Document:

Document

EXHIBIT 10.5

 

MANAGEMENT AGREEMENT

 

AGREEMENT entered into as of <<Date>> by

and between Tennant Company, a Minnesota corporation (the “Company”), and  <<Name>> (the “Executive”).

 

WITNESSETH:

 

WHEREAS, the Executive is a key member of the

management of the Company and is expected to devote substantial skill and

effort to the affairs of the Company, and the Board of Directors of the Company

desires to recognize the significant personal contribution that the Executive

has made and is expected to continue to make to further the best interests of

the Company and its shareholders; and

 

WHEREAS, it is desirable and in the best interests of

the Company and its shareholders to continue to obtain the benefits of the

Executive’s services and attention to the affairs of the Company; and

 

WHEREAS, it is desirable and in the best interests of

the Company and its shareholders to provide inducement for the Executive (A) to

remain in the service of the Company in the event of any proposed or

anticipated change in control of the Company and (B) to remain in the service

of the Company in order to facilitate an orderly transition in the event of a

change in control of the Company; and

 

WHEREAS, it is desirable and in the best interests of

the Company and its shareholders that the Executive be in a position to make

judgments and advise the Company with respect to proposed changes in control of

the Company without regard to the possibility that the Executive’s employment

may be terminated without compensation in the event of certain changes in

control of the Company; and

 

WHEREAS, the Executive desires to be protected in the

event of termination of the employment of the Executive by the Company or

termination of employment by the Executive for Good Reason (as defined in

Section 9); and

 

WHEREAS, for the reasons set forth above, the Company

and the Executive desire to enter into this Agreement.

 

NOW, THEREFORE, in consideration of the foregoing and

the mutual covenants and agreements contained herein, the Company and the

Executive agree as follows:

 

1.             Employment.

The Executive shall remain in the employ of the Company for the Term (as

defined in Section 22) of this Agreement, as <<Title>> of the

Company and shall have all duties customarily associated with such office and

shall perform such other duties as may be specified by the Board of Directors

and/or the Chief Executive Officer of the Company; provided, however, that

either the Executive or the Company may terminate 

 

 

the employment of the Executive with the Company at any time prior to

the expiration of the Term, with or without Cause and for any reason whatever,

in the manner provided in Section 4, subject to the right of the Executive

to receive any payment and other benefits that may be due pursuant to the terms

and conditions of Section 5 or 6 (as the case may be).  While the Executive is employed by the

Company hereunder, the Executive shall devote substantially all of Executive’s

business time and energy to the performance of the Executive’s duties hereunder

and shall not accept other employment with or engage in or render services to

any other business or enterprise.

 

2.             Compensation.

 

(a)           During the Term, the Executive shall

receive such base salary (the “Base Salary”) per Employment Year (as defined in

Section 9), prorated for any partial Employment Year, as the Board of Directors

shall from time to time determine. 

Subject to all terms and conditions hereof, while the Executive is

employed by the Company hereunder during the Term, the Company shall pay to the

Executive an annual base salary (“Base Salary”) of $<<Amount>> per

Employment Year (as defined in Section 9), prorated for any partial

Employment Year, or such higher amount as is from time to time hereafter

established by the Board of Directors of the Company.  The Executive’s Base Salary shall be payable in accordance with

the Company’s regular payroll practices. 

The Board of Directors of the Company will review the Executive’s Base

Salary at the beginning of each Employment Year commencing after

December 31, 2000, to determine whether a change in the annual amount

thereof is merited.  In no event shall

the Board of Directors decrease the Executive’s Base Salary in any Employment

Year by more than 15% of the amount of Base Salary paid by the Company to the

Executive for the immediately preceding Employment Year.

 

(b)           Subject to all terms and conditions

hereof, while the Executive is employed by the Company hereunder, the Executive

shall participate in the STIP, as defined in Section 9.

 

3.             Fringe Benefits.

 

(a)           While the Executive is employed by

the Company hereunder during the Term, the Company shall provide to the

Executive and the Executive’s dependents such medical, dental and life

insurance and disability, retirement savings, vacation, sick leave and other employee

and fringe benefits as are provided from time to time by the Company to its

senior executives and their dependents, in accordance with the general benefits

practices of the Company then in effect; provided, however, that the benefits

provided to the Executive and the Executive’s dependents hereunder shall in no

event be less favorable to them, on a benefit-by-benefit basis, than the

benefits provided by the Company to its senior executives and their dependents

on the date hereof.  Notwithstanding

anything stated in this Section 3(a), coverage of the Executive and the

Executive’s dependents under medical, dental, and life insurance and disability

plans, programs and benefits shall be available only if the Executive and the

Executive’s dependents satisfy applicable waiting periods under such plans,

programs and benefits.

 

2

 

(b)           The Company shall promptly reimburse

the Executive for all reasonable travel and other expenses that are incurred by

the Executive during the Term in connection with the conduct of the business of

the Company while the Executive is employed by the Company hereunder and for

which the Executive furnishes appropriate documentation in accordance with the

Company’s general expense reimbursement practices then in effect.

 

4.             Termination. 

The Executive’s employment by the Company hereunder shall terminate and

be effective upon:

 

(i)                                     receipt

by the Company of the Executive’s written resignation from the Company (which

resignation shall specify whether it is with or without Good Reason (as defined

in Section 9) and, if with Good Reason, shall set forth in reasonable

detail the basis therefor);

 

(ii)                                  three

business days following receipt by the Executive of written notice from the

Company of termination of the Executive’s employment (which notice shall

specify whether such termination is with or without Cause and, if with Cause,

shall set forth in reasonable detail the basis therefor);

 

(iii)                               the

Executive’s death or Disability (as defined in Section 9); or

 

(iv)                              expiration

of the Term,

 

and the date on which the

Executive’s employment by the Company hereunder ends shall be the “Termination

Date”.

 

5.             Payments Upon Termination Prior to a Change in

Control.  If the Executive’s

employment by the Company hereunder ends pursuant to death, Disability or

voluntary termination prior to the occurrence of any Change in Control (as

defined in Section 9) and:

 

(a)           if such employment by the Company

hereunder ends prior to the expiration of the Term by reason of resignation by

the Executive without Good Reason, then:

 

(i)                                     the

Company shall pay to the Executive, in accordance with Section 2(a), the

Executive’s Base Salary through and including the Termination Date and any

accrued vacation pay;

 

(ii)                                  if

the Termination Date occurs on or after the last day of any Plan Year (as

defined in Section 9) but prior to the date payment of the Executive’s award,

if any, under the STIP for such Plan Year has been

 

3

 

made, the Company shall

pay the full amount of such award to the Executive no later than the date

awards under the STIP for such Plan Year are paid to the other participants in

the STIP; and

 

(iii)                               the

Company shall pay to the Executive, in accordance with Section 3(b), all

amounts due thereunder for reimbursement of expenses.

 

(b)           if such employment by the Company

hereunder ends by reason of the Executive’s death or Disability prior to the

expiration of the Term or if such employment terminates upon the expiration of

the Term, then:

 

(i)                                     the

Company shall pay to the Executive (or the Executive’s legal representative),

in accordance with Section 2(a), the Executive’s Base Salary through and

including the last day of the month in which the Termination Date occurs and

any accrued vacation pay (in the event employment hereunder ends by reason of

death or Disability) or through and including the Termination Date (in the

event employment hereunder ends by reason of the expiration of the Term);

 

(ii)                                  if

the Termination Date occurs on or after the last day of any Plan Year but prior

to the date payment of the Executive’s award, if any, under the STIP for such

Plan Year has been made, the Company shall pay the full amount of such award to

the Executive (or the Executive’s legal representative) no later than the date

awards under the STIP for such Plan Year are paid to the other participants in

the STIP;

 

(iii)                               if

the Termination Date occurs on any day of a Plan Year other than the last day,

the Company shall pay to the Executive (or the Executive’s legal

representative) a pro rata portion of the award that would have been payable to

the Executive under the STIP for such Plan Year had the Executive remained

employed by the Company hereunder for the duration of such Plan Year, which

payment shall be made no later than the date awards under the STIP for such

Plan Year are paid to the other participants in the STIP; and

 

(iv)                              the

Company shall pay to the Executive (or the Executive’s legal representative),

in accordance with Section 3(b), all amounts due thereunder for reimbursement

of expenses.

 

4

 

(c)           if such employment by the Company

hereunder ends prior to the expiration of the Term by reason of resignation by

the Executive for Good Reason or termination by the Company with or without

Cause, then:

 

(i)                                     the

Company shall continue to pay to the Executive, in accordance with, and at the

times provided in, Section 2(a), the Executive’s Base Salary and any retirement

plan contributions through and including the first anniversary of the

Termination Date;

 

(ii)                                  if

the Termination Date occurs on or after the last day of any Plan Year but prior

to the date payment of the Executive’s award, if any, under the STIP for such

Plan Year has been made, the Company shall pay the full amount of such award to

the Executive no later than the date awards under the STIP for such Plan Year

are paid to the other participants in the STIP;

 

(iii)                               if

the Termination Date occurs on any day of a Plan Year other than the last day,

the Company shall pay to the Executive the full amount of the award that would

have been payable to the Executive under the STIP for such Plan Year had all

Company performance targets been met and the Executive remained employed by the

Company hereunder for the duration of such Plan Year, which payment shall be

made no later than the date awards under the STIP for such Plan Year are or

would have been paid to the other participants in the STIP;

 

(iv)                              the

Executive and the Executive’s dependents shall continue for a period ending on

the first anniversary of the Termination Date to have the right to participate

in all medical, dental and life insurance and disability plans, programs and

benefits in which they were entitled to, and did, participate immediately prior

to the Termination Date as if the Executive were an employee of the Company

until the end of such period (or, in the event their participation in any such

plan, program or benefit is barred by the terms of such plan, program or

benefit because the Executive is not an employee of the Company, the Company,

at its sole cost and expense, shall arrange to provide the Executive and the

Executive’s dependents with benefits that are no less favorable to them than

the benefits under such plan, program or benefit), except, with respect to

medical and dental insurance coverage, to the extent essentially equivalent and

no less favorable benefits are provided to them by a subsequent employer; and

 

(v)                                 the

Company shall pay to the Executive, in accordance with Section 3(b), all

amounts due thereunder for reimbursement of expenses.

 

5

 

6.             Payments upon Termination in Connection with, or

Following, a Change in Control.  If

any Change in Control shall occur during the Term of this Agreement and the

Executive’s employment by the Company shall end at the time of, or at any time

after, the occurrence of the earliest Change in Control to occur (the “First

Change in Control”) and prior to the end of the Transition Period (as defined

in Section 9), then the Company or its successor (which term as used herein

shall include any person acquiring all or substantially all of the assets of

the Company) shall pay cash to the Executive and provide other benefits on the

following basis (it being understood that if the Executive’s employment by the

Company terminates voluntarily or involuntarily during the Term, but prior to

the occurrence of the First Change in Control, the Executive shall be entitled

to no cash payment or benefits under this Section 6, but shall be entitled to

payments and benefits to the extent provided in Section 5):

 

(a)           If at the time of, or at any time

after, the occurrence of the First Change in Control and prior to the end of

the Transition Period, the employment of the Executive with the Company is

voluntarily or involuntarily terminated for any reason (unless such termination

is a voluntary termination by the Executive other than for Good Reason or is on

account of the death or Disability of the Executive or is a termination by the

Company for Cause), the Executive (or the Executive’s legal representative),

subject to the limitations set forth in Section 6(b),

 

(i)                                     shall

be entitled to receive from the Company or its successor, on the Termination

Date (or, in the event of termination by the Executive for Good Reason, within

five days after the Termination Date), a cash payment in an amount equal to (A)

three times (or one time in the case of a voluntary termination by the

Executive during the Window Period, as defined in Section 9(e)(iii)(E),

which, but for Section 9(e)(iii)(E), would not constitute a termination for

Good Reason) the average annual compensation payable by the Company and

includible in the gross income for Federal Income Tax purposes of the Executive

during the shorter of the period consisting of (1) the most recent five

completed taxable years of the Executive ending before the First Change in

Control (other than a Change in Control described in Section 9(b)(iv) unless

the Executive is terminated prior to the occurrence of a Change in Control

described in clause (i), (ii) or (iii) of Section 9(b)) or (2) that

portion of such five-year period during which the Executive was employed by the

Company (for which purpose compensation for a partial year shall be annualized

before determining average annual compensation for the period in accordance

with temporary or final regulations promulgated under Section 280(G)(d) of the

Internal Revenue Code of 1986 (the “Code”) or any successor provision thereto),

less (B) $1.00, such payment to be made to the Executive by the Company or its

successor in a lump sum; and

 

6

 

(ii)                                  shall,

together with the Executive’s dependents, be entitled until the end of the

Transition Period (or for one year after the Termination Date in the case of a

voluntary termination by the Executive during the Window Period, as defined in

Section 9(e)(iii)(E), which, but for Section 9(e)(iii)(E), would not constitute

a termination for Good Reason) to participate in any medical, dental and life

insurance and disability plans, programs and benefits in which they were

entitled to, and did, participate immediately prior to the First Change in

Control as if the Executive were an employee of the Company until the end of

the Transition Period or such one-year period, as the case may be (or, in the

event their participation in any such plan, program or benefit is barred

because the Executive is not an employee of the Company, the Company, at its

sole cost and expense, shall arrange to provide the Executive and the

Executive’s dependents with benefits that are no less favorable to them than

the benefits under such plan, program or benefit), except, with respect to

dental and medical insurance coverage, to the extent essentially equivalent and

no less favorable benefits are provided by a subsequent employer.

 

(b)                                 Notwithstanding

any provision to the contrary contained herein except the last sentence of this

Section 6(b), if the lump sum cash payment due and the other benefits to which

the Executive shall become entitled under Section 6(a), either alone or

together with other payments made pursuant to this Agreement or any other

agreement between the Executive and the Company or any compensation plan or

program that are in the nature of compensation to the Executive and are

contingent on a change in the ownership or effective control of the Company or

in the ownership of a substantial portion of the assets of the Company or

otherwise, would constitute a “parachute payment” as defined in Section 28OG of

the Code or any successor provision thereto, such lump sum payment and/or such

other benefits and payments shall be reduced (but not below zero) to the

largest aggregate amount as will result in no portion thereof being subject to

the excise tax imposed under Section 4999 of the Code (or any successor

provision thereto) or being non-deductible to the Company for Federal Income

Tax purposes pursuant to Section 280G of the Code (or any successor provision

thereto).  Within ten days after the

Company informs the Executive of the necessity of reducing the payments or

benefits to avoid the excise tax or non-deductibility or promptly after the

Executive otherwise becomes aware of the necessity of such a reduction, the

Executive in good faith shall determine the amount of any reduction to be made

pursuant to this Section 6(b) and shall select from among the foregoing

benefits and payments those which shall be reduced. No modification of, or

successor provision to, Section 280G or Section 4999 subsequent to the date of

this Agreement shall, however, reduce the benefits to which the Executive would

be entitled under this Agreement in the absence of this Section 6(b) to a

greater extent than they would have been reduced if Section 280G and Section

4999 had not been modified or superseded subsequent to the date of this

Agreement, notwithstanding anything to the contrary provided in the first

sentence of this paragraph 6(b).

 

7

 

(c)           The Company shall pay to the

Executive, in accordance with Section 3(a), the Executive’s Base Salary

and any accrued vacation pay through and including the Termination Date.

 

(d)           If the Termination Date occurs on or

after the last day of any Plan Year but prior to the date payment of the

Executive’s award, if any, under the STIP for such Plan Year has been made, the

Company shall pay the full amount of such award to the Executive (or the

Executive’s legal representative) no later than the date awards under the STIP

for such Plan Year are paid to the other participants in the STIP.

 

(e)           If the Termination Date occurs on any

day of a Plan Year other than the last day, the Company shall pay to the

Executive (or the Executive’s legal representative) a pro rata portion of the

target award that would have been payable to the Executive under the STIP for

such Plan Year had the Executive remained employed by the Company hereunder for

the duration of such Plan Year and the company had achieved its financial

goals, which payment shall be made no later than the date awards under the STIP

for such Plan Year are or would have been paid to the other participants in the

STIP.

 

(f)            The Company shall pay to the

Executive (or the Executive’s legal representative), in accordance with

Section 3(b), all amounts due thereunder for reimbursement of expenses.

 

7.             Interpretations.

 

(a)           For purposes of determining any

amounts payable under this Section 5 or Section 6, the Executive’s Base

Salary at any time after the Termination Date shall be deemed to equal the

Executive’s Base Salary as in effect on the Termination Date.

 

(b)           In the event the Executive’s

employment hereunder is terminated on any day of an Employment Year or a Plan

Year other than the last day and payment is required hereunder of a pro rata

portion of any sum due with respect to such Employment Year or Plan Year, such

pro rata portion shall be determined based on the number of days in such

Employment Year or Plan Year occurring on or before, and after, the Termination

Date.

 

(c)           Nothing in Section 5 or

Section 6 shall limit any obligation of the Company to the Executive or

his dependents upon termination of the Executive’s employment hereunder

(i) as a matter of law, (ii) under any other provision of this

Agreement or, except as otherwise expressly provided in this Agreement, any

other agreement between the Executive and the Company, or (iii) in the

event of termination by reason of the Executive’s death or Disability, under

life or disability insurance policies then in effect.  Notwithstanding the foregoing, (x) if the Executive is receiving

payments pursuant to Paragraph G of the Employee Agreement attached hereto

as Exhibit A, then payments required by Section 5 or Section 6

shall be reduced to by an amount equal to the amounts paid pursuant to

Paragraph G of such Employee Agreement, and (y) the payments required by

Section 5 or Section 6 shall be

 

8

 

reduced by any severance

pay which the Executive receives from the Company, its subsidiaries or its

successors under any policy or agreement of the Company, other than this

Agreement, in the event of the Company’s termination of the Executive’s

employment with the Company.

 

(d)           The Executive shall not be required

to mitigate the amount of any payment or other benefit provided for in

Section 5 or Section 6 by seeking employment with another employer or

otherwise; nor shall the amount of any payment or other benefit provided for in

Section 5 or 6 be reduced by any compensation earned by the Executive as

the result of the Executive’s subsequent employment by another employer, except

as otherwise expressly provided in Section 5 or 6.

 

(e)           The obligations of the Company under

Section 5 and Section 6, if otherwise payable thereunder because of the

termination of the Executive’s employment with the Company, shall survive any

termination of employment of the Executive pursuant to Section 4.

 

8.             Directors’ and Officers’ Indemnification; Stock Based

Compensation.  While the Executive

is employed by the Company hereunder, the Company shall not, without the prior

written consent of the Executive, amend its articles of incorporation or

by-laws to prohibit or limit the indemnification of, or advances of expenses

to, its directors and officers or to impose conditions on such indemnification

or advances of expenses in addition to those provided by law.  While the Executive is employed by the

Company hereunder, the Company shall not modify any stock based incentive plan

or agreement to which the Executive is a party (or is subject) to limit or

otherwise affect the acceleration of vesting or exercisability of stock options

of the Executive in the event of a Change in Control, the lapse of restrictions

on restricted stock of the Executive in the event of a Change in Control, or

any other acceleration of, or increase in benefits under, any stock based

benefit in the event of a Change in Control.

 

9.             Certain Definitions.  As used in this Agreement, the following defined terms have the

meanings indicated below:

 

(a)           “Cause” for termination of the

Executive’s employment at the instance of the Company means termination for:

 

(i)            prior to a Change in Control, the

Executive’s material breach of this Agreement, which is not remedied within 30

days after receipt of written notice thereof;

 

(ii)           prior to a Change in Control, an act

or acts of dishonesty undertaken by the Executive and intended to result in

gain or personal enrichment of the Executive at the expense of the Company;

 

9

 

(iii)                               persistent

failure by the Executive to perform the duties of the Executive’s employment,

which failure is demonstrably willful and deliberate on the part of the

Executive and constitutes gross neglect of duties by the Executive and which is

not remedied within 90 days after receipt of written notice thereof; or

 

(iv)                              the

indictment or conviction of the Executive for a felony if the act or acts

constituting the felony are substantially detrimental to the Company or its

reputation.

 

(b)           “Change in Control” shall be deemed

to have occurred if:

 

(i)            a majority of the directors of the Company shall be persons other than

persons

 

(A)          for whose election proxies shall have

been solicited by the Board of Directors of the Company, or

 

(B)           who are then serving as directors

appointed by the Board of Directors to fill vacancies on the Board of Directors

caused by death or resignation (but not by removal) or to fill newly created

directorships,

 

(ii)                                       30% or more of the outstanding voting stock of

the Company is acquired or beneficially owned (as defined in Rule 13d-3 under

the Securities Exchange Act of 1934, as amended, or any successor rule thereto

(the “Exchange Act”)) by any individual, entity or group (within the meaning of

Section 13(d)(3) or 14(d)(2) of the Exchange Act), provided, however, that the

following acquisitions and beneficial ownership shall not constitute Changes in

Control pursuant to this Section 9(a)(ii):

 

(A)                              any acquisition or beneficial ownership by the Company or a subsidiary of the

Company, or

 

(B)                                any acquisition or beneficial ownership by any

employee benefit plan (or related trust) sponsored or maintained by the Company

or one or more of its subsidiaries, or

 

(C)                                any acquisition or beneficial ownership by the

Executive or any group that includes the Executive, or

 

(D)                               any acquisition or beneficial ownership by a

parent corporation of the Company (after giving effect to the merger or

statutory share exchange) or its wholly-owned subsidiaries, as long as they

shall 

 

10

 

remain

wholly-owned subsidiaries, of 100% of the outstanding voting stock of the

Company as a result of a merger or statutory share exchange that complies with

Section 9(b)(iii)(A)(2) or the exception in Section 9(b)(iii)(B) in all

respects,

 

(iii)          the shareholders of the Company

approve a definitive agreement or plan to

 

(A)                              merge or consolidate the Company with or into

another corporation (other than (1) a merger or consolidation with a subsidiary

of the Company or (2) a merger in which

 

(i)                                     the

Company is the surviving

corporation,

 

(ii)                                  no outstanding voting stock of the Company (other

than fractional shares) held by shareholders immediately prior to the merger is

converted into cash, securities, or other property (except into (I) voting

stock of a parent corporation of the Company (after giving effect to the

merger) owning directly, or indirectly through wholly-owned subsidiaries, both

beneficially and of record 100% of the voting stock of the Company immediately

after the merger or (II) cash upon the exercise by holders of voting stock of

the Company of statutory dissenters’ rights),

 

(iii)                               the persons who were the beneficial owners,

respectively, of the outstanding common stock and outstanding voting stock of

the Company immediately prior to such merger beneficially own, directly or

indirectly, immediately after the merger, more than 70% of, respectively, the

then outstanding common stock and the then outstanding voting stock of the

surviving corporation in the merger or its parent corporation, and

 

(iv)                              if voting stock of the parent corporation of the

Company (after giving effect to the merger) is exchanged for voting stock of

the Company in the merger, all holders of any class or series of voting stock

of the Company immediately prior to the merger have the right to receive

substantially the same per share consideration in exchange for their voting

stock of the Company as all other holders of such class or series),

 

11

 

(B)                                exchange, pursuant to a statutory exchange of

shares of voting stock of the Company held by shareholders of the Company

immediately prior to the exchange, shares of one or more classes or series of

voting stock of the Company for cash, securities or other property, except for

(a) voting stock of a parent corporation of the Company (after giving effect to

the statutory share exchange) owning directly, or indirectly through

wholly-owned subsidiaries, both beneficially and of record 100% of the voting

stock of the Company immediately after the statutory share exchange if (I) the

persons who were the beneficial owners, respectively, of the outstanding common

stock and outstanding voting stock of the Company immediately prior to such

statutory share exchange own, directly or indirectly, immediately after the

statutory share exchange more than 70% of, respectively, the then outstanding

common stock and the then outstanding voting stock of such parent corporation, and

(II) all holders of any class or series of voting stock of the Company

immediately prior to the statutory share exchange have the right to receive

substantially the same per share consideration in exchange for their voting

stock of the Company as all other holders of such class or series or (b) cash

with respect to fractional shares of voting stock of the Company or payable as

a result of the exercise by holders of voting stock of the Company of statutory

dissenters’ rights,

 

(C)                                sell or otherwise dispose of all or substantially

all of the assets of the Company (in one transaction or a series of

transactions), or

 

(D)                               liquidate or dissolve the Company,

 

unless

a majority of the voting stock (or the voting equity interest) of the surviving

corporation or its parent corporation or of any corporation (or other entity)

acquiring all or substantially all of the assets of the Company (in the case of

a merger, consolidation or disposition of assets) or the Company or its parent

corporation (in the case of a statutory share exchange) is, immediately

following the merger, consolidation, statutory share exchange or disposition of

assets, beneficially owned by the Executive or a group of persons, including

the Executive, acting in concert, or

 

(iv)          (A)                              the Company enters into an agreement in principle

or a definitive agreement relating to a Change in Control described in clause

(i), (ii) or (iii) above which ultimately results in such a Change in Control

described in clause (i), (ii) or (iii) hereof,

 

12

 

(B)                                a tender or exchange offer or proxy contest is

commenced which ultimately results in a Change in Control described in clause

(i) or (ii) hereof, or

 

(C)                                there shall be an involuntary termination of

employment of Executive or a termination by the Executive of employment for

Good Reason prior to an event that would otherwise constitute a Change in

Control, and Executive reasonably demonstrates that such event (x) was

requested by a third party that has previously taken other steps reasonably

calculated to result in a Change in Control described in clause (i), (ii) or

(iii) above and which ultimately result in a Change in Control described in

clause (i), (ii) or (iii) hereof or (y) otherwise arose in connection with or

in anticipation of a Change in Control described in clause (i), (ii) or (iii)

above that ultimately occurs.

 

(c)           “Disability” means the inability of

Executive, with or without reasonable accommodation, to perform the essential

functions of Executive’s duties hereunder by reason of illness or other

physical or mental impairment or condition, if such inability continues for an

uninterrupted period of 90 business days or more.  A period of inability shall be “uninterrupted” unless and until

Executive returns to full–time work for a continuous period of at least

30 calendar days.

 

(d)           “Employment Year” shall mean the

12-month period ending on December 31, 2001, and each succeeding year

during the Term, or such portion of such 12-month period as the Executive is

employed by the Company under this Agreement.

 

(e)           “Good Reason” for termination of the

Executive’s employment at the instance of Executive means termination for:

 

(i)            Company’s material breach of this

Agreement, which is not remedied within 30 days after receipt of written notice

thereof;

 

(ii)           the assignment to the Executive,

without the Executive’s written consent, of duties and responsibilities that

are substantially inconsistent with, or materially diminish, the Executive’s

position as «Title» of the Company other than for Cause or on account of

Disability; or

 

(iii)          in the event of a termination of the

Executive’s employment with the Company at the time of or after the First

Change in Control, and prior to the end of the Transition Period

 

(A)          the Executive shall not be given

substantially equivalent or greater title, duties, responsibilities and

authority or substantially 

 

13

 

equivalent or greater

salary and other remuneration and fringe benefits (including paid vacation), in

each case as compared with the Executive’s status immediately prior to the

First Change in Control, other than for Cause or on account of Disability,

 

(B)                                the Company shall have failed to obtain

assumption of this Agreement by any successor as contemplated by Section 11,

 

(C)                                the Company shall require the Executive to

relocate to any place other than a location within twenty-five miles of the

location at which the Executive performed his duties immediately prior to the

First Change in Control or, if the Executive performed such duties at the

Company’s principal executive offices, the Company shall relocate its principal

executive offices to any location other than a location within twenty-five

miles of the location of the principal executive offices immediately prior to

the First Change in Control,

 

(D)                               the Company shall require that the Executive

travel on Company business to a substantially greater extent than required

immediately prior to the First Change in Control, or

 

(E)                                 subject to the limitations contained in

Section 6(a)(i), the Executive shall terminate employment with the Company

during the thirty-day period (the “Window Period”) immediately following the

first anniversary of the First Change in Control (provided that for purposes of

this Section 9(e)(iii)(E) only, all references in the definition of Change in

Control in Section 9(b) (as used in the definition of “First Change in Control”

in Section 6) to 30% and 70% shall instead be deemed to be references to 50%),

and such termination would not otherwise constitute a termination for Good

Reason.

 

(f)            “Plan Year” shall mean the plan year

with respect to which awards are determined under the STIP.

 

(g)           “person” shall mean an individual,

partnership, corporation, limited liability company, estate, trust or other

entity.

 

(h)           “STIP” shall mean the Company’s

Short-Term Incentive Plan as in existence at the date hereof or any successor

plan.

 

14

 

(i)            “Transition Period” shall mean the

three-year period commencing on the date of the earliest to occur of a Change

in Control described in clause (i), (ii) or (iii) of Section 9(b) (the

“Commencement Date”) and ending on the third anniversary of the Commencement

Date.

 

(j)            “voting stock” shall mean all

outstanding shares of capital stock entitled to vote generally in the election

of directors, considered for purposes of this Agreement as one class, and all

references to percentages of the voting stock shall be deemed to be references

to percentages of the total voting power of the voting stock.

 

10.           Non-Competition, Non-Solicitation

and Non-Disclosure.  The Executive

agrees to be bound by the terms of the Employee Agreement attached hereto as

Exhibit A, which Employee Agreement is incorporated herein by reference.

 

11.           Successors and Assigns.

 

(a)           This Agreement is binding on and

inures to the benefit of the Executive and Executive’s heirs, legal

representatives and permitted assigns, and on the Company and its successors

and permitted assigns.  No rights or

obligations of the Executive or the Company hereunder may be assigned, pledged,

disposed of or transferred by such party to any other person or entity without

the prior written consent of the other party.

 

(b)           The

Company will require any successor (whether direct or indirect, by purchase of

a majority of the outstanding voting stock of the Company or all or

substantially all of the assets of the Company, or by merger, consolidation or

otherwise), by agreement in form and substance satisfactory to the Executive,

to assume expressly and agree to perform this Agreement in the same manner and

to the same extent that the Company would be required to perform it if no such

succession had taken place. Failure of the 

Company to obtain such agreement prior to the effectiveness of any such

succession (other than in the case of a merger or consolidation) shall be a

breach of this Agreement and shall entitle the Executive to compensation from

the Company in the same amount and on the same terms as the Executive would be

entitled hereunder if the Executive had otherwise terminated the Executive’s

employment for Good Reason, except that for purposes of implementing the

foregoing, the date on which any such succession becomes effective shall be deemed

the Termination Date. As used in this Agreement, “Company” shall mean the

Company as hereinbefore defined and any successor to its business and/or assets

as aforesaid which is required to execute and deliver the agreement provided

for in this Section 11(b) or that otherwise becomes bound by all the terms and

provisions of this Agreement by operation of law.

 

12.           Separate Representation.  The Executive hereby acknowledges that he

has sought and received independent advice from counsel of his own selection in

connection with this Agreement and has not relied to any extent on any officer,

director or shareholder of, or counsel to, the Company in deciding to enter

into this Agreement.

 

15

 

13.           Governing Law.  This Agreement shall be construed under and

governed by the laws of the State of Minnesota.

 

14.           Withholding of Taxes, Etc.  All payments to the Executive hereunder are

subject to withholding of income and employment taxes and all other amounts

required by law.

 

15.           Specific Performance.  Each of the parties acknowledges and agrees

that the other party would be damaged irreparably in the event any of the

covenants contained in this Agreement are not performed in accordance with

their specific terms or otherwise are breached.  Accordingly, each of the parties agrees that the other party

shall be entitled to an injunction or injunctions to prevent breaches of such

covenants and to enforce specifically such covenants in any action instituted

before a proper forum in addition to any other remedy to which such other party

may be entitled under this Agreement or at law or in equity.

 

16.           Arbitration and Attorney’s Fees

and Costs.  The Executive and the

Company agree that any dispute or claim that relates to or arises out of

Executive’s employment with the Company shall be resolved by the Rules of

Arbitration set forth in Exhibit B to this Agreement.  Disputes and claims encompassed by this

Agreement include all applicable federal and state employment related claims,

whether based on common law (such as breach of contract or defamation) or

statutes (such as the Americans With Disabilities Act, Title VII of the Civil

Rights Act of 1964, the Age Discrimination in Employment Act, and the Minnesota

Human Rights Act).  The Rules of

Arbitration are intended to be exclusive and awards issued pursuant to the

rules are final and binding.  The

Executive is entitled to retain independent representation of his or her

choosing for any dispute relating to Executive’s employment or interpretation

of this agreement.  All fees, costs, and

expenses of any nature whatsoever, including expert witnesses, arising out of

said representation shall be paid in a timely way (30 days or less after presentation

of invoice) by the Company.  The Executive

and the Company acknowledge and agree that this arbitration provision is

beneficial to both parties because it provides a quick, less expensive and

confidential manner of resolving finally any dispute or claim.  The cost of any arbitration, including

attorneys’ fees and arbitration expenses of both the Company and the Executive,

and the cost of any court proceedings permitted by this Agreement, including

attorneys’ fees and court costs of both the Company and the Executive, shall be

paid by the Company.  Notwithstanding

anything to the contrary provided in this Section 16 and without prejudice

to the above procedures, either party may apply to any court of competent

jurisdiction for temporary injunctive or other provisional judicial relief if

in such party’s sole judgment such action is necessary to avoid irreparable

damage or to preserve the status quo until such time as the arbitration award

is rendered or the controversy is otherwise resolved.

 

17.           Notices.  All notices hereunder shall be delivered by

hand or sent by registered or certified mail, return receipt requested, postage

prepaid, to the party to receive the same at 

 

16

 

the address set forth

with the signature of such party hereto or at such other address as may have

been furnished to the sender by notice hereunder.

 

18.           Counterparts.  This Agreement may be executed in

counterparts, each of which when so executed shall be deemed to be an original,

and such counterparts shall together constitute but one and the same

instrument.

 

19.           Entire Agreement.  This Agreement and the documents and

instruments referred to herein contain the entire understanding of the parties

hereto with respect to the employment of the Executive by the Company.

 

20.           Amendments and Waivers.  No provision hereof may be altered, amended,

modified, waived or discharged in any way whatsoever except by written

agreement executed by both parties.  No

delay or failure of either party to insist, in any one or more instances, upon

performance of any of the terms and conditions of this Agreement or to exercise

any rights or remedies hereunder shall constitute a waiver or a relinquishment

of such rights or remedies or any other rights or remedies hereunder.

 

21.           Severability;

Severance. In the event that any portion of this Agreement is held to be

invalid or unenforceable for any reason, it is hereby agreed that such

invalidity or unenforceability shall not affect the other portions of this

Agreement and that the remaining covenants, terms and conditions or portions

hereof shall remain in full force and effect, and any court of competent 

jurisdiction or arbitrator, as the case may be, may so modify the

objectionable provision as to make it valid, reasonable and enforceable. In the

event that any benefits to the Executive provided in this Agreement are held to

be unavailable to the Executive as a matter of law, the Executive shall be

entitled to severance benefits from the Company, in the event of an involuntary

termination of employment of the Executive by the Company (other than a

termination on account of the death or Disability of the Executive or a

termination for Cause) or a termination by the Executive for Good Reason during

the Term occurring at the time of, or following, the occurrence of a Change in

Control, at least as favorable to the Executive (when taken together with the

benefits under this Agreement that are actually received by the Executive) as

the most advantageous benefits made available by the Company to employees of

comparable position and seniority to the Executive during the five–year

period prior to the First Change in Control.

 

22.           Term.

This Agreement shall commence on the date of this Agreement and shall

terminate, and the term of this Agreement (the “Term”) shall end, on

(A) December 31, 2003, provided that such period shall be

automatically extended for one year, and from year to year thereafter, until

written notice of termination of this Agreement is given by the Company or the

Executive to the other party hereto at least 60 days prior to December 31, 2003

or the extension year then in effect, or (B) if the Commencement Date occurs

prior to December 31, 2003 (or prior to the end of the extension year then in

effect), the third anniversary of the Commencement Date.

 

17

 

23.           Replacement

of Prior Agreement(s).  This

Agreement replaces and supersedes all prior Management Agreement(s) between the

Company and the Executive of any nature whatsoever, which Original Agreement(s)

shall be of no further force or effect.

 

IN WITNESS WHEREOF, the

parties hereto have caused this Agreement to be duly executed on the date and

year first above written.

 

	

  EXECUTIVE

  	

  TENNANT COMPANY

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  Name:  «Name»

  	

   

  	

  Name:

  	

   

  
	

   

  	

   

  	

   

  
	

  Address:

  	

   

  	

   

  	

  Title:

  	

   

  	 

	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  Address:

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
											

 

18

EXHIBIT

10.5

 

schedule of

management parties

 

	

  Name

  	

   

  	

  Title

  	

   

  	

  Amount

  	

   

  	

  Date

  
	

  Janet M. Dolan

  	

   

  	

  President and Chief Executive Officer

  	

   

  	

  $

  	

  367,500

  	

   

  	

  May 22, 2001

  
	

  James H. Moar

  	

   

  	

  Chief Operating Officer

  	

   

  	

  $

  	

  286,000

  	

   

  	

  May 22, 2001

  
	

  Richard M. Adams

  	

   

  	

  Vice President

  	

   

  	

  $

  	

  178,092

  	

   

  	

  May 22, 2001

  
	

  Anthony T. Brausen

  	

   

  	

  Vice President, Chief Financial Officer and

  Treasurer

  	

   

  	

  $

  	

  205,000

  	

   

  	

  May 22, 2001

  
	

  Grant M. DesRoches

  	

   

  	

  Vice President

  	

   

  	

  $

  	

  154,876

  	

   

  	

  May 22, 2001

  
	

  Thomas J. Dybsky

  	

   

  	

  Vice President

  	

   

  	

  $

  	

  170,888

  	

   

  	

  May 22, 2001

  
	

  James J. Seifert

  	

   

  	

  Vice President, General Counsel & Secretary

  	

   

  	

  $

  	

  170,625

  	

   

  	

  May 22, 2001

  
	

  David T. Vedder

  	

   

  	

  Vice President

  	

   

  	

  $

  	

  160,364

  	

   

  	

  May 22, 2001

  
	

  Steven K. Weeks

  	

   

  	

  Vice President

  	

   

  	

  $

  	

  160,200

  	

   

  	

  May 22, 2001

  
	

  Anthony Lenders

  	

   

  	

  Managing Director, TNV

  	

   

  	

  $

  	

  210,000

  	

   

  	

  May 22, 2001

  
	

  Robert J. Luck

  	

   

  	

  Director, Australia/Export/Japan

  	

   

  	

  $

  	

  145,320

  	

   

  	

  May 22, 2001

  
	

  Rex L. Carter

  	

   

  	

  Vice President, E-Solutions

  	

   

  	

  $

  	

  250,000

  	

   

  	

  October 15, 2001Document

EXHIBIT 10.11

 

12-14-01

 

TENNANT

COMPANY PROFIT SHARING AND

 

EMPLOYEE

STOCK OWNERSHIP PLAN

 

(As

Amended and Restated Effective as of January 1, 2001)

 

 

TENNANT

COMPANY PROFIT SHARING AND

EMPLOYEE

STOCK OWNERSHIP PLAN

 

Table of Contents

 

	

  ARTICLE I

  	

  GENERAL

  
	

  Sec. 1.1

  	

  Name of Plan

  
	

  Sec.

  1.2

  	

  Purpose

  
	

  Sec. 1.3

  	

  Effective Date

  
	

  Sec. 1.4

  	

  Construction and Applicable Law

  
	

  Sec. 1.5

  	

  Rules of Construction

  
	

  Sec. 1.6

  	

  Benefits Determined Under Provisions in

  Effect at Termination of Employment

  
	

  Sec. 1.7

  	

  Effective Date of Document

  
	

   

  	

   

  
	

  ARTICLE II

  	

  MISCELLANEOUS DEFINITIONS

  
	

  Sec.

  2.1

  	

  Account

  
	

  Sec. 2.2

  	

  Administrator

  
	

  Sec. 2.3

  	

  Affiliate

  
	

  Sec. 2.4

  	

  Aggregate Continuous Service

  
	

  Sec. 2.5

  	

  Beneficiary

  
	

  Sec.

  2.6

  	

  Board

  
	

  Sec. 2.7

  	

  Certified Earnings

  
	

  Sec. 2.8

  	

  Common Control

  
	

  Sec. 2.9

  	

  Committee

  
	

  Sec. 2.10

  	

  Company

  
	

  Sec. 2.11

  	

  Company Stock

  
	

  Sec. 2.12

  	

  Eligibility Computation Period

  
	

  Sec. 2.13

  	

  Employment Commencement Date

  
	

  Sec. 2.14

  	

  ESOP Account

  
	

  Sec. 2.15

  	

  Exempt Loan

  
	

  Sec. 2.16

  	

  Fair Market Value

  
	

  Sec. 2.17

  	

  401(k) Account

  
	

  Sec.

  2.18

  	

  Fund

  
	

  Sec. 2.19

  	

  Highly Compensated Employee

  
	

  Sec. 2.20

  	

  Hour of Service

  
	

  Sec. 2.21

  	

  Investment Account

  
	

  Sec. 2.22

  	

  Investment Manager

  
	

  Sec. 2.23

  	

  Leased Employee

  
	

  Sec. 2.24

  	

  Named Fiduciary

  
	

  Sec. 2.25

  	

  Normal Retirement Age

  
	

  Sec. 2.26

  	

  One Year Break In Service

  
	

  Sec. 2.27

  	

  Participant

  
	

  Sec. 2.28

  	

  Participating Employer

  
	

  Sec. 2.29

  	

  Period of Continuous Service

  
	

  Sec. 2.30

  	

  Plan Year

  
	

  Sec. 2.31

  	

  Qualified Employee

  
	

  Sec. 2.32

  	

  Recognized Break In Service

  
			

 

i

 

 

	

  Sec. 2.33

  	

  Retirement Account

  
	

  Sec. 2.34

  	

  Termination of Employment

  
	

  Sec.

  2.35

  	

  Trust

  
	

  Sec. 2.36

  	

  Trustee

  
	

  Sec. 2.37

  	

  Unallocated Reserve

  
	

  Sec. 2.38

  	

  Valuation Date

  
	

  Sec. 2.39

  	

  Year of Eligibility Service

  
	

   

  	

   

  
	

  ARTICLE III

  	

  SERVICE PROVISIONS

  
	

  Sec. 3.1

  	

  Employment Commencement Date

  
	

  Sec. 3.2

  	

  Termination of Employment

  
	

  Sec. 3.3

  	

  Hours of Service

  
	

  Sec. 3.4

  	

  Eligibility Computation Period

  
	

  Sec. 3.5

  	

  Year of Eligibility Service

  
	

  Sec. 3.6

  	

  One Year Break In Service

  
	

  Sec. 3.7

  	

  Effect of One Year Break In Service

  
	

  Sec. 3.8

  	

  Period of Continuous Service

  
	

  Sec. 3.9

  	

  Aggregate Continuous Service

  
	

  Sec. 3.10

  	

  Recognized Break In Service

  
	

  Sec. 3.11

  	

  Periods of Military Service

  
	

   

  	

   

  
	

  ARTICLE IV

  	

  PLAN PARTICIPATION

  
	

  Sec. 4.1

  	

  Qualified Employee

  
	

  Sec. 4.2

  	

  Eligibility for Participation

  
	

  Sec. 4.3

  	

  Duration of Participation

  
	

  Sec. 4.4

  	

  Active Participant

  
	

  Sec. 4.5

  	

  Eligibility to Share in Participating

  Employer Contributions

  
	

  Sec. 4.6

  	

  No Guarantee of Employment

  
	

   

  	

   

  
	

  ARTICLE V

  	

  401(K) CONTRIBUTIONS

  
	

  Sec. 5.1

  	

  401(k) Contributions

  
	

  Sec. 5.2

  	

  Profit Related Retirement Contributions

  
	

   

  	

   

  
	

  ARTICLE VI

  	

  PROFIT SHARING AND MATCHING CONTRIBUTIONS

  
	

  Sec. 6.1

  	

  Profit Sharing Contributions

  
	

  Sec. 6.2

  	

  Leveraged Acquisitions

  
	

  Sec. 6.3

  	

  Leveraged ESOP Contributions

  
	

  Sec. 6.4

  	

  Application of Dividends

  
	

  Sec. 6.5

  	

  ESOP Allocations

  
	

  Sec. 6.6

  	

  Matching Contributions

  
	

   

  	

   

  
	

  ARTICLE VII

  	

  LIMITATIONS ON CONTRIBUTIONS AND

  ALLOCATIONS

  
	

  Sec. 7.1

  	

  Limitation on Allocations

  
	

  Sec. 7.2

  	

  Limit on 401(k) Contributions

  
	

  Sec. 7.3

  	

  Adjustment of Employer Contributions If

  Required by Code Section 401(k)

  
	

  Sec. 7.4

  	

  Adjustment of Contributions Required by

  Code Section 401(m)

  
	

  Sec. 7.5

  	

  Multiple Use of the Alternative Limitations

  
	

   

  	

   

  
	

  ARTICLE VIII

  	

  EMPLOYEE CONTRIBUTIONS

  
	

  Sec. 8.1

  	

  Employee Contributions Not Permitted After

  December 31, 1986

  
			

 

ii

 

 

	

  Sec. 8.2

  	

  Rollover Contributions

  
	

   

  	

   

  
	

  ARTICLE IX

  	

  PARTICIPANTS’ ACCOUNTS

  
	

  Sec. 9.1

  	

  Retirement Account

  
	

  Sec. 9.2

  	

  Investment Account

  
	

  Sec. 9.3

  	

  401(k) Account

  
	

  Sec. 9.4

  	

  ESOP Account

  
	

  Sec. 9.5

  	

  Accounts from Tennant Trend Plan

  
	

   

  	

   

  
	

  ARTICLE X

  	

  INVESTMENT OF ACCOUNTS

  
	

  Sec. 10.1

  	

  Description of Funds

  
	

  Sec. 10.2

  	

  Investment of Retirement Accounts

  
	

  Sec. 10.3

  	

  Disposition of Life Insurance Policies

  
	

  Sec. 10.4

  	

  Investment of Investment Accounts and

  401(k) Accounts

  
	

  Sec. 10.5

  	

  Investment of ESOP Accounts

  
	

  Sec. 10.6

  	

  Restrictions Imposed by Certain Funds

  
	

  Sec. 10.7

  	

  Orderly Disposition of Company Stock

  
	

   

  	

   

  
	

  ARTICLE XI

  	

  VALUATION OF ACCOUNTS

  
	

  Sec. 11.1

  	

  Valuation of Funds

  
	

  Sec. 11.2

  	

  Valuation of Accounts in Fund Established

  Under Sec. 10.1(c).

  
	

  Sec. 11.3

  	

  Valuation of Accounts in Company Stock Fund

  and ESOP Fund

  
	

  Sec. 11.4

  	

  Special Valuation Procedure for Funds

  Investing in Mutual Funds

  
	

  Sec. 11.5

  	

  Certificates

  
	

   

  	

   

  
	

  ARTICLE XII

  	

  DESIGNATION OF BENEFICIARY

  
	

  Sec. 12.1

  	

  Persons Eligible to Designate

  
	

  Sec. 12.2

  	

  Special Requirements for Married

  Participants

  
	

  Sec. 12.3

  	

  Form and Method of Designation

  
	

  Sec. 12.4

  	

  No Effective Designation

  
	

  Sec. 12.5

  	

  Successor Beneficiary

  
	

   

  	

   

  
	

  ARTICLE XIII

  	

  ELIGIBILITY FOR A BENEFIT

  
	

  Sec. 13.1

  	

  Benefit Upon Retirement

  
	

  Sec. 13.2

  	

  Other Termination of Employment

  
	

  Sec. 13.3

  	

  Distributions Following Death

  
	

  Sec. 13.4

  	

  Withdrawals from Investment Accounts and

  401(k) Accounts While Employed

  
	

   

  	

   

  
	

  ARTICLE XIV

  	

  DISTRIBUTION OF BENEFITS

  
	

  Sec. 14.1

  	

  Time and Method of Payment

  
	

  Sec. 14.2

  	

  Distribution From More Than One Account

  
	

  Sec. 14.3

  	

  Reemployment

  
	

  Sec. 14.4

  	

  Source of Benefits

  
	

  Sec. 14.5

  	

  Incompetent Payee

  
	

  Sec. 14.6

  	

  Benefits May Not Be Assigned or Alienated

  
	

  Sec. 14.7

  	

  Payment of Taxes

  
	

  Sec. 14.8

  	

  Conditions Precedent

  
	

  Sec. 14.9

  	

  Committee Directions to Trustee

  
	

  Sec. 14.10

  	

  Effect on Unemployment Compensation

  
	

  Sec. 14.11

  	

  Nonterminable ESOP Protections

  

 

iii

 

 

	

  Sec. 14.12

  	

  Special Distribution Events

  
	

  Sec. 14.13

  	

  Inability to Locate Distributee

  
	

   

  	

   

  
	

  ARTICLE XV

  	

  LOANS TO PARTICIPANTS

  
	

  Sec. 15.1

  	

  Loans to Participants

  
	

  Sec. 15.2

  	

  Term and Repayment of Loans

  
	

  Sec. 15.3

  	

  Rate of Interest on Loans

  
	

  Sec. 15.4

  	

  Miscellaneous

  
	

   

  	

   

  
	

  ARTICLE XVI

  	

  TRUST

  
	

  Sec. 16.1

  	

  Composition

  
	

  Sec. 16.2

  	

  Trustee or Other Funding Agency

  
	

  Sec. 16.3

  	

  Compensation and Expenses of Trustee; Other

  Expenses

  
	

  Sec. 16.4

  	

  Securities of the Company

  
	

  Sec. 16.5

  	

  No Diversion

  
	

  Sec. 16.6

  	

  Voting Company Stock

  
	

  Sec. 16.7

  	

  Tender or Exchange Offers Regarding Company

  Stock

  
	

   

  	

   

  
	

  ARTICLE XVII

  	

  COMMITTEE

  
	

  Sec. 17.1

  	

  Membership and Responsibility

  
	

  Sec. 17.2

  	

  Organization of Committee

  
	

  Sec. 17.3

  	

  Meetings and Actions of Committee

  
	

  Sec. 17.4

  	

  Outside Assistance

  
	

  Sec. 17.5

  	

  Powers of Committee

  
	

  Sec.

  17.6

  	

  Compensation,

  Expenses, and Bonds

  
	

   

  	

   

  
	

  ARTICLE XVIII

  	

  ADMINISTRATION OF PLAN

  
	

  Sec. 18.1

  	

  Certain Fiduciary Provisions

  
	

  Sec. 18.2

  	

  General Fiduciary Standard

  
	

  Sec. 18.3

  	

  Prohibited Transactions

  
	

  Sec. 18.4

  	

  Discrimination Prohibited

  
	

  Sec. 18.5

  	

  Evidence

  
	

  Sec. 18.6

  	

  Correction of Errors

  
	

  Sec. 18.7

  	

  Claims Procedure

  
	

  Sec. 18.8

  	

  Bonding

  
	

  Sec. 18.9

  	

  Waiver of Notice

  
	

  Sec. 18.10

  	

  Agent For Legal Process

  
	

  Sec. 18.11

  	

  Indemnification

  
	

   

  	

   

  
	

  ARTICLE XIX

  	

  AMENDMENT, TERMINATION, MERGER

  
	

  Sec. 19.1

  	

  Amendment

  
	

  Sec. 19.2

  	

  Permanent Discontinuance of Contributions

  
	

  Sec. 19.3

  	

  Termination

  
	

  Sec. 19.4

  	

  Partial Termination

  
	

  Sec.

  19.5

  	

  Merger,

  Consolidation, or Transfer of Plan Assets

  
	

  Sec. 19.6

  	

  Deferral of Distributions

  
	

   

  	

   

  
	

  ARTICLE XX

  	

  TOP-HEAVY PLAN PROVISIONS

  
	

  Sec. 20.1

  	

  Key Employee Defined

  
	

  Sec. 20.2

  	

  Determination of Top-Heavy Status

  

 

iv

 

 

	

  Sec. 20.3

  	

  Minimum Contribution Requirement

  
	

  Sec. 20.4

  	

  Definition of Employer

  

 

v

 

TENNANT COMPANY PROFIT SHARING AND

EMPLOYEE

STOCK OWNERSHIP PLAN

 

(As

Amended and Restated Effective as of January 1, 2001)

 

ARTICLE I

 

GENERAL

 

Sec. 1.1 

Name of Plan.  The name of this plan is “Tennant Company

Profit Sharing and Employee Stock Ownership Plan.”  It is sometimes herein referred to as the “Plan”.  The Plan is a single plan consisting of a

profit sharing portion and a stock bonus portion.  The stock bonus portion (which consists of the ESOP Accounts and

the Unallocated Reserve) is an employee stock ownership plan which is designed

to invest primarily in Company Stock. 

The portion of the Plan other than the ESOP Accounts and Unallocated

Reserve is a profit sharing plan.  The

Plan also holds accounts accrued under the Tennant Trend 401(k) Savings Plan,

which was merged into this Plan effective January 1, 1991.

 

Sec. 1.2 

Purpose.  The Plan has been established so that eligible employees may

share in the profits of the Participating Employers, may have an additional

source of retirement income, and may acquire an ownership interest in the

Company.

 

Sec. 1.3 

Effective Date.  The “Effective Date” of the Plan is December 29, 1944, the

date as of which the Plan was established.

 

Sec. 1.4  Construction and Applicable Law.  The Plan is intended to meet the

requirements for qualification under Code section 401(a), the requirements for

a qualified cash or deferred arrangement under Code section 401(k), the

requirements for a stock bonus plan under Code section 401(a), and the

requirements for an employee stock ownership plan under Code section 4975(e)(7)

which is designed to invest primarily in qualifying employer securities meeting

the requirements of Code sections 4975(e)(8) and 409(l).  The Plan is also intended to be in full

compliance with applicable requirements of the Employee Retirement Income

Security Act.  The Plan shall be administered

and construed consistent with said intent. 

It shall also be construed and administered according to the laws of the

State of Minnesota to the extent that such laws are not preempted by the laws

of the United States of America.  All

controversies, disputes, and claims arising hereunder shall be submitted to the

United States District Court for the District of Minnesota, except as otherwise

provided in any trust agreement entered into with a Trustee.  All references herein to the “Code” or

“Internal Revenue Code” are to the Internal Revenue Code of 1986 as from time

to time amended.  All references herein

to “ERISA” or to the “Employee Retirement Income Security Act” are to the

Employee Retirement Income Security Act of 1974 as from time to time amended.

 

Sec. 1.5 

Rules of Construction.  The Plan shall be construed in accordance with

the following:

 

(a)                                  Headings at the

beginning of articles and sections hereof are for convenience of reference,

shall not be considered as part of the text of the Plan, and shall not

influence its construction.

 

(b)                                 Capitalized terms used

in the Plan shall have their meaning as defined in the Plan unless the context

clearly indicates to the contrary.

 

(c)                                  Any references to the

masculine gender include the feminine and vice versa.

 

(d)                                 Use of the words

“hereof”, “herein”, “hereunder”, or similar compounds of the word “here” shall

mean and refer to the entire Plan unless the context clearly indicates to the

contrary.

 

(e)                                  The provisions of the

Plan shall be construed as a whole in such manner as to carry out the

provisions thereof and shall not be construed separately without relation to

the context.

 

 

Sec. 1.6  Benefits Determined Under Provisions in

Effect at Termination of Employment.  Except as may be specifically provided

herein to the contrary, with respect to a Participant whose Termination of Employment

has occurred, benefits under the Plan attributable to service prior to his

Termination of Employment shall be determined and paid in accordance with the

provisions of the Plan as in effect on the date his Termination of Employment

occurred unless he becomes an Active Participant after that date and such

active participation causes a contrary result under the provisions hereof.  However, the provisions of Articles XII, XIV

and XV apply to each Participant or Beneficiary who has an Account under the Plan,

regardless of the date of his or her Termination of Employment.

 

Sec. 1.7  Effective Date of Document.  Unless a different date is specified for

some purpose in this document, the provisions of this Plan document are

generally effective as of January 1, 2001. 

However, any provision necessary to comply with a requirement of federal

legislation or a Treasury regulation which has an earlier effective date shall

be effective retroactively to the date required by the applicable law or

regulation.

 

2

 

ARTICLE

II

 

MISCELLANEOUS

DEFINITIONS

 

Sec. 2.1 

Account.  An “Account” is any of the types of accounts described in Article

IX.

 

Sec. 2.2 

Administrator.  The Company is the “Administrator” of the Plan for purposes of

ERISA.

 

Sec. 2.3 

Affiliate   “Affiliate” means any trade or business

entity under Common Control with a Participating Employer.

 

Sec. 2.4  Aggregate Continuous Service.  “Aggregate Continuous Service” is defined in

Sec. 3.9.

 

Sec. 2.5 

Beneficiary.  “Beneficiary” means the person or persons designated as such

pursuant to Article XII.

 

Sec. 2.6 

Board.  The “Board” is the board of directors of the Company, and

includes any executive committee thereof authorized to act for such body.

 

Sec. 2.7 

Certified Earnings.  “Certified Earnings” of a Participant from a

Participating Employer for a particular period means the total compensation

paid to the Participant by that Participating Employer during such period for

service as an Active Participant, subject to the following:

 

(a)                                  For Plan Years

commencing on or after January 1, 2001, bonuses based on earnings or profits

from operations for a Plan Year and paid in the following Plan Year after the

amount thereof has been determined shall be included in computing Certified

Earnings for the Plan Year in which paid; provided, however, that any bonus

accrued in 2000 and paid in 2001 shall be disregarded for purposes of

determining Profit Sharing Contributions under Sec. 6.1 for 2001.

 

(b)                                 If a Participant has

elected to have his compensation reduced for the purpose of making a

contribution to a 401(k) Account under this Plan, to a cafeteria plan

established under Code section 125, or for qualified transportation fringe

benefits under Code section 132(f)(4), his Certified Earnings shall be the

amount he would have received but for the reduction.  If a portion of the reduction is later paid back to him, said

payment shall not be included in Certified Earnings.  Any other payment or contribution to or for the benefit of the

Participant under this Plan shall not be included in Certified Earnings.

 

(c)                                  Extraordinary

payments which are not a part of regular compensation, vacation pay taken in a

lump sum at Termination of Employment, sick pay or disability pay,severance pay,

allowances or reimbursements for expenses, payments or contributions to or for

the benefit of the employee under any other deferred compensation, pension,

profit sharing, insurance, ERISA excess benefit or other employee benefit plan,

suggestion awards, merchandise discounts, stock options or income resulting

from the grant or exercise of stock options, or benefits in the form of

property or the use of property shall not be included in computing Certified

Earnings, regardless of whether such amounts are deemed to constitute income

for income tax purposes or for any other purpose.

 

(d)                                 Certified Earnings of

a Participant for any Plan Year shall not exceed $170,000 for Plan Years

commencing after 1999 and prior to 2002. 

Effective for Plan Years commencing during or after 2002, Certified

Earnings of a Participant for a Plan Year shall not exceed $200,000, adjusted

for each Plan Year to take into account any cost of living increase provided

for that year in accordance with regulations prescribed by the Secretary of the

Treasury.  The dollar increase in effect

on January 1 of any calendar year shall apply to Plan Years beginning in

that calendar year.  If a Plan Year is

shorter than 12 months, the limit under this subsection for that year shall be

multiplied by a fraction, the numerator of which is the number of months in the

short Plan Year and the denominator of which is 12.

 

3

 

Sec. 2.8 

Common Control.  A trade or business entity (whether corporation, partnership,

sole proprietorship or otherwise) is under “Common Control” with another trade

or business entity (i) if both entities are corporations which are members of a

controlled group of corporations as defined in Code section 414(b), or (ii) if

both entities are trades or businesses (whether or not incorporated) which are

under common control as defined in Code section 414(c), or (iii) if both

entities are members of an affiliated service group as defined in Code section

414(m), or (iv) if both entities are required to be aggregated pursuant to

regulations under Code section 414(o). 

Service for all entities under Common Control shall be treated as

service for a single employer to the extent required by the Code; provided,

however, that an individual shall not be a Qualified Employee by reason of this

section.  In applying the preceding

sentence for purposes of Sec. 7.1, the provisions of subsections (b) and (c) of

Code section 414 are deemed to be modified as provided in Code section 415(h).

 

Sec. 2.9 

Committee.  “Committee” means the committee appointed and acting as provided

in Article XVII.

 

Sec. 2.10 

Company.  The “Company” is Tennant Company, a Minnesota corporation.

 

Sec. 2.11 

Company Stock.  “Company Stock” means common stock of the

Company.

 

Sec. 2.12  Eligibility Computation Period.  “Eligibility Computation Period” is defined

in Sec. 3.4.

 

Sec. 2.13  Employment Commencement Date.  “Employment Commencement Date” means any

date defined as such in Sec. 3.1.

 

Sec. 2.14 

ESOP Account.  A Participant’s “ESOP Account” is an Account in the Trust derived

from amounts allocated to him pursuant to Article VI.

 

Sec. 2.15 

Exempt Loan.  “Exempt Loan” means a direct or indirect

extension of credit to the Plan that is not prohibited by Code section 4975,

subject to the following:

 

(a)                                  The Exempt Loan may

be made or guaranteed by either a party in interest (as defined in section

3(14) of ERISA) or a disqualified person (as defined in Code section 4975).

 

(b)                                 The proceeds of the

Exempt Loan must be used solely, and within a reasonable time after their

receipt, to acquire Company Stock for the Unallocated Reserve, or to repay such

Exempt Loan, or to repay a prior Exempt Loan, or for any combination of the

foregoing purposes.

 

(c)                                  The Exempt Loan must

be without recourse against the Fund except that:

 

(1)                                  The Company Stock

acquired with the proceeds of the Exempt Loan may be pledged or otherwise used

to secure repayment of the Exempt Loan, and

 

(2)                                  Any Company Stock

which was acquired with the proceeds of a prior Exempt Loan which was repaid

with the proceeds of the Exempt Loan may be pledged or otherwise used to secure

repayment of the Exempt Loan, and

 

(3)                                  Any cash

contributions to the Plan that are made for the purpose of satisfying the

Plan’s obligations under the Exempt Loan (and earnings thereon) may be pledged

or otherwise used to secure repayment of the Exempt Loan, and

 

(4)                                  Earnings attributable

to shares of Company Stock acquired with the proceeds of an Exempt Loan may be

used to repay that Loan or any renewal or extension thereof, and

 

(5)                                  The unallocated

earnings attributable to unallocated shares of Company Stock that were acquired

with the proceeds of an Exempt Loan may be pledged or otherwise used as

security for another Exempt Loan.

 

4

 

 

(d)                                 The Exempt Loan must

provide for principal and interest to be paid over a specific term.

 

(e)                                  Except as provided

below in subsection (f), the number of shares which shall be so released from

the Unallocated Reserve each Plan Year shall equal the number of shares of

Company Stock held in the Unallocated Reserve immediately before the release of

any shares for the Plan Year, multiplied by a fraction with a numerator equal

to all principal and interest payments made on the Exempt Loan for said Plan

Year and a denominator equal to the total principal and interest paid under the

Exempt Loan for the current Plan Year and to be paid for all subsequent

years.  The number of future years for

which principal and interest are payable under the Exempt Loan must be

definitely ascertainable and must be determined without taking into account any

possible extensions or renewal periods. 

If the interest rate under the loan is variable, the amount of future

interest payable shall be calculated by using the interest rate in effect on

the last day of the current Plan Year.

 

(f)                                    In lieu of the

method described in subsection (e), the number of shares of Company Stock held

in the Unallocated Reserve which shall be released from the Unallocated Reserve

each Plan Year may be determined with reference to principal payments only,

provided all of the following conditions are met.

 

(1)                                  The Exempt Loan

provides for principal and interest payments at a cumulative rate that is not

less rapid at any time than level annual payments of such amounts for ten

years.

 

(2)                                  If the Exempt Loan

constitutes a renewal, extension or refinancing of a prior Exempt Loan, the sum

of the expired duration of the prior Exempt Loan, the renewal period, the

extension period, and the duration of the new Exempt Loan does not exceed ten

years.

 

(3)                                  The number of shares

which shall be released from the Unallocated Reserve each Plan Year must equal

the number of shares of Company Stock held in the Unallocated Reserve

immediately before the release of any shares for the Plan Year, multiplied by a

fraction with a numerator equal to the amount of all principal payments made

with respect to the Exempt Loan for the current Plan Year and a denominator

equal to the total principal payments to be paid over the remaining term of the

Exempt Loan (including the principal payments for the current Plan Year).

 

(4)                                  For purposes of this

subsection (f), the amount of interest included in any payment is disregarded

only to the extent that it would be determined to be interest under standard

loan amortization tables.

 

(g)                                 The rate of interest

(which may be fixed or variable) on the Exempt Loan must not be in excess of a

reasonable rate of interest considering all relevant factors including (but not

limited to) the amount and duration of the loan, the security given, the

guarantees involved, the credit standing of the Plan, the Company, and the

guarantors, and the generally prevailing rates of interest.

 

(h)                                 In the event of

default upon an Exempt Loan, the fair market value of Company Stock and other

assets which can be transferred in satisfaction of the loan must not exceed the

amount of the loan.  If the lender is a

party in interest (as defined in ERISA) or disqualified person (as defined in

the Code), the loan must provide for a transfer of Plan assets upon default

only upon and to the extent of the failure of the Plan to satisfy the payment

schedule of the Exempt Loan.

 

Sec. 2.16 

Fair Market Value.  The “Fair Market Value” of a share of

Company Stock as of a certain date means the closing price on that date on the

New York Stock Exchange.

 

Sec. 2.17 

401(k) Account.  A Participant’s “401(k) Account” is an Account in the Trust based

on 401(k) Contributions pursuant to Sec. 5.1. 

Prior to January 1, 2001, this Account was known as the Individual

Shelter Account.

 

 

5

 

Sec. 2.18 

Fund.  “Fund” means any fund for investment of Plan assets established

pursuant to Sec. 10.1.

 

Sec. 2.19  Highly Compensated Employee.  “Highly Compensated Employee” for any Plan

Year means an individual described as such in Code section 414(q).

 

(a)                                  Unless otherwise

provided in Code section 414(q), each employee who meets one of the following

requirements is a “Highly Compensated Employee”:

 

(1)                                  The employee at any

time during the current or prior Plan Year was a more than 5-percent owner as

defined in Code section 414(q)(2), or was the spouse, child, parent or

grandparent of such an owner to whom the owner’s stock is attributed pursuant

to Code section 318 (regardless of the Compensation of the owner or family

member).

 

(2)                                  The employee received

Compensation from the employer in excess of $85,000 for the prior Plan Year in

the case of determinations for Plan Years commencing during or after 2001.

 

(b)                                 The dollar amount

specified in paragraph (2) of subsection (a) shall be indexed for cost of

living increases for each calendar year as provided in the applicable Treasury

regulations.  For any Plan Year, the

applicable dollar amount shall be the dollar amount in effect for the calendar

year in which the Plan Year commences.

 

(c)                                  For purposes of this

section, “employer” includes  all Participating Employers and all

Affiliates, and “employee” includes Leased Employees.

 

(d)                                 For purposes of this

section, “Compensation” means the amount defined as such under Sec. 7.1(d).

 

Sec. 2.20 

Hour of Service.  “Hour of Service” is defined in Sec. 3.3.

 

Sec. 2.21 

Investment Account.  A Participant’s “Investment Account” is an

Account in the Trust to which contributions are allocated as indicated below. A

Participant’s Investment Account is comprised of one or more of the following

subaccounts:

 

(a)                                  The Participant’s

Deferred Investment Account, which may not be distributed to him until after

the earlier of (i) his Termination of Employment or (ii) his attainment of age

591⁄2.  The following contributions are

allocated to the Participant’s Deferred Investment Account:

 

(1)                                  Matching

Contributions under Sec. 6.6 for the months of January through June of 2001.

 

(2)                                  Profit Sharing

Contributions under Sec. 6.1 for years after 2000, except to the extent such

contributions are allocated to the Participant’s ESOP Account pursuant to Sec.

6.1(b) or (c).

 

(3)                                  Profit Sharing

Contributions for the years 1980 through 1989.

 

(4)                                  Matching

Contributions for years prior to 1990.

 

Separate subaccounts within the Deferred Investment Account may be

established to hold funds attributable to some or all of the types of

contributions described in this subsection.

 

(b)                                 The Participant’s

Withdrawable Investment Account, which may be withdrawn by the Participant

prior to Termination of Employment to the extent provided in Sec. 13.4.  Amounts allocated to the Participant’s

Withdrawable Investment Account include Rollover Contributions made during 1992

and certain other types of contributions that were allocated to such accounts

in 1987 and prior years.

 

6

 

(c)                                  The Participant’s

Rollover Account, if any, which holds Rollover Contributions under Sec. 8.2

made during 1993 and subsequent years, and which may be withdrawn by the

Participant prior to Termination of Employment to the extent provided in Sec.

13.4.

 

Sec. 2.22 

Investment Manager.  An “Investment Manager” is a person or

persons appointed by the Committee to direct the Trustee as to investment of

part or all of the Trust.

 

Sec. 2.23 

Leased Employee.  “Leased Employee” means any person defined as such by Code

section 414(n).  In general, a Leased

Employee is any person who is not otherwise an employee of a Participating

Employer or an Affiliate (referred to collectively as the “recipient”) and who

pursuant to an agreement between the recipient and any other person (“leasing

organization”) has performed services for the recipient on a substantially

full-time basis for a period of at least one year and such services are

performed under primary direction or control by the recipient.  For purposes of the requirements listed in

Code section 414(n)(3), any Leased Employee shall be treated as an employee of

the recipient, and contributions or benefits provided by the leasing

organization which are attributable to services performed for the recipient

shall be treated as provided by the recipient. 

However, if Leased Employees constitute less than 20% of the

Participating Employers’ non-highly compensated work force within the meaning

of Code section 414(n)(5)(C)(ii), those Leased Employees covered by a plan

described in Code section 414(n)(5) shall be disregarded.  Notwithstanding the foregoing, no Leased Employee

shall be a Qualified Employee or a Participant in this Plan.

 

Sec. 2.24 

Named Fiduciary.  The Company is a “Named Fiduciary” for purposes of ERISA with

authority to control or manage the operation and administration of the Plan,

including control or management of the assets of the Plan, in accordance with

the provisions hereof.  The Committee is

also a Named Fiduciary under ERISA with the authority to control and manage the

operation and administration of the Plan allocated to it by the provisions of

the Plan.  Other persons are also Named

Fiduciaries under ERISA if so provided by ERISA or if so identified by the

Company, by action of the Board.  Such

other person or persons shall have such authority to control or manage the

operation and administration of the Plan, including control or management of

the assets of the Plan, as may be provided by ERISA or as may be allocated by

the Company, by action of the Board.

 

Sec. 2.25  Normal Retirement Age.  “Normal Retirement Age” is age 65.

 

Sec. 2.26  One Year Break In Service.  “One Year Break In Service” is defined in

Sec. 3.6.

 

Sec. 2.27 

Participant.  A “Participant” is an individual described as such in Article IV.

 

Sec. 2.28  Participating Employer.  The Company is a “Participating Employer” in

the Plan.  With the consent of the

Company, any other employer may also become a Participating Employer in the

Plan effective as of a date specified by it in its adoption of the Plan.  Also with such consent, any such adopting

employer may modify the provisions of the Plan as they shall be applicable to

its employees.  The other Participating

Employer on January 1, 2001 is Tennant Sales and Service Company, a

Minnesota corporation.

 

Sec. 2.29  Period of Continuous Service.  “Period of Continuous Service” is defined in

Sec. 3.8.

 

Sec. 2.30 

Plan Year.  A “Plan Year” is the 12-consecutive-month period commencing on

January 1, and is the period on which records of the Plan are kept.

 

Sec. 2.31 

Qualified Employee.  A “Qualified Employee” is a person described

as such in Sec. 4.1.

 

Sec. 2.32  Recognized Break In Service.  A “Recognized Break In Service” is a break

in service recognized as such pursuant to Sec. 3.10.

 

7

 

Sec. 2.33 

Retirement Account.  A Participant’s “Retirement Account” is an

Account in the Trust derived from Profit Related Retirement Contributions made

for years prior to 2001 and Past Service Contributions to the extent based on

Profit Related Retirement Contributions.

 

Sec. 2.34  Termination of Employment.  An employee’s “Termination of Employment”

occurs at the time provided in Sec. 3.2.

 

Sec. 2.35 

Trust.  “Trust” means the aggregate of assets described in Sec. 16.1.

 

Sec. 2.36 

Trustee.  “Trustee” is a trustee or trustees appointed and acting from time

to time in accordance with the provisions of Sec. 16.2 for the purpose of

holding, investing, and disbursing all or a part of the Trust.

 

Sec. 2.37 

Unallocated Reserve.  “Unallocated Reserve” means that portion of

the Fund which consists of shares of Company Stock (and dividends and other

earnings attributable thereto) that were acquired with the proceeds of an

Exempt Loan and that are held in suspense pending allocation to Participants’

Accounts pursuant to Article VI.

 

Sec. 2.38 

Valuation Date.  “Valuation Date” means the date on which the Trust and Accounts

are valued as provided in Article XI. Each of the following is a

“Valuation Date”:

 

(a)                                  The last day of each

quarter of a Plan Year, or, if the Committee so prescribes by written notice to

the Trustee, the last day of each month. 

Commencing July 1, 2001, each business day on which the New York Stock

Exchange is open for trading is a Valuation Date.

 

(b)                                 Such other day, if

any, as may be prescribed by the Committee as the Committee in its sole discretion

may consider necessary or advisable to provide for the orderly and equitable

administration of the Plan.

 

Sec. 2.39  Year of Eligibility Service.  “Year of Eligibility Service” is defined in

Sec. 3.5.

 

8

 

ARTICLE III

 

SERVICE

PROVISIONS

 

A.  In General

 

Sec. 3.1  Employment Commencement Date.  “Employment Commencement Date” means the

date on which an employee-employer relationship is first established between an

employee and a Participating Employer (whether before or after the

Participating Employer becomes such) or Affiliate.  The date on which an employee-employer relationship is

re-established following a Recognized Break In Service or One Year Break In

Service is also an Employment Commencement Date.

 

Sec. 3.2  Termination of Employment.  The “Termination of Employment” of an

employee for purposes of the Plan shall be deemed to occur upon his

resignation, discharge, retirement, death, failure to return to active work at

the end of an authorized leave of absence or the authorized extension or

extensions thereof, failure to return to work when duly called following a

temporary layoff, or upon the happening of any other event or circumstance

which, under the policy of a Participating Employer or Affiliate as in effect

from time to time, results in the termination of the employer-employee

relationship.  Termination of Employment

shall not be deemed to occur upon a transfer between any combination of

Participating Employers and Affiliates. 

An employee who has ceased actively working for the Participating

Employers shall in all events be treated as having had a Termination of

Employment for purposes of this Plan if the Company determines, based on

medical evidence acceptable to the Company, that the employee is disabled and

either that the disability satisfies the requirements of Code section 72(m)(7),

or that the employee has been determined by the Social Security Administration

to be eligible for Social Security disability benefits.

 

B.  Service Provisions Relating to

Eligibility to Participate

 

Sec. 3.3 

Hours of Service.  “Hours of Service” are determined according to the following

subsections with respect to each applicable computation period.  The Company may round up the number of Hours

of Service at the end of each computation period or more frequently as long as

a uniform practice is followed with respect to all employees determined by the

Company to be similarly situated for compensation, payroll, and recordkeeping

purposes.

 

(a)                                  Hours of Service are

computed only with respect to service with Participating Employers (for service

both before and after the Participating Employer becomes such) and Affiliates,

and are aggregated for service with all such employers.

 

(b)                                 For any portion of a

computation period during which a record of hours is maintained for an

employee, Hours of Service shall be credited as follows:

 

(1)                                  Each hour for which

the employee is paid, or entitled to payment, for the performance of duties for

his employer during the applicable computation period is an Hour of Service.

 

(2)                                  Each hour for which

the employee is paid, or entitled to payment, by his employer 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, is an Hour of Service.  No

more than 501 Hours of Service shall be credited under this paragraph for any

single continuous period (whether or not such period occurs in a single

computation period).  Hours of Service

shall not be credited under this paragraph with respect to payments under a

plan maintained solely for the purpose of complying with applicable workers’

compensation, unemployment compensation, or disability insurance laws or with

respect to a payment which solely reimburses the individual for medical or

medically related expenses incurred by the employee.

 

9

 

(3)                                  Each hour for which

back pay, irrespective of mitigation of damages, is either awarded or agreed to

by the employer is an Hour of Service. 

Such Hours of Service shall be credited to the computation period or

periods to which the award or agreement for back pay pertains, rather than to

the computation period in which the award, agreement, or payment is made.  Crediting of Hours of Service for back pay

awarded or agreed to with respect to periods described in paragraph (2) shall

be subject to the limitations set forth therein.

 

(4)                                  Hours under this

subsection shall be calculated and credited pursuant to section 2530.200b-2 of

the Department of Labor Regulations, which are incorporated herein by this

reference.

 

(5)                                  The Company may use

any records to determine Hours of Service which it considers an accurate

reflection of the actual facts.

 

(c)                                  For any portion of a

computation period during which an employee is within a classification for

which a record of hours for the performance of duties is not maintained, the employee

shall be credited with 190 Hours of Service for each month for which he would

otherwise be credited with at least one Hour of Service under subsection (b).

 

(d)                                 Nothing in this

section shall be construed as denying an employee credit for an Hour of Service

if credit is required by any federal law other than ERISA.  The nature and extent of such credit shall

be determined under such other law.

 

(e)                                  In no event shall

duplicate credit as an Hour of Service be given for the same hour.

 

(f)                                    This subsection (f)

shall apply to an individual who has service as (i) either a common law

employee or Leased Employee of (ii) either a Participating Employer or

Affiliate.  For purposes of determining

Hours of Service, such individual shall be considered an employee of such

Participating Employer or Affiliate during any period he would have been a

Leased Employee of such Participating Employer or Affiliate but for the

requirement that he must have performed services for such Participating

Employer or Affiliate on a substantially full-time basis for a period of at

least one year.  If this Plan is a

multiple employer plan as defined in section 2530.210 of the Department of

Labor Regulations, service as a leased individual with more than one legal

entity shall be aggregated only in accordance with the rules set forth in said

section.

 

Sec. 3.4  Eligibility Computation Period.  An employee’s first Eligibility Computation

Period is the 12-consecutive-month period beginning on his Employment

Commencement Date.  His second Eligibility

Computation Period is the Plan Year commencing in said 12-consecutive-month

period.  Each subsequent Plan Year prior

to the end of the Plan Year in which the employee has a One Year Break In

Service is an Eligibility Computation Period. 

If subsequent to a One Year Break In Service he has another Employment

Commencement Date, Eligibility Computation Periods for the period beginning on

such date shall be computed as though such date were his first Employment

Commencement Date.

 

Sec. 3.5  Year of Eligibility Service.  A “Year of Eligibility Service” is an

Eligibility Computation Period in which an employee has at least 1000 Hours of

Service.

 

Sec. 3.6  One Year Break In Service.  “One Year Break In Service” means a Plan

Year in which (i) the employee has no Hours of Service and (ii) an

employer-employee relationship with a Participating Employer or Affiliate is

not in effect at any time.  The One Year

Break In Service shall be recognized as such on the last day of such Plan Year.

 

(a)                                  Notwithstanding the

provisions of Sec. 3.3, for purposes of determining whether a One Year Break In

Service has occurred with respect to a Plan Year beginning after 1984, an

individual who is absent from work for maternity or paternity reasons shall

receive credit for the Hours of Service which would otherwise have been

credited to such individual but for such absence, or in any case in which such

hours cannot be determined, 8 Hours of Service per day of such absence;

provided, however, that the 

 

10

 

 

                                                total

number of Hours of Service recognized under this subsection shall not exceed

501 hours.  The Hours of Service

credited under this subsection shall be credited in the Plan Year in which the

absence begins if the crediting is necessary to prevent a One Year Break In

Service in that Plan Year or, in all other cases, in the following Plan Year.

 

(b)                                 For purposes of

subsection (a), an absence from work for maternity or paternity reasons means

an absence that began on or after January 1, 1985 (i) by reason of the

pregnancy of the individual, (ii) by reason of a birth of a child of the

individual, (iii) by reason of the placement of a child with the individual in

connection with the adoption of such child by such individual, or (iv) for

purposes of caring for such child for a period beginning immediately following

such birth or placement.

 

Sec. 3.7  Effect of One Year Break In Service.  If a nonvested employee has a period of five

consecutive One Year Breaks In Service, Years of Eligibility Service prior to

such break shall not be recognized for purposes of this section if the number

of his consecutive One Year Breaks In Service equals or exceeds the aggregate

number of his Years of Eligibility Service before the break, subject to the

following:

 

(a)                                  Prior to January 1,

1985, the preceding sentence shall apply if the employee had a One Year Break

In Service.  If as of December 31, 1984,

any service prior to a One Year Break In Service would not have been required

to be taken into account under the law as then in effect, such service shall

not be taken into account thereafter.

 

(b)                                 If any Years of

Eligibility Service are not required to be taken into account by reason of a

break-in-service period to which this subsection applies, such Years of

Eligibility Service shall not be taken into account in applying this subsection

to a subsequent break-in-service period.

 

(c)                                  A “nonvested

employee” is an individual who has no vested right to an accrued benefit under

the Plan derived from employer contributions (including 401(k) Contributions).

 

C.  Service Provisions Relating To

Eligibility For Retirement.

 

Sec. 3.8  Period of Continuous Service.  A “Period of Continuous Service” is the

period beginning on an employee’s Employment Commencement Date and ending on

the day before the day on which the employee begins a Recognized Break In

Service.  The duration of a Period of

Continuous Service is measured in years and days.

 

Sec. 3.9  Aggregate Continuous Service.  An employee’s “Aggregate Continuous Service”

is equal to the aggregate duration of his Periods of Continuous Service.  However, if a nonvested employee has had a

Recognized Break in Service of a duration equal to or longer than the aggregate

duration of his Periods of Continuous Service prior to such break, all Periods

of Continuous Service prior to such Recognized Break In Service shall be

disregarded.  The preceding sentence

shall not apply unless the employee incurs a Recognized Break In Service of at

least 60 months duration.  The individual’s

Periods of Continuous Service prior to a Recognized Break In Service shall not

include any Periods of Continuous Service disregarded under this section (or

any predecessor of this section) because of any previous Recognized Break In

Service.  “Nonvested employee” is

defined in Sec. 3.7(c).  Aggregate

Continuous Service is measured in years and days with 365 days constituting one

year.

 

Sec. 3.10  Recognized Break In Service.  A “Recognized Break In Service” is a period

of at least 12 months duration which begins on the day on which an employee’s

Termination of Employment occurs.  A

Recognized Break In Service ends, if ever, on the day on which the individual

again performs an Hour of Service for a Participating Employer or

Affiliate.  However, if an individual is

absent from work for maternity or paternity reasons, and the absence begins on

or after January 1, 1985, the 12-month period beginning with the first day of

such absence shall not be included in a Recognized Break In Service.  Whether an absence from work is for

maternity or paternity reasons will be determined under Sec. 3.6(b).

 

11

 

Sec. 3.11  Periods of Military Service.  Notwithstanding any provision of this Plan

to the contrary, contributions, benefits and service credit with respect to

qualified military service will be provided in accordance with Code section

414(u).

 

12

 

ARTICLE IV

 

PLAN

PARTICIPATION

 

Sec. 4.1 

Qualified Employee.  “Qualified Employee” means each employee of

a Participating Employer, subject to the following:

 

(a)                                  A nonresident alien

while not receiving earned income (within the meaning of Code section

911(d)(2)) from a Participating Employer which constitutes income from sources

within the United States (within the meaning of Code section 861(a)(3)) is not

a Qualified Employee.  An alien who is

temporarily employed to perform duties in the United States for a Participating

Employer is a Qualified Employee to the same extent as a comparable U.S.

citizen employee would be a Qualified Employee, except that no alien will be a

Qualified Employee while working under a “B” or “F” visa status.

 

(b)                                 Except as otherwise

provided by action of the Committee, citizens of the United States whose

principal place of employment is a country other than the United States are not

Qualified Employees.  The action of the

Committee shall specify the date on which an individual described in the

previous sentence becomes a Qualified Employee pursuant to this subsection (and

the date the individual ceases to be a Qualified Employee, if applicable).

 

(c)                                  Eligibility of

employees in a collective bargaining unit to participate in the Plan shall be

subject to negotiations with the representative of that unit.  During any period that an employee is

covered by the provisions of a collective bargaining agreement between a

Participating Employer and such representative, he shall not be considered a

Qualified Employee for purposes of this Plan unless such agreement expressly so

provides.  For purposes of this section

only, such an agreement shall be deemed to continue after its formal expiration

during collective bargaining negotiations pending the execution of a new

agreement.

 

(d)                                 An employee shall be

deemed to be a Qualified Employee during a period of absence from active

service which does not result from his Termination of Employment, provided he

is a Qualified Employee at the commencement of such period of absence.

 

(e)                                  An individual

employed in the Tennant Trend Division was not a Qualified Employee prior to

January 1, 1991.

 

(f)                                    Notwithstanding

anything herein to the contrary, any employee of the Company or Tennant Sales

and Service Company who is classified as an employee paid through the Tennant

Commercial payroll maintained for individuals employed at the Company’s

Holland, Michigan facility and in certain related operations is not a Qualified

Employee during the period while so classified.  Any individual who is classified by a Participating Employer as a

temporary employee and whose Employment Commencement Date is on or after

January 1, 2002 is not a Qualified Employee during the period while so

classified.

 

(g)                                 Notwithstanding

anything herein to the contrary, an individual is not a Qualified Employee during

any period during which the individual is classified by  a Participating Employer as

an independent contractor or as any other status in which the person is not

treated as a common law employee of a Participating Employer for purposes of

withholding of taxes, or is treated as an employee of another entity who is

leased to a Participating Employer, regardless of the correct legal status of

the individual.  The previous sentence

applies to all periods of such service of an individual who is subsequently reclassified

as an employee of a Participating Employer, whether the reclassification is

retroactive or prospective.

 

Sec. 4.2  Eligibility for Participation.  Commencing January 1, 2001, eligibility to

participate in the Plan shall be determined as follows:

 

 

13

 

(a)                                  For purposes of

eligibility to make 401(k) Contributions and receive Matching Contributions

under Article V, an employee shall become a Participant as soon as

administratively feasible following the later of (i) the date he becomes a

Qualified Employee (or the date he becomes a Qualified Employee again following

any break in service) or (ii) the date he files with the Company or its

designated agent an election to make 401(k) Contributions.

 

(b)                                 For purposes of

eligibility to receive Profit Sharing Contributions under Article VI, an

employee shall become a Participant on the first day of the pay period

applicable to him (or the first day of the Plan Year, if earlier) that

immediately follows his completion of one Year of Eligibility Service, provided

he is a Qualified Employee on said day. 

If the employee is rehired after a Recognized Break in Service or One

Year Break in Service, however, he shall become a Participant for purposes of

such contributions on the first day of the pay period applicable to him (or the

first day of the Plan Year, if earlier) that immediately follows his completion

of one Year of Eligibility Service after such break, provided he is a Qualified

Employee on said day.  In determining

the employee’s share of the Profit Sharing Contributions for the Plan Year in

which he reenters the Plan as a Participant pursuant to the previous sentence

of this subsection (b), his compensation during that entire Plan Year for

service as a Qualified Employee shall be taken into account as Certified

Earnings.

 

Sec. 4.3  Duration of Participation.  A Participant shall continue to be such

until the later of (i) his Termination of Employment or (ii) the date all

benefits, if any, to which he is entitled hereunder have been distributed to

him from the Trust.

 

Sec. 4.4 

Active Participant.

An employee is an “Active Participant” while he is both a Participant and a

Qualified Employee.

 

Sec. 4.5  Eligibility to Share in Participating

Employer Contributions.  A Participant’s eligibility to share in Participating Employer

contributions and to make 401(k) Contributions for a particular Plan Year shall

be determined as follows:

 

(a)                                  He shall be eligible

to share in the Profit Sharing Contributions for the Plan Year if he was an

Active Participant during all or any part of the Plan Year and he meets the

requirements of (1), (2), or (3):

 

(1)                                  His Termination of

Employment did not occur prior to the last day of such Plan Year.

 

(2)                                  His Termination of

Employment occurred prior to the last day of such Plan Year on account of his

death (in which event the amount that would otherwise be allocated to the

deceased Participant shall be allocated to his Beneficiary).

 

(3)                                  His Termination of

Employment occurred prior to the last day of such Plan Year under circumstances

such that he qualified for a retirement benefit under Sec. 13.1.

 

If Certified Earnings are paid with respect to a Participant described

in (2) or (3), and the payment occurs after the close of the Plan Year in which

his Termination of Employment occurred, said Certified Earnings shall be taken

into account in allocating Profit Sharing Contributions for the Plan Year in

which the Certified Earnings are paid. 

Notwithstanding anything herein to the contrary, an employee shall be

eligible to share in contributions and allocations under this subsection, and

shall be treated as “Active” for purposes of this subsection, only during

periods for which the employee has satisfied the requirements of Sec. 4.2(b)

for being a Participant (except as otherwise provided in the last sentence of

Sec. 4.2(b)).

 

(b)                                 He shall be eligible

to make 401(k) Contributions, and to receive Matching Contributions with

respect to such 401(k) Contributions, if he has executed a 401(k) salary reduction

agreement with his Participating Employer specifying the amount he wishes to

contribute.

 

14

 

The determination as to who is eligible to share in Participating

Employer contributions and make 401(k) Contributions for a Plan Year shall be

made on the basis of books and records kept by the Participating Employers in

the regular course of business.  Such

determinations shall be final and conclusive on all persons.

 

Sec. 4.6  No Guarantee of Employment. Participation in the Plan does not

constitute a guarantee or contract of employment with the Participating

Employers.  Such participation shall in

no way interfere with any rights a Participating Employer would have in the

absence of such participation to determine the duration of the employee’s

employment.

 

15

 

ARTICLE V

 

401(K)

CONTRIBUTIONS

 

Sec. 5.1 

401(k) Contributions.  Each Participant may elect to have his

Participating Employer make 401(k) Contributions on his behalf, subject to the

following:

 

(a)                                  A Participant may

elect to have his current pay from his Participating Employer reduced by such

amounts as he may designate from time to time. 

Prior to January 1, 2002, the reduction may not exceed 15% of the

Participant’s Certified Earnings for the payroll period.  Commencing January 1, 2002, the reduction

may not exceed 25% of the Participant’s Certified Earnings for the payroll

period (or such lesser percentage as the Committee may designate). Any election

by the Participant regarding 401(k) Contributions shall be in writing (or in

such other form as the Committee may permit) and shall be effective as soon as

administratively feasible after the election is received by the Company or its

designated agent.  Any election under

this subsection shall be made in accordance with rules adopted by the

Committee.

 

(b)                                 For each Plan Year,

each Participating Employer shall make a 401(k) Contribution with respect to

each Participant who elects to have his pay reduced pursuant to subsection (a)

in an amount equal to the amount by which the Participant’s pay was

reduced.  Prior to January 1, 2001,

401(k) Contributions were called “Individual Shelter Contributions.”

 

(c)                                  401(k) Contributions

with respect to a Participant shall be paid to the Trustee promptly after the

date withheld from the Participant, and shall be allocated to 401(k) Accounts.

 

(d)                                 The 401(k)

Contribution with respect to each Participant shall be limited to the extent

required under Sec. 7.2.

 

Sec. 5.2  Profit Related Retirement Contributions.  No Profit Related Retirement Contributions

will be made to the Plan for Plan Years commencing after 2000.  Profit Related Retirement Contributions for

2000 shall be made in accordance with the provisions of the Plan in effect on

December 31, 2000.

 

16

 

ARTICLE

VI

 

PROFIT

SHARING AND MATCHING CONTRIBUTIONS

 

Sec. 6.1  Profit Sharing Contributions.  For each Plan Year commencing on or after

January 1, 2001, the Company will determine in its discretion the amount of the

Profit Sharing Contribution that will be made for the Plan Year, or the formula

by which the amount shall be calculated. 

The contribution of each Participating Employer other than the Company

for a Plan Year shall be an amount which is the same percent of the Certified

Earnings of its employees eligible to share in the contribution for that year

as the contribution of the Company for the Plan Year bears to the total

Certified Earnings of its employees eligible to share in the contribution for

that year, unless the Company determines that the contribution by a

Participating Employer for the eligible Participants in its employ for a Plan

Year shall be a different amount and also determines the amount or formula by

which such amount shall be calculated (in which case, subsections (b), (c) and

(d) of this section shall be applied separately to each Participating

Employer).

 

(a)                                  To be eligible to

share in the Profit Sharing Contributions for each Plan Year commencing on or

after January 1, 2001, the Participant must satisfy the requirements of Sec.

4.5(a) for that Plan Year.

 

(b)                                 The amount of Company

Stock available for allocation as Leveraged ESOP Profit Sharing Contributions

under Sec. 6.5(c)(1) for the Plan Year shall be allocated among the ESOP

Accounts of the eligible Participants for that Plan Year in the proportion that

the Certified Earnings of each such Participant for the Plan Year bears to the

total Certified Earnings of all such Participants for the Plan Year.  Such allocations shall be made as of the

last day of the Plan Year and shall be based on the Fair Market Value of the

shares of Company Stock on the business day coinciding with or immediately

preceding such last day of the Plan Year.

 

(c)                                  If the Company so

determines in its sole discretion, the Participating Employers may make a

Profit Sharing Contribution for a Plan Year in the form of shares of Company

Stock.  Any such contribution is

referred to as a “Non-Leveraged ESOP Profit Sharing Contribution.”  Any such contribution for a Plan Year shall

be allocated among the ESOP Accounts of the eligible Participants for that Plan

Year in the proportion that the Certified Earnings of each such Participant for

the Plan Year bears to the total Certified Earnings of all such Participants

for the Plan Year.  Such allocations

shall be credited to the Participant’s ESOP Account as of a Valuation Date

determined by the Trustee which occurs within a reasonable time after the date

the contribution is received by the Trustee, and shall be based on the Fair

Market Value of the shares of Company Stock on that date.

 

(d)                                 To the extent the

Profit Sharing Contribution for a Plan Year is made in cash, that contribution

shall be allocated among the eligible Participants for that Plan Year in the

proportion that the Certified Earnings of each such Participant for the Plan

Year bears to the total Certified Earnings of all such Participants for the

Plan Year.  Such allocations shall be

credited to the Participant’s Deferred Investment Account as of a Valuation

Date determined by the Trustee which occurs within a reasonable time after the

date the contribution is received by the Trustee, and shall be invested as

provided in Sec. 10.4.

 

(e)                                  All Profit Sharing

Contributions for a Plan Year shall be made before the time (including

extensions thereof) prescribed by law for filing the Company’s federal income

tax return for the Plan Year.

 

Sec. 6.2  Leveraged Acquisitions.  The Trustee, with the prior concurrence of

the Company, is authorized to enter into one or more Exempt Loans.  The proceeds of any Exempt Loan shall be

used as provided in Section 2.15(b). 

All shares of Company Stock acquired with the proceeds of an Exempt Loan

and held to secure payment of an Exempt Loan shall be credited to the

Unallocated Reserve until such time as they are released pursuant to sections

2.15 and 6.3.

 

Sec. 6.3  Leveraged ESOP Contributions.  The Participating Employers shall make

sufficient cash contributions to enable the Trustee to pay any currently

maturing obligations under an Exempt Loan, to the extent those obligations have

not been paid with dividends pursuant to Sec. 6.4.  The Participating Employers may also 

 

17

 

make additional cash contributions for

the purpose of repaying the Exempt Loan more rapidly than is required under the

terms of that loan.  The Trustee shall

apply such contributions (and any earnings thereon) to make said loan payments

as directed by the Company. The amount determined by the Company under this

section shall be the “Leveraged ESOP Contribution” for the Plan Year.

 

Sec. 6.4  Application of Dividends.  Dividends on shares of Company Stock held in

the Unallocated Reserve and on shares of Company Stock allocated to ESOP

Accounts shall be applied as follows:

 

(a)                                  Dividends received on

shares of Company Stock held in the Unallocated Reserve shall first be used to

repay principal and interest then due on the Exempt Loan used to acquire such

shares.  If the amount of such dividends

exceeds the amount needed to repay such principal and interest, the excess

shall be held in the Unallocated Reserve until it is needed to repay principal

and interest due on such Exempt Loan or, with the prior concurrence of the

Company, the excess may be (i) used to prepay principal on such Exempt Loan, or

(ii) treated as a general investment gain of the Fund and allocated to the ESOP

Accounts of Participants.  Any amounts

allocated to ESOP Accounts as general investment gain shall be allocated in

proportion to the number of shares held in said Accounts as of the last

Valuation Date for the Plan Year for which they are allocated.  Any dividends so allocated shall not be

considered an Annual Addition with respect to a Participant for purposes of Sec.

7.1.

 

(b)                                 If the amount

necessary to repay principal and interest then due on the Exempt Loan exceeds

the amount of dividends on shares acquired with the proceeds of the Exempt Loan

that are held in the Unallocated Reserve, the remaining amount then due shall

be repaid from dividends on shares of Company Stock allocated to ESOP Accounts

that were (i) acquired with the proceeds of the Exempt Loan and released from

the Unallocated Reserve, and/or (ii) acquired through tax credit contributions

and/or (iii) acquired through Non-Leveraged ESOP Contributions.  To the extent dividends on such allocated

shares exceed the amount necessary to repay principal and interest then due on

the Exempt Loan, they may with the prior concurrence of the Company be used to

prepay principal on the Exempt Loan. 

Dividends remaining after such payments shall be allocated to the ESOP

Accounts holding the shares on which the dividends were paid.

 

Sec. 6.5 

ESOP Allocations. 

The shares of Company Stock available for allocation shall be

allocated among the ESOP Accounts of eligible Participants as follows:

 

(a)                                  The following amounts

are available for allocation pursuant to this section:

 

(1)                                  Shares of Company

Stock released from the Unallocated Reserve pursuant to Sec. 2.15(e) or (f) as

a result of contributions under Sec. 6.3 and dividends under Sec. 6.4..

 

(2)                                  Non-Leveraged ESOP

Matching Contributions under Sec. 6.6(c)(2), if any.

 

(3)                                  Non-Leveraged ESOP

Profit Sharing Contributions under Sec. 6.1(c), if any.

 

Said amounts shall be allocated as provided

in the remainder of this section.

 

(b)                                 If dividends paid on

Company Stock held in Participants’ ESOP Accounts are used to make payments on

an Exempt Loan, there shall be allocated to each such Account an amount of

Company Stock having a Fair Market Value as of the earliest Valuation Date

coincident with or next following the dividend record date equal to the amount

of dividends so used.  Said allocation

shall be made as of said Valuation Date.

 

(c)                                  Any remaining shares

of Company Stock available for allocation under this section shall be allocated

as follows:

 

(1)                                  Any remaining shares

of Company Stock available for allocation under subsection (a)(1) shall first

be allocated as Leveraged ESOP Matching Allocations under Sec. 6.6(c)(1).  Any amounts 

 

 

18

                                                remaining

under subsection (a)(1) after all Leveraged ESOP Matching Allocations have been

made for the Plan Year shall be allocated as Leveraged ESOP Profit Sharing

Contributions under Sec. 6.1(b).

 

(2)                                  Any shares of Company

Stock available for allocation under subsection (a)(2) shall be allocated as

Non-Leveraged ESOP Matching Allocations under Sec. 6.6(c)(2).

 

(3)                                  Any shares of Company

Stock available for allocation under subsection (a)(3) shall be allocated as

Non-Leveraged ESOP Profit Sharing Allocations under Sec 6.1(c).

 

(4)                                  All shares of Company

Stock so allocated shall be credited to the Participant’s ESOP Account.  Such allocations are referred to

collectively herein as “ESOP Allocations.”

 

Sec. 6.6  Matching Contributions.

For each month commencing on or after January 1, 2001, each Participating

Employer will make a Matching Contribution equal to 75% of the 401(k)

Contributions made by each eligible Participant in its employ which were

deducted from the Participant’s compensation on payroll dates occurring during

that month, disregarding for this purpose any 401(k) Contributions made on any

payroll date in excess of 4% of the Participant’s Certified Earnings from the

Participating Employer on such payroll date. A Participant will be eligible to

receive Matching Contributions only while the Participant meets the

requirements of Sec. 4.5(b).  Matching

Contributions shall be paid to the Trustee by the Participating Employer as

soon as administratively feasible following close of the month for which such

Matching Contributions are made.

 

(a)                                  No Matching

Contribution will be made with respect to any amount by which the Participant’s

401(k) Contributions must be reduced pursuant to Sec. 7.1, Sec. 7.2 or Sec.

7.3.  Any such Matching Contributions

which are made by a Participating Employer before the amount of the reduction

is determined shall be forfeited and shall be applied as a credit against

future Matching Contributions by the same employer.

 

(b)                                 For the months of

January through June of 2001, the Matching Contribution shall be made in cash,

shall be allocated to the Participant’s Deferred Investment Account, and shall

be invested as provided in Sec. 10.4.

 

(c)                                  Commencing July 1,

2001, Matching Contributions shall be made as follows:

 

(1)                                  The Matching

Contribution will be in the form of Company Stock to the extent shares of

Company Stock are available for allocation for the Plan Year pursuant to Sec.

6.5.  The number of shares so allocated

for a month will be determined by dividing (i) the Matching Contributions for

the month by (ii) the Fair Market Value of a share of Company Stock as of the

last business day of the month to which those contributions relate.  Allocations under this paragraph are

referred to as “Leveraged ESOP Matching Allocations” and shall be credited to

the Participant’s ESOP Account.

 

(2)                                  If the total Matching

Contributions for a particular month and all previous months in the Plan Year

exceed the total amount of Company Stock available for the Plan Year pursuant

to Sec. 6.5 for allocation as Leveraged ESOP Matching Allocations, the

Participating Employers shall make the contribution (or the balance of the

contribution) for the month either in the form of cash or in Company Stock

having an equivalent Fair Market Value as of the last business day of the

month.  Any such contributions made in

cash shall be invested in Company Stock promptly after the date contributed

except to the extent the Trustee, in its discretion, otherwise invests such

contributions in order to facilitate benefit distributions.  Allocations under this paragraph are

referred to as “Non-Leveraged ESOP Matching Allocations” and shall be credited

to the Participant’s ESOP Account.

 

19

 

ARTICLE

VII

 

LIMITATIONS

ON CONTRIBUTIONS AND ALLOCATIONS.

 

Sec. 7.1  Limitation on Allocations.  Notwithstanding any provisions of the Plan

to the contrary, allocations to Participants under the Plan shall not exceed

the maximum amount permitted under Code section 415.  For purposes of the preceding sentence:

 

(a)                                  The Annual Additions

with respect to a Participant for any Plan Year shall not exceed the lesser of:

 

(1)                                  $35,000 for the Plan

Year ending in 2001, and $40,000 for Plan Years commencing in 2002 or later,

adjusted for each subsequent Plan Year to reflect cost of living increases for

that Plan Year provided under Code section 415(d) or published by the Secretary

of the Treasury.

 

(2)                                  25% of the

Compensation of such Participant for Plan Years commencing prior to 2002, and

100% of the Compensation of such Participant for Plan Years commencing in 2002

or later.  This paragraph (2) shall not

apply to any contribution for medical benefits after separation from service

within the meaning of Code sections 401(h) or 419(f)(2) which is otherwise

treated as an Annual Addition.

 

(b)                                 If for any Plan Year

the limitations described in subsection (a) would be exceeded with respect to

any Participant, the Participant’s Annual Additions shall be adjusted in the

following sequence, but only to the extent necessary to reduce such Annual

Additions to the level permitted in subsection (a):

 

(1)                                  The Participant’s

401(k) Contributions shall be reduced and his Participating Employer shall pay

an equivalent amount to him in cash. 

Any amount refunded under this paragraph shall be disregarded for

purposes of applying the limits under Sec. 7.2, Sec. 7.3 and Sec. 7.5.  Matching Contributions shall be reduced as

provided in Sec. 6.6(a) to reflect any such reductions in 401(k) Contributions.

 

(2)                                  The Profit Sharing

Contributions allocated to the Participant under Sec. 6.1 shall be reduced,

beginning first with any cash Profit Sharing Contributions allocated under Sec.

6.1(d), and then with any Non-Leveraged ESOP Profit Sharing Contributions under

Sec. 6.1(c)..

 

(3)                                  If, after the

adjustments in paragraph (1), there is an excess amount with respect to a

Participant for a Plan Year, such excess amount shall be held unallocated in a

suspense account.  The suspense account

will be applied to reduce future employer contributions for all Participants in

the next year, and in each succeeding year, if necessary.  The suspense account will participate in the

allocation of the investment gains and losses of the Fund (and the value of

such account will be considered in valuing other Accounts under the Plan).

 

(c)                                  “Annual Additions”

means the sum of the amounts allocated to a Participant for a Plan Year under

this Plan and all other defined contribution plans maintained by his

Participating Employer or an Affiliate in which he participates; provided,

however, that interest on Exempt Loans shall not be Annual Additions for the

year if no more than one-third of the amounts allocated to ESOP Accounts under

Article VI for that year are allocated to the ESOP Accounts of Highly

Compensated Employees.  Excess

contributions distributable under Sec. 7.3 or Sec. 7.4 are included as Annual

Additions, but Excess Deferrals which are distributed under Sec. 7.2 are not

included as Annual Additions.  Annual

Additions also include amounts attributable to medical benefits as described in

Code sections 415(1)(2) and 419A(d)(2). 

An Annual Addition with respect to a Participant’s Accounts shall be

deemed credited thereto with respect to a Plan Year if it is allocated to the

Participant’s Accounts under the terms of the Plan as of any date within such

year.  Annual Additions do not include

any rollover contributions as defined in Code sections 402(c), 403(a)(4),

403(b)(8) or 457(e)(16), or in any other provision of the Code which may allow

rollover contributions to be made to this Plan from time to 

 

 

20

 

                                                time.  For Plan Years commencing in 2002 or later,

any catch-up contributions under Code section 414(v) shall be disregarded in

determining Annual Additions.

 

(d)                                 For purposes of this

section, “Compensation” means an employee’s earned income, wages, salaries,

fees for professional services and other amounts received (without regard to

whether or not an amount is paid in cash) for personal services actually

rendered in the course of employment with the Participating Employers and

Affiliates to the extent that the amounts are includible in gross income

(including, but not limited to, commissions, compensation for services on the

basis of a percentage of profits, tips, bonuses, fringe benefits, and

reimbursements or other expense allowances under a nonaccountable plan

described in Treasury Regulation § 1.62-2(c)), subject to the following:

 

(1)                                  Compensation includes

the 401(k) Contributions to this Plan and any other elective deferrals which

are not includible in the gross income of the employee under Code sections 125,

132(f)(4), 401(k), 402(h)(1)(B), 403(b) or 457.  Compensation excludes any other employer contributions to a plan

of deferred compensation which are not includible in the employee’s gross

income for the taxable year in which contributed, any distributions from a plan

of deferred compensation, and any other amounts which receive special tax benefits.  However, any amounts received by an employee

pursuant to an unfunded non-qualified plan of deferred compensation may be

considered as Compensation in the year such amounts are includible in the

employee’s gross income.

 

(2)                                  Compensation excludes

amounts realized from the exercise of a non-qualified stock option, or when

restricted stock (or property) either becomes transferable or is no longer

subject to a substantial risk of forfeiture.

 

Sec. 7.2  Limit on 401(k) Contributions.  401(k) Contributions by a Participant for

any calendar year may not exceed $10,500 for 2001, and may not exceed $11,000

for 2002 or later (adjusted for any increases provided for any calendar year

after 2002 in accordance with the Code or regulations issued by the Secretary of

the Treasury) and shall cease at the point that limit is reached during the

year.  Notwithstanding any other

provisions of the Plan, Excess Deferrals for a calendar year and income or

losses allocable thereto shall be distributed no later than the following

April 15 to Participants who claim such Excess Deferrals, subject to the

following:

 

(a)                                  For purposes of this

section, “Excess Deferrals” means the amount of 401(k) Contributions for a

calendar year that the Participant claims pursuant to the procedure set forth

in subsection (b) because the total amount deferred for the year exceeds the

limit in the first paragraph of this section or such other limit imposed on the

Participant for that year under Code section 402(g).

 

(b)                                 The Participant’s

written claim, specifying the amount of the Participant’s Excess Deferral for

any calendar year, shall be submitted to the Company no later than the

March 1 following such year.  The

claim shall include the Participant’s written statement that if such amounts

are not distributed, such Excess Deferrals, when added to amounts deferred

under other plans or arrangements, exceed the limit imposed on the Participant

by Code section 402(g) for the year in which the deferral occurred.  A Participant shall be deemed to have submitted

such a claim to the extent the Participant has Excess Deferrals for the

calendar year taking into account only contributions under this Plan and any

other plan maintained by a Participating Employer or an Affiliate.

 

(c)                                  Excess Deferrals

distributed to a Participant with respect to a calendar year shall be adjusted

to include income or losses allocable thereto using the same method specified

for excess 401(k) Contributions under Sec. 7.3(e).

 

(d)                                 The amount of Excess

Deferrals and income allocable thereto which would otherwise be distributed

pursuant to this section shall be reduced, in accordance with regulations, by

the amount of Excess 401(k) Contributions and income allocable thereto

previously distributed to the Participant pursuant to Sec. 7.3, and by the

amount of any deferrals properly distributed as excess annual additions under

Sec. 7.1.

 

21

 

(e)                                  Any reduction of

401(k) Contributions for a Participant shall be accompanied by a corresponding

reduction of Matching Contributions.  If

by operation of this section a Participant’s 401(k) Contributions are limited

to an amount less than the amount he elected, the amount by which the 401(k)

Contributions were reduced shall be paid to him by his Participating Employer

in cash, but there will be no cash payment of the Matching Contributions the

Participant lost as a result of the reduction.

 

Sec. 7.3  Adjustment of Employer Contributions If

Required by Code Section 401(k).  If necessary to satisfy the requirements of

Code section 401(k), 401(k) Contributions shall be adjusted for Plan Years

commencing on or after January 1, 1997 in accordance with the following:

 

(a)                                  Each Plan Year the

Company shall calculate the deferral percentage for each Participant.  Each Participant’s “deferral percentage” is

calculated by dividing the amount in paragraph (1) by the amount in paragraph

(2):

 

(1)                                  The Participant’s

401(k) Contributions for said Plan Year, plus all or part of any cash Profit

Sharing Contributions allocated to his Account pursuant to Sec. 6.1(d) for said

Plan Year, as determined by the Company. 

Inclusion of such Profit Sharing Contributions may occur only if such

inclusion is on a uniform and nondiscriminatory basis and the provisions of

Treasury Regulation § 1.401(k)-1(b) are satisfied.

 

(2)                                  The Participant’s

Compensation for said Plan Year.  For

purposes of this section, a Participant’s “Compensation” for the Plan Year

means compensation determined according to a definition selected by the

Committee for that year which satisfies the requirements of Code section

414(s).  The same definition of

Compensation shall be used for all Participants for a particular Plan Year, but

different definitions may be used for different Plan Years.  The Committee shall also determine whether

Compensation includes or does not include the 401(k) Contributions to this Plan

and any contributions made pursuant to a salary reduction agreement by or on

behalf of the Participant to any other plan which meets the requirements of Code

sections 125,  132(f)(4), 401(k) or

402(h)(1)(B), and whether or not it includes amounts paid prior to the date an

individual became a Participant. 

Compensation shall be subject to the limit provided under Sec. 2.7(d).

 

(b)                                 Each Plan Year the

Company shall calculate the average deferral percentage for Active Participants

who are Highly Compensated Employees and the average deferral percentage for

Active Participants who are not Highly Compensated Employees.  In each case the average is the average of

the percentages calculated under subsection (a) for the employees in the

particular group.  The deferral

percentage for each Participant and the average deferral percentage for a

particular group of employees shall be calculated to the nearest one-hundredth

of one percent.  The average deferral

percentage for Active Participants who are not Highly Compensated Employees

that is used in applying this section for a particular Plan Year shall be the

percentage determined for the preceding Plan Year.

 

(c)                                  If the requirements

of either paragraph (1) or (2) are satisfied, then no further action is needed

under this section:

 

(1)                                  The average deferral

percentage for Active Participants who are Highly Compensated Employees is not

more than 1.25 times the average deferral percentage for Active Participants

who are not Highly Compensated Employees.

 

(2)                                  The excess of the

average deferral percentage for Active Participants who are Highly Compensated

Employees over the average deferral percentage for Active Participants who are

not Highly Compensated Employees is not more than two percentage points, and

the average deferral percentage for Active Participants who are Highly

Compensated Employees is not more than two times the average deferral

percentage for Active Participants who are not Highly Compensated Employees.

 

22

 

(d)                                 If neither of the

requirements of subsection (c) is satisfied, then the 401(k) Contributions with

respect to Highly Compensated Employees shall be reduced, beginning with the

contributions representing the greatest dollar amount per Participant, to the

extent necessary to make the aggregate dollar amount of such reductions equal

to the amount by which the 401(k) Contributions (prior to such reduction) had

exceeded the requirements of subsection (c)(1) or (c)(2), whichever is

less.  Such reduction shall be made in

accordance with the methodology prescribed at the time of the reduction by the

Internal Revenue Service under Notice 97-2 or other applicable Notices or

Treasury Regulations.

 

(e)                                  If 401(k)

Contributions with respect to a Highly Compensated Employee are reduced

pursuant to subsection (d), the excess 401(k) Contributions shall be

distributed, subject to the following:

 

(1)                                  For purposes of this

subsection, “excess 401(k) Contributions” shall mean the amount by which 401(k)

Contributions for Highly Compensated Employees have been reduced under

subsection (d).

 

(2)                                  Excess 401(k)

Contributions (adjusted for income or losses allocable thereto for the Plan

Year for which the contribution was made as specified in paragraph (3), if any)

shall be distributed to Participants on whose behalf such excess contributions

were made for the Plan Year no later than the last day of the following Plan

Year.  Furthermore, the Company shall

attempt to distribute such amount by March 15 of the following Plan Year

to avoid the imposition on the Participating Employers of an excise tax under

Code section 4979.

 

(3)                                  Income or losses

allocable to excess 401(k) Contributions for the Plan Year shall be determined

by multiplying the amount of income or loss for the Plan Year which is

allocable to the Participant’s 401(k) Account (and to other amounts credited to

the Participant that the Company elects to include under subsection (a)(1)) by

a fraction.  The numerator of the

fraction is the Participant’s excess 401(k) Contributions for the Plan

Year.  The denominator of the fraction

is the total balance in the Participant’s 401(k) Account (plus any other

amounts the Company has elected to include under subsection (a)(1)) on the

first day of the Plan Year, plus 401(k) Contributions for the Plan Year and any

other amounts the Company has elected to include under subsection (a)(1) for

the Plan Year.

 

(4)                                  The amount of excess

401(k) Contributions and income or losses allocable thereto which would

otherwise be distributed pursuant to this subsection shall be reduced, in

accordance with regulations, by the amount of Excess Deferrals and income or

losses allocable thereto previously distributed to the Participant pursuant to

Sec. 7.2 for the Plan Year.

 

(f)                                    At any time during

the Plan Year, the Company may make an estimate of the amount of 401(k)

Contributions that will be permitted under this section for the year and may

reduce the maximum percent specified in Sec. 5.1(a) to the extent the Company

determines in its sole discretion to be advisable to satisfy at least one of

the requirements in subsection (c).

 

(g)                                 The deferral

percentage for any Participant who is a Highly Compensated Employee for the

Plan Year, and who is eligible to participate in two or more plans with cash or

deferred arrangements described in Code section 401(k) to which any

Participating Employer or Affiliate contributes, shall be determined as if all

employer contributions were made under a single arrangement unless mandatorily

disaggregated pursuant to regulations under Code section 401(k).  This subsection shall be applied by treating

all cash or deferred arrangements with Plan Years ending within the same

calendar year as a single arrangement.

 

(h)                                 Any reduction of

401(k) Contributions for a Participant shall be accompanied by a corresponding

reduction of Matching Contributions.  If

by operation of this section a Participant’s 401(k) Contributions are limited to

an amount less than the amount he elected, the amount by which the 401(k)

Contributions were reduced shall be paid to him by the Plan or by his

Participating Employer in cash, 

 

23

 

                                                but

there will be no such payment of the Matching Contributions the Participant

lost as a result of the reduction.

 

(i)                                     If two or more

plans which include cash or deferred arrangements are considered as one plan

for purposes of Code section 401(a)(4) or Code section 410(b), the cash or

deferred arrangements shall be treated as one for the purposes of applying the

provisions of this section unless mandatorily disaggregated pursuant to

regulations under Code section 401(k).

 

(j)                                     If the entire

Account balance of a Highly Compensated Employee has been distributed during

the Plan Year in which an excess arose, the distribution shall be deemed to

have been a corrective distribution of the excess and income attributable

thereto to the extent that a corrective distribution would otherwise have been

required under subsection (e) of this section, Sec. 7.2 or Sec. 7.4.

 

(k)                                  A corrective

distribution of excess amounts under this section, Sec. 7.2 or Sec. 7.4 may be

made without regard to any notice or Participant or spousal consent required

under Article XII or XIV.

 

(l)                                     In the event of a

complete termination of the Plan during the Plan Year in which an excess arose,

any corrective distribution under this section or Sec. 7.4 shall be made as

soon as administratively feasible after the termination, but in no event later

than 12 months after the date of termination.

 

(m)                               The Committee may apply

this section by disregarding all Participants who have not satisfied the

requirements of Sec. 4.2(b) during the Plan Year and who are not Highly

Compensated Employees with respect to the Plan Year to the extent permitted by

Code section 401(k)(3)(F) and regulations thereunder.

 

Sec. 7.4  Adjustment of Contributions Required by

Code Section 401(m).  After the provisions of Sec. 7.2 and Sec. 7.3 have been

satisfied, the requirements set forth in this section must also be met.  If necessary to satisfy the requirements of

Code Section 401(m), contributions shall be adjusted in accordance with the

following:

 

(a)                                  Each Plan Year, the

“contribution percentage” will be calculated for each Participant.  Each Participant’s contribution percentage

is calculated by dividing the amount in paragraph (1) by the amount in

paragraph (2):

 

(1)                                  The Matching

Contributions allocated to him under Sec. 6.6. If the Company so elects, there

shall also be included in the amount under this paragraph (except in the case

of the test applicable to Matching Contributions for January through June of

2001), the Leveraged and Non-Leveraged ESOP Profit Sharing Contributions

allocated to his Account for said Plan Year pursuant to Sec. 6.1(b) and (c);

provided, however, that such amounts may be included only if such inclusion is

on a uniform and nondiscriminatory basis and the provisions of Treasury

Regulation §1.401(m)-1(b) are satisfied.

 

(2)                                  The Participant’s Compensation

for said Plan Year.  For purposes of

this section, “Compensation” has the same meaning as provided in Sec.

7.3(a)(2).

 

(b)                                 Each Plan Year, the

Company shall calculate the average contribution percentage for Active

Participants who are Highly Compensated Employees and the average contribution

percentage for Active Participants who are not Highly Compensated

Employees.  In each case, the average is

the average of the percentages calculated under subsection (a) for the

employees in the particular group.  The

contribution percentage for each Participant and the average contribution

percentage for a particular group of employees shall be calculated to the

nearest one-hundredth of one percent. 

The average contribution percentage for Active Participants who are not

Highly Compensated Employees that is used in applying this section for a

particular Plan Year shall be the percentage determined for the preceding Plan

Year.

 

24

 

(c)                                  If the requirements

of either paragraph (1) or (2) are satisfied, then no further action is needed

under this section:

 

(1)                                  The average

contribution percentage for Active Participants who are Highly Compensated

Employees is not more than 1.25 times the average contribution percentage for

Active Participants who are not Highly Compensated Employees.

 

(2)                                  The excess of the

average contribution percentage for Active Participants who are Highly

Compensated Employees over the average contribution percentage for Active

Participants who are not Highly Compensated Employees is not more than two

percentage points, and the average contribution percentage for Active

Participants who are Highly Compensated Employees is not more than 2 times the

average contribution percentage for Active Participants who are not Highly

Compensated Employees.

 

(d)                                 If neither of the

requirements of subsection (c) is satisfied, then the Matching Contributions

with respect to Highly Compensated Employees shall be reduced, beginning with

the contributions representing the greatest dollar amount per Participant, to

the extent necessary to make the aggregate dollar amount of such reductions

equal to the amount by which the Matching Contributions (prior to such

reduction) had exceeded the requirements of subsection (c)(1) or (c)(2),

whichever is less.  Such reduction shall

be made in accordance with the methodology prescribed at the time of the

reduction by the Internal Revenue Service under Notice 97-2 or other applicable

Notices or Treasury Regulations.

 

(e)                                  The aggregate amount

of Matching Contributions shall be reduced to reflect the reductions referred

to in subsection (d).  The reduction

amounts shall not be paid to Participants. 

Amounts which due to this section may not be allocated as Matching

Contributions shall be applied as a credit against future contributions of

Participating Employers.  Similar

treatment shall apply if Matching Contributions are reduced pursuant to Sec.

7.2 or Sec. 7.3.

 

(f)                                    If a Highly

Compensated Employee participates in more than one plan of a Participating

Employer to which employer matching contributions, employee contributions or

elective deferral contributions are made, all such contributions must be

aggregated for purposes of applying the provisions of this section, unless

mandatorily disaggregated pursuant to regulations under Code section 401(m).

 

(g)                                 If two or more plans

maintained by the Participating Employers or Affiliates are treated as one plan

for purposes of satisfying the eligibility requirements of Code section 410(b),

those plans must be treated as one plan for purposes of applying the provisions

of this section unless mandatorily disaggregated pursuant to regulations under

Code section 401(m).

 

(h)                                 The Committee may

apply this section by disregarding all Participants who have not satisfied the

requirements of Sec. 4.2(b) during the Plan Year and who are not Highly

Compensated Employees with respect to the Plan Year to the extent permitted by

Code section 401(k)(3)(F) and regulations thereunder.

 

(i)                                     For the Plan Year

commencing January 1, 2001, this section and Sec. 7.5 shall be applied

separately to the Matching Contributions for January through June of 2001 which

are allocated to Deferred Investment Accounts and to the Matching Contributions

for July through December of 2001 which are allocated to ESOP Accounts.

 

Sec. 7.5  Multiple Use of the Alternative

Limitations.  This section does not apply to Plan Years commencing on or after

January 1, 2002.  Prior to that date, if

neither Sec. 7.3(c)(1) nor Sec. 7.4(c)(1) is satisfied, the following

additional requirements must also be satisfied:

 

(a)                                  The sum of the

following two amounts must not exceed the greater of the limit determined under

subsection (b) or the limit determined under subsection (c):

 

25

 

(1)                                  The average deferral

percentage for Highly Compensated Employees (determined under Sec. 7.3(b)

following any adjustments required by Sec. 7.3).

 

(2)                                  The average

contribution percentage for Highly Compensated Employees (determined under Sec.

7.4(b) following any adjustments required by Sec. 7.4).

 

(b)                                 The applicable limit

under this subsection is the sum of the following amounts:

 

(1)                                  1.25 multiplied by

the greater of:

 

(A)                              The average deferral

percentage for Participants who are not Highly Compensated Employees

(determined under Sec. 7.3(b) following any adjustments required by Sec. 7.3),

or

 

(B)                                The average

contribution percentage for Participants who are not Highly Compensated

Employees (determined under Sec. 7.4(b) following any adjustments required by

Sec. 7.4).

 

(2)                                  Two percentage points

plus the lesser of:

 

(A)                              The average deferral

percentage for Participants who are not Highly Compensated Employees, or

 

(B)                                The average

contribution percentage for Participants who are not Highly Compensated

Employees.

 

Notwithstanding the foregoing, the amount under this subparagraph (2)

cannot exceed the lesser of (A) or (B) above, multiplied by two, or such other

limit as may be prescribed by Treasury Regulations.

 

(c)                                  The limit under this

subsection (c) is the amount that would be determined under subsection (b) by:

 

(1)                                  Substituting “lesser”

for “greater” in paragraph (1) of subsection (b), and

 

(2)                                  Substituting

“greater” for “lesser” each place that word appears in paragraph (2) of

subsection (b).

 

(d)                                 If the amount

determined under subsection (a) exceeds the greater of the limits determined

under subsections (b) and (c), an additional amount must be treated as excess

401(k) Contributions and distributed under Sec. 7.3.  Matching Contributions with respect thereto shall be reduced as

provided in Sec. 7.3(h).  Appropriate

adjustments under this subsection must be made pursuant to Treasury regulations

until the sum of the average deferral percentage and average contribution

percentage for Highly Compensated Employees is equal to the greater of the

limits determined under subsections (b) and (c).

 

(e)                                  For Plan Years

commencing after 1996 and prior to 2002, this section shall be applied in

accordance with the provisions of IRS Notice 97-2 or other applicable Notices

or Treasury Regulations.

 

26

 

ARTICLE

VIII

 

EMPLOYEE

CONTRIBUTIONS

 

Sec. 8.1  Employee Contributions Not Permitted

After December 31, 1986.  Prior to January 1, 1987, employees

were permitted to make voluntary, after–tax contributions to the

Plan.  Effective January 1, 1987,

such contributions were no longer permitted. 

Amounts contributed prior to January 1, 1987 will continue to be

held by the Plan until distributed in accordance with Articles XIII and XIV.

 

Sec. 8.2  Rollover Contributions.  With the consent of the Committee, which

shall be granted in its sole discretion and only if it is reasonably certain

that the amount to be transferred constitutes a Rollover Contribution as

defined in subsection (a), a Qualified Employee may transfer to the Fund an

amount that constitutes a Rollover Contribution.  Notwithstanding any provisions of the Plan to the contrary, the

following shall apply with respect to a Rollover Contribution:

 

(a)                                  For purposes of this

section, “Rollover Contribution” means a contribution of an amount which may be

rolled over to this Plan pursuant to Code section 401(a)(31), 402(c),

403(a)(4), 408(d)(3), pursuant to Code section 403(b)(8) or 457(e)(16)

commencing January 1, 2002, or pursuant to any other provision of the Code

which may permit rollovers to this Plan from time to time.  However, no Rollover Contribution will be

permitted to this Plan to the extent it consists of amounts attributable to

after-tax contributions, regardless of the provisions of Code section

402(c)(2).

 

(b)                                 A Rollover

Contribution by a Participant shall be credited to his Rollover Account, which

is a subaccount of the Participant’s Investment Account, as provided in Sec.

2.21(c).

 

(c)                                  If a Rollover

Contribution is made by a Qualified Employee who has not yet met the length of

service requirements to become a Participant, the employee shall be treated the

same as a Participant hereunder from the time of the transfer (but shall not

actually be a Participant until satisfying the requirements of Article IV, and

shall not be eligible for an allocation of employer contributions hereunder

until he satisfies all requirements of the Plan read as though this section

were not a part thereof).

 

27

 

ARTICLE

IX

 

PARTICIPANTS’

ACCOUNTS

 

Sec. 9.1 

Retirement Account.  A Participant’s Retirement Account shall be

invested as provided in Sec. 10.2.

 

Sec. 9.2 

Investment Account.  A Participant’s Investment Account shall be

invested as provided in Sec. 10.4.  A

Participant’s Investment Account shall be comprised of one or more of the

following subaccounts:

 

(a)                                  The Participant’s

Deferred Investment Account, which may not be distributed to him until after

the earlier of (i) his Termination of Employment or (ii) his attainment of age

591⁄2.

 

(b)                                 The Participant’s

Withdrawable Investment Account, which may be withdrawn by the Participant

prior to Termination of Employment to the extent provided in Sec. 13.4.

 

(c)                                  The Participant’s

Rollover Account, which may be withdrawn by the Participant prior to

Termination of Employment to the extent provided in Sec. 13.4.

 

Sec. 9.3 

401(k) Account.  A Participant’s 401(k) Account shall be invested as provided in

Sec. 10.4.

 

Sec. 9.4 

ESOP Account.  A Participant’s ESOP Account shall be invested as provided in

Sec. 10.5.  Shares of Company Stock

formerly held in a Participant’s Investment Account which were attributable to

tax credit contributions were transferred to his ESOP Account during 1990.

 

Sec. 9.5  Accounts from Tennant Trend Plan.  One or more Accounts have been established

by the Company for each individual who was a participant in the Tennant Trend

401(k) Savings Plan to hold assets transferred from that plan.  Each such Account shall be treated the same

as a 401(k) Account except as otherwise required by applicable law or

regulation.

 

28

 

ARTICLE X

 

INVESTMENT

OF ACCOUNTS

 

Sec. 10.1 

Description of Funds.  There shall be the following Funds for

investment of Participant Accounts:

 

(a)                                  Company

Stock Fund.  The Company Stock

Fund shall consist of shares or units of Company Stock held as investments for

Accounts other than ESOP Accounts.

 

(b)                                 ESOP

Fund.  The ESOP Fund shall

consist of shares or units of Company Stock acquired by the Plan pursuant to

Article VI and allocated to ESOP Accounts.

 

(c)                                  Other

Funds.  Any Fund established at

the direction of the Committee.  The

Committee shall determine the types of investments to be held in each such Fund

and the Investment Manager, Trustee, or insurance company responsible for

selecting investments.  On January 1,

2001, the other Funds consisted of certain mutual funds managed by various

investment managers.

 

(d)                                 The Committee may add

new Funds or may eliminate, divide or merge existing Funds at any time.  All transfers of investments among Funds

shall be subject to such rules and regulations as the Committee may establish

from time to time.  Notwithstanding any

provision of the Plan to the contrary:

 

(1)                                  In the event of the

creation of a new Fund or the elimination, division or merger of a Fund or

Funds, the Committee may provide rules for the transition.  The Committee also may establish rules which

it determines are appropriate to avoid the need to liquidate assets held in a

particular Fund (or to provide for an orderly liquidation), to provide for the

equitable valuation of Funds and Accounts, or to facilitate administration of

the Plan.  Those rules may include (but

are not limited to) restrictions on transfers, withdrawals or distributions (or

on the timing or frequency of such transactions), proration of the amount that

can be transferred, withdrawn or distributed, modifications or cancellation of

investment directions filed by Participants, restrictions of the investment of

new amounts in existing Funds, designation of a later Valuation Date (including

a special Valuation Date established pursuant to Sec. 2.38(b)) as the date as

of which a transfer, withdrawal or distribution is effective, or postponement

of the effective date of loans, withdrawals under Sec. 13.4, or distributions

(subject to the requirements of Sec. 14.1(c) through (f)).

 

(2)                                  The Committee may

establish rules which limit or preclude the transfer of amounts into a

particular Fund, rules which limit the percent of a Participant’s Accounts that

may be invested in a particular Fund, or rules which limit the number of Funds

in which a Participant’s Accounts may be invested at any time.

 

(e)                                  The Trustee or

Investment Manager may, in its discretion, maintain in cash, without obligation

to credit interest thereon, such part of the assets of each investment Fund as

it considers necessary or desirable for the proper administration of such

Fund.  Any such uninvested funds may be

deposited with the Trustee (if a bank) or with any other bank, or may be

invested in short term securities issued or guaranteed by the United States of

America or any agency or instrumentality thereof, or any other investment of a

short term nature, including corporate obligations or participations therein.

 

(f)                                    Shares of Company

Stock to be acquired by the Plan (other than shares released from the

Unallocated Reserve) either shall be acquired by the Trustee from the Company

or shall be purchased from time to time by the Trustee through brokers or from

securities dealers or by private purchase at such prices and in such amounts as

the Trustee may determine in its absolute and uncontrolled discretion;

provided, however, that no private purchase of such shares shall be made at a

total cost greater than the total cost (including expenses of purchase) of

purchasing such shares at the then prevailing price of such shares in the open

market, such prevailing price to be determined by the Trustee as nearly as

practicable; and 

 

29

 

                                                provided

further that the Company may in its sole discretion direct the Trustee to

purchase any such shares from the Company at a price to be designated by the

Company not in excess of the Fair Market Value of the shares on the date of

purchase.  The Trustee may, in its

discretion, limit the daily volume of its purchases or sales to the extent that

such action is deemed by it to be in the best interest of Participants or to be

required by any applicable law.

 

Sec. 10.2  Investment of Retirement Accounts.  Retirement Accounts shall be invested as

follows:

 

(a)                                  Each Participant and

Beneficiary may elect to have all or any part of his Retirement Account

invested in one or more of the Funds established under Sec. 10.1(c).  Such a person may direct that any portion of

his Retirement Account previously invested in one of such Funds shall be

transferred to another such Fund designated by him.  Transfers among the Funds established under Sec. 10.1(c) shall be

effected as soon as reasonably possible following receipt of the Participant’s

directions by the Trustee.

 

(b)                                 Every election by a

Participant or Beneficiary authorized by this section shall be submitted to the

Committee or its designated agent in such manner as the Committee may provide

and shall be made in accordance with such rules and regulations as the

Committee may prescribe, except that directions for transfers among the Funds

established under Sec. 10.1(c) shall be submitted to the Trustee.

 

(c)                                  In the event a

Participant or Beneficiary does not make an election as to investment of all or

a portion of his Retirement Account, that part of said Account with respect to

which an election has not been made shall be invested as specified by the

Committee.

 

(d)                                 No portion of any

Retirement Account may be invested in the Company Stock Fund, except as

provided under the Plan as in effect prior to January 1, 1987.  No portion of any Retirement Account may be

invested in the ESOP Fund.

 

Sec. 10.3  Disposition of  Life Insurance

Policies. 

Prior to January 1, 1982 certain Participants were permitted to

direct that a portion of their Retirement Accounts be used to purchase ordinary

life insurance.  No additional life

insurance policies could be purchased after December 31, 1981, and the

face amount of any existing policy could not be increased after said date.  As of January 1, 1987, all such

policies held by the Plan were fully paid up, and no additional premiums were

payable thereon.  During 1992, each

Participant was given the option of either (i) having the policy surrendered

for its cash surrender value and having the proceeds invested in one or more of

the Funds established under Sec. 10.1(c), or (ii) purchasing the policy from

the Trust for its cash surrender value. 

After 1992, no such life insurance policies are held in the Trust.

 

Sec. 10.4  Investment of Investment Accounts and

401(k) Accounts.  A Participant may elect to have his Investment Accounts and

401(k) Account invested as follows:

 

(a)                                  Withdrawable Investment Accounts.  A Participant’s Withdrawable Investment

Account may be invested in any Fund established under Sec. 10.1(c).  Prior to July 1, 2001, no amounts in a

Participant’s Withdrawable Investment Account may be transferred to the Company

Stock Fund, but amounts held in said Fund on March 31, 1982 may continue

to be held there.  Commencing July 1,

2001, a Participant’s Withdrawable Investment Account may also be invested in

the Company Stock Fund.

 

(b)                                 Deferred

Investment Accounts and 401(k) Accounts.  A Participant’s 401(k) Account and Deferred Investment Account

may be invested as follows:

 

(1)                                  Prior to July 1,

2001, a Participant’s 401(k) Contributions up to 4% of Certified Earnings may

be invested initially in the Company Stock Fund or in any Fund established

under Sec. 10.1(c), except as otherwise provided in subsection (c), and a

Participant’s 401(k) Contributions in excess of 4% of Certified Earnings and

any Matching Contributions allocated to the Participant’s Deferred Investment

Account may be invested initially in any Fund established under Sec.

10.1(c).  Commencing July 1, 2001, a

Participant’s 401(k) Contributions and any cash Profit 

 

30

 

                                                Sharing

Contributions allocated to the Participant’s Deferred Investment Account may be

invested initially in the Company Stock Fund or in any Fund established under

Sec. 10.1(c).

 

(2)                                  A Participant’s

Deferred Investment Account and amounts credited to the Participant’s 401(k)

Account prior to 2001 may be invested in any Fund established under Sec

10.1(c); provided, however, that any portion of such Account that was invested

in the Company Stock Fund pursuant to the provisions of the Plan in effect on

December 31, 2000 with respect to contributions for Plan Years ending on or

before that date shall continue to be held in the Company Stock Fund until

distributed or transferred to Funds established under Sec. 10.1(c), subject to

the provisions of subsection (c).

 

(3)                                  Except as provided in

subsection (c), the portion of a Participant’s Deferred Investment Account

and/or 401(k) Account that is invested in the Company Stock Fund may thereafter

be transferred to any Fund established under Sec. 10.1(c).  Prior to July 1, 2001, no portion of such

Accounts that is invested in any Fund established under Sec. 10.1(c) may be

transferred to the Company Stock Fund, but such amounts may be transferred to

other Funds established under Sec. 10.1(c). 

Commencing July 1, 2001, any portion of such Accounts that is

invested in any Fund established under Sec. 10.1(c) may thereafter be

transferred to the Company Stock Fund or to other Funds established under Sec.

10.1(c).

 

(c)                                  Limitations

With Regard To Company Stock. 

The following limitations apply with regard to Company Stock held by the

Trust:

 

(1)                                  This paragraph ceases

to apply effective July 1, 2001.  Prior

to July 1, 2001, shares of Company Stock acquired by 401(k) Accounts with

respect to contributions for Plan Years prior to 2001, and shares acquired with

dividends on such shares, must be held in the Company Stock Fund.  Such amounts may not be transferred to

another Fund during the five year period beginning on the first day of the Plan

Year for which the shares are purchased or contributed.  After the end of said five year period the

Participant may direct transfer of the portion of his Account reflecting such

shares to another Fund.  A transfer

following the five year period may be made effective as of any January 31,

April 30, July 31, or October 31, provided the Participant has filed the

request with the Committee at least three business days prior to the effective

date, with the proceeds to be actually transferred as soon as possible after

the effective date.  However, the

restrictions imposed by the third sentence of this paragraph are not applicable

to (i) a Participant who has attained age 55, (ii) a Participant whose

Termination of Employment has occurred, or (iii) a Beneficiary of a deceased

Participant.

 

(2)                                  Each dividend (other

than a stock dividend) paid with respect to Company Stock held in an Account in

the Company Stock Fund shall be invested in additional shares of Company Stock.

 

(3)                                  This paragraph ceases

to apply effective July 1, 2001.  Prior

to July 1, 2001, a Participant may not direct the acquisition of Company Stock

for his Accounts for any pay period beginning during the 12-month period

following the date on which the Participant (i) transfers ownership, other than

to an inter vivos trust for his own benefit or to himself and his spouse as

joint tenants, of any Company Stock that had been acquired by him pursuant to

the Tennant Company Employees Stock Purchase Plan or had been acquired for any

of his Accounts pursuant to the current provisions of this Plan, or pursuant to

any former provision of the Plan whereby Company Stock would be acquired for

less than Fair Market Value, and subsequently distributed to him; or (ii)

directs that any Company Stock that had been acquired for any of his Accounts

pursuant to this Plan be sold with the proceeds to be transferred to another

Fund or distributed to him.

 

(d)                                 Election Procedure.  Except as otherwise provided in subsections

(a), (b) and (c), a Participant or a Beneficiary may direct that any portion of

his Account previously invested in one of the available Funds shall be

transferred to another such Fund designated by him, subject to the following:

 

31

 

(1)                                  Transfers among the

Funds established under Sec. 10.1(c) shall be effected as soon as reasonably

possible following the receipt of the Participant’s directions by the

Trustee.  Transfers between the Company

Stock Fund and the Funds established under Sec. 10.1(c) are subject to the

restrictions of subsection (c).

 

(2)                                  Every election by a

Participant or Beneficiary authorized by this section shall be submitted to the

Committee or its designated agent in such manner as the Committee may provide

and shall be made in accordance with such rules and regulations as the

Committee may prescribe, except that directions for transfers among the Funds

established under Sec. 10.1(c) shall be submitted to the Trustee.  Such elections may be made by a Participant

whose Termination of Employment has occurred, as well as by a Participant who

is an employee.

 

(3)                                  An election by a

Participant to change how future contributions to his or her Accounts shall be

invested may be effective as of any date, provided the election is received by

the Trustee prior to such deadline as may be established from time to time by

the Trustee or the Committee for the effective date.

 

(4)                                  In the event a

Participant or Beneficiary does not make an election as to all or a part of any

Account, the portion of the Account with respect to which an election has not

been made shall be invested as specified by the Committee.

 

Sec. 10.5  Investment of ESOP Accounts.  ESOP Accounts shall be invested in the ESOP

Fund.  Amounts allocated to an ESOP

Account (including allocations of dividends and other earnings) may not be

transferred to another fund except as follows:

 

(a)                                  Those amounts may be

transferred from the ESOP Fund to a fund established under Sec. 10.1(c) at the

direction of a Participant as follows:

 

(1)                                  Prior to July 1,

2001, such a transfer may be made following the close of the five Plan Year

period beginning on the first day of the Plan Year following the Plan Year for

which those amounts are allocated to the ESOP Account.

 

(2)                                  Commencing July 1,

2001, such a transfer may be made following July 31 of the Plan Year after the

Plan Year for which those amounts are allocated to the ESOP Account.

 

The portion of the ESOP Account that is transferred may not

subsequently be invested in shares of Company Stock.

 

(b)                                 Those amounts may be

transferred at the Participant’s direction from the ESOP Fund to a fund

established under Sec. 10.1(c) at any time after he has attained age 55 or had

a Termination of Employment.  Such

transfers may also be directed by the Beneficiary of a deceased

Participant.  The portion of the ESOP

Account so transferred by a Participant or Beneficiary may not subsequently be

invested in shares of Company Stock. 

The Plan will offer a sufficient number and variety of investment

options to satisfy the requirements of Code section 401(a)(28)(B).

 

(c)                                  Prior to July 1,

2001, all transfers from the ESOP Fund pursuant to this section shall be

effected as of January 31, April 30, July 31 or October 31, provided that the

Participant filed the request with the Committee at least three business days

prior to the effective date, with the proceeds to be actually transferred as

soon as possible after the effective date. 

Commencing July 1, 2001, all transfers from the ESOP Fund pursuant to

this section shall be effected by the Trustee as soon as reasonably possible

(as determined by the Trustee) after the request is received by the Trustee.

 

(d)                                 Every election by a

Participant or Beneficiary authorized by this section shall be submitted to the

Committee or its designated agent in such manner as the Committee may provide

and shall be made in 

 

32

 

                                                accordance

with such rules and regulations as the Committee may prescribe.  Such elections may be made by a Participant

whose Termination of Employment has occurred, as well as by a Participant who

is an employee.

 

Sec. 10.6  Restrictions Imposed by Certain Funds.  If the Participant has elected to invest

part or all of the Participant’s Accounts in a Fund established under Sec.

10.1(c) which includes a restriction or limitation on the amount that can be

transferred, withdrawn or distributed from the Fund, or on the time or

frequency of such transfers, withdrawals or distributions, the provisions of

this Article X, Sec. 13.4, Article XIV and Article XV shall be modified to the

extent necessary to comply with such restriction or limitation.  However, no such restriction or limitation

may postpone a distribution beyond the date the distribution is required under

subsections (c) through (f) of Sec. 14.1.

 

Sec. 10.7  Orderly Disposition of Company Stock.  If the Trustee, after consulting with the

Company, determines that an immediate attempt to sell all shares of Company

Stock which Participants and Beneficiaries have directed to sell as of a

particular date under the provisions of the Plan might have a significant

adverse effect on the price at which those shares could be sold, the Trustee

may make arrangements for the orderly disposition of the shares over a period

of time, and at varying prices, to be determined by the Trustee after

consulting with the Company.

 

(a)                                  Notwithstanding any

provision of the Plan to the contrary, except as provided in subsection (b),

the proceeds from sales of Company Stock during a period of orderly disposition

under this section shall not be transferred to and invested in any other Fund

until the end of that period of orderly disposition.  During this period, the Trustee may invest the proceeds from

sales of Company Stock in a liquid investment authorized by the Trustee for

this purpose, in which case the amount ultimately transferred to the other

funds at the end of the period shall be adjusted on a reasonable basis to

reflect the earnings during the period.

 

(b)                                 Notwithstanding

subsection (a), the Trustee, after consulting with the Company, may determine

to make one or more partial transfers to other Funds during a period of orderly

disposition under this section of proceeds from Company Stock that has been

sold prior to the transfer.  In that

event, the proceeds shall first be allocated to those Participants and Beneficiaries

who have directed sales from their ESOP Accounts to the extent that those sales

are required to satisfy the diversification requirements of Code section

401(a)(28)(B).  Any remaining proceeds

shall be allocated pro rata among all Participants and Beneficiaries who have

directed sales of Company Stock as of a date prior to the date of the transfer

(disregarding any Company Stock covered by the allocations in the previous

sentence or by a prior transfer under this subsection).

 

(c)                                  In making

dispositions of Company Stock pursuant to the provisions of the Plan, the

Trustee may net the purchase and sell activity against the Trustee’s

obligations to acquire shares of Company Stock for the Plan.

 

33

 

ARTICLE XI

 

VALUATION

OF ACCOUNTS

 

Sec. 11.1 

Valuation of Funds.  As of each Valuation Date there shall be

determined, in accordance with a method consistently followed and uniformly

applied, the then fair market value of each Fund established under Sec. 10.1(c)

and the number of shares or units held in the Company Stock Fund and ESOP

Fund.  During any period that all or a

part of any Fund is held under a contract, of a type sometimes referred to as a

“guaranteed income contract”, issued by an insurance company and invested by it

and under which the insurance company pays a guaranteed minimum rate of return,

and provided no event has occurred that would result in a payment by the

insurance company under the contract at a discount from book value of the

contract, the fair market value of the contract shall be deemed to be its book

value.

 

Sec. 11.2  Valuation of Accounts in Fund Established

Under Sec. 10.1(c).  There shall be determined as of each Valuation Date the value of

each Account in each Fund established under Sec. 10.1(c).  The value of each such Account shall be

adjusted to reflect the effect of income, realized and unrealized profits and

losses, withdrawals, interfund transfers, and all other transactions since the

next preceding Valuation Date, as follows:

 

(a)                                  From the value of the

Account determined as of the next preceding Valuation Date, there shall be

deducted the amount of all distributions made from the Account after such

preceding Valuation Date.

 

(b)                                 From the fair market

value of the applicable Fund determined as of the Valuation Date there shall be

deducted the amount of any contributions therein already made by a

Participating Employer for the current or a preceding Plan Year that have not

previously been allocated to the appropriate Accounts.

 

(c)                                  The value of each

such Account as determined in (a) shall be adjusted so that the total value of

all such Accounts in the applicable Fund equals the fair market value of the

applicable Fund as determined and adjusted in (b).  Said adjustment shall be pro rata.

 

(d)                                 There shall be

allocated to the Participant’s Account in the appropriate Fund any dividends

(other than stock dividends) paid with respect to Company Stock in that

Account.

 

(e)                                  There shall be

allocated to the adjusted value of each Account in the appropriate Fund any

contributions made during the period subsequent to the preceding Valuation Date

and ending on the current Valuation Date.

 

(f)                                    All transfers

between the Funds pursuant to Article X shall then be made and the Accounts

adjusted or established accordingly.

 

(g)                                 Notwithstanding

anything herein to the contrary, if the Plan receives a recovery on an

investment (including, but not limited to, a recovery from the Federal Deposit

Insurance Corporation, a state insurance guaranty association or the Securities

Industry Protection Corporation, or a recovery under federal or state

securities laws) which recovery is earmarked by the paying entity as

attributable to a specific Participant or Beneficiary, the amount recovered

shall be allocated only to the Account(s) of such Participant or Beneficiary,

and the Accounts of other Participants and Beneficiaries shall not share in the

recovery.  The Company shall make

appropriate adjustments in allocations of investment earnings and losses and

Account values to reflect the provisions of this subsection.

 

All calculations and determinations required to be made under this

section shall be made by the Committee, whose determinations shall be final and

binding on all persons.

 

Sec. 11.3  Valuation of Accounts in Company Stock

Fund and ESOP Fund.  Each Account in the Company Stock Fund and ESOP Fund shall

reflect all transactions for that Account including, without limitation,

contributions in cash or kind, purchase and sale of shares of Company Stock,

withdrawals, distributions, and inter-

 

34

 

fund transfers.  For each Participant’s Account, the

Committee shall maintain a record of the aggregate cost of all shares or units

of Company Stock held in the Account.

 

For purposes of adjusting the number of shares or units of Company

Stock held in such Accounts, all such shares or units acquired by the Trustee

for the Company Stock Fund or ESOP Fund during a valuation period shall be

deemed acquired on the Valuation Date at the end of the valuation period.  Such shares or units, including fractional

shares or units to three decimal places, shall be credited to the Accounts as

of said Valuation Date.  As of each

Valuation Date the total number of shares or units of Company Stock in each

Account shall be calculated according to the record of all previous

transactions in the Account.

 

Sec. 11.4  Special Valuation Procedure for Funds

Investing in Mutual Funds. 

The Committee may in its sole discretion establish a special

valuation procedure for valuing any Account invested in Fund or Funds

consisting of mutual fund shares. 

Valuations of such Accounts and Funds may be done at different times or

intervals than the other Funds, provided, however, that valuation must be done

at least annually.

 

Sec. 11.5 

Certificates.  The Committee may cause to be issued from time to time notices or

certificates advising Participants of the status of their interests in the

Trust, but shall not be required to do so and the issuance of such notices or

certificates shall not in any way alter or affect the rights of Participants

hereunder.

 

35

 

ARTICLE

XII

 

DESIGNATION

OF BENEFICIARY

 

Sec. 12.1  Persons Eligible to Designate.  Any participant may designate a Beneficiary

to receive any amount payable from the Fund as a result of the Participant’s

death.  The Beneficiary may be one or

more persons, natural or otherwise.  By

way of illustration, but not by way of limitation, the Beneficiary may be an

individual, trustee, executor, or administrator.  A Participant may also change or revoke a designation previously

made, without the consent of any Beneficiary named therein.

 

Sec. 12.2  Special Requirements for Married

Participants.  Notwithstanding the provisions of Sec. 12.1, if a Participant is

married at the time of his death, his Beneficiary shall be his spouse unless

the spouse has consented in writing to the designation of a different

Beneficiary, the spouse’s consent acknowledges the effect of such designation,

and the spouse’s consent is witnessed by a representative of the Plan or a

notary public.  Such consent shall be

deemed to have been obtained if it is established to the satisfaction of the

Company that such consent cannot be obtained because there is no spouse,

because the spouse cannot be located, or because of such other circumstances as

may be prescribed by federal regulations. 

Any consent by a spouse shall be irrevocable.  Any designation of a Beneficiary or form of benefits which has

received spousal consent may be changed (other than by being revoked) without

spousal consent only if the consent by the spouse expressly permits subsequent

designations by the Participant without any requirement of further consent by

the spouse.  Any such consent shall be

valid only with respect to the spouse who signed the consent, or in the case of

a deemed consent, the designated spouse.

 

 Sec. 12.3  Form and Method of Designation.  Any designation or a revocation of a prior

designation of Beneficiary shall be in writing on such form as the Committee

may prescribe and shall be filed with the Committee.  The Committee and all other parties involved in making payment to

a Beneficiary may rely on the latest Beneficiary designation on file with the

Committee at the time of payment or may make payment pursuant to Sec. 12.4 if

an effective designation is not on file, shall be fully protected in doing so,

and shall have no liability whatsoever to any person making claim for such

payment under a subsequently filed designation of Beneficiary or for any other

reason.

 

Sec. 12.4  No Effective Designation.  If there is not on file with the Committee

an effective designation of Beneficiary by a deceased Participant, his

Beneficiary shall be the person or persons surviving him in the first of the

following classes in which there is a survivor, share and share alike:

 

(a)                                  His spouse.

 

(b)                                 His children, except

that if any of his children predecease him but leave issue surviving him, such

issue shall take by right of representation the share their parent would have

taken if living.

 

(c)                                  His parents.

 

(d)                                 His brothers and

sisters.

 

(e)                                  His estate.

 

Determination of the identity of the Beneficiary in each case shall be

made by the Company.

 

Sec. 12.5  Successor Beneficiary.  If a Beneficiary who survives the Participant

subsequently dies before receiving all payments to which the Beneficiary was

entitled, the successor Beneficiary, determined in accordance with the

provisions of this section, shall be entitled to the balance of any remaining

payments due.  A Beneficiary who is not

the surviving spouse of the Participant may not designate a successor

Beneficiary.  A Beneficiary who is the

surviving spouse may designate a successor Beneficiary only if the Participant

specifically authorized such designations on the Participant’s Beneficiary

designation form and the form was authorized by the Committee.  If a Beneficiary is permitted to designate a

successor Beneficiary, each such designation shall be made according to the

same rules (other than Sec. 12.2) applicable to designations by

Participant.  If a Beneficiary is not 

 

36

 

permitted to designate a successor

Beneficiary, or is permitted to do so but fails to make such a designation, the

balance of any payments remaining due will be payable to a contingent

Beneficiary if the Participant’s Beneficiary designation so provides, otherwise

to the estate of the deceased Beneficiary.

 

37

 

ARTICLE

XIII

 

ELIGIBILITY

FOR A BENEFIT

 

Sec. 13.1  Benefit Upon Retirement.  If a Participant’s Termination of

Employment occurs, for any reason other than his death,

 

(a)                                  after his attainment

of age 55, or

 

(b)                                 because, in the

opinion of the Company, based on competent medical evidence, he is totally and

permanently disabled, or

 

(c)                                  after he completed 10

years of Aggregate Continuous Service,

 

he shall be entitled to a benefit equal to 100% of the value of all of

his Accounts (including his allocable share of Profit Sharing Contributions for

the Plan Year in which his Termination of Employment occurred).  Distribution of such benefit shall be made

in accordance with the provisions of Article XIV.

 

Sec. 13.2  Other Termination of Employment.  If a Participant’s Termination of Employment

occurs (for any reason other than his death) under circumstances such that he

is not entitled to a benefit under Sec. 13.1, he shall be entitled to a benefit

equal to 100% of the value of all of his Accounts.  Distribution of such benefit shall be made in accordance with the

provisions of Article XIV.

 

Sec. 13.3  Distributions Following Death.  If a Participant’s Termination of Employment

is the result of his death, his Beneficiary shall be entitled to a benefit

equal to 100% of the value of all the Participant’s Accounts (including the

Participant’s allocable share of Profit Sharing Contributions for the Plan Year

in which his death occurred). 

Distribution of such benefit shall be made in accordance with the

provisions of Article XIV as though the date of the Participant’s death

were the applicable Termination of Employment date.

 

If a Participant’s death occurs after his Termination of Employment,

his Beneficiary shall be entitled to such benefit as the Participant would have

been entitled thereafter from the Trust had he lived, said benefit to be paid

at the times and in the manner determined in Article XIV.

 

Sec. 13.4  Withdrawals from Investment Accounts and

401(k) Accounts While Employed.  Pursuant to rules and regulations adopted by

the Committee, an Active Participant may elect to make a cash withdrawal from

his Withdrawable Investment Account.  A

Participant who has attained age 591⁄2 may also elect to make a cash withdrawal

from his Deferred Investment Account or 401(k) Account.  In making such elections the Participant

must designate the Fund or Funds from which such a withdrawal shall be

made.  The Participant may elect to

withdraw Company Stock from his Withdrawable Investment Account (and, if he has

attained age 591⁄2, from his Deferred Investment Account or 401(k) Account).

 

(a)                                  Such an election

shall be effective as of a Valuation Date determined by the Trustee which

occurs a reasonable time after the withdrawal request has been approved and

transmitted to the Trustee.  The amount

of such withdrawal shall be specified in the Participant’s request.

 

(b)                                 The Trustee shall

charge the amount withdrawn against the appropriate Fund or Funds in the

Participant’s Accounts, based on their respective values determined as of the

applicable Valuation Date.

 

(c)                                  Unless otherwise

specifically requested by a Participant, to the extent possible, the amount

withdrawn shall be charged against the Participant’s voluntary

contributions.  For purposes of this

paragraph, the amount of voluntary contributions by the Participant held in the

Trust on the applicable Valuation Date shall be considered to be the total of

all voluntary contributions made by him under the Plan less the 

 

38

 

                                                sum

of all such withdrawals previously made by him that were deemed to be refunds

of his voluntary contributions.

 

(d)                                 Requests for a

withdrawal under this section shall be filed by the Participant with the

Committee or its designated agent in such manner and prior to such deadline as

the Committee may establish from time to time for a particular effective

date.  The Trustee, upon direction by

the Committee, shall pay the withdrawal amount to the Participant as soon as

practicable following the effective date of the election.

 

(e)                                  No withdrawals shall

be permitted under this section from a Participant’s Deferred Investment

Account or 401(k) Account prior to his attainment of age 591⁄2.  No withdrawal shall be permitted at any time

from the portion of an Account which attributable to an outstanding loan under

Article XV.

 

39

 

ARTICLE

XIV

 

DISTRIBUTION

OF BENEFITS

 

Sec. 14.1  Time and Method of Payment.  The benefit to which a

Participant or Beneficiary may become entitled under Article XIII shall be

distributed to him at such time as he elects and according to the method he

elects, subject to the following:

 

(a)                                  Distributions may

commence at any time after the Participant or Beneficiary has become entitled

to a benefit under Article XIII. 

Distribution shall be made by one or a combination of the following

methods, as the Participant or Beneficiary may select:

 

(1)                                  Payment in a single

sum.

 

(2)                                  Payment in a series

of annual or more frequent installments.

 

(3)                                  Prior to May 1, 2002,

purchase of a non-transferable period-certain annuity contract providing

substantially nonincreasing payments.

 

The Committee shall establish rules for processing distribution

requests on a quarterly or more frequent basis, and may establish deadlines by

which a request must be received by the Committee or its designated agent to be

included in a particular processing cycle. 

Distributions shall be based on the value of the Participant’s Accounts

as of a Valuation Date or Dates determined by the Trustee which is after the

date the request is filed with the Committee or its designated agent and a

reasonable time prior to the date the payment is made.  Prior to July 1, 2001, distribution of

shares of Company Stock held in the ESOP Fund or the Company Stock Fund may be

made only as of the last Valuation Date of a calendar quarter and only if the

request is received by the Committee at least three business days prior to said

date.

 

(b)                                 Unless the Participant

elects otherwise, distributions must commence no later than the 60th day after

the close of the Plan Year in which he reaches Normal Retirement Age or in

which his Termination of Employment occurs, whichever is later.  For purposes of this subsection, the failure

of a Participant to elect to receive a distribution shall be deemed to be an

election to defer commencement of benefit distributions.

 

(c)                                  For purposes of this

Sec. 14.1, a distribution of all benefits must occur or distributions in

installments must commence by the Participant’s “Required Beginning Date”,

which is April 1 of the calendar year following the later of (i) the

calendar year in which the Participant attained age 701⁄2, or (ii) the calendar

year in which the Participant’s Termination of Employment occurs.  However, clause (ii) of the previous

sentence does not apply to any Participant who is a more than 5-percent owner

of a Participating Employer (as defined in Code section 416) with respect to

the Plan Year ending in the calendar year in which the Participant attains age

701⁄2.  Notwithstanding the foregoing:

 

(1)                                  Any Participant who

had begun receiving minimum distributions for Plan Years prior to 1997, but who

is not required to receive such distributions under the provisions of this

subsection, may file a written election with the Company to stop those

distributions until the Required Beginning Date under this subsection.

 

(2)                                  Any Participant whose

Termination of Employment has not occurred prior to April 1 following the

calendar year in which he attained age 701⁄2 may file a written election with the

Company to begin receiving distributions pursuant to the provisions of the Plan

at any time on or after said April 1st as if his Termination of Employment had

occurred.

 

(d)                                 Installments payable

to the Participant on or after his Required Beginning Date shall be paid no

less rapidly than by reference to one of the following periods:  (i) a period-certain not longer than the

life 

 

40

 

                                                expectancy

of the Participant, or (ii) a period-certain not longer than the joint life and

last survivor expectancy of the Participant and his designated

Beneficiary.  However, if the designated

Beneficiary is not the Participant’s spouse, the amounts payable to the

Participant must satisfy the incidental death benefit requirements of Proposed

Treasury Regulation 1.401(a)(9)-2.

 

(e)                                  If the Participant

dies after his Required Beginning Date, the remaining payments shall be made to

his Beneficiary at least as rapidly as under the method of distribution

selected by the Participant.  The

Beneficiary may direct payment of any benefit earlier than the date it

otherwise would have been paid.

 

(f)                                    If the Participant

dies before his Required Beginning Date, the Participant’s Accounts shall be

distributed to his Beneficiary not later than December 31 of the year

containing the fifth anniversary of the Participant’s death, subject to the

following:

 

(1)                                  Distributions to a

designated Beneficiary may extend beyond five years from the death of the

Participant if they are in the form of installment payments or payments under an

annuity contract over a period-certain not exceeding the Beneficiary’s life

expectancy, provided such payments begin not later than December 31 of the

year following the year in which the Participant’s death occurred.

 

(2)                                  If the designated

Beneficiary under paragraph (1) is the surviving spouse of the Participant,

payments pursuant to paragraph (1) may commence at any time on or before the

later of (i) December 31 of the year in which the Participant would have

reached age 701⁄2, or (ii) December 31 of the year following the year in

which the Participant’s death occurred.

 

If a surviving spouse who is entitled to benefits under this subsection

dies before distributions to the surviving spouse begin, this subsection (other

than paragraph (2)) shall be applied as if the surviving spouse were the

Participant, with the date of death of the surviving spouse being substituted

for the date of death of the Participant.

 

(g)                                 If more than one

Beneficiary is entitled to benefits following the Participant’s death, the interest

of each Beneficiary shall be segregated into a separate Account for purposes of

applying this section.

 

(h)                                 If distributions are

made in installments, the amount to be distributed for each calendar year,

beginning with the first calendar year for which payments are required, must be

at least equal to the quotient obtained by dividing the entire interest of the

individual on the most recent Valuation Date preceding the calendar year

(adjusted as may be required by Treasury regulations) by the lesser of (i) the

number of years of life expectancy which remain, determined as provided in

subsection (i), or (ii) in the case of distributions to a Participant with a

designated Beneficiary other than the Participant’s spouse, the applicable

divisor prescribed in regulations under Code section 401(a)(9)(G) relating to

incidental death benefits.

 

(1)                                  For purposes of

determining the amount which must be distributed for any year, excess

contributions distributed in accordance with Article VII (including income

on such amounts) shall be disregarded.

 

(2)                                  For purposes of this

subsection, the first calendar year for which a distribution is required shall

be determined as follows:

 

(A)                              In the case of

distributions to the Participant, the first calendar year for which a

distribution is required is the year preceding the calendar year which contains

the Participant’s Required Beginning Date. 

The installment payable for such year is not required to be distributed

until the Required Beginning Date.

 

41

 

(B)                                In the case of

distributions to a designated Beneficiary pursuant to subsection (f), the first

calendar for which a distribution is required is the calendar year containing

the latest date by which distribution must commence under subsection (f).

 

(3)                                  Any installment

method under this section shall be selected by a written election filed with

the Company by the person entitled to the distributions, which shall specify

the method for determining life expectancies under subsection (i).  The election shall be irrevocable after the

date the Plan requires payments to commence, except that the individual

entitled to payments may elect to receive a larger amount at any time.

 

(i)                                     For purposes of

this section, life expectancies initially shall be determined based on the

birth dates occurring in the first calendar year for which payment is required

to be made under this section, using the expected return multiples in

Tables V and VI of Treasury Regulation §1.72-9, in accordance with regulations

under Code section 401(a)(9).  Such

determinations shall also be in accordance with the following:

 

(1)                                  For life expectancies

determined for purposes of installment distributions to the Participant as of

the Required Beginning Date, life expectancies shall be calculated based on the

Participant’s (and the designated Beneficiary’s) age as of the birthday in the

calendar year preceding the calendar year in which falls the Participant’s

Required Beginning Date.  For purposes

of calculating the minimum distribution for each succeeding calendar year, one

of the following methods shall apply as selected by the Participant (or by the

surviving spouse, where applicable):

 

(A)                              If the life expectancy of

the Participant (or the joint life and last survivor expectancy of the

Participant and the designated Beneficiary who is a surviving spouse) is being

recalculated pursuant to paragraph (4), then the life expectancy of the

Participant (or the joint life and last survivor expectancy of the Participant

and the surviving spouse) shall be recalculated using the Participant’s (and

the spouse’s) actual age as of the Participant’s birthday (and the spouse’s

birthday) in each succeeding calendar year.

 

(B)                                If the life expectancy

of the Participant (or the joint life and last survivor expectancy of the

Participant and the designated Beneficiary) is not being recalculated, then the

initial life expectancy (or joint life and last survivor expectancy) shall be

reduced by one for each subsequent calendar year.

 

(C)                                If a joint life and

last survivor expectancy is being determined by recalculating one but not both

of the joint lives, then the joint life and last survivor expectancy shall be

recalculated using (i) the actual age of the individual whose life expectancy

is being recalculated as of the individual’s birthday in each succeeding

calendar year and (ii) the adjusted age of the individual whose life expectancy

is not being recalculated.  For purposes

of the preceding sentence, an individual’s “adjusted age” is determined in

accordance with regulations under Code section 401(a)(9).

 

(2)                                  For life expectancies

determined for purposes of subsection (f), the designated Beneficiary’s life

expectancy shall be calculated based on the Beneficiary’s age as of the

birthday in the calendar year in which distributions are required to commence

pursuant to subsection (f).  For

purposes of calculating the minimum distribution for each succeeding calendar

year, one of the following methods shall apply:

 

(A)                              If the designated

Beneficiary is the Participant’s surviving spouse, and the life expectancy is

being recalculated pursuant to paragraph (4), then the surviving spouse’s life

expectancy shall be recalculated using the surviving spouse’s actual age as of

the surviving spouse’s birthday in each succeeding calendar year.

 

42

 

(B)                                If the designated

Beneficiary’s life expectancy is not being recalculated, then the initial life

expectancy shall be reduced by one for each subsequent calendar year.

 

(3)                                  If the life

expectancy of a Participant (or the Participant’s spouse) is being recalculated

pursuant to paragraph (4), the recalculated life expectancy of the Participant

(or spouse) will be reduced to zero in the calendar year following the calendar

year in which the person’s death occurs.

 

(4)                                  The life expectancy

of a Participant or the life expectancy of a designated Beneficiary who is the

Participant’s spouse, or both of their life expectancies, may be recalculated

each year if so elected by the Participant (or spouse).  Such election must be made no later than the

time of the first required distribution under subsections (c) or (f).  Such election shall be irrevocable after the

date distributions must commence.  If no

election is made by the Required Beginning Date, life expectancies will not be

recalculated.

 

(j)                                     If benefits are to

be distributed by purchase prior to May 1, 2002 of a period-certain annuity,

the issuer may be any company engaged in the business of writing annuity

contracts.  The annuity must provide for

substantially non-increasing periodic payments over a fixed period no longer

than the applicable life expectancy or joint life and last survivor expectancy

allowed under subsection (d), (e), or (f). 

Life expectancies for this purpose shall be determined pursuant to

subsection (i) at the time payments begin. 

The annuity contract shall be endorsed to prohibit any optional

settlement which provides for payment in any form of a life annuity.  In the case of any conflict between the

provisions of any annuity contract and the provisions of the Plan, the

provisions of the Plan shall control.

 

(k)                                  For purposes of this

section, “designated Beneficiary” means any individual who is a Beneficiary

pursuant to Article XII.

 

(l)                                     Notwithstanding

the foregoing, distributions may be made to any Participant or Beneficiary

pursuant to any designation made prior to January 1, 1984 which satisfied

all the requirements of Section 242(b)(2) of the Tax Equity and Fiscal

Responsibility Act of 1982, as in effect on January 1, 1984, and the

regulations thereunder; provided, however, that any designation of Beneficiary

included as a part of such designation must comply with the spousal consent

requirements under Sec. 12.2.

 

(m)                               If the entire value of a

Participant’s Account in the Company Stock Fund and ESOP Fund is to be

distributed in one payment, such distribution to the extent possible shall be

made in full shares of Company Stock and the remaining balance if any, shall be

paid in cash.  Installment payments from

a Participant’s Accounts in the Company Stock Fund and ESOP Fund shall in the

discretion of the Participant be paid in cash or Company Stock; provided,

however, that such installment distributions of Company Stock must be in units

of not less than five shares.

 

(n)                                 If distribution of a

Participant’s benefit is to be deferred for any reason, in whole or in part,

the value of the undistributed portion of each of his various Accounts shall

thereafter be redetermined as provided in Article XI.  Prior to the commencement of installment

payments or purchase of an annuity, the Participant shall be permitted to make

a final withdrawal equal to the amount of any voluntary contribution not

previously withdrawn pursuant to Sec. 13.4.

 

(o)                                 Notwithstanding the

foregoing, if the total value of the Accounts of a Participant (or a

Beneficiary following the Participant’s death) is less than $5,000 on the

Valuation Date at the end of the quarter following the quarter in which the

Participant’s Termination of Employment occurs (or at any time thereafter), a

single sum distribution shall be made to the Participant (or Beneficiary) as

soon as administratively feasible thereafter.

 

(p)                                 Distributions under

this section shall be made in accordance with the requirements of Code section

401(a)(9), including the incidental death benefit requirements of Code section

401(a)(9)(G), and Treasury Regulation § 1.401(a)(9)-2.  No distribution option otherwise permitted

under this Plan will be available to a Participant or Beneficiary if such distribution

option does not meet said requirements.

 

43

 

(q)                                 Notwithstanding any

provision of the Plan to the contrary that would otherwise limit a

distributee’s election, a distributee may elect, at the time and in the manner

prescribed by the Company, to have any portion of an eligible rollover

distribution paid directly to an eligible retirement plan specified by the

distributee in a direct rollover.  For

purposes of this subsection:

 

(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 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 life expectancies)

of the distributee and the distributee’s designated beneficiary, or for a

specified period of ten years or more; any distribution to the extent such

distribution is required under Code section 401(a)(9); and the portion of any

distribution that is not includible in gross income (determined without regard

to the exclusion for net unrealized appreciation with respect to employer

securities).

 

(2)                                  An “eligible

retirement plan” is an individual retirement account described in Code section

408(a), an individual retirement annuity described in Code section 408(b), an

annuity plan described in Code section 403(a), or a qualified trust described

in Code section 401(a) with respect to a defined contribution plan, that

accepts the distributee’s eligible rollover distribution.  Commencing January 1, 2002, an eligible

retirement plan also means an annuity contract described in Code section

403(b), or an eligible plan under Code section 457(b) which is maintained by a

state, a political subdivision of a state, or any agency or instrumentality of

a state or political subdivision of a state and which agrees to account

separately for amounts transferred into such plan from this Plan.  Prior to January 1, 2002, in the case of an

eligible rollover distribution to the surviving spouse, an eligible retirement

plan is limited to an individual retirement account or individual retirement

annuity.

 

(3)                                  A “distributee”

includes a Participant or former Participant. 

In addition, the Participant’s or former Participant’s surviving spouse

and the Participant’s or former Participant’s spouse or former spouse who is

the alternate payee under a qualified domestic relations order, as defined in

Code section 414(p), are distributees with regard to the interest of the spouse

or former spouse.

 

(4)                                  A “direct rollover’

is a payment by the Plan to the eligible retirement plan specified by the

distributee.

 

(5)                                  If a distributee

elects a direct rollover of a distribution which is less than the entire

benefit to which the individual is entitled under the Plan, the rollover shall

be made from all other amounts available for distribution at that time before

any distribution is made from any separate account maintained to hold the

Participant’s after-tax voluntary contributions, if any, and the earnings on

those contributions.

 

(6)                                  Commencing January 1,

2002, 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 includible in gross income.  However, such portion may be transferred

only to an individual retirement account or annuity described in Code section

408(a) or (b), or to a qualified defined contribution plan described in Code

section 401(a) or 403(a) that agrees to separately account for the amounts so

transferred, including separately accounting for the portion of such

distribution which is includible in gross income and the portion of such

distribution which is not so includible.

 

(r)                                    With respect to

distributions under the Plan made on or after November 1, 2001, for calendar

years beginning on or after January 1, 2001, the Plan will apply the minimum

distribution requirements of Code section 401(a)(9) that were proposed on

January 17, 2001 (the “2001 Proposed Regulations”), 

 

44

 

                                                notwithstanding

any provision of the Plan to the contrary. 

If the total amount of required minimum distributions made to a

Participant for 2001 prior to November 1, 2001 is equal to or greater than the

amount of required minimum distributions determined under the 2001 Proposed

Regulations, then no additional distributions are required for such Participant

for 2001 on or after such date.  If the

total amount of required minimum distributions made to a Participant for 2001

prior to November 1, 2001 is less than the amount determined under the 2001

Proposed Regulations, then the amount of required minimum distributions for

2001 on or after such date will be determined so that the total amount of

required minimum distributions for 2001 is the amount determined under the 2001

Proposed Regulations.  This subsection

shall continue in effect until the last calendar year beginning before the

effective date of the final regulations under Code section 401(a)(9) or such

other date as may be published by the Internal Revenue Service.  Notwithstanding anything in the foregoing

provisions of this subsection to the contrary, nothing in this subsection in

any way modifies or expands the methods of payment permitted under subsection

(a).

 

Sec. 14.2  Distribution From More Than One Account.  If a distributee has more than one Account,

or his Account is invested in more than one Fund, distributions will be in the

following sequence unless the distributee directs otherwise:

 

(a)                                  Distributions will

first be made from the Participant’s Investment Account and will be made from

investment Funds in the sequence determined by the Committee.

 

(b)                                 Distributions will

then be made from the Participant’s 401(k) Account, and will be made from

investment Funds in the sequence determined by the Committee.

 

(c)                                  Distributions will

then be made from the Participant’s Retirement Account, and will be made from

investment Funds in the sequence determined by the Committee.

 

(d)                                 Distributions will

then be made from the Participant’s ESOP Account, and will be made from

investment Funds in the sequence determined by the Committee.

 

Sec. 14.3 

Reemployment.  Except where distributions are required under Sec. 14.1,

distributions from the Trust shall cease upon reemployment of a Participant in

a regular position by the Company or an Affiliate, and shall recommence in accordance

with the provisions of this Article XIV upon his subsequent Termination of

Employment.

 

Sec. 14.4 

Source of Benefits.  All benefits to which persons become entitled

hereunder shall be provided only out of the Trust and only to the extent that

the Trust is adequate therefor.  No

benefits are provided under the Plan except those expressly described herein.

 

Sec. 14.5 

Incompetent Payee.  If in the opinion of the Committee a person

entitled to payments hereunder is disabled from caring for his affairs because

of mental condition, physical condition, or age, payment due such person may be

made to such person’s guardian, conservator, or other legal personal

representative upon furnishing the Committee with evidence satisfactory to it

of such status.  Prior to the furnishing  of such evidence, the Committee may cause

payments due the person under disability to be made, for such person’s use and

benefit, to any person or institution then in the opinion of the Company caring

for or maintaining the person under disability.  The Committee shall have no liability with respect to payments so

made.  The Committee shall have no duty

to make inquiry as to the competence of any person entitled to receive payments

hereunder.

 

Sec. 14.6  Benefits May Not Be Assigned or Alienated.  Except as otherwise expressly permitted by

the Plan or required by law, the interests of persons entitled to benefits

under the Plan may not in any manner whatsoever be assigned or alienated,

whether voluntarily or involuntarily, or directly or indirectly.  However, the Plan shall comply with the

provisions of any court order which the Company determines is a qualified

domestic relations order as defined in Code section 414(p).  Distributions to an alternate payee pursuant

to an order determined by the Company to be a qualified domestic relations

order may occur at any time after the Company determines said order is

qualified.

 

45

 

Sec. 14.7 

Payment of Taxes. 

The Trustee may pay any estate, inheritance, income, or other

tax, charge, or assessment attributable to any benefit payable hereunder which

in the Trustee’s opinion it shall be or may be required to pay out of such

benefit.  The Trustee may require,

before making any payment, such release or other document from any taxing

authority and such indemnity from the intended payee as the Trustee shall deem

necessary for its protection.

 

Sec. 14.8  Conditions Precedent.  No person shall be entitled to a benefit

hereunder until his right thereto has been finally determined by the Committee

nor until he has submitted to the Committee relevant data reasonably requested

by it, including, but not limited to, proof of date of birth or death.

 

Sec. 14.9  Committee Directions to Trustee.  The Committee shall issue such written

directions to the Trustee as are necessary to accomplish distributions to the

Participants and Beneficiaries in accordance with the provisions of the Plan.

 

Sec. 14.10  Effect on Unemployment Compensation.  For purposes of any unemployment compensation

law, a distribution hereunder in one sum shall be considered to be a severance

payment and shall be allocated over a period of weeks equal to the one sum

payment divided by the employee’s regular weekly pay while employed by the

Company, which period shall commence immediately following the employee’s

Termination of Employment.

 

Sec. 14.11  Nonterminable ESOP Protections.  Because Company Stock is readily

tradable on an established market, the put provisions referred to in Code

section 409(h) are not applicable.  If

Company Stock ceases to be readily tradable on an established market, said

provisions shall become and remain applicable until such time as Company Stock

resumes being readily tradable on an established market.

 

Sec. 14.12  Special Distribution Events.  This section ceases to apply effective

January 1, 2002.  Prior to that date,

notwithstanding anything herein to the contrary, if the agreement between the

buyer and the seller in one of the following types of transaction provides that

distributions are to be made to affected Participants, each such Participant

shall receive a distribution of his or her Account balance as soon as

administratively feasible after either of the following events:

 

(a)                                  The disposition by a

Participating Employer to an unrelated corporation of substantially all of the

assets (within the meaning of Code section 409(d)(2)) used in a trade or

business if the Participating Employer continues to maintain this Plan after

the disposition, but only with respect to employees who continue employment

with the corporation acquiring such assets.

 

(b)                                 The disposition by a

Participating Employer or by an Affiliate to an unrelated entity of such

corporation’s interest in a subsidiary (within the meaning of Code section

409(d)(3)) which had employees who were covered by this Plan if such

corporation continues to maintain this Plan, but only with respect to employees

who continue employment with such subsidiary.

 

All distributions under this section are subject to any applicable

consent requirements under Sec. 14.1. 

In addition, distributions under this section must be made in a lump

sum.

 

Sec. 14.13  Inability to Locate Distributee.  If all or any portion of the Accounts of a

Participant or Beneficiary cannot be distributed solely because of the

inability of the Company to determine the whereabouts of the distributee, after

mailing a letter by first class mail to the last known address of the

distributee, and after such further diligent effort as the Company determines

is appropriate, and either (i) the Participant has attained age 65, or has

died, or (ii) the Accounts are distributable pursuant to Sec. 14.1(o) without

the consent of the distributee, or (iii) the distributee consented in writing

to receive a distribution, the amount that cannot be distributed shall be

treated as a forfeiture and shall be applied by the Trustee to pay

administrative expenses of the Plan which are chargeable against the Trust

following the date the Company notifies the Trustee of the forfeiture.  In the event the Participant or Beneficiary

is located after a forfeiture has occurred under this section, the Company

shall pay to the Trustee an 

 

46

 

amount equal to the amount forfeited

and the individual’s Accounts shall be restored to their value on the date the

forfeiture occurred.

 

47

 

ARTICLE XV

 

LOANS

TO PARTICIPANTS

 

Sec. 15.1  Loans to Participants.  The Committee may authorize a loan to an

Active  Participant from the Trust.

Loans made on or after July 1, 1992 shall be subject to the provisions of this

Article XV.  Loans made prior to July 1,

1992 shall be subject to the provisions of the Plan in effect on the date the

loan was made.

 

(a)                                  Each loan to a

Participant shall be supported by the borrower’s promissory note payable to the

order of a Trustee.  A loan shall be

considered adequately secured whenever the outstanding balance does not exceed

the amount in which the Participant would have a vested interest in the event

of his or her Termination of Employment.

 

(b)                                 In no event shall the

Committee authorize a loan to a Participant which, together with the unpaid

principal and accrued interest of any other outstanding loan to such

Participant, exceeds whichever of the following amounts is least:

 

(1)                                  The amount of the

Participant’s Investment Account and 401(k) Account (excluding any Company

Stock in any such Account subject to the limitations in Sec. 10.4(c)) on the

Valuation Date coincident with or immediately preceding the date the loan is

made.

 

(2)                                  50% of the aggregate

value of the portion of the Participant’s Accounts invested in the Funds other

than the Company Stock Fund and the ESOP Fund on the Valuation Date coincident

with or immediately preceding the date of the loan.

 

(3)                                  $50,000, reduced by

the excess (if any) of (i) the highest outstanding balance of loans from the

Plan during the 1-year period ending on the day before the date on which such

loan is made over (ii) the outstanding balance of loans from the Plan on the

date on which such loan is made.

 

(c)                                  The Committee may

require that part or all of a Participant’s Accounts be invested in a

particular Fund or Funds as a precondition to permitting a loan, and may also

require subsequent transfers to a particular Fund or Funds.

 

(d)                                 No more than two loans

may be outstanding to a Participant at any time.  The minimum amount of any loan is $1,000.

 

(e)                                  The portion of a

Participant’s Account or Accounts represented by the outstanding loan principal

shall be segregated for investment purposes. 

In lieu of sharing in income or losses on investments of the Trust, the

segregated portion of the Participant’s Accounts shall be credited with all

interest paid by the Participant on the loan. 

Repayments of principal and interest on a loan shall be reinvested in

accordance with the investment designation in effect under Article X for future

contributions on the date the repayment is received by the Trustee.  The Trustee may charge to the Participant’s

Accounts any expenses attributable to the loan and such portion of the general

expenses of the Trust as the Trustee determines in its discretion to be

reasonable.

 

Sec. 15.2  Term and Repayment of Loans.  The term to maturity and repayment of loans

shall be limited as follows:

 

(a)                                  Any term to maturity

not in excess of five years shall be allowed.  

However, if the loan is used to acquire a dwelling unit which within a

reasonable time is to be used as the principal residence of the Participant,

“ten years” will be substituted for “five years” in the preceding

sentence.  Notwithstanding the forgoing

sentences, all outstanding loans shall become due and payable in full 60 days

following the end of the calendar quarter in which the Participant’s

Termination of Employment occurs, if earlier, except as otherwise provided in

Sec. 15.4(e).

 

48

 

(b)                                 Each such loan shall

provide for the payment of accrued interest and for repayment of principal in

substantially equal installments not less frequently than quarterly.  While the Participant is employed by the

Participating Employers, all loans shall be repaid through payroll deductions

to the extent possible.  The Participant

shall execute any documents required to authorize such deductions.

 

(c)                                  If a Participant

fails to make timely payments, the Trustee may reduce the amount credited to

the Participant’s Withdrawable Investment Account by the amount in

arrears.  If said Accounts are

insufficient, such a reduction may be made from the Participant’s Deferred

Investment Account, 401(k) Account and Retirement Account, but only if one or

more of the following has occurred:

 

(1)                                  The Participant has

attained age 591⁄2.

 

(2)                                  The Participant’s

Termination of Employment has occurred.

 

(3)                                  The Committee has

determined that due to financial hardship, the Participant is unable to repay

the loan.  Any such determination of

hardship shall be made in a manner consistent with the requirements of Code

section 401(k).

 

(d)                                 A loan may be paid

without penalty at any time prior to the date of maturity.

 

(e)                                  If a loan to a

Participant is outstanding on the date a distribution is to be made from the

Trust with respect to the portion of the Participant’s Account or Accounts

represented by the loan, the balance of the loan, or a portion thereof equal to

the amount to be distributed, if less, shall on such date become due and

payable.  The portion of the loan due

and payable shall be satisfied by offsetting such amount against the amount to

be distributed to the Participant. 

Alternatively, the portion of the Participant’s Account or Accounts

equal to the outstanding balance on the loan may be distributed in kind by

distribution of the Participant’s note.

 

(f)                                    If a loan to a

Participant is outstanding at the time of the Participant’s death, and if the

loan is not repaid by the Participant’s executor or administrator, the note

shall be distributed in kind to the Participant’s Beneficiary.

 

(g)                                 The Committee may from

time to time establish a grace period during which late payments on a loan may

be made by the Participant without the loan being treated as in default;

provided, however, that except as otherwise provided in this subsection, said

grace period for any payment must end not later than the last day of the

calendar quarter following the quarter in which the payment was originally

due.  Loan repayments will be suspended

under this Plan as permitted under Code section 414(u)(4) (relating to periods

of military service).  Loan repayments

will also be suspended while the Participant is on an unpaid medical leave of

absence not exceeding 12 months, provided that interest will continue to accrue

during the leave and the loan must be repaid in full not later than the end of

the maximum term to maturity permitted under subsection (a) at the time the

loan was made.

 

Sec. 15.3  Rate of Interest on Loans.  The loan shall bear interest at a fixed or

variable rate determined by the Committee which shall not be less than a rate

which would be considered a “reasonable rate of interest” pursuant to Code

section 4975(d)(1)(D).

 

Sec. 15.4 

Miscellaneous.  All loans shall be subject to the following:

 

(a)                                  The Committee shall

direct the Trustee with respect to the making of loans to Participants, the

collection thereof, and all other matters pertaining thereto, and the Trustee

shall not take any independent action with respect to such loans.  The Trustee shall have no responsibility

whatsoever with respect to loans to Participants except to follow the directions

of the Committee, to the extent possible.

 

49

 

(b)                                 In accordance with the

foregoing standards and requirements, loans shall be available to all Active

Participants on a reasonably equivalent basis.

 

(c)                                  All loans shall be

governed by such non-discriminatory written rules as the Committee may

adopt.  Applications for loans shall be

made on such forms as the Committee may authorize for such purpose.

 

(d)                                 Any shares of Company

Stock subject to the limitations in Sec. 10.4(c) shall be disregarded for

purposes of determining the amount a Participant may borrow or whether the loan

is adequately secured.  The Committee

may not require liquidation of such shares pursuant to Sec. 15.1(c), nor may it

reduce the number of such shares pursuant to Sec. 15.2(c).

 

(e)                                  Solely for purposes

of this Article XV, a former Active Participant (or any Beneficiary of a

deceased Participant) who is entitled to a benefit from the Plan and who is a

“party in interest” as defined in Section 3(14) of ERISA will be treated as an

Active Participant for purposes of entitlement to request loans until such time

as the individual ceases to be a party in interest, and the last sentence of

Sec 15.2(a) shall not apply to such an individual until that time.  For purposes of this subsection, an

individual will be treated as a “party in interest” during any period that the

individual is employed by an Affiliate or is employed by a Participating

Employer in a position in which the individual is not a Qualified Employee.

 

50

 

ARTICLE XVI

 

TRUST

 

Sec. 16.1 

Composition.  All sums of money and all securities and other property received

by the Trustee for purposes of the Plan, together with all investments made

therewith, the proceeds thereof, and all earnings and accumulations thereon,

and the part from time to time remaining shall constitute the “Trust”.  Although the term “Trust” is used, part or

all of said assets may be held by an insurance company pursuant to a group

annuity contract between the Company and the insurance company.  The Trust shall be composed of the Funds

described in Sec. 10.1.  All

contributions of the Company or employees to the Trust may be commingled for

investment without distinction between principal and income.

 

Sec. 16.2  Trustee or Other Funding Agency.  The Trust may be held and invested as one

fund or may be divided into any number of parts for investment purposes.  Each part of the Trust, or the entire Trust

if it is not divided into one or more parts for investment purposes, shall be

held and invested by one or more Trustees pursuant to the trust agreement

entered into by the Company and said Trustee or Trustees or held and invested

by an insurance company pursuant to an annuity contract entered into by the Company

and said insurance company.  The

selection and appointment of each Trustee or insurance company shall be made by

the Company.  The Company shall have the

right at any time to remove a Trustee or insurance company and appoint a

successor thereto, subject to the terms of any applicable trust agreement or

group annuity contract.  The Company

shall have the right to determine the form and substance of each trust

agreement and group annuity contract under which any part of the Fund is held,

subject only to the requirement that they are not inconsistent with the

provisions of the Plan.  Action on

behalf of the Company pursuant to the foregoing provisions of this section may

be taken only by the Board or by a person or persons so authorized by

resolution of the Board.  Any such trust

agreement may contain provisions pursuant to which (i) the Trustee will make

investments on direction of an Investment Manager appointed by the Committee or

(ii) the Trustee will enter into an annuity contract with an insurance company

and transfer assets to said insurance company pursuant to directions by the

Committee.

 

Sec. 16.3  Compensation and Expenses of Trustee;

Other Expenses.  The Trustee shall be entitled to receive such reasonable

compensation for its services as may be agreed upon with the Company.  The Trustee shall also be entitled to

reimbursement for all reasonable and necessary costs, expenses, and

disbursements incurred by it in the performance of its services.  Such compensation and reimbursements shall

be paid from the Trust if not paid directly by the Company.  The Company or the Committee may obtain

reimbursement from the Trust for expenses incurred in connection with

administration of the Plan.  The Company

or Committee may also direct the Trustee to make payment from the Trust to

third parties for expenses incurred in connection with administration of the

Plan.  However, no person who is a

full-time employee of the Company may receive compensation from the Trust,

except for reimbursement of expenses properly and actually incurred.  Amounts paid from the Trust pursuant to this

section may be charged to the Funds in such proportions as are determined by

the Committee.

 

Sec. 16.4  Securities of the Company.  An agreement with a Trustee may provide that

all or any part of the Trust may be invested in qualifying employer securities,

as that term is used in ERISA.  If

qualifying employer securities are purchased or sold as an investment of the

Trust from or to a disqualified person or party in interest, as those terms are

used in ERISA, and if there is no generally recognized market for such

securities, the purchase shall be for not more than fair market value and the

sale shall be for not less than fair market value, as determined in good faith

by the (h)Company or other Named Fiduciary assigned such function, or if the

applicable trust agreement so provides, as determined in good faith by the

Trustee.

 

Sec. 16.5 

No Diversion.  The Trust shall be for the exclusive purpose of providing

benefits to Participants under the Plan and their beneficiaries and defraying

reasonable expenses of administering the Plan. 

Such expenses may include premiums for the bonding of Plan officials

required by ERISA.  No part of the

corpus or income of the Fund may be used for, or diverted to, purposes other

than for the exclusive benefit of employees of the Company or their

beneficiaries.  However:

 

(a)                                  If any contribution

or portion thereof is made by a Participating Employer by a mistake of fact,

the Trustee shall, upon written request of the Company or the Participating

Employer, return such 

 

51

 

                                                contribution

or portion thereof to the Participating Employer within one year after the

payment of the contribution to the Trustee. 

However, earnings attributable to such contribution or portion thereof

shall not be returned to the Participating Employer but shall remain in the

Fund, and the amount returned to the Participating Employer shall be reduced by

any losses attributable to such contribution or portion thereof.

 

(b)                                 Contributions by the

Participating Employers are conditioned upon the deductibility of each

contribution under Code section 404.  To

the extent the deduction is disallowed, the Trustee shall, upon written request

of the Company or the Participating Employer, return such contribution to the

Participating Employer within one year after the disallowance of the

deduction.  However, earnings

attributable to such contribution (or disallowed portion thereof) shall not be

returned to the Participating Employer but shall remain in the Fund, and the

amount returned to the Participating Employer shall be reduced by any losses

attributable to such contribution (or disallowed portion thereof).

 

(c)                                  Contributions by each

Participating Employer are conditioned upon initial qualification of the Plan

as to that employer under Code section 401(a). 

If the Plan receives an adverse determination letter from the Internal

Revenue Service with respect to such initial qualification, the Trustee shall,

upon written request of the Company, return the amount of such contribution to

the Participating Employer within one year after the date of denial of

qualification of the Plan.  For this

purpose, the amount to be so returned shall be the contributions actually made,

adjusted for the investment experience of, and any expenses chargeable against,

the portion of the Fund attributable to the contributions actually made.

 

(d)                                 In the case of any

such return of contribution the Company shall cause such adjustments to be made

to the Accounts of Participants as it considers fair and equitable under the

circumstances resulting in the return of such contribution.

 

Sec. 16.6 

Voting Company Stock.  Before each meeting of the stockholders of

the Company, the Company shall cause to be sent to each Participant a copy of

the proxy solicitation material therefor, together with a form requesting

confidential instructions to the Trustee on how to vote the shares of Company

Stock held in the Trust Fund. 

Instructions received from Participants by the Trustee shall be held in

the strictest confidence and shall not be divulged or released to any person,

including officers or employees of the Company.  To be effective, such instructions must be received by the

Trustee at least 10 days prior to the stockholder’s meeting.

 

(a)                                  The Trustee shall

vote all shares of Company Stock held in the Company Stock Fund, the ESOP Fund,

and the Unallocated Reserve in proportion to “votes” cast by Participants, as

follows:

 

(1)                                  The Trustee shall

determine the aggregate number of votes which may be cast with respect to all

shares of Company Stock held as of the record date in the Company Stock Fund,

the ESOP Fund, and the Unallocated Reserve.

 

(2)                                  The Company shall

determine the Participant’s aggregate interest in the Company Stock Fund and

the ESOP Fund as a percentage of the interests of all Participants in said

Funds.

 

(3)                                  The number of “votes”

the Participant may cast shall be determined by applying the percentage in (2)

to the aggregate number of allocated shares in (1).

 

(4)                                  The Trustee shall

determine the number of “votes” for, against, and abstaining with respect to

each proposition and shall vote, in person or by proxy, all of the shares of

Company Stock held in the Company Stock Fund, the Company ESOP Fund, and the

Unallocated Reserve in proportion to the “votes” received.

 

The determinations in (2) and (3) shall be as of the most recent

Valuation Date prior to the meeting.  It

is intended that by reason of the foregoing provisions, unallocated shares held

in the Unallocated Reserve, and allocated shares held for the benefit of

Participants who do not give voting instructions, 

 

52

 

will be voted by the Trustee in proportion to the instructions actually

received.  The Company may require

verification of the Trustee’s compliance with voting instructions received from

Participants by any independent auditor selected by the Company.  The rights extended to Participants by this

section shall also apply to the Beneficiaries of deceased Participants.

 

(b)                                 For purposes of this

Sec. 16.6, each Participant or Beneficiary who gives voting instructions shall

be deemed a “named fiduciary” (within the meaning of ERISA) with respect to

such instructions.

 

Sec. 16.7  Tender or Exchange Offers Regarding

Company Stock.  As soon as practicable after the commencement of a tender or

exchange offer (an “Offer”) for shares of Company Stock, the Company shall use

its best efforts to cause each Participant (whose Account has allocated to it

any shares of Company Stock) to be advised in writing of the terms of the

Offer, and to be provided with forms by which the Participant may instruct the

Trustee, or revoke such instruction, to tender or exchange shares of Company

Stock, to the extent permitted under the terms of such Offer.  The Trustee shall follow the directions of

each Participant.  In advising

Participants of the terms of the Offer, the Company may include statements from

the Board setting forth its position with respect to the Offer.  The giving of instructions by a Participant

to the Trustee to tender or exchange shares and the tender or exchange thereof

shall not be deemed a withdrawal or suspension from the Plan or a forfeiture of

any portion of such Participant’s interest in the Plan solely by reason of the

giving of such instructions and the Trustee’s compliance therewith.  Instructions by Participants pursuant to

this section shall apply both to allocated shares held in the Company Stock

Fund and the ESOP Fund, and to unallocated shares held in the Unallocated

Reserve.

 

(a)                                  The number of shares

as to which a Participant may provide instructions shall be determined as

follows:

 

(1)                                  The Trustee shall

determine the aggregate number of shares held in the Company Stock Fund, the

ESOP Fund, and the Unallocated Reserve.

 

(2)                                  The Company shall

determine the Participant’s aggregate interest in Company Stock Fund and the

ESOP Fund as a percentage of the interests of all Participants in said Funds.

 

(3)                                  The Participant may

provide instructions with respect to a number of shares of Company Stock

determined by applying the percentage in (2) to the aggregate number of shares

in (3).  If the Participant directs

tender or exchange of the shares for which he may provide instructions, the Trustee

shall follow that instruction.  The

Trustee shall not tender or exchange the shares for which a Participant may

provide instructions if the Participant (i) directs against their tender or

exchange or (ii) gives no direction.

 

(b)                                 The determination of

the number of shares as to which a Participant may provide instructions shall

be as of the close of business on the day preceding the date on which the Offer

is commenced or such earlier date as shall be designated by the Company as the

Company, in its sole discretion, deems appropriate for reasons of

administrative convenience.  Any

securities received by the Trustee as a result of a tender or exchange of

shares of Company Stock shall be held, and any cash so received shall be

invested in short-term investments pending any reinvestment by the Trustee, as

it may deem appropriate, consistent with the purposes of the Plan.  The rights extended to Participants by this

section shall also apply to the Beneficiaries of deceased Participants.

 

(c)                                  If a tender or exchange

offer is limited so that all of the shares that the Trustee has been directed

to tender or exchange cannot be sold or exchanged, the shares that each

Participant directed be tendered or exchanged shall be deemed to have been sold

or exchanged in the same ratio that the number of shares actually sold or

exchanged bears to the total number of shares that the Trustee was directed to

tender or exchange.  Shares sold or

exchanged at the direction of a Participant shall be deemed to come first out

of the shares allocated to the Participant’s Accounts and only after all of

those shares have been sold or exchanged, out of the Unallocated Reserve.

 

53

 

(d)                                 For purposes of this

Sec. 16.7, each Participant or Beneficiary who is entitled to give such

instructions shall be deemed a “named fiduciary” (within the meaning of ERISA)

with respect to such instructions.

 

54

 

ARTICLE XVII

 

COMMITTEE

 

Sec. 17.1  Membership and Responsibility.  The general administration of the Plan,

except as otherwise specifically provided herein, shall be placed in a

Committee of not less than three members appointed from time to time by the

Company, by action of the Board, to serve at the pleasure of said Board.  The members may, but need not be,

shareholders, directors or employees of the Company or an Affiliate.  Each person appointed a member of the

Committee shall signify his acceptance of the office by filing a written

acceptance with the Board, and with the secretary of the Committee.  Any member of the Committee may resign by

notice in writing delivered to the Board and to the secretary of the Committee,

such resignation to become effective at delivery or at any later date specified

therein.

 

Sec. 17.2  Organization of Committee.  The Committee shall elect a chairman, who

shall be one of the members of the Committee, and shall elect a secretary, who

may but need not be one of the members of the Committee.

 

Sec. 17.3  Meetings and Actions of Committee.  The Committee shall hold such meetings, upon

such notice, at such place or places, and at such time or times as it may from

time to time determine.  A majority of

the members of the Committee at the time in office shall constitute a quorum

for the transaction of business.  All

resolutions adopted or other actions taken by the Committee at a meeting shall

be by vote of the majority of the members of the Committee at the time in

office.  Action by the Committee may be

taken without a formal meeting by the written authorization of a majority of

the members of the Committee at the time in office.  The Committee may authorize one or more of its members or any

agent to sign and deliver on its behalf directions, instructions, notices,

certificates, consents, approvals, waivers, or other documents.  The certificate of the secretary of the

Committee or of the majority of the members of the Committee that the Committee

has taken or authorized any action shall be conclusive in favor of any person

acting in reliance thereon.  No member

of the Committee shall vote or otherwise participate in the consideration or

determination by the Committee of any matters solely concerning the rights or

interest of such member as a Participant hereunder.

 

Sec. 17.4 

Outside Assistance.  The Committee may retain counsel (who may be

counsel for the Company), employ agents, and provide for such clerical,

accounting, investment, and other services as it may require in carrying out

its responsibilities under the Plan.

 

Sec. 17.5 

Powers of Committee.  The Committee shall have full power,

authority and discretion to take any action it is specifically required or

permitted to take under the provisions of the Plan and in addition thereto

shall have the sole and exclusive power, authority and discretion subject to

the limitations of the Plan:

 

(a)                                  For Plan

administration:

 

(1)                                  To adopt rules and

regulations, not inconsistent with the purposes and specific provisions of the

Plan, for its administration.

 

(2)                                  To interpret and

construe the provisions of the Plan.

 

(3)                                  To determine from

time to time the status of all parties for the purposes of the Plan.

 

(4)                                  To determine the

rights of Participants to benefits under the Plan and the method and time or

times of payment of the same.

 

The foregoing determinations by the Committee shall be based on the

books and records of the Company and Affiliates as applicable, kept in the

regular course of business and such other sources as the Committee may consider

to be reliable.

 

(b)                                 For Plan funding:

 

55

 

(1)                                  To establish and

carry out a funding policy and method consistent with the means and objectives

of the Plan and with the requirements of ERISA.

 

(2)                                  To communicate said

policy and method to each Trustee and Investment Manager.

 

(c)                                  For investment

management:

 

(1)                                  To establish an

investment program strategy and supporting investment guidelines and criteria

for communication to the Trustee or Investment Manager consistent with the

funding policy of the Plan.

 

(2)                                  To allocate

investment responsibility for Funds among Investment Managers in accordance

with the requirements of established funding policy and investment program

strategies.

 

(3)                                  To select and appoint

Investment Managers and to assign said Managers specific investment programs as

determined by established investment guidelines and criteria.

 

(4)                                  To direct the Trustee

to enter into an annuity contract with an insurance company, to determine the

form of said contract, and to direct the Trustee to transfer assets to the

insurance company pursuant to said contract.

 

(d)                                 For delegation of

powers:  To appoint employees of the

Company to carry out any of the aforesaid powers of the Committee.

 

It is intended that the Committee have discretion to the fullest extent

permitted by law and that the Committee’s exercise of its discretion be given

deference to the greatest extent allowed under the law.

 

Sec. 17.6  Compensation, Expenses, and Bonds.  No member of the Committee shall receive any

compensation for his services as such, but the Company shall reimburse the

Committee and the members thereof for all expenses, including counsel and other

fees, incurred or paid by them or any of them in carrying out the

responsibilities of the Committee under the Plan.  The members of the Committee shall furnish such bonds as the

Company may require.

 

56

 

ARTICLE

XVIII

 

ADMINISTRATION

OF PLAN

 

Sec. 18.1  Certain Fiduciary Provisions.  For purposes of the Plan:

 

(a)                                  Any person or group

of persons may serve in more than one fiduciary capacity with respect to the

Plan.

 

(b)                                 A Named Fiduciary, or

a fiduciary designated by a Named Fiduciary pursuant to the provisions of the

Plan, may employ one or more persons to render advice with regard to any

responsibility such fiduciary has under the Plan.

 

(c)                                  At any time that the

Plan has more than one Named Fiduciary, if pursuant to the Plan provisions

fiduciary responsibilities are not already allocated among such Named

Fiduciaries, the Company, by action of the Board or chief executive officer,

may provide for such allocation; except that such allocation shall not include

any responsibility, if any, in a trust agreement to manage or control the

assets of the Plan other than a power under the trust agreement to appoint an

investment manager as defined in ERISA.

 

(d)                                 Unless expressly

prohibited in its appointment, a Named Fiduciary which is not the Company may

designate a person or persons other than such Named Fiduciary to carry out any

or all of the fiduciary responsibilities under the Plan of such Named

Fiduciary; except that such designation shall not include any responsibility,

if any, in a trust agreement to manage or control the assets of the Plan other

than a power to appoint an investment manager as defined in ERISA.

 

(e)                                  A person who is a

fiduciary with respect to the Plan, including a Named Fiduciary, shall be

recognized and treated as a fiduciary only with respect to the particular

fiduciary functions as to which such person has responsibility.

 

Each Named Fiduciary (other than the Company), each other fiduciary,

each person employed pursuant to subsection (b) above, and each investment

manager shall be entitled to receive reasonable compensation for services

rendered, or for the reimbursement of expenses properly and actually incurred

in the performance of their duties with the Plan and to payment therefor from

the Trust if not paid directly by the Participating Employers in such

proportions as the Company shall determine. 

However, no person so serving who already receives full-time pay from

any Participating Employer shall receive compensation from the Plan, except for

reimbursement of expenses properly and actually incurred.

 

Sec. 18.2  General Fiduciary Standard.   Each fiduciary shall discharge his duties

with respect to the Plan solely in the interests of Participants and their

beneficiaries and with the care, skill, prudence, and diligence under the

circumstances then prevailing that a prudent man acting in a like capacity and

familiar with such matters would use in the conduct of an enterprise of a like

character and with like aims.

 

Sec. 18.3  Prohibited Transactions.  A fiduciary with respect to the

Plan shall not cause the Plan to engage in any prohibited transaction within

the meaning of ERISA.

 

Sec. 18.4  Discrimination Prohibited.  No person or persons in

exercising discretion in the operation and administration of the Plan shall

discriminate in favor of Highly Compensated Employees.

 

Sec. 18.5 

Evidence.  Evidence required of anyone under this Plan may be by

certificate, affidavit, document, or other instrument which the person acting

in reliance thereon considers to be pertinent and reliable and to be signed,

made, or presented to the proper party.

 

Sec. 18.6 

Correction of Errors.  It is recognized that in the

operation and administration of the Plan certain mathematical and accounting

errors may be made or mistakes may arise by reason of factual errors in 

 

57

 

information supplied to or generated by

the Committee or the Trustee.  The

Committee shall have power to cause such equitable adjustments to be made to

correct for such errors as the Committee in its discretion considers appropriate.  Such adjustments shall be final and binding

on all persons.

 

Sec. 18.7 

Claims Procedure.  The Committee shall establish a claims procedure consistent with

the requirements of ERISA.  Such claims

procedure shall provide adequate notice in writing to any Participant or

beneficiary whose claim for benefits under the Plan has been denied, setting

forth the specific reasons for such denial, written in a manner calculated to

be understood by the claimant and shall afford a reasonable opportunity to a

claimant whose claim for benefits has been denied for a full and fair review by

the appropriate Named Fiduciary of the decision denying the claim.

 

Sec. 18.8 

Bonding.  Plan personnel shall be bonded to the extent required by

ERISA.   Premiums for such bonding may,

in the sole discretion of the Company, be paid in whole or in part from the

Fund.  The Company may provide by

agreement with any person that the premium for required bonding shall be paid

by such person.

 

Sec. 18.9 

Waiver of Notice. 

Any notice required hereunder may be waived by the person

entitled thereto.

 

Sec. 18.10  Agent For Legal Process.  The Company shall be the agent

for service of legal process with respect to any matter concerning the Plan,

unless and until the Company designates some other person as such agent.

 

Sec. 18.11  Indemnification.  In addition to any other

applicable provisions for indemnification, the Participating Employers jointly

and severally agree to indemnify and hold harmless, to the extent permitted by

law, each director, each officer, each employee of the Company, and each member

of the Committee against any and all liabilities, losses, costs, or expenses

(including legal fees) of whatsoever kind and nature which may be imposed on,

incurred by, or asserted against such person at any time by reason of such person’s

services as a fiduciary in connection with the Plan, but only if such person

did not act dishonestly or in bad faith, or in willful violation of the law or

regulations under which such liability, loss, cost or expense arises.

 

58

 

ARTICLE XIX

 

AMENDMENT,

TERMINATION, MERGER

 

Sec. 19.1 

Amendment.  Subject to the non-diversion provisions of Sec. 16.5, the

Company, by action of the Board, or by action of a person so authorized by

resolution of the Board, may amend the Plan at any time and from time to

time.  No amendment of the Plan shall

have the effect of changing the rights, duties, and liabilities of any Trustee

without its written consent.  Also, no

amendment shall divest a Participant or Beneficiary of Accounts accrued prior

to the amendment.

 

(a)                                  Promptly upon

adoption of any amendment to the Plan, the Company will furnish a copy of the

amendment, together with a certificate evidencing its due adoption, to each

Trustee then acting.

 

(b)                                 If an amendment to the

Plan changes the vesting schedule of the Plan, each Participant having not less

than three years of service by the end of the election period with respect to

such amendment shall be permitted within such election period to elect to have

his or her vested percentage computed under the Plan without regard to such

amendment.  Each election shall be made

in writing by filing with the Company within the election period a form

available from the Company for the purpose. 

The election period shall be a reasonable period determined by the

Company commencing not later than the date the amendment is adopted and shall

be in conformance with any applicable regulation prescribed by the Secretary of

Labor or the Secretary of the Treasury. 

Notwithstanding the foregoing, no election need be provided for any

Participant whose vested percentage under the Plan, as amended, cannot at any

time be less than the vested percentage determined without regard to such

amendment.

 

Sec. 19.2  Permanent Discontinuance of Contributions.  The Company, by action of the Board, may

completely discontinue its contributions in support of the Plan.  In such event, notwithstanding any

provisions of the Plan to the contrary, (i) no employee shall become a

Participant after such discontinuance, and (ii) each Participant in the employ

of the Company at the time of such discontinuance shall be 100% vested in his

Accounts.  Subject to the foregoing, all

of the provisions of the Plan shall continue in effect, and upon entitlement

thereto distributions shall be made in accordance with the provisions of

Article XIV.

 

Sec. 19.3 

Termination. 

The Company, by action of the Board, may terminate the

Plan.  After such termination no

employee shall become a Participant, and no employer contributions shall be

made.  Each Participant in the employ of

the Company at the time of such termination shall be 100% vested in his

Accounts.  He shall be entitled to a

benefit equal to the value of his Accounts determined as of the Valuation Date

coincident with or next following the termination of the Plan.  Distributions of said benefits shall be made

promptly after the Plan terminates.  The

Plan and any related trust agreement shall continue in force for the purpose of

making such distributions.

 

Sec. 19.4 

Partial Termination.  If there is a partial termination of the

Plan, by operation of law, by amendment of the Plan, or for any other reason,

which partial termination shall be confirmed by the Company, each Participant

with respect to whom the partial termination applies shall be 100% vested in

his Accounts.  Subject to the foregoing,

all of the provisions of the Plan shall continue in effect as to each such

Participant, and upon entitlement thereto distributions shall be made in

accordance with the provisions of Article XIV.

 

Sec. 19.5 

Merger, Consolidation, or Transfer of Plan

Assets.  In the case of

any merger or consolidation of the Plan with any other plan, or in the case of

the transfer of assets or liabilities of the Plan to any other plan, provision

shall be made so that each Participant and Beneficiary would (if such other

plan then terminated) receive a benefit immediately after the merger,

consolidation, or transfer which is equal to or greater than the benefit he

would have been entitled to receive immediately before the merger,

consolidation, or transfer (if the Plan had then terminated).  No such merger, consolidation, or transfer

shall be effected until such statements with respect thereto, if any, required

by ERISA to be filed in advance thereof have been filed.

 

Sec. 19.6  Deferral of Distributions.  Notwithstanding any provisions of

the Plan to the contrary, in the case of a complete discontinuance of

contributions to the Plan or of a complete or partial termination of the Plan, 

 

59

 

the Company or the Trustee may defer

any distribution of benefit payments to Participants and Beneficiaries with

respect to which such discontinuance or termination applies until after the

following have occurred:

 

(a)                                  Receipt of a final

determination from the Treasury Department or any court of competent

jurisdiction regarding the effect of such discontinuance or termination on the

qualified status of the Plan under Code section 401(a).

 

(b)                                 Appropriate adjustment

of Accounts to reflect taxes, costs, and expenses, if any, incident to such

discontinuance or termination.

 

60

 

ARTICLE

XX

 

TOP-HEAVY

PLAN PROVISIONS

 

Sec. 20.1 

Key Employee Defined.  “Key Employee” means any employee

or former employee of the employer who at any time during the determination

period was an officer of the employer or is deemed to have had an ownership

interest in the employer and who is within the definition of key employee in

Code section 416(i) and the regulations thereunder in effect for the particular

Plan Year.

 

Sec. 20.2  Determination of Top-Heavy Status.  The top-heavy status of the Plan

shall be determined according to the following standards and definitions:

 

(a)                                  The Plan is a

Top-Heavy Plan for a Plan Year if either of the following applies:

 

(1)                                  If this Plan is not

part of a required aggregation group and the top-heavy ratio for this Plan

exceeds 60 percent.

 

(2)                                  If this Plan is part

of a required aggregation group of plans and the top-heavy ratio for the group

of plans exceeds 60 percent.

 

However, the Plan is not a Top-Heavy Plan with respect to a Plan Year

if it is part of a permissive aggregation group of plans for which the

top-heavy ratio does not exceed 60 percent.

 

(b)                                 The “top-heavy ratio”

shall be determined as follows:

 

(1)                                  If the ratio is being

determined only for this Plan or if the aggregation group only includes defined

contribution plans, the top-heavy ratio is a fraction, the numerator of which

is the sum of the present values of the account balances of all Key Employees

under the Plan or plans as of the determination date (including any part of any

account balance distributed in the five-year period ending on the determination

date), and the denominator of which is the sum of the account balances

(including any part of any account balance distributed in the five-year period

ending on the determination date) of all employees under the Plan or plans as

of the determination date.  (The “plans”

referred to in the preceding sentence are the plans in the required or

permissive aggregation group.)

 

(2)                                  If the determination

is being made for a required or permissive aggregation group which includes one

or more defined benefit plans, the top-heavy ratio is a fraction, the numerator

of which is the sum of account balances of all Key Employees under the defined

contribution plans and the present value of accrued benefits under the defined

benefit plans for all Key Employees as of the determination date (including any

part of any account balance or accrued benefit distributed in the five-year

period ending on the determination date), and the denominator of which is the

sum of the account balances under the defined contribution plans for all

employees and the present value of accrued benefits under the defined benefit

plans for all employees as of the determination date (including any part of any

account balance or accrued benefit distributed in the five-year period ending

on the determination date).  (The

“plans” referred to in the preceding sentence are the plans in the required or

permissive aggregation group.)  Both the

numerator and denominator of the top-heavy ratio shall be adjusted to reflect

any contribution due but unpaid as of the determination date.

 

(3)                                  For purposes of

paragraphs (1) and (2), the value of account balances and the present value of

accrued benefits will be determined as of the most recent valuation date that

falls within the 12-month period ending on the determination date.  The account balances and accrued benefits of

an employee who is not a Key Employee but who was a Key Employee in a prior

year will be disregarded.  The

calculation of the top-heavy ratio and the extent to which distributions,

rollovers, and transfers are taken into account will be made in accordance with

Code section 416 

 

61

 

                                                and

the regulations thereunder.  When

aggregating plans, the value of account balances and accrued benefits will be

calculated with reference to the determination dates that fall within the same

calendar year.

 

(4)                                  Commencing January 1,

2002, any distribution due to separation from service, death or disability

which was made prior to the one-year period ending on the determination date

shall be disregarded for purposes of applying this subsection (b).  Paragraphs (1) and (2) of this subsection

shall also apply to distributions under a terminated plan which, had it not

been terminated, would have been aggregated with this Plan under Code section

416(a)(2)(A)(i).

 

(c)                                  “Required aggregation

group” means (i) each qualified plan of the employer in which at least one Key

Employee participates, and (ii) any other qualified plan of the employer that

enables a plan described in (i) to meet the requirements of Code sections

401(a)(4) and 410.

 

(d)                                 “Permissive

aggregation group” means the required aggregation group of plans plus any other

plan or plans of the employer which, when consolidated as a group with the

required aggregation group, would continue to satisfy the requirements of Code

sections 401(a)(4) and 410.

 

(e)                                  “Determination date”

means the last day of the preceding Plan Year.

 

(f)                                    The “determination

period” for a Plan Year is the Plan Year in which the applicable determination

date occurs and the four preceding Plan Years.

 

(g)                                 The “valuation date”

is the last day of each Plan Year and is the date as of which account balances

or accrued benefits are valued for purposes of calculating the top-heavy ratio.

 

(h)                                 For purposes of

establishing the “present value” of benefits under a defined benefit plan to

compute the top-heavy ratio, any benefit shall be discounted only for mortality

and interest based on the interest rate and mortality table specified in the

defined benefit plan for this purpose.

 

(i)                                     If an individual

has not performed any services for the employer at any time during the five–year

period ending on the determination date with respect to a Plan Year commencing

prior to 2002, or during the one-year period ending on the determination date

with respect to a Plan Year commencing in 2002 or later, any account balance or

accrued benefit for such individual shall not be taken into account for such

Plan Year.

 

(j)                                     For purposes of

determining if a defined benefit plan included in a required aggregation group

of which this Plan is a part is a Top-Heavy Plan, the accrued benefit to any

employee (other than a Key Employee) shall be determined as follows:

 

(1)                                  Under the method

which is used for accrual purposes under all defined benefit plans maintained

by the employer.

 

(2)                                  If there is no method

described in paragraph (1), as if such benefit accrued not more rapidly than

the lowest accrual rate permitted under Code section 411(b)(1)(C).

 

Sec. 20.3  Minimum Contribution Requirement.  For any Plan Year with respect to

which the Plan is a Top-Heavy Plan, the employer contributions allocated to

each Active Participant who is not a Key Employee and whose Termination of

Employment has not occurred prior to the end of such Plan Year shall not be

less than the minimum amount determined in accordance with the following:

 

(a)                                  The minimum amount

shall be the amount equal to that percentage of the Participant’s Compensation

for the Plan Year which is the smaller of (i) 3 percent or (ii) the percentage

which is the largest percentage of Compensation allocated to any Key Employee

from employer contributions for such Plan 

 

 

62

 

                                                Year.  For purposes of this section, “Compensation”

means the amounts specified in Sec. 7.1(d), subject to the limitation in Sec.

2.7(d).

 

(b)                                 For purposes of this

section, any employer contribution attributable to a salary reduction or

similar arrangement shall be taken into account as an employer contribution for

purposes of clause (ii) of subsection (a), but may not be used to satisfy the

minimum amount of employer contributions which must be allocated under

subsection (a).  However, commencing

January 1, 2002, Matching Contributions under this Plan (and employer matching

contributions under any other plan whose contributions are to be used to

satisfy the requirements of subsection (a)) may be used to satisfy the minimum

amount of employer contributions which must be allocated under subsection

(a).  Matching Contributions that are

used to satisfy subsection (a) shall be treated as employer matching

contributions for purposes of the actual contribution percentage test and other

requirements of Code section 401(m).

 

(c)                                  If this Plan and the

Tennant Company Pension Plan are both top-heavy, this section shall not apply

to any Participant who is not a Key Employee and who is covered under both

plans.  Such an employee will receive

benefit accruals under the Pension Plan not less than the minimum benefit

requirement applicable to top-heavy plans.

 

Sec. 20.4  Definition of Employer.  For purposes of this Article, the term

“employer” means all Participating Employers and any trade or business entity

under Common Control with a Participating Employer.

 

63

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00036-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00036-of-00352.parquet"}]]