Document:

Document

EXHIBIT

10.12

 

12-10-01

 

 

TENNANT

COMPANY PENSION PLAN

 

(As

Amended and Restated Effective January 1, 2002)

 

 

TENNANT

COMPANY PENSION PLAN

 

(As

Amended and Restated Effective January 1, 2002)

 

	

  ARTICLE I

  	

  GENERAL

  
	

  Sec. 1.1

  	

  Name of Plan

  
	

  Sec. 1.2

  	

  Purpose

  
	

  Sec. 1.3

  	

  Effective Date and History

  
	

  Sec. 1.4

  	

  Construction and

  Applicable Law

  
	

  Sec. 1.5

  	

  Rules of Construction

  
	

  Sec. 1.6

  	

  Benefits

  Determined Under Provisions in Effect at Termination of Employment

  
	

  Sec. 1.7

  	

  Effective Date of Document

  
	

   

  	

   

  
	

  ARTICLE

  II

  	

  MISCELLANEOUS DEFINITIONS

  
	

  Sec. 2.1

  	

  Active Participant

  
	

  Sec. 2.2

  	

  Actuary

  
	

  Sec. 2.3

  	

  Actuarial

  Equivalent, Actuarial Value

  
	

  Sec. 2.4

  	

  Administrator

  
	

  Sec. 2.5

  	

  Affiliate

  
	

  Sec. 2.6

  	

  Board

  
	

  Sec. 2.7

  	

  Certified Earnings

  
	

  Sec. 2.8

  	

  Common Control

  
	

  Sec. 2.9

  	

  Committee

  
	

  Sec. 2.10

  	

  Company

  
	

  Sec. 2.11

  	

  Employment Commencement

  Date

  
	

  Sec. 2.12

  	

  Final Average Compensation

  
	

  Sec. 2.13

  	

  Final Average Monthly

  Earnings

  
	

  Sec. 2.14

  	

  Hours of Service

  
	

  Sec. 2.15

  	

  Leased Employee

  
	

  Sec. 2.16

  	

  Named Fiduciary

  
	

  Sec. 2.17

  	

  Normal Retirement Age

  
	

  Sec. 2.18

  	

  Normal Retirement Date

  
	

  Sec. 2.19

  	

  Participant

  
	

  Sec. 2.20

  	

  Participating Employer

  
	

  Sec. 2.21

  	

  Plan Year

  
	

  Sec. 2.22

  	

  Predecessor Employer

  
	

  Sec. 2.23

  	

  Qualified Employee

  
	

  Sec.

  2.24

  	

  Social Security

  Covered Compensation

  
	

  Sec. 2.25

  	

  Social Security

  Retirement Age

  
	

  Sec. 2.26

  	

  Termination of Employment

  
	

  Sec. 2.27

  	

  Trust

  
	

  Sec. 2.28

  	

  Trustee

  
	

   

  	

   

  
	

  ARTICLE III

  	

  SERVICE

  DEFINITIONS

  
	

  Sec. 3.1

  	

  Years of Vesting Service

  
	

  Sec. 3.2

  	

  Years of Credited Service

  
	

  Sec. 3.3

  	

  Adjusted Years of

  Credited Service

  
	

  Sec. 3.4

  	

  1-Year Break In Service

  
	

  Sec. 3.5

  	

  Effect

  of l-Year Breaks In Service On Years of Credited Service and Vesting Service

  
	

  Sec. 3.6

  	

  Periods of Military Service

  

 

i

 

	

  ARTICLE IV

  	

  PLAN

  PARTICIPATION

  
	

  Sec. 4.1

  	

  Eligibility to Participate

  
	

  Sec. 4.2

  	

  Duration of Participation

  
	

  Sec. 4.3

  	

  No Guarantee of Employment

  
	

   

  	

   

  
	

  ARTICLE V

  	

  BENEFIT

  PROVISIONS

  
	

  Sec. 5.1

  	

  Accrued Monthly Pension

  
	

  Sec. 5.2

  	

  Pension on Normal

  Retirement

  
	

  Sec.

  5.3

  	

  Pension on Late Retirement

  
	

  Sec. 5.4

  	

  Pension on Early Retirement

  
	

  Sec. 5.5

  	

  Vested Termination

  
	

  Sec. 5.6

  	

  Deduction for

  Other Pension Payments

  
	

  Sec. 5.7

  	

  Amendments

  Affecting Pension Rights

  
	

  Sec. 5.8

  	

  Qualified Joint

  and Survivor Annuity

  
	

  Sec. 5.9

  	

  Optional Settlements

  
	

  Sec. 5.10

  	

  Qualified

  Preretirement Survivor Annuity

  
	

  Sec. 5.11

  	

  Additional Death Benefit

  
	

  Sec. 5.12

  	

  Suspension

  of Benefits and Effect of Reemployment

  
	

   

  	

   

  
	

  ARTICLE VI

  	

  ADDITIONAL

  PROVISIONS REGARDING BENEFITS

  
	

  Sec. 6.1

  	

  Commencement

  Date for Pension Payments

  
	

  Sec. 6.2

  	

  Payment

  of Lump Sums and Certain Consequences Thereof

  
	

  Sec. 6.3

  	

  No Other Benefits

  
	

  Sec. 6.4

  	

  Source of Benefits

  
	

  Sec. 6.5

  	

  Incompetent Payee

  
	

  Sec. 6.6

  	

  Assignment and

  Alienation of Benefits

  
	

  Sec. 6.7

  	

  Payment of Taxes

  
	

  Sec. 6.8

  	

  Conditions Precedent

  
	

  Sec. 6.9

  	

  Committee Directions to

  Trustee

  
	

  Sec. 6.10

  	

  Benefits Not

  Increased by Actuarial Gains

  
	

  Sec. 6.11

  	

  Maximum Limitations on

  Benefits

  
	

  Sec. 6.12

  	

  Restrictions

  on Benefits for Highly Compensated Employees

  
	

  Sec. 6.13

  	

  Effect on

  Unemployment Compensation

  
	

  Sec. 6.14

  	

  Distributions

  Made in Accordance with Code Section 401(a)(9)

  
	

  Sec. 6.15

  	

  Inability to Locate

  Distributee

  
	

   

  	

   

  
	

  ARTICLE VII

  	

  TRUST

  
	

  Sec. 7.1

  	

  Composition

  
	

  Sec. 7.2

  	

  Trustee or Other

  Funding Agency

  
	

  Sec. 7.3

  	

  Compensation

  and Expenses of Trustee; Other Expenses

  
	

  Sec. 7.4

  	

  Securities and

  Property of the Company

  
	

  Sec. 7.5

  	

  No Diversion

  
	

  Sec. 7.6

  	

  Employer Contributions

  
	

   

  	

   

  
	

  ARTICLE VIII

  	

  ACTUARY

  
	

  Sec. 8.1

  	

  Appointment

  
	

  Sec. 8.2

  	

  Responsibilities

  
	

  Sec. 8.3

  	

  Compensation

  
	

  Sec. 8.4

  	

  Resignation, Removal, and Successor

  

 

ii

 

	

  ARTICLE IX

  	

  COMMITTEE

  
	

  Sec. 9.1

  	

  Membership and

  Responsibility

  
	

  Sec. 9.2

  	

  Organization of Committee

  
	

  Sec. 9.3

  	

  Meetings and Actions

  of Committee

  
	

  Sec. 9.4

  	

  Outside Assistance

  
	

  Sec. 9.5

  	

  Powers of Committee

  
	

  Sec. 9.6

  	

  Compensation,

  Expenses, and Bonds

  
	

   

  	

   

  
	

  ARTICLE X

  	

  ADMINISTRATION

  OF PLAN

  
	

  Sec. 10.1

  	

  Certain Fiduciary

  Provisions

  
	

  Sec. 10.2

  	

  General Fiduciary Standard

  
	

  Sec. 10.3

  	

  Discrimination Prohibited

  
	

  Sec. 10.4

  	

  Evidence

  
	

  Sec. 10.5

  	

  Correction of Errors

  
	

  Sec. 10.6

  	

  Claims Procedure

  
	

  Sec. 10.7

  	

  Bonding

  
	

  Sec. 10.8

  	

  Waiver of Notice

  
	

  Sec. 10.9

  	

  Agency For Legal Process

  
	

  Sec. 10.10

  	

  Indemnification

  
	

  Sec. 10.11

  	

  Records

  
	

  Sec. 10.12

  	

  Prohibited Transactions

  
	

  Sec. 10.13

  	

  Actions Against

  the Secretary of Labor

  
	

  Sec. 10.14

  	

  Effect of Criminal

  Conviction

  
	

   

  	

   

  
	

  ARTICLE

  XI

  	

  AMENDMENT, TERMINATION,

  MERGER

  
	

  Sec.

  11.1

  	

  Amendment

  
	

  Sec.

  11.2

  	

  Discontinuance

  of Joint Participation in Plan by a Participating Employer

  
	

  Sec. 11.3

  	

  Reorganizations

  of Participating Employers

  
	

  Sec. 11.4

  	

  Termination

  
	

  Sec. 11.5

  	

  Partial Termination

  
	

  Sec. 11.6

  	

  Merger,

  Consolidation, or Transfer of Plan Assets

  
	

  Sec. 11.7

  	

  Deferral of Distributions

  
	

   

  	

   

  
	

  ARTICLE XII

  	

  TOP-HEAVY

  PLAN PROVISIONS

  
	

  Sec. 12.1

  	

  Key Employee Defined

  
	

  Sec. 12.2

  	

  Determination of

  Top-Heavy Status

  
	

  Sec. 12.3

  	

  Minimum Accrued Benefit

  
	

  Sec. 12.4

  	

  Definition of Employer

  
	

  Sec. 12.5

  	

  Exception for

  Collective Bargaining Unit

  
	

   

  	

   

  
	

  APPENDIX

  	

  1999 VOLUNTARY EARLY

  RETIREMENT PROGRAM

  

 

iii

 

TENNANT

COMPANY PENSION PLAN

 

(As

Amended and Restated Effective January 1, 2002)

 

ARTICLE I

 

GENERAL

 

Sec.

1.1  Name of Plan.  The name of the pension plan set forth herein is “Tennant Company

Pension Plan”.  It is sometimes herein

referred to as the “Plan”.

 

Sec.

1.2  Purpose. 

This Plan has been established so that eligible employees will have a

source of retirement income in addition to the other sources of retirement

income available to them.

 

Sec.

1.3  Effective Date and History. The

“Effective Date” of the Plan is January 1, 2001. This Plan is a “spin-off” from

the Tennant Company Defined Benefit Retirement Plan, which was originally

established on January 1, 1982, and amended thereafter from time to time.

 

(a)                                  The

Tennant Company Defined Benefit Retirement Plan was amended effective

January 1, 2001 to provide for the spin-off and establishment of this Plan

with respect to those active participants in the Defined Benefit Retirement

Plan on December 31, 2000 who elected to continue participation under a defined

benefit pension program sponsored by the Company.  Effective January 1, 2001, this Plan was established to provide

the accrued benefits of those Participants and to add an “enhanced” benefit

formula for those Participants effective as of January 1, 2001.  The spin-off from the Tennant Company

Defined Benefit Retirement Plan to this Plan effective January 1, 2001 also

included the benefits payable to (i) retirees or other participants in the

Defined Benefit Retirement Plan who had a Termination of Employment with a

vested accrued benefit prior to that date, (ii) surviving spouses, joint

annuitants or beneficiaries of such participants, and (iii) alternate payees

with respect to participants described in this sentence or in the first

sentence of this subsection. Commencing January 1, 2001, the accrued benefits

of all the individuals described in the previous sentences of this subsection

are payable solely from this Plan.

 

(b)                                 Effective

December 31, 2000, the Tennant Company Defined Benefit Retirement Plan was also

amended to freeze the accrued benefits of those participants who elected (or

are deemed to have elected) not to continue participating in a defined benefit

pension program sponsored by the Company.  

The Tennant Company Defined Benefit Retirement Plan was subsequently

terminated and the benefits of such participants were distributed.  Such individuals are not eligible for

benefits under this Plan.

 

Sec.

1.4  Construction and Applicable Law.

The Plan is intended to meet the requirements for qualification under section

401(a) of the Internal Revenue Code. 

The Plan is also intended to be in full compliance with applicable

requirements of the Employee Retirement Income Security Act.  The Plan shall be administered and construed

consistently with said intent.  It shall

also be construed and administered according to the laws of the State of

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

United States of America.  All

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

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

provided in any trust agreement entered into with a Trustee.  All references herein to

 

 

 the “Internal Revenue Code” or “Code” are to

the Internal Revenue Code of 1986 as from time to time amended.  All references herein to the “Employee

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

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

 

Sec.

1.5  Rules of Construction. The Plan

shall be construed in accordance with the following:

 

(a)                                  Headings

at the beginning of articles and sections hereof are for convenience of

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

not influence its construction.

 

(b)                                 Capitalized

terms used in the Plan shall have their meaning as defined in the Plan unless

the context clearly indicates to the contrary.

 

(c)                                  Any

references to the masculine gender include the feminine and vice versa.

 

(d)                                 Use

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

“here” shall mean and refer to the entire Plan unless the context clearly

indicates to the contrary.

 

(e)                                  The

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

out the provisions thereof and shall not be construed separately without

relation to the context.

 

Sec.

1.6  Benefits Determined Under

Provisions in Effect at Termination of Employment. Except as

may be specifically provided herein to the contrary, with respect to a

Participant whose Termination of Employment has occurred, benefits under the

Plan attributable to service prior to his Termination of Employment shall be

determined and paid in accordance with the provisions of the Plan in effect as

of the date his Termination of Employment occurred unless he becomes an Active

Participant after that date and such active participation causes a contrary

result under the provisions hereof. 

However, the provisions of this document shall apply to any such

Participant to the extent necessary to maintain the qualified status of the

Plan under Code section 401(a) or to comply with the requirements of

ERISA.  The benefits payable to or with

respect to a Participant whose Termination of Employment occurred prior to

January 1, 2001 and whose benefit has been spun off to this Plan pursuant to

Sec. 1.3 shall be paid pursuant to the provisions of the Tennant Company

Defined Benefit Retirement Plan as in effect at the applicable times.

Amendments of Code section 415, including changes in Sec. 6.11 implementing

such amendments, and changes in the dollar limitations under Code section 415

and Sec. 6.11 due to cost of living adjustments, apply only to Participants who

have at least one Hour of Service as a Qualified Employee on or after the

effective date of the change

 

Sec.

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

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

generally effective as of January 1, 2002. 

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

legislation or regulations which has an effective date earlier than January 1,

2002 shall be effective as of the date required by the applicable law or

regulation, unless a different effective date is specifically stated in this

document.

 

2

 

ARTICLE II

 

MISCELLANEOUS DEFINITIONS

 

Sec.

2.1  Active Participant. An employee is

an Active Participant while he is both a Participant and a Qualified Employee.

 

Sec.

2.2  Actuary. “Actuary” means the individual,

partnership, corporation, or other organization appointed and acting as such

from time to time in accordance with the provisions of Article VIII.

 

Sec.

2.3  Actuarial Equivalent, Actuarial Value.

Each “Actuarial Equivalent” or “Actuarial Value” shall be determined by the

Actuary by the utilization of such assumptions and techniques as in the

aggregate represent the Actuary’s best estimate of equivalent value for the

purpose for which the determination is being made, and subject to the

following:

 

(a)                                  For

determinations involving early or late commencement of benefits, Qualified

Joint and Survivor Annuities, optional settlements (other than lump sum

settlements), or redetermination of a pension that was interrupted due to a

period of reemployment, the following mortality and interest assumptions shall

be used:

 

(1)           Mortality:  U. P. 1984 Mortality Table.

 

(2)           Interest:  7%.

 

(b)                                 Determinations

involving payment of the present value of a Participant’s pension in a single

sum or translation of a single sum value under the Tennant Company Profit

Sharing Plan into an equivalent monthly benefit shall be based on the

applicable mortality table and applicable interest rate determined under Code

section 417(e)(3)(A), as amended by the Retirement Protection Act of 1994, in

effect for October preceding the Plan Year in which the single sum payment is

or would be paid (which is based on the average of the rates during the

preceding September).  However, for lump

sum distributions occurring during 2001 or during January, February, March or

April of 2002, the applicable interest rate used to determine present values

shall be the rate in effect on the first day of the Plan Year in which the

single sum payment is or would be paid if the use of that rate would produce a

larger lump sum payment and the resulting lump sum payment is $10,000 or less.

 

(c)                                  For

determinations pursuant to Sec. 6.11 and Article XII, each “Actuarial

Equivalent” shall be determined on the basis of a 5% interest rate assumption

(except to the extent a different rate is required by Code section

415(b)(2)(E)(ii)) and the mortality assumptions contained in the U.P. 1984

Mortality Table.  However, the reduction

under Sec. 6.11(c) for a benefit commencing before age 62 shall not be less

than the reduction for early commencement applicable to the Participant under

Sec. 5.4 or Sec. 5.5, whichever is applicable. 

If benefit payments commence after the Participant attains age 65,

mortality between age 65 and the age at which benefits commence shall be

disregarded for purposes of Sec. 6.11.

 

3

 

(d)                                 Each

such determination shall be made in accordance with any applicable regulation

promulgated by the Secretary of Labor or the Secretary of the Treasury or their

respective delegates.

 

Sec.

2.4  Administrator.  The

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

 

Sec.

2.5  Affiliate.  “Affiliate”  means any

trade or business entity under Common Control with a Participating Employer or

under Common Control with a Predecessor Employer while it is such.

 

Sec.

2.6  Board. 

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

executive committee thereof authorized to act for such body.

 

Sec.

2.7  Certified Earnings.  “Certified Earnings” of a Participant for a

Plan Year means the total compensation paid to the Participant by the

Participating Employers during such Plan Year, subject to the following:

 

(a)                                  Overtime

pay and bonuses shall not be included in Certified Earnings.

 

(b)                                 Payments

or contributions to or for the benefit of the employee under this Plan shall

not be included in Certified Earnings.

 

(c)                                  Except

as provided in subsection (d), extraordinary payments which are not a part of

regular compensation, vacation pay taken in a lump sum at Termination of

Employment, sick pay or disability pay, allowances or reimbursements for

expenses, payments or contributions to or for the benefit of the employee under

any other deferred compensation, pension, profit sharing, insurance, ERISA

excess benefit, or other employee benefit plan, suggestion awards, merchandise

discounts, severance pay, or benefits in the form of property or the use of

property shall not be included in computing Certified Earnings, regardless of

whether such amounts are deemed to constitute income for income tax purposes or

for any other purpose.

 

(d)                                 However,

if a Participant has elected to have his compensation reduced for the purpose

of making a pre-tax contribution under the Tennant Company Profit Sharing Plan,

a cafeteria plan established under Code section 125, or a qualified

transportation fringe benefit plan established under Code section 132(f)(4),

his Certified Earnings for purposes of this Plan shall include the amount he

would have received but for the reduction. 

If a portion of the reduction is later paid back to him, said payment

shall not be included in Certified Earnings.

 

(e)                                  Compensation

with respect to any period of employment after December 31, 1981, when an

employee was not an Active Participant shall not be included in Certified

Earnings.  Compensation with respect to

any period of employment prior to January 1, 1982 when an employee was not a

participant in the Tennant Company Profit Sharing Plan shall not be included in

Certified Earnings.  However, this

subsection shall not have the effect of excluding earnings prior to January 1,

1985 from Tennant Trend, Inc. or Contract Applications, Inc. from Certified

Earnings.

 

4

 

(f)                                    For

Plan Years commencing on or after January 1, 1989, but prior to January 1,

1994, a Participant’s Certified Earnings for any such Plan Year shall not

exceed $200,000.  Said amount shall be

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

provided for that year in accordance with regulations provided by the Secretary

of the Treasury.

 

(g)                                 For

Plan Years commencing on or after January 1, 1994 and prior to 1997, a

Participant’s Certified Earnings for any such Plan Year shall not exceed

$150,000.  For Plan Years commencing

after 1996 and prior to 2000, the Certified Earnings of a Participant for any

Plan Year shall not exceed $160,000. 

For Plan Years commencing in 2000 and 2001, the Certified Earnings of a

Participant for any Plan Year shall not exceed $170,000.  For Plan Years commencing during or after

2002, the Certified Earnings of a Participant shall not exceed $200,000,

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

provided for that year in accordance with regulations prescribed by the

Secretary of the Treasury.  The dollar

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

beginning in that calendar year.  If a

Plan Year is shorter than 12 months, the limit under this subsection for that

year shall be multiplied by a fraction, the numerator of which is the number of

months in the short Plan Year and the denominator of which is 12.

 

(h)                                 In

calculating a Participant’s Accrued Monthly Pension as of any date in a Plan

Year commencing on or after January 1, 1994, the Participant’s Certified

Earnings taken into account for any prior Plan Year may not exceed the

applicable annual compensation limit in effect for that prior Plan Year.  For this purpose, except as otherwise

provided in subsection (i) and in Sec. 5.1, in determining benefits in Plan

Years beginning on or after January 1, 1994, the annual compensation limit

in effect for Plan Years beginning before that date is $150,000.

 

(i)                                     Notwithstanding

subsections (f), (g) and (h), in the case of a Participant who is an Active

Participant eligible to accrue additional benefits under Article V on January

1, 2002, benefit accruals for Plan Years commencing on or after January 1, 2002

shall be determined by assuming that the limit under subsections (f) and (g)

for years commencing prior to 2002 is $200,000.

 

(j)                                     Effective

January 1, 1997, family aggregation rules ceased to apply to this Plan..

 

Sec.

2.8  Common Control.  A trade or business entity (whether

corporation, partnership, sole proprietorship or otherwise) is under “Common

Control” with another trade or business entity (i) if both entities are

corporations which are members of a controlled group of corporations as defined

in Code section 414(b), or (ii) if both entities are trades or businesses

(whether or not incorporated) which are under common control as defined in Code

section 414(c), or (iii) if both entities are members of an affiliated service

group as defined in Code section 414(m), or (iv) if both entities are required

to be aggregated pursuant to regulations under Code section 414(o).  Service for all entities under Common

Control shall be treated as service for a single employer to the extent required

by the Code; provided, however, that an individual shall not be a Qualified

Employee by reason of this section.  In

applying the preceding sentence for purposes of Sec. 6.11, the provisions of

Code section 414(b) and (c) are deemed to be modified as provided in Code

section 415(h).

 

Sec.

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

in Article IX.

 

5

 

Sec.

2.10  Company. 

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

 

Sec.

2.11  Employment Commencement Date.  “Employment Commencement Date” means the

date on which an employee first performs an Hour of Service for a Participating

Employer (whether before or after the Participating Employer becomes such), an

Affiliate, or a Predecessor Employer, and the date on which he first performs

an Hour of Service after any One-Year Break In Service.

 

Sec.

2.12  Final Average Compensation.  A Participant’s “Final Average Compensation”

determined with respect to any Plan Year is the average of the Participant’s Compensation

for the most recent three consecutive Plan Years throughout which he was an

employee of a Participating Employer (or the average Compensation for all

service as an employee of a Participating Employer if less than three years).  “Compensation” for this purpose is as

defined in Sec. 6.11(i), except as follows:

 

(a)                                  Compensation

means gross pay before any reduction pursuant to Code section 401(k) or 125.

 

(b)                                 Compensation

for any Plan Year in excess of the Social Security taxable wage base in effect

at the beginning of such Plan Year shall not be taken into account.

 

Sec.

2.13  Final Average Monthly Earnings.  A Participant’s “Final Average Monthly

Earnings” is (i) 1/12th of his average Certified Earnings for those five

consecutive Plan Years during all of which he is an Active Participant, within

the last ten Plan Years during all of which he is an Active Participant that

produce the highest average, or (ii) 1/12th of his average Certified Earnings

for all of the Plan Years during all of which he is an Active Participant if

five or less, subject to the following:

 

(a)                                  However,

a Plan Year during which he is not an Active Participant throughout the entire

year shall be used as one of the five consecutive Plan Years if it results in a

higher average than above.

 

(b)                                 The

five consecutive Plan Years used in making the computation will not necessarily

be five consecutive Plan Years, because Plan Years during all or part of which

he is not an Active Participant may be interspersed with Plan Years during all

of which he is an Active Participant.

 

(c)                                  If

there are no Plan Years during all of which the Participant was an Active

Participant, his Final Average Monthly Earnings shall be his average adjusted

Certified Earnings for the last five Plan Years (or all if less than five)

during any part of which he is an Active Participant.  Adjusted Certified Earnings are determined by annualizing his

Certified Earnings in such Plan Year or Years to reflect what they would have been

if he had been an Active Participant for the entire Plan Year.

 

(d)                                 For

purposes of determining his Final Average Monthly Earnings pursuant to this

section, a Participant shall be deemed to have been an Active Participant at

all times prior to January 1, 1982 when he was both a participant in the

Tennant Company Profit Sharing Plan and a Qualified Employee.

 

6

 

Sec.

2.14  Hours of Service.  “Hours of Service” are determined according

to the following subsections with respect to each applicable Plan Year.  The Company may round up the number of Hours

of Service at the end of each Plan Year or more frequently as long as a uniform

practice is followed with respect to all employees who the Company determines are

in the same, or a similar, job classification, reasonably defined.

 

(a)                                  Hours

of Service are computed only with respect to service with the Participating

Employers (for service both before and after the Participating Employer becomes

such), Affiliates, and Predecessor Employers and are aggregated for service

with all such employers.

 

(b)                                 For

any Plan Year during all of which a record of hours is maintained for an

employee, each of the following is an Hour of Service:

 

(1)                                  Each

hour for which the employee is paid, or entitled to payment, for the

performance of duties for his employer during the applicable computation period

is an Hour of Service.

 

(2)                                  Each

hour for which the employee is paid, or entitled to payment, by his employer on

account of a period of time during which no duties are performed (irrespective

of whether the employment relationship has terminated) due to vacation,

holiday, illness, incapacity (including disability), layoff, jury duty,

military duty, or leave of absence, is an Hour of Service.  No more than 501 Hours of Service shall be

credited under this paragraph for any single continuous period (whether or not

such period occurs in a Plan Year). 

Hours of Service shall not be credited under this paragraph with respect

to payments under a plan maintained solely for the purpose of complying with

applicable workers’ compensation, unemployment compensation, or disability

insurance laws or with respect to a payment which solely reimburses the

individual for medical or medically related expenses incurred by the employee.

 

(3)                                  Each

hour for which back pay, irrespective of mitigation of damages, is either

awarded or agreed to by the employer is an Hour of Service.  Such Hours of Service shall be credited to

the computation period or periods to which the award or agreement for back pay

pertains, rather than to the computation period in which the award, agreement,

or payment is made.  Crediting of Hours

of Service for back pay awarded or agreed to with respect to periods described

in paragraph (2) shall be subject to the limitations set forth therein.

 

(4)                                  Hours

under this subsection shall be calculated and credited pursuant to section

2530.200b-2 of the Department of Labor Regulations, which are incorporated

herein by this reference.

 

(5)                                  The

Company may use any records to determine Hours of Service which it considers an

accurate reflection of the actual facts.

 

(c)                                  For

any portion of a Plan Year during which an employee is within a classification

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

the employee shall be credited with 190 Hours of Service for each month for

which he would otherwise be credited with at least one Hour of Service under

subsection (b).

 

7

 

(d)                                 Nothing

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

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

be determined under such other law.

 

(e)                                  In

no event shall duplicate credit as an Hour of Service be given for the same

hour.

 

(f)                                    This

subsection (f) shall apply to an individual who has service as (i) either a

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

or Affiliate of the Participating Employer. 

For purposes of determining Hours of Service, such individual shall be

considered an employee of such Participating Employer or Affiliate during any

period the individual would have been a Leased Employee of such Participating

Employer or Affiliate but for the requirement that he must have performed

services for such Participating Employer or Affiliate on a substantially

full-time basis for a period of at least one year.  If this Plan is a multiple employer plan as defined in section

2530.210 of the Department of Labor Regulations, service as a leased individual

with more than one legal entity shall be aggregated only in accordance with the

rules set forth in said section.

 

Sec.

2.15  Leased Employee.  “Leased Employee” means any person defined

as such by Code section 414(n).  In general,

commencing January 1, 1997, a Leased Employee is any person who is not

otherwise an employee of a Participating Employer or an Affiliate (referred to

collectively as the “recipient”) and who pursuant to an agreement between the

recipient and any other person (“leasing organization”) has performed services

for the recipient on a substantially full-time basis for a period of at least

one year and such services are performed under primary direction or control by

the recipient.  For purposes of the requirements

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

employee of the recipient, and contributions or benefits provided by the

leasing organization which are attributable to services performed for the

recipient shall be treated as provided by the recipient.  However, if Leased Employees constitute less

than 20% of the Participating Employers’ non-highly compensated work force

within the meaning of Code section 414(n)(5)(C)(ii), those Leased Employees

covered by a plan described in Code section 414(n)(5) shall be

disregarded.  Notwithstanding the

foregoing, no Leased Employee shall be a Qualified Employee or a Participant in

this Plan.

 

Sec.

2.16  Named Fiduciary.  The Company is a “Named Fiduciary” for

purposes of ERISA with authority to control or manage the operation and

administration of the Plan, including control or management of the assets of

the Plan, in accordance with the provisions hereof.  The Committee is also a Named Fiduciary under ERISA with the

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

allocated to it by the provisions of the Plan. 

Other persons are also Named Fiduciaries under ERISA if so provided by

ERISA or if so identified by the Company, by action of the Board.  Such other person or persons shall have such

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

including control or management of the assets of the Plan, as may be provided

by ERISA or as may be allocated by the Company, by action of the Board.

 

Sec.

2.17  Normal Retirement Age. “Normal Retirement Age” is

age 65.

 

Sec.

2.18  Normal Retirement Date. A Participant’s Normal

Retirement Date is the last day of the month in which he attains Normal

Retirement Age.

 

Sec.

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

 

8

 

Sec.

2.20  Participating Employer.  The Company is a Participating Employer in

the Plan.  With the consent of the

Company, by action of the Board or any duly authorized officer, any other

employer may also become a Participating Employer in the Plan effective as of a

date specified by it in its adoption of the Plan.  Also with such consent, any such adopting employer may modify the

provisions of the Plan as they shall be applicable to its employees.  The following corporations also were

Participating Employers for certain periods prior to January 1, 1995:

 

Contract

Applications, Inc., a Minnesota corporation.

Tennant Trend,

Inc., a New York corporation.

 

Sec.

2.21  Plan Year. 

A “Plan Year” is the 12-consecutive-month period commencing on January 1

(including years prior to 2001) and is the year on which records of the Plan

are kept.

 

Sec.

2.22  Predecessor Employer.  Any corporation, partnership, firm, or

individual, a substantial part of the assets and employees of which are

acquired by a successor, is a “Predecessor Employer” if named in this section

and subject to any conditions and limitations with respect thereto imposed by

this section; provided, however, that any such entity may be named as a

Predecessor Employer only if all of its employees who become employees of the

successor at the time of the acquisition and Participants hereunder are treated

uniformly, if recognizing service with it does not produce discrimination in

favor of highly compensated employees (as defined in Code section 414(q)), and

if there is no duplication of benefits for such service.  To be considered a Predecessor Employer, the

acquisition of assets and employees must be by the Company, by an Affiliate, or

by another Predecessor Employer.  Any

other employer shall be a Predecessor Employer if so required by regulations

prescribed by the Secretary of the Treasury or his delegate.  As of January 1, 2002, there are no Predecessor

Employers.

 

Sec.

2.23  Qualified Employee.  “Qualified Employee” means each employee of

a Participating Employer, subject to the following:

 

(a)                                  A

nonresident alien while not receiving earned income (within the meaning of Code

section 911(d)(2)) from the Company which constitutes income from sources

within the United States (within the meaning of Code section 861(a)(3)) is not

a Qualified Employee, nor is an alien who is temporarily assigned to perform

duties in the United States.

 

(b)                                 Except

as otherwise provided by resolution of the Board, citizens of the United States

whose principal place of employment is a country other than the United States

are not Qualified Employees.

 

(c)                                  Eligibility

of employees in a collective bargaining unit to participate in the Plan shall

be subject to negotiations with the representative of that unit.  During any period that an employee is

covered by the provisions of a collective bargaining agreement between a

Participating Employer and such representative, he shall not be considered a

Qualified Employee for purposes of this Plan unless such agreement expressly so

provides.  For purposes of this section

only, such an agreement shall be deemed to continue after its formal expiration

during collective bargaining negotiations pending the execution of a new

agreement.

 

9

 

(d)                                 An

employee shall be deemed to be a Qualified Employee during a period of absence

from active service which does not result from his Termination of Employment,

provided he is a Qualified Employee at the commencement of such period of

absence.

 

(e)                                  Notwithstanding

anything herein to the contrary, an individual is not a Qualified Employee

during any period during which the individual is classified by a Participating

Employer  as

an independent contractor or as any other status in which the person is not

treated as a common law employee of a Participating Employer for purposes of

withholding of taxes, or is treated as an employee of another entity who is

leased to a Participating Employer, regardless of the correct legal status of

the individual.  The previous sentence

applies to all periods of such service of an individual who is subsequently

reclassified as an employee of a Participating Employer, whether the reclassification

is retroactive or prospective.

 

(f)                                    Notwithstanding

anything herein to the contrary, no individual other than an individual who was

an active participant in the Tennant Company Defined Benefit Retirement Plan on

December 31, 2000 and who elected on or prior to December 29, 2000 to continue

to participate in a defined benefit pension program sponsored by the Company

shall be a Qualified Employee for purposes of this Plan after that date, except

as provided in Sec. 4.1(c) in the case of certain reemployed non-vested former

participants.

 

Sec.

2.24  Social Security Covered Compensation.  A Participant’s “Social Security Covered

Compensation” determined with respect to any Plan Year (the “current year”) is

the average (without indexing) of the taxable wage bases for Social Security in

effect for each calendar year during the 35-year period ending with the

calendar year in which the Participant attains (or will attain) Social Security

Retirement Age.  For purposes of

computing said average it will be assumed that the taxable wage base for years

after the current year will be the same as the taxable wage base for the

current year.

 

Sec.

2.25  Social Security Retirement Age.  A Participant’s “Social Security Retirement

Age” is the age determined from the following table according to the year of

the Participant’s birth:

 

	

  Year of

  Birth

  	

   

  	

  Social Security Retirement Age

  	

   

  
	

  Prior to 1938

  	

   

  	

  65

  	

   

  
	

  1938 through

  1954

  	

   

  	

  66

  	

   

  
	

  1955 or later

  	

   

  	

  67

  	

   

  

 

Sec.

2.26  Termination of Employment.  The “Termination of Employment” of an

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

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

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

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

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

which, under the policy of a Participating Employer, an Affiliate, or a

Predecessor Employer as in effect from time to time, results in the termination

of the employer-employee relationship. 

However, Termination of Employment shall not be deemed to occur upon a

transfer between any combination of Participating Employers, Affiliates, and

Predecessor Employers.

 

Sec.

2.27  Trust.  “Trust” means the aggregate of assets

described in Sec. 7.1.

 

10

 

Sec.

2.28  Trustee. 

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

time in accordance with the provisions of Sec. 7.2 for the purpose of holding,

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

 

11

 

ARTICLE

III

 

SERVICE DEFINITIONS

 

A.                                    Provisions

Relating to Vesting Service

 

Sec.

3.1  Years of Vesting Service.  An employee shall obtain one “Year of

Vesting Service” for each Plan Year (including years prior to 2001) in which he

completes 1000 or more Hours of Service, subject to the following:

 

(a)                                  If

the employee did not have one or more Hours of Service after December 31, 1984,

service before the first day of the Plan Year in which he attains age 22 shall

be disregarded.

 

(b)                                 In

the case of any employee of Tennant Trend, Inc., Years of Vesting Service with

said corporation is not limited to service after said corporation was acquired

by the Company on February 1, 1983, but also shall include service prior to

said acquisition date.  Measurement of

such service is subject to the Plan’s usual rules for measuring Years of

Vesting Service.

 

B.                                    Provisions

Relating to Benefit Accrual

 

Sec.

3.2  Years of Credited Service. A

Participant’s “Years of Credited Service” shall be determined as follows (and

for purposes of this section, the individual will be deemed to have been a

Participant in this Plan while the individual was a participant prior to

January 1, 2001 in the Tennant Company Defined Benefit Retirement Plan):

 

(a)                                  Service

prior to the date an employee became a Participant in the Tennant Company

Defined Benefit Retirement Plan shall be disregarded for purposes of

determining his Years of Credited Service. 

However:

 

(1)                                  If

an employee was excluded from participating because his employment commenced

after he attained age 60, and he is an active employee of a Participating

Employer on or after January 1, 1987, his Years of Credited Service shall be

the total amount he would have received if the age 60 exclusion had never

applied.

 

(2)                                  If

the employee was an Active Participant on January 1. 2001, and if the employee

had been excluded from participating in the Plan during a prior Plan Year

solely because the Plan at that time required that the employee have attained

age 25 to become a Participant, the employee’s Years of Credited Service shall

include any years that would have been included if the Plan had required

attainment of age 21 rather than age 25 to become a Participant.

 

(b)                                 With

respect to service after the date an employee became a Participant, his Years

of Credited Service shall be determined as follows:

 

(1)                                  For

any Plan Year in which the employee does not become a Participant and does not

have a Termination of Employment:

 

12

 

(A)                              He

shall receive one Year of Credited Service if he has at least 1000 Hours of

Service as an Active Participant.

 

(B)                                He

shall receive no Years of Credited Service if he completes fewer than 1000

Hours of Service as an Active Participant.

 

(2)                                  For

any Plan Year in which the employee becomes a Participant or has a Termination

of Employment, he shall receive 1/12 of a Year of Credited Service for each month

in which he has at least one Hour of Service as an Active Participant, provided

his total Hours of Service as an Active Participant for the Plan Year equals or

exceeds the amount determined from the following table:

 

	

  Number of

  months in which the

  employee has at least one Hour

  of Service as an 

  Active Participant

  	

   

  	

  Hours of

  Service as an

  Active Participant

  	

   

  
	

   

  
	

   

  
	

   

  
	

  1

  	

   

  	

  83

  1/3

  	

   

  
	

  2

  	

   

  	

  166

  2/3

  	

   

  
	

  3

  	

   

  	

  250

  	

   

  
	

  4

  	

   

  	

  333

  1/3

  	

   

  
	

  5

  	

   

  	

  416

  2/3

  	

   

  
	

  6

  	

   

  	

  500

  	

   

  
	

  7

  	

   

  	

  583

  1/3

  	

   

  
	

  8

  	

   

  	

  666

  2/3

  	

   

  
	

  9

  	

   

  	

  750

  	

   

  
	

  10

  	

   

  	

  833

  1/3

  	

   

  
	

  11

  	

   

  	

  916

  2/3

  	

   

  
	

  12

  	

   

  	

  1000

  	

   

  

 

If the employee’s Hours of Service as an Active Participant for such a

Plan Year is less than the amount determined from the foregoing table, he shall

receive no Year of Credited Service or fractional year for the Plan Year.

 

(c)                                  Notwithstanding

any of the foregoing provisions to the contrary:

 

(1)                                  In

the case of any employee of Tennant Trend, Inc. who becomes a Participant on

January 1, 1985, he will be treated as an Active Participant for all portions

of the 1983 and 1984 Plan Years that he would have been an Active Participant

if Tennant Trend, Inc. had been a Participating Employer effective February 1,

1983, and his Years of Credited Service will be calculated accordingly.

 

(2)                                  In

the case of any employee of Contract Applications, Inc., he will be treated as

an Active Participant for service with said corporation prior to January 1,

1985 to the same extent as would have been the case if Contract Applications,

Inc. had been a Participating Employer, and his Years of Credited Service will

be calculated accordingly.

 

13

 

(3)                                  If

a person became a Participant on January 1, 1987 pursuant to Sec. 4.1(d)(2) of

the Tennant Company Defined Benefit Retirement Plan, his service prior to said

date shall not be counted as Years of Credited Service.

 

Sec.

3.3  Adjusted Years of Credited Service.  A Participant’s “Adjusted Years of Credited

Service” shall be equal to his Years of Credited Service (as determined under

the preceding section), adjusted as follows:

 

(a)                                  If

he was a “Sec. 4.2 Participant” under the Tennant Company Defined Benefit

Retirement Plan and was under age 35 on December 31, 1981, his Adjusted

Years of Credited Service shall be equal to (1) plus (2):

 

(1)                                  His

Years of Credited Service, but not more than 30 years.

 

(2)                                  One

half of (i) his Years of Credited Service prior to Normal Retirement Date,

minus (ii) 30 years.

 

 (b)                              If

he is not described in subsection (a), his Adjusted Years of Credited Service

shall be equal to his Years of Credited Service, but not more than 30 years.

 

C.                                    Provisions

Relating to Breaks In Service

 

Sec.

3.4  1-Year Break In Service.  “1-Year Break In Service” means a Plan Year

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

relationship with a Participating Employer, an Affiliate, or a Predecessor

Employer is not in effect at any time during such Plan Year.  The 1-Year Break In Service shall be

recognized as such on the last day of such Plan Year.  For purposes of determining whether a Participant has a 1-Year

Break In Service, a Participant who has an absence from work with a

Participating Employer commencing in 1985 or any later year,

 

(a)                                  by

reason of the pregnancy of the Participant,

 

(b)                                 by

reason of the birth of a child of the Participant.

 

(c)                                  by

reason of the placement of a child with the Participant in connection with the

adoption of such child by the Participant (including placement with the

Participant for a trial period prior to adoption), or

 

(d)                                 for

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

such birth or placement,

 

shall be credited

with Hours of Service provided either (i) that the Company has reasonable

access to the relevant information or (ii) that the Participant furnishes to

the Company such timely information as the Company may reasonably require to

establish that the absence from work is for one of the reasons referred to

above and the number of days for which there was such an absence.  The Hours of Service shall be credited to

the Plan Year in which the period of absence begins if but for such crediting

there would be a 1-Year Break In Service in such computation period.  Otherwise, the Hours of Service shall be

credited to the next following Plan Year. 

The Hours of Service to be credited are the Hours of Service which

otherwise would normally have been credited to the Participant but for such

absence.  If the Company is unable to

determine the number of such hours, eight hours shall be credited per day of

such 

 

14

 

absence.  In no event, however, shall more than 501

Hours of Service be credited for such period of absence.

 

Sec.

3.5  Effect of l-Year Breaks In Service On

Years of Credited Service and Vesting Service.  If a Participant has had a 1-Year Break In

Service ending prior to January 1, 1985, or a period of five consecutive 1–Year

Breaks In Service ending on or after that date, his Years of Vesting Service

and Years of Credited Service prior to his Break in Service shall be disregarded

if (i) he had no vested right to an accrued benefit under the Plan based on

service prior to his Break in Service and (ii) the number of his consecutive

1-Year Breaks In Service equals or exceeds the aggregate number of his Years of

Vesting Service prior to his Break in Service. 

Such aggregate number of years shall not include any Years of Vesting

Service not required to be taken into account by virtue of any prior Break in

Service.

 

Sec.

3.6  Periods of Military Service.  Notwithstanding any provision of

this Plan to the contrary, benefits and service credit with respect to

qualified military service will be provided in accordance with Code section

414(u).

 

15

 

ARTICLE IV

 

PLAN PARTICIPATION

 

Sec.

4.1  Eligibility to Participate.  Commencing January 1, 2001, participation in

this Plan shall be determined as follows:

 

(a)                                  Active

Participants.  An employee is an

Active Participant in this Plan on and after January 1, 2001, only while all of

the following requirements are satisfied:

 

(1)                                  The

employee was an active participant in the Tennant Company Defined Benefit

Retirement Plan on December 31, 2000.

 

(2)                                  The

employee affirmatively elected on or before December 29, 2000 to continue

participation in a defined benefit pension program sponsored by the Company.

 

(3)                                  The

employee is currently employed as a Qualified Employee.

 

(b)                                 Inactive

Participants, Retirees, Beneficiaries and Alternate Payees Entitled to Vested

Benefits.  Any individual receiving

benefits or entitled to a vested benefit under the Tennant Company Defined

Benefit Retirement Plan as of December 31, 2000, whose benefits had not been

distributed in full from said plan prior to January 1, 2001, and whose benefits

were spun off to this Plan effective as of January 1, 2001 as described in Sec.

1.3, shall be a Participant under this Plan (or shall be treated as a surviving

spouse, joint annuitant, beneficiary or alternate payee of a Participant, as

applicable) until such time as the individual’s benefits are distributed in

full from the Trust, subject to the following:

 

(1)                                  Any

such individual entitled to a vested benefit under the Tennant Company Defined

Benefit Retirement Plan on December 31, 2000 who had made an irrevocable

election to receive benefits from said plan on or before that date shall

receive (or continue to receive) benefits from this Plan in accordance with

such election.

 

(2)                                  Any

such individual entitled to a vested benefit under the Tennant Company Defined

Benefit Retirement Plan on December 31, 2000 who had not made an irrevocable

election to receive benefits from said plan as of December 31, 2000 shall be

entitled to elect a distribution of benefits from this Plan in accordance with

the provisions of the Tennant Company Defined Benefit Retirement Plan in effect

at the applicable time determined pursuant to Sec. 1.6.

 

(c)                                  Individuals

Rehired on or after January 1, 2001. 

If an individual (i) was a participant in the Tennant Company Defined

Benefit Retirement Plan prior to January 1, 2001, or was a Participant in this

Plan on or after that date, (ii) has (or had) a Termination of Employment,

(iii) was not 100% vested in his accrued benefit at the time of the Termination

of Employment, and (iv) is subsequently reemployed by a Participating Employer

on or after January 1, 2001, but before the time that the employee’s service

prior to the break is disregarded under Sec. 3.5, then the employee shall

become a Participant again for purposes of earning additional Years of Vesting

Service with respect to service after the reemployment, but shall not be a

Qualified Employee or an

 

16

 

Active Participant

and shall not accrue any additional benefit or earn any additional Years of

Credited Service with respect to the period of reemployment.  Upon the employee’s Termination of

Employment following the period of reemployment, the employee’s benefit

hereunder shall be determined under the provisions of this Plan then in effect,

giving appropriate effect to any additional Years of Vesting Service.

 

Sec.

4.2  Duration of Participation. A

Participant shall continue to be such until the later of:

 

(a)                                  His

Termination of Employment.

 

(b)                                 The

date all benefits, if any, to which he is entitled hereunder have been distributed

to him from the Trust.

 

Sec.

4.3  No Guarantee of Employment.  Participation in the Plan does not

constitute a guarantee or contract of employment with a Participating

Employer.  Such participation shall in

no way interfere with any rights a Participating Employer would have in the

absence of such participation to determine the duration of the employee’s

employment with that employer.

 

17

 

ARTICLE V

 

BENEFIT PROVISIONS

 

Sec.

5.1  Accrued Monthly Pension.  The “Accrued Monthly Pension” of an

individual who is an Active Participant in this Plan on or after January 1,

2001 shall be determined as follows:

 

(a)                                  A

Participant’s Accrued Monthly Pension shall be equal to (1) minus (2) plus (3):

 

(1)                                  1.40%

of the Participant’s Final Average Monthly Earnings multiplied by the number of

his Adjusted Years of Credited Service.

 

(2)                                  .609%

of the amount in (A), (B), or (C), whichever is least, multiplied by the number

of the Participant’s Adjusted Years of Credited Service:

 

(A)                              The

Participant’s Final Average Monthly Earnings.

 

(B)                                1/12

of the Participant’s Final Average Compensation.

 

(C)                                1/12

of the Participant’s Social Security Covered Compensation.

 

(3)                                  If

the individual was an active participant in the Tennant Company Defined Benefit

Retirement Plan on December 31, 2000, .60% of the Participant’s Final Average

Monthly Earnings on December 31, 2000 multiplied by the number of his Adjusted

Years of Credited Service prior to January 1, 2001.  However, this paragraph (3) does not apply to any Participant who

was employed by the Company on January 1, 2000 in the capacity of a management

employee classified by the Company at the “Director” level or above, or who was

hired during 2000 into such a position.

 

(b)                                 For

any person who was a “Sec. 4.2 Participant” under the Tennant Company Defined

Benefit Retirement Plan, his Accrued Monthly Pension determined under (a) on

Normal Retirement, Late Retirement, or Early Retirement shall be increased by

the amount, if any, by which the amount in paragraph (1) exceeds the amount in

paragraph (2), subject, however, to paragraph (3):

 

(1)                                  The

amount in (A) minus the amount in (B):

 

(A)                              1.40%

of the Participant’s Final Average Monthly Earnings multiplied by the number of

Years of Credited Service he would have had prior to January 1, 1982 if he had

become a Participant on the later of (i) the date he attained age 35 or (ii)

his most recent Employment Commencement Date prior to January 1, 1982.

 

(B)                                .609%

of the amount in (A), (B), or (C) of paragraph (a)(2), whichever is least,

multiplied by the number of Years of Credited Service referred to in paragraph

(b)(1)(A).

 

(2)                                  The

monthly amount of a pension payable monthly for life, the first payment to be

made on the first day of the month following the Participant’s Normal

 

18

 

Retirement Date,

and the last payment to be made as of the first day of the month in which his

death occurs, said pension to be equal in Actuarial Value to the sum of (A) and

(B):

 

(A)                              The

amount credited to the Participant’s Retirement Account under the Tennant

Company Profit Sharing Plan as of the valuation date coincident with or next

following the Participant’s Termination of Employment.

 

(B)                                The

net amounts taken from the Participant’s Retirement Account to pay life

insurance premiums after the end of the Plan Year in which the Participant

attained age 34 and prior to January 1, 1983. 

Said amount shall be determined as follows:

 

(i)                                     Each

such premium payment shall be deemed to have been paid on January 1 of the Plan

Year in which it was paid.  The amount

of each such premium shall be increased at an annual rate of 5%, compounded

annually, from said January 1 until December 31, 1981.

 

(ii)                                  The

sum of the premiums, increased as provided in (i), shall be determined.

 

(iii)                               The sum determined in

(ii) shall be adjusted by the same amount as if it were invested in the same

investment funds and in the same proportions as the Participant’s Retirement

Account under the Tennant Company Profit Sharing Plan is invested from time to

time from January 1, 1982 until the valuation date coincident with or next

following the Participant’s Termination of Employment.

 

(iv)                              For

purposes of the above calculations, amounts received upon surrender of a life

insurance policy shall be treated as a negative premium, shall be adjusted as

provided above, and shall be subtracted from the amount determined in

(iii).  Any such negative amount shall

not result in reducing the total amount under this subparagraph (B) to less

than zero.

 

(3)                                  The

portion of the Accrued Monthly Pension determined under this subsection (b)

shall become fixed upon a Participant’s Termination of Employment and shall not

be increased by virtue of a period of reemployment.

 

(4)                                  For

purposes of this subsection (b), a “Sec. 4.2 Participant” is a person who was

an employee of the Company on December 31, 1981, was a Qualified Employee on

January 1, 1982, elected not to participate in Company contributions to

Retirement Accounts (or any successor to such Accounts) under the Tennant

Company Profit Sharing Plan for 1982 or any Plan Year thereafter, became a

Participant in the Tennant Company Defined Benefit Retirement Plan on the later

of January 1, 1982 or the date he otherwise would have become a Participant in

the Tennant Company Profit Sharing Plan under said plan as in effect on

December 31, 1981, and became a Participant in the Tennant Company

 

19

 

Defined Benefit

Retirement Plan on or  before the date

he otherwise would have become a Participant under the terms of that Plan.  A person who  made a similar election effective January 1, 1987 is not a “Sec.

4.2 Participant.”

 

(c)                                  However,

the Accrued Monthly Pension under (a) and (b) of an employee who became a

Participant under the Tennant Company Defined Benefit Retirement Plan prior to

January 1, 1989 shall not be less than his Minimum Accrued Monthly Pension

determined as follows:

 

(1)                                  If

his compensation during 1988 was $78,353 or more, his Minimum Accrued Monthly

Pension is an amount equal to his Accrued Monthly Pension on December 31, 1988

under the benefit formula then in effect, based on pay and service through said

date, and disregarding any pay or service after said date.

 

(2)                                  If

his compensation during 1988 was less than 

$78,353, his Minimum Accrued Monthly Pension is an amount equal to his

Accrued Monthly Pension as of December 31, 1989 (or as of his Termination of

Employment if it occurred in 1989). 

Said amount shall be determined under the benefit formula in effect on

December 31, 1988, and shall be based on pay and service through December 31,

1989.  Pay and service after December

31, 1989 shall be disregarded.

 

“Compensation” referred to in (1) and (2) means Compensation as defined

in Sec. 6.11(i) except that gross pay shall be determined before any reduction

pursuant to Code section 401(k) or 125.

 

(d)                                 Notwithstanding

any provision of the Plan to the contrary, a Participant’s Accrued Monthly

Pension under this section shall not be less than the greater of:

 

(1)                                  The

Participant’s Accrued Monthly Pension determined under the provisions of this

section (or the corresponding section of the Tennant Company Defined Benefit

Retirement Plan) in effect on and after January 1, 1994 as applied to the

Participant’s total Years of Credited Service (but disregarding any such years

to the extent specified in this section and other provisions of the Plan).

 

(2)                                  The

sum of the amounts determined under (A) and (B):

 

(A)                              The

Participant’s Accrued Monthly Pension determined as of December 31, 1993 on the

basis of the provisions of the Tennant Company Defined Benefit Retirement Plan

in effect on that date as if the Participant’s Termination of Employment had

occurred on December 31, 1993.  For this

purpose, the annual compensation limit in effect under Code section 401(a)(17)

and Sec. 2.7(f) for Plan Years beginning on and after January 1, 1989, but

prior to January 1, 1994 shall be deemed to be equal to $235,840.

 

(B)                                The

Participant’s Accrued Monthly Pension determined under the provisions of this

section (and the corresponding section of the Tennant Company Defined Benefit

Retirement Plan) in effect on and after January 1, 1994 as applied to the

Participant’s Years of Credited Service on and after January 1, 1994.

 

20

 

For purposes of compliance with any limitation on the number of the

Participant’s Years of Credited Service, such years shall first be taken into

account under subparagraph (A), and the number of years used in subparagraph

(B) shall be reduced by the number of years used in subparagraph (A).

 

Sec. 5.2 

Pension on Normal Retirement.  “Normal Retirement” means Termination of

Employment of a Participant (except termination by his death) occurring on his

Normal Retirement Date.  On Normal

Retirement, a Participant shall be entitled to a pension payable monthly for

life, the first payment to be made on the first day of the month following his

Normal Retirement Date (if he is living on said first day of the month) and the

last payment to be made as of the first day of the month in which his death

occurs, in a monthly amount equal to his Accrued Monthly Pension.  The pension under this section is subject to

all of the provisions of the Plan, and in this regard special reference is to

be made to the provisions of Articles V and VI.

 

Sec. 5.3 

Pension on Late Retirement.  “Late Retirement” means any Termination of

Employment of a Participant (except termination by his death) occurring after

his Normal Retirement Date.  On Late

Retirement a Participant shall be entitled to a pension payable monthly for

life, the first payment to be made as of the first day of the month following

his Late Retirement (if he is living on said first day of the month) and the

last payment to be made as of the first day of the month in which his death

occurs, in a monthly amount which is equal to whichever of the following

amounts is greater:

 

(a)                                  His

Accrued Monthly Pension determined as of his Normal Retirement Date, increased

so that the monthly pension on Late Retirement is the Actuarial Equivalent

thereof.

 

(b)           His Accrued Monthly Pension

determined as of the date of his Termination of Employment.

 

The pension payable under

this section is subject to all the provisions of the Plan, and in this regard

special reference is to be made to the provisions of Articles V and VI.  Effective January 1, 1997, if the

Participant’s Termination of Employment occurs on or after April 1 following

the calendar year in which the Participant attained age 701⁄2 and payments of the

Participant’s pension do not commence by said April 1, the Participant’s

monthly pension payable under this section at the time payments commence shall

not be less than the Actuarial Equivalent of the benefit that would have been

payable under this section as of said April 1 (or as of January 1, 1997, if

later), plus the Actuarial Equivalent of any additional benefits accrued after

that date, and reduced by the Actuarial Equivalent of any distributions with

respect to the Participant after that date. 

For purposes of the previous sentence, Actuarial Equivalents shall be

determined pursuant to Sec. 2.3(b), and all adjustments of the Participant’s

pension shall be made in accordance with Code section 401(a)(9)(C)(iii) and

applicable regulations or IRS Notices.

 

Sec. 5.4 

Pension on Early Retirement.  “Early Retirement” means any Termination of

Employment of a Participant (except termination by his death) (i) after he has

attained age 55 and (ii) before his Normal Retirement Date.

 

(a)                                  On

Early Retirement, the Participant shall be entitled to a pension payable

monthly for life, the first payment to be made as of the first day of the month

following the earlier of (i) his Normal Retirement Date, or (ii) his

Termination of Employment in the case of a Participant who satisfies the Rule

of 85, (if he is living on said first day of the month) 

 

21

 

                and

the last payment to be made as of the first day of the month in which his death

occurs, in a monthly amount equal to his Accrued Monthly Pension.

 

(1)                                  A

Participant satisfies the “Rule of 85” if the Participant had attained age 40

prior to January 1, 2001 and the sum on the date the Participant’s Termination

of Employment occurs of the Participant’s age (determined on his most recent

birthday) and his Years of Vesting Service equals or exceeds 85.

 

(2)                                  For

purposes of the Rule of 85 in paragraph (1), Years of Vesting Service do not

include any service with Castex Incorporated, or any service with the Company

or any other subsidiary of the Company for which the individual is paid through

the Tennant Commercial payroll maintained for individuals employed at the

Company’s Holland, Michigan facility and certain related operations

 

(b)                                 In

lieu of a pension commencing under subsection (a) following his Normal

Retirement Date, a Participant who does not satisfy the Rule of 85 may elect to

receive a monthly pension with the first payment to be made as of the first day

of any month designated in such election that precedes his Normal Retirement

Date (if he is living on the commencement date so elected) and the last payment

to be made as of the first day of the month in which his death occurs.  The monthly amount thereof shall be equal to

his Accrued Monthly Pension reduced as follows for the number of months by

which the commencement date precedes the Participant’s Normal Retirement Date:

 

(1)                                  One-third

of one percent per month for the first 36 months.

 

(2)                                  One-half

of one percent per month for the next 48 months.

 

(3)                                  Two-thirds

of one percent per month for the next 36 months.

 

The election of an Early Retirement benefit under this

subsection (b) shall be made by requesting the appropriate form from the

Company and completing, signing, and filing the form with the Company before

the commencement date elected.

 

(c)                                  The

pension payable under this section is subject to all the provisions of the

Plan, and in this regard special reference is to be made to the provisions of

Articles V and VI.

 

(d)                                 Notwithstanding

anything in Sec. 1.6 to the contrary, if the Participant’s Termination of

Employment occurred prior to January 1, 1999 and prior to his Normal Retirement

Date, but after the Participant had both attained age 55 and completed 10 Years

of Vesting Service, the following shall apply:

 

(1)                                  If

the Participant’s pension payments commenced prior to January 1, 1999 and prior

to his Normal Retirement Date, the monthly payments payable to or with respect

to the Participant on and after January 1, 1999 shall be recalculated by

assuming that the early commencement reduction factors in subsection (b),

rather than the corresponding reduction factors in the Plan in effect at the

time of the Participant’s Termination of Employment, had applied to the

Participant. If a Participant described in the previous sentence died prior to

January 1, 1999, this paragraph (1) shall be applied to recalculate the amount

payable to the Participant’s surviving spouse, joint annuitant or Beneficiary

on and after 

 

22

 

                                                January

1, 1999.

 

(2)                                  If

the Participant’s pension payments have not commenced prior to January 1, 1999

and the Participant subsequently elects to commence those payments prior to his

Normal Retirement Date, the early commencement reduction factors in subsection

(b) shall be used to determine the monthly benefit payable to the Participant

under the terms of the Plan.  If such a

Participant dies prior to his Normal Retirement Date and prior to the due date

for his first pension payment hereunder, the early commencement reduction

factors in subsection (b) shall be used to determine the amount of any

Qualified Preretirement Survivor Annuity payable under Sec. 5.10 following the

Participant’s death.

 

(3)                                  If

the Participant died prior to January 1, 1999, prior to his Normal Retirement

Date, and prior to the due date for his first pension payment hereunder, the

monthly amount payable on and after January 1, 1999 of any Qualified

Preretirement Survivor Annuity payable to the Participant’s spouse under Sec.

5.10 shall be recalculated by assuming that the early commencement reduction

factors in subsection (b) had applied to the determination of that benefit.

 

(4)                                  This

subsection (d) shall not affect the amount payable to an alternate payee of the

Participant under a qualified domestic relations order unless the order

specifically provided that the alternate payee’s benefit is to be adjusted to

reflect increases in the amount payable to the Participant.

 

Sec. 5.5 

Vested Termination.  “Vested Termination” means any Termination

of Employment of a Participant (except termination by his death) that is not

defined herein as a form of retirement and that occurs after December 31, 2000.

On a Vested Termination that occurs after December 31, 2000, the Participant

shall be entitled to receive a pension payable monthly for life, the first

payment to be made as of the first day of the month following his Normal

Retirement Date (if he is living on said commencement date) and the last

payment to be made as of the first day of the month in which his death occurs,

in a monthly amount equal to his Accrued Monthly Pension.  In lieu of said pension, he may elect to

receive a monthly pension which is the Actuarial Equivalent thereof, the first

payment to be made as of the first day of any month he may elect which is after

the month in which his Termination of Employment occurs (if he is living on the

commencement date so elected) and the last payment to be made as of the first

day of the month in which his death occurs. 

However, if the Participant had not attained age 40 prior to January 1,

2001, the earliest commencement date that can be elected under the previous

sentence is the first day of the month following the date the Participant

attains age 55.  The election shall be

made by requesting the appropriate form from the Company and completing,

signing, and filing the form with the Company before the commencement date

elected.  The pension payable under this

section is subject to all the provisions of the Plan, and in this regard

special reference is to be made to the provisions of Articles V and VI.

 

Sec. 5.6 

Deduction for Other Pension

Payments. 

Notwithstanding the foregoing provisions, the monthly amounts otherwise

payable thereunder shall be reduced by the amount (expressed on a comparable

basis that is an Actuarial Equivalent) of the monthly pension, if any, to which

the Participant is entitled under any other defined benefit pension plan that

meets the requirements of Code section 401(a), or any comparable section or

sections of any future legislation that amends, supplements, or supersedes said

section, and that is financed in whole or in part by a Participating Employer

or an Affiliate, but only to the extent such other pension is attributable to employer

contributions and to the same period of service for which the pension is being

paid under this Plan.

 

23

 

Sec. 5.7 

Amendments Affecting Pension

Rights. 

Notwithstanding the foregoing provisions, in the event of an amendment

to the Plan, the following shall be applicable:

 

(a)                                  The

amendment shall not reduce the accrued benefit, within the meaning of Code

section 411(d)(6), of a Participant determined at the time of such amendment

except in conformity with said section.

 

(b)                                 If

the amendment to the Plan should change the vesting schedule of the Plan, each

Participant having not less than three Years of Vesting Service by the end of

the election period with respect to such amendment shall be permitted within

such election period to elect to have his vested percentage computed under the

Plan without regard to such amendment. 

Each such election shall be made in writing by filing with the Company

within the election period a form available from the Company for the

purpose.  The election period shall be a

reasonable period determined by the Company commencing not later than the date

the amendment is adopted.  However, the

Company need not provide such election for any Participant whose vested

percentage under the Plan, as amended, at any time cannot be less than such

percentage determined without regard to such amendment.

 

Sec. 5.8 

Qualified Joint and Survivor

Annuity. 

Notwithstanding the foregoing provisions, the pension otherwise payable

to the Participant for his life only shall instead be paid as a Qualified Joint

and Survivor Annuity which is the Actuarial Equivalent of said life only

pension unless the Participant elects otherwise within the Election Period,

subject to all of the following:

 

(a)                                  A

“Qualified Joint and Survivor Annuity” is a pension commencing at the same time

as the life-only pension would commence, with monthly payments for the life of

the spouse of the Participant after the Participant’s death which are each

one-half the amount of the payments made to the Participant during her

lifetime.

 

(b)                                 For

purposes of this section the “Election Period” is the 90-day period ending on

the due date of the Participant’s first pension payment.  The Participant and his or her spouse may

waive any notice or election period required under this section to the extent

permitted by applicable regulations.

 

(c)                                  The

Company within a reasonable period of time before the due date for the

Participant’s first pension payment (and consistent with such regulations as the

Secretary of the Treasury may prescribe) shall furnish the Participant with a

written explanation in nontechnical language of the following:

 

(1)                                  The

terms and conditions of the Qualified Joint and Survivor Annuity.

 

(2)                                  The

Participant’s right to make, and the effect of, an election to waive the

Qualified Joint and Survivor Annuity form of benefit.

 

(3)                                  The

rights of the Participant’s spouse with respect to the spouse’s required

consent to the Participant’s election to waive the Qualified Joint and Survivor

Annuity form of benefit.

 

24

 

(4)                                  The

right to make, and the effect of, a revocation of the Participant’s election to

waive the Qualified Joint and Survivor Annuity form of benefit.

 

(d)                                 An

election under this section may be revoked in writing during the Election

Period, and after such revocation another written election may be made during

the Election Period.

 

(e)                                  All

elections and revocations shall be made on the appropriate form available from

the Company and shall be effective only upon completing, signing, and filing of

the form with the Company during the Election Period.

 

(f)                                    A

Participant who elects not to receive her pension in the form of a Qualified

Joint and Survivor Annuity will receive a pension for her life only.

 

(g)                                 The

provisions of this section shall not be applicable unless the Participant and

his spouse are married to each other on the due date for the first pension

payment to the Participant.  References

to “spouse” in this section are to such spouse.

 

(h)                                 A

Participant’s election to waive the Qualified Joint and Survivor Annuity shall

not be effective unless all of the following conditions are satisfied:

 

(1)                                  The

Participant’s spouse consents in writing to the election.

 

(2)                                  The

Participant’s election designates a specific form of benefit payment (i.e.,

life annuity or an optional form of settlement under Sec. 5.9) and a specific

beneficiary or contingent annuitant, if applicable in connection with such form

of benefit payment, which designations may not be changed without further

spousal consent (unless the spouse’s initial consent expressly permits future

designations by the Participant without any further spousal consent.).

 

(3)                                  The

spouse’s consent acknowledges the effect of the Participant’s election.

 

(4)                                  The

spouse’s consent is witnessed by a Plan representative or notary public.

 

However, the above requirements will be deemed to be satisfied if it is

established to the satisfaction of a Plan representative that the spouse’s consent

may not be obtained because there is no spouse, because the spouse cannot be

located, or because of such other circumstances as the Secretary of the

Treasury may by regulations prescribe. 

Any consent by a spouse, or establishment that the consent of a spouse

may not be obtained, shall be effective only with respect to such spouse.  A consent by a spouse is not revocable by

that spouse.

 

Sec. 5.9 

Optional Settlements.  In lieu of the amount and form of pension

payable under the preceding sections of this Article, a Participant with

respect to whom the Qualified Preretirement Survivor Annuity under Sec. 5.10 or

the Qualified Joint and Survivor Annuity under Sec. 5.8 is not payable may,

under such rules and regulations as the Company may prescribe which are in

accord with the advice of the Actuary, elect to have a pension payable under

one of the following options:

 

(a)                                  An

option providing a reduced monthly pension which is the Actuarial Equivalent of

his life only pension and which is payable to the Participant commencing on the

same date

 

25

 

as

that upon which payments would otherwise commence and terminating with the last

monthly payment before his 

death.  If 

his death occurs on or after the due date of the first monthly payment

under the option and before 120 monthly payments have been made to him such

benefit shall be continued to the Beneficiary designated by the Participant in

accordance with the rules in Sec. 5.11(d) until a total of 120 monthly payments

have been made to him and his Beneficiary.

 

(b)                                 An

option providing a reduced monthly pension which is the Actuarial Equivalent of

his life only pension and which is payable to the Participant for his lifetime

commencing on the same date as that upon which payments would otherwise

commence, with provision for continuance upon his death of monthly payments of

100% or 50% of such reduced amount, as he shall have designated, to the person

designated by him as his joint annuitant, if such joint annuitant survives him,

with such monthly payments to continue for the lifetime of the joint

annuitant.  Except as provided in the

last paragraph of this section, an election of this option shall be

automatically cancelled if either the person electing the option or his joint

annuitant dies before the due date of the first monthly payment under the

option.

 

(c)                                  In

the case of a benefit payable to or with respect to a Participant whose

Termination of Employment occurs on or after January 1, 2001 and who had

attained age 40 prior to that date, an option providing a lump sum payment

equal to the Actuarial Equivalent present value, determined as of the date the

distribution is to occur using the factors specified in Sec. 2.3(b), of the

Participant’s Accrued Monthly Pension payable as a life-only annuity commencing

on the first day of the month following the Participant’s Normal Retirement

Date (or following the Participant’s Late Retirement, in the case of a

Participant who is older than age 65). 

The lump sum payment will be determined without regard to any benefit to

which the Participant may be entitled commencing prior to his Normal Retirement

Date under Sec. 5.4 or Sec. 5.5.

 

Election of an

option may be made at any time prior to commencement of pension payments.  If a Participant remains in the employ of a

Participating Employer or an Affiliate after his Normal Retirement Date, if his

death occurs thereafter prior to his Termination of Employment, and if he

elected an optional settlement under this section which was not revoked prior

to his death, the same benefit shall be provided his beneficiary or joint or

contingent annuitant under the option as though the Participant’s Termination

of Employment had occurred for a reason other than death on the last day of the

month preceding his death.

 

Sec. 5.10 

Qualified Preretirement

Survivor Annuity.  If

the requirements of subsection (a) are met, a Qualified Preretirement Survivor

Annuity shall be paid with respect to a deceased Participant, subject to the

following:

 

(a)                                  All

of the following requirements must be met with respect to the Participant:

 

(1)                                  Immediately

prior to his death the Participant has a nonforfeitable right to his accrued

benefit under the Plan.

 

(2)                                  The

Participant dies before the due date for his first pension payment.

 

(3)                                  The

Participant is survived by a Qualified Spouse.

 

26

 

(b)                                 The

“Qualified Preretirement Survivor Annuity” is the annuity that would be paid to

the Qualified Spouse if the Participant had retired with an immediate Qualified

Joint and Survivor Annuity on the day before the Participant’s date of

death.   However, if the Participant had

not attained age 40 prior to January 1, 2001 and dies before attaining age 55,

the “Qualified Preretirement Survivor Annuity” is instead the annuity that

would be paid to the Qualified Spouse under the following circumstances:

 

(1)                                  The

Participant had a Termination of Employment on the date of his death.

 

(2)                                  The

Participant survived to the first day of the month after his attainment of age

55.

 

(3)                                  Payments

under the Qualified Joint and Survivor Annuity form of payment commenced to the

Participant on the first day of the month after his attainment of age 55, and

he died on the next day.

 

(c)                                  A

surviving spouse entitled to a benefit under this section may elect to delay

the commencement of pension payments to a later date than the date specified in

subsection (b) by filing the election with the Company prior to the date

payments commence.  However, the

commencement date elected may not be later than the first day of the month

following the date the Participant would have attained age 62.  The amount of the delayed pension shall be

the Actuarial Equivalent, determined pursuant to Sec. 2.3(a), of the pension to

which the spouse was entitled commencing on the date specified in subsection

(b). However, the amount of the delayed pension shall not exceed the pension

the spouse would have received if the Participant had died in the month

following his Normal Retirement Date.

 

(d)                                 If

the Participant’s Termination of Employment occurred on or after January 1,

2001 and the Participant had attained age 40 prior to that date, at any time

prior to the date that payments to the Qualified Spouse are to commence under

subsection (b), the Qualified Spouse may file an election with the Company that

the benefit shall instead be paid in the form of a lump sum distribution that

is the Actuarial Equivalent, determined as of the date the distribution is to

occur using the factors specified in Sec. 2.3(b), of the benefit payable to the

Qualified Spouse under subsection (b).

 

(e)                                  A

person is a “Qualified Spouse” of a Participant if, and only if, such person

and the Participant have been married to each other throughout the one-year

period ending on the date of the Participant’s death.

 

Sec. 5.11 

Additional Death Benefit.

If a Participant’s death occurs while he is a Qualified Employee, a death

benefit shall be payable, subject to the following:

 

(a)                                  The

amount of the death benefit shall be equal to 200% of his Certified Earnings

for the Plan Year preceding the Plan Year in which his death occurred, reduced

as follows:

 

(1)                                  Said

amount shall be reduced by the sum of (i) any workers compensation benefit

payable with respect to the Participant by reason of his death and (ii) any

other death benefit paid by the Company with respect to the Participant, other

than any benefit paid under a trust fund established pursuant to Code section

501(c)(9) or paid under a travel/accident policy.

 

27

 

(2)                                  If

the Participant was age 55 or older on the date of his death, the reduced

amount determined in paragraph (1) shall be further reduced as provided in (A)

or (B), whichever results in the greater reduction:

 

(A)                              The

reduced amount determined in paragraph (1) shall be further reduced to the

percentage thereof determined from the following table according to the

Participant’s attained age on his last birthday coincident with or immediately

preceding the date of his death:

 

	

  Attained age on 

  last birthday

  	

   

  	

  Percentage Payable

  	

   

  
	

  55

  	

   

  	

  92

  	

  %

  
	

  56

  	

   

  	

  84.64

  	

  %

  
	

  57

  	

   

  	

  77.87

  	

  %

  
	

  58

  	

   

  	

  71.64

  	

  %

  
	

  59

  	

   

  	

  65.91

  	

  %

  
	

  60

  	

   

  	

  60.64

  	

  %

  
	

  61

  	

   

  	

  55.78

  	

  %

  
	

  62

  	

   

  	

  51.32

  	

  %

  
	

  63

  	

   

  	

  47.22

  	

  %

  
	

  64

  	

   

  	

  43.44

  	

  %

  
	

  65

  	

   

  	

  39.96

  	

  %

  
	

  66

  	

   

  	

  36.77

  	

  %

  
	

  67

  	

   

  	

  33.83

  	

  %

  
	

  68

  	

   

  	

  31.12

  	

  %

  
	

  69

  	

   

  	

  28.63

  	

  %

  
	

  70 or more

  	

   

  	

  25

  	

  %

  

 

(B)                                The

reduced amount determined in (1) shall be further reduced by a single sum

amount which is the Actuarial Equivalent of the Qualified Preretirement

Survivor Annuity, if any, payable with respect to the Participant under Sec.

5.10.

 

(3)                                  If

the Participant was under age 55 on the date of his death, the reduced amount

determined in paragraph (1) shall be further reduced by a single sum amount

which is the Actuarial Equivalent of the Qualified Preretirement Survivor

Annuity, if any, payable with respect to the Participant under Sec. 5.10.

 

(b)                                 However,

the amount of the death benefit may not exceed 100 times the Net Accrued

Monthly Pension the Participant would have had on his Normal Retirement Date if

he had continued working until said date at the same rate of Certified Earnings

as he was credited with for the Plan Year preceding the Plan Year in which his

death occurred.

 

(c)                                  The

death benefit under this section shall be paid in a single sum on a date

determined by the Committee which shall not be more than one year after the

date of the Participant’s death.

 

(d)                                 The

Participant’s “Beneficiary” is the person or persons, natural or otherwise,

designated by a Participant to receive any benefits payable under this

section.  A Participant who

 

28

 

has designated a Beneficiary may, without the consent of such

Beneficiary, alter or revoke such designation. 

To be effective, any such designation, alteration, or revocation shall

be in writing, in such form as the Company may prescribe, and shall be filed

with the Company prior to the Participant’s death.  If at the time of a Participant’s death there is not on file with

the Company a fully effective designation of his Beneficiary, or if the

designated Beneficiary does not survive the Participant, the Participant’s

Beneficiary shall be the person or persons surviving him in the first of the

following classes in which there is a survivor, share and share alike:

 

(1)                                  His

spouse.

 

(2)                                  His

children, except that if any of his children predecease him but leave

descendants surviving him such descendant shall take by right of representation

the share their parent would have taken if living.

 

(3)                                  His

parents.

 

(4)                                  His

brother and sisters.

 

(5)                                  His

personal representative (executor or administrator).

 

Determination of the identity of the Beneficiary in each case shall be

made by the Company.

 

(e)                                  If

the Participant was receiving disability benefits under any disability plan

sponsored by a Participating Employer at the time of his death, the

Participant’s Certified Earnings for purposes of subsection (a) of this section

shall not be less than his Certified Earnings for the twelve full calendar

months immediately preceding the month in which the disability commenced.

 

Sec. 5.12 

Suspension of Benefits and

Effect of Reemployment. 

If a Participant has a Termination of Employment, commences receiving

pension payments under the Plan, and is subsequently reemployed by a

Participating Employer, or if a Participant’s employment with a Participating

Employer continues after he attains Normal Retirement Age, the following shall

be applicable:

 

(a)                                  If

a Participant is reemployed by a Participating Employer, his pension payments

shall continue through the month in which he completes 1000 or more Hours of

Service during a Plan Year or portion thereof. 

After said month and prior to the month following his subsequent

Termination of Employment, pension payments that the Participant would otherwise

be entitled to receive for the following calendar months shall be permanently

withheld:

 

(1)                                  Each

calendar month ending prior to or with the Participant’s attainment of Normal

Retirement Age in which he completes one or more hours of service.

 

(2)                                  Each

calendar month ending after the Participant’s attainment of Normal Retirement

Age in which he completes 40 or more hours of service.

 

29

 

(b)                                 If

a Participant’s employment with a Participating Employer continues after he

attains Normal Retirement Age, his pension payments will be permanently

withheld for each calendar month in which he completes 40 or more hours of

service.

 

(c)                                  If

pension payments have been withheld pursuant to subsection (a)(2) or (b),

payments shall resume or commence no later than the first day of the third

calendar month following the last month subject to withholding.  The initial payment shall include the

payment for the month in which payments resume and any amounts withheld during

the period between the last month subject to withholding under subsection

(a)(2) or (b) and the resumption of payments, less any amounts which are

subject to offset.

 

(d)                                 If

a monthly pension payment is made for a calendar month and it later is

determined that such payment was subject to permanent withholding, the amount

of such payment shall be applied as an offset against subsequent monthly

payments unless the Participant has previously repaid the overpayment.  However, the amount of any such offset shall

not exceed, in any one month after the Participant attains Normal Retirement

Age, 25 percent of the monthly total benefit payment that would have been paid

but for the offset (excluding the initial payment described in subsection (c),

which is subject to offset without limitation).

 

(e)                                  The

Company shall notify a Participant of any suspension under subsection (a)(2) or

(b).  The notice shall conform to the

requirements of section 2530.203-3(b)(4) of the Department of Labor

Regulations.

 

(f)                                    If

the Participant was reemployed as a Qualified Employee prior to January 1,

2001, when the Participant’s benefit payments resume following any period of

suspension under subsection (a), the pension to which he is entitled under the

Plan shall be paid under the same form as previously in effect and shall be in

a monthly amount equal to the sum of (i) the monthly amount payable prior to

the suspension plus (ii) any additional amount based on his service during the

period of reemployment.  However,

notwithstanding any other provision of the Plan to the contrary, no additional

amount will be accrued for any Plan Year during the period of reemployment

prior to the earliest Plan Year therein during which the Participant completed

1000 or more hours of service.

 

(g)                                 If

the Participant was reemployed on or after January 1, 2001, when the

Participant’s benefit payments resume following any period of suspension under

subsection (a), the pension to which he is entitled under the Plan shall be

paid under the same form as previously in effect and shall be in a monthly

amount equal to the monthly amount payable prior to the suspension.  Notwithstanding any other provision of the

Plan to the contrary, no additional amount will be accrued for any Plan Year

during the period of reemployment.

 

(h)                                 “Hour

of service” for purposes of this section is as required to be counted as such

under sections 2530.200b-2(a)(1) and (2) of the Labor Department regulations.

 

(i)                                     The

provisions of this section shall be administered in accordance with section

2530.203-3 of the Department of Labor Regulations.

 

30

 

ARTICLE VI

 

ADDITIONAL

PROVISIONS REGARDING BENEFITS

 

Sec. 6.1 

Commencement Date for

Pension Payments. 

Pension payments under this Plan shall be subject to the following

rules:

 

(a)                                  Pension

payments shall commence at the earlier of the times specified in paragraph (1)

or (2) as follows:

 

(1)                                  As

soon as administratively feasible after the date specified by the applicable

Plan provision for the commencement of pension payments.

 

(2)                                  The

60th day after the close of the Plan Year in which the Participant reaches

Normal Retirement Age or has a Termination of Employment, whichever is later;

provided, however, that if the amount of the payment to be made cannot be

determined by the latest of said dates, a payment retroactive to such date may

be made no later than 60 days after the earliest date on which the amount of

such payment can be ascertained.

 

(b)                                 Notwithstanding

any provision of subsection (a) or Article V to the contrary, effective January

1, 1997, pension payments must commence or must recommence by April 1 following

the later of (i) the calendar year in which the Participant attains age 701⁄2, or

(ii) the calendar year in which the Participant’s Termination of Employment

occurs.  However, clause (ii) of the

previous sentence does not apply to any Participant who is a more than

5-percent owner of a Participating Employer (as defined in Code section 416)

with respect to the Plan Year ending in the calendar year in which the

Participant attained age 701⁄2.  A

Participant whose Termination of Employment has not occurred prior to April 1

of the calendar year following the year in which he attained age 701⁄2 may file a

written election with the Company to begin receiving pension payments as of the

first day of any month on or after said April 1st and prior to his actual

Termination of Employment pursuant to the provisions of the Plan as if his

Termination of Employment had occurred.

 

(c)                                  Effective

January 1, 1997, for purposes of determining the amount of the monthly pension

payments to a Participant who will receive pension payments pursuant to

subsection (b) while the Participant continues to be employed by a

Participating Employer, the calculation shall be based on the assumption that

the Termination of Employment occurred on March 31 of the calendar year

following the calendar year in which the Participant attained age 701⁄2 (or the

day before the commencement date elected by the Participant, if later).  The amount of the monthly payments in each

calendar year following the year in which payments commence shall be adjusted

to reflect any additional benefit accrued. 

The monthly amount shall be increased beginning with the monthly payment

for January of the calendar year immediately following the calendar year in

which the additional benefit accrues. 

If a Participant had begun receiving required minimum distributions

under this section prior to 1997, those distributions shall continue pursuant

to the provisions of this subsection (c), except to the extent modifications

are required by applicable laws or regulations.

 

31

 

Sec. 6.2 

Payment of Lump Sums and

Certain Consequences Thereof.  If the Actuarial Equivalent present value of an individual’s

entire vested benefit is $5,000 or less, the benefit shall be paid in a single

lump sum as soon as administratively feasible following the Participant’s

Termination of Employment (or in the case of a death benefit payable under

Article V, as soon as administratively feasible following the Participant’s

death).  If the Actuarial Equivalent

present value of an individual’s entire vested benefit is more than $5,000, (i)

a lump sum distribution may be elected as an optional settlement pursuant to

Sec. 5.9(c) by a Participant who had attained age 40 prior to January 1,

2001, and (ii) a lump sum distribution may be elected pursuant to this section

by a Participant who had not attained age 40 prior to January 1, 2001 if the

Actuarial Equivalent present value of the Participant’s entire vested benefit

payable as a life-only annuity commencing on the first day of the month

following the Participant’s Normal Retirement Date (or following the

Participant’s Late Retirement, in the case of a Participant who is older than

age 65 when payments would commence) is $10,000 or less.  Lump sum distributions are subject to the

following:

 

(a)                                  In

no event will a lump sum payment be made to or with respect to a Participant

after pension payments have commenced to or with respect to that Participant.  In any case in which a lump sum distribution

exceeds $5,000, the following requirements must be met:

 

(1)                                  If

the Participant is living, the distribution may be made only with his written

consent.

 

(2)                                  If

the Participant’s spouse is living, the distribution may be made only with the

spouse’s written consent.  Any such

consent shall be subject to the requirements of Sec. 5.8(h).

 

(b)                                 If

a distribution is made to the Participant of the Actuarial Equivalent present

value of his entire accrued pension under the Plan not later than the close of

the second Plan Year following the Plan Year in which the Participant’s

Termination of Employment occurs, or if such a distribution was made under the

Tennant Company Defined Benefit Retirement Plan prior to January 1, 2001,

service performed by the Participant with respect to which such distribution is

made shall be disregarded in determining his Years of Credited Service under

the Plan if he is reemployed.

 

(c)                                  If

the requirements of subsection (b) are not met, and the Participant is later

reemployed, his pension upon termination of said period of reemployment will be

reduced by the Actuarial Equivalent of the amount previously distributed to him

under this Plan or the Tennant Company Defined Benefit Retirement Plan.

 

(d)                                 If

a Participant who had not attained age 40 prior to January 1, 2001 has a

Termination of Employment prior to attainment of age 55, and if the Actuarial

Equivalent present value of the Participant’s entire vested benefit is more

than $5,000 but not more than $10,000, the Participant shall be eligible to

receive an immediate pension commencing on the first day of any month he elects

which is after his Termination of Employment but prior to his Normal Retirement

Date.  The pension payable under this

subsection shall be the Actuarial Equivalent (determined pursuant to Sec.

2.3(a)) of the Participant’s pension payable under Sec. 5.5 following his

Normal Retirement Date and shall be payable in any form the Participant elects

which is permitted under Sec. 5.5, Sec. 5.8 or Sec. 5.9.  Except as provided in this subsection, any

pension payable under this subsection shall be subject to all requirements of

the Plan, including the spousal consent requirements of Sec. 5.8.

 

32

 

(e)                                  If

the present value of a Participant’s vested accrued benefit is $0 upon his

Termination of Employment, the Participant shall be deemed to have received an

immediate lump sum distribution of $0, his prior service shall be disregarded

for purposes of determining his accrued benefit under the Plan, and he shall

thereupon cease to be a Participant for purposes of section 4006 of ERISA.  However, such a Participant who is

subsequently reemployed by a Participating Employer or an Affiliate before he has

incurred a period of five consecutive 1 - Year Breaks In Service shall be

deemed to make a repayment of the $0 distribution at the time of reemployment

and his prior service shall thereupon be reinstated.

 

(f)                                    The

Company may provide for payment annually, semiannually, or quarterly, on an

Actuarial Equivalent basis, of benefits which would otherwise be payable in

small amounts monthly for life or a period of years.

 

(g)                                 With

respect to lump sum distributions made under this section, notwithstanding any

provision of the Plan to the contrary that would otherwise limit a

distributee’s election, a distributee may elect, at the time and in the manner

prescribed by the Company, to have any portion of the distribution paid

directly to an eligible retirement plan specified by the distributee in a

direct rollover.  For the purposes of

this subsection:

 

(1)                                  An

“eligible retirement plan” is an individual retirement account described in

Code section 401(a), an individual retirement annuity described in Code section

408(b), an annuity plan described in Code section 403(a), or a qualified trust

described in Code section 401(a) with respect to a defined contribution plan,

that accepts the distributee’s distribution. Commencing January 1, 2002, an

eligible retirement plan also means an annuity contract described in Code

section 403(b) and an eligible plan under Code section 457(b) which is

maintained by a state, a political subdivision of a state, or any agency or

instrumentality of a state or political subdivision of a state and which agrees

to account separately for amounts transferred into such plan from this

Plan.  Prior to January 1, 2002, in the

case of a distribution to the surviving spouse, an eligible retirement plan is

limited to an individual retirement account or individual retirement annuity.

 

(2)                                  A

“distributee” includes a Participant or former Participant.  In addition, the Participant’s or former

Participant’s surviving spouse and the Participant’s or former Participant’s

spouse or former spouse who is the alternate payee under a qualified domestic

relations order, as defined in Code section 414(p), are distributees with

regard to the interest of the spouse or former spouse.

 

(3)                                  A

“direct rollover” is a payment by the Plan to the eligible retirement plan

specified by the distributee.

 

(4)                                  This

subsection does not apply to any portion of a lump sum distribution which is

required to be distributed under Code section 401(a)(9).

 

Sec. 6.3 

No Other Benefits.  No benefits other than those specifically

provided for herein are to be provided under the Plan.

 

33

 

Sec. 6.4 

Source of Benefits.  All benefits to which persons become

entitled hereunder shall be provided only out of the Trust and only to the

extent that the Trust is adequate therefor. 

No benefits are provided under the Plan except those expressly described

herein.

 

Sec. 6.5   Incompetent Payee.  If in the opinion of the Committee a person

entitled to payments hereunder is disabled from caring for his affairs because

of mental condition, physical condition, or age, payment due such person may be

made to such person’s guardian, conservator, or other legal personal

representative upon furnishing the Committee with evidence satisfactory to the

Committee of such status.  Prior to the

furnishing of such evidence, the Committee may cause payments due the person

under disability to be made, for such person’s use and benefit, to any person

or institution then in the opinion of the Committee caring for or maintaining

the person under disability.  The

Committee shall have no liability with respect to payments so made.  The Committee shall have no duty to make

inquiry as to the competence of any person entitled to receive payments

hereunder.

 

Sec. 6.6 

Assignment and Alienation

of Benefits.  Except

as otherwise expressly permitted by the Plan or required by law, including a

“qualified domestic relations order” as defined in ERISA, the interests of

persons entitled to benefits under the Plan may not in any manner whatsoever be

assigned or alienated, whether voluntarily or involuntarily, or directly or

indirectly.  The Committee shall

establish reasonable procedures to determine the qualified status of domestic

relations orders and to administer distributions under such qualified

orders.  Where payments are to be made

under a qualified domestic relations order before payments commence to the

Participant, the present value of the benefits actually accrued for the

Participant shall be determined on an Actuarial Equivalent basis.  Notwithstanding any other provisions of the

Plan to the contrary, all benefits otherwise payable under the Plan with

respect to a Participant shall be adjusted to the extent necessary to comply

with a qualified domestic relations order.

 

Sec. 6.7 

Payment of Taxes.  The Trustee may pay any estate, inheritance,

income, or other tax, charge, or assessment attributable to any benefit payable

hereunder which in the Trustee’s opinion it shall be or may be required to pay

out of such benefit.  The Trustee may

require, before making any payment, such release or other document from any

taxing authority and such indemnity from the intended payee as the Trustee

shall deem necessary for its protection.

 

Sec. 6.8 

Conditions Precedent.  No person shall be entitled to a benefit

hereunder until his right there to has been finally determined by the Committee

nor until he has submitted to the Committee relevant data reasonably requested

by the Committee, including, but not limited to, proof of birth or death.

 

Sec. 6.9 

Committee Directions to Trustee.  The Committee shall issue such written

directions to the Trustee as are necessary to accomplish distributions to the

Participants and beneficiaries in accordance with the provisions of the Plan.

 

Sec. 6.10 

Benefits Not Increased by

Actuarial Gains. 

Forfeitures arising from severance of employment, death, or for any

other reason shall not be applied to increase the benefits that any person

would otherwise receive under the Plan at any time prior to the termination of

the Plan or the complete discontinuance of employer contributions thereunder.

 

Sec. 6.11 

Maximum Limitations on Benefits.  Notwithstanding any provision of the Plan to

the contrary, a Participant’s benefit under the Plan shall not exceed the

maximum amount permitted under Code section 415.  For purposes of applying the preceding sentence to Plan Years

beginning on or after January 1, 2002:

 

34

 

(a)                                  The

projected annual pension for any Plan Year with respect to a Participant whose

benefit has not yet commenced, and the annual pension paid during any Plan Year

to a Participant whose benefit has commenced, may not exceed the lesser of:

 

(1)                                  $160,000.  Effective January 1, 2003, and each January

1 thereafter, this amount shall be automatically adjusted by multiplying such

limit by the cost of living adjustment factor prescribed by the Secretary of

the Treasury under Code section 415(d) in such manner as the Secretary shall

prescribe.  The new limitation shall

apply to Plan Years ending within the calendar year of the date of the

adjustment.

 

(2)                                  100%

of the Participant’s average Compensation for his high three consecutive years

of employment.

 

(b)                                 If

a Participant’s benefit is paid in any form other than a straight life annuity

or a Qualified Joint and Survivor Annuity, such benefit shall be converted on

an Actuarial Equivalent basis to a straight life annuity beginning at the same

age for purposes of applying the limitation in subsection (a).

 

(c)                                  If

a Participant’s benefit commences before the Participant attains age 62, the

dollar limitation in subsection (a)(1) (as reduced in (e), below, if necessary)

shall be reduced for each month by which benefits commence before the month in

which the Participant attains age 62 so that it is the Actuarial Equivalent of

an annual benefit equal to such limitation commencing at age 62.

 

(d)                                 If

the Participant’s benefit commences after the Participant attains age 65, the

dollar limitation in subsection (a)(1) (as reduced in (e), below, if necessary)

shall be increased so that it is the Actuarial Equivalent of a benefit of such

dollar limitation commencing at age 65.

 

(e)                                  If

a Participant has less than ten years of participation in this Plan, the limit

referred to in subsection (a)(1) shall be reduced by multiplying that limit by

a fraction, the numerator of which is the number of years (or part thereof) of

participation (not to exceed ten and not to be less than one) in this Plan and

the denominator of which is ten.

 

(f)                                    If

a Participant has less than ten years of service with the employer, the limit

referred to in subsection (a)(2) shall be reduced by multiplying that limit by

a fraction, the numerator of which is the number of years (or part thereof) of

service (not to exceed ten and not to be less than one) with the employer and

the denominator of which is ten.

 

(g)                                 To

the extent provided in Treasury regulations, the provisions of subsections (e)

and (f) shall be applied separately with respect to each change in the benefit

structure of the Plan.

 

(h)                                 If

a Participant is or has been covered under more than one defined plan

maintained by a Participating Employer or an Affiliate, the sum of the

Participant’s annual benefits under all such plans may not exceed the maximum

amount permitted under this section. To the extent necessary to comply with

such limitation, the benefits under all such plans shall be reduced on a pro

rata basis.  For Plan Years commencing

in 2002 or later, any 

 

35

 

                                                multiemployer

plan shall be disregarded for purposes of applying the limit under subsection

(a)(2).

 

(i)                                     For

purposes of this section, “Compensation” means a Participant’s earned income,

wages, salaries, and other amounts received (without regard to whether or not an

amount is paid in cash) for personal services actually rendered in the course

of employment with his Participating Employer or an Affiliate to the extent

that the amounts are includible in gross income (including, but not limited to,

commissions paid salespersons, compensation for services on the basis of a

percentage of profits, commissions on insurance premiums, tips, bonuses, fringe

benefits, and reimbursements or other expense allowances under a nonaccountable

plan described in Treasury Regulation § 1.62-2(c)), and excluding the

following:

 

(1)                                  Employer

contributions to a plan of deferred compensation which are not includible in

the Participant’s gross income for the taxable year in which contributed,

employer contributions under a simplified employee pension plan to the extent

such contributions are deductible by the Participant, and any distributions

from a plan of deferred compensation. 

However, any amounts received by a Participant pursuant to an unfunded

non-qualified plan of deferred compensation are Compensation in the year such

amounts are includible in the Participant’s gross income.  Notwithstanding the foregoing, for Plan

Years commencing on or after January 1, 1998, Compensation includes any

elective deferrals which are not includible in the gross income of the employee

under Code sections 125, 401(k), 402(h)(1)(B), 403(b) or 457 (or under Code

section 132(f)(4) commencing January 1, 2001).

 

(2)                                  Amounts

realized from the exercise of a non-qualified stock option, or when restricted

stock (or property) held by the Participant either becomes freely transferable

or is no longer subject to a substantial risk of forfeiture.

 

(3)                                  Amounts

realized from the sale, exchange, or other disposition of stock acquired under

a qualified stock option.

 

(4)                                  Other

amounts which received special tax benefits.

 

Sec. 6.12 

Restrictions on Benefits

for Highly Compensated Employees. 

Notwithstanding any other provisions of the Plan, the benefits payable

under the Plan shall be limited in each case to the extent necessary to qualify

the Plan under the applicable provisions of Code section 401(a).  Without limiting the generality of the

foregoing:

 

(a)                                  In

the event the Plan is terminated, the benefit of any highly compensated

employee (within the meaning of Code section 414(q)) and any highly compensated

former employee (within the meaning of Code section 414(q)(9)) shall be limited

to a benefit that is nondiscriminatory under Code section 401(a)(4), in

accordance with Treasury Regulation section 1.401(a)(4)-5(b)(2).

 

(b)                                 The

total payments made under the Plan in any Plan Year to or on behalf of a

restricted employee shall not exceed an amount equal to the payments that would

be made to or on behalf of the restricted employee in that Plan Year under a

single life annuity that is the Actuarial Equivalent of the accrued benefit and

other benefits (within the meaning of

 

36

 

Treasury Regulation section 1.401(a)(4)-5(b)(3)(iii)) to which the

restricted employee is entitled under the Plan; provided, however, that this

limitation shall not apply in any Plan Year in which any one of paragraphs (1),

(2), or (3) below is satisfied.

 

(1)                                  This

paragraph is satisfied if, after taking into account payment of all benefits

under the Plan payable to or on behalf of the restricted employee, the value of

Plan assets equals or exceeds 110 percent of the value of current liabilities

(within the meaning of Code section 412(l)(7)) of the Plan.

 

(2)                                  This

paragraph is satisfied if the value of the benefits under the Plan payable to

or on behalf of the restricted employee is less than one percent of the value

of current liabilities (within the meaning of Code section 412(l)(7)) of the

Plan.

 

(3)                                  This

paragraph is satisfied if the value of the benefits under the Plan payable to

or on behalf of the restricted employee does not exceed $5,000

 

(c)                                  For

purposes of this section, the term “restricted employee” for a Plan Year means

any highly compensated employee (within the meaning of Code section 414(q)) or

highly compensated former employee (within the meaning of Code section

414(q)(9)) who is one of the 25 nonexcludable employees or former employees of

the Participating Employers or any Affiliate with the largest amount of

compensation in the current Plan Year or any prior Plan Year.

 

(d)                                 These

conditions shall not restrict the full payment of any benefits payable on

account of the death of a Participant who dies while the Plan is in effect.

 

(e)                                  This

section is included herein solely to meet the requirements of Treasury

Regulation section 1.401(a)(4)-5(b), and the conditions and limitations

contained in this section shall not preclude settlements with Participants that

comply with the requirements of such regulation.  This section shall cease to be effective at such time as the

provisions of Treasury Regulation section 1.401(a)(4)-5(b) or any substitute

therefor are no longer effective or applicable.

 

(f)                                    A

restricted employee’s benefit may be distributed in full if prior to receipt of

the restricted amount, the employee enters into a written agreement with the

Company to secure repayment to the Plan of the restricted amount.  The restricted amount is the excess of the

amounts distributed to the employee (accumulated with reasonable interest) over

the amounts that could have been distributed to the employee under the single

life annuity described in subsection (b) (accumulated with reasonable

interest).  Subject to paragraphs

(1)-(4), below, the employee may secure repayment of the restricted amount by

(i) entering into an agreement for promptly depositing in escrow with an

acceptable depository property having a fair market value equal to at least 125

percent of the restricted amount, (ii) providing a bank letter of credit in an

amount equal to at least 100 percent of the restricted amount, or (iii) posting

a bond equal to at least 100 percent of the restricted amount.

 

(1)                                  If

the employee elects to post bond, the bond will be furnished by an insurance

company, bonding company, or other surety for federal bonds.

 

37

 

(2)                                  The

escrow arrangement may provide that an employee may withdraw amounts in excess

of 125 percent of the restricted amount. 

If the market value of the property in an escrow account falls below 110

percent of the remaining restricted amount, the employee must deposit

additional property to bring the value of the property held by the depository

up to 125 percent of the restricted amount. 

The escrow arrangement may provide that the employee may have the right

to receive any income from the property placed in escrow, subject to the

employee’s obligation to deposit additional property, as set forth in the

preceding sentence.

 

(3)                                  A

surety or bank may release any liability on a bond or letter of credit in excess

of 100 percent of the restricted amount.

 

(4)                                  If

the Company certifies to the depository, surety, or bank that the employee (or

employee’s estate) is no longer obligated to repay any restricted amount, a

depository may redeliver to the employee any property held under an escrow

agreement, and a surety or bank may release any liability on an employee’s bond

or letter of credit.

 

Sec. 6.13 

Effect on Unemployment

Compensation.  For

purposes of any unemployment compensation law, a distribution hereunder in one

sum shall be considered to be a severance payment and allocated over a period

of weeks equal to one sum payment divided by the employee’s regular weekly pay

while employed by a Participating Employer, which period shall commence

immediately following the employee’s Termination of Employment.

 

Sec. 6.14 

Distributions Made in

Accordance with Code Section 401(a)(9).  Notwithstanding any provision of the Plan to

the contrary, distributions hereunder shall be made in accordance with the

requirements of Code section 401(a)(9) and regulations thereunder, including

Regulation §1.41(a)(9)-2.  Any

provisions of the Plan that are inconsistent with Code section 401(a)(9) and

the regulations thereunder shall be deemed inoperative.

 

Sec. 6.15 

Inability to Locate Distributee.  If all or any portion of the benefit of a

Participant, joint annuitant, or Beneficiary cannot be distributed solely

because of the inability of the Company to determine the whereabouts of the

distributee, after mailing a letter by first class mail to the last known

address of the distributee, and after such further diligent effort as the

Company determines is appropriate, and either (i) the Participant has attained

age 65, or has died, or (ii) the benefit is distributable pursuant to Sec. 6.2

without the consent of the distributee, or (iii) the distributee consented in

writing to receive a distribution, the benefit that cannot be distributed shall

be forfeited.  In the event the

distributee is located after a forfeiture has occurred under this section, the

individual’s benefit shall be restored, and the individual shall be paid any

amount that would have been required by law to have been paid prior to the date

the benefit is restored, but without any interest or other adjustment for any

period prior to the date the benefit is restored.

 

38

 

ARTICLE VII

 

TRUST

 

Sec. 7.1 

Composition.  All sums of money and all securities and

other property received by the Trustee for purposes of the Plan, together with

all investments made therewith, the proceeds thereof, and all earnings and

accumulations thereon, and the part from time to time remaining shall

constitute the “Trust”.  Although the

term “Trust” is used, part or all of said assets may be held by an insurance

company pursuant to a group annuity contract between the Company and the

insurance company.  All contributions of

the Company to the Trust may be commingled for investment without distinction

between principal and income.

 

Sec. 7.2 

Trustee or Other Funding Agency.  The Trust may be held and invested as one

fund or may be divided into any number of parts for investment purposes.  Each part of the Trust, or the entire Trust

if it is not divided into one or more parts for investment purposes, shall be

held and invested by one or more Trustees pursuant to the trust agreement

entered into by the Company and said Trustee or Trustees or held and invested

by an insurance company pursuant to an annuity contract entered into by the

Company and said insurance company.  The

selection and appointment of each Trustee or insurance company shall be made by

the Company.  The Company shall have the

right at any time to remove a Trustee or insurance company and appoint a

successor thereto, subject to the terms of any applicable trust agreement or

group annuity contract.  The Company

shall have the right to determine the form and substance of each trust

agreement and group annuity contract under which any part of the Fund is held,

subject only to the requirement that they are not inconsistent with the

provisions of the Plan. Action on behalf of the Company pursuant to the

foregoing provisions of this section may be taken only by the Board or by a

person or persons so authorized by resolution of the Board.

 

Any such trust agreement may contain provisions pursuant to which (i)

the Trustee will make investments on direction of an investment manager

appointed by the Committee or (ii) the Trustee will enter into an annuity

contract with an insurance company and transfer assets to said insurance

company pursuant to directions by the Committee.

 

Sec. 7.3 

Compensation and Expenses

of Trustee; Other Expenses. 

The Trustee shall be entitled to receive such reasonable compensation

for its services as may be agreed upon with the Company.  The Trustee shall also be entitled to

reimbursement for all reasonable and necessary costs, expenses, and

disbursements incurred by it in the performance of its services.  Such compensation and reimbursements shall

be paid from the Trust if not paid directly by the Company.  The Company or the Committee may obtain

reimbursement from the Trust for expenses incurred in connection with

administration of the Plan.  The Company

or Committee may also direct the Trustee to make payment from the Trust to third

parties for expenses incurred in connection with administration of the

Plan.  However, no person who is a

full-time employee of the Company may receive compensation from the Trust,

except for reimbursement of expenses properly and actually incurred.

 

Sec. 7.4 

Securities and Property of

the Company.  An

agreement with a Trustee may provide that the Trust may be invested in

qualifying employer securities or qualifying employer real property, as those

terms are used in ERISA, and to the extent permitted by said Act.  If qualifying employer securities or

qualifying employer real property are purchased or sold as an investment of the

Trust from or to a disqualified person or party in interest, as those terms are

used in the aforesaid Act, and if there is no generally recognized market for

such securities or property, the purchase shall be for not more than fair

market value and the sale shall be for not less than fair market value, as

determined in 

 

39

 

good faith by the

Company or other Named Fiduciary assigned such function, or if the trust

agreement so provides, as determined in good faith by the Trustee.

 

Sec. 7.5 

No Diversion.  The Trust shall be for the exclusive purpose

of providing benefits to Participants under the Plan and their beneficiaries

and defraying reasonable expenses of administering the Plan.  Such expenses may include premiums for the

bonding of Plan officials required by ERISA, and may also include premiums

payable with respect to the Plan to the Pension Benefit Guaranty Corporation

other than premiums for contingent liability coverage.  No part of the corpus or income of the Trust

may be used for, or diverted to, purposes other than for the exclusive benefit

of employees of Participating Employers or their beneficiaries.  Notwithstanding the foregoing:

 

(a)                                  If

any contribution or portion thereof is made by a Participating Employer by a

mistake of fact, the Trustee shall, upon written request of the Participating

Employer, return such contribution or portion thereof to the Participating

Employer within one year after the payment of the contribution to the Trustee;

however, earnings attributable to such contribution or portion thereof shall

not be returned to the Participating Employer but shall remain in the Trust,

and the amount returned to the Participating Employer shall be reduced by any

losses attributable to such contribution or portion thereof.

 

(b)                                 Contributions

by a Participating Employer are conditioned upon the deductibility of each contribution

under Code section 404.  To the extent

the deduction is disallowed, the Trustee shall, upon written request of the

Participating Employer, return such contribution to the Participating Employer

within one year after the disallowance of the deduction; however, earnings

attributable to such contribution (or the disallowed portion thereof) shall not

be returned to the Participating Employer but shall remain in the Trust, and

the amount returned to the Participating Employer shall be reduced by any losses

attributable to such contribution (or disallowed portion thereof).

 

(c)                                  If,

in the case of termination of the Plan as to a Participating Employer, any

residual assets attributable to such Participating Employer remain in the Trust

after all liabilities of the Plan to Participants of such Participating

Employer and their beneficiaries have been satisfied, such residual assets

shall be returned to such Participating Employer.

 

Sec. 7.6 

Employer Contributions.

The Participating Employers shall make such contributions to the Trust from

time to time as they consider advisable which shall not be less than the

minimum contributions required by ERISA.

 

40

 

ARTICLE VIII

 

ACTUARY

 

Sec. 8.1 

Appointment.  The Committee shall appoint as Actuary

hereunder an individual who is an enrolled actuary as defined in ERISA or a

partnership, corporation, or other organization which has as a partner or

employee thereof such an enrolled actuary.

 

Sec. 8.2 

Responsibilities.  The Actuary shall have the responsibilities

expressly allocated to it hereunder and shall have such other responsibilities

with respect to the Plan as may be agreed upon by the Committee and the

Actuary.

 

Sec. 8.3 

Compensation.  The Actuary shall receive such reasonable

compensation for its services hereunder as may be agreed upon by the Committee

and the Actuary.  To the extent not paid

from the Fund, such compensation shall be paid by the Participating Employers

in such proportions as the Company shall determine.

 

Sec. 8.4  Resignation, Removal, and

Successor.  Any agreement

between the Committee and the Actuary for services hereunder may be terminated

by either party on 30 days written notice to the other.  In the event of a vacancy in the office of

Actuary, the Committee shall appoint a successor.

 

41

 

ARTICLE IX

 

COMMITTEE

 

Sec. 9.1 

Membership and Responsibility.  The general administration of the Plan,

except as otherwise specifically provided herein, shall be placed in a

Committee of not less than three members appointed from time to time by the

Company, by action of the Board, to serve at the pleasure of said Board.  The members may, but need not be

shareholders, directors or employees of the Company or an Affiliate.  Any member of the Committee may resign by

notice in writing delivered to the Board and to the secretary of the Committee,

such resignation to become effective at delivery or at any later date specified

therein.  Except as expressly otherwise

provided herein, the Committee shall control and manage the operation and

administration of the Plan and make all decisions and determinations incident

thereto.  In carrying out its Plan

responsibilities, the Committee shall have full discretionary authority to make

factual determinations concerning eligibility for benefits or the amount of any

benefits and to construe the terms of the Plan.  It is intended that the Committee have discretion to the fullest

extent permitted by law and that the Committee’s exercise of its discretion be

given deference to the greatest extent allowed under the law.  This discretion includes, but is not limited

to, the authority to make any rules, regulations or computations that the Committee

deems necessary to administer the Plan.

 

Sec. 9.2 

Organization of Committee.  The Committee shall elect a chairman, who

shall be one of the members of the Committee, and shall elect a secretary, who

may but need not be one of the members of the Committee.

 

Sec. 9.3 

Meetings and Actions of

Committee.  The

Committee shall hold such meetings, upon such notice, at such place or places,

and at such time or times as it may from time to time determine.  A majority of the members of the Committee

at the time in office shall constitute a quorum for the transaction of

business.  All resolutions adopted or

other actions taken by the Committee at a meeting shall be by vote of the

majority of the members of the Committee at the time in office.  Action by the Committee may be taken without

a formal meeting by the written authorization of a majority of the members of

the Committee at the time in office. 

The Committee may authorize one or more of its members or any agent to

sign and deliver on its behalf directions, instructions, notices, certificates,

consents, approvals, waivers, or other documents.  The certificate of the secretary of the Committee or of the

majority of the members of the Committee that the Committee has taken or

authorized any action shall be conclusive in favor of any person acting in

reliance thereon.  No member of the

Committee shall vote or otherwise participate in the consideration or

determination by the Committee of any matters solely concerning the rights or

interest of such member as a Participant hereunder.

 

Sec. 9.4 

Outside Assistance.  The Committee may retain counsel (who may be

counsel for the Company), employ agents, and provide for such clerical,

accounting, investment, and other services as it may require in carrying out

its responsibilities under the Plan.

 

Sec. 9.5 

Powers of Committee.  The Committee shall have full power and

authority to take any action it is specifically required or permitted to take

under the provisions of the Plan and in addition thereto shall have the sole

and exclusive power and authority subject to the limitations of the Plan:

 

(a)                                  For

Plan administration:

 

(1)                                  To

adopt rules and regulations, not inconsistent with the purposes and specific

provisions of the Plan, for its administration;

 

42

 

(2)                                  To

interpret and construe the provisions of the Plan;

 

(3)                                  To

determine from time to time the status of all parties for the purposes of the

Plan;

 

(4)                                  To

determine the rights of Participants to benefits under the Plan and the method

and time or times of payment of the same;

 

The foregoing determinations by the Committee shall be based on the

books and records of the Company and Affiliates as applicable, kept in the

regular course of business and such other sources as the Committee may consider

to be reliable.

 

(b)                                 For

Plan funding:

 

(1)                                  To

establish and carry out a funding policy and method consistent with the means

and objectives of the Plan and with the requirements of ERISA.

 

(2)                                  To

communicate said policy and method to each Trustee and Investment Manager.

 

(3)                                  To

appoint an Actuary pursuant to Article VIII.

 

(c)                                  For

investment management:

 

(1)                                  To

establish an investment program strategy and supporting investment guidelines

and criteria for communication to the Trustee or investment manager consistent

with the funding policy of the Plan.

 

(2)                                  To

allocate investment responsibility for Plan assets among investment managers in

accordance with the requirements of established funding policy and investment

program strategies.

 

(3)                                  To

select and appoint investment managers and to assign said managers specific

investment programs as determined by established investment guidelines and

criteria.

 

(4)                                  To

direct the Trustee to enter into an annuity contract with an insurance company,

to determine the form of said contract, and to direct the Trustee to transfer

assets to the insurance company pursuant to said contract.

 

(d)                                 For

delegation of powers: To appoint employees of the Company to carry out any of

the aforesaid powers of the Committee.

 

Sec. 9.6 

Compensation, Expenses, and Bonds.  No member of the committee shall receive any

compensation for his services as such, but the Company shall reimburse the

Committee and the members thereof for all expenses, including counsel and other

fees, incurred or paid by them or any of them in carrying out the

responsibilities of the Committee under the Plan.  The Company may also pay any such expenses directly.  The members of the Committee shall furnish such

bonds as the Company may require.

 

43

 

ARTICLE X

 

ADMINISTRATION OF PLAN

 

Sec. 10.1 

Certain Fiduciary Provisions.  For purposes of the Plan:

 

(a)                                  Any

person or group of persons may serve in more than one fiduciary capacity with

respect to the Plan.

 

(b)                                 A

Named Fiduciary, or a fiduciary designated by a Named Fiduciary pursuant to the

provisions of the Plan, may employ one or more persons to render advice with

regard to any responsibility such fiduciary has under the Plan.

 

(c)                                  At

any time that the Plan has more than one Named Fiduciary, if pursuant to the

Plan provisions fiduciary responsibilities are not already allocated among such

Named Fiduciaries, the Company, by action of the Board or chief executive

officer, may provide for such allocation; except that such allocation shall not

include any responsibility, if any, in a trust agreement to manage or control

the assets of the Plan other than a power under the trust agreement to appoint

an investment manager as defined in ERISA.

 

(d)                                 Unless

expressly prohibited in its appointment, a Named Fiduciary which is not the

Company may designate a person or persons other than such Named Fiduciary to

carry out any or all of the fiduciary responsibilities under the Plan of such

Named Fiduciary; except that such designation shall not include any

responsibility, if any, in a trust agreement to manage or control the assets of

the Plan other than a power to appoint an investment manager as defined in

ERISA.

 

(e)                                  A

person who is a fiduciary with respect to the Plan, including a Named

Fiduciary, shall be recognized and treated as a fiduciary only with respect to

the particular fiduciary functions as to which such person has responsibility.

 

Each Named

Fiduciary (other than the Company), each other fiduciary, each person employed

pursuant to subsection (b) above, and each investment manager shall be entitled

to receive reasonable compensation for services rendered, or for the

reimbursement of expenses properly and actually incurred in the performance of

their duties with the Plan and to payment therefor from the Trust if not paid

directly by the Participating Employers. 

However, no person so serving who already receives full-time pay from a

Participating Employer shall receive compensation from the Plan, except for

reimbursement of expenses properly and actually incurred.

 

Sec. 10.2 

General Fiduciary Standard.  Each Fiduciary shall discharge his duties

with respect to the Plan solely in the interests of Participants and their

beneficiaries and with the care, skill, prudence, and diligence under the circumstances

then prevailing that a prudent man acting in a like capacity and familiar with

such matters would use in the conduct of an enterprise of a like character and

with like aims.

 

Sec. 10.3 

Discrimination Prohibited.  No person or persons in exercising

discretion in the operation and administration of the Plan shall discriminate

in favor of highly compensated employees (as defined in Code section 414(q).

 

44

 

Sec. 10.4 

Evidence.  Evidence required of anyone under this Plan

may be by certificate, affidavit, document, or other instrument which the

person acting in reliance thereon considers to be pertinent and reliable and to

be signed, made or presented to the proper party.

 

Sec. 10.5 

Correction of Errors.  It is recognized that in the operation and

administration of the Plan certain mathematical and accounting errors may be

made or mistakes may arise by reason of factual errors in information supplied

to or generated by the Committee or the Trustee.  The Committee shall have power to cause such equitable

adjustments to be made to correct for such errors as the Committee in its

discretion considers appropriate.  Such

adjustments shall be final and binding on all persons.

 

Sec. 10.6 

Claims Procedure.  The Committee shall establish a claims

procedure consistent with the requirements of ERISA.  Such claims procedure shall provide adequate notice in writing to

any Participant or beneficiary whose claim for benefits under the Plan has been

denied, setting forth the specific reasons for such denial, written in a manner

calculated to be understood by the claimant and shall afford a reasonable

opportunity to a claimant whose claim for benefits has been denied for a full

and fair review by the appropriate Named Fiduciary of the decision denying the

claim.

 

Sec. 10.7 

Bonding.  Plan personnel shall be bonded to the extent required by

ERISA.  Premiums for such bonding may,

in the sole discretion of the Company, be paid in whole or in part from the Fund.  Such premiums may also be paid in whole or

in part by the Participating Employers in such proportions as the Company shall

determine.  The Company may provide by

agreement with any person that the premium for required bonding shall be paid

by such person.

 

Sec. 10.8 

Waiver of Notice.  Any notice required hereunder may be waived

by the person entitled thereto.

 

Sec. 10.9 

Agency For Legal Process.  The Company shall be the agent for service

of legal process with respect to any matter concerning the Plan, unless and

until the Company designates some other person as such agent.

 

Sec. 10.10   Indemnification.  In addition to any other applicable

provisions for indemnification, the Participating Employers jointly and

severally agree to indemnify and hold harmless, to the extent permitted by law,

each director, each officer, each employee of the Participating Employers, and

each member of the Committee against any and all liabilities, losses, costs, or

expenses (including legal fees) of whatsoever kind and nature which may be imposed

on, incurred by, or asserted against such person at any time by reason of such

person’s services as a fiduciary in connection with the Plan, but only if such

person did not act dishonestly, or in bad faith, or in willful violation of the

law or regulations under which such liability, loss, cost or expense arises.

 

Sec. 10.11  Records.  Each Participating Employer, each fiduciary

with respect to the Plan, and each other person performing any functions in the

operation or administration of the Plan or the management or control of the

assets of the Plan shall keep such records as may be necessary or appropriate

in the discharge of their respective functions hereunder, including records

required by ERISA or any other applicable law. 

Records shall be retained as long as necessary for the proper

administration of the Plan and at least for any period required by ERISA or

other applicable law.

 

Sec. 10.12  Prohibited

Transactions.  A

fiduciary with respect to the Plan shall not cause the Plan to engage in any

prohibited transaction within the meaning of ERISA.

 

45

 

Sec. 10.13  Actions

Against the Secretary of Labor.  Under ERISA the Administrator of the Plan may bring suit to

review a final order of the Secretary of Labor, to restrain said Secretary of

Labor from taking any actions contrary to the provisions of ERISA, or to compel

said Secretary to take any action required under Title I of said Act.  If the Administrator of the Plan acting in

good faith brings any such suit in connection with any matter affecting the

Plan, the costs and expenses (including legal fees) of such suit may be paid

from the Fund.

 

Sec. 10.14  Effect

of Criminal Conviction. 

Persons who have been convicted of a crime shall not be permitted to

serve as Administrator, fiduciary, officer, trustee, custodian, counsel, agent,

or employee of or as a consultant to the Plan, if prohibited from so serving by

ERISA.

 

46

 

ARTICLE XI

 

AMENDMENT,

TERMINATION, MERGER

 

Sec. 11.1 

Amendment. 

Subject to the non-diversion provisions of Sec. 7.5, the Company, by

action of the Board, or by action of a person so authorized by resolution of

the Board, may amend the Plan at any time and from time to time.  No amendment of the Plan shall have the

effect of changing the rights, duties, and liabilities of any Trustee without

its written consent.  The Company agrees

that promptly upon adoption of any amendment to the Plan it will furnish a copy

of the amendment together with a certificate evidencing its due adoption, to

each Trustee then acting.  Except as

otherwise expressly provided by the amendment, an amendment to the Plan shall

not be applicable in determining a Participant’s benefit unless that

Participant was actively working for the Company or an Affiliate on or after

the effective date of the amendment.

 

Sec. 11.2 

Discontinuance of Joint

Participation in Plan by a Participating Employer.  A Participating Employer, by action of its

board of directors and on appropriate written notice to the Company and each

Trustee then acting, may discontinue its joint participation in the Plan with

the other Participating Employers.  The

Company shall cause a determination to be made of the equitable part of the

Trust assets held on account of Participants of the withdrawing employer and

their beneficiaries.  The Company shall

direct the Trustee to transfer assets representing such equitable part to a

separate fund for the plan of the withdrawing employer; provided, however, that

such transfer shall be made only if and when the Company in its sole judgment

is satisfied that the transfer can be made in full compliance with the

applicable requirements of ERISA.  Such

withdrawing employer may thereafter exercise, in respect of such separate fund,

all the rights and powers reserved to the Company with respect to the

Trust.  The plan of the withdrawing

employer shall, until amended by the withdrawing employer, continue with the

same terms as the Plan herein, except that with respect to the separate plan of

the withdrawing employer the words “Participating Employer”, “Participating

Employers”, and “Company” shall thereafter be considered to refer only to the

withdrawing employer.  Any discontinuance

of participation by a Participating Employer shall be effected in such manner

that each Participant or beneficiary would (if the Plan and the plan of the

withdrawing employer then terminated) receive a benefit immediately after such

discontinuance of participation which is equal to or greater than the benefit

he would have been entitled to receive immediately before such discontinuance

of participation if the Plan had then terminated.  No transfer of assets pursuant to this section shall be effected

until such statements with respect thereto, if any, required by ERISA to be

filed in advance thereof have been filed.

 

Sec. 11.3 

Reorganizations of

Participating Employers. 

In the event two or more Participating Employers shall be consolidated

or merged or in the event one or more Participating Employers shall acquire the

assets of another Participating Employer, the Plan shall be deemed to have

continued, without termination and without a complete discontinuance of

contributions, as to all the Participating Employers involved in such

reorganization and their employees.  In

such event, in administering the Plan the corporation resulting from the

consolidation, the surviving corporation in the merger, or the employer

acquiring the assets shall be considered as a continuation of all of the

Participating Employers involved in the reorganization.

 

Sec. 11.4 

Termination.  The Plan may be terminated by action of all

of the Participating Employers jointly participating therein at the time by

action of their respective boards of directors.  An employer which has discontinued its joint participation in the

Plan with the other Participating Employers shall also have the right to

terminate its separate plan which resulted from such discontinuance at any time

by action of its board of directors. 

Any such voluntary termination of the Plan, or separate plan, shall be

made in compliance with all applicable provisions of ERISA.  The Plan or separate plan, may

 

47

 

also be terminated by

action of the Pension Benefit Guaranty Corporation pursuant to the provisions

of said Act.  Upon termination of the

Plan, or separate plan, the following shall be applicable:

 

(a)                                  No

further benefits shall accrue under the terminated Plan, and the rights of each

employee thereunder to benefits accrued to the date of such termination, to the

extent then funded, shall be nonforfeitable, provided, however, that the sole

recourse for satisfaction of such rights shall be to the Trust and where

applicable, to the Pension Benefit Guaranty Corporation.

 

(b)                                 The

Trustee shall receive for the Trust of the applicable terminated plan any

amount recovered under section 4045 of ERISA.

 

(c)                                  The

Trustee shall deduct from the Trust of the terminated Plan its compensation,

expenses properly chargeable thereto, and any and all taxes that may be imposed

upon the Trust by virtue of the termination of the Plan or otherwise; provided,

however, that the Trustee may accept such reasonable indemnity therefor from

the Participating Employers as the Trustee shall specify.

 

(d)                                 If

adequate the Trust of the terminated Plan shall then be applied to provide, in

accordance with the provisions of such terminated plan as in effect at the time

of such termination, all benefits accrued to the date of such termination

whether vested or not.

 

(e)                                  If

the Trust of the terminated plan is not adequate to provide all benefits

accrued to the date of termination, the assets of the Trust of the terminated

plan shall be allocated to provide benefits in the following order of priority

subject to any applicable regulations promulgated by the Pension Benefit

Guaranty Corporation or the Secretary of the Treasury or his delegate:

 

(1)                                  In

the case of benefits payable as an annuity:

 

(A)                              In

the case of the benefit of a Participant or beneficiary which was in pay status

as of the beginning of the 3-year period ending on the termination date of the

Plan, to provide each such benefit, based on the provisions of the Plan (as in

effect during the 5-year period ending on such date) under which such benefit

would be the least.  The lowest benefit

in pay status during the 3-year period shall be considered the benefit in pay

status for such period.

 

(B)                                In

the case of the benefit of a Participant or beneficiary (other than a benefit

described in subparagraph (A) above) which would have been in pay status as of

the beginning of the 3-year period ending on the termination date of the Plan

if the Participant had retired prior to the beginning of the 3-year period and

if his benefits had commenced as a life only annuity as of the beginning of

such period, to provide each such benefit based on the provisions of the Plan

(as in effect during the 5-year period ending on such date) under which such

benefit would be the least.

 

(2)                                  To

provide all other benefits, if any, of individuals under the Plan guaranteed

under ERISA (determined without regard to section 4022(b)(5) of said Act), and

the additional benefits, if any, which would be so provided if section

4022(b)(6) 

 

48

 

                                                of said

Act did not apply.  In determining such

benefits, section 4021 of said Act shall be applied without regard to

subsection (c) thereof.

 

(3)                                  To

provide all other nonforfeitable benefits under the Plan. If the assets

available are not sufficient to satisfy in full such benefits:

 

(A)                              The

assets shall be allocated to provide individuals with such benefits accrued

under the Plan as in effect at the beginning of the 5-year period ending on the

date of Plan termination.

 

(B)                                If

the assets available for allocation under subparagraph (A) above are sufficient

to satisfy in full the benefits described therein (without regard to this

subparagraph (B)), then for purposes of subparagraph (A), benefits of

individuals thereunder shall be determined on the basis of the Plan as amended

by the most recent Plan amendment effective during such 5-year period under

which the assets available for allocation are sufficient to satisfy in full the

benefits of such individuals, and any assets remaining to be allocated shall be

allocated on the basis of the Plan as amended by the next succeeding Plan

amendment effective during such period.

 

(4)                                  To

provide all other accrued benefits under the Plan.

 

The amount allocated under any of paragraphs (1) through (4) above with

respect to any benefit shall be properly adjusted for any allocation of assets

with respect to that benefit under any of the preceding of said

paragraphs.  Except as otherwise

provided in paragraph (3) above, if the assets available for allocation under

any of said paragraphs are insufficient to satisfy in full the benefits to be

provided individuals under such paragraph, the assets shall be allocated pro

rata among such individuals on the basis of the present value, as of the

termination date of the Plan, of their respective benefits described in such

paragraph. If the Secretary of the Treasury or his delegate determines that the

allocation made pursuant to this subsection results in discrimination

prohibited by Code section 401(a)(4) then, if required to prevent the

disqualification of the Plan (or any trust under the Plan) the assets shall be

reallocated to the extent necessary to avoid such discrimination but only to

the extent permitted by ERISA.

 

(f)                                    If

all liabilities of the Plan to Participants and their beneficiaries have been

satisfied, any residual assets of the Plan shall be returned to the

Participating Employer if such distribution does not contravene any provision

of law.

 

(g)                                 If

the Actuarial Equivalent present value of an individual’s entire benefit is

$5,000 or less, the benefit shall be paid in a single sum promptly after

termination of the Plan, provided, however, that payment may be deferred as

provided in Sec. 11.7.  In all other

cases, benefits following termination of the Plan shall be provided through

purchase of an annuity contract from an insurance company offering the same

settlement options and payment terms as are provided under the Plan.

 

(h)                                 In

the event of the termination of the Plan, all Plan provisions and any

agreements with Trustees relating to the Plan shall continue to have effect for

the purpose of completing distributions in accordance with this section.

 

49

 

Sec. 11.5 

Partial Termination.  If there is a partial termination of the

Plan, either by operation of law, by amendment of the Plan, or for any other

reason, which partial termination shall be confirmed by the Company, the

Company shall:

 

(a)                                  Determine

the equitable part of the Trust assets held on account of Participants with

respect to whom the Plan is terminated and their beneficiaries as though the

partial termination was a discontinuance of joint participation in the Plan by

a Participating Employer under Sec. 11.2.

 

(b)                                 Cause

that portion of the Trust allocated to those Participants (and their

beneficiaries) with respect to whom the partial termination takes place to be

treated as the Trust of a terminated plan with respect to such persons.

 

(c)                                  Cause

that portion of the Trust that is not allocated to those Participants (and

their beneficiaries) with respect to whom the partial termination takes place

to continue to be held and administered under the Plan for the benefit of the

other Participants (and their beneficiaries).

 

The provisions of

Sec. 11.4 shall be applicable to the partially terminated plan, to the

Participants (and their beneficiaries) with respect to whom the partial

termination takes place, and to the funds allocated to such persons, as though

it constituted a separate plan; provided, however, that any residual assets

shall be credited to the portion of the Trust referred to in subsection (c)

above rather than being returned to the Participating Employers.

 

Sec. 11.6 

Merger, Consolidation, or Transfer of Plan Assets.  In the case of any merger or consolidation

of the Plan with any other plan, or in the case of the transfer of assets or

liabilities of the Plan to any other plan, provision shall be made so that each

Participant and beneficiary would (if such other plan then terminated) receive

a benefit immediately after the merger, consolidation, or transfer which is

equal to or greater than the benefit he would have been entitled to receive

immediately before the merger, consolidation, or transfer (if the Plan had then

terminated).  No such merger,

consolidation, or transfer shall be effected until such statements with respect

thereto, if any, required by ERISA to be filed in advance thereof have been

filed.

 

Sec. 11.7 

Deferral of Distributions.

Notwithstanding any provisions of the Plan to the contrary, in the case of a

complete or partial termination of the Plan, the Company or the Trustee may

defer any distribution of benefit payments to Participants and beneficiaries

with respect to which such termination applies until after the following have

occurred:

 

(a)                                  Receipt

of a final determination from the Treasury Department or any court of competent

jurisdiction regarding the effect of such termination on the qualified status

of the Plan under Code section 401(a).

 

(b)                                 Appropriate

adjustment of the Trust to reflect taxes, costs, and expenses, if any, incident

to such termination.

 

50

 

ARTICLE XII

 

TOP-HEAVY PLAN PROVISIONS

 

Sec. 12.1 

Key Employee Defined.

“Key Employee” means any employee or former employee of the employer who at any

time during the determination period was an officer of the employer or is

deemed to have had an ownership interest in the employer and who is within the

definition of key employee in Code section 416(i) and the regulations

thereunder in effect for the particular Plan Year.

 

Sec. 12.2 

Determination of Top-Heavy

Status.  The

top-heavy status of the Plan shall be determined according to the following

standards and definitions:

 

(a)                                  The

Plan is a Top-Heavy Plan for a Plan Year commencing after 1983 if the top-heavy

ratio for this Plan exceeds 60 percent or if this Plan is part of a required

aggregation group of plans and the top-heavy ratio for the group of plans

exceeds 60 percent.  However, the Plan is

not a Top-Heavy Plan with respect to a Plan Year if it is part of a permissive

aggregation group of plans for which the top-heavy ratio does not exceed 60

percent.

 

(b)                                 The

“top-heavy ratio” shall be determined as follows:

 

(1)                                  If

the ratio is being determined only for this Plan or if the aggregation group

only includes defined benefit pension plans, the top-heavy ratio is a fraction,

the numerator of which is the sum of the present values of the accrued benefits

of all Key Employees under the Plan or plans as of the determination date

(including any part of any accrued benefit distributed in the five-year period

ending on the determination date), and the denominator of which is the sum of

the present value of all accrued benefits (including any part of any accrued

benefit distributed in the five-year period ending on the determination date)

of all employees under the Plan or plans as of the determination date.  (The “plans” referred to in the preceding

sentence are the plans in the required or permissive aggregation group.)

 

(2)                                  If

the determination is being made for a required or permissive aggregation group

which includes one or more defined contribution plans, the top-heavy ratio is a

fraction, the numerator of which is the sum of account balances of all Key

Employees under the defined contribution plans and the present value of accrued

benefits under the defined benefit plans for all Key Employees as of the

determination date (including any part of any account balance or accrued

benefit distributed in the five-year period ending on the determination date),

and the denominator of which is the sum of the account balances under the

defined contribution plans for all employees and the present value of accrued

benefits under the defined benefit plans for all employees as of the

determination date (including any part of any account balance or accrued

benefit distributed in the five-year period ending on the determination

date).  (The “plans” referred to in the

preceding sentence are the plans in the required or permissive aggregation

group.)  Both the numerator and

denominator of the top-heavy ratio shall be adjusted to reflect any

contribution due but unpaid as of the determination date.

 

51

 

(3)                                  For

purposes of paragraphs (1) and (2), the value of account balances and the

present value of accrued benefits will be determined as of the most recent

valuation date that falls within the 12-month period ending on the

determination date. The account balances and accrued benefits of an employee

who is not a Key Employee but who was a Key Employee in a prior year will be

disregarded.  The calculation of the

top-heavy ratio and the extent to which distributions, rollovers, and transfers

are taken into account will be made in accordance with Code section 416 and the

regulations thereunder.  When

aggregating plans, the value of account balances and accrued benefits will be

calculated with reference to the determination dates that fall within the same

calendar year.

 

(4)                                  Commencing

January 1, 2002, any distribution due to separation from service, death or

disability which was made prior to the one-year period ending on the

determination date shall be disregarded for purposes of applying this

subsection (b).  The provisions of

this subsection (b) also apply to distributions under a terminated plan which,

had it not been terminated, would have been aggregated with this Plan under

Code section 416(g)(2)(A)(i).

 

(c)                                  “Required

aggregation group” means (i) each qualified plan of the employer in which at

least one Key Employee participates, and (ii) any other qualified plan of the

Employer that enables a plan described in (i) to meet the requirements of Code

sections 401(a)(4) and 410.

 

(d)                                 “Permissive

aggregation group” means the required aggregation group of plans plus any other

plan or plans of the employer which, when consolidated as a group with the

required aggregation group, would continue to satisfy the requirements of Code

sections 401(a)(4) and 410.

 

(e)                                  “Determination

date” for any Plan Year means the last day of the preceding Plan Year.

 

(f)                                    The

“determination period” for a Plan Year is the Plan Year in which the applicable

determination date occurs and the four preceding Plan Years.

 

(g)                                 The

“valuation date” is the last day of each Plan Year and is the date as of which

account balances or accrued benefits are valued for purposes of calculating the

top-heavy ratio.

 

(g)                                 The

“present value” of benefits under this Plan and all other defined benefit plans

of the employer for purposes of computing the top-heavy ratio shall be based on

5% interest and mortality rates based on the U.P. 1984 Mortality Table.

 

(i)                                     If

an individual has not performed services for the employer during the five–year

period ending on the determination date with respect to a Plan Year commencing

prior to 2002, or during the one-year period ending on the determination date

with respect to a Plan Year commencing in 2002 or later, any account balance or

accrued benefit for such individual shall not be taken into account for such

Plan Year.

 

(j)                                     For

purposes of determining if the Plan, or any other plan included in the required

aggregation group of which this Plan is a part, is a Top-Heavy Plan, the

accrued benefit of any employee (other than a Key Employee) shall be determined

as follows:

 

52

 

(1)                                  Under

the method which is used for accrual purposes under all plans maintained by the

employer.

 

(2)                                  If

there is no method described in paragraph (1), as if such benefit accrued not

more rapidly than the lowest accrual rate permitted under Code section

411(b)(1)(C).

 

Sec. 12.3 

Minimum Accrued Benefit.  If the Plan is a Top-Heavy Plan,

notwithstanding any other provisions of this Plan, each Participant who is not

a Key Employee shall have a minimum accrued benefit (to be provided by employer

contributions and expressed as a single life annuity, with no ancillary

benefits, commencing at Normal Retirement Age) equal to the applicable

percentage of the Participant’s average monthly compensation for years in the

testing period.

 

(a)                                  For

purposes of this section:

 

(1)                                  The

“applicable percentage” is the lesser of 2 percent multiplied by the

Participant’s number of years of service with the employer, or 20 percent.  For purposes of this paragraph (1), a

Participant has a year of service for each Plan Year in which he completes 1000

Hours of Service; provided, however, that the following years shall not be

taken into account:

 

(A)                              Plan

Years commencing before January 1, 1984.

 

(B)                                Plan

Years in which the Plan is not a Top-Heavy Plan.

 

(C)                                Plan

Years in which the Participant is a Key Employee.

 

(D)                               Plan

Years during which the employer did not maintain the Plan or a predecessor

plan.

 

(E)                                 Plan

Years that may be disregarded under the break in service provisions of Code

section 411(a)(6).

 

(2)                                  “Compensation”

is as defined in Sec. 6.11(i), subject to the limits in Sec. 2.7(f) and (g).

 

(3)                                  A

Participant’s “testing period” comprises the five consecutive Plan Years during

which the Participant had the greatest aggregate compensation from the

employer, subject to the following:

 

(A)                              The

Plan Years taken into account for purposes of this paragraph shall be adjusted

for years not included in years of service for purposes of paragraph (1) above,

as provided in Code section 416(c)(1)(D)(ii).

 

(B)                                The

following Plan Years shall be disregarded for purposes of this paragraph if by

disregarding such Plan Years the Participant’s average monthly compensation for

years in the testing period will be reduced:

 

I.                                         Any

Plan Year beginning before January 1, 1984.

 

53

 

II.                                     Any

Plan Year commencing after the last Plan Year in which the Plan was a Top-Heavy

Plan.

 

(b)                                 If

a Participant becomes entitled to a benefit under the Plan, and (i) if the form

of the benefit is other than a single life annuity and/or (ii) if the benefit

commences at a date other than at Normal Retirement Age, the benefit payable to

the Participant must be at least the Actuarial Equivalent of the minimum single

life annuity benefit commencing at Normal Retirement Age.

 

(c)                                  A

Participant’s minimum accrued benefit required under this section shall not be

subject to suspension of payment under Sec. 5.12(a)(2) or (b).

 

(d)                                 This

section shall not apply to any Participant who is covered under any other

defined benefit plan of the employer to the extent the minimum benefit

requirement otherwise applicable under this Plan will be satisfied by such

other plan.

 

Sec. 12.4 

Definition of Employer.  For purposes of this Article, the term

“employer” means the Company and any trade or business entity under Common

Control with the Company.

 

Sec. 12.5 

Exception for Collective

Bargaining Unit. 

Section 12.3 shall not apply with respect to any employee included in a

unit of employees covered by an agreement which the Secretary of Labor finds to

be a collective bargaining agreement between employee representatives and one

or more employers if there is evidence that retirement benefits were the

subject of good faith bargaining between such employee representative and such

employer or employers.

 

54

 

APPENDIX

 

1999 VOLUNTARY EARLY RETIREMENT PROGRAM

 

 

Section 1.  Eligibility.  This Appendix is effective August 1, 1999 and applies to each

Participant who satisfies all of the following requirements:

 

(a)                                  The

Participant must have been employed by the Company on June 1, 1999.

 

(b)                                 The

Participant either must have attained age 60 or will have attained age 60 by

December 31, 1999.

 

(c)                                  The

Participant must have completed at least 20 years of actual service with the

Company (including any continuous service preceding the acquisition date with

any predecessor entity that has been acquired by the Company), or would be

credited with such years of service by December 31, 1999 if the

Participant’s Termination of Employment did not occur prior to that date.

 

(d)                                 The

Participant must file with the Company on or before September 17, 1999, a

written election to retire under this Appendix, and such election must not have

been revoked. The election must include a release of all claims against the

Company or the Plan in such form as the Company specifies.  The Participant must also file with the

Company such other forms as are specified by the Company for this program.

 

(e)                                  The

Participant’s Termination of Employment must occur on a date specified by the

Company, which shall be on or before March 31, 2000, and the Participant

must file with the Company a written election to commence pension payments as

to the first day of the month following the Participant’s Termination of

Employment.

 

(f)                                    This

Appendix also applies to any individual who meets the requirements of

subsections (a) through (e) of this section but who was not previously a

Participant in this Plan solely because the individual was employed by the

Company on December 31, 1981 and is excluded from participation in this Plan

because the individual made an election to participate in Company contributions

to Retirement Accounts as described in Sec. 4.1(d) of the Tennant Company Defined

Benefit Retirement Plan.  An individual

described in the previous sentence shall become a Participant as of the date

the individual’s election of this program pursuant to subsection (d) becomes

irrevocable, but such participation shall be solely for purposes of receiving

the benefits described in Sections 2 and 3 of this Appendix.

 

Section 2.  Enhanced Pension Benefit.  The benefit to which a Participant who

satisfies the requirements of Section 1 of this Appendix is entitled under the

Plan shall be determined as follows:

 

(a)                                  Except

as provided in subsection (b), the benefit to which the Participant is entitled

under the Plan shall be determined pursuant to the applicable provisions of the

Plan, with the following modifications:

 

(1)                                  The

Participant’s age shall be deemed to be equal to his or her actual age on the

 

1

                                                first

day of the month following the date the Participant’s Termination of Employment

occurred, plus three years; provided, however, that such deemed age shall not

exceed age 65 (or the Participant’s actual age, if greater than 65).

 

(2)                                  The

Participant’s Adjusted Years of Credited Service under Sec. 3.3 shall be

determined by adding three years to the Participant’s Years of Credited Service

on the date his or her Termination of Employment occurred.

 

The Participant’s

pension, adjusted pursuant to this subsection (a), shall commence pursuant to

the terms of the Plan as of the first day of the month following the date the

Participant’s Termination of Employment occurred.

 

(b)           The benefit payable under this

Section 2 to an individual who became a Participant pursuant to Section 1(f) of

this Appendix shall be determined as follows:

 

(1)                                  A

monthly amount shall be calculated equal to the Accrued Monthly Pension the

individual would have earned under this Plan as of the date his or her

Termination of Employment occurred if the individual had been a Participant in

this Plan since January 1, 1982.  If the

Participant is under age 65 on the first day of the month following his or her

Termination of Employment, the amount determined under the previous sentence

shall be reduced as provided in Sec. 5.4 to reflect the early commencement.

 

(2)                                  A

monthly amount shall be calculated equal to the Accrued Monthly Pension the

individual would have earned under this Plan as of the date his or her

Termination of Employment occurred if the individual had been a Participant in

this Plan since January 1, 1982, but reflecting three additional Years of

Credited Service as provided in subsection (a)(2) of this Section 2.  If the Participant’s deemed age determined

pursuant to subsection (a)(1) of this Section 2 as of the first day of the

month following the Participant’s Termination of Employment is less than 65,

the amount determined under the previous sentence shall be reduced as provided

in Sec. 5.4 to reflect an early commencement at such deemed age.

 

(3)                                  The

benefit to which the individual is entitled under this Section 2 shall be equal

to the amount determined under paragraph (2) minus the amount determined under

paragraph (1).  Such benefit shall be

payable as a monthly pension, with the first payment to be made as of the first

day of the month following the Participant’s Termination of Employment and the

last payment to be made as of the first day of the month in which the

Participant’s death occurs.

 

(4)                                  If

the benefit payable under this subsection (b) is to be paid in a form other

than the life-only annuity described in paragraph (3), the benefit shall be

reduced on an Actuarial Equivalent basis pursuant to the terms of the Plan to

reflect the form in which it is to be paid.

 

(c)           All rights to a pension under this

Section 2 shall cease in the event the Participant is reemployed by a

Participating Employer (subject to any provision of the Plan regarding

suspension of benefits that applies in the event of reemployment), and the

Participant shall thereafter only be entitled to such benefits as may be

provided under Articles V and

 

2

 

VI. However, the

monthly benefit payable as a life-only annuity following a subsequent

Termination of Employment shall not be less than the monthly benefit that was

payable in the same form under this Section 2 prior to the reemployment.

 

(d)                                 The

benefits payable under this Section 2 and Section 3 may not exceed the maximum

amount allowed under Sec. 6.11.  For

purposes of Sec. 6.11(e), an individual who is a Participant as a result of

Section 1(f) has one year of participation in this Plan.

 

(e)                                  Except

as provided above to the contrary, the pension payable under this Section 2

shall be subject to all the provisions of the Plan, and in this regard special

reference is to be made to the provisions of Articles V and VI.

 

Section 3.  Social Security Supplement.  Each Participant who satisfies the

requirements of Section 1 of this Appendix shall receive a monthly Social

Security Supplement payment commencing as of the first day of the month

following his or her Termination of Employment, provided the Participant is

under age 62 on that commencement date, subject to the following:

 

(a)                                  The

amount of the Participant’s Social Security Supplement each month shall be

equal to the amount estimated by the Actuary based on the Participant’s rate of

Certified Earnings in effect on July 1, 1999 to be the old-age insurance

benefit to which the Participant will be entitled commencing at age 62 under

Title II of the Social Security Act as in effect on July 1, 1999.  The estimate shall be made by assuming (i)

that the Participant will have no earnings covered by the Social Security Act

after 1999, (ii) that past increases in the Participant’s earnings covered by

the Social Security Act had been at the same rate as the rate of increase in

the National Average Wage, and (iii) that there will be no increases in the

Social Security Wage Base or cost of living adjustments under the Social

Security Act after 1999.

 

(b)                                 The

last monthly payment under this Section 3 shall be made as of the earliest of

the following dates:

 

(1)                                  The

first day of the month in which the Participant attains age 62.

 

(2)                                  The

first day of the month in which the Participant is reemployed by a

Participating Employer.

 

(c)                                  If

the Participant dies before receiving all the payments to which he or she is entitled

under this Section 3, the remaining payments shall be made to the Participant’s

surviving spouse, or if there is no surviving spouse, to the Participant’s

estate.  If the Participant’s spouse

survives the Participant but dies prior to receiving all of the payments due

under this section, the remaining payments shall be made to the spouse’s

estate.  The amount and time of each

monthly payment under this subsection shall be determined as though the

Participant had lived.

 

Section 4.  Certain Death Situations.    If the Participant’s death occurs after the

Participant’s election to retire under Section 1(d) of this Appendix has become

irrevocable but before the date that benefit payments are to commence under

this Appendix, the Participant’s Termination of Employment for purposes of

Section 1(e) shall be deemed to have occurred on the date of the death, any

Qualified Preretirement Survivor Annuity payable under Sec. 5.10 with respect

to the Participant shall take into account the modifications provided in

Section 2 of this Appendix, and payments of any Social Security

 

3

 

Supplement to which the

Participant was entitled under Section 3 of this Appendix shall commence as of

the first day of the month following the Participant’s death to the person

entitled to such payments under Section 3(c).

 

Section 5.  Applicable Plan Provisions.  Benefits under this Appendix shall be

determined pursuant to the provisions of the Plan that were in effect on the

date this Appendix was adopted, disregarding any amendments of the Plan that

were adopted after the date this Appendix was adopted unless such amendment

specifically refers to this Appendix or is required by applicable law or

regulation to apply to the benefits payable under this Appendix.  All cross references in this Appendix are to

the provisions of the Plan in effect on the date this Appendix was adopted.

 

4Exhibit 4.13

 

SECOND AMENDED AND

RESTATED FORBEARANCE AGREEMENT

 

                This

Amended and Restated Forbearance Agreement (the “Agreement”) is made effective

the 18th day of February, 2002, and is by and among American Medical

Technologies, Inc. a Delaware corporation (the “Borrower”) and Bank One,

Michigan, (the “Lender”).

 

W I T N E S S E T

H:

 

                In

consideration of the sum of Ten Dollars ($10.00), the mutual covenants and

agreements contained herein and other valuable consideration, the receipt and

sufficiency of which are hereby acknowledged, the parties agree as follows:

 

1.             Recitations.

 

1.1           The

Credit Agreement.  On or about September 21, 2000, the Lender

and the Borrower executed a certain Line of Credit Agreement (the “Credit

Agreement”) providing for certain loans made by Lender to Borrower and

evidenced by a Revolving Business Credit Note (the “Note”). Among other

documents executed contemporaneously with the Credit Agreement were a

Continuing Security Agreement and UCC-1 Financing Statements (collectively, the

“Loan Documents”).

 

1.2           The

First Amendment.  On or about March 20, 2001, the Lender and

Borrower executed that certain letter agreement constituting an amendment to

the Credit Agreement (the “First Amendment”) providing for certain amendments

to the Credit Agreement as set forth therein.

 

1.3           The Second Amendment. 

On or about June 25, 2001, the Lender and Borrower executed that certain

letter agreement constituting an amendment to the Credit Agreement (the “Second

Amendment”) providing for certain amendments to the Credit Agreement as set

forth therein.

 

1.4           The Credit Card Balance.  Borrower is further indebted to Lender in

the approximate amount of $100,000.00 resulting from charges made by Borrower

utilizing a business charge card line of credit (the “Credit Card Balance”).

 

1.5           Payable Status.  Except for the Credit Card Balance, all

obligations of Borrower are in default and are presently due and payable and

Borrower has requested that Lender: (a) forbear from taking any actions to

collect the amounts due under the Loan Documents, and (b) agree to the other

terms and conditions set forth herein. The Lender is willing to agree to the

Borrower’s request on the

 

1

 

condition that the

Borrower fully and faithfully perform its obligations under the Loan Documents,

including but not limited to, the Credit Agreement, as amended.

 

1.6           The Forbearance Agreement.  At Borrower’s request, Borrower and Lender entered into that certain

Forbearance Agreement dated November 6, 2001 (the “Forbearance Agreement”)

whereby the Lender agreed to forbear from exercising certain of its rights and

remedies under the Loan Documents for a period ending on December 20, 2001 in

reliance upon the covenants, representations, and warranties of Borrower

contained in the Forbearance Agreement.

 

1.7           The Amended &

Restated Forbearance Agreement.  At Borrower’s request, Borrower and Lender entered into that certain

Amended and Restated Forbearance Agreement dated December 20, 2001 (the “ A&R

Forbearance Agreement”) whereby the Lender agreed to forbear from exercising

certain of its rights and remedies under the Loan Documents for a period ending

on February 18, 2002 in reliance upon the covenants, representations,

and warranties of Borrower contained in the Forbearance Agreement.  This

Agreement is intended to amend and restate the terms and provisions of the

A&R Forbearance Agreement.

 

1.8           Borrower’s Request.  Borrower

continues to be in default in the payment and/or performance of the Note and

other Loan Documents.  Borrower

acknowledges that the indebtedness evidenced by the Note is due and owing to

the Lender without right of setoff, and such indebtedness has not been paid in

accordance with the terms of the Loan Documents.  Borrower has requested that the Bank forebear from exercising its

rights and remedies under the Loan Documents for a period of time as specified

herein in reliance upon the covenants, representations, and warranties of

Borrower and for other good and valuable consideration.

 

 

The term “Loan Documents”

shall include the Credit Agreement, the Note, the First Amendment, the Second

Amendment, the Credit Card Balance, the Forbearance Agreement, the A&R

Forbearance Agreement and all writings, documents, instruments, security

agreements contemplated therein, respectively. 

The term “Obligations” shall include the Note, the Credit Card Balance

and all other obligations pursuant to which Borrower may owe performance or

payment to Lender.  The term

“Indebtedness” shall include the Note, the Credit Card Balance and all other

indebtedness owning from Borrower to Lender.

 

2.             Acknowledgment of Amounts Due

and Maturity Date.   Lender and

Borrower acknowledge that as of the beginning of business on February 18, 2002

the outstanding balance in respect of the Indebtedness was as follows:

 

2

 

	

   

  	

   

  	

  Principal

  	

   

  	

  Accrued

  and Unpaid Interest

  	

   

  
	

  Note:

  	

   

  	

  $

  	

  1,745,656.25

  	

   

  	

  $

  	

  11,031.57

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Credit Card Balance:

  	

   

  	

  $

  	

  98,007.55

  	

   

  	

   

  	

   

  
								

 

Borrower waives any and

all rights to notice of payment default or any other default, protest and

notice of protest, dishonor, diligence in collecting and the bringing of suit

against any party, notice of intention to accelerate, notice of acceleration,

demand for payment and other notices whatsoever regarding the Credit Agreement,

as amended, the Indebtedness, or any other Loan Documents, and further waive

any claims that any notices previously given are insufficient for any

reason.  Borrower further agrees that

the Indebtedness set forth above is presently due and payable in full to Lender

without discount or offset, and any claims or defenses thereto are waived and

released herein.

 

3.             No Further Advances.  Borrower acknowledges and agrees that it

shall not be entitled to, nor shall Borrower request, any additional advances

under the Credit Agreement, the Note, or any other Loan Documents.  Furthermore, Borrower shall not request nor

shall Lender be obligated to issue any further or additional letters of credit.

 

4.             No

Waiver. The execution, delivery and

performance of this Agreement by Lender and the acceptance by Lender of performance of Borrower hereunder (a) shall not

constitute a waiver or release by Lender of any default that may now or

hereafter exist under the Loan Documents, (b) shall not constitute a novation

of the Loan Documents as it is the intent of the parties to modify the Loan

Documents as expressly set out herein, and (c) except as expressly provided in

this Agreement, shall be without prejudice to, and is not a waiver or release

of, Lender’s rights at any time in the future to exercise any and all rights

conferred upon Lender by the Loan Documents or otherwise at law or in equity,

including but not limited to the right to accelerate the Indebtedness, if not

already accelerated, and to institute collection proceedings against Borrower

and/or any right against any other person or entity not a party to this

Agreement.  Similarly, the execution,

delivery, and performance of this Agreement by Borrower and the acceptance by

Borrower of the performance by Lender hereunder shall not, subject to the

express provisions of this Agreement, constitute a waiver or release of any of

Borrower’s rights under the Loan Documents; provided, however, that Borrower

waives any and all claims now or hereafter arising from or related to any delay

by Lender in exercising any rights or remedies under the Loan Documents,

including, without limitation, any delay in foreclosing on any collateral

securing the Indebtedness.

 

5.             Forbearance.

So long as this Agreement is not terminated as provided herein, the Lender

agrees not to foreclose or attempt to foreclose any collateral securing the

Indebtedness, institute suit for collection of the Indebtedness against

Borrower, or exercise any other remedies available to it under the Loan

Documents or under applicable law for a period of time commencing on the date

hereof and extending through and including September 15, 2002 at 5:00 p.m. (the

“Forbearance Period”).  Upon termination

of the Forbearance Period, or otherwise under the provisions of this Agreement,

or if all amounts due and owing under the Credit Agreement, the

 

3

 

Indebtedness or

other Loan Documents are not paid in full on or before the expiration of the

Forbearance Period, Lender may seek to foreclose upon any collateral and to

exercise any other remedies to which Lender may be entitled under the Loan

Documents, or applicable law to collect amounts due under the Indebtedness, the

Credit Agreement or any other Loan Documents. 

Borrower agrees that Borrower will not during the Forbearance Period,

initiate any action of any kind against Lender with respect to the Loan

Documents, exercise any remedy available under the Loan Documents or otherwise,

or make or suffer to exist any type of demand upon Lender with respect to the

Obligations.

 

6.             Borrower’s

Management.  Borrower shall continue

to comply with the requirements for a Crisis Manager as set forth in Paragraph

6 of the Forbearance Agreement.

 

7.             Interest Rate.  During the Forbearance Period, all

Indebtedness owed by Borrower to Lender under the Loan Documents shall continue to bear interest at the per annum

rate equal to the sum of the Prime Rate plus four percent (4.0%).  The Prime Rate shall be that variable per

annum rate announced, from time to time, by the Lender as its Prime Rate.

 

8.             Interest Payments. Borrower

shall continue to make the interest payments required by the Forbearance

Agreement.  Such payments shall begin on

April 15, 2002 at which time the Borrower shall pay all accrued and unpaid

interest due on the Indebtedness.  All

accrued and unpaid interest thereafter shall be paid on or before the 15th

day of each month thereafter until the Indebtedness is paid in full.

 

9.             Principal

Payments.  During the Forbearance

Period, the Borrower shall make the following principal payments:

 

	

  April 15, 2002

  	

   

  	

  $

  	

  30,000.00

  
	

  May 15, 2002

  	

   

  	

   

  	

  30,000.00

  
	

  June 15, 2002

  	

   

  	

   

  	

  30,000.00

  
	

  July 15, 2002

  	

   

  	

   

  	

  40,000.00

  
	

  August 15, 2002

  	

   

  	

   

  	

  40,000.00

  
	

  September 15, 2002

  	

   

  	

   

  	

  All

  remaining principal

  

 

10.           Loan Fees.  Simultaneously with the execution of this

Agreement, Borrower shall pay to Lender a non-refundable loan fee to Lender in

the sum of Twenty Five Thousand and no\100s dollars ($25,000.00) which loan fee

shall be earned when paid.  In the event

the indebtedness is not paid in full on or before the expiration of the

Forbearance Period, in addition to all other Indebtedness, the Borrower shall

pay a non-refundable loan fee to Lender in the sum of Fifty Thousand and

no\100s dollars ($50,000.00) which loan fee shall be earned when paid.

 

11.           Tangible Net Worth.  Paragraph 6.3(H) of the Credit Agreement is

amended to read as follows:  “Permit its

Tangible Net Worth plus Subordinated Debt to

 

4

 

be less than

$4,500,000.00.”

 

12.           Junior Liens.    Notwithstanding the terms of the Loan

Documents, the Borrower may grant a lien on its Accounts and Inventory so long

as: (a) such lien is second in priority and junior to that of the Lender; (b)

no later than the time that such lien is granted, Borrower pays to Lender the

sum of One Hundred Thousand and no\100s Dollars ($100,000.00); and (c) the

holder of any such junior lien executes a subordination agreement in favor of Lender

prior to such lien being granted that is acceptable in form to Lender and that

provides, at a minimum, that no principal payments shall be made to the holder

of the junior lien until the Indebtedness is paid in full.  Until the Indebtedness is paid in full,

Borrower shall make no such principal payments to any junior lien holder.

 

13.           Borrowing Base.  Notwithstanding any other provision of this

Agreement or the Loan Documents, the aggregate principal amount of the

Indebtedness outstanding at any one time shall not exceed the Borrowing

Base.   Should the Indebtedness exceed

the Borrowing Base, Borrower shall immediately prepay the excess amount to

Lender.  “Borrowing Base” means the sum

of 75% of Eligible Accounts and 30% of Eligible Inventory.  “Eligible Accounts” means an Account of the

Borrower: (i) which arises from a bona fide, outright sale of inventory or for

services performed, or expenses incurred in the normal course of business; (ii)

which is based upon a valid, enforceable and legally binding order or contract;

(iii) as to which an invoice for payment has been sent to the account debtor

and for which the account debtor is unconditionally obligated and liable to

make payment thereof; (iv) in and to which the rights of the Borrower are

absolute and not subject to any assignment, claim, lien or security interest

(except in favor of Lender); (v) except as otherwise agreed by Lender, which is

not an intracompany account or an account receivable between the Borrower and

any affiliate of the Borrower; (vi) which is not evidenced by any note, chattel

paper, trade acceptance, draft, check or other instrument with respect thereto

or in payment thereof; (vii) except as otherwise agreed by Lender, as to which

the account Borrower thereof has not died and is not the subject of

dissolution, liquidation, termination of existence, insolvency, business

failure, receivership, bankruptcy, readjustment of debt, assignment for the

benefit of creditors or similar proceedings; (viii) which has not been

outstanding for more than 90 days from date of invoice; (ix) which is not owed

by an account debtor not a resident of the United States; (x) which is not an

account owed by a debtor from which 20% or more of the aggregate amount owed

from such debtor is more than 90 days past due from the date of invoice; (xi)

which is not owed by any governmental entity; (xii) which is not owed by a

contractor; (xiii) which is not an account that is bonded or secured by a bond;

and (ixv) which is not an account otherwise unacceptable to Lender.  At any particular date, the Eligible

Accounts shall be the sum of the unpaid principal balance of all of the

Eligible Accounts, as defined above; provided, however, that Accounts from any

one account debtor shall not exceed 20% of the Eligible Accounts, unless

otherwise approved by Lender.  “Eligible

Inventory” shall mean that Inventory physically located in the United States

owned by the Borrower and in which Lender holds a perfected first priority

security interest that constitutes: (a) finished goods in marketable condition;

and (b) raw materials reasonably necessary to

 

5

 

meet the

Borrower’s production requirements for a period of six (6) months.  For purposes hereof, Eligible Inventory

shall be valued at the lower of cost or market value.

 

14.           Borrowing Base Certificate and

Compliance Statement.   Prior to the

20th day of each and every month hereafter, the Borrower shall

provide to Lender a Borrowing Base Certificate and Compliance Statement in a form

acceptable to Lender and signed by an officer of Borrower.

 

15.             Tax Refunds.  In addition to the other payments required

herein, should the Borrower receive any federal or state tax refunds from any

governmental entity, it shall pay 75% of any such refunds to Lender for

application to the Indebtedness.

 

16.           Compliance

with Loan Documents.  During the

term of this Agreement, Borrower shall fully and faithfully comply with all of

the terms of the Loan Documents including the Forbearance Agreement, the terms

of which shall remain in full effect unless modified herein.  Upon Borrower’s failure to fully and

faithfully timely pay Lender any of the payments set forth in this Agreement,

the term of this Agreement shall immediately end and terminate without the

necessity of notice or demand, and Lender shall be entitled to pursue any and

all remedies.  Upon the occurrence of

Borrower’s failure to fully and faithfully perform any other obligation with

respect to the Loan Documents or, they shall be entitled to such notice and

opportunity to cure, if any, as provided in the Loan Documents.

 

17.           Representations and Warranties. In

order to induce Lender to execute, deliver, and perform this Agreement,

Borrower warrants and represents to Lender that:

 

	

  (a)

  	

   

  	

  this

  Agreement is not being made or entered into with the actual intent to hinder,

  delay, or defraud any entity or person;

  
	

   

  	

   

  	

   

  
	

  (b)

  	

   

  	

  this

  Agreement is not intended by the parties to be a novation of the Loan

  Documents and, except as expressly modified herein, all terms, conditions,

  rights and obligations as set out in the Loan Documents are hereby reaffirmed

  and shall otherwise remain in full force and effect as originally written and

  agreed;

  
	

   

  	

   

  	

   

  
	

  (c)

  	

   

  	

  no

  action or proceeding, including, without limitation, a voluntary or

  involuntary petition for bankruptcy under any chapter of the Federal

  Bankruptcy Code, has been instituted by or against any Borrower;

  
	

   

  	

   

  	

   

  
	

  (d)

  	

   

  	

  to the best of Borrower’s knowledge, and with the sole exception of

  financial statements projecting profitability for the period ending December

  31, 2001, all balance sheets, and cash flow statements, and all information

  provided by Borrower to Lender prior to the date hereof, including, without

  limitation, all financial statements, balance sheets, and cash flow

  statements, was, at the date of delivery, and is, as of the date hereof, true

  and correct in all respects.  Borrower

  

 

6

 

	

   

  	

   

  	

  recognizes and acknowledges that Lender is entering into this

  Agreement based in part on the financial information provided to Lender by

  each of them and that the truth and correctness of that financial information

  is a material inducement to Lender in entering into this Agreement.  During the term of this Agreement,

  Borrower agrees to advise Lender promptly in writing of any and all new

  information, facts, or occurrences that would in any way materially

  supplement, contradict, or affect any financial statements, balance sheets,

  cash flow statements, or similar items furnished to Lender.

  
	

   

  	

   

  	

   

  
	

  (e)

  	

   

  	

  this Agreement and the Loan Documents constitute the entire agreement

  among Lender and Borrower with respect to this matter.

  

 

18.           Bankruptcy.   In entering into this Agreement, Borrower

and Lender hereby stipulate, acknowledge and agree that Lender gave up valuable

rights and agreed to forbear from exercising legal remedies available to it in

exchange for the promises, representations, acknowledgments and warranties of

Borrower as contained herein and that Lender would not have entered into this

Agreement but for such promises, representations, acknowledgments, agreements,

and warranties, all of which have been accepted by Lender in good faith, the

breach of which by Borrower in any way, at any time, now or in the future,

would admittedly and confessedly constitute cause for dismissal of any such

bankruptcy petition pursuant to 11 U.S.C. § 1112(b).  As additional consideration for Lender agreeing to forbear from

immediately enforcing its rights and remedies under this Agreement and in the

Loan Documents, including but not limited to the institution of foreclosure or

collection proceedings, Borrower agrees that in the event a bankruptcy petition

under any Chapter of the Bankruptcy Code (11 U.S.C. §101, et  seq.)

is filed by or against any Borrower at any time after the execution of this

Agreement, Lender shall be entitled to the immediate entry of an order from the

appropriate bankruptcy court granting Lender complete relief from the automatic

stay imposed by §362 of the bankruptcy Code (11 U.S.C. §362) to exercise its

foreclosure and other rights, including but not limited to obtaining a

foreclosure judgment and foreclosure sale, upon the filing with the appropriate

court of a motion for relief from the automatic stay with a copy of this

Agreement attached thereto.  Borrower

specifically agrees (i) that upon filing a motion for relief from the automatic

stay, Lender shall be entitled to relief from the stay without the necessity of

an evidentiary hearing and without the necessity or requirement of the Lender

to establish or prove the value of any collateral, the lack of adequate

protection of its interest in any collateral, or the lack of equity in any

collateral; (ii) that the lifting of the automatic stay hereunder by the

appropriate bankruptcy court shall be deemed to be “for cause” pursuant to

§362(d)(1) of the bankruptcy Code (11 U.S.C. §362 (d)(1); and (iii) that

Borrower will not directly or indirectly oppose or otherwise defend against

Lender’s efforts to gain relief from the automatic stay. This provision is not

intended to preclude Borrower from filing for protection under any Chapter of

the Bankruptcy Code.  The remedies

prescribed in this paragraph are not exclusive and shall not limit Lender’s

rights under the Loan Documents, this Agreement or under any law.  All of the above terms and conditions have

been freely bargained for and are all supported by reasonable and adequate

consideration and the provisions herein are material inducements for Lender entering

into

 

7

 

this Agreement.

 

19.           Release.  Borrower hereby remises, releases, and

forever discharges Lender, its successors and assigns, its officers, directors,

employees, agents and attorneys (collectively, “Released Parties”) of and from

all actions, causes of action, suits, proceedings, debts, contracts, claims,

damages, liability and demands whatsoever, known or unknown, in law or equity,

which Borrower ever had or now has, by reason of any matter, cause, or thing

whatsoever arising from the actions or inactions of the Released Parties prior

to the date hereof including any matter relating to the Agreement, the Loan

Documents (collectively, “Released Matters”); and Borrower covenants not to sue

any of the Released Parties with respect to the Released Matters.  The release and covenant not to sue set

forth in this Section are intended by the parties to be as broad and

comprehensive as possible.  However,

this release will not cover any intentional torts or acts of gross negligence.

 

20.           Default.  Lender shall be entitled to pursue each and

every remedy hereunder and under the Loan Documents, at Lender’s sole option,

upon the occurrence of any of the following:

 

(a)                                       Borrower files a

petition for bankruptcy under any chapter of the Federal Bankruptcy Code or

takes advantage of any other debtor relief law, or an involuntary petition for

bankruptcy under any chapter of the Federal Bankruptcy Code is filed against

Borrower, or any other judicial action is taken with respect to Borrower by any

creditor;

 

(b)                                      Lender discovers

that any representation or warranty made herein by Borrower was or is untrue,

incorrect or misleading in any material respect;

 

(c)                                       After the date of this Agreement, and

except for financial covenants relating to the Borrower’s profitability for the

periods ending December 31, 2001 and March 30, 2002, Borrower’s breach or

default in the performance of any covenant or agreement contained in this

Agreement or the Loan Documents;

 

(d)                                      Lender receives any draft or request for

payment in respect of any letter of credit.

 

21.           Miscellaneous.

 

                                                                21.1  Successors and Assigns. All of the grants, covenants,

terms, conditions and agreements hereof shall be binding upon and inure to the

benefit of all of the assigns and successors in interest of the parties hereto.

 

                                                                21.2         Modification. 

Neither this Agreement nor any provision hereof may be changed,

altered, waived, amended, or discharged orally, but only by an instrument

reduced to writing, signed by all parties hereto.

 

8

 

                                                                21.3         Choice of Law. 

It is the intention of the parties hereto that the laws of the State of

Michigan shall govern the validity of this Agreement,

construction of its terms and the interpretation of the rights and duties of the

parties.

 

                                                                21.4.        Paragraph Headings. 

Headings contained in this Agreement are for

reference purposes only and shall not affect in any way the meaning or

interpretation of this agreement.

 

                                                                21.5.        Authority. 

Each party, for itself, its successors and assigns, hereby represents

and warrants that it has the full capacity and authority to enter into,

execute, deliver and perform this Agreement, and

that such execution, delivery and performance does not violate any contractual

or other obligation by which it is bound.

 

                                                                21.6.        Controlling Agreement.  This Agreement shall be construed to govern and control over any

inconsistent provisions that may be contained in the Agreement or any other

Loan Documents.

 

THIS AGREEMENT

REPRESENTS THE FINAL AGREEMENT AMONG THE PARTIES WITH RESPECT TO THE SUBJECT

MATTER HEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR ORAL OR WRITTEN,

CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS AMONG THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG

THE PARTIES.

 

 

                IN WITNESS WHEREOF, the parties

have executed this agreement as of the date and year first above written.

	

   

  	

   

  	

   

  
	

   

  	

   

  	

  BORROWER:

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  AMERICAN MEDICAL

  TECHNOLOGIES, INC. a Delaware corporation

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  By:

  	

  /s/ Benjamin J. Gallant

  
								

 

9

 

	

   

  	

   

  	

  LENDER:

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  BANK ONE, MICHIGAN

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  By:

  	

  /s/ Tipton Burch

  

 

10

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