Document:

Exhibit 10.1

MID-SOUTHERN BANCORP, INC.

EMPLOYEE STOCK OWNERSHIP PLAN

Effective January 1, 2018

	
MID-SOUTHERN BANCORP, INC.

	
EMPLOYEE STOCK OWNERSHIP PLAN

	 	 	 	 	 	 
	
TABLE OF CONTENTS

 

	 	 	 	 	 	 
	 	
PREAMBLE

	 	 	
1

	 	 	 	 	 	 
	 	
ARTICLE I - DEFINITION OF TERMS AND CONSTRUCTION

	
2

	 	 	
1.1

	
Definitions

	
2

	 	 	 	
(a)

	
Account

	
2

	 	 	 	
(b)

	
Act

	
2

	 	 	 	
(c)

	
Administrator

	
2

	 	 	 	
(d)

	
Annual Additions

	
2

	 	 	 	
(e)

	
Authorized Leave of Absence

	
2

	 	 	 	
(f)

	
Beneficiary

	
2

	 	 	 	
(g)

	
Board of Directors

	
3

	 	 	 	
(h)

	
Break

	
3

	 	 	 	
(i)

	
Code

	
3

	 	 	 	
(j)

	
Compensation

	
3

	 	 	 	
(k)

	
Date of Hire

	
4

	 	 	 	
(l)

	
Disability

	
4

	 	 	 	
(m)

	
Disability Retirement Date

	
4

	 	 	 	
(n)

	
Effective Date

	
4

	 	 	 	
(o)

	
Eligibility Period

	
5

	 	 	 	
(p)

	
Employee

	
5

	 	 	 	
(q)

	
Employee Stock Ownership Account

	
5

	 	 	 	
(r)

	
Employee Stock Ownership Contribution

	
5

	 	 	 	
(s)

	
Employee Stock Ownership Suspense Account

	
5

	 	 	 	
(t)

	
Employer

	
5

	 	 	 	
(u)

	
Employer Securities

	
5

	 	 	 	
(v)

	
Employment Commencement Date

	
5

	 	 	 	
(w)

	
Entry Date

	
5

	 	 	 	
(x)

	
Exempt Loan

	
5

	 	 	 	
(y)

	
Exempt Loan Suspense Account

	
6

	 	 	 	
(z)

	
Financed Shares

	
6

	 	 	 	
(aa)

	
Former Participant

	
6

	 	 	 	
(bb)

	
Fund

	
6

	 	 	 	
(cc)

	
Hour of Service

	
6

	 	 	 	
(dd)

	
Investment Adjustments

	
6

	 	 	 	
(ee)

	
Limitation Year

	
6

	 	 	 	
(ff)

	
Normal Retirement Date

	
7

	 	 	 	
(gg)

	
Participant

	
7

	 	 	 	
(hh)

	
Plan

	
7

	 	 	 	
(ii)

	
Plan Year

	
7

	 	 	 	
(jj)

	
Qualified Domestic Relations Order

	
7

	 	 	 	
(kk)

	
Qualified Military Service

	
7

	 	 	 	
(ll)

	
Related Employer

	
7

	 	 	 	
(mm)

	
Retirement

	
7

	 	 	 	
(nn)

	
Service

	
8

	 	 	 	
(oo)

	
Sponsor

	
8

	 	 	 	
(pp)

	
Statutory Compensation

	
8

	 	 	 	
(qq)

	
Trust Agreement

	
8

	 	 	 	
(rr)

	
Trustee

	
8

 

i

 

 

	 	 	 	
(ss)

	
Valuation Date

	
8

	 	 	 	
(tt)

	
Year of Eligibility Service

	
8

	 	 	 	
(uu)

	
Year of Vesting Service

	
8

	 	 	
1.2

	
Plurals and Gender

	
8

	 	 	
1.3

	
Incorporation of Trust Agreement

	
8

	 	 	
1.4

	
Headings

	 	
8

	 	 	
1.5

	
Severability

	
8

	 	 	
1.6

	
References to Governmental Regulations

	
9

	 	 	
1.7

	
Notices

	 	
9

	 	 	
1.8

	
Evidence

	 	
9

	 	 	
1.9

	
Action by Employer

	
9

	 	 	 	 	 	 
	 	
ARTICLE II - PARTICIPATION

	
10

	 	 	
2.1

	
Commencement of Participation

	
10

	 	 	
2.2

	
Termination of Participation

	
10

	 	 	
2.3

	
Resumption of Participation

	
10

	 	 	
2.4

	
Determination of Eligibility

	
10

	 	 	
2.5

	
Restricted Participation

	
11

	 	 	 	 	 	 
	 	
ARTICLE III - CREDITED SERVICE

	
12

	 	 	
3.1

	
Service Counted for Eligibility Purposes

	
12

	 	 	
3.2

	
Service Counted for Vesting Purposes

	
12

	 	 	
3.3

	
Credit for Pre-Break Service

	
12

	 	 	
3.4

	
Service Credit During Authorized Leaves

	
12

	 	 	
3.5

	
Service Credit During Maternity or Paternity Leave

	
13

	 	 	
3.6

	
Ineligible Employees

	
13

	 	 	
3.7

	
Military Service Provisions

	
13

	 	 	 	 	 	 
	 	
ARTICLE IV - CONTRIBUTIONS

	
15

	 	 	
4.1

	
Employee Stock Ownership Contribution

	
15

	 	 	
4.2

	
Time and Manner of Employee Stock Ownership Contribution

	
15

	 	 	
4.3

	
Records of Contributions

	
16

	 	 	
4.4

	
Erroneous Contributions

	
16

	 	 	 	 	 	 
	 	
ARTICLE V - ACCOUNTS, ALLOCATIONS AND INVESTMENTS

	
17

	 	 	
5.1

	
Establishment of Separate Participant Accounts

	
17

	 	 	
5.2

	
Establishment of Suspense Accounts

	
17

	 	 	
5.3

	
Allocation of Earnings, Losses and Expenses

	
18

	 	 	
5.4

	
Application of Forfeitures

	
18

	 	 	
5.5

	
Allocation of Employee Stock Ownership Contribution

	
18

	 	 	
5.6

	
Limitation on Annual Additions

	
18

	 	 	
5.7

	
Erroneous Allocations

	
19

	 	 	
5.8

	
Value of Participant's Account

	
19

	 	 	
5.9

	
Investment of Account Balances

	
19

	 	 	 	 	 	 
	 	
ARTICLE VI - RETIREMENT, DEATH AND DESIGNATION OF BENEFICIARY

	
20

	 	 	
6.1

	
Normal Retirement

	
20

	 	 	
6.2

	
Early Retirement

	
20

	 	 	
6.3

	
Disability Retirement

	
20

	 	 	
6.4

	
Death Benefits

	
20

	 	 	
6.5

	
Designation of Beneficiary and Manner of Payment

	
20

	 	 	 	 	 	 
	 	
ARTICLE VII - VESTING AND FORFEITURES

	
22

 

ii

 

	 	 	
7.1

	
Vesting on Death, Disability and Normal Retirement

	
22

	 	 	
7.2

	
Vesting on Termination of Participation

	
22

	 	 	
7.3

	
Forfeitures

	
22

	 	 	 	 	 	 
	 	
ARTICLE VIII - EMPLOYEE STOCK OWNERSHIP PROVISIONS

	
24

	 	 	
8.1

	
Right to Demand Employer Securities

	
24

	 	 	
8.2

	
Voting Rights; Tendering Shares

	
24

	 	 	
8.3

	
Nondiscrimination in Employee Stock Ownership Contribution

	
25

	 	 	
8.4

	
Dividends

	 	
25

	 	 	
8.5

	
Exempt Loans

	
26

	 	 	
8.6

	
Exempt Loan Payments

	
27

	 	 	
8.7

	
Put Option

	
28

	 	 	
8.8

	
Diversification Requirements

	
28

	 	 	
8.9

	
Independent Appraiser

	
29

	 	 	 	 	 	 
	 	
ARTICLE IX - PAYMENTS AND DISTRIBUTIONS

	
30

	 	 	
9.1

	
Payments on Termination of Service - In General

	
30

	 	 	
9.2

	
Commencement of Payments

	
30

	 	 	
9.3

	
Mandatory Commencement of Benefits

	
30

	 	 	
9.4

	
Required Beginning Dates

	
33

	 	 	
9.5

	
Form of Payment

	
34

	 	 	
9.6

	
Payments Upon Termination of Plan

	
34

	 	 	
9.7

	
Distributions Pursuant to Qualified Domestic Relations Orders

	
34

	 	 	
9.8

	
ESOP Distribution Rules

	
35

	 	 	
9.9

	
Direct Rollover

	
35

	 	 	
9.1

	
Share Legend

	
36

	 	 	
9.11

	
Power to Reduce Benefit

	
36

	 	 	 	 	 	 
	 	
ARTICLE X - PROVISIONS RELATING TO TOP-HEAVY PLANS

	
37

	 	 	
10.1

	
Top-Heavy Rules to Control

	
37

	 	 	
10.2

	
Top-Heavy Plan Definitions

	
37

	 	 	
10.3

	
Calculation of Accrued Benefits

	
38

	 	 	
10.4

	
Determination of Top-Heavy Status

	
39

	 	 	
10.5

	
Minimum Contribution

	
39

	 	 	 	 	 	 
	 	
ARTICLE XI - ADMINISTRATION

	
41

	 	 	
11.1

	
Appointment of Administrator

	
41

	 	 	
11.2

	
Resignation or Removal of Administrator

	
41

	 	 	
11.3

	
Appointment of Successors:  Terms of Office, Etc.

	
41

	 	 	
11.4

	
Powers and Duties of Administrator

	
41

	 	 	
11.5

	
Action by Administrator

	
42

	 	 	
11.6

	
Participation by Administrator

	
42

	 	 	
11.7

	
Agents

	 	
43

	 	 	
11.8

	
Allocation of Duties

	
43

	 	 	
11.9

	
Delegation of Duties

	
43

	 	 	
11.1

	
Administrator's Action Conclusive

	
43

	 	 	
11.11

	
Compensation and Expenses of Administrator

	
43

	 	 	
11.12

	
Records and Reports

	
43

	 	 	
11.13

	
Reports of Fund Open to Participants

	
44

	 	 	
11.14

	
Named Fiduciary

	
44

	 	 	
11.15

	
Information from Employer

	
44

	 	 	
11.16

	
Responsibilities of Directors

	
44

	 	 	
11.17

	
Liability and Indemnification

	
44

 

iii

 

	 	 	 	 	 	 
	 	
ARTICLE XII - CLAIMS PROCEDURE

	
45

	 	 	
12.1

	
Notice of Denial

	
45

	 	 	
12.2

	
Right to Reconsideration

	
45

	 	 	
12.3

	
Review of Documents

	
45

	 	 	
12.4

	
Decision by Administrator

	
45

	 	 	
12.5

	
Notice by Administrator

	
45

	 	 	
12.6

	
Special Claims Procedures

	
45

	 	 	 	 	 	 
	 	
ARTICLE XIII - AMENDMENTS, TERMINATION AND MERGER

	
47

	 	 	
13.1

	
Amendments

	
47

	 	 	
13.2

	
Effect of Change In Control

	
47

	 	 	
13.3

	
Consolidation or Merger of Trust

	
48

	 	 	
13.4

	
Bankruptcy or Insolvency of Employer

	
49

	 	 	
13.5

	
Voluntary Termination

	
49

	 	 	
13.6

	
Partial Termination of Plan or Permanent Discontinuance of Contributions

	
49

	 	 	 	 	 	 
	 	
ARTICLE XIV - MISCELLANEOUS

	
51

	 	 	
14.1

	
No Diversion of Funds

	
51

	 	 	
14.2

	
Liability Limited

	
51

	 	 	
14.3

	
Facility of Payment

	
51

	 	 	
14.4

	
Spendthrift Clause

	
51

	 	 	
14.5

	
Benefits Limited to Fund

	
51

	 	 	
14.6

	
Cooperation of Parties

	
52

	 	 	
14.7

	
Payments Due Missing Persons

	
52

	 	 	
14.8

	
Governing Law

	
52

	 	 	
14.9

	
Nonguarantee of Employment

	
52

	 	 	
14.1

	
Counsel

	 	
52

	 	 	
14.11

	
Purposes

	 	
52

	 	 	
14.12

	
Invalidity

	 	
53

iv

MID-SOUTHERN BANCORP, INC.

EMPLOYEE STOCK OWNERSHIP PLAN

PREAMBLE

THIS PLAN AGREEMENT, made and entered into this ____ day of ______________, 2018, by and between Mid-Southern Bancorp, Inc. (hereinafter referred to as "Sponsor" or "Employer") and                                                       __________________________ (hereinafter referred to as "Trustee"), is to witnesseth that:

WHEREAS, effective as of January 1, 2018, Mid-Southern Bancorp, Inc. has adopted the Mid-Southern Bancorp, Inc. Employee Stock Ownership Plan ("Plan") in order to enable Participants to share in the growth and prosperity of the Sponsor and its wholly owned subsidiary, Mid-Southern Savings Bank, FSB, and to provide Participants with an opportunity to accumulate capital for their future economic security by accumulating funds to provide retirement, death and disability benefits; and

WHEREAS,  the Plan is a stock bonus plan, designed to meet the applicable requirements of Section 409 of the Code, and an employee stock ownership plan, designed to meet the applicable requirements of Section 4975(e)(7) of the Code and Section 407(d)(6) of the Act; and

WHEREAS, the Plan is intended to invest primarily in "qualifying employer securities" as defined in Code Section 4975(e)(8); and

WHEREAS, The Sponsor intends that the Plan will qualify under Sections 401(a) and 501(a) of the Code and will comply with such provisions; and

WHEREAS, the Sponsor's Board of Directors has resolved to adopt, sponsor, and maintain the Plan for the benefit of eligible employees.

NOW, THEREFORE, in consideration of the foregoing premises, effective                                      January 1, 2018, except to the extent a different effective date is prescribed by applicable pension legislation, or except to the extent a particular Plan section specifies a different effective date, the sponsor adopts and agrees to maintain that certain stock bonus plan and employee stock ownership plan qualified under Sections 401(a) and 4975(e)(7) of the Code and Treasury Regulation Section 1.401-1(b)(1)(iii) known as the "Mid-Southern Bancorp, Inc. Employee Stock Ownership Plan" in accordance with the provisions set forth herein. Notwithstanding the foregoing, the rights of any person (including such person's beneficiaries) who terminated employment or who retired on or before any effective date, or the effective date of a particular amend--ment, shall be deter-mined solely under the terms of this Plan as in effect on the date of his termination of employment or retirement, unless such per-son is thereafter reemployed and again becomes a participant.

1

ARTICLE I

DEFINITION OF TERMS AND CONSTRUCTION

1.1          Definitions.

Unless a different meaning is plainly implied by the context, the following terms as used in this Plan shall have the following meanings:

(a) "Account" shall mean a Participant's or Former Participant's entire accrued benefit under the Plan, including the balance credited to his Employee Stock Ownership Account and any other account described in Section 5.1.

(b) "Act" shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, or any successor statute, together with the applicable regulations promulgated thereunder.

(c) "Administrator" shall mean the fiduciary provided for in Article XI.

(d) "Annual Additions" shall mean, with respect to each Participant, the sum of those amounts allocated to the Participant's Account under this Plan and accounts under any other qualified defined contribution plan to which the Employer or a Related Employer contributes for any Limitation Year, consisting of the following:

      (1)  Employer contributions;

      (2)  Forfeitures; and

      (3)  Employee contributions (if any).

Annual Additions shall not include any Investment Adjustment.  Annual Additions also shall not include employer contributions which are used by the Trust to pay interest on an Exempt Loan nor any forfeitures of Employer Securities purchased with the proceeds of an Exempt Loan, provided that not more than one-third of the employer contributions are allocated to Participants who are among the group of employees deemed "highly compensated employees" within the meaning of Code Section 414(q), as further described in Section 8.3.  Annual Additions also shall not include any other amounts not considered annual additions pursuant Treasury Regulations issued under Code Section 415.

(e) "Authorized Leave of Absence" shall mean an absence from Service with respect to which the Employee may or may not be entitled to Compensation and which meets any one of the following requirements:

      (1)      Service in any of the armed forces of the United States for up to 36 months, provided that the Employee resumes Service within 90 days after discharge, or such longer period of time during which such Employee's employment rights are protected by law; or

      (2)       Any other absence or leave expressly approved and granted by the Employer.  In approving such leaves of absence, the Employer shall treat all Employees on a uniform and nondiscriminatory basis.

(f) "Beneficiary" shall mean such legal or natural persons, who may be designated contingently or successively, as may be designated by the Participant pursuant to Section 6.5 to receive 

 

 

2

 

benefits after the death of the Participant, or in the absence of a valid designation, such persons specified in Section 6.5(b) to receive benefits after the death of the Participant.

(g)                "Board of Directors" shall mean the Board of Directors of the Sponsor.

(h) "Break" shall mean a Plan Year during which an Employee fails to complete more than 500 Hours of Service.  No Break shall occur while a Participant is performing Qualified Military Service.

(i) "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time, or any successor statute, together with the applicable regulations promulgated thereunder.

(j) "Compensation" shall be defined as follows:

    (1)       Allocation Compensation. Allocation Compensation shall mean the "compensation" paid to an Employee by the Employer for services rendered to the Employer during a Plan Year, after the date on which the Employee becomes a Participant, as defined in Code Section 3401(a) (for purposes of income tax withholding at the source) plus amounts that would be required to be included as wages but for an election under Section 125(a), 132(f)(4), 402(e)(3), 402(h)(1)(B), 402(k) or 457(b) of the Code, plus all other payments of compensation to an employee by his employer (in the course of the employer's trade or business) for which the employer is required to furnish the employee a written statement under Section 6041(d), 6051(a)(3), and 6052 of the Code.  Notwithstanding the following, for purposes of this Section 1.1(j)(1), the following items shall not constitute Allocation Compensation: reimbursements or other expense allowances, fringe benefits, moving expenses, amounts paid by the Employer or accrued with respect to this Plan or any other qualified or non-qualified unfunded plan of deferred compensation or other employee welfare plan(s) to which the Employer contributes, payments for group insurance, medical benefits, expense reimbursements, and moving expenses. Also excluded from the definition of Allocation Compensation are other forms of extraordinary pay, including but limited to amounts that vest under a program whose benefits are subject to taxation under Code Section 83, such as a stock option plan or a recognition and retention (or similar) plan. Compensation must be determined without regard to any rules under Section 3401(a) of the Code 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 3401(a)(2)) of the Code.

   (2)       Statutory Compensation.  For purposes of applying the limitations of Section 415 of the Code and certain other statutory purposes, the term "Statutory Compensation" shall mean wages within the meaning of Section 3401(a) of the Code for 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 3401(a)(2) of the Code), that are paid to an Employee by the Employer for services rendered to the Employer during a Plan Year, plus amounts that would be included in wages but for an election under Sections 125(a), 132(f)(4), 402(e)(3), 402(h)(1)(B), 402(k), or 457(b) of the Code, but excluding amounts paid or reimbursed by the Employer for moving expenses incurred by the Participant, but only to the extent that, at the time of the payment, it is reasonable to believe that these amounts are deductible by the Participant under Section 217 of the Code.  Back pay, within the meaning of Section 1.415(c)-2(g)(8) of the Treasury Regulations, shall be treated as Statutory Compensation for the Plan Year to which the back pay relates to the extent the back pay represents wages and compensation that would otherwise be included in this definition.  This paragraph shall be interpreted in a manner consistent with the Treasury Regulations under Code Section 415.

   (3)       General timing rule.  In order to be taken into account for a Plan Year under subparagraphs (1) and (2) above, Compensation must be actually paid or made available to a Participant 

 

 

3

 

(or, if earlier, includible in the gross income of the Participant) within the Plan Year or Limitation Year, as the case may be. For this purpose, compensation is treated as paid on a date if it is actually paid on that date or it would have been paid on that date but for an election under Section 125, 132(f)(4), 401(k), 403(b), 408(k), 408(p)(2)(A)(i), or 457(b) of the Code.

  (4)        Special rules regarding severance compensation.  For purposes of applying subparagraphs (1) and (2) above, in order to be taken into account for a Plan Year or Limitation Year, Compensation must be paid or treated as paid to the Participant prior to the Participant's severance from employment with the Employer maintaining the plan.  For this purpose, severance from employment is determined in the same manner as under Section 1.401(k)‐1(d)(2) of the Treasury Regulations except that, for purposes of determining the employer of an employee, the modifications provided under Section 415(h) of the Code to the employer aggregation rules apply.

  (5)         Notwithstanding subparagraph (4), for purposes of determining Statutory Compensation, Compensation for a Plan Year shall also include Compensation paid by the later of 2 1/2 months after an Employee's severance from employment (as defined in subparagraph (4)) with the Employer maintaining the Plan or the end of the Plan Year that includes the date of the Employee's severance from employment with the Employer maintaining the Plan, if the payment is regular Compensation for services during the Employee's regular working hours, or Compensation for services outside the Employee's regular working hours (such as overtime or shift differential), commissions, bonuses, or other similar payments, and, absent a severance from employment, the payments would have been paid to the Employee while the Employee continued in employment with the Employer.  Any payments not described above shall not be considered Compensation if paid after severance from employment, even if they are paid by the later of 2 1/2 months after the date of severance from employment or the end of the Limitation Year that includes the date of severance from employment.

  (6)          Dollar Limitation.   Notwithstanding anything herein to the contrary, the annual Compensation of each Participant taken into account under the Plan for any purpose during any Plan Year shall not exceed the compensation limitation set forth in Section 401(a)(17) of the Code ($275,000 for the Plan Year that commences in 2018).  This limitation shall be adjusted from time to time as permitted by Section 401(a)(17)(B) of the Code.

(k)              "Date of Hire" shall mean the date on which an Employee shall perform his first Hour of Service.  Notwithstanding the foregoing, in the event that an Employee incurs one or more consecutive Breaks after his initial Date of Hire which results in the forfeiture of his pre-Break Service pursuant to Section 3.3, his "Date of Hire" shall thereafter be the date on which he completes his first Hour of Service after such Break or Breaks.

(l)               "Disability" shall mean a physical or mental impairment which prevents a Participant from performing the duties assigned to him by the Employer, and which either has caused the Social Security Administration to classify the individual as "disabled" for purposes of Social Security or qualifies as a disability under a long-term disability plan maintained by the Employer in which the Participant participates.  The determination of whether a Participant has a Disability shall be made by a qualified physician selected by the Administrator.

(m)              "Disability Retirement Date" shall mean the date a Participant is determined to have incurred a Disability while employed by an Employer.

(n)               "Effective Date" shall mean January 1, 2018.

 

 

4

(o)               "Eligibility Period" shall mean the period of 12 consecutive months commencing on an Employee's Date of Hire.  Succeeding Eligibility Periods after the initial Eligibility Period shall be based on the Plan Year beginning with the Plan Year which includes the first anniversary date of an Employee's Date of Hire, and subsequent Plan Years.

(p)                "Employee" shall mean any person who is classified as an employee by the Employer or a Related Employer, including officers, but excluding directors in their capacity as such.  Individuals not originally classified as Employees who are later classified as such for any reason shall not be treated as Employees under the Plan.

(q)                "Employee Stock Ownership Account" shall mean the separate bookkeeping account established for each Participant pursuant to Section 5.1(a).

(r)                 "Employee Stock Ownership Contribution" shall mean the cash, Employer Securities, or both that are contributed to the Plan by the Employer pursuant to Article IV.

(s)                "Employee Stock Ownership Suspense Account" shall mean the temporary account in which the Trustee may maintain any Employee Stock Ownership Contribution that is made prior to the last day of the Plan Year for which it is made, as described in Section 5.2.

(t) "Employer" shall mean Mid-Southern Bancorp, Inc. and its wholly owned subsidiary, Mid-Southern Savings Bank, FSB, or any successors to the aforesaid corporations by merger, consolidation or otherwise, which may agree to continue this Plan, or any Related Employer or any other business organization which, with the consent of the Sponsor, shall agree to become a party to this Plan.  To the extent required by the Code or the Act, references herein to the Employer shall also include all Related Employers, whether or not they are participating in this Plan.

(u) "Employer Securities" shall mean the common stock issued by Mid-Southern Bancorp, Inc.  Such term shall also mean, in the discretion of the Board of Directors, any other common stock issued by the Employer or any Related Employer having voting power and dividend rights equal to or in excess of:

      (1)       that class of common stock of the Employer or a Related Employer having the greatest voting power, and

      (2)       that class of common stock of the Employer or a Related Employer having the greatest dividend rights.

     

Non-callable preferred stock shall be treated as Employer Securities if such stock is convertible at any time into stock which meets the requirements of (1) and (2) next above and if such conversion is at a conversion price which (as of the date of the acquisition by the Plan) is reasonable.  For purposes of the last preceding sentence, preferred stock shall be treated as non-callable if, after the call, there will be a reasonable opportunity for a conversion which meets the requirements of the last preceding sentence.

(v) "Employment Commencement Date" shall mean the first date on which the Eligible Employee performs an Hour of Service.

(w) "Entry Date" shall mean each January 1 and July 1.

(x) "Exempt Loan" shall mean a loan described at Section 4975(d)(3) of the Code to the Trustee to purchase Employer Securities for the Plan, made or guaranteed by a disqualified person, as defined at Section 4975(e)(2) of the Code, including, but not limited to, a direct loan of cash, a purchase 

 

 

 

5

 

money transaction, an assumption of an obligation of the Trustee, an unsecured guarantee or the use of assets of such disqualified person as collateral for such a loan.

(y) "Exempt Loan Suspense Account" shall mean the account to which Financed Shares are initially credited until they are released in accordance with Section 8.5.

(z) "Financed Shares" shall mean the Employer Securities acquired by the Trustee with the proceeds of an Exempt Loan and which are credited to the Exempt Loan Suspense Account until they are released in accordance with Section 8.5.

(aa)               "Former Participant" shall mean any previous Participant whose participation has terminated but who has a vested Account in the Plan which has not been distributed in full.

(bb)               "Fund" shall mean the trust fund maintained by the Trustee pursuant to the Trust Agreement in order to provide for the payment of the benefits specified in the Plan.

(cc)               "Hour of Service" shall mean each hour for which an Employee is directly or indirectly paid or entitled to payment by the Employer or a Related Employer for the performance of duties or for reasons other than the performance of duties (such as vacation time, holidays, sickness, disability, paid lay-offs, jury duty and similar periods of paid nonworking time). To the extent not otherwise included, Hours of Service shall also include each hour for which back pay, irrespective of mitigation of damages, is either awarded or agreed to by the Employer or a Related Employer.  Hours of working time shall be credited on the basis of actual hours worked, even though compensated at a premium rate for overtime or other reasons.  In computing and crediting Hours of Service for an Employee under this Plan, the rules set forth in Sections 2530.200b-2(b) and (c) of the Department of Labor Regulations shall apply, said sections being herein incorporated by reference.  Hours of Service shall be credited to the Plan Year or other relevant period during which the services were performed or the nonworking time occurred, regardless of the time when compensation therefor may be paid.  Any Employee for whom no hourly employment records are kept by the Employer or a Related Employer shall be credited with 190 Hours of Service for each month in which he would have been credited with a least one Hour or Service under the foregoing provisions, if hourly records were available.  Solely for purposes of determining whether a Break for participation and vesting purposes has occurred in an Eligibility Period or a Plan Year, an individual who is absent from work for maternity or paternity reasons shall receive credit for the Hours of Service which would otherwise have been credited to such individual but for such absence, or in any case in which such hours cannot be determined, 8 Hours of Service per day of such absence. For purposes of Section 1.1(cc), an absence from work for maternity or paternity reasons means an absence (1) by reason of the pregnancy of the individual, (2) by reason of the birth of a child of the individual, (3) by reason of the placement of a child with the individual in connection with the adoption of such child by such individual, or (4) for purposes of caring for such child for a period beginning immediately following such birth or placement. The Hours of Service credited under this provision shall be credited (1) in the computation period in which the absence begins if the crediting is necessary to prevent a Break in that period, or (2) in all other cases, in the following computation period.

(dd)              "Investment Adjustments" shall mean the increases and/or decreases in the value of a Participant's Account attributable to earnings, gains, losses and expenses of the Fund, as set forth in Section 5.3.

(ee)               "Limitation Year" shall mean the Plan Year.

 

 

6

(ff)                "Normal Retirement Date" shall mean the date on which a Participant attains age 65 or the fifth anniversary of the date the Employee commences participation in the Plan.

(gg)              "Participant" shall mean an Employee who has met all of the eligibility requirements of the Plan and who is currently included in the Plan as provided in Article II hereof; provided, however, that the term "Participant" shall not include (1) leased employees (as defined herein), (2) any individual who is employed by a Related Employer that has not adopted the Plan, (3) any Employee who is a non-resident alien individual and who has no earned income from sources within the United States, or (4) any Employee who is included in a unit of Employees covered by a collective-bargaining agreement with the Employer or a Related Employer that does not expressly provide for participation of such Employees in the Plan, where there has been good-faith bargaining between the Employer or a Related Employer and Employees' representatives on the subject of retirement benefits.  To the extent required by the Code or the Act, or appropriate based on the context, references herein to Participant shall include Former Participant.  The term "leased employee" means any person (other than an employee of the recipient) who pursuant to an agreement between the recipient and any other person ("leasing organization") has performed services for the recipient (or for the recipient and related persons determined in accordance with Section 414(n)(6)) of the Code on a substantially full time basis for a period of at least one year, and such services are performed under primary direction or control by the recipient.

(hh)              "Plan" shall mean the Mid-Southern Bancorp, Inc. Employee Stock Ownership Plan, as described herein or as hereafter amended from time to time.

(ii) "Plan Year" shall mean the twelve month period commencing January 1 and ending December 31.

(jj) "Qualified Domestic Relations Order" shall mean any judgment, decree or order that satisfies the requirements to be a "qualified domestic relations order," as defined in Section 414(p) of the Code.

(kk)               "Qualified Military Service" shall have the meaning provided for in Section 414(u) of the Code.

(ll) "Related Employer" shall mean any entity that is:

     (1)       a member of a controlled group of corporations that includes the Employer, while it is a member of such controlled group (within the meaning of Section 414(b) of the Code);    

     (2)       a member of a group of trades or businesses under common control with the Employer, while it is under common control (within the meaning of Section 414(c) of the Code);

     (3)       a member of an affiliated service group that includes the Employer, while it is a member of such affiliated service group (within the meaning of Section 414(m) of the Code); or

     (4)       a leasing or other organization that is required to be aggregated with the Employer pursuant to the provisions of Section 414(n) or 414(o) of the Code.

(mm)            "Retirement" shall mean termination of employment which qualifies a retirement under Article VI.

 

 

7

(nn)             "Service" shall mean, for purposes of eligibility to participate and vesting, employment with the Employer or any Related Employer, and for purposes of allocation of the Employee Stock Ownership Contribution and forfeitures, employment with the Employer.

(oo)              "Sponsor" shall mean Mid-Southern Bancorp, Inc.

(pp)              "Statutory Compensation" shall mean Compensation as defined in Section 1.1(j)(2).

(qq)              "Trust Agreement" shall mean the agreement by and between the Sponsor and the Trustee, as in effect from time to time, whether set forth herein or otherwise.

(rr)                "Trustee" shall mean the trustee or trustees by whom the assets of the Plan are held, as provided in the Trust Agreement, or his or their successors.

(ss)              "Valuation Date" shall mean the last day of each Plan Year.  Notwithstanding the foregoing, the Trustee may value the Trust as frequently as each business day of the Plan Year to determine the fair market value of each Participant's Account under the Plan.  For transactions involving the Plan and a disqualified person (within the meaning of Section 4975(e)(2) of the Code), the valuation date shall be the date of the transaction.

(tt)                "Year of Eligibility Service" shall mean an Eligibility Period during which an Employee is credited with at least 1,000 Hours of Service, except as otherwise specified in Article III.

(uu)             "Year of Vesting Service" shall mean a Plan Year during which an Employee is credited with at least 1,000 Hours of Service (prorated for Plan Years of less than 12 months), except as otherwise specified in Article III.

1.2           Plurals and Gender.

Where appearing in the Plan and the Trust Agreement, the masculine gender shall include the feminine and neuter genders, and the singular shall include the plural, and vice versa, unless the context clearly indicates otherwise.

1.3           Incorporation of Trust Agreement.

If there is a separate Trust Agreement, then that Trust Agreement, as the same may be amended from time to time, is intended to be and hereby is incorporated by reference into this Plan.  All contributions made under the Plan will be held, managed and controlled by the Trustee pursuant to the terms and conditions of the Trust Agreement.

1.4           Headings.

The headings and sub-headings in this Plan are inserted for the convenience of reference only and are to be ignored in any construction of the provisions hereof.

1.5           Severability.

In case any provision of this Plan shall be held illegal or void, such illegality or invalidity shall not affect the remaining provisions of this Plan, but shall be fully severable, and the Plan shall be construed and enforced as if said illegal or invalid provisions had never been inserted herein.

 

 

8

1.6          References to Governmental Regulations.

References in this Plan to regulations issued by the Internal Revenue Service, the Department of Labor, or other governmental agencies shall include all regulations, rulings, procedures, releases and other position statements issued by any such agency.

1.7           Notices.

Any notice or document required to be filed with the Administrator or Trustee under the Plan will be properly filed if delivered or mailed by registered mail, postage prepaid, to the Administrator in care of the Sponsor or to the Trustee, each at its principal business offices.  Any notice required under the Plan may be waived in writing by the person entitled to notice.

1.8           Evidence.

Evidence required of anyone under the Plan may be by certificate, affidavit, document or other information which the person acting on it considers pertinent and reliable, and signed, made or presented by the proper party or parties.

1.9           Action by Employer.

Any action required or permitted to be taken by any entity constituting the Employer under the Plan shall be by resolution of its Board of Directors or by a person or persons authorized by its Board of Directors.

9

ARTICLE II

PARTICIPATION

2.1           Commencement of Participation.

(a)      Any Employee who is eligible to become a Participant in accordance with Section 1.1(gg) hereof shall initially become a Participant on the Entry Date coincident with or next following the date on which he has attained age twenty-one (21) and completes one Year of Eligibility Service.

(b)      Any Employee who had satisfied the requirements set forth in Section 2.1(a) during the 12 consecutive month period prior to the Effective Date shall become a Participant on the Effective Date, provided he is still actively employed by the Employer or on an Authorized Leave of Absence on the Effective Date, unless the Employee is described within a classification that is not treated as a "Participant", as defined in Section 1.1(gg).

2.2          Termination of Participation.

After commencement or resumption of his participation, an Employee shall remain a Participant during each consecutive Plan Year thereafter until the earliest of the following dates:

(a)      His actual Retirement date;

(b)      His date of death; or

(c)      The last day of a Plan Year during which he incurs a Break.

2.3           Resumption of Participation.

(a)      Any Participant whose employment terminates and who resumes Service before he incurs a Break shall resume participation immediately on the date he is reemployed.

(b)      Except as otherwise provided in Section 2.3(c), any Participant who incurs one or more Breaks and resumes Service shall resume participation retroactively as of the first day of the first Plan Year in which he completes a Year of Eligibility Service after such Break(s).

(c)      Any Participant who incurs one or more Breaks and resumes Service, but whose pre-Break Service is not reinstated to his credit pursuant to Section 3.3, shall be treated as a new Employee and shall again be required to satisfy the eligibility requirements contained in Section 2.1(a) before resuming participation on the appropriate Entry Date.

2.4           Determination of Eligibility.

The Administrator shall determine the eligibility of Employees in accordance with the provisions of this Article.  For each Plan Year, the Employer shall furnish the Administrator a list of all Employees, indicating their Date of Hire, their Hours of Service during their Eligibility Period, their date of birth, the original date of their reemployment with the Employer, if any, and any Breaks they may have incurred.

10

2.5           Restricted Participation.

Subject to the terms and conditions of the Plan, during the period between the Participant's date of termination of participation in the Plan (as described in Section 2.2) and the distribution of his entire Account (as described in Article IX), and during any period that a Participant does not meet the requirements of Section 2.1(a) or is employed by a Related Employer that is not participating in the Plan (or otherwise is not within a classification of Employee that is considered a Participant as defined herein), the Participant or, in the event of the Participant's death, the Beneficiary of the Participant, will be considered and treated as a Participant for all purposes of the Plan, except as follows:

(a)      the Participant will not share in the Employee Stock Ownership Contribution and forfeitures (as described in Section 7.3), except as provided in Sections 5.4 and 5.5; and

(b)      the Beneficiary of a deceased Participant cannot designate a Beneficiary under Section 6.5.

11

ARTICLE III

CREDITED SERVICE

3.1           Service Counted for Eligibility Purposes.

Except as provided in Section 3.3, all Years of Eligibility Service completed by an Employee shall be counted in determining his eligibility to become a Participant on and after the Effective Date, regardless of whether such Service was completed before or after the Effective Date.

3.2           Service Counted for Vesting Purposes.

All Years of Vesting Service completed by an Employee (including Years of Vesting Service completed prior to the Effective Date) shall be counted in determining his vested interest in this Plan, except the following:

(a)       Service which is disregarded under the provisions of Section 3.3;

(b)       Service prior to the Effective Date of this Plan if such Service would have been disregarded under the "break in service" rules (within the meaning of Section 1.411(a)-5(b) of the Treasury Regulations).

3.3           Credit for Pre-Break Service.

Upon his resumption of participation following one or a series of consecutive Breaks, an Employee's pre-Break Service shall be reinstated to his credit for eligibility and vesting purposes only if either:

(a)       He was vested in any portion of his accrued benefit at the time the Break(s) began; or

(b)       The number of his consecutive Breaks does not equal or exceed the greater of 5 or the number of his Years of Eligibility Service or Years of Vesting Service, as the case may be, credited to him before the Breaks began.

Except as provided in the foregoing, none of an Employee's Service prior to one or a series of consecutive Breaks shall be counted for any purpose in connection with his participation in this Plan thereafter.

3.4           Service Credit During Authorized Leaves.

An Employee shall receive no Service credit under Section 3.1 or 3.2 during any Authorized Leave of Absence.  However, solely for the purpose of determining whether he has incurred a Break (if the Plan does not use the elapsed time method of crediting Service) during any Plan Year in which he is absent from Service for one or more Authorized Leaves of Absence, he shall be credited with 45 Hours of Service for each week during any such leave period.  Notwithstanding the foregoing, if an Employee fails to return to Service on or before the end of a leave period, he shall be deemed to have terminated Service as of the first day of such leave period and his credit for Hours of Service, determined under this Section 3.4, shall be revoked.

12

3.5           Service Credit During Maternity or Paternity Leave.

For purposes of determining whether a Break has occurred for participation and vesting purposes, an individual who is on maternity or paternity leave as described in Section 1.1(cc) shall be deemed to have completed Hours of Service during such period of absence, all in accordance with Section 1.1(cc).  Notwithstanding the foregoing, no such credit shall be given unless the individual furnishes to the Administrator such timely information as the Administrator may reasonably require to determine:

(a)      that the absence from Service was attributable to one of the maternity or paternity reasons enumerated in Section 1.1(cc); and

 

(b)      the number of days of such absence.

 

In no event, however, shall any credit be given for such leave other than for determining whether a Break has occurred.

3.6           Ineligible Employees.

Notwithstanding any provisions of this Plan to the contrary, any Employee who is ineligible to participate in this Plan either because of his failure:

(a)      To meet the eligibility requirements contained in Article II; or

(b)      To be a Participant, as defined in Section 1.1(gg),

shall, nevertheless, earn Years of Eligibility Service and Years of Vesting Service pursuant to the rules contained in this Article III.  However, such Employee shall not be entitled to an allocation of any contributions or forfeitures hereunder unless and until he becomes a Participant in this Plan, and then, only during his period of participation.

3.7           Military Service Provisions.

(a)      In General. Notwithstanding any provision of this Plan to the contrary, contributions, benefits and service credit with respect to qualified military service shall be provided in accordance with Section 414(u) of the Code.

(b)      Death Benefits Under USERRA. If a Participant dies while performing Qualified Military Service, the survivors of the Participant are entitled to any additional benefits provided under the plan as if the Participant had resumed and then terminated employment on account of death pursuant to Section 401(a)(37) of the Code, Notice 2010-5 and any superseding guidance.

(c)      Differential Military Pay. Pursuant to Section 414(u)(12) of the Code, Notice 2010-5 and any superseding guidance, a Participant receiving differential wage payments (as defined in Section 3401(h)(2) of the Code) shall be treated as an Employee of the Employer making the payment and the differential wage payments shall be treated as Compensation under the Plan.

(d)      Deemed Severance. If a Participant performs service in the uniformed services (as defined in Section 414(u)(12)(B)) of the Code on active duty for a period of more than 30 days, the Participant will be deemed to have a severance from employment solely for purposes of eligibility for distribution of amounts not subject to Section 412 of the Code. However, the Plan will not distribute such a Participant's account on account of this deemed severance unless the Participant specifically elects to receive a benefit 

 

13

distribution hereunder. If a Participant elects to receive a distribution on account of this deemed severance, then the individual may not make an elective deferral or employee contribution during the 6-month period beginning on the date of the distribution. If a Participant would be entitled to a distribution on account of a deemed severance, and a distribution on account of another Plan provision (such as a qualified reservist distribution), then the other Plan provision will control and the 6-month suspension will not apply.

14

ARTICLE IV

CONTRIBUTIONS

4.1            Employee Stock Ownership Contribution.

(a)      Subject to all of the provisions of this Article IV, for each Plan Year commencing on or after the Effective Date, the Employer shall make an Employee Stock Ownership Contribution to the Fund in such amount as may be determined by resolution of the Board of Directors in its discretion; provided, however, that the Employer shall contribute an amount in cash not less than the amount required to enable the Trustee to discharge any indebtedness incurred with respect to an Exempt Loan in accordance with Section 8.6(c).  If any part of the Employee Stock Ownership Contribution under this Section 4.1 for any Plan Year is in cash in an amount exceeding the amount needed to pay the amount due during or prior to such Plan Year with respect to an Exempt Loan, such cash shall be applied by the Trustee, as directed by the Administrator in its sole discretion, either to the purchase of Employer Securities or to repay an Exempt Loan.  Contributions hereunder shall be in the form of cash, Employer Securities or any combination thereof.  In determining the value of Employer Securities transferred to the Fund as an Employee Stock Ownership Contribution, the Administrator may determine the average of closing prices of such securities for a period of up to 90 consecutive days immediately preceding the date on which the securities are contributed to the Fund.  In the event that the Employer Securities are not readily tradable on an established securities market, the value of the Employer Securities transferred to the Fund shall be determined by an independent appraiser in accordance with Section 8.9.

(b)      Subject to Section 4.1(a), in no event shall the Employee Stock Ownership Contribution exceed for any Plan Year the maximum amount that may be deducted by the Employer under Section 404 of the Code, nor shall such contribution cause the Employer to violate its regulatory capital requirements.  Each Employee Stock Ownership Contribution by the Employer shall be deemed to be made on the express condition that the Plan, as then in effect, shall be qualified under Sections 401(a) and 501(a) of the Code and that the amount of such contribution shall be deductible from the Employer's income under Section 404 of the Code.

4.2           Time and Manner of Employee Stock Ownership Contribution.

(a)      The Employee Stock Ownership Contribution (if any) for each Plan Year shall be paid to the Trustee in one lump sum or installments at any time on or before the expiration of the time prescribed by law (including any extensions) for filing of the Employer's federal income tax return for its fiscal year ending concurrent with or during such Plan Year; provided, however, that the Employee Stock Ownership Contribution (if any) for a Plan Year shall be made in a timely manner to make any required payment of principal and/or interest on an Exempt Loan for such Plan Year.  Any portion of the Employee Stock Ownership Contribution for each Plan Year that may be made prior to the last day of the Plan Year shall, if there is an Exempt Loan outstanding at such time, at the election of the Administrator, either be applied immediately to make payments on such Exempt Loan or maintained in the Employee Stock Ownership Suspense Account described in Section 5.2 until the last day of such Plan Year.

(b)      If an Employee Stock Ownership Contribution for a Plan Year is paid after the close of the Employer's fiscal year which ends concurrent with or during such Plan Year but on or prior to the due date (including any extensions) for filing of the Employer's federal income tax return for such fiscal year, it shall be considered, for allocation purposes, as an Employee Stock Ownership Contribution to the Fund for the Plan Year for which it was computed and accrued, unless such contribution is accompanied by a statement to the Trustee, signed by the Employer, which specifies that the Employee Stock Ownership Contribution is made with respect to the Plan Year in which it is received by the Trustee.  Any Employee Stock 

 

 

15

 

Ownership Contribution paid by the Employer during any Plan Year but after the due date (including any extensions) for filing of its federal income tax return for the fiscal year of the Employer ending on or before the last day of the preceding Plan Year shall be treated, for allocation purposes, as an Employee Stock Ownership Contribution to the Fund for the Plan Year in which the contribution is paid to the Trustee.

(c)      Notwithstanding anything contained herein to the contrary, no Employee Stock Ownership Contribution shall be made for any Plan Year that would cause the Plan to violate the requirements of Section 5.6 (related to Section 415 of the Code).

4.3           Records of Contributions.

The Employer shall deliver at least annually to the Trustee, with respect to the Employee Stock Ownership Contribution contemplated in Section 4.1, a certificate of the Administrator, in such form as the Trustee shall approve, setting forth:

(a)      The aggregate amount of such contribution, if any, to the Fund for such Plan Year;

(b)      The names, Internal Revenue Service identifying numbers and current residential addresses of all Participants in the Plan;

(c)      The amount and category of contributions to be allocated to each such Participant; and

(d)      Any other information reasonably required for the proper operation of the Plan.

4.4           Erroneous Contributions.

(a)       Notwithstanding anything herein to the contrary, upon the Employer's written request, a contribution which was made by a mistake of fact, or conditioned upon the initial qualification of the Plan, under Code Section 401(a), or upon the deductibility of the contribution under Section 404 of the Code, shall be returned to the Employer by the Trustee within one year after the payment of the contribution, the denial of the qualification or the disallowance of the deduction (to the extent disallowed), whichever is applicable; provided, however, that in the case of denial of the initial qualification of the Plan, a contribution shall not be returned unless an Application for Determination has been timely filed with the Internal Revenue Service.  Any portion of a contribution returned pursuant to this Section 4.4 shall be adjusted to reflect its proportionate share of the losses of the Fund, but shall not be adjusted to reflect any earnings or gains.  Notwithstanding any provisions of this Plan to the contrary, the right or claim of any Participant or Beneficiary to any asset of the Fund or any benefit under this Plan shall be subject to and limited by this Section 4.4.

(b)       In no event shall Employee contributions be accepted.  Any such Employee contributions (and any earnings attributable thereto) mistakenly received by the Trustee shall promptly be returned to the Participant.

16

ARTICLE V

ACCOUNTS, ALLOCATIONS AND INVESTMENTS

5.1           Establishment of Separate Participant Accounts.

The Administrator shall establish and maintain a separate Account for each Participant in the Plan and for each Former Participant in accordance with the provisions of this Article V.  Such separate Account shall be for bookkeeping purposes only and shall not require a segregation of the Fund, and no Participant, Former Participant or Beneficiary shall acquire any right to or interest in any specific assets of the Fund as a result of the allocations provided for under this Plan.

(a)        Employee Stock Ownership Accounts.

The Administrator shall establish a separate Employee Stock Ownership Account in the Fund for each Participant.  The Administrator may establish subaccounts hereunder, an Employer Stock Account reflecting a Participant's interest in Employer Securities held by the Fund, and an Other Investments Account reflecting the Participant's interest in his Employee Stock Ownership Account other than Employer Securities.  Each Participant's Employer Stock Account shall reflect his share of any Employee Stock Ownership Contribution made in Employer Securities, his allocable share of forfeitures (as described in Section 5.4), and any Employer Securities attributable to earnings on such stock.  Each Participant's Other Investments Account shall reflect any Employee Stock Ownership Contribution made in cash, any cash dividends on Employer Securities allocated and credited to his Employee Stock Ownership Account (other than currently distributable dividends) and his share of corresponding cash forfeitures, and any income, gains, losses, appreciation, or depreciation attributable thereto.  Dividends attributable to Employer Securities that are allocated to a Participant pursuant to Section 8.4 (and not distributable thereunder) shall be treated as part of the Participant's Employee Stock Ownership Account.

(b)      Other Accounts.

The Administrator shall establish such other separate accounts for each Participant as may be necessary or desirable for the convenient administration of the Fund.

5.2           Establishment of Suspense Accounts.

The Administrator shall establish a separate Employee Stock Ownership Suspense Account.  There shall be credited to such account any Employee Stock Ownership Contribution that may be made prior to the last day of the Plan Year and that are allocable to the Employee Stock Ownership Suspense Account pursuant to Section 4.2(a).  The Employee Stock Ownership Suspense Account shall share proportionately as to time and amount in any Investment Adjustments.  As of the last day of each Plan Year, the balance of the Employee Stock Ownership Suspense Account shall be added to the Employee Stock Ownership Contribution and allocated to the Employee Stock Ownership Accounts of Participants as provided in Section 5.5, except as provided herein.  In the event that the Plan takes an Exempt Loan, the Employer Securities purchased thereby shall be allocated as Financed Shares to a separate Exempt Loan Suspense Account, from which Employer Securities shall be released in accordance with Section 8.5 and shall be allocated in accordance with Section 8.6(b).

 

 

17

5.3           Allocation of Earnings, Losses and Expenses.

Except as otherwise provided in this instrument, as of each Valuation Date, any increase or decrease in the net worth of the aggregate Employee Stock Ownership Accounts held in the Fund attributable to earnings, losses, expenses and unrealized appreciation or depreciation in each such account, as determined by the Trustee, shall be credited to or deducted from the appropriate suspense accounts and all Participants' Employee Stock Ownership Accounts, in accordance with this Section.  Earnings, losses, and unrealized appreciation or depreciation in Employer Securities in a Participant's Employee Stock Ownership Account shall be determined and allocated only to such account, but such determination shall be made immediately prior to crediting any Contributions and forfeitures for the current Plan Year, but after adjustment for any transfer to or from such accounts.  Earnings, losses, and unrealized appreciation or depreciation in investments other than Employer Securities in the Participant's Other Investment Accounts shall be allocated in the proportion that the value of each such account (determined immediately prior to such allocation and before crediting any Contributions and forfeitures for the current Plan Year but after adjustment for any transfer to or from such accounts and for the time such funds were in such accounts) bears to the value of all Other Investment Accounts.  Provided, however, cash dividends paid to the Plan shall be allocated or otherwise disposed of in accordance with Plan Section 8.4. Plan expenses paid from the assets of this employee pension benefit plan shall be allocated across all Accounts in the proportion that the value of each Participant's Account bears to the value of all Participant Accounts.

5.4           Application of Forfeitures.

Forfeitures occurring during the Plan Year may, at the discretion of the Administrator, be used to pay or reimburse expenses of the Plan, to the extent such payment or reimbursement is consistent with the applicable fiduciary requirements of the Act.  As of the last day of each Plan Year, all forfeitures which have not been applied in accordance with the preceding sentence shall be added to the Employee Stock Ownership Contribution (if any) for such year and allocated among the Participants' Employee Stock Ownership Accounts, as appropriate, in the manner provided in Section 5.5.

5.5           Allocation of Employee Stock Ownership Contribution.

As of the last day of each Plan Year for which the Employer shall make an Employee Stock Ownership Contribution, the Administrator shall allocate the Employee Stock Ownership Contribution (including reallocable forfeitures) for such Plan Year to the Employee Stock Ownership Account of each Participant who completed a Year of Vesting Service during that Plan Year, provided that he is still employed by the Employer on the last day of the Plan Year (or the Participant terminated employment with the Employer and all Related Employers during the Plan Year on account of death, Disability or after attaining Normal Retirement Age).  Such allocation shall be made in the same proportion that each such Participant's Allocation Compensation (defined in Section 1.1(j)) for such Plan Year bears to the total Allocation Compensation (defined in Section 1.1(j)) of all such Participants for such Plan Year, subject to Section 5.6.  Furthermore, if a Participant completes a Year of Vesting Service and is on an Authorized Leave of Absence on the last day of the Plan Year, such a Participant shall be entitled to an allocation based on his Allocation Compensation earned during such Plan Year.

5.6            Limitation on Annual Additions.

(a) Notwithstanding any provisions of this Plan to the contrary, the total Annual Additions credited to a Participant's Account under this Plan (and accounts under any other defined contribution plan maintained by the Employer or a Related Employer) for any Limitation Year shall not exceed the lesser of:

 

 

18

     (1)       the applicable dollar limitation provided for in Section 415(c)(1)(A) of the Code for the Limitation ($55,000 for Limitation Years commencing in 2018), as adjusted for increases in the cost-of-living under Section 415(d) of the Code, or

 

           (2)       100 percent of the Participant's Statutory Compensation for the Limitation Year.

 

(b) This Section 5.6 shall be applied in a manner consistent with the Treasury Regulations under Section 415 of the Code, which shall be incorporated herein by this reference, except as provided herein or in the definition of Compensation.

(c) In the event that the limitations on Annual Additions described in Section 5.6(a) above are exceeded with respect to any Participant in any Limitation Year, then:

     (1)        The Administrator shall determine to what extent the Annual Additions to any Participant's Employee Stock Ownership Account must be reduced in each Limitation Year.  The Administrator shall reduce the Annual Additions to all other qualified, tax-exempt retirement plans maintained by the Employer or a Related Employer in accordance with the terms contained therein for required reductions or reallocations mandated by Section 415 of the Code before reducing any Annual Additions in this Plan.

      (2)         If any excess Annual Additions remain, then the excess shall be corrected pursuant to a correction method provided for in the Internal Revenue Service employee plans compliance resolution system (EPCRS) then in effect.

5.7           Erroneous Allocations.

No Participant shall be entitled to any Annual Additions or other allocations to his Account in excess of those permitted under Sections 5.3, 5.4, 5.5, and 5.6.  If it is determined at any time that the Administrator has erred in accepting and allocating any contributions or forfeitures under this Plan, or in allocating Investment Adjustments, or in excluding or including any person as a Participant, then the Administrator, in a uniform and nondiscriminatory manner, shall determine the manner in which such error shall be corrected and shall promptly advise the Trustee in writing of such error and of the method for correcting such error.  The accounts of any or all Participants may be revised, if necessary, in order to correct such error.  To the extent applicable, such correction shall be made in accordance with the requirements of the Internal Revenue Service employee plans compliance resolution system (EPCRS) then in effect.

5.8           Value of Participant's Account.

At any time, the value of a Participant's Account shall consist of the aggregate value of his Employee Stock Ownership Account and his distribution account, if any, determined as of the next-preceding Valuation Date.  The Administrator shall maintain adequate records of the cost basis of Employer Securities allocated to each Participant's Employee Stock Ownership Account.

5.9            Investment of Account Balances.

The Employee Stock Ownership Accounts shall be invested primarily in Employer Securities.  All sales of Employer Securities by the Trustee attributable to the Employee Stock Ownership Accounts of all Participants shall be charged pro rata to the Employee Stock Ownership Accounts of all Participants.

19

ARTICLE VI

RETIREMENT, DEATH AND DESIGNATION OF BENEFICIARY

6.1           Normal Retirement.

A Participant who reaches his Normal Retirement Date and who shall retire at that time shall thereupon be entitled to retirement benefits based on the value of his Account, payable pursuant to the provisions of Section 9.1.  A Participant who remains in Service after his Normal Retirement Date shall not be entitled to any retirement benefits until his actual termination of Service thereafter (except as provided in Section 9.4), and he shall meanwhile continue to participate in this Plan.

6.2           Early Retirement.

There is no early retirement under this Plan.

6.3           Disability Retirement.

In the event a Participant incurs a Disability before his Retirement or other termination of Service, he may retire on his Disability Retirement Date and shall thereupon be entitled to retirement benefits based on the value of his Account, payable pursuant to the provisions of Section 9.1.

6.4           Death Benefits.

(a) Upon the death of a Participant before his Retirement or other termination of Service, the value of his Account shall be payable pursuant to the provisions of Section 9.1.  The Administrator shall direct the Trustee to distribute his Account to any surviving Beneficiary designated by the Participant or, if none, to such persons specified in Section 6.5(b).  Survivors of a Participant who dies while performing Qualified Military Service shall be entitled to any additional benefits provided under the Plan as if the Participant resumed service with the Employer and then terminated employment on account of death. The additional benefits shall not include benefit accruals relating to the period of Qualified Military Service.

(b) Upon the death of a Former Participant, the Administrator shall direct the Trustee to distribute any undistributed balance of his vested Account to any surviving Beneficiary designated by him or, if none, to such persons specified in Section 6.5(b).

(c) The Administrator may require such proper proof of death and such evidence of the right of any person to receive the balance credited to the Account of a deceased Participant or Former Participant as the Administrator may deem desirable.  The Administrator's determination of death and of the right of any person to receive payment shall be conclusive.

6.5           Designation of Beneficiary and Manner of Payment.

(a) Each Participant shall have the right to designate a Beneficiary to receive the sum or sums to which he may be entitled upon his death.  The Participant may also designate the manner in which any death benefits under this Plan shall be payable to his Beneficiary, provided that such designation is in accordance with Section 9.5.  Such designation of Beneficiary and manner of payment 

 

 

20

 

shall be in writing and delivered to the Administrator, and shall be effective when received by the Administrator while the Participant is alive.  The Participant shall have the right to change such designation by notice in writing to the Administrator while the Participant is alive.  Such change of Beneficiary or the manner of payment shall become effective upon its receipt by the Administrator while the Participant is alive.  Any such change shall be deemed to revoke all prior designations.

(b) If a Participant shall fail to designate validly a Beneficiary, or if no designated Beneficiary survives the Participant, the balance credited to his Account shall be paid to the person or persons in the first of the following classes of successive preference Beneficiaries surviving at the death of the Participant:  the Participant's (1) widow or widower, (2) natural-born or adopted children, (3) natural-born or adoptive parents, and (4) estate.  The Administrator shall determine which Beneficiary, if any, shall have been validly designated or entitled to receive the balance credited to the Participant's Account in accordance with the foregoing order of preference, and its decision shall be binding and conclusive on all persons.

(c) Notwithstanding the foregoing, if a Participant is married on the date of his death, the sum or sums to which he may be entitled under this Plan upon his death shall be paid to his spouse, unless the Participant's spouse shall have consented to the election of another Beneficiary.  Such a spousal consent shall be in writing and shall be witnessed either by a representative of the Administrator or by a notary public.  Any designation by an unmarried Participant shall be rendered ineffective by any subsequent marriage, and any consent of a spouse shall be effective only as to that spouse.  If it is established to the satisfaction of the Administrator that spousal consent cannot be obtained because there is no spouse, because the spouse cannot be located, or other reasons prescribed by governmental regulations, the consent of the spouse may be waived, and the Participant may designate a Beneficiary or Beneficiaries other than his spouse.

(d) Automatic revocation of spousal designation.  A divorce decree, or a decree of legal separation, shall automatically revoke the Participant's prior designation, if any, of his or her spouse or former spouse as his or her Beneficiary under the Plan unless a qualified domestic relations order or other written agreement specifically provides otherwise.

21

ARTICLE VII

VESTING AND FORFEITURES

7.1          Vesting on Death, Disability and Normal Retirement.

Unless his participation in this Plan shall have terminated prior thereto, upon a Participant's death, Disability or Normal Retirement Date (whether or not he actually retires at that time) while he is still employed by the Employer, the Participant's entire Account shall be fully vested and nonforfeitable.

7.2            Vesting on Termination of Participation.

(a) Upon termination of his participation in this Plan for any reason other than death, Disability, or Normal Retirement, a Participant shall be vested in a percentage of his Employee Stock Ownership Account, such vested percentage to be determined under the following table ("Vesting Schedule"), based on the Years of Vesting Service (including Years of Vesting Service prior to the Effective Date) credited to him at the time of his termination of participation:

Years of Vesting Service Percentage Vested

		Less than 2	
0%

		2	
20%

		3	
40%

		4	
60%

		5	
80%

		6 or more	
100%

Notwithstanding the foregoing, a Participant shall at all times have a nonforfeitable interest in Employer Securities acquired with dividends received pursuant to Section 8.4(c).

(b) Any portion of the Participant's Employee Stock Ownership Account which is not vested at the time he incurs a Break shall thereupon be forfeited and disposed of pursuant to Section 7.3.  In such event, Employer Securities shall be forfeited only after other assets. Distribution of the vested portion of a terminated Participant's interest in the Plan shall be payable in any manner permitted under Section 9.1.

(c) If a portion of a Participant's Account is forfeited, Employer Securities allocated from an Exempt Loan must be forfeited only after other assets.  If interests in more than one class of Employer Securities have been allocated to the Participant's Account, the Participant must forfeit the same proportion of each such class.

7.3           Forfeitures.

(a) Subject to the provisions of this Section 7.3, a Participant shall forfeit the nonvested portion of his Employee Stock Ownership Account upon the earlier of the date (1) the Participant receives a complete distribution of his Employee Stock Ownership Account (or is deemed to receive, in the case of a Participant who terminates employment with a zero percent vested interest in his Employee Stock Ownership Account), or (2) the Participant incurs 5 consecutive Breaks.

(b) In the event an Employee is rehired by the Employer, the following rules shall apply in determining the vested portion of the Employee's interest in the Plan:

 

22

      (1)       If the Employee has a Break, Years of Vesting Service before such Break shall not be taken into account until after he is credited with a Year of Vesting Service after his return.

      (2)       If the Employee has five or more consecutive Breaks upon his return, then his Years of Vesting Service after such Breaks shall not be taken into account in determining the vested portion of his Employee Stock Ownership Account that accrued before such Breaks.

      (3)        If the Employee was not vested in his Employee Stock Ownership Account at the time of his termination, then Years of Vesting Service before a consecutive period of Breaks shall not be required to be taken into account if the number consecutive Breaks exceeds the greater of (A) five, or (B) the aggregate number of Years of Vesting Service before such period.

(c) If the Plan operates under a graded vesting schedule and a Participant receives a distribution of his entire vested Account balance because of the termination of his participation in the Plan, the Plan shall disregard the Participant's Service with respect to which such cash-out distribution shall have been made, in computing his Account balance in the event that a Former Participant shall again become an Employee and become eligible to participate in the Plan. Such a distribution shall be deemed to be made on termination of participation in the Plan if it is made not later than the close of the second Plan Year following the Plan Year in which such termination occurs.  The forfeitable portion of a Participant's Account balance shall be restored upon repayment to the Plan by such Former Participant of the full amount of the cash-out distribution, provided that the Former Participant again becomes an Employee.  Such repayment must be made by the Employee not later than the end of the 5-year period beginning with the date the Participant is reemployed by the Employer or a Related Employer, or the close of the first period of 5 consecutive Breaks commencing after the distribution to the Employee.  Forfeitures required to be restored by virtue of such repayment shall be restored from the following sources in the following order of preference: (1) current forfeitures; (2) an additional Employer contribution, as appropriate, and as subject to Section 5.6; and (3) investment earnings of the Fund.  In the event that a Participant's Account balance is totally forfeitable, a Participant shall be deemed to have received a distribution of zero upon his termination of Service, and in the event of a return to Service within 5 years of the date of his deemed distribution, the Participant shall be deemed to have repaid his distribution as of the date of his return to Service.

(d) If a distribution is made at a time when a Participant has a nonforfeitable right to less than 100 percent of his Account and the Participant may increase the nonforfeitable percentage in the Account:

     (1)        A separate account will be established for the Participant's interest in the Plan as of the time of the distribution, and

     (2)        At any relevant time the Participant's nonforfeitable portion of the separate account will be equal to an amount ("X") determined by the formula:

X = P(AB + (R x D)) - (R x D)

      For purposes of applying the formula: P is the nonforfeitable percentage at the relevant time, AB is the Account balance at the relevant time, D is the amount of the distribution, and R is the ratio of the Account balance at the relevant time to the Account balance after distribution.

23

ARTICLE VIII

EMPLOYEE STOCK OWNERSHIP PROVISIONS

8.1           Right to Demand Employer Securities.

A Participant entitled to a distribution from his Account shall be entitled to demand that his interest in the Account be distributed to him in the form of Employer Securities, subject to Section 9.8.  The Administrator shall notify the Participant of his right to demand distribution of his vested Account balance entirely in whole shares of Employer Securities (with the value of any fractional share paid in cash).  However, if the charter or by-laws of the Employer restrict ownership of substantially all of the outstanding Employer Securities to Employees and the Trust, then the distribution of a Participant's vested Account shall be made entirely in the form of cash or other property, and the Participant is not entitled to a distribution in the form of Employer Securities.

8.2           Voting Rights; Tendering Shares.

(a) Each Participant with an Employee Stock Ownership Account shall be entitled to direct the Trustee as to the manner in which the Employer Securities in such account are to be voted.  Employer Securities held in the Employee Stock Ownership Suspense Account or the Exempt Loan Suspense Account shall be voted by the Trustee on each issue with respect to which shareholders are entitled to vote in the same proportion as the Participants who timely directed the Trustee as to the manner of voting their shares in the Employee Stock Ownership Accounts with respect to such issue (that is, affirmatively, negatively or with an abstention).  In the event that a Participant fails to give timely voting instructions to the Trustee with respect to the voting of Employer Securities that are allocated to his Employee Stock Ownership Account, the Trustee shall vote such shares in the same proportion as those shares on which the Trustee has received timely direction from the Participants with respect to such issue (that is, affirmatively, negatively or with an abstention).

(b) Tender rights or exchange offers for Employer Securities will be passed through to Participants.  As soon as practicable after the commencement of a tender or exchange offer for Employer Securities, the Employer shall cause each person with power to control the response to such tender or exchange offer to be advised in writing the terms of the offer and, if applicable, to be provided with a form for instructing the Trustee, or for revoking such instruction, to tender or exchange shares of Employer Securities, to the extent permitted under the terms of such offer.  In advising such persons of the terms of the offer, the Employer may include statements from the board of directors setting forth its position with respect to the offer.  To the extent some or all of the Participants have not directed or have not timely directed the Trustee on how to respond to such tender or exchange, then the Trustee shall tender or exchange such Employer Securities on which no direction was received as directed by the Plan Administrator.  In addition, shares attributable to Employer Securities held unallocated in the Exempt Loan Suspense Account as a result of an Exempt Loan shall be tendered or exchanged (or not tendered or exchanged) in the same proportion as those tendered by Participants.  If the tender or exchange offer is limited so that all of the shares that the Trustee has been directed to tender or exchange cannot be sold or exchanged, the shares that each Participant directed to be tendered or exchanged shall be deemed to have been sold or exchanged in the same ratio that the number of shares actually sold or exchanged bears to the total number of shares that the Trustee was directed to tender or exchange. The Trustee shall hold the Participant's individual directions with respect to voting rights or tender decisions in confidence and, except as required by law, shall not divulge or release such individual directions to anyone associated with the Employer. The Employer may require verification of the Trustee's compliance with the directions received from Participants by any independent auditor selected by the Employer, provided that such auditor agrees to maintain the confidentiality of such individual directions. The Employer may develop procedures to facilitate the 

 

 

24

 

exercise of votes or tender rights, such as the use of facsimile transmissions for the Participants located in physically remote areas.

8.3           Nondiscrimination in Employee Stock Ownership Contribution.

In the event that the amount of the Employee Stock Ownership Contribution that would be required in any Plan Year to make the scheduled payments on an Exempt Loan would exceed the amount that would otherwise be deductible by the Employer for such Plan Year under Section 404 of the Code, then no more than one-third of the Employee Stock Ownership Contribution for the Plan Year, which is also the Employer's taxable year, shall be allocated to the group of Employees who:

(a) Was at any time during the Plan Year or the preceding Plan Year a 5 percent owner of the Employer (within the meaning of Section 416(i)(1) of the Code); or

(b) Received Statutory Compensation from the Employer for the preceding Plan Year in excess of $120,000, as adjusted under Section 414(q) of the Code with respect to the current year.

A former Employee shall be included in the group of Employees described above if either such former Employee was included in such group when such Employee separated from Service, or such former Employee was included in such group at any time after attaining age 55.

The determination of who is included in the group of Employees described above, shall be made in accordance with Section 414(q) of the Code and the regulations thereunder. Amounts not allocable on account of this Section 8.3 shall be allocated among the Accounts of Participants who are not highly compensated employees, as defined herein, in accordance with Sections 5.5 and 5.6.

8.4           Dividends.

(a) Dividends paid with respect to Employer Securities credited to a Participant's Employee Stock Ownership Account as of the record date for the dividend payment may be allocated to the Participant's Employee Stock Ownership Account, paid in cash to the Participant, or used by the Trustee to make payments on an Exempt Loan, pursuant to the direction of the Administrator.

(b) If the Administrator shall direct that the aforesaid dividends shall be paid directly to Participants, the dividends paid with respect to such Employer Securities shall be paid to the Plan, from which dividend distributions in cash shall be made to the Participants with respect to the Employer Securities in their Employee Stock Ownership Accounts within 90 days of the close of the Plan Year in which the dividends were paid.

(c) If the Administrator permits, then Participants shall be able to elect, in accordance with regulations or other guidance, to have the dividends paid and allocable to the Participant's Account either (1) distributed to the Participant (or his Beneficiary) no later than 90 days after close of the Plan Year in which the dividend is paid (reduced by any investment losses occurring from when the dividend is paid to the Plan to when it is distributed to the Participant), or (2) retained in the Participant's Account under the Plan to be invested in Employer Securities.  Such election procedure shall be consistent with the requirements of Section 404(k) of the Code. If the Participant fails to make the election, he shall be deemed to have elected payment to the Plan and reinvestment in Employer Securities.  All elections shall be irrevocable upon the later of the date of the Participant's election or the end of the applicable election period.

 

 

25

(d) If dividends on Employer Securities already allocated to Participants' Employee Stock Ownership Accounts are used to make payments on an Exempt Loan, the Employer Securities which are released from the Exempt Loan Suspense Account shall first be allocated to each Employee Stock Ownership Account in an amount equal to the amount of dividends that would have been allocated to such Account if the dividends had not been used to make payments on an Exempt Loan, and the remaining Employer Securities (if any) which are released shall be allocated in the proportion that the value of each Employee Stock Ownership Account bears to the value of all such Accounts, all in accordance with Section 404(k) of the Code.

(e) Dividends on Employer Securities obtained pursuant to an Exempt Loan and still held in the Exempt Loan Suspense Account may be used to make payments on an Exempt Loan, as described in Section 8.6.

8.5           Exempt Loans.

(a) The Sponsor may direct the Trustee to obtain Exempt Loans.  The Exempt Loan shall be primarily for the benefit of the Plan participants and their beneficiaries. The Exempt Loan may take the form of (i) a loan from a bank or other commercial lender to purchase Employer Securities (ii) a loan from the Employer to the Plan; or (iii) an installment sale of Employer Securities to the Plan.  The proceeds of any such Exempt Loan shall be used, within a reasonable time after the Exempt Loan is obtained, only to purchase Employer Securities, repay the Exempt Loan, or repay any prior Exempt Loan.  Any such Exempt Loan shall provide for no more than a reasonable rate of interest and shall be without recourse against the Plan.  The number of years to maturity under the Exempt Loan must be definitely ascertainable at all times.  At the time the Exempt Loan is entered into, the interest rate on the Exempt Loan and the price of the Employer Securities acquired with the proceeds of the Exempt Loan shall not be such that Plan assets might be drained off.  The only assets of the Plan that may be given as collateral for an Exempt Loan are Financed Shares acquired with the proceeds of the Exempt Loan and Financed Shares that were used as collateral for a prior Exempt Loan repaid with the proceeds of the current Exempt Loan.  Such Financed Shares so pledged shall be placed in an Exempt Loan Suspense Account.  No person or institution entitled to payment under an Exempt Loan shall have recourse against Trust assets other than the Financed Shares, the Employer Stock Ownership Contribution (other than contributions of Employer Securities) that is available under the Plan to meet obligations under the Exempt Loan, and earnings attributable to such Financed Shares and the investment of such contribution.  Any Employee Stock Ownership Contribution paid during the Plan Year in which an Exempt Loan is made (whether before or after the date the proceeds of the Exempt Loan are received), any Employee Stock Ownership Contribution paid thereafter until the Exempt Loan has been repaid in full, and all earnings from investment of such Employee Stock Ownership Contribution, without regard to whether any such Employee Stock Ownership Contribution and earnings have been allocated to Participants' Employee Stock Ownership Accounts, shall be available to meet obligations under the Exempt Loan as such obligations accrue, or prior to the time such obligations accrue, unless otherwise provided by the Employer at the time any such contribution is made.  Any pledge of Employer Securities shall provide for the release of Financed Shares upon the payment of any portion of the Exempt Loan.  The Exempt Loan shall not be payable at the demand of any person, except in the event of default. In the event of a default regarding the repayment of an Exempt Loan, the amounts transferred in satisfaction of the Exempt Loan must not exceed the amount of default.  If the lender of the Exempt Loan is a disqualified person (within the meaning of Section 4975(e)(2) of the Code), then the transfer of assets in connection with an Exempt Loan shall be permitted only upon and to the extent of the failure of the Plan to meet the payment schedule of the Exempt Loan.  For purposes of the preceding two sentences, the making of a guarantee shall not make a person a lender.

 

 

26

(b) For each Plan Year during the duration of the Exempt Loan, the number of Financed Shares released from such pledge shall equal the number of Financed Shares held immediately before release for the current Plan Year multiplied by a fraction.  The numerator of the fraction is the sum of principal and interest paid in such Plan Year.  The denominator of the fraction is the sum of the numerator plus the principal and interest to be paid for all future years.  Such years will be determined without taking into account any possible extension or renewal periods.  If interest on any Exempt Loan is variable, the interest to be paid in future years under the Exempt Loan shall be computed by using the interest rate applicable as of the end of the Plan Year.

(c) Notwithstanding the foregoing, the Trustee may, in accordance with the direction of the Administrator, obtain an Exempt Loan pursuant to the terms of which the number of Financed Shares to be released from encumbrance shall be determined with reference to principal payments only.  In the event that such an Exempt Loan is obtained, annual payments of principal and interest shall be at a cumulative rate that is not less rapid at any time than level payments of such amounts for not more than 10 years.  The amount of interest in any such annual loan repayment shall be disregarded only to the extent that it would be determined to be interest under standard loan amortization tables.  The requirement set forth in the preceding sentence shall not be applicable from the time that, by reason of a renewal, extension, or refinancing, the sum of the expired duration of the Exempt Loan, the renewal period, the extension period, and the duration of a new Exempt Loan exceeds 10 years.

8.6           Exempt Loan Payments.

(a) Payments of principal and interest on any Exempt Loan during a Plan Year shall be made by the Trustee (as directed by the Administrator) only from (1) the Employee Stock Ownership Contribution to the Trust made to meet the Plan's obligation under an Exempt Loan (other than contributions of Employer Securities) and from any earnings attributable to Financed Shares and investments of such contributions (both received during or prior to the Plan Year); (2) the proceeds of a subsequent Exempt Loan made to repay a prior Exempt Loan; and (3) the proceeds of the sale of any Financed Shares.  Such contribution and earnings shall be accounted for separately by the Plan until the Exempt Loan is repaid.  Payments made with respect to an Exempt Loan during a Plan Year shall not exceed an amount equal to the sum of such contributions and earnings received during or prior to the year, less such payment in prior years.

(b) Employer Securities released from the Exempt Loan Suspense Account by reason of the payment of principal or interest on an Exempt Loan from amounts allocated to Participants' Employee Stock Ownership Accounts shall immediately upon release be allocated as set forth in Section 5.5.

(c) The Employer shall contribute to the Trust sufficient amounts to enable the Trust to pay principal and interest on any such Exempt Loans as they are due, provided, however, that no such contribution shall exceed the limitations in Section 5.6.  In the event that such contributions by reason of the limitations in Section 5.6 are insufficient to enable the Trust to pay principal and interest on such Exempt Loan as it is due, then upon the Administrator's direction the Employer shall:

     (1)      Make an Exempt Loan to the Trust in sufficient amounts to meet such principal and interest payments.  Such new Exempt Loan shall be subordinated to the prior Exempt Loan.  Employer Securities released from the pledge of the prior Exempt Loan shall be pledged as collateral to secure the new Exempt Loan.  Such Employer Securities will be released from this new pledge and allocated to the Employee Stock Ownership Accounts of the Participants in accordance with the applicable provisions of the Plan;

 

 

27

    (2)       Purchase any Financed Shares in an amount necessary to provide the Trustee with sufficient funds to meet the principal and interest repayments.  Any such sale by the Plan shall meet the requirements of Section 408(e) of the Act; or

     (3)       Any combination of the foregoing.

However, the Employer shall not, pursuant to the provisions of this subsection, do, fail to do or cause to be done any act or thing which would result in a disqualification of the Plan as an employee stock ownership plan under Section 4975(e)(7) of the Code.

(d) Except as provided in Section 8.1 above and notwithstanding any amendment to or termination of the Plan which causes it to cease to qualify as an employee stock ownership plan within the meaning of Section 4975(e)(7) of the Code, or any repayment of an Exempt Loan, no shares of Employer Securities acquired with the proceeds of an Exempt Loan obtained by the Trust to purchase Employer Securities may be subject to a put, call or other option, or buy-sell or similar arrangement, while such shares are held by the Plan or when such shares are distributed from the Plan.  The provisions of this Section 8.6(d) shall continue to be applicable to Employer Securities held by the Trustee, whether or not allocated to Participants' and Former Participants' Accounts, even if the Plan ceases to be an employee stock ownership plan, as defined in Section 4975(e)(7) of the Code.  The Plan shall not obligate itself to acquire Employer Securities from a particular security at an indefinite time upon the happening of an event, such as the death of the security holder.

8.7          Put Option.

In the event that the Employer Securities distributed to a Participant are not readily tradable on an established market, the Participant shall be entitled to require that the Employer repurchase the Employer Securities under a fair valuation formula, as provided by governmental regulations.  The Participant or Beneficiary shall be entitled to exercise the put option described in the preceding sentence for a period of not more than 60 days following the date of distribution of Employer Securities to him.  If the put option is not exercised within such 60-day period, the Participant or Beneficiary may exercise the put option during an additional period of not more than 60 days after the beginning of the first day of the first Plan Year following the Plan Year in which the first put option period occurred, all as provided in regulations promulgated by the Secretary of the Treasury.

If a Participant exercises the foregoing put option with respect to Employer Securities that were distributed as part of a total distribution pursuant to which a Participant's Employee Stock Ownership Account is distributed to him in a single taxable year, the Employer or the Plan may elect to pay the purchase price of the Employer Securities over a period not to exceed 5 years.  Such payments shall be made in substantially equal installments not less frequently than annually over a period beginning not later than 30 days after the exercise of the put option.  Reasonable interest shall be paid to the Participant with respect to the unpaid balance of the purchase price, and adequate security shall be provided with respect thereto.  In the event that a Participant exercises a put option with respect to Employer Securities that are distributed as part of an installment distribution, if permissible under Section 9.5, the amount to be paid for such securities shall be paid not later than 30 days after the exercise of the put option.

8.8           Diversification Requirements.

Each Participant who has completed at least 10 years of participation in the Plan and has attained age 55 may elect within 90 days after the close of each Plan Year during his "qualified election period" to direct the Plan as to the investment of at least 25 percent of his Employee Stock Ownership Account 

 

28

 

 

(reduced by the amount of any distributions made pursuant to a prior election under this Section 8.8).  For purposes of this Section 8.8, the term "qualified election period" shall mean the five Plan Year period beginning with the Plan Year after the Plan Year in which the Participant attains age 55 (or, if later, beginning with the Plan Year after the first Plan Year in which the Employee first completes at least 10 years of participation in the Plan).  In the case of an Employee who has attained age 60 and completed 10 years of participation in the prior Plan Year and in the case of the election year in which any other Participant who has met the minimum age and service requirements for diversification can make his last election hereunder, he shall be entitled to direct the Plan as to the investment of at least 50 percent of his Employee Stock Ownership Account (reduced by the amount of any distributions made pursuant to a prior election under this Section 8.8).  The Plan shall make available at least 3 investment options (chosen by the Administrator in accordance with Treasury Regulations) to each Participant making an election hereunder.  The Plan shall be deemed to have met the requirements of this Section 8.8 if the portion of the Participant's Employee Stock Ownership Account covered by the election hereunder is distributed to the Participant or his designated Beneficiary within 90 days after the period during which the election may be made.  In the absence of such a distribution, the Trustee shall implement the Participant's election within 90 days following the expiration of the qualified election period.  Notwithstanding the foregoing, if the fair market value of the Employer Securities allocated to the Employee Stock Ownership Account of a Participant otherwise entitled to diversify hereunder is $500 or less as of the Valuation Date immediately preceding the first day of any election period, then such Participant shall not be entitled to an election under this Section 8.8 for that qualified election period.

8.9            Independent Appraiser.

An independent appraiser meeting the requirements of the regulations promulgated under Section 170(a)(1) of the Code shall value the Employer Securities in those Plan Years when such securities are not readily tradable on an established securities market.

29

ARTICLE IX

PAYMENTS AND DISTRIBUTIONS

9.1           Payments on Termination of Service - In General.

All benefits provided under this Plan shall be funded by the value of a Participant's vested Account in the Plan.  As soon as practicable after a Participant's Retirement, Disability, death or other termination of Service, the Administrator shall ascertain the value of his vested Account, as provided in Article V, and the Administrator shall hold or dispose of the same in accordance with the following provisions of this Article IX.

9.2           Commencement of Payments.

(a) Distributions upon Retirement, Disability or Death.  Upon a Participant's Retirement, Disability or death, payment of benefits under this Plan shall, unless the Participant otherwise elects (in accordance with Section 9.3), commence as soon as practicable after the Valuation Date next following the date of the Participant's Retirement, Disability or death.

(b) Distribution following Termination of Service.  Unless a Participant elects otherwise, if a Participant terminates Service prior to Retirement, Disability or death, he shall be accorded an opportunity to commence receipt of benefits as soon as practicable after the Valuation Date next following the date of the Participant's termination of Service.  A Participant who terminates Service with a vested Account balance shall be entitled to receive from the Administrator a statement of his benefits.  If a Participant's vested Account balance does not exceed $1,000, the Plan Administrator shall distribute the vested Account balance as soon as practicable after the Valuation Date next following the date the Participant terminates Service without the consent of the Participant or his spouse.

(c) Distribution of Larger Accounts.  If the value of a Participant's vested Account balance exceeds $1,000, and the vested Account balance is immediately distributable (i.e., is distributable prior to the date the Participant attains age 65), the Participant must consent to any distribution of such vested Account balance.  The Administrator shall notify the Participant of the right to defer any distribution until the Participant's vested Account balance is no longer immediately distributable.  Such notification shall be provided no less than 30 days, nor more than 180 days, prior to the account distribution date.  The Administrator must clearly inform the Participant: (1) that the Participant has a right to a period of at least 30 days after receiving the notice to decide whether or not to elect a distribution (and, if applicable, a particular distribution option); (2) that there are consequences for failing to defer receipt of a distribution; (3) that the Participant must affirmatively elect a distribution after receiving the 30-day notice, and (4) any other information required under Section 411(a)(11) of the Code and the Treasury Regulations thereunder. The consent of the Participant shall be obtained in writing within the 180-day period ending on the date the distribution is to be made. 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 30 days after the notice required under Section 1.411(a)-11(c) of the Treasury Regulations is given, provided that the Administrator clearly informs the Participant that the Participant has a right to a period of at least 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 the Participant, after receiving the notice, affirmatively elects a distribution.

9.3           Mandatory Commencement of Benefits.

(a) Unless a Participant elects otherwise, in writing, distribution of benefits will begin no later than the 60th day after the latest to occur of the close of the Plan Year in which (1) the Participant attains 

 

 

 

30

 

age 65, (2) the tenth anniversary of the Plan Year in which the Participant commenced participation, or (3) the Participant terminates Service with the Employer and all Related Employers.

(b) In the event that the Plan shall be subsequently amended to provide for a form of distribution other than a lump sum, if the Participant's interest is to be distributed in other than a lump sum, the following minimum distribution rules shall apply on or after the required beginning date:

      (1)        All distributions required under this Section 9.3(b) shall be determined and made in accordance with the Treasury Regulation under Code Section 401(a)(9).

      (2)        Time and Manner of Distribution.

   (A)      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.

   (B)       If the Participant dies before distributions begin, the Participant 's entire interest will be distributed, or begin to be distributed, no later than as follows:

(i)      If the Participant's surviving spouse is the Participant's sole designated beneficiary, then 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.

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

(iii)     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.

(iv)     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 9.3(b)(2)(B), other than Section 9.3(b)(2)(B)(i), will apply as if the surviving spouse were the participant.

For purposes of this Section 9.3(b)(2)(B) and Section 9.3(b)(4) ,unless Section 9.3(b)(2)(B)(iv) applies, distributions are considered to begin on the Participant's required beginning date. If Section 9.3(b)(2)(B)(iv) applies, distributions are considered to begin on the date distributions are required to begin to the surviving spouse under Section 9.3(b)(2)(B)(i).

       (3)      Required Minimum Distributions During Participant's Lifetime.  During the Participant's lifetime, the minimum amount that will be distributed for each distribution calendar year is the lesser of:

(A)      the quotient obtained by dividing the Participant's account balance by the distribution period in the Uniform Lifetime Table set forth 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

 

 

31

(B)       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.

Required minimum distributions will be determined under this Section 9.3(b)(2) beginning with the first distribution calendar year and up to and including the distribution calendar year that includes the participant's date of death.

		(4)	
Required Minimum Distributions After Participant's Death.

(A)      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:

 

               (i)      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.

 

               (ii)      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.

 

               (iii)      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.

 (B)      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 each subsequent year.

		(5)	
Death Before Date Distributions Begin.

(A)      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 (4) above.

 

 

32

(B)       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 Spouse 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, this paragraph (5) will apply as if the surviving spouse were the Participant.

		(6)	
Definitions.

(A)         Designated beneficiary. The individual who is designated as the beneficiary under the Plan 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 9.3(b)(2).  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(a)(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.

		(E)	
Required beginning date. The date specified in Section 9.4.

9.4           Required Beginning Dates.

(a) General Rule. The required beginning date of a Participant who is a 5-percent owner of the Employer is the first day of April of the calendar year following the calendar year in which the Participant attains age 70-1/2.  The required beginning date of a Participant who is not a 5-percent owner shall be April 1 of the calendar year following the later of either:  (i) the calendar year in which the Participant attains age 70-1/2, or (ii) the calendar year in which the Participant retires.

 

 

33

(b) 5-percent owner.  A Participant is treated as a 5-percent owner for purposes of this section if such Participant is a 5-percent owner as defined in Section 416(i) of the Code.  Once distributions have begun to a 5-percent owner under this section, they must continue to be distributed, even if the Participant ceases to be a 5-percent owner in a subsequent year.

9.5           Form of Payment.

Each Participant's vested Account balance shall be distributed in a lump sum payment.  This form of payment shall be the normal form of distribution.  However, in the event that the Administrator must commence distributions, as required by Section 9.4 herein, with respect to an Employee who has attained age 701⁄2 and is still employed by the Employer, if the Employee does not elect a lump sum distribution, payments shall be made in installments in such amounts as shall satisfy the minimum distribution rules of Section 9.3.

9.6          Payments Upon Termination of Plan.

Upon termination of this Plan pursuant to Sections 13.2, 13.4, 13.5 or 13.6, the Administrator shall continue to perform its duties and the Trustee as directed by the Administrator, and shall make all payments upon the following terms, conditions and provisions:  The Account balance of each affected Participant and Former Participant shall immediately become fully vested and nonforfeitable; the Account balance of all Participants and Former Participants shall be determined within 60 days after such termination, and the Administrator shall have the same powers to direct the Trustee in making payments as contained in Sections 9.1 and 13.5.

9.7           Distributions Pursuant to Qualified Domestic Relations Orders.

(a) Nothing contained in this Plan prevents the Administrator from complying with the provisions of a Qualified Domestic Relations Order. This Plan specifically permits distribution to an alternate payee under a Qualified Domestic Relations Order at any time, irrespective of whether the Participant has attained his earliest retirement age (as defined under Section 414(p) of the Code) under the Plan. A distribution to an alternate payee prior to the Participant's attainment of earliest retirement age is available only if: (1) the order specifies distribution at that time or permits an agreement between the Plan and the alternate payee to authorize an earlier distribution; and (2) if the present value of the alternate payee's benefits under the Plan exceeds $5,000, and the order requires, the alternate payee consents to any distribution occurring prior to the Participant's attainment of earliest retirement age. Nothing in this Section 9.7 gives a Participant a right to receive distribution at a time otherwise not permitted under the Plan nor does it permit the alternate payee to receive a form of payment not otherwise permitted under the Plan.

(b) The Administrator must establish reasonable procedures to determine the qualified status of a domestic relations order. Upon receiving a domestic relations order, the Administrator promptly will notify the Participant and any alternate payee named in the order, in writing, of the receipt of the order and the Plan's procedures for determining the qualified status of the order. Within a reasonable period of time after receiving the domestic relations order, the Administrator must determine the qualified status of the order and must notify the Participant and each alternate payee, in writing, of its determination. The Administrator must provide notice under this paragraph by mailing to the individual's address specified in the domestic relations order, or in a manner consistent with Department of Labor regulations.

(c) If any portion of the Participant's Account is payable during the period the Administrator is making its determination of the qualified status of the domestic relations order, the Administrator must make a separate accounting of the amounts payable. If the Administrator determines the order is a Qualified 

 

 

34

 

Domestic Relations Order within 18 months of the date amounts first are payable following receipt of the order, the Administrator will direct the Trustee to distribute the payable amounts in accordance with the order. If the Administrator does not make its determination of the qualified status of the order within the 18 month determination period, the Administrator will direct the Trustee to distribute the payable amounts in the manner the Plan would distribute if the order did not exist and will apply the order prospectively if the Administrator later determines the order is a Qualified Domestic Relations Order. To the extent it is not inconsistent with the provisions of the Qualified Domestic Relations Order, the Administrator may direct the Trustee to invest any partitioned amount in a segregated sub-account or separate account and to invest the account in Federally insured, interest‐bearing savings account(s) or time deposit(s) (or a combination of both), or in other fixed income investments. A segregated sub-account remains a part of the Trust, but it alone shares in any income it earns, and it alone bears any expense or loss it incurs. The Trustee will make any payments or distributions required under this Section 9.7 by separate benefit checks or other separate distribution to the alternate payee(s).

9.8           ESOP Distribution Rules.

Notwithstanding any provision of this Article IX to the contrary, the distribution of a Participant's Employee Stock Ownership Account (unless the Participant elects otherwise in writing) shall commence as soon as administratively feasible as of the first Valuation Date coincident with or next following his death, Disability or termination of Service, but not later than 1 year after the close of the Plan Year in which the Participant separates from Service by reason of the attainment of his Normal Retirement Date, Disability, death or separation from Service.  In addition, all distributions hereunder shall, to the extent that the Participant's Account is invested in Employer Securities, be made in the form of Employer Securities or cash, or a combination of Employer Securities and cash, in the discretion of the Administrator, subject to the Participant's right to demand Employer Securities in accordance with Section 8.1.  Fractional shares, however, may be distributed in the form of cash.  If Employer Securities acquired with the proceeds of an Exempt Loan available for distribution consist of more than one class of Employer Securities, the Participant receiving a distribution of Employer Securities shall receive substantially the same proportion of each such class.

9.9           Direct Rollover.

(a) Notwithstanding any provision of the Plan to the contrary that would otherwise limit a distributee's election under this Article IX, a distributee may elect, at the time and in the manner prescribed by the Administrator, 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) An "eligible rollover distribution" is any distribution of all or any portion of the balance to the credit of the distributee, except that an "eligible rollover distribution" does not include:  any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the distributee or the joint lives (or joint life expectancies) of the distributee and the distributee's designated Beneficiary, or for a specified period of ten years or more; any distribution to the extent such distribution is required under Section 401(a)(9) of the Code; the portion of any distribution that is not includable in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to Employer Securities); and any hardship distribution made on behalf of the Participant.

(c) An "eligible retirement plan" is an individual retirement account described in Section 408(a) of the Code, an individual retirement annuity described in Section 408(b) of the Code, an annuity plan described in Section 403(a) of the Code, or a qualified trust described in Section 401(a) of the Code, 

 

 

35

 

that accepts the distributee's eligible rollover distribution.  However, in the case of an "eligible rollover distribution" to the surviving spouse or a non-spouse designated beneficiary, an "eligible retirement plan" is an individual retirement account or individual retirement annuity (and in the case of a non-spouse designated beneficiary an inherited individual retirement account or individual retirement annuity).  An eligible retirement plan shall also mean an annuity contract described in Section 403(b) of the Code and 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.  The definition of eligible retirement plan shall also apply in the case of a distribution to a surviving spouse or a non-spouse designated beneficiary, or to a spouse or former spouse who is the alternate payee under a qualified domestic relation order, as defined in Section 414(p) of the Code.

(d) A "distributee" includes a Participant or Former Participant.  In addition, the Participant's or Former Participant's surviving spouse and the Participant's or Former Participant's spouse or former spouse who is the alternate payee under a Qualified Domestic Relations Order are "distributees" with regard to the interest of the spouse or former spouse.  Pursuant to Section 402(c)(11) of the Code, a "distributee" may also be a designated beneficiary of the Participant (determined in accordance with Code Section 401(a)(9)(E) of the Code).

(e) A "direct rollover" is a payment by the Plan to the "eligible retirement plan" specified by the distributee.

(f) The Plan shall allow a direct trustee-to-trustee transfer of an eligible rollover distribution to a Roth IRA (within the meaning of Section 408A of the Code).

9.10         Share Legend.

Employer Securities held or distributed by the Trustee may include such legend restrictions on transferability as the Employer may reasonably require in order to assure compliance with applicable Federal and State securities and other laws.

	9.11.	
Power to Reduce Benefit.

Notwithstanding Section 14.4, effective for judgments, orders, and decrees issued, and settlement agreements entered into, on or after August 5, 1997, a Participant's Plan benefit may be reduced to satisfy liabilities of the Participant to the Plan due to:

(a) The Participant's being convicted of committing a crime involving the Plan;

(b) A civil judgment (or consent order or decree) entered by a court in an action brought in connection with a violation of the fiduciary provisions of the Act; or

(c) A settlement agreement between the Department of Labor and the Participant in connection with a violation of the fiduciary provisions of the Act.

The court order establishing such liability must require that the Participant's benefit in the Plan be applied to satisfy the liability.

36

ARTICLE X

PROVISIONS RELATING TO TOP-HEAVY PLANS

10.1         Top-Heavy Rules to Control.

Anything contained in this Plan to the contrary notwithstanding, if for any Plan Year the Plan is a top-heavy plan, as determined pursuant to Section 416 of the Code, then the Plan must meet the requirements of this Article X for such Plan Year.

10.2         Top-Heavy Plan Definitions.

Unless a different meaning is plainly implied by the context, the following terms as used in this Article X shall have the following meanings:

(a) "Accrued Benefit" shall mean the account balances or accrued benefits of an Employee, calculated pursuant to Section 10.3.

(b) "Determination Date" shall mean, with respect to any particular Plan Year of this Plan, the last day of the preceding Plan Year (or, in the case of the first Plan Year of the Plan, the last day of the first Plan Year).  In addition, the term "Determination Date" shall mean, with respect to any particular plan year of any plan (other than this Plan) in a Required Aggregation Group or a Permissive Aggregation Group, the last day of the plan year of such plan which falls within the same calendar year as the Determination Date for this Plan.

(c) "Employer" shall mean the Employer and any Related Employer.

(d) "Key Employee" shall mean any Employee or former Employee (including any deceased Employee) who at any time during the Plan Year that includes the Determination Date was an officer of the Employer having Statutory Compensation greater than $175,000 (as adjusted under Section 416(i)(1) of the Code), a 5-percent owner of the Employer, or a 1-percent owner of the Employer having Statutory Compensation of more than $150,000.  The determination of who is a key employee will be made in accordance with Section 416(i)(1) of the Code and the Treasury Regulations and other guidance of general applicability issued thereunder.

(e) "Non-Key Employee" shall mean any Employee or former Employee (or any Beneficiary of such Employee or former Employee, as the case may be) who is not considered to be a Key Employee with respect to this Plan.

(f) "Permissive Aggregation Group" shall mean all plans in the Required Aggregation Group and any other plans maintained by the Employer which satisfy Sections 401(a)(4) and 410 of the Code when considered together with the Required Aggregation Group.

(g) "Required Aggregation Group" shall mean each plan (including any terminated plan) of the Employer in which a Key Employee is (or in the case of a terminated plan, had been) a Participant in the Plan Year containing the Determination Date or any of the 4 preceding Plan Years, and each other plan of the Employer which enables any plan of the Employer in which a Key Employee is a Participant to meet the requirements of Sections 401(a)(4) or 410 of the Code.

 

 

37

10.3        Calculation of Accrued Benefits.

(a)            An Employee's Accrued Benefit shall be equal to:

(1)      With respect to this Plan or any other defined contribution plan (other than a defined contribution pension plan) in a Required Aggregation Group or a Permissive Aggregation Group, the Employee's account balances under the respective plan, determined as of the most recent plan valuation date within a 12-month period ending on the Determination Date, including contributions actually made after the valuation date but before the Determination Date (and, in the first plan year of a plan, also including any contributions made after the Determination Date which are allocated as of a date in the first plan year).

(2)       With respect to any defined contribution pension plan in a Required Aggregation Group or a Permissive Aggregation Group, the Employee's account balances under the plan, determined as of the most recent plan valuation date within a 12-month period ending on the Determination Date, including contributions which have not actually been made, but which are due to be made as of the Determination Date.

(3)        With respect to any defined benefit plan in a Required Aggregation Group or a Permissive Aggregation Group, the present value of the Employee's accrued benefits under the plan, determined as of the most recent plan valuation date within a 12-month period ending on the Determination Date, pursuant to the actuarial assumptions used by such plan, and calculated as if the Employee terminated Service under such plan as of the valuation date (except that, in the first plan year of a plan, a current Participant's estimated Accrued Benefit as of the Determination Date shall be taken into account).

(4)         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 severance from employment, death, or disability, this provision shall be applied by substituting "5-year period" for "1-year period."

(5)          The accrued benefits and accounts of any individual who has not performed services for the Employer during the 1-year period ending on the Determination Date shall not be taken into account.

(6)          The Accrued Benefit shall be calculated to include all amounts attributable to both Employer and Employee contributions, but shall exclude amounts attributable to voluntary deductible Employee contributions, if any.

(7)          Rollover and direct plan-to-plan transfers shall be taken into account as follows:

(A)      If the transfer is initiated by the Employee and made from a plan maintained by one employer to a plan maintained by another unrelated employer, the transferring plan shall continue to count the amount transferred; the receiving plan shall not count the amount transferred.

(B)       If the transfer is not initiated by the Employee or is made between plans maintained by related employers, the transferring plan shall no longer count the amount transferred; the receiving plan shall count the amount transferred.

38

10.4         Determination of Top-Heavy Status.

This Plan shall be considered to be a top-heavy plan for any Plan Year if, as of the Determination Date, the value of the Accrued Benefits of Key Employees exceeds 60% of the value of the Accrued Benefits of all eligible Employees under the Plan.  Notwithstanding the foregoing, if the Employer maintains any other qualified plan, the determination of whether this Plan is top-heavy shall be made after aggregating all other plans of the Employer in the Required Aggregation Group and, if desired by the Employer as a means of avoiding top-heavy status, after aggregating any other plan of the Employer in the Permissive Aggregation Group.  If the required Aggregation Group is top-heavy, then each plan contained in such group shall be deemed to be top-heavy, notwithstanding that any particular plan in such group would not otherwise be deemed to be top-heavy.  Conversely, if the Permissive Aggregation Group is not top-heavy, then no plan contained in such group shall be deemed to be top-heavy, notwithstanding that any particular plan in such group would otherwise be deemed to be top-heavy.  In no event shall a plan included in a top-heavy Permissive Aggregation Group be deemed a top-heavy plan unless such plan is also included in a top-heavy Required Aggregation Group.

10.5         Minimum Contribution.

(a)           For any Plan Year in which the Plan is top-heavy, each Non-Key Employee who has met the age and service requirements, if any, contained in the Plan, shall be entitled to a minimum contribution (which may include forfeitures otherwise allocable) equal to a percentage of such Non-Key Employee's Statutory Compensation as follows:

(1)        If the Non-Key Employee is not covered by a defined benefit plan maintained by the Employer, then the minimum contribution under this Plan shall be 3% of such Non-Key Employee's Statutory Compensation.

(2)        If the Non-Key Employee is covered by a defined benefit plan maintained by the Employer, then the minimum contribution under this Plan shall be 5% of such Non-Key Employee's Statutory Compensation.

(b)            Notwithstanding the foregoing, the minimum contribution otherwise allocable to a Non-Key Employee under this Plan shall be reduced in the following circumstances:

(1)        The percentage minimum contribution required under this Plan shall in no event exceed the percentage contribution made for the Key Employee for whom such percentage is the highest for the Plan Year after taking into account contributions under other defined contribution plans in this Plan's Required Aggregation Group; provided, however, that this Section 10.5(b)(1) shall not apply if this Plan is included in a Required Aggregation Group and this Plan enables a defined benefit plan in such Required Aggregation Group to meet the requirements of Section 401(a)(4) or 410 of the Code.

(2)         No minimum contribution shall be required (or the minimum contribution shall be reduced, as the case may be) for a Non-Key Employee under this Plan for any Plan Year if the Employer maintains another qualified plan under which a minimum benefit or contribution is being accrued or made on account of such Plan Year, in whole or in part, on behalf of the Non-Key Employee, in accordance with Section 416(c) of the Code.

(c)            For purposes of this Section 10.5, there shall be disregarded (1) any Employer contributions attributable to a salary reduction or similar arrangement, or (2) any Employer contributions to or any 

 

 

39

 

benefits under Chapter 21 of the Code (relating to the Federal Insurance Contributions Act), Title II of the Social Security Act, or any other federal or state law.

(d)            For purposes of this Section 10.5, minimum contributions shall be required to be made on behalf of only those Non-Key Employees, as described in Section 10.6(a), who have not terminated Service as of the last day of the Plan Year.  If a Non-Key Employee is otherwise entitled to receive a minimum contribution pursuant to this Section 10.5(d), the fact that such Non-Key Employee failed to complete 1,000 Hours of Service or failed to make any mandatory or elective contributions under this Plan, if any are so required, shall not preclude him from receiving such minimum contribution.

(e)            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.  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.

40

ARTICLE XI

ADMINISTRATION

11.1         Appointment of Administrator.

This Plan shall be administered by a committee, whether or not Employees or Participants, who shall be appointed from time to time by the Board of Directors to serve at its pleasure.  Such Committee may, at the Board's discretion, be one and the same as the Committee or Retirement and Benefits Committee which administers the Sponsor's other employee benefit plans.  The Sponsor may require that each person appointed as an Administrator shall signify his acceptance by filing an acceptance with the Sponsor.  The term "Administrator" as used in this Plan shall refer to the members of the committee, either individually or collectively, as appropriate.  The authority to control and manage the operation and administration of the Plan is vested in the Administrator appointed by the Board of Directors. The Administrator shall have the rights, duties and obligations of an "administrator," as that term is defined in Section 3(16)(A) of the Act, and of a "plan administrator," as that term is defined in Section 414(g) of the Code.  In the event that the Sponsor shall elect not to appoint any individuals to constitute a committee to administer the Plan, the Sponsor shall serve as the Administrator hereunder.

11.2         Resignation or Removal of Administrator.

An Administrator shall have the right to resign at any time by giving notice in writing, mailed or delivered to the Sponsor and to the Trustee.  Any Administrator who was an employee of the Employer at the time of his appointment shall be deemed to have resigned as an Administrator upon his termination of Service.  The Board of Directors may, in its discretion, remove any Administrator with or without cause, by giving notice in writing, mailed or delivered to the Administrator and to the Trustee.

11.3        Appointment of Successors:  Terms of Office, Etc.

Upon the death, resignation or removal of an Administrator, the Sponsor may appoint, by Board of Directors' resolution, a successor or successors.  Notice of termination of an Administrator and notice of appointment of a successor shall be made by the Sponsor in writing, with copies mailed or delivered to the Trustee, and the successor shall have all the rights and privileges and all of the duties and obligations of the predecessor.

11.4          Powers and Duties of Administrator.

The Administrator shall have the following duties and responsibilities in connection with the administration of this Plan:

(a) To promulgate and enforce such rules, regulations and procedures as shall be proper for the efficient administration of the Plan, such rules, regulations and procedures to apply uniformly to all Employees, Participants and Beneficiaries;

(b) To exercise discretion in determining all questions arising in the administration, interpretation and application of the Plan, including questions of eligibility and of the status and rights of Participants, Beneficiaries and any other persons hereunder;

(c) To decide any dispute arising hereunder strictly in accordance with the terms of the Plan; provided, however, that no Administrator shall participate in any matter involving any questions relating solely to his own participation or benefits under this Plan;

 

 

41

(d) To advise the Employer and direct the Trustee regarding the known future needs for funds to be available for distribution in order that the Trustee may establish investments accordingly;

(e) To correct defects, supply omissions and reconcile inconsistencies to the extent necessary to effectuate the Plan;

 

(f) To advise the Employer of the maximum deductible contribution to the Plan for each fiscal year;

(g) To direct the Trustee concerning all matters requiring the Administrator's direction pursuant to the provisions of this Plan and the Trust Agreement;

(h) To advise the Trustee on all terminations of Service by Participants, unless the Employer has so notified the Trustee;

(i)   To confer with the Trustee on the settling of any claims against the Fund;

(j)   To make recommendations to the Board of Directors with respect to proposed amendments to the Plan and the Trust Agreement;

(k)  To file all reports with government agencies, Employees and other parties as may be required by law, whether such reports are initially the obligation of the Employer, the Plan or the Trustee;

(l)   To have all such other powers as may be necessary to discharge its duties hereunder; and

(m) To direct the Trustee to pay all expenses of administering this Plan, except to the extent that the Employer pays such expenses.

Full discretion is granted to the Administrator to interpret the Plan and to determine the benefits, rights and privileges of Participants, Beneficiaries or other persons affected by this Plan.  The Administrator shall exercise its discretion under the terms of this Plan and shall administer the Plan in accordance with its terms, such administration to be exercised uniformly so that all persons similarly situated shall be similarly treated.

11.5         Action by Administrator.

The Administrator may elect a Chairman and Secretary from among its members and may adopt rules for the conduct of its business.  A majority of the members then serving shall constitute a quorum for the transaction of business.  All resolutions or other action taken by the Administrator shall be by vote of a majority of those present at such meeting and entitled to vote.  Resolutions may be adopted or other action taken without a meeting upon written consent signed by at least a majority of the members.  All documents, instruments, orders, requests, directions, instructions and other papers shall be executed on behalf of the Administrator by either the Chairman or the Secretary of the Administrator, if any, or by any member or agent of the Administrator duly authorized to act on the Administrator's behalf.

11.6         Participation by Administrator.

No member of the committee constituting the Administrator shall be precluded from becoming a Participant in the Plan if he would be otherwise eligible, but he shall not be entitled to vote or act upon matters or to sign any documents relating specifically to his own participation under the Plan, except when 

 

 

42

 

such matters or documents relate to benefits generally.  If this disqualification results in the lack of a quorum, then the Board of Directors shall appoint a sufficient number of temporary members of the committee constituting the Administrator who shall serve for the sole purpose of determining such a question.

11.7          Agents.

The Administrator may employ agents and provide for such clerical, legal, actuarial, accounting, medical, advisory or other services as it deems necessary to perform its duties under this Plan.  The cost of such services and all other expenses incurred by the Administrator in connection with the administration of the Plan shall be paid from the Fund, unless paid by the Employer.

11.8         Allocation of Duties.

The duties, powers and responsibilities reserved to the Administrator may be allocated among its members so long as such allocation is pursuant to written procedures adopted by the Administrator, in which case, except as may be required by the Act, no Administrator shall have any liability, with respect to any duties, powers or responsibilities not allocated to him, for the acts of omissions of any other Administrator.

11.9         Delegation of Duties.

The Administrator may delegate any of its duties to any Employees of the Employer, or to any other person or firm, provided that the Administrator shall prudently choose such agents and rely in good faith on their actions.

11.10       Administrator's Action Conclusive.

Any action on matters within the authority of the Administrator shall be final and conclusive except as provided in Article XII.

11.11       Compensation and Expenses of Administrator.

No Administrator who is receiving compensation from the Employer as a full-time employee, as a director or agent, shall be entitled to receive any compensation or fee for his services hereunder.  Any other Administrator shall be entitled to receive such reasonable compensation for his services as an Administrator hereunder as may be mutually agreed upon between the Employer and such Administrator.  Any such compensation shall be paid from the Fund, unless paid by the Employer.  Each Administrator shall be entitled to reimbursement by the Employer for any reasonable and necessary expenditures incurred in the discharge of his duties.

11.12       Records and Reports.

The Administrator shall maintain adequate records of its actions and proceedings in administering this Plan and shall file all reports and take all other actions as it deems appropriate in order to comply with the Act, the Code and governmental regulations issued thereunder.

 

 

43

11.13       Reports of Fund Open to Participants.

The Administrator shall keep on file, in such form as it shall deem convenient and proper, all annual reports of the Fund received by the Administrator from the Trustee, and a statement of each Participant's interest in the Fund as from time to time determined.  The annual reports of the Fund and the statement of his Account balance, as well as a complete copy of the Plan and the Trust Agreement and copies of annual reports to the Internal Revenue Service, shall be made available by the Administrator to the Employer for examination by each Participant during reasonable hours at the office of the Employer, provided, however, that the statement of a Participant's Account balance shall not be made available for examination by any other Participant.

11.14       Named Fiduciary.

The Administrator is the named fiduciary for purposes of Section 402 of the Act and shall be the designated agent for receipt of service of process on behalf of the Plan.  It shall use the care and diligence in the performance of its duties under this Plan that are required of fiduciaries under the Act.  Nothing in this Plan shall preclude the Employer from purchasing liability insurance to protect the Administrator with respect to its duties under this Plan.

11.15       Information from Employer.

The Employer shall promptly furnish all necessary information to the Administrator to permit it to perform its duties under this Plan.  The Administrator shall be entitled to rely upon the accuracy and completeness of all information furnished to it by the Employer, unless it knows or should have known that such information is erroneous.

11.16       Responsibilities of Directors.

Subject to the rights reserved to the Board of Directors acting on behalf of the Employer as set forth in this Plan, no member of the Board of Directors shall have any duties or responsibilities under this Plan, except to the extent he shall be acting in the capacity of an Administrator or Trustee.

11.17      Liability and Indemnification.

(a) To the extent not prohibited by the Act, the Administrator shall not be responsible in any way for any action or omission of the Employer, the Trustee or any other person in the performance of their duties and obligations set forth in this Plan and in the Trust Agreement.  To the extent not prohibited by the Act, the Administrator shall also not be responsible for any act or omission of any of its agents, or with respect to reliance upon advice of its counsel (whether or not such counsel is also counsel to the Employer or the Trustee), provided that such agents or counsel were prudently chosen by the Administrator and that the Administrator relied in good faith upon the action of such agent or the advice of such counsel.

(b) The Administrator shall not be relieved from responsibility or liability for any responsibility, obligation or duty imposed upon it under this Plan or under the Act.  Except for its own gross negligence, willful misconduct or willful breach of the terms of this Plan, the Administrator shall be indemnified and held harmless by the Employer against liability or losses occurring by reason of any act or omission of the Administrator to the extent that such indemnification does not violate the Act or any other federal or state laws.

44

ARTICLE XII

CLAIMS PROCEDURE

12.1         Notice of Denial.

If a Participant or his Beneficiary is denied any benefits under this Plan, either in whole or in part, the Administrator shall advise the claimant in writing of the amount of his benefit, if any, and the specific reasons for the denial.  The Administrator shall also furnish the claimant at that time with a written notice containing:

(a) A specific reference to pertinent Plan provisions;

(b) A description of any additional material or information necessary for the claimant to perfect his claim, if possible, and an explanation of why such material or information is needed; and

(c) An explanation of the Plan's claim review procedure.

12.2         Right to Reconsideration.

Within 60 days of receipt of the information described in 12.1 above, the claimant shall, if he desires further review, file a written request for reconsideration with the Administrator.

12.3         Review of Documents.

So long as the claimant's request for review is pending (including the 60-day period described in Section 12.2 above), the claimant or his duly authorized representative may review pertinent Plan documents and the Trust Agreement (and any pertinent related documents) and may submit issues and comments in writing to the Administrator.

12.4         Decision by Administrator.

A final and binding decision shall be made by the Administrator within 60 days of the filing by the claimant of his request for reconsideration; provided, however, that if the Administrator feels that a hearing with the claimant or his representative present is necessary or desirable, this period shall be extended an additional 60 days.

12.5        Notice by Administrator.

The Administrator's decision shall be conveyed to the claimant in writing and shall include specific reasons for the decision, written in a manner calculated to be understood by the claimant, with specific references to the pertinent Plan provisions on which the decision is based.  The Administrator's decision shall be binding and conclusive with respect to all persons interested therein unless the Administrator has no reasonable basis for its decision.

12.6         Special Claims Procedures.

The following changes to the claims procedures set forth above shall apply to all claims for disability benefits under the Plan.  A disability benefit is any benefit, the availability of which is conditioned upon a showing of a disability.  Unless a change to the normal claims procedures set forth above is indicated, the normal procedures will also apply to claims for disability benefits.

 

 

45

(a) In the case of a claim for disability benefits, the Administrator shall advise the claimant of any adverse determination not later than 45 days after receipt of the claim.  Should it be necessary, that period may be extended by 30 days provided the Plan notifies the claimant of the circumstances prior to the expiration of the initial 45 day period.  In addition to the disclosure requirements of Section 12.1, a notice of denial of disability benefits must include:  (a) any internal rule or guideline relied upon by the Plan in making its determination and; (b) if the adverse determination is based on a medical necessity or experimental treatment, a statement explaining the specific clinical judgment for the determination, or a statement that such an explanation will be provided upon request.

(b) Within 180 days of receipt of a notice of denial of a disability claim, the claimant may file a written claim for review with the Administrator.

(c) Within 45 days, the Administrator must provide the claimant with a written notification of the benefit determination on review.  Should an extension of time be required, the initial period may be extended by up to 45 additional days.  The notice of the review determination shall include all of the disclosures required to be made by Section 12.1 and this Section 12.6.

46

ARTICLE XIII

AMENDMENTS, TERMINATION AND MERGER

13.1        Amendments.

The Sponsor reserves the right at any time and from time to time, for any reason and retroactively if deemed necessary or appropriate by it, to the extent permissible under law, to conform with governmental regulations or other policies, to amend in whole or in part any or all of the provisions of this Plan, provided that:

(a) No amendment shall make it possible for any part of the Fund to be used for, or diverted to, purposes other than for the exclusive benefit of Participants or their Beneficiaries under the Trust Agreement, except to the extent provided in Section 4.4;

(b) No amendment may, directly or indirectly, reduce the vested portion of any Participant's Account balance as of the effective date of the amendment or change the vesting schedule with respect to the future accrual of Employer contributions for any Participants unless each Participant with 3 or more Years of Vesting Service is permitted to elect to have the vesting schedule in effect before the amendment used to determine his vested benefit;

(c) No amendment may eliminate an optional form of benefit; and.

(d) No amendment may increase or change the duties or liabilities of the Trustee without its consent.

Amendments may be made in the form of resolutions or separate written document adopted by the Board of Directors or its delegate.  Copies of all amendments shall be delivered to the Trustee.

13.2         Effect of Change In Control.

(a) In the event of a "change in control" of the Sponsor, as defined in paragraph (d) below, this Plan shall terminate at the effective time of such change in control.  Nothing in this Plan shall prevent the Sponsor from becoming a party to such a change in control.

(b) Upon the effective time of a change in control, the Account balances of all affected Participants and Former Participants shall become fully vested and nonforfeitable, and the Trustee shall make payments to each Participant and Beneficiary in accordance with Section 9.5.

(c) Notwithstanding any provision of the Plan to the contrary, at and after the effective time of a change in control, each of the following provisions shall become applicable; provided, however, that any such provision shall not apply if the Board of Directors determines that such provision would adversely affect the tax-qualified status of the Plan pursuant to Section 401(a) of the Code, or should not apply for any other reason:

    (1)        The Plan shall be interpreted, maintained and operated exclusively for the benefit of those individuals who are participating in the Plan as of the effective time of the change in control and their Beneficiaries.  Notwithstanding the provisions of Section 2.1(a), no Employee shall become a Participant for the first time at or after the effective time of a change in control.

 

 

47

    (2)        After a Participant's Retirement, Disability or other termination of Service, such Participant's Account, regardless of its value, shall not be distributed and shall share in the allocation of the Employee Stock Ownership Contribution and Investment Adjustments until such time as either (A) the Fund is liquidated in connection with the termination of the Plan, or (B) the Participant (or his Beneficiary) receives a full distribution of his Account either upon his election in accordance with Section 9.2(c) or as required in accordance with Section 8.8, 9.3 or 9.4.

    (3)         Upon the termination of the Plan, Employer Securities that are allocated to the Exempt Loan Suspense Account and that are not used to repay an Exempt Loan shall be allocated as Investment Adjustments in accordance with Section 5.3.

    (4)          Employer Securities that are released from the Exempt Loan Suspense Account in accordance with Section 8.5 shall be allocated to the Employee Stock Ownership Account of each Participant regardless of     whether he completed a Year of Vesting Service during the Plan Year or was an Employee on the last day of such Plan Year.

    (5)         The Administrator shall consist of a committee selected by the Board of Directors, and such committee shall have the exclusive authority (i) to remove the Trustee and to appoint a successor trustee, (ii) to adopt amendments to the Plan or the Trust Agreement to effectuate the provisions and intent of this Section 13.2, and (iii) to perform any or all of the functions and to exercise all of the discretion that are delegated to the Administrator pursuant to Article XI.

    (6)         Any application for a favorable determination letter with respect to the tax-qualified status of the Plan under Section 401(a) of the Code with respect to its termination shall be subject to the prior review, comment and approval (which approval shall not be unreasonably withheld) of the Administrator, as defined in paragraph (5) above.

(d) For purposes of this Section 13.2, the term "change in control" means the occurrence of any one or more of the events specified in the following clauses (i) through (iii): (i) any third person, including a "group" as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, shall become the beneficial owner of shares of the Sponsor with respect to which 25% or more of the total number of votes for the election of the Board of Directors may be cast, (ii) as a result of, or in connection with, any cash tender offer, merger or other business combination, sale of assets or contested election, or combination of the foregoing, the persons who were directors of the Sponsor shall cease to constitute a majority of the Board of Directors, or (iii) the effective time of a transaction that is approved by the stockholders of the Sponsor and that provides either for the Sponsor to cease to be an independent publicly-owned corporation or for a sale or other disposition of all or substantially all of the assets of the Sponsor.

13.3         Consolidation or Merger of Trust.

In the event of any merger or consolidation of the Fund with, or transfer in whole or in part of the assets and liabilities of the Fund to, another trust fund held under any other plan of deferred compensation maintained or to be established for the benefit of all or some of the Participants of this Plan, the assets of the Fund applicable to such Participants shall be transferred to the other trust fund only if:

(a) Each Participant would receive a benefit under such successor trust fund immediately after the merger, consolidation or transfer which is equal to or greater than the benefit he would have been entitled to receive immediately before the merger, consolidation or transfer (determined as if this Plan and such transferee trust fund had then terminated);

 

 

48

(b) Resolutions of the Board of Directors, or of any new or successor employer of the affected Participants, shall authorize such transfer of assets, and, in the case of the new or successor employer of the affected Participants, its resolutions shall include an assumption of liabilities imposed under this Plan with respect to such Participants' inclusion in the new employer's plan; and

(c) Such other plan and trust are qualified under Sections 401(a) and 501(a) of the Code.

13.4        Bankruptcy or Insolvency of Employer.

In the event of (a) the Employer's legal dissolution or liquidation by any procedure other than a consolidation or merger, (b) the Employer's receivership, insolvency, or cessation of its business as a going concern, or (c) the commencement of any proceeding by or against the Employer under the federal bankruptcy laws, or similar federal or state statute, or any federal or state statute or rule providing for the relief of debtors, compensation of creditors, arrangement, receivership, liquidation or any similar event which is not dismissed within 30 days, this Plan shall terminate automatically with respect to such entity on such date (provided, however, that if a proceeding is brought against the Employer for reorganization under Chapter 11 of the United States Bankruptcy Code or any similar federal or state statute, then this Plan shall terminate automatically if and when said proceeding results in a liquidation of the Employer, or the approval of any Plan providing therefor, or the proceeding is converted to a case under Chapter 7 of the Bankruptcy Code or any similar conversion to a liquidation proceeding under federal or state law including, but not limited to, a receivership proceeding).  In the event of any such termination as provided in the foregoing sentence, the Trustee shall make payments to the persons entitled thereto in accordance with Section 9.6 hereof.

13.5        Voluntary Termination.

The Board of Directors reserves the right to terminate this Plan at any time by giving to the Trustee and the Administrator notice in writing of such desire to terminate.  The Plan shall terminate upon the date of receipt of such notice, the Account balances of all affected Participants and Former Participants shall become fully vested and nonforfeitable, and the Trustee shall make payments to each Participant or Beneficiary in accordance with Section 9.6.  Alternatively, the Sponsor, in its discretion, may determine to continue the Trust Agreement and to continue the maintenance of the Fund, in which event distributions shall be made upon the contingencies and in all the circumstances under which such distributions would have been made, on a fully vested basis, had there been no termination of the Plan.  In addition, an entity other than the Sponsor that is participating in this Plan may terminate its participation in the Plan on a prospective basis by action of its board of directors.  Upon such termination of participation, Participants who are employees of such entity shall be entitled to distributions from this Plan in accordance with Article IX and this Article XIII.

13.6         Partial Termination of Plan or Permanent Discontinuance of Contributions.

In the event that a partial termination of the Plan shall be deemed to have occurred, or if the Employer shall discontinue permanently its contributions hereunder, the right of each affected Participant and Former Participant in his Account balance shall be fully vested and nonforfeitable.  The Sponsor, in its discretion, shall decide whether to direct the Trustee to make immediate distribution of such portion of the Fund assets to the persons entitled thereto or to make distribution in the circumstances and contingencies which would have controlled such distributions if there had been no partial termination or permanent discontinuance of contributions.  Determining whether a partial termination of the Plan pursuant to Section 411(d)(3) of the Code has occurred depends on the facts and circumstances including the extent to which 

 

 

49

participating Employees have had a severance from employment. If the turnover rate is at least 20 percent, there is a presumption that a partial termination of the Plan has occurred.

50

ARTICLE XIV

MISCELLANEOUS

14.1         No Diversion of Funds.

It is the intention of the Employer that it shall be impossible for any part of the corpus or income of the Fund to be used for, or diverted to, purposes other than for the exclusive benefit of the Participants or their Beneficiaries, except to the extent that a return of the Employer's contribution is permitted under Section 4.4.

14.2         Liability Limited.

Neither the Employer nor the Administrator, nor any agents, employees, officers, directors or shareholders of any of them, nor the Trustee, nor any other person, shall have any liability or responsibility with respect to this Plan, except as expressly provided herein.

14.3         Facility of Payment.

If the Administrator shall receive evidence satisfactory to it that a Participant or Beneficiary entitled to receive any benefit under the Plan is, at the time when such benefit becomes payable, a minor, or is physically or mentally incompetent to receive such benefit and to give a valid release therefor, and that another person or an institution is then maintaining or has custody of such Participant or Beneficiary and that no guardian, committee or other representative of the estate of such Participant or Beneficiary shall have been duly appointed, the Administrator may direct the Trustee to make payment of such benefit otherwise payable to such Participant or Beneficiary, to such other person or institution, including a custodian under a Uniform Gifts to Minors Act, or corresponding legislation (who shall be an adult, a guardian of the minor or a trust company), and the release of such other person or institution shall be a valid and complete discharge for the payment of such benefit.

14.4         Spendthrift Clause.

Except as permitted by the Act or the Code, including in the case of certain judgments and settlements described in Section 401(a)(13)(C) of the Code, no benefits or other amounts payable under the Plan shall be subject in any manner to anticipation, sale, transfer, assignment, pledge, encumbrance, charge or alienation.  If the Administrator determines that any person entitled to any payments under the Plan has become insolvent or bankrupt or has attempted to anticipate, sell, transfer, assign, pledge, encumber, charge or otherwise in any manner alienate any benefit or other amount payable to him under the Plan or that there is any danger of any levy or attachment or other court process or encumbrance on the part of any creditor of such person entitled to payments under the Plan against any benefit or other accounts payable to such person, the Administrator may, at any time, in its discretion, and in accordance with applicable law, direct the Trustee to withhold any or all payments to such person under the Plan and apply the same for the benefit of such person, in such manner and in such proportion as the Administrator may deem proper.

14.5         Benefits Limited to Fund.

All contributions by the Employer to the Fund shall be voluntary, and the Employer shall be under no legal liability to make any such contributions, except as otherwise provided herein.  The benefits of this Plan shall be provided solely by the assets of the Fund, and no liability for the payment of benefits under the Plan or for any loss of assets due to any action or inaction of the Trustee shall be imposed upon the Employer.

 

 

51

14.6         Cooperation of Parties.

All parties to this Plan and any party claiming interest hereunder agree to perform any and all acts and execute any and all documents and papers which are necessary and desirable for carrying out this Plan or any of its provisions.

14.7         Payments Due Missing Persons.

The Administrator shall direct the Trustee to make a reasonable effort to locate all persons entitled to benefits under the Plan; however, notwithstanding any provision in the Plan to the contrary, if, after a period of 5 years from the date such benefit shall be due, any such persons entitled to benefits have not been located, their rights under the Plan shall stand suspended.  Before this provision becomes operative, the Trustee shall send a certified letter to all such persons at their last known address advising them that their interest in benefits under the Plan shall be suspended.  Any such suspended amounts shall be held by the Trustee for a period of 3 additional years (or a total of 8 years from the time the benefits first became payable), and thereafter such amounts shall be reallocated among current Participants in the same manner that a current contribution would be allocated.  However, if a person subsequently makes a valid claim with respect to such reallocated amounts and any earnings thereon, the Plan earnings or the Employer's contribution to be allocated for the year in which the claim shall be paid shall be reduced by the amount of such payment.  Any such suspended amounts shall be handled in a manner not inconsistent with regulations issued by the Internal Revenue Service and Department of Labor.

14.8        Governing Law.

This Plan has been executed in the State of Indiana, and all questions pertaining to its validity, construction and administration shall be determined in accordance with the laws of that State, except to the extent superseded by the Act.

14.9         Nonguarantee of Employment.

Nothing contained in this Plan shall be construed as a contract of employment between the Employer and any Employee, or as a right of any Employee to be continued in the employment of the Employer, or as a limitation of the right of the Employer to discharge any of its Employees, with or without cause.

14.10       Counsel.

The Trustee and the Administrator may consult with legal counsel, who may be counsel for the Employer and for the Administrator or the Trustee (as the case may be), with respect to the meaning or construction of this Plan and the Trust Agreement, their respective obligations or duties hereunder, or with respect to any action or proceeding or any question of law, and they shall be fully protected to the extent allowable by law with respect to any action taken or omitted by them in good faith pursuant to the advice of legal counsel.

14.11       Purposes.

This Plan is intended to satisfy the tax qualification requirements of Section 401(a) of the Code for stock bonus plans which are intended to operate and serve as employee stock ownership plans as described in Section 4975(e)(7) of the Code.  This Plan has been implemented so that Participants may be provided 

 

 

52

 

with an opportunity to accumulate capital for their future economic security by being provided an equity interest in their employer.  This Plan, as an employee stock ownership plan, is intended to invest primarily in "qualifying employer securities" as defined in Section 4975(e)(8) of the Code.

14.12       Invalidity.

Subject to the requirements of the Code and the Act, in the event any provision of the Agreement, as between the Sponsor and the Trustee, shall be held illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining provisions hereof, and this Agreement shall thereafter be construed and enforced as if said illegal or invalid provisions had never been included herein.

IN WITNESS WHEREOF, the Sponsor has caused these presents to be executed by its duly authorized officers and its corporate seal to be affixed on this _____ day of _______, 20__.

 

	ATTEST:	 	
Mid-Southern Bancorp, Inc.

	
 

	 	
 

	
 

	 	
 

	
_____________________________________

	 	By_____________________________________
	Secretary	 	
President and Chief Executive Officer

	
 

	 	
 

	
 

	 	
 

	[Corporate Seal]	 	
 

	
 

	 	
 

	
 

	 	
 

	ATTEST:	 	
Mid-Southern Savings Bank, FSB

	 	 	 
	 	 	 
	_____________________________________	 	By_____________________________________
	Secretary	 	President and Chief Executive Officer
	 	 	 
	[Corporate Seal]	 	 

 

 

 

53

 

ESOP TRUST AGREEMENT

BETWEEN

_____________________________

AND

MID-SOUTHERN BANCORP, INC.

THIS AGREEMENT OF TRUST (the "Agreement") is effective as of ___________________, 2018, by and between Mid-Southern Bancorp, Inc. (the "Employer") and ______________________, a non-depository trust company incorporated under the laws of the State of ___________ (the "Trustee");

WITNESSETH

WHEREAS, the Employer has adopted the Mid-Southern Bancorp, Inc. Employee Stock Ownership Plan (the "Plan"), effective as of January 1, 2018, for the exclusive purpose of providing benefits under the Plan to participants and their beneficiaries of the Employer and related entities of the Employer, if any; and

WHEREAS, the Employer desires to establish a trust (the "Trust") for the Plan and to appoint the Trustee to serve as trustee for the Trust, effective as of January 1, 2018; and

WHEREAS, the Trustee wishes to accept its appointment as trustee for the Plan.

NOW, THEREFORE, in consideration of the mutual covenants contained herein, the parties hereto, intending to be legally bound, hereby agree and declare as follows:

ARTICLE I

 ESTABLISHMENT OF TRUST

Section 1.1.        The Employer and the Trustee hereby agree to the establishment of a trust consisting of such sums as shall from time to time be paid to the Trustee under the Plan and such earnings, income and appreciation as may accrue thereon which, less payments made by the Trustee to carry out the purposes of the Plan, are referred to herein as the "Fund".  The Trustee shall carry out the duties and responsibilities herein specified, but shall be under no duty to determine whether the amount of any contribution by the Employer or any affiliated entity or by any participant under the Plan is in accordance with the terms of the Plan.

Section 1.2.        The Fund shall be held, invested, reinvested and administered by the Trustee in accordance with the terms of the Plan and this Agreement solely in the interest of participants and their beneficiaries under the Plan and for the exclusive purpose of providing benefits to participants and their beneficiaries and defraying the reasonable expenses of administering the Plan.  Except as provided in Section 4.2, no assets of the Plan shall inure to the benefit of the Employer or any affiliated entity.

 

 

Section 1.3.         The Trustee shall pay benefits and expenses from the Fund only upon the written direction of the Administrator or its delegate.  The Trustee shall be fully entitled to rely on such directions furnished by the Administrator or its delegate and shall be under no duty to ascertain whether the directions are in accordance with the provisions of the Plan.

ARTICLE II

 INVESTMENT OF THE FUND

Section 2.1.         In accordance with the provisions of the Plan, the Trustee shall invest and reinvest the Fund without distinction between principal and income primarily in the Employer's common stock (herein "Employer Securities"), in accordance with the terms of the Plan and this Agreement as directed by the Employer.  To the extent that contributions are made in Employer Securities, the Trustee will be expected to retain such Employer Securities.  To the extent contributions are made in cash or other amounts are received in cash and are not needed to pay principal or interest on an ESOP loan, to pay distributions to participants and their beneficiaries or to pay expenses of the Trust, the Trustee will be expected to acquire Employer Securities either from other shareholders or directly from the Employer as directed by the Administrator.  If at the time Employer Securities is to be purchased, the Employer has outstanding more than one class of Employer Securities, the Administrator shall direct the Trustee as to which class of Employer Securities shall be purchased.

Section 2.2.         In accordance with the provisions of the Plan and except as provided in Section 2.1 herein or the Plan, all assets of the Fund shall be invested by the Trustee primarily in Employer Securities, with the specific exception that if the Trustee is notified by the Administrator that a participant is eligible to make a diversification election, if provided for under the Plan, whereby the participant may transfer a specified portion of the participant's account to other investment options available under the Plan, the Trustee shall invest such specified portion of the participant's account in accordance with the participant's investment directions as provided for in the Plan and Section 2.3 hereof.  The Administrator may also notify the Trustee that all or a portion of the Plan assets shall be invested in assets other than Employer Securities, in which case the Administrator shall direct the Trustee regarding how such Plan assets shall be invested; provided, however, that the Administrator may not cause the Trust to be invested in a manner that would result in the Plan not being invested primarily in Employer Securities, within the meaning of Section 4975(e)(7) of the Internal Revenue Code of 1986, as amended ("Code").

In accordance with the provisions of the Plan, the "named fiduciary" of the Plan, as defined in Section 3(38) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), is authorized to appoint an "investment manager" as defined in Section 3(38) of ERISA, to be responsible for managing one or more of the designated investment options available under the Plan and selecting the specific investments that comprise any such investment option.    The Trustee shall follow the directions of the investment manager regarding the designated investment option(s) for which the investment manager is assigned responsibility.

Section 2.3.        In accordance with the provisions of the Plan, each participant who is eligible to make the diversification election described in Section 2.2 shall direct the Trustee as to the investment of that portion of his or her account subject to such election.  All investment directions by participants shall be timely furnished to the Trustee by the Administrator, except to 

 

2

 

the extent such directions are transmitted telephonically or otherwise by participants and beneficiaries directly to the Trustee in accordance with rules and procedures established and approved by the Administrator and the Trustee.  A participant's diversification election shall be effected in the manner (i.e., reinvestment in the Plan in other assets, or transfer to another tax-qualified plan sponsored by the Employer, or directly to an individual retirement account for the benefit of the participant) determined by the Administrator and conveyed to the Trustee by the Administrator in writing.  In making any such investment or transfer of the assets of the Fund, the Trustee shall be fully entitled to rely on the directions from participants and/or the Administrator that are properly furnished to the Trustee, and the Trustee shall be under no duty to make any inquiry or investigation with respect thereto.

Section 2.4.       Subject to the provisions of Section 2.1, 2.2, and 2.3, the Trustee shall have the authority, in addition to any authority given by law, to exercise the following powers in the administration of the Fund:

(a)        in accordance with Section 2.2 above, to invest and reinvest all or a part of the assets of the Fund in the available investment options under the Plan without restriction to investments authorized for fiduciaries, including, without limitation on the amount that may be invested therein, any common, collective or commingled trust fund maintained by the Trustee, investment company, mutual fund, or other security or investment option offered by the Trustee.  Any investment in, and any terms and conditions of, any common, collective or commingled trust fund available only to employee trusts which meet the requirements of the Code or corresponding provisions of subsequent income tax laws of the United States, shall constitute an integral part of this Agreement and the Plan;

(b)        to dispose of all or any part of the investments, securities, or other property which may from time to time or at any time constitute the Fund and to make, execute and deliver to the purchasers thereof good and sufficient deeds of conveyance thereof, and all assignments, transfers and other legal instruments, either necessary or convenient for passing the title and ownership thereto, free and discharged of all trusts and without liability on the part of such purchasers to see to the application of the purchase money;

(c)         to cause any investment of the Fund to be registered in the name of the Trustee or the name of its nominee or nominees or to retain such investment unregistered or in a form permitting transfer by delivery; provided that the books and records of the Trustee shall at all times show that all such investments are part of the Fund;

(d)         to consult and employ any suitable agent to act on behalf of the Trustee and to contract for legal, accounting, clerical and other services deemed necessary by the Trustee to manage and administer the Fund according to the terms of the Plan and this Agreement;

(e)         to pay from the Fund all taxes imposed or levied with respect to the Fund or any part thereof under existing or future laws, and to contest the validity or amount of any tax, assessment, claim or demand respecting the Fund or any part thereof;  and

 

3

(f)         generally to exercise any of the powers of an owner with respect to all or any part of the Fund.

Section 2.5.        Each participant or beneficiary to whose account shares of Employer Securities have been allocated shall, as a named fiduciary within the meaning of Section 403(a)(1) of ERISA, direct the Trustee with respect to the voting and, if applicable, tendering of shares of Employer Securities allocated to his or her account, and the Trustee shall follow the directions of those participants and beneficiaries who provide timely instructions to the Trustee.  The Trustee shall vote the shares of Employer Securities allocated to the accounts of participants for whom no timely instructions have been received in the same proportion as those shares of Employer Securities for which instructions were timely received.  Allocated shares of Employer Securities will not be tendered, unless directed by a participant or beneficiary to whose account shares of Employer Securities have been allocated.  Employer Securities held in a suspense account under the Plan shall be voted by the Trustee on each issue with respect to which shareholders are entitled to vote in the same proportion as the Employer Securities that are credited to the Accounts of those Participants who directed the Trustee as to the manner of voting their shares in such Accounts with respect to such issue, unless the Trustee determines otherwise as required under ERISA.  In the event that a Participant fails to give timely voting instructions to the Trustee with respect to the voting of Employer Securities that are allocated to his Account, such shares shall be voted by the Trustee in the same proportion as the Employer Securities that are credited to the Accounts of those Participants who directed the Trustee as to the manner of voting their shares in such Accounts with respect to such issue, unless the Trustee determines otherwise as required under ERISA.

Section 2.6.       Except as may be authorized by regulations promulgated by the Secretary of Labor, the Trustee shall not maintain the indicia of ownership in any assets of the Fund outside of the jurisdiction of the district courts of the United States.

ARTICLE III

 DUTIES AND RESPONSIBILITIES

Section 3.1.       The Trustee, Employer, Named Fiduciary and Administrator shall each discharge their assigned fiduciary duties and responsibilities under this Agreement and the Plan solely in the interest of participants and their beneficiaries in the following manner:

(a)        for the exclusive purpose of providing benefits to participants and their beneficiaries and defraying reasonable expenses of administering the Plan;

(b)        with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims;

(c)        except as permitted by ERISA Section 404(a)(2), by diversifying the Plan investments so as to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so, including selecting a range of available investment options under the Plan referenced in Section 2.2 so as to permit participants and beneficiaries to diversify their investments pursuant to Section 2.3; and

 

4

(d)         in accordance with the provisions of the Plan and this Trust Agreement insofar as they are consistent with the provisions of ERISA.

Section 3.2.        The Trustee shall keep full and accurate accounts of all receipts, investments, disbursements and other transactions hereunder, including such specific records as may be agreed upon in writing between the Employer and Trustee.  All such accounts, books and records shall be open to inspection and audit at all reasonable times by any authorized representative of the Employer, the Named Fiduciary or the Administrator.  Any participant or beneficiary under the Plan may examine only those individual account records pertaining directly to that participant or beneficiary.

Section 3.3.         The Trustee shall determine the value of the Fund at such times as are mutually agreed upon by the Trustee and the Employer but in no case less frequently than annually or as required under the terms of the Plan, the Code or ERISA.  The value of shares of Employer Securities held in the Fund shall be determined at their fair market value defined as their closing market price on the relevant valuation date; provided, however, that in the event such shares of Employer Securities have no readily-ascertainable fair market value because they are thinly-traded, at their fair value as determined in good faith and pursuant to written procedures recommended by the Administrator and approved by the Trustee as of such times as the Trustee determines to be appropriate, and from such financial publications, pricing services, or other services or sources as the Trustee reasonably believes appropriate.  All other securities and the value of other assets held in the Fund shall be valued by the Trustee at their market values on the relevant valuation date under procedures established by the Trustee.  For purposes of this Section, Employer Securities shall be considered "thinly traded" if it is publicly traded on a national exchange or other generally recognized market, but not in sufficient volume and/or with sufficient frequency to assure prompt execution of buy and sell orders.  In making this determination, Internal Revenue Service Notice 2011-19 shall be taken into account.  The Trustee may seek an opinion from an independent investment advisor or legal counsel as to whether a given Securities is "thinly traded."

Section 3.4.         Within 120 days after the end of each plan year for the Plan, or within 120 days after its removal or resignation, the Trustee shall file with the named fiduciary a written account of the administration of the Fund showing all transactions effected by the Trustee with respect to the assets of the Plan subsequent to the period covered by the last preceding account to the end of such plan year or date of removal or resignation and all property held at its fair market value at the end of the accounting period.  Such accounting shall show the net value of the Plan's interest in each investment option maintained by the Trustee for the Fund and shall include financial information necessary for the completion of the annual reports required for the Plan under ERISA.  The named fiduciary may approve such accounting by written notice of approval delivered to the Trustee or by failure to express objection to such accounting in writing delivered to the Trustee within 120 days from the date on which the accounting is delivered to the named fiduciary.

Section 3.5.          In accordance with the terms of the Plan, the Trustee shall establish and maintain separate accounts in the name of each participant in order to record all contributions by or on behalf of the participant to the Plan and any earnings, losses and expenses attributable thereto.  The Administrator shall furnish the Trustee with participant enrollment data in a format acceptable 

 

5

 

to the Trustee identifying the name, address, social security number, and current investment directions of each participant for whom one or more separate accounts are to be established by the Trustee under this Agreement.  With respect to all contributions to the Plan and other amounts that are transmitted to the Trustee, the Administrator shall furnish the Trustee with participant allocation data in a format acceptable to the Trustee identifying each participant on whose behalf an amount is being transmitted to the Trustee and the dollar amount to be allocated to each of the participant's separate account under the Plan.  In allocating amounts to participants' separate accounts under the Plan, the Trustee shall be fully entitled to rely on the participant enrollment and allocation data furnished to it by the Administrator and shall be under no duty to make any inquiry or investigation with respect thereto.

Section 3.6.        The Trustee shall, at least annually, or more frequently as required by the Code or ERISA, furnish each participant in the Plan with statements reflecting the current fair market value of the participant's separate accounts under the Plan and all activities occurring within such accounts during the most recent reporting period, including Plan contributions, earnings, investment exchanges, distributions, and withdrawals.

Section 3.7.         The Trustee shall not be required to determine the facts concerning the eligibility of any participant to participate in the Plan, the amount of benefits payable to any participant or beneficiary under the Plan, or the date or method of payment or disbursement.  The Trustee shall be fully entitled to rely solely upon the written advice and directions of the Administrator as to any such question of fact.

Section 3.8.          Unless resulting from the Trustee's gross negligence, willful misconduct, lack of good faith, or breach of its fiduciary duties under this Agreement or ERISA, the Employer shall indemnify and save harmless the Trustee from, against, for and in respect of any and all damages, losses, obligations, liabilities, liens, deficiencies, costs and expenses, including without limitation, reasonable attorney's fees incident to any suit, action, investigation, claim or proceedings suffered, sustained, incurred or required to be paid by the Trustee in connection with the Plan or this Agreement.

ARTICLE IV

 PROHIBITION OF DIVERSION

Section 4.1.           Except as provided in Section 4.2, at no time prior to the satisfaction of all liabilities with respect to participants and their beneficiaries under the Plan shall any part of the corpus or income of the Fund be used for, or diverted to, purposes other than for the exclusive benefit of participants or their beneficiaries, or for defraying reasonable expenses of administering the Plan.

Section 4.2.           The provisions of Section 4.1 notwithstanding, contributions made by the Employer or any affiliated entity under the Plan will be returned to the Employer or affiliated entity under the following conditions:

(a)            If a contribution is made by mistake of fact, such contributions may be returned within one year of the payment of such contribution upon demand of the Employer or affiliated entity; and

 

6

 

(b)           Contributions to the Plan are specifically conditioned upon their deductibility under the Code.  To the extent a deduction is disallowed for any such contribution, it will be returned within one year after the disallowance of the deduction upon demand of the Employer or affiliated entity.  Contributions which are not deductible in the taxable year in which made but are deductible in subsequent taxable years shall not be considered to be disallowed for purposes of this subsection; and

(c)            Contributions to the Plan are specifically conditioned on initial qualification of the Plan under the Code.  If a Plan is determined by the Internal Revenue Service to not be initially qualified, upon demand of the Employer, any employer contributions made incident to that initial qualification will be returned within one year after the date the initial qualification is denied, provided that the determination of the Internal Revenue Service is made pursuant to an application for determination made by the time prescribed by law for filing the return of the Employer for the taxable year in which the Plan is adopted or such later date as is prescribed by the Secretary of the Treasury.

ARTICLE V

 COMMUNICATION WITH FIDUCIARIES

Section 5.1.           Whenever the Trustee is permitted or required to act upon the directions or instructions of the Employer, any named fiduciary, any investment manager or the Administrator, the Trustee shall be entitled to rely upon any written communication signed by any person or agent designated to act as or on behalf of any such fiduciary.  Such person or agent shall be so designated either under the provisions of the Plan or in writing by the Employer and such authority shall continue until revoked in writing.  The Trustee shall incur no liability for failure to act on such person's or agent's instructions or orders without written communication, and the Trustee shall be fully protected in all actions taken in good faith in reliance upon any instructions, directions, certifications and communications believed to be genuine and to have been signed or communicated by the proper person.

Section 5.2.            The Employer shall notify the Trustee in writing of the appointment, removal or resignation of any person designated to act as or on behalf of the Employer, the named fiduciary, any investment manager, or the Administrator.  After such notification, the Trustee shall be fully protected in acting upon the directions of any person designated to act as or on behalf of any such fiduciary until the Trustee receives notice from the Employer to the contrary.  The Trustee shall have no duty to inquire into the qualifications of any person designated to act as or on behalf of the Employer, the named fiduciary, any investment manager or the Administrator.

ARTICLE VI

 TRUSTEE'S COMPENSATION

Section 6.1.             The Trustee shall be entitled to reasonable compensation for its services as is agreed upon with the Employer, unless the payment of such compensation would give rise to a prohibited transaction under ERISA.  The Trustee shall also be entitled to reimbursement for all direct expenses properly and actually incurred on behalf of the Plan.  Such compensation or reimbursement shall be paid to the Trustee out of the Fund unless paid directly by the Employer.  Trustee compensation is set forth in Schedule A, attached to and forming part of this Agreement.

 

7

ARTICLE VII

 RESIGNATION AND REMOVAL OF TRUSTEE

Section 7.1.              The Trustee may resign at any time by written notice to the Employer which shall be effective 60 days after delivery unless prior thereto a successor trustee shall have been appointed.

Section 7.2.              The Trustee may be removed by the Employer at any time upon 60 days written notice to the Trustee; such notice, however, may be waived by the Trustee.

Section 7.3.              The appointment of a successor trustee hereunder shall be accomplished by and take effect upon the delivery to the Trustee of written notice of the Employer appointing such successor trustee, and an acceptance in writing of the successor trustee hereunder executed by the successor so appointed.  A successor trustee may be either a corporation authorized and empowered to exercise trust powers or one or more individuals.  All of the provisions set forth herein with respect to the Trustee shall relate to each successor trustee so appointed with the same force and effect as if such successor trustee had been originally named herein as the trustee hereunder.  If within 60 days after notice of resignation or removal shall have been given under the provisions of this Article VII, a successor trustee shall not have been appointed, the Trustee or Employer may apply to any court of competent jurisdiction for the appointment of a successor trustee.

Section 7.4.               Upon the appointment of a successor trustee, the Trustee shall transfer and deliver the Fund to such successor trustee, after reserving such reasonable amount as it shall deem necessary to provide for its expenses in the settlement of its account, the amount of any compensation due to it and any sums chargeable against the Fund for which it may be liable.  If the sums so reserved are not sufficient for such purposes, the resigning or removed Trustee shall be entitled to reimbursement for any deficiency from the successor trustee and the Employer who shall be jointly and severally liable therefor.

ARTICLE VIII

 AMENDMENT AND TERMINATION OF THE TRUST AND PLAN

Section 8.1.               The Employer may, by delivery to the Trustee of an instrument in writing, terminate this Agreement at any time.

Section 8.2.               The Employer may partially terminate this Agreement, at any time, by delivering to the Trustee a written direction to transfer such part of the Fund as may be specified in such direction to any other trust established for the purpose of funding benefits under the Plan or under any other plan qualifying under Section 401 of the Code, established for the benefit of participants in the Plan or their beneficiaries by the Employer or any affiliated entity or any successor transferee of the Employer or any affiliated entity; provided such transfer shall be in conformity with the requirements of Federal law.

Section 8.3.              This Agreement may be amended from time to time by the Employer; provided, however, that no amendment shall increase the duties or liabilities of the Trustee without the Trustee's consent; and, provided further, that no amendment shall divert any part of the Fund 

 

8

 

to any purpose other than providing benefits to participants and their beneficiaries under the Plan or defraying the reasonable expenses of administering the Plan.

Section 8.4.             If the Plan is terminated in whole or in part, the Trustee shall distribute the Fund or any part thereof in such manner and at such times as the Administrator shall direct in writing in accordance with the provisions of the Plan; provided, however, that the Trustee may delay distribution of the Fund until it has received from the Employer a copy of an Internal Revenue Service determination letter addressing the Plan's tax-qualified status upon termination, or, in lieu thereof at the Trustee's sole discretion, an opinion from the Employer's legal counsel that the Plan met all qualification requirements at the date of termination.

ARTICLE IX

 MISCELLANEOUS PROVISIONS

Section 9.1.            Unless the context of this Agreement clearly indicates otherwise, the terms defined in the Plan shall, when used herein, have the same meaning as in the Plan.

Section 9.2.            Except as otherwise required by law in the case of any qualified domestic relations order within the meaning of Section 414(p) of the Code, to the extent of any offset of a Participant's benefits as a result of any judgment, order, decree or settlement agreement provided in Section 401(a)(13)(C) of the Code, or any federal tax levy made pursuant to Section 6331 of the Code, or except as otherwise provided in the Plan with respect to any loan to a leveraged ESOP described in Section 4975(d)(3) of the Code or loan from the Fund to a participant in accordance with the provisions of the Plan, the benefits or proceeds of any allocated or unallocated portion of the assets of the Fund and any interest of any participant or beneficiary arising out of or created by the Plan either before or after the participant's retirement shall not be subject to execution, attachment, garnishment or other legal or judicial process whatsoever by any person, whether creditor or otherwise, claiming against such participant or beneficiary.  Except as otherwise provided in the Plan with respect to any loan from the Fund to a participant in accordance with the provisions of the Plan, no participant or beneficiary shall have the right to alienate, encumber or assign any of the payments or proceeds or any other interest arising out of or created by the Plan and any action purporting to do so shall be void.  The provisions of this Section shall apply to all participants and beneficiaries, regardless of their citizenship or place of residence.

Section 9.3.           Any person dealing with the Trustee may rely upon a copy of this Agreement and any amendments thereto certified to be true and correct by the Trustee.

Section 9.4.           The Trustee hereby acknowledges receipt of a copy of the Plan.  The Employer will cause a copy of any amendment to the Plan to be delivered to the Trustee.

Section 9.5.           The construction, validity and administration of this Agreement shall be governed by ERISA and, to the extent not preempted by ERISA, the laws of the State of Maine without regard to its rules regarding conflict of laws.

9

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in their respective names by their duly authorized officers as of the day and year first above written.

	
 

	MID-SOUTHERN BANCORP, INC.
	
 

	
 

	
 

	
 

	
 

	
BY:   ____________________________________  

	
 

	
     

         ____________________________________

	
 

	
                            PRINT NAME

 

          ____________________________________

	
 

	                                  TITLE
	
 

	
 

	 	 
	 	 [NAME OF TRUSTEE]
	 	 
	 	 
	 	BY:      ____________________________________
	 	
 

             ____________________________________

	 	                          PRINT NAME
	 	
             

             ____________________________________

	 	                                 TITLE                          

10

STATE OF INDIANA               )

                                                      :  ss.:

COUNTY OF                              )

On this         day of                          , in the year 2018, before me, the undersigned, a Notary Public in and for the said state, personally appeared                                                                     , personally known to me or proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies) and that by his/her/their signature(s) on the instrument, the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument.

	
SEAL:

	
_______________________________________

	
 

	Notary Public of  __________________________
	
 

	My Commission expires _____________________

 

STATE OF     _____________                      )

:  ss.:

COUNTY OF _____________                      )

On this         day of                                   , in the year 2018, before me, the undersigned, a Notary Public in and for the said state, personally appeared ________________, personally known to me or proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his capacity(ies) and that by his signature on the instrument, the person or the entity upon behalf of which the person acted, executed the instrument.

	
SEAL:

	
_______________________________________

	
 

	Notary Public of  __________________________
	
 

	My Commission expires _____________________

 

11

Schedule A

Fee Schedule Prepared for

Mid-Southern Bancorp, Inc. Employee Stock Ownership Plan

Directed Trustee Services

Annual Asset Fee

__________________________________________

12Exhibit 10.2

  

E XECUT I VE EMPLOYMENT AGREEMENT

This          EXECUTIVE EMPLOYMENT AGREEMENT  (the  ''Agreement" )  is   dated   as of December 20, 2017, between Mid-Southern Savings Bank, FSB (the "Bank") and Alexander G. Babey ('' Executive"). Mid-Southern Savings Bank, FSB (the "Company") joins for purposes of Section 4.

 

Agreement

Now, THEREFORE, in consideration of the foregoing and of the covenants contained herein, the Bank, Company, and Executive agree as follows:

 

1.            Employment and Term

The Bank agrees, subject to obtaining Regulatory Approval to employ Executive as Chief Credit Officer, and Executive hereby accepts such employment on the terms and conditions set forth in this Agreement. Unless earlier terminated pursuant to Section 5, the initial term of this Agreement begins on the Effective Date and ends on the three-year anniversary of the Effective Date; thereafter, the term of this Agreement will automatically be extended for additional 12-month periods unless the Bank or Executive give a notice of nonrenewal to the other party at least 45 days before the end of the then-current 12 -month period (the initial term, together with all 12-month extensions, the " Term"). As used in this Agreement, the "Effective Date" is the date upon which the Bank receives approval pursuant to 12 C.F.R § 5.51 ("Regulatory Approval") from the Office of the Comptroller of the Currency (the "OCC") for Executive to serve as its Chief Credit Officer.

 

2.            Duties and Responsibilities

Executive will perform the duties customary for the position of a President/Chief Executive Officer, and any specific duties assigned from time to time by the Bank's Board of Directors or President. Throughout the Term, Executive agrees to use his best efforts for Bank's benefit and to devote his full time, attention , and energies to the Bank's business. Executive may engage in other business activities with the Board's approval, and may invest his personal assets so long as such investment does not interfere with his perforn1ance under this Agreement.

3.            Compensation; Benefits.

 

                (a)        During the Term, the Bank will pay Executive $150,000 annually (the "Base Salary") as compensation for his services under this Agreement, which will be paid on the Bank's norma l payroll schedu le. Executive's Base salary will be reviewed periodically and may be increased from time to time by the Board of Directors in their sole discretion. Except as otherwise provided in this Agreement, Executive's Base Salary may only be decreased with his consent.

 

                (b)        Benefits. To the extent pern1ined under the applicable plan documents, Executive is entitled to participate in all benefit plans and arrangements generally availab le to employees of the Bank and in any supplementary benefits provided to senior executives of the Bank, all in accordance with the terms of such plans and programs.

 

 

  

 

 

 

                (c)        Business Expenses: Vehicle Allowance. The Bank will reimburse Executive for all reasonable , ordinary, and necessary business expenses incurred by Executive in performing his duties as an employee of the Bank; provided that Executive must account for such expenses by providing the Bank with substantiating documentation sufficient for tax purposes. The Bank agrees to provide Executive with an automobile allowance of $10,000 per year, payable in equal installments on the Bank' s regular payroll schedule and subject to any withholding required by law. Any reimbursements that may create taxable income to Executive must be submitted for reimbursement as soon as practicable and will be paid in no event later than the 74th day after the end of Executive's taxable year in which the expenses are incurred.

 

                (d)        Vacation and Holidays. In addition to paid holidays under the Bank' s policies applicable to employees generally, Executive is entitled to three weeks of paid vacation time per year in accordance with the Bank's vacation policies. Unused vacation for any year during the Tenn may not be accumulated for use in subsequent years, and Executive is not entitled to any additional compensation for failure to use vacation time.

4.            Participation in Second Step Conversion Offering. If the Bank and the Company desire to convert from a mutual holding company structure to a stock holding company structure by means of a second step conversion and stock offering, the Bank and the Company will use their best efforts to ensure that Executive is entitled to participate in such offering as an executive officer of the Bank.

 

5.            Termination.

 

                (a)        Events of Termination. Notwithstanding any other provision of this Agreement to the contrary, Executive' s employment with the Bank and this Agreement will terminate upon the first of the following events to occur:

 

	
(i)

	
Exec utive ' s death or Disability ;

	
(ii)

	
 voluntary  termination  by Executive of  his employment  for any  reason; or

(iii)           termination by the Bank with or without Cause (in the case of termination witho ut Cause, the Bank must give executive at least 30 days' written notice of termination).

The notice, if any, required to be given und er this Section 5(a) must (x) be in writin g; (y) identify the specific termination provision relied upon and, in the case of a termination for Cause, state in reasonable detail the facts and circumstances claimed to provide a basis for the termina tion , and (z) specify an effective date of the termination.

 

            (b)        Compensation Upon Termination.

 

                        (i)        Termination Without Cause . Subject to Section 5(b)(iii) below , if Executive experiences an Involuntary Termination witho ut Cause (as defined in Section 7), then the Bank will pay Executive his compensation through the date of Termination plus the Severance Amount in a lump sum within 90 days following such Termination. Notwithstanding the foregoing or anything to the contrary in this Agreement, Executive acknowledges and agrees that

 

 

2

the Bank will not be obligated to make any payment to Executive that is deemed a "golden parachute" payment by regulatory authorities under the banking laws and regulations applicable to the Bank.

 

                        (ii)        Termination/or Any Other Reason. If Executive's employment terminates for any reason other than an Involuntary Termination without Cause, then Executive will be entitled to his compensation and benefits through the date of termination and will be entitled to no additional compensation or benefits.

 

                        (iii)        Release Requirement. Exec utive ' s right to receive the Severance Amount pursuant to Section 5(b)(i) is specifically conditioned on his execution and nonrevocation of a full general release (in a form reasonably satisfactory to the Bank) of the Protected Parties, and their respective directors , officers, employees, agents, and affiliates (the"Release" ). The Release will be given to Executive no later than 60 days after his Termina tion , and Executive must execute and deliver the Release to the Bank no later than 90 days after his Termination. Payment will be made after Executive executes the Release and after any applicable revocation period expires. If the Executive does not return the signed release by the date set by the Bank, he will forfeit all rights to payment of the Severance Amount.

 

            (c)        Forfeiture: Clawback. If prior payment of the Severance Amount to Executive , it is detennined that Executive (A) committed any fraudulent act or omission , breach of trust or fiduciary duty, or insider abuse with regard to the Bank that has had or is likely to have a material adverse effect on either of the Bank or the Company, (b) is substantially responsible for the insolvency of, the appointment of a conservator or receiver for, or the troubled conditio n, as defined by applicable regulations of the appropriate federal banking agency, of the Bank or the Company, (C) has materially violated any applicable federal or state banking law or regulation that has had or is likely to have a material adverse effect on the Bank or the Compa ny, (D) has violated or conspired to violate Sections 215, 656, 657, I 005, I 006 , 1007, IO14, 1302 or 1344 of Title 18 of the United State Code, or Sections 1341 or 1343 of Title 18 affecting the Bank; or (E) violates any of the restrictive covenants contained in Section 6, then Executive will automatically and imm ediately forfeit any right to be paid the Severance Amount. If , after the Severance Amount is paid to Executive, that any of the matters set forth in clauses (A) through (E) of this Section 5(c) apply to the Executive, then the Executive must promptly (and in any event within ten business days following written notice to the Executive) return to the Bank an amount equal to the Severance Amount in immediately available funds.

 

            (d)        Golden Parachute Rules. Notwithstanding any provision to the contrary in this Agreement, if the payments and benefits due to Executive hereunder in connection with or following a change in control (as defined in Internal Revenue Code Section 2800), either alone or together with any other payments received or to be received by Executive from the Bank or its affiliates (collectively, the "Aggregate Payments"), or any portion thereof, would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code (or any successor thereto), the following provisions shall apply:

 

                        (i)        If the net amount that would be retained by Executive after all taxes on the Aggregate Payments are paid would be greater than the net amount that would be retained by Executive after all taxes are paid if the Aggregate Payments were limited to the largest amount

3

that would result in no portion of the Aggregate Payments being subject to such excise tax, Executive shall be entitled to receive the Aggregate Payments.

 

                    (ii)        If, however, the net amount that would be retained by Executive after all taxes were paid would be greater if the Aggregate Payments were limited to the largest amount that would result in no portion of the Aggregate Payments being subject to such excise tax, the Aggregate Payments to which Executive is entitled shall be reduced to such largest amount.

 

        (e)        Resignation Upon Termination. If Executive is termina ted for any reason, Executive must resign from all offices Executive holds with the Bank, the Company, or their affiliates .

 

6.        Nonsolicitation; Confidentiality

 

        (a)        Confidentiality.

 

                    (i)        General. Executive acknowledges that the Bank continually develop s Confidential Information , that Executive may develop Confidential Information for the Bank, and that Executive may learn of Confidential Information during the course of his employment. Executive will comply with the policies and procedures of the Bank for protecting Confidential Information and may never disclose to any Person (except as required by applicable law or for the proper performance of his duties and responsibilities), or use for his own benefit or gain, or otherwise use in a manner adverse to the interests of the Protected Parties , any Confidential Information obtained by Executive incident to his employment or other association with the Bank. Executive understands that this restriction will continu e to app ly after his employment terminate s, regardless of the reason for such termination.

 

                    (ii)        Return of Documents. All documents, records , tapes and other media of every kind and description containing Confidential Information or otherwise relating to the business , present or otherwise, of the Protected Parties, and any copies, in whole or in part, thereof (" Documents" ), whether or not prepared by Executive , and any and all equipment or other tangible personal property provided by the Bank for Executive' s use (" Com pany Property" ) is the sole and exclusive property of the Bank. Executive must safeguard all Documents and Company Property, and must surrender to the Bank at the time his employment terminates , or at such earlie r time(s) as the Board or its designee may specify, all Docume nts and all Company Property then in Executive's possession or control.

    

        (b)        Nonsolicitation. Unless the Bank gives explicit written consent, for a two-yea r period following the termination of Executive' s employment (the "Restricted Perio ff' ), Executive agrees that he will not directly or indirectly , whether for his own account or that of any other person or entity, attempt to or actually do any of the following:

 

                    (i)        solicit or divert any portion of the business of any Custo mer of a Protected Party with respect to any product or service that is the same as, similar to, or a substitute for any product or service offered or sold by such Protected Parties;

 

                    (ii)       induce any Customer of a Protected Party to cease doing business with such Protected Party or to reduce the volume of business they do with such Protected Party;

 

4

                    (iii)        provide any advice to or otherwise induce a Customer of a Protected Party to cease doing business with such Protected Party or to reduce the volum e of business it does with such Protected Party;

 

                    (iv)        in any other way interfere with a Protected Party's business or the relationship between a Protected Party and any other person or entity; or

 

                    (v)        in any manner solicit, induce, entice, or persuade any Employee of a Protected Party to terminate or change the Employee's employme nt or other relationship with such Protected Party or discuss the prospect of an Employee of a Protected Party leaving or changing employment with such Protected Party.

 

For purposes of this Section 6(b) and Section 6(c), (x) the term "Customer" means any person or entity that is, or was within  the  one-year  period  immediately  prior  to  the  termination  of Executive ' s  em ployment, an  actual  or  prospective  customer or client  of a  Protected  Party;  and (y) the term " Employee" means any person or entity that is, or was within the one-year period im med iate ly prior to Executive' s termination of employment, an  employee,  independent contractor,  director, officer, or agent of a  Protected  Party.

 

        (c)        No Competition. Executive agrees that during the Term and the Restricted Period, he will not:

 

                    (i)        direc tly or indirectly, individually or as a consultant, employee, officer, director, stockholder, partner or other owner or participant in any entity or venture other than the Bank, accept any position or perform any services for a Competitor if Executive' s principal working location for such Competitor will be in any Indiana county in which the Bank does or plans to do business; or

 

                    (ii)        seek or accept employment with a Customer of the Bank for the performance, management, or supervision of services that might otherwise be provided by the Bank if Executive' s principal working location will be in any Indiana county in which the Bank does or plans to do business.

For purposes of this Section 6(c), the term "Competitor" means any entity or  venture other  than  the Bank that competes with any business in which  the Bank  or  its affiliates  is engaging  or  in which  the Bank or such affiliates plan to  engage.

 

        (d)        TollinQ of Restricted Period. If Executive violates any of the restrictive covena nts in Sections 6(b) or 6(c), then the Restricted Period will be tolled or will not begin to run, as the case may be, until the date on which Executive ceases to be in viola tion of such covenant.

 

        (e)        Equitable Remedies. Executive acknowledges that the restrictions contained in this Section 6, in view of the nature of the business in which the Bank is engaged, are reasonable and necessary in order to protect the legitimate business interests of Bank and its affiliates. The Bank and Executive acknowledge and agree that any breach or threatened breach of the provisions of this Section 6 would cause irreparable injury and that a remedy at law would be inadeq uate. Therefore, in the event of a breach or a threatened breach by Executive of any provision of this Section 6, the Bank is entitled to an injunction or other equita ble relief in a

5

court of law restraining Executive from the commission of such breach without any  bond or other security being required and without the necessity of showing actual damages, and  to recover its attorneys' fees, costs and expenses related to the breach or threatened breach. Nothing contained herein should be construed as prohibiting the Bank from pursuing any other remedies available to it for such breach or threatened breach, including the recovery of money damages. The covenants and disclosures in this Agreement must be construed as independent of any other provisions in this Agreement, and the existence of any claim or cause of action by Executive against the Bank, whether predicated on this Agreement or otherwise does not constitute  a defense to the enforcement by the Bank of such covenants and agreements.

 

7.        Definitions. As used herein, the following capitalized terms have the meaning set forth below:

"Cause" means a good-faith determination by the Bank's Board of Directors that Executive has (a) wilfully failed to perform his duties under this Agreement after demand for performance has been made by the Bank; (b) breached a fiduciary duty involving  personal benefit; (c) breached any restrictive covenant contained in Section 6; (d) had a  criminal complaint filed against him for any misdemeanor involving dishonesty or moral turpitude or any felony; (e) engaged in any conduct that is prohibited by Bank policy; (t) engaged in any conduct that, in the good-faith opinion of the board, is injurious to the Bank, its business ,  or  its  reputation ; or (g) breached any covenants or agreements or made inaccurate representations in this Agreement

"Change in Controf' means (i) an event or series of events that have the effect of any "person" as such term is used in Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the"ExchangeAct"), other than any trustee or other fiduciary holding securities of the Bank under any employee benefit plan of the Bank, becoming the " beneficial owner" as defined in Rule l 3d-3 under the Exchange Act, directly or indirectl y, of securities of the Bank representing  50% or more of the combined  voting power of the Bank' s then-outstanding  stock;

(ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of the Bank cease for any reason to constitute a majority  thereof, unless the election, or the nomination for election by the stockholders, of each new director was approved by a vote of a majority of the directors then still in office who were directors at the beginning of the period; (iii) the shareholders of the Bank approve a definitive agreement to merge or consolidate the Bank with or into another company (other than a merger or consolidation that would result in the voting securities of the Bank outstanding immediately prior to such transaction continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of the Bank or such surviving entity outstanding imm ediately after such transaction) or to sell or otherwise transfer all or substantially all of the Bank' s assets or to adopt a plan of liquidation.

"Confidential Information" means any and all information of the Protected Parties that is not generally known by the public, that is proprietary, or that would reasonably be considered confidential. Without limiting the generality of the foregoing, Confidential Information includ es, but is not limited to, information relating to (i) the services or products sold or offered by the Protected  Parties, (ii) the costs, sources of supply, financial  perfo1mance and strategic  plans  of

6

the Protected Parties, (iii) the identity and special needs of the customers of the Protected Parties, and (iv) the people and organizations with whom the Protected Parties have business relationships, and the nature of those relationships. Confidential Information also includes comparable information that the Protected Parties have received belonging to others, or that was received by a Protected Party with an understanding that it would not be disclosed.

"Disability" means Executive' s inability (as determined by a physician appointed by the Bank) due to accident or physical or mental  illness,  to  adequately  and  fully  perform  the duties that Executive was performing for Executive when the disability began, with the reasonable expectation that such inability  will continue for at  least 180 days. If at  any  time during  the Term  of this Agreement the physician appointed by the Bank makes a determination with respect to Executive' s Disability, that determination shall be final, conclusive, and binding upon the Bank, Executive , and their successors in interest.

"Good Reason" means (a) the assignment to Executive of significant duties inconsistent with Executive' s position or other material diminution of Executive' s position, duties or responsibilities, unless agreed to by Executive, (b) unless such reduction is applied  to other senior executives or is required by law , a reduction in Executive' s Base Salary or a material reduction of benefits described in Section 3(b) of this Agreement, ( c) a material relocation of Executive's place of work. In order to terminate for Good Reason , Executive must notify the Bank in writing of his intention to terminate his employment for Good Reason. Such notice must specify the particular acts or failures to act that constitute Good Reason, and Executive must allow the Bank at least thirty days in which to cure such conduct, to the extent that such cure is possible.

"lnvolunta,y" Termination of Executive' s employment means a Termination due to the independent exercise of the unilateral authority of the Bank to  terminate  Executive ' s  services , other than due to Executive' s  implicit or  explicit  request, where  Executive  was willing and able  to continue  performing services.

"Protected Parties" means the Bank, the Company, their affiliates, and any direct or indirect subsidiaries thereof.

"Severance Amouuf' means an amount equal to one times the Executive ' s then-current annual Base Salary as of the date of his Termination.

"Termination" of Executive ' s employment for purposes  of  Section  5(b)  occurs  on  the date Exec utive and the Bank reasonably anticipate that (i) Executive will not perform any further services for the Bank or any other entity considered a single  employer  with  the  Bank  under  Section 414(b) or (c) of the Internal Revenue Code (but substituting 50%  for  80%  in  the  application thereof) (the "Employer Group" ), or (ii) the level of bona  fide  service s  Ex ecutiv e will perform for the Employ er Group after that date  will  permanently  decrease to 20% or  less of the average level of bona fide services performed over the previous 36  months (or  if shorter  over the duration of service). For this purpose, service performed as an employee or as an ind ependent contractor is counted, except that service as a member of the board of directors of an  Employer Group entity is not counted  unless  termination  benefits  under  this  Employment  Agreement are aggr egated  for  purposes of  Internal  Revenue Code Section  409A  with  benefits  under  any other

 

7

Employer Group plan or agreement in which you also participate as a director. Executive  will  not  be treated as  having  a  termination  of  Executive's  employment  while  Executive  is  on  military  lea ve, sick leave or other bona fide lea ve of absence if the leave does not exceed six months or, if longer, the period during which  Executive  has a  reemployment   right under statute or contract. If   a bona fide leave of absence extends beyond six months,  Executive's  employment  will  be considered to terminate on the first day after the end of such six month period, or on the day after Executive ' s statu tory or contractual reemployment right lapses, if later. The Bank will determine when  Executive's  termination  of  employment  occurs  based  on  all  relevant   facts   and   circumsta  nces , in accordance with Treasury  Regulation Section  J .409A-1(h).

 

8.        Regulatory Matters. The following provisions shall be applicable to the parties hereto or any successor thereto, and shall be controlling in the event of a conflict with any other provision of this Agreement.

 

        (a)        If the Executive is suspended from office and/or temporarily prohibited from participating in the conduct of the Bank's affairs pursuant to notice served under Section 8(e)(3) or Section 8(g)(l) of the Federal Deposit Insurance Act (" FDIA" )(l 2 U.S.C. §§ I 818(e)(3) and 18I 8(g)(I )), the Bank' s obligations under this Agreement will be suspended as of the date of service, unless stayed by appropriate proceedings. If the charges in the notice are dismissed, the Bank may, in its discretion: (i) pay the Executive all or part of the compensation withheld while its obligations under this Agreement were suspended, and (ii) reinstate (in whole or in part) any of its obliga t ions which were suspended.

 

        (b)        lf the Executive is removed from office and/or permanently prohibited from participating in the conduct of the Bank' s affairs by an order issued under Section 8(e)(4) or Section 8(g)(l) of the FDIA (12 U.S.C. §§1818(e)(4) and (g)(l )), all obligations of the Bank under this Agreement shall tenninate as of the effective date of the order, but vested rights of the Executive and the Bank as of the date of termination will not be affected.

 

        (c)        If the Bank is in default, as defined in Section 3(x)(l) of the FDIA (12 U.S.C. §181J(x)(l )), all obliga tions under this Agreement shall terminate as of the date of default, but vested rights of the Executive and the Bank as of the date of termination will not be affected.

 

        (d)        Notwithstanding any other provision of this Agreement to the contrary, any payments made to the Executive pursuant to this Agreement, or otherwise , are subject to and conditioned upon their compliance with Section 18(k) of the FDIA (12 U.S.C. §1828(k)) and 12 C.F.R. Part 359.

 

        (e)        All obligations under this Agreemen t will be terminated (except to the extent it is determined that continuation of this Agreement is necessary for the continued operation of the Bank): (i) by the Director of the OCC (the "Director") or his or her designee at the time the Federal Deposit Insurance Corporation enters into an agreement to provide assistance to or on behalf of the Bank under the authority contained in Sect io n I 3(c) of the FDIA; or (ii) by the Director or his or her designee at the time the Director or such designee approves a supervisory merger to resolve problems related to operation of the Bank or when the Bank is determined by the Director to be in an unsafe or unsound condition. Any rights of the parties that have already vested, however, will not be affected by such action.

 

8

(t) All obligations under this Agreement may be terminated except to the extent determined that the continuation of the Agreement is necessary for the continued operation of the Bank or the Company by order of any state or  federal  banking  regulatory  agency  with supervis ion of the Bank, the Company, or any of their affiliates, unless stayed by appropriate proceedings, and neither the Company nor the Bank is under any obligation to perform any of its obligations hereunder if it is infom1ed in writing by any state or federal banking regulatory agency with supervision of the Bank, the Company, or any of their affiliates that performance of its obligations would constitute an unsafe or unsound banking practice.

 

9.        Miscellaneous

 

        (a)        No Conflicts. Executive represents and warrants that (i) entering into and performing under this Agreement will not violate any contract to which Executive is a party; (ii) Executive is not party to any contract or subject to any restrictions that would impair his ability to fully perform under this Agreement; (iii) entering into and performing under this Agreement will not breach or give rise to any cause of action against Executive, the Bank, or the Company under the terms of any contract to which he is a party; (iv) Executive has disclosed to the Bank and the Company any restrictive covenants (including noncompetition, nonsolic itation, and confidentiality) applicable to him under any contract to which he is or was a party.

 

        (b)        Assignment. The services to be rendered by Executive under this Agreement are unique and personal , a nd Executive may not assign any of Executive's rights or delega te any of Executive's duties under this Agreement. Except as provided in the immediately preceding sentence, this Agreement shall benefit Executive and Executive's heirs and personal representatives. The Bank freely assign its obligations hereunder to any affiliate or any entity into which the Bank merges or consolidat s or to which the Bank transfers all or substantially all of its assets.

 

        (c)        Severability. The provisions of this Agreement are severable. If any provision of this Agreement or application thereof is detem1ined by a comt of competent jurisdiction to be invalid , illegal, o r othe1wise unenforceable (in whole or in patt ), the validity, legality, or enforceability of all other applications of that provision, and of all other provisions and applicati ons of this Agreement, will not in any way be affected. Such invalid , illegal, or unenforceable provision or application will be deemed not to be a part of this Agreement, and this Agreement will then be enforced to the maximum extent allowed by applicable law. If any provision of this Agreement is invalid in part or in whole, it will be deemed to have been amended, whether as to time, area covered or otherwise, as and to the extent required for its validity under applicable law and, as so amended, will be enforceable.

 

        (d)        Notices . Any notice or consent required or permitted hereunder shall be deemed to have been give n when hand-delivered, three business days after mailing by certified mail, postage prepaid and return-receipt requested, one business day after mailing by a recognized overnight carrier , or upon confirmation of delivery by elec tronic mail, in each case to the intended recipient at the following address (or at such other address as either party may notify the other):

 

9

If to the Bank or the Company:

Dana Dunbar

Chairman of the Board of Directors Mid-Southern Savings Bank, FSB 300 N. Water Street

PO Box 545

Salem, Indiana 47167

With a copy (which does not constitute notice) to:

R. James Straus

Frost  Brown Todd LLC

400 West Market Street, Suite 3200 Louisville, Kentucky  40202

If to  Executive:

Alexander G. Babey 

3690 East Highway 146

LaGrange,  Kentucky 40031

 

        (e)        Governing Law; Venue: Consent to Jurisdiction. This Agreement shall be construed and enforced in accordance with the laws of the State of Indiana without regard to its conflicts of laws principles to the extent they would require or permit the application of the laws of any other jurisdiction. Each of the parties irrevocably agrees that any lega l action or proceeding arising out of or in connection with this Agreement may be brought and determined in any Indiana state or federal court located in (or nearest to) Washington County, Indiana (or if such court lacks subject matter jurisdic tion , in any appropriate Indiana state or federal court), and each of the parties irrevocably submits to the nonexclusive personal jurisdiction of the aforesaid courts, generally and unconditionally, with regard to any such action or proceeding arising out of or in connection with this Agreement. Each of the parties further agrees to accept service of process in any manner permitted by such courts. Each of the parties hereby irr evocably and unconditionally waives, and agrees not to assert, by way of. motion or as a defense, counte rclaim or otherwise, in any action or proceeding arising out of or in connection with this Agreement, (a) any claim that it is not personally subject to the jurisdiction of the above-named courts for any reason other than the failure lawfully to serve process, (b) that it or its property is exempt or imm une from jurisdiction of any such court or from any legal process commenced in any such court (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (c) to the fullest extent permitted by law, that (i) the suit, action or proceeding in any such court is brought in an inco nvenient forum, (ii) the venue or forum of such suit, action or proceeding is improper or (iii) this Agreement, or the subject matter hereof, may not be enforced in or by any such court.

10

        (f)        Non-Waiver. A delay or failure by either party to exercise a right under this Agreement, or a partial or single exercise of that right, shall not constitute a waiver of that or any other right.

 

        (g)        Entire Agreement. This Agreement constitutes the entire understanding and agreement between, and supersedes all other agreements, understandings and communications between the Bank or any of its affiliates and Executive . There are no other agreements, conditions or representations , oral or written, expressed or implied with regard thereto. This Agreement may be amended only in writing, signed by both parties.

 

        (h)       Headings. The headings in this Agreement have been inserted solel y for convenience of reference and shall not be considered in the interpretation or construction of this Agreement.

 

        (i)        Counterparts. This Agreement may be executed any numbe r of counterparts, each of which is deemed an original but all of which together constitute one and the same instrument. This Agreement may be executed and delivered by facsimile transmission.

 

        (j)        Payments. All amounts payable under this Agreement shall be subject to such deductions and withholdings as the Bank reasonably determines should be withheld pursuant to any applicable law or regulation.

 

        (k)        Survival. All provisions of this Agreement that by their nature should survive any expiration or termination of this Agreement will so survive, including without limitation Executive's confidentiality obligations contained in Section 6(a).

 

        (l)            Tax Matters.

 

                    (i)        Intent to Comply. Executive and the Bank agree and confirm that this Agreement is intended by both parties to provide for compensation that is exempt from Code Section 409A as separation pay (up to the Code Section 409A limit) or as a short-tem1 defe1Tal or otherw ise , or to provide for compensation that is compliant with Code Section 409A. This Agreement shall be interpreted, construed, and administered in accordance with this agreed intent; provided that the Bank does not promise or warrant any tax treatment of compensation hereunder. Executive is responsible for obtaining advice regarding all questions as to federal, state, local income, estate, payroll, or other tax consequences arising under this Agreement. In the event provisions of this Agreement do not comply with Code Section 409A, Executive and the Bank agree to use reasonable business efforts to amend this Agreement as necessary to bring it into compliance with Code Section 409A while, to the largest extent possible, maintaining the economic interests hereunder of both parties. This Agreement shall not be amended or terminated in a manner that would accelerate or delay payments except as permitted under Treasu ry Regulations under Code Section 409A.

 

                    (ii)        Specified Employee. Notwithstanding anything in this Agreement to the contrary, if Executive is a "specified employee" within the meaning of Treasury Regulation Section 1.409A- l(i) (or any successor thereto) on Executive's termination of employment, any payments hereunder tr iggered by Executive's termination of employment and that are not separat ion pay under Treasury Regulations Section l. 409A-1(b)(9) or short-term deferral pay or

11

otherwise exempt from Code Section 409A, shall not begin to be paid until the earlier to occur of Executive' s death or the date that is six months and one day after Executive's termination of employmen t, and at  that  time,  Executive  will  receive  in  one  lump sum  payment  all  of  the se verance payment that would have been paid to Executive during the first six months following Executive' s te1mination of employment. The Bank will determine, consistent with any guidance issued under Code Section 409A, the portion of severance payments that are required to be delayed, if any .

 

 

[Remainder of page intentionally left blank; signature page follows]

 

 

12

IN WITNESS WHEREOF, and intending to be legally bound hereby, Executive, the Bank, and the Company have executed this Agreement as of the date first set forth above.

/s/Alexander G. Babey                                       

Alexander G. Babey 

 

 

	
MID-SOUTHERN SAVINGSB ANK, FSB

	
 

	
 

	
 

	
By: /s/Dana Dunbar

	
 

	       Dana Dunbar, Chairman 	       
	 	 
		
	
 

	
 

	
 

	
 

  

Signature Page to Alexander G. Babey Executive Employment Agreement

 

 

13

 

 

 

 

AMENDMENT TO EMPLOYMENT AGREEMENT

WHEREAS, Alexander G. Babey and Mid-Southern Savings Bank, FSB are parties to an employment agreement dated October 1, 2016 (the "Agreement-); and

WHEREAS, Mid-Southern, M.H.C. is undertaking a the second step conversion from mutual to stock form, which necessitates the amendment of the change in control provision contained in Section 4 of the Agreement; and

WHEREAS, the Agreement may be amended by a writing signed by both parties. Accordingly, the parties agree as follows:

1.      Section 4(a)(vi) should be revised to read as follows, to be effective immediately prior to the second step conversion:

(vi)      For all purposes of this Agreement, a "Change in Control" of the Bank means (A) an event or series of events that have the effect of any "person" as such term is used in Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), other than any trustee or other fiduciary holding securities of the Company under any employee benefit plan of the Company or the Bank, becoming the "beneficial owner" as defined in Rule 13d-3 under the Exchange Act, directly or indirectly, of securities of the Company or the Bank representing 50% or more of the combined voting power of the Bank's then-outstanding stock; (B) during any period of two consecutive years, individuals who at the beginning of such period constitute the board of directors of the Company cease for any reason to constitute a majority thereof, unless the election, or the nomination for election by the stockholders, of each new Company director was approved by the vote of at least two-thirds of the Company's directors then still in office who were Company directors at the beginning of the period; or (C) the shareholders of the Company approving a definitive agreement to merge or consolidate the Company with or into another company (other than a merger or consolidation that would result in the holders of voting securities of the Company outstanding immediately prior to such transaction continuing to hold (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such transaction) or to sell or otherwise transfer all or substantially all of the Company's assets or to adopt a plan of liquidation. Notwithstanding the foregoing, the term "Change in Control" shall not include a second step conversion where Mid-Southern, M.H.C. converts from mutual to stock form in connection with a second step conversion where shares of Mid-Southern Bancorp are sold to the public and such shares are also issued in an exchange offering to existing stockholders of the Bank.

2. Any provision of the Agreement inconsistent with the foregoing amendment shall be deemed amended to be consistent therewith, and the Agreement shall be interpreted accordingly.

IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties have executed this amendment to the Agreement as of the date set forth above.

 

EXECUTIVE

 

/s/Alexander G. Babey                                   

Alexander G. Babey

 

 

 

MID-SOUTHERN SAVINGS BANK, FSB

 

By: /s/Dana Dunbar                                      

       Dana Dunbar, Chairman

 

 

FIRST AMENDMENT

EXECUTIVE EMPLOYMENT AGREEMENT

This is the First Amendment (the "Amendment") dated as of February 1, 2018 to the Executive Employment Agreement dated as of October 1, 2016 (the "Agreement") between Mid-Southern Savings Bank, FSB (the "Bank") and Alexander G. Babey ("Executive").

1.            The Agreement is hereby amended so that the "Effective Date" as that term is used in the Agreement is February 1, 2018.  Unless earlier terminated pursuant to Section 5 of the Agreement, the initial term of the Agreement begins on the new Effective Date and ends on the three-year anniversary of the new Effective Date.

2.            All other terms of the Agreement remain in full force and effect.

IN WITNESS WHEREOF, and intending to be legally bound hereby, Executive and the Bank have executed this Amendment as of February 1, 2018.

/s/Alexander G. Babey                                 

Alexander G. Babey

MID-SOUTHERN SAVINGS BANK, FSB

By:/s/Dana J. Dunbar                                    

      Dana J. Dunbar, Chairman

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00281-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00281-of-00352.parquet"}]]