<PAGE> COVER
As filed with the Securities and Exchange Commission on November 6, 1998
Registration No. 333-________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
LEGG MASON, INC.
(Exact name of registrant as specified in its charter)
MARYLAND 52-1200960
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
100 Light Street, Baltimore, Maryland 21202
(Address of Principal Executive Offices) (Zip Code)
THE LEGG MASON
PROFIT SHARING PLAN AND TRUST
(Full Title of the Plan)
THEODORE S. KAPLAN, ESQUIRE
Senior Vice President and General Counsel
Legg Mason, Inc.
100 Light Street
Baltimore, Maryland 21202
(Name and address of agent for service)
(410) 539-0000
(Telephone number, including area code, of agent for service)
______________________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Title of Amount Maximum Maximum Amount of
Securities to to be Offering Price Aggregate Registration
be Registered (1) Registered (2) Per Share (3) Offering Price Fee
<S> <C> <C> <C> <C>
Common Stock 1,000,000 shs. $25.5625 $25,562,500 $7,106.38
($.10 Par Value)
</TABLE>
(1) Pursuant to Rule 416(c) under the Securities Act of 1933, as amended
(the "Securities Act"), this Registration Statement also covers an
indeterminate amount of interests to be offered pursuant to The Legg
Mason Profit Sharing Plan and Trust (the "Plan").
(2) Pursuant to Rule 416(a) under the Securities Act, this Registration
Statement also registers such indeterminate number of additional shares
as may be issuable under the Plan in connection with stock splits, stock
dividends or similar transactions.
(3) Estimated solely for the purpose of determining the registration fee
pursuant to Rule 457(h). The proposed maximum offering price per share
is based upon the average of the high and low sale prices for Legg Mason,
Inc. common stock on the New York Stock Exchange on November 3, 1998.
<PAGE> 1
PART I. INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The information required by Part I is included in
documents sent or given to participants in The Legg Mason Profit
Sharing Plan and Trust (the "Plan") pursuant to Rule 428(b)(1).
Such documents are not being filed with the Securities and
Exchange Commission (the "Commission") either as part of this
Registration Statement or as prospectuses or prospectus
supplements pursuant to Rule 424.
PART II. INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents filed by Legg Mason, Inc. (the
"Company") with the Commission are incorporated herein by
reference and made a part hereof:
(a) The Company's Annual Report on Form 10-K for the
fiscal year ended March 31, 1998.
(b) The Company's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1998.
(c) The description of the Company's common stock,
$.10 par value, contained in Amendment No. 4 to the Company's
Application for Registration on Form 8-A, filed April 25, 1997.
In addition to the foregoing, all documents
subsequently filed by the Company or the Plan pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), prior to the filing
of a post-effective amendment indicating that all of the
securities offered hereunder have been sold or deregistering all
securities then remaining unsold, shall be deemed to be
incorporated by reference in this Registration Statement and to
be part hereof from the date of filing of such documents. Any
statement contained in a document incorporated or deemed to be
incorporated by reference in this Registration Statement shall be
deemed to be modified or superseded for purposes of this
Registration Statement to the extent that a statement contained
herein or in any subsequently filed document that also is or is
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.
Experts
The consolidated financial statements and financial
statement schedules of the Company and its subsidiaries as of
March 31, 1998 and 1997 and for each of the years in the three-
year period ended March 31, 1998, included in the Company's Annual
<PAGE> 2
Report on Form 10-K for the fiscal year ended March 31, 1998, have been
incorporated by reference in this Registration Statement in reliance upon
the report of PricewaterhouseCoopers LLP, independent certified public
accountants, incorporated by reference herein, and upon the authority of
said firm as experts in accounting and auditing. To the extent that
PricewaterhouseCoopers LLP audits and reports on financial statements of
the Company issued at future dates, and consents to the use of their report
thereon, such financial statements also will be incorporated by reference
in the registration statement in reliance upon their report and said
authority.
Item 4. Description of Securities.
Not Applicable.
Item 5. Interests of Named Experts and Counsel.
The validity of the shares of the Company's common stock
registered hereby that will be newly issued by the Company have been passed
upon for the Company by Theodore S. Kaplan, Esq., the Company's General
Counsel. Mr. Kaplan beneficially owns, or has rights to acquire under the
Plan, less than one percent of the common stock of the Company.
Item 6. Indemnification of Directors and Officers.
Section 2-418 of the Maryland General Corporation Law
("Section 2-418") establishes provisions whereby a Maryland corporation
may indemnify any director or officer made a party to an action or
proceeding by reason of service in that capacity, against judgments,
penalties, fines, settlements and reasonable expenses incurred in connection
with such action or proceeding unless it is proved that the director or
officer (i) acted or failed to act in bad faith or with active and deliberate
dishonesty, (ii) actually received an improper personal benefit in money,
property or services or (iii) in the case of a criminal proceeding, had
reasonable cause to believe that his act or omission was unlawful. However,
if the proceeding is a derivative suit in favor of the corporation,
indemnification may not be made if the individual is adjudged to be liable
to the corporation. In no case may indemnification be made until a
determination has been reached that the director or officer has met the
applicable standard of conduct. Indemnification for reasonable expenses is
mandatory if the director or officer has been successful on the merits or
otherwise in the defense of any action or proceeding covered by
Section 2-418. Section 2-418 also provides for indemnification of
directors and officers by court order. The indemnification provided or
authorized in Section 2-418 does not preclude a corporation from extending
other rights (indemnification or otherwise) to directors and officers.
<PAGE> 3
The Registrant's By-Laws provide for indemnification of any person
who is serving or has served as a director or officer of the Registrant,
against all liabilities and expenses incurred in connection with any action,
suit or proceeding arising out of such service to the full extent permitted
under Maryland law.
The Registrant's officers and directors are insured against
certain liabilities under certain policies maintained by the Registrant with
aggregate maximum coverage of $35,000,000.
The foregoing summaries are subject to the complete text of the
statute, By-Laws and agreements referred to above and are qualified in their
entirety by reference thereto.
Item 7. Exemption from Registration Claimed.
Not Applicable.
Item 8. Exhibits.
Description of
Exhibit Number Document
4 The Legg Mason Profit Sharing Plan and Trust,
as amended.
5 Opinion of Theodore S. Kaplan, Esq.,
Senior Vice President and
General Counsel of the Registrant.
23(a) Consent of PricewaterhouseCoopers LLP,
independent public accountants.
23(b) Consent of Theodore S. Kaplan, Esq.
(included in Exhibit 5).
24 Powers of Attorney of certain directors
of the Registrant (included on signature
pages hereto).
The Company has submitted the Plan and any amendments thereto to
the Internal Revenue Service ("IRS") and has made or will make all changes
required by the IRS in order to qualify the Plan under Section 401 of the
Internal Revenue Code of 1986, as amended.
Item 9. Undertakings.
(a) The undersigned Registrant hereby undertakes:
<PAGE> 4
(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;
(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. Notwithstanding the foregoing, any increase or
decrease in 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 Commission
pursuant to Rule 424(b) 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;
(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)(i)(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
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 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 15(d) of the Exchange Act and each filing of the
Plan's annual report pursuant to Section 15(d) of the Exchange
<PAGE> 5
Act that is incorporated by reference herein 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.
<PAGE> 6
SIGNATURES
The Registrant. Pursuant to the requirements of the Securities
Act of 1933, the Registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form S-8 and
has duly caused this Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Baltimore,
State of Maryland, on the 6th day of November, 1998.
LEGG MASON, INC.
By: /s/Theodore S. Kaplan
Theodore S. Kaplan
Senior Vice President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Raymond A. Mason, Richard J. Himelfarb
and Theodore S. Kaplan, and each of them, his true and lawful
attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and
all capacities, to sign any and all amendments (including pre-effective
and post-effective amendments) to this Registration Statement, and to file
the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them acting singly, full power
and authority to do and perform each and every act and thing necessary and
requisite to be done, as fully and to all intents and purposes as he might
or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
/s/ Raymond A. Mason Chairman of the Board, November 6, 1998
Raymond A. Mason President and Chief
Executive Officer
(Principal Executive
Officer)
[SIGNATURES CONTINUED]
<PAGE> 7
[SIGNATURES CONTINUED]
/s/ F. Barry Bilson Vice President - November 6, 1998
F. Barry Bilson Finance
(Principal Financial
and Accounting Officer)
/s/ Harold L. Adams Director November 6, 1998
Harold L. Adams
/s/ Charles A. Bacigalupo Director November 6, 1998
Charles A. Bacigalupo
/s/ James W. Brinkley Director November 6, 1998
James W. Brinkley
/s/ Edmund J. Cashman, Jr. Director November 6, 1998
Edmund J. Cashman, Jr.
/s/ Harry M. Ford, Jr. Director November 6, 1998
Harry M. Ford, Jr.
/s/ Richard J. Himelfarb Director November 6, 1998
Richard J. Himelfarb
/s/ John E. Koerner, III Director November 6, 1998
John E. Koerner, III
[SIGNATURES CONTINUED]
<PAGE> 8
[SIGNATURES CONTINUED]
/s/ W. Curtis Livingston Director November 6, 1998
W. Curtis Livingston
/s/ Edward I. O'Brien Director November 6, 1998
Edward I. O'Brien
Director November __, 1998
Peter F. O'Malley
/s/ Nicholas J. St. George Director November 6, 1998
Nicholas J. St. George
/s/ Roger W. Schipke Director November 6, 1998
Roger W. Schipke
/s/ Margaret DeB. Tutwiler Director November 6, 1998
Margaret DeB. Tutwiler
/s/ James E. Ukrop Director November 6, 1998
James E. Ukrop
/s/ William Wirth Director November 6, 1998
William Wirth
<PAGE> 9
The Plan. Pursuant to the requirements of the Securities Act of
1933, the trustees of the Plan have duly caused this Registration Statement
to be signed on behalf of the Plan by the undersigned, thereunto duly
authorized, in the City of Baltimore, State of Maryland, on the 6th day of
November, 1998.
THE LEGG MASON PROFIT SHARING PLAN AND TRUST
By: /s/ F. Barry Bilson
F. Barry Bilson
Plan Administrator
<PAGE> 10
EXHIBIT INDEX
Description of
Exhibit Number Document
4 The Legg Mason Profit Sharing Plan and Trust,
as amended.
5 Opinion of Theodore S. Kaplan, Esq.,
Senior Vice President and
General Counsel of the Registrant.
23(a) Consent of PricewaterhouseCoopers LLP,
independent public accountants.
23(b) Consent of Theodore S. Kaplan, Esq.
(included in Exhibit 5).
24 Powers of Attorney of certain directors
of the Registrant (included on signature
pages hereto).
<PAGE> COVER
THE LEGG MASON
PROFIT SHARING PLAN AND TRUST
1996 AMENDING RESTATEMENT
<PAGE>
TABLE OF CONTENTS
ARTICLE I General
1.1 Name and Type of Plan. . . . . . . . . . . . . . . . 1
1.2 Applicability. . . . . . . . . . . . . . . . . . . . 1
1.3 Continuation of Existing Plan. . . . . . . . . . . . 1
1.4 Transition Rules . . . . . . . . . . . . . . . . . . 2
ARTICLE II Definitions and Top Heavy Provisions
2.1 Definitions. . . . . . . . . . . . . . . . . . . . . 2
2.2 Top Heavy Status . . . . . . . . . . . . . . . . . . 7
ARTICLE III Eligibility and Participation
3.1 Requirements . . . . . . . . . . . . . . . . . . . . 9
3.2 Reemployment . . . . . . . . . . . . . . . . . . . . 9
3.3 Change of Employment Category. . . . . . . . . . . 10
3.4 Waiver of Participation. . . . . . . . . . . . . . 10
3.5 Leased Employees . . . . . . . . . . . . . . . . . 10
ARTICLE IV Hours and Years of Service
4.1 Credit for Years of Service. . . . . . . . . . . . 11
4.2 Leaves of Absence. . . . . . . . . . . . . . . . . 11
4.3 Predecessor and Related Employers. . . . . . . . . 11
4.4 Credit for Hours of Service. . . . . . . . . . . . 12
ARTICLE V Contributions
5.1 Company Contributions. . . . . . . . . . . . . . . 12
5.2 Compensation Deferrals . . . . . . . . . . . . . . 14
5.3 Rollovers and Inter-Plan Transfers . . . . . . . . 18
5.4 Non-Deductible Participant Contributions . . . . . 19
ARTICLE VI Allocation of Funds
6.1 Allocation of Company Contributions. . . . . . . . 19
6.2 Allocation of Earnings or Losses of Trust. . . . . 20
6.3 Valuations . . . . . . . . . . . . . . . . . . . . 21
6.4 Accounting for Distributions . . . . . . . . . . . 21
6.5 Allocation Not Equivalent of Vesting . . . . . . . 21
6.6 Separate Accounts. . . . . . . . . . . . . . . . . 21
6.7 Interim Valuations . . . . . . . . . . . . . . . . 21
6.8 Maximum Limitation on Annual Additions . . . . . . 21
6.9 Right of Participants to Specify Investments . . . 23
6.10 Erroneous Allocations. . . . . . . . . . . . . . . 24
ARTICLE VII Entitlement to Benefits
7.1 Retirement . . . . . . . . . . . . . . . . . . . . 24
7.2 Disability . . . . . . . . . . . . . . . . . . . . 25
7.3 Death. . . . . . . . . . . . . . . . . . . . . . . 25
7.4 Other Terminations . . . . . . . . . . . . . . . . 25
<PAGE>
7.5 Financial Hardship Distributions . . . . . . . . . 26
7.6 Other In-Service Withdrawals . . . . . . . . . . . 27
ARTICLE VIII Distribution of Benefits
8.1 Amount . . . . . . . . . . . . . . . . . . . . . . 28
8.2 Method of Payment. . . . . . . . . . . . . . . . . 28
8.3 Timing of Benefit Commencement . . . . . . . . . . 31
8.4 Special Provisions - Death Benefits. . . . . . . . 32
8.5 Special Provisions - Termination Benefits. . . . . 32
8.6 Direct Transfers to Other Plans. . . . . . . . . . 32
ARTICLE IX Beneficiaries; Participant Data
9.1 Designation of Beneficiaries . . . . . . . . . . . 33
9.2 Location of Participants and Beneficiaries . . . . 34
ARTICLE X The Trust Fund
10.1 Establishment and Acceptance of Trust. . . . . . . 34
10.2 Powers of Trustees . . . . . . . . . . . . . . . . 34
10.3 Management Authority . . . . . . . . . . . . . . . 37
10.4 Tenure of Trustees . . . . . . . . . . . . . . . . 37
10.5 Common Investments . . . . . . . . . . . . . . . . 37
10.6 Compensation and Expenses of Trustees. . . . . . . 37
10.7 Immunity and Liability of Trustees . . . . . . . . 38
10.8 Vote of Trustees . . . . . . . . . . . . . . . . . 38
10.9 Financial Records. . . . . . . . . . . . . . . . . 38
10.10 Periodic Accounting . . .. . . . . . . . . . . . . 39
10.11 Prohibition Against Diversion of Funds . . . . . . 39
10.12 Spendthrift Provision . . . . . . . . . . . . . . 40
10.13 Commingling with Related Trusts . . . . . . . . . 40
10.14 Payment on Behalf of Infant or Incompetent . . . . 40
10.15 Relationship of Insurers to Trust . . . . . . . . 41
10.16 Separate Investment Funds . . . . . . . . . . . . 41
10.17 Loans to Participants . . . . . . . . . . . . . . 42
10.18 Allocation of Holding Company Securities . . . . . 45
ARTICLE XI Administration
11.1 Administrative Authority . . . . . . . . . . . . . 45
11.2 Company Administration . . . . . . . . . . . . . . 45
11.3 Retirement Plan Committee. . . . . . . . . . . . . 46
11.4 Mutual Exclusion of Responsibility . . . . . . . . 47
11.5 Uniformity of Discretionary Acts . . . . . . . . . 47
11.6 Fiduciary Standards. . . . . . . . . . . . . . . . 47
11.7 Litigation . . . . . . . . . . . . . . . . . . . . 47
11.8 Payment of Administration Expenses . . . . . . . . 47
11.9 Claims Procedure . . . . . . . . . . . . . . . . . 47
ARTICLE XII Amendment
12.1 Right to Amend . . . . . . . . . . . . . . . . . . 48
12.2 Amendment Pursuant to Federal Law. . . . . . . . . 48
<PAGE>
ARTICLE XIII Termination
13.1 Right to Terminate . . . . . . . . . . . . . . . . 49
13.2 Automatic Termination of Contributions . . . . . . 49
13.3 Suspension of Contributions. . . . . . . . . . . . 49
13.4 Allocation and Distribution. . . . . . . . . . . . 49
13.5 Successor to Company . . . . . . . . . . . . . . . 50
13.6 Plan Combinations and Transfers. . . . . . . . . . 50
ARTICLE XIV Multiple-Employer Provisions
14.1 Adoption by Other Companies. . . . . . . . . . . . 50
14.2 Construction . . . . . . . . . . . . . . . . . . . 50
14.3 Participation. . . . . . . . . . . . . . . . . . . 50
14.4 Combined Service . . . . . . . . . . . . . . . . . 51
14.5 Administration . . . . . . . . . . . . . . . . . . 51
14.6 Funding. . . . . . . . . . . . . . . . . . . . . . 51
14.7 Amendment. . . . . . . . . . . . . . . . . . . . . 51
14.8 Transfer . . . . . . . . . . . . . . . . . . . . . 51
14.9 Termination. . . . . . . . . . . . . . . . . . . . 52
14.10 Special Affiliate Provisions . . . . . . . . . . . 52
ARTICLE XV Miscellaneous
15.1 Limitations on Liability of Company. . . . . . . . 60
15.2 Construction . . . . . . . . . . . . . . . . . . . 60
<PAGE> 1
THE LEGG MASON
PROFIT SHARING PLAN AND TRUST
1996 AMENDING RESTATEMENT
THIS 1996 AMENDING RESTATEMENT is made by and between LEGG MASON
WOOD WALKER, INCORPORATED (hereinafter referred to as the "Company"), and
GERALD SCHEINKER, WILLIAM B. JONES and WILLIAM A. VERCH (hereinafter referred
to as the "Trustees").
R E C I T A L S
On December 30, 1960, Legg & Co., a partnership which was
predecessor to the Company, established a profit sharing plan
and trust. Since that time, Legg & Co. changed its form, through
various corporate transactions, to become the present Company,
and correspondingly, the plan also changed form numerous times,
having been most recently restated effective as of January 1,
1984. On May 28, 1993, the Company renamed and again amended
and restated the said plan and trust, effective January 1, 1989,
in a document designated "1993 Amending Restatement". The Company
then further amended the plan and incorporated the additional
changes into a new restatement of the plan, designated the
"1993 (II) Amending Restatement", which, since it had an
effective date of January 1, 1989, superseded ab initio the
"1993 Amending Restatement".
The Company has recently amended the plan so as to
provide for the merger of the plan of an acquired corporation
(Bartlett & Co.) into the plan. The Company now wishes to
incorporate that amendment, and certain additional technical
changes, into a new restatement to be designated the "1996
Amending Restatement".
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, the parties hereto hereby amend and restate
The Legg Mason Profit Sharing Plan and Trust under the terms and conditions
herein set forth and agree as follows:
ARTICLE I
General
1.1 Name and Type of Plan - This Plan, which is intended to be a
tax-qualified 401(k) profit sharing plan, may be referred to as "The Legg
Mason Profit Sharing Plan and Trust."
1.2 Applicability - The provisions of this Amending Restatement
shall apply only to an individual who meets the definition of Employee set
forth herein and whose employment with the Employer Group terminates on or
after the Effective Date. The rights and benefits, if any, of an individual
whose employment with the Employer Group terminated prior thereto shall be
determined in accordance with the prior provisions of the Plan in effect on
the date his employment with the Employer Group terminated (subject to any
modification set forth herein which may affect the holding and/or
distribution of previously accrued but unpaid benefits).
1.3 Continuation of Existing Plan - The adoption of this Plan by
the Company constitutes the continuation of the existing plan as in effect
immediately prior to the Effective Date of this Amending Restatement (the
"Prior Plan"). Notwithstanding any other Plan provisions to the contrary,
the following shall be applicable:
(a) Subject to the conditions and limitations of this Plan,
each person who is a participant under the Prior Plan immediately prior to
the Effective Date will continue as a Participant under this Plan.
<PAGE> 2
(b) The amounts, if any, credited to a Participant's Accrued
Benefit immediately prior to the Effective Date shall constitute the opening
balance of his Accrued Benefit under this Plan.
(c) Amounts being paid to a former participant or beneficiary
in accordance with the provisions of the Prior Plan shall continue to be paid
in accordance with such provisions.
(d) Any beneficiary designation in effect under the Prior
Plan immediately before its amendment and continuation in the form of this
Plan shall be deemed to be a valid designation filed with the Company under
this Plan, to the extent consistent with the provisions of this Plan, unless
and until the Participant revokes such designation or makes a new designation
under this Plan.
(e) Except as permitted by regulations or other promulgations
of the Internal Revenue Service under Section 411 of the Internal Revenue
Code, this Plan shall not, with respect to any Participant's Accrued Benefit
as it existed immediately prior to the Effective Date: (i) decrease vesting
therein, or (ii) reduce, restrict or eliminate any benefit that is a "Section
411(d)(6) protected benefit" under Treas. Regs. Section 1.411(d)-4 (or any
successor thereto). In the event of any violation of either prohibition,
the terms of the Prior Plan shall control.
1.4 Transition Rules - Notwithstanding the effective date
generally applicable to any provision of this Amending Restatement, the
transition rules set forth in Section 1.4 of the Prior Plan shall continue
to apply as set forth therein.
ARTICLE II
Definitions and Top Heavy Provisions
2.1 Definitions - The following terms, as used herein, unless a
different meaning is implied by the context, shall have the following
meanings:
Account - A functional sub-division of an Accrued Benefit, or
a combination of such functional sub-divisions, based upon the nature of the
contributions which generate balances therein, the purpose of which is to
provide the separate accounting which will permit differences in vesting,
taxation, and/or withdrawal rights with respect thereto. To the extent that
such differences are eliminated with respect to any two or more Accounts they
may be combined into a single Account (in which case all references
throughout the Plan to the separate Accounts shall be deemed to be
references to the combination Account). Each Account shall reflect not
only the contributions thereto, but also the income, expenses, gains and
losses (whether or not realized) allocated or attributable thereto. The
Accounts and/or combinations of Accounts, are as follows:
Participant Contributions Accounts
Compensation Deferral Accounts
Rollover/Transfer Accounts
Non-Deductible Contributions Accounts
Company Contributions Accounts
Immediate Vest Company Contributions Accounts
Graded Vest Company Contributions Accounts
Pre-Merger Profit Sharing Accounts (York)*<F1*>
Pre-Merger Matching Contributions Accounts (Western Asset)*<F1*>
Pre-Merger Profit Sharing Accounts (Bartlett)*<F1*>
Pre-Merger After-Tax Employer Contributions Accounts (Bartlett)*<F1*>
___________________
[FN]
<F1*> described in Section 14.10.
</FN>
<PAGE> 3
Accrued Benefit - The balance to a Participant's or
Beneficiary's credit, including contributions, forfeitures, income, expenses,
gains and losses (whether or not realized) allocated or attributable thereto,
which balance shall consist of the appropriate portion of all commingled
Trust assets plus the value or proceeds of any Policies, or other Trust
assets, separately earmarked therefor. Said balance shall be determined
as of the most recent valuation date but adjusted for any additions or
distributions subsequent thereto.
Each Accrued Benefit shall be divided into one or more
Accounts, to the extent applicable. The Accounts, which are designated as
functional accounts, are derived from the nature of the contributions
thereto, whereas the accounts referred to as Segregated Accounts, and the
Separate Investment Funds described in Section 10.16, are investment
accounts, derived from the investment of the functional accounts.
Administrator - The person, group or entity designated in
accordance with the provisions of ARTICLE XI to administer and operate the
Plan.
Beneficiary - Any person entitled to death benefits in
accordance with the provisions of ARTICLE IX.
Benefit Commencement Date - The first day of the first period
for which the sole payment or the first in a series of payments constituting
the distribution of an Accrued Benefit is due.
Break in Service - A Plan Year during which an individual has
not completed more than 500 Hours of Service.
C/L Increase - An automatic increase (without necessity of
Plan amendment) in a dollar value set forth or described in the Plan, for
the purpose of reflecting increases in the cost of living to the extent
prescribed in or pursuant to regulations under Section 415(d) of the Internal
Revenue Code, but only to the extent permitted by the operative Internal
Revenue Code or regulatory provision specifically governing the dollar value
in question.
Company - LEGG MASON WOOD WALKER, INCORPORATED, a corporation
duly organized and existing under the laws of the State of Maryland, and its
successors and assigns, unless otherwise herein provided, or any other
business organization which, as hereinafter provided, shall assume the
obligations hereunder, or which, pursuant to ARTICLE XIV, shall become a
party to the Plan.
Compensation - The Remuneration actually paid to an individual
by or on behalf of the Company, during the applicable period, with respect to
the individual's service as a Covered Employee, but excluding: (i) amounts
in excess of the Compensation Limit, (ii) solely for purposes of Section
6.1(b), amounts in excess of $100,000, (iii) contributions, credits or
benefits under this Plan or under any other retirement, stock-related,
deferred compensation, fringe benefit or employee welfare benefit plan, or
(iv) direct reimbursement or allowances for moving and other expenses;
provided, however, that Compensation shall include any amount that would have
qualified as Compensation but for the fact that it is deferred pursuant to
Section 5.2 or but for the fact that it constitutes salary reduction under
any other plan described in Section 125, 402(e)(3), 402(h)(1)(B), 403(b),
414(h)(2) or 457(b) of the Internal Revenue Code.
If any Participant is a Highly-Compensated Employee because he
is a 5% owner, or if any Participant who is a Highly-Compensated Employee is
one of the top ten Highly-Compensated Employees when ranked on the basis of
Remuneration paid by the Employer Group, the Compensation of each member of
the immediate family group consisting of the Participant, his spouse and his
lineal descendants who have not reached age 19 before the end of the Plan
Year shall not exceed the Compensation Limit multiplied by a fraction, the
numerator of which is his Compensation (without regard to the Compensation
Limit) and the denominator of which is the aggregate Compensation (without
regard to the Compensation Limit) of the immediate family group, or such
other limit as may be mandated for this purpose by regulations issued by the
Internal Revenue Service.
Compensation Limit - With respect to any Plan Year, the
dollar limit on the amount of Compensation that may be taken into account
for Plan purposes pursuant to Section 401(a)(17) of the Internal Revenue
<PAGE> 4
Code for that Plan Year (or, where appropriate according to the context,
the monthly equivalent of that limit.) In general, the said limit is
$200,000/$150,000 (or such other amount as may be substituted therefor in
Section 401(a)(17)), as adjusted by C/L increases, and as prorated on a
monthly basis for any Plan Year of less than twelve full calendar months.
If the Compensation measuring period is other than the Plan Year, all
references herein to the Plan Year shall be deemed to mean the actual
Compensation measuring period.
Covered Employee - Subject to Section 14.10 (Fairfield), any
Employee other than a Leased Employee, except that, where retirement benefits
were the subject of good faith bargaining between the appropriate parties,
the term Covered Employee shall not include any individual whose employment
is subject to a collective bargaining agreement which does not by its terms
provide that such individual is eligible for participation in this Plan.
Designation Date - The date or dates as of which a designation
of investment categories, or any change in a prior designation, shall become
effective. As of the Effective Date, the first business day in each month
shall be deemed to be a Designation Date, but the Company shall have the
right, at any time, without necessity of Plan amendment, to change any
Designation Date or to add or delete Designation Dates, on a temporary or
permanent basis.
Effective Date - The effective date of this Amending
Restatement, which shall be January 1, 1996.
Employee - Any person employed by the Company, any individual
deemed to be an Employee pursuant to regulations issued under Section 414(o)
of the Internal Revenue Code, and, to the extent described in Section 3.5,
any Leased Employee.
Employer Group - A group of employers consisting of the
Company and all other employers who are treated as a single employer under
Section 414(b), (c), (m) or (o) of the Internal Revenue Code.
Entry Date - The last day in each calendar month.
ERISA - The Employee Retirement Income Security Act of 1974,
or any provision or section thereof herein specifically referred to, as such
Act, provision or section may from time to time be amended or replaced.
Highly-Compensated Employee - To the extent required by, and
as more fully defined and described in, Section 414(q) of the Internal
Revenue Code and the regulations promulgated thereunder, any individual who
is a Highly-Compensated Active Employee or a Highly-Compensated Former
Employee, determined as follows:
A "Highly-Compensated Active Employee" is: (A) any Employee
who performs service for the Employer Group during the Determination Year and
who, during the Look-Back Year: (i) received Remuneration from the Employer
Group in excess of $75,000 (adjusted for C/L Increases), (ii) received
Remuneration from the Employer Group in excess of $50,000 (as adjusted for
C/L Increases), and was in the top 20% of the non-excludable Employees when
ranked on the basis of Remuneration paid by the Employer Group during the
Look-Back Year, or (iii) was an officer of any member of the Employer Group
who received Remuneration from the Employer Group in excess of $45,000 (as
adjusted for C/L Increases) or, if no officer was paid that much Remuneration
during either the Determination Year or the Look-Back Year, the officer who
received the highest Remuneration from the Employer Group during such year,
and (iv) is not disregarded by reason of the family rule described below;
(B) any Employee who is one of the top 100 Employees when ranked on the basis
of Remuneration paid by the Employer Group during the Determination Year and
who would be a Highly-Compensated Active Employee if the Determination Year
were substituted for the Look-Back Year; and (C) any Employee who was a 5%
owner at any time during the Look-Back Year or the Determination Year. For
any Determination Year in which the Employer Group maintains significant
business activities (and employees) in at least two significantly separate
geographic areas, the Company may elect to construe clause (A)(i) by
substituting "$50,000" for "$75,000" and to disregard clause (A)(ii).
<PAGE> 5
If, during the Determination Year or Look-Back Year, any
Employee is a Highly-Compensated Employee because he is a 5% owner, or any
Highly-Compensated Employee is one of the top ten Highly-Compensated
Employees when ranked on the basis of Remuneration paid by the Employer
Group during such year, and in either case such Highly-Compensated Employee
is a member of a family group consisting of the Employee, his spouse and
his lineal ascendants and descendants and their spouses, all members of the
family group shall be treated as a single Highly-Compensated Employee
receiving Remuneration and Plan contributions or benefits equal to that
of all such members.
A "Highly-Compensated Former Employee" is any former Employee
who separated from service (or was deemed to have separated from service)
prior to the Determination Year, performs no service for the Employer Group
during the Determination Year, and was a Highly-Compensated Active Employee
for either: (i) the Determination Year in which separation (or deemed
separation) occurred, or (ii) any Determination Year ending on or after the
Employee's 55th birthday.
The "Determination Year" is the Plan Year for which the
determination is being made, or, in the event of a change in the Plan Year,
the short period between the day following the last day of the old Plan Year
and the last day of the first new Plan Year. The "Look-Back Year" is either
(as elected by the Company) the calendar year ending with or within, or the
twelve month period immediately preceding, the Determination Year.
Holding Company - Legg Mason, Inc.
Holding Company Security Account - An individual investment
account established pursuant to Section 10.18.
Holding Company Stock - Common or preferred stock issued by
the Holding Company.
Holding Company Stock Fund - A Separate Investment Fund
established pursuant to Section 10.16(a).
Hour of Service - Each hour for which an individual, in his
capacity as an Employee, is directly or indirectly paid, or entitled to
payment, for the performance of duties for the Company (to be credited for
the period in which the duties were performed), plus (except as otherwise set
forth in Section 4.2) each hour during which the Employee is on a Leave of
Absence, plus each additional hour, not otherwise credited, for which back
pay, irrespective of mitigation of damages, has been awarded or agreed to by
the Company (to be credited for the period for which the award or agreement
pertains). Hours of Service of a Leased Employee, or of an individual deemed
to be an Employee pursuant to regulations issued under Section 414(o) of the
Internal Revenue Code, shall be treated as Hours of Service hereunder to the
extent described in Section 3.5 or required by said regulations. Credit for
Hours of Service on account of periods during which no duties are performed,
and determination of the periods to which Hours of Service are to be credited,
shall be in accordance with Department of Labor Regulations Sec.
2530.200b-2(b) and (c).
Internal Revenue Code - The Internal Revenue Code of 1986, or
any provision or section thereof herein specifically referred to, as such
Code, provision or section may from time to time be amended or replaced.
Key Employee - Defined in Section 2.2.
Leased Employee - An individual designated as such pursuant to
Section 3.5.
Leave of Absence - An authorized absence from active service,
under conditions described in Section 4.2, which does not constitute a
termination of employment.
Non-Key Employee - Defined in Section 2.2.
<PAGE> 6
Participant - Any person who has met the participation
requirements set forth in ARTICLE III and who retains the right to receive
benefits under the Plan because those benefits have not been fully
distributed or forfeited, including (where appropriate to the context of the
Plan) any person who is no longer accruing benefits under the Plan.
Plan - The plan set forth herein, as amended from time to time.
Plan Year - The twelve consecutive month period ending on
December 31. In the event of a change in the Plan Year, then, solely for
purposes of determining the amount and/or allocation of (but not
eligibility for) contributions, and the 401(k)/(m) testing described in
Section 5.1 and 5.2, the short period between the day following the last day
of the old Plan Year and the last day of the first new Plan Year shall be
deemed to be a complete Plan Year.
Policy - Any contract issued by an insurance company under the
Plan.
Related Employer - Any member of the Employer Group other than
the Company.
Remuneration - For the applicable period, a Participant's
wages as defined in Section 3401(a) of the Internal Revenue Code, for
purposes of income tax withholding at the source, but determined without
regard to any rules that limit the remuneration included in wages based on
the nature or location of the employment or the services performed.
For all purposes other than Section 6.8, Remuneration shall
include any amount that would have qualified for the foregoing but for the
fact that it is deferred pursuant to Section 5.2 or but for the fact that it
constitutes salary reduction under any other plan described in Section 125,
402(e)(3), 402(h)(1)(B), 403(b), 414(h)(2) or 457(b) of the Internal Revenue
Code.
Required Aggregation Group - Defined in Section 2.2.
Retirement Plan - Defined in Section 2.2.
Segregated Account - That portion, or all, of an Accrued
Benefit which is segregated from the remainder of the Trust (and excluded
from any allocation of net earnings or losses of the remainder of the Trust)
and placed either: (i) in shares issued by open end or closed end investment
companies, (ii) in any Separate Investment Fund described in Section 10.16(d),
or (iii) in one or more interest bearing accounts, certificates of deposit
or other savings or time deposit instruments of any federally or state
supervised bank or similar financial institution and/or invested in
obligations of the United States government, as determined by the Trustees
or pursuant to Participant elections as described in Section 6.9.
All income earned by the Segregated Account shall be deemed to
be part thereof and distributable therewith, and a pro-rata portion of total
Trust fees and expenses may be charged thereto.
Separate Investment Fund - An investment vehicle described in
Section 10.16.
Special Valuation Date - The last day of each of the first
three fiscal quarters of each Plan Year, or any other date designated by the
Company, pursuant to Section 6.7, as an accounting or valuation date.
Sponsor - Legg Mason Wood Walker, Incorporated, and its
successors and assigns.
Super Top Heavy Plan - Defined in Section 2.2.
Top Heavy Compensation - Defined in Section 2.2.
Top Heavy Plan - Defined in Section 2.2.
<PAGE> 7
Trust - The trust fund established pursuant to the Plan.
Trustees - Collectively, the trustee or trustees named in the
Plan and such successor and/or additional trustees as may be named pursuant
to the terms of the Plan.
Valuation Date - January 1.
Year of Service - A twelve month period during which an
individual has completed not less than 1,000 Hours of Service. The aforesaid
twelve month period shall be the Plan Year in all cases except that, for
purposes of Section 3.1, the period shall initially be the twelve consecutive
month period beginning with the date on which the individual first performed
an Hour of Service, and shall thereafter be the succeeding twelve consecutive
month periods beginning on the anniversaries of said date.
2.2 Top Heavy Status - To the extent necessary to prevent
disqualification under Section 401(a)(10)(B) of the Internal Revenue Code,
the following provisions shall apply if the Plan is or becomes a Top Heavy
Plan:
(a) Definitions - The following terms shall have the
following meanings in the determination of whether or not the Plan is a
Top Heavy Plan:
Cumulative Benefit - The value of the account of a
participant in a defined contribution Retirement Plan, or the present value
of the accrued benefit of a participant in a defined benefit Retirement Plan,
as such account or benefit is defined and determined under Section 416 of
the Internal Revenue Code and Treas. Regs. Section 1.416-1. The value of the
account or accrued benefit, as the case may be, with respect to any
Determination Date, shall be based upon the most recent plan valuation
date occurring within the twelve months ending on the Determination Date
(it being intended that the value of all accounts and/or accrued benefits
shall be calculated with reference to the Determination Dates that fall
within the same calendar year), after: (i) adding back distributions made
during the Determination Period, (ii) adding in any contributions not
actually made as of the Determination Date but which are required to be
taken into account under Section 416 of the Internal Revenue Code and Treas.
Regs. Section 1.416-1, and (iii) making any other adjustments required
thereunder. Amounts attributable to a participant's own contributions
(whether mandatory or voluntary, but not including deductible employee
contributions) shall be considered part of his Cumulative Benefit, but
rollovers and direct plan-to-plan transfers shall only be considered to the
extent required under Section 416(g). The accrued benefit of any Non-Key
Employee shall be determined: (i) under the method, if any, that uniformly
applies for accrual purposes under all defined benefit plans maintained by
the Employer, or (ii) if there is no such method, as if such benefit accrued
not more rapidly than the slowest accrual rate permitted under the
fractional rule of Section 411(b)(1)(C) of the Internal Revenue Code.
Determination Date - Except as otherwise provided in
regulations issued by the Internal Revenue Service, the last day of the plan
year preceding the plan year for which Top Heavy Plan status is being
determined (or, if the determination is being made with respect to the
first plan year of a plan, the last day of such plan year).
Determination Period - A five year period consisting of
the plan year containing the Determination Date and the four preceding plan
years.
Employer - The Company and any other employer some or
all of whose employees participate in this Plan or in a Retirement Plan
which is aggregated with this Plan as part of a Permissive or Required
Aggregation Group.
Former Key Employee - Any employee or former employee of
an Employer who was, but is no longer, a Key Employee, and the beneficiaries
of any such individual.
Key Employee - Any employee or former employee
(whether or not deceased) of an Employer who, at any time during
the Determination Period, was: (i) an officer of the Employer if
his Top Heavy Compensation exceeded 50% of the B Limit described
in the next sentence, (ii) the owner of an ownership
<PAGE> 8
interest in the Employer which is at least 1/2% and one of the ten largest
ownership interests if his Top Heavy Compensation exceeded the C Limit
described in the next sentence, (iii) a 5% owner of the Employer, or
(iv) a 1% owner of the Employer if his Top Heavy Compensation exceeded
$150,000, and the beneficiaries of any such employee or former employee,
all as defined and determined under Section 416(i) of the Internal Revenue
Code. For purposes of the foregoing: (i) ownership shall include
constructive ownership within the meaning of Section 318 of the Internal
Revenue Code (applied by substituting 5% for 50% in Section 318(a)(2)(C)) and
similar principles in connection with non-corporate Employers, (ii) Top Heavy
Compensation shall include compensation for the relevant plan year from the
Employer and any other members of an Employer Group including the Employer,
and (iii) the B or C Limit shall mean the dollar limit under Section
415(b)(1)(A) or (c)(1)(A), respectively, of the Internal Revenue Code for
the calendar year in which the relevant plan year ends.
Non-Key Employee - Any employee or former employee of an
Employer who is not a Key Employee, and the beneficiaries of any such
individual.
Permissive Aggregation Group - A group of Retirement
Plans of an Employer Group consisting of: (i) each plan which is a part of
a Required Aggregation Group, plus (ii) each plan voluntarily included by
the Employer Group, provided that, with such inclusion, the group (as a group)
meets the requirements of Sections 401(a)(4) and 410 of the Internal Revenue
Code.
Required Aggregation Group - A group of one or more
Retirement Plans of an Employer Group consisting of: (i) each plan (whether
or not terminated) in which a Key Employee has participated at any time
during the Determination Period, and (ii) each other plan which, at any time
during the Determination Period, enables a plan described in (i) to meet the
requirements of Section 401(a)(4) or 410 of the Internal Revenue Code.
Retirement Plan - This Plan and any other defined
benefit or defined contribution retirement plan, annuity contract, or
simplified employee pension plan, as those terms are defined for purposes of
Sections 401, 403(a) and 408(k) of the Internal Revenue Code.
Super Top Heavy Plan - A Retirement Plan which would be a
Top Heavy Plan if 90% were substituted for 60% in each place it appears in
the definition thereof.
Top Heavy Compensation - Remuneration from the Company
for the relevant plan year.
Top Heavy Plan- A Retirement Plan which, as of a
Determination Date: (i) is a plan in which the Top Heavy Ratio exceeds 60%,
or (ii) is a plan which (even though its own Top Heavy Ratio may not exceed
60%) is a member of a Required Aggregation Group in which the Top Heavy Ratio
exceeds 60%, but (iii) is not a plan which (even though its own Top Heavy
Ratio may exceed 60%) is a member of a Required or Permissive Aggregation
Group in which the Top Heavy Ratio does not exceed 60%; provided, however,
that in no event shall a Retirement Plan be deemed to be a Top Heavy Plan
with respect to any plan year beginning before 1984.
Top Heavy Ratio - The ratio, as determined pursuant to
Section 416(g) of the Internal Revenue Code and Treas. Regs. Section 1.416-1,
of the aggregate amount of the Cumulative Benefits of the Key Employees to the
aggregate amount of the Cumulative Benefits of the Key Employees and the
Non-Key Employees other than Former Key Employees. The ratio shall be
computed without regard to the Cumulative Benefit of any individual who has
not been credited with at least one Hour of Service, by the Employer or any
member of an Employer Group which includes the Employer, at any time during
the five year period ending on the Determination Date.
(b) Operative Provisions - The following Plan provisions
shall become operative in the event the Plan is or becomes a Top Heavy Plan:
(i) Annual Addition Limits - Section 6.8(c)(ii).
<PAGE> 9
(ii) Minimum Vesting - Section 7.4(c).
(iii) Minimum Contributions - Section 6.1(d).
ARTICLE III
Eligibility and Participation
3.1 Requirements - Subject to Section 1.3, every individual
included under the prior provisions of the Plan as of the Effective Date
shall continue to participate in accordance with the provisions of this
Amending Restatement. On or after the Effective Date, every other Covered
Employee shall become a Participant on the first Entry Date occurring on or
after the date he has completed one Year of Service and attained the age of
21. No individual shall become a Participant, however, if he is not a
Covered Employee on the date his participation is to begin. An Employee
who is not, but subsequently becomes, a Covered Employee, shall become a
Participant on the later of: (i) the date he becomes a Covered Employee, or
(ii) the date he first meets the requirements of this Section 3.1.
3.2 Re-employment - If an Employee or Participant whose employment
with the Employer Group is terminated is subsequently re-employed, his status
with respect to the Plan shall be governed by the following:
(a) Eligibility - If the re-employed Employee was not a
Participant prior to his termination of employment, he shall become a
Participant in accordance with the provisions of Section 3.1. If he was
a Participant prior to such termination, or if he would have become a
Participant pursuant to Section 3.1 but for the fact that he was not a
Covered Employee on what would have been his Entry Date, his participation
shall commence immediately upon the resumption of his status as a Covered
Employee.
(b) Vesting - The re-employed Employee shall receive credit
for all Years of Service for purposes of determining the vested percentage
in his Accrued Benefit, except that, if the termination of employment
included five consecutive Breaks in Service, then any Years of Service
completed after the Breaks in Service shall be disregarded for purposes of
determining the vested percentage of any Accrued Benefit to which the
Participant may have been entitled with respect to the period before the
Breaks in Service.
(c) Separate Accounting - If a re-employed Participant has
an undistributed Accrued Benefit with respect to the period both before and
after the termination of employment, separate accounting shall be maintained
for each such portion of his Accrued Benefit if, and so long as, the
Participant is not fully vested, and (i) the termination of employment
amounted to five consecutive Breaks in Service, or (ii) separate accounting
is required by Section 8.5.
(d) Benefit Payments - If, at the time of his re-employment,
the Participant is receiving benefits under the Plan, such benefits shall
continue without regard to the benefits accrued with respect to the
Participant's subsequent employment. If, however, the Participant is
re-employed prior to his Benefit Commencement Date, he shall cease to be
entitled to such benefits, all benefit elections made by him are
automatically revoked, and the Plan's distribution provisions shall apply
upon his subsequent retirement, disability, death or other termination of
employment.
(e) Restoration of Forfeiture - If the re-employed
Participant: (i) was less than 100% vested in his Accrued Benefit
when he terminated employment, (ii) received the vested portion,
if any, of his Accrued Benefit not later than the end of the second
Plan Year following the Plan Year of his termination of employment,
(iii) resumes his status as a Covered Employee, and (iv) before the
earlier of the fifth anniversary of such resumption or the occurrence,
following the distribution, of five consecutive Breaks in Service,
repays to the Plan the full amount of the distribution, if any, then,
as of the date of such repayment, the full amount of the forfeiture
which occurred pursuant to Section 8.5 (unadjusted for gains or losses
in the interim) shall be restored to his Accrued Benefit. If the
<PAGE> 10
Participant had no vested interest in his Accrued Benefit (other than his
Non-Deductible Contributions Account), the restoration shall be made as of
the date of resumption of status as a Covered Employee, but only if such
resumption occurs before the Participant has incurred five consecutive Breaks
in Service. Notwithstanding any other Plan provisions regarding utilization
of forfeitures, the restored forfeiture shall be derived from forfeitures
arising in the Plan Year in which the restoration occurs. However, the
Company may, and in the absence of available forfeitures as aforesaid shall,
make a separate contribution to the Plan for the purpose of restoring the
forfeiture, which separate contribution shall be made not later than the end
of the Plan Year following the Plan Year in which the repayment or resumption
(as the case may be) by the Participant occurred. Neither the repayment nor
the restoration shall be deemed to be Annual Additions for purposes of
Section 6.8.
3.3 Change of Employment Category - During any period in which a
Participant remains in the employ of the Employer Group but ceases to be a
Covered Employee, he will continue his Plan participation and shall continue
to accrue credit for Years of Service for purposes of vesting and eligibility
for contributions, but he shall not receive any allocation of, or be
permitted to make, contributions based upon Compensation paid during such
period.
3.4 Waiver of Participation - The Company may grant a waiver of
participation to any Employee who so requests. Whether or not such waiver
shall be granted, and the terms and conditions (including duration) thereof,
shall be in the sole discretion of the Company.
3.5 Leased Employees - To the extent required by the Internal
Revenue Code, any Leased Employee, who is not an Excluded Leased Employee,
shall be treated as an Employee of the Recipient. For this purpose:
(a) "Leased Employee" shall mean any individual who, pursuant
to an agreement between the Recipient and a Leasing Organization, has
directly or indirectly performed services for the Recipient, other than as
a common-law employee of the Recipient, on a substantially full time basis
for a period of at least one year, which services are of a type historically
performed by employees in the business field of the Recipient;
(b) "Recipient" shall mean any member of the Employer Group
(or any person related thereto pursuant to Section 414(n)(6)(A) of the
Internal Revenue Code);
(c) "Leasing Organization" shall mean the actual employer of
the Leased Employee (or any person aggregated with the actual employer
pursuant to Section 414(b), (c), (m) or (o) of the Internal Revenue Code);
(d) "Excluded Leased Employee" shall mean: (i) any
individual whose services to the Recipient fall within a regulatory exception
relating to the fact that the services require substantial operating assets
owned by the individual and/or his spouse, or (ii) any Leased Employee who is
not a participant in, and has no accrued benefit under, any qualified plan of
the Recipient, but who is covered by a Safe Harbor Plan, except that the
participation of the Leased Employee in such pension plan will cause the
Leased Employee to be an Excluded Leased Employee only if: (A) such
participation is not relied on by any plan of the Recipient to meet the
requirements of Section 410(b) of the Internal Revenue Code, and (B) Leased
Employees (including Excluded Leased Employees) constitute less than 20% of
the Recipient's non-Highly-Compensated workforce (within the meaning of
Section 414(n)(5) of the Internal Revenue Code; and
(e) "Safe Harbor Plan" shall mean a qualified money purchase
plan of the Leasing Organization which meets the requirements of Section
414(n)(5) of the Internal Revenue Code and the regulations promulgated
thereunder, including (so long as is required thereby): (i) immediate
participation, (ii) full and immediate vesting, and (iii) a non-integrated
employer contribution rate of at least 10% of compensation as defined for
purposes of Section 415(c)(3) of the Internal Revenue Code but including any
amount that would have qualified as such compensation but for the fact that
it constitutes salary reduction under any plan described in Section 125,
402(e)(3), 402(h)(1)(B), 403(b), 414(h)(2) or 457(b) of the Internal Revenue
Code.
<PAGE> 11
ARTICLE IV
Hours and Years of Service
4.1 Credit for Years of Service - A Participant will receive
credit for all Years of Service, except as otherwise provided in ARTICLE III.
4.2 Leaves of Absence -
(a) General - Employment shall not be deemed to have
terminated though it is interrupted by a temporary absence from active
service by reason of: (i) a Leave of Absence granted by the Company on
account of vacation, holiday, illness, incapacity (including disability),
layoff or jury duty, (ii) a Leave of Absence required by law or granted by
the Company on account of service in the Armed Forces of the United States,
(iii) any other Leave of Absence during which the individual remains in
active pay status (irrespective of whether the employment relationship has
terminated), or (iv) any other Leave of Absence, extending for not more than
two years, under conditions which are not treated by the Company as a
termination of employment. If any Participant on Leave of Absence fails to
answer an inquiry by the Company as to the status of the Leave of Absence, or
if the Company is not notified of the death or disability of such Participant,
and the Company has no actual knowledge thereof, the Company may determine
that the Leave of Absence had or has expired.
Hours of Service with respect to a Leave of Absence will
be credited pursuant to the following:
(i) Unless excluded by ARTICLE III, Hours of Service
will be credited for the customary period of work during a Leave of Absence,
whether paid or unpaid.
(ii) Notwithstanding the foregoing, no Hours of
Service will be credited during an unpaid Leave of Absence for military
service, except to the extent required by law.
(iii) Notwithstanding the foregoing, not more than 501
Hours of Service shall be credited on account of any single continuous period
during which an individual performs no duties, except that he shall be
credited with an Hour of Service without regard to this limit for each hour:
(A) during a paid Leave of Absence, provided that he returns to active
service upon the expiration thereof, or (B) of paid sick leave (regardless of
whether he is paid directly by the Company or through Company-financed wage
continuation insurance), other than where payments are made solely for the
purpose of complying with workmen's compensation, unemployment insurance or
disability insurance laws.
(b) Maternity/Paternity Absences - Without regard to whether
an absence described herein is treated as a Leave of Absence pursuant to
Section 4.2(a), the hours occurring during an absence, whether paid or
unpaid, by reason of the pregnancy of a Participant, the birth to or
adoption by a Participant of a child, or the care of such child immediately
following such birth or adoption, shall, to the extent set forth herein, be
utilized toward prevention of a Break in Service. Said hours (whether or not
they would have been, and notwithstanding any contrary crediting provisions
in the definition of, Hours of Service) shall: (i) be credited for the sole
purpose of preventing a Break in Service; (ii) be credited at the rate per
normal working day of eight hours or such other number of hours as would
normally have been credited to the Participant but for such absence, but in
no event to exceed 501 hours with respect to any such absence; and (iii) be
credited for (and only for) the Plan Year following that in which the absence
began, or, if to do so would prevent a Break in Service, instead be credited
for (and only for) the Plan Year during which the absence began.
4.3 Predecessor and Related Employers - Subject to any special
provisions set forth in Section 14.10 with respect to specific employers,
service with employers other than the Company shall be credited in accordance
with the following:
<PAGE> 12
(a) Service with Legg & Co. and its predecessor partnerships,
service with Mason & Company, Inc., and service with Wood Walker & Company
and its predecessors shall be included for all periods during which the
individual was not a partner in any of the partnerships, but no Break in
Service will be deemed to have occurred during any period in which the
individual was a partner in any of the aforesaid partnerships.
(b) Subject to the remainder of this Section 4.3, credit for
Years of Service and Hours of Service accrued in connection with employment
by employers who have adopted the Plan shall be determined in accordance with
Section 14.4.
(c) Except as the Sponsor shall otherwise determine, credit
shall not be given for Years of Service and Hours of Service accrued in
connection with employment by an employer prior to its adoption of the Plan.
(d) Except as the Sponsor shall otherwise determine, a
Participant who is transferred from the Company to any employer shall not
be deemed to have terminated employment, and shall continue to receive credit
for Years of Service and Hours of Service for vesting purposes, so long as he
continues employment with such other employer and such other employer is a
Related Employer.
(e) Notwithstanding the foregoing, to the extent required by
the Internal Revenue Code or ERISA, credit shall be given for Years of
Service and Hours of Service accrued in connection with employment with
Related Employers.
4.4 Credit for Hours of Service - Hours of Service for all
part-time employees will be credited based upon the relevant payroll records
maintained by the Company. However, any full-time Employee shall be deemed
to have worked, and will receive credit for, 45 Hours of Service for any week
in which he would be credited with any Hours of Service if his hours were
directly recorded.
ARTICLE V
Contributions
5.1 Company Contributions - Company contributions to the Plan
shall be made as follows:
(a) Matching Company Contributions -
(i) Amount of Contributions - As of each Valuation
Date, the Company shall contribute to the Plan, on behalf of each eligible
Participant, an amount equal to a percentage of the Participant's Section
5.2(a) deferral contributions to the Plan for the Plan Year ending on the
day preceding the Valuation Date. The percentage shall be determined as
follows:
Range of Compensation Matching Contribution
for the Plan Year Percentage
0 - $20,000 50%
$20,001 - $30,000 35%
$30,001 - $40,000 20%
$40,001 or more 0%
However, the matching Company contributions shall be based only on the
eligible Participant's Section 5.2(a) deferral contributions which do not
exceed 5% of his Compensation for the Plan Year.
(ii) Eligible Participants - Subject to
Section 3.3, eligible Participants entitled to a contribution
pursuant to this Section 5.1(a) as of the Valuation Date, as
aforesaid, shall consist of all Participants
<PAGE> 13
on whose behalf deferral contributions were made pursuant to
Section 5.2(a) for the Plan Year ending on the day preceding the Valuation
Date, except that no matching Company contribution shall be made on behalf of
any such Participant who was not in the employ of the Company on the last day
of the Plan Year.
Additionally, if the failure to treat Terminated Participants
as eligible Participants would cause the Plan to fail to meet the coverage or
participation requirements of Section 410(b) or 401(a)(26) of the Internal
Revenue Code for the Plan Year, then all Terminated Participants shall be
deemed to be eligible Participants for the Plan Year. Solely for this
purpose, Terminated Participants shall be defined as all Participants who
terminated employment with the Employer Group during the Plan Year, after
having completed more than 500 Hours of Service during the Plan Year, and
who were not in the employ of the Employer Group on the last day of the Plan
Year.
(iii) Limitations - Notwithstanding the foregoing, the
Company shall limit the contributions made pursuant to this Section 5.1(a) on
behalf of any Participant who is a Highly-Compensated Employee for any Plan
Year, to the extent necessary to assure that, in accordance with the tests
set forth in Section 401(m)(2)(A) of the Internal Revenue Code, and subject
to all applicable regulations issued by, or other requirements of, the
Internal Revenue Service, the contribution percentage for the eligible
Highly-Compensated Participants is either: (i) not more than 1.25 times
the contribution percentage for all other eligible Participants, or
(ii) subject to Section 5.2(a)(ii)(C), not more than two times, and not
more than two percentage points in excess of, the contribution percentage
for all other eligible Participants. Subject to Section 5.1(c), any Section
5.1(a) contributions in excess of the applicable limit (determined after
first determining excess compensation deferrals pursuant to Section
5.2(a)(ii)(B) and then determining excess compensation deferrals pursuant
to Section 5.2(a)(ii)(A)), plus or minus (as the case may be) any Trust
income or loss allocable thereto (determined in accordance with the
principles set forth in Section 5.2(a)(ii)(A)(6)), shall be distributed
(after designation by the Company as a distribution of excess contributions)
to the Participants on whose behalf the contributions were made, no earlier
than the first day after, and no later than twelve months after, the end of
the Plan Year for which they were made.<F1> For this purpose:
(A) The contribution percentage for any
Participant shall be the ratio (calculated to the nearest .0001) of his
matching Company contributions (including forfeitures) for the Plan Year
to his Remuneration for the period described below (but subject to the
Compensation Limit), and the contribution percentage of the
Highly-Compensated group or the remaining group, as the case may be,
shall be the average of the ratios separately calculated for each eligible
Participant in the group. The excess contribution of each Highly-Compensated
Participant shall be determined by allocating the total excess contributions
among the members of the Highly-Compensated group based upon the magnitude of
their respective contribution percentages, such that no member of the group
shall be deemed to have an excess contribution until his contribution
percentage is no lower than the net contribution percentage, after reduction
by an allocable share of excess contributions, of each other member of the
group. So long as the elections are applied uniformly to each eligible
Participant, the Company may elect, with respect to any Plan Year (and
different elections may be made with respect to any other Plan Year) to:
(i) calculate Remuneration on the basis of either the Plan Year or the
calendar year ending within the Plan Year, and (ii) limit the Remuneration
taken into account for each Participant for the Plan Year or calendar year
(as the case may be) to the Remuneration attributable to the portion of the
Plan Year or calendar year during which he was an eligible Participant.
(B) In determining the contribution percentage
for any employee: (i) if the Plan satisfies the requirements of Section
410(b) of the Internal Revenue Code only if aggregated with one or more other
plans, or if this Plan is actually aggregated with one or more other plans
for such purpose (other than for purposes of the average benefits test), his
contribution percentage shall be determined as if all such plans were a
single plan; and (ii) if he is a Highly-Compensated Employee who is eligible
for matching employer contributions under more than one 401(a) plan or 401(k)
cash or deferred arrangement maintained by the Employer Group, then (unless
the plans may not be aggregated for purposes of Section 410(b) of the
Internal Revenue Code), the total of such matching employer contributions
for the Plan Year (or, in the case of any other plan or arrangement having a
_______________
[FN]
<F1> If such excess amounts are distributed more than 2-1/2 months after the
lst day of the Plan Year in which they arose, Section 4979 of the
Internal Revenue Code imposes a 10% excise tax on the Company with
respect to such amounts.
</FN>
<PAGE> 14
different plan year, for the calendar year ending with or within the Plan
Year of this Plan) shall be deemed to have been made under each such plan
or arrangement.
(C) If any Participant is a Highly-Compensated
Employee because he is a 5% owner, or if any Participant who is a
Highly-Compensated Employee is one of the top ten Highly-Compensated
Employees when ranked on the basis of Remuneration paid by the Employer
Group, and in either case such Participant is a member of a family group
consisting of the Participant, his spouse and his lineal ascendants and
descendants and their spouses, all eligible members of the family group shall
be treated as a single Highly-Compensated Employee, and all members who are
not Highly-Compensated shall be disregarded in calculating the contribution
percentage of the non-Highly-Compensated group. The contribution percentage
of the deemed single Highly-Compensated Employee shall be the combined
contribution percentage of all eligible family members. Excess contributions
attributable to the family group shall be allocated among the members of the
group in the proportion that the matching Company contribution of each member
of the group bears to the aggregate matching Company contributions of all of
the members of the group.
(D) In determining each Participant's
contribution percentage, as well as his excess contributions and the Trust
income or loss allocable thereto, his matching Company contributions:
(i) shall be deemed (if so elected by the Company) to include any
contributions which qualify for inclusion pursuant to Section 401(m)(3) of
the Internal Revenue Code (provided that Section 5.2 compensation deferrals
may be included only if the Section 5.2(a)(ii)(A) test is met with or without
such deferrals), but (ii) shall be deemed to exclude any matching Company
contributions taken into account in determining the actual deferral
percentage pursuant to Section 5.2(a)(ii)(A). The distribution of each
Participant's excess contributions, and the Trust income allocable thereto,
shall be charged against his Immediate Vest Company Contributions Account and
each of his other Accounts attributable to contributions included as matching
Company contributions as aforesaid, in proportion to his contributions in
each such category for the Plan Year in which the excess was created.
(E) The Company shall maintain records adequate
to demonstrate compliance with the requirements described in this Section
5.1(a)(iii).
(b) Discretionary Contributions - Subject to the minimum
contribution requirements described in Section 6.1(d), the Company shall
contribute, with respect to any Plan Year for which the Company determines
that a contribution shall be made pursuant to this Section 5.1(b), such
amount as shall be determined by the Company.
(c) 401(k)/(m) Test Deficiency Contributions - In lieu of
the distribution of excess contributions as contemplated by Sections
5.1(a)(iii) and/or 5.2(a)(ii)(A), the Company may, in its discretion,
contribute to the Plan an amount sufficient to cause the Plan to satisfy
the tests described in Section 401(k)(3)(A) or 401(m)(2)(A), as the case
may be, of the Internal Revenue Code for any Plan Year as to which either
or both of said tests would not otherwise be met.
(d) Payment - All Company contributions made pursuant to
Section 5.1 for any Plan Year shall become due on the last day in such Plan
Year, unless actually paid prior thereto, and shall be paid to the Trustees
not later than the first to occur of: (i) the due date (including
extensions) of the Company's federal income tax return for the taxable year
within which the Plan Year ends, or (ii) twelve months after the last day of
the Plan Year (except that this clause (ii) shall not apply to Section 5.1(b)
contributions).
5.2 Compensation Deferrals - Participants shall be permitted to
make elective compensation deferrals in accordance with rules and procedures
established by the Company, and in accordance with the following:
(a) Amount of Deferrals -
(i) Available for Election - Any Participant may
elect to defer, in the form of Company contributions to the Plan on his
behalf, Compensation that would otherwise have been paid to him, provided
that such amount is not less than 1% of his Compensation for the Plan Year,
and does not exceed the least of: (i) 15%, or such other percentage of his
Compensation for the Plan Year as may be established by the Company
<PAGE> 15
with respect to the Plan Year, (ii) the maximum percentage which is
estimated to permit at least one of the tests set forth in section
401(k)(3) of the Internal Revenue Code to be met, or (iii) the maximum
amount which is estimated to allow the Annual Additions to the Participant's
Accrued Benefit for the Plan Year to remain within the limits specified in
Section 6.8.
Solely for purposes of this Section 5.2(a)(i),
Compensation paid to a Participant prior to the Entry Date on which he became
a Participant, or, if later, the Entry Date following his 21st birthday,
shall not be eligible for deferral.
(ii) Limitations - Notwithstanding the foregoing:
(A) The amount which may be deferred by any
Participant who is a Highly-Compensated Employee for any Plan Year shall be
limited to the extent necessary to assure that, in accordance with the
tests set forth in Section 401(k)(3)(A) of the Internal Revenue Code, and
subject to all applicable regulations issued by, or other requirements of,
the Internal Revenue Service, the actual deferral percentage for the eligible
Highly-Compensated Participants is either: (i) not more than 1.25 times the
actual deferral percentage for all other eligible Participants, or (ii)
subject to Section 5.2(a)(ii)(C), not more than two times, and not more than
two percentage points in excess of, the actual deferral percentage for all
other eligible Participants. Subject to Section 5.1(c), any compensation
deferrals in excess of the applicable limit (after first determining excess
deferrals pursuant to Section 5.2(a)(ii)(B)), plus or minus (as the case may
be) any Trust income or loss allocable thereto, shall be distributed (after
designation by the Company as a distribution of excess compensation deferrals)
to the Participants on whose behalf they were made (in proportion to the
excess deferrals allocated to each), no earlier than the first day after,
and no later than twelve months after, the end of the Plan Year to which they
are attributable.<F2> For this purpose:
(1) The actual deferral percentage for
any Participant is the ratio (calculated to the nearest .0001) of his
compensation deferrals for the Plan Year to his Remuneration for the period
described below (but subject to the Compensation Limit), and the actual
deferral percentage of the Highly-Compensated group or the remaining group,
as the case may be, shall be the average of the ratios separately calculated
for each Participant in the group. The excess deferral of each
Highly-Compensated Participant shall be determined by allocating the total
excess deferrals among the members of the Highly-Compensated group based upon
the magnitude of their respective actual deferral percentages, such that no
member of the group shall be deemed to have an excess deferral until his
actual deferral percentage is no lower than the net deferral percentage,
after reduction by an allocable share of excess deferrals, of each other
member of the group. So long as the elections are applied uniformly to each
eligible Participant, the Company may elect, with respect to any Plan Year
(and different elections may be made with respect to any other Plan Year),
to: (i) calculate Remuneration on the basis of either the Plan Year or the
calendar year ending within the Plan Year, and (ii) limit the Remuneration
taken into account for each Participant for the Plan Year or calendar year
(as the case may be) to the Remuneration attributable to the portion of the
Plan Year or calendar year during which he was an eligible Participant.
(2) In determining the actual deferral
percentage for any employee: (i) if the Plan satisfies the requirements of
Section 410(b) of the Internal Revenue Code only if aggregated with one or
more other plans, or if this Plan is actually aggregated with one or more
other plans for such purpose (other than for purposes of the average benefits
test), his deferral percentage shall be determined as if all such plans were
a single plan; and (ii) if he is a Highly-Compensated Employee who is
eligible for more than one 401(k) cash or deferred arrangement maintained
by the Employer Group, then (unless the plans may not be aggregated for
purposes of Section 410(b) of the Internal Revenue Code), all of his elective
compensation deferrals made during the Plan Year (or, in the case of any
other arrangement having a different plan year, during the calendar year
ending with or within the Plan Year of this Plan) shall be deemed to have
been made under each such arrangement.
_______________
[FN]
<F2> If such excess amaounts are distributed more than 2-1/2 months after
the last day of the plan Year in which they arose, Section 4979 of the
Internal Revenue Code imposes a 10% excise tax on the Company with
respect to such amounts.
</FN>
<PAGE> 16
(3) If any Participant is a
Highly-Compensated Employee because he is a 5% owner, or if any Participant
who is a Highly-Compensated Employee is one of the top ten Highly-Compensated
Employees when ranked on the basis of Remuneration paid by the Employer Group,
and in either case such Participant is a member of a family group consisting
of the Participant, his spouse and his lineal ascendants and descendants and
their spouses, all eligible members of the family group shall be treated as a
single Highly-Compensated Employee, and all members who are not
Highly-Compensated shall be disregarded in calculating the actual deferral
percentage of the non-Highly-Compensated group. The actual deferral
percentage of the deemed single Highly-Compensated Employee shall be the
combined actual deferral percentage of all eligible family members. Excess
deferrals attributable to the family group shall be allocated among the
members of the group in the proportion that the compensation deferral
(including any other Company contributions treated as compensation deferrals
in accordance with Section 5.2(a)(ii)(A)(4)) of each member of the group
bears to the aggregate compensation deferrals of all of the members of the
group.
(4) In determining each Participant's
actual deferral percentage, as well as his excess deferrals and the Trust
income or loss allocable thereto, his compensation deferrals: (i) shall be
deemed (if so elected by the Company) to include any other Company
contributions which qualify for inclusion pursuant to Section 401(k)(3)(D) of
the Internal Revenue Code, but (ii) shall be deemed to exclude any
compensation deferrals taken into account in determining the contribution
percentage pursuant to Section 5.1(a)(iii) (provided this Section
5.2(a)(ii)(A) test is met with or without such compensation deferrals).
Each Participant's excess deferrals, and the Trust income allocable thereto,
shall be distributed from his Accrued Benefit as follows: (i) first, from
his Compensation Deferral Account, and (ii) thereafter from the Participant's
Immediate Vest Company Contributions Account.
(5) In determining the actual deferral
percentage of any Participant who is a non-Highly-Compensated Employee, his
compensation deferrals (to this Plan or any other plan of the Employer Group)
shall be disregarded to the extent that they constitute excess deferrals for
purposes of Section 5.2(a)(ii)(B). In determining the actual deferral
percentage of any Participant, whether or not he is a Highly-Compensated
Employee, his compensation deferrals (to this or any other plan of the
Employer Group) shall be disregarded to the extent that they are distributed
to the Participant pursuant to Section 6.8(b) to correct an excess Annual
Addition. Deferrals disregarded pursuant to this Section 5.2(a)(ii)(5) shall
not be disregarded for purposes of allocating Trust income or losses to
excess deferrals pursuant to Section 5.2(a)(ii)(6).
(6) The Trust income or loss allocable to
an excess deferral shall be an amount equal to the Applicable Year Amount
plus or minus (as the case may be) the Distribution Period Amount. The
Applicable Year is the Plan Year during which the excess deferral arose, and
the Applicable Year Amount shall be determined either: (i) by multiplying
the net earnings or losses for the Applicable Year (as calculated for
purposes of Section 6.2) allocable to the Account or Accounts containing the
excess compensation deferrals by a fraction, the numerator of which is the
excess deferral, and the denominator of which is the sum of the balances in
said Accounts as of the beginning of the Applicable Year plus the
Participant's compensation deferrals for the Applicable Year (including
any other Company contributions treated as compensation deferrals in
accordance in Section 5.2(a)(ii)(A)(4)), or (ii) by any other
non-discriminatory (within the meaning of Section 401(a)(4) of the Internal
Revenue Code) method that is used consistently for all excess deferral
distributions for all Participants with respect to the Applicable Year,
and is actually used to allocate net earnings or losses for purposes of
Section 6.2 for the Applicable Year. The Distribution Period is the period
beginning on the day following the Applicable Year and ending on the last
day of the month preceding the date of distribution of the excess deferral,
and the Distribution Period Amount shall be determined in accordance with the
preceding sentence (but substituting "Distribution Period" for "Applicable
Year" in each place it appears); provided, however, that if the Applicable
Year Amount is calculated pursuant to clause (i) of the preceding sentence,
the Distribution Period Amount may, in the sole discretion of the Company,
be calculated to be an amount determined by multiplying 10% of the Applicable
Year Amount by the number of full calendar months during the Distribution
Period (treating any excess deferral distribution occurring before the 16th
day of the month as having occurred on the last day of the preceding month
and any distribution occurring after the 15th day of the month as having
occurred on the first day of the next month).
(7) The amount of any excess deferrals
to be distributed pursuant to this Section 5.2(a)(ii)(A) with respect
to a Participant for a Plan Year shall be reduced by any excess
<PAGE> 17
deferrals previously distributed to the Participant pursuant to Section
5.2(a)(ii)(B) for the calendar year ending within the Plan Year.
(B) The amount which may be deferred by any
Participant shall be limited to the extent necessary to assure that the
Participant's total deferrals in any calendar year, to this Plan or any
other plan maintained by the Employer Group, do not exceed $7,000.00
(adjusted for C/L Increases). If the aforesaid limit is exceeded, the
Company shall be deemed to have been so notified by the Participant and shall
distribute to the Participant, not later than the April 15 following the
calendar year to which the deferral is attributable, any deferral in excess
of the limit, net of any Trust income or loss allocable thereto (determined
in accordance with Section 5.2(a)(ii)(A)(6) on a calendar year basis and
taking into account only compensation deferrals which constitute excess
deferrals hereunder). The Company shall also distribute to the Participant
any deferrals, plus or minus (as the case may be) any Trust income or loss
allocable thereto, which the Participant has advised the Company (in writing
prior to March 15) constitute excess deferrals because of elective deferrals
on behalf of the Participant during the preceding calendar year under any
other plans or arrangements described in Sections 401(k), 402(h)(1)(B),
403(b), 457 or 501(c)(18) of the Internal Revenue Code. An excess deferral
distribution pursuant to this Section 5.2(ii)(B) may be made prior to the end
of the calendar year to which the deferral is attributable only if it is made
after the excess deferral has been received by the Plan, and only if the Plan
designates the distribution as an excess deferral distribution. The amount
of any excess deferrals to be distributed pursuant to this Section
5.2(a)(ii)(B) with respect to a Participant for a calendar year shall be
reduced: (i) by any excess deferrals previously distributed to the
Participant pursuant to Section 5.2(a)(ii)(A) for the Plan Year beginning
within the calendar year, and (ii) by any compensation deferrals previously
distributed to the Participant pursuant to Section 6.8(b) to correct an
excess Annual Addition for the Limitation Year beginning within the calendar
year. Any reference in the Plan to a calendar year, in connection with the
limitation described in this Section 5.2(a)(ii)(B), shall mean the taxable
year of any Participant whose taxable year is not the calendar year.
(C) If one or more Highly-Compensated Employees
are eligible for: (a) elective compensation deferrals, and (b) matching
employer contributions and/or after-tax employee contributions, under this
Plan and/or any other plan maintained by the Employer Group, and if the 125%
portion of both the limitation referred to in Section 401(k)(3)(A) of the
Internal Revenue Code (the "K Limit") and the limitation referred to in
Section 401(m)(2)(A) of the Internal Revenue Code (the "M Limit") have been
exceeded, the following alternate limitation shall apply in lieu of the two
times/two percentage points portion of the K Limit and the M Limit: the sum
of the contribution percentage of the Highly-Compensated Employees subject to
the M Limit and the actual deferral percentage of the Highly-Compensated
Employees subject to the K Limit may not exceed the greater of Sum A or Sum
B. Sum A is the sum of: (i) 125% of the greater of the contribution
percentage of the non-Highly-Compensated Employees subject to the M Limit
(the "M-NHC Percentage") or the actual deferral percentage of the
non-Highly-Compensated Employees subject to the K Limit (the "K-NHC
Percentage"), and (ii) two percentage points over, but not more than two
times, the lesser of the M-NHC Percentage or the K-NHC Percentage. Sum B is
the sum of: (i) 125% of the lesser of the M-NHC Percentage or the K-NHC
Percentage, and (ii) two percentage points over, but not more than two
times, the greater of the M-NHC Percentage or the K-NHC Percentage. If the
Plan Year for which the M Limit is calculated does not coincide with the
Plan Year for which the K Limit is calculated, the M Limit for the Plan
Year beginning within the Plan Year for the K Limit shall be utilized. If
the alternate limitation described in this Section 5.2(a)(ii)(C) is exceeded,
the Plan (and thereafter, if necessary, all other applicable plans) shall be
brought into compliance either by making additional Company contributions
pursuant to Section 5.1(c) that qualify for inclusion pursuant to Section
401(k)(3)(D) of the Internal Revenue Code, or by reducing the contribution
percentage of the Highly-Compensated Employees subject to both the M Limit
and the K Limit in the manner described in Section 5.1(a)(iii).
(D) Notwithstanding any other provision of the
Plan to the contrary, in the event of a corrective distribution of excess
compensation deferrals pursuant to Section 5.2(a)(ii)(A), (B) or (C), any
matching Company contribution otherwise allocable to the Participant for the
Plan Year by reason of the excess compensation deferrals shall not be made,
or, if already made, the contribution shall be forfeited (regardless of
whether or not vested pursuant to Section 7.4) and treated in accordance
with Section 7.4 as of the last day of the Plan Year for which the
contribution was made.
<PAGE> 18
(E) The Company shall maintain records adequate
to demonstrate compliance with this Section 5.2(a)(iii).
(b) Contribution Procedures -
(i) Payment of Contributions - Deferral contributions
may, but need not, be made through regular payroll deductions. The deferral
contributions shall be deducted by the Company from the pay of the
contributing Participants, and, within the time limits described in Section
5.2(b)(ii), shall be paid by the Company to the Trustees and credited to the
Compensation Deferral Accounts of the contributing Participants.
The Company may establish procedural rules for the
administration of a payroll deduction system, including limitations on the
permitted frequency (not less than once in each Plan Year) of, and minimum
notice periods for, commencement, changes, suspensions and terminations of
payroll deductions by Participants.
Any FICA or other payroll tax which may be imposed on
the Participant with respect to matched deferral contributions shall, unless
otherwise determined by the Company, be deducted from the non-deferred
remainder of the Participant's remuneration.
(ii) Transfer and Crediting of Contributions - All
deferral contributions for a Plan Year shall be paid by the Company to the
Trustees within an administratively reasonable period of time (not to exceed
90 days) after the date on which the amounts being deferred would otherwise
have been paid to the contributing Participants. The foregoing time limit is
set forth solely to reflect the relevant provision of ERISA (the plan asset
rules), and shall not create any obligations or standards in addition to or
in substitution of those set forth in said Act. In no event, however, shall
the deferral contributions be paid to the Trustees later than the last date
described in Section 5.1(d).
The deferral contributions shall be credited to
the Compensation Deferral Accounts of the contributing Participants as of
the first to occur of: (i) the date of payment to the Trustees, or (ii) the
last day of the Plan Year to which the contributions relate. A contribution
will be deemed to relate to a Plan Year if it represents a deferral of
Compensation that would have been received by the contributing Participant
during the Plan Year but for his election to defer.
(c) Compensation Deferral Accounts - There shall be
established and maintained a separate Compensation Deferral Account in the
name of each Participant, which shall be fully vested at all times, and to
which shall be credited or charged: (a) his deferral contributions,
(b) withdrawals thereof, and (c) any income, expenses, gains or losses
(whether or not realized, based upon fair market value of invested assets)
attributable or allocable thereto. Notwithstanding any provisions to the
contrary which may be set forth in Section 6.2 or 6.4, the Trustees shall
have the discretion to allocate income, expenses, gains or losses of the
Trust among the Compensation Deferral Accounts pursuant to such allocation
rules as the Trustees deem to be reasonable and administratively practicable.
The Company may, but shall not be required to, direct the Trustees to invest
any Participant's Compensation Deferral Account separately or in a different
manner from the investment of the balance of the Trust.
5.3 Rollovers and Inter-Plan Transfers - With the consent of the
Company: (i) a Covered Employee may pay over to the Trust any amount which
constitutes a rollover; and (ii) the Trustees may accept a direct transfer
of funds from a qualified (under Section 401(a) of the Internal Revenue Code)
retirement plan in which a Covered Employee was a participant. However, the
Trustees may not accept a direct or indirect transfer (other than a rollover)
of funds from a profit sharing or stock bonus plan as to which the
Participant had elected or was otherwise subject to distribution in the form
of a life annuity, or from a pension plan. Such rollover, or any such
transfer to the Plan, shall constitute a part of the Covered Employee's
Accrued Benefit (although accounted for separately in a Rollover/Transfer
Account), shall be invested in a Segregated Account until the Valuation Date
or Special Valuation Date next following receipt by the Trustees, and shall
be fully vested at all times. If a rollover or transfer is made by or on
behalf of a Covered Employee who has not yet become a Participant, his
rollover or transfer Account shall constitute his entire Accrued Benefit
(and his sole interest in the Plan), and he shall not be deemed to be a
Participant for any purpose not related to that Account, until he becomes a
Participant pursuant to Section 3.1.
<PAGE> 19
For purposes of this Section 5.3, a "rollover" means either:
(i) a rollover contribution as contemplated by Section 402(c) or 408(d)(3) of
the Internal Revenue Code, or (ii) a direct transfer from a qualified plan by
reason of a participant election pursuant to Section 401(a)(31) of the
Internal Revenue Code.
5.4 Non-Deductible Participant Contributions - Non-deductible
Participant contributions (permitted under the Plan prior to January 1, 1987),
together with Trust income and loss allocable thereto, shall be accounted for
separately in the Non-Deductible Contributions Account of the contributing
Participant, which Account shall be fully vested at all times and shall be
governed by principles similar to those set forth in Section 5.2(c).
ARTICLE VI
Allocation of Funds
6.1 Allocation of Company Contributions - As of each Valuation
Date:
(a) Matching Company Contributions - Matching Company
contributions for the Plan Year ending on the day preceding the Valuation
Date shall be credited to the Immediate Vest Company Contributions Account
of each eligible Participant in the manner described in Section 5.1(a).
(b) Discretionary Contributions - Subject to Section 6.1(d),
the Company contribution, if any, contributed pursuant to Section 5.1(b) for
the Plan Year ending on the day preceding the Valuation Date shall be
allocated among the Company Contributions Accounts of the eligible
Participants according to that proportion which the Compensation of each
such Participant for the Plan Year bears to the total Compensation of all
such Participants for the Plan Year. Each Participant's allocable share of
the Section 5.1(b) contribution shall be further allocated as follows:
(i) So much of his share of said contribution as does
not exceed a percentage of his Compensation for the Plan Year shall be
credited to his Immediate Vest Company Contributions Account. In the absence
of a different percentage being designated by the Company (not later than the
Valuation Date) with respect to the Plan Year, the percentage will be that
percentage, if any, of the contribution which, if allocated pursuant to this
clause (i), would cause at least one of the tests set forth in Section
401(k)(3)(A) to be met without distributing excess deferrals to Participants
(as described in Section 5.2(a)(ii)(A)), and without making deficiency
contributions (as described in Section 5.1(c)).
(ii) The portion, if any, of his share of said
contribution as is in excess of the percentage described in clause (i) of
his Compensation for the Plan Year shall be credited to his Graded Vest
Company Contributions Account.
Subject to Section 3.3, eligible Participants entitled to
an allocation of the contribution made pursuant to Section 5.1(b) for the
Plan Year ending on the day preceding the Valuation Date shall consist of all
Participants who completed a Year of Service with respect to the Plan Year,
but excluding any Participant who was not in the employ of the Company on the
last day of the Plan Year, unless his employment terminated by reason of
retirement, disability or death.
Additionally, if the failure to treat Part-Time
or Terminated Participants as eligible Participants would cause the
Plan to fail to meet the coverage or participation requirements of
Section 410(b) or 401(a)(26) of the Internal Revenue Code for the
Plan Year, then: (i) all Part-Time Participants shall be deemed to
be eligible Participants for the Plan Year, and (ii) if the Section
410(b) or 401(a)(26) requirements have not been met even after
inclusion of the Part-Time Participants, all Terminated Participants
shall also be deemed to be eligible Participants for the Plan Year.
Solely for this purpose: (i) Part-Time Participants shall be defined
as all Participants who were in the employ of the Employer Group on
the Valuation Date but who failed to complete a Year of Service
during the Plan Year, and (ii) Terminated Participants shall be
defined as all Participants who terminated employment
<PAGE> 20
with the Employer Group during the Plan Year, after having completed more
than 500 Hours of Service during the Plan Year, and who were not in the
employ of the Employer Group on the last day of the Plan Year.
(c) 401(k)/(m) Test Deficiency Contributions - The Company
contribution, if any, contributed for the Plan Year pursuant to Section
5.1(c) shall be allocated among the eligible Participants on a per capita
basis. Each eligible Participant's allocable share of the Section 5.1(c)
contribution shall be credited to his Compensation Deferral Account.
Eligible Participants entitled to an allocation of the
Section 5.1(c) contribution for the Plan Year shall consist of all
Participants, other than Participants who are Highly-Compensated Employees,
who are included in the tests described in Section 401(k)(3)(A) or
401(m)(2)(A), as the case may be, of the Internal Revenue Code and who
made Section 5.2(a) contributions for the Plan Year, but excluding any
Participant who was not in the employ of the Company on the last day of
the Plan Year.
(d) Minimum Top Heavy Allocation - For any Plan Year with
respect to which the Plan is a Top Heavy Plan, the Section 5.1(b)
contribution (as increased by forfeitures) allocated to the Accrued Benefit
of any Minimum Contribution Participant shall not be less than the Minimum
Contribution Percentage multiplied by his Minimum Contribution Earnings for
the Plan Year. For this purpose:
(i) "Minimum Contribution Participant" means any
individual, other than a Key Employee, who was a Participant for benefit
accrual purposes pursuant to Section 3.3 during the Plan Year and who was
employed by the Employer Group on the last day of the Plan Year, regardless
of whether or not he completed a Year of Service with respect to the Plan
Year or his Compensation is less than any stated amount.
(ii) "Minimum Contribution Percentage" means whichever
of the following percentages is applicable: (i) 3%; (ii) unless this Plan
enables a defined benefit plan, which is a member of a Required Aggregation
Group including this Plan, to meet the requirements of Section 401(a)(4) or
410 of the Internal Revenue Code, such lesser percentage as is determined by
dividing the Section 5.1 and 5.2 contributions (as increased by forfeitures)
allocated to the Accrued Benefit of the Key Employee who receives the highest
such allocation (as a percentage of his Minimum Contribution Earnings) for
the Plan Year by his Minimum Contribution Earnings for the Plan Year,
considering for this purpose all Key Employees participating in this Plan
and in any other defined contribution plan in a Required Aggregation Group
which includes this Plan; or (iii) such greater percentage as may be required
to meet the requirements of Section 416(c) and (f) of the Internal Revenue
Code when taking into account any other Retirement Plans of the Employer
Group.
(iii) "Minimum Contribution Earnings" means the lesser
of: (i) the Compensation Limit, or (ii) the Participant's Top Heavy
Compensation.
This Section 6.1(d) shall not apply to any Participant for
a Plan Year to the extent that such Participant is credited with
contributions and/or benefits which meet the minimum requirements of
Section 416(c), (e) and (f) of the Internal Revenue Code under one or more
Retirement Plans of the Company or any other member of an Employer Group
which includes the Company.
6.2 Allocation of Earnings or Losses of Trust - Subject to the
provisions of Section 10.16, as of each Valuation Date and Special Valuation
Date, the net earnings or losses of the Trust (including capital gains
and losses, whether or not realized) since the preceding Valuation Date or
Special Valuation Date, whichever last occurred, shall be allocated among
all Participants in accordance with the ratio which the Accrued Benefit of
each Participant, determined as provided herein, bears to the aggregate of
all such Accrued Benefits so determined. For purposes of this allocation,
the Accrued Benefit of each Participant will consist of the balances in all
of the functional accounts contained therein as of the preceding Valuation
Date or Special Valuation Date, whichever last occurred, adjusted: (i) by
excluding therefrom the value of any Policy purchased for such Participant,
(ii) pursuant to the next paragraph, and (iii) pursuant to Section 6.4;
provided, however, that the allocation of earnings and losses, as herein
provided, need not be made if the method used to account for the respective
interest of each Participant is such that, in an equitable manner, it
includes a revaluation at current market values of each such interest as of
each valuation date (e.g., the Unit Method of accounting).
<PAGE> 21
In its allocations of income, gains or losses, and changes in
value occurring in the Trust, the Trustees may make reasonable assumptions
as to the timing of contributions received, and transfers and distributions
made, between valuation dates.
In the event that the Company contributes all or any part of a
Section 5.1 contribution prior to the date as of which it is to be allocated
among the Accrued Benefits of the eligible Participants, the Trustees shall
establish, as part of the Trust, a separate suspense account to which such
advance contribution will be credited when received by the Trustees until the
date as of which it is to be allocated. The suspense account may be held in
cash or it may be invested by the Trustees, in which case any suspense
account earnings between the date or dates of contribution and the date of
allocation shall be allocated in the manner described in the first paragraph
of this Section 6.2, except that: (i) any Holding Company Stock which is
contributed by the Company, or purchased with cash contributed by the
Company, prior to the allocation date shall be allocated on the basis of its
fair market value on the allocation date, and (ii) any cash dividends on such
Holding Company Stock shall be allocated in the same manner as the Holding
Company Stock itself is allocated.
6.3 Valuations - In determining the earnings or losses of the
Trust, the Trust (excluding Policies and/or Holding Company Security Accounts)
shall be valued at fair market value, as of each Valuation Date and Special
Valuation Date.
6.4 Accounting for Distributions - As of the preceding Valuation
Date or Special Valuation Date, whichever last occurred, all withdrawals and
distributions made to a Participant or his Beneficiary, all transfers to
Segregated Accounts and/or Holding Company Security Accounts, and all
disbursements for Policy premiums and other separately identifiable charges,
shall be charged to such Participant's Accrued Benefit.
6.5 Allocation Not Equivalent of Vesting - The fact that an
allocation has been made, as hereinabove provided, will not operate to vest
in a Participant any right, title or interest in and to any assets of the
Trust. Vesting of such assets shall be accomplished at the times and on the
contingencies hereinafter set forth.
6.6 Separate Accounts - A separate account shall be established
and maintained to reflect the Accrued Benefit for each Participant, with
Accounts to separately show the divisions described in Section 2.1.
6.7 Interim Valuations - In the event it is determined that the
value of the Trust as of any date on which distributions are to be made
differs materially from the value of the Trust on the Valuation Date or prior
Special Valuation Date upon which the distribution is to be based, the
Company, in its discretion, shall have the right to designate any date in the
interim as a Special Valuation Date for the purpose of revaluing the Trust so
that the Accrued Benefit from which the distribution is being made will,
prior to the distribution, reflect its share of such material difference in
value. Similarly, the Company may provide for regular interim valuations
(e.g. designation of the last day of each fiscal quarter as a Special
Valuation Date) without regard to the materiality of changes in the value
of the Trust.
6.8 Maximum Limitation on Annual Additions - Notwithstanding any
Plan provisions to the contrary:
(a) To the extent necessary to prevent disqualification under
Section 415 of the Internal Revenue Code, the maximum Annual Additions which
may be credited to the Accrued Benefit of any Participant in any Limitation
Year (hereafter referred to as the "Maximum Addition") shall be equal to the
lesser of: (i) the greater of $30,000.00 (such amount, as adjusted by
C/L Increases, hereafter referred to as the "Dollar Limit"), or (ii) 25% of
his Remuneration for the Limitation Year (hereafter referred to as the
"Remuneration Limit"). Annual Additions shall be defined as the Section
5.1 and 5.2 contributions (other than excess deferrals distributed to the
Participant pursuant to Section 5.2(a)(ii)(B) not later than April 15
following the close of the Participant's taxable year in which the deferrals
were made), together with forfeitures, allocable to the Participant's Accrued
Benefit for the Limitation Year. Limitation Year shall be defined as the
twelve month period beginning January 2 and ending on the following
January 1 (except as otherwise provided by Plan amendment or written
resolution of the Company).
<PAGE> 22
(b) Except as provided in the remainder of this Section
6.8(b), contributions for and/or allocations to the Accrued Benefit of any
Participant, otherwise provided for or permitted by the Plan, shall be
reduced or eliminated to the extent necessary to implement the limitations
described in Section 6.8(a), and any unallocable amounts generated thereby
shall instead be allocated to the Accrued Benefits of the remaining
Participants in accordance with Section 6.1(b) (but only to the extent that
such allocation does not cause the limits set forth in this Section 6.8 to
be exceeded with respect to any such Participant). If, for any Limitation
Year, the Maximum Addition is exceeded by reason of: (i) forfeitures,
(ii) a reasonable error in estimating a Participant's Remuneration, (iii) a
reasonable error in determining the amount of Section 5.2 compensation
deferrals that may be made with respect to a Participant under the limits
described in Section 6.8(a), or (iv) other circumstances approved by the
Internal Revenue Service, then, subject to the right of the Company to
reallocate any portion of the excess generated by Section 5.1(b)
contributions pursuant to the preceding sentence in the Limitation Year in
which the excess was generated, such excess shall be applied as follows:
(i) any portion of the excess generated by Section 5.2 compensation deferrals,
plus any investment gains or other income attributable thereto, shall be
distributed to the Participant to the extent that the distribution would
reduce the excess in the Participant's Account, (ii) if the Participant is
covered by the Plan as of the end of the Limitation Year in which the excess
arose, the excess shall (subject to the restrictions set forth in this
Section 6.8) be applied as soon as possible to reduce Section 5.1
contributions allocable in subsequent Limitations Years to the various
Accounts in the Participant's Accrued Benefit representing Section 5.1
contributions, in the same proportions as existed for the Participant in the
Limitation Year in which the excess arose, or (iii) if the Participant is not
covered by the Plan as of the end of the Limitation Year in which the excess
arose, or as of the end of any subsequent Limitation Year in which the
contribution reduction described in clause (ii) would otherwise apply to him
(as the case may be), such excess shall be held unallocated in a suspense
account and (subject to the restrictions set forth in this Section 6.8)
applied as soon as possible to reduce Section 5.1 contributions allocable to
the remaining Participants in such subsequent Limitation Years, through
allocations to be made prior to any contributions which would constitute
Annual Additions for such subsequent Limitation Years. No investment gains
or losses or other income shall be allocated to the suspense account, and
funds in the account may not be distributed to Participants or Beneficiaries,
but any balance which may be in the account upon termination of the Plan will
revert to the Company. For purposes of this Section 6.8(b), in the absence
of any Company determination to the contrary, excess amounts shall be deemed
to have been generated, first, by Section 5.2 compensation deferrals, and
second, by Section 5.1 contributions.
(c) Except as otherwise provided by Section 415 of the
Internal Revenue Code, in any case in which an individual has at any time
participated in a defined benefit plan and a defined contribution plan
maintained by the Company, the sum of the defined benefit plan fraction and
the defined contribution plan fraction for any Limitation Year may not exceed
1.0. For this purpose:
(i) The defined benefit plan fraction for any
Limitation Year is a fraction, the numerator of which is the projected annual
benefit (assuming continued employment until normal retirement date and
constancy of all relevant factors) of the individual under the plan
(determined as of the close of the Limitation Year), and the denominator of
which is the lesser of (A) or (B), where (A) is 1.25 times the dollar limit
for such Limitation Year under Section 415(b)(1)(A) of the Internal Revenue
Code, and (B) is 1.4 times the remuneration limit for such Limitation Year
under Section 415(b)(1)(B) of the Internal Revenue Code. The defined
contribution plan fraction for any Limitation Year is a fraction, the
numerator of which is the sum of the Annual Additions to the individual's
Accrued Benefit as of the close of the Limitation Year, and the denominator
of which (unless the Company elects otherwise pursuant to Section 415(e)(6)
of the Internal Revenue Code) is the sum of the lesser of (A) or (B),
determined separately for such Limitation Year and for each prior Limitation
Year during which the individual had any Hours of Service, where (A) is 1.25
times the Dollar Limit for the applicable Limitation Year, and (B) is 1.4
times the Remuneration Limit for such individual for the applicable
Limitation Year. In the event that the aforesaid 1.0 limitation has been
exceeded, provisions contained in the defined benefit plan to freeze or
reduce the rate of benefit accrual to a level necessary to prevent
disqualification under Section 415 of the Internal Revenue Code shall be
applied prior to application of provisions contained in the defined
contribution plan to freeze or reduce annual additions to a level necessary
to prevent such disqualification.
(ii) Except as otherwise provided in Section
416(h)(3) of the Internal Revenue Code, for any Limitation Year which
includes the first day of a Plan Year for which the Plan is a Top
Heavy Plan, Section 6.8(c)(i) shall be applied by reducing the 1.25
factor to 1.0 in each of the two places it appears; provided,
<PAGE> 23
however, that this Section 6.8(c)(ii) may be disregarded for any Plan Year
for which the Plan is not a Super Top Heavy Plan if, with respect to such
Plan Year: (i) the requirements of Section 6.1(d) would be met if the
3% minimum contribution percentage set forth therein were one percentage
point higher, and (ii) similar one percentage point additional minimum
contribution or benefit accrual requirements are met by any other Retirement
Plan in a Required Aggregation Group which includes this Plan, except to
the extent that (iii) such requirements are eliminated by rules under
Section 416(f) of the Internal Revenue Code which preclude duplication of
required minimum contributions or benefit accruals.
(d) In addition to the foregoing, the Maximum Addition shall
be reduced, to the extent necessary to prevent disqualification of the Plan
under Section 415 of the Internal Revenue Code, with respect to any
Participant who is also a participant in: (i) any other tax-qualified
defined contribution plan maintained by the Company; (ii) any tax-qualified
pension plan maintained by the Company in which an individual medical benefit
account (as described in Section 415(l) of the Internal Revenue Code) has
been established for him; (iii) any welfare plan maintained by the Company in
which a separate account (as described in Section 419A(d) of the Internal
Revenue Code) has been established to provide post-retirement medical
benefits for him; and/or (iv) any retirement or welfare plan, as aforesaid,
maintained by a Related Employer.
If the Employer Group maintains one or more defined
contribution plans in addition to this Plan, and one or more individuals
participates in both plans in the same Limitation Year, the provisions of
Section 6.8(b) of this Plan shall not be applied until after the application
of similar provisions in the other plan or plans.
6.9 Right of Participants to Specify Investments - Subject to such
limitations as may from time to time be required by law, imposed by the
Company or the Trustees or contained elsewhere in the Plan (including dollar,
percentage or other limits with respect to any investment category or on the
portion of the Trust to which this Section 6.9 shall be applicable), and
subject to such operating rules and procedures as may be imposed from time
to time by the Company or the Trustees, each Participant (including for this
purpose Beneficiaries and/or an alternate payee under a qualified domestic
relations order in which a Participant's Accrued Benefit has been validly
divided into separate Accrued Benefits for the Participant and the alternate
payee) shall have the right to designate the percentage of his Accrued
Benefit which is to be invested in any one or more Separate Investment Funds
as may be made available from time to time by the Trustees, pursuant to
Section 10.16, and shall have the right to thereafter designate amounts to
be withdrawn from any one or more Separate Investment Funds and invested in
one or more other Separate Investment Funds then available, in accordance
with the following:
(a) Except as the Company shall otherwise determine, any
initial or subsequent investment designation shall be in writing, on a form
supplied by and filed with the Company, and shall be effective as of the
next Designation Date which is at least 15 days after the date of receipt of
such designation by the Trustees (for which purpose the 15th day of each
month shall be deemed to be 15 days before the first day of the next month),
or such earlier date as may be permitted by the Trustees. Alternatively, the
Company may provide for telephone or other electronic investment designations
to the extent that such facilities are made available by the funding agency,
and may establish (and thereafter change) an annual limit on the number of
designations that may be made by any Participant.
(b) Except as the Company shall otherwise determine, each
Participant shall be allowed only one Designation Date in each calendar
quarter.
(c) All contributions and other amounts added to a
Participant's Accrued Benefit (except for investment earnings) shall
be allocated among the Separate Investment Funds in accordance with
the then effective investment designation. Except as the Company shall
otherwise determine, any distributions shall be taken proportionately
from each Separate Investment Fund in which the Accrued Benefit is invested
at the time of the distribution. As of the effective date of any new
investment designation, the entire balance of the Participant's Accrued
Benefit at that date shall be reallocated among the designated Separate
Investment Funds according to the percentages specified in the investment
designations (unless the Company permits, and the Participant has
designated, different allocations as between existing balances and
future contributions), but no reallocations of the Participant's
<PAGE> 24
Accrued Benefit are to be made merely to adjust for disproportionate
investment growth among such funds (other than in response to a subsequent
investment designation filed with respect to the Participant's Accrued
Benefit).
In any case where separate investment category designations
are required pursuant to Section 6.9(g) for a Participant's Participant
Contributions Accounts and his Company Contributions Accounts, each such
investment category designation shall be administered separately pursuant to
this Section 6.9(c).
(d) In the event the Company receives an initial or revised
investment designation which it deems to be incomplete, unclear, not in
accordance with procedures established pursuant to this Section 6.9, or
otherwise improper, the Participant's investment designation then in effect
shall remain in effect (or, in the case of a deficiency in an initial
designation, the Participant shall be deemed to have filed no designation)
until the next Designation Date, unless the Company provides for, and permits
the application of, corrective action prior thereto.
(e) The Company, at any time and in its sole discretion, may
suspend or terminate the operation of this Section 6.9 in its entirety or
with respect to a portion of the Trust.
(f) It is intended that all Participants be required to
direct the investment of their Accrued Benefits to the extent set forth in
this Section 6.9. In the event that the Trustees possess at any time
instructions as to the investment of less than all of a Participant's Accrued
Benefit, the Participant shall be deemed to have designated that the
non-directed portion of his Accrued Benefit be invested in accordance with
Section 10.3. To the extent that the Trustees find it to be administratively
appropriate to hold a portion of the Trust out of the operation of this
Section 6.9, or to the extent that the operation of this Section 6.9 is
suspended or terminated with respect to any portion of the Trust as
aforesaid, investment shall be in accordance with Section 10.3.
(g) In the case of any Participant whose Accrued Benefit
consists in part of Participant Contributions Accounts, and who desires to
designate the investment of some or all of his Company Contributions Accounts
in the Holding Company Stock Fund, he shall be required to file two separate
investment designations, one specifying the percentages of his Company
Contributions Accounts which are to be allocated to each of the Separate
Investment Funds, and the other specifying the percentages of his Participant
Contributions Accounts which are to be allocated to each of such Separate
Investment Funds other than the Holding Company Stock Fund. Under no
circumstances shall a Participant be permitted to designate the investment of
any of his Participant Contributions Accounts in the Holding Company Stock
Fund. In the case of any Participant having separate investment designations
in effect for his Company Contributions Accounts and his Participant
Contributions Accounts, and who files a new investment designation with no
investment in the Holding Company Stock Fund, then such new designation shall
be deemed to terminate the separate investment designation for his
Participant Contributions Accounts whether or not expressly so stated.
This Section 6.9(g) shall not be operative if, and so long as,
the Holding Company has taken such actions as it may determine to be
necessary or advisable under applicable federal and state securities and
other laws to permit use of Participant contributions and deferrals to
acquire interests in the Holding Company Stock Fund.
6.10 Erroneous Allocations - If it is determined at any time that
an error has been made in allocating contributions or other items among the
Participants' Accrued Benefits, or by excluding any Participant from an
allocation he should have received, then the Company, in its sole discretion
(but consistent with its intent to maintain the tax-qualified status of the
Plan), shall determine the manner in which that error is to be corrected, and
any Participant's Accrued Benefit may be adjusted, if necessary, to correct
the error.
ARTICLE VII
Entitlement to Benefits
7.1 Retirement - Every Participant who has not otherwise
ceased to be employed by the Employer Group shall be deemed to have
reached retirement upon the attainment of his 65th birthday, or, if he
<PAGE> 25
remains in the employ of the Employer Group after such date, the effective
date of his actual retirement. As of the date of his retirement, or such
earlier date as may be required by the minimum distribution requirements
described in Section 8.2(b), such retired Participant shall be entitled to
the full value of his Accrued Benefit (which shall be deemed to be 100%
vested upon the Participant's 65th birthday, whether or not he remains in
the employ of the Employer Group thereafter), payable according to the
provisions of ARTICLE VIII.
7.2 Disability - If a Participant who has not otherwise ceased to
be employed by the Employer Group shall become totally and permanently
disabled, and if proof of such disability satisfactory to the Company shall
be furnished (which proof shall include a written statement of a licensed
physician appointed or approved by the Company), such Participant, as of the
date of determination by the Company of his disability, shall be entitled to
the full value of his Accrued Benefit (which shall be deemed to be 100%
vested), payable according to the provisions of ARTICLE VIII (for which
purpose the disability determination date shall be deemed to be his
termination of employment date). Total and permanent disability shall mean
a medically determinable physical or mental impairment which can be expected
to result in death or to last at least twelve months, and by reason of which
the Participant will be prevented from performing his usual duties or any
other similar duties available in the Company's employ.
7.3 Death - Upon the death of a Participant who has not otherwise
ceased to be employed by the Employer Group, the full value of his Accrued
Benefit (which shall be deemed to be 100% vested) shall become payable,
according to the provisions of ARTICLE VIII, upon submission of proof of
death satisfactory to the Company.
7.4 Other Terminations - Except as otherwise provided in the last
paragraph of this Section 7.4, in the event of a Participant's termination of
employment with the Employer Group for any reason other than retirement,
disability or death, then, as of the date of his termination, he shall become
entitled to the vested portion of his Accrued Benefit, payable according to
the provisions of ARTICLE VIII. The vested portion of a Participant's
Accrued Benefit shall be determined as follows:
(a) The Participant shall at all times be 100% vested in the
following portions of his Accrued Benefit: Compensation Deferral Account,
Immediate Vest Company Contributions Account, Non-Deductible Contributions
Account, Pre-Merger Matching Contributions Account (Western) and
Rollover/Transfer Account.
(b) The Participant shall acquire a vested interest in his
Graded Vest Company Contributions Account, determined on the basis of his
number of Years of Service (other than those disregarded pursuant to Section
3.2(b)), according to the following schedule:
Years of Percentage
Service Vested
Less than 2 0%
2 10%
3 20%
4 40%
5 60%
6 80%
7 or more 100%
(c) For any Plan Year with respect to which the Plan is a Top
Heavy Plan, the following vesting schedule shall be substituted for the
vesting described in (b) above with respect to any Participant who completes
at least one Hour of Service after the Plan becomes a Top Heavy Plan:
<PAGE> 26
Years of Percentage
Service Vested
Less than 2 0%
2 20%
3 40%
4 60%
5 80%
6 or more 100%
Once effective, the vesting schedule set forth herein shall not revert to
the non-Top Heavy vesting described above in the absence of a Plan amendment
which meets the requirements of the last paragraph of this Section 7.4.
In the event of a termination of employment described in this
Section 7.4 at a time when a Participant's Graded Vest Company Contributions
Account shall not yet be 100% vested, then, as of the forfeiture date set
forth in Section 8.5, that portion which shall not have vested shall be
forfeited by him. The aggregate of forfeitures occurring in any Plan Year
shall be used pursuant to Section 3.2(e) and, thereafter, treated as an
additional Section 5.1(b) contribution to the Trust by the Company and
allocated among the remaining eligible Participants in like manner as a
discretionary Company contribution attributable to the Plan Year in which the
forfeitures occurred.
No vesting amendment (i.e., a Plan amendment changing the
Plan's vesting schedule, or which directly or indirectly affects the
computation of a Participant's vested percentage) may reduce the vested
percentage of the Participant's Accrued Benefit determined as of the later
of the date the amendment is adopted or it becomes effective. Further, in
the event of the adoption of a vesting amendment, each Participant shall
have the right to elect (irrevocably, except as the Company shall otherwise
permit) to have the vested percentage of his Accrued Benefit determined under
the vesting schedule in effect prior to the amendment, which right shall be
exercised, if at all, by the filing of written notice with the Company during
the period beginning with the date of adoption of the amendment and ending
60 days after the latest of the said adoption date, the effective date of the
amendment, or the date the Participant receives written notice of the
amendment; provided, however, that the right to elect applies only to
individuals: (i) who are Participants when the election is made, (ii) who
have completed three Years of Service on or before the later of the adoption
or the effective date of the amendment, and (iii) other than any individual
whose vested percentage under the amended vesting schedule cannot at any time
be less than his vested percentage under the prior vesting schedule. For
Participants who do not have at least one Hour of Service in any Plan Year
beginning after December 31, 1988, the preceding sentence shall be applied by
substituting "five" for "three".
With respect to the portion of a Participant's Accrued Benefit
consisting of his Compensation Deferral Accounts, as well as his Company
Contributions Accounts to the extent that they are subject to utilization in
the Section 401(k)(3)(A) testing described in Section 5.2(a)(iii), the
Participant shall not be deemed to have incurred a termination of employment
with the Employer Group unless the termination constitutes a "separation
from service" within the meaning of, or is in conjunction with a corporate
transaction described in, Sections 401(k)(2)(B) and 401(k)(10) of the
Internal Revenue Code.
7.5 Financial Hardship Distributions -
(a) General - In addition to the in-service withdrawal rights
described in Section 7.6, in the event of Financial Hardship (as hereinafter
defined), a Participant may apply to the Company for a distribution of all or
any part of his Available Hardship Amount (as hereafter defined). After
considering all relevant facts and circumstances (but only to the extent
described herein), the Company shall have the right, in its discretion but
based solely on the standards set forth herein, to allow distribution of all
or any part of the sum requested, or to refuse to allow any distribution.
Upon a finding of Financial Hardship, and upon a further finding that the
distribution is necessary to alleviate the Financial Hardship, the Company
shall instruct the Trustees to make the appropriate distribution, subject to
Section 8.6, to the Participant from his Available Hardship Amount. In no
event shall the aggregate amount of the distribution exceed the lesser of:
(i) the amount determined by the Company to be necessary to alleviate the
Participant's Financial Hardship, and which is not reasonably available from
other resources of the Participant, or (ii) an amount equal to the
Participant's Available Hardship Amount.
<PAGE> 27
For purposes of this Section 7.5 and Section 10.17(h), with
respect to any Participant who is insolvent (as determined by the Company
utilizing appropriate principles of federal or state law), a "distribution"
shall be deemed to include a direct offset of all or any part of the
principal and accrued interest on a defaulted Participant loan.
(b) Source of Distribution - A Participant's Available
Hardship Amount shall be defined as: (i) his total Section 5.2 compensation
deferral contributions as of the date of the distribution, reduced by the
amount of previous Financial Hardship distributions, (ii) the net income
credited to his Compensation Deferral Account as of December 31, 1988, and
(iii) the vested portion of his Pre-Merger Profit Sharing Account (York), the
value of which shall be based upon the evaluation of the Trust made as of the
Valuation Date or Special Valuation Date, whichever last occurred, coincident
with or otherwise immediately preceding the date of payment (except that any
amount invested in a Segregated Account shall be valued as closely as possible
(consistent with normal administrative procedures) before the date of
distribution), but adjusted for subsequent distributions and withdrawals.
Except as the Company shall otherwise determine, the distribution shall be
taken proportionately from all of the Separate Investment Funds in which the
Participant's Accrued Benefit is invested.
(c) Financial Hardship - "Financial Hardship" shall be
defined as: (i) expenses for medical care described in Section 213(d) of the
Internal Revenue Code previously incurred by the Participant, his spouse or
his dependents (as defined in Section 152 of the Internal Revenue Code), or
necessary for such persons to obtain such medical care; (ii) costs directly
related to the purchase of the Participant's principal residence (excluding
mortgage payments); (iii) payment of tuition, related educational fees and
room and board expenses for the next twelve months of post-secondary
education for the Participant or his spouse, his children, or his dependents
(as defined in Section 152 of the Internal Revenue Code); or (iv) payments
necessary to prevent the eviction of the Participant from, or foreclosure of
the mortgage on, his principal residence. Financial Hardship shall include
any amounts necessary to pay any income taxes or penalties reasonably
anticipated to result from the distribution.
(d) Necessity for Distribution - A distribution will be
deemed to be necessary to alleviate the Participant's Financial Hardship only
to the extent that the need cannot be met from other resources reasonably
available to the Participant (including assets of his spouse and minor
children not held in trust or under the Uniform Gifts to Minors Act and
otherwise reasonably available to the Participant). This standard shall be
deemed to have been met only in the event of compliance with both of the
following paragraphs:
(i) The Company is provided with evidence that
establishes the amount of the Participant's Financial Hardship.
(ii) The following requirements are met: (A) the
distribution is not in excess of the Participant's Financial Hardship, (B)
the Participant has obtained all non-hardship distributions, and all
non-taxable loans, currently available from any retirement plan maintained
by the Company, (C) the Participant has liquidated all funds available from
any investment or similar account maintained by or through any member of the
Employer Group (e.g., IRA accounts, customer accounts, stock purchase plan
accounts), and (D) Section 5.2 compensation deferrals on behalf of the
Participant, as well as any compensation deferrals or employee contributions
by or for the Participant under any other qualified or non-qualified deferred
compensation plan maintained by the Company, are suspended (under the terms
of the plan or an otherwise legally enforceable agreement) for not less than
twelve months after receipt of the distribution and are further limited so
that the compensation deferrals made during the Participant's taxable year in
which he receives the distribution and his following taxable year do not
exceed the limitation described in Section 5.2(a)(ii)(B) for the following
taxable year.
7.6 Other In-Service Withdrawals -
(a) In-service withdrawals shall be subject to Section 8.6
and to the following:
(i) Any Participant who has attained age 59-1/2 may
withdraw from his Rollover/Transfer Account, his Compensation Deferral
Account and/or his Pre-Merger Matching Contributions Account (Western) any
amount not in excess of the value of the Account. However, the right of
withdrawal shall not apply to any portion of the Rollover/Transfer account
attributable to any direct transfer (other than a direct transfer
<PAGE> 28
by reason of a participant election pursuant to Section 401(a)(31) of the
Internal Revenue Code), except to the extent expressly so provided in any
provision of the Plan relating to such direct transfer.
(ii) A Participant may withdraw from his Non-Deductible
Contributions Account any amount not in excess of the value of the Account.
(b) The Company shall have the right to determine the date or
dates as of which withdrawals will be permitted, but at least one such
withdrawal date shall be provided in any Plan Year; regardless of the number
of withdrawal dates which are so provided, an individual Participant shall
not be permitted to make more than one Section 7.6(a) withdrawal in any Plan
Year. All such withdrawals must be preceded by the receipt by the Company of
a written withdrawal request from the Participant.
(c) For purposes of withdrawals described in Section 7.6(a),
the value of the Participant's Accounts shall be based upon the evaluation of
the Trust made as of the Valuation Date or Special Valuation Date, whichever
last occurred, immediately preceding the date of payment (except that any
amount invested in a Segregated Account shall be valued as closely as
possible (consistent with normal administrative procedures) before the date
of distribution), but adjusted for any subsequent distributions and
withdrawals. Except as the Participant shall otherwise determine, the
withdrawal shall be taken proportionately from all of the Separate Investment
Funds in which the Participant's Accrued Benefit is invested.
ARTICLE VIII
Distribution of Benefits
8.1 Amount - Except as otherwise provided in the remainder of this
ARTICLE VIII, upon a Participant's termination of employment with the
Employer Group he (or his Beneficiary) shall become entitled to receive the
vested portion of his Accrued Benefit, payable in accordance with Section 8.2
or 8.4, as the case may be. Determination of the amount to be distributed
shall be based upon the following:
(a) Determination of the amount to be distributed shall be
based upon the evaluation of the Trust made as of the Valuation Date or
Special Valuation Date coincident with or otherwise immediately following
the date of termination of employment.
(b) If a Participant who is entitled to a distribution
pursuant to Section 8.1(a) is also entitled to a Company contribution that
has not yet been allocated to his Accrued Benefits when the distribution is
due to be paid, he shall nevertheless receive an initial distribution
calculated and made pursuant to Section 8.1(a), to be thereafter followed
by a distribution or distributions, as the case may be, based upon his share
of the subsequent Company contribution.
(c) Notwithstanding the foregoing: (i) if one or more
Valuation Dates or Special Valuation Dates have occurred between the
Valuation Date or Special Valuation Date described in Section 8.1(a) or
(b), as the case may be, and the date distribution is made (or commenced),
the distribution shall be based upon the evaluation of the Trust as of the
Valuation Date or Special Valuation Date, whichever last occurred,
immediately preceding the date of distribution (or commencement of
distribution), (ii) any distribution based upon an amount invested in a
Segregated Account shall be valued as closely as possible (consistent with
normal administrative procedures) before the date of distribution, and
(iii) the Participant's Accrued Benefit will be appropriately adjusted for
any contributions, distributions and withdrawals between the date as of
which it is valued and the date of distribution.
8.2 Method of Payment - The Company shall give to the
Trustees such directions and information as may be necessary for
the Trustees to make the distributions described in this Section 8.2.
Each such distribution: (i) shall be made in a single lump sum
unless the vested portion of the Participant's Accrued Benefit is
(or at the time of any prior distribution was) greater than
$3500.00 and he elects to receive the distribution in a fixed
<PAGE> 29
number of annual installments; and (ii) shall be made in cash, except
that, to the extent that the Participant's Accrued Benefit is invested in
shares of a Legg Mason mutual fund that so permits, the Participant may
elect, by written notification to the Company as part of his election of
method of payment, to have those shares distributed in kind, but only if the
distribution is to be a rollover to an IRA maintained by a member of the
Employer Group.
Subject to, and in accordance with, regulations issued by the
Internal Revenue Service, the Company, not less than 30 nor more than 90 days
before the actual distribution is made or commenced (or, if so elected by the
Company, the Participant's Benefit Commencement Date), will provide the
Participant with a written notice containing a general description of the
material features and relative values of his benefit options and his rights
with respect thereto. However, the distribution may commence less than 30
days after the notice has been provided if: (i) the Company informs the
Participant that he has a right to a period of at least 30 days after
receiving the notice to consider (as applicable) which distribution option
to elect and/or the timing thereof, and (ii) the Participant, after receiving
the notice, affirmatively elects a distribution. The election by the
Participant to receive his distribution in installments must be in writing
and filed with the Company not more than 90 days prior to the Participant's
Benefit Commencement Date and not before his receipt of the aforesaid notice.
Distribution of the Accrued Benefit of a Participant shall be
subject to the following:
(a) Installment Payments - If the distribution is to be in
annual installments, the Participant shall determine the number of such
installments. In the discretion of the Company, the total to be so
distributed shall either: (i) continue to be invested in those assets
currently retained in the Trust, in which case any income, gain or loss
attributable thereto (but not Company contributions or forfeitures) shall
be reflected in the installment distributions, in such equitable manner as
the Trustees shall determine, or (ii) be transferred to a Segregated Account.
(b) Minimum Distribution Requirements - Notwithstanding any
other provision in the Plan to the contrary, distribution shall be made only
in accordance with regulations prescribed by the Internal Revenue Service
under Section 401(a)(9) of the Internal Revenue Code. To the extent required
thereby, distribution of benefits shall comply with the following:
(i) Except as otherwise provided in (iii), (v) or
(vii) below, distribution shall begin not later than the calendar year
(hereinafter referred to as the "Commencement Year") in which the Participant
reaches age 70-1/2. Distribution shall be made over a period certain not
extending beyond the life expectancy of the Participant or the joint life and
last survivor expectancy of the Participant and his Beneficiary, as described
in Treasury Regulation Section 1.401(a)(9)-1, or, if shorter, the alternate
period described in Treasury Regulation Section 1.401(a)(9)-2.
(ii) The amount to be distributed during each calendar
year (hereinafter referred to as a "Payment Year") beginning with the
Commencement Year, shall be at least equal to the lesser of: (i) the
Participant's total undistributed Accrued Benefit, or (ii) an amount equal
to the quotient obtained by dividing the Participant's Accrued Benefit by the
lesser of: (A) the applicable life expectancy, or (B) unless the
Participant's Beneficiary is his spouse, the "applicable divisor" as
determined under Treasury Regulation Section 1.401(a)(9)-2. For this purpose:
(A) Life expectancies shall be determined
pursuant to Treasury Regulation Section 1.401(a)(9)-1, using the appropriate
expected return multiples in Treasury Regulation Section 1.72-9 (or any
regulation or other Internal Revenue Service-approved source substituted
therefor). For the Commencement Year, life expectancy shall be based upon
the Participant's (and the Beneficiary's) attained age as of the
Participant's birthday (and his Beneficiary's birthday) in the Commencement
Year. For each succeeding Payment Year:
(1) The life expectancy of the Participant,
or the joint life and last survivor expectancy of the Participant and his
spouse, shall be annually recalculated based upon the Participant's (and his
spouse's) attained age as of the Participant's birthday (and the spouse's
birthday) in the calendar year to which such recalculation is applicable.
<PAGE> 30
(2) The life expectancy of a Beneficiary
who is not the Participant's spouse may not be annually recalculated, so that
in determining the joint life and last survivor expectancy of the Participant
and a non-spousal Beneficiary, the determination shall be based upon: (i) a
recalculated life expectancy for the Participant based upon his age in the
Payment Year, and (ii) a life expectancy for the Beneficiary based upon his
age in the Commencement Year and then reduced by one for each Payment Year
which has begun since the Commencement Year. The Beneficiary's reduced life
expectancy shall be converted (through the appropriate annuity table) to an
adjusted age to be utilized, together with the Participant's actual age, in
determining the recalculated joint and last survivor expectancy.
(3) Notwithstanding (1) and (2) above, the
Participant shall have the right, by filing written notice with the Company
prior to his Benefit Commencement Date, to elect that his life expectancy,
and/or that of his spouse, shall not be annually recalculated, in which case
the life expectancy determined for the Commencement Year shall be reduced by
one for each Payment Year which has begun since the Commencement Year.
(B) The Participant's Accrued Benefit shall be
valued as of the Valuation Date or Special Valuation Date, whichever last
occurred, immediately preceding the first day of the Payment Year, adjusted
for contributions and forfeitures allocated and distributions made after that
valuation date.
(iii) A required distribution shall be deemed to have
been made during the Commencement Year if actually made by the following
April 1, but such delayed distribution shall not change the amount of such
distribution, and the distribution otherwise required during the subsequent
calendar year shall be calculated as if the first distribution had been made
on the last day of the Commencement Year.
(iv) Benefits paid prior to the Commencement Year
shall reduce the aggregate amount subject to (but shall not otherwise negate)
the minimum distribution requirements described herein.
(v) Notwithstanding (i) above, the Commencement Year
for any Participant who attained age 70-1/2 before January 1, 1988 shall be
determined as follows:
(A) Except as described in (B) below, his
Commencement Year shall be the later of the calendar year in which he
attained age 70-1/2 or the calendar year in which he retires.
(B) If the Participant is a 5% Owner, his
Commencement Year shall be the later of: (i) the calendar year in which he
attained age 70-1/2, or (ii) the earlier of: (a) the calendar year in which
he retires, or (b) the calendar year with or within which ends the Plan Year
in which he becomes a 5% Owner. A "5% Owner" is any individual who, at any
time on or after the later of the first day of the first Plan Year beginning
after December 31, 1979 or the first day of the first Plan Year ending with
or within the calendar year in which he attained age 66-1/2, owned or owns
more than 5% of the Company, within the meaning of Section 416(i) of the
Internal Revenue Code.
(vi) If the provisions of this Section 8.2(b) require
the commencement of benefits to a Participant who has not yet retired,
distribution shall be made or commenced in accordance with this ARTICLE VIII
as if the Participant had retired on the last day of the Commencement Year
(except that, notwithstanding the first paragraph of Section 8.1, his Accrued
Benefit shall be valued in accordance with Section 8.2(b)(ii)(B)). However,
notwithstanding the commencement of benefits pursuant to this Section 8.2(b),
all other aspects of the Participant's Plan participation, including the
crediting of additional contributions to his Accrued Benefit, shall continue
in accordance with the remaining provisions of the Plan. Amounts credited to
the Participant's Accrued Benefit after commencement of his benefits shall be
distributed as follows:
(A) If the original distribution was in a single
lump sum, then, in each Payment Year subsequent to the Commencement Year, the
Participant shall receive a distribution of the entire amount in his Accrued
Benefit, valued in accordance with Section 8.2(b)(ii)(B).
<PAGE> 31
(B) If the original distribution was in
installments, distribution of the Participant's Accrued Benefit (as increased
by the additional credits) shall continue to be made in accordance with
Section 8.2(a) and this Section 8.2(b). However, the Participant shall have
a one-time election, exercisable by delivery of a written notice to the
Company at any time after he actually retires, to receive a lump sum
distribution of his entire Accrued Benefit (determined in accordance with
Section 8.1 as if the date of the Company's receipt of the written notice
were the Participant's retirement).
(vii) Notwithstanding the foregoing, benefits payable
to or on behalf of any Participant who had an Accrued Benefit as of
December 31, 1983, and who, on or before such date, executed a valid, written
designation of method of distribution (as described in Section 242(b)(2) of
the Tax Equity and Fiscal Responsibility Act of 1982) which complies with the
incidental benefit requirements then in effect (i.e., Section 401(a)(9) of
the Internal Revenue Code prior to amendment by the Deficit Reduction Act of
1984), and which specifies the time at which distribution will commence, the
period over which distribution will be made, shall be paid in accordance with
such designation (if such designation has not been revoked by the Participant)
without regard to whether or not such designation complies with this Section
8.2(b); provided, however, that the Company may disregard such designation to
the extent that it believes that distribution in accordance with such
designation will adversely affect the Plan's tax-qualified status. If the
designation is revoked after the date distribution is required to begin, the
Plan shall distribute, by the end of the calendar year following the calendar
year in which the revocation occurs, the total amount not yet distributed and
which would have been required to have been distributed to meet the
requirements of this Section 8.2(b) (without regard to this paragraph (vii)).
Although any change in the designation will be considered to be a revocation,
the mere substitution or addition of another Beneficiary will not be
considered to be a revocation so long as such substitution or addition does
not directly or indirectly (e.g., by altering the relevant measuring life)
alter the period over which distribution is to be made.
8.3 Timing of Benefit Commencement - Except as otherwise provided
in the remainder of this ARTICLE VIII, the payment of benefits to each
Participant will commence as soon as is administratively feasible after the
date set forth in Section 8.1 as of which his distribution is to be
evaluated, but subject to the following:
(a) In no event (unless the Participant otherwise elects
pursuant to any elective provision which may be then present in the Plan),
shall benefits begin later than the 60th day after the close of the Plan Year
in which occurs the latest of: (i) the date on which the Participant attains
age 65 (or any earlier normal retirement age which may be then specified in
the Plan); (ii) the tenth anniversary of the year in which the Participant
commenced Plan participation; or (iii) the termination of the Participant's
employment with the Employer Group.
(b) Notwithstanding the foregoing, if the vested portion of a
Participant's Accrued Benefit is (or at the time of any prior distribution
was) greater than $3,500.00, no distribution of any part thereof (for any
reason other than death) may be paid or begun prior to the last day of the
Plan Year in which the Participant's 65th birthday occurs, without his
written consent thereto not more than 90 days prior to his Benefit
Commencement Date (and after receipt of notice of his right to defer
provided by the Company during the notice period provided in Section 8.2).
In the absence of such consent, the Participant's Accrued Benefit shall, in
the discretion of the Company, remain invested in the commingled Trust assets
or be transferred to a Segregated Account.
(c) In no event shall benefits begin later than the benefit
commencement deadline described in Section 8.2(b).
(d) In the event that a qualified domestic relations order
(as defined in Section 414(p) of the Internal Revenue Code) validly requires
payment of part or all of a Participant's Accrued Benefit to an alternate
payee in a single lump sum distribution (and not in any other form) prior to
the earlier of: (i) the earliest date benefits are payable under the Plan to
the Participant or (ii) the later of the Participant's 50th birthday or the
earliest date the Participant could begin receiving benefits under the Plan
if he separated from service, such payment shall be made, and shall be based
upon the Valuation Date or Special Valuation Date, whichever last occurred,
immediately preceding the date of payment (except that any amount invested in
a Segregated Account shall be valued as closely as possible (consistent with
normal administrative procedures) before the date of distribution), but
adjusted for subsequent distributions and withdrawals.
<PAGE> 32
8.4 Special Provisions - Death Benefits - The following provisions
govern the payment of death benefits following the death of a Participant:
(a) Upon the death of a Participant while in the active
employ of the Employer Group, or after termination of employment but before
commencement of his benefits, or before he has received all of the amount to
which he is entitled pursuant to the option under which his benefits are
being paid, the entire (or remaining) value of his Accrued Benefit (including
insurance proceeds), to the extent vested prior to or as a result of his
death, shall be paid: (i) to his surviving spouse, or (ii) if there is no
surviving spouse or the surviving spouse has executed a written consent (in
the presence of a Plan representative or a notary public) waiving the right
to receive the death benefits in favor of one or more specific Beneficiaries
or classes of Beneficiaries, to the person or persons designated in
accordance with ARTICLE IX.
(b) All death benefits payable pursuant to this Section 8.4
shall be paid in a single lump sum unless the Participant's Beneficiary
(other than his surviving spouse) elects to receive payments in annual
installments over a period not to exceed five years from date of death.
Payment will be made or commenced within a reasonable period of time after
the Participant's death (not to exceed 90 days unless necessary to value the
benefit in accordance with Section 8.1 on the same basis as lifetime
distributions to Participants, or except in unusual circumstances making
payment within 90 days unreasonable or impossible).
(c) All death benefits payable pursuant to this Section 8.4
shall be distributed only in accordance with regulations prescribed by the
Internal Revenue Service under Section 401(a)(9) of the Internal Revenue Code.
To the extent required thereby, such benefits shall be distributed in full
not later than the last day of the calendar year containing the fifth
anniversary of the death of the Participant.
8.5 Special Provisions - Termination Benefits - If a Participant
described in this Section 8.5 (or his Beneficiary) receives the vested
portion of his Accrued Benefit not later than the end of the second Plan Year
following the Plan Year in which his termination of employment with the
Employer Group occurred, forfeiture of the non-vested portion of his Accrued
Benefit shall occur (subject to restoration pursuant to Section 3.2(e)) as of
the date on which the distribution is made. If, upon termination of
employment with the Employer Group, a Participant has no vested interest in
his Accrued Benefit, forfeiture of his entire Accrued Benefit shall occur
(subject to restoration pursuant to Section 3.2(e)) as of the date of
termination of employment with the Employer Group. In any other case
involving a termination described in Section 7.4: (i) forfeiture of the
non-vested portion of the terminated Participant's Accrued Benefit shall
occur on the first to occur of the date of the Participant's death or the
last day of the Plan Year in which the Participant incurs the last of five
consecutive Breaks in Service, (ii) a separate Account shall be established
for the Participant's Graded Vest Company Contributions Account as of the
time of the distribution, and (iii) at any relevant time the vested portion
of the separate Account shall be equal to an amount determined by the
formula: P(AB + (R x D)) - (R x D), where P is the vested percentage at
the relevant time, AB is the separate Account balance at the relevant time,
D is the amount of the distribution, R is the ratio of the separate Account
balance at the relevant time to the separate Account balance after
distribution, and the relevant time is the date of forfeiture.
8.6 Direct Transfers to Other Plans -
(a) Direct Transfer Elections - To the extent required by
(or permitted by the Company within the contemplation of) Section 401(a)(31)
of the Internal Revenue Code and/or the regulations issued thereunder,
but subject to Section 8.6, if a Participant who is entitled to receive
a distribution from the Plan which qualifies as an Eligible Rollover
Distribution elects in writing (in such form and at such time prior
to his Benefit Commencement Date as the Company may prescribe and as
is deemed reasonable by applicable regulations) to have all or any
part of such distribution paid directly to an Eligible Retirement Plan,
the Trustees shall pay such distribution in the form of a direct
transfer to the Eligible Retirement Plan specified in the election.
An election made with respect to one in a series of periodic payments
shall apply to all subsequent payments in the series unless and until
the Participant files a new election. To the extent required by Section
3405(c) of the Internal Revenue Code, any Eligible Rollover Distribution
as to which the aforesaid direct transfer election is not made shall
be subject to 20% federal income tax withholding. However, neither the
direct transfer election nor the withholding requirement shall apply
<PAGE> 33
to any distribution which, when combined with all other distributions
made or expected to be made from the Plan to the distributee during the same
calendar year, is less than $200.00. For these purposes:
(i) "Eligible Rollover Distribution" shall mean any
distribution which qualifies for rollover treatment pursuant to Section
402(c) of the Internal Revenue Code (generally, the taxable (if not rolled
over) portion of any distribution from the Plan to a Participant, other than
a distribution which is: (A) one of a series of substantially equal periodic
payments (not less frequently than annually) over the life (or life
expectancy) of the Participant or the joint lives (or joint life and last
survivor expectancies) of the Participant and his Beneficiary, or over a
specified period of ten years or more, or (B) any distribution which is
required under Section 8.2(c) or 8.4(c)).
(ii) "Eligible Retirement Plan" shall mean any plan
which qualifies as a rollover recipient pursuant to Section 402(c)(8) of the
Internal Revenue Code (generally, an IRA, an IRAN, a tax-qualified retirement
plan or a Section 403(a) annuity, but, in the case of a surviving spouse,
only an IRA or IRAN). However, a tax-qualified retirement plan shall not
constitute an Eligible Retirement Plan unless it is a defined contribution
plan that accepts rollover contributions.
(iii) The term "Participant" includes the Participant's
surviving spouse as well as his spouse or former spouse under a qualified
domestic order as defined in Section 414(p) of the Internal Revenue Code.
(b) Other Direct Transfers - Subject to the requirements of
Section 411(d)(6) of the Internal Revenue Code, under appropriate
circumstances involving a transfer of participation of one or more
individuals from this Plan to another qualified (under Section 401(a) of
the Internal Revenue Code) retirement plan without interim access to their
Accrued Benefits (including but not limited to plan mergers, terminations,
partial terminations and spin-offs and other divisive transactions), the
Trustees, with the consent of the Company, but without the necessity of
consent by the affected individuals, may make a direct transfer of funds to
any qualified retirement plan in which the individuals will participate.
ARTICLE IX
Beneficiaries; Participant Data
9.1 Designation of Beneficiaries - Subject to Section 8.4(a), each
Participant from time to time may designate any person or persons (who may be
named contingently or successively) to receive such benefits as may be
payable under the Plan upon or after his death, and such designation may be
changed from time to time by the Participant by filing a new designation.
Each designation will revoke all prior designations by the same Participant,
shall be in form prescribed by the Company, and will be effective only when
filed in writing with the Company during his lifetime.
In the absence of a valid Beneficiary designation (except in
conjunction with the election of a form of benefit payment which does not
require the designation of a specific Beneficiary), or if, at the time any
benefit payment is due to a Beneficiary, there is no living Beneficiary
eligible to receive the payment, validly named by the Participant, the
Company shall direct the Trustees to distribute any such benefit payment
to the Participant's spouse, if then living, otherwise to the Participant's
then living descendants, if any, per stirpes, otherwise to the Participant's
then living parent or parents, equally, otherwise to the Participant's
estate. In determining the existence or identity of anyone entitled to
a benefit payment, the Company and the Trustees may rely conclusively
upon information supplied by the Participant's Personal Representative.
In the event of a lack of adequate information having been supplied to
the Company, or in the event that any question arises as to the right of
any person to receive a benefit payment as aforesaid, or in the event
that a dispute arises with respect to any such payment, then, notwithstanding
the foregoing, the Company, in its sole discretion, may, in complete
discharge of the Company and the Trustees, and without liability for
any tax or other consequences which might flow therefrom, direct the Trustees
<PAGE> 34
to: (i) distribute the payment to the Participant's estate, (ii) retain
such payment, without liability for interest, until the rights thereto
are determined, or (iii) deposit the payment into any court of competent
jurisdiction.
9.2 Location of Participants and Beneficiaries - Any communication,
statement or notice addressed to a Participant or Beneficiary at his last
post office address filed with the Company, or if no such address was filed
with the Company then at his last post office address as shown on the
Company's records, shall be binding on the Participant or Beneficiary for all
purposes of the Plan. Except for the Company's sending of a registered
letter to the last known address, neither the Trustees nor the Company shall
be obliged to search for any Participant or Beneficiary. If the Company
notifies any Participant or Beneficiary of a deceased Participant that he is
entitled to an amount under the Plan and the Participant or Beneficiary fails
to claim such amount or make his location known to the Company within three
years thereafter, then, except as otherwise required by law, the Company
shall have the right to direct that the amount payable shall be deemed to be
a forfeiture and treated in accordance with Section 7.4, except that the
dollar amount of the forfeiture, unadjusted for gains or losses in the
interim, shall be reinstated if a claim for the benefit is made by the
Participant or Beneficiary to whom it was payable. If a benefit payable to
an unlocated Participant or Beneficiary is subject to escheat pursuant to
applicable state law, neither the Trustees nor the Company shall be liable to
any person for any payment made in accordance with such law.
ARTICLE X
The Trust Fund
10.1 Establishment and Acceptance of Trust - The Trust will consist
of all funds held by the Trustees under the Plan, including contributions
made pursuant to the provisions hereof and the investments, reinvestments
and proceeds thereof. The Trust shall be held, managed, invested and
administered in trust, without distinction between principal and income,
pursuant to the terms of the Plan. The Trustees hereby accept the Trust
created hereunder and agree to perform the duties under the Plan on their
part to be performed. Except as otherwise expressly provided for in the
Plan (and particularly in Section 10.16), the Trustees shall have exclusive
authority and discretion to manage and control the Trust assets. The duties,
powers and responsibilities reserved to the Trustees may be allocated among
the Trustees (if there be more than one) so long as such allocation is
pursuant to action of the Company, or by written agreement executed by the
Trustees and approved by the Company, in which case, except as may be
required by ERISA, no Trustee shall have any liability, with respect to any
duties, powers or responsibilities not allocated to him, for the acts or
omissions of any other Trustee.
10.2 Powers of Trustees - With respect to the Trust, the Trustees
shall have the following powers, in addition to those vested in them
elsewhere in the Plan or by law:
(a) To retain in cash so much of the Trust as they deem
advisable to meet the liquidity needs of the Plan and to deposit any cash
so retained at a reasonable rate of interest in any federally or state
supervised bank or similar institution (including any such institution which
is a Trustee hereunder).
(b) To invest the balance of the Trust in any shares of stock
(including any mutual fund sponsored or maintained by, or which receives
investment advice from, any institution which is, or is related to, a Trustee
hereunder), bonds, securities, mortgages, notes, partnership or joint venture
interests, choses in action, options, deposits bearing a reasonable rate of
interest in any federally or state supervised bank or similar financial
institution (including any such institution which is a Trustee hereunder),
leaseholds, real estate, other evidences of indebtedness or ownership, and
other property of any kind, real, personal or mixed, wherever located, as in
the opinion of the Trustees offer possibilities for investment return through
income and/or capital appreciation; in making such investments, the Trustees
shall not be restricted to securities or other property of the character
authorized or required by applicable law, custom or rules of court from time
to time for trust investments.
(c) To manage, sell, contract to sell, deal in options
with respect to, create holding companies to own, convey, dispose of,
mortgage, exchange, transfer, abandon, improve, develop, preserve,
repair, insure, lease for any term even though commencing in the
future or extending beyond the term of the Trust, make
<PAGE> 35
contracts for, bid for, acquire, and otherwise deal with (alone or with
others, and utilizing other Trust assets where appropriate), all property,
real or personal, in such manner, for such considerations, and on such
terms and conditions as the Trustees shall decide; to acquire, hold,
and exercise the other powers set forth herein with respect to, securities
issued by the Company or its affiliates, and/or real property (and related
personal property) which is leased to the Company or its affiliates, without
limit as to amount, value or percentage of the total Trust, but only to
the extent each such security constitutes a "qualifying employer security"
and such property constitutes "qualifying employer real property", as
defined in Section 407(d) of ERISA.
(d) To invest the assets of the Trust in any collective or
commingled trust fund maintained by a bank or trust company, including any
bank or trust company which may act as a Trustee hereunder. In this
connection, the commingling of the assets of the Trust with assets of other
eligible, participating trusts through such a medium is hereby specifically
authorized. Any assets of the Trust which may be so added to such collective
trusts shall be subject to all of the provisions of the applicable
declaration of trust, as amended from time to time, which declaration, if
required by its terms or by applicable regulations under the Internal Revenue
Code or ERISA, is hereby adopted as part of the Plan, to the extent of the
participation in such collective or commingled trust fund by the Trust.
(e) To make any payment or distribution directed by the
Company or otherwise required or advisable to carry out the provisions of the
Plan.
(f) With the approval of the Company, to borrow money from
others upon such terms and conditions as they may deem proper, and, for the
sum so borrowed, to issue promissory notes and secure the repayment thereof
by the pledging of any Trust assets.
(g) To compromise, contest, arbitrate, enforce or abandon
claims and demands.
(h) To have with respect to the Trust all of the rights of an
individual owner, including the power to vote or give proxies, to join in,
dissent from or oppose any voting trusts, mergers, consolidations,
foreclosures, reorganizations, or liquidations, and to exercise or sell stock
subscription rights or, if the Plan receives adequate consideration,
conversion rights.
(i) To hold any securities or other property in the names of
the Trustees or their nominees, or in such other form as they deem best, with
or without disclosing the trust relationship, and to cause or permit any
Trust property to be held for safekeeping or custodial purposes by any
authorized person or entity; provided, however, that, except as may be
authorized pursuant to ERISA, the indicia of ownership of any Trust property
may not be maintained outside the jurisdiction of the district courts of the
United States.
(j) To retain any funds or property subject to any dispute
without liability for the payment of interest, and to decline to make payment
or delivery thereof until final adjudication is made by a court of competent
jurisdiction, or the Trustees are indemnified against loss to their
satisfaction.
(k) After advance notice to the Company, to pay, and to
deduct from and charge against the Trust, any taxes which may be imposed
upon the Trust, the income, property or transfer thereof, or upon or with
respect to the interest of any person therein, which the Trustees are
required to pay; to contest, in their discretion, the validity or amount of
any tax, assessment, claim or demand which may be levied or made against or
in respect of the Trust, the income, property or transfer thereof, or in any
matter or thing connected therewith, provided they are indemnified to their
satisfaction.
(l) After advance notice to the Company, to begin, maintain
or defend any litigation necessary in connection with the administration of
the Trust, except that the Trustees shall not be obliged or required to do
so unless indemnified to their satisfaction.
(m) To make, execute and deliver, as Trustees, any
and all deeds, leases, mortgages, conveyances, contracts, waivers,
releases or other instruments in writing necessary or proper for the
accomplishment of any of the foregoing powers; in the event that
there be more than one Trustee under the Plan, any single Trustee
<PAGE> 36
shall have the power to execute, on behalf of all of the Trustees, any
document or return to be filed with any governmental agency or insurance
company; all of the Trustees at any time acting hereunder may, by a written
instrument, designate each or any of such Trustees, severally or any two or
more of them, jointly, and/or any one or more other persons, severally or
jointly, to make, execute, acknowledge or deliver on behalf of all of the
Trustees any instrument to be executed by the Trustees, and all of the
Trustees at any time acting hereunder may, by a written instrument, revoke
and/or change any such designation.
(n) To appoint any persons or firms (including but not
limited to, accountants, investment advisors, counsel, actuaries, physicians,
appraisers, consultants, professional plan administrators and other
specialists) and to pay their reasonable compensation and expenses, or
otherwise act to secure specialized advice or assistance, as they deem
necessary or desirable in connection with the management of the Trust; to the
extent not prohibited by ERISA, the Trustees shall be entitled to rely
conclusively upon, and shall be fully protected in any action taken or
omission made by them in good faith reliance upon, the advice or opinion of
such persons or firms, provided such persons or firms were prudently chosen
by the Trustees, taking into account the interests of the Participants and
Beneficiaries and with due regard to the ability of the persons or firms to
perform their assigned functions.
(o) With the approval of the Company, to retain the services
of one or more persons or firms for the management of (including the power to
acquire and dispose of) all or any part of the Trust assets, provided that
each of such persons or firms is registered as an investment advisor under
the Investment Advisors Act of 1940, is a bank (as defined in that Act), or
is an insurance company qualified to manage, acquire or dispose of Trust
assets under the laws of more than one state, and provided that each of such
persons or firms has acknowledged in writing that he is a fiduciary with
respect to the Plan; in such event, the investment manager or managers shall
have the same investment powers and duties as are set forth herein with
respect to the Trustees (except as limited by the terms of the applicable
asset management arrangement or agreement), and the Trustees shall follow the
directions of such investment manager or managers with respect to the
acquisition and disposition of Trust assets, but shall not be liable for the
acts or omissions of such investment manager or managers, nor shall they be
under any obligation to review, invest or otherwise manage any Trust assets
which are subject to the management of such investment manager or managers.
(p) With the approval of the Company, to apply for, and to
invest the monies of the Trust in, insurance company investment contracts,
and, in connection therewith, to hold such contracts in trust pursuant hereto
and exercise all of the rights and privileges of ownership of such contracts
as they deem advisable.
(q) Upon the order of the Company, to invest part of the
Accrued Benefit of a Participant in life insurance contracts issued by a
legal reserve life insurance company; provided that, at any time, less than
the following percentages of the contributions and forfeitures which have
been allocated to the Participant's Accrued Benefit for less than two years
shall in the aggregate have been used to purchase and pay premiums on such
life insurance contracts: ordinary life contracts - 50%; term, universal
and all other life contracts - 25%; both ordinary and other life contracts
with respect to a Participant - 25% (taking into account one-half of the
ordinary life premiums plus all of the other premiums). The Trustees shall
be the owner of each Policy purchased hereunder, and any and all rights
provided under the Policy or permitted by the insurance company shall be
reserved to the Trustees. Each insurable Participant shall have the right to
have a portion of his Accrued Benefit invested in life insurance contracts,
within the limits herein stated or imposed by the Company on all Participants,
and any exercise of Policy loan provisions by the Trustees shall be
proportionate with respect to each insured Participant. The Trustees shall
normally pay premiums on any Policy subject hereto as each premium falls due.
Dividends may be used in reduction of any such premium, may be applied in any
other manner permitted by the insurance company or may be taken in cash by
the Trustees and allocated to the Participant's Accrued Benefit, as they may
determine from time to time. Any Policy purchased hereunder shall provide
that, upon the death of the insured Participant, the proceeds shall be
payable to the Trustees, who shall then pay over such proceeds to the
Participant's Beneficiary in accordance with Sections 8.4 and 9.1. When any
insured Participant shall retire or otherwise terminate employment with the
Employer Group, or if the Plan should terminate, the Trustees shall have the
right to surrender the Policy for its cash value or otherwise dispose of the
Policy in order that the provisions of the Plan covering disposition of the
Accrued Benefit of the Participant in the happening of any such event may be
effected, and so that the Participant's Accrued Benefit shall not be used to
continue life insurance protection beyond retirement.
<PAGE> 37
(r) To perform any and all other acts, take all other
proceedings, and exercise all other rights and privileges, although not
mentioned herein, in their judgment necessary or appropriate for the proper
and advantageous management, administration, investment, and distribution of
the Trust, and to carry out the purposes of the Plan.
10.3 Management Authority - Except as otherwise provided in Section
10.2, and subject to the provisions of Section 10.16, the powers granted the
Trustees thereunder shall be exercised in the discretion of the Trustees;
however, the Company may at any time affirmatively direct the Trustees with
regard to investment of the Trust, or direct the Trustees to obtain the
Company's approval before exercising any of the powers granted the Trustees.
Any such direction may be of a continuing nature or otherwise, may be revoked
at any time, and shall be complied with as promptly as possible by the
Trustees. To the extent not inconsistent with the fiduciary responsibility
provisions of ERISA, the Trustees shall not be liable for any loss or
depreciation in value of the Trust, or any adverse effect upon the exempt
status of the Trust under the Internal Revenue Code, resulting from actions
taken in accordance with the Company's affirmative direction or from the
failure or refusal of the Company to give any required approval, nor shall
the Trustees be obliged to review the assets of the Trust acquired on the
direction of the Company. If the Company exercises its discretion under this
Section: (i) the Company shall have the power to retain an investment
manager as set forth in Section 10.2(o), and its fiduciary liability, as well
as that of the Trustees, with respect thereto shall be limited to the extent
set forth therein; and (ii) the Company agrees to indemnify the Trustees and
hold them harmless from and against any claim or liability which may be
asserted against the Trustees by reason of their acting or not acting
pursuant to any such direction or failing to act in the absence of any such
direction.
10.4 Tenure of Trustees - Any Trustee may resign at any time by
giving written notice to the Company. The Company may remove any Trustee at
any time by written notice to such Trustee. Such resignation or removal
shall take effect on the date specified in such notice, but not less than
30 days nor more than 60 days following the date on which the notice was
either delivered or mailed. The Company may fill any vacancy in the office
of Trustee, howsoever caused; the Company shall also have the right, at any
time, to add additional Trustees. However, upon resignation or removal of
all of the existing Trustees, the Company shall appoint one or more successor
trustees at the earliest possible date, consistent with prudent exercise of
its fiduciary responsibility, after the effective date of the resignation or
removal. Each individual Trustee shall be a full-time Employee of the
Company; the termination of employment with the Company by a Trustee shall
be deemed to be a resignation by the individual as a Trustee hereunder.
Pending the appointment of any successor Trustee and the acceptance of such
appointment, the existing Trustee or Trustees shall have full power to take
any actions hereunder. Each successor or additional Trustee shall have all
the rights and powers, as well as duties and liabilities, vested in the
original Trustees without the signing or filing of any further instrument,
but any resigning or removed Trustee shall execute all documents and do all
acts necessary to transfer possession of and vest title of record to any
assets of the Trust in any successor Trustee, or in the remaining Trustee
or Trustees. In the event of the resignation or removal of a Trustee, such
Trustee shall forthwith turn over to the then remaining Trustees, or if none,
to the successor Trustee or Trustees, all funds, records and books of account
pertaining to the Trust which are in his possession and shall render an
accounting thereof. With the approval of the Company, a successor Trustee
may accept the accounting rendered pursuant to Section 10.10 and the property
delivered to it by a predecessor Trustee as a full and complete discharge of
the predecessor Trustee, without incurring any liability or responsibility
for so doing.
10.5 Common Investments - Except as otherwise expressly set forth
in the Plan, the Trustees shall not be required to make separate investments
for individual Participants or to maintain separate investments for each
Participant's Accrued Benefit, but may invest contributions and any profits
or gains therefrom in common investments.
10.6 Compensation and Expenses of Trustees - The Trustees shall be
entitled to such reasonable compensation as shall from time to time be agreed
upon by the Company and the Trustees. Such compensation, and all expenses
reasonably incurred by the Trustees in carrying out their functions, shall
constitute a charge upon the Trust assets unless and until they shall be paid
or discharged by the Company; the Company shall be under no obligation to pay
such costs and expenses, and in the event of its failure to do so, the
Trustees shall be entitled to pay the same, or to reimburse themselves for
the payment thereof, from the Trust.
<PAGE> 38
10.7 Immunity and Liability of Trustees - Except to the extent
inconsistent with Title I, Subtitle B, Part 4 of ERISA:
(a) The Trustees shall be fully protected in acting upon any
instrument, certificate or paper believed by them to be genuine and to be
signed or presented by the proper person or persons, and the Trustees shall
be under no duty to make any investigation or any inquiry as to any statement
contained in any such writing, but may accept the same as conclusive evidence
of the truth and accuracy of the statements therein contained.
(b) In the absence of actual knowledge that a direction by
the Company is in violation of the terms of the Plan, the Trustees shall not
be liable for the proper application of any part of the Trust if payments
are made in accordance with the directions of the Company as herein provided,
and the Trustees shall not be obliged to inquire as to whether any payee is
entitled to any payment or distribution, pursuant to such directions, or as
to whether any payment or distribution, pursuant to such directions, is
proper or within the terms of the Plan. The Trustees shall not be required
to make any investigation to determine the identity or mailing address of any
person entitled to benefits under the Plan and shall be entitled to withhold
making any payments or deliveries upon instructions from the Company.
(c) The Trustees shall not be responsible for the
administration of the Plan or for the adequacy of the Trust to meet and
discharge any and all payments and liabilities under the Plan. The Trustees
shall be responsible only for such sums as shall actually be received by them
as Trustees hereunder, and it shall not be the duty of the Trustees to
collect, or to ascertain the correctness of the amount of, any sum receivable
or received from the Company.
(d) All persons dealing with the Trustees are released from
inquiry as to the decision or authority of the Trustees and from seeing to
the application of any property paid or delivered to the Trustees.
(e) No single Trustee shall be personally liable for the acts
or omissions of any other single Trustee, and no successor Trustee shall be
in any way liable or responsible for anything done or omitted in the
administration of the Trust prior to the date he became a Trustee.
(f) In the absence of knowledge to the contrary, the Trustees
may assume that the Trust is entitled to exemption from federal and state
income taxes.
(g) The Trustees shall act only in accordance with the
provisions of Sections 11.5 and 11.6.
(h) The Trustees shall have the right to obtain a judicial
settlement of their accounts at any time (the only necessary parties thereto
being the Trustees and the Company), and such judicial settlement shall
be binding on all parties claiming any interest under the Plan or Trust.
(i) If any matter arises as to which the Trustees are
entitled to indemnity under this ARTICLE X, the Trustees shall give the
Company prompt written notice thereof. The Company, at its own expense,
shall then take charge of the disposition of the matter, including compromise
or the conduct of litigation. The Trustees, at their own expense, may retain
their own counsel and share in the conduct of any such litigation, but the
failure to do so shall not adversely affect their right to indemnity.
(j) The Trustees may request the advice or direction of the
Company with respect to the administration and distribution of the Trust, and
shall be fully protected in relying upon any advice or direction given to
them by the Company, in writing, in response to such request.
10.8 Vote of Trustees - Whenever any action is required or permitted
by the Plan to be taken by the Trustees, such action shall be determined by
vote of a majority of the Trustees then acting.
10.9 Financial Records - The Trustees shall maintain records and
accounts reflecting all receipts and disbursements made by them under the
Plan and showing such other items and information as the Company from
<PAGE> 39
time to time may specify. The Trustees' records and accounts shall be
open to the inspection of the Company at all reasonable times, and may be
audited from time to time by such person or persons as the Company may
specify.
10.10 Periodic Accounting - The Trust will be periodically
evaluated by the Trustees, and a written accounting will be rendered as of
the date of each such evaluation showing the financial condition of the Trust
(and each Participant's Accrued Benefit) and all receipts, disbursements and
other transactions effected by the Trustees during the period covered by the
accounting, based on fair market values prevailing as of such date. Such
evaluation and accounting will be performed annually as of each Valuation
Date, and shall be performed on an interim basis as requested by the Company
or required by the terms of the Plan, and, if so requested by a resigning or
removed Trustee, as of the effective date of such resignation or removal.
Any such accounting shall be due within 90 days after the date thereof (or
such later date as may be agreed to by the Company). To the extent permitted
by law, upon the expiration of one year from the filing of such accounting,
the Trustees shall be forever released, remised and discharged from all
liability and accountability to anyone with respect to the propriety of their
accounts and transactions shown in such accounts except with respect to any
such accounts or transactions as to which the Company shall within such one
year period file written exceptions. If such written exception is filed with
the Trustees and the matters thereby brought in to controversy can not be
adjusted by agreement between the Company and the Trustees, the Trustees
shall file such account in any court of competent jurisdiction for audit and
adjudication. All determinations as to the value of the assets of the Trust,
and as to the amount of the liabilities thereof, shall be made by the
Trustees, whose decisions shall be final and conclusive and binding on all
parties hereto, the Participants and Beneficiaries and their estates. In
making any such determination, the Trustees shall be entitled to seek and
rely upon the opinion of or any information furnished by brokers, appraisers
and other experts, and the Trustees shall also be entitled to rely upon
reports as to sales and quotations, both on security exchanges and otherwise
as contained in newspapers and in financial publications.
In the event of a written disapproval of the Trustees'
accounting by the Company within the time specified, and assuming that the
differences cannot be reasonably resolved by the Trustees and the Company,
the Trustees shall be entitled to apply for a judicial determination of the
accuracy thereof. If the accounting proves accurate, the cost of such
proceeding, including a reasonable counsel fee for the Trustees, shall be
paid from the Trust; if the accounting proves inaccurate, the cost of such
proceeding, including a reasonable counsel fee for the Company, shall be
paid by the Trustees (unless the Company agrees to pay it) and shall not be
charged against the Trust. Except as required by law, no person, including a
Participant or Beneficiary, shall be entitled to any further or different
accounting by the Trustees.
10.11 Prohibition Against Diversion of Funds - It shall be
impossible by operation of the Plan or Trust, by natural termination of
either, by power of revocation or amendment, by the happening of any
contingency, by collateral arrangement or by other means, for any part of
the corpus or income of the Trust, or any funds contributed thereto, to inure
to the benefit of the Company or otherwise be used for or diverted to
purposes other than providing benefits to Participants and Beneficiaries and
defraying reasonable expenses of administering the Plan, except as otherwise
provided in Section 6.8(b) or 10.12, and except that:
(a) Except as the Company shall otherwise expressly determine
all contributions made by the Company to the Trust are and shall be
conditioned on the deductibility of the contributions under Section 404 of
the Internal Revenue Code, so that to the extent that the aforesaid deduction
is disallowed by the Internal Revenue Service, the Trustees shall return to
the Company the disallowed portion of the contribution within one year after
disallowance (less any Trust losses attributable thereto), but only to the
extent that such return does not cause the Accrued Benefit of any Participant
to be less than it would have been had the disallowed amount not been
contributed. An unfavorable determination or a disallowance of deduction
shall be deemed to have occurred when appeal rights with respect thereto
shall have expired or been waived or exhausted.
(b) The amount of any contribution made by the Company by
reason of a mistake of fact (less any Trust losses attributable thereto)
shall be returned by the Trustees to the Company within one year after the
payment of the contribution, but only to the extent that such return does not
cause the Accrued Benefit of any Participant to be reduced to less than it
would have been had the mistaken amount not been contributed.
<PAGE> 40
(c) To the extent that any contributions which would be
returned to the Company pursuant to the foregoing represent contributions
made pursuant to Sections 5.2 and/or 5.3, said contributions, in lieu of
being paid to the Company, shall be paid to the Participants on whose behalf,
or by whom, the contributions were made.
10.12 Spendthrift Provision - No amount payable under the Plan
will, except as otherwise specifically provided by law, be subject in any
manner to anticipation, alienation, attachment, garnishment, sale, transfer,
assignment (either at law or in equity), levy, execution, pledge, encumbrance,
charge or any other legal or equitable process, and any attempt to do so will
be void; nor will any benefit be in any manner liable for or subject to the
debts, contracts, liabilities, engagements or torts of the person entitled
thereto. The foregoing shall not preclude, and the Trustees (at the
direction of the Company or to the extent necessary to comply with a
directive of a court or other governmental agency of competent jurisdiction)
shall honor: (i) the enforcement of a federal tax levy made pursuant to
Section 6331 of the Internal Revenue Code, (ii) the collection by the United
States on a judgment resulting from an unpaid tax assessment, or (iii) the
creation, assignment or recognition of a right to any benefit payable with
respect to a Participant pursuant to a qualified domestic relations order (as
defined in Section 414(p) of the Internal Revenue Code) or any other order
under which payment of Plan benefits pursuant thereto commenced prior to, or
which would be a qualified domestic relations order but for the fact that it
was entered into prior to, January 1, 1985. Further, the foregoing events
shall not include any arrangement for: (i) the withholding of taxes from
Plan benefit payments, (ii) the recovery by the Plan of overpayments of
benefits previously made to a Participant, (iii) the transfer of benefit
rights from the Plan to another plan, or (iv) the direct deposit of benefit
payments to an account in a banking institution (if not part of an
arrangement constituting an assignment or alienation).
Notwithstanding the foregoing, any Participant or Beneficiary
may make, and the Trustees shall honor, any arrangement (so long as it is
revocable at any time by the Participant or Beneficiary) whereby the
Participant or Beneficiary assigns to the Company (i) all or any portion of
a presently due benefit payment, or (ii), once the Participant or Beneficiary
begins receiving benefits, the right to up to 10% of any future benefit
payment. The Company acknowledges to the Administrator that, as to (i), it
has no enforceable right in or to any Plan benefit payment or portion thereof
under any such arrangement, except to the extent of payments actually
received pursuant to the terms of the arrangement.
In the event that any Participant's benefits are garnished or
attached by order of any court, the Trustees may bring an action for a
declaratory judgment in a court of competent jurisdiction to determine the
proper recipient of the benefits to be paid by the Plan. During the pendency
of said action, any benefits that become payable shall be paid into the
court as they become payable, to be distributed by the court to the recipient
it deems proper at the close of said action.
10.13 Commingling with Related Trusts - The Trust may be held by
the Trustees in trust in common with the trust funds under any other
qualified profit sharing or pension plan of the Company or its subsidiaries
or affiliates. In such case, the Trustees shall be under no duty to earmark
or keep separate the assets of the Trust, but may commingle them with the
assets of the trust funds under the other plans. The Trustees shall,
however, maintain a separate accounting reflecting the equitable share of
each plan in such assets. The Company may at any time direct the Trustees to
segregate and withdraw the equitable share of the Trust in such assets in
such manner as may be agreed upon between the Company and the Trustees. The
Trustees' valuation of the assets for the purpose of such withdrawal shall
be conclusive. The Trustees shall thereafter hold the assets so withdrawn
as a separate Trust in accordance with the provisions of the Plan.
10.14 Payment on Behalf of Infant or Incompetent - Subject to the
applicable rules of any insurer and/or the applicable provisions of any
insurance company contract, if any Participant or Beneficiary to whom a
benefit is payable hereunder is a minor or has been adjudicated to be unable
to manage his or her property or financial affairs, the Company or the
Trustees shall have the power to cause the payments becoming due to such
person to be made to any parent, guardian, custodian, relative or such other
person then assuming responsibility for the care of the Participant or
Beneficiary, without responsibility of the Company or the Trustees to see to
the application of such payments, but only so long as the arrangement for
payment is revocable at any time by the Participant or Beneficiary and the
third party acknowledges in writing to the Company or Trustees that the
payments are being received for the benefit of the Participant or Beneficiary.
<PAGE> 41
10.15 Relationship of Insurers to Trust - In no event shall any
insurance company issuing any policy or other contract to the Trustees under
the Plan be considered a party to, or be required to examine, the Plan, nor
shall it have any obligation to determine whether its actions are proper
under, or in accordance with, the provisions of the Plan. Nothing in the
Plan shall in any way be construed to enlarge, change, vary or in any way
affect the obligations of an insurer as expressly provided in a policy or
contract issued by it. It is understood that any insurer may deal with the
Trustees in accordance with the terms and conditions of the contracts and in
such manner as the Trustees and the insurer shall agree, without the consent
of any other person or persons interested in the Plan. No insurer shall be
responsible for the failure of the Company or the Trustees to perform their
duties as such or for the application or disposition of any money paid or to
be paid to the Trust, and such payment shall fully discharge the insurer for
the amount so paid. In the event of any conflict between the provisions of
the Plan and the terms of any policy or contract, the provisions of the Plan
shall control (except as to the issuing insurer).
Neither the Company nor the Trustees shall be responsible:
(i) for the validity of any policy or contract issued by an insurer, (ii) for
the failure on the part of any insurer to make any payments or provide any
benefits thereunder, (iii) for the action or inaction of any person or
persons which may render the policy or contract invalid or unenforceable, or
(iv) for any restrictions or provisions contained therein or imposed by the
insurer or by any other person.
10.16 Separate Investment Funds - The Trustees shall establish and
maintain such Separate Investment Funds (each of which may consist of a
commingled bank or insurance company fund, mutual fund, insurance or annuity
contract or any other investment vehicle or individual investment) as they,
subject to Section 10.3, may deem appropriate from time to time, and shall
allocate the assets of the Trust among such funds pursuant to the investment
designations of the Participants described in Section 6.9, or pursuant to the
direction of the Company with respect to any portion of the Trust not subject
to Section 6.9, in accordance with the following:
(a) In the discretion of the Company, one of the investment
funds shall be a fund (the "Holding Company Stock Fund") which shall be
primarily invested in Holding Company Stock. Except as otherwise required
by law or deemed advisable by the Trustees pursuant to opinion of counsel,
the assets of the Holding Company Stock Fund shall be held on a pooled basis
and no Participant shall be entitled to exercise any voting rights with
respect to Holding Company Stock held in the fund, nor shall any Participant
acquire any right to or interest in any specific share of Holding Company
Stock or other asset of the fund, as the result of the allocation of any part
or all of his Accrued Benefit to the fund.
If prohibited by Section 6.9(g), Participant Contributions
Accounts shall not be invested at any time in the Holding Company Stock Fund.
To the extent that the aggregate investment designations
by all Participants or by the Company, as the case may be, for investment in
the Holding Company Stock Fund are greater or less than the number of shares
of Holding Company Stock then held in the Trust, the Trustees shall acquire
or dispose of shares of Holding Company Stock accordingly. Such transactions
may be carried out on any securities exchange where the shares are traded,
in the over-the-counter market, or in negotiated transactions (including
purchases of previously unissued or treasury stock from the Holding Company),
and may be on such terms as to price, delivery and otherwise as the Trustees
may determine to be in the best interest of the Participants and with due
regard to any applicable requirements of law. However, the stated goal of
equating Trust holdings of Holding Company Stock with the aggregate
Participant or Company designations shall not be deemed to be a directive to
the Trustees, nor shall it obligate the Trustees, to purchase or sell Holding
Company Stock in any transaction that would constitute a prohibited
transaction under ERISA, or at other than what the Trustees deem to be an
appropriate price. Any portion of the Holding Company Stock Fund for which
shares of Holding Company Stock are not available on this basis shall be
invested in a money market-type (or similar investments) pending such
availability.
Notwithstanding any other provision of the Plan,
neither the Trustees nor the Holding Company nor any other person who
may be a fiduciary with respect to the Plan shall have any liability,
fiduciary or otherwise, for any loss arising from or as a result of the
Participant's election to invest in the Holding Company Stock Fund, nor
resulting from the Participant's inability to withdraw from the Holding
Company Stock Fund until the next Designation Date. The Trustees are
specifically absolved of any statutory, judicial, legal or other
<PAGE> 42
responsibility with respect to such election by the Participant, and the
Trustees shall not be obliged to manage or review the viability of Holding
Company Stock as a Trust investment, in which connection the elections of
the Participants to invest in the Holding Company Stock Fund shall be deemed
to be directives to the Trustees to act without power or responsibility to
determine the appropriateness of the investment for any individual
Participant or for the Trust as a whole.
(b) Upon the direction of the Company, but without necessity
of Plan amendment, the Trustees shall provide for the establishment of
additional Separate Investment Funds, shall limit or terminate the
availability of, or modify the investment policy of, any Separate Investment
Fund, and/or shall terminate the availability of Separate Investment Funds
entirely (in which case the Plan shall be administered without regard to
this Section 10.16 except to the extent necessary to preserve, pursuant to
Section 6.9(g), the inability to invest Participant Contributions Accounts in
the Holding Company Stock Fund).
(c) Notwithstanding any provision in Section 6.2 to the
contrary, the assets of each Separate Investment Fund shall be invested and
administered separately and the income, gains, expenses and losses shall be
determined separately for each fund. The Trustees shall charge to each
Separate Investment Fund all costs, expenses, taxes or other charges which
are separately identifiable as attributable to that fund. To the extent that
any such charges or any portion thereof shall not be separately identifiable,
in whole or in part, the Trustees shall allocate such charges among any two
or more of the funds in any reasonable manner.
(d) Notwithstanding the provisions of Section 10.16(c), any
Separate Investment Fund may be treated for accounting and valuation purposes
as a Segregated Account to the extent so designated by the Company with the
consent of the Trustees.
(e) To the extent necessary and to give effect to any new
Participant or Company investment designations, adjustment of the relative
balances in the Separate Investment Funds may be accomplished either by
transfer of any of the assets of any fund to any of the other funds, or by
the liquidation of any of the assets of a fund and the transfer of the cash
received upon such liquidation to any of the other funds, as may be
determined by the Trustees to be appropriate.
(f) Notwithstanding any other provision of the Plan, neither
the Trustees nor the Company nor any other person who may be a fiduciary with
respect to the Plan shall have any liability, fiduciary or otherwise, for any
loss arising from or as a result of any investment designation by the
Participant pursuant to Section 6.9, or from the inability of the Participant
to change his investment designation until the next Designation Date, and the
Trustees are specifically absolved of any statutory, judicial, legal or other
responsibility with respect thereto (including any responsibility to
determine the appropriateness of any individual Participant's investment
designations).
10.17 Loans to Participants - Notwithstanding any other provision
in the Plan to the contrary, the Trustees, upon direction of the Company,
shall establish a Participant loan program whereby the Trustees will make
loans to Participants (as defined for this purpose in Section 10.17(a)) on
the terms and conditions set forth herein. The provisions of this Section
10.17, together with any additional provisions that the Company may set forth
in the Summary Plan Description or in any other separate document deemed
(solely for this purpose) to form part of the Plan, are intended to
constitute a Participant loan program within the meaning of DOL Regs.
Section 2550.408(b)-1(d). Each loan shall be based upon a written
application made to the Company by the Participant setting forth the desired
loan amount and such other information as may be deemed pertinent by the
Company. Subject to the principle that loans shall be made available to
all Participants on a reasonably equivalent basis (and without regard to
an individual's race, color, religion, sex, age or national origin) and
in the same percentage of their Accrued Benefits (except as otherwise
described in Section 10.17(c)), the Company shall have the final and
exclusive right to determine the propriety, amount and terms of any loan
to be made, and to adopt such rules, limitations and procedures with
respect thereto as it deems appropriate (including the right to limit
loans to Participants who put in place arrangements for automatic loan
repayment as more fully described in Section 10.17(g)). All loans shall
comply with the following terms and conditions:
<PAGE> 43
(a) The Participants eligible for loans under the Participant
loan program described in this Section 10.17 shall consist of (and the term
"Participant" shall, solely for purposes of this 10.17, be defined as):
(i) Participants who are actively employed by the Employer Group (including,
from and after September 1, 1992, individuals who are Participants solely
because of the last sentence of the first paragraph of Section 5.3), (ii) to
the extent required pursuant to DOL Regs. Section 2550.408b-1, parties in
interest (as defined in Section 3(14) of ERISA) who are either: (A)
Participants who are no longer actively employed by the Employer Group,
(B) Beneficiaries, or (C) to the extent required by Sections 206(d)(3)(J)
and 408(b)(1) of ERISA, alternate payees under qualified domestic
relations orders (as defined in Section 414(p) of the Internal Revenue Code)
that validly divide a Participant's Accrued Benefit into separate Accrued
Benefits for the Participant and the alternate payee, and (iii) to the
extent determined by the Company from time to time under the Participant
loan program, Participants who would be described by clause (ii) but for
the fact that they are not parties in interest. In no event shall loans
be made to any individual who does not have an Accrued Benefit to his
credit under the Plan, or to any individual who has reached his Benefit
Commencement Date, and, in the absence of a prohibited transaction
exemption, loans may not be made, if the Company is an S Corporation, to
Employees or officers who own (or are considered as owning within the
meaning of Section 318(a)(1) of the Internal Revenue Code) on any day
during the taxable year of the Company, more than 5% of its outstanding
stock.
(b) Each loan shall be deemed to be, and shall be accounted
for as, a specific investment of the borrowing Participant's Compensation
Deferral Account and/or Rollover/Transfer Account, which shall be the sole
sources of such loan. Except as the Company shall otherwise determine, the
loan shall be taken proportionately from all of the Separate Investment Funds
in which the Participant's Accrued Benefit is invested at the time of the
loan.
(c) Except as the Company shall otherwise determine, the
amount of any loan shall not exceed 50% (or such other percentage, not
exceeding 100%, as may be determined by the Company from time to time) of the
Participant's Compensation Deferral Account and Rollover Transfer Account,
and, when added to the outstanding balance of all other loans to the
Participant from the Related Plans, shall not exceed the lesser of:
(i) $50,000 (reduced by the excess of: (A) the highest outstanding balance
of loans from the Related Plans to the Participant during the twelve months
ending on the day before the loan is made, over (B) such balance on the day
the loan is made), or (ii) the greater of $10,000 or 50% of the sum of the
vested portions of the Participant's accrued benefits in all of the Related
Plans, valued as of the last trust fund valuation date in each Related Plan
preceding the date on which the loan is approved (adjusted for subsequent
contributions and/or distributions). For purposes of this Section 10.17(b),
the term "Related Plan" shall mean this Plan and any other qualified
retirement plan of the Company or any Related Employer containing similar
loan provisions.
(d) The period of repayment for any loan shall be arrived at
by mutual agreement between the Company and the Participant, but, except for
home loans (as defined in Section 72(p)(2)(B)(ii) of the Internal Revenue
Code), shall in no event exceed five years. Except as otherwise permitted in
regulations issued by the Internal Revenue Service, and subject to any
acceleration or early repayment provisions in the loan agreement, each loan
shall be repaid in substantially level payments, not less frequently than
quarterly, over the term of the loan.
(e) Each loan shall bear interest at a reasonable rate to be
fixed by the Company, and, in determining the interest rate, the Company
shall take into consideration interest rates currently being charged for
similar type and similarly secured loans by one or more representative major
banks in the Company's metropolitan area, it being intended that each loan
provide the Plan with a return commensurate with the interest rates charged
by commercial lenders for similar loans. The Company shall not discriminate
among Participants in the matter of interest rates, but loans granted at
different times may bear different interest rates if, in the opinion of the
Company, the difference in rates is justified by a change in general economic
conditions.
(f) Loans shall be permitted only for: (i) expenditures to
alleviate financial hardship, as defined in and as determined by the Company
pursuant to Section 7.5 (without regard to Section 7.5(d)(ii)), and shall not
exceed the actual amount needed therefor, (ii) funeral expenses for immediate
family members, (iii) past due income taxes, including interest and penalties,
assessed pursuant to an IRS deficiency notice, and (iv) such other purposes
as may be permitted from time to time by Company directive applicable to
all Participants. However: (i) without regard to any position the
Internal Revenue Service may take in connection with financial hardship
<PAGE> 44
distributions, "related educational fees", as used in Section 7.5(c), shall
be deemed for purposes of this Section 10.17(f) to include room and board,
and (ii) the Company may deny any loan, if, based upon its knowledge of
the Participant's creditworthiness, it is reasonable to believe that the
Participant will be unable to make each payment of principal and interest
when due.
(g) Each loan shall be secured by the Participant's
promissory note for the amount of the loan, including interest, payable to
the order of the Trustees, and by an assignment (notwithstanding the
provisions of Section 10.12) of all or any portion, as determined by the
Company, of the Participant's right, title and interest in and to his Accrued
Benefit, provided, however, that the terms of the assignment may not permit
the Trustees, prior to the Participant's death or other termination of
employment with the Employer Group, the attainment of age 59-1/2 or the
termination of the Plan, to charge the Participant's Compensation Deferral
Accounts or Immediate Vest Company Contributions Account. The loan shall
also be secured with such other collateral, if any, as the Company, in its
sole discretion, may deem necessary to adequately secure the repayment of the
loan and interest, and, in this regard, the Company may distinguish between
Participants who are actively employed and/or are subject to automatic loan
payment arrangements (i.e., payroll deduction loan repayment authorizations
or other similar procedures, such as automatic fund transfers between
financial institutions, which provide for periodic loan payments without
action by the Participant or the Trustees) and those who are not; such
collateral shall be limited to marketable securities and such other assets
which do not present substantial administrative difficulties with respect to
valuation, stability, salability, liquidity, title transfer or safekeeping.
(h) Except as the Company shall otherwise determine, a loan
shall be in default upon: (i) non-payment by the Participant of any
installment of principal or interest when due, (ii) failure (without cure
within 30 days) by the Participant to perform any covenant contained in the
promissory note, (iii) failure of the Participant to provide additional
collateral within 30 days after written demand by the Company if the value of
the collateral, relative to the amount of the unpaid principal plus interest,
falls below the adequate security standard that would have been utilized
pursuant to Section 10.17(g) if the loan were a new loan, (iv) revocation
(other than by the Company or the Trustees) or other termination (without
substitution acceptable to the Company) of any existing authorization for
automatic loan repayment as more fully described in Section 10.17(g), (v)
termination of employment with the Employer Group unless the Participant is,
after termination, a member of any non-employee category of Participant
described in Section 10.17(a) that would be eligible for a new loan under the
Participant loan program, (vi) a Participant's reaching his Benefit
Commencement Date pursuant to ARTICLE VIII, or (vii) termination of the Plan
and Trust. In the event of default the Company will direct the Trustees to
take such action as the Company deems necessary to protect the interests of
the Trust and best secure maximum repayment of the outstanding debt
(including declaring the full amount of principal and interest to be
immediately due and payable, charging the Participant's Accrued Benefit for
the amount thereof to the extent that such charge will not constitute an
in-service distribution that will disqualify the Plan, and/or exercising any
and all rights and remedies of a secured party under applicable law or any
assignment or other security agreement then securing the loan), but the
Trustees shall not be required to act, and shall not be liable for failure to
act, in the absence of instructions from the Company. The Participant shall
be liable for all costs incurred by the Company or the Trustees in connection
with the default, including reasonable attorney's fees. In no event shall
the fact that a loan is secured by a Participant's interest in his Accrued
Benefit be construed as limiting the Participant's personal obligation to
repay the loan in full in accordance with its terms.
(i) No ARTICLE VIII distribution shall be made or commenced
to any Participant or Beneficiary unless and until all unpaid loans made to
the Participant, including accrued interest thereon, have been liquidated or
directly transferred to another plan pursuant to Section 8.6.
(j) Notwithstanding any other provisions of the Plan to the
contrary, the Trustees shall not have any liability, fiduciary or otherwise,
for any loss, or by reason of any breach of fiduciary responsibility, arising
from or as a result of a loan to a Participant made, or any action with
respect thereto taken, at the direction of the Company.
(k) The Company, at any time and in its sole discretion, may
suspend the operation of this Section 10.17; provided, however, that such
suspension shall not affect any loan then outstanding.
<PAGE> 45
10.18 Allocation of Holding Company Securities - In the discretion
of the Trustees, securities issued by the Holding Company which are held by
the Trust may be allocated to the Holding Company Stock Fund, as described in
Section 10.16(a), held as unallocated investments outside the scope of Section
10.16, or specifically allocated, on a share-by-share basis, to a separate
Holding Company Security Account for each Participant.
ARTICLE XI
Administration
11.1 Administrative Authority - Except as otherwise specifically
provided herein, the Company shall have the sole responsibility for and the
sole control of the operation and administration of the Plan, and shall have
the power and authority to take all action and to make all decisions and
interpretations which may be necessary or appropriate in order to administer
and operate the Plan, including, without limiting the generality of the
foregoing, the power, duty and responsibility to: (i) resolve and determine
all disputes or questions arising under the Plan, including the power to
determine the rights of Employees, Participants and Beneficiaries, and their
respective benefits, and to remedy any ambiguities, inconsistencies or
omissions; (ii) adopt such rules of procedure and regulations as in its
opinion may be necessary for the proper and efficient administration of the
Plan and as are consistent with the Plan; (iii) implement the Plan in
accordance with its terms and such rules and regulations; (iv) direct the
Trustees with respect to the eligibility of any Employee as a Participant and
the crediting and distribution of the Trust, which are to be made only upon
the basis of instructions from the Company pursuant to the terms of the Plan;
and (v) establish and carry out a funding policy and method consistent with
the objectives of the Plan and ERISA, pursuant to which the Company shall
determine the Plan's liquidity and financial needs and communicate them to
the Trustees (or other fiduciaries who are charged with determining
investment policy). Subject to the power to delegate in the manner described
in Sections 11.2 and 12.2, the Company shall act through its Board of
Directors or by any committee of, and which is appointed by, the Board of
Directors.
11.2 Company Administration - The Plan shall be operated and
administered on behalf of the Company by an Administrator. The Administrator
shall be deemed to be the "Named Fiduciary" for purposes of ERISA, and shall
be governed by the following:
(a) In the absence of any designation to the contrary
pursuant to Section 11.3, and subject to the power to delegate pursuant to
this Section, the Administrator shall be the Company. Except as the Company
shall otherwise expressly determine, the Administrator shall have full
authority to act for the Company before all persons in any matter directly
pertaining to the Plan, including the exercise of any power or discretion
otherwise granted to the Company pursuant to the terms of the Plan, other
than the power to participate in any matter solely involving a question as to
the Administrator's participation or benefits under the Plan, to amend or
terminate the Plan, to determine Company contributions, to exercise authority
to direct the Trustees pursuant to Section 10.3, to affect the
employer-employee relationship between the Company and any Employee, and
to retain and/or discharge the Trustees, all of which powers are reserved to
the Company unless expressly granted to the Administrator. Fiduciary duties,
powers and responsibilities (other than those reserved to the Trustees, with
respect to management or control of Trust assets) may be allocated among the
fiduciaries (if there be more than one) to whom such duties, powers and
responsibilities have been delegated, so long as such allocation is pursuant
to action of the Company or by written agreement executed by the involved
fiduciaries and approved by the Company, in which case, except as may be
required by ERISA, no such fiduciary shall have any liability, with respect
to any duties, powers or responsibilities not allocated to him, for the acts
or omissions of any other fiduciary. Any person may serve in more than one
fiduciary capacity under the Plan, including those of Administrator and
Trustee.
(b) The Administrator may appoint any persons or firms,
or otherwise act to secure specialized advice or assistance, as it
deems necessary or desirable in connection with the administration and
operation of the Plan; the Administrator shall be entitled to rely
conclusively upon, and shall be fully protected in any action or omission
taken by it in good faith reliance upon, the advice or opinion of such
firms or persons. The Administrator shall have the power and authority
to delegate from time to time by written instrument all or any part
of its duties, powers or responsibilities under the Plan, both
ministerial and discretionary, as it deems appropriate, to any person,
<PAGE> 46
and in the same manner to revoke any such delegation of duties, powers
or responsibilities. Any action of such person in the exercise of such
delegated duties, powers or responsibilities shall have the same force
and effect for all purposes hereunder as if such action had been taken
by the Administrator. Further, the Administrator may authorize one or
more persons to execute any certificate or document on behalf of the
Administrator, in which event any person notified by the Administrator
of such authorization shall be entitled to accept and conclusively rely
upon any such certificate or document executed by such person as
representing action by the Administrator until such third person shall
have been notified of the revocation of such authority. The Administrator
shall not be liable for any act or omission of any person to whom the
Administrator's duties, powers or responsibilities have been delegated,
nor shall any person to whom any duties, powers or responsibilities have
been delegated have any liabilities with respect to any duties, powers or
responsibilities not delegated to him, except to the extent required by ERISA.
(c) All representatives of the Company, and/or members of the
Retirement Plan Committee if one be appointed, shall use ordinary care and
diligence in the performance of their duties pertaining to the Plan, but,
except to the extent required by ERISA, no such individual shall incur any
liability: (i) by virtue of any contract, agreement, bond or other
instrument made or executed by him or on his behalf in his official capacity
with respect to the Plan, (ii) for any act or failure to act, or any mistake
or judgment made, in his official capacity with respect to the Plan, unless
resulting from his gross negligence or willful misconduct, or (iii) for the
neglect, omission or wrongdoing of any other person involved with the Plan.
The Company shall indemnify and hold harmless each such individual from the
effects and consequences of his acts, omissions and conduct in his official
capacity with respect to the Plan, except to the extent that such effects and
consequences shall result from his own willful misconduct or gross negligence.
If any matter arises as to which an individual is entitled to indemnity
hereunder, the indemnitee shall give the Company prompt written notice
thereof. The Company, at its own expense, shall then take charge of the
disposition of the asserted liability, including compromise or the conduct of
litigation. The indemnitee may, at his own expense, retain his own counsel
and share in the conduct of any such litigation, but the failure to do so
shall not adversely affect his right to indemnity.
(d) The Plan may purchase, as an expense of the Plan,
liability insurance for the Plan and/or for its fiduciaries to cover
liability or losses occurring by reason of an act or omission of a fiduciary,
providing such insurance contract permits recourse by the insurer against the
fiduciary in the case of breach of fiduciary obligation by such fiduciary.
Any fiduciary may purchase, from and for his own account, insurance to
protect himself in the event of a breach of fiduciary duty and the Company
may also purchase insurance to cover the potential liability of one or more
persons who serve in a fiduciary capacity with regard to the Plan.
(e) Nothing in the Plan shall be construed so as to prevent
any fiduciary from: (i) receiving any benefit to which he may be entitled as
a Participant or Beneficiary, or (ii) receiving any reasonable compensation
for services rendered, or for the reimbursement of expenses properly incurred
in the performance of his duties under the Plan (except that no person so
serving who receives compensation as an Employee shall receive compensation
from the Plan, except for reimbursement of expenses properly incurred), or
(iii) serving as a fiduciary in addition to being an officer, employee,
agent, or other representative of the Company or any related entity.
11.3 Retirement Plan Committee - The Company shall have the right
to designate and appoint a committee, to be known as the Retirement Plan
Committee, as Administrator. Except to the extent that the Company has
retained any power or authority, or allocated duties and responsibilities to
another administrator or other fiduciary, said Committee shall have full
power and authority to administer and operate the Plan in accordance with its
terms and in particular the authority contained in this ARTICLE XI, and, in
acting pursuant thereto, shall have full power and authority to deal with all
persons in any matter directly connected with the Plan, including, but not
limited to, the Trustees, other fiduciaries, insurance companies, investment
advisors, other advisors and specialists, Participants, Beneficiaries and
their representatives, in accordance with the following provisions:
(a) The Committee shall consist of one or more
individuals designated by the Company. Subject to his right to
resign at any time, each member of the Committee shall serve (without
compensation, unless otherwise determined by the Company) at the pleasure
of the Company, and the Company may appoint, and may revoke the
appointment of, additional members to serve with the Committee as may
be determined to be necessary or desirable from time to time. Each
member of the Committee, by accepting his appointment to the
<PAGE> 47
Committee, shall thereby be deemed to have accepted all of the duties and
responsibilities of such appointment, and to have agreed to the faithful
performance of his duties thereunder.
(b) The Committee shall adopt such formal organization and
method of operation as it shall deem desirable for the conduct of its affairs.
The Committee shall act as a body, and the individual members of the
Committee shall have no powers and duties as such, except as provided herein;
the Committee shall act by vote of a majority of its members at the time in
office, either at a meeting or in writing without a meeting.
(c) Except as set forth in Section 11.9, the determination of
the Committee on any matter pertaining to the Plan within the powers and
discretion granted to it shall be final and conclusive on the Company, the
Trustees, all Participants and Beneficiaries and all those persons dealing in
any way or capacity with the Plan.
11.4 Mutual Exclusion of Responsibility - Neither the Trustees nor
the Company shall be obliged to inquire into or be responsible for any act
or failure to act, or the authority therefor, on the part of the other.
11.5 Uniformity of Discretionary Acts - Whenever in the
administration or operation of the Plan discretionary actions by the Company,
the Administrator or the Trustees are required or permitted, such action
shall be consistently and uniformly applied to all persons similarly situated,
and no such action shall be taken which shall discriminate in favor of
Highly-Compensated Employees.
The sole criterion for determining whether or not, pursuant to
any applicable provision of the Plan, the Company exercises its discretion to
transfer all or any part of a Participant's Accrued Benefit to a Segregated
Account shall be whether the Company determines it to be in the best interests
of the Participant to insulate such Accrued Benefit from fluctuations in
market value of Trust assets, and the Company shall have no liability by
reason of any increase in said market value in which the funds transferred to
the Segregated Account do not share.
11.6 Fiduciary Standards - The Administrator, Trustees and all
other persons in any fiduciary capacity with respect to the Plan shall
discharge their duties with respect to the Plan: (i) solely in the interest
of the Participants and Beneficiaries and for the exclusive purposes of
providing benefits to Participants and their Beneficiaries and defraying
reasonable expenses of administering and operating the Plan, (ii) 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, (iii) with respect to fiduciaries charged with management and control
over Trust assets, by diversifying the investments of the Trust so as to
minimize the risk of large losses, unless under the circumstances it is
clearly prudent not to do so, and (iv) in accordance with the documents and
instruments governing the Plan to the extent consistent with the provisions
of ERISA; provided, however, any requirement of diversification expressed or
implied in the foregoing shall not be deemed to have been violated by the
acquisition of qualifying employer real property or qualifying employer
securities, to the extent defined and/or permitted in ERISA and elsewhere in
the Plan. The provisions of this Section 11.6 are set forth solely to
reflect the relevant provisions of ERISA, and shall not create any
obligations or standards in addition to or in substitution of those set forth
in said Act.
11.7 Litigation - In any action or judicial proceeding affecting
the Plan and/or the Trust, it shall be necessary to join as parties only the
Trustees and the Company. Except as may be otherwise required by law, no
Participant or Beneficiary shall be entitled to any notice or service of
process, and any final judgment entered in such action shall be binding on
all persons interested in, or claiming under, the Plan.
11.8 Payment of Administration Expenses - Expenses (other than
those referred to in Section 10.6) incurred in the administration and
operation of the Plan shall be paid by the Trustees out of the Trust unless
the Company, in its discretion, elects to pay them.
11.9 Claims Procedure - In the event that any Participant or
Beneficiary (hereinafter referred to as the "Claimant") believes that he is
entitled to a benefit under the Plan, and such benefit has not been paid or
commenced, or if such benefit has been paid or commenced under terms or in an
amount with which the Claimant is not in agreement, said Claimant shall have
the right to file a written claim with the Company setting forth the reason
<PAGE> 48
he believes he is entitled to the benefit, or setting forth the nature of his
dispute with the terms or amount of the benefit, as the case may be. Such
claim shall be delivered or mailed to the Company (to the attention of the
President or such other person as shall have been delegated to receive such
claim).
Unless it is determined that the matter is to be resolved in
accordance with the wishes of the Claimant as set forth in the claim, the
Administrator shall provide the Claimant with a written notice setting forth
the specific reason or reasons for the denial, specific reference to
pertinent Plan provisions on which the denial is based, a description of any
additional material or information necessary for the Claimant to perfect his
claim and an explanation of why such material or information is necessary,
and an explanation of the Plan's claim review procedure. If such a notice
has not been provided to the Claimant within 90 days after the claim was
received by the Company, and the claim has not been granted within such
period of time, the claim shall be deemed denied and the Claimant shall be
entitled to institute review procedures as hereinafter set forth, except that
the 90 day period may in special circumstances be extended to 180 days
provided that the Company so notifies the Claimant, before expiration of the
initial 90 day period, in a written notice setting forth the reason for the
extension and the estimated decision date.
For a period of 60 days following the date on which a Claimant
has been provided with a notice of denial as aforesaid, the Claimant may
appeal the denial by submitting to the Administrator a written request for a
review by the Administrator of the denial. At any time prior to the filing of
such an appeal, the Claimant shall have a right to review all pertinent
documents (which shall be made available to the Claimant during normal
business hours at his place of employment or such other place as may be
reasonably designated by the Company). The Claimant shall have the right to
submit to the Administrator, at any time during the pendency of the review
procedure, any written statement of issues and comments which the Claimant
believes it relevant for the Administrator to consider. A decision by the
Administrator shall be made promptly, and not later than 60 days after the
Administrator's receipt of the request for review, unless special
circumstances require an extension of time for processing, and the
Administrator so notifies the Claimant in writing prior to the expiration of
the initial 60 day period, in which case a decision shall be rendered as soon
as possible but not later than 120 days after such receipt of a request for
review. The Administrator's decision shall be set forth in writing and
delivered to the Claimant and shall include specific reasons for the decision
and specific references to the pertinent Plan provisions on which the
decision is based. The Administrator's decision shall be final and binding
on the Company, the Claimant, and all other parties claiming any interest
under the Plan, and their heirs and assigns.
Any reference herein to the "Claimant" shall be deemed to
include any person named by the Claimant as his duly authorized
representative, provided that such representative delivers to the Company a
written power of attorney or otherwise satisfies the Company that he has been
duly authorized to act for the Claimant.
ARTICLE XII
Amendment
12.1 Right to Amend - The Company shall have the right to amend the
Plan, at any time, and with respect to any provisions thereof (subject to the
provisions of Section 10.11 and the next to last paragraph of Section 7.4),
and all parties thereto or claiming any interest thereunder shall be bound
thereby; provided, however, that such amendment must be in writing and
adopted by the Board of Directors (except as otherwise set forth in the last
sentence of Section 11.1 or 12.2) in accordance with applicable state law,
and no such amendment which affects the rights, duties, responsibilities or
immunities of the Trustees shall be binding upon the Trustees in the absence
of their consent thereto. Except as permitted by regulations or other
promulgations of the Internal Revenue Service under Section 411 of the
Internal Revenue Code, this Plan shall not, with respect to any Participant's
Accrued Benefit as it existed immediately prior to the amendment: (i)
decrease vesting therein, or (ii) reduce, restrict or eliminate any benefit
that is a "Section 411(d)(6) protected benefit" under Treas. Regs.
Section 1.411(d)-4 (or any successor thereto).
12.2 Amendment Pursuant to Federal Law - Notwithstanding the
provisions of Section 12.1, the Plan and Trust may be amended at any time,
retroactively if required, if found necessary in order to conform to
<PAGE> 49
the provisions and requirements of the Internal Revenue Code or ERISA, or any
similar act or any amendments thereto or regulations promulgated thereunder,
and the Plan shall be administered in accordance with, and from the effective
dates of, any changes in such provisions and requirements, notwithstanding
deferred adoption of Plan amendments with respect thereto; no such amendment
shall be considered prejudicial to any interest of a Participant or
Beneficiary hereunder. Notwithstanding any provision of Section 12.1 to the
contrary, the authority to adopt any such amendment, or any Internal Revenue
Service model amendment pertaining to the Plan's qualified status, is
delegated to the president or any vice president of the Company, without the
need for any further authorization by the Board of Directors.
ARTICLE XIII
Termination
13.1 Right to Terminate - It is the present intention of the Company
to maintain the Plan throughout the Company's existence. Nevertheless, the
Company reserves the right, at any time, to terminate its obligation to make
further contributions to the Trust or to suspend making contributions for a
fixed or indeterminate period of time or to terminate the entire Plan.
13.2 Automatic Termination of Contributions - The liability of the
Company to make contributions to the Trust shall automatically terminate upon
the liquidation and/or dissolution of the Company, upon its adjudication as a
bankrupt or upon the making of a general assignment for the benefit of
creditors.
13.3 Suspension of Contributions - In the event of suspension of
Company contributions under the Plan, the Company shall continue all aspects
of the Plan, other than the Company contributions during the period of
suspension, in which event distributions will be made, coincident with or
following each Participant's termination of employment with the Employer
Group, in accordance with ARTICLE VIII.
13.4 Allocation and Distribution - This Section shall become
operative in any of the following events: (a) a complete termination of the
Company's liability to make further contributions to the Trust; (b) a
complete discontinuance of contributions by the Company to the Trust; (c) a
suspension of contributions to the Trust which ripens into a complete
discontinuance of contributions; or (d) a complete termination of the Plan.
The provisions of this Section shall also become operative in the event of a
partial termination of the Plan, but only with respect to that portion of the
Plan attributable to the Participants to whom the termination is applicable.
Upon the effective date of any such event, then, notwithstanding any other
provisions of the Plan, no persons who were not theretofore Participants
shall be eligible to become Participants, and all interests of Participants
not theretofore vested, and not theretofore forfeited pursuant to Section
8.5, shall immediately become fully vested. The value of the interests of
all Participants and Beneficiaries shall be determined and, after deduction
of estimated expenses in liquidating and distributing the Trust, distributed
to them as soon as is practicable after such termination, in accordance with
the provisions of ARTICLE VIII as if each Participant had retired. Every
Participant (regardless of his age or the amount of his Accrued Benefit)
shall be deemed to have consented to an immediate distribution of his Accrued
Benefit; however, if any member of the Employer Group maintains another
tax-qualified defined contribution plan (other than an employee stock
ownership plan within the meaning of Section 4975(e)(7) of the Internal
Revenue Code), any Participant who is covered by Section 8.3(b) and does not
actually give his consent pursuant thereto shall be deemed to have consented
to a transfer of his Accrued Benefit to such other plan (or to any such other
plan, as determined by the Company, if there is more than one such other
plan).
Notwithstanding the foregoing, values reflected in
Compensation Deferral Accounts, as well as any Company Contributions Accounts
subject to utilization in the Section 401(k)(3)(A) testing described in
Section 5.2(a)(ii)(A), may be distributed upon termination of the Plan only
in the absence of the establishment or maintenance of a successor plan
(within the meaning of Section 401(k)(10)(A) of the Internal Revenue Code).
As an alternative to immediate distribution of the Trust, the
Company, in its discretion, but subject to the consent of the Sponsor, and
subject to the Company's option at any time to require the complete
<PAGE> 50
distribution of the Trust to the then Participants in accordance with the
preceding two paragraphs, may defer distribution of benefits to each
Participant until such Participant terminates employment with the Employer
Group, at which time the provisions of ARTICLE VIII shall become applicable.
The provisions set forth in this Section shall be subject to
such modification, retroactively if required, without necessity of formal
amendment to the Plan, as may be necessary in order to cause the termination
of the Plan and/or Trust, and any distributions made pursuant thereto, to
conform to any requirements which may be imposed by the Internal Revenue
Service to prevent disqualification of the Plan and/or Trust or which may be
otherwise imposed pursuant to ERISA, and no such modification shall be deemed
prejudicial to the interest of any Participant or Beneficiary.
13.5 Successor to Company - In the event of the dissolution,
merger, consolidation, sale of all or substantially all the assets, or
reorganization of the Company, provision may be made by which the Plan will
be continued by the successor employer, in which case such successor shall be
substituted for the Company under the Plan. The substitution of the
successor shall constitute an assumption of Plan liabilities by the successor
and the successor shall have all of the powers, duties and responsibilities
of the Company under the Plan. If such action has not been taken within
90 days from the effective date of such transaction, the Plan shall terminate
as of the effective date of the transaction, and the provisions of Section
13.4 shall become operative.
13.6 Plan Combinations and Transfers - In the case of any merger or
consolidation of the Plan with, or transfer of assets or liabilities of the
Trust to, any other plan, the transaction shall be structured so that each
Participant in the Plan would (if the Plan then terminated) receive a benefit
immediately after the transaction which is at least equal to the benefit he
would have been entitled to receive immediately before the transaction (if
the Plan had then terminated).
ARTICLE XIV
Multiple-Employer Provisions
14.1 Adoption by Other Companies - Subject to approval of the
Sponsor, the Plan may be adopted by any other employer (hereinafter in this
ARTICLE XIV referred to as a "Participating Company"). Such adoption and
approval shall be evidenced by the execution of an Adoption Agreement by the
Sponsor and the Participating Company. The Adoption Agreement may contain
special provisions concerning the eligibility, vesting, crediting of service,
contributions, benefits and/or other aspects of Plan participation which are
to apply only to the Employees of that Participating Company, in which case
those special provisions shall supersede any conflicting Plan provisions
(except to the extent that to do so would cause the Plan to lose its
tax-qualified status).
14.2 Construction - It is intended that the provisions of the Plan
shall apply separately to each Participating Company, if there be more than
one, and to the Participants of each such Participating Company, and, unless
the context otherwise requires, the terms "Company" and "Plan" as used
throughout the Plan shall be so construed. However, except as otherwise
provided in this ARTICLE XIV, the Plan shall be deemed to be, and shall be
administered as, a single Plan rather than a separate Plan for each
Participating Company.
14.3 Participation - The participation of any Participating Company
in the Plan shall become effective as of the date the Adoption Agreement is
executed and approved as provided in Section 14.1, or on such other date as
may be set forth in said Adoption Agreement. Once participation by a
Participating Company has begun, such participation shall continue until
terminated in accordance with the terms of the Plan; provided, however, that
in the event of an unfavorable initial determination by the Internal Revenue
Service with respect to qualification under Section 401 of the Internal
Revenue Code of the participation by the Participating Company, such
participation shall automatically terminate ab initio, and the Trustees,
within one year of the denial of qualification, shall return all the then
value of the Trust attributable to the Participating Company, and,
notwithstanding any provision in the Plan to the contrary, no Participant
or Beneficiary shall have a right or claim against the Trust or to any
benefit under the Plan, and no such benefit shall be paid until the
aforesaid favorable initial determination shall have been received.
<PAGE> 51
Further, participation by any Participating Company shall forthwith
terminate if such Participating Company shall be notified by the Internal
Revenue Service of the failure of such participation to retain qualified
status under the Internal Revenue Code; provided that termination of the
participation of such Participating Company shall not occur unless and
until such Participating Company ceases to contest the said determination
by the Internal Revenue Service and is unsuccessful in having said
determination reversed, unless the Internal Revenue Service requires that
such termination be retroactively effective to an earlier date.
14.4 Combined Service - The term "service" or "employment" shall be
deemed to refer equally to service with any Participating Company, so that,
for purposes of measuring Hours of Service or Years of Service, or for any
other purpose under the Plan, service with any Participating Company shall be
deemed to be the equivalent of service with any other Participating Company,
and service with any Participating Company shall be combined with service
with any other Participating Company as if all service had been with a single
employer. A Participant shall be deemed to have terminated employment only
upon the occurrence of an event which results in the termination of his
employment with all of the Participating Companies. If a Participant is
employed by more than one Participating Company, either concurrently or
successively, a separate account in the Trust shall be opened for his benefit
to reflect his participation in the portion of the Plan attributable to each
Participating Company.
14.5 Administration - The term "Company" as used in ARTICLE XI,
pertaining to administration of the Plan, refers only to the Sponsor, and to
the Retirement Plan Committee appointed by the Sponsor, although any other
Participating Company may appoint its own separate committee, or otherwise
act, to administer the Plan with regard to those internal matters peculiar to
that Participating Company and which do not conflict with the concept set
forth in this Section 14.5. Unless the Sponsor otherwise so states in its
instructions to the Trustees, its directives to the Trustees shall apply to
the entire Trust, without distinction as to the portion thereof contributed
by any one Participating Company.
14.6 Funding - Funding of the Plan shall be in accordance with the
following:
(a) Contributions and Expenses - Except as otherwise directed
by the Sponsor, agreed to by the Participating Company directed to make a
contribution, and permitted by Section 404(a)(3)(B) of the Internal Revenue
Code, each Participating Company shall be solely responsible for the funding
of its own participation in the Plan, including annual contributions and all
expenses allocable or attributable thereto.
(b) Trust Investment - Subject to the right of the Sponsor
to require separate investment of the Trust assets attributable to the
participation in the Plan of any or all of the Participating Companies,
the Trustees shall commingle the Trust assets attributable to all the
Participating Companies for investment purposes, in which case the Trustees
shall maintain a separate accounting reflecting each Participating Company's
share in the commingled assets.
(c) Allocation of Contributions - Contributions made by all
Participating Companies shall be allocated among the Participants employed by
all of the Participating Companies as if they were employed by a single
employer.
(d) Forfeitures - All forfeitures shall be utilized in
accordance with Section 7.4 as if all of the Participating Companies were
(and their Participants were employed by) a single employer.
14.7 Amendment - The term "Company" as used in ARTICLE XII,
pertaining to amendment of the Plan, refers only to the Sponsor, which shall
be vested with the sole power to amend the Plan in any manner, and, except as
otherwise provided in Section 14.8, such amendment will bind each
Participating Company and its Participants. However, with the consent of
the Sponsor, any other Participating Company shall have the right to amend
the Plan in any manner (otherwise permitted by ARTICLE XII) which affects the
Plan only as to that Participating Company and, in the sole judgment of the
Sponsor, in no significant way affects the Plan as to any other Participating
Company.
14.8 Transfer - Any Participating Company shall have the right to
transfer its participation in the Plan and the portion of the assets of the
Trust attributable thereto to a separate plan established solely for the
<PAGE> 52
benefit of employees of that Participating Company. Such a transfer may be
made without the consent of the Sponsor or any other Participating Company,
but shall be subject to the right of the Sponsor to review the transferee
plan, summary plan description and application for an Internal Revenue
Service determination letter with respect to the transfer and/or the
transferee plan, and to require, as a condition precedent to any transfer of
funds, delivery of: (i) a favorable Internal Revenue Service determination
letter with respect to the transfer and/or the transferee plan covering the
effective date of the transfer (or, alternatively, in the discretion of the
Sponsor, evidence that said determination letter was requested within the
remedial amendment period of the transferee plan covering the effective date
of the transfer, together with an undertaking of the Participating Company to
take any action required by the Internal Revenue Service to cause the plan to
be qualified retroactively to the effective date of the transfer), and/or
(ii) an opinion of counsel for the Participating Company to the effect that
the transferee plan does not constitute an amendment of the transferor plan
which would: (A) divest participants of previously vested benefits,
(B) reduce, restrict or eliminate any protected benefits (within the meaning
of Treas. Regs. Section 1.411(d)-4 or any successor thereto), or (C) contain
any adverse vesting changes (within the meaning of Treas. Regs. Section
1.411(a)-8(c)(1) or any successor thereto) without providing the required
participant election. The effective date of such transfer shall be as set
forth in a written transfer notice delivered by the Participating Company
to the Sponsor and the Trustees (except that such effective date may not
be earlier than 30 days following delivery of said transfer notice, except
as the Sponsor and the Participating Company otherwise mutually agree). As
of the effective date of the transfer, contributions to this Plan shall
cease, and, in the event of the death or other termination of employment
of any affected Participant, his benefits shall be paid by, and determined
solely by reference to, the transferee plan. As interim measures prior
to the actual transfer of funds to the transferee plan: (i) the Sponsor
or the Participating Company may direct the Trustees to hold the portion
of the Trust assets attributable to the Participating Company in a separate
account (within the Trust) for the exclusive benefit of the affected
Participants, and (ii) the Sponsor may direct the Trustees to either
transfer from said portion to the transferee plan such Trust assets as
may be needed to pay benefits or otherwise meet the operating needs of
the transferee plan, or pay such benefits and expenses directly from
said portion without transfer.
The Sponsor may require a Participating Company to implement a
transfer in the manner just described; failure of the Participating Company
to implement such transfer within a reasonable period of time after
notification by the Sponsor shall be deemed to be a termination of the Plan
(to the extent of the participation therein by the Participating Company)
pursuant to ARTICLE XIII.
14.9 Termination - A Participating Company may terminate its
participation in the Plan or discontinue its contributions, pursuant to
ARTICLE XIII, at any time. Any such termination or discontinuance of
contributions shall operate only as to the Participants employed by that
Participating Company.
14.10 Special Affiliate Provisions - The following provisions,
relating to specific groups of Participants, shall apply without regard to
any other Plan provisions to the contrary:
Collings Legg Mason, Inc.
The adoption of this Plan as of May 1, 1984 (the "Adoption
Date") by Collings Legg Mason, Inc. (formerly C. C. Collings and Company,
Inc.) ("Collings") constituted the continuation and amending restatement of
The C. C. Collings and Company Profit Sharing Plan and The C. C. Collings
Profit Sharing Trust, both dated May 21, 1976, as amended (collectively, the
"Collings Plan"). Notwithstanding any other Plan provisions to the contrary,
the following shall be applicable:
(a) With respect to any person who was an employee of
Collings and/or a participant in the Collings Plan immediately prior to the
Adoption Date, all of his service with Collings prior to the Adoption Date
shall be counted for all purposes in determining his Hours of Service and
Years of Service under this Plan.
(b) The amounts, if any, credited to a Participant's account
in the Collings Plan immediately prior to the Adoption Date shall constitute
the opening balance(s) of the appropriate functional account(s) within his
Accrued Benefit under this Plan.
<PAGE> 53
(c) Amounts being paid to a former participant or beneficiary
in accordance with the provisions of the Collings Plan shall continue to be
paid in accordance with such provisions.
(d) Any beneficiary designation in effect under the Collings
Plan immediately before the Adoption Date shall be deemed to be a valid
designation filed with the Company under this Plan, to the extent consistent
with the provisions of this Plan, unless and until the Participant revokes
such designation or makes a new designation under this Plan.
(e) Notwithstanding the provisions of Section 7.4 of this
Plan, any Participant described in Section 14.10(b) shall be deemed to be
40%, rather than 20%, vested in his Graded Vest Company Contribution Account
if he has completed four Years of Service as of the Adoption Date, and 45%,
rather than 40%, vested if he has completed five Years of Service as of the
Adoption Date. In accordance with the last paragraph of Section 7.4 of this
Plan, each Participant described in Section 14.10(b) who has completed at
least five, but not more than ten, Years of Service as of the Adoption Date
may elect to have his vesting determined in accordance with the Original Plan
rather than this Plan. For purposes of determining the vested percentage as
of the Adoption Date of a Participant described in Section 14.10(b), Years of
Service completed prior to 1984 shall be based upon completion of 500, rather
than 1000, Hours of Service.
(f) For purposes of calculating contributions pursuant to
Sections 5.3 and 5.4, and for purposes of calculating the allocation pursuant
to Section 6.1(b), Compensation of Collings employees for calendar 1984 was
determined without regard to amounts paid prior to the Adoption Date, and,
with respect thereto, the $80,000.00 limit in the definition of Compensation
was reduced to $53,333.33.
Legg Mason Masten, Inc.
The adoption of this Plan as of November 1, 1984 (the
"Adoption Date") by Legg Mason Masten, Inc. (formerly A. E. Masten & Co.,
Incorporated) ("Masten") did not constitute a continuation of the A. E.
Masten & Co., Incorporated Profit Sharing Plan, which plan has been
terminated. Notwithstanding any other provisions in this Plan to the
contrary, the following shall be applicable:
(a) With respect to any person who was an employee of Masten
immediately prior to the Adoption Date, all of his service with Masten prior
to the Adoption Date shall be counted for all purposes in determining his
Hours of Service and Years of Service under this Plan.
(b) For purposes of calculating contributions pursuant to
Sections 5.3 and 5.4, and for purposes of calculating the allocation pursuant
to Section 6.1(b), Compensation of Masten employees for calendar 1984 shall
be determined without regard to amounts paid prior to the Adoption Date, and,
with respect thereto, the $80,000.00 limit set forth in the definition of
Compensation was reduced to $13,333.33.
Warren W. York & Co., Inc.
The adoption of this Plan as of January 1, 1987 (the "Adoption
Date") by Legg Mason Warren York, Inc. (formerly Warren W. York & Co., Inc.)
("York") constituted the continuation and amending restatement of The Warren
W. York & Co., Inc. Employees' Profit Sharing Plan (the "York Plan"), and
The Warren W. York & Co., Inc. Employees' Profit Sharing Plan Trust Agreement,
as amended (the "York Trust"). Notwithstanding any other Plan provisions to
the contrary, the following shall be applicable:
(a) With respect to any person who was an employee of York
and/or a participant in the York Plan immediately prior to the Adoption Date,
all of his service with York prior to the Adoption Date shall be counted for
all purposes in determining his Hours of Service and Years of Service under
this Plan.
(b) The amounts, if any, credited to a Participant's
account in the York Plan immediately prior to the Adoption Date
shall constitute the opening balance of an appropriate functional
account within his Accrued Benefit under this Plan, which account
shall be referred to as his "Pre-Merger Profit Sharing Account
(York)" and shall be maintained as a separate functional account
until such time, if ever, as it is no longer subject to
<PAGE> 54
separate vesting or withdrawal provisions as hereinafter set forth.
However, the York Trust shall be retained as a separate trust until
receipt of a favorable Internal Revenue Service determination letter with
respect to the amendment of which this language is a part, at which time the
York Trust shall be merged into the Trust established pursuant to this Plan.
(c) Amounts being paid to a former participant or beneficiary
in accordance with the provisions of the York Plan shall continue to be paid
in accordance with such provisions, such amounts to be paid out of the York
Trust pending its merger with the Trust established under this Plan.
(d) Any beneficiary designation in effect under the York Plan
immediately before the Adoption Date shall be deemed to be a valid
designation filed with the Company under this Plan, to the extent consistent
with the provisions of this Plan, unless and until the Participant revokes
such designation or makes a new designation under this Plan.
(e) The Accrued Benefit of any Participant who was a
participant in the York Plan immediately prior to the Adoption Date shall
vest in accordance with the provisions of this Plan, except that: (i) the
Years of Service with which he is credited as of the Adoption Date shall be
equal to the number of years of service with which he was credited under the
York Plan immediately prior to the Adoption Date, and (ii) the portion of his
Accrued Benefit consisting of his York Profit Sharing Account and his Graded
Vest Company Contributions Account shall be subject to the vesting schedule
set forth in Section 7.4(c), in lieu of the vesting schedule set forth in
Section 7.4(b). Vesting of the Accrued Benefit of any other York Participant
shall be in accordance with the provisions of this Plan.
(f) Section 7.5 of this Plan, pertaining to hardship
withdrawals, shall be deemed to apply to a Participant's York Profit Sharing
Account (to the extent vested) in addition to his Compensation Deferral
Account.
Moseley Securities Corporation
In connection with the acquisition by the Sponsor of certain
operating assets of Moseley Securities Corporation ("Moseley"), certain
individuals ("Transferred Individuals") employed by Moseley entered the
employ of the Sponsor. Notwithstanding any other Plan provisions to the
contrary, the following shall be applicable:
(a) Each Transferred Individual who was a Covered Employee
became a Participant in the Plan as of March 1, 1988 without regard to the
minimum service requirement set forth in Section 3.1; provided, however, that
the Transferred Individual was not entitled to any matching Company
contributions which would otherwise be made and credited pursuant to Sections
5.1(a) and 6.1(a), or any share of discretionary Company contributions
allocated pursuant to Section 6.1(b), as of a Valuation Date occurring prior
to the Entry Date on which the Transferred Individual would otherwise have
become a Participant pursuant to Section 3.1; and
(b) Any amount contributed to this Plan by a Transferred
Individual as a rollover contribution from the Moseley Plan shall be treated
in accordance with Section 5.3, except that: (i) the contribution shall not
be subject to withdrawal and distribution in accordance with Section
7.6(a)(i); and (ii) in lieu of being credited to a Segregated Account or
Rollover/Transfer Account pursuant to Section 5.3, the portion of such
contribution representing compensation deferrals made under the Moseley Plan
(net of earnings or losses) shall be designated as the opening balance in his
Compensation Deferral Account, and the portion of such contribution
representing employer matching contributions made under the Moseley Plan
(net of earnings or losses thereon) shall be designated as the opening
balance in his Immediate Vest Company Contributions Account.
The Pinnacle Group, Inc.
In connection with the acquisition by the Sponsor of
certain operating assets of The Pinnacle Group, Inc. ("Pinnacle"),
certain individuals ("Transferred Individuals") employed by Pinnacle
entered the employ of the Sponsor. Notwithstanding any other
Plan provisions to the contrary, each Transferred Individual who
was a Covered Employee became a Participant in the Plan as of
September 1, 1988 without regard to the minimum service
<PAGE> 55
requirement set forth in Section 3.1; provided, however, that the
Transferred Individual shall not be entitled to any matching Company
contributions which would otherwise be made and credited pursuant to Sections
5.1(a) and 6.1(a), or any share of discretionary Company contributions
allocated pursuant to Section 6.1(b), as of a Valuation Date occurring prior
to the Entry Date on which the Transferred Individual would otherwise have
become a Participant pursuant to Section 3.1.
Fahnestock & Co., Inc.
Certain individuals ("Transferred Individuals") employed by the
Norwalk, Connecticut office of Fahnestock & Co., Inc. have entered the
employ of the Sponsor. Notwithstanding any other Plan provisions to the
contrary, each Transferred Individual who is a Covered Employee shall become
a Participant in the Plan as of January 1, 1989 without regard to the minimum
service requirement set forth in Section 3.1; provided, however, that the
Transferred Individual shall not be entitled to any matching Company
contributions which would otherwise be made and credited pursuant to Sections
5.1(a) and 6.1(a), or any share of discretionary Company contributions
allocated pursuant to Section 6.1(b), as of a Valuation Date occurring prior
to the Entry Date on which the Transferred Individual would otherwise have
become a Participant pursuant to Section 3.1.
Western Asset Management Company
The adoption of this Plan as of January 1, 1989 (the "Adoption
Date") by Western Asset Management Company ("Western") constitutes the
continuation and amending restatement of The Western Asset Management Company
Tax Deferred Savings Plan and Trust (the "Western Plan" or the "Western
Trust"). Notwithstanding any other Plan provisions to the contrary, the
following shall be applicable:
(a) With respect to any person who was an employee of Western
and/or a participant in the Western Plan immediately prior to the Adoption
Date, all of his service with Western prior to the Adoption Date shall be
counted for all purposes in determining his Hours of Service and Years of
Service under this Plan. Any person who was a participant in the Western
Plan immediately prior to the Adoption Date shall become a Participant in
this Plan as of the Adoption Date. Any person who was an employee of Western
immediately prior to the Adoption Date, and who would have been a participant
in the Western Plan immediately prior to the Adoption Date but for the fact
that he had not yet completed three months of employment, shall become a
Participant in this Plan on the Entry Date coincident with the date on which
he would have become a participant in the Western Plan, if he is then a
Covered Employee.
(b) Notwithstanding the provisions of (a) above, with respect
to the accrued benefits of the participants in the Western Plan ("Western
Participants") immediately prior to the Adoption Date (including employer
contributions paid in 1989 but attributable the plan year ending December 31,
1988), the Western Plan shall be maintained as a separate plan, and the
Western Trust shall be maintained as a separate trust, as an interim measure
until such time as this Plan is amended and restated to conform to the Tax
Reform Act of 1986 and other legislation, and to provide with respect to the
pre-Adoption Date accrued benefits of the Western Participants the
protections required by Section 411(d)(6) of the Internal Revenue Code.
However, no further contributions shall be made to the Western Trust, and no
persons who were not Western Participants immediately prior to the Adoption
Date shall become participants under the Western Plan. As of December 31,
1990, the Western Trust shall be merged into the Trust established pursuant
to this Plan, and the balances credited to the functional accounts of each
Western Participant in the Western Plan immediately prior to the effective
date of the merger shall be credited to the appropriate functional accounts
within his Accrued Benefit under this Plan (separate functional accounting
to be maintained only to the extent, and so long as, the accounts are subject
to separate vesting, withdrawal and/or distribution provisions).
(c) Distributions payable to any Western Participant
with respect to his pre-Adoption Date accrued benefit shall be payable
in accordance with the Western Plan, and benefits being paid to a
former participant or beneficiary in accordance with the provisions
of the Western Plan shall continue to be paid in accordance with such
provisions, such amounts to be paid out of the Western Trust pending
its merger with the Trust established under this Plan. Any beneficiary
designation in effect under the Western Plan immediately before the
Adoption Date shall be deemed to be a valid designation filed with
the Company under this Plan, to the extent consistent with the
<PAGE> 56
provision of this Plan, unless and until the Participant revokes such
designation or makes a new designation under this Plan.
(d) Section 7.6(a)(i) of this Plan, pertaining to in-service
withdrawals after age 59-1/2, shall be deemed to apply to a Participant's
Pre-Merger Matching Contributions Account (Western Asset) in addition to his
Compensation Deferral Account.
(e) Because Western has re-established its own stand-alone
401(k) plan as of January 1, 1993 (to which the Trust assets representing the
Accrued Benefits of the Participants employed by Western will be spun off
when the Internal Revenue Service has approved the new plan), participation
of Western in this Plan shall terminate as of December 31, 1992 (except that
the Participants employed by Western shall share in the Section 6.1
contribution allocations for 1992 as if the January 1, 1993 Valuation Date
were December 31, 1992).
Howard, Weil, Labouisse, Friedrichs, Incorporated
The adoption of this Plan as of January 1, 1989 (the "Adoption
Date") by Howard, Weil, Labouisse, Friedrichs, Incorporated ("HWLF")
constitutes a continuation and amending restatement of the Howard, Weil,
Labouisse, Friedrichs, Incorporated Salary Reduction Thrift Plan, as amended
(the "HWLF Plan"), and the Howard, Weil, Labouisse, Friedrichs, Incorporated
Salary Reduction Thrift Plan Trust Agreement, as amended (the "HWLF Trust").
Notwithstanding any other Plan provisions to the contrary, the following
shall be applicable:
(a) With respect to any person: (i) who was an employee of
HWLF and/or a participant in the HWLF Plan immediately prior to the Adoption
Date, or (ii) who was an employee of HWLF who was transferred to the employ
of the Company during the last calendar quarter of 1988 and who is in the
employ of the Company on or after the Adoption Date, all of his service with
HWLF prior to the Adoption Date shall be counted for all purposes in
determining his Hours of Service and Years of Service under this Plan (for
all purposes other than benefit accrual with respect to Company contributions
under this Plan for any Plan Year ending prior to the Adoption Date).
(b) Notwithstanding the foregoing, with respect to the
accrued benefits of the participants in the HWLF Plan ("HWLF Participants")
immediately prior to the Adoption Date (including employer contributions paid
in 1989 but attributable to the plan year ending December 31, 1988), the HWLF
Plan shall be maintained as a separate plan, and the HWLF Trust shall be
maintained as a separate trust, as an interim measure until such time as the
Sponsor determines that the trusts should be merged together. Upon the
merger of the HWLF Trust into the Trust established pursuant to this Plan,
the balances credited to the functional accounts of each HWLF Participant in
the HWLF Plan immediately prior to the effective date of the merger shall be
credited to the appropriate functional accounts within his Accrued Benefit
under this Plan (separate functional accounting to be maintained only to the
extent, and so long as, the accounts are subject to separate vesting,
withdrawal and/or distribution provisions). However, no further
contributions shall be made to the HWLF Trust, and no persons who were not
HWLF Participants immediately prior to the Adoption Date shall become
participants under the HWLF Plan.
(c) Distributions payable to any HWLF Participant with
respect to his pre-Adoption Date accrued benefit shall be payable in
accordance with the HWLF Plan, and benefits being paid to a former
participant or beneficiary in accordance with the provisions of the HWLF Plan
shall continue to be paid in accordance with such provisions, such amounts to
be paid out of the HWLF Trust pending its merger with the Trust established
under this Plan.
(d) Any beneficiary designation in effect under the HWLF Plan
immediately before the Adoption Date shall be deemed to be a valid
designation filed with the Company under this Plan, to the extent consistent
with the provisions of this Plan, unless and until the Participant revokes
such designation or makes a new designation under the Plan.
<PAGE> 57
Philadelphia/New York Corporate Finance Addition
As of January 1, 1992, the Sponsor acquired certain assets of The
Middle Market Group, L.P., and the individuals who the individuals who were
its employees immediately prior thereto (the "Employed Individuals") entered
the employ of the Sponsor. Notwithstanding any other Plan provisions to the
contrary, the following shall be applicable:
(a) For, and only for, purposes of eligibility for entry into
the Plan pursuant to Section 3.1 (and not for purposes of vesting credit
pursuant to Section 7.4 or eligibility for matching or discretionary Company
contributions pursuant to Section 6.1), each Employed Individual shall
receive credit for Years of Service and Hours of Service accrued in
connection with his service with The Middle Market Group, L.P., as if it were
service with the Company.
(b) To the extent an Employed Individual is a Covered
Employee and has completed a Year of Service on March 10, 1992 (determined by
taking into account the Years of Service and Hours of Service accrued in
connection with his service with The Middle Market Group, L.P.), the Employed
Individual will become a Participant in the Plan as of March 10, 1992. To
the extent an Employed Individual is a Covered Employee and completes a Year
of Service after March 10, 1992 (determined by taking into account the Years
of Service and Hours of Service accrued in connection with his service with
The Middle Market Group, L.P.), the Employed Individual shall become a Plan
Participant on the next Entry Date. However, in either case, the Employed
Individual shall not be entitled to any matching or discretionary Company
contributions which are allocable under the terms of the Plan as of any date
prior to the Entry Date on which the Employed Individual would otherwise
satisfy the eligibility requirements of Section 3.1 (determined without
receiving credit for any Years of Service and Hours of Service with The
Middle Market Group, L.P), it being intended that the only purpose for the
Employed Individual's early entry into the Plan is to enable compensation
deferrals to be made on his behalf pursuant to Section 5.2.
Fairfield Group, Inc.
As of a date on or about April 22, 1993 (the "Acquisition Date"),
Legg Mason, Inc. acquired ownership of the stock of Fairfield Group, Inc. and
caused it to be merged with a newly-created subsidiary of Legg Mason, Inc.
through which the acquired business would be operated under the name
Fairfield Group, Inc. ("Fairfield"). The individuals who were its employees
immediately prior thereto (the "Employed Individuals") continued in the
employ of Fairfield. Notwithstanding any other Plan provisions to the
contrary, the following shall be applicable:
(a) For, and only for, purposes of eligibility for entry into
the Plan pursuant to Section 3.1, each Employed Individual shall receive
credit for Years of Service and Hours of Service accrued in connection with
his service with Fairfield, as if it were service with the Company.
(b) To the extent an Employed Individual is a Covered
Employee and has completed a Year of Service on the Acquisition Date
(determined by taking into account the Years of Service and Hours of Service
accrued in connection with his service with Fairfield), the Employed
Individual will become a Participant in the Plan on the Acquisition Date. To
the extent an Employed Individual is a Covered Employee and completes a Year
of Service after the Acquisition Date (determined by taking into account the
Years of Service and Hours of Service accrued in connection with his service
with Fairfield), the Employed Individual shall become a Plan Participant on
the next Entry Date. However, in either case, neither the Employed
Individual nor any other individual employed by Fairfield shall be entitled
to any discretionary Company contributions which are allocable under the
terms of the Plan with respect to his Compensation from Fairfield, it being
intended that the only purpose for the Employed Individual's into the Plan is
to enable Compensation deferrals to be made on his behalf pursuant to Section
5.2 and matching Company contributions to be made on his behalf pursuant to
Section 5.1(a). Accordingly, solely for the purpose of implementing the
exclusion, pursuant to Section 3.3, of his Compensation as a basis for a
Section 6.1(b) contribution allocation for any Plan Year, an Employee shall
be deemed not to be a Covered Employee with respect to his employment by
Fairfield.
<PAGE> 58
Bartlett & Co.
On January 2, 1996 (the "Acquisition Date"), Legg Mason, Inc.
acquired ownership of the stock of Bartlett & Co. and caused it to be merged
with a newly-created subsidiary of Legg Mason, Inc. through which the
acquired business would be operated under the name Bartlett & Co.
("Bartlett"). Certain of the individuals who were Bartlett's employees
immediately prior to the Acquisition Date (the "Employed Individuals") have
continued in the employ of Bartlett.
The adoption of this Plan as of January 1, 1996 (the "Adoption
Date") by Bartlett constituted the continuation and amending restatement of
The Bartlett & Co. Profit Sharing Plan (the "Bartlett Plan"), and of the
portion of The Bartlett & Co. Pension and Profit Sharing Plan Trust
Agreement that relates to the Bartlett Plan (the "Bartlett Trust").
Notwithstanding any other Plan provisions to the contrary, the following
shall be applicable:
(a) With respect to each Employed Individual, all of his service
with Bartlett prior to the Adoption Date shall be counted for all purposes
in determining his Hours of Service and Years of Service under this Plan.
(b) The amounts, if any, credited to a Participant's account in
the Bartlett Plan immediately prior to the Adoption Date shall constitute
the opening balance(s) of the appropriate functional account(s) within his
Accrued Benefit under this Plan. However:
(i) The amount, if any, credited to the Participant's
"Employer Contribution Account" in the Bartlett Plan (which refers to the
portion of his account attributable to employer discretionary contributions
pursuant to Section 3.1 of the Bartlett Plan) immediately prior to the
Adoption Date shall constitute the opening balance of an appropriate
functional account within his Accrued Benefit under this Plan, which account
shall be referred to as his "Pre-Merger Profit Sharing Account (Bartlett)"
and shall be maintained as a separate functional account until such time, if
ever, as it is no longer subject to separate withdrawal provisions as
hereinafter set forth.
(ii) The amount, if any, credited to the Participant's
"Employee Contribution Account" in the Bartlett Plan (which refers to the
portion of his account attributable to his after-tax voluntary contributions
pursuant to Section 3.5 of the Bartlett Plan) immediately prior to the
Adoption Date shall constitute the opening balance of an appropriate
functional account within his Accrued Benefit under this Plan, which account
shall be referred to as his "Pre-Merger After-Tax Employee Contributions
Account (Bartlett)" and shall be maintained as a separate functional account
until such time, if ever, as it is no longer subject to separate withdrawal
provisions as hereinafter set forth.
(iii) The Bartlett Trust shall be retained as a separate
trust until receipt of a favorable Internal Revenue Service determination
letter with respect to the amendment of which this language is a part, at
which time the Bartlett Trust shall be merged into the Trust established
pursuant to this Plan.
(c) Amounts being paid to a former participant or beneficiary in
accordance with the provisions of the Bartlett Plan shall continue to be paid
in accordance with such provisions, such amounts to be paid out of the
Bartlett Trust pending its merger with the Trust established under this Plan.
(d) Any beneficiary designation in effect under the Bartlett Plan
immediately before the Adoption Date shall be deemed to be a valid
designation filed with the Company under this Plan, to the extent consistent
with the provisions of this Plan, unless and until the Participant revokes
such designation or makes a new designation under this Plan.
(e) Notwithstanding the provisions of Section 7.4 of this Plan,
any Employed Individual who was a participant in the Bartlett Plan as of the
Adoption Date, and who had completed at least two Years of Service (as
defined for vesting purposes in the Bartlett Plan) as of the Adoption Date,
shall be deemed to be, as of the Adoption Date, fully vested in his entire
Accrued Benefit (including both his account in the Bartlett Plan and any
additional amounts credited to his Accrued Benefit in this Plan).
<PAGE> 59
(f) The provisions of Section 7.6 of this Plan (but without regard
to any limit on the number of withdrawals that may be made in any Plan Year)
shall apply to permit in-service withdrawals by any Employed Individual who
has attained age 55 from his Pre-Merger Profit Sharing Account (Bartlett).
(g) The provisions of Section 7.6 of this Plan shall be applied
without regard to any limit on the number of withdrawals that may be made by
an Employed Individual in any Plan Year from his Rollover/Transfer Account
(including amounts credited before and after the Adoption Date) or his
Pre-Merger After-Tax Employee Contributions Account (Bartlett).
(h) Notwithstanding the provisions of Sections 8.2 and 8.2(a) of
this Plan, any Employed Individual whose Accrued Benefit is (or at the time
of any prior distribution was) greater than $3,500.00 may elect to have his
Accrued Benefit (including amounts credited before and after the Adoption
Date) distributed: (i) in monthly in lieu of annual installments, and (ii)
if a lump sum, in kind in lieu of cash.
(i) Notwithstanding the provisions of Section 8.4(b) and (c) of
this Plan, a surviving spouse or other Beneficiary of an Employed Individual
whose Accrued Benefit is (or at the time of any prior distribution was)
greater than $3,500.00 may elect to receive death benefit payments under any
of the inter vivos options available under Section 8.2 of this Plan (as
modified by (h) above).
(j) All death benefits payable pursuant to this clause (j) shall
be distributed only in accordance with regulations prescribed by the Internal
Revenue Service under Section 401(a)(9) of the Internal Revenue Code. To
the extent required thereby, such benefits shall be distributed in full not
later than the last day of the calendar year containing the fifth anniversary
of the death of the Participant, except that, notwithstanding the provisions
of Section 8.4(c) of this Plan:
(i) Unless the Participant or his Beneficiary irrevocably
elects (prior to the earliest date on which distribution would be otherwise
required pursuant to this clause (j)) to have the aforesaid five year limit
apply, benefits payable to or for the benefit of the Participant's
Beneficiary, and which begin not later than the last day of the calendar
year containing the first anniversary of the Participant's death, may be
distributed over a period certain not extending beyond the life expectancy of
the Beneficiary, under a method of distribution which meets the requirements
of Section 8.2(b) (but with life expectancy based upon the Beneficiary's
attained age as of the Beneficiary's birthday in such calendar year).
(ii) If the Participant's Beneficiary is his surviving
spouse, then, unless the Participant or his spouse irrevocably elects (prior
to the earliest date on which distribution would be otherwise required
pursuant to this clause (j)) to have the aforesaid five year limit apply,
benefits payable to or for the benefit of the spouse, and which begin not
later than the later of the last day of the calendar year containing the
first anniversary of the Participant's death, or the last day of the calendar
year in which the Participant would have reached age 70-1/2, may be
distributed over a period certain not extending beyond the life expectancy
of the spouse, under a method of distribution which meets the requirements
of Section 8.2(b) (but with life expectancy based initially upon the spouse's
attained age as of the spouse's birthday in such calendar year).
(iii) If benefits are payable in accordance with clause
(j)(ii), and the surviving spouse dies after the Participant but prior to
the date on which benefits are required to commence pursuant to clause
(j)(ii), the aforesaid five year limit, and the alternate limit set forth in
clause (j)(i), are to be applied as if the spouse were the Participant, so
that such limits shall be measured from the death of the spouse.
(iv) If benefits to the Participant required by Section
8.2(b) had commenced prior to his death, and the Participant died on or
after the required initial payment date described in Section 8.2(b)(iii),
the death benefits payable pursuant to this clause (j) may be distributed
without regard to the aforesaid five year limit, but must be distributed at
least as rapidly as they would have been under the pre-death method of
distribution.
<PAGE> 60
ARTICLE XV
Miscellaneous
15.1 Limitations on Liability of Company - Neither the
establishment of the Plan or Trust nor any modification thereof, nor the
creation of any fund or account, nor the payment of any benefits, shall be
construed as giving to any Participant or other person any legal or equitable
right against the Company (or any person connected therewith) or the Trustees,
except as provided by law or by any Plan provision. The Company does not in
any way guarantee the Trust from loss or depreciation, nor does the Company
guarantee the payment of any money which may be or become due to any person
from the Trust. Any person having a right or claim under the Plan shall look
solely to the Trust assets, and in no event shall the Company (or any person
connected therewith) be liable to any person on account of any claim arising
by reason of the provisions of the Plan or of any instrument or instruments
implementing its provisions, or for the failure of any Participant,
Beneficiary or other person to be entitled to any particular tax consequences
with respect to the Plan, the Trust or any contribution thereto or
distribution therefrom. The Company shall not be liable to any person for
failure on its part to make contributions as provided in Section 5.1, nor
shall any action lie to compel the Company to make such contributions. The
Company (or any person connected therewith) shall not have any liability to
any person by reason of the failure of the Plan to attain and/or maintain
qualified status under Section 401(a) of the Internal Revenue Code, or the
failure of the Trust to attain and/or maintain tax exempt status under
Section 501(a) of the Internal Revenue Code, regardless of whether or not
such failure is due to any act or omission (willful, negligent or otherwise)
of the Company (or any person connected therewith). The provisions of this
Section shall apply only to the extent not inconsistent with the provisions
of ERISA.
15.2 Construction - The Plan is intended to comply with all
requirements for qualification under Section 401(a) of the Internal Revenue
Code and, if any provision of the Plan is subject to more than one
interpretation or construction, such ambiguity shall be resolved in favor of
that interpretation or construction which is consistent with the Plan being
so qualified. In case any provision of the Plan shall be held to be illegal
or void, such illegality or invalidity shall not affect the remaining
provisions of the Plan, but shall be fully severable, and the Plan shall be
construed and enforced as if said illegal or invalid provisions had never
been inserted herein. For all purposes of the Plan, where the context
admits, words in the masculine gender shall include the feminine and neuter
genders, the singular shall include the plural, and the plural shall include
the singular, and references to persons shall include corporations,
partnerships, estates and trusts. Headings of Articles and Sections are
inserted only for convenience of reference and are not to be considered in
the construction of the Plan. Except to the extent preempted by the laws of
the United States of America, the laws of the State of Maryland shall govern,
control and determine all questions arising with respect to the Plan and the
interpretation and validity of its respective provisions. If the indefinite
continuance of the Plan would be in violation of the law, then the Plan shall
continue for the maximum period permitted by law and shall then terminate,
whereupon distribution of the Trust shall be made as provided in Section 13.4
hereof. Participation under the Plan will not give any Participant the right
to be retained in the service of the Company nor any right or claim to any
benefit under the Plan unless such right or claim has specifically accrued
hereunder.
WITNESS the hands and seals of the parties hereto this __ day of
______________________, 1997.
LEGG MASON WOOD WALKER, INCORPORATED
By: /s/ James W. Brinkley (SEAL)
James W. Brinkley, President
/s/ Gerald Scheinker (SEAL)
Gerald Scheinker, Trustee
<PAGE> 61
/s/ William B. Jones (SEAL)
William B. Jones, Trustee
/s/ William A. Verch (SEAL)
William A. Verch, Trustee
<PAGE> 62
LEGG MASON PROFIT SHARING PLAN
1996 AMENDING RESTATEMENT
ADOPTION AGREEMENT
THIS ADOPTION AGREEMENT is made by and between the undersigned
adopting employers (the "Participating Companies"), LEGG MASON WOOD WALKER,
INC. (the "Sponsor") and GERALD SCHEINKER, WILLIAM B. JONES and WILLIAM A.
VERCH (the "Trustees").
1. The Participating Company hereby adopts, and incorporates
herein by reference, The Legg Mason Profit Sharing Plan and Trust, as amended
and restated through the date hereof (the "Plan and Trust"), and hereby
agrees to be bound by all of the provisions thereof as now or hereafter
amended from time to time, in accordance with the terms and conditions
thereof, and the Sponsor hereby approves said adoption.
2. The Participating Company expressly authorizes the Trustees
to commingle the trust assets attributable to its Plan with the trust assets
attributable to the Plan of each other present or future participating
company, in accordance with the terms of Section 14.6 of the Plan and Trust.
3. In accordance with Section 14.5 of the Plan and Trust, the
Participating Company hereby designates the Retirement Plan Committee, as
composed from time to time by the Sponsor, as its authorized representative,
and hereby acknowledges and agrees that the Trustees may conclusively, and
without further investigation, rely upon any written instructions,
representations, data or other communications pertaining to the Participating
Company which have been delivered by the Retirement Plan Committee to the
Trustees.
4. The adoption of the Plan and Trust by the Participating
Company constitutes a continuation and amending restatement of its existing
401(k) profit sharing plan and the trust established thereunder, with respect
to which the provisions of Section 14.10 of the Plan and Trust shall be
applicable.
5. This Adoption Agreement shall be effective as of the date set
forth below. From and after such date, this Adoption Agreement shall be
deemed to be an integral part of the Plan and Trust.
Effective Date: January 1, 1996
WITNESS the hands and seals of the parties hereto this 26th day of
December, 1997.
Participating Companies Sponsor:
HOWARD, WEIL, LABOUISSE, FRIEDRICHS, LEGG MASON WOOD WALKER, INC.
INCORPORATED
By:/s/ Authorized Officer (SEAL) By: /s/ James W. Brinkley (SEAL)
James W. Brinkley, President
FAIRFIELD GROUP, INC. Trustees:
By:/s/ Authorized Officer (SEAL) /s/ Gerald Scheinker (SEAL)
Gerald Scheinker
<PAGE> 63
/s/ William B. Jones (SEAL)
BARTLETT & CO. William B. Jones
By:/s/ Authorized Officer (SEAL) /s/ William A. Verch (SEAL)
William A. Verch
<PAGE> 1
THE LEGG MASON
PROFIT SHARING PLAN AND TRUST
FIRST AMENDEMENT TO 1996 AMENDING RESTATEMENT
Pursuant to the rights reserved in Section 12.1 of The Legg Mason
Profit Sharing Plan and Trust, heretofore restated on December 26, 1997, said
Plan and Trust is hereby amended, effective as of May 1, 1998, as follows:
1. The first paragraph of Section 8.2 shall be amended to read as
follows:
The Company shall give to the Trustees such directions and
information as may be necessary for the Trustees to make the distributions
described in this Section 8.2 Each such distribution:
(i) shall be made in a single lump sum unless the vested
portion of the Participant's Accrued Benefit is (or at the time of any prior
distribution was) greater than $5,000.00 and he elects to receive the
distribution in a fixed number of annual installments; and
(ii) shall be made in cash, except that:
(A) to the extent that the Participant's Accrued
Benefit is invested in shares of a Legg Mason mutual fund that so permits,
the Participant may elect, by written notification to the Company as part of
his election of method of payment, to have those shares distributed in kind,
but only if the distribution is to be a rollover to an IRA maintained by a
member of the Employer Group; and
(B) to the extent that the Participant's Accrued
Benefit is invested in the Holding Company Stock Fund, the Participant may
elect, by written notification to the Company as part of his election of
method of payment, to receive an in-kind distribution, in lieu of cash, of
all or any part of the shares of Holding Company Stock (other than fractional
shares) attributable to the portion of the Holding Company Stock Fund
allocated to his Accrued Benefit.
2. Section 10.2(c) shall be amended to read in its entirety as
follows:
(c) (i) Subject to Section 10.2(c)(ii), to manage, sell,
contract to sell, deal in options with respect to, create holding companies
to own, convey, dispose of, mortgage, exchange, transfer, abandon, improve,
develop, preserve, repair, insure, lease for any term even though commencing
in the future or extending beyond the term of the Trust, make contracts for,
bid for, acquire, and otherwise deal with (alone or with others, and
utilizing other Trust assets where appropriate), all property, real or
personal, in such manner, for such considerations, and on such terms and
conditions as the Trustees shall decide.
(ii) To acquire, hold, and exercise the other
powers set forth herein with respect to, securities issued by the
Company or its affiliates, and/or real property (and related personal
property) which is leased to the Company or its affiliates, without
limit as to amount, value or percentage of the total Trust (except as set
forth in the proviso), but only to the extent each such security
constitutes a "qualifying employer security" and such property constitutes
"qualifying employer real property", as defined in Section 407(d) of
ERISA; provided, however, that the portion of the Trust attributable
to Participants' Compensation Deferral Accounts (but not including
<PAGE> 2
the value of those Accounts as of December 31, 1998 which exceeds the
actual Compensation deferrals credited to those Accounts on that date)
shall be treated as a separate Trust (for, and only for, purposes of
this Section 10.2(c)(ii)) subject to a 10% limit rather than the absence of
a percentage limit, for which purpose any amount invested in such employer
securities or employer real property at the discretion of the Participant
shall be ignored; and provided, further, that the 10% limit shall not apply:
(A) to any Plan Year if, on the last day of the preceding Plan Year, the
fair market value of all of the Company's individual account plans (as
defined in Section 3(34) of ERISA) was no more than 10% of the fair market
value of the assets of all of the Company's pension plans (as defined in
Section 3(2) of ERISA) other than multi-employer plans (as defined in
Section 3(37) of ERISA), or (B) to any period during which the Plan, by its
terms, limits investment (except for investment at the discretion of the
Participant) of any Participant's Accrued Benefit in such employer securities
or employer real property to not more than 1% of the Participant's
Compensation eligible for deferral pursuant to Section 5.2.
3. The first paragraph of Section 10.16(a) shall be amended to
read as follows:
In the discretion of the Company, one of the investment funds
shall be a fund (the "Holding Company Stock Fund") which shall be primarily
invested in Holding Company Stock. Except as otherwise required by law or
deemed advisable by the Trustees pursuant to opinion of counsel, the assets
of the Holding Company Stock Fund shall be held on a pooled basis, and no
Participant shall acquire any right to or interest in any specific share of
Holding Company Stock or other asset of the fund as the result of the
investment of his Accrued Benefit in the fund, except that each Participant
and Beneficiary shall have the right to direct the Trustees as to exercise
of voting rights and/or response to tender offers with respect to the shares
of Holding Company Stock attributable to the portion of the Holding Company
Stock Fund allocated to his Accrued Benefit.
IN WITNESS WHEREOF, these presents are executed under seal
this _____ day of April, 1998.
LEGG MASON WOOD WALKER, INCORPORATED
By: /s/ James W. Brinkley (SEAL)
James W. Brinkley, President
<PAGE> 1
[LEGG MASON, INC. LETTERHEAD]
November 6, 1998
Board of Directors
Legg Mason, Inc.
100 Light Street
Baltimore, Maryland 21202
Re: The Legg Mason Profit Sharing Plan and Trust
Registration Statement on Form S-8
Ladies and Gentlemen:
This opinion is being furnished in connection with the registration
of 1,000,000 shares (the "Shares") of common stock, par value $.10 per share,
of Legg Mason, Inc. (the "Company") with the Securities and Exchange
Commission on Form S-8.
Please be advised that I have examined the corporate records of the
Company (including the Articles of Incorporation, as amended, By-Laws, as
amended, and minutes) and such other documents as I considered necessary to
give the opinion set forth below. In connection with my examination, I have
assumed the genuineness of all signatures, the authenticity of all documents
submitted to me as originals, and the conformity to the original document of
all documents submitted to me as copies.
Based upon and subject to the foregoing, it is my opinion that the
Shares covered by the Registration Statement will, upon issuance of such
Shares pursuant to The Legg Mason Profit Sharing Plan and Trust (the "Plan")
by the Company (assuming such issuances are made in accordance with the
terms of the Plan, as such Plan is filed as an exhibit to the Registration
Statement), constitute legally issued, fully paid and non-assessable shares
of common stock of the Company.
Exhibits 5 and 23(b)
<PAGE> 2
November 6, 1998
Page 2
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of my name therein and in the
Prospectus. In giving this consent, I do not admit that I am within the
category of persons whose consent is required by Section 7 of the Securities
Act of 1933.
Very truly yours,
/s/ Theodore S. Kaplan
Theodore S. Kaplan
General Counsel
TSK:pc
<PAGE> 1
CONSENT OF INDEPENDENT ACCOUNTANTS
___________________
We consent to the incorporation by reference in the registration
statement of Legg Mason, Inc. on Form S-8 (which registers 1,000,000 shares
of Legg Mason, Inc. Common Stock under The Legg Mason Profit Sharing Plan and
Trust) of our reports dated May 4, 1998, on our audits of the consolidated
financial statements and financial statement schedules of Legg Mason, Inc.
and Subsidiaries as of March 31, 1998 and 1997, and for each of the three
years in the period ended March 31, 1998, which reports are included in Legg
Mason, Inc.'s 1998 Annual Report on Form 10-K. We also consent to the
reference to our firm under the caption "Experts".
/s/ PricewaterhouseCoopers LLP
PRICEWATERHOUSECOOPERS LLP
Baltimore, Maryland
November 6, 1998
Exhibit 23(a)
