Document:

EXHIBIT
4.3

 

ALLSTATE
401(k) SAVINGS PLAN

 

(As Amended and Restated
Effective March 1, 2009)

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  
	
  SECTION 1 - Introduction

  	
  1

  
	
   

  	
   

  
	
  1.1

  	
  Purpose

  	
  1

  
	
  1.2

  	
  Structure of the Plan

  	
  1

  
	
  1.3

  	
  Effective Date, Plan Year

  	
  3

  
	
  1.4

  	
  Employers

  	
  3

  
	
  1.5

  	
  Administration of the Plan

  	
  3

  
	
  1.6

  	
  Funding of Benefits

  	
  4

  
	
  1.7

  	
  Plan Supplements

  	
  4

  
	
   

  	
   

  	
   

  
	
  SECTION 2 - Eligibility and Participation

  	
  4

  
	
   

  	
   

  
	
  2.1

  	
  Eligibility

  	
  4

  
	
  2.2

  	
  Participation Voluntary

  	
  6

  
	
  2.3

  	
  Employees

  	
  6

  
	
  2.4

  	
  Leave of Absence

  	
  7

  
	
  2.5

  	
  Resumption of Participation

  	
  8

  
	
   

  	
   

  
	
  SECTION 3 - Participant Deposits

  	
  8

  
	
   

  	
   

  
	
  3.1

  	
  Participant Pre-Tax Deposits

  	
  8

  
	
  3.2

  	
  Participant After-Tax Deposits

  	
  9

  
	
  3.3

  	
  Payment of Participant Deposits

  	
  10

  
	
  3.4

  	
  Variation, Discontinuance and Resumption of
  Participant Deposits

  	
  10

  
	
  3.5

  	
  Eligible Compensation

  	
  11

  
	
  3.6

  	
  Maximum Amount of Participant Pre-Tax Deposits

  	
  12

  
	
  3.7

  	
  Limitation on Participant Pre-Tax Deposits

  	
  14

  
	
  3.8

  	
  Highly Compensated Employee

  	
  15

  
	
  3.9

  	
  Aggregation Rules

  	
  16

  
	
  3.10

  	
  Special Rules for Deposits

  	
  17

  
	
  3.11

  	
  Catch-Up Deposits

  	
  17

  
	
  3.12

  	
  Qualified Nonelective Contributions

  	
  20

  
	
   

  	
   

  	
   

  
	
  SECTION 4 - Employer Contributions

  	
  20

  
	
   

  	
   

  
	
  4.1

  	
  Amount of Employer Contributions

  	
  20

  
	
  4.2

  	
  Funding of Employer Contributions

  	
  21

  
	
  4.3

  	
  Individual Employer’s Share of Aggregate
  Contribution Amount

  	
  22

  
	
  4.4

  	
  Limitations on Employer Contributions

  	
  22

  
	
  4.5

  	
  Payment of Employer Contributions

  	
  23

  
	
  4.6

  	
  Verification of Employer Contributions

  	
  23

  
	
  4.7

  	
  No Interest in Employers

  	
  23

  
	
   

  	
   

  	
   

  
	
  SECTION 5 - Plan Investments

  	
  24

  
	
   

  	
   

  
	
  5.1

  	
  The Trust Fund

  	
  24

  
	
  5.2

  	
  The Investment Funds

  	
  24

  
	
  5.3

  	
  Investment Fund Elections

  	
  25

  
					

 

i

 

TABLE OF
CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  5.4 

  	
  Rollover Account, Pre-Tax Account and After-Tax
  Account Investment Fund Transfers

  	
  27

  
	
  5.5

  	
  Company Account Investment Fund Transfers

  	
  28

  
	
  5.6

  	
  Participants as Named Fiduciaries with Respect to
  the Allstate Stock Fund

  	
  29

  
	
   

  	
   

  	
   

  
	
  SECTION 6 - Period of Participation

  	
  29

  
	
   

  	
   

  
	
  6.1

  	
  Settlement Date

  	
  29

  
	
  6.2

  	
  Restricted Participation

  	
  30

  
	
  6.3

  	
  Controlled Group Member

  	
  30

  
	
   

  	
   

  	
   

  
	
  SECTION 7 - Accounting

  	
  31

  
	
   

  	
   

  
	
  7.1

  	
  Separate
  Accounts

  	
  31

  
	
  7.2

  	
  Accounting Date

  	
  32

  
	
  7.3

  	
  When Employer Contributions are Considered Made

  	
  32

  
	
  7.4

  	
  Adjustment of Participants’ Accounts

  	
  32

  
	
  7.5

  	
  Allocation of Employer Contributions

  	
  32

  
	
  7.6

  	
  Crediting of Participant Deposits and Qualified
  Nonelective Contributions

  	
  34

  
	
  7.7

  	
  Charging Distributions

  	
  34

  
	
  7.8

  	
  Rollovers

  	
  34

  
	
  7.9

  	
  Statement of Account

  	
  34

  
	
  7.10

  	
  Contribution Limitations

  	
  35

  
	
  7.11

  	
  Limitation on Allocation of Contributions

  	
  37

  
	
  7.12 

  	
  Allocation of Net Investment Gains or Losses to
  Distributions of Excess Contributions

  	
  39

  
	
   

  	
   

  	
   

  
	
  SECTION 8 - Withdrawals and Loans During
  Employment

  	
  40

  
	
   

  	
   

  
	
  8.1

  	
  Partial
  Withdrawals

  	
  40

  
	
  8.2

  	
  Hardship Withdrawal of Pre-Tax Deposits and Catch-Up
  Deposits

  	
  40

  
	
  8.3

  	
  Charging of Withdrawals

  	
  42

  
	
  8.4

  	
  Loans to Participants

  	
  42

  
	
   

  	
   

  	
   

  
	
  SECTION 9 - Payment of Account Balances

  	
  44

  
	
   

  	
   

  
	
  9.1

  	
  Vesting

  	
  44

  
	
  9.2

  	
  Manner of Distribution

  	
  47

  
	
  9.3

  	
  Commencement of Distributions

  	
  48

  
	
  9.4

  	
  Designation of Beneficiary

  	
  49

  
	
  9.5

  	
  Missing Participants or Beneficiaries

  	
  51

  
	
  9.6

  	
  Facility of Payment

  	
  52

  
	
  9.7

  	
  Direct Transfer of Eligible Rollover Distributions

  	
  52

  
	
  9.8

  	
  Distribution to Alternate Payees

  	
  53

  
	
  9.9

  	
  Forfeitures

  	
  54

  
					

 

ii

 

TABLE OF
CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  
	
  SECTION 10 - Relating to Company Shares

  	
  54

  
	
   

  	
   

  
	
  10.1

  	
  Company Shares

  	
  54

  
	
  10.2

  	
  Investment in Company Shares

  	
  54

  
	
  10.3

  	
  Dividends on Company Shares

  	
  56

  
	
  10.4

  	
  ESOP Loan Payments

  	
  59

  
	
  10.5

  	
  Release of Company Shares From Suspense Account

  	
  59

  
	
  10.6

  	
  Allocation and Crediting of Company Shares

  	
  61

  
	
  10.7

  	
  Fair Market Value

  	
  61

  
	
  10.8

  	
  Voting and Tendering of Company Shares

  	
  62

  
	
  10.9

  	
  Put Option for Purchase of Company Shares by the
  Company

  	
  63

  
	
   

  	
   

  	
   

  
	
  SECTION 11 - Administration

  	
  65

  
	
   

  	
   

  
	
  11.1

  	
  Administrative
  Committee

  	
  65

  
	
  11.2

  	
  General Powers, Rights and Duties of the
  Administrative Committee

  	
  65

  
	
  11.3

  	
  Investment Committee

  	
  67

  
	
  11.4

  	
  General Powers, Rights and Duties of the Investment
  Committee

  	
  67

  
	
  11.5 

  	
  Manner of Action of the Administrative Committee and
  Investment Committee

  	
  68

  
	
  11.6

  	
  Administrative Committee and Investment Committee
  Expenses

  	
  69

  
	
  11.7

  	
  Information Required by Administrative Committee

  	
  69

  
	
  11.8

  	
  Uniform Rules

  	
  70

  
	
  11.9

  	
  Claims Procedures

  	
  70

  
	
  11.10

  	
  Administrative Committee’s Decision Final

  	
  72

  
	
   

  	
   

  	
   

  
	
  SECTION 12 - General Provisions

  	
  73

  
	
   

  	
   

  
	
  12.1

  	
  Additional
  Employers

  	
  73

  
	
  12.2

  	
  Action by Company or Employers

  	
  73

  
	
  12.3

  	
  Waiver of Notice

  	
  73

  
	
  12.4

  	
  Gender and Number

  	
  73

  
	
  12.5

  	
  Controlling Law

  	
  73

  
	
  12.6

  	
  Employment Rights

  	
  73

  
	
  12.7

  	
  Interests Not Transferable

  	
  74

  
	
  12.8

  	
  Absence of Guaranty

  	
  74

  
	
  12.9

  	
  Evidence

  	
  74

  
	
  12.10 

  	
  Liabilities and Responsibilities of the Trustee,
  Administrative Committee, Investment Committee and Employers

  	
  74

  
	
   

  	
   

  	
   

  
	
  SECTION 13 - Amendment and Termination

  	
  75

  
	
   

  	
   

  
	
  13.1

  	
  Amendment

  	
  75

  
	
  13.2

  	
  Termination

  	
  75

  
	
  13.3

  	
  Vesting and Distribution on Termination

  	
  76

  
	
  13.4

  	
  Plan Merger, Consolidation, etc

  	
  76

  
				

 

iii

 

TABLE OF DEFINED
TERMS

 

	
  TERM

  	
   

  	
  SECTION

  	
   

  	
  PAGE

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Account

  	
   

  	
  7.1

  	
   

  	
  31

  	
   

  
	
  Accounting Date

  	
   

  	
  7.2

  	
   

  	
  32

  	
   

  
	
  Administrative Committee

  	
   

  	
  11.1

  	
   

  	
  65

  	
   

  
	
  Affiliate

  	
   

  	
  1.4

  	
   

  	
  3

  	
   

  
	
  After-Tax Account

  	
   

  	
  7.1(b)

  	
   

  	
  31

  	
   

  
	
  After-Tax Deposits

  	
   

  	
  3.2

  	
   

  	
  9

  	
   

  
	
  Annual Addition

  	
   

  	
  7.10

  	
   

  	
  35

  	
   

  
	
  Average Deferral Percentage

  	
   

  	
  3.7(a)

  	
   

  	
  14

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Basic Pre-Tax Deposits

  	
   

  	
  3.1

  	
   

  	
  8

  	
   

  
	
  Beneficiary

  	
   

  	
  9.4

  	
   

  	
  49

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Catch-Up Deposits

  	
   

  	
  3.11

  	
   

  	
  17

  	
   

  
	
  Catch-Up Eligible Participant

  	
   

  	
  3.11(a)(ii)

  	
   

  	
  19

  	
   

  
	
  Claim

  	
   

  	
  11.9

  	
   

  	
  70

  	
   

  
	
  Claimant

  	
   

  	
  11.9

  	
   

  	
  70

  	
   

  
	
  Code

  	
   

  	
  1.1

  	
   

  	
  1

  	
   

  
	
  Company

  	
   

  	
  1.1

  	
   

  	
  1

  	
   

  
	
  Company Account

  	
   

  	
  7.1(c)

  	
   

  	
  31

  	
   

  
	
  Company Shares

  	
   

  	
  10.1

  	
   

  	
  54

  	
   

  
	
  Contribution Percentage

  	
   

  	
  17.11

  	
   

  	
  37

  	
   

  
	
  Controlled Group Member

  	
   

  	
  6.3

  	
   

  	
  30

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Designated Beneficiary

  	
   

  	
  9.4

  	
   

  	
  49

  	
   

  
	
  Distributable Dividends

  	
   

  	
  10.3

  	
   

  	
  56

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Effective Date

  	
   

  	
  1.3

  	
   

  	
  3

  	
   

  
	
  Elective Deferrals

  	
   

  	
  3.6

  	
   

  	
  12

  	
   

  
	
  Eligible Compensation

  	
   

  	
  3.5

  	
   

  	
  11

  	
   

  
	
  Eligible Participant

  	
   

  	
  7.5

  	
   

  	
  32

  	
   

  
	
  Employee

  	
   

  	
  2.3

  	
   

  	
  6

  	
   

  
	
  Employer

  	
   

  	
  1.4

  	
   

  	
  3

  	
   

  
	
  ERISA

  	
   

  	
  1.1

  	
   

  	
  1

  	
   

  
	
  ESOP Loan

  	
   

  	
  10.2

  	
   

  	
  54

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fair Market Value

  	
   

  	
  10.7

  	
   

  	
  61

  	
   

  
	
  Five Year Break in Service

  	
   

  	
  9.1

  	
   

  	
  44

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Highly Compensated Employee

  	
   

  	
  3.8

  	
   

  	
  15

  	
   

  
	
  Hour of Service

  	
   

  	
  2.1

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Investment Committee

  	
   

  	
  11.3

  	
   

  	
  67

  	
   

  
	
  Investment Funds

  	
   

  	
  5.2

  	
   

  	
  24

  	
   

  
	
  Investment Manager

  	
   

  	
  11.4

  	
   

  	
  67

  	
   

  

 

iv

 

	
  TERM

  	
   

  	
  SECTION

  	
   

  	
  PAGE

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Leased Employee

  	
   

  	
  2.3

  	
   

  	
  6

  	
   

  
	
  Leave of Absence

  	
   

  	
  2.4

  	
   

  	
  7

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Nonparticipating Controlled Group Member

  	
   

  	
  6.3

  	
   

  	
  30

  	
   

  
	
  Nonvested

  	
   

  	
  9.1

  	
   

  	
  44

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Participant

  	
   

  	
  2.1

  	
   

  	
  4

  	
   

  
	
  Participant Deposits

  	
   

  	
  1.2

  	
   

  	
  1

  	
   

  
	
  Participation Share Contribution

  	
   

  	
  4.1

  	
   

  	
  20

  	
   

  
	
  Performance Share Contribution

  	
   

  	
  4.1

  	
   

  	
  20

  	
   

  
	
  Plan

  	
   

  	
  Introduction

  	
   

  	
  1

  	
   

  
	
  Plan Administrator

  	
   

  	
  11.2

  	
   

  	
  65

  	
   

  
	
  Plan Year

  	
   

  	
  1.3

  	
   

  	
  3

  	
   

  
	
  Pre-Tax Account

  	
   

  	
  7.1(a)

  	
   

  	
  31

  	
   

  
	
  Pre-Tax Deposits

  	
   

  	
  3.1

  	
   

  	
  8

  	
   

  
	
  Prior Plan

  	
   

  	
  1.3

  	
   

  	
  3

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Qualified Nonelective Contributions

  	
   

  	
  3.12

  	
   

  	
  20

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Regular Accounting Date

  	
   

  	
  7.2

  	
   

  	
  32

  	
   

  
	
  Regular Full-Time Employee

  	
   

  	
  2.1

  	
   

  	
  4

  	
   

  
	
  Regular Part-Time Employee

  	
   

  	
  2.1

  	
   

  	
  4

  	
   

  
	
  Rollover Account

  	
   

  	
  7.1(d)

  	
   

  	
  31

  	
   

  
	
  Rollover Deposit

  	
   

  	
  7.8

  	
   

  	
  34

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 415 Compensation

  	
   

  	
  7.10

  	
   

  	
  35

  	
   

  
	
  Settlement Date

  	
   

  	
  6.1

  	
   

  	
  29

  	
   

  
	
  Special Accounting Date

  	
   

  	
  7.2

  	
   

  	
  32

  	
   

  
	
  Spouse

  	
   

  	
  9.4

  	
   

  	
  49

  	
   

  
	
  Stock Bonus/ESOP

  	
   

  	
  1.1

  	
   

  	
  1

  	
   

  
	
  Subsidiary

  	
   

  	
  1.4

  	
   

  	
  3

  	
   

  
	
  Suspense Account

  	
   

  	
  10.2

  	
   

  	
  54

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Trust Fund

  	
   

  	
  5.1

  	
   

  	
  24

  	
   

  
	
  Trustee

  	
   

  	
  1.6

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Valuation Date

  	
   

  	
  7.4

  	
   

  	
  32

  	
   

  
	
  Vested

  	
   

  	
  9.1

  	
   

  	
  44

  	
   

  
	
  Vesting Service

  	
   

  	
  9.1

  	
   

  	
  44

  	
   

  

 

v

 

ALLSTATE
401(k) SAVINGS PLAN

 

(As Amended and Restated Effective
March 1, 2009)

 

SECTION 1

 

Introduction

 

The Savings and Profit Sharing Fund of Allstate
Employees, as amended and restated effective January 1, 2006, and as
subsequently amended from time to time, is hereby amended and restated
effective March 1, 2009 as set forth herein (the “Plan”) and is hereby renamed
the Allstate 401(k) Savings Plan.

 

1.1           Purpose.  The Plan is maintained by The Allstate
Corporation (the “Company”) to enable eligible Employees to provide for their
future security by accumulating funds, sharing in the contributions of the
Employers, and acquiring a proprietary interest in the Company.  The Plan consists of a profit sharing and
stock bonus plan containing a cash or deferred arrangement which is intended to
meet the requirements of Sections 401(a) and 401(k) of the Internal Revenue
Code of 1986, as amended (the “Code”). 
The stock bonus portion of the Plan includes a leveraged and a
non-leveraged employee stock ownership plan which is intended to meet the
requirements of Section 409 and Section 4975(e)(7) of the Code.  The stock bonus and employee stock ownership
portion of the Plan (the “Stock Bonus/ESOP”) is designed to invest primarily in
Company Shares (as defined in subsection 10.1), which constitute qualifying
employer securities under Section 407(d)(5) of the Employee Retirement Income
Security Act of 1974 (“ERISA”) and Section 4975(e)(8) of the Code.

 

1.2           Structure
of the Plan.  As noted in subsection
1.1 above, the Plan consists of a profit sharing component and a Stock
Bonus/ESOP component.  The Stock
Bonus/ESOP consists of a leveraged employee stock ownership plan and a
non-leveraged employee stock 

 

1

 

ownership plan.  The leveraged
portion of the Stock Bonus/ESOP consists of the Suspense Account (as defined in
subsection 10.2), all Employer Contributions and earnings that are used to
repay an ESOP Loan and, subject to Participants’ diversification/investment
elections as described below, all Company Shares allocated to Participants’
Accounts that were acquired with the proceeds of an ESOP Loan.  The non-leveraged portion of the Stock
Bonus/ESOP shall consist of the portion of each Participant’s Accounts that is
invested in the Allstate Stock Fund (other than Company Shares acquired with
the proceeds of an ESOP Loan).

 

Although the Stock Bonus/ESOP portion of the Plan is
designed to be invested primarily in Company Shares, the Company understands
and recognizes that Participants may want to diversify the investment of their
Accounts to minimize the risk of loss associated with the investment in a
single security.  Accordingly, the Plan
provides that Participants may elect to diversify all or part of their
Participant Pre-Tax Deposits, Catch-Up Deposits and After-Tax Deposits (such
Pre-Tax Deposits, Catch-Up Deposits and After-Tax Deposits shall be referred to
collectively as “Participant Deposits”), Qualified Nonelective Contributions
and Rollover Deposits by directing the Trustee to transfer such deposits and
contributions to the profit sharing portion of the Plan and invest such
deposits and contributions among the Investment Funds described in subsection
5.2(b) in accordance with and subject to the terms and conditions of subsection
5.3.  In addition, Participants may elect
to transfer all or part of their Accounts held under the Stock Bonus/ESOP
portion of the Plan to the profit sharing portion of the Plan and invest such
transferred amounts among the Investment Funds described in subsection 5.2(b)
in accordance with and subject to the terms and conditions of subsections 5.4
and 5.5.  Any amounts so transferred to
the profit sharing portion of the Plan will no longer be treated as part of the
Stock Bonus/ESOP portion of the Plan, including for purposes of determining
whether the 

 

2

 

Stock Bonus/ESOP portion of the Plan satisfies the requirement that its
assets be invested primarily in qualifying employer securities.

 

Participants may also elect to have all or part of
their Accounts invested under the profit sharing portion of the Plan
transferred to the Stock Bonus/ESOP portion of the Plan for investment in the
Allstate Stock Fund in accordance with and subject to the terms and conditions
of subsections 5.4 and 5.5.  Any amounts
so transferred to the Stock Bonus/ESOP portion of the Plan will no longer be
treated as part of the profit sharing portion of the Plan.

 

1.3           Effective
Date, Plan Year.  The Plan was
established as of June 30, 1995 as a successor to The Savings and Profit
Sharing Fund of Sears Employees (the “Prior Plan”) as it applied to Employees
of the Employers.  The “Effective Date”
of the amendment and restatement of the Plan as set forth herein is March 1,
2009.  A “Plan Year” is the 12-month
period beginning on January 1 and ending on the next following December 31.

 

1.4           Employers.  Any Subsidiary or Affiliate of the Company
may adopt the Plan with the Company’s consent, as described in subsection
12.1.  A “Subsidiary” of the Company is
any corporation 80 percent or more of the voting stock of which is owned,
directly or indirectly, by the Company. 
An “Affiliate” of the Company is any corporation 80 percent or more of
the voting stock of which is owned, directly or indirectly, by the owner or
owners of 80 percent or more of the voting stock of the Company.  The Company and any Subsidiaries or
Affiliates of the Company which adopt the Plan are referred to below
collectively as the “Employers” and sometimes individually as an “Employer.”

 

1.5           Administration
of the Plan.  The Plan is
administered by an administrative committee (the “Administrative Committee”)
appointed by the Profit Sharing Committee of the Company, as described in
Section 11.  Any notice or document
required to be given to or filed 

 

3

 

with the Administrative Committee will be properly given or filed if
delivered or mailed, by certified mail, postage prepaid, to the Administrative
Committee, the Allstate 401(k) Savings Plan, in care of the Company, at
Northbrook, Illinois.

 

1.6           Funding
of Benefits.  Funds contributed under
the Plan are held, until distribution, by a trustee (the “Trustee”) appointed
by the Company, in accordance with the terms of a trust agreement between the Company
and the Trustee which implements and forms a part of the Plan.  The provisions of and benefits under the Plan
are subject to the terms and provisions of the trust agreement.  The assets of the Plan are managed by a plan
investment committee (the “Investment Committee”) appointed by the Company, as
described in Section 11.

 

1.7           Plan
Supplements.  The provisions of the
Plan may be modified by supplements to the Plan.  The terms and provisions of each supplement
are a part of the Plan and supersede the provisions of the Plan to the extent
necessary to eliminate inconsistencies between the Plan and the supplement.

 

SECTION 2

Eligibility and
Participation

 

2.1           Eligibility.  Each Employee of an Employer will become a
“Participant” and will be eligible to participate in the Plan on the date on
which he meets all of the following requirements:

 

(a)                        He has attained age 18 years;

 

(b)                       He is either:

 

(i)                            a Regular Full-Time Employee, or

 

(ii)                         a Regular Part-Time Employee; and

 

4

 

(c)                        He is neither: (i) a resident of Puerto
Rico, nor (ii) a nonresident alien (other than a person employed by an Employer
under the H-1B visa program and working in the United States).

 

A “Regular Full-Time Employee” means any Employee of
an Employer who regularly is scheduled to work the full work week in the unit
to which he is assigned.

 

A “Regular Part-Time Employee” means any Employee of
an Employer who regularly is scheduled to work less than the full work week in
the unit to which he is assigned, but who has completed a 12-month period
commencing on his date of hire or any anniversary of his date of hire during
which he has completed 1,000 or more Hours of Service.  An “Hour of Service” means each hour for
which an Employee is directly or indirectly paid or entitled to payment by an
Employer for the performance of duties and for reasons other than the
performance of duties (but no more than 501 hours for any single continuous
period during which no duties are performed), including each hour for which
back pay, irrespective of mitigation of damages, has been either awarded or
agreed to by an Employer, determined and credited in accordance with Department
of Labor Reg. Sec. 2530.200b-2.  For this
purpose, Hours of Service shall include all hours that, under the provisions of
Sections 414(b), (c), (m), (n) and (o) of the Code, are treated as Hours of
Service with an Employer.  If an Employee
who fails to meet the requirements of subparagraph 2.1(c) has satisfied the
requirements of subparagraphs 2.1(a) and (b), he will become eligible to
participate in the Plan on the date he subsequently meets the requirements of
subparagraph 2.1(c).  If an Employee
satisfies the requirements of subparagraphs 2.1(a), (b) and (c) as of his date
of employment or reemployment by an Employer, he will become eligible to
participate in the Plan as of that date.

 

5

 

2.2           Participation Voluntary. 
Participation in the Plan on the part of eligible employees is
voluntary.  The Employers will notify
each Employee of the date on which he becomes eligible to participate in the
Plan.

 

2.3           Employees.  For all
purposes of the Plan, the term “Employee” shall not include persons who are
performing services for and/or are classified by an Employer in one of the
following categories:

 

(a)                                  An “Independent Contractor,” which means
a person who provides services to an Employer under a contract, arrangement or
understanding (i) between the Employer (or any Controlled Group Member)
and such person or (ii) between an Employer (or any Controlled Group
Member) and an agency or leasing organization, pursuant to which such person shall
perform such services as an independent agent, contractor, consultant, leased
employee (whether or not such person constitutes a leased employee within the
meaning of Section 414(n) of the Code), or in any other job
classification, title or status that is not classified or categorized as an
“employee” on the Employer’s books and records, even if such person is
determined by a court or governmental agency to be a common law employee or a
statutory employee for purposes of Code Section 3121(d).  “Independent Contractor” includes:
(a) those persons who have entered into an Exclusive Agent Independent
Contractor Agreement with an Employer, and (b) those persons who have
entered into an Exclusive Financial Specialist Independent Contractor Agreement
with the Company or any subsidiary or affiliated corporation, regardless
whether such person is considered to be a common law employee or a statutory
employee for purposes of Code Section 3121(d).

 

(b)                                 A “Full Time Temporary Employee,” which
means a person who is regularly scheduled to work the full work-week for
periods of 16 weeks or less.

 

(c)                                  A “Part Time Employee,” which means
a person who is regularly scheduled to work less than the hours that comprise a
full work-week, but who has not satisfied the time and services requirements to
be a “Regular Part Time Employee.”

 

(d)                                 A “Leased Employee,” which means, with
respect to an Employer or any Controlled Group Member (a “Recipient”), any
person who pursuant to an agreement between the Recipient and any other person
(a “Leasing Organization”) has performed services for the Recipient and any
related person (determined in accordance with Section 414(n)(6) of
the Code) on 

 

6

 

a substantially full time basis for a period of at least
one year, if such services are performed under primary direction or control by
the Recipient.  The period during which a
Leased Employee performs services for a Recipient shall be taken into account
for purposes of subsections 2.1 and 9.1 of the Plan if such Leased Employee
becomes an Employee of an Employer; unless (i) such Leased Employee is a
participant in a money purchase pension plan maintained by the Leasing
Organization which provides a non-integrated employer contribution rate of at
least 10 percent of compensation, immediate participation for all employees and
full and immediate vesting, and (ii) Leased Employees do not constitute
more than 20 percent of the Recipient’s nonhighly compensated workforce.

 

(e)                                  An “International Employee,” which means
(i) a person who is employed by an Employer whose permanent employment
location is outside of the United States, regardless whether such person is on
a temporary assignment within the United States and (ii) non-resident
aliens other than persons employed by an Employer under the H-1B visa program
and working in the Untied States.

 

(f)                                    An “Otherwise Excluded Person,” which
means any person who is excluded from participation in this Plan by any other
provision of the Plan or pursuant to an agreement with an Employer that
excludes such individual from participation in the Plan.

 

(g)                                 An “Excluded Employee Agent,” which means
an R3000 Employee Agent employed under either an Allstate R3000 Exclusive Agent
Employment Agreement or an Allstate New Jersey R3000 Exclusive Agent Employment
Agreement, or an Agent Trainee employed under an agent trainee employment
agreement including but not limited to an Allstate R2672 Agent Trainee
Employment Agreement.

 

If a person is not considered to be an “Employee” for
purposes of Plan eligibility, a later change in the person’s status, even if
the change in status is applicable to prior years, will not have a retroactive
effect for Plan purposes.

 

2.4           Leave of Absence. 
A Leave of Absence will not interrupt continuity of service or
participation in the Plan.  A “Leave of
Absence” for plan purposes means an absence from work which is not treated by
the Employers as a termination of employment or which is required by law to be
treated as a Leave of Absence.  Leaves of
Absence will be granted under employer rules applied uniformly to all Employees
similarly situated.  Effective
October 13, 1996, with 

 

7

 

respect to reemployments initiated on or after
December 12, 1994, notwithstanding any provision of the Plan to the contrary,
contributions, benefits and service credit (including Vesting Service) with
respect to qualified military service will be provided in accordance with
Section 414(u) of the Code. In addition, if a Participant dies while performing
qualified military service (as defined in Code Section 414(u)) on or after
January 1, 2008, such Participant’s beneficiaries shall be entitled to receive
the benefits that they would have been entitled to receive under this Plan
(other than benefits attributable to contributions for the period of qualified
military service) had the Participant resumed employment on the day preceding
his death and terminated employment on the date of his death.

 

2.5           Resumption of Participation. 
If a Participant’s employment with all of the Employers and Controlled
Group Members should terminate and such Participant is subsequently reemployed
by an Employer, he shall be eligible to participate in the Plan as of his date
of rehire if he then meets the requirements of subsection 2.1.  If an Employee who is not participating in
the Plan should terminate employment and then subsequently be reemployed by an
Employer, his eligibility for participation shall be determined in accordance
with subsection 2.1.

 

SECTION 3

 

Participant Deposits

 

3.1           Participant Pre-Tax Deposits. 
Under the terms stated below, and subject to any limitations required
under Code Section 401(k) or any other applicable law, and subject to any
limitations and restrictions contained in the Plan or established by the
Administrative Committee, a Participant, if he so desires, may elect to have
his Eligible Compensation (as defined in subsection 3.5) reduced and
contributed to the Plan as a “Pre-Tax Deposit.” 
The 

 

8

 

Eligible Compensation for any payroll period of any
Participant who makes an election under this subsection 3.1 will be reduced by
the percentage of Eligible Compensation specified in the Participant’s
election.  Such reduction will occur at
the time such Eligible Compensation would have been currently available to the
Participant in the absence of such election. 
The percentage of Eligible Compensation that a Participant may elect
shall not exceed the maximum percentage of Eligible Compensation permitted by
the Administrative Committee.  The
Administrative Committee may prospectively change the maximum percentage from
time to time.  Each election by a
Participant under this subsection shall be made at such time and in such way as
the Administrative Committee determines and will be subject to such rules as
the Administrative Committee may establish from time to time.  A Participant’s Eligible Compensation for any
payroll period shall be reduced by the percentage of Eligible Compensation
specified in the Participant’s election in effect under this subsection at the
time such Eligible Compensation becomes currently available to the
Participant.  An election made under this
subsection shall apply solely to Eligible Compensation that is not currently
available to the Participant as of the date the election is made and shall
remain in effect until revoked or modified by the Participant or until the
Participant fails to meet the requirements of subsection 2.1.  References in the Plan to a Participant’s
“Basic Pre-Tax Deposits” means the portion of the Participant’s Pre-Tax
Deposits for the Plan Year that does not exceed 5 percent of his Eligible
Compensation for the Plan Year.

 

3.2           Participant After-Tax Deposits. 
Under the terms stated below, and subject to any limitations required by
law, contained in the Plan or established by the Administrative Committee, a
Participant, if he so desires, may elect to make “After-Tax Deposits” under the
Plan in the percentage of Eligible Compensation (as defined in subsection 3.5)
elected by the Participant, which may not exceed the maximum percentage of his
Eligible Compensation 

 

9

 

established by the Administrative Committee.  The Administrative Committee may prospectively
change the maximum percentage from time to time.  Each election by a Participant under this
subsection shall be made at such time and in such way as the Administrative
Committee determines, and will be subject to such rules as the Administrative
Committee may establish from time to time. 
A Participant’s After-Tax Deposits for any payroll period shall be
deducted from the Participant’s Eligible Compensation for such payroll period
in an amount equal to the percentage of Eligible Compensation specified in the
Participant’s election in effect under this subsection at the time such
Eligible Compensation becomes currently available to the Participant.  An election made under this subsection shall
apply solely to Eligible Compensation that is not currently available to the
Participant as of the date the election is made and shall remain in effect
until revoked or modified by the Participant or until the Participant fails to
meet the requirements of subsection 2.1.

 

3.3           Payment of Participant Deposits. 
Each Employer shall contribute to the Trust on behalf of each
Participant employed by such Employer the amount by which such Participant’s
compensation was reduced under subsections 3.1 (Pre-Tax Deposits) and 3.11
(Catch-Up Deposits) and the amount deducted from such Participant’s
compensation under subsection 3.2 (After-Tax Deposits) as soon as practicable
after the compensation from which such amounts were so reduced or deducted is
paid to the Participant, but not later than the 15th business day of the month following the month
in which such compensation was paid.  All
Participant Deposits shall be contributed in cash.

 

3.4           Variation, Discontinuance and Resumption
of Participant Deposits.  A Participant may elect to
change his deposit rate (but not retroactively) within the limits specified in
subsections 3.1, 3.2 and 3.11, to discontinue deposits or to resume
deposits.  Each such election 

 

10

 

by a Participant shall be made at such time and in
such manner as the Administrative Committee shall determine and shall be
effective only in accordance with such rules as shall be established from time
to time by the Administrative Committee; provided, however, that any such
change or discontinuance shall apply solely to Eligible Compensation that is
not currently available to the Participant as of the date the change or
discontinuance is properly made.

 

3.5           Eligible Compensation. 
A Participant’s “Eligible Compensation” for any Plan Year shall mean,
except as excluded in this subsection 3.5, total cash compensation not in
excess of the maximum limitation described in Section 401(a)(17) of the
Code (as that limitation is adjusted from time to time by the Secretary of the
Treasury to reflect cost of living increases) paid to such Participant in the
aggregate by the Employers prior to the date of termination for personal
services rendered as an Employee during any calendar year of employment,
including: salary; wages; bonuses; pay for Paid Time Off (PTO) Bank days taken;
holiday pay; overtime pay; Employer payments for short term disability and
temporary military service; Pre-Tax Employee Deposits under this or any other
qualified profit sharing or stock bonus plan maintained by an Employer; and
pre-tax contributions to a plan designed to comply with Section 125 of the
Code.  Eligible Compensation excludes:
amounts paid in the Participant’s final paycheck received on or after the date
of termination; lump sum and periodic payments paid upon termination or
retirement, including payments in accordance with any severance policy or plan
maintained by the Employers; service allowances; stay and sign-on bonuses; lump
sum payments for PTO Bank days earned but not taken; payments related to the
cash-out of PTO Bank days bought but not taken; payments for PTO Bank days
sold;  payments made in settlement of
disputes (including amounts in lieu of wages or salary); retainers, payments or
reimbursements in connection with moving or living expenses; foreign
allowances; medical 

 

11

 

expenses reimbursements; prizes or awards, including
awards for special merit or achievement; taxable fringe benefits, including tax
gross-up payments on fringe benefits; dividends paid with respect to shares of
restricted stock; and dividend equivalents on restricted stock units, value of
stock options or stock appreciation rights and tax benefit rights relating to
stock options; cash payments received pursuant to stock options; payments under
any long-term executive compensation plans; performance units or restricted
stock awards and stock received in settlement of restricted stock units.  Eligible Compensation also excludes: payments
(including bonuses) for Plan Business (i.e., business which is placed through
or reinsured with a plan, association or organization established pursuant to a
statute or regulation or a cooperative plan of the insurance industry
(including assigned risk business, California Earthquake Authority, facility
business, flood business, and Hawaii Hurricane Relief Fund)), involuntary
insurance business (including business written under a Joint Underwriting
Association or FAIR Plan and business which is written by the Company and its
subsidiaries pursuant to an order mandating depopulation of Plan Business),
General Underwriters Agency, Inc. business, and any business owned by an
agent; retirement or profit sharing benefits; distributions from any deferred
compensation plan; amounts paid after death, disability (except Employer
payments for short term disability), termination or retirement; debt
forgiveness by the Employers; Employer-paid contributions and benefit credits
for any welfare benefit plans or any profit participation or stock plans;
long-term disability benefit payments; workers’ compensation payments; and any
other similar types of compensation which may be specifically excluded by
action of the Administrative Committee.

 

3.6           Maximum Amount of Participant Pre-Tax
Deposits.  In no event shall the sum of (i) the
Participant’s Pre-Tax Deposits, (ii) any elective deferrals excluded from the
Participant’s 

 

12

 

gross income made under any other plan described in
Section 401(k), 403(b), 408(k) or 408(p)(2) of the Code maintained by
a Controlled Group Member and (iii) if the Participant shall notify the
Administrative Committee in writing of any other plan described in Code
Section 401(k), 403(b), 408(k) or 408(p)(2) under which elective
deferrals are excluded from the Participant’s gross income, any other elective
deferrals excluded from the Participant’s gross income made under such other
plan(s) for any calendar year (such sum referred to as “Elective
Deferrals”) exceed the applicable dollar limit imposed under Code
Section 402(g)(1) for such calendar year (as adjusted for cost of
living increases as determined by the Commission of the Internal Revenue
Service) and as increased in accordance with regulations or rulings prescribed
by the Secretary of Treasury or his delegate under Code Section 402(g)(7) with
respect to any Participant who is a qualified employee (as defined in Code
Section 402(g)(7)(C)) in a plan described in Code Section
403(b) maintained by a qualified organization (as defined in Code
Section 402(g)(7)(B)). 
Notwithstanding the foregoing, for purposes of this subsection 3.6, the
term Elective Deferrals shall not include the Participant’s Catch-Up Deposits
made pursuant to subsection 3.11 or any catch-up contributions described in
Code Section 414(v) made on behalf of the Participant under any other
plan.  If, because of the foregoing
limitation and after taking into account any recharacterization of Pre-Tax
Deposits as Catch-Up Deposits required in accordance with subparagraph
3.11(b)(ii), a portion of the Pre-Tax Deposits made by a Participant may not be
credited to his Account for a calendar year, such portion (adjusted for income,
gains or losses thereon in accordance with subsection 7.12) shall be
distributed to the Participant by April 15 of the following calendar year.  Any Employer Contributions (adjusted for
income, gains and losses in accordance with subsection 7.12) made with respect
to Pre-Tax Deposits that are distributed to 

 

13

 

the Participant pursuant to this subsection 3.6 shall
be forfeited and applied to reduce future Employer Contributions.

 

3.7           Limitation
on Participant Pre-Tax Deposits. 
Notwithstanding the foregoing provisions of this Section 3, in no
event shall the Average Deferral Percentage (as defined below) for any Plan
Year of the Highly Compensated Employees (as defined in subsection 3.8) who are
Plan Participants exceed the greater of:

 

(a)                                  the Average Deferral Percentage of all
other Participants for the current Plan Year multiplied by 1.25; or

 

(b)                                 the lesser of (i) Average Deferral
Percentage of all other Participants for the current Plan Year multiplied by
2.0, or (ii) the Average Deferral Percentage of all other Participants for
the current Plan Year plus 2 percentage points.

 

The “Average Deferral Percentage” of a group of
Participants for a Plan Year means the average of the ratios, determined
separately for each Participant in such group (the “ADR”) of:  (i) the Pre-Tax Deposits made by such
Participant for such Plan Year (plus, at the discretion of the Administrative
Committee, all or any portion of the Qualified Nonelective Contributions made
on behalf of the Participant for such Plan Year); to (ii) the
Participant’s compensation (as defined in subsection 3.8) for such Plan Year.  Except to the extent provided in subparagraph
3.11(b), Catch-Up Deposits described in subsection 3.11 shall not be taken into
Account in determining the Average Deferral Percentages.  For purposes of this subsection 3.7, a
Participant means any Employee who is directly or indirectly eligible to make
Pre-Tax Deposits under the Plan.

 

If the Average Deferral Percentage for the Highly
Compensated Employees exceeds the foregoing limitations, the Pre-Tax Deposits
of the Highly Compensated Employees for the Plan Year will be reduced in the
following steps:

 

14

 

Step 1:  The aggregate
amount of the excess Pre-Tax Deposits of the Highly Compensated Employees for
the Plan Year (the “Aggregate Excess”) shall be determined by hypothetically
reducing the Pre-Tax Deposits of the Highly Compensated Participants for such
Plan Year in descending order beginning with the Highly Compensated Employees
with highest ADRs until the Average Deferral Percentage of the Highly
Compensated Employees satisfies the foregoing limitations for such Plan Year.

 

Step 2.  The Pre-Tax
Deposits made by the Highly Compensated Employees will be reduced in descending
order beginning with the Highly Compensated Employees with the largest amount
of Pre-Tax Deposits until the Highly Compensated Employees’ Pre-Tax Deposits
have been reduced by the entire Aggregate Excess.

 

If, because of the foregoing limitations and after
taking into account any recharacterization of Pre-Tax Deposits as Catch-Up
Deposits required in accordance with subparagraph 3.11(b)(iii), a portion of
the Pre-Tax Deposits made by a Highly Compensated Employee may not be credited
to his Account for a Plan Year, such portion (adjusted for income, gains or
losses thereon in accordance with subsection 7.12) shall be distributed to such
employee within two and one-half months after the end of that Plan Year.

 

If a Participant has made both excess deferrals and
excess pre-tax deposits (as defined in subsection 7.12), the return of such
amounts shall be coordinated to the extent necessary to prevent duplication.

 

Any Employer Contributions (adjusted for income, gains
and losses in accordance with subsection 7.12) made with respect to Pre-Tax
Deposits that are distributed to a Highly Compensated Employee pursuant to this
subsection 3.7 shall be forfeited and applied to reduce future Employer
Contributions.

 

3.8           Highly Compensated Employee. 
“Highly Compensated Employee” means any present or former Employee who:

 

15

 

(a)                                  was a 5 percent owner of an Employer
during the current or immediate preceding Plan Year; or

 

(b)                                 received annual compensation from the
Employers during the immediate preceding Plan Year in excess of $105,000 (in
2008 for purposes of determining Highly Compensated Employees in 2009, as
adjusted in subsequent years in accordance with regulations and rulings under Section 414(q) of
the Code).

 

For purposes of subsections 3.7, 3.8, 3.11(a), 3.12
and 7.11, an Employee’s compensation means his wages as defined in Section 3401(a) of
the Code (determined without regard to any rules that limit the
remuneration included in wages based on the nature or location of the
employment or the services performed) and all other payments of compensation to
the Employee by an Employer or Controlled Group Member for which the Employer
or Controlled Group Member is required to furnish a written statement under
Sections 6041(d), 6051(a)(3) and 6052 of the Code, increased by the
amounts excludable from income under Sections 125, 132(f)(4) and 402(e)(3) of
the Code.  For purposes of subsections
3.7, 3.11(a), 3.12 and 7.11, an Employee’s compensation (as defined above) for
a Plan Year shall not exceed the maximum limitation described in Section 401(a)(17)
of the Code (as that limitation is adjusted from time to time by the Secretary
of the Treasury to reflect cost of living increases).

 

3.9                                 Aggregation Rules. 
For purposes of subsections 3.7 and 7.11, all Participant Pre-Tax
Deposits, Participant After-Tax Deposits, Qualified Nonelective Contributions
and employer matching contributions made under two or more plans that are
aggregated for purposes of Section 401(a)(4) and Section 410(b) of
the Code (other than Section 410(b)(2)(A)(ii)) are to be treated as made
under a single plan; and if two or more plans are aggregated for purposes of Section 401(k) or
Section 401(m) of the Code, the aggregated plans must satisfy
Sections 410(b) and 401(a)(4) of the Code as if they were a single
plan.  A Highly Compensated Employee’s
deferral percentage under subsection 3.7 and contribution percentage under
subsection 7.11 shall 

 

16

 

be determined by treating all cash or deferred arrangements maintained
by an Employer or Controlled Group Member under which such Highly Compensated
Employee is eligible as one arrangement.

 

3.10                           Special Rules for Deposits. 
Deposits under this Section 3 shall be subject to the following
rules:

 

(a)                                  The amount of a Participant’s Pre-Tax
Deposits and After-Tax Deposits for a payroll period may not in the aggregate
exceed 30 percent (or such greater percentage as the Administrative Committee
may permit) of such Participant’s Eligible Compensation for such payroll
period.  Catch-Up Deposits are not taken
into Account for purposes of applying this subparagraph (a).

 

(b)                                 Participant Deposits may not be made by,
or withheld from, the compensation of any individual whose place of employment
with an Employer is outside of the United States of America and who is neither
a citizen nor a resident of the United States of America.

 

(c)                                  Participants who are residents of Puerto
Rico may not make Participant Deposits.

 

3.11                           Catch-Up Deposits. 
A Participant who has attained age 50 or who will attain age 50 before
the last day of the Plan Year (a “Catch-Up Eligible Participant”), if he so
desires, may elect to have his Eligible Compensation reduced and contributed to
the Plan as a “Catch-Up Deposit” in such amount or percentage of Eligible
Compensation as elected by the Participant. 
The amount of Catch-Up Deposits that may be made on behalf of a Catch-Up
Eligible Participant may not exceed the Participant’s Eligible Compensation (as
defined in subsection 3.5) for the payroll period reduced by Pre-Tax Deposits,
any pre-tax contributions to any plan designed to comply with Section 125
of the Code made on his behalf with respect to such Eligible Compensation and
any employment taxes or other payroll deductions.  Each election by a Catch-Up Eligible
Participant under this subsection shall be made at such time and in such way as
the Administrative Committee determines and will be subject to such rules as
the 

 

17

 

Administrative Committee may establish from time to time.  Such rules may require or permit a
Catch-Up Eligible Participant’s election to specify a percentage of Eligible
Compensation or a specified dollar amount per payroll period.

 

Subject to the limitations described in subparagraph (a) below,
a Participant’s Eligible Compensation for any payroll period shall be reduced
by the percentage of Eligible Compensation or dollar amount specified in the
Catch-Up Eligible Participant’s election in effect under this subsection at the
time such Eligible Compensation becomes currently available to the
Participant.  An election made under this
subsection shall apply solely to Eligible Compensation that is not currently
available to the Catch-Up Eligible Participant as of the date the election is
made and shall remain in effect until revoked or modified by the Participant or
until the Catch-Up Eligible Participant fails to meet the requirements of
subsection 2.1.

 

Notwithstanding the foregoing, the amount of Catch-Up
Deposits that may be made on behalf of a Catch-Up Eligible Participant for any
calendar year shall not exceed the maximum amount set forth in subparagraph (a) below.  In addition, while a Catch-Up Eligible
Participant may elect to make Catch-Up Eligible Deposits at any time during the
calendar year, the amount treated as Catch-Up Deposits for any calendar year
shall be determined as of the last day of the year after taking into account
the adjustments to the amount of Catch-Up Deposits and Pre-Tax Deposits as
described in subparagraph (b) below.

 

(a)                                  Annual Limit on Catch-Up Deposits. 
In no event shall the sum of the Participant’s Catch-Up Deposits under
the Plan and his catch-up contributions described in Section 414(v) of
the Code made under any other plan maintained by a Controlled Group Member for
a calendar year exceed the lesser of:

 

(i)                                     The applicable dollar limit imposed under
Code Section 414(v)(2)(B) for the calendar year, as adjusted for cost
of living increases in accordance with regulations or rulings prescribed by 

 

18

 

the Secretary of the Treasury or his delegate pursuant
to the provisions of Code Section 414(v)(2)(C); or

 

(ii)                                  The Catch-Up Eligible Participant’s
compensation (as defined in subsection 3.8) for such year, reduced by the
amount of the Pre-Tax Deposits made on behalf of the Participant under this
Plan for such year and the amount of Elective Deferrals (as defined in
subsection 3.6) for such year made on behalf of the Catch-Up Eligible
Participant under any other plan maintained by an Employer or Controlled Group
Member.

 

(b)                                 Year-End Adjustments to Catch-Up Deposits. 
The amount of a Catch-Up Eligible Participant’s Catch-Up Deposits for a
calendar year shall not be determinable until the last day of the year.  An amount contributed under this subsection
3.11 shall be treated as a Catch-Up Deposit only if the Participant’s Pre-Tax
Deposits for the year equal or exceed the Plan limits described in subsection
3.1 or 3.10, the statutory contribution limits described in subsection 3.6 or
7.10, or the nondiscrimination limits described in subsection 3.7.  Accordingly, as of the last day of the
calendar year, the amount of a Catch-Up Eligible Participant’s Catch-Up
Deposits and Pre-Tax Deposits for a calendar year shall be adjusted as follows.

 

(i)                                     Plan Limits. 
As of the last day of the calendar year, and before application of
subsections 3.6, 3.7 and 7.10, all or a portion of a Participant’s Catch-Up
Deposits made during such year shall be recharacterized as Pre-Tax Deposits to
the extent that such recharacterization does not cause the Participant’s
Pre-Tax Deposits for the year to exceed the maximum amount the Participant
could have elected for such year under subsection 3.1 and subsection 3.10 had
the Participant elected the maximum percentage of Eligible Compensation
permitted under subsections 3.1 and 3.10 at all times during such year.

 

(ii)                                  Statutory Limits. 
If a Catch-Up Eligible Participant’s Elective Deferrals (as defined in
subsection 3.6) for a calendar year exceed the limitations imposed under
subsection 3.6 or 7.10 for the year, the excess Pre-Tax Deposits shall be
recharacterized as Catch-Up Deposits for such year but only to the extent that
the amount of Catch-Up Deposits for such year after application of this clause (ii) does
not exceed the maximum amount of Catch-Up Deposits permitted under subparagraph
3.11(a).

 

(iii)                               Nondiscrimination
Limits.  If the Pre-Tax Deposits made on behalf of any
Catch-Up Eligible Participant who is a Highly Compensated Employee are reduced
pursuant to the nondiscrimination requirements of subsection 3.7, the Pre-Tax
Deposits so reduced shall be recharacterized as Catch-Up Deposits for such year
but 

 

19

 

only to the extent that the amount of Catch-Up
Deposits for such year after application of clauses (i) and (ii) above
does not exceed the maximum amount of Catch-Up Deposits permitted under
subparagraph 3.11(a).

 

3.12                           Qualified Nonelective Contributions. 
Each Employer shall contribute to the Trust such amount, if any, for a
Plan Year as determined by the Company in its discretion, as a Qualified
Nonelective Contribution.  Qualified
Nonelective Contributions for a Plan Year shall be allocated to the Pre-Tax
Account of the Participant who (i) is not a Highly Compensated Employee, (ii) is
employed by an Employer or Controlled Group Member on the last day of the Plan
Year and (iii) has the lowest compensation (as defined in subsection 3.8)
for the Plan Year until all Qualified Nonelective Contributions for such Plan
Year have been allocated or such Participant’s Annual Additions (as defined in
subsection 7.10) equal 5% of his compensation (as defined in subsection 3.8)
for the Plan Year.  If any Qualified
Nonelective Contributions remain after the allocation in the preceding
sentence, the Qualified Nonelective Contributions shall be allocated to the
Pre-Tax Account of the Participant meeting the criteria described in (i) and
(ii) above with the next lowest amount of compensation (as defined in
subsection 3.8) for the Plan Year until all such Qualified Nonelective
Contributions have been allocated or such Participant’s Annual Additions equal
5% of his compensation (as defined in subsection 3.8) for the Plan Year.  This process shall be repeated until all
Qualified Nonelective Contributions for the Plan Year have been allocated.  Qualified Nonelective Contributions for a
Plan Year shall be contributed no later than twelve (12) months after the last
day of such Plan Year.

 

SECTION 4

 

Employer Contributions

 

4.1                                 Amount of Employer Contributions. 
The aggregate amount of “Employer Contributions” to the Plan for each
Plan Year shall be an amount equal to the sum of the 

 

20

 

Participation Share Contribution and the Performance Share Contribution
made on behalf of all Eligible Participants (as defined in subsection 7.5) for
that Plan Year.

 

(a)                                  The amount of the “Participation Share
Contribution” made on behalf of each Eligible Participant is equal to the sum
of (i) $.50 for each $1.00 of Basic Pre-Tax Deposits made during that Plan
Year by such Eligible Participant that do not exceed 3% of his Eligible
Compensation for the Plan Year plus (ii) $.25 for each $1.00 of Basic
Pre-Tax Deposits made during that Plan Year by such Eligible Participant that
exceeds 3% of his Eligible Compensation but does not exceed 5% of his Eligible
Compensation for the Plan Year.

 

(b)                                 The amount, if any, of each Eligible
Participant’s “Performance Share Contribution” for the Plan Year shall be
determined by the Company in its sole discretion.  The amount of the Performance Share
Contribution per dollar of Participation Share Contribution for any Plan Year
shall be the same for all Eligible Participants.  Notwithstanding the foregoing, the maximum
amount of Performance Share Contributions that the Company may authorize for
any Plan Year shall not exceed the sum of (i) $.50 for each $1.00 of Basic
Pre-Tax Deposits made during that Plan Year by such Eligible Participant that
do not exceed 3% of his Eligible Compensation for the Plan Year plus (ii) $.25
for each $1.00 of Basic Pre-Tax Deposits made during that Plan Year by such
Eligible Participant that exceeds 3% of his Eligible Compensation but does not
exceed 5% of his Eligible Compensation for the Plan Year.

 

Notwithstanding the foregoing, if a Participant terminates employment
on or after January 1, 2009 and prior to January 16, 2009 and is an
Eligible Participant (as defined in subsection 7.5) for the Plan Year
commencing on January 1, 2009, then such Participant shall be entitled to
have an Employer Contribution credited to his Account for the Plan Year
commencing on January 1, 2009 in an amount that shall be no less than the
Participation Share Contribution that would have been credited to such
Participant’s Account for such Plan Year under the terms of the Plan in effect
immediately prior to the adoption of this amendment.

 

4.2                                 Funding of Employer Contributions. 
The Employer Contributions required under subsection 4.1 for any Plan
Year shall be funded (A) with the Company Shares released from the
Suspense Account under subsection 10.5 (based on the fair market value of the
shares 

 

21

 

determined as of December 31 of that Plan Year) and allocated to
the Accounts of Participants in accordance with subparagraph 10.6(b), (B) with
forfeitures and cash contributions or contributions of Company Shares (based on
the fair market value of the Company Shares as of December 31 of that Plan
Year), as provided in subsection 4.5, allocated to Participants’ Company
Accounts in accordance with the provisions of subsection 7.5, and/or (C) dividends
on Company shares held in a Suspense Account (and earnings thereon) which are
allocated directly to Participants’ Accounts pursuant to subsection 10.3.  The Company shall determine, in its sole
discretion, the portion, if any, of the Employers’ cash contributions that will
be allocated directly to Participants’ Accounts and the portion that will be
used to make principal and interest payments on outstanding ESOP Loans in
accordance with subsection 10.4 
Notwithstanding the foregoing, for any Plan Year, the minimum amount of
the Employers’ cash contributions required to be used to make principal and
interest payments on outstanding ESOP Loans shall be an amount which, after
taking into account the use of dividends and earnings in accordance with
subsection 10.3, is sufficient to meet all scheduled payments of principal and
interest on outstanding ESOP Loans.

 

4.3                                 Individual Employer’s Share of Aggregate
Contribution Amount.  The Company shall have the authority to
determine, in its complete discretion, the manner in which the Employer
Contribution expense shall be allocated among the Employers.

 

4.4                                 Limitations on Employer Contributions. 
Each Employer’s total contribution for a Plan Year is conditioned on its
deductibility under Section 404 of the Code in that year, shall comply
with the contribution limitations set forth in subsection 7.10, and shall not
exceed an amount equal to the maximum amount deductible on account thereof by
the Employer for that year for purposes of federal taxes on income.

 

22

 

4.5                                 Payment of Employer Contributions. 
The Employers’ total contribution under the Plan for any Plan Year shall
be due no later than the time prescribed by law for filing the Employer’s
federal income tax return for the taxable year ending with or within such Plan
Year, including extensions thereof; provided that Qualified Nonelective
Contributions for a Plan Year shall be contributed no later than twelve (12)
months after the last day of such Plan Year. 
Employer Contributions may be made in cash or in Company Shares, or
partly in each.  If an Employer
contributes Company Shares, (i) the Company Shares shall be valued at their
fair market value as of the last day of the Plan Year for which they were
contributed for purposes of determining the number of shares the Employer is
required to contribute pursuant to subsection 4.2 and for purposes of
determining the number of Company Shares required to be allocated to
Participants’ Company Accounts under subsection 7.5, and (ii) such Company
Shares shall be valued at their fair market value on the date of contribution
for all other purposes.

 

4.6                                 Verification of Employer Contributions. 
If for any reason the Company decides to verify the correctness of any
amount or calculation relating to an Employer’s contribution for any Plan Year,
the certificate of an independent accountant selected by the Company as to the
correctness of any such amount or calculation shall be conclusive on all
persons.

 

4.7                                 No Interest in Employers. 
The Employers shall have no right, title or interest in the Trust Fund,
nor shall any part of the Trust Fund revert or be repaid to an Employer,
directly or indirectly, unless:

 

(a)                                  the Internal Revenue Service initially
determines that the Plan, as applied to such Employer, does not meet the
requirements of Section 401(a) of the Code, in which event the
contributions made to the Plan by such Employer shall be returned to it within
one year after such adverse determination;

 

23

 

(b)                                 a contribution is made by such Employer
by mistake of fact and such contribution is returned to the Employer within one
year after payment to the Trustee; or

 

(c)                                  a contribution conditioned on the
deductibility thereof is disallowed as an expense for federal income tax
purposes and such contribution (to the extent disallowed) is returned to the
Employer within one year after the disallowance of the deduction.

 

Contributions may be returned to an Employer pursuant
to subparagraph (a) above only if they are conditioned upon initial
qualification of the Plan, and an application for determination was made by the
time prescribed by law for filing the Employer’s Federal income tax return for
the taxable year in which the Plan was adopted (or such later date as the
Secretary of the Treasury may prescribe). 
The amount of any contribution that may be returned to an Employer pursuant
to subparagraph (b) or (c) above must be reduced by any portion
thereof previously distributed from the Trust Fund and by any losses of the
Trust Fund allocable thereto, and in no event may the return of such
contribution cause any Participant’s Account balances to be less than the
amount of such balances had the contribution not been made under the Plan.

 

SECTION 5

 

Plan Investments

 

5.1                                 The Trust Fund. 
The “Trust Fund” as at any date will consist of all property of every
kind then held by the Trustee.

 

5.2                                 The Investment Funds. 
The Trust Fund shall consist of all assets held in the profit sharing
portion of the Plan and the Stock Bonus/ESOP portion of the Plan as described
in subsection 1.2.

 

(a)                                  The Allstate Stock Fund is maintained
under the Stock Bonus/ESOP portion of the Plan.

 

24

 

(i)                                    The profit sharing portion of the Plan
shall consist of three or more diversified Investment Funds designated by the
Investment Committee from time to time.

 

Pending investment, reinvestment, or distribution as
provided in the Plan, the Trustee may invest all or a portion of the assets of
any one or more of the Investment Funds in cash, commercial paper, short-term
obligations, or undivided interests or participations in common or collective
short-term investment funds.  Any
Investment Fund may be partially or entirely invested in any common or
commingled fund or in any group annuity, deposit administration or separate
account contract issued by a legal reserve life insurance company which is
invested generally in property of the kind specified for the Investment Fund.

 

The Investment Committee, in its discretion, may
direct the Trustee to establish such Investment Funds or to terminate any of
the Investment Funds (other than the Allstate Stock Fund) as it shall from time
to time consider appropriate and in the best interests of the
Participants.  The funds established
hereunder may be referred to collectively as the “Investment Funds” and
individually as an “Investment Fund.”

 

5.3                                 Investment Fund Elections. 
All Participant Deposits, Rollover Deposits, Qualified Nonelective
Contributions and Employer Contributions shall be contributed under the Stock
Bonus/ESOP portion of the Plan.  Although
Participant Deposits, Rollover Deposits and Qualified Nonelective Contributions
shall be contributed to the Stock Bonus/ESOP portion of the Plan, the Company
understands and recognizes that Participants may want to diversify the
investment of their deposits to minimize the risk of loss associated with the
investment in a single security and invest all or a portion of such deposits
and Qualified Nonelective Contributions in Investment Funds other than the
Allstate Stock Fund.  Accordingly, the
Plan provides Participants with an opportunity to diversify the investment of
all or any portion of their 

 

25

 

deposits and/or Qualified Nonelective Contributions in accordance with
the provisions of this subsection 5.3 by having such deposits and Qualified
Nonelective Contributions invested in Investment Funds other than the Allstate
Stock Fund.

 

Participant Deposits, Qualified Nonelective
Contributions and Rollover Deposits shall be temporarily invested in cash,
commercial paper, short-term obligations, or undivided interests or
participations in common or collective short-term investment funds maintained
under the Stock Bonus/ESOP pending the Trustee’s investment of such deposits in
accordance with Participants’ diversification/investment elections then in
effect.

 

If a Participant elects (as provided below) to
diversify all or any portion of such deposits and/or Qualified Nonelective
Contributions by having such deposits and Qualified Nonelective Contributions
invested in Investment Funds other than the Allstate Stock Fund, the portion of
such deposits and/or Qualified Nonelective Contributions that the Participant
has elected to diversify shall be transferred to the profit sharing portion of
the Plan as soon as reasonably practicable after such deposits and/or Qualified
Nonelective Contributions are contributed and shall be invested among the
Investment Funds in accordance with the Participant’s investment directions
under this subsection 5.3.  The portion
of such deposits and/or Qualified Nonelective Contributions that the
Participant has not elected to diversify shall be invested in the Allstate
Stock Fund as soon as reasonably practicable after such deposits are
contributed.

 

A Participant may make a diversification/investment
election under this subsection at such time, in such manner, and with respect
to such Investment Funds as the Administrative Committee shall determine, and
such election shall be effective only in accordance with such rules as the
Administrative Committee shall establish. 
A diversification/investment election under this subsection will remain
in effect with respect to all future Participant Deposits, 

 

26

 

Qualified Nonelective Contributions and Rollover
Deposits until the Participant files a new election under this subsection.  If a Participant fails to make an election
under this subsection 5.3, his Participant Deposits, Qualified Nonelective
Contributions and Rollover Deposits shall be invested in the Allstate Stock
Fund under the Stock Bonus/ESOP portion of the Plan.

 

Except as provided in subsection 5.5, Employer
Contributions shall be automatically invested in the Allstate Stock Fund under
the Stock Bonus/ESOP portion of the Plan.

 

5.4                                 Rollover Account, Pre-Tax Account and
After-Tax Account Investment Fund Transfers.  A Participant
may elect to transfer all or part of the interest of his Pre-Tax Account,
After-Tax Account and Rollover Account that is invested in the Allstate Stock
Fund to one or more of the other Investment Funds.  If the Participant elects to transfer any
portion of his Pre-Tax Account, After-Tax Account and Rollover Account from the
Allstate Stock Fund into any other Investment Fund, such portion of the
Participant’s Accounts shall be transferred from the Stock Bonus/ESOP portion
of the Plan to the profit sharing portion of the Plan and invested among the
Investment Funds in accordance with the Participant’s investment directions.

 

A Participant may also elect to have all or part of
the interest of his Pre-Tax Account, After-Tax Account and Rollover Account
that is held in an Investment Fund under the profit sharing portion of the Plan
transferred to one or more other Investment Funds in the profit sharing portion
of the Plan and/or to the Allstate Stock Fund. 
If the Participant elects to transfer any portion of his Pre-Tax
Account, After-Tax Account and Rollover Account from one or more Investment
Funds under the profit sharing portion of the Plan to one or more other
Investment Funds under the profit sharing portion of the Plan, such amounts
shall remain in the profit sharing portion of the Plan.  If the Participant elects to transfer any
portion of his Pre-Tax Account, After-Tax Account and Rollover Account from any
Investment Fund in the profit 

 

27

 

sharing portion of the Plan to the Allstate Stock
Fund, such portion of the Participant’s Accounts shall be transferred from the
profit sharing portion of the Plan to the Stock Bonus/ESOP portion of the Plan.

 

Each investment election under this subsection shall
be made at such time, in such manner, and with respect to such Investment Funds
as the Administrative Committee shall determine and shall be effective only in
accordance with such rules as shall be established from time to time by
the Administrative Committee.  Each
investment election under this subsection 5.4 shall apply to all of the
Participant’s Accounts (other than the Company Account) uniformly.  Subject to subsection 5.5, a Participant
shall not be permitted to make a separate investment election applicable only
to a single Account.

 

5.5                                 Company Account Investment Fund Transfers. 
A Participant may elect to transfer all or part of the interest of his
Company Account that is invested in the Allstate Stock Fund to one or more of
the other Investment Funds.  If the
Participant elects to transfer any portion of his Company Account from the
Allstate Stock Fund into any other Investment Fund, such portion of the
Participant’s Company Account shall be transferred from the Stock Bonus/ESOP
portion of the Plan to the profit sharing portion of the Plan and invested
among the Investment Funds in accordance with the Participant’s investment
directions.

 

A Participant who has elected to diversify a portion
of his Company Account pursuant to the preceding paragraph may subsequently
elect to have all or part of the interest of his Company Account that is held
in an Investment Fund under the profit sharing portion of the Plan transferred
to one or more other Investment Funds in the profit sharing portion of the Plan
and/or to the Allstate Stock Fund.  If
the Participant elects to transfer any portion of his Company Account from one
or more Investment Funds under the profit sharing portion of the 

 

28

 

Plan to one or more other Investment Funds under the
profit sharing portion of the Plan, such amounts shall remain in the profit
sharing portion of the Plan.  If the
Participant elects to transfer any portion of his Company Account from any
Investment Fund in the profit sharing portion of the Plan to the Allstate Stock
Fund, such portion of the Participant’s Company Account shall be transferred
from the profit sharing portion of the Plan to the Stock Bonus/ESOP portion of
the Plan.

 

Each investment election under this subsection shall
be made at such time, in such manner, and with respect to such Investment Funds
as the Administrative Committee shall determine and shall be effective only in
accordance with such rules as shall be established from time to time by
the Administrative Committee.

 

5.6                                 Participants as Named Fiduciaries with
Respect to the Allstate Stock Fund.  A Participant
shall be a named fiduciary within the meaning of Section 402 of ERISA to the
extent of his authority to elect either the continued investment of his
Accounts in Company Shares or the transfer of such shares to other Investment
Funds as provided in subsections 5.3, 5.4 and/or 5.5, as applicable.

 

SECTION 6

 

Period of Participation

 

6.1                                 Settlement Date. 
A Participant’s “Settlement Date” will be the date on which his
employment with all of the Employers is terminated for any reason.  If a Participant is transferred from
employment with an Employer to employment with a Nonparticipating Controlled
Group Member (as defined in subsection 6.3) then, for the purpose of
determining when his Settlement Date occurs under this subsection 6.1, his
employment with such 

 

29

 

Nonparticipating Controlled Group Member (or any Nonparticipating
Controlled Group Member to which he is subsequently transferred) shall be
considered as employment with the Employers.

 

6.2                                 Restricted Participation. 
If (i) payment of all of a Participant’s Account balances is not made at
his Settlement Date or (ii) a Participant transfers to a Nonparticipating
Controlled Group Member or no longer meets the requirements of subparagraph
2.1, the Participant or his beneficiary will be treated as a Participant for
all purposes of the Plan, except as follows:

 

(a)                                  The Participant will not share in
Employer Contributions after his Settlement Date or during any period he is
either employed by a Nonparticipating Controlled Group Member or fails to meet
the requirements of subparagraph 2.1, except as provided in subsection 7.5.

 

(b)                                 The Participant may not make Participant
Deposits under Section 3 after his Settlement Date or during any period he is
either employed by a Nonparticipating Controlled Group Member or fails to meet
the requirements of subparagraph 2.1.

 

(c)                                  The Participant may not make a withdrawal
under subsection 8.1 or 8.2 after his Settlement Date.  Distribution of a Participant’s Account
balances after the Participant’s Settlement Date will be made in accordance
with subsection 9.2.

 

(d)                                 The Participant may not receive a loan
under subsection 8.5 after his Settlement Date or during any period he is
employed by a Nonparticipating Controlled Group Member.

 

6.3                                 Controlled Group Member. 
A “Controlled Group Member” means:

 

(a)                                  any corporation which is a member of a
controlled group of corporations (within the meaning of Section 1563(a) of the
Code, determined without regard to Sections 1563(a)(4) and 1563(e)(3)(C)
thereof) which contains an Employer;

 

(b)                                 any trade or business (whether or not
incorporated) which is under common control with an Employer (within the
meaning of Section 414(c) of the Code); or

 

(c)                                  any trade or business (whether or not
incorporated) which is a member of an affiliated service group with an Employer
(within the meaning of Section 414(m) of the Code) or is otherwise required to
be aggregated 

 

30

 

with an Employer pursuant to regulations issued under
Section 414(o) of the Code.

 

A “Nonparticipating Controlled Group Member” means any
Controlled Group Member which is not an Employer under the Plan.

 

SECTION 7

 

Accounting

 

7.1                                 Separate Accounts. 
The Administrative Committee will maintain the following Accounts in the
name of each Participant:

 

(a)                                  a “Pre-Tax Account” which will reflect
his Pre-Tax Deposits, Catch-Up Deposits and Qualified Nonelective Contributions
under the Plan and the income, losses, appreciation and depreciation
attributable thereto;

 

(b)                                 an “After-Tax Account” which will reflect
his After-Tax Deposits under the Plan and the income, losses, appreciation and
depreciation attributable thereto (except as provided in subsection 5.2);

 

(c)                                  a “Company Account” which will reflect
his share of Employer Contributions under the Plan, his share of employer
contributions allocated under the Prior Plan, and the income, losses,
appreciation and depreciation attributable thereto; and

 

(d)                                 a “Rollover Account” which will reflect
any Rollover Deposits he made to the Plan and the income, losses, appreciation
and depreciation attributable thereto.

 

The Administrative Committee also may maintain such
other Accounts and sub-Accounts in the names of Participants or otherwise as it
considers advisable.  Accounts reflecting
a Participant’s interest in the Allstate Stock Fund shall be maintained on a
unit, rather than a share, basis.  The
accounting for the other Investment Funds shall be maintained on a unit, share
or dollar basis, as determined (on an Investment Fund by Investment Fund basis)
by the Administrative Committee.  Unless
the context indicates otherwise, references in the Plan to a 

 

31

 

Participant’s “Account” or “Accounts” means all Accounts maintained in
his name under the Plan.

 

7.2                                 Accounting Date. 
A “Regular Accounting Date” is the last day of any Plan Year.  A “Special Accounting Date” is any date
designated as such by the Administrative Committee and a special accounting
date occurring under subsection 13.3. 
The term “Accounting Date” includes both a Regular Accounting Date and a
Special Accounting Date.

 

7.3                                 When Employer Contributions are
Considered Made.  For purposes of this Section 7, Employer
Contributions for any Plan Year will be considered to have been made on the
last day of that year, regardless of when paid to the Trustee and allocated to
Participants’ Company Accounts.  Such
Employer Contributions will reflect any increase or decrease in the Fair Market
Value of the Allstate Stock Fund units between the last day of the Plan Year
and the date the Employer Contributions are actually allocated to Participants’
Accounts.

 

7.4                                 Adjustment of Participants’ Accounts. 
The income, losses, appreciation and depreciation of each Investment
Fund will be allocated as they arise to the Accounts of each Participant with
an interest in the Investment Fund, pro rata, according to the portion of the
Participant’s Account balance invested in that fund.  Adjustments under this subsection 7.4 shall
be made as of each Valuation Date, based on the fair market value of the assets
of the Investment Fund as of that date. 
A “Valuation Date” means each day on which the New York Stock Exchange
is open for business.

 

7.5                                 Allocation of Employer Contributions. 
Subject to subsections 7.10 and 7.11, the Employer Contributions to the
Plan will be allocated and credited to the Accounts of Eligible Participants
(as defined below) as follows:

 

32

 

(a)                                  Participation Share Contribution. 
As of each Regular Accounting Date, the Employers’ Participation Share
Contribution made on behalf of each Eligible Participant for the Plan Year
ending on that date shall be allocated and credited to the Company Account of
each Eligible Participant for that Plan Year in the amount determined under
subsection 4.1(a) based on his Basic Pre-Tax Deposits during that Plan Year.

 

(b)                                 Performance Share Contribution. 
As of each Regular Accounting Date, the Employers’ Performance Share
Contribution, if any, for the Plan Year ending on that date shall be allocated
and credited to the Company Account of each Eligible Participant for that Plan
Year in the proportion that the Participant’s Participation Share Contributions
for that Plan Year bears to the Participation Share Contributions made on
behalf of all Eligible Participants for such Plan Year.

 

For purposes of allocating Employer Contributions
under paragraphs (a) and (b) above for a Plan Year, the term “Eligible
Participant” means a Participant who either (i) is employed by an Employer or
Controlled Group Member on the Regular Accounting Date for such Plan Year or
(ii) was employed by an Employer at any time during the Plan Year and died, or
otherwise terminated employment with the Employers and Controlled Group Members
after both completing 20 years of Vesting Service (as defined in Section 9.1)
and attaining age 55 years (or completing 10 years of Vesting Service (as
defined in Section 9.1) and attaining age 50 years, if the termination was for
health reasons).  Amounts allocated in
error to a Participant’s Company Account under this subsection 7.5 shall be
forfeited and shall be applied to reduce future Employer Contributions for the
Plan Year in which such adjustment to the Participant’s Company Account is
actually made.

 

The number of Company Shares allocated to the Company
Account of any Participant pursuant to this subsection 7.5 shall be determined
based on the fair market value of the Company Shares as of the Regular
Accounting Date regardless of the date on which such Company Shares are
contributed or released from the Suspense Account.

 

33

 

7.6           Crediting
of Participant Deposits and Qualified Nonelective Contributions.  Subject to subsections 3.7, 5.3 and 7.11,
each Participant’s Pre-Tax Deposits, Catch-Up Deposits and Qualified
Nonelective Contributions made on his behalf will be credited to his Pre-Tax
Account under the Stock Bonus/ESOP portion of the Plan, and each Participant’s
After-Tax Deposits will be credited to his After-Tax Account under the Stock
Bonus/ESOP portion of the Plan.

 

7.7           Charging
Distributions.  All payments or
distributions made to a Participant or his beneficiary will be charged to the
appropriate Accounts of such Participant when they are made.

 

7.8           Rollovers.  At the direction of the Administrative
Committee, and in accordance with such rules as the Administrative Committee
may establish from time to time, eligible rollover distributions described in
Section 402(c)(4) of the Code or rollover amounts described in Section
403(a)(4), which are timely contributed to the Plan by a Participant or which
are transferred directly from the distributing plan to the Plan in a direct
rollover (a “Rollover Deposit”), will be credited to a Rollover Account
established in the name of the Participant when they are received by the
Trustee.  Notwithstanding the foregoing,
the Trustee shall not accept as a Rollover Deposit any amount that would be
excluded from the Participant’s gross income if it was distributed directly to
the Participant and not rolled over into the Plan or any other plan or
individual retirement account that accepts rollover contributions.  Any amount received by the Trustee for a
Participant in accordance with this subsection 7.8 shall be adjusted from time
to time in accordance with subsection 7.4 and shall be fully Vested in the
Participant for whom it is held under the Plan.

 

7.9           Statement
of Account.  Each Participant shall
be able to access information regarding his Account balances and Account
transactions on a daily basis through electronic

 

34

 

and/or telephonic media in accordance with such rules and
procedures as the Administrative Committee may establish.  No Participant, except one authorized by the
Administrative Committee, shall have the right to inspect the records
reflecting the Accounts of any other Participant.

 

7.10         Contribution
Limitations.  For each Plan Year, the
Annual Addition (as defined below) to a Participant’s accounts under all
defined contribution plans maintained by the Employers or any Controlled Group
Member shall not exceed the lesser of $46,000 (in 2009, adjusted in subsequent
years in accordance with regulations and rulings under Code Section 415(d))
or 100 percent of the Participant’s Section 415 compensation (as defined
below) during that Plan Year.  The term “Annual
Addition” for any Plan Year means the sum of the Employer Contributions,
Qualified Nonelective Contributions, Participant Deposits and forfeitures
credited to a Participant’s Accounts for that year plus the employer
contributions and employee contributions made under any other defined
contribution plan maintained by an Employer or a Controlled Group Member;
provided, however, that (i) Annual Additions shall not include catch-up
contributions described in Code Section 414(v) or rollover
contributions and (ii) for any Plan Year in which no more than one-third
of the Employer Contributions made under the Stock Bonus/ESOP portion of the
Plan which are deductible under Code Section 404(a)(9) are allocated
to Highly Compensated Employees (as defined in subsection 3.8), the Annual Addition
shall not include Employer Contributions used to pay interest on an ESOP Loan
(as defined in subsection 10.2) or forfeitures.

 

Annual Additions attributable to Company Shares
released from the Suspense Account shall be determined as provided below without
regard to the value of such Company Shares. 
The amount of a Participant’s Annual Additions attributable to Employer
Contributions used to make 

 

35

 

principal payments (and if clause (ii) of the preceding paragraph
does not apply, interest payments) on an ESOP Loan shall equal the total amount
of Employer Contributions used to make principal (and if clause (ii) of
the preceding paragraph does not apply, interest payments) on the ESOP Loan for
the Plan Year multiplied by a fraction the numerator of which is the number of
Company Shares allocated to the Participant’s Company Account under
subparagraph 10.6(b) for such Plan Year and the denominator of which is
the total number of Company Shares allocated to the Company Accounts of all
Participants under subparagraph 10.6(b) for such Plan Year.

 

A Participant’s “Section 415 compensation” means
his wages as defined in Section 3401(a) of the Code (determined
without regard to any rules that limit the remuneration included in wages
based on the nature or location of the employment or the services performed)
and all other payments of compensation to the Participant by an Employer or
Controlled Group Member for which the Employer or Controlled Group Member is required
to furnish a written statement under Sections 6041(d), 6051(a)(3) and 6052
of the Code.  Section 415
compensation shall be increased by the amounts excludable from income under
Sections 125, 132(f)(4) and 402(e)(3) of the Code but shall not
exceed the maximum limitation described in Section 401(a)(17) of the Code
(as that limitation is adjusted from time to time by the Secretary of the
Treasury to reflect cost of living increases). 
Notwithstanding the foregoing, Section 415 Compensation for a Plan
Year shall not include any compensation paid after the Participant’s severance
of employment with all Employers and Nonparticipating Controlled Group Members
unless (i) such payment is made before the later of 21⁄2 months after the
Participant’s severance of employment or the end of the Plan Year that includes
the Participant’s severance of employment and, (ii) the payment consists
of regular compensation for services actually rendered (such as base salary or
wages, 

 

36

 

commissions, bonuses, or other similar payments) that would have been
paid to the Participant while an employee had he not had a severance of
employment, or the payment is for unused accrued bona fide sick, vacation, or
other leave that the Participant would have been able to use if his employment
had continued.

 

7.11                           Limitation on Allocation of Contributions. 
Notwithstanding the foregoing provisions of this Section 7, in no
event shall the Contribution Percentage (as defined below after taking into
account the adjustments, if any, required pursuant to subsections 3.6 and 3.7)
of the Highly Compensated Employees (as defined in subsection 3.8) who are Plan
Participants for any Plan Year exceed the greater of:

 

(a)                                  the Contribution Percentage of all other
Participants for the current Plan Year multiplied by 1.25; or

 

(b)                                 the lesser of (i) Contribution
Percentage of all other Participants for the current Plan Year multiplied by
2.0, or (ii) the Contribution Percentage of all other Participants for the
current Plan Year plus 2 percentage points.

 

The “Contribution Percentage” of a group of
Participants for a Plan Year means the average of the ratios, determined
separately for each Participant in such group (the “ACR”), of:  (i) the sum of the Employer Contributions
allocated to the Participant’s Company Account under subsection 4.1 for such
Plan Year, the Participant After-Tax Deposits allocated to such Participant’s
After-Tax Account for such Plan Year and, at the discretion of the
Administrative Committee, all or any portion of the Qualified Nonelective
Contributions made on behalf of the Participant for such Plan Year (to the
extent that such Qualified Nonelective Contributions are not included in the
Average Deferral Percentage under subsection 3.7 for such Plan Year); to (ii) the
Participant’s compensation (as defined in subsection 3.8) for such Plan
Year.  Notwithstanding the foregoing,
solely for purposes of determining the Contribution Percentage of the group of
Participants who are not Highly Compensated Employees, the Employer 

 

37

 

Contributions made on behalf of any Participant who is not a Highly
Compensated Employee shall be excluded from the sum determined under clause (i) above
for such Participant for such Plan Year to the extent that such Participant’s
Employer Contributions for the Plan Year exceed the greatest of (x) 5% of
the Participant’s compensation (as defined in subsection 3.8), (y) the
Participant’s Pre-Tax Deposits for such Plan Year, or (z) the product of
2.0 times the Plan’s representative matching rate (as defined in Treasury
Regulation § 1.401(m) - 2(a)(5)(ii)(B)) times the Participant’s Pre-Tax
Deposits for such Plan Year.  For
purposes of this subsection 7.11, a Participant means any Employee who is
directly or indirectly eligible to receive Employer Contributions or to make
Participant After-Tax Deposits under the Plan for the Plan Year.

 

If the Contribution Percentage for the Highly
Compensated Employees exceeds the foregoing limitations, the Participant
After-Tax Deposits made by and Employer Contributions made on behalf of the
Highly Compensated Employees for the Plan Year will be reduced in the following
steps:

 

Step 1: 
The aggregate amount of the excess Participant After-Tax Deposits made
by and the Employer Contributions allocated to the Highly Compensated Employees
for the Plan Year (the “Aggregate Excess”) shall be determined by
hypothetically reducing the Participant After-Tax Deposits and/or Employer
Contributions of the Highly Compensated Participants for such Plan Year in
descending order beginning with the Highly Compensated Employees with highest
ACRs until the Contribution Percentage of the Highly Compensated Employees
satisfies the foregoing limitations for such Plan Year.

 

Step 2. 
First the Participant After-Tax Deposits and then the Employer
Contributions of the Highly Compensated Employees will be reduced in descending
order beginning with the Highly Compensated Employees with the largest amount
of Participant After-Tax Deposits and Employer Contributions until the Highly
Compensated Employees’ Participant After-Tax Deposits and/or 

 

38

 

Employer Contributions have been reduced by the entire
Aggregate Excess.

 

If, because of the foregoing limitations, a portion of
the Employer Contributions allocated to or the Participant After-Tax Deposits
made by a Highly Compensated Employee may not be credited to his Account for a
Plan Year, such portion (adjusted for income, gains or losses thereon in
accordance with subsection 7.12) shall be distributed to such Highly
Compensated Employee within two and one-half months after the end of that Plan
Year.

 

7.12                           Allocation of Net Investment Gains or
Losses to Distributions of Excess Contributions.  Any Pre-Tax
Deposits exceeding the limits of subsection 3.6 (“excess deferrals”) or
subsection 3.7 (“excess pre-tax deposits”), any Employer Contributions
attributable to excess deferrals or excess pre-tax deposits which must be
forfeited pursuant to subsection 3.6 or 3.7, and any After-Tax Deposits or
Employer Contributions exceeding the limits of subsection 7.11 (“excess
after-tax deposits or matching contributions”) for a Plan Year that are
distributed or forfeited pursuant to subsection 3.6, 3.7 or 7.11 shall be
increased by the net investment gains and/or reduced by the amount of any net
investment losses attributable to such distributed or forfeited
contributions.  Such net investment gains
or losses shall equal the product of:

 

(a)                                  the total investment gains or losses
credited to the Participant’s Account to which the distributed or forfeited
contributions were made for the period (the “Measuring Period”) beginning on
the first day of such Plan Year (or calendar year, as applicable) and ending a
day that is no earlier than the seventh day immediately preceding the date on
which such distribution or forfeiture is made, multiplied by

 

(b)                                 a fraction, the numerator of which is the
amount of contributions distributed or forfeited and the denominator of which
is the balance of such Account as of the first day of such Measuring Period
plus the contributions allocated to such Account during the Measuring Period.

 

Notwithstanding the foregoing, for purposes of determining the net
investment gains or losses attributable to (i) excess deferrals made for
Plan Years commencing prior to January 1, 2007, (ii) 

 

39

 

excess pre-tax deposits made on or after January 1, 2008, (iii) any
Employer Contributions made on or after January 1, 2008 with respect to
excess deferrals or excess pre-tax deposits which must be distributed or
forfeited pursuant to subsection 3.6 or 3.7, and (iv) any excess after-tax
deposits or matching contributions made for Plan Years commencing on or after January 1,
2008, the Measuring Period shall end on the last day of the Plan Year for which
such contributions were made.

 

SECTION 8

 

Withdrawals and Loans
During Employment

 

8.1                                 Partial Withdrawals. 
A Participant may elect to withdraw all or any portion of the balance in
his:

 

(a)                                  Pre-Tax Account (excluding Pre-Tax
Deposits and Catch-Up Deposits made during the Plan Year of withdrawal), if he
has attained age 591⁄2.

 

(b)                                 After-Tax Account.

 

(c)                                  Vested Company Account (excluding
Employer Contributions paid to the Plan within the past 24 months if he has
been a Participant in the Plan and the Prior Plan for fewer than 5 years).

 

(d)                                 Rollover Account.

 

Each election by a Participant under this subsection
8.1 shall be made at such time and in such manner as the Administrative
Committee shall determine and shall be effective in accordance with such rules as
the Administrative Committee shall establish.

 

8.2                                 Hardship Withdrawal of Pre-Tax Deposits
and Catch-Up Deposits.  Subject to the following provisions
of this subsection 8.2, a Participant who has not attained age 591⁄2 may elect to
withdraw all or any portion of his Pre-Tax Deposits and Catch-Up Deposits
(excluding Pre-Tax Deposits and Catch-Up Deposits made during the Plan Year of
withdrawal) then credited to 

 

40

 

his Pre-Tax Account (but not in excess of the then balance in such
Account); provided that the withdrawal is necessary in light of immediate and
heavy financial needs of the Participant. 
Such a withdrawal shall not exceed the amount required to meet the
immediate financial need and not reasonably available from other resources of
the Participant (including all other distributions and non-taxable loans
currently available under the Plan).  Each
such election shall be made at such time and in such manner as the
Administrative Committee shall determine and shall be effective in accordance
with such rules as the Administrative Committee shall establish and
publish from time to time.  Immediate and
heavy financial needs are limited to amounts necessary for:

 

(a)                                  Medical expenses incurred by the
Participant, his spouse or his dependents that are not reimbursed or
compensated through insurance or otherwise.

 

(b)                                 Purchase (excluding mortgage payments) of
a principal residence for the Participant.

 

(c)                                  Payment of tuition and related
educational fees for the next 12-months of post-secondary education for the
Participant, his spouse or his dependents.

 

(d)                                 Preventing foreclosure on or eviction
from the Participant’s principal residence.

 

(e)                                  Payment of funeral expenses for the death
of a relative of the Participant.

 

(f)                                    Payment of uninsured costs of repairing
the Participant’s principal residence as a result of a catastrophic event.

 

If a Participant makes a withdrawal under this
subsection 8.2, he must discontinue making Pre-Tax Deposits and After-Tax
Deposits under the Plan and all other elective deferrals (other than catch-up
contributions described in Section 414(v) of the Code) and employee
contributions under any other qualified and nonqualified plans of deferred
compensation maintained by an Employer or Controlled Group Member as of the
date of withdrawal, and he may not resume making such contributions until six
months after such hardship withdrawal is approved.

 

41

 

8.3                                 Charging of Withdrawals. 
A withdrawal in cash by a Participant under subsection 8.1 or 8.2 shall
be charged to the interest of the Participant’s Account in the Investment Funds
on a proportionate basis.  A withdrawal
in the form of shares of stock by a Participant under subsection 8.1 shall be
charged to the portion of the Participant’s Account that is invested in the
Allstate Stock Fund.  Any withdrawal by a
Participant under subsection 8.1 shall be deemed to apply first to his
After-Tax Account, then to his Rollover Account, then to his Company Account,
and finally to his Pre-Tax Account. 
Withdrawals under subsection 8.1 in the form of both cash and shares of
stock shall be treated first as an election to withdraw shares and then as an
election to withdraw cash.  In
determining the amount any Participant may withdraw hereunder, the portion of
the Participant’s Accounts that is invested in one or more outstanding loans
made to the Participant pursuant to subsection 8.4 shall not be available for
withdrawal under subsections 8.1 or 8.2.

 

8.4                                 Loans to Participants. 
While it is the primary purpose of the Plan to accumulate funds for the
Participants when they retire, it is recognized that under some circumstances,
it is in the best interests of Participants to permit loans to be made to them
while they continue in the active service of the Employers.  Accordingly, the Administrative Committee,
pursuant to such rules as it may from time to time establish, and upon
application by a Participant supported by such evidence as the Administrative
Committee requests, may direct the Trustee to make a loan from the Trust Fund
to a Participant subject to the following:

 

(a)                                  The principal amount of any loan made to
a Participant, when added to the outstanding balance of all other loans made to
the Participant from all qualified plans maintained by the Employers, shall not
exceed the lesser of:

 

(i)                                     $50,000, reduced by the excess (if any)
of the highest outstanding balance during the one-year period ending
immediately preceding 

 

42

 

the date of the loan, over the outstanding balance on
the date of the loan, of all such loans from all such plans; or

 

(ii)                                  one-half of the Participant’s Vested
Account balances under the Plan.

 

(b)                                 The loan proceeds shall be taken from the
Participant’s Accounts in the following order: 
(1) Pre-Tax Account, (2) Rollover Account and (3) his
After-Tax Account.  No loans may be made
from any portion of the Participant’s Company Account.  The loan proceeds shall be taken pro rata
from each Investment Fund in which the Participant’s Account is invested as of
the date the loan is made.

 

(c)                                  Each loan must be evidenced by a written
note in a form approved by the Administrative Committee, shall bear interest at
a reasonable rate, and shall require substantially level amortization (with
payments at least quarterly) over the term of the loan.

 

(d)                                 Each note representing a loan to a
Participant will be segregated in a separate fund held by the Trustee as a
separate earmarked investment solely for the Account of the Participant.

 

(e)                                  The loan and any accrued but unpaid
interest with respect thereto, shall constitute a first lien upon the interest
of such Participant in the Accounts from which the loan is made to the extent
that the loan and accrued interest is unpaid.

 

(f)                                    Each loan shall specify a repayment
period that shall not extend beyond five years. 
However, the five year limit shall not apply to any loan used to acquire
any dwelling unit which within a reasonable time is to be used (determined at
the time the loan is made) as the principal residence of the Participant.

 

In the event that a Participant fails to repay a loan
according to its terms and foreclosure occurs, the Plan may foreclose on the
portion of the Participant’s Accounts that secures the loan; provided that the
Plan may not foreclose on a Participant’s Pre-Tax Account until the earlier of
the date Participant attains age 591⁄2 or he terminates employment with all
Employers and Controlled Group Members. 
Such foreclosed amount shall be charged to the Participant’s Accounts
and deemed to be a distribution therefrom. 
All outstanding loans made to a Participant under the Plan shall be
accelerated upon his Settlement Date.  If
the Participant fails to repay any

 

43

 

such loan or portion of a loan within the applicable
repayment period following his Settlement Date in accordance with the Plan’s
loan procedures, together with the accrued interest thereon, an amount equal to
the unpaid balance of such loan, together with any accrued interest thereon,
shall be charged to the Participant’s Accounts and treated as a distribution
therefrom, after all other adjustments required under the Plan, but before any
distribution pursuant to subsection 9.4. 
Loan repayments will be suspended under the plan as permitted under Section 414(u)(4) of
the Code.

 

SECTION 9

 

Payment of Account
Balances

 

9.1           Vesting.  A Participant’s right to his Pre-Tax Account,
After-Tax Account and Rollover Account shall be fully Vested at all times.  A Participant shall become fully Vested in
his Company Account if:

 

(a)                                  On or before his Settlement Date, the
Participant dies, attains age 65 (his normal retirement date) or completes
three (3) years of Vesting Service (as defined below); or

 

(b)                                 The Participant became eligible to
participate in this Plan at any time prior to March 1, 2009.

 

If a Participant is not Vested in his Company Account
on his Settlement Date, he will forfeit his entire Company Account balance on
the earlier of (i) the last day of the Plan Year in which he completes a
Five Year Break in Service (as defined below) or (ii) the date he receives
a distribution of his entire Vested Account balance.

 

If a Participant’s Company Account has been forfeited
and the Participant subsequently resumes employment with any  Controlled Group Member before he has
completed a Five Year Break in Service, the amount forfeited from his Company
Account (without any adjustment to 

 

44

 

reflect imputed investment earnings after such
forfeiture occurs) shall be reinstated to the Participant’s Company Account
within ninety (90) days after he resumes active employment out of forfeitures
occurring during the Plan Year in which such restoration occurs and to the
extent that forfeitures are not sufficient, the Company shall make a
contribution in an amount sufficient to restore such forfeitures.  The restored forfeitures will be invested in
the Investment Funds designated by the Participant pursuant to subsection 5.3;
provided, however, that if the Participant has not made an investment election
under subsection 5.3 on or after the date he resumes active employment, the
restored forfeitures will be invested in the default Investment Fund designated
by the Investment Committee.

 

For purposes of this subsection 9.1, the term “Vesting
Service” means all periods of employment as an employee (or as a Leased
Employee) of any Controlled Group Member, including a period in which such
person is on a leave of absence granted by such Controlled Group Member.  If a Participant severs his employment with
all Controlled Group Members and subsequently resumes employment with a
Controlled Group Member before the first anniversary of the day next following
the date of severance of the Participant’s previous period of employment with
all such entities, such severance from employment will be disregarded for
purposes of determining whether the Participant has a Five Year Break in
Service and the period between such severance of employment and re-employment
shall also be included as Vesting Service. 
Solely for purposes of determining a Participant’s Vesting Service under
the previous sentence (but not for any other provision in this Plan including,
without limitation, for purposes of determining the Participant’s eligibility
to make Participant Deposits under Section 3 or receive an allocation of
Employer Contributions under subsection 7.5), a severance from employment for a
Participant who is absent from work by reason of a maternity or paternity 

 

45

 

absence and who continues to be absent from work
beyond the first anniversary of the first day of such absence shall be deemed
to have occurred on the first anniversary of such absence.  For this purpose, an absence for maternity or
paternity reasons means an absence by reason of (1) the pregnancy of the
Employee, (2) the birth of the child of the Employee, (3) the
placement of a child with the Employee in connection with the adoption of such
child by Employee, or (4) the purpose of caring for such child following
such birth or placement; provided that this sentence and the prior sentence
shall only apply if the Participant has provided notice to the Employers that
he or she is taking maternity or paternity leave.  Vesting Service shall also include any period
that a Participant is considered to be an employee of a domestic corporation
under the provisions of Code Section 406 or a domestic parent corporation
under the provisions of Code Section 407. 
With respect to persons employed by American Heritage Life Insurance
Company on December 31, 2003 whose employment was transferred to Allstate
Insurance Company on January 1, 2004, Vesting Service shall also include
all periods of employment with American Heritage Life Insurance Company that
precedes periods of service as an employee of a Nonparticipating Controlled
Group Member.

 

For purposes of this subsection 9.1, a Participant
will have had a “Five Year Break in Service” if the Participant has a period of
severance lasting for a period of at least five consecutive years.  A Participant’s period of severance means the
period commencing on the date the Participant has a severance from employment
with all Controlled Group Members and ending on the date the Participant is
re-employed by any Controlled Group Member; provided, however, that the period
of severance for a Participant who is absent from work by reason of a maternity
or paternity absence and who continues to be absent from work beyond the first 

 

46

 

anniversary of the first day of such absence shall be
deemed to commence on the second anniversary of such absence.

 

For purposes of this Plan, a Participant’s “Vested”
Account is the portion of the Participant’s Account that is
nonforfeitable.  A Participant’s “Nonvested”
Account is the portion of the Participant’s Company Account that is forfeitable
in accordance with this subsection 9.1.

 

9.2           Manner
of Distribution.  Subject to the
conditions set forth below and the provisions of subsection 9.3, after each
Participant’s Settlement Date, distribution of the balances in the Participant’s
Accounts (to the extent Vested) will be made to or for the benefit of the
Participant by either of the following methods:

 

(a)                                  By payment in one lump sum distribution.

 

(b)                                 By payment in one or more partial
distributions during the period ending on the last day of the month in which
the Participant attains age 69.

 

If a Participant dies before complete distribution of
his Vested benefits and his beneficiary is his surviving spouse, the remaining
portion of his benefits may be distributed by either of the methods set forth
in subparagraphs (a) and (b) next above at any time during the period
following the Participant’s death and ending on or before the last day of the
month in which the Participant would have attained age 69 had he survived.  If a Participant dies before complete
distribution of his benefits and his beneficiary is not his surviving spouse,
his remaining Vested benefits shall be distributed in the form of a lump sum
cash payment as soon as practicable after his date of death, but no later than
90 days after the date on which a separate Account is established in the name
of the beneficiary.  Distributions shall
be made in the form of cash; provided, however, that a Participant and his
surviving spouse may elect, pursuant to such rules as the Administrative
Committee may establish, to receive distribution of their interest in 

 

47

 

the Allstate Stock Fund in the form of Company
Shares.  Notwithstanding the provisions
of this subsection 9.2, a Participant may elect to have any specified
percentage of his Account distributed in the form of Company Shares.  Any Company Shares so distributed shall be
valued at their fair market value (as defined in subsection 10.7) on the date
of distribution.  All distributions under
the Plan shall comply with the requirements of Section 401(a)(9) of
the Code and the final regulations thereunder.

 

9.3           Commencement
of Distributions.  If a Participant’s
Vested Account balances at the time of distribution do not exceed $1,000,
distribution shall be made to the Participant, or in the case of his death, to
his beneficiary, in the form of a lump sum cash payment as soon as practicable
after his Settlement Date.  If a
Participant’s Vested Account balances at the time of distribution exceed
$1,000, the Participant or his surviving spouse may elect, in accordance with
such rules as the Administrative Committee may establish, to defer
commencement of distribution of the Participant’s benefits to a date not later
than the last day of the month in which the Participant attains (or would have
attained) age 69.  Except as provided
below in this paragraph, all of a Participant’s remaining Vested Account
balances shall be distributed as soon as practicable after the end of the month
in which the Participant attains (or would have attained) age 69.  If a Participant’s Settlement Date has not
occurred by the last day of the month in which he attains age 69, his remaining
Vested Account balances shall be distributed by payment in a lump sum as soon
as practicable after his Settlement Date.

 

Notwithstanding the foregoing, the Vested Account
balances of a Participant who is a five percent owner (as defined in Section 416
of the Code) with respect to the Plan Year ending in the calendar year in which
he attains age 701⁄2 shall be distributed no later than April 1 of the
following calendar year and the Vested Account balances of a Participant who is
not a five 

 

48

 

percent owner with respect to the Plan Year ending in
the calendar year in which he attains age 701⁄2 shall be distributed no later
than April 1 following the later of the calendar year in which he attains
age 701⁄2 or retires.  Moreover, a
Participant’s Vested benefits shall be distributed (unless the Participant
elects otherwise) no later than the 60th day after the latest of the close of
the Plan Year in which (i) such Participant attains age 65, (ii) occurs
the 10th anniversary of the date on which such Participant commenced
participation in the Plan, or (iii) such Participant’s employment with all
Employers is terminated; provided, however, that the Participant’s failure to
request a distribution shall be deemed to be an election to defer commencement
of distributions for purpose of this paragraph. 
Nothing in this paragraph shall be construed to permit any Participant
to defer distribution of his benefits to any date that is later than the latest
date on which such Participant’s distributions may be paid under the first
paragraph of this subsection 9.3.

 

9.4           Designation
of Beneficiary.  Each Participant
from time to time, by signing a form furnished by the Administrative Committee,
may designate any person or persons (who may be designated concurrently,
contingently or successively) to whom his Vested benefits are to be paid if he
dies before he receives all of his Vested benefits.  A beneficiary designation form will be
effective only when the form is filed with the Administrative Committee while
the Participant is alive, and an effective beneficiary designation will cancel
all beneficiary designation forms previously filed with the Administrative
Committee.  If a Participant designates
someone other than (or in addition to) his spouse as his primary beneficiary,
his spouse must consent in writing to the designation.  Such a consent will be effective only if it
acknowledges the specific beneficiary and the effect of the beneficiary
designation, is witnessed by a notary public, and may not be changed without
further spousal consent.  If a
Participant 

 

49

 

designates someone other than (or in addition to) his spouse as his primary
beneficiary, and his spouse does not (or cannot) consent and is living at his
death, the Participant’s beneficiary designation shall be ineffective, and his
benefits shall be distributed to his spouse. 
If a deceased Participant failed to designate a beneficiary as provided
above, or if all of the designated beneficiaries die before the Participant,
the Participant’s benefits shall be distributed to his spouse or, if there is
no surviving spouse, to the legal representative or representatives of the estate
of the Participant; provided, however, that in the absence of an estate, the
Participant’s benefits shall be distributed to the person or persons who would
be entitled to receive the benefits under the laws of descent and distribution
of the State of Illinois.  If a
beneficiary who is living at the Participant’s death dies before complete
payment of the Participant’s benefits, the Participant’s benefits shall be
distributed to the legal representative or representatives of the estate of
such beneficiary; provided, however, that if the beneficiary is the surviving
spouse of the Participant, the Participant’s benefits shall be distributed in
accordance with the spouse beneficiary’s properly completed beneficiary
designation form, if any.  Notwithstanding
the foregoing, if a deceased Participant’s beneficiary, including his spouse,
disclaims his right to the Participant’s Accounts in accordance with Section 2518
of the Code, such beneficiary shall be treated as having predeceased the
Participant.  The term “designated
beneficiary” as used in the Plan means the person or persons (including a
trustee or other legal representative acting in a fiduciary capacity)
designated by a Participant as his beneficiary in the last effective
beneficiary designation form filed with the Administrative Committee under this
subsection and to whom a deceased Participant’s benefits are payable under the
Plan.  The term “beneficiary” as used in
the Plan means the natural or legal person or persons to whom a deceased
Participant’s benefits are payable under this subsection.  The term “spouse” as used in this subsection
means the spouse to 

 

50

 

whom the Participant was married at the earlier of the date of his
death or the date payment of his benefits commenced, and who is living at the
date of the Participant’s death.  With
respect to each Participant in the Plan who was a Participant in the Prior
Plan, the last effective beneficiary designation form filed by such Participant
under the Prior Plan shall remain in effect under the Plan unless and until
changed by the Participant in accordance with the provisions of this subsection
9.4; provided, however, that any beneficiary designation form signed by a
Participant before October 1, 1991, that has not been re-signed by the
Participant on or after October 1, 1991, shall be invalid and shall not be
given effect.

 

9.5           Missing
Participants or Beneficiaries.  Each
Participant and each designated beneficiary must file with the Administrative Committee
from time to time in writing his post office address and each change of post
office address.  Any communication,
statement or notice addressed to a Participant or beneficiary at his last post
office address filed with the Administrative Committee, or if no address is
filed with the Administrative Committee then, in the case of a Participant, at
his last post office address as shown on the Employers’ records, will be
binding on the Participant and his beneficiary for all purposes of the
Plan.  Neither the Employers nor the
Administrative Committee will be required to search for or locate a Participant
or beneficiary.  If the Administrative
Committee attempts to notify a Participant or beneficiary that he is entitled
to benefits under the Plan, and the Participant or beneficiary fails to claim
his benefits or make his whereabouts known to the Administrative Committee
within a reasonable time after the notification, the benefits of the
Participant or beneficiary shall be forfeited; provided that such benefits
shall be reinstated if the Participant or beneficiary makes a claim for the
forfeited benefits.

 

51

 

9.6           Facility
of Payment.  When a person entitled
to benefits under the Plan is under legal disability, or, in the Administrative
Committee’s opinion, is in any way incapacitated so as to be unable to manage
his financial affairs, the Administrative Committee may direct the Trustee to
pay the benefits to such person’s legal representative, or to a relative or
friend of such person for such person’s benefit, or the Administrative
Committee may direct the application of such benefits for the benefit of such
person.  Any payment made in accordance
with the preceding sentence shall be a full and complete discharge of any
liability for such payment under the Plan.

 

9.7           Direct
Transfer of Eligible Rollover Distributions.  If payment of a Participant’s Vested benefits
constitutes an “Eligible Rollover Distribution” (as defined below), then the
Participant, the Participant’s spouse or other “Eligible Distributee” (as
defined below) may elect to have such distribution payable directly to an
eligible retirement plan described in Section 402(c)(8)(B) of the
Code; provided, however, that the portion, if any, of an Eligible Rollover
Distribution that would not be includable in the Participant’s gross income if
distributed to the Participant shall not be paid directly to any eligible
retirement plan other than a qualified retirement plan described in Code Section 401(a) or
403(a), an individual retirement account described in Code Section 408(a) or
an individual retirement annuity described in Code Section 408(b).  In addition, the portion, if any, of an
Eligible Rollover Distribution that is payable to the Participant’s non-spouse
beneficiary shall not be paid directly to any eligible retirement plan other
than an individual retirement account described in Code Section 408(a) or
an individual retirement annuity described in Code Section 408(b).  Each election under this subsection 9.7 shall
be made at such time and in such manner as the Administrative Committee shall
determine 

 

52

 

and shall be effective
only in accordance with such rules as shall be established from time to time
by the Administrative Committee.

 

An “Eligible Rollover Distribution” means any distribution of all
or any portion of the balance to the credit of an Eligible Distributee, except
that an Eligible Rollover Distribution does not include:  (i) any distribution that is one of a
series of substantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the distributee or the
joint lives (or joint life expectancies) of the distributee and the distributee’s
beneficiary, or over a specified period of ten years or more; (ii) any
distribution to the extent such distribution is required under Code Section 401(a)(9);
or (iii) any distribution made on account of hardship.

 

An “Eligible Distributee,” with respect to a
Participant’s Vested Accounts, means the Participant, the Participant’s
surviving spouse or former spouse who is an alternate payee under a qualified
domestic relations order and any non-spouse beneficiary of the Participant who
is a “designated beneficiary” within the meaning of Code Section 401(a)(9)(E).

 

9.8           Distribution
to Alternate Payees.  The Trustee, in
accordance with such rules and procedures as the Administrative Committee
from time to time shall establish, may distribute Vested benefits to an alternate
payee on the earliest date specified in a qualified domestic relations order,
without regard to whether such distribution is made or commences prior to the
Participant’s earliest retirement age (as defined in Section 414(p)(4)(B) of
the Code) or the earliest date that the Participant could commence receiving
benefits under the Plan.  Unless a
qualified domestic relations order provides otherwise, an alternate payee’s
benefits shall be distributed in the form of a lump sum cash payment no later
than 90 days after the date on which a separate Account is established in the
name of the alternate payee.

 

53

 

9.9                                 Forfeitures. 
In the event of a forfeiture under the Plan of all or any portion of a
Participant’s Account balance, such forfeiture shall be applied to restore
forfeitures, pursuant to Section 9.1, against expenses of the Plan or as a
reduction in the amount of Employer Contributions required under the Plan, as
the Plan Administrator in his discretion shall determine.

 

SECTION 10

 

Relating to Company
Shares

 

10.1                           Company Shares. 
The Stock Bonus/ESOP portion of the Plan is intended to be invested
primarily in Company Shares.  For all
purposes of the Plan, the term “Company Shares” means common stock of the
Company.

 

10.2                           Investment in Company Shares. 
Subject to Participants’ investment election under subsections 5.3, 5.4
and 5.5, Participant Deposits, Rollover Deposits, Qualified Nonelective
Contributions and Employer Contributions under the Plan shall be invested by
the Trustee in Company Shares primarily to provide Participants with whole or
fractional interests in Company Shares which shall be held in the Allstate
Stock Fund under the Stock Bonus/ESOP portion of the Plan.  For any period during which funds held by the
Trustee under the Stock Bonus/ESOP portion of the Plan are not invested in
Company Shares, such funds may be retained in cash or invested in short-term
securities.  Company Shares may be
acquired by the Trustee, subject to applicable law, through private purchases,
purchases from the Company (including purchases from the Company of treasury
shares or authorized but unissued shares), or otherwise.

 

The Trustee is authorized to incur debt (an “ESOP Loan”)
for the purpose of acquiring Company Shares or for the purpose of repaying all
or any portion of any outstanding ESOP 

 

54

 

Loan, including any debt or portion thereof incurred by the trustees of
the Prior Plan which may be assumed or refinanced by the Trustee.  The terms of any ESOP Loan as set forth in
the applicable loan agreement (and other related agreements) shall be subject
to the conditions and restrictions set forth in the applicable provisions of
the trust agreement or agreements between the Company and the Trustee.

 

The terms of the ESOP Loan shall satisfy the following
requirements:

 

(a)                                  The interest rate on the ESOP Loan may
not be in excess of a reasonable rate of interest;

 

(b)                                 The ESOP Loan shall be for a specific
term and not payable upon demand except in the event of default;

 

(c)                                  The ESOP Loan shall be, at the time the
loan is made (i) primarily for the benefit of Participants and
beneficiaries, (ii) at a reasonable rate of interest, and (iii) under
terms at least as favorable to the Plan as the terms of a comparable ESOP Loan
resulting from arms-length negotiations between independent parties;

 

(d)                                 At the time the ESOP Loan is made, the
interest rate on the ESOP Loan and the price of the Company Shares acquired
with the proceeds of the ESOP Loan should not be such that Plan assets may be
drained off;

 

(e)                                  The proceeds of the ESOP Loan must be
used within a reasonable time after their receipt to acquire Company Shares, to
repay such ESOP Loan or to refinance or repay a prior exempt loan;

 

(f)                                    Company Shares acquired with the proceeds
of an ESOP Loan shall be credited to a “Suspense Account” until released in
accordance with subsection 10.5;

 

(g)                                 The ESOP Loan shall be without recourse
against the Plan and the assets that may be given as collateral for the ESOP
Loan shall be limited to the Company Shares acquired with the proceeds of the
ESOP Loan or Company Shares that were purchased with the proceeds of a prior
exempt loan that is being repaid with the proceeds of the ESOP Loan;

 

(h)                                 No person entitled to payment under the
ESOP Loan shall have any right to any assets of the Plan other than (i) the
collateral given for the ESOP Loan, (ii) earnings on such collateral
(including but not limited to dividends paid on unallocated Company Shares held
in the Suspense 

 

55

 

Account) and (iii) Employer Contributions made to
satisfy the Plan’s obligations under the ESOP Loan;

 

(i)                                     In the event of a default upon the ESOP
Loan, the value of the Plan assets that may be transferred in satisfaction of
the ESOP Loan shall not exceed the amount of the default and, if the lender is
a party in interest or disqualified person, only to the extent of the failure
of the Plan to meet the payment schedule of the ESOP Loan; and

 

(j)                                     If Company Shares acquired with the
proceeds of an ESOP Loan consist of more than one class of security, upon
distribution of the Company Shares to a Participant, the distribution must be
made in substantially the same proportion of each class of Company Shares held
by the Plan.

 

10.3                           Dividends on Company Shares. 
Cash dividends on Company Shares held in a Suspense Account as of the
last day of the Plan Year, and the earnings thereon for a Plan Year, shall be
allocated between payment of principal and interest on the ESOP Loan maintained
with respect to such Suspense Account and direct allocation to Participants’
Accounts in such manner that the sum of (x) the fair market value
(determined as of December 31 of such Plan Year) of the Company Shares
released from the Suspense Account as a result of using cash dividends to make
principal and interest payments for such Plan Year on the outstanding ESOP Loan
plus (y) the dividends and earnings that are not used to make payments on
the outstanding ESOP Loan but are instead allocated directly to Participants’
Accounts for such Plan Year equals:

 

(a)                                  The aggregate amount of the Employer
Contributions for that Plan Year as determined under subsection 4.1

 

minus

 

(b)                                 The sum of (i) the amount of cash
contributions and contributions of Company Shares (based on the fair market
value of the Company Shares as of December 31 of such Plan Year) designated
by the Company for direct allocation to Participants’ Accounts for that Plan
Year plus (ii) the fair market value (determined as of December 31 of
that Plan Year) of the Company Shares released from the Suspense Account for
such Plan Year as a result of using cash contributions to make principal and
interest payments on the ESOP Plan.

 

56

 

Cash dividends on Company Shares acquired with the
proceeds of an ESOP Loan that have been allocated to Participants’ Accounts
shall, at the direction of the Administrative Committee, be:  (a) used to make payments on such ESOP
Loan (or an ESOP Loan that refinanced such ESOP Loan), (b) reinvested in
Company Shares and/or (c) distributable to Participants and beneficiaries
(as provided below).

 

Cash dividends on Company Shares that were not
acquired with the proceeds of an ESOP Loan shall, at the direction of the
Administrative Committee, be:  (a) reinvested
in Company Shares or (b) distributable to Participants and beneficiaries
(as provided below); provided, however, if the Administrative Committee so
directs, cash dividends on Company Shares acquired prior to August 5, 1989
also shall be used to make payments on outstanding ESOP Loans.

 

Any amount that is applied to make a payment on an
outstanding ESOP Loan after the last day of a Plan Year (the “prior plan year”),
but on or before the due date (including extensions thereof) for the filing of
the federal income tax return of the Company for the tax year in which the last
day of such prior plan year occurs, may be designated by the Company as a
payment with respect to such prior plan year.

 

Any cash dividends on Company Shares allocated to
Participants’ Accounts that the Administrative Committee designates as
distributable to Participants and beneficiaries (“Distributable Dividends”)
shall (at the election of each Participant and beneficiary at such time and in
such manner as the Administrative Committee shall determine) be (i) distributed
to the Participant or beneficiary no later than 90 days after the end of the
Plan Year in which such dividends are paid to the Trustee or (ii) retained
by the Participant’s or beneficiary’s Accounts and reinvested in additional
Company Shares; provided, however, that dividends on Company 

 

57

 

Shares that are held in the nonvested portion of the Participant’s or
beneficiary’s Account (determined at the time the Plan receives such dividends)
shall not be treated as Distributable Dividends.  If a Participant or beneficiary fails to make
a timely election with respect to his Distributable Dividends, he will be
deemed to have elected to have his Distributable Dividends retained by his
Accounts and reinvested in additional Company Shares.  At the direction of the Administrative
Committee, the Trustee shall “acquire” Company Shares necessary to reinvest
Distributable Dividends that are retained by the Participant’s (or beneficiary’s)
Accounts from one or more of the following means:  (1) by purchasing additional Company
Shares from the market, (2) by purchasing additional Company Shares from
the Company, (3) by using Company Shares currently held in the Allstate
Stock Fund for other Participants who have elected to transfer out of the
Allstate Stock Fund pursuant to an investment election made under Section 5,
who have elected to receive loans pursuant to subsection 8.5 or who have
elected to receive a cash withdrawal or distribution pursuant to Section 8
or 9, or (4) if the Administrative Committee determines that it is in the
best interests of Participants and beneficiaries, by transferring such
dividends to the Suspense Account to be used to repay an ESOP Loan in exchange
for the release of Company Shares from the Suspense Account and allocation of such
Company Shares to Participants’ Accounts pursuant to subsection 10.6(a).  Notwithstanding the foregoing, cash dividends
on Company Shares allocated to the Company Account of any Participant that is
not Vested at the time the dividends are paid shall be reinvested in Company
Shares; provided, however, that if such dividends are paid with respect to
Company Shares that were acquired with the proceeds of an ESOP Loan, the
Administrative Committee may, in its sole discretion, direct such dividends to
be used to make payments on such ESOP Loan (or an ESOP Loan that refinanced
such ESOP Loan).

 

58

 

10.4                           ESOP Loan Payments. 
The Trustees shall use all Employer Contributions that the Company has
directed pursuant to subsection 4.2 to be used to make principal and interest
payments (including principal prepayments) on any outstanding ESOP Loan to make
such principal and interest payments; provided, that the minimum amount of
Employer Contributions that shall be used to make payments on an ESOP Loan
under this subsection 10.4 for a Plan Year shall be an amount which, after
taking into account the use of dividends and earnings in accordance with
subsection 10.3, is sufficient to meet all scheduled payments of principal and
interest on outstanding ESOP Loans.  In
addition to the foregoing contributions, in any Plan Year, the Employers may
make supplemental contributions to be used by the Trustee to pay expenses of
the Plan and any related trust and to satisfy the dividend requirements for
that year with respect to Company Shares allocated to Participants’
Accounts.  To the extent that dividends
paid on Company Shares held in the Suspense Account for a Plan Year exceed the
greater of (i) the amount required to meet any scheduled payment of
principal and interest for the Plan Year or (ii) the amount necessary to
fund the Participation Share Contributions and the Performance Share
Contributions determined by the Company pursuant to subsection 4.1, such
dividends shall be retained by the Suspense Account and used in subsequent Plan
Years as set forth in subsection 10.3.

 

10.5                           Release of Company Shares From Suspense
Account.  As of the last day of each Plan Year, or as
of each calendar quarter in the case of Company Shares allocable for that Plan
Year as dividend replacements under subparagraph 10.6(a), throughout the
duration of an ESOP Loan, a portion of the Company Shares acquired with the
proceeds of such ESOP Loan shall be withdrawn from the Suspense Account and
allocated to Participants’ Accounts in accordance with the provisions of
subsection 10.6.

 

59

 

(a)                                  Subject to the provisions of subparagraph
(b) next below, the number of Company Shares which shall be released from
the Suspense Account for any Plan Year (calculated separately with respect to
each ESOP Loan) shall be equal to the product of:

 

(i)                                     the number of Company Shares acquired
with the proceeds of the ESOP Loan held in the Suspense Account prior to any
allocations as dividend replacements for that Plan Year;

 

multiplied by

 

(ii)                                  a fraction, the numerator of which is the
amount of principal and interest paid on that loan for that Plan Year and the
denominator of which is the amount of principal and interest paid or payable on
that loan for that Plan Year and for all future years.  For purposes of determining this fraction, if
the interest rate under the ESOP Loan is variable, the interest rate to be paid
in future years shall be assumed to be equal to the interest rate applicable as
of the last day of the Plan Year.

 

(b)                                 Notwithstanding the provisions of
subparagraph (a) next above, if provided by the terms of an ESOP Loan or
directed by the Administrative Committee prior to the first payment of
principal or interest on any ESOP loan, the number of Company Shares
attributable to such ESOP Loan which are withdrawn from the Suspense Account
for any Plan Year shall be proportionate to principal payments only, provided
that:

 

(i)            such withdrawal is consistent with the
provisions of the ESOP Loan with respect to the release of Company Shares as
collateral, if any, for such loan;

 

(ii)           the ESOP Loan provides for annual
payments of principal and interest at a cumulative rate that is not less rapid
at any time than level annual payments of such amounts for ten years;

 

(iii)          interest is disregarded for purposes of
determining such release only to the extent that it would be determined to be
interest under standard loan amortization tables; and

 

(iv)          the term of the ESOP Loan, together with
any renewal, extension or refinancing thereof, does not exceed ten years.

 

The provisions of this subsection 10.5 shall apply
without regard to the date on which Employer Contributions for a Plan Year are
actually contributed and the number of Company Shares to be released is
actually determined.  Thus, while the
number of Company Shares to be 

 

60

 

released from the Suspense Account for a Plan Year shall be determined
as of the last day of the Plan Year, the actual release of such shares may
occur after the last day of the Plan Year.

 

10.6                           Allocation and Crediting of Company
Shares.  Company Shares released from the Suspense
Account for any Plan Year shall be allocated and credited as follows:

 

(a)                                  To the extent that dividends on Company
Shares previously allocated to Participants’ Accounts have been used to make
payments on an ESOP Loan, such Accounts shall be credited with Company Shares
with a fair market value determined as of the business day prior to the
dividend payment date equal to the amount of such dividend.

 

(b)                                 As of each December 31, any Company
Shares released from the Suspense Account for the Plan Year ending on that date
and not credited in accordance with subparagraph (a) next above shall
be:  (i) credited to the Company
Accounts of Participants pursuant to subsection 7.5, based on the fair market
value of the Company Shares on that December 31; and; (ii) if any
such Company Shares remain unallocated after the crediting of Company Shares under
subparagraph (i) next above, such remaining Company Shares shall be
credited to the Company Accounts of those Participants entitled to receive a
Performance Share Contribution as of that December 31, according to the
Basic Pre-Tax Deposits made by them, respectively, during the Plan Year ending
on that date.

 

(c)                                  All Company Shares allocated as of December 31
of a Plan Year to Participants in accordance with subparagraph (b) above
shall be treated as Employer Contributions for purposes of subsection 7.11 and
as “matching contributions” for purposes of Section 401(m) of the
Code for the Plan Year ending on such December 31.

 

10.7                           Fair Market Value.  For
purposes of the Plan, the “fair market value” of a Company Share as of any date
means the closing price of a share of such stock on that date as reported on
the New York Stock Exchange, unless such date is not a trading date, in which
case it means the closing price as reported on the most recent trading date.

 

Notwithstanding the foregoing, in the event that
Company Shares are not readily tradable on an established securities market,
all valuations of Company Shares with respect to activities 

 

61

 

carried on by the Plan shall be made by an independent appraiser
meeting requirements similar to the requirements of the regulations prescribed
under Code Section 170(a)(1).

 

10.8                           Voting and Tendering of Company Shares. 
Notwithstanding any other provisions of the Plan:

 

(a)                                  Company Shares held by the Trustee shall be
voted as follows:

 

(i)                                     Before each meeting of the Company’s
shareholders, the Trustee or the Company (with the Trustee’s consent) shall
furnish to each Participant (in such manner and by such means as the Trustee
shall determine, including, without limitation, by means of electronic
delivery) with a proxy statement for the meeting, together with an appropriate
form on which the Participant may provide voting instructions (including
instructions on matters not specified in the proxy statement which may come
before the meeting) for the Company Shares credited to the Participant’s
Account under the plan on the record date for such meeting.  Upon timely receipt of such instructions,
such shares shall be voted as instructed.

 

(ii)                                  If the Trustee receives timely voting
instructions with regard to at least 50 percent of the total outstanding
Company Shares credited to Participants’ Accounts according to subparagraph (a)(i) next
above, then Company Shares of any class for which the Trustee does not receive
timely voting directions, including those shares which are not credited to
Participants’ Accounts, shall be voted in the same proportion as all Company
Shares of that class held under the Plan (including shares held in a separate
trust fund) with respect to which directions are received by the Trustee or by
any other trustee acting under the Plan. 
If the Trustee receives timely voting instructions with regard to less
than fifty percent of the total outstanding Company Shares credited to
Participants’ Accounts, then the Trustee shall vote uncredited and undirected
credited shares in its sole discretion.

 

(b)                                 Tender and exchange rights with respect
to Company Shares held by the Trustee shall be exercised as follows:

 

(i)                                     Each Participant shall be furnished (in
such manner and by such means as the Trustee shall determine, including,
without limitation, by means of electronic delivery) with a notice of any
tender or exchange offer for, or a request or invitation for tender of, Company
Shares, together with an appropriate form on which such Participant may
instruct the Trustee with respect to the tender or 

 

62

 

exchange of Company Shares credited to his
Account.  Company Shares as to which the
Trustee has received timely instructions shall be tendered or exchanged in
accordance with such instructions.

 

(ii)           Company Shares credited to Participants’
Accounts for which instructions are not timely received shall not be tendered
or exchanged.

 

(iii)          Company Shares which are not credited to
Participants’ Accounts shall be tendered or exchanged by the Trustee in its
sole discretion.

 

(c)                                  The Company and the Trustee shall take
all reasonable steps necessary to assure that Participants’ individual
directions shall remain confidential. 
Notwithstanding the foregoing, the Trustee shall provide such
information with respect to the tender or exchange of Company Shares as an
independent recordkeeper may require for operation of the Plan if such recordkeeper
agrees to keep such information confidential.

 

(d)                                 The Trustee shall execute such ballots,
proxies or other instruments as may be necessary or desirable in order to
effectuate the provisions of this subsection 10.8.

 

(e)                                  Each Participant shall be a named
fiduciary within the meaning of Section 402 of ERISA to the extent of his
authority under this subsection 10.8 to exercise voting, tender and exchange
rights with respect to Company Shares credited to his Accounts under the Plan
and with respect to a proportionate share of the uncredited Company Shares and
the credited Company Shares for which other Participants do not give timely
voting instructions to the Trustee.

 

(f)                                    For purposes of this subsection 10.8,
voting instructions by Participants may be given in writing or, if available,
by use of an automated telephone system or through an Internet web site.

 

10.9                           Put Option for Purchase of Company Shares
by the Company.  If any Company Shares acquired with the
proceeds of an exempt loan are not readily tradable on an established market
(or thereafter ceases to be readily tradable) and such Company Shares are
distributed from the Plan, the distributee shall be given an option exercisable
only by the distributee (or the distributee’s donees or a person, including an
estate of a distributee, to whom the security passes by reason of the
Participant’s death), to put the security to the Company for a 60 day period 

 

63

 

beginning on the date of distribution (“First Put Period”) and for
another 60 day period commencing on the first anniversary of the date of
distribution (“Second Put Period”).  The
Company shall notify the distributee of the fair market value of the Company
Shares before the beginning of the First Put Period and again before the
beginning of the Second Put Period.  The
Plan shall have the right, but not the obligation, to assume the rights and
obligations of the Company with respect to the put option at the time the put
option is exercised.  A put option
hereunder shall be exercised by the holder notifying the Company in writing
that the put option is being exercised.

 

A put option shall be exercisable at a price equal to
the fair market value of the security determined as of the most recent
Valuation Date for which there has been an appraisal (as provided in subsection
10.7) following the Participant’s exercise of the put option.  If the distributee exercises a put option
with respect to Company Shares received by the Participant as part of an
installment distribution, the Company shall pay for such Company Shares not
later than thirty days after the exercise of such option.  If the distributee exercises a put option
with respect to Company Shares received as part of a distribution to the
Participant within one taxable year of the balance to the credit of the
Participant’s account, the Company may pay for such Company Shares not later
than 30 days after the exercise of such option or may elect to pay for such
Company Shares with deferred payments. 
Payments for Company Shares put to the Company may be deferred only if
adequate security and a reasonable rate of interest are provided and if
periodic payments are made in substantially equal installments (at least
annually) beginning within 30 days after the date the put option is exercised
and extending for no more than 5 years after the put option is exercised.  No Company Shares acquired with the proceeds
of an ESOP Loan shall be subject to a put, call, or other option, or buy-sell
or similar arrangement 

 

64

 

while held by or when distributed by the Plan, whether or not the Plan
is then a Stock Bonus/ESOP Plan.

 

The foregoing protections and rights in this
subsection 10.9 are non-terminable, except to the extent required or permitted
under applicable law, Treasury Regulations and rulings of the Internal Revenue
Service, with respect to Company Shares acquired with the proceeds of an exempt
loan regardless of whether the Plan continues to be maintained as a leveraged
employee stock ownership Plan with respect to such Company Shares.

 

SECTION 11

 

Administration

 

11.1                           Administrative Committee. 
The Plan is administered by an administrative committee (the “Administrative
Committee”) consisting of one or more persons (who may but need not be
Employees of the Employers).  The members
of the Administrative Committee shall be appointed by the Profit Sharing Committee
of the Company and shall serve at the pleasure of the Profit Sharing Committee
of the Company.  The Administrative
Committee shall be the named fiduciary under ERISA with respect to the
administration of the Plan.

 

11.2                           General Powers, Rights and Duties of the
Administrative Committee.  Except as otherwise
specifically provided and in addition to the powers, rights and duties
specifically given to the Administrative Committee elsewhere in the Plan and
the trust agreement, the Administrative Committee shall have the following
discretionary powers, rights and duties:

 

(a)                                  To select a Secretary, who may but need
not be an Administrative Committee member. 
The Secretary of the Administrative Committee shall be the “Plan
Administrator” as defined in Section 3(16)(A) of ERISA and Section 414(g) of
the Code.

 

65

 

(b)                                 To construe and
interpret the provisions of the Plan and make factual determinations
thereunder, including the power to determine the rights or eligibility of
Employees or Participants and any other persons, and the amounts of their
benefits under the Plan, and to remedy ambiguities, inconsistencies or
omissions, and such determinations shall be binding on all parties.

 

(c)                                  To adopt such rules of
procedure and regulations as in its opinion may be necessary for the proper and
efficient administration of the Plan and as are consistent with the Plan and
trust agreement.

 

(d)                                 To enforce the Plan in
accordance with the terms of the Plan and the trust agreement and the rules and
regulations adopted by the Administrative Committee as above.

 

(e)                                  To maintain and keep
adequate records concerning the Plan in such form and detail as it may decide.

 

(f)                                    To direct the
Trustee as respects payments or distributions from the Trust Fund in accordance
with the provisions of the Plan.

 

(g)                                 To furnish the
Employers with such information as may be required by them for tax or other
purposes in connection with the Plan.

 

(h)                                 To employ agents,
attorneys, accountants or other persons (who also may be employed by the
Employers) and to allocate or delegate to them such powers, rights and duties
as the Administrative Committee may consider necessary or advisable to properly
carry out administration of the Plan, provided that such allocation or
delegation and the acceptance thereof by such agents, attorneys, accountants or
other persons, shall be in writing.  Any
action of the person to whom such powers, rights and duties are allocated or
delegated shall have the same force and effect as if such action had been taken
by the Administrative Committee.  Neither
the Administrative Committee nor any of its members shall be liable for the
acts or omissions of such delegates or persons to whom responsibilities have
been allocated except as required by law.

 

Notwithstanding any other provision of the Plan to the
contrary, the Administrative Committee shall also be authorized or permitted to
carry out any transaction or activity pursuant to a court order, court-approved
settlement or agreement between the Employer or the Plan with either the
Department of Labor or the Internal Revenue Service.

 

66

 

11.3                           Investment
Committee.  The assets of the Plan
are managed by a plan investment committee (the “Investment Committee”)
consisting of one or more persons (who may but need not be Employees of the Employers).  The members of the Investment Committee shall
be appointed by the Profit Sharing Committee of the Company and shall serve at
the pleasure of the Profit Sharing Committee of the Company.  The Investment Committee shall be a named
fiduciary under ERISA with respect to the investment of plan assets.

 

11.4                           General
Powers, Rights and Duties of the Investment Committee.  Except as otherwise specifically provided and
in addition to the powers, rights and duties specifically given to the
Investment Committee elsewhere in the Plan and the trust agreement, the
Investment Committee shall have the following discretionary powers, rights and
duties:

 

(a)                                  To direct the Trustee
to the extent required under the terms of any trust agreement with respect to
the acquisition, retention and disposition of Plan assets and with respect to
the exercise of investment powers, authorities and discretions relating to such
assets; provided, however, that subject to the provisions of the Plan and trust
agreement, the Trustee shall invest that portion of the assets of the Plan
consisting of Employer Contributions and earnings thereon in Company Shares to
the end that, in the largest measure possible, Participants may share in the
earnings of the Company and acquire a proprietary interest therein.

 

(b)                                 To furnish the
Trustee, the Administrative Committee and the Company with such information as
may be required by them for any purpose related to the Plan.

 

(c)                                  To adopt such rules of
procedure and regulations as in the Investment Committee’s opinion may be
necessary for the proper and efficient performance of the Investment Committee’s
duties and responsibilities.

 

(d)                                 To appoint a Chairman
and a Secretary, who may, but need not, be members of the Investment Committee,
and to employ such other agents, attorneys, accountants, investment advisors
and other persons and to delegate to them and allocate among them, in writing,
such powers, rights and duties as the Investment Committee may consider
necessary or advisable properly to carry out the Investment Committee’s
responsibilities, and in the same manner to revoke such delegation and
allocation; the acceptance of such written allocation or delegation shall 

 

67

 

also be in writing; any action of the delegate or
person to whom responsibilities have been allocated shall have the same force
and effect for all purposes hereunder as if such action had been taken by the
Investment Committee; and neither the Investment Committee nor any of its members
shall be liable for the acts or omissions of such delegates or persons to whom
responsibilities have been allocated except as required by law.

 

(e)                                  Without limiting the
generality of subparagraph (d) next above, to appoint an investment
manager as defined in Section 3(38) of ERISA (“Investment Manager”) to
manage (with power to acquire and dispose of) the assets of the Plan, which
Investment Manager may or may not be a subsidiary of the Company, and to
delegate to any such Investment Manager all of the powers, authorities and
discretions granted to the Investment Committee hereunder or under the trust
agreement (including the power to delegate and the power, with prior notice to
the Investment Committee, to appoint an Investment Manager), in which event any
direction to the Trustee from any duly appointed Investment Manager with
respect to the acquisition, retention or disposition of Plan assets shall have
the same force and effect as if such direction had been given by the Investment
Committee, and to remove any Investment Manager; provided, however, that the
power and authority to manage, acquire, or dispose of any asset of the Plan
shall not be delegated except to an Investment Manager, and provided further
that the acceptance by any Investment Manager of such appointment and
delegation shall be in writing, and the Investment Committee shall give notice
to the Trustee, in writing, of any appointment of, delegation to or removal of
an Investment Manager.

 

11.5                           Manner
of Action of the Administrative Committee and Investment Committee.  During a period in which two or more members
of the Administrative Committee or the Investment Committee are acting, the
following provisions apply where the context admits:

 

(a)                                  An
Administrative Committee or Investment Committee member by writing may delegate
any or all of his rights, powers, duties and discretions to any other member,
with the consent of the latter.

 

(b)                                 The
Administrative Committee and Investment Committee members may act by meeting or
by writing signed without meeting, and may sign any document by signing one
document or concurrent documents.

 

(c)                                  An action or a
decision of a majority of the members of the Administrative Committee or
Investment Committee as to a matter shall be as effective as if taken or made
by all members.

 

68

 

(d)                                 If, because of the
number qualified to act, there is an even division of opinion among the
Administrative Committee or Investment Committee members as to a matter, a
disinterested party selected by the Administrative Committee or Investment
Committee shall decide the matter and his decision shall control.

 

(e)                                  Except as otherwise
provided by law, no member of the Administrative Committee or Investment
Committee shall be liable or responsible for an act or omission of the other
members in which the former has not concurred.

 

(f)                                    The certificate of
the Secretary of the Administrative Committee or Investment Committee or of a
majority of the Administrative Committee or Investment Committee members that
the Administrative Committee or Investment Committee has taken or authorized
any action shall be conclusive in favor of any person relying on the certificate.

 

11.6                           Administrative
Committee and Investment Committee Expenses.  All costs, charges and expenses reasonably
incurred by the Administrative Committee and the Investment Committee
(including, to the extent permitted by law, all direct expenses incurred by the
Company or any Employer in providing administrative and asset management services
to the Plan or otherwise incurred by them in connection with the Plan) will be
paid from the Trust Fund to the extent not paid by the Employers in such
proportions as the Company may direct. 
No compensation will be paid to an Administrative Committee or
Investment Committee member as such.

 

11.7                           Information
Required by Administrative Committee. 
Each person entitled to benefits under the Plan shall furnish the
Administrative Committee with such documents, evidence, data or information as
the Administrative Committee considers necessary or desirable for the purpose
of administering the Plan.  The Employers
shall furnish the Administrative Committee with such data and information as
the Administrative Committee may deem necessary or desirable in order to
administer the Plan.  The records of the
Employers as to an Employee’s or Participant’s period of employment, Hours of
Service, termination of 

 

69

 

employment and the reason therefore, Leave of Absence, reemployment and
compensation will be conclusive on all persons unless determined to the
Administrative Committee’s satisfaction to be incorrect.

 

11.8                           Uniform
Rules.  The Administrative Committee
shall administer the Plan on a reasonable and nondiscriminatory basis and shall
apply uniform rules to all persons similarly situated.

 

11.9                           Claims
Procedures.  Each Participant or
beneficiary (for purposes of this subsection called a “Claimant”) may submit
his claim for benefits, including any claim for breach of fiduciary duty or
other violation of the Plan or ERISA (a “Claim”), to the Administrative
Committee (or other person designated by the Administrative Committee who shall
be a named fiduciary under ERISA with respect to the administration of such
claim) in writing in such form as is permitted by the Administrative
Committee.  A Claimant shall have no
right to seek review of a denial of benefits, or to bring any action in any
court to enforce a Claim, prior to his filing a Claim with the Administrative
Committee (or its designee) and exhausting his rights to review in accordance
with this subsection.  Any Claim that is
based, in whole or in part, on the failure of the Administrative Committee (or
its agents) to follow the proper directions given by the Participant or
beneficiary in accordance with the provisions in the Plan (including without
limitation, the failure to follow the Participant’s or beneficiary’s investment
directions or the Participant’s payroll deduction election for Participant
Deposits), must be submitted to the Administrative Committee (or its designee)
no later than one hundred twenty (120) days after the date on which such
direction was given (or allegedly given) and the failure of a Claimant to
submit such Claim within such one hundred twenty (120) day period shall be
conclusive grounds for denial of such Claim.

 

70

 

When a Claim has been filed properly, such Claim shall
be evaluated and the Claimant shall be notified of the approval or the denial
within ninety (90) days after the receipt of such Claim unless special
circumstances require an extension of time for processing the Claim.  If such an extension of time for processing
is required, written notice of the extension shall be furnished to the Claimant
prior to the termination of the initial ninety (90) day period, and such notice
shall specify the special circumstances requiring an extension and the date by
which a final decision will be reached (which date shall not be later than one
hundred and eighty (180) days after the date on which the Claim was
filed).  A Claimant shall be given a
written notice in which he shall be advised as to whether the Claim is granted
or denied, in whole or in part.  If a
Claim is denied, in whole or in part, the Claimant shall be given written
notice which shall contain (1) the specific reasons for the denial, (2) references
to pertinent Plan provisions on which the denial is based, (3) a
description of any additional material or information necessary to perfect the
Claim and an explanation of why such material or information is necessary, and (4) the
Claimant’s rights to seek review of the denial.

 

If a Claim is denied, in whole or in part, the
Claimant shall have the right to request that the Administrative Committee
review the denial, provided that he files a written request for review with the
Administrative Committee within sixty (60) days after the date on which he
received written notification of the denial. 
A Claimant (or his duly authorized representative) may review pertinent
documents and submit issues and comments in writing to the Administrative
Committee.  A Claimant must address all
issues that are relevant to his Claim in connection with his request for review.  If a Claimant fails to raise or address any
material issue relevant to his Claim in connection with his request for review,
the Administrative Committee shall not consider such issue on review and the
Claimant shall have no right to later reopen or 

 

71

 

resubmit such Claim based on such issue.  Within sixty (60) days after a request for
review is received, the review shall be made and the Claimant shall be advised
in writing of the decision on review, unless special circumstances require an
extension of time for processing the review, in which case the Claimant shall,
within such initial sixty (60) day period, be given a written notification
specifying the reasons for the extension and when such review shall be
completed (provided that such review shall be completed within one hundred and
twenty (120) days after the date on which the request for review was
filed).  The decision on review shall be
forwarded to the Claimant in writing and shall include specific reasons for the
decision and references to Plan provisions upon which the decision is
based.  A decision on review shall be
final and binding on all persons for all purposes.  If a Claimant shall fail to file a request
for review in accordance with the procedures herein outlined, such Claimant
shall have no rights to review and shall have no right to bring action in any
court, and the denial of the claim shall become final and binding on all
persons for all purposes.  Moreover, no
Claimant shall have any right to bring action in any court more than one
hundred eighty (180) days after notification to the Claimant of the decision on
review under this paragraph.

 

11.10                     Administrative
Committee’s Decision Final.  Subject
to applicable law, any interpretation of the provisions of the Plan and any decisions
on any matter within the discretion of the Administrative Committee (or its
designee) made by the Administrative Committee (or its designee) in good faith
shall be binding on all persons.  A
misstatement or other mistake of fact shall be corrected when it becomes known
and the Administrative Committee shall make such adjustment on account thereof
as it considers equitable and practicable.

 

72

 

SECTION 12

 

General Provisions

 

12.1                           Additional
Employers.  Any Subsidiary or
Affiliate of the Company may, with the Company’s
consent, adopt the Plan and become a party to the trust agreement by filing
with the Administrative Committee a written instrument (approved by the
Administrative Committee) to that effect.

 

12.2                           Action
by Company or Employers.  Any action
required or permitted to be taken by the Company or an Employer under the Plan
shall be by resolution of its Board of Directors, by resolution of a duly
authorized committee of its Board of Directors, or by a person or persons
authorized by the Company’s or Employer’s charter or by-laws or by resolution
of its Board of Directors or such committee.

 

12.3                           Waiver
of Notice.  Any notice required under
the Plan may be waived by the person entitled to such notice.

 

12.4                           Gender
and Number.  Where the context
admits, words in the masculine gender shall include the feminine and neuter
genders, the singular shall include the plural, and the plural shall include
the singular.

 

12.5                           Controlling
Law.  Except to the extent superseded
by laws of the United States, the laws of Illinois shall be controlling in all
matters relating to the Plan.

 

12.6                           Employment
Rights.  The Plan does not constitute
a contract of employment, and participation in the Plan will not give any Employee
the right to be retained in the employ of an Employer, nor any right or claim
to any benefit under the Plan, unless such right or claim has specifically
accrued under the terms of the Plan.

 

73

 

12.7                           Interests
Not Transferable.  The interests of
persons entitled to benefits under the Plan are not subject to their debts or
other obligations and, except as may be required by the tax withholding
provisions of the Code or any state’s income tax act or pursuant to a qualified
domestic relations order as defined in Section 414(p) or except as
permitted under Section 401(a)(13)(C) of the Code, may not be
voluntarily or involuntarily sold, transferred, alienated, assigned or
encumbered.

 

12.8                           Absence
of Guaranty.  None of the
Administrative Committee, the Investment Committee, nor the Employers in any
way guarantee the Trust Fund from loss or depreciation.  The liability of the Trustee or the
Administrative Committee to make any payment under the Plan will be limited to
the assets held by the Trustee which are available for that purpose.

 

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

 

12.10                     Liabilities
and Responsibilities of the Trustee, Administrative Committee, Investment
Committee and Employers.  Any final
judgment or decree which may be rendered against the Plan, the Trustee, the
Administrative Committee, the Investment Committee or any other fiduciary with
respect to the Plan which is not predicated upon a breach of fiduciary
responsibility shall be satisfied from the Plan assets, and not from the
individual assets of the Trustee, the members of the Administrative Committee
or Investment Committee or other fiduciaries. 
No Employer shall have any responsibility or liability whatsoever with
reference to the management or conduct of the business of the Plan, or for any
act or failure to act on the part of the Trustee, any member of the
Administrative Committee or Investment Committee, any Investment Manager or any
other fiduciary or their agents and employees.

 

74

 

SECTION 13

 

Amendment and Termination

 

13.1                           Amendment.  While the
Employers expect and intend to continue the Plan, the Company reserves the
right to amend the Plan from time to time, except as follows:

 

(a)                                  The duties and liabilities of the
Administrative Committee or the Investment Committee cannot be changed
substantially without its consent;

 

(b)                                 No amendment shall reduce a Participant’s
benefits to less than those to which he would be entitled if he had resigned
from the employ of all of the Employers on the day immediately preceding the
date of the amendment; and

 

(c)                                  Except as provided in subsection 4.7,
under no condition shall an amendment result in the return or repayment to any
Employer of any part of the Trust Fund or the income from it or result in the
distribution of the Trust Fund for the benefit of anyone other than persons
entitled to benefits under the Plan.

 

13.2                           Termination. 
The Plan will terminate as to all Employers on any date specified by the
Company if advance written notice of the termination is given to the
Administrative Committee, the Trustee and the other Employers.  The Plan will terminate as to an individual
Employer on the first to occur of the following:

 

(a)                                  The date specified by the Employer if (i) the
Company consents to such termination by the Employer and (ii) the Employer
provides advance written notice of the termination to the Administrative
Committee, the Trustee and the other Employers.

 

(b)                                 The date that Employer completely
discontinues its contributions under the Plan.

 

(c)                                  The dissolution, merger, consolidation or
reorganization of that Employer, or the sale by that Employer of all or
substantially all of its assets, except that:

 

(i)                                     in any such event, arrangements may be
made with the consent of the Company whereby the Plan will be continued by any
successor to that Employer or any purchaser of all or substantially all of its 

 

75

 

assets, in which case the successor or purchaser will
be substituted for that Employer under the Plan and the trust agreement; and

 

(ii)                                  if an Employer is merged, dissolved, or
in any other way reorganized into, or consolidated with, any other Employer (or
any Nonparticipating Controlled Group Member that elects to become an Employer
under Section 1.4), the Plan as applied to the Employer or former Employer
will automatically continue in effect without a termination thereof.

 

13.3                           Vesting and Distribution on Termination. 
On termination or partial termination of the Plan, the date of termination
will be a “Special Accounting Date” and, after all adjustments then required
have been made, each affected Participant’s benefits will be fully Vested and
nonforfeitable and will be distributable to the Participant or his beneficiary
in accordance with the provisions of Section 9.

 

13.4                           Plan Merger, Consolidation, etc. 
In the case of any merger or consolidation with, or transfer of assets
or liabilities to, any other plan, each Participant’s benefits if the Plan
terminated immediately after such merger, consolidation or transfer shall be
equal to or greater than the benefits he would have been entitled to receive if
the Plan had terminated immediately before the merger, consolidation or
transfer.

 

76

 

SUPPLEMENT A

Special Rules for Top-Heavy
Plans

 

A-1                            Purpose and
Effect.  The purpose of this Supplement A is to comply
with the requirements of Section 416 of the Code.  The provisions of this Supplement A shall be
effective for each Plan Year in which the Plan is a “top-heavy plan” within the
meaning of Section 416(g) of the Code.

 

A-2                            Top-Heavy Plan. 
In general, the Plan will be a top-heavy plan for any Plan Year if, as
of the last day of the preceding Plan Year (the “determination date”), the
aggregate account balances of Participants who are key employees (as defined in
Section 416(i)(1) of the Code) exceed 60 percent of the aggregate
account balances of all Participants.  In
making the foregoing determination, the following special rules shall
apply:

 

(a)                                  A Participant’s account balances shall be
increased by the aggregate distributions, if any, made with respect to the
Participant during the 1-year period ending on the determination date.  In the case of a distribution made for a reason
other than severance from employment, death or disability, the preceding
sentence shall be applied by substituting “5-year period” for “1-year period.”

 

(b)                                 The account balances of a Participant who
was previously a key employee, but who is no longer a key employee, shall be
disregarded.

 

(c)                                  The accounts of a beneficiary of a
Participant shall be considered accounts of the Participant.

 

(d)                                 The account balances of a Participant who
did not perform any services for an Employer during the 1-year period ending on
the determination date shall be disregarded.

 

A-3                            Key Employee. 
In general, a “key employee” is an Employee who, at any time during the
Plan Year that includes the determination date, is:

 

(a)                                  an officer of an Employer receiving
annual compensation greater than $150,000 (in 2008, adjusted in subsequent
years in accordance with regulations and rulings under Code Section 416(i)(1)(A));
provided, that for purposes of this subparagraph (a), no more than 50 Employees
of the Employers (or if lesser, the greater of 3 Employees or 10 percent of the
Employees) shall be treated as officers;

 

(b)                                 a 5 percent owner of an Employer; or

 

(c)                                  a 1 percent owner of an Employer
receiving annual compensation from the Employers of more than $150,000.

 

A-4                            Minimum Employer
Contribution.  For any Plan Year in which the Plan is a top
heavy plan, the employer contribution credited to each Participant who is not a
key employee 

 

77

 

shall not be less than 3 percent of such Participant’s compensation for
that year.  In no event, however, shall
the employer contribution credited in any year to a Participant who is not a
key employee exceed the maximum employer contribution credited in that year to
a key employee (expressed as a percentage of such key employee’s
compensation).  For purposes of this
paragraph A-4, “employer contributions” include Pre-Tax Deposits made on behalf
of any Participant who is a key employee and Employer Contributions allocated
to the Account of any employee under subsection 7.5 but “employer contributions”
shall not include any Pre-Tax Deposits made on behalf of any Participant who is
not a key employee or any Catch-Up Deposits made on behalf of any employee.

 

For purposes of this paragraph A-4, a Participant’s
compensation means his wages as defined in Section 3401(a) of the
Code (determined without regard to any rules that limit the remuneration
included in wages based on the nature or location of the employment or the
services performed) and all other payments of compensation to the Participant
by an Employer or Controlled Group Member for which the Employer or Controlled
Group Member is required to furnish a written statement under Sections 6041(d),
6051(a)(3) and 6052 of the Code, increased by the amounts excludable from
income under Sections 125, 132(f)(4) and 402(e)(3).

 

A-5                            Aggregation of
Plans.  For purposes of determining whether this Plan
is top-heavy, all plans (including terminated plans) within the aggregation
group, if any, that includes the Plan will be treated as a single plan.  The “aggregation group” means the required
aggregation group (as defined below) or, at the election of the Administrative
Committee, a permissive aggregation group (as defined below).

 

The “required aggregation group” includes (i) each
qualified plan (including a terminated plan) maintained by an Employer or
Controlled Group Member during the plan year that includes the determination
date in which at least one key employee participates, and (ii) each other
qualified plan (including a terminated plan) maintained by an Employer or
Controlled Group Member during the plan year that includes the determination
date which enables a plan described in clause (i) to meet the requirements
of Sections 401(a)(4) or 410 of the Code (the “required aggregation group”).

 

The “permissive aggregation group” includes each plan in the required
aggregation group and any other qualified plan (including a terminated plan)
maintained by an Employer or Controlled Group Member during the plan year that
includes the determination date that when considered with all other plans in
the permissive aggregation group would continue to satisfy the requirements of
Sections 401(a)(4) and 410 of the Code.

 

A-6                            No Duplication
of Benefits.  If the Plan is top heavy and a Plan Participant
who is not a key employee participates in this Plan and one or more other
defined contribution plans within the aggregation group that includes the Plan,
the minimum employer contribution required under paragraph A-4 shall be made
under this Plan.  If the Plan is top
heavy and a Plan Participant who is not a key employee also participates in a
defined benefit plan within the aggregation group that includes the Plan, (i) the
minimum employer contribution otherwise required under paragraph A-4 for the
plan year shall not be made under this Plan if such Participant receives a
minimum benefit under the defined benefit plan that satisfies the requirements
of Code Section 416(c)(1), and (ii) he will receive the minimum
employer 

 

78

 

contribution required under paragraph A-4 if such Participant does not
receive a minimum benefit under the defined benefit plan that satisfied the
requirements of Code Section 416(c)(1) (except that the minimum
contribution required under paragraph A-4 will equal 5 percent of the
Participant’s compensation (as defined in paragraph A-4)).

 

A-7                            Use of Terms. 
All terms and provisions of the Plan shall apply to this Supplement A,
except that where the terms and provisions of the Plan and this Supplement A
conflict, the terms and provisions of this Supplement A shall govern.  This Supplement A shall be construed and
interpreted in accordance with the requirements of Section 416 of the Code
and the regulations thereunder.

 

79

 

SUPPLEMENT B

 

In order to insure that the Plan will continue to satisfy the tax
qualification requirements of the Code, the Plan Administrator will take the
actions described herein with respect to a Participant who is or was an
Allstate Neighborhood Agent (“NOA”) who becomes a Litigating Agent, as
described herein; provided that the Company informs the Plan Administrator of
the NOA’s status as a Litigating Agent. 
A “Litigating Agent” is an NOA with respect to whom there is a final,
nonappealable decision, within the meaning of Code Sections 7481 or 7463 (or,
in the case of a court other than the Tax Court, under the applicable federal rules of
procedure), in which the court issues a written opinion deciding that the federal
income tax or federal employment tax treatment of income earned or expenses
incurred by the NOA with respect to services performed as an NOA for the
Company is the tax treatment applicable to an independent contractor.  If the court determines that an NOA who filed
a Schedule C with respect to such expenses is not taxed currently on elective
contributions held in the Plan for reasons other than the NOA’s status as an
employee of the Company, such NOA shall be a Litigating Agent.  An NOA who is determined by a court to be an
employee within the meaning of Code Section 3121(d)(3)(B) shall not
be a Litigating Agent.  For periods of
service performed as an NOA prior to January 1, 1999, a Litigating Agent
shall be treated as an independent contractor beginning as of the First
Litigation Year and continuing for all subsequent periods in which such Agent
performed services as an NOA ending on or before December 31, 1998.  For purposes of this Supplement B, the “First
Litigation Year” means, for each Litigating Agent, the earliest tax year at
issue in such final, nonappealable decision that is rendered with respect to
such Litigating Agent.  A Litigating
Agent shall be treated as an independent contractor, for periods in which such
Agent performed services as an NOA on or after January 1, 1999, only to
the extent that such Agent becomes a Litigating Agent with respect to services
performed as an NOA on or after January 1, 1999, in which case such
Litigating Agent shall be treated as an independent contractor for all years in
which he or she performed services as an NOA beginning as of the First
Litigation Year and continuing thereafter.

 

Pursuant to subsection 11.2(h), the Plan Administrator shall adjust a
Litigating Agent’s Accounts, maintained pursuant to subsection 7.1, so that the
balance in the Litigating Agent’s Accounts do not include any amount that is
equal to the contributions, and earnings thereon, that were allocated to the
Litigating Agent’s Account beginning as of January 1 of the First
Litigation Year and continuing for all subsequent years in which such
Litigating Agent performed services as an NOA and is treated as an independent
contractor.  The Plan Administrator shall
make a payment from the Plan to a Litigating Agent equal to the amount of any
pre-tax deposits, and earnings thereon, plus the amount of any after-tax
deposits, and earnings thereon, plus the amount of any employee rollover
contributions, and earnings thereon, that were previously allocated to such
Litigating Agent’s Account balance for periods beginning as of January 1
of the First Litigation Year and continuing thereafter for all periods in which
such Litigating Agent is treated as an independent contractor.  The portion of such payments attributable to
pre-tax deposits, after-tax deposits, and the earnings thereon, shall be
reported on a Form 1099-R issued to the Litigating Agent as a distribution
not eligible for rollover.  No payment
from the Plan shall be made on Account of any pre-tax deposits, and earnings
thereon, for calendar years 1997 and thereafter to the extent that the Company
has made payment to a Litigating Agent on Account of such pre-tax
deposits.  A payment shall be treated as
paid and constructively received regardless whether such payment is accepted by
the Litigating Agent.  The portion of
such payment 

 

80

 

attributable to any employee rollover contributions,
and the earnings thereon, shall be treated as an eligible rollover distribution
within the meaning of Code Section 402(c)(4).  The adjustments made to the Litigating Agent’s
Accounts, unless otherwise distributed to the Litigating Agent, shall be
treated in the same manner as a forfeiture pursuant to subsection 9.9.

 

Notwithstanding the foregoing, nothing in this Supplement B shall
impair the Plan Administrator’s or the Administrative Committee’s powers under Section 11,
including but not limited to the powers in subsection 11.10.

 

81

 

SUPPLEMENT C

Merger of Laughlin Group, Inc.
401(k) Profit Sharing Plan into

The Savings and Profit Sharing Fund of Allstate Employees

 

C-1                              Merger of Plans. 
Effective as of December 28, 2000 (the “Merger Date”), Laughlin
Group, Inc. 401(k) Profit Sharing Plan (the “Laughlin Plan”) was
merged into The Savings and Profit Sharing Fund of Allstate Employees (the “Plan”),
and thereafter shall be continued in the form of the Plan.

 

C-2                              Transfer of
Account Balances.  All accounts maintained under
the Laughlin Plan were transferred to the Plan and credited to appropriate
Accounts established under the Plan (“Transferred Accounts”).  Participants in the Laughlin Plan whose
account balances were transferred to the Plan under this paragraph C-2 are
referred to below as “Laughlin Participants.” 
Each Transferred Account shall be subject to the provisions of the Plan,
shall be fully Vested and nonforfeitable, shall be invested in accordance with
the Participant’s investment election then in effect under the Plan (or, if no
investment election is in effect, shall be invested in the Plan’s Money Market
Fund until such time as the Participant elects an Investment Fund transfer or
reallocation), and shall be treated in a manner consistent with Section 411(d)(6) of
the Code and the regulations thereunder.

 

C-3                              Laughlin Plan
Benefits.  Subject to the provisions of the Plan,
benefits payable to or on account of any Laughlin Participant who was receiving
benefits from the Laughlin Plan prior to the transfer of his Laughlin Plan
accounts to the Plan, will be paid under the Plan in the same manner as if the
Laughlin Plan had continued in effect without change.  Upon the retirement or other termination of
employment of a Laughlin Participant, the benefits, if any, payable to such
Participant shall be determined in accordance with the Plan.

 

82

 

SUPPLEMENT D

 

Merger of the AHL Plans into

The Savings and Profit Sharing Fund of Allstate Employees

 

D-1                             Merger of Plans. 
Effective on or about December 22, 2006 (the “Merger Date”), the
American Heritage Life Insurance Company 401(k) Plan and the Employees’
Profit Sharing Retirement Program of American Heritage Life Insurance Company
(collectively the “AHL Plans”) shall be merged into The Savings and Profit
Sharing Fund of Allstate Employees (the “Plan”), and thereafter they shall be
continued in the form of the Plan.

 

D-2                             Transfer of
Account Balances.  The accounts of each
participant in the AHL Plans (an “AHL Participant”) shall be transferred to the
Plan and credited to the corresponding Account maintained under the Plan on
behalf of the AHL Participant (i.e., the AHL Participant’s 401(k) account
under the AHL Plans will be transferred to his Pre-Tax Account under the Plan,
his rollover account under the AHL Plans will be transferred to his Rollover
Account under the Plan, his profit sharing account under the AHL Plans will be
transferred to his Company Account under the Plan and his after-tax account
under the AHL Plans will be transferred to his After-Tax Account).  Each transferred account shall be fully
Vested and nonforfeitable and shall be invested as directed by the Investment
Committee based on the investment funds among which each AHL Participants’
transferred accounts were invested under the AHL Plans immediately prior to the
Merger Date (unless or until such time as the AHL Participant elects an
Investment Fund transfer or reallocation).

 

D-3                             Distributions
and Withdrawals.  Distributions and withdrawals
with respect to the accounts transferred from the AHL Plans shall be subject to
the terms and conditions of the Plan; provided, however, that an AHL
Participant shall be permitted to defer the distribution of the portion of his
or Accounts that are attributable to the AHL Plans until April 1 of the
year following the year in which the AHL Participant attains age 701⁄2 or
terminates his employment with all Employers and all Nonparticipating
Controlled Group Members, whichever occurs later.

 

83EXHIBIT 10.26

 

EMPLOYMENT AGREEMENT

 

This
EMPLOYMENT AGREEMENT (this “Agreement”) made this 5th day of December 2008, is by and between
Citi Trends, Inc., a Delaware corporation (the “Company”), and David
Alexander, an individual (the “Executive”).

 

WHEREAS, the
Company and the Executive are also parties to an Employment Non-Compete, Non-Solicit
and Confidentiality Agreement (the “Confidentiality Agreement”) which is
to remain in full force and effect; and

 

NOW,
THEREFORE, in consideration of the mutual agreements set forth herein, the
parties agree as follows:

 

1.                                       Term of Employment. 
The Executive’s employment shall commence with the execution of this Agreement
and the Confidentiality Agreement and shall continue, pursuant to the terms of
this Agreement, on an at-will basis, until either the Executive or the Company
terminates the employment relationship for any or no reason, with or without
Cause (as defined in Section 4 below). 
If Executive terminates the Agreement, he agrees to provide the Company
with a minimum of thirty (30) days written notice.

 

2.                                       Nature of Duties.  The Executive
shall, during his employment hereunder, be the Company’s President
and Chief Operating Officer.  The Executive shall devote his full
business time and effort to the performance of his duties to the Company.

 

3.                                       Compensation.

 

A.                                   The
Company shall pay the Executive a base salary at an annual rate of $500,000, minus
legally required withholdings, which may be adjusted from time to time at the
sole discretion of the Chief Executive Officer (“CEO”) and/or Board of
Directors of the Company (the “Board”). 
The Executive’s base salary shall be paid in conformity with the Company’s
salary payment practices that are generally applicable to similarly situated
Company executives.  The Executive will
be eligible for a performance compensation review in March 2010.

 

B.                                     The
Executive shall be eligible for consideration of a discretionary bonus under
the Company’s Executive Management Level Bonus Plan, which is currently 100% of
base salary with the opportunity to achieve up to 200% of the bonus plan
percent.  The company will guarantee 20%
(i.e., $100,000) of Executive’s first year bonus which covers FY2009.  This bonus is payable no later than April 2,
2010.   The Executive must be employed with
The Company at the time the bonus is paid to be eligible for a payout.  The Company may revise or eliminate the
Executive Management Level Bonus Plan at any time without notice at its sole
discretion.

 

C.                                     Upon
the Executive’s start date with the Company, the Executive will be awarded
restricted stock valued at $500,000, fully vested in four years at the rate of
25% per year.

 

D.                                    The Executive will
be eligible for the following benefits as an executive management employee:

 

 

·                                          401(k) profit
sharing account;

 

·                                          Equity
Awards: Consideration for Annual Restricted Stock Awards based on company
performance and personal performance achievements;

 

·                                          Health,
dental, life and disability insurance; and

 

·                                          Vacation:  4 weeks per year.

 

These benefits set forth in Section 3.D. are offered at the
Company’s sole discretion and may be modified or eliminated by the Company at
any time without notice.

 

E.                                      The
Executive will be reimbursed up to $150,000 in relocation costs.  Additionally, costs that are taxable will be
grossed up for federal and state tax purposes. 
We estimate that the gross up will total approximately $80,000.  If Executive voluntarily terminates his
employment for any reason within 24 months of his hire date, Executive must
immediately pay back to the Company all reimbursed relocation costs.

 

4.                                       Termination Payments and Benefits.  Regardless of the circumstances of the
Executive’s termination, he shall be entitled to payment when due of any unpaid
base salary, expense reimbursements and vacation days accrued prior to the
termination of his employment, and other unpaid vested amounts or benefits
under Company pension and health benefit plans, and to no other compensation or
benefits.  If the Company terminates the
Executive’s employment without Cause or as a result of a Change in Control, the
Company will provide the Executive with separation payments of twelve (12)
months base salary, to be paid in Twenty-six (26) regular bi-weekly pay periods
beginning on the first pay period following the termination of the Executive.  For purposes of this Agreement, “Change in
Control” shall mean the acquisition by any person (as defined under section
409A of the Code), or more than one person acting as a group (as defined under
section 409A of the Code), of stock of the Company that, together with the
stock of the Company held by such person or group, constitutes more than fifty
percent (50%) of the total fair market value or total voting power of the stock
of the Company and either Executive’s job duties have been materially and
permanently diminished or the Executive’s compensation has been materially
decreased.  These separation payments are
conditioned upon Executive executing a Separation and General Release Agreement
at the time of termination which is acceptable to the Company and the Executive.

 

In all other circumstances, including if the Executive
resigns, retires or is terminated for Cause, the Executive shall not be
entitled to receive such separation payments. 
For purposes of this Agreement, “Cause” shall mean the Executive’s:

 

(1)                                 commission
of a willful act of fraud or dishonesty, the purpose or effect of which, in the
CEO and/or Board’s sole determination, materially and adversely affects the
Company;

 

(2)                                 conviction
of a felony or a crime involving embezzlement, conversion of property or moral
turpitude (whether by plea of nolo contendere or otherwise);

 

2

 

(3)                                  engaging
in willful or reckless misconduct or gross negligence in connection with any
property or activity of the Company, the purpose or effect of which, in the CEO
and/or Board’s determination, materially and adversely affects the Company;

 

(4)                                  material
breach of any of the Executive’s obligations as an employee or  stockholder as set forth in the Company’s
Information Security Policies and Code of Business Conduct; provided that the
Executive has been given written notice by the CEO and/or Board of such breach
and 30 days from such notice fails to cure the breach; or

 

(5)                                  failure
or refusal to perform any material duty or responsibility under this Agreement
or a determination that the Executive has breached his fiduciary obligations to
the Company; provided that the Executive has been given written notice by the CEO
and/or Board of such failure, refusal or breach and 30 days from such notice
fails to cure such failure, refusal or breach.

 

5.                                       Notice.  The Executive
will send all communications to the Company in writing, to: Citi Trends, Inc.,
104 Coleman Blvd., Savannah, Georgia 31408, Fax: (912) 443-3663.  All communications from the Company to the
Executive relating to this Agreement shall be sent to the Executive in writing
at his office and home address as reflected in the Company’s records.

 

6.                                       Amendment.  No
provisions of this Agreement may be modified, waived, or discharged except by a
written document signed by a duly authorized Company officer and the
Executive.  A waiver of any conditions or
provisions of this Agreement in a given instance shall not be deemed a waiver
of such conditions or provisions at any other time in the future.

 

7.                                       Choice of Law and Venue. 
The validity, interpretation, construction, and performance of this
Agreement shall be governed by the laws of the State of Georgia (excluding any
that mandate the use of another jurisdiction’s laws).  Any action to enforce or for breach of this
Agreement shall be brought exclusively in the state or federal courts of the
County of Chatman, City of Savannah.

 

8.                                       Successors.  This
Agreement shall be binding upon, and shall inure to the benefit of, the
Executive and his estate, but the Executive may not assign or pledge this
Agreement or any rights arising under it, except to the extent permitted under
the terms of the benefit plans in which he participates.  Without the Executive’s consent, the Company
may assign this Agreement to any affiliate or to a successor to substantially
all the business and assets of the Company.

 

9.                                       Validity.  The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement,
which shall remain in full force and effect.

 

10.                                 Counterparts.  This
Agreement may be executed in one or more counterparts, each of which shall be
deemed to be an original but all of which together shall constitute the same
instrument.

 

11.                                 Entire Agreement.  This
Agreement and the Confidentiality Agreement between the parties constitute the
entire agreement between the parties and supersede any and all prior

 

3

 

contracts, agreements, or understandings between the
parties which may have been entered into by Company and the Executive relating
to the subject matter hereof.  This
Agreement may not be amended or modified in any manner except by an instrument
in writing signed by both Company and the Executive.  The failure of either party to enforce at any
time any of the provisions of this Agreement shall in no way be construed to be
a waiver of any such provision or the right of such party thereafter to enforce
each and every such provision.  No waiver
of any breach of this Agreement shall be held to be a waiver of any other or
subsequent breach.  All remedies are
cumulative, including the right of either party to seek equitable relief in
addition to money damages.

 

IN WITNESS WHEREOF, the parties hereto have set their
hands as of the day and year first written above.

 

	
   

  	
  CITI TRENDS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ R. Edward Anderson

  
	
   

  	
  Name:

  	
  R. Edward Anderson

  
	
   

  	
  Title:

  	
  Chairman and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ David Alexander

  
	
   

  	
  DAVID ALEXANDER

  

 

4

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00157-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00157-of-00352.parquet"}]]