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Sample Business Contracts

Employee Stock Ownership Plan - Atlas America Inc.

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ATLAS AMERICA
EMPLOYEE STOCK OWNERSHIP PLAN
RECITALS

Atlas America, Inc., a Delaware corporation (the “Company”), desires to recognize and reward the contribution by its employees to its successful operation, and to provide incentive for its employees to increase their productivity, by enabling them to acquire stock ownership interests in the Company and to share in the profits of the Company. The Company desires to attain these objectives pursuant to a plan designed to invest primarily in stock of the Company, which shall qualify as an “employee stock ownership plan” within the meaning of Section 4975(e)(7) of the Internal Revenue Code of 1986 and Section 407(d)(6) of the Employee Retirement Income Security Act of 1974.

The Company intends to enter into a trust agreement, known as the “Atlas America Employee Stock Ownership Trust” (the “Trust Agreement”), with Frank Carolas, Nancy McGurk, and Freddie Kotek, as Trustees, dated as of the date of this Plan. Pursuant to the Trust Agreement, all contributions made by the Company under this plan will be held, managed, and controlled by the Trustees.

Therefore, the Company hereby adopts the Atlas America Employee Stock Ownership Plan (the “Plan”), effective as of June 30, 2005.

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ARTICLE I

DEFINITIONS

Whenever used in this Plan, the following words and phrases shall have the meanings stated below, unless a different meaning is plainly required by the context:

1-1.      Accounts. The term “Accounts” means, collectively, a Participant’s Company Stock Account, Other Investments Account, and Transfer Account.

1-2.      Code. The term “Code” means the Internal Revenue Code of 1986, as amended from time to time. Reference to a section of the Code shall include that section and any comparable section or sections of any future legislation that amend, supplement, or supersede that section.

1-3.      Company Stock. The term “Company Stock” means the shares of common stock issued by the Company, provided that the shares constitute “employer securities” as that term is defined in Section 409(l) of the Code.

1-4.      Company Stock Account. The term “Company Stock Account” means the account established for a Participant by the Administrator pursuant to Section 7-1 and to which Company Stock shall be allocated pursuant to Section 7-3.

1-5.      Compensation. Except as otherwise provided in Section 7-6(a), the term “Compensation” means a Participant’s total regular earnings from the Company paid during a Fiscal Year for services rendered that are reportable on the Participant’s IRS Form W-2, Wage and Tax Statement, including bonuses, overtime, and commissions. In addition, the term “Compensation” shall include earnings which are not currently includible in a Participant’s gross income for federal income tax purposes by reason of Section 125, 132(f), 402(e)(3), 402(h), or 403(b) of the Code. However, the term “Compensation” shall not include any of the following: (a) any earnings in excess of the amount that is determined under Section 401(a)(17) of the Code (which amount for the Limitation Year ending September 30, 2005 is $210,000); or (b) any contributions or benefits under this Plan or under any other pension, profit sharing, insurance, hospitalization, or other plan or policy maintained by the Company for the benefit of the Participant. In any case where a Participant commences participation in the Plan, or resumes active participation in the Plan after incurring a One-Year Break-in-Service, on any day other than the first day of a Fiscal Year, his or her Compensation for that Fiscal Year shall be that portion of his or her compensation as determined under this Section 1-5 paid during the period of his or her participation in the Plan for that Fiscal Year.

1-6.      Controlled Group. The term “Controlled Group” means: (a) the Company and one or more other corporations which are members of a “controlled group” of corporations within the meaning of Section 414(b) of the Code and the regulations thereunder; (b) the Company and one or more unincorporated trades or businesses which are under “common control” within the meaning of Section 414(c) of the Code and the regulations thereunder; (c) the Company and one or more other organizations which are members of an “affiliated service group,” as determined under Section 414(m) of the Code and the regulations thereunder; and (d) the Company and any other entities that must be treated as a “controlled group” under Section 414(o) of the Code and the regulations thereunder.

1-7.      Effective Date. The term “Effective Date” means June 30, 2005, the date upon which this Plan first shall be effective.

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1-8.      Employee. The term “Employee” means any person employed by the Company, including any officer, who receives regular Compensation other than retirement benefits under this Plan and any person who is a Leased Employee. However, if Leased Employees constitute less than twenty percent of the Company’s “nonhighly compensated work force” (as that term is defined in Section 414(n)(5)(C)(ii) of the Code), the term “Employee” then shall not include any Leased Employees who are covered by a plan described in Section 414(n)(5)(B) of the Code which is maintained by the leasing organization.

1-9.      ERISA. The term “ERISA” means Public Law No. 93-406, the Employee Retirement Income Security Act of 1974, as amended from time to time.

1-10.    ESOP Loan. The term “ESOP Loan” means any loan to the Trustees for the purpose of financing the purchase by the Trustees of Company Stock or for the purpose of repaying all or any portion of any outstanding ESOP Loan.

1-11.    Fiscal Year. The term “Fiscal Year” means the year that begins on October 1st and ends on September 30th.

1-12.    Highly Compensated Employee. The term “Highly Compensated Employee” means any Employee who during a particular Fiscal Year: (a) was a “5-percent owner” (as that term is defined in Section 416(i)(1) of the Code) at any time during the Fiscal Year or during the preceding Fiscal Year; or (b) for the preceding Fiscal Year (i) had compensation from the Company in excess of $95,000 (as adjusted each Fiscal Year to take into account any cost-of-living increase adjustment provided for that Fiscal Year under Section 415(d) of the Code), and (ii) was in the group of Employees consisting of the top 20 percent of the Employees when ranked on the basis of compensation paid by the Company during the preceding Fiscal Year.

1-13.   Leased Employee. The term “Leased Employee” means any person (other than an employee of the Recipient) who, pursuant to an agreement between the Recipient and any other Leasing Organization: (a) has performed services for the Recipient (or for the Recipient and related persons determined in accordance with Section 414(n)(6) of the Code) on a substantially full-time basis for a period of at least one year; and (b) has performed these services under the primary direction and control of the Recipient. For purposes of this Section 1-13, the terms “Recipient” and “Leasing Organization” shall have the meanings set forth in Section 414(n) of the Code.

1-14.   Limitation Year. The term “Limitation Year” means the period of twelve consecutive months to be used in determining whether the Plan is in compliance with the provisions of Section 415 of the Code and of the regulations thereunder. The Company shall take all actions necessary to ensure that the Limitation Year is the same twelve-month period as the Fiscal Year.

1-15.   Other Investments Account. The term “Other Investments Account” means the account established for a Participant by the Administrator pursuant to Section 7-1 and to which the Participant’s share of the Company’s contributions made in cash or in property other than Company Stock shall be allocated pursuant to Section 7-4.

1-16.   Participant. The term “Participant” means an Employee who becomes a participant in the Plan under the provisions of Section 3-1. An Employee who makes a “rollover contribution” to the Plan pursuant to Section 14-1, or whose account balances under another tax-qualified plan are transferred to this Plan pursuant to Section 14-2 shall be deemed to be a Participant to the extent that the provisions of this Plan apply to the Transfer Account of the Employee established pursuant to Section 14-3.

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1-17.   Qualified Military Service. The term “Qualified Military Service” means any service performed in the “uniform services” (as defined in Title 38 of the United States Code) by an Employee who terminates his or her employment with the Company in order to perform this service and who is entitled to reemployment with the Company after he or she has completed this service pursuant to Title 38 of the United States Code.

1-18.   Related Plan. The term “Related Plan” means any other defined contribution plan (as defined in Section 415 of the Code) maintained by the Company or by any other employer that is: (a) a member of a “controlled group” of corporations which includes the Company; (b) under “common control” with the Company; or (c) part of an “affiliated service group” that includes the Company. For purposes of this Section 1-18, the following terms shall be defined as follows: (a) the term “controlled group” shall have the meaning set forth in Section 414(b) of the Code, as modified by Section 415(h) of the Code; (b) the term “common control” shall have the meaning set forth in Section 414(c) of the Code, as modified by Section 415(h) of the Code; and (c) the term “affiliated service group” shall have the meaning set forth in Section 414(m) of the Code.

1-19.   Transfer Account. The term “Transfer Account” means the account established for a Participant by the Administrator pursuant to Section 14-3 and to which shall be credited all amounts transferred by the Participant to this Plan from any other tax-qualified plan.

1-20.   Trust Fund. The term “Trust Fund” means all property held by the Trustees under the Trust Agreement.

1-21.   Valuation Date. The term “Valuation Date” means the date of termination or partial termination of the Plan, the last day of each Fiscal Year, and any other dates that may be determined by the Company.

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ARTICLE II

SERVICE COMPUTATIONS

2-1.      Service. The term “Service” means the period of employment of an Employee or Participant for which he or she receives credit pursuant to the provisions of this Article II.

2-2.      Hour of Service. The term “Hour of Service” means, with respect to any Employee or Participant:

(a)    each hour for which he or she is directly or indirectly paid, or entitled to payment, by the Company for the performance of duties during the applicable computation period;

(b)    each hour for which he or she has been awarded back pay or for which the Company has agreed to award him or her back pay, irrespective of mitigation of damages;

(c)    each hour for which he or she is directly or indirectly paid, or entitled to payment, by the Company for reasons other than the performance of duties during the applicable computation period (such as for vacation, sickness, injury, or disability); and

(d)    each hour for which he or she performs Qualified Military Service, provided that he or she is rehired by the Company after his or her performance of the Qualified Military Service is completed.

Hours of Service shall not be credited under more than one of the preceding subsections. Hours described in clause (a) above shall be credited to the Employee or Participant for the computation periods in which the duties were performed. Employees for whom the Company does not maintain records of their hours worked shall be credited with Hours of Service on the basis of a 45-hour workweek or, in the case of a partial workweek, on the basis of a ten-hour workday. Hours described in clause (b) above shall be credited to the Employee or Participant for the computation periods to which the award or agreement pertains, rather than for the computation periods in which either payment is actually made or amounts payable to the Employee or Participant become due. Hours described in clause (c) above shall be credited to the Employee or Participant for the computation periods during which the events giving rise to the payments occurred. Hours of service shall be computed in accordance with paragraphs (b), (c), and (e) of Section 2530.200b-2 of the Department of Labor Regulations under ERISA and any successor regulations. The provisions of this Section 2-2 shall be construed so as to resolve any ambiguities in favor of crediting an Employee or Participant with Hours of Service.

2-3.     One-Year Break-in-Service. (a) General. The term “One-Year Break-in-Service” means any Fiscal Year during which a Participant completes 500 or fewer Hours of Service with the Company.

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(b)    Pregnancy or Birth or Adoption of a Child. For purposes of determining whether a One-Year Break-in-Service has occurred, a Participant shall be given credit for the Hours of Service which normally would have been credited but for an absence from work for any period for any of the following reasons: (i) by reason of the pregnancy of the Participant; (ii) by reason of the birth of a child of the Participant; (iii) by reason of the placement of a child with the Participant in connection with the adoption of the child by the Participant; or (iv) for purposes of caring for the child for a period beginning immediately following the birth or placement. If the Administrator is unable to determine the hours which normally would have been credited to a Participant but for an absence of the kind described above, there shall be credited to the Participant eight Hours of Service per day of absence. However, the total number of hours treated as Hours of Service by reason of an absence of the kind described above shall not exceed 501. The hours described in this Section 2-3(b) shall be treated as Hours of Service either: (i) only in the year in which the absence from work begins, if a Participant would be prevented from incurring a One-Year Break-in-Service in that year solely because the period of absence is treated as Hours of Service; or (ii) in any other case, in the immediately following year.

2-4.      Year of Service. The term “Year of Service” means any Fiscal Year during which an Employee or Participant has completed at least 1,000 Hours of Service with the Company.

2-5.      Credit for Service. Except as otherwise specifically provided below in this Section 2-5, each Employee and each Participant shall receive credit for each Year of Service for all purposes of the Plan, including Years of Service with the Company prior to the Effective Date.

(a)    Years of Service prior to the Effective Date with the Company and with employers which operated predecessor businesses of the Company shall be credited for all purposes of this Plan.

(b)    For purposes of Article III, an Employee will be deemed to have completed a Year of Service for the twelve-month period commencing on his or her first date of hire by the Company if he or she has completed at least 1,000 Hours of Service with the Company during that twelve-month period.

(c)    If an Employee fails to complete a Year of Service for the twelve-month period commencing on his or her first date of hire by the Company, the determination when that Employee has first completed a Year of Service then shall be made by reference to the Plan’s Fiscal Year, beginning with the Fiscal Year which includes the first anniversary of the Employee’s first date of hire by the Company.

(d)    Years of Service before a One-Year Break-in-Service shall be disregarded until the Employee completes a Year of Service after the break. However, once an Employee completes a Year of Service after a One-Year Break-in-Service, his or her participation in the Plan shall be effective as of the date of his or her return to service if the other conditions for participation are satisfied.

(e)    In the case of a Participant who does not have any nonforfeitable right under the Plan to an accrued benefit derived from Company contributions, Years of Service before any period of five consecutive One-Year Breaks-in-Service shall not be taken into account in computing that Participant’s period of service.

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(f)    If at the time that a Participant first incurs a One-Year Break-in-Service any portion of his or her Accounts is vested pursuant to Article IX, then Years of Service completed after a period of five consecutive One-Year Breaks-in-Service shall not be counted for purposes of determining the nonforfeitable percentage of the Participant’s accrued benefit derived from Company contributions which were made before that period.

(g)    If at the time that an Employee terminates his or her service with the Company he or she is not a Participant and he or she is subsequently rehired by the Company after a period of five consecutive One-Year Breaks-in-Service, then the Years of Service that the Employee completed prior to his or her termination shall be disregarded for purposes of determining the nonforfeitable percentage of his or her accrued benefit derived from Company contributions which are made after his or her reemployment.
 
2-6.      Service with Affiliated Companies. For purposes of determining Hours of Service and Years of Service under this Article II and the vested portion of a Participant’s Accounts under Article IX, credit shall be granted for service with any other entity which, together with the Company, is a member of a Controlled Group.

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ARTICLE III

PLAN PARTICIPATION

3-1.      Eligibility for Participation. (a) Employees other than Leased Employees and Union Employees. Each Employee shall initially become a Participant in the Plan on the Effective Date, or else on the first day of any subsequent October 1st or April 1st immediately following the date when he or she first meets the following requirements:

 
(i)
he or she has completed one Year of Service; and

 
(ii)
he or she has attained age 21.

(b)    Leased and Union Employees. Notwithstanding anything to the contrary contained in subparagraph (a) of this Section 3-1, an Employee will not be eligible to participate in this Plan if he or she is a Leased Employee or if the following conditions exist: (i) the Employee is included in a unit of Employees covered by a collective bargaining agreement between Employee representatives and the Company; (ii) retirement benefits were the subject of good faith bargaining between the Employee representatives and the Company; and (iii) as a result of the negotiations, either the Employee is covered by another retirement plan to which the Company makes contributions or there has been no agreement between the Employee representatives and the Company for his or her coverage under this Plan.

3-2.      Summary Plan Description. Within 90 days after the date on which an Employee becomes a Participant in the Plan, the Administrator shall furnish him or her with a summary plan description containing the information required by Section 102(b) of ERISA.

3-3.      Subsequent Ineligibility of a Participant. If at any time after an Employee becomes a Participant any of the conditions described below in this Section 3-3 shall occur, then that Employee shall cease to be a Participant in the Plan for purposes of Section 7-5(b). If either of the conditions described in subsections (a) and (b) below shall occur, then the affected Participant’s Accounts shall be reduced in the manner provided for in Section 9-4 as of the last day of the Fiscal Year in which the condition first occurs. The conditions which shall bring this Section 3-3 into effect are the following:

(a)    the Participant incurs a One-Year Break-in-Service and receives or is deemed to receive a distribution of the vested portions of the balances credited to his or her Accounts;

(b)    the Participant incurs five consecutive One-Year Breaks-in-Service prior to receiving a distribution of the vested portions of the balances credited to his or her Accounts;

(c)    the Participant becomes a Leased Employee; or

(d)    the Participant is included in a unit of Employees covered by a collective bargaining agreement between Employee representatives and the Company, if retirement benefits were the subject of good faith bargaining between the Employee representatives and the Company and if, as a result of the negotiations, either the Participant is covered by another retirement plan to which the Company makes contributions or there has been no agreement between the parties for his or her coverage under this Plan.

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A Participant will be deemed to have received a distribution as of the date of his or her separation from service with the Company if his or her vested interest in the balances credited to his or her Accounts is zero. If after a Participant’s Accounts have been reduced pursuant to the provisions of this Section 3-3 the condition causing the Participant’s Accounts to be placed in suspense is eliminated, and if the conditions set forth in Section 9-6 are satisfied, then the Participant’s Accounts shall be reinstated as Company Stock and Other Investments Accounts on the first day of the first fiscal quarter next succeeding the month in which the condition is eliminated.

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ARTICLE IV

ANNUAL COMPANY CONTRIBUTIONS

4-1.     Annual Company Contribution. Subject to the following provisions of this Article IV, for any Fiscal Year the Company may pay over to the Trustees the amount, if any, as an annual contribution to the Plan for that year as is determined by resolution of the Board of Directors of the Company. Payment of all contributions shall be conditioned on qualification of the Plan under Section 401(a) of the Code and on deductibility of the contributions under Section 404 of the Code. However, for any year during which an ESOP Loan is outstanding, the Company shall pay over to the Trustees, as contributions to the Plan for that year, no less than the amounts necessary to enable the Trustees to pay any maturing obligations under any outstanding ESOP Loan.

4-2.     Manner of Payment. The Company’s contributions may be made in cash or in shares of Company Stock. Contributions shall be made in cash to the extent necessary to enable the Trustees to pay any maturing obligations under any outstanding ESOP Loan. Any shares of Company Stock contributed to the Plan shall be valued at their fair market value as of the date of the contribution, as determined by the Trustees based upon a valuation by an independent appraiser to the extent that the Company Stock is not readily tradeable on an established securities market within the meaning of Section 401(a)(28)C) of the Code.

4-3.     Limitation on Amount of Annual Company Contribution. In no event shall the amount of the Company’s contribution under the Plan for any Fiscal Year exceed the maximum amount allowable as a deduction in computing its taxable income for that year for federal income tax purposes.

4-4.     When Contributions Made. The Company’s contributions for any Fiscal Year shall accrue on the last day of that Fiscal Year and shall be paid over to the Trustees not later than the time prescribed by law for filing the Company’s federal income tax return for that Fiscal Year (including any extensions of the filing deadline).

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ARTICLE V

INVESTMENT OF TRUST ASSETS
 
5-1.      Investment Policy. Assets held in the Trust Fund shall be invested by the Trustees primarily in Company Stock. Contributions made by the Company to the Plan and other assets of the Trust Fund may be used to acquire shares of Company Stock from any shareholder of the Company or from the Company. The Trustees also may invest assets of the Trust Fund in other properties, as the Trustees deem appropriate for the Trust Fund, and as provided in Article II of the Trust Agreement. All purchases of Company Stock by the Trustees shall be made only at prices which do not exceed the fair market value of the shares purchased, as determined by the Trustees based upon a valuation by an independent appraiser to the extent that the Company Stock is not readily tradeable on an established securities market within the meaning of Section 401(a)(28)C) of the Code.

5-2.      Sales of Company Stock. The Trustees may sell shares of Company Stock to any person, including the Company. Any sale must be made at a price not less than the fair market value of the shares sold as of the date of the sale, as determined by the Trustees based upon a valuation by an independent appraiser. The Trustees may not sell shares of Company Stock in a sale that would be a “prohibited transaction” within the meaning of the Code and ERISA.

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ARTICLE VI

SUSPENSE ACCOUNT FOR UNALLOCATED SHARES
 
6-1.      Suspense Account. The Administrator shall establish and maintain a “Suspense Account,” to which it shall allocate all shares of Company Stock that the Trustees acquire with the proceeds of an ESOP Loan. These shares shall be released from the Suspense Account at the time and in the manner provided for in Section 6-2 and then shall be allocated to Participants’ Company Stock Accounts in the manner provided for in Article VII.

6-2.      Release of Company Stock from Suspense Account. For each Fiscal Year, there shall be released from the Suspense Account that percentage of the shares of Company Stock allocated to the Suspense Account equal to “Fraction 1” or “Fraction 2,” as those terms are defined below. The Company shall determine which fraction shall be used during the initial Fiscal Year. However, to the extent that shares of Company Stock allocated to the Suspense Account are not pledged as collateral to secure an ESOP Loan, Fraction l shall be used.

6-3.      Definitions.  (a) Fraction 1. For purposes of this Article VI, the term “Fraction 1” shall mean a fraction, the numerator of which is the amount of principal and interest paid on any ESOP Loan outstanding for a particular Fiscal Year, and the denominator of which is the sum of the numerator plus the principal and interest to be paid for all future Fiscal Years. If the rate of interest payable 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 Fiscal Year for which a calculation is being made.

(b)    Fraction 2. The Term “Fraction 2” shall mean a fraction, the numerator of which is the amount of principal paid on an ESOP Loan for a particular Fiscal Year, and the denominator of which is the sum of the numerator plus the principal to be paid for all future Fiscal Years.

6-4.      Limitation on Use of Fraction 2. Notwithstanding anything to the contrary contained above in this Article VI, the Company shall be permitted to use Fraction 2 to determine the number of shares of Company Stock to be released from the Suspense Account for any particular Fiscal Year only if the following conditions are satisfied:

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

(b)    interest is disregarded for purposes of determining the number of shares of Company Stock to be released from the Suspense Account only to the extent that the interest would be determined to be interest under standard loan amortization tables; and

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

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ARTICLE VII

PARTICIPANTS’ ACCOUNTS AND ANNUAL ADJUSTMENTS
 
7-1.      Accounts for Participants. The Trustees shall establish and maintain a Company Stock Account and an Other Investments Account for each Participant. If the Plan receives the account balances of a Participant in a tax-qualified plan or trust in accordance with Section 14-2, the Trustees shall also establish and maintain a Transfer Account in the name of that Participant.

7-2.      Charges to Accounts. When a Valuation Date occurs, any distributions made to or on behalf of any Participant or beneficiary since the last preceding Valuation Date shall be charged to the proper Accounts maintained for that Participant or beneficiary.

7-3.      Company Stock Account. Subject to the provisions of Section 7-6, as of the last day of each Fiscal Year, the Trustees shall credit to each Participant’s Company Stock Account: (a) the Participant’s allocable share of Company Stock purchased by the Trustees or contributed by the Company to the Trust Fund for that year; (b) the Participant’s allocable share of the Company Stock that is released from the Suspense Account for that year; (c) the Participant’s allocable share of any forfeitures of Company Stock arising under the Plan during that year; and (d) any stock dividends declared and paid during that year on Company Stock credited to the Participant’s Company Stock Account.

7-4.      Other Investments Account. As of the last day of each Fiscal Year, the Trustees shall credit to each Participant’s Other Investments Account: (a) the Participant’s allocable share of any contribution for that year made by the Company in cash or in property other than Company Stock that is not used by the Trustees to purchase Company Stock or to make payments due under an ESOP Loan agreement; (b) the Participant’s allocable share of any forfeitures from the Other Investments Accounts of other Participants arising under the Plan during that year; (c) any cash dividends paid during that year on Company Stock credited to the Participant’s Company Stock Account, other than dividends which are paid directly to the Participant and other than dividends which are used to repay an ESOP Loan; and (d) the share of the net income or loss of the Trust Fund properly allocable to that Participant’s Other Investments Account, as provided in Section 7-8.

7-5.      Allocations.  (a) Eligibility. Subject to the provisions of Sections 7-6 and 7-7, as of the last day of each Fiscal Year, the Company’s contributions for that year, the shares of Company Stock that are released from the Suspense Account during that year, and the forfeitures arising under the Plan during that year shall be allocated among Participants who either: (i) were employed by the Company on the last day of that year; or (ii) died or retired on a Retirement Date (as defined in Section 8-4) during that Fiscal Year. However, a Participant who is not a “key employee” shall be eligible to share in allocations of Company contributions and forfeitures for any Fiscal Year during which the Plan is “top heavy,” regardless of whether he or she is credited with a Year of Service for that Fiscal Year. For purposes of the preceding sentence, the terms “key employee” and “top heavy” shall have the meanings set forth in Section 416 of the Code.

(b)    Allocation Formula. The portion of the Company’s contribution for any Fiscal Year that is not used to pay down an ESOP Loan, the shares of Company Stock released from the Suspense Account during that year by reason of Company contributions, and forfeitures arising under the Plan during that year shall be allocated to the eligible Participants in the proportion that each Participant’s Compensation for that year bears to all Participants’ Compensation for that year.

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7-6.      Limitation on Allocations to Participants. (a) General. Notwithstanding any other provisions of the Plan to the contrary, the Annual Additions credited to a Participant’s Accounts for any Limitation Year shall not exceed an amount equal to the lesser of:

(i)    $42,000, adjusted each Limitation Year to take into account any cost-of-living increase adjustment provided for that year under Sec-tion 415(d) of the Code; or

(ii)   100 percent of the Compensation paid to the Partici-pant by the Company and by any member of a Con-trolled Group in that Limitation Year.

The maximum amount that may be credited to a Participant’s Company Stock and Other Investments Accounts in any Limitation Year, as determined pursuant to the preceding provisions of this Section 7-6(a), shall be reduced to the extent necessary to comply with the provisions of Section 415 of the Code, which are incorporated in this Plan by reference. For purposes of this Section 7-6, the term “Compensation” shall include only those items specified in Section 1.415-2(d)(2) of the Treasury Regulations and shall exclude all items listed in Section 1.415-2(d)(3) of the Treasury Regulations, except that the term “Compensation” shall include earnings which are not currently includible in a Participant’s gross income for federal income tax purposes by reason of Section 125, 132(f), 402(e)(3), 402(h), or 403(b) of the Code. For purposes of determining the limitations of this subsection (a), any Participant who terminates his or her employment with the Company in order to perform Qualified Military Service and who subsequently is rehired by the Company upon the completion of his or her Qualified Military Service shall be deemed to have received Compensation equal to the Compensation that the Participant would have received if he or she had been employed by the Company during the period of his or her Qualified Military Service.

(b)    Definition of “Annual Additions”. The term “Annual Additions” means the sum of: (i) a Participant’s allocable share of employer contributions and forfeitures under this Plan and under any Related Plan; and (ii) a Participant’s voluntary employee contributions to Related Plan. Annual Additions shall not include a contribution of a rollover amount or earnings and losses of the Trust Fund. Shares of Company Stock that are released from the Suspense Account during any Limitation Year shall be valued at the lesser of: (i) a Participant’s allocable share of Company contributions for that year that are used to repay the ESOP Loan; or (ii) the fair market value of the Company Stock that is allocated to the Participant’s Company Stock Account for that year.

(c)    Limitations on Accounts of Highly Compensated Employees. If the limitations of subsection (a) would be exceeded in any Limitation Year for any Participant but for the application of subsection (d), then no more than one-third of the Company contributions for that Limitation Year which are applied to the payment of principal or interest on an ESOP Loan shall be allocated to the Accounts of Highly Compensated Employees. Any amount in excess of one-third of the Company contributions that otherwise would be allocated to the Accounts of Highly Compensated Employees shall be an “excess amount” and shall be allocated as provided in subsection (f) of this Section 7-6.

(d)    Exclusion of Certain Amounts in Computing Allocations. Provided that no more than one-third of the Company contributions for a Limitation Year which are applied to the payment of principal or interest on an ESOP Loan are allocated to the Accounts of Highly Compensated Employees, the limitations of subsection (a) shall not apply for that Limitation Year to either Company contributions used to pay interest on an ESOP Loan or forfeitures of employer securities that were purchased with the proceeds of an ESOP Loan.

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(e)    Related Plans. If the limitations of Section 7-6(a) shall apply to the Accounts of any Participant for any Limitation Year, then the amounts credited to his or her accounts under any Related Plan shall be reduced to the extent required to bring the total amount allocated to his or her accounts under this Plan and under any Related Plans within the limit set forth in Section 7-6(a). If after the reduction in the amounts credited to a Participant’s accounts under any Related Plan required by this Section 7-6(e) the limitations of Section 7-6(a) still shall be exceeded, then (i) the amount credited to the Participant’s Accounts under this Plan shall be reduced to the extent required by Section 7-6(a), and (ii) the amount in excess of the limit set forth in Section 7-6(a) shall be an “excess amount” and shall be allocated as provided in subsection (f) of this Section 7-6.

(f)     Allocations of Excess Amounts. Subject to the limitations of this Section 7-6, the portions of any Company contributions and of any forfeitures which have been allocated to a Participant under this Plan for a Limitation Year, but which cannot be credited to his or her Accounts because of the limitations imposed by this Section 7-6 (the “excess amounts”), shall be allocated among and credited to the Accounts of the remaining Participants entitled to share in the Company’s contribution and forfeitures for that year, in accordance with Sections 7-3, 7-4, and 7-5. If it is not possible to so allocate the excess amounts among the remaining Participants without exceeding the limitations set forth in this Section 7-6, then any portion of the excess amounts which cannot be so allocated shall be held in a suspense account, which shall not share in the increase or decrease in the net worth of the Trust Fund. The amounts held in the suspense account shall be allocated in the following year as if they were forfeitures occurring on the first day of the following year.

(g)    Dividend Recharacterization. If any dividend paid on Company Stock shall be recharacterized to be a Company contribution to the Plan for any Limitation Year, and if this recharacterization would cause an allocation to a Participant’s Accounts to exceed the limits allowed under Section 415 of the Code for that Limitation Year, then the Participant’s Accounts shall be retroactively reduced by an amount equal to the sum of (i) the excess of the amount credited to the Participant’s Accounts over the maximum amount that was properly allocable to his or her Accounts (the “excess amount”), plus (ii) all earnings of the Trust Fund credited to the Participant’s Accounts that are attributable to the excess amount. This provision shall be administered in such a way as to assure that no Participant receives any benefit from an allocation of any excess amount to his or her Accounts. Any excess amount and any earnings attributable to the excess amount shall be placed in the suspense account referred to in subsection (f) of this Section 7-6. It shall be conclusively presumed that any error with respect to the characterization of any dividend payment by the Company was a mistake of fact with respect to which the Trustees or the Administrator shall be entitled to make corrective adjustments to Participant Accounts.

7-7.      Special Limitations for Participants Who Sell Their Stock. (a) General. If any person sells any shares of Company Stock to the Trustees and elects to have the federal income tax treatment of the sale determined under the provisions of Section 1042 of the Code (the “Section 1042 election”), then the following two rules shall apply:

(i)    During the nonallocation period, none of the shares of Company Stock sold to the Trustees with respect to which the Section 1042 election has been made (the “Section 1042 Stock”), and no dividends or other income attributable to those shares, may be allocated to the Accounts of the seller, to the Accounts of any person who is related to the seller within the meaning of Section 267(b) of the Code (except as otherwise provided below), or to the Accounts of any other person who has sold shares of Company Stock to the Trustees and who has made the Section 1042 election; and

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(ii)  None of the Section 1042 Stock, and no dividends or other income attributable to that stock, may be allocated to the Accounts of any other person who owns more than 25 percent of the outstanding shares of the Company’s stock, as determined after application of the provisions of Section 318(a) of the Code (without regard to the provisions of subparagraph (2)(B)(i) of that Section).

For purposes of this Section 7-7, the term “nonallocation period” means the period of time beginning on the date of the purchase of Section 1042 Stock by the Trustees and ending on the later of (A) the date which is ten years after the date of the purchase, or (B) the date of the allocation of shares of Company Stock attributable to the final payment of any ESOP Loan incurred in connection with the purchase.

(b)  Lineal Descendants. Notwithstanding the provisions of Section 7-7(a)(i) to the contrary, shares of Company Stock which the Trustees have purchased in a Section 1042 transaction may be allocated to the seller’s lineal descendants. However, the aggregate amount of Section 1042 Stock that may be allocated to the accounts of all lineal descendants of the seller may not exceed five percent of the Company Stock held by the Plan which is attributable to sales to the Trustees by any persons related to the seller’s lineal descendants (within the meaning of Section 267(c)(4) of the Code) in transactions to which Section 1042 of the Code applied.

7-8.      Special Limitations for Disqualified Persons. (a) General. For any Fiscal Year during which the Company is an S corporation for federal income tax purposes, no Company Stock, and no portion of the Trust Fund that is allocable to the Other Investments Accounts in lieu of Company Stock, shall be allocated to the Accounts of any “Disqualified Person” for a “Nonallocation Year.”

(b)  Nonallocation Year. For purposes of this Section 7-8, the term “Nonallocation Year” means any Fiscal Year for which an S corporation election by the Company under Section 1362(a) of the Code is in effect if, at any time during that Fiscal Year, Disqualified Persons own or are deemed to own at least 50 percent of the outstanding shares of the Company’s stock.

(c)  Disqualified Person. For purposes of this Section 7-8, the term “Disqualified Person” means any person if -

(i)    he or she is deemed to own ten percent or more of the “Deemed-Owned Shares” of Company Stock;

(ii)   the number of shares of Company Stock deemed to be owned by the person, together with the shares of Company Stock deemed to be by owned members of his or her family, is at least 20 percent of the total Deemed-Owned Shares of Company Stock; or

(iii)  the person is a member of the family of a Disqualified Person described in subparagraph (c)(ii) above (if not otherwise treated as a Disqualified Person under subparagraph (c)(i) or (c)(ii) above).

(d)  Deemed-Owned Shares. For purposes of this Section 7-8, the term “Deemed-Owned Shares” means, with respect to any Participant -

(i)  shares of Company Stock allocated to his or her Company Stock Account;

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(ii)  that number of the shares of Company Stock allocated to the Suspense Account that would be allocated to his or her Company Stock Account if all of the shares of Company Stock that are allocated to the Suspense Account were allocated among the Company Stock Accounts of the Participants pursuant to the formula set forth in Section 7-5(b) as of the most recent Valuation Date; and

(iii)  the shares of Company Stock on which any “Synthetic Equity” held by that Participant is based, if this treatment of the Participant’s Synthetic Equity results either in the treatment of any Participant as a Disqualified Person or the treatment of any Fiscal Year as a Nonallocation Year.

(e)  Synthetic Equity. For purposes of this Section 7-8, the term “Synthetic Equity” means any stock option, warrant, restricted stock, deferred issuance stock right, or similar interest or right that gives the holder the right to acquire or receive stock of the Company in the future. Except to the extent provided in regulations issued by the Treasury Department, the term “Synthetic Equity” also includes stock appreciation rights, phantom stock units, and similar rights to future cash payments based on the value of the Company’s stock or on the appreciation in the value of the Company’s stock.

(f)  Member of Family. For purposes of this Section 7-8, the term “member of the family” means, with respect to any individual -

(i)    his or her husband or wife,

(ii)   any ancestor or lineal descendant of the individual or of the individual’s husband or wife,
 
(iii)  a brother or sister of the individual or of the individual’s husband or wife and any lineal descendant, and
 
(iv)  the husband or wife of any individual described in clauses (ii) or (iii) above.

(g)  Attribution of Ownership. For purposes of this Section 7-8, the attribution-of-ownership rules of Section 318(a) of the Code, as modified by Section 409(p) of the Code, shall apply for purposes of determining ownership of shares of the Company’s stock.

7-9.      Adjusting to Value of Trust Fund. As of each Valuation Date, the Trustees shall determine: (i) the net worth of that portion of the Trust Fund which consists of properties other than Company Stock (the “Investment Fund”); and (ii) the increase or decrease in the net worth of the Investment Fund since the last Valuation Date. The net worth of the Investment Fund shall be the fair market value of all properties held by the Trustees under the Trust Agreement other than Company Stock, net of liabilities other than liabilities to Participants and their beneficiaries. The Trustees shall allocate to the Other Investments and Transfer Accounts of each Participant that percentage of the increase or decrease in the net worth of the Investment Fund equal to the ratio which the balances credited to the Participant’s Other Investments and Transfer Accounts bear to the total amount credited to all Other Investments and Transfer Accounts. This allocation shall be made after application of Section 7-2, but before application of Sections 7-4, 7-5, and 7-6

7-10.    Participant Statements. Each Fiscal Year, the Trustees will provide each Participant with a statement of his or her Account balances as of the most recent Valuation Date. This statement shall show the value of the Company Stock credited to a Participant’s Company Stock Account, which value shall be deter-mined by an independent appraiser.

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ARTICLE VIII

RETIREMENT DATES
 
8-1.      Normal Retirement Date. The term “Normal Retirement Date” means the date on which a Participant’s employment with the Company is terminated for any reason on or after the date on which he or she attains age 65.

8-2.      Early Retirement Date. The term “Early Retirement Date” means the date on which a Participant’s employment with the Company is terminated for any reason on or after the date on which he or she attains age 55 and completes at least twenty-five Years of Service with the Company.

8-3.      Disability Retirement Date. The term “Disability Retirement Date” means the date that the Partici-pa-nt’s employment by the Company is terminated because of physical or mental disability (as determined by a duly-licensed physician selected by the Company).

8-4.      Retirement Date. The term “Retirement Date” means a Participant’s Normal Retirement Date, Early Retirement Date, or Disability Retirement Date, as the case may be.

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ARTICLE IX
 
VESTING OF ACCOUNT BALANCES
 
9-1.      Vesting on Retirement. If a Participant retires or is retired on a Retirement Date, the balances credited to his or her Accounts will be fully vested and will be distributed to him or her, or for his or her benefit, as provided in Article X.

9-2.      Vesting on Disability. If a Participant becomes disabled while in the employ of the Company, the balances credited to his or her Accounts will be fully vested and will be distributed to him or her, or for his or her benefit, as provided in Article X. Whether a Participant has become disabled shall be determined by a duly-licensed physician selected by the Company.

9-3.      Vesting on Death. If a Participant dies while in the employ of the Company, the balances credited to his or her Accounts will be fully vested and will be distributed to or for the benefit of his or her beneficia-ry, as provided in Article X.

9-4.      Vesting on Other Termination. (a) Schedule. A Participant shall have a vested and nonforfeitable right to a percentage of the balances credited to his or her Company Stock and Other Investments Accounts, as determined in accordance with the schedule set forth below. If either of the conditions described in subsections (a) and (b) of Section 3-3 shall occur, then the balances credited to the Participant’s Company Stock and Other Investments Accounts shall be reduced, as of the last day of the Fiscal Year in which the condition first occurs, to an amount equal to that percentage of the balances credited to the Participant’s Company Stock and Other Investments Accounts as is determined in accordance with the following schedule:

Number of Completed
Years of Service
 
Percentage
       
Less than three years
   
0
%
Three years
   
20
%
Four years
   
40
%
Five years
   
60
%
Six years
   
80
%
Seven or more years
   
100
%

(b)    Vesting and Forfeitures. The vested percentage of the balances credited to the Participant’s Accounts will be distributed to him or her or for his or her benefit as provided in Article X. The portions of the balances credited to the Participant’s Company Stock and Other Investments Accounts which he or she is not entitled to receive by reason of the application of the schedule set forth in subparagraph (a) of this Section 9-4 will be “forfeitures” and will be allocated and credited in accordance with Section 7-5. Forfeitures shall first be charged against a Participant’s Other Investments Account. If the amount forfeited exceeds the amount credited to the Participant’s Other Investments Account, the balance then shall be charged against his or her Company Stock Account.

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9-5.      Determination of Account Balances. All determinations of the balances credited to the Accounts of Participants required pursuant to this Article IX shall be made as of the last day of the Fiscal Year during which the event giving rise to the determination occurs. All Other Investments and Transfer Accounts shall continue to share in the changes in the value of the Investment Fund, pursuant to Section 7-9, until they are distributed.

9-6.      Reinstatement of Forfeitures. This Section 9-6 shall apply if the following events shall occur: (a) a Participant separates from service with less than a 100-percent vested interest in the balances credited to his or her Company Stock and Other Investments Accounts; (b) the Participant receives a distribution of his or her vested interest in these Accounts prior to incurring five consecutive One-Year Breaks-in-Service; (c) the Participant returns to service with the Company before incurring five consecutive One-Year Breaks-in-Service; and (d) the Participant repays to the Trustees the full amount that was distributed from his or her Accounts. Upon repayment by the Participant of the amounts that were distributed from his or her Accounts: (i) there shall be restored to the Participant’s Company Stock Account that number of Shares that have a value equal to the value of the Shares that previously were forfeited from his or her Company Stock Account (determined as of the date of the forfeiture); and (ii) there shall be restored to the Participant’s Other Investments Account the amount that was forfeited from that Account. Any reinstatement of forfeited amounts under this Section 9-6 shall be made from amounts forfeited under Section 9-4 or from additional contributions by the Company. Neither Section 7-6 (which imposes limi-tations on allocations to Participants) nor Section 4-1 (which imposes limitations on contributions by the Company) shall apply to a reinstatement under this Section 9-6.

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ARTICLE X

DISTRIBUTION OF PLAN BENEFITS
 
10-1.    Method of Distribution. Subject to the provisions of this Article X, distribution of the balances credited to a Participant’s Accounts will be made by the Trustees by payment in a lump sum.

10-2.    Form of Distribution. (a) Company Stock Account. The distribution of the balance credited to a Participant’s Company Stock Account shall be made in whole shares of Company Stock or in cash, as elected by the Participant. Before making any distribution to a Participant from his or her Company Stock Account in cash, the Trustees shall notify the Participant of his or her right to demand that the amounts credited to his or her Company Stock Account be distributed in the form of Company Stock. If the Participant makes this demand, the Trustees shall distribute the Participant’s benefits entirely in whole shares of Company Stock, except that the value of any fractional share shall be paid in cash.

(a)    Other Investments and Transfer Accounts. Distri-butions of the balances credited to a Participant’s Other Investments and Transfer Accounts shall be made in cash.

10-3.    Distributions After Death. If a Participant dies before the entire balance credited to his or her Accounts has been distributed, the remaining balance shall be payable in full upon the death of the Participant to the Participant’s surviving spouse. However, the remaining balance may be paid to a beneficiary designated by the Participant in accordance with Section 10-12 if either one of the following conditions is satisfied: (a) the surviving spouse of the deceased Participant has consented in writing to the payment of the balances credited to the Participant’s Accounts to the beneficiary and the spouse’s consent acknowledges the effect of the consent and has been witnessed by the Administrator or by a notary public; or (b) it is established to the satisfaction of the Administrator that the consent could not be obtained because the Participant was not married, because the Participant’s spouse cannot be located, or because of any other circumstances that the Secretary of the Treasury may prescribe by regulation. Any consent by a spouse under this Section 10-3, or any establishment that the consent of a spouse cannot be obtained, shall be effective only with respect to that spouse. Any consent by a spouse under this Section 10-3 must acknowledge the beneficiary designated by the Participant, including any class of beneficiaries or any contingent beneficiaries; and the Participant may not subsequently change beneficiaries without the consent of his or her spouse. Any consent by a spouse pursuant to this Section 10-3 shall be irrevocable. If there is no surviving spouse upon the death of a Participant, the balances credited to the Participant’s Accounts shall be paid to the beneficiary designated by the Participant in accordance with Section 10-12.

10-4.     Time of Distribution.   (a) Company Stock, Other Investments and Transfer Accounts. If a Participant terminates employment before his or her Normal Retirement Date, the Participant’s vested balances credited to the Participant’s Company Stock, Other Investments, and Transfer Accounts shall be made within one year after the close of the Fiscal Year in which he or she terminates employment with the Company. Subject to Section 10-4(b) below, the Account balances of a Participant who has attained age 65 shall be distributed no later than 60 days after the close of the Fiscal Year in which he or she attains age 65. However, except as otherwise provided below in Section 10-5, no shares of Company Stock that were purchased with the proceeds of an ESOP Loan shall be distributed to a Participant whose service with the Company is terminated for any reason other than death, disability, or retirement until the ESOP Loan has been repaid in full.

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(b)    Deferral of Distribution. A Participant whose Account balances exceed $1,000 may elect to defer distribution of his or her benefits until the time specified below in Section 10-5.

10-5.    Minimum Distribution Requirements. (a) Definitions. For purposes of this Section 10-5, the following terms shall have the meanings set forth below.

(ii)    Designated Beneficiary. The term “Designated Beneficiary” means the individual who is designated as the beneficiary of a Participant under Section 10-12 and who is the Participant’s “designated beneficiary” within the meaning of Section 401(a)(9) of the Code and Section 1.401(a)(9)-1, Q&A-4, of the Treasury Regulations.

(iii)    Distribution Calendar Year. The term “Distribution Calendar Year” means a calendar year for which a minimum distribution is required under the terms of this Article X or under Section 401(a)(9) of the Code. For distributions beginning before a Participant’s death, the first Distribution Calendar Year shall be the calendar year which contains the Participant’s Required Beginning Date. For distributions beginning after a Participant’s death, the first Distribution Calendar Year shall be the calendar year in which distributions are required to commence under Section 10-5(c).

(iv)    Required Beginning Date. The term “Required Beginning Date” means: (A) for any Participant other than a “five-percent owner” of the Company (as that term is defined in Section 416(i)(1)(B)(i) of the Code), April 1st of the calendar year immediately following the calendar year in which the Participant terminates employment after attaining age 70½; (B) for any Participant who is a “five-percent owner” of the Company, April 1st of the calendar year immediately following the calendar year in which he or she attains age 70½, regardless of whether he or she has terminated employment with the Company; and (C) for any Participant who dies before distributions from his or her Accounts commence, the latest of the dates specified in Section 10-5(c). Distributions to a Participant shall be made in accordance with Sections 401(a)(9) and 411(d)(6)(C) of the Code and the regulations thereunder.

(b)    Commencement of Distributions. Notwithstanding anything to the contrary set forth in paragraph (a), (b), or (c) of Section 10-4, distribution of a portion of the balances credited to a Participant’s Accounts equal to the minimum distribution required by Section 401(a)(9) of the Code and subsection (d) or (e) of this Section 10-5 (the “Required Minimum Distribution”) shall be made no later than the Participant’s “Required Beginning Date” in the Participant’s first “Distribution Calendar Year,” except that if the Participant dies before his or her Required Beginning Date, then the Required Minimum Distribution shall be made on or before December 31st of the Distribution Calendar Year in which his or her Required Beginning Date occurs. Required Minimum Distributions in Distribution Calendar Years after the Participant’s first Distribution Calendar Year shall be made on or before December 31st of each year.

(c)    Death of Participant Before Distributions Are Made or Commence. If a Participant dies before distributions from his or her Accounts commence, then the balances credited to the Participant’s Accounts shall be distributed, or shall commence to be distributed, no later than the latest of the following dates:

(i)    if the Participant’s surviving spouse is his or her sole Designated Beneficiary, then distributions to the surviving spouse will commence by December 31st of the calendar year immediately following the calendar year in which the Participant died, or by December 31st of the calendar year in which the Participant would have attained age 70 1/2, if later;

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(ii)    if the Participant’s surviving spouse is not his or her sole Designated Beneficiary, then distributions to the Designated Beneficiary will commence by December 31st of the calendar year immediately following the calendar year in which the Participant died;

(iii)    if there is no Designated Beneficiary as of September 30th of the calendar year following the calendar year in which the Participant died, then the balances credited to the Participant’s Accounts will be distributed by December 31st of the calendar year that includes the fifth anniversary of the Participant’s death; and

(iv)    if the Participant’s surviving spouse is the Participant’s sole Designated Beneficiary and the surviving spouse dies after the Participant but before distributions from the Participant’s Accounts to the surviving spouse commence, then the provisions of this Section 10-5(c), other than Section 10-5(c)(i), shall apply as if the surviving spouse was the Participant.

(d)    Required Minimum Distributions During Participant’s Lifetime. During a Participant’s lifetime, the minimum amount that shall be distributed for each Distribution Calendar Year is the lesser of:

(i)    the quotient obtained by dividing (A) the balances credited to the Participant’s Accounts, by (B) the number of calendar years in the distribution period, as set forth in the Uniform Lifetime Table in Section 1.401(a)(9)-9 of the Treasury Regulations, determined by reference to the Participant’s age as of the Participant’s birthday in the Distribution Calendar Year; or

(ii)    if the Participant’s sole Designated Beneficiary for the Distribution Calendar Year is the Participant’s spouse, then the quotient obtained by dividing (A) the balances credited to the Participant’s Accounts, by (B) the number of calendar years in the distribution period, as set forth in the Joint and Last Survivor Table in Section 1.401(a)(9)-9 of the Treasury Regulations, determined by reference to the age of the Participant and the age of the spouse as of their respective birthdays in the Distribution Calendar Year.

(iii)    Required minimum distributions shall be determined under this Section 10-5(d) beginning with the first Distribution Calendar Year and up to and including the Distribution Calendar Year that includes the Participant’s date of death.

(e)    Required Minimum Distributions After Participant’s Death. If the Participant dies on or after the date distributions commence from his or her Accounts and there is a Designated Beneficiary, then the minimum distribution for each Distribution Calendar Year after the calendar year of the Participant’s death shall be equal to the quotient obtained by dividing (A) the balances credited to the Participant’s Accounts, by (B) the greater of the remaining life expectancy of the Participant or the remaining life expectancy of the Participant’s Designated Beneficiary, determined as set forth below and pursuant to the Single Life and Joint Survivor Annuity Tables set forth in Section 1.401(a)(9)-9 of the Treasury Regulations.

(i)    The Participant’s remaining life expectancy equals the number of years of the Participant’s remaining life expectancy, calculated using the age of the Participant in the calendar year of his or her death, minus the number of calendar years that have expired subsequent to his or her death.

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(ii)    If the Participant’s surviving spouse is the Participant’s sole Designated Beneficiary, the remaining life expectancy of the surviving spouse shall be calculated for each Distribution Calendar Year after the calendar year of the Participant’s death by reference to the surviving spouse’s age as of the spouse’s birthday in the applicable calendar year. For Distribution Calendar Years after the calendar year of the surviving spouse’s death, the remaining life expectancy of the surviving spouse shall equal the number of years of the surviving spouse’s life expectancy, calculated using the age of the surviving spouse as of the spouse’s birthday in the calendar year of the spouse’s death, minus the number of calendar years subsequent to his or her death.

(iii)    If the Participant’s surviving spouse is not the Participant’s sole Designated Beneficiary, the Designated Beneficiary’s remaining life expectancy shall be equal to the number of years of the Designated Beneficiary’s life expectancy, calculated using the age of the Designated Beneficiary in the calendar year following the calendar year of the Participant’s death, minus the number of calendar years that have expired subsequent to the Participant’s death.

(f)    No Designated Beneficiary. If the Participant dies on or after the date distributions commence from his or her Accounts and there is no Designated Beneficiary as of September 30th of the calendar year following the calendar year of the Participant’s death, the minimum amount that will be distributed for each Distribution Calendar Year after the calendar year of the Participant’s death shall be an amount equal to the quotient obtained by dividing (i) the balances credited to the Participant’s Accounts, by (ii) the number of years of the Participant’s remaining life expectancy, based on the Participant’s age in the calendar year of his or her death, minus the number of calendar years that have expired subsequent to his or her death.

(g)    Required Minimum Distribution if Participant Dies Before Distributions Commence. (i) Participant Survived by Designated Beneficiary. If the Participant dies before the date distributions from his or her Accounts commence and there is a Designated Beneficiary, then the minimum amount that will be distributed for each Distribution Calendar Year after the calendar year of the Participant’s death shall be equal to the quotient obtained by dividing (A) the balances credited to the Participant’s Account, by (B) the remaining life expectancy of the Participant’s Designated Beneficiary, determined as provided in Section 10-5(e).

(ii)    Death of Surviving Spouse Before Distributions to Surviving Spouse Are Required to Commence. If the Participant dies before the date distributions from the Participant’s Accounts commence, the Participant’s surviving spouse is the Participant’s sole Designated Beneficiary, and the surviving spouse dies before distributions from the Participant’s Accounts are required to commence to the surviving spouse under Section 10-5(c)(i), then this Section 10-5(g) will apply as if the surviving spouse was the Participant.

(h)    Forms of Distribution. Unless distributions commence from an annuity contract or in a lump sum on or before the Required Beginning Date, as of the first Distribution Calendar Year distributions will be made in accordance with Sections 10-5(d) and 10-5(e).

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10-6.     Diversification of Company Stock Account. A Participant who has attained age 55 and who has completed at least ten years of participation in the Plan shall be notified of his or her right to elect to direct the transfer of a portion of the balance credited to his or her Company Stock Account to an account in his or her name in another tax-qualified plan maintained by the Company, to be invested at the direction of the Participant among three or more investment funds consisting of differing types of properties and offering different degrees of risk and potential reward. An election to transfer must be made on a form prescribed by the Administrator and filed with the Administra-tor within the 90-day period immediately following the close of any Fiscal Year within the “Election Period”. The “Election Period” is the period of six consecutive Fiscal Years beginning with the Fiscal Year in which the Participant first becomes eligible to make a transfer. For each of the first five Fiscal Years in the Election Period, the Participant may elect to transfer an amount which does not exceed: (a) 25 percent of the sum of the value of the Company Stock credited to his or her Company Stock Account plus all amounts previously transferred pursuant to this Section 10-6; less (b) all amounts previously transferred pursuant to this Section 10-6. In the case of the last Fiscal Year in the Election Period, the Participant may elect to transfer an amount which does not exceed: (a) 50 percent of the sum of the value of the Company Stock credited to his or her Company Stock Account plus all amounts previously transferred pursuant to this Section 10-6; less (b) all amounts previously transferred pursuant to this Section 10-6. Any amount which a Participant elects to transfer to another tax-qualified plan maintained by the Company under this Section 10-6 shall be transferred to that plan within 90 days after the 90-day period in which the election may be made.
 
10-7.    Rollover Distributions. (a) Election. A distributee may elect, in accordance with the administrative rules and procedures prescribed by the Administrator, to have any portion of an eligible rollover distribution paid directly to an eligible retirement plan specified by the distributee in a direct rollover.

(b)    Definitions. (i) Eligible Rollover Distributions. An “eligible rollover distribution” is any distribution of all or any portion of the balance to the credit of the distributee, except that an eligible rollover distribution does not include: (A) any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the distributee or the joint lives (or joint life expectancies) of the distributee and the distributee’s designated beneficiary, or for a specified period of ten years or more; (B) any distribution to the extent the distribution is required under Section 401(a)(9) of the Code; (C) the portion of any distribution that is not includible in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities); or (D) any distribution that is made on account of a hardship.

(ii)    Eligible Retirement Plan. An “eligible retirement plan” is an individual retirement account described in Section 408(a) of the Code, an individual retirement annuity described in Section 408(b) of the Code, an annuity plan described in Section 403(a) of the Code, a qualified trust described in Section 401(a) of the Code that accepts the distributee’s eligible rollover distribution, an annuity contract described in Section 403(b) of the Code, or an eligible plan under Section 457(b) of the Code which is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state and which agrees to separately account for amounts transferred into that plan from this Plan. The definition of eligible retirement plan shall also apply in the case of a distribution to a surviving spouse or to a spouse or former spouse who is the alternative payee under a Qualified Domestic Relation Order, as defined in Section 414(p) of the Code.

25


(iii)    Distributee. A “distributee” includes an employee or former employee. In addition, the employee or former employee’s surviving spouse and the employee or former employee’s spouse or former spouse who is the alternate payee under a qualified domestic relations order, as that term is defined in Section 414(p) of the Code, are distributees with regard to the interest of the spouse or former spouse.

(iv)    Direct Rollover. A “direct rollover” is a payment by the plan to the eligible retirement plan specified by the distributee.
 
10-8.  Dividends on Company Stock. (i) If so determined by the Board of Directors of the Company, any cash dividends on Company Stock received by the Trustees shall be used to repay any ESOP Loan taken out by the Trustees to finance the purchase of Company Stock. If dividends on Company Stock held in the Plan are used to repay an ESOP Loan, then the shares of Company Stock that are released from the Suspense Account by reason of the dividends shall be allocated to Participants’ Company Stock Accounts on the following basis:

(i)    first, shares of Company Stock with a fair market value at least equal to the dividends paid with respect to the Company Stock allocated to the Participants’ Accounts shall be allocated among the Company Stock Accounts of the Participants in proportion to the number of shares of Company Stock allocated to their Accounts as of the record date of the dividends; and

(ii)    then any remaining shares of Company Stock which are released from the Suspense Account by reason of dividends paid on those shares shall be allocated as provided in Section 7-5(b).

(b)    If so determined by the Board of Directors of the Company, any cash dividends received by the Trustees on Company Stock allocated to the Company Stock Accounts of Participants which are not required to be used to repay an ESOP Loan may be paid currently (or within 90 days after the end of the Limitation Year in which the dividends are paid to the Trustees) in cash by the Trustees to the Participants (or to their beneficiaries), in proportion to the amounts of Company Stock allocated to their Company Stock Accounts as of the record date of the dividends. Alternatively, the Company may pay the dividends directly to Participants or beneficiaries. Any distribution of cash dividends may be limited to dividends on shares of Company Stock which are then vested or may be applicable to cash dividends on all shares allocated to Participants’ Company Stock Accounts.

(c)    If so determined by the Board of Directors of the Company, any cash dividends received by the Trustees on Company Stock allocated to the Suspense Account which are not required to be used to repay an ESOP Loan may be allocated to the Participants’ Other Invest-ments Accounts, as provided in Article VII, or may be distributed to the Participants as provided for in subparagraph (b) of this Section 10-8.

(d)    No distributions received by the Trustees on Company Stock for any Fiscal Year for which the S corporation election by the Company under Section 1362(a) of the Code is in effect (an “S election year”) shall be paid to the Participants. Rather, S corporation distributions received for an S election year by the Trustees on shares of Company Stock that are being held by the Trustees in the Suspense Account may be either applied toward repayment of an ESOP loan, in accordance with Section 10-8(a), or allocated to the Participants’ Other Investments Accounts.

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10-9.    Distributions To Persons Under Disability. Notwithstanding any provisions of this Article X to the contrary, if a Participant, surviving spouse, or beneficiary is declared incompetent and a conservator or other person legally charged with the care of his or her person or of his or her estate is appointed, then any benefits to which that Participant, surviving spouse, or beneficiary is entitled shall be paid to the conservator or other person. Except as provided above in this Section 10-9, when the Administrator, in its sole discretion, determines that a Participant, surviving spouse, or beneficiary is unable to manage his or her financial affairs, the Administrator may direct the Trustees to make distributions to any person for the benefit of the Participant, surviving spouse, or beneficiary.

10-10.  Benefits may not be Assigned or Alienated. The benefits payable to any person under this Plan may not be voluntarily or involuntarily assigned or alienated. However, the provisions of this Section 10-10 shall not apply to the creation, assignment, or recognition of a right to any benefit payable with respect to a Participant pursuant to a “qualified domestic relations order,” as that term is defined in Section 414(p) of the Code.

10-11.   No Guarantee of Benefits. The benefits provided under the Plan for any Participant shall be paid solely from that Participant’s Accounts.

10-12.   Beneficiaries. Subject to the provisions of Section 10-3, each Participant may designate any legal or natural person to receive any benefits payable under the Plan on account of his or her death. Each designation by a Participant shall be in writing and shall be filed with the Administrator in the form that the Administrator requires. Subject to the provisions of Section 10-3, a beneficiary may change or revoke a direction as to the manner in which his or her benefits are to be paid, or may make a direction if none has been made, at any time prior to the payment of his or her benefits by the Trustees. Subject to the provisions of Section 10-3, by a writing filed with the Administrator, a Participant may change his or her beneficiary designation at any time and from time to time without the consent of or notice to any person previously designated by him or her. If no person has been designated by a Participant, or if all persons so designated predecease the Participant or die prior to complete distribution of his or her benefits, then the Administrator, in its sole discretion, shall direct the Trustees to distribute the Participant’s benefits to:

(a)    one or more of the Participant’s relatives by blood, adoption, or marriage, as the Trustees de-cide; or

(b)    the Participant’s executor or administrator.

In no event may the beneficiary of a deceased Participant designate a beneficiary.
 
10-13.  Benefits of Persons Who Cannot Be Located. If the Administrator notifies a Participant or a beneficiary designated in accordance with Section 10-12 in writing at his or her last known address that he or she is entitled to benefits under the Plan and the Participant or beneficiary fails to claim his or her benefits within seven calendar years after notification, then his or her benefits will be distributed to one or more of the Participant’s or beneficiary’s relatives by blood, adoption, or marriage, as the Administrator decides.

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10-14.  Participant’s Consent to a Distribution. Notwithstanding anything to the contrary set forth in Section 10-4, no distributions shall be made to a Participant without his or her written consent, unless the entire balance credited to the Participant’s Accounts is $1,000 or less or unless the distribution is required to be made in accordance with the minimum distribution requirements set forth in Section 10-5. The Administrator shall furnish a written explanation of the distribution options available under the Plan, including a rollover distribution, to each Participant who is entitled to receive a distribution under this Article X within 30 to 90 days prior to the distribution. A distribution may be made less than 30 days after the explanation is given to the Participant only if the Participant is advised that he or she has at least 30 days in which to elect a distribution and the Participant elects a distribution.

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ARTICLE XI

SHAREHOLDER RIGHTS AND RESTRICTIONS
 
11-1.    Voting of Company Stock. Except as otherwise provided below in this Section 11-1, the Trustees shall vote the shares of Company Stock held in the Trust Fund with respect to all matters. Each Participant will be entitled to direct the Trustees as to how to vote the shares of Company Stock allocated to his or her Company Stock Account with respect to any proposed merger or consolidation, recapitalization, reclassification, liquidation, dissolution, sale of substantially all the assets of a trade or business, or any similar transactions that are specified in regulations interpreting Section 409(e)(3) of the Code. The Trustees shall vote the shares of Company Stock which are not allocated to any Participant’s Company Stock Account and the shares of allocated Company Stock with respect to which no direction is received from the Participants to whose Accounts the shares are allocated, in their discretion. Notwithstanding anything to the contrary set forth in this paragraph, if the Company has a registration-type class of securities, each Participant or beneficiary shall be entitled to direct the Trustees as to how to vote the shares of Company Stock allocated to his or her Company Stock Account with respect to any matter in which the Company Stock is to be voted. For this purpose, the term “registration-type class of securities” means: (a) a class of securities required to be registered under Section 12 of the Securities Exchange Act of 1934, as amended (the “Act”); and (b) a class of securities which would be required to be so registered except for the exemption from registration provided in Section 12(g)(2)(H) of the Act. Each Participant and each beneficiary of a deceased Participant shall be a “named fiduciary,” within the meaning of Section 402 of ERISA, with respect to the voting of shares of Company stock to the extent that voting rights are passed through to the Participant or beneficiary.

11-2.    Nonterminable Rights. Except as otherwise provided in this Article XI, no shares of Company Stock held or distributed by the Trustees may be subject to a put, call, or other option or to a buy-sell or similar arrangement. The provisions of this Article XI shall continue to be applicable to Company Stock even if the Plan ceases to be an employee stock ownership plan within the meaning of Section 4975(e)(7) of the Code.

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ARTICLE XII
 
PLAN ADMINISTRATION
 
12-1.    Plan Administration. The authority to control and manage the operation and administration of the Plan is vested in a Committee, as described in Article XIII. The Committee shall be the Administrator of the Plan, having the rights, duties, and obligations of an “administrator” under the provisions of ERISA. The members of the Committee and the Trustees shall be “Named Fiduciaries” (as described in Section 402 of ERISA) with respect to their authority under the Plan.

12-2.    The Trust. All contributions made under the Plan will be held, managed, and controlled by a trustee acting under a trust which forms a part of the Plan. The terms of the trust are set forth in a Trust Agreement known as the “Atlas America Employee Stock Ownership Trust” (the “Trust”). All rights which may accrue to any person under the Plan shall be subject to all of the terms and provisions of the Trust as in effect from time to time.

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ARTICLE XIII

THE COMMITTEE
 
13-1.    Membership. The Committee referred to in Section 12-1 shall consist of one or more members who shall be appointed by the Board of Directors of the Company. In controlling and managing the operation and administration of the Plan, the Committee shall act by the concurrence of a majority of its members at a meeting or by writing without a meeting. By unanimous written consent, the Committee may authorize any one of its members to sign any document, instrument, or direction on its behalf. A written statement by a majority of the Committee members or by an authorized Committee member shall be conclusive in favor of any person (including the Trustees) acting in reliance on that statement.
 
13-2.    Rights, Powers, and Duties. The Committee shall have all authority necessary to efficiently administer the Plan. The rights, powers, and duties of the Committee shall include the following:

(a)    to interpret and construe the provisions of the Plan;

(b)    to determine all questions relating to the eligibility, benefits, and other rights of Employees, Participants, and beneficiaries under the Plan;

(c)    to adopt rules of procedure and regulations, consistent with the provisions of the Plan, as the Committee deems necessary and proper;

(d)    to maintain and keep adequate records concerning the Plan, and concerning the proceedings and acts of the Committee, in the form and amount of detail that the Committee may decide;

(e)    to appoint investment managers to manage any assets of the Trust Fund, and to authorize the managers to acquire and dispose of assets of the Trust Fund;

(f)    to employ one or more persons to render advice with respect to any responsibility which the Committee has under the Plan;

(g)    to delegate authority and duties, including the authority to sign any documents, as the Committee may deem appro-priate to the Trustees or to other agents, provided that the Committee shall exercise reasonable care in the selection of any agents; and

(h)    to act as the agent for the service of legal process.

13-3.     Application of Rules. In operating and administering the Plan, the Committee shall apply all rules of procedure and regulations adopted by it in a uniform and nondiscriminatory manner.

13-4.     Remuneration and Expenses. No remuneration shall be paid to any Committee member as such. However, the reasonable expenses of a Committee member incurred in the performance of a Committee function shall be reimbursed by the Company.

13-5.     Exercise of Committee’s Duties. Notwithstanding any other provisions of the Plan, the Committee shall discharge its duties under this Plan solely in the interests of the Plan Participants and their beneficiaries, and:

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(a)    for the exclusive purpose of providing benefits to Plan Participants and their beneficiaries; and

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

13-6.    Resignation or Removal of Committee Members. A Committee member may resign at any time by giving ten days’ advance written notice to the Company, to the Trustees, and to the other members of the Committee. The Company may remove a Committee member by giving written notice to him or her, to the Trustees, and to the other members of the Committee. A Committee member who is a Participant in the Plan shall be automatically removed upon his or her termination of employment with the Company.

13-7.    Appointment of Successor Committee Members. The Board of Directors of the Company may fill any vacancy in the membership of the Committee and shall give prompt written notice of the appointment to the other Committee members and to the Trustees. While there is a vacancy in the membership of the Committee, the remaining Committee members shall have the same powers as the full Committee until the vacancy is filled.

13-8.    Procedures with Respect to Domestic Relations Orders. (a) Definitions. For purposes of this Section 13-8, the following terms shall have the following meanings: (i) the term “domestic relations order” shall mean any judgment, decree, or order (including approval of a property settlement agreement) which relates to the provision of child support, alimony payments, or marital property rights to a spouse, former spouse, child, or other dependent of a Participant and which is made pursuant to a state domestic relations law, including a community property law; (ii) the term “qualified domestic relations order” shall have the meaning set forth in Section 414(p) of the Code; and (iii) the term “alternate payee” shall mean any spouse, former spouse, child, or other dependent of a Participant who is recognized by a domestic relations order as having a right to receive all or a portion of the benefits payable under the Plan with respect to the Participant.

(b)    Procedures. The Committee shall establish reason-able procedures with respect to the following matters: (i) the manner for determining whether a domestic relations order consti-tutes a qualified domestic relations order; and (ii) the adminis-tration of distributions under qualified domestic relations orders.

(c)    Notice. Promptly following the receipt of any domestic relations order, the Committee shall notify the Participant affected by the order, and any other alternate payee, of the receipt of the order and of the procedures established under the Plan for determining the qualified status of domestic relations orders. Within a reasonable period of time after receipt of any domestic relations order, the Committee shall determine whether the order is a qualified domestic relations order and shall notify the Participant affected by the order and each alternate payee of the determination.

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(d)    Segregation of Account. During any period in which the issue whether a domestic relations order is a qualified domestic relations order is being determined by the Committee, by a court of competent jurisdiction, or otherwise, the Committee shall instruct the Trustees to segregate in a separate account under the Trust Fund or to deposit in an escrow account the amounts which would have been payable to the alternate payee during this period if the order had been determined to be a qualified domestic relations order. If the order or any modification of the order is determined to be a qualified domestic relations order within eighteen months, the Committee shall direct the Trustees to pay the segregated amounts, plus any accrued interest, to the persons entitled to those amounts. If within eighteen months either it is determined that the order is not a qualified domestic relations order or the issue whether the order is a qualified domestic relations order is not resolved, then the Committee shall direct the Trustees to pay the segregated amounts, plus any accrued interest, to the persons who would have been entitled to those amounts if there had been no order. Any determination that an order is a qualified domestic relations order which is made after the close of the eighteen-month period described above shall be applied prospectively only.

13-9.    Interested Committee Member. No member of the Committee may participate in the determination of any matter or question concerning his or her own benefits under the Plan or as to how his or her benefits are to be paid unless either (a) the determination could be made by him or her under the Plan if he or she were not a member of the Committee, or (b) the determination applies to all Participants similarly. If a member is disqualified to act, and the remaining members of the Committee cannot agree on a decision, the Company may appoint a temporary member to exercise the powers of the interested member concerning the matter as to which he or she is disqualified.

13-10.   Records. All acts and determinations of the Committee shall be duly recorded by the secretary of the Committee, and all of those records shall be preserved in the custody of the secre-tary. The records shall be open for inspection and copying at all times by any person designated by the Company. The Committee shall provide to the Trustees and to the accountant engaged on behalf of the Plan by the Company timely information regarding the perform-ance of the Committee’s responsibilities under the Plan, as needed by the Trustees and the accountant for the effective discharge of their duties.

13-11.   Claims Procedure. (a) Procedure. (i) General. Claims for benefits under the Plan shall be made in writing to the Committee. The Committee shall have full discretion to render a decision with respect to any claim. If a claim for benefits is wholly or partially denied by the Committee, then the Committee must provide notice of its denial to the claimant (a “Notice of Denial”), which shall be written in a manner calculated to be understood by the claimant and which shall set forth: (A) the specific reason or reasons for denial of the claim; (B) a specific reference to the pertinent Plan provisions upon which the denial is based; (C) a description of any additional material or information necessary for the claimant to perfect the claim, together with an explanation of why the material or information is necessary; and (D) appropriate information regarding the steps to be taken if the claimant wishes to submit his or her claim for review.

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(ii)    Disability Claims. If a claim is related to any distribution or rights to which a Participant or other claimant may be entitled in connection with the Participant’s termination of employment by reason of becoming disabled (“Disability Benefits”) and the claim is wholly or partially denied by the Committee, then the Committee shall provide the Notice of Denial within a reasonable period of time, not to exceed 45 days after receipt of the claim. This period within which the Committee must provide a Notice of Denial may be extended twice, for up to 30 days per extension, provided that the Committee (A) determines that an extension is needed and beyond the control of the Plan, and (B) notifies the claimant prior to the expiration of the initial 45-day period or of the first 30-day extension period. If the Committee shall fail to notify the claimant either that his or her claim for benefits has been granted or that it has been denied within the initial 45-day period or prior to the expiration of an extension, if applicable, then the claim shall be deemed to have been denied as of the last day of the applicable period, and the claimant then may request a review of his or her claim.

(iii)    Other Claims. The Committee shall notify a claimant in writing of the denial of any claim not related to Disability Benefits within a reasonable period of time, not to exceed 90 days after receipt of the claim. If the Committee shall fail to notify the claimant either that his or her claim has been granted or that it has been denied within 90 days after the claim is received by the Committee, then the claim shall be deemed to have been denied.

(b)    Procedure for Review of a Denied Claim. (i) Disability Claims. If a claim is denied, a claimant may file a written request with the Committee that it conduct a full and fair review of his or her claim, and the Committee then must make a determination with respect to its review of the denied claim. A claimant must file a written request for a review of a claim for Disability Benefits with the Committee within 180 days after the receipt by the claimant of a Notice of Denial of his or her claim or within 180 days after the claim is deemed to have been denied. The Committee’s decision with respect to its review of the denied claim shall be rendered not later than 45 days after the receipt of the claimant’s request for a review, unless special circumstances require an extension of time for processing, in which case the 45-day period may be extended to 90 days if the Committee shall notify the claimant in writing within the initial 45-day period and shall state the reason for the extension.

(ii)    Other Claims. A claimant must file a written request for a review of any claim not related to Disability Benefits with the Committee within 60 days after the receipt by the claimant of a Notice of Denial of his or her claim or within 60 days after the claim is deemed to have been denied. The Committee’s decision with respect to its review of the denied claim shall be rendered not later than 60 days after the receipt of the claimant’s request for a review, unless special circumstances require an extension of time for processing, in which case the 60-day period may be extended to 120 days if the Committee shall notify the claimant in writing within the initial 60-day period and shall state the reason for the extension.

(c)    Review of Documents. In connection with a claimant’s appeal of a denial of his or her benefits (including Disability Benefits), the claimant may review pertinent documents and may submit issues and comments in writing. The Committee shall have full discretion to fully and fairly review the claim, and the Committee’s decision upon review shall (i) include specific reasons for the decision, (ii) be written in a manner calculated to be understood by the claimant, and (iii) contain specific references to the pertinent Plan provisions upon which the decision is based.

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ARTICLE XIV

TRANSFERS FROM OTHER BENEFIT PLANS
 
14-1.  Rollover Contributions. The Plan may not receive “Rollover Contributions” from a tax-qualified plan, trust, individual retirement account, or annuity. The term “Rollover Contributions” means amounts described in Sections 402(c), 403(a)(4), and 408(d)(3) of the Code.

14-2.  Transferred Accounts from Merged or Spun-off Plans. Notwithstanding the limits on annual contributions that otherwise apply, the Plan may receive:

(a)    account balances from a tax-qualified plan or trust that has been merged into this Plan as approved by the Board of Directors of the Company; and

(b)    account balances transferred from another tax-qualified plan or trust pursuant to a plan spin-off.

14-3.     Separate Accounts. All amounts transferred in accordance with Section 14-2 will be credited to “Transfer Accounts” separate from the other Accounts provided for under the Plan. These Transfer Accounts will share only in the gains and losses in the net value of the Investment Fund as determined from time to time on Valuation Dates, as provided in Article VII.
 
14-4.    Restrictions on Transferred Amounts. Notwithstanding any other provision of this Article XIV, no amounts shall be transferred to this Plan from any defined benefit plan, from any defined contribution plan which is subject to the funding standards of Section 412 of the Code, or from any other defined contribution plan to which clause (III) of Section 401(a)(11)(B)(iii) of the Code applied with respect to any person who is a Participant in the Plan or who otherwise would become a Participant by reason of the merger of this Plan and another defined contribution plan.
 
14-5.     Eligibility and Vesting.
 
(a)    Participants in merged or spun-off plans will be credited with Years of Service based upon their prior plan in determining their eligibility and vesting under this Plan.

(b)    Employees of subsidiaries or of affiliated companies that have adopted this Plan in accordance with Section 16-4 will be credited with Years of Service with the subsid-iary or affiliated company, as the case may be, in determining their eligibility and vesting under this Plan.

(c)    If a business entity is acquired by the Company and its employees are employed by the Company:

(i)    if the acquired entity does not have a qualified retirement plan, then employees of that entity will be credited with Years of Service for employment with the prior employer for eligibility purposes only; and

(ii)    if the acquired entity has a qualified retire-ment plan which is to be merged into this Plan, the provisions of this Article XIV relative to merging plans of subsidiaries shall apply.
 
14-6.  Other Provisions of the Plan. All provisions of the Plan not inconsistent with this Article XIV shall apply to all transferred Participants and to all Transfer Accounts.

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ARTICLE XV

AMENDMENT AND TERMINATION
 
15-1.    Amendment. Subject to the provisions of Section 16-1, the Company reserves the right to amend the Plan at any time by action of its Board of Directors or of a person designated by resolution of its Board of Directors. However, no amendment shall eliminate any benefit described in Section 411(d)(6)(A) of the Code, including an optional form of benefit, or divest a Participant of any amount that he or she would have received had he or she resigned from the Company’s employ immediately prior to the effective date of the amendment. The Company shall provide the Trustees with copies of any proposed amendment to the Plan at least seven days prior to its adoption.
 
15-2.    Termination. The Company reserves the right to terminate the Plan at any time by action of its Board of Directors. The Plan will terminate on the earliest of the following dates:

(a)    the date the Company is judicially declared bankrupt or insolvent;

(b)    the date the Company permanently discontinues its contri-butions under the Plan; or

(c)    the date the Company is dissolved, merged, consolidated, or reorganized, or sells all or substantially all of its assets, except that, subject to the provisions of Section 15-3, provision may be made by the successor or purchaser for continuing the Plan (and in that event, the successor or purchaser shall be substituted for the Company under the Plan).
 
15-3.    Merger or Consolidation of Plan, Transfer of Plan Assets. In the case of any merger or consolidation with, or transfer of assets and liabilities to, any other pension or profit sharing plan, each Participant in the Plan on the date of the merger, consolidation, or transfer shall be entitled to receive a benefit immediately after the merger, consolidation, or transfer if the Plan then terminated which is equal to or greater than the benefit he or she would have been entitled to receive immediately prior to the merger, consolidation, or transfer if this Plan had terminated then.
 
15-4.    Vesting and Distribution on Termination and Partial Termination. Notwithstanding any other provision of the Plan to the contrary, on termination of the Plan in accordance with Section 15-2 or on partial termination of the Plan by operation of law, the date of termination or partial termination will be a Valuation Date and, after all adjustments required on a Valuation Date have been made, each affected Participant’s benefits will be nonforfeitable. If on termination of the Plan a Participant remains an Employee of the Company, the amount of his or her benefits shall be retained in the Trust until after his or her termination of employment with the Company and shall be paid to him or her in accordance with the provisions of Article X. The benefits payable to a Participant whose employment with the Company is terminated coincident with the termination of the Plan, or who is affected by a partial termination of the Plan, shall be paid to him or her in a lump sum. The provisions of Article VII will continue to apply until the benefits of all affected Participants have been distributed to them.
 
15-5.    Notice of Amendment, Termination, or Partial Termination. Affected Participants and the Trustees will be notified of an amendment, termination, or partial termination of the Plan as required by the applicable provisions of ERISA.

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ARTICLE XVI

MISCELLANEOUS
 
16-1.    No Reversion to Company. No part of the corpus or income of the Trust Fund shall revert to the Company or be used for or diverted to purposes other than for the exclusive benefit of Participants and their beneficiaries, except as specifically provided in Article III of the Trust Agreement.
 
16-2.    Notices. Any notice required to be filed with any person under the Plan will be properly filed if delivered or mailed to that person, in care of the Company, at 311 Rouser Road, Moon Township, PA 15108, or at such other address as the Company may designate from time to time.
 
16-3.    Indemnification. The Company shall indemnify the Trustees, the Administrator, the members of the Committee, and any other person acting as a fiduciary with respect to the Plan for, and hold them harmless against, any and all liabilities, losses, costs, or expenses of any kind or nature which may be imposed on, incurred by, or asserted against them at any time by reason of their service under this Plan (including legal fees and expenses), to the extent the liability, loss, cost, or expense is not insured against or exceeds any insurance recovery. However, no person shall be entitled to indemnity under this Section if he or she acted dishonestly or in willful or grossly negligent violation of the law or regulation under which the liability, loss, cost, or expense arises.
 
16-4.    Subsidiary and Affiliated Companies. With the approval of the Board of Directors of the Company, any subsidiary or affiliate of the Company may become a party to this Plan, and become entitled to all of the benefits and subjected to all of the obligations of this Plan, by executing an acceptance of this Plan in the form that the Company and the Trustees shall approve. Upon acceptance of this Plan by any subsidiary or affiliate, employees of the subsidiary or affiliate may become Participants upon meeting the eligibility requirements provided in Article III; and when so qualified, they shall be subject to the same obligations and entitled to the same rights and benefits as if they were employees of the Company. The contributions to be made in respect of employees of any subsidiary or affiliate of the Company which becomes a party to this Plan shall be made by the subsidiary or affiliate and not by the Company. The subsidiary or affiliate shall have no right to defer payment of its contribution or to terminate the Plan in respect of itself or its participating employees without the written consent of the Board of Directors of the Company.
 
16-5.    Participation Not Guarantee of Employment. Participation in the Plan does not constitute a guarantee or contract of employment with the Company.
 
16-6.    Gender and Number. In this Plan, where the context admits, words in the masculine gender include the feminine and neuter genders, words in the singular include the plural, and the plural includes the singular.
 
16-7.    Governing Laws. The Plan shall be construed and administered according to the laws of the State of Delaware, to the extent that those laws are not preempted by the laws of the United States of America.

16-8.    Text to Control. The Article and Section headings and numbers in this Plan are included solely for convenience of reference, and if there shall be any conflict between the headings and numbers and the text of this Plan, the text shall control.

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The foregoing is a true and correct copy of the Atlas America Employee Stock Ownership Plan.

Dated at Philadelphia, Pennsylvania this 30th day of June, 2005.

 
ATLAS AMERICA, INC.
     
     
     
 
By:
 
   
Its President
 
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SUPPLEMENT A

Special Rules for Years in Which Plan is Top-Heavy

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 Supple-ment A shall be effective for each Fiscal 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 Fiscal Year if, as of the last day of the preceding Fiscal Year or, in the case of the first Fiscal Year, the last day of that year (the “determination date”), the present value of accrued benefits of Participants who are “key employees” (as defined in Section 416(i)(1) of the Code) under this Plan and under any plan included in the Aggregation Group (defined in Section A-3) exceeds 60 percent of the present value of accrued benefits of all Participants under this Plan and under any plan included in the Aggregation Group. In making this determination, the following special rules shall apply:

 
(a)
A Participant’s accrued benefits shall be increased by the aggregate distributions, if any, made with respect to the Participant during the one-year period ending on the determination date, even if the Plan has terminated. However, in the case of a distribution made for a reason other than termination of employment, death or disability, this provision shall be applied by substituting “five-year period” for “one-year period.”

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

 
(c)
Benefits paid on account of death shall be treated as distributions to the extent the benefits do not exceed the present value of the accrued benefits of the Participant determined immediately prior to death.

 
(d)
The accrued benefits of a Participant who has not performed services for the Company during the one-year period ending on the determination date shall be disregarded.

A-3     Aggregation Group. The term “Aggregation Group” means (a) each pension, profit sharing, stock bonus, and employee stock ownership plan of the Controlled Group in which a Key Employee is a Participant, and (b) each other plan of the Controlled Group which enables any plan described in subclause (a) to meet the requirements of Section 401(a)(4) or 410 of the Code. In addition, the term “Aggregation Group” shall include any plan designated by the Company as being part of the group if the group would continue to meet the requirements of Sections 401(a)(4) and 410 of the Code with that plan being taken into account.
 
A-4      Key Employee. In general, a “key employee” is an Employee or a former Employee who, at any time during the Fiscal Year is:

A-1


(i)    an officer of the Company receiving annual Compen-sation greater than $130,000, adjusted each twelve-month period to take into account any cost-of-living increase adjustment provided for that period under Sec-tion 416(h) of the Code;
 
(ii)    a five-percent owner of the Company; or

(iii)    a one-percent owner of the Company receiving annual Compensation from the Company of more than $150,000.

A-5     Top-Heavy Vesting Schedule. For any Fiscal Year in which the Plan is a top-heavy plan, a Participant’s vested interest in his or her Company Stock and Other Investments Accounts shall not be less than the percentage determined in accordance with the following schedule:

Number of Completed
Years of Service
 
Percentage
       
Less than two years
   
0
%
Two years
   
20
%
Three years
   
40
%
Four years
   
60
%
Five years
   
80
%
Six or more years
   
100
%

If the Plan subsequently ceases to be a top-heavy plan, each Participant who has then completed three or more Years of Service may elect to continue to have the vested percentage of his or her Company Stock and Other Investments Accounts determined under the provisions of this Section A-5, except that the Participant’s vested interest in his or her Company Stock and Other Investments Accounts after the Plan ceases to be a top-heavy plan shall not be less than his or her vested interest immediately before the Plan ceased to be a top-heavy plan.
 
A-6      Minimum Employer Contribution. For any Fiscal Year in which the Plan is a top-heavy plan, the Company’s contributions and forfeitures, if any, allocated to each Participant who is not a key employee shall not be less than the “applicable percentage” of the Participant’s Compensation for that year. For purposes of this Section A-6, the term “applicable percentage” means the lesser of three percent or the maximum of the Company’s contributions and forfeitures allocated in that year to any key employee (expressed as a percentage of the key employee’s Compensation).
 
A-7      No Duplication of Benefits. If the Company maintains more than one plan, the minimum amount of the Company’s contributions otherwise required under Section A-6 may be reduced in accordance with regulations of the Secretary of the Treasury to prevent inappropriate duplication of minimum contributions or benefits.
 
A-8      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.

A-2


   
TABLE OF CONTENTS
 
       
     
Page
ARTICLE I
 
DEFINITIONS
2
1-1.
 
Accounts
2
1-2.
 
Code
2
1-3.
 
Company Stock
2
1-4.
 
Company Stock Account
2
1-5.
 
Compensation
2
1-6.
 
Controlled Group
2
1-7.
 
Effective Date
3
1-8.
 
Employee
3
1-9.
 
ERISA
3
1-10.
 
ESOP Plan
3
1-11.
 
Fiscal Year
3
1-12.
 
Highly Compensated Employee
3
1-13.
 
Leased Employee
3
1-14.
 
Limitation Year
4
1-15.
 
Other Investments Account
4
1-16.
 
Participant
4
1-17.
 
Qualified Military Service
4
1-18.
 
Related Plan
4
1-19.
 
Transfer Account
4
1-20.
 
Trust Fund
5
1-21.
 
Valuation Date
5
ARTICLE II
 
SERVICE COMPUTATIONS
6
2-1.
 
Service
6
2-2.
 
Hour of Service
6
2-3.
 
One-Year Break-in-Service
7
2-4.
 
Year of Service
7
2-5.
 
Credit for Service
7
2-6.
 
Service with Affiliated Companies
8
ARTICLE III
 
PLAN PARTICIPATION
9
3-1.
 
Eligibility for Participation
9
3-2.
 
Summary Plan Description
9
3-3.
 
Subsequent Ineligibility of a Participant
9
ARTICLE IV
 
ANNUAL COMPANY CONTRIBUTIONS
11
4-1.
 
Annual Company Contribution
11
4-2.
 
Manner of Payment
11
4-3.
 
Limitation on Amount of Annual Company Contribution
11
4-4.
 
When Contributions Made
11
ARTICLE V
 
INVESTMENT OF TRUST ASSETS
12
5-1.
 
Investment Policy
12
5-2.
 
Sales of Company Stock
12
ARTICLE VI
 
SUSPENSE ACCOUNT FOR UNALLOCATED SHARES
13
6-1.
 
Suspense Account
13
6-2.
 
Release of Company Stock from Suspense Account
13
6-3.
 
Definitions
13
6-4.
 
Limitation on Use of Fraction 2
13

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Page
ARTICLE VII
 
PARTICIPANTS ‘ ACCOUNTS AND ANNUAL ADJUSTMENTS
15
7-1.
 
Accounts for Participants
15
7-2.
 
Charges to Accounts
15
7-3.
 
Company Stock Account
15
7-4.
 
Other Investments Account
15
7-5.
 
Allocations
15
7-6.
 
Limitation on Allocations to Participants
16
7-7.
 
Special Limitations for Participants Who Sell Their Stock. (a)General
18
7-8.
 
Special Limitations for Disqualified Persons
19
7-9.
 
Adjusting to Value of Trust Fund
20
7-10.
 
Participant Statements
21
ARTICLE VIII
 
RETIREMENT DATES
22
8-1.
 
Normal Retirement Date
22
8-2.
 
Early Retirement Date
22
8-3.
 
Disability Retirement Date
22
8-4.
 
Retirement Date
22
ARTICLE IX
 
VESTING OF ACCOUNT BALANCES
23
9-1.
 
Vesting on Retirement
23
9-2.
 
Vesting on Disability
23
9-3.
 
Vesting on Death
23
9-4.
 
Vesting on Other Termination
23
9-5.
 
Determination of Account Balances
24
9-6.
 
Reinstatement of Forfeitures
24
ARTICLE X
 
DISTRIBUTION OF PLAN BENEFITS
25
10-1.
 
Method of Distribution
25
10-2.
 
Form of Distribution. (a)Company Stock Account
25
10-3.
 
Distributions After Death
25
10-4.
 
Time of Distribution
26
10-5.
 
Minimum Distribution Requirements
26
10-6.
 
Diversification of Company Stock Account
30
10-7.
 
Rollover Distributions
30
10-8.
 
Dividends on Company Stock
31
10-9.
 
Distributions To Persons Under Disability
32
10-10.
 
Benefits may not be Assigned or Alienated
32
10-11.
 
No Guarantee of Benefits
32
10-12.
 
Beneficiaries
32
10-13.
 
Benefits of Persons Who Cannot Be Located
33
10-14.
 
Participant’s Consent to a Distribution
33
ARTICLE XI
 
SHAREHOLDER RIGHTS AND RESTRICTIONS
34
11-1.
 
Voting of Company Stock
34
11-2.
 
Nonterminable Rights
34
ARTICLE XII
 
PLAN ADMINISTRATION
35
12-1.
 
Plan Administrator
35
12-2.
 
The Trust
35

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Page
ARTICLE XIII
 
THE COMMITTEE
36
13-1.
 
Membership
36
13-2.
 
Rights, Powers, and Duties
36
13-3.
 
Application of rules
37
13-4.
 
Remuneration and Expenses
37
13-5.
 
Exercise of Committee’s Duties
37
       
13-6.
 
Resignation or Removal of Committee Members
37
13-7.
 
Appointment of Successor Committee Members
37
13-8.
 
Procedures with Respect to Domestic Relations Orders
37
13-9.
 
Interested Committee Member
38
13-10.
 
Records
39
13-11.
 
Claims Procedure
39
ARTICLE XIV
 
TRANSFERS FROM OTHER BENEFIT PLANS
41
14-1.
 
Rollover Contributions
41
14-2.
 
Transferred Accounts from Merged or Spun-off Plans
41
14-3.
 
Separate Accounts
41
14-4.
 
Restrictions on Transferred Amounts
41
14-5.
 
Eligibility and Vesting
41
14-6.
 
Other Provisions of the Plan
42
ARTICLE XV
 
AMENDMENT AND TERMINATION
43
15-1.
 
Amendment
43
15-2.
 
Termination
43
15-3.
 
Merger or Consolidation of Plan, Transfer of Plan Assets
43
15-4.
 
Vesting and Distribution on Termination and Partial Termination
43
15-5.
 
Notice of Amendment, Termination, or Partial Termination
44
ARTICLE XVI
 
MISCELLANEOUS
45
16-1.
 
No Reversion to Company
45
16-2.
 
Notices
45
16-3.
 
Indemnification
45
16-4.
 
Subsidiary and Affiliated Companies
45
16-5.
 
Participation Not Guarantee of Employment
45
16-6.
 
Gender and Number
46
16-7.
 
Governing Laws
46
16-8.
 
Text to Control
46
SUPPLEMENT   A A-1  
A-1
 
Purpose and Effect
A-1
A-2
 
Top-Heavy Plan
A-1
A-3
 
Aggregation Group
A-1
A-4
 
Key Employee
A-2
A-5
 
Top-Heavy Vesting Schedule
A-2
A-6
 
Minimum Employer Contribution
A-2
A-7
 
No Duplication of Benefits
A-3
A-8
 
Use of Terms
A-3
 
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