Registration No.
FORM S-8
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Registration Statement Under the Securities Act of 1933
ZURN INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 25-1040754
(State of incorporation) (IRS employer identification no.)
One Zurn Place, Erie, Pennsylvania 16505
(Address of principal executive offices) (Zip code)
ELJER TAX REDUCTION INVESTMENT PLAN
(Full title of the plan)
George W. Hanthorn, Vice President-General Counsel and Secretary
One Zurn Place, Erie, Pennsylvania 16505
(Name and address of agent for service)
Telephone number, including area code, of agent for service 814-452-2111
Approximate date of proposed sale to the public:
From time to time after the effective date of this registration statement
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Title of maximum maximum
securities Amount offering aggregate Amount of
to be to be price per offering registration
registered registered (1) share (2) price fee
Common Stock, 20,000
$.50 Par Value shares $33.4375 $668,750 $202.65
(1) To be acquired by a trustee pursuant to the Plan for the accounts of Plan
participants. The number of shares represents the maximum number issuable
under the Plan that are covered by this registration statement pursuant to
Rule 457(h).
(2) Based on the average of the high and low sales prices of the registrant's
common stock on the New York Stock Exchange on September 24, 1997 solely for
the purpose of calculating the registration fee.
In addition, pursuant to Rule 416(c) under the Securities Act of 1933, as
amended, this registration statement also covers an indeterminate amount of
interests to be offered or sold pursuant to the employee benefit plan
described herein.
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PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The documents containing the information specified in Part I of Form S-8 will
be delivered to the participants in the Eljer Tax Reduction Investment Plan
(the "Plan") as required by Securities Act Rule 428(b). As permitted by the
rules of the Securities and Exchange Commission, such documents are not being
filed as part of this registration statement or as prospectuses or prospectus
supplements pursuant to Securities Act Rule 424.
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PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3 - INCORPORATION OF DOCUMENTS BY REFERENCE
The Registrant's Annual Report on Form 10-K for the year ended March 31, 1997
filed pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934,
as amended, is incorporated herein by reference.
The Plan's Annual Report on Form 11-K for the year ended December 31, 1996
filed pursuant to Section 15(d) of the Securities Exchange Act of 1934, as
amended, is incorporated herein by reference.
All documents subsequently filed by the Registrant and the Plan with the
Securities and Exchange Commission pursuant to Sections 13(a), 13(c), 14, or
15(d) of the Securities Exchange Act of 1934, as amended, prior to the filing
of a post-effective amendment which indicates that all securities offered have
been sold or which deregisters all 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 such documents.
ITEM 4 - DESCRIPTION OF SECURITIES
The Registrant's Common Stock, $.50 par value, has been registered under
Section 12 of the Securities Exchange Act of 1934, as amended.
Not applicable to Plan interests.
ITEM 5 - INTERESTS OF NAMED EXPERTS AND COUNSEL
Not applicable.
ITEM 6 - INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Registrant's Articles of Incorporation and Bylaws provide that, to the
fullest extent that the laws of the Commonwealth of Pennsylvania, as in effect
on January 27, 1987, or as thereafter amended, permit the elimination or
limitation of liability of directors, officers, or employees, no such person
shall be personally liable for monetary damages as such for any action taken
or any failure to take any action on behalf of the Registrant. Also, the
Registrant maintains a directors and officers liability insurance policy
covering all of its directors.
The Plan provides that the Company indemnifies each member of the Committee
and each employee, officer and director of an Affiliated Company who are
delegated responsibilities under or pursuant to the Plan against any and all
liabilities and expenses, including attorney's fees, actually and reasonably
incurred by them in connection with any threatened, pending or completed legal
action or judicial or administrative proceeding to which they may be a party,
or may be threatened to be made a party, by reason of membership on the
Committee or other delegation of responsibilities, except with regard to any
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matters as to which they shall be adjudged in such action or proceeding to be
liable for gross negligence or willful misconduct in connection therewith.
The Plan also provides that the Company may provide appropriate insurance
coverage for the members of the Committee or each such other individual
indemnified pursuant to the Plan who is not otherwise appropriately insured.
(The terms "Affiliated Company", "Committee", and "Company" as used herein
have the meanings defined in the Plan.)
ITEM 7 - EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8 - EXHIBITS
The exhibits listed in the Exhibit Index to this registration statement are
incorporated herein by reference.
In lieu of an opinion of counsel concerning compliance with the requirements
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
or an Internal Revenue Service ("IRS") determination letter that the Plan is
qualified under Section 401 of the Internal Revenue Code of 1986, as amended,
the Registrant has submitted the Plan, and hereby undertakes to submit any
amendments to the Plan, to the IRS in a timely manner and has made, or will
make, all changes required by the IRS in order to qualify the Plan.
ITEM 9 - UNDERTAKINGS
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 purposes of determining any liability under the Securities Act of
1933, as amended, 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, and (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.
The undersigned Registrant hereby undertakes that, for purposes of determining
any liability under the Securities Act of 1933, as amended, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934, as amended, and each filing of the Plan's
annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934, as amended, 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.
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Insofar as indemnification for liabilities arising under the Securities Act of
1933, as amended, may be permitted to directors, officers, or employees of the
Registrant pursuant to the provisions set forth in Item 6, or otherwise, the
Registrant has been advised that, in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as
expressed in the Securities Act of 1933, as amended, 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 in the successful defense of any action, suit, or
proceeding) is asserted by such director, officer, or employee 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 of 1933, as amended, and will be governed by the final adjudication of
such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, 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 the City of Erie, Commonwealth of Pennsylvania,
on September 29, 1997.
ZURN INDUSTRIES, INC.
(Registrant)
/s/ George W. Hanthorn
George W. Hanthorn, Vice President-
General Counsel and Secretary
Pursuant to the requirements of the Securities Act of 1933, as amended, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.
/s/ Robert R. Womack Director, Chairman, and September 29, 1997
Robert R. Womack Chief Executive Officer
/s/ John R. Mellett Senior Vice President- September 29, 1997
John R. Mellett Chief Financial Officer
/s/ John E. Rutzler III Vice President-Controller September 29, 1997
John E. Rutzler III
By John E. Rutzler III for the following Directors:
Scott G. Arbuckle Zoe Baird Michael K. Brown
William E. Butler Edward J. Campbell Robert D. Neary
/s/ John E. Rutzler III Attorney In Fact September 29, 1997
John E. Rutzler III
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Pursuant to the requirements of the Securities Act of 1933, as amended, the
Pension Committee of Zurn Industries, Inc. has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Erie, Commonwealth of Pennsylvania, on September
29, 1997.
ELJER TAX REDUCTION INVESTMENT PLAN
(Plan)
/s/ James A. Zurn
James A. Zurn, Chairman
Pension Committee of
Zurn Industries, Inc.
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EXHIBIT INDEX
4 Instruments Defining the Rights of Security Holders,
Including Indentures
Description of Common Stock contained in the prospectus Incorporated
dated July 26, 1972 beginning on page 18 ("Description of by reference
Capital Stock") forming a part of Amendment No. 3 to the
Form S-1 Registration Statement No. 2-44631
Description of Common Stock as set forth in the Restated Incorporated
Articles of Incorporation with Amendments through by reference
April 22, 1996 filed as Exhibit 3.1 to Form 10-K for
the year ended March 31, 1996
Description of Preferred Share Purchase Rights contained Incorporated
in the Form 8-A Registration Statement dated May 17, 1996 by reference
Consents of Experts and Counsel
23.1 Consent of Ernst & Young LLP
23.2 Consent of Arthur Andersen LLP
Power of Attorney
24 Powers Of Attorney signed on June 4, 1997 by S.G. Arbuckle,
Z. Baird, M.K. Brown, W.E. Butler, E.J. Campbell, and
R.D. Neary
99 Additional Exhibits
Annual Report on Form 10-K for the year Incorporated
ended March 31, 1997 by reference
Annual Report on Form 11-K for the year Incorporated
ended December 31, 1996 by reference
99.1 Eljer Tax Reduction Investment Plan
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EXHIBIT 23.1 - CONSENT OF ERNST & YOUNG LLP
We consent to the incorporation by reference in this Registration Statement on
Form S-8 of our report dated May 19, 1997 with respect to the consolidated
financial statements and financial statement schedule incorporated by
reference or included in the Annual Report on Form 10-K of Zurn Industries,
Inc. for the year ended March 31, 1997.
/s/ Ernst & Young LLP
Erie, Pennsylvania
September 29, 1997
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EXHIBIT 23.2 - CONSENT OF ARTHUR ANDERSEN LLP
As independent public accountants, we hereby consent to the incorporation by
reference of our report dated September 24, 1997 included in the Annual Report
on Form 11-K of the Eljer Tax Reduction Investment Plan for the year ended
December 31, 1996 with respect to the financial statements and supplemental
schedules of the Eljer Tax Reduction Investment Plan for the year ended
December 31, 1996 in this Registration Statement on Form S-8.
/s/ Arthur Andersen LLP
Dallas, Texas
September 29, 1997
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EXHIBIT 24
POWERS OF ATTORNEY
Each person whose name appears below hereby authorizes Dennis Haines and John
E. Rutzler III, severally, to execute in the name of each such person, and to
file with the Securities and Exchange Commission registration statements on
Form S-8, or amendments to such registration statements which may make such
changes as each of the above named attorneys deems appropriate, with all
exhibits and other related documents, all as necessary or advisable to enable
Zurn Industries, Inc. (the "Registrant") to comply with the Securities Act of
1933, as amended, and any applicable rules, regulations, and requirements of
the Securities and Exchange Commission, in connection with the registration of
securities for the Zurn Industries, Inc. 1995 Directors Stock Option Plan, the
Zurn Industries, Inc. 1996 Employee Stock Plan, the Zurn Retirement Savings
Plan, and the Eljer Tax Reduction Investment Plan.
Signed on the 4th day June 1997:
/s/ Scott G. Arbuckle /s/ Zoe Baird
Scott G. Arbuckle Zoe Baird
/s/ M.K. Brown /s/ William E. Butler
Michael K. Brown William E. Butler
/s/ Edware J. Campbell /s/ Robert D. Neary
Edward J. Campbell Robert D. Neary
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Exhibit 99.1
ELJER TAX REDUCTION INVESTMENT PLAN
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TABLE OF CONTENTS
Page No.
ARTICLE I - INTRODUCTION
1.1 Introduction . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II - DEFINITIONS
2.1 Account . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Administrator . . . . . . . . . . . . . . . . . . . . . 2
2.3 Affiliated Company . . . . . . . . . . . . . . . . . . . 3
2.4 Allocation Date . . . . . . . . . . . . . . . . . . . . 3
2.5 Alternate Payee . . . . . . . . . . . . . . . . . . . . 3
2.6 Annuity Starting Date . . . . . . . . . . . . . . . . . 3
2.7 Beneficiary . . . . . . . . . . . . . . . . . . . . . . 3
2.8 Board of Directors . . . . . . . . . . . . . . . . . . . 4
2.9 Code . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.10 Committee . . . . . . . . . . . . . . . . . . . . . . . 4
2.11 Company . . . . . . . . . . . . . . . . . . . . . . . . 4
2.12 [Reserved] . . . . . . . . . . . . . . . . . . . . . . . 4
2.13 Compensation . . . . . . . . . . . . . . . . . . . . . . 5
2.13A Credited Service . . . . . . . . . . . . . . . . . . . . 6
2.14 Disability or Disabled . . . . . . . . . . . . . . . . . 6
2.15 Effective Date . . . . . . . . . . . . . . . . . . . . . 6
2.16 Employee . . . . . . . . . . . . . . . . . . . . . . . . 6
2.17 Employer . . . . . . . . . . . . . . . . . . . . . . . . 6
2.18 Entry Date . . . . . . . . . . . . . . . . . . . . . . . 7
2.19 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.20 Family Member . . . . . . . . . . . . . . . . . . . . . 7
2.21 Former Participant . . . . . . . . . . . . . . . . . . . 7
2.22 Highly Compensated Employee . . . . . . . . . . . . . . 7
2.23 Highly Compensated Participant . . . . . . . . . . . . . 9
2.24 Hour of Service . . . . . . . . . . . . . . . . . . . . 9
2.25 Investment Fund or Fund . . . . . . . . . . . . . . . . 9
2.26 Investment Plan Contributions . . . . . . . . . . . . . 10
2.27 Investment Plan Contribution Account . . . . . . . . . . 10
2.28 Interactive Telephone Communication . . . . . . . . . . 10
2.29 Key Employee . . . . . . . . . . . . . . . . . . . . . . 10
2.30 Leased Employee . . . . . . . . . . . . . . . . . . . . 11
2.31 Limitation Year . . . . . . . . . . . . . . . . . . . . 11
2.32 Matching Company Contributions . . . . . . . . . . . . . 11
2.33 Matching Company Contribution Account . . . . . . . . . 11
2.34 Named Fiduciary . . . . . . . . . . . . . . . . . . . . 11
2.35 Non-Highly Compensated Employee . . . . . . . . . . . . 12
2.36 Non-Highly Compensated Participant . . . . . . . . . . . 12
2.37 Non-Key Employee . . . . . . . . . . . . . . . . . . . . 12
2.38 Normal Retirement Date . . . . . . . . . . . . . . . . . 12
2.39 Notice . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.40 Participant . . . . . . . . . . . . . . . . . . . . . . 12
2.41 Plan . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.42 Plan Year . . . . . . . . . . . . . . . . . . . . . . . 12
2.43 Prior Plan . . . . . . . . . . . . . . . . . . . . . . . 12
2.44 Qualified Domestic Relations Order . . . . . . . . . . . 12
2.45 Quarterly Valuation Date . . . . . . . . . . . . . . . . 12
<PAGE>
2.46 Recordkeeper . . . . . . . . . . . . . . . . . . . . . . 13
2.47 Rollover Account . . . . . . . . . . . . . . . . . . . . 13
2.48 Rollover Contribution . . . . . . . . . . . . . . . . . 13
2.49 Tax Reduction Contributions . . . . . . . . . . . . . . 13
2.50 Tax Reduction Contribution Account . . . . . . . . . . . 13
2.50A TRIP+ Contributions . . . . . . . . . . . . . . . . . . 13
2.50B TRIP+ Contribution Account . . . . . . . . . . . . . . . 13
2.51 Trust . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.52 Trust Agreement . . . . . . . . . . . . . . . . . . . . 14
2.53 Trust Fund . . . . . . . . . . . . . . . . . . . . . . . 14
2.54 Trustee . . . . . . . . . . . . . . . . . . . . . . . . 14
2.55 Valuation Date . . . . . . . . . . . . . . . . . . . . . 14
2.56 Year of Service . . . . . . . . . . . . . . . . . . . . 14
2.57 Zurn . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.58 Zurn Stock . . . . . . . . . . . . . . . . . . . . . . . 14
2.59 Zurn Stock Fund . . . . . . . . . . . . . . . . . . . . 14
ARTICLE III - PARTICIPATION AND YEARS OF SERVICE
3.1 Eligibility to Participate . . . . . . . . . . . . . . . 15
3.2 Commencement of Participation . . . . . . . . . . . . . 15
3.3 Waiver of Participation . . . . . . . . . . . . . . . . 15
3.4 Transfers from Eligible Employment . . . . . . . . . . . 16
3.5 Hour of Service . . . . . . . . . . . . . . . . . . . . 16
3.6 Year of Service . . . . . . . . . . . . . . . . . . . . 17
3.7 Participation and Service Upon Reemployment . . . . . . 17
3.8 Predecessor Service . . . . . . . . . . . . . . . . . . 18
3.9 Credited Service . . . . . . . . . . . . . . . . . . . . 18
ARTICLE IV - CONTRIBUTIONS
4.1 Tax Reduction Contributions . . . . . . . . . . . . . . 19
4.2 Investment Plan Contributions . . . . . . . . . . . . . 20
4.3 Matching Company Contributions . . . . . . . . . . . . . 22
4.3A TRIP+ Contributions . . . . . . . . . . . . . . . . . . 23
4.4 Employer Qualified Non-Elective Contributions . . . . . 23
4.5 Time of Contributions . . . . . . . . . . . . . . . . . 24
4.6 Maximum Combined Tax Reduction and Investment
Plan Contributions . . . . . . . . . . . . . . . . . . . 24
4.7 Manner of Making Contributions . . . . . . . . . . . . . 24
4.8 Reduction of Employer Contributions . . . . . . . . . . 25
4.9 Rollover Contributions . . . . . . . . . . . . . . . . . 25
4.10 Transfers from Other Plans . . . . . . . . . . . . . . . 25
ARTICLE V - LIMITATIONS AND RESTRICTIONS ON
TAX REDUCTION CONTRIBUTIONS
5.1 Dollar Limitation . . . . . . . . . . . . . . . . . . . 26
5.2 Actual Deferral Percentage Tests . . . . . . . . . . . . 28
5.3 Adjustments Required to Satisfy an Actual
Deferral Percentage Test . . . . . . . . . . . . . . . . 30
5.4 Election of Applicable Correction
Methods By Highly Compensated Employees . . . . . . . 32
5.5 Additional Adjustments of Tax Reduction Contributions . 32
5.6 Other Permissible Methods of Testing and Correction . . 32
<PAGE>
ARTICLE VI - LIMITATIONS AND RESTRICTIONS ON INVESTMENT
PLAN CONTRIBUTIONS AND MATCHING COMPANY
CONTRIBUTIONS
6.1 Contribution Percentage Tests . . . . . . . . . . . . . 32
6.2 Adjustments Required to Satisfy a
Contribution Percentage Test . . . . . . . . . . . . . . 35
6.3 Procedures Applicable to Tax Reduction Contributions . .
Recharacterized As Investment Plan Contributions . . 37
6.4 Additional Adjustments and Prospective Reductions of
Investment Plan Contributions . . . . . . . . . . . . 38
6.5 Testing of Tax Reduction Contributions . . . . . . . . .
Under Contribution Percentage Test . . . . . . . . . 38
6.6 Other Permissible Methods of Testing and Corrections . . 38
ARTICLE VII - AGGREGATE LIMIT ON ACTUAL DEFERRAL
AND CONTRIBUTION PERCENTAGES
7.1 General Rules . . . . . . . . . . . . . . . . . . . . . 39
7.2 Multiple Use Limitation . . . . . . . . . . . . . . . . 39
7.3 Prospective Reduction of Contributions . . . . . . . . . 40
ARTICLE VIII - LIMITATION ON ALLOCATIONS
8.1 Limitation on Allocations . . . . . . . . . . . . . . . 40
8.2 Definitions . . . . . . . . . . . . . . . . . . . . . . 41
8.3 Excess Annual Additions . . . . . . . . . . . . . . . . 44
8.4 Combined Plan Limits . . . . . . . . . . . . . . . . . . 44
8.5 Special Rules . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE IX - PARTICIPANTS ACCOUNTS
9.1 Establishment of Accounts . . . . . . . . . . . . . . . 47
9.2 Allocation of Contributions to Participant's Accounts . 47
9.3 Trust Fund Valuation . . . . . . . . . . . . . . . . . . 49
9.4 Adjustments to Participant's Accounts . . . . . . . . . 49
9.5 Participant-Directed Investments . . . . . . . . . . . . 50
9.6 Investment of Matching Company Contributions and
TRIP+ Contributions . . . . . . . . . . . . . . . . . 53
9.7 Diversification Election . . . . . . . . . . . . . . . . 54
9.8 Qualified Domestic Relations Orders . . . . . . . . . . 54
9.9 Special Restrictions on Transfer and Withdrawal of Amounts
Invested in Zurn Stock Fund . . . . . . . . . . . . . 54
ARTICLE X - PARTICIPANT VESTING
10.1 Vesting of Accounts . . . . . . . . . . . . . . . . . . 55
10.2 Termination of Service Prior to Normal Retirement Date,
Disability or Death . . . . . . . . . . . . . . . . . 55
10.3 Forfeiture of Non-Vested Portion of Account . . . . . . 56
10.4 Restoration of Non-Vested Interest . . . . . . . . . . . 56
ARTICLE XI - PAYMENT OF BENEFITS
11.1 Withdrawals During Employment . . . . . . . . . . . . . 57
11.2 Amounts Payable Following Termination of Service . . . . 60
11.3 Time of Payment . . . . . . . . . . . . . . . . . . . . 60
11.4 Method of Payments . . . . . . . . . . . . . . . . . . . 63
<PAGE>
11.5 Minority or Legal Disability of Distributee . . . . . . 65
11.6 Additional Requirements Relating to Benefit Payments . . 66
11.7 Claims Procedure . . . . . . . . . . . . . . . . . . . . 66
11.8 Committee's Duty to Trustee . . . . . . . . . . . . . . 67
11.9 Duty to Keep Committee Informed of
Distributee's Current Address . . . . . . . . . . . . . 67
11.10 Distribution Pursuant to Qualified
Domestic Relations Orders . . . . . . . . . . . . . . . 68
11.11 Tax Withholding and Participant's Direct Rollover Election 68
11.12 Application of Forfeitures . . . . . . . . . . . . . . . 69
11.13 Restrictions on Distributions . . . . . . . . . . . . . 69
ARTICLE XII - NOTICES
12.1 Notice . . . . . . . . . . . . . . . . . . . . . . . . . 70
12.2 Modification of Notice . . . . . . . . . . . . . . . . . 70
12.3 Reliance on Notice . . . . . . . . . . . . . . . . . . . 70
ARTICLE XIII - LOANS
13.1 General Provisions Regarding Loans . . . . . . . . . . . 70
13.2 Amount and Limitations Applicable to Loans . . . . . . . 70
13.3 Security for Loans . . . . . . . . . . . . . . . . . . . 71
13.4 Interest Rate for Loans . . . . . . . . . . . . . . . . 71
13.5 Repayment of Loans . . . . . . . . . . . . . . . . . . . 71
13.6 Default on Loans . . . . . . . . . . . . . . . . . . . . 72
13.7 Acceleration of Loans Upon Termination of Employment . . 72
13.8 Manner of Making Loans . . . . . . . . . . . . . . . . . 72
13.9 Additional Loan Procedures . . . . . . . . . . . . . . . 73
ARTICLE XIV - ADMINISTRATION OF THE PLAN
14.1 Allocation of Responsibilities Among Fiduciaries . . . . 73
14.2 Management of Plan Assets . . . . . . . . . . . . . . . 74
14.3 Powers and Responsibilities of the Committee . . . . . . 75
14.4 Operation of Committee . . . . . . . . . . . . . . . . . 76
14.5 Compensation and Expenses of Employees and Directors
Serving as Fiduciaries . . . . . . . . . . . . . . . 77
14.6 Indemnification of Employees and Directors . . . . . . . 77
14.7 Action Taken in Good Faith . . . . . . . . . . . . . . . 77
14.8 Expenses of the Plan . . . . . . . . . . . . . . . . . . 77
ARTICLE XV - TRUST FUND
15.1 Establishment of Trust Fund . . . . . . . . . . . . . . 77
15.2 Investments in Zurn Stock . . . . . . . . . . . . . . . 78
15.3 Title of Trust Assets . . . . . . . . . . . . . . . . . 78
ARTICLE XVI - AMENDMENT AND TERMINATION
16.1 Amendment . . . . . . . . . . . . . . . . . . . . . . . 78
16.2 Termination or Discontinuance of Contributions . . . . . 78
16.3 Distribution on Plan Termination . . . . . . . . . . . . 79
16.4 Distributions upon Certain Sales . . . . . . . . . . . . 80
16.5 Merger or Consolidation of Plan . . . . . . . . . . . . 80
16.6 Merger and Other Reorganization of Employer . . . . . . 80
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ARTICLE XVII - MISCELLANEOUS
17.1 No Employment or Compensation Agreement . . . . . . . . 80
17.2 Spendthrift Provision . . . . . . . . . . . . . . . . . 80
17.3 Construction . . . . . . . . . . . . . . . . . . . . . . 81
17.4 Titles . . . . . . . . . . . . . . . . . . . . . . . . . 81
17.5 Texas Law Applicable . . . . . . . . . . . . . . . . . . 81
17.6 Successors and Assigns . . . . . . . . . . . . . . . . . 81
17.7 Payments Only from Trust Fund . . . . . . . . . . . . . 81
17.8 Plan Controls . . . . . . . . . . . . . . . . . . . . . 81
17.9 Effect of Mistakes . . . . . . . . . . . . . . . . . . . 81
17.10 IRC 414(u) Compliance Provision . . . . . . . . . . . . 81
ARTICLE XVIII - TOP HEAVY PROVISIONS
18.1 Application and Purpose . . . . . . . . . . . . . . . . 82
18.2 Minimum Allocation Requirements . . . . . . . . . . . . 82
18.3 Adjustment to Limitation on Allocations . . . . . . . . 82
18.4 Vesting Schedule . . . . . . . . . . . . . . . . . . . . 82
18.5 Definitions . . . . . . . . . . . . . . . . . . . . . . 83
<PAGE>
ELJER TAX REDUCTION INVESTMENT PLAN
WHEREAS, effective April 1, 1989, in connection with a transaction in which
Eljer Manufacturing, Inc. ceased to be a subsidiary of Household
International, Inc., Eljer Manufacturing, Inc. established the Eljer Tax
Reduction Investment Plan (hereinafter referred to as the "Plan") as a savings
and profit-sharing plan designed to constitute a "qualified plan" within the
meaning of Section 401(a) of the Internal Revenue Code of 1986, as amended
(the "Code"); and
WHEREAS, the Plan was thereafter amended from time to time and was most
recently restated in its entirety in 1994; and
WHEREAS, the Plan has been amended three times following the most recent
restatement, the last amendment of which incorporated changes reflecting the
acquisition of Eljer Manufacturing, Inc. by Zurn Industries, Inc. (hereinafter
referred to as "Zurn") and established Zurn as sponsor of the Plan and the
entity responsible for the administration and amendment of the Plan; and
WHEREAS, Zurn now desires to amend and restate the Plan in its entirety,
effective as set forth herein;
NOW, THEREFORE, the Plan is hereby amended and restated, effective as
provided herein, as follows:
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ARTICLE I
INTRODUCTION
1.1 Introduction.
Zurn hereby completely amends and restates the Eljer Tax Reduction
Investment Plan (the "Plan"). The assets of the Plan are held, administered
and managed in accordance with the terms and conditions of the Trust Agreement
which is an integral part of the Plan. Zurn intends that the Plan continue to
be a plan qualified under Section 401(a) of the Code (as hereinafter defined)
with a cash or deferred arrangement qualified under Section 401(k) of the Code
and a trust exempt from taxation under Section 501(a) of the Code. Pursuant to
the requirements of Section 401(a)(27)(B) of the Code, Zurn also intends that
the Plan be a profit sharing plan.
The Plan may be amended further from time to time. Except as otherwise
provided in the Plan or any amendment to the Plan, the provisions of an
amendment shall apply solely to an Employee, former Employee, Participant or
Former Participant whose employment with an Employer is terminated on or after
the effective date of the amendment. The rights of an Employee, former
Employee, Participant or Former Participant whose employment with an Employer
is terminated prior to the effective date of an amendment shall be determined
solely by the provisions of the Plan as in effect on the date of his
termination of employment.
The benefits payable from this Plan are independent of any benefits the
Employee is or may become entitled to under any other funded pension, profit
sharing or savings plan.
ARTICLE II
DEFINITIONS
The following words and phrases when used in this Plan shall have the
respective meanings set forth below unless the context clearly indicates
otherwise:
2.1 Account means the account or record maintained by the Trustee
or the Recordkeeper reflecting the monetary value of the undivided interest in
the Trust Fund of each Participant, each Former Participant and each
Beneficiary and shall include the Tax Reduction Contribution Account,
Investment Plan Contribution Account, Matching Company Contribution Account,
Rollover Account, TRIP+ Contribution Account and such additional Accounts as
the Company may establish from time to time, including subaccounts and
segregated accounts.
2.2 Administrator means, with respect to the administration of the
Plan as herein described, the Committee. However, with respect to periods on
and after June 30, 1997, for purposes of applying the applicable provisions of
ERISA to the Plan, Zurn shall be the "administrator" as described in Section
3(16)(A) of ERISA.
-2-<PAGE>
2.3 Affiliated Company means the Company and any other entity which
is, along with the Company, a member of a controlled group of corporations or
a controlled group of trades or businesses [as defined in Section 414(b) or
(c) of the Code], any entity which along with the Company is included in an
affiliated service group as defined in Section 414(m) of the Code, and any
other entity which is required to be aggregated with the Company pursuant to
Section 414(o) of the Code.
2.4 Allocation Date means the last day of each month; provided,
however, that the Allocation Date for Matching Company Contributions and TRIP+
Contributions shall be the last day of each calendar quarter, as provided in
Sections 9.2(c) and 9.2(e).
2.5 Alternate Payee means a person defined in Code Section
414(p)(8) who is entitled to benefits under the Plan pursuant to a Qualified
Domestic Relations Order.
2.6 Annuity Starting Date means (i) the first day of the first
period with respect to which an amount is payable as an annuity, or (ii) in
the case of a benefit not payable in the form of an annuity, the first day on
which all events have occurred that entitle the Participant, Former
Participant or Beneficiary to such benefit in accordance with Article XI.
2.7 Beneficiary means any person or fiduciary designated by a
Participant or Former Participant in accordance with the terms hereof and
Section 401(a)(9) of the Code to receive benefits hereunder following the
death of such Participant or Former Participant. Each Participant and Former
Participant may, from time to time, select one or more Beneficiaries to
receive benefits in the event of the death of such Participant or Former
Participant. Such selection shall be made in writing by Notice to the
Committee. Unless the provisions of this Plan or a Qualified Domestic
Relations Order provide otherwise, the last such selection filed with the
Committee prior to the death of the Participant or Former Participant shall
determine to whom Plan benefits shall be paid.
If the Participant or Former Participant is married at the date of his
death, the Beneficiary shall be his surviving spouse unless the spouse has
consented in writing to the designation of some other Beneficiary, which
designation may not be changed without consent of the spouse unless the
voluntary consent of the spouse (i) expressly permits designations by the
Participant or Former Participant without any requirement of further consent
by the spouse and (ii) acknowledges that the spouse has the right to limit the
consent to a specific Beneficiary. Such written consent must acknowledge the
effect of the Participant's or Former Participant's Beneficiary selection and
must be witnessed by a Plan representative or a notary public. Spousal consent
is not required if it is established to the satisfaction of the Committee that
the consent may not be obtained (i) because the Participant has no spouse,
(ii) because the spouse cannot be located or (iii) because of such other
circumstances as the Secretary of Treasury may by regulations prescribe.
-3-<PAGE>
If the Committee cannot determine readily whether a Participant has a
spouse under the laws of the state in which the Participant resides resulting
from an individual's claim to be a "common law" spouse of a Participant or
similar circumstances, the Committee may request such individual to provide
the Committee with a legal opinion satisfactory to the Committee or other
evidence demonstrating the individual's status as a spouse of a Participant.
The Committee has the sole and absolute authority to determine an individual's
status as a spouse of a Participant and any such determination shall be final,
binding and conclusive on all parties ever claiming an interest in the Plan.
Any consent by a spouse (or establishment that the consent of the spouse may
not be obtained) shall be effective only with respect to that spouse. If a
Participant's or Former Participant's Beneficiary selection is not made in
compliance with these provisions or if all designated persons shall predecease
the Participant or Former Participant, Beneficiary shall mean the first of the
following classes of successive preference beneficiaries then surviving, the
Participant's or Former Participant's: (a) spouse, (b) descendants, per
stirpes (including adopted children), (c) parents, (d) brothers and sisters
and (e) executors or administrators.
If more than one Beneficiary of a particular class (primary or
secondary) is entitled to benefits, payments shall be made in equal shares to
such Beneficiaries, unless some other specific proportions are clearly
designated by the Participant or Former Participant. If more than one
Beneficiary of a particular class (primary or secondary) is named, the
interest of any deceased Beneficiary of that class shall pass to the surviving
Beneficiary or Beneficiaries of that class except to the extent that the
designation provides for payment to any secondary Beneficiary or Beneficiaries
upon the death of a primary Beneficiary. In determining whether any person
named as a Beneficiary is living at the time of a Participant's or Former
Participant's death, if such person and the Participant or Former Participant
die in a common disaster and there is insufficient evidence to determine which
person died first, then it shall be deemed that the Beneficiary died first.
2.8 Board of Directors means, effective on and after June 30, 1997,
the Board of Directors of Zurn Industries, Inc., or any committee of such
Board of Directors authorized to act on its behalf.
2.9 Code means the Internal Revenue Code of 1986, as it may be
amended from time to time. Reference to a section of the Code shall include
that section, applicable Treasury regulations promulgated thereunder and any
comparable section of any future legislation that amends, supplements or
supersedes said section.
2.10 Committee means, effective on and after June 30, 1997, the Zurn
Pension Committee as from time to time constituted or such other committee
appointed by the Board of Directors.
2.11 Company means Eljer Manufacturing, Inc., or any successor
thereto.
2.12 [Reserved]
-4-<PAGE>
2.13 Compensation means, unless defined otherwise herein:
(a) for purposes of making contributions and allocations hereunder,
the sum of (i) compensation for services performed by an Employee for an
Employer that is required to be reported as wages on the Employee's Form W-2
(or its equivalent) for Federal income tax purposes and compensation received
in the form of salary continuation payments by an Employee compensated on a
salaried basis under an Employer's short-term disability program, and (ii)
amounts contributed by the Employer pursuant to a salary reduction agreement
that are not includible in gross income of the Employee under Sections 125,
402(a)(8), 402(h) or 403(b) of the Code, but less per diem allowances, expense
allowances, moving expense allowances and excess group term life insurance
premium costs includible by the Employee as "PS-58 costs" and severance,
disability (other than short-term disability payments described in clause (i)
of this Section 2.13(a)) and other welfare benefits; provided, however, that
Compensation shall include only amounts actually paid an Employee during the
period he is a Participant;
(b) for purposes of the Actual Deferral Percentage tests under
Section 5.2 and the Contribution Percentage tests under Section 6.1, amounts
paid to an Employee for the Plan Year that are required to be reported by the
Employer pursuant to Sections 6041(d) and 6051(a)(3) of the Code, plus Tax
Reduction Contributions and other amounts representing elective contributions
by the Employer on behalf of the Employee that are excluded from and
Employee's gross income by reason of Sections 125, 402(a)(8), 402(h)(1)(B)
and/or 403(b) of the Code; provided, however, that the Committee, in its sole
and absolute discretion, may limit Compensation under this Section 2.13(b)
taken into account for a Plan Year to only that Compensation received with
respect to the portion of the Plan Year during which an Employee is eligible
to participate in the Plan under Article III, provided such limitation is
applied uniformly to all eligible Employees under the Plan for such Plan Year;
and
(c) for other purposes of the Plan, including determining the
limits on Annual Additions imposed by Section 415 of the Code as set forth in
Article VIII, the special top-heavy rules of Article XVIII and determining the
identity of Highly Compensated Employees, amounts paid to an Employee for the
Plan Year (or Limitation Year for purposes of Article VIII) that are required
to be reported pursuant to Sections 6041(d) and 6051(a)(3) of the Code.
For (i) each Plan Year beginning before January 1, 1994, only the first
$200,000 of an individual's Compensation-on shall be taken into account for
purposes of the Plan [or such other amount as the Secretary of the Treasury
may prescribe at the same time and in the same manner as provided under
Section 415(d) of the Code for adjusting the dollar limitation in effect under
Section 415(b)(1)(A) of the Code] and (ii) each Plan Year beginning after
December 31, 1993, only the first $150,000 of an individual's Compensation
shall be taken into account for purposes of the Plan [or, beginning January 1,
1995, such larger amount as may be determined under Section 401(a)(17)(B) of
the Code]. Each limitation on Compensation described in the preceding sentence
shall be referred to herein as the "Compensation Limitation." For Plan Years
beginning before January 1, 1997, in determining the Compensation of each
-5-<PAGE>
Participant who is (i) a more than five percent owner of an Employer or (ii) a
Highly Compensated Employee in the group consisting of the ten Highly
Compensated Employees paid the greatest Compensation during the Plan Year
(without regard to this sentence), for purposes of applying the Compensation
Limitation (as it may be adjusted), the spouse of each such Participant and
each of his lineal descendants who have not attained age l9 before the close
of the Plan Year shall not be treated as a separate Employee for that Plan
Year and the Compensation of each such family member shall be aggregated with
the Compensation of the Participant as if it were paid to the Participant. If,
as a result of the application of the preceding sentence, the Compensation
Limitation (as it may be adjusted) is exceeded, then the limitation shall be
prorated among the affected individuals in proportion to each such
individual's Compensation as determined under this Section 2.13 prior to the
application of this limitation.
2.13A Credited Service has the meaning set forth in Section 3.9.
2.14 Disability or Disabled means the physical or mental incapacity
of a Participant that, in the opinion of the Committee, based on medical
evidence satisfactory to the Committee, renders him unfit to perform any
employment for the Employer
2.15 Effective Date of this Plan, as amended and restated, shall
generally be August 1, 1997; provided, however, that as necessary to comply
with the effective dates of the applicable provisions of recent legislation,
certain provisions of the Plan shall be effective as of the dates such
provisions are required to be effective with respect to the Plan under the
Code or, if later, under administrative pronouncements issued by the Internal
Revenue Service or the Treasury Department. Notwithstanding the general
effective date set forth above, certain provisions of the Plan shall be
effective as of the dates set forth herein.
2.16 Employee means, for Plan Years beginning on and after
January 1, 1991, any person employed by the Employer who is included on the
Federal Insurance Contributions Act rolls of the Employer; provided, however,
the term Employee shall not include (i) any individual employed on an hourly
basis at the Company's Nampa, Idaho plant and individuals employed at the
Fiberglass Products Division at Wilson, North Carolina or at the GlasTec
Division of the Company and (ii) any employees of an Affiliated Company who
are included in a unit of employees covered by a collective bargaining
agreement. The term Employee includes a Leased Employee that Section 414(n)
of the Code requires the Employer to treat as an employee, but such Leased
Employee shall not be eligible to participate in the Plan.
2.17 Employer means the Company and any other Affiliated Company,
with respect to its Employees, provided such Affiliated Company is designated
by the Committee as an Employer under the Plan and whose designation as such
has become effective and has continued in effect. The designation shall become
effective only when it shall have been accepted by the governing body of the
Employer. An Employer may revoke its acceptance of such designation at any
time, but until such acceptance has been revoked, all of the provisions of the
Plan and amendments thereto shall apply to the Employees of the Employer. In
-6-<PAGE>
the event the designation of the Employer as such is revoked by the governing
body of the Employer, such revocation will not be deemed a termination of the
Plan. The Committee shall have the exclusive right to determine whether any
Affiliated Company shall become an Employer for purposes of the Plan.
2.18 Entry Date means the first day of each January, April, July and
October.
2.19 ERISA means the Employee Retirement Income Security Act of
1974, as it may be amended from time to time, and applicable regulations
promulgated thereunder.
2.20 Family Member means with respect to any Employee, such
Employee's spouse and lineal ascendants or descendants and the spouses of such
lineal ascendants or descendants.
2.21 Former Participant means any individual who has been a
Participant in the Plan, who is no longer in the employ of an Affiliated
Company and who has not yet received the entire benefit to which he is
entitled under the Plan.
2.22 Highly Compensated Employee means, for each Plan Year beginning
before January 1, 1997, any Employee who is determined to be included in
subsection (a) after applying the special rules in subsection (b):
(a) any Employee who, during the Plan Year for which the
determination is being made or the immediately preceding Plan Year:
(i) was, at any time, a more than five percent owner of any
Employer;
(ii) received Compensation from all Employers in excess of
$75,000;
(iii) received Compensation from all Employers in excess of
$50, 000 and was in the top 20% of Employees for the Plan Year
(when ranked on the basis of Compensation for such Plan Year); or,
(iv) was at any time an officer of any Employer and received
Compensation greater than 50% of the dollar limitation in effect
under Section 415(b)(1)(A) of the Code for the Plan Year.
(b) For purposes of determining the Employees who are to be included in
subsection (a) above, the following special rules shall apply to this Section
2.22:
(i) Any Employee not described in subsection (a)(ii), (iii) or
(iv) of this Section 2.22 for the Plan Year immediately preceding
the Plan Year of determination shall not be treated as described
in subsection (a)(ii), (iii) or (iv) of this Section 2.22 for the
Plan Year of determination unless, in addition to meeting the
requirements of subsection (a)(ii), (iii) or (iv) for the Plan
Year of determination, such Employee is a member of the group
consisting of the one hundred Employees paid the highest
Compensation during that Plan Year.
-7-<PAGE>
(ii) In determining the top 20% of Employees pursuant to
subsection (a)(iii), Employees who (A) have not completed at
least six months of service, (B) normally work fewer than 17-1/2
hours per week, (C) normally work during not more than six months
during any Plan Year, (D) have not attained age 21 or (E) are
covered under a collective bargaining agreement (except to the
extent provided in applicable Treasury regulations) shall be
excluded from such determination.
(iii) In determining officers under subsection (a)(iv), no more
than fifty (50) Employees (or, if less, the greater of three
Employees or ten percent of the Employees) shall be treated as
officers, and if in such Plan Year no officer is described in
subsection (a)(iv), the highest paid officer of any Employer
during such Plan Year shall be treated as an officer for purposes
of subsection (a)(iv).
(iv) If any Employee is a Family Member of an Employee who is a
more than five percent owner of any Employer or a Highly
Compensated Employee in the group consisting of the ten Highly
Compensated Employees paid the greatest Compensation during the
Plan Year [without regard to this subsection (b)(iv)], then (A)
such Family Member shall not be considered a separate Employee and
(B) any Compensation paid to such Family Member (and any
applicable contribution or benefit on behalf of such Employee)
shall be treated as if it were paid to (or on behalf of) the
Employee who is the five percent owner or one of the ten Highly
Compensated Employees paid the greatest Compensation during the
Plan Year.
(v) A former Employee whose employment terminates prior to the
Plan Year of determination shall be treated as a Highly
Compensated Employee for the Plan Year of determination if such
Employee was a Highly Compensated Employee upon termination of
employment with an Employer, or such Employee was a Highly
Compensated Employee at any time after attaining age 55.
(vi) "Compensation" for purposes of determining who is a Highly
Compensated Employee shall have the meaning set forth in Section
2.13(c), but prior to any reduction on account of a Participant's
Tax Reduction Contributions and any other contributions not
treated as taxable income by reasons of Sections 125, 402(a)(8) or
402(h)(1) (B) of the Code.
(vii) The dollar amounts in subsections (a)(ii) and (iii) shall be
adjusted to such other amount as the Secretary of the Treasury
shall prescribe at the same time and in the same manner as
provided under Section 415(d) of the Code for adjusting the dollar
limitation in effect under Section 415(b)(1)(A) of the Code.
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(viii) In determining the number of Employees pursuant to
this Section, any Employee who is a non-resident alien and who
receives no earned income [within the meaning of Section 911(d)(2)
of the Code] from any Employer which constitutes income from
sources within the United States within the meaning of Section
861(a)(3) of the Code] shall be excluded from such determination.
(c) Notwithstanding the foregoing provisions of this Section 2.22, for
each Plan Year beginning on and after January 1, 1997, Highly Compensated
Employee means any Employee who:
(i) was a five percent owner (as defined in Section 416(i)(l) of
the Code) of the Employer at any time during the Plan Year or the
preceding Plan Year; or
(ii) for the preceding Plan Year (A) received Compensation from
the Employer in excess of $80,000, adjusted to such other amount
as the Secretary of the Treasury shall prescribe at the same time
and in the same manner as provided under Section 415(d) of the
Code (except that the "base period" shall be the calendar quarter
ending September 30, 1996) and (B) was in the top 20 percent of
Employees when ranked on the basis of Compensation for such Plan
Year.
2.23 Highly Compensated Participant means a Highly Compensated
Employee who has met the eligibility requirements in accordance with Article
III.
2.24 Hour of Service means each hour credited to an individual in
accordance with the provisions of Section 3.5.
2.25 Investment Fund or Fund means a fund designated by the
Committee pursuant to Section 9.5 from time to time and maintained for the
purpose of providing a vehicle for the investment of the Trust Fund, in
accordance with the directions of each Participant, Former Participant or
Beneficiary with respect to his Account as provided hereunder, until such
Investment Fund shall be eliminated by action of the Committee and shall,
effective as set forth below, include the following funds:
(a) Effective as of June 30, 1997:
(i) Zurn Stock Fund
(ii) Household International, Inc. Common Stock Fund (Frozen
Fund);
(iii) Fixed Income Fund;
(iv) U.S. Stock Fund;
(v) International Stock Fund;
(vi) Managed Growth Funds; and
(vii) Managed Balanced Fund.
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2.26 Investment Plan Contributions mean contributions paid by the
Participant on an after-tax basis in accordance with Section 4.2 of the Plan
and contributions which were paid on an after-tax basis pursuant to the terms
of the Plan prior to the amendment and restatement of the Plan as set forth
herein.
2.27 Investment Plan Contribution Account means the portion of the
individual Account maintained by the Trustee or the Recordkeeper for each
Participant, each Former Participant and each Beneficiary, showing the
monetary value of the person's individual interest in the Trust Fund
attributable to Investment Plan Contributions and contributions made on an
after-tax basis to the Prior Plan.
2.28 Interactive Telephone Communication means a communication
between a Participant, Former Participant or Beneficiary and the Recordkeeper
pursuant to a system maintained by the Recordkeeper and communicated to each
Participant, Former Participant and Beneficiary whereby each such individual
may make elections and exercise options as described herein with respect to
his Account through the use of such system and a personal identification
number. If a Participant, Former Participant or Beneficiary in writing (i)
consents to participate in Interactive Telephone Communication procedures
adopted by the Committee and (ii) acknowledges that actions taken by such
Participant, Former Participant or Beneficiary through the use of his personal
identification number pursuant to the Interactive Telephone Communication
procedure constitute his signature for purposes of initiating Investment Fund
changes, participant loans and Plan withdrawals, the Participant, Former
Participant or Beneficiary, as the case might be, will be deemed to have
given his written consent and authorization to any such action resulting from
the use of the Interactive Telephone Communication system by the Participant,
Former Participant or Beneficiary.
2.29 Key Employee means, as of any Determination Date [as defined in
Section 18.5], any Employee or Former Employee (or Beneficiary of such
Employee) who, at any time during the Plan Year that includes the
Determination Date, or during the preceding four Plan Years, is:
(a) an officer of any Employer having Compensation greater than 50%
of the amount in effect under Section 415(b)(1)(A) of the Code for any such
Plan Year;
(b) one of the ten Employees having Compensation from any Employer
of more than the dollar limitation in effect under Section 415(c)(1)(A) of the
Code and owning the largest interests in such Employer;
(c) a more than five percent owner of any Employer; or
(d) a more than one percent owner of any Employer having
Compensation from all Employers of more than $150,000.
For purposes of this Section 2.29, Compensation shall have the meaning set
forth in Section 2.13(c), but including amounts contributed by the Employer
pursuant to a salary reduction agreement which are excludable from the
-10-<PAGE>
Participant's gross income under Sections 125, 402(a)(8), 402(h) or 403(b) of
the Code. For purposes of subsection (a) of this Section, no more than 50
Employees (or, if lesser, the greater of three or ten percent of the
Employees) shall be treated as officers. For purposes of subsection (b) of
this Section, if two Employees have the same interest in an Employer, the
Employee having the greater Compensation shall be treated as having the larger
interest. The constructive ownership rules of Section 318 of the Code (or the
principles of that section, in the case of an unincorporated Employer) will
apply to determine ownership in each Employer.
2.30 Leased Employee means an individual who is not in the employ of
an Employer and who, pursuant to a leasing agreement between an Employer and
any other person ("leasing organization), has performed services for an
Employer [or for an Employer and any other person related to an Employer
within the meaning of Section 144(a)(3) of the Code] on a substantially
full-time basis for at least one year and, effective on and after January 1,
1997, such services are performed under primary direction or control by the
recipient. Leased Employee shall also include any individual who is deemed to
be an employee of an Employer under Section 414(o) of the Code.
Notwithstanding the foregoing, if individuals described in the preceding
sentences constitute less than 20% of an Employer's non-highly compensated
work force within the meaning of Section 414(n)(5)(C)(ii) of the Code, the
Plan shall not treat an individual as a Leased Employee if the leasing
organization covers the individual in a money purchase pension plan providing
immediate participation, full and immediate vesting and a non-integrated
contribution formula equal to at least ten percent of the individual's annual
compensation [as defined in Section 415(c)(3) of the Code, but including
amounts contributed by an Employer pursuant to a salary reduction agreement
that are excludable from the individual's gross income under Sections 125,
402(a)(8), 402(h) or 403(b) of the Code]. If any Leased Employee shall be
treated as an Employee of an Employer, however, contributions or benefits
provided by the leasing organization which are attributable to services of the
Leased Employee performed for an Employer shall be treated as provided by the
Employer.
2.31 Limitation Year means the calendar year.
2.32 Matching Company Contributions mean contributions paid to the
Plan on behalf of a Participant in accordance with Section 4.5 based on the
Participant's Tax Reduction Contributions and Investment Plan Contributions
made pursuant to Sections 4.1 and 4.2 of the Plan.
2.33 Matching Company Contribution Account means the portion of the
individual Account maintained by the Trustee or Recordkeeper for each
Participant, each Former Participant and each Beneficiary, showing the
monetary value of that person's individual interest in the Trust Fund
attributable to Matching Company Contributions and employer matching
contributions made to the Prior Plan.
2.34 Named Fiduciary means the Committee.
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2.35 Non-Highly Compensated Employee means any Employee who is
neither a Highly Compensated Employee nor a Family Member who is not treated
as a separate Employee under Section 2.22(b)(iv).
2.36 Non-Highly Compensated Participant means a Participant who is
not a Highly Compensated Participant.
2.37 Non-Key Employee means any Employee who is not a Key Employee.
2.38 Normal Retirement Date means a Participant's or Former
Participant's 65th birthday.
2.39 Notice means, unless otherwise provided specifically in this
Plan, (i) written Notice on an appropriate form provided by the Committee that
is properly completed and executed by the party giving such Notice and which
is delivered by hand or by mail to the Committee or to such other party
designated by the terms of the Plan or by the Committee to receive the Notice
or (ii) Notice by Interactive Telephone Communication to the Recordkeeper.
Notice to the Committee, the Recordkeeper or to any other person as provided
herein shall be deemed to be given when it is actually received (either
physically or by Interactive Telephone Communication, as the case may be) by
the party to whom such Notice is given.
2.40 Participant means an Employee who has met the eligibility
requirements of the Plan as provided in Article III hereof and who has begun
participating in the Plan.
2.41 Plan means the salary reduction and savings retirement plan and
trust embodied herein, as the same may be amended from time to time, and shall
be known as "Eljer Tax Reduction Investment Plan"
2.42 Plan Year means the twelve (12) month period commencing each
January 1 and ending the following December 31; provided, however, that the
first Plan Year shall be the short year commencing April 1, 1989 and ending
December 31, 1989.
2.43 Prior Plan means the Household International Tax Reduction
Investment Plan.
2.44 Qualified Domestic Relations Order means any judgment, decree,
or order (including approval of a property settlement agreement) that (i)
relates to the provision of child support, alimony payments, or marital
property rights to a spouse, former spouse, child or other dependent of a
Participant or Former Participant, (ii) is made pursuant to a state domestic
relations law, (iii) creates or recognizes the existence of an Alternate
Payee's right to, or assigns to an Alternate Payee the right to receive all or
a portion of the benefits payable with respect to a Participant or Former
Participant under the Plan and (iv) complies with the requirements of Code
Section 414(p).
2.45 Quarterly Valuation Date means the last day of each calendar
quarter.
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2.46 Recordkeeper means any person or entity appointed by the
Committee to perform recordkeeping and other administrative services on behalf
of the Plan.
2.47 Rollover Account means the portion of the Account maintained by
the Trustee or the Recordkeeper for each Employee, each Participant, each
Former Participant and each Beneficiary, showing the monetary value of such
person's individual interest in the Trust Fund attributable to his Rollover
Contribution and amounts contributed as a rollover to the Prior Plan.
2.48 Rollover Contribution means, in addition to a contribution
described in the last sentence of this Section 2.48, any amount transferred to
the Plan that would constitute a rollover contribution within the meaning of
Section 402(a)(5), 403(a)(4) or 408(d)(3) of the Code. Any such rollover
contribution must consist of either (i) all or a portion of the property (in
excess of employee contributions) that the Employee received in a distribution
from an employee's trust described in Section 401(a) of the Code which is
exempt from tax under Section 501(a) thereof or an annuity plan described in
Section 403(a) of the Code and any earnings thereon (whether such contribution
is paid directly by the Employee, from such other trust or annuity plan, or
from an individual retirement account or individual retirement annuity) or
(ii) all or a portion of the proceeds from the sale of property received in
such a distribution pursuant to Section 402(a)(6)(D) of the Code. Commencing
January 1, 1993, a Rollover Contribution shall include an eligible rollover
contribution as described in Code Section 402(c)(4) transferred to the Plan
pursuant to an Employee's election as described in Code Section 401(a)(31)(A).
2.49 Tax Reduction Contributions mean contributions paid to the Plan
on behalf of a Participant on a before-tax basis in accordance with Section
4.1 of the Plan and contributions which were paid on a before-tax basis
pursuant to the terms of the Plan prior to the amendment and restatement of
the Plan as set forth herein.
2.50 Tax Reduction Contribution Account means the portion of the
individual Account maintained by the Trustee or the Recordkeeper for each
Participant, each Former Participant and each Beneficiary, showing the
monetary value of that person's individual interest in the Trust Fund
attributable to Tax Reduction Contributions, contributions made by an Employer
pursuant to Section 4.4 as "qualified non-elective contributions" within the
meaning of Section 401(m)(4)(C) of the Code and contributions made on a
before-tax basis to the Prior Plan.
2.50A TRIP+ Contributions mean profit sharing contributions paid to
the Plan on behalf of a Participant in accordance with Section 4.3A of the
Plan.
2.50B TRIP+ Contribution Account means the portion of the individual
Account maintained by the Trustee or the Recordkeeper for each Participant,
each Former Participant and each Beneficiary, showing the monetary value of
that person's individual interest in the Trust Fund attributable to TRIP+
Contribution made by the Employer pursuant to Section 4.3A. Each TRIP+
Contribution Account shall contain subaccounts to identify separately the
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portion thereof attributable to TRIP+ Contributions described in Section
4.3A(a) and the portion thereof attributable to TRIP+ Contributions described
in Section 4.3A(b).
2.51 Trust means the fund maintained by the Trustee for the
investment of Plan assets in accordance with the terms and conditions of the
Trust Agreement.
2.52 Trust Agreement means the agreement between the Company and the
Trustee under which the assets of the Plan are held, administered and managed
by the Trustee. The provisions of the Trust Agreement shall be considered an
integral part of this Plan as if set forth fully herein.
2.53 Trust Fund means all assets of whatsoever kind and nature from
time to time held by the Trustee pursuant to the terms of the Trust Agreement
without distinction as to income or principal out of which benefits of the
Plan are provided. The Trust Fund shall be divided into Investment Funds as
provided in Section 9.5.
2.54 Trustee means NationsBank of Texas, N.A. or any successor
trustee and any additional trustee or trustees.
2.55 Valuation Date means the close of business on the last day of
each month, or such other date or dates as the Committee shall establish from
time to time.
2.56 Year of Service has the meaning set forth in Section 3.6.
2.57 Zurn means Zurn Industries, Inc., or any successor thereto.
2.58 Zurn Stock means the Common Stock, $0.50 par value, of Zurn
Industries, Inc.
2.59 Zurn Stock Fund means an Investment Fund, established effective
as of June 30, 1997 in connection with contributions of Zurn Stock as provided
in Section 4.7. The Zurn Stock Fund shall consist exclusively of Zurn Stock
provided that a portion not exceeding 10% of the fair market value of the Fund
may be held in short-term interest-bearing investments or cash pending
purchase of Zurn Stock and to provide sufficient liquidity for transfers out
of the Fund, withdrawals and loans. Unless otherwise limited under the terms
of the Trust Agreement, the Trustee may purchase or sell Zurn Stock on the
open market or by privately-negotiated transaction; provided however, that any
such purchase or sale shall be made only in exchange for fair market value as
determined by the Trustee and, provided further that, except for purchases or
sales of Zurn Stock on the New York Stock Exchange, no commission shall be
charged or paid with respect to any purchase or sale of Zurn Stock by the
Trustee. Any distributions, dividends or other income received by the Trustee
with respect to the Zurn Stock Fund shall be reinvested by the Trustee in the
Zurn Stock Fund. Notwithstanding the foregoing, the Committee may provide, at
such time and in such manner as it shall determine in its discretion, that
share accounting be performed with respect to the Zurn Stock Fund. Prior to
July 1, 1997 or such later date as shall be selected by the Committee, in its
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discretion, the Zurn Stock Fund is not available for investment elections by
Participants, Former Participants, Beneficiaries or Alternate Payees.
Except as otherwise indicated by the context, any masculine terminology used
herein also includes the feminine and neuter, and vice versa, and the
definition of any term herein in the singular shall also include the plural,
and vice versa.
ARTICLE III
PARTICIPATION AND YEARS OF SERVICE
3.1 Eligibility to Participate.
(a) Prior Plan Participants. An individual who was eligible to
participate in the Prior Plan on March 31, 1989 and who is an Employee of an
Employer on April l, 1989 shall be eligible to participate in this Plan as of
April l, 1989
(b) Other Employees. Each other Employee who is hired by the
Employer prior to January 1, 1996 shall be eligible to participate in the Plan
on the Entry Date (if he is employed by the Employer on that date) that
coincides with or that next follows the earlier of (i) the date he completes
three Years of Service; or (ii) the date he attains age 21 and completes one
Year of Service. Each other Employee who is hired by the Employer on or after
January 1, 1996 shall be eligible to participate in the Plan on the Entry Date
(if he is employed by the Employer on that date) that coincides with or that
next follows the date he attains age 21 and completes one Year of Service.
3.2 Commencement of Participation. Any Employee who has satisfied
the eligibility requirements of Section 3.1 shall become a Participant on the
Entry Date coinciding with or next following the date the Employee satisfies
such eligibility requirements. Any Employee eligible to participate in the
Plan who desires to make Tax Reduction Contributions and/or Investment Plan
Contributions may elect to make such contributions by executing and filing
with his Employer an enrollment form, in such form and manner as the Committee
may prescribe, on which he (i) authorizes Tax Reduction Contributions pursuant
to a tax reduction agreement as described in Section 4.1(b), or Investment
Plan Contributions pursuant to an investment plan agreement as described in
Section 4.2(b), or both, and (ii) designates a contribution rate.
Participation in the Plan with respect to such contributions shall commence on
the effective date of the Employee's agreement in accordance with the
provisions of Section 4.1(b) or Section 4.2(b), whichever date is earlier, and
shall continue in effect until amended or terminated. Upon commencement of
participation, each Employee shall designate a Beneficiary and shall elect the
Investment Funds to which contributions made to the Plan on his behalf are to
be allocated. By commencing participation in the Plan, the Employee agrees to
be bound by all terms and conditions of the Plan as then in effect or as
thereafter amended.
3.3 Waiver of Participation. Any Employee eligible to participate
in the Plan who chooses not to participate in the Plan with respect to
Investment Plan Contributions and tax Reduction Contributions as of the first
Entry Date following the date he becomes eligible to participate shall waive
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his right to participate until any subsequent Entry Date with respect to such
contributions.
3.4 Transfers from or to Eligible Employment. If a Participant is
transferred to a class of employment not eligible for participation in this
Plan but continues to be employed by an Affiliated Company, no further
contributions to the Trust shall be made by or on behalf of the Participant
under the Plan with respect to periods on and after the transfer unless the
Participant is subsequently transferred back to eligible employment. In
addition, a new enrollment form containing a tax reduction agreement must be
executed in accordance with Section 4.1(b) or a new enrollment form containing
an investment plan agreement must be executed in accordance with Section
4.2(b) before any Investment Plan Contributions or Tax Reduction Contributions
are made to the Plan on behalf of the Participant. During the period of his
employment in such transferred position:
(1) vesting shall continue in Matching Company Contributions and TRIP+
Contributions; and
(2) he may make withdrawals, transfer his account among the Funds,
apply for loans pursuant to Article XIII, and change Beneficiaries
in accordance with the provisions of the Plan.
If an employee is transferred to a class of employment eligible for
participation in this Plan, such Employee shall commence participation in the
Plan upon satisfying the eligibility requirements of Section 3.1 determined by
including all of such employee's Years of Service (including Years of Service
for periods during which such Employee was in a class of employment not
eligible to participate in the Plan. In addition, such Employee will be
credited with Credited Service for periods of service with the Company or an
Affiliated Company during which he was in a class of employment not eligible
to participate in the Plan for purposes of calculating TRIP+ Contributions to
be made on his behalf under Section 4.3A.
3.5 Hour of Service. An "Hour of Service" means:
(a) Performance of Duties. Each actual hour for which an individual
is paid or entitled to be paid for the performance of duties for an Affiliated
Company;
(b) Nonworking Paid Time. Each hour for which an individual is paid
or entitled to be paid by an Affiliated Company on account of a period of time
during which no duties are performed (irrespective of whether the employment
relationship has terminated) due to vacation, holiday, illness, incapacity,
disability, layoff, jury duty, military duty or leave of absence provided,
however, that no credit shall be given for payments made or due under a plan
maintained solely for the purpose of complying with applicable worker's or
unemployment compensation or disability insurance laws or for payments which
solely reimburse an individual for medical or medically related expenses
incurred by the individual; and
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(c) Back Pay. Each hour for which back pay, irrespective of
mitigation of damages, is either awarded or agreed to by an Affiliated
Company.
Notwithstanding any other provision of this Plan to the contrary, an
individual shall not be credited with Hours of Service more than once with
respect to the same period of time.
3.6 Year of Service.
(a) In General. A "Year of Service" means each 365 day period
(disregarding fractional years), measured during the period beginning on the
date on which an employee of an Affiliated Company (whether or not in a class
of employment eligible to participate in the Plan) first completes an Hour of
Service (or the first day of the month in which he is employed and completes
an Hour of Service, if his employment commences on the first regularly
scheduled workday of a month) and ending on the earlier of (i) the date such
employee quits, is discharged, retires or dies or (ii) the first anniversary
of the date such employee is absent from active employment for any other
reason including, but not limited to, short-term disability, vacation, leave
of absence or layoff. The applicable date under (i) or (ii) is such employee's
"severance from service date".
(b) Service Spanning Rules. Notwithstanding the foregoing, if an
employee is severed from service with an Affiliated Company by reason of
quitting, discharge or retirement but returns to employment with an Affiliated
Company and performs an Hour of Service within the 365 day period ending on
the first anniversary of his severance from service date, the interim period
shall count towards the computation of Years of Service. If an employee of an
affiliated Company is absent for a reason described in (a)(ii) of this Section
3.6 and then quits, is discharged or retires but subsequently returns to
employment and performs an Hour of Service, the interim period of absence
shall count towards the computation of Years of Service, provided that the
date on which such employee again performs an Hour of Service occurs within
the 365 day period ending on the first anniversary of the date the employee
was first absent from employment for a reason described in (a)(ii) of this
Section 3.6.
(c) Leaves of Absence. In accordance with uniform rules, the
Committee may, in its sole and absolute discretion, count certain periods of
absence from active employment with an Affiliated Company toward the
computation of Years of Service, even if not required pursuant to paragraphs
(a) or (b) of this Section 3.6.
3.7 Participation and Service Upon Reemployment. If an
individual's employment with an Affiliated Company is terminated but he is
reemployed as an Employee, the following rules shall apply in determining his
eligibility to participate in the Plan and His Years of Service:
(a) If the reemployed employee was a Participant in the Plan or had
satisfied the service and age requirements of Section 3.1 during his prior
period of employment, he shall be entitled upon reemployment to become a
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Participant in the Plan (if he is then included in a class of employment
eligible to participate in the Plan). In order to make contributions pursuant
to Section 4.1 and/or Section 4.2, he shall be required to execute a new
enrollment form containing a tax reduction agreement in accordance with
Section 4.1(b) and/or a new investment plan agreement in accordance with
Section 4.2(b).
(b) If the reemployed employee was not a Participant in the Plan or
had not satisfied the service and age requirements of Section 3.1 during his
prior period of employment, such service and age requirements must be
satisfied and the employee must be included in a class of employment eligible
to participate in the Plan before he becomes a Participant upon reemployment;
provided, however, that any Years of Service and Credited Service credited
during his prior period of employment shall be automatically reinstated as of
the date of his reemployment.
3.8 Predecessor Service. Credit towards Hours and Years of Service
shall be given for periods of employment with any corporation that 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, but only to the extent required by Section 414(a) of the Code;
provided, however, that even if not required by the Code, the Committee, on a
nondiscriminatory basis may, in its sole and absolute discretion, grant credit
for Hours and Years of Service with a predecessor corporation. Without
limitation of the foregoing, all service credited to an employee of an
Affiliated Company as of March 31, 1989 for eligibility and vesting purposes
under the terms of the Prior Plan shall be credited as of April 1, 1989 for
such purpose hereunder.
3.9 Credited Service.
(a) In General. Credited Service shall be used to determine the
amount of TRIP+ Contributions to be made by the Employer on behalf of each
Participant under Section 4.3A and shall be calculated in accordance with
paragraph (b) of this Section 3.9.
(b) Calculation of Credited Service. In determining an Employee's
Credited Service under the Plan, each Employee will be credited with periods
of service credited under any defined benefit pension plan maintained by the
Company or an Affiliated Company (a "Pension Plan") and, with respect to any
periods of service not credited to an Employee under a Pension Plan, the
Employee's service with the Company or an Affiliated Company and any
predecessor entity to the Company or an Affiliated Company commencing on the
date the Employee first completes an Hour of Service for the Company, an
affiliated Company or any predecessor entity to the Company or an Affiliated
Company and ending on the date he separates from service with the Company or
an Affiliated Company. For periods during which an Employee is not credited
with service under a Pension Plan, the Employee will be credited with one
month of service for each month in which he performs one Hour of Service or in
which he receives short-term or long-term disability payments from a
disability program maintained by the Company or an Affiliated Company.
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ARTICLE IV
CONTRIBUTIONS
4.1 Tax Reduction Contributions.
(a) Amount of Contributions. Any Employee eligible to participate
in the Plan may elect to have the Company make Tax Reduction Contributions to
the Trust on his behalf by executing an enrollment form containing a tax
reduction agreement as described in Section 4.1(b). The amount of Tax
Reduction Contributions made on behalf of a Participant for any payday shall
equal that whole percentage of his Compensation per payday selected by the
Participant, subject to the restrictions and limitations of Section 4.6 and
Article V hereof.
(b) Tax Reduction Agreement.
(i) Nature of Agreement. The tax reduction agreement referred to
in Section 4.1(a) shall be a legally binding agreement (on a form
prescribed by the Committee) whereby (A) the Participant agrees
that, as of the effective date of the agreement, the Compensation
otherwise payable to him thereafter shall be reduced by a whole
percentage (as selected by the Participant) not to exceed the
maximum percentage permitted under Section 4.6, and (B) the
Employer agrees to contribute the total amount of such reduction
in Compensation to the Trust on behalf of the Participant as a Tax
Reduction Contribution under Section 4.1(a). Such contributions
may be made by the Employer to the Trust on a monthly basis,
provided that in no event shall the Company's aggregate
contribution on behalf of a Participant under Section 4.1(a) with
respect to any pay period be made to the Trust later than the
earliest date on which the contribution can reasonably be
segregated from the Company's general assets or such later date
prescribed by the Code or applicable Treasury or Department of
Labor regulations. Subject to the provisions of paragraph (v) of
this Section 4.1(b) and Article V hereof, a Participant's tax
reduction agreement shall remain in effect until modified or
terminated in accordance with paragraphs (iii) or (iv) of this
Section 4.1(b).
(ii) Effective Date of Agreement. The effective date of a
Participant's tax reduction agreement shall be no earlier than the
first Entry Date commencing at least 30 days after such agreement
is received in executed form by the Committee (provided such
effective date is no earlier than the date the Participant first
becomes eligible to participate in the Plan).
(iii) Amendment of Agreement.
(A) A Participant may amend his tax reduction agreement
with respect to Compensation not yet paid to provide a
new lower whole percentage to be used to determine his
reduced Compensation amount; provided, however, the
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amended tax reduction agreement shall be effective no
earlier than the first Entry Date commencing at least
30 days after Notice is received. A Participant may
not amend his tax reduction agreement to lower his
percentage more often than two times in any Plan Year.
(B) A Participant may amend his tax reduction agreement
with respect to Compensation not yet paid to provide a
new higher percentage (within the limits of Section
4.6) to be used to determine his reduced Compensation
amount. A Participant who is a Non-Highly Compensated
Employee may increase his Tax Reduction Contributions
effective as of any Entry Date, provided that the
Committee has received an amended tax reduction
agreement at least 30 days prior to such Entry Date. A
Participant who is a Highly Compensated Employee may
increase his Tax Reduction Contributions effective
only as of the first day of a Plan Year, provided that
the Committee has received an amended tax reduction
agreement at least 30 days prior to the first day of
such Plan Year. The Committee may, in its sole and
absolute discretion, shorten the 30-day prior notice
periods required under this paragraph (iii).
(iv) Termination of Agreement. A Participant may terminate his tax
reduction agreement at any time with respect to Compensation not yet paid. The
effective date of termination shall be as soon as administratively possible
after the Participant's notice of termination is received in executed form by
the Committee. Any Participant who terminates his tax reduction agreement
shall be permitted to execute a new tax reduction agreement and resume having
contributions made to the Trust on his behalf under Section 4.1(a), provided
that the effective date of such new tax reduction agreement shall be
determined in the same manner as the effective date is determined for
increased Tax Reduction Contributions under paragraph (iii) of this Section
4.1(b).
(v) Transfer to Ineligible Employment or Termination of Employment.
A Participant's tax reduction agreement shall terminate automatically if the
Participant transfers to a class of employment not eligible for participation
in this Plan or if he terminates his reemployment with the Employer. Upon
return of the Participant to eligible employment, the Participant shall be
permitted to execute a new tax reduction agreement and resume having
contributions made to the Trust on his behalf under Section 4.1(a), provided
that the effective date of the new tax reduction agreement shall be no earlier
than the later of (A) the first Entry Date commencing at least 30 days after
the agreement is received in executed form by the Committee or (B) the date
the Participant resumes eligible employment. Transfers of Participants to
different payroll systems among the Employers shall be administered by
procedures established by the Committee.
4.2 Investment Plan Contributions.
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(a) Amount of Contributions. Any Employee eligible to participate
in the Plan may elect to make Investment Plan Contributions to the Trust by
executing an enrollment form containing an investment plan agreement as
described in Section 4.2(b). The amount of Investment Plan Contributions made
by a Participant for any payday shall equal that whole percentage of his
Compensation per payday selected by the Participant, subject to the
restrictions and limitations contained in Section 4.6 and Article VI hereof.
(b) Investment Plan Agreement.
(i) Nature of Agreement. The investment plan agreement
referred to in Section 4.2(a) shall be a legally binding
agreement (on a form prescribed by the Committee) whereby (A)
the Participant agrees that, as of the effective date of the
agreement, the Compensation otherwise payable to him thereafter
shall be adjusted by a whole percentage (as selected by the
Participant) not to exceed the maximum percentage permitted
under Section 4.6 and (B) the Participant agrees to contribute
the total amount of said adjustment in Compensation upon each
payday to the Trust as an Investment Plan Contribution under
Section 4.2(a). Such contributions may be made by the Employer
to the Trust on a monthly basis, provided that in no event
shall the Company's aggregate contribution on behalf of a
Participant under Section 4.2(a) with respect to any pay period
be made to the Trust later than the earliest date on which the
contribution can reasonably be segregated from the Company's
general assets or such later date prescribed by the Code or
applicable Treasury or Department of Labor regulations.
Subject to the provisions of paragraph (v) of this Section
4.2(b) and Article VI hereof, a Participant's investment plan
agreement shall remain in effect until modified or terminated
in accordance with paragraphs (iii) or (iv) of this Section
4.2(b).
(ii) Effective Date of Agreement. The effective date of a
Participant's investment plan agreement shall be no earlier
than the first Entry Date commencing at least 30 days after
such agreement is received in executed form by the Committee
(provided such effective date is no earlier than the date the
Participant first becomes eligible to participate in the Plan).
(iii) Amendment of Agreement. A Participant may amend his
investment plan agreement at any time with respect to
Compensation not yet paid to increase or to decrease the whole
percentage of his Compensation (within the limits of Section
4.6) to be used to determine his Investment Plan Contribution.
The amended investment plan agreement shall be effective no
earlier than the first Entry Date commencing at least 30 days
after Notice is received. A Participant may not amend his
investment plan agreement under this Section 4.2(b)(iii) more
often than two times in any Plan Year.
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(iv) Termination of Agreement. A Participant may terminate
his investment plan agreement at any time with respect to
Compensation not yet paid. The effective date of termination
shall be as soon as administratively possible after the
Participant's notice of termination is received in executed
form by the Committee. Any Participant who terminates his
investment plan agreement shall be permitted to execute a new
investment plan agreement and resume making contributions to
the Trust under Section 4.2(a), provided that the effective
date of such new investment plan agreement shall be no earlier
than a subsequent Entry Date (and, in the case of a Highly
Compensated Participant, the first Entry Date in the following
Plan Year), in any case commencing at least 30 days after the
new investment plan agreement is received in executed form by
the Committee.
(v) Transfer to Ineligible Employment or Termination of
Employment. A Participant's investment plan agreement shall
terminate automatically if the Participant transfers to a class
of employment not eligible for participation in this Plan or if
he terminates his employment with the Employer. Upon return of
the Participant to eligible employment, the Participant shall
be permitted to execute a new investment plan agreement and
resume making contributions to the Trust under Section 4.2(a),
provided that the effective date of the new investment plan
agreement shall be no earlier than the later of (A) first Entry
Date commencing at least 30 days after the agreement is
received in executed form by the Committee or (B) the date the
Participant resumes eligible employment. Transfers of
Participants to different payroll systems among the Employers
shall be administered by procedures established by the
Committee.
4.3 Matching Company Contributions.
(a) Contributions. In addition to the contributions described in
Sections 4.1, 4.2, 4.3A and 4.4 hereof, the Employer shall make Matching
Company Contributions to the Trust on behalf of each Participant. The amount
of Matching Company Contributions for any given Plan Year shall be determined
by the Employer, in conjunction with Zurn, and shall be subject to the
limitations of Section 6.1; provided, however, that no Matching Company
Contributions will be made with respect to Tax Reduction Contributions or
Investment Plan Contributions that in the aggregate exceed 6% of a
Participant's Compensation for the Plan Year. If, as of the last day of any
Plan Year, the Employer determines that a Participant who is an Employee on
the last day of such Plan Year did not receive the amount of Matching Company
Contributions to which such Participant was entitled for the Plan Year based
on his Tax Reduction Contributions and Investment Plan contributions made
during the Plan Year and his Compensation for the Plan Year, the Employer
shall make an additional Matching Company Contribution on behalf of such
Participant in an amount necessary to provide the Participant with the
Matching Company Contribution to which he is entitled for such Plan Year at
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the time prescribed in Section 4.3(b).
(b) Timing of Matching Company Contributions. The Matching Company
Contributions made to the Trust under Section 4.3(a) for any Plan Year
generally shall be made quarterly, and in no event later than the date
described in Section 4.5.
(c) Waiver of Matching Contributions. In accordance with rules
prescribed by the Committee, a Participant may waive in advance of any Plan
Year or other prescribed period the allocation of Matching Company
Contributions to his Matching Company Contribution Account that otherwise
would be made thereto.
4.3A TRIP+ Contributions. In addition to the contributions
described in Sections 4.1, 4.2, 4.3 and 4.4 hereof, the Employer shall make
TRIP+ Contributions to the Trust for each calendar quarter in the amount
determined under paragraphs (a) and (b) below.
(a) Level One Contributions. The Employer shall contribute on
behalf of each Participant an amount equal to 2% of the Participant's
Compensation.
(b) Level Two Contributions. The Employer shall contribute on
behalf of each Participant a percentage of the Participant's Compensation
determined under the following formula, based on the Participant's years of
Credited Service:
Years of Credited Service Percentage of Compensation
Less than 5 0%
5 but less than 15 2%
15 but less than 20 4%
20 or more 7%
The Employer may for any Plan Year designate all or any portion of the TRIP+
Contributions made pursuant to this Section 4.3A(b) for such Plan Year as
"qualified non-elective contributions" within the meaning of Section
401(m)(4)(C) of the Code.
4.4 Employer Qualified Non-Elective Contributions. To insure that the
Actual Deferral Percentage tests of Section 401(k) of the Code as described in
Section 5.2 hereof or the Contribution Percentage tests of Section 401(m) of
the Code as described in Section 6.1 hereof are met for any Plan Year, an
Employer, under such rules and regulations as the Secretary of the Treasury
may prescribe, may make additional contributions that shall constitute
"qualified non-elective contributions" within the meaning of Section
401(m)(4)(C) of the Code on behalf of Non-Highly Compensated Employees
selected by the Company who are eligible to make Tax Reduction Contributions
or Investment Plan Contributions for the Plan Year. Each Plan Year an
Employer shall designate the portion, if any, of the qualified non-elective
contributions that it made for the Plan Year that shall be considered under
Section 5.2 for the Actual Deferral Percentage tests and the portion, if any,
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that shall be considered under Section 6.1 for the Contribution Percentage
test.
4.5 Time of Contributions. In addition to any other requirements
hereunder relating to the timing of contributions, contributions made by an
Employer pursuant to Sections 4.1, 4.3, 4.3A or 4.4 if any, for any fiscal
year of the Employer shall be paid in full not later than the time prescribed
by law to enable the Employer to obtain a deduction therefor on its Federal
income tax return for said year. Contributions made after the last day of the
Plan Year but within the time for filing an Employer's Federal income tax
return (including extensions thereof) for the fiscal year that ends with or
within the last day of the Plan Year shall be deemed made as of the last day
of that Plan Year if so directed by the Employer, except such contributions
shall not share in increase, decreases, or income to the Trust Fund prior to
the date actually made. Notwithstanding the foregoing, upon an Employer's
request, a contribution that was made upon a mistake of fact or upon
deductibility of the contribution shall be returned to the Employer within one
year after the payment of the contribution or disallowance of the deduction
(to the extent disallowed) as the case may be; provided, however, the amount
returned to an Employer due to mistake of fact or denial of deductibility
shall not be increased by any earnings thereon and shall be reduced by any
losses attributable to such amount.
4.6 Maximum Combined Tax Reduction and Investment Plan
Contributions. Notwithstanding any provision of Sections 4.1 and 4.2 to the
contrary, no Participant may make Tax Reduction Contributions and/or
Investment Plan Contributions in an amount, when combined for any Plan Year,
in excess of 15% of such Participant's Compensation or such other percentage
as the Committee shall determine for purposes of complying with any
restriction or limitation imposed by the Code.
4.7 Manner of Making Contributions. All contributions to the Trust
shall be paid directly to the Trustee. Tax Reduction Contributions and
Investment Plan Contributions shall be made in cash. Matching Company
Contributions and TRIP+ Contributions made with respect to calendar quarters
ending on and after June 30, 1997 shall be made in Zurn Stock except as
otherwise directed by Zurn, acting in its discretion. Rollover Contributions
shall be made as provided in Section 4.9. In connection with each
contribution, the Employer shall provide the Recordkeeper with the following
information:
(a) the identity of each Participant on whose behalf the
contribution is being made and the amount thereof; and
(b) whether the amount contributed on behalf of the Participant is
a Tax Reduction Contribution, an Investment Plan Contribution, a Matching
Company Contribution, a TRIP+ Contribution, or a Rollover Contribution.
The Recordkeeper shall provide the Trustee with any of the information
received by it which is necessary for the Trustee to perform its duties and
obligations with respect to the Trust.
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4.8 Reduction of Employer Contributions. The aggregate
contributions of each Employer pursuant to Sections 4.3, 4.3A and 4.4 in any
Plan Year shall be reduced by the value of Accounts forfeited under the
provisions of Sections 5.1, 5.3, 6.2, 8.3, 10.3 and 11.9 after payment of
expenses pursuant to Section 14.8.
4.9 Rollover Contributions. Any Participant or Employee (including
an Employee who has not satisfied the eligibility requirements of Article
III), with the Committee's written consent and after complying with all
applicable laws and filing with the Trustee the form prescribed by the
Committee, may make or have made on his behalf a Rollover Contribution as
described in Section 2.48. The Committee may adopt rollover procedures and,
before permitting a Rollover Contribution, may require an Employee to furnish
such information regarding the amount proposed to be rolled over as the
Committee determines is necessary or appropriate. If a Rollover Contribution
is made by or on behalf of an Employee who has not satisfied the eligibility
requirements of Article III, the provisions of the Plan shall be generally
applicable to such Employee and the Rollover Contribution, unless expressly
provided otherwise herein. The Committee shall allocate and credit a Rollover
Contribution to the contributing party's Rollover Contribution Account as of
the Valuation Date immediately following the date on which the Rollover
Contribution is made. A Rollover Contribution shall be nonforfeitable and the
value thereof shall be paid to the Participant in the manner the Participant
(or, if applicable, the Participant's Beneficiary) elects pursuant to Section
11.4 upon retirement, termination of employment, Disability or death.
Rollover Contributions shall be made in cash and not in stock or other
property, unless otherwise permitted by the Committee. An investment election
on a form prescribed by the Committee shall be submitted with an Employee's
Rollover Contribution and shall direct that such contribution be invested in
the Investment Funds in multiples described in Section 9.5(d). Hereafter, the
Employee may change the investment of his Rollover Contribution in accordance
with Section 9.5(d)(ii).
4.10 Transfers from Other Plans. The Committee, in its discretion,
may accept a direct transfer to the Plan from another plan qualified under
Section 401(a) of the Code of all or a portion of the amount credited under
such other plan to an Employee; provided, however, that the Plan shall not
accept a transfer from any plan that is subject to the survivor annuity
requirements of Sections 401(a)(11) or 417 of the Code. The Committee may
adopt rules with respect to any such transfer including, but not limited to,
rules with respect to accounting for, and the investment of, amounts
transferred. In the event that an amount transferred to the Plan pursuant to
this Section 4.10 is attributable to a cash or deferred election that was made
pursuant to Section 401(k) of the Code, such amount shall be subject to the
same rules that apply under the Plan to Tax Reduction Contributions.
-25-<PAGE>
ARTICLE V
LIMITATIONS AND RESTRICTIONS ON
TAX REDUCTION CONTRIBUTIONS
5.1 Dollar Limitation. For any taxable year of a Participant, the
aggregate amount of (i) contributions made to the Plan pursuant to Section 4.1
on behalf the Participant for that taxable year, and (ii) amounts deferred by
the Participant for that taxable year under a salary reduction agreement under
any other plan, contract or agreement described in Sections 401(k), 403(b) or
408(k) of the Code sponsored by an Affiliated Company, shall not exceed $7,000
or such other dollar limitation prescribed by Code Section 402(g) for that
taxable year as adjusted by the Secretary of the Treasury at the same time and
in the same manner as provided under Section 415(d) of the Code for adjusting
the dollar limitation in effect under Section 415(b)(1)(A) of the Code (such
dollar limitation, as adjusted, shall hereinafter be referred to as the
"Annual Deferral Limitation").
If Tax Reduction Contributions made on behalf of a Participant for a
taxable year exceed the Annual Deferral Limitation for that year, the amount
of such excess-shall be referred to as "Excess Elective Deferrals." Excess
Elective Deferrals (adjusted for the income or loss attributable to such
excess amount) shall be distributed to the Participant not later than the
April 15 immediately following the taxable year of the Participant for which
the Excess Elective Deferrals were made to the Plan. The Company shall reduce
the amount of the Excess Elective Deferrals under this Section 5.1 by the
amount of Excess Contributions (as determined under Section 5.3), if any,
previously distributed to the Participant for the Plan Year beginning in that
taxable year. The Company shall determine the net income or net loss in the
same manner as described in Section 5.3 for Excess Contributions, except the
numerator of the allocation fraction shall be the amount of the Participant's
Excess Elective Deferrals for the taxable year under this Section 5.1 and the
denominator of the allocation fraction shall be the balance of the
Participant's Tax Reduction Contribution Account attributable to Tax Reduction
Contributions as of the end of the taxable year (without regard to the net
income or net loss for the taxable year on that portion of the Participant's
Tax Reduction Contribution Account); provided, however, if there is a loss
attributable to such excess amount, the amount of the distribution adjusted
for such loss shall be limited to an amount which does not exceed the lesser
of (i) the aggregate balance of the Participant's Tax Reduction Contribution
Account or (ii) the Tax Reduction Contributions made on behalf of the
Participant for that taxable year. In adjusting a Participant's Excess
Elective Deferrals for the income or loss attributable to such Excess Elective
Deferrals, the income or loss attributable to such excess contributions for
the "gap period" shall not be considered. For purposes of this Section 5.1,
"gap period" shall mean the period beginning with the first day of the taxable
year next following the taxable year for which the Excess Elective Deferrals
were made on behalf of the Participant and ending on the date of the distribu-
tion. If the Excess Elective Deferrals are distributed to a Participant from
the Plan pursuant to this Section 5.1, the Matching Company Contribution, if
any, to which such Excess Elective Deferrals relate (plus any income and minus
any loss attributable thereto), determined after the application of Section
6.2, shall be forfeited (whether or not vested) at the time the Excess
-26-<PAGE>
Elective Deferrals are distributed, and the forfeitures shall be applied as
set forth in Section 11.12.
If the Participant also (i) participates in one or more other qualified
cash or deferred arrangements within the meaning of Section 401(k) of the
Code, (ii) has employer contribution made on his behalf pursuant to a salary
reduction agreement under Section 408(k) of the Code, or (iii) has an employer
contribution made on his behalf pursuant to a salary reduction agreement
toward the purchase of an annuity contract under Section 403(b) of the Code,
and the sum of the elective deferrals [as defined in Section 402(g)(3) of the
Code] that are made for the Participant during a taxable year under such other
arrangements and this Plan exceeds the Annual Deferral Limitation for that
taxable year, the Participant shall, not later than the March 1 following the
close of his taxable year for which the Excess Elective Deferrals have been
made, notify the Committee in writing of the portion of the Excess Elective
Deferrals that he wishes to be allocated to this Plan, if any, and request
that the Tax Reduction Contributions made on his behalf under this Plan be
reduced by the allocable amount specified by the Participant. If all plans,
contracts and agreements described in Sections 401(k), 403(b) and 408(k) of
the Code pursuant to which the Participant is able to defer amounts for a
taxable year for which Excess Elective Deferrals have been made are sponsored
by an Affiliated Company, the Company shall determine to which plan, contract
or agreement (including the Plan) the Excess Elective Deferrals shall be
allocated for that taxable year end if the Excess Elective Deferrals are to be
allocated to the Plan, the Company shall notify the Committee in writing not
later than March 1 following the close of that taxable year. Such
notification shall be deemed to be a notification by the Participant to the
Committee. The portion of Excess Elective Deferrals that is allocated to this
Plan, if any, shall be adjusted for income and loss in the same manner as
described in Section 5.3 and shall then be distributed to the Participant no
later than the immediately following April 15. If the Tax Reduction
Contributions made on behalf of a Participant for a taxable year do not exceed
the Annual Deferral Limitation for that taxable year and the Committee has not
received any written Notice from the Participant (or deemed to have received
such Notice as described above) by the March 1 immediately following that
taxable year notifying the Committee that the Participant allocates a portion
of the Excess Elective Deferrals, if any, for that taxable year to the Plan,
the Committee may assume that none of the Tax Reduction Contributions made on
behalf of the Participant for that taxable year constitute Excess Elective
Deferrals and that no distribution is required to be made from the
Participant's Tax Reduction Contribution Account pursuant to this Section 5.1.
Notwithstanding the fact that Excess Elective Deferrals have been (or will be)
distributed to a Highly Compensated Employee as provided above, the excess
amount of such Tax Reduction Contributions or the portion of such Tax
Reduction Contributions that are deemed to constitute Excess Elective
Deferrals by reason of the Company's or Participant's written Notice of
allocation hereunder shall still be treated as a Tax Reduction Contribution
for purposes of applying the Actual Deferral Percentage test described in
Section 5.2 hereof for the Plan Year in which such Excess Elective Deferrals
were made, except to the extent provided under rules prescribed by the
Secretary of Treasury.
-27-<PAGE>
5.2 Actual Deferral Percentage Tests. For each Plan Year, the
Employer shall determine whether the aggregate amount allocated to each
Participant's Tax Reduction Contribution Account attributable to Tax Reduction
Contributions, and qualified non-elective contributions (that are designated
under Section 4.3A and/or Section 4.4 for consideration under this Section
5.2) made for that Plan Year shall satisfy one of the following tests, in
addition to the test set forth in Article VII:
(a) the "Actual Deferral Percentage" for the group consisting of
all eligible Highly Compensated Employees (as defined below) shall not exceed
the "Actual Deferral Percentage" for the group consisting of all eligible
Non-Highly Compensated Employees (as defined below) multiplied by 1.25; or
(b) the "Actual Deferral Percentage" for the group consisting of
all eligible Highly Compensated Employees shall not exceed the lesser of (i)
200% of the "Actual Deferral Percentage" for the group consisting of all
eligible Non-Highly Compensated Employees or (ii) the "Actual Deferral
Percentage" for the group consisting of all eligible Non-Highly Compensated
Employees plus two percentage points or such lesser amount as the Secretary of
the Treasury shall prescribe.
For purposes of this Article V, the following terms shall have the
following meanings:
(a) "Actual Deferral Percentage" for a Plan Year means, with
respect to the group consisting of the eligible Highly Compensated Employees
and the group consisting of the eligible Non-Highly Compensated Employees, the
average (expressed as a percentage) of the ratios, calculated separately for
each Employee in each such group and rounded to the nearest one-hundredth of
one percent, of the amount of Tax Reduction Contributions and qualified
non-elective contributions (which are designated under Section 4.3A and/or
Section 4.4 for consideration under this Section 5.2) allocated to each
Employee's Tax Reduction Contribution Account (unreduced in the case of Highly
Compensated Employees by distributions made to such Employee pursuant to
Section 5.1 hereof) for such Plan Year to such Employee's Compensation as
defined in Section 2.13(c) for the Plan Year.
For aggregated Family Members treated as a single Highly Compensated
Employee under Section 2.22(b)(iv), the ratio of the family unit is the
greater of (i) the ratio determined by combining the aggregate Tax Reduction
Contributions and qualified non-elective contributions (described above)
allocated to each Employee's Tax Reduction Contribution Account (unreduced by
distributions made to such Employee pursuant to Section 5.1 hereof) for such
Plan Year and dividing such sum by the Compensation for such Plan Year of the
Family Members who are Highly Compensated Employees without family aggregation
or (ii) the ratio determined by combining the aggregate Tax Reduction
Contributions and qualified non-elective contributions (described above)
allocated to each Employee's Tax Reduction Contribution Account (unreduced by
distributions made to such Employee pursuant to Section 5.1 hereof) for such
Plan Year and dividing such sum by the Compensation for such Plan Year of all
aggregated Family Members. Each Family Member aggregated with a Highly
Compensated Employee for purposes of the preceding sentence shall not be
-28-<PAGE>
considered a separate Employee in determining the Actual Deferral Percentage
for either eligible Highly Compensated Employees or eligible Non-Highly
Compensated Employees.
(b) "Actual Deferral Ratio" means each separately calculated ratio
under subparagraph (a) above.
An Employee who is considered a Highly Compensated Employee under Section
2.22 or a Non-Highly Compensated Employee under Section 2.35 shall be
considered an "eligible Highly Compensated Employee" or an "eligible
Non-Highly Compensated Employee" for purposes of this Section 5.2 for each
Plan Year he is employed by an Employer if he has satisfied the eligibility
requirements of Article III and reached an Entry Date on which he could have
become a Participant, regardless of (i) whether he has elected to have an
Employer make a Tax Reduction Contribution to the Plan on his behalf under
Section 4.1 for that Plan Year, (ii) whether his right to make Tax Reduction
Contributions to the Plan for that Plan Year has been suspended under Section
11.1 due to his receipt of a hardship distribution, or (iii) he is suspended
from further contributions during the Plan Year due to the limitations of
Section 415 of the Code as described in Article VIII. Consequently, for
purposes of this Section 5.2, the Actual Deferral Ratio for each Highly
Compensated Employee and Non-Highly Compensated Employee who is eligible to,
but does not elect to have an Employer make an Employee Tax Reduction
Contribution on his behalf to the Plan for a Plan Year, shall be zero for that
Plan Year, unless the Employer makes a qualified non-elective contribution to
the Plan for a Plan Year to satisfy the Actual Deferral Percentage tests, in
which case the Actual Deferral Ratio for each such Non-Highly Compensated
Employee shall be the ratio of that portion of the qualified non-elective
contribution attributable to contributions made by the Employer to satisfy the
Actual Deferral Percentage tests that is allocated to his Tax Reduction
Contribution Account for the Plan Year to his Compensation as defined in
Section 2.13(c) for the Plan Year.
If any Employee who is an eligible Highly Compensated Employee is a
participant in two or more cash or deferred arrangements described in Section
401(k) of the Code that are maintained by an Affiliated Company, excluding any
such arrangement that is part of an employee stock ownership plan [as defined
in Section 4975(e)(7) of the Code] for purposes of determining his ratio under
this Section 5.2, all such cash or deferred arrangements shall be treated as
one cash or deferred arrangement to the extent required under Section 401(k)
of the Code. For purposes of this Section 5.2, if two or more plans or
arrangements described in Section 401(k) of the Code are considered one plan
for the purposes of Sections 401(a)(4) or 410(b) of the Code, such
arrangements shall be treated as a single arrangement, and if the plans use
different plan years, the Company shall determine the combined cash or
deferred contributions and ratios on the basis of the plan years ending in the
same calendar year. The Committee shall maintain records to demonstrate
compliance with the tests under this Section 5.2, including the extent to
which the Plan used qualified non-elective contributions pursuant to Section
4.3A and/or Section 4.4 to satisfy a test.
-29-<PAGE>
5.3 Adjustments Required to Satisfy an Actual Deferral Percentage
Test. If Tax Reduction Contributions made for any Plan Year do not satisfy
one of the tests set forth in Section 5.2, the excess amount that would result
in a test being satisfied for that Plan Year if it had not been made to the
Plan shall be referred to as an "Excess Contribution" and the Committee shall,
in its sole and absolute discretion and notwithstanding any other provision of
the Plan to the contrary (but subject to the provisions of Sections 5.4, 5.5
and 5.6), make appropriate adjustments pursuant to one or more of the
following provisions:
(a) Within 2-1/2 months following the close of the Plan Year for
which an Excess Contribution was made, Tax Reduction Contributions
representing the Excess Contribution may be recharacterized as Investment Plan
Contributions, subject to the conditions set forth in this Section 5.3;
(b) Within 2-1/2 months following the close of the Plan Year for
which an Excess Contribution was made, if administratively possible, and
within 12 months after the close of such Plan Year at the latest, the Excess
Contribution (plus any income and minus any loss attributable thereto) shall
be distributed to the Highly Compensated Employees to whose Tax Reduction
Contribution Account all or a portion of such Excess Contribution was made
first from such Highly Compensated Employees' unmatched Tax Reduction
Contributions, and then if necessary, from the such Highly Compensated
Employees' matched Tax Reduction Contributions; provided, however, that if
matched Tax Reduction Contributions are distributed to correct an Excess
Contribution, the Matching Company Contributions to which such Excess
Contribution relates (plus any income and minus any loss attributable thereto)
shall be forfeited (whether or not vested) at the time the Excess Contribution
is distributed and the forfeiture shall be applied as set forth in Section
11.12; or
(c) Within the time prescribed by law to enable an Employer to
obtain a deduction for a contribution on its federal income tax return for the
Plan Year for which an Excess Contribution was made, the Employer shall, if
the conditions applicable to qualified non-elective contributions under final
Treasury Regulations issued by the Secretary of the Treasury are satisfied,
make a qualified non- elective contribution pursuant to Section 4.3A and/or
4.4 on behalf of the eligible Non-Highly Compensated Employees (as defined in
Section 5.2) who meet the requirements of Section 4.4 in an amount sufficient
to satisfy one of the tests set forth in Section 5.2 [before or after the
application of subsections (a) and/or (b)above].
Tax Reduction Contributions that are recharacterized as Investment Plan
Contributions pursuant to subsection (a) hereof shall be reported to the
Internal Revenue Service and to the affected Highly Compensated Employee as
income for the taxable year in which the Highly Compensated Employee would
have received the recharacterized Tax Reduction Contributions in cash, had he
not elected to have such amounts contributed to the Plan. These characterized
amounts shall be treated as Investment Plan Contributions for purposes of
Sections 72, 401(a)(4) and 6047 of the Code and for purposes of applying the
Contribution Percentage tests of Section 6.1 (for the Plan Year when included
as income by the Highly Compensated Employee), but such amounts shall be
-30-<PAGE>
treated for all other purposes under the Plan as Tax Reduction Contributions.
The Employer shall notify each affected Highly Compensated Employee of the
recharacterization within 2-l/2 months following the Plan Year to which the
recharacterization occurs.
With respect to Plan Years beginning before January 1, 1997, the amount of
the Excess Contributions to be distributed pursuant to subsection (b) hereof
shall be determined by a leveling method, under which the Actual Deferral
Ratio of the Highly Compensated Employee with the highest Actual Deferral
Ratio is reduced to the extent required (i) to enable the Plan to satisfying
of the Actual Deferral Percentage tests set forth in Section 5.2 or (ii) to
cause such Highly Compensated Employee's Actual Deferral Ratio to equal the
Actual Deferral Ratio of the Highly Compensated Employee with the next highest
Actual Deferral Ratio. This procedure shall be repeated until the Plan
satisfies one of the Actual Deferral Percentage tests set forth in Section
5.2. Once the Plan satisfies one of the Actual Deferral Percentage tests, the
amount of the Excess Contributions for each Highly Compensated Employee who
had his Actual Deferral Ratio reduced under the preceding sentences shall be
determined for each such Employee by first subtracting from the total Tax
Reduction Contributions made on his behalf (without regard to this Section
5.3) the product of such Employee's Actual Deferral Ratio (as reduced under
this Section 5.3) and his Compensation and then subtracting the amount of
Excess Deferrals for the Plan Year, if any, that have been previously
distributed under Section 5.1 to the Employee for the taxable year ending in
that Plan Year.
With respect to Plan Years beginning on and after January 1, 1997, the
amount of Excess Contributions to be distributed pursuant to subsection (b)
hereof shall be determined by first determining the total dollar amount of Tax
Reduction Contributions which must be reduced to satisfy the limitation and by
allocating these amounts, in accordance with guidance provided by the
Secretary of the Treasury or his delegate, to the Highly Compensated Employees
on behalf of whom the largest amounts of Tax Reduction Contributions have been
made to the Plan for the given Plan Year.
Excess Contributions of each Highly Compensated Employee subject to the
family member aggregation rules under Section 2.22(b)(iv) shall be allocated
among the Highly Compensated Employee and his aggregated Family Members in
proportion to the Tax Reduction Contributions and qualified non-elective
contributions that are considered under Section 5.2 of the Highly Compensated
Employee and each such Family Member aggregated with him to determine the
combined Actual Deferral Ratio.
The income or loss attributable to the portion of the Excess Contributions
for a Plan Year that are to be distributed to a Highly Compensated Employee
hereunder shall be determined by multiplying the amount of the income or loss
allocable to the Participant's Tax Reduction Contribution Account for the Plan
Year by a fraction, the numerator of which is the portion of the Excess
Contributions for the Plan Year that is to be distributed to that Participant
and the denominator of which is the balance of the Participant's Tax Reduction
Contribution Account on the last day of the Plan Year after adjustment as of
such date under Section 9.4. In adjusting a Participant's Excess
-31-<PAGE>
Contributions for the income or loss attributable to such Excess
Contributions, the income or loss attributable to such Excess Contributions
for the "gap period" shall not be considered. For purposes of this Section
5.3, "gap period" shall mean the period beginning with the first day of the
Plan Year next following the Plan Year for which the Excess Contributions were
made on behalf of the Participant and ending on the date of the distribution.
5.4 Election of Applicable Correction Methods By Highly Compensated
Employees. For purposes of satisfying the Actual Deferral Percentage tests,
the Committee, in its sole discretion, may permit a Highly Compensated
Employee to elect whether the appropriate method of correcting Excess
Contributions shall be recharacterization pursuant to Section 5.3(a),
distribution pursuant to Section 5.3(b) or a combination of both.
5.5 Additional Adjustments of Tax Reduction Contributions. For
purposes of assuring compliance with the Actual Deferral Percentage tests of
Section 5.2 hereof, the Committee may, in its sole and absolute discretion,
make such adjustments, reductions or suspensions to Tax Reduction Contribution
rates of Participants who are Highly Compensated Employees at such times and
in such amounts as the Committee shall reasonably deem necessary, including
prospective reductions of Tax Reduction Contributions at any time prior to or
within a Plan Year. The Committee shall make such adjustments, reductions or
suspensions based upon periodic reviews of the Tax Reduction Contribution
rates of Highly Compensated Employees during the Plan Year and may make such
adjustments, reductions or suspensions in any amount notwithstanding any other
provisions hereof. In addition, the Committee shall take any other action to
assure compliance with the Actual Deferral Percentage tests as shall be
prescribed by the Secretary of the Treasury.
5.6 Other Permissible Methods of Testing and Correction. The
provisions of this Article V are intended to conform with Sections 401(k) and
402(g) of the Code. In the event that the Committee determines, based on
changes to the Code or interpretations or guidance issued by the Internal
Revenue Service, that the requirements of such Code sections may be applied in
a manner different from that prescribed in this Article V, the Committee may
make appropriate adjustments to the administration of the Plan to incorporate
such changes to the Code or interpretations or guidance. If a change to the
Code or interpretations or guidance issued by the Internal Revenue Service
results in more than one additional option in the manner in which this Article
V may be administered, the Committee shall have the limited discretion to
select the option to be used, provided that such option, when compared to the
other option or options, results in the smallest adjustment to Participant 's
Accounts.
ARTICLE VI
LIMITATIONS AND RESTRICTIONS ON INVESTMENT PLAN
CONTRIBUTIONS AND MATCHING COMPANY CONTRIBUTIONS
6.1 Contribution Percentage Tests. Subject to the provisions of
this Section 6.1, for each Plan Year, the Employer shall determine, after
first applying the provisions of Section 5.3(b), whether the sum of (i) the
amounts allocated to each Participant's Investment Plan Contribution Account
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attributable to Investment Plan Contributions [including Tax Reduction
Contributions recharacterized as Investment Plan Contributions pursuant to
Section 5.3(a)] for that Plan Year, (ii) amounts allocated to each
Participant's Matching Company Contribution Account attributable to Matching
Company Contributions (including Tax Reduction Contributions treated as
Matching Company Contributions pursuant to Section 6.5) for that Plan Year,
and (iii) the amount allocated to each Participant's Tax Reduction
Contribution Account attributable to qualified non-elective contributions
(that are designated under Section 4.3A and/or Section 4.4 for consideration
under this Section 6.1) for that Plan Year shall satisfy one of the following
tests, in addition to the test set forth in Article VII:
(a) the "Contribution Percentage" for the group consisting of all
eligible Highly Compensated Employees (as defined below) shall not exceed the
"Contribution Percentage" for the group consisting of all eligible Non-Highly
Compensated Employees (as defined below) multiplied by 1.25; or
(b) the "Contribution Percentage" for the group consisting of all
eligible Highly Compensated Employees shall not exceed the lesser of (i) 200%
of the "Contribution Percentage" for the group consisting of all eligible
Non-Highly Compensated Employees or (ii) the "Contribution Percentage" for the
group consisting of all eligible Non-Highly Compensated Employees plus two
percentage points or such lesser amount as the Secretary of the Treasury shall
prescribe.
For purposes of this Article VI, the following terms shall have the
following meanings:
(a) "Contribution Percentage" for a Plan Year means, with respect
to the group consisting of the eligible Highly Compensated Employees and the
group consisting of the eligible Non-Highly Compensated Employees, the average
(expressed as a percentage) of the ratios, calculated separately for each
Employee in each such group, of the sum of (i) the amount of Investment Plan
Contributions allocated to each Investment Plan Contribution Account for such
Plan Year, (ii) the amount of Matching Company Contributions allocated to each
Employee's Matching Company Contribution Account for such Plan Year, after
reduction for forfeited matching contributions, if any, under Section 5.3(b)
and (iii) the amount allocated to each Employee's Tax Reduction Contribution
Account attributable to qualified non-elective contributions which are
designated under Section 4.3A and/or Section 4.4 for consideration under this
Section 6.1 for such Plan Year to such Employee's Compensation as defined in
Section 2.13(c) for the Plan Year in which the Employees was an eligible
Highly Compensated Employee or eligible Non-Highly Compensated Employee.
Applicable to Plan Years beginning prior to January 1, 1997, for aggregated
Family Members treated as a single Highly Compensated Employee under Section
2.22 as then in effect, the ratio of the family unit is the greater of (i) the
ratio determined by combining the aggregate Investment Plan Contributions
allocated to each Employee's Investment Plan Contribution Account for such
Plan Year, Matching Company Contributions allocated to each Employee's
Matching Company Contribution Account for such Plan Year and qualified
non-elective contributions (described above) allocated to his Tax Reduction
-33-<PAGE>
Contribution Account for such Plan Year and dividing such sum by the
Compensation for such Plan Year of the Family Members who are Highly
Compensated Employees without family aggregation or (ii) the ratio determined
by combining the aggregate Investment Plan Contributions allocated to each
Employee's Investment Plan Contribution Account for such Plan Year, Matching
Company Contributions allocated to each Employee's Matching Company
Contribution Account for such Plan Year and qualified non-elective
contributions (described above) allocated to his Tax Reduction Contribution
Account for such Plan Year and dividing such sum by the Compensation
considered in the preceding sentence for such Plan Year of all aggregated
Family Members. Each Family Member aggregated with a Highly Compensated
Employee for purposes of the preceding sentence shall not be considered a
separate Employee in determining the Contribution Percentage for either
eligible Highly Compensated Employees or eligible Non-Highly Compensated
Employees.
(b) "Actual Contribution Ratio" means each such separately
calculated ratio under paragraph (a) above.
An Employee who is considered a Highly Compensated Employee under Section
2.22 or a Non-Highly Compensated Employee under Section 2.35 shall be
considered an "eligible Highly Compensated Employee" or an "eligible
Non-Highly Compensated Employee" for purposes of this Section 6.1 for each
Plan Year he is employed by an Employer if he has satisfied the eligibility
requirements of Article III and reached an Entry Date on which he could have
become a Participant, regardless of whether he elected to have an Employer
make an Investment Plan Contribution to the Plan on his behalf under Section
4.2 and is eligible to receive an allocation of an Investment Plan
Contribution or a Matching Company Contribution for that Plan Year.
Consequently, for purposes of this Section 6.1, the Actual Contribution Ratio
for each Highly Compensated Employee and Non-Highly Compensated Employee who
is eligible to, but does not elect to have an Employer make an Investment Plan
Contribution on his behalf to the Plan for a Plan Year and who does not
receive an allocation of a Matching Company Contribution for the Plan Year,
shall be zero for that Plan Year, unless an Employer makes a qualified
non-elective contribution to the Plan for a Plan Year to satisfy the
Contribution Percentage tests, in which case the Actual Contribution Ratio for
each such Non-Highly Compensated Employee shall be the ratio of that portion
of the qualified non-elective contribution attributable to contributions made
by an Employer to satisfy the Contribution Percentage tests that is allocated
to his Tax Reduction Contribution Account for the Plan Year to his
Compensation as defined in Section 2.13(c) for the Plan Year.
For purposes of this Section 6.1, if two or more plans of an Employer to
which matching contributions within the meaning of Section 401(m)(4)(A) of the
Code, employee voluntary after-tax contributions or elective deferrals within
the meaning of Section 401(m)(4)(B) of the Code are made are treated as one
plan for purposes of Section 410(b) of the Code [other than the average
benefit test, and excluding allocations under an employee stock ownership plan
described in Section 4975(e)(7) or 409 of the Code, or the portion of a plan
that constitutes an employee stock ownership plan], such plans shall be
treated as one plan for purposes of this Section 6.1, and, if the plans use
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different plan years, the Committee shall determine such combined
contributions and the Actual Contribution Ratios of Highly Compensated
Employees eligible to participate in the Plan on the basis of the plan years
ending in the same calendar year. The Committee shall maintain records to
demonstrate compliance with the tests under this Section 6.1, including the
extent to which the Plan used qualified non-elective contributions pursuant to
Section 4.3A and/or Section 4.4 to satisfy a test. In addition, if any
Employee who is an eligible Highly Compensated Employee participates in two or
more plans described in Section 401(a) of the Code that are maintained by an
Affiliated Company to which such contributions are made, all such
contributions shall be aggregated for purposes of this Section 6.1 to the
extent required under Section 401(m) of the Code.
6.2 Adjustments Required to Satisfy a Contribution Percentage Test.
If Investment Plan Contributions and Matching Company Contributions made for
any Plan Year do not satisfy one of the tests set forth in Section 6.1, the
excess amount that would result in a test being satisfied for the Plan Year if
it had not been made to the Plan shall be referred to as an "Excess Aggregate
Contribution" and the Committee shall, in its sole and absolute discretion and
notwithstanding any other provision hereof, make appropriate adjustments in
accordance with Sections 401(a)(4) and 401(m) the Code (and Treasury
regulations thereunder) pursuant to one or more of the following provisions in
the following order, provided that adjustments under subsection (c) may be
made without any adjustments first being made under subsections (a) or (b):
(a) Any Investment Plan Contributions made by Highly Compensated
Employees during the Plan Year that are not matched by Matching Company
Contributions in accordance with Section 4.3 (plus any income and minus any
loss attributable thereto) shall be distributed (according to the method
specified in this Section 6.2 below) to the Highly Compensated Employees to
whose Investment Plan Contribution Accounts all or a portion of Excess
Aggregate Contribution was made within 2-1/2 months following the close of the
Plan Year, if administratively possible, and within 12 months after the close
of such Plan Year, at the latest until either (i) the limits of Section 6.1
are satisfied or (ii) all such contributions are distributed.
(b) To the extent that the portion of the Excess Aggregate
Contribution for the Plan Year is allocable to a Matching Company Contribution
and Investment Plan Contributions that are matched in accordance with Section
4.3, the Committee shall eliminate the Excess Aggregate Contribution by
alternately applying paragraphs (i) and (ii) below [beginning with paragraph
(i)], on a pro rata basis.
(i) If the Matching Company Contribution is fully vested,
such vested portion, plus any income and minus any loss
attributable thereto, shall be distributed to the applicable
Highly Compensated Employees within 2-1/2-months following the
close of that Plan Year, if administratively possible, and
within 12 months after the close of such Plan Year, at the
latest, and if such Matching Company Contribution is not fully
vested, within 2-1/2 months following the close of that Plan
Year, if administratively possible, and within 12-months after
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the close of such Plan Year, at the latest, (A) the non-vested
portion of such Matching Company Contribution, plus any income
and minus any loss attributable thereto, shall be forfeited
from the Matching Company Contribution Accounts of the
applicable Highly Compensated Employees at the time the Excess
Aggregate Contribution is distributed and the forfeitures shall
be applied as set forth in Section 11.12 and (B) the vested
portion of such Matching Company Contribution, plus any income
and minus any loss attributable thereto, shall be distributed
to the applicable Highly Compensated Employees.
(ii) Any Investment Plan Contributions that were matched or
would have been matched but for the application of this Section
6.2 (plus any income and minus any loss attributable thereto)
shall be distributed (according to the method specified in this
Section 6.2 below) to the applicable Highly Compensated
Employees, within 2-1/2 months following the close of that Plan
Year, if administratively possible, and within 12 months after
the close of such Plan Year, at the latest.
(c) Within the time prescribed by law to enable an Employer to
obtain a deduction for a contribution on its federal income tax return for the
Plan Year for which an Excess Aggregate Contribution was made, the Employer
shall, if the conditions applicable to qualified non-elective contributions
under final Treasury Regulations issued by the Secretary of the Treasury are
satisfied make a qualified non-elective contribution pursuant to Section 4.3A
and/or Section 4.4 on behalf of the eligible Non-Highly Compensated Employees
(as defined in Section 6.1) who meet the requirements of Section 4.4 in an
amount sufficient to satisfy one of the tests set forth in Section 6.1 before
or after the application of subsections (a) and/or (b) above].
With respect to Plan Years beginning before January 1, 1997, the amount of
the Excess Aggregate Contributions to be distributed or forfeited pursuant to
subsections (a) and (b) hereof shall be determined by a leveling method under
which the Actual Contribution Ratio of the Highly Compensated Employee with
the highest Actual Contribution Ratio is reduced to the extent required (i) to
enable the Plan to satisfy one of the Contribution Percentage tests set forth
in Section 6.1 or (ii) to cause such Highly Compensated Employee's Actual
Contribution Ratio to equal the Actual Contribution Ratio of the Highly
Compensated Employee with the next highest Actual Contribution Ratio. This
procedure shall be repeated until the Plan satisfies one of the Contribution
Percentage tests set forth in Section 6.1. Once the Plan satisfies one of the
Contribution Percentage tests, the amount of the Excess Aggregate
Contributions for each such Highly Compensated Employee who had his Actual
Contribution Ratio reduced under the preceding sentences shall be determined
for each such Employee by subtracting from the total Investment Plan
Contributions and Matching Company Contributions made on his behalf (without
regard to this Section 6.2) the product of such Employee's Actual Contribution
Ratio (as reduced under this Section 6.2) and his Compensation.
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With respect to Plan Years beginning on and after January 1, 1997, the
amount of Excess Aggregate Contributions to be distributed pursuant to
subsections (a) and (b) hereof shall be determined by first determining the
total dollar amount of Excess Aggregate Contributions which must be reduced to
satisfy the limitation and by allocating these amounts, in accordance with
guidance provided by the Secretary of the Treasury or his delegate, to the
Highly Compensated Employees on behalf of whom the largest aggregate dollar
amounts of Investment Plan Contributions and Matching Company Contributions
(and qualified non-elective contributions that are considered under Section
6.1) have been made to the Plan for the given Plan Year.
Applicable to Plan Years beginning prior to January 1, 1997, Excess
Aggregate Contributions of each Highly Compensated Employee subject to the
Family Member aggregation rules of Section 2.22 as then in effect shall be
allocated among the Highly Compensated Employee and his aggregated Family
Members in proportion to the Investment Plan Contributions and Matching
Company Contributions (and qualified non-elective contributions that are
considered under Section 6.1) of the Highly Compensated Employee and each such
Family Member aggregated with him to determine the combined Actual
Contribution Ratio.
The income or loss attributable to the portion of the Excess Aggregate
Contributions for a Plan Year that are to be distributed to a Highly
Compensated Employee or forfeited from his Account shall be determined by
multiplying the amount of the income or loss allocable to the Participant's
Matching Company Contribution Account and his Investment Plan Contribution
Account for the Plan Year by a fraction, the numerator of which is the portion
of the Excess Aggregate Contributions for the Plan Year that are to be
distributed to that Participant and the denominator of which is the balance of
the Participant's Matching Company Contribution Account and Investment Plan
Contribution Account on the last day of the Plan Year after adjustment as of
such date under Section 9.4.
In adjusting a Participant's Excess Aggregate Contributions for the income
or loss attributable to such excess contributions, the income or loss
attributable to such excess contributions for the "gap period" shall not be
considered. For purposes of this Section 6.2, "gap period" shall mean the
period beginning with the first day of the Plan Year next following the Plan
Year for which the Excess Aggregate Contributions were made on behalf of the
Participant and ending on the date of the distribution.
6.3 Procedures Applicable to Tax Reduction Contributions
Recharacterized As Investment Plan Contributions. The determination of the
amount of Excess Aggregate Contributions with respect to a Plan Year shall be
made after determining the Excess Contributions, if any, to be treated as
Investment Plan Contributions due to recharacterization pursuant to Section
5.3(a). The income allocable to Excess Aggregate Contributions resulting from
the recharacterization of Tax Reduction Contributions shall be determined and
distributed as if such recharacterized Tax Reduction Contributions had been
distributed pursuant to Section 5.3(b) instead of recharacterized pursuant to
Section 5.3(a).
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6.4 Additional Adjustments and Prospective Reductions of Investment
Plan Contributions. In the event that it is determined at any time prior to
or within a Plan Year that the Contribution Percentage tests of Section 6.1
hereof could be exceeded with respect to such Plan Year, the Committee, in its
sole and absolute discretion, may make such adjustments, reductions or
suspensions to Investment Plan Contribution rates of Highly Compensated
Participants at such times and in such amounts as the Committee shall
reasonably deem necessary, including prospective reductions of Investment Plan
Contributions at any time prior to or within a Plan Year. The Committee shall
make such adjustments, reductions or suspensions based upon periodic reviews
of the Investment Plan Contribution rates of Highly Compensated Participants
during the Plan Year and may make such adjustments, reductions or suspensions
in any amount notwithstanding any other provisions hereof. In addition, the
Committee shall take any other action to assure compliance with the
Contribution Percentage tests as shall be prescribed by the Secretary of the
Treasury. If the Investment Plan Contributions of Highly Compensated
Participants are reduced, the amount of such reduction shall be determined by
(i) reducing the maximum allowable Investment Plan Contributions under Section
4.2 to such percentage which will, when applied to all Highly Compensated
Participants (and taking into account any reduction in Matching Company
Contributions as a consequence of a reduction in Tax Reduction Contributions
under Section 5.5 and a reduction in Investment Plan Contributions hereunder)
result in the maximum contribution percentage set forth in Section 6.1 not
being exceeded, and (ii) reducing accordingly the Investment Plan
Contributions that may be made in the remainder of the Plan Year in the case
of each Highly Compensated Participant with respect to whom such reduced
maximum percentage is exceeded. Notwithstanding the foregoing, the Committee
may round off or estimate the prospective reductions hereunder. Once a
reduction has been made hereunder, it shall remain in effect unless the
Committee determines that it is no longer necessary in order for the maximum
contribution percentage to be met.
6.5 Testing of Tax Reduction Contributions Under Contribution
Percentage Test. Notwithstanding the foregoing provisions of this Article VI
or of Article V, all or a portion of the Tax Reduction Contributions made on
behalf of eligible Non-Highly Compensated Employees may be treated as Matching
Company Contributions made on behalf of such eligible Non-Highly Compensated
Employees for the purpose of meeting the Contribution Percentage test set
forth in Section 6.1, provided that the Actual Deferral Percentage test of
Section 5.2 can be met, both when the Tax Reduction Contributions treated as
Matching Company Contributions hereunder are included in performing such
Actual Deferral Percentage test and when such Tax Reduction Contributions are
excluded in performing such Actual Deferral Percentage test. Except for
purposes of meeting the Contribution Percentage test of Section 6.1 to the
extent described hereunder, any such Tax Reduction Contributions shall
continue to be treated as Tax Reduction Contributions for all other purposes
of the Plan.
6.6 Other Permissible Methods of Testing and Corrections. The
provisions of this Article VI are intended to conform with Section 401(m) of
the Code. In the event that the Committee determines, based on changes to the
Code or interpretations or guidance issued by the Internal Revenue Service,
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that the requirements of such Code section may be applied in a manner
different from that prescribed in this Article VI, the Committee may make
appropriate adjustments to the administration of the Plan to incorporate such
changes to the Code or interpretations or guidance. If a change to the Code
or interpretations or guidance issued by the Internal Revenue Service results
in more than one additional option in the manner in which this Article VI may
be administered, the Committee shall have the limited discretion to select the
option to be used, provided that such option, when compared to the other
option or options, results in the smallest adjustment to Participant's
Accounts.
ARTICLE VII
AGGREGATE LIMIT ON ACTUAL DEFERRAL
AND CONTRIBUTION PERCENTAGES
7.1 General Rules. If at least one Highly Compensated Employee is
included in the Actual Deferral Percentage test under Section 5.2 and in the
Contribution Percentage test under Section 6.1, in addition to satisfaction of
the Actual Deferral Percentage test and the Contribution Percentage test, the
sum of the Highly Compensated Group's Actual Deferral Percentage under Section
5.2 and Contribution Percentage under Section 6.1 may not exceed the aggregate
limit (the "multiple use limitation") of this Article VII. The multiple use
limitation of this Article VII does not apply, however, unless prior to the
application of the multiple use limitation, the Actual Deferral Percentage and
the Contribution Percentage of the Highly Compensated Group each exceeds 125%
of the respective percentages for the Non-Highly Compensated Group.
7.2 Multiple Use Limitation. The multiple use limitation is the
greater of:
(a) the sum of (i) and (ii), where:
(i) is 1.25 times the greater of:
(A) the Actual Deferral Percentage of the Non-Highly
Compensated Group under Section 5.2 for the Plan Year; or
(B) the Contribution Percentage of the Non-Highly Compensated
Group under Section 6.1 for the Plan Year; and
(ii) is equal to two percentage points plus the lesser of the
percentage in subsection (i)(A) or (i)(B) above, but not more than
twice the lesser of the percentage in subsection (i)(A)or (i)(B); or
(b) the sum of (i) and (ii), where:
(i) is equal to 1.25 times the lesser of:
(A) the Actual Deferral Percentage of the Non-Highly
Compensated Group under Section 5.2 for the Plan Year; or
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(B) the Contribution Percentage of the Non-Highly Compensated
Group under Section 6.1 for the Plan Year; and
(ii) is equal to two percentage points plus the greater of the
percentage in subsection (i)(A) or (i)(B) above, but not more
than twice the greater of the percentage in subsection (i)(A)
or (i)(B).
The Committee shall determine whether the Plan satisfies the multiple use
limitation after applying the Actual Deferral Percentage test under Section
5.2 and the Contribution Percentage test under Section 6.1 and after any
corrective distributions, the use of qualified non-elective contributions, any
recharacterization of Excess Contributions, or any other adjustments required
or permitted by Articles V and VI. If after applying this Section 7.2, the
Committee determines that the Plan has failed to satisfy the multiple use
limitation, the Committee will correct the failure (i) for Plan Years
beginning before January 1, 1994, by alternately reducing the Investment Plan
Contributions and the Tax Reduction Contributions of Highly Compensated
Employees in whole percentages (or fractional percentages, if applicable) to
the extent necessary to satisfy the multiple use limitation and (ii) for Plan
Years beginning on and after January 1, 1994, by treating the excess amount as
Excess Aggregate Contributions under Section 6.2. For purposes of this
Article VII, "Highly Compensated Group" and "Non-Highly Compensated Group"
mean the group of Employees who are eligible Highly Compensated Employees and
eligible Non-Highly Compensated Employees, respectively, for the year as
defined in Sections 5.2 and 6.1.
7.3 Prospective Reduction of Contributions. In the event that it
is determined by the Committee at any time prior to or within a Plan Year that
the aggregate limit prescribed in Section 7.2 could be exceeded with respect
to such Plan Year, then the amount of Tax Reduction Contributions, Investment
Plan Contributions or both (as determined by the Committee in its sole and
absolute discretion) made on behalf of Participants who are Highly Compensated
Employees may be reduced in a manner similar to the procedures described in
Sections 5.5 and 6.4.
ARTICLE VIII
LIMITATION ON ALLOCATIONS
8.1 Limitation on Allocations. Notwithstanding any other provision
of the Plan, the following provisions shall be applicable to the Plan:
(a) If this Plan is the only plan maintained by an Employer that covers
the class of Employees eligible to participate hereunder and the Participant
does not participate in and has never participated in a Related Plan or a
welfare benefit fund, as defined in Section 419(e) of the Code, maintained by
the Employer, or an individual medical account, as defined in
Section 415(1)(2)of the Code, maintained by the Employer, which provides an
Annual Addition as defined in Section 8.2(a), the Annual Additions that may be
allocated under this Plan to a Participant's Account for a Limitation Year
shall not exceed the lesser of:
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(i) the Maximum Permissible Amount; or
(ii) any other limitation contained in this Plan.
(b) If an Employer maintains, in addition to this Plan, (i) Related Plan
that covers the same class of Employees eligible to participate hereunder,
(ii) a welfare benefit fund, as defined in Section 419(e) of the Code, or
(iii) an individual medical account as defined in Section 415(1)(2) of the
Code, which provides an Annual Addition, the Annual Additions that may be
allocated under this Plan to a Participant's Account for a Limitation Year
shall not exceed the lesser of:
(A) the Maximum Permissible Amount, reduced by the sum of any
Annual Additions allocated to the Participant's accounts for
the same Limitation Year under this Plan and such other Related
Plan and the welfare plans described in clauses (ii) and (iii)
above; or
(B) any other limitation contained in this Plan.
8.2 Definitions. For purposes of this Article VIII, the following
terms shall have the meanings set forth below:
(a) "Annual Additions" means the sum of the following amounts
allocated to a Participant's Account for a Limitation Year:
(i) all Employer contributions/ including contribution
described in Sections 4.1, 4.3, 4.3A and 4.4, and forfeitures
treated as Matching Company Contributions or TRIP+
Contributions);
(ii) all forfeitures;
(iii) all Employee contributions (including contributions
described in Section 4.2); and
(iv) amounts described in Sections 415(1)(1) and 419A(d)(2) of
the Code.
In addition, Annual Additions shall include Excess Elective Deferrals under
Section 5.1 that are not distributed to the Participant before April 15
following the taxable year of deferral, Excess Contributions within the
meaning of Section 5.3 and Excess Aggregate Contributions within the meaning
of Section 6.2.
For purposes of this Article VIII, Employee contributions shall be
determined without regard to any (i) rollover contributions within the meaning
of Section 402(a)(5), 403(a)(4) or 408(d)(3) of the Code [or, on or after
January 1, 1993, an eligible rollover contribution as described in Section
402(c)(4) of the Code], (ii) contribution by the Employee to a simplified
employee pension, (iii) contribution to an individual retirement account or
individual retirement annuity, (iv) repayments of loans made to the
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Participant from the Plan and (v) direct transfers of Employee contributions
from a plan described in Section 401(a) of the Code to the Plan.
(b) "Maximum Permissible Amount" means for a Limitation Year with
respect to any Participant the lesser of:
(i) $30,000 [or, if greater, one-fourth of the dollar
limitation in effect under Section 415(b)(1)(A) of the Code as
it may be adjusted under Section 415(d)(1) of the Code by the
Secretary of the Treasury for the Limitation Year]; or
(ii) 25% of the Participant's Compensation for the Limitation
Year.
(c) "Excess Amount" means the excess of the Annual Additions
allocated to a Participant's Account for the Limitation Year over the Maximum
Permissible Amount, less administrative charges allocable to such excess.
(d) "Employer" means for purposes of this Article VIII, any
Employer and any Affiliated Company that adopts this Plan provided, however,
the determination under Sections 414(b) and (c) of the Code shall be made as
if the phrase "more than 50 percent" were substituted for the phrase "at least
80 percent" each place it is incorporated into Sections 414(b) and (c) of the
Code.
(e) "Related Plan" means any other defined contribution plan [as
defined in Section 415(k) of the Code] maintained by any Employer as defined
in subparagraph (d) above.
(f) "Defined Contribution Plan Fraction" means for any Limitation
Year:
(i) the sum of the Annual Additions to the Participants
Account under this Plan and his accounts under any Related Plan
and welfare plans [as described in Section 8.1(b)(ii) and
(iii)] as of the close of the Limitation Year, divided by:
(ii) the sum of the lesser of the following amounts determined
for the Limitation Year and for each prior year of his service
for an Employer:
(A) the product of 1.25, multiplied by the dollar
limitation in effect under Section 415(c)(1)(A) of
the Code for the Limitation Year [determined
without regard to Section 415(c)(6) of the Code],
or
(B) the product of 1.4, multiplied by an amount equal
to 25% of the Participant's Compensation for the
Limitation Year.
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If the Plan satisfied the applicable requirements of Section 415 of the
Code as in effect for all Plan Years beginning before January 1, 1987, an
amount shall be subtracted from the numerator of the Defined Contribution Plan
Fraction (not exceeding such numerator) as prescribed by the Secretary of
Treasury so that the sum of the Defined Benefit Plan Fraction and Defined
Contribution Plan Fraction computed under Section 415(e)(1) of the Code (as
revised by this Article VIII) does not exceed 1.0 for such Plan Year.
(g) "Defined Benefit Plan Fraction" means for any Limitation Year:
(i) the projected Annual Benefit of the Participant under the
defined benefit plans maintained by an Employer determined as
of the close of the Limitation Year divided by:
(ii) the lesser of:
(A) the product of 1.25, multiplied by the dollar
limitation in effect under Section 415(b)(1)(A) of
the Code for the Limitation Year, or
(B) the product of 1.4, multiplied by 100% of the
Participant's Average Compensation.
If the Employee was a Participant as of the first day of the first
Limitation Year beginning after December 31, 1986, in one or more defined
benefit plans maintained by an Employer which were in existence on May 6,
1986, the denominator of this fraction will not be less than 125% of the sum
of the annual benefits under such plans which the Participant had accrued as
of the close of the last Limitation Year beginning before January 1, 1987,
disregarding any changes in the terms and conditions of the plans after May 5,
1986. The preceding sentence applies only if the defined benefit plans
individually and in the aggregate satisfied the requirements of Section 415 of
the Code for all Limitation Years beginning before January 1, 1987.
(h) "Average Compensation" means the average Compensation during a
Participant's high three years of service, which period is the three
consecutive calendar years (or, the actual number of consecutive years of
employment for those Employees who are employed for less than three
consecutive years with an Employer) during which the Employee had the greatest
aggregate Annual Compensation from the Employer, including any adjustments
under Section 415(d) of the Code.
(i) "Annual Benefit" means a benefit payable annually in the form
of a straight life annuity (with no ancillary benefits) under a plan to which
Employees do not contribute and under which no Rollover Contributions are
made.
(j) "Compensation" means compensation as defined in Section
2.13(c).
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8.3 Excess Annual Additions. In the event that, notwithstanding
Section 8.5(a) hereof, the limitations with respect to Annual Additions
prescribed hereunder are exceeded with respect to any Participant for a
Limitation Year and such excess arises as a result of the allocation of
forfeitures, a reasonable error in estimating a Participant's Compensation for
the Plan Year, a reasonable error in determining the amount of Tax Reduction
Contributions that may be made by a Participant under the limits of Section
415 of the Code, or as a result of other facts and circumstances as
established by the Commissioner of the Internal Revenue Service, the Excess
Amounts shall not be deemed Annual Additions in that Limitation Year, to the
extent such Excess Amounts are treated in accordance with any of the
following:
(a) Either Tax Reduction Contributions or Investment Plan
Contributions, or both, and earnings thereon shall be distributed to the
Participant to the extent necessary to reduce the Excess Amount as soon as
practicable after the close of the Plan Year. The amounts distributed are
disregarded for purposes of applying Code Section 402(g) and the tests set
forth in Sections 5.2 and 6.1.
(b) The Excess Amounts in the Participant's Account are allocated
and reallocated to other Participants in the Plan. However, if the allocation
or reallocation of the Excess Amounts pursuant to the provisions of the Plan
causes the limitations of Section 415 to be exceeded with respect to each Plan
Participant for the Limitation Year, then these amounts must be held
unallocated in a suspense account. If a suspense account in existence at any
time during a particular Limitation Year, other than the Limitation Year
described in the preceding sentence, all amounts in the suspense account must
be allocated and reallocated to Participants' Accounts (subject to the
limitation of Code Section 415) before any Employer contributions and Employee
contributions that would constitute Annual Additions may be made to the Plan
for that Limitation Year.
(c) The Excess Amounts in the Participant's Account are used to
reduce Employer contributions for the next Limitation Year (and succeeding
Limitation Years, as necessary) for that Participant if that Participant is
covered by the Plan as of the of the Limitation Year. However, if that
Participant is not covered by the Plan as of the end of the Limitation Year,
then the Excess Amounts must be held unallocated in a suspense account for the
Limitation Year and allocated and reallocated in the next Limitation Year to
all of the remaining Participants in the Plan in accordance with the rules set
forth in Section 8.3(b). Furthermore, the Excess Amounts must be used to
reduce Employer contributions for the next Limitation Year (and succeeding
Limitation Years, as necessary) for all of the remaining Participants in the
Plan.
8.4 Combined Plan Limits.
(a) If an Employer maintains, or has ever maintained, one or more
defined benefit plans covering an Employee who is also a Participant in this
Plan, the sum of the Defined Contribution Plan Fraction and the Defined
Benefit Plan Fraction, cannot exceed 1.0 for any Limitation Year. The Annual
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Addition for any Limitation Year beginning before January 1, 1987 shall not be
recomputed to treat all Employee contributions as an Annual Addition. If the
Plan satisfied the applicable requirements of Section 415 of the Code as in
effect for all Limitation Years beginning before January 1, 1987, an amount
shall be subtracted from the numerator of the Defined Contribution Plan
Fraction (not exceeding such numerator) as prescribed by the Secretary of
Treasury so that the sum of the Defined Benefit Plan Fraction and the Defined
Contribution Plan Fraction computed under Section 415(e)(1) of the Code [as
revised by this Section 8.4] does not exceed 1.0 for such Limitation Year.
(b) For the purpose of this Section 8.4, Employee contributions to
a defined benefit plan are treated as a separate defined contribution plan.
In addition, any contributions paid or accrued after December 31, 1985 that
are attributable to medical benefits allocated under a welfare benefit fund
[as defined in Section 419(e) of the Code] during Limitation Years ending
after December 31, 1985 to a separate account established for any is
postretirement medical benefits provided with respect to a Participant, who,
at any time, during the Limitation Year or any preceding Limitation Year, is
or was a Key Employee, shall be treated as Annual Additions to a defined
contribution plan Further, all defined contribution plans of an Employer are
to be treated as one defined contribution plan and all defined benefit plans
of an Employer are to be treated as one defined benefit plan, whether or not
such plans have been terminated.
(c) If the sum of the Defined Contribution Plan Fraction and the
Defined Benefit Plan Fraction exceeds 1.0, the sum of the fractions will be
reduced to 1.0 as follows:
(i) voluntary nondeductible Employee contributions made by a
Participant to the defined benefit plan that constitute an
Annual Addition to a defined contribution plan, to the extent
they would reduce the sum of the fractions to 1.0, will be
returned to the Participant;
(ii) if additional reductions are required for the sum of the
fractions to equal 1.0, Investment Plan Contributions made by a
Participant to this Plan which constitute an Annual Addition to
this Plan, to the extent they would reduce the sum of the
fractions to 1.0, will be returned to the Participant;
(iii) if additional reductions are required for the sum of the
fractions to equal 1.0, the Annual Benefit of a Participant
under the defined benefit plan will be reduced (but not below
zero and not below the amount of the Participant's accrued
benefit to date) to the extent necessary to prevent the sum of
the fractions, computed as of the close of the Limitation Year
from exceeding 1.0; and
(iv) if additional reductions are required for the sum of the
fractions to equal 1.0, the reductions will then be made to the
Annual Additions of this Plan.
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8.5 Special Rules
(a) Notwithstanding any other provision of this Article VIII, an
Employer shall not contribute any amount that would cause an allocation to the
suspense account as of the date the contribution is allocated. In the event
the making of any Investment Plan Contribution, Tax Reduction Contribution,
Matching Company Contribution or TRIP+ Contribution, or any part thereof,
would result in the limitation set forth in this Article VIII being exceeded,
the Committee shall cause such contributions not to be made. If the
contribution is made prior to the date as of which it is to be allocated, then
such contribution shall not exceed an amount that would cause an allocation to
the suspense account if the date of the contribution were an Allocation Date.
The Committee shall maintain records, showing the contributions to be
allocated to the Account of each Participant in any Limitation Year. In the
event that it is determined prior to or within any Limitation Year that the
foregoing limitations would be exceeded if the full amount of contributions
otherwise allocable would be allocated, the Annual Additions to this Plan for
the remainder of the Limitation Year shall be adjusted by reducing (i) first,
any unmatched Investment Plan Contributions, (ii) second, any unmatched Tax
Reduction Contributions, (iii) third, matched Investment Plan Contributions
and a corresponding share of Matching Company Contributions (iv) fourth,
matched Tax Reduction Contributions and a corresponding share of Matching
Company Contributions and (v) fifth, TRIP+ Contributions but, in each case,
only to the extent necessary to satisfy the limitations.
(b) If the Annual Additions with respect to the Participant under
other Related Plans and welfare plans described in Section 8.1(b)(ii) and
(iii) are less than the Maximum Permissible amount and the Matching Company
Contribution that otherwise would be contributed or allocated to the
Participant's Account under this Plan would cause the Annual Additions for the
Limitation Year to exceed the limitation of Section 8.1(b), the amount
contributed or allocated will be reduced so that the Annual Additions under
all such plans for the Limitation Year will equal the Maximum Permissible
Amount. If the Annual Additions with respect to the Participant under the
Related Plans and welfare plans described in Section 8.1(b)(ii) and (iii) in
the aggregate are equal to or greater than the Maximum Permissible Amount, no
amount will be contributed or allocated to the Participant's Account under
this Plan for the Limitation Year. If a Participant's Annual Additions under
this Plan and all Related Plans result in an Excess Amount, such Excess Amount
shall be deemed to consist of the amounts last allocated, except that Annual
Additions attributable to a welfare plan described in Section 8.1(b)(ii) or
(iii) will be deemed to have been allocated first regardless of the actual
allocation date.
(c) If an Excess Amount was allocated to a Participant on an
allocation date of a Related Plan, the Excess Amount attributed to this Plan
will be the product of:
(i) the total Excess Amount allocated as of such date
[including any amount that would have been allocated but for
the limitations of Section 8.1(b)], multiplied by:
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(ii) the ratio of:
(A) the amount allocated to the Participant as of such
date under this Plan, divided by:
(B) the total amount allocated as of such date under
this Plan and all Related Plans [determined without
regard to Section 8.1(b)].
(d) Prior to the determination of the Participant's actual
Compensation for a Limitation Year, the Maximum Permissible Amount may be
determined on the basis of the Participant's estimated Compensation for such
Limitation Year. Such estimated Compensation shall be determined on a
reasonable basis and shall be uniformly determined for all Participants
similarly situated. Any Employer contributions (including allocation of
forfeitures) based on estimated Compensation shall be reduced by any Excess
Amounts carried over from prior Years.
(e) As soon as is administratively feasible after the end for the
Limitation Year, the Maximum Permissible Amount for such Limitation Year shall
be determined on the basis of the Participant's actual Compensation for such
Limitation Year.
ARTICLE IX
PARTICIPANT'S ACCOUNTS
9.1 Establishment of Accounts. The Recordkeeper shall establish
and maintain a separate account as a record of each Participant's and Former
Participant's interest in the Trust Fund with respect to each Account in which
a Participant or Former Participant has an interest, including, as
appropriate, subaccounts for the Participant's Tax Reduction Contributions,
his Investment Plan Contributions, his Matching Company Contributions, his
TRIP+ Contributions and his Rollover Contributions. Subject to the remaining
provisions of this Article IX, within each such Account, one or more
subaccounts shall be maintained to reflect the Participant's investment
elections among the Investment Funds.
9.2 Allocation of Contributions to Participant's Accounts. Subject
to the limitations of Article VIII, contributions shall be allocated to the
Accounts of Participants as follows:
(a) As of each Allocation Date, but after adjustment of each
Participant's Accounts as provided in Section 9.4, each Participant's Tax
Reduction Contributions and Investment Plan Contributions deposited with the
Trustee since the last Allocation Date shall be allocated, as applicable, to
the Participant's Tax Reduction Contribution Account and Investment Plan
Contribution Account in the amount by which the Participant has elected, in
accordance with Sections 4.1 and 4.2, to defer and/or to contribute a portion
of his Compensation to the Plan during the period since the last Allocation
Date; provided, however, that the amount allocated to the Tax Reduction
Contribution Account and the Investment Plan Contribution Account of a Highly
Compensated Employee for a Plan Year shall be subject to the limitations of
Sections 5.1, 5.2 and 6.1.
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(b) As of each Allocation Date, but after adjustment of each
Participant's Accounts as provided in Section 9.4, each Participant's Rollover
Contributions deposited with the Trustee since the last Allocation Date shall
be allocated to the Participant's Rollover Account.
(c) As of each Allocation Date ending on the last day of a calendar
quarter, but after adjustment of each Participant's Accounts as provided in
Section 9.4, Matching Company Contributions made on behalf of a Participant
who has authorized Tax Reduction Contributions and/or Investment Plan
Contributions for the period since the last Allocation Date shall be allocated
to such Participant's Matching Company Contribution Account in an amount equal
to the percentage of such Participant's Tax Reduction Contributions and/or
Investment Plan Contributions specified for that Plan Year by the Board of
Directors; provided, however, that the amount allocated to the Matching
Company Contribution Account of a Highly Compensated Employee for a Plan Year
shall be subject to the limitations of Section 6.1 and Article VII.
Notwithstanding the preceding sentence, a Participant who makes an election to
receive an early distribution under Section 11.3(d) in connection with his
termination of employment shall not receive an allocation of a Matching
Company Contribution for the quarterly Allocation Date following his
termination of employment.
(d) As of the last day of each Plan Year, but after adjustment of
Participant's Accounts as provided in Section 9.4, if an Employer made
qualified non-elective contributions for a Plan Year under Section 4.4 on
behalf of Participants who are Non-Highly Compensated Employees in order to
insure that one of the Actual Deferral Percentage tests described in Section
5.2 are met for such Plan Year or that one of the Contribution Percentage test
described in Section 6.1 are met for such Plan Year, such qualified elective
contributions shall be allocated to the Tax Reduction Contribution Account of
each Non-Highly Compensated Employee eligible to participate in such
contribution pursuant to Section 4.4 in the ratio that such Employee's
Compensation for the Plan Year bears to the Compensation for such Plan Year of
all Employees eligible to participate in such contribution. Notwithstanding
the preceding sentence, for any Plan Year, the Company may designate a
specific dollar amount to be allocated as a qualified non-elective
contribution to the Tax Reduction Contribution Account of each Non-Highly
Compensated Employee eligible to participate in such contribution pursuant to
Section 4.4 for such Plan Year.
(e) As of each Allocation Date ending on the last day of a calendar
quarter, but after adjustment of each Participant's Accounts as provided in
Section 9.4, TRIP+ Contributions made on behalf of a Participant under Section
4.3A since the last Allocation Date shall be allocated to such Participant's
TRIP+ Contribution Account in an amount equal to the percentage of the
Participant's Compensation described in Section 4.3A. Notwithstanding the
preceding sentence, a Participant who makes an election to receive an early
distribution under Section 11.3(d) in connection with his termination of
employment shall not receive an allocation of a TRIP+ Contribution for the
quarterly Allocation Date following his termination of employment.
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9.3 Trust Fund Valuation. The value of each Investment Fund and of
the Trust Fund shall be determined by the Trustee as of the close of business
on each Valuation Date, or as soon thereafter as practicable, and shall be the
fair market value of all securities or other property held in the Investment
Funds, plus cash and the fair market value of any other assets held by the
Trust Fund, with equitable adjustments for pending trades.
While it is contemplated that the Trust Fund will be valued by the Trustee
and allocations made only on the Valuation Date, should it be necessary to
make distributions under the provisions hereof, and the Committee, in good
faith determines that, because of (i) an extraordinary change in general
economic conditions, (ii) the occurrence of some casualty materially affecting
the value of the Trust Fund or a substantial part thereof, or (iii) a
significant fluctuation in the value of the Trust Fund has occurred since the
immediately preceding Allocation Date, the Committee may, in it sole
discretion, to prevent the payee from receiving a substantially greater or
lesser amount than what he would been titled to, based on current values,
cause a reevaluation of the Trust Fund to be made and a reallocation of the
interests therein as of the date the payee's right of distribution becomes
fixed. The Committee's determination to make such special valuation and the
valuation of the Trust Fund as determined by the Trustee shall be conclusive
and binding on all persons ever interested thereunder.
If the Committee in good faith determines that certain expenses of
administration paid by the Trustee during the Plan Year under consideration
are not general, ordinary, and usual and should not equitably be borne by all
Participants, but should be borne only by one or more Participants, for whom
or because of whom such specific expenses were incurred, the net earnings and
adjustments in value of the Accounts shall be increased by the amounts of such
expenses, and the Committee shall make suitable adjustments by debiting the
particular Account or Accounts of such one or more Participants, Former
Participants, or Beneficiaries; provided, however, that any such adjustment
must be nondiscriminatory and consistent with the provisions of Section 401(a)
of the Code.
9.4 Adjustments to Participant's Accounts. Each Investment Fund
shall be valued at fair market value as of the close of business on each
Valuation Date. As of such Valuation Date, each Participant's interest in an
Investment Fund shall be adjusted for the net earnings, losses, appreciation
and depreciation in such Investment Fund since the immediately preceding
Valuation Date. The portion of the total net earnings, losses, appreciation
or depreciation of an Investment Fund allocated to a Participant's interest in
such Investment Fund shall be the same ratio that the value of the
Participant's interest in such Investment Fund as of the immediately preceding
Valuation Date bears to the total value of all Participants' interests in such
Investment Fund as of the preceding Valuation Date; provided, however, that
for this purpose, the value of a Participant's interest as of the preceding
Valuation Date shall be increased by any transfers to the Investment Fund from
another Investment Fund during the period for which the valuation is being
made and shall be decreased by any loans, withdrawals or other distribution to
the Participant paid to the Participant during the period for which the
valuation being made; provided, however, that for purposes of Section 11.2,
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distributions other than loans and withdrawals shall not be taken into
account. All contributions and loan repayments shall be credited as of the
last day of the month during which such contributions and loan repayments are
made and shall not be credited until the foregoing adjustments for earnings,
losses, appreciation and depreciation have been made.
9.5 Participant-Directed Investments.
(a) Investment Funds. All contributions to the Trust that are
allocated to the Tax Reduction Contribution Account, Investment Plan Account,
Rollover Account (and, effective prior to June 30, 1997, Matching Company
Contribution Account and TRIP+ Contribution Account) of each Participant,
Former Participant or Beneficiary shall be invested in one or more of the
Investment Funds (other than the Household International, Inc. Common Stock
Fund and any other Investment Fund designated by the Committee from time to
time as a Fund in which additional participation is frozen) as directed by the
Participant, Former Participant or Beneficiary by Notice to the Committee or
to the Recordkeeper (in the form and manner prescribed by the Committee) in
the minimum percentages set forth in Section 9.5(d) or in such other minimum
percentages or amounts as may be prescribed by the Committee from time to
time. The Committee may change the Investment Funds set forth in Section 2.25
at such time as it may determine in its sole and absolute discretion;
provided, however, that the Committee shall maintain, at a minimum, and in
addition to the Zurn Stock Fund, at least three investment funds representing
a former broad range of investment alternatives which provide Participants,
Former Participants and Beneficiaries with a reasonable opportunity to
materially affect the potential return on amounts in their Accounts.
(b) Funding Arrangements. The Committee may use registered mutual
funds, bank-maintained collective investment funds or similar arrangements as
funding vehicles for the Investment Funds, provided that the underlying
investments of any such arrangement are consistent with the investment
objectives of the particular Investment Fund, as established by the Committee.
The Committee, in its sole and absolute discretion, may at any time establish
new Investment Funds or discontinue existing Investment Funds and may at any
time increase or decrease the number of Investment Funds that are offered to
Participants, Former Participants and Beneficiaries under the Plan.
(c) Loan Repayments. A loan to a Participant pursuant to Article
XIII shall be treated as a separate investment option with respect to such
Participant; provided, however, the transfer of assets from one Investment
Fund to another in order to facilitate a Plan loan to a Participant shall not
constitute an investment election change pursuant to Section 9.5(d). A loan
subaccount shall be established and maintained by the Recordkeeper and the
Participant's balance in the other Investment Funds shall be reduced in the
percentages and from such Funds designated by the Participant in accordance
with rules adopted by the Committee to account for the funding of the loan or,
if the Participant fails to designate which Investment Funds shall be used to
fund his loan, the Participant's balance in the other Investment Funds shall
be reduced on a pro rata basis to account for the funding of the loan. The
Participant's loan subaccount shall be credited with interest at the loan
repayment rate. As the Participant repays the loan, the balance in the loan
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subaccount shall be reduced and the Participant's balance in the Investment
Funds then selected by the Participant shall be increased by allocating the
Participant's loan repayments to such Investment Funds. Loan repayments shall
be allocated to Investment Funds in the same proportion as the Participant's
current investment direction election with respect to contributions. If the
Participant is not making current contributions, then loan repayments shall be
allocated to the Investment Funds in the same proportion as the Participant's
most recent investment direction election with respect to contributions.
(d) Change of Future Investment Elections and Transfer of Past
Investment Elections. Except as provided in Sections 9.6, 9.7 and 9.9, and
subject to any special rules adopted by the Committee with respect to certain
Investment Funds which, by their nature, require special treatment or are
subject to particular restrictions, a Participant shall be permitted to change
the investment of any future contributions made to the Plan on his behalf
(including loan repayments pursuant to Article XIII) and to transfer
contributions to the Trust Fund previously invested in one Investment Fund and
earnings thereon to one or more other investment Funds (other than the
Household International, Inc. Common Stock Fund or any other Investment Fund
designated by the Committee from time to time as a frozen Fund) in accordance
with the provisions of this Section 9.5(d). A change of future investment
elections or a transfer of past investment elections from one Investment Fund
to another Investment Fund shall be made in multiples of 5%, or in such other
minimum percentages or amount as may be prescribed by the Committee from time
to time.
(i) Change of Future Investment Elections.
(A) Contributions Other than Matching Company
Contributions and TRIP+ Contributions. A
Participant may elect to change his investment
elections for future payroll periods with respect
to Tax Reduction Contributions, Investment Plan
Contributions, Rollover Contributions and loan
repayments (and, effective prior to June 30, 1997,
Matching Company Contributions and TRIP+
Contributions made with respect to calendar
quarters ending prior to June 30, 1997) made to the
Plan on his behalf effective as of the first
payroll period occurring on or after the first day
of any month designated by the Participant
following Notice to the Committee or the
Recordkeeper, provided that such Notice is received
by the Committee or the Recordkeeper on or before
the 25th day of the month preceding the month for
which the change is to be effective or such other
date as may be prescribed by the Committee from
time to time.
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(B) Certain Matching Company Contributions and TRIP+
Contributions. Matching Company Contributions and
TRIP+ Contributions made to the Plan on a
Participant's behalf with respect to calendar
quarters ending on and after June 30, 1997 shall be
invested in the Zurn Stock Fund and, except as
provided in Section 9.7, a Participant may not
elect to change such investment election applicable
to such Matching Company Contributions and TRIP+
Contributions.
(ii) Transfer of Past Investment Elections.
(A) Amounts Attributable to Contributions Other than
Certain Matching Company Contributions and TRIP+
Contributions. A Participant, or if applicable, a
Former Participant, Beneficiary or Alternate Payee,
may elect to transfer amounts attributable to his
past investment elections with respect to
contributions made to the Plan on his behalf (other
than Matching Company Contributions and TRIP+
Contributions made with respect to calendar
quarters ending on and after June 30, 1997),
effective as soon as administratively practicable
after the first day of any month designated by the
Participant (or the Former Participant or
Beneficiary, if applicable) following Notice to the
Committee or the Recordkeeper provided that such
Notice is received by the Committee or the
Recordkeeper on or before the 25th day of the month
preceding the month for which the transfer is to be
effective or such other date as may be prescribed
by the Committee from time to time.
(B) Amounts Attributable to Certain Matching Company
Contributions and TRIP+ Contributions. Except as
provided in Section 9.7, amounts attributable to
Matching Company Contributions and TRIP+
Contributions made with respect to calendar
quarters ending on and after June 30, 1997 and
which are invested in the Zurn Stock Fund shall not
be available for transfer to any other Investment
Fund.
(iii) Elective Investments in Zurn Stock Fund. Notwithstanding
the foregoing, prior to July 1, 1997 or such later date as
shall be selected by the Committee, in its discretion, (such
date referred to herein as the "Zurn Stock Fund Transition
Date"), a Participant, or if applicable, a Former Participant,
Beneficiary of Alternate Payee, may not elect to invest in the
Zurn Stock Fund future Tax Reduction Contributions, Investment
Plan Contributions, Rollover Contributions or loan repayments
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made to the Plan on his behalf nor may any such individual,
prior to the Zurn Stock Fund Transition Date, elect to transfer
to the Zurn Stock Fund any amounts attributable to
contributions made to the Plan on his behalf prior to the Zurn
Stock Fund Transition Date. Effective as of the Zurn Stock
Fund Transition Date, a Participant, or if applicable, a Former
Participant, Beneficiary or Alternate Payee, may elect to
invest future Tax Reduction Contributions, Investment Plan
Contributions, Rollover Contributions, or loan repayments made
to the Plan on his behalf in the Zurn Stock Fund and may elect
to transfer to the Zurn Stock Fund amounts attributable to
contributions made to the Plan on his behalf prior to the Zurn
Stock Fund Transition Date.
(e) Failure to Provide Investment Instructions. If a Participant
or Former Participant fails to provide instructions to the Committee directing
the investment of any contribution to the Trust or amount held by the Trust
for which the Participant or Former Participant may direct the investment,
such contribution or other amount, pending the Committee's receipt of proper
investment instructions from the Participant or Former Participant, shall be
invested in such Investment Fund or Funds as may be designated by the
Committee from time to time for such purpose. If a Beneficiary of a deceased
Participant or an Alternate Payee under a Qualified Domestic Relations Order
fails to provide instructions to the committee directing the investment of any
amount held by the Trust for which such Beneficiary or Alternate Payee may
direct the investment, such amount, pending the Committee's receipt of proper
investment instructions from the Beneficiary or Alternate Payee, shall
continue to be invested in the manner last elected by the Participant from
whose Account such amount arose.
(f) Participant Investment Directions. It is intended that the
rights given to Participants to direct the investment of their Accounts, as
set forth in this Section 9.5, satisfy the provisions of Section 404(c)(2) of
ERISA and Department of Labor regulations promulgated thereunder.
Accordingly, notwithstanding any other provisions of the Plan, in no event
shall any person who is otherwise a fiduciary under this Plan be liable for
any loss, or by reason of any breach under ERISA, which results from a
Participant's direction of the investment of his Account.
9.6 Investment of Matching Company Contributions and TRIP+
Contributions. Except as elected otherwise by a Participant pursuant to
Section 9.7, Matching Company Contributions and TRIP+ Contributions made with
respect to calendar quarters ending on and after June 30, 1997 shall be
invested in the Zurn Stock Fund and may be made in the form of Zurn Stock or
cash. Except as elected otherwise by a Participant or a Former Participant
pursuant to Section 9.7, amounts attributable to Matching Company
Contributions and TRIP+ Contributions made with respect to calendar quarters
ending on and after June 30, 1997 shall remain invested in the Zurn Stock
Fund.
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9.7 Diversification Election. Notwithstanding the provisions of
Sections 9.5 and 9.6, effective June 30, 1997, any Participant or Former
Participant who has attained age 57 may elect to transfer all or a portion of
his Matching Company Contribution Account and TRIP+ Contribution Account from
the Zurn Stock Fund to one or more other Investment Funds (except the
Household International, Inc. Common Stock Fund or any other Investment Fund
designated by the Committee from time to time as a frozen Fund) in accordance
with the provisions of this Section 9.7.
(a) An election by a Participant or Former Participant pursuant to
this Section 9.7 to transfer the investment of any or all of the portion of
his Matching Company Contribution Account and TRIP+ Contribution Account which
is attributable to Matching Company Contributions and TRIP+ Contributions made
with respect to calendar quarters ending on and after June 30, 1997 and before
the effective date of the election (as provided herein) shall be made only in
connection with a transfer of past investment elections which applies to all
Accounts then maintained on behalf of the Participant or Former Participant
and shall be in 5% multiples (or such other minimum percentages or amounts as
may be prescribed by the Committee from time to time) of all such Accounts.
The election shall be subject to the same procedural requirements described in
Section 9.5(d)(ii)(A) and, subject to such requirements, may be made effective
as of any effective date described in Section 9.5(d)(ii)(A); provided,
however, the effective date of any election under this Section 9.7(a) shall
not precede the first payroll period occurring on or after the first day of
the month following the month in which the Participant attains age 57.
(b) A Participant or Former Participant shall have no election as
to whether Matching Company Contributions and/or TRIP+ Contributions are made
in the form of Zurn Stock or cash.
9.8 Qualified Domestic Relations Orders. The Committee shall
establish policies and procedures for reviewing domestic relations orders
relating to a Participant's interest in the Plan. The Committee or its
delegate shall determine whether any such domestic relations order is a
Qualified Domestic Relations Order. If an Alternate Payee does not receive an
immediate distribution pursuant to Section 11.10, the Committee shall direct
the Recordkeeper to identify the Alternate Payee's interest in the Trust Fund
pending a distribution to the Alternate Payee.
9.9 Special Restrictions on Transfer and Withdrawal of Amounts
Invested in Zurn Stock Fund.
(a) The restrictions in Section 9.9(b) shall apply to that portion
of Accounts maintained on behalf of Participants, Former Participants,
Beneficiaries and Alternate Payees which are invested in the Zurn Stock Fund
and, if and to the extent necessary, any election made by a Participant,
Former Participant, Beneficiary or Alternate Payee under the Plan shall be
deemed modified to be consistent with this Section 9.9.
(b) Notwithstanding the foregoing provisions of this Article IX or
any other provision of the Plan:
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(i) No Participant, Former Participant, Beneficiary or
Alternate Payee shall, on the basis of material nonpublic
information with respect to Zurn or its affiliates, make an
election permitted under the Plan if (A) such election would
result in an exchange into or out of, loans from, withdrawals
from, or an increase or decrease in the amount of contributions
to the Zurn Stock Fund, and (B) the transaction resulting from
such election is prohibited by Rule 10b-5
(ii) No officer shall make an election permitted under the
Plan if such election would result in a transaction involving
the Zurn Stock Fund which is not an exempt transaction pursuant
to Rule 16b-3.
(c) For purposes of this Section 9.9, the terms "Rule 10b-5" and
"Rule 16b-3" shall mean the rules, as amended, having those designations
promulgated by the United States Securities and Exchange Commission pursuant
to the Securities Exchange Act of 1934, as amended, and the terms "affiliate"
and "officer" shall have the meanings set forth in Rule 12b-2 and Rule 16a-
1(f), respectively, both as so promulgated and amended.
ARTICLE X
PARTICIPANT VESTING
10.1 Vesting of Accounts. A Participant shall at all times be fully
vested in all amounts credited to his Tax Reduction Contribution Account,
Investment Plan Contribution Account, TRIP+ Contribution Account attributable
to contributions made pursuant to Section 4.3A(b), and his Rollover Account,
including any such contributions made for the Plan Year of the Participant's
termination of employment but not yet allocated. Amounts credited to a
Participant's Matching Company Contribution Account and TRIP+ Contribution
Account attributable to contributions made pursuant to Section 4.3A(a) shall
become fully vested upon the occurrence, while employed by an Affiliated
Company, of (i) a Participant's attainment of his Normal Retirement Date, (ii)
a Participants Disability or (iii) a Participant's death. In addition, the
Committee may, in its sole and absolute discretion, fully vest the Matching
Company Contribution Accounts and TRIP+ Contribution Accounts attributable to
contributions made pursuant to Section 4.3A(a) of similarly situated
Participants in special circumstances including, but not limited to, a sale of
stock or assets of an Employer.
10.2 Termination of Service Prior to Normal Retirement Date,
Disability or Death. If a Participant's employment terminates prior to his
Normal Retirement Date for any reason other than Disability, death, or an
event referred to in Section 10.1, the portion of such Participant's Matching
Company Contribution Account, if any, that shall be vested shall be determined
according to the following schedule:
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Years of Matching Vested Forfeited
Company Account Percentage Percentage
less than 1 0% 100%
1 but less than 2 20% 80%
2 but less than 3 40% 60%
3 but less than 4 60% 40%
4 or more 100% 0%
For purposes of this Section 10.2, "Years of Matching Company Account" will be
measured in calendar quarters beginning with the calendar quarter with respect
to which the Participant first has Matching Company Contributions allocated to
his account (or, if he was a Participant in the Prior Plan, had such
contributions allocated to his account in the Prior Plan) and ending with the
calendar quarter in which the Participant's employment is terminated.
Notwithstanding the foregoing vesting schedule, a Participant shall be 100%
vested in amounts allocated to his Matching Company Contribution Account after
5 Years of Service, determined in accordance with Article III hereof. The
value of a Participant's vested benefit shall be determined as of the
Valuation Date immediately preceding the Participant's Annuity Starting Date.
Such payment shall be made at such times and in such manner as provided in
Article XI.
If a Participant's employment terminates prior to his Normal Retirement
Date for any reason other than Disability, death, or an event referred to in
Section 10.1, the portion of such Participant's TRIP+ Contribution Account
attributable to contributions made pursuant to Section 4.3A(a), if any, that
shall be vested shall be determined according to the following schedule:
Years of Service Vested Percentage
less than 5 0%
5 or more 100%
10.3 Forfeiture of Non-Vested Portion of Account. The portion of a
Participant's Account attributable to Matching Company Contributions in which
he is not vested when his employment with the Company or an Affiliated Company
is terminated shall be forfeited upon the earlier of (i) the date he receives
a distribution of his entire vested interest (including for this purpose, an
annuity contract that represents his right to such vested interest), or (ii)
the fifth anniversary of the Participant's severance from service date, as
defined in Section 3.6. A Participant who does not have any vested interest
in the portion of his Account attributable to Matching Company Contributions
as of his severance from service date shall be deemed to have received a
distribution for purposes of this Section 10.3 as of his severance from
service date. The non-vested portion of a Participant's Account shall be
forfeited in accordance with this Section 10.3 and Section 11.9, and the
forfeitures shall be applied as set forth in Section 11.12.
10.4 Restoration of Non-Vested Interest. If, following his
termination of employment, a Participant received a distribution, or was
deemed to have received a distribution pursuant to Section 10.3, of his entire
vested interest under the Plan and then is reemployed and performs an Hour of
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Service prior to the fifth anniversary of the date on which he received (or
was deemed to have received) a distribution, the entire amount forfeited,
unadjusted for gains and losses following the distribution, shall be restored
to his Account. At any time thereafter, the amount in which he is vested
shall be determined by applying his vested percentage against the sum of the
distribution and the amount restored; provided, however, that the amount
actually distributed to him upon his subsequent termination of employment
shall be offset by the amount previously distributed. The amount to be
restored shall be credited first against forfeitures arising for the Plan
Year, and if such forfeitures are not sufficient to satisfy the amount to be
restored in full, such amount shall be satisfied out of Employer contributions
for the Plan Year, which contributions shall be supplemented for the Plan Year
by an amount equal to such remainder. The amount restored shall not be deemed
an Annual Addition or portion thereof for any Limitation Year.
ARTICLE XI
PAYMENT OF BENEFITS
11.1 Withdrawals During Employment.
(a) A Participant, upon Notice, may, during his employment, elect
to withdraw amounts from his Account pursuant to this Section 11.1 to the
extent vested under Article X; provided, however, that with respect to each
withdrawal, a minimum of $500 (or, if less, the balance of the Participant's
Account) must be withdrawn and a Participant may receive no more than two non-
hardship withdrawals during any Plan Year. The provisions of Category A and
Category B below shall be effective January 1, 1991. A Participant must
withdraw all amounts eligible for withdrawal, if any, in each category below
(listed in descending order) before amounts in the next lower category may
be withdrawn:
Category A: All of his Investment Plan Contributions made prior to 1987
under the Prior Plan excluding earnings attributable to such contributions. A
Participant may withdraw amounts from this category no more often than twice
in any Plan Year.
Category B: All of his other Investment Plan Contributions and earnings
attributable to Investment Plan Contributions (including earnings attributable
to pre-1987 Investment Plan Contributions); provided, however, that the most
recent twenty-four months of Investment Plan Contributions that were matched
by Matching Company Contributions and the earnings attributable to such
contributions may not be withdrawn unless a Participant has participated in
the Plan (or the Plan and the Prior Plan) for at least five years. A
Participant may withdraw amounts from this category no more often than twice
in any Plan Year.
Category C: In the case of a Participant who has been a Participant in the
Plan (including participation in the Prior Plan) for five or more years, all
or any portion of his Matching Company Contributions (plus earnings thereon)
made with respect to calendar quarters ending prior to June 30, 1997 and all
or any portion of the earnings on such Matching Company Contributions. A
Participant described in the preceding sentence who has attained age 57 may
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also withdraw all or any portion of his Matching Company Contributions (plus
earnings thereon) made with respect to calendar quarters ending on and after
June 30, 1997. A Participant may withdraw amounts from this category no more
often than once in any Plan Year.
Category D: All or any portion of his Rollover Contribution (plus earnings
thereon). A Participant may withdraw amounts from this category no more often
than twice in any Plan Year.
Category E: All or any portion of his Tax Reduction Contributions (but only
to the extent of the value of the Participant's Tax Reduction Contribution
subaccount in the Prior Plan as of December 31, 1988 plus the amount of his
Tax Reduction Contributions to the Prior Plan and to this Plan thereafter)
that is needed to satisfy a hardship created by an immediate and heavy
financial need, subject to the following rules and procedures:
(i) A withdrawal for hardship may be made only if the Participant
has:
(A) withdrawn the maximum amount available under the
foregoing Categories A-D;
(B) withdrawn the maximum amount available to him under any
other qualified plan maintained by an Affiliated Company;
and
(C) taken out the maximum loan amount pursuant to the
provisions of Article XIII.
(ii) A withdrawal for a hardship may be made only for the following
reasons:
(A) medical expenses described in Section 231(d) of the Code
incurred by the Participant, his spouse or any dependents
(as defined in Section 152 of the Code) or necessary for
such persons to obtain medical care as described in
Section 213(d) of the Code;
(B) costs directly related to the purchase (excluding
mortgage payments) of a principal residence of the
Participant;
(C) payment of tuition and related educational fees for the
next 12 months of post secondary education for the
Participant or his spouse, children or dependents (as
defined in Section 152 of the Code); or
(D) payments necessary to prevent eviction of the Participant
from his principal residence or foreclosure on the
mortgage of the Participant's principal residence.
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(iii) A withdrawal for a hardship may be made only once during any
Plan Year and may be made only under the following terms and conditions:
(A) the withdrawal shall not exceed the amount of the
hardship;
(B) the Participant may not make any Tax Reduction
Contributions or Investment Plan Contributions under this
Plan or before tax or after tax contributions to any
other pension, profit sharing, deferred compensation or
stock purchase plan maintained by an Affiliated Company
(whether such plan is qualified or nonqualified) but
excluding any health or welfare plan (including a
cafeteria plan within the meaning of Section 125 of the
Code) for a period beginning with the payroll period next
following the date he receives the hardship withdrawal
and ending with the last day of the calendar quarter that
is at least 12 months following the receipt of the
hardship withdrawal; and
(C) the Participant may not make Tax Reduction Contributions
to this Plan or before tax contributions to any other
pension or profit sharing plan maintained by an
Affiliated Company for the Participant's taxable year
immediately following the taxable year of a hardship
distribution in excess of the applicable limits under
Section 402(g) of the Code for such taxable year less the
amount of such Participant's Tax Reduction Contributions
for the taxable year of the hardship withdrawal.
(iv) The determination of the amount of an immediate and heavy
financial need for purposes of this subsection shall, at the
Participant's election, include any amounts necessary to pay any
federal, state or local income taxes, based on applicable
supplemental withholding tables, and penalties resulting from the
withdrawal for a hardship under this Section 11.1(a).
(b) Any Participant who has attained age 59-1/2 may elect once each Plan
Year to withdraw all or a portion of his Tax Reduction Contributions and/or
his TRIP+ Contributions and the earnings thereon, regardless of whether he
meets the hardship requirements hereof, provided he has first exhausted all
amounts eligible for withdrawal in Categories A through D of Section 11.1(a).
All withdrawals under this Section 11.1 shall be made as soon as
administratively practicable after the first day of any month, as elected by
the Participant, following the date the Participant's Notice of withdrawal is
received by the Recordkeeper with respect to withdrawals under Categories A
through D of Section 11.1(a) and Section 11.1(b) or the Committee with respect
to withdrawals under Category E of Section 11.1(a) specifying the category of
the withdrawal and the amount requested to be withdrawn, if the Recordkeeper
or, if applicable, the Committee receives such Notice on or before the 25th
day of the preceding month; provided, however, that hardship withdrawals shall
be made as soon as administratively practicable following the date Notice is
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received by the Committee and the Committee approves the withdrawal. All
withdrawals under this Section 11.1 shall be based on the value of the
Participant's Investment Plan Contribution Account, his Tax Reduction
Contribution Account, his Matching Company Contribution Account, his TRIP+
Contribution Account and his Rollover Account, as the case might be, as of the
Valuation Date immediately preceding receipt of the Participant's Notice by
the Recordkeeper or, if applicable, the Committee. Upon approving the amount
of any withdrawal, the Recordkeeper shall furnish the Trustee with written
instructions directing the Trustee to make a single sum payment of the
withdrawal. Except as provided in the following sentence, payments from the
Investment Funds shall be in cash. Payments from the Zurn Stock Fund and the
Household International, Inc. Common Stock Fund shall be in cash or stock or a
combination of both, as elected by the Participant; provided, however, that
(i) a hardship withdrawal may only be made in cash, (ii) no distribution of
less than twenty (20) shares will be made from either the Zurn Stock Fund or
the Household International, Inc. Common Stock Fund, and (iii) partial shares
of stock held in the Funds described in (ii) above will be paid in cash.
Withdrawals under this Section 11.1 shall, to the extent required by the Code,
be subject to the provisions of Section 11.11. A Participant may, subject to
any restrictions and limitations imposed on a particular Investment Fund,
direct withdrawals under this Section 11.1 which are less than the full value
of any Account from which an amount is withdrawn to be charged to any one or
more of the Investment Funds in which such Account is invested. Such
direction shall be given by the Participant with his Notice to withdraw and
shall specify the manner in which the withdrawal will be allocated among the
Investment Funds. If a Participant does not specify the manner in which a
withdrawal shall be allocated among Investment Funds, the Committee shall
allocate the withdrawal on a pro rata basis among the Participant's Investment
Fund elections, subject to any restrictions or limitations applicable to a
particular Investment Fund. The Committee or its delegate from time to time
may establish procedures that govern the tax treatment of withdrawals from the
Plan, which procedures shall not necessarily be consistent with the categories
of withdrawals provided under this Article XI. Unless the Committee or its
delegate determines otherwise, however, Categories A and B of Section 11.1(a)
shall be treated as a single contract for Federal income tax purposes.
11.2 Amounts Payable Following Termination of Service. Upon a
Participant's termination of employment, distributions from the Plan shall be
made, to the extent vested under Article X, at the time specified in Section
11.3 (subject to the provisions of Section 11.6) and in the form specified in
Section 11.4.
11.3 Time of Payment.
(a) Retirement. In the event a Participant terminates employment
with the Employer after (i) attaining his Normal Retirement Date or (ii)
satisfying the requirements for early retirement under any defined benefit
pension plan maintained by the Employer in which he participates, unless the
Participant elects to defer payment pursuant to this Section 11.3(a), payment
of the Participant's entire Account shall commence as soon as administratively
practicable after the Quarterly Valuation Date coincides with or next
following the Participant's severance from service date, provided that
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the Committee has received at least 30 days advance written notice of the
Participant's severance from service date. The amount distributable shall be
valued as of such Quarterly Valuation Date, or such later Valuation Date
selected by the Participant in the event the Participant elects to defer
payment as provided herein. A Participant described in this Section 11.3(a)
may, regardless of the value of his Account, elect to defer payment of his
Account to any Valuation Date after his severance from service date specified
by him, but no later than December 31 of the Plan Year immediately following
the later of (i) the Plan Year in which he terminates employment with the
Employer or (ii) the Plan Year in which he attains age 65. An election of a
Participant to defer payment of benefit shall be made by submitting to the
Committee a written statement signed by the Participant, describing the
benefits and the Valuation Date on which the Participant requests that the
payments commence; provided, however, a Participant may not elect to defer
receipt or commencement of receipt of benefits beyond the date required
pursuant to Section 401(a)(9) of the Code. The value of the Participant's
Account shall be determined as of the Valuation Date selected by the
Participant pursuant to his deferral election and payment shall commence as
soon as administratively practicable following such Valuation Date.
(b) Death or Disability. In the case of the death or Disability of
a Participant (whether before or after a Participant's severance from service
date with the Employer), except in the case of a distribution deferred
pursuant to this Section 11.3(b) or Section 11.3(e), payment of the
Participant's entire Account shall commence as soon as administratively
practicable after the Quarterly Valuation Date that coincides with or next
follows 30 days advance written notice to the Committee of proof of the
Participant's death or, if applicable, 30 days following the determination by
the Committee of the Participant's Disability. The amount distributable shall
be valued as of such Quarterly Valuation Date, or such later Valuation Date in
the event the Participant (or Beneficiary) elects to defer payment as provided
herein. Subject to the provisions of Section 11.6, a Beneficiary of a
Participant who was eligible to receive a distribution pursuant to Section
11.3(a) as of the date of his death, may elect to defer payment of the
Participant's Account to any Valuation Date specified by the Beneficiary, but
not later than December 31 of the Plan Year immediately following the Plan
Year in which the Participant died. An election by a Beneficiary to defer
payment of benefits shall be made by submitting written notice to the
Committee in the same manner described for a Participant in Section 11.3(a).
The value of the Participant's Account shall be determined as of the Valuation
Date selected by the Beneficiary pursuant to his deferral election and payment
shall commence as soon as administratively practicable following such
Valuation Date.
(c) Other Severance from Service. Subject to the provisions of
Sections 11.3(d) and 11.3(e), upon a Participant's termination of employment
with the Employer for any reason other than the Participant's attainment of
his Normal Retirement Date, his death or his Disability, the Participant's
vested Account shall become distributable to him as soon as administratively
practicable after the Quarterly Valuation Date next following the
Participant's severance from service date, provided that the Committee has
received at least 30 days advance written notice of the Participant's
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severance from service. The amount payable shall be valued as of such
Quarterly Valuation Date. Pending distribution pursuant to this Section
11.3(c), the Participant's Account shall continue to share in the earnings and
losses of the Trust until the Valuation Date for which such deferred
distribution is made and the Participant's rights with respect to his Account
shall be subject to the provisions of Section 11.3(f).
(d) Earlier Distribution; Waiver of Matching Company Contributions.
A Participant (or Beneficiary) may elect to receive his vested Account as soon
as administratively practicable following a monthly Valuation Date after his
severance from service date (or death) but earlier than the Quarterly
Valuation Date set forth in Sections 11.3(a), (b) and (c) hereof, provided
that the Committee has received at least 30 days advance written notice of the
Participant's severance from service date (or death). The amount
distributable shall be valued as of such earlier monthly Valuation Date.
Notwithstanding any other provision of the Plan, a Participant (or
Beneficiary) who makes an election under this Section 11.3(d) shall not be
entitled to any Matching Company Contributions or TRIP+ Contributions with
respect to the calendar quarter in which the Valuation Date described
hereunder occurs.
(e) Limitation on Involuntary Payment of Benefits and Lump Sum
Cashouts. Notwithstanding any provision of this Article XI to the contrary,
subject to the provisions of Section 11.3(d), if upon termination of a
Participant's employment with an Employer the value of the Participant's
vested Account does not exceed $3,500, the Committee shall direct the Trustee
to distribute the value of the Participant's vested Account to the Participant
(or, in the event of the Participant's death, to the Participant's
Beneficiary) or to an eligible retirement plan as defined in Section
402(c)(8)(B) of the Code pursuant to the Participant's (or, if applicable, the
Participant's spouse's or former spouse's) direct rollover election described
in Section 11.11, in a single lump sum as soon as administratively practicable
after the Quarterly Valuation Date next following the Participant's severance
from service date. If upon termination of a Participant's employment with an
Employer for any reason other than death the then value of the Participant's
vested Account exceeds $3,500, no distribution of the Participant's vested
Account to the Participant may occur prior to the Participant's Normal
Retirement Date unless the Participant files with the Committee a written
request for the payment of his vested Account, such request expressly to
consent to the payment. If the Participant files such a request, the
Committee shall direct the Trustee to pay such amount to the Participant a
soon as administratively practicable after the later of (i) the Quarterly
Valuation Date following the Participant's separation from service date or
(ii) the Valuation Date next following receipt of said request. If such a
Participant does not consent to a distribution, the Trustee shall continue to
hold the Participant's vested Account in trust and shall distribute the
Participant's vested Account in a single lump sum payment as soon as
administratively practicable following the Valuation Date coinciding with or
next following the date the Participant attains his Normal Retirement Date.
In accordance with rules prescribed by the Committee, a Participant who does
not consent may elect to defer his distribution until a date which is as soon
as administratively practicable following any Valuation Date thereafter, but
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not later than the Valuation Date coinciding with or next following the
Participant's Normal Retirement Date, valued as of such later Valuation Date.
Except as provided otherwise herein, no consent to a distribution shall be
valid unless the Participant has received a notice describing the material
features, and an explanation of the relative values, of the forms of benefit
available under the Plan with respect to the distribution and notice
describing the Participant's direct rollover rights described in Section 11.11
hereof, no less than 30 days and no more than 90 days before the Annuity
Starting Date. If the distribution is one to which sections 401(a)(11) and
417 of the Code do not apply, such distribution may commence less than 30 days
after the notice required under section 1.411(a)-11(c)of the Income Tax
Regulations is given, provided that (i) the Administrator clearly informs the
Participant that the Participant has a right to a period of at least 30 days
after receiving the notice to consider the decision of whether or not to elect
a distribution (and, if applicable, a particular distribution option), and
(ii) the Participant, after receiving the notice, affirmatively elects a
distribution.
(f) Treatment of Accounts in the Case of Deferred Distribution. If
a Participant or Beneficiary elects to defer distribution of the Participant's
vested interest pursuant to Sections 11.3(a), (b), (c) or (e) hereof, the
Participant's Account shall continue to share in the earnings and losses of
the Trust until the applicable Valuation Date under Sections 11.3(a), (b), (c)
or (e). Transfers among Investment Funds shall be permitted until the
applicable Valuation Date. However, except as provided in Section 13.7, loans
granted under Article XIII shall be immediately due and payable upon the
Participant's severance from service date.
(g) Forfeiture of Non-Vested Account Upon Distribution. As of the
date of the distribution of a Participant's vested Account pursuant to this
Section 11.3, the Non-Vested portion of the Participant's Account shall be
forfeited, subject to restoration as provided in Section 10.
11.4 Method of Payments.
(a) Except as provided in Section 11.4(b), payment, to a
Participant, Former Participant or Beneficiary shall be made in the form of a
single lump sum payment in cash of the total amount due; provided, however,
that a Participant or Former Participant may elect to receive a portion of his
lump sum payment attributable to (i) his interest in the Zurn Stock Fund, in
the form of shares of Zurn Stock, (ii) his interest, if any, in the Household
International, Inc. Common Stock Fund, in shares of common stock of Household
International, Inc. and (iii) for a Participant, Former Participant or
Beneficiary who receives a distribution on or before June 30, 1993, his
interest, if any, in the Equity Securities Fund, in shares of the Fidelity
Equity Income Fund. Notwithstanding the preceding sentence, no distribution
of less than twenty (20) shares shall be made from either the Zurn Stock Fund
or the Household International, Inc. Common Stock Fund and partial shares in
each such fund will be paid in cash.
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(b) Notwithstanding the provisions of Section 11.4(a), subject to
Section 11.6, a Participant, Former Participant or Beneficiary may elect to
have the value of his Accounts paid in one or more of the following manners:
(i) A Participant or Former Participant who became a
Participant prior to July l, 1989 and who does not have a loan
outstanding may elect to receive his distribution in a single
sum, as an immediate annuity purchased under the group annuity
contract or contracts, or as a combination of both, or in any
other form available through a group annuity contract issued to
the Plan by a legal reserve life insurance company authorized
to do business in the State of Texas; provided, however, that
if an annuity form of payment is chosen, then unless otherwise
elected pursuant to Section 11.4(c), a married Participant's
vested Account shall be paid in the form of a Qualified Joint
and Survivor Annuity (as long as the Participant does not die
before his annuity starting date, in which case the
Participant's vested Account shall be paid in the form of a
Qualified Preretirement Survivor Annuity to his surviving
spouse). The forms of immediate annuity available under the
group annuity contract or contracts shall include the
following:
(A) Qualified Joint and Survivor Annuity. An annuity
for the life of the Participant or Former
Participant with a survivor annuity for the life of
such Participant's spouse which is not less than
one half, or greater than the amount of the annuity
payable during the joint lives of the Participant
and such Participant's spouse; and
(B) Annuity Certain and Life. An annuity for the life
of the Participant or Former Participant with a
guaranteed minimum number of monthly payments as
specified by the Participant or Former Participant.
(ii) A Participant, Former Participant or eligible Beneficiary
may elect a direct rollover to an eligible retirement plan as
described in Section 402(c)(8)(B) of the Code pursuant to the
provisions of Section 11.11.
Notwithstanding the foregoing provisions, no Participant or Former Participant
may elect a distribution in the form of an annuity unless the annuity payments
will equal or exceed $30.00 per month.
(c) A Qualified Joint and Survivor Annuity (as herein so called) is
an annuity for the life of the Participant with a survivor annuity for the
life of the spouse equal to not less than 50 percent of the amount of the
annuity which is payable during the joint lives of the Participant and his
spouse, and which is the actuarial equivalent of a single life annuity for the
life of the Participant. A Qualified Preretirement Survivor Annuity (herein
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so called) is an annuity for the life of the surviving spouse that is
actuarially equivalent to 100 percent of the vested Account of the Participant
(as of his date of death).
A Participant may elect at any time during the applicable election period
to waive the Qualified Joint and Survivor Annuity in favor of a single life
annuity or another form of distribution available under the Plan, and may
revoke such election at any time during the applicable election period,
provided that, for the election to be effective, (i) the Participant's spouse
must consent in writing to such election, such spouse's consent must
acknowledge the effect of such election, and her signature must be witnessed
by a Plan representative or notary public (or it must be established to the
satisfaction of a Plan representative that the consent may not be obtained
because there is no spouse, because the spouse cannot be located, or because
of such other circumstances as the Secretary of the Treasury may by
regulations prescribe); and (ii) the Plan must provide to each Participant,
within a reasonable period of time before the Annuity Starting Date (and
consistent with such regulations as the Secretary of Treasury may prescribe),
a written explanation of the terms and conditions of the Qualified Joint and
Survivor Annuity, the Participant's right to make, and the effect of, an
election to waive the same, the rights of the Participant's spouse, and the
right to make, and the effect of, a revocation of such election. For purposes
of this Section 11.4(c), the "application election period" is the 90 day
period ending on the Annuity Starting Date.
In the case of a married Participant who elects a life annuity form of
benefit and dies prior to his Annuity Starting Date, such that the
Participant's surviving spouse shall receive a Qualified Preretirement
Survivor Annuity pursuant to Section 11.4(b), the spouse may elect in writing
to waive such survivor annuity in favorite of a single lump sum payment equal
to the Participant's vested Account as of his date of death.
(d) Notwithstanding the foregoing provisions of this Section 11.4,
the phrase "single lump sum payment" as used herein shall not include the
distribution of an insurance contract providing for (i) a life annuity to a
Participant, (ii) a joint and survivor annuity to a Participant and his
Beneficiary, or (iii) any other form of payment having the effect of (i) or
(ii) above.
11.5 Minority or Legal Disability of Distribute. During the
minority or legal disability of a person entitled to receive benefits
hereunder, the Committee may, in its sole discretion, direct payment of all or
any portion of such benefits due such person directly to him or to his spouse
or a relative or to any individual or institution having custody of such
person. Neither an Employer, the Committee nor the Trustee shall be required
to see to the application of any payments so made and the receipt of the payee
(including the endorsement of a check or checks) shall be final, binding and
conclusive as to all interested parties. Any payment made pursuant to the
power herein conferred upon the Committee shall operate as a complete
discharge of all obligations of the Trustee and the Committee, to the extent
of the distributions so made.
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11.6 Additional Requirements Relating to Benefit Payments. Unless a
Participant otherwise elects, payment of benefits under the Plan to the
Participant will begin not later than the 60th day after the end of the Plan
Year in which the latest of the following events occur:
(a) the date on which the Participant attains his Normal Retirement
Age;
(b) the tenth anniversary of the year in which the Participant
commenced participation in the Plan; or
(c) the Participant terminates employment with the Employer.
Notwithstanding any other provisions of the Plan, all distributions
required under this Article XI shall be determined and made in accordance with
Section 401(a)(9) of the Code and the Treasury Regulations thereunder,
including the minimum distribution accidental benefit requirements of Treasury
Regulation Section 401(a)(9)-2.
11.7 Claims Procedure. The Committee shall make all determinations
as to the right of any person to receive a benefit from the Plan. The denial
by the Committee of a claim for benefits under the Plan, including but not
limited to, a claim for distribution, loan or withdrawal, shall be stated in a
written instrument signed by the Committee and delivered to or mailed to the
claimant within 60 days after receipt of the claim by the Committee, unless
special circumstances require an extension of time for processing the claim,
in which case a determination shall be made as soon as possible, but in no
event later than 120 days after receipt of the claim. Written notice of the
extension shall be furnished to the claimant prior to the termination of the
initial 60 day period and shall indicate the circumstances requiring the
extension and the date by which the Committee expects to render its decision.
The written decision shall set forth:
(a) the specific reason or reasons for the denial;
(b) a specific reference to the pertinent provisions of the Plan on
which the denial is based;
(c) a description of any additional material or information
necessary for the claimant to perfect a claim and an explanation of why such
material or information is necessary; and
(d) a statement that the claimant may:
(i) request a review upon written application to the
Committee;
(ii) review pertinent plan documents; and
(iii) submit issues and comments in writing.
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If notice of the denial is not furnished in accordance with the above
procedure, the claim shall be deemed denied and the claimant shall be
permitted to proceed with the review procedure. A request by the claimant for
a review of the denied claim must be delivered to the Committee within 60 days
after receipt by such claimant of written notification of the denial of such
claim. The Committee shall, not later than 60 days after receipt of a request
for a review, make a determination concerning the claim. If special
circumstances require, the Committee shall notify the claimant that an
extension of time for processing, not in excess of 120 days, after receipt of
the request for review, is necessary. A written statement stating the
decision on review, the specific reasons for the decision, and the specific
provisions of the Plan on which the decision is based shall be mailed or
delivered to the claimant within such 60 (or 120) day period. If the decision
on review is not furnished within the appropriate time, the claim shall be
deemed denied on review. All communications from the Committee to the
claimant shall be written in a manner calculated to be understood by the
claimant. All interpretations, determinations and decisions by the Committee
in respect of any matter hereunder will be final, conclusive, and binding upon
the Employer, Participants, Former Participants, Beneficiaries, and all other
persons claiming an interest in the Plan.
11.8 Committee's Duty to Trustee. The Committee will notify the
Trustee at the appropriate time of all facts which may be necessary hereunder
for the proper allocation of increases, decreases, expenses, and contributions
for Participants, the proper payment or distribution of benefits, or the
proper performance of any other act required of the Trustee hereunder. The
Committee will notify the Trustee of such facts as are needed by the Trustee
to perform its functions under the Plan. The Committee will secure appropriate
elections, directions, and designations for Participants, Former Participants,
and Beneficiaries provided for in the Plan.
11.9 Duty to Keep Committee Informed of Distributee's Current
Address. Each Participant, Former Participant and Beneficiary must file with
the Committee from time to time in writing his mailing address and each change
of mailing address. Any communication, statement or Notice addressed to a
Participant, Former Participant or Beneficiary at his last mailing address
filed with the Committee or if no address is filed with the Committee then at
the last mailing address as shown on an Employer's records, will be binding on
the Participant, Former Participant and their Beneficiaries for all purposes
of the Plan. Neither the Committee nor the Trustee shall be required to search
for or locate a Participant, Former Participant or Beneficiary. In connection
with the payment of any benefits, the Committee shall mail by registered or
certified mail to the Participant, Former Participant or Beneficiary at his
last known address his distribution under the Plan. If the distribution is
returned to the Committee, the unpaid amounts will be invested in an
Investment Fund consisting primarily of fixed income investments. If the
Participant, Former Participant or Beneficiary fails to claim his benefits
under the Plan within three years after the date of the distribution, the
Committee will direct that all unpaid amounts which would have been payable to
such Participant, Former Participant or Beneficiary will be forfeited as of
the next Valuation Date and applied to reduce Matching Company Contributions
as provided in Section 4.8. In the event that the Participant, Former
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Participant or Beneficiary is subsequently located, the unpaid amounts as of
the date of the forfeiture will be paid to such Participant, Former
Participant or Beneficiary. The funds used to make such distribution will be
paid from forfeitures. In the event the forfeitures are not adequate to effect
the distribution, the Employer shall make such additional contribution to the
Plan as is necessary to make such distribution.
11.10 Distribution Pursuant Qualified Domestic Relations Orders.
Notwithstanding any other provision of the Plan to the contrary, if the
provisions of a Qualified Domestic Relations Order provide that distributions
shall be made to an Alternate Payee prior to the time that the Participant
with respect to whom the Alternate Payee's benefits are derived attains age 50
or would be entitled to a distribution of assets from the Plan, the Trustee
shall commence payments to the Alternate Payee as soon as administratively
practicable following the later of (i) the receipt of such Qualified Domestic
Relations Order by the Committee or (ii) the date the Committee receives the
Alternate Payee's written consent to such distribution. Unless specified
otherwise in a Qualified Domestic Relations Order, a distribution to an
Alternate Payee who is the former spouse of the Participant shall be based on
a pro rata allocation of the Participant's Investment Plan Contributions as
provided in Section 72(m)(10) of the Code and amounts awarded to the Alternate
Payee shall be paid on a pro rata basis from the Investment Funds in which the
Participant is invested at the time of the distribution to the Alternate
Payee. Until such time as payment is made to an Alternate Payee pursuant to
this Section 11.10, the Alternate Payee shall have no rights under the Plan
other than the rights of a Beneficiary and the right to direct the investment
of amounts awarded to Alternate Payee pursuant to the provisions of Article
IX.
11.11 Tax Withholding and Participant's Direct Rollover Election.
Unless provided otherwise in regulations promulgated by the Secretary of the
Treasury, to the extent required under Section 3405 of the Code, the Trustee
shall withhold 20% of the taxable portion of the Plan distribution or
withdrawal made to a Participant, Former Participant or Beneficiary after
December 31, 1992 which constitutes an eligible rollover distribution within
the meaning of Section 402(c)(4) of the Code. Any amount withheld shall be
deposited by the Trustee with the Internal Revenue Service for the purpose of
paying the distributee's federal income tax liability associated with the
distribution or withdrawal. Notwithstanding the foregoing provisions,
commencing on and after January 1, 1993, each Participant, each Former
Participant and each spouse (or former spouse under a Qualified Domestic
Relations Order) of a Participant or Former Participant shall be provided with
a notice described in Section 11.3(e) hereof and given the right to elect
[pursuant to Section 401(a)(31) of the Code and applicable Treasury
regulations promulgated thereunder] during the period described in Section
11.3(e) hereof to rollover all or any portion of the taxable amount of such
person's distribution or withdrawal (subject to limitations and restrictions,
if any, adopted by the Committee in accordance with applicable Treasury
regulations) directly to an eligible retirement plan as defined in Section
402(c)(8)(B) of the Code as limited by Section 402(c)(9) of the Code and, to
the extent a direct rollover is elected by any such person, the tax
withholding requirements of this Section 11.11 will not apply. If permitted by
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the Code or applicable Treasury regulations, a direct rollover as described in
the preceding sentence may be accomplished by delivering a check from the Plan
to the distributee payable to the trustee or custodian of the eligible
retirement plan. Each direct rollover election shall be in writing on a form
prescribed by the Committee for such purpose and given to the Participant,
Former Participant or spouse within a reasonable period of time prior to the
distribution or withdrawal.
11.12 Application of Forfeitures. As of each Valuation Date
forfeitures under Sections 5.1, 5.3, 6.2, 8.3, 10.3 and 11.9 less any
restorations under Sections 10.4 and 11.9, shall be placed in a Plan
forfeiture account and applied as provided in Section 4.8.
11.13 Restrictions on Distributions. Notwithstanding anything to the
contrary contained in the Plan, a Participant's Tax Reduction Contribution
Account, any amounts treated as "qualified non-elective contributions" as
described in Section 401(m)(4)(C) of the Code, and any earnings thereon, shall
not be distributed before the first to occur of the following events:
(a) the Participant's retirement;
(b) his death;
(c) his permanent disability;
(d) his termination of employment;
(e) his attainment of age 59 1/2;
(f) the termination of the Plan, provided that neither the Employer
nor an Affiliated Company maintains a successor plan;
(g) the disposition, to a corporation that is not an Affiliated
Company, of substantially all of the assets [within the meaning of Code
section 409(d)(2)] used by the Employer in the trade or business in which the
Participant is employed, provided that the Participant continues employment
with the transferee corporation and the Employer continues to maintain the
Plan; or
(h) the disposition, to a corporation that is not an Affiliated
Company, of the Employer's interest in a subsidiary in which the Participant
is employed, provided that the Participant continues employment with the
subsidiary and the Employer continues to maintain the Plan.
A distribution may be made under (f), (g) or (h) above only if it constitutes
a total distribution of the Participant's entire balance in all Accounts and
the account balances under any other profit sharing plans of the Employer or
an Affiliated Company.
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ARTICLE XII
NOTICE
12.1 Notice. As soon as practicable after a Participant or Former
Participant makes a request for payment or a benefit becomes payable to a
Beneficiary, the Committee shall notify the Trustee of the following
information and give such directions as are necessary or advisable under the
circumstances
(a) name and address of the Participant, Former Participant or
Beneficiary, and
(b) amount to be distributed.
In addition to the information described above, for distributions and
withdrawals occurring after December 31, 1992, the Committee shall notify the
Trustee, if applicable, as to the identity, address and other pertinent
information of eligible retirement plans as described in Section 402(c)(8)(B)
of the Code to which the payee has elected to rollover directly such
distribution or withdrawal pursuant to Section 11.11 of the Plan.
12.2 Modification of Notice. At any time and from time to time
after giving the notice as provided for in Section 12.1, the Committee may
modify such original notice or any subsequent notice by means of a further
notice or notices to the Trustee but any action taken or payments made by the
Trustee pursuant to a prior notice shall not be affected by a subsequent
notice.
12.3 Reliance on Notice. Upon receipt of any notice as provided in
this Article XII, the Trustee shall promptly take whatever action and make
whatever payments are called for therein, it being intended that the Trustee
may rely upon the information and directions in such notice absolutely and
without question.
ARTICLE XIII
LOANS
13.1 General Provisions Regarding Loans. At any time prior to the
date a Participant's benefits are paid, the Committee, in its sole discretion
and in accordance with the policies and procedures set forth in this Article
XIII, may direct the Trustee to make a loan to a Participant (as defined
below) if such loans (a) are made on a reasonably equivalent basis, (b) are
not made available to Highly Compensated Employees in an amount greater than
the amount made available to other Employees, (c) are adequately secured, and
(d) bear a reasonable interest rate. Solely for purposes of this Article
XIII, the term "Participant" shall mean an active Participant, a Former
Participant or a Beneficiary who is a "party in interest" [within the meaning
of Section 3(14) of ERISA].
13.2 Amount and Limitations Applicable to Loans. A Participant may
request a loan in an amount which does not exceed (i) 50% of the present value
of the Participant's vested interest in the Plan determined in accordance with
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Section 13.8 hereof or, if less, (ii) $50,000 reduced by the highest
outstanding loan balance applicable to the Participant from this Plan and any
other qualified plan of the Company or an Affiliated Company during the one
year period ending on the day before the loan date. The minimum amount that
may be borrowed from the Plan is $1,000 and only two loans may be outstanding
under the Plan at any one time. It is intended that loans granted to a
Participant under this Article XIII will not place other Participants at risk
with respect to their Accounts. Therefore, each loan shall be made from the
borrower's Account and the income or loss associated with the loan shall be
allocated to the borrower's Account.
A loan to a Participant (and interest thereon) shall be considered a Plan
investment, and repayments shall be credited to an Investment Fund or Funds in
accordance with Article IX as if such repayments were future Tax Reduction
Contributions, Investment Plan Contributions, Matching Company Contributions
and/or Rollover Contributions, as the case might be, made to the Plan on
behalf of the Participant.
13.3 Security for Loans. Any loan to a Participant under this
Article XIII shall be secured by the irrevocable pledge and assignment of 50%
of the present value, determined at the time the loan is granted based on the
most recently completed Valuation Date, of the Participant's vested interest
in the Trust, supported by the execution of a promissory note for the amount
of the loan, including interest, payable to the order of the Trustee. If the
loan will be used to acquire or construct a dwelling unit which is within a
reasonable period of time to be used as the principal residence of the
Participant the Committee may permit or require the Participant to secure such
loan with assets in addition to 50% of the Participant's interest in the
Trust.
13.4 Interest Rate for Loans. Each loan shall bear interest at a
rate fixed by the Committee based on rates charged by the financial
institutions in the same geographic location for similar secured personal
loans. The loan rate shall remain fixed for the term of the loan (or the
remaining term of a renegotiated loan). The Committee shall not discriminate
among Participants in the manner of interest rates but loans granted at
different times may bear different interest rates if, in the opinion of the
Committee, the difference in rates is justified by a change in general
economic conditions.
13.5 Repayment of Loans. (a) Any loan to a Participant under this
Article XIII shall be repaid within five years of the date on which the loan
is made, except that loans used to acquire or construct any dwelling unit
which is within a reasonable time to be used as a principal residence of the
Participant may be repaid over a longer period of time (not to exceed 25
years) as determined by the Committee; provided, however, that any loan shall
be repaid (or offset against the Participant's Account) on or before the date
the Participant receives his final distribution from the Plan. Loans shall be
amortized on a level basis and repaid in regular, substantially equal
installments by payroll deduction (or, if the Participant is not receiving pay
from the Employer at any time while a loan is outstanding, by direct payment
from the Participant to the Employer for deposit in the Trust Fund) on a
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schedule prescribed by the Committee (with payments made at least as often as
quarterly), which installments shall be applied to reduce the principal as
well as the accrued interest of the loan. Notwithstanding the preceding
provisions of this Section 13.5(a) for periods commencing on and after
September 9, 1994, a Participant shall not be required to make payments on a
level amortization basis during any period the Participant is on leave of
absence from the Employer without pay for up to one year.
(b) Each loan repayment shall be paid to the Trustee, and the
Committee shall provide written instructions to be Recordkeeper regarding such
repayment that:
(i) identify the Participant on whose behalf the repayment is
being made; and
(ii) direct the investment of the loan repayment to the
Investment Fund account in the same proportion as elected by
the Participant in Section 9.5 as if the repayment were
future contributions.
13.6 Default on Loans. In the event of a default by a Participant
on a loan repayment, all remaining repayments on the loan shall be immediately
due and payable, and the entire amount of the unpaid balance of such loan and
accrued interest thereon shall be considered and treated as having been
distributed in cash under Article XI as of the date of default, and an
appropriate adjustment of his Account shall be made therefor. Notwithstanding
the foregoing, the Committee may use alternative means to pursue payment of a
loan in default if such alternative means are necessary to prevent an actual
distribution from the portion of the Participant's Account that is
attributable to Tax Reduction Contributions and that would contravene Section
401(k) of the Code; provided, however, that a taxable distribution for
purposes of Section 72(p) of the Code shall occur in the event of any default
by a Participant on a loan made under this Article XIII.
13.7 Acceleration of Loans Upon Termination of Employment. All
loans shall be accelerated and immediately due and payable upon a
Participant's termination of employment with the Employer [unless such
Participant is a "party in interest" as defined in Section 3(14) of ERISA or
is otherwise mandatorily eligible for Plan loans under ERISA, the Code or
regulations and rulings promulgated thereunder]. If a Participant does not
repay the loan at the time of acceleration, the Committee shall direct the
Recordkeeper to offset the nonforfeitable portion of the Participant's
Accounts by the outstanding amount of the loan and such offset shall reduce
the amount payable to the Participant from the Trust Fund.
13.8 Manner of Making Loans. All requests by a Participant for
loans from the Trust shall be made in writing to the Committee and if the
request is received on or before the 25th day of a month, the loan amount
shall be paid to the Participant as soon as administratively practicable after
the first day of the next month, based on the value of the Participant's
Account as of the preceding Valuation Date, adjusted to reflect the value of
the Participant's interest, if any, in the Zurn Stock Fund and the Household
International, Inc. Common Stock Fund as of the 25th day of the month
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immediately following such Valuation Date. Notwithstanding the foregoing
provisions of this Section 13.8, if a Participant repays a loan made to him
pursuant to this Article XIII, he may not apply for another loan from the
Trust prior to the expiration of two months from the date of such repayment.
The Committee shall apply its standards for the approval of loans in a uniform
and consistent manner with respect to all Participants and shall approve a
loan if the requirements of this Article XIII are satisfied. If a
Participant's request for a loan is approved by the Committee, the Committee
shall furnish the Trustee with written instructions directing the Trustee to
make the loan in a single sum payment in cash to the Participant. Such payment
shall be made by withdrawing as of the Valuation Date for which the loan is
made amounts from the Investment Funds as designated by the Participation
accordance with rules established by the Committee from time to time or if the
Participant fails to designate Investment Funds to be used to fund the loan,
by withdrawing as of the Valuation Date for which the loan is made a
proportionate amount from the separate Investment Funds of the Participant
under the Plan. No loan shall be granted hereunder if at the time the loan is
to be granted it would be treated as a distribution under Section 72(p) of the
Code. Notwithstanding the foregoing provisions of this Section 13.8, that
portion of a Participant's Account which is attributable to Matching Company
Contributions and TRIP+ Contributions made with respect to calendar quarters
ending on and after June 30, 1997 shall not be available for withdrawal in
connection with a loan under the Plan unless the Participant has attained age
57 as of the first day of the month in which the loan amount is to be paid to
the Participant.
13.9 Additional Loan Procedures. For purposes of satisfying the
requirements of Section 2550.408b-l(d) of the Labor Regulations, the Committee
may adopt written loan policies and procedures to supplement or, if
appropriate, modify the provisions of this Article XIII. Such policies and
procedures, upon adoption by the Committee, shall be incorporated in the Plan
by this reference as if fully set forth herein. The Committee shall have the
power to amend and modify such policies and procedures at anytime in the
Committee's sole discretion.
ARTICLE XIV
ADMINISTRATION OF THE PLAN
14.1 Allocation of Responsibilities Among Fiduciaries. A fiduciary
with respect to the Plan, as described in Section 3(21) of ERISA, shall have
only those specific powers, duties, responsibilities and obligations as are
explicitly given such fiduciary under the terms of the Plan and the Trust
Agreement or allocated to such fiduciary pursuant to the procedures set forth
herein. In general, Zurn shall have the sole authority to amend or terminate,
in whole or in part, the Plan or the Trust Agreement, subject to the
provisions of Article XVI. The Board of Directors shall have the sole
authority to appoint and remove the members of the Committee. The Employer
shall have the sole responsibility for making contributions to the Plan. Zurn
shall be the administrator of the Plan as described in Section 3(16)(A) of
ERISA and, except as otherwise provided herein, Zurn shall have all the duties
and responsibilities of an administrator for purposes of ERISA. Except as
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otherwise provided herein or subsequently delegated to other persons pursuant
to the provisions hereof, the Committee shall possess general authority to
manage the operation and administration of the Plan. The Committee may
designate one or more individuals or committees of individuals to carry out
any of its fiduciary responsibilities in connection with the Plan. Any such
designation may be made by action of the Committee or by a member or members
duly authorized by the Committee to make such designation on behalf of the
Committee. Any designation, or revocation thereof, made by the Committee or be
such authorized Committee member shall be made in writing, shall specify the
responsibilities which the designee is to carry out and shall be filed with
the Secretary of the Committee, from whom the names and Committee assignments,
if any, of all individuals so designated and of any Committee member
authorized to make such designations shall be available. Subject to
Participants' investment directions under Section 9.5, and subject to
Committee directions under Section 14.3, the Trustee shall have the sole
responsibility for the administration of the Trust and the management of the
assets held thereunder, as provided in the Trusts Agreement. It is intended
that each fiduciary shall be responsible only for the proper exercise of his
own powers, duties, responsibilities and obligations under the Plan and shall
not be responsible for any act or failure to act of another fiduciary. A
fiduciary may serve in more than one fiduciary capacity with respect to the
Plan and any fiduciary to the Plan may also be an Employee. The Committee may
employ one or more persons to render advice to any director, officer or
Employee with respect to such individual's responsibilities under the Plan. No
fiduciary of the Plan guarantees the Trust Fund in any manner against
investment loss or depreciation in asset value.
14.2 Management of Plan Assets. The amounts allocated under this
Plan shall be held in trust pursuant to the terms of the Trust Agreement by a
Trustee or Trustees appointed by the Committee, provided that a portion of
such amounts may be held directly by one or more insurance companies appointed
by the Committee under one or more individual or group insurance contracts.
The aggregate of the amounts so contributed to the Plan and held by the
Trustee and such insurance companies as may be acting at any time, together
with any income, gains and profits thereon, less losses, distributions and
other permissible payments therefrom, shall constitute a Trust Fund for the
payment of benefits under the Plan. The Committee shall review the performance
of the Trustee from time to time and the Committee shall determine the form
and terms of any insurance company contract to accomplish the purposes of the
Plan. The Committee may remove any Trustee and may terminate any insurance
contract, to the extent permitted by the terms hereof, the terms of the Trust
Agreement and the terms of the insurance contract.
The Trustee shall have exclusive responsibility for the management and
control of the portion of the Trust Fund held in trust by it, except as
provided in Section 14.3 and except to the extent that the Committee delegates
such responsibility to one or more persons who are "investment
managers"[within the meaning of Section 3(38) of ERISA], each of whom shall be
either
(a) registered as an investment adviser under the Investment
Advisers Act of 1940 (the "Act");
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(b) a bank, as defined in the Act; or
(c) an insurance company qualified to perform investment management
services under the laws of more than one state.
Any insurance company which holds a portion of the Trust Fund directly shall
have exclusive responsibility for the management and control of such portion
of the Trust Fund. The names of each Trustee, insurance company and investment
manager acting at any time hereunder shall be available from the Committee.
14.3 Powers and Responsibilities of the Committee. In addition to
any other powers and responsibilities allocated to the Committee pursuant to
the terms of this Plan, the following powers and responsibilities shall be
exercised by the Committee, the members of which shall be appointed by, and
serve at the pleasure of, the Board of Directors.
(a) To administer the Plan, including but not limited to, the power
to resolve any and all disputes which may arise involving Participants, Former
Participants, Beneficiaries and/or the Trustee. The Committee shall have the
exclusive discretionary authority to interpret and construe the terms of the
Plan and the Trust Agreement and the exclusive discretionary authority to
determine eligibility for all benefits hereunder. Any such determinations or
interpretations of the Plan adopted by the Committee shall be final and
conclusive and shall bind all parties. The Trustee may rely upon the decision
of the Committee with respect to any question concerning the meaning,
interpretation, or application of any provision of the Plan and the Trust
Agreement. The Committee's interpretations and determinations with respect to
the Plan and the Trust Agreement shall be based on such information as is
reasonably available to the Committee at the time a decision is made. In
addition, in administering the Plan, the Committee may rely conclusively upon
an Affiliated Company's payroll and personnel records maintained in the
ordinary course of business.
(b) To administer the Plan's claims procedure pursuant to Section
11.7 in a uniform and nondiscriminatory manner.
(c) To adopt such rules, forms and procedures as it shall deem
necessary for the efficient administration of the Plan in accordance with its
terms and the terms of any applicable law.
(d) To prepare and submit to governmental agencies, Participants,
Former Participants and Beneficiaries such Plan descriptions, reports and
other documents, or summaries thereof, as may be required by applicable law or
necessary in the administration of the Plan.
(e) To remedy possible ambiguities, inconsistencies or omissions in
connection with its power to interpret the Plan; provided, however, that all
such actions and decisions shall be applied in a uniform manner to all
Employees similarly situated.
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(f) To authorize disbursements from the Trust, including refunds of
contributions permitted by the Plan (any instructions of the Committee to the
Trustee shall be evidenced in writing and signed by a member of the Committee
delegated with such authority by a majority of the Committee).
(g) To employ such advisors (including but not limited to
attorneys, independent public accountants and investment advisors) and such
other technical and clerical personnel as may be required in the Committee's
discretion for the proper administration of the Plan, and to pay the
reasonable expenses of such persons from the Trust Fund.
(h) To establish and to instruct the Trustee and any investment
manager with respect to asset administration objectives and policies
consistent with Plan requirements and establish Investment Funds in accordance
with such objectives and policies.
(i) To review from time to time, but at least as often as annually,
the investment performance of the Trustee and any insurance company or
investment manager acting with respect to any portion of the Trust Fund. The
Committee may engage the services of such persons it deems appropriate
including, investment managers, to review investments held by the Plan and the
financial condition of insurance companies issuing insurance contracts to the
Plan.
(j) To supervise at least one audit of the Plan's assets for each
Plan Year and review the Trustee's annual accounting.
(k) To exclude Affiliated Companies from participation in the Plan.
Each of the members of the Committee is hereby authorized to sign documents
relating to the Plan required by the Department of Labor, Internal Revenue
Service or other governmental agencies on behalf of the Company provided,
however, that the Company shall have the responsibility and duty to file
reports required by any governmental agency with respect to the Plan and to
comply with all other filing and disclosure requirements required by ERISA in
connection with the administration of the Plan. Notwithstanding any other
provisions of this Section 14.3, no member of the Committee shall vote or act
upon any matter involving his own rights, benefits, or participation in the
Plan.
14.4 Operation of Committee. The Committee may act by a majority of
its members present at a meeting at which at least half the members are
present or by a unanimous written decision taken without a meeting. The Board
of Directors may remove any member of the Committee at any time and a member
may resign by written notice to the Board of Directors. If at any time the
minimum number of Committee members has not been designated by the Board of
Directors, then the Committee member or members designated and acting at such
time shall be deemed to constitute the full membership of the Committee. The
Committee may appoint a chairman, a secretary and such other agents and
representatives (who may, but need not, be members thereof) as it may deem
advisable to keep its records or otherwise to assist it in the performance of
its responsibilities. The Committee may engage agents to assist it and may
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engage legal counsel who may be legal counsel for the Company. All reasonable
expenses incurred by the Committee may be paid from the Trust Fund to the
extent not paid by the Employer.
14.5 Compensation and Expenses of Employees and Directors Serving as
Fiduciaries. The members of the Committee and employees, officers and
directors of Affiliated Companies who are designated as fiduciaries with
respect to the Plan shall serve without compensation for their services, but
all reasonable expenses of the Committee, the members thereof and such other
individuals incurred in the performance of their duties and responsibilities
under the Plan shall be paid out of the Trust Fund unless paid by the
Employer.
14.6 Indemnification of Employees and Directors. The Company hereby
indemnifies each member of the Committee and each employee, officer and
director of an Affiliated Company who are delegated responsibilities under or
pursuant to the Plan against any and all liabilities and expenses, including
attorney's fees, actually and reasonably incurred by them in connection with
any threatened, pending or completed legal action or judicial or
administrative proceeding to which they may be a party, or may be threatened
to be made a party, by reason of membership on the Committee or other
delegation of responsibilities, except with regard to any matters as to which
they shall be adjudged in such action or proceeding to be liable for gross
negligence or willful misconduct in connection therewith. In addition, the
Company may provide appropriate insurance coverage for the members of the
Committee or each such other individual indemnified pursuant to this Section
14.6 who is not otherwise appropriately insured.
14.7 Action Taken in Good Faith. To the extent permitted by ERISA,
the members of the Committee and each employee, officer and director of an
Affiliated Company who are fiduciaries with respect to the Plan shall be
entitled to rely upon, and be fully protected with respect to any action taken
or suffered by them in good faith in reliance upon, all tables, valuations,
certificates, reports and opinions furnished by the Recordkeeper, the Trustee,
or any accountant, attorney, insurance company or investment manager acting at
any time hereunder.
14.8 Expenses of the Plan. The expenses of administering the Plan,
other than the compensation of persons on the payroll of an Affiliated
Company, but including fees of the Trustee, counsel, accountants or other
experts appointed under the Plan, at the direction of the Committee may be
paid from any forfeitures which arise under the Plan, and to the extent
expenses are not paid from forfeitures, they shall be paid out of the Trust
Fund to the extent not paid by the Employer.
ARTICLE XV
TRUST FUND
15.1 Establishment of Trust Fund. The Trustee appointed by the
Committee shall accept and receipt for all assets transferred to it as
Trustee. All assets so received, together with the income therefrom and any
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other increment thereon, as well as assets held in the Trust as of the
Effective Date, shall constitute the Trust Fund and shall be held, managed and
administered by the Trustee, pursuant to the terms of the Trust Agreement. The
Trustee shall not be responsible for the collection of any contributions
pursuant to the terms of the Plan but shall be accountable only for cash or
other property actually received by the Trustee and for the administration
thereof in accordance with the terms of the Trust Agreement.
15.2 Investments in Zurn Stock. All investments by the Trustee in
shares of Zurn Stock shall be made in such a manner to comply with all
applicable federal and state securities laws and the provisions of ERISA and
the Code. Up to 100% of the assets of the Trust Fund may be invested in shares
of Zurn Stock.
15.3 Title of Trust Assets. The legal and equitable title and
ownership of all assets at any time constituting a part of the Trust Fund
shall be and remain with the Trustee, and neither the Company, or any Employer
nor any Participant, Former Participant or Beneficiary shall ever have any
legal or equitable estate therein, save and except that each Participant,
Former Participant and Beneficiary shall be entitled to receive distributions
as and when lawfully made under the terms of the Plan.
ARTICLE XVI
AMENDMENT AND TERMINATION
16.1 Amendment. Zurn, acting through its Board of Directors, may at
any time, and from time to time, modify or amend this Plan in whole or in
part, or discontinue or modify Employer contributions to the Plan; provided,
however, that except to the extent required or permitted by the Code or other
applicable law, the accrued benefit of any Participant, Former Participant or
Beneficiary shall not be affected retroactively by any such action. No
amendment of the Plan shall authorize or permit any part of the Trust Fund to
be used for or diverted to purposes other than for the exclusive benefit of
the Participants or their Beneficiaries, and no amendment shall be made or
shall be valid if it would result in the Plan's disqualification under the
applicable provisions of the Code.
16.2 Termination or Discontinuance of Contributions. The Board of
Directors may at any time terminate or partially terminate this Plan or
permanently discontinue contributions hereunder. Upon termination or partial
termination of the Plan with respect to a group of Participants or complete
discontinuance of contributions to the Plan, any amount of the Trust Fund
previously unallocated, including any amounts in a suspense account
established under Section 8.3, shall be allocated (unless such allocation
would violate Section 8.1), and the Accounts of all affected Participants
shall thereupon be and become fully vested and nonforfeitable to the extent
then funded. The Trustee shall deduct from the Trust Fund all unpaid charges
and expenses including those relating to said termination, except as the same
may be paid by an Employer. The Trustee shall then adjust the balance of all
Accounts on the basis of the net value of the Trust Fund. The Trustee shall
distribute the amount to the credit of each Participant, Former Participant,
and Beneficiary when all appropriate administrative procedures have been
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completed. If any amount in a suspense account shall not be allocable because
of the provisions of Section 8.1, such amount shall be returned to the
Employer. Upon any complete discontinuance of contributions by an Employer,
the assets of the Trust Fund shall be held and administered by the Trustee for
the benefit of the Participants employed by such Employer discontinuing
contributions in the same manner and with the same powers, rights, duties and
privileges herein described until the Trust Fund with respect to such Employer
has been fully distributed.
16.3 Distribution on Plan Termination. Except as provided in the
next sentence, if no other defined contribution plan [other than an employee
stock ownership plan as defined in Section 4975(e)(7) of the Code or a
simplified employee pension plan as defined in Section 408(k) of the Code] is
maintained by the Company or any other Affiliated Company as of the Plan
termination date, the Trustee shall distribute each Participant's entire
Account in a single lump sum distribution to him, or to an eligible retirement
plan as defined in Section 402(c)(8)(B) of the Code pursuant to the
Participant's direct rollover election described in Section 11.11, as soon as
administratively practicable after the later of (i) the termination date of
the Plan or (ii) the receipt following application of a favorable
determination letter from the Internal Revenue Service with respect to the
termination of the Plan. If the Participant either fails or refuses to consent
in writing to the distribution upon termination of the Plan, the Trustee shall
use the balance of the Participant's Account to purchase a deferred annuity
satisfying the requirements of Article XI and providing for commencement of
the Participant's benefits at age 65 and distribute such annuity contract to
the Participant. If, however, the Company or any Affiliated Company maintains
another defined contribution plan [other than an employee stock ownership plan
as defined in Section 497S(e)(7) of the Code or a simplified employee pension
plan as defined in Section 408(k) of the Code] as of the Plan termination
date, then except as provided in the next sentence, each Participant's entire
Account shall either (i) be transferred by the Trustee, without the
Participant's consent, to such other defined contribution plan provided,
however, that no such transfer may result in the elimination or reduction of a
Plan benefit of the Participant protected under Section 411(d)(6) of the Code,
unless the transfer satisfies the requirements of Q&A-3(b) of the Treasury
Regulations, or (ii) be used to purchase a deferred annuity satisfying the
requirements of Article XI and providing for commencement of benefits at age
65 and such annuity contract shall be distributed to the Participant. A
Participant may request in writing that the Trustee distribute his Account,
excluding the balance attributable to his Tax Reduction Contribution Account,
unless distribution of such account would be permitted under Section
401(k)(2)(B) of the Code and the applicable Treasury regulations thereunder,
in a single lump sum distribution to him, or to an eligible retirement plan as
defined in Section 402(c)(8)(B) of the Code pursuant to the Participant's
direct rollover election described in Section 11.11, as soon as
administratively practicable after the later of (i) the termination date of
the Plan or (ii) the receipt following application of a favorable
determination letter from the Internal Revenue Service with respect to the
termination of the Plan.
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16.4 Distributions upon Certain Sales. A single sum distribution
may be made from the Plan to any Participant, or to an eligible retirement
plan as defined in Section 402(c)(8)(B) of the Code pursuant to the
Participant's direct rollover election described in Section 11.11, affected by
(i) a disposition by an Employer of substantially all of the assets used by
the Employer in a trade or business, but only if the Participant continues
employment with the corporation acquiring such assets or (ii) a disposition by
an Employer of its interest in a subsidiary, but only if the Participant
continues employment with such subsidiary.
16.5 Merger or Consolidation of Plan. In the event of any merger or
consolidation of the Plan with, or transfer in whole or in part of the assets
and liabilities of the Trust Fund to, another trust fund held under any other
plan of deferred compensation maintained or to be established for the benefit
of all or some of the Participants in this Plan, the assets of the Trust Fund
applicable to such Participants shall be transferred to the other trust fund
only if:
(a) each Participant would (if either this Plan or the other plan
had then terminated) receive a benefit immediately after the merger,
consolidation, or transfer which is equal to or greater than the benefit he
would have been entitled to receive immediately before the merger,
consolidation, or transfer (if this Plan had then terminated); and
(b) such other plan and trust fund are qualified under Section
401(a) of the Code and exempt from tax under Section 501(a)of the Code.
16.6 Merger and Other Reorganization of Employer. A merger,
consolidation, similar corporation change, or sale which results in the
transfer of substantially all the assets and Employees of the Company or an
Employer to a successor corporation shall constitute a total or partial
termination of the Plan unless, and except to the extent that the Board of
Directors shall adopt a resolution consenting to the continuance of the Plan
and specifying appropriate amendments and conditions applicable to such
continuance.
ARTICLE XVII
MISCELLANEOUS
17.1 No Employment or Compensation Agreement. Nothing contained in
the Plan shall be construed as giving any person or entity any legal or
equitable right against the Company, any Employer, any Affiliated Company,
their stockholders or partners, officers or directors, the Named Fiduciary, or
the Trustee, except as the same shall be specifically provided in the Plan.
Nor shall anything in the Plan give any Participant or other Employee the
right to be retained in the service of an Employer. The employment of all
persons by an Employer shall remain subject to termination by such Employer to
the same extent as if the Plan had never been executed.
17.2 Spendthrift Provision. Except as provided under Article XIII
with respect to participant loans, by the terms of a Qualified Domestic
Relations Order, or as permitted pursuant to Section 401(a)(13) of the Code,
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no Participant, Former Participant, or Beneficiary shall have the right to
assign, alienate or transfer his interest hereunder, nor shall his interest be
subject to claim of his creditors or others, it being understood that all
provisions of the Plan shall be for the exclusive benefit of those designated
herein.
17.3 Construction. It is the intention of each Employer that the
Plan be qualified under Section 401 of the Code and comply with the applicable
provisions of ERISA, and all provisions hereof shall be construed to that
result.
17.4 Titles. Titles of Articles and Sections hereof are for
convenience only and shall not be considered in construing the Plan.
17.5 Texas Law Applicable. The Plan and each of its provisions
shall be construed and their validity determined by the laws of the State of
Texas to the extent not preempted by ERISA or other applicable federal law.
17.6 Successors and Assigns. The Plan shall be binding upon the
successors and assigns of the Company and each Employer and the Trustee and
upon the heirs and personal representatives of those individuals who become
Participants hereunder.
17.7 Payments Only from Trust Fund. All benefits of the Plan shall
be payable solely from the Trust Fund and neither the Employer, the Committee,
nor the Trustee shall have any liability or responsibility therefor except as
expressly provided herein.
17.8 Plan Controls. The Trust Agreement is a part of the Plan. In
case of any inconsistency between the terms of the Plan and the Trust
Agreement, the provisions of the Plan shall control. In the event of any
conflict between the terms of the Plan and any summary thereof or other
document relating thereto, from whatever a source, the terms of the Plan shall
govern.
17.9 Effect of Mistakes. In the event of a mistake or misstatement
as to the age or eligibility of any person, the service to be credited to any
person, or the amount of any kind of contributions, withdrawals or
distributions made or to be made to a Participant, or other person, the
Committee shall, to the extent it deems possible, make such adjustment as will
in its judgment afford to such person the credits, service, distributions or
other rights to which he is properly entitled under the Plan.
17.10 IRC 414(u) Compliance Provision. Notwithstanding any provision
of the Plan to the contrary and effective on and after October 13, 1996,
contributions benefits and service credit with respect to qualified military
service shall be provided in accordance with Section 414(u) of the Code.
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ARTICLE XVIII
TOP HEAVY PROVISIONS
18.1 Application and Purpose. The following special provisions
shall apply to determine if the Plan is a Top Heavy Plan in accordance with
Section 416 of the Code and special rules that will apply based on the Plan's
status as a Top Heavy Plan. In the event that the provisions contained in this
Article are inconsistent with the terms contained in the remainder of the
Plan, the provisions of this Article shall take precedence over such other
terms of the Plan.
18.2 Minimum Allocation Requirements. For any Plan Year in which
the Plan is a Top Heavy Plan, each Employee who on the last day of such Plan
Year (i) is a Non Key Employee who has satisfied the eligibility requirements
of Section 3.1 (regardless of whether he will have Tax Reduction Contributions
or Investment Plan Contributions made on his behalf to the Plan for the Plan
Year) and (ii) does not participate in a defined benefit plan maintained by an
Employer or an Affiliated Company that provides that the minimum benefit
applicable to top heavy plans will be satisfied in such other plan, shall
receive a minimum allocation of Employer contributions (excluding, for Plan
Years beginning after December 31, 1988, Tax Reduction Contributions and
Matching Company Contributions that are used to satisfy the Contribution
Percentage tests of Section 6.1) equal to the lesser of (x) three percent of
such Participant's Compensation or (y) the largest percentage of Employer
contributions (including, for Plan Years beginning after December 31, 1988,
Tax Reduction Contributions and Matching Company Contributions) made to the
Plan for the Plan Year, as a percentage of the first $200,000 (or such other
amount equal to the Compensation Limitation as defined in Section 2.13) of the
Compensation of Participants who are Key Employees allocated to any such
Participant who is a Key Employee for that Plan Year; provided, however that
if the Plan is part of a Required Aggregation Group and the Plan enables a
defined benefit plan that is included in the same Required Aggregation Group
to meet the requirements of Sections 401(a)(4) or 410 of the Code, clause (y)
above shall not apply.
18.3 Adjustment to Limitation on Allocations. For any Plan Year in
which the Plan is a Top Heavy Plan, the provisions of Article VIII hereof
shall be adjusted in accordance with the provisions of Section 416(h) of the
Code which are by this reference incorporated herein.
18.4 Vesting Schedule. For any Plan Year in which the Plan is a Top
Heavy Plan, the following provisions shall be applicable to the Plan:
(a) Except as provided in Section 18.4(b) below, each Participant
shall be entitled (as a vested interest) to receive the greater of the vested
interest calculated pursuant to any other provision of the Plan or a
percentage of the then combined balance to his credit in his Accounts and
determined in accordance with the following schedule
Years of Service Vested Interest
Less than 3 0%
3 or more 100%
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(b) The schedule in Section 18.4(a) above shall not apply to the
Account of any Participant who does not perform an Hour of Service after the
Determination Date on which the Plan first becomes a Top Heavy Plan.
18.5 Definitions.
(a) "Top Heavy Plan" means the Plan for a Plan Year if the Plan
is the only plan maintained by an Employer and the top heavy ratio as of the
Determination Date exceeds 60%. The top heavy ratio is a fraction, the
numerator of which is the sum of the present value of the Accounts of all Key
Employees as of the Determination Date, the contributions due as of the
Determination Date, and distributions made within the five-year period
immediately preceding the Determination Date (including distributions under a
terminated plan which if it had not been terminated would have been required
to be included in an aggregation group), and the denominator of which is a
similar sum determined for all Employees. The top heavy ratio shall be
calculated without regard to (i) the Account of a Participant who is not a Key
Employee but who was a Key Employee in a prior Plan Year, (ii) the Account of
any individual who has not performed any services for an Employer at any time
during the five-year period ending on the Determination Date, and (iii)
voluntary deductible Employee contributions, if any. The top heavy ratio,
including distributions, rollovers and transfers, to the extent such items
must be taken into account, shall be calculated in accordance with Section 416
of the Code and the regulations thereunder. If an Employer maintains other
qualified plans (including a simplified employee pension plan) or has ever
maintained one or more defined benefit plans which have covered or could cover
a Participant in this Plan, this Plan is top heavy for a Plan Year only if it
is part of the Required Aggregation Group, and the top heavy ratio for both
the Required Aggregation Group and the Permissive Aggregation Group exceeds
60%. The top heavy ratio shall be calculated as described above, taking into
account all plans within the aggregation group and with reference to
Determination Dates that fall within the same calendar year provided that if
a defined benefit plan is included in the aggregation group, the present value
of accrued benefits (instead of account balances) oft participants in that
plan shall be computed for purposes of calculating the top heavy ratio. The
accrued benefit under a defined benefit plan in both the numerator and the
denominator of the top heavy ratio are increased for any distribution of an
accrued benefit made in the five-year period ending on the Determination Date.
The accrued benefit of a Participant other than a Key Employee shall be
determined under (i) the method, if any, that uniformly applies for accrual
purposes under all defined benefit plans maintained by the Employer, or (ii)
if there is no such method, as if such benefit accrued not more rapidly than
the lowest accrual rate permitted under the fractional rule Section
411(b)(1)(C) of the Code. The value of account balances and the present value
of accrued benefits will be determined as of the most recent Allocation Date
that falls within or ends with the 12-month period ending on the Determination
Date, except as provided in Section 416 of the Code and the Treasury
Regulations thereunder for the first and second plan years of a defined
benefit plan. The actuarial assumptions (interest rate and mortality only)
used by the actuary under the defined benefit plan shall be used to calculate
the present value of accrued benefits from the defined benefit plan.
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(b) "Determination Date" means for any Plan Year the last day of
the preceding Plan Year, or in the case of the first Plan Year of the Plan,
the last day of that Plan Year.
(c) "Required Aggregation Group" means (i) each qualified plan
of an Employer in which at least one Key Employee participates, and (ii) any
other qualified plan of an Employer which enables a plan described in (i) to
meet the requirements of Sections 401(a)(4) and 410 of the Code.
(d) "Permissive Aggregation Group" means the Required
Aggregation Group plus any other qualified plans maintained by an Employer
which, when considered as a group with the Required Aggregation Group, would
continue to satisfy the requirements of Sections 401(a)(4) and 410 of the
Code.
IN WITNESS WHEREOF, Zurn Industries, Inc. has caused this Plan to be
executed this 15th day of September, 1997, effective as set forth herein.
ZURN INDUSTRIES, INC.
By: /s/ James A. Zurn
James A. Zurn
Senior Vice President
Chariman-Pension Committee
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