<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY , 1998.
REGISTRATION STATEMENT NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------------------
PAINE WEBBER GROUP INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 13-2760086
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
</TABLE>
1285 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
------------------------------------
PAINEWEBBER
SAVINGS INVESTMENT PLAN
(FULL TITLE OF THE PLAN)
------------------------------------
THEODORE A. LEVINE
SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
PAINE WEBBER GROUP INC.
1285 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019
TELEPHONE: (212) 713-2879
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE FOR THE EMPLOYER AND
FOR THE ISSUER OF THE SECURITIES)
------------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION FEE
TO BE REGISTERED REGISTERED(1) PER SHARE (2) OFFERING PRICE (2) (2)
- ------------------------------------------------------------------------------------------------------------------
Common Stock (par value
$1 per share)............. 3,500,000 Shs. $44.19 $154,665,000 $45,626.18
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) In addition, pursuant to rule 416(c), this Registration Statement also
covers an indeterminate amount of interests to be offered or sold pursuant
to the PaineWebber Savings Investment Plan.
(2) Pursuant to Rule 457(h), the aggregate offering price and the registration
fee have been computed based upon the average of the high and low prices
reported in the consolidated reporting system on May 14, 1998.
------------------------------------
PURSUANT TO RULE 429 UNDER THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT ALSO RELATED TO SHARES COVERED BY REGISTRATION STATEMENTS NO.
33-39539.
================================================================================
<PAGE> 2
PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
The document(s) containing the information specified in Part I of Form S-8
will be sent or given to participating employees as specified by Rule 428(b)(1)
of the Securities Act of 1933, as amended. Such documents and the documents
incorporated by reference herein pursuant to Item 3 of Part II hereof, taken
together, constitute a prospectus that meets the requirements of Section 10(a)
of the Securities Act of 1933, as amended.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
Incorporated by reference into this Registration Statement are (a) the
Registrant's latest Annual Report on Form 10-K filed pursuant to Section 13 of
the Exchange Act, (b) the Plan's latest Annual Report on Form 11-K filed
pursuant to Section 15(d) of the Exchange Act, (c) the Registrant's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1998, (d) the Registrant's
definitive proxy statement or information statement filed pursuant to Section 14
of the Securities Exchange Act in connection with the Registrant's latest annual
meeting of shareholders and any definitive proxy or information statements as
filed in connection with any subsequent special meetings of its stockholders,
and (e) the description of the Registrant's common stock contained in the
Registrant's Registration Statement on Form 8 filed under Section 12 of the
Securities Exchange Act, including Amendment No. 4 thereto dated January 30,
1986, and any other amendment or report filed under the Securities Exchange Act
for the purpose of updating such description. All documents subsequently filed
by the Registrant or the Plan pursuant to Section 13(a), 13(c), 14 and 15(d) of
the Securities Exchange Act prior to the filing of a post-effective amendment
which indicates that all securities offered have been sold or which deregisters
all securities 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.
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 102 of the General Corporation Law of the State of Delaware gives
corporations the power to eliminate or limit the personal liability of directors
under certain circumstances. Section 145 of the General Corporation Law of the
State of Delaware gives corporations the power to indemnify directors and
officers under certain circumstances.
Article IX of the Restated Certificate of Incorporation (relating to the
elimination of personal liability of directors of the Company) of Paine Webber
Group Inc. filed as Exhibit 3.1 of Registrant's Form 10-Q for the quarter ended
March 31, 1998 is incorporated herein by reference. Article VII of Paine Webber
Group Inc.'s By-Laws (relating to indemnification of directors and officers of
the Company) filed as Exhibit 3.5 of Registrant's Form 10-K for the year ended
December 31, 1997 is incorporated herein by reference.
The registrant also maintains directors and officers liability and
corporate reimbursement insurance which provides for coverage against loss
arising from claims made against directors and officers in their capacity as
such. The general scope of coverage is any breach of duty, neglect, error,
misstatement, misleading statement or omission. Such policy does not exclude
liabilities under the Securities Act of 1933. The registrant also maintains
fiduciary liability insurance for losses in connection with claims made against
directors or officers for
II-1
<PAGE> 3
violation of any of the responsibilities, obligations or duties imposed upon
fiduciaries under the Employee Retirement Income Act of 1974 ("ERISA").
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
<TABLE>
<C> <C> <S>
4.1 -- PaineWebber Savings Investment Plan, as amended through June
20, 1996.
4.2 -- Trust Agreement Amendment dated as of July 1, 1996 between
the registrant and The Northern Trust Company
23.1 -- Consent of Ernst & Young LLP.
23.2 -- Consent of Deloitte & Touche.
25 -- Power of Attorney (set forth on the signature page of this
Registration Statement).
</TABLE>
The Registrant hereby undertakes to submit the Plan and any amendment
thereto to the Internal Revenue Service ("IRS") in a timely manner and will make
all changes required by the IRS in order to qualify the Plan.
ITEM 9. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) to include any prospectus required by section 10(a)(3) of the
Securities Act of 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, represents 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-8 or Form S-3 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 section 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.
(b) 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
II-2
<PAGE> 4
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.
(h) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant, 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> 5
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 Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in The City of New York, State of New York, on May 7, 1998.
PAINE WEBBER GROUP INC.
(Registrant)
/s/ DONALD B. MARRON
By:
--------------------------------------
(Donald B. Marron,
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 DONALD B. MARRON, WILLIAM NOLAN and REGINA DOLAN,
and each of them (with full power to each of them to act alone), 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 or 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 in and about the premises, 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 his or
their substitute or substitutes, may lawfully do or cause to be done by virtue
thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement and Power of Attorney have been signed by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ DONALD B. MARRON Chairman of the Board, Chief May 7, 1998
- --------------------------------------------- Executive Officer and Director
(Donald B. Marron) (principal executive officer)
/s/ REGINA DOLAN Senior Vice President and Chief May 7, 1998
- --------------------------------------------- Financial Officer (principal
(Regina Dolan) financial and accounting officer)
and Director
/s/ E. GARRETT BEWKES, JR. Director May 7, 1998
- ---------------------------------------------
(E. Garrett Bewkes, Jr.)
/s/ RETO BRAUN Director May 7, 1998
- ---------------------------------------------
(Reto Braun)
</TABLE>
II-4
<PAGE> 6
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ JOSEPH J. GRANO, JR. Director May 7, 1998
- ---------------------------------------------
(Joseph J. Grano, Jr.)
/s/ FRANK P. DOYLE Director May 7, 1998
- ---------------------------------------------
(Frank P. Doyle)
/s/ JAMES W. KINNEAR Director May 7, 1998
- ---------------------------------------------
(James W. Kinnear)
/s/ NAOSHI KIYONO Director May 7, 1998
- ---------------------------------------------
(Naoshi Kiyono)
/s/ ROBERT M. LOEFFLER Director May 7, 1998
- ---------------------------------------------
(Robert M. Loeffler)
/s/ EDWARD RANDALL, III Director May 7, 1998
- ---------------------------------------------
(Edward Randall, III)
/s/ HENRY ROSOVSKY Director May 7, 1998
- ---------------------------------------------
(Henry Rosovsky)
/s/ YOSHINAO SEKI Director May 7, 1998
- ---------------------------------------------
(Yoshinao Seki)
/s/ JOHN R. TORELL III Director May 7, 1998
- ---------------------------------------------
(John R. Torell III)
</TABLE>
II-5
<PAGE> 7
THE PLAN. Pursuant to the requirements of the Securities Act of 1933, the
PaineWebber Savings Investment Plan has caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of New York, the State of New York, on this 7th day of May 1998.
PAINEWEBBER SAVINGS INVESTMENT PLAN
(The Plan),
By: /S/ THERESA KAROLE
Theresa Karole, Plan Administrator
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in their
capacities as members of the Administrative Committee of the Plan on this 7th
day of May 1998.
<TABLE>
<CAPTION>
<C> <S> <C>
/S/ GERALD BLITSTEIN
- ---------------------------------------------
(Gerald Blitstein)
/S/ MATTHEW LEVITAN
- ---------------------------------------------
(Matthew Levitan)
/S/ DHANANJAY PAI
- ---------------------------------------------
(Dhananjay Pai)
/S/ MARK VASSALLO
- ---------------------------------------------
(Mark Vassallo)
/S/ PETER ZURKOW
- ---------------------------------------------
(Peter Zurkow)
</TABLE>
II-6
<PAGE> 8
EXHIBIT INDEX
-------------
Exhibit
No. Description
- ------- -----------
4.1 -- PaineWebber Savings Investment Plan, as amended through June
20, 1996.
4.2 -- Trust Agreement Amendment dated as of July 1, 1996 between
the registrant and The Northern Trust Company
23.1 -- Consent of Ernst & Young LLP.
23.2 -- Consent of Deloitte & Touche.
25 -- Power of Attorney (set forth on the signature page of this
Registration Statement).
<PAGE> 1
Exhibit 4.1
- --------------------------------------------------------------------------------
PAINEWEBBER
SAVINGS INVESTMENT PLAN
(As amended and restated effective January 1, 1994)
- --------------------------------------------------------------------------------
<PAGE> 2
INDEX
Page
----
ARTICLE I - INTRODUCTION................................................ 1
ARTICLE II - DEFINITIONS................................................ 2
2.1. Accounts....................................................... 2
2.2. Administrative Committee ...................................... 2
2.3. After-Tax Contributions ....................................... 2
2.4. Aggregate Percentage........................................... 2
2.5. Annual Addition ............................................... 2
2.6. Basic Contributions ........................................... 2
2.7. Beneficiary ................................................... 3
2.8. Board ......................................................... 3
2.9. Code........................................................... 3
2.10. Common Stock................................................... 3
2.11. Company Account ............................................... 3
2.12. Company Contributions ......................................... 4
2.13. Compensation................................................... 4
2.14. Contribution Percentage........................................ 5
2.15. Deferral Percentage ........................................... 6
2.16. Disability..................................................... 6
2.17. Employee....................................................... 6
2.18. Employee Account............................................... 7
2.19. Employment Commencement Date................................... 7
2.20. ERISA ......................................................... 7
2.21. Highly Compensated Participant................................. 7
2.22. Hour of Service ............................................... 7
2.23. Life Expectancy ............................................... 7
2.24. One-Year Break-in-Service...................................... 7
2.25. PaineWebber ................................................... 8
2.26. Participant ................................................... 8
2.27. Paysop Contributions........................................... 8
2.28. Plan........................................................... 8
2.29. Plan Administrator............................................. 9
2.30. Plan Year ..................................................... 9
2.31. Pre-Tax Contributions ......................................... 9
2.32. Pre-Tax Earnings............................................... 9
2.33. Prior Year Earnings ........................................... 9
2.34. Required Beginning Date........................................ 10
2.35. Retirement Date ............................................... 10
2.36 Service........................................................ 10
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<PAGE> 3
Page
----
2.37. Severance Date................................................. 10
2.38. Trust Agreement................................................ 10
2.39. Trustee........................................................ 10
2.40. Trust Fund or Fund............................................. 10
2.41. Valuation Date................................................. 11
2.42. Voluntary Contributions........................................ 11
2.43. Masculine and Feminine Pronouns................................ 11
ARTICLE III - ELIGIBILITY AND PARTICIPATION............................. 12
3.1. Eligibility -- Employees....................................... 12
3.2. Commencement of Participation.................................. 12
3.3. Eligibility of Former Participants............................. 12
ARTICLE IV - SALARY DEFERRALS; PARTICIPANT CONTRIBUTIONS ............... 13
4.1. Pre-Tax Contributions.......................................... 13
4.2. After-Tax Contributions........................................ 13
4.3. Limit on Pre-Tax and After-Tax Contributions................... 14
4.4. Procedures for Participant Contributions....................... 14
4.5. Contribution of Pre-Tax and
After-Tax Contributions...................................... 14
4.6. Rollover Contribution.......................................... 15
4.7. Termination of the Right of Highly Compensated
Participants to Continue Making Pre-Tax
Contributions During a Plan Year............................. 15
4.8. Termination of the Right of Highly Compensated
Participants to Continue Making After-Tax
Contributions or Receiving Savings
Incentive Contributions...................................... 15
4.9. Aggregate Limitations on Contributions......................... 16
4.10. Reductions of Pre-Tax and After-Tax
Contributions................................................ 17
4.11. Corrective Distributions....................................... 19
4.12. Changes Effected by the Plan Administrator..................... 19
ARTICLE V - COMPANY CONTRIBUTIONS....................................... 20
5.1. Amount of Company Contributions................................ 20
5.2. Limitations on Company and Pre-Tax
Contributions................................................. 20
5.3. Form and Payment of Company and Pre-Tax
Contributions................................................. 20
-ii-
<PAGE> 4
Page
----
ARTICLE VI - ALLOCATION AND ACCOUNTS OF PARTICIPANTS ................... 22
6.1. Allocation of Company Contributions............................ 22
6.2. Allocation of Pre-Tax and
After-Tax Contributions...................................... 22
6.3. Valuation of Accounts.......................................... 22
6.4. Adjustments to Accounts........................................ 22
6.5. Statutory Limitation on Allocation of
Company Contributions........................................ 23
6.6. Forfeiture Suspense Account.................................... 25
ARTICLE VII - VESTING................................................... 26
7.1. Employee Account............................................... 26
7.2. Retirement..................................................... 26
7.3. Death or Disability............................................ 26
7.4. Vesting in Company Account..................................... 26
7.5. Forfeitures.................................................... 27
ARTICLE VIII - DISTRIBUTIONS AND WITHDRAWALS............................ 28
8.1. Distributions.................................................. 28
8.2. Form of Distributions.......................................... 30
8.3. Limits on Distribution Periods................................. 31
8.4. Death Benefits................................................. 32
8.5. Withdrawals of Employee Contributions
and Paysop Contributions..................................... 32
8.6. Regular Withdrawals of Pre-Tax Contributions................... 33
8.7. Hardship Withdrawals........................................... 33
8.8. Procedures for Withdrawals..................................... 34
8.9. Participant Loans to Participants.............................. 35
ARTICLE IX - ADMINISTRATION OF THE PLAN................................. 38
9.1. Appointment of an Administrative
Committee.................................................... 38
9.2. Meetings....................................................... 38
9.3. Quorum......................................................... 38
9.4. Expenses....................................................... 38
9.5. Powers and Duties of the Administrative
Committee.................................................... 38
9.6. Delegation of Authority........................................ 39
9.7. Benefit Claims Procedures...................................... 39
9.8. Indemnification of Committee Members........................... 40
-iii-
<PAGE> 5
Page
----
9.9. Reliance on Reports and Certificates........................... 41
9.10. Members' Own Participation..................................... 41
9.11. Supervision of Investment of Funds;
Confidentiality............................................. 41
9.12. QDROs.......................................................... 41
ARTICLE X - TRUST FUND.................................................. 43
10.1. Trustee........................................................ 43
10.2. Investment of Trust Fund....................................... 43
10.3. Election of Investment Funds................................... 43
10.4. Procedure for Investment of Funds.............................. 45
10.5. Purchases from Participant Accounts............................ 45
10.6. Non-Reversion.................................................. 45
10.7. Return of Certain Company Contributions........................ 45
10.8. Voting of Common Stock......................................... 46
ARTICLE XI - AMENDMENT OR TERMINATION................................... 47
11.1. Right to Amend or Terminate.................................... 47
11.2. Mergers, Consolidations and Transfers.......................... 47
11.3. Distribution of Funds Upon Termination......................... 48
ARTICLE XII - GENERAL PROVISIONS........................................ 49
12.1. No Guarantee of Employment..................................... 49
12.2. Payments to Minors and Incompetents............................ 49
12.3. Nonalienation of Benefits...................................... 49
12.4. Evidence of Survivor........................................... 50
12.5. Titles and Headings............................................ 50
12.6. Governing Law.................................................. 50
ARTICLE XIII - TOP-HEAVY PLAN REQUIREMENTS.............................. 51
13.1. General........................................................ 51
13.2. Definition of Top-Heavy Plan................................... 51
13.3. Top-Heavy Group................................................ 51
13.4. Definition of Super Top-Heavy Plan............................. 52
13.5. The Amount of Account.......................................... 52
13.6. Vesting........................................................ 52
13.7. Minimum Contribution........................................... 53
13.8. Impact on Maximum Benefits..................................... 53
13.9. Key Employee................................................... 54
-iv-
<PAGE> 6
Page
----
Exhibit A Provisions Relating to Certain
Participants in Other Plans................................. i
1. BEDCO Plan..................................................... i
2. MH Plans....................................................... i
3. PWJC Retirement Agreement and Trust............................ i
4. Becker Profit Sharing Plan..................................... ii
5. PaineWebber Capital Accumulation Plan.......................... ii
<PAGE> 7
PAINEWEBBER SAVINGS INVESTMENT PLAN
ARTICLE I
INTRODUCTION
1.1. This Plan, known as the Paine Webber Savings Investment Plan,
was adopted April 23, 1979 as the PaineWebber Incorporated Employees' Stock
Accumulation Plan.
1.2. The purpose of this Plan is to attract and retain qualified
Employees by providing them with an opportunity to save for their retirement, to
permit them to derive benefits commensurate with the financial results of Paine
Webber Group Inc., and to acquire an equity interest in Paine Webber Group Inc.
This equity interest shall be acquired through the investment of Company
Contributions to the Trust exclusively in the Common Stock of Paine Webber Group
Inc.
1.3. Except as required by law or as otherwise specifically
provided, the benefits payable hereunder to any Participant or the spouse or
Beneficiary of any Participant shall be determined under the provisions of this
Plan (or any predecessor plan that has been merged into this Plan) as in effect
as of the Participant's Severance Date, but the time his benefits shall commence
and the form of payment of his benefits shall be determined under the provisions
of this Plan as in effect at the time his benefits are to commence.
1.4. This Plan is designated as a profit-sharing plan for all
purposes of the Code.
<PAGE> 8
ARTICLE II
DEFINITIONS
Unless otherwise required by the context, the terms used herein
shall have the meanings set forth in this Article II.
2.1. Accounts shall mean a Participant's Employee Account and
Company Account, collectively.
2.2. Administrative Committee shall mean the PaineWebber Savings
Investment Plan Administrative Committee provided for in Article IX.
2.3. After-Tax Contributions shall mean the contributions made by a
Participant pursuant to Section 4.2. and shall consist of Basic After-Tax
Contributions and Voluntary After-Tax Contributions. After-Tax Contributions
shall also refer to amounts previously designated hereunder as Voluntary
Contributions.
2.4. Aggregate Percentage shall mean the sum of a Participant's
Deferral Percentage and Contribution Percentage.
2.5. Annual Addition shall mean, effective for Plan Years beginning
after 1986, the sum of the following amounts credited to a Participant's
Accounts for the Plan Year:
(a) Company Contributions,
(b) Basic After-Tax Contributions,
(c) Basic Pre-Tax Contributions,
(d) Voluntary After-Tax Contributions, and
(e) Voluntary Pre-Tax Contributions.
2.6. Basic Contributions shall mean contributions to the Plan before
July 1, 1984, that were designated as Basic Contributions, and so much of a
Participant's After-Tax Contributions and Pre-Tax Contributions each Plan Year
after 1988 as does not exceed 6% of his Compensation (with such amounts being
referred to as Basic After-Tax and Basic Pre-Tax Contributions, respectively).
If the sum of a
-2-
<PAGE> 9
Participant's After-Tax and Pre-Tax Contributions exceeds 6% of his
Compensation, Basic Contributions shall be deemed to have been made first from
Pre-Tax Contributions and then to the extent Pre-Tax Contributions do not exceed
6% of Compensation, from After-Tax Contributions.
2.7. Beneficiary shall mean (i) in the case of a Participant who is
married at the time of his death, his surviving spouse (unless the Participant
elects otherwise as provided below), or (ii) in the case of a Participant who is
not married at the time of his death, the person designated as such by the
Participant on a form supplied by, and last filed with, the Plan Administrator,
who shall receive the benefits payable under the provisions of Article VIII of
the Plan upon the death of the Participant. A Participant who is married may
elect to have someone other than his spouse as his beneficiary if (i) the spouse
of the Participant consents in writing to such election, (ii) the election
designates a specific beneficiary (including any class of beneficiaries) or any
contingent beneficiaries, which may not be changed without spousal consent (or
the spouse expressly permits designation by the Participant without any further
spousal consents), (iii) the spouse's consent acknowledges the effect of such
election, and (iv) the consent is witnessed by the Plan Administrator, another
authorized Plan representative or a notary public. If no designation is in
effect at the time of the death of the Participant, or if no person so
designated survives the Participant, or if the Beneficiary would have been the
Participant's surviving spouse but such spouse predeceased the Participant, the
Beneficiary shall be the estate of the Participant.
2.8. Board shall mean the Board of Directors of Paine Webber Group
Inc.
2.9. Code shall mean the Internal Revenue Code of 1986, as amended
and in effect from time to time.
2.10. Common Stock shall mean the common stock, $1.00 par value, of
Paine Webber Group Inc.
2.11. Company Account shall mean the separate account maintained
for each Participant to which Company Contributions, Common Stock, dividends on
Common Stock, expenses of the Plan and distributions or forfeitures are credited
or charged.
-3-
<PAGE> 10
2.12. Company Contributions shall mean the sum of the contributions
to the Plan by PaineWebber pursuant to Section 5.1 plus the forfeitures under
Sections 4.11, 6.6 and 7.5 for the Plan Year of reference.
2.13. Compensation shall mean the total compensation paid to an
Employee by PaineWebber which is, or in the absence of the Employee's election
under Section 4.1 hereof would be, considered "wages" under Section 3401(a) of
the Code, excluding amounts realized (a) upon the exercise of a non-qualified
stock option, (b) upon the disposition of stock acquired upon exercise of an
option to which Section 421 of the Code applies, (c) as payments or
reimbursements for moving expenses incurred by an Employee, but only to the
extent that it is reasonable to believe at the time of payment that the expenses
are not allowable as a deduction by the Employee under Section 217 of the Code,
(d) upon the forgiveness by PaineWebber of an Employee's indebtedness, (e) upon
the payment of, or reimbursement for, any interest rate differential on a
mortgage or otherwise, (f) upon the receipt of any benefits as a prize or award,
(g) from property transferred to an Employee in connection with the performance
of services while such property is nontransferable and subject to a substantial
risk of forfeiture, (h) from the payment of premiums for, or the value of
benefits provided under, any form of group insurance, (i) from any payment to
compensate an Employee in whole or in part from the income or employment tax
consequences of the receipt of any amount of benefit and (j) prior to becoming a
Participant. Compensation shall also include elective contributions made by
PaineWebber on behalf of the Participant that are not includible in that
Participant's gross income under Section 125 or Section 402(e)(3) of the Code.
In the case of an Employee whose earnings are paid in a currency other than
United States dollars, his earnings to be taken into account for purposes of the
Plan shall be converted to United States dollars using exchange rates employed
in preparing his Form W-2.
The Compensation of each Participant taken into account under the
Plan for any Plan Year ending on or before December 31, 1993, shall not exceed
$200,000, and for each Plan Year beginning with the 1994 Plan Year shall not
exceed $150,000, in each case, as such amount may be adjusted pursuant to
Section 401(a)(17) of the Code for cost-of-living increases in effect for the
calendar year. The cost-of-living adjustment in effect for a calendar year
applies to any period, not exceeding 12 months, over which Earnings are
determined ("determination period") beginning in such
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calendar year. If a determination period consists of fewer than 12 months, the
$200,000 or $150,000 limitation on compensation, as applicable, as adjusted for
cost-of-living increases, will be multiplied by a fraction, the numerator of
which is the number of months in the determination period, and the denominator
of which is 12. In determining the Compensation of a Participant for purposes of
this limitation, the rules of Section 414(q)(6) of the Code shall apply, except
in applying such rules, the term "family" shall include only the spouse of the
Participant and any lineal descendants of the Participant who have not attained
age 19 before the close of the Plan Year of reference. If, as a result of the
application of such rules the adjusted $200,000 or $150,000 limitation, as
applicable, is exceeded, then the limitation shall be prorated among the
affected individuals' Compensation determined prior to the application of this
limitation.
2.14. Contribution Percentage shall mean for any Employee or
specified group of Employees, the average of the ratios (calculated separately
for each Employee in the group) or the ratio (in the case of an individual
Employee) of:
(A) the sum of Basic After-Tax Contributions, Voluntary After-Tax
Contributions and Company Contributions made to the Plan on behalf of such
Employee for the Plan Year; to
(B) the Employee's "compensation" (within the meaning of Section
414(s) of the Code) for any portion of such Plan Year during which the
Employee was a Participant.
In the case of an individual who is subject to the family
aggregation rules of Section 414(q)(6) of the Code because he is either a
five-percent owner or one of the ten most highly compensated employees of
PaineWebber, the combined Contribution Percentage for the family group (which is
treated as one individual Employee) must be determined by combining Basic
After-Tax Contributions, Voluntary After-Tax Contributions, Company
Contributions and Compensation of all eligible family members. To the extent
that any reduction, suspension or distribution of Basic After-Tax Contributions,
Voluntary After-Tax Contributions or Company Contributions is required for such
family group, in accordance with Sections 4.8, 4.9, 4.10 and 4.11, such
reduction, suspension or distribution shall be made among members of the family
group in proportion to the Basic After-Tax Contributions, Voluntary After-Tax
Contributions and Company Contributions of each
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member that are combined to determine the Contribution Percentage.
2.15. Deferral Percentage shall mean for any Employee or specified
group of Employees, the average of the ratios (calculated separately for each
Employee in the group) or the ratio (in the case of an individual Employee) of:
(A) the amount of Basic Pre-Tax Contributions and Voluntary Pre-Tax
Contributions made to the Plan on behalf of such Employee during such Plan
Year; and
(B) the Employee's "compensation" (within the meaning of Section
414(s) of the Code) for any portion of such Plan Year during which the
Employee was a Participant.
In the case of an individual who is subject to the family
aggregation rules of Section 414(q)(6) of the Code either because he is a
five-percent owner or one of the ten most highly compensated employees of
Painewebber, the combined Deferral Percentage for the family group must be
determined by combining Basic Pre-Tax Contributions, Voluntary Pre-Tax
Contributions and Compensation of all eligible family members. To the extent any
reduction, suspension or distribution of Basic Pre-Tax Contributions or
Voluntary Pre-Tax Contributions is required for such family group, in accordance
with Sections 4.7, 4.9, 4.10 and 4.11, such reduction, suspension or
distribution shall be made among members of the family group in proportion to
their Basic Tax-Contributions and Voluntary Pre-Tax Contributions taken into
account to determine the Deferral Percentage.
2.16. Disability shall have the same meaning as such term has in the
PaineWebber Pension Plan.
2.17. Employee shall mean any person (other than a nonresident alien
having no gross income during the Plan Year from sources within the United
States) who is actively employed (as a common-law employee) by PaineWebber. The
term "Employee" shall also include a "leased employee" (as defined in Section
414(n) of the Code) of PaineWebber; provided, however, that no person who is
deemed to be an Employee solely by virtue of being a leased employee shall be
entitled to become a Participant under this Plan or to receive or make
contributions hereunder. No person shall be considered an Employee by reason of
service to PaineWebber solely as a director or during a period of service
pursuant to an agreement
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or understanding designating his service as that of an independent contractor or
consultant, unless such person is also a leased employee.
2.18. Employee Account shall mean the separate account maintained
for each Participant to which his Basic After-Tax Contributions, Basic Pre-Tax
Contributions, Voluntary After-Tax Contributions and Voluntary Pre-Tax
Contributions, his rollover contributions, his share of assets of the Trust Fund
and earnings thereon, expenses of the Plan and distributions are credited or
charged.
2.19. Employment Commencement Date shall mean the date upon which an
Employee first performs an Hour of Service or the date he thereafter first
performs an Hour of Service after a One-Year Break-in-Service.
2.20. ERISA shall mean the Employee Retirement Income Security Act
of 1974, as amended, and any regulations issued pursuant thereto, as such Act
affects this Plan.
2.21. Highly Compensated Participant shall mean a Participant who is
a "highly compensated employee" within the meaning of Section 414(q) of the
Code.
2.22. Hour of Service shall mean each hour for which a person is,
directly or indirectly, paid or entitled to payment by PaineWebber for the
performance of services or for other reasons, such as vacation or disability, to
the extent such hours are required to be credited under the regulations codified
at 29 C.F.R. ss. 2530.200b-2.
2.23. Life Expectancy shall mean the life expectancy (or joint and
survivor life expectancy) calculated using the expected return multiples in
Tables V and VI of Treasury Regulation Section 1.72-9 (as such tables may be
amended from time to time) and using the attained age of the Participant (or
Beneficiary) in the year a distribution begins, reduced by one for each year
that has elapsed since the date for which life expectancy was first calculated.
For purposes of satisfying the minimum distribution requirements, life
expectancy shall not be recalculated (other than by the adjustment in the
preceding sentence) after a Participant's Required Beginning Date.
2.24. One-Year Break-in-Service shall mean a period of severance of
12 consecutive months.
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For purposes of determining vesting and eligibility to participate
under the Plan, upon provision of a certification satisfactory to the Plan
Administrator which sets forth the reasons for the leave, an Employee shall not
be deemed to have a One-Year Break-in-Service during a leave of absence for up
to one calendar year if the Employee is absent from work (1) by reason of the
pregnancy of the Employee, (2) by reason of the birth of a child of the
Employee, (3) by reason of the placement of a child with the Employee in
connection with the adoption of the child by the Employee, or (4) for purposes
of caring for a child of the Employee during the period immediately following
the birth or placement for adoption of such child of the Employee.
2.25. PaineWebber shall mean (a) Paine Webber Group Inc., (b) all
corporations which are members of a controlled group of corporations, within the
meaning of Section 1563(a) of the Code (determined without regard to Section
1563 (a)(4) and (e)(3)(C)), of which Paine Webber Group Inc. or any successor
thereto is the parent, and (c) any trade or business, whether or not
incorporated, which, at the time of reference: (i) is under common control with
Paine Webber Group Inc. within the meaning of Section 414(c) of the Code, (ii)
effective January 1, 1981, is a member of the same affiliated service group,
within the meaning of Section 414(m) of the Code, or (iii) is required to be
aggregated with Paine Webber Group Inc. under Section 414(o) of the Code. In
addition, "PaineWebber" shall include any business acquired by PaineWebber (a)
if PaineWebber continues the plan of the acquired business, or (b) to the extent
required by regulations promulgated under Section 414(a)(2) of the Code.
2.26. Participant shall mean any Employee who is eligible to, and is
participating in, the Plan pursuant to Article III, any former Employee for whom
any Accounts are still maintained, any alternative payee under any qualified
domestic relations order and any beneficiary of any of the foregoing.
2.27. Paysop Contributions shall mean contributions made to the Plan
and which were designated as Paysop Contributions with respect to Plan Years
beginning before 1987.
2.28. Plan shall mean the "PaineWebber Savings Investment Plan", as
set forth in its entirety in this document, and the Trust Agreement, as this
document and such Trust Agreement may be amended from time to time.
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2.29. Plan Administrator shall mean the person serving from time to
time as Manager of Corporate Benefits of PaineWebber Incorporated, who shall be
the plan administrator of the Plan, within the meaning of Section 414(g) of the
Code.
2.30. Plan Year shall mean the calendar year, which shall be the
basis on which the records of the Plan are kept.
2.31. Pre-Tax Contributions shall mean that part of a Participant's
Compensation which, in the absence of a Participant's election under Section
4.1, would have been paid to the Participant. Pre-Tax Contributions shall
consist of Basic Pre-Tax Contributions and Voluntary Pre-Tax Contributions.
Pre-Tax Contributions shall also refer to amounts previously designated
hereunder as Deferral Contributions.
2.32. Pre-Tax Earnings shall mean "Earnings Before Taxes on Income"
for the fiscal year of Paine Webber Group Inc. of reference as reported in Paine
Webber Group Inc.'s consolidated statements of operations in its annual report
to stockholders.
2.33. Prior Year Earnings shall mean the Employee's Compensation
during the calendar year preceding the Plan Year of reference, or if an Employee
was not employed by PaineWebber for the entire prior calendar year, the
annualized Compensation of the Employee during such prior calendar year. If a
Participant who is not compensated in whole or in part on a commission basis was
not employed by PaineWebber at any time during such prior calendar year, his
Prior Year Earnings shall be deemed to be the annualized amount of the
Compensation paid to the Participant during the Plan Year. If a Participant who
is compensated in whole or in part on a commission basis was not employed by
Painewebber at any time during such prior calendar year, then, if (a) he was
employed by a securities investment services firm immediately prior to becoming
an Employee, his Prior Year Earnings shall be deemed to be the compensation paid
to him by such firm during such prior year which is considered "wages" under
Section 3401(a) of the Code, or (b) he was not employed by a securities
investment services firm immediately prior to becoming an Employee, his Prior
Year Earnings shall be deemed to be the annualized Compensation paid to him in
the period immediately prior to his becoming a Participant.
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2.34. Required Beginning Date shall mean (i) with respect to a
Participant who attained age 70-1/2 during 1988, and who had not retired by
January 1, 1989, April 1, 1990, (ii) with respect to a Participant who attains
age 70-1/2 on or after January 1, 1989, the April 1st of the calendar year
following the year in which the Participant attains age 70-1/2, and (iii) with
respect to a Participant who attained age 70-1/2 before January 1, 1988, the
April 1st of the calendar year following the later of the calendar year in which
the Participant retires or attains age 70-1/2.
2.35. Retirement Date shall mean the earlier of (i) the date of an
Employee's 65th birthday or (ii) the date the Employee has both attained age 55
and completed 10 years of Service.
2.36. Service shall mean the period commencing on an Employee's
Employment Commencement Date and ending on his Severance Date. If after an
Employee's Severance Date, the Employee performs an Hour of Service before the
anniversary of his Severance Date, the period between his Severance Date and the
date he thereafter completed an Hour of Service will also be included as
Service. In determining the length of an Employee's Service, all separate
periods of Service shall be taken into account.
2.37. Severance Date shall mean the earlier of:
(a) the date on which an Employee quits, retires, is discharged or
dies, or
(b) the first anniversary of the first date of absence for any other
reason, such as layoff, leave of absence or disability.
2.38. Trust Agreement shall mean the "PaineWebber Savings Investment
Plan Trust Agreement" entered into between Paine Webber Group Inc. and the
Trustee to carry out the purposes of the Plan, as set forth herein, which Trust
Agreement shall form a part of the Plan.
2.39. Trustee shall mean the Trustee designated in the Trust
Agreement.
2.40. Trust Fund or Fund shall mean the Common Stock, cash and other
properties of the Plan held and administered by the Trustee in accordance with
the provisions of the Trust Agreement and the Plan.
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2.41. Valuation Date shall mean the last business day in each Plan
Year of reference and the last business day in any other month during a Plan
Year as of which date the Trustee shall value the Fund.
2.42. Voluntary Contributions shall mean that portion of each
Participant's After-Tax Contributions and Pre-Tax Contributions that are not
designated as Basic Contributions.
2.43. Masculine and Feminine Pronouns when used herein shall refer
to men or women or both, and nouns and pronouns when stated in the singular
shall include the plural and when stated in the plural shall include the
singular, wherever appropriate.
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ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.1. Eligibility -- Employees. Each Employee shall be eligible to
participate in the Plan as of the later of the date he attains age 21 or six
months after his Employment Commencement Date if he is an Employee on the later
of such dates. If an Employee is not employed by PaineWebber on the later of
such dates then he shall be eligible to participate in the Plan following the
later of his reemployment date and the date he completes six months of Service
(provided that he is an Employee on such date).
If a person was employed by a securities investment services firm
immediately prior to becoming an Employee, then, solely for purposes of
determining whether he has completed the six-month service requirement to
participate in the Plan, the date he last commenced his employment with such
prior firm shall be treated as his Employment Commencement Date.
3.2. Commencement of Participation. An Employee who is eligible to
participate in the Plan shall become a Participant effective as of the first day
of the month coinciding with or immediately following the date on or after he is
both eligible to participate and has made an election in effect to make Basic
Pre-Tax or Basic After-Tax Contributions.
3.3. Eligibility of Former Participants. Any Participant whose
participation in the Plan has terminated shall again be eligible to participate
in the Plan as of the first day of the month following the date he is reemployed
by PaineWebber.
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ARTICLE IV
SALARY DEFERRALS; PARTICIPANT CONTRIBUTIONS
4.1. Pre-Tax Contributions. Each Participant shall be permitted to
elect to reduce the amount of his Compensation payable during each Plan Year at
a rate equal to 1% to 16%, in multiples of 1%, of all or certain elements of the
Compensation thereafter paid to him during the period his election is in effect
and while he remains employed by PaineWebber.
Effective as of January 1, 1987, no Participant shall be permitted
to have Pre-Tax Contributions made on his behalf under this Plan such that when
those Pre-Tax Contributions are added to similar elective deferrals under other
plans maintained by PaineWebber or any other employer for such calendar year,
such elective deferrals (as defined in Section 402(g) (3) of the Code) exceed
$7,000 (or such greater amount as may be permitted by reason of the application
of Section 402 (g) (5) of the Code).
If any amount of elective deferrals in excess of $7,000, as
adjusted, is made for any Participant in any calendar year, notwithstanding any
provisions of the Plan to the contrary -
(i) not later than the first March 1 following the close of the calendar
year, the Participant may allocate the amount of such excess elective
deferrals among this Plan and, as applicable, any other plans under which
the elective deferrals were made and may notify the Plan Administrator,
and, as applicable, each other plan's administrator of the portion
allocated to it, and (ii) not later than the first April 15 following the
close of the calendar year, the Plan and, as applicable, each such other
plan shall distribute to the Participant any amount allocated to it under
clause (i) plus any income on such amount through the close of the
calendar year in respect of which the deferrals were made.
Notice under clause (i) under the Plan shall be made in writing to the Plan
Administrator in such form as the Plan Administrator shall require. Notice under
any other plan shall be made in accordance with such plan.
4.2. After-Tax Contributions. Each Participant may elect to make
After-Tax Contributions at the rate of 1% to 16%, in multiples of 1%, of all or
certain elements of the
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Compensation thereafter paid to a Participant during the period his election
remains in effect.
4.3. Limit on Pre-Tax and After-Tax Contributions. The sum of the
rate of a Participant's Pre-Tax Contributions and After-Tax Contributions in
effect at any time may not exceed 16% of his Compensation.
4.4. Procedures for Participant Contributions. Pre-Tax and After-Tax
Contributions will be made through payroll deductions (where permitted by law).
A Participant's election as to the rate of his Pre-Tax or After-Tax
Contributions, the elements of his Compensation with respect to which he will
make Pre-Tax or After-Tax Contributions, or to suspend his Pre-Tax or After-Tax
Contributions shall be filed with the Plan Administrator and shall remain in
effect until changed or revoked, but the Plan Administrator shall not be
required to give effect to such change or suspension with respect to any
calendar month unless notice of such change or suspension has been received by
the Plan Administrator within such period prior to the commencement of such
month as the Plan Administrator, by notice to Participants, may from time to
time establish. An Employee may make his initial election as to his rate of
Pre-Tax and After-Tax Contributions any time after he first becomes a
Participant. Thereafter a Participant may increase, reduce or suspend the rate
of his Pre-Tax or After-Tax Contributions upon such notice and subject to such
requirements or limitations as the Plan Administrator, by notice to
Participants, may from time to time establish. A Participant may reduce or
suspend the rate of his Pre-Tax or After-Tax Contributions at any time. Any
election of a Participant as to his rate of Pre-Tax or After-Tax Contributions
shall terminate upon his termination of employment for any reason.
All Pre-Tax and After-Tax Contributions withheld as payroll
deductions shall be credited to the Employee Account of the Participant for the
Plan Year in which such Pre-Tax and After-Tax Contributions are withheld and
shall be paid over to the Trustee.
4.5. Contribution of Pre-Tax and After-Tax Contributions. All
Pre-Tax and After-Tax Contributions withheld by PaineWebber shall be paid to the
Trustee within 90 days of the date they are withheld from a Participant's wages.
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4.6. Rollover Contribution. Any person, whether or not a
Participant, may transfer to the Plan any "eligible rollover distribution" which
is described in Section 402(c) or Section 408(d) (3) of the Code. Each such
transfer shall be in cash and shall be accompanied by such information and
certificates as the Plan Administrator may reasonably require. Amounts
transferred to the Plan pursuant to this Section 4.6 shall be credited to such
Participant's Employee Account. A person initially may elect to invest the
amounts transferred under the terms and conditions which are available to a
Participant in regard to his Basic Contributions and Voluntary Contributions
under Section 10.2, such amounts shall be invested in accordance with any
investment election then in effect in accordance with this Section 4.6, and such
amounts shall be accounted for and treated under the Plan in the same manner as
the appreciation on his After-Tax Contributions.
4.7. Termination of the Right of Highly Compensated Participants to
Continue Making Pre-Tax Contributions During a Plan Year. Effective for Plan
Years beginning after 1986 and before 1989, the right of all Highly Compensated
Participants to continue to make Pre-Tax Contributions during any Plan Year
shall be suspended or reduced if the Plan Administrator concludes that continued
Pre-Tax Contributions by such Participants will result in a Pre-Tax Percentage
for such Participants which exceeds the greater of (A) or (B), where:
(A) is an amount equal to 125% of the Deferral Percentage for all
Participants other than Highly Compensated Participants; and
(B) is an amount equal to the sum of the Deferral Percentage for all
Participants other than Highly Compensated Participants and 2%, provided
that such amount does not exceed 200% of the Deferral Percentage for all
Participants other than Highly Compensated Participants.
4.8. Termination of the Right of Highly Compensated Participants to
Continue Making After-Tax Contributions or Receiving Savings Incentive
Contributions. Effective for Plan Years beginning after 1986 and before 1989,
the right of all Highly Compensated Participants to continue to make After-Tax
Contributions (including the right to have Pre-Tax Contributions recharacterized
as After-Tax Contributions) or to have Company Contributions made on their
behalf shall be suspended or reduced if the Plan Administrator concludes that
the continuation of such contributions will result in a
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<PAGE> 22
Contribution Percentage which for all such Participants exceeds the greater of
(A) or (B), where:
(A) is an amount equal to 125% of the Contribution Percentage for
all Participants other than Highly Compensated Participants; and
(B) is an amount equal to the sum of the Contribution Percentage for
all Participants other than Highly Compensated Participants and 2%,
provided that such amount does not exceed 200% of the Contribution
Percentage for all Participants other than Highly Compensated
Participants.
4.9. Aggregate Limitations on Contributions. Effective for Plan
Years beginning after 1988, the right of Highly Compensated Participants to make
After-Tax Contributions or to have Pre-Tax Contributions or Company
Contributions made on their behalf shall be suspended or reduced if the Plan
Administrator determines that such continuation will result in (i) the Deferral
Percentage for the Highly Compensated Participants being more than 125% of the
Deferral Percentage for all other Participants, (ii) the Contribution Percentage
for Highly Compensated Participants being more than 125% of the Contribution
Percentage for all other Participants, and (iii) aggregate contributions being
made in excess of the sum of
(A) 125% of the greater of (1) the Deferral Percentage for all
Participants other than Highly Compensated Participants and (2) the
Contribution Percentage for all Participants other than Highly Compensated
Participants; and
(B) Two percent plus the lesser of (1) or (2) above, however, this
amount shall not exceed 200% of the lesser of (1) or (2) above;
provided, however, that the following shall be substituted for both (A) and (B)
above if it will result in a greater sum:
(A) 125% of the lesser of (1) the Deferral Percentage for all
Participants other than Highly Compensated Participants and (2) the
Contribution Percentage for all Participants other than Highly Compensated
Participants; and
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(B) Two percent plus the greater of (1) or (2) above, however, this
amount shall not exceed 200% of the greater of (1) or (2) above.
4.10. Reductions of Pre-Tax and After-Tax Contributions. (a) Pre-Tax
Contributions. In the event that it is necessary to reduce the Pre-Tax
Contributions of Highly Compensated Participants in accordance with Section 4.7,
the Deferral Percentage (taking into account contributions previously made for
the Plan Year and those scheduled to be made for the Plan Year) of the Highly
Compensated Participant with the highest Deferral Percentage shall be reduced to
the extent required to -
(i) enable the Plan to satisfy the requirements of Section 4.7, or
(ii) cause such Highly Compensated Participant's Deferral Percentage
to equal the Deferral Percentage of the Highly Compensated Participant
with the next highest Deferral Percentage.
This process shall be repeated until the Plan satisfies the
requirements of Section 4.7.
Subject to Section 4.8 and Section 4.10(b) below, to the extent
practicable, if, as a result of any limitation contained in the Plan,
PaineWebber cannot contribute to the Plan the amounts which Highly Compensated
Participants elected to have treated as Pre-Tax Contributions, the amount which
cannot be so contributed shall be deemed to be made as After-Tax Contributions.
Any such recharacterization shall comply with the requirements of Treasury
Regulations Section l.401(k)-1(f)(3).
If, as a result of contributions previously made during the Plan
Year, it is impossible to reduce any Highly Compensated Pre-Tax Contributions as
described above, his Deferral Percentage shall be reduced by distributing
Pre-Tax Contributions made on his behalf in accordance with Section 4.11.
(b) After-Tax Contributions. In the event that it is necessary to
reduce the After-Tax Contributions of Highly Compensated Participants in
accordance with Section 4.8, the Contribution Percentage (taking into account
contributions previously made for the Plan Year, scheduled to be made for the
Plan Year and Pre-Tax Contributions that have been recharacterized in accordance
with paragraph (a) above for
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the Plan Year) of the Highly Compensated Participant with the highest
Contribution Percentage or, if applicable, with the highest Aggregate Percentage
shall be reduced to the extent required to -
(i) enable the Plan to satisfy the requirements of Section 4.8; or
(ii) cause such Highly Compensated Participant's Contribution
Percentage to equal the Contribution Percentage of the Highly Compensated
Participant with the next highest Contribution Percentage or, if
applicable, with the highest Aggregate Percentage.
This process shall be repeated until the Plan satisfies the
requirements of Section 4.8. Any reduction shall be made by reducing the rate of
a Participant's After-Tax Contributions.
If, as a result of contributions previously made during the year, it
is impossible to reduce any Participant's After-Tax Contributions as described
above, his Contribution Percentage shall be reduced by distributing After-Tax
Contributions made on his behalf in accordance with Section 4.11.
(c) Aggregate Limitation. If, following the application of
paragraphs (a) and (b) above, the Plan fails to satisfy the requirements of
Section 4.9, the Aggregate Percentage (taking into account contributions
previously made for the Plan Year and contributions scheduled to be made for the
Plan Year) of the Highly Compensated Participant with the highest Contribution
Percentage shall be reduced by reducing his After-Tax Contributions, as
described in paragraph (b). This process shall be repeated in the manner
described in paragraph (b) until the Plan satisfies the requirements of Section
4.9 and, if such reductions do not suffice to comply with Section 4.9, then the
Highly Compensated Participants with the highest Deferral Percentages shall have
their Pre-Tax Contributions reduced in the manner described in paragraph (a).
If, as a result of contributions previously made during the Plan
Year, it is impossible to reduce a Highly Compensated Participant's Aggregate
Percentage by reducing his After-Tax or Pre-Tax Contributions, as described
above, his Aggregate Percentage shall be reduced in accordance with Section
4.11.
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<PAGE> 25
4.11. Corrective Distributions. Notwithstanding any provision in
this Plan to the contrary (including provisions relating to spousal consent and
the earliest permissible distribution date for Pre-Tax Contributions), to the
extent that the Plan Administrator finds that it is not feasible to reduce
Pre-Tax Contributions or After-Tax Contributions for a Plan Year as provided in
Section 4.10, within 12 months after the end of such Plan Year the Plan
Administrator shall cause to be distributed to the extent vested, or cause to be
forfeited, Pre-Tax Contributions, After-Tax Contributions and/or Company
Contributions (and, in each case, earnings thereon through the end of the Plan
Year for which such Contributions were made) as may be necessary to cause the
Plan to satisfy Sections 4.7, 4.8, and 4.9. The amount of Pre-Tax Contributions,
After-Tax Contributions and/or Company Contributions (and earnings thereon
through the end of the Plan Year for which such Contributions were made) to be
distributed to any Highly Compensated Participant shall be determined in a
manner consistent with Section 4.9; provided, however, to the extent
practicable, any distribution or forfeiture shall be made first from amounts
attributable to Voluntary After-Tax Contributions; second, from amounts
attributable to Basic After-Tax Contributions; third, from amounts attributable
to Voluntary Pre-Tax Contributions; and fourth, from amounts attributable to
Basic Pre-Tax Contributions. In the case of any distribution of Basic
Contributions, to the extent required by law, Company Contributions on such
amounts (and earnings thereon) shall be distributed to the affected Participant,
to the extent they are vested and shall be forfeited to the extent they are not
vested. To the extent feasible, the Plan Administrator shall attempt (but shall
not be obligated) to cause such distribution or forfeiture to be made within
2-1/2 months of the end of the Plan Year to which the Pre-Tax Contributions,
After-Tax Contributions and/or Company Contributions relate.
4.12. Changes Effected by the Plan Administrator. Notwithstanding
the preceding provisions of this Article IV, the Plan Administrator is
authorized to take such action with respect to Pre-Tax and After-Tax
Contributions of any Participant or groups of Participants as may be necessary
to avoid the disqualification of the Plan, the loss of any tax deduction or the
imposition of any excise tax; provided, however, that any such action shall be
applied in a uniform and nondiscriminatory manner.
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ARTICLE V
COMPANY CONTRIBUTIONS
5.1. Amount of Company Contributions. For each Plan Year,
PaineWebber will contribute an amount with respect to each Participant who was a
Employee at the end of such Plan Year or who died, became Disabled or terminated
his employment on or after his Retirement Date during such Plan Year as is equal
to his Basic Contributions for such Plan Year multiplied by the Participant's
Savings Incentive Contribution Percentage for the Plan Year. For this purpose,
the amount of forfeitures during such Plan Year under Sections 4.11, 6.6 and 7.5
shall be treated as contributed by PaineWebber.
The Savings Incentive Contribution Percentage for each Participant
for each Plan Year shall be determined based on the Participant's Prior Year
Earnings and the Pre-Tax Earnings for the fiscal year of Paine Webber Group Inc.
ending with or within such Plan Year and will be the percentage determined in
accordance with the following schedule:
<TABLE>
<CAPTION>
Pre-Tax Earnings
Participant's --------------------------------------------------
Prior Year's If Pre-Tax Earnings are If Pre-Tax Earnings
Earnings $450 million or less Exceed $450 million
- ------------- ----------------------- -------------------
<S> <C> <C> <C>
Less than $ 24,999 40% 50%
$ 25,000 - 49,999 30% 40%
50,000 - 99,999 20% 30%
100,000 - 149,999 15% 25%
150,000 or more 10% 25%
</TABLE>
5.2. Limitations On Company and Pre-Tax Contributions.
Notwithstanding any provisions of the Plan to the contrary, the amount to be
contributed by PaineWebber as Company Contributions and Pre-Tax Contributions
for any Plan Year shall not exceed the maximum amount deductible for such Plan
Year under the Code.
5.3. Form and Payment of Company and Pre-Tax Contributions. All
Company Contributions may be made in cash or Common Stock or partly in cash and
partly in Common Stock. Company Contributions for each Plan Year shall be paid
to the Trustee at such time or times as PaineWebber determines, but not later
than the date (including extensions) for filing
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<PAGE> 27
PaineWebber's Federal income tax return for its fiscal year ending with or
within such Plan Year.
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ARTICLE VI
ALLOCATION AND ACCOUNTS OF PARTICIPANTS
6.1. Allocation of Company Contributions. For each Plan Year there
shall be allocated to the Company Account of each Participant who was an
Employee at the end of such Plan Year or who died, became Disabled or terminated
his employment on or after his Retirement Date during such Plan Year, so much of
the Company Contribution in respect of such Plan Year as is equal to the product
of his Basic Contributions for such Plan Year and his Savings Incentive
Contribution Percentage for the Plan Year. Company Contributions shall be
allocated to the Company Account of each Participant as of the last day of each
Plan Year.
6.2. Allocation of Pre-Tax and After-Tax Contributions. All Pre-Tax
and After-Tax Contributions made by a Participant shall be allocated to the
Employee Account of such Participant and such amounts, and the investment gains
and losses attributable to such Pre-Tax and After-Tax Contributions, shall be
separately accounted for within his Employee Account. Investment gains and
losses shall be allocated within such Employee Account on a reasonable pro rata
basis.
6.3. Valuation of Accounts. As of each Valuation Date the Trustee
shall determine the value of the Fund and the Plan Administrator shall cause the
value of the Accounts of each Participant to be determined. The value of such
Accounts shall be equal to the value of such Accounts as of the last Valuation
Date plus or minus the adjustments contained in Section 6.4.
6.4. Adjustments to Accounts. As of each Valuation Date the Plan
Administrator shall cause the Accounts of each Participant to be set up and
charged or credited as follows:
(a) the number of shares of Common Stock (or fractions thereof)
contributed or acquired during the Plan Year with Company Contributions and
dividends on Common Stock (including stock dividends) for the Plan Year (net of
the allocable portion of the expenses of the Plan) shall be credited to the
Participant's Company Account;
(b) Pre-Tax Contributions withheld as payroll deductions and
After-Tax Contributions made by PaineWebber as
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of such Valuation Date but which as of such date have not been received by the
Trustee or invested in the investment funds shall be credited to the Employee
Accounts;
(c) the Employee Accounts shall be appropriately adjusted to reflect
the amount of the Pre-Tax and After-Tax Contributions for the Plan Year invested
in each investment fund;
(d) the Employee Accounts shall be adjusted to equal the value of
his units or Common Stock, as the case may be, in each of the investment funds
(reduced by the allocable portion of the expenses of the Plan) in which a
Participant's Employee Account is invested on the Valuation Date; and
(e) all withdrawals, distributions and forfeitures since the last
Valuation Date shall be charged against the applicable Accounts.
All income, expenses, gains or losses of the Fund shall be allocated
among the Accounts of Participants on a uniform and nondiscriminatory basis.
6.5. Statutory Limitation on Allocation of Company Contributions.
(a) The Annual Addition to a Participant's Accounts for any Plan
Year shall not exceed the lesser of: (i) $30,000 (or, if greater, 1/4 of the
dollar limitation in effect under Section 415(b)(1)(A) of the Code); or (ii)
25% of the Participant's compensation (within the meaning of Proposed Treasury
Regulations Section 1.415-2(d)(11)(ii) (or any successor thereto)) for such Plan
Year.
(b) In the event a Participant is also covered under a qualified
defined benefit plan maintained by Painewebber, the decimal equivalent of the
sum of the fractions determined in accordance with the following clauses (i) and
(ii) below shall not exceed 1.0 for any Plan Year:
(i) a fraction, the numerator of which is the Participant's
projected annual benefit (determined at the end of each Plan Year) under
any qualified defined benefit plan maintained by Painewebber and the
denominator of which is the lesser of (y) the product of 1.25 multiplied
by the maximum permissible amount payable under a qualified defined
benefit plan to the Participant determined as of the close of the current
Plan Year, or (z) the product
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<PAGE> 30
of 1.4 multiplied by the amount which may be taken into account for a
Participant for a particular year assuming the Participant received a
benefit equal to 100 percent of the Participant's "compensation" (within
the meaning of Section 415(c)(3) of the Code) and
(ii) a fraction, the numerator of which is the sum of the Annual
Additions to the Participant's Accounts (determined at the end of each
Plan Year) under any defined contribution plan maintained by PaineWebber
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
Painewebber (y) the product of 1.25 multiplied by the maximum dollar
limitation applicable to a Participant under a defined contribution plan
for such year, or (z) the product of 1.4 multiplied by the maximum amount
which may be taken into account for a Participant for any such year
assuming a Participant's defined contribution account was credited with a
contribution equal to twenty-five (25) percent of the Participant's
"compensation" (within the meaning of Section 415(c)(3) of the Code).
If, for any Plan Year, the sum of such fractions will exceed 1.0, the rate of
benefit accruals under defined benefit plans maintained by PaineWebber shall be
reduced, to the extent feasible, so that the sum of the fractions equals 1.0
before any reduction benefits occur under the Plan.
(c) For purposes of this Section 6.5, all qualified defined benefit
plans (whether or not terminated) of Painewebber shall be treated as one defined
benefit plan and all defined contribution plans (whether or not terminated) of
PaineWebber shall be treated as one defined contribution plan. The foregoing
limitation shall apply to the aggregate Annual Additions which a Participant may
receive under one or more of such plans. In the event that the Annual Addition
to any Participant's Accounts for a calendar year is otherwise restricted as a
result of the application of this Section 6.5 and the limitations under Section
415 of the Code, then: first, Voluntary After-Tax Contributions; second, Basic
After-Tax Contributions made by the Participant (as well as any Matching
Contributions or earnings attributable to those Basic After-Tax Contributions)
during the calendar year on a LIFO basis shall first be returned to the
Participant; third, the Voluntary Pre-Tax Contributions and finally, Basic
Pre-Tax Contributions made by Painewebber on behalf of the Participant (as well
as any earnings attributable to those Basic Contributions) during the calendar
year, on a LIFO
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<PAGE> 31
basis shall then be distributed to the Participant; and the amount contributed
for the Participant's benefit by PaineWebber for that calendar year under any
other qualified defined contribution plan maintained by PaineWebber shall then
be reduced; in each case, the amount to be returned or the reduction to be made
shall be that amount as is necessary to permit the maximum amount of the Annual
Addition to his Company Account for such year to be made under this Plan without
violating the restrictions contained herein or in Section 415 of the Code.
6.6. Forfeiture Suspense Account. If for any Plan Year the amount of
forfeitures exceeds the amount required to be contributed by PaineWebber under
Section 5.1 and any expenses of the Plan, such excess shall be allocated to a
suspense account and used in succeeding Plan Years to reduce Company
Contributions under Section 5.1 and for payment of expenses of the Plan. The
suspense account shall be charged with its proportionate share of the Fund's
income, gains and losses. In the event that the Plan shall be terminated, a
partial termination shall occur, or any entity which is a part of PaineWebber
shall completely discontinue contributions to the Plan, the amount in the
suspense account, or in the case of a partial termination or complete
discontinuance of contributions to the Plan, the portion of the suspense account
allocable to the Participants affected by such partial termination or complete
discontinuance, shall be treated as a Company Contribution made immediately
prior to such termination, partial termination or complete discontinuance of
contributions, which amount shall be allocated to the affected Participants.
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<PAGE> 32
ARTICLE VII
VESTING
7.1. Employee Account. A Participant shall be 100% vested in all
amounts in his Employee Account at all times.
7.2. Retirement. A Participant shall be 100% vested in his Company
Account at his Retirement Date.
7.3. Death or Disability. Upon the death or Disability of a
Participant, he shall be 100% vested in his Company Account.
7.4. Vesting in Company Account.
(a) A Participant's interest in the Company Contributions and
earnings attributable thereto credited to his Company Account shall be 100%
vested as of the date a Participant shall have completed five years of Service.
(b) A Participant's interest in the Company Contributions and
earnings attributable thereto made with respect to each Plan Year beginning
before January 1, 1989, shall be 100% vested when he has completed three (3)
Years of Continuous Employment following the year of such Company Contribution,
if this will result in such Company Contributions becoming vested earlier than
the date described in paragraph (a) above. Such vesting shall be effective as of
the last day of the third Plan Year following the Plan Year in respect of which
such Company Contribution was made.
(c) If a Participant's employment is terminated as a result of the
closing of a branch office or other facility, a permanent reduction in staff, a
substantial organizational change or a substantial change in economic
conditions, the Administrative Committee, under rules uniformly applicable to
all similarly situated Participants, may determine that such a Participant shall
be 100% vested in all or any part of the Company Contributions and earnings
attributable thereto made with respect to a Plan Year for which such Participant
is not otherwise 100% vested.
(d) A Participant shall be 100% vested in his Paysop Contributions
and the earnings attributable thereto at all times.
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<PAGE> 33
7.5. Forfeitures. A Participant shall forfeit all non-vested Company
Contributions and earnings thereon as of the last day of the month in which
occurs the Participant's Severance Date. If a Participant who terminated his
employment after December 31, 1984 subsequently resumes employment with
PaineWebber prior to the completion of five consecutive One-Year
Breaks-in-Service, the amount of Company Contributions and earnings thereon
previously forfeited shall be restored as of the date of reemployment.
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<PAGE> 34
ARTICLE VIII
DISTRIBUTIONS AND WITHDRAWALS
8.1. Distributions. Upon a Participant's retirement at or after his
Retirement Date, Disability, death or termination of employment, or the
occurrence of his Required Beginning Date, the Participant, or in the case of
his death, his Beneficiary, shall be entitled to receive a distribution of the
assets in his Employee Account and that part of the assets in his Company
Account in which he is vested. In the case of a Participant who incurs a
One-Year Break-in-Service the assets in his Company Account in which he is
vested shall be determined as of his date of termination of employment.
The assets to which such Participant is entitled shall be
distributed to him as promptly as possible after the end of the calendar month
which is thirty (30) days after the later of (i) the date he filed his election
under Section 8.2 as to the form of his distribution, (ii) the date he retired,
became Disabled, died or terminated his employment or reached his Required
Beginning Date or (iii) the anniversary of the date he retired, became Disabled,
died or terminated his employment or reached his Required Beginning Date;
provided, however, that if the distribution is one to which Sections 401(a) (11)
and 417 of the Code do not apply, such distribution may commence less than 30
days after the notice required under Treas. Reg. ss. l.411(a)-11(c) is given,
provided that:
(1) the Plan Administrator clearly informs the Participant that the
Participant has a right to a period of at least 30 days after receiving the
notice to consider the decision of whether or not to elect a distribution (and,
if applicable, a particular distribution option), and
(2) the Participant, after receiving the notice, affirmatively
elects a distribution.
The amount of each distribution (other than shares of Common Stock
distributed in-kind) shall be based on the value of the assets in the
Participant's Accounts at the end of such month, without interest from the end
of such month until such amount is actually distributed. Any Company
Contribution of a Participant who died, became Disabled or terminated his
employment on or after his Retirement Date during a Plan Year in respect of that
Plan Year shall be
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<PAGE> 35
distributed as promptly as possible after such Company Contribution is actually
made to the Plan.
Notwithstanding any other provision in this Plan, effective July 1,
1993, there shall be distributed to each Participant whose employment by
PaineWebber terminates for any reason and whose vested Account balances do not
exceed $3,500 (and, at the time of any prior distribution, did not exceed
$3,500) the value of his vested Account balances as soon as practicable
following such termination of employment. If the value of such Participant's
vested Accounts is zero, the Participant shall be deemed to have received a full
distribution of such vested Accounts. If a Participant receives or is deemed to
receive a distribution pursuant to this Section 8.1 and subsequently resumes
employment covered under the Plan, the portion of the Participant's Account
balance derived from Company Contributions will be restored to the amount on the
date of distribution if he repays to the Plan the full amount of the
distribution attributable to such Company Contributions before the earlier of 5
years after the first date on which the Participant is subsequently reemployed,
or the date the Participant incurs 5 consecutive One-Year Breaks-in-Service
following the date of the distribution.
A Participant who is entitled to a distribution because of his
Disability or termination of employment prior to age 65 and whose vested Account
balances exceed $3,500 (or, at the time of any prior distribution, exceeded
$3,500) may elect to postpone the date upon which the assets to which he shall
be entitled shall be distributed to the end of any calendar month which includes
or precedes his 65th birthday. In no event shall the assets to which a
Participant is entitled be distributed later than 60 days after the end of the
Plan Year in which the latest of the following events occurs: (i) the attainment
by the Participant of age 65, (ii) the 10th anniversary of the date on which the
Participant commenced participation in the Plan, or (iii) the termination of the
Participant's Service with PaineWebber. If such a Participant does not in
writing elect to postpone the distribution of his benefits, he shall be deemed
to have elected to receive his benefits as soon as practicable after his
termination of employment or Disability. Notwithstanding the foregoing, if any
Participant again becomes an Employee before the assets to which he is entitled
are distributed to him, no distribution will be made to him as a result of such
termination and the amounts shall be retained in his Accounts.
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<PAGE> 36
Notwithstanding any other provision of this Plan to the contrary,
benefits awarded to any alternate payee (as defined in Section 414(p) of the
Code) pursuant to a domestic relations order determined by the Plan
Administrator to be a qualified domestic relations order (as defined in Section
414(p) of the Code) may be distributed to the alternate payee at any time upon
the request of such alternate payee and without regard to any limitation in the
Plan as to the time when such benefits would otherwise have been distributable.
8.2. Form of Distributions. A Participant (or his Beneficiary) may
elect either (1) to actually receive his distribution or (2) if, and to the
extent, the distribution constitutes an eligible rollover distribution (within
the meaning of Section 402(c) (4) of the Code), to have his distribution made as
a direct rollover to another eligible retirement plan (within the meaning of
Section 401(a) (31) (D) of the Code). The Plan Administrator may establish or
change reasonable procedures from time to time to effectuate direct rollovers,
and if the distributee of an eligible rollover distribution elects to have his
distribution paid to that eligible retirement plan in a direct rollover, the
distribution shall be paid to such eligible retirement plan. If a Participant
elects to receive his distribution, then he may also elect to receive his
distribution either as (1) a single lump sum or (2) monthly, quarterly,
semiannual or annual installments over a period not to exceed 10 years, with
each installment being determined by dividing the total value of the
Participant's Employee Account and Company Account immediately before the
installment is paid by the total number of such remaining installments
(including that installment).
Each Participant, or in the event of his death, his Beneficiary,
shall be entitled to elect the form of his distribution. Such election shall be
made on a form provided by the Plan Administrator and filed with him within 30
days prior to his Required Beginning Date or within 30 days following the date
of such Participant's Retirement, Disability, death or termination of
employment; provided, however, that all distributions shall be determined and
made in accordance with Section 401(a) (9) of the Code, including the minimum
distribution incidental benefit requirement of Proposed Treasury Regulations ss.
1.401(a) (9)-l, and the requirements of Section 401(a) (9) of the Code, all of
which are hereby expressly incorporated by reference.
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<PAGE> 37
If the Participant has elected to actually receive his distribution,
then with respect to a Participant's Company Account and the portion, if any, of
the Participant's Employee Account consisting of Common Stock, the Participant
may elect to receive either (1) a check in an amount equal to the value of such
Common Stock or (2) a certificate for the whole shares of Common Stock and a
check for any fractional share. The remainder of the Participant's Employee
Account shall be distributed in cash by check.
If a Participant who has elected to actually receive his
distribution fails to elect a form of distribution within the prescribed period,
the value of the Common Stock in his Company Account and the amount in his
Employee Account shall be payable in the form of a check for such amounts. No
election may be made to receive a distribution in installments unless the value
of the Participant's Company Account at the time of his election exceeds (or
ever exceeded) $3,500.
8.3. Limits on Distribution Periods.
(a) No period of distributions may be elected unless such election
is otherwise permitted under the terms of the Plan and would cause the
distribution to be made over one of the following periods (or a combination
thereof):
(i) a period certain not extending beyond the Life Expectancy of the
Participant; or
(ii) a period certain not extending beyond the joint and last survivor
Life Expectancy of the Participant and his Beneficiary.
(b) Distributions on or after the Required Beginning Date, beginning
with distributions on or after the first distribution calendar year (as defined
below) shall not be less than the quotient obtained by dividing the
Participant's benefit by the lesser of (i) the applicable Life Expectancy or
(ii) if the Participant's spouse is not his Beneficiary, the applicable divisor
determined from the table set forth in Q&A-4 of Proposed Treasury Regulations
Section 1.401(a)(9)-2 (or any successor to such table).
(c) The first distribution calendar year shall be the calendar year
ending immediately before the Required Beginning Date. The minimum distributions
for a Participant's
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<PAGE> 38
first distribution calendar year shall be made by the Required Beginning Date.
The minimum distribution for subsequent distribution calendar years (including
the calendar year in which the Required Beginning Date occurs) shall be made by
December 31 of that distribution calendar year.
8.4. Death Benefits.
(a) If a Participant who is currently receiving Plan benefits dies
before his entire interest is distributed to him, then the remaining portion of
his interest, if any, must be distributed at least as rapidly under the method
of distributions being used prior to the date of his death.
(b) If a Participant dies before he has commenced to receive his
benefits, then his entire interest must be distributed by December 31 of the
calendar year containing the fifth anniversary of the Participant's death (the
"5-Year Rule"); provided, however, subject to the forms of distribution that may
be elected in accordance with Section 8.2, that the 5-Year Rule will not be
applicable to the extent that an election otherwise permissible under the Plan
is made to receive distributions in accordance with (i) or (ii) below:
(i) if any portion of a Participant's interest is payable to a
Beneficiary, distributions may be made over the life of the Beneficiary or
over a period certain not greater than the Life Expectancy of the
Beneficiary, in either case, commencing on or before December 31 of the
calendar year immediately following the calendar year in which the
Participant died; or
(ii) if the Beneficiary is the Participant's surviving spouse, the
date distributions are required to begin in accordance with (i) above
shall not be earlier than the later of (A) December 31 of the calendar
year in which the Participant died or (B) December 31 of the calendar year
in which the Participant's Retirement Date would have occurred.
8.5. Withdrawals of Employee Contributions and Paysop Contributions.
A Participant, by written notice to the Plan Administrator, may withdraw all or
any amount of his Basic Contributions that were made before July 1, 1984, and on
and after June 1, 1994, a Participant may withdraw any Paysop Contributions and
the earnings thereon, and all After-Tax Contributions, rollover contributions
and the earnings thereon, all as he shall specify in his election.
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<PAGE> 39
8.6. Regular Withdrawals of Pre-Tax Contributions. Any Participant
who has attained age 59-1/2, by written notice to the Plan Administrator, may
withdraw any or all of his Pre-Tax Contributions and earnings thereon.
8.7. Hardship Withdrawals. A Participant who has made a voluntary
withdrawal of all amounts that he may withdraw pursuant to Sections 8.5 and 8.6
may also request the Plan Administrator to approve a hardship withdrawal of (i)
an amount equal to the value of the Common Stock in the Participant's Company
Account in which, as of such date, the Participant is l00% vested, and (ii) if
such withdrawals are insufficient to satisfy the immediate and financial needs
of the Participant, the dollar amount of his Pre-Tax Contributions and the
dollar amount of earnings on his Pre-Tax Contributions as of December 31, 1988.
Hardship withdrawals shall be limited to those for the following purposes: (1)
the payment of tuition for the next semester or quarter of post-secondary
education of the Participant or his spouse or dependents, (2) the purchase
(excluding mortgage payments) of the Participant's principal residence, (3)
extraordinary uninsured medical expenses of the Participant or his immediate
family, (4) the need to prevent the eviction of the Participant from his
principal residence or the need to prevent foreclosure on the mortgage of his
principal residence or (5) any other type of expense that is deemed by the
Commissioner of the Internal Revenue Service through Revenue Rulings, notices
and other administrative pronouncements of general applicability to constitute
immediate and heavy financial burden for purposes of Section 401(k) of the Code.
An extraordinary withdrawal shall be limited to the amount required to meet the
immediate financial need (whether attributable to amounts due or becoming due)
created by the hardship and not reasonably available from other resources of the
Participant, or where the hardship involves the spouse or dependents of such
Participant, from other resources of the spouse or dependent.
In making this determination, the Plan Administrator shall rely on
the written representations of the Participant (unless the Plan Administrator
has actual knowledge to the contrary), on a form prescribed therefor by the Plan
Administrator, that the need cannot reasonably be met:
(i) through reimbursement or compensation by insurance or otherwise;
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<PAGE> 40
(ii) by liquidation of the Participant's assets;
(iii) by cessation of Pre-Tax Contributions and Voluntary
Contributions;
(iv) by other distributions or nontaxable (at the time made) loans
from plans maintained by PaineWebber or any other employer; or
(v) by borrowing from commercial sources on reasonable commercial
terms in an amount sufficient to satisfy the need.
Requests for hardship withdrawals shall be submitted to the Plan
Administrator who shall grant in whole or in part any such request that the Plan
Administrator determines to meet the requirements of this Section 8.7.
8.8. Procedures for Withdrawals. Upon receipt of a request for a
voluntary withdrawal pursuant to Section 8.5 or 8.6, or upon the approval by the
Plan Administrator of a withdrawal pursuant to Section 8.7, the Plan
Administrator shall instruct the Trustee to sell or liquidate, as of the last
business day of the month which is 20 days after the receipt by the Plan
Administrator of such request, or the approval by the Plan Administrator, the
Participant's interest in the Trust Fund from such Participant's Accounts as
will permit the payment to the Participant of the amount requested by the
Participant or approved by the Plan Administrator; provided, however, that if
the Participant is requesting a voluntary withdrawal and his Employee Account
includes Common Stock, the Participant may also request at the time he requests
a voluntary withdrawal pursuant to Section 8.5 or 8.6, that his withdrawal be
distributed to him in the form of a certificate for such number of whole shares
of Common Stock as are shares of Common Stock in the Participant's Employee
Account at the time such shares are distributed. The Trustee shall thereafter
either remit the net proceeds of such sale or liquidation by check to the
Participant or, where permitted, arrange for the distribution of a certificate
for the number of whole shares of Common Stock elected. The liquidation (or
distribution) shall be made from a Participant's Accounts in the following order
(a Participant may elect to withdraw amounts described in item (c) before
exhausting amounts in item (b)):
(a) from the dollar amount of his After-Tax Contributions remaining
in the Plan on December 31, 1986;
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(b) from the remainder of his After-Tax Contributions, plus any
prorated earnings on these amounts and earnings on After-Tax Contributions
made before January 1, 1987 (with the amounts described in paragraph (a)
considered separate accounts under Section 72(e) (9) of the Code);
(c) from his Pre-Tax Contributions and the prorated earnings thereon
(if the Participant has attained age 59-1/2);
(d) from his Paysop Contributions (and any prorated earnings
thereof);
(e) from his rollover contributions (and any prorated earnings
thereon)
(f) from the vested portion of his Company Contributions (and any
prorated earnings thereon); and
(g) from Pre-Tax Contributions and a prorated amount equal to the
earnings credited to his Accounts as of December 31, 1988 (in the case of
a hardship withdrawal).
Except to the extent that a Participant has elected to make his withdrawal in
the form of shares of Common Stock as permitted herein, to the extent the
Participant does not specify otherwise, his investments in any available money
market fund shall first be liquidated and then his investments in each other
investment fund shall be liquidated pro rata from each investment fund.
8.9. Participant Loans to Participants.
(a) Upon the application of any Participant who is then an Employee,
the Plan Administrator may, but shall not be required to, direct the Trustee to
make a loan to such Participant from the Plan (a "Participant Loan"). The Plan
Administrator may establish or change from time to time the standards or
requirements for making any Participant Loan, provided that the standards or
requirements shall be nondiscriminatory, uniformly applicable to all
Participants similarly situated and shall permit Participant Loans to be
available to all participants on a reasonably equivalent basis and in amounts
which are not less than the amount of Participant Loans made available to Highly
Compensated Participants.
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(b) Each Participant Loan:
(1) shall not exceed the lesser of (i) $50,000, reduced by the
excess, if any, of (A) the highest outstanding balance of the Participant Loans
to the Participant during the one-year period ending on the day immediately
preceding the date on which such Participant Loan was made, over (B) the
outstanding balance of the Participant Loans to the Participant on the date on
which such Participant Loan was made and (ii) one-half of the Participant's
vested interest in his Accounts;
(2) shall bear a reasonable rate of interest as determined from time
to time by the Plan Administrator in his or her sole discretion, but not in
excess of the maximum rate permitted by law;
(3) shall be repaid in substantially level installments, not less
than quarterly, over the term of the Participant Loan;
(4) shall be repayable within 60 months of the date of the
Participant Loan, except that if the Participant's Loan is for the purpose of
acquiring the Participant's principal residence, such Participant Loan shall be
repayable within 240 months; and
(5) shall contain such terms and conditions as may be required from
time to time by the Plan Administrator.
(c) A Participant's application for a Participant Loan submitted to
the Plan Administrator shall constitute an investment direction to sell or
liquidate as of the last business day of the month in which the Participant's
application for a Participant Loan is approved from investment funds in the
Participant's Employee Account an amount sufficient to yield the amount of the
Participant Loan approved by the Plan Administrator, regardless of whether the
Participant subsequently declines the Participant Loan. The liquidation of the
investment funds in the Employee Accounts shall be made proportionately among
the investment funds in the Participant's Employee Account at that time.
Until disbursed by the Trustee to the Participant as a Participant
Loan, the proceeds of the liquidation of the investment funds in a Participant's
Employee Account shall be held uninvested. If a Participant declines a
Participant Loan after such Participant Loan has been approved by the
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<PAGE> 43
Plan Administrator, the proceeds of the liquidation shall be reinvested in the
investment funds in the same proportion, that amounts in the Participant's
Employee Account were invested in such investment funds immediately before
liquidation.
Upon the disbursement of the Participant Loan to the Participant,
the Participant's Employee Account shall be deemed invested (and each
Participant's application for a Participant Loan shall constitute an election to
invest), to the extent of the unpaid balance of such Participant Loan, in the
Participant Loan extended to the Participant. The unpaid balance of any
Participant Loan shall not reduce the amount credited to the Participant's
Employee Account.
Proceeds from the repayment of a Participant Loan shall be allocated
among the investment funds in the same proportion, if any, that the Participant
has elected to invest his contributions at the time of each such repayment.
(d) In the event of any default under any Participant Loan, the Plan
Administrator may take any action the Plan Administrator deems necessary or
appropriate to enforce the collection of all or any portion of the unpaid
balance of the Participant Loan and any accrued interest thereon including
without limitation, foreclosing on the Participant's vested interest in his
Accounts that were pledged as security for the Participant Loan. Notwithstanding
the foregoing, under no circumstances shall the Plan Administrator take any
action, whether upon the occurrence of an event of default or otherwise, which
shall result in a deemed distribution of all or any part of the Participant's
Pre-Tax Contributions and the earnings thereon, whether or not pledged as
security for the Participant Loan, until a distributable event occurs. For
purposes of the foregoing sentence, a "distributable event" means the
termination of the Participant's employment with PaineWebber or his death,
Disability or the attainment of age 59 1/2.
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ARTICLE IX
ADMINISTRATION OF THE PLAN
9.1. Appointment of an Administrative Committee. The Executive
Committee of the Board shall appoint an Administrative Committee consisting of
three or more persons, and the persons so appointed to such committee from time
to time shall be the "named fiduciaries" of the Plan within the meaning of
Section 402(a) of ERISA for the period that they are members of the
Administrative Committee. The Administrative Committee shall have the sole
responsibility for the operation and administration of the Plan. Administrative
Committee members shall serve at the pleasure of the Board. The members of the
Administrative Committee shall elect a chairman. They shall also elect a
secretary who may, but need not, be one of the members of the Administrative
Committee. No member of the Administrative Committee will receive any
compensation for his services as such.
9.2. Meetings. The Administrative Committee shall hold meetings upon
such notice, at such place or places, and at such intervals as it may from time
to time determine.
9.3. Quorum. A majority of the members of the Administrative
Committee at any time in office shall constitute a quorum for the transaction of
business. All resolutions or other actions taken by the Administrative Committee
shall be by vote of a majority of those present at a meeting of the
Administrative Committee. Action of the Administrative Committee may be taken
without a meeting by the execution of an instrument in writing signed by a
majority of the members of the Administrative Committee.
9.4. Expenses. The reasonable expenses incident to the operation of
the Plan, including the compensation of the Trustee, attorney, fiduciaries, and
such other technical and clerical assistance as may be required, shall be paid
out of the Fund, but PaineWebber in its discretion may elect at any time to pay
part or all thereof directly, and any such election shall not bind PaineWebber
as to its right to elect with respect to similar or other expenses at any other
time to have such compensation or expenses paid from the Fund.
9.5. Powers and Duties of the Administrative Committee. In addition
to any implied powers and duties which may be needed to carry out the provisions
of the Plan, the
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Administrative Committee shall have the following specific powers and duties:
(a) To make and enforce such rules and regulations as it shall deem
necessary or proper for the efficient administration of the Plan;
(b) To interpret the Plan and to decide any and all matters arising
thereunder, including the right to remedy possible ambiguities, inconsistencies
or omissions; provided, however, that all such interpretations and decisions
shall be applied in a uniform manner to all persons similarly situated;
(c) To determine the eligibility for benefits under the Plan and to
compute the Account balance or the amount which shall be payable to any
Participant or Beneficiary in accordance with the provisions of the Plan;
(d) To authorize disbursements from the Fund;
(e) To authorize the Trustee with respect to the funds for the
investment of amounts other than Company Contributions and Paysop Contributions
(and earnings thereon); and
(f) To appoint, remove or change, from time to time, persons
constituting "Investment Managers", as defined in Section 3(38) of ERISA, and
the Administrative Committee may delegate to such Investment Managers the
exclusive authority to manage (including the power to acquire and dispose of)
all or such portion of the Trust Fund as the Administrative Committee shall
designate at any time or from time to time.
9.6. Delegation of Authority. Anything in this Article IX to the
contrary notwithstanding, the Administrative Committee may authorize or delegate
one or more persons, not members of the Administrative Committee, to perform the
routine administrative functions of the Administrative Committee and to sign on
its behalf any statements of the Administrative Committee or instructions to the
Trustee or notices or other communications to Participants, Beneficiaries or
other persons.
9.7. Benefit Claims Procedures. In the event any person disputes the
amount of, or his entitlement to, any
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benefits under the Plan or their method of payment, such person shall file a
claim in writing (identified as a claim) for the benefits to which he believes
he is entitled with the Plan Administrator, setting forth the reason for his
claim. The Plan Administrator shall consider the claim and, if he shall deny
such claim in whole or in part, he shall give to such person (and if such person
has designated in writing any representative, he shall also give a copy to such
representative) a written notice setting forth the specific reason or reasons
for the denial of the claim, including references to the applicable provisions
of the Plan, a description of any additional material or information necessary
to perfect such claim along with an explanation of why such material or
information is necessary, and appropriate information as to the procedure to be
followed for review of such claim by the Administrative Committee. If the Plan
Administrator shall fail to respond to such claim within 90 days after its
receipt, such claim, for purposes of seeking review by the Administrative
Committee, shall be deemed denied.
Any person whose claim is denied by the Plan Administrator may
request a review of the Plan Administrator's decision by the Administrative
Committee by filing a written request with the Administrative Committee for such
review within 6 months after such claim is denied. In connection with that
review such person (or his authorized representative) may examine pertinent
documents and submit such written comments as may be appropriate. As part of his
request for review, such person may request a hearing before the Administrative
Committee at which he may present such material, information or arguments as are
relevant to his claim. The Administrative Committee shall render its decision
within 60 days after the receipt of the request for review, unless special
circumstances, such as the need to hold a hearing, require an extension of time
up to an additional 60 days. Any decision of the Administrative Committee shall
be in writing and shall include specific reasons for the decision and references
to the pertinent provisions of the Plan on which the decision is based.
9.8. Indemnification of Committee Members and Others. PaineWebber
shall indemnify and hold harmless, to the extent permitted by law, the Plan
Administrator and each member of the Administrative Committee and any Employee
of PaineWebber to whom fiduciary responsibilities are delegated by the Plan
Administrator or the Administrative Committee
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from and against any liability, damage, cost and expense (including attorneys'
fees and amounts paid in settlement of any claim approved by PaineWebber)
incurred by or asserted against him by reason of his occupying or having
occupied fiduciary positions in connection with the Plan, except that no
indemnification shall be provided if such Plan Administrator, Administrative
Committee member or Employee personally profited from any act or transaction in
respect of which indemnification is sought.
9.9. Reliance on Reports and Certificates. The Administrative
Committee and Plan Administrator will be entitled to rely conclusively upon all
tables, valuations, certificates, opinions and reports which will be furnished
by PaineWebber, any accountant, controller, counsel, the Trustee or other person
who is employed or engaged for such purposes.
9.10. Members' Own Participation. No member of the Administrative
Committee may act, vote or otherwise influence a decision of the Administrative
Committee specifically relating to his own participation under the Plan. Any
person or group of persons may serve in more than one fiduciary capacity with
respect to the Plan, including, without limiting the generality of the
foregoing, service as both Plan Administrator and a member of the Administrative
Committee.
9.11. Supervision of Investment of Funds; Confidentiality. The Plan
Administrator shall be responsible for supervising the implementation of all
investment directions by Participants and their Beneficiaries and the actions
necessary to permit the exercise by Participants and Beneficiaries of voting and
other rights with respect to any investment fund, including without limitation,
the PaineWebber Common Stock Fund. Furthermore, the Plan Administrator shall use
his or her best efforts to ensure the confidentiality of all information
relating to Participants' investments and the exercise of voting and other
rights. In furtherance thereof, the Plan Administrator shall be permitted to
delegate all or any of the foregoing responsibilities to any other fiduciary of
the Plan whenever the Plan Administrator, in his or her sole judgment,
determines that such delegation is in the best interests of Participants and
their Beneficiaries.
9.12. QDROs. The Plan Administrator shall establish and may change
from time to time reasonable procedures to determine the qualified status of any
domestic relations
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orders (as defined in Section 414 (p) of the Code). The procedures adopted by
the Plan Administrator may restrict the right of any Participant to withdraw
amounts potentially subject to an order (including by requesting loans) for such
periods as the Plan Administrator may provide.
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ARTICLE X
TRUST FUND
10.1. Trustee. A Trustee shall be designated by the Board and a
Trust Agreement executed between Paine Webber Group Inc. and such Trustee under
the terms of which a Trust Fund shall be established to receive and hold
contributions, dividends, and other income, to invest the assets of the Fund and
to pay the expenses of, and the benefits provided by, the Plan.
10.2. Investment of Trust Fund. The Trustee shall invest and
reinvest the Trust Fund as follows:
(a) all Company Contributions and Paysop Contributions and the
earnings thereon in each Participant's Company Account shall be invested
exclusively in Common Stock; and
(b) all amounts in each Participant's Employee Account shall be
invested and reinvested as elected by Participants from among the investment
funds made available by the Administrative Committee from time to time, one of
which shall include an investment fund which shall be invested and reinvested
exclusively in Common Stock. Investment funds may be added or deleted from time
to time by the Administrative Committee and may include open-ended investment
companies registered under the Investment Company Act of 1940 which are managed
by PaineWebber or its affiliates, provided that the conditions of any exemption
required under ERISA are complied with. Participants shall be informed from time
to time of the available investment funds and the addition or deletion of any
investment fund.
10.3. Election of Investment Funds. Each Participant shall be
permitted to elect the investment fund or funds in which the amounts in his
Employee Account shall be invested. If a Participant elects to participate in
the Plan, but fails to elect the investment fund or funds in which the amounts
in his Employee Account are to be invested, it shall be presumed that he has
elected that the amounts in his Employee Account shall be invested in a money
market fund. All elections, whether with respect to the investment of Pre-Tax
and After-Tax Contributions (withheld after the effective date of such election)
or to change the investment fund or funds in which the balance in a
Participant's Employee
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Account is invested as of the effective date of his election, shall be made in
such minimum percentages of each investment fund as the Plan Administrator shall
from time to time determine and notify the Participants.
A Participant may make only one election to change his investment
elections in each quarter of any calendar year. A Participant may elect to
change either the investment fund or funds in which his Pre-Tax and After-Tax
Contributions (withheld after his election becomes effective) shall be invested
or he may elect to change the investment fund or funds in which the balance in
his Employee Account, as of the effective date of his election, is thereafter to
be invested or both. A Participant's election as to the investment of the
balance in his Employee Account may be the same or different as his election as
to the investment of his Pre-Tax and After-Tax Contributions (withheld after his
election has become effective). If a Participant elects to change the
investment of only the balance in his Employee Account or only his subsequent
Pre-Tax and After-Tax Contributions, the investment election not so changed
shall remain in effect and may not be changed during that quarter of the
calendar year.
All elections shall be in writing and shall be filed with the Plan
Administrator. Any timely election shall be effective as of the first day of the
month after such Participant's election is filed with the Plan Administrator.
All elections, whether with respect to the investment of Pre-Tax and After-Tax
Contributions (withheld after the effective date of such election) or to change
the investment fund or funds in which the balance in a Participant's Employee
Account is invested as of the effective date of his election, shall be made in
whole percentages, which shall be in multiples of one (1) percent, of the
investment fund or funds in which his Pre-Tax or After-Tax Contributions and the
balance in his Employee Account shall be invested.
The Plan Administrator shall adopt such rules and procedures as he
deems advisable with respect to all matters relating to the election and use of
the investment funds, provided that all Participants are treated uniformly. The
Plan Administrator shall advise the Trustee of all elections made by
Participants pursuant to this Section 10.3. For purposes of this Section 10.3,
the term "Participant" shall include a former Participant who is receiving
periodic distributions pursuant to Section 8.2.
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10.4. Procedure for Investment of Funds. The Trustee, upon the
receipt of Employee contributions and Company Contributions in cash and any cash
dividends paid on Common Stock, shall invest the amounts received as promptly as
reasonably practicable in Common Stock and other investment funds as provided in
Section 10.2. Common Stock acquired with any amount so received shall be
initially valued and carried in the Accounts of Participants at the average per
share price paid by the Trustee for such Common Stock. Common Stock and other
assets of the Trust Fund may be acquired by the Trustee through open-market or
privately negotiated transactions, or, in the case of Common Stock, may be
received directly by the Trustee as a Company Contribution. Common Stock
received by the Trustee as a Company Contribution shall initially be valued on
the basis of the average of the highest and lowest prices for Common Stock on
the composite tape on the date (or dates) such Common Stock is received by the
Trustee.
10.5. Purchases from Participant Accounts. Whenever the Trustee is
authorized or required to sell shares of Common Stock from a Participant's
Employee Account or Company Account, it may, in its absolute discretion,
purchase for the benefit of the Trust Fund the shares to be sold at their value
(as determined by the Trustee on a uniform basis consistently applied) on the
applicable date.
10.6. Non-Reversion. Except as provided in Section 10.7, all
contributions when made to the Trust Fund and all property of the Trust Fund,
including income from investments and all other sources, shall be retained for
the exclusive benefit of Participants or their Beneficiaries and shall be used
to pay benefits provided hereunder or to pay expenses of administration of the
Plan and the Trust Fund to the extent not paid by PaineWebber.
10.7. Return of Certain Company Contributions. Notwithstanding any
other provisions of the Plan to the contrary, in the case of any Company
Contribution which is made by PaineWebber as a result of a mistake of fact or
which is conditioned upon the deductibility of the Company Contribution under
Section 404 of the Code, such Company Contribution, to the extent made by a
mistake of fact or to the extent that the deduction for such Company
Contribution is disallowed, may be returned to PaineWebber, provided that such
Company Contribution is returned within one year after it is mistakenly paid or
one year after such deduction is disallowed, as the case may be. For this
purpose, all Company
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Contributions made by PaineWebber are expressly declared to be conditioned upon
their deductibility under Section 404 of the Code.
10.8. Voting of Common Stock. A Participant shall be entitled to
direct the exercise of voting rights or other rights with respect to whole and
fractional shares of Common Stock allocated to his Employee Account and Company
Account. PaineWebber shall provide to each Participant materials pertaining to
the exercise of such rights containing all the materials distributed to
shareholders of Paine Webber Group Inc. A Participant shall have the opportunity
to exercise any such rights within the same time period as shareholders of Paine
Webber Group Inc. Any shares of Common Stock with respect to which a Participant
declines to exercise his voting or other rights shall not be voted by the
Trustee. Any shares of Common Stock held by the Trustee which as of the record
date are not allocated to the Employee Account or Company Account of any
Participant shall not be voted by the Trustee.
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ARTICLE XI
AMENDMENT OR TERMINATION
11.1. Right to Amend or Terminate. PaineWebber hopes and expects to
continue the Plan indefinitely. Nevertheless, Paine Webber Group Inc., with
respect to each entity forming a part of PaineWebber, and each entity forming a
part of PaineWebber with respect to its Employees, maintains the right to
suspend, terminate, or completely discontinue contributions under the Plan. In
addition, the Plan may be amended or modified from time to time; provided,
however, that no such action shall adversely affect the accrued benefit of any
Participant. Notwithstanding the foregoing, however, any modification or
amendment of the Plan may be made prospectively or retroactively, including
retroactively if necessary or appropriate to qualify or maintain the Plan as a
plan meeting the requirements of the Code and ERISA, as now in effect or
hereafter amended, or any other provisions of law, as now in effect or hereafter
amended or adopted, and any regulation issued thereunder. Any amendment of the
Plan shall be made by:
(a) the adoption of a resolution by the Board amending the Plan; or
(b) the execution of a certificate of amendment by any officer of
Paine Webber Group Inc. authorized by a resolution of the Board to amend the
Plan.
11.2. Mergers, Consolidations and Transfers. The Plan shall not be
automatically terminated by Paine Webber Group Inc.'s acquisition by, or merger
into, any other company, but the Plan shall be continued after such merger,
provided the successor company agrees to continue the Plan. All rights to amend,
modify, suspend, or terminate the Plan shall be transferred to the successor
company, effective as of the date of the merger. The merger or consolidation
with, or transfer of assets and liabilities to, any other qualified retirement
plan shall be permitted only if each Participant would receive a benefit
immediately after such merger, consolidation, or transfer of assets and
liabilities (determined as if the Plan had then terminated) which is equal to or
greater than the benefit he would have received immediately before any such
transaction (determined as if the Plan had then terminated).
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11.3. Distribution of Funds Upon Termination. In the event the Plan
shall be terminated, a partial termination shall occur, or any entity that is a
part of PaineWebber shall completely discontinue contributions to the Plan, the
rights of all Participants, or in the case of a partial termination or complete
discontinuance of contributions, those Participants affected by the partial
termination or complete discontinuance of contributions, to the balance in their
Company Account on the date of such termination, partial termination or complete
discontinuance of contributions shall be nonforfeitable, and any unallocated
assets of the Fund then held by the Trustee shall be allocated, after providing
for any unpaid expenses, among the appropriate Company Accounts and Employee
Accounts of Participants.
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ARTICLE XII
GENERAL PROVISIONS
12.1. No Guarantee of Employment. The Plan shall not be deemed to
constitute a contract between PaineWebber and any Employee or to be a
consideration for, or an inducement for, the employment of any Employees by
PaineWebber. Nothing contained in the Plan shall be deemed to give any Employee
the right to be retained in the service of any employer or to interfere with the
right of PaineWebber to discharge or to terminate the service of any Employee at
any time without regard to the effect such discharge or termination may have on
any rights under the Plan.
12.2. Payments to Minors and Incompetents. If a Participant or
Beneficiary entitled to receive any benefits hereunder is a minor or is deemed
by the Plan Administrator or is adjudged to be legally incapable of giving valid
receipt and discharge for such benefits, the benefits will be paid to such
persons as the Plan Administrator shall designate or to the duly appointed
guardian. Such payments shall, to the extent made, be deemed a complete
discharge of any liability for such payment under the Plan.
12.3. Nonalienation of Benefits. To the extent permitted by law, no
benefit payable under the Plan will be subject in any manner to anticipation,
assignment, garnishment, or pledge, and any attempt to anticipate, assign,
garnish or pledge the same will be void; and no such benefits will be in any
manner liable for or subject to the debts, liabilities, engagements, or torts of
any Participant; and if any Participant is adjudicated bankrupt or attempts to
anticipate, assign, or pledge any benefits, then payment of such benefits will,
in the discretion of the Plan Administrator, cease, and in this event, the Plan
Administrator will have the authority to cause the same or any part thereof to
be held or applied to or for the benefit of such Participant, his spouse, his
children or other dependents, or any of them, in such manner and in such
proportion as the Plan Administrator shall deem proper. Notwithstanding the
foregoing, the creation, assignment, or recognition of a right to any benefit
payable with respect to a Participant pursuant to a Qualified Domestic Relations
Order (as defined in Section 414(p) of the Code) shall not be treated as an
assignment or alienation prohibited in this Section 12.3.
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12.4. Evidence of Survivor. If the Plan Administrator or the Trustee
with the assistance of the Plan Administrator, cannot make payment of any amount
to a Participant or Beneficiary within two years after such amount becomes
payable because the identity or whereabouts of such Participant or Beneficiary
cannot be ascertained notwithstanding the mailing of a notice to such
Participant or Beneficiary by certified mail to his last known address, the Plan
Administrator at the end of such two-year period may direct that all unpaid
amounts which would have been payable to such Participant or Beneficiary be
forfeited and treated as a forfeiture under Section 7.5. In determining whether
such two-year period has elapsed, the Plan Administrator may establish rules to
be applied on a uniform and nondiscriminatory basis for determining how similar
periods under any plan which has been merged, or has transferred assets and
liabilities into the Plan, shall be counted. Notwithstanding the foregoing, the
forfeited benefits of any Participant or Beneficiary shall be reinstated and
payment of such benefits will commence upon the filing at any time of a claim
for such benefits by such Participant or Beneficiary.
12.5. Titles and Headings. The titles to Articles and headings of
sections in this Plan are for convenience of reference only, and in case of any
conflict the text of the Plan, rather than such titles and headings, shall
control.
12.6. Governing Law. To the extent not preempted by ERISA, the
provisions of the Plan will be construed according to the laws of the State of
New York applicable to agreements to be wholly performed therein.
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ARTICLE XIII
TOP-HEAVY PLAN REQUIREMENTS
13.1. General. For any Plan Year for which this Plan is a "Top-Heavy
Plan" as defined in Section 13.2, any other provisions of this Plan to the
contrary notwithstanding, this Plan shall be subject to the following
provisions:
(a) The vesting provisions of Section 13.6; and
(b) The minimum contribution provisions of Section 13.7.
13.2. Definition of Top-Heavy Plan. The Plan shall be considered
Top-Heavy for any Plan Year, if, as of the last day of the preceding Plan Year
(the "Determination Date"): (a) more than 60% of the aggregate Account balances
under the Plan are attributable to Participants who are Key Employees (as
defined) in Section 3.9; or (b) it is part of the Aggregation Group (as defined
in Section 13.3(a)) which is Top-Heavy.
13.3. Top-Heavy Group.
(a) "Aggregation Group" means:
(i) a group of plans (required to be aggregated under Section 416(g)
(2) (A) (i) of the Code) that includes: (x) each plan of PaineWebber in
which a Key Employee (as hereinafter defined) participates; and (y) each
other plan of PaineWebber which is counted to meet Section 401(a) (4) of
the Code nondiscrimination-in-benefit or Section 410 of the Code coverage
requirements; or
(ii) a group of plans that includes: (x) the group of plans listed
in Section 13.3(a) (i); and (y) plans that are permitted to be aggregated
under Section 416(g) (2) (A) (ii) of the Code.
(b) "Top-Heavy Group" means any Aggregation Group if, as of the
Determination Date, the sum of (x) the present value of the cumulative accrued
benefits for Key Employees under all qualified defined benefit plans included in
such group and (y) the aggregate of the Accounts of Key Employees under all
defined contribution plans included in such group, exceeds 60% of a similar sum
determined for all Employees. Notwithstanding
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Section 13.2, the Plan shall not be a Top-Heavy Plan if the group described in
this Section 13.3 is not Top-Heavy.
13.4. Definition of Surer Top-Heavy Plan. If for any Plan Year the
Plan is considered Top-Heavy, the Plan will be considered "Super Top-Heavy" if
the aggregate of the Accounts of Participants who are Key Employees exceeds 90%
of the aggregate of the Account balances of all Participants.
13.5. The Amount of Account. For purposes of this Article XIII, the
amount of the Account of any Participant shall be the sum of (x) the Account
balance as of the most recent Valuation Date occurring within a 12-month period
ending on the Determination Date; (y) any contributions actually made after the
Valuation Date, but on or before the Determination Date, and during the first
Plan Year only, any amount allocated as of a date prior to the Determination
Date; and (z) the aggregate distributions made to such Participant during the
5-year period ending with the Determination Date. Only the benefits and
contributions to current Participants who are Key Employees as of the
Determination Date shall count against the 60% limit.
For purposes of this Article XIII, if any former Employee has not
received any Compensation from PaineWebber (other than benefits under the Plan)
at any time during the 5-year period ending on the Determination Date, any
accrued benefit for such individual (and the Account balance of such individual)
shall be disregarded for purposes of determining whether the Plan is Top-Heavy.
13.6. Vesting.
(a) Notwithstanding any other provision contained herein, if the
Plan is Top-Heavy for any Plan Year, a Participant's nonforfeitable interest in
amounts contributed to his Company Account shall be computed as follows:
<TABLE>
<CAPTION>
Nonforfeitable
Years of Service Percentage
---------------- ----------
<S> <C>
2 20%
3 40%
4 60%
5 or more 100%
</TABLE>
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<PAGE> 59
In no event shall a Participant's nonforfeitable interest in his Company Account
be reduced by reason of the application of this paragraph.
(b) If, after the Plan has become Top-Heavy, it ceases to be
Top-Heavy for a subsequent Plan Year, any part of a Participant's Company
Account which was nonforfeitable prior to the end of the Plan Year in which the
Plan ceases to be Top-Heavy shall continue to be vested; provided, however, that
the regular vesting schedule set forth in Article VII shall apply to all amounts
contributed to a Participant's Company Account for any year after the Plan
ceases to be Top-Heavy.
13.7. Minimum Contribution.
(a) Those Participants who have not separated from Service at the
end of a Plan Year and who are not Key Employees will receive the minimum
contribution specified in paragraph (b) below.
(b) For any Plan Year in which the Plan is Top-Heavy, each
Participant who is not a Key Employee shall receive a minimum contribution in an
amount equal to the lesser of (i) 3% of Compensation or (ii) the percentage at
which contributions are made under the Plan for the Key Employee for whom such
percentage is the highest. With respect to any Participant who is not a Key
Employee and who participates in this Plan and the PaineWebber Pension Plan in a
Plan Year in which both Plans are Top-Heavy, such Participant shall receive a
minimum contribution under this Plan equal to 5% of Compensation.
(c) For purposes hereof, all defined contribution plans required to
be included in the Aggregation Group shall be treated as one plan.
13.8. Impact on Maximum Benefits. For any Plan Year for which the
Plan is Top-Heavy, the dollar limitations in the defined benefit plan fraction
and the defined contribution plan fraction set forth in Section 6.5(b) shall be
multiplied by 1.00 rather than 1.25; provided, however, for any Plan Year in
which the Plan is Top-Heavy, but is not Super Top-Heavy, the plan contributions
fraction set forth in Section 6.5(b) shall be multiplied by 1.25 and not by 1.00
if paragraph (b) of Section 13.7 is applied by substituting "4%" for "3%"
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13.9. Key Employee.
(a) As used herein, "Key Employee" shall mean any Employee or former
Employee (and Beneficiaries of such employee) who, at any time during the Plan
Year or any of the 4 preceding Plan Years, is
(i) an officer of PaineWebber whose annual compensation (as such
term is used in Section 415(c)(3) of the Code) but including amounts
contributed by PaineWebber pursuant to salary reduction agreements and
which are excludible from gross income under Sections 125, 402(a)(8),
402(h) or 403(b) of the Code is at least 50% of the dollar limit under
Section 415(b)(1)(A) of the Code, unless 50 other such officers (or, if
lesser, a number of such officers equal to the greater of 3 or 10% of the
Employees) have higher annual compensation;
(ii) 1 of the 10 Employees owning (or considered as owning within
the meaning of Section 318 of the Code) the largest interests in
Painewebber, who has annual compensation (within the meaning of Section
414(q)(7) of the Code) in excess of the dollar limitation set forth in
Section 415(c)(1)(A) of the Code;
(iii) the owner of more than 5% of the outstanding stock of
PaineWebber or stock possessing more than 5% of the total combined voting
power of all stock of PaineWebber; or
(iv) the owner of more than 1% of the outstanding stock of
PaineWebber and who received more than $150,000 in annual compensation
(within the meaning of Section 414(q)(7) of the Code) from PaineWebber.
(b) For purposes of determining ownership under this Section 13.9,
Section 318(a)(2)(C) of the Code (relating to constructive ownership) shall be
applied by substituting "5 percent" for "50 percent" and the rules of
subsections (b), (c) and (m) of Section 414 of the Code shall not apply.
(c) For purposes of this Section 13.9, the terms Employee and former
Employee include beneficiaries of such persons.
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<PAGE> 61
Exhibit A
Provisions Relating to Certain Participants in Other Plans
1. BEDCO Plan. Notwithstanding any other provision of the Plan to
the contrary, that part of the Trust Fund representing amounts transferred from
the Blyth Eastman Dillon & Co. Incorporated Profit Sharing and Savings Plan
("BEDCO Plan") shall be held by the Plan and invested and distributed in
accordance with the terms of this Plan in effect prior to January 1, 1989.
2. MH Plans. Effective as of March 4, 1983, the MH Associates
Restated Employees Profit Sharing Plan and the MH Associates Savings Plan
(collectively the "MH Plan") were merged into the Plan, and the assets of the
MH Plan were transferred to, and became a part of, the Plan. Such assets shall
be held invested and distributed in accordance with the terms of the Plan in
effect prior to January 1, 1989.
3. PWJC Retirement Agreement and Trust. Effective as of March 30,
1984, the Paine, Webber, Jackson & Curtis Retirement Agreement ("Retirement
Agreement") was merged into the Plan, and each Participant in the Paine, Webber,
Jackson & Curtis Retirement Trust ("Retirement Trust") became a Participant in
the Plan on that date if he was not otherwise a Participant in the Plan. The
assets of the Retirement Trust allocable to each person who was a Participant
under the Retirement Agreement were transferred to the Trust Fund, credited to a
separate subaccount of such Participant's Employee Account, and invested in
accordance with the investment election then in effect and thereafter shall be
credited with any earnings which are allocable to such assets and charged with
any losses and expenses which are allocable to such assets (hereinafter "the
adjusted value of such assets")
Participants initially elected to invest such assets (i) in any one
or more of the investment funds available on the date of transfer or (ii) with
respect to individuals who were actively employed by PaineWebber on March 20,
1984, in addition to such investment funds, in the investment portfolio which
the Woodstock Corporation managed with respect to the Retirement Trust
("Woodstock Portfolio"). A Participant may elect to transfer all or a portion of
the adjusted value of such assets from any of the investment funds or the
Woodstock Portfolio to one or more of the investment funds available under the
Plan at the time of transfer; provided that a Participant may not elect to
transfer (or retransfer)
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<PAGE> 62
any portion of the adjusted value of such assets from any of the investment
funds to the Woodstock Portfolio.
For all other purposes of the Plan, the part of the Retirement Trust
assets credited to each Participant's Employee Account which is attributable to
his unrecovered employee contributions under the Retirement Agreement shall be
treated as Pre-Tax Contributions under the Plan, and all other amounts shall be
treated as the appreciation on such Pre-Tax Contributions.
4. Becker Profit Sharing Plan. Certain assets of the A.G. Becker
Paribas Group Incorporated Profit Sharing Plan ("Becker Plan") were transferred
to the Plan, and each participant in the Becker Plan who was an active,
full-time Employee on the date of such transfer became a Participant in the Plan
on that date if he was not otherwise a Participant in the Plan. The transferred
assets of the Becker Plan allocable to each person who was a participant under
the Becker Plan immediately prior to the transfer of assets to the Plan and who
was an active full-time Employee on the date of such transfer were credited to a
separate subaccount of such Participant's Employee Account and initially
invested in accordance with the terms of the Plan as of the date of the
transfer. For all purposes of the Plan, the part of the Becker Plan assets
credited to each Participant's Employee Account which is attributable to his
unrecovered employee contributions under the Becker Plan shall be treated as
After-Tax Contributions under the Plan, all 401(k) contributions made to the
Becker Plan shall be treated as Pre-Tax Contributions and all other amounts
shall be treated as the appreciation on such After-Tax Contributions.
5. PaineWebber Capital Accumulation Plan.
(a) Plan Merger. Effective as of December 3, 1987, the PaineWebber
Capital Accumulation Plan (the "CAP") was terminated and its assets were
distributed to all of its participants and beneficiaries for whom correct
current addresses were available. Effective as of September 1, 1992, the
remaining accounts under the CAP were merged into the
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<PAGE> 63
Plan, and the rights of each former CAP participant to CAP benefits are
thereafter to be determined solely under the terms of the Plan, except that all
of such a participant's accrued benefits under the CAP shall be preserved under
the Plan to the extent required by Sections 401(a)(12), 411(d)(6) and 414(1) of
the Code.
(b) Establishment of Segregated CAP Accounts. The accrued benefit of
each former CAP participant shall be maintained in the Plan in a segregated "CAP
Account," which shall be credited with earnings and charged with losses in the
manner set forth in Article VI for other Plan Accounts.
(c) Preservation of Distribution Options.
(i) Married Participants. The CAP Account of a Participant who is
married on the first day on which an amount becomes payable to him (the "Annuity
Starting Date") shall be paid as an actuarially equivalent monthly benefit for
his life with a survivor annuity payable monthly for the life of such spouse
equal to 50% of the Participant's monthly benefit, unless such Participant
elects to receive that amount in another optional form under the Plan and such
election: (i) includes a written spousal consent, which is witnessed by the Plan
Administrator, another authorized Plan representative or a notary public, (ii)
designates a specific beneficiary (including any class of beneficiaries or any
contingent beneficiaries), which may not be changed without spousal consent (or
the spouse expressly authorizes such changes without further consent) and (iii)
includes an acknowledgment by the spouse of the effect of the election. Such
consent is not required if the Participant establishes to the satisfaction of
the Plan Administrator that there is no spouse or that the spouse cannot be
located. The election must be made at least 30 days prior to, but no earlier
than 90 days before the Annuity Starting Date.
(ii) Single Participants. The CAP account of a Participant who is
not married on the Annuity Starting Date shall be paid to him as an actuarially
equivalent monthly benefit for his life, unless he elects to receive his CAP
Account in another optional form under the Plan on a form provided by the Plan
Administrator therefor, at least 30 days prior to, but no earlier than 90 days
before the Annuity Starting Date.
(iii) CAP Incorporated by Reference. To the extent not fully set
forth in the text of this Plan, any optional
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<PAGE> 64
forms of distribution offered under the CAP shall be deemed offered under this
Plan in respect of the CAP Accounts, to the extent required by Section 411(d)(6)
of the Code. Actuarial equivalence shall be determined under the assumptions
used by the CAP.
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<PAGE> 65
AMENDMENT
TO THE
PAINEWEBBER SAVINGS INVESTMENT PLAN
WHEREAS, Paine Webber Group Inc. (the "Corporation") sponsors Paine
Webber Savings Plan (the "Plan") and
WHEREAS, Section 11.1 of the Plan provides that the Corporation may
amend the Plan at any time; and
WHEREAS, the Corporation now desires to amend the Plan in the manner
set forth below
NOW, THEREFORE, the Plan is hereby amended, effective as of the
dates specified below, in the following respects:
1. Effective as of the earlier to occur of (A) September 1, 1996 or
(B) the date upon which the conversion to an automated telephone system with
Hewitt Associates LLC becomes effective ("Conversion Date"), Section 2.14 of the
Plan is amended by deleting it in its entirety and replacing it with the
following:
"Valuation Date" shall mean each business day on which the Trustee
values the Fund."
2. Effective as of the Conversion Date, Section 10.3 of the Plan is
amended by:
(A) deleting the first sentence of the second paragraph therein
and replacing it with the following sentence:
"A Participant may change his investment elections on
any business day.";
(B) deleting the last sentence of the second paragraph therein,
and
(C) deleting the first and second sentences of the third paragraph
therein and replacing them with the following sentence:
"All elections shall be made by utilizing the automated
telephone system approved by the Plan Administrator and
in accordance with the procedures of such system. Any
election which is made prior to 4 p.m. on a Valuation
Date shall be effective the following Valuation Date and
any election which is made either (i) on a day which is
not a Valuation Date or (ii) on a Valuation Date after 4
p.m. shall be effective on the second Valuation Date
following the date on which the election is made."
<PAGE> 66
3. The first paragraph of Section 8.9(c) of the Plan is amended by
deleting the phrase "as of the last business day of the month in which the
Participant's application for a Participant Loan is approved" and replacing it
with the phrase "as of the day the Participant's application for a Participant
Loan is approved".
4. Effective as of June 21, 1996, the Plan is amended to create a
blackout period," which shall commence on June 21, 1996 and end on the
Conversion Date (the "Blackout Period"). During the Blackout Period, there will
he a processing freeze with respect to any elections or requests, which are
received during such Blackout Period, for Plan loans, withdrawals, distributions
or investment changes. Any such elections or requests which are properly
received, in accordance with the terms of the Plan, prior to the Blackout Period
will be processed in accordance with the Plan's normal procedures approved by
the Plan Administrator. Any such elections or requests which are received during
the Blackout Period will he processed after the Blackout Period.
5. In all other respects, the Plan shall remain in full force and
effect.
<PAGE> 67
AMENDMENT
TO
PAINEWEBBER SAVINGS INVESTMENT PLAN
1. Kidder Peabody. A new Exhibit B is added to the Painewebber
Savings Investment Plan to read as follows, effective December 1, 1994:
Exhibit B
Provisions Relating to Participants Transferred from
Kidder Peabody & Co. Incorporated
1. Service Credit. In determining the Service of a Participant who
transferred directly from the employ of Kidder Peabody & Co. Incorporated
("Kidder Peabody") to the employ of PaineWebber during the period of December 1,
1994 through March 31, 1995, the Participant's Employment Commencement Date
shall be his date of hire by Kidder Peabody. In applying this provision, the
Plan Administrator shall be entitled to rely on the information as to such date
furnished by Kidder Peabody to Painewebber.
2. Prior Year Earnings. The Prior Year Earnings of any such
transferred employee shall be: (1) in determining the Savings Incentive
Contribution Percentage applicable to the Participant for the 1994 Plan Year (in
the case of Participants so transferred during December 1994), the individual's
earnings from Kidder Peabody for the 1993 calendar year; (2) in determining the
Savings Incentive Contribution Percentage for the 1995 Plan Year, the amount (if
any) determined under Section 2.33, plus the individual's earnings from Kidder
Peabody for the
<PAGE> 68
[ILLEGIBLE] paid by Kidder Peabody in December 1993; and (3) in determining the
Savings Incentive Contribution Percentage for the 1996 Plan year; the amount
determined under Section 2.33 plus the individual's earnings from Kidder Peabody
for the 1999 calendar year (if any). The earnings from Kidder Peabody taken into
account for this purpose shall be determined without regard to any election to
reduce such earnings pursuant to a plan described in section 401(k) or 125 of
the Code. If applying this provision, the Plan Administrator shall be entitled
to rely on the information as to such earnings furnished by Kidder Peabody to
PaineWebber.
2. Clarifying Amendments. A new Section 3.4 is hereby added to the
Plan, to read as follows:
3.4 Ineligible Employees. A nonresident alien who is employed outside of
the United States, or is employed in the United States on temporary
assignment only, shall not be eligible to participate in the Plan,
and his remuneration for such employment shall not be treated as
Compensation with respect to which he may make or share in
contributions under the Plan; provided, however, that if such
individual transfers to employment in a capacity eligible for
participation in the Plan, his prior remuneration from PaineWebber
in ineligible employment may be taken into account in determining
his Prior Year Earnings in accordance with Section 2.33. An
individual who performs services for
<PAGE> 69
PaineWebber under an agreement or arrangement (which may be written,
oral, and/or evidenced by PaineWebber's payroll practice) with the
individual or with another organization that provides the services
of the individual to PaineWebber, pursuant to which the individual
is treated as an independent contractor or is otherwise treated as
an employee of an entity other than PaineWebber, shall not be
eligible to participate in the Plan, or to accrue benefits by reason
of such service or remuneration received therefor, irrespective of
whether the individual is treated as an employee of PaineWebber
under common-law employment principles or pursuant to the provisions
of Section 414(m), 414(n) or 414(o) of the Code.
The amendments made by this Paragraph 2 clarify and codify the meaning and
administrative interpretation of the Plan as heretofore in effect and are
therefore effective retroactively for all purposes. In addition, the provisions
of Section 3.4 supersede the first parenthetical phrase in the first sentence of
Section 2.17, which is therefore hereby deleted.
<PAGE> 70
AMENDMENTS TO THE PAINEWEBBER SAVINGS INVESTMENT PLAN
1. Effective immediately, Section 6.6 of the PaineWebber Savings
Investment Plan shall be amended by inserting the term "eligible" before the
term "expenses" at each place it appears and by inserting the following sentence
after the first sentence thereof:
For purposes of this Section 6.6, the term "eligible expenses" shall
mean expenses incurred in connection with the Plan which are
permitted to be paid by the Plan or reimbursed to PaineWebber by the
Plan pursuant to regulations and other pronouncements issued by the
Department of Labor.
2. Effective January 1, 1993, the first sentence of Section 8.2 of
the PaineWebber Savings Investment Plan shall be amended to read as follows:
A Participant (or his Beneficiary) may elect either (1) to actually
receive his distribution or (2) if, and to the extent, the
distribution constitutes an eligible rollover distribution (within
the meaning of Section 402(c)(4) of the Code) and if the
distribution was made on or after January 1, 1993, to have his
distribution made as a direct rollover to another eligible
retirement plan (within the meaning of Section 401(a)(31)(D) of the
Code).
<PAGE> 1
Exhibit 4.2
PAINEWEBBER, INC. SAVINGS INVESTMENT PLAN TRUST AGREEMENT
THIS AGREEMENT is made effective as of the first day of July, 1996 between
PAINEWEBBER, INC., a Delaware corporation, of New York City, New York, herein
referred to as the "Company", and THE NORTHERN TRUST COMPANY, an Illinois
corporation, of Chicago, Illinois, as Trustee and constitutes a restatement into
a trust agreement known as the PaineWebber, Inc. Savings Investment Plan Trust
Agreement of the PaineWebber, Inc. Savings Investment Plan Trust which was
heretofore made by the Company and its Subsidiaries and under which the Trustee
is accepting appointment as successor trustee.
The Company shall appoint the Administrative Committee as the fiduciary
which has the responsibility for administering the Plan and the Investment
Committee as the fiduciary which has the responsibility for Plan investments.
The Trust Fund shall consist of all assets held by the Trustee as of the
date of this agreement, all investments and reinvestments thereof and all
additions thereto by way of contributions, earnings and increments, and shall be
held upon the following terms:
ARTICLE ONE: DEFINITIONS
For the purposes of this agreement:
1.1 "Administrative Committee" means the committee as constituted from
time to time which has the responsibility for administering the Plan and shall
be deemed for purposes of ERISA to be the Plan administrator and the named
fiduciary for Plan administration;
1.2 "Beneficiary" means a person(s) or entity designated to receive a
benefit under the Plan after the death of a Participant;
1.3 "Code" means the Internal Revenue Code of 1986, as amended from time
to time and the applicable regulations thereunder;
1.4 "Company" means PaineWebber, Inc. and any corporation which is the
successor thereto;
1.5 "Company Stock" means common stock of the Company;
1.6 "Company Stock Investment Fund" means any Investment Fund composed of
investments in Company Stock as provided in ARTICLE FOUR;
<PAGE> 2
1.7 "Custodial Agent" means one or more persons or entities designated by
the Investment Committee to maintain custody of assets of a Separate Investment
Account pursuant to 3.1(c);
1.8 "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time and the applicable regulations issued thereunder;
1.9 "Investment Adviser" means an Investment Manager or an Investment
Trustee to whom the Investment Committee has delegated investment responsibility
for a Separate Account or the Investment Committee with respect to any assets
for which the Investment Committee has investment responsibility;
1.10 "Investment Committee" means the committee as constituted from time
to time which has the responsibility for allocating the assets of the Trust Fund
among the Separate Accounts and any Trustee Investment Accounts, for monitoring
the diversification of the investments of the Trust Fund, for determining the
propriety of investment of the Trust Fund in foreign securities and of
maintaining the custody of foreign investments abroad, for assuring that the
Plan does not violate any provisions of ERISA limiting the acquisition or
holding of "employer securities" or "employer real property" and for the
appointment and removal of Investment Advisers and shall be deemed for purposes
of ERISA to be named fiduciary for Plan investments;
1.11 "Investment Fund" shall mean each of the investment funds
established pursuant to ARTICLE FOUR; any of such Investment Funds may be
composed of one or more Separate Accounts and Trustee Investment Accounts
designated by the Investment Committee;
1.12 "Investment Manager" means an investment manager registered as an
investment adviser under the Investment Advisers Act of 1940, a bank as defined
in that Act or an insurance company qualified to manage, acquire or dispose of
any asset of the Trust Fund, which is appointed by the Investment Committee to
manage a Separate Investment Account;
1.13 "Investment Trustee" means the trustee appointed by the Investment
Committee to manage a Separate Investment Trust Account;
1.14 "Participant" means a person who is a Participant, or is treated as a
Participant, in the Plan in accordance with its terms;
1.15 "Plan" means the PaineWebber, Inc. Savings Investment Plan (SIP);
1.16 "Separate Account" means a Separate Investment Account, a Separate
Investment Trust Account or a Separate Insurance Contract Account;
2
<PAGE> 3
1.17 "Separate Insurance Contract Account" means assets of the Trust Fund
allocated by the Investment Committee to a Separate Account for investment in
insurance contracts directed by the Investment Committee;
1.18 "Separate Investment Account" means assets of the Trust Fund
allocated by the Investment Committee to a Separate Account to be managed by an
Investment Manager or the Investment Committee;
1.19 "Separate Investment Trust Account" means assets of the Trust Fund
allocated by the Investment Committee to a Separate Account to be managed by an
Investment Trustee;
1.20 "Subsidiary" means a subsidiary or affiliate of the Company;
1.21 "Subtrust" means assets of a Separate Investment Account which are
held by a Subtrustee pursuant to an agreement which the Investment Committee has
approved and directed the Trustee to enter into;
1.22 "Subtrustee" means the trustee appointed by the Investment Committee
to act as trustee of a Subtrust;
1.23 "Trust Fund" means all assets subject to this agreement;
1.24 "Trustee" means THE NORTHERN TRUST COMPANY and any successor to it as
trustee or trustees of the Trust Fund under this agreement; and
1.25 "Trustee Investment Account" means assets of the Trust Fund for which
investment responsibility has been allocated by the Investment Committee to the
Trustee with the written consent of the Trustee.
ARTICLE TWO: DISTRIBUTIONS
The Trustee shall make distributions from the Trust Fund to such persons,
in such amounts (but not exceeding the then value of the Trust Fund), at such
times and in such manner as the Administrative Committee or its designee shall
from time to time direct pursuant to a separate Benefit Payment Agency Agreement
executed by the Company, the Administrative Committee and the Trustee. The
Trustee shall have no responsibility to ascertain whether any direction received
by the Trustee from the Administrative Committee or its designee in accordance
with the preceding sentence is proper and in compliance with the terms of the
Plan or to see to the application of any distribution, provided, however, that
in the event the Relationship Manager of the Trustee assigned to the PaineWebber
Retirement Savings Trust has actual knowledge that a direction received from the
Administrative Committee in writing is not in compliance with the terms of the
Plan, the Trustee shall promptly notify the Administrative Committee or its
designee with respect thereto. The Trustee shall not be liable for any
distribution made in good faith
3
<PAGE> 4
without actual notice or knowledge of the changed condition or status of any
recipient. If any distribution made by the Trustee is returned unclaimed, the
Trustee shall promptly notify the Administrative Committee or its designee and
shall dispose of the distribution as the Administrative Committee or its
designee shall direct. The Trustee shall have no obligation to search for or
ascertain the whereabouts of any payee of benefits of the Trust Fund.
Notwithstanding the foregoing, the Administrative Committee may make
distributions from the Trust Fund through a commercial banking account in a
federally insured banking institution (including the Trustee) established by the
Administrative Committee for such purpose after written notice to the Trustee
that the commercial banking account has been so established. Upon such written
notice, the Administrative Committee shall have the responsibility to assure
that any such commercial banking account is established and maintained in
accordance with ERISA and is properly insured. The Trustee shall make such
deposits from the Trust Fund to the commercial banking account as the
Administrative Committee may from time to time direct in writing. The Trustee
shall have no responsibility to account for funds held in or disbursed from any
such commercial banking account, or to prepare any information returns for tax
purposes as to distributions made therefrom.
ARTICLE THREE: SEPARATE ACCOUNTS AND INVESTMENT ADVISERS
The Trust Fund shall consist of one or more Separate Accounts and, with
the Trustee's written consent, one or more Trustee Investment Accounts. All
Separate Accounts and any Trustee Investment Accounts shall be established by
the Trustee at the direction of the Investment Committee. The Investment
Committee shall designate assets of the Trust Fund to be allocated to each
Separate Account and each Trustee Investment Account and shall direct the
Trustee with respect to any transfer of assets between Separate Accounts or
between a Separate Account and a Trustee Investment Account; provided that no
asset shall be allocated or transferred to a Trustee Investment Account without
the Trustee's written consent. The Investment Committee shall have investment
responsibility for any assets of the Trust Fund not otherwise allocated to a
Separate Account or Trustee Investment Account, and such assets shall comprise a
Separate Investment Account for which the Investment Committee serves as
Investment Adviser. The following provisions shall apply to the Separate
Accounts:
3.1 With respect to each Separate Investment Account, the Investment
Committee shall appoint an Investment Adviser, who shall acknowledge by a
writing delivered to the Investment Committee and to the Trustee that the
Investment Adviser is a fiduciary with respect to the assets allocated thereto.
The Trustee shall act with respect to assets allocated to a Separate Investment
Account only as directed by the Investment Adviser. The Investment Committee may
direct that any or all of the assets of a Separate Investment Account be held by
a Subtrustee. The Trustee shall have custody of and
4
<PAGE> 5
custodial responsibility for all assets of the Trust Fund held in a Separate
Investment Account except as otherwise provided in this agreement or as follows:
(a) The Subtrustee of a Subtrust shall have custody of and custodial
responsibility for any assets of a Separate Investment Account allocated
to it by the Investment Committee;
(b) The trustee of a collective or group trust fund (including
without limitation an Investment Manager or its bank affiliate) shall have
custody of and custodial responsibility for any assets of a Separate
Investment Account invested in such collective or group trust fund.
3.2 With respect to each Separate Investment Trust Account, the Trustee
and the Investment Trustee thereof shall upon the direction of the Investment
Committee execute an investment trust agreement with respect thereto. The
Investment Trustee shall have custody of all of the assets of the Separate
Investment Trust Account except such assets as the Investment Committee may from
time to time determine shall be held in the custody of the Trustee with the
Trustee's written consent; the Trustee shall act with respect to any such assets
in its custody only as directed by the Investment Trustee.
3.3 With respect to each Separate Insurance Contract Account, from assets
allocated thereto the Trustee shall purchase or continue in effect such
insurance contracts as the Investment Committee shall direct, the issuing
insurance company may credit those assets to its general account or to one or
more of its separate accounts, and the Trustee shall act with respect to those
contracts only as directed by the Investment Committee.
3.4 The Investment Committee shall have investment responsibility for
assets held in any Separate Account for which an Investment Manager or
Investment Trustee has not been retained, has been removed, or is for any reason
unwilling or unable to act. With respect to assets or Separate Accounts for
which the Investment Committee has investment responsibility, the Trustee,
acting only as directed by the Investment Committee, shall enter into such
agreements as are necessary to facilitate any investment, including agreements
entering into a limited partnership, Subtrust or the participation in real
estate funds. The Trustee shall not make any investment review of, or consider
the propriety of holding or selling, or vote any assets for which the Investment
Committee has investment responsibility.
3.5 With respect to each Separate Account, the Investment Adviser thereof
shall have the investment powers granted to the Trustee by ARTICLE FIVE, as
limited by 6.1 through 6.3 of ARTICLE SIX, as if all references therein to the
Trustee referred to the Investment Adviser.
3.6 The Investment Committee may also direct the Trustee as fiduciary to
lend securities of the Trust Fund held by the Trustee by entering into a written
agreement with the Trustee. The terms of the agreement between the Investment
Committee and the
5
<PAGE> 6
Trustee shall be consistent with Department of Labor Prohibited Transaction
Exemption 81-6 or any successor exemption. The written agreement between the
Investment Committee and the Trustee shall direct the Trustee to enter into a
loan agreement with a borrower or borrowers. The Trustee shall transfer
securities to the borrower and invest or hold on behalf of the Trust Fund the
collateral received in exchange for the securities. Notwithstanding anything in
this agreement to the contrary, the borrower shall have the authority and
responsibility to vote securities it has borrowed. The Trustee shall maintain a
record of the market value of the loaned securities and shall be paid reasonable
compensation as agreed to by the Trustee and the Investment Committee.
3.7 The Investment Committee may direct the Trustee to (i) enter into such
agreements as are necessary to implement investment in futures contracts and
options on futures contracts; (ii) transfer initial margin to a futures
commission merchant or third party safekeeping bank pursuant to directions from
an Investment Adviser and (iii) pay or demand variation margin in accordance
with industry practice to or from such futures commission merchant based on
daily marking to market calculations. The Trustee shall have no investment or
custodial responsibility with respect to assets transferred to a futures
commission merchant or third party safekeeping bank.
ARTICLE FOUR: INVESTMENT FUNDS
The Trust Fund shall be composed of assets of the Company Stock Investment
Fund and any other Investment Funds designated in writing by the Investment
Committee. The Investment Committee is authorized to terminate the existing
Investment Funds and establish new Investment Funds by giving advance written
notice to the Trustee describing the fund to be terminated or established and
the effective date thereof; provided that in no event shall the Trustee's duties
be modified without its consent. The Investment Committee or its representative
shall direct the Trustee with respect to the allocation of assets to Investment
Funds and with respect to transfers among such Investment Funds. The Trustee
shall use its best efforts to move funds as soon as practicable when transfers
are delayed for any reason, but shall in no event be required to advance its own
funds for such purpose. Pending directions from the Investment Committee to
allocate contributions among the Investment Funds, the Trustee shall hold the
contributions in a separate account invested in short term investments,
including common or collective short term investment funds of the Trustee. Any
cash held from time to time in any Investment Fund may be invested in common or
collective funds of the Trustee or its affiliate, or participations in regulated
investment companies (including those for which the Trustee or its affiliate is
adviser).
To the extent that any Investment Fund is invested in mutual fund shares
or bank commingled funds, the Investment Committee shall initially select funds
to be invested in and shall be responsible for retaining the availability of or
terminating the availability of such funds. To the extent the Trustee is
required to enter into a custody agreement with
6
<PAGE> 7
the sponsor of a bank commingled fund or such other type of fund, the Investment
Committee shall direct the Trustee to enter into such agreement.
The Company Stock Investment Fund shall be composed of investments in
Company Stock. The Investment Committee shall notify the Trustee in writing of
the amount of the fund to be maintained in the collective short term investment
fund and the Trustee shall not be required to advance funds to make any
transfers or distributions. Any cash held by the Trustee from time to time in
the Company Stock Investment Fund may be invested in common or collective short
term investment funds of the Trustee.
The Company has determined that daily movement of Participant balances
among the Investment Funds is an important design feature and objective of the
Plan and that timely transfers and distributions from the Company Stock
Investment Fund need to be facilitated in order to achieve such objective. The
Investment Committee may authorize and direct the Trustee in writing to seek to
obtain settlement for sales of Company Stock on an expedited basis under certain
circumstances in which case the Trustee shall carry out its responsibilities for
execution of Company Stock sale transactions in accordance with such direction
and subject to any limitations expressed therein.
ARTICLE FIVE: POWERS OF TRUSTEE
Except as otherwise provided in this agreement, the Trustee shall hold,
manage, care for and protect the assets of the Trust Fund and shall have until
actual distribution thereof the following powers and, except to the extent
inconsistent herewith, those now or hereafter conferred by law:
5.1 To retain any asset originally included in the Trust Fund or
subsequently added thereto;
5.2 To invest and reinvest the assets without distinction between income
and principal in bonds, stocks, mortgages, notes, options, futures contracts,
options on futures contracts, limited partnership interests, participations in
regulated investment companies (including those for which the Trustee or its
affiliate is adviser), or other property of any kind, real or personal, foreign
or domestic, and to enter into insurance contracts;
5.3 To deposit any part or all of the assets with the Trustee or its
affiliate as trustee, or another person or entity acting as trustee of any
collective or group trust fund which is now or hereafter maintained as a medium
for the collective investment of funds of pension, profit sharing or other
employee benefit plans, and which is qualified under Section 401(a) and exempt
from taxation under Section 501(a) of the Code, and to withdraw any part or all
of the assets so deposited; any assets deposited with the trustee of a
collective or group trust fund shall be held and invested by the trustee
thereunder pursuant to all the terms and conditions of the trust agreement or
declaration of trust
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establishing the fund, which are hereby incorporated herein by reference and
shall prevail over any contrary provision of this agreement;
5.4 To deposit cash in any depository, including the banking department of
the Trustee or its affiliate and any organization acting as a fiduciary with
respect to the Trust Fund;
5.5 To hold any part of the assets in cash without liability for interest,
pending investment thereof or the payment of expenses or making of distributions
therewith, notwithstanding the Trustee's receipt of "float" from such uninvested
cash;
5.6 To cause any asset, real or personal, to be held in a corporate
depository or federal book entry account system or registered in the Trustee's
name or in the name of a nominee or in such other form as the Trustee deems best
without disclosing the trust relationship;
5.7 To vote, either in person or by general or limited proxy, or refrain
from voting, any corporate securities for any purpose, except that any security
as to which the Trustee's possession of voting discretion would subject the
issuing company or the Trustee to any law, rule or regulation adversely
affecting either the company or the Trustee's ability to retain or vote company
securities, shall be voted as directed by the Investment Committee; to exercise
or sell any subscription or conversion rights; to consent to and join in or
oppose any voting trusts, reorganizations, consolidations, mergers, foreclosures
and liquidations and in connection therewith to deposit securities and accept
and hold other property received therefor;
5.8 To lease any assets for any period of time though commencing in the
future or extending beyond the term of the trust;
5.9 To borrow money from any lender, to extend or renew any existing
indebtedness and to mortgage or pledge any assets;
5.10 To sell at public or private sale, contract to sell, convey,
exchange, transfer and otherwise deal with the assets in accordance with
industry practice, and to sell put and covered call options from time to time
for such price and upon such terms as the Trustee sees fit; the Company
acknowledges that the Trustee may reverse any credits made to the Trust Fund by
the Trustee prior to receipt of payment in the event that payment is not
received;
5.11 To employ agents, attorneys and proxies and to delegate to any one or
more of them any power, discretionary or otherwise, granted to the Trustee;
5.12 To compromise, contest, prosecute or abandon claims in favor of or
against the Trust Fund;
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5.13 To appoint foreign custodians as agent of the Trustee to custody
foreign securities holdings of any Separate Account established by the
Investment Committee or of any Trustee Investment Account;
5.14 To lend securities held by the Trustee and to receive and invest
collateral provided by the borrower, all pursuant to a written agreement with
the Administrative Committee;
5.15 To utilize any tax refund claim procedures with respect to taxes
withheld to which the Trust Fund may be entitled under applicable tax laws,
treaties and regulations; any exercise of such power by the Trustee shall be on
a best efforts basis; and
5.16 To perform other acts necessary or appropriate for the proper
administration of the Trust Fund, execute and deliver necessary instruments and
give full receipts and discharges.
ARTICLE SIX: LIMITATIONS ON POWERS
For purposes of this agreement, the powers and responsibilities allocated
to the Trustee shall be limited as follows:
6.1 The powers of the Trustee shall be exercisable for the exclusive
purpose of providing benefits to the Participants and Beneficiaries under the
Plan and in accordance with the standards of a prudent man under ERISA;
6.2 Subject to 6.1 and 6.3, the Trustee shall diversify the investments of
that portion of the Trust Fund for which it has investment responsibility so as
to minimize the risk of large losses;
6.3 Subject to 6.1, the Trustee shall, with respect to that portion of the
Trust Fund for which it has investment responsibility, follow the investment
guidelines established by the Investment Committee given in exercise of that
Committee's responsibility;
6.4 Except as otherwise provided in 3.6, the Trustee shall not make any
investment review of, consider the propriety of holding or selling, or vote
other than as directed by the Investment Adviser, any assets of the Trust Fund
allocated to a Separate Account in accordance with ARTICLE THREE, except that if
the Trustee shall not have received contrary instructions from the Investment
Adviser thereof, the Trustee shall invest for short term purposes any cash
consisting of U.S. dollars of a Separate Account in its custody in bonds, notes
and other evidences of indebtedness having a maturity date not beyond five years
from the date of purchase, United States Treasury bills, commercial paper,
bankers' acceptances and certificates of deposit, and undivided interests or
participations therein and (if subject to withdrawal on a daily or weekly basis)
participations in common or collective funds composed thereof. For currencies
other than
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U.S. dollars, the Trustee shall invest cash of a Separate Account as directed
by the Investment Adviser with respect to that Separate Account and such
investments may include an interest bearing account of a foreign custodian;
and
6.5 The Trustee shall vote shares of Company Stock held in the Company
Stock Investment Fund and respond to a tender or exchange offer in accordance
with (a) of the following provisions:
(a) The Trustee, or the Company upon written notice to the Trustee,
shall furnish to each Participant who has Company Stock credited to his or
her individual account under the Company Stock Investment Fund the date
and purpose of each meeting of the stockholders of the Company at which
Company Stock is entitled to be voted. The Trustee, or the Company if it
has furnished the above information, shall request from each Participant
instructions to be furnished to the Trustee (or to a tabulating agent
appointed by the Trustee) as to the voting at that meeting of Company
Stock credited to the Participant's account. If the Participant furnishes
such instructions to the Trustee or its agent within the time specified in
the notification, the Trustee shall vote such Company Stock in accordance
with the Participant's instructions. All Company Stock credited to
Participant accounts as to which the Trustee or its agent do not receive
instructions as specified above, and all unallocated Company Stock held in
the Company Stock Investment Fund shall be voted by the Trustee
proportionately in the same manner as it votes Company Stock as to which
the Trustee or its agent have received voting instructions as specified
above. Similarly, the Trustee, or the Company upon written notice to the
Trustee, shall furnish to each Participant who has Company Stock credited
to his or her individual account under the Company Stock Investment Fund
notice of any tender offer for, or a request or invitation for tenders of,
Company Stock received by the Trustee. The Trustee, or the Company if it
has furnished such notice, shall request from each such Participant
instructions to be furnished to the Trustee (or to a tabulating agent
appointed by the Trustee) as to the tendering of Company Stock credited to
the participant's account and for this purpose the Trustee or the Company,
as the case may be, shall provide Participants with a reasonable period of
time in which they may consider any such tender offer for, or request or
invitation for tenders of, Company Stock of which the Trustee has been
advised by the Administrative Committee. The Trustee shall tender such
Company Stock as to which the Trustee or its agent have received
instructions to tender from Participants within the time specified by the
Trustee or the Company, as the case may be. Company Stock credited to
Participant accounts as to which the Trustee or its agent have not
received instructions from Participants shall not be tendered. As to all
unallocated Company Stock held by the Trustee, the Trustee shall tender
the same proportion thereof as the Company Stock as which the Trustee or
its agent have received instructions from Participants to tender bears to
all Company Stock allocated to Participant accounts. The Administrative
Committee shall provide the Trustee with timely information regarding
proxy voting and tender offers and in carrying out its
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responsibilities under this provision the Trustee may conclusively rely on
information furnished to it by the Administrative Committee, including the
names and current addresses of Participants, the number of shares of
Company Stock credited to Participant accounts under the Company Stock
Investment Fund, and the number of shares of Company Stock held by the
Trustee in the Company Stock Investment Fund that have not yet been
allocated.
A Participant shall be a "named fiduciary" under ERISA to the extent
of the Participant's authority to direct the investment in, voting,
tender, exchange or sale of Company Stock allocated to the Participant's
account and their proportionate share of unallocated Company Stock held by
the Trustee.
(b) No provision of this Section 6.5 shall prevent the Trustee from
taking any action relating to its duties under this Section 6.5 if the
Trustee determines in its sole discretion that such action is necessary in
order for the Trustee to fulfill its fiduciary responsibilities under
ERISA.
(c) Purchases and sales of Company Stock may be made to, from or
through any source, provided that such purchases from or sales to a party
in interest (as defined in Section 3(14) of ERISA) shall comply with the
requirements of Section 408(e) of ERISA. Rights, options or warrants
offered to purchase Company Stock shall be exercised by the Trustee to the
extent that there is cash available for the investment; to the extent cash
is not available, the same shall be sold on the open market.
(d) Except for the short term investment of cash, the Company has
limited the investment power of the Trustee in the Company Stock
Investment Fund to the purchase of Company Stock. The Trustee shall not be
liable for the purchase, retention, voting, tender, exchange or sale of
Company Stock and the Company (which has the authority to do so under the
laws of the state of its incorporation) agrees to indemnify THE NORTHERN
TRUST COMPANY from any liability, loss and expense, including reasonable
legal fees and expenses which THE NORTHERN TRUST COMPANY may sustain by
reason of purchase, retention, voting, tender, exchange or sale of Company
Stock, but only to the extent the Trustee acts in accordance with the
terms of this agreement. This paragraph shall survive the termination of
this agreement.
6.6 The Investment Committee shall have sole responsibility for the
decision to maintain the custody of foreign investments abroad. Except as
otherwise directed by the Investment Committee, custody of foreign investments
shall be maintained with foreign custodians selected by the Trustee. The Trustee
shall have no responsibility for losses to the Trust Fund resulting from the
acts or omissions of any foreign custodian selected by the Trustee unless due to
(i) the foreign custodian's fraud, negligence or willful misconduct or (ii) the
Trustee's failure to prudently select a custodian from the custodians available
in the jurisdiction being invested in. The Trustee shall maintain custody of
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foreign investments in any jurisdiction where the Trustee has not selected a
custodian solely as directed by the Investment Committee. The Trustee shall have
no responsibility for the financial condition, acts or omissions of any foreign
custodian holding assets of the Trust fund at the direction of the Investment
Committee.
6.7 The Trustee shall have no responsibility for: (a) any condition which
now exists or may hereafter be found to exist in, under, or about any real
estate investment of the Trust Fund or of a corporation organized under Section
501(c)(2) or 50l(c)(25) of the Code, the stock of which is held as an asset of
the Trust Fund; or (b) any violation of any applicable environmental or health
or safety law, ordinance, regulation or ruling; or (c) the presence, use,
generation, storage, release, threatened release, or containment, treatment or
disposal of any hazardous or toxic substances or materials including such
situations at or activities on any investment of the Trust Fund or of a Section
501(c)(2) or 501(c)(25) corporation, the stock of which is held as an asset of
the Trust Fund. The Trustee is hereby authorized to pay from the Trust Fund all
costs and expenses (including reasonable attorneys fees) relating to or
connected with any condition, violation, presence or other situation referred to
in (a), (b) and (c) above, and notwithstanding anything to the contrary in this
agreement, to the extent permitted by law, THE NORTHERN TRUST COMPANY shall be
indemnified from the Trust Fund from all claims, suits, losses and expenses
(including reasonable attorneys fees) arising therefrom. The authority to pay
from the Trust Fund and the right of indemnification set forth in the preceding
sentence include and relate to, without limitation, any claims, suits,
liabilities, losses and expenses (including attorneys fees) arising from any
matters relating to the existence of petroleum including crude oil and any
fraction thereof, hazardous substances, pollutants, or contaminants as defined
in the Comprehensive Environmental, Responsibility, Compensation, and Liability
Act, as amended, 42 U.S.C. Section 9601 et seq., or hazardous wastes as defined
in the Resource Conservation and Liability Act, 42 U.S.C. Section 6906 et seq.,
or as any of the foregoing terms or similar terms may be defined in similar
state environmental laws or subsequent federal or state legislation of a similar
nature which may be enacted from time to time. This paragraph shall survive the
sale or other disposition of any real estate investment of the Trust Fund and
the termination of this agreement. Nothing in this paragraph shall be construed
to in any way limit the indemnification rights of the Trustee provided for in
ARTICLE NINE.
ARTICLE SEVEN: ACCOUNTS
The Trustee shall maintain accounts of all receipts and disbursements,
including contributions, distributions, purchases, sales and other transactions
of the Trust Fund. The accounts, and the books and records relating thereto,
shall be open to inspection and audit at all reasonable times by any person or
persons designated by the Investment Committee or entitled thereto, under ERISA.
Within 120 days after the close of each fiscal year of the Trust Fund and
of any other period agreed upon by the Trustee and the Investment Committee the
Trustee shall
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render to the Investment Committee a statement of account for the Trust Fund for
the period commencing with the close of the last preceding period and a list
showing each asset thereof as of the close of the current period and its cost
and fair market value. The Trustee shall rely conclusively upon the
determination of the issuing insurance company with respect to the fair market
value of each insurance contract and upon the determination of the Investment
Adviser of each Separate Account with respect to the fair market value of those
assets allocated thereto for which the Trustee deems not to have a readily
ascertainable value, and the Trustee shall have no responsibility with respect
thereto.
An account of the Trustee may be approved by the Investment Committee by
written notice delivered to the Trustee or by failure to object to the account
by written notice delivered to the Trustee within 6 months of the date upon
which the account was delivered to the Investment Committee. The approval of an
account shall constitute a full and complete discharge to the Trustee as to all
matters set forth in that account as if the account had been settled by a court
of competent jurisdiction in an action or proceeding to which the Trustee, the
Company and the Investment Committee were parties. In no event shall the Trustee
be precluded from having its accounts settled by a judicial proceeding. Nothing
in this article shall relieve the Trustee of any responsibility, or liability
for any responsibility, under ERISA.
ARTICLE EIGHT: TRUSTEE SUCCESSION
The Trustee may resign at any time by written notice to the Investment
Committee, or the Investment Committee may remove the Trustee by written notice
to the Trustee. The resignation or removal shall be effective 60 days after the
date of the Trustee's resignation or receipt of the notice of removal or at such
earlier date as the Trustee and the Investment Committee may agree.
In case of the resignation or removal of the Trustee, the Investment
Committee shall appoint a successor trustee by delivery to the Trustee of a
written instrument executed by the Investment Committee appointing the successor
trustee and a written instrument executed by the successor trustee accepting the
appointment, whereupon the Trustee shall deliver the assets of the Trust Fund to
the successor trustee but may reserve such reasonable amount as the Trustee may
deem necessary for outstanding and accrued charges against the Trust Fund.
The successor trustee, and any successor to the trust business of the
Trustee by merger, consolidation or otherwise, shall have all the powers given
the originally named Trustee. No successor trustee shill be personally liable
for any act or omission of any predecessor. Except as otherwise provided in
ERISA, the receipt of the successor trustee and the approval of the Trustee's
final account by the Investment Committee in the manner provided in ARTICLE
SEVEN shall constitute a full and complete discharge to the Trustee.
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ARTICLE NINE: MISCELLANEOUS
9.1 Any action required to be taken by the Company or by a Subsidiary
shall be by resolution of its board of directors or by written direction of one
or more of its president, any vice president or treasurer. The Trustee may rely
upon a resolution or direction filed with the Trustee and shall have no
responsibility for any action taken by the Trustee in accordance with any such
resolution or direction.
9.2 The Company shall certify to the Trustee the names of the members of
the Administrative Committee and of the Investment Committee acting from time to
time, and the Trustee shall not be charged with knowledge of a change in the
membership of a Committee until so notified by the Company. Any action required
to be taken by a Committee shall be by direction of such person or persons as
shall be designated by the Committee to act for the Committee. The Trustee may
rely upon an instrument of designation signed by the secretary or chairman of
the Committee and filed with the Trustee and shall have no responsibility for
any action taken by the Trustee in accordance with any such direction.
Notwithstanding anything herein to the contrary, the Administrative Committee or
the Investment Committee may delegate any of its responsibilities hereunder to a
representative by giving to the Trustee in writing a letter which identifies the
representative and sets forth the list of its responsibilities under this
agreement that it has authorized the representative to carry out.
9.3 The Trustee may consult with legal counsel, who may also be counsel
for the Company, with respect to its responsibilities under this agreement and
shall be fully protected in acting or refraining from acting in reliance upon
the written advice of legal counsel, provided, however, that legal counsel
selected by the Trustee as provided above shall be subject to the Company's
approval which approval shall not be unreasonably withheld.
9.4 In no event shall the terms of the Plan, either expressly or by
implication, be deemed to impose upon the Trustee any power or responsibility
other than those set forth in this agreement. The Trustee may assume until
advised to the contrary that the Plan and the Trust Fund are qualified under
Section 401(a) and exempt from taxation under Section 501(a) of the Code, or
under corresponding provisions of subsequent federal tax laws. The Trustee shall
be accountable for contributions made to the Plan and included among the assets
of the Trust Fund but shall have no responsibility to determine whether the
contributions comply with the provisions of the Plan or of ERISA.
9.5 In any judicial proceeding to settle the accounts of the Trustee, the
Trustee, the Company and the Investment Committee shall be the only necessary
parties; in any other judicial proceeding with respect to the Trustee or the
Trust Fund, the Trustee, the Company and each affected Subsidiary shall be the
only necessary parties; and no Participant or Beneficiary shall be entitled to
any notice of process. A final judgment in any such proceeding shall be binding
upon the parties to the proceeding.
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9.6 The Trustee shall be reimbursed for all reasonable expenses incurred
in the management and protection of the Trust Fund, including accounting and
legal fees, and shall receive such reasonable compensation for its services as
the Trustee and the Company shall from time to time determine. Those items of
expense and compensation shall be paid from the Trust Fund, subject to prior
payment or reimbursement by the Company in its discretion.
9.7 Without limiting the rights of the Trustee as otherwise provided in
this agreement, pursuant to direction by the Administrative Committee, the
Trustee shall pay from the Trust Fund reasonable expenses of the Plan or
reasonable compensation to parties providing services to the Plan including but
not by way of limitation, expenses or compensation related to actuarial, legal,
accounting, office space, printing, computer, record-keeping, investment,
performance evaluation or any other material or service provided to the Plan.
9.8 In the event that THE NORTHERN TRUST COMPANY incurs any liability,
loss, claim, suit or expense (including reasonable attorneys fees) in connection
with or arising out of its provision of services under this agreement, or its
status as Trustee hereunder, under circumstances where THE NORTHERN TRUST
COMPANY cannot obtain or would be precluded by law from obtaining payment or
reimbursement of such liability, loss, claim, suit or expense (including
attorneys fees) from the Trust Fund, then the Company (which has the authority
to do so under the laws of the state of its incorporation) shall indemnify and
hold THE NORTHERN TRUST COMPANY harmless from and against such liability, loss,
claim, suit or expense, except to the extent such liability, loss, claim, suit
or expense arises from or in connection with a breach by the Trustee of
responsibilities specifically allocated to it by the terms of this agreement,
including its obligation to act in accordance with Section 5.1 hereof with
respect to such responsibilities. This paragraph shall survive the termination
of this agreement.
The Trustee shall indemnify the Company and hold it harmless from and
against any and all liability, loss, claim, suit or expense (including
reasonable attorneys' fees) that may be incurred by the Company arising out of
or in connection with the Trustee's negligence, bad faith or willful misconduct
in the performance of responsibilities specifically allocated to it by the terms
of this agreement (including its obligation to act in accordance with Section
5.1 hereof with respect to such responsibilities).
9.9 Neither the Company, the Administrative Committee nor the Investment
Committee shall direct the Trustee to cause any part of the Trust Fund to be
diverted to any purpose other than the exclusive benefit of the Participants and
Beneficiaries or, except as otherwise permitted under the Plan and under ERISA,
to be remitted to the Company or a Subsidiary.
9.10 Any person dealing with the Trustee shall not be required to see to
the application of any money paid or property delivered to the Trustee or
inquire into the provisions of this agreement or of the Plan or the Trustee's
authority thereunder or
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compliance therewith, and may rely upon the statement of the Trustee that the
Trustee is acting in accordance with this agreement.
9.11 Except as otherwise directed by the Administrative Committee, which
direction shall be in compliance with all applicable provisions of the 1984
Retirement Equity Act, the Plan and Section 401(a)(13) of the Code, any interest
of a Participant or Beneficiary in the Trust Fund or the Plan or in any
distribution therefrom shall not be subject to the claim of any creditor, any
spouse for alimony or support, or others, or to legal process, and may not be
voluntarily or involuntarily alienated or encumbered.
9.12 If for any reason the Trustee is unwilling or unable to act as to any
property, such person or qualified corporation as the Trustee shall from time to
time designate in writing shall act as special trustee as to that property. Any
person or corporation acting as special trustee may resign at any time by
written notice to the Trustee. Each special trustee shall have the powers
granted to the Trustee by this agreement, to be exercised only with the approval
of the Trustee, to which the net income and the proceeds from sale of any part
or all of the property shall be remitted to be administered under this
agreement.
9.13 Loans to Participants as provided for in the Plan shall be granted
and administered by the Administrative Committee. The Trustee shall distribute
cash to such Participants who are granted loans in such amount and at such times
as the Administrative Committee shall from time to time direct in writing. Loan
payments collected by the Administrative Committee shall be forwarded to the
Trustee. The amount of such loans shall be carried by the Trustee as an asset of
the trust equal to the combined unpaid principal balance of all Participants.
The Trustee shall rely conclusively upon the determination of the Administrative
Committee with respect to the amount of the combined unpaid principal balance of
all Participants. The Trustee shall have no responsibility to ascertain whether
a loan complies with the provisions of the Plan, for the decision to grant a
loan or for the collection and repayment of a loan.
ARTICLE TEN: GOVERNING LAW
The provisions of ERISA and, to the extent not pre-empted by ERISA, the
internal laws of Illinois shall govern the validity, interpretation and
enforcement of this agreement. The invalidity of any part of this agreement
shall not affect the remaining parts thereof
ARTICLE ELEVEN: AMENDMENT AND TERMINATION
The Company may at any time or times with the consent of the Trustee
amend this agreement in whole or in part by instrument in writing delivered to
the Trustee and effective upon the date therein provided.
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This agreement shall terminate by action of the Company. Upon termination,
the Trustee shall distribute the Trust Fund in the manner directed by the
Investment Committee, in cash or in kind or partly in each as the Trustee and
the Investment Committee shall agree, except that the Trustee shall be entitled
to prior receipt of such rulings and determinations from such administrative
agencies as it may deem necessary or advisable to assure itself that the
distribution directed is in accordance with law and will not subject the Trust
Fund or the Trustee to liability, and except, further, that the Trustee may
reserve such reasonable amount as the Trustee may deem necessary for outstanding
and accrued charges against the Trust Fund.
This agreement shall terminate in its entirety when there is no asset
included in the Trust Fund.
IN WITNESS WHEREOF, the Company and the Trustee have executed this
agreement by their respective duly authorized officers and have caused their
respective corporate seals to be affixed hereto the day and year first above
written.
PAINEWEBBER, INC.
By: /s/ Teri J. Karole
--------------------------------------
Its: Vice President, Corporate Benefits
------------------------------------
ATTEST:
/s/ Geraldine Banyai
- ----------------------------
Geraldine Banyai, Asst. Secy
(CORPORATE SEAL)
THE NORTHERN TRUST COMPANY
By: /s/ Marcia Stempen
------------------------------
Its: Vice President
----------------------------
ATTEST:
The Northern Trust Company executes this
- ---------------------------- instrument as Trustee of aforesaid, and is
ASSISTANT SECRETARY not to be held liable in its individual
capacity in any way by reason of this
(CORPORATE SEAL) instrument.
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EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statement(Form S-8) pertaining to the PaineWebber Savings Investment Plan of
Paine Webber Group Inc. of our report dated January 30, 1998, with respect to
the consolidated financial statements and schedules of Paine Webber Group Inc.
included or incorporated be reference in its Annual Report (Form 10-K) for the
year ended December 31, 1997.
New York, New York
May 19, 1998
<PAGE> 1
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Paine Webber Group Inc. on Form S-8 of our report dated June 13, 1997, appearing
in the Annual Report on Form 11-K of the Paine Webber Savings Investment Plan
for the year ended December 31, 1996.
Deloitte & Touche LLP
New York, New York
May 19, 1998
