Common use of ESOP Matters Clause in Contracts

ESOP Matters. (a) Not later than the Closing, the Company and Seller shall adopt, subject to the review and consent of the ESOP Trustee and Buyer (which consent shall not be unreasonably withheld, conditioned or delayed), an amendment to the ESOP (the “ESOP Amendment”) to provide that, subject to the consummation of the Closing, effective at, immediately following or after the Closing as may be applicable, (i) Seller shall become the plan sponsor and have all the power and authority of the “Company” as defined in and for purposes of the ESOP with respect to periods thereafter (and without assuming any responsibility with respect to prior periods), (ii) the ESOP shall be a profit sharing plan (within the meaning of Section 401 of the Code), and shall cease to be a stock bonus plan and an employee stock ownership plan (within the meaning of Sections 401 and 4975 of the Code), (iii) the ESOP shall be terminated; (iv) pursuant to the termination of the ESOP, no further contributions will be made to the ESOP as of the Closing except for contributions that have been accrued on behalf of participants and beneficiaries prior to the Closing Date, or that are otherwise required by the IRS in connection with the issuance of a favorable determination letter with respect to the termination of the ESOP, (v) pursuant to the termination of the ESOP, all ESOP participants whose account balances had not previously been distributed in full will be fully vested, (vi) no new participants will be admitted to the ESOP after the Closing, and (vii) such other changes as Seller deems appropriate, which may include, by way of example, provisions regarding the exercise of voting power with respect to the equity of Seller after the Closing and constraints on amendments to the ESOP or the replacement of the administrator or administrative committees of the ESOP after the Closing. The ESOP Amendment shall further provide for full distribution of plan benefits in one or more payments as Seller, in consultation with the ESOP Trustee, may determine, with such distributions being completed as provided in Section 8.6.4(c). (b) Following the Closing, Seller shall administer and operate the ESOP in all material respects in accordance with the qualification and tax-exemption requirements of the Code and the requirements of ERISA. Pursuant to the termination of the ESOP by the ESOP Amendment, within 120 days after the Closing, the Seller shall file an application with the IRS for a determination for terminating plan (Form 5310) requesting a favorable determination letter to the effect that the termination of the ESOP shall not affect the qualified and tax-exempt status of the ESOP under the Code. The application by the Seller to the IRS shall disclose that the Seller intends to maintain the ESOP’s trust fund until the later of receipt of the favorable determination letter or the distribution of all funds held in escrow. Following the Closing, Seller shall promptly adopt, subject to the prior notification of the ESOP Trustee and Sellers’ Representative, such amendments to the ESOP as are required by the IRS as a condition to the issuance of such favorable determination letter (provided such actions and amendments would not require material contributions by Seller or materially increase the exposure or obligations of Seller with respect to the ESOP), shall otherwise respond promptly to any request by the IRS to provide additional information and shall use its commercially reasonable efforts, including the payment of necessary fees and expenses, to obtain such favorable determination letter from the IRS, as promptly as practicable. (c) All payments to ESOP participants shall be made in accordance with the terms of the ESOP (including the ESOP Amendment), taking into account any timely and properly completed distribution elections made in accordance with the terms of the ESOP. With respect to any participant, beneficiary of a deceased participant or alternate payee who has filed an affirmative election to receive distribution from the ESOP, provided that properly completed distribution elections in accordance with the terms of the ESOP have been made and received by Seller, the portion of the account balances of such participant, beneficiary or alternate payee in the ESOP shall be distributed in accordance with the terms of the ESOP. The final distribution of remaining account balances (after any interim distributions), after full payment of the ESOP administrative expenses incurred by the ESOP Trustee as described in Section 8.6.4(d), of such participant, beneficiary or alternate payee in the ESOP, shall be distributed in cash as soon as reasonably practicable following the later of (i) the receipt of a favorable determination from the IRS to the effect that the termination of the ESOP did not adversely affect its tax-qualified status; or (ii) the final distribution of the Adjustment Escrow Amount and the Sellers’ Representative Holdback Amount and the receipt by the ESOP of its share of such amounts and any other amounts due to it in connection with the transactions contemplated hereby, the redemption of its shares and the windup of Seller. Following the Closing, with Seller’s cooperation, Buyer shall, and shall cause the Company to, take such actions as are necessary and appropriate to permit a participant receiving an eligible rollover distribution (as defined in Section 402(t) of the Code) from the ESOP (as so amended), who is then employed by Buyer or the Company, to transfer directly, in a rollover under Sections 401(a)(31) and 402(c) of the Code, all or any portion of such distribution to a qualified plan maintained by Buyer or the Company, if permitted by such plan and if such rollover will not have an adverse effect on such qualified plan. (d) On or before the Closing Date, Seller and the Company shall take all actions (including adopting resolutions or amendments) necessary or appropriate to permit all reasonable fees and expenses of the ESOP Trustee and reasonable administration expenses of the ESOP and costs associated with complying with this Section 8.6.4 to be paid out of the assets of the ESOP, to the extent permitted by ERISA, until such time as all assets of the ESOP have been distributed to participants, beneficiaries and alternate payees. (e) The ESOP Trustee shall use its reasonable efforts to obtain (to the extent possible) an opinion (the “Fairness Opinion”), stating that, as of the Closing Date (i) the consideration to be received by the ESOP for the Shares pursuant to the terms of the transactions contemplated by this Agreement is not less than “adequate consideration” within the meaning of Section 3(18) of ERISA, and (ii) the terms and conditions of the transactions contemplated by this Agreement, taken as a whole, are fair to the ESOP from a financial point of view.

ESOP Matters. (a) Not later than As soon as practicable after notice of the Company Meeting is delivered to the Company’s stockholders, the Company will request that the trustees of the ESOP and the 401(k) Plan take all necessary action required by the respective plan documents, and for the ESOP in accordance with Section 409(e)(2) of the Code, to conduct a pass-through vote of the participants and beneficiaries to direct the respective trustee as to the manner in which the Company Common Stock and are allocated to the account of such participant or beneficiary are to be voted. In no event will Parent or the Company be entitled to receive any information identifying how any individual participant directed the trustees to vote the shares allocated to such participant’s account. The Company will further request the trustee of the ESOP and the 401(k) Plan to provide to Parent for review and comment, reasonably in advance of the pass-through votes, but in any event at least ten (10) business days prior to distribution thereof to the plan participants, all materials (including the information statement and any similar disclosure materials) prepared by the Company and approved by the plan trustees proposed to be disclosed to the participants in connection with the pass-through votes, and the Company shall incorporate any comments reasonably proposed by Parent thereto. and the plan trustees shall take all actions necessary to comply with voting requirements of the ESOP, the 401(k) Plan, the Code and applicable law for the required approvals of the consummation of the transactions contemplated by this Agreement in advance of the Company Meeting. (b) Prior to the Effective Time, the Company shall amend the ESOP, as reasonably acceptable to Parent, to permanently discontinue contributions to and terminate the ESOP, contingent upon the occurrence of the Closing and effective as of the date immediately preceding the Closing Date (the “ESOP Amendment”). The ESOP Amendment shall provide that the accounts of all participants in the ESOP shall become fully vested upon termination of the ESOP, and that each share of Company Common Stock held in the ESOP shall be converted into the right to receive, without interest, the Merger Consideration. Notwithstanding anything herein to the contrary, the Company may continue to accrue and make contributions to the ESOP, subject to applicable deduction and annual allocation limitations, from the date of this Agreement through the termination date of the ESOP in an amount sufficient to cover (but not to exceed) the loan payments which become due in the ordinary course on the outstanding ESOP Loan to the ESOP prior to the termination of the ESOP and, at the discretion of the Company, may make a pro-rated payment on the ESOP Loan for the plan year during with the Closing occurs through and including the end of the calendar month immediately preceding the Closing, prior to the termination of the ESOP. (c) To the extent not filed by the Company and Seller before the Closing Date, as soon as administratively practicable following the Closing Date, Parent shall adopt, subject submit an application to the review IRS requesting a favorable determination with respect to the amendment and consent termination of the ESOP Trustee and Buyer (which consent shall not be unreasonably withheld, conditioned or delayed), an amendment to the ESOP (the “ESOP AmendmentDetermination Letter”) to provide that, subject to the consummation of the Closing, effective at, immediately following or after the Closing as may be applicable, (i) Seller shall become the plan sponsor and have all the power and authority of the “Company” as defined in and for purposes of the ESOP with respect to periods thereafter (and without assuming any responsibility with respect to prior periods), (ii) the ESOP shall be a profit sharing plan (within the meaning of Section 401 of the Code), and shall cease to be a stock bonus plan and an employee stock ownership plan (within the meaning of Sections 401 and 4975 of the Code), (iii) the ESOP shall be terminated; (iv) pursuant to the termination of the ESOP, no further contributions will be made to the ESOP as of the Closing except for contributions that have been accrued on behalf of participants and beneficiaries prior to the Closing Date, or that are otherwise required by the IRS in connection with the issuance of a favorable determination letter with respect to the termination of the ESOP, (v) pursuant to the termination of the ESOP, all ESOP participants whose account balances had not previously been distributed in full will be fully vested, (vi) no new participants will be admitted to the ESOP after the Closing, and (vii) such other changes as Seller deems appropriate, which may include, by way of example, provisions regarding the exercise of voting power with respect to the equity of Seller after the Closing and constraints on amendments to the ESOP or the replacement of the administrator or administrative committees of the ESOP after the Closing. The ESOP Amendment shall further provide for full distribution that participants have the right to receive partial distributions of plan benefits in one or more payments up to 50% of the account balances credited to the ESOP participants as Sellerof the Closing Date, in consultation taking into account the Merger Consideration received by the ESOP, as soon as administratively practicable after the Closing Date, with the remaining portion to be distributed as soon as administratively practicable after receipt by Parent of the ESOP Trustee, may determine, with such distributions being completed as provided in Section 8.6.4(c)Determination Letter. (bd) Following the Closing, Seller shall administer and operate the ESOP in all material respects in accordance with the qualification and tax-exemption requirements of the Code and the requirements of ERISA. Pursuant Immediately prior to the termination Effective Time, a portion of the ESOP Unallocated Shares, having an aggregate value of outstanding balance of the ESOP Loan as of the Effective Time, shall be exchanged in satisfaction of the ESOP Loan. In the event that the aggregate value of the ESOP Unallocated Shares is less than outstanding balance of the ESOP Loan at the Effective Time, all ESOP Unallocated Shares will be transferred to the Company in satisfaction of the ESOP Loan which shall be deemed to have been paid in full. All remaining shares of Company Common Stock owned by the ESOP Amendment, within 120 days after the Closing, the Seller shall file an application with the IRS for a determination for terminating plan (Form 5310) requesting a favorable determination letter to the effect that the termination of the ESOP shall not affect the qualified and tax-exempt status of the ESOP under the Code. The application by the Seller to the IRS shall disclose that the Seller intends to maintain the ESOP’s trust fund until the later of receipt of the favorable determination letter or the distribution of all funds held in escrow. Following the Closing, Seller shall promptly adopt, subject to the prior notification of the ESOP Trustee and Sellers’ Representative, such amendments to the ESOP as are required by the IRS as a condition to the issuance of such favorable determination letter (provided such actions and amendments would not require material contributions by Seller or materially increase the exposure or obligations of Seller with respect to the ESOP), shall otherwise respond promptly to any request by the IRS to provide additional information and shall use its commercially reasonable efforts, including the payment of necessary fees and expenses, to obtain such favorable determination letter from the IRS, as promptly as practicable. (c) All payments to ESOP participants shall be made eligible to be converted into the right to receive the Merger Consideration pursuant to Article I and allocated in accordance with the terms of the ESOP (including and the ESOP Amendment), taking into account any timely and properly completed distribution elections made in accordance with the terms of the ESOP. With respect to any participant, beneficiary of a deceased participant or alternate payee who has filed an affirmative election to receive distribution from the ESOP, provided that properly completed distribution elections in accordance with the terms of the ESOP have been made and received by Seller, the portion of the account balances of such participant, beneficiary or alternate payee in the ESOP shall be distributed in accordance with the terms of the ESOP. The final distribution of remaining account balances . (after any interim distributions), after full payment of the ESOP administrative expenses incurred by the ESOP Trustee as described in Section 8.6.4(d), of such participant, beneficiary or alternate payee in the ESOP, shall be distributed in cash as soon as reasonably practicable following the later of (ie) the receipt of a favorable determination from the IRS to the effect that the termination of the ESOP did not adversely affect its tax-qualified status; or (ii) the final distribution of the Adjustment Escrow Amount and the Sellers’ Representative Holdback Amount and the receipt by the ESOP of its share of such amounts and any other amounts due to it in connection with the transactions contemplated hereby, the redemption of its shares and the windup of Seller. Following the Closing, with Seller’s cooperation, Buyer shall, all costs and shall cause the Company to, take such actions as are necessary and appropriate to permit a participant receiving an eligible rollover distribution (as defined in Section 402(t) expenses of the Code) from ESOP, including the ESOP Trustee’s fees and the legal, accounting and recordkeeping (and including any fees and costs related to post-Closing audits and any liabilities imposed as so amended), who is then employed by Buyer or the Company, to transfer directly, in a rollover under Sections 401(a)(31result thereof) and 402(c) of the Code, all or any portion of such distribution to a qualified plan maintained by Buyer or the Company, if permitted by such plan and if such rollover will not have an adverse effect on such qualified plan. (d) On or before the Closing Date, Seller and the Company shall take all actions (including adopting resolutions or amendments) necessary or appropriate to permit all reasonable other administrative fees and expenses of the ESOP Trustee and reasonable administration expenses ESOP, resulting from the liquidation of the ESOP and costs associated with complying with this Section 8.6.4 to be paid out the distribution of the assets of funds from the ESOP, will be paid by the ESOP to the extent permitted by ERISA, until such time permissible. (f) As soon as all assets administratively practicable following receipt of the ESOP Determination Letter, the Parent, in its capacity as plan sponsor, shall cause the trustee of the ESOP to make, and the trustee of the ESOP shall make, distributions from the ESOP until all remaining account balances of the ESOP participants and beneficiaries have been distributed to participants, beneficiaries and alternate payees. (e) The ESOP Trustee shall use its reasonable efforts to obtain (to the extent possible) an opinion (the “Fairness Opinion”), stating that, as of the Closing Date (i) the consideration to be received by the ESOP for the Shares pursuant to the terms of the transactions contemplated by this Agreement is not less than “adequate consideration” within the meaning of Section 3(18) of ERISA, and (ii) the terms and conditions of the transactions contemplated by this Agreement, taken as a whole, are fair to the ESOP from a financial point of viewshall be liquidated.

ESOP Matters. (a) Not later Until the Closing or the earlier termination of this Agreement, neither the Company nor the ESOP Trustee shall make or agree to make any distributions or other payments to or from the ESOP or purchase any capital stock from the ESOP or from participants or former participants or beneficiaries, other than (i) such distributions from, or other payments to or from, the ESOP, (ii) purchases of capital stock from participants or former participants or beneficiaries, as are required by the terms of the ESOP or (iii) ratable distributions to the ESOP made concurrently with distributions to the Company’s shareholders in order to pay estimated income Taxes. (b) The Company shall, immediately prior to the Closing, cause the Company ESOP to be amended, effective as of, and Seller contingent upon, the occurrence of, the Closing Date, in a form reasonably acceptable to Buyer (the “ESOP Amendment”), which ESOP Amendment, from and after the Closing Date, shall adoptprovide that (i) the ESOP shall be “frozen” as of the Closing such that no new participants shall enter the plan, subject no further vesting credit shall accrue, and no additional contributions shall be made to the review ESOP; (ii) all ESOP participants shall become immediately and consent 100% vested in their accounts, (iii) all proceeds from the sale of the ESOP’s suspense account shares shall be properly allocated in a manner permissible by the IRS and for the exclusive benefit of participants in the ESOP, (iv) the ESOP Trustee shall be terminated and the entire balance of an ESOP participant’s account shall be distributable in cash or securities as soon as administratively feasible after receipt of the IRS Approval or such earlier date as the Buyer may determine, (v) a committee as determined or appointed by the Buyer (which consent the “ESOP Administrative Committee”) shall not be unreasonably withheld, conditioned or delayed), an amendment to responsible for administering the ESOP during the period following the Closing until all of its assets are fully distributed in complete termination of the ESOP (the “ESOP AmendmentTermination Date”), and (vi) all costs of the administration of the ESOP during such period which may be permissibly paid from the ESOP’s trust assets shall be borne by the ESOP, and shall include such special allocation, valuation and accounting provisions necessary to provide thatprudently address administrative issues related to benefit accrual activity for periods preceding the Closing. The ESOP Trust agreement shall, subject immediately prior to the consummation of the Closing, be amended, effective at, immediately following or after as of the Closing Date, to reflect the planned termination of the ESOP upon the ESOP Termination Date. (c) Promptly following the Closing Date, the ESOP Administrative Committee shall submit an application to the IRS requesting a favorable determination with respect to the ESOP Amendment and proposed termination of the ESOP (the “IRS Approval”). If IRS Approval cannot be obtained without modification of the ESOP Amendment, no distribution shall be made from the ESOP until such modifications are made to the ESOP Amendment as may be required by the IRS in order to obtain the IRS Approval. (d) Effective as of the Closing Date, or at such time as the Buyer may determine, the cash accounts held in the ESOP (net of any administrative expense funds or such other amounts that the fiduciaries deem to be prudent to retain in the ESOP pending its termination) and all rights that the ESOP shall have to proceeds from the Transaction that may be payable from the Escrow Amount or the Secondary Escrow Amount in accordance with the Escrow Agreement or the agreement governing any successor account holding any portion of the Escrow Amount or the Secondary Escrow Amount, may be transferred in a “spin off” from the ESOP, pursuant to Section 414(l) of the Code and Treasury Regulation Section 1.414(l)-1 and ERISA Section 208 into a new profit sharing plan (the “PSP”), which, if established, shall be a frozen plan, shall contain such distribution restrictions as maintained under the ESOP and which shall remain in place until the Escrow Amount and the Secondary Escrow Amount are completely disbursed to the ESOP or PSP, as may be applicable, (i) Seller shall become and the plan sponsor and have all the power and authority of the “Company” as defined in and for purposes of the ESOP with respect to periods thereafter (and without assuming any responsibility with respect to prior periods), (ii) the ESOP shall be a profit sharing plan (within the meaning of Section 401 of the Code), and shall cease to be a stock bonus plan and an employee stock ownership plan (within the meaning of Sections 401 and 4975 of the Code), (iii) the ESOP shall be terminated; (iv) pursuant to the termination of the ESOP, no further contributions will be made to the ESOP as of the Closing except for contributions that have been accrued on behalf of participants and beneficiaries prior to the Closing Date, or that are otherwise required by the IRS in connection with the issuance of a favorable determination letter with respect to the termination of the ESOP, (v) pursuant to the termination of the ESOP, all ESOP participants whose account balances had not previously been distributed in full will be fully vested, (vi) no new participants will be admitted to the ESOP after the Closing, and (vii) such other changes as Seller deems appropriate, which may include, by way of example, provisions regarding the exercise of voting power with respect to the equity of Seller after the Closing and constraints on amendments to the ESOP or the replacement of the administrator or administrative committees of the ESOP after the Closing. The ESOP Amendment shall further provide for full distribution of plan benefits in one or more payments as Seller, in consultation with the ESOP Trustee, may determine, with such distributions being completed as provided in Section 8.6.4(c). (b) Following the Closing, Seller shall administer and operate the ESOP in all material respects Sellers in accordance with the qualification and tax-exemption requirements Escrow Agreement or the agreement governing any successor account holding any portion of the Code Escrow Amount or the Secondary Escrow Amount, or until such earlier or later time as the Buyer determines. (e) The Buyer may determine, in which event Shareholder Representative shall cooperate and assist the requirements Buyer, to cause the ESOP and PSP, if established, to make available a diverse menu of ERISA. Pursuant investments for participants in one or both plans, following the Closing and prior to the termination of the ESOP by the ESOP Amendment, within 120 days after the Closing, the Seller shall file an application with the IRS for a determination for terminating plan (Form 5310) requesting a favorable determination letter to the effect that and the termination or other disposition of the ESOP shall not affect the qualified and tax-exempt status of the ESOP under the Code. The application by the Seller to the IRS shall disclose that the Seller intends to maintain the ESOP’s trust fund until the later of receipt of the favorable determination letter or the distribution of all funds held in escrow. Following the Closing, Seller shall promptly adopt, subject to the prior notification of the ESOP Trustee and Sellers’ Representative, such amendments to the ESOP as are required by the IRS as a condition to the issuance of such favorable determination letter (provided such actions and amendments would not require material contributions by Seller or materially increase the exposure or obligations of Seller with respect to the ESOP), shall otherwise respond promptly to any request by the IRS to provide additional information and shall use its commercially reasonable efforts, including the payment of necessary fees and expenses, to obtain such favorable determination letter from the IRS, as promptly as practicablePSP. (cf) All payments to ESOP participants shall be made in accordance with the terms of the ESOP (including the ESOP Amendment), taking into account any timely and properly completed distribution elections made in accordance with the terms of the ESOP. With respect to any participant, beneficiary of a deceased participant or alternate payee who has filed an affirmative election to receive distribution from the ESOP, provided that properly completed distribution elections in accordance with the terms of the ESOP have been made and received by Seller, the portion of the account balances of such participant, beneficiary or alternate payee in the ESOP shall be distributed in accordance with the terms of the ESOP. The final distribution of remaining account balances (after any interim distributions), after full payment of the ESOP administrative expenses incurred by the ESOP Trustee as described in Section 8.6.4(d), of such participant, beneficiary or alternate payee in the ESOP, shall be distributed in cash as soon as reasonably practicable following the later of (i) the receipt of a favorable determination from the IRS to the effect that the termination of the ESOP did not adversely affect its tax-qualified status; or (ii) the final distribution of the Adjustment Escrow Amount and the Sellers’ Representative Holdback Amount and the receipt by the ESOP of its share of such amounts and any other amounts due to it in connection with the transactions contemplated hereby, the redemption of its shares and the windup of Seller. Following the Closing, with Seller’s cooperation, Buyer shall, and shall cause the Company to, take such actions as are necessary and appropriate to permit a participant receiving an eligible rollover distribution (as defined in Section 402(t) of the Code) from the ESOP (as so amended), who is then employed by Buyer or the Company, to transfer directly, in a rollover under Sections 401(a)(31) and 402(c) of the Code, all or any portion of such distribution to a qualified plan maintained by Buyer or the Company, if permitted by such plan and if such rollover will not have an adverse effect on such qualified plan. (d) On or before the Closing Date, Seller and the Company shall take all actions (including adopting resolutions or amendments) necessary or appropriate to permit all reasonable fees and expenses of the ESOP Trustee and reasonable administration expenses of the ESOP and costs associated with complying with this Section 8.6.4 to be paid out of the assets of the ESOP received in connection with the Closing (including an amount that is reasonably necessary to pay for the administrative expenses of the ESOP), net of the assets which may be transferred to the PSP, will be allocated to the accounts of the ESOP participants, beneficiaries and alternate payees no later than one hundred and twenty (120) days following the Closing Date, and, with respect to any Escrow Amount or Secondary Escrow Amount, to the extent permitted by ERISA, until such time as all assets accounts of the ESOP have been distributed or PSP participants, beneficiaries and alternate payees, as may be applicable, within thirty (30) days following the receipt by the plan of any portion of the Escrow Amount or the Secondary Escrow Amount paid in accordance with the Escrow Agreement or the agreement governing any successor account holding any portion of the Escrow Amount or the Secondary Escrow Amount. As soon as administratively feasible following the final distribution to the ESOP or PSP, as may be applicable, and the other Sellers of the entire remaining balance of the Escrow Amount or Secondary Escrow Amount in accordance with the Escrow Agreement or the agreement governing any successor account holding any portion of the Escrow Amount or the Secondary Escrow Amount, the ESOP or PSP, as may be applicable, will make a final allocation to all affected participants, beneficiaries and alternate payees. (eg) The ESOP Trustee shall use its reasonable efforts to obtain (to the extent possible) an opinion (the “Fairness Opinion”), stating that, as of the Closing Date (i) the consideration to be received by Administrative Committee will direct the ESOP for the Shares pursuant to the terms of the transactions contemplated by this Agreement is not less than “adequate consideration” within the meaning of Section 3(18) of ERISA, and (ii) the terms and conditions of the transactions contemplated by this Agreement, taken Trustee as a whole, are fair to the ESOP from a financial point of viewTrustee’s position regarding claims by the Buyer against the Escrow Amount. The ESOP Trustee will follow such instructions unless contrary to Law.