<PAGE>
As filed with the Securities and Exchange Commission on August 7, 1998
Registration No. 333-_______
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM S-8
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
METRO-GOLDWYN-MAYER INC.
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<S> <C>
DELAWARE 95-4605850
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
2500 Broadway Street 90404
SANTA MONICA, CALIFORNIA (Zip Code)
(Address of Principal Executive Offices)
</TABLE>
THE MGM SAVINGS PLAN
(Full Title of the Plan)
DAVID G. JOHNSON, ESQ.
SENIOR EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL
METRO-GOLDWYN-MAYER INC.
2500 BROADWAY STREET
SANTA MONICA, CALIFORNIA 90404
(Name and Address of Agent for Service)
(310) 449-3000
(Telephone Number, Including Area Code, of Agent for Service)
------------
Copies to:
BRUCE D. MEYER, ESQ.
GIBSON, DUNN & CRUTCHER LLP
333 SOUTH GRAND AVENUE
LOS ANGELES, CALIFORNIA 90071
(213) 229-7000
-------------------
CALCULATION OF REGISTRATION FEE
================================================================================
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
TITLE OF SECURITIES AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TO BE REGISTERED REGISTERED (1) OFFERING PRICE PER SHARE AGGREGATE OFFERING PRICE REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $0.01 par
value per share 1,000,000 N/A $18,250,000 (2) $5,384 (2)
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Pursuant to Rule 416(a), also covers additional securities that may be
offered as a result of stock splits, stock dividends or similar
transactions. Pursuant to Rule 416(c), also registers an indeterminate
amount of interests to be offered or sold pursuant to the employee benefit
plan described herein.
(2) Calculated pursuant to Rules 457(c) and 457(h)(1) based upon the average of
the high and low prices of the Common Stock on the New York Stock Exchange
on August 6, 1998, which was $18.25.
================================================================================
<PAGE>
Metro-Goldwyn-Mayer Inc.
August 7, 1998
Page 2
PART I
ITEM 1. PLAN INFORMATION.
Not filed as part of this Registration Statement pursuant to Note to Part I
of Form S-8.
ITEM 2. REGISTRATION INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION.
Not filed as part of this Registration Statement pursuant to Note to Part I
of Form S-8.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents of the Registrant heretofore filed with the
Securities and Exchange Commission (the "Commission") are hereby incorporated in
this Registration Statement by reference:
(1) the Registrant's annual report on Form 10-K for the year ended December 31,
1997, filed on March 18, 1998;
(2) the Registrant's quarterly report on Form 10-Q for the quarter ended March
31, 1998, filed on May 12, 1998;
(3) the Registrant's quarterly report on Form 10-Q for the quarter ended June
30, 1998, filed on August 5, 1998;
(4) the Registrant's report on Form 8-K dated February 6, 1998;
(5) the Registrant's report on Form 8-K dated July 24, 1998; and
(6) the description of the Common Stock set forth under the caption
"Description of Capital Stock" in the Registrant's Registration Statement
on Form 8-A (File No. 1-13481), as filed with the Commission on October 14,
1997, together with any amendment or report filed with the Commission for
the purpose of updating such description.
All reports and other documents subsequently filed by the Registrant
pursuant to Sections 13(a) and (c), 14 and 15(d) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), prior to the filing of a post-
effective amendment which indicates that all securities offered hereunder have
been sold or which deregisters all such securities then remaining unsold, shall
be deemed to be incorporated by reference in this Registration Statement and to
be a part hereof from the date of filing of such reports and documents.
Any document, and any statement contained in a document, incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Registration Statement to the extent that a
statement contained herein, or in any other subsequently filed document that
also is incorporated or deemed to be incorporated by reference herein, modifies
or supersedes such document or statement. Any such document or statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to
2
<PAGE>
Metro-Goldwyn-Mayer Inc.
August 7, 1998
Page 3
constitute a part of this Registration Statement. Subject to the foregoing, all
information appearing in this Registration Statement is qualified in its
entirety by the information appearing in the documents incorporated by
reference.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
As permitted by applicable provisions of the Delaware General Corporation
Law (the "DGCL"), the Registrant's Certificate of Incorporation contains a
provision eliminating, to the fullest extent permitted by the DGCL as it exists
or may in the future be amended, the liability of a director to the Registrant
and its stockholders for monetary damages for breaches of fiduciary duty as a
director. However, in accordance with the DGCL, such provision does not limit
the liability of a director for (i) any breach of the director's duty of loyalty
to the Registrant or its stockholders, (ii) acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, (iii)
payment of dividends, stock purchases or redemptions that violate the DGCL or
(iv) any transaction from which the director derived an improper personal
benefit. Such limitation of liability also does not affect the availability of
equitable remedies such as injunctive relief or rescission.
The Certificate of Incorporation and Bylaws of the Registrant also provide
that, to the fullest extent permitted by the DGCL as it exists or may in the
future be amended, the Registrant will indemnify each of the officers and
directors of the Registrant (or their estates, if applicable), and may indemnify
any employee or agent of the Registrant (or their estates, if applicable), who
is or was a party to, or is threatened to be made a party to, any threatened,
pending or completed action, suit or proceeding, by reason of the fact that such
person is or was an officer, director, employee or agent of the Registrant or is
or was serving at the request of Registrant as an officer, director, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise. The Registrant will so indemnify such officer or director, and may
so indemnify such employee or agent (if indemnification is authorized by the
Board of Directors), in the case of such actions (whether or not by or in the
right of the Registrant) if such person acted in good faith and in a manner such
person reasonably believed to be in or not opposed to the best interests of the
Registrant, and with respect to any criminal action or proceeding other than by
or in the right of the Registrant, had no reasonable cause to believe such
person's conduct was unlawful. With respect to indemnification other than by
or in the right of the Registrant, the termination of any action, suit or
proceeding by judgment, order, settlement or conviction, or upon a plea of nolo
contendere or its equivalent, will not, of itself, create a presumption that the
person did not act in good faith and in a manner which such person reasonably
believed to be in or not opposed to the best interests of the Registrant, and,
with respect to any criminal action or proceeding, that such person had
reasonable cause to believe that such person's conduct was unlawful. No
indemnification will be made in connection with actions by or in the right of
the Registrant in respect of any claim, issue or matter as to which such person
has been adjudged to be liable for negligence or misconduct in the performance
of such person's duty to the Registrant unless and only to the extent that the
Court of Chancery or the court in which such action or suit was brought
determines upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court deems proper. In addition, to the fullest extent permitted
3
<PAGE>
Metro-Goldwyn-Mayer Inc.
August 7, 1998
Page 4
by the DGCL, expenses (including attorneys' fees), judgments, fines incurred by
and amount paid in settlement may be advanced by the Registrant prior to the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on the behalf of such director, officer, employee or agent to
repay such amounts if it shall ultimately be determined that he or she is not
entitled to be indemnified as authorized in accordance with the DGCL and the
Registrant's Certificate of Incorporation. The Registrant's Certificate of
Incorporation and Bylaws also state that such indemnification is not exclusive
of any other rights of the indemnified party, including rights under any
indemnification agreements or otherwise.
The Registrant currently maintains insurance on behalf of its officers and
directors against certain liabilities that may be asserted against any such
officer or director in his or her capacity as such, subject to certain customary
exclusions. The amount of such insurance coverage is deemed by the Board of
Directors to be adequate to cover any liabilities.
The Registrant has entered into indemnification agreements with its
directors, its executive officers and certain other officers providing for
indemnification by the Registrant, including in circumstances in which
indemnification is otherwise discretionary under Delaware law. These agreements
constitute binding agreements between the Registrant and each of the other
parties thereto, thus preventing the Registrant from modifying its
indemnification policy in a way that is adverse to any person who is a party to
such an agreement.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Securities Act") may be permitted to directors,
officers or persons controlling the Registrant pursuant to the foregoing
provisions, the Registrant has been informed that in the opinion of the
Commission such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
5 Opinion of Gibson, Dunn & Crutcher LLP.
The undersigned Registrant hereby represents that it has submitted
the Plan and undertakes to submit any amendment thereto to the
Internal Revenue Service ("IRS") in a timely manner and will make all
changes required by the IRS in order to qualify the Plan under
Section 401 of the Internal Revenue Code.
23.1 Consent of Gibson, Dunn & Crutcher LLP (included in Exhibit 5).
23.2 Consent of Arthur Andersen LLP.
23.3 Consent of PricewaterhouseCoopers LLP.
24 Power of Attorney (included on the signature page hereof).
99.1 The MGM Savings Plan.
4
<PAGE>
Metro-Goldwyn-Mayer Inc.
August 7, 1998
Page 5
ITEM 9. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement to include
any material information with respect to the plan of distribution not
previously disclosed in the Registration Statement or any material change
to such information in the Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in the Registration Statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Santa Monica, California, on this 7th day of August, 1998.
METRO-GOLDWYN-MAYER INC.
By: /s/ David G. Johnson
----------------------------------
David G. Johnson
Senior Executive Vice President
and General Counsel
Each person whose signature appears below constitutes and appoints David G.
Johnson and Daniel J. Taylor, and each of them, as his or her true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him or her and in his or her name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and to file the same, with all exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent, or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities indicated
on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES Title Date
---------- ----- ----
<S> <C> <C>
/s/ Frank G. Mancuso
- ------------------------------- Chairman of the Board of Directors August 7, 1998
Frank G. Mancuso and Chief Executive Officer
(Principal Executive Officer)
/s/ A. Robert Pisano Vice Chairman and Director August 7, 1998
- -------------------------------
A. Robert Pisano
/s/ Daniel J. Taylor Chief Financial Officer (Principal August 7, 1998
- ------------------------------- Financial and Accounting Officer)
Daniel J. Taylor
/s/ James D. Aljian Director August 7, 1998
- -------------------------------
James D. Aljian
/s/ Francis Ford Coppola Director August 7, 1998
- -------------------------------
Francis Ford Coppola
/s/ Michael R. Gleason Director August 7, 1998
- -------------------------------
Michael R. Gleason
Director
- -------------------------------
Kirk Kerkorian
/s/ Kerry M. Stokes Director August 7, 1998
- -------------------------------
Kerry M. Stokes
/s/ Alex Yemenidjian Director August 7, 1998
- -------------------------------
Alex Yemenidjian
/s/ Jerome B. York Director August 7, 1998
- -------------------------------
Jerome B. York
</TABLE>
<PAGE>
Metro-Goldwyn-Mayer Inc.
August 7, 1998
Page 2
Pursuant to the requirements of the Securities Act, the person who
administers the MGM Savings Plan has duly executed this Registration Statement
on Form S-8 in the city of Santa Monica, state of California, on this 7th day
of August, 1998.
By: /s/ WILLIAM A. JONES
--------------------
Name: William A. Jones
Title: Plan Committee Chairman
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description
- ------- -----------
<C> <S>
5 Opinion of Gibson, Dunn & Crutcher LLP.
23.1 Consent of Gibson, Dunn & Crutcher LLP (included in Exhibit 5).
23.2 Consent of Arthur Andersen LLP.
23.3 Consent of PricewaterhouseCoopers LLP.
24 Power of Attorney (included on the signature page hereof).
99.1 The MGM Savings Plan.
</TABLE>
<PAGE>
[LETTERHEAD OF GIBSON, DUNN & CRUTCHER LLP APPEARS HERE]
August 6, 1998
(213) 229-7000 C 60385-00035
Metro-Goldwyn-Mayer Inc.
2500 Broadway Street
Santa Monica, California 90404
Re: Registration Statement on Form S-8
Ladies and Gentlemen:
We have acted as counsel for Metro-Goldwyn-Mayer Inc., a Delaware
corporation (the "Company"), in connection with the registration of 1,000,000
shares of Common Stock, par value $0.01 per share (the Common Stock"), of the
Company issuable under The MGM Savings Plan (the "Plan"). In connection
therewith, we have examined, among other things, the Registration Statement on
Form S-8 (the "Registration Statement") proposed to be filed by the Company with
the Securities and Exchange Commission on or about August 6, 1998. We have
also examined the proceedings and other actions taken by the Company in
connection with the authorization of the shares of Common Stock issuable under
the Plan and such other matters as we deemed necessary for purposes of rendering
this opinion.
Based upon the foregoing, and in reliance thereon, we are of the opinion
that the shares of Common Stock issuable under the Plan, when issued, delivered
and paid for in accordance with the Plan and in the manner described in the
Registration Statement, will be validly issued, fully paid and nonassessable.
The Company is a Delaware corporation. We are not admitted to practice in
Delaware. However, we are familiar with the Delaware General Corporation Law
and have made such review thereof as we consider necessary for the purpose of
this opinion. Subject to the foregoing, this opinion is limited to the present
laws of the State of Delaware and the State of California, and to the present
federal laws of the United States of America.
<PAGE>
Metro-Goldwyn-Mayer Inc.
August 6, 1998
Page 2
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving this consent, we do not admit that we are
within the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended, or the General Rules and Regulations of the
Securities and Exchange Commission.
Very truly yours,
/s/ GIBSON, DUNN & CRUTCHER LLP
GIBSON, DUNN & CRUTCHER LLP
BDM/GLS/LMF
<PAGE>
EXHIBIT 23.2
[LETTERHEAD OF ARTHUR ANDERSEN LLP]
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Metro-Goldwyn-Mayer Inc.:
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated February 26, 1998
included in Metro-Goldwyn-Mayer Inc.'s Form 10-K for the year ended December 31,
1997 and to all references to our Firm included in this registration statement.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Los Angeles, California
August 3, 1998
<PAGE>
<PAGE>
EXHIBIT 23.3
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated February 29, 1996, except for the
incentive bonus described in Note 12 as to which the date is July 31, 1996,
which appears on page 64 of Metro-Goldwyn-Mayer Inc.'s Annual Report on Form
10-K for the year ended December 31, 1997.
/s/ PricewaterhouseCoopers LLP
- ------------------------------
PricewaterhouseCoopers LLP
Century City, California
August 3, 1998
<PAGE>
THE MGM SAVINGS PLAN
Amended and Restated Effective January 1, 1998
<PAGE>
THE MGM SAVINGS PLAN
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C>
SECTION 1. DEFINITIONS................................. 3
SECTION 2. SERVICE..................................... 6
SECTION 3. ELIGIBILITY TO PARTICIPATE.................. 9
SECTION 4. SALARY DEFERRAL CONTRIBUTIONS............... 12
SECTION 5. MATCHING EMPLOYER CONTRIBUTIONS............. 22
SECTION 6. VOLUNTARY EMPLOYEE CONTRIBUTIONS............ 31
SECTION 7. ALLOCATIONS; ACCOUNTING..................... 32
SECTION 8. LIMITATIONS ON ANNUAL ADDITIONS............. 35
SECTION 9. INVESTMENT OF CONTRIBUTIONS................. 38
SECTION 10. VESTING..................................... 42
SECTION 11. DISTRIBUTIONS............................... 45
SECTION 12. LOANS....................................... 54
SECTION 13. ADMINISTRATION OF THE PLAN.................. 57
SECTION 14. TRUST FUND.................................. 60
SECTION 15. FIDUCIARY RESPONSIBILITY.................... 63
SECTION 16. AMENDMENT, TERMINATION, MERGER.............. 65
SECTION 17. MISCELLANEOUS............................... 67
SECTION 18. TOP-HEAVY REQUIREMENTS...................... 72
</TABLE>
-i-
<PAGE>
PREAMBLE
--------
This Plan shall be known as the MGM Savings Plan. The purpose of the Plan
is to enable employees of Metro-Goldwyn-Mayer Studios Inc. and certain of its
affiliates to save for their retirement through a program of employee and
employer contributions.
The Plan was adopted effective May 1, 1986, by MGM Group Holdings
Corporation (originally known as MGM/UA Communications Co., the sponsor
subsequently underwent several corporate name changes). The Plan is intended to
satisfy the requirements of the Employee Retirement Income Security Act of 1974
and to qualify as a profit sharing plan under Section 401(a) of the Internal
Revenue Code of 1986 or any other applicable sections thereof, as amended from
time to time.
Since its adoption the Plan has been amended to comply with applicable
provisions of the Tax Reform Act of 1986, and other related legislation and
guidance, and to reflect certain additional Plan changes. Effective on or about
December 15, 1993, MGM Group Holdings Corporation transferred certain assets and
liabilities, including the MGM Savings Plan, to Metro-Goldwyn-Mayer Studios
Inc., a wholly owned subsidiary which was, at that time, known as Metro-Goldwyn-
Mayer Inc. The MGM Savings Plan continued to be sponsored by Metro-Goldwyn-
Mayer Inc. on and after such date.
Effective October 9, 1996, Metro-Goldwyn-Mayer Inc. became a wholly-owned
subsidiary of P & F Acquisitions. Effective September 10, 1997, Metro-Goldwyn-
Mayer Inc. was renamed Metro-Goldwyn-Mayer Studios Inc., and P&F Acquisitions
was renamed Metro-Goldwyn-Mayer Inc. Metro-
-ii-
<PAGE>
Goldwyn-Mayer Studios Inc. continued to sponsor the MGM Savings Plan through
December 31, 1997. Effective January 1, 1998, Metro-Goldwyn-Mayer Inc. is the
sponsor of the MGM Savings Plan.
This amended and restated Plan is effective January 1, 1998. The rights of
any Participant whose employment terminated prior to any amendment or
restatement of this Plan shall be determined by the provisions of the Plan as in
effect at the time of his or her termination of employment, unless specifically
otherwise provided herein.
-iii-
<PAGE>
SECTION 1. DEFINITIONS
------------------------
The terms used herein shall have the following meanings unless a different
meaning is clearly required by the context:
(a) "Affiliate" shall mean any corporation or other trade or business
which is affiliated with an Employer pursuant to the provisions of Section
414(b), (c), (m), or (o) of the Internal Revenue Code.
(b) "Basic Earnings" shall mean the basic compensation paid to an Employee
by an Employer or Affiliate in any Plan Year or fractional Plan Year during
which an Employee participates in the Plan, inclusive of Salary Deferral
Contributions to the Plan (to the extent such contributions are not
recharacterized as Voluntary Employee Contributions under Section 4(g) hereof)
and pre-tax contributions under the MGM Cafeteria Plan, but exclusive of
overtime, commissions, voluntary bonus, contractual bonus, bonus based on a
percentage of annual net profits or gross receipts, penalty payments, car
allowances, and, in the case of foreign employment, earnings in excess of
amounts paid in the United States.
(c) "Board of Directors" shall mean the Board of Directors of the Company
or the Executive Committee of the Board of Directors of the Company.
(d) "Committee" shall mean the Retirement Plan Committee described in
Section 13.
(e) "Company" shall mean Metro-Goldwyn-Mayer Inc. effective January 1,
1998.
(f) "Effective Date" shall mean January 1, 1998.
(g) "Employee" shall mean any employee of an Employer and any employee of
an
-1-
<PAGE>
Affiliate that is not an Employer who is designated as eligible to participate
in the Plan by the Committee; provided, however, that the term "Employee" shall
not include any person who renders services such as, without limitation, actor,
cameraman, composer, director, musician, producer, singer or writer; provided,
further, that the term "Employee" shall not include any leased employee (as
defined in Section 414(n) of the Internal Revenue Code) covered by a plan
described in Section 414(n)(5) of the Internal Revenue Code. The determination
of the Committee with respect to the nature of a person's services shall be
conclusive for purposes of the Plan.
(h) "Employer" shall mean the Company and any Affiliate which, with the
consent of the Board of Directors, adopts the Plan.
(i) "Matching Employer Contribution" shall mean the contribution made by
the Employer in any Plan Year pursuant to Section 5.
(j) "Named Fiduciary" shall mean:
(i) The Board of Directors;
(ii) The Committee;
(iii) The Trustee; and
(iv) Any Investment Manager appointed by the Board of Directors or
the Committee to manage all or a portion of the Trust Fund.
(k) "Normal Retirement Age" shall mean the later of (i) a Participant's
65th birthday; or (ii) with respect to a Participant who is hired after
attainment of age 60, the fifth anniversary of the Participant's employment
commencement date.
(l) "Participant" shall mean any Employee who has become eligible to
participate
-2-
<PAGE>
in the Plan pursuant to Section 3 hereof, regardless of whether he has elected
to have Salary Deferral Contributions made to the Plan on his behalf by his
Employer.
(m) "Plan" shall mean the MGM Savings Plan.
(n) "Plan Year" shall mean the calendar year, except that the first Plan
Year shall begin on May 1, 1986 and end on December 31, 1986.
(o) "Rollover Contribution" shall mean the contribution described in
Section 7(e).
(p) "Salary Deferral Contribution" shall mean the amount which a
Participant elects to have contributed by the Employer to the Plan in any Plan
Year pursuant to Section 4.
(q) "Total Disability" shall mean a disability that renders a Participant
unable to satisfactorily perform the usual duties of his employment with the
Employer as determined by the Committee after consultation with a duly licensed
physician selected by the Committee.
(r) "Trust" shall mean the Trust established pursuant to Section 14 to
carry out the purposes of the Plan, which Trust, as amended from time to time,
shall form a part of the Plan.
(s) "Valuation Date" shall mean any day on which the New York Stock
Exchange or any successor to its business is open for trading, or such other
date as may be designated by the Committee.
(t) "Voluntary Employee Contribution" shall mean an amount contributed by
a Participant to the Plan in any Plan Year pursuant to Section 4(g) or 6.
SECTION 2. SERVICE
--------------------
-3-
<PAGE>
(a) Companies for Whom Service Credited. Service shall mean periods of
-----------------------------------
employment with:
(i) An Employer;
(ii) An Affiliate, on and after the date it becomes an Affiliate
(unless the Board of Directors, in its sole discretion,
provides credit for Service for periods of employment prior to
such date); and
(iii) Any corporation which is a predecessor corporation of an
Employer or a corporation merged, consolidated or liquidated
into an Employer or a predecessor of an Employer, or a
corporation, substantially all of the assets of which have been
acquired by an Employer, if the Employer maintains a plan of
such a predecessor corporation. If the Employer does not
maintain a plan maintained by such a predecessor, periods of
employment with such predecessor shall be credited as Service
only to the extent required under regulations prescribed by the
Secretary of the Treasury pursuant to Section 414(a)(2) of the
Internal Revenue Code.
Effective January 1, 1998, in the case of an individual who (A) was
employed by Orion Pictures Corporation on July 10, 1997 (the "Acquisition
Date"), (B) became an Employee of the Company or an Affiliated Company on and
after the Acquisition Date, and (C) is an Employee of the Company on January 1,
1998, all periods of service credited under the Orion Pictures Corporation
Thrift Savings/Profit Sharing Plan (the "Orion Plan") on behalf of such
individual before January 1, 1998 shall be credited as service under this Plan.
For purposes of calculating Service on and after January 1, 1998, the date of
hire of a Orion Participant shall
-4-
<PAGE>
be deemed to be January 1, 1998.
Notwithstanding the foregoing, an Employee shall receive credit for periods
of employment with a company described in Paragraph (ii) or (iii) only to the
extent that he would be given credit under this Section were he then in the
employ of an Employer.
(b) Periods Credited. An Employee shall receive credit for Service under
----------------
the Plan from the date his employment commences to the date his employment is
severed, including, by way of illustration but not by way of limitation, any
authorized leave of absence from employment, including any authorized absence
from work for maternity or paternity leave, and any period of military service
in the Armed Forces of the United States required to be credited by law. For
these purposes an Employee's employment commencement date shall be the date on
which the Employee first performs an "hour of service" for the Employer or
Affiliate, as determined under Department of Labor regulations. For these
purposes, the term "maternity" or "paternity" leave shall include any absence
from work during which no duties are performed due to the pregnancy of the
Employee, the birth of a child of the Employee, the placement of a child with
the Employee in connection with the adoption or foster care of such child by the
Employee, or caring for such child for a period immediately following such birth
or placement, the caring for a family member (defined as a child, spouse or
parent of the Employee) with a serious health condition, or a serious health
condition of the Employee, which causes the Employee to be unable to perform his
or her job responsibilities. The definition of maternity or paternity leave
shall be interpreted and applied under the Plan in a manner consistent with the
Family and Medical Leave Act of 1993, as it may be amended from time to time,
and applicable regulations.
-5-
<PAGE>
An Employee's Service shall be severed on the earlier of the date on which
he retires, resigns, is discharged or dies, or the first anniversary of his
first date of absence for any other reason; provided, however, that if an
Employee is on authorized leave of absence for maternity or paternity leave
which continues after the first anniversary of his first date of absence, the
period between the first and second anniversaries of such first date of absence
shall be neither a period of Service nor a period of severance. An Employee's
Service shall not be considered severed by reason of a transfer from one
Employer or Affiliate to another Employer or Affiliate.
(c) Reemployment Within 12 Months. Notwithstanding the foregoing, in the
-----------------------------
event that an Employee's Service is severed but he is reemployed within the 12
consecutive month period commencing on the date of severance, the period of
severance shall constitute Service.
(d) Measurement of Service. Service shall be measured in years and days,
----------------------
with each 365 days of Service being equivalent to one Year of Service.
Fractional years shall be disregarded; provided, however, that subject to
Subsection (e) hereof, all periods of Service prior to and subsequent to any
period of severance shall be aggregated.
(e) One Year Period of Severance. A one year period of severance shall
----------------------------
occur if Service is severed and the Employee does not perform an "hour of
service," as determined under Department of Labor regulations, within the 12
consecutive month period commencing on the date of severance. In the event an
Employee is reemployed after service is severed, Service prior to such severance
shall be recognized, unless the Employee has no vested account under the Plan
and the length of his period of severance equals or exceeds the greater of five
(5) years or the length of his period of Service prior to severance.
-6-
<PAGE>
SECTION 3. ELIGIBILITY TO PARTICIPATE
---------------------------------------
(a) Initial Eligibility. Any Employee who was a Participant on December
-------------------
31, 1997 shall automatically continue to be a Participant in the Plan on the
Effective Date. Any individual who was not a Participant on December 31, 1997
shall become a Participant in the Plan on the first day of the month coincident
with, or next following, the date on which he completes one Year of Service as
defined in Section 2(d) of this Plan, provided that he is employed by an
Employer at such time.
Notwithstanding the foregoing, if an Employee was a participant in the
Orion Plan on December 31, 1997 (an "Orion Participant"), such Employee shall
become a Participant in this Plan effective January 1, 1998.
(b) Reemployment. An Employee who was a Participant in the Plan and
------------
whose employment with an Employer has terminated but who subsequently is
reemployed shall again become a Participant or eligible to become a Participant
on the first date on which he is reemployed by an Employer and completes an Hour
of Service. An Employee who did not satisfy the requirements of Subsection 3(a)
and whose employment with an Employer has terminated shall, after a one-year
Break in Service, be treated as a newly-hired Employee upon his reemployment by
an Employer. An Employee who did not satisfy the requirements of Subsection 3(a)
and whose employment with an Employer has terminated shall, if he is rehired
before the end of a one-year Break in Service, be eligible to become a
Participant in accordance with Subsection 3(a), with his Service being measured
from his original date of
-7-
<PAGE>
hire.
(c) Collective Bargaining. Notwithstanding the foregoing:
---------------------
(i) An Employee who is a member of a collective bargaining unit
that is a party to a collective bargaining agreement with an
Employer shall become a Participant in the Plan only if there
is in effect an agreement making the Plan available to
Employees in such unit; provided, however, that any Employee
who is a member of a collective bargaining unit and who
participates in, and receives compensation that is treated as
Basic Earnings for purposes of the MGM Retirement Plan, shall
be eligible to participate in the Plan to the extent of such
compensation. Any such Employee shall become a Participant on
the first day of the month next following the date he becomes
an Employee in such a collective bargaining unit, provided such
Employee otherwise satisfies the requirements of Subsection
3(a).
(ii) If an Employee who was a member of a collective bargaining unit
to which the Plan was not available ceases to be a member of
such a collective bargaining unit, he shall become a
Participant on the first day of the month next following his
cessation of such membership, provided such Employee otherwise
satisfies the requirements of Subsection 3(a).
-8-
<PAGE>
(iii) If an Employee who is a Participant subsequently becomes a
member of a collective bargaining unit to which the Plan is not
available, all contributions under the Plan by him or on his
behalf shall cease, as soon as practicable; provided, however,
that the Participant's separate accounts shall continue to be
maintained as otherwise provided under the Plan.
(d) Leased Employees. Leased employees (as defined in Section 414(n) of
----------------
the Internal Revenue Code) shall not be eligible to participate in the Plan.
SECTION 4. SALARY DEFERRAL CONTRIBUTIONS
------------------------------------------
(a) Amount of Contributions. A Participant may elect with respect to each
-----------------------
Plan Year or fractional Plan Year in which he is a Participant that his Employer
shall contribute a Salary Deferral Contribution to the Trust on his behalf. Such
Salary Deferral Contribution shall be a stated whole percentage of the
Participant's Basic Earnings during each pay period, equal to not less than 1%
nor more than 15% of the Participant's Basic Earnings during such pay period
while a Participant. Salary Deferral Contributions shall be made through payroll
deduction and the Participant's Basic Earnings shall be reduced by an identical
amount. Notwithstanding anything to the contrary, and in accordance with Section
401(a)(17) of the Code, in no event shall the total of a Participant's Salary
Deferral Contributions for any Plan Year exceed 15% of the dollar limit in
effect under Section 401(a)(17) of the Code for such Plan Year.
-9-
<PAGE>
(b) Election of Salary Deferral Contributions. A Participant who elects
-----------------------------------------
to have his Employer contribute a Salary Deferral Contribution to the Plan
pursuant to Subsection (a) shall file with the Committee, on a form prescribed
by it, an election that shall designate the percentage of his Basic Earnings
during each pay period to be contributed and authorize payroll deduction.
(c) Time and Manner of Election. An election under Subsection (b) may be
---------------------------
made at any time during the Plan Year, to be effective as of the first pay day
of the calendar month after filing the form prescribed for such with the
Committee. Such election shall remain in effect until changed by the
Participant. An election may be changed not more than once in any calendar
month, and any such change may be effective as of the first pay day of the
calendar month after filing the form prescribed for such election with the
Committee.
(d) Maximum Deferral Percentage. Effective for Plan Years beginning on
---------------------------
and after January 1, 1997, notwithstanding anything herein to the contrary, in
no event may the Salary Deferral Contributions made on behalf of all Highly
Compensated Participants with respect to any Plan Year result in an Actual
Deferral Percentage for such group of Highly Compensated Participants which
exceeds the greater of (i) or (ii) below, where:
(i) is an amount equal to 125% of the Actual Deferral Percentage
for the preceding Plan Year for all Participants in the Plan
other than Highly Compensated Participants; and
(ii) is an amount equal to the sum of the Actual Deferral Percentage
for the preceding Plan Year for all Participants in the Plan
other than Highly Compensated Participants and 2%, provided
that such amount does not
-10-
<PAGE>
exceed 200% of the Actual Deferral Percentage for the preceding
Plan Year for all Participants other than Highly Compensated
Participants.
The limitations under this subsection shall be applied separately with
respect to each group of participants who are included in a unit of Employees
covered by a collective bargaining agreement, and with respect to non-collective
bargaining unit Employees.
(e) Definitions. Effective for Plan Years beginning on and after January
-----------
1, 1997, for purposes of this Section 4, the following terms shall have the
following meanings:
(i) "Actual Deferral Percentage" with respect to any group of
actively employed Participants for a Plan Year shall mean the
average of the ratios (calculated separately for each
Participant in the group) of:
(A) The amount of Salary Deferral Contributions authorized by
the Participant to be paid to the Trust for such Plan Year
plus the amount of any Qualified Nonelective Contributions
made for the Plan Year, if any, divided by
(B) The Participant's Compensation for such Plan Year.
For purposes of determining Actual Deferral Percentages,
any Participant who is suspended from participation pursuant to
Section 11(c)(iv) shall be treated as an eligible Participant.
Actual Deferral Percentages will be determined in accordance
with all of the applicable requirements (including, to the
extent applicable, the plan aggregation requirements) of
Section 401(k) of the Internal Revenue Code, and the
regulations issued thereunder. For purposes of determining the
Actual
-11-
<PAGE>
Deferral Percentage, any plans which are treated as one plan
for purposes of section 410(b) shall be treated as one plan. If
a Highly Compensated Participant participates in two or more
plans of an Employer, all deferrals under those plans shall be
aggregated for purposes of determining the Actual Deferral
Percentage of such Highly Compensated Participant.
Notwithstanding the foregoing, the Committee may elect to
determine the permissible Actual Deferral Percentage for Highly
Compensated Participants for any Plan Year beginning on or
after January 1, 1997 on the basis of the Actual Deferral
Percentage of the group of non-highly compensated employees for
the current Plan Year rather than the preceding Plan Year, in
accordance with such regulations, notices or other guidance
issued under Section 401(k) of the Code.
(ii) "Compensation" shall mean "compensation" as determined under
Section 8(g), plus, for Plan Years beginning before January 1,
1998, all pre-tax elective contributions made on behalf of a
Participant either to a "qualified cash or deferred
arrangement" (as defined under Section 401(k) of the Internal
Revenue Code and applicable regulations) or a "cafeteria plan"
(as defined under Section 125 of the Internal Revenue Code and
applicable regulations) maintained by an Employer. The total
amount of Compensation taken into account in any Plan Year
shall not
-12-
<PAGE>
exceed $150,000 (adjusted for increases in the cost of living
prescribed by the Secretary of the Treasury under Section
401(a)(17)(B) of the Internal Revenue Code). If the period for
determining Compensation consists of fewer than twelve months,
the foregoing annual compensation limit will be multiplied by a
fraction, the numerator of which is the number of months in the
period and the denominator of which is twelve. In the case of
an Employee who begins, resumes, or ceases to be eligible to
make Salary Deferral Contributions during a Plan Year, the
amount of Compensation included in the Actual Deferral
Percentage test and the Contribution Percentage test is the
amount of Compensation received by the Employee during the
entire Plan Year.
(iii) "Excess Salary Deferral Contributions" shall mean, with respect
to each Highly Compensated Participant, the amount by which the
total Salary Deferral Contributions on behalf of the
Participant must be reduced for the Participant's Actual
Deferral Percentage to equal the highest permitted Actual
Deferral Percentage under Subsection (d). In accordance with
the regulations issued under Section 401(k) of the Internal
Revenue Code, Excess Salary Deferral Contributions shall be
determined by a leveling procedure under which the Actual
Deferral Percentage of the Highly Compensated Participant with
the highest such percentage shall be reduced to the extent
required to enable the limitation of Subsection (d) to be
satisfied, or, if it results in a lower reduction, to
-13-
<PAGE>
the extent required to cause such Highly Compensated
Participant's Actual Deferral Percentage to equal the Actual
Deferral Percentage of the Highly Compensated Participant with
the next highest Actual Deferral Percentage. This leveling
procedure shall be repeated until the limitation of Subsection
(d) is satisfied. Once this leveling procedure has been
completed, the total amount of Excess Salary Deferral
Contributions shall be determined. This amount shall be
distributed in accordance with a leveling procedure under which
the dollar amount of Salary Deferral Contributions of the
Highly Compensated Participant with the highest dollar amount
of Salary Deferral Contributions shall be reduced to the extent
required to distribute the total amount of Excess Salary
Deferral Contributions or, if it results in a lower reduction,
to the extent required to cause such Highly Compensated
Participant's dollar amount of Salary Deferral Contributions to
equal the dollar amount of Salary Deferral Contributions of the
Highly Compensated Participant with the next highest dollar
amount of Salary Deferral Contributions. This distribution
procedure shall be repeated until all Excess Salary Deferral
Contributions have been distributed.
(iv) "Highly Compensated Participant" includes Highly Compensated
Active Participants and Highly Compensated Former Participants.
Effective January 1, 1997, "Highly Compensated Active
Participant" means a Participant who performs services for the
Company or Affiliate during
-14-
<PAGE>
the current Plan Year (the "determination year") and who,
during the preceding Plan Year (the "look-back year"), was an
Employee who received Compensation in excess of $80,000
(adjusted at the same time and in the same manner as under
Section 415(d) of the Internal Revenue Code). A "Highly
Compensated Active Participant" also includes an Employee who
was at any time during the determination year or the look-back
year a five percent (5%) owner of the Employer as defined in
Section 416(i)(1) of the Internal Revenue Code.
A "Highly Compensated Former Participant" means an
Employee who separated from service prior to the determination
year, who performed no services for the Company or an Affiliate
during the determination year, and who was a Highly Compensated
Active Participant for either such Employee's separation year
or any determination year ending on or after the Employee's
55th birthday. An Employee who separated from service before
January 1, 1987 will be a Highly Compensated Former Participant
only if the Employee was a five percent (5%) owner or received
compensation in excess of $50,000 during the Employee's
separation year (or the year preceding such separation year) or
any year ending on or after such Employee's 55th birthday (or
the last year ending before such Employee's 55th birthday).
For purposes of determining Highly Compensated
Participants, Employees who are nonresident aliens receiving no
United States source
-15-
<PAGE>
income within the meaning of Sections 861(a)(3) and 911(d)(2)
of the Internal Revenue Code shall be disregarded.
For purposes of determining Highly Compensated
Participants, the Company and all Affiliates shall be treated
as a single employer.
The determination of Highly Compensated Participants may
be made by the Committee on the basis of the "top-paid group"
election or the substantiation guidelines in accordance with
such regulations, notices or other guidance issued under
Section 414(q) of the Code.
(v) "Qualified Nonelective Contributions" shall mean contributions
made pursuant to Section 4(h) to the Accounts of Participants
who are not Highly Compensated Participants, as defined in
Section 401(m)(4)(C) of the Internal Revenue Code and the
regulations issued thereunder. Qualified Nonelective
Contributions shall satisfy the vesting and distribution
requirements that are applicable to Salary Deferral
Contributions, without regard to whether the contributions are
actually taken into account as Salary Deferral Contributions
under Section 4(d).
(f) The Committee shall be authorized to implement rules authorizing or
requiring reductions in the Salary Deferral Contributions that may be made on
behalf of Highly Compensated Participants during the Plan Year (prior to any
contributions to the Trust) so that the limitation of Subsection (d) is
satisfied.
(g) In addition to the reductions set forth in Subsection (f), if the
limitation under Subsection (d) is exceeded in any Plan Year, the Committee may,
in accordance with
-16-
<PAGE>
regulations issued under Section 401(k)(3) of the Internal Revenue Code,
authorize or require the recharacterization of all or part of any Excess Salary
Deferral Contributions with respect to any Highly Compensated Participant as
Voluntary Employee Contributions up to an amount necessary to assure that the
limitation in that Plan Year is not exceeded.
(h) To the extent the limitation under Subsection (d) continues to be
exceeded following any recharacterization pursuant to Subsection (g), or if
such recharacterization is not made, an Employer may, in the discretion of the
Board of Directors, make additional contributions to the Accounts of
Participants who are not Highly Compensated Participants, which additional
contributions shall be Qualified Nonelective Contributions up to an amount
necessary to assure that the limitation in that Plan Year is not exceeded.
(i) To the extent the limitation under Subsection (d) continues to be
exceeded following such recharacterization or making of Qualified Nonelective
Contributions, or if such recharacterization or additional contributions are not
made, the Excess Salary Deferral Contributions made on behalf of Highly
Compensated Participants with respect to a Plan Year and income allocable
thereto shall then be distributed to such Highly Compensated Participants as
soon as practicable after the end of such Plan Year, but no later than twelve
months after the close of such Plan Year. The amount of income allocable to each
affected Highly Compensated Participant's Excess Salary Deferral Contributions
shall be determined by multiplying the income for the Plan Year allocable to the
Participant's Salary Deferral Contributions by a fraction, the numerator of
which is the Highly Compensated Participant's Excess Salary Deferral
Contributions for the Plan Year and the denominator of which is the sum of: (A)
the Participant's account balance attributable to Salary Deferral Contributions
as
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<PAGE>
of the first day of the Plan Year, plus (B) the Participant's Salary Deferral
Contributions for the Plan Year. The income for the Plan Year allocable to each
affected Highly Compensated Participant's Salary Deferral Contributions shall be
determined by subtracting the amount in the denominator of the above-described
fraction from the account balance attributable to Salary Deferral Contributions
determined as of the last day of the Plan Year. The amount of Excess Salary
Deferral Contributions distributed to the Participant under this Subsection (i)
shall be reduced by the Excess Salary Deferral Contributions distributed to such
Participant pursuant to Section 4(k), if any, for such Plan Year.
(j) The Committee may utilize any combination of the methods described in
the foregoing Subsections (f), (g), (h) and (i) to assure that the limitation of
Subsection (d) is satisfied.
(k) Notwithstanding the limitation of Subsection (d), in no event may the
amount of Salary Deferral Contributions to the Plan, in addition to all such
salary reduction contributions under all other cash or deferred arrangements (as
defined in Section 401(k) of the Internal Revenue Code) maintained by the
Company or an Affiliate in which a Participant participates, exceed $7,000
(adjusted for increases in the cost-of-living under Section 402(g) of the
Internal Revenue Code) in any calendar year. If, in any calendar year, a
Participant's total Salary Deferral Contributions under the Plan and such other
plan and elective contributions under any other cash or deferred arrangement in
which he participates, whether or not maintained by the Company or an Affiliate,
exceed $7,000 (as adjusted) in a calendar year, he may request to receive a
distribution of the amount of the excess deferral (a deferral in excess of
$7,000 (as adjusted)) that is attributable to Salary Deferral Contributions in
the Plan together with
-18-
<PAGE>
earnings thereon, notwithstanding any limitations on distributions contained in
the Plan. Such distribution shall be made by the April 15 following the Plan
Year of the Salary Deferral Contribution provided that the Participant notifies
the Committee of the amount of the excess deferral that is attributable to a
Salary Deferral Contribution to the Plan and requests such a distribution. The
Participant's notice must be received by the Committee no later than the March 1
following the Plan Year of the excess deferral. In the absence of such notice,
the amount of such excess deferral attributable to Salary Deferral Contributions
to the Plan shall be subject to all limitations on withdrawals and distributions
in the Plan. The amount of excess deferrals that may be distributed under this
Section 4(k) with respect to any Participant for any Plan Year shall be reduced
by the amount of Excess Salary Deferral Contributions previously distributed
pursuant to Section 4(i), if any, for the Plan Year.
-19-
<PAGE>
SECTION 5. MATCHING EMPLOYER CONTRIBUTIONS
--------------------------------------------
(a) Amount of Contributions. Each Employer shall contribute to the Trust
-----------------------
on behalf of the Participants employed by it, on a monthly basis, an amount
equal to 100% of the Salary Deferral Contributions and Voluntary Employee
Contributions made by or on behalf of such Participant for such month, up to 4%
of his Basic Earnings for such month. Notwithstanding the foregoing, the
Employer may contribute an additional Matching Employer Contribution for each
Participant at the end of the Plan Year so that the total Matching Employer
Contribution for each Participant is calculated on an annual basis rather than
on a monthly basis; provided, however, that in no event shall Matching Employer
Contributions on behalf of a Participant for any Plan Year exceed 4.0% of the
dollar limit in effect under Section 401(a)(17) of the Code for such Plan Year.
(b) Contributions by Employers. Employer contributions (including Salary
--------------------------
Deferral Contributions, Matching Employer Contributions and Qualified
Nonelective Contributions, if any) shall be made by each of the Employers.
(c) Return of Contributions. In the event that an Employer Contribution -
-----------------------
(i) is made under a mistake of fact; or
(ii) is conditioned upon deduction under Section 404(a) of the
Internal Revenue Code and the deduction is disallowed
the contribution may be returned to the Employer within one (1) year
after the payment of the contribution or the date the deduction is
disallowed (to the extent
-20-
<PAGE>
disallowed), whichever is applicable. If a Matching Employer
Contribution may be returned on account of more than one reason
described hereunder, the contribution shall be returned on the
earliest applicable date.
(d) Mode and Time of Contributions. Matching Employer Contributions shall
------------------------------
be made in cash or in common stock of the Company or an Affiliate, as the
Employer in its sole discretion shall determine. Matching Employer Contributions
shall be made by the Employer as soon as practicable after it is advised as to
the amount of Matching Employer Contributions then required of it. If Matching
Employer Contributions are made in common stock of the Company or an Affiliate,
the determination of the number of shares to be contributed (i.e., the date such
shares of stock shall be valued for purposes of determining the amount of
Matching Employer Contributions) shall be made on the date on which the Employer
directs the transfer agent to issue such shares to the Plan.
(e) Maximum Contribution Percentage. Effective January 1, 1997,
-------------------------------
notwithstanding anything herein to the contrary, in no event may Matching
Employer Contributions and Voluntary Employee Contributions (including Salary
Deferral Contributions which are recharacterized pursuant to Section 4(g), if
any) made on behalf of all Highly Compensated Participants with respect to any
Plan Year result in a Contribution Percentage for such group of Employees which
exceeds the greater of (1) or (2) below, where:
(i) is an amount equal to 125% of the Contribution Percentage for
the preceding Plan Year for all Participants in the Plan other
than Highly Compensated Participants; and
(ii) is an amount equal to the sum of the Contribution Percentage for
the
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<PAGE>
preceding Plan Year for all Participants in the Plan other than
Highly Compensated Participants and 2%, provided that such
amount does not exceed 200% of the Contribution Percentage for
the preceding Plan Year for all Participants other than Highly
Compensated Participants or such lesser amount as prescribed in
regulations issued by the Secretary of the Treasury to prevent
the multiple use of this alternative limitation with respect to
any Highly Compensated Participant.
Notwithstanding the forgoing, for purposes of determining the limitations
under this subsection, Participants included in a unit of Employees covered by a
collective bargaining agreement shall be disregarded.
Notwithstanding the foregoing, the Committee may elect to determine the
permissible Actual Contribution Percentage for Highly Compensated Participants
for any Plan Year beginning on or after January 1, 1997 on the basis of the
Actual Contribution Percentage of the group of non-highly compensated employees
for the current Plan Year rather than the preceding Plan Year, in accordance
with such regulations, notices or other guidance issued under Section 401(m) of
the Code.
(f) Definitions. For purposes of this Section 5, the following terms
-----------
shall have the following meanings:
(i) "Compensation" shall mean "compensation" as determined under
Section 4(e)(ii).
(ii) "Contribution Percentage" with respect to any specified group
of actively employed Participants for a Plan Year shall mean
the average of
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<PAGE>
the ratios (calculated separately for each Participant in the
group) of:
(A) the amount of Matching Employer Contributions and
Voluntary Employee Contributions, plus the amount of any
Salary Deferral Contributions recharacterized pursuant to
Section 4(g), Salary Deferral Contributions treated as
Matching Employer Contributions pursuant to Section 5(h),
and any Qualified Nonelective Contributions or additional
Matching Employer Contributions made pursuant to Section
5(h), paid to the Trust Fund on behalf of each such
Participant for such Plan Year, to
(B) the Participant's Compensation for such Plan Year.
For purposes of determining Contribution Percentages, any
Participant who is suspended from participation pursuant to
Section 11(c)(iv) shall be treated as an eligible Participant.
Contribution Percentages will be determined in accordance with
all of the applicable requirements (including, to the extent
applicable, the plan aggregation requirements) of Section
401(m) of the Internal Revenue Code and the regulations issued
thereunder.
(iii) "Excess Aggregate Contributions" shall mean with respect to
each Highly Compensated Participant, the amount by which the
total Matching Employer Contributions made on his behalf and
his Voluntary Employee Contributions (including Salary Deferral
Contributions which are recharacterized pursuant to Section
4(g)) must be reduced for the
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<PAGE>
Participant's Contribution Percentage to equal the highest
permitted Contribution Percentage under Section 5(e). In
accordance with the regulations issued under Section 401(m) of
the Internal Revenue Code, Excess Aggregate Contributions shall
be determined by a leveling procedure under which the
Contribution Percentage of the Highly Compensated Participant
with the highest such percentage is reduced to the extent
required to enable the limitation of Section 5(e) to be
satisfied, or, if it results in a lower reduction, to the
extent required to cause such Participant's Contribution
Percentage to equal that of the Highly Compensated Participant
with the next highest Contribution Percentage. This leveling
procedure is repeated until the limitation of Section 5(e) is
satisfied. Once the leveling procedure has been completed, the
total dollar amount of Excess Aggregate Contributions shall be
determined. This amount shall be distributed in accordance with
a leveling procedure under which the dollar amount of Excess
Aggregate Contributions of the Highly Compensated Participant
with the highest dollar amount of Voluntary Employee
Contributions and Matching Employer Contributions shall be
reduced to the extent required to distribute the total amount
of Excess Aggregate Contributions or, if it results in a lower
reduction, to the extent required to cause such Highly
Compensated Participant's dollar amount of Voluntary Employee
Contributions and Matching Employer Contributions to equal the
dollar
-24-
<PAGE>
amount of Voluntary Employee Contributions and Matching
Employer Contributions of the Highly Compensated Participant
with the next highest dollar amount of Voluntary Employee
Contributions and Matching Employer Contributions. This
distribution procedure shall be repeated until all Excess
Aggregate Contributions have been distributed. In no case shall
the amount of Excess Aggregate Contributions with respect to
any Highly Compensated Participant exceed the Voluntary
Employee Contributions and Matching Employer Contributions made
on behalf of such Participant in any Plan Year.
(iv) "Highly Compensated Participant" shall have the same meaning as
in Section 4(e)(iv).
(v) "Qualified Nonelective Contributions" shall mean contributions
made pursuant to Section 5(h) to the Accounts of Participants
who are not Highly Compensated Participants, as defined in
Section 401(m)(4)(C) of the Internal Revenue Code and the
regulations issued thereunder. Qualified Nonelective
Contributions shall satisfy the vesting and distribution
requirements that are applicable to Salary Deferral
Contributions, without regard to whether the contributions are
actually taken into account under Section 5(e).
(g) The Committee shall be authorized to implement rules authorizing or
requiring reductions in the Voluntary Employee Contributions that may be made
by Highly Compensated Participants during the Plan Year (prior to any
contributions to the Trust) so that
-25-
<PAGE>
the limitation of Section 5(e) is satisfied.
(h) Notwithstanding any reductions pursuant to Section 5(g), if the
limitation under Section 5(e) is exceeded, an Employer may, in the discretion of
the Board of Directors, make additional contributions to the Participant's
Accounts of Participants who are not Highly Compensated Employees up to an
amount necessary to assure that the limitation under Section 5(e) is satisfied,
which additional contributions shall either be Qualified Nonelective
Contributions or additional Matching Employer Contributions under Section 5(a)
of the Plan; provided, however that such additional contributions shall be
allocated only to Participants employed on the last day of the Plan Year. In
addition, in accordance with regulations issued under Section 401(m) of the
Internal Revenue Code, the Committee may elect to treat amounts attributable to
Salary Deferral Contributions as such additional Matching Employer Contributions
solely for the purposes of satisfying the limitation of Section 5(e).
(i) If the limitation under Section 5(e) continues to be exceeded
following such Qualified Nonelective Contributions or additional Matching
Employer Contributions, if any, the Excess Aggregate Contributions made with
respect to Highly Compensated Participants with respect to such Plan Year, and
any income attributable thereto, shall be distributed to Highly Compensated
Participants in an amount equal to each such Participant's Voluntary Employee
Contributions (including recharacterized Salary Deferral Contributions) with
respect to which no Matching Employer Contributions were made.
(j) If the limitation under Section 5(e) continues to be exceeded
following any contributions described in Section 5(h) and any distributions
described in Section 5(i), the amount of the Excess Aggregate Contributions
attributable to Voluntary Employee
-26-
<PAGE>
Contributions with respect to which Matching Employer Contributions were made
and Matching Employer Contributions and any income attributable to either such
amounts, shall be distributed to Highly Compensated Participants to the extent
vested pursuant to Section 10 of the Plan or if not vested, forfeited. Any such
forfeitures shall be utilized to reduce future Matching Employer Contributions,
in accordance with Section 10(b). The amount of Excess Aggregate Contributions
to be distributed or forfeited pursuant to this Section 5(j) shall be determined
on a pro rata basis in proportion to the Matching Employer Contributions and
Voluntary Employee Contributions made on behalf of such Highly Compensated
Participant for the Plan Year.
(k) All Excess Aggregate Contributions and any income allocable thereto
shall be forfeited or distributed, as described above, as soon as practicable
after the close of the Plan Year, but no later than twelve months after the
close of the Plan Year in which they occur. The amount of income allocable to
Excess Aggregate Contributions shall be determined in accordance with the
regulations issued under Section 401(m) of the Internal Revenue Code. The
Committee is authorized to implement rules under which it may utilize any
combination of the methods described in the foregoing Subsections (f), (g), (h),
(i) and (j) to assure that the limitation of Section 5(e) is satisfied.
(l) Notwithstanding anything in this Plan to the contrary, if the rate of
Matching Employer Contributions (determined after application of the corrective
mechanisms described in Sections 4 and 5 above) discriminates in favor of Highly
Compensated Participants, the Matching Employer Contributions attributable to
any Excess Salary Deferral Contribution or excess deferral (as described in
Section 4(k)) of each affected Highly Compensated Participant
-27-
<PAGE>
shall be forfeited and used to reduce Matching Employer Contributions in
succeeding Plan Years in accordance with Section 10(b) so that the rate of
Matching Employer Contributions is nondiscriminatory. Any such forfeitures shall
be made no later than the end of the Plan Year following the Plan Year for which
the contribution was made.
SECTION 6. VOLUNTARY EMPLOYEE CONTRIBUTIONS
---------------------------------------------
(a) Amount of Contributions. Subject to the limitation of Section 5(e), a
-----------------------
Participant may elect to make Voluntary Employee Contributions to the Plan;
provided, however, that the sum of the Participant's Salary Deferral
Contributions and Voluntary Employee Contributions during each pay period shall
not exceed 15% of his Basic Earnings during such pay period while a Participant.
Voluntary Employee Contributions shall be made through payroll deduction.
Notwithstanding anything to the contrary, and in accordance with Section
401(a)(17) of the Code, in no event shall the total of a Participant's Salary
Deferral Contributions and Voluntary Employee Contributions for any Plan Year
exceed 15% of the dollar limit in effect under Section 401(a)(17) of the Code
for such Plan Year.
(b) Election of Voluntary Employee Contributions. A Participant who
--------------------------------------------
elects to make a Voluntary Employee Contribution to the Plan shall file with the
Committee, on a form prescribed by it, an election that shall designate the
percentage of his Basic Earnings during each pay period to be contributed and
authorize payroll deduction.
(c) Time and Manner of Election. An election under Subsection (b) may
---------------------------
be made
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<PAGE>
at any time during the Plan Year, to be effective as of the first pay day of the
month following the date the election is made. Such election shall remain in
effect until changed by the Participant. An election may be changed not more
than once in any month, and any such change may be effective as of the first pay
day of the month following the filing of the form prescribed for such election
with the Committee.
SECTION 7. ALLOCATIONS; ACCOUNTING
------------------------------------
(a) Separate Accounts. The Committee shall establish within each
-----------------
Investment Fund described in Section 9 a separate account for each Participant
to which shall be credited the Participant's allocable share of:
(i) the Salary Deferral Contributions made on his behalf and the
earnings thereon;
(ii) the Matching Employer Contributions and Qualified Nonelective
Contributions, if any, made on his behalf and the earnings
thereon;
(iii) the Participant's Voluntary Employee Contributions (including
any Salary Deferral Contributions which are recharacterized
pursuant to Section 4(g)) and the earnings thereon; and
(iv) the Participant's Rollover Contributions and the earnings
thereon.
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<PAGE>
(b) Valuation and Allocation of Earnings. The Investment Funds shall be
------------------------------------
valued at fair market value as of each Valuation Date. Notwithstanding any
other provision of the Plan, all amounts contributed to a Fund will be invested
at the time of the actual receipt by the Fund, and the balance of each account
shall, except as provided in subsection (c), below, reflect the results of such
daily pricing from the time of actual receipt until the time of distribution.
Investment elections and changes pursuant to Section 9 shall be effective upon
receipt by the Trustee or the Investment Manager, in accordance with its
processing procedures.
(c) Applicable Valuation Date. For purposes of investment elections and
-------------------------
changes in investment elections, the applicable Valuation Date shall be the
daily Valuation Date established in accordance with rules established by the
Committee. Whenever a distribution or withdrawal by a Participant is made, the
amount paid to the Participant shall be based on the value of his account as of
the Valuation Date determined in accordance with Section 11. Whenever a loan to
a Participant is made, the maximum amount which may be loaned to the Participant
shall be based on the value of his account as of the Valuation Date determined
in accordance with Section 12.
(d) Rollover Contributions.
----------------------
(i) Crediting of Rollover Contributions. Any Participant may, with
-----------------------------------
the approval of the Committee, make a Rollover Contribution. An
Employee who has not completed the eligibility requirements in
Section 3(a) of the Plan may participate in the Plan solely for
purposes of the Rollover Contribution provisions hereunder. The
Trustee shall credit
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<PAGE>
the amount of any Rollover Contribution to the Participant's
account as of the date the Rollover Contribution is made and
such amount shall be administered and invested in accordance
with Sections 7 and 9 and subject to the distribution
provisions set forth in Section 11. The limitations of Sections
4(d), 5(e), and 8 shall not apply to Rollover Contributions.
All Rollover Contributions shall be made in cash and shall be
fully vested.
(ii) Definition of Rollover Contribution. The term Rollover
-----------------------------------
Contribution means the contribution of a "rollover amount" to
the Trustee on or before the sixtieth day immediately following
the day the contributing Participant receives the "rollover
amount".
(iii) Definition of "Rollover Amount". The term "rollover amount"
-------------------------------
means:
(A) The entire amount in an individual retirement account or
individual retirement annuity (as defined in Section 408
of the Internal Revenue Code) maintained for the benefit
of the Participant making the Rollover Contribution, the
funds of which are solely attributable to a rollover
contribution from an employee plan and trust described in
Section 401(a) of the Internal Revenue Code which is
exempt from tax under Section 501(a) of the Internal
Revenue Code, which amount has been distributed from such
individual retirement account or individual retirement
annuity to such Participant; or
-31-
<PAGE>
(B) Part or all of the amount (other than nondeductible
employee contributions) received by such Participant from
an employee plan and trust described in Section 401(a) of
the Internal Revenue Code which is exempt from tax under
Section 501(a) of the Internal Revenue Code. Such amount,
however, shall constitute a "rollover amount" only if such
amount is solely attributable to a distribution eligible
for rollover treatment pursuant to Section 402(a)(5) of
the Internal Revenue Code.
SECTION 8. LIMITATIONS ON ANNUAL ADDITIONS
--------------------------------------------
(a) Basic Limitation. The maximum aggregate annual addition allocated to
----------------
a Participant's account in any Plan Year shall not exceed the lesser of:
(i) $30,000, or
(ii) 25% of the Participant's compensation in such Plan Year.
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<PAGE>
(b) Limitation for Participants in a Combination of Plans.
-----------------------------------------------------
In the case of a Participant who participates in this Plan and a qualified
defined benefit plan maintained by the Employer, the sum of the defined
contribution plan fraction (as defined in Section 415(e)(3) of the Internal
Revenue Code) and the defined benefit plan fraction (as defined in Section
415(e)(2) of the Internal Revenue Code) in any year shall not exceed 1.0.
Notwithstanding the foregoing, as of January 1, 1987, an amount shall be
subtracted from the numerator of the defined contribution plan fraction, in
accordance with IRS Notice 87-21, so that the sum of the defined benefit plan
fraction and defined contribution plan fraction computed under Section 415(e)(1)
of the Internal Revenue Code does not exceed 1.0.
(c) Preclusion of Excess Annual Additions; Reduction of Benefits. The
------------------------------------------------------------
Committee shall maintain records showing the contributions allocated to a
Participant's account in any Plan Year. In the event that the Committee
determines that the allocation of a contribution would cause the restrictions
imposed by Subsection (a) or Subsection (b) to be exceeded, the Participant's or
the Employer's contributions on behalf of such Participant shall be reduced in
the following order, but only to the extent necessary to satisfy such
restrictions:
(i) First, Voluntary Employee Contributions shall be reduced;
(ii) Second, Salary Deferral Contributions, Qualified Nonelective
Contributions, if any, and the Matching Employer Contributions
allocated in respect thereof shall be reduced.
Notwithstanding the foregoing, if the combination limitation prescribed
under Subsection (b) hereof would be exceeded, benefits under the defined
benefit plan shall be reduced or frozen prior to making any reductions in this
Plan.
-33-
<PAGE>
(d) Disposal of Excess Annual Additions. In the event that,
-----------------------------------
notwithstanding the foregoing Subsections, the restrictions prescribed hereunder
are exceeded with respect to any Participant and such excess arises as a
consequence of an allocation of forfeitures, a reasonable error in estimating
the Participant's compensation, or a reasonable error in determining the amount
of Salary Deferral Contributions that may be made under these restrictions, the
excess, to the extent attributable to Voluntary Employee Contributions, shall be
returned to the Participant, and then if necessary, the excess, to the extent
attributable to Salary Deferral Contributions, shall be distributed to the
Participant. The remaining excess, if any, shall be utilized to reduce future
Matching Employer Contributions on behalf of the Participant for the next
succeeding Plan Year and succeeding Plan Years as necessary or, if the
Participant is no longer employed in such a succeeding Plan Year, to reduce
future Matching Employer Contributions on behalf of the other Participants
entitled to an allocation. Amounts returned or distributed to a Participant
under this Subsection (d) shall not be taken into account for purposes of
determining the limitations under Sections 4(d), 4(k) and 5(e).
(e) Aggregation of Plans. For purposes of this Section, all qualified
--------------------
defined contribution plans maintained by an Employer shall be treated as a
single plan, and all qualified defined benefit plans maintained by an Employer
shall be treated as a single plan.
(f) Definition of Annual Addition. For purposes of this Section, the term
-----------------------------
"annual addition" shall mean the sum for any Plan Year of the following amounts
allocated to the account of a Participant:
(i) Employer contributions (including Salary Deferral Contributions
and Matching Employer Contributions, whether or not such
amounts are
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<PAGE>
determined to be Excess Salary Deferral Contributions under
Section 4 or Excess Aggregate Contributions under Section 5,
and Qualified Nonelective Contributions, if any);
(ii) Forfeitures; and
(iii) Voluntary Employee Contributions. Notwithstanding the
foregoing, annual additions for any Plan Year beginning before
January 1, 1987, shall include a Participant's Voluntary
Employee Contributions only to the extent greater than the
lesser of (A) one-half (1/2) of such contributions, or (B) the
amount of such contributions in excess of 6% of the
Participant's compensation.
(g) Definition of "Compensation". For purposes of this Section, the term
----------------------------
"compensation" shall mean a Participant's wages, salary, fees for professional
services and other amounts actually paid or made available during a Plan Year
for personal services actually rendered to an Employer (including, but not
limited to, commissions paid to salesmen, compensation for services on the basis
of a percentage of profits, tips and bonuses), as determined under Section
415(c)(3) of the Internal Revenue Code and the regulations issued thereunder.
The term "compensation" shall not include Employer contributions to a deferred
compensation plan to the extent such contributions are not includible in the
Participant's gross income, amounts realized from the exercise of a non-
qualified stock option or the lapse of restrictions applicable to restricted
stock or other property, amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified or incentive stock option,
premiums for group term life insurance or other amounts which receive special
tax benefits;
-35-
<PAGE>
provided, however, that for Plan Years beginning on and after January 1, 1998,
the term "compensation" shall include elective deferrals as defined in Code
section 402(g)(3) and any amount which is contributed or deferred by the
Employer at the election of the Participant and which is not includible in the
gross income of the employee by reason of Code section 125.
(h) Definition of "Employer". For purposes of this Section, the term
------------------------
"Employer" shall include any Affiliate, as defined in Section 1(a) hereof and as
modified by Section 415(h) of the Internal Revenue Code.
SECTION 9. INVESTMENT OF CONTRIBUTIONS
----------------------------------------
(a) Investment Funds. In the sole discretion of the Committee, one or
----------------
more Investment Funds shall be established in the Trust which may include, but
shall not be limited to, the following:
(i) Merrill Lynch Special Value Fund, primarily consisting of
securities of relatively small market capitalization companies
believed by Merrill Lynch to have special investment value and
emerging growth companies regardless of size;
(ii) Merrill Lynch Growth Fund, consisting of a diversified
portfolio of equity securities, with principal emphasis on
issues believed to be undervalued;
(iii) Merrill Lynch Basic Value Fund, primarily consisting of
equities that appear undervalued, especially selling at a
discount from book value or at historically low price/earnings
ratios;
-36-
<PAGE>
(iv) Merrill Lynch Developing Capital Markets Fund, consisting of
equities of issuers in countries having smaller capital
markets;
(v) Merrill Lynch International Equity Fund, primarily consisting
of a diversified portfolio of equity securities of issues
located in countries other than the United States;
(vi) Merrill Lynch Global Allocation Fund, consisting of a
diversified portfolio of U.S. and foreign equity, debt and
money market securities;
(vii) Merrill Lynch Corporate Bond Fund - High Income, consisting of
lower-rated corporate bonds which provide current high returns
and are subject to greater market fluctuations and risk that
the Investment Grade Bond Fund;
(viii) Merrill Lynch Corporate Bond Fund - Investment Grade, primarily
consisting of long-term corporate bonds rated A or better which
offer income and are subject to cyclical market fluctuations;
and
(ix) Merrill Lynch Retirement Preservation Trust, consisting of
investments which seek to provide preservation of capital,
liquidity and current income at yields that are typically
higher than money market funds.
(x) An Employer Stock Fund, consisting of shares of common stock of
the Company or an Affiliate.
(b) Participant Investment Designation. Subject to such uniform and
----------------------------------
nondiscriminatory rules as the Committee may from time to time prescribe, each
Participant shall designate, in the manner prescribed by the Committee, the
Investment Fund or Funds in which the Salary Deferral Contributions made on his
behalf, his Voluntary Employee
-37-
<PAGE>
Contributions (together with any amounts attributable to the repayment of a loan
pursuant to Section 12(e)) and his Rollover Contributions shall be invested;
provided, however, that Salary Deferral Contributions, Voluntary Employee
Contributions, and Rollover Contributions may not be invested in the Employer
Stock Fund. When selecting more than one Fund, the Participant shall designate
in whole percentages of his total Salary Deferral Contributions, Voluntary
Employee Contributions (together with any amounts attributable to the repayment
of a loan pursuant to Section 12(e)) and Rollover Contributions for any Plan
Year the amount to be deposited in each of the Funds selected.
(c) Change in Participant Investment Designation. A Participant may
--------------------------------------------
change the designation of Investment Funds under Subsection (b) hereof on a
daily basis, effective as of the first Valuation Date following such change in
designation, in the manner prescribed by the Committee.
(d) Transfers. A Participant may elect to transfer all or a portion of
---------
the value of his account balance attributable to Salary Deferral Contributions,
Voluntary Employee Contributions, Rollover Contributions and Matching Employer
Contributions invested in any Investment Fund (and if a portion, in whole
percentages or whole dollar amounts of the portion so invested) to any other
Investment Fund on a daily basis, effective as of the next Valuation Date, in
the manner prescribed by the Committee; provided, however, that if any Matching
Employer Contributions are invested in the Employer Stock Fund, a Participant
may only elect to transfer amounts from the Employer Stock Fund in accordance
with this Subsection (d) on and after the date such Participant has attained age
55 and completed five (5) years of Service.
-38-
<PAGE>
(e) Investment of Matching Employer Contributions. Matching Employer
---------------------------------------------
Contributions contributed before January 1, 1998 or attributable to services
performed prior to such date shall be invested in the Investment Fund(s) in the
same proportion the Participant has designated pursuant to Section 9(b) that his
Salary Deferral Contributions, Voluntary Employee Contributions (together with
any amounts attributable to repayment of a loan pursuant to Section 12(e)) and
his Rollover Contributions, shall be invested. Matching Employer Contributions
contributed on or after January 1, 1998 and attributable to services performed
on or after such date shall be invested in the Employer Stock Fund if Matching
Employer Contributions are made in common stock of the Company or an affiliate;
provided, however, that, at the discretion of the Committee, Matching Employer
Contributions on behalf of Participants who are officers or directors of any
Employer may be made in cash. To the extent Matching Employer Contributions made
on or after January 1, 1998 are made in cash, such Matching Employer
Contributions shall be invested in the Investment Fund(s) (other than the
Employer Stock Fund) in the same proportion the Participant has designated
pursuant to Section 9(b) that his Salary Deferral Contributions, Voluntary
Employee Contributions (together with any amounts attributable to repayment of a
loan pursuant to Section 12(e)) and his Rollover Contributions, shall be
invested.
(f) Fiduciary Responsibility. With the exception of amounts invested in
------------------------
the Employer Stock Fund, the Plan is intended to constitute a plan described in
ERISA Section 404(c). To the extent that a Participant exercises control over
the assets in his account, as determined under regulations prescribed by the
Secretary of Labor, neither the Committee, the Trustee nor any other fiduciary
shall be liable for any loss, or by reason of any breach, which
-39-
<PAGE>
results from such Participant's exercise of control. Neither the Employer nor
any fiduciary who complies with the standards set forth in Section 15(a) hereof
shall be liable for any loss which results from investment performance under any
of the Investment Funds including, but not limited to, depreciation in the value
of stock or other property held under any of the Investment Funds. The Trustee
and the Committee or their designees shall provide information to Participants
consistent with ERISA Section 404(c) and the regulations and other guidance
issued thereunder.
SECTION 10. VESTING
--------------------
(a) Salary Deferral, Voluntary Employee, Qualified Nonelective
----------------------------------------------------------
Contributions, and Rollover Contributions. A Participant shall be fully vested
- -----------------------------------------
at all times in the portion of his account attributable to Salary Deferral
Contributions, Voluntary Employee Contributions, Qualified Nonelective
Contributions, if any, and Rollover Contributions.
(b) Matching Employer Contributions Vesting. A Participant's interest
---------------------------------------
in his account which represents Matching Employer Contributions (and earnings
thereon) shall become vested to the extent of the following percentage based
upon his years of Service:
0 years of Service 0%
1 year of Service 20%
2 years of Service 40%
3 years of Service 60%
4 years of Service 80%
5 or more years of Service 100%
If the Participant's employment is terminated before he has completed five
(5) or more years of Service, the unvested portion of the Participant's account
shall be forfeited as of the
-40-
<PAGE>
earlier of the date on which the vested portion of his account is distributed or
the last day of the Plan Year coinciding with the date the Participant incurs
five (5) consecutive One Year Periods of Severance, and shall be used to reduce
Matching Employer Contributions in succeeding Plan Years. In the case of a
Participant who is not vested under this Paragraph (b) and who has not made any
Salary Deferral Contributions, a zero dollar distribution of the Participant's
Matching Employer Contributions shall be deemed to have been made, and the
Participant's unvested Matching Contributions shall be forfeited, as of the date
the Participant's employment terminates.
If an individual returns to employment with an Employer before incurring five
consecutive one year periods of severance and repays to the Plan the full amount
of a distribution before the fifth (5th) anniversary of his reemployment
(including a repayment of a zero dollar distribution), the amount of the
forfeiture, unadjusted for earnings, gains and losses, shall be restored to his
account and shall continue to vest in accordance with the provisions of this
section.
Notwithstanding the foregoing:
(i) each Employee whose employment is terminated on or before
December 31, 1991 for any reason as a result of the merger of a
subsidiary of Pathe Communications Co. with and into MGM/UA
Communications Co. shall be 100% vested in all accounts
maintained on his behalf under the Plan as of the date the
Employee's employment is terminated as a result of such merger;
and
(ii) each Employee who was actively employed by the Employer and a
-41-
<PAGE>
Participant on the date of the merger described in Subsection
(b)(i) and who voluntarily elects to terminate employment
following that date shall be 100% vested in all accounts
maintained on his behalf under the Plan as of the first date the
Employee elects to terminate employment following the date of the
merger. Benefits shall be distributed to such a Participant in
accordance with Section 11 hereof.
(c) Matching Employer Contributions Normal Retirement Age, Disability,
------------------------------------------------------------------
Retirement Plan, Death. Notwithstanding Subsection (b) hereof, a
- ----------------------
Participant shall become fully vested in the portion of his account attributable
to Matching Employer Contributions upon the earliest of (i) his attainment of
Normal Retirement Age while actively employed, (ii) the date on which he
terminates employment because of a Total Disability, or (iii) the date on which
he becomes fully vested under the terms of the MGM Retirement Plan. The
beneficiary of a Participant who was actively employed on his date of death
shall become fully vested in the portion of the Participant's account
attributable to Matching Employer Contributions upon the Participant's death.
(d) Notwithstanding Subsections (a), (b), or (c), the vesting of a
Participant's interest in whole or in part shall not prevent its proportionate
diminution in value in the event of a diminution in the fair market value of the
Trust assets, as determined under Section 7.
-42-
<PAGE>
SECTION 11. DISTRIBUTIONS
--------------------------
(a) Termination of Employment. Upon his termination of employment for any
-------------------------
reason, a Participant, or his beneficiary, shall be entitled to distribution in
a single sum of his vested interest under the Plan in accordance with the
following provisions:
(i) If the vested portion of a Participant's Account is $3,500 or
less (effective for Participants who terminate employment on or
after January 1, 1998, $5,000), determined as of the last
Valuation Date of the month coincident with or immediately
following the later of: (A) termination of employment or (B) the
date the last contribution on the Participant's behalf is made to
the Plan, distribution will be made as soon as administratively
practicable following the later of such dates in a single sum
cash payment. The amount of such distribution shall be based on
the value of the Account balance credited to the Participant as
of the latest Valuation Date (in accordance with the Trustee's
processing rules) following the date on which proper payment
instructions are received by the Trustee from the Committee or
its delegate.
(ii) Subject to Subsection (iii), if the vested portion of a
Participant's Account exceeds $3,500 (effective for Participants
who terminate employment on or after January 1, 1998, $5,000),
determined as of the last Valuation Date of the month coincident
with the latest of: (A) the
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<PAGE>
Participant's termination of employment, (B) the date the last
contribution on the Participant's behalf is made to the Plan, or
(C) the Participant's or his beneficiary's request for a
distribution is received by the Committee or its delegate in
accordance with the Committee's or the delegate's processing
rules, distribution will be made as soon as practicable following
the latest of such dates and will be made in a single sum cash
payment determined as of the latest Valuation Date (in accordance
with the Trustee's processing rules) following the Participant's
consent and receipt by the Trustee from the Committee or its
delegate of proper payment instructions; provided, however, that
a Participant or beneficiary may request that a distribution of
the portion of the Participant's Account invested in the Employer
Stock Fund be distributed in shares of Company stock, with
fractional shares to be paid in cash on the basis of the fair
market value per share of Company stock on the Valuation Date as
of which the amount of distributions is determined. Any such
request for a distribution of Company stock must be made at the
same time as the initial request for a distribution..
Notwithstanding anything herein to the contrary, no less than 30
days and no more than 90 days before the distribution date of any
distribution under this Plan where the Participant's Account is
in excess of $3,500 ($5,000 effective January 1, 1998), the
Committee or its delegate shall provide the Participant with
information concerning the benefit
-44-
<PAGE>
distribution form available under the Plan and the Participant's
right to defer distribution until he or she attains age 65.
Distributions under this Plan may commence less than 30 days
after such notice is provided to Participants, provided that:
(a)Participants are informed that they have the right to a period
of at least 30 days after receiving the notice to elect a
distribution, and (b)Participants, after receiving the notice,
affirmatively elect distributions.
(iii) Notwithstanding Subsection (a)(ii), if the vested portion of
a Participant's Account exceeds $3,500 (effective for
Participants who terminate employment on or after January 1,
1998, $5,000), determined as of the last Valuation Date of the
month coincident with the later of: (A) termination of employment
or (B) the date the last contribution on the Participant's behalf
is made to the Plan, and the Participant or his beneficiary does
not, within one year following the date of termination of
employment, submit a written request for a distribution, the
distribution of such Participant's Account shall be made upon the
earlier of the date that the Participant attains Normal
Retirement Age or dies. If the Participant attains Normal
Retirement Age, the Participant's entire Account balance shall be
distributed as soon as practicable following the end of the month
in which such Participant attains Normal Retirement Age and the
Trustee receives proper payment instructions from the Committee
or its delegate, and the amount to be distributed shall be
-45-
<PAGE>
determined as of the latest Valuation Date (in accordance with
the Trustee's processing rules) prior to such distribution. If
the Participant dies prior to attaining Normal Retirement Age,
the Participant's entire Account balance shall be distributed as
soon as practicable following the end of the month in which falls
the first anniversary of the Participant's death, and the amount
to be distributed shall be determined as of the latest Valuation
Date (in accordance with the Trustee's processing rules) prior to
such distribution. All distributions made in accordance with this
Subsection (a)(iii) shall be made in cash single sum payments.
Notwithstanding any other provisions of the Plan to the contrary,
after a Participant's termination of employment and prior to the
distribution of the Participant's Account, the Participant may
not obtain any loans under Section 12 or withdrawals under
Section 11(c); however, such Participant may continue to invest
amounts in the Participant's Account in accordance with Section
9(d).
(iv) If a Participant or beneficiary cannot be located by reasonable
efforts of the Committee within a reasonable period of time after
the latest date such benefits are otherwise payable pursuant to
Subsections (a)(i), (a)(ii), or (a)(iii), the amount in such
Participant's Account shall be forfeited and utilized to reduce
future Matching Employer Contributions in accordance with Section
10(b); provided, however, that such forfeited
-46-
<PAGE>
amount shall be restored (without earnings) if, at any time, the
Participant or beneficiary who was entitled to receive such
benefit when it first became payable shall, after furnishing
proof of their identity and right to make such claim to the
Committee, file a written request for such benefit with the
Committee.
(b) Beneficiary Designation. The sole beneficiary of a Participant who is
-----------------------
married on the date of his death shall be the spouse to whom he is married on
such date unless the Participant designates otherwise in writing and such spouse
consents in writing to such designation. A spouse's written consent shall be
notarized or witnessed by a Plan representative. In accordance with rules
prescribed by the Committee, each other Participant shall designate a
beneficiary and contingent beneficiary. In the event that a Participant dies and
there is no designation of a beneficiary or contingent beneficiary in effect,
benefits shall be paid to the first surviving class below:
(i) The Participant's spouse;
(ii) The Participant's children;
(iii) The Participant's parents;
(iv) The Participant's brothers and sisters;
(v) The Participant's executors or administrators.
(c) Withdrawals Prior to Termination of Employment. Prior to his
----------------------------------------------
termination of employment, a Participant shall be entitled to make withdrawals
in accordance with the following rules:
(i) An amount equal to all or any portion of his account attributable
to
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<PAGE>
Voluntary Employee Contributions may be withdrawn; provided,
however, that the minimum amount that may be withdrawn shall be
$100, and provided further that as of the date the withdrawal is
made, the remaining portion of the Participant's vested account
must be equal to at least 100% of the then outstanding balance of
any loan granted to the Participant pursuant to Section 12.
(ii) A withdrawal described in Subsection (c)(i) may not be made more
than once in any 12 consecutive month period unless the Committee
permits more frequent withdrawals on account of a Participant's
hardship, as described below. An election to make a withdrawal
under Subsection (c)(i) shall be made at such time, and upon such
form, as the Committee shall prescribe.
(iii) The withdrawal shall be made on a pro-rata basis from the
Investment Fund or Funds in which the Participant's account is
invested. Except for a withdrawal from the portion of his
account attributable to Voluntary Employee Contributions, or a
hardship withdrawal described below, a Participant shall not be
entitled to make any withdrawals from the Plan prior to his
termination of employment.
(iv) Hardship Withdrawals. Any Participant who suffers a financial
--------------------
hardship, as defined in this Section, may request a withdrawal of
his vested account under the Plan, other than Qualified
Nonelective Contributions, if any, by written notice to the
Committee setting forth
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<PAGE>
the amount requested and the facts establishing the existence of
such hardship. No withdrawal shall be permitted unless as of the
last Valuation Date of the month coinciding with the month in
which the request for withdrawal is received by the Committee or
its delegate, the remaining portion of the Participant's vested
account equals or exceeds at least 100% of the then outstanding
balance of any loan made to the Participant pursuant to Section
12. Upon receipt of such a request, the Committee shall determine
whether a financial hardship exists; if the Committee determines
that such a hardship does exist, it shall further determine what
portion of the amount requested by the Participant is required to
meet the need created by the hardship (taking into account such
additional amounts necessary to pay any federal, state, or local
income taxes or penalties reasonably anticipated to result from a
withdrawal under this Subsection (iv)), and shall direct the
Trustee to distribute to the Participant in a single lump sum
cash payment the amount so determined to be required. Solely to
the extent such a withdrawal consists of amounts attributable to
Salary Deferral Contributions, no such withdrawal shall be
permitted unless: (i) the Participant has obtained all
withdrawals, distributions and loans currently available to the
Participant under the Plan and all other qualified defined
contribution plans maintained by the Company or an Affiliate;
(ii) the Participant agrees to cease all Salary Deferral
-49-
<PAGE>
Contributions and Voluntary Employee Contributions under the Plan
as well as all similar contributions to all other qualified
defined contribution plans maintained by the Company or an
Affiliate for a period of twelve months from the date of the
hardship withdrawal; and (iii) the amount of pre-tax elective
contributions under all qualified defined contribution plans
maintained by the Company or an Affiliate for the year following
the year of the withdrawal are limited in accordance with
regulations issued under Section 401(k) of the Internal Revenue
Code.
For purposes of this Section, the term "financial hardship"
shall be limited to any financial need arising from:
(A) expenses relating to the payment of tuition and related
educational fees for the next 12 months of post-secondary
education of a Participant or a dependent
(B) expenses directly relating to the purchase of a primary
residence for the Participant (excluding mortgage payments)
(C) medical expenses previously incurred by the Participant
or a dependent or necessary for such individuals to obtain
medical care described in section 213(d) of the Internal Revenue
Code, which expenses are not covered by insurance, or
(D) expenses relating to the need to prevent the eviction
of the Participant from his principal residence or foreclosure on
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<PAGE>
the mortgage of the Participant's principal residence.
Hardship withdrawals shall be paid in a single cash payment
and shall be made on a pro-rata basis from the Investment Funds in
which the Participant's Account is invested.
Effective for any withdrawal under this Section of amounts
attributable to Salary Deferral Contributions, which is made on or
after January 1, 1989, the portion of the Participant's Account
attributable to Salary Deferral Contributions that is available for
withdrawal shall not exceed the lesser of: (i) the value of such
Salary Deferral Contributions as of December 31, 1988 (taking into
account earnings and losses attributable to such amounts), plus the
total amount of the Participant's Salary Deferral Contributions that
are made after December 31, 1988, or (ii) the value of all Salary
Deferral Contributions (taking into account earnings and losses
attributable to such amounts).
(v) Notwithstanding the foregoing, no withdrawal may be made by a
Participant during the period in which the Committee is making a
determination of whether a domestic relations order affecting the
Participant's account is a qualified domestic relations order, within
the meaning of Section 414(p) of the Internal Revenue Code. Further,
if the Committee is in receipt of a qualified domestic relations order
with respect to any Participant's account, it may prohibit such
Participant from making a withdrawal until the alternate payee's
rights under such
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<PAGE>
order are satisfied.
(vi) Elective Distributions for Certain Employees Over Age 70 1/2. If
-------------------------------------------------------------
a Participant attains age 70 1/2 on or before December 31, 1998 and on
or after January 1, 1996 and has not commenced receiving minimum
required distributions in accordance with Section 401(a)(9) of the
Code prior to January 1, 1997, such Participant may elect to receive
all amounts allocated to his account under the Plan in a single sum
not later than the April 1 following the close of the calendar year in
which the Participant attains age 70 1/2, with all future allocations
distributed by December 31 of the Plan Year for which such allocations
are actually made.
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<PAGE>
SECTION 12. LOANS
------------------
(a) Amount of Loan. A Participant may obtain a loan from the vested
--------------
portion of his account, provided that the minimum amount of any loan shall equal
$1,000.00 and the maximum amount of any loan shall not exceed the lesser of
$50,000 (reduced by the highest outstanding balance on any loan during the 12-
month period ending on the date the loan is made) or 50% of the vested portion
of the Participant's account. For purposes of determining the limitations on
loan amounts, a Participant's account balance shall be determined as of the
Valuation Date on which the loan request is received by the Trustee. Loans above
the minimum amount may only be made in multiples of $500.00.
(b) Promissory Note. As evidence of a loan, a Participant shall provide
---------------
an interest-bearing promissory note to the Committee in such form as shall be
prescribed by the Committee and bearing such an interest rate commensurate with
the interest rates charged by persons in the business of lending money for loans
which would be made under similar circumstances as is prescribed by the
Committee.
(c) Source of Loan Proceeds. There shall be deducted from the account of
-----------------------
a Participant to whom a loan is made an amount having a value equal to the
principal amount of the loan. If the Participant's account is invested in more
than one Investment Fund, the loan shall be made on a pro-rata basis from the
Investment Funds (other than the Employer Stock Fund) in which the Participant's
account is invested.
(d) Security. A Participant's note shall be secured by the vested
--------
portion of his account. In the event the Participant does not repay the loan
within the period certain, the
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<PAGE>
Committee may, in addition to any other legal remedies, direct the Employer by
whom the Participant is then employed to withhold from the Participant's wages,
on a periodic basis, the unpaid amount of such loan. If the Participant ceases
to be an employee of an Employer, the Committee shall deduct the unpaid amount
of the loan, and accrued interest thereon, from the benefits which become
payable to or on behalf of the Participant under the Plan. Notwithstanding the
foregoing, to the extent any loan is attributable to Salary Deferral
Contributions, no foreclosure shall occur prior to a permissible distribution
event pursuant to Section 401(k) of the Internal Revenue Code and the
regulations issued thereunder.
(e) Repayment. A Participant's note ordinarily shall be repaid in level
---------
repayments of principal and interest by payroll deduction in such amounts as are
determined by the Committee (but no less frequently than quarterly repayments);
provided, however, that the Committee shall have full discretion to provide an
alternate manner of repayment. As each payment is received, the payment
(including principal and interest) shall be invested in accordance with the
Participant's investment designation in effect at the time payment on the note
is made, in the same manner that Salary Deferral Contributions and Voluntary
Employee Contributions are invested in accordance with Section 9(b). A loan
shall be required to be repaid within 60 months from the date on which the loan
is made but may be prepaid without penalty at any time.
(f) Frequency. A loan from the Plan may not be obtained more than once in
---------
any 12 consecutive month period, nor may more than one loan to each Participant
be outstanding at any time.
(g) Effect of Domestic Relations Order. Notwithstanding the foregoing,
----------------------------------
no loan
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<PAGE>
shall be made to a Participant during the period in which the Committee is
making a determination of whether a domestic relations order affecting the
Participant's account is a qualified domestic relations order, within the
meaning of Section 414(p) of the Internal Revenue Code. Further, if the
Committee is in receipt of a qualified domestic relations order with respect to
any Participant's account, it may prohibit such Participant from obtaining a
loan until the alternate payee's rights under such order are satisfied.
(h) Note Distributed to Alternate Payee. In the event that a payment is
-----------------------------------
required to be made to an alternate payee pursuant to a qualified domestic
relations order, within the meaning of Section 414(p) of the Internal Revenue
Code, while the Participant whose account is the subject of such order has a
loan outstanding, the Committee, in its discretion, may direct that the
Participant's promissory note be transferred to the alternate payee in
satisfaction of such order.
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<PAGE>
SECTION 13. ADMINISTRATION OF THE PLAN
---------------------------------------
(a) General. The general administration of the Plan shall be vested in a
-------
Retirement Plan Committee appointed by the Board of Directors or its designee,
the number and members of which shall be designated and appointed from time to
time by, and shall serve at the pleasure of, the Board of Directors or its
designee, and who may, but need not be, members of the Board of Directors. The
Committee shall be the Named Fiduciary for the purposes of the administration of
the Plan, within the meaning of Section 402 of the Employee Retirement Income
Security Act of 1974. Any member may resign by notice in writing filed with the
Secretary of the Committee. Vacancies shall be filled promptly by the Board of
Directors or its designee but any vacancies remaining unfilled for 90 days may
be filled by a majority vote of the remaining members of the Committee. Each
person appointed a member of the Committee shall signify his acceptance with the
Secretary of the Committee.
(b) Organization. The Board of Directors or its designee shall designate
------------
one of the members of the Committee as Chairman and said Chairman shall appoint
a Secretary and an Assistant Secretary, who need not be members of the
Committee. The Secretary shall keep the minutes of the Committee's proceedings
and all data, records and documents relating to the Committee's administration
of the Plan. The Committee may appoint such subcommittees, agents, counsel and
actuaries as it may deem advisable and delegate to them such powers as the
Committee may deem necessary to carry out the provisions of the Plan and may
authorize one or more members of the Committee or any agent to execute or
deliver any instrument or make any payment on behalf of the Committee.
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<PAGE>
(c) Voting. All resolutions or other actions taken by the Committee (or a
------
subcommittee appointed by the Committee) shall be by the affirmative vote of a
majority of those present at a meeting at which at least three of the members
are present, or shall be approved in writing by a majority of the members at the
time in office if they act without a meeting.
(d) Bonding; Compensation. The members of the Committee who are
---------------------
employees of an Employer shall serve without compensation. All members of the
Committee shall serve without bond.
(e) Procedures. Subject to the Plan, the Committee shall from time to
----------
time establish rules, forms, and procedures for the administration of the Plan.
Except as herein otherwise expressly provided, the Committee shall have the
exclusive right to interpret the Plan and to decide any and all questions of
fact, interpretations, definition, or administration arising thereunder or in
connection with the administration of the Plan; provided, however, that the
Committee may delegate to a subcommittee appointed by the Committee or to
employees designated by the Committee or subcommittee such of the foregoing
rights as the Committee, in its discretion, may decide. Except as otherwise
expressly required by law, such decisions, actions, and records of the
Committee, any subcommittee and any designated employees shall be conclusive and
binding upon the Employers and all persons having or claiming to have any right
or interest in or under the Plan.
(f) Accounts. The Committee shall maintain accounts showing the fiscal
--------
transactions of the Plan. The Committee shall render annually a report
showing in reasonable detail the assets and liabilities of the Plan and
giving a brief account of the operation of the
-57-
<PAGE>
Plan for the past year. Such report shall be submitted to the Board of
Directors, and copies of such report shall be filed in the office of the
Secretary of the Committee, where they shall be open to inspection by any
Participant. The Committee shall make available to any Participant for
examination during business hours such records as pertain exclusively to the
examining Participant.
(g) Computation of Benefits. In addition to the powers hereinabove
-----------------------
specified, the Committee (or a subcommittee, if such powers be delegated) shall
have the power to compute and certify to the Trustee the amount and kind of
benefits payable to Participants and their beneficiaries and to authorize all
disbursements by the Trustee from the Trust Fund for such purposes. To enable
the Committee to perform its functions, the Employers shall supply full and
timely information to the Committee on all matters relating to the pay of all
Participants, their retirement, death or other cause for severance from Service,
and such other pertinent facts as the Committee may require. Notwithstanding the
foregoing, no liability for payment of benefits shall be imposed upon the
Committee, any subcommittee, the Employers, the Board of Directors, or the
stockholders of the Employer.
(h) Participation in the Plan. Any member of the Committee or a
-------------------------
subcommittee who is an Employee may participate in the Plan if otherwise
eligible. However, no member of the Committee or a subcommittee may vote or act
upon any matter relating exclusively to himself.
(i) Indemnification. The Employers shall indemnify and save harmless each
---------------
member of the Committee and subcommittees against any and all expenses and
liabilities arising out of his membership on the Committee or subcommittee,
excepting only expenses
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<PAGE>
and liabilities arising out of his own willful misconduct. Expenses against
which a member shall be indemnified hereunder include, without limitation, the
amount of any settlement or judgment, costs, counsel fees, and related charges
reasonably incurred in connection with a claim asserted, or a proceeding brought
or settlement thereof. The foregoing right of indemnification shall be in
addition to any other rights to which any such member may be entitled as a
matter of law.
SECTION 14. TRUST FUND
-----------------------
(a) Trust Agreement. Effective June 1, 1995, the Board of Directors or
---------------
the Committee shall have the authority to appoint a new Trustee and enter into a
Trust Agreement. The Board of Directors or the Committee may, from time to time,
remove the Trustee then serving under the Trust Agreement and appoint a
successor Trustee or Trustees. All cash, securities or other property received
by the Trustee from time to time shall constitute the Trust Fund. Each
Participant or other person who shall claim the right to any payment under the
Plan shall be entitled to look solely to the Trust Fund for payment.
(b) Responsibility for Trust Fund. The Trustee shall have the exclusive
-----------------------------
authority and discretion to manage and control the assets of the Trust Fund,
except in the event that the Named Fiduciary retains responsibility for the
investment of the Trust Fund or that an Investment Manager is appointed to
manage any portion thereof, pursuant to Subsection (c) hereof.
(c) Investment Manager. Notwithstanding the foregoing, the Board of
------------------
Directors or
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<PAGE>
the Committee may appoint one or more Investment Managers to manage all or any
portion of the Trust Fund. An Investment Manager shall acknowledge in writing
its appointment as a Named Fiduciary and, upon such acknowledgement, shall have
sole responsibility for that portion of the Trust Fund which it is appointed to
manage. Neither the Board of Directors, the Committee, the Trustee nor any other
Named Fiduciary shall have any responsibility for, nor shall it be liable for,
the investment of that portion of the Trust Fund which an Investment Manager is
appointed to manage or for any loss to, or diminution in value of, such portion
of the Trust Fund resulting from any action taken, directed or omitted by an
Investment Manager.
Any Investment Manager appointed hereunder shall be -
(i) an investment adviser registered under the Investment Advisers
Act of 1940;
(ii) a bank, as defined in such Act; or
(iii) an insurance company that is qualified to manage the assets of
employee benefit plans under the laws of more than one state.
(d) Plan Expenses. The reasonable expenses incurred by the Committee in
-------------
the administration of the Plan and the Trust shall be paid by the Trustee from
the Trust to the extent that the same are not paid by the Company.
(e) Non-Diversion. Except as provided in Section 5(c) and 5(d), in no
-------------
event shall any part of the corpus or the income of the Trust be used for, or
diverted to, any purpose other than the exclusive benefit of Participants,
former Participants and their beneficiaries hereunder.
(f) Voting Employer Stock. Except as provided in Subsection (g) hereof
---------------------
or as
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<PAGE>
otherwise required under the Internal Revenue Code or other applicable law, all
Employer Stock (including fractional shares) in a Participant's account shall be
voted by the Trustee in accordance with instructions from the Company.
(g) Tender Offer. In the event of a merger, tender offer or offer to
------------
purchase by any party other than an Employer for Employer Stock, the Trustee
shall determine in its sole discretion whether it is in the best interest of the
Plan Participants to accept such offer and shall take any and all actions which
it deems appropriate. If the Trustee accepts any such offer, or in the event of
any merger transaction, the date on which the sale or tender occurs shall be
called the "Sale Date". Proceeds from the sale by the Trustee, including
proceeds received prior to this Sale Date, shall be allocated to each
Participant and invested in the other Investment Funds in which the Participant
has invested. Each such investment shall be made in accordance with the
Participant's current investment designation made pursuant to Section 9(b).
(h) Stock Rights. In the event that the Trustee acquires any rights to
------------
purchase any assets as a result of its current or prior holding of Employer
Stock, the Trustee shall sell such rights and reinvest the proceeds in Employer
Stock. In the event such rights are not transferable, the Trustee, in its sole
discretion, may sell stock in the Employer Stock Fund and use the proceeds to
acquire the assets it is entitled to pursuant to such rights. If the assets
acquired pursuant to exercise of the rights do not constitute Employer Stock,
the Trustee shall sell such assets and reinvest the net proceeds of such sale in
Employer Stock.
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<PAGE>
SECTION 15. FIDUCIARY RESPONSIBILITY
-------------------------------------
(a) Standard of Conduct. Each fiduciary of the Plan shall discharge his
-------------------
duties with respect to the Plan and Trust solely in the interest of Participants
and their beneficiaries, for the exclusive purpose of providing benefits to such
individuals and defraying reasonable expenses of administering the Plan and
Trust Fund, and with the care, skill, prudence and diligence under the
circumstances then prevailing that a prudent man, acting in a like capacity and
familiar with such matters, would use in the conduct of an enterprise of a like
character and with like aims, in accordance with this Plan and any other
documents or instruments governing the Plan and Trust. A fiduciary who complies
with the foregoing standards shall not be liable for any loss, action or
omission hereunder.
(b) Allocation and Delegation of Responsibilities. The Named
---------------------------------------------
Fiduciaries may allocate the responsibilities, obligations and duties granted to
them for the operation and administration of the Plan and Trust among
themselves. Further, any Named Fiduciary may designate other individuals,
corporations or other entities, who are not Named Fiduciaries, to carry out such
Named Fiduciary's responsibilities, obligations and duties with respect to the
Plan and Trust, except to the extent the Employee Retirement Income Security Act
of 1974 prohibits delegation of authority and discretion to manage and control
the assets of the Trust Fund. Such allocations and delegations may be revoked or
modified at any time. Any such allocation, delegation, revocation or
modification shall be made by written instruments signed by the Named Fiduciary,
if an individual, or in the case of other entities who are Named Fiduciaries, in
accordance with the procedures governing the functions of such entity, and a
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<PAGE>
written record shall be kept thereof.
(c) Co-Fiduciary Responsibility. A Named Fiduciary or any individual,
---------------------------
corporation or other entity employed or appointed by a Named Fiduciary to serve
in a fiduciary capacity with respect to the Plan or Trust Fund shall be solely
responsible for the responsibilities, obligations or duties allocated or
delegated to it, whether under this Plan and Trust or under the terms and
conditions of employment or appointment. Any person to whom such
responsibilities, obligations or duties have not been allocated or delegated
shall not be responsible with respect to any action directed, taken or omitted
by the Named Fiduciary or individual, corporation or other entity serving in a
fiduciary capacity to whom such responsibilities, obligations or duties have
been allocated or delegated, unless such person participates knowingly in, or
knowingly undertakes to conceal, an act or omission of such other Named
Fiduciary or individual, corporation or entity, and such person fails to make
reasonable efforts under the circumstances to remedy the breach.
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<PAGE>
SECTION 16. AMENDMENT, TERMINATION, MERGER
-------------------------------------------
(a) Right to Amend or Terminate the Plan. It is the intention of each
------------------------------------
Employer to continue this Plan indefinitely and to make such contributions as
may be required hereunder regularly each Plan Year. Nevertheless, subject to the
provisions hereinafter set forth, the Board of Directors reserves the right, at
any time or from time to time, to modify or discontinue the Plan in whole or in
part by written resolution of the Board of Directors and to reduce, suspend or
discontinue contributions hereunder; provided, however, that no action may be
taken which, by reason thereof -
(i) will deprive any Participant or beneficiary, without such
person's consent, of any benefit theretofore accrued and vested
in him under the Plan; or
(ii) will, except as provided in Section 5(c), cause any part of the
corpus or income of the Trust to be used for, or diverted to, any
purpose other than the exclusive benefit of Participants and
beneficiaries hereunder. Any modification or amendment of the
Plan may be made retroactive if it does not violate Paragraph (i)
or (ii) hereof or if, notwithstanding such Paragraphs, the
modification or amendment is necessary or appropriate to conform
the Plan to, or to satisfy the conditions of, the Employee
Retirement Income Security Act of 1974, the Internal Revenue
Code, or any other law, governmental regulation or ruling.
(b) Full Vesting on Termination of the Plan. In the event of the
---------------------------------------
complete or partial
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<PAGE>
termination of the Plan, or the complete discontinuance of contributions
thereto, the account balances of all affected Participants shall become fully
vested. The account balance of each affected Participant either shall continue
to be held in trust until a Participant is entitled to a distribution under
Section 11.
(c) Merger, Consolidation or Transfer. In the case of a merger or
---------------------------------
consolidation of the Plan with, or transfer of the assets or liabilities of the
Trust Fund to, any other plan or trust, the terms of the merger, consolidation
or transfer shall be such that the benefits to which a Participant is entitled
immediately after the merger, consolidation or transfer shall be equal to or
greater than the benefits to which the Participant is entitled immediately prior
to the merger, consolidation or transfer. For purposes of this Subsection (c),
the benefits to which a Participant is entitled shall be determined on the
assumption that the Plan had terminated on the day such determination is made.
SECTION 17. MISCELLANEOUS
--------------------------
(a) Non-Alienation of Benefits. No benefit payable under the Plan shall
--------------------------
be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, garnishment, encumbrance, or charge. Notwithstanding the
foregoing, in the event that a qualified domestic relations order (as defined in
Section 414(p) of the Internal Revenue Code) is received by the Committee,
benefits shall be payable in accordance with such order and with Section 414(p)
of the Code. The amount payable to the Participant and to any other person other
than the alternate payee named in the order shall be adjusted accordingly.
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<PAGE>
(b) Plan not a Contract of Employment. The Plan shall not be construed
---------------------------------
as a contract between any Employee and an Employer nor to be considered for the
employment of any Employee. Nothing in the Plan shall give any Employee the
right to be retained in the employ of an Employer, and all Employees shall
remain subject to discharge, discipline or lay-off to the same extent as if the
Plan had not been put into effect.
(c) Gender and Number. Wherever applicable herein, the masculine
-----------------
pronoun shall include the feminine, and the singular shall include the plural.
(d) Governing Law. The Plan shall be governed in accordance with the
-------------
laws of the State of California, except to the extent superseded by the Employee
Retirement Income Security Act of 1974.
(e) Latest Date of Distribution. In no event shall distribution of a
---------------------------
Participant's vested interest under the Plan occur later than the 60th day after
the close of the Plan Year in which the latest of the following events occurs:
(i) the Participant's attainment of age 65;
(ii) the tenth anniversary of the date on which the Participant
commenced participation in the Plan; or
(iii) the Participant's Service is severed.
Notwithstanding the foregoing, if a participant attained age 70 1/2 on or
after January 1, 1988 and prior to January 1, 1997, all amounts allocated under
the Plan to the accounts of such a Participant shall be distributed in a single
sum, in accordance with Section 401(a)(9) of the Internal Revenue Code and the
regulations issued thereunder, not later than the April 1 following the close of
the calendar year in which the Participant attains age 70 1/2, regardless of
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<PAGE>
whether his employment with the Company is terminated as of such date, unless
such Participant had not received any minimum required distributions as of
December 31, 1996. Any future allocations shall be distributed to such
Participant by December 31 of the Plan Year for which such allocations are
actually made; provided, however, if a Participant is not a five percent (5%)
owner (as defined in Section 416(i)(1)(B) of the Internal Revenue Code) and
shall have attained age seventy and one-half (70 1/2) before January 1, 1988,
the benefits of any such Participant shall be distributed or shall commence to
be distributed not later than the April 1 following the later of the calendar in
which he retires or attains age seventy and one-half (70 1/2). All
distributions under this Plan shall comply with the incidental death benefit
requirements of Section 401(a)(9)(G) of the Internal Revenue Code and the
regulations (including Treas. Reg. (S)1.401(a)(9)-2) and other guidance issued
thereunder.
If a Participant attains age 70 1/2 on or after January 1, 1997 and/or
attained age 70 1/2 on or after January 1, 1996 and has not commenced receiving
minimum required distributions in accordance with Section 401(a)(9) of the Code
prior to January 1, 1997, such Participant shall commence receiving minimum
required distributions in accordance with the requirements of the Code and the
regulations and other guidance thereunder not later than the April 1 following
the close of the later of (i) the calendar year in which the Participant attains
age 70 1/2, or (ii) the calendar year in which the Participant terminates
employment; provided, however, that a Participant who is eligible to elect a
withdrawal in accordance with Section 11(c)(vi) of the Plan may elect a
withdrawal in accordance with such Section 11(c)(vi).
(f) Direct Rollover Distributions. At the written request of a
-----------------------------
distributee (which shall mean a Participant, a surviving spouse of a
Participant, or a spouse or former spouse of a
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<PAGE>
Participant that is an alternative payee under a qualified domestic relations
order), and upon receipt of the written consent of the Committee, the Trustee
shall effectuate a direct rollover distribution of the amount requested by the
distributee in accordance with Section 401(a)(31) of the Code, to an eligible
retirement plan (as defined in Section 401(a)(31)(D) of the Code). Such amount
shall constitute all or part of any distribution otherwise to be made hereunder
to the distributee, provided that such distribution constitutes an "eligible
rollover distribution," as defined in Section 402(c) of the Code and the
regulations and other guidance issued thereunder, and provided such distribution
is at least $200. All direct rollover distributions shall be made in accordance
with the following:
(i) The term "eligible rollover distribution" means any distribution
(of at least $200) 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 for a specified period of ten years or
more; or any distribution to the extent such distribution is
required under Section 401(a)(9) of the Code; or any
distribution to the extent such distribution is not includible
in gross income (determined without regard to the exclusion for
net unrealized appreciation with respect to employer
securities).
(ii) The term "eligible retirement plan" means an individual
retirement account described in Section 408(a) of the Code, an
individual
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<PAGE>
retirement annuity described in Section 408(b) of the Code, or
(to the extent provided in Section 401(a)(31)(D) of the Code) a
qualified trust described in Section 401(a) of the Code that
accepts the distributee's eligible rollover distribution.
However, in the case of an eligible rollover distribution to a
surviving spouse, an eligible retirement plan is an individual
retirement account or individual retirement annuity.
(iii) A direct rollover distribution shall only be made to one
eligible retirement plan; a distributee may not elect to have a
direct rollover distribution apportioned between or among more
than one eligible retirement plan.
(iv) Direct rollover distributions shall be made in cash in the form
of a check made out to the trustee of the eligible retirement
plan, in accordance with procedures established by the
Committee, plus shares of Company stock otherwise distributable
hereunder to the distributee, which shares shall be registered
in a manner necessary to effectuate a direct rollover under
Section 401(a)(31) of the Code.
(v) Amounts attributable to after-tax employee contributions shall
be distributed directly to the distributee and may not be
distributed in a direct rollover distribution.
(vi) No direct rollover distribution shall be made unless the
distributee furnishes the Committee with such information as the
Committee shall require, including but not limited to: the name
of the recipient eligible
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retirement plan, and any account number or other identifying
information.
(vii) A distributee may have a portion of an eligible rollover
distribution distributed directly to him and a portion directly
rolled over to an eligible retirement plan as such distributee
may determine provided that the amount to be directly rolled
over to the eligible retirement plan is at least $500.
(viii) If a distributee does not elect a direct rollover distribution
within 45 days following the date that such amounts first become
available for distribution, and the Participant's account
balance (determined as of the Valuation Date coincident with or
next following termination of employment) is not greater than
$3,500 ($5,000 for terminations of employment on or after
January 1, 1998), the Participant's account balance (determined
as of the latest Valuation Date, in accordance with the
Trustee's processing rules, following the end of the 45-day
period) shall be paid to such distributee, reduced by any
applicable income tax withholding, as soon as practicable
thereafter.
SECTION 18. TOP-HEAVY REQUIREMENTS
------------------------------------
(a) General Rule. The Plan shall meet the requirements set forth in this
------------
Section 18 in the event that the Plan is or becomes a Top-Heavy Plan.
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(b) Top-Heavy Plan.
--------------
(i) Subject to the aggregation rules set forth in Subsection (ii),
the Plan shall be considered a Top-Heavy Plan pursuant to
Section 416(g) of the Internal Revenue Code in any Plan Year if,
as of the Determination Date, the present value of the
cumulative accrued benefits of all Key Employees of the Employer
exceeds sixty percent (60%) of the present value of the
cumulative accrued benefits of all of the Employees of the
Employer as of such Date, taking into account in computing the
ratio any distributions made during the five (5) consecutive
Plan Year period ending on the Determination Date.
Notwithstanding the foregoing, former Key Employees and, except
for the Plan Year beginning May 1, 1986, any Employee who has
not performed services for the Employer during the five (5)
consecutive Plan Year period ending on the Determination Date,
shall be excluded from the above ratio. For purposes of the
above ratio, the present value of a Key Employee's accrued
benefit shall be counted only once each Plan Year,
notwithstanding the fact that an individual may be considered a
Key Employee for more than one reason in any Plan Year.
(ii) Aggregation with Other Plans. For purposes of determining
----------------------------
whether the Plan is a Top-Heavy Plan and for purposes of meeting
the requirements of this Section 18, the Plan shall be
aggregated with other qualified plans in a Required Aggregation
Group and may be
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aggregated with other qualified plans in a Permissive
Aggregation Group. If such Required Aggregation Group is Top-
Heavy, this Plan shall be considered a Top-Heavy Plan. If such
Permissive Aggregation Group is not Top-Heavy, this Plan shall
not be a Top-Heavy Plan.
(c) Definitions. For purposes of determining whether the Plan is Top-
-----------
Heavy, the following terms shall have the following meanings:
(i) Present Value of Accrued Benefit. The term "present value of an
--------------------------------
accrued benefit" as of any Determination Date shall mean the sum
of the net value of a Participant's account as of the most
recent Valuation Date and any contributions made after such
Valuation Date but on or before the Determination Date. In the
case of the first Plan Year, the amount of any contributions
made after the Determination Date but allocated as of a day
within such Plan Year also shall be included.
(ii) Determination and Valuation Dates. The term "Determination
---------------------------------
Date" shall mean, in the case of the first Plan Year, the last
day of such Plan Year and in the case of any subsequent Plan
Year, the last day of the preceding Plan Year. The term
"Valuation Date" means the most recent Valuation Date as defined
under Section 7(b) that occurs within a twelve (12) month period
ending on the Determination Date.
(iii) Key Employee. An individual shall be considered a
------------
Key Employee if he is an Employee or former Employee who at any
time during the current Plan Year or any of the four (4)
preceding Plan
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Years:
(A) was an officer of the Employer who has annual Compensation
from the Employer in the applicable Plan Year in excess of
50% of the dollar limitation under Section 415(b)(1)(A) of
the Internal Revenue Code; provided, however, that the
number of individuals treated as Key Employees by reason of
being officers hereunder shall not exceed the lesser of (1)
fifty (50) or (2) the greater of three (3) or ten percent
(10%) of all Employees, and provided further, that if the
number of Employees treated as officers is limited to fifty
(50) hereunder, the individuals treated as Key Employees
shall be those who, while officers, received the greatest
annual Compensation in the applicable Plan Year and any of
the four (4) preceding Plan Years (without regard to the
limitation set forth in Section 416(d) of the Code), or
(B) was one of the ten (10) Employees owning or considered as
owning both more than a one-half percent interest in value
and the largest interests in the Employer who has annual
Compensation from the Employer in the applicable Plan Year
in excess of the dollar limitation under Section
415(c)(1)(A) of the Code as increased under Section 415(d)
of the Code; or
(C) was a more than five percent (5%) owner of the Employer; or
(D) was a more than one percent (1%) owner of the Employer whose
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annual Compensation from the Employer in the applicable Plan
Year exceeded $150,000.
For purposes of determining who is a Key Employee, ownership
shall be determined by taking into account the constructive
ownership rules of Section 318 of the Internal Revenue Code, as
modified by Section 416(i)(1) of the Internal Revenue Code. For
purposes of determining who is a more than five percent (5%) or
more than one percent (1%) owner, ownership shall mean ownership
of the outstanding stock of the Employer or of the total
combined voting power of all stock of the Employer.
For purposes of Subparagraph (B), an Employee (or former
Employee) who has some ownership interest is considered to be
one of the top ten (10) owners unless at least ten (10) other
Employees (or former Employees) own a greater interest than such
Employee (or former Employee); provided that if an Employee has
the same ownership interest as another Employee, the Employee
having greater annual Compensation from the Employer is
considered to have the larger ownership interest.
(iv) Non-Key Employee. The term "Non-Key Employee" shall mean any
----------------
Employee who is eligible to participate and who is not a Key
Employee.
(v) Beneficiary. Whenever the term "Key Employee", "former Key
-----------
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<PAGE>
Employee", or "Non-Key Employee" is used herein, it shall
include the beneficiary or beneficiaries of such individual. If
an individual is a Key Employee by reason of the foregoing
sentence as well as a Key Employee in his own right, both the
present value of his inherited accrued benefit and the present
value of his own accrued benefit will be considered his accrued
benefit for purposes of determining whether the Plan is a Top-
Heavy Plan.
(vi) Compensation. For purposes of this Section 18, except as
------------
otherwise specifically provided, the term "Compensation" shall
mean an Employee's Form W-2 wages for the calendar year that
ends with or within the Plan Year.
(vii) Required Aggregation Group. The term "Required Aggregation
--------------------------
Group" shall mean all other qualified defined benefit and
defined contribution plans maintained by the Employer in which a
Key Employee participates, and each other plan of the Employer
which enables any plan in which a Key Employee participates to
meet the requirements of Sections 401(a)(4) or 410 of the
Internal Revenue Code.
(viii) Permissive Aggregation Group. The term "Permissive
----------------------------
Aggregation Group" shall mean all other qualified defined
benefit and defined contribution plans maintained by the
Employer that meet the requirements of Section 401(a)(4) and 410
of the Internal Revenue
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Code when considered with a Required Aggregation Group.
(ix) Employer. For purposes of determining whether the Plan is a
--------
Top-Heavy Plan, the term "Employer" shall mean the Company and
any entity required to be aggregated with the Company pursuant
to Section 414(b), (c) or (m) of the Internal Revenue Code;
provided, however, that for purposes of Section 416(i)(1)(A) of
the Internal Revenue Code, ownership percentages shall be
determined separately with respect to each entity that would
otherwise be aggregated under Section 414(b), (c) or (m) of the
Internal Revenue Code.
(d) Requirements Applicable if Plan is Top-Heavy. In the event the Plan is
--------------------------------------------
determined to be Top-Heavy for any Plan Year, the following requirements shall
be applicable:
(i) Minimum Allocation.
------------------
(A) In the case of a Non-Key Employee who is covered under this
Plan but does not participate in any qualified defined
benefit plan maintained by the Employer, the minimum amount
of Employer contributions allocated to the account of each
such Non-Key Employee who has not separated from service at
the end of a Plan Year in which the Plan is Top-Heavy
(exclusive of Salary Deferral Contributions) shall equal the
lesser of three percent (3%) of Compensation for such Plan
Year or the largest percentage of Compensation (inclusive of
Salary Deferral
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Contributions) allocated on behalf of any Key Employee for
such Plan Year. An Employee shall receive such a minimum
allocation for each Plan Year in which the Plan is Top-
Heavy, even if he has not completed a Year of Service in
such Plan Year or if he has declined to elect to have Salary
Deferral Contributions made to the Plan on his behalf.
(B) An Employee who is covered under this Plan and under a
qualified defined benefit plan maintained by the Employer
shall not be entitled to a minimum allocation under this
Plan but shall receive the minimum benefit provided under
the terms of the qualified defined benefit plan.
(ii) Limitations on Annual Additions and Benefits. For purposes of
--------------------------------------------
computing the defined benefit plan fraction and defined
contribution plan fraction as set forth in Sections 415(e)(2)(B)
and 415(e)(3)(B) of the Internal Revenue Code, the dollar
limitations on benefits and annual additions applicable to a
limitation year shall be multiplied by 1.0 rather than by 1.25.
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