<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarter ended March 31, 1998
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 0-27872
MAY & SPEH, INC.
(Exact name of registrant as specified in its charter)
Delaware 36-2992650
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1501 Opus Place, Downers Grove, Illinois 60515
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (630) 964-1501
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [x] No
---------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding as of May 14, 1998
Common Stock, par value $0.01 per share 26,068,654
<PAGE>
MAY & SPEH, INC.
INDEX
<TABLE>
<CAPTION>
Part I -- Financial Information
Page
----
<S> <C>
Item 1. Financial Statements
Consolidated Balance Sheets -- March 31, 1998
and September 30, 1997 -2-
Consolidated Statements of Operations -- Three and six
months ended March 31, 1998 and March 31, 1997 -3-
Consolidated Statements of Stockholders' Equity -- Six months
ended March 31, 1998 -4-
Consolidated Statements of Cash Flows -- Six months ended
March 31, 1998 and March 31, 1997 -5-
Notes to Financial Statements -6-
Item 2. Management's Discussion and Analysis of Financial Condition -8-
and Results of Operations
Part II -- Other Information
Item 2. Changes in Securities and Use of Proceeds -12-
Item 4. Submission of Matters to a Vote of Security Holders -12-
Item 6. Exhibits and Reports on Form 8-K -12-
</TABLE>
-1-
<PAGE>
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements
May & Speh, Inc.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
ASSETS March 31, 1998 September 30, 1997
<S> <C> <C>
Current assets:
Cash and cash equivalents $109,835,075 $ 1,888,817
Marketable securities 11,794,190 20,415,793
Accounts receivable, net 31,921,402 28,569,372
Income taxes refundable 7,072,588 6,301,217
Prepaid software 7,459,691 5,442,796
Prepaid equipment rental 826,582 766,666
Prepaid other 4,909,346 1,045,163
Deferred income taxes 634,000 634,000
------------ ------------
Total current assets 174,452,874 65,063,824
Property, plant and equipment, net 56,299,252 50,228,440
Goodwill 19,849,256 20,099,245
Other assets 17,463,973 13,404,419
------------ ------------
Total assets $268,065,355 $148,795,928
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 5,521,479 $ 5,810,927
Accounts payable 3,498,468 5,017,666
Accrued payroll and other expenses 4,338,718 7,195,717
------------ ------------
Total current liabilities 13,358,665 18,024,310
Long-term debt 144,340,146 31,546,484
Deferred income taxes 8,090,000 8,090,000
------------ ------------
Total liabilities 165,788,811 57,660,794
------------ ------------
Stockholders' equity:
Common stock 260,551 251,474
Additional paid-in capital 53,975,149 48,277,867
Retained earnings 49,822,785 45,575,694
------------ ------------
104,058,485 94,105,035
Unearned ESOP compensation (1,781,941) (2,969,901)
------------ ------------
Total stockholders' equity 102,276,544 91,135,134
------------ ------------
Total liabilities and stockholders' equity $268,065,355 $148,795,928
============ ============
</TABLE>
See Accompanying Notes
-2-
<PAGE>
May & Speh, Inc.
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
1998 1997 1998 1997
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net revenues $28,068,501 $21,692,905 $54,419,066 $42,921,635
--------------------------------------------------------------------
Operating expenses:
Wages and benefits 8,525,595 7,402,494 17,474,507 14,545,768
Services and supplies 1,120,348 1,738,829 2,490,950 3,777,845
Rents, leases and maintenance 7,173,888 4,530,047 12,424,989 9,167,141
Depreciation and amortization 1,852,185 981,244 3,631,042 1,882,640
Other operating expenses 2,411,180 2,099,258 4,526,477 3,922,848
ESOP principal payments 593,981 593,981 1,187,960 1,187,960
Restructuring costs 0 0 4,700,000 0
--------------------------------------------------------------------
Total operating expenses 21,677,177 17,345,853 46,435,925 34,484,202
--------------------------------------------------------------------
Operating income 6,391,324 4,347,052 7,983,141 8,437,433
Interest and other expense:
ESOP interest 55,993 106,842 125,207 226,875
Other (income) expense, net 543,855 338,205 1,011,240 490,950
--------------------------------------------------------------------
Income before income taxes 5,791,476 3,902,005 6,846,694 7,719,608
Income taxes 2,200,000 1,482,800 2,599,603 2,933,700
--------------------------------------------------------------------
Net Income $ 3,591,476 $ 2,419,205 $ 4,247,091 $ 4,785,908
====================================================================
Earnings per share:
Basic $0.14 $0.10 $0.17 $0.19
Weighted average shares outstanding 25,467,278 25,022,421 25,318,168 24,987,597
Diluted $0.14 $0.09 $0.16 $0.18
Weighted average shares outstanding, 26,597,879 25,958,914 26,532,228 26,075,545
including common equivalent shares
</TABLE>
See Accompanying Notes
-3-
<PAGE>
May & Speh, Inc.
Consolidated Statements of Stockholders' Equity
For Six Months Ended March 31, 1998
<TABLE>
<CAPTION>
Common Stock Additional Unearned Retained
------------
Shares Amount paid-in-capital compensation earnings Total
------ ------ --------------- ------------ -------- -----
<S> <C> <C> <C> <C> <C> <C>
BALANCE-SEPTEMBER 30, 1997 25,147,354 $251,474 $48,277,867 ($2,969,901) $45,575,694 $ 91,135,134
Net income for the six months ended
March 31, 1998 (unaudited) 4,247,091 4,247,091
ESOP compensation earned during the six 1,187,960 1,187,960
months ended March 31, 1998 (unaudited)
Exercise of stock options (unaudited) 582,700 5,827 2,189,282 2,195,109
Issuance of common stock (unaudited) 325,000 3,250 3,508,000 3,511,250
---------- -------- ----------- ----------- ----------- ------------
BALANCE-MARCH 31, 1998 (UNAUDITED) 26,055,054 $260,551 $53,975,149 ($1,781,941) $49,822,785 $102,276,544
========== ======== =========== =========== =========== ============
</TABLE>
See Accompanying Notes
-4-
<PAGE>
May & Speh, Inc.
Consolidated Statements of Cash Flows
(unaudited)
<TABLE>
<CAPTION>
Six Months Six Months
Ended March 31, Ended March 31,
1998 1997
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 4,247,091 $ 4,785,908
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 3,631,042 1,882,640
ESOP principal payments 1,187,960 1,187,960
Changes in assets and liabilities:
Accounts receivable, net (3,352,030) 1,329,157
Prepaid expenses and other current assets (5,940,994) (427,654)
Income taxes payable/refundable (771,371) 2,287,559
Accounts payable and accrued expenses (4,376,197) 49,800
Other (120,860) 4,281
------------ ------------
Net cash provided by (used in) operating activities (5,495,359) 11,099,651
------------ ------------
Cash flows from investing activities:
Purchases of property and equipment (8,952,058) (2,669,970)
Purchases of marketable securities - (7,665,581)
Sales of marketable securities 8,621,602 2,962,884
Acquisition of Strategic Decision Services - (1,395,038)
Software development costs capitalized (230,000) (3,390,222)
Increase in cash surrender value of insurance (37,000) (37,000)
------------ ------------
Net cash used in investing activities (597,456) (12,194,927)
------------ ------------
Cash flows from financing activities:
Capital lease principal payments (877,860) (820,317)
Repayments of long-term obligations (1,617,926) (1,629,249)
Proceeds from convertible debt 110,828,500 -
Proceeds from issuance of common stock 3,511,250 120,896
Exercise of stock options 2,195,109 -
------------ ------------
Net cash provided by (used in) financing activities 114,039,073 (2,328,670)
------------ ------------
Net change in cash and cash equivalents 107,946,258 (3,423,946)
Cash and cash equivalents:
Beginning of period 1,888,817 10,397,858
------------ ------------
End of period $109,835,075 $ 6,973,912
============ ============
Supplemental cash flow information
Cash paid during the period for
Interest $ 1,514,292 $ 1,193,165
Income taxes $ 2,600,000 $ 1,700,000
Non-cash investing/financing activities:
Acquisition of property and equipment under capital leases - $ 382,460
</TABLE>
See Accompanying Notes
-5-
<PAGE>
May & Speh, Inc.
Notes to Financial Statements
(1) Basis of Presentation.
The financial statements as of March 31, 1998 and for the six months then ended
are unaudited and reflect all adjustments (consisting only of normal recurring
adjustments) which are, in the opinion of management, necessary for the fair
presentation of the financial position and operating results for the interim
periods. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to the rules and regulations
of the Securities and Exchange Commission. Therefore, the financial statements
should be read in conjunction with the Financial Statements and Notes thereto
contained in the Company's annual report filed on Form 10-K for the fiscal year
ended September 30, 1997. The results of operations for the six months ended
March 31, 1998 are not necessarily indicative of the results for the entire
fiscal year.
(2) Earnings Per Share
The Company adopted Statement of Financial Accounting Standards No. 128,
"Earnings Per Share" (SFAS 128) during the first quarter of fiscal 1998. SFAS
128 requires presentation of both basic EPS and diluted EPS on the face of the
income statement. Basic EPS, which replaces primary EPS, is computed by
dividing net income available to common stockholders (numerator) by the weighted
average number of common shares outstanding (denominator) during the period.
Unlike the computation of primary EPS, basic EPS excludes the dilutive effect of
stock options. Diluted EPS replaces fully diluted EPS and gives effect to all
dilutive potential common shares outstanding during a period. In computing
diluted EPS, the average stock price for the period is used in determining the
number of shares assumed to be purchased under the treasury stock method from
exercise of stock options rather than the higher of the average or ending stock
price as used in the computation of fully diluted EPS. Earnings per share for
the three months ended March 31, 1997 have been restated in accordance with SFAS
128.
The following is a reconciliation of the numerators and denominators for the
computations of basic and diluted EPS:
<TABLE>
<CAPTION>
For the three months ended For the six months ended
March 31, March 31, March 31, March 31,
1998 1997 1998 1997
------------- ------------ ------------ -----------
<S> <C> <C> <C> <C>
Basic EPS computation
Numerator $ 3,591,476 $ 2,419,205 $ 4,247,091 $ 4,785,908
=========== =========== =========== ===========
Denominator:
Weighted average shares
outstanding 25,467,278 25,022,421 25,318,168 24,987,597
----------- ----------- ----------- -----------
Basic EPS $ 0.14 $ 0.10 $ 0.17 $ 0.19
=========== =========== =========== ===========
</TABLE>
-6-
<PAGE>
<TABLE>
<CAPTION>
For the three months ended For the six months ended
March 31, March 31, March 31, March 31,
1998 1997 1998 1997
------------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
Diluted EPS computation
Numerator $ 3,591,476 $ 2,419,205 $ 4,247,091 $ 4,785,908
=========== =========== =========== ===========
Denominator:
Weighted average shares
outstanding 25,467,278 25,022,421 25,318,168 24,987,597
Common stock equivalent of
stock options 1,130,601 936,493 1,214,060 1,087,948
----------- ----------- ----------- -----------
Total shares 26,597,879 25,958,914 26,532,228 26,075,545
----------- ----------- ----------- -----------
Diluted EPS $ 0.14 $ 0.09 $ 0.16 $ 0.18
=========== =========== =========== ===========
</TABLE>
Options to purchase 1,241,961 and 786,200 shares of common stock that were
outstanding as of March 31, 1998 and 1997, respectively, were not included in
the computation of diluted EPS because the exercise price was greater than the
average market price of the common shares in each period. The weighted-average
of securities that could potentially dilute basic EPS in the future that were
not included in the computations of diluted EPS for the six months ended March
31, 1998 and 1997 was 1,196,031 and 567,426 shares, respectively.
(3) Restructuring Costs
In October 1997, the Company announced a one-time charge of approximately $4.7
million ($2.9 million after-tax) which represents the present value of payments
under existing contracts with prior members of management.
(4) Convertible Debt and Common Stock Offerings
In March 1998, the Company completed an offering of $115 million 5.25%
convertible subordinated notes ("the notes") due 2003. The notes will be
convertible at the option of the holder into shares of common stock at a
conversion price of $15.91 per share. The notes also are redeemable, in whole
or in part, at the option of the Company at any time on or after April 3, 2001.
The total net proceeds to the Company were approximately $110.8 million after
deducting underwriting discounts and commissions and estimated offering
expenses. A portion of the proceeds will be used to repay existing debt
totalling $10 million. In connection with this prepayment, the Company will
incur an extraordinary charge of approximately $800,000 in its third fiscal
quarter.
The Company also completed an offering of 325,000 shares of the Company's common
stock on March 30, 1998. The total net proceeds to the Company after deducting
underwriting discounts and commissions aggregated $3.5 million.
-7-
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
In addition to historical information, the following discussion contains forward
looking statements that are subject to risks and uncertainties that could cause
actual results to differ materially from those anticipated, including, but not
limited to, renewal of customer and supplier contracts as they expire on terms
and conditions favorable to the Company, changes in technology, and the risks
and uncertainties described in reports and other documents filed by the Company
with the Securities and Exchange Commission, including the Prospectuses dated
March 20, 1998 included in the Company's Registration Statement on Form S-3
(File No. 333-46547).
Results of Operations
Three Months Ended March 31, 1998 Compared to the Three Months Ended March 31,
- ------------------------------------------------------------------------------
1998
- ----
Net revenues increased to $28.1 million for the three months ended March 31,
1998 from $21.7 million for the three months ended March 31, 1997, an increase
of $6.4 million or 29%. The Company's direct marketing services revenues
increased to $16.3 million for the three months ended March 31, 1998 compared to
$13.2 million for the three months ended March 31, 1997, an increase of $3.1
million, or 23%. Information technology outsourcing services revenues increased
to $11.8 million for the three months ended March 31, 1998 compared to $8.5
million for the three months ended March 31, 1997, an increase of $3.3 million
or 39%.
Wages and benefits expenses increased to $8.5 million for the three months ended
March 31, 1998 from $7.4 million for the three months ended March 31, 1997, an
increase of 15%. The increased expenses reflect additional employees hired to
continue the Company's expansion of business volume and the strengthening of its
infrastructure. These increases were offset by reductions in commission expense
and executive bonuses. As a result of significantly increased software costs in
the second quarter, executive bonuses were not earned. The Company's executive
bonuses are earned when the Company attains certain net revenue and earnings per
share targets.
Services and supplies expenses decreased to $1.1 million for the three months
ended March 31, 1998 from $1.7 million for the three months ended March 31,
1997, a decrease of 36%. This decrease reflects the reduction in cost for
outside consultants as full-time employees were hired. Service and supplies
generally consist of outsourced data entry services, general supplies, contract
labor and costs related to the use of outside consultants.
Rents, leases and maintenance expenses increased to $7.2 million for the three
months ended March 31, 1998 from $4.5 million for the three months ended March
31, 1997, an increase of 58%. This increase was primarily attributable to
increases in mainframe software costs. The Company's software agreements are
long-term and permit specified levels of growth within the current pricing
structure.
-8-
<PAGE>
Depreciation and amortization expenses increased to $1.9 million for the three
months ended March 31, 1998 from $1.0 million for the three months ended March
31, 1997, an increase of 89%. The increase was primarily attributable to
continued investment in technology including the purchase of the Hitachi Data
System Skyline 21 mainframe computer during the third quarter of fiscal year
1997. Additional goodwill of $3.7 million was recorded in fiscal year 1997
related to the acquisition of CSM and incentive payments and estimated costs to
be incurred in consolidating the operation of GIS Information Services, Inc.
("GIS"), which the Company acquired in the fourth quarter of fiscal 1996,
resulting in increased goodwill amortization.
Other operating expenses increased to $2.4 million for the three months ended
March 31, 1998 from $2.1 million for the three months ended March 31, 1997, an
increase of 15%. The increase was primarily attributable to variable costs
relating to several client contracts.
Research and development costs representing primarily wages and benefits for
information technology staff and reflected as such in the Company's financial
statements increased to $0.9 million for the three months ended March 31, 1998
from $0.8 million for the three months ended March 31, 1997, an increase of 6%.
The Company's research and development expenses relate primarily to new product
development activities.
Income taxes decreased to $2.2 million for the three months ended March 31, 1998
from $1.5 million for the three months ended March 31, 1997. The Company's
effective tax rate was 38% for the three months ended March 31, 1998 and 1997.
Six Months Ended March 31, 1998 Compared to the Six Months Ended March 31, 1997
- -------------------------------------------------------------------------------
Net revenues increased to $54.4 million for the six months ended March 31, 1998
from $42.9 million for the six months ended March 31, 1997, an increase of $11.5
million or 27%. The Company's direct marketing services revenues increased to
$31.7 million for the six months ended March 31, 1998 compared to $26.5 million
for the six months ended March 31, 1997, an increase of $5.2 million, or 20%.
Information technology outsourcing services revenues increased to $22.7 million
for the six months ended March 31, 1998 compared to $16.4 million for the six
months ended March 31, 1997, an increase of $6.3 million or 38%.
Wages and benefits expenses increased to $17.5 million for the six months ended
March 31, 1998 from $14.5 million for the six months ended March 31, 1997, an
increase of 20%. The increased expenses reflect additional employees hired to
continue the Company's expansion of business volume and the strengthening of its
infrastructure. These increases were offset by reductions in commission expense
and executive bonuses in the second fiscal quarter.
Services and supplies expenses decreased to $2.5 million for the six months
ended March 31, 1998 from $3.8 million for the six months ended March 31, 1997,
a decrease of 34%. This decrease reflects the reduction in cost for outside
consultants as full-time employees were hired. Service and supplies generally
consist of outsourced data entry services, general supplies, contract labor and
costs related to the use of outside consultants.
-9-
<PAGE>
Rents, leases and maintenance expenses increased to $12.4 million for the six
months ended March 31, 1998 from $9.2 million for the six months ended March 31,
1997, an increase of 36%. This increase was primarily attributable to increases
in mainframe software costs. The Company's software agreements are long-term and
permit specified levels of growth within the current pricing structure. Other
increases were due to leasing computers, computer peripheral hardware and
additional facility rent to house new employees.
Depreciation and amortization expenses increased to $3.6 million for the six
months ended March 31, 1998 from $1.9 million for the six months ended March 31,
1997, an increase of 93%. The increase was primarily attributable to continued
investment in technology including the purchase of the Hitachi Data System
Skyline 21 mainframe computer during the third quarter of fiscal year 1997.
Additional goodwill of $3.7 million was recorded in fiscal year 1997 related to
the acquisition of CSM and incentive payments and estimated costs to be incurred
in consolidating GIS's operations, resulting in increased goodwill amortization.
Other operating expenses increased to $4.5 million for the six months ended
March 31, 1998 from $3.9 million for the six months ended March 31, 1997, an
increase of 15%. The increase was primarily attributable to variable costs
relating to several client contracts.
Research and development costs representing primarily wages and benefits for
information technology staff and reflected as such in the Company's financial
statements increased to $1.9 million for the six months ended March 31, 1998
from $1.6 million for the six months ended March 31, 1997, an increase of 19%.
The Company's research and development expenses relate primarily to new product
development activities.
Income taxes decreased to $2.6 million for the six months ended March 31, 1998
from $2.9 million for the six months ended March 31, 1997. The Company's
effective tax rate was 38% for the six months ended March 31, 1998 and 1997.
Restructuring costs of $4.7 million ($2.9 million after-tax) for the six months
ended March 31, 1998 represent a one-time charge equal to the present value of
payments under existing contracts with prior members of management. Excluding
this one-time charge, operating income and net income would have been
approximately $12.7 million and $7.2 million, respectively.
Liquidity and Capital Resources
- -------------------------------
The Company's working capital increased to $161.1 million as of March 31, 1998
from $47.0 million as of September 30, 1997. This increase resulted principally
from the Company's offerings of convertible subordinated notes and common stock
in March 1998, resulting in net proceeds of approximately $114.3 million to the
Company. The Company's investment policy is to invest in investment-grade
corporate commercial paper and short-term money market accounts. These
investments typically have maturities of one year or less.
-10-
<PAGE>
As of March 31, 1998, the Company's net accounts receivable were $31.9 million,
an increase of 12% from September 30, 1997. The increase reflects additional
services performed for clients during six months ended March 31, 1998 compared
to the six months ended March 31, 1997.
The Company has available a $10.0 million revolving credit facility. At March
31, 1998, there were no outstanding borrowings under this credit facility.
Borrowings under a $12.0 million unsecured term loan were $9.8 million at March
31, 1998, and are being repaid over a ten year period with interest at 8.5% per
annum. The Company intends to use a portion of the net proceeds from the
offering of notes to repay this term loan. In connection with this prepayment,
the Company will incur an extraordinary charge of approximately $800,000 in its
third fiscal quarter. Capital lease debt aggregated $22.5 million at March 31,
1998. This debt primarily results from a sale-leaseback of the Company's primary
facility and related land during fiscal year 1997 and an upgrade of one of the
Company's mainframe computers in fiscal year 1996. Interest on capital lease
debt approximates 8%. The Company entered into a loan at the time of the
formation of the Company's Employee Stock Ownership Plan ("ESOP"). This loan
currently has an outstanding balance of $1.8 million with a blended interest
rate of approximately 8.8%. In addition, the Company is negotiating with a group
of banks for a new credit facility which is expected to provide for borrowings
of up to $60 million.
Long-term debt increased by $115 million in March 1998 due to the Company's
public offering of 5.25% convertible subordinated notes. The notes are
convertible at the option of the holder into shares of common stock at a
conversion price of $15.91 per share and are redeemable, in whole or in part, at
the option of the Company at any time on or after April 3, 2001. These notes
are general, unsecured obligations of the Company, subordinated in right of
payment to all current and future indebtedness of the Company.
In connection with the Company's acquisition of GIS, the Company is required to
pay $0.5 million of the purchase price on a deferred basis in the fourth quarter
of fiscal 1998. In addition, the Company paid $1.1 million to the former GIS
shareholder in fiscal 1997 based on the Company's earnings from former GIS
clients and expects to make a similar payment in fiscal year 1998.
Effective April 1, 1997, the Company entered into a new license agreement
expiring in 2004 with a major software vendor for software used for outsourcing
services clients. This agreement permits the Company to increase its
outsourcing client base and mainframe capacity to double current levels without
an increase in the contractual fees for the term of the contract. This new
arrangement increased rents, leases and maintenance expenses for the three
months ended March 31, 1998 compared to the three months ended March 31, 1997.
-11-
<PAGE>
PART II -- OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
During the second quarter of fiscal 1998, the Company used approximately $9.0
million of the net proceeds from its March 1996 initial public offering for
capital expenditures and approximately $5.5 million for general corporate
operating purposes.
In March 1998, the Company completed an offering of $115 million 5.25%
convertible subordinated notes ("the notes") due 2003. The notes will be
convertible at the option of the holder into shares of common stock at a
conversion price of $15.91 per share. The notes also are redeemable, in whole
or in part, at the option of the Company at any time on or after April 3, 2001.
The total net proceeds to the Company were approximately $110.8 million after
deducting underwriting discounts and commissions and estimated offering
expenses. A portion of the proceeds will be used to repay existing debt
totalling $10 million. In connection with this prepayment, the Company will
incur an extraordinary charge of approximately $800,000 in its third fiscal
quarter. The Company also completed an offering of 325,000 shares of the
Company's common stock on March 30, 1998. The total net proceeds to the Company
after deducting underwriting discounts and commissions aggregated $3.5 million.
Item 4. Submission of Matters to a Vote of Security Holders
The Company held its Annual Meeting of Stockholders on March 11, 1998, at
which, among other matters, Directors were elected to the Board. Proxies were
solicited by the Company pursuant to Regulation 14 of the Securities Exchange
Act of 1934. There was no solicitation in opposition to management's nominees
for the Board. All such nominees were elected at the meeting. The following
additional matters were noted on by Stockholders at the meeting:
1. Amendments to 1994 Executive Stock Option Plan
Votes For: 10,355,355
Votes Against: 6,400,145
Abstentions: 310,090
Broker Non-votes 6,194,708
2. Amendments to 1995 Key Employee Stock Option Plan
Votes For: 11,093,620
Votes Against: 5,697,714
Abstentions: 296,296
Broker Non-votes 6,172,668
3. Ratification of Price Waterhouse as Accountants
Votes For: 22,773,902
Votes Against: 445,720
Abstentions: 39,788
Broker Non-votes 888
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 May & Speh, Inc. 401(k) Savings and Retirement Plan
(filed herewith)
10.2 Employment Agreement between the Company and Michael J.
Loeffler dated as of October 1, 1997 (incorporated by
reference to Exhibit 10.1 to the Company's Registration
Statement on Form S-3 (File No. 333-46547)
10.3 Employment Agreement between the Company and Robert Early
dated as of October 1, 1997 (incorporated by reference to
Exhibit 10.2 to the Company's Registration Statement on
Form S-3 (File No. 333-46547)
27 Financial Data Schedule (filed herewith)
(b) No reports on Form 8-K were filed by the Company during the
period covered by this report.
-12-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
May & Speh, Inc.
Date: May 14, 1998 By: /s/ Eric M. Loughmiller
Eric M. Loughmiller
Executive Vice President, Chief Financial
-13-
<PAGE>
EXHIBIT 10.29
-------------
MAY & SPEH
401(K) SAVINGS AND RETIREMENT PLAN
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE 1 General................................................................................. 1
1.1 Purpose..................................................................................... 1
-------
1.2 Source of Funds............................................................................. 1
---------------
1.3 Effective Date.............................................................................. 1
--------------
1.4 Definitions................................................................................. 1
-----------
1.5 Internal Revenue Service Approval........................................................... 9
---------------------------------
ARTICLE 2 Eligibility and Participation........................................................... 10
-----------------------------
2.1 Eligibility Requirements.................................................................... 10
------------------------
2.2 Leaves of Absence........................................................................... 11
-----------------
2.3 Qualified Military Service.................................................................. 11
--------------------------
ARTICLE 3 Contributions by Employer............................................................... 12
-------------------------
3.1 Employer Contributions...................................................................... 12
----------------------
3.2 Before-Tax Contributions.................................................................... 12
------------------------
3.3 Limitations on Before-Tax Contributions..................................................... 13
---------------------------------------
3.4 Employer Contribution....................................................................... 15
---------------------
3.5 Matching Employer Contribution.............................................................. 16
------------------------------
ARTICLE 4 Participant Contributions............................................................... 17
-------------------------
4.1 After-Tax Contributions..................................................................... 17
-----------------------
4.2 Code Section 401(m) Limitation on After-Tax and Matching Employer Contributions............. 17
-------------------------------------------------------------------------------
4.3 Multiple Use................................................................................ 20
------------
4.4 Rollover Contribution....................................................................... 21
---------------------
4.5 Trust-to-Trust Transfers.................................................................... 22
------------------------
ARTICLE 5 Accounting Provisions and Allocations................................................... 23
-------------------------------------
5.1 Participant's Accounts...................................................................... 23
----------------------
5.2 Investment Funds............................................................................ 23
----------------
5.3 Allocation Procedure........................................................................ 24
--------------------
5.4 Determination of Value of Trust Fund........................................................ 25
------------------------------------
5.5 Allocation of Net Earnings or Losses........................................................ 25
------------------------------------
5.6 Eligibility to Share in the Employer Contribution........................................... 25
-------------------------------------------------
5.7 Allocation of Before-Tax Contributions...................................................... 26
--------------------------------------
5.8 Allocation of Matching Employer Contributions............................................... 26
---------------------------------------------
5.9 Allocation of After-Tax Contributions....................................................... 26
-------------------------------------
5.10 Allocation of Employer Contribution......................................................... 27
-----------------------------------
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
5.11 Provisional Annual Addition................................................................. 27
---------------------------
5.12 Limitation on Annual Additions.............................................................. 27
------------------------------
ARTICLE 6 Amount of Payments to Participants...................................................... 29
----------------------------------
6.1 General Rule................................................................................ 29
------------
6.2 Normal Retirement........................................................................... 29
-----------------
6.3 Death 29
-----
6.4 Disability.................................................................................. 29
----------
6.5 Vesting..................................................................................... 30
-------
6.6 Resignation or Dismissal.................................................................... 30
------------------------
6.7 Computation of Period of Service............................................................ 30
--------------------------------
6.8 Treatment of Forfeitures.................................................................... 31
------------------------
ARTICLE 7 Distributions........................................................................... 33
-------------
7.1 Commencement and Form of Distributions...................................................... 33
--------------------------------------
7.2 Distributions to Beneficiaries.............................................................. 34
------------------------------
7.3 Beneficiary Designations.................................................................... 34
------------------------
7.4 Deferred Distributions...................................................................... 35
----------------------
7.5 Form of Elections and Applications for Benefits............................................. 35
-----------------------------------------------
7.6 Unclaimed Distributions..................................................................... 35
-----------------------
7.7 Distribution of After-Tax Contributions Prior to Termination of Employment.................. 35
--------------------------------------------------------------------------
7.8 Loans....................................................................................... 36
-----
7.9 Withdrawals From Before-Tax Account Prior to Termination of Employment...................... 37
----------------------------------------------------------------------
7.10 Facility of Payment......................................................................... 39
-------------------
7.11 Claims Procedure............................................................................ 39
----------------
7.12 Eligible Rollover Distributions............................................................. 40
-------------------------------
ARTICLE 8 Top-Heavy Plan Requirements............................................................. 42
---------------------------
8.1 Definitions................................................................................. 42
-----------
8.1 Top-Heavy Plan Requirements................................................................. 44
---------------------------
ARTICLE 9 Powers and Duties of Plan Committee..................................................... 46
-----------------------------------
9.1 Appointment of Plan Committee............................................................... 46
-----------------------------
9.2 Powers and Duties of Committee.............................................................. 46
------------------------------
9.3 Committee Procedures........................................................................ 47
--------------------
9.4 Consultation with Advisors.................................................................. 47
--------------------------
9.5 Committee Members as Participants........................................................... 47
---------------------------------
9.6 Records and Reports......................................................................... 48
-------------------
9.7 Investment Policy........................................................................... 48
-----------------
9.8 Designation of Other Fiduciaries............................................................ 48
--------------------------------
9.9 Obligations of Committee.................................................................... 49
------------------------
ARTICLE 10 Trustee and Trust Fund................................................................. 50
----------------------
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
10.1 Trust Fund.................................................................................. 50
----------
10.2 Payments to Trust Fund and Expenses......................................................... 50
-----------------------------------
10.3 Trustee=s Responsibilities.................................................................. 50
--------------------------
10.4 Reversion to an Employer.................................................................... 50
------------------------
ARTICLE 11 Amendment or Termination................................................................. 51
------------------------
11.1 Amendment................................................................................... 51
---------
11.2 Termination................................................................................. 51
-----------
11.3 Form of Amendment, Discontinuance of Employer Contributions, and Termination................ 51
----------------------------------------------------------------------------
11.4 Limitations on Amendments................................................................... 51
-------------------------
11.5 Level of Benefits Upon Merger............................................................... 52
-----------------------------
11.6 Vesting Upon Termination or Discontinuance of Employer Contributions; Liquidation of Trust.. 52
------------------------------------------------------------------------------------------
ARTICLE 12 Miscellaneous............................................................................ 53
-------------
12.1 No Guarantee of Employment.................................................................. 53
--------------------------
12.2 Nonalienation............................................................................... 53
-------------
12.3 Qualified Domestic Relations Order.......................................................... 53
----------------------------------
12.4 Controlling Law............................................................................. 53
---------------
12.5 Severability................................................................................ 53
------------
12.6 Notification of Addresses................................................................... 54
-------------------------
12.7 Gender and Number........................................................................... 54
-----------------
ARTICLE 13 Adoption by Affiliates................................................................... 55
----------------------
13.1 Adoption of Plan............................................................................ 55
----------------
13.2 The Company as Agent for Employer........................................................... 55
---------------------------------
13.3 Adoption of Amendments...................................................................... 55
----------------------
13.4 Termination................................................................................. 55
-----------
13.5 Data to Be Furnished by Employers........................................................... 55
---------------------------------
13.6 Joint Employees............................................................................. 56
---------------
13.7 Expenses.................................................................................... 56
--------
13.8 Withdrawal.................................................................................. 56
----------
13.9 Prior Plans................................................................................. 56
-----------
</TABLE>
iii
<PAGE>
ARTICLE 1
General
-------
1.1 Purpose. It is the intention of the Employer to provide for the
-------
administration of the May & Speh 401(k) Savings and Retirement Plan and a Trust
Fund in conjunction therewith for the benefit of eligible employees of the
Employer, in accordance with the provisions of Code Sections 401 and 501 and in
accordance with other provisions of law relating to profit-sharing plans
containing a Code Section 401(k) arrangement. Except as otherwise provided in
this Plan or the Trust, upon the transfer by the Employer of any funds to the
Trust Fund in accordance with the provisions of this Plan, all interest of the
Employer therein shall cease and terminate, and no part of the Trust Fund shall
be used for, or diverted to, purposes other than the exclusive benefit of
Participants and their beneficiaries.
1.2 Source of Funds. The Trust Fund shall be created, funded and
---------------
maintained by contributions of the Employer, by contributions of the
Participants, and by such net earnings as are obtained from the investment of
the funds of the Trust Fund.
1.3 Effective Date. The provisions of the Plan shall be effective as of
--------------
January 1, 1998, except for certain provisions the effective dates of which are
set forth herein. Except as may be required by ERISA or the Code, the rights of
any person whose status as an employee of the Employer and all Affiliates has
terminated shall be determined pursuant to the Plan as in effect on the date
such employment terminated, unless a subsequently adopted provision of the Plan
is made specifically applicable to such person.
1.4 Definitions. Certain terms are capitalized and have the respective
-----------
meanings set forth in the Plan.
"Account" means each of the individual accounts established pursuant to
-------
Article 5 representing a Participant's allocable share of the Trust Fund.
"Accounts" means the collective individual accounts established pursuant to
--------
Article 5.
"Active Participant" means a Participant who, on a given date, is employed
------------------
by the Employer as an Eligible Employee.
"Actual Deferral Percentage" and "Actual Deferral Percentage Tests" are
-------------------------- --------------------------------
described in Section 3.3.
"Affiliate" means any corporation or enterprise, other than the Employer,
---------
which, as of a given date, is a member of the same controlled group of
corporations, the same group of trades or businesses under common control or the
same affiliated service group, determined in accordance with Code Sections
414(b), (c), (m) or (o), as is the Employer. For purposes of determining the
amount of a Participant's Annual Addition or Total Compensation and applying the
limitations of
<PAGE>
Code Section 415 set forth in Article 5, "Affiliate" shall include any
corporation or enterprise, other than the Employer, which, as of a given date,
is a member of the same controlled group of corporations or the same group of
trades or businesses under common control, determined in accordance with Code
Sections 414(b) or (c) as modified by Code Section 415(h), as is the Employer.
"After-Tax Contributions" means, with respect to a Participant, the
-----------------------
contributions made by such Participant pursuant to Section 4.1 and, with respect
to the Employer, the sum of all such contributions made by Participants.
"Annual Addition" means for any Limitation Year, the sum of (a) all Before-
---------------
Tax Contributions, Matching Employer Contributions, Employer Contributions,
forfeitures and After-Tax Contributions allocated to the Accounts of a
Participant under this Plan; (b) any employer contributions, forfeitures and
employee after-tax contributions allocated to such Participant under any other
defined contribution plan maintained by the Employer or an Affiliate; and (c)
amounts allocated to an individual medical account as defined in Code Section
415(l)(2) and amounts attributable to post-retirement medical benefits allocated
to an account described in Code Section 419A(d)(2) maintained by the Employer or
an Affiliate.
"Basic Before-Tax Contributions" and "Supplemental Before-Tax
------------------------------ -----------------------
Contributions" mean, with respect to a Participant, the contributions made on
- -------------
behalf of such Participant by the Employer as described in Section 3.2 and, with
respect to the Employer, the sum of all such contributions made on behalf of all
Participants. "Before-Tax Contributions" mean, with respect to a Participant,
the sum of the Basic Before-Tax Contributions and the Supplemental Before-Tax
Contributions made on behalf of such Participant by the Employer as described in
Section 3.2 and, with respect to the Employer, the sum of all such contributions
made on behalf of all Participants.
"Business Day" means each day on which the Federal Reserve, the New York
------------
Stock Exchange and the Trustee are open for business.
"Code" means the Internal Revenue Code of 1986, as from time to time
----
amended.
"Committee" means the plan administrator and named fiduciary appointed
---------
pursuant to Section 9.1.
"Company" means May & Speh, a predecessor of such corporation, or any
-------
successor to it in ownership of all or substantially all of its assets.
"Compensation" means a Participant's "Considered Compensation" or "Total
------------
Compensation," as follows:
2
<PAGE>
(a) "Considered Compensation" is the Participant's Total Compensation
-----------------------
for the Plan Year paid while he was an Active Participant but excluding
reimbursements or other expense allowances, fringe benefits (cash and non-cash),
moving expenses, deferred compensation, and welfare benefits, but including
Before-Tax Contributions and elective contributions to a plan of the Employer
established under Code Section 125; provided, however, that Considered
Compensation shall not include any amount in excess of $160,000, as adjusted by
the Commissioner for increases in the cost of living in accordance with Code
Section 401(a)(17)(B). The cost-of-living adjustment in effect for a calendar
year applies to any period, not exceeding 12 months, over which compensation is
determined (determination period) beginning in such calendar year. If a
determination period consists of fewer than 12 months, the annual compensation
limit will be multiplied by a fraction, the numerator of which is the number of
months in the determination period, and the denominator of which is 12.
(b) "Total Compensation" for a period is the Participant's wages as
------------------
defined in Code Section 3401(a) for purposes of income tax withholding at the
source, and all other payments of compensation to the Participant by the
Employer for which the Employer is required to furnish the Participant a written
statement under Code Sections 6041(d), 6051(a)(3) and 6052, but determined
without regard to any rules under Code Section 3401(a) that limit the
remuneration included in wages based on the nature or location of the employment
or the services performed, but excluding amounts paid or reimbursed by the
Employer for moving expenses incurred by the Participant, plus amounts excluded
from the Participant's income for the period under Code Sections 125, 402(g)(3)
or 457.
"Contribution Percentage" and "Contribution Percentage Tests" are described
----------------------- -----------------------------
in Section 4.2.
"Defined Contribution Dollar Limitation" means an amount equal to $30,000
--------------------------------------
(as adjusted by the Secretary of the Treasury pursuant to Code Section 415(d)),
prorated for any Limitation Year of less than 12 months;
"Eligible Employee" means any employee of the Employer who is not a Leased
-----------------
Employee, or a Member of a Collective Bargaining Unit, or an individual
providing services to the Employer in the capacity of, or who is or was
designated by the Employer as, an independent contractor.
"Eligible Participant" is a Participant as defined in Section 5.6.
--------------------
"Eligibility Period" is the continuous thirty-(30)-calendar-day period used
------------------
for the purpose of determining when an Eligible Employee is entitled to become
a Participant. An employee's first Eligibility Period shall commence on the
employee's Employment Commencement Date. Notwithstanding the foregoing, the
initial Eligibility Period of a former employee who is reemployed after
incurring one or more One-Year Breaks in Service and who is not eligible for
3
<PAGE>
immediate participation pursuant to Section 2.1(d), shall commence on his
Employment Commencement Date after such One-Year Break in Service.
"Employer" means the Company and any Affiliate which adopts this Plan
--------
pursuant to Article 13.
"Employer Contribution" means the Employer Contribution determined under
---------------------
Section 3.4.
"Employment Commencement Date" means the first date on which an individual
----------------------------
performs duties for the Employer or an Affiliate as an employee; provided that
in the case of an employee who returns to service following his Severance Date,
the employee's "Employment Commencement Date" is the first date on which he
performs duties for the Employer or an Affiliate as an employee following such
Severance Date.
"Entry Date" means the first day of each month.
----------
"ERISA" means the Employee Retirement Income Security Act of 1974, as from
-----
time to time amended.
"Excess Tentative Employer Contribution" is the excess contribution
--------------------------------------
described in Section 5.12.
"Five-Percent Owner" means an employee described in Code Section 416(i)(1).
------------------
"Highly Compensated Employee" means an employee of the Employer or an
---------------------------
Affiliate who was a Participant eligible during the Plan Year to make Before-Tax
Contributions and/or After-Tax Contributions and who:
(a) was a Five-Percent Owner at any time during the Plan Year or the
preceding Plan Year; or
(b) received Total Compensation in excess of $80,000 (as adjusted for
increases in the cost of living by the Secretary of the Treasury) during the
preceding Plan Year and was among the top 20% of the employees (disregarding
those employees excludable under Code Section 414(q)(5)) when ranked on the
basis of Total Compensation paid for that year.
To the extent required by Code Section 414(q)(6), a former employee who was
a Highly Compensated Employee when he separated from service with the Employer
and all Affiliates or at any time after attaining age 55 shall be treated as a
Highly Compensated Employee.
4
<PAGE>
"Hour of Service" is:
---------------
(a) each hour for which an employee is paid or entitled to payment for
the performance of duties for the Employer or an Affiliate;
(b) each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by the Employer or an Affiliate; and
(c) each hour for which an employee is paid or entitled to payment for
a period during which no duties are performed (irrespective of whether the
employment relationship has terminated) due to vacation, holiday, illness,
incapacity, layoff, jury duty, military duty, or leave of absence. In crediting
Hours of Service pursuant to this subparagraph (c), all payments made or due
shall be taken into account, whether such payments are made directly by the
Employer or an Affiliate or indirectly (e.g., through a trust fund or insurer to
----
which the Employer or an Affiliate makes payments, or otherwise), except that:
(i) no more than 501 such Hours of Service shall be credited
for any continuous period during which the employee performs no duties;
(ii) no such Hours of Service shall be credited if payments are
made or due under a plan maintained solely for the purpose of complying
with any workers' compensation, unemployment compensation or disability
insurance laws; and
(iii) no such Hours of Service shall be credited for payments
which are made solely to reimburse the employee for medical or medically
related expenses.
The Hours of Service, if any, for which an employee is credited for a period in
which he performs no duties shall be computed and credited to computation
periods in accordance with 29 C.F.R. 2530.200b-2 and other applicable
regulations promulgated by the Secretary of Labor. For purposes of computing
the Hours of Service to be credited to an employee for whom a record of hours
worked is not maintained, an employee shall be credited with 45 Hours of Service
for each week in which he completes at least one Hour of Service. In addition,
an employee shall be credited with Hours of Service for each week the employee
is on a leave of absence in accordance with Section 2.2.
"Individual Beneficiary" means a natural person designated by the
----------------------
Participant in accordance with Section 7.3 to receive all or any portion of the
amounts remaining in the Participant's Accounts at the time of the Participant's
death. "Individual Beneficiary" also means a natural person who is a
beneficiary of a trust designated by the Participant in accordance with Section
7.3 to receive all or a portion of such amount, provided the trust complies with
the requirements of Code Section 401(a)(9) and regulations promulgated
thereunder.
5
<PAGE>
"Leased Employee" means any individual who is not carried on the payroll of
---------------
the Employer or an Affiliate and who provides services for the Employer or an
Affiliate if:
(a) such services are provided pursuant to an agreement between the
Employer or an Affiliate and any other person ("leasing organization");
(b) such individual has performed such services for the Employer or an
Affiliate (or a related person within the meaning of Code Section 144(a)(3)) on
a substantially full-time basis for a period of at least one year; and
(c) such services have been performed under the primary direction or
control of the Employer or an Affiliate.
Contributions or benefits provided a Leased Employee by the leasing
organization which are attributable to services performed for the Employer shall
be treated as provided by the Employer. To the extent and for the purposes
required by Code Sections 414(n) and (o), a Leased Employee shall be deemed to
be an Employee of the Employer, unless: (i) he or she is covered by a money
purchase pension plan providing (1) a nonintegrated employer contribution rate
of at least 10 percent of compensation, as defined in Code Section 415(c)(3),
but including amounts contributed pursuant to a salary reduction agreement which
are excludable from the Employee's gross income under Code Sections 125,
402(e)(3), 402(h) or 403(b), (2) immediate participation, and (3) full and
immediate vesting; and (ii) Leased Employees do not constitute more than 20
percent of the Employer's nonhighly compensated workforce.
"Limitation Year" means the Plan Year.
---------------
"Matching Employer Contributions" means the contributions described in
-------------------------------
Section 3.5.
"Member of a Collective Bargaining Unit" means any employee who is included
--------------------------------------
in a collective bargaining unit and whose terms and conditions of employment are
or were covered by a collective bargaining agreement if there is evidence that
retirement benefits were the subject of good-faith bargaining between
representatives of such employee and the Employer, unless such collective
bargaining agreement makes this Plan applicable to such employee.
"Non-Highly Compensated Employee" means, for any Plan Year, any employee of
-------------------------------
the Employer or Affiliate who (a) at any time during the Plan Year was a
Participant eligible to make Before-Tax Contributions and/or After-Tax
Contributions, and (b) was not a Highly Compensated Employee for such Plan Year.
"Normal Retirement Date" means a Participant's 65th birthday.
----------------------
"One-Percent Owner" means an employee described in Code Section 416(i)(1).
-----------------
6
<PAGE>
"One-Year Break in Service" is a Plan Year in which an employee completes
-------------------------
500 Hours of Service or less. Solely for purposes of determining whether a One-
Year Break in Service has occurred, "Hours of Service" shall also include each
hour for which the employee otherwise would normally have been credited but for
the employee's absence on a maternity or paternity absence. A maternity or
paternity absence is an absence from work:
(a) by reason of the pregnancy of the employee;
(b) by reason of the birth of a child of the employee;
(c) by reason of the placement of a child with the employee in
connection with the adoption of such child by the employee; or
(d) for purposes of caring for such child for a period beginning
immediately following such birth or placement.
Any employee requesting such credit shall promptly furnish the Committee such
information as the Committee requires to show that the absence from work is a
maternity or paternity absence and the number of days for which there was such
an absence. No more than 501 hours shall be credited for a maternity or
paternity absence. All such hours shall be credited in the Plan Year in which
the absence begins if necessary to prevent a One-Year Break in Service in such
Plan Year. If such hours are not necessary to prevent a One-Year Break in
Service in such Plan Year, the hours shall be credited in the succeeding Plan
Year if necessary to prevent a One-Year Break in Service in such Plan Year. In
the event the Committee is unable to determine the hours which otherwise would
normally have been credited for such absence, the employee shall be credited
with 8 hours per day.
"Participant" means:
-----------
(a) a current employee of the Employer or an Affiliate who has become
a Participant in the Plan pursuant to Section 2.1 or;
(b) a former employee for whose benefit an Account in the Trust Fund
is maintained.
"Plan" means this May & Speh 401(k) Savings and Retirement Plan.
----
"Plan Year" means a 12-month period beginning on January 1 and ending on
---------
December 31 each year. References to specific Plan Years are made herein by
reference to the calendar year of the first day of the Plan Year.
"Provisional Annual Addition" is the amount described in Section 5.11.
---------------------------
7
<PAGE>
"Required Beginning Date" means:
-----------------------
(a) for a Participant who is not a Five-Percent Owner, the April 1
following the later of the calendar year in which the Participant attains age
70-1/2 or the calendar year in which the Participant terminates employment; or
(b) for a Participant who at any time during or after the calendar
year in which he attained age 66-1/2 was or became a Five-Percent Owner, the
April 1 following the later of (i) the calendar year in which he attained age
70-1/2 or (ii) the earlier of the calendar year in which he became a Five-
Percent Owner or his employment terminates.
"Rollover Contribution" means:
---------------------
(a) all or a portion of a distribution received by an employee from
another qualified plan which is eligible for tax-free rollover to a qualified
plan and which is rolled over by the employee to this Plan within 60 days
following his receipt thereof;
(b) amounts rolled over to this Plan from a conduit individual
retirement account which has no assets other than assets (and the earnings
thereon) which were (i) previously distributed to the employee by another
qualified plan as a distribution which is eligible for tax-free rollover to a
qualified plan and (ii) deposited in such conduit individual retirement account
within 60 days of receipt thereof;
(c) amounts distributed to the employee from a conduit individual
retirement account meeting the requirements of (b) above, and rolled over by the
employee to this Plan within 60 days of his receipt thereof from such conduit
individual retirement account; and
(d) amounts rolled over directly to this Plan by the trustee of
another qualified plan pursuant to the provisions of Code Section 401(a)(31) and
to any other related laws and regulations as in effect at the time of such
direct rollover.
"Severance Date" for an employee is the earlier of:
--------------
(a) the date on which he quits, retires, dies or is discharged; or
(b) the first day following any one-year period during which he
performed no duties for the Employer and all Affiliates.
"Tentative Employer Contribution" is the contribution described in Section
-------------------------------
3.1.
"Trust" or "Trust Fund" means the Trust established in accordance with
----- ----------
Article 10.
"Trustee" means the Trustee or Trustees under the Trust referred to in
-------
Article 10.
8
<PAGE>
"Valuation Date" means each Business Day as of which the Committee shall
--------------
determine the value of each Account.
"Year of Service" is any Plan Year in which an employee completes 1,000 or
---------------
more Hours of Service.
1.5 Internal Revenue Service Approval. Notwithstanding anything herein to
---------------------------------
the contrary, in the event the Internal Revenue Service does not issue an
initial determination letter stating that the Plan and Trust are qualified under
Code Sections 401 and 501, all contributions made by the Employer, as adjusted
by the net earnings or losses thereon, shall be returned to it by the Trustee
and the Plan and Trust shall thereupon terminate. No Participant shall have any
right or claim to any asset of the Trust Fund or any benefit under the Plan
before such a determination letter has been issued.
9
<PAGE>
ARTICLE 2
Eligibility and Participation
-----------------------------
2.1 Eligibility Requirements.
------------------------
(a) Every Eligible Employee shall first become a Participant eligible
to elect Before-Tax Contributions under Section 3.2 and After-Tax Contributions
under Section 4.1 on the Entry Date coinciding with or next following the later
of (i) the date on which he completes an Eligibility Period, or (ii) his 18th
birthday. Notwithstanding the foregoing, however, every Eligible Employee who
is employed on, and is at least 18 years of age by, April 1, 1998, shall
immediately become a Participant on such date, regardless of whether the
Eligible Employee has completed an Eligibility Period.
(b) Every Participant, in accordance with Subsection (a) above, shall
first become entitled to receive Matching Employer Contributions under Section
3.5 on the Entry Date coinciding with or next following the later of: (i)
January 1, 1999, or (ii) the date on which the Participant completes one Year of
Service.
(c) A Participant shall be eligible to share in Employer
Contributions under Section 3.4 only upon satisfying the conditions specified in
Section 5.6.
(d) Any former employee of the Employer or an Affiliate who was a
Participant or could have become a Participant under subsection (a) above had he
been employed on a prior Entry Date, and is reemployed by the Employer as an
Eligible Employee, shall be eligible to participate immediately as of the date
of such reemployment if such employee:
(i) has not incurred a One-Year Break in Service; or
(ii) had a nonforfeitable right to any part of the balance in
his Employer Account or his Matching Account on the date his most recent
employment with the Employer and all Affiliates terminated (or would have
had such right if he had been a Participant); or
(iii) has attained age 18 and the number of consecutive One-Year
Breaks in Service which such employee incurred since his most recent
termination of Employment with the Employer and all Affiliates is less than
the greater of 5 or the aggregate number of Years of Service before such
One-Year Breaks in Service (excluding any Years of Service previously
disregarded).
(e) Notwithstanding any provisions of this Plan to the contrary, any
individual who was providing services to the Employer in the capacity of, or who
was designated by the Employer as an independent contractor, or as a Leased
Employee, and who is subsequently re-classified as an Eligible Employee for the
purposes of this Plan (regardless of whether such re-
10
<PAGE>
classification is retrospective or prospective), shall be eligible to
participate in the Plan on a prospective basis only from the date of the re-
classification and shall not have any retroactive claim for benefits.
2.2 Leaves of Absence. An employee shall be credited with 45 Hours of
-----------------
Service for each full week the employee is on a leave of absence, if he is not
otherwise credited with such Hours of Service. Any such leave of absence must be
requested and granted in writing and pursuant to the Employer's established
leave policy, which shall be administered in a uniform and nondiscriminatory
manner to similarly situated employees.
2.3 Qualified Military Service. Notwithstanding any provision of this
--------------------------
Plan to the contrary, contributions, benefits and service credit with respect to
qualified military service will be provided in accordance with Code Section
414(u).
11
<PAGE>
ARTICLE 3
Contributions by Employer
-------------------------
3.1 Employer Contributions. Subject to the right reserved to the Employer
----------------------
to alter, amend or discontinue this Plan and the Trust, the Employer shall for
each Plan Year (except as otherwise specified in this Article 3) contribute to
the Trust Fund an amount equal to the sum of:
(a) the Employer Contribution;
(b) the Before-Tax Contribution; and
(c) the Matching Employer Contribution.
Such sum, which is known as the Tentative Employer Contribution, shall be
reduced by an amount equal to the Excess Tentative Employer Contribution (as
provided in Section 5.12); provided that in no event shall the Tentative
Employer Contribution, as reduced by the Excess Tentative Employer Contribution,
exceed the amount deductible by the Employer for said year for federal income
tax purposes.
3.2 Before-Tax Contributions.
------------------------
(a) Subject to the provisions of Sections 3.1 and 3.3, each Active
Participant may for each Plan Year elect to have the Employer make a Basic
Before-Tax Contribution on his behalf in an amount not in excess of 6% (rounded
to the nearest dollar) of his Considered Compensation. Each Active Participant
may, in addition to his Basic Before-Tax Contribution, elect to have the
Employer make a Supplemental Before-Tax Contribution on his behalf in an amount
not in excess of 4% (rounded to the nearest dollar) of his Considered
Compensation.
(b) Any election under subsection (a) above shall be deemed to be a
continuing election until changed by the Participant. An Active Participant may
change, discontinue or suspend his election by completing a written
authorization form provided by the Committee for that purpose and submitting it
to the Company's Payroll Department. An Active Participant's written request to
change, discontinue or suspend his election received by the Company's Payroll
Department on or before the 20th of the month will take effect on the first day
of the first payroll period of the next following calendar month. An Active
Participant's written request to change, discontinue or suspend his election
received by the Company's Payroll Department on or after the 21st of the month
will take effect on the first day of the first payroll period of the calendar
month after the calendar month next following the month in which the written
request is received.
(c) The amount of the Before-Tax Contributions to be made pursuant to
a Participant's election shall reduce the compensation otherwise payable to him
by the Employer.
12
<PAGE>
3.3 Limitations on Before-Tax Contributions.
---------------------------------------
(a) In no event shall a Participant's Before-Tax Contributions during
any calendar year exceed the dollar limitation in effect under Code Section
402(g) at the beginning of such calendar year. If a Participant's Before-Tax
Contributions, together with any additional elective contributions to a
qualified cash or deferred arrangement, and any elective deferrals under a tax-
sheltered annuity program or a simplified employee pension plan, exceed such
dollar limitation for any calendar year, such excess, and any earnings allocable
thereto, shall be distributed to the Participant by April 15 of the following
year; provided that, if such excess contributions were made to a plan or
arrangement not maintained by the Employer or an Affiliate, the Participant must
first notify the Committee of the amount of such excess allocable to this Plan
by March 1 of the following year.
(b) Notwithstanding any other provision of this Plan to the contrary,
the Before-Tax Contributions for the Highly Compensated Employees for the Plan
Year shall be reduced in accordance with the following provisions:
(i) The Before-Tax Contributions of the Highly Compensated
Employees shall be reduced if neither of the Actual Deferral Percentage
Tests set forth in (A) or (B) below is satisfied after taking into account
the provisions of subsection (f):
(A) The 1.25 Test. The Actual Deferral Percentage of the
-------------
Highly Compensated Employees is not more than the Actual Deferral
Percentage of the Non-Highly Compensated Employees multiplied by 1.25.
(B) The 2.0 Test. The Actual Deferral Percentage of the
------------
Highly Compensated Employees is not more than 2 percentage points
greater than the Actual Deferral Percentage of the Non-Highly
Compensated Employees and the Actual Deferral Percentage of the Highly
Compensated Employees is not more than the Actual Deferral Percentage
of the Non-Highly Compensated Employees multiplied by 2.0.
The provisions of this subsection (b) shall apply separately with respect to
each group of employees who are Members of a Collective Bargaining Unit (if any)
and the group of employees who are not Members of a Collective Bargaining Unit.
(ii) (A) As used in this subsection, "Actual Deferral
Percentage" means:
(1) With respect to Non-Highly Compensated Employees,
the average of the ratios of each Non-Highly Compensated
Employee's Before-Tax Contributions with respect to the prior
-----
Plan Year, to each such Participant's Total Compensation for such
Plan Year; and
13
<PAGE>
(2) With respect to Highly Compensated Employees, the
average of the ratios of each Highly Compensated Employee's
Before-Tax Contributions with respect to the current Plan Year,
-------
to each such Participant's Total Compensation for such Plan Year.
(B) All Before-Tax Contributions and Matching Employer
Contributions made under this Plan and all before-tax and matching
contributions made under any other plan that is aggregated with this
Plan for purposes of Code Sections 401(a)(4) and 410(b) shall be
treated as made under a single plan. If any plan is permissively
aggregated with this Plan for purposes of Code Section 401(k), the
aggregated plans must also satisfy Code Sections 401(a)(4) and 410(b)
as though they were a single plan. The Actual Deferral Percentage
ratios of any Highly Compensated Employee will be determined by
treating all plans subject to Code Section 401(k) under which the
Highly Compensated Employee is eligible as a single plan.
(iii) If neither Actual Deferral Percentage Test is satisfied as
of the end of the Plan Year, the Committee shall cause the Before-Tax
Contributions for the Highly Compensated Employees to be reduced and
refunded to each such Highly Compensated Employee until either Actual
Deferral Percentage Test is satisfied. The sequence of such reductions and
refunds shall begin with Highly Compensated Employees who elected to defer
the greatest dollar amount, assuming that Supplemental Before-Tax
Contributions represent the last contribution made to the Participant's
Account, then the second greatest dollar amount, continuing until either
Actual Deferral Percentage Test is satisfied. This process shall continue
through the remaining Supplemental Before Tax Contributions and continuing
with the Basic Before Tax Contributions until either Actual Deferral
Percentage Test is satisfied. However, notwithstanding anything in the
foregoing to the contrary, if a lesser reduction, when added to the total
dollar amount previously reduced, would equal the total excess
contributions, such lesser reduction shall be utilized.
(iv) Once the reductions have been determined under (iii)
above, the Committee shall direct the Trustee to distribute to the
appropriate Highly Compensated Employees the amount of the reduction of the
Before-Tax Contributions of each such Highly Compensated Employee and to
treat as forfeitures the appropriate amount of Matching Employer
Contributions, together with the net earnings or losses allocable thereto.
The Committee shall designate such distribution and forfeiture as a
distribution and forfeiture of excess contributions, determine the amount
of the allocable net earnings or losses to be distributed in accordance
with subsection (c) below, and cause such distributions and forfeitures to
occur prior to the end of the Plan Year following the Plan Year in which
the excess Before-Tax Contributions and excess Matching Employer
Contributions were made.
14
<PAGE>
(c) (i) Net earnings or losses to be refunded with the excess
Before-Tax Contributions shall be equal to the net earnings or losses on
such contributions for the Plan Year in which the contributions were made.
(ii) The net earnings or losses allocable to the excess Before-
Tax Contributions for the Plan Year shall be determined in the manner set
forth in Article 5.
(d) Net earnings or losses to be treated as forfeitures together with
the Matching Employer Contributions shall be equal to the net earnings or losses
on such contributions for the Plan Year in which the contributions were made.
Net earnings or losses on Matching Employer Contributions shall be determined in
the same manner as in subsection (c) above.
(e) For the purpose of avoiding the necessity of adjustments pursuant
to this Section or Section 5.12, or to comply with any applicable law or
regulation:
(i) The Committee may adopt such rules as it deems necessary
or desirable to:
(A) impose limitations during a Plan Year on the
percentage of Before-Tax Contributions elected by Participants
pursuant to Section 3.2; or
(B) increase during a Plan Year the percentage of
Considered Compensation with respect to which a Participant may elect
a Before-Tax Contribution for the purpose of providing Participants
with the opportunity to increase their Before-Tax Contributions within
the limitations of this Section 3.3;
(ii) The Employer may at its sole discretion make fully vested
contributions to the Plan which will be allocated to the Before-Tax
Accounts of one or more Participants who are Non-Highly Compensated
Employees in such amounts as the Employer directs for the purpose of
complying with the applicable limits on Before-Tax Contributions in the
Code. Such contributions will not be taken into account in the allocation
of Matching Contributions.
(f) The amount of each Participant's Basic Before-Tax Contributions
and Supplemental Before-Tax Contributions as determined under this Section 3.3
is subject to the provisions of Sections 5.12.
3.4 Employer Contribution. Subject to the provisions of Section 3.1, each
---------------------
Employer shall pay to the Trustee for each Plan Year beginning on or after
January 1, 1999, an amount equal to (a) five percent (5%) of the Considered
Compensation of the Eligible Employees of such
15
<PAGE>
Employer, and (b) such additional amounts, if any, as the Board of Directors of
the Company shall, in its discretion, determine. Such contribution is known as
the "Employer Contribution."
3.5 Matching Employer Contribution. Subject to the provisions of Section
------------------------------
3.1, each Employer shall pay to the Trustee for each Plan Year beginning on or
after January 1, 1999, an amount equal to $.50 for each $1 of Basic Before-Tax
Contributions made on behalf of each Participant employed by such Employer. Such
contribution is known as the "Matching Employer Contribution."
16
<PAGE>
ARTICLE 4
Participant Contributions
-------------------------
4.1 After-Tax Contributions.
-----------------------
(a) Each Active Participant may for each Plan Year elect to
contribute to the Trust Fund an After-Tax Contribution in an amount not in
excess of 6% (rounded to the nearest dollar) of his Considered Compensation.
(b) An Active Participant may change, discontinue or suspend his
election by completing a written authorization form provided by the Committee
for that purpose and submitting it to the Company's Payroll Department. An
Active Participant's written request to change, discontinue or suspend his
election received by the Company's Payroll Department on or before the 20th of
the month will take effect on the first day of the first payroll period of the
next following calendar month. An Active Participant's written request to
change, discontinue or suspend his election received by the Company's Payroll
Department on or after the 21st of the month will take effect on the first day
of the first payroll period of the calendar month after the calendar month next
following the month in which the written request is received.
(c) Participants' After-Tax Contributions shall be effected by
payroll deductions or otherwise in accordance with procedures established by the
Employer from time to time.
(d) All After-Tax Contributions by a Participant shall be
provisionally accepted and are subject to return to the Participant as provided
in Section 4.2 below and Article 5.
4.2 Code Section 401(m) Limitation on After-Tax and Matching Employer
-----------------------------------------------------------------
Contributions. Notwithstanding any other provision to the contrary, the After-
- -------------
Tax Contributions and share of Matching Employer Contributions of the Highly
Compensated Employees (after any reduction under Section 3.3(b)(iii)) shall be
reduced in accordance with the following provisions:
(a) The After-Tax Contributions and share of Matching Employer
Contributions of the Highly Compensated Employees shall be reduced if neither of
the Contribution Percentage Tests set forth in (i) or (ii) below is satisfied
after taking into account the provisions of subsection (g):
(i) The 1.25 Test. The Contribution Percentage of the Highly
-------------
Compensated Employees is not more than the Contribution Percentage of all
Non-Highly Compensated Employees multiplied by 1.25.
(ii) The 2.0 Test. The Contribution Percentage of the Highly
------------
Compensated Employees is not more than 2 percentage points greater than the
17
<PAGE>
Contribution Percentage of all Non-Highly Compensated Employees, and
Contribution Percentage of the Highly Compensated Employees is not more
than the Contribution Percentage of all Non-Highly Compensated Employees
multiplied by 2.0.
The provisions of this subsection (a) shall not apply to any group of employees
who are Members of a Collective Bargaining Unit.
(b) As used in this Section 4.2, "Contribution Percentage" means:
(i) (A) With respect to Non-Highly Compensated Employees, the
average of the ratios of each Non-Highly Compensated Employee's After-
Tax Contributions and share of Matching Employer Contributions, plus
Designated Before-Tax Contributions (as defined in subsection (c)
below), with respect to the prior Plan Year, to each such
-----
Participant's Total Compensation for such Plan Year; and
(B) With respect to Highly Compensated Employees, the
average of the ratios of each Highly Compensated Employee's After-Tax
Contributions and share of Matching Employer Contributions, plus
Designated Before-Tax Contributions (as defined in subsection (c)
below), with respect to the current Plan Year, to each such
-------
Participant's Total Compensation for such Plan Year.
(ii) All After-Tax Contributions and Matching Employer
Contributions made under this Plan and all employee contributions and
matching contributions made under any other plan that is aggregated
with this Plan for purposes of Code Sections 401(a)(4) and 410(b)
shall be treated as made under a single plan. If any plan is
permissively aggregated with this Plan for purposes of Code Section
401(m), the aggregated plans must also satisfy Code Sections 401(a)(4)
and 410(b) as though they were a single plan. The Contribution
Percentage ratio of any Highly Compensated Employee will be determined
by treating all plans subject to Code Section 401(m) under which the
Highly Compensated Employee is eligible as a single plan.
(c) To the extent necessary, and solely for the exclusive purpose of
satisfying the Contribution Percentage Test in Section 4.2(a), all or part of
the Before-Tax Contributions of Participants and/or Matching Employer
Contributions may be treated by the Committee as After-Tax Contributions
("Designated Before-Tax Contributions"), provided that each of the following is
satisfied:
(i) The Before-Tax Contributions, including Designated Before-
Tax Contributions, satisfy the requirements of Section 3.3(b); and
18
<PAGE>
(ii) The Before-Tax Contributions, excluding Designated Before-
Tax Contributions, satisfy the requirements of Section 3.3(b).
(d) (i) If neither Contribution Percentage Test is satisfied as of
the end of the Plan Year, the Committee shall cause the After-Tax
Contributions of the Highly Compensated Employees to be reduced and
refunded to each affected Highly Compensated Employee until either
Contribution Percentage Test is satisfied. The sequence of such reductions
and refunds shall begin with Highly Compensated Employees who elected the
greatest dollar amount, then the second greatest dollar amount, continuing
until either Contribution Percentage Test is satisfied. This process shall
continue through the remaining After-Tax Contributions and then through the
Matching Employer Contributions until either Contribution Percentage Test
is satisfied. However, notwithstanding anything in the foregoing to the
contrary, if a lesser reduction, when added to the dollar amount previously
reduced, would equal the total excess contribution, such lesser amount
shall be utilized.
(ii) Once the reductions have been determined under (i) above,
the Committee shall direct the Trustee to distribute to the appropriate
Highly Compensated Employees the amount of the reduction of the After-Tax
Contribution of each such Highly Compensated Employee and any excess vested
Matching Employer Contribution attributable to such Highly Compensated
Employee, and to treat as a forfeiture the appropriate amount of any excess
nonvested Matching Employer Contributions, together with the net earnings
or losses allocable thereto. The Committee shall designate such
distribution and forfeiture as a distribution and forfeiture of excess
contributions, determine the amount of the allocable net earnings or losses
to be distributed in accordance with subsection (e) below, and cause such
distributions and forfeitures to occur prior to the end of the Plan Year
following the Plan Year in which such excess After-Tax Contributions and
excess Matching Employer Contributions were made.
(e) Net earnings or losses to be refunded with the excess After-Tax
Contributions or to be treated as forfeitures together with the excess Matching
Employer Contributions shall be equal to the net earnings or losses on such
contributions for the Plan Year in which the contributions were made. Net
earnings or losses shall be determined and allocated in the same manner as in
Section 3.3(c).
(f) For the purpose of avoiding the necessity of adjustments pursuant
to this Section or Section 5.12, or to comply with any applicable laws or
regulation:
(i) the Committee may adopt such rules as it deems necessary
or desirable to impose limitations during a Plan Year on the percentage of
After-Tax Contributions made by Participants pursuant to Section 4.1;
19
<PAGE>
(ii) the Employer may in its sole discretion make fully vested
contributions to the Plan, which will be allocated to the Matching Accounts
of one or more Participants who are Non-Highly Compensated Employees, in
such amounts as the Employer directs for the purpose of complying with
applicable limits on Matching Contributions in the Code.
(g) The amount of each Participant's After-Tax Contributions as
determined under this Section 4.2 is subject to the provisions of Section 5.12.
4.3 Multiple Use.
------------
(a) This Section 4.3 will be applicable if The 2.0 Test is used to
satisfy both the Actual Deferral Percentage Test and the Contribution Percentage
----
Test. If this Section 4.3 is applicable, the Committee shall determine whether a
"Multiple Use" has occurred, and if such a Multiple Use has occurred, the After-
Tax Contributions and Matching Employer Contributions of the Highly Compensated
Employees shall be reduced in accordance with the provisions of subsection (c)
below.
(b) A Multiple Use occurs when for the Highly Compensated Employees,
the sum of the Actual Deferral Percentage used to satisfy The 2.0 Test plus the
Contribution Percentage used to satisfy The 2.0 Test exceeds the "Aggregate
Limit." The Aggregate Limit is the greater of (i) or (ii) below, determined as
follows:
(i) (A) First, multiply 1.25 by the greater of (1) the Actual
-------
Deferral Percentage, or (2) the Contribution Percentage of the Non-
Highly Compensated Employees;
(B) Second, add 2.0 to the lesser of (1) or (2) above
------
provided that such sum shall not exceed 2 times the lesser of (1) or
(2) above; and
(C) Finally, add the results from (A) and (B) to determine
the Aggregate Limit; or
(ii) (A) First, multiply 1.25 by the lesser of (1) the Actual
------
Deferral Percentage, or (2) the Contribution Percentage of the Non-
Highly Compensated Employees;
(B) Second, add 2.0 to the greater of (1) or (2) above
-------
provided that such sum shall not exceed 2 times the greater of (1) or
(2) above; and
(C) Finally, add the results from (A) and (B) to determine
the Aggregate Limit.
20
<PAGE>
(c) If a Multiple Use has occurred, such Multiple Use shall be
corrected by reducing the Contribution Percentage of Highly Compensated
Employees in accordance with the provisions of Section 4.2(d) until the sum of
the Actual Deferral Percentage plus the Contribution Percentage for the Highly
Compensated Employees equals the Aggregate Limit.
(d) Net earnings or losses to be refunded with the excess After-Tax
Contributions or to be treated as forfeitures together with the excess Matching
Employer Contributions shall be equal to the net earnings or losses on such
contributions for the Plan Year in which the contributions were made. Net
earnings or losses shall be determined and allocated in the same manner as in
Section 3.3(c).
4.4 Rollover Contribution.
---------------------
(a) A Rollover Contribution may be rolled over in cash to the Trust
Fund for the benefit of a Participant with the permission of the Committee.
Prior to accepting any contribution which is intended to be a Rollover
Contribution, the Committee may require the Participant to establish that the
amount to be rolled over meets the definition of a Rollover Contribution and any
other limitations of the Code applicable to such rollovers.
(b) An Eligible Employee who is not eligible to participate in the
Plan solely by reason of failing to meet the eligibility requirements of Article
2 and who reasonably expects to become a Participant when such requirements are
met, may be a Participant in the Plan solely for the limited purposes of making
a Rollover Contribution, and taking actions with respect to his Rollover Account
for the purposes of loans in accordance with Article 7, investment options in
accordance with Section 5.2, and the withdrawal of Rollover Contributions in
accordance with (e) below, subject to the same conditions as any other
Participant.
(c) If the Committee determines after a Rollover Contribution has
been made that such Rollover Contribution did not in fact constitute a Rollover
Contribution as defined in Section 1.4, the amount of such Rollover Contribution
and any earnings thereon shall be returned to the employee.
(d) Each Participant's Rollover Contribution shall be allocated to
his Rollover Account as of the Valuation Date coinciding with or next succeeding
the date on which such amount is received by the Trustee, and invested in
accordance with Section 5.2. A Participant's Rollover Account shall be fully
vested and nonforfeitable.
(e) Amounts may be distributed from a Participant's Rollover Account
under the same terms and conditions and subject to the same restrictions as
apply to withdrawals or distributions of a Participant's After-Tax Account
pursuant to Articles 6 and 7.
4.5 Trust-to-Trust Transfers.
------------------------
21
<PAGE>
(a) The Committee under uniform and non-discriminatory rules may
accept or make a direct transfer of assets on a trust-to-trust basis from or to
any plan qualified under Code Sections 401(a) or 401(k); provided however, that
any such transfer must meet the requirements of Section 11.5 of this Plan;
further provided, that, unless expressly provided otherwise in this Plan, the
Trust shall not accept any transfer of benefits subject to the survivor annuity
requirements of Code Sections 401(a)(11) and 417; and further provided, that the
Committee may require that any benefits transferred be fully vested and
nonforfeitable.
(b) In the event of any transfer of assets and liabilities to this
Plan, such transferred assets shall be allocated to a Participant's Trustee
Transfer Account as of the Valuation Date coinciding with or next succeeding the
date on which said amount is received by the Trustee, and invested in accordance
with Section 5.2. A Participant's Trustee Transfer Account shall be vested as
determined under Article 6.
(c) In the event of any transfer of assets and liabilities to any
other plan, effective as of the date of such transfer, any Participants (and
their beneficiaries) whose benefits were transferred shall have no further claim
for said benefits against this Plan or the Trust Fund hereunder.
22
<PAGE>
ARTICLE 5
Accounting Provisions and Allocations
-------------------------------------
5.1 Participant's Accounts. For each Participant there shall be
----------------------
maintained as appropriate a separate Employer Account, Before-Tax Account,
Matching Account, After-Tax Account, Rollover Account and Trustee Transfer
Account. Each Account shall be credited with the amount of contributions,
forfeitures, interest and earnings of the Trust Fund allocated to such Account
and shall be charged with all distributions, withdrawals and losses of the Trust
Fund allocated to such Account.
5.2 Investment Funds.
----------------
(a) The Trust Fund shall be divided into separate investment funds
(each a "Fund") as provided in this Section 5.2. Each Fund as may from time to
time be established shall be a common fund in which each Participant shall have
an undivided interest in the respective assets of the Fund, provided that all
loans made pursuant to Article 7 shall, together with any income or expense of
such loans, be accounted for separately and will not be included in any of the
adjustments resulting from the application of this Section 5.2. Except as
otherwise provided, the value of each Participant's Accounts in such Funds shall
be measured by the proportion that the net credits to his Accounts bear to the
total net credits to the Accounts of all Participants and beneficiaries as of
the date that such share is being determined. For purposes of allocation of
income and valuation, each Fund shall be considered separately. No Fund shall
share in the gains and losses of any other, and no Fund shall be valued by
taking into account any assets or distributions from any other.
(b) Each Fund shall be established and invested by the Trustee in
accordance with investment policies determined, or as the Trustee may be
directed, from time to time by the Committee. The Committee may from time to
time also direct that Funds be terminated or that Funds with similar investment
objectives be consolidated.
(c) (i) A Participant may from time to time elect to have all
contributions to his Accounts credited in a percentage or dollar amount to
one or more of the Funds. All future contributions to his Accounts shall be
credited to such Funds in accordance with such election.
(ii) Subject to any restriction on transfer which results from
the investment medium chosen for a Fund, a Participant may elect to
transfer a percentage or dollar amount of his Accounts held in any Fund to
one or more different Funds. Loans made pursuant to Article 7 shall be
treated as transfers to and from various Funds in accordance with uniform
rules established by the Committee.
(iii) Elections under this Section shall be made by filing with
the Committee a written form required thereby or by utilizing the telephone
voice system or
23
<PAGE>
any other system approved by the Committee. Such election must be made at
such times and in accordance with procedures and limitations established by
the Committee.
(d) Wherever in this Section 5.2 the term "Participant" is used, it
shall be deemed to include, where applicable, (i) the beneficiary of a deceased
Participant who is entitled to any portion of the deceased Participant's
Accounts, and (ii) an alternate payee under a qualified domestic relations order
described in Code Section 414(p).
(e) The Plan is intended to constitute a plan described in Section
404(c) of the Employee Retirement Income Security Act and Title 29 of Federal
Regulations Section 2550.404c-1. To the extent permitted by law, the fiduciary
of the Plan shall be relieved of liability for any losses which are the direct
and necessary result of investment instructions given by any Participant.
5.3 Allocation Procedure.
--------------------
(a) As of each Valuation Date, the Committee shall:
(i) first, allocate the net earnings or losses of the Trust
Fund pursuant to Section 5.5;
(ii) second, allocate Before-Tax Contributions pursuant to
Section 5.7;
(iii) third, allocate Matching Employer Contributions pursuant
to Section 5.8;
(iv) fourth, allocate After-Tax Contributions pursuant to
Section 5.9;
(v) fifth, allocate the Employer Contribution pursuant to
Section 5.10; and
(vi) sixth, allocate Rollover Contributions pursuant to Section
4.4; and
(vii) seventh, allocate Trust-to-Trust Transfers pursuant to
Section 4.5.
(b) All contributions to the Trust made by or on behalf of a
Participant shall be deposited in the form of cash or other acceptable assets in
the Trust Fund as soon as practicable and shall be credited to the appropriate
Accounts of such Participant as of the Valuation Date received by the Trust
Fund; provided that, any contributions made with respect to a Plan Year must be
credited to the appropriate Accounts of such Participant no later than the last
day of such Plan Year. All contributions to the Trust shall be credited at the
values determined as of the date received by the Trust Fund.
24
<PAGE>
5.4 Determination of Value of Trust Fund. As of each Valuation Date the
------------------------------------
Trustee shall determine for the period then ended the sum of the net earnings or
losses of the Trust Fund (excluding loans made pursuant to Article 7), which
shall reflect accrued but unpaid interest, dividends, gains or losses realized
from the sale, exchange or collection of assets, other income received,
appreciation or depreciation in the fair market value of assets, administration
expenses, and taxes and other expenses paid. Gains or losses realized and
adjustments for appreciation or depreciation in fair market value shall be
computed with respect to the difference between such value as of the preceding
Valuation Date or date of purchase, whichever is later, and the value as of the
date of disposition or the current Valuation Date, whichever is earlier. To the
extent that any assets of the Trust have been invested in one or more separate
investment trusts, mutual funds, investment contracts or similar investment
media, the net earnings or losses attributable to such investments shall be
determined in accordance with the procedures of such investment media.
5.5 Allocation of Net Earnings or Losses.
------------------------------------
As of each Valuation Date the net earnings or losses of each separate
investment Fund of the Trust Fund since the prior Valuation Date shall be
allocated to the Accounts (excluding loans made pursuant to Article 7) of all
Participants (or beneficiaries of deceased Participants) having credits in the
Fund both on such Valuation Date and the prior Valuation Date. Such allocation
shall be in the ratio that (i) the net credits to each such Account of each such
Participant on the prior Valuation Date, less the total amount of any
distributions or loans from such Account to such Participant since the prior
Valuation Date, bears to (ii) the total net credits to all such Accounts of all
Participants on the prior Valuation Date, less the total amount of distributions
or loans from all such Accounts to all Participants since the prior Valuation
Date. Notwithstanding the foregoing, to the extent the assets of the Trust have
been invested in one or more separate investment trusts, mutual funds,
investment contracts or similar investment media, the net earnings or losses
attributable to such investments shall be allocated to the Accounts of
Participants or beneficiaries on the basis of the balances of such Accounts but
in accordance with the procedures of the respective investment media in which
such assets are invested.
5.6 Eligibility to Share in the Employer Contribution
-------------------------------------------------
(a) An Active Participant shall be eligible to share in the Employer
Contribution for the Plan Year as of the last day of which such Employer
Contribution is being allocated if he (i) is then employed by the Employer as an
Eligible Employee, and (ii) has completed a Year of Service prior to such date.
A Participant who, during a Plan Year, retires on or after his Normal Retirement
Date, dies or is initially deemed to be totally and permanently disabled shall
also be eligible to share in the Employer Contribution for said Plan Year.
Notwithstanding any other provision of this Plan, no Participant shall be
eligible to share in an Employer Contribution prior to January 1, 1999. A
Participant who is eligible to share in the Employer Contribution shall be known
as an "Eligible Participant."
25
<PAGE>
(b) Notwithstanding anything in the Plan to the contrary, if the Plan
would otherwise fail to meet the requirements of Code Section 410(b) and the
regulations thereunder because Employer Contributions have not been allocated to
a sufficient number or percentage of Participants for a Plan Year, then the
following rules will apply:
(i) The group of Participants eligible to share in the
Employer Contribution for the Plan Year will be expanded to include the
minimum number of Participants who would not otherwise be eligible as are
necessary to satisfy the applicable test specified above. The specific
Participants who will become eligible under the terms of this paragraph
will be those who are actively employed on the last day of the Plan Year
and, when compared to similarly situated Participants, have completed the
greatest period of service in the Plan Year.
(ii) If after application of the previous paragraph, the
applicable test is still not satisfied, then the group of Participants
eligible to share in the Employer Contribution for the Plan Year will be
further expanded to include the minimum number of former Participants who
are (A) not employed on the last day of the Plan Year, (B) Non-Highly
Compensated Employees and (C) are vested or partially vested in their
Accounts, as are necessary to satisfy the applicable test. The specific
former Participants who will become eligible under the terms of this
paragraph will be those former Participants, when compared to similarly
situated former Participants, who have completed the greatest period of
service in the Plan Year before terminating employment.
(iii) Nothing in this Section will permit the reduction of a
Participant's benefit. Therefore any amounts that have previously been
allocated to Participants may not be reallocated to satisfy these
requirements. In the event allocations to additional Participants or former
Participants are required, the Employer will make an additional
contribution equal to the amount such persons would have received had they
been included in the allocations, even if it exceeds the amount which would
be deductible under Code Section 404. Any adjustment to the allocations
pursuant to this Section will be made by the 15th day of the tenth month
after the end of the Plan Year and will be considered a retroactive
amendment adopted by the last day of the Plan Year.
5.7 Allocation of Before-Tax Contributions. As of each Valuation Date,
--------------------------------------
the Before-Tax Contributions made on behalf of each Participant since the prior
Valuation Date shall be allocated to such Participant's Before-Tax Account.
5.8 Allocation of Matching Employer Contributions. As of each Valuation
---------------------------------------------
Date, the Matching Employer Contribution made on behalf of each Participant
since the prior Valuation Date shall be allocated to the Matching Account of
such Participant.
26
<PAGE>
5.9 Allocation of After-Tax Contributions. As of each Valuation Date, the
-------------------------------------
After-Tax Contributions of a Participant received since the prior Valuation Date
shall be allocated to such Participant's After-Tax Account.
5.10 Allocation of Employer Contribution. As of the last day of each Plan
-----------------------------------
Year, the Employer Contribution shall be allocated among the Employer Accounts
of all Eligible Participants in the ratio that the Considered Compensation of
each Eligible Participant for such Plan Year bears to the Considered
Compensation of all Eligible Participants for such Plan Year.
5.11 Provisional Annual Addition. The sum of the amounts allocated to the
---------------------------
Accounts of the Participants pursuant to Sections 5.7, 5.8, 5.9 and 5.10 for a
Plan Year shall be known as the "Provisional Annual Addition" and shall be
subject to the limitation on Annual Additions in Section 5.12.
5.12 Limitation on Annual Additions.
------------------------------
(a) For the purpose of complying with the restrictions on Annual
Additions to defined contribution plans imposed by Code Section 415, for each
Eligible Participant and each other Participant who has made Before-Tax
Contributions and/or After-Tax Contributions during the Plan Year, there shall
be computed a Maximum Annual Addition, which shall be the excess of the lesser
of
(i) 25% of his Section 415 Compensation for the Plan Year; or
(ii) the Defined Contribution Dollar Limitation for the Plan
Year,
over the amount of employer contributions, forfeitures and employee
contributions allocated as of any day in the Limitation Year to such
Participant's accounts under any other defined contribution plan maintained by
the Employer or an Affiliate.
If a short Limitation Year is created because of an amendment changing the
Limitation Year to a different 12 consecutive month period, the Maximum Annual
Addition will not exceed the Defined Contribution Dollar Limitation multiplied
by the following fraction:
Number of months in the short Limitation Year
---------------------------------------------
12
The limitation under (i) above shall not apply to any contribution for medical
benefits within the meaning of Code Section 419A(f)(2) after separation from
service which is otherwise treated as an Annual Addition, or any amount
otherwise treated as an annual addition under Code Section 415(l)(2).
27
<PAGE>
(b) If the Maximum Annual Addition for a Participant equals or
exceeds the Provisional Annual Addition for that Participant, an amount equal to
the Provisional Annual Addition shall be allocated to the Participant's
respective Accounts.
(c) If the Provisional Annual Addition exceeds the Maximum Annual
Addition for that Participant, the Provisional Annual Addition shall be reduced
as set forth below until the Provisional Annual Addition as so reduced equals
the Maximum Annual Addition for such Participant:
(i first, there shall be refunded to such Participant a
portion or all of his After-Tax Contributions; and
(ii second, the Tentative Employer Contribution allocable to
such Participant's respective Accounts shall be reduced by reducing (A) the
Supplemental Before-Tax Contributions, (B) the Basic Before-Tax
Contributions and Matching Employer Contributions, proportionately, and (C)
the Employer Contribution, in that order.
The Provisional Annual Addition remaining after such reductions shall be
allocated to the Participant's respective Accounts.
(d) The Excess Tentative Employer Contribution is an amount equal to
the sum of the reductions in the Tentative Employer Contribution allocable to
the Accounts of Participants pursuant to subsection (c)(ii) above.
(e) Notwithstanding anything to the contrary in this Plan, any After-
Tax or Before-Tax Contributions reduced in accordance with subsection (c) above
shall be distributed to the Participant with allocable earnings in accordance
with Treasury Regulation Section 1.415-6(b)(6)(iv).
28
<PAGE>
ARTICLE 6
Amount of Payments to Participants
----------------------------------
6.1 General Rule. Upon the retirement, disability, resignation or
------------
dismissal of a Participant, he, or in the event of his death, his beneficiary,
shall be entitled to receive from his respective Accounts in the Trust Fund the
following amounts as of the Valuation Date coinciding with or next succeeding
the date on which the election to receive such distribution is made:
(a an amount equal to the Participant's Before-Tax Account, After-
Tax Account, Rollover Account and Trustee Transfer Account, plus any of the
Participant's Before-Tax Contributions and After-Tax Contributions made to the
Trust Fund but not allocated to the Participant's Accounts as of such Valuation
Date; and
(b the nonforfeitable portion of the Participant's Employer Account
and Matching Account determined as hereafter set forth.
The time and manner of distribution of a Participant's Accounts shall be
determined in accordance with Article 7.
6.2 Normal Retirement. Any Participant may retire on or after his Normal
-----------------
Retirement Date, at which date the forfeitable portion, if any, of his Employer
Account and Matching Account shall become nonforfeitable. If the retirement of a
Participant is deferred beyond his Normal Retirement Date, he shall continue in
full participation in the Plan and Trust Fund.
6.3 Death. As of the date any Participant shall die while in the employ
-----
of the Employer or an Affiliate, the forfeitable portion, if any, of his
Employer Account and Matching Account shall become nonforfeitable.
6.4 Disability.
----------
(a As of the date any Participant shall be determined by the
Committee to have become totally and permanently disabled because of physical or
mental infirmity while in the employ of the Employer or an Affiliate and his
employment shall have terminated, the forfeitable portion, if any, of his
Employer Account and Matching Account shall become nonforfeitable.
(b A Participant shall be deemed totally and permanently disabled
when, on the basis of qualified medical evidence, the Committee finds such
Participant to be totally and presumably permanently prevented from engaging in
any occupation or employment available with the Employer or an Affiliate as a
result of physical or mental infirmity, injury, or disease, either occupational
or nonoccupational in cause; provided, however, that disability hereunder shall
not include any disability incurred or resulting from the Participant having
engaged in a
29
<PAGE>
criminal enterprise, or any disability consisting of or resulting from the
Participant's chronic alcoholism, addiction to narcotics or an intentionally
self-inflicted injury.
6.5 Vesting. A Participant's interest in his Before-Tax Account, After-
-------
Tax Account, Rollover Account and Trustee Transfer Account shall be
nonforfeitable at all times. Except as otherwise provided in this Article 6, a
Participant's nonforfeitable interest in his Employer Account and Matching
Account at any point in time shall be determined under Section 6.6.
6.6 Resignation or Dismissal. If any Participant shall resign or be
------------------------
dismissed from the service of the Employer and all Affiliates, there shall
become nonforfeitable a portion or all of his Employer Account and Matching
Account determined as of the Valuation Date coinciding with or immediately
succeeding the date on which the election to receive the distribution is made,
in accordance with the following schedule, subject to Section 6.7:
<TABLE>
<CAPTION>
Nonforfeitable
Years of Service Percentage
---------------- --------------
<S> <C>
Less than 3 0%
3 but less than 4 33
4 but less than 5 66
5 or more 100
</TABLE>
Any part of the Employer Account and Matching Account of such Participant which
does not become nonforfeitable shall be treated as a forfeiture pursuant to
Section 6.8.
6.7 Computation of Period of Service. For purposes of determining the
--------------------------------
nonforfeitable percentage of the Participant's Employer Account and Matching
Account, all Years of Service shall be taken into account, except that the
following shall be disregarded:
(a Years of Service before age 18;
(b Years of Service before a One-Year Break in Service until such
Participant has completed one Year of Service after such One-Year Break in
Service;
(c in the case of a Participant who incurs 5 or more consecutive
One-Year Breaks in Service, Years of Service completed after such One-Year
Breaks in Service for purposes of determining his nonforfeitable right in the
balance of his Employer Account and Matching Account determined as of the date
such One-Year Breaks in Service began; and
(d in the case of a Participant whose nonforfeitable balance of his
Employer Account and Matching Account is 0, Years of Service before a period
consisting of 5 consecutive One-Year Breaks in Service if the number of
consecutive One-Year Breaks in Service equals or exceeds the aggregate number of
Years of Service before such One-Year Breaks in Service. Such aggregate number
of Years of Service before such One-Year Breaks in Service shall not include any
Years of Service disregarded by reason of any prior One-Year Breaks in Service.
30
<PAGE>
Such aggregate number of Years of Service before such One-Year Breaks in Service
shall not include any Years of Service disregarded by reason of any prior One-
Year Breaks in Service.
6.8 Treatment of Forfeitures.
------------------------
(a Upon termination of a Participant's employment with the Employer
and all Affiliates, the nonvested portion of his Employer Account and Matching
Account shall become a forfeiture pursuant to Section 6.6 as of the end of the
Plan Year in which the termination of employment occurred if the Participant is
not then reemployed by the Employer or an Affiliate. Forfeitures shall be used
to reduce the Employer Contribution that would otherwise be paid by the Employer
to the Plan pursuant to Section 3.4.
(b If a Participant is reemployed by the Employer or an Affiliate
without incurring 5 consecutive One-Year Breaks in Service, and before
distribution of the nonforfeitable portion of his Employer Account and Matching
Account, the amount of the forfeiture shall be restored to his Employer Account
and Matching Account as of the last day of the Plan Year in which he is
reemployed.
(c If the Participant is reemployed by the Employer or an Affiliate
without incurring 5 consecutive One-Year Breaks in Service but after
distribution of the nonforfeitable portion of his Employer Account and Matching
Account, and if the Participant repays the amount distributed before the earlier
of
(i) 5 years from the date of such reemployment; or
(ii) the end of 5 consecutive One-Year Breaks in Service
following the date of such distribution,
the amount of the Employer Account and Matching Account distributed to him and
the amount of the forfeiture shall be restored to his Employer Account and
Matching Account as of the last day of the Plan Year in which such repayment is
made.
(d Amounts restored to a Participant's Employer Account and Matching
Account pursuant to (b) or (c) above shall be deducted from the forfeitures of
other Participants for the Plan Year in which such reemployment or repayment
occurs or, to the extent such forfeitures are insufficient, shall require a
supplemental contribution from the Employer.
(e If a Participant with previous forfeitures restored to his
Employer Account and Matching Account subsequently resigns or is dismissed by
the Employer while not entitled to the full balance in his Employer Account and
Matching Account, the amount to be distributed will be determined in accordance
with the following, notwithstanding the provisions of Section 6.6:
31
<PAGE>
(i) First, the amount of any previous distribution received by
the Participant at the time of a previous forfeiture shall be added to the
balance in the Participant's Employer Account and Matching Account as of
the Valuation Date coincident with or next following the subsequent
termination of employment.
(ii) Next, the amount determined under (i) shall be multiplied
by the appropriate vesting percentage from the schedule in Section 6.6.
(iii) Finally, the amount determined under (ii) shall be reduced
by the amount of the previous distribution to determine the appropriate
amount for current distribution.
The remaining portion of the Participant's Employer Account and Matching Account
will be treated as a forfeiture and will be subject to the provisions of this
Section 6.8.
32
<PAGE>
ARTICLE 7
Distributions
-------------
7.1 Commencement and Form of Distributions.
--------------------------------------
(a (i Distribution of a Participant's Accounts in the Trust Fund
following termination of employment with the Employer and all Affiliates
shall commence on or as soon as practicable after the first to occur of:
(A0 the date set forth in the Participant's request for
distribution, provided such date is not earlier than the date on which
he is entitled to a distribution, or
(B0 the 60th day after the close of the later of the Plan
Year in which the Participant attains his Normal Retirement Date or
terminates employment with the Employer and all Affiliates, unless the
Participant has requested to defer the distribution to a later date.
(ii) A Participant who continues in employment after his Normal
Retirement Date may elect to receive distribution of his Accounts in the
manner described in subsection (a) above.
(iii) In all events, distribution shall commence no later than
the Required Beginning Date, and subsequent distributions required to be
made each year for compliance with Code Section 401(a)(9) and the
regulations promulgated thereunder shall be made no later than December 31
of such year.
(b The Accounts distributable to a Participant upon termination of
employment shall be distributed in one lump sum.
(c Distributions prior to termination of employment required to
satisfy Section 7.1(b) shall be paid to the Participant in annual installments
over a period not to exceed his life expectancy or the joint life expectancy of
the Participant and his Individual Beneficiary. The minimum amount of any
installment distribution and determination of life expectancy of a Participant
and the joint life expectancy of a Participant and his Individual Beneficiary
shall be determined in accordance with the regulations prescribed under Code
Section 401(a)(9); provided that the life expectancy of a Participant or his
spouse shall be redetermined annually. In no event shall the amount
distributable to a Participant in any year be less than the amount determined in
accordance with the minimum distribution incidental benefit requirements of
Treasury Regulation Section 1.401(a)(9)-2.
(d Notwithstanding anything in this Section 7.1 to the contrary, if
the amount of any distribution required to commence on a certain date cannot be
ascertained by such date, a
33
<PAGE>
payment retroactive to such date may be made no later than 60 days after the
earliest date on which such amount can be ascertained.
(e Any distribution made pursuant to this Article 7 shall, to the
extent required by law, be eligible for a direct rollover at the individual's
election in accordance with the provisions of Section 7.13.
7.2 Distributions to Beneficiaries.
------------------------------
(a) The balance of a deceased Participant's Accounts which is
distributable to a beneficiary shall be paid in one lump sum.
(b) If a Participant's Accounts have not been distributed in full at
the time of his death, the balance of the deceased Participant's Accounts shall
be distributed in full no later than the December 31 coinciding with or next
following the 5th anniversary of the Participant's death.
7.3 Beneficiary Designations.
------------------------
(a Unless a Participant has effectively elected otherwise in
accordance with this Section 7.3, the distributable balance of a deceased
Participant's Accounts shall be paid to his surviving spouse.
(b The balance of a deceased Participant's Accounts shall be
distributed to the persons effectively designated by the Participant as his
beneficiaries. To be effective, the designation shall be filed with the
Committee in such written form as the Committee requires and may include
contingent or successor beneficiaries; provided that any designation by a
Participant who is married at the time of his death or, if earlier, the date his
benefit payments commence, which fails to name his surviving spouse as the sole
primary beneficiary shall not be effective unless such surviving spouse has
consented to the designation in writing, witnessed by a Plan representative or
notary public, acknowledging the effect of the designation and the specific non-
spouse beneficiary, including any class of beneficiaries or any contingent
beneficiary. Such consent shall not be required if the Participant establishes
to the satisfaction of the Committee that the consent of the Participant's
spouse cannot be obtained because there is no spouse, such spouse cannot be
located or by reason of such other circumstances as may be prescribed by
regulations. Any consent (or establishment that the consent cannot be obtained)
shall be effective only with respect to such spouse. Any Participant may change
his beneficiary designation at any time by filing with the Committee a new
beneficiary designation (with such spousal consent as may be required).
(c (i If a Participant dies, and to the knowledge of the Committee
after reasonable inquiry leaves no surviving spouse, has not filed an
effective beneficiary designation or has revoked all such designations, or
has filed an effective designation but
34
<PAGE>
the beneficiary or beneficiaries predeceased him, the distributable portion
of the Participant's Accounts shall be paid to the executor or
administrator of the Participant's estate.
(ii If the beneficiary, having survived the Participant, shall
die prior to the final and complete distribution of the Participant's
Accounts, then the distributable portion of said Accounts shall be paid:
(A0 to the contingent or successive beneficiary named in
the most recent effective beneficiary designation filed by the
Participant in accordance with such designation; or
(B0 if no such beneficiary has been named, to the executor
or administrator of the beneficiary's estate.
7.4 Deferred Distributions. If distribution to a Participant or to the
----------------------
beneficiary of a deceased Participant is deferred, the undistributed vested
balance shall share in the net earnings or losses (including the net adjustments
in the value of the Trust Fund) as provided in Section 5.5.
7.5 Form of Elections and Applications for Benefits. Any election,
-----------------------------------------------
revocation of an election or application for benefits pursuant to the Plan shall
not be effective unless it is (a) made on such form, if any, as the Committee
may prescribe for such purpose; (b) signed by the Participant and, if required
by Section 7.3, by the Participant's spouse; and (c) filed with the Committee.
7.6 Unclaimed Distributions. In the event any distribution cannot be made
-----------------------
because the person entitled thereto cannot be located and the distribution
remains unclaimed for 2 years after the distribution date established by the
Committee, then such amount shall be treated as a forfeiture. In the event such
person subsequently files a valid claim for such amount, such amount shall be
restored to the Participant's Accounts in a manner similar to the restoration of
forfeitures under Section 6.8.
7.7 Distribution of After-Tax Contributions Prior to Termination of
---------------------------------------------------------------
Employment. Upon request of a Participant, the Committee shall direct payment
- ----------
to such Participant of any amount not in excess of his After-Tax Account as soon
as practicable after the Valuation Date coinciding with or immediately
succeeding such Committee action; provided, however, that such withdrawals shall
not reduce the nonforfeitable portion of the Participant's Accounts below an
amount equal to the amount of any unpaid loan made pursuant to Section 7.8. Any
distribution hereunder shall be made, pro rata, from After-Tax Contributions and
from the earnings on such After-Tax Contributions.
35
<PAGE>
7.8 Loans.
-----
(a) Upon the submission by the Participant of a written loan
application form as prescribed by the Committee, the Committee shall grant a
loan to such Participant from his Accounts; provided, however, that if the
Committee reasonably believes that the Participant either does not intend to
repay the loan or lacks proper financial ability to repay the loan, it shall not
grant such a loan.
(b) The amount of any loan shall not be less than $1,000 and shall not
exceed 50% of the amount which the Participant would be entitled to receive from
his Accounts if he had resigned from the service of the Employer and all
Affiliates on the Valuation Date immediately preceding the date of such
authorization; provided, however, that the amount of such loan shall not exceed
$50,000 reduced by the greater of (i) the highest outstanding balance of loans
to the Participant from the Trust Fund during the one-year period ending on the
day before the date on which such loan is made or modified, or (ii) the
outstanding balance of loans to the Participant from the Trust Fund on the date
on which such loan is made or modified.
(c) Such loans shall be made available on a reasonably equivalent
basis to all Participants and beneficiaries who have vested Account balances in
the Plan and who either (i) are active employees or (ii) are determined by the
Committee to be "parties in interest" as that term is defined in Section 3(14)
of ERISA, so long as the making of such loans does not discriminate in favor of
Highly Compensated Employees.
(d) Loans shall be made on such terms as the Committee may prescribe,
provided that any such loan shall be evidenced by a note, shall bear interest on
the unpaid balance thereof at a reasonable rate per annum to be set from time to
time by the Committee which is commensurate with the interest rates charged by
persons in the business of lending money for loans which would be made under
similar circumstances, and shall be secured by the Participant's segregated loan
account and such other security as the Committee in its discretion deems
appropriate.
(e) Loans shall be repaid by the Participant by payroll deduction or
any other method approved by the Committee which requires level amortization of
principal and repayments not less frequently than quarterly. Such loans shall
be repaid over a period not to exceed 5 years (except for loans used to acquire
a dwelling unit which within a reasonable time is to be used as the principal
residence of the Participant as determined under the applicable Code provisions)
in accordance with procedures established by the Committee from time to time.
(f) Loans shall be an asset of the Participant's Accounts and shall be
treated in the manner of a segregated account. Upon the failure of a
Participant to make loan payments or some other event of default set forth in
the promissory note, upon the Participant's termination of employment, or upon
termination of the Plan pursuant to Section 11.2, such loan shall become due and
payable, and the unpaid balance of such loan, including any unpaid interest, may
in the
36
<PAGE>
Committee's discretion, be charged against the Participant's segregated
loan account; provided, that any unpaid balance of such loan, including any
unpaid interest, shall be charged against the Participant's segregated loan
account before any distribution to the Participant. If after the Participant's
segregated loan account has been so charged, there remains an unpaid balance of
any such loan and interest, then the remaining unpaid balance of such loan shall
be charged against any property pledged as security with respect to such loan.
(g) Loan repayments will be suspended under this Plan as permitted
under Code Section 414(u) during periods of qualified military service.
7.9 Withdrawals From Before-Tax Account Prior to Termination of
-----------------------------------------------------------
Employment.
- ----------
(a A Participant who has attained age 59-1/2 may elect to withdraw
from his Before-Tax Account any amount not in excess of the balance of such
Account determined as of the Valuation Date coinciding with or immediately
preceding the date of such withdrawal.
(b A Participant who has not attained age 59-1/2 may, upon the
determination by the Committee that he has incurred a financial hardship, make a
hardship withdrawal from his Before-Tax Account. Distributions because of
hardship shall not exceed the lesser of:
(i the amount of the immediate and heavy financial need; or
(ii the balance of the Participant's Before-Tax Account as of
the Valuation Date coinciding with or immediately preceding the date of
such withdrawal.
(c In any case where the Participant claims financial hardship, he
shall submit a written request for such distribution in accordance with
procedures prescribed by the Committee. The Committee shall determine whether
the Participant has a "financial hardship" on the basis of such written request
in accordance with this Section 7.9, and such determination shall be made in a
uniform and nondiscriminatory manner. The Committee shall only make a
determination of "financial hardship" if the distribution is requested on
account of an immediate and heavy financial need of the Participant and the
funds to be distributed are necessary to satisfy the Participant's need, taking
into account any amounts necessary to pay any Federal, state or local income
taxes or penalties reasonably anticipated to result from the distribution.
(i) The following expenses shall be deemed to constitute an
immediate and heavy financial need:
(A0 expenses for medical care (as described in Code Section
213(d)) previously incurred by the Participant, the Participant's
spouse or any dependents of the Participant (as defined in Code
Section 152) or necessary for these persons to obtain such medical
care;
37
<PAGE>
(B0 the purchase (excluding mortgage payments) of a
principal residence for the Participant;
(C0 tuition and related educational fees (including room
and board) due for the next 12 months of post-secondary education for
the Participant, the Participant's spouse, children or dependents;
(D0 the need to prevent the eviction of the Participant
from his principal residence or foreclosure on the mortgage of the
Participant's principal residence; or
(E0 any other event or expense deemed an immediate and
heavy financial need by the Department of the Treasury.
(ii) The determination of whether a distribution is necessary to
satisfy the immediate and heavy financial need of the Participant shall be
made by the Committee on the basis of all relevant facts and circumstances.
The Committee shall determine that a distribution is necessary to satisfy
the immediate and heavy financial need of the Participant if the
Participant reasonably demonstrates that all of the following requirements
are satisfied:
(A) the distribution is not in excess of the amount of the
immediate and heavy financial need of the Participant, taking
into account any amounts necessary to pay any federal, state or
local income taxes or penalties reasonably anticipated to result
from the distribution;
(B) the Participant has obtained all distributions (other
than hardship distributions), and all nontaxable loans currently
available under all of the plans maintained by the Employer or
any Affiliate;
(D) the Participant will not make any contributions to any
retirement plan (other than mandatory employee contributions to a
defined benefit plan) maintained by the Employer or any Affiliate
for 12 months after receiving the hardship distribution; and
(E) the Participant's Before-Tax Contributions to this Plan
and to all plans maintained by the Employer or any Affiliate in
the calendar year following the calendar year of the hardship
distribution do not exceed the limitation in Code Section
402(g)(1) applicable to such following calendar year, minus the
amount of his Before-Tax Contributions for the calendar year of
the hardship distribution.
38
<PAGE>
(d Any withdrawals under this Section 7.9 shall not reduce the
Participant's Before-Tax Account below the amount of twice the balance of any
outstanding loan made pursuant to Section 7.8.
7.10 Facility of Payment. When, in the Committee's opinion, a Participant
-------------------
or beneficiary is under a legal disability or is incapacitated in any way so as
to be unable to manage his affairs, the Committee may direct the Trustee to make
payments:
(a directly to the Participant or beneficiary;
(b to a duly appointed guardian or conservator of the Participant or
beneficiary;
(c to a custodian for the Participant or beneficiary under the
Uniform Gifts to Minors Act;
(d to an adult relative of the Participant or beneficiary; or
(e directly for the benefit of the Participant or beneficiary.
Any such payment shall constitute a complete discharge therefor with respect to
the Trustee and the Committee.
7.11 Claims Procedure.
----------------
(a Any person who believes that he is then entitled to receive a
benefit under the Plan, including one greater than that initially determined by
the Committee, may file a claim in writing with the Committee.
(b The Committee shall within 90 days of the receipt of a claim
either allow or deny the claim in writing. A denial of a claim shall be written
in a manner calculated to be understood by the claimant and shall include:
(i the specific reason or reasons for the denial;
(ii specific references to pertinent Plan provisions on which
the denial is based;
(iii 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
(iv an explanation of the Plan's claim review procedure.
39
<PAGE>
(c A claimant whose claim is denied (or his duly authorized
representative) may within 60 days after receipt of denial of his claim:
(i submit a written request for review to the Committee;
(ii review pertinent documents; and
(iii submit issues and comments in writing.
(d The Committee shall notify the claimant of its decision on review
within 60 days of receipt of a request for review. The decision on review shall
be written in a manner calculated to be understood by the claimant and shall
include specific reasons for the decision and specific references to the
pertinent Plan provisions on which the decision is based.
(e The 90-day and 60-day periods described in subsections (b) and
(d), respectively, may be extended at the discretion of the Committee for a
second 90- or 60-day period, as the case may be, provided that written notice of
the extension is furnished to the claimant prior to the termination of the
initial period, indicating the special circumstances requiring such extension of
time and the date by which a final decision is expected.
(f Participants and beneficiaries shall not be entitled to challenge
the Committee's determinations in judicial or administrative proceedings without
first complying with the procedures in this Article. The Committee's decisions
made pursuant to this Section are intended to be final and binding on
Participants, beneficiaries and others.
7.12 Eligible Rollover Distributions.
-------------------------------
(a Notwithstanding any provision of the Plan to the contrary that
would otherwise limit a distributee's election under this Article 7, a
distributee may elect, at the time and in the manner prescribed by the
Committee, 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 Eligible rollover distribution: 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: 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; any distribution to the extent such
distribution is required under Code Section 401(a)(9); and 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).
40
<PAGE>
(c Eligible retirement plan: An eligible retirement plan is an
individual retirement account described in Code Section 408(a), an individual
retirement annuity described in Code Section 408(b), an annuity plan described
in Code Section 403(a), or a qualified trust described in Code Section 401(a),
that accepts the distributee's eligible rollover distribution. However, in the
case of an eligible rollover distribution to the surviving spouse, an eligible
retirement plan is an individual retirement account or individual retirement
annuity.
(d Distributee: A distributee includes an employee or former
employee. In addition, the employee's or former employee's surviving spouse and
the employee's or former employee's spouse or former spouse who is the alternate
payee under a qualified domestic relations order, as defined in Code Section
414(p), are distributees with regard to the interest of the spouse or former
spouse.
(e Direct rollover: A direct rollover is a payment by the Plan to
the eligible retirement plan specified by the distributee.
41
<PAGE>
ARTICLE 8
Top-Heavy Plan Requirements
---------------------------
8.1 Definitions. For purposes of this Article 8:
-----------
(a A "Key Employee" is any current or former employee (and the
beneficiaries of such employee) who at any time during the Determination Period
was an officer of the Employer or an Affiliate if such individual's annual
compensation exceeds 50% of the defined benefit dollar limitation in Code
Section 415(b)(1)(A), an owner (or considered an owner under Code Section 318)
of one of the 10 largest interests in the Employer if such individual's
compensation exceeds 100% of the Defined Contribution Dollar Limitation, a Five-
Percent Owner, or a One-Percent Owner of the Employer who has an annual
compensation of more than $150,000. Annual compensation is determined on the
basis of Total Compensation. The "Determination Period" is the Plan Year
containing the Top-Heavy Determination Date and the 4 preceding Plan Years.
The determination of who is a Key Employee will be made in accordance
with Code Section 416(i)(1) and the regulations thereunder.
(b For any Plan Year, this Plan is "Top-Heavy" if any of the
following conditions exists:
(i The Top-Heavy Ratio for this Plan exceeds 60% and this Plan
is not part of any Required Aggregation Group or Permissive Aggregation
Group of plans;
(ii This Plan is a part of a Required Aggregation Group of
plans but not part of a Permissive Aggregation Group and the Top-Heavy
Ratio for the group of plans exceeds 60%;
(iii This Plan is a part of a Required Aggregation Group and
part of a Permissive Aggregation Group of plans and the Top-Heavy Ratio for
the Permissive Aggregation Group exceeds 60%.
(c The "Top-Heavy Ratio" shall be determined as follows:
(i If the Employer maintains one or more defined contribution
plans and the Employer has not maintained any defined benefit plan which
during the 5-year period ending on the Top-Heavy Determination Date(s) has
or has had accrued benefits, the Top-Heavy Ratio for this Plan alone or for
the Required or Permissive Aggregation Group as appropriate is a fraction,
the numerator of which is the sum of the account balances of all Key
Employees as of the Top-Heavy Determination Date(s) (including any part of
any account balance distributed in the 5-year period ending on the Top-
Heavy Determination Date(s)), and the denominator of which is the sum of
all account balances
42
<PAGE>
(including any part of any account balance distributed in the 5-year period
ending on the Top-Heavy Determination Date(s)), both computed in accordance
with Code Section 416 and the regulations thereunder. Both the numerator
and denominator of the Top-Heavy Ratio are increased to reflect any
contribution not actually made as of the Top-Heavy Determination Date, but
which is required to be taken into account on that date under Code Section
416 and the regulations thereunder.
(ii If the Employer maintains one or more defined contribution
plans and the Employer maintains or has maintained one or more defined
benefit plans which during the 5-year period ending on the Top-Heavy
Determination Date(s) has or has had any accrued benefits, the Top-Heavy
Ratio for any Required or Permissive Aggregation Group as appropriate is a
fraction, the numerator of which is the sum of account balances under the
aggregated defined contribution plan or plans for all Key Employees,
determined in accordance with (i) above, and the Present Value of accrued
benefits under the aggregated defined benefit plan or plans for all Key
Employees as of the Top-Heavy Determination Date(s), and the denominator of
which is the sum of the account balances under the aggregated defined
contribution plan or plans for all Participants, determined in accordance
with (i) above, and the Present Value of accrued benefits under the
aggregated defined benefit plan or plans for all Participants as of the
Top-Heavy Determination Date(s), all determined in accordance with Code
Section 416 and the regulations thereunder. The accrued benefits under a
defined benefit plan in both the numerator and denominator of the Top-Heavy
Ratio are increased for any distribution of an accrued benefit made in the
5-year period ending on the Top-Heavy Determination Date.
(iii For purposes of (i) and (ii) above the value of account
balances and the Present Value of accrued benefits will be determined as of
the most recent valuation date that falls within or ends with the 12-month
period ending on the Top-Heavy Determination Date, except as provided in
Code Section 416 and the regulations thereunder for the first and second
plan years of a defined benefit plan. The account balances and accrued
benefits of a Participant (A) who is not a Key Employee but who was a Key
Employee in a prior year, or (B) who has not been credited with at least
one hour of service with any employer maintaining the Plan at any time
during the 5-year period ending on the Top-Heavy Determination Date will be
disregarded. The calculation of the Top-Heavy Ratio, and the extent to
which distributions, rollovers, and transfers are taken into account, will
be made in accordance with Code Section 416 and the regulations thereunder.
Deductible employee contributions will not be taken into account for
purposes of computing the Top-Heavy Ratio. When aggregating plans the value
of account balances and accrued benefits will be calculated with reference
to the Top-Heavy Determination Date(s) that fall within the same calendar
year. The accrued benefit of a Participant other than a Key Employee shall
be determined under (1) the method, if any, that uniformly applies for
accrual purposes under all defined benefit plans maintained by the
Employer, or (2) if there is no such method, as if such benefit accrued
43
<PAGE>
not more rapidly than the slowest accrual rate permitted under the
fractional rule of Code Section 411(b)(1)(C).
(d "Permissive Aggregation Group" means the Required Aggregation
Group of plans plus any other plan or plans of the Employer which, when
considered as a group with the Required Aggregation Group, would continue to
satisfy the requirements of Code Sections 401(a)(4) and 410.
(e "Required Aggregation Group" means (i) each qualified plan of the
Employer in which at least one Key Employee participates or participated at any
time during the Determination Period (regardless of whether the plan has
terminated), and (ii) any other qualified plan of the Employer which enables a
plan described in (i) to meet the requirements of Code Section 401(a)(4) or 410.
(f "Top-Heavy Determination Date" means, for any Plan Year
subsequent to the first Plan Year, the last day of the preceding Plan Year or,
for the first Plan Year of the Plan, the last day of that year.
(g "Present Value" shall be based on the interest assumption and
post-retirement mortality assumption specified in the defined benefit plan.
(h "Employer" means the Employer and all Affiliates except for
purposes of determining ownership under Code Section 416(i)(1).
8.1 Top-Heavy Plan Requirements.
---------------------------
(a (i Except as otherwise provided in (ii) and (iii) below, the
Employer contributions and forfeitures allocated on behalf of any
Participant who is not a Key Employee shall not be less than the lesser of
three percent of such Participant's Total Compensation, as limited by Code
Section 401(a)(17), or in the case where the Employer has no defined
benefit plan which designates this Plan to satisfy Code Section 401, the
largest percentage of Employer contributions and forfeitures, as a
percentage of the Key Employee's Total Compensation, as limited by Code
Section 401(a)(17), allocated on behalf of any Key Employee for that year.
The minimum allocation is determined without regard to any Social Security
contribution. This minimum allocation shall be made even though, under
other Plan provisions, the Participant would not otherwise be entitled to
receive an allocation, or would have received a lesser allocation for the
year because of (A) the Participant's failure to complete 1,000 Hours of
Service (or any equivalent provided in the Plan), (B) the Participant's
failure to make mandatory employee contributions to the Plan, or (C) Total
Compensation less than a stated amount.
(ii The provision in (i) above shall not apply to any
Participant who was not employed by the Employer or an Affiliate on the
last day of the Plan Year.
44
<PAGE>
(iii The provision in (i) above shall not apply to any
Participant to the extent the Participant is covered under any other plan
or plans of the Employer and the Employer's contribution and forfeitures
allocated under such plan or plans are equal to or exceed the amount
required to be allocated under (i) above.
(b The minimum allocation required (to the extent required to be
nonforfeitable under Code Section 416(b)) may not be forfeited under Code
Section 411(a)(3)(B) or 411(a)(3)(D).
(c For any Plan Year in which this Plan is Top-Heavy, the following
schedule shall be substituted for the schedule set forth in Section 6.6,
provided that Section 6.6 shall apply to the extent that the nonforfeitable
percentage thereunder is greater than the following schedule:
<TABLE>
<CAPTION>
Nonforfeitable
Years of Service Percentage
---------------- ----------
<S> <C>
Less than 2 0
2 but less than 3 20
3 but less than 4 40
4 but less than 5 60
5 but less than 6 80
6 or more 100
</TABLE>
The minimum vesting schedule applies to all benefits within the meaning of Code
Section 411(a)(7) except those attributable to after-tax contributions,
including benefits accrued before the Plan became Top-Heavy. Further, no
reduction in vested benefits may occur in the event the Plan's Top-Heavy status
changes for any Plan Year. However, this Section does not apply to the Account
balances of any employee who does not have any service after the Plan has
initially become Top-Heavy and such employee's Account balance attributable to
Employer Contributions and forfeitures will be determined without regard to this
Section.
(d If a Participant has 3 Years of Service as of the last day of the
Plan Year for which the vested percentage of his Employer Account and Matching
Account were subject to subparagraph(c), he may elect to have the vested
percentage of his Employer Account and Matching Account determined under
subparagraph (c) in any subsequent Plan Year when Section 8.2 is not applicable.
45
<PAGE>
ARTICLE 9
Powers and Duties of Plan Committee
-----------------------------------
9.1 Appointment of Plan Committee.
-----------------------------
(a) The Board of Directors of the Company shall name a Plan Committee
(the "Committee") to consist of not less than 3 persons to serve as
administrator and a named fiduciary under the Plan. Initially, the Plan
Committee will consist of the Company's Chief Financial Officer, the Company's
highest ranking Human Resources professional, and a designee of the Company's
Chief Executive Officer. However, any person, including directors,
shareholders, officers and employees of the Employer, shall be eligible to serve
on the Committee. Every person appointed a member of the Committee shall
signify his acceptance of membership on the Committee in writing to the
secretary of the Company and to the secretary of the Committee. In the event
the Board of Directors does not appoint a Committee pursuant to this Section
9.1, the Company shall act as the administrator and a named fiduciary of the
Plan and all references to the Committee shall mean references to the Company so
acting as administrator and a named fiduciary of the Plan.
(b) Members of the Committee shall serve at the pleasure of the Board
of Directors and may be removed by the Board of Directors at any time with or
without cause. Any member of the Committee may resign by delivering his written
resignation to the Board of Directors, and such resignation shall become
effective at delivery or at any later date specified therein. Vacancies in the
Committee shall be filled by the Board of Directors. In the event of a vacancy
in membership, the remaining members shall constitute the Committee in question
with full power to act until said vacancy is filled.
(c) Usual and reasonable expenses of the Committee may be paid in
whole or in part by the Employer and any such expenses not paid by the Employer
shall be paid by the Trustee out of the principal or income of the Trust Fund.
The members of the Committee shall not receive any compensation for their
services as such.
9.2 Powers and Duties of Committee. The Committee shall have final and
------------------------------
binding discretionary authority to control and manage the operation and
administration of the Plan, including all rights and powers necessary or
convenient to the carrying out of its functions hereunder, whether or not such
rights and powers are specifically enumerated herein. In exercising its
responsibilities hereunder, the Committee may manage and administer the Plan
through the use of agents who may include employees of the Employer.
Without limiting the generality of the foregoing, and in addition to the
other powers set forth in this Article 9, the Committee shall have the following
discretionary authorities:
(a) To construe and interpret the Plan, decide all questions of
eligibility and determine the amount, manner and time of payment of any benefits
hereunder.
46
<PAGE>
(b) To prescribe procedures to be followed by Participants or
beneficiaries filing applications for benefits.
(c) To prepare and distribute, in such manner as the Committee
determines to be appropriate, information explaining the Plan.
(d) To request and receive from the Employer, Participants and others
such information as shall be necessary for the proper administration of the
Plan.
(e) To furnish the Employer upon request such annual and other reports
with respect to the administration of the Plan as are reasonable and
appropriate.
(f) To receive, review and maintain on file reports of the financial
condition and of the receipts and disbursements of the Trust Fund from the
Trustee.
9.3 Committee Procedures.
--------------------
(a) The Committee may adopt such bylaws and regulations as it deems
desirable for the conduct of its affairs.
(b) A majority of the members of the Committee at the time in office
shall constitute a quorum for the transaction of business. All resolutions or
other actions taken by the Committee at any meeting shall be by the vote of the
majority of the members of the Committee present at the meeting. The Committee
may act without a meeting by written consent of a majority of its members.
(c) The Committee may elect one of its members as chairman and will
appoint a secretary, who may or may not be a Committee member, and shall advise
the Trustee and the Employer of such actions in writing. The secretary shall
keep a record of all actions of the Committee and shall forward all necessary
communications to the Employer or the Trustee.
(d) Filing or delivery of any document with or to the secretary of the
Committee in person or by registered or certified mail, addressed in care of the
Employer, shall be deemed a filing with or delivery to the Committee.
9.4 Consultation with Advisors. The Committee (or any fiduciary
--------------------------
designated by the Committee pursuant to Section 9.8) may employ or consult with
counsel, actuaries, accountants, physicians or other advisors (who may be
counsel, actuaries, accountants, physicians or other advisors for the Employer).
9.5 Committee Members as Participants. Any Committee member may also be a
---------------------------------
Participant, but no Committee member shall have power to take part in any
discretionary
47
<PAGE>
decision or action affecting his own interest as a Participant under this Plan
unless such decision or action is upon a matter which affects all other
Participants similarly situated and confers no special right, benefit or
privilege not simultaneously conferred upon all other such Participants.
9.6 Records and Reports. The Committee shall take all such action as it
-------------------
deems necessary or appropriate to comply with governmental laws and regulations
relating to the maintenance of records, notifications to Participants,
registrations with the Internal Revenue Service, reports to the U.S. Department
of Labor and all other requirements applicable to the Plan.
9.7 Investment Policy.
-----------------
(a) The Committee from time to time shall determine the Plan's short-
term and long-term financial needs, with which the investment policy of the
Trust shall be appropriately coordinated, and such needs shall be communicated
from time to time to the Trustee, Investment Managers or others having any
responsibility for management and control of the Trust assets.
(b) Subject to the provisions of Section 5.2 relating to investment
direction of Participants, and to (c) below, the Trustee shall have exclusive
authority and discretion to manage and control the assets of the Trust pursuant
to an investment policy coordinated with the needs of the Plan as determined by
the Committee.
(c) The Committee may in its discretion appoint one or more Investment
Managers to manage (including the power to direct the Trustee to acquire and
dispose of) any assets of the Plan pursuant to an investment policy coordinated
with the needs of the Plan as determined by the Committee, in which event the
Trustee shall not be liable for the acts or omissions of any such Investment
Manager or be under an obligation to invest or otherwise manage any asset of the
Plan which is subject to the management of any such Investment Manager except as
directed. Any such Investment Manager shall acknowledge in writing that he is a
fiduciary with respect to the Plan.
(d) The term "Investment Manager" shall mean: (i) a registered
investment adviser under the Investment Advisers Act of 1940; (ii) a bank as
defined in the Investment Advisers Act of 1940; or (iii) an insurance company
qualified under the laws of more than one state to manage, acquire and dispose
of plan assets.
9.8 Designation of Other Fiduciaries. The Committee may designate in
--------------------------------
writing other persons to carry out a specified part or parts of its
responsibilities hereunder (including the power to designate other persons to
carry out a part of such designated responsibility), but not including the power
to appoint Investment Managers. Any such designation shall be accepted by the
designated person, who shall acknowledge in writing that he is a fiduciary with
respect to the Plan.
48
<PAGE>
9.9 Obligations of Committee.
------------------------
(a) The Committee or its properly authorized delegate shall make such
determinations as are necessary to accomplish the purposes of the Plan with
respect to individual Participants or classes of such Participants. The
Employer shall notify the Committee of facts relevant to such determinations,
including, without limitation, length of service, compensation for services,
dates of death, permanent disability, granting or terminating of leaves of
absence, ages, retirement and termination of service for any reason (but
indicating such reason), and termination of participation. The Employer shall
also be responsible for notifying the Committee of any other facts which may be
necessary for the Committee to discharge its responsibilities hereunder.
(b) The Committee is hereby authorized to act solely upon the basis of
such notifications from the Employer and to rely upon any document or signature
believed by the Committee to be genuine and shall be fully protected in so
doing. For the purpose of this Section, a letter or other written instrument
signed in the name of the Employer by any officer thereof shall constitute a
notification therefrom; except that any action by the Company or its Board of
Directors with respect to the appointment or removal of a member of the
Committee or the amendment of the Plan and Trust or the designation of a group
of employees to which the Plan is applicable shall be evidenced by an instrument
in writing, signed by a duly authorized officer or officers, certifying that
said action has been authorized and directed by a resolution of the Board of
Directors of the Company.
(c) The Committee shall notify the Trustee of its actions and
determinations affecting the responsibilities of the Trustee and shall give the
Trustee directions as to payments or other distributions from the Trust Fund to
the extent they may be necessary for the Trustee to fulfill the terms of the
Trust Agreement.
(d) The Committee shall be under no obligation to enforce payment of
contributions hereunder or to determine whether contributions delivered to the
Trustee comply with the provisions hereof relating to contributions, and is
obligated only to administer this Plan pursuant to the terms hereof.
9.10 Indemnification of Committee. The Company shall indemnify
----------------------------
members of the Committee and its authorized delegates who are employees of the
Employer for any liability or expenses, including attorneys' fees, incurred in
the defense of any threatened or pending action, suit or proceeding by reason
of their status as members of the Committee or its authorized delegates, to the
full extent permitted by the law of the Company's state of incorporation.
49
<PAGE>
ARTICLE 10
Trustee and Trust Fund
----------------------
10.1 Trust Fund. A Trust Fund to be known as the May & Speh 401(k) Savings
----------
and Retirement Trust (herein referred to as the "Trust" or the "Trust Fund") has
been established by the execution of a trust agreement with one or more Trustees
and is maintained for the purposes of this Plan. The assets of the Trust will
be held, invested and disposed of by the Trustee, in accordance with the terms
of the Trust, for the benefit of the Participants and their beneficiaries.
10.2 Payments to Trust Fund and Expenses. All contributions hereunder will
-----------------------------------
be paid into and credited to the Trust Fund and all benefits hereunder and
expenses chargeable thereto will be paid from the Trust Fund and charged
thereto.
10.3 Trustee's Responsibilities. The powers, duties and responsibilities
--------------------------
of the Trustee shall be as set forth in the Trust Agreement and nothing
contained in this Plan, either expressly or by implication, shall impose any
additional powers, duties or responsibilities upon the Trustee.
10.4 Reversion to an Employer. An Employer has no beneficial interest in
------------------------
the Trust Fund and no part of the Trust Fund shall ever revert or be repaid to
an Employer, directly or indirectly, except that an Employer shall upon written
request have a right to recover:
(a) within one year of the date of payment of a contribution by such
Employer, any amount (less any losses attributable thereto) contributed through
a mistake of fact;
(b) within one year of the date on which any deduction for a
contribution by such Employer under Code Section 404 is disallowed, an amount
equal to the amount disallowed (less any losses attributable thereto); and
(c) at the termination of the Plan, any amounts with respect to its
employees remaining in the Excess Forfeiture Suspense Account.
50
<PAGE>
ARTICLE 11
Amendment or Termination
------------------------
11.1 Amendment. The Company reserves the right to amend this Plan at any
---------
time to take effect retroactively or otherwise, in any manner which it deems
desirable including, but not by way of limitation, the right to increase or
diminish contributions to be made by the Employer hereunder, to change or modify
the method of allocation of its contributions, to change any provision relating
to the distribution or payment, or both, of any assets of the Trust.
11.2 Termination. The Company further reserves the right to terminate this
-----------
Plan at any time.
11.3 Form of Amendment, Discontinuance of Employer Contributions, and
----------------------------------------------------------------
Termination. Any such amendment, discontinuance of Employer contributions or
- -----------
termination shall be made only by resolution of the Board of Directors of the
Company or by any person so duly authorized by the Board of Directors.
11.4 Limitations on Amendments. The provisions of this Article are subject
-------------------------
to the following restrictions:
(a) Except as provided in Section 10.4, no amendment shall operate
either directly or indirectly to give the Employer any interest whatsoever in
any funds or property held by the Trustee under the terms hereof, or to permit
corpus or income of the Trust to be used for or diverted to purposes other than
the exclusive benefit of the Participants and their beneficiaries.
(b) Except to the extent necessary to conform to the laws and
regulations or to the extent permitted by any applicable law or regulation, no
amendment shall operate either directly or indirectly to deprive any Participant
of his nonforfeitable beneficial interest in his Accounts as at the date of the
amendment.
(c) No amendment shall change any vesting schedule unless each
Participant who has completed 3 or more Years of Service is permitted to elect
to have the nonforfeitable percentage of his Employer Account and Matching
Account computed under the Plan without regard to such amendment. The period
for making such election shall commence no later than the date of the adoption
of such amendment and shall expire no earlier than 60 days after the latest of
the following dates: (i) the date the Plan amendment is adopted, (ii) the date
the Plan amendment becomes effective, or (iii) the date the Participant is
issued written notice of the Plan amendment by the Committee. Notwithstanding
the foregoing, no election need be offered to a Participant if the Participant's
nonforfeitable percentage of his Employer Account and Matching Account cannot at
any time be lower than such percentage determined without regard to such
amendment.
51
<PAGE>
(d) Except as permitted by applicable law, no amendment shall
eliminate or reduce an early retirement benefit or a retirement-type subsidy or
eliminate an optional form of benefit.
11.5 Level of Benefits Upon Merger. This Plan shall not merge or
-----------------------------
consolidate with, or transfer assets or liabilities to, any other plan, unless
each Participant shall be entitled to receive a benefit immediately after said
merger, consolidation or transfer (if such other plan were then terminated)
which shall be not less than the benefit he would have been entitled to receive
immediately before said merger, consolidation or transfer (if this Plan were
then terminated).
11.6 Vesting Upon Termination or Discontinuance of Employer Contributions;
---------------------------------------------------------------------
Liquidation of Trust.
- --------------------
(a) This Plan shall be deemed terminated if and only if the Plan
terminates by operation of law or pursuant to Section 11.2. In the event of any
termination or partial termination within the meaning of the Code, or in the
event the Employer permanently discontinues the making of contributions to the
Plan, the Employer Account and Matching Account of each affected Participant who
is employed by the Employer on the date of the occurrence of such event shall be
nonforfeitable; provided, however, that in no event shall any Participant or
beneficiary have recourse to other than the Trust Fund for the satisfaction of
benefits hereunder.
(b) In the event the Employer permanently discontinues the making of
contributions to the Plan, the Trustee shall make or commence distribution to
each Participant or his beneficiaries of the value of such Participant's
Accounts as provided herein within the time prescribed in Article 7. However,
if, after such discontinuance, the Company shall determine it to be
impracticable to continue the Trust any longer, the Company may, in its
discretion, declare a distribution date and Valuation Date for all Participants
and beneficiaries.
(c) The liquidation of the Trust, if any, in connection with any Plan
termination shall be accomplished by the Committee acting on behalf of the
Company. After directing that sufficient funds be set aside to provide for the
payment of all expenses incurred in the administration of the Plan and the
Trust, to the extent not paid or provided for by the Employer, the Committee
shall, as promptly as shall then be reasonable under the circumstances,
liquidate the Trust assets and distribute to each Participant or beneficiary his
Accounts in the Trust Fund. Upon completion of such liquidation and
distribution, the Trust shall finally and completely terminate. In the event
the Committee is no longer in existence, the actions to be taken by the
Committee pursuant to this Section shall be taken by the Trustee.
52
<PAGE>
ARTICLE 12
Miscellaneous
-------------
12.1 No Guarantee of Employment. Neither the creation of the Plan nor
--------------------------
anything contained in the Plan or trust agreement shall be construed as a
contract of employment between the Employer and the Participant or as giving any
Participant hereunder or other employee of the Employer any right to remain in
the employ of the Employer, any equity or other interest in the assets, business
or affairs of the Employer, or any right to complain about any action taken or
any policy adopted or pursued by the Employer.
12.2 Nonalienation.
-------------
(a) Except as may be provided in the Plan with respect to loans to
Participants, no Participant shall have any right to sell, assign, pledge,
hypothecate, anticipate or in any way create a lien upon any part of the Trust
Fund. Except to the extent required by law or provided in the Plan, no interest
in the Trust Fund, or any part thereof, shall be assignable in or by operation
of law, or be subject to liability in any way for the debts or defaults of
Participants, their beneficiaries, spouses or heirs-at-law, whether to the
Employer or to others.
(b) Prior to the time that distributions are to be made hereunder, the
Participants, their spouses, beneficiaries, heirs-at-law or legal
representatives shall have no right to receive cash or other things of value
from the Employer or the Trustee from or as a result of the Plan and Trust.
12.3 Qualified Domestic Relations Order. Notwithstanding anything in this
----------------------------------
Plan to the contrary, the Committee shall distribute a Participant's Accounts,
or any portion thereof, in accordance with the terms of any domestic relations
order entered on or after January 1, 1985, which the Committee determines to be
a qualified domestic relations order described in Code Section 414(p). Further
notwithstanding any other provision of this Plan to the contrary, such
distribution of a Participant's Accounts, or any portion thereof, to an
alternate payee under a qualified domestic relations order shall, unless such
order otherwise provides, be made in one lump sum as soon as administratively
practicable after the Committee has determined that a domestic relations order
is a qualified domestic relations order described in Code Section 414(p).
12.4 Controlling Law. To the extent not preempted by the laws of the
---------------
United States of America, the laws of the State of Illinois shall be controlling
state law in all matters relating to the Plan.
12.5 Severability. If any provision of this Plan shall be held illegal or
------------
invalid for any reason, said illegality or invalidity shall not affect the
remaining parts of this Plan, but this Plan shall be construed and enforced as
if said illegal or invalid provision had never been included herein.
53
<PAGE>
12.6 Notification of Addresses. Each Participant and each beneficiary of a
-------------------------
deceased Participant shall file with the Committee from time to time in writing
his post-office address and each change of post-office address. Any
communication, statement or notice addressed to the last post-office address
filed with the Committee, or if no such address was filed with the Committee,
then to the last post-office address of the Participant or beneficiary as shown
on the Employer's records, will be binding on the Participant and his
beneficiary for all purposes of this Plan and neither the Committee nor the
Employer shall be obliged to search for or ascertain the whereabouts of any
Participant or beneficiary.
12.7 Gender and Number. Whenever the context requires or permits, the
-----------------
gender and number of words shall be interchangeable.
54
<PAGE>
ARTICLE 13
Adoption by Affiliates
----------------------
13.1 Adoption of Plan. Subject to any resolution or terms of any agreement
----------------
approved by the Board of Directors of the Company or a committee thereof to the
contrary, any Affiliate may adopt this Plan for the benefit of its eligible
employees if authorized to do so by the Board of Directors of the Company. Such
adoption shall be by resolution of such Affiliate's board of directors, a
certified copy of which shall be filed with the Company, the Committee and the
Trustee. Upon such adoption, such Affiliate shall become an "Employer."
13.2 The Company as Agent for Employer. Each Employer which has adopted
---------------------------------
this Plan pursuant to Section 13.1 hereby irrevocably gives and grants to the
Company full and exclusive power conferred upon it by the terms of the Plan and
Trust to take or refrain from taking any and all action which such Employer
might otherwise take or refrain from taking with respect to the Plan, including
sole and exclusive power to exercise, enforce or waive any rights whatsoever
which such Employer might otherwise have with respect to the Trust, and each
such Employer, by adopting this Plan, irrevocably appoints the Company its agent
for such purposes. Neither the Trustee nor the Committee nor any other person
shall have any obligation to account to any such Employer or to follow the
instructions of or otherwise deal with any such Employer, the intention being
that all persons shall deal solely with the Company as if it were the sole
company which had adopted this Plan. Each such Employer shall contribute such
amounts as determined under Article 3.
13.3 Adoption of Amendments.
----------------------
(a) Any Employer which adopts this Plan pursuant to Section 13.1 may
amend this Plan with respect to its own employees by resolution of its board of
directors, if authorized to do so by the Board of Directors of the Company or
any person so duly authorized by the Board of Directors of the Company.
(b) Any Employer shall be deemed conclusively to have assented to any
amendment of this Plan by the Company without the necessity of any affirmative
action on the part of such Employer.
13.4 Termination. Any Employer which adopts this Plan pursuant to Section
-----------
13.1 may terminate this Plan with respect to its own employees by resolution of
its board of directors, if authorized to do so by the Board of Directors of the
Company, or any person so duly authorized by the Board of Directors of the
Company.
13.5 Data to Be Furnished by Employers. Each Employer which adopts this
---------------------------------
Plan pursuant to Section 13.1 shall furnish information and maintain such
records with respect to its Participants as called for hereunder, and its
determinations and notifications with respect thereto
55
<PAGE>
shall have the same force and effect as comparable determinations by the Company
with respect to its
Participants.
13.6 Joint Employees. If a Participant receives Considered Compensation
---------------
during a Plan Year from more than one Employer, the total amount of such
Considered Compensation shall be considered for the purposes of the Plan, and
the respective Employers shall share in contributions to the Plan on account of
said Participant based on the Considered Compensation paid to such Participant
by the Employer.
13.7 Expenses. Each Employer shall pay such part of any expenses incurred
--------
in the administration of the Plan as the Company shall determine.
13.8 Withdrawal. An Employer may withdraw from the Plan by giving 60 days'
----------
written notice of its intention to the Company and the Trustee, unless a shorter
notice shall be agreed to by the Company.
13.9 Prior Plans. If an Employer adopting the Plan already maintains a
-----------
defined contribution plan covering employees who will be covered by this Plan,
it may, with the consent of the Company, provide in its resolution adopting this
Plan for the termination of its own plan or for the merger, restatement and
continuation, of its own plan by this Plan. In either case, such Employer may,
subject to the approval of the Company, provide in its resolution of adoption of
this Plan for the transfer of the assets of such plan to the Trust for this Plan
for the payment of benefits accrued under such other plan.
IN WITNESS WHEREOF, the Company has caused this Plan to be signed by a duly
authorized officer on this _____ day of March, 1998.
MAY & SPEH
By:__________________________________
Title:_______________________________
56
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS INCLUDED IN THE COMPANY'S QUARTERLY REPORT ON FORM 10-Q
ENDED MARCH 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> MAR-31-1998
<CASH> 109,835,075
<SECURITIES> 11,794,190
<RECEIVABLES> 32,238,402
<ALLOWANCES> 317,000
<INVENTORY> 0
<CURRENT-ASSETS> 174,452,874
<PP&E> 69,872,064
<DEPRECIATION> 13,572,812
<TOTAL-ASSETS> 268,065,355
<CURRENT-LIABILITIES> 13,358,665
<BONDS> 144,340,146
0
0
<COMMON> 260,551
<OTHER-SE> 102,015,993
<TOTAL-LIABILITY-AND-EQUITY> 268,065,355
<SALES> 0
<TOTAL-REVENUES> 54,419,066
<CGS> 0
<TOTAL-COSTS> 46,435,925
<OTHER-EXPENSES> (511,464)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,647,911
<INCOME-PRETAX> 6,846,694
<INCOME-TAX> 2,599,603
<INCOME-CONTINUING> 4,247,091
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,247,091
<EPS-PRIMARY> 0.17
<EPS-DILUTED> 0.16
</TABLE>
