EXHIBIT 10.3
SANDERSON FARMS, INC. AND AFFILIATES
EMPLOYEE STOCK OWNERSHIP PLAN
(As Amended and Restated Effective August 1, 2006)

 

--------------------------------------------------------------------------------

 

TABLE OF CONTENTS

         
ARTICLE 1 NAME AND EFFECTIVE DATE
    7  
 
       
Section 1.1 Name
    7  
 
       
Section 1.2 Effective Date
    7  
 
       
ARTICLE 2 DEFINITIONS
    7  
 
       
Section 2.1 “Account”
    8  
 
       
Section 2.2 “Administrative Committee”
    8  
 
       
Section 2.3 “Affiliate”
    8  
 
       
Section 2.4 “Annual Additions”
    8  
 
       
Section 2.5 “Beneficiary”
    8  
 
       
Section 2.6 “Board”
    8  
 
       
Section 2.7 “Break in Service”
    8  
 
       
Section 2.8 “Cash Account”
    8  
 
       
Section 2.9 “Company”
    8  
 
       
Section 2.10 “Compensation”
    8  
 
       
Section 2.11 “Contribution”
    9  
 
       
Section 2.12 “Disqualifying Break in Service”
    9  
 
       
Section 2.13 “Distribution Date”
    9  
 
       
Section 2.14 “Eligible Participant”
    9  
 
       
Section 2.15 “Employee”
    9  
 
       
Section 2.16 “Employer”
    9  
 
       
Section 2.17 “Forfeiture”
    9  
 
       
Section 2.18 “Excess Amount”
    9  
 
       
Section 2.19 “Hour of Service”
    9  
 
       
Section 2.20 “Leased Employee”
    10  
 
       
Section 2.21 “Limitation Year”
    10  

i

--------------------------------------------------------------------------------

 

         
Section 2.22 “Maximum Permissible Amount”
    11  
 
       
Section 2.23 “Named Fiduciary”
    11  
 
       
Section 2.24 “Normal Retirement Age”
    11  
 
       
Section 2.25 “Participant”
    11  
 
       
Section 2.26 “Plan”
    11  
 
       
Section 2.27 “Plan Year”
    11  
 
       
Section 2.28 “Qualifying Employer Security or Securities”
    11  
 
       
Section 2.29 “Related Plan”
    11  
 
       
Section 2.30 “Section 415 Compensation”
    11  
 
       
Section 2.31 “Share” means a share of a Qualifying Employer Security
    12  
 
       
Section 2.32 “Stock Account”
    12  
 
       
Section 2.33 “Suspense Account”
    12  
 
       
Section 2.34 “Termination of Employment” or “Terminates Employment”
    12  
 
       
Section 2.35 “Total and Permanent Disability”
    12  
 
       
Section 2.36 “Trust Agreement”
    12  
 
       
Section 2.37 “Trustee”
    12  
 
       
Section 2.38 “Trust Fund”
    12  
 
       
Section 2.39 “Year of Service”
    12  
 
       
Section 2.40 “Valuation Date”
    13  
 
       
ARTICLE 3 ELIGIBILITY AND PARTICIPATION
    13  
 
       
Section 3.1 Participation
    13  
 
       
Section 3.2 Termination of Participation
    13  
 
       
Section 3.3 Notification of Participation
    14  
 
       
ARTICLE 4 EMPLOYER CONTRIBUTIONS
    14  
 
       
Section 4.1 By Employers
    14  
 
       
Section 4.2 Amount of Contribution
    14  
 
       
Section 4.3 Limitation on Annual Additions
    15  

-ii

--------------------------------------------------------------------------------

 

         
ARTICLE 5 ACCOUNTS; ALLOCATIONS; AND ACCOUNTING
    17  
 
       
Section 5.1 Participant Accounts
    17  
 
       
Section 5.2 Allocation of Contributions and Forfeitures Among Eligible
Participants
    17  
 
       
Section 5.3 Allocation of Income, Losses and Expenses
    17  
 
       
Section 5.4 Allocation of Dividends
    18  
 
       
Section 5.5 Accounting Procedures
    19  
 
       
Section 5.6 Voting and Tender Rights — Qualifying Employer Securities
    19  
 
       
Section 5.7 Annual Statements
    20  
 
       
ARTICLE 6 VESTING
    20  
 
       
Section 6.1 General
    20  
 
       
Section 6.2 Retirement, Death and Disability
    21  
 
       
Section 6.3 Breaks in Service; Forfeitures
    21  
 
       
Section 6.4 Increase in Vesting
    22  
 
       
ARTICLE 7 DISTRIBUTIONS
    22  
 
       
Section 7.1 Entitlement to Distribution
    22  
 
       
Section 7.2 Method and Time of Distribution
    22  
 
       
Section 7.3 Mandatory Distributions
    23  
 
       
Section 7.4 Designation of Beneficiary
    23  
 
       
Section 7.5 Required Beginning Date
    24  
 
       
Section 7.6 Distributions of General Employees’ Profit Sharing Plan Accounts
    24  
 
       
Section 7.7 Rollover Treatment
    24  
 
       
Section 7.8 30-Day Notice of Distribution Rights
    25  
 
       
Section 7.9 Hardship Distributions
    25  
 
       
Section 7.10 Missing Persons
    27  
 
       
Section 7.11 Diversification of Investments
    27  
 
       
Section 7.12 In-Service Distributions at Age 62
    28  

-iii

--------------------------------------------------------------------------------

 

         
ARTICLE 8 SPECIAL PROVISIONS RELATING TO LOANS
    29  
 
       
Section 8.1 Exempt Loans
    29  
 
       
Section 8.2 Release of Shares from Suspense Account
    30  
 
       
Section 8.3 Exempt Loan Repayments
    30  
 
       
Section 8.4 Allocation of Released Shares
    30  
 
       
Section 8.5 Nonterminable Rights
    30  
 
       
Section 8.6 Valuation of Qualifying Employers Securities
    32  
 
       
ARTICLE 9 TRUST FUND
    32  
 
       
Section 9.1 Trust Agreement
    32  
 
       
Section 9.2 Non-Reversion; Exclusive Benefit Clause
    32  
 
       
Section 9.3 Powers of the Trustee
    32  
 
       
Section 9.4 Trust Agreement Part of the Plan
    32  
 
       
Section 9.5 Trustee Purchase of Stock
    33  
 
       
ARTICLE 10 ADMINISTRATIVE COMMITTEE
    33  
 
       
Section 10.1 Named Fiduciaries
    33  
 
       
Section 10.2 Appointment of Administrative Committee
    33  
 
       
Section 10.3 Organization and Operation of Administrative Committee
    34  
 
       
Section 10.4 Responsibilities and Powers of Administrative Committee
    34  
 
       
Section 10.5 Individual and Shared Responsibilities of Named Fiduciaries
    35  
 
       
Section 10.6 Employment of Advisers
    35  
 
       
Section 10.7 Fiduciary in More Than One Capacity
    35  
 
       
Section 10.8 Power to Construe and Interpret Plan
    35  
 
       
Section 10.9 Indemnity Agreement
    35  
 
       
Section 10.10 Costs
    36  
 
       
Section 10.11 Application and Forms for Benefits
    36  
 
       
Section 10.12 Claims for Benefits
    36  
 
       
Section 10.13 Denial of Claims
    36  
 
       

-iv

--------------------------------------------------------------------------------

 

         
Section 10.14 Appeal of Denied Claim
    37  
 
       
Section 10.15 Claims, Notices, Etc
    38  
 
       
ARTICLE 11 MODIFICATIONS FOR TOP HEAVY PLANS
    38  
 
       
Section 11.1 Application of Article
    38  
 
       
Section 11.2 Definitions
    38  
 
       
Section 11.3 Amounts Included for Computation Purposes
    39  
 
       
Section 11.4 Accelerated Vesting
    39  
 
       
Section 11.5 Minimum Contributions
    40  
 
       
Section 11.6 Modification of Top-Heavy Rules
    40  
 
       
ARTICLE 12 AMENDMENT, MERGER, CONSOLIDATION OR TRANSFER OF ASSETS; TERMINATION
OR DISCONTINUANCE
    41  
 
       
Section 12.1 Amendment
    41  
 
       
Section 12.2 Merger, Consolidation, or Transfer of Assets
    42  
 
       
Section 12.3 Termination; Discontinuance of Contributions
    42  
 
       
ARTICLE 13 MISCELLANEOUS
    42  
 
       
Section 13.1 Nonalienation of Benefits
    42  
 
       
Section 13.2 No Guarantee of Employment
    43  
 
       
Section 13.3 Authorization to Withhold Taxes
    43  
 
       
Section 13.4 Delegation of Authority by Employer
    43  
 
       
Section 13.5 Number and Gender
    43  
 
       
Section 13.6 Legal Actions
    43  
 
       
Section 13.7 Delays in Distribution
    44  
 
       
Section 13.8 Plan Document Location
    44  
 
       
Section 13.9 Plan Terms Control
    44  
 
       
Section 13.10 Severability
    44  
 
       
Section 13.11 Governing Law
    44  
 
       
ARTICLE 14 CONCERNING QUALIFIED MILITARY SERVICE
    44  

-v

--------------------------------------------------------------------------------

 

         
ARTICLE 15 MINIMUM DISTRIBUTION REQUIREMENTS
    45  
 
       
Section 15.1 General Rules
    45  
 
       
Section 15.2 Time and Manner of Distribution
    45  
 
       
Section 15.3 Required Minimum Distributions During Participant’s Lifetime
    46  
 
       
Section 15.4 Required Minimum Distributions After Participant’s Death
    47  
 
       
Section 15.5 Definitions
    48  
 
       
Section 15.6 Required Beginning Date
    48  

-vi

--------------------------------------------------------------------------------

 

SANDERSON FARMS, INC. AND AFFILIATES
EMPLOYEE STOCK OWNERSHIP PLAN
(As Amended and Restated Effective August 1, 2006)
PREAMBLE
     The Sanderson Farms, Inc. and Affiliates Employee Stock Ownership Plan
(formerly the Profit Sharing Retirement Plan and Trust) (the “Plan”) was adopted
by Sanderson Farms, Inc. (the “Company”) and Sanderson Farms, Inc. (Processing
Division) effective January 1, 1972. Effective January 1, 1972, the Plan was
converted into a stock bonus plan and an employee stock ownership plan, within
the meaning of Section 4975(e)(7) of the Code.
     Effective November 1, 1989, the Plan was amended and restated to effect
numerous technical changes and to ensure the Plan’s qualification under the
applicable provisions of the Code, including the Tax Reform Act of 1986, and
ERISA.
     Effective November 1, 1993, the General Employees’ Profit Sharing —
Retirement Plan and Trust of Sanderson Farms, Inc. and Affiliates (the “General
Employees Profit Sharing Plan”) merged into this Plan, and this Plan was amended
to reflect the merger.
     Effective November 1, 1997, the Plan was again amended and restated, to
comply with certain changes in federal law.
     Effective August 1, 2006, the Plan is amended and restated as set forth
herein to make certain design and technical changes.
ARTICLE 1
NAME AND EFFECTIVE DATE
Section 1.1 Name. This Plan shall be known as the Sanderson Farms, Inc. and
Affiliates Employee Stock Ownership Plan.
Section 1.2 Effective Date. The original effective date of the Plan is
January 1, 1972. The effective date of this amendment and restatement is
August 1, 2006.
ARTICLE 2
DEFINITIONS
     The following terms have the meanings herein which are specified below
unless the context otherwise requires:

- 7 -

--------------------------------------------------------------------------------

 

Section 2.1 “Account” means a Participant’s Cash Account or Stock Account.
Section 2.2 “Administrative Committee” means the Administrative Committee
appointed by the Company as provided in Section 10.1 hereof. The persons
constituting the Administrative Committee are herein referred to as
“Administrative Committee Members.”
Section 2.3 “Affiliate” means the Employer and any corporation under common
control (as defined in Section 414(b) of the Code) with the Employer; any trade
or business (whether or not incorporated) under common control (as defined in
Section 414(c) of the Code) with the Employer; any organization (whether or not
incorporated) that is a member of an affiliated service group (as defined in
Section 414(m) of the Code) that includes the Employer; and any other entity
required to be aggregated with the Employer pursuant to Treasury Regulations
under Section 414(o) of the Code.
Section 2.4 “Annual Additions” means the sum of the following amounts credited
to a Participant’s Accounts and to any accounts of the Participant under a
Related Plan for any Limitation Year:
          (a) Employer contributions (including any contributions hereunder used
to repay an Exempt Loan);
          (b) Employee contributions;
          (c) Forfeitures; and
          (d) Amounts described at Sections 415(l)(1) and 419(A)(d)(2) of the
Code.
Section 2.5 “Beneficiary” means a person who is entitled to a distribution
hereunder upon the death of a Participant.
Section 2.6 “Board” means the Board of Directors of the Company.
Section 2.7 “Break in Service” means a Plan Year during which an Employee fails
to complete more than 500 Hours of Service. For purposes of determining an
Employee’s vested percentage hereunder, the computation period shall be the Plan
Year.
Section 2.8 “Cash Account” means the Account of a Participant which reflects his
interest under the Plan attributable to Trust Fund assets other than Qualifying
Employer Securities.
Section 2.9 “Company” means Sanderson Farms, Inc.
Section 2.10 “Compensation” means, with respect to an Employee, all taxable
remuneration received, except performance incentive awards, from the Employer in
the whole or part of a Plan Year in which the Employee is a Participant
hereunder, increased by any amounts that are not currently included in the
Employee’s gross income by reason of Sections 125, 132(f), 402(a)(8) or
402(h)(1)(B) of the Code. Compensation of any Employee shall not include any
part of the Contributions to the Trust Fund hereunder, or to any other employee
pension benefit plan or employee welfare benefit plan or trust in connection
therewith, now or hereafter adopted or any

- 8 -

--------------------------------------------------------------------------------

 

amounts in respect of any options to purchase stock granted Employees. No
Employee shall be deemed to have Compensation for a Plan Year in excess of two
hundred thousand dollars ($200,000) as adjusted in accordance with the
provisions of Section 401(a)(17)(B). The cost-of-living adjustment in effect for
a calendar year shall apply to the annual compensation limit of
Section 401(a)(17)(B) for the Plan Year that begins with or within such calendar
year.
Section 2.11 “Contribution” means any Employer contribution made hereunder
pursuant to Article 4 hereof.
Section 2.12 “Disqualifying Break in Service” means a consecutive number of
Breaks in Service equal to the greater of (a) five (5), or (b) the number of an
Employee’s Years of Service prior to such consecutive Breaks in Service
(excluding any Years of Service disregarded hereunder because of prior Breaks in
Service).
Section 2.13 “Distribution Date” means each January 31, April 30, July 31 or
October 31.
Section 2.14 “Eligible Participant” means, with respect to a Plan Year, a
Participant who is an Employee on the last day of the Plan Year.
Section 2.15 “Employee” means each person who is employed as a common law
employee by the Employer. For purposes of Sections 2.19, 2.20, 2.24, and 2.35
hereof, the term “Employee” means each person employed as a common law employee
of any Affiliate.
Section 2.16 “Employer” means the Company, Sanderson Farms, Inc. (Production
Division), Sanderson Farms, Inc. (Processing Division) and Sanderson Farms, Inc.
(Foods Division), all of which are Mississippi corporations, and any domestic
Affiliate that adopts this Plan with the consent of the Board. As the context
requires, the term “Employer” as used herein shall apply collectively to all
Employers under the Plan or singly to an Employer.
Section 2.17 “Forfeiture” means the nonvested portion of a Participant’s Account
balances forfeited under Section 6.3 hereof.
Section 2.18 “Excess Amount” means the excess of the amount of a Participant’s
Annual Additions for a Limitation Year over the Maximum Permissible Amount for
the Limitation Year.
Section 2.19 “Hour of Service” means:
          (a) Each hour:
               (1) For which an Employee is paid, or entitled to payment, for
the performance of duties for the Employer or any Affiliate during the
applicable computation period;
               (2) For which an Employee is paid, or entitled to payment, by the
Employer or any Affiliate 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), layoff, jury duty, military duty or leave of absence.
Notwithstanding the preceding sentence, no more than five hundred one
(501) Hours of Service

- 9 -

--------------------------------------------------------------------------------

 

are required to be credited under this paragraph to an Employee on account of
any single continuous period during which the Employee performs no duties
(whether or not such period occurs in a single computation period).
               (3) For which back pay, irrespective of mitigation of damages, is
either awarded or agreed to by the Employer or any Affiliate. The same Hours of
Service shall not be credited both under paragraph (a)(1) or (2) above, as the
case may be, and under this paragraph (a)(3).
          (b) Where an Employee is credited with Hours of Service under (a)(2)
above, the number of Hours of Service to be credited and the computation period
to which such Hours of Service shall be credited shall be determined under Title
29, Code of Federal Regulations, Section 2530.200b-2(b) and (c), which
regulation is hereby incorporated into this Plan by reference.
          (c) Solely for purposes of determining whether an Employee has
incurred a Break in Service, each hour of such Employee’s customary work period
during an absence that begins after December 31, 1984, and that is due to
(1) pregnancy of the Employee; (2) birth of a child of the Employee; (3)
placement of a child in connection with the adoption of a child by the Employee;
or (4) caring for a child by the Employee during the period of birth or
placement for adoption, shall be considered an Hour of Service. Notwithstanding
the foregoing provisions:
               (1) Hours of Service described in this paragraph (c) shall be
credited to the Plan Year in which a maternity or paternity absence begins if
necessary to prevent a Break in Service in that Plan Year, otherwise all such
Hours of Service to be credited pursuant to this paragraph (c) shall be credited
to the next following Plan Year to the extent, if any, necessary to assure that
the Employee will not suffer a Break in Service in such following Plan Year;
               (2) The Administrative Committee shall have the right as a
condition precedent to providing credit under this paragraph (c) to require the
Employee to certify, on such written form as may be provided by the
Administrative Committee, that the Employer’s absence was for a reason permitted
under this paragraph (c), to require the Employee to supply information relating
to the number of normal work days for which there was an absence under this
paragraph (c), and to verify the correctness of such certification by any
reasonable means; and
               (3) The total number of Hours of Service required to be credited
under this paragraph (c) shall not exceed five hundred one (501) Hours of
Service.
Section 2.20 “Leased Employee” means any individual (other than a common law
employee of the Employer) who, pursuant to an agreement between the Employer and
another person (the “leasing organization”), (a) has performed services for the
Employer (or for the Employer and any related person determined in accordance
with Section 414(n)(6) of the Code), (b) the services are performed on a
substantially full-time basis for a period of at least one year, and (c) the
services are performed under the primary direction and control of the Employer.
Section 2.21 “Limitation Year” means the twelve (12)-month period ending each
October 31. All qualified plans maintained by the Employer shall use the same
Limitation Year.

- 10 -

--------------------------------------------------------------------------------

 

Section 2.22 “Maximum Permissible Amount” means:
          (a) With respect to a Participant, except to the extent permitted
under Section 414(v) of the Code, if applicable, the lesser of:
               (1) $40,000, as adjusted for increases in the cost-of-living
under Section 415(d) of the Code; or
               (2) 100% of the Participant’s Section 415 Compensation.
          (b) The compensation limit referred to in paragraph (a)(2) above shall
not apply to any contribution for medical benefits after separation from service
(within the meaning of Sections 401(h) or 419A(f)(2) of the Code) which is
otherwise treated as an Annual Addition.
Section 2.23 “Named Fiduciary” Means a named fiduciary, within the meaning of
Section 402(a)(2) of ERISA.
Section 2.24 “Normal Retirement Age” means age sixty five (65). Notwithstanding
any provision of the Plan to the contrary, a Participant shall be 100% vested in
his Accounts upon attainment of Normal Retirement Age while an Employee.
Section 2.25 “Participant” means each Employee who has become a participant in
the Plan under Article 3 hereof and any former Employee who has an Account
balance hereunder.
Section 2.26 “Plan” means this Sanderson Farms, Inc. and Affiliates Employee
Stock Ownership Plan, as amended from time to time. The Plan is a stock bonus
plan intended to be qualified under Section 401(a) of the Code and an employee
stock ownership plan, within the meaning of Section 4975(e)(7).
Section 2.27 “Plan Year” means the fiscal year ending October 31.
Section 2.28 “Qualifying Employer Security or Securities” means any share of
capital stock now or hereafter issued by the Company.
Section 2.29 “Related Plan” means a defined contribution plan intended to be
qualified plan under Section 401(a) of the Code maintained or established by an
Affiliate.
Section 2.30 “Section 415 Compensation” means wages within the meaning of
Section 3401(a) of the Code (for the purposes of income tax withholding at the
source) but determined without regard to any rules that limit the remuneration
included in wages based on the nature or location of the employment or the
services performed (such as the exception for agricultural labor in
Section 340(a)(2) of the Code). Section 415 Compensation shall include any
elective deferral (within the meaning of Section 402(g)(3) of the Code made by
the Employer on behalf of an Employee and any amount contributed or deferred by
the Employer at the election of the Employee which is not includable in the
Employee’s gross income by reason of Section 125 or 132(f)(4) of the Code.
Section 415 Compensation shall include only that compensation which is actually
paid to a Participant during a Plan Year and shall exclude any amount in excess
of $200,000, as adjusted by the Secretary in accordance with
Section 401(a)(17)(B) of the Code.

- 11 -

--------------------------------------------------------------------------------

 

The cost-of-living adjustment in effect for a calendar year shall apply to the
annual compensation limit of Section 401(a)(17)(B) for the Plan Year that begins
with or within such calendar year.
Section 2.31 “Share” means a share of a Qualifying Employer Security.
Section 2.32 “Stock Account” means the Account of a Participant which reflects
his interest under the Plan attributable to Trust Fund assets that are
Qualifying Employer Securities.
Section 2.33 “Suspense Account” means the account established pursuant to
Article 8 hereof to which shall be credited unallocated Shares acquired with the
proceeds of an Exempt Loan.
Section 2.34 “Termination of Employment” or “Terminates Employment” means an
Employee’s termination of employment with the Employer and the Affiliates.
Section 2.35 “Total and Permanent Disability” means a physical or mental
condition of a Participant resulting from a bodily injury or disease or mental
disorder suffered while an Employee which renders the Participant eligible to
receive Social Security total disability benefits. Determination of eligibility
to receive Social Security total disability benefits must have an effective date
of disability on or before the date of the Participant’s Termination of
Employment, and the Participant must give notice to the Employer of such
determination within ninety (90) days after the Participant receives official
notice of the determination from the Social Security Administration.
Section 2.36 “Trust Agreement” means the Employee Stock Ownership Plan Trust
Agreement, effective November 1, 1993, between the Trustee named therein and the
Company, made and entered into for the establishment of a trust to receive all
Contributions which may be made to the order of the Trustee under the Plan, and
any and all amendments of the Trust Agreement.
Section 2.37 “Trustee” mean the trustee(s) named under the Trust Agreement and
its duly appointed successors.
Section 2.38 “Trust Fund” means all cash, securities and other property held by
the Trustee pursuant to the terms of the Trust Agreement, together with any
income therefrom.
Section 2.39 “Year of Service” means a computation period in which an Employee
completes at least one thousand (1,000) Hours of Service.
          (a) For purposes of determining an Employee’s eligibility to
participate hereunder, an Employee’s first computation period shall be the
twelve (12)-month period beginning on the Employee’s date of hire by the
Employer. The second and all subsequent computation periods shall be the Plan
Year, beginning with the first Plan Year beginning after the Employee’s
employment commencement date.
          (b) For purposes of determining an Employee’s vested percentage under
Section 6.1 hereof, the computation period shall be the Plan Year. If, however,
an Employee does not complete one thousand (1,000) Hours of Service during the
Plan Year in which he was first hired by the Employer or during the next
following Plan Year, but completes one thousand (1,000) Hours of Service during
the twelve (12) month period beginning on his date of hire by

- 12 -

--------------------------------------------------------------------------------

 

the Employer, the Employee shall be credited with one (1) Year of Service under
this paragraph (b) for such twelve (12) month period.
Section 2.40 “Valuation Date” means the last day of each Plan Year and any other
date on which a special valuation is made, as designated by the Administrative
Committee.
ARTICLE 3
ELIGIBILITY AND PARTICIPATION
Section 3.1 Participation.
          (a) Each Employee or former Employee who was a Participant on July 31,
2006, shall be a Participant on August 1, 2006, if he is an Employee or has an
Account balance on such date.
          (b) Each other Employee who has completed one (1) Year of Service and
has attained twenty-one (21) years of age shall become a Participant on the date
on which the Employee satisfies the foregoing age and service requirements,
provided that he is an Employee on such date.
          (c) Notwithstanding (a) and (b) above, the following individuals shall
not be eligible to participate in the Plan:
               (1) An Employee who is included in a unit of Employees covered by
an agreement which the Secretary of Labor finds to be a collective bargaining
agreement between Employee representatives and the Employer if there is evidence
that retirement benefits were the subject of good faith bargaining between such
Employee representatives and such one or more of the Employers, unless the
collective bargaining agreement expressly permits the Employee’s participation
hereunder.
               (2) A Leased Employee; or
               (3) Any individual who is classified as an independent contractor
by an Employer, regardless of the classification placed on such person by the
Internal Revenue Service or other governmental agency or a court of competent
jurisdiction.
Section 3.2 Termination of Participation.
          (a) Each Participant shall remain a Participant until he Terminates
Employment and receives a distribution of the entire amount of his Account
balances. In the event that a Participant Terminates Employment and is
subsequently re-employed as an Employee by the Employer, subject to
Section 3.1(c) hereof, he shall resume active participation in the Plan on the
date of his re-employment. Notwithstanding the preceding, if a Participant
Terminates Employment when he has a vested percentage of zero under Section 6.1
hereof and is reemployed as an Employee of the Employer after incurring a
Disqualifying Break in Service, he

- 13 -

--------------------------------------------------------------------------------

 

shall be required to satisfy the service requirement of Section 3.1 hereof
before he can resume active participation in the Plan.
          (b) If an Employee Terminates Employment prior to becoming a
Participant and is subsequently re-employed by the Employer, the Employee must
satisfy the eligibility requirements of 3.1 hereof to become a Participant. The
Employee’s prior Years of Service shall be counted in determining whether the
Employee satisfies the service requirements of Section 3.1(b) hereof if the
Employee is re-employed before incurring a Disqualifying Break in Service.
Section 3.3 Notification of Participation.
     The Employers shall notify each Eligible Employee of his participation in
the Plan no later than the expiration of ninety (90) days following his first
Plan Year of participation.
ARTICLE 4
EMPLOYER CONTRIBUTIONS
Section 4.1 By Employers. All Contributions under the Plan shall be made by the
Employer, and no Contributions shall be required or permitted of any Employee.
Section 4.2 Amount of Contribution.
          (a) Subject to the conditions and limitations of the Plan, including
Section 4.3 hereof, Contributions shall be made by the Employer to the Trust
Fund for each Plan Year in cash or in Qualifying Employer Securities in an
amount equal to the sum of the following:
               (1) Such amount, if any, as shall be determined by the Boards of
Directors of the Company and the Employers; and
               (2) Such amount, if any, as shall be required to permit the
Trustee to meet the obligations of the Plan under any Exempt Loan.
          (b) Contributions, if any, under the Plan for each Plan Year shall be
paid to the Trust Fund not later than the due date for filing the Employer’s
federal income tax return for the Plan Year, including any extensions on such
due date; provided, however, that Contributions shall be made at such times as
to permit the Trustee to meet the Plan’s repayment obligations under any Exempt
Loan.
          (c) In the event that a Contribution is paid to the Trust Fund by
reason of a mistake of fact as determined in good faith by the Employer, upon
the Employer’s request made within one (1) year after the payment to the Trust
Fund, the Administrative Committee shall promptly direct the Trustee to return
the Contribution to the Employer.
          (d) All Contributions to the Plan are conditioned upon their
deductibility under Section 404 of the Code. If a deduction for a Contribution
is disallowed, upon the

- 14 -

--------------------------------------------------------------------------------

 

Employer’s request made within one (1) year after the disallowance, the
Administrative Committee shall promptly direct the Trustee to return the
Contribution to the Employer.
Section 4.3 Limitation on Annual Additions.
          (a) (1) If a Participant does not participate in a Related Plan, then
the amount of Annual Additions which may be credited to the Participant’s
Accounts for any Limitation Year shall not exceed the Maximum Permissible
Amount. If a Contribution otherwise allocable to the Participant’s Accounts
would cause the Participant’s Annual Additions for the Limitation Year to exceed
the Maximum Permissible Amount, then the amount of the Contribution otherwise
allocable to the Participant’s Accounts shall be reduced so that the
Participant’s Annual Additions for the Limitation Year will equal the Maximum
Permissible Amount.
               (2) Prior to determining a Participant’s Compensation for a
Limitation Year, the Employer may determine the Maximum Permissible Amount for a
Participant on the basis of a reasonable estimation of the Participant’s
Compensation for the Limitation Year. As soon as is administratively feasible
after the end of the Limitation Year, the Maximum Permissible Amount for the
Limitation Year will be determined on the basis of the Participant’s
Compensation for the Limitation Year. If there is an Excess Amount, it will be
disposed of as follows:
                    (A) If the Participant is an Employee at the end of the
Limitation Year, then the Excess Amount in the Participant’s Accounts will be
used to reduce the Contributions (including- Forfeitures) allocated thereto for
such Participant in the next Limitation Year, and each succeeding Limitation
Year if necessary; or
                    (B) If the Participant is not an Employee at the end of the
Limitation Year, then the Excess Amount will be held unallocated in a suspense
account and applied to reduce Contributions (including Forfeitures) for Eligible
Participants in the next Limitation Year, and each succeeding Limitation Year if
necessary.
          (b) If a suspense account is in existence at any time during a
Limitation Year pursuant to this section, then such suspense account will not
participate in the allocation of the Trust Fund’s investment gains and losses.
          (c) (1) If a Participant hereunder is a participant under one or more
Related Plans during a Limitation Year, the Annual Additions which may be
credited to a Participant’s Accounts hereunder for the Limitation Year shall not
exceed the Maximum Permissible Amount reduced by the Annual Additions credited
to the Participant’s account(s) under the Related Plan(s) for the same
Limitation Year. If the Annual Additions with respect to the Participant under
the Related Plan(s) are less than the Maximum Permissible Amount and the
Contributions that would otherwise be allocable to the Participant’s Account
under this Plan would cause the Annual Additions for the Limitation Year to
exceed the Maximum Permissible Amount, then the Contribution otherwise allocable
to the Participant’s Accounts hereunder shall be reduced so that the Annual
Additions under this Plan and the Related Plan(s) for the Limitation Year shall
equal the Maximum Permissible Amount. If the Annual Additions with

- 15 -

--------------------------------------------------------------------------------

 

respect to the Participant under such Related Plan(s) in the aggregate are equal
to or greater than the Maximum Permissible Amount, then no Contribution will be
allocated to the Participant’s Accounts hereunder for the Limitation Year.
               (2) If a Participant’s Annual Additions under this Plan and one
or more Related Plan(s) result in an Excess Amount for a Limitation Year, then
the Excess Amount will be deemed to consist of the Annual Additions last
allocated. If an Excess Amount was allocated to a Participant on a Valuation
Date of this Plan which coincides with a Valuation Date of such Related Plan(s),
then the Excess Amount attributable to this Plan will be the product of:
                    (A) The total Excess Amount allocated as of such date, times
                    (B) The ratio of (I) the Annual Additions allocated to the
Participant’s Accounts for the Limitation Year as of such date under this Plan
to (II) the total Annual Additions allocated to the Participant’s Accounts for
the Limitation Year as of such date under this Plan and all such Related
Plan(s).
               (3) Any Excess Amount attributable to this Plan will be disposed
of in the manner described in subsection (a)(2) above.
          (d) If no more than one-third (1/3) of the Contributions for a Plan
Year which are deductible under Section 404(a)(9) of the Code are allocated to
the Accounts of highly compensated employees (within the meaning of Section
414(q) of the Code) of the Employer, the Maximum Permissible Amount shall not
apply to:
               (1) Forfeitures of Qualifying Employer Securities if such
Securities were acquired with the proceeds of an Exempt Loan, or
               (2) Contributions which are deductible under Section 404(a)(9)(B)
of the Code and charged against Participant Accounts.
          (e) No portion of the Trust Fund attributable to (or allocable in lieu
of) Qualifying Employer Securities acquired by the Plan in a sale to which
Section 1042 of the Code applies may accrue (or be allocated directly or
indirectly under any Related Plan during the nonallocation period (as defined in
Section 409(n)(3)(C) of the Code), for the benefit of (1)(A) any taxpayer who
makes an election under Section 1042(a) of the Code with respect to Qualifying
Employer Securities, or (B) any individual who is related to the taxpayer or the
decedent (within the meaning of Section 267(b) of the Code), or (2) any other
person who owns (after application of Section 318(a) of the Code applied without
regard to the Employee trust exception) more than twenty-five (25) percent of
any class of outstanding stock of the Company or of any corporation which is a
member of the same controlled group of corporations (within the meaning of
Section 409(1)(4) of the Code) as the Company, or the total value of any class
of outstanding stock of the Company or any such corporation.

- 16 -

--------------------------------------------------------------------------------

 

ARTICLE 5
ACCOUNTS; ALLOCATIONS; AND ACCOUNTING
Section 5.1 Accounts.
          (a) The Administrative Committee shall establish a separate Cash
Account and Stock Account in the name of each Participant.
          (b) Cash credited to a Participant’s Cash Account may at any time be
used to purchase Qualifying Employer Securities from any source, subject to
Section 9.5 hereof. Upon the purchase of Shares of Qualifying Employer
Securities with such cash, such Shares shall be credited to the Participant’s
Stock Account, and the Participant’s Cash Account shall be charged by the amount
of such cash.
          (c) The Administrative Committee and/or the Trustee may maintain such
accounts and subaccounts as they deem necessary or appropriate for
administration of the Plan and Trust Fund, including a “contribution account” to
which cash and/or Qualifying Employer Securities contributed to the Plan are
allocated pending allocation to Participants’ Accounts.
Section 5.2 Allocation of Contributions and Forfeitures Among Eligible
Participants.
          (a) Subject to the limitation of Section 4.3 hereof, as of the last
Valuation Date of each Plan Year, the Stock Account maintained for each Eligible
Participant shall be credited with the Participant’s proportionate share of
(1) any Contributions for the Plan Year made in the form of, or invested in (as
of the Valuation Date), Qualifying Employer Securities, including any shares of
Qualifying Employer Securities released from the Suspense Account pursuant to
Sections 8.2 and 8.4 hereof, and (2) any Forfeitures of Qualifying Employer
Securities arising during the Plan Year.
          (b) Subject to the limitation of Section 4.3 hereof, as of the last
Valuation Date of each Plan Year, the Cash Account maintained for each Eligible
Participant shall be credited with the Participant’s proportionate share of
(1) any Contributions for the Plan Year made or held in the form of cash, and
(2) any Forfeitures of cash arising during the Plan Year.
          (c) An Eligible Participant’s proportionate share of Contributions and
Forfeitures for a Plan Year shall equal the ratio that such Eligible
Participant’s Compensation for the Plan Year bears to the aggregate Compensation
of all Eligible Participants for the Plan Year.
Section 5.3 Allocation of Income, Losses and Expenses.
          (a) As of each Valuation Date, the Cash Account maintained for each
Participant shall be credited with the Participant’s proportionate share of any
net income (or loss) of the Trust Fund since the preceding Valuation Date. It
shall be debited for all distributions and payments properly made from the Cash
Account since the preceding Valuation Date, including but not limited to, its
proportionate share of any cash payments made under the Plan for the purchase of
shares of Qualifying Employer Securities or for the repayment of principal and
interest on any Exempt Loan since such date.

- 17 -

--------------------------------------------------------------------------------

 

          (b) The net income (or loss) of the Trust Fund for any valuation
period will be determined as of the relevant Valuation Date. Each Participant’s
share of the Trust Fund’s net income (other than dividends allocated in
accordance with Section 5.4 hereof) or loss for the valuation period in question
shall be allocated to the Participant’s Cash Account in the ratio that the
Participant’s aggregate Account balances as of the preceding Valuation Date,
less any distributions and payments therefrom since such date, bears to the
aggregate of all Participant Account balances as of the preceding Valuation
Date, less all distributions and payments therefrom since such date. The net
income (or loss) of the Trust Fund includes the increase (or decrease) in the
fair market value of Trust Fund (other than Shares of Qualifying Employer
Securities), interest income, dividends and other income and gains (or losses)
attributable to the Trust Fund (other than any dividends allocated in accordance
with Section 5.4 hereof since the preceding Valuation Date. The computation of
net income (or loss) of the Trust Fund shall not take into account any interest
paid by the Trust Fund on an Exempt Loan. For this purpose, the term “valuation
period” means a period beginning with the Valuation Date immediately preceding
the Valuation Date in question and ending on the Valuation Date in question.
Section 5.4 Allocation of Dividends.
          (a) Any cash dividend received on shares of Qualifying Employer
Securities allocated to a Participant’s Stock Account as of the record date of
the dividend shall, in the sole discretion of the Administrative Committee,
either be:
               (1) Allocated to the Participant’s Cash Account;
               (2) Used by the Trustee to make payments on an Exempt Loan;
provided, however, that no cash dividend paid on Shares of Qualifying Employer
Securities allocated to a Participant’s Stock Account shall be applied to make
payments on an Exempt Loan unless Qualifying Employer Securities with a fair
market value of not less than the amount of the cash dividend are allocated to
the Participant’s Stock Account.
          (b) Any cash dividends received on unallocated shares of Qualifying
Employer Securities shall, in the sole discretion of the Administrative
Committee, either be:
               (1) Allocated among Participant Cash Accounts in the ratio
(determined as of the record date of the dividend) that the number of Shares of
Qualifying Employer Securities allocated to each Participant’s Stock Account as
of the preceding Valuation Date, less any distributions therefrom since such
date, bears to the total number of Shares of Qualifying Employer Securities
allocated to all Participants’ Stock Accounts as of the preceding Valuation
Date, less all distributions therefrom since such date;
               (2) Used by the Trustee to make payments on an Exempt Loan.
          (c) As of each Valuation Date, the Stock Account maintained for each
Participant shall be credited with any stock dividend received on Shares of
Qualifying Employer Securities allocated to the Participant’s Stock Account. Any
stock dividends received on unallocated shares of Qualifying Employer Securities
during a valuation period (as defined in Section 5.3 hereof) shall be allocated
to each Participant’s Stock Account in the ratio that the Participant’s
aggregate Account balances as of the preceding Valuation Date, less any

- 18 -

--------------------------------------------------------------------------------

 

distributions therefrom since such date, bear to the aggregate Account balances
of all Participants as of the preceding Valuation Date, less any distributions
therefrom since such date.
Section 5.5 Accounting Procedures.
     The Administrative Committee shall establish accounting procedures for the
purpose of making the allocations to Participants’ Accounts provided for in this
Article 5. The Administrative Committee shall maintain adequate records of the
cost basis of shares of Qualifying Employer Securities allocated to each
Participant’s Stock Account. From time to time, the Administrative Committee may
modify its accounting procedures for the purposes of achieving equitable and
nondiscriminatory allocations among Participant Accounts, in accordance with the
provisions of this Article 5 and the applicable requirements of the Code and
ERISA.
Section 5.6 Voting and Tender Rights — Qualifying Employer Securities.
          (a) For so long as the Qualifying Employer Securities are a class of
securities which are required to be registered under Section 12 of the
Securities Exchange Act of 1934, or a class of securities which would be
required to be so registered except for the exemption from registration provided
in subsection (g)(2)(H) of Section 12 of said Act, each Participant shall be
entitled to direct the Trustee as to the manner in which Qualifying Employer
Securities allocated to his Stock Account is to be voted.
          (b) The Trustee shall vote Shares of Qualifying Employer Securities
allocated to Participant Stock Accounts in accordance with the directions
received from the Participants. If the Trustee does not receive timely and
proper directions from one or more Participants regarding the voting of any
Shares of Qualifying Employer Securities held in the Trust Fund (including
unallocated Shares), the Trustee shall vote those Shares in the same proportion,
for and against propositions submitted to the vote of the shareholders, as the
Trustee votes Shares for which it receives timely and proper directions.
          (c) Each Participant shall be entitled to direct the Trustee whether
to tender the Shares of Qualifying Employer Securities allocated to the
Participant’s Stock Account in response to a tender offer. After the
Participants have had an opportunity to cast votes on such matter as provided
herein and said votes are counted, the Trustee shall tender only those Shares on
such matter for which the Trustee receives timely and proper tender
instructions. The Trustee shall not tender any Shares (including unallocated
Shares) for which it does not receive timely and property directions.
          (d) Notwithstanding anything contained herein to the contrary, any
voting or tender direction given by a Participant pursuant to this Section 5.6
shall not be disclosed to the Employers and shall be held confidential by the
Trustee.
          (e) This Section 5.6 shall be implemented by such rules and
regulations as may be adopted by the Trustee and the Administrative Committee
from time to time. Not in limitation of the foregoing, such rules and
regulations may set time limits for Participants to cast votes or give tender
instructions on any matter.

- 19 -

--------------------------------------------------------------------------------

 

Section 5.7 Annual Statements. On or before the expiration of four (4) calendar
months after each Valuation Date which is the last day of the Plan Year, or as
soon as administratively feasible thereafter, the Administrative Committee shall
upon information furnished by the Trustee, or the Trustee shall upon direction
of the Administrative Committee, make reports to each Participant as of the
Valuation Date showing the opening and closing balances in each of the
Participant’s Accounts for the Plan Year and all transactions involving the
Participant’s Accounts for the Plan Year.
ARTICLE 6
VESTING
Section 6.1 General.
          (a) Subject to 6.2 hereof, a percentage of the amounts credited to a
Participant’s Accounts shall become vested and nonforfeitable on the basis of
his completed Years of Service with the Affiliates according to the following
schedule:

               Completed     Years of Service   Vested Percentage
1-2  
    0 %
3
    20 %
4
    40 %
5
    60 %
6
    80 %
7
    100 %

          (b) If the Plan’s vesting schedule is amended, or the Plan is amended
in any way that directly or indirectly affects the computation of the
Participant’s nonforfeitable percentage or if the Plan is deemed amended by an
automatic change to or from a Top-Heavy vesting schedule under Article 11
hereof, then each Participant with at least three (3) Years of Service may
elect, within a reasonable period after the adoption of the amendment or change,
to have the nonforfeitable percentage computed under the Plan without regard to
such amendment or change. The period during which the election may be made shall
commence with the date the amendment is adopted or deemed to be made and shall
end on the latest of
               (1) Sixty (60) days after the amendment is adopted;
               (2) Sixty (60) days after the amendment becomes effective; or
               (3) Sixty (60) days after the Participant is issued written
notice of the amendment by the Employer.

- 20 -

--------------------------------------------------------------------------------

 

Section 6.2 Retirement, Death and Disability. Upon the death or Total and
Permanent Disability of a Participant while he is an Employee, or upon his
Retirement, the Participant shall become 100% vested in the entire amount
credited to the Participant’s Accounts.
Section 6.3 Breaks in Service; Forfeitures
          (a) In the case of a Participant who incurs one or more consecutive
Breaks in Service, but not a Disqualifying Break in Service, all of the
Participant’s Years of Service prior to and after such Breaks in Service shall
be taken into account in determining the Participant’s vested percentage under
Section 6.1 hereof.
          (b) Notwithstanding (a) above, in the case of a Participant who incurs
a Break in Service, the Participant’s Years of Service before such Break in
Service shall not be taken into account for purposes of determining the
Participant’s vested percentage under Section 6.1 hereof until the Participant
has completed one (1) Year of Service after his return.
          (c) In the case of a Participant who Terminates Employment when he is
partially vested in his Accounts, incurs a Disqualifying Break in Service, but
does not take a distribution of his vested Account balances, the Participant’s
nonvested Account balances shall be forfeited on the last day of the Plan Year
in which the Participant incurs such a Disqualifying Break in Service and shall
be reallocated in accordance with Section 5.2 hereof. The Participant’s Years of
Service, if any, after such Disqualifying Break in Service shall not be taken
into account in determining his or her vested percentage in the amounts credited
to his Accounts prior to such Disqualifying Break in Service.
          (d) In the case of a Participant who Terminates Employment and
receives a distribution of his vested Account balances pursuant to Section 7.1
hereof when the Participant is partially vested in his Accounts, the
Participant’s nonvested Account balances shall be forfeited upon such
distribution and reallocated in accordance with Section 5.2 hereof. If the
Participant again becomes an Employee prior to incurring a Disqualifying Break
in Service, the Participant’s forfeited Account balances (without earnings)
shall be restored if the Participant repays to the Plan the full amount of the
foregoing distribution prior to the expiration of the five-year period beginning
on the day after the date on which the Participant again becomes an Employee.
          (e) Notwithstanding paragraphs (b) and (c) above, in the case of a
Participant who Terminates Employment when he has a vested percentage of zero
under Section 6.1 hereof, the Participant shall be deemed to have received a
distribution of his vested Account balances, and his nonvested Account balances
shall be forfeited, as of the last day of the Plan Year in which his Termination
of Employment occurs, and the Participant’s forfeited Account balances shall be
reallocated in accordance with Section 5.2 hereof. If the Participant is
reemployed by the Employer prior to incurring a Disqualifying Break in Service,
his forfeited Account balances (without earnings) shall be restored to him.
          (f) If a Participant’s forfeited Account balances are restored under
paragraph (c) or (d) above, the source of such restoration shall be other
Forfeitures arising under paragraphs (b), (c) and (d) above. If such Forfeitures
are insufficient to restore the Account balances under

- 21 -

--------------------------------------------------------------------------------

 

paragraph (c) or (d) above, the Employer shall contribute the amount required to
restore the Account balances.
          (g) Forfeitures arising under this Section 6.3 shall be held in a
suspense account pending reallocation under Section 5.2(f) hereof.
Section 6.4 Increase in Vesting.
     An Account balance with respect to which a Participant’s vested percentage
may increase under Section 411 of the Code shall be computed such that at any
relevant time an Employee’s vested percentage is not less than an amount (“X”)
determined by the formula: X=P(AB+D)-D. For purposes of applying the formula: P
is the vested percentage at the relevant time; AB is the Account Balance at the
relevant time; D is the amount of the distribution; and the relevant time is the
time at which, under the Plan, the vested percentage of the Participant’s
Account cannot increase.
ARTICLE 7
DISTRIBUTIONS
Section 7.1 Entitlement to Distribution. A Participant (or his Beneficiary)
shall be entitled to a distribution of the Participant’s vested Account balances
upon the Participant’s Retirement Date, Total and Permanent Disability or other
Termination of Employment.
Section 7.2 Method and Time of Distribution.
          (a) Distribution of a Participant’s vested Account balances shall be
made in one lump sum payment in whole shares of Qualifying Employer Securities,
plus cash for fractional shares.
          (b) A Participant (or his Beneficiary) may elect a distribution of the
Participant’s vested Accounts as of any Distribution Date coincident with or
next following the Participant’s Termination of Employment. The Administrative
Committee shall make such distribution on, or as soon as practicable after, the
elected Distribution Date, provided, however, that the Participant (or his
Beneficiary) files his distribution election with the Administrative Committee
with such advance notice as the Administrative Committee shall prescribe. All
distribution elections shall be made in accordance with rules prescribed by the
Administrative Committee.
          (c) Except as provided in Section 7.3 hereof, or unless a Participant
otherwise elects, distribution of the Participant’s vested Account balances will
be made not later than the 60th day after the latest of the close of the Plan
Year in which occurs: (1) the date on which he attains Normal Retirement Age;
(2) the 10th anniversary of the date on which he became a Participant, or
(3) his Termination of Employment. This paragraph (d) shall not apply to any
Shares of Qualifying Employer Securities acquired with the proceeds of an Exempt
Loan until the close of the Plan Year in which the Exempt Loan is repaid in
full.

- 22 -

--------------------------------------------------------------------------------

 

Section 7.3 Mandatory Distributions. If, upon Termination of Employment for any
reason, a Participant’s vested Account balances do not exceed one thousand
dollars ($1,000), then the Administrative Committee shall direct the Trustee to
distribute the vested Account balances to the Participant as soon as practicable
after the Distribution Date coincident with or next following the Participant’s
Termination of Employment.
Section 7.4 Designation of Beneficiary.
          (a) Each Participant may designate a person or persons who shall
receive a distribution payable hereunder on the death of the Participant, and
shall, subject to paragraph (b) below, have the right to revoke any such
designation. Any such designation shall be evidenced by a written instrument
filed with the Administrative Committee and signed by the Participant. The
designation by a Participant of a Beneficiary who is not the Participant’s
spouse shall require a consent (made in accordance with paragraph (b) below)
thereto by the Participant’s surviving spouse, or a demonstration that such
consent may not be obtained or that there is no surviving spouse, as described
further in paragraph (b) below. If a Participant designates a trust as
Beneficiary, the beneficiaries of the trust with respect to the Participant’s
interest in the Plan shall be treated as designated Beneficiaries for purposes
of Article 15 hereof, if such beneficiaries are individuals and the requirements
of Treasury Regulations Section 1.401(a)(9)-4, Q&A 5 are met. If no Beneficiary
designation is on file with the Administrative Committee at the time of the
death of a Participant, or if such designation is not effective for any reason
as determined by the Administrative Committee, then payment of the distribution
shall be made to the Participant’s estate.
          (b) A Participant may designate as his Beneficiary a person who is not
his spouse if either (1) (A) his spouse consents in writing to such designation,
(B) the designation provides that it may not be changed without spousal consent
(or the consent of the spouse expressly permits designations by the Participant
without further consent by the spouse), and (C) the spouse’s consent
acknowledges the effect of such election and is witnessed by a representative of
the Plan or a notary public, or (2) it is established to the satisfaction of the
Administrator that such consent may not be obtained because there is no spouse,
because the spouse cannot be located, or because of such other circumstances as
are prescribed by Treasury Regulations. Any consent by a spouse (or
establishment that the consent of a spouse may not be obtained) shall be
effective only with respect to such spouse.
          (c) Notwithstanding paragraphs (a) and (b) above, upon the dissolution
of the marriage of a Participant, the Administrator shall treat the
Participant’s former spouse as having predeceased the Participant with respect
to any designation of the former spouse as the Participant’s Beneficiary under
paragraph (a) above unless either (1) after the dissolution of the marriage, the
Participant files with the Administrator another written instrument executed by
the Participant explicitly designating the former spouse as the Participant’s
Beneficiary, or (2) a qualified domestic relations order, within the meaning of
Section 414(p) of the Code, explicitly requires the Participant to maintain the
former spouse as his Beneficiary. In any case in which the Participant’s former
spouse is treated as having predeceased the Participant, no heir or other
beneficiary of the former spouse shall be entitled to receive any benefits from
the Plan as a Beneficiary except as otherwise provided in the Participant’s
written Beneficiary designation.

- 23 -

--------------------------------------------------------------------------------

 

Section 7.5 Required Beginning Date. Notwithstanding any other provision of the
Plan, the entire interest of each Participant (a) shall be distributed not later
than the Required Beginning Date, or (b) shall be distributed, beginning not
later than the Required Beginning Date, in accordance with regulations
prescribed by the Secretary over the life of such Participant or over the lives
of such Participant and a designated Beneficiary (or over a period not extending
beyond the life expectancy of such Participant or the life expectancy of such
Participant and a designated beneficiary). The term “Required Beginning Date”
means April 1 of the calendar year following the later of (a) the calendar year
in which the Participant attains age seventy and one-half (701/2), or (b) the
calendar year in which the Participant retires, except that clause (a) shall not
apply in the case of a Participant who is a five percent (5%) owner (as defined
in Section 416 of the Code) with respect to the Plan Year ending in the calendar
year in which the Participant attains the age of seventy and one-half (701/2).
Notwithstanding the above, any Participant (other than a five-percent owner) who
attains age seventy and one-half (701/2) before 1999 may elect to commence
distributions by April 1 of the calendar year following the calendar year in
which he attains age seventy and one-half (701/2), or elect to defer payment
until April 1 of the calendar year following the calendar year in which the
Participant retires.
Section 7.6 Distributions of General Employees’ Profit Sharing Plan Accounts.
Notwithstanding any other provisions of this Article 7, if a Participant (or his
Beneficiary) elected prior to August 1, 2006, to receive that portion of the
Participant’s Accounts attributable to the Participant’s account balance under
the General Employees’ Profit Sharing Plan as of October 31, 1993, in the form
of an annuity, the Participant (or his Beneficiary) shall continue to receive
annuity payments on and after August 1, 2006.
Section 7.7 Rollover Treatment.
          (a) Notwithstanding any provision of the Plan to the contrary that
would otherwise limit a Distributee’s election under this Section 7.7, a
Distributee may elect, at the time and in the manner prescribed by the
Administrative Committee to have any portion of an Eligible Rollover
Distribution paid directly to an Eligible Retirement Plan specified by the
Distributee in a Direct Rollover.
          (b) (1) An “Eligible Rollover Distribution” is any distribution of all
or any portion of the balance to the credit of the Distributee, except that an
Eligible Rollover Distribution does not include (i) any distribution that is one
of a series of substantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the Distributee or the joint
lives (or joint life expectancies) of the Distributee and the Distributee’s
designated beneficiary, or for a specified period of ten (10) years or more;
(ii) any distribution to the extent such distribution is required under
Section 401(a)(9) of the Code; (iii) the portion of any distribution that is not
includible in gross income (determined without regard to the exclusion for net
unrealized appreciation with respect to Shares of Qualifying Employer
Securities), and (iv) any amount that is distributed as a “hardship
distribution” as that term is described in Section 401(k)(2)(B)(i)(IV) of the
Code.
               (2) Notwithstanding (b)(1) above, a portion of a distribution
shall not fail to be an Eligible Rollover Distribution merely because the
portion consists of after-tax employee contributions which are not includable in
gross income. However, such portion may be

- 24 -

--------------------------------------------------------------------------------

 

transferred only to an individual retirement account or annuity described in
Section 408(a) or (b) of the Code, or to a qualified defined contribution plan
described in Section 401(a) or 403(a) of the Code that agrees to separately
account for amounts so transferred, including separately accounting for the
portion of such distribution which is includable in gross income and the portion
of such distribution which is not so includable.
          (c) An Eligible Retirement Plan is any of the following that accepts a
Distributee’s Eligible Rollover Distribution: (1) an individual retirement
account described in Section 408(a) of the Code, (2) an individual retirement
annuity described in Section 408(b) of the Code, (3) an annuity plan described
in Section 403(a) of the Code, (4) a qualified trust described in Section 401(a)
of the Code, (5) an annuity contract described in Section 403(b) of the Code,
and (6) an eligible plan under Section 457(b) of the Code which is maintained by
a state, political subdivision of a state, or any agency or instrumentality of a
state or political subdivision of a state and which agrees to separately account
for amounts transferred into such plan from this plan.
          (d) A Distributee includes an Employee or former Employee. In
addition, the Employee’s or former Employee’s surviving spouse and the
Employee’s or former Employee’s spouse or former spouse who is the alternate
payee under a qualified domestic relations order, as defined in Section 414(p)
of the Code, are Distributees with regard to the interest of the spouse or
former spouse.
          (e) A Direct Rollover is a payment by the Plan to the Eligible
Retirement Plan specified by the Distributee.
Section 7.8 30-Day Notice of Distribution Rights. If a distribution is one to
which Sections 401(a)(11) and 417 of the Code do not apply, such distribution
may commence less than thirty (30) days after the notice required under Treasury
Regulation Section 1.411(a)-11(c) is given, provided that:
               (a) The Administrative Committee clearly informs the Participant
that the Participant has a right to a period of at least thirty (30) days after
receiving the notice to consider the decision of whether or not to elect a
distribution (and, if applicable, a particular distribution option), and
               (b) The Participant, after receiving the notice, affirmatively
elects a distribution.
Section 7.9 Hardship Distributions
          (a) A Participant who is fully vested in his Accounts may make written
application to the Administrative Committee to withdraw all or part of the
Participant’s Account balances. Such an application shall be approved by the
Administrative Committee only if the Administrative Committee shall determine
that the withdrawal is necessary to satisfy an immediate and heavy financial
need of the Participant. Distribution of such withdrawal shall be made to the
Participant in a lump sum payment of whole shares of Qualifying Employer
Securities, plus cash for fractional shares, as soon as practicable after the
withdrawal is approved by the Administrative Committee.

- 25 -

--------------------------------------------------------------------------------

 

          (b) A Withdrawal from a Participant’s Account pursuant this
Section 7.9 shall not exceed the lesser of:
               (1) The Participant’s Account balances; or
               (2) Such amount as the Administrative Committee determines to be
necessary to relieve the immediate and heavy financial need established by the
Participant, including any amounts necessary to pay any federal, state, or local
income taxes or penalties reasonably anticipated to result from such withdrawal.
          (c) The Administrative Committee shall promulgate (and may from time
to time amend) rules and regulations prescribing the procedures to be followed
in requesting a hardship withdrawal and the circumstances which will be deemed
to warrant a withdrawal to meet an immediate and heavy financial need.
          (d) Determinations of the existence of an immediate and heavy
financial need shall be made by the Administrative Committee on the basis of all
relevant facts and circumstances. Without limiting the circumstances which will
be deemed to constitute immediate and heavy financial needs, a withdrawal shall
be deemed to be made on account of an immediate and heavy financial need of a
Participant if the withdrawal is on account of the following:
               (1) Expenses for (or necessary to obtain) medical care that would
be deductible by the Participant under Section 213(d) of the Code (determined
without regard to whether the expenses exceed 7.5% of adjusted gross income);
               (2) Costs directly related to the purchase of a principal
residence for the Participant (excluding mortgage payments);
               (3) Payment of tuition, related educational fees, and room and
board expenses, for up to the next 12 months of post-secondary education for the
Participant, or the Participant’s spouse, children, or dependents (as defined in
Section 152 of the Code and without regard to Sections 152(b)(1), (b)(2) and
(d)(1)(B) of the Code);
               (4) Payments necessary to prevent the eviction of the Participant
from the Participant’s principal residence or foreclosure on the mortgage on
that residence;
               (5) Payments for burial or funeral expenses for the Participant’s
deceased parent, spouse, children or dependents (as defined in Section 152 of
the Code and without regard to Section 152(d)(1)(B) of the Code);
               (6) Expenses for the repair of damage to the Participant’s
principal residence that would qualify for the casualty deduction under
Section 165 of the Code (determined without regard to whether the loss exceeds
10% of adjusted gross income); or
               (7) Such other circumstances as the Commissioner of Internal
Revenue may, through the publication of revenue rulings, notices, and other
documents of

- 26 -

--------------------------------------------------------------------------------

 

general applicability, determine constitute immediate and heavy financial needs
for purposes of Section 401(k) of the Code.
          (e) A distribution will not be treated as necessary to satisfy an
immediate and heavy financial need of a Participant to the extent that the
amount of the distribution exceeds the amount required to relieve the financial
need or such need may be satisfied from other resources that are reasonably
available to the Participant. The determination of whether a distribution is
necessary to satisfy a financial need shall be made on the basis of all relevant
facts and circumstances by the Administrative Committee. In making such
determination with respect to any hardship distribution to be made, the
Administrative Committee may rely upon a Participant’s representation that the
need cannot be relieved by the following:
               (1) Reimbursement or compensation by insurance or otherwise;
               (2) Reasonable liquidation of the Participant’s assets, to the
extent that such liquidation would not itself cause an immediate and heavy
financial need;
               (3) Other distributions or nontaxable (at the time of the loan)
loans from Related Plans; or
               (4) Borrowing from commercial sources on reasonable commercial
terms.
Section 7.10 Missing Persons. In the event the whereabouts of a person entitled
to benefits under the Plan cannot be determined after diligent search by the
Administrative Committee or the Trustee, and the person’s whereabouts continue
to be unknown for a period of five (5) years, then the Accounts of the person
shall be forfeited. If the person is subsequently located, his Accounts shall be
restored to him without earnings.
     Section 7.11 Diversification of Investments.
          (a) With respect to all Qualifying Employer Securities acquired after
1986, each Qualified Participant may elect under the provisions of
Section 401(a)(28)(B) of the Code within ninety (90) days after the close of
each Plan Year in the Qualified Election Period to receive a distribution of at
least twenty-five (25) percent of the Participant’s Accounts hereunder (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
“fifty (50) percent” for “twenty-five (25) percent”.
          (b) The term “Qualified Participant” means any employee who has
completed at least ten (10) years of participation under the Plan and has
attained age fifty-five (55).
          (c) The term “Qualified Election Period” means the six (6) Plan Years
beginning with the Plan Year after the Plan Year in which the Participant
attains age fifty-five (55) (or, if later, beginning with the Plan Year after
the first Plan Year in which the individual first became a Qualified
Participant).

- 27 -

--------------------------------------------------------------------------------

 

          (d) In the event a Qualified Participant makes a diversification
election with respect to his Accounts under the provisions of this Section, the
Trustee shall distribute to the Participant the portion of the Participant’s
Accounts covered by the election within ninety (90) days after the period during
which the election may be made.
          (e) All distributions under this Section shall be made in whole shares
of Qualifying Employer Securities, plus cash for fractional shares.
Section 7.12 In-Service Distributions at Age 62.
          (a) Notwithstanding the preceding provisions of this Article 7 to the
contrary, any Participant who has completed ten (10) or more Years of Service
and has attained age sixty-two (62) may elect to receive a distribution of the
entire amount of his vested Accounts or in two or more payments depending upon
the age of the Participant at the end of the Plan Year in which an election is
made. An election under this Section may be made in writing on a form provided
by the Administrative Committee no later than the end of the Plan Year during
which the election for distribution is made. Once made, an election under this
Section shall be binding and irrevocable. The first payment shall be made to the
Participant within ninety (90) days after the end of the Plan Year in which an
election to receive a distribution is made or as soon as administratively
feasible thereafter, and any successive payments shall be made within similar
time periods after the end of the immediately succeeding Plan Year(s) if more
than one (1) payment is made.
          (b) The schedule of payments shall be as follows;

      Age of Participant at the end of     the Plan Year in which an    
election to receive a distribution   Distribution is made   shall be made in
62
  Four (4) annual installments calculated as one-fourth (1/4), one-third (1/3),
one-half (1/2) and one (1) respectively, times the Participant’s Account
balances at the end of the Plan Year.
 
   
63
  Three (3) annual installments calculated as one-third (1/3), one-half (1/2)
and one (1), respectively, times the Participant’s Account balances at the end
of the Plan Year.
 
   
64
  Two (2) annual installments, calculated as one-half (1/2) and one (1),
respectively, times the Participant’s Account balances at the end of the Plan
Year.
 
   
65 and older
  One (1) installment of the entire amount in the Participant’s Account balances
at the end of the Plan Year.

- 28 -

--------------------------------------------------------------------------------

 

          (c) An in-service distribution of a Participant’s Accounts under this
Section will be made in whole shares of Qualifying Employer Securities, plus
cash for fractional shares. An election for distribution of Accounts pursuant to
this Section shall not terminate the Participant’s right to participate in
allocations of Contributions or Forfeitures hereunder.
          (d) Notwithstanding paragraphs (a), (b) and (c) above, (1) if a
Participant who has elected in-service distributions pursuant to this
Section Terminates Employment prior to receiving the entire amount of his
Account balances, the Participant’s remaining Account balances shall be
distributed in accordance with Section 7.2 hereof; and (2) if a Participant who
has elected in-service distributions pursuant to this Section has previously
made or subsequently makes a diversification election pursuant to Section 7.11
hereof, then for each Plan Year with respect to which both elections are
effective, there shall be distributed to such Participant the greater of the
amount required to be distributed to him under the Section 7.11 election or the
amount required to be distributed to him under this Section 7.12.
          (e) The amount of each payment made in accordance with the preceding
schedule shall be calculated by multiplying the Participant’s Account balances,
determined as of the end of the Plan Year immediately preceding the installment
payment, by the appropriate installment fraction.
ARTICLE 8
SPECIAL PROVISIONS RELATING TO LOANS
Section 8.1 Exempt Loans. The Trustee may incur an Exempt Loan on behalf of the
Plan in a manner and under conditions which will cause the loan to be an Exempt
Loan within the meaning of Section 4975(d)(3) of the Code and regulations
thereunder. An Exempt Loan shall be used primarily for the benefit of
Participants and their Beneficiaries. The proceeds of each Exempt Loan shall be
used, within a reasonable time after the Loan is obtained, only to purchase
Qualifying Employer Securities, to repay the Exempt Loan or to repay any prior
Exempt Loan. Any Exempt Loan shall provide for a reasonable rate of interest, an
ascertainable period of maturity and shall be without recourse against the Plan.
Any Exempt Loan shall be secured solely by shares of Qualifying Employer
Securities acquired with the proceeds of the Exempt Loan and shares of such
securities that were used as collateral on a prior Exempt Loan which was repaid
with the proceeds of the current Exempt Loan. Such securities pledged as
collateral shall be placed in a Suspense Account and released pursuant to
Section 8.2 hereof as the Exempt Loan is repaid. Qualifying Employer Securities
released from the Suspense Account shall be allocated among Participant Accounts
in the manner described in Section 5.2 hereof. No person entitled to payment
under an Exempt Loan shall have recourse against (i) any Trust Fund assets other
than the Qualifying Employer Securities used as collateral for the Loan,
(ii) Contributions of cash that are available to meet obligations under the Loan
and earnings attributable to such collateral, and (iii) the investment of such
Contributions. Contributions made with respect to any Plan Year during which the
Exempt Loan remains unpaid, and earnings on such Contributions, shall be deemed
available to meet obligations under the Exempt Loan.

- 29 -

--------------------------------------------------------------------------------

 

Section 8.2 Release of Shares from Suspense Account. An Exempt Loan shall
provide for the release of Shares of Qualifying Employer Securities used as
collateral for the Loan from the Suspense Account. For each Plan Year during the
duration of the Exempt Loan, the number of Shares released shall equal the
number of Shares held in the Suspense Account immediately before release for the
current Plan Year multiplied by a fraction. The numerator of the fraction is the
amount of principal and interest paid for the Plan Year. The denominator of the
fraction is the sum of the numerator plus the principal and interest to be paid
for all future Plan Years. The number of future years under the Exempt Loan
shall be definitely ascertainable and shall be determined without taking into
account any possible extensions or renewal periods. If the interest rate under
the Exempt Loan is variable, the interest to be paid in future years shall be
computed by using the interest rate applicable as of the end of the Plan Year.
If collateral includes more than one class of Qualifying Employer Securities,
the number of shares of each class to be released for a Plan Year shall be
determined by applying the same fraction to each class.
Section 8.3 Exempt Loan Repayments. Payments of principal and interest on any
Exempt Loan hereunder shall be made by the Trustee at the direction of the
Administrative Committee solely from: (i) Contributions available to meet
obligations under the Exempt Loan, (ii) earnings from the investment of such
Contributions, (iii) earnings attributable to Shares of Qualifying Employer
Securities pledged as collateral for the Exempt Loan, (iv) other dividends on
stock to the extent permitted by law, (v) the proceeds of a subsequent Exempt
Loan made to repay the Exempt Loan, and (vi) the proceeds of the same of any
shares pledged as collateral for the Exempt Loan. The Contributions and earnings
available to pay the Exempt Loan shall be accounted for separately by the
Administrative Committee until the Exempt Loan is repaid.
Section 8.4 Allocation of Released Shares.
     Subject to the limitations on Annual Additions to a Participant’s Accounts
under Section 4.3 hereof, Shares of Qualifying Employer Securities released from
a Suspense Account by reason of a payment made on an Exempt Loan shall be
allocated to the Stock Accounts of Eligible Participants in accordance with the
allocation formula under Section 5.2 hereof as if such payment had been made on
the last day of the Plan Year. The assets of the Trust Fund attributable to
Shares acquired by the-Plan in a sale to which Section 1042 of the Code applies
shall not accrue or be allocated for the benefit of persons specified in Section
409(n) of the Code during the nonallocation period as restricted by
Section 4.3(d) hereof.
Section 8.5 Nonterminable Rights. There shall be certain protections and rights
provided to Participants with respect to Shares of Qualifying Employer
Securities acquired with the proceeds of an Exempt Loan. These protections and
rights are as follows:
          (a) No Shares 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, the Plan, whether or not the Plan is
then an employee stock ownership plan, except that:
               (1) Shares acquired with the proceeds of an Exempt Loan may, but
need not, be subject to a right of first refusal. Shares subject to such right
must be stock or an

- 30 -

--------------------------------------------------------------------------------

 

equity security, or a debt security convertible into stock or an equity
security. Also, such Shares must not be publicly traded at the time the right
may be exercised. The right of first refusal must be in favor of the Employer,
the Plan, or both in any order of priority. The selling price and other terms
under the right must not be less favorable to the seller than the greater of
the: fair market value of the Shares, or the purchase price and other terms
offered by a buyer, other than the Employers or the Plan, making a good faith
offer to purchase a security. The right of first refusal shall lapse no later
than fourteen (14) days after the security holder gives written notice to the
holder of the right that an offer of a third party to purchase the Shares has
been received.
               (2) Shares acquired with the proceeds of an Exempt Loan shall be
subject to a put option if the Shares are not publicly traded or are subject to
a trading limitation when distributed. For purposes of this paragraph, a
“trading limitation” on Shares is a restriction under any federal or state
securities law, any regulation thereunder, or an agreement, not prohibited by
Treasury Regulations Section 54.4975-7(b), affecting the Shares which would make
the Shares not as freely tradable as one not subject to such restriction. The
put option shall be exercisable only by a Participant, by the Participant’s
donees, or by a person (including an estate or its distributees) to whom the
Shares pass by reason of a Participant’s death. (Under this paragraph,
“Participant” means a Participant and his Beneficiaries.) The put option shall
permit a Participant to put the Shares to the Employer. Under no circumstances
may the put option bind the Plan. However, it may grant the Plan an option to
assume the rights and obligations of the Employer at the time the put option is
exercised. If it is known at the time an Exempt Loan is made that federal or
state law would be violated by the Employer honoring such put option, the put
option must permit the Shares to be put, in a manner consistent with such law,
to a third party (e.g., an Affiliate or a Company shareholder other than the
Plan) that has substantial net worth at the time the Exempt Loan is made and
whose net worth is reasonably expected to remain substantial.
                    (A) A put option shall be exercisable at least during a
15-month period which begins on the date the Shares subject to the put option is
distributed by the Plan. In the case of Shares that are publicly traded without
restriction when distributed but ceases to be so traded within fifteen
(15) months after distribution, the Employer shall notify each Shareholder in
writing on or before the tenth day after the date the Shares cease to be so
traded that for the remainder-of the 15-month-period the Shares are subject to a
put option. The number of days between such tenth day and the date on which
notice is actually given, if later than the tenth day, shall be added to the
duration of the put option. The notice shall inform distributees of the terms of
the put option that they are to hold. Such terms shall satisfy the requirements
of this Section 8.5.
                    (B) A put option shall be exercised by the holder by
notifying the Employer in writing that the put option is being exercised. The
period during which a put option is exercisable shall not include any time when
a distributee is unable to exercise it because the party bound by the put option
is prohibited from honoring it by applicable federal or state law. The price at
which a put option shall be exercisable is the fair market value of the Shares.
The provisions of payment under a put option shall be reasonable. The deferral
of payment is reasonable if adequate security and a reasonable interest rate are
provided for any credit extended, and if the cumulative payments at any time are
no less than the aggregate of reasonable periodic payments as of such time.
Periodic payments are reasonable if annual

- 31 -

--------------------------------------------------------------------------------

 

installments, beginning thirty (30) days after the date the put option is
exercised, are substantially equal. Generally, the payment period may not end
more than five (5) years after the date the put option is exercised. However, it
may be extended to a date no later than the earlier of ten (10) years from the
date the put option is exercised or the date the proceeds of the Exempt Loan
used by the Plan to acquire the Shares subject to the put option are entirely
repaid. Payment under a put option may be restricted by the terms of an Exempt
Loan, including one used to acquire Shares subject to a put option. Otherwise,
payment under a put option shall not be restricted by the provisions of an
Exempt Loan or any other arrangement, including the terms of the Employers’
articles of incorporation, unless so required by applicable state law.
Section 8.6 Valuation of Qualifying Employers Securities.
          The fair market value of Qualifying Employer Securities that are not
readily tradable on an established securities market shall be determined as of
each Valuation Date by an independent appraiser who meets requirements similar
to the requirements of the regulations prescribed under Section 170(a)(1) of the
Code.
ARTICLE 9
TRUST FUND
Section 9.1 Trust Agreement. The Company has entered into a Trust Agreement with
the Trustee to hold the funds set aside pursuant to this Plan.
Section 9.2 Non-Reversion; Exclusive Benefit Clause. The Trust Fund shall be
received, held in trust and disbursed by the Trustee in accordance with the
provisions of the Trust Agreement and this Plan. Except as provided in
Section 4.2(c) or (d) hereof, no part of the Trust shall be used for or diverted
to purposes other than for the exclusive benefit of Participants or their
Beneficiaries or defraying the reasonable administrative expenses of the Plan.
No person shall have any interest in, or right to, the Trust Fund or any part
thereof, except as specifically provided for in this Plan or the Trust
Agreement. Notwithstanding the above, nothing in this Section nor the Plan shall
preclude the Trustee from complying with a qualified domestic relations order,
within the meaning of Section 414(p) of the Code.
Section 9.3 Powers of the Trustee. The Trustee shall have such powers to hold,
invest, reinvest, control, and disburse Trust Funds as at that time shall be set
forth in the Trust Agreement.
Section 9.4 Trust Agreement Part of the Plan. The Trust Agreement shall be
deemed to form a part of the Plan and all the rights of Participants or others
under this Plan shall be subject to the provisions of the Trust Agreement to the
extent such provisions are not contradicted by specific provisions of this Plan.

- 32 -

--------------------------------------------------------------------------------

 

Section 9.5 Trustee Purchase of Stock. As soon as practicable after the Trustee
receives cash Contributions, dividends or other amounts on behalf of the Plan or
any Participant, and to the extent not prohibited by applicable law, the Trustee
shall invest such cash in Qualifying Employer Securities. Pending such
investment in Qualifying Employer Securities, however, the Trustee may retain
cash uninvested without liability for interest, or may invest all or any part
thereof in suitable investments and securities. Notwithstanding the foregoing,
the Trustee may hold Trust Fund assets in cash or other liquid investments to
the extent the Trustee deems reasonable or appropriate for Plan liquidity
purposes.
ARTICLE 10
ADMINISTRATIVE COMMITTEE
Section 10.1 Named Fiduciaries. The following persons shall be Named Fiduciaries
under the Plan.
          (a) The Trustee: Subject to the direction of the Administrative
Committee, as described in this Article 10, the Trustee shall have exclusive
authority and discretion to manage and control the assets of the Trust, as
provided in the Trust Agreement, and shall have no responsibilities other than
those provided in such Agreement.
          (b) Administrative Committee: The Administrative Committee shall be
the “Administrator,” as that term is defined under ERISA Section 3(16)(A), of
the Plan. The Administrative Committee shall consist of at least three persons
appointed by the Board of Directors.
Section 10.2 Appointment of Administrative Committee. The Board shall appoint
the Administrative Committee consisting of officers or other Employees. The
Administrative Committee shall be composed of no more than five (5) members, as
determined from time to time by the Board. The Administrative Committee Members
shall serve at the pleasure of the Board, and vacancies in the Administrative
Committee arising by reason of resignation, death, removal, or otherwise shall
be filled by the Board. Any Administrative Committee Member may resign of his
own accord by delivering his written resignation to the Board.

- 33 -

--------------------------------------------------------------------------------

 

Section 10.3 Organization and Operation of Administrative Committee. The
Administrative Committee shall appoint a Chairman and a Secretary and such other
officers as it shall deem advisable. The Administrative Committee shall act by a
majority of the Administrative Committee Members at the time in office and such
action may be taken either by a vote at a meeting or in writing without a
meeting. The Administrative Committee may by such majority action authorize any
one or more of the Administrative Committee Members to execute any document or
documents on behalf of the Administrative Committee.
Section 10.4 Responsibilities and Powers of Administrative Committee.
          (a) The Administrative Committee shall have responsibility and
authority to control the operation and administration of the Plan in accordance
with the terms of the Plan, including, without limiting the generality of the
foregoing,
               (1) All functions assigned to the Administrative Committee under
the terms of the Plan;
               (2) Determination of benefit eligibility;
               (3) Determination of any questions arising in connection with the
interpretation, application or administration of the Plan (including any
questions of fact relating to age, service, compensation or eligibility of
Employees);
               (4) Hiring of persons to provide necessary services to the Plan,
including a recordkeeper and the Trustee;
               (5) Issuance of directions to the Trustee as to (i) the payment
of any fees, taxes, charges or other costs incidental to the operation and
management by the Administrative Committee of the Plan; (ii) the payment of
benefits to Participants; (iii) the allocation, payment and distribution of the
Trust Fund, including interest thereon; or (iv) any other matter; and
               (6) Maintenance of all records of the Plan other than those
required to be maintained by the Trustee or any recordkeeper.
          (b) The Administrative Committee’s decisions and actions shall be
conclusive and binding upon any and all persons and parties;
          (c) Administrative Committee Members shall serve without compensation
for their services in the administration and operation of the Plan unless
compensation therefor is fixed by the Board in its appointment of the
Administrative Committee or thereafter.
          (d) The Administrative Committee shall enact such rules and
regulations as it may deem proper and necessary to facilitate the administration
and operation of the Plan.

- 34 -

--------------------------------------------------------------------------------

 

Section 10.5 Individual and Shared Responsibilities of Named Fiduciaries.
     This Article 10 is intended to allocate to each Named Fiduciary the
individual responsibility for the prudent execution of the functions assigned to
the Named Fiduciary, and none of such responsibilities or any other
responsibility shall be shared by the Named Fiduciaries unless such sharing
shall be provided by a specific provision of the Plan or the Trust Agreement.
Whenever one Named Fiduciary is required by the Plan or the Trust Agreement to
follow the directions of another Named Fiduciary, the two Named Fiduciaries
shall not be deemed to have been assigned a shared responsibility, but the
responsibility of the Named Fiduciary giving the directions shall be deemed his
sole responsibility, and the responsibility of the Named Fiduciary receiving
those directions shall be to follow them insofar as such instructions are on
their face proper under applicable law.
Section 10.6 Employment of Advisers. A Named Fiduciary may employ one or more
persons to render advice concerning any responsibility such Named Fiduciary has
under the Plan or Trust Agreement.
Section 10.7 Fiduciary in More Than One Capacity. Any person serving as a
fiduciary may serve in more than one fiduciary capacity.
Section 10.8 Power to Construe and Interpret Plan.
          (a) The Administrative Committee shall have the sole, absolute and
exclusive right, power, and discretionary authority to construe and interpret
the provisions of the Plan, and all parts thereof, and then administer the Plan
for the best interests of the Participants and the Beneficiaries. It may
construe any ambiguity, or supply any omission, or reconcile any inconsistencies
in such manner and to such extent as it deems proper. The Administrative
Committee shall have further discretionary authority to determine all questions
with respect to the individual rights of the Employees under the Plan,
including, but not by way of limitation, all issues with respect to any
Employee’s or Beneficiary’s eligibility for benefits and Employee’s earnings,
compensation, service and retirement, as may be reflected by the records of the
Employer, and such other information on which these decisions shall be based. It
is the intent of this Plan that any court reviewing an action of the
Administrative Committee shall apply the arbitrary and capricious standard of
review.
          (b) The Administrative Committee shall be entitled to rely upon all
certificates and reports made by any duly appointed accountant, and upon all
opinions given by any duly appointed legal counsel.
Section 10.9 Indemnity Agreement.
          (a) The Employer shall indemnify and hold harmless each Administrative
Committee Member from any and all claims, losses, damages, expenses (including
accounting, consulting and legal fees approved by the Administrative Committee),
and liabilities (including any amounts paid in settlement with the
Administrative Committee’s approval) arising from any act or omission of such
member, except, when the same is determined to be due to the gross negligence or
willful misconduct of such member.

- 35 -

--------------------------------------------------------------------------------

 

          (b) The Employer shall indemnify the Administrative Committee Members,
the Trustee and any employee of any Affiliate to whom the Administrative
Committee or the Trustee has delegated fiduciary duties against any and all
claims, losses, damages, expenses and liabilities arising from their
responsibilities in connection with the Plan, unless the same is determined to
be due to gross negligence or willful misconduct.
Section 10.10 Costs. The Trust Fund shall be used to pay all expenses, costs and
fees of the Administrative Committee, to the extent such expenses, costs and
fees are not paid by the Employer.
Section 10.11 Application and Forms for Benefits.
     The Administrative Committee may require a Participant or Beneficiary to
complete and file with the Administrative Committee an Application for Benefits
and all other forms approved by the Administrative Committee, and to furnish all
pertinent information requested by the Administrative Committee. The
Administrative Committee may rely upon all such information so furnished it,
including the Participant’s current mailing address.
Section 10.12 Claims for Benefits
     It shall not be necessary for a Participant or Beneficiary who has become
entitled to receive a benefit hereunder to file a claim for such benefit with
any person as a condition precedent to receiving a distribution of such benefit.
However, any Participant or Beneficiary who believes that he has become entitled
to a benefit hereunder in excess of the benefit which he has received, or
commenced receiving, may file a written claim for such benefit with the
Administrative Committee. Such written claim shall set forth the Participant’s
or Beneficiary’s name and address and a statement of the facts and a reference
to the pertinent provisions for the Plan on which such claim is based.
Section 10.13 Denial of Claims.
          (a) If the claim of any person (a “Claimant”) to all or any part of
any payment or benefit under this Plan shall be denied, the Administrative
Committee shall provide to the Claimant, within 90 days after receipt of such
claim, a written notice setting forth:
               (1) the specific reason or reasons for the denial;
               (2) the specific references to the pertinent Plan provisions on
which the denial is based;
               (3) a description of any additional material or information
necessary for the Claimant to perfect the claim and an explanation as to why
such material or information is necessary; and
               (4) a description of the Plan’s review procedures and the time
limits applicable to those procedures, including a statement of the Claimant’s
right to bring a civil action under ERISA Section 502(a) following an adverse
decision on review by the Administrative Committee.

- 36 -

--------------------------------------------------------------------------------

 

          (b) If the Administrative Committee determines that special
circumstances require an extension of time beyond the initial 90-day period, the
Administrative Committee shall provide to the Claimant, within the initial
90-day period, a written notice of such extension stating the special
circumstances requiring the extension and the date by which the Administrative
Committee expects to make its determination (which date will not be later than
90 days after the end of the initial 90-day period).
Section 10.14 Appeal of Denied Claim.
          (a) Within 60 days after receipt of a notice of denial of his claim
for benefits, a Claimant may request, upon written application to the
Administrative Committee, a review by the Administrative Committee of its
decision denying the Claimant’s claim. The Administrative Committee shall
provide the Claimant the opportunity to submit written comments, documents,
records and other information relating to his claim for benefits, and shall
provide the Claimant, upon request and free of charge, reasonable access to and
copies of pertinent documents. The Administrative Committee shall make a full
and fair review, and shall make its decision on review by taking into account
all comments, documents, records and other information submitted by the
Claimant, regardless of whether such comments, documents, records and other
information were considered by the Administrative Committee when it initially
denied the Claimant’s claim for benefits.
          (b) The Administrative Committee shall issue its decision on review of
a Claimant’s denied claim for benefits within a reasonable period of time, but
not later than 60 days after the Plan receives the Claimant’s request for a
review. If the Administrative Committee determines that special circumstances
require an extension of time for processing a Claimant’s review request beyond
the initial 60-day period, the Administrative Committee shall provide the
Claimant, within the initial 60-day period, a written notice of such extension
stating the special circumstances requiring the extension and the date by which
the Administrative Committee expects to make its decision on review (which date
will not be later than 60-days after the end of the initial 60-day period). If
the Administrative Committee grants an extension due to the Claimant’s failure
to submit information necessary to decide the Claimant’s claim, the period for
making the decision on review shall be tolled from the date on which the
Administrative Committee sends the notice of extension to the Claimant until the
date on which the Claimant responds to the request for additional information.
          (c) The Administrative Committee shall notify a claimant of its
decision on review in writing, and if the decision is adverse, the notice shall
set forth:
               (1) the specific reasons for the decision;
               (2) the specific references to the pertinent Plan provisions on
which the decision on review is based;
               (3) a statement that the Claimant is entitled to receive, upon
request and free of charge, reasonable access to, and copies of, all documents
and other information relevant to his claim for benefits; and

- 37 -

--------------------------------------------------------------------------------

 

               (4) a statement of the Claimant’s right to bring a civil action
under Section 502(a) of ERISA.
Section 10.15 Claims, Notices, Etc.
          (a) Any claim, notice, application or other writing permitted or
required to be filed with or given to a party under this Article 12 shall be
deemed to have been filed or given when deposited in the U.S. mail, certified,
postage prepaid, and properly addressed to the party to whom it is to be given
or with whom it is to be filed. Any such claim, notice, application, or other
writing deemed filed or given pursuant to the next foregoing sentence shall, in
the absence of clear and convincing evidence to the contrary, be deemed to have
been received on the fifth business day following the date upon which it was
filed or given. Any such claim, notice, application or other writing directed to
the Administrative Committee shall be deemed properly addressed if addressed as
follows:
Administrative Committee
Sanderson Farms, Inc.
127 Flynt Road
Laurel, Mississippi 39441
          (b) Any such notice, application, or other writing directed to a
Participant or Beneficiary shall be deemed properly addressed if directed to the
address set forth in the written claim fled by such Participant or Beneficiary.
ARTICLE 11
MODIFICATIONS FOR TOP HEAVY PLANS
Section 11.1 Application of Article.
     Prior to the allocation of Contributions for a Plan Year pursuant to
Article 5 hereof, the Administrative Committee shall determine whether the Plan
constitutes a Top Heavy Plan during the preceding Plan Year. If. a determination
is made that this Plan constitutes a Top Heavy Plan, then the provisions of this
Article 11 shall be applicable notwithstanding any other provisions of this Plan
to the contrary.
Section 11.2 Definitions.
          (a) Top Heavy Plan: This Plan shall constitute a Top Heavy Plan for a
Plan Year if, as of the Determination Date (i) the aggregate of the Account
balances of Key Employees exceeds sixty percent (60%) of the aggregate of the
Account balances of all Employees under the Plan, or (ii) if the Plan is part of
a Top Heavy Group.
          (b) Top Heavy Group: This Plan shall be deemed to be a part of a Top
Heavy Group if the plans which make up the group of which this Plan is
considered a part are such that, when aggregated, the sum of (i) the present
value of the cumulative accrued benefits of Key

- 38 -

--------------------------------------------------------------------------------

 

Employees under all defined benefit plans in the group, and (ii) the aggregate
of the accounts of Key Employees under all defined contribution plans in the
group, exceed sixty percent (60%) of the sum of such amounts for all employees
who participate in the plans of such group. The group of plans of which this
Plan shall be considered a part includes: (i) all plans of the Employer and
Affiliates in which a Key Employee participates; (ii) all plans which enable a
plan in which a Key Employee participates to meet the qualification requirements
of Section 401(a)(4) or Section 410 of the Code; and (iii) all plans which the
Employer, in its discretion, decides to include, provided that the inclusion of
such plan or plans would not prevent the group of plans from meeting the
qualification requirements of Section 401 (a)(4) and Section 410 of the Code.
          (c) Key Employee: The term “Key Employee” means any Employee who, at
any time during the Plan Year in question or during any of the four
(4) preceding Plan Years is (i) an officer of the Employer having Annual
Compensation which exceeds fifty percent (50%) of the amount in effect under
Section 415(b)(1)(A) of the Code for any such Plan Year (not to exceed the
greater of three (3) Employees or ten percent (10%) of the Employees), (ii) one
(1) of the ten (10) Employees having an annual compensation from the Employer of
more than the limitation in effect under Section 415(c)(1)(A) of the Code and
owning (or considered as owning within the meaning of Section 318 of the Code)
the largest interest in the Employer, (iii) a five percent (5%) (or greater)
owner of the Employer, or (iv) a one percent (1%) owner of the Employer having
an Annual Compensation from the Employer of more than two hundred thousand
dollars ($200,000). For the purposes of applying the terms of the preceding
sentence; the provisions of Section 416(i) of the Code are incorporated herein
by reference.
          (d) Determination Date: The term “Determination Date” means the last
day of the Plan Year immediately preceding the Plan Year for which a Top Heavy
determination is made.
          (e) Annual Compensation: The term “Annual Compensation” means
compensation within the meaning of Section 415(c)(3) of the Code.
Section 11.3 Amounts Included for Computation Purposes. For the purposes of this
Section 11.3, in determining the present value of the cumulative accrued benefit
for any Employee or the amount of the Account of any Employee, there shall be
included therein the aggregate of all distributions made with respect to such
Employee within the five (5) year period ending on the Determination Date. The
preceding sentence shall also apply to distributions under a terminated plan
which if it had not been terminated would have been required to be included in
an aggregation group described in Section 11.2(b) hereof. If an individual has
not received any Annual Compensation from any Employer (other than benefits
under the Plan) at any time during the five (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. Furthermore, the accrued
benefits and Account balances of any Employee who is not a Key Employee for the
Plan Year in question, but was a Key Employee in any previous Plan Year, shall
not be taken into consideration in making any of the computations required in
this Section 11.3.
Section 11.4 Accelerated Vesting.

- 39 -

--------------------------------------------------------------------------------

 

          (a) For any Plan Year in which this Plan is deemed to be a Top Heavy
Plan, the vesting schedule contained in Section 6.1 hereof shall be modified as
follows:

          COMPLETE YEARS OF SERVICE   VESTED PERCENTAGE
1
    0 %
2
    20 %
3
    40 %
4
    60 %
5
    80 %
6
    100 %

          (b) If this Plan is not deemed to be a Top-Heavy Plan after previously
being so categorized, then the vesting schedule contained in Section 6.1 hereof
shall again be effective, except that the vested percentage attained by
Participants shall not be reduced thereby and Participants with three (3) or
more Years of Service for vesting shall have the right to select the vesting
schedule under which their vested accrued benefit will be determined.
Section 11.5 Minimum Contributions.
          (a) For any Plan Year in which this Plan is determined to be a Top
Heavy Plan, a minimum Employer contribution shall be made, under this Plan or
another defined contribution plan maintained by the Employers, to the account of
each non-Key Employee with a Year of Service for accrual of benefits.
          (b) For the purposes of the first sentence of this Section 11.5, the
minimum Employer contribution provided to each non-Key Employee with a Year of
Service for accrual of benefits shall be equal to three percent (3%) of such
non-Key Employee’s Annual Compensation. If, however, the Employer contribution
under this and any other defined contribution plan required to be included in
the Top-Heavy Group and maintained by the Employer for any Key Employee for such
Plan Year is less than three percent (3%) of such Key Employee’s total Annual
Compensation, then the Employer contribution for each Employee with a Year of
Service for accrual of benefits shall equal the amount which results from
multiplying such Employee’s Annual Compensation times the highest contribution
rate for the purpose of the preceding sentence. For purposes of this
Section 11.5, a non-Key Employee who is a Participant and is employed on the
last day of the Plan Year shall be deemed to have a Year of Service for purposes
of accrual of benefits for that Plan Year.
Section 11.6 Modification of Top-Heavy Rules
          (a) Effective date. This Section shall apply for purposes of
determining whether the plan is a Top-Heavy Plan for Plan Years beginning after
December 31, 2001, and whether the Plan satisfies the minimum benefits
requirements of Section 416(c) of the Code for such years. This Section amends
this Article 11.
          (b) Determination of Top-Heavy status.
               (1) Key Employee. Key Employee means any Employee or former
Employee (including any deceased Employee) who at any time during the Plan Year
that

- 40 -

--------------------------------------------------------------------------------

 

includes the Determination Date was an officer of the Employer having Annual
Compensation greater than $130,000 (as adjusted under Section 416(1)(1) of the
Code for Plan Years beginning after December 31, 2002), a 5-percent owner of the
Employer, or a 1-percent owner of the Employer having Annual Compensation of
more than $150,000. The determination of who is a Key Employee will be made in
accordance with Section 416(1)(1) of the Code and the applicable regulations and
other guidance of general applicability issued thereunder.
          (c) Determination of present values and amounts. This Section 11.6
shall apply for purposes of determining the present values of accrued benefits
and the amounts of Account balances of Employees as of the Determination Date.
               (1) Distributions during Plan Year ending on the Determination
Date. The present values of accrued benefits and the amounts of Account balances
of an Employee as of the Determination Date shall be increased by the
distributions made with respect to the Employee under the Plan and any plan
aggregated with the Plan under Section 416(g)(2) of the Code during the 1-year
period ending on the Determination Date. The preceding sentence shall also apply
to distributions under a terminated plan which, had it not been terminated,
would have been aggregated with the Plan under Section 416(g)(2)(A)(i) of the
Code. In the case of a distribution made for a reason other than separation from
service, death, or disability, this provision shall be applied by substituting
“5-year period” for “1-year period.”
               (2) Employees not performing services during year ending on the
Determination Date. The accrued benefits and Accounts of any individual who has
not performed services for the Employers during the 1-year period ending on the
Determination Date shall not be taken into account.
          (d) Minimum benefits; Matching contributions. Employer matching
contributions shall be taken into account for purposes of satisfying the minimum
contribution requirements of Section 416(c)(2) of the Code and the Plan. The
preceding sentence shall apply with respect to matching contributions under the
Plan or, if the Plan provides that the minimum contribution requirement shall be
met in another plan, such other plan. Employer matching contributions that are
used to satisfy the minimum contribution requirements shall be treated as
matching contributions for purposes of the actual contribution percentage test
and other requirements of Section 401(m) of the Code.
ARTICLE 12
AMENDMENT, MERGER, CONSOLIDATION OR TRANSFER OF ASSETS;
TERMINATION OR DISCONTINUANCE
Section 12.1 Amendment.
     The Company shall have the right at any time, and from time to time, to
amend, in whole or in part, any or all of the provisions of this Plan by action
of the Board. No amendment to the Plan shall reduce the Account balance of any
Participant prior to the amendment. Furthermore, no amendment to the Plan shall
have the effect of decreasing a Participant’s vested interest determined without
regard to such amendment as of the later of the date such amendment is

- 41 -

--------------------------------------------------------------------------------

 

adopted or the date it becomes effective. For purposes of determining whether or
not any Participant’s Account balance is decreased, all the provisions of the
Plan affecting directly or indirectly the computation of Account balances which
are amended with the same adoption and effective dates shall be treated as one
Plan amendment.
Section 12.2 Merger, Consolidation, or Transfer of Assets. In the case of any
merger or consolidation with or transfer of assets or liabilities to, or any
other plan, each Participant would or shall (if the Plan then terminated)
receive a benefit immediately after the merger, consolidation or transfer which
is equal to or greater than the benefit the Participant would have been entitled
to receive immediately before the merger, consolidation or transfer (if the Plan
had been terminated).
Section 12.3 Termination; Discontinuance of Contributions.
          (a) The Company through action of its Board shall have the right at
any time to terminate the Plan in whole or in part or to permanently or
temporarily discontinue Contributions hereunder. A certified copy of such
resolutions shall be delivered to the Administrative Committee and to the
Trustee.
          (b) Upon termination of the Plan or discontinuance of Contributions
hereunder, each affected Participant shall immediately vest in his Accounts
hereunder. Upon such termination or discontinuance of Contributions, the Trust
Fund shall nevertheless continue, and the Trustee is authorized to continue to
hold and administer the Trust Fund for the benefits, rights, and privileges as
hereinabove provided. The Trustee may distribute to the Participants or their
Beneficiaries their vested Account balances, if the Participants or their
Beneficiaries so request, or make distributions at some future dates pursuant to
the provisions of Article 7 hereof, provided that the method or methods of
distribution adopted do not discriminate in favor of highly compensated
employees of the Employer, within the meaning of Section 414(q) of the Code.
          (c) Until the final distribution of the Trust Fund, the Trustee shall
continue to have all the powers provided under this Plan and the Trust Agreement
as are necessary and expedient for the orderly administration, liquidation and
distribution of the Trust Fund.
ARTICLE 13
MISCELLANEOUS
Section 13.1 Nonalienation of Benefits.
          (a) Except with respect to federal income tax withholding, benefits
payable under this Plan shall not be subject- in any. manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, charge,
garnishment, execution, or levy of any kind, either voluntary or involuntary,
and any attempt to anticipate, alienate, sell, transfer, assign, pledge,
encumber, charge or otherwise dispose of any right to benefits payable
hereunder, shall be void.

- 42 -

--------------------------------------------------------------------------------

 

The Trust Fund shall not in any manner be liable for, or subject to, the debts,
contracts, liabilities, engagements or torts of any person entitled to benefits
hereunder.
          (b) The preceding paragraph shall also apply to the creation,
assignment or recognition of a right to any benefit payable with respect to a
Participant pursuant to a domestic relations order, unless such order is
determined to be a qualified domestic relations order, as defined in Section
414(p) of the Code.
Section 13.2 Qualified Domestic Relations Order.
     The Administrative Committee shall comply with the terms of any judgment,
decree or order (including approval of a property settlement agreement) which is
a qualified domestic relations order, within the meaning of Section 414(q) of
the Code.
Section 13.3 No Guarantee of Employment. Except as otherwise provided by law and
as provided herein, the adoption of this Plan shall not be construed as giving
any Employee or any other person any legal or equitable right against the
Employers, or any officer or Employee thereof, the Administrative Committee
established in connection herewith, the Trustee or the principal and income of
the Trust Fund or any equity or interest in the assets, business or affairs of
the Employer, unless such right, equity or interest is specifically provided for
in this Plan, nor shall it be construed as giving any Employee the right to be
retained in the service of the Employer.
Section 13.4 Authorization to Withhold Taxes. The Trustee is authorized in
accordance with applicable law to withhold from distribution to any payee such
sums as may be necessary to cover federal and state taxes which may be due with
respect to such distributions.
Section 13.5 Delegation of Authority by Employer. Whenever the Employer under
the terms of this Plan is permitted or required to do or perform any action or
matter or thing, it shall be done and performed by any of the Employer’s
officers thereunto duly authorized by the Employer’s Boards of Directors.
Section 13.6 Number and Gender. Whenever any words are used herein in the
singular number or masculine gender, they shall be construed as though they were
also used in the plural number or feminine gender in all cases where they would
so apply.
Section 13.7 Legal Actions.
          (a) Except as may be specifically provided for by law, in any action
or proceeding involving this Plan and the Trust Fund, or any property
constituting part or all thereof, or the administration thereof, the Employer
and the Trustee shall be the only necessary parties and no Employees or former
Employees of the Employer or their Beneficiaries or any other person having or
claiming to have an interest in the Trust Fund or under this Plan shall be
entitled to any notice of process. Service of process for any actions relation
to the Plan and Trust Fund may be made on the Employer.
          (b) Except as may be specifically provided for by law, any final
judgment which is not appealed or appealable that may be entered in any such
action or proceeding shall

- 43 -

--------------------------------------------------------------------------------

 

be binding and conclusive on the parties hereto and all persons having or
claiming to have any interest under this Plan or in the Trust Fund.
Section 13.8 Delays in Distribution. Notwithstanding any other provisions of
this Plan and the Trust Agreement, the Trustee may delay distribution to a
Participant or, his Beneficiary or Beneficiaries of Shares of Qualifying
Employer Securities pursuant to this Plan until one of the following conditions
shall have been satisfied:
          (a) The shares with respect to which distribution of an Account is to
be made are at the time of distribution effectively registered under the
Securities Act of 1933 as now in force or hereafter amended.
          (b) A no-action letter in respect of the distribution of such shares
shall have been obtained by the Employer from the Securities Exchange
Commission; or
          (c) Counsel for the Employer shall have given an opinion, which
opinion shall not be unreasonably conditioned or withheld, that such shares are
exempt from registration under the Securities Act of 1933 as now in force or
hereafter amended, and are nonrestricted upon transfer.
Section 13.9 Plan Document Location. Official copies of this Plan and the Trust
Agreement shall be available for inspection by Participants, their Beneficiaries
and other persons with a legal or equitable interest under the Plan or in the
Trust Fund, at the principal offices of the Employer located at 127 Flynt Road,
Laurel, Mississippi 39443,
Section 13.10 Plan Terms Control. In any instances where the provisions or terms
of this Plan are inconsistent with or conflict with the terms of the Trust
Agreement, the provisions or terms of this Plan shall, govern or control the
matter to be interpreted or resolved.
Section 13.11 Severability. Each provision of this Plan maybe severed. If any
provision is determined to be invalid- or unenforceable, that determination
shall not affect the validity or enforceability of any other provision.
Section 13.12 Governing Law. The provisions of this Plan shall be construed,
administered, and governed under the laws of the State of Mississippi and, to
the extent applicable, by the laws and regulations of the United States.
ARTICLE 14
CONCERNING QUALIFIED MILITARY SERVICE
     Notwithstanding the provisions of this Plan to the contrary, effective
December 12, 1994, contributions, benefits and service with respect to qualified
military service shall be provided in accordance with Section 414(u) of the
Code.

- 44 -

--------------------------------------------------------------------------------

 

ARTICLE 15
MINIMUM DISTRIBUTION REQUIREMENTS
Section 15.1 General Rules.
          (a) Effective Date. The provisions of this Article 15 will apply for
purposes of determining required minimum distributions for calendar years
beginning with the 2003 calendar year.
          (b) Precedence. The requirements of this Article will take precedence
over any inconsistent provisions of the Plan.
          (c) Requirements of Treasury Regulations Incorporated. All
distributions required under this Article will be determined and made in
accordance with the Treasury regulations under Section 401(a)(9) of the Code.
          (d) TEFRA Section 242(b)(2) Elections. Notwithstanding the other
provisions of this Article, distributions may be made under a designation trade
before January 1, 1984, in accordance with Section 242(b)(2) of the Tax Equity
and Fiscal Responsibility Act (TEFRA) and the provisions of the Plan that relate
to section 242(b)(2) of TEFRA.
Section 15.2 Time and Manner of Distribution.
          (a) Required beginning. The Participant’s entire interest will be
distributed, or begin to be distributed, to the Participant no later than the
Participant’s required beginning date which for Plan Years commencing after
October 30, 1999 shall be:
               (1) For a Participant who is a 5% owner (as defined in
Section 416 of the Code), the required beginning date is April 1 following the
calendar year in which the Participant attains age 701/2.
               (2) For a Participant who is not a 5% owner, the required
beginning date is April 1 following the later of (i) the calendar year in which
the Participant attains age 701/2, and (ii) the calendar year in which the
Participant retires; however, such Participant who attains age 701/2 before 1999
may elect to commence distributions by April 1 of the calendar year following
the calendar year in which he attains age 701/2, or elect to defer payment until
April 1 of the calendar year following the calendar year in which the
Participant retires.
          (b) Death of Participant Before Distributions Begin. If the
Participant dies before distributions begin, the Participant’s entire interest
will he distributed, or begin to be distributed, no later than as follows:
               (1) If the Participant’s surviving spouse is the Participant’s
sole designated Beneficiary, distributions to the surviving spouse will begin by
December 31 of the calendar year immediately following the calendar year in
which the Participant died, or by December 31 of the calendar year in which the
Participant would have attained age 701/2, if later.

- 45 -

--------------------------------------------------------------------------------

 

               (2) If the Participant’s surviving spouse is not the
Participant’s sole designated Beneficiary, distributions to the designated
Beneficiary will begin by December 31 of the calendar year immediately following
the calendar year in which the Participant died.
               (3) If there is no designated Beneficiary as of September 30 of
the year following the year of the Participant’s death, the Participant’s entire
interest will be distributed by December 31 of the calendar year containing the
fifth anniversary of the Participant’s death.
               (4) If the Participant’s surviving spouse is the Participant’s
sole designated Beneficiary and the surviving spouse dies after the Participant
but before distributions to the surviving spouse begin, this Section 15.2, other
than Section 15.2(b)(1), will apply as if the surviving spouse were the
Participant.
     For purposes of this Section 15.2(b) and 15.4 hereof, unless
Section 15.2(b)(4) applies, distributions are considered to begin on the
Participant’s required beginning date. If Section 15.2(b)(4) applies,
distributions are considered to begin on the date distributions are required to
begin to the surviving spouse under Section 15.2(b)(1). If distributions under
an annuity purchased from an insurance company irrevocably commence to the
Participant before the Participant’s required beginning date (or to the
Participant’s surviving spouse before the date distributions are required to
begin to the surviving spouse under Section 15.2(b)(1)), the date distributions
are considered to begin is the date distributions actually commence.
          (c) Forms of Distribution. Unless the Participant’s interest is
distributed in the form of an annuity purchased from an insurance company or in
a single sum on or before the required beginning date, as of the first
distribution calendar year distributions will be made in accordance with
Sections 15.3 and 15.4 of this Article. If the Participant’s interest is
distributed in the form of an annuity purchased from an insurance company,
distributions thereunder will be made in accordance with the requirements of
Section 401(a)(9) of the Code and the Treasury regulations thereunder.
Section 15.3 Required Minimum Distributions During Participant’s Lifetime.
          (a) Amount of Required Minimum Distributions for Each Distribution
Calendar Year. During the Participant’s lifetime, the minimum amount that will
be distributed for each distribution calendar year is the lesser of:
               (1) The quotient obtained by dividing the Participant’s account
balance by the distribution period in the Uniform Lifetime Table tier fourth in
Section 1.401(a)(9)-9 of the Treasury regulations, using the Participant’s age
as of the Participant’s birthday in the distribution calendar year; or
               (2) If the Participant’s sole designated Beneficiary for the
distribution calendar year is the Participant’s spouse, the quotient obtained by
dividing the Participant’s account balance by the number in the Joint and Last
Survivor Table set forth in Section 1.401(a)(9)-9 of the Treasury regulations,
using the Participant’s and spouse’s attained ages as of the Participant’s and
spouse’s birthdays in the distribution calendar year.

- 46 -

--------------------------------------------------------------------------------

 

          (b) Lifetime Required Minimum Distributions Continue Through Year of
Participant’s Death. Required minimum distributions will be determined under
this Section 15.3 beginning with the first distribution calendar year and up to
and including the distribution calendar year that includes the Participant’s
date of death.
Section 15.4 Required Minimum Distributions After Participant’s Death.
          (a) Death On or After Date Distributions Begin.
               (1) Participant Survived by Designated Beneficiary. If the
Participant dies on or after the date distributions begin and there is a
designated Beneficiary, the minimum amount that will be distributed for each
distribution calendar year after the year of the Participant’s death is the
quotient obtained by dividing the Participant’s account balance by the longer of
the remaining life expectancy of the Participant or the remaining life
expectancy of the Participant’s designated Beneficiary, determined as follows:
                    (A) The Participant’s remaining life expectancy is
calculated using the age of the Participant in the year of death, reduced by one
for each subsequent year.
                    (B) If the Participant’s surviving spouse is the
Participant’s sole designated Beneficiary, the remaining life expectancy of the
surviving spouse is calculated for each distribution calendar year after the
year of the Participant’s death using the surviving spouse’s age as of the
spouse’s birthday in that year. For distribution calendar years after the year
of the surviving spouse’s death, the remaining life expectancy of the surviving
spouse is calculated using the age of the surviving spouse as of the spouse’s
birthday in the calendar year of the spouse’s death, reduced by one for each
subsequent calendar year.
                    (C) If the Participant’s surviving spouse is not the
Participant’s sole designated Beneficiary, the designated Beneficiary’s
remaining life expectancy is calculated using the age of the Beneficiary in the
year following the year of the Participant’s death, reduced by one for each
subsequent year.
               (2) No Designated Beneficiary. If the Participant dies on or
after the date distributions begin and there is no designated Beneficiary as of
September 30 of the year after the year of the Participant’s death, the minimum
amount that will be distributed for each distribution calendar year after the
year of the Participant’s death is the quotient obtained by dividing the
Participant’s account balance by the Participant’s remaining life expectancy
calculated using the age of the Participant in the year of death, reduced by one
for cash subsequent year.
          (b) Death Before Date Distributions Begin.
               (1) Participant Survived by Designated Beneficiary. If the
Participant dies before the date distributions begin and there is a Designated
beneficiary, the minimum amount that will be distributed for each distribution
calendar year after the year of the Participant’s death is the quotient obtained
by dividing the Participant’s account balance by the remaining life expectancy
of the Participant’s designated Beneficiary, determined as provided in
Section 15.4(a) hereof.

- 47 -

--------------------------------------------------------------------------------

 

               (2) No Designated Beneficiary. If the Participant dies before the
date distributions begin and there is no designated Beneficiary as of
September 30 of the year following the year of the Participant’s death,
distribution of the Participant’s entire interest will be completed by
December 31 of the calendar year containing the fifth anniversary of the
Participant’s death.
          (c) Death of Surviving Spouses Before Distributions to Surviving
Spouse Are Required to Begin. If the Participant dies before the date
distributions begin, the Participant’s surviving spouse is the Participant’s
sole designated Beneficiary, and the surviving spouse dies before distributions
are required to begin to the surviving spouse under section 15.2(a)(1), this
Section 15.4(b) will apply as if the surviving spouse were the Participant.
Section 15.5 Definitions.
          (a) Designated Beneficiary. The individual who is designated as the
Beneficiary under Article 7 thereof and is the designated Beneficiary under
Section 401(a)(9) of the Code and Section 1.401(a)(9)-1, Q&A-4, of the Treasury
regulations.
          (b) Distribution calendar year. A calendar year for which a minimum
distribution is required. For distributions beginning before the Participant’s
death, the first distribution calendar year is the calendar year immediately
preceding the calendar year which contains the Participant’s required beginning
date. For distributions beginning after the Participant’s death, the first
distribution calendar year is the calendar year in which distributions are
required to begin under Section 15.2(b) hereof. The required minimum
distribution for the Participant’s first distribution calendar year will be made
on or before the Participant’s required beginning date. The required minimum
distribution for other distribution calendar years, including the required
minimum distribution for the distribution calendar year in which the
Participant’s required beginning date occurs, will be made on or before
December 31 of that distribution calendar year.
          (c) Life expectancy. Life expectancy as computed by use of the Single
Life Table in Section 1.401(x)(9)-9 of the Treasury regulations.
          (d) Participant’s account balance. The account balance as of the last
valuation date in the calendar year immediately preceding the distribution
calendar year (valuation calendar year) increased by the amount of any
contributions made and allocated or forfeitures allocated to the account balance
as of dates in the valuation calendar year after the valuation date and
decreased by distributions made in the valuation calendar year after the
valuation date. The account balance for the valuation calendar year includes any
amounts rolled over or transferred to the Plan either in the valuation calendar
year or in the distribution calendar year if distributed or transferred in the
valuation calendar year.
Section 15.6 Required Beginning Date. The date specified in Section 15.2(a) of
this Article.
[signatures appear on the following page]

- 48 -

--------------------------------------------------------------------------------

 

     IN WITNESS WHEREOF, the Employer has caused this Plan to be executed on the
27th day of July, 2006.

            SANDERSON FARMS, INC.
      By:   /s/ D. Michael Cockrell         D. Michael Cockrell        Its:
Treasurer and CFO
                       

          ATTEST:    
 
       
By:
  /s/ James A. Grimes    
Its:
 
 
Secretary    

- 49 -