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01/04/89
EMPLOYEE STOCK
OWNERSHIP PLAN
AND TRUST
OF
STANDARD MOTOR PRODUCTS, INC.
Effective January 1, 1989
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AGREEMENT made this 5th day of January, 1989, by and between
Standard Motor Products, Inc. (the "Company"), a corporation organized under the
laws of the State of New York, ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ and ▇▇▇▇▇ ▇▇▇▇ (the "Trustees").
W I T N E S S E T H :
WHEREAS, the Company desires to adopt and establish an
employee stock ownership plan, known as the Employee Stock Ownership Plan and
Trust of Standard Motor Products, Inc. (the "Plan") in order to provide
retirement benefits for its eligible employees and their beneficiaries;
WHEREAS, the Company intends that the Plan meet the
requirements of an employee stock ownership plan under Section 4975 of the
Internal Revenue Code for its eligible employees; and
NOW, THEREFORE, in consideration of the premises, it is agreed
that the EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST OF STANDARD MOTOR PRODUCTS,
INC. is hereby adopted effective January 1, 1989.
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ARTICLE ONE
DEFINITIONS
1.1 "Account" means the separate account which the Trustees shall
maintain for a Participant under the Plan.
1.2 "Accounting Date" means the last day of the Plan Year or such other
interim valuation date as may be set by the Trustees.
1.3 "Beneficiary" means a person designated by a Participant, or
otherwise, who is or may become entitled to a benefit under the Plan.
1.4 "Break in Service" means an eligibility or vesting computation
period, as the case may be, during which a Participant has not completed more
than 500 Hours of Service. Solely for purposes of determining whether the
Employee incurs a Break in Service under any provision of this Plan, the
Trustees shall credit Hours of Service during an Employee's unpaid absence
period due to maternity or paternity leave. The Trustees shall consider an
Employee on maternity or paternity leave if the Employee's absence is due to the
Employee's pregnancy, the birth of the Employee's child, the placement with the
Employee of an adopted child, or the care of the Employee's child immediately
following the child's birth or placement. The Trustees shall credit Hours of
Service under this paragraph on the basis of the number of Hours of Service the
Employee would receive if he were paid during the absence period or, if the
Trustees cannot determine the number of Hours of Service the Employee would
receive, on the basis of eight (8) hours per day during the absence period. The
Trustees shall credit only the number of Hours of Service (up to 501 Hours of
Service) necessary to prevent an Employee's Break in Service. The Trustees shall
credit all Hours of Service described in this paragraph to the computation
period in which the absence period begins or, if the Employee does not need
these Hours of Service to
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prevent a Break in Service in the computation period in which his absence period
begins, the Trustees shall credit these Hours of Service to the immediately
following computation period.
1.5 "Code" means the Internal Revenue Code of 1986, as amended.
1.6 "Company" means STANDARD MOTOR PRODUCTS, INC., a New York
corporation, and any successor thereto.
1.7 "Compensation" means the compensation as reported on Form W-2 and
including any salary deferral contributions made by the Employee pursuant to a
plan qualified under Section 401(k) of the Code, for services paid or accrued by
an Employer to an Employee during the Plan Year. For the purpose of allocating
contributions under Section 6.2 and for purposes of Article Twelve a
Participant's Compensation for a Plan Year in excess of $200,000, or such other
amount as may be specified by the Secretary of the Treasury or his delegates
pursuant to regulations issued under Sections 401(a)(17) and 415(d) of the Code,
shall not be recognized.
For the purposes of Section 6.4 and Article Twelve Compensation shall
include:
I) the participant's wages, salaries, fees for professional
service and other amounts received for personal services actually rendered in
the course of employment with the Employer maintaining the Plan (including, but
not limited to commissions paid salesmen, compensation for services on the basis
of a percentage of profits, commissions or insurance premiums, tips and
bonuses).
II) In the case of a Participant who is an Employee within of
Section 401(c)(l) and the regulations thereunder, the Participant's earned
income (as described in Section 401(c)(2) and the regulations thereunder).
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III) For purposes of subdivisions (I) and (II) of this
subparagraph, earned income from sources outside the United States (as defined
in Section 911(b)) of the Code, whether or not excludable from gross income
under Section 911 or deductible under Section 913.
IV) Amounts described in Sections 104(a)(3), 105(a) and
105(h), but only to the extent that these amounts are includible in the gross
income of the Employee.
V) Amounts described in Section 105(d), whether or not these
amounts are excludable from the gross income of the Employee under that Section.
VI) Amounts paid or reimbursed by the Employer for moving
expenses incurred by an Employee, but only to the extent that these amounts are
not deductible by the Employee under Section 217. VII) The value of a
non-qualified stock option granted to an Employee by the Employer, but only to
the extent that the value of the option is includible in the gross income of the
Employee for the taxable year in which granted.
VIII) The amount includible in the gross income of an Employee
upon making the election described in Section 83(b); but shall not include
i) Contributions made by an Employer to a plan of
deferred compensation to the extent that, before the application of the
section 415 limitations to that plan, the contributions are not
includible in the gross income of the Employee for the taxable year in
which contributed. In addition, Employer contributions made on behalf
of an Employee to a simplified Employee pension described in section
408(k) are not considered as compensation for the taxable year in which
contributed to the extent such contributions are deductible by the
Employee under section 219(b)(7). Additionally, any distributions from
a funded plan of deferred compensation are not considered as
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compensation for section 415 purposes, regardless of whether such
amounts are includible in the gross income of the Employee when
distributed. However, any amounts received by an Employee pursuant to
an unfunded non-qualified plan may be considered as compensation for
section 415 purposes in the year such amounts are includible in the
gross income of the Employee.
ii) Amounts realized from the exercise of a
non-qualified stock option, or when restricted stock (or property) held
by an Employee either becomes freely transferable or is no longer
subject to a substantial risk of forfeiture (see section 83 and the
regulations thereunder).
iii) Amounts realized from the sale, exchange, or other
disposition of stock under a qualified stock option.
iv) Other amounts which receive special tax benefits,
such as premiums for group term life insurance (but only to the extent
that the premiums are not includible in the gross income of the
Employee), or contributions made by an Employer (whether or not under a
salary reduction agreement) towards the purchase of an annuity contract
described in section 403(b) or under a Section 401(k) Plan (whether or
not the contributions are excludable from the gross income of the
Employee).
1.8 "Company Securities" means shares of common stock issued by the
Company which constitute "employer securities" as defined under Code Sections
409(1) and 4975(e)(8).
1.9 "Disability" means that a Participant, because of a physical or
mental disability, is unable to perform the duties of his customary position of
employment for an indefinite period which the Trustee considers will be of long
and continued duration. The Trustee may require a
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Participant to submit to a physical examination in order to confirm disability.
The Trustee shall make its determinations in a nondiscriminatory, consistent and
uniform manner.
1.10 "Disqualified Person" shall have the meaning ascribed to that term
under Code Section 4975(e)(2).
1.11 "Eligible Spouse" shall mean a Participant's spouse if the
Participant and such spouse had been married throughout the one year period
ending on the date of the Participant's death. To the extent provided in any
qualified domestic relations order, "Eligible Spouse" shall also mean a former
spouse of the Participant, if such former spouse and the Participant had been
married for at least one year.
1.12 "Employee" means any individual employed by an Employer.
1.13 "Employer" means the Company and any ERISA Affiliate that, with
the consent of the Company, hereafter adopts the Plan, as provided in Section
13.4.
1.14 "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
1.15 "ERISA Affiliate" means any organization (whether or not
incorporated) which, together with the Company, is under "common control" or is
a member of an "affiliated service group" within the meaning of Sections 414(b),
414(c) and 414(m) of the Code, respectively.
1.16 "Exempt Loan" means a loan (including an extension of credit) used
by the Trust to finance the acquisition of Company Securities, which loan may be
made or guaranteed by a Disqualified Person, provided the loan satisfies the
requirements of Treasury Regulation 54.4975--7(b).
1.17 "Fair Market Value" means the fair market value as set by
procedures established by the Trustee that comply with Section 3(18) of ERISA
and Section 4975 of the Code.
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1.18 "Hour of Service" means:
a) Each hour for which an Employee is paid, or entitled to
payment, for the performance of duties for the Company. These hours shall be
credited to the Employee for the computation period or periods in which the
duties are performed, irrespective of when paid.
b) Each hour for which an Employee is paid, or entitled to
payment, by the Company on account of a period of time during which no duties
are performed (irrespective of whether the employment relationship has
terminated) due to vacation, holiday, illness, incapacity (including
disability), jury duty, military duty, or a leave of absence; authorized by the
Company under a uniform, nondiscriminatory policy applicable to all Employees.
c) Each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by the Company. These hours shall be
credited to the Employee for the computation period or periods to which the
award or payment pertains, rather than the computation period in which the
award, agreement or payment is made, provided, however, that no more than 501
Hours of Service shall be credited under Paragraph (b) or this Paragraph (c) to
an Employee on account of any single continuous period during which the Employee
performs no services (whether or not such period occurs in a single Plan Year or
other computation period). These hours shall be credited to the Employee in
accordance with the rules of Paragraphs (b) and (c) of Labor Reg. 2530.200b-2
which the Plan hereby specifically incorporates by reference.
An Hour of Service shall not be credited to an Employee under more
than one of the above methods.
For the purposes of determining Hours of Service, the term
"Company" shall include all ERISA Affiliates regardless of whether they have
adopted the Plan, and the term
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"Employee" shall include all employees regardless of whether they are covered by
a collective bargaining agreement. Where an Employer maintains a plan of a
predecessor employer, service with such predecessor employer shall be treated as
service with the Employer.
1.19 "Normal Retirement Age" means the date on which a Participant
attains sixty-five (65) years of age.
1.20 "Participant" means any present or former employee who is
qualified to participate and does participate in the Plan and for whom there
remains any balance in his Account.
1.21 "Plan" means the tax-qualified stock bonus plan established by the
Company hereunder, designed to invest primarily in Company Securities and known
as an the Employee Stock Ownership Plan and Trust of Standard Motor Products,
Inc..
1.22 "Plan Administrator" shall be the person designated by the Company
from time to time to have full responsibility for compliance with the reporting
and disclosure rules under the Act with respect to the Plan, and such other
duties as may be consistent therewith. If no such person is designated, the Plan
Administrator shall be the Company.
1.23 "Plan Year means the 12 consecutive month period beginning on
January and ending on December 31.
1.24 "Trust" means the entity created under the provisions of this
Plan.
1.25 "Trustees" means the party or parties, individual or corporate,
who are signatories to this Plan as Trustees, and any duly appointed additional
or successor Trustee or Trustees acting hereunder. The Trustees shall be the
"named fiduciaries" referred to in Section 402(a) of ERISA with respect to the
control, management and disposition of the assets of the Trust.
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1.26 "Trust Fund" means the total of the contributions made by the
Employers to the Trust pursuant to the Plan, increased by profits, gains, income
and recoveries received, and decreased by losses, depreciation, benefits paid
and expenses incurred in the administration of the Trust. Trust Fund includes
all assets acquired by investment and reinvestment which are held in the Trust
by the Trustees.
1.27 "Year of Service" means a twelve (12) consecutive month period
during which an Employee is credited with at least 1,000 Hours of Service. For
purposes of determining an Employee's eligibility for participation in the Plan:
a) the initial twelve (12) consecutive month period shall begin on the first day
on which the Employee is credited with an Hour of Service; and b) the subsequent
twelve (12) consecutive month periods shall be Plan Years (including Plan Years
prior to the effective date of the Plan) beginning after the first day on which
the Employee is credited with an Hour of Service. In the case of an Employee who
incurs a Break in Service at a time when he is non-vested in any portion of his
benefit, and whose Breaks-in-Service exceeds the greater of (i) 5, or (ii) his
years of eligibility service prior to such Breaks in Service, his eligibility
service prior to such Breaks in Service shall be disregarded for eligibility
purposes, and the initial twelve (12) consecutive month period for determining
his eligibility for participation following such Breaks in Service shall begin
on the date such Employee first completes an Hour of Service following such
Breaks in Service.
1.28 "Year of Vesting Service" means any Plan Year, including Plan
Years prior to the effective date of this Plan, during which an Employee is
credited with at least 1,000 Hours of Service.
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ARTICLE TWO
PURPOSE
2.1 The Plan is established to provide for the participation of
employees in the growth of the Company by enabling them to acquire stock
ownership interests in the Company. The Plan is intended as a stock bonus plan
qualified under Section 401(a) of the Code and as an Employee Stock Ownership
Plan under Section 4975(e)(7) of the Code and Section 407(d)(6) of ERISA.
2.2 The Trust hereunder is designed to invest primarily in Company
Securities and is created for the exclusive benefit of Participants and their
Beneficiaries and shall be interpreted and administered at all times in a manner
consistent with the requirements of the Code and the Regulations thereunder
relating to qualified stock bonus plans and trusts and employee stock ownership
plans. Except as provided in Section 4.4 or Section 9.3(b), the principal or
income of this Trust shall not be paid to or revert to the Company or be used
for any purpose whatsoever other than the exclusive benefit of the Participants
or their Beneficiaries.
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ARTICLE THREE
PARTICIPANTS
3.1 Each Employee who, on January 1, 1989, is a Participant in the
Standard Motor Products, Inc. Employees' Profit Sharing Plan and Trust shall
participate in this Plan as of January 1, 1989.
For all other Employees, the following eligibility rules shall
apply:
a) Employees who are hired on or after July 1 of any year will
become Participants on the January 1 following the completion of one Year of
Service.
b) Employees who are hired prior to July 1 of any year, complete
one thousand (1,000) Hours of Service by December 31 of the same year, and are
still employed by the Company as of such date, will become Participants on
January 1 immediately following their date of hire.
c) Employees who are hired prior to July 1 of any year, and who
either do not complete one thousand (1,000) Hours of Service or who are not
employed by December 31, will become Participants effective as of the January 1
immediately prior to the end of their completion of a Year of Service.
3.2 If a former Employee who has incurred a termination of employment
again becomes an Employee, then, unless his prior Years of Service are
disregarded for eligibility purposes in accordance with Section 1.27, his prior
service shall be recognized for eligibility purposes under Section 3.1 above and
he shall be eligible to participate in this Plan as of the later of the date he
again became an Employee, or the date he would have been eligible to participate
in the Plan in accordance with Section 3.1 above had he not incurred a
termination of employment.
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3.3 Notwithstanding the foregoing, an Employee shall not be eligible to
participate in the Plan if he is covered by a collective bargaining agreement
between employee representatives and an Employer if retirement benefits were the
subject of good faith bargaining.
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ARTICLE FOUR
COMPANY CONTRIBUTIONS
4.1 Each Employer, or the Company acting on behalf of such Employer,
shall contribute to the Trust under the Plan for each Plan Year it is in effect
such an amount or amounts as it shall determine to be advisable.
4.2 The Trustees shall not be under any duty to inquire into the
correctness of the amounts contributed and paid over to the Trustees nor shall
they have any duty to enforce payment of any contributions to be made hereunder.
An Employer contributions may be made in whole or in part in cash or in the form
of Company Securities.
4.3 If more than one Employer maintains the Plan, the Trustees shall
account separately for each Employer's contributions under the Plan. The
Trustees shall allocate each Employer's contribution(s) for a Plan Year to the
Accounts of those Participants actually employed by that Employer during the
Plan Year. For purposes of Section 6.2, Compensation shall only include
compensation paid or accrued during the Plan Year by an Employer to those
Participants actually employed by that Employer during that Plan Year.
4.4 The establishment of the Plan and Trust by the Company is
contingent upon obtaining the approval of the Internal Revenue Service. In the
event that the Internal Revenue Service fails to approve the Plan and Trust, the
Trustees shall proceed to liquidate the Trust by paying all expenses and
returning all remaining assets to the Employers to which they are attributable
as promptly as practicable, but in no event later than one (1) year after the
date of the final resolution of any appeals before the Internal Revenue Service
or the courts. The Trust shall thereupon terminate. In the event an Employer
contribution is made under a mistake of fact, such contribution shall be
returned to the Employer within one (1) year after the payment of the
contribution, and if a contribution is conditioned upon the deductibility of
such contribution
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under Section 404 of the Code, such contribution shall be returned to the
Employer (to the extent disallowed) within one (1) year after the disallowance
of the deduction. The Trustees may require an Employer to furnish whatever
evidence the Trustees deem necessary to enable the Trustees to confirm that the
amount an Employer has requested be returned is properly returnable under ERISA.
4.5 Employer contributions may be paid in cash in such amounts and at
such times as may be needed to provide the Trustees with cash sufficient to pay
any currently maturing Exempt Loan obligations, provided, however, that to the
extent provided in Section 11.12, such loan obligations (principal and interest)
may be paid from cash dividends on Company Securities held by the Plan.
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ARTICLE FIVE
EMPLOYEE CONTRIBUTIONS
5.1 The Plan does not require nor permit contributions by Employees or
Participants.
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ARTICLE SIX
ALLOCATIONS OF CONTRIBUTIONS AND FORFEITURES
6.1 The Trustees shall establish and maintain an Account in the name of
each Participant and shall determine the accrual of benefits on the basis of the
Plan Year.
6.2
a) Seventy Percent (70%) of the contributions for the Plan Year
made by an Employer shall be allocated to the Accounts of those Participants (A)
who have completed at least 1,000 Hours of Service during the Plan Year and who
are Employees or on maternity or paternity leave as of the last day of the Plan
Year or (B) who retire on or after their Normal Retirement Date, die or become
disabled during such Plan Year, in the ratio which the Compensation of each such
Participant for such Plan Year bears to the total Compensation of all such
Participants for such year.
b) Thirty Percent (30%) of the contributions made by an Employer
for a Plan Year shall be allocated to the Accounts of those Participants who (A)
have completed at least five (5) Years of Vesting Service by the last day of
such Plan Year, and (B) have either (I) completed at least one thousand (1,000)
Hours of Service during such Plan Year and remain employed or are on a maternity
or paternity leave on the last day of such year or (II) retired on or after
their Normal Retirement Date, died or become disabled during the Plan Year, in
the ratio of the Compensation of each such Participant for such Plan Year bears
to the total Compensation of all such Participants for such year.
c) Subject to any restoration allocation required under Section
7.5, the Trustees shall allocate forfeitures (in addition to the allocation of
contributions) to Accounts in the same manner as Employer contributions are
allocated pursuant to paragraphs (a) and (b)
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above for the Plan Year in which such forfeiture occurs, and without regard to
the identity of the Employer who employed the Participant with respect to which
such forfeiture arose.
d) Notwithstanding the foregoing, for the Plan Year beginning
January 1, 1989, the Company may, in its discretion, direct the Trustees to
allocate all or any specific portion of the Employer contributions to the Plan
for such year to Accounts as follows: seventy percent (70%) of such contribution
shall be allocated to the Accounts of those Participants who have completed at
least one Year of Service by January 1, 1989 in the ratio which the Compensation
of each such Participant for calendar year 1988 bears to the total Compensation
of all such Participants for such year; and thirty percent (30%) of such
contribution shall be allocated to the Accounts of those Participants who
completed at least five Years of Service by January 1, 1989 in the ratio that
the Compensation of such Participant for calendar year 1988 bears to the total
Compensation of all such Participants for such year. Any Employer contributions
for the Plan Year beginning January 1, 1989 not allocated in accordance with
this Section 6.2(d), shall be allocated in accordance with paragraphs (a) and
(b) above.
6.3 In no event shall the Trustees allocate to the account of any
Participant in any Limitation Year an Annual Addition (as hereinafter defined)
in excess of the Maximum Permissible Amount (as hereinafter defined). If, as a
result of the allocation of forfeitures, a reasonable error in estimating a
Participant's annual compensation, or under other limited facts and
circumstances justify the availability of the rules set forth in this
subparagraph, the annual additionals under the terms of this Plan for a
particular Participant exceed the Maximum Permissible Amount applicable to that
Participant for the limitation year, the excess amounts shall not be deemed
annual additions in that limitation year, and the Trustees shall hold the excess
in a suspense account and allocate in the following Plan Year to the Account
from which
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such excess arose. The Trustees shall not distribute any such excess to
Participants or former Participants.
6.4 For purposes of this Article:
a) Annual Addition shall mean the sum of the following amounts
allocated on behalf of a Participant for a Limitation Year: (i) all Employer
contributions; (ii) all forfeitures (including income allocable thereto) and
(iii) the amount of all non-deductible Participant contributions. For the
purposes of this Article, Annual Addition also shall include excess amounts
allocated to Accounts under Section 6.3. Notwithstanding the foregoing, any
Company contributions applied by the Trustees for any Limitation Year to pay
interest on an Exempt Loan and any shares of Company Securities acquired by the
Plan with the proceeds of an Exempt Loan which are allocated as forfeitures
pursuant to Section 6.2(b) for any Year shall not be included as Annual
Additions, provided that not more than one-third (1/3) of the Company
contributions applied to pay principal and interest on an Exempt Loan for such
Year are allocated to the Special Participant Group, as hereafter defined. The
Trustees may reallocate such Company contributions in order to satisfy this
special limitation.
Annual Additions also include amounts allocated after March 31,
1984, to an individual medical account (as defined in Code Section 415(1)
included as part of a defined benefit plan maintained by the Company.
Furthermore, Annual Additions include contributions paid or accrued after
December 31, 1985, for taxable years ending after December 31, 1985,
attributable to post-retirement medical benefits allocated to the separate
account of a key employee (as defined in Code Section 419A(d)(3)) under a
welfare benefit fund (Code Section 419(e)) maintained by the Company.
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b) Maximum Permissible Amount shall mean with respect to any
Participant for any Year the lesser of (i) $30,000 (or such greater amount as
the Secretary of the Treasury or his delegates may prescribe pursuant to
regulations under Section 415(d) of the Code), or (ii) twenty-five percent (25%)
of the Participant's Compensation. Notwithstanding the foregoing, such dollar
amount (i) may be increased by the lesser of (A) 100% of the dollar amount
otherwise applicable for that Plan Year or (B) the amount of Company Securities
allocated as Employer contributions to the Participant's Account for that Plan
Year provided no more than one-third of Employer contributions for such year are
allocated to the Accounts of members of the Special Participant Group and
provided further that the Employer's contribution if made in cash, is made no
later than thirty (30) days after the time prescribed by law, plus extensions,
for the filing of the Employer's income tax returns applicable to the taxable
year with or within which the Plan Year ends and that Company Securities are
purchased no later than sixty (60) days after the end of such period.
For these purposes "Special Participant Group" shall mean
participants who are highly compensated employees within the meaning of Section
414(q) of the Code.
c) Company shall mean all members of a group which constitutes a
controlled group of corporations (as defined in Code Section 414(b) as modified
by Code Section 415(h)), or which constitutes trades or businesses (whether or
not incorporated) which are under common control (as defined in Code Section
414(c) as modified by Code Section 415(h)), or which constitutes an affiliated
service group as defined by Code Section 414(m).
d) The Trustees shall treat all defined contribution plans
(whether or not terminated) maintained by the Company or any ERISA Affiliate as
a single plan.
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6.5 If the Participant presently participates, or has ever
participated, under a defined benefit plan maintained by the Company or any
ERISA Affiliate, then the sum of the defined benefit plan fraction and the
defined contribution plan fraction for the Participant for that Limitation Year
shall not exceed 1.0. If in any Limitation Year the sum of the defined benefit
plan fraction and the defined contribution plan fraction on behalf of a
Participant exceeds 1.0, then the Company shall reduce the Participant's
projected annual benefit under the defined benefit plan to the extent necessary
to prevent the sum of the defined contribution plan fraction and the defined
benefit plan fraction from exceeding 1.0. For these purposes the following
definitions shall apply:
a) "Defined benefit plan" -- A retirement plan which does not
provide for individual accounts for Employer contributions. The Trustees shall
treat all defined benefit plans (whether or not terminated) maintained by the
Company or any ERISA Affiliate as a single plan and the Trustees shall treat all
defined contribution plans (whether or not terminated) maintained by the
Company, or any ERISA Affiliate as a single plan.
b) "Defined benefit plan fraction"--
projected annual benefit of the Participant under
the defined benefit plan(s)
The lesser of (i) l25% of the dollar limitation
in effect under Code Section 415(b)(l)(A) for the
Limitation Year, or (ii) 140% of the Participant's
average Compensation for his high three (3)
consecutive Years of Service
If the Employee was a Participant in one or more defined benefit
plans maintained by the Company or ERISA Affiliate which were in existence on
July 1, 1982, the denominator of this fraction will not be less than l25% of the
sum of the annual benefits under such plans which the Employee had accrued as of
the end of the 1982 Limitation Year (the last Limitation Year beginning before
January 1, 1983). The preceding sentence only applies if the defined benefit
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plans individually and in the aggregate satisfied the requirements of Code
Section 415 as in effect at the end of the 1982 Limitation Year.
c) "Defined contribution plan fraction" --
the sum of the Annual Additions to the
Participant's Account under the defined contribution
plan(s) and defined benefit plan(s) as of the close
of the Limitation Year
the sum of the lesser of the following amounts
determined for the Limitation Year and for each prior Year
of Service with the Company or ERISA Affiliate: (i) 125% of the dollar
limitation in effect under Code Section 415(c)(l)(A) for the Limitation
Year (determined without regard to the special dollar limitations for
employee stock ownership plans), or ii) 35% of the Participant's
Compensation for the Limitation Year
At the discretion of the Trustees, in applying the provisions of this Section
6.5 with respect to the defined contribution plan fraction for any Plan Year
ending after December 31, 1982, the amount taken into account for the
denominator for each Participant for all Plan Years ending before January 1,
1983 shall be an amount equal to the product of the amount of the denominator
determined under this Section 6.5 (as in effect for the Plan Year ending in
1982) for Plan Years ending in 1982, multiplied by the "transition fraction".
This paragraph shall apply only if the plan was in existence on or before July
1, 1982.
For the purposes of the preceding paragraph, the term "transition
fraction" means a fraction (a) the numerator of which is the lesser of (1)
$51,875, or (2) 1.4 multiplied by twenty-five percent (25%) of the Participant's
Compensation for the Limitation Year ending in 1981, and, (b) the denominator of
which is the lesser of (1) $41,500, or (2) twenty-five percent (25%) of the
Participant's Compensation for the Limitation Year ending in 1981.
The Trustees may also modify the defined contribution fraction
with respect to any Participant in accordance with Section 1106(i)(4) of the Tax
Reform Act of 1986.
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d) "Projected Annual Benefit" -- The annual retirement benefit
(adjusted to an actuarially equivalent straight life annuity if the plan
expresses such benefit in a form other than a straight life annuity or qualified
joint and survivor annuity) of the Participant under the terms of the defined
benefit plan on the assumptions he continues employment until his normal
retirement age as stated in the defined benefit plan, his compensation continues
at the same rate as in effect in the Limitation Year under consideration until
the date of his normal retirement age and all other relevant factors used to
determine benefits under the defined benefit plan remain constant as of the
current Limitation Year for all future Limitation Years.
e) "Limitation Year" -- The Plan Year.
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ARTICLE SEVEN
TERMINATION OF EMPLOYMENT
7.1 All payments made by the Trustees pursuant to this Article shall be
made in the manner provided in Article Eight.
7.2 A Participant's Account shall be 100% non-forfeitable upon his
attainment of his Normal Retirement Age (A) while employed by the Company or any
ERISA Affiliate or (B) while on maternity or paternity leave. The Account of a
Participant who remains in the employ of an Employer after attaining Normal
Retirement Age shall continue to share in Employer contributions.
7.3 When a Participant terminates employment prior to attaining Normal
Retirement Age because of death or disability, the Trustees shall commence
payment of the Participant's non-forfeitable Account Balance as determined under
Section 7.6 to him (or to his beneficiary if the Participant is deceased), in
accordance with the provisions of Article Eight.
7.4 In no event shall the Trustees commence payment under Section 7.2
later than the time prescribed by Article Eight.
7.5 The non-vested portion of a Participant's Account shall be
forfeited at the time the Participant incurs five (5) consecutive one-year
Breaks in Service or, if earlier, at the time the Participant receives a lump
sum distribution of the non-forfeitable portion of his Account upon his
termination of participation in the Plan. A distribution shall be deemed to be
made upon termination of participation in this Plan if such distribution is made
prior to the close of the second Plan Year following the Plan Year in which such
termination occurs. For purposes of this Section 7.5, if a Participant
terminates employment without having any non-forfeitable interest in his
Account, he shall be deemed to have received an immediate distribution of the
non-
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25
forfeitable portion of such Account and thus the non-vested portion of the
Account shall at that time be forfeited.
In making a forfeiture, to the extent possible Company
Securities held in an Account that have been acquired pursuant to an Exempt Loan
shall be forfeited last. If a Participant's Account reflects an interest in more
than one (1) class of Company Securities, the Trustees shall treat a Participant
who incurs a forfeiture as forfeiting the same proportion of each such class.
Forfeitures arising under this Section 7.5 shall first be
applied to the restoration of previously forfeited amounts to the extent
required by Section 7.6. All or any portion of the remaining forfeitures shall
be allocated among the Accounts of Participants in the same manner as provided
in Section 6.2(a).
7.6 In the event that a former Participant who was not 100% vested in
his Account, and who received a lump sum distribution upon his termination of
employment prior to the time he incurred five (5) consecutive one-year Breaks in
Service and who forfeited a portion of his Account upon such distribution, is
re-employed by the Company or an ERISA Affiliate prior to the time he incurs
five (5) consecutive one-year Breaks in Service, such Participant may elect on a
form prescribed by the Trustees to repay to the Plan in cash, at an time prior
to the earlier of (A) five (5) years from his date of re-employment or (B) his
incurring five (5) consecutive one-year Breaks in Service, the full amount
distributed to him upon his termination of employment. In such event, the amount
repaid plus the amount forfeited by such Participant upon his prior termination
of employment will be restored and credited to his Account as of such Accounting
Date. Any forfeited amounts restored shall be derived, to the extent necessary,
from:
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26
a) The amount, if any, of Participant forfeitures that would
otherwise be allocated under Section 7.6;
b) The amount, if any, of the Trust Fund net income or gain for
the Plan Year; and
c) The amount, if any, of Employer contributions under Section
4.01 for the Plan Year, as the Trustees, in their discretion, directs. To the
extent possible, such restoration of forfeitures shall be made in the form of
Company Securities.
7.7
a) A Participant's Account balance shall be one hundred (100)
percent non-forfeitable upon his death or becoming disabled (A) while employed
by the Company or an ERISA Affiliate or (B) while on maternity or paternity
leave.
b) A Participant shall receive for each Year of Vesting Service a
non-forfeitable right to such Account balance according to the following
schedule:
Years of Vesting Service % of Non-forfeitable
-------------------------- Accrued Benefit
---------------------
Less than 3 0%
3 20%
4 40%
5 60%
6 80%
7 100%
7.8 The following rules shall apply to the determination of Years of
Vesting Service:
a) Years of Vesting Service before any Break in Service shall be
disregarded if a Participant terminates employment without any non-forfeitable
interest in his Account and the number of consecutive one-year Breaks in Service
equals or exceeds the greater of:
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27
i) the aggregate number of Years of Vesting Service
prior to such consecutive Breaks in Service; or
ii) five (5).
b) Years of Vesting Service after any five (5) consecutive
one-year Breaks in Service shall not increase the non-forfeitable percentage of
the Participant's account which accrued before such Break in Service.
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ARTICLE EIGHT
MANNER OF PAYMENT
8.1 Except as otherwise provided herein, the Trustees shall direct that
the distribution of the benefits payable to a Participant upon his retirement
after attaining his Normal Retirement Date, or to his Beneficiary upon his
death, commence as soon as practicable after the Accounting Date coincident with
or next following such event based upon the balance in such Participant's
Accounts as of such Accounting Date.
8.2 When a Participant incurs a Termination of Employment or a Total
and Permanent Disability, his benefits shall be distributed as soon as is
practicable after the Accounting Date coincident with or next following such
event based upon the value of the Participant's Account as of such date;
provided however, that if the value of such benefit exceeds $3,500 then
distribution of such benefit may not commence until the earlier of (A) the later
of his Normal Retirement Date or 62nd birthday, or (B) his death, unless the
Participant, at the time he incurs a Termination of Employment, consents to such
distribution.
8.3 Benefits shall be distributed in accordance with the following
methods:
a) All benefits payable on account of a Participant reaching his
Normal Retirement Date or on account of his Total and Permanent Disability or
Termination of Employment shall be paid in the form of a lump sum.
b) All benefits payable on account of a Participant's death shall
be distributed to his Beneficiary or Beneficiaries in a lump sum as soon as
practicable after the Accounting Date coincident with or next following the date
of such death, but in no event later than 12 months following such Accounting
Date.
VIII-1
29
Notwithstanding the foregoing, in the event a Participant dies
before the distribution of his Account has begun, a Beneficiary may request in
writing that said distribution be made in a lump sum at some later date within
five (5) years after the Participant's death.
8.4 All benefits payable under the Plan shall be paid or provided for
solely by the Trust Fund. Neither the Company nor any other Employer assumes any
liability or responsibility therefor. Notwithstanding any provision hereof, and
unless the Participant otherwise elects, in no event shall the payment of
benefits commence later than sixty (60) days after the close of the Plan Year in
which occurs the latest of:
a) the Participant reaching his Normal Retirement Date;
b) the 10th anniversary of the year in which the Participant
commenced participation in the Plan; or,
c) the Participant's Termination of Employment.
8.5 a) A Participant may, with the approval of the Trustees, elect to
postpone the payment of his benefits, provided, however, that (A) in the case of
a Participant who attains age seventy and one-half (70 1/2) after December 31,
1987, his benefits shall commence no later than April 1 of the calendar year
following the calendar year in which he attains age seventy and one-half (70
1/2)), and (B) in the case of a Participant who attains age seventy and one-half
(70 1/2) before January 1, 1988, his benefits shall commence no later than April
1 of the calendar year following the later of (i) the calendar year in which he
attains age seventy and one-half (70 1/2), or (ii) the earlier of (I) the
calendar year with or within which ends the Plan Year in which he becomes a "5
percent owner" or (II) the calendar year in which he retires. For purposes of
this Section 8.05, a Participant shall be considered to be a "5% owner" if
during the Plan Year in which such Participant attain age sixty-six and one-half
(66 1/2) or any subsequent Plan Year the
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30
Participant is a 5% owner within the meaning of Section 416 of the Code,
ignoring for this purpose Plan Years beginning before January 1, 1980.
8.6 Each Participant may designate one or more Beneficiaries and
contingent Beneficiaries by delivering a written designation thereof to the
Trustees. Upon the death of a Participant, his Beneficiaries shall be entitled
to payment of benefits in an amount and in the manner provided in the Plan. A
Participant may change his Beneficiary designation at any time by delivering a
new written designation to the Trustees. The most recent designation received by
the Trustees shall supersede all prior designations. A designation of
Beneficiary shall be effective only if the designated Beneficiary survives the
Participant.
Notwithstanding the foregoing, if a Participant has an Eligible
Spouse on the date of his death, such Eligible Spouse shall be his sole primary
Beneficiary, unless the spouse delivers a written consent to the Trustees
waiving her right to be the sole primary Beneficiary. Such consent shall be in
favor of a specific alternate beneficiary who may not be changed without the
further consent of such spouse; provided, however, that an Eligible Spouse's
consent may expressly permit the Participant to select any alternate Beneficiary
at any time without the need for any additional consent by such spouse. An
Eligible Spouse's consent shall be irrevocable and shall contain an
acknowledgement by the Eligible Spouse of the effect thereof, and shall be
witnessed by a representative of the Plan or by a notary public. Such consent of
an Eligible Spouse shall not be required if it is established to the
satisfaction of the Trustees that the required consent cannot be obtained
because there is no Eligible Spouse, or an Eligible Spouse cannot be located, or
in other circumstances that may be prescribed by Treasury regulations.
8.7 If a Participant fails to designate a Beneficiary, in accordance
with Section 8.6, or if no designated Beneficiary survives the Participant, the
Participant's spouse, if he is married at
VIII-3
31
the date of his death, shall be deemed to be his designated Beneficiary. If,
under such circumstances, the Participant is not married at the date of his
death, his designated Beneficiary shall be deemed to be his estate.
8.8 Whenever the rights of a Participant are stated or limited in the
Plan, his Beneficiary or Beneficiaries shall be bound thereby.
8.9 The Plan does not require the Trustees to search for, or ascertain
the whereabouts of, any Participant or Beneficiary. The Employer, by certified
or registered mail addressed to his last known address of record with the
Trustees, shall notify any Participant or Beneficiary that he is entitled to a
distribution under the Plan. If the Participant or Beneficiary fails to claim
his Accounts or make his whereabouts known in writing to the Trustees within
twelve (12) months of the date of mailing of the notice, or before the
termination or discontinuance of the Plan, whichever should first occur, the
Trustees shall treat the Participant's or Beneficiary's unclaimed Accounts as
forfeited and shall reduce Employer contributions, made pursuant to Section
4.01, by the amount forfeited for the Plan Year in which such forfeiture occurs.
If a Participant or Beneficiary who has incurred a forfeiture of his Accounts
under the provisions of this Section 8.09 makes a claim, at any time, for its
forfeited Accounts, the Trustees shall direct the Employer to restore the
Participant's or Beneficiary's forfeited Accounts to the same dollar amount as
the dollar amount of the Accounts so forfeited, unadjusted for any gains or
losses occurring subsequent to the date of forfeiture. The Employer shall make
the restoration within sixty (60) days after the close of Plan Year in which the
Participant or Beneficiary makes such claim.
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32
ARTICLE NINE
ADMINISTRATION
9.1 The Company will furnish the Trustee with such information as the
Trustee may deem necessary to carry out the Plan, but assumes no obligation to
any Employee, Participant or Beneficiary for any act, or failure to act, of the
Trustee, or the Plan Administrator.
9.2 The Company will indemnify and save each Trustee and the Plan
Administrator harmless from and against any and all loss resulting from
liability to which he may be subjected by any act or conduct (except willful
misconduct or gross negligence) in his official capacity in the administration
of the Trust or Plan, except, however, from any liability he may have under the
Act for breach of a fiduciary duty.
9.3 a) Subject to paragraph (b) below relating to qualified domestic
relations orders, neither a Participant nor a Beneficiary shall anticipate,
assign or alienate any benefit under the Plan, and the Trustees shall not
recognize any such anticipation, assignment or alienation. Furthermore, a
benefit under the Plan is not subject to attachment, garnishment, levy,
execution or other legal or equitable process.
b) Nothing contained in this Plan shall prevent the Trustees from
complying with the provisions of a qualified domestic relations order (as
defined in Code Section 4l4(p).
The Plan Administrator shall establish reasonable procedures to
determine the qualified status of a domestic relations order upon receiving a
domestic relations order. The Plan Administrator promptly shall notify the
Participant and any alternate payee named in the order, in writing, of the
specific alternative beneficiary designated by the Participant. Notwithstanding
the foregoing, a Participant's Eligible Spouse may irrevocably receipt of the
order and the Plan's procedures for determining the qualified status of the
order. Within a reasonable period of time after receiving the domestic relations
order, the Plan Administrator shall determine the qualified
IX-1
33
status of the order and shall notify the Participant and each alternate payee,
in writing, of its determination. The Plan Administrator shall provide notice
under this paragraph by mailing to the individual's address specified in the
domestic relations order, or in a manner consistent with Department of Labor
regulations. The Plan Administrator may treat as qualified any domestic
relations order entered prior to January 1, 1985, irrespective of whether it
satisfied all the requirements described in Code Section 414(p).
If any portion of the Participant's non-forfeitable Account balance
is payable during the period the Plan Administrator is making its determination
of the qualified status of the domestic relations order, the Trustees shall
segregate the amounts payable in a separate account and to invest the segregated
account solely in fixed income investments. If the Plan Administrator determines
the order is a qualified domestic relations order within eighteen (18) months of
receiving the order, the Trustees shall distribute the segregated account in
accordance with the order. If the Plan Administrator does not make its
determination of the qualified status of the order within eighteen (18) months
after receiving the order, the Trustees shall distribute the segregated account
in the manner the Plan would distribute if the order did not exist and shall
apply the order prospectively if the Plan Administrator later determines the
order is a qualified domestic relations order.
To the extent it is not inconsistent with the provisions of the
qualified domestic relations order, the Trustees may invest any partitioned
amount in a segregated subaccount or separate account and to invest the account
in federally insured, interest-bearing savings account(s) or time deposit(s) (or
a combination of both), or in other fixed income investments. A segregated
subaccount shall remain a part of the Trust, but it alone shall share in any
income it earns, and it alone shall bear any expense or loss it incurs.
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34
The Trustees shall make any payments or distributions required
under this Section 9.3 (b) by separate benefit checks or other separate
distribution to the alternate payee(s).
9.4 Any Participant in the Plan or any Beneficiary may examine copies
of the Plan description, latest annual report, this Plan and Trust or any other
instrument under which the Plan was established or is operated. The Plan
Administrator will maintain such copies on the premises of the Company for
examination during reasonable business hours and will furnish copies at a
reasonable charge upon request of a Participant or Beneficiary.
9.5 The Trustees shall establish a funding policy and method consistent
with the objectives of the Plan and the requirements of Title I of ERISA. The
Trustees shall meet at least annually to review such funding policy and method.
All actions of the Trustees, and the reasons therefor, taken pursuant to this
Section 9.6 shall be recorded in the minutes of the meeting of the Trustees.
9.6 The Trustees, or an Investment Manager appointed by the Trustees,
shall have the sole and complete discretion with respect to the management and
control of the Trust Fund. The Trustees may reserve from investment such amounts
of cash as they, from time to time, deem necessary or advisable in the
administration of the Trust.
9.7 The Trust Fund shall be primarily invested in shares of Company
Securities. Notwithstanding the foregoing, each "qualified Participant" in the
Plan may elect within 90 days after the close of each Plan Year in the qualified
election period to direct the Trustees as to the investment of at least 25
percent of such Participant's Account in the Plan (to the extent such portion
exceeds the amount to which a prior election under this Section applies). In the
case of the election year in which the Participant can make his last election,
the preceding sentence shall be applied by substituting "50 percent" for "25
percent".
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35
The Plan shall be treated as meeting requirements of this Section if
I) the portion of the Participant's Account covered by the
foregoing election is distributed within 90 days after the period during which
the election may be made, or
II) the Plan offers at least 3 investment options (not
inconsistent with regulations prescribed by the Secretary or the Treasury or his
delegate) to each Participant making an election under this Section,
For purposes of this Section, the term "qualified Participant" means
any Participant who has completed at least 10 years of participation under the
Plan and has attained age 55.
For purposes of this Section, the term "qualified election period"
means the six (6) Plan Year period beginning with the later of the first Plan
Year in which the individual first becomes a qualified Participant or the first
Plan Year beginning after December 31, 1986.
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36
ARTICLE TEN
CLAIMS PROCEDURE
10.1 The Trustees shall establish a procedure for the resolution of
disputes and dispositions of claims arising under the Plan. Until modified by
the Trustees, this procedure is as follows:
Any of the Employees, former Employees, or any Beneficiaries
of such Employees or former Employees may, if they so desire, file with the
Trustees a written claim for benefits under the Plan. Within ninety (90) days
after the filing of such a claim, the Trustees shall notify the claimant whether
his claim is upheld or denied. The Trustees may, under special circumstances,
extend the period of time for processing a claim by an additional ninety (90)
days. If such an extension of time is required written notice shall be furnished
to the claimant or his duly authorized representative prior to the termination
of the initial ninety (90) day period. Such notice will indicate the special
circumstance requiring an extension. In the event the claim is denied, the
Trustees shall state in writing:
a) the specific reasons for the denial;
b) specific references to pertinent Plan provisions on
which the denial is based;
c) a description of any additional material or
information necessary for the claimant to perfect the
claim and an explanation of why such material or
information is necessary; and
d) an explanation of the claim review procedure set
forth in this Section 13.01.
Within sixty (60) days after receipt of notice that his claim
has been denied, the claimant or his duly authorized representative may file
with the Trustees a written request for a
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37
review hearing and may, in conjunction therewith, submit written issues and
comments. The Trustees shall then schedule, within sixty (60) days after the
filing of such request, a full and fair hearing of the claim before the
Trustees. The Trustees may, under special circumstances, extend such period of
time by an additional sixty (60) days. Prior to said hearing, the claimant or
his representative shall have a reasonable opportunity to review a copy of the
Plan, the Trust agreement, and other pertinent documents in the possession of
the Trustees. The Trustees shall communicate their decision in writing to the
claimant within thirty (30) days after the hearing. Any claim for benefits and
any request for a review hearing hereunder must be filed on forms to be
furnished by the Trustees upon a Participant's request.
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38
ARTICLE ELEVEN
TRUSTEES POWERS AND DUTIES
11.1 The Trustees accept the Trust created hereunder and agree to
perform the obligations imposed. The Trustees shall provide bond for the
faithful performance of their duties under the Trust to the extent required by
law.
11.2 The Trustees shall have full discretion and authority regarding
the investment of the Trust Fund. The Trustees shall have, but not by way of
limitation, the following powers, rights, and duties: (a) to invest the Trust
Fund primarily in Company Securities ("primarily" meaning the power and
authority to acquire from Company shareholders or the Company or any ERISA
Affiliate at prices not in excess of fair market value not more than one hundred
percent (100%) of the Trust Fund in Company Securities) and to invest the
balance, if any, of the Trust Fund in any common or preferred stocks, bonds,
shares of investment companies, common trust funds, insurance contracts,
mortgages, notes or other property of any kind, real or personal, as a prudent
man would do under like circumstances with due regard for the purposes of the
Plan; (b) to retain in cash so much of the Trust Fund as they may deem advisable
without liability for obtaining the highest rate of interest available; (c) to
manage, sell, exchange, transfer and lease for any term, and otherwise deal with
all Trust property, real or personal, in such manner, for such consideration,
and on such terms and conditions as they shall deem best; (d) to borrow money by
mortgage, pledge or otherwise; (e) to compromise, contest, arbitrate or abandon
claims and demands in their discretion; (f) to have with respect to the Trust
all of the rights of an individual owner, including the power to give proxies,
participate in voting trusts, mergers, consolidations or liquidations and to
exercise or sell stock subscriptions or conversion rights; (g) to hold any
securities or other property in the name of the Trustees or a nominee, or in
another form as they deem best, without disclosing the trust relationship; (h)
to furnish to the Company
XI-1
39
an annual statement of account showing the condition of the Trust Fund and all
investments, receipts, disbursements and other transactions affected by the
Trustees during the Year covered by the statement, and the assets of the Trust
held at the end of the Year, which statement of account shall be conclusive on
all persons unless objected to within ninety (90) days after receipt; and (i) to
borrow money, to assume indebtedness, including installment obligations, extend
mortgages and encumber by mortgage or pledge; provided however, if any loan
transaction is with a Disqualified Person or a Disqualified Person guarantees a
loan to the Plan or Trust, the following terms and conditions shall apply to
such Exempt Loan:
(1) The Trustees shall use the proceeds of the Exempt Loan within
reasonable time after receipt only for any or all of the following purposes: (i)
to acquire Company Securities, (ii) to repay such Exempt Loan, or (iii) to repay
a prior Exempt Loan. Except as may be expressly provided under this Plan no
Company Security acquired with the proceeds of an Exempt Loan may be subject to
a put, call or other option, or buy-sell or similar arrangement while held by
and when distributed from this Plan, whether or not this Plan is then a
leveraged employee stock ownership plan.
(2) The interest rate of the Exempt Loan shall not be more than a
reasonable rate of interest.
(3) Any collateral the Trustees pledge to the creditor shall consist
only of the Company Securities purchased by the borrowed funds and Company
Securities the Trust used as collateral on the prior Exempt Loan repaid with the
proceeds of the current Exempt Loan.
(4) The creditor shall have no recourse against the Trust under the
Exempt Loan except with respect to such collateral given for the Loan,
contributions (other than contributions of Company Securities) that the Company
makes to the Trust to meet its
XI-2
40
obligations under the Loan, and earnings attributable to such collateral and the
investment of such contributions. The payment made with respect to an Exempt
Loan by the Plan during a Plan Year must not exceed an amount equal to the sum
of such contributions and earnings received during or prior to the year less
such payments in prior years. The Trustees and the Trustees must account
separately for such contributions and earnings in the books of account of the
Plan until the Trust repays the Loan.
(5) In the event of default upon the Exempt Loan, the value of Plan
assets transferred in satisfaction of the Loan must not exceed the amount of the
default, and if the lender is a Disqualified person, the Loan must provide for
transfer of Plan assets upon default only upon and to the extent of the failure
of the Plan to meet the payment schedule of the Loan.
(6) The Trustees must add and maintain all assets acquired with the
proceeds of an Exempt Loan in a Suspense Account. In withdrawing assets from the
Suspense Account, the Trustees shall apply the provisions of Treasury Regulation
54.4975-7(b)(8) as if all securities in the Suspense Account were encumbered.
Upon the payment of any portion of the Loan, the Trustees shall effect the
release of assets in the Suspense Account from encumbrances, and the pledge
agreement must so provide. For each Plan Year during the duration of the loan,
the number of Company Securities released must equal the number of encumbered
Company Securities held immediately before release for the current Plan Year
multiplied by a fraction. The numerator of the fraction is the amount of
principal paid for the Plan Year. The denominator of the fraction is the sum of
the numerator plus the principal to be paid for all future Plan Years. The
number of future Plan Years under the loan must be definitely ascertainable and
must be determined without taking into account any possible extension or renewal
periods, and may not exceed 10 years. Further, any such loan must provide for
annual payments of principal and
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41
interest at a cumulative rate that not be less rapid at any time than level
annual payments of such amounts for 10 years. In determining principal, interest
shall be disregarded only to the extent that it would be determined to the
interest under standard amortization tables. If the collateral includes more
than one (1) class of Company Securities, the number of Company Securities of
each class to be released from a Suspense Account for a Plan Year must be
determined by applying the same fraction to each such class. The Trustees shall
allocate shares of Company Securities released from the Suspense Account to the
Accounts of Participants in accordance with Section 6.2 for the Plan Year with
respect to which the Trustees have paid the corresponding portion of the Exempt
Loan.
(7) The Exempt Loan must be for a specific term and may not be
payable at the demand of any person except in the case of default.
(8) Notwithstanding the fact this Plan ceases to be an
employee stock ownership plan, Company Securities acquired with the proceeds of
an Exempt Loan shall continue after the Trustees repay the Loan to be subject to
the provisions of Treasury Regulation 54.4975-7(b)(4), (10), (11) and (12) as
provided under Article Fifteen.
11.3 The Trustees (except full-time employees of an Employer or ERISA
Affiliate) shall receive such reasonable annual compensation as may be agreed to
from time to time between the Company and the Trustees, and shall pay all
expenses reasonably incurred from the Trust Fund unless the Company pays such
expenses.
11.4 The Trustees may employ agents, attorneys, accountants and other
persons and pay their reasonable compensation from the Trust Fund. No person
dealing with the Trustees shall be obligated to see to the proper application of
any money paid or property delivered to
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them. The certificate of the Trustees that they are acting in accordance with
the Plan shall be conclusive in favor of any person relying thereon.
11.5 Any Trustee may resign at any time by giving thirty (30) days
advance written notice to the Company and the Trustees. The Company, by giving
thirty (30) days advance written notice to the Trustees, may remove any Trustee.
In the event of resignation or removal of a Trustee, the Company may appoint a
successor Trustee who shall succeed to the title of Trustee by accepting his
appointment in writing and shall have and enjoy all of the powers conferred
under this Agreement upon his predecessor. No successor Trustee shall be
personally liable for any act or failure to act of any predecessor Trustee.
11.6 The Trustees shall value the Trust Fund as of each Accounting Date
to determine the Fair Market Value of each Participant's Account, and shall
credit (or debit) each Account with its proportionate share of gains, earnings,
income, losses or expenses of the Trust Fund.
11.7 If there shall be more than one Trustee, they shall act by a
majority of their number at a meeting, but may authorize one or more of them to
sign papers on their behalf. The Trustees may also act by unanimous written
consent in lieu of a meeting.
11.8 Except as otherwise provided by ERISA, only the Company, the Plan
Administrator, and the Trustees shall be necessary parties to any court
proceeding involving the Trustees or the Trust Fund. No Participant or
Beneficiary shall be entitled to any notice of process unless required by the
Act. Any final judgment entered in any proceeding shall be conclusive upon the
Company, the Plan Administrator, the Trustees, Participants, and Beneficiaries.
11.9 Every Participant shall have the right to direct the Trustees as
to the exercise of any voting rights for the shares of Company Securities then
allocated to his Account with respect
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to any matter which involves the voting of such shares with respect to the
approval or disapproval of any corporate merger or consolidation,
recapitalization, re-classification, liquidation, dissolution, sale of
substantially all assets of a trade of business, or such similar transaction as
the Secretary of the Treasury may prescribe by regulation. On other matters the
Trustees shall solicit and follow voting instructions from a Participant with
respect to shares of Company Securities entitled to vote that are then allocated
to his Account if the Company has a registration type class of Securities (as
defined in Section 409(e)(4) of the Code).
11.10 On a matter involving the voting of shares of Company Securities,
the Trustees shall vote the shares of Company Securities then held in the Trust
Fund (A) but not released from a Suspense Account or (B) otherwise not yet
allocated to the Account of any Participant or (C) allocated to the Account of a
Participant who has not provided the Trustees with the relevant voting
instructions as described in Section 11.9, in proportion to the voting
instructions of Participants as received by the Trustees with respect to such
matter as described in Section 11.9, to the extent that such voting procedure
does not violate the Trustees' duties under ERISA or other relevant law. If no
voting instructions are received or are required from Participants with respect
to a voting matter, the Trustees shall vote the shares of Company Securities
held in the Trust Fund (including shares of Company Securities held in a
Suspense Account and shares that have been allocated to the Accounts of
Participants) in a manner that they choose.
11.11 The Trustees and their assistants and representatives shall
distribute benefits under the Plan in whole shares of Company Securities valued
at fair market value at the time of distribution, cash, or a combination of
both, as they were determined, provided, however, a Participant shall have the
right to demand distribution entirely in whole shares of Company Securities
(with the value of any fractional share paid in cash or with the balance in the
Account
XI-6
44
applied to provide whole shares of Company Securities for distribution at the
then fair market value). If the Company's charter or by-laws restrict ownership
of substantially all shares of Company Securities to employees and the Trust,
the distribution may be made entirely in cash without granting the Participant
the right to demand distribution in shares of Company Securities.
11.12 All or any portion of any cash dividends declared by the Company
with respect to shares of Company Securities held by the Trust as of the
ex-dividend date with respect to such dividends (including shares held in a
Suspense Account and shares that have been allocated to the Accounts of
Participants) may, at the discretion of the Company, be distributed to those
individuals who are Participants (or to the Beneficiaries of such Participants)
in the Plan as of such ex-dividend date (A) directly to such Participants (or
their Beneficiaries), or (B) through the Trust provided that the Trust in such
case distributes such dividends to such Participants (or Beneficiaries) within
90 days after the close of the Plan Year in which such dividends are paid. Those
Participants (or Beneficiaries) entitled to a share in a distribution of cash
dividends pursuant to this Section 11.12 shall receive such a distribution of
dividends in proportion to the number of shares of Company Securities allocated
to their Accounts as of the relevant ex-dividend date.
If the Company chooses not to distribute to Participants a
portion of any cash dividends declared with respect to shares of Company
Securities held by the Trust, then all, or any part, as the Company decides, of
the portion of such dividends that are not to be distributed may be used to
repay all or a part of the interest and/or principal on an Exempt Loan then
outstanding; provided, however, that dividends on shares of Company Securities
that have been allocated to the Account of a Participant may not be used to pay
interest or principal on an
XI-7
45
Exempt Loan unless shares of Company Securities having a Fair Market Value not
less than the amount of such dividends so used are allocated to such Account for
the Plan Year in which such dividends are so used. To the extent that dividends
are not distributed to Participants or used to repay interest or principal on an
Exempt Loan, such dividends, to the extent paid with respect to shares of
Company Securities held in a Suspense Account shall be treated as an investment
gain of the Trust, and to the extent paid with respect to shares of Company
Securities allocated to the Accounts of Participants shall themselves be
allocated to such Accounts as income.
11.13 The Trustees and their assistants and representatives and the
Trustees and its members, assistants and representatives shall be free from all
liability for their acts and conduct in the administration of the Plan and Trust
except for acts of willful misconduct; provided, however, that the foregoing
shall not relieve any party from any liability for any responsibility,
obligation or duty they may arise pursuant to ERISA or the Code.
11.14 In the event of and to the extent not insured against by any
insurance company pursuant to provisions of any applicable insurance policy, the
Company shall indemnify and hold harmless, to the extent permitted by law, any
individual, but not corporate, Trustees and their assistants and representatives
and the Trustees and their assistants and representatives from any and all
claims, demands, suits or proceedings which may in connection with the Plan or
Trust be brought by the Company's Employees, Participants or their Beneficiaries
or legal representatives, or by any other person, corporation, entity,
government or agency thereof; provided, however, that such indemnification shall
not apply to any such person for such person's acts of willful misconduct in
connection with the Plan or Trust.
11.15 If a tender offer is made for all or a portion of the outstanding
shares of Company Securities, the Trustees shall poll the Participants with
regard to such tender offer on the basis of
XI-8
46
the number of shares of Company Securities then allocated to their Accounts and
shall, to the extent consistent with their duties under ERISA or other relevant
law, tender the shares of Company Securities held in the Trust Fund (including
shares held in a Suspense Account or shares allocated to the Accounts of
Participants) if, and only if, the number of votes of Participants in favor of a
tender is greater than the number of votes of Participants opposed to tender.
XI-9
47
ARTICLE TWELVE
TOP HEAVY RULES
12.1 Special Definitions. For the purposes of this Article Twelve, the
following words and phrases shall have the meanings set forth below:
a) "Aggregate Account" means, as of the Determination
Date, the sum of:
i) a Participant's account balance as of the most
recent valuation occurring within a twelve (12) consecutive
month period ending on the Determination Date, including, in
the case of a plan subject to the minimum funding standards of
Section 412 of the Code, amounts that would be allocated to
such account as of a date not later than the Determination
Date even though such amounts are not yet required to be
contributed to the plan by such Determination Date;
ii) an adjustment for any contribution due as of the
Determination Date. In the case of a plan not subject to the
minimum funding standards of Section 412 of the Code, such
adjustment shall be the amount of any contributions actually
made after the valuation date but on or before the
Determination Date. In the case of a plan that is subject to
the minimum funding standards of Section 412 of the Code, such
adjustment shall include any contribution made, or due to be
made, after the valuation date but before the expiration of
the extended payment period described in Section 412(c)(10) of
the Code. In the first plan year, such adjustment shall also
reflect the amount of any contributions made after the
Determination Date that are allocated as of a date in the
first plan year;
iii) any plan distributions made within the plan year
that includes the Determination Date or within the four (4)
preceding plan years. However, in the
XII-1
48
case of distributions made after the valuation date and prior
to the Determination Date, such distributions are not included
as distributions for the purposes of this Article Twelve to
the extent that such distributions are already included in the
Participant's Aggregate Account balance as of the valuation
date. Notwithstanding anything herein to the contrary, all
distributions, including distributions made prior to the first
Plan Year beginning after December 31, 1983 will be counted.
iv) any employee contributions, whether voluntary or
mandatory provided, however, that amounts attributable to
"deductible employee contributions", as defined in Section
72(o)(5)(A) of the Code, if any, shall not be considered to be
a part of the Participant's Aggregate Account balance.
v) with respect to unrelated rollovers and
plan-to-plan transfers (ones which are both initiated by the
employee and made from a plan maintained by one employer to a
plan maintained by another employer that is not an ERISA
Affiliate), if the Plan provides for rollovers or plan-to-plan
transfers, it shall always consider such rollovers or
plan-to-plan transfers as a distribution for the purposes of
this Article Twelve.
vi) If the plan is the plan accepting such rollovers
or plan-to-plan transfers, it shall not consider any such
rollovers or plan-to-plan transfers accepted after December
31, 1983 as part of the Participant's Aggregate Account
balance. However, rollovers or plan-to-plan transfers accepted
prior to January 1, 1984 shall be considered as part of the
Participant's Aggregate Account balance.
XII-2
49
vi) with respect to related rollovers and
plan-to-plan transfers (ones either not initiated by the
employee or made to a plan maintained by an ERISA affiliate),
if the plan provides for rollovers or plan-to-plan transfers,
they shall not be counted as a distribution for purposes of
this Article Twelve. If the plan is the plan accepting such
rollover or plan-to-plan transfer, it shall consider such
rollover or plan-to-plan transfer as part of the Participant's
Aggregate Account balance, irrespective of the date on which
such rollover or plan-to-plan transfer is accepted.
vii) If any individual is a non-key Employee with
respect to any Plan for any Plan Year, but such individual was
a Key Employee with respect to such Plan for any prior Plan
Year, any accrued benefit for such Employee (and the account
of such Employee) shall not be taken into account.
viii) If any individual has not performed services
for the Employer maintaining the Plan at any time during the
5-year period ending on the determination date, any accrued
benefit for such individual (and the account of such
individual) shall not be taken into account.
b) "Aggregation Group" means either a Required Aggregation
Group or a Permissive Aggregation Group, as hereinafter determined.
i) Required Aggregation Group: In determining a
Required Aggregation Group hereunder, each plan of the
Employer in which a Key Employee is a Participant, or has been
a Participant (regardless of whether the Plan has terminated)
during the plan year containing the Determination Date, or in
any of the four (4) preceding plan years, and each other plan
of the employer
XII-3
50
which enables any plan in which a Key Employee participates to
meet the requirements of Sections 401(a)(4) or 410 of the Code
during such period, will be required to be aggregated. Such
group shall be known as a Required Aggregation Group. In the
case of a Required Aggregation Group, each plan in the group
will be considered a "Top Heavy Plan" if the Required
Aggregation Group is a Top Heavy Group. No plan in the
Required Aggregation Group will be considered a Top Heavy Plan
if the Aggregation Group is not a Top Heavy Group.
ii) Permissive Aggregation Group: the employer may
also include any other plan which provides comparable benefits
but is not required to be included in the Required Aggregation
Group, provided the resulting group, taken as a whole, would
satisfy the provisions of Sections 401(a)(4) and 410 of the
Code. Such group shall be known as a Permissive Aggregation
Group. In the case of a Permissive Aggregation Group, only a
plan that is part of the Required Aggregation Group will be
considered a Top Heavy Plan if the Permissive Aggregation
Group is a Top Heavy Group. No plan in the Permissive
Aggregation Group will be considered a Top Heavy Plan if the
Permissive Aggregation Group is not a Top Heavy Group.
iii) Only those plans of the employer, in which the
Determination Dates fall within the same calendar year, shall
be aggregated in order to determine whether such plans are Top
Heavy Plans.
c) "Determination Date" means (1) the last day of the
preceding plan year, or (2) in the case of the first plan year, the
last day of such plan year.
XII-4
51
d) "Key Employee" means any employee (former employee, or the
beneficiary of such employee) who, at any time during the plan year
containing the Determination Date or any of the preceding four (4) plan
years, is or was:
i) an "officer of the employer" (as defined within
the meaning of the regulations issued under Section 416 of the
Code) having annual compensation that, for a plan year,
exceeds l50% of the amount referred to in Section 415(c)(l)(A)
of the Code as in effect for the calendar year in which the
plan year ends.
ii) one of the ten (10) Employees owning (or
considered as owning within the meaning of Section 318 of the
Code) the largest percentage ownership interest in value in
the employer or in any of the employers required to be
aggregated under Sections 414(b), (c) or (m) of the Code, if:
(A) such ownership interest exceeds one-half percent (1/2%)
and, (B) if such Employee's annual compensation during the
Plan Year of such ownership exceeds the amount referred to in
Section 415(c)(l)(A) of the Code as in effect for the calendar
year in which such plan year ends. For purposes of determining
ownership in an entity other than a corporation, the rules of
Section 318 of the Code shall apply in a manner similar to the
way in which they apply for purposes of determining ownership
in a corporation. For non-corporate interests, capital or
profits interest must be substituted for stock.
iii) a "5-percent owner" of the employer. "5-percent
owner" means any employee who owns (or is considered as owning
within the meaning of Section 318 of the Code) more than five
percent (5%) of the value of the
XII-5
52
outstanding stock of the employer or stock possessing more
than five percent (5%) of the total combined voting power of
all stock of the employer. If the Employer is not a
corporation, a 5 percent (5%) owner is any Employee who owns
more than 5 percent (5%) of the capital or profit interest in
the Employer.
iv) a "1-percent owner" of the employer having an
annual compensation from the employer of more than $150,000.
"1-percent owner" means any employee who owns (or is
considered as owning within the meaning of Section 318 of the
Code) more than one percent (1%) of the value of the
outstanding stock of the employer or stock possessing more
than one percent (1%) of the total combined voting power of
all stock of the employer. If the Employer is not a
corporation, a 1-percent owner is any Employee who owns more
than 1 percent of the capital or profit interest in the
Employer.
v) For the purposes of determining percentage
ownership in accordance with the provisions of this Article
Twelve, employers that would otherwise be aggregated under
Sections 414(b), (c) or (m) of the Code shall be treated as
separate employers. However, in determining whether an
employee has compensation of more than $150,000, compensation
from all employers required to be aggregated under Sections
414(b), (c) or (m) the Code shall be taken into account.
e) "Non-key Employee" means any Employee who is not a Key
Employee.
f) "Top Heavy Plan Year" means that, for a particular plan
year commencing after December 31, 1983, the Plan is a Top Heavy Plan.
XII-6
53
12.2 Determination of Top Heavy Status.
a) An Aggregation Group shall be a "Top Heavy Group" for any
plan year commencing after December 31, 1983 in which, as of the
Determination Date, the sum of the Present Value of Accrued Benefits of
Key Employees and the Aggregate Account balances of Key Employees under
the plan and all plans of an Aggregation Group exceeds sixty percent
(60%) of the sum of the Present Value of Accrued Benefits and the
Aggregate Account balances of all employees under the plan and all
plans of the Aggregation Group.
b) The plan shall be a "Super Top Heavy Plan" for any plan
year commencing after December 31, 1983 in which, at the Determination
Date, the sum of the Present Value of Accrued Benefits of Key Employees
and the Aggregate Account balances of Key Employees under the Plan and
all plans of an Aggregation Group exceeds ninety percent (90%) of the
sum of the Present Value of Accrued Benefits and the Aggregate Account
balances of all employees under the plan and all plans of the
Aggregation Group.
c) "Present Value of Accrued Benefit" means, in the case of a
defined benefit plan, the present value of an Accrued Benefit, as
determined under the provisions of the applicable defined benefit plan
and in compliance with Reg. Section 1.416-1 (T-25 and T-26).
d) In determining Top Heavy Status, the accrued benefit of (I)
an individual who is not a Key Employee with respect to any Plan in an
Aggregation Group for a Plan Year, but who was a Key Employee with
respect to a Plan in an Aggregation Group for a prior Plan Year, and
(II) an individual who performed no services for the Company of an
ERISA Affiliate during the 5 year period ending on the Determination
Date, shall be disregarded.
12.3 Top Heavy Plan Requirements. For any Top Heavy Plan Year, the Plan
shall provide the following:
XII-7
54
a) Special minimum benefit and contribution requirements of
Section 416(c) of the Code, pursuant to Section 12.4 of the plan.
b) Special vesting requirements of Section 416(b) of the Code,
pursuant to Section 12.7 of the plan.
c) Special compensation requirements of Section 416(d) of the
Code, pursuant to Section 12.6 of the plan.
d) Special benefit limitations of Section 416(h) of the Code,
pursuant to Section 12.5 of the plan.
12.4 Minimum Allocations and Benefits.
a) In the case of a defined contribution plan, for any Top
Heavy Plan Year, the sum of employer contributions and forfeitures
allocated to the account of each Non-key Employee who is a Participant
and who has not terminated employment by the end of such Plan Year
(including (A) Participants who fail to complete at least 1,000 Hours
of Service during the Plan Year, (B) employees who are excluded from
the plan or accrue no benefit because their compensation is less than a
stated amount, and (C) employees who are excluded from the Plan or
accrue no benefit because they fail to make mandatory contributions,
or, in the case of a plan intended to qualify under Section 401(k) of
the Code, elective contributions shall be equal to at least three
percent (3%) of such Non-Key Employee's compensation. However, should
the sum of the Employer's contributions and forfeitures allocated to
the account of each Key Employee for such Top Heavy Plan Year be less
than three percent (3%) of each such Key Employee's compensation, the
sum of the Employer's contributions and forfeitures allocated to the
account of each Non-key Employee who is a Participant (including the
employees referred to in the preceding sentence) shall be equal to the
highest percentage allocated to the account of a Key
XII-8
55
Employee. The preceding sentence shall not apply to any plan required
to be included in an aggregation group if such plan enables a defined
benefit plan required to be included in such group to meet the
requirements of Section 401(a)(4) or Section 410 of the Code. For plan
years beginning after December 31, 1984, amounts that an employee
elects to defer pursuant to a plan intended to qualify under Section
401(k) of the Code shall be treated as employer contributions for
purposes of this paragraph.
b) In the case of a defined benefit plan, for any Top Heavy
Plan Year, the Accrued Benefit, when expressed as an Annual Retirement
Benefit (as defined below), of a Participant who is a Non-key Employee
and who has completed at least one thousand (1,000) Hours of Service
during the plan year (including employees who are excluded from the
Plan or accrue no benefit because their compensation is less than a
stated amount and employees who are excluded from the plan or accrue no
benefit because they fail to make mandatory contributions) will be at
least equal to the lesser of (I) the product of (A) an Employee's
average annual compensation for the period of consecutive years (not
exceeding five) when the Employee had the highest aggregate
compensation from the Employer and (B) 2% per year of service with the
Employer, or (II) 20%.
i) The foregoing defined benefit minimum is
determined without regard to any Social Security contribution
or benefit.
ii) "Annual Retirement Benefit" means a benefit which
commences at age 65 and is payable annually in the form of a
single life annuity.
iii) "A year of Top Heavy Service" shall be a Year of
Service as determined under the rules of Section 411(a)(4)(5)
and (6) of the Code, provided, however, that a Plan may
disregard any year of service if the Plan was not top
XII-9
56
heavy for any Plan Year ending during such year of service, or
if the year of service was completed in a Plan Year beginning
before January 1, 1984.
c) Notwithstanding anything herein to the contrary, in any
plan year in which both a defined benefit plan and a defined
contribution plan are part of a Top Heavy group the following rules
shall apply: For each Non-key Employee who is participating in the Top
Heavy defined contribution plan maintained by the employer, the defined
contribution minimum, as provided under Section 12.4(b) above, shall
accrue, and the defined benefit minimum shall not be applicable. For
each other Non-key Employee who is a participant in the Top Heavy
defined benefit plan maintained by the Employer, the employer shall
satisfy the minimum contribution requirement of Section 12.4(b).
12.5 Multiple Plan Reduction for Top Heavy Plan Years.
a) For any Top Heavy Plan Year, 1.0 shall be substituted for
1.25 in the multiple plan reduction provisions of the plan, unless (1)
the defined contribution minimum is made pursuant to Section 12.4(a)
with "four percent (4%)" substituted for "three percent (3%)", or (2)
the defined benefit minimum accrues pursuant to Section 12.4(b) with
"three percent (3%)" substituted for "two percent (2%)", and "thirty
percent (30%)" substituted for "twenty percent (20%)". However, for any
plan year in which the plan is a Super Top Heavy Plan, 1.0 shall be
substituted for 1.25 without exception.
b) For any Top Heavy Plan Year, $41,500 shall be substituted
for $51,875 in determining the "transition fraction" defined in Code
Section 415(e)(6)(b)(i) as it applies to this Plan, unless the extra
minimum benefit accrual is made pursuant to Section 12.5(a). However,
for any limitation year in which the Plan is a Super Top Heavy Plan,
$41,500 shall be substituted for $51,875 without exception.
XII-10
57
12.6 Includible Compensation.
Compensation in excess of $200,000 (or such other amount as
the Secretary of the Treasury may prescribe by the regulations issued under
Section 416 of the Code) shall be disregarded in determining a Participant's
benefit with respect to Top Heavy Plan Years, and, in the case of a defined
benefit plan, with respect to years prior to and including such Top Heavy Plan
Years; provided, however, that this paragraph shall not reduce the accrued
annual benefit of any Participant determined as of the end of the last year
before the plan became a Top Heavy Plan (but ignoring any plan amendments
subsequent to the date).
12.7 Minimum Vesting.
For any Top Heavy Plan Year, the vested interest in his
Accrued Benefit of each Participant who has been credited with at least one (1)
Hour of Service during such Top Heavy Plan Year (including benefits accrued
before the effective date of Section 416 of the Code and before the plan became
a Top Heavy Plan, but not including benefits that were forfeited before the plan
became a Top Heavy Plan) shall not be less than the applicable percentage of
Section 7.7(b) of the Plan, nor less than the applicable percentage indicated by
the following schedule:
Years of Vesting Service Minimum Vesting Percentage
------------------------ --------------------------
Less than 2 0
2 20
3 40
4 60
5 80
6 or more 100
For purposes of this Section 12.7, Years of Vesting Service which may be
disregarded under Section 411(a)(4) of the Code shall not be taken into account.
Should the plan cease to be a Top Heavy Plan, this minimum
vesting schedule shall no longer apply provided, however, that: (a) a
Participant's vested percentage shall not be
XII-11
58
less than his vested percentage determined pursuant to the above minimum vesting
schedule as of the end of the last Top Heavy Plan Year, and (b) such reversion
to the original vesting schedule of the plan shall be treated as change in the
plan's vesting schedule so that for each Participant with three (3) or more
years of service the provisions of Section 14.6 of the Plan shall apply.
XII-12
59
ARTICLE THIRTEEN
MISCELLANEOUS
13.1 The Trustees and the Company in no way guarantee the Trust Fund
from loss or depreciation, and the Company does not guarantee the payment of any
money which may be or becomes due to any person from the Trust Fund. The
liability of the Trustees to make any payment from the Trust Fund at any time
and all times is limited to the then available assets of the Trust Fund.
13.2 Words used in the masculine hereunder shall apply to the feminine
where applicable and the plural shall be read as the singular, and the singular
as the plural, wherever the context dictates.
13.3 All questions with respect to the interpretation of this Agreement
shall be determined by the laws of the State of New York, except to the extent
Federal law controls.
13.4 Conditional upon prior approval by the Company, any ERISA
Affiliate may participate in this Plan as a participating company, provided it
shall make, execute and deliver such instruments as the Company and the Trustees
shall require. Such an ERISA Affiliate shall accept the Company as its agent to
act for it in all transactions in which the Company believes such agency will
facilitate the administration of the Plan. Any such ERISA Affiliate may withdraw
from participation in this Plan upon written notice to the Company and the
Trustees, and upon such withdrawal this Plan shall automatically terminate
insofar as it relates to such withdrawing participating organization and its
employees.
13.5 Nothing contained in this Plan, or with respect to the
establishment of the Trust, or any modification or amendment to the Plan or
Trust, or in the creation of any Account, or the payment of any benefit, shall
give any Employee, Employee-Participant or any Beneficiary any right to continue
employment, any legal or equitable right against the Company, or Employee of
XIII-1
60
the Company, or against the Trustees, or their agents or employees, or against
the Plan Administrator, except as expressly provided by the Plan, the Trust, the
Act or by a separate agreement.
XIII-2
61
ARTICLE FOURTEEN
AMENDMENT AND TERMINATION
14.1 The Company has the right to amend this Agreement at any time it
deems necessary or advisable in order to maintain qualification of this Plan and
Trust under the Code. It may further amend this Agreement for any other purpose
provided no such amendment shall permit the Trust Fund to be used for or
diverted to purposes other than for the exclusive benefit of the Participants or
their beneficiaries or estates, or cause or permit any portion of the trust Fund
to revert to or become the property of the Company.
14.2 The Company shall make all amendments in writing which shall state
the date on which they are retroactively or prospectively effective.
14.3 The Company or any Employer has the right to suspend or
discontinue its contributions under the Plan at any time. The Company may at any
time terminate this Plan. The Plan shall terminate upon the first to occur of
the following: (a) the date terminated by action of the Company; (b) the date
the Company is judicially declared bankrupt or insolvent; (c) the dissolution,
merger, consolidation or reorganization of the Company or the sale by the
Company of all or substantially all of its assets, unless the successor or
purchaser makes provisions to continue the Plan, in which event the successor or
purchaser shall substitute itself as the Company under the Plan.
14.4 Notwithstanding any other provision of this Plan to the contrary,
upon the date of either partial or full termination of the Plan, or of complete
discontinuance of contributions to the Plan, an affected Participant's right to
his Account shall be one hundred (100) percent non-forfeitable.
14.5 The Trustees shall not consent to, or be a party to, any merger or
consolidation with another Plan, or to a transfer of assets or liabilities to
another Plan unless immediately after
XIV-1
62
the merger, consolidation or transfer, the surviving Plan provides each
Participant a benefit equal to or greater than the benefit each Participant
would have received had the Plan terminated immediately before the merger,
consolidation or transfer. Upon termination of the Plan, the Trust shall
continue until the Trustees have distributed all of its benefits under the Plan.
14.6 The Company shall not amend the vesting schedule (and no amendment
shall be effective) if the amendment reduces the non-forfeitable percentage of
any Participant's Account balance derived from Employer contributions
(determined as of the later of the date the Company adopts the amendment or the
date the amendment becomes effective) to a percentage less than the
non-forfeitable percentage computed under the Plan without regard to the
amendment. If the Company amends the vesting schedule, each Participant having
completed at least three (3) Years of Service with the Company before this
expiration of the election period may irrevocably elect during the election
period to have the non-forfeitable percentage of his Account balance computed
under the Plan without regard to the amendment. For purposes of the preceding
sentence the election period shall begin no later than the date the Plan
amendment is adopted and end no earlier than the latest of (i) the date which is
sixty (60) days after the day the Plan amendment is adopted; (ii) the date which
is sixty (60) days after the day the Plan amendment becomes effective, or (iii)
the date which is sixty (60) days after the day the participant is given written
notice of the Plan amendment by the Company or the Trustees. The Plan
Administrator, as soon as practicable, shall forward a true copy of any
amendment to the vesting schedule to each affected Participant, together with an
explanation of the effect of the amendment, the appropriate form upon which the
Participant may make an election to remain under the vesting schedule provided
under the Plan prior to the amendment and notice of the
XIV-2
63
time within which the Participant must make an election to remain under the
prior vesting schedule.
XIV-3
64
ARTICLE FIFTEEN
REPURCHASE OF COMPANY SECURITIES
15.1 Shares of Company Securities distributed by the Trustees shall be
subject to a "right of first refusal" which shall provide that, prior to any
subsequent transfer, such shares must first be offered in writing to the Company
and then if refused by the Company, to the Trust at the then Fair Market Value,
or, if greater, at the purchase price offered by the first buyer making a good
faith offer to purchase. A bona fide written offer from an independent
prospective buyer shall be deemed to be the fair market value of such shares for
this purpose. The Company and the Trustees (on behalf of the Trust) shall have
fourteen (14) days from the date the Company receives notice of the offer to
exercise the right of first refusal on the same terms offered by the prospective
buyer. A Participant (or Beneficiary) entitled to a distribution of Company
Securities shall be required to execute an appropriate stock transfer agreement
evidencing the right of first refusal prior to receiving a certificate for
Company Securities. The right of first refusal shall only apply if the Company
Securities otherwise subject thereto are not publicly traded at the time the
right is to be exercised. The right of first refusal shall be administered in
accordance with Treasury Regulation Section 54.4975-7(b)(9).
15.2 The Company shall issue a "put option" to each Participant
receiving a distribution of Company Securities from the Trust if such Company
Securities are not readily tradeable on an established market when distributed,
or are subject to a trading limitation. The put option shall permit the
Participant (or his Beneficiary) to sell such Company Securities to the Company
at any time during two option periods at their then Fair Market Value.
The first put option period shall be a period of at least
sixty (60) days beginning on the date of distribution of Company Securities to
the Participant. The second put option period shall be a period of at least
sixty (60) days beginning after the new determination of the
XV-1
65
fair market value of Company Securities by the Trustees (and notice to the
Participant) in the next following Plan Year. The Company may permit the
Trustees to direct the Trustee to purchase Company Securities tendered to the
Company under a put option. Payment for such securities shall be made in a lump
sum, over a period beginning not later than 30 days after the exercise of the
put option. The put option shall be administered in accordance with Treasury
Regulation Section 54.4975-7(b)(l0,)(11) and (12).
15.3 Shares of Company Securities held or distributed by the Trustees
may include such legend restrictions on transferability as the Company may
reasonably require to assure compliance with applicable Federal and state
securities laws. Except as otherwise provided herein, no shares of Company
Securities held or distributed by the Trustees may be subject to a put, call or
other option or buy--sell or other similar arrangement.
15.4 If shares of Company Securities are not readily tradeable on an
established securities market, all valuations of such shares with respect to an
activity carried on by the Plan shall be made by an independent appraiser
meeting requirements similar to the requirements for an appraiser under
regulations promulgated by the Secretary of the Treasury or his delegates
pursuant to Section 170(a)(l) of the Code.
15.5 The provisions of this Article Fifteen shall continue to apply to
shares of Company Securities even if this Plan ceases to be an Employee Stock
Ownership Plan under section 4975 (e)(7) of the Code.
XV-2
66
IN WITNESS WHEREOF, this Plan has been executed this 5th day of
January, 1989.
STANDARD MOTOR PRODUCTS, INC.
By: /s/
-------------------------------
/s/
-------------------------------
(Trustee)
/s/
-------------------------------
(Trustee)
/s/
-------------------------------
(Trustee)
ATTEST:
/s/
-------------------------------
XV-3
67
APPENDIX I
LIST OF ADOPTING EMPLOYERS
Name Effective Date of Adoption
---- --------------------------
Stanric, Inc. January 1, 1989
68
TABLE OF CONTENTS
PAGE
ARTICLE ONE DEFINITIONS........................................... I-1
ARTICLE TWO PURPOSE............................................... II-1
ARTICLE THREE PARTICIPANTS.......................................... III-1
ARTICLE FOUR COMPANY CONTRIBUTIONS................................. IV-1
ARTICLE FIVE EMPLOYEE CONTRIBUTIONS................................ v-1
ARTICLE SIX ALLOCATIONS OF CONTRIBUTIONS AND FORFEITURES.......... VI-1
ARTICLE SEVEN TERMINATION OF EMPLOYMENT............................. VII-1
ARTICLE EIGHT MANNER OF PAYMENT..................................... VIII-1
ARTICLE NINE ADMINISTRATION........................................ IX-1
ARTICLE TEN CLAIMS PROCEDURE...................................... X-1
ARTICLE ELEVEN TRUSTEES POWERS AND DUTIES............................ XI-1
ARTICLE TWELVE TOP HEAVY RULES....................................... XII-1
ARTICLE THIRTEEN MISCELLANEOUS......................................... XIII-1
ARTICLE FOURTEEN AMENDMENT AND TERMINATION............................. XIV-1
ARTICLE FIFTEEN REPURCHASE OF COMPANY SECURITIES...................... XV-1
-i-
69
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delete this section break if you plan to add text after the Table of
Contents/Authorities. Deleting this break will cause Table of
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Table of Contents/Authorities.
I-1