<PAGE>
As filed with the Securities and Exchange Commission on June 9, 1999
Registration No. 333 - _____
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
TRUE NORTH COMMUNICATIONS INC.
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<CAPTION>
<S> <C>
Delaware 36-1088161
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
101 East Erie Street
Chicago, Illinois 60611-2897
(Address of Principal Executive Offices) (Zip Code)
</TABLE>
TRUE NORTH COMMUNICATIONS INC.
RETIREMENT PLAN
(Full title of the plan)
Theodore J. Theophilos
Executive Vice President of Corporate Development and Business Affairs
True North Communications Inc.
101 East Erie Street
Chicago, Illinois
60611-2897
(Name and address of agent for service)
(312) 425-6500
(Telephone number, including area code, of agent for service.)
<TABLE>
<CAPTION>
Calculation of Registration Fee
======================================================================================================================
Proposed maximum Proposed maximum
Title of Securities Amount to be offering price aggregate offering Amount of
to be Registered (1) registered per share (2) price registration fee
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock,
$.33 1/3 par value (3) 850,000 $24.06 $20,451,000 $5,685
======================================================================================================================
</TABLE>
- -------------------------
(1) In addition, pursuant to Rule 416(c) under the Securities Act of 1933, this
registration statement also covers an indeterminate amount of interests to
be offered or sold pursuant to the employee benefit plan described herein.
(2) Estimated pursuant to Rule 457(h) under the Securities Act of 1933, solely
for the purpose of calculating the amount of the registration fee, based
upon the average of the high and low sales prices reported for shares of
the Common Stock in the New York Stock Exchange Composite Transactions on
June 2, 1999, which was $24.06.
(3) Includes an equal number of associated preferred stock purchase rights
("Rights") to purchase 1/2,000 of a share of Series B Junior Participating
Preferred Stock, par value $1.00 per share. Rights initially are attached
to and trade with the Common Stock of Registrant. The value attributable
to such Rights, if any, is reflected in the market price of the Common
Stock.
<PAGE>
PART I: INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The documents containing information specified in Part I (plan
information and registrant information) will be sent or given to employees as
specified by Rule 428(b)(1) under the Securities Act of 1933, as amended (the
"Securities Act"). Such documents need not be filed with the Securities and
Exchange Commission (the "SEC") either as part of this Registration Statement or
as prospectuses or prospectus supplements pursuant to Rule 424 under the
Securities Act. These documents and the documents incorporated by reference in
this Registration Statement pursuant to Item 3 of Part II of this Registration
Statement, taken together, constitute a prospectus that meets the requirements
of Section 10(a) of the Securities Act.
PART II: INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents heretofore filed (File Number 1-5029) by the
Registrant with the SEC pursuant to the Securities Exchange Act of 1934, as
amended (the "Exchange Act") are incorporated herein by reference:
1. Annual Report on Form 10-K for the year ended December 31, 1998;
2. Quarterly Report on Form 10-Q for the quarter ended March 31, 1999;
3. Current Reports on Form 8-K dated February 25, 1999, March 12, 1999, April
13, 1999 and April 16, 1999;
4. The description of the Registrant's Common Stock contained in the Joint
Proxy Statement/ Registration Statement on Form S-4 (Registration No. 333-
41189) under the caption "Description of True North Common Stock" filed by
the Registrant with the SEC on November 26, 1997, including any amendments
or reports filed for the purpose of updating such description;
5. The description of the Registrant's Preferred Stock Purchase Rights
contained in the Registrant's Registration Statement on Form 8-A filed on
November 5, 1998 and any amendment or report filed for the purpose of
updating such description; and
6. The Plan's Annual Report on Form 11-K for the year ended December 31, 1998.
All reports and other documents filed by the Registrant pursuant to
Section 13(a), 13(c) 14 or 15(d) of the Exchange Act subsequent to the date
hereof and prior to the filing of a post-effective amendment which
indicates that all securities offered hereby have been sold or which
deregisters all securities then remaining unsold shall be deemed to be
incorporated by reference herein and to be a part hereof from the dates of
filing of such reports and documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Registration
Statement to the extent that a statement
2
<PAGE>
contained herein, or in any other subsequently filed document which also is
incorporated or deemed to be incorporated by reference herein, modifies or
supersedes such statement. Any statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of
this Registration Statement.
Item 4. Description of Securities
Not applicable.
Item 5. Interests of Named Experts and Counsel
Suzanne S. Bettman, Vice President and Assistant General Counsel of
True North, will issue an opinion about the legality of the True North Common
Stock being offered by this prospectus.
Item 6. Indemnification of Directors and Officers.
Under Section 145 of the Delaware General Corporation Law, the
Registrant has broad powers to indemnify its directors and officers against
liabilities they may incur in such capacities, including liabilities under the
Securities Act. Registrant's Bylaws also provide that Registrant will indemnify
its directors, officers, employees and other agents to the fullest extent
permitted by Delaware law.
Registrant's Certificate of Incorporation, as amended, provides for
the elimination of liability for monetary damages for breach of the directors'
fiduciary duty of care to Registrant or its stockholders. These provisions do
not eliminate the directors' duty of care and in appropriate circumstances,
equitable remedies such as injunctive or other forms of non-monetary relief will
remain available under Delaware law. In addition, each director will continue to
be subject to liability for breach of the director's duty of loyalty to
Registrant or its stockholders, for acts or omissions not in good faith or
involving intentional misconduct, for knowing violations of law, for any
transaction from which the director derived an improper personal benefit, or for
payment of dividends or approval of stock repurchases or redemptions that are
unlawful under Delaware law. The provision does not affect a director's
responsibilities under any other laws, such as the federal securities laws or
state or federal environmental laws.
Furthermore, Registrant has secured insurance covering Registrant and
its directors and officers and those of its principal subsidiaries against
certain liabilities.
Item 7. Exemptions from Registration Claimed.
Not applicable.
Item 8. Exhibits.
(a) The following is a list of Exhibits included as part of this
Registration Statement. Items marked with a single asterisk are filed
herewith.
3
<PAGE>
4.1 Restated Certificate of Incorporation, as amended, of Registrant
(incorporated by reference to Exhibit 3(i) to Registrant's
Annual Report on Form 10-K for the year ended December 31,
1994).
4.2 Certificate of Ownership and Merger changing Registrant's name
to True North Communications Inc. (incorporated by reference to
Exhibit (3)(i) to Registrant's Current Report on Form 8-K dated
December 9, 1994).
4.3 Certificate of Designation of Series B Junior Participating
Preferred Stock of Registrant, filed in Delaware on November 5,
1998 (incorporated by reference to Exhibit 4.3 to Registrant's
Registration Statement on Form S-3, filed December 7, 1998 (File
No. 333-68485)).
4.4 Bylaws, as restated March 4, 1998, of Registrant (incorporated
by reference to Exhibit 4.4 to Registrant's Post-Effective
Amendment No. 1 on Form S-8, dated March 17, 1998 to
Registrant's Registration Statement on Form S-4, filed November
26, 1997 (File No. 333-41189)).
4.5 Certificate of Amendment of Restated Certificate of
Incorporation filed in Delaware on December 30, 1997
(incorporated by reference to Exhibit 4.6 to Registrant's Annual
Report on Form 10-K for the year ended December 31, 1997).
4.6 Rights Agreement dated as of November 4, 1998 between Registrant
and The First Chicago Trust Company of New York, as Rights Agent
(incorporated by reference to Exhibit 4 to Registrant's Current
Report on Form 8-K dated November 4, 1998).
*4.7 Registrant's Retirement Plan.
Pursuant to Item 8(b), the Registrant undertakes that it will
submit the Plan and all amendments thereto to the Internal
Revenue Service in a timely manner and that it will make all
changes required by the Service to issue a determination letter
with respect to the Plan.
*5.1 Opinion of Suzanne S. Bettman, Vice President, Assistant General
Counsel of Registrant.
*23.1 Consent of Arthur Andersen LLP, independent public accountants.
*23.2 Consent of KPMG LLP, independent certified public
accountants.
*23.2 Consent of Suzanne S. Bettman, Vice President, Assistant
General Counsel of Registrant (included in Exhibit 5.1).
*24.1 Power of Attorney (included in signature page).
4
<PAGE>
(b) Not applicable.
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 1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement; and notwithstanding the foregoing, any
increase or decrease in the volume of securities offered if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Securities and Exchange Commission (the
"Commission") pursuant to Rule 424(b) of the Securities Act if, in the
aggregate, the changes in volume and price represent no more than a 20
percent 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 the registration
statement or any material change to such information in the
registration statement;
provided, however, that paragraphs (a) (1) (i) and (a) (1) (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 with or furnished to the
Commission by the Registrant pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (the "Exchange Act") that are incorporated by reference in
the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that , for purposes
of determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange
5
<PAGE>
Act) that is incorporated by reference in this Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
6
<PAGE>
SIGNATURES
Registrant: Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Chicago, State of Illinois, on
June 8, 1999.
TRUE NORTH COMMUNICATIONS INC.
By: /s/ David A. Bell
------------------------------
David A. Bell
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints David A. Bell, Donald L. Seeley and Theodore J.
Theophilos, and each of them, his or her true and lawful attorney-in-fact with
full power of substitution and resubstitution, in any and all capacities, to
sign this Registration Statement or amendments (including post-effective
amendments) thereto and to file the same with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto each of said attorneys-in-fact and agents full power and authority
to do and perform each and every act and thing requisite and necessary to be
done in and about the premises, as fully to all intents and purposes and he or
she might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or their substitutes, may lawfully do or cause to
be done by virtue hereof.
* * * * *
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement and power of attorney has been signed by the following
persons on June 8, 1999 in the capacities indicated.
<TABLE>
<CAPTION>
Signature Capacity
--------- --------
<S> <C>
/s/ David A. Bell Chairman and Chief Executive
---------------------------------- Officer (principal executive
David A. Bell officer) and Director
Vice Chairman, Executive Vice
/s/ Donald L. Seeley President, Chief Financial
---------------------------------- Officer (principal financial
Donald L. Seeley officer) and Director
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
/s/ Kevin J. Smith Senior Vice President, Chief
---------------------------------- Accounting Officer
Kevin J. Smith (principal accounting officer)
/s/ Ronald W. Bess
---------------------------------- Director
Ronald W. Bess
/s/ Joseph A. Califano, Jr.
---------------------------------- Director
Joseph A. Califano, Jr.
/s/ Donald M. Elliman, Jr.
---------------------------------- Director
Donald M. Elliman, Jr.
---------------------------------- Director
H. John Greeniaus
---------------------------------- Director
Leo-Arthur Kelmenson
/s/ Michael E. Murphy
---------------------------------- Director
Michael E. Murphy
/s/ Charles D. Peebler, Jr.
---------------------------------- Director
Charles D. Peebler, Jr.
/s/ J. Brendan Ryan
---------------------------------- Director
J. Brendan Ryan
/s/ Marilyn R. Seymann
---------------------------------- Director
Marilyn R. Seymann
/s/ Stephen T. Vehslage
---------------------------------- Director
Stephen T. Vehslage
</TABLE>
8
<PAGE>
The Plan. Pursuant to the requirements of the Securities Act of 1933, as
amended, the trustees (or other persons who administer the employee benefit
plan) have duly caused this Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Chicago, State of
Illinois on June 8, 1999.
TRUE NORTH COMMUNICATIONS INC.
Retirement Plan
By: True North Communications Inc.,
as Plan Administrator
By: /s/ Gary D. Chester
--------------------------------
Gary D. Chester
Vice President
9
<PAGE>
Exhibit 4.7
TRUE NORTH COMMUNICATIONS INC.
RETIREMENT PLAN
(as amended and restated effective January 1, 1998)
<PAGE>
TRUE NORTH COMMUNICATIONS INC.
RETIREMENT PLAN
TABLE OF CONTENTS
______________________________
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 1
TITLE AND PURPOSE............................................................. 1
ARTICLE 2
DEFINITIONS................................................................... 2
ARTICLE 3
PARTICIPATION................................................................. 7
Section 3.1. Eligibility for Participation............................... 7
Section 3.2. Application for Elective Contributions...................... 9
Section 3.3. Transfer to Other Employers or Affiliates................... 10
ARTICLE 4
EMPLOYER CONTRIBUTIONS........................................................ 10
Section 4.1. Elective Contributions...................................... 10
Section 4.2. Matching Contributions...................................... 12
Section 4.3. Discretionary Matching Contributions........................ 13
Section 4.4. Profit Sharing Contributions................................ 14
Section 4.5. Annual Limit on Elective Contributions...................... 14
Section 4.6. Limitations on Contributions and Adjustments
for Highly Compensated Employees............................ 16
Section 4.7. Limitation on Employer Contributions........................ 24
ARTICLE 5
ROLLOVER CONTRIBUTIONS........................................................ 26
Section 5.1. Requirements for Rollover Contributions..................... 26
Section 5.2. Delivery of Rollover Contributions.......................... 27
Section 5.3. Special Accounting Rules for Rollover
Contributions............................................... 28
ARTICLE 6
TRUST......................................................................... 28
ARTICLE 7
PARTICIPANT ACCOUNTS.......................................................... 29
Section 7.1. Participant Accounts........................................ 29
Section 7.2. Investment of Participant Accounts.......................... 31
Section 7.3. Allocation to Participants' Accounts of
Net Income of Trust and Fluctuation in Value
of Trust Assets............................................. 34
Section 7.4. Determination of Net Worth of Investment
Funds....................................................... 35
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C>
Section 7.5. Allocation of Employer Contributions to
Participants' Accounts...................................... 36
Section 7.6. Statutory Limitations on Allocations to
Participants' Accounts...................................... 37
Section 7.7. Correction of Error......................................... 41
ARTICLE 8
DISTRIBUTIONS AND WITHDRAWALS................................................. 42
Section 8.1. Circumstances Entitling Participant to
Distribution of His Accounts................................ 42
Section 8.2. Form of Distribution........................................ 43
Section 8.3. Medium of Distribution...................................... 46
Section 8.4. Time of Distribution........................................ 46
Section 8.5. Special Rules Relating to Annuity Form of
Benefit..................................................... 50
Section 8.6. In-Service Withdrawals from Participant
Accounts.................................................... 52
Section 8.7. Designation of Beneficiary.................................. 55
Section 8.8. Distributions to Minor and Disabled
Distributees................................................ 57
Section 8.9. Loans to Participants....................................... 58
Section 8.10. Dividends Paid on Company Stock............................. 61
Section 8.11. Direct Rollovers............................................ 62
ARTICLE 9
SPECIAL PARTICIPATION AND DISTRIBUTION RULES.................................. 63
Section 9.1. Reemployment of a Terminated Participant.................... 63
Section 9.2. Employment by Related Entities.............................. 63
Section 9.3. Leased Employee............................................. 64
Section 9.4. Reemployment of Veterans.................................... 64
ARTICLE 10
PARTICIPANTS' STOCKHOLDER RIGHTS.............................................. 67
Section 10.1. Voting Shares of Company Stock.............................. 67
Section 10.2. Tender Offers............................................... 68
Section 10.3. Applicability............................................... 70
Section 10.4. Confidentiality............................................. 70
ARTICLE 11
ADMINISTRATION................................................................ 71
Section 11.1. The Committee............................................... 71
Section 11.2. Claims Procedure............................................ 75
Section 11.3. Qualified Domestic Relations Orders......................... 76
Section 11.4. Notices to Participants or Distributees..................... 77
Section 11.5. Notices to Employers or Committee........................... 78
Section 11.6. Records..................................................... 78
</TABLE>
-ii-
<PAGE>
<TABLE>
<S>........................................................................... <C>
Section 11.7. Reports of Trust Fund and Accounting to
Participants................................................ 79
ARTICLE 12
PARTICIPATION BY OTHER EMPLOYERS.............................................. 79
Section 12.1. Adoption of Plan............................................ 79
Section 12.2. Withdrawal from Participation............................... 80
Section 12.3. Company and Committee as Agents for Employers............... 80
ARTICLE 13
CONTINUANCE BY A SUCCESSOR.................................................... 81
ARTICLE 14
MISCELLANEOUS................................................................. 82
Section 14.1. Expenses.................................................... 82
Section 14.2. Non-Assignability........................................... 82
Section 14.3. Employment Non-Contractual.................................. 83
Section 14.4. Limitation of Rights........................................ 83
Section 14.5. Merger or Consolidation with Another Plan................... 83
Section 14.6. Gender and Plurals.......................................... 83
Section 14.7. Severability................................................ 84
Section 14.8. Applicable Law.............................................. 84
ARTICLE 15
TOP-HEAVY PLAN REQUIREMENTS................................................... 84
Section 15.1. Top-Heavy Plan Determination................................ 84
Section 15.2. Definitions and Special Rules............................... 85
Section 15.3. Minimum Contribution for Top-Heavy Years.................... 86
Section 15.4. Special Rules for Applying Statutory
Limitations on Benefits..................................... 87
ARTICLE 16
AMENDMENT, ESTABLISHMENT OF SEPARATE PLAN AND TERMINATION..................... 88
Section 16.1. Amendment................................................... 88
Section 16.2. Establishment of Separate Plan.............................. 89
Section 16.3. Termination................................................. 89
Section 16.4. Trust Fund to Be Applied Exclusively for
Participants and Their Beneficiaries........................ 90
</TABLE>
-iii-
<PAGE>
TRUE NORTH COMMUNICATIONS INC.
RETIREMENT PLAN
(as amended and restated effective January 1, 1998)
ARTICLE 1
---------
TITLE AND PURPOSE
-----------------
The title of this Plan is the "True North Communications Inc.
Retirement Plan." This document is an amendment and restatement of the True
North Communications Inc. Stock Purchase Plan (the "Stock Purchase Plan"), as in
effect on December 31, 1997, and effects the merger of the True North
Communications Inc. Profit Sharing - Retirement Plan (the "Profit Sharing Plan")
into this Plan. The amendment and restatement shall be effective January 1,
1998, except that:
(1) Subdivision (10) of Article 2, to the extent such subdivision reflects
the deletion of family aggregation previously required under the Plan,
Section 4.6, Section 8.4(b) and the first sentence of Section 8.5(b)
of the Plan shall be effective as of January 1, 1997;
(2) Section 9.4 of the Plan shall be effective as of December 12, 1994;
and
(3) any provision which specifies a different effective date shall be
effective as of such specified date. This Plan is a "profit sharing
plan" within the meaning of section 1.401-1(a)(2)(ii) of the
Regulations, with a portion of the Plan designated as an employee
stock
<PAGE>
ownership plan within the meaning of section 54.4975-11(a) of
the Regulations and such portion is designed to invest primarily in
shares of Company Stock.
ARTICLE 2
---------
DEFINITIONS
-----------
As used herein, the following words and phrases shall have the
following respective meanings unless the context clearly indicates otherwise:
(1) Additional Contributions. A Participant's elective contributions
------------------------
pursuant to Section 4.1 in excess of 3.33% of the Participant's
Compensation.
(2) Affiliate. (a) A corporation that is a member of the same
---------
controlled group of corporations (within the meaning of section 414(b) of
the Code) as an Employer, (b) a trade or business (whether or not
incorporated) under common control (within the meaning of section 414(c) of
the Code) with an Employer, (c) any organization (whether or not
incorporated) that is a member of an affiliated service group (within the
meaning of section 414(m) of the Code) that includes an Employer, a
corporation described in clause (a) of this subdivision or a trade or
business described in clause (b) of this subdivision or (d) any other
entity that is required to be aggregated with an Employer pursuant to
Regulations promulgated under section 414(o) of the Code.
(3) Basic Contributions. A Participant's elective contributions
-------------------
pursuant to Section 4.1 not in excess of 3.33% of the Participant's
Compensation.
(4) Beneficiary. The person or persons or legal entity or entities
-----------
entitled under Section 8.7 to receive benefits in the event of the death of
a Participant.
(5) Board of Directors. The Board of Directors of the Company, or
------------------
any duly authorized committee thereof.
(6) Code. The Internal Revenue Code of 1986, as amended.
----
-2-
<PAGE>
(7) Committee. The Retirement Plan Administrative Committee, or such
---------
other group of individuals appointed by the Board of Directors pursuant to
Section 11.1 to administer the Plan.
(8) Company. True North Communications Inc., a Delaware corporation,
-------
and any successor to such corporation that adopts the Plan pursuant to
Article 13.
(9) Company Stock. Shares of the common stock of the Company,
-------------
including fractions thereof which are described in section 409(l) of the
Code.
(10) Compensation. Cash compensation in the form of salary, wages,
------------
incentive compensation and overtime for personal services rendered to an
Employer, including any such compensation which is subject to a salary
reduction arrangement which is part of a cafeteria plan within the meaning
of section 125 of the Code or a qualified cash or deferred arrangement
within the meaning of section 401(k) of the Code. Without limiting the
generality of the foregoing, the term Compensation shall not include (a)
any reimbursement of expenses incurred by the Participant, fringe benefits,
moving expenses, compensation deferred from prior years and welfare
benefits and (b) any amount which for federal income tax purposes is
treated as compensation (i) in connection with any stock option or stock
appreciation right or (ii) as a result of an Employer's purchase of term
life insurance for the benefit of an Employee. Notwithstanding the
foregoing, for purposes of subdivision (25) of this Article 2 and Section
7.5(b), a Participant's Compensation for any Plan Year shall not include
any compensation paid to such Participant for any period during which he
was not a Participant. In determining the Compensation of a Participant,
earnings of such Participant in excess of $160,000 (as adjusted for
increases in the cost-of-living pursuant to section 401(a)(17) of the Code)
shall not be taken into account for any purpose under the Plan.
(11) Disability. A medically determinable, permanent inability to
----------
perform the normal duties of a Participant's regular employment with an
Employer, established to the satisfaction of the Committee by the written
report of a licensed physician or otherwise.
(12) Distributee. A person entitled to receive a distribution from
-----------
the Trust under Article 8.
(13) Effective Date. The effective date of this amended and restated
--------------
Plan with respect to an Employee's
-3-
<PAGE>
Employer, which in the case of the Company and each other Employer
participating in this Plan and in the Profit Sharing Plan on December 31,
1997, shall be January 1, 1998, except as otherwise provided herein, and
which in the case of any other Employer, shall be the date designated by
such Employer.
(14) Eligible Employee. Any Employee of any Employer, excluding only
-----------------
the following:
(a) any Employee who is a nonresident alien who received no
earned income from an Employer with constitutes income from sources within
the United States;
(b) any Employee whose employment is governed by the terms of a
collective bargaining agreement under which retirement benefits were the
subject of good faith bargaining;
(c) any individual who performs services for an Employer and is
treated by such Employer as an independent contractor, a consultant or an
employee of another entity, or any individual who has otherwise waived
participation in this Plan, regardless of such individual's employment
status under common law; and
(d) any Employee who is actively participating in the True North
Communications Inc. Profit Sharing and Savings Plan for Bozell, Jacobs,
Kenyon & Eckhardt, Inc.
(15) Employee. An individual whose relationship with an Employer is,
--------
under common law, that of an employee.
(16) Employer. The Company and any other entity that, with the
--------
consent of the Board of Directors, elects to participate in the Plan in the
manner described in Section 12.1 and any successor entity that adopts the
Plan pursuant to Article 13. If any such entity withdraws from
participation in the Plan pursuant to Section 12.2, or terminates its
participation in the Plan pursuant to Section 16.3, such entity shall
thereupon cease to be an Employer.
(17) Entry Date. For the Plan Year ending December 31, 1998, January
----------
1, April 1, July 1 and October 1 and for Plan Years commencing thereafter,
the first day of each calendar month orsuch other dates as the Committee
may, in its sole discretion, determine).
(18) ERISA. The Employee Retirement Income Security Act of 1974, as
-----
amended.
-4-
<PAGE>
(19) Excess Compensation. For any Plan Year, a Participant's
-------------------
Compensation in excess of the taxable wage base determined under the
federal Social Security Act as in effect as of the beginning of such year,
provided, however, that in the case of a person who becomes a Participant
-------- -------
other than on the first day of a Plan Year, such person's Excess
Compensation for such year shall be his Compensation in excess of a
percentage of the taxable wage base determined under the federal Social
Security Act as in effect for such year, such percentage being equal to the
fractional portion of such Plan Year during which such person was a
Participant.
(20) Hours of Employment. In general, the sum of:
-------------------
(a) in the case of an Employee who is customarily employed on a
regular full-time basis, 190 hours for each month for which he is entitled
to receive Compensation from an Employer or an Affiliate (including
Compensation which he receives without rendering services such as
Compensation with respect to paid holidays, vacations, sick leave or
disability leave);
(b) in the case of all other Employees, each hour for which an
Employee is entitled to receive Compensation from an Employer or an
Affiliate (including hours for any period during which he receives
Compensation without rendering services such as Compensation with respect
to paid holidays, vacations, sick leave or disability leave);
(c) in the case of all Employees, eight hours for each working
day in any period during which an Employee is in Military Service, provided
that such Military Service does not extend beyond the date on which he,
with or without application, could have been discharged and after discharge
from such Military Service he returns to the employ of an Employer within
the period prescribed by USERRA or any other laws relating to the
reemployment rights of persons following Military Service; and
(d) in the case of all Employees, eight hours for each working
day in any period during which an Employee is receiving benefits under a
long-term disability insurance plan of an Employer.
Notwithstanding clause (a) and clause (b) above, an Employee shall not be
credited with more than 501 Hours of Employment on account of any single
continuous period during which he does not render services. The
computation of Hours of Employment and the periods to which they are to be
credited
-5-
<PAGE>
shall be determined under uniform rules applied by the Committee in
accordance with Department of Labor Regulations (S)(S)2530.200b-2(b), (c)
and (f).
Notwithstanding any other provision within this Plan, employment
with Bozell, Jacobs, Kenyon and Eckhardt, Inc. ("BJK&E") and any of its
Affiliates (as such term is defined in subdivision (2) of Article 2 of this
Plan, except that the phrase "BJK&E" shall be substituted in the place of
the phrase "an Employer" as it appears therein) shall be considered Hours
of Employment under this Plan to the same extent such employment would have
been considered Hours of Employment under this Plan if performed for an
Employer.
(21) Military Service. (a) Service in active duty, in time of
----------------
national or local emergency, in the armed forces of the United States or of
any state thereof; (b) service in the armed forces of the United States or
of any state thereof under any compulsory service law; or (c) service in
the armed forces of the United States or any of its allies in time of war
in which the United States is engaged.
(22) Participant. An Eligible Employee who has satisfied the
-----------
requirements set forth in Section 3.1(a). Such an Eligible Employee shall
cease to be a Participant upon the complete distribution of his account
balances under the Plan.
(23) Plan. The True North Communications Inc. Retirement Plan, as
----
herein set forth and as from time to time amended.
(24) Plan Year. The 12-consecutive-month period beginning on each
---------
January 1 and ending on the next December 31.
(25) Profit Sharing Compensation. For any Plan Year, the sum of a
---------------------------
Participant's Compensation and Excess Compensation for such Plan Year.
(26) Regulations. Written promulgations of the Department of Labor
-----------
construing Title I of ERISA or of the Internal Revenue Service construing
the Code, as applicable.
(27) Trust. The trust created by agreement between the Company and
-----
the Trustee, as from time to time amended.
(28) Trustee. The trustee provided for in Article 6, or any successor
-------
trustee or, if there is more than one trustee acting at any time, all of
such trustees collectively.
-6-
<PAGE>
(29) Trust Fund. All money and property of every kind of the Trust
----------
held by the Trustee under the Trust agreement.
(30) USERRA. The Uniformed Services Employment and Reemployment
------
Rights Act of 1994.
(31) Valuation Date. Each date that the record keeper for the Plan,
--------------
as appointed by the Committee, is open for business and any other date or
dates as may be designated by the Committee.
(32) Year of Service. Each 12-consecutive-month period commencing on
---------------
the date on which an Employee first performs an Hour of Employment or the
first day of any Plan Year commencing after such date, during which an
Employee completes 1,000 or more Hours of Employment.
ARTICLE 3
---------
PARTICIPATION
-------------
Section 3.1. Eligibility for Participation.
----------- -----------------------------
(a) Eligibility for Elective Contributions. Each Eligible Employee who was a
--------------------------------------
Participant in this Plan immediately prior to the Effective Date shall remain
eligible to make elective contributions pursuant to Section 4.1 on and after
such date. Prior to January 1, 1999, any Eligible Employee who is not a
Participant in this Plan as of the Effective Date and whose Hours of Employment
customarily exceed 1,000 in a Plan Year shall become eligible to make elective
contributions pursuant to Section 4.1 as of the first Entry Date coinciding with
or following the date he becomes an Eligible Employee, or as soon as
administratively practicable thereafter. Effective January 1, 1999, such an
Eligible Employee shall become eilgible to make elective contributions pursuant
to Section 4.1 as of the Entry
-7-
<PAGE>
Date coinciding with or next following the 60th day after his or her date of
employment. An Employee whose Hours of Employment customarily exceed 1,000 in a
Plan Year and who becomes an Eligible Employee upon his transfer to an Employer
from an Affiliate that is not an Employer shall become eligible to make elective
contributions pursuant to Section 4.1 as soon as administratively practicable
following such transfer, but in no event earlier than the first Entry Date
following such transfer. Any other Eligible Employee shall become eligible to
make elective contributions pursuant to Section 4.1 as of the Entry Date
coinciding with or next following his completion of a Year of Service.
(b) Eligibility for Profit Sharing Contributions. Each Eligible
--------------------------------------------
Employee who was a participant in the Profit Sharing Plan immediately prior to
the Effective Date shall remain eligible to receive an allocation of a profit
sharing contribution pursuant to Section 7.5(b) on and after such date. Any
other Eligible Employee shall become eligible for an allocation of a profit
sharing contribution pursuant to Section 7.5(b) as of the January 1 or July 1
coinciding with or following the later of the two-year anniversary of the date
he first performs an Hour of Employment and the date he completes two Years of
Service. If a Participant who is not yet eligible for an allocation of a profit
sharing contribution pursuant to Section 7.5(b) incurs five or more consecutive
one-year breaks in
-8-
<PAGE>
service, then Years of Service before such breaks shall be disregarded for
purposes of determining when the Participant is eligible for an allocation of a
profit sharing contribution. For purposes of this Section 3.1(b), a one-year
break in service is a 12-consecutive-month period commencing on the date on
which an Employee first performs an Hour of Employment or the first day of any
Plan Year commencing after such date, during which the Employee does not
complete more than 500 Hours of Employment.
Section 3.2. Application for Elective Contributions. A Participant
--------------------------------------
may commence elective contributions as of any payroll period by executing and
delivering to the Committee, before the first day of such payroll period, an
application on the prescribed form (or by such other means as may be prescribed
by the Committee) specifying his chosen rate of elective contributions pursuant
to Section 4.1. Such application shall authorize the Participant's Employer to
reduce such Participant's Compensation otherwise payable for the payroll period
for which each such elective contribution is made by the amount of such
contribution by means of a payroll deduction. The application shall evidence the
Participant's acceptance of and agreement to all provisions of the Plan and
shall also specify the Participant's investment election as described in Section
7.2. Any election specifying the rate of elective contributions shall be
effective only with respect to Compensation not yet earned as of the effective
date of such election.
-9-
<PAGE>
Section 3.3. Transfer to Other Employers or Affiliates. If a
----------- -----------------------------------------
Participant is transferred from an Employer to another Employer or from an
Employer to an Affiliate that is not an Employer, such transfer shall not
terminate the Participant's participation in the Plan and such Participant shall
continue to participate in the Plan until an event occurs that would have
terminated his participation had he continued in the service of his prior
Employer until the occurrence of such event. Notwithstanding the foregoing,
during periods of employment by an Affiliate that is not an Employer, no
Employer shall contribute to the Plan on behalf of the Participant elective
contributions pursuant to Section 4.1, matching contributions pursuant to
Section 4.2, discretionary matching contributions pursuant to Section 4.3 or
profit sharing contributions pursuant to Section 4.4.
ARTICLE 4
---------
EMPLOYER CONTRIBUTIONS
----------------------
Section 4.1. Elective Contributions. (a) Initial Election.
----------- ---------------------- ----------------
Subject to the limitations set forth in Sections 4.5, 4.6, 4.7 and 7.6, each
Employer shall contribute for each payroll period on behalf of each Participant
who is an Employee of such Employer and who has elected to have elective
contributions made on his behalf an amount equal to a whole percentage not less
than 1% and not more than 10% of such Participant's Compensation for
-10-
<PAGE>
such payroll period, as designated by the Participant on his application
pursuant to Section 3.2; provided, however, that a Participant who had in effect
-------- -------
on December 31, 1997 an election to contribute 6 2/3% of such Participant's
Compensation for each payroll period may continue such rate of elective
contributions, until such date as he elects to change in any manner his rate of
elective contributions or suspend such contributions. Elective contributions
shall be delivered to the Trustee within a reasonable time after the appropriate
deduction has been made from the Participant's Compensation, but in no event
later than the fifteenth business day of the month following the month in which
the contributions are withheld from such Participant's Compensation.
(b) Changes in the Rate, Suspension or Resumption of Elective
---------------------------------------------------------
Contributions. Elective contributions shall continue in effect at the rate
- -------------
initially or thereafter elected by the Participant until the Participant changes
such election or suspends such contributions. A Participant may change the rate
of elective contributions from one permitted percentage to another, suspend such
contributions or resume such contributions at any time in such manner as may be
prescribed by the Committee and any such change, suspension or resumption shall
become effective as of the commencement of the first payroll period thereafter.
Such change, suspension or resumption shall be
-11-
<PAGE>
effective only with respect to Compensation not yet earned as of the effective
date thereof.
(c) Types of Elective Contributions. Elective contributions
-------------------------------
shall be designated as Basic Contributions or Additional Contributions.
1. Basic Contributions shall be made in cash, shares of Company
Stock, or a combination thereof, as determined by the Employer in its sole
discretion. Any such contributions made in cash shall be used by the
Trustee to purchase shares of Company Stock from the Company or on the open
market, as the Company shall direct. For purposes of this Section
4.1(c)(1), shares of Company Stock shall be valued as of the date such
shares are delivered to the Trustee by taking the closing price of a share
of Company Stock as reported on the New York Stock Exchange or such other
national securities exchange on which the Company Stock may be listed as of
such date, or, if shares of Company Stock shall not be listed on a stock
exchange on such date, the mean of the reported bid prices of the Company
Stock on such date.
2. Additional Contributions shall be made in cash.
Section 4.2. Matching Contributions. Subject to the limitations set
----------- ----------------------
forth in Sections 4.6, 4.7 and 7.6, each Employer shall contribute for each
payroll period on behalf of each Participant who is an Employee of such Employer
an amount equal to the Basic Contributions, if any, made on behalf of such
Participant pursuant to Section 4.1. Matching contributions made pursuant to
this Section 4.2 shall be delivered to the Trustee at the same time as elective
contributions made pursuant to Section 4.1 are delivered by such Employer to the
Trustee. Matching
-12-
<PAGE>
contributions shall be made in cash, shares of Company Stock, or a combination
thereof, as determined by the Employer in its sole discretion. Any such
contributions made in cash shall be used or applied in the same manner by the
Trustee as cash contributions are used or applied under Section 4.1(c)(1). The
valuation rules applicable to Company Stock under Section 4.1(c)(1) shall apply
to Company Stock contributed pursuant to this Section 4.2.
Section 4.3. Discretionary Matching Contributions. Subject to the
----------- ------------------------------------
limitations set forth in Sections 4.6, 4.7 and 7.6, each Employer may contribute
for each Plan Year on behalf of each Participant who is an Employee of such
Employer an amount equal to such percentage of the elective contributions made
by such Participant for the Plan Year as the Employer shall determine in its
sole discretion; provided, however, that the percentage determined by the
-------- -------
Employer for any Participant shall be the same percentage as determined by the
Employer for each other Participant employed by that Employer for such Plan
Year. Discretionary matching contributions made pursuant to this Section 4.3
shall be delivered to the Trustee no later than the due date, including
extensions thereof, of the Employer's federal income tax return for the fiscal
year of the Employer which ends with or within such Plan Year. Any such
discretionary matching contributions shall be made in cash, shares of Company
Stock, or a combination thereof, as determined by the Employer in its sole
discretion. Any such contributions made in cash shall be used or
-13-
<PAGE>
applied in the same manner by the Trustee as cash contributions are used or
applied under Section 4.1(c)(1). The valuation rules applicable to Company Stock
under Section 4.1(c)(1) shall apply to Company Stock contributed pursuant to
this Section 4.3.
Section 4.4. Profit Sharing Contributions. Subject to the
----------- ----------------------------
limitations set forth in Sections 4.7 and 7.6, the Employers shall in the
aggregate contribute for each Plan Year an amount as may be determined by the
Board of Directors in its sole discretion. The portion of the aggregate profit
sharing contribution for a Plan Year which shall be made by each Employer shall,
subject to Sections 4.7 and 7.6, equal that part of the aggregate profit sharing
contribution which is allocated to the accounts of Participants employed by such
Employer under Section 7.5(b). Profit sharing contributions for any Plan Year
shall be made in cash and delivered to the Trustee no later than the due date,
including extensions thereof, of the Employer's federal income tax return for
the fiscal year of the Employer which ends with or within such Plan Year.
Section 4.5. Annual Limit on Elective Contributions.
----------- --------------------------------------
(a) General Rule. Notwithstanding the provisions of Section 4.1, a Participant's
------------
elective contributions made pursuant to Section 4.1 for any calendar year,
together with amounts contributed under other plans or arrangements described in
sections 401(k), 403(b), 408(k) or 408(p) of the Code, shall not
-14-
<PAGE>
exceed $10,000 (as adjusted for increases in the cost-of-living in accordance
with section 402(g)(5) of the Code).
(b) Correction of Excess Elective Contributions. If for any
-------------------------------------------
calendar year, the aggregate of (1) elective contributions to the Plan and (2)
amounts contributed under other plans or arrangements described in sections
401(k), 403(b), 408(k) or 408(p) of the Code will exceed the limit described in
Section 4.5(a) for the calendar year in which such contributions were made
("excess elective contributions"), such Participant shall be permitted, pursuant
to such rules and at such time following such calendar year as determined by the
Committee, to submit a written request that the excess elective contributions,
plus any income and minus any loss allocable thereto, be distributed to him.
Such request shall be made on a form designated by the Committee that specifies
the amount of such excess elective contributions to be distributed from the Plan
for the calendar year. The request shall be accompanied by the Participant's
written statement that if such amount is not distributed, the amounts
contributed by the Participant under all plans and arrangements described under
sections 401(k), 403(b), 408(k) and 408(p) of the Code will exceed the limit for
such Participant under section 402(g) of the Code. The Committee shall direct
the Trustee to distribute such amount no later than April 15 of the calendar
year following the calendar year in which such excess elective contributions
were made. The amount
-15-
<PAGE>
of any income or loss allocable to such excess elective contributions shall be
determined pursuant to applicable Regulations. Notwithstanding the provisions of
this Section 4.5, any such excess elective contributions shall be treated as
"annual additions" for the purpose of Section 7.6.
Section 4.6. Limitations on Contributions and Adjustments for Highly
----------- -------------------------------------------------------
Compensated Employees. (a) Actual Deferral Percentage Test of Section
- --------------------- ------------------------------------------
401(k)(3) of the Code. Notwithstanding the provisions of Section 4.1, if the
- ---------------------
elective contributions made pursuant to such section for a Plan Year fail to
satisfy both of the tests set forth in this Section 4.6(a), the adjustments
prescribed in Section 4.6(e)(1) shall be made.
(1) The HCE average deferral percentage does not exceed the product
of the NHCE average deferral percentage multiplied by 1.25.
(2) The HCE average deferral percentage (A) does not exceed the NHCE
average deferral percentage by more than two percentage points, and (B)
does not exceed two times the NHCE average deferral percentage.
(b) Actual Contribution Percentage Test of Section 401(m) of the
------------------------------------------------------------
Code. Notwithstanding the provisions of Sections 4.2 and 4.3, if the aggregate
- ----
of the matching contributions and discretionary matching contributions made
pursuant to Sections 4.2 and 4.3, respectively, fail to satisfy
-16-
<PAGE>
both of the tests set forth in this Section 4.6(b), the adjustments prescribed
in Section 4.6(e)(2) shall be made.
(1) The HCE average contribution percentage does not exceed the
product of the NHCE average contribution percentage multiplied by 1.25.
(2) The HCE average contribution percentage (A) does not exceed the
NHCE average contribution percentage by more than two percentage points,
and (B) does not exceed two times the NHCE average contribution percentage.
(c) Aggregate Limit on Contributions. Notwithstanding anything
--------------------------------
herein to the contrary, if the sum of the HCE average deferral percentage (as
determined under Section 4.6(e)(1) after making the adjustments required by such
section for the Plan Year) and the HCE average contribution percentage (as
determined under Section 4.6(e)(2) after making the adjustments required by such
section for the Plan Year) exceeds, or in the judgment of the Company is likely
to exceed, the aggregate limit for such Plan Year, the adjustments prescribed in
Section 4.6(e)(3) shall be made.
(d) Definitions and Special Rules. For purposes
-----------------------------
of this Section 4.6, the following definitions and special rules shall apply:
(1) The "actual deferral percentage test" refers collectively to the
tests set forth in Section 4.6(a)(1) and (2) relating to elective
contributions. The actual deferral percentage test shall be satisfied if
either of such tests are satisfied.
-17-
<PAGE>
(2) The "HCE average deferral percentage" for a Plan Year is a
percentage determined for the group of Eligible Employees who are eligible
to make elective contributions for such Plan Year and who are highly
compensated employees for such Plan Year. Such percentage shall be equal to
the average of the ratios, calculated separately for each such Eligible
Employee to the nearest one-hundredth of one percent, of the elective
contributions for the benefit of such Eligible Employee for such Plan Year
(if any) to the total compensation for such Plan Year paid to such Eligible
Employee.
(3) The "NHCE average deferral percentage" for a Plan Year is a
percentage determined for the group of Eligible Employees who were eligible
to make elective contributions for the prior Plan Year and who were not
highly compensated employees for such prior Plan Year. Such percentage
shall be equal to the average of the ratios, calculated separately for each
such Eligible Employee to the nearest one-hundredth of one percent, of the
elective contributions for the benefit of such Eligible Employee for such
prior Plan Year (if any) to the total compensation for such prior Plan Year
paid to such Eligible Employee.
(4) The "actual contribution percentage test" refers collectively to
the tests set forth in Section 4.6(b)(1) and (2) relating to matching
contributions and discretionary matching contributions. The actual
contribution percentage test shall be satisfied if either of such tests are
satisfied.
(5) The "HCE average contribution percentage" for a Plan Year is a
percentage determined for the group of Eligible Employees who are eligible
to make elective contributions and share in an allocation of corresponding
matching contributions or discretionary matching contributions (if any) for
such Plan Year, and who are highly compensated employees for such Plan
Year. Such percentage shall be equal to the average of the ratios,
calculated separately for each such Eligible Employee to the nearest one-
hundredth of one percent, of the sum of the matching contributions made
pursuant to Section 4.2 and discretionary matching contributions made
pursuant to Section 4.3 for the benefit of such Eligible Employee (if any)
for such Plan Year to the total compensation for such Plan Year paid to
such Eligible Employee.
(6) The "NHCE average contribution percentage" for a Plan Year is a
percentage determined for the group of Eligible Employees who were eligible
to make elective contributions and share in an allocation of corresponding
-18-
<PAGE>
matching contributions or discretionary matching contributions (if any) for
the prior Plan Year, and who were not highly compensated employees for such
prior Plan Year. Such percentage shall be equal to the average of the
ratios, calculated separately for each such Eligible Employee to the
nearest one-hundredth of one percent, of the sum of the matching
contributions and discretionary contributions made for the benefit of such
Eligible Employee for such prior Plan Year (if any) to the total
compensation for such prior Plan Year paid to such Eligible Employee.
(7) The "aggregate limit" shall equal the greater of (A) the sum of
(i) 1.25 times the greater of the NHCE average deferral percentage or the
NHCE average contribution percentage plus (ii) the lesser of (a) the sum of
two percentage points and the lesser of the NHCE average deferral
percentage or the NHCE average contribution percentage and (b) 200% of the
lesser of the NHCE average deferral percentage or the NHCE average
contribution percentage; or (B) the sum of (i) 1.25 times the lesser of the
NHCE average deferral percentage or the NHCE average contribution
percentage plus (ii) two percentage points plus the greater of (a) the NHCE
average deferral percentage or (b) the NHCE average contribution
percentage, but not greater than 200% of the greater of (a) and (b) above.
(8) A "highly compensated employee" is, for a Plan Year, any Employee
who is (a) a 5%-owner (as determined under section 416(i) of the Code) at
any time during the Plan Year or the preceding Plan Year or (b) is paid
compensation in excess of $80,000 (as adjusted for increases in the
cost-of-living in accordance with section 414(q)(1)(B)(ii) of the Code)
from an Employer for the preceding Plan Year; provided, however, that an
-------- -------
Employee shall be taken into account under clause (b) herein only if such
Employee was a member of the "top-paid group" (as defined in section
414(q)(3) of the Code) for the preceding Plan Year.
(9) The term "compensation" shall have the meaning set forth in
section 414(s) of the Code or, in the sole discretion of the Company, any
other meaning in accordance with the Code for these purposes.
(10) If the Plan and one or more other plans of an Employer to which
elective contributions or qualified nonelective contributions (as such term
is defined in section 401(m)(4)(C) of the Code) are made are treated as one
plan for purposes of section 410(b) of the Code, such plans shall be
treated as one plan for purposes of this Section 4.6.
-19-
<PAGE>
(e) Adjustments to Comply with Limits. This Section 4.6(e) sets
---------------------------------
forth the adjustments and correction methods which shall be used to comply with
the actual deferral percentage test under section 401(k)(3) of the Code and the
actual contribution percentage test under section 401(m) of the Code.
(1) Adjustments to Comply with Actual Deferral Percentage Test. (A)
----------------------------------------------------------
Adjustment to Elective Contributions of Highly Compensated Employees. The
--------------------------------------------------------------------
Committee shall cause to be made such periodic computations as it shall
deem necessary or appropriate to determine whether one of the tests set
forth in Section 4.6(a) is satisfied during a Plan Year, and, if it appears
to the Committee that such tests will not be satisfied, the Committee shall
take such steps as it deems necessary or appropriate to adjust the elective
contributions made pursuant to Section 4.1 for all or a portion of such
Plan Year on behalf of each Participant who is a highly compensated
employee to the extent necessary in order for one of such tests to be
satisfied. If, as of the end of the Plan Year, the Committee determines
that, notwithstanding any adjustments made pursuant to the preceding
sentence, neither of the tests set forth in Section 4.6(a) was satisfied,
the Committee shall calculate a total amount by which elective
contributions must be reduced in order to satisfy either such test, in the
manner prescribed by section 401(k)(8)(B) of the Code (the "excess
contributions amount"). The amount to be returned to each Participant who
is a highly compensated employee shall be determined by first reducing the
elective contributions of each Participant whose actual dollar amount of
elective contributions for such Plan Year is highest until such reduced
dollar amount equals the next highest actual dollar amount of elective
contributions made for such Plan Year on behalf of any highly compensated
employee, or until the total reduction equals the excess contributions
amount. If further reductions are necessary, then such elective
contributions on behalf of each Participant who is a highly compensated
employee and whose actual dollar amount of elective contributions made for
such Plan Year is the highest (determined after the reduction described in
the preceding sentence) shall be reduced in accordance with the preceding
sentence. Such reductions shall continue to be
-20-
<PAGE>
made to the extent necessary so that the total reduction equals the excess
contributions amount.
(B) Corrective Distributions. No later than 2 1/2 months
------------------------
after the end of the Plan Year (or if correction by such date is
administratively impracticable, no later than the last day of the
subsequent Plan Year), the Committee shall cause to be distributed to
each affected Participant (i) the amount of elective contributions to
be returned to such Participant pursuant to Section 4.6(e)(1)(A)
above, plus any income and minus any loss allocable thereto, and (ii)
any corresponding matching contributions and discretionary matching
contributions related thereto, plus any income and minus any loss
allocable thereto. The amount of any income or loss allocable to any
such reductions to be so distributed, including income or loss
attributable to the gap period (as defined in Regulations), shall be
determined pursuant to applicable Regulations. The amount of elective
contributions (and income or loss allocable thereto) to be distributed
to a Participant hereunder shall be reduced by any excess elective
contributions previously distributed to such Participant pursuant to
Section 4.5 in order to comply with the limitations of section 402(g)
of the Code. The unadjusted amount of any such reductions so
distributed shall be treated as "annual additions" for purposes of
Section 7.6 relating to the limitations under section 415 of the Code.
(2) Adjustments to Comply with Actual Contribution Percentage Test.
--------------------------------------------------------------
(A) Adjustment to Matching Contributions and Discretionary Matching
---------------------------------------------------------------
Contributions of Highly Compensated Employees. If, as of the end of the
---------------------------------------------
Plan Year, after taking into account the distribution of matching
contributions and discretionary matching contributions made on behalf of
highly compensated employees pursuant to Section 4.6(e)(1)(B) above, the
Committee determines that neither of the tests set forth in Section
4.6(b)(1) and (2) was satisfied, the Committee shall calculate a total
amount by which matching contributions made pursuant to Section 4.2 and
discretionary matching contributions made pursuant to Section 4.3 must be
reduced in order to satisfy either such test, in the manner prescribed by
section 401(m)(6)(B) of the Code (the "excess aggregate contributions
amount"). For purposes of determining whether such tests are satisfied as
described in the preceding sentence, the Committee can elect to treat a
portion of the elective contributions made by Participants for a Plan Year
as matching contributions, in accordance with Regulations. The amount to be
reduced with respect to each Participant who is a highly compensated
-21-
<PAGE>
employee shall be determined by first reducing the matching contributions
and discretionary matching contributions of each Participant whose actual
dollar amount of matching contributions and discretionary matching
contributions for such Plan Year is highest until such reduced dollar
amount equals the next highest actual dollar amount of matching
contributions and discretionary matching contributions made for such Plan
Year on behalf of any highly compensated employee, or until the total
reduction equals the excess aggregate contributions amount. If further
reductions are necessary, then such matching contributions and
discretionary matching contributions on behalf of each Participant who is a
highly compensated employee and whose actual dollar amount of matching
contributions and discretionary matching contributions made for such Plan
Year is the highest (determined after the reduction described in the
preceding sentence) shall be reduced in accordance with the preceding
sentence. Such reductions shall continue to be made to the extent necessary
so that the total reduction equals the excess aggregate contributions
amount. Any reduction prescribed by this Section 4.6(e)(2)(A) shall be
applied to a Participant's discretionary matching contributions first, and
shall be applied to his matching contributions only after reduction of his
discretionary matching contributions for such Plan Year to zero.
(B) Corrective Distributions. No later than 2 1/2 months
------------------------
after the end of the Plan Year (or if correction by such date is
administratively impracticable, no later than the last day of the
subsequent Plan Year), the Committee shall cause to be distributed to
each affected Participant the amount of matching contributions and
discretionary matching contributions to be reduced with respect to
such Participant pursuant to Section 4.6(e)(2)(A) above, plus any
income and minus any loss allocable thereto. The amount of any income
or loss allocable to any such reductions to be so distributed,
including income or loss attributable to the gap period (as defined in
Regulations), shall be determined pursuant to applicable Regulations.
The unadjusted amount of any reductions so distributed shall be
treated as "annual additions" for purposes of Section 7.6 relating to
the limitations under section 415 of the Code.
(3) Adjustments to Comply with the Aggregate Limit. If, after
----------------------------------------------
making the adjustments required by Section 4.6(e)(1) and (2) for a Plan
Year, the Committee determines that the sum of the average deferral
percentage and the average contribution percentage for Participants who are
highly compensated employees exceeds the aggregate limit for
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<PAGE>
such Plan Year, the Committee shall within 2 1/2 months after the close of
such Plan Year (or if correction by such date is administratively
impracticable, no later than the last day of the subsequent Plan Year)
adjust the matching contributions and discretionary matching contributions
for such Plan Year on behalf of each Participant who is a highly
compensated employee to the extent necessary to eliminate such excess. For
purposes of the preceding sentence, the average deferral percentage and
average contribution percentage for Participants who are highly compensated
employees shall be equal to the highest deferral percentage and
contribution percentage permissible in determining the excess contributions
amount under section 401(k)(8)(B) of the Code pursuant to Section
4.6(e)(1), and the excess aggregate contributions amount under section
401(m)(6)(B) of the Code pursuant to Section 4.6(e)(2), respectively. The
adjustment required by this Section 4.6(e)(3) shall be effected in the same
manner described in Section 4.6(e)(2) relating to reductions made to
satisfy the average contribution percentage test of the Code. In the event
that further reductions are necessary, the Committee shall adjust the
elective contributions for such Plan Year on behalf of each Participant who
is a highly compensated employee to the extent necessary to eliminate such
excess. Such adjustment shall be effected in the same manner described in
Section 4.6(e)(1) relating to reductions made to satisfy the actual
deferral percentage test.
(f) Designation of Qualified Nonelective Contributions. Each Plan
--------------------------------------------------
Year, the Committee may, to the extent permitted by the Secretary of Treasury,
designate an amount of Employer contributions allocated to Participant accounts
on behalf of any group of Participants to be treated as "qualified nonelective
contributions" within the meaning of section 401(m)(4)(C) of the Code for
purposes of applying the actual deferral percentage test and the actual
contribution percentage test. Any such Employer contributions designated as
qualified nonelective contributions and earnings related thereto shall be
accounted for separately by the Trustee and shall be
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<PAGE>
distributable pursuant to the provisions of the Plan concerning distributions of
matching contributions (but no earlier than the Participant's separation from
service or death).
Section 4.7. Limitation on Employer Contributions. The
----------- ------------------------------------
contributions of an Employer for any Plan Year to the Plan shall not exceed the
maximum amount for which a deduction is allowable to such Employer for federal
income tax purposes on account of such contributions for the fiscal year of such
Employer that ends with or within such Plan Year. The profit sharing
contributions of an Employer for any Plan Year to the Plan shall not exceed the
then current or accumulated earnings and profits of such Employer. The
determination of earnings and profits shall be made in accordance with the
consistent application of generally accepted accounting principles. If an
Employer's contributions would otherwise exceed either of the limitations
prescribed in this Section 4.7, the amount of the Employer's contributions shall
be reduced by the amount of such excess, and the amount allocable under Section
7.5 for such Plan Year to each Participant employed by such Employer shall be
reduced to an amount which bears the same ratio to the amount thereof determined
without regard to this Section 4.7 which the amount of such contributions minus
such excess bears to the amount of such contributions.
-24-
<PAGE>
Upon an Employer's request, any contributions which were made by an
Employer by reason of a good faith mistake of fact shall be returned to such
Employer. Such Employer's request and the return of any such contributions must
be made within one year after the contributions were made. Any portion of any
contributions made by an Employer which exceeds the maximum amount for which a
deduction is allowable to such Employer for federal income tax purposes by
reason of a good faith mistake in determining the maximum allowable deduction
shall be returned to such Employer within one year after the deduction is
disallowed. The amount to be returned to an Employer pursuant to this Section
4.7 shall be the excess of the amount contributed over the amount that would
have been contributed had there not been a mistake of fact or a mistake in
determining the maximum allowable deduction. Earnings attributable to the
mistaken contributions shall not be returned to the Employer, but losses
attributable thereto shall reduce the amount to be so returned. If the return to
the Employer of the amount attributable to the mistaken contributions would
cause the balance of any Participant's account as of the date such amount is to
be returned (determined as if such date coincided with the close of a Plan Year)
to be reduced to less than what would have been the balance of such account as
of such date had the mistaken amount not been contributed, the amount to be
returned to the Employer shall be limited so as to avoid such reduction.
-25-
<PAGE>
ARTICLE 5
---------
ROLLOVER CONTRIBUTIONS
----------------------
Section 5.1. Requirements for Rollover Contributions. If an
----------- ---------------------------------------
Eligible Employee receives, either before or after becoming a Participant, an
eligible rollover distribution (within the meaning of section 402(c)(4) of the
Code) from an employees' trust described in section 401(a) of the Code which is
exempt from tax under section 501(a) of the Code or from a qualified annuity
plan described in section 403(a) of the Code, then such Eligible Employee may
contribute to the Plan an amount which does not exceed the amount of such
eligible rollover distribution (including the proceeds from the sale of any
property received as part of such eligible rollover distribution) less the
amount considered contributed to such trust or annuity plan by the Eligible
Employee (determined by applying section 402(d)(4)(D)(i) of the Code). If an
Eligible Employee receives, either before or after becoming a Participant, a
distribution or distributions from an individual retirement account or
individual retirement annuity (within the meaning of section 408 of the Code)
and the amount received represents the entire amount in such account or the
entire value of such annuity and no amount in such account or no value of such
annuity is attributable to a source other than an eligible rollover distribution
(within the meaning of section 402(c)(4) of the Code) from an employees' trust
described in section 401(a) of the Code which is exempt from tax under section
-26-
<PAGE>
501(a) of the Code or from a qualified annuity plan described in section 403(a)
of the Code and any earnings on such a rollover distribution, then such Eligible
Employee may contribute to the Plan such distribution or distributions.
Section 5.2. Delivery of Rollover Contributions. Any rollover
----------- ----------------------------------
contribution pursuant to this Article 5 shall be delivered by the Eligible
Employee to the Committee and by the Committee to the Trustee on or before the
60th day after the day on which the Eligible Employee receives the distribution
(or on or before such later date as may be prescribed by law). Any such
contribution must be accompanied by (a) a statement of the Eligible Employee
that to the best of his knowledge the amount so transferred meets the conditions
specified in Section 5.1 and (b) a copy of such documents as may have been
received by the Eligible Employee advising him of the amount and character of
such distribution. Notwithstanding the foregoing, the Committee shall not accept
a rollover contribution if in its sole judgment accepting such contribution
would cause the Plan to violate any provision of the Code or Regulations and the
Committee shall not be required to accept a contribution to the extent it
consists of property other than cash.
Section 5.3. Special Accounting Rules for Rollover Contributions.
----------- ---------------------------------------------------
If an Eligible Employee makes a rollover contribution, the Committee shall
establish and maintain, or
-27-
<PAGE>
cause to be established and maintained, for such Eligible Employee a rollover
contributions account and the Eligible Employee's rollover contribution shall be
credited to such account as of the date on which such contribution is delivered
to the Trustee. If a rollover contribution is made by an Eligible Employee prior
to his becoming a Participant, such Eligible Employee shall until such time as
he becomes a Participant be deemed to be a Participant for all purposes of the
Plan except for the purposes of the allocation of contributions pursuant to
Article 4 and any determination of when he becomes a Participant pursuant to
Article 3 or 9.
ARTICLE 6
---------
TRUST
-----
A Trust shall be created by the execution of a Trust agreement between
the Company and the Trustee. All contributions under the Plan shall be paid to
the Trustee. The Trustee shall hold all monies and other property received by it
and invest and reinvest the same, together with the income therefrom, on behalf
of the Participants collectively in accordance with the provisions of the Plan
and the Trust agreement. The Trustee shall make distributions from the Trust
Fund at such time or times to such person or persons (or such qualified plans or
individual retirement accounts) and in such amounts as the Committee shall
direct in accordance with the Plan.
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<PAGE>
ARTICLE 7
---------
PARTICIPANT ACCOUNTS
--------------------
Section 7.1. Participant Accounts. The Committee shall establish
----------- --------------------
and maintain or cause to be established and maintained separate accounts for
each Participant. The accounts maintained for a Participant shall include (a) a
Basic Contributions account, to which shall be credited any Basic Contributions
made pursuant to Section 4.1 (and any earnings or losses thereon), (b) an
Additional Contributions account, to which shall be credited any Additional
Contributions made pursuant to Section 4.1 (and any earnings or losses thereon),
(c) a matching contributions account, to which shall be credited any matching
contributions made pursuant to Section 4.2 (and any earnings or losses thereon)
and any discretionary matching contributions made pursuant to Section 4.3 (and
any earnings or losses thereon), (d) a profit sharing contributions account, to
which shall be credited any profit sharing contributions made pursuant to
Section 4.4 (and any earnings or losses thereon), (e) a rollover contributions
account, to which shall be credited any rollover contributions made pursuant to
Article 5 (and any earnings or losses thereon), (f) a frozen voluntary
contributions account, to which shall be credited the balance of the voluntary
contributions account(s) under the Stock Purchase Plan and/or the Profit Sharing
Plan as of December 31, 1997 (and any earnings or losses thereon) (g) a frozen
employer contributions account, to
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<PAGE>
which shall be credited the sum of the balances of the accounts, other than the
voluntary contributions account, under the Profit Sharing Plan as of December
31, 1997 (and any earnings or losses thereon) and (h) such other accounts as the
Committee may establish from time to time.
Each such account shall be divided and invested in accordance with
Section 7.2 among such separate investment funds maintained or employed by the
Trustee as may be designated by the Company from time to time, which may include
but are not limited to, investments in securities of open-end or closed-end
investment companies and investments in any suitable collective investment fund
maintained by any bank or trust company. An investment fund called the "Company
Stock Fund" shall be established and maintained, as well as three or more
additional separate investment funds as directed by the Company. The assets of
the Company Stock Fund shall be invested primarily in shares of Company Stock.
Such assets also may be invested in short-term liquid investments, to the extent
determined by the Trustee to be necessary to satisfy such fund's cash needs.
Unless the context requires otherwise, a Participant's "account" and
"account balance" shall mean all accounts and the aggregate value of all
accounts, respectively, maintained for such Participant pursuant to the Plan and
Trust. Such accounts shall be solely for accounting purposes and there shall be
no
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<PAGE>
segregation of assets of the Trust or of any of the separate investment funds
among separate accounts. The books of account, forms and accounting methods used
in the administration of Participants' accounts shall be the responsibility of,
and shall be subject to the supervision and control of, the Committee.
Section 7.2. Investment of Participant Accounts. (a) Investment
----------- ---------------------------------- ----------
Election. Except as provided in Section 7.2(c), each Participant shall, at the
- --------
time and in the manner prescribed by the Committee and in accordance with rules
and procedures prescribed by the Committee, specify the amount or percentage of
his existing account balances and the percentage of any future contributions (in
multiples established by the Committee from time to time) that are to be
invested in each of the separate investment funds. Such opportunity to direct
investment is offered in accordance with Section 404(c) of ERISA. Thus, except
as otherwise provided in Section 404(c) of ERISA, all investment directions made
pursuant to this Section 7.2 shall be followed and fiduciaries for the Plan
shall not be liable for any losses that are the direct and necessary result of
an Employee's investment direction. During any period in which no direction as
to the investment of a Participant's account balances and contributions is on
file with the Committee, such account balances and contributions will be
invested in the investment fund or funds designated by the Committee.
Notwithstanding the foregoing, no such investment election may be made during
the
-31-
<PAGE>
period commencing on January 1, 1998 and ending on March 31, 1998 (or such other
date the Committee shall determine the Trustee is prepared to implement timely
and properly such elections). Prior to such date, amounts not otherwise required
to be invested in Company Stock shall be invested in the investment fund or
funds designated by the Committee.
(b) Change of Investment Election. A Participant may elect, at the
-----------------------------
time and in the manner prescribed by the Committee and in accordance with rules
and procedures prescribed by the Committee, to change his investment election as
of any Valuation Date. Unless so changed, an election once made shall remain in
effect.
(c) Special Rule for Account Balances under the Stock Purchase Plan as
------------------------------------------------------------------
of December 31, 1997 and Basic Contributions, Matching Contributions and
- ------------------------------------------------------------------------
Discretionary Matching Contributions. Notwithstanding Sections 7.2(a) and (b)
- ------------------------------------
and subject to Section 7.2(d), a Participant's account balances under the Stock
Purchase Plan as of December 31, 1997 and a Participant's Basic Contributions,
matching contributions and discretionary matching contributions (and any
earnings on such account balances or contributions) shall be invested in the
Company Stock Fund. A Participant shall not be permitted to provide any
investment direction with respect to such amounts.
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<PAGE>
(d) Investment Election for Purposes of Diversification.
---------------------------------------------------
Notwithstanding Section 7.2(c), Participants whose account balances or a portion
of such account balances otherwise must be invested at all times in the Company
Stock Fund may make diversification investment elections, in the manner
prescribed by the Committee, as follows:
(1) A Participant who has attained age 55 (but not age 60) may elect at any
time to transfer up to 50% of his Company Stock Fund account balance to one or
more other available investment funds. Such election shall be made in the
manner, and is subject to the rules, prescribed by the Committee.
(2) A Participant who has attained age 60 may elect at any time to transfer
all or any portion of his Company Stock Fund account balance to one or more
other available investment funds. Such election shall be made in the manner,
and is subject to the rules, prescribed by the Committee.
(3) A Participant who had not attained age 55 as of December 31, 1997 may
make a one-time election at any time between January 1, 1998 and March 15,
1998 to transfer up to 50% of his account balances under the Stock Purchase
Plan as of December 31, 1997 attributable to elective contributions from the
Company Stock Fund to one or more other available investment funds. Such
election shall be made in the manner, and is subject to the rules, prescribed
by the Committee.
The Committee, in its sole discretion, may prescribe additional rules and
procedures with respect to any investment election for purposes of
diversification. A Participant who elects to diversify amounts pursuant to this
Section 7.2(d) may, after diversification, make additional investment elections
with respect to such diversified amounts pursuant to Sections 7.2(a)
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<PAGE>
and (b), including an election to reinvest, or reinvest and withdraw, such
amounts from the Company Stock Fund. Notwithstanding anything in Section 7.2(a)
to the contrary, if any Participant fails to make an investment election for
purposes of diversification pursuant to this Section 7.2(d), such account
balances shall remain invested in the Company Stock Fund.
Section 7.3. Allocation to Participants' Accounts of Net Income of
----------- -----------------------------------------------------
Trust and Fluctuation in Value of Trust Assets. As soon as administratively
- ----------------------------------------------
practicable after each Valuation Date, the net worth of each separate investment
fund (as determined pursuant to Section 7.4) shall be determined as of such
Valuation Date. If the net worth of any investment fund as of any Valuation Date
is more or less than the total of all account balances of all Participants as of
such Valuation Date to the extent such balances are allocable to such investment
fund, then the amount of any excess or deficiency shall as of such Valuation
Date be allocated and credited or charged to such accounts in the proportion
that the adjusted balance of each such account (to the extent allocable to the
investment fund in question) as of the preceding Valuation Date bears to the
total of the adjusted balances of all such accounts as of the preceding
Valuation Date. For purposes of the preceding sentence, the adjusted balance of
each account allocable to a particular investment fund shall be the balance in
such account allocable to such investment fund as of the preceding Valuation
Date after making all allocations as
-34-
<PAGE>
of such preceding Valuation Date prescribed by this Article 7 to the extent
allocable to such investment fund, if any, reduced by the amount of any
withdrawals or distributions from such account made after such preceding
Valuation Date to the extent allocable to such investment fund, and further
reduced or increased in such manner as the Committee determines in its sole
discretion to be necessary to provide an equitable allocation of any change in
the value of the net worth of the investment fund.
Section 7.4. Determination of Net Worth of Investment Funds. The
----------- ----------------------------------------------
net worth of any separate investment fund as of any Valuation Date shall be the
fair market value of all assets (including any uninvested cash) held by or with
respect to such investment fund as of such date, as determined by the Trustee on
the basis of such evidence and information as it may deem pertinent and
reliable, reduced by any liabilities of the Trust Fund as of such date, other
than Participants' accounts, which are allocable to such investment fund. For
purposes of the preceding sentence, such other liabilities of the Trust Fund as
of any Valuation Date, if any, shall be allocated among the investment funds in
the proportion that the net worth of each such investment fund as of the
preceding Valuation Date bears to the net worth of the Trust Fund as of the
preceding Valuation Date.
-35-
<PAGE>
Section 7.5. Allocation of Employer Contributions to Participants'
----------- -----------------------------------------------------
Accounts. (a) Contributions made pursuant to Sections 4.1, 4.2 and 4.3 shall
- --------
be allocated to the respective accounts of each Participant for whom such
contributions are made as soon as practicable after the Valuation Date
coinciding with or next following the date on which such contributions are
delivered to the Trustee and shall be credited to each such Participant's
accounts as of such Valuation Date.
(b) The aggregate contribution made by the Employers pursuant to
Section 4.4 for a Plan Year shall be allocated to the accounts of all
Participants eligible for a profit sharing contribution (as determined under
Section 3.1(b)) who (i) are Eligible Employees as of the last day of such Plan
Year and complete at least 1,000 Hours of Employment in such Plan Year, (ii)
retire during such Plan Year after attaining age 65, (iii) retire during such
Plan Year after attaining age 55 and completing at least Six Years of Service,
(iv) die or suffer a Disability during such Plan Year or (v) transfer from
employment with an Employer to employment with an Affiliate that is not an
Employer during such Plan Year and are still employed by such Affiliate as of
the last day of such Plan Year and complete at least 1,000 Hours of Employment
in such Plan Year. Such contribution shall, to the extent it does not exceed the
product of the rate of tax under section 3111(a) of the Code as in effect at the
beginning of the Plan Year multiplied by the total Profit
-36-
<PAGE>
Sharing Compensation of all such persons for such Plan Year, be allocated among
the accounts of such persons in the proportion that each such person's Profit
Sharing Compensation for such Plan Year bears to the total Profit Sharing
Compensation of all such persons for such Plan Year. The balance of such
contribution, if any, shall be allocated among the accounts of such persons in
the proportion that each such person's Compensation for such Plan Year bears to
the total Compensation of all such persons for such Plan Year. The contribution
shall be allocated as soon as practicable after the last day of the Plan Year
for which the contribution is made and shall be credited to Participants'
accounts as of the date of allocation.
Section 7.6. Statutory Limitations on Allocations to Participants'
----------- -----------------------------------------------------
Accounts. Notwithstanding any other provisions of the Plan, the amount
- --------
allocated to a Participant's accounts under the Plan for each Plan Year shall be
limited so that (a) the aggregate annual additions to the Participant's accounts
in the Plan and in all other defined contribution plans maintained by his
employer shall not exceed the lesser of (1) $30,000 (as adjusted for increases
in the cost-of-living in accordance with Section 415(d) of the Code) and (2) 25%
of the Participant's compensation for such Plan Year; and (b) with respect to
Plan Years commencing prior to January 1, 2000, the sum of (1) and (2) below
shall not exceed 1.
-37-
<PAGE>
(1) The sum of the separate amounts determined as follows for
each Plan Year during which the Participant shall have participated in
the Plan or in any other defined contribution plan or plans maintained
by his employer (computed as of the close of the Plan Year for which
these computations are being made):
(A) the aggregate annual additions to the Participant's
accounts in all of such plans for each such Plan Year, divided by
(B) the lesser of (i) 125% of the maximum dollar amount
which under section 415(c)(1)(A) of the Code could have been
contributed on behalf of the Participant to a defined contribution
plan and (ii) 35% of the Participant's compensation, for each such
Plan Year, respectively.
(2) The aggregate projected annual benefit of the Participant
under all defined benefit plans maintained by his employer (determined
as of the close of the Plan Year for which these computations are
being made) divided by the lesser of:
(A) 125% of the maximum dollar limitation contained in
section 415(b)(1)(A) of the Code as adjusted for increases in the
cost-of-living pursuant to section 415(d) of the Code, and
(B) 140% of the average of the Participant's compensation
for the three consecutive calendar years of his participation in such
defined benefit plans during which his compensation was the highest.
If the amount to be allocated to a Participant's accounts pursuant to
Section 7.5 for a Plan Year would exceed any of the limitations set forth in
this Section 7.6, the amount which would otherwise be allocated to such
Participant's accounts for such Plan Year under any other defined contribution
plans maintained by an employer shall be reduced until the amount to be
allocated to the Participant's accounts under the Plan is not so
-38-
<PAGE>
limited or until the amount allocated under all such other plans has been
reduced to zero, whichever occurs first.
If after such reduction has been made, the amount to be allocated to a
Participant's accounts for such Plan Year remains limited by this Section 7.6 as
a result of a reasonable error in estimating a Participant's compensation, a
reasonable error in determining the amount of elective deferrals (within the
meaning of section 402(g)(3) of the Code) that may be made with respect to a
Participant under the limits of section 415 of the Code, or under other limited
facts and circumstances as determined by the Commissioner of Internal Revenue,
and the excess contribution cannot be returned to the employer, then
(i) the elective contributions made pursuant to Section 4.1
(plus any income or gains and minus any loss allocable thereto) shall
be distributed to the Participant to the extent necessary to comply
with such limitations, and if such limitations shall still be exceeded
after distributing such contributions,
(ii) the amount of annual additions in excess of such limitations
(after making the distribution under (i) above) (plus any income and
minus any loss allocable thereto) shall be reallocated among all
remaining Participants to the extent such reallocation is not limited
by this Section 7.6. If after such reallocation, the amount to be
allocated to all Participants' accounts is limited by this Section
7.6, the remainder of the contribution for the Plan Year shall be held
by the Trustee in a suspense account, and until fully allocated to
Participants' accounts, the balance remaining in such suspense
account, together with any earnings on such balance, shall be
allocated in each succeeding Plan Year in accordance with the previous
sentence, to the extent such allocation
-39-
<PAGE>
is not limited by this Section 7.6. Upon termination of the Plan, any
balance in such suspense account shall be returned to the employers as
determined by the Company, but only if the allocation of such amount
to Participants upon Plan termination would cause all Participants to
receive annual additions in excess of the limitations of section 415
of the Code.
For purposes of this Section 7.6, the "annual additions" for a Plan
Year to a Participant's accounts under the Plan and any other defined
contribution plan maintained by an employer is the sum during such Plan Year of:
(i) the amount of Employer contributions allocated to such
Participant's accounts pursuant to Sections 4.1, 4.2, 4.3
and 4.4 of this Plan and pursuant to any other defined
contribution plan maintained by an employer,
(ii) the amount of forfeitures allocated to such Participant's
accounts,
(iii) the amount allocated to any individual medical benefit
account (as defined in section 415(l) of the Code)
maintained on behalf of the Participant, and
(iv) the amount of contributions by the Participant to any such
plan (excluding any rollover contributions within the
meaning of Sections 402(a)(5), 403(a)(4), 408(d)(3) and
409(b)(3)(C) of the Code).
For purposes of this Section 7.6, the terms "defined contribution plan,"
"projected annual benefit," "defined benefit plan" and "compensation" shall have
the meanings set forth in section 415 of the Code and the Regulations
promulgated thereunder, and the term "employer" shall include the Company and
all Affiliates, as
-40-
<PAGE>
such term is defined in subdivision (2) of Article 2 but as modified by section
415(h) of the Code.
Section 7.7. Correction of Error. If it comes to the attention of
----------- -------------------
the Committee that an error has been made in any of the allocations prescribed
by this Article 7, appropriate adjustment shall be made to the accounts of all
Participants and Distributees who are affected by such error, except that no
adjustment need be made with respect to any Distributee whose account has been
distributed in full prior to the discovery of such error.
ARTICLE 8
---------
DISTRIBUTIONS AND WITHDRAWALS
-----------------------------
Section 8.1. Circumstances Entitling Participant to Distribution of
----------- ------------------------------------------------------
His Accounts. (a) In General. Amounts contributed by or on behalf of a
- ------------ ----------
Participant shall be fully vested and nonforfeitable at all times. A
Participant, or his designated Beneficiary, as the case may be, shall be
entitled to receive the entire balance credited to his accounts, determined as
of the Valuation Date coinciding with or next following the date as of which
such balance is to be distributed as described in Section 8.4 (or such other
date prescribed by the Committee), (1) upon termination for any reason of the
Participant's employment with all Employers and Affiliates, (2) upon the
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<PAGE>
Participant's death or Disability, (3) upon the Participant's eligibility for
and request of an in-service withdrawal pursuant to Section 8.6 or (4) upon
termination of the Plan.
(b) Distribution under Qualified Domestic Relations Order. An
-----------------------------------------------------
alternate payee under a qualified domestic relations order (as defined in
section 414(p) of the Code) may elect that a distribution of his accounts under
the Plan occur prior to the date that the Participant with respect to such
qualified domestic relations order has attained his earliest retirement age (as
defined in section 414(p) of the Code); provided, however, that a distribution
-------- -------
to an alternate payee prior to such Participant's attainment of his earliest
retirement age is available only if the qualified domestic relations order
specifies distribution prior to such time or permits the alternate payee,
subsequent to the entering of the qualified domestic relations order by the
court, to elect distribution prior to such time. Nothing in this Section 8.1(b)
shall permit a Participant to receive a distribution of his accounts at a time
otherwise not permitted under the Plan.
Section 8.2. Form of Distribution. (a) In General. Except as
----------- -------------------- ----------
provided in Sections 8.2(b) and (d), a Participant may elect distribution of his
accounts under the Plan in the following forms:
(1) by lump sum payment; or
-42-
<PAGE>
(2) by payment in a series of monthly installments over a period of
5, 10 or 15 years, as selected by the Participant; provided, however, that
-------- -------
the selected number of years shall not be longer than the joint life
expectancy of the Participant and his Beneficiary, or in the case of a
Distributee other than the Participant, the life expectancy of the
Distributee; and provided further, that (A) if distribution is payable to
-------- -------
the Participant, the aggregate installment paid in any one Plan Year shall
be at least equal to the remaining balance of the Participant's account at
the beginning of such Plan Year divided by the then joint life expectancy
of the Participant and his Beneficiary, and (B) if the Participant's
Beneficiary is an individual other than his spouse, the present value (as
determined by the Committee) of the installments expected to be paid to the
Participant shall not be less than 50% of the balance of his account at the
time distributions hereunder shall commence or shall otherwise comply with
the minimum distribution incidental benefit requirements of section
401(a)(9) of the Code and the Regulations thereunder. The life expectancy
of the Participant or his spouse may, in the sole discretion of the
Committee, be redetermined as of April 1 of each calendar year after
payments under this Section 8.2(a)(2) have commenced. If a balance remains
in an account at the expiration of the period of time over which
installments are to be paid, such balance shall be paid to the Distributee
in a lump sum. If the balance in an account is insufficient to complete the
number of installments initially contemplated, payment of installments
shall terminate upon exhaustion of the account.
Subject to Section 8.2(b), if a Participant has failed to elect the form of
distribution at the time distribution is scheduled to commence, his accounts
shall be distributed by lump sum payment.
(b) Protected Forms of Distribution with Respect to Account Balances
----------------------------------------------------------------
under the Profit Sharing Plan as of December 31, 1997. Notwithstanding Section
- -----------------------------------------------------
8.2(a), a Participant with an account balance under the Profit Sharing Plan as
of December 31, 1997 shall receive the portion of his accounts attributable to
such account balance and any earnings thereon
-43-
<PAGE>
(the "Frozen Profit Sharing Account Balance") in one of the following forms,
unless he has elected an optional method of distribution pursuant to Section
8.2(c) or Section 8.2(d) applies:
(1) Joint and Survivor Annuity. If such a Participant becomes
--------------------------
eligible to receive his Frozen Profit Sharing Account Balance other than by
reason of the Participant's death, and he is married on the date he becomes
thus eligible, then any distribution to which he is entitled with respect
to his Frozen Profit Sharing Account Balance shall be paid in substantially
equal monthly payments for the Participant's remaining lifetime and
thereafter, if his spouse shall survive him, and without regard to whether
or not the Participant dies before receiving any payments, such spouse
shall receive payments during the remainder of her lifetime, each such
payment being one-half of the amount of each payment payable to the
Participant during the Participant's lifetime, which may be accomplished
through the purchase of a single premium joint and survivor annuity
contract.
(2) Pre-retirement Surviving Spouse Annuity. If such a Participant's
---------------------------------------
employment is terminated by the Participant's death and he was married on
the day of his death, then any distribution with respect to his Frozen
Profit Sharing Account Balance shall be paid in substantially equal monthly
payments for the spouse's remaining lifetime, which may be accomplished
through the purchase of a single premium annuity contract.
(3) Single Annuity. If such a Participant becomes eligible to
--------------
receive his Frozen Profit Sharing Account Balance and he is not married on
the date he becomes eligible, he shall receive his Frozen Profit Sharing
Account Balance in the form of an annuity providing the Participant with
monthly payments for the period of his lifetime.
(c) Optional Methods of Distribution. Subject to the special
--------------------------------
rules described in Section 8.5, a Participant with a Frozen Profit Sharing
Account Balance may elect to receive such
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<PAGE>
balance under the Plan in either of the forms of distribution provided in
Section 8.2(a).
(d) Small Benefits Payable in Lump Sum. Notwithstanding any
----------------------------------
provision of the Plan to the contrary, if the amount of the Participant's
accounts to be distributed does not exceed $5,000 (or such other amount
prescribed by section 411(a)(11) of the Code) (such amount referred to herein as
the "small benefit amount"), such amount shall be distributed in a lump-sum cash
payment as soon as practicable after the Valuation Date coinciding with or next
following the Participant's termination of employment with all Employers and
Affiliates (or such other date prescribed by the Committee). For purposes of
this Section 8.3(d), if at the time of any distribution the value of a
Participant's accounts exceed the small benefit amount, the value of the
Participant's accounts at the time of any subsequent distribution will be deemed
to exceed the small benefit amount.
Section 8.3. Medium of Distribution. Account balances of $1,000
----------- ----------------------
(or, effective January 1, 1999, $3,000) or more invested in the Company Stock
Fund shall be distributed in shares of Company Stock; provided, however, that
-------- -------
the value of any fractional shares of Company Stock shall be distributed in
cash. Account balances invested in the other funds or account balances of less
than $1,000 (or, effective January 1, 1999, $3,000) invested in the Company
Stock Fund shall be distributed in cash;
-45-
<PAGE>
provided, however, that account balances of less than $1,000 (or, effective
- -------- -------
January 1, 1999, $3,000) invested in the Company Stock Fund may be distributed
in Company Stock at the election of the Participant.
Section 8.4. Time of Distribution. Distribution shall commence as
----------- --------------------
soon as administratively practicable on or after the date on which the
Participant or the Participant's Beneficiary becomes entitled to such
distribution or, subject to Section 8.2(d), such later time as the Participant
or the Participant's Beneficiary, as the case may be, elects, which election may
be changed prior to the commencement of distribution in such manner as may be
prescribed by the Committee; provided, however, that:
-------- -------
(a) In no event shall distribution with respect to a
Participant who has terminated employment commence later than the 60th day of
the Plan Year following the Plan Year in which contains the later of (i) the
date on which the Participant attains age 65 and (ii) the date on which the
Participant terminates employment.
(b) With respect to a Participant who continues in employment
after attaining age 70 1/2, distribution of the Participant's account balance
shall commence no later than the Participant's required beginning date. For
purposes of this
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<PAGE>
Section 8.4(b), the term "required beginning date" shall mean (i) with respect
to a Participant who is a 5%-owner (within the meaning of section 416(i) of the
Code), April 1 of the calendar year following the calendar year in which the
Participant attains age 70 1/2 and (ii) with respect to any other Participant,
April 1 of the calendar year following the calendar year in which the
Participant retires. Notwithstanding the foregoing, (1) a Participant who is not
a 5%-owner and who attains age 70 1/2 prior to January 1, 1999 shall be
permitted to elect that distribution commences no later than April 1 of the
calendar year following the calendar year in which the Participant attains age
70 1/2 and (2) a Participant who is not a 5% owner, who attained age 70 1/2
prior to January 1, 1997 and who continues in employment may elect to stop
distribution of his account balance at any time prior to the end of the remedial
amendment period with respect to the Small Business Job Protection Act of 1996,
as prescribed by the Internal Revenue Service pursuant to section 401(b) of the
Code; provided, however, that such election shall be subject to the terms of any
-------- -------
applicable qualified domestic relations order within the meaning of section
414(p) of the Code; and provided further that for purposes of section 417 of the
-------- -------
Code, to the extent that such a Participant has a Frozen Profit Sharing Account
Balance, the recommencement of distribution of such Frozen Profit Sharing
Account Balance shall not be treated as a new annuity starting date and prior to
such recommencement spousal consent pursuant to Section 8.5 of the Plan shall be
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<PAGE>
required if the Participant elects to recommence distribution either in a
different form than the form in which such account balance was being distributed
prior to the cessation of distribution or with a different Beneficiary.
Distributions made under this Section 8.4(c) shall be made in the manner
described in section 401(a)(9) of the Code and Regulations thereunder.
(c) Distributions commencing after the Participant's death shall
be completed within five years after the death of the Participant, except that
(1) if the Participant's Beneficiary is the Participant's spouse, such
Beneficiary may elect to receive any form of distribution described in this
Article 8 commencing no later than the later of (A) December 31 of the calendar
year in which the Participant died and (B) December 31 of the calendar year in
which the Participant would have attained age 70 1/2 had the Participant
survived, and (2) if the Participant's Beneficiary is a natural person other
than the Participant's spouse and distribution commences not later than one year
after the Participant's death, such Beneficiary may elect to receive such
distributions over a period not longer than the life expectancy of such
Beneficiary. If at the time of the Participant's death, distribution of the
Participant's benefit has commenced, the remaining portion of the Participant's
benefit shall be paid in the manner elected by the Participant's Beneficiary,
but at least as rapidly as was the
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<PAGE>
method of distribution being used prior to the Participant's death;
(d) If upon the Participant's death, whether before or after
distribution has commenced, any amount is distributable to an entity other than
a natural person, such distribution shall be made within five years after the
Participant's death; and
(e) Any Participant entitled to an allocation of a profit
sharing contribution for a Plan Year under Section 7.5(b) and who receives a
lump-sum distribution prior to the allocation of such profit sharing
contribution for such Plan Year shall as soon as practicable after the
allocation of such contribution receive an additional distribution equivalent to
such profit sharing contribution.
Section 8.5. Special Rules Relating to Annuity Form of Benefit.
----------- -------------------------------------------------
The provisions of this Section 8.5 shall apply only to a Participant with a
Frozen Profit Sharing Account Balance.
(a) Election By Participant to Receive His Distribution Other
---------------------------------------------------------
Than By Annuity. A Participant may, on a form provided by the Committee, and
- ---------------
during his election period, elect (or revoke a prior election) to have any
distribution to which he may become entitled made in a manner other than as
described in
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<PAGE>
Section 8.2(b), provided, however, that if the Participant is married, no such
-------- -------
election shall be effective unless the Participant's spouse shall have consented
thereto in writing at the time of such election and such consent acknowledges
the effect thereof and is witnessed by a Plan representative or a notary public,
or it is established to the satisfaction of the Committee that such consent
cannot be obtained because the Participant's spouse cannot be located or such
other circumstances as may be prescribed by Regulations. A Participant's
election period shall be the 90-day period immediately preceding the
distribution date.
(b) Notice to Participants of Availability of Election. No
--------------------------------------------------
less than 30 days (or 8 days, to the extent that a Participant, with the consent
of his spouse, elects to waive such 30 day period pursuant to Section
417(a)(7)(A) of the Code) and no more than 90 days before a Participant's
distribution date, the Committee shall give such Participant by mail or personal
delivery written notice in nontechnical language of his right to make the
election described in Section 8.5(a). Such notice shall include a general
description of the annuity payment described in Section 8.2(b)(1). Such notice
shall also advise the Participant that upon written request to the Committee
prior to the end of his election period, he will be given a written explanation
in nontechnical language of the terms and conditions of such annuity payment, of
the other methods of distribution available pursuant
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<PAGE>
to Section 8.2 and of the amount of each payment which he would be entitled to
receive under such annuity or under such other methods of distribution, all
based upon the balances of his accounts as of the preceding Valuation Date. Such
explanation shall be provided to the Participant by mail or personal delivery
within 30 days from the date his written request is received by the Committee.
Notwithstanding the provisions of Section 8.5(a), a Participant's election
period shall end no earlier than 90 days after the date such explanation, if
requested, is mailed or personally delivered to the Participant.
Section 8.6. In-Service Withdrawals from Participant Accounts. (a)
----------- ------------------------------------------------
Frozen Voluntary Contributions Account. A Participant may at any time, pursuant
- --------------------------------------
to the procedures and subject to the conditions prescribed by the Committee,
withdraw all or any part of the value of the balances credited to his frozen
voluntary contributions account.
(b) Withdrawals after Age 59-1/2. Upon attaining age 59-1/2, a
----------------------------
Participant who is an Employee may at any time, pursuant to the procedures and
subject to the conditions prescribed by the Committee, withdraw all or any part
of (i) the value of the balances credited to his rollover account, Additional
Contributions account, Basic Contributions account and matching contributions
account and (ii) the value of the balances credited to any other accounts, to
the extent diversified
-51-
<PAGE>
pursuant to Section 7.2(d)). Any amounts withdrawn pursuant to this Section
8.6(b) shall be debited from the Participant's accounts in the order such
accounts were listed in the previous sentence.
(c) Financial Hardship. A Participant who has demonstrated a
------------------
financial hardship may at any time, pursuant to the procedures and subject to
the conditions prescribed by the Committee, withdraw all or any part of (i) the
value of the balances credited to his rollover account, Additional Contributions
account, Basic Contributions account and matching contributions account and (ii)
the value of the balances credited to any other accounts, to the extent
diversified pursuant to Section 7.2(d)). Any amounts withdrawn pursuant to this
Section 8.6(c) shall be debited from the Participant's accounts in the order
such accounts were listed in the previous sentence. The determination of the
existence of financial hardship and the amount required to be distributed to
satisfy the need created by the hardship will be made by the Committee in a
uniform and non-discriminatory manner subject to the following rules:
(1) A financial hardship shall be deemed to exist if the financial
need is on account of:
(A) medical expenses described in section 213(d) of the Code
incurred by the Participant, the Participant's spouse or any
dependents of the Participant (as defined in section 152 of the Code);
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<PAGE>
(B) the purchase (excluding mortgage payments) of a principal
residence of the Participant;
(C) the payment of tuition, related educational fees and room
and board for the next 12-months of post-secondary education for the
Participant or the Participant's spouse, children or dependents; or
(D) the need to prevent eviction of the Participant from his
principal residence or foreclosure of the Participant's principal
residence.
(2) A Participant shall be required to certify to the Committee in
the manner prescribed by the Committee both the reason for the financial
need and that such need cannot be satisfied from sources other than a
hardship withdrawal from the Plan. The Participant shall be required to
submit any additional supporting documentation as may be requested by the
Committee, including any documentation that demonstrates to the
satisfaction of the Committee that the distribution is not in excess of the
amount of the immediate and heavy financial need.
(3) A distribution shall be treated as necessary to satisfy a
financial need only if the Participant certifies to the Committee (and if
the Committee has no reason to believe that such certification is
inaccurate) that such distribution cannot be relieved by or through:
(A) reimbursement or compensation by insurance or otherwise;
(B) reasonable liquidation of the Participant's assets
(including for this purpose assets of the Participant's spouse and
minor children that are reasonably available to the Participant), to
the extent such liquidation would not itself cause an immediate and
heavy financial need; or
(C) other distributions or nontaxable (at the time of the loan)
loans from plans maintained by an Employer or by another employer, or
by borrowing from commercial sources on reasonable commercial terms.
(4) Notwithstanding any provision of the Plan to the contrary, the
minimum amount of any hardship withdrawal made
-53-
<PAGE>
pursuant to this Section 8.6(c) shall be $100. Amounts eligible for
withdrawal pursuant to this Section 8.6(c) are subject to reduction in the
sole discretion of the Committee to take into account the investment
experience of the Trust Fund between the preceding Valuation Date and the
date of withdrawal.
(5) Notwithstanding any provision of the Plan to the contrary, a
Participant who receives a hardship distribution hereunder shall be
prohibited from making any elective contributions under section 4.1 until
the first payroll period which is at least 12 months after the date of the
hardship distribution. At such time, such a Participant may elect to resume
making elective contributions in accordance with the procedures set forth
in Section 4.1(b).
(6) Notwithstanding any provision of the Plan to the contrary,
earnings credited to a Participant's Basic Contributions account and
Additional Contributions account after December 31, 1988 shall not be
available for withdrawal pursuant to this Section 8.6(c).
(d) Miscellaneous Rules Relating to In-Service Withdrawals. All
------------------------------------------------------
withdrawals made pursuant to this Section 8.6 shall be paid in cash; provided
that with respect to the portion of any such withdrawals invested in the Company
Stock Fund, the rules as to distributions in Company Stock set forth in Section
8.3 shall apply. Withdrawals made pursuant to this Section 8.6 shall be made
pro rata from the various investment funds in which the applicable accounts are
invested.
Section 8.7. Designation of Beneficiary. Subject to Section 8.2(b),
----------- --------------------------
each Participant shall have the right to designate a Beneficiary or
Beneficiaries (who may be designated contingently or successively) to receive
any distribution to be made under Section 8.1(a) upon the death of such
Participant or,
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<PAGE>
in the case of a Participant who dies subsequent to the date in which he becomes
entitled to receive a distribution but prior to the distribution of the entire
amount to which he is entitled under the Plan, any undistributed balance to
which such Participant would have been entitled, provided, however, that no such
-------- -------
designation (or change thereof) shall be effective if the Participant was
married throughout the one-year period ending on the date of the Participant's
death unless such designation (or change thereof) was consented to at the time
of such designation (or change thereof) by the person who was the Participant's
spouse during such period, in writing, acknowledging the effect of such consent
and witnessed by a notary public or a Plan representative, or it is established
to the satisfaction of the Committee that such consent could not be obtained
because the Participant's spouse cannot be located or such other circumstances
as may be prescribed in Regulations. Subject to the preceding sentence, a
Participant may from time to time, without the consent of any Beneficiary,
change or cancel any such designation. Such designation and each change therein
shall be made on the form prescribed by the Committee and shall be filed with
the Committee. If (a) no Beneficiary has been named by a deceased Participant,
(b) any Beneficiary designation is not effective pursuant to the proviso
contained in the first sentence of this Section 8.7 or (c) all designated
Beneficiaries have predeceased the Participant, the undistributed balance of the
deceased Participant's accounts shall be distributed by the
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<PAGE>
Trustee at the direction of the Committee (i) to the surviving spouse of such
deceased Participant, if any, or (ii) if there is no surviving spouse, to the
surviving children of such deceased Participant, if any, in equal shares, or
(iii) if there is no surviving spouse or surviving children, to the surviving
parents of such deceased Participant, if any, in equal shares, or (iv) if there
is no surviving spouse, surviving children or surviving parents, to the executor
or administrator of the estate of such deceased Participant or (v) if there is
no surviving spouse, surviving children or surviving parents and if no executor
or administrator is appointed for the estate of such deceased Participant within
six months following the date of the Participant's death, to the person or
persons who would be entitled under the intestate succession laws of the state
of the Participant's domicile to receive the Participant's personal estate, in
equal shares. The marriage of a Participant shall be deemed to revoke any prior
designation of a Beneficiary made by him and a divorce shall be deemed to revoke
any prior designation of the Participant's divorced spouse if written evidence
of such marriage or divorce shall be received by the Committee before
distribution shall have been made in accordance with such designation. If within
a period of three years following the death or other termination of employment
of any Participant, the Committee in the exercise of reasonable diligence has
been unable to locate the person or persons entitled to benefits under this Plan
in respect of such Participant, the rights of such person or
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<PAGE>
persons shall be forfeited and the Committee shall direct the Trustee to pay
such benefit or benefits to the person or persons next entitled thereto under
the succession order prescribed by this Section 8.7.
Section 8.8. Distributions to Minor and Disabled Distributees. Any
----------- ------------------------------------------------
distribution under this Plan which is payable to a Distributee who is a minor or
to a Distributee who, in the opinion of the Committee, is unable to manage his
affairs by reason of illness or mental incompetency may be made to or for the
benefit of any such Distributee in such of the following ways as the Committee
shall direct: (a) directly to any such minor Distributee if, in the opinion of
the Committee, he is able to manage his affairs, (b) to the legal representative
of any such Distributee, (c) to a custodian under a Uniform Gifts to Minors Act
for any such minor Distributee or (d) to some near relative of any such
Distributee to be used for the latter's benefit. Neither the Committee nor the
Trustee shall be required to see to the application by any third party of any
distribution made to or for the benefit of a Distributee pursuant to this
Section 8.8.
Section 8.9. Loans to Participants. (a) Subject to the restrictions
----------- ---------------------
set forth in this Section 8.9, any Participant may, upon application to the
Committee in the manner prescribed by the Committee, borrow from his rollover
account, Additional Contributions account, Basic Contributions account and
matching
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<PAGE>
contributions account an amount not in excess of the lesser of (i) 50% of the
value of the sum of such accounts, and (ii) $50,000. Notwithstanding the
foregoing, the sum of any loan plus the highest balance of all loans from the
Plan to the Participant outstanding at any one time during the 12-month period
preceding the day on which the loan is made shall not exceed $50,000. Any
amounts borrowed pursuant to this Section 8.9 shall be debited from the
Participant's accounts in the order such accounts were listed in the first
sentence of this Section 8.9 and shall be made pro rata from the various
investment funds in which the amounts are invested. Loans under this Section 8.9
shall be made in cash.
(b) Participants shall be permitted to borrow from the Plan only upon
the following terms and conditions:
(1) The period of repayment of the loan shall be arrived at by mutual
agreement between the Committee and the Participant, but such period shall
not exceed five years from the date of the loan, except that if the purpose
of the loan as determined by the Committee is to acquire a dwelling unit
which is or within a reasonable period of time will be the principal
residence of the Participant, then such period for repayment shall not
exceed ten years. Such loan may be prepaid, without penalty.
(2) No loan shall be made unless the Participant consents to have
such loan repaid in substantially equal installments deducted from his
regular payments of compensation during the term of the loan; provided,
--------
however, that the Committee shall have the discretion to provide for
-------
an alternative form of payment when payment via payroll deduction is not
possible or is no longer possible and provided further, that the Committee
-------- -------
shall exercise this discretion in a non-discriminatory manner.
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<PAGE>
(3) Each loan shall be evidenced by the Participant's collateral
promissory note for the amount of the loan, with interest, payable to the
order of the Trustee, and shall be secured by an assignment of 50% of the
Participant's entire right, title and interest in and to his basic,
additional, matching and rollover contributions accounts.
(4) Each loan shall bear a fixed interest rate equivalent to the
prime rate plus 1% in effect as of the last business day of the quarter
preceding the month in which the loan is taken, as reported in the eastern
edition of the Wall Street Journal.
-------------------
(5) Failure to pay principal or interest when due shall result in
default.
(6) No distribution (other than a hardship withdrawal made pursuant
to Section 8.6(c)) shall be made to any Participant who has borrowed from
the Plan, or to a Beneficiary of any such Participant, unless and until the
loan, including interest, has been repaid out of the funds otherwise
distributable.
(7) No more than two loans may be outstanding for a Participant at
any time and no more than one loan may be made to a Participant during any
12-month period. The minimum amount for any loan shall be $1,000.
(8) The Committee may, in its sole discretion, charge as an expense
to the account of any Participant or Beneficiary receiving a loan any
reasonable administrative fee for processing or annual maintenance of the
loan.
(9) The provisions of this Section 8.9 shall apply to a Participant
who is not an Employee and a Beneficiary under the Plan if such Participant
or Beneficiary is a "party in interest" as defined in section 3(14) of
ERISA. The grant of a loan pursuant to this Section 8.9 and the terms and
conditions thereof shall apply to any such Participant or Beneficiary in
the same manner as to a Participant who is an Employee, except that the
requirements of Section 8.9(b)(2) shall be met with respect to each such
Participant and Beneficiary if the Participant or Beneficiary consents to
have such loan repaid in substantially equal installments as determined by
the Committee, but not less frequently than quarterly.
(10) A Participant's obligation to repay his loan shall be suspended
during any period of Military Service, as permitted under section 414(u)(4)
of the Code.
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<PAGE>
(c) Loan Subaccount. The Committee shall cause to be maintained a
---------------
loan subaccount for the receipt of amounts debited from a Participant's accounts
attributable to any loan made pursuant to this Section 8.9. Appropriate
accounting entries reflecting such transfers shall be concurrent with the
disbursement to the Participant of amounts borrowed. A repayment of interest or
principal received in respect of amounts borrowed by a Participant shall be
credited to the loan subaccount of such Participant as soon as practicable after
the Valuation Date coinciding with or next following the date on which such
payment is made. The Committee shall then cause to be credited such repayments
to the Participant's basic, additional, matching and rollover contributions
accounts in the same proportion as such accounts were charged with the loan.
Repayments so allocated to a Participant shall then be invested in accordance
with such Participant's investment direction in effect at the time that such
repayments are credited to the Participant's accounts.
Section 8.10. Dividends Paid on Company Stock. If the Company shall
------------ -------------------------------
have consented for a Plan Year, each Participant may, prior to October 1 of each
Plan Year, designate, in the manner prescribed by the Committee, that dividends
payable on Company Stock during such year be paid to the Participant in cash.
Any such election will remain in effect until revoked by the Participant. Any
Participant who makes such an election will receive a cash payment no later than
90 days after the end of the
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Plan Year in an amount equal to the amount of dividends paid by the Company
during the Plan Year on Company Stock represented by units credited to the
Participant's accounts pursuant to Section 7.5. The Trustee shall take whatever
actions are appropriate to have sufficient cash to make any such payment and
shall charge the Participant's appropriate account with the amount of the
payment. Dividends payable on Company Stock allocated to a Participant's
accounts which are not paid to the Participant in cash shall be used to purchase
Company Stock.
Section 8.11. Direct Rollovers. In the case of a distribution that
------------ ----------------
is an "eligible rollover distribution" within the meaning of section 402 of the
Code, a Distributee may elect that all or any portion of such distribution be
directly transferred as a rollover contribution from this Plan to an individual
retirement account described in section 408 of the Code, to another plan
qualified under section 401(a) of the Code (the terms of which permit the
acceptance of rollover contributions) or to an annuity plan described in Section
403(a) of the Code; provided, however, that if the Distributee is a surviving
-------- -------
spouse of a Participant, such Distributee may only elect to have such
distribution transferred directly to an individual retirement account or annuity
plan. Notwithstanding the foregoing, a Distributee shall not be entitled to
elect to have an eligible rollover distribution transferred pursuant to this
Section 8.12 unless (a) if the total of all eligible
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rollover distributions with respect to the Distributee for the Plan Year is
reasonably expected to equal at least $200 or (b) in the case of a partial
direct rollover, the portion so rolled over equals at least $500. At least 30
days and no more than 90 days prior to the date on which a Distributee is
entitled to receive a distribution, the Company shall provide a written
explanation to the Distributee of the availability of the direct rollover
option, the rules that require income tax withholding on distributions, the
rules under which the Distributee may roll over the distribution within 60 days
of receipt and, if applicable, other special tax rules that may apply to the
distribution. For purposes of this Section 8.12, the term "Distributee" shall
include a Participant, an alternate payee (within the meaning of section
414(p)(8) of the code) with respect to a Participant under a qualified domestic
relations order and a surviving spouse of a Participant.
ARTICLE 9
---------
SPECIAL PARTICIPATION AND DISTRIBUTION RULES
--------------------------------------------
Section 9.1. Change of Employment Status. If an Employee who
----------- ---------------------------
is not an Eligible Employee becomes an Eligible Employee, he shall become a
Participant as of the date he becomes an Eligible Employee, or as soon as
administratively practicable thereafter, provided that his Hours of Employment
-------- ----
customarily exceed 1,000 in a Plan Year or he has completed a Year of
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Service; otherwise he shall become a Participant as of the first Entry Date
coinciding with or following satisfaction of such requirement, or as soon as
administratively practicable thereafter.
Section 9.2. Reemployment of an Eligible Employee Whose Employment
----------- -----------------------------------------------------
Terminated Prior to His Becoming a Participant. If an Eligible Employee whose
- ----------------------------------------------
employment terminated prior to his becoming a Participant is reemployed by an
Employer, he shall become a Participant as of the date of his reemployment, or
as soon as administratively practicable thereafter, provided that his Hours of
-------- ----
Employment customarily exceed 1,000 in a Plan Year or he has completed a Year of
Service; otherwise he shall become a Participant as of the first Entry Date
coinciding with or following satisfaction of such requirement, or as soon as
administratively practicable thereafter.
Section 9.3. Reemployment of a Terminated Participant. If a
----------- ----------------------------------------
terminated Participant is reemployed, he shall again become a Participant as of
the date of his reemployment, or as soon as administratively practicable
thereafter, provided that he remains an Eligible Employee. If such a terminated
-------- ----
Participant is entitled to receive payments from his account pursuant to Article
8, such payments shall be suspended during his period of reemployment.
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Section 9.4. Employment by Related Entities. If a person is
----------- ------------------------------
employed by an Affiliate that is not an Employer, any period of such employment
shall be taken into account solely for the purposes of determining whether and
when such person is eligible to participate in the Plan under Article 3 and
determining when such person has retired or otherwise terminated his employment
for purposes of Article 8 to the same extent it would have been had such period
of employment been as an Employee of an Employer. A person shall not be
entitled to have contributions made on his behalf pursuant to Sections 4.1, 4.2,
4.3 and 4.4 during periods of employment by an Affiliate that is not an
Employer.
Section 9.5. Leased Employee. If a person who performed services
----------- ---------------
as a leased employee (within the meaning of section 414(n)(2) of the Code) of an
Employer or an Affiliate that is not an Employer becomes an Eligible Employee,
or if an Eligible Employee becomes such a leased employee, then any period
during which services were performed as a leased employee shall be taken into
account solely for the purposes of determining whether and when such person is
eligible to participate in the Plan under Article 3 and determining when such
person has retired or otherwise terminated his employment for purposes of
Article 8 to the same extent it would have been had such service been as an
Employee of an Employer. A person shall not be entitled to have contributions
made on his behalf pursuant to Sections 4.1, 4.2,
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<PAGE>
4.3 and 4.4 during such periods of service as a leased employee. This Section
9.5 shall not apply to any period of service during which such a leased employee
was covered by a plan described in section 414(n)(5) of the Code.
Section 9.6. Reemployment of Veterans. The provisions of this
----------- ------------------------
Section 9.6 shall apply in the case of the reemployment by an Employer of an
Eligible Employee within the period prescribed by USERRA after the Eligible
Employee's completion of a period of qualified military service (as defined in
section 414(u)(5) of the Code). For the purposes of this Section 9.6, such an
Eligible Employee who is reemployed within such period after a period of
qualified military service shall be referred to as a "reemployed veteran." The
provisions of this Section 9.6 are intended to provide reemployed veterans with
the rights required by USERRA and section 414(u) of the Code and shall be
interpreted in accordance with such intent.
(a) Make Up of Elective Contributions. A reemployed veteran
---------------------------------
shall be entitled to make contributions under the Plan ("Make Up
Contributions"), in addition to any elective contributions which the reemployed
veteran elects to make under the Plan pursuant to Section 4.1. Such reemployed
veteran may elect to make such Make Up Contributions during the period beginning
on the date of such reemployment and ending on the earlier of: (1) the end of
the period equal to the product of
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three and such reemployed veteran 's period of qualified military service, and
(2) the 5th anniversary of the date of such reemployment. Such reemployed
veteran shall not be permitted to contribute Make Up Contributions to the Plan
in excess of the amount which the reemployed veteran could have elected to have
made under the Plan in the form of elective contributions if the reemployed
veteran had continued in employment with his Employer during such period of
qualified military service. Such reemployed veteran shall be deemed to have
earned "compensation" from his Employer during such period of qualified military
service for this purpose in the amount prescribed by sections 414(u)(2)(B) and
414(u)(7) of the Code. The manner in which a reemployed veteran may elect to
contribute Make Up Contributions pursuant to this Section 9.6(a) shall be
prescribed by the Committee.
(b) Make Up of Matching, Discretionary Matching and Profit Sharing
--------------------------------------------------------------
Contributions. A reemployed veteran who contributes Make Up Contributions as
- -------------
described in Section 9.6(a) shall be entitled to an allocation of matching
contributions and an allocation of discretionary matching contributions in an
amount equal to the amount of matching contributions and discretionary matching
contributions which would have been allocated to the matching contributions
account of such reemployed veteran under the Plan if such Make Up Contributions
had been made in the form of elective contributions during the
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period of such reemployed veteran's qualified military service. A reemployed
veteran also shall be entitled to an allocation of profit sharing contributions
in an amount equal to the amount of profit sharing contributions which would
have been allocated to the profit sharing contributions account of the
reemployed veteran under the Plan during the period of such reemployed veteran's
qualified military service.
ARTICLE 10
----------
PARTICIPANTS' STOCKHOLDER RIGHTS
--------------------------------
Section 10.1. Voting Shares of Company Stock. The Trustee shall
------------ ------------------------------
vote, in person or by proxy, shares of Company Stock held by the Trustee and
represented by units which are credited to a Participant's accounts in
accordance with instructions timely obtained from such Participant. Each
Participant shall be entitled to give voting instructions with respect to the
number of shares of Company Stock represented by units credited to his accounts
as of the Valuation Date coinciding with or immediately preceding the
shareholder record date for such vote. Written notice of any meeting of
stockholders of the Company or other occasion for the exercise of voting rights
and a request for voting instructions shall be given by the Committee or the
Trustee, at such time and in such manner as the Committee shall determine, to
each Participant entitled to give instructions for voting Company Stock at such
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meeting or occasion. The Committee shall establish, and the Company shall pay
for, a means by which a Participant can expeditiously deliver to the Committee
voting instructions addressed to the Trustee. All shares of Company Stock
represented by units credited to Participants' accounts for which timely voting
instructions are not received shall, to the extent permitted by law, be voted by
the Trustee in the same proportions as shares represented by units credited to
Participants' accounts for which timely instructions are received.
Section 10.2. Tender Offers. (a) Rights of Participants. In the
------------ ------------- ----------------------
event a tender or exchange offer is made generally to the shareholders of the
Company to transfer all or a portion of their shares of Company Stock in return
for valuable consideration, including but not limited to, offers regulated by
section 14(d) of the Securities Exchange Act of 1934, as amended, the Trustee
shall respond to such tender or exchange offer in respect of shares of Company
Stock held by the Trustee which are represented by units credited to a
Participant's accounts in accordance with instructions timely obtained from such
Participant. Each Participant shall be entitled to give instructions with
respect to tendering or withdrawing from tender such shares. A Participant
shall not be limited in the number of instructions to tender or withdraw from
tender which he can give but a Participant shall not have the right to give
instructions to tender or withdraw from tender after a reasonable time
-68-
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established by the Trustee pursuant to Section 10.2(c). The Trustee shall, to
the extent permitted by law, respond to any such tender or exchange offer in
respect of all shares of Company Stock represented by units credited to
Participants' accounts for which timely instructions are not received in the
same proportions as shares represented by units credited to Participants
accounts for which timely instructions are received.
(b) Duties of the Committee. Within a reasonable time after the
-----------------------
commencement of a tender or exchange offer, the Committee or the Trustee shall
provide to each Participant:
(1) the offer to purchase or exchange as distributed by the offeror
to the shareholders of the Company;
(2) a statement of the shares of Company Stock represented by units
credited to his account; and
(3) directions as to the means by which a Participant can give
instructions with respect to the tender or exchange offer.
The Committee shall establish, and the Company shall pay for, a means
by which a Participant can expeditiously deliver to the Committee instructions
addressed to the Trustee with respect to a tender or exchange offer. The
Committee shall transmit to the Trustee the aggregate number of shares to be
tendered or withheld from tender representing instructions of Participants. The
Committee, at its election, may engage an
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agent to receive instructions from Participants and transmit them to the
Trustee.
(c) Duties of the Trustee. The Trustee shall follow the
---------------------
instructions of the Participants with respect to the tender or exchange offer as
transmitted to the Trustee. The Trustee may establish a reasonable time, taking
into account the time restrictions of the tender or exchange offer, after which
it shall not accept instructions of Participants.
Section 10.3. Applicability. In the case of a Beneficiary of a
------------ -------------
deceased Participant or an alternate payee under a qualified domestic relations
order for whom an account has been established under this Plan, such Beneficiary
or alternate payee, as the case may be, shall be a named fiduciary for the same
purposes, shall have the same rights as and shall otherwise be treated in the
same manner for purposes of this Article 10 as the Participant on whose behalf
the account initially was established.
Section 10.4. Confidentiality. Notwithstanding anything contained
------------ ---------------
herein to the contrary, all instructions and directions received by the Trustee
from Participants pursuant to this Article 10 shall be maintained by the Trustee
as confidential and shall not be disclosed to any person, including but not
limited to, any Employer or Affiliate, or any Employee,
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officer or director of any Employer or Affiliate; provided, however, that such
-------- -------
instructions may be relayed by the Trustee to a record keeper, auditor or other
person providing services to the Plan if such person (a) is not an Employer or
Affiliate, or an Employee, officer or director of an Employer or Affiliate and
(b) agrees not to divulge such instructions to any other person, including but
not limited to, any Employer or Affiliate, or any Employee, officer or director
of any Employer or Affiliate.
ARTICLE 11
----------
ADMINISTRATION
--------------
Section 11.1. The Committee. (a) The Committee, consisting of two
------------ -------------
or more members, shall be responsible (except for duties specifically vested in
the Trustee) for the administration of the provisions of the Plan. The Committee
shall be the "administrator" and a "named fiduciary" of the Plan within the
meaning of such terms as used in ERISA; provided, however, that a Participant
-------- -------
who directs the investment of his accounts pursuant to Section 7.2, and not the
Committee, shall, to the extent section 404(c) of the Code is applicable to the
Plan, be the "named fiduciary" with respect to such investment decisions; and
provided further that the Pension Investment Committee, and not Committee, shall
- -------- -------
be responsible for, and shall be the "named fiduciary" with respect to, Plan
investment decisions not made by Participants. The Board of Directors shall
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have the right at any time, with or without cause, to remove any member of the
Committee. A member of the Committee may resign at any time and his resignation
shall be effective upon delivery of his written resignation to the Company. Upon
the removal or resignation of any member of the Committee or the failure or
inability for any reason of any member of the Committee to act hereunder, the
Board of Directors shall appoint a successor member. All successor members of
the Committee shall have all the rights, privileges and duties of their
predecessors, but shall not be held accountable for the acts of their
predecessors.
(b) Any member of the Committee may, but need not, be an Employee or
a director, officer or shareholder of any of the Employers, and such status
shall not disqualify him from taking any action hereunder or render him
accountable for any distribution or other material advantage received by him
under the Plan, provided that no member of the Committee who is a Participant
shall take part in any action of the Committee or any matter involving solely
his rights under the Plan.
(c) Promptly after the appointment of the original members of the
Committee, and promptly after the appointment of any successor member of the
Committee, the Trustee shall be notified as to the names of the persons
appointed as members or successor members of the Committee by delivery to the
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Trustee of a certified copy of the resolution of the Board of Directors making
such appointment.
(d) The Committee shall have the duty and the sole discretionary
authority to interpret and construe the terms of the Plan, including but not
limited to, all questions of eligibility, the status and rights of Participants,
Beneficiaries and other persons under the Plan, and the manner, time and amount
of payment of any distributions under the Plan. Any interpretation or
construction of the Plan by the Committee pursuant to this Section 11.1(d) shall
be final and binding on Participants, Beneficiaries and all other concerned
parties. Each Employer shall, from time to time, upon request of the Committee,
furnish to the Committee such data and information as the Committee shall
require in the performance of its duties.
(e) The Committee shall direct the Trustee to make payments of
amounts to be distributed from the Trust pursuant to Article 8.
(f) The members of the Committee may allocate their responsibilities
among themselves and may designate any person, partnership or corporation to
carry out any of their responsibilities with respect to administration of the
Plan.
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<PAGE>
(g) The Committee may act at a meeting by the vote of assent, or
without a meeting by the written assent, of a majority of its members. The
Committee shall elect one of its members as secretary and keep the Trustee
advised of the identity of the member holding that office. The secretary shall
be the Plan's agent for service of legal process and keep records of all
meetings of the Committee. The Committee may adopt such rules and procedures as
it deems desirable for the conduct of its affairs and the administration of the
Plan, provided that any such rules and procedures shall be consistent with the
provisions of the Plan and ERISA.
(h) The members of the Committee, and each of them, shall discharge
their duties with respect to the Plan (i) solely in the interest of the
Participants and Beneficiaries, (ii) for the exclusive purpose of providing
benefits to Participants and Beneficiaries and of defraying reasonable expenses
of administering the Plan and (iii) with the care, skill, prudence, and
diligence under the circumstances then prevailing that a prudent man acting in a
like capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims. The Employers hereby jointly
and severally indemnify the members of the Committee, and each of them, from the
effects and consequences of their acts, omissions and conduct in their official
capacity,
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except to the extent that such effects and consequences shall result from their
own willful misconduct.
(i) No member of the Committee shall receive any compensation or fee
for his services, unless otherwise agreed between such member of the Committee
and the Employers, but the Employers shall reimburse the Committee members for
any necessary expenditures incurred in the discharge of their duties as
Committee members.
(j) The Committee may employ such counsel (who may be counsel for any
Employer) and agents and may arrange for such clerical and other services as it
may require in carrying out its duties with respect to the Plan.
Section 11.2. Claims Procedure. If any Participant or Distributee
------------ ----------------
believes he is entitled to benefits in an amount greater than those which he is
receiving or has received or which have been credited to his accounts, he may
file a claim with the member or members of the Committee who is/are designated
to review such claims. Such a claim shall be in writing and state the nature of
the claim, the facts supporting the claim, the amount claimed and the address of
the claimant. The Committee member(s) shall review the claim and, unless special
circumstances require an extension of time, within 90 days after receipt of the
claim, give written notice by registered or
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<PAGE>
certified mail to the claimant of his/their decision with respect to the claim.
If special circumstances require an extension of time, the claimant shall be so
advised in writing within the initial 90-day period and in no event shall such
an extension exceed 90 days. The notice of the decision of the Committee
member(s) with respect to the claim shall be written in a manner calculated to
be understood by the claimant and, if the claim is wholly or partially denied,
set forth the specific reasons for the denial, specific references to the
pertinent Plan provisions on which the denial is based, a description of any
additional material or information necessary for the claimant to perfect the
claim and an explanation of why such material or information is necessary, and
an explanation of the claims review procedure under the Plan. The Committee
member(s) shall also advise the claimant that he or his duly authorized
representative may request a review by the full Committee of the denial by
filing with the Committee, within 60 days after notice of the denial has been
received by the claimant, a written request for such review. The claimant shall
be informed that he may have reasonable access to pertinent documents and submit
comments in writing to the Committee within the same 60-day period. If a request
is so filed, the full Committee shall review the denial and, unless special
circumstances require an extension of time, within 60 days after receipt of such
request, give written notice by registered or certified mail to the claimant of
the full Committee's final decision with respect to the claim. If special
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<PAGE>
circumstances require an extension of time, the claimant shall be so advised in
writing within the initial 60-day period and in no event shall such an extension
exceed 60 days. The notice of the full Committee's final decision shall include
specific reasons for the decision and specific references to the pertinent Plan
provisions on which the decision is based and shall be written in a manner
calculated to be understood by the claimant.
Section 11.3. Qualified Domestic Relations Orders. If the Committee
------------ -----------------------------------
receives any written judgment, decree or order (including approval of a property
settlement agreement) pursuant to state domestic relations or community property
law relating to the provision of child support, alimony or marital property
rights of a spouse, former spouse, child or other dependent of a Participant and
purporting to provide for the payment of all or a portion of the Participant's
account balances to or on behalf of one or more of such persons (such judgment,
decree or order being hereinafter called a "domestic relations order"), the
Committee shall arrange to determine whether such order constitutes a "qualified
domestic relations order," as defined in section 414(p) of the Code and section
206(d)(3) of ERISA. If the order is determined to be a qualified domestic
relations order, all or a portion of the Participant's account balances, as
specified in the order, shall be assigned to the person or persons named
therein, and shall be payable in accordance with the terms of such order. The
manner in which all or any portion of a
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Participant's account balances under the Plan may be assigned and paid to any
other person pursuant to the terms of a domestic relations order shall be
governed by written procedures adopted by the Committee for this purpose and
section 414(p) of the Code, section 206(d)(3) of ERISA and Regulations issued
thereunder.
Section 11.4. Notices to Participants or Distributees. Written
------------ ---------------------------------------
notices, reports and statements given, made, delivered or transmitted to a
Participant, Distributee or other person entitled to or claiming benefits under
the Plan shall be deemed to have been duly given, made, delivered or transmitted
when addressed to and mailed by first class mail with postage prepaid to the
Participant, Distributee or other person at the address of such Participant,
Distributee or other person last appearing on the records of the Committee. A
Participant, Distributee or other person may record any change of his address by
written notice filed with the Committee.
Section 11.5. Notices to Employers or Committee. Written directions,
------------ ---------------------------------
notices and other communications from Participants, Distributees or other
persons entitled to or claiming benefits under the Plan to an Employer or the
Committee shall be deemed to have been duly given, made, delivered or
transmitted either when delivered to such location as shall be specified upon
the forms prescribed by an Employer or the Committee for the giving of such
directions, notices and other
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communications, or when addressed to and mailed by first class mail with postage
prepaid to the addressee at the address specified upon such forms.
Section 11.6. Records. The Committee shall keep a record of all of
------------ -------
its proceedings with respect to the Plan and shall keep or cause to be kept all
books of accounts, records and other data as may be necessary or advisable in
its judgment for the administration of the Plan.
Section 11.7. Reports of Trust Fund and Accounting to Participants.
------------ ----------------------------------------------------
The Committee shall keep on file, in such form as it shall deem convenient and
proper, all reports concerning the Trust Fund received by it from the Trustee.
The Committee shall, not less frequently than quarterly, advise each
Participant, Distributee or other person entitled to or claiming benefits under
the Plan of the balance credited to his accounts through a written statement
mailed in accordance with Section 11.4.
ARTICLE 12
----------
PARTICIPATION BY OTHER EMPLOYERS
--------------------------------
Section 12.1. Adoption of Plan. With the consent of the Board of
------------ ----------------
Directors, any entity may become an Employer under the Plan by (a) taking such
action as shall be necessary to adopt the Plan and (b) executing and delivering
such instruments and
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taking such other action as may be necessary or desirable to put the Plan into
effect with respect to such entity, as prescribed by the Company. The powers and
control of the Company, as provided in the Plan and Trust agreement, including
but not limited to, the right of amendment and of appointment and removal of the
Trustee and its successors, shall not be diminished by reason of the
participation of any such adopting entity in the Plan.
Section 12.2. Withdrawal from Participation. Any Employer may
------------ -----------------------------
withdraw from participation in the Plan at any time by, prior to the effective
date of withdrawal, filing with the Committee a duly certified copy of a
resolution of its board of directors to that effect and giving notice of its
intended withdrawal to the Company and the Trustee.
Section 12.3. Company and Committee as Agents for Employers. Each
------------ ---------------------------------------------
entity that becomes an Employer pursuant to Section 12.1 or Article 13 by so
doing shall be deemed to have appointed the Company and the Committee as its
agents to exercise on its behalf all of the powers and authorities conferred
upon the Company and the Committee by the terms of the Plan, including but not
limited to, the Company's power to amend and terminate the Plan. The authority
of the Company and the Committee to act as such agents shall continue unless and
until the portion of the Trust Fund held for the benefit of the Employees of a
particular
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Employer and their Beneficiaries is set aside in a separate trust fund as
provided in Section 16.2.
ARTICLE 13
----------
CONTINUANCE BY A SUCCESSOR
--------------------------
In the event that an Employer is reorganized by way of merger,
consolidation, transfer of assets or otherwise, so that another entity other
than an Employer succeeds to all or substantially all of such Employer's
business, such successor entity may, with the consent of the Board of Directors,
be substituted for such Employer under the Plan by adopting the Plan and
executing and delivering such instruments and taking such other action as may be
necessary or desirable to put the Plan into effect with respect to such entity,
as prescribed by the Company. Contributions by such Employer automatically shall
be suspended from the effective date of any such reorganization until the date
upon which the substitution of such successor entity for the Employer under the
Plan becomes effective. If, within 90 days following the effective date of any
such reorganization, such successor entity shall not have elected to become a
party to the Plan, or if the Employer adopts a plan of complete liquidation
other than in connection with a reorganization, the Plan automatically shall be
terminated with respect to Employees of such Employer as of the close of
business on the 90th day following the effective date of such
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reorganization or as of the close of business on the date of adoption of such
plan of complete liquidation, as the case may be, and the Committee shall direct
the Trustee to distribute the portion of the Trust applicable to such Employer
in the manner provided in Section 16.3.
ARTICLE 14
----------
MISCELLANEOUS
-------------
Section 14.1. Expenses. All costs and expenses incurred in
------------ --------
administering the Plan and the Trust Fund, including the expenses of the
Committee, the fees of counsel and any agents for the Committee, the fees and
expenses of the Trustee, the fees of counsel for the Trustee and other
administrative expenses shall be paid under the direction of the Committee from
the Trust Fund to the extent such expenses are not paid by the Employers. The
Committee shall determine, in its sole discretion, taking into account the
nature of a particular expense, the portion of such expense that is to be borne
by each Employer.
Section 14.2. Non-Assignability. Subject to Section 11.3 of this
------------ -----------------
Plan, no right or interest of any Participant or Distributee in the Plan shall
be assignable or transferable in whole or in part, either directly, by operation
of law or otherwise, including but not limited to, by execution, levy,
garnishment, attachment, pledge or bankruptcy, but
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excluding devolution by death or mental incompetency, and no right or interest
of any Participant or Distributee in the Plan shall be liable for, or subject
to, any obligation or liability of such Participant or Distributee, including
claims for alimony or the support of any spouse.
Section 14.3. Employment Non-Contractual. The Plan confers no right
------------ --------------------------
upon any Employee to continue in employment with any Employer.
Section 14.4. Limitation of Rights. A Participant or Distributee
------------ --------------------
shall have no right, title or claim in or to any specific asset of the Trust
Fund, but shall have the right only to distributions from the Trust Fund on the
terms and conditions herein provided.
Section 14.5. Merger or Consolidation with Another Plan. A merger or
------------ -----------------------------------------
consolidation of the Plan with, or transfer of assets or liabilities of the Plan
to, any other plan shall not be effected unless the terms of such merger,
consolidation or transfer are such that each Participant, Distributee,
Beneficiary or other person entitled to receive benefits under this Plan would
receive a benefit if such other plan terminated immediately after the merger,
consolidation or transfer which is equal to or greater than the benefit such
person would have been entitled to
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<PAGE>
receive immediately before the merger, consolidation, or transfer if this Plan
had then terminated.
Section 14.6. Gender and Plurals. Wherever used in the Plan, words
------------ ------------------
in the masculine gender shall include the masculine or feminine gender, and,
unless the context otherwise requires, words in the singular shall include the
plural and words in the plural shall include the singular.
Section 14.7. Severability. If a provision of this Plan shall be
------------ ------------
held illegal or invalid, the illegality or invalidity shall not affect the
remaining parts of this Plan and this Plan shall be construed and enforced as if
the illegal or invalid provision had not been included in this Plan.
Section 14.8. Applicable Law. The Plan and all rights hereunder
------------ --------------
shall be governed by and construed in accordance with the laws of the State of
Illinois to the extent such laws have not been preempted by applicable federal
law.
ARTICLE 15
----------
TOP-HEAVY PLAN REQUIREMENTS
---------------------------
Section 15.1. Top-Heavy Plan Determination. If as of the
------------ ----------------------------
determination date (as defined in Section 15.2) for any Plan Year, the aggregate
of (a) the sum of the account balances under
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this Plan and all other defined contribution plans in the aggregation group (as
defined in Section 15.2) and (b) the present value of accrued benefits under all
defined benefit plans in such aggregation group, of all participants in such
plans who are key employees (as defined in Section 15.2) for such Plan Year
exceeds 60% of the aggregate of the account balances and present value of
accrued benefits of all participants in such plans, then this Plan shall be a
"top-heavy plan" for such Plan Year, and the requirements of Sections 15.3 and
15.4 shall be applicable for such Plan Year as of the first day thereof. If the
Plan is a top-heavy plan for a Plan Year and not a top-heavy plan for a
subsequent Plan Year, the requirements of Sections 15.3 and 15.4 shall not be
applicable for such subsequent Plan Year.
Section 15.2. Definitions and Special Rules.
------------ -----------------------------
(a) Definitions. For purposes of this Article 15, the following definitions
-----------
shall apply:
(1) Determination Date. The determination date for all plans in the
------------------
aggregation group shall be the last day of the preceding Plan Year, and the
valuation date applicable to a determination date shall be (A) in the case
of a defined contribution plan, the date as of which account balances are
determined which is coincident with or immediately precedes the
determination date and (B) in the case of a defined benefit plan, the date
as of which the most recent actuarial valuation for the Plan Year which
includes the determination date is prepared, except that if any such plan
specifies a different determination or valuation date, such different date
shall be used with respect to such plan.
(2) Aggregation Group. The aggregation group shall consist of (A)
-----------------
each plan of an Employer in which a key employee is a participant, (B) each
other plan which enables
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<PAGE>
such a plan to be qualified under section 401(a) of the Code and (C) any
other plans of an Employer which the Company designates as part of the
aggregation group.
(3) Key Employee. Key employee shall have the meaning set forth in
------------
section 416(i) of the Code.
(4) Compensation. Compensation shall have the meaning set forth in
------------
section 415 of the Code, except that the compensation of a participant in
excess of the limit determined pursuant to section 401(a)(17) of the Code
shall not be taken into account.
(b) Special Rules. For the purpose of determining the account
-------------
balance or accrued benefit of a plan participant, the account balance or accrued
benefit of any person who has not performed services for an Employer at any time
during the 5-year period ending on the determination date shall not be taken
into account and any person who received a distribution from a plan (including a
plan that has terminated) in the aggregation group during the 5-year period
ending on the last day of the preceding Plan Year shall be treated as a
participant in such plan, and any such distribution shall be included in such
participant's account balance or accrued benefit, as the case may be.
Section 15.3. Minimum Contribution for Top-Heavy Years.
------------ ----------------------------------------
Notwithstanding any provision of the Plan to the contrary, the sum of the
contributions made pursuant to Sections 4.2, 4.3 and 4.4 and allocated during
any Plan Year for which the Plan is a top-heavy plan to the accounts of each
Participant
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<PAGE>
(other than a key employee) shall in no event be less than the lesser of (a) 3%
of such Participant's compensation during such Plan Year and (b) the highest
percentage at which Employer contributions are made on behalf of any key
employee for such Plan Year. If during any Plan Year for which this Section 15.3
is applicable, a defined benefit plan is included in the aggregation group and
such defined benefit plan is a top-heavy plan for such Plan Year, the percentage
set forth in clause (a) of the first sentence of this Section 15.3 shall be 5%.
The percentage referred to in clause (b) of the first sentence of this Section
15.3 shall be obtained by dividing the aggregate of Employer contributions made
pursuant to this Plan and any other defined contribution plan that is required
to be included in the aggregation group (other than a defined contribution plan
that enables a defined benefit plan that is required to be included in such
group to be qualified under section 401(a) of the Code) during the Plan Year on
behalf of such key employee by such key employee's compensation for the Plan
Year.
Section 15.4. Special Rules for Applying Statutory Limitations on
------------ ---------------------------------------------------
Benefits. The provisions of this Section 15.4 shall apply only with respect to
- --------
Plan Years commencing prior to January 1, 2000.
(a) In any Plan Year for which the Plan is a top-heavy plan,
clause (a)(2)(i) of Section 7.6 shall be applied by
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<PAGE>
substituting "100%" for "125%" appearing therein, unless, for such Plan Year (1)
the percentage of account balances of Participants who are key employees does
not exceed 90% and (2) contributions made pursuant to Sections 4.2, 4.3 and 4.4
and allocated to the accounts of Participants who are not key employees equal at
least 4% of the compensation of each such Participant.
(b) In any Plan Year for which the Plan is a top-heavy plan,
clause (b)(1) of Section 7.6 shall be applied by substituting "100%" for "125%"
appearing therein, unless, for such Plan Year (1) the percentage of accrued
benefits of Participants who are key employees does not exceed 90% and (2) the
minimum accrued benefit of each Participant under all defined benefit plans in
the aggregation group is at least 3% of his average compensation (determined
under section 416 of the Code) multiplied by each year of service after 1983,
not in excess of 10, for which such plans are top-heavy plans.
ARTICLE 16
----------
AMENDMENT, ESTABLISHMENT OF SEPARATE PLAN AND TERMINATION
---------------------------------------------------------
Section 16.1. Amendment. The Company may at any time and from time
------------ ---------
to time amend or modify the Plan by written instrument duly adopted by the Board
of Directors or a duly authorized committee of the Board of Directors to that
effect.
-88-
<PAGE>
Any such amendment or modification of the Plan shall become effective on
such date or dates as the Board of Directors or the duly authorized committee,
as the case may be, shall determine, including retroactively to the extent
permitted by law, and may apply to Participants in the Plan at the time thereof
as well as to future Participants.
Section 16.2. Establishment of Separate Plan. If an Employer
------------ ------------------------------
withdraws from the Plan pursuant to Section 12.2, the Committee shall determine
the portion of the Trust Fund held by the Trustee which is applicable to the
Participants, Beneficiaries and Distributees of such Employer and direct the
Trustee to segregate such portion in a separate trust. Such separate trust shall
thereafter be held and administered as a part of the separate plan of such
Employer.
The portion of the Trust Fund applicable to the Participants,
Beneficiaries and Distributees of a particular Employer shall be the proportion
of the total value of the Trust Fund which the total amount credited to the
accounts of Participants, Beneficiaries and Distributees employed by or with
respect to the particular Employer bears to the total amount credited to the
accounts of all Participants, Beneficiaries and Distributees.
-89-
<PAGE>
Section 16.3. Termination. Any Employer may at any time terminate
------------ -----------
its participation in the Plan and the Company may at any time terminate the Plan
in its entirety with respect to all Employers, by, prior to the effective date
of termination, filing with the Committee a duly certified copy of a resolution
of its board of directors to that effect and giving notice of the intended
termination to the other Employers and the Trustee. In the event of any such
termination, the Committee shall determine, pursuant to Section 16.2, the
portion of the Trust Fund held by the Trustee which is applicable to the
Participants, Beneficiaries and Distributees of such Employer or Employers and
direct the Trustee to distribute such portion to such Participants,
Beneficiaries and Distributees ratably in proportion to the balances of their
respective accounts. A complete discontinuance of contributions by an Employer
shall be deemed a termination of such Employer's participation in the Plan for
purposes of this Section 16.3.
Section 16.4. Trust Fund to Be Applied Exclusively for Participants
------------ -----------------------------------------------------
and Their Beneficiaries. Subject only to Sections 4.7 and 16.3 and any other
- -----------------------
provision of the Plan to the contrary notwithstanding, it shall be impossible
for any part of the Trust Fund to be used for or diverted to any purpose not for
the exclusive benefit of Participants and their Beneficiaries either by
operation or termination of the Plan, power of amendment or other means.
-90-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be
executed and its corporate seal to be hereunto affixed by its duly authorized
officers on this 30th day of December, 1998.
True North Communications Inc.
By: /s/ Paul Sollitto
______________________________
Title: Vice President, Director of
Corporate Human Resources
-91-
<PAGE>
FIRST SUPPLEMENT TO THE
TRUE NORTH COMMUNICATIONS INC. RETIREMENT PLAN
WHEREAS, True North Communications Inc., a Delaware corporation, (the
"Company") has adopted and maintains a defined contribution plan for the benefit
of certain of its employees entitled the True North Communications Inc.
Retirement Plan (the "True North Plan");
WHEREAS, R/GA Media Group, Inc. ("R/GA") maintains for the benefit of
certain of its employees and the employees of its wholly-owned subsidiaries the
R/GA Media, Inc. Pension Plan and Trust for RGA Employees (the "R/GA Plan");
WHEREAS, the R/GA Plan also covers a small group of individuals who are
employed by entities that are not affiliated with R/GA;
WHEREAS, the Finance Committee, appointed by the Board of Directors of the
Company, has authorized the spin-off into the True North Plan of the portion of
the R/GA Plan that includes employees of R/GA and its subsidiaries, effective
March 31, 1998;
WHEREAS, the Board of Directors of R/GA has authorized this spin-off of a
portion of the R/GA Plan into the True North Plan effective March 31, 1998; and
WHEREAS, the Company desires to amend the True North Plan in certain
respects.
NOW, THEREFORE, pursuant to the power of amendment contained in Section
16.1 of the True North Plan, the True North Plan is hereby amended, effective
March 31, 1998, as follows:
1. Notwithstanding anything contained in the True North Plan to the
contrary, Sections 8.2(b) and 8.5 of the True North Plan shall apply
to a participant with an account balance under the R/GA Plan as of
March 31, 1998, with respect to such participant's account balance
under the R/GA Plan on such date, except that, with respect to the
joint and survivor annuity described in Section 8.2(b)(1)(A) of the
True North Plan, such participant may designate a beneficiary other
than such participant's spouse. Any such designation by a participant
shall be subject to the notice and consent provisions of Section 8.5
of the True North Plan. Furthermore, also with respect to such
participant's account balance under the R/GA Plan as of March 31,
1998, a participant may elect to receive a smaller annuity benefit
with continuation of
<PAGE>
payments to his beneficiary at a rate of 75% or 100% of the rate
payable to a participant during his lifetime, which alternative joint
and survivor annuity shall be equal in value to the joint and 50%
survivor annuity.
2. Notwithstanding Article 4 or any other provision of the True North
Plan to the contrary, the following provisions shall apply with
respect to individuals who are employees of R/GA or any wholly-owned
subsidiary of R/GA on or after March 31, 1998:
(a) An R/GA employee who, as of March 31,1998, has satisfied the
eligibility requirements for participation in the R/GA Plan (in
accordance with Sections 3.1 and 3.3 of the R/GA Plan) shall be
eligible to participate in the R/GA Profit Sharing Contribution
feature of the True North Plan (which is described in paragraph
(e) below).
(b) An R/GA employee who, as of March 31,1998, has not satisfied the
eligibility requirements for participation in the R/GA Plan (in
accordance with Sections 3.1 and 3.3 of the R/GA Plan) shall,
notwithstanding Section 3.1 of the True North Plan, become
eligible to participate in the R/GA Profit Sharing Contribution
feature of the True North Plan upon completion of the eligibility
requirements set forth in Sections 3.1 and 3.3 of the R/GA Plan
(i.e., as of the January 1 or July 1 next following attainment of
age 21 and completion of one year of service).
(c) An individual who is hired by R/GA after March 31, 1998 shall be
subject to the eligibility provisions set forth in the second
paragraph of Section 3.1 of the True North Plan for purposes of
R/GA Profit Sharing Contribution eligibility.
(d) No R/GA employee shall be eligible to receive an allocation of
profit sharing contributions described in Section 4.4 of the True
North Plan.
(e) In lieu of the contributions described in Section 4.4 of the True
North Plan, R/GA shall contribute, on behalf of each "Profit
Sharing Eligible R/GA Participant" an amount equal to 5.065% of
such individual's annual Compensation each Plan Year (the "R/GA
Profit Sharing Contribution"). For purposes of the preceding
sentence, a Profit Sharing Eligible R/GA Participant for a Plan
Year
<PAGE>
is an employee of R/GA or one of its wholly-owned subsidiaries
who has satisfied the eligibility requirements of paragraph (a),
(b) or (c) above, as applicable, and has satisfied the
requirements of Section 7.5(b) of the True North Plan for such
Plan Year.
3. Notwithstanding Sections 7.1 and 7.5 of the True North Plan to the
contrary, the R/GA Profit Sharing Contribution (described in item 2(e)
above) for any Plan Year shall be allocated to the profit sharing
contributions account of each Profit Sharing Eligible R/GA Participant
pursuant to the formula described in item 2(e) above. All amounts
transferred from the R/GA Plan to the True North Plan shall also be
credited to the profit sharing contributions account of each applicable
R/GA Plan participant, and the profit sharing contributions account of
each R/GA Plan participant who is an employee of R/GA or one of its
wholly-owned subsidiaries as of March 31, 1998 shall be 100% vested and
non-forfeitable.
4. Notwithstanding any provision of the True North Plan to the contrary,
the sum of the account balances of each participant under the R/GA Plan
and the True North Plan following the spin-off shall equal the sum of
the account balances of the participant under each plan immediately
prior to such spin-off.
<PAGE>
SECOND SUPPLEMENT TO THE
TRUE NORTH COMMUNICATIONS INC. RETIREMENT PLAN
WHEREAS, True North Communications Inc., a Delaware corporation, (the
"Company") has adopted and maintains a defined contribution plan for the benefit
of certain of its employees entitled the True North Communications Inc.
Retirement Plan (the "Plan"); and
WHEREAS, the Company desires to amend the Plan in certain respects to
recognize the terms of participation under the Plan of employees of Foote Cone &
Belding, Inc. and Park Advertising, Inc., the Company's wholly-owned
subsidiaries in Puerto Rico ("FCB Puerto Rico").
NOW, THEREFORE, pursuant to the power of amendment contained in Section
16.1 of the Plan, the Plan is hereby amended, effective January 1, 1998, as
follows:
1. Notwithstanding the second paragraph of Section 3.1 and Section 4.4 of
the Plan, participants who are FCB Puerto Rico employees shall not be
eligible to receive allocations of any profit sharing contributions
described in Section 4.4 of the Plan.
2. With respect to participants who are FCB Puerto Rico employees, the
calendar year limit on elective contributions specified in Section 4.5
of the Plan shall be $7,000.
3. Notwithstanding Section 7.2 of the Plan, all contributions under the
Plan that are made on behalf of participants who are FCB Puerto Rico
employees, including such participants' entire account balances as of
December 31, 1997, shall be invested in the Common Stock Fund.
95
<PAGE>
THIRD SUPPLEMENT TO THE
TRUE NORTH COMMUNICATIONS INC. RETIREMENT PLAN
WHEREAS, True North Communications Inc., a Delaware corporation, (the
"Company") has adopted and maintains a defined contribution plan for the benefit
of certain of its employees entitled the True North Communications Inc.
Retirement Plan (the "Plan"); and
WHEREAS, the Company desires to amend the Plan in certain respects to
recognize the terms of participation under the Plan of employees of The Tierney
Group, Inc. ("Tierney").
NOW, THEREFORE, pursuant to the power of amendment contained in Section
16.1 of the Plan, the Plan is hereby amended, effective April 10, 1998, as
follows:
1. Notwithstanding Section 3.1 of the Plan, any individual who became an
employee of Tierney on April 10, 1998 (the "Closing Date") and who was
an employee of BP Tierney & Associates, Inc. ("BP Tierney") and a
participant in the The Tierney Group Profit Sharing Plan (the "BP
Tierney Plan") immediately prior to the Closing Date shall become a
participant in the Plan as of the Closing Date rather than the next
Entry Date.
2. Notwithstanding Section 3.2 of the Plan, as of the Closing Date, the
elective contributions made under the Plan on behalf of the
individuals described in 1 above shall be made in accordance with such
individuals' latest elective contribution elections under the BP
Tierney Plan. As soon as practicable after the Closing Date, these
individuals shall be given the opportunity to make elective
contribution elections in accordance with Sections 3.2 and 4.1 of the
Plan.
3. In determining the eligibility under the Plan of Tierney employees,
employment prior to the Closing Date that was counted as service under
the BP Tierney Plan shall be counted as hours of employment under
items (22) and (31) of Article 2 of the Plan.
<PAGE>
4. Notwithstanding Article 4 or any other provision of the Plan to the
contrary, the following provisions shall apply with respect to
individuals who are employees of Tierney on or after the Closing Date:
(a) A Tierney employee who, immediately prior to the Closing Date, had
satisfied the eligibility requirements for participation in the BP
Tierney Plan shall be eligible to participate as of the Closing
Date in the Tierney Profit Sharing Contribution feature of the
Plan (which feature is described in paragraph (e) below).
(b) A Tierney employee hired on or before June 30, 1998 who had not
yet satisfied the eligibility requirements for participation in
the BP Tierney Plan as of the Closing Date shall, notwithstanding
Section 3.1 of the Plan, become eligible to participate in the
Tierney Profit Sharing Contribution feature of the Plan upon
completion of the eligibility requirements set forth in Sections
3.1(A) and 3.2(E) of the Adoption Agreement under the BP Tierney
Plan (i.e., as of the next January 1 or July 1 after attainment of
age 21 and completion of one year of service).
(c) An individual who is hired by Tierney after June 30, 1998 shall be
subject to the eligibility provisions set forth in the second
paragraph of Section 3.1 of the Plan for purposes of Tierney
Profit Sharing Contribution eligibility.
(d) No Tierney employee shall be eligible to receive an allocation of
profit sharing contributions described in Section 4.4 of the Plan.
(e) In lieu of the contributions described in Section 4.4 of the Plan,
Tierney may in its discretion make a profit sharing contribution
each Plan Year, which contribution, if any, shall be referred to
<PAGE>
as the Tierney Profit Sharing Contribution and shall be allocated
to each "Profit Sharing Eligible Tierney Participant." A Profit
Sharing Eligible Tierney Participant for a Plan Year is an
employee of Tierney who has satisfied the Tierney Profit Sharing
Contribution feature eligibility requirements of paragraph (a),
(b) or (c) above, as applicable, and has satisfied the
requirements of Section 7.5(b) of the Plan for such Plan Year.
The allocation of the Tierney Profit Sharing Contribution for a
Plan Year shall be allocated to Profit Sharing Eligible Tierney
Participants in accordance with the allocation method described in
Section 7.5(b) of the Plan.
5. Any individual described in 1 above who, upon distribution of his or
her interest in the BP Tierney Plan, elects to roll over the entire
amount of such distribution to the Plan (in accordance with Section
5.1 of the Plan) may, elect to include his or her outstanding loan, if
any, from the BP Tierney Plan in such rollover; provided that the
Trustee agrees to assume the applicable promissory note and that the
terms of the loan under the Plan shall be materially the same as the
terms of the loan under the BP Tierney Plan.
<PAGE>
EXHIBIT 5.1
[LOGO APPEARS HERE]
101 EAST ERIE STREET, CHICAGO, ILLINOIS 60611.2897, USA PHONE 312 425 6598
FAX 312 425 6589
SUZANNE S. BETTMAN
VICE PRESIDENT
ASSISTANT GENERAL COUNSEL
June 8, 1999
True North Communications Inc.
101 East Erie Street
Chicago, Illinois 60611
Ladies and Gentlemen:
This opinion is delivered to you in connection with the registration
statement on Form S-8 to be filed with the Securities and Exchange Commission on
the date hereof (the "Registration Statement") relating to the registration of
850,000 shares of common stock, $.33-1/3 par value per share, of True North
Communications Inc. (the "Company"), together with Preferred Stock Purchase
Rights (the "Rights") associated therewith (the "Registered Shares") issued
under, and interests (the "Interests") in, the True North Communications Inc.
Retirement Plan (the "Plan"). The terms of the Rights are set forth in the
Rights Agreement dated as of November 4, 1998 and amended as of April 12, 1999
between the Company and the First Chicago Trust Company of New York, as Rights
Agent.
I, in my capacity as Vice President and Assistant General Counsel of the
Company, am familiar with the proceedings to date with respect to the
Registration Statement and have examined such records, documents and matters of
law and satisfied myself as to such matters of fact as I have considered
relevant for the purposes of this opinion.
Based upon my examination mentioned above, and relying upon statements of
fact contained in the documents which I have examined, I am of the opinion that:
(i) the Interests of participants in the Plan will be valid and the
Registered Shares, when sold or issued hereafter in accordance with
the provisions of the Plan, in accordance with Delaware law and upon
payment of the consideration for such shares as contemplated by the
Plan, will be validly issued, fully paid and non-assessable; and
(ii) the Rights associated with the Registered Shares will be legally
issued when such Rights shall have been duly issued in accordance with
the terms of the Rights Agreement.
I do not find it necessary for the purposes of this opinion, and
accordingly do not purport to cover herein, the application of the securities or
"blue sky" laws of the various states to the sale of the Registered shares of
associated Rights.
<PAGE>
June 4, 1999
Page 2
This opinion is limited to the General Corporation Law of the State of
Delaware and the federal laws of the United States of America.
This opinion is limited to the specific issues addressed herein, and no
opinion may be inferred or implied beyond that expressly stated herein. I assume
no obligation to revise or supplement this opinion should the General
Corporation Law of the State of Delaware or the federal law of the United States
as presently in effect be changed by legislative action, judicial decision or
otherwise.
I hereby consent to the filing of this opinion with the Securities and
Exchange Commission as Exhibit 5.1 to the Registration Statement and to the
references to me in the Registration Statement. In giving this consent, I do not
thereby admit that I am in the category of persons whose consent is required
under Section 7 of the Securities Act of 1933, as amended, or the rules and
regulations of the Securities and Exchange Commission.
Very truly yours,
/s/ S. Bettman
--------------------------
Suzanne S. Bettman
Vice President
Assistant General Counsel
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement of our reports and to all references to
our Firm included in or made a part of this Registration Statement on Form S-8.
Arthur Andersen LLP
Chicago, Illinois
June 3, 1999
<PAGE>
EXHIBIT 23.2
ACCOUNTANTS' CONSENT
--------------------
The Board of Directors
True North Communications, Inc.:
We consent to the use of our report incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the prospectus.
KPMG LLP
Omaha, Nebraska
June 4, 1999
