<PAGE> 1
As filed with the Securities and Exchange Commission on October 15, 1999
Registration No. 33-38702
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
Post Effective Amendment No. 2
to
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
QUANEX CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 38-1872178
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1900 West Loop South, Suite 1500 77027
Houston, Texas (Zip Code)
(Address of Principal Executive Offices)
Quanex Corporation Employee Savings Plan
(Full title of the plan)
TERRY M. MURPHY
QUANEX CORPORATION
1900 WEST LOOP SOUTH, SUITE 1500
HOUSTON, TEXAS 77027
(Name and address of agent for service)
(713) 961-4600
(Telephone number, including area code, of agent for service)
Copies to:
HARVA R. DOCKERY, ESQ.
FULBRIGHT & JAWORSKI L.L.P.
2200 ROSS AVENUE, SUITE 2800
DALLAS, TEXAS 75201-9975
(214) 855-8000
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PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. Incorporation of Documents by Reference.
Quanex Corporation, a Delaware corporation (the "Company" or
"Registrant"), and the Quanex Corporation Employee Savings Plan (the "Plan")
incorporate by reference, as applicable, in this Registration Statement the
following documents:
(a) The Registrant's original Registration Statement
on Form S-8, Reg. No. 33-38702, filed January 25, 1991, as
amended by Post-Effective Amendment No. 1 filed February 2,
1999;
(b) The Registrant's Annual Report on Form 10-K for
the fiscal year ended October 31, 1998;
(c) The Registrant's Quarterly Reports on Form 10-Q
for the quarters ended January 31, 1999, April 30, 1999 and
July 31, 1999;
(d) The Plan's Annual Report on Form 11-K for the
fiscal year ended December 31, 1998;
(e) All other reports filed by the Registrant or the
Plan pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), since
October 31, 1998;
(f) The description of the Registrant's common stock,
$.50 par value (the "Common Stock"), contained in the
Prospectus dated January 12, 1981, included in the
Registrant's Registration Statement (Registration No. 2-70313)
and filed with the Securities and Exchange Commission pursuant
to Rule 424(b) of the Securities Act of 1933; and
(g) The description of the rights to purchase Series
A Junior Participating Preferred Stock (the "Rights") set
forth in the Amended and Restated Certificate of Designation,
Preferences and Rights, filed as Exhibit 1 to Amendment No. 1
to the Registrant's Form 8-A dated April 28, 1989, as amended
by that certain second Amended and Restated Rights Agreement
between the Registrant and American Stock Transfer Co., as
Rights Agent, filed as Exhibit 4.1 to the Registrant's Report
on form 8-K filed April 16, 1999.
All documents subsequently filed by the Registrant pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act after the date of filing
of this Post Effective Amendment No. 2 to the Registration Statement on Form S-8
(this "Amendment No. 2") and before the filing of a post-effective amendment
which indicates that all securities offered have been sold or which deregisters
all securities then remaining unsold, are incorporated by reference in, and
constitute a part of, the Registration Statement from the date such documents
are filed.
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The language in this Amendment No. 2 modifies and supersedes
the language in any previously filed document that is incorporated by reference
in this Registration Statement. The language in any document that is filed after
the date of filing of this Amendment No. 2 that is incorporated by reference in
this Registration Statement modifies and supersedes the language in this
Registration Statement. However, such language constitutes a part of this
Registration Statement only to the extent that it modifies and supersedes this
Registration Statement.
ITEM 4. Description of Securities.
Not applicable.
ITEM 5. Interests of Named Experts and Counsel.
Not applicable.
ITEM 6. Indemnification of Directors and Officers.
Section 145 of the General Corporation Law of the State of
Delaware provides that a corporation has the power to indemnify a director,
officer, employee or agent of the corporation and certain other persons serving
at the request of the corporation in related capacities against amounts paid and
expenses incurred in connection with an action or proceeding to which he is, or
is threatened to be made, a party by reason of such position, if such person
shall have acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the corporation, and, in any criminal
proceeding, if such person had no reasonable cause to believe his conduct was
unlawful; provided that, in the case of actions brought by or in the right of
the corporation, no indemnification shall be made with respect to any matter as
to which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the adjudicating court determines that such
indemnification is proper under the circumstances.
The Registrant's Restated Certificate of Incorporation
eliminates the personal monetary liability of a director to the Registrant and
its stockholders for breach of his fiduciary duty of care as a director to the
extent currently allowed under the Delaware General Corporation Law. Article
XVII of the Registrant's Restated Certificate of Incorporation provides that a
director of the Registrant shall not be personally liable to the Registrant or
its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the Registrant or its stockholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (iii) based on the payment of an improper dividend or an improper
repurchase of the Registrant's stock under Section 174 of the General
Corporation Law of the State of Delaware, or (iv) for any transaction from which
the director derived an improper personal benefit.
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The Amended and Restated Bylaws of the Registrant provide
that, under certain circumstances, the Registrant is required to indemnify any
person who was, is, or is threatened to be made a party in any action, suit or
proceeding because such person is or was a director or officer of the
Registrant. The Registrant's Amended and Restated Bylaws were amended in
February 1987 to provide for indemnification by the Registrant of its officers
and directors to the fullest extent authorized by the General Corporation Law of
the State of Delaware. This right to indemnification under the Registrant's
Amended and Restated Bylaws is a contract right, and requires the Registrant to
provide for the payment of expenses in advance of the final disposition of any
suit or proceeding brought against the director or officer of the Registrant in
his official capacity as such, provided that such director or officer delivers
to the Registrant an undertaking to repay any amounts advanced if it is
ultimately determined that such director or officer is not entitled to
indemnification. The Registrant also maintains a directors' and officers'
liability insurance policy.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or persons controlling
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been informed that in the opinion of the Commission, such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
ITEM 7. Exemption from Registration Claimed.
Not applicable.
ITEM 8. Exhibits.
4.1 Restated Certificate of Incorporation of the Registrant, as
amended on February 27, 1997, filed as Exhibit 4.1 to the
Registrant's Registration Statement on Form S-8, Registration
No. 333-22977, and incorporated herein by reference.
4.2 Amended and Restated Bylaws of the Registrant, as amended
through August 26, 1999, filed as Exhibit 3 to the
Registrant's Quarterly Report on Form 10-Q for the Quarter
ended July 31, 1999, and incorporated herein by reference.
4.3 Form of Registrant's Common Stock certificate, filed as
Exhibit 4.1 to the Registrant's Quarterly Report on Form 10-Q
for the quarter ended April 30, 1987, and incorporated herein
by reference.
4.4 Second Amended and Restated Rights Agreement between the
Registrant and American Stock Transfer Co., as Rights Agent,
filed as Exhibit 4.1 to the Registrant's Report on Form 8-K
filed April 16, 1999, and incorporated herein by reference.
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4.5 Amended and Restated Certificate of Designation, Preferences
and Rights of the Registrant's Series A Junior Participating
Preferred Stock, filed as Exhibit 1 to Amendment No. 1 to the
Registrant's Form 8-A dated April 28, 1989, and incorporated
herein by reference.
4.6 Quanex Corporation Employee Savings Plan, as amended
and restated effective January 1, 1995.
4.7 Sixth [sic] Amendment to Quanex Corporation Employee Savings
Plan, effective October 1, 1995.
4.8 Master Trust Agreement between the Registrant and Fidelity
Management Trust Company dated as of February 1, 1999.
4.9 First Amendment to Trust Agreement between Fidelity Management
Trust Company and the Registrant, effective as of November 1,
1999.
23.1 Consent of Deloitte & Touche LLP.
24.1 Powers of Attorney.
The Registrant hereby undertakes to submit the Plan, and any
amendments thereto, to the Internal Revenue Service ("IRS") in a timely manner
and will make all changes required by the IRS in order to qualify the Plan.
ITEM 9. Undertakings.
A. The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or
sales are being made, a post-effective amendment to this
Registration Statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act of 1993, as
amended (the "Securities Act");
(ii) To reflect in the prospectus any facts
or events arising after the effective date of this
Registration Statement (or the most recent
post-effective amendment hereof) which, individually
or in the aggregate, represent a fundamental change
in the information set forth in this Registration
Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered
(if the total dollar volume of securities offered
would not exceed that which was registered) and any
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deviation from the high or low end of the estimated
maximum offering range may be reflected in the form
of prospectus filed with the Securities and Exchange
Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent
no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of
Registration Fee" table in the effective registration
statement; and
(iii) To include any material information
with respect to the plan of distribution not
previously disclosed in this Registration Statement
or any material change to such information in this
Registration Statement;
Provided, however, that paragraphs (i) and (ii) do
not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed by the Registrant pursuant to Section
13 or 15(d) of the Exchange Act that are incorporated by
reference in this Registration Statement.
(2) That, for the purpose of determining any
liability under the Securities Act, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of the
offering.
B. The undersigned Registrant hereby undertakes that, for the
purposes of determining any liability under the Securities Act, each filing of
the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference into this Registration Statement shall be deemed to be
a new registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
C. Insofar as indemnification for liabilities arising under
the Securities Act may be permitted to directors, officers, and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a
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director, officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question of whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
7
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
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
Post-Effective Amendment No. 2 to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Houston,
State of Texas, on the 15th day of October, 1999.
QUANEX CORPORATION
By /s/ Vernon E. Oechsle
--------------------------------------
Vernon E. Oechsle
Director, President and Chief Executive Officer
(Principal Executive Officer)
Pursuant to the requirements of the Securities Act of 1933,
this Post-Effective Amendment No. 2 to registration Statement has been signed
below by the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
==================================== ==================================== ====================================
<S> <C> <C>
/s/ Vernon E. Oechsle Director, President and October 15, 1999
- ------------------------------------ Chief Executive Officer
Vernon E. Oechsle (Principal Execute Officer)
/s/ James H. Davis Executive Vice President and October 15, 1999
- ------------------------------------ Chief Operating Officer
James H. Davis (Principal Operating Officer)
* Director October 15, 1999
- ------------------------------------
Donald G. Barger, Jr.
</TABLE>
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<TABLE>
<S> <C> <C>
* Director October 15, 1999
- ------------------------------------
Susan F. Davis
* Director October 15, 1999
- ------------------------------------
Russell M. Flaum
* Director October 15, 1999
- ------------------------------------
Carl E. Pfeiffer
* Director October 15, 1999
- ------------------------------------
John D. O'Connell
* Director October 15, 1999
- ------------------------------------
Vincent R. Scorsone
* Director October 15, 1999
- ------------------------------------
Michael J. Sebastian
President, Engineered
/s/ Terry M. Murphy Products Group and October 15, 1999
- ------------------------------------ Chief Financial Officer
Terry M. Murphy (Principal Financial Officer)
/s/ Viren M. Parikh Controller October 15, 1999
- ------------------------------------ (Principal Accounting Officer)
Viren M. Parikh
*By /s/ Viren M. Parikh
--------------------------------
Viren M. Parikh
----------------
Attorney-in-fact
</TABLE>
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The Plan. Pursuant to the requirements of the Securities Act
of 1933, the Administrative Committee of the Plan has duly caused this
Post-Effective Amendment No. 2 to Registration Statement on Form S-8 to be
signed on its behalf by the undersigned members of such committee, thereunto
duly authorized, in the City of Houston, State of Texas, on October 15, 1999.
QUANEX CORPORATION EMPLOYEE
SAVINGS PLAN
By: /s/ Vernon E. Oechsle
-----------------------------------
Vernon E. Oechsle
By: /s/ James H. Davis
-----------------------------------
James H. Davis
By: /s/ Wayne M. Rose
-----------------------------------
Wayne M. Rose
By: /s/ Terry M. Murphy
-----------------------------------
Terry M. Murphy
By: /s/ Paul J. Giddens
-----------------------------------
Paul J. Giddens
By: /s/ Viren M. Parikh
-----------------------------------
Viren M. Parikh
10
<PAGE> 11
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
- -------
Number Description
- ------ -----------
<S> <C>
4.1 Restated Certificate of Incorporation of the Registrant, as
amended on February 27, 1997, filed as Exhibit 4.1 to the
Registrant's Registration Statement on Form S-8, Registration
No. 333-22977, and incorporated herein by reference.
4.2 Amended and Restated Bylaws of the Registrant, as amended
through August 26, 1999, filed as Exhibit 3 to the
Registrant's Quarterly Report on Form 10-Q for the Quarter
ended July 31, 1999, and incorporated herein by reference.
4.3 Form of Registrant's Common Stock certificate, filed as
Exhibit 4.1 to the Registrant's Quarterly Report on Form 10-Q
for the quarter ended April 30, 1987, and incorporated herein
by reference.
4.4 Second Amended and Restated Rights Agreement between the
Registrant and American Stock Transfer Co., as Rights Agent,
filed as Exhibit 4.1 to the Registrant's Report on Form 8-K
filed April 16, 1999, and incorporated herein by reference.
4.5 Amended and Restated Certificate of Designation, Preferences
and Rights of the Registrant's Series A Junior Participating
Preferred Stock, filed as Exhibit 1 to Amendment No. 1 to the
Registrant's Form 8-A dated April 28, 1989, and incorporated
herein by reference.
4.6 Quanex Corporation Employee Savings Plan, as amended
and restated effective January 1, 1995.
4.7 Sixth [sic] Amendment to Quanex Corporation Employee Savings
Plan, effective October 1, 1995.
4.8 Master Trust Agreement between the Registrant and Fidelity
Management Trust Company dated as of February 1, 1999.
4.9 First Amendment to Trust Agreement between Fidelity Management
Trust Company and the Registrant, effective as of November 1,
1999.
23.1 Consent of Deloitte & Touche LLP.
24.1 Powers of Attorney.
</TABLE>
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EXHIBIT 4.6
QUANEX CORPORATION
EMPLOYEE SAVINGS PLAN
Amended and Restated Effective January 1, 1995
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section
<S> <C>
ARTICLE I -- DEFINITIONS
Account............................................................1.1
Account Balance....................................................1.2
Active Service.....................................................1.3
Administrative Committee...........................................1.4
Adjustment Factor..................................................1.5
Affiliate..........................................................1.6
Beneficiary........................................................1.7
Benefit Commencement Date..........................................1.8
Code...............................................................1.9
Compensation......................................................1.10
Defined Benefit Plan..............................................1.11
Defined Contribution Plan.........................................1.12
Disability........................................................1.13
Elective Deferrals................................................1.14
Employee..........................................................1.15
Employer..........................................................1.16
Employer Matching Contributions Account...........................1.17
Entry Date........................................................1.18
ERISA.............................................................1.19
Family Member.....................................................1.20
401(k) Account....................................................1.21
401(k) Election...................................................1.22
Fully Vested Separation...........................................1.23
Highly Compensated Employee.......................................1.24
Hour of Service...................................................1.25
Matching Contribution.............................................1.26
Net Income........................................................1.27
Non-Elective Contributions Account................................1.28
Non-Highly Compensated Employee...................................1.29
Non-Vested Separation.............................................1.30
Normal Retirement Age.............................................1.31
Partially Vested Separation.......................................1.32
Participant.......................................................1.33
Participant Contributions.........................................1.34
Participant Contributions Account.................................1.35
Plan..............................................................1.36
Plan Compensation.................................................1.37
Plan Year.........................................................1.38
Qualified Non-elective Contributions..............................1.39
</TABLE>
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<TABLE>
<CAPTION>
Section
<S> <C>
Qualified Plan....................................................1.40
Retained Earnings.................................................1.41
Rollover Contribution.............................................1.42
Rollover Contributions Account....................................1.43
Severance From Service Date.......................................1.44
Sponsor...........................................................1.45
Spouse............................................................1.46
Surviving Spouse..................................................1.47
Trust.............................................................1.48
Trust Fund........................................................1.49
Trustee...........................................................1.50
Valuation Date....................................................1.51
Vesting Service...................................................1.52
Year of Severance.................................................1.53
ARTICLE II -- PARTICIPATION
Admission as a Participant.........................................2.1
Rollover Membership................................................2.2
Provision of Information...........................................2.3
Termination of Participation.......................................2.4
ARTICLE III -- CONTRIBUTIONS AND ACCOUNT ALLOCATIONS
Employer Contributions.............................................3.1
Treatment of Forfeitures...........................................3.2
Participant Contributions..........................................3.3
Rollover Contributions and Plan to Plan Transfers..................3.4
Establishing of Accounts and Crediting of Contributions............3.5
Allocations to Participant Accounts................................3.6
Limitations on Allocations.........................................3.7
Return of Employer Contributions under Special Circumstances.......3.8
Valuation of Accounts..............................................3.9
ARTICLE IV -- VESTING
Determination of Vesting...........................................4.1
Rules for Crediting Vesting Service................................4.2
Employer Contributions Account Forfeitures.........................4.3
</TABLE>
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<TABLE>
<CAPTION>
Section
<S> <C>
ARTICLE V -- AMOUNT OF BENEFITS AND WITHDRAWALS
Fully Vested Separation............................................5.1
Partially Vested Separation........................................5.2
Non-Vested Separation..............................................5.3
Benefits Commencement Date.........................................5.4
Method of Distribution.............................................5.5
Participant Withdrawals............................................5.6
Distributions Upon Disposition of Assets or a Subsidiary...........5.7
Direct Rollover Option For Distributions Made On or
After January 1, 1993.........................................5.8
ARTICLE VI -- DEATH BENEFITS
Payment of Account Balance.........................................6.1
Beneficiaries......................................................6.2
ARTICLE VII -- ADMINISTRATIVE COMMITTEE
Appointment, Term of Service and Removal...........................7.1
Powers.............................................................7.2
Organization.......................................................7.3
Quorum and Majority Action.........................................7.4
Signatures.........................................................7.5
Disqualification of Committee Member...............................7.6
Disclosure to Participants.........................................7.7
Standard of Performance............................................7.8
Liability of Committee and Liability Insurance.....................7.9
Exemption from Bond...............................................7.10
Compensation......................................................7.11
Persons Serving in Dual Fiduciary Roles...........................7.12
Administrator.....................................................7.13
ARTICLE VIII -- TOP-HEAVY PROVISIONS
Definitions........................................................8.1
Consequences if Plan is Top-Heavy..................................8.2
ARTICLE IX -- PLAN AMENDMENT OR TERMINATION
Right to Amend and Limitations Thereon.............................9.1
Mandatory Amendments...............................................9.2
Withdrawal of Employer.............................................9.3
Voluntary or Involuntary Termination...............................9.4
Continuance Permitted Upon Sale or Transfer of Assets..............9.5
</TABLE>
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<TABLE>
<CAPTION>
Section
<S> <C>
Requirement on Merger, Transfer, etc...............................9.6
ARTICLE X -- ADOPTION OF PLAN BY OTHER EMPLOYERS
Adoption Procedure................................................10.1
No Joint Venture Implied..........................................10.2
ARTICLE XI -- INVESTMENT ELECTION
Investment Funds Established......................................11.1
Election Procedures Established...................................11.2
ARTICLE XII -- MISCELLANEOUS PROVISIONS
Exclusive Benefit of Participants.................................12.1
Plan Not a Contract of Employment.................................12.2
Action by Employer................................................12.3
Source of Benefits................................................12.4
Benefits Not Assigned.............................................12.5
Domestic Relations Orders.........................................12.6
Claims Procedure..................................................12.7
Benefits Payable to Minors, Incompetents and Others...............12.8
Transfers from Other Plans........................................12.9
Controlling Law..................................................12.10
Singular and Plural and Section References.......................12.11
Deductibility of Contributions...................................12.12
</TABLE>
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QUANEX CORPORATION
EMPLOYEE SAVINGS PLAN
THIS AGREEMENT by Quanex Corporation, a Delaware corporation,
W I T N E S S E T H:
WHEREAS, effective April 1, 1986, for the exclusive benefit of
its eligible employees and their beneficiaries, Quanex Corporation, a Delaware
corporation, previously adopted the savings plan embodied herein which is
intended to meet the requirements for qualification under applicable provisions
of the Internal Revenue Code of 1986, as amended (the "Code") and to comply with
applicable provisions of the Employee Retirement Income Security Act of 1974
("ERISA"); and
WHEREAS, the Company has determined to amend and restate the
Plan to comply with the Tax Reform Act of 1986, the Omnibus Budget
Reconciliation Act of 1986, the Omnibus Budget Reconciliation Act of 1987, the
Technical and Miscellaneous Revenue Act of 1988, the Revenue Reconciliation Act
of 1989 and Department of Treasury Regulations; and
WHEREAS, it is intended that certain other business
organizations may adopt this savings plan and its related trust for the
exclusive benefit of their employees and their employees' beneficiaries; and
WHEREAS, it is intended that the benefits offered under this
savings plan will help retain and attract the highest quality employees by
providing additional financial incentives and financial security for eligible
employees and their beneficiaries;
NOW, THEREFORE, the Company agrees to carry into effect the
savings plan herein following:
<PAGE> 7
ARTICLE I
DEFINITIONS
As used in this Plan each of the following terms shall have
the meaning for that term set forth in this Article I:
1.1 ACCOUNT: All of the ledger accounts maintained for a
Participant to set out his or her interest in the Trust Fund. A separate
Employer Matching Contributions Account, Participant Contributions Account,
401(k) Account, Nonelective Contributions Account or Rollover Contributions
Account will be maintained for each
Participant.
1.2 ACCOUNT BALANCE: The value of an Account determined as of
the applicable Valuation Date.
1.3 ACTIVE SERVICE: The number of whole years of the
Employee's period of service on or after April 1, 1986, whether or not such
period(s) of service were completed consecutively. Except as otherwise provided
below, in determining the number of whole years of an Employee's period of
service, non-successive periods of service will be aggregated, and less than
whole year periods of service (whether or not consecutive) will be aggregated on
the basis that 365 days of service equals a whole year of Active Service. If an
employee severs from service by reason of a quit, discharge, or retirement, and
the Employee then performs an hour of service within twelve months of the
severance from service date, such Employee's period of severance will be deemed
to have been a period of service. If an Employee severs from service by reason
of a quit, discharge, or retirement during an absence from service for any
reason other than a quit, discharge, retirement, or death, and then performs an
hour of service within twelve months of the date on which the Employee was first
absent from service, such Employee's period of severance will be deemed to have
been a period of service. For purposes of the Plan, all service with any
Affiliate shall be deemed to be service with the Employer.
If the Employer assumes and maintains the plan of a
predecessor employer described in Section 414(a)(2) of the Code, Active Service
for such predecessor employer will be treated as Active Service for the
Employer. If the Employer does not maintain the plan of a predecessor employer
Active Service for such predecessor employer will be treated as Active Service
for the Employer only to the extent required by Section 414(a)(2) of the Code.
1.4 ADMINISTRATIVE COMMITTEE: The committee appointed by the
Board of Directors of the Company to administer the Plan.
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1.5 ADJUSTMENT FACTOR: The cost of living adjustment factor
prescribed by the Secretary of the Treasury under Code Section 415(d) for years
beginning after December 31, 1987, as applied to such items and in such manner
as the Secretary shall provide.
1.6 AFFILIATE: Any corporation or unincorporated trade or
business (other than the Employer) while it is:
(a) a member of a "controlled group of corporations" (within
the meaning of Code Section 414(b)) of which the Employer is a member;
(b) a member of any trade or business under "common control"
(within the meaning of Code Section 414(c)) with the Employer;
(c) a member of an "affiliated service group" (as that term is
defined in Code Section 414(m)) which includes the Employer; or
(d) a member of a group of businesses required to be
aggregated with the Employer under Code Section 414(o).
With respect to Section 3.8, "Affiliate" status shall be
determined in accordance with Code Section 415(h).
1.7 BENEFICIARY: A person entitled to receive any payment of
benefits pursuant to Article VI.
1.8 BENEFIT COMMENCEMENT DATE: The date, determined under
Section 5.4, as of which a Participant or a Beneficiary receives or begins to
receive, as the case may be, payment of his or her benefits under the Plan as a
result of death, Disability, termination of employment, Plan termination upon or
after his or her Early Retirement Date or upon or after Normal Retirement Age.
1.9 CODE: The Internal Revenue Code of 1986, as now in effect
or as amended from time to time. A reference to a specific provision of the Code
shall include such provision and any applicable regulation pertaining thereto.
1.10 COMPENSATION: Wages as defined in Section 3401(a) of the
Code for purposes of income tax withholding at the source (but determined
without regard to any rules that limit the remuneration included in wages based
on the nature or location of employment or the services performed) paid to the
Participant by the Employer or an Affiliate, plus elective pre-tax contributions
under a cafeteria plan governed by Section 125 of the Code (other than elective
contributions made with BeneFlex dollars) and elective pre-tax contributions to
any plan qualified under Section 401(k), 408(k) or 403(b) of the Code. However,
Compensation excludes all of the following items (even if includable in gross
income): All reimbursements or other
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expense allowances, fringe benefits (cash and noncash, such as vacation pay paid
on or after the Employee's termination of employment with the Employer, employer
contributions to the Quanex Corporation Employee Stock Purchase Plan, club
memberships, tax gross-ups, attendance and safety awards, fitness
reimbursements, housing allowances, financial planning benefits, corporate
automobile use and BeneFlex dollars), moving expenses, deferred compensation
(such as amounts realized from the exercise of a nonqualified stock option or
when restricted property or other property held by a Participant either becomes
freely transferable or no longer subject to a substantial risk of forfeiture
under Section 83 of the Code, or amounts realized upon the sale, exchange or
disposition of an incentive stock option) and welfare benefits (such as
severance pay, life insurance benefits and short term disability benefits).
The determination of Compensation will be in accordance with
records maintained by the Employer and shall be conclusive.
The annual Compensation of each Participant taken into account
under the Plan for any year shall not exceed $150,000, as adjusted by the
Secretary for increases in the cost-of-living in accordance with Section
401(a)(17)(B) of the Code. The cost-of-living adjustment in effect for a
calendar year applies to any period, not exceeding 12 months, over which
compensation is determined (determination period) beginning in such calendar
year. If a determination period consists of fewer than 12 months, the annual
compensation limit will be multiplied by a fraction, the numerator or which is
the number of months in the determination period, and the denominator of which
is 12. In determining the Compensation of a Participant for purposes of this
limitation, the rules of Section 414(q)(6) of the Code shall apply, except that
in applying such rules, the term "family" shall include only the Spouse of the
Participant and any lineal descendants of the Participant who have not attained
age 19 before the close of the year.
1.11 DEFINED BENEFIT PLAN: A plan of the type defined in Code
Section 414(j) maintained by the Employer or an Affiliate, as applicable.
1.12 DEFINED CONTRIBUTION PLAN: A plan of the type defined in
Code Section 414(i) maintained by the Employer or an Affiliate, as applicable.
1.13 DISABILITY: A mental or physical disability as a result
of illness or injury which in the opinion of a physician selected by the
Administrative Committee will prevent a Participant from performing his regular
work during the first twenty-four months of disability and after twenty-four
months of disability from performing any job for which he is educated, trained
or experienced. A disability will not be treated as a Disability if it:
(a) was contracted, suffered or incurred while the Participant
was engaged in, or resulted from his having engaged in, a felonious
enterprise;
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(b) resulted from alcoholism or addiction to narcotics; or
(c) resulted from an injury incurred while a member of the
armed forces of the United States after the effective date of the Plan
and for which the Participant receives a military pension.
1.14 ELECTIVE DEFERRALS: Contributions made to the Plan during
the Plan Year by the Employer, at the election of the Participant, in lieu of
cash compensation.
1.15 EMPLOYEE: Except as otherwise specified in this Section,
effective October 1, 1995, Employee means all common law employees employed by
the Employer who are not covered by a collective bargaining agreement. Employees
of the Sponsor who are working at one of the Nichols-Homeshield divisions and
directors not regularly employed by the Employer will not be considered
Employees. All leased employees (as defined in Section 414(n) of the Code) will
not be considered Employees unless the Plan's qualified status is dependent upon
their coverage.
1.16 EMPLOYER: Quanex Corporation and any other business
organization which adopts the Plan.
1.17 EMPLOYER MATCHING CONTRIBUTIONS ACCOUNT: The Account
established for a Participant pursuant to Section 3.5.3.
1.18 ENTRY DATE: The first day of the quarter.
1.19 ERISA: The Employee Retirement Income Security Act of
1974, as amended from time to time. Reference to a specific provision of ERISA
shall include such provision and any applicable regulation pertaining thereto.
1.20 FAMILY MEMBER: An Employee's spouse, lineal ascendants or
descendants, and the spouses of such lineal ascendants or descendants. For this
purpose, a former employee is treated as an Employee if he was a Highly
Compensated Employee when he separated from service or he was a Highly
Compensated Employee at any time after attaining age 55.
1.21 401(k) ACCOUNT: The Account under the Plan established
for a Participant pursuant to Section 3.5.1.
1.22 401(k) ELECTION: The election by a Participant to make
Elective Deferrals in accordance with Section 3.1.2.
1.23 FULLY VESTED SEPARATION: Termination of Employment of a
Participant whose vested percentage in his or her Employer Contributions Account
is 100%.
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1.24 HIGHLY COMPENSATED EMPLOYEE: An individual described in
Code Section 414(q) including Highly Compensated active employees and Highly
Compensated former employees.
For this purpose persons who are or were employees of an
Employer or an Affiliate will be treated as active Employees or former
Employees.
A Highly Compensated active Employee includes any Employee who
performs service for the Employer or an Affiliate during the determination year
and who, during the look-back year: (i) received Plan Compensation from the
Employer or an Affiliate in excess of $75,000 (as adjusted pursuant to Code
Section 415(d)); (ii) received Plan Compensation from the Employer or an
Affiliate in excess of $50,000 (as adjusted pursuant to Code Section 415(d)) and
was a member of the top-paid group for such year; or (iii) was an officer of the
Employer of an Affiliate and received Plan Compensation during such year that is
greater than 50 percent of the dollar limitation in effect under Code Section
415(b)(1)(A). The term Highly Compensated Employee also includes: (i) Employees
who are both described in the preceding sentence if the term "determination
year" is substituted for the term "look-back year" and the Employee is one of
the 100 Employees who received the most Plan Compensation from the Employer
during the determination year; and (ii) Employees who are 5-percent owners (as
defined in Code Section 416(i)(1)) at any time during the look-back year or
determination year.
For this purpose no more than 50 Employees or, if lesser, the
greater of three Employees or 10% of the Employees will be treated as officers
of the Employer. An Employee is in the "top-paid group" of Employees for any
year if he is in the group consisting of the top 20 percent of Employees when
ranked on the basis of Compensation paid during such year. For purposes of
determining the number of Employees in the top-paid group or the number of
officers taken into account, the following Employees shall be excluded, (A)
Employees who have not completed six months of service, (B) Employees who
normally work less than 17 1/2 hours per week, (C) Employees who normally work
not more than six months during any year, (D) Employees who have not attained
age 21, and (E) except to the extent provided in Treasury Regulations, Employees
who are included in a unit of employees covered by an agreement which the
Secretary of Labor finds to be a collective bargaining agreement between
Employee representatives and the Employer.
If no officer has satisfied the Plan Compensation requirement
of (iii) above during either a determination year or look-back year, the highest
paid officer for such year shall be treated as a Highly Compensated Employee.
For this purpose, the determination year shall be the Plan
Year. The look-back year shall be the twelve-month period immediately preceding
the determination year.
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A Highly Compensated former Employee includes any Employee who
separated from service (or was deemed to have separated) prior to the
determination year, performs no service for the Employer during the
determination years, and was a Highly Compensated active Employee for either the
separation year or any determination year ending on or after the Employee's 55th
birthday.
If an Employee is, during a determination year or look-back
year, a Family Member of either a 5 percent owner who is an active or former
Employee or a Highly Compensated Employee who is one of the 10 most highly
compensated Employees ranked on the basis of Plan Compensation paid by the
Employer during such year, then the Family Member and the 5 percent owner or
top-ten highly compensated Employee shall be aggregated. In such case, the
Family Member and the 5 percent owner or top-ten highly compensated Employee
shall be treated as a single Employee receiving Plan Compensation and Plan
contributions or benefits equal to the sum of such Plan Compensation and
contribution of the Family Member and 5 percent owner or top-ten Highly
Compensated Employee.
The determination of who is a Highly Compensated Employee,
including the determinations of the number and identity of Employees in the
top-paid group, the top 100 Employees, the number of Employees treated as
officers and the Plan Compensation that is considered, will be made in
accordance with Code Section 414(q) and the regulations thereunder.
1.25 HOUR OF SERVICE: An hour for which an Employee is paid,
or entitled to payment, by the Employer or an Affiliate, for the performance of
duties for the Employer or an Affiliate.
1.26 MATCHING CONTRIBUTION: Any contribution to this or any
other Defined Contribution Plan made by the Employer for the Plan Year and
allocated to a Participant's Employer Matching Contributions Account by reason
of the Participant's 401(k) Election and/or Participant Contributions. Each
payroll period the Employer will make a Matching Contribution to the Trust from
its Net Income or Retained Earnings a sum equal to fifty percent (50%) of the
Elective Deferrals and/or Participant Contributions made for a Participant for
the same pay period but not in excess of five percent (5%) of the Participant's
Compensation so that the maximum Matching Contribution on behalf of any
Participant will be a Matching Contribution of two and one-half percent (2 1/2%)
of the Participant's Compensation.
1.27 NET INCOME: An Employer's net earnings for any given year
as determined in accordance with generally accepted accounting principles and
reflected in the consolidated statement of operations for such year, without
reductions for contributions under this Plan or provided for income taxes.
1.28 NON-ELECTIVE CONTRIBUTIONS ACCOUNT: The Account
established for a Participant pursuant to Section 3.5.4.
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1.29 NON-HIGHLY COMPENSATED EMPLOYEE: An Employee of the
Employer who is neither a Highly Compensated Employee nor a Family Member.
1.30 NON-VESTED SEPARATION: Termination of employment of a
Participant whose vested percentage in his or her Employer Contributions Account
is 0%.
1.31 NORMAL RETIREMENT AGE: Age sixty-five (65).
1.32 PARTIALLY VESTED SEPARATION: Termination of employment of
a Participant whose vested percentage in his or her Employer Contributions
Account is less than 100% but greater than 0%.
1.33 PARTICIPANT: An Employee who has commenced, but not
terminated, participation in the Plan as provided in Article II.
1.34 PARTICIPANT CONTRIBUTIONS: Contributions made to the Plan
for the Plan Year at the election of the Participant pursuant to Section 3.3.2.
1.35 PARTICIPANT CONTRIBUTIONS ACCOUNT: The Account
established for a Participant pursuant to Section 3.5.2.
1.36 PLAN: The Quanex Corporation Employee Savings Plan herein
set forth and all subsequent amendments thereto.
1.37 PLAN COMPENSATION: Wages as defined in Section 3401(a) of
the Code for purposes of income tax withholding at the source (but determined
without regard to any rules that limit the remuneration included in wages based
on the nature or location of the employment or the services performed) paid to
the Participant by the Employer or an Affiliate, plus elective pre-tax
contributions under a cafeteria plan governed by Section 125 of the Code and
elective pre-tax contributions to any plan qualified under Section 401(k),
408(k) or 403(b) of the Code.
1.38 PLAN YEAR: The 12-consecutive-month period beginning on
January 1st and ending on December 31st. However, the first Plan Year shall be a
short Plan Year beginning on April 1, 1986, and ending December 31, 1986.
1.39 QUALIFIED NON-ELECTIVE CONTRIBUTIONS: Contributions, if
any (other than Matching Contributions or Elective Deferrals), made by the
Employer and allocated to 401(k) and Non-Elective Contributions Accounts that
the Participant may not elect to receive in cash until distributed from the
Plan; that are nonforfeitable when made; and that are not distributable under
the terms of the Plan to Participants or their Beneficiaries earlier than the
earlier of the separation from service, death, or Disability of the Participant.
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1.40 QUALIFIED PLAN: A Defined Benefit Plan or Defined
Contribution Plan which is qualified under Code Section 401(a).
1.41 RETAINED EARNINGS: An Employer's retained earnings at the
end of any given year as determined in accordance with generally accepted
accounting principles and reflected in the consolidated balance sheet at the end
of such year, without reductions for contributions under this Plan or provided
for income taxes.
1.42 ROLLOVER CONTRIBUTION: A contribution so described in
Section 3.4.
1.43 ROLLOVER CONTRIBUTIONS ACCOUNT: The Account established
for a Participant pursuant to Section 3.5.6.
1.44 SEVERANCE FROM SERVICE DATE: The earlier of (i) the date
on which the Employee quits, retires, is discharged, or dies; or (ii) the first
anniversary of the first date of a period in which the Employee remains absent
from service (with or without pay) for any reason other than a quit, retirement,
discharge, or death, such as vacation, holiday, sickness, disability, leave of
absence, layoff, the pregnancy of the Employee, the birth of a child of the
Employee, or the placement of a child with the Employee in connection with the
adoption by such Employee, or for purposes of caring for such child for a period
beginning immediately following such birth or placement. The Severance From
Service Date of an Employee who is absent from service beyond the first
anniversary of the first date of absence by reason of maternity or paternity
absence described in Section 410(a)(5)(E)(i) of the Code is the second
anniversary of the first date of absence. The period between the first and
second anniversaries of the first date of absence will be treated as neither a
period of service nor a period of severance.
1.45 SPONSOR: Quanex Corporation.
1.46 SPOUSE: The person married to a Participant or the
surviving spouse, provided that a former spouse will be treated as the Spouse to
the extent provided under a "qualified domestic relations order" (or a "domestic
relations order" treated as such) as described in Code Section 414(p).
1.47 SURVIVING SPOUSE: The Spouse of a Participant on the
earlier of:
(a) the date of the Participant's death; or
(b) the Participant's Benefit Commencement Date.
1.48 TRUST: The trust estates created by separate instruments
entered into by and between the Company and the Trustee, as it or they may be
amended from time to time.
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1.49 TRUST FUND: The assets of the Trust held by or in the
name of the Trustee.
1.50 TRUSTEE: One or more corporations with trust powers
and/or one or more individuals initially appointed by the Company to serve as
Trustee, each of which will serve separately of that portion of the Trust Fund
held by it, respectively, or any successor or successors appointed by the
Company.
1.51 VALUATION DATE: The last day of each month. For assets
that are valued daily ("daily market assets"), each trading date upon which a
Participant's Accounts can be valued.
1.52 VESTING SERVICE: The years of Active Service credited to
a Participant under Section 4.2 for purposes of determining the Participant's
vested percentage in the Account Balance of the Employer Contributions Account
established for the Participant.
1.53 YEAR OF SEVERANCE: A 12-consecutive-month period
beginning on the Severance From Service Date and ending on an anniversary of
such date, provided that the Employee does not perform an Hour of Service during
such 12-consecutive-month period.
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ARTICLE II
PARTICIPATION
2.1 ADMISSION AS A PARTICIPANT:
2.1.1 An Employee shall become a Participant on the Entry Date
coincident with or next following the later of (i) the effective date of the
adoption of the Plan by the Employer, or (ii) the date on which he or she
completes three months of Service.
2.1.2 If an Employee who did not become a Participant is
separated from service of the Employer during a period that includes an Entry
Date, the Employee will be eligible to start participation in the Plan on the
first Entry Date that occurs with or next follows his or her completion of an
Hour of Service following his or her return to employment with the Employer.
2.1.3 An individual who has ceased to be a Participant and who
again becomes an Employee shall become a Participant on the next Entry Day
following the day on which he or she completes an Hour of Service following his
or her return to employment with the Employer.
2.1.4 In the event a Participant is no longer an Employee and
becomes ineligible to participate, but has not incurred a Period of Severance,
such Employee will participate immediately upon again becoming an Employee. If
such Participant incurs a Period of Severance, eligibility will be determined
under the Period of Severance rules of the Plan.
2.2 ROLLOVER MEMBERSHIP: An Employee who makes a Rollover
Contribution shall become a Participant as of the date of such contribution even
if he or she had not previously become a Participant. Such an Employee shall be
a Participant only for the purposes of such Rollover Contribution and shall not
be eligible to make other contributions or to share in contributions made by the
Employer or a Participating Affiliate until he or she has become a Participant
in accordance with Section 2.1.
2.3 PROVISION OF INFORMATION: For purposes of the Plan, each
Employee shall execute such forms as may reasonably be required by the
Administrative Committee, and the Participant shall make available to the
Administrative Committee and the Trustee any information they may reasonably
request in this regard. By virtue of his or her participation in this Plan, an
Employee agrees, on his or her own behalf and on behalf of all persons who may
have or claim any right by reason of the Employee's participation in the Plan,
to be bound by all provisions of the Plan.
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2.4 TERMINATION OF PARTICIPATION: A Participant shall cease to
be a Participant:
(a) upon his or her death;
(b) upon his or her termination of Employment; or
(c) upon transfer to a group of Employees not eligible for
participation in the Plan in accordance with Section 2.1.
The Employer will withhold from such an individual's final
paycheck for services rendered prior to his death, termination of Employment or
transfer an amount necessary to comply with his 401(k) Election.
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ARTICLE III
CONTRIBUTIONS AND ACCOUNT ALLOCATIONS
3.1 EMPLOYER CONTRIBUTIONS:
3.1.1 DEFINITIONS: As used in this Section 3.1, each of the
following terms shall have the meanings for that term set forth in this Section
3.1.1.
(a) ACTUAL DEFERRAL PERCENTAGE means the ratio for a specified
group of Participants for a Plan Year, calculated separately for each
Participant in the group (and expressed as a percentage), of Elective
Deferrals and, if applicable, Qualified Nonelective Contributions on
behalf of each Participant for the Plan Year to such Participant's
Compensation for the Plan Year (whether or not the Employee was a
Participant for the entire Plan Year). The Actual Deferral Percentage
of an eligible Employee who does not make an Elective 401(k) deferral
and who does not receive an allocation of a qualified Nonelective
Contribution, is zero. Employer contributions on behalf of any
Participant taken into account for the Actual Deferral Percentage shall
include (1) any Employer contributions made pursuant to the
Participant's Elective Deferral, including Excess Deferral Amounts of
Highly Compensated Employees, but excluding Elective Deferrals that are
taken into account in the Contribution Percentage test (provided the
Average Actual Deferral Percentage is satisfied both with and without
exclusion of these Elective Deferrals), and (2) under such rules as the
Secretary of the Treasury may prescribe, may, at the election of the
Employer, include Qualified Nonelective Contributions. Qualified
Nonelective Contributions may be treated as Elective Deferrals only if
the conditions described in Treas. Reg. Section 1.401(k)-1(b)(5) are
met. For purposes of computing Actual Deferral Percentages, an
individual is an eligible Employee if he is directly or indirectly
eligible to make a cash or deferred election under the Plan for all or
a portion of the Plan Year, including but not limited to an Employee
who would be eligible to make Elective Deferrals but for a suspension
due to a distribution, withdrawal, loan, or an election not to
participate in the Plan. In addition, an Employee does not fail to be
treated as an eligible Employee merely because the Employee may receive
no additional annual additions because of Section 415(c)(1) or 415(e)
of the Code.
(b) AGGREGATE LIMIT shall mean the sum of (i) 125 percent of
the greater of the Actual Deferral Percentage of the Non-Highly
Compensated Employees for the Plan Year or the Actual Contribution
Percentage of Non-Highly Compensated Employees under the plan subject
to Code Section 401(m) for the Plan Year beginning with or within the
Plan Year of the cash or deferred arrangement and (ii) the lesser of
200% or two plus the lesser of such Actual Deferral Percentage or
Actual Contribution Percentage. "Lesser" is substituted
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for "greater" in "(i)", above, and "greater" is substituted for
"lesser" after "two plus the" in "(ii)" if it would result in a larger
Aggregate limit.
(c) AVERAGE ACTUAL DEFERRAL PERCENTAGE means the average
(expressed as a percentage) of the Actual Deferral Percentages of the
eligible Employees in a group.
(d) AVERAGE ACTUAL CONTRIBUTION PERCENTAGE means the average
(expressed as percentage) of the Contribution Percentages of the
eligible Employees in a group.
(e) CONTRIBUTION PERCENTAGE means the ratio (expressed as a
percentage) of the Participant Contributions and Matching Contributions
under the Plan on behalf of the Eligible Employee for the Plan Year to
the Eligible Employee's Compensation for the Plan Year (whether or not
the Employee was a Participant for the entire Plan Year). If the
Employer elects to include Elective Deferrals and Qualified Nonelective
Contributions in the Contribution Percentage, such percentage shall be
the ratio of the Matching Contributions, Participant Contributions,
Elective Deferrals and Qualified Nonelective Contributions on behalf of
the Participant for the Plan Year to such Participant's Compensation
for the Plan Year. For purposes of computing Contribution Percentages,
the term eligible Employee means an Employee who is directly or
indirectly eligible to make Participant Contributions or to receive an
allocation of Matching Contributions (including Matching Contributions
derived from forfeitures) under the Plan for the Plan Year, including
an Employee who would be eligible to make Participant Contributions but
for a suspension due to a distribution, withdrawal, loan or an election
not to participate in the Plan. In addition, an Employee does not fail
to be an eligible Employee merely because the Employee may receive no
additional annual additions because of Section 415(c)(1) or 415(e) of
the Code.
(f) CONTRIBUTION PERCENTAGE AMOUNTS mean the sum of the
Participant Contributions and Matching Contributions under the Plan on
behalf of the Participant for the Plan Year. The Employer may include,
in the Contribution Percentage Amounts, Elective Deferrals or Qualified
Nonelective Contributions, or both, as provided by regulations. The
Employer may also elect to use Elective Deferrals in the Contribution
Percentage Amounts so long as the Average Deferral Percentage test is
met before the Elective Deferrals are used in the Actual Contribution
Percentage test and continues to be met following the exclusion of
those Elective Deferrals that are used to meet the Actual Contribution
Percentage test. Such Contribution Percentage Amounts shall include
forfeitures of Excess Aggregate Contributions or matching contributions
allocated to the Participant's Account which shall be taken into
account in the year in which such forfeiture is allocated.
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(g) EMPLOYER: For purposes of this article, Employer shall
mean the Employer that adopts this Plan, and all members of a
controlled group of corporations (as defined in Section 414(b) of the
Code as modified by Section 415(h)), all commonly controlled trades or
businesses (as defined in Code Section 414(c) as modified in Code
Section 415(h)) or affiliated service groups (as defined in Code
Section 414(m)) of which the adopting employer is a part, and any other
entity required to be aggregated with the employer pursuant to
regulations under Section 414(o) of the Code.
(h) EXCESS AGGREGATE CONTRIBUTIONS means with respect to any
Plan Year, the excess of:
(i) The aggregate Contribution Percentage Amounts
taken into account in computing the numerator of the
Contribution Percentage actually made on behalf of Highly
Compensated Employees for such Plan Year, over
(ii) The maximum Contribution Percentage Amounts
permitted by the Average Contribution Percentage test
(determined by reducing contributions made on behalf of Highly
Compensated Employees in order of their Contribution
Percentages beginning with the highest of such percentages).
Such determinations shall be made after first determining Excess
Elective Deferrals pursuant to Section 3.1.2 and then determining
Excess Contributions pursuant to Section 3.1.3.
(i) EXCESS CONTRIBUTIONS means with respect to any Plan Year,
the aggregate amount of Elective Deferrals actually paid over to the
Trustee for a Plan Year on behalf of Highly Compensated Employees over
the maximum amount of such contributions permitted under Section
3.1.4(b); and
(j) EXCESS DEFERRAL AMOUNT means the amount of Elective
Deferrals for a calendar year that the Participant allocates to this
Plan in excess of the dollar limit contained in Code Section 402(g) in
Section 3.1.2(a) below pursuant to the claim procedure set forth in
Section 3.1.4(a)(ii).
3.1.2 ELECTIVE DEFERRALS: For each Plan Year each Employer
will contribute to the Trust Fund an amount equal to the Elective Deferral
percentage elected by each Participant on his or her 401(k) Election (which
election can be made at least once each calendar year, but not retroactively)
multiplied by each such Participant's Compensation, subject to the following:
(a) MAXIMUM AMOUNT OF ELECTIVE DEFERRALS: No Participant shall
be permitted to have Elective Deferrals made under this Plan during any
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taxable year in excess of $7,000 multiplied by the Adjustment Factor as
provided by the Secretary of the Treasury; and subject to the
limitations provided by Code Section 402(g) in effect at the beginning
of such taxable year. Excess Deferrals shall be treated as annual
additions under the Plan. A Participant may assign to this Plan any
Excess Elective Deferrals made during a taxable year of the Participant
by notifying the Administrative Committee on or before April 15 of the
amount of the Excess Elective Deferrals to be assigned to the Plan.
(b) AVERAGE ACTUAL DEFERRAL PERCENTAGE: The Average Actual
Deferral Percentage for eligible Employees who are Highly Compensated
Employees for the Plan Year and the Average Actual Deferral Percentage
for eligible Employees who are Non-Highly Compensated Employees must
satisfy one of the following tests:
(i) The Average Actual Deferral Percentage for
eligible Employees who are Highly Compensated Employees for
the Plan Year shall not exceed the Average Actual Deferral
Percentage for eligible Employees who are Non-Highly
Compensated Employees for the Plan Year multiplied by 1.25; or
(ii) The Average Actual Deferral Percentage for
eligible Employees who are Highly Compensated Employees for
the Plan Year shall not exceed the Average Actual Deferral
Percentage for eligible Employees who are Non-Highly
Compensated Employees for the Plan Year multiplied by 2,
provided that the Average Actual Deferral Percentage for
eligible Employees who are Highly Compensated Employees does
not exceed the Average Actual Deferral Percentage for eligible
Employees who are Non-Highly Compensated Employees by more
than two (2) percentage points or such lesser amount as the
Secretary of the Treasury shall prescribe to prevent the
multiple use of this alternative limitation with respect to
any Highly Compensated Employee.
For purposes of determining the Actual Deferral Percentage, Qualified
Nonelective Contributions will be considered made for a Plan Year if made by the
date specified in the applicable regulations.
(c) SPECIAL RULES:
(i) For purposes of this Section 3.1.2, the Actual
Deferral Percentage for any eligible Employee who is a Highly
Compensated Employee for the Plan Year and who is eligible to
have Elective Deferrals or Qualified Nonelective Contributions
allocated to his or her account under two or more plans or
arrangements described in Code Section 401(k) that are
maintained by the Company or an Affiliate shall be
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determined as if all such Elective Deferrals and Qualified
Nonelective Contributions were made under a single
arrangement. If a Highly Compensated Employee participates in
two or more cash or deferred arrangements that have different
plan years, all cash and deferred arrangements ending with or
within the same calendar year shall be treated as a single
arrangement.
(ii) For purposes of determining the Actual Deferral
Percentage of a Participant who is a 5-percent owner or one of
the ten most highly paid Highly Compensated Employees, the
Elective Deferrals, Qualified Nonelective Contributions, if
treated as Elective Deferrals for purpose of the Actual
Deferral Percentage of Compensation of such Participant shall
include the Elective Deferrals, Qualified Nonelective
Contributions and Compensation for the Plan Year of Family
Members, and such Family Members with respect to such Highly
Compensated Employees, shall be disregarded in determining the
Actual Deferral Percentage for Participants who are Non-Highly
Compensated Employees and for Participants who are Highly
Compensated Employees.
(iii) In the event that this Plan satisfies the
requirements of Code Sections 401(k), 401(a)(4), or 410(b)
only if aggregated with one or more other plans, or if one or
more other plans satisfy the requirements of such sections of
the Code only if aggregated with this Plan, then this Section
shall be applied by determining the Average Actual Deferral
Percentage of Employees as if all such plans were a single
plan. For Plan Years beginning after December 31, 1989, plans
may be aggregated in order to satisfy Code Section 401(k) only
if they have the same Plan Year.
(iv) For purposes of determining the Average Deferral
Percentage test, Elective Deferrals and Qualified Nonelective
Contributions must be made before the last day of the
twelve-month period immediately following the Plan Year to
which contributions relate.
(v) The Employer shall maintain records sufficient to
demonstrate satisfaction of the Average Deferral Percentage
test and the amount of Qualified Nonelective Contributions
used in such test.
(vi) The determination and treatment of the Elective
Deferrals, Qualified Nonelective Contributions and Actual
Deferral Percentage of any Participant shall satisfy such
other requirements as may be
prescribed by the Secretary of the Treasury.
(d) A Participant may elect to have the Employer contribute to
the Plan on his or her behalf Elective Deferrals of up to fifteen
percent (15%) of his or her Compensation. The amount elected by a
Participant pursuant to a 401(k)
III-5
<PAGE> 23
Election may not be made retroactively. The 401(k) Election shall be
made on a form provided by the Administrator but no election shall be
effective prior to approval by the Administrator. Subject to the
provisions of this Section 3.1.2, a Participant's 401(k) Election shall
remain in effect until modified or terminated. The Administrator may
reduce the amount of any 401(k) Election, or make such other
modifications as necessary, so that the Plan complies with the
provisions of the Code. All Elective Deferrals pursuant to a 401(k)
Election shall be made in accordance with such rules and procedures as
established by the Administrator.
3.1.3 PARTICIPANT AND MATCHING CONTRIBUTIONS: The following
limitation applies to Participant Contributions and Matching Contributions:
(a) LIMITATION ON ACTUAL CONTRIBUTION PERCENTAGE: Participant
and Matching Employer contributions for each Plan Year must satisfy one
of the following tests:
(i) The Average Actual Contribution Percentage for
eligible Employees who are Highly Compensated Employees for
the Plan Year shall not exceed the Average Contribution
Percentage for eligible Employees who are Non-Highly
Compensated Employees for the Plan Year multiplied by 1.25; or
(ii) The Average Actual Contribution Percentage for
eligible Employees who are Highly Compensated Employees for
the Plan Year shall not exceed the Average Contribution
Percentage for eligible Employees who are Non-Highly
Compensated Employees for the Plan Year multiplied by 2,
provided that the Average Actual Contribution Percentage for
eligible Employees who are Highly Compensated Employees does
not exceed the Average Actual Contribution Percentage for
eligible Employees who are Non-Highly Compensated Employees by
more than two (2) percentage points.
(b) SPECIAL RULES:
(i) For purposes of this Section 3.1.3, the
Contribution Percentage for any eligible Employee who is a
Highly Compensated Employee for the Plan Year and who is
eligible to receive Participant and Matching Contributions,
Qualified Nonelective Contributions or Elective Deferrals
allocated to his or her account under two or more plans
described in Code Section 401(a) or arrangements described in
Code Section 401(k) that are maintained by the Company or an
Affiliate shall be determined as if all such contributions and
Elective Deferrals were made under a single plan. If a Highly
Compensated Employee participates in two or more cash or
deferred arrangements that have
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<PAGE> 24
different Plan Years, all cash or deferred arrangements ending
with or within the same calendar year shall be treated as a
single arrangement.
(ii) If this Plan is aggregated with other plans for
purposes of Code Section 410(b) (other than the average
benefit percentage test), then this Section 3.1.3 shall be
applied by determining the Contribution Percentages of
eligible Employees as if all such plans were a single plan.
(iii) For purposes of determining the Actual
Contribution Percentage of an eligible Employee who is a
five-percent owner or one of the ten most highly-paid Highly
Compensated Employees, Participant Contributions, Matching
Contributions and Compensation of such Participant shall
include the Participant and Matching Contributions and
Compensation of Family Members. Family Members of Highly
Compensated Employees shall be disregarded as separate
employees in determining the actual Contribution Percentage
both for eligible Employees who are Non-Highly Compensated
Employees and for Employees who are Highly Compensated
Employees.
(iv) In computing the Average Contribution Percentage
test, the Employer shall be permitted to take Elective
Deferrals and Qualified Nonelective Contributions not used in
the Actual Deferral Percentage test into account and may
include such deferrals and contributions in the annual
determination of the Contribution Percentage Amounts under
this Plan provided that the conditions described in Treas.
Reg. Section 1.401(m)-1(b)(5) are satisfied.
(v) For purposes of determining the Actual
Contribution Percentage test, Participant Contributions are
considered to have been made in the Plan Year in which
contributed to the trust or to an agent of the Plan, as
provided for in Proposed Regulation Section 1.401(m)-1(b)(5).
Matching Contributions and Qualified Nonelective Contributions
will be considered made for a Plan Year if made no later than
the end of the twelve-month period beginning on the day after
the close of the Plan Year, and allocated to a Participant's
Account for the Plan Year.
(vi) The Employer shall maintain records sufficient
to demonstrate satisfaction of the Actual Contribution
Percentage test and the amount of Elective Deferrals and
Qualified Nonelective Contributions used in such test.
(vii) The determination and treatment of the
Contribution Percentage of any Participant shall satisfy such
other requirements as may be prescribed by the Secretary of
the Treasury.
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<PAGE> 25
3.1.4 DISTRIBUTIONS OF EXCESS AMOUNTS:
(a) DISTRIBUTION OF EXCESS DEFERRALS:
(i) IN GENERAL: Notwithstanding any other provision
of the Plan, Excess Deferral Amounts and income allocable
thereto shall be distributed no later than April 15th of the
following calendar year to Participants who claim such
allocable Excess Deferral Amounts for the preceding calendar
year or, if so designated by the Participant, during the same
taxable year in which the Excess Deferral was realized. Excess
Deferral Amounts shall be treated as Annual Additions.
(ii) CLAIMS: The Participant's claim shall be in
writing; shall be submitted to the Administrative Committee no
later than March 1; shall specify the Participant's Excess
Deferral Amount for the preceding calendar year; and shall be
accompanied by the Participant's written statement that if
such amounts are not distributed, such Excess Deferral Amount,
when added to amounts to which an election to defer had been
made under other plans or arrangements described in Code
Sections 401(k), 402(h)(1)(B), 408(k) or 403(b), any eligible
deferred compensation plan under Code Section 457 or any plan
described under Code Section 501(c)(18), exceeds the limit
imposed on the Participant by Code Section 402(g) for the year
in which the deferral occurred. A Participant will be deemed
to have made a claim for a distribution from this Plan of any
Elective Deferral contributed on his or her behalf to this
Plan to the extent that the Elective Deferral amount
contributed exceeds the dollar limitation set out in Section
3.1.2.
(iii) DETERMINATION OF INCOME OR LOSS: The Excess
Deferral Amount distributed to a Participant with respect to a
calendar year shall be adjusted for income and, if there is a
loss allocable to the Excess Deferral, shall in no event be
less than the lesser of the Participant's 401(k) Account under
the Plan or the Participant's Elective Deferrals for the Plan
Year. For the taxable year in which the Excess Deferral was
realized, the income or loss allocable to Excess Deferral
Amounts shall be adjusted for any income or loss up to the
date of distribution. The income allocable to Excess Elective
Deferrals for the taxable year of the Participant shall be
determined by multiplying the income for the taxable year of
the Participant allocable to Elective Deferrals by a fraction.
The numerator of the fraction is the amount of Excess Elective
Deferrals made on behalf of the Participant for the taxable
year. The denominator of the fraction is the Participant's
total Elective Deferrals Account balance as of the beginning
of the taxable year plus the Participant's Elective Deferrals
for the taxable year.
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<PAGE> 26
(b) DISTRIBUTION OF EXCESS CONTRIBUTIONS:
(i) IN GENERAL: Notwithstanding any other provision
of the Plan, Excess Contributions, plus any income and minus
any loss allocable thereto shall be distributed from the
401(k) Contributions Account no later than the last day of
each Plan Year, to Participants on whose behalf such Excess
Contributions were made for the preceding Plan Year. If such
Excess Contributions are distributed more than 2 1/2 months
after the last day of the Plan Year in which such Excess
Contributions arose, a ten (10) percent excise tax will be
imposed on the Employer maintaining the Plan with respect to
such amounts. The Excess Contributions with respect to a
Highly Compensated Employee shall be determined by reducing
Elective Deferrals made on behalf of such Highly Compensated
Employees in order of the Actual Deferral Percentage beginning
with the highest of such percentage. Excess Contributions
(including any amounts recharacterized) shall be treated as
Annual Additions under the Plan. Excess Contributions shall be
allocated to Participants who are subject to the family member
aggregation rules of Code Section 414(q)(6) in the manner
prescribed by the regulations.
(ii) DETERMINATION OF INCOME OR LOSS: The income
allocable to Excess Contributions for the Plan Year shall be
determined by multiplying the income for the Plan Year
allocable to Elective Deferrals and Qualified Nonelective
Contributions that the Employer elects to have treated as
Elective Deferrals by a fraction. The numerator of the
fraction is the amount of Excess Contributions made on behalf
of the Participant for the Plan Year. The denominator of the
fraction is the Member's total Account balance attributable to
Elective Deferrals and Qualified Nonelective Contributions
that the Employer elects to have treated as Elective Deferrals
as of the beginning of the Plan Year plus the Participant's
Elective Deferrals and Qualified Nonelective Contributions
that the Employer elects to have treated as Elective Deferrals
for the Plan Year.
(iii) MAXIMUM DISTRIBUTION AMOUNT: The Excess
Contributions which would otherwise be distributed to the
Participant shall be adjusted for income; shall be reduced, in
accordance with regulations, by the amount of Excess Deferrals
distributed to the Participant.
(iv) ACCOUNTING FOR EXCESS CONTRIBUTIONS: Amounts
distributed under this Section 3.1.4(b) shall first be treated
as distributions from the Participant's 401(k) Account; then
be treated as distributions from the Participant's matched
contributions to his or her 401(k) Account; and shall then be
treated as distributions from the
III-9
<PAGE> 27
Participant's Matching Contributions to his or her 401(k)
Account only to the extent that such Excess Contributions
exceed the balance of the Participant's Elective Deferral
Account to his or her 401(k) Account.
(v) SPECIAL QUALIFIED NONELECTIVE CONTRIBUTIONS:
(A) In lieu of distributing Excess
Contributions pursuant to the subparagraph (i), the
Employer or Participating Affiliate may make special
Qualified Nonelective Contributions on behalf of
Non-Highly Compensated Employees that are sufficient
to satisfy either of the Average Actual Deferral
Percentage tests. Allocations of such Qualified
Nonelective Contributions shall be made to such
Non-Highly Compensated Employees as are selected by
the Administrative Committee.
(B) Under no circumstances may Elective
Deferrals and Qualified Nonelective Contributions be
contributed and allocated to the Trust later than
thirty days after the close of the Plan Year for
which contributions are deemed to be made, or such
other time as provided in applicable regulations
under the Code.
(c) DISTRIBUTION OF EXCESS AGGREGATE CONTRIBUTIONS:
(i) IN GENERAL: Excess Aggregate Contributions plus
any income and minus any loss allocable thereto shall be
forfeited, if otherwise forfeitable under the Plan, or if not
forfeitable, shall be distributed no later than the last day
of each Plan Year to Participants to whose Accounts such
Excess Aggregate Contributions were allocated for the
preceding Plan Year. Excess Aggregate Contributions to be
distributed shall be apportioned to Participants who are
subject to the Family Member aggregation rules of Code Section
414(q)(6) in the manner prescribed by the regulations. If such
Excess Aggregate Contributions are distributed more than 2 1/2
months after the last day of the Plan Year in which such
excess amounts arose, a ten (10) percent excise tax will be
imposed on the Employer maintaining the Plan with respect to
those amounts. Excess Aggregate Contributions shall be treated
as Annual Additions.
(ii) DETERMINATION OF INCOME OR LOSS: The income
allocable to Excess Aggregate Contributions for a Plan Year
shall be determined by multiplying the income for the Plan
Year allocable to Employee Contributions, Matching
Contributions, and Qualified Nonelective Contributions that
the Employer elects to have treated as Employee Contributions
by a fraction. The numerator of the fraction is the amount of
Excess Aggregate Contributions made on behalf of the
Participant for
III-10
<PAGE> 28
the Plan Year. The denominator of the fraction is the
Participant's total Account balance attributable to Employee
Contributions, Matching Contributions, and Qualified
Nonelective Contributions that the Employer elects to have
treated as Employee Contributions as of the beginning of the
Plan Year plus the Participant's Employee Contributions,
Matching Contributions, and Qualified Nonelective
Contributions that the Employer elects to have treated as
Employee Contributions for the Plan Year.
Forfeitures of Excess Aggregate Contributions:
Forfeitures of Excess Aggregate Contributions will be applied
to reduce future Employer Matching Contributions.
(iii) MAXIMUM DISTRIBUTION AMOUNT: The Excess
Aggregate Contributions to be distributed to a Participant
shall be adjusted for income, and, if there is a loss
allocable to the Excess Aggregate Contribution, shall in no
event be less than the lesser of the Participant's,
Participant Contributions Account and Employer Contributions
Account under the Plan or the Participant's Matching
Contributions for the Plan Year.
(iv) ACCOUNTING FOR EXCESS AGGREGATE CONTRIBUTIONS:
Excess Aggregate Contributions shall be forfeited, if
forfeitable or distributed on a pro-rata basis from the
Participant's Participant Contribution Account and Matching
Contribution Account, (and, if applicable, the Participant's
Qualified Nonelective Contribution Account or Elective
Deferral Account, or both).
3.1.5 MULTIPLE USE OF ALTERNATIVE LIMITATION: If the second
alternatives set out in Sections 3.1.2(b)(ii) and 3.1.3(a)(ii) are used for both
the actual deferral percentage test and the actual contribution percentage test,
then the additional limitation on contributions set forth in this Section will
apply. The Actual Deferral Percentage of the group of eligible Employees who are
Highly Compensated Employees plus the Contribution Percentage of the group of
eligible Employees cannot exceed the Aggregate Limit.
If this limitation would be exceeded for a Plan Year, then
before the close of the following Plan Year the Actual Contribution Percentage
of the group of eligible Employees who are Highly Compensated Employees will be
reduced and distributions of contributions will be made in the manner set forth
in Section 3.1.4(c) and Department of Treasury Regulation Section
1.401(m)-1(e)(2). Any distributions required under this Section are in addition
to and not in lieu of distributions required under Section 3.1.4(b) or Section
3.1.4(c).
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<PAGE> 29
3.1.6 All Elective Deferrals and Matching Contributions by an
Employer as well as Participant contributions made pursuant to Section 3.3.2
shall be paid to the Trustee no later than thirty (30) days after the last
calendar day of the month next following or coincident with the applicable
payroll period. Contributions by an Employer with respect to any Plan Year made
pursuant to Section 3.1.4 shall be paid to the Trustee no later than thirty (30)
days following the end of the Company's taxable year, which includes the last
day of such Plan Year.
3.2 TREATMENT OF FORFEITURES:
3.2.1 The amount of forfeitures for any Plan Year shall be
considered as part of the Matching Contributions of the Employer or
Participating Affiliate with respect to which the forfeiture derives and such
amount shall reduce the Matching Contributions of the Employer or Participating
Affiliate, as the case may be, otherwise to be made for the succeeding Plan
Year.
3.2.2 No forfeitures will occur solely as a result of an
Employee's withdrawal of Participant contributions.
3.3 PARTICIPANT CONTRIBUTIONS:
3.3.1 No Participant contributions shall be required as a
condition of participation in the Plan.
3.3.2 To the extent permitted by the Committee, each
Participant may make voluntary after-tax contributions to the Plan through
payroll deductions or in a lump sum in cash. The total of a Participant's
Elective Deferrals and voluntary after-tax contributions for a Plan Year cannot
exceed 15% of the Participant's Compensation for that Plan Year.
3.3.3 Participant Contributions shall be made in accordance
with procedures and rules adopted by the Administrative Committee. For this
purpose, "Participant Contribution" shall mean any contribution made to the plan
by or on behalf of a Participant that is included in the Participant's gross
income in the year in which made and that is maintained under a separate account
to which earnings and losses are allocated.
3.4 ROLLOVER CONTRIBUTIONS AND PLAN TO PLAN TRANSFERS. The
Administrative Committee may permit Rollover Contributions by Participants
and/or direct transfers to or from another qualified plan on behalf of
Participants from time to time. If Rollover Contributions and/or direct
transfers to or from another qualified plan are permitted, the opportunity to
make those contributions and/or direct transfers must be made available to
Participants on a nondiscriminatory basis. For this purpose, all Employees of an
Employer shall be considered to be Participants of the Plan even though they may
not have met the eligibility requirements. However, they
III-12
<PAGE> 30
shall not be entitled to contribute to the Plan, share in Employer Contributions
or share in forfeitures unless and until they have met the requirements for
eligibility, contributions and allocations. A Rollover Contribution shall not be
accepted unless it is made on or before the 60th day after the Participant
received the distribution or it is directly rolled over to this Plan in a
rollover described in Section 401(a)(31) of the Code. A Participant shall not be
permitted to make a Rollover Contribution if the property he intends to
contribute is for any reason unacceptable to the Trustee. A Rollover
Contribution Account shall be established for any Employee who makes a Rollover
Contribution.
A direct transfer of assets from another qualified plan in a
transfer subject to the requirements of Section 414(l) of the Code shall not be
accepted if it was at any time part of (a) a defined benefit plan (as defined in
Section 401(a) or 414(j) of the Code), (b) a defined contribution plan (as
defined in Sections 401(a) and 414(i) of the Code) which is subject to the
minimum funding standards of Section 412 of the Code, (c) any other qualified
plan which has joint and survivor annuity benefits or qualified preretirement
survivor annuity benefits as described in Section 417 of the Code, or (d) a plan
which permits a distribution or withdrawal in a form not permitted under this
Plan.
Rollover Contribution means the amount contributed by a
Participant of this Plan which consists of any part of an eligible rollover
distribution (as defined in Section 402 of the Code) from a qualified employee
trust described in Section 401(a) of the Code.
3.5 ESTABLISHING OF ACCOUNTS AND CREDITING OF CONTRIBUTIONS:
3.5.1 A 401(k) Account shall be established for each
Participant who contributes to the Plan pursuant to Section 3.1.2 to which the
Administrative Committee shall credit, or cause to be credited, Elective
Deferrals plus gains or losses thereon.
3.5.2 A Participant Contributions Account shall be established
for each Participant who contributes to the Plan pursuant to Section 3.3.2, to
which the Administrative Committee shall credit, or cause to be credited,
Participant Contributions plus gains or losses thereon.
3.5.3 Subject to the limitations imposed by Code Section 415,
as of the last day of each month the Administrative Committee shall allocate
each Matching Contribution to the Employer Matching Contributions Account of
each Participant eligible for such an allocation.
3.5.4 A Nonelective Contributions Account shall be established
for each Participant with respect to whom Qualified Nonelective Contributions
are made, to
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<PAGE> 31
which the Administrator shall credit, or cause to be credited, all amounts so
allocable to each such Participant plus gains or losses thereon.
3.5.5 Unless the Administrative Committee determines, in a
uniform and nondiscriminatory basis, that such contributions shall not be
permitted, a Rollover Contributions Account shall be established for each
Participant who makes a Rollover Contribution to the Plan pursuant to Section
3.4 to which the Administrator shall credit, or cause to be credited, Rollover
Contributions made by the Participant plus earnings thereon.
3.5.6 A Rollover Contributions Account will be established for
each person who makes a Rollover Contribution to the Plan.
3.6 ALLOCATIONS TO PARTICIPANT ACCOUNTS: A contribution to a
401(k) Account which is made pursuant to a 401(k) Election, a voluntary Employee
contribution which is made pursuant to Section 3.3.2, and a Matching
Contribution shall be allocated to the respective sub-accounts of a Participant
Account of the electing Participant on the date that the Trustee receives such
contribution(s). However, solely for nondiscrimination testing purposes, a
contribution on behalf of a Participant for a given Plan Year that is received
by the Trustee after the last day of that Plan Year will be deemed to be
allocated to the Participant's Account as of the last day of the Plan Year to
which the contribution relates if the Trustee receives the contribution within
one year after the Plan Year to which the contribution relates and the
contribution satisfies such other conditions that are prescribed by the Internal
Revenue Service. No later than as of the last day of the Plan Year will
Qualified Nonelective Contributions be allocated to the Qualified Nonelective
Contributions Accounts of those Participants who are selected by the
Administrative Committee who are not Highly Compensated Employees and who are in
the employ of the Employer at the end of the Plan Year.
Notwithstanding the foregoing, Elective Deferrals will be
taken into account under the Actual Deferral Percentage test of Code Section
401(k) and this Section for a Plan Year only if it relates to Compensation that
either would have been received by the Employee in the Plan Year (but for the
deferral election) or is attributable to services performed by the employee in
the Plan Year and would have been received by the Employee within 2 1/2 months
after the close of the Plan Year (but for the deferral election). In addition,
an Elective Deferral or Qualified Nonelective Contribution will be taken into
account under the Actual Deferral Percentage test of Code Section 401(k) and
this Section for a Plan Year only if it is allocated to an Employee as of a date
within that Plan Year. For this purpose an Elective Deferral or Qualified
Nonelective Contribution is considered allocated as of a date within a Plan Year
if the allocation is not contingent on participation or performance of services
after such date and an Elective Deferral or Qualified Nonelective Contribution
is actually paid to the Trust no later than 12 months after the Plan Year to
which such contribution relates.
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<PAGE> 32
3.7 LIMITATIONS ON ALLOCATIONS:
3.7.1 As used in this Section 3.7, each of the following terms
shall have the meaning for that term set forth in this Section 3.7.1:
(a) Annual Additions means, for each Participant, the sum of
the following amounts credited to the Participant's Accounts for the
Limitation Year:
(i) Employer and Employee contributions;
(ii) forfeitures; and
(iii) amounts described in Code Sections 415(1)(2)
and 419A(d)(3). Any portion of any Excess Amount applied under
Section 3.7.2(d) or Section 3.7.3(f) in the Limitation Year to
reduce Employer contributions will also be considered as part
of the Annual Additions for such Limitation Year. Amounts
allocated after March 31, 1984 to an "individual medical
benefit account" (as defined in Code Section 415(i)(2)) which
is part of a Defined Benefit Plan or annuity plan are treated
as "annual additions" (as defined in Code Section 415(c)(2))
to a Defined Contribution Plan. Also, amounts derived from
contributions paid or accrued after December 31, 1985, in
taxable years ending after that date, which are attributable
to post-retirement medical benefits allocated to the separate
account of a "key employee" (as defined in Code Section
419A(d)(3)) under a "welfare benefits fund" (as defined in
Code Section 419(e)) maintained by the Employer, are treated
as "annual additions", defined as indicated in this paragraph,
to a Defined Contribution Plan.
(b) Considered Compensation means a Participant's wages as
defined in Code Section 3401(a) for purposes of income tax withholding
at the source but determined without regard to any rules that limit the
remuneration included in wages based on the nature or location of the
employment or the services performed (such as the exception for
agricultural labor in Section 3401(a)(2)).
For purposes of applying the limitations of this article, Considered
Compensation for a limitation year is the Considered Compensation actually paid
or includible in gross income during such year. Notwithstanding the preceding
sentence, Considered Compensation for a Participant in a Defined Contribution
plan who is permanently and totally disabled (as defined in Code Section
22(e)(3)) is the Considered Compensation such Participant would have received
for the Limitation Year if the Participant had been paid at the rate of
compensation paid immediately before becoming permanently and totally disabled;
such imputed Considered Compensation for the disabled Participant may be taken
into account only if the Participant is not a
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<PAGE> 33
Highly Compensated Employee and contributions made on behalf of such Participant
are nonforfeitable when made.
(c)(i) Defined Benefit Fraction means a fraction, the
numerator of which is the sum of the Projected Annual Benefit of the
Participant involved under all Defined Benefit Plans (whether or not
terminated) maintained by the Employer or an Affiliate determined as of
the close of the Limitation Year involved, and the denominator of which
is the lesser of 125 percent of the dollar limitation determined for
the Limitation Year under Code Sections 415(b) and (d) or 140% of the
Participant's Highest Average Limitation Compensation, including any
adjustments under Code Section 415(b).
(ii) Notwithstanding the above, if the Participant 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 the Employer which were in existence on May 6, 1986, the
denominator of this fraction will not be less than 125 percent 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 Plan after May 5, 1986. The preceding sentence applies only if
the defined benefit plans individually and in the aggregate satisfied
the requirements of Code Section 415 for all Limitation Years beginning
before January 1, 1987.
(d) Defined Contribution Dollar Limitation means $30,000 or,
if greater, one-fourth of the defined benefit dollar limitation set
forth in Code Section 415(b)(1) as in effect for the Limitation Year.
(e) Defined Contribution Fraction means a fraction, the
numerator of which is the sum of the "annual additions" (as defined in
Code Section 415(c)(2)) to the Participant's Account or Accounts under
all the Defined Contribution Plans (whether or not terminated)
maintained by the Employer or an Affiliate for the current and all
prior Limitation Years including the "annual additions", as defined in
Code Section 415(c)(2), attributable to the Participant's nondeductible
contributions to Defined Benefit Plans, whether or not terminated,
maintained by the Employer or an Affiliate and the "annual additions",
as so defined, attributable to all "welfare benefits funds", as defined
in Code Section 419(e) and individual medical accounts, as defined in
Code Section 415(1)(2), maintained by the Employer or an Affiliate, and
the denominator of which is the sum of the "maximum aggregate amounts"
(as defined in the following sentence) for the current and all prior
Limitation Years of service with the Employer or an Affiliate
(regardless of whether a Defined Contribution Plan was maintained by
the Employer or an Affiliate). The "maximum aggregate amount" in any
Limitation Year is the lesser of:
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<PAGE> 34
(i) 125% of the dollar limitation determined under
Code Sections 415(b) and (d) in effect for that year under
Code Section 415(c)(1)(A); or
(ii) 35% of the Participant's Considered Compensation
for such year.
If the Employee was a Participant as of the end of the first
day of the first Limitation Year beginning after December 31, 1986, in
one or more Defined Contribution Plans maintained by the Employer or an
Affiliate in existence on May 6, 1986, the numerator of this fraction
will be adjusted if the sum of this fraction and the Defined Benefit
Fraction would otherwise exceed 1.0 under the terms of this Plan. Under
the adjustment, an amount equal to the product of (A) the excess of the
sum of the fractions over 1.0 times (B) the denominator of this
fraction will be permanently subtracted from the numerator of this
fraction. The adjustment is calculated using the fractions as they
would be computed as of the end of the last Limitation Year beginning
before January 1, 1987, and disregarding any changes in the terms and
conditions of the Plan made after May 5, 1986, but using the Code
Section 415 limitation applicable to the first Limitation Year
beginning on or after January 1, 1987. The annual addition for any
Limitation Year beginning before January 1, 1987, shall not be
recomputed to treat all employee contributions as annual additions.
(f) Employer: For purposes of this Article, Employer shall
mean the Employer that adopts this Plan, and all members of a
controlled group of corporations (as defined in Section 414(b) of the
Code as modified by Section 415(h)), all commonly controlled trades or
businesses (as defined in Section 414(c) as modified by Section 415(h))
or affiliated service groups (as defined in Section 414(m)) of which
the adopting Employer is a part, and any other entity required to be
aggregated with the Employer pursuant to regulations under Section
414(o) of the Code.
(g) Excess Amount means the excess of the Participant's Annual
Additions for the Limitation Year involved over the Maximum Permissible
Amount for that Limitation Year.
(h) Highest Average Limitation Compensation means the average
Considered Compensation of the Participant involved for that period of
3 consecutive Years of Service with the Employer or Affiliate (or if
the Participant has less than 3 such Years of Service, the actual
number thereof) that produces the highest average.
(i) Limitation Year means the Plan Year. All Qualified Plans
maintained by the Employer or an Affiliate must use the same Limitation
Year* If the Limitation Year is amended to a different
12-consecutive-month period,
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<PAGE> 35
the new Limitation Year must begin on a date within the Limitation Year
in which the amendment is made.
(j) Maximum Permissible Amount means, the maximum annual
addition that may be contributed or allocated to a Participant's
Account for a Limitation Year and with respect to any Participant,
shall not exceed the lesser of:
(i) the Defined Contribution Dollar Limitation; or
(ii) 25% of the Participant's Considered Compensation
for the Limitation Year.
The compensation limitation referred to in the preceding
sentence shall not apply to any contribution for medical
benefits (within the meaning of Section 401(h) or Section
411(f)(2) of the Code) which is otherwise treated as an annual
addition under Section 415(l)(1) or 419A(d)(2) of the Code.
If a short Limitation Year is created because of an amendment
changing the Limitation Year to a different
12-consecutive-month period, the Maximum Permissible Amount
will not exceed $30,000 multiplied by the number of months in
the short Limitation Year/12.
(k) Projected Annual Benefit means the annual retirement
benefit (adjusted to an actuarially equivalent straight life annuity)
if such benefit is expressed in a form other than a straight life
annuity or "qualified joint and survivor annuity" (as defined in Code
Section 417(b)) to which the Participant would be entitled under the
terms of the Plan assuming:
(i) the Participant continues in employment with the
Employer until the Participant's Normal Retirement Age under
the Plan within the meaning of Code Section 411(a)(8) (or the
Participant's current age, if later); and
(ii) the Participant's Considered Compensation for
the current Limitation Year and all other relevant factors
used to determine benefits under the Plan will remain constant
for all future Limitation Years.
3.7.2 The provisions of this Section 3.7.2 apply with respect
to a Participant who does not participate in, and has never participated in, a
Qualified Plan or a "welfare benefits fund" (as defined in Code Section 419(e))
or an individual medical account, as defined in Code Section 415(l)(2),
maintained by the Employer which provides an annual addition as defined in
Section 3.7.1(a) maintained by the Employer or an Affiliate, other than this
Plan:
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<PAGE> 36
(a) The amount of Annual Additions which may be credited to
the Participant's Account for any Limitation Year will not exceed the
lesser of the Maximum Permissible Amount or any other limitation
contained in this Plan* If the Employer contribution that would
otherwise be contributed or allocated to the Participant's Account
would cause the Annual Additions on behalf of the Participant for the
Limitation bear to exceed the Maximum Permissible Amount with respect
to that Participant for the Limitation Year, the amount contributed or
allocated will be reduced so that the Annual Additions on behalf of the
Participant for the Limitation Year will equal such Maximum Permissible
Amount.
(b) Prior to determining the Participant's actual Considered
Compensation for a Limitation Year, the Employer may determine the
Maximum Permissible Amount for the Participant for the Limitation Year
on the basis of a reasonable estimation of the Participant's Considered
Compensation for that Limitation Year. Such estimated Considered
Compensation shall be uniformly determined for all Participants
similarly situated.
(c) As soon as is administratively feasible after the end of a
Limitation Year, the Maximum Permissible Amount for the Limitation Year
will be determined on the basis of the Participant's actual Considered
Compensation for the Limitation Year.
(d) If there is an Excess Amount with respect to the
Participant for a Limitation Year pursuant to paragraph (c) above or as
a result of the allocation of forfeitures, a reasonable error in
estimating a Participant's Compensation, a reasonable error in
calculating the maximum Elective Deferral that may be made with respect
to a Participant under Section 415 of the Code or because of other
facts and circumstances which the Commissioner of Internal Revenue
finds to be justified, the Excess Amount shall be disposed of as
follows:
(i) First, any contribution to the Participant
Contributions Account and any earnings allocable thereto, to
the extent that the return thereof to the Participant would
reduce the Excess Amount, will be returned to the Participant,
(ii) If, after the application of subsection
3.7.2(d)(i) above, an Excess Amount still exists, and the
Participant is covered by the Plan at the end of the
Limitation Year, the remaining Excess Amount in the
Participant's Accounts will be used to reduce Employer
contributions under this Plan for such Participant in the next
Limitation Year, and in each succeeding Limitation Year, if
necessary,
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<PAGE> 37
(iii) If, after the application of subsection
3.7.2(d)(i) above, an Excess Amount still exists, and the
Participant is not covered by the Plan at the end of a
Limitation Year, the remaining Excess Amount will be held
unallocated in a suspense account. The suspense account will
be applied to reduce future Employer contributions under this
Plan for all remaining Participants in the next Limitation
Year, and in each succeeding Limitation Year, if necessary.
(iv) If a suspense account is in existence at any
time during a Limitation Year pursuant to subsections 3.7.2(d)
(ii) or (iii) above, the Employer will be considered the
Participant with respect to the investment thereof and the
suspense account will not participate in the allocation of the
Fund's investment gains and losses to or from any other
Account. If a suspense account is in existence at any time
during a particular Limitation Year, all amounts in the
suspense account must be allocated and reallocated to
Participants' Account before any Employer or any Employee
contributions may be made to the Plan for that Limitation
Year. Excess amounts may not be distributed to Participants or
former Participants.
3.7.3 If the employer maintains, or at any time maintained, a
qualified defined benefit plan covering any Participant in this Plan, the sum of
the Participant's Defined Benefit Plan fraction and Defined Contribution Plan
fraction will not exceed 1.0 in any Limitation Year. If this limit is exceeded,
then the Participant's benefit under the defined benefit plan will be reduced
before the Participant's benefit under this Plan is reduced.
3.8 RETURN OF EMPLOYER CONTRIBUTIONS UNDER SPECIAL
CIRCUMSTANCES: Notwithstanding any provision of this Plan to the contrary, upon
timely written demand by the Employer or the Administrative Committee to the
Trustee:
(a) Any contribution by the Employer to the Plan under a
mistake of fact shall be returned to the Employer by the Trustee within
one year after the payment of the contribution.
(b) Any contribution made by the Employer incident to the
determination by the Commissioner of Internal Revenue that the Plan is
initially a Qualified Plan shall be returned to the Employer by the
Trustee within one year after notification from the Internal Revenue
Service that the Plan is not initially a Qualified Plan, but only if
the application for qualification is made by the time prescribed by law
for filing the Employer's tax return for the taxable year in which the
Plan is adopted, or such later date as the Secretary of the Treasury
may prescribe.
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<PAGE> 38
(c) Any contribution made by the Employer conditioned upon the
deductibility of the contribution under Code Section 404 shall be
returned to the Employer within one year after a deduction for the
contribution under Code Section 404 is disallowed by the Internal
Revenue Service, but only to the extent disallowed.
The Employer has the exclusive right to determine if a
contribution or any part of it is to be repaid or is to remain as a
part of the Trust Fund except that the amount to be repaid is limited,
if the contribution is made by mistake of fact or if the deduction for
the contribution is disallowed, to the excess of the amount contributed
over the amount that would have been contributed had there been no
mistake or over the amount disallowed. Earnings which are attributable
to any excess contribution cannot be repaid. Losses attributable to an
excess contribution must reduce the amount that may be repaid. All
repayments of mistaken contributions or contributions which are
disallowed are limited so that the balance in a Participant's Account
cannot be reduced to less than the balance that would have been in the
Participant's Account had the mistaken amount or the amount disallowed
never been contributed.
3.9 VALUATION OF ACCOUNTS:
(a) A Participant's Accounts shall be valued at fair market
value on each Valuation Date. On such date, the earnings and losses of
each fund within the Trust Fund, other than Daily Market Assets, shall
be allocated to each Participant's Accounts in each fund in the ratio
that such Account Balance bears to all Account Balances in each fund;
provided, however, that with respect to Daily Market Assets, the
earnings and losses of such assets shall be allocated solely to the
Account of the Participant or Beneficiary having authority to direct
the investment of the assets in the Account. For this purpose, "Daily
Market Assets" shall be those assets in a Participant's Account, the
value of which shall be determined on each business day.
(b)(i) In determining the fair market value of a Participant's
Accounts, the Trustee shall value the assets at their fair market value
as of the Valuation Date which shall reflect the sum of the net
earnings and losses of a Participant's Account (excluding (1) dividends
and capital gain distributions attributable to regulated investment
company shares and (2) and accrued but unpaid interest, dividends,
gains or losses realized from the sale, exchange or collection of
assets, other income received, appreciation or depreciation in the fair
market value of assets, administrative expenses, and taxes other
expenses paid). Gains or losses realized and adjustments for
appreciation or depreciation in fair market value shall be computed
with respect to the difference between such value as of the preceding
Valuation Date, date of purchase or with respect to regulated
investment company shares, the most recent day in which such shares had
been
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<PAGE> 39
valued by such investment company, whichever is applicable, and the
value as of the date of disposition or the current Valuation Date,
whichever is applicable.
(ii) In determining the fair market value of the Participant's
Accounts, the Trustee shall utilize such sources of information as it
may deem reliable including, but not limited to, stock market
quotations, statistical evaluation services, newspapers of general
circulation, financial publications, advice from investment counselors
or brokerage firms, or any combination of sources which in the opinion
of the Trustee will provide the price such assets were last traded at
on a registered stock exchange; provided, however, that with respect to
regulated investment company shares, the Trustee shall rely exclusively
on information provided to it by the investment adviser to such funds.
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<PAGE> 40
ARTICLE IV
VESTING
4.1 DETERMINATION OF VESTING:
4.1.1 A Participant shall at all times have a vested
percentage of 100% in the Account Balance of his or her 401(k) Account,
Participant Contributions Account, Nonelective Contributions Account and
Rollover Contributions Account and shall have a vested percentage in his or her
Matching Contributions Account in accordance with the following schedule:
<TABLE>
<CAPTION>
Years of Active Service Vested Percentage
----------------------- -----------------
<S> <C>
Less than one........................... 0%
One but less than two................... 20%
Two but less than three................. 40%
Three but less than four................ 60%
Four but less than five................. 80%
Five or more............................ 100%
</TABLE>
Each Account will be credited with the applicable contributions and earnings
thereon. Upon attaining his Normal Retirement Age a Participant will have a
fully nonforfeitable interest in his Accounts.
4.1.2 Any Participant whose Employment terminates either
because of his or her death or Disability, upon or after attaining his Normal
Retirement Age, upon the complete or partial termination of the Plan or upon the
complete discontinuance of Employer contributions shall have a vested percentage
of 100% in his or her entire Account Balance.
4.2 RULES FOR CREDITING VESTING SERVICE:
4.2.1 Subject to Section 4.2.2, all years of Active Service
will be credited for purposes of determining a Participant's Vesting Service.
4.2.2 If an Employee has incurred a Year of Severance, the
period of service completed before such period of severance will not be taken
into account until the Employee has completed a year of Active Service after his
return to employment. If an Employee does not have any vested right under the
Plan to amounts credited to his Employer Matching Contributions Account or his
401(k) Account at the time he incurs five consecutive Years of Severance,
service completed by such Employee before such period of severance will not be
taken into account. In computing the aggregate
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<PAGE> 41
period of service prior to such period of severance, years of Active Service
which may be disregarded by reason of any prior period of severance will be
disregarded.
4.3 EMPLOYER CONTRIBUTIONS ACCOUNT FORFEITURES: Upon the
Non-Vested Separation or Partially Vested Separation of a Participant and
subject to Section 5.4.4, the non-vested portion of his or her Employer
Contributions Account will be treated as a forfeiture. The non-vested portion of
the Employer Matching Contributions Account of such a Participant shall be
forfeited, in the case of Daily Market Assets, as of the Valuation Date the
assets are withdrawn from the Account involved, and, in the case of other
assets, as of the Valuation Date coincident with or immediately preceding his or
her Benefit Commencement Date. No forfeitures will occur solely as a result of
an Employee's withdrawal of Participant contributions under Section 5.6.
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<PAGE> 42
ARTICLE V
AMOUNT OF BENEFITS AND WITHDRAWALS
5.1 FULLY VESTED SEPARATION: A Participant's benefits, upon
his or her Fully Vested Separation, shall be the Account Balance of all of his
or her Accounts determined, in the case of Daily Market Assets, as of the
Valuation Date the assets are withdrawn from the Account involved, and, in the
case of other assets, as of the Valuation Date coincident with or immediately
preceding the Participant's Benefit Commencement Date, plus any principal amount
contributed by the Participant's since that date.
5.2 PARTIALLY VESTED SEPARATION: A Participant's benefits upon
his or her Partially Vested Separation shall be:
(a) the Account Balance of his or her Employer Matching
Contributions Account determined, in the case of Daily Market Assets,
as of the Valuation Date the assets are withdrawn from the Account
involved, and, in the case of other assets, as of the Valuation Date
coincident with or immediately preceding the Participant's Benefit
Commencement Date, multiplied in either case by his or her vested
percentage determined pursuant to Section 4.1.1, plus
(b) the Account Balance of his or her 401(k) Account,
Nonelective Account, Participant Contributions Account and Rollover
Contributions Account, if any, as of the Valuation Date applicable for
purposes of clause (a) of this Section 5.2, plus any principal amount
contributed since that date.
5.3 NON-VESTED SEPARATION: A Participant's benefits upon his
or her Non-Vested Separation shall be the Account Balance of the Participant's
Participant Contribution Account, 401(k) Account, Nonelective Account and
Rollover Contributions Account, if any, determined, in the case of Daily Market
Assets, as of the Valuation Date the assets are withdrawn from the Account
involved, and, in the case of other assets, as of the Valuation Date coincident
with or immediately preceding the Participant's Benefit Commencement Date, plus
any principal amount contributed by the Participant since that date.
5.4 BENEFITS COMMENCEMENT DATE:
5.4.1 Except as otherwise provided in this Section 5.4, a
Participant's Benefit Commencement Date shall be as soon as practicable after
his or her Severance From Service Date.
5.4.2 A Participant may elect in writing filed with the
Administrator a Benefit Commencement Date other than the date otherwise
applicable pursuant to
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<PAGE> 43
Section 5.4.1. If a deferred Benefit Commencement Date is elected pursuant to
the preceding sentence, the Valuation Date for purposes of determining the
benefits to be paid to the electing Participant shall be, in the case of Daily
Market Assets, as of the Valuation Date the assets are withdrawn from the
Account involved, and, in the case of other assets, as of the Valuation Date
coincident with or immediately preceding the deferred Benefit Commencement Date.
Except, if otherwise elected by the Participant, a Participant shall in no event
begin to receive his or her benefits later than the 60th day after the close of
the Plan Year in which the latest of the following events occurs:
(a) The attainment by the Participant of his or her Normal
Retirement Age.
(b) The tenth anniversary of the year in which the Participant
commenced participation in the Plan; or
(c) The Participant's Severance from Service Date.
Also, the entire vested interest of each Participant must be distributed not
later than April 1 of the calendar year next following the calendar year in
which the Participant attains age 70 1/2.
5.4.3 Any other provisions of this Article V or Article VI to
the contrary notwithstanding:
(a)(i) If an Employee terminates service, and the value of
the Employee's vested Account balance derived from Employer and
Participant contributions is not greater than $3,500, the Employee will
receive a distribution of the value of the entire vested portion of
such Account balance and the non-vested portion will be treated as a
forfeiture. For purposes of this Section, if the value of an Employee's
vested Account balance is zero, the Employee shall be deemed to have
received a distribution of such vested Account balance.
For purposes of this Section, if a Participant's vested
Account balance is $3,500 or less and the individual is temporarily
laid off for a period that the Administrative Committee expects to be
less than 365 days, such Participant's vested Account balance will not
be distributed immediately upon the occurrence of the lay off. Rather,
such individual's vested Account balance will be distributed as soon as
practicable after the first anniversary of the date that the individual
is laid off.
If an Employee terminates service, and elects to receive the
value of the Employee's vested Account balance, the non-vested portion
will be treated as a forfeiture. If the Employee elects to have
distributed less than the entire vested portion of the Account balance
derived from Employer contributions, the part of the non-vested portion
that will be treated as a forfeiture is the total non-
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<PAGE> 44
vested portion multiplied by a fraction, the numerator of which is the
amount of the distribution attributable to Employer contributions and
the denominator of which is the total value of the vested Employer
derived Account balance.
(ii) If the value of a participant's vested account
balance derived from Employer and Employee contributions
exceeds (or at the time of any prior distribution exceeded)
$3,500, and the Participant has not attained Normal Retirement
Age, the Participant must consent to any distribution of such
Account balance. The consent of the Participant shall be
obtained in writing within the 90-day period ending on the
Annuity Starting Date. The Annuity Starting Date is the first
day of the first period for which all events have occurred
which entitle the Participant to a distribution. The
Administrative Committee will notify the Participant of the
right to defer any distribution until the Participant attains
Normal Retirement Age. Such notification shall include a
general description of the material features, and an
explanation of the relative values of, the optional forms of
benefit available under the Plan in a manner that would
satisfy the notice requirements of Code Section 417(a)(3), and
shall be provided no less than 30 days and no more than 90
days prior to the Annuity Staring Date. The consent of the
Participant shall not be required to the extent that a
distribution is required to satisfy Code Section 401(a)(9) or
Section 415.
5.4.4 In the event a Participant terminates employment and
receives a distribution of the entire vested portion of his Accounts, any
nonvested amounts in the Participant's Employer Account shall be immediately
forfeited and shall be used as soon as administratively possible to reduce
Employer Matching Contributions. For purposes of this section if a Participant
is 100% vested in his Employer Account at termination of employment and
therefore no amounts are forfeited, the Participant is deemed to have received a
distribution of his entire vested interest in his Employer Account as of the
date of termination of employment.
If a former Participant terminates employment with an Employer
and all members of the controlled or affiliated service group and receives a
distribution of his entire vested interest and then resumes employment covered
by the Plan prior to the date on which he incurs five (5) consecutive one-year
periods of severance the total amount which was previously forfeited from the
Participant's Employer Account; unadjusted for subsequent gains or losses, will
be restored as soon as administratively practical after the date the Participant
resumes employment covered by the Plan whether or not the Participant repays to
the Plan the amounts previously distributed.
However, in the event a Participant terminates employment and
receives no distribution from the Plan, any nonvested amounts shall be forfeited
upon the Participant incurring five one-year periods of severance and then shall
be used as soon as administratively practical to reduce Matching Contributions.
Provided, however,
V-3
<PAGE> 45
if the Participant resumes employment with the Employer prior to incurring five
or more one-year periods of severance, the Participant shall reenter the Plan
with his Account intact, adjusted for gains earned and losses incurred
subsequent to such Participant's termination of employment.
5.5 METHOD OF DISTRIBUTION: Every distribution under the Plan
will be in the form of a lump sum cash payment.
5.6 PARTICIPANT WITHDRAWALS: The following withdrawal
provisions shall apply to all Participants:
(a) Each Participant, upon giving thirty (30) days' written
notice to the Administrative Committee prior to the expected date of
withdrawal shall be entitled to withdraw a portion or all of his
Participant Contributions Account and his vested interest in his
Matching Contributions Account which have not been previously
withdrawn. However, the minimum withdrawal permitted under this Section
5.6(a) shall be the lesser of $1,000.00 or the total amount which could
be withdrawn under this Section. Also, a Participant may make a
withdrawal of a portion of his vested interest in his Matching
Contributions Account only if the Participant has been a Participant in
the Plan for five or more years or the amounts withdrawn from the
Matching Contributions Account have been in such Account for a minimum
of two years. The distribution of the withdrawal shall be made as soon
as administratively practical after the end of the calendar month
coincident or next following the date the request is received and
processed. A Participant may not make another withdrawal request under
this Section 5.6(a) until such Participant has made Participant
Contributions and/or Elective Deferrals for a period of twelve months
or more.
(b) Upon giving 30 days written notice to the Administrative
Committee, a Participant is entitled to receive a withdrawal from his
Account in the event of an immediate and heavy financial need incurred
by the Participant and the Administrative Committee's determination
that the withdrawal is necessary to alleviate that hardship.
A Participant shall not be entitled to make a withdrawal
pursuant to this Section 5.6(b) of any amounts credited to his
Nonelective Contributions Account or of any income that is not
allocable and credited to his 401(k) Account as of December 31, 1988.
A distribution shall be made on account of financial hardship
only if the distribution is for: (i) Expenses for medical care
described in Section 213(d) of the Code previously incurred by the
Participant, the Participant's spouse, or any dependents of the
Participant (as defined in Section 152 of the Code) or
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<PAGE> 46
necessary for these persons to obtain medical care described in Section
213(d) of the Code, (ii) costs directly related to the purchase
(excluding mortgage payments) of a principal residence for the
Participant, (iii) payment of tuition and related educational fees for
the next 12 months of post-secondary education for the Participant, his
or her spouse, children, or dependents (as defined in Section 152 of
the Code), (iv) payments necessary to prevent the eviction of the
Participant from his principal residence or foreclosure on the mortgage
of the Participant's principal residence, or (v) any other event added
to this list by the Commissioner of Internal Revenue.
A distribution to satisfy an immediate and heavy financial
need shall not be made in excess of the amount of the immediate and
heavy financial need of the Participant and the Participant must have
obtained all distributions, other than hardship distributions, and all
nontaxable (at the time of the loan) loans currently available under
all plans maintained by the Employer. The amount of a Participant's
immediate and heavy financial need includes any amounts necessary to
pay any federal, state or local income taxes or penalties reasonably
anticipated to result from the financial hardship distribution.
The Participant's hardship distribution shall terminate his or
her right to make any Participant Contributions or to have the Employer
make any Elective Deferrals on his or her behalf until the next time
Participant Contributions and Elective Deferrals are permitted after
the lapse of 12 months following the hardship distribution and his or
her timely filing of a written request to resume his or her Participant
Contributions or Elective Deferrals. Even then, if the Participant
resumes Elective Deferrals in his next taxable year he cannot have the
Employer make any Elective Deferrals in excess of the limit in Section
402(g) of the Code for that taxable year reduced by the amount of
Elective Deferrals made by the Employer on the Participant's behalf
during the taxable year of the Participant in which he received the
hardship distribution.
In addition, for 12 months after he receives a hardship
distribution from this Plan the Participant is prohibited from making
elective contributions and employee contributions to all other
qualified and nonqualified plans of deferred compensation maintained by
the Employer, including stock option plans, stock purchase plans and
Code Section 401(k) cash or deferred arrangements that are part of
cafeteria plans described in Section 125 of the Code. However, the
Participant is not prohibited from making mandatory employee
contributions to a defined benefit plan, or contributions to a health
or welfare benefit plan, including one that is part of a cafeteria plan
within the meaning of Section 125 of the Code.
Withdrawals made pursuant to this Section 5.6(b) shall be made
in the following order: first, withdrawals shall be made from a
Participant's
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<PAGE> 47
Participant Contribution Account, then from his Rollover Account, then
from his Matching Contributions Account, and finally, from his 401(k)
Account.
(c) For the purposes of allocating appreciation or
depreciation of the Trust Fund and income of the Trust Fund, any
withdrawal from the Participant's Participant Contributions Account or
401(k) Account shall be subtracted from the Participant's Participant
Contributions Account or 401(k) Account balances at the beginning of
the calendar month during which the withdrawal is made for purposes of
determining the amount eligible to participant in earnings and/or
appreciation and for purposes of determining the amount of a
distribution.
(d) Former Participants described in Section 5.7 shall be
entitled to make withdrawals from the Plan under the same terms and
conditions that are applicable to Participants.
5.7 DISTRIBUTIONS UPON DISPOSITION OF ASSETS OR A SUBSIDIARY.
A Participant employed by an Employer that is a corporation is entitled to
receive a lump sum distribution of his interest in his Accounts in the event of
the sale or other disposition by the Employer of at least 85% of all of the
assets used by the Employer in a trade or business to an unrelated corporation
if (a) the Employer continues to maintain the Plan after the disposition and (b)
in connection with the disposition the Participant is transferred to the employ
of the corporation acquiring the assets.
A Participant employed by an Employer that is a corporation is
entitled to receive a lump sum distribution of his interest in his Accounts in
the event of the sale or other disposition by the Employer of its interest in a
subsidiary (within the meaning of Section 409(d)(3) of the Code) to an unrelated
entity or individual if (a) the Employer continues to maintain the Plan after
the disposition and (b) in connection with the disposition the Participant
continues employment with the subsidiary.
The selling Employer is treated as continuing to maintain the
Plan after the disposition only if the purchaser does not maintain the Plan
after the disposition. A purchaser is considered to maintain the Plan if it
adopts the Plan, becomes an employer whose employees accrue benefits under the
Plan, or if the Plan is merged or consolidated with, or any assets or
liabilities are transferred from the Plan to, a plan maintained by the purchaser
in a transaction subject to Section 414(l)(1) of the Code.
An unrelated corporation, entity or individual is one that is
not required to be aggregated with the selling Employer under Section 414(b),
(c), (m), or (o) of the Code after the sale or other disposition.
If a Participant's Account balance is $3,500 or less at the
date of the disposition, the Administrative Committee will direct the Trustee to
pay to the Participant a lump sum cash distribution of his Account balance as
soon as
V-6
<PAGE> 48
administratively practicable following the disposition and any Internal Revenue
Service approval of the distribution that the Administrative Committee deems
advisable to obtain.
If a Participant's Account balance is more than $3,500 at the
date of the disposition, he may elect (1) to receive a lump sum cash
distribution of his Account balance as soon as administratively practicable
following the disposition and receipt of any Internal Revenue Service approval
of the distribution that the Administrative Committee deems advisable to obtain,
or (2) he may elect to defer receipt of his vested Account balance until the
first day of the month coincident with or next following the date that he
attains age 65. In the manner and at the time required under Department of
Treasury regulations, the Administrative Committee will provide the Participant
with a notice of his right to defer receipt of his Account balance.
However, no distribution shall be made to a Participant under
this Section after the end of the second calendar year following the calendar
year in which the disposition occurred. In addition, no distribution shall be
made under this Section unless it is a lump sum distribution within the meaning
of Section 402(d)(4) of the Code, without regard to subparagraphs (A)(i) through
(iv), (B), and (H) of that Section.
5.8 DIRECT ROLLOVER OPTION FOR DISTRIBUTIONS MADE ON OR AFTER
JANUARY 1, 1993. Effective for distributions made on or after January 1, 1993, a
Participant, former Participant, his spouse or former spouse who is an alternate
payee under a qualified domestic relations order (as defined in Section 414(p)
of the Code), or his surviving spouse will have the right to direct that any
portion of his eligible rollover distribution will be directly paid to an
eligible retirement plan specified by the distributee. Any payment made under
this Section will not be subject to the requirements of Section 414(l) of the
Code. The term "eligible rollover distribution" means any distribution of all or
any portion of the balance to the credit of the distributee, except that an
eligible rollover distribution does not include: any distribution that is one of
a series of substantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the distributee or the joint
lives (or joint life expectancies) of the distributee and the distributee's
designated beneficiary, or for a specified period of ten years or more; any
distribution to the extent such distribution is required under section 401(a)(9)
of the Code; and the portion of any distribution that is not includible in gross
income (determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities). The term "eligible retirement
plan" means an individual retirement account described in section 408(a) of the
Code, an individual retirement annuity described in section 408(b) of the Code,
an annuity plan described in section 403(a) of the Code, or a qualified trust
described in section 401(a) of the Code, that accepts the distributee's eligible
rollover distribution. However, in the case of an eligible rollover distribution
to the surviving spouse, an eligible retirement plan is an individual retirement
account or individual retirement annuity.
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ARTICLE VI
DEATH BENEFITS
6.1 PAYMENT OF ACCOUNT BALANCES:
6.1.1 The benefits payable to the Beneficiary of a Participant
shall be the Account Balance of all of his or her accounts. A Beneficiary shall
be paid his or her benefits as soon as practicable after the Participant's death
in the form of a lump sum cash payment.
6.1.2 The Valuation Date for purposes of determining the
benefits payable to a Beneficiary shall be, in the case of Daily Market Assets,
as of the Valuation Date the assets are withdrawn from the Account involved,
and, in the case of any other assets as of the Valuation Date coincident with or
immediately preceding the date of distribution.
6.1.3 Notwithstanding any other provision of the Plan to the
contrary, if a Participant dies before distribution of his or her interest in
the Plan has commenced, the Participant's entire interest must be distributed by
December 31st of the calendar year containing the fifth anniversary of the
Participant's death.
6.2 BENEFICIARIES:
6.2.1 At any time, each Participant will have the right to
designate the Beneficiary to receive his death benefit and will have the right
to revoke any such designation. Each such designation or revocation will be
evidenced by a written instrument filed with the Administrative Committee,
signed by the Participant, and bearing the signature of a person as witness to
his signature. If no such designation is on file with the Administrative
Committee at the time of the Participant's death, or if the Administrative
Committee for any reason determined that such designation is ineffective, then
such Participant's spouse, if then living, or if not, then the executor,
administrator, or other personal representative of the estate of such
Participant shall be conclusively deemed to be the Beneficiary designated to
receive such Participant's death benefit.
6.2.2 If a Participant is lawfully married (or is deemed to be
married under applicable local law), such Participant's designation of a
Beneficiary other than the Participant's spouse to receive any portion of such
death benefit will be ineffective, unless the spouse of such Participant
consents to the Participant's beneficiary election. The spousal consent must (1)
be in writing, (2) consent to the specific nonspouse Beneficiary designated by
the Participant to receive Plan benefits or specify that the Participant can
change his designated Beneficiary without any requirement of further consent by
the spouse, (3) acknowledge the effect of the spouse's consent to the
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Participant's Beneficiary designation, (4) be filed with the Administrative
Committee, (5) be signed by the spouse, and (6) bear the signature of either a
member of the Administrative Committee or a notary public, as witness to the
spouse's signature. Notwithstanding the preceding sentence, a Participant's
designation of someone other than the Participant's spouse as Beneficiary shall
be effective if it is established to the satisfaction of the Administrative
Committee that the consent required in the preceding sentence may not be
obtained because (i) there is no spouse, (ii) the spouse cannot be located or
(iii) there exist other circumstances (such as are prescribed in regulations or
other authority issued under Sections 401(a)(11) and 417(a)(2) of the Code)
which obviate the necessity of obtaining the consent described in the preceding
sentence.
Any consent by a Participant's spouse (or establishment that
the consent of a Participant's spouse may not be obtained) shall be effective
only with respect to such spouse. Any designation of a Beneficiary (other than
the Participant's spouse) which otherwise meets the above requirements shall
become inoperative in the event that (i) the Participant subsequently marries
(or subsequently is deemed to be married under applicable local law), (ii) any
missing spouse is located or (iii) any other circumstances which earlier
obviated the necessity of obtaining the consent of the Participant's spouse no
longer exist.
Whenever any Trustee is authorized by the terms of this Plan
or by a designation of Beneficiary to pay funds to a minor or an incompetent,
the Trustee shall be authorized to pay such funds to a parent of such minor, to
a guardian of such minor or incompetent, or directly to such minor, or to apply
such funds for the benefit of such minor or incompetent in such manner as the
Administrative Committee may in writing direct.
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ARTICLE VII
ADMINISTRATIVE COMMITTEE
7.1 APPOINTMENT, TERM OF SERVICE AND REMOVAL: The Board of
Directors of the Sponsor shall appoint an Administrative Committee of three or
more persons, the members of which shall serve until their resignation, death or
removal. Any member of the Administrative Committee may resign at any time by
mailing written notice of such resignation to the Board of Directors of the
Sponsor. Any member of the Administrative Committee may be removed by the Board
of Directors of the Sponsor, with or without cause. Vacancies in the
Administrative Committee arising by resignation, death, removal or otherwise
shall be filled by such persons as may be appointed by the Board of Directors of
the Sponsor.
7.2 POWERS: The Administrative Committee shall be a fiduciary
and shall, in that capacity, have the exclusive responsibility for the general
administration of the Plan and Trust, according to the terms and provisions of
this Agreement, and shall have all powers necessary to accomplish such purposes,
including, but not by way of limitation, the right, power, and authority:
(a) To make rules and regulations for the administration of
the Plan and Trust which are not inconsistent with the terms and
provisions hereof, provided such rules and regulations are evidenced in
writing;
(b) To construe all terms, provisions, conditions, and
limitations of the Plan and its related Trust; and its construction
thereof made in good faith and without discrimination in favor of or
against any Participant shall be final and conclusive on all parties at
interest;
(c) To correct any defect, supply any omission, or reconcile
any inconsistency which may appear in the Plan or Trust in such manner
and to such extent as it shall deem expedient to carry the Plan and its
related Trust into effect for the greatest benefit of all parties at
interest, and its judgment in such matters shall be final and
conclusive as to all parties at interest;
(d) To select, employ, and compensate from time to time such
consultants, actuaries, accountants, attorneys, and other agents and
employees as the Administrative Committee may deem necessary or
advisable for the proper and efficient administration of the Plan and
its related Trust; any agent, firm or employee so selected by the
Administrative Committee may be a disqualified person but only if the
requirements of Section 4975(d) of the Code have been met;
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(e) To determine all questions relating to the eligibility of
Employees to become Participants, and to determine the period of Active
Service and the amount of Plan Compensation upon which the benefits of
each Participant shall be calculated;
(f) To determine all controversies relating to the
administration of the Plan and its related Trust, including but not
limited to: (1) differences of opinion arising between an Employer and
the Trustee or a Participant, or any combination thereof; and (2) any
questions it deems advisable to determine in order to promote the
uniform and non-discriminatory administration of the Plan and its
related Trust for the benefit of all parties at interest;
(g) To direct or instruct or to appoint an investment manager
or managers which would have to direct and instruct the Trustee in all
matters relating to the preservation, investment, reinvestment,
management and disposition of the Trust Fund.
(h) To direct and instruct the Trustee in all matters relating
to the payment of Plan benefits and to determine a Participant's
entitlement to a benefit should he appeal a denial of his claim or any
portion thereof for a benefit, and
(i) To delegate by written notice such of the clerical and
recordation duties of the Administrative Committee under the Plan as
the Administrative Committee may deem necessary or advisable for the
proper and efficient administration of the Plan or its related Trust.
7.3 ORGANIZATION: The Administrative Committee shall select
from among its members a chairman, who shall preside at all of its meetings, and
shall select a secretary, without regard as to whether that person is a member
of the Administrative Committee, who shall keep all records, documents and data
pertaining to its supervision of the administration of the Plan and its related
Trust.
7.4 QUORUM AND MAJORITY ACTION: A majority of the members of
the Administrative Committee constitutes a quorum for the transaction of
business, and the vote of a majority of the members present at any meeting will
decide any question brought before that meeting. In addition, the Administrative
Committee may decide any question by a vote, taken without a meeting, of a
majority of its members.
7.5 SIGNATURES: The chairman, the secretary and any one or
more of the members of the Administrative Committee to which the Administrative
Committee has delegated the power, shall each, severally, have the power to
execute any document on behalf of the Administrative Committee, and to execute
any certificate or other written evidence of the action of the Administrative
Committee. The Trustee, after being notified of any such delegation of power in
writing, shall thereafter accept and
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<PAGE> 53
may rely upon any document executed by such member or members as representing
the action of the Administrative Committee until the Administrative Committee
files with the Trustee a written revocation of that delegation of power.
7.6 DISQUALIFICATION OF COMMITTEE MEMBER: A member of the
Administrative Committee who is also a Participant of this Plan shall not vote
or act upon any matter relating solely to himself.
7.7 DISCLOSURE TO PARTICIPANTS: The Administrative Committee
shall make available to each Participant and Beneficiary for his examination
such records, documents and other data as are required under the Employee
Retirement Income Security Act of 1974, but only at reasonable times during
business hours. No Participant or Beneficiary shall have the right to examine
any data or records reflecting the compensation paid to any other Participant or
Beneficiary, and the Administrative Committee shall not be required to make any
other data or records available other than those required by the Employee
Retirement Income Security Act of 1974.
7.8. STANDARD OF PERFORMANCE: The Administrative Committee and
each of its members, shall use the care, skill, prudence and diligence under the
circumstances then prevailing that a prudent man acting in a like capacity and
familiar with such matters would use in conducting his business as the
administrator of the Plan; and shall otherwise act in accordance with the
provisions of this Plan and the Employee Retirement Income Security Act of 1974.
7.9 LIABILITY OF COMMITTEE AND LIABILITY INSURANCE: No member
of the Administrative Committee shall be liable for any act or omission of any
other member of the Administrative Committee, the Trustee, or any agent
appointed by the Administrative Committee except to the extent required by the
terms of the Employee Retirement Income Security Act of 1974, and any other
state or federal law applicable, which liability cannot be waived. No member of
the Administrative Committee shall be liable for any act or omission on his own
part except to the extent required by the terms of the Employee Retirement
Income Security Act of 1974, and any other state or federal law applicable,
which liability cannot be waived.
Further, it is specifically provided that the Trustee may
purchase out of the Trust Funds hereof insurance for the members of the
Administrative Committee and any other fiduciaries appointed by the
Administrative Committee, and for the Trust Fund itself to cover liability or
losses occurring by reason of the act or omission of any one or more of the
members of the Administrative Committee or any other fiduciary appointed by them
under this Plan, provided such insurance permits recourse by the insurer against
the members of the Administrative Committee or the other fiduciaries concerned
in the case of a breach of a fiduciary obligation by one or more members of the
Administration Committee or other fiduciary covered thereby.
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<PAGE> 54
7.10 EXEMPTION FROM BOND: No member of the Administrative
Committee shall be required to give bond for the performance of his duties
hereunder unless required by law, which cannot be waived.
7.11 COMPENSATION: The Administrative Committee shall serve
without compensation for their services, but shall be reimbursed by the
Employers for all expenses properly and actually incurred in the performance of
their duties under the Plan unless an Employer elects to have such expenses paid
out of the Trust Fund. Each Employer shall bear that portion of such expense as
the amount in the Account of Participants employed by it bears to the amount in
the Accounts of all Participants.
7.12 PERSONS SERVING IN DUAL FIDUCIARY ROLES: Any person,
group of persons, corporations, firm or other entity, may serve in more than one
fiduciary capacity with respect to this Plan, including the ability to serve
both as a Trustee and as a member of the Administrative Committee.
7.13 ADMINISTRATOR: For all purposes of the Employee
Retirement Income Security Act of 1974, the Administrator of the Plan shall be
the Sponsor. The Administrator of the Plan shall have final responsibility for
compliance with all reporting and disclosure requirements imposed with respect
to the Plan under any federal or state law, or any regulations promulgated
thereunder.
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ARTICLE VIII
TOP-HEAVY PROVISIONS
8.1 DEFINITIONS: As used in this Article VIII, each of the
following terms shall have the meanings for that term set forth on this Section
8.1:
(a) DETERMINATION DATE means, for any Plan Year subsequent to
the first Plan Year, the last day of the preceding Plan Year. For the
first Plan Year of the Plan, the last day of that year.
(b) DETERMINATION PERIOD means the Plan Year containing the
Determination Date and the four preceding Plan Years.
(c) KEY EMPLOYEE means any Employee or former Employee (and
the beneficiaries of such Employee) who at any time during the
Determination Period was:
(i) an officer of an Employer having an annual Plan
Compensation greater than 50% of the dollar limitation under
Code Section 415(b)(1)(A) for any Plan Year within the
Determination Period,
(ii) an owner (or an individual considered an owner
under Code Section 318) of one of the ten largest interests in
an Employer, if such individual's Plan Compensation exceeds
100% of the dollar limitation under Code Section 415(c)(1)(A);
(iii) a "5-percent owner" (as defined in Code Section
416(i)) of an Employer; or
(iv) a "1-percent owner" (as defined in Code Section
416(i)) of an Employer who has an annual Plan Compensation of
more than $150,000.
The determination of who is a key employee will be made in accordance
with Code Section 416(i)(l) and the regulations thereunder.
(d) NON-KEY EMPLOYEE means an Employee who is not a Key
Employee.
(e) PERMISSIVE AGGREGATION GROUP means the Required
Aggregation Group of plans plus any other plan or plans of the Company
or an Affiliate which, when considered as a group with the Required
Aggregation Group, would continue to satisfy the requirements of Code
Section 401(a)(4) or 410.
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(f) REQUIRED AGGREGATION GROUP means:
(i) each Qualified Plan of an Employer in which at
least one Key Employee participates or participated at any
time during the determination period (regardless of whether
the plan has terminated); and
(ii) any other Qualified Plan of an Employer
(regardless of whether the plan has terminated) which enables
a plan described in (i) to meet the requirements of Code
Section 401(a)(4) and 410.
(g) SUPER TOP-HEAVY PLAN means the Plan, if the Top-Heavy
Ratio, as determined under the definition of Top-Heavy Plan, exceeds 90
percent.
(h) TOP-HEAVY PLAN means the Plan, if any of the following
conditions exists:
(i) If the Top-Heavy Ratio for the Plan exceeds sixty
percent and the Plan is not part of any Required Aggregation
Group or Permissive Aggregation Group of plans.
(ii) If the Plan is a part of a Required Aggregation
Group of plans but not part of a Permissive Aggregation Group
and the Top-Heavy Ratio for the Group of plans exceeds sixty
percent.
(iii) If the Plan is a part of a Required Aggregation
Group and part of a Permissive Aggregation Group of plans and
the Top-Heavy Ratio for the Permissive Aggregation Group
exceeds sixty percent.
(i) TOP-HEAVY RATIO means:
(i) If the Company or an Affiliate maintains one or
more Defined Contribution Plans (including any "simplified
employee pension" within the meaning of Code Section 408(k))
and the Company or an Affiliate has never maintained any
Defined Benefit Plan which during the five-year period ending
on the Determination Date has or has had accrued benefits, the
Top-Heavy Ratio for this Plan alone or for the Required or
Permissive Aggregation Group as appropriate is a fraction, the
numerator of which is the sum of the Account Balances of all
Key Employees as of the Determination Date (including any part
of any Account Balance distributed in the five-year period
ending on the Determination Date), and the denominator of
which is the sum of all Account Balances (including any part
of any Account Balance distributed in the five-year period
ending on the Determination Date) both computed in accordance
with Code Section 416. Both the numerator and
VIII-2
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denominator of the Top-Heavy Ratio are increased to reflect
any contribution not actually made as of the Determination
Date, but which is required to be taken into account on that
date under Code Section 416. For purposes of this Section, a
Participant's Rollover Contribution Account will not be
treated as part of his Account.
(ii) If the Employer maintains one or more defined
contribution plans (including any Simplified Employee Pension
Plan) and the Employer maintains or has maintained one or more
defined benefit plans which during the 5-year period ending on
the Determination Date(s) has or has had any accrued benefits,
the Top-Heavy Ratio for any Required or Permissive Aggregation
Group as appropriate is a fraction, the numerator of which is
the sum of Account balances under the aggregated defined
contribution plan or plans for all Key Employees, determined
in accordance with (i) above, and the present value of accrued
benefits under the aggregated defined benefit plan or plans
for all key employees as of the determination date(s), and the
denominator of which is the sum of the account balances under
the aggregated defined contribution plan or plans for all
participants determined in accordance with (i) above, and the
present value of accrued benefits under the defined benefit
plan or plans for all participants as of the determination
date(s), all determined in accordance with Code Section 416
and the regulations thereunder. The accrued benefits under a
defined benefit plan in both the numerator and denominator of
the Top-Heavy Ratio are increased for any distribution of an
accrued benefit made in the five-year period ending on the
determination date.
(iii) For purposes of (i) and (ii) above, the value
of Account Balances will be determined as of the most recent
Valuation Date that falls within or ends with the twelve-month
period ending on the Determination Date, except as provided in
Code Section 416 for the first and second Plan Years of a
Defined Benefit Plan. The Account Balances of a Participant
(1) who is not a Key Employee but who was a Key Employee in a
prior year, or (2) who has not been credited with at least one
Hour of Service with the Employer at any time during the
five-year period ending on the Determination Date, will be
disregarded. The calculation of the Top-Heavy Ratio, and the
extent to which distributions, rollovers, and transfers are
taken into account will be made in accordance with Code
Section 416. When aggregating plans the value of Account
Balances will be calculated with reference to the
Determination Dates that fall within the same calendar year.
(j) VALUATION DATE means the date as of which Account
Balances, or accrued benefits, are valued for purposes of calculating
the Top-Heavy Ratio.
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<PAGE> 58
8.2 CONSEQUENCES IF PLAN IS TOP-HEAVY: For any Plan Year that
the Plan is a Top-Heavy Plan the following provisions will be applicable for
that Plan Year:
(a) Contributions and forfeitures allocated to the Employer
Contributions Account of any Participant who is not a Key Employee,
shall not be less than the smaller of:
(i) three percent of such Participant's Annual
Compensation; or
(ii) the largest percentage of contributions and
forfeitures, as a percentage of the Key Employee's Plan
Compensation, allocated on behalf of any Key Employee for that
year. The minimum allocation is determined without regard to
any Social Security contribution.
(b) Neither Elective Deferrals nor Matching Contributions for
Non-Key Employees may be taken into account for the purpose of
satisfying the minimum top-heavy contribution requirements. Elective
Deferrals made on behalf of Key Employees are included in determining
the minimum necessary Employer contribution to be made on behalf of
Non-Key Employees.
(c) The provision in (a) above shall not apply to any
Participant who was not employed by the Company or an Affiliate on the
last day of the Plan Year.
(d) The minimum allocation required (to the extent required to
be nonforfeitable under Code Section 416(b) may not be forfeited under
Code Section 411(a)(3)(B) or 411(a)(3)(D).
(e) If the Plan is a Top-Heavy Plan, the Participant's Defined
Benefit Fraction and Defined Contribution Fraction shall be determined
by substituting "1.0" for "1.25" (or their percentage equivalents) in
Sections 3.8.1(b) and 3.8.1(d) unless the Plan meets the requirements
of Code Section 416(h)(2)(B) and the Employer increases the minimum
benefit provided in Section 8.4(a) by one percent.
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ARTICLE IX
PLAN AMENDMENT OR TERMINATION
9.1 RIGHT TO AMEND AND LIMITATIONS THEREON: The Sponsor shall
have the sole right to amend the Plan.
Any amendment shall be made by an instrument in writing
executed by the Sponsor setting forth the nature of the amendment and its
effective date, and shall be supported by a certified copy of the resolution or
direction which authorized it. No amendment shall:
(a) Have the effect of vesting in any Employer any interest in
the trust assets;
(b) Cause or permit any trust assets to be diverted to any
purpose other than the exclusive benefit of the present or future
Participants and their Beneficiaries;
(c) Increase substantially the duties of liabilities of the
Trustee without its written consent;
(d) Decrease the accrued benefit of any Participant or
eliminate an optional form of payment in violation of Section 411(d)(6)
of the Code; or
(e) Change the vesting schedule to one which would result in
the nonforfeitable percentage of the accrued benefit derived from
Employer contributions (determined as of the later of the date of the
adoption of the amendment or of the effective date of the amendment) of
any Participant being less than such nonforfeitable percentage computed
under the Plan without regard to such amendment. If the Plan's vesting
schedule is amended, or if the Plan is amended in any way that directly
or indirectly affects the computation of the Participant's
nonforfeitable percentage or if the Plan is deemed amended by an
automatic change to or from a top-heavy vesting schedule, each
Participant with three (3) or more years of service may elect, within a
reasonable period of time after the adoption of the amendment, to have
his nonforfeitable percentage computed under the Plan without regard to
the amendment. The period during which the election may be made shall
begin no later than the date upon which the amendment is adopted or
deemed to be made and shall end no later than the latest of the
following dates: (l) the date which is 60 days after the day the
amendment is adopted or deemed to be made; (2) the date which is 60
days after the day the amendment becomes effective; or (3) the date
which is 60 days after the day the Participant is issued written notice
of the amendment by the Sponsor.
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<PAGE> 60
In the event of an amendment, each other Employer will be deemed to have
consented to and adopted the amendment unless an Employer notifies the Sponsor
and the Administrative Committee to the contrary in writing within thirty (30)
days after receipt of a copy of the amendment, in which case the rejection will
constitute a withdrawal from this Plan and its related Trusts by that Employer.
9.2 MANDATORY AMENDMENTS: The Contributions of each Employer
to this Plan are intended to be:
(a) Deductible under the applicable provisions of the Code;
(b) Exempt from the Federal Social Security Act;
(c) Exempt from withholding under the Code; and
(d) Excludible from any Employee's regular rate of pay, as
that term is defined under the Fair Labor Standards Act of 1938, as
amended.
The Sponsor shall make such amendments to this Plan as may be
necessary to carry out this intention, and all such amendments may be made
retroactively.
9.3 WITHDRAWAL OF EMPLOYER: An Employer may withdraw from this
Plan either by rejecting an amendment to this Plan or the Trust if the Sponsor
does not acquiesce in the rejection or by giving written notice of its intent to
withdraw to the Sponsor, the Administrative Committee and the Trustee. The
Administrative Committee will then determine, within sixty (60) days following
the receipt of the rejection or notice, the portion or each of the Trust Funds
that is attributable to the Participants employed by the withdrawing Employer
and shall forward a copy of the determination to the Trustee. Upon receipt of
the determination, the Trustee will immediately segregate those assets
attributable to the Participants employed by the withdrawing Employer and will
transfer those assets to the successor Trustee or Trustees when it receives a
designation of such successor from the withdrawing Employer.
The withdrawal from this Plan will not terminate the Plan with
respect to the withdrawing Employer. Instead, the withdrawing Employer shall, as
soon as practical, either appoint a successor Trustee or Trustees and reaffirm
this Plan as a new and separate plan intended to qualify under Section 401(a) of
the Code or establish another profit sharing plan intended to qualify under
Section 401(a) of the Code.
The determination of the Administrative Committee, in its sole
discretion, of the portion of the Trust Fund that is attributable to the
Participants employed by
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the withdrawing Employer will be final and binding upon all parties at interest;
and, the Trustee's transfer of those assets to the designated successor Trustee
shall relieve the former Trustee of any further obligation, liability or duty to
the withdrawing Employer, the Participants employed by that Employer and their
Beneficiaries, and the successor Trustee or Trustees.
9.4 VOLUNTARY OR INVOLUNTARY TERMINATION: Any Employer may
terminate this Plan with respect to itself by executing and delivering to the
Trustee a notice of termination which specifies the date on which the Plan shall
terminate. Likewise, this Plan will automatically terminate with respect to any
Employer upon the adjudication of that Employer as a bankrupt, the general
assignment by that Employer to or for the benefit of its creditors, the complete
discontinuance of contributions by the Employer to the Plan or the dissolution
of that Employer without a successor. Upon the termination of this Plan with
respect to any Employer, each affected Participant will have a fully
nonforfeitable interest in his Accounts.
The termination of this Plan as to any one or more Employers
will not constitute a termination of this plan with respect to the other
remaining Employers.
9.5 CONTINUANCE PERMITTED UPON SALE OR TRANSFER OF ASSETS:
This Plan will not automatically terminate with respect to an Employer in the
event it consolidates, merger, and is not the surviving corporation, sells
substantially all of its assets, is a party to a reorganization and its
Employees and substantially all of its assets are transferred to another entity,
liquidates or dissolves if there is a successor organization. Instead, the
resulting successor person, firm or corporation may continue this Plan by
executing a direction, entering into a contractual commitment or adopting a
resolution, as the case may be, providing for the continuance of the Plan
simultaneous with or within one hundred twenty (120) days after such
consolidation, merger, sale, reorganization, liquidation or dissolution. If,
after the one hundred twenty (120) day period the successor has not adopted this
Plan, this Plan will then automatically terminate with respect to the Employer
on the one hundred twenty-first (121st) day and the Trust will be distributed
exclusively to the Participants or their Beneficiaries as soon as possible in
one of the ways permitted under this Plan as if they had all retired on the day
the Plan terminated. Then, the Trust will terminate with respect to the
Employer.
9.6 REQUIREMENT ON MERGER, TRANSFER, ETC.: Notwithstanding any
other provision hereof, the Plan will not be merged or consolidated with, nor
shall any assets or liabilities of the Plan be transferred to, and other plan
unless each Participant would (if the plan 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 the Plan had then terminated).
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ARTICLE X
ADOPTION OF PLAN BY OTHER EMPLOYERS
10.1 ADOPTION PROCEDURE: Any business organization may, with
the approval of the Sponsor, adopt this Plan for all or any classification of
its Employees, as permitted by Section 401(a) of the Code, by depositing with
the Trustee:
(a) A duly executed adoption instrument setting forth its
agreement to be bound as a signatory Employer by all the terms,
provisions, conditions and limitations of this Plan except those, if
any, specifically set forth in the adoption agreement;
(b) All information required by the Administrative Committee
and either or both of the Trustees with reference to Employees or
Participants; and
(c) The written consent of the Sponsor to the adoption of this
Plan.
Any adoption may be made retroactive to the beginning of a Plan Year by
complying with the foregoing conditions on or before the last day of that Plan
Year.
10.2 NO JOINT VENTURE IMPLIED: The adoption instrument
executed by a signatory Employer shall become, as to it and its Employees, a
part of this Plan. However, neither the adoption of this Plan and its related
Trusts by a signatory Employer, nor any act performed by it in relation to this
Plan or either or both of the related Trusts shall ever create a joint venture
or partnership relation between it and any other signatory Employer.
Although the Accounts of Participants employed by the
Employers which adopt this Plan shall be commingled for purposes of investment
thereof, unless the Administrative Committee and the Trustee are otherwise
directed by the Board of Directors of Quanex Corporation, amounts held in the
Trust Fund allocable to a particular Employer shall on an ongoing basis be
available to pay benefits to Participants employed by that Employer and to pay
benefits to Participants employed by any other Employer which is a member of the
same controlled and affiliated service groups required to be aggregated with the
first such Employer, but not otherwise. In addition, unless the Administrative
Committee and Trustee are otherwise directed by the Board of Directors of Quanex
Corporation, the Trustee shall maintain completely separate accounts and records
for the Employer and each Affiliated Employer (and Employees thereof who are
Participants) as distinguished from maintaining the Plan and Trust on a
consolidated basis for the Employer and all such Employers.
X-1
<PAGE> 63
ARTICLE XI
INVESTMENT ELECTION
11.1 INVESTMENT FUNDS ESTABLISHED: It is contemplated that the
assets of this Plan shall be invested in such categories of assets as may be
determined from time to time by the Administrative Committee and announced and
made available on an equal basis to all Participants. When the Trustee receives
funds to be invested or determine that assets from those funds, if applicable,
should be sold and the proceeds held for a period of time pending reinvestment
or other purpose, such funds may be held in cash or invested in short-term
investments such as certificates of deposit, U.S. Treasury bills, savings
accounts, commercial paper, demand notes, money market funds, any common, pooled
or collective trust funds which the Trustee or any other corporation may now
have or in the future may adopt for such short-term investments and other
similar assets which may be offered by the federal government, national or state
banks (whether or not serving as Trustee hereunder), or any savings and loan
association, and as may be determined by the Trustee in its sole discretion,
which assets will remain a part of the fund to which they would otherwise
relate.
11.2 ELECTION PROCEDURES ESTABLISHED: The Administrative
Committee shall, from time to time, establish rules to be applied in a
nondiscriminatory manner as to all matters relating to the administration of the
investment of funds including, but not limited to, the following:
(a) The percentage of a Participant's Account as it exists,
from time to time, that may be transferred from one fund to another and
the limitations based on amounts, percentages, time or frequency, if
any, on such transfers;
(b) The percentage of a Participant's future contributions,
when allocated to his Account, that may be invested in any one or more
funds and the limitations based upon amounts, percentages, time or
frequency, if any, on such investments in various funds;
(c) The procedures for making investment elections and
changing existing investment elections;
(d) The period of notice required for making investment
elections and changing existing investment elections;
(e) The handling of income and change of value in funds when
funds are in the process of being transferred between investment funds
and to investment funds; and
XI-1
<PAGE> 64
(f) All other matters necessary to permit the orderly
operation of investment funds within the Plan.
When the Administrative Committee changes any previous applicable rule, it shall
state the effective time of the change and the procedures for complying with any
such change. Any change shall remain effective until such date as stated in the
change, or if none is stated, then until revoked or changed in a like manner.
XI-2
<PAGE> 65
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1 EXCLUSIVE BENEFIT OF PARTICIPANTS: The Trust Fund shall
be held for the benefit of all persons who shall be entitled to receive payments
under the Plan. Subject to Section 3.8, it shall be prohibited at any time for
any part of the Trust Fund (other than such part as is required to pay expenses)
to be used for, or diverted to, purposes other than for the exclusive benefit of
Participants or their Beneficiaries.
12.2 PLAN NOT A CONTRACT OF EMPLOYMENT: The Plan is not a
contract of Employment, and the terms of Employment of any Employee shall not be
affected in any way by the Plan or related instruments except as specifically
provided therein.
12.3 ACTION BY EMPLOYER: Any action by an Employer which is a
corporation shall be taken by the Board of Directors of the corporation or any
person or persons duly empowered to exercise the powers of the corporation with
respect to the Plan.
12.4 SOURCE OF BENEFITS: Benefits under the Plan shall be paid
or provided for solely from the Trust, and neither the Employer, any
Participating Affiliate, the Administrator, the Trustee nor any investment
manager or insurance company shall have any liability under the Plan therefor.
12.5 BENEFITS NOT ASSIGNED: Benefits provided under the Plan
may not be assigned or alienated, either voluntarily or involuntarily. The
preceding sentence shall also apply to the creation, assignment or recognition
of a right to any benefit payable with respect to a Participant pursuant to a
"domestic relations order" (as defined in Code Section 414(p)) unless such order
is determined by the Administrator to be a "qualified domestic relations order"
(as defined in Code Section 414(p)) or, in the case of a "domestic relations
order" entered before January 1, 1985, if either payment of benefits pursuant to
the order has commenced as of that date or the Administrator decides to treat
such order as a "qualified domestic relations order" within the meaning of Code
Section 414(p)) even if it does not otherwise qualify as such.
12.6 DOMESTIC RELATIONS ORDERS: Any other provision of the
Plan to the contrary notwithstanding, the Administrative Committee shall have
all powers necessary (with respect to the Plan for the proper operation of Code
Section 414(p)) with respect to "qualified domestic relations orders" (or
"domestic relations orders" treated as such) referred to in Section 12.5,
including, but not limited to, the power to establish all necessary or
appropriate procedures, to authorize the establishment of new accounts with such
assets and subject to such investment control by the Administrative Committee as
the Administrative Committee may deem appropriate,
XII-1
<PAGE> 66
and the Administrative Committee may decide upon and direct appropriate
distributions therefrom. The Administrative Committee may permit a distribution
to be made pursuant to a domestic relations order as soon as practicable after
it determines that the order is a qualified domestic relations order.
12.7 CLAIMS PROCEDURE: In the event that a claim by a
Participant, Beneficiary , or other person for benefits under the Plan is
denied, the Administrative Committee will so notify the claimant, giving the
reasons for denial. This notice will also refer to the specific provisions of
the Plan on which the denial was based, will specify whether any additional
information is needed from the Participant or Beneficiary and will explain the
review procedure.
Within 60 days after receiving the denial, the claimant may
submit directly or through a duly authorized representative, a written request
for reconsideration of the application to the Administrator. Documents or
records relied on by the claimant should be filed with the request. The person
making the request may review relevant documents and submit issues and
additional comments in writing.
The Administrative Committee will review the claim within 60
days (or 120 days if a hearing is held because special circumstances exist) and
provide a written response to the appeal. The response will explain the reasons
for the decision and will refer to the Plan provisions on which the decision is
based. The decision of the Administrative Committee is the final one under this
claims procedure.
12.8 BENEFITS PAYABLE TO MINORS, INCOMPETENTS AND OTHERS: In
the event any benefit is payable to a minor or an incompetent or to a person
otherwise under a legal disability, or who, is by reason of advanced age,
illness or other physical or mental incapacity incapable of handling and
disposing of his or her property, payment shall be made to such person's legal
representative. The receipt by any such person to whom any such payment on
behalf of any Participant or Beneficiary is made shall be a discharge therefor.
12.9 TRANSFERS FROM OTHER PLANS: The plan will not receive,
directly, a transfer of assets from and the Plan will not be merged with any
plan that is a Defined Benefit Plan or a Defined Contribution Plan that is
subject to the minimum funding standards of Section 412 of the Code, or any
other plan that is required to provide for automatic survivor benefits.
12.10 CONTROLLING LAW: The Plan is intended to qualify under
Code Section 401(a), et. seq. and to comply with ERISA, and its terms shall be
interpreted accordingly. Otherwise, to the extent not preempted by ERISA, the
laws of the State of Texas shall control the interpretation and performance of
the terms of the Plan and the laws of the state of incorporation of the Trustee
(if such Trustee is incorporated) or domicile of the Trustee, if not
incorporated, shall control the interpretation and performance of the
responsibilities of the Trustee.
XII-2
<PAGE> 67
12.11 SINGULAR AND PLURAL AND SECTION REFERENCES: As used in
the Plan, the singular includes the plural, and the plural includes the
singular, unless qualified by the context. Titles of Articles and Sections of
the Plan are for convenience of reference only and are to be disregarded in
applying the provisions of the Plan. Any reference in this Prototype Plan to an
Article or Section is to the Article or Section so specified of the Prototype
Plan, unless otherwise indicated.
12.12 DEDUCTIBILITY OF CONTRIBUTIONS: The contributions made
by an Employer to this Plan are conditioned on their deductibility under Code
Section 404.
IN WITNESS WHEREOF, Quanex Corporation has caused this Agreement to be
executed this day of , 1996, in multiple counterparts, each of which shall be
deemed to be an original, to be effective the 1st day of January, 1995, except
for those provisions which have an earlier effective date provided by law, or as
otherwise provided under applicable provisions of this Plan.
QUANEX CORPORATION
By
--------------------------------------
-----------------------------------------
Title
XII-3
<PAGE> 1
EXHIBIT 4.7
SIXTH AMENDMENT TO
QUANEX CORPORATION EMPLOYEE SAVINGS PLAN
THIS AGREEMENT by Quanex Corporation (the "Sponsor"),
W I T N E S S E T H :
WHEREAS, on January 30, 1991, the Sponsor executed the plan
agreement known as "Quanex Corporation Employee Savings Plan" (the "Plan"); and
WHEREAS, the Sponsor retained the right in Section 9.1 of the
Plan to amend the Plan from time to time on behalf of itself and all other
employers that have adopted the Plan; and
WHEREAS, the Board of Directors of the Sponsor has approved
resolutions to amend the Plan;
NOW, THEREFORE, the Sponsor agrees that the Plan is amended,
effective as of October 1, 1995, as follows:
(1) Section 1.16 of the Plan is hereby completely amended and restated
to provide as follows:
1.16 Employee: Except as otherwise specified in this Section,
Employee means all common law employees employed by the Employer who
are not covered by a collective bargaining agreement. Employees of the
Sponsor who are working at one of the Nichols-Homeshield divisions and
directors not regularly employed by the Employer will not be
considered Employees. All leased employees (as defined in Section
414(n) of the Code) will not be considered Employees unless the Plan's
qualified status is dependent upon their coverage.
<PAGE> 2
IN WITNESS WHEREOF, the Sponsor has caused this Agreement to
be executed this ______ day of ______________, 1995.
QUANEX CORPORATION
By
---------------------------
-2-
<PAGE> 1
EXHIBIT 4.8
MASTER TRUST AGREEMENT
BETWEEN
------------------------------------------------------------------------------
QUANEX CORPORATION
AND
FIDELITY MANAGEMENT TRUST COMPANY
------------------------------------------------------------------------------
QUANEX EMPLOYEE SAVINGS
MASTER TRUST
DATED AS OF FEBRUARY 1, 1999
<PAGE> 2
TRUST AGREEMENT, dated as of the first day of February 1999, between
QUANEX CORPORATION a Delaware corporation, having an office at 1900 West Loop
South, Houston, Texas 77027 (the "Sponsor"), and FIDELITY MANAGEMENT TRUST
COMPANY, a Massachusetts trust company, having an office at 82 Devonshire
Street, Boston, Massachusetts 02109 (the "Trustee").
WITNESSETH:
WHEREAS, the Sponsor or one of its subsidiaries is the sponsor of the
Quanex Corporation Employee Savings Plan, the Quanex Corporation Hourly
Bargaining Unit Employees Savings Plan, the Piper Impact 401(k) Plan, the
Nichols-Homeshield 401(k) Savings Plan and the Nichols-Homeshield 401(k) Savings
Plan for Hourly Davenport Employees (collectively and individually, the "Plan");
and
WHEREAS, certain affiliates and subsidiaries of the Sponsor maintain,
or may in the future maintain, qualified defined contribution plans for the
benefit of their eligible employees; and
WHEREAS, the Sponsor desires to establish a single trust to hold all of
the assets of the Plan and or such other tax-qualified defined contribution
plans maintained by the Sponsor, or any of its subsidiaries or affiliates, as
are designated by the Sponsor as being eligible to participate therein; and
WHEREAS, the Trustee shall maintain a separate account reflecting the
equitable share of each Plan in the Trust and in all investments, receipts,
disbursements and other transactions hereunder, and shall report the value of
such equitable share at such times as may be mutually agreed upon by the Trustee
and the Sponsor. Such equitable share shall be used solely for the payments of
benefits, expenses and other charges properly allocable to each such Plan and
shall not be used for the payment of benefits, expenses or other charges
properly allocable to any other Plan; and
WHEREAS, the Trustee is willing to hold and invest the aforesaid plan
assets in trust pursuant to the provisions of this Trust Agreement, which trust
shall constitute a continuation, by means of an amendment and restatement, of
each of the prior trusts from which plan assets are transferred to the Trustee;
and
<PAGE> 3
WHEREAS, the Trustee is willing to hold and invest the aforesaid plan
assets in trust among several investment options selected by the Named
Fiduciary; and
WHEREAS, the Trustee is willing to perform recordkeeping and
administrative services for the Plan if the services are purely ministerial in
nature and are provided within a framework of plan provisions, guidelines and
interpretations conveyed in writing to the Trustee by the Administrator.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and agreements set forth below, the Sponsor and the Trustee
agree as follows:
SECTION 1. DEFINITIONS. The following terms as used in this Trust Agreement have
the meaning indicated unless the context clearly requires otherwise:
(a) "Administrator" shall mean, with respect to the Plan, the person or
entity which is the "administrator" of such Plan within the meaning of
section 3(16)(A) of ERISA.
(b) "Agreement" shall mean this Trust Agreement, as the same may be amended
and in effect from time to time.
(c) "Code" shall mean the Internal Revenue Code of 1986, as it has been or
may be amended from time to time.
(d) "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as it has been or may be amended from time to time.
(e) "Existing Investment Contracts" shall mean shall mean each annuity
contract heretofore entered into by the Sponsor, any other Employer or
any predecessor trustee and specifically identified on Schedule "G"
attached hereto.
(f) "Fidelity Mutual Fund" shall mean any investment company advised by
Fidelity Management & Research Company or any of its affiliates.
(g) "Mutual Fund" shall refer both to Fidelity Mutual Funds and Non-Fidelity
Mutual Funds.
(h) "Named Fiduciary" shall mean, with respect to the application of any
provision of this Agreement to any Plan, the person or entity which is
the relevant fiduciary under such Plan with respect to such matter
(within the meaning of section 402(a) of the Employee Retirement Income
Security Act of 1974, as amended); and
(i) "Non-Fidelity Mutual Fund" shall mean certain investment companies not
advised by Fidelity Management & Research Company or any of its
affiliates.
2
<PAGE> 4
(j) "Participant" shall mean, with respect to the Plan, any employee (or
former employee) with an account under the Plan, which has not yet been
fully distributed and/or forfeited, and shall include the designated
beneficiary(ies) with respect to the account of any deceased employee (or
deceased former employee) until such account has been fully distributed
and/or forfeited.
(k) "Plan" shall mean the Quanex Corporation Employee Savings Plan, the
Quanex Corporation Hourly Bargaining Unit Employees Savings Plan, the
Piper Impact 401(k) Plan, the Nichols-Homeshield 401(k) Savings Plan, the
Nichols-Homeshield 401(k) Savings Plan for Hourly Davenport Employees and
such other tax-qualified, defined contribution plans which are maintained
by the Sponsor or any of its subsidiaries or affiliates for the benefit
of their eligible employees as may be designated by the Sponsor in
writing to the Trustee as a Plan hereunder, such writing to be in the
form of the Plan Designation Form attached hereto as Schedule "J". Each
reference to "a Plan" or "the Plan" in this Agreement shall mean and
include the Plan or Plans to which the particular provision of this
Agreement is being applied or all Plans, as the context may require.
(l) "Reporting Date" shall mean the last day of each calendar quarter, the
date as of which the Trustee resigns or is removed pursuant to Section 9
hereof and the date as of which this Agreement terminates pursuant to
Section 11 hereof.
(m) "Sponsor" shall mean Quanex Corporation, a Delaware corporation, or any
successor to all or substantially all of its businesses which, by
agreement, operation of law or otherwise, assumes the responsibility of
the Sponsor under this Agreement.
(n) "Sponsor Stock" shall mean the Common Stock of the Sponsor, or such other
publicly-traded stock of the Sponsor, or such other publicly-traded stock
of the Sponsor's affiliates as meets the requirements of section
407(d)(5) of ERISA with respect to the Plan.
(o) "Trust" shall mean the Quanex Employee Savings Master Trust, being the
trust established by the Sponsor and the Trustee pursuant to the
provisions of this Agreement.
(p) "Trustee" shall mean Fidelity Management Trust Company, a Massachusetts
trust company and any successor to all or substantially all of its trust
business as described in Section 10(c). The term Trustee shall also
include any successor trustee appointed pursuant to Section 10 to the
extent such successor agrees to serve as Trustee under this Agreement.
SECTION 2. TRUST. The Sponsor hereby establishes the Trust with the Trustee. The
Trust shall consist of the assets of the Plan that are transferred from the
previous trusts funding to the Plan, such additional sums of money and Sponsor
Stock as shall from time to time be delivered to the Trustee under a Plan, all
investments made therewith and proceeds thereof, and all earnings and profits
thereon, less the payments that are made by the Trustee as provided herein,
without distinction between principal and income. The Trustee hereby accepts the
Trust on the terms and conditions set forth in this Agreement. In accepting this
Trust, the Trustee shall be accountable for the assets received by it, subject
to the terms and conditions of this Agreement.
3
<PAGE> 5
SECTION 3. EXCLUSIVE BENEFIT AND REVERSION OF SPONSOR CONTRIBUTIONS.
Except as provided under applicable law, no part of the Trust allocable to a
Plan may be used for, or diverted to, purposes other than the exclusive benefit
of the Participants in the Plan or their beneficiaries prior to the satisfaction
of all liabilities with respect to the Participants and their beneficiaries.
SECTION 4. DISBURSEMENTS.
(a) Directions from Administrator. The Trustee shall make disbursements
in the amounts and in the manner that the Administrator directs from time to
time in writing. The Trustee shall have no responsibility to ascertain any
direction's compliance with the terms of the Plan or of any applicable law or
the direction's effect for tax purposes or otherwise; nor shall the Trustee have
any responsibility to see to the application of any disbursement.
(b) Limitations. The Trustee shall not be required to make any
disbursement under a Plan in excess of the net realizable value of the assets of
the Trust allocable to such Plan at the time of the disbursement. The Trustee
shall not be required to make any disbursement in cash unless the Named
Fiduciary has provided a written direction as to the assets to be converted to
cash for the purpose of making the disbursement.
SECTION 5. INVESTMENT OF TRUST.
(a) Selection of Investment Options. The Trustee shall have no
responsibility for the selection of investment options under the Trust and shall
not render investment advice to any person in connection with the selection of
such options.
(b) Available Investment Options. The Named Fiduciary with respect to a
Plan shall direct the Trustee as to the investment options in which Plan
Participants may invest, subject to the following limitations. The Named
Fiduciary may determine to offer as investment options only (i) Mutual Funds,
(ii) Sponsor Stock, (iii) notes evidencing loans to Participants in accordance
with the terms of the Plan, (iv) Existing Investment Contracts, and (v)
collective investment funds maintained by the Trustee for qualified plans.
The Named Fiduciary hereby directs the Trustee to continue to hold such
Existing Investment Contracts until the Named Fiduciary directs otherwise, it
being expressly understood that such direction is given in accordance with
Section 403(a) of ERISA. The Trustee shall be considered a fiduciary with
4
<PAGE> 6
investment discretion only with respect to Plan assets that are invested in
collective investment funds maintained by the Trustee for qualified plans.
The investment options initially selected by the Named Fiduciary are
identified on Schedules "A" and "C" attached hereto. The Named Fiduciary may add
additional investment options with the consent of the Trustee and upon mutual
amendment of this Trust Agreement and the Schedules thereto to reflect such
additions.
(c) Participant Direction. Each Participant shall direct the Trustee in
which investment option(s) to invest the assets in the Participant's individual
accounts. Such directions may be made by Participants by use of the telephone
exchange system maintained for such purposes by the Trustee or its agent, in
accordance with written Telephone Exchange Guidelines attached hereto as
Schedule "G". In the event that the Trustee fails to receive a proper direction,
the assets shall be invested in the securities of the Mutual Fund set forth for
such purpose on Schedule "C", until the Trustee receives a proper direction.
(d) Mutual Funds. The Sponsor hereby acknowledges that it has received
from the Trustee a copy of the prospectus for each Fidelity Mutual Fund selected
by the Named Fiduciary as a Plan investment option. All transactions involving
Non-Fidelity Mutual Funds shall be done in accordance with the Operational
Guidelines for Non-Fidelity Mutual Funds attached hereto as Schedule "H". Trust
investments in Mutual Funds shall be subject to the following limitations:
(i) Execution of Purchases and Sales. Purchases and sales of
Mutual Funds (other than for exchanges) shall be made on the date on which the
Trustee receives from the Sponsor in good order all information and
documentation necessary to accurately effect such purchases and sales (or in the
case of a purchase, the subsequent date on which the Trustee has received a wire
transfer of funds necessary to make such purchase). Exchanges of Mutual Funds
shall be made in accordance with the Telephone Exchange Guidelines attached
hereto as Schedule "G".
(ii) Voting. At the time of mailing of notice of each annual
or special stockholders' meeting of any Mutual Fund, the Trustee shall send a
copy of the notice and all proxy solicitation materials to each Participant who
has shares of the Mutual Fund credited to the Participant's accounts, together
with a voting direction form for return to the Trustee or its designee. The
Sponsor shall have the right to direct the Trustee as to the manner in which the
Trustee is to vote the mutual fund shares held in any short-term
5
<PAGE> 7
investment fund or liquidity reserve. The Participant shall have the right to
direct the Trustee as to the manner in which the Trustee is to vote the shares
credited to the Participant's accounts (both vested and unvested). The Trustee
shall vote the shares as directed by the Participant. The Trustee shall not vote
shares for which it has received no directions from the Participant. With
respect to all rights other than the right to vote, the Trustee shall follow the
directions of the Participant and if no such directions are received, the
directions of the Named Fiduciary. The Trustee shall have no duty to solicit
directions from Participants or the Sponsor.
(e) Sponsor Stock. Trust investments in Sponsor Stock shall be made via
the Quanex Corporation Stock Fund (the "Stock Fund") which shall consist of
shares of Sponsor Stock and short-term liquid investments, including Fidelity
Institutional Cash Portfolios: Money Market Portfolio: Class I or such other
Mutual Fund or commingled money market pool as agreed to by the Sponsor and
Trustee, necessary to satisfy the Fund's cash needs for transfers and payments.
A cash target range shall be maintained in the Stock Fund. Such target range may
be changed as agreed to in writing by the Sponsor and the Trustee. The Trustee
is responsible for ensuring that the actual cash held in the Stock Fund falls
within the agreed upon range over time. Each Participant's proportional interest
in the Stock Fund shall be measured in units of participation, rather than
shares of Sponsor Stock. Such units shall represent a proportionate interest in
all of the assets of the Stock Fund, which includes shares of Sponsor Stock,
short-term investments and at times, receivables for dividends and/or Sponsor
Stock sold and payables for Sponsor Stock purchased. A Net Asset Value ("NAV")
per unit will be determined daily for each unit outstanding of the Stock Fund.
The return earned by the Stock Fund will represent a combination of the
dividends paid on the shares of Sponsor Stock held by the Stock Fund, gains or
losses realized on sales of Sponsor Stock, appreciation or depreciation in the
market price of those shares owned, and interest on the short-term investments
held by the Stock Fund. Dividends received by the Stock Fund are reinvested in
additional shares of Sponsor Stock. Investments in Sponsor Stock shall be
subject to the following limitations:
(i) Acquisition Limit. Pursuant to the Plan, the Trust may be
invested in Sponsor Stock to the extent necessary to comply with investment
directions under Section 5(c) of this Agreement.
(ii) Fiduciary Duty of Named Fiduciary. The Named Fiduciary
shall continually monitor the suitability under the fiduciary duty rules of
section 404(a)(1) of ERISA (as modified by
6
<PAGE> 8
section 404(a)(2) of ERISA) of acquiring and holding Sponsor Stock. The Trustee
shall not be liable for any loss, or by reason of any breach, which arises from
the directions of the Named Fiduciary with respect to the acquisition and
holding of Sponsor Stock, unless it is clear on their face that the actions to
be taken under those directions would be prohibited by the foregoing fiduciary
duty rules or would be contrary to the terms of the Plan or this Agreement.
(iii) Execution of Purchases and Sales. (A) Purchases and
sales of Sponsor Stock (other than for exchanges) shall be made on the open
market on the date on which the Trustee receives from the Sponsor in good order
all information and documentation necessary to accurately affect such purchases
and sales (or, in the case of purchases, the subsequent date on which the
Trustee has received a wire transfer of the funds necessary to make such
purchases). Exchanges of Sponsor Stock shall be made in accordance with the
Telephone Exchange Guidelines attached hereto as Schedule "G". Such general
rules shall not apply in the following circumstances:
(1) If the Trustee is unable to determine the number
of shares required to be purchased or sold on such day; or
(2) If the Trustee is unable to purchase or sell the
total number of shares required to be purchased or sold on such day as a result
of market conditions; or
(3) If the Trustee is prohibited by the Securities
and Exchange Commission, the New York Stock Exchange, or any other regulatory
body from purchasing or selling any or all of the shares required to be
purchased or sold on such day.
In the event of the occurrence of the circumstances described in (1), (2), or
(3) above, the Trustee shall purchase or sell such shares as soon as possible
thereafter and shall determine the price of such purchases or sales to be the
average purchase or sales price of all such shares purchased or sold,
respectively. The Trustee may follow directions from the Named Fiduciary to
deviate from the above purchase and sale procedures provided that such direction
is made in writing by the Named Fiduciary.
(B) Purchases and Sales from or to Sponsor. If directed by the
Sponsor in writing prior to the trading date, the Trustee may purchase or sell
Sponsor Stock from or to the Sponsor if the
7
<PAGE> 9
purchase or sale is for adequate consideration (within the meaning of section
3(18) of ERISA) and no commission is charged. If Sponsor contributions or
contributions made by the Sponsor on behalf of the Participants under the Plan
are to be invested in Sponsor Stock, the Sponsor may transfer Sponsor Stock in
lieu of cash to the Trust. In either case, the number of shares to be
transferred will be determined by dividing the total amount of Sponsor Stock to
be purchased or sold by the 4:00 p.m. closing price of the Sponsor Stock on the
New York Stock Exchange on the trading date.
(C) Use of an Affiliated Broker. The Sponsor hereby directs
the Trustee to use Fidelity Capital Markets and its affiliates ("Capital
Markets") to provide brokerage services in connection with any purchase or sale
of Sponsor Stock in accordance with directions from Plan Participants. Capital
Markets shall execute such directions directly or through its affiliate,
National Financial Services Company ("NFSC"). The provision of brokerage
services shall be subject to the following:
(1) As consideration for such brokerage services, the
Sponsor agrees that Capital Markets shall be entitled to remuneration under this
authorization provision in an amount of no greater than three and two-fifths
cents ($.032) commission on each share of Sponsor Stock. Any change in such
remuneration may be made only by a signed agreement between Sponsor and Trustee.
(2) The Trustee will provide the Sponsor with a
description of Capital Markets' brokerage placement practices and a form by
which the Sponsor may terminate this direction to use a broker affiliated with
the Trustee. The Trustee will provide the Sponsor with this termination form
annually, as well as quarterly and annual reports which summarize all securities
transaction-related charges incurred by the Plan.
(3) Any successor organization of Capital Markets,
through reorganization, consolidation, merger or similar transactions, may, upon
consumption of such transaction, become the successor broker in accordance with
the terms of this direction provision.
(4) The Trustee and Capital Markets shall continue to
rely on this direction provision until notified to the contrary. The Sponsor
reserves the right to terminate this direction upon sixty (60) days written
notice to Capital Markets (or its successor) and the Trustee, in accordance with
Section 11 of this Agreement.
8
<PAGE> 10
(iv) Securities Law Reports. The Named Fiduciary shall be
responsible for filing all reports required under Federal or state securities
laws with respect to the Trust's ownership of Sponsor Stock, including, without
limitation, any reports required under section 13 or 16 of the Securities
Exchange Act of 1934, and shall immediately notify the Trustee in writing of any
requirement to stop purchases or sales of Sponsor Stock pending the filing of
any report. The Trustee shall provide to the Named Fiduciary such information on
the Trust's ownership of Sponsor Stock as the Named Fiduciary may reasonably
request in order to comply with Federal or state securities laws.
(v) Voting and Tender Offers. Notwithstanding any other
provision of this Agreement the provisions of this Section shall govern the
voting and tendering of Sponsor Stock. The Sponsor, after consultation with the
Trustee, shall provide and pay for all printing, mailing, tabulation and other
costs associated with the voting and tendering of Sponsor Stock.
(A) Voting.
(1) When the issuer of the Sponsor Stock
prepares for any annual or special meeting , the Sponsor shall notify the
Trustee at least thirty (30) days in advance of the intended record date and
shall cause a copy of all materials to be sent to the Trustee. Based on these
materials the Trustee shall prepare a voting instruction form. At the time of
mailing of notice of each annual or special stockholders' meeting of the issuer
of the Sponsor Stock, the Sponsor shall cause a copy of the notice and all proxy
solicitation materials to be sent to each Plan Participant with an interest in
Sponsor Stock held in the Trust, together with the foregoing voting instruction
form to be returned to the Trustee or its designee. The form shall show the
proportional interest in the number of full and fractional shares of Sponsor
Stock credited to the Participant's accounts held in the Stock Fund. The Sponsor
shall provide the Trustee with a copy of any materials provided to the
Participants pursuant to this Section 5(e)(v)(A) and shall certify to the
Trustee that the materials have been mailed or otherwise sent to Participants.
(2) Each Participant with an interest in the
Stock Fund shall have the right to direct the Trustee as to the manner in which
the Trustee is to vote (including not to vote) that number of shares of Sponsor
Stock reflecting such Participant's proportional interest in the Stock Fund
(both vested and unvested). Directions from a Participant to the Trustee
concerning the voting of Sponsor
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Stock shall be communicated in writing, or by mailgram or similar means. These
directions shall be held in confidence by the Trustee and shall not be divulged
to the Sponsor, or any officer or employee thereof, or any other person except
to the extent that the aggregate consequences of such directions are reflected
in reports regularly communicated to any such person in the ordinary course of
the performance of the Trustee's services hereunder. Upon its receipt of the
directions, the Trustee shall vote the shares of Sponsor Stock reflecting the
Participant's proportional interest in the Stock Fund as directed by the
Participant. Except as otherwise required by law, the Trustee shall vote shares
of Sponsor Stock reflecting a Participant's proportional interest in the Stock
Fund for which it has received no direction from the Participant in the same
proportion on each issue as it votes shares for which it has received voting
instructions from Participants.
(3) Except as otherwise required by law, the
Trustee shall vote that number of shares of Sponsor Stock not credited to
Participants' accounts which is determined by multiplying the total number of
shares not credited to Participant's accounts by a fraction of which the
numerator is the number of shares of Sponsor Stock reflecting a Participant's
proportional interest in the Stock Fund that are credited to Participant's
accounts for which the Trustee received voting directions from Participants and
of which the denominator is the total number of shares of Sponsor Stock
reflecting a Participant's proportional interest in the Stock Fund that are
credited to participants' accounts. The Trustee shall vote those shares of
Sponsor Stock not credited to Participant's accounts which are to be voted by
the Trustee pursuant to the foregoing formula in the same proportion on each
issue as it votes those shares reflecting a Participant's proportional interest
in the Stock Fund that are credited to Participants' accounts for which it
received voting directions from Participants. The Trustee shall not vote the
remaining shares of Sponsor Stock not credited to Participant's accounts.
(B) Tender Offers.
(1) Upon commencement of a tender offer for
any securities held in the Trust that are Sponsor Stock, the Sponsor shall
notify each Plan Participant with an interest in such Sponsor Stock of the
tender offer and utilize its best efforts to timely distribute or cause to be
distributed to the Participant the same information that is distributed to
shareholders of the issuer of Sponsor Stock in connection with the tender offer,
and, after consulting with the Trustee, shall provide and pay for a means by
which the Participant may direct the Trustee whether or not to tender the
Sponsor Stock reflecting such
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Participant's proportional interest in the Stock Fund (both vested and
unvested). The Sponsor shall provide the Trustee with a copy of any material
provided to the Participants pursuant to this Section 5(e)(v)(B) and shall
certify to the Trustee that the materials have been mailed or otherwise sent to
Participants.
(2) Each Participant shall have the right to
direct the Trustee to tender or not to tender some or all of the shares of
Sponsor Stock reflecting such Participant's proportional interest in the Stock
Fund (both vested and unvested). Directions from a Participant to the Trustee
concerning the tender of Sponsor Stock shall be communicated in writing, or by
mailgram or such similar means as is agreed upon by the Trustee and the Sponsor
under the preceding paragraph. These directions shall be held in confidence by
the Trustee and shall not be divulged to the Sponsor, or any officer or employee
thereof, or any other person except to the extent that the consequences of such
directions are reflected in reports regularly communicated to any such persons
in the ordinary course of the performance of the Trustee's services hereunder.
The Trustee shall tender or not tender shares of Sponsor Stock as directed by
the Participant. Except as otherwise required by law, the Trustee shall not
tender shares of Sponsor Stock reflecting a Participant's proportional interest
in the Stock Fund for which it has received no direction from the Participant.
(3) Except as otherwise required by law, the
Trustee shall tender that number of shares of Sponsor Stock not credited to
Participants' accounts which is determined by multiplying the total number of
shares of Sponsor Stock not credited to Participants' accounts by a fraction of
which the numerator is the number of shares of Sponsor Stock reflecting the
Participants' proportional interests in the Stock Fund that are credited to
Participants' accounts for which the Trustee has received directions from
Participants to tender and of which the denominator is the total number of
shares of Sponsor Stock reflecting the Participants' proportional interests in
the Stock Fund that are credited to Participants' accounts.
(4) A Participant who has directed the
Trustee to tender some or all of the shares of Sponsor Stock reflecting the
Participant's proportional interest in the Stock Fund may, at any time prior to
the tender offer withdrawal date, direct the Trustee to withdraw some or all of
the tendered shares reflecting the Participant's proportional interest, and the
Trustee shall withdraw the directed number of shares from the tender offer prior
to the tender offer withdrawal deadline. Prior to the withdrawal deadline, if
any shares of Sponsor Stock not credited to Participants' accounts have been
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tendered, the Trustee shall redetermine the number of shares of Sponsor Stock
that would be tendered under Section 5(e)(v)(B)(3) if the date of the foregoing
withdrawal were the date of determination, and withdraw from the tender offer
the number of shares of Sponsor Stock not credited to Participants' accounts
necessary to reduce the amount of tendered Sponsor Stock not credited to
Participants' accounts to the amount so redetermined. A Participant shall not be
limited as to the number of directions to tender or withdraw that the
Participant may give to the Trustee.
(5) A direction by a Participant to the
Trustee to tender shares of Sponsor Stock reflecting the Participant's
proportional interest in the Stock Fund shall not be considered a written
election under the Plan by the Participant to withdraw, or have distributed, any
or all of his withdrawable shares. The Trustee shall credit to each proportional
interest of the Participant from which the tendered shares were taken the
proceeds received by the Trustee in exchange for the shares of Sponsor Stock
tendered from that interest. Pending receipt of directions (through the
Administrator) from the Participant or the Named Fiduciary, as provided in the
Plan, as to which of the remaining investment options the proceeds should be
invested in, the Trustee shall invest the proceeds in the Mutual Fund described
in Schedule "C".
(vi) Shares Credited. For all purposes of this Section, the
number of shares of Sponsor Stock deemed "credited" or "reflected" to a
Participant's proportional interest shall be determined as of the relevant date
(the record date or the date specified in the tender offer) shall be calculated
by reference to the number of shares reflected on the books of the transfer
agent as of the relevant date.
(vii) General. With respect to all rights other than the right
to vote, the right to tender, and the right to withdraw shares previously
tendered, in the case of Sponsor Stock credited to a Participant's proportional
interest in the Stock Fund, the Trustee shall follow the directions of the
Participant and if no such directions are received, the directions of the Named
Fiduciary. The Trustee shall have no duty to solicit directions from
Participants. With respect to all rights other than the right to vote and the
right to tender, in the case of Sponsor Stock not credited to Participants'
accounts, the Trustee shall follow the directions of the Named Fiduciary.
(viii) Conversion. All provisions in this Section 5(e) shall
also apply to any securities received as a result of a conversion of Sponsor
Stock.
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(f) Participant Loans. The Administrator shall act as the Trustee's
agent for the purpose of holding all trust investments in participant loan notes
and related documentation and as such shall (i) hold physical custody of and
keep safe the notes and other loan documents, (ii) separately account for
repayments of such loans and clearly identify such assets as Plan assets, (iii)
collect and remit all principal and interest payments to the Trustee, and (iv)
cancel and surrender the notes and other loan documentation when a loan has been
paid in full. To originate a participant loan, the Plan participant shall direct
the Trustee as to the type of loan to be made from the participant's individual
account. Such directions shall be made by Plan participants by use of the
telephone exchange system maintained for such purpose by the Trustee or its
agent. The Trustee shall determine, based on the current value of the
participant's account, the amount available for the loan. Based on the interest
rate supplied by the Sponsor in accordance with the terms of the Plan, the
Trustee shall advise the participant of such interest rate, as well as the
installment payment amounts. The Trustee shall forward the loan document to the
participant for execution and submission for approval to the Administrator. The
Administrator shall have the responsibility for approving the loan and
instructing the Trustee to send the loan proceeds to the Administrator or to the
participant if so directed by the Administrator. In all cases, if the Trustee
does not receive approval or disapproval by the Administrator within thirty (30)
days of the participant's initial request (the origination date) the participant
will be required to reinitiate the loan request process.
(g) Commingled Pool Investments. To the extent that the Named Fiduciary
selects as an investment option the Managed Income Portfolio of the Fidelity
Group Trust for Employee Benefit Plans (the "Group Trust"), the Sponsor hereby
(i) agrees to the terms of the Group Trust and adopts said terms as a part of
this Agreement and (ii) acknowledges that it has received from the Trustee a
copy of the Group Trust, the Declaration of Separate Fund for the Managed Income
Portfolio of the Group Trust, and the Circular for the Managed Income Portfolio.
(h) Reliance of Trustee on Directions.
(i) The Trustee shall not be liable for any loss, or by reason
of any breach, which arises from any Participant's exercise or non-exercise of
rights under this Section 5 over the assets in the Participant's accounts.
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(ii) The Trustee shall not be liable for any loss, or by
reason of any breach, which arises from the Named Fiduciary's exercise or
non-exercise of rights under this Section 5, unless it was clear on their face
that the actions to be taken under the Named Fiduciary's directions were
prohibited by the fiduciary duty rules of Section 404(a) of ERISA or were
contrary to the terms of the Plan or this Agreement.
(i) Trustee Powers. The Trustee shall have the following powers and
authority:
(i) Subject to paragraphs (b), (c) and (d) of this Section 5,
to sell, exchange, convey, transfer, or otherwise dispose of any property held
in the Trust, by private contract or at public auction. No person dealing with
the Trustee shall be bound to see to the application of the purchase money or
other property delivered to the Trustee or to inquire into the validity,
expediency, or propriety of any such sale or other disposition.
(ii) Subject to paragraphs (b) and (c) of this Section 5, to
invest in Investment Contracts and short term investments (including interest
bearing accounts with the Trustee or money market mutual funds advised by
affiliates of the Trustee) and in collective investment funds maintained by the
Trustee for qualified plans, in which case the provisions of each collective
investment fund in which the Trust is invested shall be deemed adopted by the
Sponsor and the provisions thereof incorporated as a part of this Trust as long
as the fund remains exempt from taxation under sections 401(a) and 501(a) of the
Code.
(iii) To cause any securities or other property held as part
of the Trust to be registered in the Trustee's own name, in the name of one or
more of its nominees, or in the Trustee's account with the Depository Trust
Company of New York and to hold any investments in bearer form, but the books
and records of the Trustee shall at all times show that all such investments are
part of the Trust.
(iv) To keep that portion of the Trust in cash or cash
balances as the Named Fiduciary or Sponsor may, from time to time, deem to be in
the best interest of the Trust.
(v) To make, execute, acknowledge, and deliver any and all
documents of transfer or conveyance and to carry out the powers herein granted.
(vi) To borrow funds from a bank not affiliated with the
Trustee in order to provide sufficient liquidity to process Plan transactions in
a timely fashion, provided that the cost of borrowing shall be allocated in a
reasonable fashion to the investment fund(s) in need of liquidity.
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(vii) To settle, compromise, or submit to arbitration any
claims, debts, or damages due to or arising from the Trust; to commence or
defend suits or legal or administrative proceedings; to represent the Trust in
all suits and legal and administrative hearings; and to pay all reasonable
expenses arising from any such action, from the Trust if not paid by the
Sponsor.
(viii) To employ legal, accounting, clerical, and other
assistance as may be required in carrying out the provisions of this Agreement
and to pay their reasonable expenses and compensation from the Trust if not paid
by the Sponsor.
(ix) To invest all of any part of the assets of the Trust in
any collective investment trust or group trust which then provides for the
pooling of the assets of plans described in section 401(a) and exempt from tax
under section 501(a) of the Code, or any comparable provisions of any future
legislation that amends, supplements, or supersedes those sections, provided
that such collective investment trust or group trust is exempt from tax under
the Code or regulations or rulings issued by the Internal Revenue Service; the
provisions of the document governing such collective investment trusts or group
trusts, as it may be amended from time to time, shall govern any investment
therein and are hereby made a part of this Trust Agreement.
(x) To do all other acts that are in accordance with the
powers granted to the Trustee under common law, the applicable state trust law
and other applicable statutes.
SECTION 6. RECORDKEEPING AND ADMINISTRATIVE SERVICES TO BE PERFORMED.
(a) General. The Trustee shall perform those recordkeeping and
administrative functions described in Schedule "A" attached hereto. These
recordkeeping and administrative functions shall be performed within the
framework of the Named Fiduciary's written directions regarding the Plan's
provisions, guidelines and interpretations.
(b) Accounts. The Trustee shall keep accurate accounts of all
investments, receipts, disbursements, and other transactions hereunder, and
shall report the value of the assets held in the Trust as of each Reporting
Date. Within thirty (30) days following each Reporting Date or within sixty (60)
days in the case of a Reporting Date caused by the resignation or removal of the
Trustee, or the termination of this Agreement, the Trustee shall file with the
Sponsor a written account setting forth all investments, receipts,
disbursements, and other transactions affected by the Trustee between the
Reporting Date and the prior
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Reporting Date, and setting forth the value of the Trust as of the Reporting
Date. Except as otherwise required under ERISA, upon the expiration of six (6)
months from the date of filing such account with the Sponsor, the Trustee shall
have no liability or further accountability to anyone with respect to the
propriety of its acts or transactions shown in such account, except with respect
to such acts or transactions as to which the Sponsor shall within such six (6)
month period file with the Trustee written objections.
(c) Inspection and Audit. All records generated by the Trustee in
accordance with paragraphs (a) and (b) shall be open to inspection and audit,
during the Trustee's regular business hours prior to the termination of this
Agreement, by the Sponsor or any person designated by the Sponsor. Upon the
resignation or removal of the Trustee or the termination of this Agreement, the
Trustee shall provide to the Sponsor, at no expense to the Sponsor, in the
format regularly provided to the Sponsor, a statement of each Participant's
accounts as of the resignation, removal, or termination, and the Trustee shall
provide to the Sponsor or the Plan's new recordkeeper such further records as
are reasonable, at the Sponsor's expense.
(d) Effect of Plan Amendment. A confirmation of the current qualified
status of each Plan is attached hereto as Schedule "F". The Trustee's provision
of the recordkeeping and administrative services set forth in this Section 6
shall be conditioned on the Sponsor delivering to the Trustee a copy of any
amendment to the Plan as soon as administratively feasible following the
amendment's adoption, with, if requested, an IRS determination letter or an
opinion of counsel substantially in the form of Schedule "F" covering such
amendment, and on the Sponsor providing the Trustee on a timely basis with all
the information the Sponsor deems necessary for the Trustee to perform the
recordkeeping and administrative services and such other information as the
Trustee may reasonably request.
(e) Returns, Reports and Information. The Sponsor shall be responsible
for the preparation and filing of all returns, reports, and information required
of the Trust or Plan by law. The Trustee shall provide the Sponsor with such
information as the Sponsor may reasonably request to make these filings. The
Sponsor shall also be responsible for making any disclosures to Participants
required by law including, without limitation, such disclosures as may be
required by law, except such disclosure as may be required under federal or
state truth-in-lending laws with regard to Participant loans, which shall be
provided by the Trustee.
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(f) Allocation of Plan Interests. All transfers to, withdrawals from,
or other transactions regarding the Trust shall be conducted in such a way that
the proportionate interest in the Trust of each Plan and the fair market value
of that interest may be determined at any time. Whenever the assets of more than
one Plan are commingled in the Trust or in any investment option, the undivided
interest therein of each such Plan shall be debited or credited (as the case may
be) (i) for the entire amount of every contribution received on behalf of such
Plan, every benefit payment, or other expense attributable solely to such Plan,
and every other transaction relating only to such Plan; and (ii) for its
proportionate share of every item of collected or accrued income, gain or loss,
and general expense, and of any other transactions attributable to the Trust or
that investment option as a whole.
SECTION 7. COMPENSATION AND EXPENSES. Within thirty (30) days of receipt of the
Trustee's bill, which shall be computed and billed in accordance with Schedule
"B" attached hereto and made a part hereof, as amended from time to time, the
Sponsor shall send to the Trustee a payment in such amount or the Sponsor may
direct the Trustee to deduct such amount from Participants' account. All
expenses of the Trustee relating directly to the acquisition and disposition of
investments constituting part of the Trust, and all taxes of any kind whatsoever
that may be levied or assessed under existing or future laws upon or in respect
of the Trust or the income thereof, shall be a charge against and paid from the
appropriate Participants' accounts.
SECTION 8. DIRECTIONS AND INDEMNIFICATION.
(a) Identity of Sponsor and Named Fiduciaries. The Trustee shall be
fully protected in relying on the fact that the Sponsor and the Named
Fiduciaries under a Plan are the individuals or persons named as such on the
Authorization Letters in the form of Schedules "D" and "E" attached hereto or on
a Plan Designation Form in accordance with Schedule "J" attached hereto or such
other individuals or persons as the Sponsor may notify the Trustee in writing.
(b) Directions from Sponsor or Administrator. Whenever the Sponsor or
Administrator provides a direction to the Trustee, the Trustee shall not be
liable for any loss, or by reason of any breach, arising from the direction if
the direction is contained in a writing (or is oral and immediately confirmed in
a writing) signed by any individual whose name and signature have been submitted
(and not withdrawn) in writing to the Trustee by the Sponsor in the form
attached hereto as Schedule "D", provided the Trustee reasonably believes the
signature of the individual to be genuine. Such direction may also be made via
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Electronic Data Transfer ("EDT") in accordance with procedures agreed to by the
Sponsor and the Trustee; provided, however, that the Trustee shall be fully
protected in relying on such direction as if it were a direction made in writing
by the Sponsor. The Trustee shall have no responsibility to ascertain any
direction's (i) accuracy, (ii) compliance with the terms of the Plan or any
applicable law, or (iii) effect for tax purposes or otherwise.
(c) Directions from Named Fiduciary. Whenever a Named Fiduciary
provides a direction to the Trustee, the Trustee shall not be liable for any
loss, or by reason of any breach, arising from the direction (i) if the
direction is contained in a writing (or is oral and immediately confirmed in a
writing) signed by any individual whose name and signature have been submitted
(and not withdrawn) in writing to the Trustee by the Named Fiduciary in the form
attached hereto as Schedule "E" and (ii) if the Trustee reasonably believes the
signature of the individual to be genuine, unless it is clear on the direction's
face that the actions to be taken under the direction would be prohibited by the
fiduciary duty rules of section 404(a) of ERISA or would be contrary to the
terms of the Plan or this Agreement.
(d) Co-Fiduciary Liability. In any other case, the Trustee shall not be
liable for any loss, or by reason of any breach, arising from any act or
omission of another fiduciary under the Plan except as provided in section
405(a) of ERISA. Without limiting the foregoing, the Trustee shall have no
liability for the acts or omissions of any predecessor or successor trustee.
(e) Indemnification. The Sponsor shall indemnify the Trustee against,
and hold the Trustee harmless from, any and all loss, damage, penalty,
liability, cost, and expense, including without limitation, reasonable
attorneys' fees and disbursements, that may be incurred by, imposed upon, or
asserted against the Trustee by reason of any claim, regulatory proceeding, or
litigation arising from any act done or omitted to be done by any individual or
person with respect to the Plan or Trust, excepting only any and all loss, etc.,
arising from the Trustee's breach of its fiduciary duties under ERISA.
(f) Survival. The provisions of this Section 8 shall survive the
termination of this Agreement.
SECTION 9. RESIGNATION OR REMOVAL OF TRUSTEE.
(a) Resignation. The Trustee may resign at any time upon sixty (60)
days' notice in writing to the Sponsor, unless a shorter period of notice is
agreed upon by the Sponsor.
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(b) Removal. The Sponsor may remove the Trustee at any time upon sixty
(60) days' notice in writing to the Trustee, unless a shorter period of notice
is agreed upon by the Trustee.
SECTION 10. SUCCESSOR TRUSTEE.
(a) Appointment. If the office of Trustee becomes vacant for any
reason, the Sponsor may in writing appoint a successor trustee under this
Agreement. The successor trustee shall have all of the rights, powers,
privileges, obligations, duties, liabilities, and immunities granted to the
Trustee under this Agreement. The successor trustee and predecessor trustee
shall not be liable for the acts or omissions of the other with respect to the
Trust.
(b) Acceptance. When the successor trustee accepts its appointment
under this Agreement, title to and possession of the Trust assets shall
immediately vest in the successor trustee without any further action on the part
of the predecessor trustee. The predecessor trustee shall execute all
instruments and do all acts that reasonably may be necessary or reasonably may
be requested in writing by the Sponsor or the successor trustee to vest title to
all Trust assets in the successor trustee or to deliver all Trust assets to the
successor trustee.
(c) Corporate Action. Any successor of the Trustee or successor
trustee, through sale or transfer of the business or trust department of the
Trustee or successor trustee, or through reorganization, consolidation, or
merger, or any similar transaction, shall, upon consummation of the transaction,
become the successor trustee under this Agreement.
SECTION 11. TERMINATION. This Agreement may be terminated at any time by the
Sponsor upon sixty (60) days' notice in writing to the Trustee. On the date of
the termination of this Agreement, the Trustee shall forthwith transfer and
deliver to such individual or entity as the Sponsor shall designate, all cash
and assets then constituting the Trust. If, by the termination date, the Sponsor
has not notified the Trustee in writing as to whom the assets and cash are to be
transferred and delivered, the Trustee may bring an appropriate action or
proceeding for leave to deposit the assets and cash in a court of competent
jurisdiction. The Trustee shall be reimbursed by the Sponsor for all costs and
expenses of the action or proceeding including, without limitation, reasonable
attorneys' fees and disbursements.
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SECTION 12. RESIGNATION, REMOVAL, AND TERMINATION NOTICES. All notices of
resignation, removal, or termination under this Agreement must be in writing and
mailed to the party to which the notice is being given by certified or
registered mail, return receipt requested, to the Sponsor c/o Chief Financial
Officer, Quanex Corporation, 1900 West Loop South, Suite 1500, Houston, TX 77027
and to the Trustee c/o John M. Kimpel, Fidelity Investments, 82 Devonshire
Street, Boston, Massachusetts 02109, or to such other addresses as the parties
have notified each other of in the foregoing manner.
SECTION 13. DURATION. This Trust shall continue in effect without limit as to
time, subject, however, to the provisions of this Agreement relating to
amendment, modification, and termination thereof.
SECTION 14. AMENDMENT OR MODIFICATION. This Agreement may be amended or modified
at any time and from time to time only by an instrument executed by both the
Sponsor and the Trustee. Notwithstanding the foregoing, to reflect increased
operating costs the Trustee may once each calendar year amend Schedule "B"
without the Sponsor's consent upon seventy-five (75) days written notice to the
Sponsor.
SECTION 15. ELECTRONIC SERVICES.
(a) The Trustee may provide communications and services via electronic
medium ("Electronic Services"), including, but not limited to, Fidelity Plan
Sponsor WebStation, Client Intranet, Client e-mail, interactive software
products or any other information provided in an electronic format. The Sponsor,
its agents and employees agree to keep confidential and not publish, copy,
broadcast, retransmit, reproduce, commercially exploit or otherwise
redisseminate the data, information, software or services without the Trustee's
written consent.
(b) The Sponsor shall be responsible for installing and maintaining all
Electronic Services on its computer network and/or Intranet upon receipt in a
manner so that the information provided via the Electronic Service will appear
in the same form and content as it appears on the form of delivery, and for any
programming required to accomplish the installation. Materials provided for Plan
Sponsor's intranet web sites shall be installed by the Sponsor and shall be
clearly identified as originating from Fidelity. The Sponsor shall promptly
remove Electronic Services from its computer network and/or Intranet, or replace
the Electronic Service with an updated service provided by the Trustee, upon
written notification (including written notification via facsimile) by the
Trustee.
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(c) All Electronic Services shall be provided to the Sponsor without
any express or implied legal warranties or acceptance of legal liability by the
Trustee relative to the use of material or Electronic Services by the Sponsor.
No rights are conveyed to any property, intellectual or tangible, associated
with the contents of the Electronic Services and related material.
(d) To the extent that any Electronic Services utilize Internet
services to transport data or communications, the Trustee will take, and Plan
Sponsor agrees to follow, reasonable security precautions; however, the Trustee
disclaims any liability for interception of any such data or communications. The
Trustee shall not be responsible for, and makes no warranties regarding access,
speed or availability of Internet or network services. The Trustee shall not be
responsible for any loss or damage related to or resulting from any changes or
modifications to the electronic material after delivering it to the Plan
Sponsor.
SECTION 16. GENERAL.
(a) Performance by Trustee, its Agents or Affiliates. The Sponsor
acknowledges and authorizes that the services to be provided under this
Agreement shall be provided by the Trustee, its agents or affiliates, including
Fidelity Investments Institutional Operations Company or its successor, and that
certain of such services may be provided pursuant to one or more other
contractual agreements or relationships.
(b) Delegation by Employer. By authorizing the assets of any Plan as to
which it is an Employer to be deposited in the Trust, each Employer, other than
the Sponsor, hereby irrevocably delegates and grants to the Sponsor full and
exclusive power and authority to exercise all of the powers conferred upon the
Sponsor and each Employer by the terms of this Agreement, and to take or refrain
from taking any and all action which such Employer might otherwise take or
refrain from taking with respect to this Agreement, including the sole and
exclusive power to exercise, enforce or waive any rights whatsoever which such
Employer might otherwise have with respect to the Trust, and irrevocably
appoints the Sponsor as its agent for all purposes under this Agreement. The
Trustee shall have no obligation to account to any such Employer or to follow
the instructions of or otherwise deal with any such Employer, the intention
being that the Trustee shall deal solely with the Sponsor.
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(c) Entire Agreement. This Agreement contains all of the terms agreed
upon between the parties with respect to the subject matter hereof.
(d) Waiver. No waiver by either party of any failure or refusal to
comply with an obligation hereunder shall be deemed a waiver of any other or
subsequent failure or refusal to so comply.
(e) Successors and Assigns. The stipulations in this Agreement shall
inure to the benefit of, and shall bind, the successors and assigns of the
respective parties.
(f) Partial Invalidity. If any term or provision of this Agreement or
the application thereof to any person or circumstances shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement, or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby, and each
term and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
(g) Section Headings. The headings of the various sections and
subsections of this Agreement have been inserted only for the purposes of
convenience and are not part of this Agreement and shall not be deemed in any
manner to modify, explain, expand or restrict any of the provisions of this
Agreement.
SECTION 17. GOVERNING LAW.
(a) Massachusetts Law Controls. This Agreement is being made in the
Commonwealth of Massachusetts, and the Trust shall be administered as a
Massachusetts trust. The validity, construction, effect, and administration of
this Agreement shall be governed by and interpreted in accordance with the laws
of the Commonwealth of Massachusetts, except to the extent those laws are
superseded under section 514 of ERISA.
(b) Trust Agreement Controls. The Trustee is not a party to the Plan,
and in the event of any conflict between the provisions of the Plan and the
provisions of this Agreement, the provisions of this Agreement shall control.
SECTION 18. PLAN QUALIFICATION. The Sponsor shall be responsible for verifying
that while any assets of a particular Plan are held in the Trust, the Plan (i)
is qualified within the meaning of section 401(a) of the
22
<PAGE> 24
Code; (ii) is permitted by existing or future rulings of the United States
Treasury Department to pool its funds in a group trust; and (iii) permits its
assets to be commingled for investment purposes with the assets of other such
plans by investing such assets in this Trust. If any Plan ceases to be qualified
within the meaning of section 401(a) of the Code, the Sponsor shall notify the
Trustee as promptly as is reasonable. Upon receipt of such notice, the Trustee
shall promptly segregate and withdraw from the Trust, the assets which are
allocable to such disqualified Plan, and shall dispose of such assets in the
manner directed by the Sponsor.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.
QUANEX CORPORATION
Attest: ______________________ By: _______________________________
Secretary
Name: _______________________________
Title: _______________________________
Date: _______________________________
FIDELITY MANAGEMENT TRUST COMPANY
Attest: ______________________ By: ______________________________
Assistant Clerk
Name: ______________________________
Title: ______________________________
Date: ______________________________
23
<PAGE> 25
SCHEDULE "A"
ADMINISTRATIVE SERVICES
Administration
* Establishment and maintenance of Participant account and election
percentages.
* Maintenance of the following investment options:
- Quanex Corporation Stock Fund
- Fidelity Balanced Fund
- Fidelity Contrafund
- Fidelity Growth & Income Portfolio
- Fidelity Low-Priced Stock Fund
- Fidelity Magellan Fund
- Fidelity Money Market Trust: Retirement Government Money Market
Portfolio
- Fidelity Overseas Fund
- Fidelity Puritan Fund
- Fidelity Asset Manager
- Managed Income Portfolio
- Neuberger & Berman Partners Trust
- Templeton Foreign Fund
- Fidelity Blue Chip Growth Fund
- Fidelity Retirement Growth Fund
* Maintenance of the following money classifications for the Quanex
Corporation Employee Savings Plan:
- Elective Deferrals
- Employee After-tax
- Company Match
- Rollover
- Qualified Non-elective Employer Contribution
* Maintenance of the following money classifications for the Quanex
Corporation Hourly Bargaining Unit Employees Savings Plan:
- Elective Deferrals
- Employee After-tax
- Company Match
- Rollover
- Supplemental Employer Contributions
* Maintenance of the following money classifications for the Piper Impact
401(k) Plan:
- Employee Deferral
<PAGE> 26
- Employer Match
- Supplemental Employer Contribution
- Rollover
* Maintenance of the following money classifications for the
Nichols-Homeshield 401(k) Savings Plan:
- Salary Deferral Contribution Account
- Supplemental Employer Contribution Account
- Rollover Account
- Qualified Non-elective Employer Contribution Account
* Maintenance of the following money classifications for the
Nichols-Homeshield 401(k) Savings Plan for Hourly Davenport Employees:
- Salary Deferral Contribution Account
- Supplemental Employer Contribution Account
- Rollover Account
- Qualified Non-elective Employer Contribution Account
The Trustee will provide the recordkeeping and administrative services set
forth on this Schedule "A" and as detailed in the Plan Administrative
Manual and no others.
A) PROVIDE PARTICIPANT TELEPHONE SERVICES
1. Fidelity registered representatives are available from 8:30 a.m. -
12:00 midnight ET each business day to provide toll free telephone
service for Participant inquiries and transactions. Additionally,
Participants have 24 hour account balance and transaction inquiry
access utilizing our automated voice response system and the internet.
2. For security purposes, all calls are recorded. In addition, several
levels of security are available including the verification of a
Personal Identification Number (PIN) and/or any other indicative data
resident on the system.
3. Through our telephone services, Fidelity provides the following
services:
o Provide Plan investment option information.
o Maintain Plan specific provisions.
o Process exchanges (transfers) between investment options on a
daily basis.
o Maintain and process changes to Participants' contribution
allocations for all money sources.
o Allow Participants to change their deferral and after-tax
percentages and provide updates via EDT for customer to
apply to its payrolls accordingly.
o Consult with Participants in various loan scenarios and
generate all documentation.
o Process all Participant loan and withdrawal requests via
Fidelity's toll-free telephone service according to Plan
provisions on a daily basis.
o Process in-service withdrawals via telephone due to certain
circumstances previously approved by the Sponsor.
o Process hardship withdrawals via telephone as directed and
approved by the Sponsor.
ii
<PAGE> 27
o Enroll new Participants via telephone; provide confirmation of
enrollment within five (5) days of the request.
B) PLAN ACCOUNTING
1. Process payroll contributions according to payroll frequency via
electronic data transfer (EDT), consolidated magnetic tape or diskette.
The data format will be provided by Fidelity.
2. Provide Plan and Participant level accounting for up to nine (9)
money classifications for the Plan.
3. Audit and reconcile the Plan and Participant accounts daily.
4. Provide daily Plan and Participant level accounting for the Plan
investment options.
5. Reconcile and process Participant withdrawal requests as approved
and directed by the Sponsor. All requests are paid based on the current
market values of Participants' accounts, not advanced or estimated
values. A distribution report will accompany each check.
6. Track individual Participant loans; process loan withdrawals;
re-invest loan repayments; and prepare and deliver comprehensive
reports to the Sponsor to assist in the administration of Participant
loans.
7. Fidelity's Guaranteed Investments Daily Equity System (GUIDE) is an
automatic Investment Contract daily portfolio accounting system. GUIDE
provides the Sponsor with daily valuation of its Plan assets whether
individually managed or in our Managed Income Portfolio.
8. Maintain and process changes to Participants' prospective and
existing investment mix elections via Fidelity's toll-free telephone
service.
C) PARTICIPANT REPORTING
1. Mail confirmation to Participants of all transactions initiated via
Fidelity Telephone Services within three (3) calendar days of the
transaction.
2. Prepare and mail via first class to each Plan Participant a
quarterly detailed Participant statement reflecting all activity for
the period. Statements will be mailed no later than twenty (20)
calendar days after each quarter end.
3. Mail required 402(f) notification for distribution from the Plan.
This notice advises Participants of the tax consequences of their Plan
distributions.
D) PLAN REPORTING
1. Prepare, reconcile and deliver a monthly Trial Balance Report
presenting all money classes and investments. This report is based on
the market value as of the last business day of the month. The report
will be delivered not later than twenty (20) days after the end of each
month in the absence of unusual circumstances.
iii
<PAGE> 28
2. Prepare, reconcile and deliver a Quarterly Administrative Report
presenting both on a Participant and a total Plan basis all money
classes, investment positions and a summary of all activity of the
Participant and Plan as of the last business day of the quarter. The
report will be delivered not later than twenty (20) days after the end
of each quarter in the absence of unusual circumstances.
E) GOVERNMENT REPORTING
1. Process year-end tax reports for Participants - 1099R, as well as
financial reporting to assist in the preparation of Form 5500.
F) COMMUNICATION SERVICES
1. Employee communications describing available investment options,
including multimedia informational materials and group presentations.
G) OTHER
1. Performance of non-discrimination limitation testing upon request.
In order to obtain this service, the client shall be required to
provide the information identified in the Fidelity Discrimination
Testing Package Guidelines.
2. Monitor and process required minimum distribution amounts (MRD) as
follows: the Trustee will notify the MRD Participant and, upon
notification from the MRD Participant, will use the MRD Participant's
information to process their distributions. If the MRD Participant does
not respond to the Trustee's notification, the Sponsor directs the
Trustee to automatically begin the required distributions for the
Participant.
3. The Fidelity Recordkeeping System is available on-line to the
Sponsor via our Plan Sponsor Webstation ("PSW"). PSW is a graphical,
Windows-based application that provides current plan and
participant-level information, including indicative data, account
balances, activity and history. PSW also provides Sponsors with the
ability to instruct the Trustee to process particular transactions.
4. NetBenefits: Plan participants may access their accounts and conduct
transactions via the Internet's World Wide Web, including obtaining
current account balances, exchanges, contributions, dividend/capital
gains, new loans and repayments, new withdrawals, quotes on all plan
level investment options, fund performance on all plan level investment
options, and Plan literature ordering
QUANEX CORPORATION FIDELITY MANAGEMENT TRUST COMPANY
By: _______________________ By: ________________________________
Date Vice President Date
iv
<PAGE> 29
SCHEDULE "B"
FEE SCHEDULE
<TABLE>
<S> <C>
Annual Participant Fee: $15.00 per Participant* per year, billed and
payable quarterly.
Loan Fee: Establishment fee of $35.00 per loan account;
annual fee of $15.00 per loan account.
Minimum Required Distribution: $25.00 per Participant per MRD withdrawal.
Plan Sponsor Webstation (PSW): Two (2) user IDs provided free of charge, each
additional user ID, $500 per year.
Return of Excess Contribution Fee: $25.00 per Participant, one-time charge per
calculation and check generation.
Non-Fidelity Mutual Funds: .35% annual administration fee on the following
Non-Fidelity Mutual Fund assets which are
equity/balanced funds: AMR Funds, Calvert Funds,
Franklin/Templeton Funds, Founders Funds, Pilgrim
Baxter Funds and Warburg Pincus Funds. .25% annual
administration fee on all other Non-Fidelity Mutual
Fund assets (to be paid by the Non-Fidelity Mutual
Fund vendor.)
</TABLE>
o Other Fees: separate charges for optional non-discrimination testing,
extraordinary expenses resulting from large numbers of simultaneous manual
transactions, from errors not caused by Fidelity, reports not contemplated
in this Agreement, or extraordinary and/or duplicative expenses associated
with electronic services. The Administrator may withdraw reasonable
administrative fees from the Trust by written direction to the Trustee.
* This fee will be imposed pro rata for each calendar quarter, or any part
thereof, that it remains necessary to keep a Participant's account(s) as
part of the Plan's records, e.g., vested, deferred, forfeiture, top-heavy
and terminated Participants who must remain on file through calendar
year-end for 1099-R reporting purposes.
TRUSTEE FEE
o To the extent that assets are invested in Mutual Funds, 0.02% per year
payable pro rata quarterly on the basis of such assets in the Trust as of
the calendar quarter's last valuation date, but no less than $2,500.00 nor
more than $5,000.00 per year.
v
<PAGE> 30
o To the extent that assets are invested in Sponsor Stock, 0.25% of such
assets in the Trust payable pro rata quarterly on the basis of such assets
as of the calendar quarter's last valuation date, but no less than $10,000
per year.
QUANEX CORPORATION FIDELITY MANAGEMENT TRUST COMPANY
By: __________________________ By: ____________________________
Date Vice President Date
vi
<PAGE> 31
SCHEDULE "C"
INVESTMENT OPTIONS
In accordance with Section 5(b), the Named Fiduciary hereby directs the
Trustee that Participants' individual accounts may be invested in the following
investment options:
- Quanex Corporation Stock Fund
- Fidelity Balanced Fund
- Fidelity Contrafund
- Fidelity Growth & Income Portfolio
- Fidelity Low-Priced Stock Fund
- Fidelity Magellan Fund
- Fidelity Money Market Trust: Retirement Government Money Market
Portfolio
- Fidelity Overseas Fund
- Fidelity Puritan Fund
- Fidelity Asset Manager
- Managed Income Portfolio
- Neuberger & Berman Partners Trust
- Templeton Foreign Fund
- Fidelity Blue Chip Growth Fund
- Fidelity Retirement Growth Fund
The investment option referred to in Section 5(c) and Section
5(e)(v)(B)(5) shall be Fidelity Money Market Trust: Retirement Government Money
Market Portfolio.
QUANEX CORPORATION
By: ______________________
Date
vii
<PAGE> 32
SCHEDULE "D"
[Administrator's Letterhead]
[DATE]
Mr. David Phillips
Fidelity Investments Institutional Operations Company, Inc.
82 Devonshire Street - MM3H
Boston, Massachusetts 02109
[Name of Plan]
*** NOTE: This schedule should contain names and
signatures for ALL individuals who will be providing
directions to Fidelity representatives in connection
with the Plan.
Fidelity representatives will be unable to accept
directions from any individual whose name does not
appear on this schedule.***
Dear Mr. Phillips:
This letter is sent to you in accordance with Section 8(b) of the Trust
Agreement, dated as of [date], between [name of Plan Sponsor] and Fidelity
Management Trust Company. [I or We] hereby designate [name of individual], [name
of individual], and [name of individual], as the individuals who may provide
directions, on behalf of the Administrator, upon which Fidelity Management Trust
Company shall be fully protected in relying. Only one such individual need
provide any direction. The signature of each designated individual is set forth
below and certified to be such.
You may rely upon each designation and certification set forth in this
letter until [I or we] deliver to you written notice of the termination of
authority of a designated individual.
Very truly yours,
[SPONSOR]
By
[signature of designated individual]
[name of designated individual]
[signature of designated individual]
[name of designated individual]
[signature of designated individual]
[name of designated individual]
viii
<PAGE> 33
SCHEDULE "E"
[Named Fiduciary's Letterhead]
[DATE]
Mr. David Phillips
Fidelity Investments Institutional Operations Company, Inc.
82 Devonshire Street - MM3H
Boston, Massachusetts 02109
[Name of Plan]
Dear Mr. Phillips:
This letter is sent to you in accordance with Section 8(c) of the Trust
Agreement, dated as of [date], between [name of Plan Sponsor] and Fidelity
Management Trust Company. [I or We] hereby designate [name of individual], [name
of individual], and [name of individual], as the individuals who may provide
directions, on behalf of the Named Fiduciary, upon which Fidelity Management
Trust Company shall be fully protected in relying. Only one such individual need
provide any direction. The signature of each designated individual is set forth
below and certified to be such.
You may rely upon each designation and certification set forth in this
letter until [I or we] deliver to you written notice of the termination of
authority of a designated individual.
Very truly yours,
[NAMED FIDUCIARY]
By
[signature of designated individual]
[name of designated individual]
[signature of designated individual]
[name of designated individual]
[signature of designated individual]
[name of designated individual]
ix
<PAGE> 34
SCHEDULE "G"
TELEPHONE EXCHANGE GUIDELINES
The following telephone exchange guidelines are currently employed by Fidelity
Investments Institutional Operations Company, Inc. (FIIOC).
Telephone exchange hours via a Fidelity Representative are 8:30 a.m. (ET) to
12:00 midnight (ET) on each business day. A "business day" is any day on which
the New York Stock Exchange ("NYSE") is open. Exchanges via the Internet and
Fidelity's voice response system are intended to be available virtually 24 hours
a day.
FIIOC reserves the right to change these telephone exchange guidelines at its
discretion.
Note: The NYSE's normal closing time is 4:00 p.m. (ET); in the event the NYSE
alters its closing time, all references below to 4:00 p.m. shall mean the NYSE
closing time as altered.
MUTUAL FUNDS
EXCHANGES BETWEEN MUTUAL FUNDS
Participants may call on any business day to exchange between the mutual
funds. If the request is received before 4:00 p.m. (ET), it will receive
that day's trade date. Calls received after 4:00 p.m.
(ET) will be processed on a next day basis.
MANAGED INCOME PORTFOLIO
I. EXCHANGES BETWEEN MUTUAL FUNDS AND MANAGED INCOME PORTFOLIO
Participants who wish to exchange between a mutual fund and the Managed
Income Portfolio may call on any business day. If the request is
received before 4:00 p.m. (ET), it will receive that day's trade date.
Calls received after 4:00 p.m. (EST) will be processed on a next day
basis.
II. EXCHANGE RESTRICTIONS
Participants will not be permitted to make direct transfers from the
Managed Income Portfolio into a competing fund. Participants who wish
to exchange from the Managed Income Portfolio into a competing fund
must first exchange into a non-competing fund for a period of 90 days.
QUANEX CORPORATION STOCK FUND
I. EXCHANGES BETWEEN MUTUAL FUNDS AND SPONSOR STOCK FUND
Participants may call on any business day to exchange between the
mutual funds and the Sponsor Stock Fund. If the request is received
before 4:00 p.m. (ET), it will receive that day's trade date. Calls
received after 4:00 p.m. (ET) will be processed on a next day basis.
x
<PAGE> 35
II. EXCHANGES BETWEEN SPONSOR STOCK FUND AND MANAGED INCOME PORTFOLIO
Participants who wish to exchange between the Sponsor Stock Fund and
the Managed Income Portfolio may call on any business day. If the
request is received before 4:00 p.m. (ET), it will receive that day's
trade date. Calls received after 4:00 p.m. (ET) will be processed on a
next day basis.
III. EXCHANGE RESTRICTIONS
Investments in the Sponsor Stock Fund will consist primarily of shares
of Sponsor Stock. In order to satisfy daily Participant requests for
exchanges, loans and withdrawals, the Stock Fund will also hold cash or
other short-term liquid investments in an amount that has been agreed
to in writing by the Sponsor and the Trustee. The Trustee will be
responsible for ensuring that the percentage of these investments falls
within the agreed upon range over time. However, if there is
insufficient liquidity in the Sponsor Stock Fund to allow for such
activity, the Trustee will sell shares of Sponsor Stock in the open
market. Exchange and redemption transactions will be processed as soon
as proceeds from the sale of Sponsor Stock are received.
QUANEX CORPORATION
By: _____________________
Date
xi
<PAGE> 36
SCHEDULE "H"
OPERATIONAL GUIDELINES FOR NON-FIDELITY MUTUAL FUNDS
PRICING
By 7:00 p.m. Eastern Time ("ET") each Business Day, the Non-Fidelity Mutual
Fund Vendor (Fund Vendor) will input the following information ("Price
Information") into the Fidelity Participant Recordkeeping System ("FPRS")
via the remote access price screen that Fidelity Investments Institutional
Operations Company, Inc. ("FIIOC"), an affiliate of the Trustee, has
provided to the Fund Vendor: (1) the net asset value for each Fund at the
Close of Trading, (2) the change in each Fund's net asset value from the
Close of Trading on the prior Business Day, and (3) in the case of an income
fund or funds, the daily accrual for interest rate factor ("mil rate").
FIIOC must receive Price Information each Business Day (a "Business Day" is
any day the New York Stock Exchange is open). If on any Business Day the
Fund Vendor does not provide such Price Information to FIIOC, FIIOC shall
pend all associated transaction activity in the Fidelity Participant
Recordkeeping System ("FPRS") until the relevant Price Information is made
available by Fund Vendor.
TRADE ACTIVITY AND WIRE TRANSFERS
By 7:00 a.m. ET each Business Day following Trade Date ("Trade Date plus
One"), FIIOC will provide, via facsimile, to the Fund Vendor a consolidated
report of net purchase or net redemption activity that occurred in each of
the Funds up to 4:00 p.m. ET on the prior Business Day. The report will
reflect the dollar amount of assets and shares to be invested or withdrawn
for each Fund. FIIOC will transmit this report to the Fund Vendor each
Business Day, regardless of processing activity. In the event that data
contained in the 7:00 a.m. ET facsimile transmission represents estimated
trade activity, FIIOC shall provide a final facsimile to the Fund Vendor by
no later than 9:00 a.m. ET. Any resulting adjustments shall be processed by
the Fund Vendor at the net asset value for the prior Business Day.
The Fund Vendor shall send via regular mail to FIIOC transaction confirms
for all daily activity in each of the Funds. The Fund Vendor shall also send
via regular mail to FIIOC, by no later than the fifth Business Day following
calendar month close, a monthly statement for each Fund. FIIOC agrees to
notify the Fund Vendor of any balance discrepancies within twenty (20)
Business Days of receipt of the monthly statement.
xii
<PAGE> 37
For purposes of wire transfers, FIIOC shall transmit a daily wire for
aggregate purchase activity and the Fund Vendor shall transmit a daily wire
for aggregate redemption activity, in each case including all activity
across all Funds occurring on the same day.
PROSPECTUS DELIVERY
FIIOC shall be responsible for the timely delivery of Fund prospectuses and
periodic Fund reports ("Required Materials") to Plan participants, and shall
retain the services of a third-party vendor to handle such mailings. The
Fund Vendor shall be responsible for all materials and production costs, and
hereby agrees to provide the Required Materials to the third-party vendor
selected by FIIOC. The Fund Vendor shall bear the costs of mailing annual
Fund reports to Plan participants. FIIOC shall bear the costs of mailing
prospectuses to Plan participants.
PROXIES
The Fund Vendor shall be responsible for all costs associated with the
production of proxy materials. FIIOC shall retain the services of a
third-party vendor to handle proxy solicitation mailings and vote
tabulation. Expenses associated with such services shall be billed directly
to the Fund Vendor by the third-party vendor.
PARTICIPANT COMMUNICATIONS
The Fund Vendor shall provide internally-prepared fund descriptive
information approved by the Funds' legal counsel for use by FIIOC in its
written Participant communication materials. FIIOC shall utilize historical
performance data obtained from third-party vendors (currently Morningstar,
Inc., FACTSET Research Systems and Lipper Analytical Services) in telephone
conversations with plan Participants and in quarterly Participant
statements. The Sponsor hereby consents to FIIOC's use of such materials and
acknowledges that FIIOC is not responsible for the accuracy of such
third-party information. FIIOC shall seek the approval of the Fund Vendor
prior to retaining any other third-party vendor to render such data or
materials under this Agreement.
COMPENSATION
FIIOC shall be entitled to fees as set forth in a separate agreement with
the Fund Vendor.
xiii
<PAGE> 38
SCHEDULE "I"
[Sponsor's Letterhead]
Mr. David Phillips
Fidelity Investments Institutional Operations Company, Inc.
82 Devonshire Street
Boston, Massachusetts 02109
[Name of Plan]
Dear Mr. Phillips:
This letter is sent to you in accordance with Section 8(a) of the Trust
Agreement dated as of the [ ] day of [ ], 199X, between [ ] and Fidelity
Management Trust Company.
Each of the plans identified below is a tax-qualified defined
contribution plan which meets the requirements of Section 18 of said Trust
Agreement and which is maintained by the undersigned, or one of its subsidiaries
or affiliates, for the benefit of their eligible employees. Each such plan is
hereby designated as a "Plan" for purposes of said Trust Agreement. The
following individuals or entities are the Administrator and Named Fiduciary
(ies) of said Plan(s).
Plans Administrator Named Fiduciary(ies)
----- ------------- ----- --------------
We hereby further certify that each Employer with respect to each of
the foregoing Plan(s) has authorized the assets of such Plan to be deposited in
the Trust and, as a result, is bound by Section 16(b) of said Trust Agreement.
You may rely upon the foregoing designations and certifications until
we deliver to you written notice of a change in any of the information set forth
therein.
Very truly yours,
[SPONSOR]
By
xiv
<PAGE> 1
EXHIBIT 4.9
FIRST AMENDMENT TO TRUST AGREEMENT BETWEEN
FIDELITY MANAGEMENT TRUST COMPANY AND
QUANEX CORPORATION
THIS FIRST AMENDMENT, dated as of the first day of November, 1999, by
and between Fidelity Management Trust Company (the "Trustee") and Quanex
Corporation (the "Sponsor").
WITNESSETH:
WHEREAS, the Trustee and the Sponsor heretofore entered into a Trust
Agreement dated February 1, 1999 with regard to the Quanex Corporation Employee
Savings Plan, the Quanex Corporation Hourly Bargaining Unit Employees Savings
Plan, the Piper Impact 401(k) Plan, the Nichols-Homeshield 401(k) Savings Plan
and the Nichols-Homeshield 401(k) Savings Plan for Hourly Davenport Employees
(the "Plan"); and
WHEREAS, the Trustee and the Sponsor now desire to amend said Trust
Agreement as provided for in Section 14 thereof;
NOW THEREFORE, in consideration of the above premises, the Trustee and
the Sponsor hereby amend the Trust Agreement by:
(1) Amending Schedule "G" by adding the following to the Exchange
Restrictions for the Quanex Corporation Stock Fund, as follows:
Participants who exchange into the Sponsor Stock Fund must
wait a minimum of forty-five (45) days prior to exchanging
out of the Sponsor Stock Fund.
Participants who exchange out of the Sponsor Stock Fund must
wait a minimum of forty-five (45) days prior to exchanging
back into the Sponsor Stock Fund.
IN WITNESS WHEREOF, the Trustee and the Sponsor have caused this First
Amendment to be executed by their duly authorized officers effective as of the
day and year first above written.
QUANEX CORPORATION FIDELITY MANAGEMENT TRUST COMPANY
By: By:
-------------------------------- --------------------------------
Date Vice President Date
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Post-Effective Amendment
No. 2 to Registration Statement No. 33-38702 of Quanex Corporation on Form S-8
of our reports dated November 23, 1998 and June 1, 1998, appearing in the
Annual Report on Form 10-K of Quanex Corporation for the fiscal year ended
October 31, 1998 and in the Annual Report on Form 11-K of Quanex Corporation
Employee Savings Plan for the year ended December 31, 1998, respectively.
DELOITTE & TOUCHE LLP
Houston, Texas
October 15, 1999
<PAGE> 1
EXHIBIT 24.1
MASTER POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Vernon E. Oeschsle , James H. Davis,
Wayne M. Rose, Viren M. Parikh and Thomas R. Royce, and each of them, either
one of whom may act without joinder of the other, his true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments (including post-effective amendments)
to the Registration Statements listed below, and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, and each of them, or the substitute
to substitutes of any or all of them, may lawfully do or cause to be done by
virtue hereof.
Registration Statement No. 333-66777, filed November 4, 1998, relating
to the Quanex Corporation 1997 Key Employee Stock Option Plan and the
Quanex Corporation 1997 Non-Employee Director Sock Option Plan
Registration Statement No. 333-22977, filed March 7, 1997, as amended
by Post-Effective Amendment No. 1, filed February 2, 1999, relating
to the Piper Impact 401(k) Plan
Registration Statement No. 333-18267, filed December 19, 1996,
relating to the Quanex Corporation 1996 Employee Stock Option and
Restricted Stock Plan and the Quanex Corporation Deferred Compensation
Plan
Registration Statement No. 33-57235, filed January 11, 1995, relating
to the Quanex Corporation Employee Stock Purchase Plan
Registration Statement No. 33-54081, filed June 10, 1994, as amended
by Post-Effective Amendment No. 1 filed February 2, 1999, relating to
the Nichols-Homeshield 401(k) Savings Plan
Registration Statement No. 33-54085, filed June 10, 1994, as amended
by Post-Effective Amendment No. 1 filed February 2, 1999, relating to
the Nichols-Homeshield 401(k) Savings Plan for Davenport Hourly
Employees
Registration Statement No. 33-54087, filed June 10, 1994, relating to
the Quanex Corporation Employee Stock Option and Restricted Stock Plan
Registration Statement No. 33-46824, filed March 30, 1992, as amended
by Post-Effective Amendment No. 1 filed February 2, 1999, relating to
the Quanex Corporation Hourly Bargaining Unity Employee Savings Plan
<PAGE> 2
Registration Statement No. 33-38702, filed January 25, 1991, as
amended by Post-Effective Amendment No. 1 filed February 2, 1999,
relating to the Quanex Corporation Employee Savings Plan
Registration Statement No. 33-35128, filed June 4, 1990, relating to
the Quanex Corporation 1989 Non-Employee Director Stock Option Plan
Registration Statement No. 33-29585, filed June 29, 1989, relating to
the Quanex Corporation 1988 Stock Option Plan
Registration Statement No. 33-22550, filed June 15, 1988, relating to
the Quanex Corporation 1987 Non-Employee Director Stock Option Plan
Registration Statement No. 33-23474, as amended by Post-Effective
Amendment No. 1 and Post-Effective Amendment No. 2 filed June 28,
1989, relating to the Quanex Corporation 1978 Stock Option Plan
Registration Statement No. 333-36635, filed September 29, 1997,
relating to the Quanex Corporation Deferred Compensation Trust
Dated: February 25, 1999
/s/ Vernon E. Oechsle
----------------------------
Vernon E. Oechsle
/s/ Donald G. Barger, Jr.
----------------------------
Donald G. Barger, Jr.
/s/ Susan F. Davis
----------------------------
Susan F. Davis
/s/ Russell M. Flaum
----------------------------
Russell M. Flaum
/s/ John D. O'Connell
----------------------------
John D. O'Connell
<PAGE> 3
/s/ Carl E. Pfeiffer
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Carl E. Pfeiffer
/s/ Vincent R. Scorsone
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Vincent R. Scorsone
/s/ Michael J. Sebastian
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Michael J. Sebastian
