Document:

EX-10.3

 

EXHIBIT
10.3

SANDERSON FARMS, INC. AND AFFILIATES

EMPLOYEE STOCK OWNERSHIP PLAN

(As Amended and Restated Effective August 1, 2006)

 

 

TABLE OF CONTENTS

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

i

 

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

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

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

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

-v

 

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

-vi

 

SANDERSON FARMS, INC. AND AFFILIATES

EMPLOYEE STOCK OWNERSHIP PLAN

(As Amended and Restated Effective August 1, 2006)

PREAMBLE

     The Sanderson Farms, Inc. and Affiliates Employee Stock Ownership Plan (formerly the Profit
Sharing Retirement Plan and Trust) (the “Plan”) was adopted by Sanderson Farms, Inc. (the
“Company”) and Sanderson Farms, Inc. (Processing Division) effective January 1, 1972. Effective
January 1, 1972, the Plan was converted into a stock bonus plan and an employee stock ownership
plan, within the meaning of Section 4975(e)(7) of the Code.

     Effective November 1, 1989, the Plan was amended and restated to effect numerous technical
changes and to ensure the Plan’s qualification under the applicable provisions of the Code,
including the Tax Reform Act of 1986, and ERISA.

     Effective November 1, 1993, the General Employees’ Profit Sharing — Retirement Plan and Trust
of Sanderson Farms, Inc. and Affiliates (the “General Employees Profit Sharing Plan”) merged into
this Plan, and this Plan was amended to reflect the merger.

     Effective November 1, 1997, the Plan was again amended and restated, to comply with certain
changes in federal law.

     Effective August 1, 2006, the Plan is amended and restated as set forth herein to make certain
design and technical changes.

ARTICLE 1

NAME AND EFFECTIVE DATE

Section 1.1 Name.
This Plan shall be known as the Sanderson Farms, Inc. and Affiliates Employee Stock Ownership Plan.

Section 1.2 Effective Date.
The original effective date of the Plan is January 1, 1972. The effective date of this amendment
and restatement is August 1, 2006.

ARTICLE 2

DEFINITIONS

     The following terms have the meanings herein which are specified below unless the context
otherwise requires:

- 7 -

 

Section 2.1 “Account”
means a Participant’s Cash Account or Stock Account.

Section 2.2 “Administrative Committee”
means the Administrative Committee appointed by the Company as provided in Section 10.1 hereof.
The persons constituting the Administrative Committee are herein referred to as “Administrative
Committee Members.”

Section 2.3 “Affiliate”
means the Employer and any corporation under common control (as defined in Section 414(b) of the
Code) with the Employer; any trade or business (whether or not incorporated) under common control
(as defined in Section 414(c) of the Code) with the Employer; any organization (whether or not
incorporated) that is a member of an affiliated service group (as defined in Section 414(m) of the
Code) that includes the Employer; and any other entity required to be aggregated with the Employer
pursuant to Treasury Regulations under Section 414(o) of the Code.

Section 2.4 “Annual Additions”
means
the sum of the following amounts credited to a Participant’s Accounts and to any accounts of
the Participant under a Related Plan for any Limitation Year:

          (a) Employer contributions (including any contributions hereunder used to repay an Exempt
Loan);

          (b) Employee contributions;

          (c) Forfeitures; and

          (d) Amounts described at Sections 415(l)(1) and 419(A)(d)(2) of the Code.

Section 2.5 “Beneficiary”
means a person who is entitled to a distribution hereunder upon the death of a Participant.

Section 2.6 “Board”
means the Board of Directors of the Company.

Section 2.7 “Break in Service”
means a Plan Year during which an Employee fails to complete more than 500 Hours of Service. For
purposes of determining an Employee’s vested percentage hereunder, the computation period shall be
the Plan Year.

Section 2.8 “Cash Account”
means the Account of a Participant which reflects his interest under the Plan attributable to Trust
Fund assets other than Qualifying Employer Securities.

Section 2.9 “Company”
means Sanderson Farms, Inc.

Section 2.10 “Compensation”
means, with respect to an Employee, all taxable remuneration received, except performance incentive
awards, from the Employer in the whole or part of a Plan Year in which the Employee is a
Participant hereunder, increased by any amounts that are not currently included in the Employee’s
gross income by reason of Sections 125, 132(f), 402(a)(8) or 402(h)(1)(B) of the Code.
Compensation of any Employee shall not include any part of the Contributions to the Trust Fund
hereunder, or to any other employee pension benefit plan or employee welfare benefit plan or trust
in connection therewith, now or hereafter adopted or any

- 8 -

 

amounts in respect of any options to
purchase stock granted Employees. No Employee shall be deemed to have Compensation for a Plan Year
in excess of two hundred thousand dollars ($200,000) as adjusted in accordance with the provisions
of Section 401(a)(17)(B). The cost-of-living adjustment in effect for a calendar year shall apply
to the annual compensation limit of Section 401(a)(17)(B) for the Plan Year that begins with or
within such calendar year.

Section 2.11 “Contribution”
means any Employer contribution made hereunder pursuant to Article 4 hereof.

Section 2.12 “Disqualifying Break in Service”
means a consecutive number of Breaks in Service equal to the greater of (a) five (5), or (b) the
number of an Employee’s Years of Service prior to such consecutive Breaks in Service (excluding any
Years of Service disregarded hereunder because of prior Breaks in Service).

Section 2.13 “Distribution Date”
means each January 31, April 30, July 31 or October 31.

Section 2.14 “Eligible Participant”
means, with respect to a Plan Year, a Participant who is an Employee on the last day of the Plan
Year.

Section 2.15 “Employee”
means each person who is employed as a common law employee by the Employer. For purposes of
Sections 2.19, 2.20, 2.24, and 2.35 hereof, the term “Employee” means each person employed as a
common law employee of any Affiliate.

Section 2.16 “Employer”
means the Company, Sanderson Farms, Inc. (Production Division), Sanderson Farms, Inc. (Processing
Division) and Sanderson Farms, Inc. (Foods Division), all of which are Mississippi corporations,
and any domestic Affiliate that adopts this Plan with the consent of the Board. As the context
requires, the term “Employer” as used herein shall apply collectively to all Employers under the
Plan or singly to an Employer.

Section 2.17 “Forfeiture”
means the nonvested portion of a Participant’s Account balances forfeited under Section 6.3 hereof.

Section 2.18 “Excess Amount”
means the excess of the amount of a Participant’s Annual Additions for a Limitation Year over the
Maximum Permissible Amount for the Limitation Year.

Section 2.19 “Hour of Service”
means:

          (a) Each hour:

               (1) For which an Employee is paid, or entitled to payment, for the performance of duties for
the Employer or any Affiliate during the applicable computation period;

               (2) For which an Employee is paid, or entitled to payment, by the Employer or any Affiliate on
account of a period of time during which no duties are performed (irrespective of whether the
employment relationship has terminated) due to vacation, holiday, illness, incapacity (including
disability), layoff, jury duty, military duty or leave of absence. Notwithstanding the preceding
sentence, no more than five hundred one (501) Hours of Service

- 9 -

 

are required to be credited under
this paragraph to an Employee on account of any single continuous period during which the Employee
performs no duties (whether or not such period occurs in a single computation period).

               (3) For which back pay, irrespective of mitigation of damages, is either awarded or agreed to
by the Employer or any Affiliate. The same Hours of Service shall not be credited both under
paragraph (a)(1) or (2) above, as the case may be, and under this paragraph (a)(3).

          (b) Where an Employee is credited with Hours of Service under (a)(2) above, the number of
Hours of Service to be credited and the computation period to which such Hours of Service shall be
credited shall be determined under Title 29, Code of Federal Regulations, Section 2530.200b-2(b)
and (c), which regulation is hereby incorporated into this Plan by reference.

          (c) Solely for purposes of determining whether an Employee has incurred a Break in Service,
each hour of such Employee’s customary work period during an absence that begins after December 31,
1984, and that is due to (1) pregnancy of the Employee; (2) birth of a child of the Employee; (3)
placement of a child in connection with the adoption of a child by the Employee; or (4) caring for
a child by the Employee during the period of birth or placement for adoption, shall be considered
an Hour of Service. Notwithstanding the foregoing provisions:

               (1) Hours of Service described in this paragraph (c) shall be credited to the Plan Year in
which a maternity or paternity absence begins if necessary to prevent a Break in Service in that
Plan Year, otherwise all such Hours of Service to be credited pursuant to this paragraph (c) shall
be credited to the next following Plan Year to the extent, if any, necessary to assure that the
Employee will not suffer a Break in Service in such following Plan Year;

               (2) The Administrative Committee shall have the right as a condition precedent to providing
credit under this paragraph (c) to require the Employee to certify, on such written form as may be
provided by the Administrative Committee, that the Employer’s absence was for a reason permitted
under this paragraph (c), to require the Employee to supply information relating to the number of
normal work days for which there was an absence under this paragraph (c), and to verify the
correctness of such certification by any reasonable means; and

               (3) The total number of Hours of Service required to be credited under this paragraph (c)
shall not exceed five hundred one (501) Hours of Service.

Section 2.20 “Leased Employee”
means any individual (other than a common law employee of the Employer) who, pursuant to an
agreement between the Employer and another person (the “leasing organization”), (a) has performed
services for the Employer (or for the Employer and any related person determined in accordance with
Section 414(n)(6) of the Code), (b) the services are performed on a substantially full-time basis
for a period of at least one year, and (c) the services are performed under the primary direction
and control of the Employer.

Section 2.21 “Limitation Year”
means the twelve (12)-month period ending each October 31. All qualified plans maintained by the
Employer shall use the same Limitation Year.

- 10 -

 

Section 2.22 “Maximum Permissible Amount”
means:

          (a) With respect to a Participant, except to the extent permitted under Section 414(v) of the
Code, if applicable, the lesser of:

               (1) $40,000, as adjusted for increases in the cost-of-living under Section 415(d) of the Code;
or

               (2) 100% of the Participant’s Section 415 Compensation.

          (b) The compensation limit referred to in paragraph (a)(2) above shall not apply to any
contribution for medical benefits after separation from service (within the meaning of Sections
401(h) or 419A(f)(2) of the Code) which is otherwise treated as an Annual Addition.

Section 2.23 “Named Fiduciary”
Means a named fiduciary, within the meaning of Section 402(a)(2) of ERISA.

Section 2.24 “Normal Retirement Age”
means age sixty five (65). Notwithstanding any provision of the Plan to the contrary, a
Participant shall be 100% vested in his Accounts upon attainment of Normal Retirement Age while an
Employee.

Section 2.25 “Participant”
means each Employee who has become a participant in the Plan under Article 3 hereof and any former
Employee who has an Account balance hereunder.

Section 2.26 “Plan”
means this Sanderson Farms, Inc. and Affiliates Employee Stock Ownership Plan, as amended from time
to time. The Plan is a stock bonus plan intended to be qualified under Section 401(a) of the Code
and an employee stock ownership plan, within the meaning of Section 4975(e)(7).

Section 2.27 “Plan Year”
means the fiscal year ending October 31.

Section 2.28 “Qualifying Employer Security or Securities”
means any share of capital stock now or hereafter issued by the Company.

Section 2.29 “Related Plan”
means a defined contribution plan intended to be qualified plan under Section 401(a) of the Code
maintained or established by an Affiliate.

Section 2.30 “Section 415 Compensation”
means wages within the meaning of Section 3401(a) of the Code (for the purposes of income tax
withholding at the source) but determined without regard to any rules that limit the remuneration
included in wages based on the nature or location of the employment or the services performed (such
as the exception for agricultural labor in Section 340(a)(2) of the Code). Section 415
Compensation shall include any elective deferral (within the meaning of Section 402(g)(3) of the
Code made by the Employer on behalf of an Employee and any amount contributed or deferred by the
Employer at the election of the Employee which is not includable in the Employee’s gross income by
reason of Section 125 or 132(f)(4) of the Code. Section 415 Compensation shall include only that
compensation which is actually paid to a Participant during a Plan Year and shall exclude any
amount in excess of $200,000, as adjusted by the Secretary in accordance with Section 401(a)(17)(B)
of the Code.

- 11 -

 

The cost-of-living adjustment in effect for a calendar year shall apply to the annual
compensation limit of Section 401(a)(17)(B) for the Plan Year that begins with or within such
calendar year.

Section 2.31 “Share” means a share of a Qualifying Employer Security.

Section 2.32 “Stock Account”
means the Account of a Participant which reflects his interest under the Plan attributable to Trust
Fund assets that are Qualifying Employer Securities.

Section 2.33 “Suspense Account”
means the account established pursuant to Article 8 hereof to which shall be credited unallocated
Shares acquired with the proceeds of an Exempt Loan.

Section 2.34 “Termination of Employment” or “Terminates Employment”
means an Employee’s termination of employment with the Employer and the Affiliates.

Section 2.35 “Total and Permanent Disability”
means a physical or mental condition of a Participant resulting from a bodily injury or disease or
mental disorder suffered while an Employee which renders the Participant eligible to receive Social
Security total disability benefits. Determination of eligibility to receive Social Security total
disability benefits must have an effective date of disability on or before the date of the
Participant’s Termination of Employment, and the Participant must give notice to the Employer of
such determination within ninety (90) days after the Participant receives official notice of the
determination from the Social Security Administration.

Section 2.36 “Trust Agreement”
means the Employee Stock Ownership Plan Trust Agreement, effective November 1, 1993, between the
Trustee named therein and the Company, made and entered into for the establishment of a trust to
receive all Contributions which may be made to the order of the Trustee under the Plan, and any and
all amendments of the Trust Agreement.

Section 2.37 “Trustee”
mean the trustee(s) named under the Trust Agreement and its duly appointed successors.

Section 2.38 “Trust Fund”
means all cash, securities and other property held by the Trustee pursuant to the terms of the
Trust Agreement, together with any income therefrom.

Section 2.39 “Year of Service”
means a computation period in which an Employee completes at least one thousand (1,000) Hours of
Service.

          (a) For purposes of determining an Employee’s eligibility to participate hereunder, an
Employee’s first computation period shall be the twelve (12)-month period beginning on the
Employee’s date of hire by the Employer. The second and all subsequent computation periods shall
be the Plan Year, beginning with the first Plan Year beginning after the Employee’s employment
commencement date.

          (b) For purposes of determining an Employee’s vested percentage under Section 6.1 hereof, the
computation period shall be the Plan Year. If, however, an Employee does not complete one thousand
(1,000) Hours of Service during the Plan Year in which he was first hired by the Employer or during
the next following Plan Year, but completes one thousand (1,000) Hours of Service during the twelve
(12) month period beginning on his date of hire by

- 12 -

 

the Employer, the Employee shall be credited
with one (1) Year of Service under this paragraph (b) for such twelve (12) month period.

Section 2.40 “Valuation Date”
means the last day of each Plan Year and any other date on which a special valuation is made, as
designated by the Administrative Committee.

ARTICLE 3

ELIGIBILITY AND PARTICIPATION

Section 3.1 Participation.

          (a) Each Employee or former Employee who was a Participant on July 31, 2006, shall be a
Participant on August 1, 2006, if he is an Employee or has an Account balance on such date.

          (b) Each other Employee who has completed one (1) Year of Service and has attained twenty-one
(21) years of age shall become a Participant on the date on which the Employee satisfies the
foregoing age and service requirements, provided that he is an Employee on such date.

          (c) Notwithstanding (a) and (b) above, the following individuals shall not be eligible to
participate in the Plan:

               (1) An Employee who is included in a unit of Employees covered by an agreement which the
Secretary of Labor finds to be a collective bargaining agreement between Employee representatives
and the Employer if there is evidence that retirement benefits were the subject of good faith
bargaining between such Employee representatives and such one or more of the Employers, unless the
collective bargaining agreement expressly permits the Employee’s participation hereunder.

               (2) A Leased Employee; or

               (3) Any individual who is classified as an independent contractor by an Employer, regardless
of the classification placed on such person by the Internal Revenue Service or other governmental
agency or a court of competent jurisdiction.

Section 3.2 Termination of Participation.

          (a) Each Participant shall remain a Participant until he Terminates Employment and receives a
distribution of the entire amount of his Account balances. In the event that a Participant
Terminates Employment and is subsequently re-employed as an Employee by the Employer, subject to
Section 3.1(c) hereof, he shall resume active participation in the Plan on the date of his
re-employment. Notwithstanding the preceding, if a Participant Terminates Employment when he has a
vested percentage of zero under Section 6.1 hereof and is reemployed as an Employee of the Employer
after incurring a Disqualifying Break in Service, he

- 13 -

 

shall be required to satisfy the service
requirement of Section 3.1 hereof before he can resume active participation in the Plan.

          (b) If an Employee Terminates Employment prior to becoming a Participant and is subsequently
re-employed by the Employer, the Employee must satisfy the eligibility requirements of 3.1 hereof
to become a Participant. The Employee’s prior Years of Service shall be counted in determining
whether the Employee satisfies the service requirements of Section 3.1(b) hereof if the Employee is
re-employed before incurring a Disqualifying Break in Service.

Section 3.3 Notification of Participation.

     The Employers shall notify each Eligible Employee of his participation in the Plan no later
than the expiration of ninety (90) days following his first Plan Year of participation.

ARTICLE 4

EMPLOYER CONTRIBUTIONS

Section 4.1 By Employers.
All Contributions under the Plan shall be made by the Employer, and no Contributions shall be
required or permitted of any Employee.

Section 4.2 Amount of Contribution.

          (a) Subject to the conditions and limitations of the Plan, including Section 4.3 hereof,
Contributions shall be made by the Employer to the Trust Fund for each Plan Year in cash or in
Qualifying Employer Securities in an amount equal to the sum of the following:

               (1) Such amount, if any, as shall be determined by the Boards of Directors of the Company and
the Employers; and

               (2) Such amount, if any, as shall be required to permit the Trustee to meet the obligations of
the Plan under any Exempt Loan.

          (b) Contributions, if any, under the Plan for each Plan Year shall be paid to the Trust Fund
not later than the due date for filing the Employer’s federal income tax return for the Plan Year,
including any extensions on such due date; provided, however, that Contributions shall be made at
such times as to permit the Trustee to meet the Plan’s repayment obligations under any Exempt Loan.

          (c) In the event that a Contribution is paid to the Trust Fund by reason of a mistake of fact
as determined in good faith by the Employer, upon the Employer’s request made within one (1) year
after the payment to the Trust Fund, the Administrative Committee shall promptly direct the Trustee
to return the Contribution to the Employer.

          (d) All Contributions to the Plan are conditioned upon their deductibility under Section 404
of the Code. If a deduction for a Contribution is disallowed, upon the

- 14 -

 

Employer’s request made
within one (1) year after the disallowance, the Administrative Committee shall promptly direct the
Trustee to return the Contribution to the Employer.

Section 4.3 Limitation on Annual Additions.

          (a) (1) If a Participant does not participate in a Related Plan, then the amount of Annual
Additions which may be credited to the Participant’s Accounts for any Limitation Year shall not
exceed the Maximum Permissible Amount. If a Contribution otherwise allocable to the Participant’s
Accounts would cause the Participant’s Annual Additions
for the Limitation Year to exceed the Maximum Permissible Amount, then the amount of the
Contribution otherwise allocable to the Participant’s Accounts shall be reduced so that the
Participant’s Annual Additions for the Limitation Year will equal the Maximum Permissible Amount.

               (2) Prior to determining a Participant’s Compensation for a Limitation Year, the Employer may
determine the Maximum Permissible Amount for a Participant on the basis of a reasonable estimation
of the Participant’s Compensation for the Limitation Year. As soon as is administratively feasible
after the end of the Limitation Year, the Maximum Permissible Amount for the Limitation Year will
be determined on the basis of the Participant’s Compensation for the Limitation Year. If there is
an Excess Amount, it will be disposed of as follows:

                    (A) If the Participant is an Employee at the end of the Limitation Year, then the Excess
Amount in the Participant’s Accounts will be used to reduce the Contributions
(including- Forfeitures) allocated thereto for such Participant in the next Limitation
Year, and each succeeding Limitation Year if necessary; or

                    (B) If the Participant is not an Employee at the end of the Limitation Year, then the Excess
Amount will be held unallocated in a suspense account and applied to reduce Contributions
(including Forfeitures) for Eligible Participants in the next Limitation Year, and each succeeding
Limitation Year if necessary.

          (b) If a suspense account is in existence at any time during a Limitation Year pursuant to
this section, then such suspense account will not participate in the allocation of the Trust Fund’s
investment gains and losses.

          (c) (1) If a Participant hereunder is a participant under one or more Related Plans during a
Limitation Year, the Annual Additions which may be credited to a Participant’s Accounts hereunder
for the Limitation Year shall not exceed the Maximum Permissible Amount reduced by the Annual
Additions credited to the Participant’s account(s) under the Related Plan(s) for the same
Limitation Year. If the Annual Additions with respect to the Participant under the Related Plan(s)
are less than the Maximum Permissible Amount and the Contributions that would otherwise be
allocable to the Participant’s Account under this Plan would cause the Annual Additions for the
Limitation Year to exceed the Maximum Permissible Amount, then the Contribution otherwise allocable
to the Participant’s Accounts hereunder shall be reduced so that the Annual Additions under this
Plan and the Related Plan(s) for the Limitation Year shall equal the Maximum Permissible Amount.
If the Annual Additions with

- 15 -

 

respect to the Participant under such Related Plan(s) in the aggregate
are equal to or greater than the Maximum Permissible Amount, then no Contribution will be allocated
to the Participant’s Accounts hereunder for the Limitation Year.

               (2) If a Participant’s Annual Additions under this Plan and one or more Related Plan(s) result
in an Excess Amount for a Limitation Year, then the Excess Amount will be deemed to consist of the
Annual Additions last allocated. If an Excess Amount was allocated to a Participant on a Valuation
Date of this Plan which coincides with a Valuation Date of such Related Plan(s), then the Excess
Amount attributable to this Plan will be the product of:

                    (A) The total Excess Amount allocated as of such date, times

                    (B) The ratio of (I) the Annual Additions allocated to the Participant’s Accounts for the
Limitation Year as of such date under this Plan to (II) the total Annual Additions allocated to the
Participant’s Accounts for the Limitation Year as of such date under this Plan and all such Related
Plan(s).

               (3) Any Excess Amount attributable to this Plan will be disposed of in the manner described in
subsection (a)(2) above.

          (d) If
no more than one-third
(1/3) of the Contributions for a Plan Year which are deductible
under Section 404(a)(9) of the Code are allocated to the Accounts of highly compensated employees
(within the meaning of Section 414(q) of the Code) of the Employer, the Maximum Permissible Amount
shall not apply to:

               (1) Forfeitures of Qualifying Employer Securities if such Securities were acquired with the
proceeds of an Exempt Loan, or

               (2) Contributions which are deductible under Section 404(a)(9)(B) of the Code and charged
against Participant Accounts.

          (e) No portion of the Trust Fund attributable to (or allocable in lieu of) Qualifying Employer
Securities acquired by the Plan in a sale to which Section 1042 of the Code applies may accrue (or
be allocated directly or indirectly under any Related Plan during the nonallocation period (as
defined in Section 409(n)(3)(C) of the Code), for the benefit of (1)(A) any taxpayer who makes an
election under Section 1042(a) of the Code with respect to Qualifying Employer Securities, or (B)
any individual who is related to the taxpayer or the decedent (within the meaning of Section 267(b)
of the Code), or (2) any other person who owns (after application of Section 318(a) of the Code
applied without regard to the Employee trust exception) more than twenty-five (25) percent of any
class of outstanding stock of the Company or of any corporation which is a member of the same
controlled group of corporations (within the meaning of Section 409(1)(4) of the Code) as the
Company, or the total value of any class of outstanding stock of the Company or any such
corporation.

- 16 -

 

ARTICLE 5

ACCOUNTS; ALLOCATIONS; AND ACCOUNTING

Section 5.1 Accounts.

          (a) The Administrative Committee shall establish a separate Cash Account and Stock Account in
the name of each Participant.

          (b) Cash credited to a Participant’s Cash Account may at any time be used to purchase
Qualifying Employer Securities from any source, subject to Section 9.5 hereof. Upon the purchase
of Shares of Qualifying Employer Securities with such cash, such Shares shall be
credited to the Participant’s Stock Account, and the Participant’s Cash Account shall be
charged by the amount of such cash.

          (c) The Administrative Committee and/or the Trustee may maintain such accounts and subaccounts
as they deem necessary or appropriate for administration of the Plan and Trust Fund, including a
“contribution account” to which cash and/or Qualifying Employer Securities contributed to the Plan
are allocated pending allocation to Participants’ Accounts.

Section 5.2 Allocation of Contributions and Forfeitures Among Eligible Participants.

          (a) Subject to the limitation of Section 4.3 hereof, as of the last Valuation Date of each
Plan Year, the Stock Account maintained for each Eligible Participant shall be credited with the
Participant’s proportionate share of (1) any Contributions for the Plan Year made in the form of,
or invested in (as of the Valuation Date), Qualifying Employer Securities, including any shares of
Qualifying Employer Securities released from the Suspense Account pursuant to Sections 8.2 and 8.4
hereof, and (2) any Forfeitures of Qualifying Employer Securities arising during the Plan Year.

          (b) Subject to the limitation of Section 4.3 hereof, as of the last Valuation Date of each
Plan Year, the Cash Account maintained for each Eligible Participant shall be credited with the
Participant’s proportionate share of (1) any Contributions for the Plan Year made or held in the
form of cash, and (2) any Forfeitures of cash arising during the Plan Year.

          (c) An Eligible Participant’s proportionate share of Contributions and Forfeitures for a Plan
Year shall equal the ratio that such Eligible Participant’s Compensation for the Plan Year bears to
the aggregate Compensation of all Eligible Participants for the Plan Year.

Section 5.3 Allocation of Income, Losses and Expenses.

          (a) As of each Valuation Date, the Cash Account maintained for each Participant shall be
credited with the Participant’s proportionate share of any net income (or loss) of the Trust Fund
since the preceding Valuation Date. It shall be debited for all distributions and payments
properly made from the Cash Account since the preceding Valuation Date, including but not limited
to, its proportionate share of any cash payments made under the Plan for the purchase of shares of
Qualifying Employer Securities or for the repayment of principal and interest on any Exempt Loan
since such date.

- 17 -

 

          (b) The net income (or loss) of the Trust Fund for any valuation period will be determined as
of the relevant Valuation Date. Each Participant’s share of the Trust Fund’s net income (other
than dividends allocated in accordance with Section 5.4 hereof) or loss for the valuation period in
question shall be allocated to the Participant’s Cash Account in the ratio that the Participant’s
aggregate Account balances as of the preceding Valuation Date, less any distributions and payments
therefrom since such date, bears to the aggregate of all Participant Account balances as of the
preceding Valuation Date, less all distributions and payments therefrom since such date. The net
income (or loss) of the Trust Fund includes the increase (or decrease) in the fair market value of
Trust Fund (other than Shares of Qualifying Employer Securities), interest income, dividends and
other income and gains (or losses) attributable to the Trust Fund (other than any dividends
allocated in accordance with Section 5.4 hereof since the
preceding Valuation Date. The computation of net income (or loss) of the Trust Fund shall not
take into account any interest paid by the Trust Fund on an Exempt Loan. For this purpose, the
term “valuation period” means a period beginning with the Valuation Date immediately preceding the
Valuation Date in question and ending on the Valuation Date in question.

Section 5.4 Allocation of Dividends.

          (a) Any cash dividend received on shares of Qualifying Employer Securities allocated to a
Participant’s Stock Account as of the record date of the dividend shall, in the sole discretion of
the Administrative Committee, either be:

               (1) Allocated to the Participant’s Cash Account;

               (2) Used by the Trustee to make payments on an Exempt Loan; provided, however, that no cash
dividend paid on Shares of Qualifying Employer Securities allocated to a Participant’s Stock
Account shall be applied to make payments on an Exempt Loan unless Qualifying Employer Securities
with a fair market value of not less than the amount of the cash dividend are allocated to the
Participant’s Stock Account.

          (b) Any cash dividends received on unallocated shares of Qualifying Employer Securities shall,
in the sole discretion of the Administrative Committee, either be:

               (1) Allocated among Participant Cash Accounts in the ratio (determined as of the record date
of the dividend) that the number of Shares of Qualifying Employer Securities allocated to each
Participant’s Stock Account as of the preceding Valuation Date, less any distributions therefrom
since such date, bears to the total number of Shares of Qualifying Employer Securities allocated to
all Participants’ Stock Accounts as of the preceding Valuation Date, less all distributions
therefrom since such date;

               (2) Used by the Trustee to make payments on an Exempt Loan.

          (c) As of each Valuation Date, the Stock Account maintained for each Participant shall be
credited with any stock dividend received on Shares of Qualifying Employer Securities allocated to
the Participant’s Stock Account. Any stock dividends received on unallocated shares of Qualifying
Employer Securities during a valuation period (as defined in Section 5.3 hereof) shall be allocated
to each Participant’s Stock Account in the ratio that the Participant’s aggregate Account balances
as of the preceding Valuation Date, less any

- 18 -

 

distributions therefrom since such date, bear to the
aggregate Account balances of all Participants as of the preceding Valuation Date, less any
distributions therefrom since such date.

Section 5.5 Accounting Procedures.

     The Administrative Committee shall establish accounting procedures for the purpose of making
the allocations to Participants’ Accounts provided for in this Article 5. The Administrative
Committee shall maintain adequate records of the cost basis of shares of Qualifying Employer
Securities allocated to each Participant’s Stock Account. From time to time, the Administrative
Committee may modify its accounting procedures for the purposes of achieving equitable and
nondiscriminatory allocations among Participant Accounts, in
accordance with the provisions of this Article 5 and the applicable requirements of the Code
and ERISA.

Section 5.6 Voting and Tender Rights — Qualifying Employer Securities.

          (a) For so long as the Qualifying Employer Securities are a class of securities which are
required to be registered under Section 12 of the Securities Exchange Act of 1934, or a class of
securities which would be required to be so registered except for the exemption from registration
provided in subsection (g)(2)(H) of Section 12 of said Act, each Participant shall be entitled to
direct the Trustee as to the manner in which Qualifying Employer Securities allocated to his Stock
Account is to be voted.

          (b) The Trustee shall vote Shares of Qualifying Employer Securities allocated to Participant
Stock Accounts in accordance with the directions received from the Participants. If the Trustee
does not receive timely and proper directions from one or more Participants regarding the voting of
any Shares of Qualifying Employer Securities held in the Trust Fund (including unallocated Shares),
the Trustee shall vote those Shares in the same proportion, for and against propositions submitted
to the vote of the shareholders, as the Trustee votes Shares for which it receives timely and
proper directions.

          (c) Each Participant shall be entitled to direct the Trustee whether to tender the Shares of
Qualifying Employer Securities allocated to the Participant’s Stock Account in response to a tender
offer. After the Participants have had an opportunity to cast votes on such matter as provided
herein and said votes are counted, the Trustee shall tender only those Shares on such matter for
which the Trustee receives timely and proper tender instructions. The Trustee shall not tender any
Shares (including unallocated Shares) for which it does not receive timely and property directions.

          (d) Notwithstanding anything contained herein to the contrary, any voting or tender direction
given by a Participant pursuant to this Section 5.6 shall not be disclosed to the Employers and
shall be held confidential by the Trustee.

          (e) This Section 5.6 shall be implemented by such rules and regulations as may be adopted by
the Trustee and the Administrative Committee from time to time. Not in limitation of the
foregoing, such rules and regulations may set time limits for Participants to cast votes or give
tender instructions on any matter.

- 19 -

 

Section 5.7 Annual Statements.
On or before the expiration of four (4) calendar months after each Valuation Date which is the
last day of the Plan Year, or as soon as administratively feasible thereafter, the Administrative
Committee shall upon information furnished by the Trustee, or the Trustee shall upon direction of
the Administrative Committee, make reports to each Participant as of the Valuation Date showing the
opening and closing balances in each of the Participant’s Accounts for the Plan Year and all
transactions involving the Participant’s Accounts for the Plan Year.

ARTICLE 6

VESTING

Section 6.1 General.

          (a) Subject to 6.2 hereof, a percentage of the amounts credited to a Participant’s Accounts
shall become vested and nonforfeitable on the basis of his completed Years of Service with the
Affiliates according to the following schedule:

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

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

               (1) Sixty (60) days after the amendment is adopted;

               (2) Sixty (60) days after the amendment becomes effective; or

               (3) Sixty (60) days after the Participant is issued written notice of the amendment by the
Employer.

- 20 -

 

Section 6.2 Retirement, Death and Disability.
Upon the death or Total and Permanent Disability of a Participant while he is an Employee, or
upon his Retirement, the Participant shall become 100% vested in the entire amount credited to the
Participant’s Accounts.

Section 6.3 Breaks in Service; Forfeitures

          (a) In the case of a Participant who incurs one or more consecutive Breaks in Service, but not
a Disqualifying Break in Service, all of the Participant’s Years of Service prior to and after such
Breaks in Service shall be taken into account in determining the Participant’s vested percentage
under Section 6.1 hereof.

          (b) Notwithstanding (a) above, in the case of a Participant who incurs a Break in Service, the
Participant’s Years of Service before such Break in Service shall not be taken into account for
purposes of determining the Participant’s vested percentage under Section 6.1 hereof until the
Participant has completed one (1) Year of Service after his return.

          (c) In the case of a Participant who Terminates Employment when he is partially vested in his
Accounts, incurs a Disqualifying Break in Service, but does not take a distribution of his vested
Account balances, the Participant’s nonvested Account balances shall be forfeited on the last day
of the Plan Year in which the Participant incurs such a Disqualifying Break in Service and shall be
reallocated in accordance with Section 5.2 hereof. The Participant’s Years of Service, if any,
after such Disqualifying Break in Service shall not be taken into account in determining his or her
vested percentage in the amounts credited to his Accounts prior to such Disqualifying Break in
Service.

          (d) In the case of a Participant who Terminates Employment and receives a distribution of his
vested Account balances pursuant to Section 7.1 hereof when the Participant is partially vested in
his Accounts, the Participant’s nonvested Account balances shall be forfeited upon such
distribution and reallocated in accordance with Section 5.2 hereof. If the Participant again
becomes an Employee prior to incurring a Disqualifying Break in Service, the Participant’s
forfeited Account balances (without earnings) shall be restored if the Participant repays to the
Plan the full amount of the foregoing distribution prior to the expiration of the five-year period
beginning on the day after the date on which the Participant again becomes an Employee.

          (e) Notwithstanding paragraphs (b) and (c) above, in the case of a Participant who Terminates
Employment when he has a vested percentage of zero under Section 6.1 hereof, the Participant shall
be deemed to have received a distribution of his vested Account balances, and his nonvested Account
balances shall be forfeited, as of the last day of the Plan Year in which his Termination of
Employment occurs, and the Participant’s forfeited Account balances shall be reallocated in
accordance with Section 5.2 hereof. If the Participant is reemployed by the Employer prior to
incurring a Disqualifying Break in Service, his forfeited Account balances (without earnings) shall
be restored to him.

          (f) If a Participant’s forfeited Account balances are restored under paragraph (c) or (d)
above, the source of such restoration shall be other Forfeitures arising under paragraphs (b), (c)
and (d) above. If such Forfeitures are insufficient to restore the Account balances under

- 21 -

 

paragraph (c) or (d) above, the Employer shall contribute the amount required to restore the
Account balances.

          (g) Forfeitures arising under this Section 6.3 shall be held in a suspense account pending
reallocation under Section 5.2(f) hereof.

Section 6.4 Increase in Vesting.

     An Account balance with respect to which a Participant’s vested percentage may increase under
Section 411 of the Code shall be computed such that at any relevant time an Employee’s vested
percentage is not less than an amount (“X”) determined by the formula: X=P(AB+D)-D. For purposes
of applying the formula: P is the vested percentage at the relevant time; AB is the
Account Balance at the relevant time; D is the amount of the distribution; and the relevant
time is the time at which, under the Plan, the vested percentage of the Participant’s Account
cannot increase.

ARTICLE 7

DISTRIBUTIONS

Section 7.1 Entitlement to Distribution.
A Participant (or his Beneficiary) shall be entitled to a distribution of the Participant’s
vested Account balances upon the Participant’s Retirement Date, Total and Permanent Disability or
other Termination of Employment.

Section 7.2 Method and Time of Distribution.

          (a) Distribution of a Participant’s vested Account balances shall be made in one lump sum
payment in whole shares of Qualifying Employer Securities, plus cash for fractional shares.

          (b) A Participant (or his Beneficiary) may elect a distribution of the Participant’s vested
Accounts as of any Distribution Date coincident with or next following the Participant’s
Termination of Employment. The Administrative Committee shall make such distribution on, or as
soon as practicable after, the elected Distribution Date, provided, however, that the Participant
(or his Beneficiary) files his distribution election with the Administrative Committee with such
advance notice as the Administrative Committee shall prescribe. All distribution elections shall
be made in accordance with rules prescribed by the Administrative Committee.

          (c) Except as provided in Section 7.3 hereof, or unless a Participant otherwise elects,
distribution of the Participant’s vested Account balances will be made not later than the 60th day
after the latest of the close of the Plan Year in which occurs: (1) the date on which he attains
Normal Retirement Age; (2) the 10th anniversary of the date on which he became a Participant, or
(3) his Termination of Employment. This paragraph (d) shall not apply to any Shares of Qualifying
Employer Securities acquired with the proceeds of an Exempt Loan until the close of the Plan Year
in which the Exempt Loan is repaid in full.

- 22 -

 

Section 7.3 Mandatory Distributions.
If, upon Termination of Employment for any reason, a Participant’s vested Account balances do
not exceed one thousand dollars ($1,000), then the Administrative Committee shall direct the
Trustee to distribute the vested Account balances to the Participant as soon as practicable after
the Distribution Date coincident with or next following the Participant’s Termination of
Employment.

Section 7.4 Designation of Beneficiary.

          (a) Each Participant may designate a person or persons who shall receive a distribution
payable hereunder on the death of the Participant, and shall, subject to paragraph (b) below, have
the right to revoke any such designation. Any such designation shall be evidenced by a written
instrument filed with the Administrative Committee and signed by the Participant. The designation
by a Participant of a Beneficiary who is not the Participant’s spouse shall require a consent (made
in accordance with paragraph (b) below) thereto by the Participant’s surviving spouse, or a
demonstration that such consent may not be obtained or that there is no surviving spouse, as
described further in paragraph (b) below. If a Participant designates a trust as Beneficiary, the
beneficiaries of the trust with respect to the Participant’s interest in the Plan shall be treated
as designated Beneficiaries for purposes of Article 15 hereof, if such beneficiaries are
individuals and the requirements of Treasury Regulations Section 1.401(a)(9)-4, Q&A 5 are met. If
no Beneficiary designation is on file with the Administrative Committee at the time of the death of
a Participant, or if such designation is not effective for any reason as determined by the
Administrative Committee, then payment of the distribution shall be made to the Participant’s
estate.

          (b) A Participant may designate as his Beneficiary a person who is not his spouse if either
(1) (A) his spouse consents in writing to such designation, (B) the designation provides that it
may not be changed without spousal consent (or the consent of the spouse expressly permits
designations by the Participant without further consent by the spouse), and (C) the spouse’s
consent acknowledges the effect of such election and is witnessed by a representative of the Plan
or a notary public, or (2) it is established to the satisfaction of the Administrator that such
consent may not be obtained because there is no spouse, because the spouse cannot be located, or
because of such other circumstances as are prescribed by Treasury Regulations. Any consent by a
spouse (or establishment that the consent of a spouse may not be obtained) shall be effective only
with respect to such spouse.

          (c) Notwithstanding paragraphs (a) and (b) above, upon the dissolution of the marriage of a
Participant, the Administrator shall treat the Participant’s former spouse as having predeceased
the Participant with respect to any designation of the former spouse as the Participant’s
Beneficiary under paragraph (a) above unless either (1) after the dissolution of the marriage, the
Participant files with the Administrator another written instrument executed by the Participant
explicitly designating the former spouse as the Participant’s Beneficiary, or (2) a qualified
domestic relations order, within the meaning of Section 414(p) of the Code, explicitly requires the
Participant to maintain the former spouse as his Beneficiary. In any case in which the
Participant’s former spouse is treated as having predeceased the Participant, no heir or other
beneficiary of the former spouse shall be entitled to receive any benefits from the Plan as a
Beneficiary except as otherwise provided in the Participant’s written Beneficiary designation.

- 23 -

 

Section 7.5 Required Beginning Date.
Notwithstanding any other provision of the Plan, the entire interest of each Participant (a) shall
be distributed not later than the Required Beginning Date, or (b) shall be distributed, beginning
not later than the Required Beginning Date, in accordance with regulations prescribed by the
Secretary over the life of such Participant or over the lives of such Participant and a designated
Beneficiary (or over a period not extending beyond the life expectancy of such Participant or the
life expectancy of such Participant and a designated beneficiary). The term “Required Beginning
Date” means April 1 of the calendar year following the later of (a) the calendar year in which the
Participant attains age seventy and one-half (701/2), or (b) the calendar year in which the
Participant retires, except that clause (a) shall not apply in the case of a Participant who is a
five percent (5%) owner (as defined in Section 416 of the Code) with respect to the Plan Year
ending in the calendar year in which the Participant attains the age of seventy and one-half (701/2).
Notwithstanding the above, any Participant (other than a five-percent owner) who attains age
seventy and one-half (701/2) before 1999 may elect to commence distributions by April 1 of the
calendar year following the calendar year in which he attains age seventy and one-half (701/2), or
elect to defer payment until April 1 of the calendar year following the calendar year in which the
Participant retires.

Section 7.6 Distributions of General Employees’ Profit Sharing Plan Accounts.

Notwithstanding any other provisions of this Article 7, if a Participant (or his Beneficiary)
elected prior to August 1, 2006, to receive that portion of the Participant’s Accounts attributable
to the Participant’s account balance under the General Employees’ Profit Sharing Plan as of October
31, 1993, in the form of an annuity, the Participant (or his Beneficiary) shall continue to receive
annuity payments on and after August 1, 2006.

Section 7.7 Rollover Treatment.

          (a) Notwithstanding any provision of the Plan to the contrary that would otherwise limit a
Distributee’s election under this Section 7.7, a Distributee may elect, at the time and in the
manner prescribed by the Administrative Committee to have any portion of an Eligible Rollover
Distribution paid directly to an Eligible Retirement Plan specified by the Distributee in a Direct
Rollover.

          (b) (1) An “Eligible Rollover Distribution” is any distribution of all or any portion of the
balance to the credit of the Distributee, except that an Eligible Rollover Distribution does not
include (i) any distribution that is one of a series of substantially equal periodic payments (not
less frequently than annually) made for the life (or life expectancy) of the Distributee or the
joint lives (or joint life expectancies) of the Distributee and the Distributee’s designated
beneficiary, or for a specified period of ten (10) years or more; (ii) any distribution to the
extent such distribution is required under Section 401(a)(9) of the Code; (iii) the portion of any
distribution that is not includible in gross income (determined without regard to the exclusion for
net unrealized appreciation with respect to Shares of Qualifying Employer Securities), and (iv) any
amount that is distributed as a “hardship distribution” as that term is described in Section
401(k)(2)(B)(i)(IV) of the Code.

               (2) Notwithstanding (b)(1) above, a portion of a distribution shall not fail to be an Eligible
Rollover Distribution merely because the portion consists of after-tax employee contributions which
are not includable in gross income. However, such portion may be

- 24 -

 

transferred only to an individual
retirement account or annuity described in Section 408(a) or (b) of the Code, or to a qualified
defined contribution plan described in Section 401(a) or 403(a) of the Code that agrees to
separately account for amounts so transferred, including separately accounting for the portion of
such distribution which is includable in gross income and the portion of such distribution which is
not so includable.

          (c) An Eligible Retirement Plan is any of the following that accepts a Distributee’s Eligible
Rollover Distribution: (1) an individual retirement account described in Section 408(a) of the
Code, (2) an individual retirement annuity described in Section 408(b) of the Code, (3) an annuity
plan described in Section 403(a) of the Code, (4) a qualified trust described in Section 401(a) of
the Code, (5) an annuity contract described in Section 403(b) of the Code, and (6) an eligible plan
under Section 457(b) of the Code which is maintained by a state, political subdivision of a state,
or any agency or instrumentality of a state or political subdivision of a state and which agrees to
separately account for amounts transferred into such plan from this plan.

          (d) A Distributee includes an Employee or former Employee. In addition, the Employee’s or
former Employee’s surviving spouse and the Employee’s or former Employee’s spouse or former spouse
who is the alternate payee under a qualified domestic relations order, as defined in Section 414(p)
of the Code, are Distributees with regard to the interest of the spouse or former spouse.

          (e) A Direct Rollover is a payment by the Plan to the Eligible Retirement Plan specified by
the Distributee.

Section 7.8 30-Day Notice of Distribution Rights.
If a distribution is one to which Sections 401(a)(11) and 417 of the Code do not apply, such
distribution may commence less than thirty (30) days after the notice required under Treasury
Regulation Section 1.411(a)-11(c) is given, provided that:

               (a) The Administrative Committee clearly informs the Participant that the Participant has a
right to a period of at least thirty (30) days after receiving the notice to consider the decision
of whether or not to elect a distribution (and, if applicable, a particular distribution option),
and

               (b) The Participant, after receiving the notice, affirmatively elects a distribution.

Section 7.9 Hardship Distributions

          (a) A Participant who is fully vested in his Accounts may make written application to the
Administrative Committee to withdraw all or part of the Participant’s Account balances. Such an
application shall be approved by the Administrative Committee only if the Administrative Committee
shall determine that the withdrawal is necessary to satisfy an immediate and heavy financial need
of the Participant. Distribution of such withdrawal shall be made to the Participant in a lump sum
payment of whole shares of Qualifying Employer Securities, plus cash for fractional shares, as soon
as practicable after the withdrawal is approved by the Administrative Committee.

- 25 -

 

          (b) A Withdrawal from a Participant’s Account pursuant this Section 7.9 shall not exceed the
lesser of:

               (1) The Participant’s Account balances; or

               (2) Such amount as the Administrative Committee determines to be necessary to relieve the
immediate and heavy financial need established by the Participant, including any amounts necessary
to pay any federal, state, or local income taxes or penalties reasonably anticipated to result from
such withdrawal.

          (c) The Administrative Committee shall promulgate (and may from time to time amend) rules and
regulations prescribing the procedures to be followed in requesting a hardship withdrawal and the
circumstances which will be deemed to warrant a withdrawal to meet an immediate and heavy financial
need.

          (d) Determinations of the existence of an immediate and heavy financial need shall be made by
the Administrative Committee on the basis of all relevant facts and circumstances. Without
limiting the circumstances which will be deemed to constitute immediate and heavy financial needs,
a withdrawal shall be deemed to be made on account of an immediate and heavy financial need of a
Participant if the withdrawal is on account of the following:

               (1) Expenses for (or necessary to obtain) medical care that would be deductible by the
Participant under Section 213(d) of the Code (determined without regard to whether the expenses
exceed 7.5% of adjusted gross income);

               (2) Costs directly related to the purchase of a principal residence for the Participant
(excluding mortgage payments);

               (3) Payment of tuition, related educational fees, and room and board expenses, for up to the
next 12 months of post-secondary education for the Participant, or the Participant’s spouse,
children, or dependents (as defined in Section 152 of the Code and without regard to Sections
152(b)(1), (b)(2) and (d)(1)(B) of the Code);

               (4) Payments necessary to prevent the eviction of the Participant from the Participant’s
principal residence or foreclosure on the mortgage on that residence;

               (5) Payments for burial or funeral expenses for the Participant’s deceased parent, spouse,
children or dependents (as defined in Section 152 of the Code and without regard to Section
152(d)(1)(B) of the Code);

               (6) Expenses for the repair of damage to the Participant’s principal residence that would
qualify for the casualty deduction under Section 165 of the Code (determined without regard to
whether the loss exceeds 10% of adjusted gross income); or

               (7) Such other circumstances as the Commissioner of Internal Revenue may, through the
publication of revenue rulings, notices, and other documents of

- 26 -

 

general applicability, determine
constitute immediate and heavy financial needs for purposes of Section 401(k) of the Code.

          (e) A distribution will not be treated as necessary to satisfy an immediate and heavy
financial need of a Participant to the extent that the amount of the distribution exceeds the
amount required to relieve the financial need or such need may be satisfied from other resources
that are reasonably available to the Participant. The determination of whether a distribution
is necessary to satisfy a financial need shall be made on the basis of all relevant facts and
circumstances by the Administrative Committee. In making such determination with respect to any
hardship distribution to be made, the Administrative Committee may rely upon a Participant’s
representation that the need cannot be relieved by the following:

               (1) Reimbursement or compensation by insurance or otherwise;

               (2) Reasonable liquidation of the Participant’s assets, to the extent that such liquidation
would not itself cause an immediate and heavy financial need;

               (3) Other distributions or nontaxable (at the time of the loan) loans from Related Plans; or

               (4) Borrowing from commercial sources on reasonable commercial terms.

Section 7.10 Missing Persons.
In the event the whereabouts of a person entitled to benefits under the Plan cannot be
determined after diligent search by the Administrative Committee or the Trustee, and the person’s
whereabouts continue to be unknown for a period of five (5) years, then the Accounts of the person
shall be forfeited. If the person is subsequently located, his Accounts shall be restored to him
without earnings.

     Section 7.11 Diversification of Investments.

          (a) With respect to all Qualifying Employer Securities acquired after 1986, each Qualified
Participant may elect under the provisions of Section 401(a)(28)(B) of the Code within ninety (90)
days after the close of each Plan Year in the Qualified Election Period to receive a distribution
of at least twenty-five (25) percent of the Participant’s Accounts hereunder (to the extent such
portion exceeds the amount to which a prior election under this Section applies). In the case of
the election year in which the Participant can make his last election, the preceding sentence shall
be applied by substituting “fifty (50) percent” for “twenty-five (25) percent”.

          (b) The term “Qualified Participant” means any employee who has completed at least ten (10)
years of participation under the Plan and has attained age fifty-five (55).

          (c) The term “Qualified Election Period” means the six (6) Plan Years beginning with the Plan
Year after the Plan Year in which the Participant attains age fifty-five (55) (or, if later,
beginning with the Plan Year after the first Plan Year in which the individual first became a
Qualified Participant).

- 27 -

 

          (d) In the event a Qualified Participant makes a diversification election with respect to his
Accounts under the provisions of this Section, the Trustee shall distribute to the Participant the
portion of the Participant’s Accounts covered by the election within ninety (90) days after the
period during which the election may be made.

          (e) All distributions under this Section shall be made in whole shares of Qualifying Employer
Securities, plus cash for fractional shares.

Section 7.12 In-Service Distributions at Age 62.

          (a) Notwithstanding the preceding provisions of this Article 7 to the contrary, any
Participant who has completed ten (10) or more Years of Service and has attained age sixty-two (62)
may elect to receive a distribution of the entire amount of his vested Accounts or in two or more
payments depending upon the age of the Participant at the end of the Plan Year in which an election
is made. An election under this Section may be made in writing on a form provided by the
Administrative Committee no later than the end of the Plan Year during which the election for
distribution is made. Once made, an election under this Section shall be binding and irrevocable.
The first payment shall be made to the Participant within ninety (90) days after the end of the
Plan Year in which an election to receive a distribution is made or as soon as administratively
feasible thereafter, and any successive payments shall be made within similar time periods after
the end of the immediately succeeding Plan Year(s) if more than one (1) payment is made.

          (b) The schedule of payments shall be as follows;

	 	 	 
	Age of Participant at the end of	 	 
	the Plan Year in which an	 	 
	election to receive a distribution	 	Distribution
	is made	 	shall be made in
	62

	 	Four (4) annual installments
calculated as one-fourth (1/4),
one-third
(1/3), one-half (1/2) and one
(1) respectively, times the
Participant’s Account balances at
the end of the Plan Year.
	 
	 	 
	63

	 	Three (3) annual installments
calculated as one-third (1/3),
one-half (1/2) and one (1),
respectively, times the
Participant’s Account balances at
the end of the Plan Year.
	 
	 	 
	64

	 	Two (2) annual installments,
calculated as one-half (1/2) and one
(1), respectively, times the
Participant’s Account balances at
the end of the Plan Year.
	 
	 	 
	65 and older

	 	One (1) installment of the entire
amount in the Participant’s Account
balances at the end of the Plan
Year.

- 28 -

 

          (c) An in-service distribution of a Participant’s Accounts under this Section will be made in
whole shares of Qualifying Employer Securities, plus cash for fractional shares. An election for
distribution of Accounts pursuant to this Section shall not terminate the Participant’s right to
participate in allocations of Contributions or Forfeitures hereunder.

          (d) Notwithstanding paragraphs (a), (b) and (c) above, (1) if a Participant who has elected
in-service distributions pursuant to this Section Terminates Employment prior to receiving the
entire amount of his Account balances, the Participant’s remaining Account balances shall be
distributed in accordance with Section 7.2 hereof; and (2) if a Participant who has elected
in-service distributions pursuant to this Section has previously made or subsequently makes a
diversification election pursuant to Section 7.11 hereof, then for each Plan Year with respect to
which both elections are effective, there shall be distributed to such Participant the greater of
the amount required to be distributed to him under the Section 7.11 election or the amount required
to be distributed to him under this Section 7.12.

          (e) The amount of each payment made in accordance with the preceding schedule shall be
calculated by multiplying the Participant’s Account balances, determined as of the end of the Plan
Year immediately preceding the installment payment, by the appropriate installment fraction.

ARTICLE 8

SPECIAL PROVISIONS RELATING TO LOANS

Section 8.1 Exempt Loans.
The Trustee may incur an Exempt Loan on behalf of the Plan in a manner and under conditions
which will cause the loan to be an Exempt Loan within the meaning of Section 4975(d)(3) of the Code
and regulations thereunder. An Exempt Loan shall be used primarily for the benefit of Participants
and their Beneficiaries. The proceeds of each Exempt Loan shall be used, within a reasonable time
after the Loan is obtained, only to purchase Qualifying Employer Securities, to repay the Exempt
Loan or to repay any prior Exempt Loan. Any Exempt Loan shall provide for a reasonable rate of
interest, an ascertainable period of maturity and shall be without recourse against the Plan. Any
Exempt Loan shall be secured solely by shares of Qualifying Employer Securities acquired with the
proceeds of the Exempt Loan and shares of such securities that were used as collateral on a prior
Exempt Loan which was repaid with the proceeds of the current Exempt Loan. Such securities pledged
as collateral shall be placed in a Suspense Account and released pursuant to Section 8.2 hereof as
the Exempt Loan is repaid. Qualifying Employer Securities released from the Suspense Account shall
be allocated among Participant Accounts in the manner described in Section 5.2 hereof. No person
entitled to payment under an Exempt Loan shall have recourse against (i) any Trust Fund assets
other than the Qualifying Employer Securities used as collateral for the Loan, (ii) Contributions
of cash that are available to meet obligations under the Loan and earnings attributable to such
collateral, and (iii) the investment of such Contributions. Contributions made with respect to any
Plan Year during which the Exempt Loan remains unpaid, and earnings on such Contributions, shall be
deemed available to meet obligations under the Exempt Loan.

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Section 8.2 Release of Shares from Suspense Account.
An Exempt Loan shall provide for the release of Shares of Qualifying Employer Securities used
as collateral for the Loan from the Suspense Account. For each Plan Year during
the duration of the Exempt Loan, the number of Shares released shall equal the number of
Shares held in the Suspense Account immediately before release for the current Plan Year multiplied
by a fraction. The numerator of the fraction is the amount of principal and interest paid for the
Plan Year. The denominator of the fraction is the sum of the numerator plus the principal and
interest to be paid for all future Plan Years. The number of future years under the Exempt Loan
shall be definitely ascertainable and shall be determined without taking into account any possible
extensions or renewal periods. If the interest rate under the Exempt Loan is variable, the
interest to be paid in future years shall be computed by using the interest rate applicable as of
the end of the Plan Year. If collateral includes more than one class of Qualifying Employer
Securities, the number of shares of each class to be released for a Plan Year shall be determined
by applying the same fraction to each class.

Section 8.3 Exempt Loan Repayments.
Payments of principal and interest on any Exempt Loan hereunder shall be made by the Trustee
at the direction of the Administrative Committee solely from: (i) Contributions available to meet
obligations under the Exempt Loan, (ii) earnings from the investment of such Contributions, (iii)
earnings attributable to Shares of Qualifying Employer Securities pledged as collateral for the
Exempt Loan, (iv) other dividends on stock to the extent permitted by law, (v) the proceeds of a
subsequent Exempt Loan made to repay the Exempt Loan, and (vi) the proceeds of the same of any
shares pledged as collateral for the Exempt Loan. The Contributions and earnings available to pay
the Exempt Loan shall be accounted for separately by the Administrative Committee until the Exempt
Loan is repaid.

Section 8.4 Allocation of Released Shares.

     Subject to the limitations on Annual Additions to a Participant’s Accounts under Section 4.3
hereof, Shares of Qualifying Employer Securities released from a Suspense Account by reason of a
payment made on an Exempt Loan shall be allocated to the Stock Accounts of Eligible Participants in
accordance with the allocation formula under Section 5.2 hereof as if such payment had been made on
the last day of the Plan Year. The assets of the Trust Fund attributable to Shares acquired by
the-Plan in a sale to which Section 1042 of the Code applies shall not accrue or be
allocated for the benefit of persons specified in Section 409(n) of the Code during the
nonallocation period as restricted by Section 4.3(d) hereof.

Section 8.5 Nonterminable Rights.
There shall be certain protections and rights provided to Participants with respect to Shares
of Qualifying Employer Securities acquired with the proceeds of an Exempt Loan. These protections
and rights are as follows:

          (a) No Shares acquired with the proceeds of an Exempt Loan may be subject to a put, call or
other option, or buy-sell or similar arrangement, while held by, and when distributed from, the
Plan, whether or not the Plan is then an employee stock ownership plan, except that:

               (1) Shares acquired with the proceeds of an Exempt Loan may, but need not, be subject to a
right of first refusal. Shares subject to such right must be stock or an

- 30 -

 

equity security, or a debt security convertible into stock or an equity security. Also, such
Shares must not be publicly traded at the time the right may be exercised. The right of first
refusal must be in favor of the Employer, the Plan, or both in any order of priority. The selling
price and other terms under the right must not be less favorable to the seller than the greater of
the: fair market value of the Shares, or the purchase price and other terms offered by a buyer,
other than the Employers or the Plan, making a good faith offer to purchase a security. The right
of first refusal shall lapse no later than fourteen (14) days after the security holder gives
written notice to the holder of the right that an offer of a third party to purchase the Shares has
been received.

               (2) Shares acquired with the proceeds of an Exempt Loan shall be subject to a put option if
the Shares are not publicly traded or are subject to a trading limitation when distributed. For
purposes of this paragraph, a “trading limitation” on Shares is a restriction under any federal or
state securities law, any regulation thereunder, or an agreement, not prohibited by Treasury
Regulations Section 54.4975-7(b), affecting the Shares which would make the Shares not as freely
tradable as one not subject to such restriction. The put option shall be exercisable only by a
Participant, by the Participant’s donees, or by a person (including an estate or its distributees)
to whom the Shares pass by reason of a Participant’s death. (Under this paragraph, “Participant”
means a Participant and his Beneficiaries.) The put option shall permit a Participant to put the
Shares to the Employer. Under no circumstances may the put option bind the Plan. However, it may
grant the Plan an option to assume the rights and obligations of the Employer at the time the put
option is exercised. If it is known at the time an Exempt Loan is made that federal or state law
would be violated by the Employer honoring such put option, the put option must permit the Shares
to be put, in a manner consistent with such law, to a third party (e.g., an Affiliate or a Company
shareholder other than the Plan) that has substantial net worth at the time the Exempt Loan is made
and whose net worth is reasonably expected to remain substantial.

                    (A) A put option shall be exercisable at least during a 15-month period which begins on the
date the Shares subject to the put option is distributed by the Plan. In the case of Shares that
are publicly traded without restriction when distributed but ceases to be so traded within fifteen
(15) months after distribution, the Employer shall notify each Shareholder in writing on or before
the tenth day after the date the Shares cease to be so traded that for the remainder-of
the 15-month-period the Shares are subject to a put option. The number of days between
such tenth day and the date on which notice is actually given, if later than the tenth day, shall
be added to the duration of the put option. The notice shall inform distributees of the terms of
the put option that they are to hold. Such terms shall satisfy the requirements of this Section
8.5.

                    (B) A put option shall be exercised by the holder by notifying the Employer in writing that
the put option is being exercised. The period during which a put option is exercisable shall not
include any time when a distributee is unable to exercise it because the party bound by the put
option is prohibited from honoring it by applicable federal or state law. The price at which a put
option shall be exercisable is the fair market value of the Shares. The provisions of payment under
a put option shall be reasonable. The deferral of payment is reasonable if adequate security and a
reasonable interest rate are provided for any credit extended, and if the cumulative payments at
any time are no less than the aggregate of reasonable periodic payments as of such time. Periodic
payments are reasonable if annual

- 31 -

 

installments, beginning thirty (30) days after the date the put option is exercised, are
substantially equal. Generally, the payment period may not end more than five (5) years after the
date the put option is exercised. However, it may be extended to a date no later than the earlier
of ten (10) years from the date the put option is exercised or the date the proceeds of the Exempt
Loan used by the Plan to acquire the Shares subject to the put option are entirely repaid. Payment
under a put option may be restricted by the terms of an Exempt Loan, including one used to acquire
Shares subject to a put option. Otherwise, payment under a put option shall not be restricted by
the provisions of an Exempt Loan or any other arrangement, including the terms of the Employers’
articles of incorporation, unless so required by applicable state law.

Section 8.6 Valuation of Qualifying Employers Securities.

          The fair market value of Qualifying Employer Securities that are not readily tradable on an
established securities market shall be determined as of each Valuation Date by an independent
appraiser who meets requirements similar to the requirements of the regulations prescribed under
Section 170(a)(1) of the Code.

ARTICLE 9

TRUST FUND

Section 9.1 Trust Agreement.
The Company has entered into a Trust Agreement with the Trustee to hold the funds set aside
pursuant to this Plan.

Section 9.2 Non-Reversion; Exclusive Benefit Clause.
The Trust Fund shall be received, held in trust and disbursed by the Trustee in accordance with the
provisions of the Trust Agreement and this Plan. Except as provided in Section 4.2(c) or (d)
hereof, no part of the Trust shall be used for or diverted to purposes other than for the exclusive
benefit of Participants or their Beneficiaries or defraying the reasonable administrative expenses
of the Plan. No person shall have any interest in, or right to, the Trust Fund or any part
thereof, except as specifically provided for in this Plan or the Trust Agreement. Notwithstanding
the above, nothing in this Section nor the Plan shall preclude the Trustee from complying with a
qualified domestic relations order, within the meaning of Section 414(p) of the Code.

Section 9.3 Powers of the Trustee.
The Trustee shall have such powers to hold, invest, reinvest, control, and disburse Trust Funds as
at that time shall be set forth in the Trust Agreement.

Section 9.4 Trust Agreement Part of the Plan.
The Trust Agreement shall be deemed to form a part of the Plan and all the rights of Participants
or others under this Plan shall be subject to the provisions of the Trust Agreement to the extent
such provisions are not contradicted by specific provisions of this Plan.

- 32 -

 

Section 9.5 Trustee Purchase of Stock. As soon as practicable after the Trustee receives
cash Contributions, dividends or other amounts on behalf of the Plan or any Participant, and to the
extent not prohibited by applicable law, the Trustee shall invest such cash in Qualifying Employer
Securities. Pending such investment in Qualifying Employer Securities, however, the Trustee may
retain cash uninvested without liability for interest, or may invest all or any part thereof in
suitable investments and securities. Notwithstanding the foregoing, the Trustee may hold Trust
Fund assets in cash or other liquid investments to the extent the Trustee deems reasonable or
appropriate for Plan liquidity purposes.

ARTICLE 10

ADMINISTRATIVE COMMITTEE

Section 10.1 Named Fiduciaries.
The following persons shall be Named Fiduciaries under the Plan.

          (a) The Trustee: Subject to the direction of the Administrative Committee, as described in
this Article 10, the Trustee shall have exclusive authority and discretion to manage and control
the assets of the Trust, as provided in the Trust Agreement, and shall have no responsibilities
other than those provided in such Agreement.

          (b) Administrative Committee: The Administrative Committee shall be the “Administrator,” as
that term is defined under ERISA Section 3(16)(A), of the Plan. The Administrative Committee shall
consist of at least three persons appointed by the Board of Directors.

Section 10.2 Appointment of Administrative Committee.
The Board shall appoint the Administrative Committee consisting of officers or other Employees. The
Administrative Committee shall be composed of no more than five (5) members, as determined from
time to time by the Board. The Administrative Committee Members shall serve at the pleasure of the
Board, and vacancies in the Administrative Committee arising by reason of resignation, death,
removal, or otherwise shall be filled by the Board. Any Administrative Committee Member may resign
of his own accord by delivering his written resignation to the Board.

- 33 -

 

Section 10.3 Organization and Operation of Administrative Committee.
The Administrative Committee shall appoint a Chairman and a Secretary and such other officers as it
shall deem advisable. The Administrative Committee shall act by a majority of the Administrative
Committee Members at the time in office and such action may be taken either by a vote at a meeting
or in writing without a meeting. The Administrative Committee may by such majority action
authorize any one or more of the Administrative Committee Members to execute any document or
documents on behalf of the Administrative Committee.

Section 10.4 Responsibilities and Powers of Administrative Committee.

          (a) The Administrative Committee shall have responsibility and authority to control the
operation and administration of the Plan in accordance with the terms of the Plan, including,
without limiting the generality of the foregoing,

               (1) All functions assigned to the Administrative Committee under the terms of the Plan;

               (2) Determination of benefit eligibility;

               (3) Determination of any questions arising in connection with the interpretation, application
or administration of the Plan (including any questions of fact relating to age, service,
compensation or eligibility of Employees);

               (4) Hiring of persons to provide necessary services to the Plan, including a recordkeeper and
the Trustee;

               (5) Issuance of directions to the Trustee as to (i) the payment of any fees, taxes, charges or
other costs incidental to the operation and management by the Administrative Committee of the Plan;
(ii) the payment of benefits to Participants; (iii) the allocation, payment and distribution of the
Trust Fund, including interest thereon; or (iv) any other matter; and

               (6) Maintenance of all records of the Plan other than those required to be maintained by the
Trustee or any recordkeeper.

          (b) The Administrative Committee’s decisions and actions shall be conclusive and binding upon
any and all persons and parties;

          (c) Administrative Committee Members shall serve without compensation for their services in
the administration and operation of the Plan unless compensation therefor is fixed by the Board in
its appointment of the Administrative Committee or thereafter.

          (d) The Administrative Committee shall enact such rules and regulations as it may deem proper
and necessary to facilitate the administration and operation of the Plan.

- 34 -

 

Section 10.5 Individual and Shared Responsibilities of Named Fiduciaries.

     This Article 10 is intended to allocate to each Named Fiduciary the individual responsibility
for the prudent execution of the functions assigned to the Named Fiduciary, and none of such
responsibilities or any other responsibility shall be shared by the Named Fiduciaries unless such
sharing shall be provided by a specific provision of the Plan or the Trust Agreement. Whenever one
Named Fiduciary is required by the Plan or the Trust Agreement to follow the directions of another
Named Fiduciary, the two Named Fiduciaries shall not be deemed to have been assigned a shared
responsibility, but the responsibility of the Named Fiduciary giving the directions shall be deemed
his sole responsibility, and the responsibility of the Named Fiduciary receiving those directions
shall be to follow them insofar as such instructions are on their face proper under applicable law.

Section 10.6 Employment of Advisers.
A Named Fiduciary may employ one or more persons to render advice concerning any
responsibility such Named Fiduciary has under the Plan or Trust Agreement.

Section 10.7 Fiduciary in More Than One Capacity.
Any person serving as a fiduciary may serve in more than one fiduciary capacity.

Section 10.8 Power to Construe and Interpret Plan.

          (a) The Administrative Committee shall have the sole, absolute and exclusive right, power, and
discretionary authority to construe and interpret the provisions of the Plan, and all parts
thereof, and then administer the Plan for the best interests of the Participants and the
Beneficiaries. It may construe any ambiguity, or supply any omission, or reconcile any
inconsistencies in such manner and to such extent as it deems proper. The Administrative Committee
shall have further discretionary authority to determine all questions with respect to the
individual rights of the Employees under the Plan, including, but not by way of limitation, all
issues with respect to any Employee’s or Beneficiary’s eligibility for benefits and Employee’s
earnings, compensation, service and retirement, as may be reflected by the records of the Employer,
and such other information on which these decisions shall be based. It is the intent of this Plan
that any court reviewing an action of the Administrative Committee shall apply the arbitrary and
capricious standard of review.

          (b) The Administrative Committee shall be entitled to rely upon all certificates and reports
made by any duly appointed accountant, and upon all opinions given by any duly appointed legal
counsel.

Section 10.9 Indemnity Agreement.

          (a) The Employer shall indemnify and hold harmless each Administrative Committee Member from
any and all claims, losses, damages, expenses (including accounting, consulting and legal fees
approved by the Administrative Committee), and liabilities (including any amounts paid in
settlement with the Administrative Committee’s approval) arising from any
act or omission of such member, except, when the same is determined to be due to the gross
negligence or willful misconduct of such member.

- 35 -

 

          (b) The Employer shall indemnify the Administrative Committee Members, the Trustee and any
employee of any Affiliate to whom the Administrative Committee or the Trustee has delegated
fiduciary duties against any and all claims, losses, damages, expenses and liabilities arising from
their responsibilities in connection with the Plan, unless the same is determined to be due to
gross negligence or willful misconduct.

Section 10.10 Costs.
The Trust Fund shall be used to pay all expenses, costs and fees of the Administrative
Committee, to the extent such expenses, costs and fees are not paid by the Employer.

Section 10.11 Application and Forms for Benefits.

     The Administrative Committee may require a Participant or Beneficiary to complete and file
with the Administrative Committee an Application for Benefits and all other forms approved by the
Administrative Committee, and to furnish all pertinent information requested by the Administrative
Committee. The Administrative Committee may rely upon all such information so furnished it,
including the Participant’s current mailing address.

Section 10.12 Claims for Benefits

     It shall not be necessary for a Participant or Beneficiary who has become entitled to receive
a benefit hereunder to file a claim for such benefit with any person as a condition precedent to
receiving a distribution of such benefit. However, any Participant or Beneficiary who believes
that he has become entitled to a benefit hereunder in excess of the benefit which he has received,
or commenced receiving, may file a written claim for such benefit with the Administrative
Committee. Such written claim shall set forth the Participant’s or Beneficiary’s name and address
and a statement of the facts and a reference to the pertinent provisions for the Plan on which such
claim is based.

Section 10.13 Denial of Claims.

          (a) If the claim of any person (a “Claimant”) to all or any part of any payment or benefit
under this Plan shall be denied, the Administrative Committee shall provide to the Claimant, within
90 days after receipt of such claim, a written notice setting forth:

               (1) the specific reason or reasons for the denial;

               (2) the specific references to the pertinent Plan provisions on which the denial is based;

               (3) a description of any additional material or information necessary for the Claimant to
perfect the claim and an explanation as to why such material or information is necessary; and

               (4) a description of the Plan’s review procedures and the time limits applicable to those
procedures, including a statement of the Claimant’s right to bring a civil action under ERISA
Section 502(a) following an adverse decision on review by the Administrative Committee.

- 36 -

 

          (b) If the Administrative Committee determines that special circumstances require an extension
of time beyond the initial 90-day period, the Administrative Committee shall provide to the
Claimant, within the initial 90-day period, a written notice of such extension stating the special
circumstances requiring the extension and the date by which the Administrative Committee expects to
make its determination (which date will not be later than 90 days after the end of the initial
90-day period).

Section 10.14 Appeal of Denied Claim.

          (a) Within 60 days after receipt of a notice of denial of his claim for benefits, a Claimant
may request, upon written application to the Administrative Committee, a review by the
Administrative Committee of its decision denying the Claimant’s claim. The Administrative
Committee shall provide the Claimant the opportunity to submit written comments, documents, records
and other information relating to his claim for benefits, and shall provide the Claimant, upon
request and free of charge, reasonable access to and copies of pertinent documents. The
Administrative Committee shall make a full and fair review, and shall make its decision on review
by taking into account all comments, documents, records and other information submitted by the
Claimant, regardless of whether such comments, documents, records and other information were
considered by the Administrative Committee when it initially denied the Claimant’s claim for
benefits.

          (b) The Administrative Committee shall issue its decision on review of a Claimant’s denied
claim for benefits within a reasonable period of time, but not later than 60 days after the Plan
receives the Claimant’s request for a review. If the Administrative Committee determines that
special circumstances require an extension of time for processing a Claimant’s review request
beyond the initial 60-day period, the Administrative Committee shall provide the Claimant, within
the initial 60-day period, a written notice of such extension stating the special circumstances
requiring the extension and the date by which the Administrative Committee expects to make its
decision on review (which date will not be later than 60-days after the end of the initial 60-day
period). If the Administrative Committee grants an extension due to the Claimant’s failure to
submit information necessary to decide the Claimant’s claim, the period for making the decision on
review shall be tolled from the date on which the Administrative Committee sends the notice of
extension to the Claimant until the date on which the Claimant responds to the request for
additional information.

          (c) The Administrative Committee shall notify a claimant of its decision on review in writing,
and if the decision is adverse, the notice shall set forth:

               (1) the specific reasons for the decision;

               (2) the specific references to the pertinent Plan provisions on which the decision on review
is based;

               (3) a statement that the Claimant is entitled to receive, upon request and free of charge,
reasonable access to, and copies of, all documents and other information relevant to his claim for
benefits; and

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               (4) a statement of the Claimant’s right to bring a civil action under Section 502(a) of ERISA.

Section 10.15 Claims, Notices, Etc.

          (a) Any claim, notice, application or other writing permitted or required to be filed with or
given to a party under this Article 12 shall be deemed to have been filed or given when deposited
in the U.S. mail, certified, postage prepaid, and properly addressed to the party to whom it is to
be given or with whom it is to be filed. Any such claim, notice, application, or other writing
deemed filed or given pursuant to the next foregoing sentence shall, in the absence of clear and
convincing evidence to the contrary, be deemed to have been received on the fifth business day
following the date upon which it was filed or given. Any such claim, notice, application or other
writing directed to the Administrative Committee shall be deemed properly addressed if addressed as
follows:

Administrative
Committee
 Sanderson
Farms, Inc.

127 Flynt Road

Laurel, Mississippi 39441

          (b) Any such notice, application, or other writing directed to a Participant or Beneficiary
shall be deemed properly addressed if directed to the address set forth in the written claim fled
by such Participant or Beneficiary.

ARTICLE 11

MODIFICATIONS FOR TOP HEAVY PLANS

Section 11.1 Application of Article.

     Prior to the allocation of Contributions for a Plan Year pursuant to Article 5 hereof, the
Administrative Committee shall determine whether the Plan constitutes a Top Heavy Plan during the
preceding Plan Year. If. a determination is made that this Plan constitutes a Top Heavy
Plan, then the provisions of this Article 11 shall be applicable notwithstanding any other
provisions of this Plan to the contrary.

Section 11.2 Definitions.

          (a) Top Heavy Plan: This Plan shall constitute a Top Heavy Plan for a Plan Year if,
as of the Determination Date (i) the aggregate of the Account balances of Key Employees exceeds
sixty percent (60%) of the aggregate of the Account balances of all Employees under the Plan, or
(ii) if the Plan is part of a Top Heavy Group.

          (b) Top Heavy Group: This Plan shall be deemed to be a part of a Top Heavy Group if
the plans which make up the group of which this Plan is considered a part are such that, when
aggregated, the sum of (i) the present value of the cumulative accrued benefits of Key

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Employees
under all defined benefit plans in the group, and (ii) the aggregate of the accounts of Key
Employees under all defined contribution plans in the group, exceed sixty percent (60%) of the sum
of such amounts for all employees who participate in the plans of such group. The group of plans of
which this Plan shall be considered a part includes: (i) all plans of the Employer and Affiliates
in which a Key Employee participates; (ii) all plans which enable a plan in which a Key Employee
participates to meet the qualification requirements of Section 401(a)(4) or Section 410 of the
Code; and (iii) all plans which the Employer, in its discretion, decides to include, provided that
the inclusion of such plan or plans would not prevent the group of plans from meeting the
qualification requirements of Section 401 (a)(4) and Section 410 of the Code.

          (c) Key Employee: The term “Key Employee” means any Employee who, at any time during
the Plan Year in question or during any of the four (4) preceding Plan Years is (i) an officer of
the Employer having Annual Compensation which exceeds fifty percent (50%) of the amount in effect
under Section 415(b)(1)(A) of the Code for any such Plan Year (not to exceed the greater of three
(3) Employees or ten percent (10%) of the Employees), (ii) one (1) of the ten (10) Employees having
an annual compensation from the Employer of more than the limitation in effect under Section
415(c)(1)(A) of the Code and owning (or considered as owning within the meaning of Section 318 of
the Code) the largest interest in the Employer, (iii) a five percent (5%) (or greater) owner of the
Employer, or (iv) a one percent (1%) owner of the Employer having an Annual Compensation from the
Employer of more than two hundred thousand dollars ($200,000). For the purposes of applying the
terms of the preceding sentence; the provisions of Section 416(i) of the Code are incorporated
herein by reference.

          (d) Determination Date: The term “Determination Date” means the last day of the Plan
Year immediately preceding the Plan Year for which a Top Heavy determination is made.

          (e) Annual Compensation: The term “Annual Compensation” means compensation within the
meaning of Section 415(c)(3) of the Code.

Section 11.3 Amounts Included for Computation Purposes.
For the purposes of this Section 11.3, in determining the present value of the cumulative
accrued benefit for any Employee or the amount of the Account of any Employee, there shall be
included therein the aggregate of all distributions made with respect to such Employee within the
five (5) year period ending on the Determination Date. The preceding sentence shall also apply to
distributions under a terminated plan which if it had not been terminated would have been required
to be included in an aggregation group described in Section 11.2(b) hereof. If an individual has
not received any Annual Compensation from any Employer (other than benefits under the Plan) at any
time during the five (5)-year period ending on the Determination Date, any accrued benefit for such
individual (and the Account of such individual) shall not be taken into account. Furthermore, the
accrued benefits and Account balances of any Employee who is not a Key Employee for the Plan Year
in question, but was a Key Employee in any previous Plan
Year, shall not be taken into consideration in making any of the computations required in this
Section 11.3.

Section 11.4 Accelerated Vesting.

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

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

          (b) If this Plan is not deemed to be a Top-Heavy Plan after previously being so categorized,
then the vesting schedule contained in Section 6.1 hereof shall again be effective, except that the
vested percentage attained by Participants shall not be reduced thereby and Participants with three
(3) or more Years of Service for vesting shall have the right to select the vesting schedule under
which their vested accrued benefit will be determined.

Section 11.5 Minimum Contributions.

          (a) For any Plan Year in which this Plan is determined to be a Top Heavy Plan, a minimum
Employer contribution shall be made, under this Plan or another defined contribution plan
maintained by the Employers, to the account of each non-Key Employee with a Year of Service for
accrual of benefits.

          (b) For the purposes of the first sentence of this Section 11.5, the minimum Employer
contribution provided to each non-Key Employee with a Year of Service for accrual of benefits shall
be equal to three percent (3%) of such non-Key Employee’s Annual Compensation. If, however, the
Employer contribution under this and any other defined contribution plan required to be included in
the Top-Heavy Group and maintained by the Employer for any Key Employee for such Plan Year is less
than three percent (3%) of such Key Employee’s total Annual Compensation, then the Employer
contribution for each Employee with a Year of Service for accrual of benefits shall equal the
amount which results from multiplying such Employee’s Annual Compensation times the highest
contribution rate for the purpose of the preceding sentence. For purposes of this Section 11.5, a
non-Key Employee who is a Participant and is employed on the last day of the Plan Year shall be
deemed to have a Year of Service for purposes of accrual of benefits for that Plan Year.

Section 11.6 Modification of Top-Heavy Rules

          (a) Effective date. This Section shall apply for purposes of determining whether the plan is
a Top-Heavy Plan for Plan Years beginning after December 31, 2001, and whether the Plan satisfies
the minimum benefits requirements of Section 416(c) of the Code for such years. This Section
amends this Article 11.

          (b) Determination of Top-Heavy status.

               (1) Key Employee. Key Employee means any Employee or former Employee (including any deceased
Employee) who at any time during the Plan Year that

- 40 -

 

includes the Determination Date was an officer
of the Employer having Annual Compensation greater than $130,000 (as adjusted under Section
416(1)(1) of the Code for Plan Years beginning after December 31, 2002), a 5-percent owner of the
Employer, or a 1-percent owner of the Employer having Annual Compensation of more than $150,000.
The determination of who is a Key Employee will be made in accordance with Section 416(1)(1) of the
Code and the applicable regulations and other guidance of general applicability issued thereunder.

          (c) Determination of present values and amounts. This Section 11.6 shall apply for purposes
of determining the present values of accrued benefits and the amounts of Account balances of
Employees as of the Determination Date.

               (1) Distributions during Plan Year ending on the Determination Date. The present values of
accrued benefits and the amounts of Account balances of an Employee as of the Determination Date
shall be increased by the distributions made with respect to the Employee under the Plan and any
plan aggregated with the Plan under Section 416(g)(2) of the Code during the 1-year period ending
on the Determination Date. The preceding sentence shall also apply to distributions under a
terminated plan which, had it not been terminated, would have been aggregated with the Plan under
Section 416(g)(2)(A)(i) of the Code. In the case of a distribution made for a reason other than
separation from service, death, or disability, this provision shall be applied by substituting
“5-year period” for “1-year period.”

               (2) Employees not performing services during year ending on the Determination Date. The
accrued benefits and Accounts of any individual who has not performed services for the Employers
during the 1-year period ending on the Determination Date shall not be taken into account.

          (d) Minimum benefits; Matching contributions. Employer matching contributions shall be taken
into account for purposes of satisfying the minimum contribution requirements of Section 416(c)(2)
of the Code and the Plan. The preceding sentence shall apply with respect to matching
contributions under the Plan or, if the Plan provides that the minimum contribution requirement
shall be met in another plan, such other plan. Employer matching contributions that are used to
satisfy the minimum contribution requirements shall be treated as matching contributions for
purposes of the actual contribution percentage test and other requirements of Section 401(m) of the
Code.

ARTICLE 12

AMENDMENT, MERGER, CONSOLIDATION OR TRANSFER OF ASSETS;

TERMINATION OR DISCONTINUANCE

Section 12.1 Amendment.

     The Company shall have the right at any time, and from time to time, to amend, in whole or in
part, any or all of the provisions of this Plan by action of the Board. No amendment to the Plan
shall reduce the Account balance of any Participant prior to the amendment. Furthermore, no
amendment to the Plan shall have the effect of decreasing a Participant’s vested interest
determined without regard to such amendment as of the later of the date such amendment is

- 41 -

 

adopted
or the date it becomes effective. For purposes of determining whether or not
any Participant’s Account balance is decreased, all the provisions of the Plan affecting directly
or indirectly the computation of Account balances which are amended with the same adoption and
effective dates shall be treated as one Plan amendment.

Section 12.2 Merger, Consolidation, or Transfer of Assets.
In the case of any merger or consolidation with or transfer of assets or liabilities to, or
any other plan, each Participant would or shall (if the Plan then terminated) receive a benefit
immediately after the merger, consolidation or transfer which is equal to or greater than the
benefit the Participant would have been entitled to receive immediately before the merger,
consolidation or transfer (if the Plan had been terminated).

Section 12.3 Termination; Discontinuance of Contributions.

          (a) The Company through action of its Board shall have the right at any time to terminate the
Plan in whole or in part or to permanently or temporarily discontinue Contributions hereunder. A
certified copy of such resolutions shall be delivered to the Administrative Committee and to the
Trustee.

          (b) Upon termination of the Plan or discontinuance of Contributions hereunder, each affected
Participant shall immediately vest in his Accounts hereunder. Upon such termination or
discontinuance of Contributions, the Trust Fund shall nevertheless continue, and the Trustee is
authorized to continue to hold and administer the Trust Fund for the benefits, rights, and
privileges as hereinabove provided. The Trustee may distribute to the Participants or their
Beneficiaries their vested Account balances, if the Participants or their Beneficiaries so request,
or make distributions at some future dates pursuant to the provisions of Article 7 hereof, provided
that the method or methods of distribution adopted do not discriminate in favor of highly
compensated employees of the Employer, within the meaning of Section 414(q) of the Code.

          (c) Until the final distribution of the Trust Fund, the Trustee shall continue to have all the
powers provided under this Plan and the Trust Agreement as are necessary and expedient for the
orderly administration, liquidation and distribution of the Trust Fund.

ARTICLE 13

MISCELLANEOUS

Section 13.1 Nonalienation of Benefits.

          (a) Except with respect to federal income tax withholding, benefits payable under this Plan
shall not be subject- in any. manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, charge, garnishment, execution, or levy of any kind, either voluntary or
involuntary, and any attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber,
charge or otherwise dispose of any right to benefits payable hereunder, shall be void.

- 42 -

 

The Trust
Fund shall not in any manner be liable for, or subject to, the debts, contracts, liabilities,
engagements or torts of any person entitled to benefits hereunder.

          (b) The preceding paragraph shall also apply to the creation, assignment or recognition of a
right to any benefit payable with respect to a Participant pursuant to a domestic relations order,
unless such order is determined to be a qualified domestic relations order, as defined in Section
414(p) of the Code.

Section 13.2 Qualified Domestic Relations Order.

     The Administrative Committee shall comply with the terms of any judgment, decree or order
(including approval of a property settlement agreement) which is a qualified domestic relations
order, within the meaning of Section 414(q) of the Code.

Section 13.3 No Guarantee of Employment.
Except as otherwise provided by law and as provided herein, the adoption of this Plan shall
not be construed as giving any Employee or any other person any legal or equitable right against
the Employers, or any officer or Employee thereof, the Administrative Committee established in
connection herewith, the Trustee or the principal and income of the Trust Fund or any equity or
interest in the assets, business or affairs of the Employer, unless such right, equity or interest
is specifically provided for in this Plan, nor shall it be construed as giving any Employee the
right to be retained in the service of the Employer.

Section 13.4 Authorization to Withhold Taxes.
The Trustee is authorized in accordance with applicable law to withhold from distribution to
any payee such sums as may be necessary to cover federal and state taxes which may be due with
respect to such distributions.

Section 13.5 Delegation of Authority by Employer.
Whenever the Employer under the terms of this Plan is permitted or required to do or perform
any action or matter or thing, it shall be done and performed by any of the Employer’s officers
thereunto duly authorized by the Employer’s Boards of Directors.

Section 13.6 Number and Gender.
Whenever any words are used herein in the singular number or masculine gender, they shall be
construed as though they were also used in the plural number or feminine gender in all cases where
they would so apply.

Section 13.7 Legal Actions.

          (a) Except as may be specifically provided for by law, in any action or proceeding involving
this Plan and the Trust Fund, or any property constituting part or all thereof, or the
administration thereof, the Employer and the Trustee shall be the only necessary parties and no
Employees or former Employees of the Employer or their Beneficiaries or any other person having or
claiming to have an interest in the Trust Fund or under this Plan shall be entitled to any notice
of process. Service of process for any actions relation to the Plan and Trust Fund may be made on
the Employer.

          (b) Except as may be specifically provided for by law, any final judgment which is not
appealed or appealable that may be entered in any such action or proceeding shall

- 43 -

 

be binding and
conclusive on the parties hereto and all persons having or claiming to have any interest under this
Plan or in the Trust Fund.

Section 13.8 Delays in Distribution.
Notwithstanding any other provisions of this Plan and the Trust Agreement, the Trustee may
delay distribution to a Participant or, his Beneficiary or Beneficiaries of Shares of Qualifying
Employer Securities pursuant to this Plan until one of the following conditions shall have been
satisfied:

          (a) The shares with respect to which distribution of an Account is to be made are at the time
of distribution effectively registered under the Securities Act of 1933 as now in force or
hereafter amended.

          (b) A no-action letter in respect of the distribution of such shares shall have been obtained
by the Employer from the Securities Exchange Commission; or

          (c) Counsel for the Employer shall have given an opinion, which opinion shall not be
unreasonably conditioned or withheld, that such shares are exempt from registration under the
Securities Act of 1933 as now in force or hereafter amended, and are nonrestricted upon transfer.

Section 13.9 Plan Document Location.
Official copies of this Plan and the Trust Agreement shall be available for inspection by
Participants, their Beneficiaries and other persons with a legal or equitable interest under the
Plan or in the Trust Fund, at the principal offices of the Employer located at 127 Flynt Road,
Laurel, Mississippi 39443,

Section 13.10 Plan Terms Control.
In any instances where the provisions or terms of this Plan are inconsistent with or conflict
with the terms of the Trust Agreement, the provisions or terms of this Plan shall, govern or
control the matter to be interpreted or resolved.

Section 13.11 Severability.
Each provision of this Plan maybe severed. If any provision is determined to be invalid- or
unenforceable, that determination shall not affect the validity or enforceability of any other
provision.

Section 13.12 Governing Law.
The provisions of this Plan shall be construed, administered, and governed under the laws of
the State of Mississippi and, to the extent applicable, by the laws and regulations of the United
States.

ARTICLE 14

CONCERNING QUALIFIED MILITARY SERVICE

     Notwithstanding the provisions of this Plan to the contrary, effective December 12, 1994,
contributions, benefits and service with respect to qualified military service shall be provided in
accordance with Section 414(u) of the Code.

- 44 -

 

ARTICLE 15

MINIMUM DISTRIBUTION REQUIREMENTS

Section 15.1 General Rules.

          (a) Effective Date. The provisions of this Article 15 will apply for purposes of
determining required minimum distributions for calendar years beginning with the 2003 calendar
year.

          (b) Precedence. The requirements of this Article will take precedence over any
inconsistent provisions of the Plan.

          (c) Requirements of Treasury Regulations Incorporated. All distributions required
under this Article will be determined and made in accordance with the Treasury regulations under
Section 401(a)(9) of the Code.

          (d) TEFRA Section 242(b)(2) Elections. Notwithstanding the other provisions of this
Article, distributions may be made under a designation trade before January 1,
1984, in accordance with Section 242(b)(2) of the Tax Equity and Fiscal Responsibility Act
(TEFRA) and the provisions of the Plan that relate to section 242(b)(2) of TEFRA.

Section 15.2 Time and Manner of Distribution.

          (a) Required beginning. The Participant’s entire interest will be distributed, or
begin to be distributed, to the Participant no later than the Participant’s required beginning date
which for Plan Years commencing after October 30, 1999 shall be:

               (1) For a Participant who is a 5% owner (as defined in Section 416 of the Code), the required
beginning date is April 1 following the calendar year in which the Participant attains age 701/2.

               (2) For a Participant who is not a 5% owner, the required beginning date is April 1 following
the later of (i) the calendar year in which the Participant attains age 701/2, and (ii) the calendar
year in which the Participant retires; however, such Participant who attains age 701/2 before 1999
may elect to commence distributions by April 1 of the calendar year following the calendar year in
which he attains age 701/2, or elect to defer payment until April 1 of the calendar year following
the calendar year in which the Participant retires.

          (b) Death of Participant Before Distributions Begin. If the Participant dies before
distributions begin, the Participant’s entire interest will he distributed, or begin to be
distributed, no later than as follows:

               (1) If the Participant’s surviving spouse is the Participant’s sole designated Beneficiary,
distributions to the surviving spouse will begin by December 31 of the calendar year immediately
following the calendar year in which the Participant died, or by December 31 of the calendar year
in which the Participant would have attained age 701/2, if later.

- 45 -

 

               (2) If the Participant’s surviving spouse is not the Participant’s sole designated
Beneficiary, distributions to the designated Beneficiary will begin by December 31 of the calendar
year immediately following the calendar year in which the Participant died.

               (3) If there is no designated Beneficiary as of September 30 of the year following the year of
the Participant’s death, the Participant’s entire interest will be distributed by December 31 of
the calendar year containing the fifth anniversary of the Participant’s death.

               (4) If the Participant’s surviving spouse is the Participant’s sole designated Beneficiary and
the surviving spouse dies after the Participant but before distributions to the surviving spouse
begin, this Section 15.2, other than Section 15.2(b)(1), will apply as if the surviving spouse were
the Participant.

     For purposes of this Section 15.2(b) and 15.4 hereof, unless Section 15.2(b)(4) applies,
distributions are considered to begin on the Participant’s required beginning date. If Section
15.2(b)(4) applies, distributions are considered to begin on the date distributions are required to
begin to the surviving spouse under Section 15.2(b)(1). If distributions under an annuity
purchased from an insurance company irrevocably commence to the Participant before the
Participant’s required beginning date (or to the Participant’s surviving spouse before the date
distributions are required to begin to the surviving spouse under Section 15.2(b)(1)), the
date distributions are considered to begin is the date distributions actually commence.

          (c) Forms of Distribution. Unless the Participant’s interest is distributed in the
form of an annuity purchased from an insurance company or in a single sum on or before the required
beginning date, as of the first distribution calendar year distributions will be made in accordance
with Sections 15.3 and 15.4 of this Article. If the Participant’s interest is distributed in the
form of an annuity purchased from an insurance company, distributions thereunder will be made in
accordance with the requirements of Section 401(a)(9) of the Code and the Treasury regulations
thereunder.

Section 15.3 Required Minimum Distributions During Participant’s Lifetime.

          (a) Amount of Required Minimum Distributions for Each Distribution Calendar Year.
During the Participant’s lifetime, the minimum amount that will be distributed for each
distribution calendar year is the lesser of:

               (1) The quotient obtained by dividing the Participant’s account balance by the distribution
period in the Uniform Lifetime Table tier fourth in Section 1.401(a)(9)-9 of the Treasury
regulations, using the Participant’s age as of the Participant’s birthday in the distribution
calendar year; or

               (2) If the Participant’s sole designated Beneficiary for the distribution calendar year is the
Participant’s spouse, the quotient obtained by dividing the Participant’s account balance by the
number in the Joint and Last Survivor Table set forth in Section 1.401(a)(9)-9 of the Treasury
regulations, using the Participant’s and spouse’s attained ages as of the Participant’s and
spouse’s birthdays in the distribution calendar year.

- 46 -

 

          (b) Lifetime Required Minimum Distributions Continue Through Year of Participant’s
Death. Required minimum distributions will be determined under this Section 15.3 beginning
with the first distribution calendar year and up to and including the distribution calendar year
that includes the Participant’s date of death.

Section 15.4 Required Minimum Distributions After Participant’s Death.

          (a) Death On or After Date Distributions Begin.

               (1) Participant Survived by Designated Beneficiary. If the Participant dies on or
after the date distributions begin and there is a designated Beneficiary, the minimum amount that
will be distributed for each distribution calendar year after the year of the Participant’s death
is the quotient obtained by dividing the Participant’s account balance by the longer of the
remaining life expectancy of the Participant or the remaining life expectancy of the Participant’s
designated Beneficiary, determined as follows:

                    (A) The Participant’s remaining life expectancy is calculated using the age of the Participant
in the year of death, reduced by one for each subsequent year.

                    (B) If the Participant’s surviving spouse is the Participant’s sole designated Beneficiary,
the remaining life expectancy of the surviving spouse is calculated for each distribution calendar
year after the year of the Participant’s death using the surviving spouse’s age as of the spouse’s
birthday in that year. For distribution calendar years after the year of the surviving spouse’s
death, the remaining life expectancy of the surviving spouse is calculated using the age of the
surviving spouse as of the spouse’s birthday in the calendar year of the spouse’s death, reduced by
one for each subsequent calendar year.

                    (C) If the Participant’s surviving spouse is not the Participant’s sole designated
Beneficiary, the designated Beneficiary’s remaining life expectancy is calculated using the age of
the Beneficiary in the year following the year of the Participant’s death, reduced by one for each
subsequent year.

               (2) No Designated Beneficiary. If the Participant dies on or after the date
distributions begin and there is no designated Beneficiary as of September 30 of the year after the
year of the Participant’s death, the minimum amount that will be distributed for each distribution
calendar year after the year of the Participant’s death is the quotient obtained by dividing the
Participant’s account balance by the Participant’s remaining life expectancy calculated using the
age of the Participant in the year of death, reduced by one for cash subsequent year.

          (b) Death Before Date Distributions Begin.

               (1) Participant Survived by Designated Beneficiary. If the Participant dies before
the date distributions begin and there is a Designated beneficiary, the minimum amount that will be
distributed for each distribution calendar year after the year of the Participant’s death is the
quotient obtained by dividing the Participant’s account balance by the remaining life expectancy of
the Participant’s designated Beneficiary, determined as provided in Section 15.4(a) hereof.

- 47 -

 

               (2) No Designated Beneficiary. If the Participant dies before the date distributions
begin and there is no designated Beneficiary as of September 30 of the year following the year of
the Participant’s death, distribution of the Participant’s entire interest will be completed by
December 31 of the calendar year containing the fifth anniversary of the Participant’s death.

          (c) Death of Surviving Spouses Before Distributions to Surviving Spouse Are Required to
Begin. If the Participant dies before the date distributions begin, the Participant’s
surviving spouse is the Participant’s sole designated Beneficiary, and the surviving spouse dies
before distributions are required to begin to the surviving spouse under section 15.2(a)(1), this
Section 15.4(b) will apply as if the surviving spouse were the Participant.

Section 15.5 Definitions.

          (a) Designated Beneficiary. The individual who is designated as the Beneficiary under
Article 7 thereof and is the designated Beneficiary under Section 401(a)(9) of the Code and Section
1.401(a)(9)-1, Q&A-4, of the Treasury regulations.

          (b) Distribution calendar year. A calendar year for which a minimum distribution is
required. For distributions beginning before the Participant’s death, the first distribution
calendar year is the calendar year immediately preceding the calendar year which contains the
Participant’s required beginning date. For distributions beginning after the Participant’s death,
the first distribution calendar year is the calendar year in which distributions are required to
begin under Section 15.2(b) hereof. The required minimum distribution for the Participant’s first
distribution calendar year will be made on or before the Participant’s required beginning date.
The required minimum distribution for other distribution calendar years, including the required
minimum distribution for the distribution calendar year in which the Participant’s required
beginning date occurs, will be made on or before December 31 of that distribution calendar year.

          (c) Life expectancy. Life expectancy as computed by use of the Single Life Table in
Section 1.401(x)(9)-9 of the Treasury regulations.

          (d) Participant’s account balance. The account balance as of the last valuation date
in the calendar year immediately preceding the distribution calendar year (valuation calendar year)
increased by the amount of any contributions made and allocated or forfeitures allocated to the
account balance as of dates in the valuation calendar year after the valuation date and decreased
by distributions made in the valuation calendar year after the valuation date. The account balance
for the valuation calendar year includes any amounts rolled over or transferred to the Plan either
in the valuation calendar year or in the distribution calendar year if distributed or transferred
in the valuation calendar year.

Section 15.6 Required Beginning Date.
The date specified in Section 15.2(a) of this Article.

[signatures appear on the following page]

- 48 -

 

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

	 	 	 	 	 
	 	SANDERSON FARMS, INC. 

 	 
	 	By:  	/s/ D. Michael Cockrell
 	 
	 	 	D. Michael Cockrell 	 
	 
	 	Its: Treasurer and CFO

 	 
	 	 	 
	 	 	 
	 	 	 
	 

	 	 	 	 	 
	ATTEST:	 	 
	 
	 	 	 	 
	By:

	 	/s/ James A. Grimes	 	 
	Its:

	 	 

Secretary
	 	 

- 49 -EX-10.19

 

EXHIBIT (10-19)

The Gillette Company Executive Life Insurance Program

 

 

THE GILLETTE COMPANY

EXECUTIVE LIFE INSURANCE PLAN

(as amended and restated effective as of July 1, 1990)

(with amendments effective through March 1, 2001)

ARTICLE 1

ESTABLISHMENT AND PURPOSE

     1.1. Establishment. This Plan was established January 1, 1988 and amended July 1, 1990. The
Plan as set forth herein, unless otherwise stated, is effective and applicable only for
participants terminating active employment or retiring on or after March 1, 2001.

     1.2. Purpose. The purpose of the Plan is to provide life insurance protection under a
split—dollar arrangement as a benefit to certain executive employees of the Employer, in order to
encourage such employees to continue their employment with the Employer, to reward such employees
for their service with the Employer, and to induce desirable persons to enter into the Employer’s
employ in the future. The Plan amends the Prior Plan and the life insurance policies thereunder to
replace the life insurance protection provided to a Participant under the Prior Plan with the life
insurance protection provided under the Plan.

ARTICLE 2

DEFINITIONS

     Except as otherwise provided, the following terms have the definitions hereinafter indicated
whenever used in this Plan with initial capital letters:

     2.1. Base Salary. “Base Salary” means a Participant’s annualized base salary, exclusive of
overtime, bonuses and other compensation, in effect at the time of the Participant’s death or
earlier Retirement. In the case of a Participant who continues to be paid on the Employer’s
payroll following the Participant’s scheduled release date, the Participant’s Base Salary shall be
determined as of such release date.

     2.2. Beneficiary. “Beneficiary” means the person, persons, entity or entities designated to
be the recipient of the Participant’s share of the proceeds of a Policy in accordance with the
terms of Section 5.4.

     2.3. Committee. “Committee” means the Executive Life Insurance Plan Committee, which shall be
composed of the Senior Vice President—Administration and the Treasurer of the Company.

     2.4. Company. “Company” means The Gillette Company, a Delaware corporation, and its
successors and assigns.

     2.5. Eligible Employee. “Eligible Employee” means an Employee who is selected by the
Committee to participate in the Plan.

 

 

     2.6. Employee. “Employee” means any person who is or was before Retirement employed by the
Employer as an executive employee and satisfied the job grade, officer status, employment status
and/or other eligibility criteria, as set forth in Appendix I.

     2.7. Employer. “Employer” means the Company and its subsidiaries.

     2.8. Enrollment Agreement. “Enrollment Agreement” means the written agreement entered into by
the Company and an Eligible Employee pursuant to which such Eligible Employee becomes a Participant
in the Plan as of the date specified in such agreement.

     2.9. Insurer. “Insurer” means the insurance company that provides life insurance coverage on
a Participant under the Plan or the insurance company to whom application for such coverage has
been made.

     2.10. Participant. “Participant” means an Eligible Employee who is participating in the Plan
pursuant to an Enrollment Agreement.

     2.11. Plan. “Plan” means The Gillette Company Executive Life Insurance Plan as set forth
herein together with any and all amendments and supplements hereto.

     2.12. Policy. “Policy” means, with respect to each Employee, any policy of individual life
insurance on the Employee’s life which the Employer acquires or otherwise utilizes pursuant to
Article 5 to provide benefits under the Plan.

     2.13. Policy Proceeds. “Policy Proceeds” means the aggregate amount payable by the Insurer
pursuant to the Policy to the Participant’s Beneficiary and the Employer upon the death of the
Participant.

     2.14. Prior Plan. “Prior Plan” means The Gillette Company Executive Group Life Insurance Plan
which provided life insurance coverage through a group life insurance contract issued by John
Hancock Mutual Life Insurance Company.

     2.15. Retirement. “Retirement” means termination of an Employee’s employment with the
Employer, for reasons other than death, on or after the date the Employee reaches the Employee’s
earliest retirement date under a retirement plan sponsored by the Employer.

ARTICLE 3

PLAN RIGHTS AND OBLIGATIONS

     The rights of Participants are set forth herein. Each Participant is bound by the terms of
the Plan. As a condition of participation in this Plan, an Eligible Employee’s participation in the
Prior Plan and any other group life insurance arrangement sponsored by the Employer shall terminate
as of the date specified in the Eligible Employee’s Enrollment Agreement on which the Eligible
Employee becomes a Participant in the Plan.

 

 

ARTICLE 4

AMOUNT OF COVERAGE

     4.1. Pre—Retirement Coverage. The amount of life insurance coverage to be provided to a
Participant while the Participant continues to be employed by the Employer shall be equal to four
times the Participant’s Base Salary (coverage rounded up, if necessary, to the next $1,000).

     4.2. Post—Retirement Coverage. The amount of life insurance coverage to be provided to a
Participant after the Participant’s Retirement shall be equal to the Participant’s Base Salary
(coverage rounded up, if necessary to the next $1,000).

     4.3. Termination of Participation. Termination of a Participant’s participation hereunder
will occur upon the earlier to occur of the following events: (1) termination of the Plan or (2)
termination of the Participant’s employment with the Employer for reasons other than the
Participant’s death or Retirement. Thereafter, the Participant shall have no life insurance
coverage under the Plan.

ARTICLE 5

POLICY OWNERSHIP AND RIGHTS

     5.1. Introduction. The provisions of this Article establish certain rights and obligations of
the Employer and each Participant with respect to the Policy or Policies used to provide benefits
under the Plan. The terms of this Article shall apply separately to each Participant.

     5.2. Acquisition of Policy. The Employer shall apply for a Policy or Policies or utilize an
existing Policy or Policies to provide the Participant’s benefits under the Plan. The Employer and
the Participant shall take all reasonable actions (1) to cause the Insurer to issue the Policy, and
(2) to cause the Policy to conform to the provisions of this Plan. The Policy shall be subject to
the terms and conditions of this Plan.

     5.3. Policy Ownership. The Employer shall be the sole and absolute owner of each Policy, and
may exercise all ownership rights granted to the owner thereof by the terms of the Policy, except
as may otherwise be provided herein.

     5.4. Beneficiary Designation. The Participant shall select the Beneficiary to receive the
death benefit to which the Participant is entitled under Section 6.2 of the Plan, by specifying the
same on a designation of beneficiary form prescribed by the Committee. Upon receipt of such form,
the Employer shall execute and deliver to the Insurer the forms necessary to designate the persons
or entities selected by the Participant as the beneficiaries to receive the death benefit to which
the Participant is entitled under Section 6.2 of the Plan. The Employer shall also be a named
beneficiary in the Policy for any remaining Policy Proceeds referred to in

     Section 6.2 of the Plan.

     The Employer shall take all reasonable steps to cause the beneficiary designation provisions
of the Policy to conform to the provisions hereof. The Employer shall not terminate, alter or
amend the Participant’s designation without the express written consent of the

 

 

Participant. The Employer shall not be responsible for any loss or delay in transmitting the
designation of beneficiary information to the Insurer.

     A Participant who has designated a beneficiary under the Prior Plan shall be deemed to have
selected such beneficiary as the Participant’s Beneficiary under this Plan. A Participant may
change his or her Beneficiary from time to time by execution of a designation of beneficiary form
as provided above.

     If the Participant fails to designate a Beneficiary as provided above, or if all designated
Beneficiaries predecease the Participant or die prior to distribution of the Participant’s death
benefit, then such death benefit shall be paid to the Participant’s estate (or, in the case of an
assignment pursuant to Section 5.5, to the Participant’s assignee)

     5.5. Assignment. An Employee shall have the right at any time to absolutely and irrevocably
assign all of the Employee’s right, title and interest in and to this Plan and any Policy which has
been or may be acquired hereunder to an assignee. This right shall be exercisable by the execution
and delivery to the Employer of a written assignment, on a form prescribed the Committee. Upon
receipt of such written assignment executed by the Employee and duly accepted by the assignee
thereof, the Employer shall consent thereto in writing, and shall thereafter treat the Employee’s
assignee as the sole owner of all of the right, title and interest in and to this Plan and in and
to any Policy which has been or may be acquired hereunder. Thereafter, the Employee shall have no
right, title or interest in and to this Plan or any Policy which has been or may be acquired
hereunder, all such rights being vested in and exercisable only by such assignee, and any
designation of Beneficiary made by the Employee prior to such assignment shall be null and void.
If an Employee has made an assignment under the Prior Plan, such assignment shall be effective for
purposes of this Plan.

ARTICLE 6

DEATH BENEFITS

     6.1. Prompt Collection. Upon the death of a Participant, the Employer with the cooperation of
the Beneficiary, shall promptly take all action necessary to initiate payment by the Insurer of the
Policy Proceeds.

     6.2. Division of Policy Proceeds. A death benefit equal to the amount of life insurance
coverage to which the Participant is entitled under Article 4 of this Plan, if any, shall be paid
directly from the Insurer to the Participant’s designated Beneficiary, and any remaining Policy
Proceeds shall be paid to the Employer.

     6.3. Interest on Policy Proceeds. Any interest payable by the Insurer with respect to a
Beneficiary’s share of the Policy Proceeds shall be paid to the Beneficiary and any interest
payable by the Insurer with respect to the Employer’s share of the Policy Proceeds shall be paid to
the Employer.

     6.4. Additional Payment if Insufficient Policy Proceeds. In the event that, at the time of a
Participant’s death, the aggregate Policy Proceeds on Policies covering the Participant, reduced by
the outstanding balance of any indebtedness incurred by the Employer and secured by the

 

 

Policies (including any interest due on such indebtedness) , is less than the amount of life
insurance coverage to which the Participant is entitled under Article 4, the Employer shall pay
directly to the designated Beneficiary an additional amount equal, on an after—tax basis, to the
excess of such life insurance coverage over the available Policy Proceeds.

ARTICLE 7

POLICY PREMIUMS

     7.1. Payment of Premiums. The Employer shall pay the premiums on each Policy to the Insurer
on or before the due date or within the grace period provided therein. Participants shall neither
be required nor permitted to make contributions to the Plan or additional premiums on any Policy.

     7.2. Recovery by Employer. The Employer shall receive from the Policy Proceeds of each Policy
the amount thereof reduced by (i) the amount of life insurance coverage paid from such Policy to
the designated Beneficiary pursuant to Section 6.2, and (ii) the outstanding balance of any
indebtedness incurred by the Employer and secured by the Policy (including any interest due on such
indebtedness). In the event that, prior to the death of the Participant covered by a Policy, the
Employer surrenders the Policy to the Insurer, the Employer shall receive the entire cash surrender
value of the Policy reduced by (i) the outstanding balance of any indebtedness incurred by the
Employer and secured by the Policy (including any interest due on such indebtedness), and (ii) the
amount, if any, transferred into another Policy.

ARTICLE 8

PLAN ADMINISTRATION

     8.1. Named Fiduciary; Administration. The Committee is hereby designated as the named
fiduciary under this Plan. The named fiduciary shall have authority to control and manage the
operation and administration of this Plan, and it shall be responsible for establishing and
carrying out a funding policy and method consistent with the objectives of this Plan. The
Committee shall also have the power to establish, adopt, or revise such rules, regulations,
procedures and forms as it may deem advisable for the administration of the Plan. The
interpretation and construction of the Plan by the Committee and any action taken thereunder, shall
be binding and conclusive upon all parties in interest. No member of the Committee shall, in any
event, be liable to any person for any action taken or omitted to be taken in connection with the
interpretation, construction or administration of the Plan, so long as such action or omission to
act is made in good faith. (Members of the Committee shall be eligible to participate in the Plan
while serving as members of the Committee, but a member of the Committee shall not vote or act upon
any matter that relates solely to such member’s interest in the Plan as a Participant.)

     8.2. Determination of Benefits. The Committee shall make all determinations concerning
eligibility to participate, rights to benefits, the amount of benefits, and any other question
under this Plan. Any decision by the Committee denying a claim by a Participant or Beneficiary for
benefits under this Plan shall be stated in writing and delivered or mailed to the Participant or
Beneficiary. Such decision shall set forth the specific reasons for the denial written

 

 

in a manner calculated to be understood by the Participant or Beneficiary. In addition, the
Committee shall afford a reasonable opportunity to the Participant or Beneficiary for a full and
fair review of the decision denying such claim.

ARTICLE 9

MISCELLANEOUS

     9.1. No Contract of Employment. Nothing contained herein shall be construed to be a contract
of employment for any term of years, nor as conferring upon an Employee the right to continue in
the employ of the Company in any capacity.

     9.2. Amendment and Termination of Plan. The Company, through action of the Personnel
Committee of its Board of Directors, may, in its sole discretion, amend or terminate the Plan in
whole or in part at any time. In addition, without limiting the foregoing, the Committee shall
have the power to amend the Plan on behalf of the Company where such amendment would not result in
a material increase in the cost of the Plan for the Company. The Plan will also terminate, without
notice, upon the total cessation of the business of the Company or upon the bankruptcy,
receivership or dissolution of the Company.

     9.3. Conflicting Provisions. In the event of a conflict between the provisions of this Plan
and the provisions of any collateral assignment, beneficiary designation or other document related
to a Policy, the provisions of the Plan shall prevail.

     9.4. Notice. Any notice, consent, or demand required or permitted to be given under the
provisions of this Plan shall be in writing, and shall be signed by the party giving or making the
same. If such notice, consent, or demand is mailed, it shall be sent by United States certified
mail, postage prepaid, addressed to such party’s last known address as shown on the records of the
Company. If notice, consent or demand is sent to the Company, it shall be sent to: Senior Vice
President of Administration, Prudential Tower Building, 39th Floor, Boston, MA 02199. The date of
such mailings shall be deemed the date of notice, consent, or demand. Either party may change the
address to which notice is to be sent by giving notice of the change of address in the manner
aforesaid.

     9.5. Governing Law. This Plan shall be governed by and construed in accordance with the laws
of the Commonwealth of Massachusetts.

     9.6. Gender, Singular and Plural. All pronouns and any variations thereof shall be deemed to
refer to the masculine, feminine, or neuter, as the identity of the person or persons may require.
As the context may require, the singular may be read as the plural and the plural as the singular.
-

     9.7. Captions. The captions of the articles, sections, and paragraphs of this Plan are for
convenience only and shall not control or affect the meaning or construction of any of its
provisions.

     9.8. Validity. In the event any provision of this Plan is held invalid, void, or
unenforceable, the same shall not affect, in any respect whatsoever, the validity of any other
provision of this Plan.

 

 

     9.9. Binding Effect. This Plan shall be binding upon, and inure to the benefit of the
Employer and its successors and assigns, and the Participants and their successors, assigns, heirs,
executors, administrators and beneficiaries.

     IN WITNESS WHEREOF, the Company has caused this Plan to be executed on behalf of the Company
by its officer thereunto duly authorized, effective as of the date and year first above written.

	 	 	 	 	 
	 	 	THE GILLETTE COMPANY

	 

	 	By:
	 	/s/ Lloyd B. Swaim

 

	 

	 	Title:
	 	Vice President and Treasurer

	 

	 	Date:
	 	March 13, 1992

	 	 	[Reflects amendments executed March 18, 1996,

September 24, 1997 and February 15, 2001]

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