<PAGE> 1
As filed with the Securities and Exchange Commission on October 15, 1999
Registration No. 33-54085
================================================================================
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)
<TABLE>
<S> <C>
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)
</TABLE>
Nichols 401(k) Savings Plan
for Hourly Employees
(formerly known as the Nichols-Homeshield
401(k) Savings Plan for Davenport
Hourly Employees)
(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
================================================================================
<PAGE> 2
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 Nichols 401(k) Savings Plan for Hourly Employees (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. 33-54085, filed June 10, 1994, 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.
2
<PAGE> 3
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.
3
<PAGE> 4
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 fiscal
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
<PAGE> 5
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 Nichols 401(k) Savings Plan for Hourly Employees, as amended,
and restated effective January 1, 1999.
4.7 Master Trust Agreement between the Registrant and Fidelity
Management Trust Company dated as of February 1, 1999.
4.8 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 any and all
amendments to the Plan 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
5
<PAGE> 6
securities offered would not exceed that which was
registered) and any 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
6
<PAGE> 7
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question 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
<PAGE> 8
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>
Director, President and
/s/ Vernon E. Oechsle Chief Executive Officer October 15, 1999
- ----------------------------------------- (Principal Execute Officer)
Vernon E. Oechsle
Executive Vice President and
/s/ James H. Davis Chief Operating Officer October 15, 1999
- ----------------------------------------- (Principal Operating Officer)
James H. Davis
*
- ----------------------------------------- Director October 15, 1999
Donald G. Barger, Jr.
</TABLE>
8
<PAGE> 9
<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>
9
<PAGE> 10
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.
NICHOLS 401(K) SAVINGS PLAN
FOR HOURLY EMPLOYEES
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 fiscal
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 Nichols 401(k) Savings Plan for Hourly Employees, as amended,
and restated effective January 1, 1999.
4.7 Master Trust Agreement between the Registrant and Fidelity
Management Trust Company dated as of February 1, 1999.
4.8 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>
<PAGE> 1
EXHIBIT 4.6
NICHOLS 401(k) SAVINGS PLAN
FOR HOURLY EMPLOYEES
AMENDMENT AND RESTATEMENT
EFFECTIVE JANUARY 1, 1999
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
SECTION
<S> <C>
ARTICLE I--DEFINITIONS
Account .........................................................1.01
Active Service....................................................1.02
Affiliated Employer...............................................1.03
Annual Compensation...............................................1.04
Annuity Starting Date.............................................1.05
Beneficiary or Beneficiaries......................................1.06
Board .........................................................1.07
Code .........................................................1.08
Committee.........................................................1.09
Considered Compensation...........................................1.10
Contribution......................................................1.11
Decatur Plan......................................................1.12
Direct Rollover...................................................1.13
Disability........................................................1.14
Distributee.......................................................1.15
Eligible Retirement Plan..........................................1.16
Eligible Rollover Distribution....................................1.17
Employee .........................................................1.18
Employer or Employers.............................................1.19
Entry Date........................................................1.20
ERISA .........................................................1.21
Five Percent Owner................................................1.22
Highly Compensated Employee.......................................1.23
Hour of Service...................................................1.24
Leased Employee...................................................1.25
Member .........................................................1.26
Non-Highly Compensated Employee...................................1.27
Period of Service.................................................1.28
Period of Severance...............................................1.29
Plan .........................................................1.30
Plan Year.........................................................1.31
Qualified Domestic Relations Order................................1.32
Regulation........................................................1.33
Required Beginning Date...........................................1.34
Retirement Age....................................................1.35
Rollover Contribution.............................................1.36
Separation From Service...........................................1.37
Service .........................................................1.38
Severs Service....................................................1.39
Sponsor .........................................................1.40
Spouse .........................................................1.41
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C>
Steelworkers Collective Bargaining Agreement......................1.42
Teamsters Collective Bargaining Agreement.........................1.43
Trust .........................................................1.44
Trustee .........................................................1.45
Valuation Date....................................................1.46
ARTICLE II--ACTIVE SERVICE
When Active Service Begins........................................2.01
Aggregation of Service............................................2.02
Periods of Service of Less Than One Year..........................2.03
Service Prior to Severance........................................2.04
Periods of Severance Due to Child Birth or Adoption...............2.05
Transfers.........................................................2.06
Employment Records Conclusive.....................................2.07
Service Credit Required under Federal Law.........................2.08
Special Transitional Rule.........................................2.09
Credit for Service With Alumi-Brite Corporation...................2.10
Credit for Service With Fruehauf Trailer Corporation..............2.11
ARTICLE III--ELIGIBILITY
Eligibility Requirements..........................................3.01
Early Participation for Some Purposes.............................3.02
Eligibility Upon Reemployment.....................................3.03
Cessation of Participation........................................3.04
Recommencement of Participation...................................3.05
ARTICLE IV--CONTRIBUTIONS
Salary Deferral Contributions.....................................4.01
Supplemental Contributions........................................4.02
Rollover Contributions and Plan-to-Plan Transfers.................4.03
QNECs - Extraordinary Employer Contributions......................4.04
Restoration Contributions.........................................4.05
Nondeductible Contributions Not Required..........................4.06
Form of Payment of Contributions..................................4.07
Deadline for Payment of Employer Contributions....................4.08
Return of Contributions for Mistake, Disqualification or
Disallowance of Deduction.................................4.09
ARTICLE V--ALLOCATION AND VALUATION OF ACCOUNTS
Information Statements from Employer..............................5.01
Allocation of Salary Deferral Contribution........................5.02
Allocation of Supplemental Contribution...........................5.03
Allocation of QNEC................................................5.04
Valuation of Accounts.............................................5.05
No Vesting Unless Otherwise Prescribed............................5.06
</TABLE>
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<PAGE> 4
<TABLE>
<S> <C>
ARTICLE VI--BENEFITS
Retirement Benefit................................................6.01
Disability Benefit................................................6.02
Severance Benefit.................................................6.03
Death Benefit.....................................................6.04
In-Service Financial Hardship Distributions.......................6.05
In-Service Age 59 1/2 Distributions...............................6.06
Loans .........................................................6.07
Distribution Methods Available....................................6.08
Election of Distribution Method...................................6.09
Lump Sum Payment of Small Amounts Upon Separation From Service....6.10
Form of Payment...................................................6.11
Direct Rollover Option............................................6.12
Time of Distributions.............................................6.13
Consent to Distributions Upon Separation From Service.............6.14
Information Provided to Members...................................6.15
Designation of Beneficiary........................................6.16
Distributions to Disabled Persons.................................6.17
Distributions Pursuant to Qualified Domestic Relations Orders.....6.18
Claims Procedure..................................................6.19
ARTICLE VII--FORFEITURES
Forfeiture by Lost Former Members or Beneficiaries................7.01
Forfeiture on Termination of Participation........................7.02
Allocation of Forfeitures.........................................7.03
Restoration of Forfeited Amounts..................................7.04
Transition Rule for Decatur Plan Participants.....................7.05
ARTICLE VIII--ADMINISTRATION OF THE PLAN
Appointment, Term of Service & Removal............................8.01
Powers .........................................................8.02
Organization......................................................8.03
Quorum and Majority Action........................................8.04
Signatures........................................................8.05
Disqualification of Committee Member..............................8.06
Disclosure to Members.............................................8.07
Liability of Committee and Liability Insurance....................8.08
Exemption from Bond...............................................8.09
Compensation......................................................8.10
Persons Serving in Dual Fiduciary Roles...........................8.11
Administrator.....................................................8.12
ARTICLE IX--TRUST
Funding of Plan...................................................9.01
Incorporation of Trust............................................9.02
</TABLE>
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<PAGE> 5
<TABLE>
<S> <C>
Authority of Trustee..............................................9.03
ARTICLE X--ADOPTION OF PLAN BY OTHER EMPLOYERS
Adoption Procedure...............................................10.01
No Joint Venture Implied.........................................10.02
All Trust Assets Available to Pay All Benefits...................10.03
Qualification a Condition Precedent to Adoption and Continued
Participation...........................................10.04
ARTICLE XI--AMENDMENT AND TERMINATION
Right to Amend and Limitations Thereon...........................11.01
Mandatory Amendments.............................................11.02
Withdrawal of Employer...........................................11.03
Termination of Plan..............................................11.04
Partial or Complete Termination or Complete Discontinuance of
Contributions...........................................11.05
ARTICLE XII--MISCELLANEOUS
Plan Not an Employment Contract..................................12.01
Benefits Provided Solely From Trust..............................12.02
Assignments Prohibited...........................................12.03
Requirements Upon Merger or Consolidation of Plans...............12.04
Gender of Words Used.............................................12.05
Severability.....................................................12.06
Reemployed Veterans..............................................12.07
Governing Law....................................................12.08
APPENDIX A--LIMITATIONS ON CONTRIBUTIONS
</TABLE>
-iv-
<PAGE> 6
NICHOLS 401(k) SAVINGS PLAN
FOR HOURLY EMPLOYEES
THIS AGREEMENT adopted by Quanex Corporation, a Delaware corporation
(the "Sponsor"), and Nichols Aluminum-Alabama, Inc., a Delaware corporation,
W I T N E S S E T H:
WHEREAS, Nichols-Homeshield, Inc. established the Nichols-Homeshield,
Inc. 401(k) Savings Plan for Davenport Hourly Employees (the "Plan") effective
October 1, 1987;
WHEREAS, the Sponsor assumed sponsorship of the Plan effective January
1, 1992;
WHEREAS, effective July 1, 1999, the Decatur Aluminum Corporation
Hourly Employees' 401(k) Retirement Plan and Trust was merged into the Plan;
WHEREAS, the Plan is maintained for the benefit of persons who are
included in a unit of employees covered by a collective bargaining agreement
between Quanex Corporation and the Chauffers, Teamsters and Helpers Union,
Local No. 371 or a collective bargaining agreement between Nichols
Aluminum-Alabama, Inc. and the United Steelworkers of America, Local No. 203A;
WHEREAS, effective January 1, 1999, the name of the Plan was changed
to the "Nichols 401(k) Savings Plan for Hourly Employees"; and
WHEREAS, the Sponsor desires to amend and restate the Plan to comply
with new legislation;
NOW, THEREFORE, the Plan is hereby amended and restated in its
entirety as set forth below.
<PAGE> 7
ARTICLE I
DEFINITIONS
The words and phrases defined in this Article shall have the meaning
set out in the definition unless the context in which the word or phrase
appears reasonably requires a broader, narrower or different meaning.
1.01 "ACCOUNT" means all ledger accounts pertaining to a Member which
are maintained by the Committee to reflect the Member's interest in the Trust.
The Committee shall establish the following Accounts and any additional
Accounts that the Committee considers necessary to reflect the entire interest
of the Member in the Trust. Each of the Accounts listed below and any
additional Accounts established by the Committee shall reflect the
Contributions or amounts transferred to the Trust, if any, and the appreciation
or depreciation of the assets in the Trust and the income earned or loss
incurred on the assets in the Trust attributable to the Contributions and/or
other amounts transferred to the Account.
(a) Salary Deferral Contribution Account -- the Member's
before-tax contributions.
(b) Supplemental Contribution Account -- the Employer's
contributions, if any, made pursuant to Section 4.02.
(c) QNEC Account -- the contributions, known as "qualified
nonelective employer contributions", made by the Employer as a means
of passing the actual deferral percentage test of section 401(k) of
the Code.
(d) Rollover Account -- funds transferred from another
qualified plan or individual retirement account for the benefit of a
Member.
1.02 "ACTIVE SERVICE" means the Periods of Service which are counted
for either eligibility or vesting purposes as calculated under Article II.
1.03 "AFFILIATED EMPLOYER" means the Employer and any employer which
is a member of the same controlled group of corporations within the meaning of
section 414(b) of the Code or which is a trade or business (whether or not
incorporated) which is under common control (within the meaning of section
414(c) of the Code), which is a member of an affiliated service group (within
the meaning of section 414(m) of the Code) with the Employer, or which is
required to be aggregated with the Employer under section 414(o) of the Code.
For purposes of the limitation on allocations contained in Appendix A, the
definition of Affiliated Employer is modified by substituting the phrase "more
than 50 percent" in place of the phrase "at least 80 percent" each place the
latter phrase appears in section 1563(a)(1) of the Code.
1.04 "ANNUAL COMPENSATION" means the Employee's wages from the
Affiliated Employers as defined in section 3401(a) of the Code for purposes of
federal income tax withholding at the source (but determined without regard to
any rules that limit the remuneration included in
I-1
<PAGE> 8
wages based on the nature or location of the employment or the services
performed) modified by including elective contributions under a cafeteria plan
described in section 125 of the Code and elective contributions to any plan
qualified under section 401(k), 408(k), or 403(b) of the Code. For purposes of
allocating Supplemental Contributions, QNECs and Salary Deferral Contributions,
Annual Compensation does not include Employer contributions to the Quanex
Corporation Employee Stock Purchase Plan. Except for purposes of Section 1.1 of
Appendix A of the Plan, Annual Compensation in excess of $150,000.00 (as
adjusted by the Secretary of Treasury) shall be disregarded. If the Plan Year
is ever less than twelve months, the $150,000.00 limitation (as adjusted by the
Secretary of Treasury) will be prorated by multiplying the limitation by a
fraction, the numerator of which is the number of months in the Plan Year, and
the denominator of which is 12.
1.05 "ANNUITY STARTING DATE" means the first day of the first period
for which an amount is payable as an annuity, or in the case of a benefit
payable in the form of a lump sum, the date on which the Trustee disburses the
lump sum.
1.06 "BENEFICIARY" OR "BENEFICIARIES" means the person or persons, or
the trust or trusts created for the benefit of a natural person or persons or
the Member's or former Member's estate, designated by the Member or former
Member to receive the benefits payable under the Plan upon his death.
1.07 "BOARD" means the board of directors of the Sponsor.
1.08 "CODE" means the Internal Revenue Code of 1986, as amended from
time to time.
1.09 "COMMITTEE" means the committee appointed by the Sponsor to
administer the Plan.
1.10 "CONSIDERED COMPENSATION" means as to each Employee, that
Employee's Annual Compensation modified by excluding the following items (even
if includable in gross income): bonuses, awards, Employer contributions to the
Quanex Corporation Employee Stock Purchase Plan, reimbursements or other
expense allowances, fringe benefits (cash and noncash), moving expenses,
deferred compensation, and welfare benefits (such as severance pay). Considered
Compensation in excess of $150,000.00 (as adjusted by the Secretary of
Treasury) shall be disregarded. If the Plan Year is ever less than twelve
months, the $150,000.00 limitation (as adjusted by the Secretary of Treasury)
will be prorated by multiplying the limitation by a fraction, the numerator of
which is the number of months in the Plan Year, and the denominator of which is
12.
1.11 "CONTRIBUTION" means the total amount of contributions made under
the terms of the Plan. Each specific type of Contribution shall be designated
by the type of contribution made as follows:
(a) Salary Deferral Contribution -- a contribution made by
the Employer under the Employee's salary deferral agreement.
(b) Supplemental Contribution -- a contribution made by the
Employer pursuant to Section 4.02.
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(c) QNEC - an extraordinary contribution, known as a
"qualified nonelective employer contribution", made by the Employer as
a means of passing the actual deferral percentage test of section
401(k) of the Code.
(d) Rollover Contribution - contributions made by a Member
which consist 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.
1.12 "DECATUR PLAN" means the Decatur Aluminum Corporation Hourly
Employers' 401(k) Retirement Plan and Trust.
1.13 "DIRECT ROLLOVER" means a payment by the Plan to the Eligible
Retirement Plan specified by the Distributee.
1.14 "DISABILITY" means a mental or physical disability which, in the
opinion of a physician selected by the Committee, shall prevent the Member from
earning a reasonable livelihood with any Affiliated Employer and which can be
expected to result in death or which has lasted or can be expected to last for
a continuous period of not less than 12 months and which: (a) was not
contracted, suffered or incurred while the Member was engaged in, or did not
result from having engaged in, a felonious criminal enterprise; (b) did not
result from alcoholism or addiction to narcotics; and (c) did not result from
an injury incurred while a member of the Armed Forces of the United States for
which the Member receives a military pension.
1.15 "DISTRIBUTEE" means an Employee or former Employee. In addition,
the Employee's or former Employee's surviving Spouse and the Employee's or
former Employee's Spouse or former Spouse who is the alternate payee under a
Qualified Domestic Relations Order, are Distributees with regard to the
interest of the Spouse or former Spouse.
1.16 "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.
1.17 "ELIGIBLE ROLLOVER DISTRIBUTION" as defined in section 402 of the
Code 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: (a) 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 Beneficiary, or for a
specified period of ten years or more; (b) any distribution to the extent the
distribution is required under section 401(a)(9) of the Code; (c) the portion
of any distribution that is not includable in gross income (determined without
regard to the exclusion for net unrealized appreciation with respect to
employer securities); and (d), with respect to Salary Deferral
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Contribution Accounts and QNEC Accounts, any financial hardship distribution
described in section 401(k)(2) of the Code.
1.18 "EMPLOYEE" means, except as otherwise specified in this Section,
all common law employees of an Affiliated Employer and all Leased Employees.
1.19 "EMPLOYER" OR "EMPLOYERS" means the Sponsor, Nichols
Aluminum-Alabama, Inc., a Delaware corporation (previously named Decatur
Aluminum Corp.), and any other business organization that adopts the Plan.
1.20 "ENTRY DATE" means any of January 1, April 1, July 1 and October
1 of each Plan Year.
1.21 "ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
1.22 "FIVE PERCENT OWNER" means an Employee who is a five percent
owner as defined in section 416(i) of the Code.
1.23 "HIGHLY COMPENSATED EMPLOYEE" means an Employee of an Employer or
an Affiliated Employer who, during the Plan Year or the preceding Plan Year,
(a) was at any time a Five Percent Owner at any time during the Plan Year or
the preceding Plan Year or (b) had Annual Compensation from the Affiliated
Employers in excess of $80,000.00 (as adjusted from time to time by the
Secretary of the Treasury) for the preceding Plan Year.
1.24 "HOUR OF SERVICE" means each hour for which an Employee is paid
or entitled to payment for the performance of duties for an Affiliated
Employer.
1.25 "LEASED EMPLOYEE" means any person who (a) is not a common law
employee of an Affiliated Employer, (b) pursuant to an agreement between an
Affiliated Employer and any other person, has performed services for an
Affiliated Employer (or for an Affiliated Employer and related persons
determined in accordance with section 414(n)(6) of the Code) on a substantially
full-time basis for a period of at least one year and (c) performs the services
under primary direction and control of the recipient.
1.26 "MEMBER" means the person or persons employed by an Employer
during the Plan Year and eligible to participate in the Plan.
1.27 "NON-HIGHLY COMPENSATED EMPLOYEE" means an Employee of the
Employer who is not a Highly Compensated Employee.
1.28 "PERIOD OF SERVICE" means a period of employment with an
Affiliated Employer which commences on the day on which an Employee performs
his initial Hour of Service or performs his initial Hour of Service upon
returning to the employ of an Affiliated Employer, whichever is applicable, and
ends on the date the Employee Severs Service.
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1.29 "PERIOD OF SEVERANCE" means the period of time commencing on the
date an Employee Severs Service and ending on the date the Employee again
performs an Hour of Service.
1.30 "PLAN" means the Nichols 401(k) Savings Plan for Hourly
Employees.
1.31 "PLAN YEAR" means the calendar year, the fiscal year of the Plan.
1.32 "QUALIFIED DOMESTIC RELATIONS ORDER" means a qualified domestic
relations order as defined in section 414(p) of the Code.
1.33 "REGULATION" means the Department of Treasury regulation
specified, as it may be changed from time to time.
1.34 "REQUIRED BEGINNING DATE" means:
(a) in the case of an individual who is not a Five Percent
Owner in the Plan Year that ends in the calendar year in which he
attains age 70 1/2, the Required Beginning Date is April 1 of the
calendar year following the later of (i) the calendar year in which
the individual attains age 70 1/2, or (ii) the calendar year in which
the individual Severs Service; and
(b) in the case of an individual who is a Five Percent Owner
in the Plan Year that ends in the calendar year in which he attains
age 70 1/2, the Required Beginning Date is April 1 of the calendar
year in which he attains age 70 1/2.
1.35 "RETIREMENT AGE" means the later of time a Member or former
Member attains age 65 or the fifth anniversary of the date he commenced
participation in the Plan. In the case of a Member or former Member who was a
participant in the Decatur Plan, "Retirement Age" means the later of the time
he attains age 55 or completes five years of Active Service if that definition
is more favorable for him than the definition in the preceding sentence. Once a
Member or former Member has attained his Retirement Age he shall have a 100
percent nonforfeitable interest in his Account balances at all times.
1.36 "ROLLOVER CONTRIBUTION" means the amount contributed by a Member
of the 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.
1.37 "SEPARATION FROM SERVICE" means an individual's termination of
employment with an Affiliated Employer without commencing or continuing
employment with any other Affiliated Employer.
1.38 "SERVICE" means the period or periods that a person is paid or is
entitled to payment for performance of duties with an Affiliated Employer.
1.39 "SEVERS SERVICE" means the earlier of the following events: (a)
the Employee's quitting, retiring, dying or being discharged, (b) the
completion of a period of 365 continuous days in which the Employee remains
absent from Service (with or without pay) for any reason other than
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quitting, retiring, dying or being discharged, such as vacation, holiday,
sickness, disability, leave of absence, layoff or any other absence or (c) the
second anniversary of the commencement of a continuous period of absence
occasioned by the reason of the pregnancy of the Employee, the birth of a child
of the Employee, the placement of a child with the Employee in connection with
the adoption of the child by the Employee or the caring for the child for a
period commencing immediately after the child's birth or placement.
1.40 "SPONSOR" means Quanex Corporation, a Delaware corporation.
1.41 "SPOUSE" means the person to whom the Member or former Member is
married under applicable local law. In addition, to the extent provided in a
Qualified Domestic Relations Order, a surviving former spouse of a Member or
former Member will be treated as the Spouse of the Member or former Member, and
to the same extent any current spouse of the Member or former Member will not
be treated as a Spouse of the Member or former Member.
1.42 "STEELWORKERS COLLECTIVE BARGAINING AGREEMENT" means the
collective bargaining agreement in effect between Nichols Aluminum-Alabama,
Inc. and the United Steelworkers of America, Local No. 203A.
1.43 "TEAMSTERS COLLECTIVE BARGAINING AGREEMENT" means the collective
bargaining agreement in effect between the Sponsor and the Chauffers, Teamsters
and Helpers Union, Local No. 371.
1.44 "TRUST " means the trust estate created to fund the Plan.
1.45 "TRUSTEE" means collectively one or more persons or corporations
with trust powers which have been appointed by the initial Sponsor and have
accepted the duties of Trustee and any successor appointed by the Sponsor.
1.46 "VALUATION DATE" means each business day of the Plan Year.
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ARTICLE II
ACTIVE SERVICE
2.01 WHEN ACTIVE SERVICE BEGINS. For purposes of eligibility and
vesting, Active Service begins when an Employee first performs an Hour of
Service for an Affiliated Employer. If an Employee who has begun Active Service
Severs Service he shall recommence Active Service when he again performs an
Hour of Service for an Affiliated Employer.
2.02 AGGREGATION OF SERVICE. When determining an Employee's Active
Service, all Periods of Service, whether or not completed consecutively, shall
be aggregated on a per day basis. For purposes of eligibility and vesting, only
full years of Active Service shall be counted. In aggregating Active Service,
30 days shall be counted as one month and 12 months shall be counted as one
year. No fractional years shall be counted for purposes of eligibility or
vesting.
2.03 PERIODS OF SERVICE OF LESS THAN ONE YEAR. If an Employee performs
an Hour of Service within 12 months after he Severs Service, the intervening
Period of Severance shall be counted as a Period of Service.
2.04 SERVICE PRIOR TO SEVERANCE. If an Employee Severs Service at a
time when he does not have any vested right to amounts credited to his
Supplemental Contribution Account and the Period of Severance continues for a
continuous period of five years or more, the Period of Service completed by the
Employee before the Period of Severance shall not be taken into account if his
Period of Severance equals or exceeds his Period of Service, whether or not
consecutive, completed before the Period of Severance.
2.05 PERIODS OF SEVERANCE DUE TO CHILD BIRTH OR ADOPTION. The period
of time between (a) the first anniversary of the first day of an absence from
Service by reason of the pregnancy of the Employee, the birth of a child of the
Employee, the placement of a child with the Employee in connection with the
adoption of the child by the Employee or for purposes of caring for the child
immediately following the birth or placement and (b) the second anniversary of
the first day of the absence shall not be counted as a Period of Service or a
Period of Severance.
2.06 TRANSFERS. If an Employee is transferred to the employ of an
Affiliated Employer, he will continue to earn Active Service for eligibility
and vesting purposes.
2.07 EMPLOYMENT RECORDS CONCLUSIVE. The employment records of the
Employer shall be conclusive for all determinations of Active Service.
2.08 SERVICE CREDIT REQUIRED UNDER FEDERAL LAW. An Employee shall be
credited with such additional years of Active Service as are required under any
applicable law of the United States.
2.09 SPECIAL TRANSITIONAL RULE. Any person who was an Employee before
July 1, 1999, will have all or a portion of his Active Service for vesting
purposes figured under the applicable provisions of the Plan in effect before
July 1, 1999, if that method of calculating service is more beneficial for him
than the method otherwise set out in this Article II.
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2.10 CREDIT FOR SERVICE WITH ALUMI-BRITE CORPORATION. For purposes of
determining an Employee's Active Service for eligibility to participate and
vesting, his service with Alumi-Brite Corporation, an Illinois corporation will
be counted as Active Service under the Plan.
2.11 CREDIT FOR SERVICE WITH FRUEHAUF TRAILER CORPORATION. For
purposes of determining an Employee's Active Service for eligibility to
participate and vesting, his service with Fruehauf Trailer Corporation, a
Delaware corporation, will be counted as Active Service under the Plan.
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ARTICLE III
ELIGIBILITY
3.01 ELIGIBILITY REQUIREMENTS. Each Employee who is (a) employed by
the Sponsor at one of its Nichols divisions and included in a unit of employees
covered by the Teamsters Collective Bargaining Agreement or (b) employed by
Nichols Aluminum-Alabama, Inc. and included in a unit of employees covered by
the Steelworkers Collective Bargaining Agreement shall be eligible to
participate in the Plan for all purposes beginning on the Entry Date that
occurs with or next follows the date on which the Employee completes one year
of Active Service.
3.02 EARLY PARTICIPATION FOR SOME PURPOSES. An Employee who satisfies
the eligibility requirements specified in Section 3.01 other than the service
requirement will be eligible to participate in the cash or deferred arrangement
portion of the Plan for all purposes relating to Salary Deferral Contributions
and he shall be eligible to make Rollover Contributions to the Plan, in both
cases, on the Entry Date next following (not coincident with) the date on which
he completes an Hour of Service.
3.03 ELIGIBILITY UPON REEMPLOYMENT. If an Employee Severs Service with
the Employer prior to the date he initially begins participating in the Plan,
he shall be eligible to begin participation in the Plan on the later of the
date he would have become a Member if he did not Sever Service or the date on
which he performs an Hour of Service after he Severs Service. Subject to
Section 3.04, once an Employee becomes a Member, his eligibility to participate
in the Plan shall continue until he Severs Service.
3.04 CESSATION OF PARTICIPATION. An individual who has become a Member
will cease to be a Member on the earliest of the date on which he (a) Severs
Service, (b) is transferred from the employ of an Employer to the employ of an
Affiliated Employer that has not adopted the Plan, (c) becomes included in a
unit of employees covered by a collective bargaining agreement that does not
require coverage of those employees under the Plan, or (d) becomes included in
another classification of Employees who, under the terms of the Plan, are not
eligible to participate. Under these circumstances, the Member's Account
becomes frozen; he cannot contribute to the Plan or share in the allocation of
any Supplemental Contributions or QNECs for the frozen period. However, his
Accounts shall continue to share in any Plan income allocable to his Accounts
during the frozen period of time.
3.05 RECOMMENCEMENT OF PARTICIPATION. A former Member will again
become a Member on the day on which he again becomes included in a
classification of Employees that, under the terms of the Plan, is eligible to
participate.
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ARTICLE IV
CONTRIBUTIONS
4.01 SALARY DEFERRAL CONTRIBUTIONS. The Employer shall make a Salary
Deferral Contribution in an amount equal to the amount by which its Members'
Annual Compensation was reduced as a result of salary deferral agreements. Any
such salary deferral agreement shall be an agreement in a form satisfactory to
the Committee to prospectively receive Annual Compensation from the Employer in
a reduced amount and to have the Employer contribute an amount equal to the
amount of the reduction to the Trust on account of the Member. Any such salary
deferral agreement shall be revocable in accordance with its terms, provided
that no revocation shall be retroactive or permit payment to the Member of the
amount required to be contributed to the Trust. A Member shall be entitled to
prospectively modify his salary deferral agreement at least once a year. A
Member's right to benefits derived from Salary Deferral Contributions made to
the Plan on his behalf shall be nonforfeitable. The election to have Salary
Deferral Contributions made, the ability to change the rate of Salary Deferral
Contributions, the right to suspend Salary Deferral Contributions, and the
manner of commencing new Salary Deferral Contributions shall be permitted under
any uniform method determined by the Committee from time to time.
4.02 SUPPLEMENTAL CONTRIBUTIONS. The Sponsor shall contribute to the
Trust for each Plan Year a Supplemental Contribution for Members who are
employed by the Sponsor in such amount as is required under the terms of the
Teamsters Collective Bargaining Agreement. Nichols Aluminum-Alabama, Inc. shall
contribute to the Trust for each Plan Year a Supplemental Contribution for
Members who are employed by it in such amount as is required under the terms of
the Steelworkers Collective Bargaining Agreement.
4.03 ROLLOVER CONTRIBUTIONS AND PLAN-TO-PLAN TRANSFERS. The Committee
may permit Rollover Contributions by Members and/or direct transfers to or from
another qualified plan on behalf of Members 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 Members on a nondiscriminatory basis. For this
purpose only, all Employees who are included in a classification of Employees
who are eligible to participate in the Plan shall be considered to be Members
of the Plan even though they may not have met the Active Service requirements
for eligibility. However, they shall not be entitled to elect to have Salary
Deferral Contributions made or to share in Employer Contributions or
forfeitures unless and until they have met the requirements for eligibility,
contributions and allocations. A Rollover Contribution shall not be accepted
unless it is directly rolled over to the Plan in a rollover described in
section 401(a)(31) of the Code. A Member 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.
4.04 QNECs - EXTRAORDINARY EMPLOYER CONTRIBUTIONS. Any Employer may
make a QNEC in such amount, if any, as shall be determined by it. A Member's
right to benefits derived from QNECs made to the Plan on his behalf shall be
nonforfeitable. In no event will QNECs be distributed before Salary Deferral
Contributions may be distributed.
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4.05 RESTORATION CONTRIBUTIONS. The Employer shall, for each Plan
Year, make a restoration contribution in an amount equal to the sum of (a) such
amount, if any, as shall be necessary to fully restore all Supplemental
Contribution Accounts required to be restored pursuant to the provisions of
Section 7.04, after application of all forfeitures and any appreciation in the
value of the Trust available for such restoration; plus (b) an amount equal in
value to the value of forfeited benefits described in and payable under Section
7.01.
4.06 NONDEDUCTIBLE CONTRIBUTIONS NOT REQUIRED. Notwithstanding any
other provision of the Plan, no Employer shall be required to make any
contribution that would be a "nondeductible contribution" within the meaning of
section 4972 of the Code.
4.07 FORM OF PAYMENT OF CONTRIBUTIONS. Contributions may be paid to
the Trustee either in cash or in qualifying employer securities (as such term
is defined in section 407(d) of ERISA) or any combination thereof, provided
that payment may not be made in any form constituting a prohibited transaction
under section 4975 of the Code or section 406 of ERISA.
4.08 DEADLINE FOR PAYMENT OF EMPLOYER CONTRIBUTIONS. Salary Deferral
Contributions shall be paid to the Trustee in installments. The installment for
each payroll period shall be paid as soon as administratively feasible, and
shall be in an amount equal to the amount by which all Members' Annual
Compensation was reduced pursuant to salary deferral agreements for such
period. The Supplemental Contributions and QNECs for a Plan Year shall be paid
to the Trustee in one or more installments, as the Employer may from time to
time determine; provided, however, that such contributions may not be paid
later than the time prescribed by law (including extensions thereof) for filing
the Employer's income tax return for its taxable year ending with or within
such Plan Year.
4.09 RETURN OF CONTRIBUTIONS FOR MISTAKE, DISQUALIFICATION OR
DISALLOWANCE OF DEDUCTION. Subject to the limitations of section 415 of the
Code, the assets of the Trust shall not revert to any Employer or be used for
any purpose other than the exclusive benefit of the Members and their
Beneficiaries and the reasonable expenses of administering the Plan except:
(a) any Contribution made because of a mistake of fact may be
repaid to the Employer within one year after the payment of the
Contribution;
(b) all Contributions are conditioned upon the Plan's initial
qualification under section 401 of the Code and may be repaid to the
Employer within one year after the date of denial of the initial
qualification of the Plan; and
(c) all Employer Contributions are conditioned upon their
deductibility under section 404 of the Code; therefore, to the extent
the deduction is disallowed, the Contributions may be repaid to the
Employer within one year after the disallowance.
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 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
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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
Contributions made due to a mistake of fact or with respect to which a
deduction is disallowed are limited so that the balance in a Member's Account
cannot be reduced to less than the balance that would have been in the Member's
Account had the mistaken amount or the amount disallowed never been
contributed.
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ARTICLE V
ALLOCATION AND VALUATION OF ACCOUNTS
5.01 INFORMATION STATEMENTS FROM EMPLOYER. Upon request by the
Committee, the Employer shall provide the Committee with a schedule setting
forth the amount of its Salary Deferral Contribution, Supplemental
Contribution, QNEC, and restoration contribution; the names of its Members, the
number of years of Active Service of each of its Members, the amount of
Considered Compensation and Annual Compensation paid to each Member, and the
amount of Considered Compensation and Annual Compensation paid to all its
Members. Such schedules shall be conclusive evidence of such facts.
5.02 ALLOCATION OF SALARY DEFERRAL CONTRIBUTION. The Committee shall
allocate the Salary Deferral Contribution among the Members by allocating to
each Member the amount by which his Annual Compensation was reduced pursuant to
a salary deferral agreement (as described in Section 4.01) and shall credit
each such Member's share to his Salary Deferral Contribution Account.
5.03 ALLOCATION OF SUPPLEMENTAL CONTRIBUTION. For each Plan Year, the
Committee shall allocate the Supplemental Contribution made to the Trust by the
Sponsor to the Supplemental Contribution Account of each person who was an
Employee of the Sponsor at any time during the Plan Year based on such person's
Annual Compensation for the portion of the Plan Year in which he was employed
by the Sponsor and eligible to participate in the Plan for all purposes (as
specified in Section 3.01) as compared to the Annual Compensation of all such
persons for the portions of the Plan Year in which they were eligible to
participate in the Plan for all purposes. For each Plan Year, the Committee
shall allocate the Supplemental Contribution made to the Trust by Nichols
Aluminum-Alabama, Inc. to the Supplemental Contribution Account of each person
who was an Employee of Nichols Aluminum-Alabama, Inc. at any time during the
Plan Year based on such person's Considered Compensation for the portion of the
Plan Year in which he was employed by Nichols Aluminum-Alabama, Inc. and
eligible to participate in the Plan for all purposes as compared to the
Considered Compensation of all such persons for the portions of the Plan Year
in which they were eligible to participate in the Plan for all purposes.
5.04 ALLOCATION OF QNEC. The Committee shall allocate the QNEC made to
the Trust by the Sponsor to the QNEC Account of each Non-Highly Compensated
Employee who is a Member employed by the Sponsor on the last day of the Plan
Year based upon Member's Annual Compensation for the portion of the Plan Year
in which he was eligible to participate in the Plan for all purposes as
compared to the Annual Compensation of all such Members for the portions of the
Plan Year in which they were eligible to participate in the Plan for all
purposes. The Committee shall allocate the QNEC made to the Trust by Nichols
Aluminum-Alabama, Inc. to the QNEC Account of each Non-Highly Compensated
Employee who is a Member employed by Nichols Aluminum-Alabama, Inc. on the last
day of the Plan Year based upon such Member's Considered Compensation for the
portion of the Plan Year in which he was eligible to participate in the Plan
for all purposes as compared to the Considered Compensation of all such Members
for the portion of the Plan Year in which they were eligible to participate in
the Plan for all purposes.
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5.05 VALUATION OF ACCOUNTS. A Member's or former Member's Accounts
shall be valued at fair market value on each Valuation Date. The earnings and
losses attributable to any asset in the Trust will be allocated solely to the
Account of the Member or former Member on whose behalf the investment in the
asset was made. In determining the fair market value of the Members' or former
Member'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.
5.06 NO VESTING UNLESS OTHERWISE PRESCRIBED. No allocations,
adjustments, credits, or transfers shall ever vest in any Member or former
Member any right, title, or interest in the Trust except at the times and upon
the terms and conditions herein set forth.
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ARTICLE VI
BENEFITS
6.01 RETIREMENT BENEFIT. Upon his Separation From Service after he has
attained his Retirement Age, a Member or former Member is entitled to receive
100 percent of all of his Account balances.
6.02 DISABILITY BENEFIT. Upon an Employee's Separation From Service
due to a Disability, he is entitled to receive 100 percent of all of his
Account balances.
6.03 SEVERANCE BENEFIT. Upon an Employee's Separation From Service for
any reason other than death, Separation From Service after attaining Retirement
Age or incurring a Disability, he is entitled to receive (a) 100 percent of all
of his Account balances, except his Supplemental Contribution Account, and (b)
that percentage of his Supplemental Contribution Account, if any, as shown in
the vesting schedule below, as of the date of his Separation From Service.
6.04 DEATH BENEFIT. If a Member or former Member dies before he has
otherwise incurred a Separation From Service, the death benefit payable to his
Beneficiary shall be 100 percent of the remaining amount of his Account
balances.
<TABLE>
<CAPTION>
Percentage of Amount Invested
In Accounts Containing
Completed Years of Active Service Employer Contributions
--------------------------------- ------------------------------
<S> <C>
Less than one year....................................................... 0
One year but less than two years......................................... 20
Two years but less than three years...................................... 40
Three years but less than four years..................................... 60
Four years but less than five years...................................... 80
Five years or more.......................................................100
</TABLE>
Prior to a Member's Separation From Service, he will have a
nonforfeitable interest in the portion of the Supplemental Contributions
specified in the above vesting schedule.
6.05 IN-SERVICE FINANCIAL HARDSHIP DISTRIBUTIONS.
(a) General. Prior to his Separation From Service, a Member
is entitled to receive a distribution from his Salary Deferral
Contribution Account, his Rollover Account, his vested interest in his
Supplemental Contribution Account in the event of an immediate and
heavy financial need incurred by the Member and the Committee's
determination that the withdrawal is necessary to alleviate that
hardship.
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<PAGE> 22
(b) Permitted Reasons For Financial Hardship Withdrawals. 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 Member, the
Member's Spouse, or any dependents of the Member (as defined in
section 152 of the Code) or 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 Member, (iii) payment of tuition and
related educational fees for the next 12 months of post-secondary
education for the Member, his Spouse, children, or dependents (as
defined in section 152 of the Code), (iv) payments necessary to
prevent the eviction of the Member from his principal residence or
foreclosure on the mortgage of the Member's principal residence, or
(v) any other event added to this list by the Commissioner of Internal
Revenue.
(c) Amount. 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 Member and the Member 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 Member'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.
(d) Suspension of Participation in Certain Benefit Programs.
The Member's hardship distribution shall terminate his right to have
the Employer make any Salary Deferral Contributions on his behalf
until the next time Salary Deferral Contributions are permitted after
the lapse of 12 months following the hardship distribution and his
timely filing of a written request to resume his Salary Deferral
Contributions. In addition, for 12 months after he receives a hardship
distribution from the Plan, the Member is prohibited from making
elective contributions and employee contributions to or under 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 Member is not prohibited from making 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.
(e) Resumption of Salary Deferral Contributions. When the
Member resumes Salary Deferral Contributions, he cannot have the
Employer make any Salary Deferral Contributions in excess of the limit
in section 402(g) of the Code for that taxable year reduced by the
amount of Salary Deferral Contributions made by the Employer on the
Member's behalf during the taxable year of the Member in which he
received the hardship distribution.
(f) Order of Withdrawals. Financial hardship distributions
will be made in the following order: First withdrawals will be made
from the Member's Supplemental Contribution Account, then from his
Rollover Account, and finally, from his Salary Deferral Contribution
Account. A Member shall not be entitled to receive a financial
hardship
VI-2
<PAGE> 23
distribution of any amount credited to his QNEC Account, or of any
income that is allocable or credited to his Member's Salary Deferral
Contribution Account.
6.06 IN-SERVICE AGE 59 1/2 DISTRIBUTIONS. Prior to his Separation From
Service, a Member may withdraw part or all of his vested Account balances on or
after the date that he attains age 59 1/2 .
6.07 LOANS. The Committee may direct the Trustees to make loans to
Members (and Beneficiaries who are "parties in interest" within the meaning of
ERISA) who have a vested interest in the Plan. The Loan Committee established
by the Committee will be responsible for administering the Plan loan program.
All loans will comply with the following requirements:
(a) All loans will be made solely from the Member's or
Beneficiary's Account.
(b) Loans will be available on a nondiscriminatory basis to
all Beneficiaries who are "parties in interest" within the meaning of
ERISA, and to all Members.
(c) Loans will not be made for less than $1,000.00.
(d) The maximum amount of a loan may not exceed the lesser of
(A) $50,000.00 reduced by the person's highest outstanding loan
balance from the Plan during the preceding one-year period, or (B)
one-half of the present value of the person's vested Account balances
under the Plan determined as of the date on which the loan is approved
by the Loan Committee.
(e) Any loan from the Plan will be evidenced by a note or
notes (signed by the person applying for the loan) having such
maturity, bearing such rate of interest, and containing such other
terms as the Loan Committee will require by uniform and
nondiscriminatory rules consistent with this Section and proper
lending practices.
(f) All loans will bear a reasonable rate of interest which
will be established by the Loan Committee.
(g) Each loan will be fully secured by a pledge of the
borrowing person's vested Account balances. No more than 50 percent of
the person's vested Account balances (determined immediately after the
origination of the loan) will be considered as security for any loan.
(h) The term of the loan will not be less than 18 months.
Generally, the term of the loan will not be more than five years. The
Loan Committee may agree to a longer term (but not more than seven
years) only if such term is otherwise reasonable and the proceeds of
the loan are to be used to acquire a dwelling which will be used
within a reasonable time (determined at the time the loan is made) as
the principal residence of the borrowing person.
VI-3
<PAGE> 24
(i) The loan agreement will require level amortization over
the term of the loan. A Member's loan agreement will also require that
loan repayments be made through payroll deductions.
(j) If a person fails to make required payments for two
calendar quarters, the loan will be in default.
(k) If a Member has an outstanding loan from the Plan at the
time of his Separation From Service, the outstanding loan principal
balance and any accrued but unpaid interest will become immediately
due in full. The Member will have the right to immediately pay the
Trustee that amount. If the Member fails to repay the loan, the
Trustee will foreclose on the loan and the Member will be deemed to
have received a Plan distribution of the amount foreclosed upon. The
Trustee will not foreclose upon a Member's Salary Deferral
Contribution Account or QNEC Account until the Member's Separation
From Service.
(l) If a Beneficiary defaults on his loan, the Trustee will
foreclose on the loan and the Beneficiary will be deemed to have
received a Plan distribution of the amount foreclosed upon.
(m) No person shall be entitled to apply for a new Plan loan
until at least 60 days have transpired since he fully repaid his last
loan from the Plan.
(n) No amount that is pledged as collateral for a Plan loan
to a Participant will be available for withdrawal before he has fully
repaid his loan.
(o) All interest payments made pursuant to the terms of the
loan agreement will be credited to the borrowing person's Account and
will not be considered as general earnings of the Trust to be
allocated to other Members.
6.08 DISTRIBUTION METHODS AVAILABLE. Subject to section 6.10, the
distribution methods available under the Plan are (a) a lump sum payment or (b)
periodic installment payments.
If a Member or former Member elects periodic installment payments, his
Account balances shall be paid in substantially equal monthly, quarterly,
semi-annual or annual periodic installments (as elected by him) for a specified
number of years which may not exceed his life expectancy or the joint and last
survivor life expectancy of him and his Beneficiary. Life expectancies will be
determined, under Regulations issued under section 79 of the Code, as of the
time payments commence. If installments are elected, the Committee may direct
that the Member's or former Member's interest in the Plan be segregated and
invested separately. Upon the death of a Member or former Member prior to the
complete distribution of his Account balances, his Beneficiary may elect to
receive the Beneficiary's interest in the Account in (a) an immediate lump sum
cash payment or (b) installment payments for any period not in excess of the
period (if any) selected by the Member or former Member.
6.09 ELECTION OF DISTRIBUTION METHOD. Each Member or former Member
shall have the right to elect the method of distribution applicable to him. An
election of an option available under
VI-4
<PAGE> 25
this Article shall be made within the 90-day period that ends on the Member's
or former Member's Annuity Starting Date, and may be rescinded or changed by a
Member or former Member at any time prior to the distribution. An election,
change, or rescission of an option must be made by executing and properly
filing the form or forms approved by the Committee. Proof of age and other
information may be required by the Committee.
6.10 LUMP SUM PAYMENT OF SMALL AMOUNTS UPON SEPARATION FROM SERVICE.
Notwithstanding any other provision of the Plan other than section 6.12,
effective January 1, 1998, each Member or former Member (a) who does not die
before the Annuity Starting Date and (b) whose vested Account balances at the
time of a distribution to him on account of his Separation From Service are, in
the aggregate, less than or equal to $5,000.00, shall be paid in the form of a
single sum payment. Subject to section 6.12, effective January 1, 1998, if a
Member or former Member dies before he has received any payment from the Plan,
and the total of his vested Account balances is less than or equal to
$5,000.00, his Beneficiary shall be paid in the form of a lump sum payment. For
this purpose, if the aggregate value of a Member's or former Member's Account
balances determined at the time of any prior payment to him exceeded $5,000.00,
then the benefit to be distributed at any subsequent time shall be deemed to
exceed that amount. If a Distributee who is subject to this Section 6.12 does
not furnish instructions in accordance with Plan procedures to directly
rollover his Plan benefit within 45 days after he has been given direct
rollover forms, he will be deemed to have elected a lump sum cash distribution
of his entire Plan benefit.
6.11 FORM OF PAYMENT. Except as specified below, all payments from the
Plan shall be made in the form of cash. However, a Participant who accrued any
benefits under the Decatur Plan has the right to elect to receive payments in
the form of property instead of cash, but only with respect to the dollar value
(determined as of the date of the transfer) of his Decatur Plan account
balances that were transferred to the Plan.
6.12 DIRECT ROLLOVER OPTION. To the extent required under Regulations,
a Distributee has the right to direct that any portion of his Eligible Rollover
Distribution will be directly paid to an Eligible Retirement Plan specified by
him that will accept the Eligible Rollover Distribution.
6.13 TIME OF DISTRIBUTIONS. Notwithstanding any other provision of the
Plan, all benefits payable under the Plan shall be distributed, or commence to
be distributed, in compliance with the following provisions:
(a) DISTRIBUTION DEADLINES FOR MEMBERS OR FORMER MEMBERS WHO
ARE 70 1/2 OR OLDER. If a Member or former Member attains 70 1/2, the
Member or former Member must elect to receive the distribution
required under section 401(a)(9) of the Code in one lump sum or in
installments which must commence by his Required Beginning Date. If
installments are elected, each installment paid must be equal to or
greater than the minimum required distribution under section 401(a)(9)
of the Code.
(b) DISTRIBUTION DEADLINE FOR DEATH BENEFITS. If a Member or
former Member dies before the distribution of his Plan benefit has
commenced, his entire interest shall be distributed within five years
after his death. If a Member or former Member dies after the
distribution of his Plan benefit has commenced, the remaining portion
of his interest in the
VI-5
<PAGE> 26
Plan, if any, will be distributed at least as rapidly as under the
installment method of distribution selected by him.
(c) LIMITATIONS ON DEATH BENEFITS. Benefits payable under the
Plan shall not be provided in any form that would cause a Member's
death benefit to be more than incidental. Any distribution required to
satisfy the incidental benefit requirement shall be considered a
required distribution for purposes of section 401(a)(9) of the Code.
(d) COMPLIANCE WITH SECTION 401(a)(9). All distributions
under the Plan will be made in accordance with the requirements of
section 401(a)(9) of the Code and all Regulations promulgated
thereunder. The provisions of the Plan reflecting section 401(a)(9) of
the Code override any distribution options in the Plan inconsistent
with such Section.
(e) COMPLIANCE WITH SECTION 401(a)(14). Unless the Member or
former Member otherwise elects, the payment of benefits under the Plan
to the Member or former Member will begin not later than the 60th day
after the close of the Plan Year in which occurs the latest of (a) the
date on which the Member or former Member attains the later of age 62
or Retirement Age, (b) the tenth anniversary of the year in which the
Member or former Member commenced participation in the Plan, or (c)
the Member's or former Member's Separation From Service.
6.14 CONSENT TO DISTRIBUTIONS UPON SEPARATION FROM SERVICE.
Notwithstanding any other provision of the Plan, no benefit shall be
distributed or commence to be distributed to a Member or former Member prior to
his attainment of the later of age 62 or Retirement Age without his consent,
unless the benefit is payable in a single sum under Section 6.10. Any such
consent shall be valid only if given not more than 90 days prior to the
Member's or former Member's Annuity Starting Date and after his receipt of the
notice regarding benefits described in Section 6.15(a).
6.15 INFORMATION PROVIDED TO MEMBERS. Information regarding the form
of benefits available under the Plan shall be provided to Members or former
Members in accordance with the following provisions:
(a) General Information. Except as otherwise provided in
paragraph (c), the Sponsor shall provide each Member or former Member
with a written general explanation or description of (1) the
eligibility conditions and other material features of the optional
forms of benefit available under the Plan, (2) the relative values of
the optional forms of benefit available under the Plan, and (3) the
Member's or former Member's right, if any, to defer receipt of the
distribution.
(b) Time for Giving Notice. The written general explanation
or description regarding any optional forms of benefit available under
the Plan shall be provided to a Member or former Member no less than
30 days and no more than 90 days before his Annuity Starting Date
unless he legally waives this requirement.
(c) Exception for Members with Small Benefit Amounts.
Notwithstanding the preceding provisions of this Section, no
information regarding any optional forms of benefit
VI-6
<PAGE> 27
otherwise available under the Plan shall be provided to the Member or
former Member if his benefit is payable in a single sum under Section
6.10.
6.16 DESIGNATION OF BENEFICIARY. Each Member has the right to
designate and to revoke the designation of his Beneficiary or Beneficiaries.
Each designation or revocation must be evidenced by a written document in the
form required by the Committee, signed by the Member and filed with the
Committee. If no designation is on file at the time of a Member's death or if
the Committee determines that the designation is ineffective, the designated
Beneficiary shall be the Member's Spouse, if living, or if not, the executor,
administrator or other personal representative of the Member's estate.
If a Member is considered to be married under local law, the Member's
designation of any Beneficiary, other than the Member's Spouse, shall not be
valid unless the spouse acknowledges in writing that she understands the effect
of the Member's beneficiary designation and consents to it. The consent must be
to a specific Beneficiary. The written acknowledgement and consent must be
filed with the Committee, signed by the Spouse and at least two witnesses, one
of whom must be a member of the Committee or a notary public. However, if the
Spouse cannot be located or there exist other circumstances as described in
sections 401(a)(11) and 417(a)(2) of the Code, the requirement of the Member's
Spouse's acknowledgement and consent may be waived. If a Beneficiary other than
the Member's Spouse is named, the designation shall become invalid if the
Member is later determined to be married under local law, the Member's missing
Spouse is located or the circumstances which resulted in the waiver of the
requirement of obtaining the consent of the Member's Spouse no longer exist.
6.17 DISTRIBUTIONS TO DISABLED PERSONS. If the Committee determines
that any person to whom a payment is due is unable to care for his affairs
because of physical or mental disability, it shall have the authority to cause
the payments to be made to the Spouse, brother, sister or other person the
Committee determines to have incurred, or to be expected to incur, expenses for
that person unless a prior claim is made by a qualified guardian or other legal
representative. The Committee and the Trustee shall not be responsible to
oversee the application of those payments. Payments made pursuant to this power
shall be a complete discharge of all liability under the Plan and Trust and the
obligations of the Employer, the Trustee, the Trust and the Committee.
6.18 DISTRIBUTIONS PURSUANT TO QUALIFIED DOMESTIC RELATIONS ORDERS.
The Committee will instruct the Trustee to pay benefits in accordance with the
terms of any order that has been determined, in accordance with Plan
procedures, to be a Qualified Domestic Relations Order. A Qualified Domestic
Relations Order may require the payment of an immediate cash lump sum to an
alternate payee even if the Member or former Member is not then entitled to
receive an immediate payment of Plan benefits.
6.19 CLAIMS PROCEDURE. When a benefit is due, the Member or
Beneficiary should submit his claim to the person or office designated by the
Committee to receive claims. Under normal circumstances, a final decision shall
be made as to a claim within 90 days after receipt of the claim. If the
Committee notifies the claimant in writing during the initial 90-day period, it
may extend the period up to 180 days after the initial receipt of the claim.
The written notice must contain the circumstances necessitating the extension
and the anticipated date for the final decision. If a claim
VI-7
<PAGE> 28
is denied during the claims period, the Committee must notify the claimant in
writing. The denial must include the specific reasons for it, the Plan
provisions upon which the denial is based, and the claims review procedure. If
no action is taken during the claims period, the claim is treated as if it were
denied on the last day of the claims period.
If a Member's or Beneficiary's claim is denied and he wants a review,
he must apply to the Committee in writing. That application may include any
comment or argument the claimant wants to make. The claimant may either
represent himself or appoint a representative, either of whom has the right to
inspect all documents pertaining to the claim and its denial. The Committee may
schedule any meeting with the claimant or his representative that it finds
necessary or appropriate to complete its review.
The request for review must be filed within 60 days after the denial.
If it is not, the denial becomes final. If a timely request is made, the
Committee must make its decision, under normal circumstances, within 60 days of
the receipt of the request for review. However, if the Committee notifies the
claimant prior to the expiration of the initial review period, it may extend
the period of review up to 120 days following the initial receipt of the
request for a review. All decisions of the Committee must be in writing and
must include the specific reasons for their action and the Plan provisions on
which their decision is based. If a decision is not given to the claimant
within the review period, the claim is treated as if it were denied on the last
day of the review period.
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<PAGE> 29
ARTICLE VII
FORFEITURES
7.01 FORFEITURE BY LOST FORMER MEMBERS OR BENEFICIARIES. If a person
who is entitled to a distribution cannot be located during a reasonable search
after the Trustee has initially attempted making payment, that person's Account
shall be forfeited. However, if at any time prior to the termination of the
Plan and the complete distribution of the Trust assets, the former Member or
Beneficiary files a claim with the Committee for the forfeited benefit, that
benefit shall be reinstated (without adjustment for Trust income or losses
during the forfeited period) effective as of the date of the receipt of the
claim. Following the Employer's contribution of the reinstated amount, it shall
be paid to the former Member or Beneficiary in the form specified in Section
6.08 selected by him.
7.02 FORFEITURE ON TERMINATION OF PARTICIPATION.
(a) If as a result of his Separation From Service a former
Member receives, not later than the end of the second Plan Year
following the Plan Year in which his Separation From Service occurs, a
distribution of his entire vested interest in his Account, the
nonvested amount in his Supplemental Contribution Account will be
immediately forfeited upon the distribution.
(b) If, not later than the end of the second Plan Year
following the Plan Year in which his Separation from Service occurs, a
former Member receives a distribution of less than the full amount of
his entire vested interest as a result of his Separation From Service,
the nonvested amount in his Supplemental Contribution Account will be
forfeited immediately upon the distribution.
(c) If a former Member receives no distribution as a result
of his Separation From Service, the nonvested amount in his
Supplemental Contribution Account will be permanently forfeited (with
no right of reinstatement under Section 7.04) on the later of the date
of his Separation From Service or the date on which he has incurred a
Period of Severance of five consecutive years.
7.03 ALLOCATION OF FORFEITURES. Subject to Section 7.05, at the time a
forfeiture occurs, the amount forfeited will first be used to reinstate any
Account required to be reinstated under Section 7.01 or 7.04, and any remaining
amount will be applied to the payment of Supplemental Contributions by any
Employer.
7.04 RESTORATION OF FORFEITED AMOUNTS. If a Member or former Member
who forfeited any portion of his Supplemental Contribution Account pursuant to
the provisions of Section 7.02 resumes employment covered under the Plan, then
the following provisions shall apply:
(a) REPAYMENT REQUIREMENT. The Member's Supplemental
Contribution Account shall be restored if he repays to the Trustee the
full amount of any distribution from the Supplemental Contribution
Account with respect to which the forfeiture arose. Any such repayment
must be made prior to the earlier of (i) the date on which he incurs a
Period of
VII-1
<PAGE> 30
Severance of five years commencing after his distribution, or (ii) the
fifth anniversary of the first date on which the Member is
subsequently re-employed by the Employer.
(b) AMOUNT RESTORED. The amount to be restored under the
preceding provisions of this Section shall be the dollar value of the
amount in the Member's Supplemental Contribution Account, both the
amount distributed and the amount forfeited, unadjusted by any
subsequent gains or losses. The Member's Supplemental Contribution
Account balance shall be restored as soon as administratively
practicable after the later of the date the Member resumes employment
covered under the Plan or the date on which any required repayment is
completed. No distribution shall be made to a Member from his
Supplemental Contribution Account as a result of a prior Separation
From Service after the restoration of such Account has been
effectuated.
(c) NO OTHER BASIS FOR RESTORATION. Except as otherwise
provided above, a Member's Supplemental Contribution Account shall not
be restored upon resumption of employment covered by the Plan.
7.05 TRANSITION RULE FOR DECATUR PLAN PARTICIPANTS. Any Plan
forfeitures occurring during or prior to the 1999 Plan Year that are
attributable to persons who are or were employed by Nichols Aluminum-Alabama,
Inc. will be allocated to the Supplemental Contribution Accounts of Members who
are Employees of Nichols Aluminum-Alabama, Inc. in the manner specified in the
provisions of the Decatur Plan as in effect immediately prior to January 1,
1999. Any forfeitures that occur during the 2,000 Plan Year or subsequent Plan
Years will be applied as specified in the other provisions of this Article VII.
VII-2
<PAGE> 31
ARTICLE VIII
ADMINISTRATION OF THE PLAN
8.01 APPOINTMENT, TERM OF SERVICE & REMOVAL. The Board shall appoint a
Committee to administer the Plan. The members shall serve until their
resignation, death or removal. Any member may resign at any time by mailing a
written resignation to the Board. Any member may be removed by the Board, with
or without cause. Vacancies may be filled by the Board from time to time.
8.02 POWERS. The Committee is a fiduciary. It has the exclusive
responsibility for the general administration of the Plan and the Trust, and
has all powers necessary to accomplish that purpose, including but not limited
to the following rights, powers, and authorities:
(a) to make rules for administering the Plan and the Trust
so long as they are not inconsistent with the terms of
the Plan;
(b) to construe all provisions of the Plan and the Trust;
(c) to correct any defect, supply any omission, or reconcile
any inconsistency which may appear in the Plan or the
Trust;
(d) to select, employ, and compensate at any time any
consultants, actuaries, accountants, attorneys, and
other agents and employees the Committee believes
necessary or advisable for the proper administration of
the Plan and the Trust; any firm or person selected may
be a disqualified person, but only if the requirements
of section 4975(d) of the Code have been met;
(e) to determine all questions relating to eligibility,
Active Service, Compensation, allocations and all other
matters relating to benefits or Members' entitlement to
benefits;
(f) to determine all controversies relating to the
administration of the Plan and the Trust, including but
not limited to any differences of opinion arising
between an Employer and the Trustee or a Member, or any
combination of them and any questions it believes
advisable for the proper administration of the Plan and
the Trust;
(g) to direct or to appoint an investment manager or
managers who can direct the Trustee in all matters
relating to the investment, reinvestment and management
of the Trust assets;
(h) to direct the Trustee in all matters relating to the
payment of Plan benefits; and
VIII-1
<PAGE> 32
(i) to delegate any clerical or recordation duties of the
Committee as the Committee believes is advisable to
properly administer the Plan and Trust.
The actions of the Committee in exercising all of the rights, powers, and
authorities set out in this Section and all other Sections of the Plan, when
performed in good faith and in its sole judgment, shall be final, conclusive
and binding on all parties.
8.03 ORGANIZATION. The Committee may select, from among its members, a
chairman, and may select a secretary. The secretary need not be a member of the
Committee. The secretary shall keep all records, documents and data pertaining
to its administration of the Plan and Trust.
8.04 QUORUM AND MAJORITY ACTION. A majority of the Committee
constitutes a quorum for the transaction of business. The vote of a majority of
the members present at any meeting shall decide any question brought before
that meeting. In addition, the Committee may decide any question by a vote,
taken without a meeting, of a majority of its members.
8.05 SIGNATURES. The chairman, the secretary and any one or more of
the members of the Committee to which the Committee has delegated the power
shall each, severally, have the power to execute any document on behalf of the
Committee, and to execute any certificate or other written evidence of the
action of the Committee. The Trustee, after it is notified of any delegation of
power in writing, shall accept and may rely upon any document executed by the
appropriate member or members as representing the action of the Committee until
the Committee files a written revocation of that delegation of power with the
Trustee.
8.06 DISQUALIFICATION OF COMMITTEE MEMBER. A member of the Committee
who is also a Member of the Plan shall not vote or act upon any matter relating
solely to himself.
8.07 DISCLOSURE TO MEMBERS. The Committee shall make available to each
Member and Beneficiary for his examination those records, documents and other
data required under ERISA, but only at reasonable times during business hours.
No Member or Beneficiary has the right to examine any data or records
reflecting the compensation paid to any other Member or Beneficiary. The
Committee is not required to make any other data or records available other
than those required by ERISA.
8.08 LIABILITY OF COMMITTEE AND LIABILITY INSURANCE. No member of the
Committee shall be liable for any act or omission of any other member of the
Committee, the Trustee, any investment manager appointed by the Committee or
any other agent appointed by the Committee unless required by the terms of
ERISA or another applicable state or federal law under which liability cannot
be waived. No member of the Committee shall be liable for any act or omission
of his own unless required by ERISA or another applicable state or federal law
under which liability cannot be waived.
If the Committee directs the Trustee to do so, it may purchase out of
the Trust assets insurance for the members of the Committee, for any other
fiduciaries appointed by the Committee and for the Trust itself to cover
liability or losses occurring because of the act or omission of any one or more
of the members of the Committee or any other fiduciary appointed under the
Plan. But, that
VIII-2
<PAGE> 33
insurance must permit recourse by the insurer against the members of the
Committee or the other fiduciaries concerned if the loss is caused by breach of
a fiduciary obligation by one or more members of the Committee or other
fiduciary.
8.09 EXEMPTION FROM BOND. No member of the Committee is required to
give bond for the performance of his duties unless required by a law which
cannot be waived.
8.10 COMPENSATION. The Committee shall serve without compensation but
shall be reimbursed from the Trust for all expenses properly incurred in the
performance of its duties unless the Employer elects to pay those expenses.
8.11 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 the Plan, including serving as both Trustee
and as a member of the Committee.
8.12 ADMINISTRATOR. For all purposes of ERISA, the administrator of
the Plan is the Sponsor. The administrator has the final responsibility for
compliance with all reporting and disclosure requirements imposed under all
applicable federal or state laws and regulations.
VIII-3
<PAGE> 34
ARTICLE IX
TRUST
9.01 FUNDING OF PLAN. The Plan shall be funded by the Trust.
9.02 INCORPORATION OF TRUST. The Trust is a part of the Plan. All
rights or benefits which accrue to a person under the Plan shall be subject
also to the terms of the agreements creating the Trust and any amendments to
them that are not in direct conflict with the Plan.
9.03 AUTHORITY OF TRUSTEE. The Trustee shall have full title and legal
ownership of the assets in the Trust.
IX-1
<PAGE> 35
ARTICLE X
ADOPTION OF PLAN BY OTHER EMPLOYERS
10.01 ADOPTION PROCEDURE. Any business organization may, with the
approval of the Board, adopt the Plan by:
(a) a certified resolution or consent of the board
of directors of the adopting Employer or an executed adoption
instrument (approved by the board of directors of the
adopting Employer) agreeing to be bound as an Employer by all
the terms, conditions and limitations of the Plan except
those, if any, specifically described in the adoption
instrument; and
(b) providing all information required by the
Committee and the Trustee.
10.02 NO JOINT VENTURE IMPLIED. The document which evidences the
adoption of the Plan by an Employer shall become a part of the Plan. However,
neither the adoption of the Plan and the Trust by an Employer nor any act
performed by it in relation to the Plan and the Trust shall ever create a joint
venture or partnership relation between it and any other Employer.
10.03 ALL TRUST ASSETS AVAILABLE TO PAY ALL BENEFITS. The Accounts of
Members employed by the Employers that adopt the Plan shall be commingled for
investment purposes. All assets in the Trust shall be available to pay benefits
to all Members employed by any Employer.
10.04 QUALIFICATION A CONDITION PRECEDENT TO ADOPTION AND CONTINUED
PARTICIPATION. The adoption of the Plan and the Trust by a business
organization is contingent upon and subject to the express condition precedent
that the initial adoption meets all statutory and regulatory requirements for
qualification of the Plan and the exemption of the Trust that are applicable to
it continue in operation to maintain their qualified and exempt status. In the
event the adoption fails to initially qualify, the adoption shall fail
retroactively for failure to meet the condition precedent and the portion of
the Trust assets applicable to the adoption shall be immediately returned to
the adopting business organization and the adoption shall be void ab initio. In
the event the adoption as to a given business organization later becomes
disqualified and loses its exemption for any reason, the adoption shall fail
retroactively for failure to meet the condition precedent and the portion of
the Trust assets allocable to the adoption by that business organization shall
be immediately spun off, retroactively as of the last date for which the Plan
qualified, to a separate trust for its sole benefit and an identical but
separate Plan shall be created, retroactively effective as of the last date the
Plan as adopted by that business organization qualified, for the benefit of the
Members covered by that adoption.
X-1
<PAGE> 36
ARTICLE XI
AMENDMENT AND TERMINATION
11.01 RIGHT TO AMEND AND LIMITATIONS THEREON. The Sponsor has the sole
right to amend the Plan. An amendment may be made by a certified resolution or
consent of the Board, or by an instrument in writing executed by the
appropriate officer of the Sponsor. The amendment must describe the nature of
the amendment and its effective date. No amendment shall:
(a) vest in an Employer any interest in the Trust;
(b) cause or permit the Trust assets to be diverted to any
purpose other than the exclusive benefit of the present or future
Members and their Beneficiaries except under the circumstances
described in Section 4.09;
(c) decrease the Account of any Employee, or eliminate an
optional form of payment in violation of section 411(d)(6) of the
Code;
(d) increase substantially the duties or liabilities of the
Trustee without its written consent; or
(e) change the vesting schedule to one which would result in
the nonforfeitable percentage of a Member's Account (determined as of
the later of the date of the adoption of the amendment or of the
effective date of the amendment) of any Member being less than the
nonforfeitable percentage computed under the Plan without regard to
the amendment. If the Plan's vesting schedule is amended, if the Plan
is amended in any other way that affects the computation of the
Member's nonforfeitable percentage, each Member with at least three
years of Active Service as of the date of the amendment or change
shall have his nonforfeitable percentage computed under the Plan
without regard to the amendment or the change if that results in a
higher nonforfeitable percentage.
Each Employer shall be deemed to have adopted any amendment made by
the Sponsor unless the Employer notifies the Committee of its rejection in
writing within 30 days after it receives a copy of the amendment. A rejection
shall constitute a withdrawal from the Plan by that Employer unless the Sponsor
acquiesces in the rejection.
11.02 MANDATORY AMENDMENTS. The Contributions of each Employer to the
Plan are intended to be:
(a) deductible under the applicable provisions of the Code;
(b) except as otherwise prescribed by applicable law, exempt
from the Federal Social Security Act;
(c) except as otherwise prescribed by applicable law, exempt
from withholding
XI-1
<PAGE> 37
under the Code; and
(d) excludable 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 any amendment necessary to carry out this
intention, and it may be made retroactively.
11.03 WITHDRAWAL OF EMPLOYER. An Employer may withdraw from the Plan
and the Trust if the Sponsor does not acquiesce in its rejection of an
amendment or by giving written notice of its intent to withdraw to the
Committee. The Committee shall then determine the portion of the Trust assets
that is attributable to the Members employed by the withdrawing Employer and
shall notify the Trustee to segregate and transfer those assets to the
successor Trustee when it receives a designation of the successor from the
withdrawing Employer.
A withdrawal shall not terminate the Plan and the Trust with respect
to the withdrawing Employer, if the Employer either appoints a successor
Trustee and reaffirms the Plan and the Trust as its new and separate plan and
trust intended to qualify under section 401(a) of the Code, or establishes
another plan and trust intended to qualify under section 401(a) of the Code.
The determination of the Committee, in its sole discretion, of the
portion of the Trust assets that is attributable to the Members employed by the
withdrawing Employer shall be final and binding upon all parties; and, the
Trustee's transfer of those assets to the designated successor Trustee shall
relieve the Trustee of any further obligation, liability or duty to the
withdrawing Employer, the Members employed by that Employer and their
Beneficiaries, and the successor Trustee.
11.04 TERMINATION OF PLAN. The Sponsor may terminate the Plan and the
Trust with respect to all Employers by executing and delivering to the
Committee and the Trustee, a notice of termination, specifying the date of
termination.
11.05 PARTIAL OR COMPLETE TERMINATION OR COMPLETE DISCONTINUANCE OF
CONTRIBUTIONS. Without regard to any other provision of the Plan, if there is a
partial or total termination of the Plan or there is a complete discontinuance
of the Employer's Contributions, each of the affected Members shall immediately
become 100 percent vested in his Account as of the end of the last Plan Year
for which a substantial Employer Contribution was made and in any amounts later
allocated to his Account. If the Employer then resumes making substantial
Contributions at any time, the appropriate vesting schedule shall again apply
to all amounts allocated to each affected Member's Account beginning with the
Plan Year for which they were resumed.
XI-2
<PAGE> 38
ARTICLE XII
MISCELLANEOUS
12.01 PLAN NOT AN EMPLOYMENT CONTRACT. The maintenance of the Plan and
the Trust is not a contract between any Employer and its Employees which gives
any Employee the right to be retained in its employment. Likewise, it is not
intended to interfere with the rights of any Employer to discharge any Employee
at any time or to interfere with the Employee's right to terminate his
employment at any time.
12.02 BENEFITS PROVIDED SOLELY FROM TRUST. All benefits payable under
the Plan shall be paid or provided for solely from the Trust. No Employer
assumes any liability or responsibility to pay any benefit provided by the
Plan.
12.03 ASSIGNMENTS PROHIBITED. No principal or income payable or to
become payable from the Trust shall be subject to anticipation or assignment by
a Member or by a Beneficiary to attachment by, interference with, or control of
any creditor of a Member or Beneficiary; or to being taken or reached by any
legal or equitable process in satisfaction of any debt or liability of a Member
or Beneficiary prior to its actual receipt by the Member or Beneficiary. Any
attempted conveyance, transfer, assignment, mortgage, pledge, or encumbrance of
any Trust assets or any interest in the Trust by a Member or Beneficiary prior
to distribution shall be void, whether that conveyance, transfer, assignment,
mortgage, pledge, or encumbrance is intended to take place or become effective
before or after any distribution of Trust assets or the termination of the
Trust itself. The Trustee shall never under any circumstances be required to
recognize any conveyance, transfer, assignment, mortgage, pledge or encumbrance
by a Member or Beneficiary of the Trust, any part of it, or any interest in it,
or to pay any money or thing of value to any creditor or assignee of a Member
or Beneficiary for any cause whatsoever. These prohibitions against the
alienation of a Member's Account shall not apply to Qualified Domestic
Relations Orders.
12.04 REQUIREMENTS UPON MERGER OR CONSOLIDATION OF PLANS. The Plan
shall not merge or consolidate with or transfer any assets or liabilities to
any other plan unless each Member would 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).
12.05 GENDER OF WORDS USED. If the context requires it, words of one
gender when used in the Plan shall include the other gender, and words used in
the singular or plural shall include the other.
12.06 SEVERABILITY. Each provision of this Agreement may be severed.
If any provision is determined to be invalid or unenforceable, that
determination shall not affect the validity or enforceability of any other
provision.
XII-1
<PAGE> 39
12.07 REEMPLOYED VETERANS. The requirements of the Uniformed Services
Employment and Reemployment Rights Act of 1994 will be complied with in the
operation of the Plan in the manner permitted under section 414(u) of the Code.
12.08 GOVERNING LAW. The provisions of the Plan shall be construed,
administered, and governed under the laws of the State of Texas and, to the
extent applicable, by the laws of the United States.
XII-2
<PAGE> 40
IN WITNESS WHEREOF, Quanex Corporation and Nichols Aluminum-Alabama,
Inc. have caused this Agreement to be executed this ______ day of
__________________, 1999, in multiple counterparts, each of which shall be
deemed to be an original, to be effective the 1st day of January 1999, except
for those provisions which have an earlier effective date provided by law, or as
otherwise provided under applicable provisions of the Plan.
QUANEX CORPORATION
By
----------------------------------
Title
--------------------------------
NICHOLS ALUMINUM-ALABAMA, INC.
By
----------------------------------
Title
--------------------------------
<PAGE> 41
APPENDIX A
LIMITATIONS ON CONTRIBUTIONS
PART A. DEFINITIONS
DEFINITIONS. As used herein the following words and phrases have the
meaning attributed to them below:
(a) "ACTUAL DEFERRAL PERCENTAGE" means, for a specified group
of Employees for a Plan Year, the average of the ratios (calculated
separately for each Employee in the group) of the amount of Section
401(k) Contributions actually paid into the Trust on behalf of the
Employee for the Plan Year to the Employee's Annual Compensation for
the Plan Year.
(b) "ACTUAL DEFERRAL RATIO" means the ratio of Section 401(k)
Contributions actually paid into the Trust on behalf of an Employee
for a Plan Year to the Employee's Annual Compensation for the same
Plan Year. For this purpose, Annual Compensation for any portion of
the Plan Year in which the Employee was not an eligible Employee (as
defined in Section 2.1 of Appendix A) will not be taken into account.
(c) "ANNUAL ADDITIONS" means the sum of the following amounts
credited on behalf of a Member for the Limitation Year: (a) Employer
contributions, (b) Employee contributions and (c) forfeitures. Excess
401(k) Contributions for a Plan Year are treated as Annual Additions
for that Plan Year even if they are corrected through distribution.
Excess Deferrals that are timely distributed as set forth in Section
3.2 of Appendix A will not be treated as Annual Additions.
(d) "EXCESS DEFERRAL" means that part, if any, of the Salary
Deferral Contribution of a Member for his taxable year which, when
added to the amounts he deferred under other plans or arrangements
described in sections 401(k) and 403(b) of the Code, exceeds the
deferral dollar limitation permitted by section 402(g) of the Code.
(e) "EXCESS 401(k) CONTRIBUTIONS" means, with respect to any
Plan Year, the excess of (a) the aggregate amount of Section 401(k)
Contributions actually paid to the Trustee on behalf of Highly
Compensated Employees for the Plan Year over (b) the maximum amount of
those contributions permitted under the limitations set out in the
first sentence of Section 2.1 of Appendix A.
(f) "LIMITATION YEAR" means the calendar year.
(g) "SECTION 401(k) CONTRIBUTIONS" means the sum of Salary
Deferral Contributions made on behalf of the Member during the Plan
Year, and QNECs that the Employer elects to have treated as section
401(k) Contributions pursuant to section 401(k)(3)(d)(ii) of the Code.
PART B. SUMMARY OF SECTIONS 415 AND 402(g) LIMITATIONS
1.1 SECTION 415 LIMITATION ON TOTAL ALLOCATIONS. The Annual Additions
that may be credited to an individual Member's Accounts under the Plan and any
other qualified defined contribution plan maintained by an Affiliated Employer
for a Limitation Year shall not exceed the lesser of (a) $30,000.00 (as
adjusted by the Secretary of Treasury), or (b) 25 percent of the Member's
Annual Compensation for the Limitation Year. If the Limitation Year is ever
less than 12 months, the $30,000.00 limitation (as adjusted by the Secretary of
Treasury) will be prorated by multiplying the limitation by a fraction, the
numerator of which is the number of months in the Limitation Year, and the
denominator of which is 12. The Plan will be operated in compliance with
section 415 of the Code and its Regulations, the terms of which are
incorporated in the Plan.
1.2 DOLLAR LIMITATION ON SALARY DEFERRAL CONTRIBUTIONS. The maximum
Salary Deferral Contribution that a Member may elect to have made on his behalf
during the Member's taxable year may not, when added to the amounts deferred on
a pre-tax basis under other plans or arrangements described in sections 401(k),
408(k), 403(b) and 408(p) of the Code exceed $7,000.00 (as adjusted by the
Secretary of Treasury). For purposes of applying the
A-1
<PAGE> 42
requirements of Section 2.1 of Appendix A, Excess Deferrals shall not be
disregarded merely because they are Excess Deferrals or because they are
distributed in accordance with Section 3.2 of Appendix A. However, Excess
Deferrals made to the Plan on behalf of Non-Highly Compensated Employees will
not be taken into account under Section 2.1 of Appendix A.
PART C. SECTION 401(k) LIMITATION
2.1 The Actual Deferral Percentage for Highly Compensated Employees
for any Plan Year must bear a relationship to the Actual Deferral Percentage
for all other eligible Employees for the same Plan Year which meets either of
the following tests:
(a) the Actual Deferral Percentage of the Highly Compensated
Employees is not more than the Actual Deferral Percentage of all other
eligible Employees multiplied by 1.25; or
(b) the excess of the Actual Deferral Percentage of the
Highly Compensated Employees over that of all other eligible Employees
is not more than two percentage points, and the Actual Deferral
Percentage of the Highly Compensated Employees is not more than the
Actual Deferral Percentage of all other eligible Employees multiplied
by two.
For purposes of this test, an eligible Employee is an Employee who is
directly or indirectly eligible to make Salary Deferral Contributions for all
or part of the Plan Year. A person who is suspended from making Salary Deferral
Contributions because he has made a withdrawal is an eligible Employee. If no
Salary Deferral Contributions are made for an eligible Employee, the Actual
Deferral Ratio that shall be included for him in determining the Actual
Deferral Percentage is zero. If the Plan and any other plan or plans which
include cash or deferred arrangements are considered as one plan for purposes
of section 401(a)(4) or 410(b) of the Code, the cash or deferred arrangements
included in the Plan and the other plans shall be treated as one plan for these
tests. If any Highly Compensated Employee is a Member of the Plan and any other
cash or deferred arrangements of the Employer, when determining the deferral
percentage of the Employee, all of the cash or deferred arrangements are
treated as one. A Salary Deferral 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 relates to Annual 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, a Section 401(k)
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,
a Section 401(k) 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 that date and the Section 401(k) Contribution is actually
paid to the Trustee no later than 12 months after the Plan Year to which the
Section 401(k) Contribution relates. Failure to correct Excess 401(k)
Contributions by the close of the Plan Year following the Plan Year for which
they were made will cause the Plan's cash or deferred arrangement to be
disqualified for the Plan Year for which the Excess 401(k) Contributions were
made and for all subsequent years during which they remain in the Trust. Also,
the Employer will be liable for a ten percent excise tax on the amount of
Excess 401(k) Contributions unless they are corrected within 2 1/2 months after
the close of the Plan Year for which they were made.
Notwithstanding any other provision of the Plan, to the
extent permitted by law, the Actual Deferral Percentage test set forth in this
Section 2.1 of Appendix A (and any correction procedures specified in Section
3.3 of this Appendix A) may be applied separately with respect to Members or
former Members who were, during the Plan Year, covered by the Steelworkers
Collective Bargaining Agreement and Members or former Members who were, during
the Plan Year, covered by the Teamsters Collective Bargaining Agreement.
PART D. CORRECTION PROCEDURES FOR ERRONEOUS CONTRIBUTIONS
3.1 CORRECTION OF EXCESS ANNUAL ADDITIONS. If Annual Additions are
made in excess of the limitations contained in Section 1.1 of Appendix A, to
the maximum extent permitted by law, those excess Annual Additions shall be
attributed to the Plan. If an excess Annual Addition attributed to the Plan is
held or contributed as a result of the allocation of forfeitures, reasonable
error in estimating a Member's Annual Compensation, reasonable error in
calculating
A-2
<PAGE> 43
the maximum Salary Deferral Contribution that may be made for a Member 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 Annual
Addition shall be corrected as follows:
(a) first, the excess Annual Addition shall be reduced to the
extent necessary by distributing to the Member all Salary Deferral
Contributions together with their earnings. These distributed amounts
are disregarded for purposes of the testing and limitations contained
in this Appendix A;
(b) second, if the Member is still employed by the Employer
at the end of the Plan Year, any remaining excess funds shall be
placed in an unallocated suspense account to be applied to reduce
future Employer Contributions for that Member for as many Plan Years
as are necessary to exhaust the suspense account in keeping with the
amounts which would otherwise be allocated to that Member's Account;
(c) third, if the Member is not employed by the Employer at
the end of the Plan Year, the remaining excess funds shall be placed
in an unallocated suspense account to reduce future Employer
Contributions for all remaining Members for as many Plan Years as are
necessary to exhaust the suspense account; and
(d) If the Plan terminates prior to the exhaustion of the
suspense account, the remaining amount shall revert to the Employer.
3.2 EXCESS DEFERRAL FAIL SAFE. As soon as practical after the close of
each Plan Year, the Committee shall determine if there would be any Excess
Deferrals. If there would be an Excess Deferral by a Member, the Excess
Deferral as adjusted by any earnings or losses, will be distributed to the
Member no later than April 15 following the Member's taxable year in which the
Excess Deferral was made. The income allocable to the Excess Deferrals for the
taxable year of the Member shall be determined by multiplying the income for
the taxable year of the Member allocable to Salary Deferral Contributions by a
fraction. The numerator of the fraction is the amount of the Excess Deferrals
made on behalf of the Member for the taxable year. The denominator of the
fraction is the Member's total Salary Deferral Account balance as of the
beginning of the taxable year plus the Member's Salary Deferral Contributions
for the taxable year.
3.3 ACTUAL DEFERRAL PERCENTAGE FAIL SAFE. As soon as practicable after
the close of each Plan Year, the Committee shall determine whether the Actual
Deferral Percentage for the Highly Compensated Employees would exceed the
limitation set forth in Section 2.1 of Appendix A. If the limitation would be
exceeded for a Plan Year, before the close of the following Plan Year (a) the
amount of Excess 401(k) Contributions for that Plan Year (and any income
allocable to those Contributions as calculated in the specific manner required
by Section 3.6 of Appendix A) shall be distributed, or (b) the Employer may
make a QNEC that it elects to have treated as a Section 401(k) Contribution.
The amount of Excess 401(k) Contributions to be distributed shall be that
amount of the Salary Deferral Contributions by or on behalf of those Highly
Compensated Employees with the largest Salary Deferral Contributions as is
equal to the Excess 401(k) Contributions, taken ratably from each Account,
based solely on those Salary Deferral Contributions for the Plan Year. This
initial distribution shall not reduce those Accounts affected below the next
highest level of Salary Deferral Contributions. If any further reduction is
necessary, the same process is to be repeated at the next highest level of
Salary Deferral Contributions by or on behalf of the Highly Compensated
Employees, and if necessary repeated in successively lower levels of Salary
Deferral Contributions until the cash or deferred arrangement satisfies the
Actual Deferral Percentage test. QNECs shall be treated as Section 401(k)
Contributions only if: (a) the conditions described in Regulation section
1.401(k)- 1(b)(5) are satisfied and (b) they are allocated to Members' Accounts
as of a date within that Plan Year and are actually paid to the Trustee no
later than the end of the 12-month period immediately following the Plan Year
to which the contributions relate. If the Employer makes a QNEC that it elects
to have treated as a Section 401(k) Contribution, the Contribution will be in
an amount necessary to satisfy the Actual Deferral Percentage test and will be
allocated first to those Non-Highly Compensated Employees who had the lowest
Actual Deferral Ratios. Any distributions of the Excess 401(k) Contributions
for any Plan Year are to be made to Highly Compensated Employees on the basis
of the amount of contributions by or on behalf of each Highly Compensated
Employee. The amount of Excess 401(k) Contributions to be distributed for any
Plan Year must be reduced by any excess Salary Deferral Contributions
previously distributed for the taxable year ending in the same Plan Year.
A-3
<PAGE> 44
3.4 INCOME ALLOCABLE TO EXCESS 401(k) CONTRIBUTIONS. The income
allocable to Excess 401(k) Contributions for any Member for the Plan Year shall
be determined by multiplying the income for the Plan Year allocable to Section
401(k) Contributions by a fraction. The numerator of the fraction is the amount
of Excess 401(k) Contributions made on behalf of the Member for the Plan Year.
The denominator of the fraction is the Member's total Account balance
attributable to Section 401(k) Contributions as of the beginning of the Plan
Year plus the Member's Section 401(k) Contributions for the Plan Year.
A-4
<PAGE> 1
EXHIBIT 4.7
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.
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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
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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
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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
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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
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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.
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(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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<PAGE> 18
(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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<PAGE> 19
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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<PAGE> 20
(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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<PAGE> 21
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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<PAGE> 22
(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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<PAGE> 23
(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
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<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: ______________________________
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<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.
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<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.
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<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.
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<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]
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<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 4.8
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. 33-54085 of Quanex Corporation on Form S-8
of our reports dated November 23, 1998 and June 1, 1999, 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 Nichols 401 (K) Savings Plan for
Hourly Employees 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
--------------------------
Carl E. Pfeiffer
/s/ Vincent R. Scorsone
--------------------------
Vincent R. Scorsone
/s/ Michael J. Sebastian
--------------------------
Michael J. Sebastian
