Amended and Restated Employee Stock Ownership Plan and Trust of Standard Motor Products, Inc., dated as of December 21, 2018

(i)           a payment of regular compensation for services during the Employee’s regular working hours, or compensation for services outside the Employee’s regular working hours (such as overtime or shift differential), commissions, bonuses, or other similar payments to the extent such payment would have been made prior to a severance from employment if the Employee had continued in employment with the Employer, provided such amounts are paid within the period beginning on the Employee’s severance from employment and ending on the later of (i) 2-1/2 months thereafter or (ii) the last day of the limitation year that includes the date of the Employee’s severance from employment (the “Post-Severance Period”);

(ii)          payments for “unused leave” (i.e., accrued bona fide sick, vacation, or other leave, but only if the Employee would have been able to use such leave if employment had continued) that are paid within the Post-Severance Period;

(iii)         payments received by a Participant within the Post-Severance Period pursuant to a nonqualified unfunded deferred compensation plan, but only if the payment would have been paid to the Participant at the same time if the Participant had not severed employment and only to the extent that the payment is includible in the Participant’s gross income; and

(iv)         Compensation paid to an Employee by the Employer with regard to military service meeting the definition of differential wage payment found in Code Section 3401(h)(2) (“Differential Wages”).

(i)           Regular pay. 415 Compensation shall include regular pay after severance of employment if:

(ii)         Leave cashouts and deferred compensation.  Leave cashouts shall be included in 415 Compensation if those amounts would have been included in the definition of 415 Compensation if they were paid prior to the participant’s severance from employment, and the amounts are payment for unused accrued bona fide sick, vacation, or other leave, but only if the participant would have been able to use the leave if employment had continued. In addition, deferred compensation shall be included in 415 Compensation if the compensation would have been included in the definition of 415 Compensation if it had been paid prior to the participant’s severance from employment and the compensation is received pursuant to a nonqualified unfunded deferred compensation plan, but only if the payment would have been paid at the same time if the participant had continued in employment with the Employer and only to the extent that the payment is includible in the participant’s gross income.

(iii)        Salary continuation payments for military service participants.  415 Compensation does not include payments to an individual who does not currently perform services for the Employer by reason of qualified military service (as that term is used in Section 414(u)(1) of the Code) to the extent those payments do not exceed the amounts the individual would have received if the individual had continued to perform services for the Employer rather than entering qualified military service.

(i)           Restorative payments. Annual additions for purposes of Section 415 of the Code shall not include restorative payments. A restorative payment is a payment made to restore losses to a Plan resulting from actions by a fiduciary for which there is reasonable risk of liability for breach of a fiduciary duty under ERISA or under other applicable federal or state law, where participants who are similarly situated are treated similarly with respect to the payments. Generally, payments are restorative payments only if the payments are made in order to restore some or all of the plan’s losses due to an action (or a failure to act) that creates a reasonable risk of liability for such a breach of fiduciary duty (other than a breach of fiduciary duty arising from failure to remit contributions to the Plan). This includes payments to a plan made pursuant to a Department of Labor order, the Department of Labor’s Voluntary Fiduciary Correction Program, or a court approved settlement, to restore losses to a qualified defined contribution plan on account of the breach of fiduciary duty (other than a breach of fiduciary duty arising from failure to remit contributions to the Plan). Payments made to the Plan to make up for losses due merely to market fluctuations and other payments that are not made on account of a reasonable risk of liability for breach of a fiduciary duty under ERISA are not restorative payments and generally constitute contributions that are considered annual additions.

(ii)          Other Amounts. Annual additions for purposes of Section 415 of the Code shall not include:  (1) The direct transfer of a benefit or employee contributions from a qualified plan to this Plan; or (2) Rollover contributions (as described in Sections 401(a)(31), 402(c)(1), 403(a)(4), 403(b)(8), 408(d)(3), and 457(e)(16) of the Code).

(i)          For purposes of applying the limitations of Section 415 of the Code, all defined contribution plans (without regard to whether a plan has been terminated) ever maintained by the Employer (or a “predecessor employer”) under which the participant receives annual additions are treated as one defined contribution plan. The “Employer” means the Employer that adopts this Plan and all members of a controlled group or an affiliated service group that includes the Employer (within the meaning of Section 414(b), (c), (m) or (o) of the Code), except that for purposes of this Section, the determination shall be made by applying Section 415(h) of the Code, and shall take into account tax exempt organizations under regulation Section 1.414(c)-5, as modified by regulation Section 1.415(a)-1(f)(1). For purposes of this Section:

(ii)          Break up of an affiliate employer or an affiliated service group.  For purposes of aggregating plans for Section 415 of the Code, a “formerly affiliated plan” of an employer is taken into account for purposes of applying the Section 415 of the Code limitations to the employer, but the formerly affiliated plan is treated as if it had terminated immediately prior to the “cessation of affiliation.”  For purposes of this paragraph, a “formerly affiliated plan” of an employer is a plan that, immediately prior to the cessation of affiliation, was actually maintained by one or more of the entities that constitute the employer (as determined under the employer affiliation rules described in regulation Section 1.415(a)-1(f)(1) and (2)), and immediately after the cessation of affiliation, is not actually maintained by any of the entities that constitute the employer (as determined under the employer affiliation rules described in regulation Section 1.415(a)-1(f)(1) and (2)). For purposes of this paragraph, a “cessation of affiliation” means the event that causes an entity to no longer be aggregated with one or more other entities as a single employer under the employer affiliation rules described in Regulation Section 1.415(a)-1(f)(1) and (2) (such as the sale of a subsidiary outside a controlled group), or that causes a plan to not actually be maintained by any of the entities that constitute the employer under the employer affiliation rules of regulation Section 1.415(a)-1(f)(1) and (2) (such as a transfer of plan sponsorship outside of a controlled group).

(iii)        Midyear Aggregation.  Two or more defined contribution plans that are not required to be aggregated pursuant to Section 415(f) of the Code and the regulations thereunder as of the first day of a limitation year do not fail to satisfy the requirements of Section 415 of the Code with respect to a participant for the limitation year merely because they are aggregated later in that limitation year, provided that no annual additions are credited to the participant’s account after the date on which the plans are required to be aggregated.

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

 

 

9.1         The Company will furnish the Trustee with such information as the Trustee will deem necessary to carry out the Plan, but assumes no obligation to any Employee, Participant or Beneficiary for any act, of the Trustee, or the Plan Administrator.

9.2         The Company will indemnify and save each Trustee and the Plan Administrator harmless from and against any and all loss resulting from liability to which he may be subjected by any act or conduct (except for willful misconduct or gross negligence) in his official capacity in the administration of the Trust or Plan, except, however, from any liability he may have under the Act for breach of fiduciary duty.

9.3         (a)          Subject to paragraph (b) below relating to qualified domestic relations orders, neither a Participant nor a Beneficiary shall anticipate, assign or alienate any benefit under the Plan, and the Trustees shall not recognize any such anticipation, assignment or alienation. Furthermore, a benefit under the Plan is not subject to attachment, garnishment, levy, execution or other legal or equitable process.

(b)          Nothing contained in this Plan shall prevent the Trustees from complying with the provisions of a qualified domestic relations order (as defined in Code Section 414(p)).

The Plan Administrator shall establish reasonable procedures to determine the qualified status of a domestic relations order upon receiving a domestic relations order. The Plan Administrator promptly shall notify the Participant and any alternate payee named in the order, in writing, of the receipt of the order and the Plan’s procedures for determining the qualified status of the order. Within a reasonable period of time after receiving the domestic relations order, the Plan Administrator shall determine the qualified status of the order and shall notify the Participant and each alternate payee, in writing of the determination. The Plan Administrator shall provide notice under this paragraph by mailing to the individual’s address specified in the domestic relations order, or in a manner consistent with Department of Labor regulations. The Plan Administrator may treat as qualified any domestic relations order entered prior to January 1, 1985, irrespective of whether it satisfied all the requirements described in Code Section 414(p).

If any portion of the Participant’s non-forfeitable Account balance is payable during the period the Plan Administrator is making its determination of the qualified status of the domestic relations order, the Trustees shall segregate the amounts payable in a separate account and invest the segregated account solely in fixed income investments. If the Plan Administrator determines the order is a qualified domestic relations order within 18 months of receiving the order, the Trustees shall distribute the segregated account in accordance with the order. If the Plan Administrator does not make a determination of the qualified status of the order within 18 months of receiving the order, the Trustees shall distribute the segregated account in the manner the Plan would distribute if the order did not exist and shall apply the order prospectively if the Plan Administrator later determines the order is a qualified domestic relations order.

To the extent it is not inconsistent with the provisions of the qualified domestic relations order, the Trustees may invest any partitioned amount in a segregated sub-account or separate account and invest the account in federally insured, interest bearing savings account(s) or time deposit(s) (or a combination of both), or in other fixed income investments. A segregated sub-account shall remain a part of the Trust, but it alone shall share in any income it earns, and it alone shall bear any expense or loss it incurs.

The Trustees shall make any payments or distributions required under this Section 9.3(b) by separate checks or other separate distribution to the alternate payee(s).

9.4         Any Participant in the Plan or any Beneficiary may examine copies of the Plan description, latest annual report, this Plan and Trust or any other instrument under which the Plan was established or is operated. The Plan Administrator will maintain such copies on the premises of the Company for examination during reasonable business hours and will furnish copies at a reasonable charge upon request of a Participant or Beneficiary.

9.5         The Trustees shall establish a funding policy and method consistent with the objectives of the Plan and the requirements of Title I of ERISA. The Trustees shall meet at least annually to review such funding policy and method. All action of the Trustees, and the reasons therefore, taken pursuant to this Section 9.5 shall be recorded in the minutes of the meeting of the Trustees.

9.6         The Trustees, or an Investment Manager appointed by the Trustees, shall have the sole and complete discretion of the Trust Fund. The Trustees may reserve from investment such amounts of cash as they, from time to time, deem necessary or advisable in the administration of the Trust.

9.7         The Trust Fund shall be primarily invested in shares of Company Securities. Notwithstanding the foregoing, each “qualified Participant” may elect within 90 days after the close of the Plan Year in the “qualified election period” (a “Diversification Year”), as defined below, to direct the Trustees to distribute a number of shares from the Participant’s account up to (i) 25% of the total number of shares of Company Securities allocated to the Participant’s Account at any time after 1986 minus (ii) the total number of such shares of Company Securities that were previously distributed to the Participant pursuant to a prior election under this Section 9.7.

In the case of a qualified election period in which the Participant has attained the age of 60, the Participant can make an election in the same manner as described in the preceding sentence except that “50%” may be replaced for “25%” (the applicable percentage being the Maximum Diversification Amount).

For purposes of this Section, the term “qualified Participant” means any Participant who has attained age 55 and who has a 100% non-forfeitable right to their Account balance in accordance with Section 7.7.

For purposes of this Section, the term “qualified election period” begins as soon as the Participant becomes a qualified Participant and ends as of the earlier of the qualified Participant no longer maintaining an Account balance or electing distribution of the Maximum Diversification Amount, as defined in Section 9.7.

Notwithstanding the foregoing, nothing in this Section 9.7 shall limit the ability of any Participant who has terminated employment (including due to the Participant’s retirement on or after his Normal Retirement Date) or incurred a Disability or, in the case of the Participant’s death, his Beneficiary from electing a distribution in excess of his Maximum Diversification Amount in accordance with Article Eight.

 

 

10.1       The Trustees shall establish a procedure for the resolution of disputes and dispositions of claims arising under the Plan. Until modified by the Trustees, this procedure is as follows:

Any of the Employees, former Employees, or any Beneficiaries of such Employees or former Employees may, if they so desire, file with the Trustees a written claim for benefits under the Plan. Within 90 days after the filing of such a claim, the Trustees shall notify the claimant whether his claim is upheld or denied. The Trustees may, under special circumstances, extend the period of time for processing a claim by an additional 90 days. If such an extension of time is required written notice shall be furnished to the claimant or his duly authorized representative prior to the termination of the initial 90 day period. Such notice will indicate the special circumstance requiring an extension. in the event the claim is denied, the Trustees shall state in writing:

(a)          the specific reason for the denial;

(b)          specific references to pertinent Plan provisions on which the denial is based;

(c)          a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary; and

(d)          an explanation of the claim review procedure set forth in this Section 10.1.

Within 60 days after receipt of notice that his claim has been denied, the claimant or his duly authorized representative may file with the Trustees a written request for a review hearing and may, in conjunction therewith, submit written issues and comments. The Trustees shall then schedule, within 60 days after the filing of such request, a full and fair hearing of the claim before the Trustees. The Trustees may, under special circumstances, extend such period of time by an additional 60 days. Prior to said hearing, the claimant or his representative shall have a reasonable opportunity to review a copy of the Plan, the Trust agreement, and other pertinent documents in the possession of the Trustees. The Trustees shall communicate their decision in writing to the claimant within 30 days after the hearing. The decision will include the specific reasons for the decision, specify the pertinent Plan provisions on which the decision is based, a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claimant’s claim for benefits, and a statement describing any voluntary appeal procedures offered by the Plan and the claimant’s right to obtain the information about such procedures and a statement of the claimant’s right to bring an action under Section 502(a) of ERISA.  Any claim for benefits and any request for a review hearing must be filed on forms to be furnished by the Trustees upon a Participant’s request.

(e)          To the extent a Disability benefit related claim is made under the Plan, the claim will be handled in accordance with the applicable regulations promulgated by the Department of Labor in 29 C.F.R. 2560.503-1.

 

 

11.1       The Trustees accept the Trust created hereunder and agree to perform the obligations imposed. The Trustees shall provide a bond for the faithful performance of their duties under the Trust to the extent required by law.

11.2       The Trustees shall have full discretion and authority regarding the investment of the Trust Fund. The Trustees shall have, but not by way of limitation, the following powers, rights, and duties:

(a)          to invest the Trust Fund primarily in Company Securities (“primarily” meaning the power and authority to acquire, from Company shareholders or the Company or any ERISA Affiliate at prices not in excess of fair market value, not more than 100% of the Trust Fund in Company Securities) and to invest the balance, if any, of the Trust Fund in any common or preferred stocks, bonds, share of investment companies, common trust funds, insurance contracts, mortgages, notes or other property of any kind, real or personal, as a prudent man would do under like circumstances with due regard for the purposes of the Plan;

(b)          to retain in cash so much of the Trust Fund as they may deem advisable without liability for obtaining the highest rate of interest available;

(c)          to manage, sell, exchange, transfer, and lease for any term, and otherwise deal with all Trust property, real or personal, in such manner, for such consideration, and on such terms and conditions as they deem best;

(d)          to borrow money by mortgage, pledge or otherwise;

(e)          to compromise, contest, arbitrate or abandon claims and demands in their discretion;

(f)          to have with respect to the Trust all of the rights of an individual owner, including the power to give proxies, participate in voting trusts, mergers, consolidations or liquidations;

(g)          to hold any securities or other property in the name of the Trustees or a nominee, or in another form as they deem best, without disclosing the trust relationship;

(h)          to furnish the Company an annual statement of account showing the condition of the Trust Fund and all investments, receipts, disbursements and other transactions affected by the Trustees during the Plan Year covered by the statement, and the assets of the Trust held at the end of the Plan Year, which statement of account shall be conclusive on all persons unless objected to within 90 days after receipt; and

(i)           to borrow money, to assume indebtedness, including installment obligations, extend mortgages and encumber by mortgage or pledge; provided, however, if any transaction is with a Disqualified Person or a Disqualified Person guarantees a loan to the Plan or Trust, any such Exempt Loan shall be primarily for the benefit of Participants or their Beneficiaries, and the following terms and conditions shall apply.

(1)          The Trustees shall use the proceeds of the Exempt Loan within a reasonable time after receipt only for any or all of the following purposes: (i) to acquire Company Securities, (ii) to repay such Exempt Loan, or (iii) to repay a prior Exempt Loan. Except as may be expressly provided under this Plan, no Company Security acquired with the proceeds of an Exempt Loan may be subject to a put, call or other option, or buy/sell or similar arrangement while held by and when distributed form this Plan, whether or not this Plan is then a leveraged employee stock ownership plan.

(2)          The interest rate on the Exempt Loan shall not be more than a reasonable rate of interest.

(3)          Any collateral the Trustees pledge to the creditor shall consist only of the Company Securities purchased with the borrowed funds and Company Securities the Trust used as collateral on the prior Exempt Loan repaid with the proceeds of the current Exempt Loan.

(4)          The creditor shall have no recourse against the Trust under the Exempt Loan except with respect to such collateral given for the Exempt Loan, contributions (other than contributions of Company Securities) that the Company makes to the Trust to meet its obligations under the Exempt Loan, and earnings attributable to such collateral and the investment of such contributions. The payment made with respect to an Exempt Loan by the Plan during a Plan Year must not exceed an amount equal to the sum of such contributions and earnings received during or prior to the year less such payments in prior years. The Trustees must account separately for such contributions and earnings in the books of account of the Plan until the Trust repays the Loan.

(5)          In the event of default upon the Exempt Loan, the value of Plan assets transferred in satisfaction of the Exempt Loan must not exceed the amount of the default, and if the lender is a Disqualified Person, the Exempt Loan must provide for transfer of Plan assets upon default only upon and to the extent of the failure of the Plan to meet the payment schedule of the Exempt Loan.

(6)          The Trustees must deposit and maintain all assets acquired with the proceeds of an Exempt Loan in a Suspense Account. In withdrawing assets from the Suspense Account, the Trustees shall apply the provisions of Treasury Regulation 54.4975-7(b)(8) as if all securities in the Suspense Account were encumbered. Upon the payment of any portion of the Exempt Loan, the Trustees shall effect the release of assets in the Suspense Account from encumbrances, and the pledge agreement must so provide. For each Plan Year during the duration of the Exempt Loan, the number of Company Securities released must equal the number of encumbered Company Securities held immediately before the release for the current Plan Year multiplied by a fraction. The numerator of the fraction is the amount of principal paid for the Plan Year. The denominator of the fraction is the sum of the numerator plus the principal to be paid for all future years. The number of future Plan Years under the Exempt Loan must be definitely ascertainable and must be determined without taking into account any possible extension or renewal periods, and may not exceed 10 years. Further, any such Exempt Loan must provide for annual payments of principal and interest at a cumulative rate that cannot be less rapid at any time than any level annual payments of such amounts for 10 years. In determining principal, interest shall be disregarded only to the extent that it would be determined to the interest under the amortization tables. If the collateral includes more than one class of Company Securities, the number of Company Securities of each class will be released from the Suspense Accounts to the Accounts of Participants in accordance with Section 6.2 for the Plan Year with respect to which the Trustees have paid the corresponding portion of the Exempt Loan.

(7)          The Exempt Loan must be for a specific term and may not be payable at the demand of any person except in the case of default.

(8)          Notwithstanding the fact this Plan ceases to be an employee stock ownership plan, Company Securities acquired with the proceeds of an Exempt Loan shall continue after the Trustees repay the Exempt Loan to be subject to the provisions of Treasury Regulation Section 54.4975-7(b)(4), (10), (11) and (12) as provided under Article Fifteen.

11.3       The Trustees (except full-time Employees of an Employer or ERISA Affiliate) shall receive such reasonable annual compensation as may agree to from time to time between the Company and the Trustees, and shall pay all expenses reasonably incurred from the Trust Fund unless the Company pays such expenses.

11.4       The Trustees may employ agents, attorneys, accountants and other persons and pay their reasonable compensation from the Trust Fund. No person dealing with the Trustees shall be obligated to see to the proper application of any money paid or property delivered to them. The certificate of the Trustees that they are acting in accordance with the Plan shall be conclusive in favor of any person relying thereon.

11.5       Any Trustee may resign at any time by giving 30 days advance written notice to the Company and Trustees. The Company, by giving 30 days advance written notice to the Trustees, may remove any Trustee. In the event of resignation or removal of a Trustee, the Company may appoint a successor Trustee who shall succeed to the title of Trustee by accepting his appointment in writing and shall have and enjoy all of the powers conferred under this Agreement upon his predecessor Trustee.

11.6       The Trustees shall value the Trust Fund as of each Accounting Date to determine the Fair Market Value of each Participant’s Account, and shall credit (or debit) each Account with its proportionate share of gains, earnings, income, losses or expenses of the Trust Fund.

11.7       If there shall be more than one Trustee, they shall act by a majority of their number at a meeting, but may authorize one or more of them to sign papers on their behalf. The Trustees may also act by unanimous consent in lieu of a meeting.

11.8       Except as otherwise provided by ERISA, only the Company, the Plan Administrator, and the Trustees shall be necessary parties to any court proceeding involving the Trustees or the Trust Fund. No Participant or Beneficiary shall be entitled to any notice of process unless required by the Act. Any final judgment entered in any proceeding shall be conclusive upon the Company, the Plan Administrator, the Trustees, Participants, and Beneficiaries.

11.9       Every Participant shall have the right to direct the Trustees as to the exercise of any voting shares for the share of Company Securities then allocated to his Account with respect to any matter which involves the voting of such shares with respect to the approval or disapproval of any corporate merger or consolidation, recapitalization, reclassification, liquidation, dissolution, sale of substantially all assets of a trade or business, or such similar transaction as the Secretary of the Treasury may prescribe by regulation. On other matters the Trustees shall solicit and follow voting instructions from a Participant with respect to shares of Company Securities entitled to vote that are then allocated to his Account if the Company has a registration type class of Securities (as defined in Section 409(e)(4) of the Code).

11.10     On a matter involving the voting of shares of Company Securities, the Trustees shall vote the shares of Company Securities then held in the Trust Fund (A) but not released from a Suspense Account or (B) otherwise not yet allocated to the Account of any Participant or (C) allocated to the Account of a Participant who has not provided the Trustees with the relevant voting instructions as described in Section 11.9, in proportion to the voting instructions of Participants as received by the Trustees.  If no voting instructions are received or are required from Participants with respect to a voting matter, the Trustees shall vote the shares of Company Securities held in the Trust Fund (including the shares of Company Securities held in a Suspense Account and shares that have been allocated to the Accounts of the Participants) in a manner that they choose.

11.11     The Trustees and their assistants and representatives shall distribute benefits under the Plan in whole shares of Company Securities valued at Fair Market Value at the time of distribution, cash, or a combination of both, as they were determined, provided, however, a Participant shall have the right to demand distribution entirely in whole shares of Company Securities (with the value of any fractional shares paid in cash).

11.12     Subject to the last paragraph of this Section 11.12, all or any portion of any cash dividends declared by the Company with respect to shares of Company Securities held by the Trust as of the ex-dividend date with respect to such dividends (including shares held in a Suspense Account and shares that have been allocated to the Accounts of Participants) may, at the discretion of the Company, be distributed to those individuals who are Participants (or to the Beneficiaries of such Participants) in the Plan as of such ex-dividend date (A) directly to such Participants (or their Beneficiaries) or (B) through the Trust provided that the Trust in such case distributes such dividends to such Participants (or Beneficiaries) within 90 days after the close of the Plan Year in which such dividends are paid. Those Participants (or Beneficiaries) entitled to a share in a distribution of cash dividends in proportion to the number of shares of Company Securities allocated to their Accounts as of the relevant ex-dividend date.

If the Company chooses not to distribute to Participants a portion of any cash dividends declared with respect to shares of Company Securities held by the Trust, then all, or any part, as the Company decides, of the portion of such dividends that are not to be distributed may be used to repay all or a part of the interest and/or principal of an Exempt Loan then outstanding; provided, however, that dividends on shares of Company Securities that have been allocated to the Account of a Participant may not be used to pay interest or principal on an Exempt Loan unless shares of Company Securities having a Fair Market Value not less than the amount of such dividends so used are allocated to such Account for the Plan Year in which such dividends are so used, to the extent that dividends are so used. To the extent that dividends are not distributed to Participants or used to repay interest or principal on an Exempt Loan, such dividends, to the extent paid with respect to shares of Company Securities held in a Suspense Account shall be treated as an investment gain of the Trust, and to the extent paid with respect to shares of Company Securities allocated to the Accounts of Participants shall themselves be allocated to such Accounts as income.

Notwithstanding any other provision of this Section 11.12 or the Trust overall, effective with respect to cash dividends paid on Company Securities held by the Trust in which a Participant is fully vested, and which dividends have a record date of February 15, 2011 or later, the Participant (or his or her Beneficiary if applicable) in whose account such Company Securities are held shall have the right to receive current payment of such dividends from the Trust in lieu of reinvestment of the dividends in Company Securities.  An election by a Participant or Beneficiary to receive payment of dividends under this Section 11.12 shall be made in the manner designated by the Company provided that, (1) any Participant or Beneficiary who fails to make an affirmative election to receive payment of dividends within the time prescribed for such election by the Company shall be deemed to have elected to have such dividends remain in the Trust and reinvested in Company Securities under the Trust, and (2) any election by a Participant or Beneficiary to receive payment of dividends in lieu of reinvestment shall remain in effect until such election is revoked by the Participant or Beneficiary.  Distributions of dividends in accordance with a Participant’s or Beneficiary’s election shall occur not later than ninety (90) days after the close of the Plan Year in which such dividends were paid to the Trust.  This final paragraph of this Section 11.12 shall not apply to cash dividends (and the remainder of this Section 11.12 shall apply instead), to the extent such dividends (and the underlying Company Securities) are not yet vested in accordance with Section 7.7 of this Trust.

11.13     The Trustees and its members, assistants and representatives shall be free from all liability for their acts and conduct in the administration of the Plan and Trust except for acts of willful misconduct; provided, however, that the foregoing shall not relieve any party from any liability for any responsibility, obligation or duty that may arise pursuant to ERISA or the Code.

11.14      In the event of and to the extent not insured against by any insurance company pursuant to provisions of any applicable insurance policy, the Company shall indemnify and hold harmless, to the extent permitted by law, any individual (but not a corporation), Trustees and their assistants and representatives from any claim, demands, suits or proceedings which may be in connection with the Plan or Trust be brought by the Company’s Employees, Participants or their Beneficiaries or legal representatives, or by any other person, corporation, entity, government, or agency thereof provided, however, that such indemnification shall not apply to any such person’s acts of willful misconduct in connection with the Plan or Trust.

11.15      If a tender offer is made for all or a portion of the outstanding shares of Company Securities, the Trustees shall poll the Participants with regard to such tender offer on the basis of the number of shares of Company Securities held in the Trust Fund (including shares held in a suspense account if, and only if, the number of votes of Participants in favor of a tender is greater than the number of votes of Participants opposed to tender).

 

 

12.1       Special Definitions. For the purposes of this Article Twelve, the following words and phrases shall have the meanings set forth below:

(a)          “Aggregate Account” means, as of the Determination Date, the sum of:

If the Plan is the plan accepting such rollovers or plan-to-plan transfers, it shall not consider any such rollovers or plan-to-plan transfers accepted after December 31, 1983 as part of the Participant’s Aggregate Account balance. However, such unrelated rollovers or plan-to-plan transfers accepted prior to January 1, 1984 shall be considered as part of the Participant’s Aggregate Account balance.

(b)          “Aggregation Group” means either a Required Aggregation Group or a Permissive Aggregation Group, as hereinafter determined.

No plan in the Permissive Aggregation Group will be considered a Top Heavy Plan if the Permissive Aggregation Group is not a Top Heavy Group.

(c)          “Determination Date” means (1) the last day of the preceding Plan Year, or (2) in the case of the first Plan Year of a Plan, the last day of such Plan Year.

(d)          “Key Employee” means any Employee or former Employee (including any deceased Employee) who at any time during the Plan Year that includes the Determination Date was:

(e)          “Non-Key Employee” means any Employee who is not a Key Employee.

(f)          “Top Heavy Plan Year” means that, for a particular Plan Year commencing after December 31, 1983, the Plan is a Top Heavy Plan.

(g)          “Valuation Date” means the most recent valuation date within a 12-month period ending on the determination date.

12.2       Determination of Top Heavy Status.

(a)          An Aggregation Group shall be a “Top Heavy Group” for any Plan Year commencing after December 31, 1983 in which, as of the Determination Date, the sum of the Present Value of Accrued Benefits of Key Employees and the Aggregate Account balances of Key Employees under all Plans of an Aggregation Group exceeds 60% of the sum of the Present Value of Accrued Benefits and the Aggregate Account balances of all Employees under the Plan and all Plans of the Aggregation Group.

(b)          An Aggregation Group shall be a “Super Top Heavy Group” for any Plan Year commencing after December 31, 1983 in which, at the Determination Date, the sum of the Present Value of Accrued Benefits of Key Employees and the Aggregate Account balances of Key Employees and all Plans in an Aggregation Group exceeds 90% of the sum of the Present Value of Accrued Benefits and the Aggregate Account balances of all Employees under all Plans of the Aggregation Group.

(c)          “Present Value of Accrued Benefit” means, in the case of a defined benefit plan, the present value of an accrued benefit, as determined under the provisions of the applicable defined benefit plan and in compliance with Treasury Regulations Section 1.416-l(T-25 and T-26).

(d)          In determining Top Heavy Status, the accrued benefit of (i) an individual who is not a Key Employee with respect to any Plan in an Aggregation Group for a Plan Year but who was a Key Employee with respect to a Plan in an Aggregation Group for a prior Plan Year and (ii) an individual who performed no services for the Employer of an ERISA Affiliate during the 5-year period ending on the Determination Date, shall be disregarded.

12.3       For any Top Heavy Plan Year, the Plan shall provide special minimum benefit and contribution requirements of Section 416(c) of the Code, pursuant to Section 12.4 of the Plan.

12.4       Minimum Allocations and Benefits.

(a)          In the case of a defined contribution plan, for any Top Heavy Plan Year, the sum of employer contributions and forfeitures allocated to the Account of each Non-Key Employee who is a Participant and who has not terminated employment by the end of such Plan Year (including (A) Participants who fail to complete at least 1,000 Hours of Service during the Plan Year, (B) Employees who are excluded from the Plan or accrue no benefit because their Compensation is less than a stated amount, and (C) Employees who are excluded from the Plan or accrue no benefit because they fail to make mandatory contributions, or, in the case of a Plan intended to qualify under Section 401(k) of the Code, elective contributions) shall be equal to at least 3% of such Non-Key Employee’s Compensation. However, should the sum of the Employer’s contributions and forfeitures allocated to the Account of each Key Employee for such Top Heavy Plan Year be less than 3% of each such Key Employee’s Compensation, the sum of the Employer’s contributions and forfeitures allocated to the Account of each Non-Key Employee who is a Participant (including the Employees referred to in the preceding sentence) shall be equal to the highest percentage allocated to the Account of a Key Employee. The preceding sentence shall not apply to any plan required to be included in an Aggregation Group if such plan enables a defined benefit plan required to be included in an Aggregation Group to meet the requirements of Section 401(a)(4) or Section 410 of the Code. For purposes of satisfying the minimum contribution requirements of this subparagraph, an Employee’s elective deferrals under a cash or deferred arrangement (as defined under Section 401(k) of the Code shall not be treated as an Employer Contribution.  Employer matching contributions shall be taken into account for purposes of satisfying the minimum contribution requirements of Section 416(c)(2) of the Code and the Plan.

(b)          In the case of a defined benefit plan, for any Top Heavy Plan Year, the accrued benefit, when expressed as an Annual Retirement Benefit (as defined below), of a Participant who is a Non-Key Employee and who has completed at least 1,000 Hours of Service during the Plan Year (including Employees who are excluded from the Plan or accrue no benefit because their Compensation is less than a stated amount and Employees who are excluded from the Plan or accrue no benefit because they fail to make mandatory contributions) will be at least equal to the lesser of (i) the product of (A) an Employee’s average annual Compensation for the period of consecutive years (not exceeding (5)) when the Employee had the highest aggregate Compensation from the Employer and (B) 2% per year of service with the Employer, or (ii) 20%.

(c)          Notwithstanding anything herein to the contrary, in any Plan Year in which both a defined benefit plan and a defined contribution plan are part of a Top Heavy Group, the following rules shall apply: For each Non-Key Employee who is participating in the Top Heavy defined contribution plan maintained by the Employer, the defined contribution minimum, as provided under Section 12.4(b) above, shall accrue, and the defined benefit minimum shall not be applicable. For each other Non-Key Employee who is a Participant in the Top Heavy defined benefit plan maintained by the Employer, the Employer shall satisfy the minimum contribution requirement of Section 12.4(b).

 

13.1       The Trustees and the Company in no way guarantee the Trust Fund from loss or depreciation, and the Company does not guarantee the payment of any money which may be or becomes due to any person from the Trust Fund. The liability of the Trustees to make any payment from the Trust Fund at any time and all times is limited to the then available assets of the Trust Fund.

13.2       Words used in the masculine hereunder shall apply to the feminine where applicable and the plural shall be read as the singular, and the singular as the plural, wherever the context dictates.

13.3       All questions with respect to the interpretation of this Agreement shall be determined by the laws of the State of New York, except to the extent that Federal law controls.

13.4       Conditional upon prior approval by the Company, any ERISA Affiliate may participate in this Plan as a participating company, provided it shall make, execute and deliver such instruments as the Company and the Trustees shall require. Such an ERISA Affiliate shall accept the Company as its agent to act for it in all transactions in which the Company believes such agency will facilitate the administration of the Plan. Any such ERISA Affiliate shall accept the Company as its agent to act for it in all transactions in which the Company believes such agency will facilitate the administration of the Plan. Any such ERISA Affiliate may withdraw from participation in this Plan upon written notice to the Company and the Trustees, and upon such withdrawal this Plan shall automatically terminate insofar as it relates to such withdrawing participating organization and its Employees.

13.5       Nothing contained in this Plan, or with respect to the establishment of the Trust, or any modification or amendment to the Plan or Trust, or in the creation of any Account, or the payment of any benefit, shall give any Employee, Employee-Participant or any Beneficiary any right to continue employment, any legal or equitable right against the Company, or Employee of the Company, or against the Trustees, or their agents or Employees, or against the Plan Administrator, except as expressly provided by the Plan, the Trust, the Act of by a separate agreement.

 

 

14.1       The Company has the right to amend this Agreement at any time it deems necessary or advisable in order to maintain qualification of this Plan and Trust under the Code. It may further amend this Agreement for any other purpose provided no such amendment shall permit the Trust Fund to be used for or diverted to purposes other than for the exclusive benefit of the Participants or their Beneficiaries or estates, or cause or permit any portion of the Trust Fund to revert to or become the property of the Company.

14.2       The Company shall make all amendments in writing which shall state the date on which they are retroactively or prospectively effective.

14.3       Notwithstanding any other provision of this Plan to the contrary, upon the date of either partial or full termination of the Plan, or of Complete discontinuance of contributions to the Plan, an affected Participant’s right to his Account shall be 100% non-forfeitable.

14.4       The Trustees shall not consent to, or be a party to, any merger or consolidation with another Plan, or to a transfer of assets or liabilities to another Plan unless immediately after the merger, consolidation or transfer, the surviving Plan provides each Participant a benefit equal or greater than the benefit each Participant would have received had the Plan terminated immediately before the merger, consolidation or transfer. Upon termination of the Plan, the Trust shall continue until the Trustees have distributed all of its benefits under the Plan.

14.5       The Company shall not amend the vesting schedule (and no amendment shall be effective) if the amendment reduces the non-forfeitable percentage of any Participant’s Account balance derived from Employer contributions (determined as of the later of the date the Company adopts the amendment or the date the amendment becomes effective) to a percentage less than the non-forfeitable percentage computed under the Plan without regard to the amendment. If the Company amends the vesting schedule, each Participant having completed at least 3 Years of Service with the Company before the expiration of the election period may irrevocably elect during the election period to have the non-forfeitable percentage of his Account balance computed under the Plan without regard to the amendment. For purposes of the preceding sentence the election period shall begin no later than the date the Plan amendment is adopted and end no earlier than the latest of (i) the date which is 60 days after the day the Plan amendment is adopted; (ii) the date which is 60 days after the day the Plan amendment becomes effective, or (iii) the date which is 60 days after the day the Participant is given written notice of the Plan amendment by the Company or the Trustees. The Plan Administrator, as soon as practicable, shall forward a true copy of any amendment to the vesting schedule to each affected Participant, together with an explanation of the effect of the amendment, the appropriate form which the Participant may make an election to remain under the vesting schedule provided under the Plan prior to the amendment and notice of the time within which the Participant must make an election to remain under the prior vesting schedule.

 

 

15.1       Shares of Company Securities acquired with the proceeds of an Exempt Loan and distributed by the Trustees shall be subject to a “right of first refusal” which shall provide that, prior to any subsequent transfer, such shares must first be offered in writing to the Company and then if refused by the Company, to the Trust at the then Fair Market Value, or, if greater, at the purchase price offered by the first buyer making a good faith offer to purchase. A bona fide written offer from an independent prospective buyer shall be deemed to be the Fair Market Value of such shares for this purpose. The Company and the Trustees (on behalf of the Trust) shall have 14 days from the date of refusal on the same terms offered by the prospective buyer. A Participant (or Beneficiary) entitled to a distribution of Company Securities shall be required to execute an appropriate stock transfer agreement evidencing the right of first refusal prior to receiving a certificate for Company Securities. The right of first refusal shall be administered in accordance with Treasury Regulation Section 54.4975-7(b)(9).

15.2       The Company shall issue a “put option” to each Participant receiving a distribution of Company Securities from the Trust if such Company Securities are not readily tradeable on an established market when distributed, or are subject to a trading limitation. The put option shall permit the Participant (or his Beneficiary) to sell such Company Securities to the Company at any time during 2 option periods at their then Fair Market Value.

The first put option shall be a period of at least 60 days beginning on the date of distribution of Company Securities to the Participant. The second put option period shall be at least 60 days beginning after the new determination of the Fair Market Value of Company Securities by the Trustees (and notice to the Participant) in the next following Plan Year. The Company may permit the Trustees to direct the Plan to purchase Company Securities tendered to the Company under a put option.

Payment by the Company of Securities put to it pursuant to this Section 15.2 shall be made (A) in a single sum within 30 days after such put option is exercised if such securities were part of an installment distribution, or (B) if such securities were distributed to the Participant as part of a total distribution, in a single sum or substantially equal periodic installments (not less frequently than annually) over a period beginning not later than 30 days after the exercise of the put option and not exceeding 5 years, with adequate security provided and reasonable interest charged on unpaid installments. The put option shall be administered in accordance with Treasury Regulation Section 54.4975-7(b)(l0), (11) and (12).

15.3       Shares of Company Securities held or distributed by the Trustees may include such legend restrictions on transferability as the Company may reasonably require to assure compliance with applicable Federal and state securities laws. Except as otherwise provided herein, no shares of Company Securities held or distributed by the Trustees may be subject to a put, call or other option or buy-sell or other similar arrangement.

15.4       If shares of Company Securities are not readily tradeable on an established securities market, all valuations of such shares with respect to an activity carried on by the Plan shall be made by an independent appraiser meeting the requirements similar to the requirements for an appraiser under regulations promulgated by the Security of the Treasury or his delegates pursuant to Section 170(a)(1) of the Code. Valuations of Company Securities must be made in good faith and based on all relevant factors for determining the fair market value of securities.

15.5       (a)          No portion of the Plan assets attributable to (or allocable in lieu of) Employer Stock acquired by the Plan in a Section 1042 Sale may accrue (or be allocated directly or indirectly under any plan qualified under Section 401(a) of the Code maintained by the Employer) (1) during the Nonallocation Period for the benefit of any Nonallocation Participant, or (2) for the benefit of a 25-Percent Shareholder.

(b)          The following terms shall have the following meanings:

“Employer Stock” for purposes of this Section 15.5 means employer securities (as defined in Section 409(l) of the Code) which are issued by a domestic C corporation that has no stock outstanding that is readily tradable on an established securities market, and were not received by the Participant in a distribution from a plan described in Section 401(a) of the Code, or a transfer pursuant to an option or other right to acquire stock to which Sections 83, 422 or 423 of the Code applied (or to which Sections 422 or 424 (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990) applied).

“Nonallocation Participant” means any Participant who makes an election under Section 1042(a) of the Code with respect to Employer Stock and any Participant who is related to such Participant within the meaning of Section 267(b) of the Code.  “Nonallocation Participant” does not include any participant who is a lineal descendant of a Participant who makes an election under Section 1042 of the Code if the aggregate amount allocated for the benefit of all such lineal descendants during the Nonallocation Period does not exceed more than 5 percent of the Employer Stock (or amounts allocated in lieu thereof) by any person related to such descendants (within the meaning of Section 267(c)(4) of the Code).

“Nonallocation Period” means the period beginning on the date of the Section 1042 Sale and ending on the later of the date that is 10 years after the date of the Section 1042 Sale, or the date of the plan allocation attributable to the final payment of acquisition indebtedness incurred in connection with the Section 1042 Sale.

“Section 1042 Sale” means a sale of Employer Stock to the Plan in a transaction to which Section 1042 of the Code (pertains to the nonrecognition of gain) applies.

“25-percent Shareholder” means a Participant who owns more than 25 percent of any class of outstanding stock of Employer or any corporation that is a member of the same controlled group of corporations (within the meaning of Section 409(l)(4) of the Code)) as the Employer, or owns more than 25 percent of the total value of any class of outstanding company stock pursuant to Code Section 409(n)(1)(B).  The rules of Section 318(a) of the Code, without regard to the employee trust exception in Section 318(a)(2)(B)(i), are used to calculate the ownership percentage.  This definition is applicable at any time during either the 1-year period ending on the date of sale of such stock to the Plan, or on the date as of which Employer Stock is allocated to Participants.

15.6       The provisions of this Article Fifteen shall continue to apply to shares of Company Securities even if the Plan ceases to be an Employee Stock Ownership Plan under Section 4975(e)(7) of the Code.

IN WITNESS WHEREOF, this Plan has been executed this _________ day of ______________ of 2018.

 

EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST OF STANDARD MOTOR PRODUCTS, INC.

Special provisions relating to the Employee Stock Ownership Plan and Trust of Standard Motor Products, Inc. (“ESOP”) and the participation of the employees of the Guaranteed Parts/Sorensen Division of Wickes Manufacturing Company, Inc. who transferred their employment to the Company on October 26, 1989 (“Transferred Employees”).

---