<PAGE>
As filed with the Securities and Exchange Commission on November 27, 1995
REGISTRATION NO. 33-18278
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
POST EFFECTIVE AMENDMENT NO. 7
TO
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
CIRCUS CIRCUS ENTERPRISES, INC.
(EXACT NAME OF ISSUER AS SPECIFIED IN ITS CHARTER)
NEVADA 88-0121916
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
2880 LAS VEGAS BOULEVARD SOUTH
LAS VEGAS, NEVADA 89109
(702) 734-0410
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, ZIP CODE AND TELEPHONE NUMBER)
----------------
CIRCUS CIRCUS EMPLOYEES' PROFIT SHARING AND INVESTMENT PLAN
----------------
MIKE SLOAN, GENERAL COUNSEL
CIRCUS CIRCUS ENTERPRISES, INC.
2880 LAS VEGAS BOULEVARD SOUTH
LAS VEGAS, NEVADA 89109
(702) 734-0410
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
COPY TO:
HOWELL J. REEVES, ESQUIRE
WOLF, BLOCK, SCHORR AND SOLIS-COHEN
TWELFTH FLOOR, PACKARD BUILDING
15TH AND CHESTNUT STREETS
PHILADELPHIA, PENNSYLVANIA 19102-2678
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
CIRCUS CIRCUS ENTERPRISES, INC.
CROSS-REFERENCE SHEET
PURSUANT TO RULE 404 AND ITEM 501 OF REGULATION S-K
<TABLE>
<CAPTION>
FORM S-8 ITEM NO. HEADING IN PROSPECTUS
----------------- ---------------------
<C> <C> <C> <S>
1. Plan Information
(a) General Plan Information............ Cover Page; General Information;
Definitions; The Plan;
Applicable Requirements of
ERISA; Reports of the Company;
Incorporation of
Certain Documents by Reference
(b) Securities to be Offered............ Cover Page; The Plan
(c) Employees Who May Participate in the
Plan............................... The Plan--Eligibility
(d) Purchase of Securities Pursuant to
the Plan and Payments for The Plan--Contributions and--
Securities Offered................. Investment of Contributions
(e) Resale Restrictions................. The Plan--Assignment; Liens
(f) Tax Effects of Plan Participation... Federal Tax Aspects
(g) Investment of Funds................. The Plan--Investment of
Contributions
(h) Withdrawal from the Plan; Assignment
of Interest........................ The Plan--Withdrawals on Account
of Hardship and--Benefits Under
the Plan
(i) Forfeitures and Penalties........... The Plan--Contributions,--
Limitations on Contributions and
--Investment of Contributions
(j) Charges and Deductions and Liens
Therefor........................... The Plan--Investment of
Contributions
2. Registrant Information and Employee Plan
Annual Information..................... Reports of the Company;
Incorporation of Certain
Documents by Reference
</TABLE>
i
<PAGE>
PROSPECTUS
[LOGO OF CIRCUS CIRCUS]
ENTERPRISES, INC.
2,700,000 SHARES
OF
COMMON STOCK
($.01 2/3PAR VALUE)
----------------
CIRCUS CIRCUS EMPLOYEES'
PROFIT SHARING AND INVESTMENT PLAN
----------------
This Prospectus covers interests in the Circus Circus Employees' Profit
Sharing and Investment Plan (the "Plan") as well as 2,700,000 shares of Common
Stock, $.01 2/3 par value, of Circus Circus Enterprises, Inc. (the "Company")
which may be acquired pursuant to the Plan as more fully set forth herein.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCU-
RACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
----------------
THE NEVADA GAMING COMMISSION HAS NOT PASSED UPON THE ADE-
QUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTA-
TION TO THE CONTRARY IS UNLAWFUL.
----------------
The date of this Prospectus is November 27, 1995.
<PAGE>
ADDITIONAL INFORMATION
The Company has filed a Registration Statement with the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended, with respect to the shares offered hereby. This Prospectus does not
contain all of the information set forth in the Registration Statement,
certain items of which are contained in schedules and exhibits to the
Registration Statement as permitted by the rules and regulations of the
Commission. For further information, reference is made to the Registration
Statement, including the financial schedules and exhibits filed or
incorporated as a part thereof. Items of information omitted from this
Prospectus but contained in the Registration Statement may be inspected and
copies may be obtained (at prescribed rates) at the Commission's Public
Reference Section at 450 Fifth Street, N.W., Washington, D.C. 20549.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 and, in accordance therewith, files reports, proxy
statements and other information with the Commission. Such reports, proxy
statements and other information can be inspected and copied (at prescribed
rates) at the Public Reference Section offices of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's regional offices
at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511; and Seven World Trade Center, Suite 1300, New York, New York
10048. In addition, the Company's Common Stock is listed on the New York Stock
Exchange and the Pacific Stock Exchange and similar information concerning the
Company can be inspected and copied at the New York Stock Exchange, 20 Broad
Street, New York, New York 10005 and at the Pacific Stock Exchange, 301 Pine
Street, San Francisco, California 94104.
No person is authorized to give any information or to make any
representations not contained in this Prospectus in connection with the offer
described herein, and any information or representation not contained herein
must not be relied upon as having been authorized by the Company. This
Prospectus does not constitute an offer to sell these securities in any state
to any person to whom it is unlawful to make such offer in such state. Neither
the delivery of this Prospectus nor any sale made hereunder shall, under any
circumstances, create an implication that information herein is correct as of
any time subsequent to its date.
GENERAL INFORMATION
This Prospectus relates to interests in the Circus Circus Employees' Profit
Sharing and Investment Plan of Circus Circus Enterprises, Inc., and its
participating subsidiaries, and to shares of the Company's Common Stock, $.01
2/3 par value ("Common Stock"), which may be purchased by the Trustee or
contributed by the Employer pursuant to the Plan. The information set forth in
this Prospectus has been adjusted to reflect a 3-for-2 split of the Company's
Common Stock effective July 9, 1993. The Company is a Nevada corporation
having its principal executive offices located at 2880 Las Vegas Boulevard
South, Las Vegas, Nevada 89109 (telephone number 702-734-0410). The principal
provisions of the Plan are summarized in this Prospectus.
2
<PAGE>
DEFINITIONS
The following terms, as used in this Prospectus, have the following
meanings:
"Account" means, as required by the context, the entire amount held from
time to time for the benefit of any one Participant, or the portion thereof
attributable to Savings Contributions, Matching Contributions, Automatic
Contributions, Discretionary Contributions or Rollover Contributions, as well
as ESOP Matching Contributions, ESOP Automatic Contributions, 401(k) Automatic
Contributions and 401(k) Matching Contributions made under Plan provisions
previously in effect.
"Actual Deferral Percentage" means, with respect to a group of Participants
for a Plan Year, the average of the ratios (calculated separately for each
member of the group) of the amount of Savings Contributions as well as
Matching Contributions, Automatic Contributions, 401(k) Matching Contributions
and 401(k) Automatic Contributions on behalf of each Participant who is a
member of such group (other than Family Members of certain Highly Compensated
Employees) to the amount of the Compensation for each Participant who is a
member of such group for the Plan Year.
"Agreement of Trust" means the Fifth Amendment and Restatement of the Circus
Circus Employees' Profit Sharing and Investment Trust entered into between the
Company and the Trustee effective as of January 1, 1996, except as otherwise
provided therein.
"Automatic Contribution" means, as the context requires, the Automatic
Contribution, or for Plan Years beginning on or after January 1, 1989 and
ending prior to January 1, 1996, the ESOP Automatic Contribution, or for Plan
Years beginning prior to January 1, 1989, the 401(k) Automatic Contribution.
"Code" means the Internal Revenue Code of 1986, as amended, or any successor
statute.
"Company" means Circus Circus Enterprises, Inc., or its successors.
"Compensation" means regular salaries and wages, overtime pay, bonuses and
commissions paid or accrued by an Employer, tips declared by or distributed to
an Employee while performing services for an Employer, Savings Contributions
to this Plan, and elective contributions to any plan maintained by an Employer
pursuant to Section 125 of the Code, but does not include third party
disability payments, stock options, relocation expense payments, credits or
benefits under the Plan (other than Savings Contributions), any amount
contributed to any pension, employee welfare, life insurance or health
insurance plan or arrangement, or any other tax-favored fringe benefits (other
than elective contributions to a Section 125 plan). However, no Compensation
in excess of $150,000 (adjusted under such regulations as may be issued by the
Secretary of the Treasury) will be taken into account for any Employee. In
applying such limit, the Compensation of a Highly Compensated Employee who is
(i) a 5% owner of an Employer, or (ii) one of the ten Highly Compensated
Employees paid the greatest amount of Compensation during the Plan Year will
be aggregated with the Compensation of any spouse or minor child of such
Employee who is also receiving Compensation from the Employer.
"Contract" means the Group Annuity Contract No. GA70867, effective as of
November 1, 1985, between the Custodian and the Company, and the related
letters dated November 15 and December 4, 1985, respectively, from the
Custodian.
"Custodian" means Principal Financial Group, Des Moines, Iowa, acting in its
capacity under the Contract.
"Discretionary Contribution" generally means a Discretionary Contribution
under the Plan by an Employer on behalf of a Participant.
3
<PAGE>
"Diversification Election" means a Participant's election to diversify a
portion of his ESOP Matching Contribution Account and ESOP Automatic
Contribution Account pursuant to the Diversification provisions of the Plan.
"Diversification Election Period" means the six Plan Year period beginning
with the later of: (1) the Plan Year after the Plan Year in which the
Participant attains age 55; or (2) the Plan Year after the Plan Year in which
the Participant first completes ten (10) years of participation in the Plan
(disregarding participation before January 1, 1989).
"Earnings" means, with respect to a Valuation Period, the aggregate of the
unrealized appreciation or depreciation accruing to the Trust Fund (or any
Fund or separate portion of a Segregated Investment Fund) during such a
period; and the income earned or the loss sustained by the Trust Fund (or any
Fund or separate portion of a Segregated Investment Fund) during such period,
whether from investments or from the sale or exchange of assets.
"Eligibility Date" means January 1 and July 1 in any Plan Year.
"Employee" means, except as otherwise provided in the Plan, any person
employed by the Employer, but generally does not include union employees other
than participating union employees at Circus Circus Reno, Circus Circus Las
Vegas, Excalibur, Luxor and Hacienda.
"Employer" means the Company, Circus Circus Casinos, Inc., Slots-A-Fun,
Inc., Edgewater Hotel Corporation, Colorado Belle Corp., New Castle Corp.,
Racing Boats, Inc., Circus Circus Development Corp., Pinkless, Inc., and
Ramparts, Inc., all Nevada corporations; Circus Circus Mississippi, Inc., a
Mississippi corporation; Railroad Pass Investment Group, Jean Development
Company and Jean Development West, all Nevada partnerships; and any other
subsidiary or related corporation or other entity that adopts the Plan with
the consent of the Company. Railroad Pass Investment Group, Jean Development
Company and Jean Development West are, at times, collectively referred to
herein as the "Gold Strike Entities".
"Employer Securities" means securities of the Company that are readily
tradable on an established securities market or meet other conditions of
Section 4975 of the Code.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute.
"ESOP Automatic Contribution" means an Automatic Contribution pursuant to
the Plan, attributable to any Plan Year beginning on or after January 1, 1989,
and ending prior to January 1, 1996, by an Employer on behalf of a
Participant, other than an officer, director, 10% owner of the Company, or any
other Participant who is required to file reports under Section 16(a) of the
Securities Exchange Act of 1934.
"ESOP Contribution" means an ESOP Automatic Contribution and an ESOP
Matching Contribution attributable to any Plan Year beginning on or after
January 1, 1989 and ending prior to January 1, 1996.
"ESOP Fund" means a Fund established under the Plan based upon all
contributions other than (i) Savings Contributions, (ii) Matching
Contributions for years beginning prior to January 1, 1990 and beginning after
January 1, 1996, and (iii) Automatic Contributions for years beginning prior
to January 1, 1989 and beginning after January 1, 1996.
"ESOP Matching Contribution" means a Matching Contribution pursuant to the
Plan, attributable to any Plan Year beginning on or after January 1, 1990 and
ending prior to January 1, 1996, by an Employer on behalf of a Participant,
other than an officer, director, 10% owner of the Company, or any other
Participant who is required to file reports under Section 16(a) of the
Securities Exchange Act of 1934.
"Family Member" of a Highly Compensated Employee generally means such
Employee's spouse, lineal descendent or ascendent, or the spouse of his lineal
descendant or ascendent. However, for certain circumstances as enumerated in
the Plan, Family Member of a Highly Compensated Employee includes only the
Employee's spouse and his lineal descendants who have not attained age 19
before the close of the Plan Year.
4
<PAGE>
"401(k) Automatic Contribution" means an Automatic Contribution under the
Plan, attributable to any Plan Year beginning before January 1, 1989, on
behalf of a Participant by an Employer.
"401(k) Matching Contribution" means a Matching Contribution under the Plan,
attributable to any Plan Year beginning before January 1, 1990, on behalf of a
Participant by an Employer.
"Fund" means a fund established under the Plan.
"Gross Compensation" means, with respect to an Employee during a Plan Year,
total taxable compensation of such Employee for such Plan Year as defined in
the Plan, subject to certain limits defined in the Plan, plus the amount of
such Employee's Savings Contribution for such Plan Year.
"Highly Compensated Employee" means, subject to certain further limitations
set forth in the Plan, any Employee during the Plan Year or the immediately
preceding Plan Year:
(1) who was a 5% owner of an Employer;
(2) whose Section 415 Compensation was more than $100,000 (adjusted under
such regulations as may be issued by the Secretary of the Treasury);
(3) whose Section 415 Compensation was more than $66,000 (adjusted under
such regulations as may be issued by the Secretary of the Treasury), and
who was a member of the "top paid group." As used herein, "top paid group"
means all Employees who are in the top 20% of the Employer's work force on
the basis of Section 415 Compensation paid during the year; or
(4) who was an officer of an Employer and received compensation in excess
of 50% of the amount in effect under Section 415(b)(1)(A) of the Code for
any such Plan Year. However, no more than 50 Employees will be considered
Highly Compensated Employees merely by reason of their status as officers
of an Employer.
"Hour of Service" means, as set forth in detail in the Plan, an hour for
which an Employee performs services, an hour for which he is paid for reasons
other than the performance of services (i.e., sick pay and vacation pay), or
an hour of unpaid maternity or paternity leave within certain limits described
in the Plan.
"Matching Contribution" means, as the context requires, the Matching
Contribution, or for Plan Years beginning on or after January 1, 1990 and
ending prior to January 1, 1996, the ESOP Matching Contribution, or for Plan
Years beginning prior to January 1, 1990, the 401(k) Matching Contribution.
"Net Compensation" means, with respect to an Employee during a Plan Year,
the amount of such Employee's Gross Compensation for such Plan Year less the
amount of such Employee's Savings Contribution for such Plan Year.
"Normal Retirement Date" means the date on which a Participant attains the
age of 65 years, or the 5th anniversary of the date the Participant commenced
participation in the Plan, whichever date occurs later.
"One Year Break in Service" means a Plan Year (and, for purposes of
eligibility and participation, the year beginning with the date the Employee's
employment commenced), in which an Employee has 500 or fewer Hours of Service,
and it is deemed to occur on the last day of any such year.
"Participant" means:
(1) any eligible Employee of an Employer who has become a Participant
under the Plan, except that an Employee who has made a Rollover
Contribution prior to his Eligibility Date is considered a Participant
solely with respect to his Rollover Contribution Account; and
(2) any former employee of an Employer who became a Participant under the
Plan and who still has a balance in an Account under the Plan.
5
<PAGE>
"Plan" means the profit sharing and investment plan described in this
Prospectus.
"Plan Administrator" means the Company.
"Plan Year" means each 12-month period ending on December 31.
"Savings Contribution" means a contribution to the Plan by or on behalf of
an Employee pursuant to paragraph (a) of Article VI of the Plan.
"Section 415 Compensation" means all compensation received by or made
available to the Participant from all Employers and all affiliates for
personal services actually rendered, as well as tips which the Employer is
required to report to the Employee and the Internal Revenue Service, but does
not include Savings Contributions, elective contributions to any plan
maintained by an employer pursuant to Section 125 of the Code, deferred
compensation, stock options and other distributions that receive special tax
benefit.
"Segregated Investment Fund" means a Fund established under the Plan for
designated investments, in which the assets of each Participant selecting the
Fund are separately invested, and the Earnings attributable to such assets are
separately accounted for.
"Transfer of Functions Date" means the date on or about January 1, 1991 when
there was transferred to the Trustee the responsibility for investments made
with respect to the General Common Stock Fund and the Money Market Fund.
"Trust" means, collectively, the trust or trusts established by the
Agreement and Declarations of Trust and the account or accounts established by
the Contract.
"Trust Fund" means, collectively, the trust funds and accounts established
under all Agreements of Trust and all Contracts from which the amounts of
supplementary compensation provided for by the Plan are to be paid or are to
be funded.
"Trustee" means Bank of America, Nevada (formerly Valley Bank of Nevada), in
its capacity as trustee under the Agreement of Trust.
"Valuation Date" means, with respect to the Trust Fund, the last day of each
calendar month, and such other dates as the Plan Administrator may select.
Interim Valuation Dates no more frequently than weekly may be used for
purposes of facilitating hardship withdrawals.
"Valuation Period" means the period beginning with the first day after a
Valuation Date and ending with the next Valuation Date.
"Year of Credited Service" means, in general, a Plan Year beginning on or
after the Employee's date of employment or most recent date of reemployment,
whichever is later, during which the Employee completed 1,000 or more Hours of
Service. However, an Employee who becomes a Participant after November 20,
1989 will not receive credit for any Plan Year before the Plan Year in which
he became a Participant, except that any Employee who would have become a
Participant in an earlier Plan Year if he had not been a member of a
collective bargaining unit will have the same number of Years of Credited
Service that he would have had if he had not been a member of such unit.
Employees of Employers acquired by the Company during 1995 will get credit for
all 1995 service with the acquired Employer (or its predecessor), but only if
they were employed continuously by the acquired Employer (or its predecessor)
from January 1, 1995 through the date of the acquisition.
"Year of Service" means a Year of Vesting Service or a Year of Eligibility
Service, as required by the context as follows:
(A) "Year of Vesting Service" means a Plan Year beginning on or after
January 1, 1985, during which an Employee completes 1,000 or more Hours of
Service. Employees of Employers acquired by the
6
<PAGE>
Company during 1995 will get credit for all 1995 service with the acquired
Employer (or its predecessor), but only if they were employed continuously
by the acquired Employer (or its predecessor) from January 1, 1995 through
the date of the acquisition.
(B) "Year of Eligibility Service" means the consecutive 12-month period
beginning with the date the Employee is first credited with an Hour of
Service, provided he completes 1,000 Hours of Service during that 12-month
period; otherwise, any Plan Year during which the Employee completes 1,000
or more Hours of Service. (The Year of Service is not completed until the
end of the 12-month period or the Plan Year, as the case may be, even if
1,000 Hours of Service are completed earlier).
An Employee receives credit for his Hours of Service for the Employer or an
"Affiliate" of the Employer (as defined in the Plan) whether or not he was an
Employee at the time such Hours of Service were completed.
7
<PAGE>
THE PLAN
GENERAL
The Plan covers the Employees of the Employer. The Plan was originally
adopted in 1985. In 1989, employee stock ownership plan ("ESOP") features were
added to the Plan, and it was renamed the Circus Circus Employees' Profit
Sharing, Investment and Employee Stock Ownership Plan and thereafter, the
Board of Directors of the Company adopted additional amendments to the Plan
and the Trust. The Company has obtained from the Internal Revenue Service (the
"IRS") a favorable determination letter dated May 23, 1995 that the Plan, as
amended through November 22, 1993, meets the requirements of a qualified
profit sharing plan under Section 401(a) of the Code, a qualified cash or
deferred arrangement under Section 401(k) of the Code, and a qualified ESOP
under Section 4975(e)(7) of the Code, and that the Trust, as amended through
the Third Trust Amendment, is exempt from Federal income tax under Section
501(a) of the Code. However, the favorable determination letter was
conditioned upon the adoption of an additional amendment on or before August
21, 1995. The required additional amendment was in fact adopted on July 12,
1995.
On November 21, 1995, the Company adopted a Tenth Amendment and Restatement
of the Plan and a Fifth Amendment and Restatement of the Trust (collectively
the "1995 Amendments"). In conjunction with the 1995 Amendments, the Company
intends to resubmit the Plan, as so amended, to the IRS to seek its
determination that the Plan, in its amended form, continues to meet the
requirements of a qualified profit sharing plan under Section 401(a) of the
Code, a qualified cash or deferred arrangement under Section 401(k) of the
Code, and a qualified ESOP under Section 4975(e)(7) of the Code, and that the
Trust continues to be exempt from Federal income tax under Section 501(a) of
the Code. It is possible that the IRS could request further amendments to the
Plan or the Trust, and could condition any determination letter upon timely
adoption of such amendments. Trenam, Kemker, Scharf, Barkin, Frye, O'Neill &
Mullis, special counsel to the Company ("Trenam Kemker"), has provided the
Company with their opinion that subject to certain limitations set forth
therein, principally related to adoption of final regulations by the IRS and
the U.S. Department of Labor, the adoption of the 1995 Amendments will not
cause the Plan or Trust documents to fail to be in substantial compliance with
Sections 401(a), 401(k) and 4975(e) of the Code, so long as any further
amendments requested by the IRS are adopted within 90 days after the issuance
of any determination letter that is conditioned upon timely adoption of such
amendments, and that the adoption of the 1995 Amendments will not cause the
Plan to fail to be in substantial compliance with the applicable portions of
ERISA that did not amend the Code.
PURPOSE
The Plan is designed to provide eligible Employees an opportunity to
increase their retirement savings by offering the advantages of a qualified
cash or deferred arrangement under Section 401(k) of the Code. See "Federal
Tax Aspects." In general, an Employee who meets the Plan's eligibility
requirements becomes a Participant. A Participant may authorize the Company to
make a 401(k) Savings Contribution (as described under "Contributions," below)
by reducing the Participant's salary by an amount not in excess of his base
pay and not in excess of 15% of his Gross Compensation. Subject to limitations
set forth in the Plan, the Company will partially match Savings Contributions,
and will make Automatic Contributions. The Company further may choose to make
Discretionary Contributions. A Participant may direct the investment of all of
his Savings Contributions, together with Matching Contributions for years
beginning prior to January 1, 1990 and beginning on or after January 1, 1996
and Automatic Contributions for years beginning prior to January 1, 1989 and
beginning on or after January 1, 1996, into one or more of five investment
options until January 1, 1996 when the number of available investment options
will increase to seven. See "Investment of Contributions," below. All other
contributions will be ESOP Contributions, which will generally remain
invested, pursuant to an Agreement of Trust, in Employer Securities in the
ESOP Fund.
ADMINISTRATION
The Company, as Plan Administrator, is responsible for the control and
management of the operation and administration of the Plan. As Plan
Administrator, the Company is a "named fiduciary" as such term is defined
8
<PAGE>
in the Employee Retirement Income Security Act of 1974, as amended ("ERISA").
The Plan Administrator has the power and the duty to take all action and to
make all decisions necessary or proper to administer the Plan. To the extent
consistent with applicable law, the determination of the Plan Administrator as
to any question involving the general administration and interpretation of the
Plan is conclusive and binding on any person making a claim under the Plan.
The Plan Administrator may make and enforce rules and regulations relating to
the Plan. In administering the Plan, the Plan Administrator must act in a
nondiscriminatory manner. Each year, the Plan Administrator prepares a report
concerning the financial condition and operation of the Plan.
The assets of the Plan constitute a Trust Fund. The Plan Administrator has
no duty with respect to the investments to be made of the funds in the Trust
Fund. The Trustee has such function with respect to each of the Plan's funds
other than with respect to amounts which remain invested in GIAs constituting
part of the Custodian's general account, as described under "Investments of
Contributions--II. Fixed Income Fund," below.
The Trustee has powers and responsibilities with respect to the
administration of the Circus Circus Stock Fund, the ESOP Fund, the Fixed
Income Fund (except to the extent amounts remain invested in GIAs constituting
part of the Custodian's general account, as described under "Investment of
Contributions--II. Fixed Income Fund," below), the General Common Stock Fund,
the U.S. Government Securities Fund, the Capital Fund, the International
Growth Fund and the Small Capitalization Index Fund, including (i) initial
investment of the funds deposited in each such Fund, (ii) reinvestment, sale,
exchange or other disposition of all or any portion of each such Fund's
assets, (iii) exercise of the voting rights associated with any securities
constituting a part of each such Fund's assets (except that any shares in the
ESOP Fund that are allocated to a Participant's Account are voted by the
Trustee in accordance with instructions from the Participant), (iv)
disbursement from each such Fund in accordance with instructions from the Plan
Administrator, and (v) the valuation of each such Fund.
Except where the Plan expressly provides that the Trustee is subject to the
direction of a named fiduciary or where authority to manage, acquire or
dispose of assets of the Plan is delegated by a named fiduciary to one or more
investment managers, the Circus Circus Stock Fund, the ESOP Fund, the Fixed
Income Fund (except to the extent amounts remain invested in GIAs constituting
part of the Custodian's general account as described under "Investment of
Contributions--II. Fixed Income Fund," below), the General Common Stock Fund,
the U.S. Government Securities Fund, the Capital Fund, the International
Growth Fund and the Small Capitalization Index Fund are under the control and
management of the Trustee. In connection with its control and management of
the Circus Circus Stock Fund and the ESOP Fund, the Trustee selects brokers to
effect particular securities transactions resulting in the most favorable net
results for the Plan by taking into account such factors as price, commission,
size of order and execution by the broker. Factors such as the broker's
execution and capital commitment capabilities, initiation of trades and
securities syndication are evaluated by the Trustee in selecting a broker.
Brokerage transactions are not directed to brokers because of their research
services. The Trustee periodically evaluates the reasonableness of brokerage
commissions paid by the Circus Circus Stock Fund and the ESOP Fund by
reviewing such factors as the competitive negotiated rate structure at the
time the commission was charged and the effectiveness of the brokers'
executions. The Trustee may pay a brokerage commission in excess of that which
another broker might have charged for effecting the same transaction in
recognition of the value of the brokerage execution services performed by the
selected broker.
The Company is responsible for all expenses incurred in implementing the
Plan and the Trust. Except as otherwise described in this Prospectus, the
expenses of the administration of the Trust Fund, including compensation
payable to the Trustee and the Custodian, the compensation of any investment
manager, the expenses incurred by the Plan Administrator in discharging its
duties, all income or other taxes of any kind levied or assessed upon or with
respect to the Trust Fund and any interest that may be payable on money
borrowed for the benefit of the Trust by the Trustee or the Custodian are to
be paid or provided for by the Company and, if not paid by the Company, are to
be paid out of the assets of the Trust Fund. However, no excise tax or other
liability imposed upon the Trustee, the Custodian, the Plan Administrator or
anyone else, for failure to comply with the provisions of any federal law will
be subject to payment or reimbursement from the assets of the Trust. For
information regarding certain fees to be paid out of the assets of the Funds,
see "Description of Investment Options," below.
9
<PAGE>
ELIGIBILITY
Participation in the Plan is available to eligible Employees of the Company
and any of the Company's subsidiaries that adopt the Plan with the Company's
consent. The subsidiaries of the Company presently participating in the Plan
are Circus Circus Casinos, Inc., Colorado Belle Corp., Edgewater Hotel
Corporation, Slots-A-Fun, Inc., New Castle Corp., Ramparts, Inc., Circus
Circus Development Corp., Pinkless, Inc., and Racing Boats, Inc., all Nevada
corporations; Railroad Pass Investment Group, Jean Development Company and
Jean Development West, all Nevada partnerships; and Circus Circus Mississippi,
Inc., a Mississippi corporation. Such entities are herein referred to
collectively with the Company and individually, as the context requires, as
the "Employer."
Employees of Pinkless, Inc. on September 1, 1995, who were continuously
employed by Hacienda Hotel, Inc. from January 1, 1995 through September 1,
1995, and who remain employed by Pinkless, Inc. or another Employer on January
1, 1996, are eligible to become Participants in the Plan on January 1, 1996,
provided they would have completed 1,000 Hours of Service during the Plan Year
ending December 31, 1995 if Pinkless, Inc. had been an Employer continuously
since January 1, 1995.
Employees of Pinkless, Inc. who become so employed after January 1, 1995 are
eligible to become Participants in the Plan, with Hours of Service credited
for all purposes under the Plan being limited to those completed on or after
September 1, 1995.
Employees of one or more of the Gold Strike Entities on June 1, 1995, who
were continuously employed by one or more of the Gold Strike Entities from
January 1, 1995 through June 1, 1995, and who remain employed by an Employer
on January 1, 1996, are eligible to become Participants in the Plan on January
1, 1996, provided they would have completed 1,000 Hours of Service during the
Plan Year ending December 31, 1995 if the Gold Strike Entities had been
Employers continuously since January 1, 1995.
Employees of one or more of the Gold Strike Entities who become so employed
after January 1, 1995 are eligible to become Participants in the Plan, with
Hours of Service credited for all purposes under the Plan being limited to
those completed on or after June 1, 1995.
The eligibility requirements for participation in the Plan restrict
participation to Employees who have completed one Year of Eligibility Service
and have attained the age of 21 years.
The number of employees anticipated to be eligible to participate in the
Plan as of January 1, 1996 is approximately 11,500.
PARTICIPATION IN THE PLAN
Under the terms of the Plan, an Employee initially becomes a Participant in
the Plan on the first January 1 or July 1 on which such Employee meets all of
the requirements for eligibility to participate in the Plan. In addition, the
Plan Administrator may accept a Rollover Contribution from an Employee who is
expected to become a Participant, and any Employee who has made a Rollover
Contribution prior to entering the Plan is considered a Participant with
respect to his Rollover Contribution Account. Each Participant in the Plan
remains a Participant until his termination of employment.
Participation in the Plan is not terminated by transfers between the Company
and its participating subsidiaries, provided the Participant continues to be
an eligible Employee after the transfer. If a Participant transfers to a
subsidiary or business of the Company that is not an Employer, no further
contributions to the Plan may be made on his behalf. However, amounts credited
to his Account remain invested under the terms of the Plan.
An Employee who ceases to be a Participant in the Plan, and who later is
reemployed by an Employer, will become a Participant again on the date of his
reemployment. An Employee who has completed one Year of
10
<PAGE>
Service before becoming an Employee of an Employer (as a result of his
employment with an "Affiliate," as defined in the Plan, or his exclusion as a
result of a collective bargaining agreement) will enter the Plan as a
Participant on the later to occur of (i) the first Eligibility Date concurring
with or occurring after the Employee's 21st birthday and (ii) the date he
becomes an Employee of the Employer.
CONTRIBUTIONS
As described below, a Participant may make Savings Contributions to the
Plan, and an Employer makes Matching Contributions and Automatic Contributions
and may make Discretionary Contributions.
Savings Contributions. Savings Contributions are those made to the Plan at
the election of a Participant pursuant to Section 401(k) of the Code. The
Participant selects the amount of his Savings Contributions which, under the
terms of the Plan, may be in any amount not exceeding 15% of his Gross
Compensation, up to a maximum of $9,500 (subject to annual adjustment) in any
Plan Year. See "Limitations on Contributions," below. The Participant's
Employer will make the appropriate reduction in the salary of the Participant.
Savings Contributions are forwarded by the Plan Administrator to the Trustee
to be invested in accordance with the Participant's investment election. The
Savings Contributions specified by the Participant are made by the Employer
and, provided the Actual Deferral Percentage is within the limits described
under "Limitations on Contributions", below, will not be included in the
Participant's compensation for Federal income tax purposes at the time the
contribution is made. See "Federal Tax Aspects."
Each Participant must indicate the amount of his Savings Contributions in a
written salary reduction agreement between the Participant and the Employer,
which must be executed and in effect before the first day of the first pay
period to which it applies. Savings Contributions may be changed or suspended,
as discussed below. A Savings Contribution is made through a payroll deduction
and must be paid by the Employer to the Plan within a reasonable period after
it is withheld from the Participant's pay, and in no event later than 12
months after the end of the Plan Year in which the withholding occurs.
The amount of a Participant's Savings Contribution is credited to the
Participant's Account and invested in accordance with his instructions. See
"Investment of Contributions," below. Savings Contributions are fully (100%)
vested and nonforfeitable.
If a Participant selects a specified dollar contribution, that contribution
will be subject to certain limits, so that it may have to be reduced under
certain circumstances. However, it will not be increased unless the
Participant formally changes his election. If a Participant elects to
contribute a specified percentage of his compensation, any increase or
decrease in such Participant's compensation at any time will automatically
result in a corresponding adjustment to the Participant's Savings
Contribution.
11
<PAGE>
Matching Contributions. Matching Contributions for each eligible Participant
are made by the Employer in cash. Subject to the Plan's limitation on Matching
Contributions in any Plan Year, a Matching Contribution is made for each Plan
Year, for each Participant who is an Employee on the last day of such Plan
Year, in an amount equal to 25% of the Participant's Savings Contributions for
the Plan Year. Under the Plan, the Matching Contribution made to a
Participant's Account in a Plan Year will not exceed the amount determined
from the following table based on the Participant's Years of Credited Service:
<TABLE>
<CAPTION>
MAXIMUM AMOUNT OF ESOP
YEARS OF MATCHING CONTRIBUTIONS
CREDITED SERVICE PER PLAN YEAR
---------------- ----------------------
<S> <C>
1 $ 62.50
2 75.00
3 87.50
4 100.00
5 125.00
6 150.00
7 175.00
8 or more 200.00
</TABLE>
The amount of the Matching Contribution made on behalf of a Participant is
credited to the Participant's Matching Contributions Account and invested in
accordance with his instructions. Matching Contributions, along with ESOP
Matching Contributions made prior to January 1, 1996, become vested and
nonforfeitable according to a vesting schedule as described under "Vesting,"
below.
Automatic Contributions. Automatic Contributions are made by the Employer
for each Plan Year on behalf of each eligible Participant who completes 1,000
Hours of Service during such Plan Year and who is an Employee on the last day
of such Plan Year. Automatic Contributions are made in cash. The amount of the
Automatic Contribution for a Participant in any Plan Year is determined from
the following table based on the Participant's Years of Credited Service:
<TABLE>
<CAPTION>
AMOUNT OF ESOP
YEARS OF AUTOMATIC CONTRIBUTIONS
CREDITED SERVICE PER PLAN YEAR
---------------- -----------------------
<S> <C>
1 $250.00
2 300.00
3 350.00
4 400.00
5 500.00
6 600.00
7 700.00
8 or more 800.00
</TABLE>
The amount of the Automatic Contribution made on behalf of a Participant is
credited to the Participant's Automatic Contributions Account and invested in
accordance with his instructions. Automatic Contributions, along with ESOP
Automatic Contributions made prior to January 1, 1996, become vested and
nonforfeitable according to a vesting Schedule as described under "Vesting,"
below.
Amounts that are forfeited during a Plan Year ("Forfeitures"), to the extent
they are not needed to restore the Forfeitures of returning Participants who
have "bought back" their prior Forfeitures, will be reallocated as additional
Automatic Contributions to Participants who otherwise qualify for Automatic
Contributions for that Plan Year. A Participant's share of any such additional
Automatic Contributions will be a fraction, the numerator of which is his
regular Automatic Contribution for the Plan Year and the denominator of which
is the aggregate of all regular Automatic Contributions for all Participants
for the Plan Year.
12
<PAGE>
Discretionary Contributions. Discretionary Contributions may be made by the
Employer at its discretion. The Discretionary Contributions made by the
Employer will be in cash. A Participant's share of any Discretionary
Contributions in a Plan Year will be determined as of the last day of such
Plan Year by multiplying the total Discretionary Contribution for the Plan
Year by a fraction, the numerator of which is the Participant's Compensation
for such Plan Year and the denominator of which is aggregate Compensation for
such Plan Year for all Participants receiving an allocation. The amount of the
Discretionary Contribution credited to a Participant's Account is invested in
accordance with his instructions. Discretionary Contributions will become
vested and nonforfeitable according to a vesting schedule described under
"Vesting," below.
An Employee will be entitled to share in a Discretionary Contribution for a
Plan Year only if he completes 1,000 Hours of Service during that Plan Year
and only if he is employed by the Employer on the last day of the Plan Year.
Top Heavy Rules. If the Plan becomes "top heavy" as defined in Section 416
of the Code, certain limitations may be placed on contributions made on behalf
of "key employees" as defined in Section 416 and certain minimum contributions
may be required on behalf of certain other Participants as set forth in the
Plan.
ROLLOVER CONTRIBUTIONS
Any Participant of the Plan (or an Employee who is expected to become a
Participant), at any time, may submit a written application requesting the
Plan Administrator to direct the Trustee to accept a Rollover Contribution. A
Rollover Contribution accepted by the Plan Administrator will be placed in a
Rollover Contribution Account established for the Participant and will become
part of the Trust Fund. The amount placed in a Rollover Contribution Account
will be invested in accordance with the contributing Participant's
instructions. See "Investment of Contributions," below. Rollover Contributions
are not subject to the limits outlined under "Limitations on Contributions,"
below.
LIMITATIONS ON CONTRIBUTIONS
Section 401(k) of the Code limits the Savings Contributions of Participants
who are Highly Compensated Employees. Under the Plan, the Actual Deferral
Percentage ("ADP") for the group of Highly Compensated Employees for a Plan
Year (the "HC ADP") may not exceed 125% of the ADP for the group of all other
eligible employees (the "non-HC ADP"). Alternatively, the excess of the HC ADP
for a Plan Year over the non-HC ADP may not exceed two percentage points (or
such lesser amount as may be established by applicable regulations); and the
HC ADP for a Plan Year may not exceed 200% of the non-HC ADP. Savings
Contributions that are in violation of these limits must be returned to the
Highly Compensated Employees on whose behalf the excess Savings Contributions
were made, as provided in Section 401(k) of the Code.
Under Section 401(k) of the Code, no Participant's Savings Contributions for
any Plan Year can exceed $9,500 (subject to annual adjustment). Any Savings
Contribution in excess of this limit must be returned to the Participant
making such contribution, as provided in Section 401(k) of the Code.
As described above, the Plan limits each Participant's Savings Contributions
to 15% of his Gross Compensation. However, Section 415 of the Code also limits
overall allocations on behalf of any Participant to 25% of the Participant's
Net Compensation. (Section 415 also establishes other limitations, which are
described below.) All contributions including both Savings Contributions and
all employer contributions, are counted toward the overall limit, and the
maximum Savings Contributions that can be made in a Plan Year without
exceeding the 25% of Net Compensation overall limit will be difficult to
calculate.
Illustration: In general, a Savings Contribution equal to 15% of
Gross Compensation will equal approximately 18% of Net Compensation,
thus leaving a margin of only 7% of Net Compensation for Employer
contributions. Thus, if Employer contributions for a Participant for
any year are to exceed 7% of Net Compensation, then the Participant
must contribute less than 18% of Net Compensation (or less than 15% of
Gross Compensation) in order to stay within the overall limit of 25%
of Net Compensation.
13
<PAGE>
Section 401(m) of the Code further limits Matching Contributions of
Participants who are Highly Compensated Employees. Under the Plan, the Actual
Contribution Percentage ("ACP") for the group of Highly Compensated Employees
for a Plan Year (the "HC ACP") may not exceed 125% of the ACP for the group of
all other eligible employees (the "Non-HC ACP"). Alternatively, the excess of
the HC ACP for a Plan Year over the Non-HC ACP may not exceed two percentage
points (or such lesser amount as may be established by applicable
regulations); and the HC ACP for a Plan Year may not exceed 200% of the Non--
HC ACP. Matching Contributions that are in violation of these limits, but that
are vested under the schedule set forth herein, will be distributed to the
Highly Compensated Employees on whose behalf the excess Matching Contributions
were made, and such amounts that are not vested will be forfeited, and held in
the Plan to be allocated to the Accounts of other Participants in the manner
set forth in the Plan.
Under Section 415 of the Code, the total of all Savings, Matching, Automatic
and Discretionary Contributions allocated to a Participant's Account for any
year generally may not exceed the lesser of (a) $30,000 or (b) 25% of his
Compensation for the year. The $30,000 limitation is subject to cost of living
adjustments. If, for any year, these limitations are exceeded, the Plan
currently provides as follows:
1. The excess will be deemed first to consist of Discretionary
Contributions (but only up to the amount of Discretionary Contributions
to which the Participant would have been entitled in the absence of
these limitations). Excess Discretionary Contributions will be allocated
to the Accounts of Participants who have not yet reached their
respective Section 415 limits.
2. Any remaining excess will be deemed to consist next of Savings
Contributions (but only up to the amount of Savings Contributions made
by the Participant). Excess Savings Contributions will be refunded (with
the earnings, if any, on the excess amounts) to the Participant
following the end of the Plan Year.
3. Any remaining excess will be deemed next to consist of Automatic
Contributions (but only up to the Automatic Contributions to which the
Participant would have been entitled in the absence of these
limitations), and finally Matching Contributions. Excess Automatic and
Matching Contributions will be allocated to the Automatic Contribution
Accounts of Participants who have not yet reached their respective
Section 415 limits.
CHANGE OF CONTRIBUTIONS
A Participant may elect to increase or decrease the amount of the Savings
Contribution made on his behalf by revising his salary reduction agreement
with the approval of the Plan Administrator. Changes in the amount of a
Participant's Savings Contribution may be made by the Participant, with the
approval of the Plan Administrator, as of the first day of any calendar
quarter, for pay periods beginning after the date a revised salary reduction
agreement is executed and made effective. A new salary reduction agreement,
reflecting a change in the amount of a Participant's Savings Contribution,
must be signed before the first day of the first pay period to which the
change applies. Salary reduction agreements with respect to cash bonuses must
be executed and in effect prior to the date on which the bonus is declared.
Any increase or decrease in the rate of contributions must be within the
percentage limits set forth above. See "Contributions" and "Limitations on
Contributions," above. However, a Participant may always suspend or reduce
further Savings Contributions to the Plan at any time, provided the Plan
Administrator receives the request for such suspension or reduction before the
first day of the first pay period to which the suspension or reduction
applies. A Participant who suspends further Savings Contributions may
reinstate such contributions, but only as provided in the Plan.
ACCOUNTS
The accounts and records of the Plan are maintained by the Plan
Administrator and disclose the status of the Account of each Participant. Each
Participant will be advised from time to time, at least once each year, of the
balance of his Account.
14
<PAGE>
Each Participant's Account under the Plan represents the Participant's
interest in the Funds established under the Plan. Separate accounting records
are kept for those parts of the Participant's Account that result from
Savings, Matching, Automatic, 401(k) Matching, 401(k) Automatic, ESOP
Matching, ESOP Automatic, Discretionary and Rollover Contributions.
INVESTMENT OF CONTRIBUTIONS
Generally, each Participant must direct how the portion of his Savings
Contributions Account, Matching Contribution Account, Automatic Contribution
Account, Discretionary Contribution Account, 401(k) Matching Contribution
Account, 401(k) Automatic Contribution Account and Rollover Contribution
Account are to be allocated among the seven investment options available under
the Plan. Furthermore, each Participant who has made a Diversification
Election must direct the applicable portion of his ESOP Matching Contribution
Account and ESOP Automatic Contribution Account to be invested among four
investment options available under the Plan until January 1, 1996 when the
number of such investment options will increase to six. No more than 25% of
contributions may be invested in the Circus Circus Stock Fund (referred to in
the Plan as "Fund A").
If a Participant does not specifically designate the investment option or
options for all or part of his Account, the Plan requires such portion to be
invested in the Fixed Income Fund unless the Trustee determines that a
different fund shall be the default fund. Also, if the Plan Administrator has
been notified that the Participant (or the beneficiary of a deceased
Participant) is incompetent, or if the beneficiary of a deceased Participant
is a child, the Trustee will determine the fund in which the Participant's
Account is invested unless a legal guardian has been appointed for such
Participant or beneficiary.
A Participant may change his investment election with respect to the
investment of future contributions or transfer previously contributed amounts
among the available investment options described below, so long as no more
than 25% of future contributions are invested in the Circus Circus Stock Fund,
and so long as the change does not increase the combined percentage of the
Participant's Matching Contribution Account, Automatic Contribution Account,
Discretionary Contribution Account, Rollover Account and 401(k) Employer
Contribution Account, together with any portion of his ESOP Matching
Contribution Account and ESOP Automatic Contribution Account which is subject
to a diversification election that is invested in the Circus Circus Stock Fund
to exceed 25% of his combined balances of such accounts. However, a
Participant may not change investment options other than as of the beginning
of a calendar quarter, and any change will not be effective until the first
January 1, April 1, July 1 or October 1 following the Plan Administrator's
receipt of the Participant's written notice of such change. The Plan
Administrator will accept a Participant's written notice of a change in
investment options on or prior to the 21st day of the month immediately
preceding the date as of which the change is to be effective. If, as a result
of a change of investment election by a Participant, there occurs any
withdrawal of funds from the Fixed Income Fund (referred to in the Plan as
"Fund B") prior to maturity other than for termination of employment,
retirement, disability or death benefits, the Participant's Account may be
subject to a surrender charge. See the description of the "Fixed Income Fund,"
below.
Each Participant is solely responsible for the investment of the amounts in
his Account other than those invested in the ESOP Fund, as described below.
Neither the Trustee, the Custodian, any investment advisors to the Funds, the
Plan Administrator, nor any officer or employee of the Company is empowered to
advise a Participant as to the manner in which his Account should be invested.
THE FACT THAT A PARTICULAR INVESTMENT OPTION IS AVAILABLE TO PARTICIPANTS FOR
INVESTMENT UNDER THE PLAN IS NOT TO BE CONSTRUED AS A RECOMMENDATION FOR
INVESTMENT IN SUCH INVESTMENT OPTION. A PARTICIPANT ASSUMES ALL RISKS IN
CONNECTION WITH CHANGES IN VALUE OF THE FUND OR FUNDS IN WHICH HE INVESTS.
EARNINGS, IF ANY, OF EACH FUND WILL BE REINVESTED IN THE SAME FUND, AND
LOSSES, IF ANY, WILL BE ALLOCATED ONLY TO THE FUND INCURRING THE LOSS.
15
<PAGE>
The Plan is intended to constitute a plan described in Section 404(c) of
ERISA and the regulations thereunder (which may be found at Section 2550.404c-
1 of the Code of Federal Regulations). Information required by those
regulations will be provided by the Plan Administrator, and the designated
contact for such information is the Corporate Director--Human Resources.
Fiduciaries will be relieved of liability for any losses that are the direct
and necessary result of investment instructions given by the Participant (or
beneficiary).
The portion of a Participant's ESOP Matching Contributions Account and ESOP
Automatic Contributions Account that is not invested pursuant to a
Diversification Election will be invested, pursuant to an Agreement of Trust,
in the ESOP Fund which will, except in certain circumstances provided in the
Plan, invest primarily in Employer Securities. Contributions to the ESOP Fund
may be made, at the Employer's election on a year-to-year basis, in Employer
Securities, cash, or any combination thereof. Where possible, it is the
Company's intention to credit Participants' accounts in the ESOP Fund with the
amounts of ESOP Matching Contributions and ESOP Automatic Contributions
(whether in cash, Employer Securities or combinations thereof) on or as of
December 31 of the Plan Year as follows:
1. Where the contribution is made in cash, the credit to the
Participant's ESOP Fund Account will initially reflect the
Participant's pro-rata entitlement to the cash contribution. The
Trustee has sole investment discretion. However, the Trustee has
indicated that it will generally attempt to purchase, at their
market price, the number of Employer Securities which can be
purchased with the cash contribution on such funding date or such
alternative date as the Trustee may elect consistent with its duties
to the Participants.
2. Upon such purchase of Employer Securities, each Participant's ESOP
Account will reflect the number of shares so acquired in
substitution of the cash credit previously reflected therein.
DESCRIPTION OF INVESTMENT OPTIONS
There currently are five investment options available to Participants under
the Plan and, effective January 1, 1996, two additional investment options
(referred to in the Plan as "Fund F" and "Fund G", respectively, will become
available. Set forth below is information concerning each of the seven
investment options.
I. CIRCUS CIRCUS STOCK FUND
This Fund (referred to in the Plan as "Fund A") is invested by the Trustee
primarily in the Common Stock of the Company, subject to the right of the
Trustee to invest this Fund or any part thereof in other investments. The
Trustee has discretion as to the timing and manner of purchasing shares. Such
purchases may include open-market or privately negotiated transactions. Cash
dividends, if any, will be reinvested in this Fund, and any stock dividends or
shares issued pursuant to a stock split on the shares held by this Fund will
be added to this Fund. The Company has from time to time declared a split of
its Common Stock, the most recent such action being a three-for-two split
effective at the close of business on July 9, 1993, but has not declared any
cash dividends on its Common Stock since it became publicly owned in 1983 and
there is no assurance such dividends will be paid in the future. The Company's
current policy is to retain earnings for the operation and expansion of its
business. Various loan agreements to which the Company is a party contain
covenants limiting the amount of dividends the Company may pay on its Common
Stock and there is no assurance the Company may not enter into other
agreements which impose other restrictions on the payment of dividends.
Participants investing in this Fund will not have any voting rights with
respect to the shares held in this Fund. The voting rights with respect to
such shares are vested in the Trustee. Participants who have made
Diversification Elections may not direct investments into this Fund with
respect to applicable portions of their ESOP Matching Contribution and ESOP
Automatic Contribution Accounts.
16
<PAGE>
THE VALUE OF THIS FUND IS DETERMINED BY THE MARKET PRICE OF THE COMPANY'S
COMMON STOCK. AS THE MARKET PRICE OF THE COMMON STOCK FLUCTUATES UP OR DOWN,
SO DOES THE VALUE OF A PARTICIPANT'S SHARE OF THIS FUND. AND, COMMISSIONS PAID
ON ACCOUNT OF TRANSACTIONS BY THIS FUND ARE NOT PAID BY THE COMPANY BUT ARE
CHARGED AGAINST THE ASSETS OF THE FUND. ACCORDINGLY, THE VALUE OF A
PARTICIPANT'S SHARE OF THIS FUND COULD BE LESS THAN HIS CONTRIBUTIONS TO THIS
FUND. SINCE THIS FUND IS NOT DIVERSIFIED, IT HAS A HIGHER DEGREE OF RISK THAN
THE OTHER FUNDS.
The Company's Common Stock is listed on the New York Stock Exchange and on
the Pacific Stock Exchange. The following table sets forth for the calendar
quarters shown the low and high sale prices for the Common Stock on the New
York Stock Exchange Composite Tape (adjusted retroactively to reflect a three-
for-two split effective July 9, 1993, rounded to the nearest one-eighth). The
last reported sale price of the Common Stock on November 17, 1995 on the New
York Stock Exchange Composite Tape was $25 5/8 per share. A PARTICIPANT WHO IS
CONTEMPLATING AN INVESTMENT IN THIS FUND IS ENCOURAGED TO OBTAIN CURRENT
INFORMATION CONCERNING THE PRICE OF THE COMPANY'S COMMON STOCK.
<TABLE>
<CAPTION>
1992 LOW HIGH
---- ------ ------
<S> <C> <C>
First Quarter................................................ 23 3/8 31 1/8
Second Quarter............................................... 25 1/2 31 1/2
Third Quarter................................................ 26 7/8 36 1/8
Fourth Quarter............................................... 32 5/8 38 1/2
1993
----
First Quarter................................................ 27 7/8 39 7/8
Second Quarter............................................... 27 5/8 41 1/2
Third Quarter................................................ 33 3/4 48 1/8
Fourth Quarter............................................... 31 1/4 49 3/4
1994
----
First Quarter................................................ 30 1/8 40 3/4
Second Quarter............................................... 20 1/2 32 3/8
Third Quarter................................................ 21 1/2 28 5/8
Fourth Quarter............................................... 19 3/4 25
1995
----
First Quarter................................................ 23 1/2 33 1/8
Second Quarter............................................... 30 36
Third Quarter................................................ 27 36 1/8
Fourth Quarter (through November 17)......................... 24 3/4 28 1/4
</TABLE>
None of the Company's Common Stock purchased for the Circus Circus Stock
Fund pursuant to the Plan will be purchased from the Company. Because all of
the Company's Common Stock purchased for the Circus Circus Stock Fund pursuant
to the Plan will be previously issued and outstanding, the Company will not
receive any proceeds on account of any purchase of its Common Stock for the
Circus Circus Stock Fund.
In order to facilitate compliance with Section 16 of the Securities Exchange
Act of 1934 (the "1934 Act") and the regulations promulgated thereunder, a
Participant in the Plan who is subject to the reporting requirements of
Section 16(a) of the 1934 Act (i.e., an "officer" of the Company within the
meaning of Rule 16a-1 under the 1934 Act, a director of the Company or the
beneficial owner of 10% or more of the issued and outstanding shares of the
Company's Common Stock within the meaning of Rule 16a-1(a)(1) under the 1934
Act) will not be permitted to invest in the Circus Circus Stock Fund.
17
<PAGE>
II. FIXED INCOME FUND
Amounts allocated to this Fund (referred to in the Plan as "Fund B"), and
amounts originally invested in Guaranteed Interest Accounts ("GIAs") which are
reinvested in this Fund as GIAs mature, are invested by the Trustee in the
Merrill Lynch Retirement Preservation Trust, a collective trust fund whose
primary objective is to achieve high current income consistent with
preservation of capital and liquidity through a diversified portfolio of
guaranteed investments, U.S. Government and U.S. Government Agency securities
and money market instruments. Merrill Lynch Trust Company, the trustee of the
Merrill Lynch Retirement Preservation Trust, utilizes the services of Merrill
Lynch Asset Management as a nondiscretionary investment advisor, but Merrill
Lynch Trust Company makes all investment decisions for the Merrill Lynch
Retirement Preservation Trust. WHILE THE MERRILL LYNCH RETIREMENT PRESERVATION
TRUST INVESTS IN GUARANTEED INVESTMENTS, NEITHER THE MERRILL LYNCH RETIREMENT
PRESERVATION TRUST NOR ITS UNITS ARE GUARANTEED.
Although there can be no assurances that the Merrill Lynch Retirement
Preservation Trust's objectives will be achieved, the Merrill Lynch Retirement
Preservation Trust seeks to achieve an effective yield that is typically
higher than money market fund yields and the yields of sponsor-managed GIC
portfolios of comparable duration. The portfolio is also structured to produce
yields that are sensitive to market opportunities. The return on this Fund's
investment in the Merrill Lynch Retirement Preservation Trust will be a blend
of all the rates on each GIC, U.S. Government Agency Obligation and money
market instrument in the Merrill Lynch Retirement Preservation Trust's
portfolio, less its fees and expenses, during the period of the investment.
Since the Merrill Lynch Retirement Preservation Trust will remain in the
market to make new investments, the effective rate may change frequently.
The Merrill Lynch Retirement Preservation Trust invests in GICs (i.e.,
contracts issued by insurance companies or banks which provide for a return of
principal plus interest, either periodically or at maturity), or similar
investments which pay a fixed or variable rate of return on an agreed schedule
and are benefit responsive (collectively "Guaranteed Investments"). Benefit
responsiveness may be provided by the issuer of the Guaranteed Investment or a
third party. A maximum of 80% of the Merrill Lynch Retirement Preservation
Trust will be invested in Guaranteed Investments and a minimum of 20% of the
assets of the Merrill Lynch Retirement Preservation Trust will be invested in
money market instruments.
The Merrill Lynch Retirement Preservation Trust reviews the quality of each
issuer's credit at least quarterly and each issuer must be determined to have
a AA- or better rating from Standard & Poors Corporation or an Aa3 or better
rating from Moody's Investors Service, or be determined to be of comparable
quality in order to qualify for investment of Merrill Lynch Retirement
Preservation Trust assets. As of October 30, 1995, approximately 26 insurance
carriers and approximately 13 banks satisfied the credit criteria for
investment of the Merrill Lynch Retirement Preservation Trust's assets.
There are no voting rights associated with this Fund's investment in the
Merrill Lynch Retirement Preservation Trust to which Participants who invest
in this Fund or the Trustee are entitled.
A DESCRIPTION OF THE CREDIT REQUIREMENTS FOR THE INVESTMENTS MADE BY THE
MERRILL LYNCH RETIREMENT PRESERVATION TRUST, WHICH IS A SUMMARY OF INFORMATION
PROVIDED TO THE COMPANY BY MERRILL LYNCH TRUST COMPANY, IS SET FORTH IN
APPENDIX A TO THIS PROSPECTUS.
18
<PAGE>
The following information concerning the performance of the Merrill Lynch
Retirement Preservation Trust has been provided to the Company on an unaudited
basis by Merrill Lynch Trust Company.
<TABLE>
<CAPTION>
NET ANNUAL EFFECTIVE YIELD(1)(2)(3)
---------------------------------------
1995 1994 1993 1992 1991
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
January......................... 6.20% 5.54% 6.22% 6.88% 8.16%
February........................ 6.26% 5.99% 6.71% 6.90% 8.01%
March........................... 6.20% 5.45% 6.18% 6.76% 7.92%
April........................... 6.21% 5.81% 6.22% 7.05% 7.88%
May............................. 6.20% 5.79% 6.10% 6.92% 7.71%
June............................ 6.23% 5.21% 6.24% 7.02% 7.66%
July............................ 6.16% 5.85% 5.94% 6.77% 7.66%
August.......................... 6.15% 5.89% 5.99% 6.61% 7.57%
September....................... 6.19% 5.93% 5.98% 6.63% 7.50%
October......................... -- 5.98% 5.88% 6.63% 7.39%
November........................ -- 6.09% 6.06% 6.66% 7.37%
December........................ -- 6.19% 5.90% 6.68% 7.30%
</TABLE>
- --------
(1) The net annual effective yield for the period from September 22, 1989
(commencement of operations) through September 30, 1995 was 7.02%.
(2) These yields are net of the .30% fee payable to Merrill Lynch Trust
Company at the current level of investment by this Fund in the Merrill
Lynch Retirement Preservation Trust ($13,052,103 at October 31, 1995).
Such fee, which is not paid by the Company but is charged against the
assets of this Fund, is based upon the amount of assets invested by this
Fund in the Merrill Lynch Retirement Preservation Trust. Accordingly, such
fee may increase or decrease in the future, as described below, depending
on subsequent levels of investment by this Fund in the Merrill Lynch
Retirement Preservation Trust.
(3) The net annual effective yield assumes that income earned from investments
in the Merrill Lynch Retirement Preservation Trust during the applicable
period is reinvested and is expressed as an annual percentage rate.
The following table sets forth certain information provided to the Company
by Merrill Lynch Trust Company concerning the fee payable to Merrill Lynch
Trust Company, which is not paid by the Company but is charged against the
assets of this Fund.
<TABLE>
<CAPTION>
ANNUAL
PERCENTAGE
ASSETS(1) RATE(2)
--------- ----------
<S> <C>
$10,000-$100,000.................................................. 1.00%
$100,001-$500,000................................................. .80%
$500,001-$1,000,000............................................... .60%
$1,000,001-$3,000,000............................................. .50%
$3,000,001-$10,000,000............................................ .40%
$10,000,001-$15,000,000........................................... .30%
$15,000,001-$50,000,000........................................... .20%
$50,000,001-$100,000,000.......................................... .15%
$100,000,001-$500,000,000......................................... .13%
</TABLE>
- --------
(1) Represents the assets of this Fund projected by the Merrill Lynch Trust
Company to be invested in the Merrill Lynch Retirement Preservation Trust
during the 12-month period for which the fee is payable. Once established
for a 12-month period, the fee will not be adjusted for such period, even
if the actual amount of assets is different than the amount projected.
(2) The rate payable on account of this Fund's participation in the Merrill
Lynch Retirement Preservation Trust is determined initially as of the date
such participation commences and on each subsequent anniversary of such
date and, in each case, is applicable to the 12-month period commencing on
the applicable determination date. The fee for the 12-month periods of
this Fund's participation in the Merrill Lynch Retirement Preservation
Trust ending December 31, 1995 and 1996 will be .30% and .30%,
respectively.
19
<PAGE>
Amounts allocated to this Fund prior to the Transfer of Functions Date were
invested in GIAs which constitute part of the Custodian's general account. The
Custodian's general account is invested principally in privately placed bonds
and mortgage loans with maturities that generally parallel the Custodian's
guarantees under its GIAs. The Custodian's GIAs offer guaranteed principal and
interest for different length guarantee periods ranging from two through seven
years, but five year terms were generally selected. All contributions received
during the first year (hereinafter referred to as the "Deposit Year") of each
guarantee period became part of that year's GIA. Each contribution made during
a Deposit Year received the then available guaranteed interest rate for the
guarantee period selected by the Plan Administrator, as declared from time to
time by the Custodian. At the end of the Deposit Year, the average guaranteed
rate (weighted by the size and timing of each deposit) was determined. The
average guaranteed rate was then credited and is compounded annually to the
account balance for the remaining years of the guarantee period. At the end of
each Deposit Year, that GIA was closed and no additional contributions were
made to it. At the end of its guarantee period, a GIA matures. At maturity,
GIAs are reinvested (without penalty or adjustment) by the Trustee in the
Merrill Lynch Retirement Preservation Trust unless the funds are transferred
to one or more of the other investment options then available under the Plan
in accordance with the terms of the Plan.
Any transfer out of a GIA prior to the end of its guarantee period (other
than for benefit payments at retirement, death, disability, or termination of
employment) will be subject to a charge if the guaranteed interest rate for an
account with the same guarantee period on the surrender date is greater than
the guaranteed interest rate being credited to the GIA from which the transfer
is being made. The charge, a percentage of the amount being withdrawn, is the
difference between the guaranteed interest rate for new deposits to an account
with the same guarantee period and the guaranteed interest rate being credited
to the GIA from which the transfer is being made, multiplied by the number of
years and fractions (to the nearest day) remaining in the guarantee period of
the GIA from which the transfer is being made. If the guaranteed interest rate
for new deposits to an account with the same guarantee period is equal to or
less than the average credited rate for the GIA from which the transfer is
being made, the transfer will involve no charge. If a Participant has more
than one GIA and does not specify the GIA from which the transfer is to be
made, the transfer will be made proportionally from each of the Participant's
GIAs.
III. GENERAL COMMON STOCK FUND
This Fund (referred to in the Plan as "Fund C") is invested by the Trustee
in the S&P 500 Index Portfolio (the "Portfolio"), one of the portfolios of SEI
Index Funds ("SEI Index Funds"). SEI Index Funds is an open-end management
investment company that has diversified portfolios. The Portfolio seeks to
provide investment results that correspond to the aggregate price and dividend
performance of the securities in the Standard & Poor's 500 Composite Stock
Price Index (the "S&P 500 Index") which is comprised of 500 selected common
stocks, most of which are listed on the New York Stock Exchange. However,
there can be no assurance that the Portfolio will achieve its investment
objective.
The Portfolio's ability to duplicate the performance of the S&P 500 Index
will depend to some extent on the size and timing and cashflows into and out
of the Portfolio as well as the extent of the Portfolio's expenses. Over time,
the correlation between the performance of the Portfolio and the S&P 500 Index
is expected to be over 0.95. A correlation of 1.00 would indicate perfect
correlation. The Portfolio will normally be invested in all of the stocks
which comprise the S&P 500 Index, except when changes are made to the S&P 500
Index itself. The Portfolio's policy is to be fully invested in common stocks,
and it is expected that cash reserve items would normally be less than 10% of
net assets.
The weightings of stocks in the S&P 500 Index are based on each stock's
relative total market value, i.e., market price per share times the number of
shares outstanding. Because of this weighting, approximately 50% of the S&P
500 Index is currently composed of the 50 largest companies in the S&P 500
Index, and the S&P 500 Index currently represents over 65% of the market value
of all U.S. common stocks listed on the New York Stock Exchange.
20
<PAGE>
World Asset Management, the Portfolio's investment adviser (the "Portfolio
Adviser") makes no attempt to "manage" the Portfolio in the traditional sense
by using economic, financial or market analysis. The adverse financial
situation of a company usually will not result in the elimination of a stock
from the Portfolio. However,
SEI Index Funds reserves the right, without the obligation, to remove an
investment from the Portfolio if, in the judgment of the Portfolio Adviser,
the merit of the investment has been substantially impaired by extraordinary
events or financial conditions. Furthermore, administrative adjustments may be
made in the Portfolio from time to time because of mergers, changes in the
composition of the S&P 500 Index and similar reasons. In certain
circumstances, the Portfolio Adviser may exercise discretion in determining
whether to exercise warrants or rights issued in respect to portfolio
securities or whether to tender portfolio securities pursuant to a tender or
exchange offer.
THE PORTFOLIO IS NOT SPONSORED, ENDORSED, SOLD OR PROMOTED BY STANDARD &
POOR'S CORPORATION ("S&P"). S&P MAKES NO REPRESENTATION OR WARRANTY, IMPLIED
OR EXPRESS, REGARDING THE ADVISABILITY OF INVESTING IN INDEX FUNDS OR THE
PORTFOLIO OR THE ABILITY OF THE S&P 500 INDEX TO TRACK GENERAL STOCK MARKET
PERFORMANCE.
Information included in this Prospectus concerning the Portfolio is a
summary of certain of the information contained in the current prospectus of
SEI Index Funds, dated July 31, 1995, relating to the Portfolio and an
unrelated Bond Index Portfolio of SEI Index Funds (the "Portfolio's 1995
Prospectus"). Such summary is qualified in its entirety by reference to the
Portfolio's 1995 Prospectus. ANY PARTICIPANT WHO IS CONTEMPLATING AN
INVESTMENT IN THIS FUND IS ADVISED TO OBTAIN A COPY OF SUCH PROSPECTUS, READ
IT AND RETAIN THE COPY FOR FUTURE REFERENCE. A copy of the most recent
prospectus of the SEI Index Funds for the Portfolio which has been provided to
the Company will be provided to a Participant by the Company upon request, and
a copy of such prospectus will be provided to a Participant as soon as
practicable following such Participant's initial investment in this Fund
unless, prior to such initial investment, a copy had been provided to the
Participant.
A DESCRIPTION OF THE PORTFOLIO'S INVESTMENT OBJECTIVES AND POLICIES AND ITS
INVESTMENT LIMITATIONS IS SET FORTH IN APPENDIX B TO THIS PROSPECTUS.
SEI Financial Management Corporation, the Portfolio's manager and a wholly-
owned subsidiary of SEI Corporation (the "Manager"), provides overall
management services, regulatory reporting, all necessary office space,
equipment, personnel and facilities, and acts as transfer agent, dividend
disbursing agent, and shareholder servicing agent for SEI Index Funds. The
Manager is entitled to receive from the Portfolio a fee for these services
which is calculated daily and paid monthly at an annual rate of .22% of the
Portfolio's average daily net assets. The Manager may from time to time waive
all or a portion of its fee in order to limit the operating expenses of the
Portfolio. This waiver is voluntary and may be terminated by the Manager at
any time in its sole discretion. For the fiscal year ended March 31, 1995, the
Portfolio paid the Manager a fee of .12% of its average daily net assets after
fee waivers.
The Portfolio Adviser and SEI Index Funds are parties to an investment
advisory agreement relating to the Portfolio (the "Advisory Agreement"). Under
the terms of the Advisory Agreement, the Portfolio Adviser provides SEI Index
Funds with certain record keeping and management services in connection with
the Portfolio, including the monitoring of the indexing system and determining
which securities to purchase and sell in order to keep the Portfolio in
balance with the S&P 500 Index. For its services, the Portfolio Adviser is
entitled to a fee, which is calculated daily and paid monthly, at an annual
rate of .03% of the average daily net assets of the Portfolio. According to
the Portfolio's 1995 Prospectus, no monthly payment to the Portfolio Adviser
shall exceed the payment actually made to the Manager pursuant to the current
Management Agreement between the Manager and SEI Index Funds. For the fiscal
year ended March 31, 1995, the Portfolio paid to Woodbridge Capital Management
and the Portfolio Adviser an advisory fee of .03% of the Portfolio's average
daily net assets.
SEI Financial Services Company (the "Portfolio Distributor"), a wholly-owned
subsidiary of SEI Corporation, serves as the Portfolio's distributor pursuant
to a distribution agreement (the "Distribution
21
<PAGE>
Agreement") with SEI Index Funds. SEI Index Funds may also execute brokerage
or other agency transactions through the Portfolio Distributor for which the
Portfolio Distributor may receive usual and customary compensation. The
Distribution Agreement provides for reimbursement for expenses incurred by the
Portfolio Distributor in an amount not to exceed .30% of the average daily net
assets of the Portfolio on an annualized basis, provided those expenses are
permissible as to both type and amount under a budget approved and monitored
by the SEI Index Funds' Trustees.
The following table sets forth certain information taken from the
Portfolio's 1995 Prospectus concerning the Portfolio's annual operating
expenses expressed as a percentage of the Portfolio's average net assets.
<TABLE>
<CAPTION>
EXPENSES (1) AMOUNT
------------ ------
<S> <C>
Management/Advisory Fees (After Fee Waiver) (2)...................... .15 %
12b-1 Fees (After Fee Waiver) (3).................................... .05 %
Other Expenses....................................................... .05 %
---
Total Operating Expenses (After Fee Waiver) (4)...................... .25 %
</TABLE>
- --------
(1) These expenses are not paid by the Company but are charged against the
assets of the Portfolio.
(2) The Manager has waived, on a voluntary basis, a portion of its fee, and
the management/advisory fee shown reflects this voluntary waiver. The
Manager reserves the right to terminate its waiver at any time in its sole
discretion. Absent such fee waiver, management fees would be .22% of
average net assets.
(3) The 12b-1 fee shown reflects the Portfolio's current 12b-1 budget for
reimbursement of expenses. The maximum 12b-1 fee payable by the Portfolio
is .30%.
(4) Absent fee waivers, total operating expenses would have been .35% of
average net assets.
EXAMPLE:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
An investor in the Portfolio would pay the fol-
lowing expenses on a $1,000 investment assum-
ing (1) 5% annual return and
(2) redemption at the end of each time peri-
od............................................ $3.00 $8.00 $14.00 $32.00
</TABLE>
THE EXAMPLE, WHICH IS TAKEN FROM THE PORTFOLIO'S 1995 PROSPECTUS, SHOULD NOT
BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES
MAY BE GREATER OR LESS THAN THOSE SHOWN. THE PURPOSE OF THE EXPENSE TABLE AND
EXAMPLE IS TO ASSIST THE INVESTOR IN UNDERSTANDING THE VARIOUS COSTS AND
EXPENSES THAT MAY BE DIRECTLY OR INDIRECTLY BORNE BY INVESTORS IN THE
PORTFOLIO. ADDITIONAL INFORMATION MAY BE FOUND UNDER THE HEADINGS "THE MANAGER
AND SHAREHOLDER SERVICING AGENT", "THE ADVISOR" AND "DISTRIBUTION" IN THE
PORTFOLIO'S 1995 PROSPECTUS.
22
<PAGE>
The following table sets forth financial highlights taken from the
Portfolio's 1995 Prospectus. This table should be read in conjunction with the
financial statements and notes thereto included in the Statement of Additional
Information referred to on the cover page of the Portfolio's 1995 Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
------------------------------------------------
1995 1994 1993 1992 1991
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period.................. $ 15.07 $ 15.80 $ 14.17 $ 13.43 $ 12.45
-------- -------- -------- -------- --------
Income from Investment Oper-
ations:
Net Investment Income(1).. 0.42 0.43 0.40 0.40 0.43
Net Realized and
Unrealized Gain (Loss) on
Investments.............. 1.79 (0.22) 1.69 1.01 1.24
-------- -------- -------- -------- --------
Total from Investment
Operations............... 2.21 0.21 2.09 1.41 1.67
-------- -------- -------- -------- --------
Less Distributions:
Dividends from Net Invest-
ment Income.............. (0.42) (0.42) (0.40) (0.41) (0.43)
Distributions from Capital
Gains.................... (0.46) (0.52) (0.06) (0.26) (0.26)
Returns of Capital........ -- -- -- -- --
-------- -------- -------- -------- --------
Total Distributions..... (0.88) (0.94) (0.46) (0.67) (0.69)
-------- -------- -------- -------- --------
Net Asset Value, End of
Period................... $ 16.40 $ 15.07 $ 15.80 $ 14.17 $ 13.43
-------- -------- -------- -------- --------
Total Return.............. 15.26% 1.19% 14.97% 10.71% 14.18%
-------- -------- -------- -------- --------
Net Assets, End of Period
(000)...................... $458,012 $424,647 $675,484 $470,847 $261,165
======== ======== ======== ======== ========
RATIOS AND SUPPLEMENTAL DATA
Ratio of Expenses to Average
Net Assets................. 0.25% 0.25% 0.25% 0.25% 0.25%
Ratio of Expenses to Average
Net Assets Excluding Fee
Waivers.................... 0.35% 0.33% 0.35% 0.34% 0.32%
Ratio of Net Investment
Income to Average
Net Assets................. 2.69% 2.57% 2.75% 2.99% 3.56%
Ratio of Net Investment
Income to Average
Net Assets Excluding Fee
Waivers.................... 2.59% 2.49% 2.65% 2.90% 3.49%
Portfolio Turnover Rate..... 4.00% 23.00% 1.00% 1.00% 40.00%
======== ======== ======== ======== ========
</TABLE>
- --------
(1) Had management fees not been waived and certain other expenses not been
absorbed by the Manager for the Portfolio, the net investment income per
share would have been $.41, $.41, $.39, $.38 and $.42 for the periods
ended 3/31/95, 3/31/94, 3/31/93, 3/31/92 and 3/31/91, respectively.
Participants investing in this Fund will not have any voting rights with
respect to the interest in the Portfolio held in this Fund. The voting rights
with respect to such interest are vested in the Trustee.
IV. U.S. GOVERNMENT SECURITIES FUND
This Fund (referred to in the Plan as "Fund D") is invested by the Trustee
in shares of Federated U.S. Government Securities Fund: 2-5 years (the "U.S.
Fund"), an open-end management investment company (a mutual fund) investing in
U.S. Government securities. The investment objective of the U.S. Fund is to
provide current income. According to the U.S. Fund's prospectus dated March
31, 1995, as supplemented by a supplement dated April 24, 1995 (the "U.S. Fund
1995 Prospectus"), the U.S. Fund pursues this investment objective by
investing in U.S. government securities with remaining maturities of five
years or less. According to the U.S. Fund 1995 Prospectus, as a matter of
operating policy, which may be changed without approval of the U.S. Fund's
shareholders, the dollar-weighted average maturity of the U.S. Fund's
portfolio will not be less than two years nor more than five years. While
there is no assurance that the U.S. Fund will achieve its investment
objective, it endeavors to do so by following the investment policies
described in the U.S. Fund 1995
23
<PAGE>
Prospectus. The U.S. Fund's investment objective and the policies and
limitations described in Appendix C to this Prospectus are subject to approval
of the U.S. Fund's shareholders, to the extent described in Appendix C. THE
U.S. FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF ANY BANK, ARE NOT ENDORSED
OR GUARANTEED BY ANY BANK, AND ARE NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT
AGENCY. U.S. Fund shares are currently sold and redeemed at net asset value
without a sales charge imposed by the U.S. Fund.
The following table sets forth selected per share data and ratios for the
shares of the U.S. Fund which appears in the U.S. Fund 1995 Prospectus. This
information (which is presented for a share outstanding throughout each
period) should be read in conjunction with the financial statements of the
U.S. Fund included in the U.S. Fund 1995 Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31,
-------------------------------------------------
1995 1994 1993 1992 1991
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD.................. $ 10.78 $ 10.61 $ 10.25 $ 9.87 $ 9.59
Income from investment oper-
ations
Net investment income...... 0.54 0.46 0.57 0.71 0.75
Net realized and unrealized
gain (loss) on invest-
ments..................... (0.67) 0.17 0.36 0.38 0.28
-------- -------- -------- -------- --------
Total from investment oper-
ations.................... (0.13) 0.63 0.93 1.09 1.03
Less distributions
Dividends to shareholders
from net investment in-
come...................... (0.54) (0.46) (0.57) (0.71) (0.75)
Distributions for
shareholders from net
realized gain on
investment transactions... -- -- -- -- --
-------- -------- -------- -------- --------
Total distributions......... (0.54) (0.46) (0.57) (0.71) (0.75)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PE-
RIOD....................... $ 10.11 $ 10.78 $ 10.61 $ 10.25 $ 9.87
======== ======== ======== ======== ========
Total return(a)............. (1.18)% 6.07% 9.37% 11.44% 11.18%
Ratios to average net assets
Expenses................... 0.54% 0.52% 0.50% 0.50% 0.51%
Net investment income...... 5.16% 4.30% 5.52% 7.08% 7.75%
Expense
waiver/reimbursement(b)... 0.02% -- -- -- --
Supplemental data
Net assets, end of period
(000 omitted)............. $731,280 $951,528 $845,620 $779,686 $791,131
Portfolio turnover rate.... 163% 131% 85% 108% 60%
</TABLE>
- --------
(a) Based on net asset value which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
Information included in this Prospectus concerning the U.S. Fund is a
summary of certain of the information contained in the U.S. Fund 1995
Prospectus. Such summary is qualified in its entirety by reference to the U.S.
Fund 1995 Prospectus. ANY PARTICIPANT WHO IS CONTEMPLATING AN INVESTMENT IN
THIS FUND IS ADVISED TO OBTAIN A COPY OF SUCH PROSPECTUS, READ IT AND RETAIN
THE COPY FOR FUTURE REFERENCE. A copy of the most recent prospectus of the
U.S. Fund which has been provided to the Company will be provided to a
Participant by the Company upon request, and a copy of such prospectus will be
provided to a Participant as soon as practicable following such Participant's
initial investment in this Fund unless, prior to such initial investment, a
copy had been provided to the Participant.
A DESCRIPTION OF THE U.S. FUND'S INVESTMENT OBJECTIVE AND POLICIES IS SET
FORTH IN APPENDIX C TO THIS PROSPECTUS.
24
<PAGE>
The following table sets forth certain information from the U.S. Fund 1995
Prospectus concerning shareholder transaction expenses and annual
institutional shares operating expenses of the U.S. Fund. Such expenses are
not paid by the Company but are charged against the assets of the U.S. Fund.
<TABLE>
<CAPTION>
CHARGE
SHAREHOLDER TRANSACTION EXPENSES: ------
<S> <C> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)......................... None
Maximum Sales Load Imposed on Reinvested
Dividends (as a percentage of offering price)............... None
Contingent Deferred Sales Charge (as a percentage of
original purchase price or redemption
proceeds, as applicable).................................... None
Redemption Fee (as a percentage of amount
redeemed, if applicable).................................... None
Exchange Fee................................................. None
ANNUAL INSTITUTIONAL SHARES OPERATING EXPENSES (AS A PERCENT-
AGE OF AVERAGE NET ASSETS):
Management Fee (after waiver)(1)............................. 0.38%
12b-1 Fee.................................................... None
Total Other Expenses......................................... 0.16%
Shareholder Services Fee (after waiver)(2).................. 0.00%
Total Institutional Share Operating Expenses(3)............... 0.54%
====
</TABLE>
- --------
(1) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee. The adviser can terminate this voluntary
waiver at any time at its sole discretion. The maximum management fee is
0.40%.
(2) The maximum shareholder services fee is 0.25%.
(3) The Total Institutional Shares Operating Expenses would have been 0.56%
absent the voluntary waiver of a portion of the management fee.
THE PURPOSE OF THE FOREGOING TABLE, WHICH IS TAKEN FROM THE U.S. FUND 1995
PROSPECTUS, IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE VARIOUS COSTS AND
EXPENSES THAT A SHAREHOLDER OF THE U.S. FUND WILL BEAR, EITHER DIRECTLY OR
INDIRECTLY. FOR MORE COMPLETE DESCRIPTIONS OF THE VARIOUS COSTS AND EXPENSES,
SEE THE INFORMATION APPEARING UNDER THE HEADINGS "TRUST INFORMATION" AND
"INVESTING IN INSTITUTIONAL SHARES" IN THE U.S. FUND 1995 PROSPECTUS.
EXAMPLE:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a
$1,000 investment assuming (1) 5% annual re-
turn and (2) redemption at the end of each
time period.................................. $6 $17 $30 $68
</TABLE>
THE FOREGOING EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
Investment decisions for the U.S. Fund are made by Federated Management, the
U.S. Fund's investment adviser, subject to direction by the U.S. Fund's Board
of Trustees. The adviser, a subsidiary of Federated Investors, continually
conducts investment research and supervision for the U.S. Fund and is
responsible for the purchase or sale of portfolio instruments, for which it
receives an annual fee from the U.S. Fund. The adviser receives an annual
investment advisory fee equal to .40 of 1% of the U.S. Fund's average daily
net assets. The adviser has also undertaken to reimburse the U.S. Fund for
operating expenses in excess of limitations established by certain states. For
additional information concerning the U.S. Fund's investment adviser,
reference is made to the U.S. Fund 1995 Prospectus.
25
<PAGE>
Federated Administrative Services, a subsidiary of Federated Investors,
provides administrative personnel and services (including certain legal and
financial reporting services) necessary to operate the U.S. Fund. Federated
Administrative Services provides these at an annual rate, which relates to the
average aggregate daily net assets of all funds advised by subsidiaries of
Federated Investors ("Federated Funds"), as specified below:
<TABLE>
<CAPTION>
AVERAGE AGGREGATE DAILY
MAXIMUM NET ASSETS OF THE FEDERATED
ADMINISTRATIVE FEE FUNDS
------------------ -----------------------------------
<S> <C>
0.15 of 1% on the first $250 million
0.125 of 1% on the next $250 million
0.10 of 1% on the next $250 million
0.075 of 1% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$125,000 and $30,000 per each additional class of shares (the U.S. Fund
currently has one additional class of shares). Federated Administrative
Services may choose voluntarily to waive a portion of its fee.
The U.S. Fund has adopted a Shareholder Services Plan (the "Services Plan")
with respect to shares under which it may make payments up to 0.25 of 1% of
the average daily net asset value of shares to obtain certain personal
services for shareholders and the maintenance of shareholder accounts
("shareholder services"). The U.S. Fund has entered into a Shareholder
Services Agreement with Federated Shareholder Services, a subsidiary of
Federated Investors, under which Federated Shareholder Services will either
perform shareholder services directly or will select financial institutions to
perform shareholder services. Financial institutions will receive fees based
upon shares owned by their clients or customers. The schedules of such fees
and the basis upon which such fees will be paid will be determined from time
to time by the U.S. Fund and Federated Shareholder Services.
Participants investing in this Fund will not have any voting rights with
respect to the interest in the U.S. Fund held in this Fund. The voting rights
with respect to such interest are vested in the Trustee.
V. CAPITAL FUND
This Fund (referred to in the Plan as "Fund E") is invested by the Trustee
in Class A shares of Merrill Lynch Capital Fund, Inc. (the "Capital Fund").
The Capital Fund seeks to achieve the highest total investment return
consistent with prudent risk through a fully managed investment policy
utilizing equity, debt (including money market) and convertible securities.
This permits management of the Capital Fund to vary investment policy based on
its evaluation of changes in economic and market trends. Total investment
return is the aggregate of income and capital value changes. Consistent with
this policy, the Capital Fund's portfolio may, at any given time, be invested
substantially in equity securities, corporate bonds or money market
securities. It is the expectation of the Capital Fund's management that, over
longer periods, a major portion of the Capital Fund's portfolio will consist
of equity securities of larger market capitalization, quality companies. Since
January 1, 1974, the portion of the Capital Fund's portfolio invested in
equity securities has ranged from approximately 43% to 98% with the balance
being invested in corporate bonds and money market securities. On March 31,
1995, approximately 60% of the Capital Fund's portfolio was invested in equity
securities. There can be no assurance that the Capital Fund's investment
objective will be achieved.
26
<PAGE>
The following table sets forth selected per share data for the Class A
shares of the Capital Fund taken from the current prospectus of the Capital
Fund, dated July 27, 1995 (the "Capital Fund 1995 Prospectus"). This
information should be read in conjunction with the financial statements of the
Capital Fund included in the Statement of Additional Information referred to
on the cover page of the Capital Fund 1995 Prospectus.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MARCH 31,
----------------------------------------------------------
1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSET VALUE:
PER SHARE OPERATING PER-
FORMANCE:
Net asset value, begin-
ning of year........... $ 27.46 $ 27.89 $ 26.90 $ 25.38 $ 23.65
---------- ---------- ---------- ---------- ----------
Investment income--
net.................... 1.01 .97 .87 1.02 1.17
Realized and
unrealized gain
(loss) on
investments and
foreign currency
transactions--net... 1.77 .50 1.99 2.12 2.24
---------- ---------- ---------- ---------- ----------
Total from investment
operations............. 2.78 1.47 2.86 3.14 3.41
---------- ---------- ---------- ---------- ----------
Less dividends and dis-
tributions:
Investment income--
net.................... (.94) (.95) (.87) (1.02) (1.14)
Realized gains on in-
vestments--net......... (1.56) (.95) (1.00) (.60) (.54)
---------- ---------- ---------- ---------- ----------
Total dividends and dis-
tributions............. (2.50) (1.90) (1.87) (1.62) (1.68)
---------- ---------- ---------- ---------- ----------
Net asset value, end of
year................... $ 27.74 $ 27.46 $ 27.89 $ 26.90 $ 25.38
========== ========== ========== ========== ==========
TOTAL INVESTMENT RETURN
(EXCLUSIVE OF EFFECTS
OF SALES LOADS):
Based on net asset value
per share.............. 10.95% 5.39% 11.33% 12.96% 15.17%
========== ========== ========== ========== ==========
RATIOS TO AVERAGE NET
ASSETS:
Expenses................ .57% .53% .55% .56% .58%
========== ========== ========== ========== ==========
Investment income--net.. 3.81% 3.52% 3.56% 4.21% 5.13%
========== ========== ========== ========== ==========
SUPPLEMENTAL DATA:
Net assets, end of year
(in thousands)......... $2,507,767 $2,237,492 $2,056,023 $1,533,530 $1,083,741
========== ========== ========== ========== ==========
Portfolio turnover...... 89% 86% 55% 59% 86%
========== ========== ========== ========== ==========
</TABLE>
Certain of the information included in this Prospectus concerning the
Capital Fund is a summary of information contained in the Capital Fund 1995
Prospectus. Such summary is qualified in its entirety by reference to the
Capital Fund 1995 Prospectus. ANY PARTICIPANT WHO IS CONTEMPLATING AN
INVESTMENT IN THIS FUND IS ADVISED TO OBTAIN A COPY OF SUCH PROSPECTUS, READ
IT AND RETAIN THE COPY FOR FUTURE REFERENCE. A copy of the most recent
prospectus of the Capital Fund which has been provided to the Company will be
provided to a Participant by the Company upon request, and a copy of such
prospectus will be provided to a Participant as soon as practicable following
such Participant's initial investment in this Fund unless, prior to such
initial investment, a copy had been provided to the Participant.
A DESCRIPTION OF THE CAPITAL FUND'S INVESTMENT OBJECTIVE AND POLICIES IS SET
FORTH IN APPENDIX D TO THIS PROSPECTUS.
The Capital Fund offers four classes of shares which may be purchased at a
price equal to the next determined net asset value per share, plus, in the
case of Class A shares (the Class invested in by this Fund), a sales charge
imposed at the time of purchase (the "Class A shares"). Each Class A share and
each share of the Capital Fund's other classes of shares represents an
identical interest in the investment portfolio of the Capital Fund and has the
same rights, except that Class B, Class C and Class D shares bear the expenses
of the ongoing account maintenance fees and Class B and Class C shares bear
the expenses of the ongoing distribution fees and the additional incremental
transfer agency costs resulting from a deferred sales charge arrangement. The
deferred sales charges and account maintenance fees that are imposed on Class
B and Class C shares, as well as the account maintenance fees that are imposed
on the Class D shares, are imposed directly against those classes and not
against all assets of the Capital Fund and, accordingly, such charges do not
affect the net asset value of the
27
<PAGE>
Class A shares. ALL OF THIS FUND'S INVESTMENT IN THE CAPITAL FUND WILL BE
EXCLUSIVELY IN CLASS A SHARES. The aforementioned sales charge generally
applicable to the purchase of Class A shares has been waived for purchases by
this Fund so that the purchase price paid for each Class A share acquired by
this Fund is the Capital Fund's per share net asset value at the time of the
purchase. However, the Class A shares purchased by this Fund are subject
instead to a contingent deferred sales charge of 1.0% of amounts redeemed
within the first year after purchase.
Participants investing in this Fund will not have any voting right with
respect to the interest in the Capital Fund held by this Fund. The voting
rights with respect to such interest are vested in the Trustee.
The Capital Fund pays certain expenses incurred in the operation of the
Capital Fund including, among others, taxes, expenses for legal and auditing
services, costs of printing proxies and stock certificates, charges of the
custodian and transfer agent, expenses of redemption, brokerage costs,
Securities and Exchange Commission fees, all expenses of shareholders' and
Directors' meetings and certain of the expenses of printing prospectuses,
statements of additional information and reports to shareholders. For the
fiscal year ended March 31, 1994, the ratio of total expenses to average net
assets for the Class A shares was 0.53%.
Financial Data Services, Inc. ("FDS"), which is a wholly-owned subsidiary of
Merrill Lynch & Co., Inc., acts as the Capital Fund's transfer agent pursuant
to a transfer agency, dividend disbursing agency and shareholder servicing
agency agreement (the "Transfer Agency Agreement"). Pursuant to the Transfer
Agency Agreement, FDS is responsible for the issuance, transfer and redemption
of shares and the opening and maintenance of shareholder accounts. Pursuant to
the Transfer Agency Agreement, the Capital Fund pays FDS a fee of $7.00 per
Class A shareholder account and $9.00 per Class B shareholder account and FDS
is entitled to reimbursement from the Capital Fund for out-of-pocket expenses
incurred by it under the Transfer Agency Agreement. For the fiscal year ended
March 31, 1994, the Capital Fund paid FDS $5,299,415 pursuant to the Transfer
Agency Agreement. At April 30, 1994 the Capital Fund had 201,249 Class A
shareholder accounts and 269,571 Class B shareholder accounts. At this level
of accounts, the annual fee payable to FDS would aggregate approximately
$3,834,882 plus out-of-pocket expenses.
The following table sets forth certain information from the Capital Fund
1995 Prospectus concerning the annual operating expenses of the Capital Fund
applicable to Class A shares. Such expenses are not paid by the Company but
are charged against the assets of the Capital Fund.
<TABLE>
<CAPTION>
CHARGE
------
<S> <C> <C>
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE
NET ASSETS) FOR THE YEAR ENDED MARCH 31, 1995:
Investment Advisory Fees.................................... 0.40%
12b-1 Fees.................................................. None
Other Expenses
Custodial Fees............................................. 0.01%
Shareholder Servicing Costs................................ 0.13%
Other...................................................... 0.03%
----
Total Other Expenses..................................... 0.17%
----
TOTAL FUND OPERATING EXPENSES................................ 0.57%
====
</TABLE>
28
<PAGE>
EXAMPLE:
<TABLE>
<CAPTION>
CUMULATIVE EXPENSES PAID FOR
THE PERIOD OF
-------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
This Fund would pay the following expenses on
a $1,000 investment in the Capital Fund based
on the aforementioned waiver of any front-end
sales charge for Class A shares acquired by
this Fund and assuming (1) an operating
expense ratio of 0.57% for Class A shares,
(2) a 5% annual return throughout the periods
and (3) redemption at the end of the
period....................................... $5.50 $17.50 $30.50 $67.50
You would pay the following expenses on the
same $1,000 investment assuming no redemption
at the end of the period..................... $5.50 $17.50 $30.50 $67.50
</TABLE>
THE FOREGOING FEE TABLE (WHICH IS BASED ON A FEE TABLE IN THE CAPITAL FUND
1995 PROSPECTUS, AS ADJUSTED TO ELIMINATE THE MAXIMUM $52.50 FRONT-END SALES
CHARGE WAIVED WITH RESPECT TO THIS FUND'S PURCHASE OF CLASS A SHARES) IS
INTENDED TO ASSIST INVESTORS IN UNDERSTANDING THE COSTS AND EXPENSES THAT A
SHAREHOLDER IN THE CAPITAL FUND WILL BEAR DIRECTLY OR INDIRECTLY. THE EXAMPLE
SET FORTH ABOVE ASSUMES REINVESTMENT OF ALL DIVIDENDS AND DISTRIBUTIONS AND
UTILIZES A 5% ANNUAL RATE OF RETURN AS MANDATED BY SECURITIES AND EXCHANGE
COMMISSION REGULATIONS. THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION
OF PAST OR FUTURE EXPENSES OR ANNUAL RATES OF RETURN, AND ACTUAL EXPENSES OR
ANNUAL RATES OF RETURN MAY BE MORE OR LESS THAN THOSE ASSUMED FOR PURPOSES OF
THE EXAMPLE.
Merrill Lynch Asset Management, L.P. (the "Investment Adviser"), owned and
controlled by Merrill Lynch & Co., Inc., a financial services holding company,
acts as the investment adviser for the Capital Fund and provides the Capital
Fund with management and investment advisory services. Achieving the Capital
Fund's investment objective depends on informed decisions to buy, sell or hold
particular securities. Subject to the direction of the Capital Fund's Board of
Directors, the Investment Adviser has created a comprehensive management
system that sets objectives and establishes a framework for the selection of
particular securities and the distribution of assets. The system appraises
economic and other forces affecting securities markets and industries, and
assesses short- and long-term prospects. The Investment Adviser regularly
reviews the research and analysis of other brokerage firms with which the
Capital Fund does business.
The Capital Fund pays the Investment Adviser a monthly fee based on the
average daily value of the Capital Fund's net assets at the annual rates of:
0.50% of that portion of average daily net assets not exceeding $250 million;
0.45% of that portion of average daily net assets exceeding $250 million but
not exceeding $300 million; 0.425% of that portion of average daily net assets
exceeding $300 million but not exceeding $400 million; and 0.40% of that
portion of average daily net assets exceeding $400 million. For the fiscal
year ended March 31, 1995, the Investment Adviser earned a fee of $23,221,209
and the effective fee rate was 0.40%.
Merrill Lynch Financial Data Services, Inc. (formerly called Financial Data
Services, Inc.) (the "Transfer Agent"), which is a wholly-owned subsidiary of
Merrill Lynch & Co., Inc., acts as the Capital Fund's transfer agent pursuant
to a transfer agency, dividend disbursing agency and shareholder servicing
agency agreement (the "Transfer Agency Agreement"). Pursuant to the Transfer
Agency Agreement, the Transfer Agent is responsible for the issuance, transfer
and redemption of shares and the opening and maintenance of shareholder
accounts. Pursuant to the Transfer Agency Agreement, the Capital Fund pays the
Transfer Agent a fee of $11.00 per Class A or Class D shareholder account and
$14.00 per Class B or Class C shareholder account and the Transfer Agent is
entitled to reimbursement from the Capital Fund for out-of-pocket expenses
incurred by the Transfer Agent under the Transfer Agency Agreement. For the
fiscal year ended March 31, 1995, the Capital Fund paid the Transfer Agent
$8,317,906 pursuant to the Transfer Agency Agreement. At June 3, 1995 the
Capital Fund had 186,712 Class A shareholder accounts, 312,964 Class B
shareholder accounts, 10,627 Class C shareholder accounts and 233,421 Class D
shareholder accounts. At this level of accounts, the annual fee payable to the
Transfer Agent would aggregate approximately $9,151,737 plus out-of-pocket
expenses.
The Investment Adviser is responsible for placing the Capital Fund's
brokerage business and for negotiating prices, commissions and the charges for
other services. The Investment Adviser is not restricted in its choice of
29
<PAGE>
brokers or dealers. According to the Capital Fund 1995 Prospectus, the
Investment Adviser seeks the most favorable rates and services from any number
of brokers and dealers, including Merrill Lynch, Pierce, Fenner & Smith
Incorporated.
VI. SMALL CAPITALIZATION INDEX FUND
This Fund (referred to in the Plan as "Fund F") is invested by the Trustee
in the Small Capitalization Stock Portfolio (the "Small Cap Fund"), one of the
portfolios of Vanguard Index Trust ("Vanguard Index Trust"). Vanguard Index
Trust is an open-end diversified investment company designed as an "index
fund." The Small Cap Fund seeks to replicate the aggregate price and yield
performance of the Russell 2000 Small Stock Index (the "Russell 2000 Index"),
a broadly diversified small-capitalization stock index consisting of
approximately 2,000 common stocks. However, there can be no assurance that the
Small Cap Fund will achieve its investment objective.
The Small Cap Fund invests in a statistically selected sample of the
approximately 2,000 stock included in the Russell 2000 Index. Typically, the
Small Cap Fund invests in approximately 1,000 stocks. Stocks are selected for
inclusion in the Small Cap Fund based on their contribution to the Small Cap
Fund's market capitalization, industry weightings and other fundamental
characteristics such as price-earnings ratios, dividend yields, price-to-book
ratios and financial leverage. The stocks held by the Small Cap Fund are
weighted to make the Small Cap Fund's aggregate investment characteristics
similar to those of the Russell 2000 Index as a whole. The Small Cap Fund
attempts to remain fully invested in common stocks. Under normal circumstances
the Small Cap Fund will invest at least 95% of its assets in the common stocks
of the Russell 2000 Index and futures contracts and options. The Small Cap
Fund may invest in certain short-term fixed income securities as cash
reserves, although cash or cash equivalents are normally expected to represent
less than 1% of the Small Cap Fund's assets. The Small Cap Fund may also
invest up to 20% of its assets in stock futures contracts and options in order
to invest uncommitted cash balances, to maintain liquidity to meet shareholder
redemptions, or to minimize trading costs.
The stocks of the Russell 2000 Index to be included in the Small Cap Fund
will be selected utilizing a statistical sampling technique known as
"optimization". This process selects stocks for the Small Cap Fund so that
various industry weightings, market capitalizations and fundamental
characteristics (e.g., price-to-book, price-to-earnings, debt-to-asset ratios,
and dividend yields) closely approximate those of the Russell 2000 Index.
Over time, the correlation between the performance of the Small Cap Fund and
the Russell 2000 Index is expected to be at least 0.95. A correlation of 1.00
would indicate perfect correlation, which would be achieved when the net asset
value of the Small Cap Fund, including the value of its dividend and capital
gains distributions, increases or decreases in exact proportion to changes in
the Russell 2000 Index target benchmark.
Although the Small Cap Fund generally seeks to invest for the long term, the
Small Cap Fund retains the right to sell securities irrespective of how long
they have been held. However, because of the "passive" investment management
approach of the Vanguard Index Trust, the portfolio turnover rate for the
Small Cap Fund is expected to be under 50%, a generally lower turnover rate
than for most other investment companies. A portfolio turnover rate of 50%
would occur if one-half of the Small Cap Fund's securities were sold within
one year. Ordinarily, securities will be sold from the Small Cap Fund only to
reflect certain administrative changes in an index (including mergers or
changes in the composition of an index) or to accommodate cash flows into and
out of the Small Cap Fund while maintaining the similarity of the Small Cap
Fund to the Russell 2000 Index.
THE SMALL CAP FUND IS NEITHER SPONSORED BY NOR AFFILIATED WITH THE FRANK
RUSSELL COMPANY. FRANK RUSSELL'S ONLY RELATIONSHIP TO THE SMALL CAP FUND IS
THE LICENSING OF THE USE OF THE RUSSELL 2000 SMALL STOCK INDEX. FRANK RUSSELL
COMPANY IS THE OWNER OF THE TRADEMARKS AND COPYRIGHTS RELATING TO THE RUSSELL
INDEXES.
30
<PAGE>
Information included in this Prospectus concerning the Small Cap Fund is a
summary of certain of the information contained in the current prospectus of
Vanguard Index Trust, dated April 28, 1995, revised September 15, 1995,
relating to the Small Cap Fund and five unrelated index funds (the "Small Cap
Fund 1995 Prospectus"). Such summary is qualified in its entirety by reference
to the Small Cap Fund 1995 Prospectus. ANY PARTICIPANT WHO IS CONTEMPLATING AN
INVESTMENT IN THIS FUND IS ADVISED TO OBTAIN A COPY OF SUCH PROSPECTUS, READ
IT AND RETAIN THE COPY FOR FUTURE REFERENCE. A copy of the most recent
prospectus of the Vanguard Index Trust for the Small Cap Fund which has been
provided to the Company will be provided to a Participant by the Company upon
request, and a copy of such prospectus will be provided to a Participant as
soon as practicable following such Participant's initial investment in this
Fund unless, prior to such initial investment, a copy had been provided to the
Participant.
A DESCRIPTION OF THE SMALL CAP FUND'S INVESTMENT OBJECTIVES AND POLICIES AND
ITS INVESTMENT LIMITATIONS IS SET FORTH IN APPENDIX E TO THIS PROSPECTUS.
The following table sets forth selected per share data and ratios for the
shares of the Small Cap Fund. This information, which has been taken from the
Small Cap Fund 1995 Prospectus, should be read in conjunction with the
financial statements of the Small Cap Fund included in the 1994 Annual Report
of the Vanguard Index Trust.
<TABLE>
<CAPTION>
OCT. 1,
FEB. 1 TO 1993 TO
DEC. 31, JAN. 31,
1994(1) 1994 1993 1992 1991 1990(2)
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Begin-
ning of Period......... $16.24 $16.23 $12.63 $12.03 $ 8.55 $11.88
------ ------ ------ ------ ------ ------
Investment Operations
Net Investment Income
(Loss)............... .20 .05 .20 .19 .20 .17
Net Realized and
Unrealized Gain
(Loss) on
Investments.......... (.86) .96 3.73 .88 3.60 (3.46)
------ ------ ------ ------ ------ ------
Total from
Investment
Operations......... (.66) 1.01 3.93 1.07 3.80 (3.29)
- -------------------------------------------------------------------------------
Distributions
Dividends from Net
Investment Income.... (.22) (.18) (.18) (.18) (.18) (.04)
Distributions from
Realized Capital
Gains................ (.37) (.82) (.15) (.29) (.14) --
------ ------ ------ ------ ------ ------
Total
Distributions...... (.59) (1.00) (.33) (.47) (.32) (.04)
- -------------------------------------------------------------------------------
Net Asset Value, End of
Period................. $14.99 $16.24 $16.23 $12.63 $12.03 8.55
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Total Return(3)......... (4.00)% 6.65% 31.60% 9.34% 45.91% (27.73)%
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Pe-
riod (Millions)........ $ 605 $ 533 $ 432 $ 202 $ 111 $ 40
Ratio of Expenses to Av-
erage Net Assets....... .17%* .18%* .18% .18% .21% .31%
Ratio of Net Investment
Income (Loss) to Aver-
age Net Assets......... 1.50%* 1.16%* 1.47% 1.65% 2.11% 1.91%
Small Cap Fund Turnover
Rate................... 25% 5% 26% 26% 33% 40%
</TABLE>
- --------
(1) Results prior to January 31, 1994 are for the former Vanguard Small
Capitalization Stock Fund.
(2) Adjusted to reflect a 3-for-1 stock split as of February 3, 1990.
(3) Total return figures do not reflect the annual account maintenance fees
of $10 or applicable portfolio transaction fees.
* Annualized.
The Vanguard Index Trust is a member of The Vanguard Group of Investment
Companies, a family of more than 30 investment companies with more than 80
distinct portfolios and total assets in excess of $130 billion. Through their
jointly-owned subsidiary, The Vanguard Group, Inc. ("Vanguard"), the Vanguard
Index Trust
31
<PAGE>
and the other funds in the group obtain at cost virtually all of their
corporate management, administrative and distribution services. Vanguard also
provides investment advisory services on an at-cost basis to certain Vanguard
funds. According to the Small Cap Fund 1995 Prospectus, as a result of
Vanguard's unique corporate structure, the Vanguard funds have costs
substantially lower than those of most competing mutual funds. In 1994,
according to expense data provided by Lipper Analytical Services, the average
expense ratio (annual costs including advisory fees divided by total net
assets) for the Vanguard funds (including the Small Cap Fund) amounted to
approximately .30% compared to an average of 1.05% for the mutual fund
industry.
The Small Cap Fund receives all investment advisory services on an at-cost
basis from Vanguard's Core Management Group (the "Small Cap Fund Investment
Adviser"). The Small Cap Fund is not actively managed, but is instead
administered by the Small Cap Fund Investment Adviser using computerized,
quantitative techniques. The Small Cap Fund Investment Adviser is supervised
by the officers of the Vanguard Index Trust.
The following table from the Small Cap Fund 1995 Prospectus illustrates all
expenses and fees a shareholder of the Small Cap Fund would incur. The
expenses and fees are for the fiscal year ended December 31, 1994.
<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
Sales Load Imposed on Purchases.................................... None(1)
Sales Load Imposed on Reinvested Dividends......................... None
Redemption Fees.................................................... None
Exchange Fees...................................................... None
ANNUAL FUND OPERATING EXPENSES
Management and Administrative Expenses(2).......................... 0.12%
Investment Advisory Fees........................................... 0.01
12b-1 Fees......................................................... None
Other Expenses
Distribution Costs............................................... 0.02
Miscellaneous Expenses........................................... 0.02
----
Total Other Expenses............................................... 0.04
----
Total Operating Expenses........................................... 0.17%
====
</TABLE>
- --------
(1) Shareholders are charged a 1% portfolio transaction fee, payable directly
to the Small Cap Fund, on each purchase of shares.
(2) In addition to these costs, the Vanguard Index Trust deducts a $10 annual
account maintenance fee. This fee will be waived for shareholders with an
account balance of $10,000 or more. For this purpose, the Plan's entire
investment in the Small Cap Fund will constitute the investment of a
single shareholder.
32
<PAGE>
EXAMPLE:
The following example illustrates the expenses that an investor in the Small
Cap Fund would incur on a $1,000 investment over various time periods,
assuming (1) a 5% annual rate of return and (2) redemption at the end of each
period. The example includes the $10 account maintenance fee and the 1%
portfolio transaction fee. As noted in the table on the previous page, the
Vanguard Index Trust charges no redemption fees of any kind.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C>
$22 $45 $69 $131
</TABLE>
Included in these estimates are account maintenance fees of $10, $30, $50
and $100 for the respective periods shown. Accordingly, assuming the Plan's
investment in the Small Cap Fund is larger than $10,000, this Fund's total
expenses will be substantially lower in percentage terms than this
illustration implies.
THIS EXAMPLE WHICH IS TAKEN FROM THE SMALL CAP FUND 1995 PROSPECTUS, SHOULD
NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR PERFORMANCE.
ACTUAL EXPENSES MAY BE HIGHER OR LOWER THAN THOSE SHOWN.
Participants investing in this Fund will not have any voting right with
respect to the interest in the Small Cap Fund held by this Fund. The voting
rights with respect to such interest are vested in the Trustee.
VII. INTERNATIONAL GROWTH FUND
This Fund (referred to in the Plan as "Fund G") is invested by the Trustee
in the Scudder International Fund (the "Scudder Fund"), one of a series of
funds of Scudder International Fund, Inc. ("SIDI"). The Scudder Fund seeks
long-term growth of capital primarily through a diversified portfolio of
marketable foreign equity securities selected primarily to permit the Scudder
Fund to participate in non-United States companies and economies with
prospects for growth. The Scudder Fund invests in companies, wherever
organized, which do business primarily outside the United States. The Scudder
Fund intends to diversify investments among several countries and to have
represented in its portfolio, in substantial proportions, business activities
in not less than three different countries. The Scudder Fund does not intend
to concentrate investments in any particular industry.
Investors should recognize that investing in foreign securities involves
certain special considerations, including those set forth below, which are not
typically associated with investing in U.S. securities and which may favorably
or unfavorably affect the Scudder Fund's performance. As foreign companies are
not generally subject to uniform accounting, auditing and financial reporting
standards, practices and requirements comparable to those applicable to
domestic companies, there may be less publicly available information about a
foreign company than about a domestic company. Many foreign securities
markets, while growing in volume of trading activity, have substantially less
volume than the U.S. market, and securities of some foreign issuers are less
liquid and more volatile than securities of domestic issuers. Similarly,
volume and liquidity in most foreign bond markets is less than in the U.S.
and, at times, volatility of price can be greater than in the U.S. Fixed
commissions on some foreign securities exchanges and bid to asked spreads in
foreign bond markets are generally higher than commissions or bid to asked
spreads on U.S. markets, although the Scudder Fund will endeavor to achieve
the most favorable net results on its portfolio transactions. There is
generally less government supervision and regulation of securities exchanges,
brokers and listed companies than in the U.S. It may be more difficult for the
Scudder Fund's agents to keep currently informed about corporate actions which
may affect the prices of portfolio securities. Communications between the U.S.
and foreign countries may be less reliable than within the U.S., thus
increasing the risk of delayed settlements of portfolio transactions or loss
of certificates for portfolio securities. Payment for securities without
delivery may be required in certain foreign markets. In addition, with respect
to certain foreign countries, there is the possibility of expropriation or
confiscatory taxation, political or social instability, or diplomatic
developments which could affect U.S. investments in those countries. Moreover,
individual foreign economies may differ favorably or unfavorably from the U.S.
economy in such respects as growth of gross national product, rate of
inflation, capital reinvestment, resource self-sufficiency and balance of
payments position. The management of the Scudder Fund seeks to mitigate the
risks associated with the foregoing considerations through continuous
professional management.
33
<PAGE>
Because investments in foreign securities usually will involve currencies of
foreign countries, and because the Scudder Fund may hold foreign currencies
and forward contracts, futures contracts and options on foreign currencies and
foreign currency futures contracts, the value of the assets of the Scudder
Fund as measured in U.S. dollars may be affected favorably or unfavorably by
changes in foreign currency exchange rates and exchange control regulations,
and the Scudder Fund may incur costs in connection with conversions between
various currencies. Although the Scudder Fund values its assets daily in terms
of U.S. dollars, it does not intend to convert its holdings of foreign
currencies into U.S. dollars on a daily basis. It will do so from time to
time, and investors should be aware of the costs of currency conversion.
Although foreign exchange dealers do not charge a fee for conversion, they do
realize a profit based on the difference (the "spread") between the prices at
which they are buying and selling various currencies. Thus, a dealer may offer
to sell a foreign currency to the Scudder Fund at one rate, while offering a
lesser rate of exchange should the Scudder Fund desire to resell that currency
to the dealer. The Scudder Fund will conduct its foreign currency exchange
transactions either on a spot (i.e., cash) basis at the spot rate prevailing
in the foreign currency exchange market, or through entering into options or
forward or futures contracts to purchase or sell foreign currencies.
For a discussion of additional risk factors associated with the Scudder
Fund, see "The Fund's Investment Objectives and Policies--Risk Factors" in the
Statement of Additional Information referred to on the cover page of the
Scudder Fund 1995 Prospectus.
Information included in this Prospectus concerning the Scudder Fund is a
summary of certain of the information contained in the current prospectus
dated August 1, 1995, relating to the Scudder Fund (the "Scudder Fund 1995
Prospectus"). Such summary is qualified in its entirety by reference to the
Scudder Fund 1995 Prospectus. ANY PARTICIPANT WHO IS CONTEMPLATING AN
INVESTMENT IN THIS FUND IS ADVISED TO OBTAIN A COPY OF SUCH PROSPECTUS, READ
IT AND RETAIN THE COPY FOR FUTURE REFERENCE. A copy of the most recent
prospectus of the Scudder Fund which has been provided to the Company will be
provided to a Participant by the Company upon request, and a copy of such
prospectus will be provided to a Participant as soon as practicable following
such Participant's initial investment in this Fund unless, prior to such
initial investment a copy had been provided to the Participant.
34
<PAGE>
A DESCRIPTION OF THE SCUDDER FUND'S INVESTMENT OBJECTIVES AND POLICIES AND
ITS INVESTMENT LIMITATIONS IS SET FORTH IN APPENDIX F TO THIS PROSPECTUS.
The following table sets forth certain information taken from the Scudder
Fund 1995 Prospectus concerning the Scudder Fund's shareholder transaction
expenses and its annual operating expenses expressed as a percentage of its
average daily net assets for the fiscal year ended March 31, 1995.
<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES: Expenses charged directly to
individual accounts in the Scudder Fund for various transactions.
Sales commissions to purchase shares (sales load)................. NONE
Commissions to reinvest dividends................................. NONE
Redemption fees................................................... NONE
Fees to exchange shares........................................... NONE
ANNUAL FUND OPERATING EXPENSES: Expenses paid by the Scudder Fund
before it distributes its net investment income, expressed as a
percentage of its average daily net assets for the fiscal year
ended March 31, 1995.
Investment management fee......................................... 0.83%
12b-1 fees........................................................ NONE
Other expenses.................................................... 0.36%
-----
Total Scudder Fund operating expenses............................. 1.19%
=====
</TABLE>
EXAMPLE
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Based on the level of total Scudder Fund
operating expenses listed above, the total
expenses relating to a $1,000 investment,
assuming a 5% annual return and redemption
at the end of each period, are listed
below. Investors do not pay these expenses
directly; they are paid by the Scudder
Fund before it distributes its net
investment income to shareholders......... $12 $38 $65 $144
</TABLE>
ACCORDING TO THE SCUDDER FUND 1995 PROSPECTUS, THE FOREGOING EXAMPLE ASSUMES
REINVESTMENT OF ALL DIVIDENDS AND DISTRIBUTIONS AND THAT THE PERCENTAGE
AMOUNTS LISTED UNDER "ANNUAL FUND OPERATING EXPENSES" REMAIN THE SAME EACH
YEAR. THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES OR RETURN. ACTUAL SCUDDER FUND EXPENSES AND RETURN VARY FROM YEAR TO
YEAR AND MAY BE HIGHER OR LOWER THAN THOSE SHOWN.
35
<PAGE>
The following table includes selected data for a share of the Scudder Fund
outstanding throughout each period (based on monthly average shares
outstanding during the period) and other performance information derived from
the audited financial statements of the Scudder Fund. If you would like more
detailed information concerning the Scudder Fund's performance, a complete
listing of its portfolio and audited financial statements are available in the
Scudder Fund's Annual Report dated March 31, 1995.
<TABLE>
<CAPTION>
YEARS ENDED MARCH 31,
--------------------------------------
1995 1994 1993 1992 1991
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period... $42.96 $35.69 $34.36 $34.69 $37.00
------ ------ ------ ------ ------
Income from investment operations:
Net investment income................ .21 .31 .38 .44 .80
Net realized and unrealized gain
(loss) on investment transactions... (1.03) 7.74 2.64 (.37) (.39)
------ ------ ------ ------ ------
Total from investment operations....... (.82) 8.05 3.02 .07 .41
------ ------ ------ ------ ------
Less distributions:
From net investment income........... -- (.63) (.83) -- (.74)
In excess of net investment income... -- (.06) -- -- --
From net realized gains on investment
transactions........................ (2.42) (.09) (.86) (.40) (1.98)
------ ------ ------ ------ ------
Total distributions.................... (2.42) (.78) (1.69) (.40) (2.72)
------ ------ ------ ------ ------
Net asset value, end of period......... $39.72 $42.96 $35.69 $34.36 $34.69
====== ====== ====== ====== ======
TOTAL RETURN (%)....................... (2.02) 22.69 9.12 .18 1.46
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period ($
millions)............................. 2,192 2,198 1,180 933 929
Ratio of operating expenses to average
net assets (%)........................ 1.19 1.21 1.26 1.30 1.24
Ratio of net investment income to
average net assets (%)................ .48 .75 1.13 1.25 2.22
Portfolio turnover rate (%)............ 46.3 39.9 29.2 50.4 70.1
</TABLE>
According to the Scudder Fund 1995 Prospectus, the Scudder Fund is designed
for long-term investors who can accept international investment risk. The
dollar value of the Scudder Fund's portfolio securities fluctuates with
changes in market and economic conditions abroad and with changes in relative
currency values. Changes in the Scudder Fund's share price may not be related
to changes in the U.S. stock and bond markets. As with any long-term
investment, the value of shares of the Scudder Fund when sold may be higher or
lower than when purchased. For additional information concerning risks of
international investment, see "Risk Factors" in the Scudder Fund 1995
Prospectus.
36
<PAGE>
Set forth below is additional information from the Scudder Fund 1995
Prospectus concerning the performance of the Scudder Fund. Performance figures
are historical and all total return calculations assume reinvestment of
capital gains and income distributions. THE INVESTMENT RETURN AND PRINCIPAL
VALUE OF THE SCUDDER FUND'S SHARES REPRESENT PAST PERFORMANCE AND WILL VARY
DUE TO MARKET CONDITIONS, AND THE SHARES MAY BE WORTH MORE OR LESS AT
REDEMPTION THAN AT ORIGINAL PURCHASE.
ANNUAL CAPITAL CHANGES--PAST TEN YEARS*
<TABLE>
<CAPTION>
YEARS ENDED NET ASSET CAPITAL GAINS
MARCH 31, VALUE/SHARE DIVIDENDS DISTRIBUTIONS CAPITAL CHANGE
----------- ----------- --------- ------------- --------------
<S> <C> <C> <C> <C>
1985 $23.03
1986 36.93 $0.41 $0.13 +61.28%
1987 44.05 0.49 5.93 +38.44
1988 33.43 0.82 9.39 - 2.45
1989 34.79 0.13 3.06 +13.91
1990 37.00 0.43 3.15 +15.81
1991 34.69 0.74 1.98 - 0.67
1992 34.36 -- 0.40 - 0.95
1993 35.69 0.83 0.86 + 6.53
1994 42.96 0.69 0.09 +21.59
1995 39.72 -- 2.42 - 2.02
</TABLE>
GROWTH OF A $10,000 INVESTMENT
<TABLE>
<CAPTION>
TOTAL RETURN
YEARS ENDED VALUE OF INITIAL ----------------------------------
MARCH 31, 1995 $10,000 INVESTMENT AVERAGE ANNUAL CUMULATIVE
-------------- ------------------ -------------- ----------
<S> <C> <C> <C>
One Year $ 9,798 - 2.02% - 2.02%
Five Years $13,333 + 5.92% + 33.33%
Ten Years $40,879 +15.12% +308.79%
</TABLE>
- --------
* For definition of "capital change" please see "Distribution and performance
information" in the Scudder Fund 1995 Prospectus.
The Scudder Fund retains the investment management firm of Scudder, Stevens
& Clark, Inc., a Delaware corporation (the "Scudder Fund Adviser"), to manage
the Scudder Fund's daily investment and business affairs subject to the
policies established by the SIDI's Board of Directors. Such Board has overall
responsibility for the management of the Scudder Fund under Maryland law. For
the fiscal year ended March 31, 1995, the Scudder Fund Adviser received an
investment management fee of 0.83% of the Scudder Fund's average daily net
assets. The Scudder Fund Adviser receives from the Scudder Fund an investment
management fee for its services equal, on an annual basis, to 0.90% of the
first $500 million of average daily net assets; 0.85% of the next $500 million
of such assets; 0.80% of the next $1 billion of such assets and 0.75% of such
assets in excess of $2 billion.
Prior to September 8, 1994 the Scudder Fund Adviser received from the
Scudder Fund an investment management fee equal, on an annual basis, to 1.00%
of the first $200 million of average daily net assets; 0.90% of the next $200
million of such assets; 0.85% of the next $400 million of such assets and
0.80% of such assets in excess of $800 million.
The fee is payable monthly, provided that the Scudder Fund will make such
interim payments as may be requested by the Scudder Fund Adviser not to exceed
75% of the amount of the fee then accrued on the books of the Scudder Fund and
unpaid. According to the Scudder Fund 1995 Prospectus, the fee is higher than
that charged by many funds which invest primarily in U.S. securities but not
necessarily higher than the fees charged to funds with investment objectives
similar to that of the Scudder Fund. All the Scudder Fund's expenses are paid
out of its gross investment income. Shareholders pay no direct charges or fees
for investment services.
37
<PAGE>
Participants investing in this Fund will not have any voting rights with
respect to the interest in the Scudder Fund held by this Fund. The voting
rights with respect to such interest are vested in the Trustee.
----------------
AVAILABILITY OF ADDITIONAL INFORMATION CONCERNING INVESTMENT OPTIONS
A Participant or a Participant's beneficiary will be provided, upon request,
the following information, which will be based on the latest information
available to the Plan:
(i) A description of the annual operating expenses of each designated
investment alternative (e.g., investment management fees, administrative
fees, transaction costs) which reduce the rate of return to Participants
and beneficiaries, and the aggregate amount of such expenses expressed as a
percentage of average net assets of the designated investment alternative;
(ii) Copies of any prospectuses, financial statements and reports, and of
any other materials relating to the investment alternatives available under
the Plan, to the extent such information is provided to the Plan;
(iii) A list of the assets comprising the portfolio of each designated
investment alternative which constitute Plan assets within the meaning of
29 CFR 2510.3-101, the value of each such asset (or the proportion of the
investment alternative which it comprises), and, with respect to each such
asset which is a fixed rate investment contract issued by a bank, savings
and loan association or insurance company, the name of the issuer of the
contract, the term of the contract and the rate of return on the contract;
(iv) Information concerning the value of shares or units in designated
investment alternatives available to Participants and beneficiaries under
the Plan, as well as the past and current investment performance of such
alternatives, determined, net of expenses, on a reasonable and consistent
basis; and
(v) Information concerning the value of shares or units in designated
investment alternatives held in the account of the Participant or
beneficiary.
The information described above may be obtained by a Participant or a
beneficiary upon his or her request, which should be directed to Kathryn
Turner, Corporate Director--Human Resources, Circus Circus Enterprises, Inc.,
2880 Las Vegas Boulevard South, Las Vegas, Nevada 89109 (702-734-0410).
VALUATION OF THE FUNDS
As of the last day of each calendar month and such other dates as the Plan
Administrator may designate from time to time (the "Valuation Date"), the
Custodian and the Trustee will determine the "net worth" of the respective
investment Funds in their custody. Interim Valuation Dates no more frequently
than weekly may be used for purposes of facilitating hardship withdrawals. The
"net worth" of an investment Fund as of any Valuation Date is equal to the
"adjusted net worth" of the assets of such investment Fund as of such
Valuation Date, as determined by the Custodian or Trustee, as the case may be,
and reported to the Plan Administrator, including withdrawals, distributions
and transfers chargeable to such investment Fund which have been incurred but
not yet paid as of such Valuation Date. The Account of each Participant is
adjusted upward or downward as of each Valuation Date in proportion to the
amounts credited to the respective Accounts of all of the Participants that
are invested in each of such Funds so that the sum of the amounts credited to
the Accounts of all of the Participants that are invested in each such Fund
will be equal to the "adjusted net worth" of that Fund and so that the sum of
the Accounts of all of the Participants will be equal to the "adjusted net
worth" of the investment Funds.
VESTING
A participant will be 100% vested in all amounts allocated to his Savings
Contribution Account or his Rollover Contribution Account at all times.
If a Participant first worked as an Eligible Employee before July 3, 1989,
he will be 100% vested in all amounts allocated to his other Accounts at all
times, provided he entered the Plan by December 31, 1992. If he first worked
as an eligible Employee on or after July 3, 1989, or if he enters the Plan
after December 31, 1992, the vested portion of his Matching Contribution
Account, Automatic Contribution Account, ESOP Matching
38
<PAGE>
Contributions, ESOP Automatic Contributions and any Discretionary
Contributions, as well as the earnings thereon, will be determined under the
following schedule based upon the Participant's total number of Years of
Vesting Service as of the date his eligible service terminates:
<TABLE>
<CAPTION>
NUMBER OF
YEARS OF VESTING SERVICE VESTED
------------------------ INTEREST
--------
<S> <C>
Less than 3...................................................... 0%
3................................................................ 25%
4................................................................ 50%
5................................................................ 75%
6 or more........................................................ 100%
</TABLE>
However, a Participant will be 100% vested in all of his accounts upon
reaching his Normal Retirement Date.
The vested portion of a Participant's Account will be available for payment
after the end of the calendar quarter in which his employment terminates. See
"Benefits Under the Plan," below. Any non-vested portion will be forfeited at
the time the vested benefits are paid, or, if earlier, at the time the
Participant has incurred five consecutive One Year Breaks in Service.
Forfeitures during any Plan Year, to the extent not needed to restore the
Forfeitures of returning Participants who have "bought back" their prior
Forfeitures, will be reallocated to other Participants as additional Automatic
Contributions. See "Contributions," above.
If a Participant who has incurred a Forfeiture returns to work after
incurring five consecutive One Year Breaks in Service, the Forfeiture cannot
be reclaimed for any reason.
If a Participant returns before incurring five consecutive One Year Breaks
in Service, then:
--If the Participant did not receive his vested benefits, his entire
Account will remain intact, and he will not incur a Forfeiture.
--If the vested benefits were paid to the Participant, he will have
incurred a Forfeiture, but he has the right to "buy back" his
Forfeiture by paying back to the Trustee the full amount of the prior
distribution, generally within five years after the date he returns to
employment.
WITHDRAWALS ON ACCOUNT OF HARDSHIP
An Employee who has been a Participant in the Plan for at least 18 months
may request a distribution from his Account of his Savings Contributions, plus
earnings credited directly to those contributions prior to January 1, 1989,
for reasons of a "hardship," as defined in the Plan, as determined in the Plan
Administrator's discretion exercised in a uniform and nondiscriminatory
manner. In exercising its discretion, the Plan Administrator will request a
detailed financial statement from the Participant explaining his need for the
funds and available access to funds from other sources.
"Hardship" may include expenses for (a) the purchase of a Participant's
primary residence (excluding mortgage payments), (b) payment of tuition for
the next 12 months of post-secondary education of the Participant, his spouse,
children, or other dependents, (c) payments needed to prevent the
Participant's eviction from or foreclosure on the mortgage on his principal
residence, and (d) medical expenses described in Section 213(d) of the Code
incurred by the Participant, the Participant's spouse or any dependents of the
Participant (as defined in Section 152 of the Code) or that are necessary in
order to permit the Participant or dependent to obtain medical care.
39
<PAGE>
A distribution based on financial hardship may not exceed the amount
required to meet the immediate financial needs created by the hardship and not
reasonably available from the Participant's other resources, nor may such a
distribution be in an amount less than $1,000.
The Plan Administrator has the discretion to determine whether the
requirements for a hardship withdrawal have been met. The Plan Administrator
must deny any request for a financial hardship withdrawal that does not meet
those requirements. The Plan requires that the Plan Administrator strictly
construe the application of facts to the "hardship" definition.
The amount of funds withdrawn by a Participant will be charged against the
Participant's Account.
WITHDRAWALS AFTER AGE 59 1/2
A Participant who is fully vested in his Account balance and has attained
the age of 59 1/2 may request a withdrawal, which will be paid to the
qualifying Participant in a single lump sum payment.
DIVERSIFICATION ELECTION
During the Diversification Election Period a qualifying Participant may
(subject to the minimum amounts specified in the Plan) make a Diversification
Election by directing the Trustee in writing as to the investment of a portion
of his ESOP Matching Contribution Account and ESOP Automatic Contribution
Account through the sale of Employer Securities attributable to the amount to
be diversified.
Such a Participant may elect, within 90 days after the close of the first
Plan Year in the Diversification Election Period, to diversify an amount not
exceeding 25% of the balance of his ESOP Matching and ESOP Automatic Accounts,
determined as of the last day of such Plan Year. Within 90 days after the
close of the second, third, fourth and fifth Plan Years in the Diversification
Election Period, such a Participant may elect to diversify the ESOP Matching
and ESOP Automatic Contribution Accounts, determined as of the last day of
such Plan Year, and the amount with respect to which diversification was
previously elected. In the last Plan Year of the Diversification Election
Period, the Participant may elect to diversify the difference between 50% of
the balance of his ESOP Matching and ESOP Automatic Contribution Accounts,
determined as of the last day of such Plan Year, and the amount with respect
to which diversification was previously elected.
The Trustee may offer Employer Securities being sold pursuant to a
Diversification Election to the Company or its affiliates or in the organized
trading market. The terms of any such offer to the Company or its affiliates
will require that such entities purchase the Employer Securities at fair
market value, as determined at the time of acquisition of the Employer
Securities, without the payment of any sales commissions. The proceeds of
diversification sales are required to be invested in the Funds referred to in
the Plan as Funds B, C, D, E, F and/or G in the proportions elected by the
Participant.
BENEFITS UNDER THE PLAN
Retirement Benefit. A Participant will be entitled to full retirement
benefits under the Plan upon such Participant's attaining the age of 65 years
or, if later, the date on which he completes five full years of participation
in the Plan. Until a Participant reaches the age of 70 1/2 or actually retires
from the employ of the Employer, generally no retirement benefits will be
payable to him, and he will continue to be treated in all respects as a
Participant. Upon retirement of a Participant or his reaching age 70 1/2, such
Participant is entitled to a retirement benefit in an amount equal to 100% of
the balance in his Account as of the Valuation Date concurring with or next
following the date of his retirement.
Generally, a Participant will be required to begin receiving payment of his
vested retirement benefit, whether or not he has retired, no later than the
first April 1 following the end of the calendar year in which he attains age
40
<PAGE>
70 1/2. Thereafter, additional distributions will be made to him from his
Account in amounts determined under Section 401(a)(9) of the Code, not later
than December 31 of each year, until his entire vested Account balance has
been distributed to him.
Severance of Employment Benefit. A Participant whose employment with the
Employer is terminated for reasons other than retirement or death will be
entitled to a severance of employment benefit in an amount equal to the vested
portion of his Account as of the Valuation Date concurring with or next
following the date on which such termination of employment occurs.
Death Benefit. If a Participant dies, his beneficiary will be entitled to a
death benefit in an amount equal to 100% of the balance in his Account as of
the Valuation Date immediately preceding or concurring with the date of his
death. Each Participant may designate a beneficiary to receive his death
benefit, and may change or revoke any such designation. Each designation or
revocation must be in writing and filed with the Plan Administrator on forms
prescribed by the Plan Administrator.
If a Participant dies without designating a beneficiary or beneficiaries, or
if any such designation is legally ineffective, or if such beneficiary or
beneficiaries do not survive the Participant, then the Participant's death
benefit will be paid to his estate. However, if no personal representative is
appointed for the Participant's estate, then his next of kin under the laws of
descent and distribution in the state where he resided at the time of his
death will be deemed to be his beneficiary or beneficiaries.
Notwithstanding the foregoing, if the Participant is married as of the date
of his death, the Participant's surviving spouse will be his sole beneficiary,
and will receive the full amount of his death benefit unless the spouse
consents to, or has consented to, the Participant's designation of another
beneficiary. Any such consent to the designation of another beneficiary must
be in writing, must acknowledge the effect of the consent, must be witnessed
by a Plan representative or by a notary public, and will be effective only
with respect to that spouse.
To the extent permitted by Internal Revenue Service Rules, any death benefit
payable to a minor child will generally be held until the child has reached
the age of majority unless a legal guardian is appointed for the child.
Deferred Benefit. A Participant or beneficiary who is eligible to receive a
benefit under the Plan, but who does not receive the benefit on the Valuation
Date as of which it is determined, will continue to have his Account held and
invested under the Plan, where it will continue to share in the earnings and
losses of the trust fund and separately invested Funds in which it is
invested.
Payment of Benefits. The benefit to which a Participant is entitled will be
paid to him (or, in the case of a death benefit, will be paid to his
beneficiary or beneficiaries) in a lump sum, as soon as practicable after the
Valuation Date that coincides with or immediately follows the Participant's
retirement, disability, severance of employment or death, as the case may be.
No distribution may be made of the benefit of any Participant prior to his
Normal Retirement Date unless the value of his benefit does not exceed $3,500,
or unless the Participant consents to the distribution. In any event,
retirement or disability benefits must begin no later than the April 1 of the
year immediately following the calendar year in which the Participant reaches
age 70 1/2.
Any benefits attributable to a Participant's ESOP Matching Contribution
Account and ESOP Automatic Contribution Account (except as invested pursuant
to a Diversification Election) will be paid to the Participant (or, if
applicable, his beneficiary or beneficiaries), to the extent possible, in
whole units of Employer Securities. Fractional interests will be paid in cash
based on the market price of the Employer Securities at the distribution date.
Any other benefits payable under the Plan may be paid to the Participant
(or, if applicable, his beneficiary or beneficiaries) in cash or in kind.
41
<PAGE>
Under certain circumstances, set forth in detail in the Plan, if Employer
Securities distributed to a Participant or beneficiary are not then listed on
a national securities exchange or quoted by a national securities association,
the Participant or beneficiary will have an option to put any of the units of
such Employer Securities to the Company.
VOTING AND OTHER RIGHTS
As the owner of record of the Employer Securities held under the terms of
the Plan, the Trustee exercises any and all voting and other rights with
respect to such securities. However, a Participant may direct the Trustee
regarding the exercise of such rights for the Employer Securities (including
fractional shares) allocated to his ESOP Matching Contribution Account and
ESOP Automatic Contribution Account.
If possible, the Trustee will notify each Participant at least 30 days
before the date upon which any voting or other rights are to be exercised, and
will provide each Participant with copies of all information distributed to
the security holders of record by the Employer regarding the exercise of such
rights. However, if the notice received by the Trustee, as stockholder of
record, makes it impossible for the Trustee to give the Participants 30 days
notice, the Trustee will notify the Participants regarding the exercise of
such rights as soon as practicable after it receives the information.
Under the terms of the Plan, if the Trustee receives no direction regarding
exercise of voting or other rights with respect to Employer Securities
allocated to a Participant's ESOP Matching Contribution Account and ESOP
Automatic Contribution Account, the Trustee will exercise such rights in the
manner it deems appropriate.
Notwithstanding the provisions of the Plan relating to the voting of
allocated shares, it is also possible that ERISA requirements might be
interpreted, in limited situations, to require the Trustee to make an
independent decision regarding the voting of allocated shares even when
instructions are received from Participants.
Any voting and other rights with respect to Employer Securities (including
fractional shares) held by the Trustee that are allocated to any ESOP loan
suspense account or to the Circus Circus Stock Fund are exercised by the
Trustee at its sole discretion.
Any voting rights with respect to securities representing investments of the
Plan in investment options other than the Circus Circus Stock Fund are vested
in the Trustee.
DIVIDENDS
Cash dividends paid for any Plan Year with respect to Employer Securities
(including fractional shares) allocated to the Participant's ESOP Matching
Contribution Account and ESOP Automatic Contribution Account will be paid, if
the Company so directs, to the Participants to whom they are allocated.
Any such cash dividends which are not distributed to Participants will be
retained by the Trustee and allocated in the same manner as other income of
the ESOP Fund.
Stock Dividends paid with respect to Employer Securities (including
fractional shares) allocated to each Participant's ESOP Matching Contribution
Account and ESOP Automatic Contribution Account will be retained by the
Trustee and allocated in the same manner as other income of the ESOP Fund.
ASSIGNMENT; LIENS
A Participant or his beneficiary may not alienate, sell, transfer, assign,
pledge, encumber or charge his interest in the Plan. No interest in the Plan
may be attached or subjected to other legal process except to the extent
provided in the Plan or as may be required by law. Pursuant to the Retirement
Equity Act of 1984 amending Section 401(a)(13) of the Code, a "qualified
domestic relations order" will not be treated as an illegal assignment or
attachment. Detailed procedures regarding the administration of such orders
are set forth in the Plan's Summary Plan Description, which is available on
request from the Corporate Director--Human Resources. Also, an Internal
Revenue Service levy on an Account is not considered an illegal assignment or
attachment.
42
<PAGE>
AMENDMENT AND TERMINATION
The Company anticipates that the Plan will continue indefinitely as a
qualified plan under the Code, but reserves the right to terminate the Plan at
any time by action of the Board of Directors of the Company or to amend the
Plan by action of the Company's Board of Directors. However, such an amendment
or termination cannot transfer assets of the Plan for purposes other than for
the exclusive benefit of Participants and their beneficiaries, and cannot
cause or permit any assets of the Plan, its Trusts or Contracts to revert to
or become the property of the Company except in the case of a contribution
made to the Plan under a mistake of fact or in the case of a contribution
disallowed as a deduction under the Code with respect to the Company.
REFERENCE TO THE PLAN
The above summary of the Plan and the Agreement of Trust does not purport to
be complete and is subject in all respects to the provisions of the Plan and
the Agreement of Trust, copies of which are available from the Company on
request and which have been filed with the Securities and Exchange Commission
as exhibits to the Company's Registration Statement (SEC File No. 33-18278).
FEDERAL TAX ASPECTS
The Company has obtained from the Internal Revenue Service a favorable
determination letter that the Plan, including the cash or deferred
arrangements under Section 401(k) of the Code and the ESOP features under
Section 4975(e)(7) of the Code, constitutes a qualified profit sharing plan
under Section 401(a) of the Code and a qualified ESOP under Section 4975(e)(7)
of the Code, and that the Trust is exempt from Federal income tax under
Section 501(a) of the Code. In conjunction with the 1995 Amendments, the
Company intends to submit the Plan to the Internal Revenue Service to seek its
determination that the Plan, in its amended form, continues to meet the
requirements of a qualified profit sharing plan under Section 401(a) of the
Code, a qualified cash or deferred arrangement under Section 401(k) of the
Code, and a qualified ESOP under Section 4975(e)(7) of the Code, and that the
Trust continues to be exempt from Federal income tax under Section 501(a) of
the Code, Trenam Kemker, special counsel to the Company, has provided the
Company with their opinion that, subject to certain limitations set forth
therein, principally related to the adoption of final regulations by the
Internal Revenue Service and the U.S. Department of Labor, the adoption of the
1995 Amendments will not cause the Plan or Trust documents to fail to be in
substantial compliance with Sections 401(a), 401(k) and 4975(e)(7) of the
Code, and the adoption of the 1995 Amendments will not cause the Plan to fail
to be in substantial compliance with the applicable portions of ERISA that did
not amend the Code. The IRS could request further amendments to the Plan, and
could condition any determination letter upon timely adoption of such
amendments. The opinion of Trenam Kemker is conditioned upon the adoption by
the Company of any IRS requested amendments within 90 days after the issuance
of a determination letter that is conditioned upon timely adoption of such
amendments. So long as the Code requirements continue to be met, the amounts
contributed by the Company on behalf of a Participant will be deductible by
the Company for Federal income tax purposes and amounts contributed by the
Company as Savings Contributions on behalf of a Participant who has executed a
salary reduction agreement will be excluded from the Participant's gross
income. Contributions made on a Participant's behalf and the income and
appreciation on Employer contributions will not be subject to income tax while
held in the Trust Fund and will not be includable in the Participant's taxable
income until distributed to him.
If an amount in a Participant's Account is withdrawn, the amount withdrawn
will be taxable to him as ordinary income (except for certain lump sum
distributions made after a member has attained age 59 1/2). Any withdrawal
prior to age 59 1/2 will also be subject to a 10% excise tax unless an
exemption from such excise tax is applicable. If a Participant rolls the
distribution over into an IRA or another eligible qualified plan, the excise
tax will not be imposed on the portion of the distribution that is rolled
over. The excise tax also will not be imposed if the Participant is over age
59 1/2 when the distribution is received, or if he is over age 55 and has
retired. Any distribution made after the death of the Participant is exempt
from the 10% excise tax regardless of
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the age of the Participant. Also, any distribution to a spouse, former spouse,
child or other dependent of the Participant pursuant to a qualified domestic
relations order will be exempt from the excise tax.
Upon distribution of a Participant's entire Account in a lump sum by reason
of his death or other termination of employment, or after his attainment of
age 59 1/2, the distribution will constitute taxable (ordinary) income to the
Participant which may qualify for special five-year forward income averaging
if the Participant has been a Participant in the Plan for five or more taxable
years. The availability of the election to be taxed under the five-year
forward income averaging provision is subject to a number of limitations
including the limitations that the election be made only once, and that it be
made only after attaining age 59 1/2. Certain Participants who attained the
age of 50 before January 1, 1986, whether or not they have reached age 59 1/2
at the time of distribution, may elect to be taxed under either ten-year
forward income averaging, as in effect immediately before to the adoption of
the Tax Reform Act of 1986, or five-year forward averaging.
If a Participant, or an alternate payee under a qualified domestic relations
order who is a spouse or former spouse of a Participant, receives a qualifying
rollover distribution from the Plan, he may transfer, on or before the 60th
day after the day on which he receives such distribution, all or part of the
distribution to: (i) another exempt employees' trust which is part of a
"qualified" plan for Federal income tax purposes, (ii) an "annuity" plan
described in Section 403(a) of the Code, or (iii) an "individual retirement
account," or an "individual retirement annuity" as such terms are described in
the Code, and thereby avoid current taxation of the portion of the
distribution so transferred. Moreover, if the spouse of a Participant receives
a qualifying rollover distribution by reason of the Participant's death, the
spouse may transfer, within the period described in the preceding sentence,
all or a portion of such distribution to an "individual retirement plan" and
thereby avoid current taxation on the portion of the distribution so
transferred. Any lump sum distribution from the Plan to a Participant, to the
surviving spouse of a Participant, or to an alternate payee under a qualified
domestic relations order who is a spouse or former spouse of a Participant,
will be a qualifying rollover distribution. A hardship withdrawal will also
constitute a qualifying rollover distribution, although any intent of the
Participant to roll the money over to an IRA may be inconsistent with the
requirements for receipt of the distribution. A minimum distribution that is
required to be paid at age 70 1/2 is not a qualifying rollover distribution,
and may not be rolled over to an IRA.
If a Participant, or an alternate payee under a qualified domestic relations
order who is a spouse or former spouse of a Participant, is to receive a
qualifying rollover distribution, he may direct the Trustee to transfer the
amount to be distributed directly to: (i) another exempt employees' trust
which is part of a "qualified" plan for Federal income tax purposes, (ii) an
"annuity" plan described in Section 403(a) of the Code, or (iii) an
"individual retirement account" or an "individual retirement annuity," as such
terms are described in the Code. If he does not elect such a transfer, the
Trustee must withhold 20% of the amount of the distribution to be applied
toward his Federal income tax obligation. In that case, the Participant or
alternate payee may still roll the entire amount of his distribution over to
another plan or an IRA, but the withholding cannot be waived and he will have
to use other funds to complete the rollover.
Similarly, if the surviving spouse of a deceased Participant, is to receive
a qualifying rollover distribution, he may direct the Trustee to transfer the
amount to be distributed directly to an "individual retirement account" or an
"individual retirement annuity," as such terms are described in the Code. In
the absence of a direct transfer election, the same 20% withholding
requirement will apply.
The Plan Administrator will notify all eligible Participants, surviving
spouses and alternate payees who are spouses or former spouses of Participants
of their rights to elect a direct transfer and the procedures for doing so.
If a distribution during a calendar year to a Participant exceeds $150,000,
it may be subject to a 15% excise tax on the portion of the distribution that
is in excess of that amount. In determining whether the $150,000 threshold has
been reached, all distributions from all "qualified" plans, certain similar
types of plans, and IRAs are aggregated. The $150,000 amount is subject to
cost of living adjustments, and also may be a different amount for certain
individuals who filed a "grandfather election" with their 1988 federal income
tax returns. The excise
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tax may be avoided for the year of distribution by rolling the distribution
over into another "qualified" plan, "annuity" plan or IRA on or before the
60th day after receipt of the distribution.
The 15% excise tax on any lump sum distribution from the Plan that is made
on account of termination of employment or termination of the Plan, or that is
made after attainment of age 59 1/2, is imposed only on the portion of the
distribution that, when aggregated with all other plan and IRA distributions
received by the Participant or spouse in a calendar year, exceeds $750,000.
However, this $750,000 threshold is only available if five-year or ten-year
forward income averaging, as explained above, is elected, and if no portion of
the distribution is rolled over into an IRA.
With respect to Federal estate tax, distributions under the Plan made as a
result of the death of a Participant or former Participant will generally be
included in determining the taxable amount of the Participant's estate.
However, amounts payable to the deceased Participant's spouse may be eligible
for the Federal estate tax marital deduction. For Federal income tax purposes,
amounts distributed to the beneficiary or estate of a Participant will be
treated in substantially the same way as if distributed to a Participant after
termination of employment.
If a Participant dies with an accumulation that exceeds a threshold
determined under Section 4980A of the Code, the Participant's estate may be
subject to a 15% excise tax on the amount of the "excess accumulation." This
excise tax cannot be avoided by a rollover to an IRA, although in certain
circumstances the Participant's surviving spouse may have the right, if the
spouse is the beneficiary of substantially all of the Participant's
"qualified" plan, "annuity" plan and IRA death benefits, to make an election
to convert the Participant's accumulation to the spouse's distribution for
purposes of this excise tax. In the event that the spouse makes such an
election and then receives a lump sum distribution, the spouse may avoid the
excise tax for the year of distribution by rolling the distribution over into
an IRA on or before the 60th day after receipt of the distribution. Spousal
rollovers to other "qualified" or "annuity" plans are not permitted.
The foregoing description of tax effects is intended to be general in
nature, and is based on interpretations of present Federal statutory and
regulatory authority which may be subject to change. Each Participant or
beneficiary should discuss specific questions with his own tax adviser or
attorney. In addition, there may be tax considerations under foreign, state
and local laws applicable to Participants.
Any material changes in the tax effects of participation in the Plan will be
described in a Supplement to this Prospectus.
APPLICABLE REQUIREMENTS OF ERISA
The Plan is a "defined contribution plan" as described in Section 3(34) of
ERISA. As such, the Plan is subject to the applicable provisions set forth in
Part 1 (Reporting and Disclosure), Part 2 (Participation and Vesting), Part 4
(Fiduciary Responsibility) and Part 5 (Administration and Enforcement) of
Subtitle B of Title I of ERISA which relate to employee pension benefit plans
which are defined contribution plans.
The Plan is not subject to Part 3 (Funding) of Subtitle B of Title I of
ERISA nor is it subject to any of the provisions of Title IV of ERISA. Those
portions of ERISA pertain to "money purchase plans" and "defined benefit
plans."
AMENDMENTS AND OTHER CHANGES AFFECTING THIS PROSPECTUS
After the date hereof, the Plan may from time to time be amended and certain
other changes in respect of the Plan, such as changes in applicable law, may
also occur. Any such amendments or changes that are material for purposes of
this Prospectus will be reflected in a Supplement to this Prospectus.
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REPORTS OF THE COMPANY
The Company's Quarterly and Annual Reports to Stockholders, proxy soliciting
material and other communications distributed to the Company's stockholders
generally will be provided to all Participants of the Plan whether or not such
Participants are stockholders of the Company. If a Participant does not for
some reason receive a copy of any of such reports, material or other
communications, he may obtain copies of the same which the Company will
provide promptly without charge upon written or oral request made to the
Company's Corporate Director--Human Resources in the manner described under
"Incorporation of Certain Documents by Reference."
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission are incorporated in this
Prospectus by reference:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
January 31, 1995;
(b) The Company's Quarterly Reports on Form 10-Q for the fiscal quarters
ended April 30, 1995 and July 31, 1995, respectively;
(c) The Company's Current Report on Form 8-K dated June 1, 1995, and the
amendment thereto on Form 8-K/A dated August 11, 1995;
(d) The description of the Common Stock contained in the Company's Form
8-A Registration Statement declared effective by the Commission on October
25, 1983, and any amendments or reports filed for the purpose of updating
such description;
(e) The description of the Company's Common Stock Purchase Rights
contained in the Company's Form 8-A Registration Statement declared
effective by the Commission on August 12, 1994, and any amendments or
reports filed for the purpose of updating such description;
(f) The Plan's Annual Report on Form 11-K for the year ended December 31,
1994; and
(g) All documents subsequently filed by the Company or the Plan pursuant
to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the
filing of a post-effective amendment which indicates that all securities
offered hereby have been sold or which deregisters all securities offered
hereby then remaining unsold, shall be deemed to be incorporated herein by
reference and to be a part hereof from the date of filing of such
documents.
Copies of the documents incorporated by reference herein, except for the
exhibits to such documents (unless such exhibits are specifically incorporated
by reference into the documents which this Prospectus incorporates), and
copies of any other documents to which a Participant is entitled as described
in this Prospectus, are available to any Participant receiving a copy of this
Prospectus upon written or oral request. Such request should be directed to
Kathryn Turner, Corporate Director--Human Resources, Circus Circus
Enterprises, Inc., 2880 Las Vegas Boulevard South, Las Vegas, Nevada 89109
(702-734-0410). See "Additional Information."
LEGAL OPINIONS
The validity of the participation interests in the Plan has been passed upon
by the firm of Schreck, Jones, Bernhard, Woloson & Godfrey, Chartered, Las
Vegas, Nevada. Certain legal matters relating to compliance of the Plan with
the requirements of ERISA have been passed upon by the firm of Trenam, Kemker,
Scharf, Barkin, Frye, O'Neill & Mullis, P.A., Tampa, Florida.
EXPERTS
The consolidated financial statements incorporated by reference in the
Company's Annual Report on Form 10-K for the fiscal year ended January 31,
1995, the Plan's financial statements included in Amendment No. 1
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on Form 11-K/A to its Annual Report on Form 11-K for the fiscal year ended
December 31, 1994, and the combined financial statements of Gold Strike
Resorts for the years ended December 31, 1994 and 1993 incorporated by
reference in Amendment No. 1 on Form 8-K/A to the Company's Current Report on
Form 8-K dated June 1, 1995 incorporated by reference in this Prospectus and
elsewhere in the Registration Statement, to the extent and for the periods
indicated in their reports, have been audited by Arthur Andersen LLP,
independent public accountants, and are incorporated herein by reference in
reliance upon the authority of said firm as experts in giving said reports.
Future consolidated financial statements of the Company and financial
statements of the Plan and the reports thereon of Arthur Andersen LLP also
will be incorporated by reference herein in reliance upon the authority of
that firm as experts in giving those reports to the extent that firm has
audited those consolidated financial statements and consented to the use of
their reports thereon.
The financial statements of Elgin Riverboat Resort-Riverboat Casino for the
years ended December 31, 1994 and 1993 incorporated by reference in Amendment
No. 1 on Form 8-K/A to the Company's Current Report on Form 8-K dated June 1,
1995 incorporated by reference in this Prospectus and elsewhere in the
Registration Statement, to the extent and for the periods indicated in their
reports, have been audited by Coopers & Lybrand LLP, independent public
accountants, and are incorporated herein by reference in reliance upon the
authority of said firm as experts in giving said report.
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APPENDIX A
INFORMATION CONCERNING CREDIT REQUIREMENTS APPLICABLE TO INVESTMENTS OF THE
MERRILL LYNCH RETIREMENT PRESERVATION TRUST
THE FOLLOWING DESCRIPTION OF CREDIT REQUIREMENTS IS A SUMMARY OF INFORMATION
PROVIDED TO THE COMPANY BY MERRILL LYNCH TRUST COMPANY.
GUARANTEED INVESTMENTS
The Merrill Lynch Retirement Preservation Trust invests in GICs (i.e.,
contracts issued by insurance companies which provide for a return of
principal plus interest, either periodically or at maturity), BICs (i.e.,
contracts issued by domestic and foreign banks which provide for a return of
principal plus interest, either periodically or at maturity) or similar
investments which pay a fixed or variable rate of return on an agreed schedule
and are benefit responsive (collectively "Guaranteed Investments"). Benefit
responsiveness may be provided by the issuer of the Guaranteed Investment or a
third party. A maximum of 80% of the Trust will be invested in Guaranteed
Investments.
The types of Guaranteed Investments and the applicable investment standards
for the Merrill Lynch Retirement Preservation Trust are as follows:
GICs. Guaranteed Investment Contracts (also referred to as "Guaranteed
Interest Contracts," "Guaranteed Insurance Contracts" and "Funding
Agreements") may be participating or non-participating. They may have fixed
rates or variable rates which are indexed to some other instrument. They
may have fixed maturity dates (single or installment) or variable maturity
dates. They may be supported by United States Government Securities or
other high quality assets. Some variable rate contracts may have no
specific nominal maturity date; such contracts must contain a provision
which allows either party to terminate the contract on a reset date upon
reasonable notice. The minimum credit requirement for an issuer of a GIC is
either an Aa3 claims paying rating from Moody's Investors Service or an AA-
claims paying rating from Standard and Poors. Additionally a minimum of $1
billion in admitted assets will be required of an insurance company at the
time of purchase. Currently, approximately 34 insurers meet the above
criteria.
BICs. Bank Investment Contracts (also referred to as "Deposit
Agreements") may be participating or non-participating. They may have fixed
rates or variable rates which are indexed to some other instrument. They
may have fixed maturity dates (single or installment) or variable maturity
dates. They may be supported by United States Government Securities or
other high quality assets. Some variable rate contracts may have no
specific nominal maturity date; such contracts must contain a provision
which allows either party to terminate the contract on a reset date upon
reasonable notice. The minimum credit requirement for a bank which issues
BICs purchased by the Merrill Lynch Retirement Preservation Trust is an Aa3
long term deposit rating from Moody's Investors Service for purchases
exceeding one year. A short term deposit rating of P-2 or higher is
required for purchases which do not exceed one year. Additionally, a
minimum of $1 billion in assets will be required of a bank at the time of
purchase. Currently, approximately 16 banks meet the above criteria.
MONEY MARKET INSTRUMENTS
A minimum of 20% of the assets of the Merrill Lynch Retirement Preservation
Trust must be invested in the below-described money market instruments. All
money market instruments must meet both the Standard and Poors A-1 and the
Moody's P-1 short-term investment ratings. The types of investments and the
applicable investment standards are as follows:
United States Government Securities. Marketable securities issued or
guaranteed as to principal and interest by the United States Government and
supported by the full faith and credit of the United States with no more
than two years remaining to maturity at the date of settlement. The
aggregate value of these securities may constitute up to 100% of the money
market portion of the Merrill Lynch Retirement Preservation Trust's
portfolio.
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United States Government Agency Securities. Debt securities issued by
United States Government sponsored enterprises, Federal agencies and
certain international institutions which are not direct obligations of the
United States but involve United States Government sponsorship or
guarantees by United States Government agencies or enterprises. The United
States Government is not obligated to provide financial support to these
instrumentalities. These agencies include, but are not limited to, Federal
Home Loan Bank, Federal Home Loan Mortgage Corporation, Federal National
Mortgage Association, Student Loan Marketing Association, Federal Farm
Credit Bank, and the International Bank for Reconstruction and Development.
The aggregate value of these securities may constitute up to 100% of the
money market portion of the Merrill Lynch Retirement Preservation Trust's
portfolio. Up to 25% of the aggregate value of such portfolio may be
invested in the obligations of any single agency or instrumentality.
Bank Money Instruments. Obligations of commercial banks, savings banks or
savings and loan associations such as certificates of deposit, including
variable rate certificates of deposit, time deposits, deposit notes and
bankers acceptances. The savings banks and savings and loan associations
must be organized and operating in the United States. The obligations of
commercial banks may be issued by United States banks, foreign branches or
subsidiaries of United States banks ("Eurodollar" obligations), United
States branches or subsidiaries of foreign banks ("Yankee" obligations) or
Eurodollar obligations of foreign banks. The aggregate value of these
securities may constitute up to 75% of the money market portfolio of the
Merrill Lynch Retirement Preservation Trust with no more than one year
remaining to maturity at the date of settlement. The Merrill Lynch
Retirement Preservation Trust may purchase up to 10% of the value of its
total money market assets (taken at market value) with each issuer.
Short-Term Corporate Debt Instruments. Commercial paper (including
variable amount master demand notes) which refers to short-term, unsecured
promissory notes issued by a corporation to finance short-term credit needs
and non-convertible corporate debt securities (e.g., bonds and debentures)
with no more than one year remaining to maturity at the date of settlement.
The aggregate value of these securities may constitute up to 80% of the
Merrill Lynch Retirement Preservation Trust's money market portfolio. The
Merrill Lynch Retirement Preservation Trust may purchase up to 5% of the
value of its total money market assets (taken at market value) with an
issuer.
Repurchase Agreements or Purchase and Sale Contracts. Under such
agreements or contracts, the bank or primary dealer agrees, upon entering
into the contract, to repurchase the security at a mutually agreed upon
time and price, thereby determining the yield during the term of the
agreement. This results in a fixed rate of return insulated from market
fluctuations during such period. Repurchase agreements and purchase and
sale contracts may be entered into only with a member bank of the Federal
Reserve System or a primary dealer in United States Government securities.
The Merrill Lynch Retirement Preservation Trust may purchase up to 10% of
the money market portion of its portfolio with any one entity.
Reverse Repurchase Agreements. The sale of securities held by the Merrill
Lynch Retirement Preservation Trust, with an agreement to repurchase the
securities at an agreed upon price, date and interest payment. During the
time a reverse purchase agreement is outstanding, the Merrill Lynch
Retirement Preservation Trust will maintain a segregated custodial account
containing United States Government or other appropriate high-grade debt
securities having a value equal to the repurchase price. The Merrill Lynch
Retirement Preservation Trust may purchase up to 10% of the money market
portion of its portfolio with any one entity.
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APPENDIX B
INVESTMENT OBJECTIVE AND POLICIES OF THE S&P
500 INDEX PORTFOLIO OF SEI INDEX FUNDS
THE FOLLOWING DESCRIPTION OF THE INVESTMENT OBJECTIVE AND POLICIES AND
INVESTMENT LIMITATIONS OF THE PORTFOLIO IS BASED ON INFORMATION SET FORTH IN
THE PORTFOLIO'S 1995 PROSPECTUS AND IN THE STATEMENT OF ADDITIONAL INFORMATION
REFERRED TO ON THE COVER PAGE OF THE PORTFOLIO'S 1995 PROSPECTUS (THE
"PORTFOLIO'S STATEMENT"), AND SUCH DESCRIPTION IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH PROSPECTUS AND STATEMENT.
Investment Objectives and Policies. The Portfolio seeks to provide
investment results that correspond to the aggregate price and dividend
performance of the securities in the Standard & Poor's 500 Composite Stock
Price Index (the "Index") which is comprised of 500 selected common stocks,
most of which are listed on the New York Stock Exchange. There can be no
assurance that the Portfolio will achieve its investment objective.
The Portfolio's ability to duplicate the performance of the Index will
depend to some extent on the size and timing of cash flows into and out of the
Portfolio as well as the extent of the Portfolio's expenses. Adjustments made
to accommodate cash flows will track the Index to the maximum extent possible
and may result in brokerage expenses for the Portfolio. Over time, the
correlation between the performance of the Portfolio and the Index is expected
to be over 0.95. A correlation of 1.00 would indicate perfect correlation,
which would be achieved when the net asset value of the Portfolio, including
the value of its dividend and capital gains distributions, increased or
decreased in exact proportion to changes in the Index. An investment in shares
of the Portfolio involves risks similar to those of investing in a portfolio
consisting of the common stocks of some or all of the companies included in
the Index.
The Portfolio will normally be invested in all of the stocks which comprise
the Index, except when changes are made to the Index itself. The Portfolio's
policy is to be fully invested in common stocks, and it is expected that cash
reserve items would normally be less than 10% of net assets.
The Portfolio may lend up to 20% of its assets to qualified institutions for
the purpose of realizing additional income; however the Portfolio has no
present intention to lend its securities. The Portfolio may invest in illiquid
securities, however, not more than 10% of the Portfolio's total assets will be
invested in such instruments. The Portfolio may enter into forward
commitments, or purchase securities on a when-issued or delayed delivery
basis.
The weightings of stocks in the Index are based on each stock's relative
total market value (i.e., market price per share times the number of shares
outstanding). Because of this weighting, approximately 50% of the Index is
currently composed of the 50 largest companies in the Index, and the Index
currently represents over 65% of the market value of all U.S. common stocks
listed on the New York Stock Exchange.
The Portfolio is not sponsored, endorsed, sold or promoted by Standard &
Poor's Corporation ("S&P"). S&P makes no representation or warranty, implied
or express, to the purchasers of the Portfolio or any member of the public
regarding the advisability of investing in index funds or the Portfolio or the
ability of the Index to track general stock market performance.
S&P does not guarantee the accuracy and/or the completeness of the Index or
any data included therein. S&P makes no warranty, express or implied, as to
the results to be obtained by the Portfolio, owners of the Portfolio, or any
data included therein. S&P makes no express or implied warranties and
expressly disclaims all such warranties of merchantability or fitness for a
particular purpose for use with respect to the Index or any data included
therein. S&P's only relationship to the Portfolio is the licensing of the S&P
marks and the Index, which is determined, composed and calculated by S&P
without regard to the Portfolio.
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The Portfolio may invest cash reserves in securities issued by the United
States Government, its agencies or instrumentalities, bankers' acceptances,
commercial paper rated at least A-1 by S&P and/or Prime-1 by Moody's Investors
Service, Inc., certificates of deposit, and repurchase agreements involving
such obligations. Such investments will not be used for defensive purposes.
The Portfolio may enter into stock index futures contracts, provided that
the value of these contracts does not exceed 20% of the Portfolio's total
assets. The Portfolio may purchase futures contracts solely to maintain
adequate liquidity to meet its redemption demands while maximizing the level
of the Portfolio's assets which are tracking the performance of the Index. In
addition, the Portfolio may only purchase those stock index futures
contracts--such as futures contracts on the Index--that are likely to closely
duplicate the performance of the Index. The Portfolio also can sell such
futures contracts in order to close out a previously established position. The
Portfolio will not enter into any stock index futures contract for the purpose
of speculation, and will only enter into contracts traded on national
securities exchanges with standardized maturity dates. The Portfolio will not
purchase or sell futures contracts if immediately thereafter the sum of the
amount of margin deposits on its existing futures positions would exceed 5% of
its total assets.
The Portfolio may invest in the stock of foreign issuers which is traded in
the United States. The Portfolio ordinarily will purchase securities of
foreign issuers in U.S. markets. However, the Portfolio may purchase
securities of foreign issuers directly in foreign markets if the Portfolio
Adviser determines that it is in the best interest of the Portfolio to do so.
Investment Limitations. The following investment limitations are fundamental
policies of the Portfolio and cannot be changed with respect to the Portfolio
without the consent of the holders of a majority of the Portfolio's
outstanding shares.
The Portfolio may not:
1. Purchase securities of any issuer (except securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities) if,
as a result, more than 5% of the total assets of the Portfolio would be
invested in the securities of such issuer. This restriction applies to 75%
of the Portfolio's total assets.
2. Purchase any securities which would cause more than 25% of the total
assets of the Portfolio to be invested in the securities of one or more
issuers conducting their principal business activities in the same
industry, provided that this limitation does not apply to investments in
obligations issued or guaranteed by the United States Government or its
agencies and instrumentalities.
3. Borrow money except for temporary or emergency purposes and then only
in an amount not exceeding 10% of the value of the total assets of the
Portfolio. This borrowing provision is included solely to facilitate the
orderly sale of portfolio securities to accommodate heavy redemption
requests if they should occur and is not for investment purposes. All
borrowings in the Portfolio will be repaid before making additional
investments for the Portfolio and any interest paid on such borrowings will
reduce the Portfolio's income.
4. Make loans, except that the Portfolio may enter into repurchase
agreements, provided that repurchase agreements and time deposits maturing
in more than seven days, and other illiquid securities, including
securities which are not readily marketable or are restricted, are not to
exceed, in the aggregate, 10% of the Portfolio's total assets, may engage
in securities lending as described in the Portfolio's 1995 Prospectus, and
may purchase or hold debt instruments in accordance with its investment
objectives and policies.
5. Pledge, mortgage or hypothecate the assets of the Portfolio except to
secure temporary borrowings, as described in the Portfolio's 1995
Prospectus, in aggregate amounts not to exceed 10% of the net assets of the
Portfolio taken at current value at the time of the incurrence of such
loan, and in connection with stock index futures trading as provided in the
Portfolio's 1995 Prospectus and the Portfolio's Statement.
6. Invest in companies for the purpose of exercising control.
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7. Purchase or sell real estate, real estate limited partnership
interests, commodities or commodities contracts. However, subject to its
permitted investments, the Portfolio may purchase obligations issued by
companies which invest in real estate, commodities or commodities
contracts.
8. Make short sales of securities, maintain a short position or purchase
securities on margin, except that SEI Index Funds may obtain short-term
credits as necessary for the clearance of security transactions.
9. Act as an underwriter of securities of other issuers except as it may
be deemed an underwriter in selling a portfolio security.
10. Purchase securities of other investment companies except as permitted
by the Investment Company Act of 1940 and the rules and regulations
thereunder and may only purchase securities of money market funds.
11. Issue senior securities (as defined in the Investment Company Act of
1940) except in connection with permitted borrowings as described in the
Portfolio's 1995 Prospectus and the Portfolio's Statement or as permitted
by rule, regulation or order of the Securities and Exchange Commission.
12. Purchase or retain securities of an issuer if, to the knowledge of
SEI Index Funds, an officer, trustee, partner or director of SEI Index
Funds or any investment adviser of SEI Index Funds owns beneficially more
than 1/2 of 1% of the shares or securities of such issuer and all such
officers, trustees, partners and directors owning more than 1/2 of 1% of
such shares or securities together own more than 5% of such shares or
securities.
13. Purchase securities of any company which has (with predecessors) a
record of less than three years continuing operations if, as a result, more
than 5% of the total assets of the Portfolio (taken at current value) would
be invested in such securities.
14. Purchase warrants, puts, calls, straddles, spreads or combinations
thereof.
15. Invest in interests in oil, gas or other mineral exploration or
development programs.
16. Purchase restricted securities (securities which must be registered
under the Securities Act of 1933 before they may be offered or sold to the
public) or other illiquid securities except as described in the Portfolio's
1995 Prospectus and the Portfolio's Statement.
The foregoing percentages will apply at the time of the purchase of a
security and shall not be considered violated unless an excess or deficiency
occurs or exists immediately after and as a result of a purchase of such
security.
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APPENDIX C
INVESTMENT OBJECTIVE AND INVESTMENT POLICIES OF FEDERATED U.S. GOVERNMENT
SECURITIES FUND: 2-5 YEARS
THE FOLLOWING DESCRIPTION OF THE INVESTMENT OBJECTIVE AND INVESTMENT
POLICIES AND LIMITATIONS OF THE U.S. FUND IS BASED ON INFORMATION SET FORTH IN
THE U.S. FUND 1995 PROSPECTUS AND THE COMBINED STATEMENT OF ADDITIONAL
INFORMATION REFERRED TO ON THE COVER PAGE OF THE U.S. FUND 1995 PROSPECTUS
(THE "U.S. FUND STATEMENT"), AND SUCH DESCRIPTION IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH PROSPECTUS AND STATEMENT.
INVESTMENT OBJECTIVE
The investment objective of the Federated U.S. Government Securities Fund:
2-5 Years (the "U.S. Fund") is current income. The U.S. Fund pursues this
investment objective by investing in U.S. government securities with remaining
maturities of five years or less. While there is no assurance that the U.S.
Fund will achieve its investment objective, it endeavors to do so by following
the investment policies described in the U.S. Fund 1995 Prospectus. The
investment objective and the policies and limitations described below cannot
be changed without approval of the U.S. Fund's shareholders.
INVESTMENT POLICIES
Acceptable Investments. The U.S. government securities in which the U.S.
Fund invests are either issued or guaranteed by the U.S. government, its
agencies, or instrumentalities. The prices of fixed income securities
fluctuate inversely to the direction of interest rates. The securities in
which the U.S. Fund may invest are limited to:
. direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes, and bonds; and
. notes, bonds, and discount notes of U.S. government agencies or
instrumentalities, such as the: Farm Credit System, including the
National Bank for Cooperatives, Farm Credit Banks, and Banks for
Cooperatives; Farmers Home Administration; Federal Home Loan Banks;
Federal Home Loan Mortgage Corporation; Federal National Mortgage
Association; Government National Mortgage Association; and Student Loan
Marketing Association.
Some obligations issued or guaranteed by agencies or instrumentalities of
the U.S. government, such as Government National Mortgage Association
participation certificates, are backed by the full faith and credit of the
U.S. Treasury. No assurances can be given that the U.S. government will
provide financial support to other agencies or instrumentalities, since it is
not obligated to do so. These instrumentalities are supported by:
. the issuer's right to borrow an amount limited to a specific line of
credit from the U.S. Treasury;
. discretionary authority of the U.S. government to purchase certain
obligations of an agency or instrumentality; or
. the credit of the agency or instrumentality.
Repurchase Agreements. Repurchase agreements are arrangements in which
banks, broker/dealers, and other recognized financial institutions sell U.S.
government securities or other securities to the U.S. Fund and agree at the
time of sale to repurchase them at a mutually agreed upon time and price. To
the extent that the original seller does not repurchase the securities from
the U.S. Fund, the U.S. Fund could receive less than the repurchase price on
any sale of such securities.
As a matter of investment practice, which can be changed without shareholder
approval, the U.S. Fund will not invest more than 10% of its total assets in
securities which are illiquid, including repurchase agreements providing for
settlement in more than seven days after notice.
When-Issued and Delayed Delivery Transactions. The U.S. Fund may purchase
U.S. government securities on a when-issued or delayed delivery basis. These
transactions are arrangements in which the U.S.
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Fund purchases securities with payment and delivery scheduled for a future
time. The seller's failure to complete these transactions may cause the U.S.
Fund to miss a price or yield considered to be advantageous. Settlement dates
may be a month or more after entering into these transactions, and the market
values of the securities purchase may vary from the purchase prices.
Accordingly, the U.S. Fund may pay more or less than the market value of the
securities on the settlement date.
The U.S. Fund may dispose of a commitment prior to settlement if the U.S.
Fund's adviser deems it appropriate to do so. In addition, the U.S. Fund may
enter into transactions to sell its purchase commitments to third parties at
current market values and simultaneously acquire other commitments to purchase
similar securities at later dates. The U.S. Fund may realize short-term
profits or losses upon the sale of such commitments.
These transactions are made to secure what is considered to be an
advantageous price or yield for the U.S. Fund. No fees or other expenses,
other than normal transaction costs, are incurred. However, liquid assets of
the U.S. Fund sufficient to make payment for the securities to be purchased
are segregated on the U.S. Fund's records at the trade date. As a matter of
operating policy, the U.S. Fund does not intend to engage in when-issued and
delayed delivery transactions to an extent that would cause the segregation of
more than 20% of the total value of its assets. These assets are marked to
market daily and are maintained until the transaction is settled.
Portfolio Turnover. The U.S. Fund conducts portfolio transactions to
accomplish its investment objective as interest rates change, to invest new
money obtained from selling its shares, and to meet redemption requests. The
U.S. Fund may dispose of portfolio securities at any time if it appears that
selling the securities will help the U.S. Fund achieve its investment
objective. According to the U.S. Fund Statement, the U.S. Fund will not
attempt to set or meet a portfolio turnover rate since any turnover would be
incidental to transactions undertaken in an attempt to achieve the U.S. Fund's
investment objective. During the fiscal years ended January 31, 1995 and 1994,
the U.S. Fund's portfolio turnover rates were 163% and 131%, respectively.
INVESTMENT LIMITATIONS
The U.S. Fund will not borrow money or pledge securities except, under
certain circumstances, the U.S. Fund may borrow up to one-third of the value
of its total assets and pledge up to 10% of the value of those assets to
secure such borrowings.
The U.S. Fund Statement includes the following investment limitations which,
according to the U.S. Fund Statement, will not be changed without approval of
the U.S. Fund's shareholders.
Selling Short and Buying on Margin. The U.S. Fund will not sell any
securities short or purchase any securities on margin but may obtain such
short-term credits as may be necessary for clearance of purchases and sales of
portfolio securities.
Borrowing Money. The U.S. Fund will not borrow money except as a temporary
measure for extraordinary or emergency purposes and then only in amounts not
in excess of 5% of the value of its total assets or in an amount up to one-
third of the value of its total assets, including the amount borrowed, in
order to meet redemption requests without immediately selling portfolio
securities. This borrowing provision is not for investment leverage but solely
to facilitate management of the portfolio by enabling the U.S. Fund to meet
redemption requests when the liquidation of portfolio securities would be
inconvenient or disadvantageous. However, such use will not assure that
portfolio securities will not be liquidated at a disadvantageous time.
Interest paid on borrowed funds will not be available for investment. While
borrowings are outstanding, no portfolio securities may be purchased by the
U.S. Fund.
Pledging Assets. The U.S. Fund will not mortgage, pledge, or hypothecate any
assets except to secure permitted borrowings. In those cases, it may mortgage,
pledge, or hypothecate assets having a market value not exceeding 10% of the
value of total assets at the time of the borrowing.
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Lending Cash or Securities. The U.S. Fund will not lend any of its assets,
except that it may purchase or hold U.S. government securities, including
repurchase agreements, permitted by its investment objective and policies.
Issuing Senior Securities. The U.S. Fund will not issue senior securities,
except as permitted by its investment objective and policies.
Except with respect to borrowed money, if a percentage limitation is adhered
to at the time of investment, a later increase or decrease in percentage
resulting from any change in value or net assets will not result in a
violation of such restriction.
According to the U.S. Fund Statement, the U.S. Fund did not borrow money or
pledge securities in excess of 5% of the value of its total assets during the
last fiscal year and has no present intent to do so in the coming fiscal year.
As a matter of operating policy, the U.S. Fund will not, according to the
U.S. Fund Statement, purchase any securities while borrowings in excess of 5%
of its total assets are outstanding.
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APPENDIX D
INVESTMENT OBJECTIVE AND POLICIES OF THE MERRILL LYNCH CAPITAL FUND, INC.
THE FOLLOWING DESCRIPTION OF THE INVESTMENT OBJECTIVE AND POLICIES OF THE
CAPITAL FUND IS BASED ON INFORMATION SET FORTH IN THE CAPITAL FUND 1995
PROSPECTUS AND IN THE STATEMENT OF ADDITIONAL INFORMATION REFERRED TO ON THE
COVER PAGE OF THE CAPITAL FUND 1995 PROSPECTUS (THE "CAPITAL FUND STATEMENT"),
AND SUCH DESCRIPTION IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
PROSPECTUS AND STATEMENT.
The Capital Fund's investment objective is to achieve the highest total
investment return consistent with prudent risk. To do this, management of the
Capital Fund shifts the emphasis among equity, debt (including money market)
and convertible securities. This flexible, total investment return approach is
called a "fully managed" investment policy. It distinguishes the Capital Fund
from other investment companies which often seek either capital growth or
current income. Of course, there is no assurance that the Capital Fund will
attain this objective.
The Capital Fund's investment philosophy is based on the belief that, as in
the past, the structure of the United States economy and other economies and
their securities markets will undergo continuous change. Thus, the fully
managed approach puts maximum emphasis on flexibility.
The two principal features of the Capital Fund's management approach are
flexibility and concentration in "quality" companies.
Flexibility. The Capital Fund's fully managed investment approach makes use
of equity, debt (including money market) and convertible securities. Freedom
to move among these different types of securities as prevailing trends change
is the keystone of the Capital Fund's investment policy.
Concentration in "Quality" Companies. The earnings of quality companies
generally tend to grow consistently. Their internal strengths--good financial
resources, a strong balance sheet, a satisfactory rate of return on capital, a
good industry position and superior management skills--give the Capital Fund
confidence that these companies consistently will achieve at high levels. The
Capital Fund considers quality companies to be those which conform most
closely to these characteristics. Most of the Capital Fund's equity portfolio
is in the common stocks of these quality companies.
Sometimes, to reduce risk and to achieve the highest total investment
return, the Capital Fund may invest in other securities.
. non-convertible, long-term debt securities, including "deep discount"
corporate debt securities, mortgage-backed securities issued or
guaranteed by governmental entities or private issuers, and debt
securities issued or guaranteed by governments, their agencies and
instrumentalities. Such debt securities generally will be "investment
grade". However, the Fund has established no rating criteria for the debt
securities in which it may invest, and the Fund may invest in securities
which are rated below "investment grade".
. convertible securities--fixed income issues which give the owner the
option of a later exchange for common stock.
. cash or money-market securities to produce interest income during periods
of defensive investment.
Merrill Lynch Asset Management, L.P. (the "Investment Adviser"), expects
that over longer periods a larger portion of the Capital Fund's portfolio will
consist of equity securities. However, the flexible fully managed investment
approach enables the Capital Fund to switch its emphasis to debt and
convertible securities if, in the opinion of the Investment Adviser,
prevailing market or economic conditions warrant. The Investment Adviser will
determine the emphasis among equity and debt securities, including convertible
securities, based on
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its evaluation as to the types of securities presently providing the
opportunity for the highest total investment return consistent with prudent
risk. On March 31, 1995, approximately 60% of the Capital Fund's portfolio was
invested in equity securities.
The Capital Fund may invest in the securities of smaller or emerging growth
companies. The securities of smaller or emerging growth companies may be
subject to more abrupt or erratic market movements than larger, more
established companies or the market average in general. These companies may
have limited product lines, markets or financial resources, or they may be
dependent on a limited management group.
The Capital Fund may purchase securities that are not registered
("restricted securities") under the Securities Act of 1933, as amended (the
"Securities Act"), but can be offered and sold to "qualified institutional
buyers" under Rule 144A under the Securities Act. However, the Capital Fund
will not invest more than 15% of its total assets in illiquid investments,
which includes securities for which there is no readily available market,
securities subject to contractual restrictions on resale, certain investments
in asset-backed and receivable-backed securities and restricted securities,
unless the Capital Fund's Board of Directors continuously determines, based on
the trading markets for the specific restricted security, that it is liquid.
The Board of Directors may adopt guidelines and delegate to the Investment
Adviser the daily function of determining and monitoring liquidity of
restricted securities. The Capital Fund's Board of Directors, however, will
retain sufficient oversight and be ultimately responsible for the
determinations.
The Capital Fund's Board of Directors carefully monitors the Capital Fund's
investments in these securities purchased pursuant to Rule 144A, focusing on
such factors, among others, as valuation, liquidity and availability of
information. These investments in securities purchased pursuant to Rule 144A
could have the effect of increasing the level of illiquidity in the Capital
Fund to the extent that qualified institutional buyers become for a time
uninterested in purchasing these restricted securities.
The Capital Fund may invest up to 25% of its total assets in securities of
foreign issuers. Investments in securities of foreign issuers involve certain
risks, including fluctuations in foreign exchange rates, future political and
economic developments, and the possible imposition of exchange controls or
other foreign governmental laws or restrictions. In addition, foreign
companies are not subject to accounting, auditing and financial reporting
standards and requirements comparable to those of United States companies. The
foreign markets also have different clearance and settlement procedures, and
in certain markets there have been times when settlements have been unable to
keep pace with the volume of securities transactions, making it difficult to
conduct such transactions. Delays in settlement could result in temporary
periods when assets of the Capital Fund are uninvested and no return is earned
thereon. The inability of the Capital Fund to make intended security purchases
due to settlement problems could cause the Capital Fund to miss attractive
investment opportunities. Inability to dispose of a portfolio security due to
settlement problems could result either in losses to the Capital Fund due to
subsequent declines in value of such portfolio security or, if the Capital
Fund has entered into a contract to sell the security, could result in
possible liability to the purchaser. To the extent such investments are
subject to withholding or other taxes or to regulations relating to
repatriation of assets, the Capital Fund's distributable income will be
reduced. The prices of securities in different countries may be subject to
different economic, financial, political and social factors.
Portfolio Turnover. The rate of portfolio turnover is not a limiting factor
and, given the Capital Fund's investment policies, it is anticipated that
there may be periods when high portfolio turnover will exist. The use of
covered call options at times when the underlying securities are appreciating
in value may result in higher portfolio turnover. The Capital Fund pays
brokerage commissions in connection with writing call options and effecting
closing purchase transactions, as well as in connection with purchases and
sales of portfolio securities. Although the Capital Fund anticipates that its
annual portfolio turnover rates should not exceed 100%, the turnover rate may
vary greatly from year to year or during periods within a year. A high rate of
portfolio turnover results in correspondingly greater brokerage commission
expenses. The portfolio turnover rate is calculated by dividing the lesser of
the Capital Fund's annual sales or purchases of portfolio securities
(exclusive of purchases or sales of all securities with maturities at the time
of acquisition of one year or less) by the monthly average
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value of the securities in the portfolio during the year. The portfolio
turnover rate for each of the years ended March 31, 1993, 1994 and 1995 were
55%, 86% and 89%, respectively.
Investment Restrictions. The Capital Fund has adopted a number of
fundamental and non-fundamental investment policies and restrictions. The
fundamental policies and restrictions set forth below may not be changed
without the approval of the holders of a majority of the Capital Fund's
outstanding voting shares, which for this purpose means the lesser of (a) 67%
of the shares represented at a meeting where more than 50% of the outstanding
shares are represented or (b) more than 50% of the outstanding shares. Unless
otherwise provided, all references to the assets of the Capital Fund below are
in terms of current market value. The Capital Fund may not:
1. Make any investment inconsistent with the Capital Fund's
classification as a diversified company under the Investment Company Act of
1940, as amended (the "Investment Company Act").
2. Invest more than 25% of its total assets, taken at market value, in
the securities of issuers in any particular industry (excluding the U.S.
Government and its agencies and instrumentalities).
3. Make investments for the purpose of exercising control or management.
4. Purchase or sell real estate, except that, to the extent permitted by
applicable law, the Capital Fund may invest in securities directly or
indirectly secured by real estate or interests therein or issued by
companies which invest in real estate or interests therein.
5. Make loans to other persons, except that the acquisition of bonds,
debentures or other corporate debt securities and investment in government
obligations, commercial paper, pass-through instruments, certificates of
deposit, bankers acceptances, repurchase agreements or any similar
instruments shall not be deemed to be the making of a loan, and except
further that the Capital Fund may lend its portfolio securities, provided
that the lending of portfolio securities may be made only in accordance
with applicable law and the guidelines set forth in the Capital Fund 1995
Prospectus and the Capital Fund Statement, as they may be amended from time
to time.
6. Issue senior securities to the extent such issuance would violate
applicable law.
7. Borrow money, except that (i) the Capital Fund may borrow from banks
(as defined in the Investment Company Act) in amounts up to 33 1/3% of its
total assets (including the amount borrowed), (ii) the Capital Fund may
borrow up to an additional 5% of its total assets for temporary purposes,
(iii) the Capital Fund may obtain such short-term credit as may be
necessary for the clearance of purchases and sales of portfolio securities
and (iv) the Capital Fund may purchase securities on margin to the extent
permitted by applicable law. The Capital Fund may not pledge its assets
other than to secure such borrowings or, to the extent permitted by the
Capital Fund's investment policies as set forth in the Capital Fund 1995
Prospectus and the Capital Fund Statement, as they may be amended from time
to time, in connection with hedging transactions, short sales, when-issued
and forward commitment transactions and similar investment strategies.
8. Underwrite securities of other issuers except insofar as the Capital
Fund technically may be deemed an underwriter under the Securities Act in
selling portfolio securities.
9. Purchase or sell commodities or contracts on commodities, except to
the extent that the Capital Fund may do so in accordance with applicable
law and the Capital Fund 1995 Prospectus and the Capital Fund Statement, as
they may be amended from time to time, and without registering as a
commodity pool operator under the Commodity Exchange Act.
Under the non-fundamental investment restrictions, the Capital Fund may not:
a. Purchase securities of other investment companies, except to the
extent such purchases are permitted by applicable law.
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b. Make short sales of securities or maintain a short position, except to
the extent permitted by applicable law. The Capital Fund currently does not
intend to engage in short sales, except short sales "against the box".
c. Invest in securities which cannot be readily resold because of legal
or contractual restrictions or which cannot otherwise be marketed, redeemed
or put to the issuer or a third party, if at the time of acquisition more
than 15% of its total assets would be invested in such securities. This
restriction shall not apply to securities which mature within seven days or
securities which the Capital Fund's Board of Directors has otherwise
determined to be liquid pursuant to applicable law. Notwithstanding the 15%
limitation herein, to the extent the laws of any state in which the Capital
Fund's shares are registered or qualified for sale require a lower
limitation, the Capital Fund will observe such limitation. As of the date
hereof, therefore, the Capital Fund will not invest more than 10% of its
total assets in securities which are subject to this investment restriction
(c). Securities purchased in accordance with Rule 144A under the Securities
Act (each, a "Rule 144A security") and determined to be liquid by the
Capital Fund's Board of Directors are not subject to the limitations set
forth in this investment restriction (c). Notwithstanding the fact that the
Capital Fund's Board of Directors may determine that a Rule 144A security
is liquid and not subject to limitations set forth in this investment
restriction (c), the State of Ohio does not recognize Rule 144A securities
as securities that are free of restrictions as to resale. To the extent
required by Ohio law, the Capital Fund will not invest more than 50% of its
total assets in securities of issuers that are restricted as to
disposition, including Rule 144A securities, or in securities of issuers
described in (e) below.
d. Invest in warrants if, at the time of acquisition, its investments in
warrants, valued at the lower of cost or market value, would exceed 5% of
the Capital Fund's net assets; included within such limitation, but not to
exceed 2% of the Capital Fund's net assets, are warrants which are not
listed on the New York Stock Exchange or American Stock Exchange or a major
foreign exchange. For purposes of this restriction, warrants acquired by
the Capital Fund in units or attached to securities may be deemed to be
without value.
e. Invest in securities of companies having a record, together with
predecessors, of less than three years of continuous operation, if more
than 5% of the Capital Fund's total assets would be invested in such
securities. This restriction shall not apply to mortgage-backed securities,
asset-backed securities or obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities.
f. Purchase or retain the securities of any issuer, if those individual
officers and directors of the Capital Fund, the officers and general
partner of Merrill Lynch Asset Management, L.P., the investment adviser for
the Capital Fund (the "Investment Adviser"), the directors of such general
partner or the officers and directors of any subsidiary thereof each owning
beneficially more than one-half of one percent of the securities of such
issuer own in the aggregate more than 5% of the securities of such issuer.
g. Invest in real estate limited partnership interests or interests in
oil, gas or other mineral leases, or exploration or development programs,
except that the Capital Fund may invest in securities issued by companies
that engage in oil, gas or other mineral exploration or development
activities.
h. Write, purchase or sell puts, calls, straddles, spreads or
combinations thereof, except to the extent permitted in the Capital Fund
1995 Prospectus and the Capital Fund Statement, as they may be amended from
time to time.
i. Notwithstanding fundamental investment restriction (7) above, borrow
amounts in excess of 5% of its total assets, taken at acquisition or market
value, whichever is lower and then only from banks as a temporary measure
for extraordinary or emergency purposes.
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Because of the affiliation of Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch") with the Capital Fund, the Capital Fund is
prohibited from engaging in certain transactions involving Merrill Lynch
except pursuant to a permissive order or otherwise in compliance with the
provisions of the Investment Company Act, and the rules and regulations
thereunder. Included among such restricted transactions are purchases from or
sales to Merrill Lynch of securities in transactions in which Merrill Lynch
acts as principal and purchases of securities from underwriting syndicates of
which Merrill Lynch is a member. See "Portfolio Transactions and Brokerage" in
the Capital Fund Statement.
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Lending of Portfolio Securities. Subject to investment restriction (5)
above, the Capital Fund from time to time lends securities from its portfolio
to approved borrowers and receives therefor collateral in cash or securities
issued or guaranteed by the United States Government which are maintained at
all times in an amount equal to at least 100% of the current market value of
the loaned securities. The purpose of such loans is to permit the borrower to
use such securities for delivery to purchasers when such borrower has sold
short. If cash collateral is received by the Capital Fund, it is invested in
short-term money market securities, and a portion of the yield received in
respect of such investment is retained by the Capital Fund; and if securities
are delivered to the Capital Fund as collateral, the Capital Fund and the
borrower negotiate a rate for the loan premium to be received by the Capital
Fund for lending its portfolio securities. In either event, the total yield on
the Capital Fund's portfolio is increased by loans of its portfolio
securities. The Capital Fund will have the right to regain record ownership of
loaned securities to exercise beneficial rights such as voting rights,
subscription rights and rights to dividends, interest or other distributions.
Such loans are terminable at any time. The Capital Fund may pay reasonable
finder's, administrative and custodial fees in connection with such loans.
Writing of Covered Call Options. The Capital Fund may from time to time
write, i.e. sell, covered call options on its portfolio securities and enter
into closing purchase transactions with respect to certain of such options. A
call option is considered covered where the writer of the option owns the
underlying securities. By writing a covered call option, the Capital Fund, in
return for the premium income realized from the sale of the option, may give
up the opportunity to profit from a price increase in the underlying security
above the option exercise price. In addition, the Capital Fund will not be
able to sell the underlying security until the option expires, is exercised or
the Capital Fund effects a closing purchase transaction as described below. A
closing purchase transaction cancels out the Capital Fund's position as the
writer of an option by means of an offsetting purchase of an identical option
prior to the expiration of the option it has written. If the option expires
unexercised, the Capital Fund realizes a gain in the amount of the premium
received for the option which may be offset by a decline in the market price
of the underlying security during the option period. The Capital Fund may not
write covered options on underlying securities exceeding 15% of the value of
its total assets.
All options referred to herein and in the Capital Fund 1995 Prospectus are
options issued by The Options Clearing Corporation (the "Clearing
Corporation") which are currently traded on the Chicago Board Options
Exchange, the American Stock Exchange, the Philadelphia Stock Exchange, the
Pacific Stock Exchange or the New York Stock Exchange. A call option gives the
purchaser of an option the right to buy, and obligates the writer (seller) to
sell, the underlying security at the exercise price during the option period.
The option period normally ranges from three to nine months from the date the
option is written. For writing an option, the Capital Fund receives a premium,
which is the price of such an option on the exchange on which it is traded.
The exercise price of the option may be below, equal to or above the current
market value of the underlying security at the time the option is written.
The writer may terminate its obligation prior to the expiration date of the
option by executing a closing purchase transaction which is effected by
purchasing on an exchange an option of the same series (i.e., same underlying
security, exercise price and expiration date) as the option previously
written. Such a purchase does not result in ownership of an option. A closing
purchase transaction ordinarily will be effected to realize a profit on an
outstanding call option, to prevent an underlying security from being called,
to permit the sale of the underlying security or to permit the writing of a
new call option containing different terms on such underlying security. The
cost of such a liquidation purchase plus transaction costs may be greater than
the premium received on the original option, in which case the Capital Fund
will have incurred a loss in the transaction. An option may be closed out only
on an exchange which provides a secondary market for an option of the same
series and there is no assurance that a secondary market will exist for any
particular option. A covered option writer unable to effect a closing purchase
transaction will not be able to sell the underlying security until the option
expires or the underlying security is delivered upon exercise, with the result
that the writer will be subject to the risk of market decline in the
underlying security during such period. The Capital Fund will write an option
on a particular security only if management believes that a secondary market
will exist on an exchange for options of
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the same series which will permit the Capital Fund to make a closing purchase
transaction in order to close out its position.
Due to the relatively short time that exchanges have been dealing with
options, options involve risks of possible unforeseen events which can be
disruptive to the option markets or could result in the institution of certain
procedures including restriction of certain types of orders.
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APPENDIX E
INVESTMENT OBJECTIVES AND POLICIES AND INVESTMENT LIMITATIONS OF THE SMALL
CAPITALIZATION INDEX FUND
THE FOLLOWING DESCRIPTION OF THE INVESTMENT OBJECTIVES AND POLICIES AND
INVESTMENT LIMITATIONS OF THE SMALL CAP FUND IS BASED ON INFORMATION SET FORTH
IN THE SMALL CAP FUND 1995 PROSPECTUS AND IN THE STATEMENT OF ADDITIONAL
INFORMATION REFERRED TO ON THE COVER PAGE OF THE SMALL CAP FUND 1995
PROSPECTUS, AND SUCH DESCRIPTION IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH PROSPECTUS AND STATEMENT.
INVESTMENT OBJECTIVES AND POLICIES
Repurchase Agreements. The Small Cap Fund may invest in repurchase
agreements with commercial banks, brokers or dealers either for defensive
purposes due to market conditions or to generate income from its excess cash
balances. A repurchase agreement is an agreement under which the Small Cap
Fund acquires a money market instrument (generally a security issued by the
U.S. Government or an agency thereof, a banker's acceptance or a certificate
of deposit) from a commercial bank, broker or dealer, subject to resale to the
seller at an agreed upon price and date (normally, the next business day). A
repurchase agreement may be considered a loan collateralized by securities.
The resale price reflects an agreed upon interest rate effective for the
period the instrument is held by the Small Cap Fund and is unrelated to the
interest rate on the underlying instrument. In these transactions, the
securities acquired by the Small Cap Fund (including accrued interest earned
thereon) must have a total value in excess of the value of the repurchase
agreement and are held by the Vanguard Index Trust's custodian banks until
repurchased. In addition, the Board of Trustees of the Vanguard Index Trust
will monitor the Vanguard Index Trust's repurchase agreement transactions
generally and will establish guidelines and standards for review of the
creditworthiness of any bank, broker or dealer party to a repurchase agreement
with the Vanguard Index Trust. No more than an aggregate of 15% of the Small
Cap Fund's assets at the time of investment will be invested in repurchase
agreements having maturities longer than seven days and securities subject to
legal or contractual restrictions on resale, or for which there are no readily
available market quotations.
The use of repurchase agreements involves certain risks. For example, if the
other party to the agreement defaults on its obligation to repurchase the
underlying security at a time when the value of the security has declined, the
Small Cap Fund may incur a loss upon disposition of the security. If the other
party to the agreement becomes insolvent and subject to liquidation or
reorganization under the Bankruptcy Code or other laws, a court may determine
that the underlying security is collateral for a loan by the Small Cap Fund
not within the control of the Small Cap Fund and therefore the Small Cap Fund
may not be able to substantiate its interest in the underlying security and
may be deemed an unsecured creditor of the other party to the agreement. While
the Vanguard Index Trust's management acknowledges these risks, it is expected
that they can be controlled through careful monitoring procedures.
Lending of Securities. The Small Cap Fund may lend its securities to
qualified institutional investors who need to borrow securities in order to
complete certain transactions, such as covering short sales, avoiding failures
to deliver securities or completing arbitrage operations. By lending its
portfolio securities, the Small Cap Fund attempts to increase its net
investment income through the receipt of interest on the loan. Any gain or
loss in the market price of the securities loaned that might occur during the
term of the loan would be for the account of the Small Cap Fund. The Small Cap
Fund may lend its portfolio securities to qualified brokers, dealers, banks or
other financial institutions, so long as the terms, the structure and the
aggregate amount of such loans are not inconsistent with the Investment
Company Act of 1940, or the Rules and Regulations or interpretations of the
Securities and Exchange Commission (the "Commission") thereunder, which
currently require that (a) the borrower pledge and maintain with the Vanguard
Index Trust collateral consisting of cash, a letter of credit issued by a
domestic U.S. bank, or securities issued or guaranteed by the United States
Government having at all times not less than 100% of the value of the
securities loaned, (b) the borrower add to such collateral whenever the price
of the securities loaned rises (i.e. the borrower "marks to the market" on a
daily basis), (c) the loan be made subject to termination by the Vanguard
Index Trust at any time and (d) the Small Cap Fund receive
E-1
<PAGE>
reasonable interest on the loan (which may include the Small Cap Fund's
investing any cash collateral in interest bearing short-term investments), any
distribution on the loaned securities and any increase in their market value.
Loan arrangements made by the Vanguard Index Trust will comply with all other
applicable regulatory requirements, including the rules of the New York Stock
Exchange, which rules presently require the borrower, after notice, to
redeliver the securities within the normal settlement time of five business
days. All relevant facts and circumstances, including the creditworthiness of
the broker, dealer or institution, will be considered in making decisions with
respect to the lending of securities, subject to review by the Board of
Trustees of the Vanguard Index Trust.
At the present time, the Staff of the Commission does not object if an
investment company pays reasonable negotiated fees in connection with loaned
securities, so long as such fees are set forth in a written contract and
approved by the investment company's trustees. In addition, voting rights may
pass with the loaned securities, but if a material event will occur affecting
an investment on loan, the loan must be called and the securities voted.
Futures Contracts. The Small Cap Fund may enter into futures contracts,
options, warrants, options on futures contracts, convertible securities and
swap agreements for the purpose of simulating full investment and reducing
transactions costs. The Vanguard Index Trust does not use futures or options
for speculative purposes. The Small Cap Fund will only use futures and options
to simulate full investment in the underlying index while retaining a cash
balance for fund management purposes. Futures contracts provide for the future
sale by one party and purchase by another party of a specified amount of a
specific security at a specified future time and at a specified price. Futures
contracts which are standardized as to maturity date and underlying financial
instrument are traded on national futures exchanges. Futures exchanges and
trading are regulated under the Commodity Exchange Act by the Commodity
Futures Trading Commission ("CFTC"), a U.S. Government Agency.
Although futures contracts by their terms call for actual delivery or
acceptance of the underlying securities, in most cases the contracts are
closed out before the settlement date without the making or taking of
delivery. Closing out an open futures position is done by taking an opposite
position ("buying" a contract which has previously been "sold," or "selling" a
contract previously purchased) in an identical contract to terminate the
position. Brokerage commissions are incurred when a futures contract is bought
or sold.
Futures traders are required to make a good faith margin deposit in cash or
government securities with a broker or custodian to initiate and maintain open
positions in futures contracts. A margin deposit is intended to assure
completion of the contract (delivery or acceptance of the underlying security)
if it is not terminated prior to the specified delivery date. Minimal initial
margin requirements are established by the futures exchange and may be
changed. Brokers may establish deposit requirements which are higher than the
exchange minimums. Futures contracts are customarily purchased and sold on
deposits which may range upward from less than 5% of the value of the contract
being traded.
After a futures contract position is opened, the value of the contract is
marked to market daily. If the futures contract price changes to the extent
that the margin on deposit does not satisfy margin requirements, payment of
additional "variation" margin will be required. Conversely, change in the
contract value may reduce the required margin, resulting in a repayment of
excess margin to the contract holder. Variation margin payments are made to
and from the futures broker for as long as the contract remains open. The
Small Cap Fund expects to earn interest income on its margin deposits.
Traders in futures contracts may be broadly classified as either "hedgers"
or "speculators". Hedgers use the futures markets primarily to offset
unfavorable changes in the value of securities otherwise held for investment
purposes or expected to be acquired by them. Speculators are less inclined to
own the securities underlying the futures contracts which they trade, and use
futures contracts with the expectation of realizing profits from fluctuations
in the prices of underlying securities. The Small Cap Fund intends to use
futures contracts only for bonafide hedging purposes.
E-2
<PAGE>
Regulations of the CFTC applicable to the Vanguard Index Trust require that
all of its futures transactions constitute bonafide hedging transactions. The
Small Cap Fund will only sell futures contracts to protect against a decease
in the price of securities it intends to sell or purchase contracts to protect
against an increase in the price of securities it intends to purchase. As
evidence of this hedging interest, the Small Cap Fund expects that
approximately 75% of its futures contract purchases will be "completed," that
is, equivalent amounts of related securities will have been purchased or are
being purchased by the Small Cap Fund upon sale of open futures contracts.
Although techniques other than the sale and purchase of futures contracts
could be used to control the Small Cap Fund's exposure to market fluctuations,
the use of futures contracts may be a more effective means of hedging this
exposure. While the Small Cap Fund will incur commission expenses in both
opening and closing out futures positions, these costs are lower than
transaction costs incurred in the purchase and sale of the underlying
securities.
Restrictions on the Use of Futures Contracts. The Small Cap Fund will not
enter into futures contract transactions to the extent that, immediately
thereafter, the sum of its initial margin deposits on open contracts exceeds
5% of the market value of the Small Cap Fund's total assets. In addition, the
Small Cap Fund will not enter into futures contracts to the extent that its
outstanding obligations to purchase securities under these contracts would
exceed 20% of the Small Cap Fund's total assets.
Risk Factors in Futures Transactions. Positions in futures contracts may be
closed out only on an Exchange which provides a secondary market for such
futures. However, there can be no assurance that a liquid secondary market
will exist for any particular futures contract at any specific time. Thus, it
may not be possible to close a futures position. In the event of adverse price
movements, the Small Cap Fund would continue to be required to make daily cash
payments to maintain its required margin. In such situations, if the Small Cap
Fund has insufficient cash, it may have to sell portfolio securities to meet
daily margin requirements at a time when it may be disadvantageous to do so.
In addition, the Small Cap Fund may be required to make delivery of the
instruments underlying futures contracts it holds. The inability to close
options and futures positions also could have an adverse impact on the ability
to effectively hedge it.
The Small Cap Fund will minimize the risk that it will be unable to close
out a futures contract by only entering into futures which are traded on
national futures exchanges and for which there appears to be a liquid
secondary market.
The risk of loss in trading futures contracts in some strategies can be
substantial, due both to the low margin deposits required, and the extremely
high degree of leverage involved in futures pricing. As a result, a relatively
small price movement in a futures contract may result in immediate and
substantial loss (as well as gain) to the investor. For example, if at the
time of purchase, 10% of the value of the futures contract is deposited as
margin, a subsequent 10% decrease in the value of the futures contract would
result in a total loss of the margin deposit, before any deduction for the
transaction costs, if the account were then closed out. A 15% decrease would
result in a loss equal to 150% of the original margin deposit if the contract
were closed out. Thus, a purchase or sale of a futures contract may result in
losses in excess of the amount invested in the contract. The Vanguard Index
Trust also bears the risk that the Small Cap Fund Investment Adviser will
incorrectly predict future stock market trends. However, because the futures
strategies of the Vanguard Index Trust are engaged in only for hedging
purposes, the Vanguard Index Trust's officers do not believe that the Small
Cap Fund is subject to the risks of loss frequently associated with futures
transactions. The Small Cap Fund would presumably have sustained comparable
losses if, instead of the futures contract, it had invested in the underlying
financial instrument and sold it after the decline.
Utilization of futures transactions by the Vanguard Index Trust does involve
the risk of imperfect or no correlation where the securities underlying
futures contracts have different maturities than the portfolio securities
being hedged.
E-3
<PAGE>
It is also possible that the Small Cap Fund could both lose money on futures
contracts and also experience a decline in value of its portfolio securities.
There is also the risk of loss by the Small Cap Fund of margin deposits in the
event of bankruptcy of a broker with whom the Small Cap Fund has an open
position in a futures contract or related option.
Most futures exchanges limit the amount of fluctuation permitted in futures
contract prices during a single trading day. The daily limit establishes the
maximum amount that the price of a futures contract may vary either up or down
from the previous day's settlement price at the end of a trading session. Once
the daily limit has been reached in a particular type of contract, no trades
may be made on that day at a price beyond that limit. The daily limit governs
only price movement during a particular trading day and therefore does not
limit potential losses, because the limit may prevent the liquidation of
unfavorable positions. Futures contract prices have occasionally moved to the
daily limit for several consecutive trading days with little or no trading,
thereby preventing prompt liquidation of future positions and subjecting some
futures traders to substantial losses.
INVESTMENT LIMITATIONS
The following restrictions and fundamental policies cannot be changed
without approval of the holders of a majority of the outstanding shares of the
Small Cap Fund (as defined in the Investment Company Act of 1940). The Small
Cap Fund may not under any circumstances:
1. change its investment objective, which is to provide investment
results that correspond to the performance of the Russell 2000 Index;
2. change its investment policy, which is to duplicate the investment
performance of the Russell 2000 Index;
3. invest in commodities or purchase real estate, although it may
purchase securities of companies which deal in real estate or interests
therein, and that the Small Cap Fund may invest in stock index futures
contracts, stock options and options on stock index futures contracts to
that extent that not more than 5% of the Small Cap Fund's assets are
required as margin deposit for futures contracts and not more than 20% of
the Small Cap Fund's assets are invested in futures and options at any
time;
4. lend money to any person except (i) by purchasing a portion of an
issue of short-term debt securities or similar obligations (including
repurchase agreements) which are publicly distributed or customarily
purchased by institutional investors, and (ii) as provided under "Lending
of Securities";
5. purchase securities on margin or sell securities short, except as set
forth in paragraph 3 above;
6. with respect to 75% of its assets, purchase more than 10% of the
outstanding voting securities of any issuer;
7. with respect to 75% of its assets, purchase securities of any issuer
(except obligations of the United States Government and its
instrumentalities), if, as a result, more than 5% of the value of the Small
Cap Fund's total assets would be invested in the securities of such issuer;
8. borrow money, except from banks (or through reverse repurchase
agreements) for temporary or emergency (not leveraging) purposes, including
the meeting of redemption requests which might otherwise require the
untimely disposition of securities, in an amount not exceeding 15% of the
value of its net assets (including the amount borrowed and the value of any
outstanding reverse repurchase agreements) at the time the borrowing is
made. Whenever a borrowing exceeds 5% of the Small Cap Fund's net assets,
the Small Cap Fund will not make any additional investments;
9. pledge, mortgage, or hypothecate any of its assets to an extent
greater than 5% of the value of its total assets;
E-4
<PAGE>
10. engage in the business of underwriting securities issued by other
persons except to the extent that the Small Cap Fund may technically be
deemed an underwriter under the Securities Act of 1933, as amended, in
disposing of portfolio securities;
11. purchase or otherwise acquire any security if, as a result, more than
15% of its net assets would be invested in securities that are illiquid
(included in this limitation is the Vanguard Index Trust's investment in
The Vanguard Group, Inc.);
12. invest for the purpose of controlling management of any company;
13. invest in securities of other investment companies, except as may be
acquired as a part of a merger, consolidation or acquisition of assets
approved by the Small Cap Fund's shareholders, or otherwise to the extent
permitted by Section 12 of the Investment Company Act of 1940. The Small
Cap Fund will invest only in investment companies which have investment
objectives and investment policies consistent with those of the Small Cap
Fund;
14. invest more than 25% of its assets in any one industry; or
15. invest in put, call, straddle or spread options or in interests in
oil, gas or other mineral exploration or development programs, except as
set forth in limitation number "3", above.
The above-mentioned investment limitations are considered at the time
investment securities are purchased. Notwithstanding these limitations, the
Vanguard Index Trust may own all or any portion of the securities of, or make
loans to, or contribute to the costs or other financial requirements of any
company which will be wholly owned by the Vanguard Index Trust and one or more
other investment companies and is primarily engaged in the business of
providing, at-cost, management, administrative, distribution or related
services to the Vanguard Index Trust and other investment companies. The Small
Cap Fund may not invest more than 5% of its total assets in securities of
companies which have (with predecessors) a record of less than three years' of
continuous operation. Additionally, the Small Cap Fund will not purchase or
retain securities of an issuer if those Officers and Trustees of the Vanguard
Index Trust owning more than 1/2 of 1% of such securities together own more
than 5% of such securities. These are non-fundamental policies which may be
changed by the vote of a majority of the Trustees of the Vanguard Index Trust.
E-5
<PAGE>
APPENDIX F
INVESTMENT OBJECTIVE AND POLICIES AND INVESTMENT RESTRICTIONS OF THE
INTERNATIONAL GROWTH FUND
THE FOLLOWING DESCRIPTION OF THE INVESTMENT OBJECTIVE AND POLICIES AND
INVESTMENT RESTRICTIONS OF THE SCUDDER FUND IS BASED ON INFORMATION SET FORTH
IN THE SCUDDER FUND 1995 PROSPECTUS AND IN THE STATEMENT OF ADDITIONAL
INFORMATION REFERRED TO ON THE COVER PAGE OF THE SCUDDER FUND 1995 PROSPECTUS
(THE "SCUDDER FUND STATEMENT"), AND SUCH DESCRIPTION IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH PROSPECTUS AND STATEMENT.
GENERAL INVESTMENT OBJECTIVE AND POLICIES
The Scudder Fund's investment objective is to seek long-term growth of
capital primarily through a diversified portfolio of marketable foreign equity
securities selected primarily to permit the Scudder Fund to participate in
non-U.S. companies and economies with prospects for growth.
To the extent consistent with the Scudder Fund's objective of long-term
growth of capital, as described in the preceding paragraph, it is the policy
of the Scudder Fund to provide shareholders with participation in the
economies of a number of countries other than the U.S. The Scudder Fund may
purchase securities of companies, wherever organized, which, in the judgment
of the Scudder Fund's investment adviser, Scudder, Stevens & Clark, Inc. (the
"Scudder Fund Adviser"), have their principal activities and interests outside
of the U.S.
The Scudder Fund intends to diversify investments among several countries
and to have represented in the portfolio, in substantial proportions, business
activities in not less than three different countries. The Scudder Fund may
invest in securities of companies incorporated in the U.S. and having their
principal activities and interests outside of the U.S.
Except as otherwise noted, the Scudder Fund's investment objective and
policies may be changed without a shareholder vote. Achievement of the Scudder
Fund's investment objective cannot be assured.
The major portion of the Scudder Fund's assets consists of equity securities
of established companies listed on recognized exchanges; the Scudder Fund
Adviser expects this condition to continue, although the Scudder Fund may
invest in other securities. Up to 20% of the total assets of the Scudder Fund
may be invested in debt securities of foreign governments, supranational
organizations and private issuers, including bonds denominated in the European
Currency Unit (ECU). In determining the location of the principal activities
and interests of a company, the Scudder Fund Adviser takes into account such
factors as the location of the company's assets, personnel, sales and
earnings. In selecting securities for the Scudder Fund's portfolio, the
Scudder Fund Adviser seeks to identify companies whose securities prices do
not adequately reflect their established positions in their fields. In
analyzing companies for investment, the Scudder Fund Adviser ordinarily looks
for one or more of the following characteristics: above-average earnings
growth per share, high return on invested capital, healthy balance sheets and
overall financial strength, strong competitive advantages, strength of
management and general operating characteristics which will enable the
companies to compete successfully in the marketplace. Investment decisions are
made without regard to arbitrary criteria as to minimum asset size, debt-
equity ratios or dividend history of portfolio companies.
The Scudder Fund may invest in any type of security including, but not
limited to shares, preferred or common; bonds and other evidences of
indebtedness; and other securities of issuers wherever organized, and not
excluding evidences of indebtedness of governments and their political
subdivisions. The Scudder Fund, in view of its investment objective, intends
under normal conditions to maintain a portfolio consisting primarily of a
diversified list of equity securities.
Under exceptional economic or market conditions abroad, the Scudder Fund
may, for temporary defensive purposes, until normal conditions return, invest
all or a major portion of its assets in Canadian or U.S.
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<PAGE>
Government obligations or currencies, or securities of companies incorporated
in and having their principal activities in such countries.
Foreign securities such as those purchased by the Scudder Fund may be
subject to foreign government taxes which could reduce the yield on such
securities, although a shareholder of the Scudder Fund may, subject to certain
limitations, be entitled to claim a credit or deduction for U.S. federal
income tax purposes for his or her proportionate share of such foreign taxes
paid by the Scudder Fund.
From time to time, the Scudder Fund may be a purchaser of restricted debt or
equity securities (i.e., securities which may require registration under the
Securities Act of 1933, or an exemption therefrom, in order to be sold in the
ordinary course of business) in a private placement. The Scudder Fund has
undertaken not to purchase or acquire any such securities if, solely as a
result of such purchase or acquisition, more than 5% of the value of the
Scudder Fund's total assets would be invested in restricted securities
(securities subject to legal restrictions on resales to institutions, or
contractual restrictions on resale) and more than 10% of its net assets would
be invested in securities that are not readily marketable.
INVESTMENT RESTRICTIONS
The policies set forth below are fundamental policies of the Scudder Fund
and may not be changed without the approval of a majority of the Scudder
Fund's outstanding shares. As used herein, a "majority of the outstanding
voting securities of the Scudder Fund" means the lesser of (1) 67% or more of
the voting securities present at such meeting, if the holders of more than 50%
of the outstanding voting securities of the Scudder Fund are present or
represented by proxy; or (2) more than 50% of the outstanding voting
securities of the Scudder Fund. The Scudder Fund may not:
(1) with respect to 75% of its total assets, taken at market value,
purchase more than 10% of the voting securities of any one issuer, or
invest more than 5% of the value of its total assets in the securities
of any one issuer, except obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities and except securities of
other investment companies;
(2) borrow money, except as a temporary measure for extraordinary or
emergency purposes or except in connection with reverse repurchase
agreements; provided that the Scudder Fund maintains asset coverage of
300% for all borrowings;
(3) act as an underwriter of securities issued by others, except to the
extent that it may be deemed an underwriter in connection with the
disposition of portfolio securities of the Scudder Fund;
(4) make loans to other persons, except (a) loans of portfolio securities,
and (b) to the extent the entry into repurchase agreements and the
purchase of debt securities in accordance with its investment
objectives and investment policies may be deemed to be loans;
(5) purchase or sell real estate (except that the Scudder Fund may invest
in (i) securities of companies which deal in real estate or mortgages,
and (ii) securities secured by real estate or interests therein, and
that the Scudder Fund reserves freedom of action to hold and to sell
real estate acquired as a result of the Scudder Fund's ownership of
securities); and
(6) purchase or sell physical commodities or contracts relating to physical
commodities.
The Scudder Fund will not as a matter of nonfundamental policy:
(a) purchase or retain securities of any open-end investment company, or
securities of closed-end investment companies except by purchase in the
open market where no commission or profit to a sponsor or dealer
results from such purchases, or except when such purchase, though not
made in the open market, is part of a plan of merger, consolidation,
reorganization or acquisition of assets; in any event the Scudder Fund
may not purchase more than 3% of the outstanding voting securities of
another investment company, may not invest more than 5% of its assets
in another investment company, and may not invest more than 10% of its
assets in other investment companies;
F-2
<PAGE>
(b) pledge, mortgage or hypothecate its assets in excess, together with
permitted borrowings, of 1/3 of its total assets;
(c) purchase or retain securities of an issuer any of whose officers,
directors, trustees or security holders is an officer, director or
trustee of the Scudder Fund or a member, officer, director or trustee
of the investment adviser of the Scudder Fund if one or more of such
individuals owns beneficially more than one-half of one percent ( 1/2%)
of the outstanding shares or securities or both (taken at market value)
of such issuer and such individuals owning more than one-half of one
percent ( 1/2%) of such shares or securities together own beneficially
more than 5% of such shares or securities or both;
(d) purchase securities on margin or make short sales, unless, by virtue of
its ownership of other securities, it has the right to obtain
securities equivalent in kind and amount to the securities sold and, if
the right is conditional, the sale is made upon the same conditions,
except in connection with arbitrage transactions and except that the
Scudder Fund may obtain such short-term credits as may be necessary for
the clearance of purchases and sales of securities;
(e) invest more than 10% of its net assets in securities which are not
readily marketable, the disposition of which is restricted under
Federal securities laws, or in repurchase agreements not terminable
within 7 days, and the Scudder Fund will not invest more than 5% of its
total assets in restricted securities;
(f) purchase securities of any issuer with a record of less than three
years continuous operations, including predecessors, and in equity
securities which are not readily marketable except U.S. Government
securities, and obligations issued or guaranteed by any foreign
government or its agencies or instrumentalities, if such purchase would
cause the investments of the Scudder Fund in all such issuers to exceed
5% of the total assets of the Scudder Fund taken at market value;
(g) buy options on securities or financial instruments, unless the
aggregate premiums paid on all such options held by the Scudder Fund at
any time do not exceed 20% of its net assets; or sell put options on
securities if, as a result, the aggregate value of the obligations
underlying such put options would exceed 50% of the Scudder Fund's net
assets;
(h) enter into futures contracts or purchase options thereon unless
immediately after the purchase, the value of the aggregate initial
margin with respect to all futures contracts entered into on behalf of
the Scudder Fund and the premiums paid for options on futures contracts
does not exceed 5% of the fair market value of the Scudder Fund's total
assets; provided, that in the case of an option that is in-the-money at
the time of purchase, the in-the-money amount may be excluded in
computing the 5% limit;
(i) invest in oil, gas or other mineral leases, or exploration or
development programs (although it may invest in issuers which own or
invest in such interests);
(j) borrow money in excess of 5% of its total assets (taken at market
value) except for temporary or emergency purposes or borrow other than
from banks;
(k) purchase warrants if as a result warrants taken at the lower of cost or
market value would represent more than 5% of the value of the Scudder
Fund's total net assets or more than 2% of its net assets in warrants
that are not listed on the New York or American Stock Exchanges or on
an exchange with comparable listing requirements (for this purpose,
warrants attached to securities will be deemed to have no value);
(l) invest more than 20% of its total assets in debt securities (including
convertible securities) or more than 5% of its total assets in
securities rated BB/Ba or below by Moody's or S&P or the equivalent;
(m) make securities loans if the value of such securities loaned exceeds
30% of the value of the Scudder Fund's total assets at the time the
loan is made; all loans of portfolio securities will be fully
collateralized and marked to market daily. The Scudder Fund has no
current intention of making loans of portfolio securities that would
amount to greater than 5% of the Scudder Fund's total assets; or
(n) purchase or sell real estate limited partnership interests.
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<PAGE>
In addition to the foregoing restrictions, it is not the policy of the
Scudder Fund to concentrate its investments in any particular industry and the
Scudder Fund's management does not intend to make acquisitions in particular
industries which would increase the percentage of the market value of the
Scudder Fund's assets above 25% for any one industry. The Scudder Fund may not
deviate from such policy without a vote of a majority of the outstanding
shares as provided by the Investment Company Act of 1940.
Any investment restrictions herein which involve a maximum percentage of
securities or assets shall not be considered to be violated unless an excess
over the percentage occurs immediately after, and is caused by, an acquisition
or encumbrance of securities or assets of, or borrowings by, the Scudder Fund.
F-4
<PAGE>
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NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS
IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS OTHER THAN THOSE CONTAINED
IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THESE
SECURITIES IN ANY STATE TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION IN SUCH STATE.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Additional Information .................................................... 2
General Information ....................................................... 2
Definitions ............................................................... 3
The Plan .................................................................. 8
General ................................................................. 8
Purpose ................................................................. 8
Administration .......................................................... 8
Eligibility ............................................................. 10
Participation in the Plan ............................................... 10
Contributions ........................................................... 11
Rollover Contributions .................................................. 13
Limitations on Contributions ............................................ 13
Change of Contributions ................................................. 14
Accounts ................................................................ 14
Investment of Contributions ............................................. 15
Description of Investment Options........................................ 16
Availability of Additional Information Concerning Investment Options..... 38
Valuation of the Funds .................................................. 38
Vesting ................................................................. 38
Withdrawals on Account of Hardship ...................................... 39
Withdrawals After Age 59 1/2 ............................................ 40
Diversification Election ................................................ 40
Benefits Under the Plan ................................................. 40
Voting and Other Rights ................................................. 42
Dividends ............................................................... 42
Assignment; Liens ....................................................... 42
Amendment and Termination ............................................... 43
Reference to the Plan ................................................... 43
Federal Tax Aspects ....................................................... 43
Applicable Requirements of ERISA .......................................... 45
Amendments and Other Changes Affecting this Prospectus..................... 45
Reports of the Company .................................................... 46
Incorporation of Certain Documents By Reference............................ 46
Legal Opinions ............................................................ 46
Experts ................................................................... 46
Appendix A................................................................. A-1
Appendix B................................................................. B-1
Appendix C................................................................. C-1
Appendix D................................................................. D-1
Appendix E................................................................. E-1
Appendix F................................................................. F-1
</TABLE>
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NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UN-
DER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE COMPANY OR THE PLAN SINCE THE DATE HEREOF.
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[LOGO OF CIRCUS CIRCUS]
ENTERPRISES, INC.
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CIRCUS CIRCUS EMPLOYEES' PROFIT SHARING AND INVESTMENT PLAN
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PROSPECTUS
---------------
NOVEMBER 27, 1995
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
Reference is made to the information appearing under the heading
"Incorporation of Certain Documents by Reference" in the Prospectus
constituting a part of this Registration Statement, which information is
incorporated herein by this reference.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 78.751 of the Nevada Revised Statutes (the "Nevada Law") permits a
corporation to indemnify any of its directors, officers, employees and agents
against costs and expenses arising from claims, suits and proceedings if such
persons acted in good faith and in a manner reasonably believed to be in or
not opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. Notwithstanding the foregoing, in an action by or in the right
of the corporation, no indemnification may be made in respect of any claim,
issue or matter, as to which such person is adjudged to be liable to the
corporation unless a court of competent jurisdiction determines that in view
of all the circumstances of the case, indemnification would be appropriate.
The indemnification provisions of the Nevada Law expressly do not exclude any
other rights a person may have to indemnification under any bylaw, among other
things.
In accordance with Nevada Revised Statutes 78.037, Article XI of the
Company's Restated Articles of Incorporation provides that no director or
officer of the Company shall be personally liable to the Company or its
stockholders for damages for breach of fiduciary duty as a director or
officer, except for (a) acts or omissions which include intentional
misconduct, fraud or a knowing violation of law, or (b) the payment of
dividends in violation of Nevada Revised Statutes 78.300.
Article X, Section 10.2 of the Company's Restated Bylaws provides for
mandatory indemnification of directors and officers to the fullest extent now
or hereafter permitted by law.
The Company maintains a liability insurance policy under which officers and
directors are generally indemnified against losses and liability (including
costs, expenses, settlements, and judgments) incurred by them in such
capacities, individually or otherwise, other than specified excluded losses.
The insurance policy will pay on behalf of the Company all covered losses for
which the Company grants indemnification of each officer or director as
permitted by law which the officer or director becomes legally obligated to
pay on account of an indemnifiable claim. The policy would generally cover, in
addition to other liabilities, liabilities arising under the federal
securities laws; however, the subject of loss may not include any claim or
claims under federal or state law arising out of or relating to (i) the filing
of a registration statement with the Securities and Exchange Commission or the
offer or sale by means of a prospectus of any security with respect to which a
registration statement has been filed, including, but not limited to, any
claim asserting that such registration statement or prospectus contained an
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, (ii) any underwriting agreement for the offer or sale of any
security, or (iii) any accounting of profits from the purchase or sale of
securities of the Company under Section 16(b) of the Securities Exchange Act
of 1934 or a similar state law.
II-1
<PAGE>
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not Applicable.
ITEM 8. EXHIBITS.
<TABLE>
<C> <S>
3(i)(a) Restated Articles of Incorporation of the Company as of July 15, 1988
and Certificate of Amendment thereto, dated June 29, 1989
(Incorporated by reference to Exhibit 3(a) to the Company's Annual
Report on Form 10-K for the fiscal year ended January 31, 1991).
3(i)(b) Certificate of Division of Shares into Smaller Denominations, dated
June 20, 1991 (Incorporated by reference to Exhibit 3(b) to the
Company's Annual Report on Form 10-K for the fiscal year ended
January 31, 1992).
3(i)(c) Certificate of Division of Shares into Smaller Denominations, dated
June 22, 1993 (Incorporated by reference to Exhibit 3(i) to the
Company's Current Report on Form 8-K dated July 21, 1993).
3(ii)(a) Restated Bylaws of the Company dated June 20, 1991 (Incorporated by
reference to Exhibit 3(c) to the Company's Annual Report on Form 10-K
for the fiscal year ended January 31, 1992).
3(ii)(b) Amendments, dated March 29, 1993, to the Restated Bylaws of the
Company dated June 20, 1991 (Incorporated by reference to Exhibit
3(d) to the Company's Annual Report on Form 10-K for the fiscal year
ended January 31, 1993).
4(a) Rights Agreement, dated as of July 14, 1994, between the Company and
First Chicago Trust Company of New York (Incorporated by reference to
Exhibit 4 to the Company's Current Report on Form 8-K dated August
15, 1994.
4(b) Group Annuity Contract No. GA70867, effective as of November 1, 1985,
between Bankers Life Company and Circus Circus Enterprises, Inc., and
related letters dated November 15, 1985 and December 4, 1985--
Incorporated by reference to Exhibit 4(c) to the Company's
Registration Statement on Form S-8 (No. 33-1459).
4(c) Eighth Amendment and Restatement of the Circus Circus Employees'
Profit Sharing, Investment and Employee Stock Ownership Plan.*
4(d) Ninth Amendment to the Circus Circus Employees' Profit Sharing,
Investment and Employee Stock Ownership Plan.
4(e) Tenth Amendment and Restatement of the Circus Circus Employees'
Profit Sharing, Investment and Employee Stock Ownership Plan.
4(f) Third Amendment and Restatement of the Circus Circus Employees'
Profit Sharing, Investment and Employee Stock Ownership Trust.*
4(g) Fourth Amendment to the Circus Circus Employees' Profit Sharing,
Investment and Employee Stock Ownership Trust.
4(h) Fifth Amendment and Restatement of the Circus Circus Employees'
Profit Sharing, Investment and Employee Stock Ownership Trust.
5(a) Opinion of Schreck, Jones, Bernhard, Woloson & Godfrey, Chartered,
Las Vegas, Nevada.*
5(b) Internal Revenue Service determination letter, dated April 28, 1987--
Incorporated by reference to Exhibit 5(b) to the Company's
Registration Statement on Form S-8 (No. 33-1459).
5(c) Opinion of Trenam, Kemker, Scharf, Barkin, Frye, O'Neill & Mullis,
Tampa, Florida.
5(d) Internal Revenue Service determination letter, dated May 23, 1995.
23(a) Consent of Schreck, Jones, Bernhard, Woloson & Godfrey, Chartered.
Reference is made to Exhibit 5(a) hereto.
23(b) Consent of Trenam, Kemker, Scharf, Barkin, Frye, O'Neill & Mullis.
Reference is made to Exhibit 5(c) hereto.
23(c) Consent of Arthur Andersen LLP
23(d) Consent of Coopers & Lybrand LLP
24 Power of Attorney. Included on Page II-4 hereof.
</TABLE>
- --------
* Previously filed as an exhibit to this Registration Statement.
II-2
<PAGE>
ITEM 9. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(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;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the registration statement is on Form S-3 or Form S-8, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the registrant pursuant to Section 13
or 15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the 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 Act and will be governed by
the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL THE
REQUIREMENTS FOR FILING ON FORM S-8 AND HAS DULY CAUSED THIS AMENDMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY
OF LAS VEGAS, STATE OF NEVADA, ON THE 21ST DAY OF NOVEMBER, 1995.
Circus Circus Enterprises, Inc.
/s/ Clyde T. Turner
By__________________________________
CLYDE T. TURNER, CHAIRMAN OF THE
BOARD AND CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, THAT EACH PERSON WHOSE SIGNATURE APPEARS
BELOW CONSTITUTES AND APPOINTS CLYDE T. TURNER, MICHAEL S. ENSIGN OR WILLIAM A.
RICHARDSON, 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 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, FULL POWER AND AUTHORITY TO DO
AND PERFORM EACH AND EVERY ACT AND THING REQUISITE AND NECESSARY TO BE DONE, AS
FULLY TO ALL INTENTS AND PURPOSES AS HE MIGHT OR COULD DO IN PERSON, HEREBY
RATIFYING AND CONFIRMING ALL THAT SAID ATTORNEYS-IN-FACT AND AGENTS OR ANY OF
THEM, OR THEIR OR HIS SUBSTITUTE OR SUBSTITUTES, MAY LAWFULLY DO OR CAUSE TO BE
DONE BY VIRTUE HEREOF.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE
DATES INDICATED.
SIGNATURE TITLE DATE
/s/ Clyde T. Turner Chairman of the November 21, 1995
- ------------------------------------ Board and Chief
CLYDE T. TURNER Executive Officer
(Principal
Executive Officer)
/s/ Michael S. Ensign Vice Chairman of November 21, 1995
- ------------------------------------ the Board and
MICHAEL S. ENSIGN Chief Operating
Officer
/s/ Glenn W. Schaeffer President, November 21, 1995
- ------------------------------------ Treasurer and
GLENN W. SCHAEFFER Chief Financial
Officer (Principal
Financial Officer)
/s/ William A. Richardson Executive Vice November 21, 1995
- ------------------------------------ President--
WILLIAM A. RICHARDSON Construction and
Director
II-4
<PAGE>
SIGNATURE TITLE DATE
/s/ Kurt D. Sullivan Senior Vice November 21, 1995
- ------------------------------------- President--
KURT D. SULLIVAN Operations and
Director
/s/ Tony Coelho Director November 21, 1995
- -------------------------------------
TONY COELHO
/s/ Carl F. Dodge Director November 21, 1995
- -------------------------------------
CARL F. DODGE
/s/ William N. Pennington Director November 21, 1995
- -------------------------------------
WILLIAM N. PENNINGTON
/s/ Fred W. Smith Director November 21, 1995
- -------------------------------------
FRED W. SMITH
/s/ Arthur M. Smith Director November 21, 1995
- -------------------------------------
ARTHUR M. SMITH
The Plan. Pursuant to the requirements of the Securities Act of 1933, the
Plan has duly caused this Amendment to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Las Vegas, State of
Nevada, on the 21st day of November, 1995.
Circus Circus Employees' Profit
Sharing And Investment Plan
By Circus Circus Enterprises, Inc.
Plan Administrator
/s/ Clyde T. Turner
By __________________________________
Clyde T. Turner, Chairman of the
Board and Chief Executive Officer
II-5
<PAGE>
EXHIBIT 4(d)
NINTH AMENDMENT
TO THE
CIRCUS CIRCUS EMPLOYEES' PROFIT SHARING,
INVESTMENT AND EMPLOYEE STOCK OWNERSHIP PLAN
This Ninth Amendment to the Circus Circus Employees' Profit Sharing,
Investment and Employee Stock Ownership Plan is made and entered into this 12th
-----
day of July , day 1995, but is effective for all purposes (except as
---------
otherwise provided herein) as of January 1, 1995, by Circus Circus Enterprises,
Inc. (the "Company").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company has previously adopted the Circus Circus Employees'
Profit Sharing, Investment and Employee Stock Ownership Plan, which has
previously been amended (as amended, the "Plan"); and
WHEREAS, pursuant to the terms of the Plan, the Company is authorized and
empowered to further amend the Plan; and
WHEREAS, the Company desires to amend the Plan to clarify certain
provisions, to make changes required by the Internal Revenue Service, and to
make other desired changes.
NOW, THEREFORE, the Plan is hereby amended as follows:
I.
Effective January 1, 1995, paragraph (w) of Article I is hereby amended to
read as follows:
(z) "EMPLOYER" shall mean the Company, Circus Circus Casinos, Inc.,
--------
Slots-A-Fun, Inc., Edgewater Hotel Corporation, Colorado Belle Corp., New
Castle Corp., Ramparts, Inc., Circus Circus Mississippi, Inc., and Racing
Boats, Inc., as well as any other subsidiary, related corporation or other
entity that adopts this Plan with the consent of the Company.
<PAGE>
II.
Article VII is hereby amended by adding a new paragraph (h) at the end
thereof to read as follows:
(h) REQUIREMENTS FOR ESOP LOANS. No loan to the Plan or the Trust
---------------------------
that shall be made or guaranteed by a disqualified person, including a
direct loan of cash, a purchase money obligation, an assumption of an
obligation of the Plan or the Trust, an unsecured guaranty, or the use of
assets of a disqualified person as collateral for the loan (whether or not
such use of assets is deemed a guaranty under applicable state law), unless
a Plan fiduciary determines that the loan complies with the following
requirements:
(1) The interest rate of the loan does not exceed a reasonable
rate of interest, determined based on all relevant factors including
(without limitation):
(A) the amount and duration of the loan,
(B) the security and guarantee (if any) involved,
(C) the credit standing of the ESOP and the guarantor (if
any), and
(D) the interest rate prevailing for comparable loans.
A variable interest rate may be reasonable.
(2) The loan is for a specific term, and is not payable at the
demand of any person, except in the case of default.
(3) The loan is primarily for the benefit of the ESOP
participants and their beneficiaries; the interest rate for the loan
and the price of securities to be acquired with the loan proceeds are
not such that plan assets are likely to be drained off; and the terms
of the loan, whether or not between independent parties, are at least
as favorable to the ESOP as the terms of a comparable loan resulting
from arm's-length negotiations between independent parties.
2.
<PAGE>
(4) The proceeds will be used within a reasonable time after
their receipt by the borrowing ESOP only for any or all of the
following purposes:
(A) To acquire qualifying employer securities;
(B) To repay such loan; or
(C) To repay a prior exempt loan.
(5) Except as provided in subparagraphs (9) and (10) of
paragraph (b) of Reg. (S)54.4975-7 or as otherwise required by
applicable law, no security acquired with the proceeds of the loan is
subject to a put, call, or other option, or buy-sell or similar
arrangement, while held by and when distributed from the Plan, whether
or not the Plan is then an ESOP.
(6) To the extent required by Reg. (S)54.4975-7, the loan is
without recourse against the Plan and the Trust except that:
(A) Assets of the ESOP that may be given as collateral are
qualifying employer securi ties of two classes: those acquired
with the proceeds of the loan and those that were used as
collateral on a prior exempt loan repaid with the proceeds of the
current exempt loan;
(B) To the extent permitted by Reg. (S)54.4975-7, the Plan
and the Trust shall nevertheless have the power to enter into a
binding obligation to repay the loan from Plan assets the use of
which is not prohibited by Reg. (S)54.4975-7 or other applicable
law.
(7) To the extent required by Reg. (S)54.4975-7, no person
entitled to payment under the exempt loan has any right to assets of
the Plan or the Trust other than:
(A) Collateral given for the loan,
(B) Contributions (other than contribu tions of employer
securities) that are made under an ESOP to meet its obligations
under the loan, and
3.
<PAGE>
(C) Earnings attributable to such collateral and the
investment of such contributions.
The foregoing shall not restrict the Trustee's obligation to repay the
loan, nor the right of the Trustee to repay such loan from assets the
use of which is not precluded by Reg. (S)54.4975-7.
(8) The payments made with respect to the loan during a Plan
Year will not exceed an amount equal to the sum of such contributions
and earnings received during or prior to the Plan Year, less such
payments in prior years.
(9) In the event of default, the value of plan assets
transferred in satisfaction of the loan will not exceed the amount of
the default. If the lender is a disqualified person, such default
shall be limited to the failure of the Plan to meet the payment
schedule of the loan. (A guarantor shall not be deemed a lender for
purposes of this subparagraph.)
IN WITNESS WHEREOF, this Ninth Amendment has been executed on the day and
year first above written.
ATTEST: CIRCUS CIRCUS ENTERPRISES, INC.
(CORPORATE SEAL)
By: /s/ David R. Belding BY: /s/ Glenn Schaeffer
- ------------------------------ ------------------------------
Secretary President
"COMPANY"
4.
<PAGE>
EXHIBIT 4(e)
TENTH AMENDMENT AND RESTATEMENT
OF THE
CIRCUS CIRCUS EMPLOYEES' PROFIT SHARING
AND INVESTMENT PLAN
<PAGE>
TENTH AMENDMENT AND RESTATEMENT
OF THE
CIRCUS CIRCUS EMPLOYEES' PROFIT SHARING
AND INVESTMENT PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
ARTICLE TITLE NUMBER
- ------- ----- ------
<S> <C> <C>
I Definitions .................................................. 1
II Amendment and Restatement and Name of the Plan ............... 19
III Purpose of the Plan and the Trust ............................ 19
IV Plan Administrator ........................................... 20
V Eligibility and Participation ................................ 22
VI Contributions to the Trust ................................... 24
VII Participants' Accounts and Allocation of Contributions ....... 35
VIII Benefits Under the Plan ...................................... 46
IX Form and Payment of Benefits ................................. 53
X Designated Investments ....................................... 58
XI Withdrawals and Diversification Election ..................... 61
XII Trust Fund ................................................... 64
XIII Expenses of Administration of the Plan and the Trust Fund .... 64
XIV Amendment and Termination .................................... 65
XV Miscellaneous ................................................ 68
</TABLE>
<PAGE>
TENTH AMENDMENT AND RESTATEMENT
OF THE
CIRCUS CIRCUS EMPLOYEES' PROFIT SHARING
AND INVESTMENT PLAN
This Tenth Amendment and Restatement of the Circus Circus Employees' Profit
Sharing and Investment Plan is made and entered into this 21st day of November,
1995, but is effective for all purposes as of January 1, 1996, except as may be
otherwise provided herein, by Circus Circus Enterprises, Inc. (referred to
hereinafter as the "Company").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company and the other Employers have previously adopted the
Circus Circus Employees' Profit Sharing, Investment and Employee Stock Ownership
Plan, which has been amended from time to time (as amended, the "Plan"); and
WHEREAS, pursuant to Article XIV of the Plan, the Company is authorized and
empowered to further amend the Plan; and
WHEREAS, the Company and the other Employers deem it advisable and in the
best interests of the Participants to amend the Plan to reflect changes made to
applicable law by recent Acts of Congress, and to make other desired changes.
NOW, THEREFORE, the Plan is hereby amended and restated in its entirety to
read as follows:
ARTICLE I
DEFINITIONS
-----------
(a) "ACCOUNT" shall mean, as required by the context, the entire amount
-------
held from time to time for the benefit of any one Participant, or the portion
thereof attributable to Savings Contributions, Matching Contributions, Automatic
Contributions, Discretionary Contributions or Rollover Contributions, as well as
ESOP Matching Contributions, ESOP Automatic Contributions, 401(k) Automatic
Contributions and 401(k) Employer Contributions made under Plan provisions
previously in effect. A Participant's ESOP
<PAGE>
Matching Contribution Account and ESOP Automatic Contribution Account may each
include an Employer Securities Account and an Other Investments Account, as
established pursuant to paragraph (b) of Article VII.
(b) "ACTUAL CONTRIBUTION PERCENTAGE" shall mean, with respect to a group
------------------------------
of Participants for the Plan Year, the average of the Actual Contribution Ratios
(calculated separately for each member of the group) of each Participant who is
a member of such group (other than Family Members of certain Highly Compensated
Employees described in paragraph (ll) of this Article I).
(c) "ACTUAL CONTRIBUTION RATIO" shall mean the ratio of the amount of
-------------------------
Matching Contributions (including elective contributions, if any, treated as
Matching Contributions in accordance with Treasury Regulation Section 1.401(m)-
1(b)(5)) made on behalf of a Participant to the Participant's Compensation.
(d) "ACTUAL DEFERRAL PERCENTAGE" shall mean, with respect to a group of
--------------------------
Participants for the Plan Year, the average of the Actual Deferral Ratios
(calculated separately for each member of the group) of each Participant who is
a member of such group (other than Family Members of certain Highly Compensated
Employees described in paragraph (ll) of this Article I).
(e) "ACTUAL DEFERRAL RATIO" shall mean the ratio of the aggregate amount
---------------------
of Savings Contributions (including Savings Contributions made by Highly
Compensated Employees in excess of the limitation set forth in paragraph
(a)(1)(A) of Article VI to the extent required by Treasury Regulation
(S)1.402(g)-1(e)(1)(ii)) made on behalf of a Participant to the Participant's
Compensation for the Plan Year.
(f) "ADMINISTRATOR" shall mean the Plan Administrator.
-------------
(g) "AFFILIATE" shall mean, with respect to an Employer, any corporation
---------
other than such Employer that is a member of a controlled group of corporations,
within the meaning of Section 414(b) of the Code, of which such Employer is a
member; all other trades or businesses (whether or not incorporated) under
common control, within the meaning of Section 414(c) of the Code, with such
Employer; any service organization other than such Employer that is a member of
an affiliated service group, within the meaning of Section 414(m) of the Code,
of which such Employer is a member; and any other organization that is required
to be aggregated with such Employer under Section 414(o) of the Code. For
purposes of
2.
<PAGE>
determining the limitations on Annual Additions, the special rules of Section
415(h) of the Code shall apply.
(h) "AGREEMENT OF TRUST" shall mean the agreement between one or more
------------------
Trustees and the Company providing for the investment of the portion of the
Trust Fund that is not invested in one or more Contracts, as may be amended from
time to time.
(i) (1) "ANNUAL ADDITIONS" shall mean the sum of:
----------------
(A) the amount of Employer contributions (including Savings
Contributions other than amounts distributed as "excess deferrals" in
accordance with Treasury Regulation (S)1.402(g)-1(e)(2) or (3), as
well as Matching Contributions, Automatic Contributions and
Discretionary Contributions), allocated to the Participant during the
Limitation Year under any defined contribution plan maintained by an
Employer or an Affiliate;
(B) the amount of the Employee's contributions (other than
rollover contributions, if any) to any contributory defined
contribution plan maintained by an Employer or an Affiliate;
(C) except as provided in subparagraph (2), any forfeitures
separately allocated to the Participant under this Plan or any other
defined contribution plan maintained by an Employer or an Affiliate;
or
(D) to the extent required by law for purposes of determining
the limitations under paragraph (e)(1) of Article VII, any
contributions allocated to an individual account on behalf of such
Participant under Section 401(h) or Section 419A(d) of the Code.
(2) The amount of any Employer contribution allocated to a
Participant for purposes of subparagraph (1)(A), if such contribution is
used to repay a loan for the purchase of Employer Securities, shall be
equal to the Participant's share of the repayment, and not to the value of
Employer Securities released from a suspense account and allocated to such
Participant's Employer Securities Account as a result of such repayment. If
no more than one-third of an Employer's contributions for a Plan Year that
are used to repay a loan for the purchase of Employer Securities are
allocated to Highly Compensated Employees, the Annual Additions for such
Plan Year shall not include
3.
<PAGE>
(A) forfeitures of Employer Securities that were acquired with
the proceeds of a loan, and
(B) amounts used to pay interest on a loan used for the purchase
of Employer Securities.
(j) "AUTOMATIC CONTRIBUTION" shall mean a contribution on behalf of a
----------------------
Participant by an Employer pursuant to paragraph (c) of Article VI.
(k) "BOARD OF DIRECTORS" and "BOARD" shall mean the board of directors of
------------------ -----
the Company or, when required by the context, the board of directors of an
Employer other than the Company.
(l) "CODE" shall mean the Internal Revenue Code of 1986, as amended, or
----
any successor statute. Reference to a specific section of the Code shall include
a reference to any successor provision.
(m) "COMPANY" shall mean Circus Circus Enterprises, Inc., and its
-------
successors.
(n) (1) "COMPENSATION" shall mean regular salaries and wages, overtime
------------
pay, bonuses and commissions paid (or, for Limitation Years beginning
before January 1, 1992, accrued) by an Employer, tips declared by or
distributed to an Employee while performing services for an Employer,
Savings Contributions to this Plan, and elective contributions to any plan
maintained by an Employer pursuant to Section 125 of the Code, but shall
not include third party disability payments, tax-deferred stock options,
deductible relocation expense payments, credits or benefits under this Plan
(other than Savings Contributions), any amount contributed to any pension,
employee welfare, life insurance or health insurance plan or arrangement,
or any other tax-favored fringe benefits (other than elective contributions
to a Section 125 plan).
(2) For purposes of determining a Participant's Actual Contribution
Ratio and Actual Deferral Ratio pursuant to Article I with respect to any
Plan Year, no Compensation paid or accrued by an Employer with respect to
an Employee prior to the Employee's first day of participation shall be
taken into account.
(3) No Compensation in excess of $150,000 (adjusted by the
Commissioner of the Internal Revenue Service in accordance with Section
401(a)(17)(B) of the Code) shall be taken into account for any Employee.
4.
<PAGE>
For these purposes, if any Employee is a Family Member of a Highly
Compensated Employee who is (1) a 5% owner of an Employer or (2) one of the
ten Highly Compensated Employees paid the greatest amount of compensation
during the Plan Year, then such Family Member shall not be considered as a
separate Employee and any compensation paid to such Family Member shall be
treated as if it were paid to or on behalf of the related Highly
Compensated Employee.
(o) "CONTRACT" shall mean an agreement between an Insurer and the Company
--------
or the Trustee to invest all or part of the assets of a Fund.
(p) "DIRECT ROLLOVER" shall mean a payment of an Eligible Rollover
---------------
Distribution by the Plan to an Eligible Retirement Plan specified by the
Eligible Distributee.
(q) "DISCRETIONARY CONTRIBUTION" shall mean a contribution pursuant to
--------------------------
paragraph (d) of Article VI of this Plan by an Employer on behalf of a
Participant.
(r) "DIVERSIFICATION ELECTION" shall mean a Participant's election to
------------------------
diversify a portion of his ESOP Matching Contribution Account and/or ESOP
Automatic Contribution Account pursuant to paragraph (c) of Article XI.
(s) "DIVERSIFICATION ELECTION PERIOD" shall mean the six Plan Year period
-------------------------------
beginning with the later of:
(1) the Plan Year after the Plan Year in which the Participant
attains age 55; or
(2) the Plan Year after the Plan Year in which the Participant first
completes 10 years of participation in the Plan (disregarding participation
before January 1, 1989).
(t) "EARNINGS" shall mean, with respect to a Valuation Period, the
--------
aggregate of the unrealized appreciation or depreciation accruing to the Trust
Fund (or any Fund or separate portion of a Segregated Investment Fund) during
such a period; and the income earned or the loss sustained by the Trust Fund (or
any Fund or separate portion of a Segregated Investment Fund) during such
period, whether from investments or from the sale or exchange of assets. For
purposes of determining the Earnings attributable to the portion of a
Participant's ESOP Matching Contribution Account and ESOP Automatic Contribution
Account that is invested in an Other Investments Account within the ESOP Fund,
the term "Earnings"
5.
<PAGE>
shall include cash dividends received on Employer Securities, whether or not
allocated to Participants' Employer Securities Accounts, but shall not include
stock dividends and unrealized appreciation or depreciation attributable to
Employer Securities held in Participants' Employer Securities Accounts.
(u) "EFFECTIVE DATE" of this Amendment and Restatement shall mean January
--------------
1, 1996.
(v) "ELIGIBLE DISTRIBUTEE" shall mean, in connection with a distribution
--------------------
eligible for rollover to an Eligible Retirement Plan:
(1) a Participant or former Participant who is entitled to benefits
under the terms of this Plan as a result of his retirement, disability or
other severance of employment;
(2) the surviving Eligible Spouse of a Participant or former
Participant who is entitled to death benefits under the terms of this Plan;
and
(3) a spouse or former spouse of a Participant or former Participant
who is entitled to benefits under the terms of this Plan as the alternate
payee under a qualified domestic relations order, as defined in Section
414(p) of the Code.
(w) "ELIGIBLE RETIREMENT PLAN" shall mean an individual retirement account
------------------------
described in Section 408(a) of the Code, an individual retirement annuity
described in Section 408(b) of the Code, an annuity plan described in Section
403(a) of the Code, or a qualified trust described in Section 401(a) of the
Code, which accepts an Eligible Distributee's Eligible Rollover Distribution;
provided, however, that in the case of an Eligible Rollover Distribution to the
surviving Eligible Spouse of a Participant or former Participant who is entitled
to death benefits under the terms of the Plan, an Eligible Retirement Plan shall
be limited to an individual retirement account or individual retirement annuity.
(x) "ELIGIBLE ROLLOVER DISTRIBUTION" shall mean any distribution of all
------------------------------
or any portion of the balance to the credit of an Eligible Distributee, other
than:
(1) any distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made
6.
<PAGE>
(A) for the life (or life expectancy) of the Eligible
Distributee, or the joint lives (or life expectancies) of the Eligible
Distributee and the Eligible Distributee's designated beneficiary, or
(B) for a specified period of ten years or more;
(2) any distribution to the extent such distribution is required
under Section 401(a)(9) of the Code; and
(3) the portion of any distribution that is not includible in gross
income (determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities).
Notwithstanding the foregoing provisions of this paragraph (x), an Eligible
Rollover Distribution shall not include any distributions during a Plan Year
with respect to a Participant if the aggregate amount distributed during the
Plan Year with respect to such Participant is less than $200 (adjusted under
such regulations as may be issued from time to time by the Secretary of the
Treasury).
(y) "ELIGIBILITY DATE" shall mean January 1 and July 1 of each Plan Year.
----------------
(z) "EMPLOYEE" shall mean any person employed by an Employer or an
--------
Affiliate or an individual required to be treated as an Employee by reason of
Section 414(n) of the Code (but only to the extent required by and for the
purposes specified in such Section 414(n)), other than a member of a collective
bargaining unit covering employees working at Circus Circus Las Vegas, Slots-A-
Fun Casino, Silver City Casino, Excalibur, Luxor, Hacienda (or any other
collective bargaining unit if retirement benefits were a subject of good faith
bargaining between such unit and an Employer); provided however, that:
(1) Members of a collective bargaining unit covering employees
working at Circus Circus Reno shall be considered Employees unless the
collective bargaining agreement applicable to such unit specifically
provides otherwise; and
(2) If any collective bargaining agreement, to which any Employer is
a party, specifically provides for the participation in the Plan by
members of the unit covered by such agreement, then such members shall be
considered Employees to the extent provided by such agreement.
7.
<PAGE>
(aa) "EMPLOYER" shall mean the Company, Circus Circus Casinos, Inc., Slots-
--------
A-Fun, Inc., Edgewater Hotel Corporation, Colorado Belle Corp., New Castle
Corp., Ramparts, Inc., Circus Circus Mississippi, Inc., Pinkless, Inc., Racing
Boats, Inc., Circus Circus Development Corp., Railroad Pass Investment Group,
Jean Development Company, and Jean Development West, as well as any other
subsidiary, related corporation or other entity that adopts this Plan with the
consent of the Company. (Railroad Pass Investment Group, Jean Development
Company and Jean Development West are, at times, collectively referred to herein
as the "Gold Strike Entities").
(bb) "EMPLOYER SECURITIES" shall mean common stock, any other type of stock
-------------------
or any marketable obligation (as defined in Section 407(e) of ERISA) issued by
the Company or any Affiliate of the Company; provided, however, that if Employer
Securities are purchased with borrowed funds, Employer Securities, to the extent
required by Section 4975 of the Code, shall only include:
(1) Such securities that are readily tradable on an established
securities market; or
(2) If none of the stock of an Employer (or any Affiliate of such
Employer other than a member of an affiliated service group that includes
such Employer) is publicly tradable on an established securities market,
common stock issued by the Employer having a combination of voting power
and dividend rights equal to or in excess of (A) that class of common stock
of the Employer or any Affiliate having the greatest voting power, and (B)
that class of common stock of the Employer or any Affiliate having the
greatest dividend rights; or
(3) Noncallable preferred stock that is convertible at any time into
stock meeting the requirements of subparagraph (1) or (2) (whichever is
applicable), if such conversion is at a reasonable price (determined as of
the date of acquisition by the Trustee).
(cc) "ERISA" shall mean the Employee Retirement Income Security Act of
-----
1974, as amended, or any successor statute. References to a specific section of
ERISA shall include references to any successor provisions.
(dd) "ESOP AUTOMATIC CONTRIBUTION" shall mean a contribution by an Employer
---------------------------
on behalf of a Participant attributable to any Plan Year beginning on or after
January 1, 1989, and ending prior to January 1, 1996, under the terms of the
Plan as in effect during such time.
8.
<PAGE>
(ee) "ESOP MATCHING CONTRIBUTION" shall mean a contribution by an Employer
--------------------------
on behalf of a Participant attributable to any Plan Year beginning on or after
January 1, 1990, and ending prior to January 1, 1996, under the terms of the
Plan as in effect during such time.
(ff) "FAIR MARKET VALUE" shall mean, for purposes of the valuation of
-----------------
Employer Securities, the closing price (or, if there is no closing price, then
the closing bid price) of such Employer Securities as reported on the Composite
Tape, or if not reported thereon, then such price as reported in the trading
reports of the principal securities exchange in the United States on which such
Employer Securities are listed, or if the Employer Securities are not listed on
a securities exchange in the United States, the mean between the dealer closing
"bid" and "ask" prices on the over-the-counter market as reported by the
National Association of Securities Dealers Automated Quotation System (NASDAQ),
or NASDAQ's successor, or if not reported on NASDAQ, the fair market value of
the securities as determined by an independent appraiser, as required by Section
401(a)(28)(C) of the Code.
(gg) "FAMILY MEMBER" of a Highly Compensated Employee shall mean such
-------------
Employee's spouse, lineal descendant or ascendent, or the spouse of his lineal
descendant or ascendant; provided, however, that for purposes of determining the
$150,000 limit on a Highly Compensated Employee's Compensation, the term "Family
Member" shall include only the Employee's spouse and his lineal descendants who
have not attained age 19 before the close of the Plan Year.
(hh) "401(K) AUTOMATIC CONTRIBUTION" shall mean a contribution on behalf of
-----------------------------
a Participant by an Employer attributable to any Plan Year ending prior to
January 1, 1989, under the terms of the Plan as in effect immediately prior to
such date.
(ii) "401(K) EMPLOYER CONTRIBUTION" shall mean a matching contribution on
----------------------------
behalf of a Participant by an Employer attributable to any Plan Year ending
prior to January 1, 1990, under the terms of the Plan as in effect immediately
prior to such date.
(jj) "FUND" shall mean a fund established under Article X.
----
(kk) "HARDSHIP" shall mean an immediate and heavy financial need of the
--------
Participant that cannot be met by his other reasonably available financial
resources.
9.
<PAGE>
(ll) "HIGHLY COMPENSATED EMPLOYEE" shall mean:
---------------------------
(1) any Employee during the Plan Year or the immediately preceding
Plan Year
(A) who was a 5% owner of an Employer;
(B) whose Section 415 Compensation was more than $100,000
(adjusted under such regulations as may be issued by the Secretary of
the Treasury);
(C) whose Section 415 Compensation was more than $66,000
(adjusted under such regulations as may be issued by the Secretary of
the Treasury); and who was a member of the "top paid group." As used
herein, "top paid group" shall mean all Employees who are in the top
20% of the Employer's work force on the basis of Section 415
Compensation paid during the year; or
(D) who was an officer of an Employer and received compensation
in excess of 50% of the amount in effect under Section 415(b)(1)(A) of
the Code for any such Plan Year; provided, however, that in no event
shall more than 50 Employees be considered Highly Compensated
Employees merely by reason of their status as officers of an Employer;
and
(2) any former Employee who separated from service (or was deemed to
have separated from service) prior to the Plan Year and performs no service
for an Employer during the Plan Year, but was an actively employed Highly
Compensated Employee in the Plan Year of his separation or any Plan Year
ending on or after the date he attained age 55.
For purposes of determining whether a Participant is a Highly Compensated
Employee, if any Employee is a Family Member of a Highly Compensated Employee
who is (i) a 5% owner of an Employer, or (ii) one of the ten Highly Compensated
Employees paid the greatest amount of Compensation during the Plan Year, then
such Family Member shall not be considered as a separate Employee and any
Compensation paid to such Family Member (and any applicable benefit or
contribution on behalf of such Family Member) shall be treated as if it were
paid to or on behalf of the related Highly Compensated Employee.
10.
<PAGE>
(mm) "HOUR OF SERVICE" shall mean:
---------------
(1) (A) an hour for which an Employee is paid, or entitled to
payment, for the performance of duties for an Employer or an
Affiliate;
(B) an hour for which an Employee is paid, or entitled to
payment, by an Employer or an Affiliate on account of a period of time
during which no duties are performed (irrespective of whether the
employment relationship has terminated) due to vacation, holiday,
illness, incapacity (including disability), lay-off, jury duty,
military duty or leave of absence. Notwithstanding the preceding:
(i) no more than 501 Hours of Service shall be credited
under this section (B) to an Employee on account of any single
continuous period during which the Employee performs no duties
(whether or not such period occurs in a single Plan Year);
(ii) an hour for which an Employee is directly or
indirectly paid, or entitled to payment, on account of a period
during which no duties are performed shall not be credited to the
Employee if such payment is made or due under a plan maintained
solely for the purpose of complying with applicable workers'
compensation, unemployment compensation or disability insurance
laws; and
(iii) an hour shall not be credited for a payment which
solely reimburses an Employee for medical or medically related
expenses incurred by the Employee; and
(C) an hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by an Employer or an
Affiliate; provided, however, that the same Hour of Service shall not
be credited both under section (A) or section (B), as the case may be,
and under this section (C). Crediting of an Hour of Service for back
pay awarded or agreed to with respect to periods described in section
(B) shall be subject to the limitations set forth in that section.
The definition set forth in this subparagraph (1) is subject to the special
rules contained in Department of Labor Regu-
11.
<PAGE>
lations (S)(S)2530.200b-2(b) and (c), and any regulations amending or
superseding such sections, which special rules are hereby incorporated in
the definition of "Hour of Service" by this reference.
(2) (A) Notwithstanding the other provisions of this paragraph (mm),
in the case of an Employee who is absent from work for any period by
reason of her pregnancy, by reason of the birth of a child of the
Employee, by reason of the placement of a child with the Employee in
connection with the adoption of such child by the Employee or for
purposes of caring for such child for a reasonable period beginning
immediately following such birth or placement, the Employee shall be
treated as having those Hours of Service described in section (B).
(B) The Hours of Service to be credited to an Employee under the
provisions of section (A) are the Hours of Service that otherwise
would normally have been credited to such Employee but for the absence
in question or, in any case in which the Plan is unable to determine
such hours, eight Hours of Service per day of such absence; provided,
however, that the total number of hours treated as Hours of Service
under this subparagraph (2) by reason of any such pregnancy or
placement shall not exceed 501 hours.
(C) The hours treated as Hours of Service under this
subparagraph (2) shall be credited only in the Plan Year in which the
absence from work begins, if the Employee would be prevented from
incurring a One Year Break in Service in such Plan Year solely because
the period of absence is treated as Hours of Service under this
subparagraph (2), or, in any other case, in the immediately following
Plan Year.
(D) Credit shall be given for Hours of Service under this
subparagraph (2) solely for purposes of determining whether a One Year
Break in Service has occurred for participation or vesting purposes;
credit shall not be given hereunder for any other purposes (including,
without limitation, benefit accrual).
(E) Notwithstanding any other provision of this subparagraph
(2), no credit shall be given under this subparagraph (2) unless the
Employee in question furnishes to the Administrator such timely
information as the
12.
<PAGE>
Administrator may reasonably require to establish that the absence
from work is for reasons referred to in section (A) and the number of
days for which there was such an absence.
(3) Solely for the Plan Year ending on December 31, 1995, and solely
to the extent provided in paragraph (lll) of this Article I, Employees of
Pinkless, Inc. and the Gold Strike Entities who were employed by such
entities continuously from January 1, 1995 until the respective dates such
entities became members of the Company's controlled groups shall receive
credit for hours that would have been Hours of Service if such entities had
been part of the Company's controlled group at the time such hours were
completed.
(nn) "INSURER" shall mean a legal reserve life insurance company licensed
-------
or authorized to transact business in the State of Nevada that shall issue a
Contract.
(oo) "KEY EMPLOYEE" shall mean any Employee or former Employee (and the
------------
beneficiaries of such Employee) who is at any time during the Plan Year (or was
at any time during the four preceding Plan Years):
(1) an officer of an Employer or an Affiliate having an aggregate
annual compensation from the Employer and its Affiliates in excess of 50%
of the amount in effect under Section 415(b)(1)(A) of the Code for any such
Plan Year; provided, however, that no more than the lesser of
(A) 50 Employees, or
(B) the greater of (i) three Employees or (ii) 10 percent of all
Employees,
shall be treated as officers, and such officers shall be those with the
highest annual compensation in the five-year period;
(2) one of the ten Employees owning (or considered as owning) the
largest interests in an Employer or an Affiliate, owning more than a 1/2%
interest in the Employer or an Affiliate, and having an aggregate annual
compensation from the Employer and its Affiliates of more than the
limitation in effect under Section 415(c)(1)(A) of the Code for the
calendar year that includes the last day of the Plan Year;
(3) a 5% owner of an Employer or an Affiliate; or
13.
<PAGE>
(4) a 1% owner of an Employer or an Affiliate having an aggregate
annual compensation from the Employer and its Affiliates of more than
$150,000.
Ownership, for purposes of sections (2), (3) and (4), shall be determined in
accordance with Section 416(i)(1)(B) and (C) of the Code. For purposes of
section (2), if two Employees have the same ownership interest in an Employer or
an Affiliate, the Employee having the greatest annual compensation from the
Employer and all Affiliates shall be treated as having a larger interest. For
purposes of this paragraph, "compensation" shall mean compensation as defined in
Section 415(c)(3) of the Code, but including amounts contributed by an Employer
on behalf of an Employee pursuant to a salary reduction agreement which are
excludable from the Employee's gross income under Section 125, Section
402(a)(8), Section 402(h), or Section 403(b) of the Code.
(pp) "LEAVE OF ABSENCE" shall mean the time granted to an Employee for
----------------
vacation, sick leave, temporary layoff or other purposes, all as authorized in
accordance with uniform rules adopted by his Employer from time to time. Leave
of Absence shall also include the time that an Employee serves in the armed
forces of the United States of America during a period of national emergency or
as a result of the operation of a compulsory military service law of the United
States of America and during any period after his discharge from such armed
forces in which his employment rights are guaranteed by law.
(qq) "LIMITATION YEAR" shall mean the Plan Year.
---------------
(rr) "MATCHING CONTRIBUTION" shall mean a contribution on behalf of a
---------------------
Participant by an Employer pursuant to paragraph (b) of Article VI.
(ss) "NON-KEY EMPLOYEE" shall mean, with respect to any Plan Year, an
----------------
Employee or former Employee who is not a Key Employee (including any such
Employee who formerly was a Key Employee).
(tt) "NORMAL RETIREMENT DATE" shall mean the date on which a Participant
----------------------
attains the age of 65 years, or the 5th anniversary of the date the Participant
commenced participation in the Plan, whichever date occurs later.
(uu) "ONE YEAR BREAK IN SERVICE" shall mean a Plan Year (and, for purposes
-------------------------
of Article V, the year beginning with the date the Employee's employment
commenced) in which an Employee has 500 or
14.
<PAGE>
fewer Hours of Service, and it shall be deemed to occur on the last day of any
such year.
(vv) "PARTICIPANT" shall mean:
-----------
(1) any eligible Employee of an Employer who has become a Participant
under the Plan, except that an Employee who has made a Rollover
Contribution prior to his Eligibility Date shall be considered a
Participant solely with respect to his Rollover Contribution Account; and
(2) any former employee of an Employer who became a Participant under
the Plan and who still has a balance in an Account under the Plan.
(ww) "PLAN" shall mean the profit sharing and investment plan as herein set
----
forth, as it may be amended from time to time.
(xx) "PLAN ADMINISTRATOR" shall mean the Company.
------------------
(yy) "PLAN YEAR" shall mean the 12-month period ending on December 31.
---------
(zz) "POOLED INVESTMENT FUND" shall mean a Fund established under Article
----------------------
X, the combined assets of which shall consist of the common investments of all
Participants selecting the Fund.
(aaa) "ROLLOVER CONTRIBUTION" shall mean a contribution to this Plan by an
---------------------
Employee or a Participant pursuant to paragraph (b)(2) of Article V or paragraph
(j) of Article VI.
(bbb) "SAVINGS CONTRIBUTION" shall mean a contribution to this Plan on
--------------------
behalf of a Participant by an Employer pursuant to paragraph (a) of Article VI.
(ccc) "SECTION 415 COMPENSATION" shall include all wages and other payments
------------------------
of compensation to a Participant from all Employers and all Affiliates for
personal services actually rendered for which the Employers and Affiliates are
required to furnish the Participant a written statement under Sections 6041(d)
and 6051(a)(3) of the Code (and without regard to any provisions under Section
3401(a) of the Code that limit the remuneration included in wages based on the
nature or location of the employment or the services performed).
(ddd) "SEGREGATED INVESTMENT FUND" shall mean a Fund established under
--------------------------
Article X, in which the assets of each Participant
15.
<PAGE>
selecting the Fund shall be separately invested, and for which the Earnings
attributable to such assets shall be separately accounted.
(eee) "TOP HEAVY PLAN" shall mean this Plan if the aggregate account
--------------
balances (not including voluntary rollover contributions made by any Participant
from an unrelated plan) of the Key Employees and their beneficiaries for such
Plan Year exceed 60% of the aggregate account balances (not including voluntary
rollover contributions made by any Participant from an unrelated plan) for all
Participants and their beneficiaries.
(1) Such values shall be determined for any Plan Year as of the last
day of the immediately preceding Plan Year. The account balances on any
determination date shall include the aggregate distributions made with
respect to Participants during the five-year period ending on the
determination date. For the purposes of this definition, the aggregate
account balances for any Plan Year shall include the account balances and
accrued benefits of all retirement plans qualified under Section 401(a) of
the Code with which this Plan is required to be aggregated to meet the
requirements of Section 401(a)(4) or 410 of the Code (including terminated
plans that would have been required to be aggregated with this Plan) and
all plans of an Employer or an Affiliate in which a Key Employee
participates; and such term may include (at the discretion of the Plan
Administrator) any other retirement plan qualified under Section 401(a) of
the Code that is maintained by an Employer or an Affiliate, provided the
resulting aggregation group satisfies the requirements of Sections 401(a)
and 410 of the Code.
(2) All calculations shall be on the basis of actuarial assumptions
that are specified by the Plan Administrator and applied on a uniform basis
to all plans in the applicable aggregation group.
(3) The account balance of any Participant shall not be taken into
account if:
(A) he is a Non-Key Employee for the Plan Year that includes the
determination date, but was a Key Employee for any prior Plan Year, or
(B) he has not performed any service for an Employer during the
five-year period ending on the determination date.
16.
<PAGE>
(fff) "TRUST" shall mean, collectively, the trust or trusts established by
-----
the Agreements and Declarations of Trust and the account or accounts established
by the Contracts.
(ggg) "TRUSTEE" shall mean the individual, individuals or corporation
-------
designated as trustee under an Agreement of Trust.
(hhh) "TRUST FUND" shall mean, collectively, the trust funds and accounts
----------
established under all Agreements and Declarations of Trust and all Contracts
from which the amounts of supplementary compensation provided for by the Plan
are to be paid or are to be funded.
(iii) "VALUATION DATE" shall mean, with respect to the Trust Fund and
--------------
distributions therefrom to terminated Participants or their beneficiaries, the
last day of each calendar month, and such other dates as the Plan Administrator
may select. Interim Valuation Dates no more frequently than weekly may be used
for purposes of facilitating hardship withdrawals.
(jjj) "VALUATION PERIOD" shall mean the period beginning with the first day
----------------
after a Valuation Date and ending with the next Valuation Date.
(kkk) "YEAR OF CREDITED SERVICE" shall mean a Plan Year beginning on or
------------------------
after the Employee's date of employment or most recent date of reemployment,
whichever is later, during which the Employee completed 1,000 or more Hours of
Service; provided, however, that:
(1) No Employee who became a Participant after November 20, 1989
shall receive credit for any Plan Year prior to the Plan Year in which he
became a Participant, except that any Employee who would have been a
Participant in an earlier Plan Year if he had not been a member of a
collective bargaining unit shall have the same number of Years of Credited
Service that he would have had if he had not been a member of such unit.
(2) In the case of employees of Pinkless, Inc. who were continuously
employed by Hacienda Hotel, Inc. from January 1, 1995 through September 1,
1995, January 1, 1995 shall be treated as the date of employment for
purposes of this paragraph.
(3) In the case of employees of the Gold Strike Entities who were
continuously employed by such employer from January
17.
<PAGE>
1, 1995 through June 1, 1995, January 1, 1995 shall be treated as the date
of employment for purposes of this paragraph.
(lll) (1) "YEAR OF SERVICE" shall mean:
---------------
(A) for all purposes of this Plan except for purposes of Article
V, a Plan Year during which an Employee completes 1,000 or more Hours
of Service; and
(B) for purposes of Article V, the consecutive 12-month period
beginning with the date the Employee's employment with his Employer or
any Affiliate thereof commenced (the first day for which the Employee
is credited with an Hour of Service) if, during such consecutive 12-
month period, the Employee completes 1,000 Hours of Service; provided,
however, that if, during such consecutive 12-month period, the
Employee does not complete 1,000 Hours of Service, then "Year of
Service" shall mean any Plan Year beginning after the Employee's date
of employment during which the Employee completes 1,000 or more Hours
of Service. In either event, for purposes of Article V, the Year of
Service is not completed until the end of the consecutive 12-month
period or the Plan Year, as the case may be, without regard to when
during the period that 1,000 Hours of Service are completed, and in
determining his Years of Service the Employee shall receive credit for
his Hours of Service for his Employer or any Affiliate thereof,
whether or not he was an Employee at the time such Hours of Service
were completed.
(2) For purposes of Article VIII and paragraph (a)(5) of Article XIV,
an Employee's "Years of Service" shall not include any Year of Service
completed prior to January 1, 1985.
(3) Each Employee of Pinkless, Inc. or one or more of the Gold Strike
Entities on January 1, 1995, who remained continuously employed by such
employer through the date it (or its successor) became a member of the
Company's controlled group, shall receive credit for a "Year of Service"
for purposes of Article VIII and paragraph (a)(5) of Article XIV, for the
Plan Year ending December 31, 1995, if he completes 1,000 Hours of Service
with such employer (or in the case of Pinkless, Inc., for Hacienda Hotel,
Inc.), whether or not such employer was a member of the Company's
controlled group at the time such Hours of Service were completed.
18.
<PAGE>
ARTICLE II
AMENDMENT AND RESTATEMENT AND NAME OF THE PLAN
----------------------------------------------
This profit sharing and investment plan is hereby amended and restated in
accordance with the terms hereof and shall be known as the "CIRCUS CIRCUS
EMPLOYEES' PROFIT SHARING AND INVESTMENT PLAN."
ARTICLE III
PURPOSE OF THE PLAN AND THE TRUST
---------------------------------
(a) EXCLUSIVE BENEFIT. This Plan is created for the sole purpose of
-----------------
providing benefits to the Participants and enabling them to share in the profits
and growth of their Employer. The ESOP Matching Contribution Accounts and ESOP
Automatic Contribution Accounts are designed to be invested primarily in
Employer Securities. Except as otherwise permitted by law and the terms of this
Plan, in no event shall any part of the principal or income of the Trust be paid
to or reinvested in any Employer or be used for or diverted to any purpose
whatsoever other than for the exclusive benefit of the Participants and their
beneficiaries.
(b) RETURN OF CONTRIBUTIONS. Notwithstanding the foregoing provisions of
-----------------------
paragraph (a), any contribution made by an Employer to this Plan by a mistake of
fact may be returned to the Employer within one year after the payment of the
contribution; and any contribution made by an Employer that is conditioned upon
the deductibility of the contribution under Section 404 of the Code (each
contribution shall be presumed to be so conditioned unless the Employer
specifies otherwise) may be returned to the Employer if the deduction is
disallowed and the contribution is returned (to the extent disallowed) within
one year after the disallowance of the deduction.
(c) PARTICIPANTS' RIGHTS. The establishment of this Plan shall not be
--------------------
considered as giving any Employee, or any other person, any legal or equitable
right against any Employer, any Affiliate, the Plan Administrator, the Trustee
or the principal or the income of the Trust, except to the extent otherwise
provided by law. The establishment of this Plan shall not be considered as
giving any Employee, or any other person, the right to be retained in the employ
of any Employer or any Affiliate.
(d) QUALIFIED PLAN. This Plan and the Trust are intended to qualify under
--------------
the Code as a tax-free employees' profit sharing plan
19.
<PAGE>
and trust, as a cash or deferred arrangement subject to Section 401(k) of the
Code, and as an employee stock ownership plan within the meaning of Section
4975(e)(7) of the Code. The provisions of this Plan and the Trust shall be
interpreted accordingly.
ARTICLE IV
PLAN ADMINISTRATOR
------------------
(a) ADMINISTRATION OF THE PLAN. The Plan Administrator shall control and
--------------------------
manage the operation and administration of the Plan, except with respect to
investments. The Administrator shall have no duty with respect to the
investments to be made of the funds in the Trust except as may be expressly
assigned to it by the terms of the Agreement of Trust.
(b) POWERS AND DUTIES. The Administrator shall have complete control over
-----------------
the administration of the Plan herein embodied, with all powers necessary to
enable it to carry out its duties in that respect. Not in limitation, but in
amplification of the foregoing, the Administrator shall have power and
discretion to interpret or construe this Agreement and to determine all
questions that may arise as to the status and rights of the Participants and
others hereunder.
(c) DIRECTION OF TRUSTEE. It shall be the duty of the Administrator to
--------------------
direct the Trustee with regard to the distribution of the benefits to the
Participants and others hereunder.
(d) SUMMARY PLAN DESCRIPTION. The Administrator shall prepare or cause to
------------------------
be prepared a Summary Plan Description and such periodic and annual reports as
are required by law.
(e) DISCLOSURE. At least once each year, the Administrator shall furnish
----------
to each Participant a statement containing the value of his interest in the
Trust Fund and such other information as may be required by law.
(f) CONFLICT IN TERMS. The Administrator shall notify each Employee, in
-----------------
writing, as to the existence of the Plan and the basic provisions thereof. In
the event of any conflict between the terms of this Plan and the Trust, as set
forth in this Agreement and in any Agreement of Trust or Contract, and as set
forth in any explanatory booklet or other description, this Agreement and the
Agreement of Trust or Contract shall control.
20.
<PAGE>
(g) NONDISCRIMINATION. The Administrator shall not take any action or
-----------------
direct the Trustee or Insurer to take any action whatsoever that would result
in unfairly benefiting one Participant or group of Participants at the expense
of another or in improperly discriminating between Participants similarly
situated or in the application of different rules to substantially similar sets
of facts.
(h) RECORDS. The Administrator shall keep a complete record of all its
-------
proceedings as such Administrator and all data necessary for the administration
of the Plan. All of the foregoing records and data shall be located at the
principal office of the Administrator.
(i) FINAL AUTHORITY. Except to the extent otherwise required by law or by
---------------
this Plan, the decision of the Administrator in matters within its jurisdiction
shall be final, binding and conclusive upon each Employer and each Employee,
member and beneficiary and every other interested or concerned person or party.
(j) (1) ACTION ON CLAIMS. Claims for benefits under the Plan may be made
----------------
by a Participant or a beneficiary of a Participant on forms supplied by the
Plan Administrator. Written notice of the disposition of a claim shall be
furnished to the claimant by the Administrator within 90 days after the
application is filed with the Administrator, unless special circumstances
require an extension of time for processing, in which event action shall be
taken as soon as possible, but not later than 180 days after the
application is filed with the Administrator.
(A) In the event that no action has been taken within such 90 or
180 day period, the claim shall be deemed to be denied for the
purposes of paragraph (j)(2).
(B) In the event that the claim is denied, the denial shall be
written in a manner calculated to be understood by the claimant and
shall include the specific reasons for the denial, specific references
to pertinent Plan provisions on which the denial is based, a
description of the material information, if any, necessary for the
claimant to perfect the claim, an explanation of why such material
information is necessary and an explanation of the claim review
procedure.
(2) REVIEW OF CLAIMS. If a claim is denied (either in the form of a
----------------
written denial or by the failure of the Plan
21.
<PAGE>
Administrator, within the required time period, to notify the claimant of
the action taken), a claimant or his duly authorized representative shall
have 60 days after the receipt of such denial to petition the Plan
Administrator in writing for a full and fair review of the denial, during
which time the claimant or his duly authorized representative shall have
the right to review pertinent documents and to submit issues and comments
in writing.
(A) The Plan Administrator shall promptly review the claim and
shall make a decision not later than 60 days after receipt of the
request for review, unless special circumstances require an extension
of time for processing, in which event a decision shall be rendered as
soon as possible, but not later than 120 days after the receipt of the
request for review. If such an extension is required because of
special circumstances, written notice of the extension shall be
furnished to the claimant prior to the commencement of the extension.
(B) The decision on review shall be in writing and shall include
specific reasons for the decision, written in a manner calculated to
be understood by the claimant, with specific references to the Plan
provisions on which the decision is based.
(k) APPOINTMENT OF ADVISORS. The Administrator may appoint such
-----------------------
accountants, counsel (who may be counsel for an Employer), specialists and other
persons that it deems necessary and desirable in connection with the
administration of this Plan. The Administrator, by action of its Board of
Directors, may designate one or more of its employees to perform the duties
required of the Administrator hereunder.
ARTICLE V
ELIGIBILITY AND PARTICIPATION
-----------------------------
(a) CURRENT PARTICIPANTS. Any Employee who was a Participant in this Plan
--------------------
on the Effective Date of this Amendment and Restatement shall remain as a
Participant in the Plan.
(b) ELIGIBILITY AND PARTICIPATION. Thereafter, any other Employee of an
-----------------------------
Employer shall be eligible to become a Participant in the Plan upon completing
one Year of Service and attaining the age of 21 years.
22.
<PAGE>
(1) ENTRY INTO PLAN. Any such eligible Employee shall enter the Plan
---------------
as a Participant, if he is still an Employee of an Employer, on the first
Eligibility Date concurring therewith or occurring thereafter.
(2) ROLLOVER CONTRIBUTION PRIOR TO ENTRY. Notwithstanding the
------------------------------------
foregoing provisions of this paragraph (b), the Plan Administrator may
accept a Rollover Contribution from an Employee who is reasonably expected
to become a Participant.
(c) SPECIAL RULES FOR EMPLOYEES OF PINKLESS, INC. AND THE GOLD STRIKE
-----------------------------------------------------------------
ENTITIES. Notwithstanding the foregoing provisions of this Article V,
- --------
(1) Employees of Pinkless, Inc. on September 1, 1995, who were
continuously employed by Hacienda Hotel, Inc. from January 1, 1995 through
September 1, 1995, and who remain employed by Pinkless, Inc. or another
Employer on the Effective Date of this Amendment and Restatement, shall be
eligible to become Participants in the Plan on the Effective Date of this
Amendment and Restatement, provided they would have completed 1,000 Hours
of Service during the Plan Year ending December 31, 1995 if Pinkless, Inc.
had been an Employer continuously since January 1, 1995.
(2) Employees of one or more of the Gold Strike Entities on June 1,
1995, who were continuously employed by one or more of the Gold Strike
Entities from January 1, 1995 through June 1, 1995, and who remain employed
by an Employer on the Effective Date of this Amendment and Restatement,
shall be eligible to become Participants in the Plan on the Effective Date
of this Amendment and Restatement, provided they would have completed 1,000
Hours of Service during the Plan Year ending December 31, 1995 if the Gold
Strike Entities had been Employers continuously since January 1, 1995.
(3) Employees of Pinkless, Inc. or the Gold Strike Entities who
become so employed after January 1, 1995 shall be eligible to become
Participants in the Plan under the requirements established pursuant to
paragraph (b) of this Article V, with Hours of Service credited for all
purposes under the Plan being limited to those completed on or after:
(A) September 1, 1995, in the case of Employees of Pinkless,
Inc., and
23.
<PAGE>
(B) June 1, 1995 in the case of the Gold Strike Entities.
(d) FORMER EMPLOYEES.
----------------
(1) A Participant who ceases to be an Employee, and who subsequently
returns as an Employee, shall be eligible again to become a Participant on
the date he again becomes an Employee.
(2) An Employee who has completed one Year of Service, but who is not
an Employee of an Employer on the next following Eligibility Date, shall
enter the Plan as a Participant on the first date following such
Eligibility Date on which he is an Employee of an Employer.
(e) NOTIFICATION. The Administrator shall notify each Employee of his
------------
eligibility to participate in the Plan.
ARTICLE VI
CONTRIBUTIONS TO THE TRUST
--------------------------
(a) SAVINGS CONTRIBUTIONS.
---------------------
(1) AMOUNT CONTRIBUTED. The Employer shall contribute to the Trust,
------------------
on behalf of each Participant, a Savings Contribution as specified in a
written salary reduction agreement (if any) between the Participant and
such Employer; provided, however, that such contribution for a Participant
shall not exceed the lesser of
(A) $9,500 (adjusted under such regulations as may be issued
from time to time by the Secretary of the Treasury) with respect to
any calendar year, or
(B) 15% of the Participant's Compensation for such Plan Year.
A Savings Contribution hereunder may be expressed as a fixed dollar amount
per payroll period, or as a fixed percentage of pay.
24.
<PAGE>
(2) REFUND OF EXCESS SAVINGS CONTRIBUTIONS.
--------------------------------------
(A) If a Participant's Savings Contributions, together with any
elective contributions made by the Participant to any other plans of
his Employer or an Affiliate that are intended to qualify under
Section 401(k) of the Code, exceed the limitation set forth in
paragraph (a)(1)(A) of this Article VI for any calendar year, the
Administrator, upon notification from the Participant or his Employer,
shall refund to such Participant the portion of such excess that is
attributable to his Savings Contributions to the Plan, increased by
the earnings thereon for such calendar year (if any) and reduced by
any excess Savings Contributions and earnings for the Plan Year
beginning with or within the calendar year that have been previously
distributed to him in accordance with the provisions of paragraph
(a)(6).
(B) If a Participant's Savings Contributions, together with any
elective contributions made by the Participant to any other plans
intended to qualify under Sections 401(k), 403(b), 408(k) or 457 of
the Code, exceed the limitation set forth in paragraph (a)(1)(A) of
this Article VI for any calendar year (after the application of
paragraph (a)(2)(A)), the Administrator may refund to such
Participant, at his request, the portion of such excess that is
attributable to Savings Contributions made to the Plan, increased by
the earnings thereon for such calendar year and reduced by any excess
Savings Contributions and earnings for the Plan Year beginning with or
within the calendar year that have been previously distributed to the
Participant in accordance with the provisions of paragraph (a)(6).
Any earnings on Savings Contributions refunded pursuant to this
subparagraph (2) shall be determined by the Plan Administrator as permitted
by Treasury Regulation (S)1.402(g)-1(e)(5). Any such refund shall be made
on or before April 15 immediately following the calendar year in which the
excess Savings Contribution is made.
(3) SALARY REDUCTION AGREEMENT. Any salary reduction agreement shall
--------------------------
be executed and in effect prior to the first day of the first pay period to
which it applies. Any such agreement may be revised by the Participant,
with the approval of the Administrator, as of the first day of any calendar
25.
<PAGE>
quarter, for pay periods beginning after the date such revision is executed
and made effective. Any salary reduction agreement relating to a cash bonus
shall be executed and in effect prior to the date on which the bonus is
declared.
(4) REFUSAL OF DEFERRAL. The Administrator shall have the right to
-------------------
require any Participant to reduce his Savings Contributions under any such
agreement, or to refuse deferral of all or part of the amount set forth in
such agreement, if necessary to comply with the requirements of this Plan
and the Code.
(5) SUSPENSION OF SAVINGS CONTRIBUTIONS. Notwithstanding any other
-----------------------------------
provision of this paragraph (a), a Participant may suspend or reduce
further Savings Contributions to the Plan at any time, provided the request
for such suspension or reduction is received by the Plan Administrator
prior to the first day of the first pay period to which such suspension or
reduction applies. Any Participant who suspends or reduces further
contributions under this subparagraph may reinstate such contributions as
provided in subparagraph (3) of this paragraph (a).
(6) REFUND OF EXCESS DEFERRAL.
-------------------------
(A) In the event that the Savings Contributions of Highly
Compensated Employees exceed the limitations set forth in paragraph
(f) of this Article VI, such excess (plus the earnings thereon),
determined as set forth below, shall be distributed to the Highly
Compensated Employees on or before the 15th day of the third month
after the close of the Plan Year to which the excess contributions
relate. Notwithstanding the preceding sentence, the Plan Administrator
may delay the distribution of any excess Savings Contributions (plus
the earnings thereon) attributable to an Employer beyond the 15th day
of the third month of such Plan Year, if the Employer consents to such
delay and the Administrator refunds all such excess amounts not later
than 12 months after the close of the Plan Year to which the excess
contributions relate.
(B) (i) The amount of such excess for a Highly Compensated
Employee for the Plan Year shall be determined by reducing the Actual
Deferral Ratio of the Highly Compensated Employee with the highest
Actual Deferral Ratio to the extent required to
26.
<PAGE>
a. enable the arrangement to satisfy the limitations
set forth in paragraph (f), or
b. cause such Highly Compensated Employee's Actual
Deferral Ratio to equal the Actual Deferral Ratio of the
Highly Compensated Employee with the next highest Actual
Deferral Ratio.
This process shall be repeated until the arrangement satisfies
the limitations set forth in paragraph (f).
(ii) For each Highly Compensated Employee, the amount of
such excess shall be deemed to equal
a. the total Savings Contributions plus Matching and
Non-Elective contributions made, if any, that are treated as
Savings Contributions, on behalf of the Participant
(determined prior to the application of this paragraph
(a)(6)), minus
b. the amount determined by multiplying the
Participant's Actual Deferral Ratio (deter mined after
application of this paragraph (a)(6)) by his Compensation
used in determining such ratio.
(C) Earnings attributable to excess Savings Contributions shall
be determined by the Plan Administrator as permitted by Treasury
Regulation (S)1.401(k)-1(f)(4)(ii).
(D) Excess Savings Contributions and earnings determined under
paragraphs (a)(6)(B) and (C) shall be reduced by any excess Savings
Contributions and earnings for the calendar year ending with or within
the Plan Year that have been previously refunded to the Participant in
accordance with the provisions of paragraph (a)(2).
(E) In the event that a Highly Compensated Employee's Actual
Deferral Ratio is determined on the basis of both his contributions
and the contributions of his Family Members, any excess Savings
Contributions and earnings attributable to such Highly Compensated
Employee under this paragraph (a)(6) shall be distributed to the
Highly Compensated Employee and his Family Members in proportion to
the
27.
<PAGE>
relative Savings Contributions of the Highly Compensated Employee and
his Family Members for the Plan Year.
(b) MATCHING CONTRIBUTIONS.
----------------------
(1) For each Plan Year, each Employer shall contribute to the Trust,
on behalf of each Participant who is its Employee on the last day of the
Plan Year and for whom a Savings Contribution is made during such Plan
Year, a Matching Contribution equal to 25% of the amount of the Savings
Contribution made to the Plan by the Participant for the Plan Year;
provided, however, that the Matching Contribution for a Participant with
respect to any Plan Year shall not exceed the amount determined for such
Plan Year from the following table, on the basis of the Participant's Years
of Credited Service:
<TABLE>
<CAPTION>
YEARS OF MAXIMUM AMOUNT OF
CREDITED SERVICE MATCHING CONTRIBUTIONS
---------------- ----------------------
<S> <C>
1 $ 62.50
2 75.00
3 87.50
4 100.00
5 125.00
6 150.00
7 175.00
8 or more 200.00
</TABLE>
(2) Any Matching Contribution made by an Employer on account of a
Savings Contribution that has been refunded pursuant to paragraph (a)(2) or
paragraph (a)(6), shall be forfeited as of the first day of the Plan Year
following the Plan Year for which the Matching Contribution was made. For
this purpose, Savings Contributions that exceed the amount subject to
Matching Contributions shall be deemed to have been refunded first. Any
forfeited amount shall be used to reduce Matching Contributions.
(3) If the Matching Contributions of Highly Compensated Employees
exceed the limitations of paragraph (f):
(A) The nonvested portion of such excess (including earnings
thereon), if any, shall be forfeited as of the last day of the Plan
Year for which the Matching Contribution was made. Such forfeited
amount shall be allocated for such Plan Year as provided in paragraphs
(d)(5) and (f) of Article VII.
28.
<PAGE>
(B) The vested portion of such excess (including earnings
thereon), if any, shall be distributed to the Highly Compensated
Employees on or before the 15th day of the third month after the close
of the Plan Year to which the matching contributions relate.
Notwithstanding the preceding sentence, the Plan Administrator may
delay the distribution of any excess Matching Contributions (plus the
earnings thereon) attributable to an Employer beyond the 15th day of
the third month of such Plan Year, if the Employer consents to such
delay and the Administrator refunds all such excess amounts not later
than 12 months after the close of the Plan Year to which the excess
contributions relate.
(C) The amount of such excess for a Highly Compensated Employee
for the Plan Year shall be determined by the following leveling
method, under which the Actual Contribution Ratio of the Highly
Compensated Employee with the highest Actual Contribution Ratio is
reduced to the extent required to
(i) enable the Plan to satisfy the limitations set forth in
paragraph (f), or
(ii) cause such Highly Compensated Employee's Actual
Contribution Ratio to equal the Actual Contribution Ratio of the
Highly Compensated Employee with the next highest Actual
Contribution Ratio.
This process shall be repeated until the Plan satisfies the
limitations set forth in paragraph (f). For each Highly Compensated
Employee, the amount of such excess is equal to the total Matching
Contributions, plus Savings Contributions, if any, treated as matching
contributions, on behalf of the Employee (determined prior to the
application of this section (C)) minus the amount deter mined by
multiplying the Employee's Actual Contribution Ratio (determined after
application of this section (C)) by his Compensation used in
determining such ratio.
(D) In determining the amount of such excess, Actual
Contribution Ratios shall be rounded to the nearest one-hundredth of
one percent of the Employee's Compensation.
(E) In no case shall the amount of such excess with respect to
any Highly Compensated Employee exceed the
29.
<PAGE>
amount of Matching Contributions on behalf of such Highly Compensated
Employee for such Plan Year.
(F) Earnings attributable to excess contributions shall be
determined by the Plan Administrator, as of the last day of the Plan
Year to which such excess contributions relate, in a manner
consistent with the provisions of paragraphs (d)(1), (d)(2) and (d)(3)
of Article VII and Treas. Reg. (S)1.401(m)-1(e)(3)(ii).
(G) In the event that a Highly Compensated Employee's Actual
Contribution Ratio is determined on the basis of both his matching
contributions and the matching contributions attributable to his
Family Members, any excess contributions and earnings attributable to
such Highly Compensated Employee that are forfeitable and
distributable as provided in sections (A) and (B) shall be allocated
to the Highly Compensated Employee and his Family Members in
proportion to the relative contributions of the Highly Compensated
Employee and his Family Members that are taken into account in
determining the Highly Compensated Employee's Actual Contribution
Ratio for the Plan Year.
(c) AUTOMATIC CONTRIBUTION.
----------------------
(1) For each Plan Year, each Employer shall contribute to the Trust
for each Plan Year, on behalf of each Participant who completes 1,000 Hours
of Service during such Plan Year and who is its Employee on the last day of
such Plan Year, an Automatic Contribution equal to the amount determined
for such Plan Year from the table set forth below. Each eligible
Participant's Automatic Contribution shall be determined pursuant to the
following table on the basis of his Years of Credited Service:
<TABLE>
<CAPTION>
YEARS OF AMOUNT OF AUTOMATIC
CREDITED SERVICE CONTRIBUTIONS
---------------- -------------------
<S> <C>
1 $250
2 300
3 350
4 400
5 500
6 600
7 700
8 or more 800
</TABLE>
30.
<PAGE>
(d) DISCRETIONARY CONTRIBUTIONS. An Employer, at the discretion of its
---------------------------
Board of Directors, may make Discretionary Contributions to the Trust on behalf
of its Participants.
(e) LIMITATIONS TO AMOUNT DEDUCTIBLE. Notwithstanding the foregoing, all
--------------------------------
Savings, Matching, Automatic and Discretionary Contributions shall not exceed
the maximum amount deductible by the Employer for federal income tax purposes.
(f) LIMITATIONS BASED ON PERCENTAGES. The amounts contributed as Savings
--------------------------------
Contributions and as Matching Contributions in any Plan Year shall be limited as
follows:
(1) Actual Deferral Percentage:
(A) The Actual Deferral Percentage for the group of Highly
Compensated Employees for a Plan Year shall not exceed the Actual
Deferral Percentage for the group of all other eligible Employees
multiplied by 1.25, or
(B) The excess of the Actual Deferral Percentage for the group
of Highly Compensated Employees for a Plan Year over the Actual
Deferral Percentage for the group of all other eligible Employees
shall not exceed 2 percentage points (or such lesser amount as may be
required by subparagraph (3)); and the Actual Deferral Percentage for
the group of Highly Compensated Employees shall not exceed the Actual
Deferral Percentage for the group of all other eligible Employees,
multiplied by 2.0 (or such lesser amount as may be required by
subparagraph (3)); and
(2) Actual Contribution Percentage:
(A) The Actual Contribution Percentage for the group of Highly
Compensated Employees for a Plan Year shall not exceed the Actual
Contribution Percentage for the group of all other eligible Employees,
multiplied by 1.25, or
(B) The excess of the Actual Contribution Percentage for the
group of Highly Compensated Employees for a Plan Year over the Actual
Contribution Percentage for the group of all other eligible Employees
shall not exceed 2 percentage points (or such lesser amount as may be
required by subparagraph (3)); and the Actual Contribution Percentage
for the group of Highly Compensated Employees shall not exceed the
Actual Contribution Percentage for the group
31.
<PAGE>
of all other eligible Employees, multiplied by 2.0 (or such lesser
amount as may be required by subparagraph (3)).
(3) Multiple Use Restriction:
(A) The provisions of this subparagraph (3) shall apply if:
(i) one or more Highly Compensated Employees are subject to
both the Actual Deferral Percentage test described in
subparagraph (1) and the Actual Contribution Percentage test
described in subparagraph (2);
(ii) the sum of the Actual Deferral Percentage and the
Actual Contribution Percentage of those Highly Compensated
Employees subject to either or both tests exceeds the Aggregate
Limit defined in subparagraph (3)(C) below;
(iii) the Actual Deferral Percentage for the group of
Highly Compensated Employees eligible to make salary deferrals
for a Plan Year exceeds the limitation set forth in subparagraph
(1)(A); and
(iv) the Actual Contribution Percentage for the group of
Highly Compensated Employees eligible to receive Matching
Contributions for a Plan Year exceeds the limitation set forth in
subparagraph (2)(A).
(B) The Actual Deferral Percentage and the Actual Contribution
Percentage for the Highly Compensated Employees described in
subparagraph (3)(A) shall be determined after any corrections required
by paragraphs (a) and (b) of this Article VI to meet the requirements
of paragraphs (f)(1) and (f)(2).
(C) "Aggregate Limit" shall mean the greater of:
(i) the sum of:
a. 125 percent of the greater of the Actual Deferral
Percentage of the Non-Highly Compensated Employees for the
Plan Year or the Actual Contribution Percentage of Non-
Highly Compensated Employees for the Plan Year, and
32.
<PAGE>
b. the lesser of 200% of, or 2 percentage points plus,
the lesser of such Actual Deferral Percentage and such
Actual Contribution Percentage; or
(ii) the sum of:
a. 125 percent of the lesser of the Actual Deferral
Percentage of the Non-Highly Compensated Employees for the
Plan Year or the Actual Contribution Percentage of Non-
Highly Compensated Employees for the Plan Year, and
b. the lesser of 200% of, or 2 percentage points plus,
the greater of such Actual Deferral Percentage and such
Actual Contribution Percentage.
(D) If each of the provisions of subparagraph (3)(A) are
met, then the Actual Contribution Percentage of those Highly
Compensated Employees eligible to receive matching contributions
for a Plan Year will be reduced (beginning with such Highly
Compensated Employee whose Actual Contribution Ratio is the
highest) so that the Aggregate Limit is not exceeded. The amount
by which each Highly Compensated Employee's Actual Contribution
Ratio is reduced shall be treated as excess amounts subject to
paragraph (b)(2).
(4) For purposes of this paragraph (f), if 2 or more plans of an
Employer to which elective salary reduction contributions, voluntary
contributions or matching contributions are made are elected by the
Employer to be treated as one Plan for purposes of Section 410(b)(6)
of the Code, such plans shall be treated as a single plan for purposes
of determining the Actual Deferral Percentage and the Actual
Contribution Percentage. For purposes of determining the Actual
Deferral Percentages and the Actual Contribution Percentages for the
group of Highly Compensated Employees and the group of all other
eligible Employees, all Employees of the respective group who are
directly or indirectly eligible to receive allocations of elective
contributions and/or matching contributions under the Plan for any
portion of the Plan Year, and all Employees of the respective group
who elect not to enter into salary reduction agreements pursuant to
paragraph (a) of Article
33.
<PAGE>
VI or whose eligibility to enter into salary reduction agreements has
been suspended or otherwise limited because of an election not to
participate, a withdrawal, a loan, or a restriction on Annual
Additions as set forth in paragraph (e) of Article VII, shall be
included. For purposes of determining the Actual Deferral Ratio and
the Actual Contribution Ratio for a Highly Compensated Employee, all
cash or deferred arrangements in which the Employee is eligible to
receive allocations of elective contributions and/or matching
contributions shall be taken into account, unless otherwise required
by Treasury Regulation (S)(S)1.401(k)-1(g)(1)(ii)(B) and 1.401(m)-
1(f)(1)(ii)(B). For purposes of determining the Actual Deferral Ratio
and the Actual Contribution Ratio of a Highly Compensated Employee who
is (i) a 5% owner of an Employer, or (ii) one of the ten Highly
Compensated Employees paid the greatest amount of Compensation during
the Plan Year, to the extent required by Section 414(q)(6) of the
Code, the elective contributions, matching contributions, voluntary
contributions and compensation of such Highly Compensated Employee's
Family Members shall be considered the elective contributions,
matching contributions, voluntary contributions and compensation,
respectively, of such Highly Compensated Employee.
(5) (A) To the extent required by Treasury Regulation
(S)1.401(k)-1(g)(11)(iii)(A), Participants who are covered by a
collective bargaining unit shall be tested separately from all
other Participants for all purposes of this paragraph (f).
(B) To the extent required by Treasury Regulation
(S)1.401(k)-1(g)(11)(iii)(B), contributions to the ESOP and non-
ESOP portions of this Plan shall be tested separately for all
purposes of this paragraph (f).
(g) LIMITATIONS ON ALLOCATIONS. The aggregate Savings, Matching,
--------------------------
Automatic and Discretionary Contributions for any Plan Year for any Participant
shall not exceed the amount that may be allocated to such Participant's Accounts
for such Plan Year pursuant to Section 415 of the Code.
(h) PAYMENT OF CONTRIBUTIONS. Payments on account of the contributions
------------------------
due from an Employer for any Plan Year shall be made in cash. All contributions
shall be paid to the Trustee. Such payments may be made by a contributing
Employer at any time, but
34.
<PAGE>
payment of the Matching, Automatic and Discretionary Contributions shall be
completed on or before the time prescribed by law, including extensions thereof,
for filing such Employer's federal income tax return for its taxable year with
which or within which such Plan Year ends. Payment of any Savings Contribution
shall be made within 90 days after it is withheld from a Participant's pay, but
not later than 12 months after the end of the Plan Year in which such
withholding occurs.
(i) ALLOCATION OF FORFEITURES. Except as otherwise provided in paragraph
-------------------------
(b)(2) of Article VI, any amount forfeited during the Plan Year pursuant to the
provisions of this Plan shall be allocated as provided in paragraphs (d)(5) and
(f) of Article VII.
(j) ROLLOVER CONTRIBUTIONS. Each Participant at any time during a Plan
----------------------
Year, with the consent of the Plan Administrator and in such manner as
prescribed by the Plan Administrator, may pay or cause to be paid to the Trustee
a rollover contribution (as defined in the applicable sections of the Code,
except that for this purpose such "rollover contribution" shall be deemed to
include both a direct payment from a Participant and a direct transfer from a
trustee of another qualified plan in which the Participant is or was a
participant).
(k) NO DUTY TO INQUIRE. The Trustee shall not have any right or duty to
------------------
inquire into the amount of any contribution made by an Employer or any
Participant or the method used in determining the amount of any such
contribution, or to collect the same, but the Trustee shall be accountable only
for funds actually received by the Trustee.
(l) CONTRIBUTIONS BY CONTROLLED GROUP MEMBERS. Notwithstanding any
-----------------------------------------
provisions of this Article VI to the contrary, if a corporation that has adopted
this Plan is a member of an affiliated group of corporations within the meaning
of Section 1504 of the Code, and if such corporation does not make a
contribution under this Plan, then another member or other members of the said
affiliated group may make the contribution that was so prohibited to the extent
permitted by Section 404(a)(3)(B) of the Code.
ARTICLE VII
PARTICIPANTS' ACCOUNTS AND ALLOCATION OF CONTRIBUTIONS
------------------------------------------------------
(a) COMMON FUND. Except as otherwise provided in this Plan, an Agreement
-----------
of Trust or a Contract, the assets of the Trust (or,
35.
<PAGE>
to the extent provided in Article X, the assets of each Fund) shall constitute a
common fund in which each Participant (or each Participant who has directed
that a portion of his Account be invested in such Fund) shall have an undivided
interest.
(b) ESTABLISHMENT OF ACCOUNTS.
-------------------------
(1) The Plan Administrator shall establish and maintain with respect
to each Participant five accounts, designated as the Participant's Savings
Contribution Account, Matching Contribution Account, Automatic Contribution
Account, Discretionary Contribution Account and Rollover Contribution
Account. In the event that an Employee makes a Rollover Contribution prior
to becoming a Participant for other purposes, the Plan Administrator shall
establish his Rollover Contribution Account at the time he makes the
Rollover Contribution.
(2) For Participants who had an ESOP Matching Contribution Account
and/or an ESOP Automatic Contribution Account pursuant to Plan provisions
in effect prior to the Effective Date of this Amendment and Restatement,
the Plan Administrator shall continue to maintain such accounts.
(3) For Participants who had 401(k) Employer Contribution Accounts
pursuant to Plan provisions in effect prior to January 1, 1993, the Plan
Administrator shall continue to maintain such accounts.
(4) The Plan Administrator may create such additional Accounts as may
be necessary to keep records as to the value of certain funds from time to
time, including (without limitation):
(A) In the event that a Participant's Savings Contribution
Account previously received proceeds of a life insurance policy as a
result of the death of an insured dependent, such proceeds shall
continue to be maintained in a separate Account in the name of such
Participant, and shall not be commingled, for accounting purposes,
with other Plan funds held in the Participant's Savings Contribution
Account. The separate Account shall be held in the Plan until the
Participant otherwise qualifies to receive a distribution under the
terms of the Plan, and shall be invested at the direction of such
Participant in the same manner as other funds held in the Savings
Contribution Account of the Participant.
36.
<PAGE>
(B) A separate Account shall be established for an alternate
payee who is entitled to benefits pursuant to a qualified domestic
relations order if such benefits are not to be paid promptly upon
approval of such order by the Administrator.
(C) A separate Account shall be established for each death
beneficiary of a Participant if distribution is not to be made
promptly upon the Administrator's notification that the Participant
has died.
(D) Separate Employer Securities Accounts and Other Investments
Accounts shall continue to be maintained for the ESOP Matching
Contribution Account and ESOP Automatic Contribution Account of each
Participant who has such accounts, whenever necessary to account for
separate portions of the ESOP Fund invested in Employer Securities and
in assets other than Employer Securities.
(5) Each Participant's Accounts shall, collectively, reflect the
Participant's interest in the Trust Fund.
(c) INTEREST OF PARTICIPANT. The interest of a Participant in the Trust
-----------------------
Fund shall be the combined balances remaining from time to time in his Accounts,
after making the adjustments required in paragraph (d). The balance in any
Account of a Participant shall include the interest of such Account held in each
Fund.
(d) ADJUSTMENTS TO ACCOUNTS. Subject to the provisions of paragraph (e),
-----------------------
the portion of the Accounts of a Participant that are invested in any Fund shall
be adjusted from time to time as follows:
(1) EARNINGS OF POOLED INVESTMENT FUNDS. As of each Valuation Date,
-----------------------------------
each of a Participant's Accounts that is invested in a Pooled Investment
Fund established under paragraph (a) of Article X shall be credited or
charged, as the case may be, with a share of the Earnings of such Fund for
the Valuation Period ending with such current Valuation Date. Each
Participant's share of the Earnings of a Pooled Investment Fund for any
Valuation Period shall be determined by the Plan Administrator on a
weighted average basis, so that each Participant with a balance in such
Fund shall receive a pro rata share of the Earnings of such Fund, taking
into account the period of time that each dollar invested in such Fund has
been so invested.
(2) EARNINGS OF SEGREGATED INVESTMENT FUNDS. As of each Valuation
---------------------------------------
Date, the portion of a Participant's Accounts that
37.
<PAGE>
are invested in each Segregated Investment Fund established under paragraph
(a) of Article X shall be credited or charged, as the case may be, with the
Earnings attributable to the Participant's investment in such Fund for the
Valuation Period ending with such current Valuation Date.
(3) EARNINGS OF ESOP FUND. As of each Valuation Date, the portion of
---------------------
a Participant's ESOP Matching Contribution Account and ESOP Automatic
Contribution Account that is invested in the ESOP Fund shall be credited or
charged, as the case may be, as follows:
(A) As of each Valuation Date, the portion of a Participant's
ESOP Matching Contribution Account and ESOP Automatic Contribution
Account that is invested in an Employer Securities Account within the
ESOP Fund shall be credited with any stock dividends for the Valuation
Period ending with such current Valuation Date which are received on
Employer Securities that are allocated to such Account.
(B) As of each Valuation Date, the portion of a Participant's
ESOP Matching Contribution Account and ESOP Automatic Contribution
Account that is invested in an Other Investments Account within the
ESOP Fund shall be credited or charged, as the case may be, with a
share of the Other Investments Accounts Earnings for the Valuation
Period ending with such current Valuation Date. The share of the
Earnings of the Other Investments Accounts attributable to the portion
of each such Account of the Participant that is invested in the ESOP
Fund for any Valuation Period shall be:
(i) that amount that shall bear the same ratio to such
Earnings as the balance in such Participant's Other Investments
Accounts as of the end of the immediately preceding Valuation
Period, less any amounts distributed from such Other Investments
Accounts to the Participant, or debited to such Accounts for any
payments made with the assets of such Accounts for the purchase
of Employer Securities, during the Valuation Period ending with
the current Valuation Date, bears to
(ii) the aggregate balances in the Other Investments
Accounts as of the end of the immediately preceding Valuation
Period of all Participants, less the aggregate amounts
distributed from Participants'
38.
<PAGE>
ESOP Matching Contribution Accounts and ESOP Automatic
Contribution Accounts (and attributable to their Other
Investments Accounts) to such Participants, or debited to such
Accounts for any payments made with the assets of such Accounts
for the purchase of Employer Securities, during the Valuation
Period ending with the current Valuation Date.
(4) CONTRIBUTIONS. Each Participant's Accounts shall be credited
-------------
with contributions made during the Plan Year as follows:
(A) As of each Valuation Date, the Savings Contribution Account
of a Participant shall be credited with any Savings contributions made
by his Employer on his behalf with respect to one or more dates
occurring during the Valuation Period ending with such Valuation Date.
(B) As of each Valuation Date that is the last day of a Plan
Year, the Matching Contribution Account of a Participant shall be
credited with any Matching Contributions made by his Employer on his
behalf with respect to such Plan Year.
(i) A Participant shall not be entitled to share in the
Matching Contributions for a Plan Year unless he is an Employee
on the last day of the Plan Year, except that:
a. if such requirement would cause this Plan to fail
to meet the requirements of Sections 401(a)(26) and
410(b)(1) of the Code (and any regulations thereunder issued
by the Secretary of the Treasury), then a Participant who is
not an Employee on the last day of the Plan Year shall be
entitled to share in the contribution if he completes 1,000
Hours of Service during such Plan Year; and
b. if such requirement still would cause this Plan to
fail to meet the requirements of Sections 401(a)(26) and
410(b)(1) of the Code (and any regulations thereunder issued
by the Secretary of the Treasury) after the application of
clause a., then a Participant who is not an Employee on the
last day of the Plan Year shall be entitled to share in the
contribution if he completes 500 Hours of Service during
such Plan Year.
39.
<PAGE>
(C) As of each Valuation Date that is the last day of a Plan
Year, the Automatic Contribution Account of a Participant shall be
credited with any Automatic Contributions made by his Employer on his
behalf with respect to such Plan Year. Except as provided in section
(E), a Participant shall be entitled to share in the Automatic
Contribution only if:
(i) the Plan Year constitutes a Year of Service for such
Participant, and
(ii) he is an Employee on the last day of the Plan Year.
(D) As of each Valuation Date that is the last day of a Plan
Year, the Discretionary Contribution Account of a Participant shall be
credited with his share of the Discretionary Contribution, if any,
made by his Employer with respect to the Plan Year ending with such
Valuation Date. The amount allocable to a Participant entitled to a
share of the Discretionary Contribution for the Plan Year shall be the
amount that shall bear the same ratio to the total of such
contribution as the Participant's Compensation for such Plan Year
ending with such Valuation Date bears to the aggregate of the
Compensation of all Particpants employed by such Employer for that
period who are entitled to share in the Discretionary Contribution for
such Plan Year. Except as provided in section (E), a Participant shall
be entitled to share in the Discretionary Contribution only if:
(i) the Plan Year constitutes a Year of Service for such
Participant, and
(ii) he is an Employee on the last day of the Plan Year.
(E) (i) In the event that the requirement set forth in section
(C)(ii) or section (D)(ii) would cause this Plan to fail to meet
the requirements of Sections 401(a)(26) and 410(b)(1) of the Code
(and any regulations thereunder issued by the Secretary of the
Treasury), a Participant shall be entitled to share in the
contribution if such Plan Year constitutes a Year of Service
for such Participant, regardless of whether he is employed by
his Employer on the last day of the Plan Year.
(ii) In the event that the requirements set forth in
sections (C)(i) and (ii) or sections (D)(i)
40.
<PAGE>
and (ii) would cause this Plan to fail to meet the requirements
of Sections 401(a)(26) and 410(b)(1) of the Code (and any
regulations thereunder issued by the Secretary of the Treasury)
after the application of section (E)(i), a Participant shall be
entitled to share in the contribution if he completes 500 Hours
of Service during such Plan Year, regardless of whether such Plan
Year constitutes a Year of Service for such Participant or
whether he is an Employee on the last day of the Plan Year.
(iii) For each Plan Year in which this Plan is a Top Heavy
Plan, a Participant who is employed by an Employer on the last
day of such Plan Year, who is a Non-Key Employee, and who earns
Compensation from an Employer for such Plan Year shall be
entitled to share in the contribution (as described in section
(C) or section (D)) to the extent such allocation does not exceed
three percent (3%) of his Section 415 Compensation (or, if less,
the highest percentage of such Section 415 Compensation allocated
to a Key Employee's Accounts hereunder (other than any amount
allocated to a Rollover Contribution Account), as well as his
employer contribution accounts under any other defined
contribution plan maintained by such Employer or an Affiliate,
and including any elective contribution to any plan subject to
Code Section 401(k)). To the extent provided in this subsection
(iii), such contribution shall be required regardless of whether
the Non-Key Employee has completed a Year of Service, except to
the extent that such a contribution is made by an Employer or
an Affiliate on behalf of the Employee for the Plan Year to any
other defined contribution plan maintained by such Employer or
Affiliate.
(F) As of each Valuation Date, the Rollover Contribution
Account of a Participant shall be credited with the rollover
contributions, if any, made by the Participant pursuant to Article VI
with respect to the Valuation Period ending with such Valuation Date.
(5) FORFEITURES. Except as otherwise required by paragraph (f) of
-----------
this Article VII, any amounts that have been forfeited pursuant to
paragraph (b) of Article VI and paragraph (c) of Article VIII during a Plan
Year shall be allocated to the Participants' Automatic Contribution
Accounts, effective as of the last day of such Plan Year, as follows:
41.
<PAGE>
(A) A Participant's share of such forfeitures shall be the
portion of such forfeitures that shall bear the same ratio to the
total of such forfeitures as the Participant's Automatic Contribution
for the Plan Year bears to the aggregate of the Automatic
Contributions of all Participants who were entitled to share in the
Automatic Contribution for such Plan Year.
(B) Forfeitures attributable to paragraph (b)(3)(A) of Article
VI shall be allocated to Participants' Automatic Contribution Accounts
before the allocation of any other forfeitures.
(6) DISTRIBUTIONS. As of each Valuation Date, each Account of a
-------------
Participant shall be charged with the amount of any distribution made to
the Participant or his beneficiary from such Account during the Valuation
Period ending with such Valuation Date.
(7) TRANSFER FOR DIVERSIFICATION. The portion of a Participant's
----------------------------
ESOP Matching Contribution Account and ESOP Automatic Contribution Account
invested in the ESOP Fund shall be credited or charged, as the case may be,
with the amount of any transfer made to or from such Fund as the result of
the Participant's election to diversify his investments as permitted in
Article XI.
(8) ACCOUNTING AND VALUATION METHODS. Except as otherwise provided
--------------------------------
in this Plan, any Agreement of Trust or Contract, for purposes of all
computations required by this Article VII, the accrual method of accounting
shall be used, and the Trust Fund, each Fund, and the assets thereof shall
be valued at their fair market value as of each Valuation Date. Employer
Securities shall be accounted for as provided in Treasury Regulation
(S)1.402(a)-1(b)(2)(ii), or any successor regulation or statute.
(9) ACCOUNTING PROCEDURES. The Plan Administrator may adopt such
---------------------
additional accounting procedures as are necessary to accurately reflect
each Participant's interest in the Trust Fund or in any Fund, which
procedures shall be effective upon approval by the Company. All such
procedures shall be applied in a consistent, nondiscriminatory manner.
(e) LIMITATIONS ON ANNUAL ADDITIONS.
-------------------------------
(1) Notwithstanding anything contained in this Plan to the contrary,
the aggregate Annual Additions to a Participant's Accounts under this Plan
and under any other defined contribu-
42.
<PAGE>
tion plans maintained by an Employer or an Affiliate for any Limitation
Year shall not exceed the lesser of:
(A) $30,000 (or, if greater, one quarter of the dollar
limitation in effect under Section 415(b)(1)(A) of the Code), or
(B) 25% of the Participant's Section 415 Compensation for the
Plan Year.
(2) In the event that the Annual Additions, under the normal
administration of the Plan, would otherwise exceed the limits set forth
above for any Participant, or in the event that any Participant
participates in both a defined benefit plan and a defined contribution plan
maintained by any Employer or any Affiliate and the aggregate annual
additions to and projected benefits under all of such plans, under the
normal administration of such plans, would otherwise exceed the limits
provided by law, then the Plan Administrator shall take such actions,
applied in a uniform and nondiscriminatory manner, as will keep the annual
additions and projected benefits for such Participant from exceeding the
applicable limits provided by law. Excess Annual Additions shall be
disposed of as provided in subparagraph (3). Adjustments shall be made to
all other plans, if necessary to comply with such limits, before any
adjustments may be made to this Plan.
(3) If as a result of the allocation of forfeitures, a reasonable
error in estimating a Participant's Section 415 Compensation or other
circumstances permitted under Section 415 of the Code, the Annual Additions
attributable to Employer contributions for a particular Participant
(including Savings, Matching, Automatic and Discretionary Contributions)
would cause the limitations set forth in this paragraph (e) to be exceeded,
the excess amount shall be deemed first to consist of Discretionary
Contributions, then Savings Contributions, then Automatic Contributions
(including forfeitures allocated as additional Automatic Contributions),
and finally Matching Contributions.
(A) Any excess amount attributable to Discretionary
Contributions for a Limitation Year shall be allocated to other
Participants, to the extent permitted by this paragraph (e), in a
manner consistent with the terms of paragraph (d)(4)(D) of this
Article VII. To the extent that any amount cannot be allocated to
Participants for such Limitation Year, such amount shall be held
unallocated in a suspense account for the Limitation Year, used to
reduce Discretionary Contributions for the next Limitation Year, and
allocated to Participants in lieu of such reduced
43.
<PAGE>
contributions as of the end of the next Limitation Year in a manner
consistent with the terms of paragraph (d) of this Article VII.
(B) Any excess Annual Additions attributable to Savings
Contributions for a Participant shall be returned to such Participant,
together with earnings thereon, within a reasonable period following
the end of the Plan Year in which such excess Savings Contributions
are made.
(C) Any excess amount attributable to Automatic Contributions
(including forfeitures allocated as additional Automatic
Contributions) and Matching Contributions for a Limitation Year shall
be allocated to other Participants, to the extent permitted by this
paragraph (e), in proportion to the amount of Automatic Contributions
that would otherwise have been allocated to such Participants for such
Limitation Year under the terms of paragraph (c) of Article VI and
paragraph (d)(4)(C) of this Article VII. To the extent that any amount
cannot be allocated to Participants for such Limitation Year, such
amount shall be held unallocated in a suspense account for the
Limitation Year, used to reduce Automatic Contributions (including
forfeitures allocated as additional Automatic Contributions) and
Matching Contributions for the next Limitation Year, and allocated to
Participants in lieu of such reduced contributions as of the end of
the next Limitation Year in a manner consistent with the first
sentence of this section (C).
(D) The suspense account holding any contribution shall be
credited or charged, as the case may be, with a share of the Earnings
for each Valuation Period during which it is in existence as if it
were an Account of a Participant.
(4) In the event that any Participant participates in both a defined
benefit plan and a defined contribution plan maintained by his Employer or
an Affiliate thereof, then the sum of the Defined Benefit Plan Fraction and
the Defined Contribution Plan Fraction for any Limitation Year shall not
exceed 1.0. For these purposes:
(A) The Defined Benefit Plan Fraction is a fraction, the
numerator of which is the projected annual benefit of the Participant
under the defined benefit plan determined as of the close of the
Limitation Year and the denominator of which is the lesser of (1) the
product of 1.25 times the dollar limitation in effect under Section
415(b)(1)(A) of the Code for such Limitation Year or (2) the product
44.
<PAGE>
of 1.4 times the amount that may be taken into account under Section
415(b)(1)(B) of the Code with respect to such Participant for such
Limitation Year.
(B) The Defined Contribution Plan Fraction is a fraction, the
numerator of which is the sum of the Annual Additions to the
Participant's Accounts as of the close of the Limitation Year (less
any amount that may be subtracted from the numerator so that the sum
of the Defined Benefit Plan Fraction and the Defined Contribution Plan
Fraction does not exceed 1.0 in accordance with any applicable
statutes, notices or rulings) and the denominator of which is the sum
of the lesser of the following amounts determined for such year and
for each prior Year of Service with the Employer: (1) the product of
1.25 times the dollar limitation in effect under Section 415(c)(1)(A)
of the Code for such Limitation Year (determined without regard to
Section 415(c)(6) of the Code), or (2) the product of 1.4 times the
amount that may be taken into account under Section 415(c)(1)(B) of
the Code with respect to such Participant for such Limitation Year.
(C) The figure "1.0" shall be substituted for the figure "1.25"
set forth in sections (A) and (B) for each year in which this Plan is
a Top Heavy Plan unless (1) the defined benefit plan provides a
minimum benefit equal to 3% of each Participant's Compensation times
the number of years (not exceeding 10) the Plan is a Top Heavy Plan or
the defined contribution plan provides a minimum contribution equal to
4% (7- 1/2% if the Participant participates in both the defined
benefit plan and the defined contribution plan) of each Participant's
Section 415 Compensation, and (2) the present value of the cumulative
accrued benefits (not including rollover contributions made after
December 31, 1983), of the Key Employees for such year does not exceed
90% of the present value of the accrued benefits (not including
rollover contributions made after December 31, 1983) under all plans.
Such values shall be determined in the same manner as described in
paragraph (eee) of Article I.
(5) For purposes of applying the limitations of this para graph (e)
for a particular Limitation Year:
(A) all qualified defined benefit plans (without regard to
whether a plan has been terminated) ever maintained by the Employer
will be treated as one defined benefit plan; and
45.
<PAGE>
(B) all qualified defined contribution plans (without regard to
whether a plan has been terminated) ever maintained by the Employer
will be treated as one defined contribution plan.
(f) ORDER OF FORFEITURES. Notwithstanding the foregoing, any previously
--------------------
forfeited benefit that is required to be restored pursuant to the provisions of
paragraph (c)(4)(C) of Article VIII shall be restored from unallocated Employer
contributions, if any, and unallocated forfeitures, if any. If the unallocated
Employer contributions and unallocated forfeitures are insufficient to fully
restore such benefit at the time that it is required to be restored to the
Participant's Account, then the Employer shall make an additional contribution
tion to the Plan in order to fully restore the benefit.
ARTICLE VIII
BENEFITS UNDER THE PLAN
-----------------------
(a) RETIREMENT BENEFIT.
------------------
(1) A Participant shall be entitled to retire from the employ of his
Employer upon his Normal Retirement Date. Until a Participant actually
retires from the employ of his Employer, no retirement benefits shall be
payable to him, and he shall continue to be treated in all respects as a
Participant; provided, however, that a Participant who attains age 70 1/2
shall be deemed to have retired so that he shall begin receiving payment of
his retirement benefit no later than the April 1 following the end of the
calendar year in which he attains age 70 1/2.
(2) Upon the retirement of a Participant as provided in paragraph
(a)(1) and subject to adjustment as provided in paragraph (d) of Article
IX, such Participant shall be entitled to a retirement benefit in an amount
equal to 100% of the balance in his Accounts as of the Valuation Date
immediately preceding or concurring with the date of his retirement, plus
the amount of contributions, if any, made on behalf of the Participant to
his Accounts subsequent to such Valuation Date.
(b) DISABILITY BENEFIT.
------------------
(1) If a Participant's employment with his Employer is terminated by
reason of his total and permanent disability and subject to adjustment as
provided in paragraph (d) of Article IX, such Participant shall be entitled
to a disability benefit in an amount equal to 100% of the balance in his
Accounts as
46.
<PAGE>
of the Valuation Date immediately preceding or concurring with the date of
the termination of his employment, plus the amount of contributions, if
any, made on behalf of the Participant to his Accounts subsequent to such
Valuation Date.
(2) Total and permanent disability shall mean the total incapacity of
a Participant to perform the usual duties of his employment with his
Employer and will be deemed to have occurred only when certified by a
physician who is acceptable to the Plan Administrator and only if such
proof is received by the Administrator within 60 days after the date such
Participant's employment terminates.
(c) SEVERANCE OF EMPLOYMENT BENEFIT.
-------------------------------
(1) In the event a Participant's employment with his Employer is
terminated for reasons other than retirement, total and permanent
disability or death, and subject to adjustment as provided in paragraph (d)
of Article IX, such Participant shall be entitled to a severance of
employment benefit in an amount equal to his vested interest in the balance
in his Accounts as of the Valuation Date immediately preceding or
concurring with the date of the termination of his employment, plus the
amount of contributions, if any, made on behalf of the Participant to his
Accounts subsequent to such Valuation Date.
(2) (A) (i) A Participant who performed his first Hour of Service
before July 3, 1989, and who entered the Plan on or before
December 31, 1992, shall be 100% vested in his Matching
Contribution Account, Automatic Contribution Account, ESOP
Matching Contribution Account, ESOP Automatic Contribution
Account and Discretionary Contribution Account regardless of the
number of his Years of Service.
(ii) A Participant who performs his first Hour of Service on
or after July 3, 1989, shall have a vested interest in his
Matching Contribution Account, Automatic Contribution Account,
ESOP Matching Contribution Account, ESOP Automatic Account and
Discretionary Contribution Account equal to the percentage of the
balance of each such Account as of the applicable Valuation Date,
based upon such Participant's Years of Service as of the date of
the termination of his employment, as follows:
47.
<PAGE>
<TABLE>
<CAPTION>
TOTAL NUMBER OF VESTED
YEARS OF SERVICE INTEREST
---------------- --------
<S> <C>
Less than 3 Years of Service 0%
3 years, but less than 4 years 25%
4 years, but less than 5 years 50%
5 years, but less than 6 years 75%
6 years or more 100%
</TABLE>
(iii) A Participant who performed his first Hour of Service
before July 3, 1989, but does not enter the Plan until after
December 31, 1992, shall have his vested interest in his Matching
Contribution Account, Automatic Contribution Account, ESOP
Matching Contribution Account, ESOP Automatic Contribution
Account and Discretionary Contribution Account determined under
the vesting schedule in subsection (ii) of this section (A).
(B) Notwithstanding the provisions of subparagraph (2)(A), for
any Plan Year in which this Plan is a Top Heavy Plan, a Participant
who performs his first Hour of Service on or after July 3, 1989 shall
have a vested interest in his Matching Contribution Account, Automatic
Contribution Account, ESOP Matching Contribution Account, ESOP
Automatic Contribution Account and Discretionary Contribution Account
equal to the percentage of the balance of such account as of the
applicable Valuation Date, based upon such Participant's Years of
Service as of the date of the termination of his employment, as
follows:
<TABLE>
<CAPTION>
TOTAL NUMBER OF VESTED
YEARS OF SERVICE INTEREST
---------------- --------
<S> <C>
Less than 2 Years of Service 0%
2 years, but less than 3 years 20%
3 years, but less than 4 years 40%
4 years, but less than 5 years 60%
5 years, but less than 6 years 80%
6 years or more 100%
</TABLE>
(C) If at any time this Plan ceases to be a Top Heavy Plan after
being a Top Heavy Plan for one or more Plan Years, the change from
being a Top Heavy Plan shall be treated as if it were an amendment to
the Plan's vesting schedule for purposes of paragraphs (a)(3) and
(a)(5) of Article XIV of this Plan.
48.
<PAGE>
(D) Notwithstanding the foregoing, a Participant shall be 100% vested
in his Matching Contribution Account, Automatic Contribution Account
and Discretionary Contribution Account upon attaining his Normal
Retirement Date. A Participant's vested interest in his Savings
Contribution Account, 401(k) Employer Contribution Account and his
Rollover Contribution Account shall be 100% regardless of the number
of his Years of Service.
(3) PARTICIPANTS WHO TERMINATE WITHOUT RECEIVING FULL DISTRIBUTIONS.
---------------------------------------------------------------
(A) If the termination of employment results in five consecutive
One Year Breaks in Service, then upon the occurrence of such five
consecutive One Year Breaks in Service, the nonvested interest of the
Participant in his Matching Contribution Account, Automatic
Contribution Account, ESOP Matching Contribution Account, ESOP
Automatic Contribution Account and Discretionary Contribution Account
as of the Valuation Date immediately preceding or concurring with the
date of his termination of employment shall be deemed to be forfeited
and such forfeited amount shall be reallocated, pursuant to the
provisions of paragraph (d)(5) of Article VII, at the end of the Plan
Year concurring with the date the fifth such consecutive One Year
Break in Service occurs.
(i) If the Participant is later reemployed by an Employer
or an Affiliate, the unforfeited balance, if any, in his Matching
Contribution Account, Automatic Contribution Account, ESOP
Matching Contribution Account, ESOP Automatic Contribution
Account and Discretionary Contribution Account that has not been
distributed to such Participant shall be set aside in a separate
account, and such Participant's Years of Service after any five
consecutive One Year Breaks in Service resulting from such
termination of employment shall not be taken into account for the
purpose of determining the vested interest of such Participant in
the balance of his Matching Contribution Account, Automatic
Contribution Account, ESOP Matching Contribution Account, ESOP
Automatic Contribution Account and Discretionary Contribution
Account that accrued before such five consecutive One Year Breaks
in Service.
49.
<PAGE>
(ii) If any portion of a Participant's Accounts is
forfeited, his Employer Securities Accounts and Other Investments
Accounts shall be treated as a single account for purposes of
this subparagraph and Employer Securities that were purchased
with borrowed funds and allocated to such Participant's ESOP
Matching Contribution Account and ESOP Automatic Contribution
Account after release from a suspense account shall be forfeited
only after all other assets in such Participant's Account. If
interests in more than one class of Employer Securities have been
so allocated to such Participant's Accounts, the Participant
shall forfeit the same proportion of each such class.
(B) Notwithstanding any other provision of this paragraph (c),
if a Participant is reemployed by an Employer or an Affiliate and, as
a result, no five consecutive One Year Breaks in Service occur, the
Participant shall not be entitled to any severance of employment
benefit as a result of such termination of employment; provided,
however, that nothing contained herein shall require or permit the
Participant to return or otherwise have restored to his Matching
Contribution Account, Automatic Contribution Account, ESOP Matching
Contribution Account, ESOP Automatic Contribution Account and
Discretionary Contribution Account any funds distributed to him prior
to his reemployment and the determination that no five consecutive One
Year Breaks in Service would occur.
(C) If a Participant is less than 100% vested in his Matching
Contribution Account, Automatic Contribution Account, ESOP Matching
Contribution Account, ESOP Automatic Contribution Account and
Discretionary Contribution Account and he receives all or a part of
his severance of employment benefit, then, if the Participant resumes
employment with an Employer or an Affiliate before the occurrence of
five consecutive One Year Breaks in Service, until such time as there
is a 5th consecutive One Year Break in Service, the Participant's
vested portion of the balance in his Matching Contribution Account,
Automatic Contribution Account, ESOP Matching Contribution Account,
ESOP Automatic Contribution Account and Discretionary Contribution
Account at any time shall be equal to an amount ("X") determined by
the formula X = P(AB + D) - D, where "P" is the vested percentage of
the Participant at such time, "AB" is the balance in the Participant's
Matching Contribution Account, Automatic Contribution Account, ESOP
Matching Contribution Account, ESOP Automatic Contribution Account and
Discretionary Contribution Account
50.
<PAGE>
at such time and "D" is the amount distributed as a severance of
employment benefit.
(4) PARTICIPANTS WHO RECEIVE FULL DISTRIBUTIONS UPON TERMINATION.
------------------------------------------------------------
(A) Notwithstanding any other provision of this paragraph (c),
if at any time a Participant is less than 100% vested in his Matching
Contribution Account, Automatic Contribution Account, ESOP Matching
Contribution Account, ESOP Automatic Contribution Account and
Discretionary Contribution Account and, as a result of his severance
of employment, he receives his entire vested severance of employment
benefit pursuant to the provisions of Article IX, and the distribution
of such benefit is made not later than the close of the 5th Plan Year
following the Plan Year in which such termination occurs (or such
longer period as may be permitted by the Secretary of the Treasury,
through regulations or otherwise), then subsequent to the occurrence
of such distribution, the non-vested interest of the Participant in
his Matching Contribution Account, Automatic Contribution Account,
ESOP Matching Contribution Account, ESOP Automatic Contribution
Account and Discretionary Contribution Account shall be forfeited as
of the first day of the Plan Year following the Plan Year in which
such distribution was made. Such forfeited amount shall be held in
suspense during the Plan Year in which the forfeiture occurs and
allocated at the end of such Plan Year as provided in paragraphs
(d)(5) and (f) of Article VII.
(B) If a Participant is not vested as to any portion of his
Matching Contribution Account, Automatic Contribution Account, ESOP
Matching Contribution Account, ESOP Automatic Contribution Account and
Discretionary Contribution Account, he will be deemed to have received
a distribution upon distribution of his Savings Contribution Account,
his 401(k) Employer Contribution Account and his Rollover Contribution
Account, if any. If the Participant has no such accounts, he shall be
deemed to have received a distribution immediately following his
severance of employment. Subsequent to the occurrence of such deemed
distribution, the non-vested interest of the Participant in his
Matching Contribution Account, Automatic Contribution Account, ESOP
Matching Contribution Account, ESOP Automatic Contribution Account and
Discretionary Contribution Account shall be forfeited as of the
first day of the Plan Year following the Plan Year for which such
deemed distribution was made. Such forfeited amount shall be held in
suspense during the Plan Year in which the
51.
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forfeiture occurs and allocated at the end of such Plan Year as
provided in paragraphs (d)(5)(E) and (f) of Article VII.
(C) If a Participant whose interest is forfeited under this
subparagraph (4) is reemployed by an Employer or an Affiliate prior to
the occurrence of five consecutive One Year Breaks in Service, then
such Participant shall have the right to repay to the Trust, within
five years after the Participant's resumption of employment, or, if
earlier, no later than the date the Participant incurs five
consecutive One Year Breaks in Service, the full amount of the
severance of employment benefit previously distributed to him. If the
Participant elects to repay such amount to the Trust within the time
periods prescribed herein, or if a non-vested Participant whose
interest was forfeited under this subparagraph (4) is reemployed by an
Employer or an Affiliate prior to the occurrence of five consecutive
One Year Breaks in Service, the non-vested interest of the Participant
previously forfeited pursuant to the provisions of this subparagraph
(4) shall be restored to the Matching Contribution Account, Automatic
Contribution Account, ESOP Matching Contribution Account, ESOP
Automatic Contribution Account and Discretionary Contribution Account
of the Participant, such restoration to be made from forfeitures of
non-vested interests and, if necessary, by contributions of his
Employer, so that the aggregate of the amounts repaid by the
Participant and restored by the Employer shall not be less than the
Matching Contribution Account, Automatic Contribution Account, ESOP
Matching Contribution Account, ESOP Automatic Contribution Account and
Discretionary Contribution Account balance of the Participant at the
time of forfeiture unadjusted by any subsequent gains or losses.
(d) DEATH BENEFIT.
-------------
(1) In the event of the death of a Participant and subject to
adjustment as provided in paragraph (c) of Article IX, his beneficiary
shall be entitled to a death benefit in an amount equal to 100% of the
balance in his Accounts as of the Valuation Date immediately preceding or
concurring with the date of his death, plus the amount of contributions, if
any, made on behalf of the Participant to his Accounts subsequent to such
Valuation Date.
(2) Subject to the provisions of subparagraph (3), at any time and
from time to time, each Participant shall have the unrestricted right to
designate a beneficiary to receive his death benefit and to revoke any such
designation. Each designa-
52.
<PAGE>
tion or revocation shall be evidenced by written instrument filed with the
Plan Administrator on forms prescribed by the Plan Administrator. In the
event that a Participant has not designated a beneficiary or beneficiaries,
or if for any reason such designation shall be legally ineffective, or if
such beneficiary or beneficiaries shall predecease the Participant, then
the estate of such Participant shall be deemed to be the beneficiary
designated to receive such death benefit, or if no personal representative
is appointed for the estate of such Participant, then his next of kin under
the Nevada statute of descent and distribution shall be deemed to be the
beneficiary or beneficiaries to receive such death benefit.
(3) Notwithstanding the foregoing, if the Participant is married as of the
date of his death, the Participant's surviving spouse shall be deemed to be
his designated beneficiary and shall receive the full amount of the death
benefit attributable to the Participant unless the spouse consents or has
consented to the Participant's designation of another beneficiary. Any
such consent to the designation of another beneficiary must acknowledge the
effect of the consent, must be witnessed by a Plan representative or by a
notary public and shall be effective only with respect to that spouse. A
spouse's consent may be either a restricted consent (which may not be
changed as to either the beneficiary or the form of payment unless the
spouse consents to such change in the manner described herein) or a blanket
consent (which acknowledges that the spouse has the right to limit consent
only to a specific beneficiary or a specific form of payment, and that the
spouse voluntarily elects to relinquish one or both of such rights).
ARTICLE IX
FORM AND PAYMENT OF BENEFITS
----------------------------
(a) TIME FOR DISTRIBUTION OF BENEFITS.
---------------------------------
(1) (A) The amount of the benefit to which a Participant is entitled
under Article VIII shall be paid to him or, in the case of a death benefit,
shall be paid to said Participant's beneficiary or beneficiaries, as
described in paragraph (b), as soon as practicable after the Valuation Date
that coincides with or immediately follows the Participant's retirement,
disability, severance of employment or death, as the case may be.
(B) Notwithstanding the foregoing, no distribution shall be made
of the benefit to which a Participant is
53.
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entitled under paragraph (a), (b) or (c) of Article VIII prior to his
Normal Retirement Date unless the value of his benefit does not exceed
$3,500, or unless the Participant consents to the distribution. The
Plan Administrator shall provide each Participant entitled to a
distribution of more than $3,500 with a written notice of his rights,
which shall include an explanation of the alternative dates for
distribution of benefits. The Participant may elect to exercise such
rights, no less than 30 days and no more than 90 days before the first
date upon which distribution of the Participant's vested Account
balances may be made. In the event that a Participant does not consent
to a distribution of a benefit in excess of $3,500 to which he is
entitled under paragraph (a), (b) or (c) of Article VIII, the amount
of his benefit shall be paid to the Participant not later than 60 days
after the last day of the Plan Year in which the Participant reaches
his Normal Retirement Date.
(2) (A) Any distribution paid to a Participant (or, in the case of a
death benefit, to his beneficiary or beneficiaries) pursuant to
subparagraph (1) shall commence not later than the earlier of:
(i) the 60th day after the last day of the Plan Year in
which the Participant's employment is terminated or, if later, in
which occurs the Participant's Normal Retirement Date; or
(ii) April 1 of the year immediately following the calendar
year in which he reaches age 70 1/2.
(B) Notwithstanding the foregoing, no distribution shall be made
of the benefit to which a Participant or beneficiary is entitled if
the Plan Administrator has actual knowledge that such Participant or
beneficiary is legally incompetent, by age or otherwise, to receive
such benefit, until either:
(i) a legal guardian has been appointed to receive and
account for such benefit to and on behalf of the Participant
or beneficiary, or
(ii) another person is legally entitled to receive such
benefit on behalf of Participant or beneficiary and payment
to such person will discharge the Plan's obligation to the
Participant or beneficiary.
54.
<PAGE>
(b) MANNER AND FORM OF PAYMENT.
--------------------------
(A) The benefits payable under paragraphs (a), (b), (c) and (d) of
Article VIII shall be paid in the form of a single lump sum distribution.
(B) Any such benefits may be in cash or in kind, except that benefits
attributable to a Participant's ESOP Matching Contribution Account and ESOP
Automatic Contribution Account (other than any portion of such Accounts
invested pursuant to a Diversification Election) shall be paid to the
Participant (or, if applicable, his beneficiary or beneficiaries), to the
extent possible, in units of Employer Securities. Notwithstanding the
foregoing, no fractional shares shall be issued and the value of any
fractional shares to which a Participant (or his beneficiary or
beneficiaries) would otherwise be entitled shall be paid in cash. During
the 60 day period immediately preceding the proposed distribution date of
the benefit which the Participant is entitled to receive under the Plan,
the Trustee, to the extent possible, shall apply the balance in the
Participant's Other Investments Account to the purchase of the maximum
number of whole units of Employer Securities at their then Fair Market
Value, which units shall be allocated to the Participant's Employer
Securities Account. Any portion of the balance of a Participant's Other
Investments Account that the Trustee is unable to apply to the purchase of
whole units of Employer Securities within the said 60 day period shall be
paid in cash.
(2) DIRECT ROLLOVER DISTRIBUTIONS. An Eligible Distributee may
-----------------------------
elect, at the time and in the manner prescribed by the Plan Administrator,
to have all or any portion of an Eligible Rollover Distribution paid
directly to an Eligible Retirement Plan specified by the Eligible
Distributee in a Direct Rollover. In the event that an Eligible Distributee
elects to have only a portion of an Eligible Rollover Distribution paid
directly to an Eligible Retirement Plan, the portion must not be less than
$500 (adjusted under such regulations as may be issued from time to time by
the Secretary of the Treasury).
(c) PERIODIC ADJUSTMENTS. To the extent the balance of a Participant's
--------------------
Accounts has not been distributed and remains in the Plan, and notwithstanding
anything contained in the Plan to the contrary, the value of such remaining
balance shall be subject to adjustment from time to time pursuant to the
provisions of Article VII.
(d) PUT OPTION. Except to the extent hereinafter provided in this
----------
paragraph (d), or except as otherwise required by applicable
55.
<PAGE>
law, no Employer Securities may be subject to a put, call or other option, or
buy-sell or similar arrangement while held by and when distributed from the
Plan.
(1) If any such Employer Securities, when distributed to or for the
benefit of a Participant, are not then listed on a national securities
exchange registered under Section 6 of the Securities Exchange Act of 1934
(the "1934 Act") or are not then quoted on a system sponsored by a national
securities association registered under Section 15A(b) of the 1934 Act, or,
if so listed or quoted, are then subject to a trading limitation (a
restriction under any federal or state securities law, any regulation
thereunder or any permissible agreement affecting such Employer Securities,
that makes such Employer Securities not as freely tradable as Employer
Securities not subject to such restriction), then the Participant, the
Participant's beneficiary or beneficiaries, the persons to whom such shares
are transferred by gift from the Participant, or any person to whom such
Employer Securities pass by reason of the death of the Participant or a
beneficiary of the Participant, as the case may be, shall be granted an
option to put any of the units of such Employer Securities to the Company.
(A) The put option shall provide that, for a period of 15 months
after such shares are distributed, the Participant, the Participant's
beneficiary or beneficiaries, the persons to whom such shares are
transferred by gift from the Participant, or any person to whom such
Employer Securities pass by reason of the death of the Participant or
a beneficiary of the Participant, as the case may be, shall have the
right to have the Company purchase such units at their Fair Market
Value as of the Valuation Date immediately preceding the date the put
option is exercised.
(B) Any such put option shall be exercised by the holder
notifying the Company in writing that the put option is being
exercised; the date of exercise shall be the date the Company receives
such written notice.
(C) Payment of the purchase price shall be made by the Company,
at the election of the Company, either in cash within 30 days after
the date of exercise or by an installment purchase. Any installment
purchase must provide for adequate security, a reasonable interest
rate and a payment schedule providing for cumulative payments at any
time not less than the payments that would be made if made in
substantially equal annual installments beginning within 30 days and
ending not more than five years (which may be extended to a date no
later than the earlier of ten years after the date of exercise or the
date the proceeds of the
56.
<PAGE>
loan used by the Plan to acquire the securities in question are
entirely repaid) after the date the put option is exercised.
(2) The following special rules shall apply to any put option granted
with respect to any such Employer Securities:
(A) At the time that any such put option is exercised, the Plan
shall have an option to assume the rights and obligations of the
Company under the put option.
(B) If it is known at the time that a loan is made to the Plan
to enable it to purchase Employer Securities that federal or state law
will be violated by the Company honoring the put option provided in
this paragraph (d), the holder of any such put option shall have the
right to put such Employer Securities to a third party that has
substantial net worth at the time the loan is made and whose net worth
is reasonably expected to remain substantial, the identity of such
third party to be selected by the Plan Administrator.
(C) If any such Employer Securities are publicly traded without
restriction when distributed, but cease to be so traded within 15
months after distribution, the Company shall notify each holder of
such Employer Securities, in writing, on or before the tenth day after
the date such Employer Securities cease to be so traded, that for the
remainder of the 15-month period, such Employer Securities are subject
to a put option. Such notice shall also inform the holder of the terms
of such put option (which terms shall be consistent with the
provisions of this paragraph (d)). If such notice is given after the
tenth day after the date such Employer Securities cease to be so
traded, the duration of the put option shall be extended by the number
of days between such tenth day and the date on which notice is
actually given.
(D) The period during which a put option is exercisable shall
not include any time when a distributee is unable to exercise it
because the party bound by the put option is prohibited from honoring
it by applicable federal or state law.
(3) Except as otherwise permitted by law, the provisions of this
paragraph (d) are not terminable for any reason, including the cessation of
the Plan as an employee stock ownership plan.
57.
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ARTICLE X
DESIGNATED INVESTMENTS
----------------------
(a) AVAILABLE INVESTMENTS.
---------------------
(1) Each Participant shall direct the portion of his Savings
Contribution Account, Matching Contribution Account, Automatic Contribution
Account, Discretionary Contribution Account, Rollover Contribution Account
and 401(k) Employer Contribution Account to be invested in:
(A) Fund A - an employer stock fund, which shall invest
------
primarily in Employer Securities; provided, however, that the
Agreement of Trust that provides for custody of such Fund shall permit
the Trustee thereof to invest such Fund or any part thereof in other
investments; and provided, further, that no amount shall be invested
in Employer Securities until all securities registration requirements
applicable to either the Employer Securities or the Plan have been
complied with;
(B) Fund B - a fixed income fund, which may consist of
------
guaranteed interest contracts, certificates of deposit, commercial
paper, mortgages, United States treasury and agency bonds, notes and
bills, corporate bonds, fixed rate annuity contracts (provided,
however, that no such annuity contract shall be deemed to permit any
Participant to receive any benefit under this Plan in the form of a
life annuity), savings accounts or comparable investments, as provided
from time to time under an Agreement of Trust, a Contract or an
agreement entered into by the Plan Administrator or the Trustee with
an investment manager, providing for all or a portion of such Fund;
(C) Fund C - a common stock fund, which shall consist of
------
common stock and such other investments as may be provided from time
to time under an Agreement of Trust, a Contract or an agreement
entered into by the Plan Administrator or the Trustee with an
investment manager, providing for all or a portion of such Fund;
provided, however, that not more than 5% of such Fund shall be
invested in Employer Securities;
(D) Fund D - a U.S. Government securities fund, which shall
------
consist primarily of U.S. Government obligations; provided, however,
that it may also include commercial paper, bank certificates of
deposit and other types of short maturity investments; or
58.
<PAGE>
(E) Fund E - a capital fund, which shall consist of equity
------
securities, corporate bonds and/or money market securities, and such
other investments as may be provided from time to time under an
Agreement of Trust, a Contract or an agreement entered into by the
Plan Administrator or the Trustee with an investment manager,
providing for all or a portion of such Fund; provided, however, that
not more than 5% of such Fund shall be invested in Employer
Securities.
(F) Fund F - a small capitalization index fund, which shall
------
consist of common stocks included in the Russell 2000 Index and such
other investments as may be provided from time to time under an
Agreement of Trust, a Contract or an agreement entered into by the
Plan Administrator or the Trustee with an investment manager,
providing for all or a portion of such Fund; provided, however, that
not more than 5% of such Fund shall be invested in Employer
Securities; or
(G) Fund G - an international growth fund, which shall consist
------
of a diversified portfolio of foreign equity securities and such other
investments as may be provided from time to time under an Agreement of
Trust, a Contract or an agreement entered into by the Plan
Administrator or the Trustee with an investment manager, providing for
all or a portion of such Fund; provided, however, that not more than
5% of such Fund shall be invested in Employer Securities.
(2) Each Participant who has made a Diversification Election pursuant
to paragraph (c) of Article XI shall direct the applicable portion of his
ESOP Matching Contribution Account and ESOP Automatic Contribution Account
to be invested in Funds B, C, D, E, F and G.
(3) Notwithstanding the provisions of subparagraph (1)(A), any
Participant who is an officer, director or 10% owner of the Company, or who
otherwise is required to file reports under Section 16(a) of the Securities
Exchange Act of 1934, shall not be permitted to direct that any portion of
his Account be invested in Fund A.
(4) Notwithstanding the provisions of subparagraph (1)(A), no
Participant may direct that more than 25% of the contributions allocated to
his Accounts for any Plan Year be invested in the Circus Circus Stock Fund
("Fund A"). No Participant may increase the portion of his Savings
Contribution Account, Matching Contribution Account, Automatic Contribution
Account, Discretionary Contribution Account, Rollover
59.
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Contribution Account and 401(k) Employer Contribution Account, together
with any portion of his ESOP Matching Contribution Account and ESOP
Automatic Contribution Account which is subject to a diversification
election, that is invested in Fund A if such increase would cause more than
25% of such Accounts to be invested in Fund A. No Participant shall be
required to reduce the portion of prior Plan contributions that are
invested in Fund A.
(b) TIME AND MANNER OF DESIGNATING INVESTMENTS. The elections described
------------------------------------------
in paragraph (a) shall be made in such form as may be approved by the Plan
Administrator from time to time, with the Participant designating the percentage
of each of his Accounts which is subject to the provisions of paragraph (a) to
be allocated to any Fund specified in paragraph (a)(1). Any such designation may
be revised as permitted by the Plan Administrator, at three month intervals, so
long as no more than 25% of the Participant's current contributions are to be
invested in the Circus Circus Stock Fund, and so long as the combined percentage
of the Participant's Matching Contribution Account, Automatic Contribution
Account, Discretionary Contribution Account, Rollover Contribution Account and
401(k) Employer Contribution Account, together with any portion of his ESOP
Matching Contribution Account and ESOP Automatic Contribution Account which is
subject to a diversification election, that is invested in the Circus Circus
Stock Fund, does not exceed 25% of the Participant's combined balances of such
Accounts.
(c) RESPONSIBILITY FOR DESIGNATING INVESTMENTS. Once a Participant has
------------------------------------------
designated a Fund, no change in such designation shall be made until the
Participant changes his election pursuant to the provisions of this Plan unless
either the Plan Administrator or the Trustee has actual knowledge that the
Participant has died or has become legally incompetent to make a designation.
(1) If a Participant does not specifically designate an investment
for all or part of any Account subject to the provisions of paragraph(a),
such portion shall be invested in Fund B unless the Trustee determines that
a different fund shall be the default fund.
(2) If either the Plan Administrator or the Trustee has actual
knowledge that the Participant has died or has become legally incompetent
to make a designation, the Trustee shall determine the Fund in which such
portion shall be invested until a designation can be obtained from the
Participant or the Participant's legal guardian.
(3) In the event of the death of a Participant, the Participant's
beneficiary (or beneficiaries) shall have the responsibility for
designating investments for the portion of
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the Participant's Accounts that are subject to the provisions of paragraph
(a), if such beneficiary is legally competent to do so, until distribution
of such Accounts can be made. If a beneficiary is legally incompetent to
make such a designation, the beneficiary's legal guardian shall make such
designations on behalf of the beneficiary.
(d) INVESTMENT OF ESOP FUND. The portion of a Participant's ESOP Matching
-----------------------
Contributions Account and ESOP Automatic Contributions Account that is not
invested pursuant to a Diversification Election shall be separately invested,
pursuant to an Agreement of Trust, in the ESOP Fund, which shall invest
primarily in Employer Securities; provided, however, that the Agreement of Trust
that provides for custody of such Fund shall permit the Trustee thereof to
invest such Fund or any part thereof in other investments when the Trustee deems
investment in Employer Securities to be imprudent or otherwise inappropriate;
and provided, further, that no amount shall be invested in Employer Securities
unless and until all securities registration requirements applicable to either
the Employer Securities or the Plan have been complied with.
ARTICLE XI
WITHDRAWALS AND DIVERSIFICATION ELECTION
----------------------------------------
(a) HARDSHIP WITHDRAWALS.
--------------------
(1) A Participant who has participated in this Plan for at least 18
months will be eligible to receive a distribution of Savings Contributions
(plus earnings credited to such contributions prior to January 1, 1989) on
account of Hardship. A distribution will be on account of Hardship only if
the distribution both (A) is made on account of an immediate and heavy
financial need of the Participant, and (B) is necessary to satisfy such
financial need. Upon receipt of a request for a Hardship withdrawal, the
Administrator shall determine whether an immediate and heavy financial need
exists and the amount necessary to meet the need in a uniform and
nondiscriminatory manner; provided, however, that no Hardship withdrawal
shall be permitted in an amount less than $1,000.
(2) The determination of whether a Participant has an immediate and
heavy financial need shall be made on the basis of all relative facts and
circumstances. Each Participant requesting a withdrawal shall provide the
Plan Administrator with a financial statement, in the form required by the
Administrator. A financial need shall not fail to qualify as
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immediate and heavy merely because such need was reasonably foreseeable or
voluntarily incurred by the Participant.
(3) A distribution shall be deemed made on account of a Hardship if
the distribution is on account of:
(A) Medical expenses, as described in Section 213(d) of the
Code, that are incurred by the Participant, the Participant's spouse,
or any dependents of the Participant (as defined in Section 152 of the
Code), or that are necessary in order to permit the Participant or
such dependent to obtain medical care;
(B) Purchase (excluding mortgage payments) of a principal
residence of the Participant;
(C) Payment of tuition and related educational fees for the next
12 months of post-secondary education for the Participant, his spouse,
children, or dependents;
(D) The need to prevent the eviction of the Participant from his
principal residence or foreclosure on the mortgage of the
Participant's principal residence; or
(E) Such other events as may be prescribed by the Commissioner
of Internal Revenue in revenue rulings, notices and other documents of
general applicability.
(4) The Administrator shall determine whether a distribution is
necessary to satisfy an immediate and heavy financial need on the basis of
all relevant facts and circumstances. A distribution will not be treated as
necessary to satisfy an immediate and heavy financial need of a Participant
to the extent that the amount of the distribution is in excess of the
amount required to relieve the financial need (plus any amount necessary to
pay taxes on such amount) or to the extent such need may be satisfied from
other resources that are reasonably available to the Participant. A
distribution generally may be treated as necessary to satisfy a financial
need if the Employer reasonably relies upon the Participant's
representation that the need cannot be relieved:
(A) Through reimbursement or compensation by insurance or
otherwise;
(B) By reasonable liquidation of the Participant's assets, to
the extent such liquidation would not itself cause an immediate and
heavy financial need;
62.
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(C) By cessation of Savings Contributions under the Plan; or
(D) By other distributions or nontaxable (at the time of the
loan) loans from plans maintained by an Employer or by any other employer,
or by borrowing from commercial sources on reasonable commercial terms.
In determining whether a distribution is necessary to satisfy a financial
need, the Participant's resources shall be deemed to include those assets
of his spouse and minor child that are reasonably available to the
Participant.
(b) WITHDRAWALS AT AGE 59 1/2. Upon reaching age 59 1/2 and fulfilling
-------------------------
the requirements for full vesting of each of his Accounts, a Participant may
apply to the Administrator for the withdrawal of his Accounts in a lump sum. The
Administrator shall establish uniform and nondiscriminatory rules and procedures
regarding the distribution of benefits pursuant to this paragraph. The
Administrator shall direct the Trustee to distribute to a Participant who has
applied for such a withdrawal the amount held in his Accounts.
(c) DIVERSIFICATION ELECTION. Any Participant who has attained age 55 and
------------------------
completed 10 years of participation in the Plan (disregarding participation
before January 1, 1989), shall have the right to direct the Trustee as to the
investment of a portion of his Employer Securities Accounts credited to his ESOP
Matching Contribution Account and ESOP Automatic Contribution Account.
(1) Such a Participant may elect, within 90 days after the close of
the first Plan Year in the Diversification Election Period, to diversify an
amount not exceeding 25% of the balance of his Employer Securities
Accounts, determined as of the last day of such Plan Year.
(2) Within 90 days after the close of the second, third, fourth and
fifth Plan Years in the Diversification Election Period, such a Participant
may elect to diversify the difference between 25% of the balance of his
Employer Securities Accounts, determined as of the last day of such Plan
Year, and the amount with respect to which diversification was previously
elected.
(3) In the last Plan Year of the Diversification Election Period, the
Participant may elect to diversify the difference between 50% of the
balance of his Employer Securities Accounts, determined as of the last day
of such Plan Year, and the amount with respect to which diversification was
previously elected.
(4) Any such election shall be in writing on forms provided by the
Plan Administrator.
63.
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(5) If any Participant elects to diversify a portion of his Accounts
in any year in the Qualified Election Period, he may direct the Trustee to
sell or exchange Employer Securities attributable to the amount to be
diversified. Upon receipt of such direction from the Participant, the
Trustee may sell the Employer Securities to any third party purchaser (who
may or may not be a "party in interest" within the meaning of Section 3(14)
of ERISA), or may exchange the shares for cash or other assets (other than
Employer Securities) then held in the ESOP Fund. Any sale of Employer
Securities by the Trustee shall be made at Fair Market Value on the date of
sale, and any such sale to a party in interest shall not be subject to any
commission or similar fee. The proceeds of a sale or exchange shall be
invested pursuant to Article X, no later than 90 days after the
Participant's election is made.
(6) Notwithstanding any other provision of this paragraph (c), no
Participant shall have the right to direct the Trustee as to the investment
of a portion of his Employer Securities Accounts unless the value of the
Employer Securities acquired by or contributed to this Plan, and allocated
to the Participant's Employer Securities Accounts, exceeds $500 as of the
Valuation Date immediately preceding the first day on which the Participant
may otherwise elect to diversify such Accounts.
ARTICLE XII
TRUST FUND
----------
The Trust Fund shall be held by such Trustees and Insurers as may be
selected by the Company from time to time under one or more Agreements of Trust
or Contracts. Any Agreement of Trust or Contract may from time to time be
amended in the manner therein provided. Similarly, the Trustee or Insurer may be
changed from time to time in the manner provided in an applicable Agreement of
Trust or Contract. To the extent elected (for purposes of paragraph (a) of
Article X) or required (for purposes of paragraph (d) of Article X) under the
provisions of this Plan, the entire Trust Fund or any portion thereof may be
invested in Employer Securities.
ARTICLE XIII
EXPENSES OF ADMINISTRATION OF THE PLAN AND THE TRUST FUND
---------------------------------------------------------
(a) EXPENSES OF IMPLEMENTATION. The Company shall bear all expenses of
--------------------------
implementing this Plan and the Trust.
64.
<PAGE>
(b) EXPENSES OF TRUSTEE OR INSURER.
------------------------------
(1) For its services, any corporate trustee and any Insurer shall be
entitled to receive reasonable compensation in accordance with its rate
schedule in effect from time to time for the handling of the assets of a
qualified retirement plan.
(2) Any individual Trustee shall be entitled to such compensation as
shall be arranged between the Company and the Trustee by separate
instrument; provided, however, that no person who is already receiving
full-time pay from any Employer or any Affiliate shall receive compensation
from the Trust Fund (except for the reimbursement of expenses properly and
actually incurred).
(3) All expenses of the administration of the Trust Fund, including
the Trustees' and Insurers' compensation, the compensation of any
investment manager, the expense incurred by the Plan Administrator in
discharging its duties, all income or other taxes of any kind whatsoever
that may be levied or assessed under existing or future laws upon or in
respect of the Trust Fund, and any interest that may be payable on money
borrowed by the Trustee for the purpose of the Trust, shall be paid or
provided for by the Company (or another Employer) and, if not so paid,
shall be paid out of the assets of the Trust Fund. Any such payment by the
Company or an Employer shall not be deemed a contribution to this Plan.
(4) Notwithstanding anything contained herein to the contrary, no
excise tax or other liability imposed upon the Trustee, the Plan
Administrator or any other person for failure to comply with the provisions
of any federal law shall be subject to payment or reimbursement from the
assets of the Trust.
ARTICLE XIV
AMENDMENT AND TERMINATION
-------------------------
(a) RIGHT TO AMEND OR TERMINATE RESERVED. It is the present intention of
------------------------------------
the Company and each Employer to maintain the Plan set forth herein throughout
its existence. Nevertheless, the Company specifically reserves to itself the
right at any time and from time to time to amend or terminate this Plan in whole
or in part; provided, however, that no such amendment:
(1) shall have the effect of vesting in any Employer, directly or
indirectly, any interest, ownership or control in
65.
<PAGE>
any of the present or subsequent funds held subject to the terms of any
Trust or Contract;
(2) shall cause or permit any property held subject to the terms of
any Trust or Contract to be diverted to purposes other than the exclusive
benefit of the Participants and their beneficiaries or for the
administrative expenses of the Plan Administrator, any Trust and any
Contract;
(3) shall reduce any vested interest of a Participant on the later of
the date the amendment is adopted or the date the amendment is effective,
except as permitted by law;
(4) shall reduce the Accounts of any Participant;
(5) shall amend any vesting schedule with respect to any Participant
who has at least 3 Years of Service at the end of the election period
described below, except as permitted by law, unless each such Participant
shall have the right to elect to have the vesting schedule in effect prior
to such amendment apply with respect to him, such election, if any, to be
made during the period beginning not later than the date the amendment is
adopted and ending no earlier than 60 days after the latest of the date the
amendment is adopted, the amendment becomes effective or the Participant is
issued written notice of the amendment by his Employer or the Plan
Administrator; or
(6) shall increase the duties or liabilities of any Trustee or
Insurer without its written consent.
(b) AMENDMENTS. Subject to the limitations stated in paragraph (a), the
----------
Company shall have the power to amend this Plan in any manner that it deems
desirable, and, not in limitation but in amplification of the foregoing, it
shall have the right to change or modify the method of allocation of
contributions hereunder, to change any provision relating to the administration
of this Plan and to change any provision relating to the distribution or
payment, or both, of any of the assets of any Trust or Contract.
(c) TERMINATION OR DISCONTINUANCE. Any Employer, in its sole and absolute
-----------------------------
discretion, may permanently discontinue making contributions under this Plan or
may terminate this Plan and all Trusts and Contracts (with respect to all
Employers if it is the Company, or with respect to itself alone if it is an
Employer other than the Company), completely or partially, at any time without
any liability whatsoever for such permanent discontinuance or complete or
partial termination. In any of such events, the affected Participants,
notwithstanding any other provisions of this Plan, shall have fully vested
interests in the amounts credited to their respective Accounts at the time of
such complete or partial termination of this Plan and
66.
<PAGE>
its Trusts and Contracts or permanent discontinuance of contributions. All such
vested interests shall be nonforfeitable.
(d) METHOD OF DISCONTINUANCE. In the event an Employer decides to
------------------------
permanently discontinue making contributions, such decision shall be evidenced
by an appropriate resolution of its Board and a certified copy of such
resolution shall be delivered to the Plan Administrator and each Trustee, and to
the Insurer of any Contract that is not held by the Trustee. All of the assets
in the Trust Fund belonging to the affected Participants on the date of
discontinuance specified in such resolutions shall, aside from becoming fully
vested as provided in paragraph (c), be held, administered and distributed by
the Trustee in the manner provided under this Plan. In the event of a permanent
discontinuance of contributions without such formal documentation, full vesting
of the interests of the affected Participants in the amounts credited to their
respective Accounts shall occur on the last day of the first year for which no
substantial contribution is made to any Trust or Contract.
(e) METHOD OF TERMINATION.
---------------------
(1) In the event an Employer decides to terminate this Plan and its
Trust and Contracts, such decision shall be evidenced by an appropriate
resolution of its Board and a certified copy of such resolution shall be
delivered to the Plan Administrator and each Trustee, and to the Insurer of
any Contract that is not held by the Trustee. After payment of all expenses
and proportional adjustments of individual accounts to reflect such
expenses and other changes in the value of the Trust Fund as of the date of
termination, each affected Particicipant (or the beneficiary of any such
Participant) shall be entitled to receive any amount then credited to his
Accounts in a lump sum, provided in the case of his Savings Contribution
Account, Matching Contribution Account, Automatic Contribution Account,
Discretionary Contribution Account and his 401(k) Employer Contribution
Account that the requirements set forth in subparagraph (2) are met.
(2) In the event this Plan and its Trust and Contracts are
terminated, completely or partially, and with respect to any one Employer
or with respect to all Employers, distributions shall not be made pursuant
to this paragraph (e) unless:
(A) the Plan has been completely terminated and no successor
plan (within the meaning of Section 401(k)(10) of the Code) has been
established;
(B) the Plan has been partially terminated as a result of the
sale or other disposition by an Employer to an unrelated corporation
of substantially all of the assets
67.
<PAGE>
used in a trade or business, in which case distribution may be made to
employees who continue employment with the acquiring corporation; or
(C) the Plan has been partially terminated as a result of the
sale or other disposition by an Employer of its interest in a
subsidiary, in which case distribution may be made to employees who
continue employment with the subsidiary.
(3) At the election of the Participant, the Plan Administrator may
transfer the amount of any Participant's distribution under this paragraph
(e) to the trustee of another qualified plan or the trustee of an
individual retirement account or individual retirement annuity instead of
distributing such amount to the Participant. Any such election by a
Participant shall be in writing and filed with the Plan Administrator.
ARTICLE XV
MISCELLANEOUS
-------------
(a) MERGER OR CONSOLIDATION. This Plan and its Trust and Contracts may
-----------------------
not be merged or consolidated with, and the assets or liabilities of this Plan
and its Trusts and Contracts may not be transferred to, any other plan or trust
unless each Participant would receive a benefit immediately after the merger,
consolidation or transfer, if the plan and trust then terminated, that is equal
to or greater than the benefit the Participant would have received immediately
before the merger, consolidation or transfer if this Plan and its Trusts and
Contracts had then terminated.
(b) (1) PROHIBITION ON ALIENATION. Except as provided in paragraphs
-------------------------
(b)(2) and (b)(3), no Participant or beneficiary of a Participant shall
have any right to assign, transfer, appropriate, encumber, commute,
anticipate or otherwise alienate his interest in this Plan or its Trusts or
Contracts or any payments to be made thereunder; no benefits, payments,
rights or interests of a Participant or beneficiary of a Participant of any
kind or nature shall be in any way subject to legal process to levy upon,
garnish or attach the same for payment of any claim against the Participant
or beneficiary of a Participant; and no Participant or beneficiary of a
Participant shall have any right of any kind whatsoever with respect to any
Trust or Contract, or any estate or interest therein, or with respect to
any other property or right, other than the right to receive such
distributions as are lawfully made out of any Trust or
68.
<PAGE>
Contract, as and when the same respectively are due and payable under the
terms of this Plan.
(2) QUALIFIED DOMESTIC RELATIONS ORDERS. Notwithstanding the
-----------------------------------
provisions of paragraph (b)(1), the Plan Administrator shall direct the
Trustee or Insurer to make payments pursuant to a Qualified Domestic
Relations Order as defined in Section 414(p) of the Code and as determined
by the Administrator pursuant to this subparagraph (2).
(A) DETERMINATION. The Plan Administrator shall determine
-------------
whether a court order purporting to qualify under Section 414(p) of
the Code actually meets such requirements as soon as practicable
following receipt of such order. The Administrator shall establish
procedures for making such determination.
(i) The Administrator shall refuse to approve any order
which, in its opinion, does not comply strictly with the
requirements of Section 414(p) of the Code. No order may be
approved if the Administrator determines that it contains any
ambiguity, or if any provision is inconsistent with any other
requirement of applicable law.
(ii) The Administrator may require an order to include
provisions that it deems necessary to properly administer the
order under the terms of this Plan, including (without
limitation):
a. instructions as to the Account of the Participant
from which the alternate payee's benefits are to be taken,
and
b. clear provisions specifying the disposition of
unpaid benefits of the alternate payee in the event of the
death of either the Participant or the alternate payee:
1. A qualified domestic relations order may
provide that the unpaid balance of an alternate payee's
benefits be paid to the alternate payee's estate or
personal representative. An alternate payee may not
designate an individual death beneficiary.
2. If the alternate payee is to receive any
unpaid benefits provided under the order
notwithstanding the prior death of the Participant, the
order must clearly
69.
<PAGE>
so provide in full compliance with the provisions of
ERISA and the Code.
(B) NOTIFICATION. The Administrator shall notify the
------------
Participant and the alternate payee of receipt of such order as soon
as practicable following such receipt. The Administrator shall notify
the Participant and the alternate payee of the Plan Administrator's
determination as to whether such order is qualified as soon as
practicable following such determination. If the Plan Administrator is
able to determine whether an order is qualified promptly upon receipt
of such order, the Administrator may send one notice which informs the
Participant and the alternate payee both of the receipt of the order
and of the Administrator's determination.
(C) SUSPENSE ACCOUNT WHILE ORDER IS BEING EVALUATED. During the
-----------------------------------------------
time that the Plan Administrator is considering whether such an order
is qualified, any amount to which the Administrator reasonably
believes that the order purports to apply shall not be paid to the
Participant, even if the Participant would otherwise be entitled to
receive such amount.
(i) If an amount would otherwise be paid to the Participant
while the Plan Administrator is considering such an order, such
amount shall be credited to a separate suspense account. The
Participant shall retain any right he may have to direct the
investment of the amounts in such suspense account to the same
extent as if no order had been received.
(ii) If the Administrator determines that the order is
qualified, the amounts in the suspense account shall be paid to
the alternate payee to the extent provided in the order. Any
remaining amounts in the suspense account shall be paid to the
Participant. If the Administrator determines that the order is
not qualified, the amounts in the suspense account shall be paid
to the Participant.
(iii) The Plan Administrator shall determine the date
following its determination as of which the amounts in the
suspense account are to be released to the Participant and/or the
alternate payee. The Administrator may allow a reasonable period
during which either party may appeal its determination as to the
status of the order before releasing the amounts from the
suspense account. If either party appeals such determination, the
Administrator shall
70.
<PAGE>
not release the amounts from the suspense account until the
Administrator makes its decision on appeal. If a substitute order
is received during the appeal period, the Administrator shall not
release any amounts from the suspense account that the Administr-
ator reasonably believes to be covered by the substitute order
until after it has determined whether the substitute order is
qualified.
(iv) No amount shall remain in a suspense account longer
than 18 months, except that the receipt of a substitute order
with respect to funds already held in a suspense account shall
extend such period until 18 months following receipt by the
Administrator of such substitute order. If, at the end of such
period, the Administrator still has not determined whether the
order (or substitute order) is qualified, the amounts in the
suspense account shall be distributed to the Participant.
(D) FREEZE ON ACCOUNT IN ANTICIPATION OF ORDER.
------------------------------------------
(i) If the Plan Administrator is informed that a person who
would qualify as an alternate payee intends to obtain a qualified
domestic relations order with respect to the Accounts of a
Participant, the Administrator may refuse, for a reasonable
period, to permit the distribution to the Participant from such
Accounts of any amount to which the Administrator reasonably
believes such alternate payee will claim.
(ii) Even in the absence of specific information that a
potential alternate payee is seeking a qualified domestic
relations order, the Plan Administrator may refuse to permit the
distribution to the Participant from his Accounts of any amount
if the Administrator reasonably believes that distribution of
such amount to the Participant would result in a violation of the
community property rights of the Participant's spouse or former
spouse.
(iii) In the event the Administrator refuses to permit a
distribution in accordance with subsection (i) or (ii) of this
section (D), the Participant shall retain any right he may have
to direct the investment of such amount to the same extent as if
the Administrator had not received such information or formed
such belief.
71.
<PAGE>
(E) TIME OF DISTRIBUTION TO ALTERNATE PAYEE. Effective as of
---------------------------------------
January 1, 1994, an alternate payee who is entitled to benefits under
a qualified domestic relations order may receive a distribution of
benefits, to the extent permitted by such order, as soon as
practicable following the Plan Administrator's determination that the
order is qualified, regardless of the age or employment status of the
Participant.
(3) LEVY BY INTERNAL REVENUE SERVICE. Notwithstanding the provisions
--------------------------------
of paragraph (b)(1), the Plan Administrator shall direct the Trustee or
Insurer to comply with the lawful terms of a levy of the Internal Revenue
Service.
(c) CONTROLLING LAW. This Plan shall be administered, construed and
---------------
enforced according to the laws of the State of Nevada, except to the extent such
laws have been preempted by federal law.
(d) ACTION BY EMPLOYER. Whenever the Company or another Employer under
------------------
the terms of this Plan is permitted or required to do or perform any act, it
shall be done and performed by the Board of Directors of the Company or such
other Employer and shall be evidenced by proper resolution of such Board of
Directors certified by the Secretary or Assistant Secretary of the Company or
such other Employer.
(e) IMPOSSIBILITY. In the event it becomes impossible for the Company,
-------------
another Employer, or the Plan Administrator to perform any act required by this
Plan, then the Company, such other Employer, or the Plan Administrator, as the
case may be, may perform such alternative act that most nearly carries out the
intent and purpose of this Plan.
(f) GENDER. Throughout this Plan, and whenever appropriate, the masculine
------
gender shall be deemed to include the feminine and neuter; the singular, the
plural; and vice versa.
IN WITNESS WHEREOF, this Tenth Amendment and Restatement has been executed
this 21st day of November, 1995.
ATTEST: CIRCUS CIRCUS ENTERPRISES, INC.
(CORPORATE SEAL)
___________________________ By: /s/ Glenn Schaeffer
SECRETARY PRESIDENT
"COMPANY"
72.
<PAGE>
EXHIBIT 4(g)
FOURTH AMENDMENT
TO THE
CIRCUS CIRCUS EMPLOYEES' PROFIT SHARING,
INVESTMENT AND EMPLOYEE STOCK OWNERSHIP TRUST
This Fourth Amendment to the Circus Circus Employees' Profit Sharing,
Investment and Employee Stock Ownership Trust is made and entered into this 12th
day of July, 1995, but is effective for all purposes (except as otherwise
provided herein) as of January 1, 1995, by Circus Circus Enterprises, Inc. (the
"Company").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company has previously adopted the Circus Circus Employees'
Profit Sharing, Investment and Employee Stock Ownership Trust, which has
previously been amended (as amended, the "Trust"); and
WHEREAS, pursuant to the terms of the Trust, the Company is authorized and
empowered to further amend the Trust; and
WHEREAS, the Company desires to amend the Trust to clarify certain
provisions, to make changes required by the Internal Revenue Service, and to
make other desired changes.
NOW, THEREFORE, the Trust is hereby amended as follows:
I.
Effective January 1, 1995, paragraph (i) of Article I is hereby amended to
read as follows:
(i) "EMPLOYER" shall mean the Company, Circus Circus Casinos, Inc.,
--------
Slots-A-Fun, Inc., Edgewater Hotel Corporation, Colorado Belle Corp., New
Castle Corp., Ramparts, Inc., Circus Circus Mississippi, Inc., and Racing
Boats, Inc., as well as
<PAGE>
any other subsidiary, related corporation or other entity that adopts this
Trust with the consent of the Company.
II.
Article VI is hereby amended by adding a new paragraph (i) at the end
thereof to read as follows:
(i) REQUIREMENTS FOR ESOP LOANS. No loan to the Plan or the Trust
---------------------------
that shall be made or guaranteed by a disqualified person, including a
direct loan of cash, a purchase money obligation, an assumption of an
obligation of the Plan or the Trust, an unsecured guaranty, or the use of
assets of a disqualified person as collateral for the loan (whether or not
such use of assets is deemed a guaranty under applicable state law), unless
a Plan fiduciary determines that the loan complies with the following
requirements:
(1) The interest rate of the loan does not exceed a reasonable
rate of interest, determined based on all relevant factors including
(without limitation):
(A) the amount and duration of the loan,
(B) the security and guarantee (if any) involved,
(C) the credit standing of the ESOP and the guarantor (if
any), and
(D) the interest rate prevailing for comparable loans.
A variable interest rate may be reasonable.
(2) The loan is for a specific term, and is not payable at the
demand of any person, except in the case of default.
(3) The loan is primarily for the benefit of the ESOP
participants and their beneficiaries; the interest rate for the loan
and the price of securities to be acquired with the loan proceeds are
not such that plan assets are likely to be drained off; and the terms
of the loan, whether or not between independent parties, are at least
as favorable to the ESOP as the terms of a comparable
2.
<PAGE>
loan resulting from arm's-length negotiations between independent
parties.
(4) The proceeds will be used within a reasonable time after
their receipt by the borrowing ESOP only for any or all of the
following purposes:
(A) To acquire qualifying employer securities;
(B) To repay such loan; or
(C) To repay a prior exempt loan.
(5) Except as provided in subparagraphs (9) and (10) of paragraph
(b) of Reg. (S)54.4975-7 or as otherwise required by applicable law,
no security acquired with the proceeds of the loan is subject to a
put, call, or other option, or buy-sell or similar arrangement, while
held by and when distributed from the Plan, whether or not the Plan is
then an ESOP.
(6) To the extent required by Reg. (S)54.4975-7, the loan is
without recourse against the Plan and the Trust except that:
(A) Assets of the ESOP that may be given as collateral are
qualifying employer securi ties of two classes: those acquired
with the proceeds of the loan and those that were used as
collateral on a prior exempt loan repaid with the proceeds of the
current exempt loan;
(B) To the extent permitted by Reg. (S)54.4975-7, the Plan
and the Trust shall nevertheless have the power to enter into a
binding obligation to repay the loan from Plan assets the use of
which is not prohibited by Reg. (S)54.4975-7 or other applicable
law.
(7) To the extent required by Reg. (S)54.4975-7, no person
entitled to payment under the exempt loan has any right to assets of
the Plan or the Trust other than:
(A) Collateral given for the loan,
(B) Contributions (other than contributions of employer
securities) that are made
3.
<PAGE>
under an ESOP to meet its obligations under the loan, and
(C) Earnings attributable to such collateral and the
investment of such contributions.
The foregoing shall not restrict the Trustee's obligation to repay the
loan, nor the right of the Trustee to repay such loan from assets the
use of which is not precluded by Reg. (S)54.4975-7.
(8) The payments made with respect to the loan during a Plan Year
will not exceed an amount equal to the sum of such contributions and
earnings received during or prior to the Plan Year, less such payments
in prior years.
(9) In the event of default, the value of plan assets transferred
in satisfaction of the loan will not exceed the amount of the default.
If the lender is a disqualified person, such default shall be limited
to the failure of the Plan to meet the payment schedule of the loan.
(A guarantor shall not be deemed a lender for purposes of this
subparagraph.)
IN WITNESS WHEREOF, this Fourth Amendment has been executed on the day and
year first above written.
ATTEST: CIRCUS CIRCUS ENTERPRISES, INC.
(CORPORATE SEAL)
By: /s/ David R. Belding By: /s/ Glenn Schaeffer
- -------------------------- -------------------------------
Secretary President
"COMPANY"
4.
<PAGE>
EXHIBIT 4(h)
FIFTH AMENDMENT AND RESTATEMENT
OF THE
CIRCUS CIRCUS EMPLOYEES'
PROFIT SHARING AND INVESTMENT TRUST
<PAGE>
FIFTH AMENDMENT AND RESTATEMENT
OF THE
CIRCUS CIRCUS EMPLOYEES'
PROFIT SHARING AND INVESTMENT TRUST
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
ARTICLE TITLE NUMBER
- ------- ----- ------
<S> <C> <C>
I Definitions ................................................... 1
II Name of the Trust ............................................. 5
III Establishment of the Trust Fund ............................... 5
IV Trust Administration .......................................... 6
V Investment Managers ........................................... 9
VI Investment of the Trust Fund .................................. 10
VII Voting and Other Rights; Dividends ............................ 13
VIII Expenses of Administration of the Plan and the Trust Fund ..... 15
IX Amendment and Termination ..................................... 16
X Acceptance of Trust ........................................... 18
XI Miscellaneous ................................................. 18
</TABLE>
<PAGE>
FIFTH AMENDMENT AND RESTATEMENT
OF THE
CIRCUS CIRCUS EMPLOYEES'
PROFIT SHARING AND INVESTMENT
TRUST
THIS AGREEMENT AND DECLARATION OF TRUST (the "Agreement"), is made and
entered into this 21st day of November, 1995, but is effective for all purposes
as of January 1, 1996 (except as otherwise provided herein), by and between
Circus Circus Enterprises, Inc. (the "Company") and Bank of America (the
"Trustee").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company has previously adopted an Agreement of Trust for the
Circus Circus Employees' Profit Sharing, Investment and Employee Stock Ownership
Trust which has been amended from time to time (as amended, the "Trust"); and
WHEREAS, pursuant to the terms of the Trust, the Company is authorized and
empowered to further amend the Trust; and
WHEREAS, the Company deems it advisable and in the best interests of the
Participants to amend the Trust to reflect changes made to applicable law by
recent Acts of Congress, and to make other desired changes.
NOW, THEREFORE, the Trust is hereby amended and restated in its entirety to
read as follows:
ARTICLE I
DEFINITIONS
-----------
As used in this Agreement, the following terms shall have the meaning
hereinafter set out:
(a) "ACCOUNT" shall mean, as required by the context, the entire amount
-------
held from time to time for the benefit of any one Participant, or the portion
thereof attributable to Savings Contributions, Matching Contributions,
Automatic Contributions, Discretionary Contributions or Rollover Contributions,
as well as ESOP Matching Contributions, ESOP Automatic Contributions, 401(k)
Automatic Contributions and 401(k) Employer Contributions, made under Plan
provisions previously in effect, and any Suspense Account.
<PAGE>
(b) "ADMINISTRATOR" shall mean the Plan Administrator.
-------------
(c) "BOARD OF DIRECTORS" and "BOARD" shall mean the board of directors of
------------------ -----
the Company or, when required by the context, the board of directors of an
Employer other than the Company.
(d) "CODE" shall mean the Internal Revenue Code of 1986, as amended, or
----
any successor statute. Reference to a specific section of the Code shall include
a reference to any successor provision.
(e) "COMPANY" shall mean Circus Circus Enterprises, Inc. and its
-------
successors.
(f) "CONTRACT" shall mean an agreement between an Insurer and the Company
--------
or the Trustee to invest all or part of the assets of a Fund.
(g) "DISCRETIONARY CONTRIBUTION ACCOUNT" shall mean an account established
----------------------------------
pursuant to paragraph (b) of Article VII of the Plan to hold Discretionary
Contributions made pursuant to paragraph (d) of Article VI of the Plan.
(h) "EFFECTIVE DATE" of this Amended and Restated Trust shall mean January
--------------
1, 1996.
(i) "EMPLOYER" shall mean the Company, Circus Circus Casinos, Inc., Slots-
--------
A-Fun, Inc., Edgewater Hotel Corporation, Colorado Belle Corp., New Castle
Corp., Ramparts, Inc., Circus Circus Mississippi, Inc., Pinkless, Inc., Racing
Boats, Inc., Circus Circus Development Corp., Railroad Pass Investment Group,
Jean Development Company and Jean Development West, as well as any other
subsidiary, related corporation or other entity that adopts the Plan with the
consent of the Company.
(j) "EMPLOYER SECURITIES" shall mean common stock, any other type of stock
-------------------
or any marketable obligation (as defined in Section 407(e) of ERISA) issued by
the Company or any Affiliate of the Company; provided, however, that if Employer
Securities are purchased with borrowed funds, Employer Securities, to the extent
required by Section 4975 of the Code, shall only include:
(1) Such securities that are readily tradable on an established
securities market; or
(2) If none of the stock of an Employer (or any Affiliate of such
Employer other than a member of an affiliated service group that includes
such Employer) is publicly
2.
<PAGE>
tradable on an established securities market, common stock issued by the
Employer having a combination of voting power and dividend rights equal to
or in excess of (A) that class of common stock of the Employer or any
Affiliate having the greatest voting power, and (B) that class of common
stock of the Employer or any Affiliate having the greatest dividend rights;
or
(3) Noncallable preferred stock that is convertible at any time into
stock meeting the requirements of subparagraph (1) or (2) (whichever is
applicable), if such conversion is at a reasonable price (determined as of
the date of acquisition by the Trustee).
(k) "ERISA" shall mean the Employee Retirement Income Security Act of
-----
1974, as amended, or any successor statute. References to a specific section of
ERISA shall include references to any successor provisions.
(l) "ESOP AUTOMATIC CONTRIBUTION ACCOUNT" shall mean an account
-----------------------------------
established pursuant to paragraph (b) of Article VII of the Plan to hold ESOP
Automatic Contributions made under the provisions of the Plan as in effect on or
after January 1, 1989 and ending prior to January 1, 1996.
(m) "ESOP MATCHING CONTRIBUTION ACCOUNT" shall mean an account established
----------------------------------
pursuant to paragraph (b) of Article VII of the Plan to hold ESOP Matching
Contributions made under the provisions of the Plan as in effect on or after
January 1, 1990 and ending prior to January 1, 1996.
(n) "401(K) EMPLOYER CONTRIBUTION ACCOUNT" shall mean an account
------------------------------------
established pursuant to paragraph (b) of Article VII of the Plan to hold 401(k)
Automatic Contributions and 401(k) Employer Contributions made under the
provisions of the Plan as in effect prior to January 1, 1990.
(o) "INSURER" shall mean a legal reserve life insurance company licensed
-------
or authorized to transact business in the State of Nevada that shall issue a
Contract.
(p) "INVESTMENT MANAGER" shall mean the individual, individuals,
------------------
partnership, corporation or other entity, if any, appointed by the Administrator
to manage all or any portion of the assets of the Plan. Any Investment Manager
shall be (1) registered as an investment advisor under the Investment Advisors
Act of 1940; (2) a bank as defined in such Act; or (3) an insurance company
qualified
3.
<PAGE>
to perform the services of an investment manager under the laws of more than one
state.
(q) "PARTICIPANT" shall mean any eligible Employee of an Employer who has
-----------
become a Participant under the Plan and shall include any former employee of an
Employer who became a Participant under the Plan and who still has a balance in
an Account under the Plan.
(r) "PLAN" shall mean the Tenth Amendment and Restatement of the Circus
----
Circus Employees' Profit Sharing and Investment Plan, as it may be in effect
from time to time.
(s) "PLAN ADMINISTRATOR" shall mean the Company.
------------------
(t) "PLAN YEAR" shall mean the 12-month period ending on December 31.
---------
(u) "ROLLOVER CONTRIBUTION ACCOUNT" shall mean an account established
-----------------------------
pursuant to paragraph (b) of Article VII of the Plan to hold Rollover
Contributions made pursuant to paragraph (b)(2) of Article V of the Plan or
paragraph (j) of Article VI of the Plan.
(v) "SAVINGS CONTRIBUTION ACCOUNT" shall mean an account established
----------------------------
pursuant to paragraph (b) of Article VII of the Plan to hold Savings
Contributions made pursuant to paragraph (a) of Article VI of the Plan.
(w) "SUSPENSE ACCOUNT" shall mean an account established for the purpose
----------------
of maintaining unallocated Employer Securities, unallocated amounts which have
been forfeited pursuant to the terms of Article VI or VII of the Plan, or
amounts being held pending evaluation of a qualified domestic relations order.
(x) "TRUST" shall mean the trust established by the Company as herein set
-----
forth and the account or accounts established by the Contracts.
(y) "TRUSTEE" shall mean the individual, individuals or corporation
-------
designated as trustee under this Agreement, or any amendment hereof.
(z) "TRUST FUND" shall mean the trust fund established under this
----------
Agreement.
4.
<PAGE>
ARTICLE II
NAME OF THE TRUST
-----------------
The trust amended and restated in accordance with the terms hereof shall be
known as the "CIRCUS CIRCUS EMPLOYEES' PROFIT SHARING AND INVESTMENT TRUST."
ARTICLE III
ESTABLISHMENT OF THE TRUST FUND
-------------------------------
(a) ASSETS TO BE HELD. The Company has previously established, pursuant
-----------------
to the Plan, a trust comprised of amounts previously contributed by the Company
and the other Employers. The Trustee shall maintain all amounts that are held
pursuant to the Trust, including any Contracts entered into with an Insurer by
the Company and transferred to the Trustee, such other sums of money and
property as shall from time to time be paid or delivered to the Trustee, the
earnings and profits thereon and any assets into which such funds are converted.
(b) ACCOUNTS HELD. The Trust Fund shall include all assets attributable
-------------
to Suspense Accounts established pursuant to paragraph (c) of Article VII of the
Plan, as well as Participants' ESOP Matching Contribution Accounts and ESOP
Automatic Contribution Accounts (other than any portion of such Accounts
invested, pursuant to a diversification election as described in Article XI of
the Plan, in Contracts issued by an Insurer directly to the Company and not
transferred to the Trustee). The Trust Fund shall also include any assets
attributable to Participants' designated investments in "Fund A," described in
Article X of the Plan, and may include investments attributable to any Contract
issued by an Insurer, as well as any other investment permitted under paragraph
(a) of Article X of the Plan, which are allocated to any other Suspense Accounts
or to Participants' Savings Contribution Accounts, Matching Contribution
Accounts, Automatic Contribution Accounts, Discretionary Contribution Accounts,
401(k) Employer Contribution Accounts, Rollover Contribution Accounts, and any
portion of Participants' ESOP Matching Contribution Accounts and ESOP Automatic
Contribution Accounts invested pursuant to a diversification election as
described in Article XI of the Plan.
(c) EXCLUSIVE BENEFIT OF PARTICIPANTS AND BENEFICIARIES. The Trust Fund
---------------------------------------------------
shall be held by the Trustee in trust and dealt with in accordance with the
provisions hereof. Except as otherwise
5.
<PAGE>
permitted by law, in no event shall any part of the principal or income of the
Trust Fund be used for or diverted to any purpose whatsoever other than for the
exclusive benefit of the Participants and their beneficiaries.
ARTICLE IV
TRUST ADMINISTRATION
--------------------
(a) RECEIPT OF CONTRIBUTIONS. The Trustee shall receive from each
------------------------
Employer and the Participants the payments made as their Savings Contributions,
Matching Contributions, Automatic Contributions, Discretionary Contributions,
Rollover Contributions, and any portion of Participants' ESOP Matching
Contribution Accounts and ESOP Automatic Contribution Accounts invested pursuant
to a diversification election as described in Article XI of the Plan, unless
such contributions are invested in Contracts issued by an Insurer directly to
the Company and not transferred to the Trustee. The Trustee shall perform such
duties as are specified under the Plan and in this Agreement; however, it shall
have no right or duty to inquire into the amount of any contribution made by an
Employer or a Participant, or the method used in determining the amount of any
such contribution, or to collect the same. The Trustee shall be accountable only
for funds actually received by it. The Trustee shall not be responsible for the
acts of any predecessor trustee, unless otherwise required under the Employee
Retirement Income Security Act or any other applicable law.
(b) PLAN ADMINISTRATOR'S DIRECTIONS. When directed in writing by the Plan
-------------------------------
Administrator, the Trustee shall:
(1) value the Trust Fund;
(2) make transfers and deliveries of assets to, and accept transfers
and deliveries of assets from, an Insurer in order to comply with any
elections by Participants under Article X of the Plan with respect to
Contracts issued by an Insurer directly to the Company and not transferred
to the Trustee;
(3) make any other transfers, payments and deliveries to or for the
account of Participants or their beneficiaries; and
(4) borrow money and pledge any Trust property for the payment of any
such loan.
6.
<PAGE>
Nothing contained in this paragraph (b) shall prevent the Plan Administrator
itself from performing the actions described in subparagraph (1).
(c) AUTHORIZED ACTIONS. The Trustee is authorized to:
------------------
(1) settle, compromise or submit to arbitration any claims, debts or
damages due or owing to or from this Trust, commence or defend suits or
legal or administrative proceedings and represent the Trust in all suits
and legal and administrative proceedings;
(2) employ suitable agents and counsel (who may be counsel for an
Employer), and pay their reasonable expenses and compensation; and
(3) make, execute and deliver as Trustee, with provisions for no
individual responsibility (except responsibility for negligence of the
Trustee and for breach of the Trustees' fiduciary duty), all instruments in
writing necessary or appropriate for the exercise of any of its powers of
administration.
(d) WRITTEN DIRECTIONS. The Trustee shall have no dealings with the
------------------
beneficiaries under this Agreement except under the direction of the Plan
Administrator to make payment to them. All directions, papers and communications
addressed to the Trustee or intended to be filed with it shall be delivered at
its principal office.
(e) RECORDS AND ACCOUNTS. The Trustee shall keep accurate and detailed
--------------------
accounts on all investments, receipts, disbursements and other transactions
hereunder. All accounts, books and records relating to this Trust shall be open
to inspection and audit at all reasonable times by any person designated by the
Plan Administrator.
(f) RESIGNATION AND REMOVAL.
-----------------------
(1) The Company may at any time remove the Trustee by providing
written notice to the Trustee, which removal shall take effect on the date
therein specified; and the Trustee may at any time resign by providing the
Company and the Plan Administrator with a written resignation, which
resignation shall take effect on the date therein specified, but not less
than 30 days from the date of the giving of such notice unless the Plan
Administrator shall agree to an earlier date. The
7.
<PAGE>
Company may appoint a corporation or an individual or individuals to be
successor Trustee hereunder in the place of any removed or resigned
Trustee. Any notice required or permitted by this subparagraph shall be
deemed given upon the mailing thereof to the appropriate person by
certified or registered U.S. mail, return receipt requested, in a properly
addressed envelope, postage prepaid.
(2) After receiving notice of removal or after the effective date of
resignation, the removed or resigning Trustee shall transfer, pay over and
deliver the Trust Fund to the successor Trustee, or if no successor Trustee
be appointed within 30 days from the Trustee's receipt of notice of removal
or within 30 days from the effective date of the Trustee's resignation, as
the case may be, the removed or resigning Trustee shall, upon the
expiration of such 30-day period, transfer, pay over and deliver the Trust
Fund to the Plan Administrator. Notwithstanding any such transfer, payment
and delivery of the Trust Fund to any successor Trustee or to the
Administrator, as the case may be, the removed or resigning Trustee may
have its entire account judicially settled and it shall be entitled to the
payment out of the Trust Fund of any compensation due to it up to the time
of removal or resignation and of any expenses or other disbursements,
whether theretofore or thereafter arising, for which the removed or
resigning Trustee would be entitled to reimbursement if the Trust Fund had
not been so transferred, paid over and delivered.
(g) PERIODIC ACCOUNTING.
-------------------
(1) Within 90 days after the end of each Plan Year, and within 60
days after removal or resignation, the Trustee shall furnish the Plan
Administrator with a verified accounting of the Trust Fund for such Plan
Year, or for the portion thereof ending with the date of such removal or
resignation, which accounting shall include a record of receipts and
disburse ments, changes in investments and realized appreciation and
depreciation for such year or period, and a statement of assets (showing
both book value and fair market value) and liabilities on hand as of the
end of such year or period.
(2) Except as otherwise permitted by law, all rights of every
Participant and every beneficiary of a Participant under the Plan or this
Agreement with relation to the Trust Fund or that may arise against or
affect the Trustee shall be enforced exclusively by the Administrator,
which is hereby given the express power and authority to enforce all such
rights as a
8.
<PAGE>
representative of every Participant and beneficiary under the Plan, and in
any action or proceeding with relation to the Trust Fund or brought by or
against the Trustee, the Plan Administrator shall be deemed to represent
every interested Participant and beneficiary. The Trustee shall provide
notice, in writing, to the Plan Administrator within 60 days after the
Trustee receives notice of any claim or potential claim relating to the
Trust Fund, or arising against or affecting the Trustee in its capacity as
Trustee.
(h) FUNDING POLICY. The Plan Administrator shall establish in writing a
--------------
funding policy and method for the Plan and this Trust, which policy shall be
reviewed at least once each year. All actions taken with respect to such funding
policy and the reasons therefor shall be recorded in writing by the Plan
Administrator.
ARTICLE V
INVESTMENT MANAGERS
-------------------
(a) APPOINTMENT. The Plan Administrator may appoint one or more
-----------
Investment Managers to manage all or part of the assets attributable to Funds B,
C, D, E, F and G described in paragraph (a) of Article X of the Plan in
accordance with the provisions of Article VI. The Plan Administrator may request
the Trustee to select one or more of such Investment Managers to be appointed by
the Plan Administrator. Each such appointment shall specify the particular
assets of the Trust Fund to be managed by such Investment Manager.
(b) WRITTEN ACCEPTANCE. Before any such appointment becomes effective,
------------------
any Investment Manager so appointed shall accept such designation in writing
and, as part of such acceptance, shall acknowledge that it is a fiduciary with
respect to the Plan.
(c) RESIGNATION AND REMOVAL. The Plan Administrator may at any time
-----------------------
remove an Investment Manager acting hereunder, and any Investment Manager acting
hereunder may at any time resign, in each case in such manner as may be or may
have been agreed by the Plan Administrator (or Trustee) and the Investment
Manager. The Administrator may appoint any individual, individuals, partnership,
corporation or other entity to be a successor Investment Manager hereunder in
the place of any removed or resigned Investment Manager.
9.
<PAGE>
ARTICLE VI
INVESTMENT OF THE TRUST FUND
----------------------------
(a) INVESTMENT IN EMPLOYER SECURITIES.
---------------------------------
(1) The Plan is designed to invest each Participant's ESOP Matching
Contribution Account and ESOP Automatic Contribution Account primarily in
Employer Securities for the benefit of the Participants and their
beneficiaries.
(2) All assets attributable to each Participant's Savings
Contribution Account, Matching Contribution Account, Automatic Contribution
Account, Discretionary Contribution Account, 401(k) Employer Contribution
Account, Rollover Contribution Account, and any portion of Participants'
ESOP Matching Contribution Account and ESOP Automatic Contribution Account
invested pursuant to a diversification election as described in Article XI
of the Plan, shall be invested, at the election of the Participant, subject
to the limitations set forth in paragraphs (a)(4) and (b) of Article X of
the Plan, in one or more investments described in the designated investment
provisions of Article X of the Plan. Any assets attributable to a
designated investment in "Fund A," as described within Article X of the
Plan, shall be invested primarily in Employer Securities by the Trustee,
unless otherwise required by Article X of the Plan.
(3) Assets attributable to any designated investment described in
paragraph (a) of Article X of the Plan, other than investments in "Fund A,"
shall be invested, as required by Article X, by the Trustee or one or more
Investment Managers appointed by the Administrator; provided, however,
that the Company may direct the Trustee to transfer or deliver any portion
of such assets from the Trust to an Insurer pursuant to a Contract entered
into by the Company with an Insurer.
(4) If one or more Investment Managers have been appointed by the
Administrator, the responsibility for investment decisions for assets held
in Trust shall be allocated between the Trustee and the Investment Managers
in accordance with the written directions of the Plan Administrator, and
the Trustee and each Investment Manager shall have no responsibility for
each other's investment decisions.
(b) ACQUISITION OF EMPLOYER SECURITIES. Employer Securities may be
----------------------------------
purchased or otherwise acquired from any source, including
10.
<PAGE>
any party that might be a party in interest (within the meaning of Section 3(14)
of ERISA) or a disqualified person (within the meaning of Section 4975(e)(2) of
the Code); provided, however, that if Employer Securities are purchased or
acquired from such a party in interest or disqualified person, the Trustee shall
neither pay more than adequate consideration (within the meaning of Section
3(18) of ERISA), nor pay any commission to any person in connection with such
acquisition.
(c) EXECUTION OF INVESTMENT DECISIONS. Investment decisions made by any
---------------------------------
Investment Manager shall be communicated to the Trustee and the Plan
Administrator, and shall be carried out forthwith either by the Investment
Manager or its agent or by the Trustee acting upon the direction of the
Investment Manager.
(d) POWERS. To the extent that it is not inconsistent with the investment
------
of the Trust assets attributable to the Participants' ESOP Matching
Contribution Accounts and ESOP Automatic Contribution Accounts (as well as
designated investments in "Fund A" described in Article X of the Plan) primarily
in Employer Securities, in carrying out their duties hereunder, each Investment
Manager, if any (with respect to making and carrying out its investment
decisions), and the Trustee (with respect to carrying out the decisions of an
Investment Manager or, to the extent there is none, with respect to making and
carrying out investment decisions) are authorized and empowered to:
(1) sell, redeem or otherwise realize the value of any assets of the
Trust Fund;
(2) invest and reinvest all or any part of the Trust Fund, the income
therefrom and the increment thereof in any common or preferred stocks,
bonds, mortgages, secured or unsecured notes, secured or unsecured
debentures, mutual funds, other securities, or commodities; any common
trust fund operated by the Trustee (provided that as long as the Trust has
any investments in a common fund available only to pension trusts and
profit sharing trusts that meet the requirements of Section 401(a) of the
Code, then such common trust fund shall constitute an integral part of this
Trust and of the Plan); insurance on the lives of the Participants; or
property of any kind or nature whatsoever, real, personal or mixed,
including mortgaged real property, without regard to any rule of law or
statute designating securities to be held for trust funds; and to hold cash
uninvested (or in deposits bearing a reasonable rate of interest, in a bank
or other similar institution supervised by the United States or a state,
including, if applicable, the Trustee) at any time and from time to time;
11.
<PAGE>
(3) without limitation on the foregoing, buy and sell listed options
and/or sell covered options and repurchase the same;
(4) vote upon any stocks, other than Employer Securities attributable
to any Participant's ESOP Matching Contribution Account or ESOP Automatic
Contribution Account bonds or other securities of any corporation or other
issuer held in the Trust, and otherwise consent to or request any action on
the part of such corporation or other issuer, and give general or special
proxies or powers of attorneys with or without power of substitution; and
(5) become a party to the reorganization, consolidation or merger of
any corporation, and for such purposes execute any agreements or consents,
or participate in or take any steps to effectuate the same, whether or not
any specific plans have been formulated therefor and in connection
therewith, deposit any such securities with creditors or stockholders'
committees, bodies or other protective groups, and surrender or exchange
any such securities for such debentures, certificates, receipts, agreements
or proceeds as may be issued or paid by such committees, bodies or groups,
or reorganized, consolidated or merged corporations, and generally
exercise all the rights and powers, whether herein enumerated or not, as
may be lawfully exercised by persons holding similar property in their own
right.
(e) HOLDING OF SECURITIES. To the extent permitted by applicable law, the
---------------------
Trustee may hold any securities or other property in its own name or in the name
of its nominee, with depositories or agent depositories or in such other form as
it may deem best, with or without disclosing the trust relationship.
(f) LOANS. In order to enable it to carry out the purpose for which the
-----
Plan and Trust was established, the Trustee shall have the power to borrow money
from any source, including (to the extent permitted by the Code and ERISA) from
any party that may be a party in interest (within the meaning of Section 3(14)
of ERISA) or a disqualified person (within the meaning of Section 4975(e)(2) of
the Code); provided, however, that no such loan shall be used to purchase
Employer Securities. The Trustee shall have the power to issue promissory notes
as Trustee to evidence any such borrowing.
(g) WRITTEN INSTRUMENTS. The Trustee and each Investment Manager shall
-------------------
make, execute and deliver, as Trustee or Investment Manager, as the case may be,
with provisions for no individual
12.
<PAGE>
liability (except responsibility for negligence and for breach of fiduciary
duty), all instruments in writing necessary for the exercise of any of the
foregoing powers.
(h) RESPONSIBILITY FOR DESIGNATING INVESTMENTS. Once a Participant has
------------------------------------------
designated a Fund with respect to the portions of his Accounts that are subject
to paragraph (a) of Article X of the Plan, no change in such designation shall
be made until the Participant changes his election pursuant to the provisions of
this Plan unless either the Plan Administrator or the Trustee has actual
knowledge that the Participant has died or has become legally incompetent to
make a designation.
(1) If a Participant does not specifically designate an investment
for all or part of any Account subject to the provisions of paragraph (a)
of Article X of the Plan, such portion shall be invested in Fund B unless
the Trustee determines that a different fund shall be the default fund.
(2) If either the Plan Administrator or the Trustee has actual
knowledge that the Participant has died or has become legally incompetent
to make a designation, the Trustee shall determine the Fund in which such
portion shall be invested until a designation can be obtained from the
Participant or the Participant's legal guardian, personal representative or
death beneficiary, as the case may be. If the Plan Administrator has actual
knowledge of the death or incompetence of a Participant, the Administrator
shall promptly so notify the Trustee.
(3) In the event of the death of a Participant, the Participant's
beneficiary (or beneficiaries) shall have the responsibility for
designating investments for the portion of the Participant's Accounts that
are subject to the provisions of paragraph (a) of Article X of the Plan, if
such beneficiary is legally competent to do so, until distribution of such
Accounts can be made. If a beneficiary is legally incompetent to make such
a designation, the beneficiary's legal guardian shall make such
designations on behalf of the beneficiary.
ARTICLE VII
VOTING AND OTHER RIGHTS; DIVIDENDS
----------------------------------
(a) VOTING AND OTHER RIGHTS. Any voting and other rights with respect to
-----------------------
units of Employer Securities held as part of each
13.
<PAGE>
Participant's Accounts, or as part of any Suspense Account, within the Trust
Fund shall be exercised as follows:
(1) Any voting and other rights with respect to units of Employer
Securities (including fractional shares) allocated to any Participant's
ESOP Matching Contribution Account or ESOP Automatic Contribution Account
shall be exercised by the Trustee in accordance with instructions received
from such Participant. In connection with the exercise of such rights, the
Trustee shall notify each Participant at least 30 days prior to the date
upon which such rights are to be exercised; provided, however, that the
Trustee shall not be under any obligation to notify the Participants sooner
than it receives such information as a security holder of record. In the
event the notice received by the Trustee makes it impossible for the
Trustee to comply with such 30 day notice requirement, the Trustee shall
notify the Participants regarding the exercise of such rights as soon as
practicable. The notification shall include all information distributed to
the security holders of record by the Employer regarding the exercise of
such rights.
(2) Any voting and other rights with respect to units of Employer
Securities (including fractional, shares) held by it that are
(A) allocated to any Suspense Account,
(B) allocated to any Participant's Savings Contribution Account,
Matching Contribution Account, Automatic Contribution Account,
Discretionary Contribution Account, 401(k) Employer Contribution
Account or Rollover Contribution Account, or
(C) allocated to any Participant's ESOP Matching Contribution
Account or ESOP Automatic Contribution Account but with respect to
which no instructions were received,
shall be exercised by the Trustee at its sole discretion.
(b) DIVIDENDS. Dividends with respect to units of Employer Securities
---------
held as part of the Trust Fund shall be dealt with as follows:
(1) Cash dividends with respect to units of Employer Securities
(including fractional shares) allocated to each
14.
<PAGE>
Participant's Employer Securities Account may be paid, at the discretion of
the Employer, directly to the Participant.
(2) Cash dividends paid to the Trustee with respect to units of
Employer Securities (including fractional shares) allocated to the Employer
Securities Account of a Participant as of the payment date shall be
distributed, if, and to the extent that, the Company so directs, to the
Participant (or his beneficiary or beneficiaries) by the Trustee.
(3) Cash dividends paid with respect to units of Employer Securities
held in the ESOP Fund shall be retained by the Trustee and allocated in the
same manner as other income of the Trust Fund.
(4) Stock Dividends paid with respect to units of Employer Securities
(including fractional shares) allocated to each Participant's ESOP Matching
Contribution Account and ESOP Automatic Contribution Account as of a
payment date shall be retained by the Trustee and allocated in the same
manner as other income of the Trust Fund.
ARTICLE VIII
EXPENSES OF ADMINISTRATION OF THE PLAN AND THE TRUST FUND
---------------------------------------------------------
(a) EXPENSES OF IMPLEMENTATION. The Company shall bear all expenses of
--------------------------
implementing the Plan and this Trust.
(b) EXPENSES OF TRUSTEE OR INSURER.
------------------------------
(1) For its services, the Trustee shall be entitled to receive
compensation in accordance with "Schedule A" attached hereto and by
reference made a part hereof.
(2) The Company may pay all expenses of the administration of the
Trust Fund, including the Trustee's compensation, the expense incurred by
the Plan Administrator in discharging its duties, all income or other taxes
of any kind whatsoever that may be levied or assessed under existing or
future laws upon or in respect of the Trust Fund, and any interest that may
be payable on money borrowed by the Trustee for the purpose of the Trust
and any Employer may pay such expenses as relate to Participants employed
by such Employer. Any such payment by the Company or an Employer shall not
be deemed a contribution to the Plan. Such expenses shall be paid out of
the assets of the Trust Fund unless paid or provided for by the Company or
another Employer.
15.
<PAGE>
(3) Notwithstanding anything contained herein to the contrary, no
excise tax or other liability imposed upon the Trustee, the Plan
Administrator or anyone else for failure to comply with the provisions of
any federal law shall be subject to payment or reimbursement from the
assets of the Trust.
ARTICLE IX
AMENDMENT AND TERMINATION
-------------------------
(a) RIGHT TO AMEND OR TERMINATE RESERVED. The Plan and this Trust may be
------------------------------------
amended or terminated by the Company in accordance with the terms of the Plan
and this Trust; provided, however, that no such amendment:
(1) shall have the effect of vesting in any Employer, directly or
indirectly, any interest, ownership or control in any of the present or
subsequent funds held subject to the terms of this Trust;
(2) shall cause or permit any property held subject to the terms of
this Trust to be diverted to purposes other than the exclusive benefit of
the Participants and their beneficiaries or for the administration
expenses of the Plan Administrator and this Trust;
(3) shall reduce any vested interest of a Participant on the later of
the date the amendment is adopted or the date the amendment is effective,
except as permitted by law;
(4) shall reduce the Accounts of any Participant;
(5) shall amend any vesting schedule with respect to any Participant
who has at least 3 Years of Service at the end of the election period
described below, except as permitted by law, unless each such Participant
shall have the right to elect to have the vesting schedule in effect prior
to such amendment apply with respect to him, such election, if any, to be
made during the period beginning not later than the date the amendment is
adopted and ending no earlier than 60 days after the latest of the date the
amendment is adopted, the amendment becomes effective or the Participant is
issued written notice of the amendment by his Employer or the Plan
Administrator; or
(6) shall increase the duties or liabilities of the Trustee without
its written consent.
16.
<PAGE>
(b) TERMINATION OR DISCONTINUANCE. Any Employer, in its sole and absolute
-----------------------------
discretion, may permanently discontinue making contributions under the Plan or
may terminate the Plan and this Trust (with respect to all Employers if it is
the Company, or with respect to itself alone if it is an Employer other than the
Company), completely or partially, at any time without any liability whatsoever
for such permanent discontinuance or complete or partial termination.
(c) METHOD OF DISCONTINUANCE. In the event an Employer decides to
------------------------
permanently discontinue making contributions, such decision shall be evidenced
by an appropriate resolution of its Board and a certified copy of such
resolution shall be delivered to the Plan Administrator and the Trustee. All of
the assets in the Trust Fund belonging to the affected Participants on the date
of discontinuance specified in such resolutions shall be held, administered and
distributed by the Trustee in the manner provided under the Plan and this
Agreement.
(d) METHOD OF TERMINATION.
---------------------
(1) In the event an Employer decides to terminate the Plan and this
Trust, such decision shall be evidenced by an appropriate resolution of its
Board and a certified copy of such resolution shall be delivered to the
Plan Administrator and the Trustee. After payment of all expenses and
proportional adjustments of individual accounts to reflect such expenses
and other changes in the value of the Trust Fund as of the date of
termination, each affected Participant (or the beneficiary of any such
Participant) shall be entitled to receive any amount then credited to his
Accounts in a lump sum, provided in the case of his Savings Contribution
Account, Matching Contribution Account, Automatic Contribution Account,
Discretionary Contribution Account and his 401(k) Employer Contribution
Account that the requirements set forth in subparagraph (2) are met.
(2) In the event the Plan and this Trust are terminated, completely
or partially, and with respect to any one Employer or with respect to all
Employers, distributions shall not be made pursuant to this paragraph (d)
unless:
(A) the Plan has been completely terminated and no successor
plan (within the meaning of Section 401(k)(10) of the Code) has been
established;
(B) the Plan has been partially terminated as a result of the
sale or other disposition by an Employer to an unrelated corporation
of substantially all of the assets used in a trade or business, in
which case distri-
17.
<PAGE>
bution may be made to employees who continue employment with the
acquiring corporation; or
(C) the Plan has been partially terminated as a result of the
sale or other disposition by an Employer of its interest in a
subsidiary, in which case distribution may be made to employees who
continue employment with the subsidiary.
(3) At the election of the Participant, the Plan Administrator may
transfer the amount of any Participant's distribution under this paragraph
(d) to the trustee of another qualified plan or the trustee of an
individual retirement account or individual retirement annuity instead of
distributing such amount to the Participant. Any such election by a
Participant shall be in writing and filed with the Plan Administrator.
ARTICLE X
ACCEPTANCE OF TRUST
-------------------
The Trustee hereby accepts this trust and agrees to hold all the property
now or hereafter constituting the Trust Fund here under, subject to all the
terms and conditions of this Agreement.
ARTICLE XI
MISCELLANEOUS
-------------
(a) MERGER OR CONSOLIDATION. The Plan and this Trust may not be merged or
-----------------------
consolidated with, and the assets or liabilities of the Plan and this Trust may
not be transferred to, any other plan or trust unless each Participant would
receive a benefit immediately after the merger, consolidation or transfer if the
plan and trust then terminated that is equal to or greater than the benefit the
Participant would have received immediately before the merger, consolidation or
transfer if the Plan and this Trust had then terminated.
(b) ALIENATION.
----------
(1) Except as provided in subparagraphs (2) and (3), no Participant
or beneficiary of a Participant shall have any right to assign, transfer,
appropriate, encumber, commute, anticipate or otherwise alienate his
interest in the Plan or this Trust or any payments to be made hereunder; no
benefits, payments, rights or interests of a Participant or a benefi-
18.
<PAGE>
ciary of a Participant of any kind or nature shall be in any way subject to
legal process to levy upon, garnish or attach the same for payment of any
claim against the Participant or beneficiary of a Participant; and no
Participant or beneficiary of a Participant shall have any right of any
kind whatsoever with respect to this Trust, or any estate or interest
therein, or with respect to any other property or right, other than the
right to receive such distributions as are lawfully made out of this Trust,
as and when the same respectively are due and payable under the terms of
the Plan and this Agreement.
(2) Notwithstanding the provisions of subparagraph (1), the Plan
Administrator shall direct the Trustee to make payments pursuant to a
Qualified Domestic Relations Order, as defined in Section 414(p) of the
Code, pursuant to the provisions of paragraph (b)(2) of Article XV of the
Plan.
(3) Notwithstanding the provisions of paragraph (b)(1), the Plan
Administrator shall direct the Trustee or Insurer to comply with the lawful
terms of a levy of the Internal Revenue Service.
(c) GOVERNING LAW. This Agreement and Declaration of Trust shall be
-------------
administered, construed and enforced according to the laws of the State of
Nevada, except to the extent such laws have been expressly preempted by federal
law.
(d) ACTION BY EMPLOYER. Whenever the Company or another Employer under
------------------
the terms of this Agreement is permitted or required to do or perform any act,
it shall be done and performed by the Board of Directors of the Company or such
other Employer and shall be evidenced by proper resolution of such Board of
Directors certified by the Secretary or Assistant Secretary of the Company or
such other Employer.
(e) ALTERNATIVE ACTIONS. In the event it becomes impossible for the
-------------------
Company, another Employer, or the Plan Administrator to perform any act required
by this Agreement, then the Company, such other Employer, or the Plan
Administrator, as the case may be, may perform such alternative act that most
nearly carries out the intent and purpose of this Agreement.
(f) GENDER. Throughout this Agreement, and whenever appropriate, the
------
masculine gender shall be deemed to include the feminine and neuter; the
singular, the plural; and vice versa.
19.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Fifth Amendment and
Restatement this 21st day of November, 1995.
ATTEST: CIRCUS CIRCUS ENTERPRISES, INC.
(CORPORATE SEAL)
______________________________ By: /s/ Glenn Schaeffer
Secretary President
"COMPANY"
ATTEST: BANK OF AMERICA
(CORPORATE SEAL)
______________________________ By: /s/ Gary Blanchard
Secretary Its:___________________________
"TRUSTEE"
20.
<PAGE>
EXHIBIT 5(c)
[LETTERHEAD OF TRENAM, KEMKER, SCHARF, BARKIN,
FRYE, O'NEILL & MULLIS APPEARS HERE]
Tampa
November 21, 1995
Circus Circus Enterprises, Inc.
2880 Las Vegas Boulevard, South
Las Vegas, Nevada 89109
Re: Circus Circus Employees' Profit
Sharing and Investment Plan
Gentlemen:
You have requested our opinion as to whether the Amendment and Restatement
of the Circus Circus Employees' Profit Sharing, Investment and Employee Stock
Ownership Plan (the "Plan"), adopted by Circus Circus Enterprises, Inc. (the
"Company") on November 21, 1995, as set forth in the Tenth Amendment and
Restatement of the Circus Circus Employees' Profit Sharing and Investment Plan
(the "Restated Plan"), and the Fifth Amendment and Restatement of the Plan's
related trust (the "Restated Trust"), have adversely affected the compliance of
the Plan and the Trust with Sections 401 and 501 of the Internal Revenue Code of
1986, as amended (the "Code"), and with the Employee Retirement Income Security
Act of 1974, as amended ("ERISA").
The Plan and the Trust received a determination letter dated April 28,
1987, from the Internal Revenue Service ("IRS") that the Plan met the
requirements of a qualified profit sharing plan under Section 401(a) of the Code
and a qualified cash or deferred arrangement under Section 401(k) of the Code,
and that the Trust was exempt from federal income taxation pursuant to Section
501(a) of the Code. The Plan and the Trust received second and third
determination letters, dated September 14, 1993 and May 23, 1995, respectively
from the IRS, that the Plan met the requirements of a qualified profit sharing
plan under Section 401(a) of the Code, a qualified cash or deferred arrangement
under Section 401(k) of the Code, and a qualified employee stock ownership plan
under Section 4975(e)(7) of the Code, and that the Trust was exempt from federal
income taxation pursuant to Section 501(a) of the Code. The most recent
favorable determination letter was conditioned upon the adoption of an
additional amendment on or before August 21, 1995. The required additional
amendment was in fact adopted on July 12, 1995.
<PAGE>
Circus Circus Enterprises, Inc.
November 21, 1995
Page 2
In connection with the rendering of this opinion, we have examined the Plan
and all amendments thereto, the Trust (of which Bank of America is the current
trustee) and all amendments thereto, the Restated Plan and the Restated Trust.
We have also examined such corporate records of the Company as we consider
necessary for the purpose of this opinion. As to various questions of fact
material to the opinions expressed below, we have relied, without independent
investigation, on oral or written statements, letters or certificates of public
officials or officers of the Company. With respect to such factual matters upon
which legal conclusions expressed below are based, we have not undertaken any
independent audit, examination, investigation or inspection of the matters
described or contained in such statements, letters, or certificates, and have
relied solely upon the facts and circumstances described therein. In our
examination, we have assumed the authenticity of all documents submitted to us
as originals, the genuineness of all signatures not actually witnessed by us,
the legal capacity of all natural persons executing instruments or documents
examined or relied upon by us (whether on their own behalf or on behalf of an
entity), and the completeness and conformity to original documents of all
documents submitted to us as certified, conformed, photo static, telecopied or
draft copies.
To date, only certain final regulations have been issued by the U.S.
Treasury and Department of Labor with respect to the requirements of the Code
and ERISA. Accordingly, our opinion concerning compliance of the Plan with the
Code and ERISA is necessarily based on our present understanding of the
applicable requirements of the Code and ERISA. In addition, this letter relates
only to the Plan's tax status under Sections 401 and 501 of the Code and its
status under ERISA, and further relates to the Plan's provisions as specifically
set forth in writing, and not to its operation. Furthermore, this opinion is
given as of the date hereof. We undertake no obligation, and hereby
specifically disclaim any obligation, to advise of any change in any matter set
forth herein.
Based on the foregoing reviews, understandings and assumptions, and subject
to the exceptions and limitations described above, we are of the opinion that:
1. The adoption of the Restated Plan and the Restated Trust did not cause
the Plan to fail to be in substantial compliance with the requirements
of Sections 401(a), 401(k) and 4975(e)(7) of the Code so long as any
further amendments requested by the IRS are adopted within 90 days
after the issuance of any determination letter that is conditioned
upon timely adoption of such amendments; and the IRS, without requir
ing material amendments thereto, should issue a favorable
determination letter with respect to the Restated Plan and the
Restated Trust; and
2. The Restated Plan and the Restated Trust substantially comply with the
applicable portions of ERISA that did not amend the Code, and the
adoption of the Restated Plan and the Restated Trust does not cause
the Plan or the Trust to fail to be in compliance with such
provisions.
<PAGE>
Circus Circus Enterprises, Inc.
November 21, 1995
Page 3
We hereby consent to the use of this opinion as an Exhibit to the Company's
Registration Statement No. 33-18278 on Form S-8 and to the reference to us under
the caption "Legal Opinions" in the Prospectus, and any amendments thereto,
filed in connection with the Plan. In giving this consent, we do not hereby
admit that we come within a category of persons whose consent is required under
Section 7 of the Securities Act of 1933, as amended, or the rules and
regulations thereunder.
Sincerely,
TRENAM, KEMKER, SCHARF, BARKIN,
FRYE, O'NEILL & MULLIS
By: /s/ Roberta Casper Watson
----------------------------
Roberta Casper Watson
RCW/RCM/jsh
cc: Wolf, Block, Schorr and Solis-Cohen
<PAGE>
EXHIBIT 5(d)
INTERNAL REVENUE SERVICE DEPARTMENT OF THE TREASURY
DISTRICT DIRECTOR
2 CUPANIA CIRCLE
MONTEREY PART, CA 91755
Employer Identification Number:
Date: May 23 1995 88-0121916
File Folder Number:
CIRCUS CIRCUS ENTERPRISES INC 880004637
C/O ROBERTA CASPER WATSON, ESQUIRE Person to Contact:
P.O. BOX 1102 STAFFORD HOWLETT
TAMPA, FL 33601 Contact Telephone Number:
(310) 325-3035
Plan Name:
CIRCUS CIRCUS
EMPLOYEES' PROFIT SHARING AND ESOP
Plan Number: 002
Dear Applicant:
We have made a favorable determination on your plan, identified above,
based on the information supplied. Please keep this letter in your permanent
records.
Continued qualification of the plan under its present form will depend on
its effect in operation. (See section 1.401-1(b) (3) of the Income Tax
Regulations.) We will review the status of the plan in operation periodically.
The enclosed document explains the significance of this favorable
determination letter, points out some features that may affect the qualified
status of your employee retirement plan, and provides information on the
reporting requirements for your plan. It also describes some events that
automatically nullify it. It is very important that you read the publication.
This letter relates only to the status of your plan under the Internal
Revenue Code. It is not a determination regarding the effect of other federal or
local statutes.
This determination is subject to your adoption of the proposed amendments
submitted in your letter dated 5/5/95. The proposed amendments should be adopted
on or before the date prescribed by the regulations under Code section 401(b).
This determination letter is applicable for the amendment(s) adopted on
11/22/93.
This plan is an employee stock ownership plan with a cash or deferred
arrangement described in Code section 401(k).
This plan satisfies the requirements of Code section 4975(e) (7).
This plan has been mandatorily disaggregated, permissively aggregated, or
restructured to satisfy the nondiscrimination requirements.
This plan satisfies the nondiscrimination in amount requirement of section
1.401(a) (4)-1(b) (2) of the regulations on the basis of a design-based safe
harbor described in the regulations.
<PAGE>
-2-
CIRCUS CIRCUS ENTERPRISES INC
This letter is issued under Rev. Proc. 93-39 and considers the amendments
required by the Tax Reform Act of 1986 except as otherwise specified in this
letter.
This plan satisfies the nondiscriminatory current availability requirements
of section 1.401(a) (4)-4(b) of the regulation with respect to those benefits,
rights, and features that are currently available to all employees in the plan's
coverage group. For this purpose, the plan's coverage group consists of those
employees treated as currently benefiting for purposes of demonstrating that the
plan satisfies the minimum coverage requirements of section 410(b) of the Code.
This letter may not be relied upon with respect to whether the plan
satisfies the qualification requirements as amended by the Uruguay Round
Agreements Act, Pub. L. 103-465.
We have sent a copy of this letter to your representative as indicated in
the power of attorney.
If you have questions concerning this matter, please contact the person
whose name and telephone number are shown above.
Sincerely yours,
/s/Richard R. Orosco
Richard R. Orosco
District Director
Enclosures:
Publication 794
Reporting & Disclosure Guide
for Employee Benefit Plans
<PAGE>
EXHIBIT 23(c)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Form S-8 Registration Statement (File No. 33-18278) of our
report dated February 22, 1995 (except with respect to the matters discussed
in Note 13, as to which the date is March 19, 1995), relating to our audit of
the consolidated financial statements of Circus Circus Enterprises, Inc. and
subsidiaries as of January 31, 1995 and 1994 and for each of the three years
ended January 31, 1995, incorporated by reference in Circus Circus
Enterprises, Inc.'s Annual Report on Form 10-K for the year ended January 31,
1995; our report dated June 6, 1995 included in the Circus Circus Employees'
Profit Sharing, Investment and Employee Stock Ownership Plan's Amendment No. 1
on Form 11-K/A to its Annual Report on Form 11-K for the year ended December
31, 1994; and our report dated January 27, 1995 (except with respect to
matters discussed in Note 10, as to which the date is March 19, 1995) relating
to the combined financial statements of Gold Strike Resorts for the years
ended December 31, 1994 and 1995 incorporated by reference in Circus Circus
Enterprises, Inc.'s Amendment No. 1 on Form 8-K/A to its Current Report on
Form 8-K dated June 1, 1995, and to all references to our Firm included in
this registration statement.
Arthur Andersen LLP
Las Vegas, Nevada
November 21, 1995
<PAGE>
EXHIBIT 23(d)
CONSENT OF PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in this Form S-8 Registration
Statement (File No. 33-18278) of our report dated January 20, 1995 relating to
the financial statements of Elgin Riverboat Resort--Riverboat Casino for the
two years ended December 31, 1994 and 1993 included in Exhibit 99(b) to the
Current Report of Circus Circus Enterprises, Inc. on Form 8-K dated June 1,
1995. We also consent to the reference to our firm under the caption
"Experts".
Coopers & Lybrand L.L.P.
Chicago, Illinois
November 21, 1995
