Northern Trust
Employee Stock Ownership Plan
(As Initially Adopted and Subsequently Amended and Restated
Effective January 1, 1989)
Northern Trust
Employee Stock Ownership Plan
(As Initially Adopted and Subsequently Amended
and Restated Effective January 1, 1989)
Contents
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Section Page
Article I. Nature of the Plan
1.1 Establishment and Amendment of the Plan 1
1.2 Purpose of the Plan 1
1.3 Legal Qualification 1
Article II. Definitions
2.1 Definitions 2
Article III. Participation and Service
3.1 Participation 11
3.2 Duration of Participation 11
3.3 Transferred or Rehired Employees 11
3.4 Vesting 12
3.5 Break in Service 14
3.6 One-Year Break in Service 15
Article IV. Employer Contributions
4.1 Contributions 16
4.2 Medium of Payment 16
4.3 Allocation of Employer Contributions 16
4.4 No Participant Contributions 17
4.5 Uniformed Services Employment and Reemployment Rights Act 17
Article V. Investment of Trust Assets
5.1 Investments 18
5.2 Valuation of Company Stock 18
5.3 Crediting of Stock 18
5.4 Sales and Resales of Company Stock 18
Northern Trust
Employee Stock Ownership Plan
(As Initially Adopted and Subsequently Amended
and Restated Effective January 1, 1989)
Contents
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Section Page
Article VI. Exempt Loans
6.1 Requirements 20
6.2 Payments on Loans 21
6.3 Crediting of Released Stock 21
6.4 Payments of Principal and Interest 21
6.5 Puts, Calls, and Other Options 22
Article VII. Allocations to Participants'
Accounts
7.1 Participants Entitled to Allocations 23
7.2 Allocations to Company Stock Accounts 23
7.3 Allocations to Other Investment Accounts 23
7.4 Allocations of Employer Contributions, Company Stock
Acquired With a Loan and Forfeitures 24
7.5 Maximum Allocation 26
7.6 Vesting 30
7.7 Net Income or Loss of the Trust 30
7.8 Accounting for Allocations 31
7.9 Diversification of Investments 32
Article VIII. Voting and Tender of Company
Stock
8.1 Procedures for Voting 34
8.2 Tender Offer 34
Northern Trust
Employee Stock Ownership Plan
(As Initially Adopted and Subsequently Amended
and Restated Effective January 1, 1989)
Contents
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Section Page
Article IX. Benefits
9.1 Payments on Retirement 36
9.2 Payments on Death 36
9.3 Payments on Permanent Disability 38
9.4 Payments on Termination for Other Reasons 38
9.5 Deemed Cashout 39
9.6 Property Distributed 39
9.7 Methods of Payment 40
9.8 Direct Rollover of Eligible Rollover Distributions 43
Article X. Rights and Options on Distributed
Shares of Company Stock
10.1 Right of First Refusal 45
10.2 Put Option 45
Article XI. Pretermination Distributions and
Dividends
11.1 Pretermination Distributions 47
11.2 Dividends 47
Article XII. Plan Administration
12.1 Powers 48
12.2 Directions to Trustee 48
12.3 Uniform Rules 49
12.4 Reports 49
12.5 Compensation 49
12.6 Claims Procedure 49
12.7 Indemnity for Liability 50
Northern Trust
Employee Stock Ownership Plan
(As Initially Adopted and Subsequently Amended
and Restated Effective January 1, 1989)
Contents
- --------------------------------------------------------------------------------
Section Page
Article XIII. Amendment and Termination
13.1 Amendment 51
13.2 Termination 51
13.3 Merger, Sale 51
13.4 Distribution Upon Termination 52
Article XIV. Extension of Plan to Affiliates
14.1 Participation in the Plan 53
14.2 Withdrawal from the Plan 53
Article XV. Top-Heavy Provisions 55
Article XVI. Miscellaneous Provisions
16.1 Spendthrift Provisions 56
16.2 Incompetency 56
16.3 Unclaimed Funds 57
16.4 Rights Against the Company 57
16.5 Illegality of Particular Provision 58
16.6 Effect of Mistake 58
16.7 Compliance with Federal and State Securities Laws 58
16.8 No Discrimination 58
16.9 Exclusive Benefit of Employees 58
16.10 Governing Law 60
16.11 Change-in-Control 60
Article I. Nature of the Plan
1.1 Establishment and Amendment of the Plan
Effective January 1, 1989, The Northern Trust Company (the "Company")
established the Northern Trust Employee Stock Ownership Plan (the "Plan"). The
Plan is hereby amended and restated effective January 1, 1989, in order to
incorporate the requirements of the Tax Reform Act of 1986 and subsequent
legislation.
1.2 Purpose of the Plan
The purpose of the Plan is to enable Members and their Beneficiaries to share in
the growth and prosperity of the Company and its Affiliates, to provide Members
with an opportunity to accumulate capital for their future economic security,
and to furnish additional security to Members who become permanently disabled.
The primary purpose of the Plan is to enable Members to acquire ownership
interests in Company Stock. Consequently, the Plan will be invested primarily in
Company Stock.
1.3 Legal Qualification
The Plan is an employee stock ownership plan under section 4975(e)(7) of the
Code and section 407(d)(6) of ERISA. It is a stock bonus plan qualified under
section 401(a) of the Code.
Article II. Definitions
2.1 Definitions
The following capitalized terms shall have the meanings stated below wherever
they appear in the text unless the context otherwise requires.
(a) "ACCOUNT" means one of several accounts maintained to record the
interest of a Member in the Plan.
(b) "AFFILIATE" means any corporation which is a member of the same controlled
group of corporations (within the meaning of Code Section 414(b)) as the
Company, or an unincorporated trade or business which is under common
control with the Company (within the meaning of Code Section 414(c)), any
organization which is a member of an affiliated service group (within the
meaning of Code Section 414(m)) of which the Company is also a member, and
any other entity required to be aggregated under Code Section 414(o). For
purposes of section 2.1(mm), this section 2.1(b) shall be as modified as
provided in section 415(h) of the Code.
(c) "ANNIVERSARY DATE" means January 31, 1989, and December 31 of each Plan
Year.
(d) "ANNUAL ADDITIONS" means the total of: (1) Company or Participating
Employer contributions allocated to a Participant's Accounts under this
Plan and any Related Plan during any Limitation Year; (2) the amount of
Employee contributions made by the Participant under any Related Plan; and
(3) Forfeitures allocated to a Participant's Accounts under this Plan and
any Related Plan.
(e) "BENEFICIARY" means the person or persons designated as such by the
Participant on a form supplied by the Committee, provided that, a married
Participant may designate a Beneficiary other than the Participant's Spouse
only if the requirements of section 9.2(c) are met. Upon the death of a
Participant, if there is no designated Beneficiary then living, or if the
designation is for any reason ineffective, as determined by the Committee,
the Participant's Beneficiary shall be the Participant's Spouse, or if
none, as directed in the Participant's will admitted to probate, or if
there is no will, to the Participant's estate to be distributed
as provided by the laws of descent of the state of Illinois in effect at
the time of the Participant's death.
(f) "BOARD OF DIRECTORS" OR "BOARD" means the Board of Directors of the
Company.
(g) "BREAK IN SERVICE" means the event described in section 3.5.
(h) "CODE" means the Internal Revenue Code of 1986, as amended.
(i) "COMMITTEE" means the Employee Benefits Administrative Committee of the
Company, as constituted from time to time, which has the responsibility for
administering the Plan and which shall be deemed to be the Plan
Administrator and the Named Fiduciary for the purposes of ERISA.
(j) "COMPANY" means The Northern Trust Company, an Illinois state bank, and
its successors and assigns.
(k) "COMPANY STOCK" means any qualifying employer security within the meaning
of section 4975(e)(8) of the Code and 407(d)(1) of ERISA and regulations
thereunder.
(l) "COMPANY STOCK ACCOUNT" means an account of a Member that is credited with
the Member's allocable share of Company Stock purchased and paid for by the
Trust or contributed to the Trust.
(m) "COMPENSATION" means the base salary paid by the Company to a Participant,
including amounts which the Participant elects to have contributed to the
Participant's before-tax deposit account under The Northern Trust Company
Thrift-Incentive Plan and any amounts contributed by or on behalf of the
Participant to a plan designed to comply with section 125 of the Code, plus
any amounts paid as shift differential, but exclusive of severance pay or
any other types of compensation. Notwithstanding the preceding provisions
of this section, for purposes of sections 2.1(u) and 7.5 and Article XV,
"Compensation" shall have the meaning set forth in section 7.5(h)(4).
Notwithstanding any provision of this Plan to the contrary, a Participant's
Compensation for any calendar year prior to January 1, 1994, shall not
exceed $200,000 (or such other amount as established by the Secretary of
the Treasury pursuant to section 401(a)(17) of the Code).
In addition to other applicable limitations set forth in the Plan, and
notwithstanding any other provision of the Plan to the contrary, effective
January 1, 1994, the Compensation of each Participant taken into account
under the Plan shall not exceed the annual compensation limit under section
401(a)(17) of the Code. Effective January 1, 1994, the annual compensation
limit under section 401(a)(17) is $150,000, as adjusted by the Commissioner
of the Internal Revenue Service for increases in the cost of living in
accordance with Code section 401(a)(17)(B). The cost-of-living adjustment
in effect for a calendar year applies to any period, not exceeding 12
months, over which Compensation is determined (the "determination period")
beginning in that calendar year. If a determination period consists of
fewer than 12 months, the annual compensation limit will be multiplied by a
fraction, the numerator of which is the number of months in the
determination period, and the denominator of which is 12.
In determining the Compensation of a Participant for purposes of this
limitation, the rules of Code section 414(q)(6) shall apply, except that,
in applying such rules, the term "family" shall include only the Spouse of
the Participant and any lineal descendants of the Participant who have not
attained age 19 before the close of the Plan Year. If, as a result of the
application of these rules, the adjusted dollar limitation of Code section
401(a)(17) applicable to family members is exceeded, then the dollar
limitation shall be prorated among the affected individuals in proportion
to each such individual's Compensation as determined under this section
2.1(m) before applying the limitation.
(n) "EFFECTIVE DATE" means January 1, 1989.
(o) "ELIGIBLE EMPLOYEE" means any Employee of the Company or a Participating
Employer other than (1) an Employee employed by any office or branch of the
Company located in a foreign country who, as to the United States, is a
nonresident alien, and (2) an Employee who (A) as to the United States, is
a foreign national, (B) is working for the Company or a Participating
Employer at a location located in the United States, and (C) is covered by
a retirement plan sponsored by a non-U.S. Affiliate in the country in which
an Affiliate is located.
(p) "EMPLOYEE" shall mean an individual employed by the Company or an
Affiliate. A person who is considered a "leased employee" (as defined
below) of the Company or an Affiliate shall not be considered an
Employee for purposes of the Plan. If such a person subsequently becomes an
Employee, and thereafter participates in the Plan, that person shall
receive Vesting Service for employment as a leased employee except to the
extent that the requirements of Section 414(n)(5) of the Code were
satisfied with respect to such Employee while he or she was a leased
employee. For purposes of the Plan a leased employee is a person who is not
employed by the Company or an Affiliate but who performs services for the
Company or an Affiliate pursuant to an agreement between the Company or
Affiliate and a leasing organization, other than a person described in Code
section 414(n)(5), if such person performed the services for a year and the
services are of a type historically performed by employees.
(q) "EMPLOYER CONTRIBUTIONS" means payments made to the Trust by the Company
or a Participating Employer.
(r) "ENTRY DATE" shall mean each January 1, April 1, July 1, and October 1
of each Plan Year on and after the Effective Date of this Plan.
(s) "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
(t) "FORFEITURE" means the nonvested portion of a Participant's Accounts
that becomes forfeited pursuant to section 9.4.
(u) "HIGHLY COMPENSATED PARTICIPANT" means a Participant who, during the
current Plan Year or the preceding Plan Year (1) was at any time a 5-
percent owner of the Company, (2) received Compensation from the Company in
excess of $75,000 (or such adjusted amount provided under section 414(q)(1)
of the Code), (3) received Compensation from the Company in excess of
$50,000 (or such adjusted amount provided under section 414(q)(1) of the
Code) and was in the top-paid group of Employees for such year, or (4) was
at any time an officer of the Company and received Compensation from the
Company in excess of 50 percent of the amount in effect under section
415(b)(1)(A) of the Code for such Plan Year. The provisions of section
414(q) of the Code shall apply in determining whether a Participant is a
Highly Compensated Participant. Highly Compensated Participants shall be
identified based upon only the current Plan Year to the extent permitted by
Section 414(q) of the Code and regulations issued thereunder.
(v) "HOUR OF SERVICE" means each hour for which an Employee is paid or entitled
to payment for the performance of duties for the Company or an Affiliate.
(w) "INACTIVE PARTICIPANT" means a person who was a Participant who is
transferred to and is in a position of employment either--
(1) as an Employee where he or she is not an Eligible Employee; or
(2) as an Employee of an Affiliate which has not adopted this Plan.
(x) "LIMITATION YEAR" means the 12-consecutive-month period to be used in
determining the Plan's compliance with section 415 of the Code and the
regulations thereunder. The Limitation Year shall be the calendar year
unless the Company elects to use another 12-month period.
(y) "LOAN" means any loan to the Trustee made or guaranteed by a disqualified
person (within the meaning of section 4975(e)(2) of the Code) including,
but not limited to, a direct loan of cash, a purchase money transaction, an
assumption of an obligation of the Trustee, an unsecured guarantee, or the
use of assets of a disqualified person (within the meaning of section
4975(e)(2) of the Code) as collateral for a loan.
(z) "MEMBER" means either a Participant, Inactive Participant, or a former
Participant.
(aa) "NORMAL RETIREMENT DATE" means (1) in the case of a Participant who
attained age 65 before the Effective Date, the Participant's 65th birthday
or (2) in the case of any other Participant, the later of (A) the date on
which a Participant attains 65 years of age, or (B) the fifth anniversary
of the date the Participant commenced participation in the Plan.
(bb) "ONE-YEAR BREAK IN SERVICE" means a period of time described in section
3.6.
(cc) "OTHER INVESTMENTS ACCOUNT" means an Account of a Participant that is
credited with the Participant's share of the net income or loss of the
Trust and Employer Contributions and Forfeitures in other than Company
Stock, and that is debited with payments made to pay for Company Stock.
(dd) "PARENTAL LEAVE" shall mean an absence from employment with the Company or
an Affiliate because of (1) the Employee's pregnancy, (2) the birth of the
Employee's child, (3) the placement of a child with the Employee in
connection with the Employee's adoption of the child, or (4) caring for
such child immediately following such birth or placement, provided that,
the Employee furnishes to the Company or Affiliate such timely information
that the Company or Affiliate may reasonably require to establish (A) that
the absence from work is for one of the reasons specified and (B) the
number of days for which there was such an absence.
(ee) "PARTICIPANT" means an Eligible Employee who meets the requirements of
Section 3.1 and who is participating in the Plan.
(ff) "PARTICIPATING EMPLOYER" means any Affiliate which has adopted the Plan
in accordance with Article XIV.
(gg) "PENSION PLAN" means The Northern Trust Company Pension Plan.
(hh) "PERMANENT DISABILITY" means any physical or mental injury, illness or
incapacity which, in the sole judgment of the Committee based on the
medical reports of a physician selected by the Committee and other evidence
satisfactory to the Committee, currently and permanently prevents an
Employee from satisfactorily performing the Employee's usual duties for the
Company or an Affiliate or the duties of such other position or job which
the Company or an Affiliate makes available to him or her and for which
such Employee is qualified by reason of training, education or experience.
To the extent that a disability case manager determines whether an Employee
is permanently disabled under the Company's short or long-term disability
plan, such determination shall be binding with respect to the question of
whether the Employee has incurred a Permanent Disability hereunder.
(ii) "PLAN" means the Northern Trust Employee Stock Ownership Plan, as
amended.
(jj) "PLAN YEAR" means the calendar year.
(kk) "QUALIFIED ELECTION PERIOD" means--
(1) prior to the date that section 2.1(ll)(2) becomes operative, the
period beginning with the Plan Year in which the Participant first has
attained age 55 and is 100 percent vested under section 7.6 and ending
with the earlier of (A) the fourth succeeding Plan Year thereafter;
(B) the Plan Year preceding the Plan Year during which the Participant
ceases being an Employee; or (C) the Plan Year preceding the Plan Year
during which the Participant becomes a Qualified Participant under
section 2.1(ll)(2), or
(2) on and after January 1, 1999 or such earlier date that any Participant
satisfies the requirements of section 401(a)(28)(B)(iii) of the Code,
the six-Plan Year period beginning with the Plan Year in which the
Participant first becomes a Qualified Participant under section
2.1(ll)(1) or (2),
provided that, the Qualified Election Period of a Participant who would
have been a Qualified Participant in any year prior to 1989 shall begin
January 1, 1989.
(ll) "QUALIFIED PARTICIPANT" means--
(1) prior to the date that paragraph (2) below becomes operative, any
Participant who is age 55 or older and is 100 percent vested under
section 7.6; and
(2) on and after January 1, 1999 or such earlier date that any Participant
satisfies the requirements of section 401(a)(28)(B)(iii) of the Code,
any Participant who has attained age 55 and has been a Participant in
the Plan for at least ten years, or has otherwise satisfied such
requirements.
(mm) "RELATED PLAN" means any other defined contribution plan (as defined in
section 415(k) of the Code) maintained by the Company or an Affiliate.
(nn) "SEVERANCE ELIGIBLE PARTICIPANT" means, effective July 1, 1995, a
Participant whose employment has terminated in a manner entitling such
Participant to severance pay under any formal severance plan, program or
arrangement maintained by The Northern Trust Company providing severance
benefits to certain employees as a result of job elimination or
termination of employment due to the acquisition or disposition of a
business entity.
(oo) "SPOUSE" means the person to whom an Employee is married or, in the
case of a deceased Employee, the person to whom an Employee was married on
the date of such Employee's death.
(pp) "SUSPENSE ACCOUNT" means an account to which securities purchased with
any Loans are allocated pending their release and allocation to Accounts as
the Loan is repaid.
(qq) "TRUST" means all money, securities, and other property held under the
Trust Agreement for purposes of the Plan.
(rr) "TRUST AGREEMENT" means the agreement between the Company and the Trustee
(or any successor Trustee) establishing the Trust and specifying the duties
of the Trustee.
(ss) "TRUST ASSETS" means the assets held in the Trust for the exclusive
benefit of Participants, Beneficiaries, and Spouses.
(tt) "TRUSTEE" means The Northern Trust Company as Trustee of the Trust.
(uu) "VALUATION DATE" means each March 31, June 30, September 30, and
December 31 of the Plan Year; provided, however, that, effective July 1,
1993, "Valuation Date" means the last business day of each calendar month.
(vv) "VESTED PORTION" means that percentage of a Participant's Account
constituting the Participant's irrevocable right to such Account, as
indicated in the following vesting schedule:
===========================================
PARTICIPANT'S YEARS
OF VESTING SERVICE VESTED
WITH THE COMPANY PERCENTAGE
-------------------------------------------
Less than 2 years 0%
2 years but less than 3 20%
3 years but less than 4 40%
4 years but less than 5 60%
5 years but less than 6 80%
6 or more years 100%
UNVESTED PORTION means the remaining Account balance after subtracting the
Vested Portion.
(ww) "VESTING SERVICE" means the period of employment credited under section
3.4.
Article III. Participation and Service
3.1 Participation
Each Eligible Employee shall become a Participant on the Entry Date on or next
following the later of the date the Eligible Employee completes one year of
Vesting Service and the date the Eligible Employee attains age 21, provided that
he or she is an Eligible Employee on such date.
3.2 Duration of Participation
An Eligible Employee who becomes a Participant shall continue to be a
Participant or Inactive Participant until he or she incurs a Break in Service,
and also shall continue to be a Member thereafter for as long as he or she is
entitled to receive any benefits hereunder. After receiving all benefits to
which he or she is entitled hereunder, he or she shall cease to be a Member
unless and until he or she thereafter becomes eligible to again become a
Participant.
3.3 Transferred or Rehired Employees
The following rules shall be applicable to Employees who (a) become Participants
because of transfer to a status qualifying for coverage under the Plan, (b)
become Inactive Participants, (c) transfer to a status not qualifying for
coverage after meeting the requirements of section 3.1 but before becoming
Participants, or (d) are rehired by the Company:
(a) An employee becomes an Eligible Employee hereunder shall be credited with
Vesting Service computed for all his or her employment with the Company and
any Affiliate, before and after such transfer.
(b) Any Participant who shall be transferred into employment as an Employee
where he or she becomes an Inactive Participant shall continue to receive
credit for Vesting Service under this Plan during the period he or she is
an Inactive Participant.
(c) Any Eligible Employee who shall meet the requirements of section 3.1 but
shall be transferred into employment as an Employee but not as an Eligible
Employee, before becoming a Participant, shall no longer be eligible to
elect to have contributions made on his or her behalf hereunder. Any such
Employee shall continue to accrue Vesting Service
during the period computed for all of the Employee's employment with the
Company and any Affiliate.
(d) An Employee who has a Break in Service and is subsequently reemployed by
the Company or an Affiliate shall be considered a new Employee for purposes
of section 3.1, unless he or she was credited with at least one year of
Vesting Service prior to his or her Break in Service. In such case, the
Employee shall become eligible to have contributions hereunder made on his
or her behalf (i) before January 1, 1995, on the first day of the first
Valuation Period in which such person is so reemployed, and (ii) from and
after January 1, 1995, on the first day of the first payroll period
following such reemployment.
(1) By written notice to the Committee after his or her reemployment, an
Employee who has not had five consecutive One-Year Breaks in Service may
deposit with the Trustee an amount which shall be equal to the aggregate
value of the distributions from his or her Account at the time of his or
her previous Break in Service. All deposits must be made in cash and in a
single lump sum. The deposits must be made within five years after the
Employee is reemployed.
(2) In the case of a reemployed Employee who does not have five consecutive
One-Year Breaks in Service, the Company shall contribute to the Account of
such Employee the amount, if any, forfeited at the time of the Employee's
termination of service, if and only if the Employee makes the deposits
permitted under paragraph (1) above or the Employee did not receive a
distribution at or after the time of his or her previous termination of
service. The Company's contribution shall be made concurrently with the
Employee's repayment if applicable, otherwise upon the date of his or her
reemployment.
For each other reemployed Employee, his or her beginning balance in each of
his or her Accounts shall be zero, and his or her previous Forfeiture, if
any, shall not be restored.
3.4 Vesting
An Employee shall receive credit for Vesting Service for the period commencing
with the Employee's date of hire with the Company or an Affiliate and ending on
the date the Employee incurs a Break in Service. Vesting Service shall be
calculated in accordance with reasonable and uniform standards and policies
adopted by the Company from time to time, which standards and policies shall be
consistently observed subject, however, to the following:
(a) Vesting Service shall be computed on the following basis: (i) prior to July
1, 1993, an Employee shall receive credit for each calendar quarter during
which the Employee earned at least one (1) Hour of Service or otherwise
would receive credit for Vesting Service pursuant to subsection (a) next
above; and (ii) from and after July 1, 1993, an Employee shall receive
credit for each calendar month during which the Employee earned at least
one (1) Hour of Service or otherwise would receive credit for Vesting
Service pursuant to subsection (b) below.
(b) An Employee shall earn Vesting Service for all periods of active employment
with the Company or an Affiliate, and for the following periods that are
not active employment but that precede a Break in Service:
(i) an approved unpaid leave of absence from the Company or an Affiliate
that is granted according to uniform and nondiscriminatory standards,
but only if the Employee returns to work with the Company or an
Affiliate upon the termination of such leave of absence;
(ii) effective August 5, 1993, an absence from work with the Company or an
Affiliate under the Family and Medical Leave Act of 1993, but only if
the Employee returns to work with the Company or an Affiliate upon
the termination of such period of absence;
(iii) a period of up to one (1) year during which an Employee is on a
Parental Leave;
(iv) an absence from work with the Company or an Affiliate on account of
military service with the armed forces of the United States, but only
if the Employee reports for work within the period required under law
pertaining to veteran's reemployment rights
(c) If an Employee incurs a Break in Service, but returns to employment with
the Company or an Affiliate prior to incurring a One-Year Break in Service
(as defined in Section 3.6), the period commencing on the date the Break in
Service began and ending on the date such Employee is reemployed shall be
counted as Vesting Service. Notwithstanding the preceding sentence, if the
Break in Service occurs during a period of absence from active employment,
the Employee shall not receive Vesting Service under the preceding sentence
unless such Employee returns to employment before the first (1st)
anniversary of the first day of such absence. If an Employee suffers a One-
Year Break in Service and the Employee is thereafter reemployed by the
Company or an Affiliate, such Employee's Vesting Service before such One-
Year Break in Service shall be added to the Employee's Vesting Service
after reemployment.
(d) A Participant's Vesting Service shall not include periods of service with
an entity prior to the date it became an Affiliate, except as provided in
Schedule A hereto.
(e) A Severance Eligible Participant shall receive credit for one (1) year of
Vesting Service beyond that earned pursuant to the foregoing.
(f) All periods of Vesting Service shall be aggregated; provided, however, that
a Participant shall not receive multiple credit for Vesting Service with
respect to any single period.
3.5 Break in Service
(a) A "Break in Service" shall occur on earliest of:
(i) the date the Employee quits, is discharged, retires, or dies; or
(ii) the first anniversary of the date the Employee separates from
service with the Company or an Affiliate for any reason other than the
reasons set forth in paragraph (i) above, such as vacation, holiday,
sickness, disability, leave of absence or layoff.
(b) The fact that an Employee separates from service with the Company or an
Affiliate on account of military service with the armed forces of the
United States shall not constitute a Break in Service unless the Employee
fails to report to work within the period required under law pertaining to
veteran's reemployment rights, in which case the Break in Service shall
occur on the earlier of (i) the expiration of the period by which such
Employee was required by law to report back to work or (ii) the first
anniversary of the d ate the Employee separated from service.
(c) A Break in Service shall end on the date on which an Employee again
performs an Hour of Service for the Company or an Affiliate.
(d) The fact that an Employee who is a Participant becomes an Inactive
Participant shall not constitute a Break in Service, but the foregoing
rules shall continue to apply to such an Employee during the period he or
she is an Inactive Participant.
(e) Effective August 5, 1993, the fact that an Employee is absent from work
under the Family and Medical Leave Act of 1993 shall not constitute a Break
in Service if the Employee returns to work with the Company or an Affiliate
after such period of absence.
3.6 One-Year Break in Service
(a) The term "One-Year Break in Service" means each 12-consecutive-month period
beginning on the date an Employee incurs a Break in Service under Section
3.5 and ending on each anniversary of such date, provided that such
Employee does not perform an Hour of Service for the Company or any
Affiliate during such period.
(b) Solely for purposes of determining whether a One-Year Break in Service has
occurred, but not for purposes of determining Vesting Service or Credited
Service, in the case of an Employee who is on Parental Leave, the
Employee's Break In Service shall be deemed to occur on the second (2nd)
anniversary of the first day of such absence, provided the Employee does
not perform an Hour of Service for the Company or any Affiliate during such
period of absence. The period of time between the first (1st) and second
(2nd) anniversaries of a Parental Leave shall not be counted as a Break in
Service, Vesting Service or Credited Service.
Article IV. Employer Contributions
4.1 Contributions
Subject to section 4.2, for each Plan Year, Employer Contributions under the
Plan may be paid to the Trust in such amounts or under such a formula and at
such times as the Board may determine. Notwithstanding any provision in the Plan
or any law to the contrary, the Company shall also make Employer Contributions
to the extent necessary to satisfy the provisions of Section 4.5.
Employer Contributions for a Plan Year may be paid during the Plan Year and must
be paid no later than the due date for filing the Company's federal income tax
return for that year, including any extensions of the due date. Employer
Contributions for any Plan Year shall not be paid to the Trust in amounts that
would exceed the limitations of section 404 of the Code. Notwithstanding the
provisions of this section, no Employer Contributions in any Limitation Year
shall be in an amount that would cause (a) the Annual Additions to the Accounts
of any Participant to exceed the Maximum Permissible Amount (as defined in
section 7.5) for such Participant for that Year or (b) the sum of the defined
benefit plan fraction (as defined in section 7.5) and the defined contribution
plan fraction (as defined in section 7.5) to exceed one for such Participant for
such Limitation Year.
4.2 Medium of Payment
Employer Contributions may be paid to the Trust in cash or in shares of Company
Stock, as determined by the Board. Employer Contributions, however, shall be
paid in cash in such amounts (subject to the limitations described in section
7.5), and at such times as needed to provide the Trust with funds sufficient to
pay in full when due any principal and interest payments required by a Loan
incurred, pursuant to Committee direction, by the Trustee to finance
acquisitions of Company Stock, except to the extent such principal and interest
payments have been satisfied by the Trustee from cash dividends paid to it with
respect to Company Stock.
4.3 Allocation of Employer Contributions
All Employer Contributions for a Plan Year shall be allocated to Participants'
Accounts as provided in Article VII.
4.4 No Participant Contributions
No Participant shall be required or permitted to make contributions to the Plan
or Trust.
4.5 Uniformed Services Employment and Reemployment Rights Act
Effective December 12, 1994, the Plan shall be administered consistent with the
provisions of Uniformed Services Employment and Reemployment Rights Act of 1994,
P.L. 103-353 ("USERRA"). As such, the Company and any Participating Employer
shall make special Employer Contributions as necessary to comply with USERRA and
other applicable laws.
Article V. Investment of Trust Assets
5.1 Investments
Trust Assets under the Plan will be invested primarily in Company Stock.
Employer Contributions and other Trust assets may be used to acquire shares of
Company Stock from the stockholders (including former Participants) or issuer
thereof. The Trustee also may hold Trust assets in cash or invest them in
savings accounts, certificates of deposit, high grade short-term securities, any
kind of investment fund (open-end or otherwise), a common trust fund for the
investment of qualified employee benefit trusts, including any such fund
maintained by the Trustee, or in other investments desirable for the Trust.
5.2 Valuation of Company Stock
All purchases of Company Stock will be made at a price, or at prices, that do
not exceed the fair market value of such Company Stock. Except as otherwise
determined by the Trustee in accordance with ERISA, the fair market value of
Company Stock as of a given date shall be the closing price as of such date on
the New York Stock Exchange; provided, however, that before January 1, 1995, the
fair market value as of a given date shall be the median of the high and low
sale prices of Company Stock on the preceding trading day. If Company Stock is
not readily tradable on an established securities market, the determination of
the fair market value of Company Stock for all purposes of the Plan shall in all
cases be made by an independent appraiser appointed by the Committee. Any
independent appraiser appointed pursuant to this section shall meet the
requirements of section 401(a)(28)(C) of the Code.
5.3 Crediting of Stock
Company Stock purchased with the proceeds of a Loan shall be held in the
Suspense Account pending release and allocation to the Accounts of Participants
as the Loan is paid pursuant to Section 7.4. Company Stock purchased with
amounts allocated to Participants' Other Investment Accounts shall immediately
upon purchase be credited pro rata to the corresponding Company Stock Accounts.
Company Stock contributed to the Plan pursuant to Article IV shall be allocated
to the Company Stock Accounts of Participants pursuant to section 7.4.
5.4 Sales and Resales of Company Stock
The Committee may direct the Trustee to sell or resell shares of Company Stock
to any person. All such sales to any disqualified person must be made at
no less than the fair market value and no commission may be charged. Such sales
shall comply with section 408(e) of ERISA. All sales of Company Stock (except
Company Stock held in a Suspense Account) by the Trustee will be charged pro
rata to the Company Stock Accounts of Participants. Sales of Company Stock
pursuant to this section 5.4 may only be made to the extent not inconsistent
with section 1.3 of the Plan.
Article VI. Exempt Loans
6.1 Requirements
(a) The Committee may direct the Trustee to obtain Loans. Any such Loan will
meet all requirements necessary to constitute an exempt loan within the
meaning of section 4975(d)(3) of the Code and Treasury regulations section
54.4975-7(b)(1)(iii) and shall be used primarily for the benefit of
Participants, Beneficiaries, and Spouses. The proceeds of any such Loan
shall be used, within a reasonable time after the Loan is obtained, only to
purchase Company Stock, repay the Loan, or repay any prior Loan. Any such
Loan shall provide for no more than a reasonable rate of interest (as
determined under Treasury regulations section 54.4975-7(b)(7)) and must be
without recourse against the Plan. The number of years to maturity under
the Loan must be definitely ascertainable at all times. The only assets of
the Plan that may be given as collateral on a Loan are shares of Company
Stock acquired with the proceeds of the Loan and shares of Company Stock
that were used as collateral on a prior Loan repaid with the proceeds of
the current Loan. No person entitled to payment under a Loan shall have
recourse against Trust Assets other than such collateral, Employer
Contributions (other than contributions of Company Stock) that are
available under the Plan to meet obligations under the Loan, and earnings
attributable to such collateral and the investment of such Employer
Contributions.
(b) All Employer Contributions paid during the Plan Year in which a Loan is
made (whether before or after the date the proceeds of the Loan are
received), all Employer Contributions paid thereafter until the Loan has
been repaid in full, and all earnings from investment of such Employer
Contributions, shall be used to meet obligations under the Loan as such
obligations accrue, or before such obligations accrue, unless otherwise
designated by the Committee at the time any such Employer Contribution is
made.
(c) Any Company Stock acquired with the proceeds of a Loan shall be placed in a
Suspense Account. The Company Stock in the Suspense Account must be
released from the Suspense Account upon the payment of any portion of the
Loan. The number of shares to be released from the Suspense Account for
each Plan Year during the duration of the Loan shall equal the number of
encumbered securities held immediately before release for the current Plan
Year multiplied by a fraction. The numerator
of the fraction is the sum of principal and interest paid in such Plan
Year. The denominator of the fraction is the sum of the numerator and the
principal and interest to be paid for all future years. Such years will be
determined without taking into account any possible extension of renewal
periods.
(d) If the collateral in the Suspense Account includes more than one class of
Company Stock, the number of shares of each class to be released from the
Suspense Account for a Plan Year must be determined by applying the same
fraction to each class. If interest on any Loan is variable, the interest
to be paid in future years under the Loan shall be computed by using the
interest rate applicable as of the end of the current Plan Year.
6.2 Payments on Loans
Payments of principal and interest on any Loan during a Plan Year shall be made
by the Trustee (as directed by the Committee) only from (a) Employer
Contributions to the Trust made to meet the Plan's obligation under a Loan and
from any earnings (including dividends) attributable to such Contributions or to
Company Stock held as collateral for a Loan (received either during or prior to
the Plan Year), less payment from such contributions and earnings in prior
Years; (b) the proceeds of a subsequent Loan made to repay a prior Loan; and (c)
the proceeds of the sale of any Company Stock held as collateral for a Loan.
Such Contributions and earnings must be accounted for separately by the Plan
until the Loan is repaid.
6.3 Crediting of Released Stock
Company Stock released by reason of the payment of principal or interest on a
Loan from Employer Contributions shall, on the Anniversary Date, be allocated to
Participants as set forth in section 7.4.
6.4 Payments of Principal and Interest
(a) The Company shall contribute to the Trust sufficient amounts to enable the
Trust to pay principal and interest on any Loans as they are due. If the
limitations of section 7.5 would result in Employer Contributions in an
amount insufficient to enable the Trust to pay principal and interest on
such Loan as it is due, then the Company may--
(1) make a Loan to the Trust (as described in Treasury regulation section
54.4975-7(b)(4)(iii)), in sufficient amounts to meet such principal
and
interest payments. A new Loan must also meet all requirements of an
exempt loan within the meaning of Treasury regulation section 54.4975-
7(b)(1)(iii) and shall be subordinated to the prior Loan. Company
Stock released from the pledge of the prior Loan shall be pledged as
collateral to secure the new Loan. Such Company Stock will be released
from this new pledge and allocated to the Accounts of the Participants
in accordance with applicable provisions of the Plan;
(2) purchase any Company Stock pledged as collateral in an amount
necessary to provide the Trustee with sufficient funds to meet the
principal and interest repayments. Any such sale by the Plan shall
meet the requirements of section 408(e) of ERISA; or
(3) any combination of paragraphs (1) and (2).
(b) Neither the Company nor any Affiliate, pursuant to this section, shall do,
fail to do, or cause to be done any act that would result in a
disqualification of the Plan as an employee stock ownership plan under the
Code or ERISA.
6.5 Puts, Calls, and Other Options
Except as provided in Article X and notwithstanding any amendment to or
termination of the Plan that causes it to cease to qualify as an employee stock
ownership plan within the meaning of section 4975(e)(7) of the Code, no shares
of Company Stock acquired with the proceeds of a Loan obtained by the Trust to
purchase Company Stock may be subject to a put, call, or other option, or buy-
sell or similar arrangement while such shares are held by and when distributed
from the Plan.
Article VII. Allocations to Participants' Accounts
7.1 Participants Entitled to Allocations
As of each Anniversary Date, a Participant is entitled to the allocations
provided in this Article VII. A Participant must be an active Eligible Employee
on the Anniversary Date in order to share in the allocations relating to that
Anniversary Date; provided that, each Participant who is on an authorized leave
of absence or whose employment terminates by reason of early or normal
retirement under the terms of the Pension Plan, or by reason of Permanent
Disability or death, or whose employment terminated in circumstances under which
he or she is a Severance Eligible Participant, will share in allocations of
Employer Contributions which have not been used to make payments on a Loan,
Company Stock released from the Suspense Account according to section 6.1(c),
and Forfeitures, for any Anniversary Date other than January 31, 1989 occurring
with respect to the Plan Year in which the leave of absence begins or employment
terminates.
7.2 Allocations to Company Stock Accounts
A separate Company Stock Account will be established for each Participant. The
Company Stock Account will be credited with (a) the Participant's allocable
share (determined under section 7.4) of Company Stock (including fractional
shares) purchased and paid for by the Trust or contributed in kind to the Trust,
(b) Forfeitures of Company Stock, and (c) any stock dividends on Company Stock
allocated to the Participant's Company Stock Accounts as of the record date
therefor. Company Stock acquired by the Trust with the proceeds of a Loan
obtained pursuant to Article VI shall be allocated to the Company Stock Accounts
of Participants according to the method set forth in section 7.4 at the time the
Company Stock is released from Suspense Accounts as provided in section 6.1(c).
7.3 Allocations to Other Investment Accounts
A separate Other Investment Account will be established for each Participant.
The Other Investments Account will be credited or debited with (a) the
Participant's allocable share (as determined under section 7.7) of the net
income or loss of the Trust, (b) Employer Contributions that have not been used
to make principal and interest payments on a Loan or to purchase Company Stock,
and (c) Forfeitures in other than Company Stock. Each Other Investment Account
will be debited for its share of any cash payments for the acquisition of
Company Stock for the benefit of Company Stock Accounts.
7.4 Allocations of Employer Contributions, Company Stock
Acquired With a Loan and Forfeitures
Subject to subsection (d) of this section and to section 7.5, Employer
Contributions which have not been used to make payments on a Loan, Company Stock
released from the Suspense Account according to section 6.1(c), and Forfeitures
incurred since the prior Anniversary Date shall be allocated among Participants
entitled to allocations under section 7.1 as follows:
(a) For the Anniversary Date on January 31, 1989, with respect to Employer
Contributions which have been made pursuant to a loan described in section
133(b)(1)(B) of the Code (as in effect on such date), in the proportion
that each such Participant's Compensation for January 1989 bears to the
total of such Compensation of all such Participants (considering in both
cases, with respect to each Participant, only Compensation not in excess of
$16,666.66);
(b) For the Anniversary Date on December 31, 1989, with respect to Employer
Contributions which have not been made to make payments on a Loan, Company
Stock released from the Suspense Account according to section 6.1(c), and
Forfeitures incurred on or before December 31, 1989, in accordance with the
following procedure:
(1) the number of shares released from the Suspense Account for the Plan
Year shall be added to the number of shares allocated on the January
31, 1989 Anniversary Date; and
(2) to preliminarily determine the number of shares to be allocated to
each Participant entitled to share in allocations under section 3.4,
the number determined under paragraph (1) above shall be multiplied by
a fraction, the numerator of which is the Participant's Compensation
for the 1989 Plan Year, and the denominator of which is the aggregate
Compensation for the 1989 Plan Year of all Participants entitled to
share in the allocation.
The product so determined for each such Participant shall be decreased by
the number of shares of Company Stock allocated to the Participant on the
January 31, 1989 Anniversary Date; provided that, for any Participant with
respect to whom the product of subsection (b)(2) is less than the number of
shares allocated on the January 31, 1989 Anniversary Date, no shares
allocated on such Anniversary Date shall be subtracted
from the Participant's Account. To accomplish the foregoing, (A) the
Participants described in the foregoing proviso (the "Deficit
Participants") will receive no allocation for the December 31, 1989
Anniversary Date and (B) for all other Participants entitled to share in
such allocation, the preliminary determination described in subsection
(b)(2) shall be adjusted by subtracting from the shares otherwise allocable
to them a number of shares equal to the shares that would have been
subtracted from the Accounts of the Deficit Participants if the foregoing
proviso had not applied. Such adjustment shall be accomplished pro rata
based on the relative Compensation of affected Participants as described in
subsection (b)(2), except that, if such adjustment would result in the
subtraction of shares allocated to any Participant on the January 31, 1989
Anniversary Date, then to the extent such subtraction would occur, the
adjustment will not be made to such Participant's allocation and any
additional adjustment shall be made pro rata (on the same basis) among the
other affected Participants; and
(c) For each Anniversary Date after December 31, 1989, with respect to Employer
Contributions which have not been made to make payments on a Loan, Company
Stock released from the Suspense Account according to section 6.1(c), and
Forfeitures incurred since the prior Anniversary Date, in the proportion
that each such Participant's Compensation for the Plan Year bears to the
total Compensation of all such Participants; provided, however, that a
special allocation may be made pursuant to section 4.5.
(d) Effective December 12, 1994, the Company and any Participating Employer
shall make special allocations as necessary to comply with USERRA and other
applicable laws.
(e) Notwithstanding subsections (b) and (c), if for any Limitation Year more
than one-third of the Employer Contributions that are deductible as
principal or interest payments on a Loan pursuant to the provisions of
section 404(a)(9) of the Code would, but for the provisions of this
subsection (e), be allocated to Highly Compensated Participants, then such
Employer Contributions otherwise allocable to such Participants shall be
reduced. The reduction shall be made among all Highly Compensated
Participants in the same proportion as the amounts of such Contributions
otherwise allocable to them and shall be made only to the minimum extent
necessary so that no further reduction would be required to satisfy the
conditions of section 415(c)(6) of the Code.
The allocations made pursuant to subsections (b), (c), and (d) shall be
consistent with the provisions of sections 9.1, 9.2, 9.3, and 9.4.
Notwithstanding the preceding provisions of this section, and subject to section
7.4(d), no allocation shall be made to the Accounts of any Participant in any
Limitation Year that would cause (A) the Annual Additions of the Participant to
exceed the Maximum Permissible Amount (as defined under section 7.5) for that
year (except as permitted in section 7.5) or (B) the sum of the defined benefit
plan fraction (as defined in section 7.5) and the defined contribution plan
fraction (as defined in section 7.5) to exceed one for that Participant for that
Limitation Year.
7.5 Maximum Allocation
(a) Notwithstanding anything to the contrary contained elsewhere in the Plan,
but subject to section 7.4(d), for each Limitation Year, the allocations to
the Accounts of any Participant shall be limited so that the Participant's
Annual Additions for such Year do not exceed the Maximum Permissible Amount
(as defined in subsection (h)(3) below).
(b) If the foregoing limitation on allocations would be exceeded in any
Limitation Year for any Participant as a result of the allocation of
Forfeitures, reasonable error in estimating a Participant's Compensation,
or under such other limited facts and circumstances as the Commissioner of
Internal Revenue, pursuant to Treasury regulation section 1.415-6(b)(6),
finds justify the availability of this subsection (b), the excess amount
shall be placed, unallocated to any Participant, in a Limitation Account.
If a Limitation Account is in existence at any time during a particular
Limitation Year, other than the Limitation Year described in the preceding
sentence, all amounts in the Limitation Account must be allocated to
Participants' Accounts (subject to the limits of this section 7.5) before
any contributions that would constitute Annual Additions may be made to the
Plan for that Limitation Year. The excess amounts allocated pursuant to
this subsection (c) shall be used to reduce Employer Contributions for the
next Limitation Year (and succeeding Limitation Years, as necessary) for
all of the Participants in the Plan. Excess amounts held in a Limitation
Account pursuant to this section 7.5 may not be distributed to Participants
or former Participants. The Limitation Account will not share in the
valuation of Participants' Accounts and the allocation of earnings set
forth in section 7.7 of the Plan, and the change in fair market value and
allocation of earnings attributable to the
Limitation Account shall be allocated to the remaining accounts hereunder
as set forth in this section 7.5.
(c) Upon termination of the Plan, any amounts in a Limitation Account at the
time of such termination shall revert to the Company or Participating
Employer that employs the Employees to whom such amounts are attributable.
(d) If any Participant under the Plan is also a Participant in a defined
benefit plan (as defined in section 415(k) of the Code) maintained by the
Company or an Affiliate, the sum of the defined benefit plan fraction (as
defined below) and the defined contribution plan fraction (as defined
below) for any Limitation Year with respect to such Participant shall not
exceed one. If a Participant is otherwise entitled to receive an allocation
under this Plan and accrue a benefit under a defined benefit plan
maintained by the Company or an Affiliate, and the combination thereof
would cause the limitations of this section to be exceeded, the allocation
under this Plan will only be reduced if the accrual under such defined
benefit plan is not decreased as necessary to cause such limitations not to
be exceeded.
(e) If a Participant is entitled to receive an allocation under this Plan and
any Related Plan and, in the absence of the limitations contained in this
section, the Company would contribute or allocate to the Accounts of that
Participant an amount for a Limitation Year that would cause the Annual
Additions to the Accounts of the Participant to exceed the annual Maximum
Permissible Amount for such Year, then the contributions and allocations
made with respect to the Participant under this Plan will only be reduced
if the contributions or allocations to the Participant's accounts under the
Related Plan are not decreased to the extent necessary so that the
Participant's Annual Additions do not exceed the Maximum Permissible
Amount.
(f) Any reduction in the contributions and allocations under this Plan made
with respect to a Participant's Accounts required pursuant to this section
and section 415 of the Code shall be effected, to the minimum extent
necessary, by reducing the Employer Contributions that would have been made
by the Company for the applicable Plan Year with respect to such
Participant.
(g) The provisions of this section shall be interpreted by the Committee, in
the administration of the Plan, to reduce contributions and allocations (as
required by this section) only to the minimum extent necessary to reflect
the requirements of section 415 of the Code, as amended and in force from
time to time, and Treasury regulations promulgated pursuant to that
section, which are incorporated by reference herein.
(h) For purposes of this section 7.5--
(1) The "defined benefit plan fraction" for any Limitation Year for a
Participant means a fraction, the numerator of which is the projected
annual benefit of the Participant under all defined benefit plans
maintained by the Company or an Affiliate, determined as of the close
of the Limitation Year, and the denominator of which is the lesser of
(A) the product of 1.25, and the dollar limitation in effect under
section 415(b)(1)(A) of the Code for such year or (B) the product of
1.4 and the amount which may be taken into account under section
415(b)(1)(B) of the Code with respect to such Participant for such
Year.
(2) The "defined contribution plan fraction" for any Limitation Year for
any Participant means a fraction, the numerator of which is the sum of
the Annual Additions to the Participant's Account under the Plan and
to the Participant's accounts under all defined contribution plans
maintained by the Company or an Affiliate as of the close of the
Limitation Year, and the denominator of which is the sum of the lesser
of the following amounts determined for such Year and for each prior
year of Vesting Service with the Company or an Affiliate (A) the
product of 1.25 and the dollar limitation in effect under section
415(c)(1)(A) of the Code for such Year (determined without regard to
section 415(c)(6) of the Code) and (B) the product of 1.4 and the
amount which may be taken into account under section 415(c)(1)(B) of
the Code with respect to such Participant for such Year.
(3) "Maximum Permissible Amount" shall mean:
(A) the lesser of--
(i) $30,000 (or, if greater, one-fourth of the dollar limitation
in effect pursuant to section 415(b)(1)(A) of the Code); or
(ii) 25 percent of a Participant's Compensation (as defined in
paragraph (4) hereof).
(B) Notwithstanding the provisions of paragraph (A), if no more than
one-third of the Employer Contributions for the Limitation Year
ending December 31, 1989 are allocated to Highly Compensated
Participants, then the Maximum Permissible Amount for that
Limitation Year shall mean the lesser of--
(i) 25 percent of a Participant's Compensation; or
(ii) the sum of (a) $30,000 (or, if greater, one-fourth of the
dollar limitation in effect under section 415(b)(1)(A) of
the Code) and (b) the lesser of the amount determined under
clause (a) above or the amount of employer securities (as
defined in sections 4975(e)(8) and 409(1) of the Code)
contributed to the Plan or purchased with cash contributions
to the Plan.
(C) If no more than one-third of the Employer Contributions for a
Limitation Year that are deductible as principal or interest
payments on a Loan pursuant to the provisions of section
404(a)(9) of the Code are allocated to Highly Compensated
Participants, then the limitations imposed by paragraph (A) or
(B), whichever is applicable, shall not apply to--
(i) Forfeitures of Company Stock if the Company Stock was
acquired with the proceeds of a Loan; or
(ii) Employer Contributions that are deductible as interest
payments on a Loan under section 404(a)(9)(B) of the Code
and charged against a Participant's Account.
(4) For purposes of this section and sections 2.1(u) and Article XV,
"Compensation" shall mean wages, salaries, fees for professional
services, and other amounts received for personal services actually
rendered in the course of employment with the Company or an Affiliate
(including, but not limited to, commissions paid salesmen,
compensation for services on the basis of a percentage of profits,
tips, and bonuses); shall include all compensation actually paid or
made
available to a Participant for an entire Limitation Year; and shall
not include any other items or amounts paid to or for the benefit of a
Participant.
(i) To the extent permitted, the limitations set forth in this section 7.5
shall be adjusted in connection with contributions made pursuant to section
7.4(d).
7.6 Vesting
(a) Each Participant shall have a vested interest in the adjusted balance of
his or her Company Stock and Other Investments Accounts in accordance with
the vesting schedule set forth in 2.1(vv).
(b) On reaching the Normal Retirement Date, a Participant shall be 100 percent
vested in the adjusted balance of his or her Company Stock and Other
Investments Accounts if such Participant is an Employee on his or her
Normal Retirement Date.
(c) In the event a Participant dies or incurs a Permanent Disability within the
meaning of section 9.3, the Participant shall be 100 percent vested in the
adjusted balance of the Company Stock and Other Investments Accounts as of
the date of the Participant's death or Permanent Disability if such
Participant is an Employee on the date he or she dies or becomes disabled.
(d) In the event the Plan is terminated or upon the complete discontinuance of
Employer Contributions to the Plan, each Participant shall be 100 percent
vested in the adjusted balance of his or her Company Stock and Other
Investments Accounts.
7.7 Net Income or Loss of the Trust
(a) DIVIDENDS ON COMPANY STOCK. Any stock dividends received in respect of
Company Stock allocated to a Participant's Company Stock Account as of the
record date therefor shall be credited to the Participant's Company Stock
Account on the Valuation Date coincident with or succeeding the Trustee's
receipt of such dividends. Any stock dividends received in respect of
Company Stock held in the Suspense Account as of the record date shall be
allocated to such Account and released pursuant to Section 6.1(c). Any cash
dividends received on Company Stock held in the Suspense Account pursuant
to section 6.1(c), or any cash or stock
dividends received on Company Stock that has been forfeited pursuant to
section 9.4(b) but not yet reallocated pursuant to section 7.4(c), as of
the record date, may be used to meet obligations under the Loan, the
proceeds of which were used to acquire such Company Stock. Any dividends
described in the preceding sentence shall, to the extent such amounts are
not used to pay principal or interest on a Loan, be considered net income
for the Trust for the Plan Year.
(b) Other Income or Loss. The net income or loss of the Trust shall be
determined as of each Valuation Date. Each Participant's share of the net
income or loss will be allocated to the Participant's Other Investments
Accounts in the ratio that the balance of all his or her Accounts on the
last Valuation Date, based on the fair market value thereof (reduced by the
amount of any distribution from such Accounts, including a distribution or
transfer pursuant to section 7.9, other than a distribution made in the
calendar quarter that the Participant ceases being an Employee), bears to
the sum of such balances for all Participants as of that date. The net
income or loss of the Trust includes the increase or decrease in the fair
market value of Trust Assets (other than Company Stock), interest income,
dividends, and other income or loss attributable to Trust Assets (other
than Company Stock, except as provided in subsection (a) above) since the
last Valuation Date. Net income or loss shall not include Employer
Contributions or Forfeitures. Any proceeds of sales of unallocated Company
Stock shall, to the extent such amounts are not used to pay principal or
interest on a Loan, be considered net income for the Trust. Net income or
loss attributable to any Limitation Account established under section 7.5
shall be allocated to the Other Investments Accounts of Participants in
accordance with the ratio described in the second sentence of this
subsection (b), and the Limitation Account shall not share in the
allocation of net income or loss of the Trust under this section.
7.8 Accounting for Allocations
The Committee shall adopt accounting procedures for the purpose of making the
allocations, valuations, and adjustments to Participants' Accounts provided for
in this section. Except as provided in Treasury regulation section 54.4975-11,
Company Stock acquired by the Plan shall be accounted for as provided under
Treasury regulation section 1.402(a)-l(b)(2)(ii); allocations of Company Stock
shall be made separately for each class of stock; and the Committee shall
maintain adequate records of the cost basis of all shares of Company Stock
allocated to each Participant's Company Stock Accounts. From time to time, the
Committee may modify the accounting procedures for the purpose of achieving
equitable and nondiscriminatory allocations among the Accounts of Participants
in accordance with the general concepts of the Plan and the provisions of this
section. Annual valuations of Trust Assets shall be made at fair market value.
7.9 Diversification of Investments
(a) Prior to the date that section 2.1(ll)(2) becomes operative, a Participant
who is a Qualified Participant pursuant to section 2.1(ll)(1) may elect, on
or before the March 15 next succeeding the end of each Plan Year in the
Qualified Election Period described in section 2.1(kk)(1) to have the
Trustee dispose of a specified whole number of shares of Company Stock not
in excess of the Participant's "Applicable Amount" and transfer the proceeds
thereof to the Northern Trust Company Thrift Incentive Plan. Participant
elections shall be in such written, electronic, or other form as the
Committee shall determine. A Qualified Participant's Applicable Amount for a
Plan Year in the Qualified Election Period shall equal 25 percent of (1) the
total number of shares of Company Stock ever acquired by or contributed to
the Plan and allocated to the Participant's Accounts in the Plan as of the
end of such Plan Year less (2) the number of shares to which a prior
election under this subsection applied; provided that, if with respect to a
Qualified Participant, such difference is not a whole number of shares of
Company Stock, it shall be rounded to the nearest whole number of shares. In
the case of the last year of a Qualified Election Period, the preceding
sentence shall be applied by substituting "50 percent" for "25 percent."
(b) On and after the date that section 2.1(ll)(2) becomes operative, a
Participant who is a Qualified Participant pursuant to section 2.1(ll)(2)
may elect, within 90 days after the close of each Plan Year in the Qualified
Election Period described in section 2.1(kk)(2) to receive a distribution of
the Applicable Amount (calculated in the manner described in subsection (a)
but considering only elections, if any, made during such Qualified Election
Period). Participant elections shall be in such written, electronic, or
other form as the Committee shall determine. The Committee shall direct the
Trustee to distribute the portion of the Participant's Accounts that is
covered by the election described in this subsection (b) within 90 days
after the last day of the period during
which the election can be made. Such a distribution shall not be subject to
the requirements of section 10.2 of the Plan.
(c) The provisions of this section shall apply notwithstanding any other
provisions of the Plan.
(d) If the Committee receives a Qualified Participant's election pursuant to
subsection (a) or (b), it shall direct the Trustee (1) to sell the required
number of shares of Company Stock (and, if the Committee desires, the
manner in which such sale should be accomplished) as of the March 31 next
succeeding the end of the Plan Year with respect to which the election is
made and (2) to transfer to the Northern Trust Company Thrift Incentive
Plan or distribute to the Qualified Participant, as the case may be, an
amount of cash equal to the proceeds of the sale of the subject shares. Any
such transfer shall be made as of the next succeeding April 1, and any such
distribution shall be made within 90 days after the last day of the period
during which the election can be made. Notwithstanding any provision of the
Plan to the contrary, if the Trustee is unable to sell the required shares
as aforesaid in a timely manner, the Company shall buy such shares. If such
shares are sold to the Company or an Affiliate, the price paid therefor
shall be the greater of the fair market value of such shares as of March 31
or the fair market value of such shares on the date the sale actually
occurs; provided that, any amount the Plan receives in excess of the fair
market value as of March 31 shall be considered earnings of the Plan and
shall be allocated as provided in section 7.7(b).
(e) Notwithstanding the foregoing, a Qualified Participant shall not be
entitled to make an election hereunder for a Plan Year within a Qualified
Election Period if the fair market value of the total number of shares of
Company Stock ever acquired by or contributed to the Plan and allocated to
the Participant's Accounts in the Plan as of the last day of such Plan Year
is less than $500.
Article VIII. Voting and Tender of Company Stock
8.1 Procedures for Voting
Each Member (or, in the event of the Member's death, the Member's Beneficiary)
shall have the right to direct the Trustee as to the manner in which whole and
partial shares of Company Stock allocated to the Member's Account as of the
record date are to be voted on each matter brought before an annual or special
stockholders' meeting. Before each such meeting of stockholders, the Trustee
shall furnish to each Member (or Beneficiary) a copy of the proxy solicitation
material, together with a form requesting directions on how such shares of
Company Stock allocated to such Member's Account shall be voted on each such
matter. Upon timely receipt of such directions, the Trustee shall on each such
matter vote as directed the number of shares (including fractional shares) of
Company Stock allocated to such Member's Account, and the Trustee shall have no
discretion in such matter. The directions received by the Trustee from Members
shall be held by the Trustee in confidence and shall not be divulged or released
to any person, including officers or employees of the Company or any Affiliate.
The Trustee shall vote allocated shares for which it has not received direction
and unallocated shares of Company Stock in the same proportion as directed
shares are voted, and shall have no discretion in such matter except as
otherwise provided in accordance with ERISA.
8.2 Tender Offer
If a tender or exchange offer is commenced for Company Stock--
(a) The Trustee shall distribute in a timely manner to each Member (or
Beneficiary) such information as is distributed to holders of the Company
Stock in connection with the tender or exchange offer.
(b) All Company Stock held by the Trustee in Accounts shall be tendered or not
tendered by the Trustee in accordance with directions it receives from
Members (or Beneficiaries). Each Member (or Beneficiary) shall be entitled
to direct the Trustee with respect to the tender of such Company Stock
allocated to the Member's Account. The instructions received by the Trustee
from Members (or Beneficiaries) shall be held by the Trustee in confidence
and shall not be divulged or released to any person, including officers or
employees of the Company or any Affiliate.
(c) The Trustee shall not tender Company Stock allocated to Accounts with
respect to which directions by Members (or Beneficiaries) are not received
or Company Stock held by the Trustee that is not allocated to Accounts
except as otherwise provided in accordance with ERISA.
Article IX. Benefits
9.1 Payments on Retirement
A Member who attains his or her Normal Retirement Date and continues to be an
Employee shall continue to share in the allocation of Employer Contributions and
Forfeitures under the Plan. Upon the retirement of a Member on or after his or
her Normal Retirement Date, the Committee shall notify the Trustee in writing of
the Member's retirement and shall direct the Trustee to make payment of the
adjusted balance of the Member's Accounts as of the Valuation Date coinciding
with or immediately preceding the date a distribution is made to the Member,
unless the Member agrees to a later date in a method provided in the Plan.
Notwithstanding the foregoing, if any such Member retires after December 31,
1989 and receives a distribution of the Member's Accounts before the Anniversary
Date next following his or her retirement, he or she shall be entitled to share
in the allocation of Employer Contributions which have not been used to make
payments on a Loan, Company Stock released from the Suspense Account according
to section 6.1(c), and Forfeitures, occurring on such Anniversary Date.
9.2 Payments on Death
(a) Upon the death of a Member, the Committee shall promptly notify the Trustee
in writing of the Member's death and the name of the Member's Beneficiary
(or Spouse if subsection (c) is applicable) and shall direct the Trustee to
make payment of the adjusted balances of the Member's Accounts (or the
Vested Portion thereof if section 7.6(c) is not applicable) as of the
Valuation Date coinciding with or immediately preceding the date a
distribution is made to the Member's Beneficiary, in a method provided in
the Plan. Notwithstanding the foregoing, if such Member dies after December
31, 1989 and the distribution of the Accounts of such Member is made before
the Anniversary Date next following his or her death, his or her
Beneficiary or Spouse, as the case may be, shall be entitled to share in
the allocation of Employer Contributions which have not been used to make
payments on a Loan, Company Stock released from the Suspense Account
according to section 6.1(c), and Forfeitures, occurring on such Anniversary
Date.
(b) Each unmarried Member and each married Member whose surviving Spouse has
consented to an alternate Beneficiary or an alternate method of payment as
provided in subsection (c) shall have the right to designate, by giving a
written designation to the Committee, a person or entity as Beneficiary to
receive the death benefit provided under this section. Successive
designations may be made, and the last designation received by the
Committee prior to the death of the Member shall be effective and shall
revoke all prior designations.
If a designated Beneficiary shall die before the Member, his or her
interest shall terminate, and, unless otherwise provided in the Member's
designation, if the designation included more than one Beneficiary, such
interest shall be paid in equal shares to those Beneficiaries, if any, who
survive the Member. A Member to whom this subsection applies shall have the
right to designate different Beneficiaries to receive the adjusted balance
in the Member's various Accounts under the Plan.
(c) The Beneficiary of each Member who is married shall be the surviving Spouse
of such Member and the death benefits of any Member who is married shall be
paid in full to his or her surviving Spouse in a single payment.
Notwithstanding the preceding sentence, the death benefits provided
pursuant to subsection (a) shall be distributed to any other Beneficiary
designated by a married Member as provided in subsection (b) of this
section if the Member's surviving Spouse consented to such designation,
prior to the date of the Member's death, in writing. Such a consent must
acknowledge the effect of the election and designation and the identity of
any nonsurviving Spouse Beneficiary, including any class of Beneficiaries
or contingent Beneficiaries, and must be witnessed by a representative of
the Plan or a notary public. Consent of a Member's surviving Spouse shall
not be required if the Member establishes to the satisfaction of the
Committee that consent may not be obtained because there is no surviving
Spouse or the surviving Spouse cannot be located, or because of such other
circumstances as the Secretary of the Treasury may prescribe by
regulations. The Member may not subsequently change the designation of the
Beneficiary unless his or her surviving Spouse consents to the new
designation in accordance with the requirements set forth in the preceding
sentence, or unless the surviving Spouse's consent permits the Member to
change the designation of his or her Beneficiary without the Spouse's
further consent. A surviving Spouse's consent shall be irrevocable. Any
consent by a surviving Spouse, or establishment that the consent of the
surviving Spouse may not be obtained, shall be effective only with respect
to that surviving Spouse.
9.3 Payments on Permanent Disability
Upon the termination of a Member's employment with the Company by reason of a
Permanent Disability, the Committee shall notify the Trustee in writing of the
Member's Permanent Disability termination and shall direct the Trustee to make
payment of the adjusted balances of the Member's Accounts as of the Valuation
Date coinciding with or immediately preceding the date a distribution is made to
the
Member. Notwithstanding the foregoing, if such termination occurs after December
31, 1989 and such Member receives a distribution of the Member's Accounts before
the Anniversary Date next following the Member's termination, he or she shall be
entitled to share in the allocation of Employer Contributions which have not
been used to make payments on a Loan, Company Stock released from the Suspense
Account according to section 6.1(c), and Forfeitures, occurring on such
Anniversary Date.
9.4 Payments on Termination for Other Reasons
(a) GENERAL. Upon the termination of a Member's employment with the Company for
any reason other than retirement on or after the Member's Normal Retirement
Date, death, or Permanent Disability, the Committee shall notify the
Trustee in writing of the termination and shall direct the Trustee to make
payment of the Vested Portion of the adjusted balances of the Member's
Accounts as of the Valuation Date coinciding with or next preceding the
date a distribution is made to the Member. Notwithstanding the foregoing,
if such termination occurs after December 31, 1989 and under circumstances
entitling the Member to early retirement benefits under the Pension Plan
and he or she receives a distribution of the Member's Accounts before the
Anniversary Date following the Member's termination, he or she shall be
entitled to share in the allocation of Employer Contributions which have
not been used to make payments on a Loan, Company Stock released from the
Suspense Account according to section 6.1(c), and Forfeitures, occurring on
such Anniversary Date. The Vested Portion of a Member's Accounts shall be
determined in accordance with section 7.6 of the Plan.
(b) FORFEITURE. The Unvested Portion of the adjusted balance of the Accounts of
a Member who terminates employment with the Company under this section
shall be forfeited as of the first Valuation Date following the date the
Member terminates employment with the Company and all Affiliates. The
amount forfeited shall be the entire Unvested Portion. If a Member's
Company Stock Account includes more than one class of Company Stock, the
Forfeiture will consist of the same proportion of each class of stock.
(c) REINSTATEMENT. If a Member is reemployed by the Company or a Participating
Employer after incurring a Forfeiture, the Member shall be entitled to make
repayment to the Plan of the aggregate amount distributed to him, at any
time before the earlier of (1) five years after the Member is reemployed
and (2) the end of a Break in Service of five consecutive years incurred by
the Member. Upon making repayment in a single cash sum of the fair market
value (at the time of distribution) of the aggregate amount
distributed to him, the amount repaid shall be credited to the Member's
Account and invested by the Trustee in a cash equivalent short term
investment fund. The amount which was forfeited (also based on the fair
market value at the time of distribution) shall be reinstated to the
Member's Account. The amount required to restore such Member's Account
shall be made up from Forfeitures and, to the extent necessary, Employer
Contributions prior to their allocation pursuant to section 7.4.
9.5 Deemed Cashout
If a Member has no vested interest in his Account balance when his or her
employment with the Company and all Affiliates terminates, such Member will be
treated as having received a Deemed Cashout of the Member's Account balance as
of the last day of the Plan Year in which the Member's employment terminated and
the Member's Account balance will be treated as a Forfeiture on such date.
"Deemed Cashout" means a distribution of zero dollars representing the Member's
entire Account balance. If the Member is reemployed with the Company or any
Affiliate before such Member has incurred five (5) consecutive One-Year Breaks
in Service, the amount of the prior Forfeiture will be restored as the Member's
Account balance.
9.6 Property Distributed
Any distribution pursuant to section 9.1, 9.2, 9.3, or 9.4, from a Member's
Company Stock Account, shall be made in whole shares of Company Stock, and the
value of partial shares of Company Stock shall be paid in cash. Distribution
from a Member's Other Investments Account shall be made in cash unless the
Member requests a distribution in stock of the whole shares purchasable with
such balance and the balance attributable to fractional shares in the Member's
Company Stock Account, in which case the Trustee shall acquire the necessary
shares for distribution. If cash is to be distributed in connection with
fractional shares, the Trustee shall sell such shares as of the Valuation Date
with respect to which the distribution is being made and distribute the proceeds
of sale to the affected Member. Any such sale shall be subject to the last two
sentences of section 7.9(d).
9.7 Methods of Payment
(a) Whenever the Committee shall direct the Trustee to make payment to a Member
upon termination of a Member's employment on or after the Member's Normal
Retirement Date, the Committee shall direct the Trustee to pay the adjusted
balances of the Member's Accounts to or for the benefit of the Member in a
single sum distribution. Whenever the Committee shall direct the Trustee to
make payment to a Member, the Member's Spouse, or other Beneficiary upon
termination of a Member's employment for any other
reason, the Committee shall direct the Trustee to pay the Vested Portion of
the adjusted balances of the Member's Accounts, if any, to or for the
benefit of the Member, the Member's Spouse, or the Member's Beneficiary, in
a single payment distribution.
(b) Payment under this section shall be made no more than 60 days after the
Valuation Date coincident with or following the date the Member ceases
being an Employee provided that (1) for purposes of the foregoing, any
Valuation Date occurring before December 31, 1989 shall be treated as
occurring on December 31, 1989, (2) any Member or Beneficiary or Spouse
described in section 9.1, 9.2, or 9.3, or who would be entitled to an
allocation at the next Anniversary Date under section 9.4, may elect to
defer distribution to such Anniversary Date, and (3) if the Member's
Accounts exceed $3,500, distribution shall not be made to the Member at any
time prior to the Member's Normal Retirement Date or death without the
Member's written consent. A Member described in paragraph (3) may elect to
receive distribution of the Member's Accounts as of any Valuation Date
following the Valuation Date next succeeding the Member's termination by
filing prescribed materials with the Trustee on or before such reasonable
deadline as established by the Trustee.
If a distribution is one to which sections 401(a)(11) and 417 of the Code
do not apply, such distribution may commence less than thirty (30) days
after the notice required under section 1.411(a)-11(c) of the Income Tax
Regulations is given, provided that:
(i) the Committee clearly informs the Member that the Member has a
right to a period of at least thirty (30) days after receiving the
notice to consider the decision of whether to elect a distribution,
and
(ii) the Member, after receiving the notice, affirmatively elects a
distribution.
(c) Notwithstanding the provisions of subsection (b) above, distribution of
each Member's Accounts must commence not later than 60 days after the last
day of the Plan Year in which the last of the following events occurs:
(1) the date on which the Member reaches his or her Normal Retirement Date;
(2) the tenth anniversary of the date on which the Member commenced
participation in the Plan; or
(3) the date on which the Member's employment with the Company and all
Affiliates terminates.
(d) Notwithstanding anything to the contrary contained elsewhere in the Plan--
(1) A Member's benefits under the Plan will--
(A) be distributed to him or her not later than the Required
Distribution Date (as defined in paragraph (3)), or
(B) be distributed commencing not later than the Required
Distribution Date in accordance with regulations prescribed by
the Secretary of the Treasury over a period not extending beyond
the life expectancy of the Member or the life expectancy of the
Member and the Member's Beneficiary.
(2) Payments on death--
(A) If the Member dies after distribution has commenced pursuant to
paragraph (1)(B) but before the Member's entire interest in the
Plan has been distributed to him, then the remaining portion of
that interest will be distributed at least as rapidly as under
the method of distribution being used under paragraph (1)(B) at
the date of the Member's death.
(B) If the Member dies before distribution has commenced pursuant to
paragraph (1)(B), then, except as provided in paragraphs (2)(C)
and (2)(D), the Member's entire interest in the Plan will be
distributed within five years after the Member's death.
(C) Notwithstanding the provisions of paragraph (2)(B), if the Member
dies before distribution has commenced pursuant to paragraph
(1)(B) and if any portion of the Member's interest in the Plan is
payable (i) to or for the benefit of a Beneficiary, (ii) in
accordance with regulations prescribed by the Secretary of the
Treasury over a period not extending beyond the life expectancy
of the Beneficiary, and (iii) beginning not later than one year
after the date of the Member's death or such later date as the
Secretary of the Treasury may prescribe by regulations, then the
portion referred to in this
paragraph (2)(C) shall be treated as distributed on the date on
which such distribution begins.
(D) Notwithstanding the provisions of paragraphs (2)(B) and (2)(C),
if the Beneficiary referred to in paragraph (2)(C) is the Spouse
of the Member, then--
(i) the date on which the distributions are required to begin
under paragraph (2)(C)(iii) of this section shall not be
earlier than the date on which the Member would have
attained age 70-1/2, and
(ii) if the Spouse dies before the distributions to that Spouse
begin, then this paragraph (2)(D) shall be applied as if the
surviving Spouse were the Member.
(3) For purposes of subsection (d)(1), the Required Distribution Date
means April 1 of the calendar year following the calendar year in
which the Member attains age 70-1/2; provided, however, that in the
case of a Member who attained age 70-1/2 before January 1, 1988 such
Member's Required Distribution Date shall be April 1 following the
calendar year in which occurs the later of (A) the Member's attainment
of age seventy and one-half (70-1/2), or (B) the Member's termination
of employment, unless such Member is a Five-Percent Owner (as defined
in Section 416(i) of the Code) of the Company at any time during the
Plan Year ending with or within the calendar year in which such owner
attains age sixty-six and one-half (66-1/2) or any subsequent year, in
which case clause (B) shall not apply.
(4) For purposes of subsection (d), once distribution has commenced
hereunder, the life expectancy of a Member and the Member's Spouse may
not be redetermined.
(5) A Member may not elect a form of distribution pursuant to paragraph
(1) providing payments to a Beneficiary who is other than the Member's
Spouse unless the actuarial value of the payments expected to be paid
to the Member is more than 50 percent of the actuarial value of the
total payments expected to be paid under such form of distribution.
9.8 Direct Rollover of Eligible Rollover Distributions
(a) This section 9.8 applies to distributions made on or after January 1, 1993.
Notwithstanding any provision of the Plan to the contrary that would
otherwise limit a distributee's election under this section, a distributee
may elect, at the time and in the manner prescribed by the Committee, to
have any portion of an eligible rollover distribution paid directly to an
eligible retirement plan specified by the distributee in a direct rollover.
Any portion of an eligible rollover distribution that is not paid directly
to an eligible retirement plan in a direct rollover may be subject to 20%
Federal income tax withholding.
(b) Definitions.
(1) Eligible Rollover Distribution. An eligible rollover distribution is
any distribution of all or any portion of the balance to the credit of
the distributee, except that an eligible rollover distribution does not
include: any distribution that is one of a series of substantially
equal periodic payments (not less frequently than annually) made for
the life (or life expectancy) of the distributee or the joint lives (or
joint life expectancies) of the distributee and the distributee's
designated Beneficiary, or for a specified period of ten years or more;
any distribution to the extent such distribution is required under
section 401(a)(9) of the Code; and the portion of any distribution that
is not includible in gross income (determined without regard to the
exclusion for net unrealized appreciation with respect to employer
securities).
(2) Eligible Retirement Plan. An eligible retirement plan is an individual
retirement account described in section 408(a) of the Code, an
individual retirement annuity described in section 408(b) of the Code,
an annuity plan described in section 403(a) of the Code, or a qualified
trust described in section 401(a) of the Code, that accepts the
distributee's 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.
(3) Distributee. A distributee includes a Participant or former
Participant. In addition, the Participant's or former Participant's
surviving Spouse and the Participant's or former Participant's Spouse
or former Spouse who is the alternate payee under a qualified domestic
relations order, as defined in section 414(p) of the Code, are
distributees with regard to the interest of the Spouse or former
Spouse.
(4) Direct Rollover. A direct rollover is a payment by the Plan to the
eligible retirement plan specified by the distributee.
Aritcle X. Rights and Options on
Distributed Shares of Company Stock
10.1 Right of First Refusal
(a) Shares of Company Stock distributed by the Trustee may be subject to a
right of first refusal. Such a right shall provide that prior to any
subsequent transfer, the shares must first be offered in writing to the
Trust and then, if refused by the Trust, to the Company at a price equal to
the greater of (1) the then fair market value of such shares of Company
Stock as determined in good faith by the Committee, in accordance with
Treasury regulation section 54.4975-11(d)(5) or (2) the purchase price
offered by a buyer, other than the Company or Trustee, making an offer in
good faith (as determined by the Committee) to purchase such shares of
Company Stock.
(b) The Trust or the Company, as the case may be, may accept the offer as to
part or all of the Company Stock at any time during a period not exceeding
14 days after the Trust receives the offer, on terms and conditions no less
favorable to the Trust than those offered by the independent third-party
buyer. Any installment purchase shall be made pursuant to a note secured by
the shares purchased and shall bear a reasonable rate of interest as
determined by the Committee.
(c) If the offer is not accepted by the Trust, the Company, or both, then the
proposed transfer may be completed within a reasonable period following the
end of the 14-day period but only upon terms and conditions no less
favorable to the shareholder than the terms and conditions of the third-
party buyer's prior offer.
(d) Shares of Company Stock that are publicly traded within the meaning of
Treasury regulation section 54.4975-7(b)(1)(iv) at the time such right may
otherwise be exercised shall not be subject to this right of first refusal.
10.2 Put Option
(a) Shares of Company Stock acquired by the Trust shall be subject to a put
option at the time of distribution if at such time the shares are not
readily tradable on an established market within the meaning of section
409(h)(1)(B) of the Code. The put option shall be exercisable by the
Member, Beneficiary, Spouse, their donees, or by a person (including an
estate or its distributee) to whom the Company Stock passes by reason of
the death of the Member, Beneficiary, or Spouse. The put option shall
provide that for a period of at least 60 days following the date of
distribution of the Company Stock, the holder of the option shall have the
right to cause the Company, by notifying it in writing, to purchase such
shares at their fair market value, as determined pursuant to section 5.2.
If the put option is not exercised within such 60-day period, the option
shall be exercisable for an additional period of 60 days in the following
Plan Year. The Committee may give the Trustee the option to assume the
rights and obligations of the Company at the time the put option is
exercised, insofar as the repurchase of Company Stock is concerned.
(b) If the entire adjusted balance of a Member's Accounts is distributed to the
Member within one taxable year, payment of the price of the Company Stock
purchased pursuant to an exercised put option shall be made in no more than
five substantially equal annual payments, and the first installment shall
be paid not later than 30 days after the Member exercises the put option.
The Plan shall provide adequate security and pay a reasonable rate of
interest on amounts not paid after 30 days. If the entire adjusted balance
of a Member's Accounts is not distributed to him or her within one taxable
year, payment of the price of the Company Stock purchased pursuant to an
exercised put option shall be made in a single sum not later than 30 days
after the Member exercises the put option.
ArticleeXI. Pretermination Distributions and Dividends
11.1 Pretermination Distributions
Except as provided in sections 11.2 and 7.9, a Member is not entitled to any
payment, withdrawal, or distribution under the Plan while he or she is a
Participant.
11.2 Dividends
Any cash dividend received by the Trustee on Company Stock allocated to the
Accounts of a Member, Beneficiary, or Spouse as of the record date for such
dividend shall be paid to such Member, Beneficiary, or Spouses. Any such payment
in cash must be made no later than 90 days after the end of the Plan Year in
which the dividend is received by the Trustee. Any such payment of cash
dividends on shares of Company Stock shall be accounted for as if the Member,
Beneficiary, or Spouse receiving such dividends were the direct owner of such
shares of Company Stock and such payment shall not be treated as a distribution
for purposes of Article X.
Article XII. Plan Administration
12.1 Powers
The Committee shall have all powers necessary to discharge its duties in
administering the Plan including, but not by way of limitation, discretionary
authority with respect to the following powers:
(a) to construe and interpret the Plan;
(b) to determine all questions regarding the status and rights of Members and
Beneficiaries, including questions relating to age, Vesting Service,
eligibility, or Compensation;
(c) to make and enforce such rules and regulations as it shall deem necessary
or proper for efficient administration of the Plan; and
(d) to retain counsel, employ agents, and actuaries and provide for such
clerical, medical, accounting, auditing, and other services as it may
require in carrying out the provisions of the Plan;
provided, however, that no member of the Committee shall participate in any
action on any matter involving solely his or her own rights or benefits or those
of his or her Spouse or children, and such matters shall be determined by the
other members of the Committee. The Committee may delegate any or all of its
powers under this Article XII to an agent designated under section 12.1(d). Any
such designation shall be in writing, signed by the Secretary of the Committee.
12.2 Directions to Trustee
The Committee shall direct the Trustee concerning all payments which shall be
made out of the Trust pursuant to the provisions of the Plan. Any direction to
the Trustee, including but not limited to a direction concerning payments, shall
be in writing, signed by the Secretary of the Committee or any member thereof,
or any agent to whom authority has been delegated. The Trustee shall act in a
manner consistent with any such direction that is proper, made in accordance
with the Plan, and not contrary to ERISA.
12.3 Uniform Rules
All rules adopted and all actions taken by the Committee shall be uniform in
nature as applied to all persons similarly situated and shall not discriminate
in favor of Employees who are officers, shareholders, or highly compensated
employees.
12.4 Reports
The Committee shall keep on file, in such form as it shall deem convenient and
proper, all reports of the Trust received from the Trustee. The Committee shall
give to each Member a written report of the amount of his or her Accounts at
annual or more frequent intervals. Additional reports may be given to a Member
by telephone.
12.5 Compensation
Members of the Committee shall not receive compensation for their services in
connection with the Plan, but the Company shall reimburse them for any necessary
expenses incurred in the discharge of their duties.
12.6 Claims Procedure
(a) Claims for benefits under the Plan shall be made in writing to the
Committee. If the Committee wholly or partially denies a claim for
benefits, the Committee shall, within a reasonable period of time, but no
later than 90 days after receipt of the claim, notify the claimant in
writing of the denial of the claim. Notice of a denial of a claim shall be
written in a manner calculated to be understood by the claimant and shall
contain (1) the specific reason or reasons for denial of the claim, (2) a
specific reference to the pertinent Plan provisions upon which the denial
is based, (3) a description of any additional material or information
necessary for the claimant to perfect the claim, together with an
explanation of why such material or information is necessary, and (4) an
explanation of the Plan's review procedure. If notice of the denial of a
claim is not furnished in accordance with this subsection (a) within 90
days after the Committee receives it, the claim shall be deemed denied and
the claimant shall be permitted to proceed to the review stage described in
subparagraph (b) below.
(b) Within 60 days after the claimant receives the written notice of denial of
the claim, or the date the claim is deemed denied pursuant to subsection
(a) above, or such later time as shall be deemed reasonable taking into
account the nature of the benefit subject to the claim and other attendant
circumstances, or within 60 days after the claim is deemed denied as set
forth above, if applicable, the claimant may file a written request with
the Committee that it conduct a full and fair review of the denial of the
claimant's claim for benefits, including the holding of a hearing, if
deemed necessary by the Committee. In connection with the claimant's appeal
of the denial of the claimant's benefit, the claimant may review pertinent
documents and may submit issues and comments in writing. The Committee
shall render a decision on the appeal promptly, but not later than 60 days
after the receipt of the claimant's request for review, unless special
circumstances (such as the need to hold a hearing, if necessary) require an
extension of time for processing, in which case the 60-day period may be
extended to 120 days. The Committee shall notify the claimant in writing of
any such extension. Such decision shall (1) include specific reasons for
the decision, (2) be written in a manner calculated to be understood by the
claimant, and (3) contain specific references to the pertinent Plan
provisions upon which the decision is based.
12.7 Indemnity for Liability
The Company shall indemnify the Committee and each other fiduciary who is an
Employee of the Company, against any and all claims, losses, damages, expenses,
including counsel fees, incurred by said fiduciaries, and any liability,
including any amounts paid in settlement with such a fiduciary's approval,
arising from the fiduciary's action or failure to act, except when the same is
judicially determined to be attributable to the gross negligence or willful
misconduct of such fiduciary.
Article XIII. Amendment and Termination
13.1 Amendment
The Company reserves the right at any time and from time to time to amend the
Plan in whole or in part either retroactively or prospectively by action of the
Board or action of the Executive Committee of the Board, but no such amendment
shall authorize or permit any part of the corpus or income of the Trust to be
used for or diverted to purposes other than for the exclusive benefit of Members
or their Beneficiaries, or to deprive any of them of any funds then held for his
or her Account.
13.2 Termination
It is the intention of the Company to continue the Plan and to make
contributions thereto, but the Company reserves the right to terminate the Plan
in whole or in part as of any Valuation Date by action of the Board or action of
the Executive Committee of the Board and for any reason satisfactory to the
Board. The Company, however, shall not terminate the Plan while any Loan remains
outstanding and unpaid in whole or in part, without the prior written consent to
any such termination by all holders and guarantors, if any, of the Plan's
obligations under such Loan. Where any holder or guarantor has a representative
on the Committee, prior written consent will not be required if such
representative approves the amendment. Upon partial or full termination, all
affected Participants shall become fully vested, and upon permanent
discontinuance of contributions by the Company, all Participants shall become
fully vested. After termination of the Plan, the Committee and the Trust will
continue until the Accounts of each Participant have been distributed in
accordance with the terms of the Plan.
13.3 Merger, Sale
In the event of any merger or consolidation of the Plan with, or transfer in
whole or in part of the assets and liabilities of the Trust to another trust
fund held under any other plan of deferred compensation maintained or to be
established for the benefit of all or some of the Participants, the Plan shall
be so merged or consolidated, or the assets of the Trust applicable to such
Participants shall be so transferred, only if--
(a) each Member would (if either the Plan or the other plan then terminated)
receive a benefit immediately after the merger, consolidation, or transfer
which is equal to or greater than the benefit he or she would have been
entitled to receive immediately before the merger, consolidation, or
transfer (if the Plan had then terminated);
(b) resolutions of the Board of Directors or of any new or successor employer
of the affected Members, shall authorize such transfer of assets; and, in
the case of the new or successor employer of the affected Members, its
resolutions shall include an assumption of liabilities with respect to such
Members' inclusion in the new employer's plan; and
(c) such other plan and trust are qualified under section 401(a) and exempt
under section 501(a) of the Code.
In the event a portion of the business of the Company is sold or discontinued,
the Board of Directors in its discretion may direct that all Members who are
employed by the new owner of that portion of the business shall become fully
vested.
13.4 Distribution Upon Termination
In the event of the termination of the Plan, there shall be distributed to each
Member, or to his or her Beneficiary in the case of a deceased Member, a benefit
equal to the sum of the value of the Member's Account as of the Valuation Date
on which termination occurs. If such benefits shall not exhaust the assets of
the Trust, any remaining assets shall be allocated to the Accounts of the
Members as though they were additional Employer Contributions, and in no event
shall any such assets revert to the Company or any Participating Employer.
Article XIV. Extension of Plan to Affiliates
14.1 Participation in the Plan
Any Affiliate which desires to become a Participating Employer under the Plan
may elect, with the consent of the Board of Directors, to become a party to the
Plan and the related Trust by adopting the Plan for the benefit of its Eligible
Employees, effective as of the date specified in such adoption. The adoption
resolution or decision may contain such specific changes and variations in Plan
or Trust Agreement terms and provisions applicable to such Participating
Employer and its Employees as may be acceptable to the Board and the Trustee.
However, the sole, exclusive right of any other amendment of whatever kind or
extent to the Plan is reserved to the Board of Directors. The Board of Directors
may amend specific changes and variations in the Plan or Trust terms and
provisions as adopted by the Participating Employer in its adoption resolution
without the consent of such Participating Employer. The adoption resolution or
decision shall become, as to such adopting organization and its employees, a
part of this Plan as then amended or thereafter amended and the related Pension
Trust. It shall not be necessary for the adopting organization to sign or
execute the original or then amended Plan and Trust. The coverage date of the
Plan for any such adopting organization shall be that stated in the resolution
or decision of adoption, and from and after such effective date, such adopting
organization shall assume all the rights, obligations, and liabilities of an
individual employer entity hereunder and under the Trust. The administrative
powers and control of the Company, as provided in the Plan and Trust Agreement
shall not be diminished by reason of the participation of any such adopting
organization in the Plan and Trust Agreement.
14.2 Withdrawal from the Plan
Any Participating Employer may withdraw from the Plan and Trust after giving
notice to the Board of Directors, provided the Board consents to such
withdrawal. In the event of such withdrawal, the Committee shall cause a
valuation of the Trust Fund to be made to ascertain the value of assets which
are attributable to Members who are Employees of the terminating Participating
Employer or their Beneficiaries in the case of deceased Members and shall direct
the Trustee to segregate assets which are deemed to be so attributable to such
Members from the Trust, and to make distribution to the Members or their
Beneficiaries as if the Plan had terminated with respect to the Members or their
Beneficiaries of such Participating Employer.
In the event such withdrawal constitutes a partial termination of this Plan,
only the affected Participants shall have fully vested and nonforfeitable rights
in the benefits to be provided by the allocations (unless they were already
fully vested prior to the partial termination). Distribution may be implemented
through continuation of the Trust, or transfer to another trust fund exempt from
tax under section 501 of the Code, or to a group annuity contract qualified
under Code section 401, or distribution may be made as an immediate cash
payment; provided, however, that no such action shall divert any part of such
fund to any purpose other than the exclusive benefit of the Employees of such
Participating Employer.
Article XV. Top-Heavy Provisions
The following provisions shall become effective in any Plan Year in which the
Plan is determined to be a top-heavy plan.
(a) Determination of Top-Heavy. The Plan will be considered a top-heavy plan
for the Plan Year if as of the last day of the preceding Plan Year (1) the
account balances of Participants who are key employees (as defined in
section 416(i) of the Code) exceeds 60 percent of the account balances of
all Participants (the "60 Percent Test") or (2) the Plan is part of a
required aggregation group and the required aggregation group is top-heavy.
However, and notwithstanding the results of the 60 Percent Test, the Plan
shall not be considered a top-heavy plan for any plan year in which the
Plan is a part of a required or permissive aggregation group which is not
top-heavy. The top-heavy ratio shall be computed pursuant to section 416(g)
of the Code and the regulations issued thereunder. A "required aggregation
group" is each plan of the Company in which a key employee is a participant
and each other plan of the Company, if any, which enables such plan to meet
the requirements of Code section 401(a)(4) or 410. The Company may treat
any plan not required to be included in an aggregation group as being part
of a "permissive aggregation group" if such group would continue to meet
the requirements of Code sections 401(a)(4) and 410 with such plan being
taken into account.
(b) Minimum Benefit. The Company's contribution to a Participant's Matching
Contribution Account under section 5.1 shall be 3 percent of the
Participant's Compensation, except that this subsection (b) shall not apply
if--
(1) the Participant is also a participant in the Pension Plan,
(2) the Pension Plan is a top-heavy plan, and
(3) the Participant receives from the Pension Plan the defined benefit
minimum required under section 416(c)(1) of the Code.
XVI. Miscellaneous Provisions
16.1 Spendthrift Provisions
The interests of Employees and their Beneficiaries in the Plan shall not be
subject to the claims of any creditor, any Spouse for alimony or support, or
others, or to legal process, and may not be voluntarily or involuntarily
alienated or encumbered.
Notwithstanding the foregoing, the Plan shall make all payments required by a
qualified domestic relations order within the meaning of Code section 414(p).
The Committee shall establish a procedure to determine the qualified status of a
domestic relations order and to administer distributions under a qualified
order. In no event shall a domestic relations order be determined to be a
qualified domestic relations order if it requires the Plan to make distributions
to an alternate payee prior to the date that a Member attains "earliest
retirement age." Notwithstanding the foregoing, the Plan may make a distribution
to an alternate payee prior to the date that a Member attains "earliest
retirement age" if the qualified domestic relations order provides that the Plan
and the alternate payee may agree in writing to the earlier distribution and the
distribution is made pursuant to such a written agreement. For purposes of a
qualified domestic relations order, "earliest retirement age" means the date on
which the earliest to occur of--
(a) the date the Member is entitled to a distribution under this Plan, or
terminates from employment,
(b) the later of (i) the date the Member attains age 50, or (ii) the earliest
date on which the Member could begin receiving benefits under this Plan if
the Member separated from service.
16.2 Incompetency
Every person receiving or claiming benefits under the Plan shall be presumed to
be mentally competent and of age until the Committee receives a written notice,
in a form and manner acceptable to it, that such person is incompetent or a
minor, and that a guardian, conservator, or other person legally vested with the
care of his estate has been appointed. In the event that the Committee finds
that any person to whom a benefit is payable under the Plan is unable to
properly care for his or her affairs, or is a minor, then any payment due
(unless a prior claim therefor shall have been made by a duly appointed legal
representative) may be paid to the Spouse, a child, a parent, or a brother or
sister, or to any person deemed by the Committee to be authorized to care for
such person otherwise entitled to payment.
In the event a guardian, executor, administrator, or conservator of the estate
of any person receiving or claiming benefits under the Plan shall be appointed
by a court of competent jurisdiction, payments shall be made to such guardian,
executor, administrator, or conservator provided that proper proof of
appointment is furnished in a form and manner suitable to the Committee. Any
payment made under the provisions of this section 16.2 shall be a complete
discharge of any liability therefor under the Plan.
16.3 Unclaimed Funds
Each Member shall keep the Committee informed of the Member's current address
and the current address of the Member's Spouse and Beneficiaries. Neither the
Company or any Affiliate, the Committee, nor the Trustee shall be obligated to
search for the whereabouts of any such person. If the then current location of a
Member is not made known to the Committee within three years after the date on
which the Committee directs the distribution to the Member of the Member's
Accounts, distribution may be made as though the Member had died at the end of
the three-year period. If, within one additional year after such three-year
period has elapsed, or within three years after the actual death of a Member,
the Committee is unable to locate any individual who would receive a
distribution upon the death of the Member pursuant to Article IX, the Member's
Accounts shall be deemed a Forfeiture; provided, however, that if the Member,
Beneficiary, or Spouse makes a claim for any amount that has been so forfeited,
the forfeited benefits shall be reinstated. The amount required to restore such
benefits shall be made up from Forfeitures and, to the extent necessary,
Employer Contributions prior to their allocation pursuant to section 7.4.
16.4 Rights Against the Company
Neither the establishment of the Plan, nor of the Trust, nor any modification
thereof, nor any distributions hereunder shall be construed as giving to any
person whomsoever any legal or equitable rights against the Committee, the
Company, or the officers, directors, or shareholders as such of the Company, or
as giving any Employee or Member the right to be retained in the employ of the
Company. All benefits payable under the Plan shall be paid or provided for
solely from the Trust, and the Company shall have no liability or responsibility
for benefit distributions other than to make contributions to the Trust as
herein provided.
16.5 Illegality of Particular Provision
The illegality of any particular provision of this Plan shall not affect the
other provisions thereof, but the Plan shall be construed in all respects as if
such invalid provision were omitted.
16.6 Effect of Mistake
In the event of a mistake or misstatement as to the age, eligibility,
compensation, service or participation of a Member or the amount of
distributions made or to be made to a Member or other person, the Committee
shall, to the extent it deems possible, cause to be withheld or accelerated, or
otherwise make adjustment of, such amounts as will in its judgment accord to
such Member or other person, or distribution to which he or she is properly
entitled under the Plan.
16.7 Compliance with Federal and State Securities Laws
(a) The Company will take all necessary steps to comply with any applicable
registration or other requirements of federal or state securities laws from
which no exemption is available.
(b) Stock certificates distributed to Members, Beneficiaries, or Spouses may
bear such legends concerning restrictions imposed by federal or state
securities laws, and concerning other restrictions and rights under the
Plan, as the Committee in its discretion may determine.
16.8 No Discrimination
Whenever in the administration of the Plan action by the Committee is required
with respect to eligibility or classification of Employees, contributions, or
benefits, such action shall be uniform in nature as applied to all persons
similarly situated, and no such action shall discriminate in favor of Employees
who are Highly Compensated Employees.
16.9 Exclusive Benefit of Employees
(a) All Employer Contributions made pursuant to the Plan shall be held by the
Trustee in accordance with the terms of the Trust Agreement for the
exclusive benefit of those Employees who are Members under the Plan,
including former Employees, Beneficiaries, and Spouses, and shall be
applied to provide benefits under the Plan and to pay expenses of
administration of the Plan and the Trust to the extent that such expenses
are not otherwise paid. At no time prior to the satisfaction of all
liabilities with respect to such Members, their Beneficiaries and Spouses
shall any part of the Trust Fund (other than such part as may be required
to pay administration expenses) be used for, or diverted to, purposes other
than the exclusive benefit of such Members, their Beneficiaries and
Spouses.
(b) Notwithstanding section 16.8(a)--
(1) if an Employer Contribution under the Plan is conditioned on initial
qualification of the Plan under section 401(a) of the Code, and the
Plan receives an adverse determination with respect to its initial
qualification, the Trustee shall, upon written request of the Company,
or Participating Employer making the contribution, return to the
Company or Participating Employer the amount of the contribution
(increased by earnings attributable thereto and reduced by losses
attributable thereto) within one calendar year after the date that
qualification of the Plan is denied, provided that the application for
the determination is made by the time prescribed by law for filing the
employer's return for the taxable year in which the Plan is adopted,
or such later date as the Secretary of the Treasury may prescribe;
(2) if an Employer Contribution is conditioned upon the deductibility of
such contribution under section 404 of the Code, then, to the extent
the deduction is disallowed, the Trustee shall, upon written request
of the Company or Participating Employer making the contribution,
return the contribution to the extent disallowed to the Company or
Participating Employer within one year after the date the deduction is
disallowed;
(3) if an Employer Contribution or any portion thereof is made by the
Company or a Participating Employer by a mistake of fact, the Trustee
shall, upon written request of the Company or Participating Employer,
return the contribution or the portion to the Company or Participating
Employer within one year after the date of payment to the Trustee; and
(4) earnings attributable to amounts to be returned to the Company or
Participating Employer pursuant to paragraph (2) or (3) shall not be
returned to the Company or Participating Employer, and losses
attributable to amounts to be returned pursuant to paragraph (2) or
(3) shall reduce the amount to be so returned.
16.10 Governing Law
The provisions of the Plan shall be construed, administered, and enforced in
accordance with the laws of Illinois, to the extent such laws are not superseded
by laws of the United States. All Employer Contributions to the Trust shall be
deemed to be made in Illinois.
16.11 Change-in-Control
Notwithstanding any provision of the Plan to the contrary, if a Change-in-
Control (as defined below) occurs--
(a) each Participant who is an Employee on the date the Change-in-Control
occurs shall be 100 percent vested in the adjusted balance of the
Participant's Company Stock and Other Investments Accounts;
(b) no merger, transfer of assets, or other similar transactions involving the
Plan shall be permitted until all Loans outstanding at the time of the
Change-in-Control have been repaid and all shares of Company Stock held in
a Suspense Account in respect thereof have been released and allocated to
Participants' Company Stock Account of Participants employed as of the
Change-in-Control date;
(c) no other action may be taken pursuant to Article XIII that would have the
affect of diverting such shares to the Company Stock Accounts of
Participants who are not employees of the Company or a Participating
Employer as of the Change-in-Control date; or
(d) if, in connection with the Change-in-Control, Company Stock held by the
Plan has been sold for consideration other than securities constituting
Company Stock, then the date that the Change-in-Control occurs shall be a
special Valuation Date and each Participant with an Account under the Plan
as of the date the Change-in-Control occurs shall be entitled to share in
the proceeds of such sale in the manner described in section 7.7(b).
For purposes of this section, a "Change-in-Control" shall be deemed to occur on
the earliest of--
(1) the receipt by Northern Trust Corporation (the "Corporation") of a Schedule
13D or other statement filed under section 13(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), indicating that any entity,
person, or group has acquired beneficial ownership, as that term is defined
in Rule 13d-3 under the Exchange Act, of more than 30 percent of the
outstanding capital stock of the Corporation entitled to vote for the
election of directors ("voting stock");
(2) the commencement by any entity, person, or group (other than the
Corporation or a subsidiary of the Corporation) of a tender offer or an
exchange offer for more than 20 percent of the outstanding voting stock of
the Corporation;
(3) the effective time of (A) a merger or consolidation of the Corporation with
one or more other corporations as a result of which the holders of the
outstanding voting stock of the Corporation immediately prior to such
merger or consolidation hold less than 80 percent of the voting stock of
the surviving or resulting corporation or (B) a transfer of substantially
all of the property of the Corporation other than to an entity of which the
Corporation owns at least 80 percent of the voting stock; or
(4) the election to the Board, without the recommendation or approval of the
incumbent Board, of the lesser of (A) three directors or (B) directors
constituting a majority of the number of Board members then in office.
* * * * * * * * * *
In Witness Whereof, the Company has caused this Plan to be executed on its
behalf by its duly authorized officer this 21st day of November, 1995.
THE NORTHERN TRUST COMPANY
ATTEST:
By /s/
--------------------------
By /s/ Mary T. Jamieson
---------------------
PLAN DOCUMENT
Schedule A
- --------------------------------------------------------------------------------
Affiliate Name ESOP Earliest Vesting Date
================================================================================
O'Hare N/A
Acquired: 5/17/82
- --------------------------------------------------------------------------------
Woodfield N/A
Acquired: 7/26/82
- --------------------------------------------------------------------------------
Naperville N/A
Acquired: 10/01/82
- --------------------------------------------------------------------------------
Oak Brook N/A
Acquired: 06/01/83
- --------------------------------------------------------------------------------
Hickey/NT Brokerage N/A
Acquired: 04/09/84
Joined TNT Plans 1/07/87
- --------------------------------------------------------------------------------
Phoenix National N/A
Acquired: 06/06/86
Joined TNT Plans 1/1/87
- --------------------------------------------------------------------------------
Lake Forest N/A
Acquired: 12/81/86
- --------------------------------------------------------------------------------
Concorde Bank Later of:
Acquired: 6/18/89 6/18/89 or DOH
- --------------------------------------------------------------------------------
Berry, Hartell, Evers & Osborne,
Inc. (BHE) Later of:
Acquired: 11/30/89 11/30/89 or DOH
- --------------------------------------------------------------------------------
Heritage Trust As of 10/01/91:
Acquired: 09/28/90 DOH w/Heritage [before or after
acquisition (Plan of Merger 10/01/91)]
- --------------------------------------------------------------------------------
Tri Valley National Bank Later of:
(CA) charter 6/27/91 or DOH
Acquired: 6/27/91
- --------------------------------------------------------------------------------
Trust Services of America Later of:
Acquired: 01/31/92 1/31/92 or DOH
Joined TNT Plans 2/1/92
================================================================================
Hazlehurst & Assoc. DOH w/Hazlehurst
Acquired: 04/15/94 (before or after acquisition)
- --------------------------------- ------------------------------------
Purchase of Master Trust Services N/A
Unit of FNBC
================================================================================
DOH = Date of Hire
AMENDMENT NUMBER ONE
TO
THE NORTHERN TRUST EMPLOYEE
STOCK OWNERSHIP PLAN
WHEREAS, The Northern Trust Company (the "Company") maintains the Northern Trust
Company Employee Stock Ownership Plan, as amended and restated effective January
1, 1989 (the "Plan"); and
WHEREAS, amendment of the Plan is now deemed desirable in order to clarify
certain provisions of the Plan;
NOW, THEREFORE, by virtue and in exercise of the amending power reserved to the
Company under Section 13.1 of the Plan, and pursuant to the authority delegated
to the undersigned officer in a resolution of the Board of Directors dated July
18, 1995, the Plan is hereby amended effective January 1, 1989, in the following
particulars:
l. Section 3.4(a) is amended in its entirety to read as follows:
"(a) Vesting Service shall be computed on the following bases: (i) prior to
July l, l993, an Employee shall receive credit for each calendar quarter
during which the Employee earned at least one (1) Hour of Service or
otherwise would receive credit for Vesting Service pursuant to this
subsection (b) below; and (ii) from and after July l, l993, an Employee
shall receive credit for each calendar month during which the Employee
earned at least one (1) Hour of Service or otherwise would receive credit
for Vesting Service pursuant to subsection (b) below."
2. Section 3.4(b)(i) is amended in its entirety to read as follows:
"(i) an approved absence of up to 12 months from the Company or an Affiliate
(e.g. vacation, paid holiday, sick, short term disability, long term
disability, Family Medical Leave, unpaid leave of absence) that is granted
according to uniform and nondiscriminatory standards."
3. Section 3.4(b)(ii) is deleted in its entirety.
4. Section 3.4(b)(iii) is redesignated as 3.4(b)(ii) and amended in its
entirety to read as follows:
"(ii) a period of up to one (1) year during which an Employee is on Parental
Leave; and"
5. Section 3.4(b)(iv) is redesignated as 3.4(b)(iii).
6. Section 3.6(b) is amended to delete the words "or Credited Service" in the
first and last sentences, and to add the word "or" immediately before "Vesting
Service" in the last sentence.
7. Section 5.2 is amended to replace the words "New York Stock Exchange" with
"NASDAQ Stock Market."
8. Section 11.1 is amended to replace the introductory clause with "Except as
provided in sections 7.9, 9.7(d) and 11.2,".
9. Section 16.1 is amended to replace the second full paragraph with the
following:
"Notwithstanding the foregoing, the Plan shall make all payments required by a
qualified domestic relations order within the meaning of Code section 414(p).
The Committee shall establish a procedure to determine the qualified status of a
domestic relations order and to administer distributions under a qualified
order. If the qualified domestic relations order so provides, the Plan may make
a distribution to an alternate payee prior to the date that a Member attains
"earliest retirement age." For purposes of a qualified domestic relations
order, "earliest retirement age" means the earlier of--
(a) the date the Member is entitled to a distribution under this Plan, or
(b) the later of (i) the date the Member attains age 50, or (ii) the earliest
date on which the Member could begin receiving benefits under this Plan if
the member separated from service."
10. Schedule A is amended to add "01/04/85" immediately after "Purchase of
Master Trust Services Unit of FNBC" in the "Affiliate Name" column.
IN WITNESS WHEREOF, the Company has caused this amendment to be executed on its
behalf by the undersigned officer this 21st day of November, 1995
____________________________
Martin J. Joyce, Jr.
Senior Vice President
2
AMENDMENT NUMBER TWO
TO
THE NORTHERN TRUST EMPLOYEE
STOCK OWNERSHIP PLAN
WHEREAS, The Northern Trust Company (the "Company") maintains the Northern Trust
Company Employee Stock Ownership Plan, as amended and restated effective January
1, 1989 (the "Plan"); and
WHEREAS, amendment of the Plan is now deemed desirable;
NOW, THEREFORE, by virtue and in exercise of the amending power reserved to the
Company under Section 13.1 of the Plan, and pursuant to the authority delegated
to the undersigned officer in a resolution of the Board of Directors dated April
16, 1996, the Plan is hereby amended effective May 1, 1996, in the following
particular:
Section 16.11 is amended by modifying clause (A) of subparagraph (3) of the
definition of "Change-in-Control" to read as follows: ". . . (A) a merger or
consolidation of the Corporation with one or more other corporations as a result
of which the holders of the outstanding voting stock of the Corporation
immediately prior to such merger or consolidation hold less than 60 percent of
the voting stock of the surviving or resulting corporation or . . ."
IN WITNESS WHEREOF, the Company has caused this amendment to be executed on its
behalf by the undersigned officer this 26th day of April, 1996.
/s/ Martin J. Joyce, Jr
----------------------------
Martin J. Joyce, Jr.
Senior Vice President