<PAGE>
As filed with the Securities and Exchange Commission on
October 25, 1994
Registration No. 33 - ________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
SCOTT PAPER COMPANY
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 23-1065080
(State of incorporation) (I.R.S. Employer
Identification No.)
SCOTT PLAZA, PHILADELPHIA, PENNSYLVANIA 19113
(Address of Principal Executive Offices)
SCOTT PAPER COMPANY SALARIED INVESTMENT PLAN
AND
SCOTT PAPER COMPANY HOURLY INVESTMENT PLAN
(Full title of the plans)
Frank W. Bubb, III, Esq.
Staff Vice President and Chief Financial Counsel
Scott Paper Company,
Scott Plaza,
Philadelphia, Pennsylvania 19113-1585
(Name and address of agent for service)
(610) 522-5806
(Telephone number of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of Amount Proposed Proposed Amount of
securities to be maximum maximum registration
to be registered offering aggregate fee
registered (1) price per offering
share price
<S> <C> <C> <C> <C>
Common
shares,
without
par value 1,500,000 $62.50(2) $93,750,000 $32,327.59
</TABLE>
(1) This registration statement also relates to an indeterminate number of
Common Shares that may be issued upon stock splits, stock dividends or similar
transactions and an indeterminate amount of interests to be offered or sold
pursuant to the employee benefit plans described herein, in accordance with Rule
416.
(2) Calculated on the basis of the average of the high and low price of shares
reported in the consolidated reporting system as of October 20, 1994.
The contents of Registration Statement No. 33-38606, which relates to the above-
referenced Plans, are incorporated herein by reference.
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
Item 8. Exhibits
- ------- --------
The registrant undertakes that it will submit or has submitted each of the
Plans and any amendments thereto to the Internal Revenue Service ("IRS") in a
timely manner and has made or will make all changes required by the IRS in order
to qualify each of the Plans.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the Township of Tinicum and the Commonwealth of Pennsylvania, on
this 25th day of October, 1994.
SCOTT PAPER COMPANY
By:/s/ Albert J. Dunalp
---------------------------
Albert J. Dunlap
Chairman and Chief
Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature and Title Date
- ------------------- ----
<S> <C>
/s/ Albert J. Dunalp October 25, 1994
- ------------------------------
Albert J. Dunlap
Chairman and
Chief Executive Officer
/s/ Basil L. Anderson October 25, 1994
- ------------------------------
Basil L. Anderson
Vice President, Treasurer and
Chief Financial Officer
/s/ Edward B. Betz October 25, 1994
- ------------------------------
Edward B. Betz
Vice President and
Controller
</TABLE>
<PAGE>
DIRECTORS
William A. Andres Richard K. Lochridge
Jack J. Crocker Bruce K. MacLaury
Albert J. Dunlap Claudine B. Malone
John F. Fort, III Gary L. Roubos
Peter Harf Paula Stern
J. Richard Leaman, Jr.
A majority of the Board of Directors
By /s/ Frank W. Bubb, III
---------------------------
Frank W. Bubb, III
Attorney-in-fact
Date: October 25, 1994
<PAGE>
The Plans. Pursuant to the requirements of the Securities Act of
---------
1933, the administrative committee of the Scott Paper Company Salaried
Investment Plan has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the Township of Tinicum
and Commonwealth of Pennsylvania on the 25th day of October, 1994.
SCOTT PAPER COMPANY SALARIED
INVESTMENT PLAN
By /s/ W. Patrick Lawrence
----------------------------
Pursuant to the requirements of the Securities Act of 1933, the
administrative committee of the Scott Paper Company Hourly Investment Plan has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Township of Tinicum and
Commonwealth of Pennsylvania on the 25th day of October, 1994.
SCOTT PAPER COMPANY HOURLY
INVESTMENT PLAN
By /s/ W. Patrick Lawrence
----------------------------
<PAGE>
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
Exhibit Description of
Number Exhibit
- ------- --------------
<S> <C>
4(a) Text of Salaried Investment Plan
4(b) Text of Hourly Investment Plan
4(c) Rights Agreement dated as of July 15,
1986 between Scott Paper Company and
Morgan Guaranty Trust Company of New
York, as Rights Agent, incorporated by
reference to Exhibit 1 to Scott Paper
Company's Current Report on Form 8-K
dated July 16, 1986 on pages 10 through
85 thereof, as amended by Amendment
No. 1 dated May 17, 1988 and Amendment
No. 2 dated October 18, 1988, incorporated
by reference to Exhibits 1 and 2,
respectively, to Scott Paper Company's
Current Report on Form 8-K dated
November 28, 1988 on pages 6 through
9 thereof.
23 Consent of Price Waterhouse LLP
24 Power of Attorney
</TABLE>
<PAGE>
Ex-4(a)
SCOTT PAPER COMPANY
SALARIED INVESTMENT PLAN
As Amended Effective January 1, 1994
The purpose of the Scott Paper Company Salaried Investment Plan is to encourage
and assist employees to save part of their income on a regular basis by
deferring its receipt through payroll deductions, supplemented by matching
employer contributions, and to invest such amounts in order to provide
additional security and income during employment and at retirement or other
termination of employment. Except as otherwise provided herein, the Plan as
hereinafter written shall be effective on January 1, 1994, and shall only apply
to a Participant who is employed on or after such date.
SECTION 1. DEFINITIONS
-----------
1.1. "Account" shall mean one of several accounts maintained to record
the interest of each Participant in the Plan. These Accounts include the
"Basic Non-Deferred Compensation Account", the "Supplementary Non-
Deferred Compensation Account", the "Matching Employer Account," the
"Basic Deferred Compensation Account" and the "Supplementary Deferred
Compensation Account," as established and maintained for each Participant
pursuant to Section 5 hereof.
1.2. "Affiliated Company" shall mean any corporation which is included
within a controlled group of corporations (within which the Company is
also included) as determined under Section 1563(a) of the Code without
regard to Sections 1563(a)(4) and (e)(3)(C) of the Code; provided,
however, that for the purposes of Section 5.4 such determination under
Section 1563(a) of the Code shall be made by substituting the phrase "at
least 50 percent" for the phrase "at least 80 percent" each place it
appears in Section 1563(a)(1) of the Code.
1.3. "Annuity Starting Date" shall mean (a) the first day of the first
period for which an amount is payable as an annuity, or (b) in the case
of a benefit not payable in the form of an annuity, the first day on
which all events have occurred which entitle the Participant to such
benefit.
<PAGE>
1.4. "Beneficiary" shall mean any person designated by a Participant
pursuant to Section 10.4 hereof to receive the amount in the Accounts of
such Participant in the event of his or her death.
1.5. "Code" shall mean the Internal Revenue Code of 1986, as the same
may be amended from time to time.
1.6. "Committee" shall mean the Committee constituted as set forth in
Section 12 hereof, which shall administer the Plan as provided herein.
1.7. "Company" shall mean Scott Paper Company. Any function of the
Company under the Plan shall be performed by its Executive Compensation
Committee, except to the extent delegated by such committee to any
employee or group of employees of the Company.
1.8. "Company Common Stock" shall mean Common Shares of Scott Paper
Company, and shall include fractional interests in such Shares and Rights
prior to the Distribution Date, such terms being defined in the Rights
Agreement dated July 15, 1986, between the Company and First Chicago
Trust Company of New York (the "Rights Agreement").
1.9. "Compensation" shall mean, for purposes of the Plan other than
Sections 1.15, 5.4, 5.6(b), 5.6(d), 5.6(e), 5.7(b), 5.7(c) and 5.7(d),
the total remuneration paid during a Pay Period to an Employee for
services rendered including but not limited to salary, overtime pay and
lump sum payments in lieu of salary increases plus Deferred Compensation
Contributions, and reductions in Compensation contributed to the Scott
Paper Company Salaried Employees' Medical, Dental and Dependent Care
Program and the Scott Paper Company Flexible Benefit Plan, but excluding
any extra or irregular remuneration, such as, but not limited to, Scott
Paper Company Flexible Benefit credits, Matching Employer Contributions,
contributions under any employee pension or welfare plan, production
bonus, quality bonus, sales contest awards, management incentive awards
or any other incentive or bonus payments, payments in settlement of
claims or in discharge of judgments or awards, severance pay and lump-sum
payments of vacation pay. Notwithstanding the foregoing, the
Compensation taken into account under the Plan shall be limited to
$150,000 (adjusted to reflect any cost of living increases provided in
accordance with Section 415(d) of the Code). In determining Compensation
for purposes of this limitation,
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<PAGE>
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 Employee and any lineal descendants who have not attained age 19
before the close of the Plan Year.
1.10. "Contributions" shall mean amounts paid under the Plan by or on
behalf of a Participant pursuant to the provisions of Sections 3 and 4
hereof, including:
(a) "Basic Non-Deferred Compensation Contributions" and
"Supplementary Non-Deferred Compensation Contributions", sometimes
collectively referred to herein as "Non-Deferred Compensation
Contributions";
(b) "Basic Deferred Compensation Contributions" and "Supplementary
Deferred Compensation Contributions," sometimes collectively
referred to herein as "Deferred Compensation Contributions"; and
(c) "Matching Employer Contributions".
"Basic Non-Deferred Compensation Contributions" and "Basic Deferred
Compensation Contributions," shall sometimes collectively be referred to
herein as "Basic Contributions". "Supplementary Non-Deferred
Compensation Contributions" and "Supplementary Deferred Compensation
Contributions," shall sometimes collectively be referred to herein as
"Supplementary Contributions".
1.11. "Effective Date" shall mean January 1, 1979.
1.12. "Employee" shall mean any person employed by the Employer on a
regular basis at a stated rate of Compensation expressed in terms of a
weekly, monthly or annual salary, excluding any person included in an
unit of employees covered by a collective bargaining agreement, unless
otherwise provided pursuant to the agreement between the Employer and
such person's collective bargaining representative. Notwithstanding the
foregoing, leased employees (as defined in Section 414(n)(2) of the Code)
shall not be considered "Employees" hereunder.
1.13. "Employer" shall mean (a) the Company, and (b) all Participating
Companies, either individually or collectively as required by the
context.
1.14. "Employment Commencement Date" shall mean the date on which an
Employee first performs an Hour of Service for
-3-
<PAGE>
the Employer. Notwithstanding the above, if an Employee shall incur a
One-Year Period of Severance, "Employment Commencement Date" shall mean
the first date on which such Employee thereafter completes an Hour of
Service for the Employer.
1.15. "Highly Compensated Employee" shall mean an Employee of the
Employer who performed services during the Plan Year for which a
determination is being made (the "Determination Year") and who during
such Determination Year, or the preceding Determination Year,
(a) was a five-percent owner (as defined in Section 416(i)(1) of
the Code and the regulations issued thereunder);
(b) received Compensation from the Employer in excess of $75,000
(adjusted to reflect any cost of living increases provided in
accordance with Section 415(d) of the Code);
(c) received Compensation from the Employer in excess of $50,000
(adjusted to reflect any cost of living increases provided in
accordance with Section 415(d) of the Code) and was in the top 20
percent of Employees based on Compensation paid during such Plan
Year; or
(d) was an officer of the Employer and received Compensation
greater than 50 percent of the amount in effect under Section
415(b)(1)(A) of the Code for such Plan Year.
Notwithstanding the foregoing, the provisions of paragraph (b), (c) or
(d) above shall not cause an Employee to be treated as a Highly
Compensated Employee for the Determination Year of reference unless such
Employee is one of the top 100 Active Employees (based on Compensation
received) during such Determination Year and was a Highly Compensated
Employee in accordance with the provisions of paragraph (b), (c) or (d)
above for the preceding Determination Year (without regard to this
sentence).
For purposes of paragraph (d), no more than fifty employees (or, if
lesser, the greater of three employees or ten percent of the employees)
shall be treated as officers, and if no officer meets the requirements of
paragraph (d), then the highest paid officer for such year
-4-
<PAGE>
shall be treated as meeting the requirements of such paragraph.
For purposes of determining the number of employees in the top-paid
group, or the number of officers under paragraph (d), employees who have
less than six months of service, employees who work less than 17 1/2
hours per week or less than six months per year, employees who have not
attained age 21, and nonresident aliens may be excluded.
A former employee shall be treated as a Highly Compensated Employee if
such employee was a Highly Compensated Employee when such employee
separated from service, or if such employee was a Highly Compensated
Employee at any time after attaining age 55.
For purposes of this Section 1.15, all employees (other than leased
employees within the meaning of Section 414(a)(2) of the Code) of the
Employer or an Affiliated Company shall be treated as employed by a
single employer.
For purposes of this Section 1.15, the term "Compensation" shall have the
meaning set forth in Section 5.4(e) hereof; provided, however, that
Compensation for this purpose shall also include a Participant's Deferred
Compensation Contributions under the Plan and any other contributions
made by the Participant pursuant to a salary reduction agreement under
the terms of any other plan maintained by the Employer or an Affiliated
Company pursuant to Section 125 or 401(k) of the Code.
1.16. "Hour of Service" shall mean each hour for which an Employee is
paid or is entitled to payment by the Employer for the performance of
duties for it.
1.17. "Manager of the Plan" or "Manager" shall mean the person
appointed by the Committee pursuant to Section 12.1 hereof to carry out
certain aspects of the administration of the Plan as required hereunder
or by the Committee.
1.18. "Maximum Deferral," as used in Section 3.3 hereof, shall mean the
greatest amount of Deferred Compensation Contributions that may be
deposited with respect to a Participant in any Plan Year pursuant to
Section 402(g) of the Code. The Maximum Deferral shall be Seven Thousand
Dollars ($7,000.00), as adjusted for cost-of-living increases pursuant to
Section 402(g)(5) of the Code.
-5-
<PAGE>
1.19. "One-Year Period of Severance" shall mean each period of twelve
(12) consecutive months beginning on an Employee's Severance Date and
ending on the day preceding each anniversary of such date during which
the Employee does not perform an Hour of Service for the Employer.
Notwithstanding the foregoing, the 24-consecutive month period beginning
on the first day of an absence from work for any period (a) by reason of
the pregnancy of an Employee, (b) by reason of the birth of a child of
the Employee, (c) by reason of the placement of a child with the Employee
in connection with the adoption of such child by the Employee, or (d) for
purposes of caring for such child for a period beginning immediately
following such birth or placement, shall not be included in a One-Year
Period of Severance. An Employee who is absent from work during any
period for one of the reasons specified in the preceding sentence shall
provide to the Committee, in the manner prescribed by the Manager or the
Committee, information establishing (i) that the absence from work is for
one of the reasons set forth in the preceding sentence, and (ii) the
number of days for which there was such an absence. Nothing in this
Section shall be construed as expanding or amending any maternity or
paternity leave policy of the Employer.
1.20. "Participant" shall mean any Employee who becomes a Participant
in the Plan as provided in Section 2 hereof.
1.21. "Participating Company" shall mean any Wholly-Owned Subsidiary of
the Company whose participation in the Plan shall have been authorized
by the Board of Directors of the Company or by the Company and which
shall have adopted the provisions of the Plan and agreed either to make
Matching Employer Contributions or to reimburse the Company on account
of Matching Employer Contributions made in respect of any of its
Employees who become Participants in the Plan. "Wholly-Owned Subsidiary
of the Company" shall mean any corporation (other than the Company) in
an unbroken chain of corporations beginning with the Company, each of
which corporations, other than the last corporation in the unbroken
chain, owns all of the voting stock (other than Directors' qualifying
shares) in one of the other corporations in such chain.
1.22. "Pay Day" shall mean the day on which an Employee is paid
Compensation for services rendered during a Pay Period.
-6-
<PAGE>
1.23. "Pay Period" shall mean a weekly, biweekly, semi-monthly or
monthly period, depending upon whether an Employee is paid Compensation
weekly, bi-weekly, semi-monthly or monthly.
1.24. "Plan" shall mean the Scott Paper Company Salaried Investment
Plan as herein set forth. The Plan is intended to be a qualified profit
sharing plan within the meaning of Section 401(a) of the Code, and with
respect to Deferred Compensation Contributions and Matching Employer
Contributions, a qualified cash or deferred arrangement within the
meaning of Section 401(k) of the Code.
1.25. "Plan Year" shall mean the calendar year commencing on the
Effective Date and each calendar year thereafter.
1.26. "Qualified Domestic Relations Order" shall mean a judgment,
decree or order (including approval of a property settlement agreement)
made pursuant to a state domestic relations law (including community
property law) which relates to the provision of child support, alimony
payments or marital property rights to a spouse, former spouse, child or
other dependent of a Participant (the "Alternate Payee") and which: (a)
creates or recognizes the existence of the Alternate Payee's right to, or
assigns to the Alternate Payee the right to, receive all or a portion of
the benefits payable to a Participant under this Plan; and (b) specifies
(i) the name and last known mailing address (if any) of the Participant
and each Alternate Payee covered by the order, (ii) the amount or
percentage of the Participant's Plan benefits to be paid to the Alternate
Payee, or the manner in which such amount or percentage is to be
determined, and (iii) the number of payments or the period to which the
order applies and each plan to which the order relates; and (c) does not
require the Plan to (i) provide any type or form of benefit, or any
option not otherwise provided under the Plan, (ii) provide increased
benefits, or (iii) pay benefits to the Alternate Payee that are required
to be paid to another Alternate Payee under a prior Qualified Domestic
Relations Order. A Qualified Domestic Relations Order may provide that
distribution commence to the Alternate Payee immediately, regardless of
whether the Participant has incurred a Severance Date, if the Order
directs (a) that the payment of the benefits be determined as if the
Participant had retired on the date on which payment is to begin under
such Order, taking into account only the vested balance standing to the
Participant's credit in his
-7-
<PAGE>
or her Accounts on such date, and (b) that the payment be made in a form
in which such benefits may be paid under the Plan to the Participant,
excluding any form of benefit prohibited by law with respect to the
Alternate Payee. If the Order provides for an immediate distribution,
such distribution shall commence as soon as practicable after the end of
the month in which the domestic relations order is determined to be a
Qualified Domestic Relations Order under Section 13.4 of the Plan.
Notwithstanding the foregoing, if the total amount distributable to an
Alternate Payee does not exceed three thousand five hundred dollars (or
such other amount as the Secretary of the Treasury shall specify), the
Committee shall make such distribution in one lump sum in cash, which
distribution shall be made as soon as practicable after the end of the
month in which the domestic relations order is determined to be a
Qualified Domestic Relations Order under Section 13.4 of the Plan. The
amount distributable to an Alternate Payee under this Section 1.26 shall
be based on the value of the Participant's Account, or the portion of the
Participant's Account allocated to the Alternate Payee, as determined
under Section 11 on the last day of the month preceding the month in
which distribution is made or commences, or if such day is not a business
day, the first business day of the month following such day.
1.27. "Required Distribution Date" shall mean the April 1 of the Plan
Year following the Plan Year in which the Participant attains age 70 1/2.
1.28. "Retirement" shall mean the retirement of an Employee under an
established retirement program of the Employer. "Early Retirement" shall
mean the early retirement of an Employee under an established retirement
program of the Employer. "Normal Retirement" shall mean the normal
retirement of an Employee under an established retirement program of the
Employer.
1.29. "Severance Date" shall mean, for any Employee, the earliest of
the dates on which such Employee dies, terminates employment with the
Employer and all Affiliated Companies and any successor to the Employer
or an Affiliated Company (including the purchaser of assets or a
subsidiary as described in Section 10.11), or ceases to be an actively
employed by the Employer or an Affiliated Company or any successor to the
Employer or an Affiliated Company (including the purchaser of assets or a
subsidiary as described in Section 10.11) for reasons other than a leave
of absence; provided, however, that for purposes of
-8-
<PAGE>
Section 10, a former Employee's Severance Date shall not be earlier than
the date such individual ceases to perform services for the Employer and
all Affiliated Companies as an employee of another entity.
Notwithstanding the foregoing, for purposes of Sections 1.19, 1.33 and
8.4, `Severance Date' shall mean, for any Employee, the earliest of the
dates on which such Employee dies, terminates employment with the
Employer and all Affiliated Companies, or is absent from active
employment with the Employer and all Affiliated Companies for one year;
provided, however, if the Employee is absent for military service
required by law, the Employee shall not incur a Severance Date if such
Employee returns to service with the Employer or an Affiliated Company
within 90 days of his or her release from active military duty or any
longer period during which his or her right to reemployment is protected
by law.
1.30. "Total and Permanent Disability" shall mean a physical or mental
disability that totally disables the Participant to such an extent that
he is rendered wholly and continuously unable to engage in any occupation
or perform any work for any kind of compensation of financial value. The
disability must be certified by a licensed doctor of medicine to be such
as can reasonably be expected to continue during the remainder of the
Participant's lifetime.
1.31. "Trust Fund" shall mean the trust fund created pursuant to
Section 6 hereof.
1.32. "Trustee" shall mean the person, firm or corporation appointed by
the Committee to manage and control the Trust Fund.
1.33. "Year of Employment" shall mean each 12-month period of service
beginning on an Employee's Employment Commencement Date and ending on his
or her Severance Date. Nonsuccessive periods of service shall be
aggregated on the basis that 12 months of service (30 days are deemed to
be a month in the case of aggregation of fractional months) equal a Year
of Employment. After such aggregation, any remaining period of service
of less than 12 months shall be disregarded for purposes of determining a
Participant's vested interest under the Plan pursuant to Section 8. If
an Employee incurs a Severance Date and, prior to the occurrence of a
One-Year Period of Severance, the Employee performs an Hour of Service
for the Employer or an Affiliated Company, Years of Employment shall also
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<PAGE>
include the period between such Severance Date and the date on which such
Hour of Service is performed. Years of Employment shall include all
years of employment with the Employer or an Affiliated Company whether or
not the employee qualified as an Employee during those years.
If a Participant had no vested interest in any of his or her Accounts
(other than his or her Basic or Supplementary Non-Deferred Compensation
Account, or amounts credited to the Participant pursuant to a rollover or
direct transfer) at the time he or she incurred a One-Year Period of
Severance, such Participant's pre-severance Years of Employment shall be
counted in determining his or her vested percentage under Section 8.2
after a subsequent Employment Commencement Date if the Participant
completes an Hour of Service at a time when his or her consecutive One-
Year Periods of Severance do not equal or exceed the greater of (a) five
(5) or (b) the number of Years of Employment such Participant had to his
or her credit prior to his or her One-Year Period of Severance.
Otherwise, the Participant's pre-severance Years of Employment shall be
canceled.
Notwithstanding the foregoing, a Participant's Years of Employment after
any One-Year Period of Severance shall not increase his or her vested
interest in his or her pre-severance Account balance unless the
Participant again completes an Hour of Service prior to incurring five
(5) consecutive One-Year Periods of Severance and only if his or her pre-
severance Account balance is restored as described in Section 8.4, if the
vested amount was previously distributed.
SECTION 2. PARTICIPATION
-------------
2.1. Each Employee on the first Pay Day of any month beginning on or
after January 1, 1993 (or on such other day or days as may be approved by
the Committee) shall be eligible on such dates to become a Participant by
delivering a properly executed subscription agreement, at such time in
advance as may be specified by the Committee.
2.2. Each eligible Employee may become a Participant by delivering a
properly executed subscription agreement to the Superintendent, Plant
Manager or General Manager at the plant from which the subscribing
Employee is paid or, in the case of Employees located at or paid from the
Company's corporate headquarters, to the Manager of the Plan.
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<PAGE>
2.3. Each subscription agreement shall be in the form prescribed by the
Manager or the Committee; provided, however, that such form shall contain
a statement that the subscribing Employee has received a copy of the
Prospectus relating to the Plan, that a copy of the Plan has been made
available to him or her, and that he or she adopts and agrees to the
terms of the Plan.
2.4. Each Participant's subscription agreement shall also specify
whether the election in Section 3.1 hereof has been made, the rate of his
or her Non-Deferred Compensation Contribution and the rate of his or her
Deferred Compensation Contribution, determined in accordance with the
provisions of Section 3 hereof, to be deducted or withheld from the
Compensation paid or otherwise payable to such Participant during each
Pay Period, and shall authorize and direct the deposit of such amount in
the Trust Fund pursuant to the provisions of Section 7 hereof.
2.5. If, as a result of a change in job classification or a transfer to
an Affiliated Company, a Participant no longer qualifies as an Employee
and becomes eligible to participate in another qualified retirement plan
maintained by the Employer or an Affiliated Company which permits the
transfer of a Participant's Accounts from this Plan and which contains a
vesting provision identical to, or more favorable to the Participant than
that under Section 8.2 hereof, the value of the Participant's Accounts
shall be transferred to such other plan and shall continue to vest, to
the extent not already vested, in accordance with the provisions of such
other plan; provided, however, that the Committee, in its sole
discretion, shall refuse to allow a transfer if such transfer would
violate the provisions of Section 411(d)(6) of the Code and the
regulations thereunder. Upon any such transfer, he or she shall cease to
be a Participant hereunder and his or her Accounts shall thereafter be
subject to the terms and conditions of such other plan.
SECTION 3. DEFERRED COMPENSATION AND NON-DEFERRED
--------------------------------------
COMPENSATION CONTRIBUTIONS
--------------------------
3.1. Each Participant may elect in the subscription agreement to reduce
his or her Compensation that would otherwise be paid and to direct the
Employer to deposit an amount equal to such reduction in the Trust Fund
pursuant to Section 7 hereof. Subject to the provisions of Sections 3.3,
5.5, 5.6, 5.7 and 5.8, and any applicable
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<PAGE>
limitations imposed by law, the rate of reduction in Compensation shall
be 1%, 2%, 3%, 9%, 5%, 6%, 7%, 8%, 9%, 10%, 11%, 12%, 13%, 14% or 15% of
the Compensation otherwise payable to the Participant in each Pay Period,
rounded to the nearest whole dollar. Such rate shall be designated as
the rate of Deferred Compensation Contributions and the amounts so
deposited in the Trust Fund shall be designated as Deferred Compensation
Contributions. Deferred Compensation Contributions up to and including
5% of Compensation shall be designated as Basic Deferred Compensation
Contributions, which shall give rise to Matching Employer Contributions
pursuant to the provisions of Section 4 hereof. Deferred Compensation
Contributions in excess of 5% of Compensation shall be designated as
Supplementary Deferred Compensation Contributions, and shall not give
rise to Matching Employer Contributions.
3.2. The subscription agreement executed by each Participant shall also
specify the rate of his or her Non-Deferred Compensation Contributions to
be paid into the Trust Fund. Subject to the provisions of Sections 3.3,
5.5, 5.7 and 5.8, and any applicable limitations imposed by law, the rate
of Non-Deferred Compensation Contributions shall be 0% (if only Deferred
Compensation Contributions are made pursuant to Section 3.1 hereof), 1%,
2%, 3%, 4%, 5%, 6%, 7%, 8%, 9%, 10%, 11%, 12%, 13%, 14% or 15% of the
Compensation paid to a Participant in each Pay Period, rounded to the
nearest whole dollar; provided, however, that the sum of the rate of
Deferred Compensation Contributions and the rate of Non-Deferred
Compensation Contributions in any Pay Period shall not exceed 15% of the
Compensation then paid or otherwise payable to a Participant. If a
Participant's rate of Deferred Compensation Contribution is less than 5%,
then Non-Deferred Compensation Contributions up to and including the
product of (a) the Compensation paid or otherwise payable to the
Participant in each Pay Period and (b) the difference between (i) 5%, and
(ii) the rate of Deferred Compensation Contributions, shall be designated
as Basic Non-Deferred Compensation Contributions, which shall give rise
to Matching Employer Contributions pursuant to the provisions of Section
4 hereof. Non-Deferred Compensation Contributions in excess of this
product shall be designated as Supplementary Non-Deferred Compensation
Contributions, and shall not give rise to matching Employer
Contributions. If a Participant's rate of Deferred Compensation
Contribution exceeds 4%, then there shall be no Basic Non-Deferred
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Compensation Contributions and all Non-Deferred Compensation
Contributions shall be designated as Supplementary Non-Deferred
Compensation Contributions, and shall not give rise to Matching Employer
Contributions.
3.3. Notwithstanding Section 3.1, Deferred Compensation Contributions
may not exceed the Maximum Deferral with respect to each Participant in
any Plan Year. If a Participant's elected Deferred Compensation
Contributions for any Plan Year would exceed the Maximum Deferral in a
Pay Period, an amount will be deposited which would bring the
Participant's Deferred Compensation Contributions to a level equal to the
Maximum Deferral. Upon reaching the Maximum Deferral, the Participant's
Deferred Compensation Contributions for the Plan Year shall cease. For
Plan Years prior to January 1, 1990, the Participant's Non-Deferred
Compensation Contributions shall also cease upon reaching the Maximum
Deferral unless the Participant elects, in the manner prescribed by the
Manager or the Committee, that Non-Deferred Compensation Contributions
shall continue to be made or commence to be made on his behalf.
Effective for Plan Years beginning on or after January 1, 1990, the
Participant's total rate of contributions in effect immediately prior to
reaching the Maximum Deferral shall be converted to a Non-Deferral
Compensation Contribution rate unless the Participant elects, in the
manner prescribed by the Manager or the Committee, that Non-Deferral
Compensation Contributions be made at a different rate. With respect to
any Plan Year following the Plan Year in which the Participant has made
the Maximum Deferral, unless the Participant delivers a properly executed
contribution rate change form, at the time and in the manner prescribed
by the Manager or the Committee, the Participant's rate of Deferred
Compensation Contribution and Non-Deferred Compensation Contribution
shall commence at the rate in effect immediately prior to the Participant
reaching the Prior Plan Year's Maximum Deferral.
3.4. Anything to the contrary notwithstanding, Contributions may not be
made by or on behalf of a Participant:
(a) at any time during which he or she is eligible to make deposits
as a`Participant' of the Scott Paper Company Hourly Investment
Plan;
(b) during any period of time in which such Participant no longer
qualifies as an Employee;
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(c) during the period of time commencing on his or her Severance
Date, and ending on his or her next Employment Commencement Date;
or
(d) who has not delivered a properly executed subscription
agreement in accordance with the provisions of Section 2 and this
Section 3.
3.5. Amounts representing Deferred Compensation and Non-Deferred
Compensation Contributions shall be deducted or withheld from payrolls,
and such amounts shall, not less frequently than monthly, be paid into
the Trust Fund; provided, however, that the Employer may, in its
discretion, transmit any monies to be invested by an insurance company
managing or maintaining a Fund hereunder, directly to such insurance
company not less frequently than monthly. Contributions by or on behalf
of a Participant shall cease automatically on the Pay Day preceding
commencement of his or her leave of absence without Compensation, and
such Contributions shall resume upon the first Pay Day following the
termination of such leave. Anything to the contrary herein
notwithstanding, no Matching Employer Contributions shall be made to a
Participant's Account in respect of any Pay Period during which no Basic
Contributions are made by or on behalf of such Participant; nor shall
any Participant be permitted to make Contributions other than as
specifically provided hereunder.
3.6. Subject to the provisions of Sections 3.3, 5.5 and 5.6, the rates
of Deferred Compensation and Non-Deferred Compensation Contributions
specified by a Participant shall remain in effect until changed by
request of the Participant in the manner prescribed by the Manager or the
Committee. Such a request shall be made no later than the fifteenth day
of the month preceding the effective date; the effective date of any such
change shall be the first Pay Day of a month.
3.7. The amount of each Participant's Contributions shall be determined
according to his or her Compensation from time to time, but his or her
rates of Contribution shall be changed only as prescribed in Section 3.6
above.
3.8. A Participant may reduce his or her rates of Contributions to zero
without withdrawing from the Plan by making a request in accordance with
the provisions of Section 3.6 above.
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3.9. The Trustee shall accept on behalf of each Participant who on
September 30, 1984 is an Active Employee with a balance in his or her
Accounts and for whom Contributions are not disallowed under Section
3.4(e), an amount equal to the interest on his or her contributions
payable to him or her under Section 6.3(g) of the Scott Paper Company
Retirement Plan for Salaried Employees ("Salaried Plan"). Such amount
shall be transferred directly from the Salaried Plan to this Plan and
shall be credited as earnings on, and invested in the same manner as,
such Participant's Supplementary Non-Deferred Compensation Account.
SECTION 4. MATCHING CONTRIBUTIONS BY THE EMPLOYER
--------------------------------------
4.1. Subject to the provisions of Section 14.1 hereof, the Employer
shall, not less frequently than monthly, pay or cause to be paid to the
Trustee, or, at the Employer's discretion, directly to an insurance
company managing or maintaining a Fund hereunder, an amount equal to
seventy-five percent (75%) of the first 2% of Basic Contributions and
fifty percent (50%) of the next 3% of Basic Contributions for each month.
Such Employer Contributions shall be designated as Matching Employer
Contributions.
4.2. Notwithstanding the above, Matching Employer Contributions shall
be made only out of current or accumulated profits as determined in
accordance with generally accepted accounting principles and shall not
exceed the aggregate thereof at the time of such Contributions. If the
current or accumulated profits of any Employer are not sufficient to
permit the required Contributions, then so much of the Contributions
which such Employer is not permitted to make may be made by any other
Employer to the extent of its current or accumulated profits remaining
after adjustment for Contributions made on behalf of its Employees. No
reimbursement shall be required as a result thereof. If the current or
accumulated profits of the Company and all Participating Companies are
not sufficient to permit the required Contributions, the Employer may
make such Contributions at a subsequent time when then current or
accumulated profits permit; provided, however, that the Basic
Contributions to which such Employer Contributions relate must still be
in the Trust Fund; and provided further, that such Contributions must not
cause the limits imposed by Section 5.4 hereof to be exceeded.
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4.3. The expenses of establishing and administering the Plan shall be
paid from the Trust Fund and allocated among the Accounts of the
Participants in the same manner as investment losses experienced
proportionately by all Accounts in the Trust Fund, except to the extent
that the Company, in its sole discretion, has determined that the
Employer shall pay any such expenses. The transfer taxes, brokerage fees
and other expenses in connection with the purchase, sale or distribution
of Company Common Stock shall be paid by the Trust Fund, and shall be
deemed part of the cost of such Company Common Stock, or deducted in
computing the sale proceeds therefrom, as the case may be except to the
extent that the Company, in its sole discretion, determines that such
taxes, fees or expenses (other than transfer taxes on distribution) shall
be paid by the Employer.
4.4. All Matching Employer and Deferred Compensation Contributions
under the Plan are conditioned upon the deductibility of such
Contributions under Section 404 of the Code and to the extent the
deduction is disallowed, shall be returned to the Employer within one
year after the disallowance of the deduction. That portion of the
Contributions returned to the Employer which is attributable to Deferred
Compensation Contributions shall thereafter be paid (subject, however, to
the withholding of taxes and other amounts as though such amounts were
current Compensation) by the Employer to the Employees from whose
Compensation such amounts were obtained. Earnings attributable to such
Contributions shall not be returned to the Employer but losses
attributable thereto shall reduce the amount to be so returned. For
purposes of this Section 4.4, Contributions which are not deductible in
the current taxable year of the Employer but which may be deducted in
taxable years subsequent to the year in respect of which it is made,
shall not be considered to be disallowed.
4.5. If Matching Employer and Deferred Compensation Contributions are
made by reason of a mistake of fact, such Contributions shall be returned
to the Employer within one year after such Contributions are made. The
amount which may be returned to the Employer shall not exceed the excess
of (i) the amount contributed, over (ii) the amount that would have been
contributed had there not occurred a mistake of fact or a mistake in
determining the deduction. That portion of the Contributions returned to
the Employer which is attributable to Deferred Compensation Contributions
shall thereafter be paid
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(subject, however, to the withholding of taxes and other amounts as
though such amounts were current Compensation) by the Employer to the
Employees from whose Compensation such amounts were obtained. Earnings
attributable to the excess Contributions shall not be returned to the
Employer but losses attributable thereto shall reduce the amount to be so
returned.
SECTION 5. ALLOCATION OF CONTRIBUTIONS
---------------------------
5.1. A Participant's Basic Deferred Compensation Contributions and
Supplementary Deferred Compensation Contributions in respect of any Plan
Year shall be allocated to his or her Basic Deferred Compensation Account
and Supplementary Deferred Compensation Account, respectively, and shall
be invested in accordance with the provisions of Section 7 hereof. Any
earnings or appreciation (less losses and depreciation) attributable to
such Contributions shall be allocated to the respective Account producing
same.
5.2. A Participant's Matching Employer Contributions in respect of any
Plan Year shall be allocated to his or her Matching Employer Account.
Fifty percent (50%) of the Matching Employer Contributions shall be
invested in the Company Common Stock Fund and the remaining fifty percent
(50%) shall be invested in the Funds in the same proportion that the
Participant designates for the Basic and Supplementary Contributions in
accordance with the provisions of Section 7 hereof. Any earnings or
appreciation (less losses and depreciation) attributable to such
Contributions shall be allocated to the Matching Employer Account
producing same.
5.3. A Participant's Basic Non-Deferred Compensation Contributions and
Supplementary Non-Deferred Compensation Contributions in respect of any
Plan Year shall be allocated to his or her Basic Non-Deferred
Compensation Account and Supplementary Non-Deferred Compensation Account,
respectively, and shall be invested in accordance with the provisions of
Section 7 hereof. Any earnings or appreciation (less losses and
depreciation) attributable to such Contributions shall be allocated to
the respective Account producing same.
5.4. Anything to the contrary herein notwithstanding, no Contribution
hereunder shall be made which will violate the limitations set forth
below:
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(a) The Annual Addition to a Participant's Accounts (as such term
is defined below) in any Plan Year either solely under the Plan or
under an aggregation of the Plan with all other qualified defined
contribution plans of the Employer may not exceed the lesser of (i)
$30,000, or, if greater, twenty-five percent (25%) of the dollar
limitation in effect under Section 415(b)(1)(A) of the Code, or (ii)
twenty-five percent (25%) of the Employee's total Compensation for
the Plan Year.
(b) If a Participant also participates under any other qualified
defined contribution plan or any qualified defined benefit plan
maintained by the Employer or an Affiliated Company, all such
defined contribution plans shall be considered as one defined
contribution plan, and all such defined benefit plans shall be
considered as one defined benefit plan. In such event, the sum of
the defined contribution plan fraction and the defined benefit plan
fraction for any Plan Year shall not exceed 1.0. In determining the
allowable limitation referred to in the preceding sentence:
(1) The defined benefit plan fraction shall be determined by
dividing the projected annual benefit of the Participant under
the defined benefit plan by the lesser of:
(i) the product of 1.25 and $90,000 (subject to all
adjustments as are permitted by, or required under,
Section 415 of the Code), or
(ii) the product of 1.4 and 100% of the Participant's
average annual total Compensation for his or her highest
three consecutive years; and
(2) The defined contribution plan fraction shall be determined
by dividing the sum of all Annual Additions to the
Participant's Accounts (as such term is defined below) for all
years in which he or she was a participant in any such defined
contribution plan by the sum of the lesser of (i) or (ii) below
for each year during which the Participant was an employee of
the Employer:
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<PAGE>
(i) the product of 1.25 and the dollar limitation in
effect under Section 415(c)(1)(A) of the Code for such
year, or
(ii) the product of 1.4 and 25% of the Participant's
total Compensation for such year.
In the event that the sum of the defined contribution plan fraction
and the defined benefit plan fraction would exceed the allowable
limitation for any Plan Year, the Participant's anticipated benefit
under the defined benefit plan shall be reduced accordingly.
(c) For purposes of this Section 5.4, the term "Annual Addition" as
applied to each Participant shall mean the sum of the following
amounts allocated to the Participant's accounts under the Plan or
any other qualified defined contribution plan of the Employer or any
Affiliated Company: (1) Matching Employer Contributions, Deferred
Compensation Contributions allocated under Section 5.1 hereof
(excluding Deferred Compensation Contributions distributed pursuant
to Section 5.5) and any other employer contributions; (2)
forfeitures; and (3) Non-Deferred Compensation Contributions and
any other employee contributions. Amounts described in Section
415(l) and 419A(d)(2) of the Code contributed for any Plan Year for
the benefit of the Participant shall be treated as an Annual
Addition to the extent provided in such sections.
(d) If a Member's Annual Addition exceeds the amount specified in
Section 5.4(a):
(1) the Participant's Non-Deferred Compensation Contributions
for such Plan Year, if any, shall be refunded to him or her in
an amount equal to the lesser of (i) the amount of such
Contributions, or (ii) the amount of such excess; and
(2) if, after application of Section 5.4(d)(1) above, there
remains an excess, the balance, subject to application of
Section 5.4(a) shall be held in a "Suspense Account" and
allocated in subsequent Plan Years as if it were a forfeiture
arising in such subsequent Plan Years; provided, however, to
the extent any portion of a
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Participant's Deferred Compensation Contributions are
determined to be excess under this Section, such Deferred
Compensation Contributions, with income thereon, shall be
refunded to him or her as soon as administratively practicable.
(e) For purposes of this Section, "Compensation" shall include
wages, salaries, fees for professional services and other amounts
received for personal services actually rendered in the course of
employment with an Employer maintaining the Plan or any Affiliated
Company, but shall not include the following:
(1) contributions made to a deferred compensation plan which,
without regard to Section 415 of the Code, are not includable
in the Participant's gross income for the taxable year in which
contributed;
(2) contributions made on behalf of a Participant to a SEP to
the extent they are deductible by the Participant under Section
219(b)(7) of the Code;
(3) distributions from a deferred compensation plan (except
from an unfunded non-qualified plan when includable in gross
income);
(4) amounts realized from the exercise of a non-qualified stock
option, or when restricted stock (or property) held by a
Participant either becomes freely transferable or is no longer
subject to a substantial risk of forfeiture;
(5) amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified stock option;
or
(6) other amounts which receive special tax benefits, such as
premiums for group term life insurance (to the extent
excludable from gross income) or employer contributions towards
the purchase of an annuity contract described in Section 403(b)
of the Code.
5.5. (a) Notwithstanding anything herein to the contrary, a
Participant's Deferred Compensation Contributions made
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under this Plan and elective deferrals made under any other qualified
plan maintained by the Employer or an Affiliated Company for any taxable
year shall not exceed the Maximum Deferral.
(b) (1) If the Participant's Deferred Compensation Contributions
made under this Plan and his elective deferrals made under any
other qualified cash or deferred arrangement maintained
pursuant to Section 401(k) of the Code by a company other than
the Employer or an Affiliated Company for a taxable year exceed
the Maximum Deferral, the Participant may allocate to the Plan
any or all of such excess deferrals. The Participant shall
notify the Committee of such allocation in writing no later
than the March 1 following the taxable year in which the excess
deferrals were made.
(2) If the Participant's Deferred Compensation Contributions
made under this Plan and his elective deferrals made under any
other qualified cash or deferred arrangement maintained
pursuant to Section 401(k) of the Code by the Employer or an
Affiliated Company for a taxable year exceed the Maximum
Deferral, the Participant shall be deemed to have made a claim
for distribution of excess elective deferrals and the Manager
shall coordinate corrective action under this Plan with the
manager of such other cash or deferred arrangement.
(c) Notwithstanding any other provisions of the Plan, not later
than the April 15th following the close of the taxable year, the
Committee shall distribute to the Participant the excess deferrals
allocated to the Plan pursuant to Section 5.5(b) (adjusted for any
income or loss attributable thereto, calculated, as of the date of
distribution, in accordance with Treasury regulations, in a
uniformly applicable method selected by the Committee; subject,
however, to the withholding of taxes and other amounts as though
such amounts were current remuneration; and reduced by any amounts
previously distributed or recharacterized as Non-Deferred
Compensation Contributions under Section 5.6(d)). Matching Employer
Contributions (excluding Matching Employer Contributions that are
returned to
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the Company pursuant to Section 5.7) made for Plan Years beginning
on or after January 1, 1992 that a Participant has received on
account of his excess deferrals shall be forfeited, with income
thereon (calculated, in accordance with Treasury regulations, in a
uniformly applicable method selected by the Committee), and shall be
used to reduce the amount of Matching Employer Contributions
otherwise required to be contributed under the Plan in accordance
with Section 8.4.
5.6. (a) The Average Deferral Percentage for all eligible Employees who
are Highly Compensated Employees shall not exceed the greater of (1) or
(2), as follows:
(1) The Average Deferral Percentage for all eligible Employees
who are not Highly Compensated Employees, multiplied by 1.25,
or
(2) The Average Deferral Percentage for all eligible Employees
who are not Highly Compensated Employees, multiplied by 2.0;
provided that the Average Deferral Percentage for Highly
Compensated Employees may not exceed the Average Deferral
Percentage for eligible Employees who are not Highly
Compensated Employees by more than two percentage points.
(b) For purposes of Section 5.6(a), the term "Average Deferral
Percentage" as applied to a specified group of eligible Employees
shall mean the average of the ratios, calculated separately for each
such eligible Employee in such group, of:
(1) the amount of Deferred Compensation Contributions
(excluding any Deferred Compensation Contributions that are (i)
taken into account in determining the Average Contribution
Percentage described in Section 5.7, (ii) distributed to an
Employee who is not a Highly Compensated Employee pursuant to a
claim for benefits under Section 5.5, or (iii) returned to the
Participant pursuant to Section 5.4), to
(2) the Employee's Compensation for such Plan Year.
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<PAGE>
(c) For the purposes of this Section, the deferral percentage of a
Highly Compensated Employee who is an eligible Employee under this
Plan and who has made elective deferrals under any other qualified
cash or deferred arrangement maintained by the Employer or an
Affiliated Company (excluding plans that are not permitted to be
aggregated under Treas. Reg. (S)1.401(k)-1(b)(3)(ii)(B)) shall be
the sum of his deferral percentages under all such plans.
(d) If the Average Deferral Percentage for all eligible Employees
who are Highly Compensated Employees exceeds the amount specified in
Section 5.6(a) for any Plan Year, the amount specified in Section
5.6(b)(1) for the Highly Compensated Employee(s) with the highest
deferral percentage shall be reduced so that his or her deferral
percentage is reduced to the greater of (a) such percentage that
enables the Plan to satisfy the Average Deferral Percentage test, or
(b) a percentage equal to the deferral percentage of the Highly
Compensated Employee(s) with the next highest percentage. This
procedure shall be repeated until the Average Deferral Percentage
test is satisfied. The amount of Deferred Compensation
Contributions so reduced, together with the attributable income
thereon (calculated, in accordance with Treasury regulations, in a
uniformly applicable method selected by the Committee), including
income for the Plan Year for which the excess amounts were
contributed and income for the period between the end of the Plan
Year and the date of distribution, shall, at the Committee's
direction, be (a) recharacterized as Non-Deferred Compensation
Contributions (except that such amount recharacterized shall
continue to be treated as Deferred Compensation Contributions for
purposes of Section 9), no later than two and one-half months
immediately following the close of such Plan Year; or (b) paid
(subject, however, to the withholding of taxes and other amounts as
though such amounts were current remuneration) by the Employer to
the Employees from whose Compensation such amount was obtained.
Such payment shall be made within two and one-half (2 1/2) months
following the close of such Plan Year, if administratively
practicable, but in no event later than twelve (12) months following
the close of the Plan Year. Matching Employer Contributions
(excluding Matching Employer Contributions that are returned to the
Company
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<PAGE>
pursuant to Section 5.7 and Matching Employer Contributions received
on account of contributions that are recharacterized as Basic Non-
Deferred Compensation Contributions) made for Plan Years beginning
on or after January 1, 1992 that a Participant has received on
account of his excess deferrals shall be forfeited, with income
thereon (calculated, in accordance with Treasury regulations, in a
uniformly applicable method selected by the Committee), and shall be
used to reduce the amount of Matching Employer Contributions
otherwise required to be contributed under the Plan in accordance
with Section 8.4.
(e) For purposes of determining the deferral percentage of a Highly
Compensated Employee who is a five-percent owner (as defined in
Section 416(i) of the Code and the regulations issued thereunder),
or who is one of the top 10 Highly Compensated Employees based on
Compensation (as defined in Section 1.15) received during the Plan
Year of reference, the amount of Deferred Compensation Contributions
(in dollars) and the Compensation of such Highly Compensated
Employee shall be aggregated with the Deferred Compensation
Contributions (in dollars) and the Compensation, respectively, of
(i) all Eligible Employees (if any) who are Family Members of such
Highly Compensated Employee and who are Highly Compensated
Employees, or (ii) all Eligible Employees (if any) who are Family
Members or such Highly Compensated Employee; whichever produces the
highest ratio of aggregated Deferred Compensation Contributions to
aggregated Compensation. Such ratio shall be the deferral
percentage attributable to the Highly Compensated Employee, and the
Family Member(s) shall not be considered a separate Employee in
determining the Average Deferral Percentage hereunder. For purposes
of this paragraph, "Family Member" means, with respect to an
Employee, such Employee's spouse and lineal ascendants and
descendants and the spouses of such lineal ascendants and
descendants, taking into account legal adoptions.
(f) For purposes of Sections 5.6(b), 5.6(d) and, except as
otherwise provided therein, Section 5.6(e), the term "Compensation"
shall mean all compensation for services performed for the Employer
which is required to be reported in Box 10 on the Employee's Form W-
2, and, at the election of the Company, any
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Deferred Compensation Contributions and other amounts excluded from
gross compensation under Section 125 or 402(a)(8) of the Code.
5.7. (a) The Average Contribution Percentage for all eligible Employees
who are Highly Compensated Employees shall not exceed the greater of (1)
or (2), as follows:
(1) The Average Contribution Percentage for all eligible
Employees who are not Highly Compensated Employees, multiplied
by 1.25, or
(2) The Average Contribution Percentage for all eligible
Employees who are not Highly Compensated Employees, multiplied
by 2.0; provided that the Average Contribution Percentage for
Highly Compensated Employees may not exceed the Average
Contribution Percentage for eligible Employees who are not
Highly Compensated Employees by more than two percentage
points.
(b) For purposes of Section 5.7 (a), the term "Average Contribution
Percentage" as applied to a specified group of eligible Employees
shall mean the average of the ratios, calculated separately for each
such Employee in such group, of:
(1) the amount of Matching Employer Contributions (to the
extent permitted by Section 401(m) of the Code and the
regulations issued thereunder), Non-Deferred Compensation
Contributions (including Deferred Compensation Contributions
recharacterized as Non-Deferred Compensation Contributions
under Section 5.6(d)), if any, and, at the discretion of the
Committee, the amount of Deferred Compensation Contributions
paid to the Plan on behalf of each such Employee for such Plan
Year, to
(2) the Employee's Compensation for such Plan Year.
Deferred Compensation Contributions may be taken into
account under this Section only to the extent permitted by
Treasury regulations.
For the purposes of this Section, the contribution
percentage of a Highly Compensated
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Employee who is an eligible Employee under this Plan and who
has made after-tax contributions (including any elective
deferrals recharacterized as after-tax contributions) or
received matching contributions under any other qualified
retirement plan maintained by the Employer or an Affiliated
Company (excluding plans that are not permitted to be
aggregated under Treas. Reg. (S)1.401(m)-1(b)(3)(ii)) shall be
the sum of his contribution percentages under all such plans.
(c) If the Average Contribution Percentage for all eligible
Employees who are Highly Compensated Employees exceeds the amount
specified in Section 5.7(a) for any Plan Year, the amount specified
in Section 5.7(b)(1) for the Highly Compensated Employee(s) with the
highest contribution percentage shall be reduced so that his or her
contribution percentage is reduced to the greater of (a) such
percentage that enables the Plan to satisfy the Average Contribution
Percentage test, or (b) a percentage equal to the contribution
percentage of the Highly Compensated Employee(s) with the next
highest percentage. This procedure shall be repeated until the
Average Contribution Percentage test is satisfied. The amount so
reduced, together with the attributable income thereon (calculated,
in accordance with Treasury regulations, in a uniformly applicable
method selected by the Committee), including income for the Plan
Year for which the excess amounts were contributed and income for
the period between the end of the Plan Year and the date of
distribution, shall be deemed to have been contributed to the Plan
by mistake of fact, shall be refunded to the Employer, and the
portion attributable to Non-Deferred Compensation Contributions
shall thereafter be paid (subject, however, to the withholding of
taxes and other amounts as though such amounts were current
remuneration) by the Employer to the Employees from whose
Compensation such amount was obtained. Such payment shall be made
within two and one-half (2 1/2) months following the close of such
Plan Year, if administratively practicable, but in no event later
than twelve (12) months following the close of the Plan Year.
Matching Employer Contributions (excluding Matching Employer
Contributions that are returned to the Company pursuant to Section
5.7) made
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for Plan Years beginning on or after January 1, 1992 that a
Participant has received on account of his excess contributions
shall be forfeited, with income thereon (calculated, in accordance
with Treasury regulations, in a uniformly applicable method selected
by the Committee), and shall be used to reduce the amount of
Matching Employer Contributions otherwise required to be contributed
under the Plan in accordance with Section 8.4.
(d) For purposes of determining the contribution percentage of a
Highly Compensated Employee who is a five-percent owner (as defined
in Section 416(i) of the Code and the regulations issued
thereunder), or who is one of the top 10 Highly Compensated
Employees based on Compensation (as defined in Section 1.15)
received during the Plan Year of reference, the amount of the
Participant's Non-Deferred Compensation Contributions (in dollars),
Matching Employer Contributions, and the Compensation of such Highly
Compensated Employee shall be aggregated with the Non-Deferred
Compensation Contributions, Matching Employer Contributions and the
Compensation respectively, of (i) all Eligible Employees (if any)
who are Family Members of such Highly Compensated Employee and who
are Highly Compensated Employees, or (ii) all Eligible Employees (if
any) who are Family Members of such Highly Compensated Employee;
whichever produces the highest ratio of aggregated Non-Deferred
Compensation Contributions to aggregated Compensation. Such ratio
shall be the contribution percentage attributable to the Highly
Compensated Employee, and the Family Member(s) shall not be
considered a separate Employee in determining the Average
Contribution Percentage hereunder. For purposes of this paragraph,
"Family Member" means, with respect to an Employee, such Employee's
spouse and lineal ascendants and descendants and the spouses of such
lineal ascendants and descendants, taking into account legal
adoptions.
(e) For purposes of Sections 5.7(b), 5.7(c) and, except as
otherwise provided therein, Section 5.7(d), the term "Compensation"
shall have the meaning set forth in Section 5.6(f).
5.8. (a) For any Plan Year, the sum of the Average Deferral Percentage
and the Average Contribution Percentage for all Eligible Employees who
are Highly
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Compensated Employees shall not exceed the greater of (1) or (2) where:
(1) is the sum of:
(i) the product of 1.25 and the greater of (A) the Average
Deferral Percentage for all Eligible Employees who are not
Highly Compensated Employees; or (B) the Average
Contribution Percentage for all Eligible Employees who are
not Highly Compensated Employees; and
(ii) the product of 2.0 and the lesser of (1)(i)(A) or
(1)(i)(B) above; provided, however, that in no event shall
this amount exceed the lesser of (1)(i)(A) or (1)(i)(B)
above by more than two percentage points; and
(2) is the sum of:
(i) the product of 1.25 and the lesser of (A) the Average
Deferral Percentage for all Eligible Employees who are not
Highly Compensated Employees; or (B) the Average
Contribution Percentage for all Eligible Employees who are
not Highly Compensated Employees; and
(ii) the product of 2.0 and the greater of (2)(i)(A) or
(2)(i)(B) above; provided, however, that in no event shall
this amount exceed the lesser of (2)(i)(A) or (2)(i)(B)
above by more than two percentage points.
(b) If the limitation in this Section is not met, the deferral
percentage or the contribution percentage of Eligible Employees who
are Highly Compensated Employees shall be reduced in the manner
prescribed in Sections 5.6 or 5.7, as applicable, until such
limitation is met.
5.9. If the Committee deems it necessary or advisable in order to meet
the requirements of Section 401 of the Code or Section 5.6, 5.7 or 5.8
above, then, anything to the contrary notwithstanding and subject to any
applicable limitations imposed by law, the Committee may, in its sole
discretion, such discretion to be exercised in a uniform
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and nondiscriminatory manner, take any or all of the following actions:
(a) reduce a Participant's rate of Deferred Compensation Contribution or
his or her rate of Non-Deferred Compensation Contribution; (b) pay a
Participant some or all of the Deferred Compensation Contributions
allocated to his or her Accounts for a Plan Year (in accordance with
applicable regulations under Section 401(k) of the Code); (c) make
additional Employer nonelective contributions to the Plan (in accordance
with applicable regulations under Section 401(k) of the Code); or (d)
recharacterize Deferred Compensation Contributions as Non-Deferred
Compensation Contributions (in accordance with applicable regulations
under Section 401(k) of the Code).
5.10. An Employee (regardless of whether he or she is a Participant) may
deposit into the Plan the entire amount received as a distribution from
another qualified trust forming part of a plan described in Section
401(a) of the Code or from an individual retirement program described in
Section 408 of the Code but only if the deposit qualifies as a tax-free
rollover as defined in Section 402 of the Code. If the deposit does not
qualify as a tax-free rollover, the amount of the deposit shall be
refunded to the Employee. In addition to the foregoing, the Committee,
in its sole discretion, may direct the Trustee to accept, on behalf of
any Employee, an amount transferred directly from another qualified trust
forming part of a qualified plan described in Section 401(a) of the Code
and such amount shall be treated as a rollover and deposited into the
Plan for such Employee. Amounts credited to an Employee pursuant to a
rollover or direct transfer shall be credited to the appropriate Account
based upon the type of contribution or contributions giving rise to the
amount transferred to the Plan. All such amounts rolled over or
transferred from the Scott Paper Company Hourly Investment Plan pursuant
to this Section shall be invested in the same Funds in which such amounts
were invested in the transferor plan and thereafter shall be subject to
the investment provisions of Section 7 hereof. All such amounts rolled
over or transferred from the Scott Paper Company Employee Stock Ownership
Plan pursuant to this Section shall be invested in the Company Common
Stock Fund and thereafter shall be subject to the investment provisions
of Sections 7.3 and 7.4 hereof. An Employee who is not a Participant
shall be treated as a Participant with respect to amounts rolled over or
transferred hereunder for purposes of valuations, investments and
distributions.
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5.11. For purposes of Sections 5.6, 5.7, and 5.8, this Plan shall be
aggregated and treated as a single plan with other plans maintained by
the Employer or any Affiliated Company to the extent that this Plan is
aggregated with any other plan for purposes of satisfying Section 410(b)
of the Code (other than Section 410(b)(2)(A)(ii) of the Code).
SECTION 6. TRUST FUND
----------
6.1. The Company shall enter into one or more Trust Agreements with such
Trustee or Trustees as may from time to time be appointed by the
Committee, and the terms of such Trust Agreements, as the same may be
amended from time to time, shall be incorporated herein by reference.
The Committee may from time to time modify, alter, amend or terminate any
Trust Agreement hereunder or enter into such further agreements with such
Trustee or other parties to any extent that it may deem advisable to
carry the Plan into effect or to facilitate its administration
including, but without limiting the generality of the foregoing, any
amendment deemed necessary to ensure the continued tax exempt status of
the Trust under Section 501(a) of the Code; provided, however, that no
such amendment shall have the effect of diverting the whole or any part
of the principal or income of the Trust Fund to purposes other than for
the exclusive benefit of Participants or their Beneficiaries; and
provided, further, that no such amendment shall increase the duties or
responsibilities of a Trustee without its consent thereto in writing.
Copies of all Trust Agreements and all amendments thereto, and of such
further agreements with the Trustee and all amendments thereto, shall be
delivered to any Participant upon written request of such Participant in
the manner prescribed by the Manager or the Committee.
6.2. To the extent not otherwise directed by any Participant or by the
Committee, the Trustees shall have such powers as to investments,
reinvestments, control and disbursement of the Trust Fund (other than
with respect to the payment of benefits hereunder) as are set forth in
the Trust Agreement; provided, however, that the Committee may appoint
one or more investment managers to direct the Trustees with respect to
the investment of any portion of the Trust Fund, each such investment
manager to be either a bank, an investment manager registered under the
Investment Advisors Act of 1940, or an insurance company qualified to do
business under the laws of more than one
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State. The Committee may remove any Trustee at any time upon such notice
as is required by the Trust Agreement, and upon such removal or upon the
resignation of the Trustee, the Committee shall designate a successor
Trustee.
6.3. The Trust Fund shall consist of the Company Common Stock Fund and
such other Funds as have been established by the Committee. The
Committee may, from time to time, in its discretion, establish additional
Funds or terminate any Fund. The Funds may include, but shall not be
limited to, funds managed by the Trustee, by an insurance company, or by
an investment company regulated under the Investment Company Act of 1940.
6.4. Any of the Funds referred to in Section 6.3 above may, in whole or
in part, be invested in any common, collective, or commingled trust fund
maintained by the Trustee or another financial institution, which is
invested principally in property of the kind specified for that
particular investment Fund or for the temporary investment of assets, and
which is maintained for the investment of the assets of plans and trusts
which are qualified under the provisions of Section 401(a) of the Code
and exempt from Federal taxation under the provisions of Section 501(a)
of the Code, and during such period of time as an investment through any
such medium exists the declaration of trust of such trust shall
constitute a part of the applicable Trust Agreement.
6.5. All interest, dividends, and other income, as well as cash received
from the sale or exchange of securities or other property, produced by
each of the Funds shall be reinvested in the same Fund which produced
such proceeds, interest, dividends or other income.
SECTION 7. INVESTMENT DIRECTIONS
---------------------
7.1. The subscription agreement executed by each Employee who elects to
become a Participant pursuant to the provisions of Section 2 hereof
shall, in the manner prescribed by the Manager or the Committee, direct
that his or her Basic and Supplementary Contributions be paid into and
invested in any one or more of the Funds in such percentages as the
Participant may direct; provided, however, that such percentage
investment in any Fund shall be in multiples of one percent (1%) of the
Basic and Supplementary Contributions.
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7.2. The percentage investment of a Participant's future Basic and
Supplementary Contributions to be paid into and invested in any one or
more of the Funds may be changed by request in the manner prescribed by
the Manager or the Committee; provided, however, that such percentage
investment in any Fund shall be in multiples of one percent (1%) of the
Basic and Supplementary Contributions in respect of each Pay Period.
7.3. A Participant may, by making a request in the manner, and subject
to any restrictions, prescribed by the Manager or the Committee, direct
that any portion, in multiples of one percent (1%), of his or her
interest in any one or more of the Funds be transferred to any one or
more of the other Funds; provided, however, that, subject to the
provisions of Section 7.4 hereof, no transfer may be made of any portion
of the Participant's interest in the Company Common Stock Fund which is
attributable to (a) amounts rolled over or transferred from the Scott
Paper Company Employee Stock Ownership Plan or (b) the fifty percent
(50%) of Matching Employer Contributions (or earnings thereon) required
to be invested in such Fund by Section 5.2 hereof, and such portion shall
be excluded in the determination of the amount subject to transfer
hereunder.
7.4. Notwithstanding the provisions of Sections 5.2 and 7.3 above,
commencing with the day on which the Participant becomes eligible for
Early Retirement (or the day on which the Participant becomes eligible
for Normal Retirement, whichever is earlier), a Participant may, by
making a request in the manner prescribed by the Manager or the
Committee, direct:
(a) the investment in any Fund established by the Committee
pursuant to Section 6.3 of any portion, in multiples of one percent
(1%), of the fifty percent (50%) of future Matching Employer
Contributions otherwise required to be invested in the Company
Common Stock Fund pursuant to the provisions of Section 5.2 hereof;
or
(b) the transfer to any Fund established by the Committee pursuant
to Section 6.3 of any portion, in multiples of one percent (1%), of
his or her interest in the Company Common Stock Fund which is
attributable to amounts rolled over or transferred from the Scott
Paper Company Employee Stock Ownership Plan or the fifty percent
(50%) of Matching Employer
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Contributions (or earnings thereon) which is required to have been
invested in the Company Common Stock Fund pursuant to the provisions
of Section 5.2 hereof.
7.5. Any request made pursuant to the provisions of Section 7.2, 7.3, or
7.4 above may be made at any time and, subject to any restrictions
prescribed by the Manager or the Committee, shall take effect as soon as
practicable after such request is received.
7.6. Any transfer made pursuant to the provisions of Section 7.3 or
7.4(b) shall be based upon the value of the Participant's interest in any
Fund on the date on which such transaction takes effect under Section
7.5, subject to any restrictions prescribed by the Manager or the
Committee.
7.7. Unless a Qualified Domestic Relations Order provides to the
contrary, an Alternate Payee shall have the right to direct the
investment of any portion of a Participant's Account payable to the
Alternate Payee under such order in the same manner as provided in this
Article 7 with respect to a Participant, which amounts shall be
separately accounted for by the Trustee in the Alternate Payee's name.
SECTION 8. VESTING OF PARTICIPANTS' INTERESTS
----------------------------------
8.1. That portion of each Participant's interest in the Trust Fund
derived from his or her Basic and Supplementary Contributions (and any
earnings thereon) shall be vested at all times in such Participant.
8.2. Except as otherwise provided in this Section 8.2, each
Participant's interest in Matching Employer Contributions (and any
earnings thereon) shall be vested in such Participant as of the second
anniversary of the date the Participant became a Participant as described
in Section 2.1 (hereinafter the "Vesting Period"); provided, however,
that the Participant is employed on such anniversary and has not suffered
a One-Year Period of Severance during the Vesting Period; and further
provided that each Participant's interest in his or her Matching Employer
Account shall be fully vested in the Participant if such Participant has
five Years of Employment.
8.3. Notwithstanding the above, each Participant's interest in all
Matching Employer Contributions (and any
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earnings thereon) made on his or her behalf shall be vested in such
Participant in whole, upon
(a) his or her Retirement, Total and Permanent Disability, death or
attainment of age 65 (and continuously after attainment of age 65);
(b) the termination of participation in the Plan pursuant to the
provisions of Section 14.5 hereof (provided, however, that such
termination of participation related to such Participant);
(c) the termination or partial termination of the Plan, or the
complete discontinuance of all Matching Employer Contributions under
the Plan pursuant to the provisions of Section 14.4 hereof
(provided, however, that such discontinuance or partial termination
related to such Participant);
(d) the Participant's Severance Date provided, however, that such
Participant incurred a Severance Date involuntarily but not for
cause or upon the mutual consent of the Participant and the
Employer; or
(e) in the case of a Participant who transfers to an Affiliated
Company, the date on which he or she first performs an Hour of
Service for the Affiliated Company. If a Participant transfers to
an Affiliated Company, he or she may elect, at the time and in the
manner prescribed by the Committee, to have his or her Accounts
transferred to a qualified cash or deferred plan maintained by the
Affiliated Company.
8.4. If a Participant incurs a Severance Date other than by reason of an
event described in Section 8.3 above, his or her interest in unvested
Matching Employer Contributions and any earnings thereon shall be
forfeited and shall reduce the amount of Matching Employer Contributions
otherwise required to be contributed under the provisions of Section 4.1
hereof as to Matching Employer Contributions for the Plan Year in which
(a) the Participant incurs five consecutive One-Year Periods of Severance
or (b), if earlier, the Participant receives a distribution of his or her
entire vested interest in his or her Account. If a Participant who has
received a distribution of all or a portion of his or her vested interest
in the Plan in accordance with the provisions of Section 10 hereof on
account of his or her incurring a
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Severance Date is reemployed by the Employer, he or she shall have
restored to his or her Matching Employer Account the amount forfeited in
accordance with the above; provided, however, that such Participant
repays the amount distributed. Such repayment must be made before the
earlier of (i) five years after the date on which the Participant is
subsequently reemployed by the Employer, or (ii) the end of a period of
five consecutive One-Year Periods of Severance. The Committee shall
maintain, or cause to be maintained, a record of the amounts required to
be restored hereunder, and the Employer shall pay such amounts within
thirty (30) days of such notice either from current forfeitures or from
an additional contribution by the Employer.
SECTION 9. WITHDRAWALS
-----------
9.1. Subject to the provisions of this Section 9 and Section 13.4, a
Participant may, by making a request in the manner prescribed by the
Manager or the Committee, withdraw all or part of those portions of his
or her interest in the Plan designated below, in cash, on no more than
two occasions during a Plan Year; provided, however, that a Participant
may not withdraw any Contributions, or amounts attributable thereto, that
were made to the Plan while the Participant was performing services for
the Employer in the United Kingdom. Each withdrawal hereunder shall be
made as soon as practicable following receipt of the Participant's
request. Withdrawals shall be permitted from the following categories in
the sequence given; provided, however, that amounts in all preceding
categories must be exhausted before withdrawals will be permitted from
any succeeding category; and provided further, that (a) Basic Non-
Deferred Compensation Contributions which were deposited less than
twenty-four (24) months before the withdrawal is made, (b) with respect
to a Participant who has less than five (5) years of participation in the
Plan, vested Matching Contributions which were deposited less than
twenty-four (24) months before the withdrawal is made and earnings on
such Matching Contributions, (c) Supplementary Deferred Compensation
Contributions (including Supplementary Deferred Compensation
Contributions that were recharacterized as Non-Deferred Compensation
Contributions under Section 5.6(d)), (d) Basic Deferred Compensation
Contributions (including Basic Deferred Compensation Contributions that
were recharacterized as Non-Deferred Compensation Contributions under
Section 5.6(d)), and (e) earnings on Supplementary and Basic Deferred
Compensation
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Contributions (including both Supplementary and Basic Deferred
Compensation Contributions that were recharacterized as Non-Deferred
Compensation Contributions under Section 5.6(d)) that were credited to a
Participant's Account on or before December 31, 1988 may only be
withdrawn in accordance with the provisions of Section 9.2 hereof:
. Supplementary Non-Deferred Compensation Contributions made before
January 1, 1987, and Basic Non-Deferred Compensation
Contributions which were deposited before January 1, 1987;
. Supplementary Non-Deferred Compensation Contributions (excluding
Deferred Compensation Contributions that were recharacterized
as Supplementary Non-Deferred Compensation Contributions under
Section 5.6(d)) made after December 31, 1986, any Basic Non-
Deferred Compensation Contributions (excluding Deferred
Compensation Contributions that were recharacterized as Basic
Non-Deferred Compensation Contributions under Section 5.6(d))
which were deposited (i) after December 31, 1986 and (ii) more
than twenty-four (24) months before the withdrawal is made, and
earnings on all such Contributions;
. Earnings on all Supplementary Non-Deferred Compensation
Contributions made before January 1, 1987, and Basic Non-
Deferred Compensation Contributions which were deposited before
January 1, 1987;
. Vested Matching Employer Contributions deposited more than
twenty-four (24) months before the withdrawal is made and all
earnings on such Employer Contributions; provided, however,
that if the Participant has completed at least five (5) years
of participation in the Plan, all vested Matching Employer
Contributions and earnings on such Employer Contributions shall
be available for withdrawal;
. Basic Non-Deferred Compensation Contributions which were
deposited less than twenty-four (24) months before the
withdrawal is made;
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. With respect to a Participant who has completed less than five
(5) years of participation in the Plan, vested Matching
Employer Contributions deposited less than twenty-four (24)
months before the withdrawal is made and all earnings on such
Employer Contributions.
. Supplementary Deferred Compensation Contributions and Basic
Deferred Compensation Contributions (including Deferred
Compensation Contributions that were recharacterized as Non-
Deferred Compensation Contributions under Section 5.6(d));
. Earnings on both Supplementary Deferred Compensation
Contributions and on Basic Deferred Compensation Contributions
(including Supplementary and Basic Deferred Compensation
Contributions that were recharacterized as Non-Deferred
Compensation Contributions under Section 5.6(d)) which were
credited to a Participant's Account on or before December 31,
1988; and
Withdrawals shall be either in multiples of $1.00 or 100% of the specific
category of contributions being withdrawn. Unvested Matching Employer
Contributions, earnings thereon, and earnings on Supplementary and Basic
Deferred Compensation Contributions (including Supplementary and Basic
Deferred Compensation Contributions that were recharacterized as Non-
Deferred Compensation Contributions under Section 5.6(d)) that were
credited to a Participant's Account after December 31, 1988 may not be
withdrawn. The amount of Contributions which may be withdrawn from an
Account will be reduced to reflect any losses or any realized
depreciation allocated to such Account. In no event shall withdrawals
from any Account be permitted in excess of the value of the balance of
the Account.
9.2. Except as provided in Section 18.5, the following contributions may
not be withdrawn except on account of an immediate and heavy financial
need of the Participant, where the withdrawal is necessary to satisfy
such financial need:
. Basic Non-Deferred Compensation Contributions which were
deposited less than twenty-four (24) months before the
withdrawal is made;
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. With respect to a Participant who has completed less than five
(5) years of participation in the Plan, vested Matching
Employer Contributions deposited less than twenty-four (24)
months before the withdrawal is made and all earnings on such
Employer Contributions;
. Supplementary Deferred Compensation Contributions (including
Supplementary Deferred Compensation Contributions that were
recharacterized as Non-Deferred Compensation Contributions
under Section 5.6(d));
. Basic Deferred Compensation Contributions (including Basic
Deferred Compensation Contributions that were recharacterized
as Non-Deferred Compensation Contributions under Section
5.6(d)); and
. Earnings on Supplementary and Basic Deferred Compensation
Contributions (including Supplementary and Basic Deferred
Compensation Contributions that were recharacterized as Non-
Deferred Compensation Contributions under section 5.6(d)) that
were credited to a Participant's Account on or before December
31, 1988.
The determination of the existence of an immediate and heavy financial
need, and the necessity of a withdrawal from the Plan to satisfy the need
shall be made by the Manager of the Plan in his or her sole discretion,
such discretion to be exercised in a uniform and non-discriminatory
fashion, subject to applicable law and regulations and in accordance with
such uniform rules as may be issued by the Committee from time to time.
A withdrawal request shall be deemed to be on account of an immediate and
heavy financial need if it is on account of:
(a) expenses incurred or necessary for medical care described in
Section 213(d) of the Code for the Participant, his or her spouse or
dependents;
(b) costs directly related to the purchase (excluding mortgage
payments) of a principal residence for the Participant;
(c) payment of tuition and related educational fees for the next
twelve (12) months of post-secondary
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education for the Participant, his or her spouse, children or
dependents;
(d) the need to prevent eviction of the Participant from his or her
principal residence or foreclosure on the mortgage of the
Participant's principal residence; or
(e) such other circumstances as the Committee determines (in
accordance with applicable governmental regulations) constitute an
immediate and heavy financial need of the Member.
A distribution shall not be treated as necessary to satisfy an immediate
and heavy financial need of a Participant to the extent the amount of the
distribution is in excess of the amount required to relieve the financial
need (including any amounts necessary to pay any federal income tax
withholding on the distribution) or to the extent such need may be
satisfied from other resources that are reasonably available to the
Participant. A Participant's resources shall include those assets of his
or her spouse and minor children that are reasonably available to the
Participant. A Participant must certify, on a form provided by the
Manager of the Plan, that his or her financial need cannot be relieved:
(a) through reimbursement or compensation by insurance or
otherwise;
(b) by reasonable liquidation of the Participant's assets to the
extent such liquidation would not itself cause an immediate and
heavy financial need;
(c) by cessation of contributions to the Plan; or
(d) by other distributions from the Plan, by other distributions or
loans from plans maintained by any employer or by borrowing from
commercial sources on reasonable commercial terms.
The Manager's determination with respect to the requirements of this
Section 9.2 is reviewable by the Committee on appeal pursuant to the
procedure set forth in Section 12.5.
9.3. An Alternate Payee shall, in no event, have the right to make
withdrawals under this Section 9 and any Qualified Domestic Relations
Order which purports to give
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an Alternate Payee such a right shall be invalid and unenforceable to
that extent.
9.4. Upon attainment of age 59 1/2, a Participant may, by making a
request in the manner prescribed by the Manager or the Committee,
withdraw up to the total value of the vested portion of his or her
Account.
SECTION 10. DISTRIBUTION OF BENEFITS
------------------------
10.1. If a Participant incurs a Severance Date for any reason other than
death, including Retirement, he or she shall receive the total vested
amount in his or her Accounts in the form of a lump sum distribution in
cash, unless he or she elects otherwise.
10.2.(a) Except as provided in Section 10.2(e), in lieu of the form of
distribution provided in Section 10.1 above, a Participant may, by
written request in the manner prescribed by the Manager or the Committee,
elect any one of the following Options which shall be the actuarial
equivalent of the total vested amount in all of the Participant's
Accounts otherwise payable to the Participant hereunder:
OPTION 1. A Participant may elect a single-life annuity with a
minimum return feature whereby upon the death of the Participant the
excess (if any) of the total amount in the Participant's Accounts
over the aggregate of all payments made to the Participant will be
paid to the survivor of the Participant in the form of a lump sum
payment in cash.
OPTION 2. A Participant may elect a reduced allowance distributable
during his or her life, and a survivor's allowance in the same
amount distributable after his or her death, during the life of, and
to, the person nominated by him or her, by written designation duly
acknowledged and filed with the Committee at the time this Option 2
is elected, if such person survives him or her. This Option shall
include a minimum return feature whereby upon the death of such
Participant's nominee, the excess (if any) of the total amount in
the Participant's Accounts over the aggregate of all payments made
to the Participant and such nominee will be paid to the estate of
such nominee in the form of a lump sum payment in cash.
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OPTION 3. A Participant may elect a reduced allowance
distributable during his or her life, and a survivor's allowance,
in one-half the amount of such reduced allowance distributable
after his or her death, during the life of, and to, the person
nominated by him or her by written designation duly acknowledged
and filed with the Committee at the time of his or her election of
this Option 3, if such person survives him or her. This Option
shall include the minimum return feature described in Option 2
above.
OPTION 4. A Participant may elect a lump sum distributable in cash
of his or her total interest in all of his or her Accounts
hereunder; provided, however, that a Participant who elects this
Option 4 may, by written request in the manner prescribed by the
Manager or the Committee, receive a distribution of that portion of
his or her total interest in the Company Common Stock Fund in the
form of whole Shares of Company Stock in lieu of cash therefor (with
cash for fractional Shares). Because it is impractical to calculate
and pay the amount of the distribution hereunder on the date
determined in accordance with the provisions of Section 10.7 hereof,
the Committee may, upon written request of the Participant in the
manner prescribed by the Manager or the Committee, distribute a
portion of the anticipated distribution as soon as administratively
possible thereafter; provided, however, that the total distribution
hereunder shall be made within one Plan Year.
OPTION 5. A Participant who incurs a Severance Date by reason of
his or her Retirement or Total and Permanent Disability may elect
distribution in annual installments of the Participant's total
interest in all Funds to be made by the Trustee over a period of
time selected by the Participant; provided, however, that such
period shall not exceed the lesser of twenty (20) years or the
Participant's life expectancy at the time such installments are to
commence. A Participant who elects to receive a distribution
pursuant to this Option may at any time prior to the final
distribution under this Option elect, in the manner prescribed by
the Manager or the Committee, to receive the remaining balance in
all of his or her Accounts in a lump sum. A Participant who elects
to receive a distribution pursuant to this Option 5 shall remain a
Participant until the final
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distribution under the Option or until his or her death, whichever
occurs first; provided, however, that such Participant shall not
make any withdrawals, changes or transfers pursuant to the
provisions of Section 7 or 9 hereof after his or her Annuity
Starting Date. The Trustee shall distribute such Participant's
interest (including attributable earnings) to the Participant (and,
upon his or her death, in accordance with the provisions of Section
10.3 below), in the number of annual installments selected by the
Participant. Distributions under this Option shall be made in cash;
provided, however, that a Participant electing this Option may, by
written request in the manner prescribed by the Manager or the
Committee, receive a distribution of that portion of his or her
total interest in the Company Common Stock Fund in the form of whole
Shares of Company Stock in lieu of cash therefor (with cash for
fractional Shares). The value of cash or Shares of Company Stock
(if any) to be distributed from the Funds shall for each installment
be determined on a declining balance method.
OPTION 6. A Participant may elect a period certain and continuous
annuity payable to the Participant for life but continuing to his or
her survivor (the person nominated by him or her by written
designation duly filed with the Committee at the time of his or her
election of this Option 6) if the Participant dies prior to
receiving the number of guaranteed monthly installments selected by
the Participant, which number shall not exceed the lesser of two
hundred forty (240) months or the Participant's life expectancy at
the time such installments are to commence.
OPTION 7. A Participant may elect a period certain annuity payable
to the Participant or to his or her survivor (the person nominated
by him or her by written designation duly filed with the Committee
at the time of his or her election of this Option 7) for the number
of guaranteed monthly installments selected by the Participant,
which number shall not exceed the lesser of two hundred forty (240)
months or the Participant's life expectancy at the time such
installments are to commence.
(b) Anything to the contrary herein notwithstanding, (1) none of
the above Options may be elected if such
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Option would result in the present value of all benefits to be
distributed to the Participant being less than fifty percent (50) of
the present value of all benefits to be distributed, unless the
designated Beneficiary or survivor is the Participant's then spouse;
and (2) if the Participant designates a survivor to receive survivor
benefits in the event of the Participant's death under any of the
foregoing Options, such designation must be made in accordance with
the provisions of Section 10.4 hereof.
(c) Notwithstanding any provision in the Plan to the contrary, if a
Participant attempts an election of Option 1, 2, 3 or 6 of this
Section 10.2, the Manager of Committee shall furnish to such
Participant, no less than 30 days and no more than 90 days prior to
his Annuity Starting Date, (and consistent with such regulation as
may be issued under Section 417(a)(3)(A) of the Code) a written
explanation of (1) the terms and conditions of Option 1 (the normal
form of benefit for an unmarried Participant) or Option 3 with his
or her then spouse as the contingent annuitant (the normal form of
benefit for a married Participant (a "qualified joint and survivor
annuity") including (i) a general explanation of the relative
financial effect on a Participant's benefit of an election to waive
the normal form of benefit; (ii) a general description of the
eligibility conditions and the other material features of the
optional forms of benefit; and (iii) sufficient additional
information to explain the relative values of the optional forms of
benefit; (2) the Participant's right to make, during the 90-day
period ending on the Annuity Starting Date, an election not to take
the applicable normal form of benefit, and the financial effect upon
the Participant's benefit (in terms of dollars per payment) of
making such an election; (3) the rights of the Participant's Spouse
under paragraph (d) of this Section; and (iv) the right to make, and
the effect of, a revocation of an election to waive the normal form
of benefit.
(d) The attempted election by a married Participant of a form of
benefit, other than Options 2 or 3 with his or her then spouse as
the sole contingent annuitant, shall not be effective unless the
consent of his or her then spouse is obtained in the same manner,
and to the same extent as would be required,
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for a spouse to consent to the designation of a survivor or
Beneficiary (other than the spouse) under Section 10.4 below. If an
Option has not been properly elected in accordance herewith, the
Participant shall receive the total amount in his or her Accounts in
the form of a lump sum distribution in cash. Any election under
this Section shall be revocable at any time prior to ninety (90)
days preceding distribution hereunder; provided, however, that any
election of Option 3 where the survivor is the Participant's spouse
may be revoked at any time within ninety (90) days preceding
distribution hereunder.
(e) Notwithstanding any provision in the Plan to the contrary, a
Participant whose Employment Commencement Date is on or after July
1, 1993 shall not be permitted to elected a form of distribution
under Option 1, 2, 3, 6, or 7 of this Section 10.2.
(f) Notwithstanding any provision in the Plan to the contrary,
distributions under the Plan shall comply with the requirements of
Section 401(a)(9) of the Code and Treasury regulations thereunder,
including, effective for distributions that commence on or after
January 1, 1989, the minimum distribution incidental benefit
requirements of proposed Treasury Regulation (S)1.401(a)(9)-2.
10.3. Consistent with the provisions of Section 10.4 hereof, if a
Participant's participation terminates by reason of his or her death, his
or her Beneficiary shall be entitled to receive distribution in full of
the total amount in his or her Accounts. Such distribution shall be in
the form of a lump sum payment in cash of the total amount in the
Participant's Accounts, or at the election of the Beneficiary and in the
manner prescribed by the Manager or the Committee, such distribution may
be made in one of the forms specified in Options 1, 4, 6 or 7 of Section
10.2 above; provided, however, that if the Participant has made a valid
election of Option 1, 2, 3 or 6, has designated his or her then spouse as
his or her Beneficiary and dies before the Annuity Starting Date,
benefits shall be paid in the form of Option 1, unless the spouse elects
otherwise.
10.4. A Participant may designate a Beneficiary or Beneficiaries to
receive the amount in the Participant's Accounts in case of his or her
death, or a survivor to
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receive any balance due to the Participant at the time of his death under
applicable Options of Section 10.2 above. In case of the Participant's
death, the amount in the Participant's Accounts shall be distributed in
accordance with the Plan to the designated Beneficiary or Beneficiaries.
If the Beneficiary is the Participant's surviving spouse, the Participant
may elect that the total amount of his or her Accounts be distributed in
the form of a survivor annuity for the life of the Beneficiary, which
shall be the actuarial equivalent of the total amount remaining in all of
the Participant's Accounts. If a Participant designates a Beneficiary or
Beneficiaries other than his or her surviving spouse or a survivor other
than the Participant's spouse at the time of such designation, such
designation shall not be effective (and the Participant's spouse shall be
the Beneficiary) unless (i) the spouse consents in writing to such
designation; (ii) the spouse's consent acknowledges the effect of such
designation, which consent shall be irrevocable; and (iii) the spouse
executes the consent in the presence of either a Plan representative
designated by the Committee or a notary public. Notwithstanding the
foregoing, such consent shall not be required if the Participant
establishes to the satisfaction of the Committee that such consent cannot
be obtained because (i) there is no spouse; (ii) the spouse cannot be
located after reasonable efforts have been made; or (iii) other
circumstances exist to excuse spousal consent under applicable
regulations. Each Beneficiary designation made by a Participant shall at
all times satisfy the requirements of this Section 10.4; if at any time
such designation shall fail to satisfy the requirements of this Section
10.4, such designation shall thereupon be deemed null and void. A
Participant may designate a different Beneficiary or survivor provided
he or she complies with the spousal consent requirements described above.
If the Participant fails to designate a Beneficiary in accordance with
the provisions of this Section 10.4, or if the designated Beneficiary
predeceases the Participant, the total amount in his or her Accounts
shall be distributed (i) in the form of a survivor annuity for the life
of the Participant's spouse (such survivor annuity to be the actuarial
equivalent of the total amount remaining in all of the Participant's
Accounts); or (ii) in the event that the Participant dies without a
surviving spouse then to the Participant's estate in the form of a lump
sum payment in cash. If the Participant fails to designate a survivor in
accordance herewith, any amount due under the applicable Option of
Section 10.2 above shall be paid in the form otherwise provided therein
to
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the surviving spouse or, if none, to the Participant's estate.
10.5. Anything to the contrary herein notwithstanding, if the total
amount distributable from a Participant's Accounts does not exceed three
thousand five hundred dollars (or such amount as the Secretary of
Treasury shall specify), the Committee shall make such distribution in
one lump sum in cash, which distribution shall be made within the time
specified in Section 10.6 below without regard to any election, by the
Participant.
10.6. Subject to the provisions of Section 10.2(c), unless a Participant
elects otherwise, any distribution made pursuant to the provisions of
Section 10.1 or 10.2 above shall be made or shall begin:
(a) as soon as practicable after the end of the month in which the
Participant incurs his or her Severance Date if the Participant
consents to the distribution as described in Section 10.7; or
(b) as soon as practicable after the end of the month in which the
Participant incurs his or her Severance Date in the event that the
Participant attained age 65 prior to such Severance Date if the
Participant does not elect to defer such distribution as described
in Section 10.7.
Unless a Beneficiary elects otherwise as described in Section 10.7,
distribution made pursuant to the provisions of Section 10.3 or 10.4
above shall be made or shall begin as soon as practicable after the end
of the month in which the Participant dies.
10.7. Except as provided in Section 10.5, a Participant entitled to a
distribution under this Section 10 must consent to the commencement of
any distribution by filing the election form provided by the Committee no
later than the end of the second month following the month in which the
Participant incurs a Severance Date. A Participant's Spouse, if any,
must also consent to any commencement of a Participant's benefit prior to
his or her attainment of age 65, unless the benefit is paid in the form
of Option 2 or 3 with the Spouse as the sole contingent annuitant, or in
the form of Option 4, 5 or 7. The failure of a Participant (or his or
her spouse, if applicable) to consent to a distribution shall be deemed
to be an election to defer commencement of the payment of benefits
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pursuant to this Section 10.7 to the last day of the month in which the
Participant attains age 65 or, if such day is not a business day, the
first business day of the following month; provided, however, that the
Participant may withdraw up to the total vested value of his or her
Account pursuant to Section 9.4 on or after the date on which such
Participant attains age 59 1/2. A Beneficiary entitled to a distribution
under this Section 10 may defer commencement of any distribution pursuant
to this Section 10.7, but only if the Beneficiary is the Participant's
surviving spouse. A Beneficiary who is not the Participant's surviving
spouse may not defer commencement of any distribution pursuant to this
Section 10.7. A Participant or Beneficiary may elect, by filing the
election form provided by the Committee no later than the end of the
second month following the month in which the Participant incurs a
Severance Date, to defer the receipt of all, but not less than all, of
the distribution otherwise to be made to him or her (i) to the last day
of the month in which occurs the first anniversary of the Participant's
Severance Date, (ii) if the Participant or Beneficiary has not attained
age 59 1/2 at the time the distribution first becomes payable under this
Section 10, to the last day of January in the Plan Year following the
Plan Year in which the Participant or Beneficiary attains age 59 1/2,
(iii) if the Participant or Beneficiary has not attained age 65 at the
time the distribution first becomes payable under this Section 10, to the
last day of January in the Plan Year in which the Participant attains (or
would have attained) age 65, (iv) to the last day of January in the Plan
Year in which the Participant's Required Distribution Date occurs (or to
what would have been the Participant's Required Distribution Date if he
or she had survived), or (v) if the day described in clause (i), (ii),
(iii), or (iv) is not a business day, the first business day of the month
following such day. Any amounts not distributed under this Section 10
shall remain in the Trust Fund and the Participant shall remain a
Participant until the last day of January in the Plan Year in which the
Participant's Required Distribution Date occurs or to what would have
been the Participant's Required Distribution Date if he or she had
survived or, if such day is not a business day, the first business day of
the month following such day.
10.8. Anything herein to the contrary notwithstanding, any distribution
made pursuant to Section 10.1, 10.2 or 10.3 shall comply with the
following requirements;
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(a) A Participant's Accounts shall be distributed to him or her
commencing not later than the Required Distribution Date, in
accordance with applicable regulations, in installments over the
life expectancy of the Participant, or over the joint life
expectancies of the Participant and his or her Beneficiary. The
Participant shall have the right to elect the form of distribution
in accordance with Committee procedures.
(b) If the distribution of the Participant's Accounts has begun in
accordance with clause (ii) of subsection (a), and the Participant
dies before his or her interest has been distributed, the remaining
portion of such interest shall be distributed at least as rapidly as
under the method of distribution in effect as of the date of the
Participant's death.
(c) Except as provided in Section 10.7, if the Participant dies
before the distribution of his or her Accounts has begun in
accordance with clause (ii) of subsection (a), the Participant's
entire interest shall be distributed within five years after the
Participant's death.
(d) Except as provided in Section 10.7, if any portion of the
Participant's interest is payable to, or for the benefit of, a
Beneficiary and if such portion shall be distributed beginning not
later than one year after the date of the Participant's death (or
such later date as may be provided by applicable regulation) over a
period not extending beyond the life expectancy of the Beneficiary,
then, for purposes of subsection (c), the portion payable to such
Beneficiary shall be treated as having been distributed on the date
on which such distributions begin.
(e) If the Beneficiary referred to in, subsection (d) is the
Participant's surviving spouse, the date on which the distributions
are required to begin under subsection (d) shall not be earlier than
the date on which the Participant would have attained age 70 1/2.
If the Participant's surviving spouse dies before the distributions
to such spouse begin, this subsection (e) shall be applied as if the
surviving spouse were the Participant.
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(f) Any election by a Participant under subsection (a) of a form of
benefit shall cease to be effective upon the Participant's actual
Retirement. In such event, the general rules under Section 10
regarding distribution of benefits and elections of forms of benefit
shall apply.
10.9. The amount distributable from a Participant's Accounts shall be
based on the value of such Accounts as determined under Section 11 hereof
for (a) the last day of the month preceding the month in which the
distribution is made or commences or, if such day is not a business day,
the first business day of the month in which the distribution is made or
commences or (b) if the distribution has been deferred pursuant to
Section 10.7, the date to which such distribution has been deferred;
provided, however, that the value of the Participant's Account, for
purposes of determining the amount to be distributed, shall be determined
no later than the last day of the second month preceding the
Participant's Required Distribution Date or, if such day is not a
business day, the first business day of the following month. In the case
of distributions pursuant to Option 5 of Section 10.2, installments
distributable from a Participant's Accounts shall be based on the value
of such Accounts determined as of the anniversaries of the date
determined above.
10.10. All distributions hereunder shall be made as of a business day.
10.11. (a) Upon the sale to a corporation that is not an Affiliated
Company, of substantially all the assets used by an Employer in the trade
or business of such Employer, a Participant who continues employment with
the corporation acquiring such assets shall be entitled to receive the
total vested amount in his or her Account.
(b) Upon the sale by an Employer to an entity that is not an
Affiliated Company, of such Employer's interest in a subsidiary, a
Participant who continues employment with such subsidiary shall be
entitled to receive the total vested amount in his or her Account.
Notwithstanding any provision in the Plan to the contrary, distribution
to a Participant described in Subsections (a) and (b) above shall be made
no later than the end of the second calendar year after the year in which
the
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disposition of assets or a subsidiary occurred or such earlier date as
may be specified by the Employer; provided, however, if the total amount
distributable from a Participant's Accounts exceeds three thousand five
hundred dollars (or such amount as the Secretary of Treasury shall
specify), or has exceeded such amount at the time of any prior
distribution, no distribution shall be made unless the Participant and
his or her Spouse consents to the distribution by filing the election
form provided by the Committee. No distribution shall be made under this
Section 10.11 unless (i) it is a lump sum distribution as defined by
Section 402(e)(4) of the Code, without regard to clauses (i), (ii),
(iii), and (iv) of subparagraph (A), subparagraph (b), or subparagraph
(H); (ii) the Employer continues to maintain the Plan, and (iii) the Plan
is not maintained, in whole or in part, by the purchasing entity
following the closing date of the sale. The Plan will be treated as
maintained by the purchasing entity if the Plan is merged or consolidated
with, or any assets or liabilities are transferred from the Plan to, a
plan maintained by the purchaser in a transfer subject to Section
414(l)(1) of the Code.
10.12. Unless a Qualified Domestic Relations Order provides to the
contrary, an Alternate Payee shall have the right to designate a
Beneficiary, in the same manner as provided in Section 10.4 (except that
no spousal consent shall be required), who shall receive benefits payable
to the Alternate Payee which have not been distributed at the time of the
Alternate Payee's death. If the Alternate Payee does not designate a
Beneficiary, or if the Beneficiary predeceases the Alternate Payee,
benefits payable to the Alternate Payee which have not been distributed
shall be paid to the Alternate Payee's estate.
10.13. In the event any payment or payments to be made to a Participant,
a Beneficiary who is the surviving spouse of a Participant, or an
Alternate Payee who is the former spouse of a Participant under the Plan
would constitute an "eligible rollover distribution," the Participant may
request, on or after January 1, 1993, that such payment or payments be
transferred directly from the Trust to the trustee of (a) an individual
retirement account described in section 408(a) of the Code, (b) an
individual retirement annuity described in section 408(b) of the Code
(other than an endowment contract), (c) an annuity plan described in
section 403(a) of the Code, or (d) a qualified retirement plan the terms
of which permit the
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acceptance of rollover distributions; provided, however, that clause (c)
and (d) shall not apply to an eligible rollover distribution made to a
Beneficiary who is the surviving spouse of a Participant or an Alternate
Payee who is the former spouse of a Participant. Any such request shall
be made in writing, on the form prescribed by the Committee for such
purpose, at such time in advance as the Committee may specify.
For purposes of this Section 10.13, eligible rollover distribution shall
mean a distribution from the Plan, excluding (a) any distribution that is
one of a series of substantially equal periodic payments (not less
frequently than annually) over the life (or life expectancy) of the
individual, the lives (or life expectancies) of the individual and the
individual's designated Beneficiary, or a specified period of ten (10) or
more years, (b) any distribution to the extent such distribution is
required under section 401(a)(9) of the Code, and (c) any distribution to
the extent such distribution is not included in gross income (determined
without regard to the exclusion for net unrealized appreciation of
Company Common Stock).
SECTION 11. VALUATION
---------
11.1. Each Fund and each Account shall be valued by the Trustee (with
appropriate adjustment for any assets held by an insurance company) on
each business day:
(a) by determining the fair market value, as of the business day,
of all securities and property which are then held in the Trust
Fund, and
(b) by adding thereto the amount of any uninvested cash and accrued
income as of the business day.
11.2. All amounts to be distributed pursuant to the provisions of
Section 10 hereof and all amounts to be withdrawn pursuant to the
provisions of Section 9 hereof as of the relevant business day shall be
taken into account in valuing the Funds and each Account pursuant to the
provisions of Section 11.1 above.
SECTION 12. ADMINISTRATION OF THE PLAN
--------------------------
12.1. The Committee constituted as set forth herein shall have the
authority to control and manage the operation and
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administration of the Plan. The Committee shall be composed of the
Company's Staff Vice President-Corporate Compensation and Benefits,
Director-Employee Benefits, Director-Financial Accounting and Director-
Pension Funding & Investment. The Company shall appoint another person
to serve as a member of said Committee whenever any such position may
for any reason be vacant. The Staff Vice President-Corporate
Compensation and Benefits or, during his absence or any vacancy in such
office, the Director-Employee Benefits shall be Chairman of said
Committee. Any two members of said Committee shall constitute a quorum
for the transaction of business. The affirmative vote of any two members
present at a meeting shall be required in order to take action. Said
Committee shall appoint a Secretary and a Manager of the Plan, both of
which positions may be filled by the same person, and such other
officers, assistant officers, committees or agents as it deems necessary
to carry out its responsibilities under the Plan. Said Committee may
delegate any of its duties hereunder to one or more of said appointees or
to any other person or persons it may designate from time to time. Said
Manager shall be the plan administrator and all of his or her
determinations and action shall be subject to review by the Committee.
12.2. The Committee shall have the exclusive discretionary authority to
determine eligibility for and the amount of benefits under the Plan, make
factual determinations, construe and interpret the terms of the Plan,
supply omissions and determine any question which may arise in connection
with its operation or administration. Its decisions or actions in
respect thereof shall be conclusive and binding upon the Employer and
upon any and all Participants, their Beneficiaries, and their respective
heirs, distributees, executors, administrators and assignees; subject,
however, to the right of a Participant or his or her Beneficiary to file
a written claim under the provisions of Section 12.5.
12.3. The Committee's responsibilities include, in addition to those
responsibilities specifically assigned to it hereunder, establishing and
maintaining (or causing the Trustee to establish and maintain) Accounts,
dealing with Participants and Beneficiaries under the Plan, maintaining
(or causing to be maintained) all records under the Plan with respect to
Participants and Beneficiaries, and causing distributions to be made to
Participants and Beneficiaries under the Plan.
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12.4. To the extent permitted by law, no member of the Committee, nor
any director, officer or employee of the Employer shall be liable for
any action or failure to act under or in connection with the Plan, except
for his or her own bad faith. Each person who is or shall have been a
member of the Committee or a director, officer or employee of the
Employer shall be indemnified and held harmless by the Employer against
and from any and all loss, cost, liability or expense that may be imposed
upon or reasonably incurred by him or her in connection with or resulting
from any claim, action, suit or proceeding to which he or she may be a
party or in which he or she may be involved by reason of any action taken
or failure to act under the Plan and against and from any and all amounts
paid by him in settlement thereof (with the Employer's written approval)
or paid by him in settlement thereof (with the Employer's written
approval) or paid in satisfaction of a judgment in any such action, suit
or proceeding, except a judgment based upon a finding of bad faith
subject, however, to the condition that, upon the assertion or
institution of any such claim, action, suit or proceeding against him or
her, he or she shall in writing give the Employer an opportunity, at its
own expense, to handle and defend the same before he or she undertakes to
handle and defend it on his or her own behalf. The foregoing right to
indemnifications shall not be exclusive of any other right to which such
person may be entitled as a matter of law or otherwise, or any power that
an Employer may have to indemnify him or her to hold him or her harmless.
12.5. In the event of a claim by a Participant or his or her Beneficiary
with respect to the Plan, such Participant or Beneficiary shall present
his or her claim in writing to the Manager of the Plan. The Manager
shall, within ninety (90) days after receipt of such written claim, make
a determination and send written notification to the Participant or
Beneficiary as to its disposition. If warranted by special
circumstances, the Manager shall be allowed an extension of time not to
exceed ninety (90) days from the end of the initial period and shall so
notify the Participant or Beneficiary. In the event the claim is wholly
or partially denied, such written notification shall (a) state the
specific reason or reasons for the denial; (b) make specific reference to
the pertinent provisions of the Plan on which the denial is based; (c)
provide a description of any additional material or information necessary
for the Participant or Beneficiary to perfect the claim and an
explanation of why
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such material or information is necessary; and (d) set forth the
procedure by which the Participant or Beneficiary may appeal the denial
of his or her claim. In the event a Participant or Beneficiary wishes
to appeal the denial of his or her claim, he or she may request a review
of such denial by making application in writing to the Committee within
sixty (60) days after receipt of such denial. Such Participant or
Beneficiary (or his or her duly authorized representative) may, upon
written request to the Committee, review any documents pertinent to his
or her claim, and submit in writing issues and comments in support of his
or her position. Within sixty (60) days after receipt of a written
appeal the Committee shall make a determination and notify the
Participant or Beneficiary of its final decision. If warranted by
special circumstances, the Committee shall be allowed an extension of
time not to exceed one hundred twenty (120) days from the receipt of the
appeal and shall so notify the Participant or Beneficiary. Such final
decision shall be in writing and shall include specific reasons for the
decision, written in a manner calculated to be understood by the
claimant, and specific references to the pertinent provisions of the Plan
on which the decision is based.
12.6. The Committee, itself or by its nominee, shall be entitled to vote
the shares of any mutual fund held by the Plan. The Trustee shall be
responsible for delivering to the Committee all notices, prospectuses,
financial statements, proxies and proxy soliciting materials relating to
the shares of any mutual fund credited to the Plan.
SECTION 13. RIGHTS OF PARTICIPANTS
----------------------
13.1. The Committee, itself or by its nominee, shall be entitled to
vote or to cause the Trustee to vote, Company Common Stock held in the
Company Common Stock Fund and registered in the name of the Plan or the
Trustee's nominee; provided, however, that any such Company Common Stock
to be voted shall be voted in accordance with the following:
(a) The Committee shall adopt, or cause the Trustee to adopt,
reasonable measures to notify each Participant of the date and
purposes of each meeting of shareholders of the Company at which
holders of Company Common Stock shall be entitled to vote, and to
request instructions from such Participant to the Committee as to
the voting at such meeting of Company
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Common Stock credited to such Participant's Accounts for Plan Years
other than the current Plan Year.
(b) In each case, the Committee, itself or by its nominee, shall
vote such Company Common Stock in accordance with the instructions
of such Participant.
(c) If prior to the time of such meeting of shareholders the
Committee shall not have received instructions from any Participant
in respect of any such Company Common Stock credited to such
Participant's Accounts, the Committee shall be entitled, itself or
by its nominee, to vote, or to cause the Trustee to vote, such
Company Common Stock at such meeting in its discretion.
(d) The Participant's rights to instruct the Committee shall apply
only with respect to the voting of such Company Common Stock and the
Committee shall not be required to exercise with respect to such
Company Common Stock the rights and remedies of dissenting
shareholders provided by the Pennsylvania Business Corporation Law
or by any similar statutory provision or at common law. The Trustee
and its nominee, if any, shall execute and deliver such
documentation as may be necessary under the Securities Exchange Act
of 1934 and the rules and regulations promulgated thereunder and the
Pennsylvania Business Corporation Law to permit the Committee to
vote such Company Common Stock as aforesaid.
13.2. Any rights issued with respect to Company Common Stock held in the
Company Common Stock Fund, any distribution of property (other than the
Company Common Stock) and any stock dividend, stock split or other change
in Company Common Stock shall be applied for the exclusive benefit of the
Participants.
13.3. Company Common Stock held in the Company Common Stock Fund and
credited to a Participant's Accounts shall remain in such Accounts until
distribution is made under Section 10 hereof.
13.4 No right or interest of any Participant under the Plan or in any
Account shall be assignable or transferable, in whole or in part, either
directly or by operation of law or otherwise, including without
limitation by execution, levy, garnishment, attachment,
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pledge or in any other manner, but excluding devolution by death or by
adjudication of incompetency; no attempted assignment or transfer thereof
shall be effective; and no right or interest of any Participant under the
Plan or in any of the Accounts therein shall be liable for, or subject
to, any obligation or liability of such Participant. Notwithstanding the
foregoing, the provisions of this Section 13.4 shall not apply to Federal
tax liens or to the creation, assignment, or recognition of a right to
any benefit payable with respect to a Participant pursuant to a Qualified
Domestic Relations Order. If the Plan receives written notice that a
Participant's Account is subject to a domestic relations order, the
Participant will not be eligible for withdrawals, loans or distributions
hereunder; provided, however, that such restrictions shall be removed if
a domestic relations order is not received by the Plan within a
reasonable period of time. If the Plan receives a domestic relations
order, the Committee shall promptly notify the Participant and any other
Alternate Payee of the receipt of such order and the procedures for
determining the qualified status of domestic relations orders. Within a
reasonable period after receipt of such order, the Committee shall
determine whether such order is a Qualified Domestic Relations Order and,
during such determination period, the Participant shall not be eligible
for withdrawals, loans or distributions hereunder. The Participant and
Alternate Payee shall be notified of the Committee's final determination.
The Committee shall establish a procedure to determine the status of a
judgment, decree or order as a Qualified Domestic Relations Order and to
administer Plan distributions in accordance with Qualified Domestic
Relations Orders. Such procedure shall be in writing, shall include a
provision specifying the notification requirements enumerated above,
shall permit an Alternate Payee to designate a representative for receipt
of communications from the Committee and shall include such other
provisions as the Committee shall determine, including provisions
required under applicable regulations.
SECTION 14. MODIFICATION OR TERMINATION OF THE PLAN
---------------------------------------
14.1. Consistent with the provisions of this Section 14, the Company
reserves the right to terminate the Plan, to completely discontinue all
Matching Employer Contributions, to suspend any or all of the provisions
hereof, to merge or consolidate it with, to transfer its
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assets or liabilities to, any other plan, at any time and for any reason.
Upon the occurrence of any of the aforementioned events, each affected
Participant (and his or her Beneficiary and surviving spouse, if any)
shall look solely to the Trust Fund for provision of any benefits
hereunder.
14.2. The Company may modify, alter or amend the Plan hereunder from
time to time to any extent that it may deem advisable including, but
without limiting the generality of the foregoing, any amendment deemed
necessary by requirements of Federal or State statutes applicable to the
Plan or authorized or made desirable by such statutes. Any such
modification shall be effective at such date as the Company may
determine, except that no modification may apply to any period prior to
the announcement of the modification unless, in the Company's sole
discretion, such modification is deemed necessary or advisable in order
to comply with provisions of the Code or amendments thereto (including
any regulations or rulings thereunder).
14.3. No amendment of the Plan shall (a) reduce the benefits of any
Participant accrued under the Plan to the date the amendment is adopted,
(b) eliminate or reduce a protected benefit under Section 411(d)(6) of
the Code except as provided in Section 412(c)(8) of the Code or in
applicable regulations, or (c) divert any part of the assets of the Trust
Fund for a purpose other than the exclusive benefit of Participants or
their Beneficiaries or surviving spouses or Alternate Payees who have an
interest in the Plan. No amendment to the Plan shall change any vesting
schedule under the Plan unless each Participant having at least three
Years of Service at the end of the period described in this sentence is
permitted to elect, within a period beginning on the date such amendment
is adopted and ending 60 days after the latest of (i) the day the
amendment is adopted, (ii) the day the amendment becomes effective, or
(iii) the day the Participant is issued written notice of the amendment,
to have his nonforfeitable percentage computed under the Plan without
regard to such amendment.
14.4. Upon termination or partial termination of the Plan or upon
complete discontinuance of Matching Employer Contributions, each
Participant shall become fully vested in all of his or her Matching
Employer Account, in accordance with Section 8.3 hereof (provided,
however, that any such partial termination or discontinuance is
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related to such Participant). If the Plan is terminated, all Matching
Employer Contributions shall cease. Upon termination or partial
termination of the Plan, the interest of each affected Participant shall
be distributed to such Participant or to his or her Beneficiary or
surviving spouse to the extent permitted by law as soon as practicable
thereafter, and no part of the Trust Fund shall revert to or be returned
to the Employer or be used or diverted for purposes other than for the
exclusive benefit of Participants or their Beneficiaries or surviving
spouses, and for the purpose of defraying reasonable expenses.
14.5. Anything to the contrary herein notwithstanding, the Company in
its sole discretion, may as to all Employees in one or more operating
divisions of the Company or of a Participating Company, withhold the
offering of participation in the Plan, to discontinue Matching Employer
Contributions in respect of any Plan Year, or to take any other
appropriate action affecting such Employees. Should participation be
terminated in consequence of the exercise of the powers hereinabove
conferred upon the Company, all Matching Employer Contributions on behalf
of such Participants shall cease, each such Participant shall become
fully vested in all of his or her Matching Employer Account, in
accordance with the provisions of Section 8.3 hereof, and the interest of
each such Participant shall be distributed to such Participant or to his
or her Beneficiary or surviving spouse to the extent permitted by law as
soon as practicable thereafter.
14.6. The Plan may not be merged or consolidated with, nor may its
assets or liabilities be transferred to, any other plan unless each
Participant or Beneficiary under the Plan would, if the resulting plan
were terminated, receive a benefit immediately after the merger,
consolidation or transfer which is equal to or greater than the benefit
he or she would have been entitled to receive immediately before the
merger, consolidation, or transfer if the Plan had then terminated.
SECTION 15. GENERAL PROVISIONS
------------------
15.1. Nothing herein contained shall be deemed to give an Employee the
right to be retained in the service of the Employer or to interfere with
the rights of the Employer to discharge him or her at any time.
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15.2. If the Committee determines that any person to whom a payment is
due hereunder is unable to care for his or her affairs because of
physical or mental incapacity, it shall have the authority to cause any
payment due such person to be made to the duly appointed guardian or
personal representative of such person. Payments made to such guardian
or personal representative shall operate as a complete discharge of the
obligations of the Employer, the Committee, the Trustee and the Trust
Fund.
15.3. A benefit shall be deemed forfeited if the Committee is unable to
locate the Participant or Beneficiary to whom payment is due; provided,
however, that such benefit shall be reinstated if a claim is made
therefor by the Participant or Beneficiary.
15.4. To the extent not otherwise preempted by the Employee Retirement
Income Security Act of 1974 or any other applicable federal law, the Plan
shall be governed by, and construed in accordance with, the laws of the
Commonwealth of Pennsylvania.
15.5 The Employer, the Trustee, the Committee, and all fiduciaries with
respect to the Plan, and all other persons or entities associated with
the operation of the Plan, the management of its assets, and the
provision of benefits thereunder, may reasonably rely on the truth,
accuracy and completeness of any data provided by any Participant, any
Beneficiary or any Alternate Payee, including, without limitation,
representations as to age, health and marital status. None of the
aforementioned persons or entities associated with the operation of the
Plan, its assets and the benefits provided under the Plan shall have any
duty to inquire into any such data, and all may rely on such data being
current to the date of reference, it being the duty of the Participants,
spouses of Participants, Beneficiaries, and Alternate Payees to advise
the appropriate parties of any change in such data. Furthermore, the
Employer, the Trustee, the Committee and all fiduciaries with respect to
the Plan may reasonable rely on all consents, elections and designations
filed with the Plan or those associated with the operation of the Plan
and the Fund by any Participant, the spouse of any Participant, any
Beneficiary of any Participant, any Alternate Payee, or the
representatives of such persons without duty to inquire into the
genuineness of any such consent, election or designation.
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The Committee shall take such steps as are considered necessary and
appropriate to remedy any inequity that results from incorrect
information received or communicated in good faith or as the consequence
of an administrative error.
SECTION 16. SPECIAL PROVISIONS FOR TOP-HEAVY PLANS
--------------------------------------
16.1. Notwithstanding any provision in the Plan to the contrary, for
any Plan Year in which the Plan is deter- mined to be Top-Heavy, the
provisions of this Section 16 shall become effective.
16.2. The Plan will be considered Top-Heavy for the Plan Year, if, as of
the last day of the first Plan Year and, thereafter, as of the last day
of the preceding Plan Year (the "Determination Date"):
(a) the value of the sum of all Accounts, including amounts
distributed during the five-year period ending on the Determination
Date, of Participants who are Key Employees (as defined below)
exceeds 60% of the sum of all Accounts of all Participants, or
(b) the Plan is part of an Aggregation Group and such Aggregation
Group is determined to be a Top-Heavy Group (as defined in Section
416(g)(2)(B) of the Code).
In determining the value of a Participant's Accounts, such Accounts shall
be valued as of the most recent business day within the twelve-month
period ending on the Determination Date.
In determining the above Top-Heavy ratio, the account balances of an
Employee (i) who is a Non-Key Employee (defined for purposes of this
Article as an Employee who is not a Key Employee, including any former
Key Employee) but who was a Key Employee in any prior Plan Year, or (ii)
who has not performed services for the Employer maintaining the Plan at
any time during the five-year period ending on the applicable
Determination Date are disregarded.
A Key Employee is defined as any Employee, former Employee or the
Beneficiary of such Employee who, at any time during a Plan Year or the
immediately preceding four (4) Plan Years is: (i) an officer of the
Employer having annual Compensation greater than 150 percent of the
amount
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in effect under section 415(c)(1)(A) of the Code for any Plan Year; (ii)
an owner (or considered as owning within the meaning of section 318 of
the Code) both more than one-half ( 1/2) percent interest as well as one
of the ten (10) largest interests in the Employer, and having annual
Compensation greater than the dollar limit in effect under section
415(c)(1)(A) for the Plan Year; (iii) a five percent (5%) owner of the
Employer; or (iv) a one-percent (1%) owner of the Employer having annual
Compensation from the Employer of more than one-hundred-fifty-thousand
dollars ($150,000).
For purposes of Section 16, Aggregation Group means (i) all plans of the
Employer or an Affiliated Company in which a Key Employee participates,
including any terminated plans which are maintained within the five-year
period ending on the applicable Determination Date, and (ii) all other
plans of the Employer or an Affiliated Company which enable such plans to
meet the requirements of Section 401(a)(4) or 410 of the Code. The
foregoing notwithstanding, the Employer may treat any plan maintained by
the Employer or an Affiliated Company not required to be included in the
Aggregation Group as being part of such group if such group would
continue to meet the requirements of Sections 401(a)(4) and 410 of the
Code with such plan being taken into account.
16.3. For any Plan Year in which the Plan is determined to be Top-Heavy
pursuant to Section 16.2, the Matching Employer Contribution for such
Plan Year for each Participant who is a Non-Key Employee shall not be
less than the lesser of:
(a) 3% of the Participant's Compensation, or
(b) the percentage at which Matching Employer Contributions and
Deferred Compensation Contributions are made or are required to be
made under the Plan for the Plan Year for the Key Employee for whom
such percentage is the highest.
Notwithstanding the foregoing, if a Participant is also participating in
another defined contribution plan maintained by the Employer or both,
then the minimum Contribution hereunder may be reduced in accordance with
regulations issued under Section 416(f) of the Code. If a Participant is
also participating in a defined benefit plan maintained by the Employer,
"5%" shall be substituted for "3%" in paragraph (a) of this Section.
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The Employer Matching Contributions referred to above shall be provided
to each Non-Key Employee who is a Participant and who has not separated
from service at the end of the Plan Year, regardless of such Employee's
number of Hours of Service, Compensation, or whether such Employee had
made any contribution to the Plan.
16.4. For any Plan Year in which the Plan is determined to be Top-Heavy
pursuant to Section 16.2, each Participant's interest in Matching
Employer Contributions (and any earnings thereon) shall become vested in
accordance with the following schedule:
<TABLE>
<CAPTION>
Years of Employment Vested Percentage
------------------- -----------------
<S> <C>
Less than 2 0
2 20
3 or more 100
</TABLE>
If the Plan thereafter ceases to be Top-Heavy, the vesting provisions
shall revert to the provisions of Section 8.2, but subject to the
provisions of Section 14.3.
16.5. For any Plan Year in which the Plan is determined to be Top-Heavy
pursuant to Section 16.2, paragraphs (I)(i) and (2)(i) of Section 5.4(b)
shall be read by substituting the number "1.00" for the number "1.25",
wherever it appears. Notwithstanding the foregoing, no adjustment shall
be made to Section 5.4(b), if the following requirements are met:
(a) Section 16.3 shall be applied by substituting "4%" for "3%";
and the annual accrued benefit derived from employer contributions
under the defined benefit plan for each Participant who is a Non-Key
Employee shall not be less than the product of:
(i) 3% of such Participant's average annual compensation
during the period of consecutive years (not exceeding five)
which yields the highest average; and
(ii) the Participant's Years of Service (not exceeding 10)
during which the Plan is Top-Heavy; and
(b) the aggregate of the Accounts of Participants who are Key
Employees under the Plan does not exceed
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90% of the aggregate of the Accounts of all Participants; and
(c) the sum of (i) the present value of the cumulative accrued
benefits for Key Employees under all defined benefit plans in the
Aggregation Group, and (ii) the aggregate of the Accounts of Key
Employees under all defined contribution plans in the Aggregation
Group does not exceed 90% of such sum determined for all employees;
and
(d) In the case of a Participant also participating in a defined
benefit plan maintained by the Employer, all of the requirements of
paragraph (a) shall be met by substituting "7 1/2%" for "3%" in
Section 16.3.
SECTION 17. DISTRIBUTION ON SALE OF RIGHTS
------------------------------
17.1. Notwithstanding anything else contained in this Plan, in the event
a Distribution Date occurs under the Rights Agreement, the Committee
shall immediately direct the Trustee to distribute promptly to each
Participant and Beneficiary (or Alternate Payee under an applicable
Qualified Domestic Relations Order) the Rights received with respect to
the Company Common Stock in the Accounts of such Participant or
Beneficiary. However, if such distribution might cause the
disqualification of the Plan under Section 401(a) of the Code or is
prohibited by law in the case of one or more Participants, Beneficiaries
or Alternate Payees, the Committee shall direct the Trustee to sell
promptly the applicable Rights at a price not less than the market price
thereof on the date of sale, and to reinvest the proceeds thereof in
Company Common Stock to be credited to such Participant's or
Beneficiary's Accounts, to the extent such Accounts are invested in
Company Common Stock, in proportion to the number of Rights sold from
each such Account.
SECTION 18. EMPLOYEE STOCK OWNERSHIP PLAN PROVISIONS
----------------------------------------
18.1. For any Plan Year in which the Committee declares any portion of
the Plan to be an employee stock ownership plan ("ESOP") within the
meaning of Sections 401(a) and 4975(e)(7) of the Code, the provisions of
this Section 1 shall become effective.
18.2. At the direction of the Committee or its designee, the Trustee may
borrow funds, enter into a purchase-money transaction or enter into an
extension of credit
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transaction for the purpose of purchasing Company Common Stock from any
party, including the Company, if the following provisions with respect to
any such transaction (hereinafter called the "Loan") are met:
(a) The Loan must be at a reasonable rate of interest and for a
specific term.
(b) Any collateral pledged to the creditor by the Trust shall
consist only of the shares of Company Common Stock purchased with
the Loan and dividends thereon (although, in addition to such
collateral, the Company may guarantee repayment of the Loan) and
such assets shall constitute assets of the Plan for all other
purposes.
(c) Under the terms of the Loan, the creditor shall have no
recourse against the Trust, except with respect to the collateral,
or against the Trustee.
(d) Upon payment of any portion of the principal amount due on the
Loan for any Plan Year, that number of shares of Company Common
Stock pledged as collateral for such Loan shall be released as shall
equal the total number of such shares so pledged multiplied by the
ratio of (i) the principal and interest paid during the Plan Year,
to (ii) the sum of the principal and interest paid during the Plan
Year and the total principal and interest to be paid for all future
years of such Loan; provided, however, that the number of future
years under the Loan must be definitely ascertainable and shall be
determined without taking into account any possible extensions or
renewal periods; and, provided, further, that if the Loan provides
for annual payments of principal and interest at a cumulative rate
not less rapid at any time than level annual payments of such
amounts for 10 years taking into account renewals and extensions,
then, if the Committee so determines, in its sole discretion,
interest paid, which would constitute interest under a standard
amortization table, may be ignored in determining the number of
shares of Company Common Stock to be released. If the interest rate
under the Loan is variable, the interest to be paid in future years
shall be computed by using the interest rate applicable as of the
end of the Plan Year. Shares shall, upon being released from
encumbrance under the Loan, be allocated to the Accounts of the
Participants for the Plan Year for
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which such portion is so released, but not before. Such allocation
shall be made in accordance with Section 4.1, to the extent the Loan
is repaid by Matching Employer Contributions, and in accordance with
Section 11, to the extent the Loan is repaid from earnings of the
Trust Fund.
18.3 Except as otherwise required by applicable law, no shares of
Company Common Stock acquired by the Trust with the proceeds of a Loan
pursuant to the provisions of Section 18.2 shall be subject to a put,
call or other option, or buy-sell or similar arrangement while held by
the Trust and when distributed from the Trust, whether or not the Plan is
then an ESOP as defined in Section 54.4975-7(b)(l)(i) of the Treasury
Regulations.
18.4. In the event a Loan described in Section 18.2 hereof is repaid, or
the Plan ceases to be an ESOP as defined in Section 54.4975-7(b)(I)(i) of
the Treasury Regulations, the protections and rights described in
Sections 18.2 and 18.3 hereof relating to shares of Company Common Stock
acquired by the Trust with the proceeds of a Loan pursuant to the
provisions of Section 18.2 shall continue to be applicable in accordance
with the provisions of those Sections.
18.5. The Committee shall notify each Participant who has attained age
55 and has completed 10 years of participation in the Plan that he or she
may elect within 90 days after the close of a Plan Year in the Qualified
Election Period to diversify the investment of his or her Account by
changing his or her investments in the Fund pursuant to Section 7.3 or by
making a withdrawal pursuant to Section 9 without regard to Section 9.2.
"Qualified Election Period" shall mean the six-Plan Year period beginning
with the later of (i) the first Plan Year in which the Participant
attains age 55, and completes 10 years of participation in the Plan, and
(ii) the first Plan Year beginning after December 31, 1986.
18.6. Notwithstanding the provisions of Section 6.5 hereof, the earnings
of the Trust Fund may be used for the purpose of repaying a Loan
hereunder.
SECTION 19. PARTICIPANT LOANS
-----------------
19.1. Subject to the provisions of Sections 13.4 and 19.9, each
Participant who is an Employee and any other
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Participant who is a party in interest as defined in ERISA may apply for
a loan from the Plan.
19.2. Subject to such uniform and nondiscriminatory rules as may from
time to time be adopted by the Manager, the Trustee, upon the
Participant's request in the manner prescribed by the Manager, may make a
loan or loans to such applicant; provided, however, that the Manager
shall reject a loan application if it has actual knowledge that the
intended use of the loan proceeds is to purchase securities on margin.
No loan shall be granted if there are already two loans outstanding.
19.3. Loans shall be at least $500 in amount, and in no event shall
total loans exceed the lesser of (a) fifty percent (50%) of the vested
balance credited to such Participant's Account as of the date of the
Manager's approval of the Participant's loan application, less estimated
amounts payable for any pending withdrawal and loan requests that are
payable prior to the effective date of the current loan request, or (b)
$50,000, reduced by the excess, if any, of (i) the highest outstanding
balance of all loans during the twelve (12) months prior to the time the
new loan is to be made over (ii) the outstanding balance of loans made to
the Participant on the date such new loan is made. Loans under any other
qualified plan sponsored by the Employer or an Affiliated Company shall
be aggregated with loans under the Plan in determining whether or not the
limitation stated herein has been exceeded.
19.4. Loans shall be available to all Participants who are parties in
interest on a reasonably equivalent basis, provided, however, that the
Manager may make reasonable distinctions among prospective borrowers on
the basis of credit worthiness. Subject to considerations relating to a
Participant's credit worthiness and ability or deemed ability to repay
the loan, loans shall not be made available to Participants who are or
were Highly Compensated Employees in an amount greater than the amount
available to other Participants.
19.5. Every Participant receiving a loan hereunder will receive a
statement from the Manager clearly reflecting the charges involved in
each transaction, including the dollar amount and annual interest rate of
the finance charges. The statement will provide all information required
to meet applicable 'truth-in-lending' laws.
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19.6. The Manager will not approve any loan if it is the belief of the
Manager that such loan, if made, would constitute a prohibited
transaction (within the meaning of Section 406 of ERISA or Section
4975(c) of the Code), would constitute a distribution taxable for federal
income tax purposes, or would imperil the status of the Plan or any part
thereof under Section 401(k) of the Code.
19.7. All loans shall be considered investments of a segregated account
of the Trust Fund (the 'Loan Fund') directed by the borrower.
Accordingly, the following conditions shall prevail with respect to each
such loan:
(a) All loans shall be secured by the vested portion of the
Participant's Accounts, less any portion of the Participant's
Account which has been assigned to an alternate payee under a
Qualified Domestic Relations Order. No additional security shall be
permitted.
(b) Interest shall be charged at a rate to be fixed by the Manager
and, in determining the interest rate, the Manager shall take into
consideration interest rates currently being charged on similar
commercial loans by persons in the business of lending money.
(c) Loans shall be for terms of six (6) to sixty (60) consecutive
calendar months. Loans shall be non-renewable and non-extendable.
(d) Any loan made to a Participant under this Section 19 shall be
evidenced by a promissory note executed by the Participant. Such
promissory note shall contain the irrevocable consent of the
Participant to the payroll withholding described in subsection (e),
if applicable.
(e) Loans shall be repaid in equal installments through payroll
withholding; provided, however, that:
(i) a Participant who is not an Employee but who is a party in
interest;
(ii) a Participant who is an Employee but for whom payroll
withholding is not possible;
(iii) a Participant who is receiving benefits under a short-
or long-term disability plan of the Employer or an Affiliated
Company for whom
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withholding from disability benefits is not possible;
(iv) a Participant who is receiving compensation, or a
disability benefit described in clause (3), which has become
insufficient to make the required monthly loan payment; and
(v) a Participant who is on an approved leave of absence,
shall repay by certified check or in such other manner directed by
the Manager.
(f) Loans may be prepaid in full at any time without penalty, upon
reasonable prior written notice to the Manager. Partial prepayment
is not permitted.
19.8. Fees properly chargeable in connection with a loan may be charged,
in accordance with a uniform and nondiscriminatory policy established by
the Manager, against the Account of the Participant to whom the loan is
granted.
19.9. The Account(s) and the Investment Fund(s) which are to be
liquidated to provide the loan principal shall be determined in
accordance with such uniform and nondiscriminatory rules as may from time
to time be adopted by the Manager.
19.10. Loan payments to the Plan by the Participant shall be allocated
among such Participant's Accounts in the Investment Funds in the
proportion that such Accounts are represented in the Loan Fund and shall
be invested in the Investment Funds on the basis of the Participant's
current investment election under Section 7.2 (or the Participant's most
recent investment election, if no investment election is currently in
effect, unless the Participant elects otherwise in accordance with rules
prescribed by the Manager); provided, however, that amounts taken from
the Company Common Stock Fund which are required to be invested in such
Fund pursuant to Section 6.3 shall be reinvested in such Fund.
19.11. In the event that:
(a) the Participant fails to make any required installment payment;
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(b) the Plan receives an opinion of counsel to the effect that (i)
the Plan will, or could, lose its status as a qualified plan under
Section 401(a) of the Code unless the loan is repaid or (ii) the
loan violates, or may violate, any provision of ERISA;
(c) the Plan is merged or terminated; or
(d) a Participant (other than a Participant who (i) continues to be
a party in interest or (ii) is receiving benefits under a short- or
long-term disability plan of the Employer or an Affiliated Company)
has a Severance Date or becomes entitled to a distribution under
Section 10.11;
before a loan is repaid in full, the unpaid balance of the loan,
with interest due thereon, shall become immediately due and payable
(unless, in the case of Section 19.11(c) or Section 19.11(d), the
Manager determines otherwise).
In the event that a loan becomes immediately due and payable (in
'default') pursuant to this Section 19.11, the Participant (or his
or her Beneficiary, if the Beneficiary is the surviving spouse, in
the event of the Participant's death) may satisfy the loan by paying
the outstanding balance in full within such time as may be specified
by the Manager in a uniform and nondiscriminatory manner.
Otherwise, any such outstanding loan shall be deducted from the
portion of the Participant's vested Accounts allocated to his or her
Loan Fund before any benefit which is or becomes payable to the
Participant or his or her Beneficiary is distributed. In the case
of a benefit which becomes payable to the Participant or his or her
Beneficiary pursuant to Section 10 (or would be payable to the
Participant or Beneficiary but for such individual's election to
defer the receipt of benefits), the deduction described in the
preceding sentence shall occur on the earliest date following such
default on which the Participant or Beneficiary could receive
payment of such benefit, had the proper application been filed or
election been made, regardless of whether or not payment is actually
made to the Participant or Beneficiary on such date. In the case of
a benefit which becomes payable under any other provision, the
deduction shall occur on the date such benefit is paid to the
Participant. The Manager shall also be entitled to take any and all
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other actions necessary and appropriate to enforce collection of the
outstanding balance of the loan. Failure of the Manager to strictly
enforce Plan rights with respect to a default on a Plan loan shall
not constitute a waiver of such rights."
19.12. In the event the outstanding balance of the Participant's loan is
assigned to an Alternate Payee pursuant to a Qualified Domestic Relations
Order, the promissory note shall be distributed to the Alternate Payee
and all further loan repayments shall be made, by such Participant, to
the Alternate Payee.
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SALARIED INVESTMENT PLAN
EXHIBIT A
------------------------
[Provisions adopted, effective May 31, 1992, relating to the participation of
certain Weyerhaeuser employees.]
1. Each person employed by Health Care Company on May 31, 1992 who was
immediately prior thereto employed by Weyerhaeuser Company is authorized
to participate in the Plan, subject to the following terms and
conditions.
2. For each such person who becomes a Participant pursuant to Section
2.1 of the plan, the Years of Employment for purposes of Section 8.1 of
the Plan shall be deemed to include such person's "Service" under the
November 30, 1987 version of the Weyerhaeuser Company Employee Stock
Plan.
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SALARIED INVESTMENT PLAN
EXHIBIT B
------------------------
[Resolution adopted by R.L. Bobertz, as designated by the Company's Executive
Compensation Committee, on October 26, 1992, relating to the sale of the
Nonwovens Division.]
RESOLVED, that, contingent upon the Company's sale of its Nonwovens Division to
FiberTech Group, Inc., each Participant who is employed by FiberTech Group, Inc.
immediately after such sale shall be fully vested in his or her Matching
Employer Account.
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Ex-4(b)
SCOTT PAPER COMPANY
HOURLY INVESTMENT PLAN
As Amended Effective January 1, 1994
The purpose of the Scott Paper Company Hourly Investment Plan (formerly known as
the Scott Paper Company Employees' Stock Investment Program) is to encourage and
assist employees to save part of their income on a regular basis by deferring
its receipt through payroll deductions, supplemented by matching employer
contributions, and to invest such amounts in order to provide additional
security and income during employment and at retirement or other termination of
employment. Except as otherwise provided herein, the Plan as hereinafter
written shall be effective on January 1, 1994, and shall only apply to a
Participant who is employed on or after such date. The Deposit Account and
Company Contribution Account of any former Participant who is a salaried
employee of the Employer and who participated in the Plan before January 1,
1991, shall be transferred to the Scott Paper Company Investment & Supplementary
Retirement Plan effective December 31, 1990 and shall thereafter be subject to
the terms and conditions of such Plan.
SECTION 1. DEFINITIONS
-----------
1.1. "Account" shall mean one of several accounts maintained to record
the interest of each Participant in the Plan. These Accounts include the
"Deposit Account," the "Basic Non-Deferred Compensation Account," the
"Supplementary Non-Deferred Compensation Account," the "Company
Contribution Account," the "Matching Employer Account," the "Basic
Deferred Compensation Account," the "Supplementary Deferred Compensation
Account," and the "Profit Sharing Account" as established and maintained
for each Participant pursuant to Section 5 hereof.
1.2. "Affiliated Company" shall mean any corporation which is included
within a controlled group of corporations (within which the Company is
also included) as determined under Section 1563(a) of the Code without
regard to Sections 1563(a)(4) and (e)(3)(C) of the Code; provided,
however, that for the purposes of Section 5.5 such determination under
Section 1563(a) of the Code shall be made by substituting the phrase "at
least 50 percent" for the phrase "at least 80 percent" each place it
appears in Section 1563(a)(1) of the Code.
1.3. "Beneficiary" shall mean any person designated by a Participant
pursuant to Section 10.3 hereof to receive the
<PAGE>
amount in the Accounts of such Participant in the event of his or her
death.
1.4. "Code" shall mean the Internal Revenue Code of 1986, as the same
may be amended from time to time.
1.5. "Committee" shall mean the Committee constituted as set forth in
Section 12 hereof, which shall administer the Plan as provided herein.
1.6. "Company" shall mean Scott Paper Company. Any function of the
Company under the Plan shall be performed by its Executive Compensation
Committee, except to the extent delegated by such committee to any
employee or group of employees of the Company.
1.7. "Company Common Stock" shall mean Common Shares of Scott Paper
Company, and shall include fractional interests in such Shares and Rights
prior to the Distribution Date, such terms being defined in the Rights
Agreement dated July 15, 1986, between the Company and First Chicago
Trust Company of New York (the "Rights Agreement").
1.8. "Compensation" shall mean, for purposes of the Plan other than
Sections 1.14, 5.5, 5.7(b), 5.7(d), 5.7(e), 5.8(b), and 5.8(d), the total
remuneration paid during a Pay Period to an Employee for services
rendered including but not limited to salary, wages and overtime pay plus
Deferred Compensation Contributions, but excluding any extra or irregular
remuneration, such as, but not limited to, Company contributions (other
than Deferred Compensation Contributions that are deemed Company
contributions for the purposes of the Code) and Matching Employer
Contributions pursuant to the provisions of Section 4 hereof, payments in
settlement of claims or in discharge of judgments or awards, termination
pay, lump-sum payments of vacation pay, production bonus, quality bonus,
and other bonuses or lump sum payments whether or not in lieu of wage
increases or signing bonuses, as well as profit sharing, incentive or
variable compensation payments. Notwithstanding the foregoing, the
Compensation taken into account under the Plan shall be limited to
$150,000 (adjusted to reflect any cost of living increases provided in
accordance with Section 415(d) of the Code). In determining Compensation
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 Employee and any lineal descendants who
have not attained age 19 before the close of the Plan Year.
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1.9. "Contributions" shall mean amounts paid under the Plan by or on behalf
of a Participant pursuant to the provisions of Sections 3 and 4 hereof,
including:
(a) "Participant's Contributions;"
(b) "Basic Non-Deferred Compensation Contributions" and
"Supplementary Non-Deferred Compensation Contributions", sometimes
collectively referred to herein as "Non-Deferred Compensation
Contributions;"
(c) "Basic Deferred Compensation Contributions" and "Supplementary
Deferred Compensation Contributions," sometimes collectively
referred to herein as "Deferred Compensation Contributions;" and
(d) "Matching Employer Contributions," "Company Contributions" and
"Profit Sharing Contributions".
"Basic Non-Deferred Compensation Contributions" and "Basic Deferred
Compensation Contributions," shall sometimes collectively be referred to
herein as "Basic Contributions". "Supplementary Non-Deferred
Compensation Contributions" and "Supplementary Deferred Compensation
Contributions," shall sometimes collectively be referred to herein as
"Supplementary Contributions".
1.10. "Effective Date" shall mean January 1, 1961.
1.11. "Employee" shall mean any person employed by the Employer at a
Participating Location on a regular basis at a stated hourly rate of
Compensation. Notwithstanding the foregoing, leased employees (as
defined in Section 414(n)(2) of the Code) and employees of the Employer
who are hired for a specific limited period of time or for periods of
varying limited duration shall not be considered "Employees" hereunder.
1.12. "Employer" shall mean (a) the Company, and (b) all Participating
Companies, either individually or collectively as required by the
context.
1.13. "Employment Commencement Date" shall mean the date on which an
Employee first performs an Hour of Service for the Employer.
Notwithstanding the above, if an Employee shall incur a One-Year Period
of Severance, "Employment Commencement Date" shall mean the first date on
which such Employee thereafter completes an Hour of Service for the
Employer.
1.14. "Highly Compensated Employee" shall mean an Employee of the
Employer who performed services during the
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Plan Year for which a determination is being made (the "Determination
Year") and who during such Determination Year, or the preceding
Determination Year,
(a) was a five-percent owner (as defined in Section 416(i)(1) of
the Code and the regulations issued thereunder);
(b) received Compensation from the Employer in excess of $75,000
(adjusted to reflect any cost of living increases provided in
accordance with Section 415(d) of the Code);
(c) received Compensation from the Employer in excess of $50,000
(adjusted to reflect any cost of living increases provided in
accordance with Section 415(d) of the Code) and was in the top 20
percent of Employees based on Compensation paid during such Plan
Year; or
(d) was an officer of the Employer and received Compensation
greater than 50 percent of the amount in effect under Section
415(b)(1)(A) of the Code for such Plan Year.
Notwithstanding the foregoing, the provisions of paragraph (b), (c) or
(d) above shall not cause an Employee to be treated as a Highly
Compensated Employee for the Determination Year of reference unless such
Employee is one of the top 100 Active Employees (based on Compensation
received) during such Determination Year and was a Highly Compensated
Employee in accordance with the provisions of paragraph (b), (c) or (d)
above for the preceding Determination Year (without regard to this
sentence).
For purposes of paragraph (d), no more than fifty employees (or, if
lesser, the greater of three employees or ten percent of the employees)
shall be treated as officers, and if no officer meets the requirements of
paragraph (d), then the highest paid officer for such year shall be
treated as meeting the requirements of such paragraph.
For purposes of determining the number of employees in the top-paid
group, or the number of officers under paragraph (d), employees who have
less than six months of service, employees who work less than 17 1/2
hours per week or less than six months per year, employees who have not
attained age 21, and nonresident aliens may be excluded.
A former employee shall be treated as a Highly Compensated Employee if
such employee was a Highly Compensated
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Employee when such employee separated from service, or if such employee
was a Highly Compensated Employee at any time after attaining age 55.
For purposes of this Section 1.14, all employees (other than leased
employees within the meaning of Section 414(n)(2) of the Code) of the
Employer or an Affiliated Company shall be treated as employed by a
single employer.
For purposes of this Section 1.14, the term "Compensation" shall have the
meaning set forth in Section 5.5(f); provided, however, that Compensation
for this purpose shall also include a Participant's Deferred Compensation
Contributions under the Plan and any other contributions made by the
Participant pursuant to a salary reduction agreement under the terms of
any other plan maintained by the Employer or an Affiliated Company
pursuant to Section 125 or 401(k) of the Code.
1.15. "Hour of Service" shall mean each hour for which an Employee is
paid or is entitled to payment by the Employer for the performance of
duties for it.
1.16. "Manager of the Plan" or "Manager" shall mean the person
appointed by the Committee pursuant to Section 12.1 hereof to carry out
certain aspects of the administration of the Plan as required hereunder
or by the Committee.
1.17. "Maximum Deferral," as used in Section 3.4 hereof, shall mean the
greatest amount of Deferred Compensation Contributions that may be
deposited with respect to a Participant in any Plan Year pursuant to
Section 402(g) of the Code. The Maximum Deferral shall be Seven Thousand
Dollars ($7,000.00), as adjusted for cost-of-living increases pursuant to
Section 402(g)(5) of the Code.
1.18. "One-Year Period of Severance" shall mean each period of twelve
(12) consecutive months beginning on an Employee's Severance Date and
ending on the day preceding each anniversary of such date during which
the Employee does not perform an Hour of Service for the Employer.
Notwithstanding the foregoing, the 24-consecutive month period beginning
on the first day of an absence from work for any period (a) by reason of
the pregnancy of an Employee, (b) by reason of the birth of a child of
the Employee, (c) by reason of the placement of a child with the Employee
in connection with the adoption of such child by the Employee, or (d) for
purposes of caring for such child for a period beginning immediately
following such birth or placement, shall not be included in a One-Year
Period of Severance. An Employee who is absent from work during any
period for one of the reasons specified in the
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preceding sentence shall provide to the Committee, in the manner
prescribed by the Manager or the Committee, information establishing (i)
that the absence from work is for one of the reasons set forth in the
preceding sentence, and (ii) the number of days for which there was such
an absence. Nothing in this Section shall be construed as expanding or
amending any maternity or paternity leave policy of the Employer.
1.19. "Participant" shall mean any Employee who becomes a Participant in
the Plan as provided in Section 2 hereof.
1.20. "Participating Company" shall mean any Wholly-Owned Subsidiary of
the Company whose participation in the Plan shall have been authorized by
the Board of Directors of the Company or by the Company and which shall
have adopted the provisions of the Plan and agreed either to make
Matching Employer Contributions or to reimburse the Company on account of
Company Contributions and Matching Employer Contributions made in respect
of any of its Employees who become Participants in the Plan. "Wholly-
Owned Subsidiary of the Company" shall mean any corporation (other than
the Company) in an unbroken chain of corporations beginning with the
Company, each of which corporations, other than the last corporation in
the unbroken chain, owns all of the voting stock (other than Directors'
qualifying shares) in one of the other corporations in such chain.
1.21. "Participating Location" shall mean any location of the Employer
which is currently designated by the Company as a Participating Location
and which is specified as such in Appendix A hereof. The type of
Contributions available and the rate of Matching Contributions, if any,
with respect to a Participating Location shall also be specified on
Appendix A.
1.22. "Pay Day" shall mean the day on which an Employee is paid
Compensation for services rendered during a Pay Period.
1.23. "Pay Period" shall mean a weekly, biweekly, semi-monthly or
monthly period, depending upon whether an Employee is paid Compensation
weekly, bi-weekly, semi-monthly or monthly.
1.24. "Plan Year" shall mean the calendar year commencing on the
Effective Date and each calendar year thereafter.
1.25. "Plan" shall mean the Scott Paper Company Hourly Investment Plan
as herein set forth. The Plan is intended to be a qualified profit
sharing plan within the meaning
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of Section 401(a) of the Code, and with respect to Deferred Compensation
Contributions and Matching Employer Contributions, a qualified cash or
deferred arrangement within the meaning of Section 401(k) of the Code.
1.26. "Qualified Domestic Relations Order" shall mean a judgment, decree
or order (including approval of a property settlement agreement) made
pursuant to a state domestic relations law (including community property
law) which relates to the provision of child support, alimony payments or
marital property rights to a spouse, former spouse, child or other
dependent of a Participant (the "Alternate Payee") and which: (a)
creates or recognizes the existence of the Alternate Payee's right to, or
assigns to the Alternate Payee the right to, receive all or a portion of
the benefits payable to a Participant under this Plan; and (b) specifies
(i) the name and last known mailing address (if any) of the Participant
and each Alternate Payee covered by the order, (ii) the amount or
percentage of the Participant's Plan benefits to be paid to the Alternate
Payee, or the manner in which such amount or percentage is to be
determined, and (iii) the number of payments or the period to which the
order applies and each plan to which the order relates; and (c) does not
require the Plan to (i) provide any type or form of benefit, or any
option not otherwise provided under the Plan, (ii) provide increased
benefits, or (iii) pay benefits to the Alternate Payee that are required
to be paid to another Alternate Payee under a prior Qualified Domestic
Relations Order. A Qualified Domestic Relations Order may provide that
distribution commence to the Alternate Payee immediately, regardless of
whether the Participant has incurred a Severance Date, if the Order
directs (a) that the payment of the benefits be determined as if the
Participant had retired on the date on which payment is to begin under
such Order, taking into account only the vested balance standing to the
Participant's credit in his or her Accounts on such date, and (b) that
the payment be made in a form in which such benefits may be paid under
the Plan to the Participant, excluding any form of benefit prohibited by
law with respect to the Alternate Payee. If the Order provides for an
immediate distribution, such distribution shall commence as soon as
practicable after the end the month in which the domestic relations order
is determined to be a Qualified Domestic Relations Order under Section
13.4 of the Plan. Notwithstanding the foregoing, if the total amount
distributable to an Alternate Payee does not exceed three thousand five
hundred dollars (or such other amount as the Secretary of the Treasury
shall specify), the Committee shall make such distribution in one lump
sum in cash, which distribution shall be made as soon as practicable
after the end of the
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month in which the domestic relations order is determined to be a
Qualified Domestic Relations Order under Section 13.4 of the Plan. The
amount distributable to an Alternate Payee under this Section 1.26 shall
be based on the value of the Participant's Account, or the portion of the
Participant's Account allocated to the Alternate Payee, as determined
under Section 11 on the last day of the month preceding the month in
which distribution is made or commences, or if such day is not a business
day, the first business day of the month following such day.
1.27. "Required Distribution Date" shall mean the April 1 of the Plan
Year following the Plan Year in which the Participant attains age 70 1/2.
1.28. "Retirement" shall mean the retirement of an Employee under an
established retirement program of the Employer. "Early Retirement" shall
mean the early retirement of an Employee under an established retirement
program of the Employer. "Normal Retirement" shall mean the normal
retirement of an Employee under an established retirement program of the
Employer.
1.29. "Severance Date" shall mean, for any Employee, the earliest of the
dates on which such Employee dies, terminates employment with the
Employer and all Affiliated Companies and any successor to the Employer
or an Affiliated Company (including the purchaser of assets or a
subsidiary as described in Section 10.10), or ceases to be actively
employed by the Employer or an Affiliated Company or any successor to the
Employer or an Affiliated Company (including the purchaser of assets or a
subsidiary as described in Section 10.10) for reasons other than a leave
of absence; provided, however, that for purposes of Section 10, a former
Employee's Severance Date shall not be earlier than the date such
individual ceases to perform services for the Employer and all Affiliated
Companies as an employee of another entity. For purposes of determining
a Participant's entitlement to a distribution under Section 10, the
Severance Date of a Participant who is on layoff status shall be the
first day of the month following the expiration of his or her recall
rights pursuant to the collective bargaining agreement to which he or she
is subject. Notwithstanding the foregoing, for purposes of Sections
1.18, 1.35 and 8.4, 'Severance Date' shall mean, for any Employee, the
earliest of the dates on which such Employee dies, terminates employment
with the Employer and all Affiliated Companies, or is absent from active
employment with the Employer and all Affiliated Companies for one year;
provided, however, if the Employee is absent for military service
required by law, the Employee shall not incur a Separation from Service
Date if
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such Employee returns to service with the Employer or an Affiliated
Company within 90 days of his or her release from active military duty or
any longer period during which his or her right to reemployment is
protected by law.
1.30. "Total and Permanent Disability" shall mean a physical or mental
disability that totally disables the Participant to such an extent that
he is rendered wholly and continuously unable to engage in any occupation
or perform any work for any kind of compensation of financial value. The
disability must be certified by a licensed doctor of medicine to be such
as can reasonably be expected to continue during the remainder of the
Participant's lifetime.
1.31. "Trust Fund" shall mean the trust fund created pursuant to
Section 6 hereof.
1.32. "Trustee" shall mean the person, firm or corporation appointed by
the Committee to manage and control the Trust Fund.
1.33. "Workweek" shall mean the regularly recurring period of 168
consecutive hours commencing at a fixed time on a fixed day of each
calendar week established by a Participant's Employer for the purpose of
scheduling the work or determining the Compensation of such Participant.
1.34. "Year of Employment" shall mean each 12-month period of service
beginning on an Employee's Employment Commencement Date and ending on his
or her Severance Date. Nonsuccessive periods of service shall be
aggregated on the basis that 12 months of service (30 days are deemed to
be a month in the case of aggregation of fractional months) equal a Year
of Employment. After such aggregation, any remaining period of service
of less than 12 months shall be disregarded for purposes of determining a
Participant's vested interest under the Plan pursuant to Section 8. If
an Employee incurs a Severance Date and, prior to the occurrence of a
One-Year Period of Severance, the Employee performs an Hour of Service
for the Employer or an Affiliated Company, Years of Employment shall also
include the period between such Severance Date and the date on which such
Hour of Service is performed. Years of Employment shall include all
years of employment with the Employer or an Affiliated Company whether or
not the employee qualified as an Employee during those years.
If a Participant had no vested interest in any of his or her Accounts
(other than his or her Basic or Supplementary Non-Deferred Compensation
Account, or amounts credited to
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the Participant pursuant to a rollover or direct transfer) at the time he
or she incurred a One-Year Period of Severance, such Participant's pre-
severance Years of Employment shall be counted in determining his or her
vested percentage under Section 8.2 after a subsequent Employment
Commencement Date if the Participant completes an Hour of Service at a
time when his or her consecutive One-Year Periods of Severance do not
equal or exceed the greater of (a) five (5) or (b) the number of Years of
Employment such Participant had to his or her credit prior to his or her
One-Year Period of Severance. Otherwise, the Participant's pre-severance
Years of Employment shall be canceled.
Notwithstanding the foregoing, a Participant's Years of Employment after
any One-Year Period of Severance shall not increase his or her vested
interest in his or her pre-severance Account balance unless the
Participant again completes an Hour of Service prior to incurring five
(5) consecutive One-Year Periods of Severance and only if his or her pre-
severance Account balance is restored as described in Section 8.4, if the
vested amount was previously distributed.
SECTION 2. PARTICIPATION
-------------
2.1. Each Employee on the first Pay Day of any month beginning on or
after January 1, 1993 (or on such other day or days as may be approved by
the Committee) shall be eligible on such dates to become a Participant by
delivering a properly executed subscription agreement, at such time in
advance as may be specified by the Committee.
2.2. Each Employee may become a Participant by delivering a properly
executed subscription agreement to the Superintendent, Plant Manager or
General Manager at the plant from which the subscribing Employee is paid
or, in the case of Employees located at or paid from the Company's
corporate headquarters, to the Manager of the Plan.
2.3. Each subscription agreement shall be in the form prescribed by the
Manager or the Committee; provided, however, that such form shall contain
a statement that the subscribing Employee has received a copy of the
Prospectus relating to the Plan, that a copy of the Plan has been made
available to him or her, and that he or she adopts and agrees to the
terms of the Plan.
2.4. Each Participant's subscription agreement shall also specify the
amount of his or her Participant's Contributions or whether the election
in Section 3.2
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hereof has been made, the rate of his or her Non-Deferred Compensation
Contribution and the rate of his or her Deferred Compensation
Contribution, determined in accordance with the provisions of Section 3
hereof, to be deducted or withheld from the Compensation paid or
otherwise payable to such Participant during each Pay Period, and shall
authorize and direct the deposit of such amounts in the Trust Fund
pursuant to the provisions of Section 7 hereof.
2.5. If, as a result of a change in job classification or a transfer to
an Affiliated Company, a Participant no longer qualifies as an Employee
and becomes eligible to participate in another qualified retirement plan
maintained by the Employer or an Affiliated Company which permits the
transfer of a Participant's Accounts from this Plan and which contains a
vesting provision identical to, or more favorable to the Participant
than, that under Section 8.2 hereof, the value of the Participant's
Accounts shall be transferred to such other plan and shall continue to
vest, to the extent not already vested, in accordance with the provisions
of such other plan; provided, however, that the Committee, in its sole
discretion, shall refuse to allow a transfer if such transfer would
violate the provisions of Section 411(d)(6) of the Code and the
regulations thereunder. Upon any such transfer, he or she shall cease to
be a Participant hereunder and his or her Accounts shall thereafter be
subject to the terms and conditions of such other plan.
SECTION 3. PARTICIPANT'S, DEFERRED COMPENSATION AND NON-DEFERRED COMPENSATION
------------------------------------------------------------------
CONTRIBUTIONS
-------------
3.1. Unless the Participant is eligible to make Deferred and
Non-Deferred Compensation Contributions pursuant to Sections 3.2 and
3.3, a Participant's subscription agreement shall specify an amount per
Workweek to be deducted from the Compensation that would otherwise be
paid to the Participant during the Plan Year for which the subscription
agreement is received and subsequent Plan Years and shall authorize and
direct the deposit of such amount in the Trust Fund pursuant to Section
7 hereof. Each Participant's subscription shall be for an amount per
Workweek which is a multiple of $.50 and which is neither less than
$2.00 nor more than that multiple of $.50 most nearly approximating 5%
of such Participant's weekly salary or wages. The maximum subscription
so permitted for each Participant for any Plan Year shall be computed
on the basis of such Participant's average weekly compensation for the
calendar year preceding such Plan Year, as reported on the
Participant's Form W-2, or the Participant's hourly base rate of pay in
effect on January
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1 (or the first date on which the Participant has an hourly base rate, if
later) of such Plan Year multiplied by forty, whichever is greater.
Payroll deductions for each Participant's Contributions in respect of
each Plan Year will begin with a deduction from Compensation for the
first Pay Period during which the Employee is a Participant for which
payment is made during such Plan Year, or if for any reason it is
impossible or impracticable to make such deduction in preparing the
payroll for such Pay Period, then with the first succeeding payroll which
includes such Participant's name and in the preparation of which such
deduction may practicably be made. The first and each succeeding such
payroll deduction made pursuant to the subscription of any Participant
will be deposited promptly in the Trust Fund created under the Plan in
respect of such Plan Year. Participant's Contributions shall give rise to
Company Contributions pursuant to the provisions of Section 4.1 hereof.
3.2. If specified on Appendix A, a Participant may elect in the
subscription agreement to reduce his or her Compensation that would
otherwise be paid and to direct the Employer to deposit an amount equal
to such reduction in the Trust Fund pursuant to Section 7 hereof.
Subject to the provisions of Sections 3.3, 3.4, 5.5, 5.6, 5.7, 5.8 and
5.9, and any applicable limitations imposed by law, the rate of reduction
in Compensation shall be 1%, 2%, 3%, 4%, 5%, 6%, 7%, 8%, 9%, 10%, 11%,
12%, 13%, 14% or 15% of the Compensation otherwise payable to the
Participant in each Pay Period, rounded to the nearest whole dollar.
Such rate shall be designated as the rate of Deferred Compensation
Contributions and the amounts so deposited in the Trust Fund shall be
designated as Deferred Compensation Contributions. Deferred Compensation
Contributions up to and including 5% of Compensation shall be designated
as Basic Deferred Compensation Contributions, which shall give rise to
Matching Employer Contributions pursuant to the provisions of Section 4
hereof. Deferred Compensation Contributions in excess of 5% of
Compensation shall be designated as Supplementary Deferred Compensation
Contributions, and shall not give rise to Matching Employer
Contributions.
3.3. The subscription agreement executed by each Participant who is
eligible to make Deferred Compensation Contributions hereunder shall also
specify the rate of his or her Non-Deferred Compensation Contributions to
be paid into the Trust Fund. Subject to the provisions of Sections 3.3,
3.4, 5.5, 5.6, 5.7, 5.8 and 5.9, and any applicable limitations imposed
by law, the rate of Non-Deferred Compensation Contributions shall be 0%
(if
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only Deferred Compensation Contributions are made pursuant to Section 3.2
hereof), 1%, 2%, 3%, 4%, 5%, 6%, 7%, 8%, 9%, 10%, 11%, 12%, 13%, 14% or
15% of the Compensation paid to a Participant in each Pay Period, rounded
to the nearest whole dollar; provided, however, that the sum of the rate
of Deferred Compensation Contributions and the rate of Non-Deferred
Compensation Contributions in any Pay Period shall not exceed 15% of the
Compensation then paid or otherwise payable to a Participant. If a
Participant's rate of Deferred Compensation Contribution is less than 5%,
then Non-Deferred Compensation Contributions up to and including the
product of (a) the Compensation paid or otherwise payable to the
Participant in each Pay Period, and (b) the difference between (i) 5%,
and (ii) the rate of Deferred Compensation Contributions, shall be
designated as Basic Non-Deferred Compensation Contributions, which shall
give rise to Matching Employer Contributions pursuant to the provisions
of Section 4 hereof. Non-Deferred Compensation Contributions in excess
of this product shall be designated as Supplementary Non-Deferred
Compensation Contributions, and shall not give rise to Matching Employer
Contributions. If a Participant's rate of Deferred Compensation
Contribution exceeds 4%, then there shall be no Basic Non-Deferred
Compensation Contributions and all Non-Deferred Compensation
Contributions shall be designated as Supplementary Non-Deferred
Compensation Contributions, and shall not give rise to Matching Employer
Contributions.
3.4. Notwithstanding Section 3.2, Deferred Compensation Contributions
may not exceed the Maximum Deferral with respect to each Participant in
any Plan Year. If a Participant's elected Deferred Compensation
Contributions for any Plan Year would exceed the Maximum Deferral in a
Pay Period, an amount will be deposited which would bring the
Participant's Deferred Compensation Contributions to a level equal to the
Maximum Deferral. Upon reaching the Maximum Deferral, the Participant's
Deferred Compensation Contributions for the Plan Year shall cease. For
Plan Years prior to January 1, 1990, the Participant's Non-Deferred
Compensation Contributions shall also cease upon reaching the Maximum
Deferral unless the Participant elects, in the manner prescribed by the
Manager or the Committee, that Non-Deferred Compensation Contributions
shall continue to be made or commence to be made on his behalf.
Effective for Plan Years beginning on or after January 1, 1990, the
Participant's total rate of contributions in effect immediately prior to
reaching the Maximum Deferral shall be converted to a Non-Deferral
Compensation Contribution rate unless the Participant elects, in the
manner prescribed by the Manager or the Committee, that Non-Deferral
Compensation Contributions be
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made at a different rate. With respect to any Plan Year following the
Plan Year in which the Participant has made the Maximum Deferral, unless
the Participant delivers a properly executed contribution rate change
form, at the time and in the manner prescribed by the Manager or the
Committee, the Participant's rate of Deferred Compensation Contribution
and Non-Deferred Compensation Contribution shall commence at the rate in
effect immediately prior to the Participant reaching the Prior Plan
Year's Maximum Deferral.
3.5. Anything to the contrary notwithstanding, Contributions may not be
made by or on behalf of a Participant:
(a) at any time during which he or she is eligible to make deposits
as a 'Participant' of the Scott Paper Company Salaried Investment
Plan;
(b) during any period of time in which such Participant no
longer qualifies as an Employee;
(c) during any period of time in which such Participant ceases to be
employed at a Participating Location;
(d) during the period of time commencing on his or her Severance
Date, and ending on his or her next Employment Commencement Date; or
(e) who has not delivered a properly executed subscription
agreement in accordance with the provisions of Section 2 and this
Section 3.
In addition, a Participant shall not be eligible to make Participant's
Contributions under Section 3.1 at any time during which he or she is
eligible to make Deferred and Non-Deferred Compensation Contributions
under Sections 3.2 and 3.3.
3.6. Notwithstanding the provisions of Section 3.5 hereof, any
Participant who is making Participant's Contributions hereunder and who
shall be temporarily absent from active employment without Compensation
for any period including one or more entire Workweeks by reason of
Disability or duly authorized leave of absence (but not by reason of
strike or layoff) may, at his or her option:
(a) discontinue his or her Participant's Contributions in the then
current Plan Year during such absence and receive full credit for
all Participant's Contributions made therein by him or
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her prior and subsequent to such absence and the Company
Contributions made thereon and any earnings on such Participant's
Contributions and Company Contributions; or
(b) continue to make Participant's Contributions during such Plan
Year, by payments which shall be made at such times and in such
manner as shall be prescribed therefor by the Committee. The
Committee may, at its discretion, accept any such payment received
after its prescribed due date but in no event later than the end of
the Plan Year to which such payment relates. If not accepted, such
payment and any payment subsequently tendered by the Participant
shall be returned to him or her. Any Participant who fails to render
any payment required by this option, or whose payment is not
accepted by the Committee as hereinabove provided, shall
nevertheless remain in good standing and receive full credit in the
current Plan Year for all Participant's Contributions made by him or
her prior to, during and subsequent to such absence and the Company
Contributions made thereon and any earnings on such Participant's
Contributions and Company Contributions.
3.7. Amounts representing Participant's Contributions, Deferred
Compensation and Non-Deferred Compensation Contributions shall be
deducted or withheld from payrolls, and such amounts shall, not less
frequently than monthly, be paid into the Trust Fund; provided, however,
that the Employer may, in its discretion, transmit any monies to be
invested by an insurance company managing or maintaining a Fund
hereunder, directly to such insurance company not less frequently than
monthly. Contributions by or on behalf of a Participant shall cease
automatically on the Pay Day preceding commencement of his or her leave
of absence without Compensation, and such Contributions shall resume upon
the first Pay Day following the termination of such leave. Anything to
the contrary herein notwithstanding, no Company Contributions or Matching
Employer Contributions shall be made to a Participant's Account in
respect of any Pay Period during which no Participant's Contributions or
Basic Contributions, respectively, are made by or on behalf of such
Participant; nor shall any Participant be permitted to make Contributions
other than as specifically provided hereunder.
3.8. Subject to the provisions of Sections 3.4, 5.6 and 5.7, the amount
of Participant's Contributions, and the rates of Deferred Compensation
and Non-Deferred
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Compensation Contributions specified by a Participant shall remain in
effect until changed by request of the Participant in the manner
prescribed by the Manager or the Committee. Such a request shall be made
no later than the fifteenth day of the month preceding the effective
date; the effective date of any such change shall be the first Pay Day of
a month.
3.9. The amount of each Participant's Deferred and Non-Deferred
Contributions shall be determined according to his or her Compensation
from time to time, but his or her rates of Contribution shall be changed
only as prescribed in Section 3.8 above.
3.10. A Participant may reduce his or her rates of Contributions to zero
without withdrawing from the Plan by making a request in accordance with
the provisions of Section 3.8 above.
SECTION 4. COMPANY CONTRIBUTIONS, MATCHING EMPLOYER CONTRIBUTIONS AND PROFIT
-----------------------------------------------------------------
SHARING CONTRIBUTIONS
---------------------
4.1. Subject to the provisions of Section 14.1 hereof, the Employer
shall contribute, not less frequently than monthly, an amount equal to
fifty percent (50%) of each Participant's Contributions, or that
percentage of Participant's Contributions otherwise specified on Appendix
A; provided, however, that any Company Contribution that exceeds either
50% of Participant's Contributions or 2-1/2% of Compensation must be
approved by the Chairman of the Board of the Company. Such Company
Contributions shall be paid or credited under the Plan within a
reasonable time after the Participant's Contributions are made; provided,
however, that Company Contributions for any Plan Year shall be paid to
the Trust Fund no later than the time prescribed under Section 404(a)(6)
of the Code.
4.2. Subject to the provisions of Section 14.1 hereof, the Employer
shall, not less frequently than monthly, pay or cause to be paid to the
Trustee, or, at the Employer's discretion, directly to an insurance
company managing or maintaining a Fund hereunder, an amount equal to that
percentage of Basic Contributions specified on Appendix A; provided,
however, that any Matching Employer Contribution that exceeds either 50%
of Basic Contributions or 2-1/2% of Compensation must be approved by the
Chairman of the Board of the Company. Such Employer Contributions shall
be designated as Matching Employer Contributions.
4.3. In each Plan Year, if specified on Appendix A with respect to an
Employee's Participating Location and at the
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discretion of the Employer, the Employer may make Profit Sharing
Contributions to the Plan for every Participant in an amount to be
determined by the Employer from current or accumulated net profits.
Profit Sharing Contributions shall be allocated equally among all
Employees at the Participating Location, and each such Employee shall
become a Participant of the Plan with respect to such Profit Sharing
Contributions.
4.4. Notwithstanding the above, Company Contributions, Matching Employer
Contributions and Profit Sharing Contributions shall be made only out of
current or accumulated profits as determined in accordance with generally
accepted accounting principles and shall not exceed the aggregate thereof
at the time of such Contributions. If the current or accumulated profits
of any Employer are not sufficient to permit the required Contributions,
then so much of the Contributions which such Employer is not permitted to
make may be made by any other Employer to the extent of its current or
accumulated profits remaining after adjustment for Contributions made on
behalf of its Employees. No reimbursement shall be required as a result
thereof. If the current or accumulated profits of the Company and all
Participating Companies are not sufficient to permit the required
Contributions, the Employer may make such Contributions at a subsequent
time when then current or accumulated profits permit; provided, however,
that the Participant's Contributions or Basic Contributions to which such
Company Contributions or Employer Contributions relate must still be in
the Trust Fund; and provided further, that such Contributions must not
cause the limits imposed by Section 5.5 hereof to be exceeded.
4.5. The expenses of establishing and administering the Plan shall be
paid from the Trust Fund and allocated among the Accounts of the
Participants in the same manner as investment losses experienced
proportionately by all Accounts in the Trust Fund, except to the extent
that the Company, in its sole discretion, has determined that the
Employer shall pay any such expenses. The transfer taxes, brokerage fees
and other expenses in connection with the purchase, sale or distribution
of Company Common Stock shall be paid by the Trust Fund, and shall be
deemed part of the cost of such Company Common Stock, or deducted in
computing the sale proceeds therefrom, as the case may be, except to the
extent that the Company, in its sole discretion, determines that such
taxes, fees or expenses (other than transfer taxes on distribution) shall
be paid by the Employer.
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<PAGE>
4.6. All Company, Matching Employer, Profit Sharing and Deferred
Compensation Contributions under the Plan are conditioned upon the
deductibility of such Contributions under Section 404 of the Code and to
the extent the deduction is disallowed, shall be returned to the Employer
within one year after the disallowance of the deduction. That portion of
the Contributions returned to the Employer which is attributable to
Deferred Compensation Contributions shall thereafter be paid (subject,
however, to the withholding of taxes and other amounts as though such
amounts were current Compensation) by the Employer to the Employees from
whose Compensation such amounts were obtained. Earnings attributable to
such Contributions shall not be returned to the Employer but losses
attributable thereto shall reduce the amount to be so returned. For
purposes of this Section 4.6, Contributions which are not deductible in
the current taxable year of the Employer but which may be deducted in
taxable years subsequent to the year in respect of which it is made,
shall not be considered to be disallowed.
4.7. If Company, Matching Employer, Profit Sharing and Deferred
Compensation Contributions are made by reason of a mistake of fact, such
Contributions shall be returned to the Employer within one year after
such Contributions are made. The amount which may be returned to the
Employer shall not exceed the excess of (i) the amount contributed, over
(ii) the amount that would have been contributed had there not occurred a
mistake of fact or a mistake in determining the deduction. That portion
of the Contributions returned to the Employer which is attributable to
Deferred Compensation Contributions shall thereafter be paid (subject,
however, to the withholding of taxes and other amounts as though such
amounts were current Compensation) by the Employer to the Employees from
whose Compensation such amounts were obtained. Earnings attributable to
the excess Contributions shall not be returned to the Employer but losses
attributable thereto shall reduce the amount to be so returned.
SECTION 5. ALLOCATION OF CONTRIBUTIONS
---------------------------
5.1. Participant's Contributions in respect of any Plan Year shall be
allocated to the Participant's Deposit Account and shall be invested in
accordance with the provisions of Section 5.3 hereof. Any earnings or
appreciation (less losses and depreciation) attributable to such
Contributions shall also be allocated to the Deposit Account producing
same.
5.2. A Participant's Basic Deferred Compensation Contributions and
Supplementary Deferred Compensation
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Contributions in respect of any Plan Year shall be allocated to his or
her Basic Deferred Compensation Account and Supplementary Deferred
Compensation Account, respectively, and shall be invested in accordance
with the provisions of Section 7 hereof. Any earnings or appreciation
(less losses and depreciation) attributable to such Contributions shall
be allocated to the respective Account producing same.
5.3. A Participant's Company Contributions, Matching Employer
Contributions or Profit Sharing Contributions in respect of any Plan Year
shall be allocated to his or her Company Contribution Account, Matching
Employer Account, or Profit Sharing Account, respectively. Except as
provided in Section 7.1, all Member's Contributions, all Company
Contributions, all Profit Sharing Contributions and fifty percent (50%)
of the Matching Employer Contributions shall be invested in the Company
Common Stock Fund and the remaining fifty percent (50%) of the Matching
Employer Contributions shall be invested in the Funds in the same
proportion that the Participant designates for the Basic and
Supplementary Contributions in accordance with the provisions of Section
7 hereof. Any earnings or appreciation (less losses and depreciation)
attributable to such Contributions shall be allocated to the Matching
Employer Account producing same. Notwithstanding the foregoing, the
Trustee in the exercise of sound discretion, pending the purchase of
Company Common Stock or the disbursement of cash may hold a reasonable
portion of the Trust Fund attributable to such Contributions in cash and
deposit same with any banking or savings institution, including the
banking department of the Trustee if the Trustee is a bank, or may invest
the same in demand and short-term notes, short-term United States
Government obligations, savings bank deposits, commercial paper, other
money market instruments and part interests in one or more of the
foregoing.
5.4. A Participant's Basic Non-Deferred Compensation Contributions and
Supplementary Non-Deferred Compensation Contributions in respect of any
Plan Year shall be allocated to his or her Basic Non-Deferred
Compensation Account and Supplementary Non-Deferred Compensation Account,
respectively, and shall be invested in accordance with the provisions of
Section 7 hereof. Any earnings or appreciation (less losses and
depreciation) attributable to such Contributions shall be allocated to
the respective Account producing same.
5.5. Anything to the contrary herein notwithstanding, no Contribution
hereunder shall be made which will violate the limitations set forth
below:
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<PAGE>
(a) The Annual Addition to a Participant's Accounts (as such term
is defined below) in any Plan Year either solely under the Plan or
under an aggregation of the Plan with all other qualified defined
contribution plans of the Employer may not exceed the lesser of
(i) $30,000, or, if greater, twenty-five percent (25%) of the
dollar limitation in effect under Section 415(b)(1)(A) of the
Code, or (ii) twenty-five percent (25%) of the Employee's total
Compensation for the Plan Year.
(b) If a Participant also participates under any other qualified
defined contribution plan or any qualified defined benefit plan
maintained by the Employer or an Affiliated Company, all such
defined contribution plans shall be considered as one defined
contribution plan, and all such defined benefit plans shall be
considered as one defined benefit plan. In such event, the sum of
the defined contribution plan fraction and the defined benefit plan
fraction for any Plan Year shall not exceed 1.0. In determining the
allowable limitation referred to in the preceding sentence:
(1) The defined benefit plan fraction shall be determined by
dividing the projected annual benefit of the Participant under
the defined benefit plan by the lesser of:
(i) the product of 1.25 and $90,000 (subject to all
adjustments as are permitted by, or required under,
Section 415 of the Code), or
(ii) the product of 1.4 and 100% of the Participant's
average annual total Compensation for his or her highest
three consecutive years; and
(2) The defined contribution plan fraction shall be determined
by dividing the sum of all Annual Additions to the
Participant's Accounts (as such term is defined below) for all
years in which he or she was a participant in any such defined
contribution plan by the sum of the lesser of (i) or (ii) below
for each year during which the Participant was an employee of
the Employer:
(i) the product of 1.25 and the dollar limitation in
effect under Section 415(c)(1)(A) of the Code for such
year, or
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<PAGE>
(ii) the product of 1.4 and 25% of the Participant's
total Compensation for such year.
In the event that the sum of the defined contribution plan fraction
and the defined benefit plan fraction would exceed the allowable
limitation for any Plan Year, the Participant's anticipated benefit
under the defined benefit plan shall be reduced accordingly.
(c) For purposes of this Section 5.5, the term "Annual Addition" as
applied to each Participant shall mean the sum of the following
amounts allocated to the Participant's accounts under the Plan or
any other qualified defined contribution plan of the Employer or any
Affiliated Company: (1) Company Contributions, Profit Sharing
Contributions, Matching Employer Contributions, Deferred
Compensation Contributions allocated under Section 5.1 hereof
(excluding Deferred Compensation Contributions distributed pursuant
to Section 5.6), and any other employer contributions; (2)
forfeitures; and (3) Member's Contributions, Non-Deferred
Compensation Contributions and any other employee contributions.
Amounts described in Section 415(l) and 419A(d)(2) of the Code
contributed for any Plan Year for the benefit of the Participant
shall be treated as an Annual Addition to the extent provided in
such sections.
(d) If a Participant's Annual Addition exceeds the amount specified
in Section 5.5(a):
(1) the Participant's Contributions and Non-Deferred
Compensation Contributions for such Plan Year, if any, shall be
refunded to him or her in an amount equal to the lesser of (i)
the amount of such Contributions, or (ii) the amount of such
excess; and
(2) if, after application of Section 5.5(d)(1) above, there
remains an excess, the balance, subject to application of
Section 5.5(a) shall be held in a "Suspense Account" and
allocated in subsequent Plan Years as if it were a forfeiture
arising in such subsequent Plan Years; provided, however, to
the extent any portion of a Participant's Deferred Compensation
Contributions are determined to be excess under this Section,
such Deferred Compensation Contributions, with income thereon,
shall be
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<PAGE>
refunded to him or her as soon as administratively practicable.
(e) For purposes of this Section, "Compensation" shall include
wages, salaries, fees for professional services and other amounts
received for personal services actually rendered in the course of
employment with an Employer maintaining the Plan or any Affiliated
Company, but shall not include the following:
(1) contributions made to a deferred compensation plan which,
without regard to Section 415 of the Code, are not includable
in the Participant's gross income for the taxable year in which
contributed;
(2) contributions made on behalf of a Participant to a SEP to
the extent they are deductible by the Participant under Section
219(b)(7) of the Code;
(3) distributions from a deferred compensation plan (except
from an unfunded non-qualified plan when includable in gross
income);
(4) amounts realized from the exercise of a non-qualified
stock option, or when restricted stock (or property) held by a
Participant either becomes freely transferable or is no longer
subject to a substantial risk of forfeiture;
(5) amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified stock option;
or
(6) other amounts which receive special tax benefits, such as
premiums for group term life insurance (to the extent
excludable from gross income) or employer contributions towards
the purchase of an annuity contract described in Section 403(b)
of the Code.
5.6. (a) Notwithstanding anything herein to the contrary, a
Participant's Deferred Compensation Contributions made under this Plan
and elective deferrals made under any other qualified plan maintained
by the Employer or an Affiliated Company for any taxable year shall not
exceed the Maximum Deferral.
(b) (1) If the Participant's Deferred Compensation Contributions
made under this Plan and his
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elective deferrals made under any other qualified cash or
deferred arrangement maintained pursuant to Section 401(k) of
the Code by a company other than the Employer or an Affiliated
Company for a taxable year exceed the Maximum Deferral, the
Participant may allocate to the Plan any or all of such excess
deferrals. The Participant shall notify the Committee of such
allocation in writing no later than the March 1 following the
taxable year in which the excess deferrals were made.
(2) If the Participant's Deferred Compensation Contributions
made under this Plan and his elective deferrals made under any
other qualified cash or deferred arrangement maintained
pursuant to Section 401(k) of the Code by the Employer or an
Affiliated Company for a taxable year exceed the Maximum
Deferral, the Participant shall be deemed to have made a claim
for distribution of excess elective deferrals and the Manager
shall coordinate corrective action under this Plan with the
manager of such other cash or deferred arrangement.
(c) Notwithstanding any other provisions of the Plan, not later
than the April 15th following the close of the taxable year, the
Committee shall distribute to the Participant the excess deferrals
allocated to the Plan pursuant to Section 5.6(b) (adjusted for any
income or loss attributable thereto, calculated, as of the date of
distribution, in accordance with Treasury regulations, in a
uniformly applicable method selected by the Committee; subject,
however, to the withholding of taxes and other amounts as though
such amounts were current remuneration; and reduced by any amounts
previously distributed or recharacterized as Non-Deferred
Compensation Contributions under Section 5.7(d)). Matching Employer
Contributions (excluding Matching Employer Contributions that are
returned to the Company pursuant to Section 5.8), made for Plan
Years beginning on or after January 1, 1992 that a Participant has
received on account of his excess deferrals shall be forfeited, with
income thereon (calculated, in accordance with Treasury regulations,
in a uniformly applicable method selected by the Committee), and
shall be used to reduce the amount of Matching Employer
Contributions otherwise required to be contributed under the Plan in
accordance with Section 8.4.
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<PAGE>
5.7. (a) The Average Deferral Percentage for all eligible Employees
who are Highly Compensated Employees shall not exceed the greater
of (1) or (2), as follows:
(1) The Average Deferral Percentage for all eligible
Employees who are not Highly Compensated Employees, multiplied
by 1.25, or
(2) The Average Deferral Percentage for all eligible
Employees who are not Highly Compensated Employees, multiplied
by 2.0; provided that the Average Deferral Percentage for
Highly Compensated Employees may not exceed the Average
Deferral Percentage for eligible Employees who are not Highly
Compensated Employees by more than two percentage points.
(b) For purposes of Section 5.7(a), the term "Average Deferral
Percentage" as applied to a specified group of eligible Employees
shall mean the average of the ratios, calculated separately for each
such eligible Employee in such group, of:
(1) the amount of Deferred Compensation Contributions
(excluding any Deferred Compensation Contributions that are (i)
taken into account in determining the Average Contribution
Percentage described in Section 5.8, (ii) distributed to an
Employee who is not a Highly Compensated Employee pursuant to a
claim for benefits under Section 5.6, or (iii) returned to the
Participant pursuant to Section 5.5), to
(2) the Employee's Compensation for such Plan Year.
(c) For the purposes of this Section, the deferral percentage of a
Highly Compensated Employee who is an eligible Employee under this
Plan and who has made elective deferrals under any other qualified
cash or deferred arrangement maintained by the Employer or an
Affiliated Company (excluding plans that are not permitted to be
aggregated under Treas. Reg. (S)1.401(k)-1(b)(3)(ii)(B)) shall be
the sum of his deferral percentages under all such plans.
(d) If the Average Deferral Percentage for all eligible Employees
who are Highly Compensated Employees exceeds the amount specified in
Section 5.7(a) for any Plan Year, the amount specified in Section
5.7(b)(1) for the Highly
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<PAGE>
Compensated Employee(s) with the highest deferral percentage shall
be reduced so that his or her deferral percentage is reduced to the
greater of (a) such percentage that enables the Plan to satisfy the
Average Deferral Percentage test, or (b) a percentage equal to the
deferral percentage of the Highly Compensated Employee(s) with the
next highest percentage. This procedure shall be repeated until the
Average Deferral Percentage test is satisfied. The amount of
Deferred Compensation Contributions so reduced, together with the
attributable income thereon (calculated, in accordance with Treasury
regulations, in a uniformly applicable method selected by the
Committee), including income for the Plan Year for which the excess
amounts were contributed and income for the period between the end
of the Plan Year and the date of distribution, shall, at the
Committee's direction, be (a) recharacterized as Non-Deferred
Compensation Contributions (except that such amount recharacterized
shall continue to be treated as Deferred Compensation Contributions
for purposes of Section 9), no later than two and one-half months
immediately following the close of such Plan Year; or (b) paid
(subject, however, to the withholding of taxes and other amounts as
though such amounts were current remuneration) by the Employer to
the Employees from whose Compensation such amount was obtained.
Such payment shall be made within two and one-half (2 1/2) months
following the close of such Plan Year, if administratively
practicable, but in no event later than twelve (12) months following
the close of the Plan Year. Matching Employer Contributions
(excluding Matching Employer Contributions that are returned to the
Company pursuant to Section 5.8 and Matching Employer Contributions
received on account of contributions that are recharacterized as
Basic Non-Deferred Compensation Contributions) made for Plan Years
beginning on or after January 1, 1992 that a Participant has
received on account of his excess deferrals shall be forfeited,
with income thereon (calculated, in accordance with Treasury
regulations, in a uniformly applicable method selected by the
Committee), and shall be used to reduce the amount of Matching
Employer Contributions otherwise required to be contributed under
the Plan in accordance with Section 8.4.
(e) For purposes of determining the deferral percentage of a Highly
Compensated Employee who is a five-percent owner (as defined in
Section 416(i) of the Code and the regulations issued thereunder),
or
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<PAGE>
who is one of the top 10 Highly Compensated Employees based on
Compensation (as defined in Section 1.14) received during the Plan
Year of reference, the amount of Deferred Compensation Contributions
(in dollars) and the Compensation of such Highly Compensated
Employee shall be aggregated with the Deferred Compensation
Contributions (in dollars) and the Compensation, respectively, of
(i) all Eligible Employees (if any) who are Family Members of such
Highly Compensated Employee and who are Highly Compensated
Employees, or (ii) all Eligible Employees (if any) who are Family
Members of such Highly Compensated Employee; whichever produces the
highest ratio of aggregated Deferred Compensation Contributions to
aggregated Compensation. Such ratio shall be the deferral
percentage attributable to the Highly Compensated Employee, and the
Family Member(s) shall not be considered a separate Employee in
determining the Average Deferral Percentage hereunder. For purposes
of this paragraph, "Family Member" means, with respect to an
Employee, such Employee's spouse and lineal ascendants and
descendants and the spouses of such lineal ascendants and
descendants, taking into account legal adoptions.
(f) For purposes of Sections 5.7(b) and, except as otherwise
provided therein, Section 5.7(e), the term "Compensation" shall mean
all compensation for services performed for the Employer which is
required to be reported in Box 10 on the Employee's Form W-2, and,
at the election of the Company, any Deferred Compensation
Contributions and other amounts excluded from gross compensation
under Section 125 or 402(a)(8) of the Code.
5.8. (a) The Average Contribution Percentage for all eligible Employees
who are Highly Compensated Employees shall not exceed the greater of (1)
or (2), as follows:
(1) The Average Contribution Percentage for all eligible
Employees who are not Highly Compensated Employees, multiplied
by 1.25, or
(2) The Average Contribution Percentage for all eligible
Employees who are not Highly Compensated Employees, multiplied
by 2.0; provided that the Average Contribution Percentage for
Highly Compensated Employees may not exceed the Average
Contribution Percentage for eligible Employees who are not
Highly Compensated Employees by more than two percentage
points.
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<PAGE>
(b) For purposes of Section 5.8(a), the term "Average Contribution
Percentage" as applied to a specified group of eligible Employees
shall mean the average of the ratios, calculated separately for
each such Employee in such group, of:
(1) the amount of Company Contributions, Matching Employer
Contributions (to the extent permitted by Section 401(m) of the
Code and the regulations issued thereunder), Participant's
Contributions, Non-Deferred Compensation Contributions
(including Deferred Compensation Contributions recharacterized
as Non-Deferred Compensation Contributions under Section
5.7(d)), if any, and, at the discretion of the Committee, the
amount of Deferred Compensation Contributions paid to the Plan
on behalf of each such Employee for such Plan Year, to
(2) the Employee's Compensation for such Plan Year.
Deferred Compensation Contributions may be taken into
account under this Section only to the extent permitted by
Treasury regulations.
For the purposes of this Section, the contribution
percentage of a Highly Compensated Employee who is an eligible
Employee under this Plan and who has made after-tax
contributions (including any elective deferrals recharacterized
as after-tax contributions) or received matching contributions
under any other qualified retirement plan maintained by the
Employer or an Affiliated Company (excluding plans that are not
permitted to be aggregated under Treas. Reg. (S)1.401(m)-
1(b)(3)(ii)) shall be the sum of his contribution percentages
under all such plans.
(c) If the Average Contribution Percentage for all eligible
Employees who are Highly Compensated Employees exceeds the amount
specified in Section 5.8(a) for any Plan Year, the amount specified
in Section 5.8(b)(1) for the Highly Compensated Employee(s) with the
highest contribution percentage shall be reduced so that his or her
contribution percentage is reduced to the greater of (a) such
percentage that enables the Plan to satisfy the Average Contribution
Percentage test, or (b) a percentage equal to the contribution
percentage of
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the Highly Compensated Employee(s) with the next highest percentage.
This procedure shall be repeated until the Average Contribution
Percentage test is satisfied. The amount so reduced, together with
the attributable income thereon (calculated, in accordance with
Treasury regulations, in a uniformly applicable method selected by
the Committee), including income for the Plan Year for which the
excess amounts were contributed and income for the period between
the end of the Plan Year and the date of distribution, shall be
deemed to have been contributed to the Plan by mistake of fact,
shall be refunded to the Employer, and the portion attributable to
Participant Contributions and Non-Deferred Compensation
Contributions shall thereafter be paid (subject, however, to the
withholding of taxes and other amounts as though such amounts were
current remuneration) by the Employer to the Employees from whose
Compensation such amount was obtained. Such payment shall be made
within two and one-half (2 1/2) months following the close of such
Plan Year, if administratively practicable, but in no event later
than twelve (12) months following the close of the Plan Year.
Matching Employer Contributions (excluding Matching Employer
Contributions that are returned to the Company pursuant to Section
5.8) made for Plan Years beginning on or after January 1, 1992 that
a Participant has received on account of his excess contributions
shall be forfeited, with income thereon (calculated, in accordance
with Treasury regulations, in a uniformly applicable method selected
by the Committee), and shall be used to reduce the amount of
Matching Employer Contributions otherwise required to be contributed
under the Plan in accordance with Section 8.4.
(d) For purposes of determining the contribution percentage of a
Highly Compensated Employee who is a five-percent owner (as defined
in Section 416(i) of the Code and the regulations issued
thereunder), or who is one of the top 10 Highly Compensated
Employees based on Compensation (as defined in Section 1.14)
received during the Plan Year of reference, the amount of the
Participant's Contributions, Non-Deferred Compensation Contributions
(in dollars), Matching Employer Contributions, and the Compensation
of such Highly Compensated Employee shall be aggregated with the
Participant's Contributions, Non-Deferred Compensation
Contributions, Matching Employer Contributions and the Compensation
respectively, of (i) all Eligible Employees (if any)
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who are Family Members of such Highly Compensated Employee and who
are Highly Compensated Employees, or (ii) all Eligible Employees (if
any) who are Family Members of such Highly Compensated Employee;
whichever produces the highest ratio of aggregated Non-Deferred
Compensation Contributions to aggregated Compensation. Such ratio
shall be the contribution percentage attributable to the Highly
Compensated Employee, and the Family Member(s) shall not be
considered a separate Employee in determining the Average
Contribution Percentage hereunder. For purposes of this paragraph,
"Family Member" means, with respect to an Employee, such Employee's
spouse and lineal ascendants and descendants and the spouses of such
lineal ascendants and descendants, taking into account legal
adoptions.
(e) For purposes of this Section 5.8, the term "Compensation" shall
have the meaning set forth in Section 5.7(f).
5.9. (a) For any Plan Year, the sum of the Average Deferral Percentage
and the Average Contribution Percentage for all Eligible Employees who
are Highly Compensated Employees shall not exceed the greater of (1) or
(2) where:
(1) is the sum of:
(i) the product of 1.25 and the greater of (A) the Average
Deferral Percentage for all Eligible Employees who are not
Highly Compensated Employees; or (B) the Average
Contribution Percentage for all Eligible Employees who are
not Highly Compensated Employees; and
(ii) the product of 2.0 and the lesser of (1)(i)(A) or
(1)(i)(B) above; provided, however, that in no event shall
this amount exceed the lesser of (1)(i)(A) or (1)(i)(B)
above by more than two percentage points; and
(2) is the sum of:
(i) the product of 1.25 and the lesser of (A) the Average
Deferral Percentage for all Eligible Employees who are not
Highly Compensated Employees; or (B) the Average
Contribution Percentage for all Eligible
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Employees who are not Highly Compensated Employees; and
(ii) the product of 2.0 and the greater of (2)(i)(A) or
(2)(i)(B) above; provided, however, that in no event shall
this amount exceed the greater of (2)(i)(A) or (2)(i)(B)
above by more than two percentage points.
(b) If the limitation in this Section is not met, the deferral
percentage or the contribution percentage of Eligible Employees who
are Highly Compensated Employees shall be reduced in the manner
prescribed in Sections 5.6 or 5.7, as applicable, until such
limitation is met.
5.10. If the Committee deems it necessary or advisable in order to meet
the requirements of Section 401 of the Code or Section 5.7, 5.8 or 5.9
above, then, anything to the contrary notwithstanding and subject to any
applicable limitations imposed by law, the Committee may, in its sole
discretion, such discretion to be exercised in a uniform and
nondiscriminatory manner, take any or all of the following actions: (a)
reduce a Participant's rate of Deferred Compensation Contribution or his
or her rate of Non-Deferred Compensation Contribution; (b) pay a
Participant some or all of the Deferred Compensation Contributions
allocated to his or her Accounts for a Plan Year (in accordance with
applicable regulations under Section 401(k) of the Code); (c) make
additional Employer nonelective contributions to the Plan (in accordance
with applicable regulations under Section 401(k) of the Code); or (d)
recharacterize Deferred Compensation Contributions as Non-Deferred
Compensation Contributions (in accordance with applicable regulations
under Section 401(k) of the Code).
5.11. An Employee (regardless of whether he or she is a Participant) may
deposit into the Plan the entire amount received as a distribution from
another qualified trust forming part of a plan described in Section
401(a) of the Code or from an individual retirement program described in
Section 408 of the Code but only if the deposit qualifies as a tax-free
rollover as defined in Section 402 of the Code. If the deposit does not
qualify as a tax-free rollover, the amount of the deposit shall be
refunded to the Employee. In addition to the foregoing, the Committee,
in its sole discretion, may direct the Trustee to accept, on behalf of
any Employee, an amount transferred directly from another qualified trust
forming part of a qualified plan described in Section 401(a) of
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the Code and such amount shall be treated as a rollover and deposited
into the Plan for such Employee. Amounts credited to an Employee
pursuant to a rollover or direct transfer shall be credited to the
appropriate Account based upon the type of contribution or contributions
giving rise to the amount transferred to the Plan. All such amounts
rolled over or transferred from the Scott Paper Company Salaried
Investment Plan pursuant to this Section shall be invested in the same
Funds in which such amounts were invested in the transferor plan and
thereafter shall be subject to the investment provisions of Section 7
hereof. All such amounts rolled over or transferred from the Scott Paper
Company Employee Stock Ownership Plan pursuant to this Section shall be
invested in the Company Common Stock Fund and thereafter shall be subject
to the investment provisions of Sections 7.3 and 7.4 hereof. An Employee
who is not a Participant shall be treated as a Participant with respect
to amounts rolled over or transferred hereunder for purposes of
valuations, investments and distributions.
5.12. For purposes of Sections 5.7, 5.8, and 5.9, this Plan shall be
aggregated and treated as a single plan with other plans maintained by
the Employer or any Affiliated Company to the extent that this Plan is
aggregated with any other plan for purposes of satisfying Section 410(b)
of the Code (other than Section 410(b)(2)(A)(ii) of the Code).
SECTION 6. TRUST FUND
----------
6.1. The Company shall enter into one or more Trust Agreements with such
Trustee or Trustees as may from time to time be appointed by the
Committee, and the terms of such Trust Agreements, as the same may be
amended from time to time, shall be incorporated herein by reference.
The Committee may from time to time modify, alter, amend or terminate any
Trust Agreement hereunder or enter into such further agreements with such
Trustee or other parties to any extent that it may deem advisable to
carry the Plan into effect or to facilitate its administration
including, but without limiting the generality of the foregoing, any
amendment deemed necessary to ensure the continued tax exempt status of
the Trust under Section 501(a) of the Code; provided, however, that no
such amendment shall have the effect of diverting the whole or any part
of the principal or income of the Trust Fund to purposes other than for
the exclusive benefit of Participants or their Beneficiaries; and
provided, further, that no such amendment shall increase the duties or
responsibilities of a Trustee without its consent thereto in writing.
Copies of all Trust Agreements and
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all amendments thereto, and of such further agreements with the Trustee
and all amendments thereto, shall be delivered to any Participant upon
written request of such Participant in the manner prescribed by the
Manager or the Committee.
6.2. To the extent not otherwise directed by any Participant or by the
Committee, the Trustees shall have such powers as to investments,
reinvestments, control and disbursement of the Trust Fund (other than
with respect to the payment of benefits hereunder) as are set forth in
the Trust Agreement; provided, however, that the Committee may appoint
one or more investment managers to direct the Trustees with respect to
the investment of any portion of the Trust Fund, each such investment
manager to be either a bank, an investment manager registered under the
Investment Advisors Act of 1940, or an insurance company qualified to do
business under the laws of more than one State. The Committee may remove
any Trustee at any time upon such notice as is required by the Trust
Agreement, and upon such removal or upon the resignation of the Trustee,
the Committee shall designate a successor Trustee.
6.3. The Trust Fund shall consist of the Company Common Stock Fund and
such other Funds as have been established by the Committee. The
Committee may, from time to time, in its discretion, establish additional
Funds or terminate any Fund. The Funds may include, but shall not be
limited to, funds managed by the Trustee, by an insurance company, or by
an investment company regulated under the Investment Company Act of 1940.
6.4. Any of the Funds referred to in Section 6.3 above may, in whole or
in part, be invested in any common, collective, or commingled trust fund
maintained by the Trustee or another financial institution, which is
invested principally in property of the kind specified for that
particular investment Fund or for the temporary investment of assets, and
which is maintained for the investment of the assets of plans and trusts
which are qualified under the provisions of Section 401(a) of the Code
and exempt from Federal taxation under the provisions of Section 501(a)
of the Code, and during such period of time as an investment through any
such medium exists the declaration of trust of such trust shall
constitute a part of the applicable Trust Agreement.
6.5. All interest, dividends, and other income, as well as cash received
from the sale or exchange of securities or other property, produced by
each of the Funds shall be
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reinvested in the same Fund which produced such proceeds, interest,
dividends or other income.
SECTION 7. INVESTMENT DIRECTIONS
---------------------
7.1. The subscription agreement executed by each Employee who elects to
become a Participant pursuant to the provisions of Section 2 hereof and
who is eligible to make Deferred Compensation Contributions and Non-
Deferred Compensation Contributions pursuant to Sections 3.2 and 3.3
hereof shall, in the manner prescribed by the Manager or the Committee,
direct that his or her Basic and Supplementary Contributions be paid into
and invested in any one or more of the Funds in such percentages as the
Participant may direct; provided, however, that such percentage
investment in any Fund shall be in multiples of one percent (1%) of the
Basic and Supplementary Contributions. The remaining fifty percent (50%)
of the Matching Employer Contributions not invested in Company Common
Stock pursuant to Section 5.3 shall be invested in the Funds in the same
proportion that the Participant designates for his or her Basic and
Supplementary Contributions hereunder. Anything herein to the contrary
notwithstanding, a Participant who made Participant's Contributions
pursuant to Section 3.1 and who subsequently becomes eligible to make
Deferred Compensation Contributions and Non-Deferred Compensation
Contributions pursuant to Sections 3.2 and 3.3 hereof may, in the manner
prescribed by the Manager or the Committee, direct that 50% of his or her
Company Contribution Account be invested in any one or more of the Funds
in such percentages, in multiples of one percent (1%), as the Participant
may direct.
7.2. The percentage investment of a Participant's future Basic and
Supplementary Contributions to be paid into and invested in any one or
more of the Funds may be changed by request in the manner prescribed by
the Manager or the Committee; provided, however, that such percentage
investment in any Fund shall be in multiples of one percent (1%) of the
Basic and Supplementary Contributions in respect of each Pay Period.
7.3. A Participant may, by making a request in the manner, and subject
to any restrictions, prescribed by the Manager or the Committee, direct
that any portion, in multiples of one percent (1%), of his or her
interest in any one or more of the Funds be transferred to any one or
more of the other Funds; provided, however, that, subject to the
provisions of Section 7.4 hereof, no transfer may be made of any portion
of the Participant's interest in the Company Common Stock Fund which is
attributable to
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(a) amounts rolled over or transferred from the Scott Paper Company
Employee Stock Ownership Plan or (b) the fifty percent (50%) of Matching
Employer Contributions (or earnings thereon) required to be invested in
such Fund by Section 5.3 hereof, and such portion shall be excluded in
the determination of the amount subject to transfer hereunder.
7.4. Notwithstanding the provisions of Sections 5.3 and 7.3 above,
commencing with the day on which the Participant becomes eligible for
Early Retirement (or the day on which the Participant becomes eligible
for Normal Retirement, whichever is earlier), a Participant may, by
making a request in the manner prescribed by the Manager or the
Committee, direct:
(a) the investment in any Fund established by the Committee pursuant
to Section 6.3 of any portion, in multiples of one percent (1%), of
the fifty percent (50%) of future Matching Employer Contributions
otherwise required to be invested in the Company Common Stock Fund
pursuant to the provisions of Section 5.3 hereof; or
(b) the transfer to any Fund established by the Committee pursuant
to Section 6.3 of any portion, in multiples of one percent (1%), of
his or her interest in the Company Common Stock Fund which is
attributable to amounts rolled over or transferred from the Scott
Paper Company Employee Stock Ownership Plan or the fifty percent
(50%) of Matching Employer Contributions (or earnings thereon) which
is required to have been invested in the Company Common Stock Fund
pursuant to the provisions of Section 5.3 hereof.
7.5. Any request made pursuant to the provisions of Section 7.2, 7.3, or
7.4 above may be made at any time and, subject to any restrictions
prescribed by the Manager or the Committee, shall take effect as soon as
practicable after such request is received.
7.6. Any transfer made pursuant to the provisions of Section 7.3 or
7.4(b) shall be based upon the value of the Participant's interest in any
Fund on the date on which such transaction takes effect under Section
7.5, subject to any restrictions prescribed by the Manager or the
Committee.
7.7. Unless a Qualified Domestic Relations Order provides to the
contrary, an Alternate Payee shall have the right to direct the
investment of any portion of a Participant's
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Account payable to the Alternate Payee under such order in the same
manner as provided in this Article 7 with respect to a Participant, which
amounts shall be separately accounted for by the Trustee in the Alternate
Payee's name.
SECTION 8. VESTING OF PARTICIPANTS' INTERESTS
----------------------------------
8.1. That portion of each Participant's interest in the Trust Fund
derived from his or her Participant's Contributions or Basic and
Supplementary Contributions (and any earnings thereon) shall be vested at
all times in such Participant.
8.2. Except as otherwise provided in this Section 8.2, each
Participant's interest in Company Contributions, Matching Employer
Contributions or Profit Sharing Contributions (and any earnings thereon)
shall be vested in such Participant as of the second anniversary of the
date the Participant became a Participant as described in Section 2.1
(hereinafter the "Vesting Period"); provided, however, that the
Participant is employed on such anniversary and has not suffered a One-
Year Period of Severance during the Vesting Period; and further provided
that each Participant's interest in his or her Company Contribution
Account, Matching Employer Account or Profit Sharing Account shall be
fully vested in the Participant if such Participant has five Years of
Employment.
8.3. Notwithstanding the above, each Participant's interest in all
Company Contributions, Matching Employer Contributions and Profit Sharing
Contributions (and any earnings thereon) made on his or her behalf shall
be vested in such Participant in whole, upon
(a) his or her Retirement, Total and Permanent Disability, death or
attainment of age 65 (and continuously after attainment of age 65);
(b) the termination of participation in the Plan pursuant to the
provisions of Section 14.5 hereof (provided, however, that such
termination of participation related to such Participant);
(c) the termination or partial termination of the Plan, or the
complete discontinuance of all Matching Employer Contributions under
the Plan pursuant to the provisions of Section 14.4 hereof
(provided, however, that such discontinuance or partial termination
related to such Participant); or
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(d) the termination of employment of the Participant as a direct
consequence of (i) the sale, other disposition, or permanent
discontinuation of a portion of the business or assets of the
Employer, (ii) a reduction in the Employer's work force, or (iii)
the elimination of a position; provided, however, that such
termination of employment is involuntary but not on account of
unsatisfactory work performance or misconduct.
8.4. If a Participant incurs a Severance Date other than by reason of an
event described in Section 8.3 above, his or her interest in unvested
Company Contributions, Matching Employer Contributions or Profit Sharing
Contributions and any earnings thereon shall be forfeited and shall
reduce the amount of Company Contributions, Matching Employer
Contributions or Profit Sharing Contributions otherwise required to be
contributed under the provisions of Sections 4.1 and 4.2 hereof as to
Company Contributions, Matching Employer Contributions or Profit Sharing
Contributions for the Plan Year in which (a) the Participant incurs five
consecutive One-Year Periods of Severance or (b), if earlier, the
Participant receives a distribution of his or her entire vested interest
in his or her Account. If a Participant who has received a distribution
of all or a portion of his or her vested interest in the Plan in
accordance with the provisions of Section 10 hereof on account of his or
her incurring a Severance Date is reemployed by the Employer, he or she
shall have restored to his or her Company Contribution Account, Matching
Employer Account or Profit Sharing Account the amount forfeited in
accordance with the above; provided, however, that such Participant
repays the amount distributed. Such repayment must be made before the
earlier of (i) five years after the date on which the Participant is
subsequently reemployed by the Employer, or (ii) the end of a period of
five consecutive One-Year Periods of Severance. The Committee shall
maintain, or cause to be maintained, a record of the amounts required to
be restored hereunder, and the Employer shall pay such amounts within
thirty (30) days of such notice either from current forfeitures or from
an additional contribution by the Employer.
SECTION 9. WITHDRAWALS
-----------
9.1. Subject to the provisions of this Section 9 and Section 13.4, a
Participant may, by making a request in the manner prescribed by the
Manager or the Committee, withdraw all or part of those portions of his
or her interest in the Plan designated below, in cash, on no more than
two occasions during a Plan Year. Each withdrawal
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hereunder shall be made as soon as practicable following receipt of the
Participant's request. Withdrawals shall be permitted from the following
categories in the sequence given; provided, however, that amounts in all
preceding categories must be exhausted before withdrawals will be
permitted from any succeeding category; and provided further, that (a) a
Participant's Contributions and Basic Non-Deferred Compensation
Contributions which were deposited less than twenty-four (24) months
before the withdrawal is made, (b) with respect to a Participant who has
less than five (5) years of participation in the Plan, vested Matching
Contributions which were deposited less than twenty-four (24) months
before the withdrawal is made and earnings on such Matching
Contributions, (c) Supplementary Deferred Compensation Contributions
(including Supplementary Deferred Compensation Contributions that were
recharacterized as Non-Deferred Compensation Contributions under Section
5.7(d)), (d) Basic Deferred Compensation Contributions (including Basic
Deferred Compensation Contributions that were recharacterized as Non-
Deferred Compensation Contributions under Section 5.7(d)), and (e)
earnings on Supplementary and Basic Deferred Compensation Contributions
(including Supplementary and Basic Deferred Compensation Contributions
that were recharacterized as Non-Deferred Compensation Contributions
under Section 5.7(d)) that were credited to a Participant's Account on or
before December 31, 1988 may only be withdrawn in accordance with the
provisions of Section 9.2 hereof:
. Participant's Contributions which were deposited before January 1,
1987;
. Supplementary Non-Deferred Compensation Contributions (excluding
Deferred Compensation Contributions that were recharacterized as
Supplementary Non-Deferred Compensation Contributions under Section
5.7(d)) made after December 31, 1988, and any Participant's
Contributions and any Basic Non-Deferred Compensation Contributions
(excluding Deferred Compensation Contributions that were
recharacterized as Basic Non-Deferred Compensation Contributions
under Section 5.7(d)) which were deposited (i) after December 31,
1986 and (ii) more than twenty-four (24) months before the
withdrawal is made, and earnings on all such Contributions;
. Earnings on all Participant's Contributions which were deposited
before January 1, 1987;
. Vested Company Contributions, Matching Employer Contributions and
Profit Sharing Contributions
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deposited more than twenty-four (24) months before the withdrawal is
made and all earnings on such Employer Contributions; provided,
however, that if the Participant has completed at least five (5)
years of participation in the Plan, all vested Company
Contributions, Matching Employer Contributions, Profit Sharing
Contributions and earnings on such Employer Contributions shall be
available for withdrawal;
. Participant's Contributions and Basic Non-Deferred Compensation
Contributions which were deposited less than twenty-four (24) months
before the withdrawal is made;
. With respect to a Participant who has completed less than five (5)
years of participation in the Plan, vested Company Contributions,
Matching Employer Contributions and Profit Sharing Contributions
deposited less than twenty-four (24) months before the withdrawal is
made and all earnings on such Employer Contributions;
. Supplementary Deferred Compensation Contributions and Basic Deferred
Compensation Contributions (including Deferred Compensation
Contributions that were recharacterized as Non-Deferred Compensation
Contributions under Section 5.7(d)); and
. Earnings on both Supplementary Deferred Compensation Contributions
and on Basic Deferred Compensation Contributions (including
Supplementary and Basic Deferred Compensation Contributions that
were recharacterized as Non-Deferred Compensation Contributions
under Section 5.7(d)) which were credited to a Participant's Account
on or before December 31, 1988.
Withdrawals shall be either in multiples of $1.00 or 100% of the specific
category of contributions being withdrawn. Unvested Company
Contributions, Matching Employer Contributions, Profit Sharing
Contributions, earnings thereon, and earnings on Supplementary and Basic
Deferred Compensation Contributions (including Supplementary and Basic
Deferred Compensation Contributions that were recharacterized as Non-
Deferred Compensation Contributions under Section 5.7(d)) that were
credited to a Participant's Account after December 31, 1988 may not be
withdrawn. The amount of Contributions which may be withdrawn from an
Account will be reduced to reflect any losses or any realized
depreciation allocated to such Account. In no event shall withdrawals
from any Account
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be permitted in excess of the value of the balance of the Account.
9.2. Except as provided in Section 18.5, the following contributions may
not be withdrawn except on account of an immediate and heavy financial
need of the Participant, where the withdrawal is necessary to satisfy
such financial need:
. Participant's Contributions and Basic Non-Deferred Compensation
Contributions which were deposited less than twenty-four (24) months
before the withdrawal is made;
. With respect to a Participant who has completed less than five (5)
years of participation in the Plan, vested Company Contributions,
Matching Employer Contributions and Profit Sharing Contributions
deposited less than twenty-four (24) months before the withdrawal is
made and all earnings on such Employer Contributions;
. Supplementary Deferred Compensation Contributions (including
Supplementary Deferred Compensation Contributions that were
recharacterized as Non-Deferred Compensation Contributions under
Section 5.7(d));
. Basic Deferred Compensation Contributions (including Basic Deferred
Compensation Contributions that were recharacterized as Non-Deferred
Compensation Contributions under Section 5.7(d)); and
. Earnings on Supplementary and Basic Deferred Compensation
Contributions (including Supplementary and Basic Deferred
Compensation Contributions that were recharacterized as Non-Deferred
Compensation Contributions under Section 5.7(d)) that were credited
to a Participant's Account on or before December 31, 1988.
The determination of the existence of an immediate and heavy financial
need, and the necessity of a withdrawal from the Plan to satisfy the need
shall be made by the Manager of the Plan in his or her sole discretion,
such discretion to be exercised in a uniform and non-discriminatory
fashion, subject to applicable law and regulations and in accordance with
such uniform rules as may be issued by the Committee from time to time.
A withdrawal request shall be deemed to be on account of an immediate and
heavy financial need if it is on account of:
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(a) expenses incurred or necessary for medical care described in
Section 213(d) of the Code for the Participant, his or her spouse or
dependents;
(b) costs directly related to the purchase (excluding mortgage
payments) of a principal residence for the Participant;
(c) payment of tuition and related educational fees for the next
twelve (12) months of post-secondary education for the Participant,
his or her spouse, children or dependents;
(d) the need to prevent eviction of the Participant from his or her
principal residence or foreclosure on the mortgage of the
Participant's principal residence; or
(e) such other circumstances as the Committee determines (in
accordance with applicable governmental regulations) constitute an
immediate and heavy financial need of the Participant.
A distribution shall not be treated as necessary to satisfy an immediate
and heavy financial need of a Participant to the extent the amount of the
distribution is in excess of the amount required to relieve the financial
need (including any amounts necessary to pay any federal income tax
withholding on the distribution) or to the extent such need may be
satisfied from other resources that are reasonably available to the
Participant. A Participant's resources shall include those assets of his
or her spouse and minor children that are reasonably available to the
Participant. A Participant must certify, on a form provided by the
Manager of the Plan, that his or her financial need cannot be relieved:
(a) through reimbursement or compensation by insurance or
otherwise;
(b) by reasonable liquidation of the Participant's assets to the
extent such liquidation would not itself cause an immediate and
heavy financial need;
(c) by cessation of contributions to the Plan; or
(d) by other distributions from the Plan, by other distributions or
loans from plans maintained by any employer or by borrowing from
commercial sources on reasonable commercial terms.
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The Manager's determination with respect to the requirements of this
Section 9.2 is reviewable by the Committee on appeal pursuant to the
procedure set forth in Section 12.5.
9.3. An Alternate Payee shall, in no event, have the right to make
withdrawals under this Section 9 and any Qualified Domestic Relations
Order which purports to give an Alternate Payee such a right shall be
invalid and unenforceable to that extent.
9.4. Upon attainment of age 59 1/2, a Participant may, by making a
request in the manner prescribed by the Manager or the Committee,
withdraw up to the total value of the vested portion of his or her
Account.
SECTION 10. DISTRIBUTION OF BENEFITS
------------------------
10.1.(a) If a Participant's incurs a Severance Date for any reason other
than death, including Retirement, he or she shall receive the total
vested amount in his or her Accounts in the form of a lump sum
distribution in cash, unless he or she elects otherwise.
Solely for purposes of determining a Participant's entitlement to a
distribution hereunder, the employment of a Participant who is on layoff
status shall not be treated as having terminated until the first day of
the month following the expiration of his or her recall rights pursuant
to the collective bargaining agreement to which he or she is subject.
(b) In lieu of the form of distribution provided in Section 10.1(a)
above, a Participant may, by written request in the manner
prescribed by the Manager or the Committee, elect to receive the
total vested amount in his or her Account in the form of any one of
the following Options:
OPTION 1. A Participant may elect a lump sum distributable in cash
of his or her total vested interest in all of his or her Accounts
hereunder; provided, however, that a Participant who elects this
Option 1 may, by written request, receive a distribution of that
portion of his or her total interest in the Company Common Stock
Fund in the form of whole shares of Company Common Stock in lieu of
cash therefor (with cash for fractional shares). Because it is
impractical to calculate and pay the amount of the distribution
hereunder on the date determined in accordance with the provisions
of
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Section 10.6 hereof, the Committee may, upon written request of the
Participant in the manner prescribed by the Manager or the
Committee, distribute a portion of the anticipated distribution as
soon as administratively possible thereafter; provided, however,
that the total distribution hereunder shall be made within one Plan
Year.
OPTION 2. A Participant who incurs a Severance Date by reason of
his or her Retirement or Total and Permanent Disability may elect
distribution in annual installments of the Participant's total
interest in all Funds to be made by the Trustee over a period of
time selected by the Participant; provided, however, that such
period shall not exceed the lesser of twenty (20) years or the
Participant's life expectancy at the time such installments are to
commence. A Participant who elects to receive a distribution
pursuant to this Option may at any time prior to the final
distribution under this Option elect, in the manner prescribed by
the Manager or the Committee, to receive the remaining balance in
all of his or her Accounts in a lump sum. A Participant who elects
to receive a distribution pursuant to this Option 2 shall remain a
Participant until the final distribution under the Option or until
his or her death, whichever occurs first; provided, however, that
such Participant shall not make any withdrawals, changes or
transfers pursuant to the provisions of Section 7 or 9 hereof after
his or her benefit commencement date. The Trustee shall distribute
such Participant's interest (including attributable earnings) to the
Participant (and, upon his or her death, in accordance with the
provisions of Section 10.3 below), in the number of annual
installments selected by the Participant. Distributions under this
Option shall be made in cash; provided, however, that a Participant
electing this Option may, by written request in the manner
prescribed by the Manager or the Committee, receive a distribution
of that portion of his or her total interest in the Company Common
Stock Fund in the form of whole Shares of Company Stock in lieu of
cash therefor (with cash for fractional Shares). The value of cash
or Shares of Company Stock (if any) to be distributed from the Funds
shall for each installment be determined on a declining balance
method.
(c) Notwithstanding any provision of the Plan to the contrary,
distributions under the Plan shall comply with the requirements of
Section 401(a)(9) of the Code and Treasury regulations thereunder,
including,
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effective for distributions that commence on or after January 1,
1989, the minimum distribution incidental benefit requirements of
proposed Treasury Regulation 1.401(a)(9)-2.
10.2. Consistent with the provisions of Section 10.3 hereof, if a
Participant's participation terminates by reason of his or her death, his
or her Beneficiary shall be entitled to receive distribution in full of
the total amount in his or her Accounts. Such distribution shall be in
the form of a lump sum payment in cash or Company Common Stock of the
total amount in the Participant's Accounts, or at the election of the
Beneficiary and in the manner prescribed by the Manager or the Committee,
such distribution may be made in from two to five annual installments.
10.3. A Participant may designate a Beneficiary or Beneficiaries to
receive the amount in the Participant's Accounts in case of his or her
death, or a survivor to receive any balance due to the Participant at the
time of his or her death under Option 2 of Section 10.1 above. In case
of the Participant's death, the amount in the Participant's Accounts
shall be distributed in accordance with the Plan to the designated
Beneficiary or Beneficiaries. If a Participant designates a Beneficiary
or Beneficiaries other than his or her surviving spouse or a survivor
other than the Participant's spouse at the time of such designation, such
designation shall not be effective (and the Participant's spouse shall be
the Beneficiary) unless (i) the spouse consents in writing to such
designation; (ii) the spouse's consent acknowledges the effect of such
designation, which consent shall be irrevocable; and (iii) the spouse
executes the consent in the presence of either a Plan representative
designated by the Committee or a notary public. Notwithstanding the
foregoing, such consent shall not be required if the Participant
establishes to the satisfaction of the Committee that such consent cannot
be obtained because (i) there is no spouse; (ii) the spouse cannot be
located after reasonable efforts have been made; or (iii) other
circumstances exist to excuse spousal consent under applicable
regulations. Each Beneficiary designation made by a Participant shall at
all times satisfy the requirements of this Section 10.3; if at any time
such designation shall fail to satisfy the requirements of this Section
10.3, such designation shall thereupon be deemed null and void. A
Participant may designate a different Beneficiary or survivor provided he
or she complies with the spousal consent requirements described above.
If the Participant fails to designate a Beneficiary in accordance with
the provisions of this Section 10.3, or if the
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designated Beneficiary predeceases the Participant, the total amount in
his or her Accounts shall be distributed (i) to the Participant's spouse;
or (ii) in the event that the Participant dies without a surviving spouse
then to the Participant's estate in the form of a lump sum payment in
cash.
10.4. Anything to the contrary herein notwithstanding, if the total
amount distributable from a Participant's Accounts does not exceed three
thousand five hundred dollars (or such amount as the Secretary of
Treasury shall specify), the Committee shall make such distribution in
one lump sum in cash, which distribution shall be made within the time
specified in Section 10.5 below without regard to any election by the
Participant.
10.5. Unless a Participant elects otherwise, any distribution made
pursuant to the provisions of Section 10.1 or 10.2 above shall be made or
shall begin:
(a) as soon as practicable after the end of the month in which the
Participant incurs his or her Severance Date if the Participant
consents to the distribution as described in Section 10.6; or
(b) as soon as practicable after the end of the month in which the
Participant incurs his or her Severance Date in the event that the
Participant attained age 65 prior to such Severance Date if the
Participant does not elect to defer such distribution as described
in Section 10.6.
Unless a Beneficiary elects otherwise as described in Section 10.6,
distribution made pursuant to the provisions of Section 10.1 or 10.2
above shall be made or shall begin as soon as practicable after the end
of the month in which the Participant dies.
10.6. Except as provided in Section 10.4, a Participant entitled to a
distribution under this Section 10 must consent to the commencement of
any distribution by filing the election form provided by the Committee no
later than the end of the second month following the month in which the
Participant incurs a Severance Date. The failure of a Participant to
consent to a distribution shall be deemed to be an election to defer
commencement of the payment of benefits pursuant to this Section 10.6 to
the last day of the month in which the Participant attains age 65 or, if
such day is not a business day, the first business day of the following
month; provided, however, that the Participant may withdraw up to the
total vested value of his or her Account pursuant to Section 9.4 on or
after the
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date on which such Participant attains age 59 1/2. A Beneficiary
entitled to a distribution under this Section 10 may defer commencement
of any distribution pursuant to this Section 10.6, but only if the
Beneficiary is the Participant's surviving spouse. A Beneficiary who is
not the Participant's surviving spouse may not defer commencement of any
distribution pursuant to this Section 10.6. A Participant or Beneficiary
may elect, by filing the election form provided by the Committee no later
than the end of the second month following the month in which the
Participant incurs a Severance Date, to defer the receipt of all, but not
less than all, of the distribution otherwise to be made to him or her (i)
to the last day of the month in which occurs the first anniversary of the
Participant's Severance Date, (ii) if the Participant or Beneficiary has
not attained age 59 1/2 at the time the distribution first becomes
payable under this Section 10, to the last day of January in the Plan
Year following the Plan Year in which the Participant or Beneficiary
attains age 59 1/2, (iii) if the Participant or Beneficiary has not
attained age 65 at the time the distribution first becomes payable under
this Section 10, to the last day of January in the Plan Year in which the
Participant attains (or would have attained) age 65, (iv) to the last day
of January in the Plan Year in which the Participant's Required
Distribution Date occurs (or to what would have been the Participant's
Required Distribution Date if he or she had survived), or (v) if the day
described in clause (i), (ii), (iii), or (iv) is not a business day, the
first business day of the month following such day. Any amounts not
distributed under this Section 10 shall remain in the Trust Fund and the
Participant shall remain a Participant until the last day of January in
the Plan Year in which the Participant's Required Distribution Date
occurs or to what would have been the Participant's Required Distribution
Date if he or she had survived or, if such day is not a business day, the
first business day of the month following such day.
10.7. Anything herein to the contrary notwithstanding, any distribution
made pursuant to Section 10.1 or 10.2 shall comply with the following
requirements:
(a) A Participant's Accounts shall be distributed to him or her
commencing not later than the Required Distribution Date, in
accordance with applicable regulations, in installments (i) over the
life expectancy of the Participant, or (ii) over the joint life
expectancies of the Participant and his or her Beneficiary. The
Participant shall have the right to elect the form of distribution
in accordance with Committee procedures.
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(b) If the distribution of the Participant's Accounts has begun in
accordance with clause (ii) of subsection (a), and the Participant
dies before his or her interest has been distributed, the
remaining portion of such interest shall be distributed at least
as rapidly as under the method of distribution in effect as of the
date of the Participant's death.
(c) Except as provided in Section 10.6, if the Participant dies
before the distribution of his or her Accounts has begun in
accordance with clause (ii) of subsection (a), the Participant's
entire interest shall be distributed within five years after the
Participant's death.
(d) Except as provided in Section 10.6, if any portion of the
Participant's interest is payable to, or for the benefit of, a
Beneficiary and if such portion shall be distributed beginning not
later than one year after the date of the Participant's death (or
such later date as may be provided by applicable regulation) over a
period not extending beyond the life expectancy of the Beneficiary,
then, for purposes of subsection (c), the portion payable to such
Beneficiary shall be treated as having been distributed on the date
on which such distributions begin.
(e) If the Beneficiary referred to in, subsection (d) is the
Participant's surviving spouse, the date on which the distributions
are required to begin under subsection (d) shall not be earlier than
the date on which the Participant would have attained age 70 1/2.
If the Participant's surviving spouse dies before the distributions
to such spouse begin, this subsection (e) shall be applied as if the
surviving spouse were the Participant.
(f) Any election by a Participant under subsection (a) of a form of
benefit shall cease to be effective upon the Participant's actual
Retirement. In such event, the general rules under Section 10
regarding distribution of benefits and elections of forms of
benefit shall apply.
10.8. The amount distributable from a Participant's Accounts shall be
based on the value of such Accounts as determined under Section 11 hereof
for (a) the last day of the month preceding the month in which the
distribution is made or commences or, if such day is not a business day,
the first business day of the month in which the distribution is made or
commences or (b) if the
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distribution has been deferred pursuant to Section 10.6, the date to
which such distribution has been deferred; provided, however, that the
value of the Participant's Account, for purposes of determining the
amount to be distributed, shall be determined no later than the last day
of the second month preceding the Participant's Required Distribution
Date or, if such day is not a business day, the first business day of the
following month. In the case of distributions pursuant to Option 2 of
Section 10.1 or Section 10.2, installments distributable from a
Participant's Accounts shall be based on the value of such Accounts
determined as of the anniversaries of the date determined above.
10.9. All distributions hereunder shall be made as of a business day.
10.10.(a) Upon the sale to a corporation that is not an Affiliated
Company, of substantially all the assets used by an Employer in the trade
or business of such Employer, a Participant who continues employment with
the corporation acquiring such assets shall be entitled to receive the
total vested amount in his or her Account.
(b) Upon the sale by an Employer to an entity that is not an
Affiliated Company, of such Employer's interest in a subsidiary, a
Participant who continues employment with such subsidiary shall be
entitled to receive the total vested amount in his or her Account.
Notwithstanding any provision in the Plan to the contrary,
distribution to a Participant described in Subsections (a) and (b)
above shall be made no later than the end of the second calendar
year after the year in which the disposition of assets or a
subsidiary occurred or such earlier date as may be specified by the
Employer; provided, however, if the total amount distributable from
a Participant's Accounts exceed three thousand five hundred dollars
(or such amount as the Secretary of Treasury shall specify), or has
exceeded such amount at the time of any prior distribution, no
distribution shall be made unless the Participant and his or her
Spouse consents to the distribution by filing the election form
provided by the Committee. No distribution shall be made under this
Section 10.11 unless (i) it is a lump sum distribution as defined by
Section 402(e)(4) of the Code, without regard to clauses (i), (ii),
(iii), and (iv) of subparagraph (A), subparagraph (b), or
subparagraph (H); (ii) the Employer continues to maintain the Plan,
and (iii) the Plan is not
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maintained, in whole or in part, by the purchasing entity following
the closing date of the sale. The Plan will be treated as
maintained by the purchasing entity if the Plan is merged or
consolidated with, or any assets or liabilities are transferred from
the Plan to, a plan maintained by the purchaser in a transfer
subject to Section 414(l)(1) of the Code.
10.11. Unless a Qualified Domestic Relations Order provides to the
contrary, an Alternate Payee shall have the right to designate a
Beneficiary, in the same manner as provided in Section 10.3 (except that
no spousal consent shall be required), who shall receive benefits payable
to the Alternate Payee which have not been distributed at the time of the
Alternate Payee's death. If the Alternate Payee does not designate a
Beneficiary, or if the Beneficiary predeceases the Alternate Payee,
benefits payable to the Alternate Payee which have not been distributed
shall be paid to the Alternate Payee's estate.
10.12. In the event any payment or payments to be made to a Participant,
a Beneficiary who is the surviving spouse of a Participant, or an
Alternate Payee who is the former spouse of a Participant under the Plan
would constitute an "eligible rollover distribution," the Participant may
request, on or after January 1, 1993, that such payment or payments be
transferred directly from the Trust to the trustee of (a) an individual
retirement account described in section 408(a) of the Code, (b) an
individual retirement annuity described in section 408(b) of the Code
(other than an endowment contract), (c) an annuity plan described in
section 403(a) of the Code, or (d) a qualified retirement plan the terms
of which permit the acceptance of rollover distributions; provided,
however, that clause (c) and (d) shall not apply to an eligible rollover
distribution made to a Beneficiary who is the surviving spouse of a
Participant or an Alternate Payee who is the former spouse of a
Participant. Any such request shall be made in writing, on the form
prescribed by the Committee for such purpose, at such time in advance as
the Committee may specify.
For purposes of this Section 10.12, eligible rollover distribution shall
mean a distribution from the Plan, excluding (a) any distribution that is
one of a series of substantially equal periodic payments (not less
frequently than annually) over the life (or life expectancy) of the
individual, the lives (or life expectancies) of the individual and the
individual's designated Beneficiary, or a specified period of ten (10) or
more years, (b) any distribution to the extent such distribution is
required
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under section 401(a)(9) of the Code, and (c) any distribution to the
extent such distribution is not included in gross income (determined
without regard to the exclusion for net unrealized appreciation of
Company Common Stock).
SECTION 11. VALUATION
---------
11.1. Each Fund and each Account shall be valued by the Trustee (with
appropriate adjustment for any assets held by an insurance company) on
each business day:
(a) by determining the fair market value, as of the business day,
of all securities and property which are then held in the Trust
Fund, and
(b) by adding thereto the amount of any uninvested cash and accrued
income as of the business day.
11.2. All amounts to be distributed pursuant to the provisions of
Section 10 hereof and all amounts to be withdrawn pursuant to the
provisions of Section 9 hereof as of the relevant business day shall be
taken into account in valuing the Funds and each Account pursuant to the
provisions of Section 11.1 above."
SECTION 12. ADMINISTRATION OF THE PLAN
--------------------------
12.1. The Committee constituted as set forth herein shall have the
authority to control and manage the operation and administration of the
Plan. The Committee shall be composed of the Company's Staff Vice
President-Corporate Compensation and Benefits, Director-Employee
Benefits, Director-Financial Accounting and Director-Pension Funding &
Investment. The Company shall appoint another person to serve as a
member of said Committee whenever any such position may for any reason
be vacant. The Staff Vice President-Corporate Compensation and Benefits
or, during his absence or any vacancy in such office, the Director-
Employee Benefits shall be Chairman of said Committee. Any two members
of said Committee shall constitute a quorum for the transaction of
business. The affirmative vote of any two members present at a meeting
shall be required in order to take action. Said Committee shall appoint
a Secretary and a Manager of the Plan, both of which positions may be
filled by the same person, and such other officers, assistant officers,
committees or agents as it deems necessary to carry out its
responsibilities under the Plan. Said Committee may delegate any of its
duties hereunder to one or more of
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said appointees or to any other person or persons it may designate from
time to time. Said Manager shall be the plan administrator and all of
his or her determinations and actions shall be subject to review by the
Committee.
12.2. The Committee shall have the exclusive discretionary authority to
determine eligibility for and the amount of benefits under the Plan, make
factual determinations, construe and interpret the terms of the Plan,
supply omissions and determine any question which may arise in connection
with its operation or administration. Its decisions or actions in
respect thereof shall be conclusive and binding upon the Employer and
upon any and all Participants, their Beneficiaries, and their respective
heirs, distributees, executors, administrators and assignees; subject,
however, to the right of a Participant or his or her Beneficiary to file
a written claim under the provisions of Section 12.5.
12.3. The Committee's responsibilities include, in addition to those
responsibilities specifically assigned to it hereunder, establishing and
maintaining (or causing the Trustee to establish and maintain) Accounts,
dealing with Participants and Beneficiaries under the Plan, maintaining
(or causing to be maintained) all records under the Plan with respect to
Participants and Beneficiaries, and causing distributions to be made to
Participants and Beneficiaries under the Plan.
12.4. To the extent permitted by law, no member of the Committee, nor
any director, officer or employee of the Employer shall be liable for
any action or failure to act under or in connection with the Plan, except
for his or her own bad faith. Each person who is or shall have been a
member of the Committee or a director, officer or employee of the
Employer shall be indemnified and held harmless by the Employer against
and from any and all loss, cost, liability or expense that may be imposed
upon or reasonably incurred by him or her in connection with or resulting
from any claim, action, suit or proceeding to which he or she may be a
party or in which he or she may be involved by reason of any action taken
or failure to act under the Plan and against and from any and all amounts
paid by him in settlement thereof (with the Employer's written approval)
or paid by him in settlement thereof (with the Employer's written
approval) or paid in satisfaction of a judgment in any such action, suit
or proceeding, except a judgment based upon a finding of bad faith;
subject, however, to the condition that, upon the assertion or
institution of any such claim, action, suit or proceeding against him or
her, he or she shall in writing give the Employer an opportunity, at its
own
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expense, to handle and defend the same before he or she undertakes to
handle and defend it on his or her own behalf. The foregoing right to
indemnifications shall not be exclusive of any other right to which such
person may be entitled as a matter of law or otherwise, or any power that
an Employer may have to indemnify him or her to hold him or her harmless.
12.5. Notwithstanding any grievance or arbitration provision in any
collective bargaining agreement covering a Participant hereunder, the
provisions of this Section 12.5 shall be the exclusive method of making a
claim under the Plan. In the event of a claim by a Participant or his or
her Beneficiary with respect to the Plan, such Participant or Beneficiary
shall present his or her claim in writing to the Manager of the Plan.
The Manager shall, within ninety (90) days after receipt of such written
claim, make a determination and send written notification to the
Participant or Beneficiary as to its disposition. If warranted by
special circumstances, the Manager shall be allowed an extension of time
not to exceed ninety (90) days from the end of the initial period and
shall so notify the Participant or Beneficiary. In the event the claim
is wholly or partially denied, such written notification shall (a) state
the specific reason or reasons for the denial; (b) make specific
reference to the pertinent provisions of the Plan on which the denial is
based; (c) provide a description of any additional material or
information necessary for the Participant or Beneficiary to perfect the
claim and an explanation of why such material or information is
necessary; and (d) set forth the procedure by which the Participant or
Beneficiary may appeal the denial of his or her claim. In the event a
Participant or Beneficiary wishes to appeal the denial of his or her
claim, he or she may request a review of such denial by making
application in writing to the Committee within sixty (60) days after
receipt of such denial. Such Participant or Beneficiary (or his or her
duly authorized representative) may, upon written request to the
Committee, review any documents pertinent to his or her claim, and submit
in writing issues and comments in support of his or her position. Within
sixty (60) days after receipt of a written appeal, the Committee shall
make a determination and notify the Participant or Beneficiary of its
final decision. If warranted by special circumstances, the Committee
shall be allowed an extension of time not to exceed one hundred twenty
(120) days from the receipt of the appeal and shall so notify the
Participant or Beneficiary. Such final decision shall be in writing and
shall include specific reasons for the decision, written in a manner
calculated to be understood
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by the claimant, and specific references to the pertinent provisions of
the Plan on which the decision is based.
12.6. The Committee, itself or by its nominee, shall be entitled to vote
the shares of any mutual fund held by the Plan. The Trustee shall be
responsible for delivering to the Committee all notices, prospectuses,
financial statements, proxies and proxy soliciting materials relating to
the shares of any mutual fund credited to the Plan.
SECTION 13. RIGHTS OF PARTICIPANTS
----------------------
13.1. The Committee, itself or by its nominee, shall be entitled to
vote or to cause the Trustee to vote, Company Common Stock held in the
Company Common Stock Fund and registered in the name of the Plan or the
Trustee's nominee; provided, however, that any such Company Common Stock
to be voted shall be voted in accordance with the following:
(a) The Committee shall adopt, or cause the Trustee to adopt,
reasonable measures to notify each Participant of the date and
purposes of each meeting of shareholders of the Company at which
holders of Company Common Stock shall be entitled to vote, and to
request instructions from such Participant to the Committee as to
the voting at such meeting of Company Common Stock credited to such
Participant's Accounts for Plan Years other than the current Plan
Year.
(b) In each case, the Committee, itself or by its nominee, shall
vote such Company Common Stock in accordance with the instructions
of such Participant.
(c) If prior to the time of such meeting of shareholders the
Committee shall not have received instructions from any Participant
in respect of any such Company Common Stock credited to such
Participant's Accounts, the Committee shall be entitled, itself or
by its nominee, to vote, or to cause the Trustee to vote, such
Company Common Stock at such meeting in its discretion.
(d) The Participant's rights to instruct the Committee shall apply
only with respect to the voting of such Company Common Stock and the
Committee shall not be required to exercise with respect to such
Company Common Stock the rights and remedies of dissenting
shareholders provided by the Pennsylvania Business Corporation Law
or by any similar statutory
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provision or at common law. The Trustee and its nominee, if any,
shall execute and deliver such documentation as may be necessary
under the Securities Exchange Act of 1934 and the rules and
regulations promulgated thereunder and the Pennsylvania Business
Corporation Law to permit the Committee to vote such Company Common
Stock as aforesaid.
13.2. Any rights issued with respect to Company Common Stock held in the
Company Common Stock Fund, any distribution of property (other than the
Company Common Stock) and any stock dividend, stock split or other change
in Company Common Stock shall be applied for the exclusive benefit of the
Participants.
13.3. Company Common Stock held in the Company Common Stock Fund and
credited to a Participant's Accounts shall remain in such Accounts until
distribution is made under Section 10 hereof.
13.4. No right or interest of any Participant under the Plan or in any
Account shall be assignable or transferable, in whole or in part, either
directly or by operation of law or otherwise, including without
limitation by execution, levy, garnishment, attachment, pledge or in any
other manner, but excluding devolution by death or by adjudication of
incompetency; no attempted assignment or transfer thereof shall be
effective; and no right or interest of any Participant under the Plan or
in any of the Accounts therein shall be liable for, or subject to, any
obligation or liability of such Participant. Notwithstanding the
foregoing, the provisions of this Section 13.4 shall not apply to Federal
tax liens or to the creation, assignment, or recognition of a right to
any benefit payable with respect to a Participant pursuant to a Qualified
Domestic Relations Order. If the Plan receives written notice that a
Participant's Account is subject to a domestic relations order, the
Participant will not be eligible for withdrawals, loans or distributions
hereunder; provided, however, that such restrictions shall be removed if
a domestic relations order is not received by the Plan within a
reasonable period of time. If the Plan receives a domestic relations
order, the Committee shall promptly notify the Participant and any other
Alternate Payee of the receipt of such order and the procedures for
determining the qualified status of domestic relations orders. Within a
reasonable period after receipt of such order, the Committee shall
determine whether such order is a Qualified Domestic Relations Order and,
during such determination period, the Participant shall not be
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eligible for withdrawals, loans or distributions hereunder. The
Participant and Alternate Payee shall be notified of the Committee's
final determination. The Committee shall establish a procedure to
determine the status of a judgment, decree or order as a Qualified
Domestic Relations Order and to administer Plan distributions in
accordance with Qualified Domestic Relations Orders. Such procedure
shall be in writing, shall include a provision specifying the
notification requirements enumerated above, shall permit an Alternate
Payee to designate a representative for receipt of communications from
the Committee and shall include such other provisions as the Committee
shall determine, including provisions required under applicable
regulations.
SECTION 14. MODIFICATION OR TERMINATION OF THE PLAN
---------------------------------------
14.1. Consistent with the provisions of this Section 14, the Company
reserves the right to terminate the Plan, to completely discontinue all
Company Contributions, Profit Sharing Contributions or Matching Employer
Contributions, to suspend any or all of the provisions hereof, to merge
or consolidate it with, to transfer its assets or liabilities to, any
other plan, at any time and for any reason. Upon the occurrence of any
of the aforementioned events, each affected Participant (and his or her
Beneficiary and surviving spouse, if any) shall look solely to the Trust
Fund for provision of any benefits hereunder.
14.2. The Company may modify, alter or amend the Plan hereunder from
time to time to any extent that it may deem advisable including, but
without limiting the generality of the foregoing, any amendment deemed
necessary by requirements of Federal or State statutes applicable to the
Plan or authorized or made desirable by such statutes. Any such
modification shall be effective at such date as the Company may
determine, except that no modification may apply to any period prior to
the announcement of the modification unless, in the Company's sole
discretion, such modification is deemed necessary or advisable in order
to comply with provisions of the Code or amendments thereto (including
any regulations or rulings thereunder).
14.3. No amendment of the Plan shall (a) reduce the benefits of any
Participant accrued under the Plan to the date the amendment is adopted,
(b) eliminate or reduce a protected benefit under Section 411(d)(6) of
the Code except as provided in Section 412(c)(8) of the Code or in
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applicable regulations, or (c) divert any part of the assets of the Trust
Fund for a purpose other than the exclusive benefit of Participants or
their Beneficiaries or surviving spouses or Alternate Payees who have an
interest in the Plan. No amendment to the Plan shall change any vesting
schedule under the Plan unless each Participant having at least three
Years of Service at the end of the period described in this sentence is
permitted to elect, within a period beginning on the date such amendment
is adopted and ending 60 days after the latest of (i) the day the
amendment is adopted, (ii) the day the amendment becomes effective, or
(iii) the day the Participant is issued written notice of the amendment,
to have his nonforfeitable percentage computed under the Plan without
regard to such amendment.
14.4. Upon termination or partial termination of the Plan or upon
complete discontinuance of Company Contributions, Profit Sharing
Contributions and Matching Employer Contributions, each Participant shall
become fully vested in all of his or her Company Contribution Account,
Profit Sharing Contribution Account or Matching Employer Account, in
accordance with Section 8.3 hereof (provided, however, that any such
partial termination or discontinuance is related to such Participant).
If the Plan is terminated, all Company Contributions, Profit Sharing
Contributions and Matching Employer Contributions shall cease. Upon
termination or partial termination of the Plan, the interest of each
affected Participant shall be distributed to such Participant or to his
or her Beneficiary or surviving spouse to the extent permitted by law as
soon as practicable thereafter, and no part of the Trust Fund shall
revert to or be returned to the Employer or be used or diverted for
purposes other than for the exclusive benefit of Participants or their
Beneficiaries or surviving spouses, and for the purpose of defraying
reasonable expenses.
14.5. Anything to the contrary herein notwithstanding, the Company, in
its sole discretion, may as to all Employees in a Participating Location,
discontinue Company Contributions, Profit Sharing Contributions or
Matching Employer Contributions in respect of any Plan Year, or to take
any other appropriate action affecting such Employees. Should
participation be terminated in consequence of the exercise of the powers
hereinabove conferred upon the Company, all Company Contributions, Profit
Sharing Contributions or Matching Employer Contributions, whichever is
applicable, on behalf of such Participants shall cease, each such
Participant shall become fully vested in all of his or her Company
Contribution Account, Profit Sharing Contribution Account
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or Matching Employer Account, in accordance with the provisions of
Section 8.3 hereof, and the interest of each such Participant shall be
distributed to such Participant or to his or her Beneficiary or surviving
spouse to the extent permitted by law as soon as practicable thereafter.
14.6. The Plan may not be merged or consolidated with, nor may its
assets or liabilities be transferred to, any other plan unless each
Participant or Beneficiary under the Plan would, if the resulting plan
were terminated, receive a benefit immediately after the merger,
consolidation or transfer which is equal to or greater than the benefit
he or she would have been entitled to receive immediately before the
merger, consolidation, or transfer if the Plan had then terminated.
SECTION 15. GENERAL PROVISIONS
------------------
15.1. Nothing herein contained shall be deemed to give an Employee the
right to be retained in the service of the Employer or to interfere with
the rights of the Employer to discharge him or her at any time.
15.2. If the Committee determines that any person to whom a payment is
due hereunder is unable to care for his or her affairs because of
physical or mental incapacity, it shall have the authority to cause any
payment due such person to be made to the duly appointed guardian or
personal representative of such person. Payments made to such guardian
or personal representative shall operate as a complete discharge of the
obligations of the Employer, the Committee, the Trustee and the Trust
Fund.
15.3. A benefit shall be deemed forfeited if the Committee is unable to
locate the Participant or Beneficiary to whom payment is due; provided,
however, that such benefit shall be reinstated if a claim is made
therefor by the Participant or Beneficiary.
15.4. To the extent not otherwise preempted by the Employee Retirement
Income Security Act of 1974 or any other applicable federal law, the Plan
shall be governed by, and construed in accordance with, the laws of the
Commonwealth of Pennsylvania.
15.5 The Employer, the Trustee, the Committee, and all fiduciaries with
respect to the Plan, and all other persons or entities associated with
the operation of the Plan, the management of its assets, and the
provision of benefits thereunder, may reasonably rely on the truth,
accuracy and completeness of any data provided by any Participant, any
Beneficiary or any Alternate Payee,
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including, without limitation, representations as to age, health and
marital status. None of the aforementioned persons or entities
associated with the operation of the Plan, its assets and the benefits
provided under the Plan shall have any duty to inquire into any such
data, and all may rely on such data being current to the date of
reference, it being the duty of the Participants, spouses of
Participants, Beneficiaries, and Alternate Payees to advise the
appropriate parties of any change in such data. Furthermore, the
Employer, the Trustee, the Committee and all fiduciaries with respect to
the Plan may reasonable rely on all consents, elections and designations
filed with the Plan or those associated with the operation of the Plan
and the Fund by any Participant, the spouse of any Participant, any
Beneficiary of any Participant, any Alternate Payee, or the
representatives of such persons without duty to inquire into the
genuineness of any such consent, election or designation.
The Committee shall take such steps as are considered necessary and
appropriate to remedy any inequity that results from incorrect
information received or communicated in good faith or as the consequence
of an administrative error.
SECTION 16. SPECIAL PROVISIONS FOR TOP-HEAVY PLANS
--------------------------------------
16.1. Notwithstanding any provision in the Plan to the contrary, for
any Plan Year in which the Plan is determined to be Top-Heavy, the
provisions of this Section 16 shall become effective.
16.2. The Plan will be considered Top-Heavy for the Plan Year, if, as of
the last day of the first Plan Year and, thereafter, as of the last day
of the preceding Plan Year (the "Determination Date"):
(a) the value of the sum of all Accounts, including amounts
distributed during the five-year period ending on the Determination
Date, of Participants who are Key Employees (as defined below)
exceeds 60% of the sum of all Accounts of all Participants, or
(b) the Plan is part of an Aggregation Group and such Aggregation
Group is determined to be a Top-Heavy Group (as defined in Section
416(g)(2)(B) of the Code).
In determining the value of a Participant's Accounts, such Accounts shall
be valued as of the most recent business day within the twelve-month
period ending on the Determination Date.
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In determining the above Top-Heavy ratio, the account balances of an
Employee (i) who is a Non-Key Employee (defined for purposes of this
Article as an Employee who is not a Key Employee, including any former
Key Employee) but who was a Key Employee in any prior Plan Year, or
(ii) who has not performed services for the Employer maintaining the
Plan at any time during the five-year period ending on the applicable
Determination Date are disregarded.
A Key Employee is defined as any Employee, former Employee or the
Beneficiary of such Employee who, at any time during a Plan Year or the
immediately preceding four (4) Plan Years is: (i) an officer of the
Employer having annual Compensation greater than 150 percent of the
amount in effect under section 415(c)(1)(A) of the Code for any Plan
Year; (ii) an owner (or considered as owning within the meaning of
section 318 of the Code) both more than one-half (1/2) percent interest
as well as one of the ten (10) largest interests in the Employer, and
having annual Compensation greater than the dollar limit in effect under
section 415(c)(1)(A) for the Plan Year; (iii) a five percent (5%) owner
of the Employer; or (iv) a one-percent (1%) owner of the Employer having
annual Compensation from the Employer of more than one-hundred-fifty-
thousand dollars ($150,000).
For purposes of Section 16, Aggregation Group means (i) all plans of the
Employer or an Affiliated Company in which a Key Employee participates,
including any terminated plans which are maintained within the five-year
period ending on the applicable Determination Date, and (ii) all other
plans of the Employer or an Affiliated Company which enable such plans to
meet the requirements of Section 401(a)(4) or 410 of the Code. The
foregoing notwithstanding, the Employer may treat any plan maintained by
the Employer or an Affiliated Company not required to be included in the
Aggregation Group as being part of such group if such group would
continue to meet the requirements of Sections 401(a)(4) and 410 of the
Code with such plan being taken into account.
16.3. For any Plan Year in which the Plan is determined to be Top-Heavy
pursuant to Section 16.2, the Company Contribution or the Matching
Employer Contribution together with the Profit Sharing Contribution for
such Plan Year for each Participant who is a Non-Key Employee shall not
be less than the lesser of:
(a) 3% of the Participant's Compensation, or
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(b) the percentage at which Company Contributions, Matching
Employer Contributions, Profit Sharing Contributions and Deferred
Compensation Contributions are made or are required to be made under
the Plan for the Plan Year for the Key Employee for whom such
percentage is the highest.
Notwithstanding the foregoing, if a Participant is also participating in
another defined contribution plan maintained by the Employer or both,
then the minimum Contribution hereunder may be reduced in accordance with
regulations issued under Section 416(f) of the Code. If a Participant is
also participating in a defined benefit plan maintained by the Employer,
"5%" shall be substituted for "3%" in paragraph (a) of this Section.
The Matching Employer Contributions, Company Contributions or Profit
Sharing Contributions referred to above shall be provided to each Non-Key
Employee who is a Participant and who has not separated from service at
the end of the Plan Year, regardless of such Employee's number of Hours
of Service, Compensation, or whether such Employee had made any
contribution to the Plan.
16.4. For any Plan Year in which the Plan is determined to be Top-Heavy
pursuant to Section 16.2, each Participant's interest in Company
Contributions, Matching Employer Contributions or Profit Sharing
Contributions (and any earnings thereon) shall become vested in
accordance with the following schedule:
<TABLE>
<CAPTION>
Years of Employment Vested Percentage
------------------- -----------------
<S> <C>
Less than 2 0%
2 20%
3 or more 100%
</TABLE>
If the Plan thereafter ceases to be Top-Heavy, the vesting provisions
shall revert to the provisions of Section 8.2, but subject to the
provisions of Section 14.3.
16.5. For any Plan Year in which the Plan is determined to be Top-Heavy
pursuant to Section 16.2, paragraphs (1)(i) and (2)(i) of Section 5.5(b)
shall be read by substituting the number "1.00" for the number "1.25",
wherever it appears. Notwithstanding the foregoing, no adjustment shall
be made to Section 5.5(b), if the following requirements are met:
(a) Section 16.3 shall be applied by substituting "4%" for "3%";
and the annual accrued benefit derived from employer contributions
under the defined benefit
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plan for each Participant who is a Non-Key Employee shall not be
less than the product of:
(i) 3% of such Participant's average annual compensation
during the period of consecutive years (not exceeding five)
which yields the highest average; and
(ii) the Participant's Years of Service (not exceeding 10)
during which the Plan is Top-Heavy; and
(b) the aggregate of the Accounts of Participants who are Key
Employees under the Plan does not exceed 90% of the aggregate of the
Accounts of all Participants; and
(c) the sum of (i) the present value of the cumulative accrued
benefits for Key Employees under all defined benefit plans in the
Aggregation Group, and (ii) the aggregate of the Accounts of Key
Employees under all defined contribution plans in the Aggregation
Group does not exceed 90% of such sum determined for all employees;
and
(d) In the case of a Participant also participating in a defined
benefit plan maintained by the Employer, all of the requirements of
paragraph (a) shall be met by substituting "7 1/2%" for "3%" in
Section 16.3.
SECTION 17. DISTRIBUTION ON SALE OF RIGHTS
------------------------------
17.1. Notwithstanding anything else contained in this Plan, in the
event a Distribution Date occurs under the Rights Agreement, the
Committee shall immediately direct the Trustee to distribute promptly to
each Participant and Beneficiary (or Alternate Payee under an applicable
Qualified Domestic Relations Order) the Rights received with respect to
the Company Common Stock in the Accounts of such Participant or
Beneficiary. However, if such distribution might cause the
disqualification of the Plan under Section 401(a) of the Code or is
prohibited by law in the case of one or more Participants, Beneficiaries
or Alternate Payees, the Committee shall direct the Trustee to sell
promptly the applicable Rights at a price not less than the market price
thereof on the date of sale, and to reinvest the proceeds thereof in
Company Common Stock to be credited to such Participant's or
Beneficiary's Accounts, to the extent such Accounts are invested in
Company Common Stock, in proportion to the number of Rights sold from
each such Account.
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SECTION 18. EMPLOYEE STOCK OWNERSHIP PLAN PROVISIONS
----------------------------------------
18.1. For any Plan Year in which the Committee declares any portion of
the Plan to be an employee stock ownership plan ("ESOP") within the
meaning of Sections 401(a) and 4975(e)(7) of the Code, the provisions of
this Section 18 shall become effective.
18.2. At the direction of the Committee or its designee, the Trustee may
borrow funds, enter into a purchase-money transaction or enter into an
extension of credit transaction for the purpose of purchasing Company
Common Stock from any party, including the Company, if the following
provisions with respect to any such transaction (hereinafter called the
"Loan") are met:
(a) The Loan must be at a reasonable rate of interest and for a
specific term.
(b) Any collateral pledged to the creditor by the Trust shall
consist only of the shares of Company Common Stock purchased with
the Loan and dividends thereon (although, in addition to such
collateral, the Company may guarantee repayment of the Loan) and
such assets shall constitute assets of the Plan for all other
purposes.
(c) Under the terms of the Loan, the creditor shall have no
recourse against the Trust, except with respect to the collateral,
or against the Trustee.
(d) Upon payment of any portion of the principal amount due on the
Loan for any Plan Year, that number of shares of Company Common
Stock pledged as collateral for such Loan shall be released as shall
equal the total number of such shares so pledged multiplied by the
ratio of (i) the principal and interest paid during the Plan Year,
to (ii) the sum of the principal and interest paid during the Plan
Year and the total principal and interest to be paid for all future
years of such Loan; provided, however, that the number of future
years under the Loan must be definitely ascertainable and shall be
determined without taking into account any possible extensions or
renewal periods; and, provided, further, that if the Loan provides
for annual payments of principal and interest at a cumulative rate
not less rapid at any time than level annual payments of such
amounts for 10 years taking into account renewals and extensions,
then, if the Committee so determines, in its sole discretion,
interest paid, which would constitute interest under a standard
amortization
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<PAGE>
table, may be ignored in determining the number of shares of Company
Common Stock to be released. If the interest rate under the Loan is
variable, the interest to be paid in future years shall be computed
by using the interest rate applicable as of the end of the Plan
Year. Shares shall, upon being released from encumbrance under the
Loan, be allocated to the Accounts of the Participants for the Plan
Year for which such portion is so released, but not before. Such
allocation shall be made in accordance with Section 4.1 or 4.2, to
the extent the Loan is repaid by Company Contributions or Matching
Employer Contributions, and in accordance with Section 11, to the
extent the Loan is repaid from earnings of the Trust Fund.
18.3. Except as otherwise required by applicable law, no shares of
Company Common Stock acquired by the Trust with the proceeds of a Loan
pursuant to the provisions of Section 18.2 shall be subject to a put,
call or other option, or buy-sell or similar arrangement while held by
the Trust and when distributed from the Trust, whether or not the Plan is
then an ESOP as defined in Section 54.4975-7(b)(1)(i) of the Treasury
Regulations.
18.4. In the event a Loan described in Section 18.2 hereof is repaid, or
the Plan ceases to be an ESOP as defined in Section 54.4975-7(b)(1)(i) of
the Treasury Regulations, the protections and rights described in
Sections 18.2 and 18.3 hereof relating to shares of Company Common Stock
acquired by the Trust with the proceeds of a Loan pursuant to the
provisions of Section 18.2 shall continue to be applicable in accordance
with the provisions of those Sections.
18.5. The Committee shall notify each Participant who has attained age
55 and has completed 10 years of participation in the Plan that he or she
may elect within 90 days after the close of a Plan Year in the Qualified
Election Period to diversify the investment of the Participant's Account
to the extent such portion exceeds the amount to which a prior election
under this Section 18.5 applies. If a Participant elects to diversify any
portion of his or her Deposit Account or Company Contribution Account in
accordance with this Section 18.5, the Committee shall distribute such
portion within 90 days after the period during which the election may be
made and such distribution shall be treated as a withdrawal under Section
9 hereof. If a Participant elects to diversify any portion of his or her
Basic Non-Deferred Compensation Account, Supplementary Non-Deferred
Compensation Account, Basic Deferred Compensation Account, Supplementary
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Deferred Compensation Account or Matching Employer Account in accordance
with this Section 18.5, the Participant may change his or her investments
in the Funds pursuant to Section 7.3 or by making a withdrawal pursuant
to Section 9 without regard to Section 9.2. "Qualified Election Period"
shall mean the six-Plan Year period beginning with the later of (i) the
first Plan Year in which the Participant attains age 55, and completes 10
years of participation in the Plan, and (ii) the first Plan Year
beginning after December 31, 1986.
18.6. Notwithstanding the provisions of Section 6.5 hereof, the earnings
of the Trust Fund may be used for the purpose of repaying a Loan
hereunder.
SECTION 19. PARTICIPANT LOANS
-----------------
19.1. Subject to the provisions of Section 13.4 and 19.9, each
Participant who is an Employee and any other Participant who is a party
in interest as defined in ERISA may apply for a loan from the Plan.
19.2. Subject to such uniform and nondiscriminatory rules as may from
time to time be adopted by the Manager, the Trustee, upon the
Participant's request in the manner prescribed by the Manager, may make a
loan or loans to such applicant; provided, however, that the Manager
shall reject a loan application if it has actual knowledge that the
intended use of the loan proceeds is to purchase securities on margin.
No loan shall be granted if there are already two loans outstanding.
19.3. Loans shall be at least $500 in amount, and in no event shall
total loans exceed the lesser of (a) fifty percent (50%) of the vested
balance credited to such Participant's Account as of the date of the
Manager's approval of the Participant's loan application, less estimated
amounts payable for any pending withdrawal and loan requests that are
payable prior to the effective date of the current loan request, or (b)
$50,000, reduced by the excess, if any, of (i) the highest outstanding
balance of all loans during the twelve (12) months prior to the time the
new loan is to be made over (ii) the outstanding balance of loans made to
the Participant on the date such new loan is made. Loans under any other
qualified plan sponsored by the Employer or an Affiliated Company shall
be aggregated with loans under the Plan in determining whether or not the
limitation stated herein has been exceeded.
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19.4. Loans shall be available to all Participants who are parties in
interest on a reasonably equivalent basis, provided, however, that the
Manager may make reasonable distinctions among prospective borrowers on
the basis of credit worthiness. Subject to considerations relating to a
Participant's credit worthiness and ability or deemed ability to repay
the loan, loans shall not be made available to Participants who are or
were Highly Compensated Employees in an amount greater than the amount
available to other Participants.
19.5. Every Participant receiving a loan hereunder will receive a
statement from the Manager clearly reflecting the charges involved in
each transaction, including the dollar amount and annual interest rate of
the finance charges. The statement will provide all information required
to meet applicable 'truth-in-lending' laws.
19.6. The Manager will not approve any loan if it is the belief of the
Manager that such loan, if made, would constitute a prohibited
transaction (within the meaning of Section 406 of ERISA or Section
4975(c) of the Code), would constitute a distribution taxable for federal
income tax purposes, or would imperil the status of the Plan or any part
thereof under Section 401(k) of the Code.
19.7. All loans shall be considered investments of a segregated account
of the Trust Fund (the 'Loan Fund') directed by the borrower.
Accordingly, the following conditions shall prevail with respect to each
such loan:
(a) All loans shall be secured by the vested portion of the
Participant's Accounts, less any portion of the Participant's
Account which has been assigned to an alternate payee under a
Qualified Domestic Relations Order. No additional security shall be
permitted.
(b) Interest shall be charged at a rate to be fixed by the Manager
and, in determining the interest rate, the Manager shall take into
consideration interest rates currently being charged on similar
commercial loans by persons in the business of lending money.
(c) Loans shall be for terms of six (6) to sixty (60) consecutive
calendar months. Loans shall be non-renewable and non-extendable.
(d) Any loan made to a Participant under this Section 19 shall be
evidenced by a promissory note executed by the Participant. Such
promissory note shall contain the irrevocable consent of the
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<PAGE>
Participant to the payroll withholding described in subsection (e),
if applicable.
(e) Loans shall be repaid in equal installments through payroll
withholding; provided, however, that:
(i) a Participant who is not an Employee but who is a party in
interest;
(ii) a Participant who is an Employee but for whom payroll
withholding is not possible;
(iii) a Participant who is receiving benefits under a short-
or long-term disability plan of the Employer or an Affiliated
Company for whom withholding from disability benefits is not
possible;
(iv) a Participant who is receiving compensation, or a
disability benefit described in clause (3), which has become
insufficient to make the required monthly loan payment; and
(v) a Participant who is on an approved leave of absence,
shall repay by certified check or in such other manner directed by
the Manager.
(f) Loans may be prepaid in full at any time without penalty, upon
reasonable prior written notice to the Manager. Partial prepayment
is not permitted.
19.8. Fees properly chargeable in connection with a loan may be charged,
in accordance with a uniform and nondiscriminatory policy established by
the Manager, against the Account of the Participant to whom the loan is
granted.
19.9. The Account(s) and the Investment Fund(s) which are to be
liquidated to provide the loan principal shall be determined in
accordance with such uniform and nondiscriminatory rules as may from time
to time be adopted by the Manager.
19.10. Loan payments to the Plan by the Participant shall be allocated
among such Participant's Accounts in the Investment Funds in the
proportion that such Accounts are represented in the Loan Fund and shall
be invested in the Investment Funds on the basis of the Participant's
current investment election under Section 7.2 (or the Participant's most
recent investment election, if no
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<PAGE>
investment election is currently in effect, unless the Participant elects
otherwise in accordance with rules prescribed by the Manager); provided,
however, that amounts taken from the Company Common Stock Fund which are
required to be invested in such Fund pursuant to Section 5.3 shall be
reinvested in such Fund.
19.11. In the event that:
(a) the Participant fails to make any required installment payment;
(b) the Plan receives an opinion of counsel to the effect that (i)
the Plan will, or could, lose its status as a qualified plan under
Section 401(a) of the Code unless the loan is repaid or (ii) the
loan violates, or may violate, any provision of ERISA;
(c) the Plan is merged or terminated; or
(d) a Participant (other than a Participant who (i) continues to be
a party in interest or (ii) is receiving benefits under a short- or
long-term disability plan of the Employer or an Affiliated Company)
has a Severance Date or becomes entitled to a distribution under
Section 10.10;
before a loan is repaid in full, the unpaid balance of the loan, with
interest due thereon, shall become immediately due and payable (unless,
in the case of Section 19.11(c) or Section 19.11(d), the Manager
determines otherwise).
In the event that a loan becomes immediately due and payable (in
'default') pursuant to this Section 19.11, the Participant (or his or her
Beneficiary, if the Beneficiary is the surviving spouse, in the event of
the Participant's death) may satisfy the loan by paying the outstanding
balance in full within such time as may be specified by the Manager in a
uniform and nondiscriminatory manner. Otherwise, any such outstanding
loan shall be deducted from the portion of the Participant's vested
Accounts allocated to his or her Loan Fund before any benefit which is or
becomes payable to the Participant or his or her Beneficiary is
distributed. In the case of a benefit which becomes payable to the
Participant or his or her Beneficiary pursuant to Section 10 (or would be
payable to the Participant or Beneficiary but for such individual's
election to defer the receipt of benefits), the deduction described in
the preceding sentence shall occur on the earliest date following such
default on which the Participant or Beneficiary could receive payment of
such benefit, had the proper application been filed or election
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been made, regardless of whether or not payment is actually made to the
Participant or Beneficiary on such date. In the case of a benefit which
becomes payable under any other provision, the deduction shall occur on
the date such benefit is paid to the Participant. The Manager shall also
be entitled to take any and all other actions necessary and appropriate
to enforce collection of the outstanding balance of the loan. Failure of
the Manager to strictly enforce Plan rights with respect to a default on
a Plan loan shall not constitute a waiver of such rights.
19.12. In the event the outstanding balance of the Participant's loan is
assigned to an Alternate Payee pursuant to a Qualified Domestic Relations
Order, the promissory note shall be distributed to the Alternate Payee
and all further loan repayments shall be made, by such Participant, to
the Alternate Payee.
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<PAGE>
SCOTT PAPER COMPANY HOURLY INVESTMENT PLAN
------------------------------------------
EXHIBIT A
---------
[Resolution adopted by R.L. Bobertz, as designated by the Company's Executive
Compensation Committee, on October 26, 1992, relating to the sale of the
Nonwovens Division.]
RESOLVED, that, contingent upon the Company's sale of its Nonwovens Division to
FiberTech Group, Inc., each Member who is employed by FiberTech Group, Inc.,
each Member who is employed FiberTech Group, Inc. immediately after such sale
shall be fully vested in all of his or her Accounts.
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<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated January 25, 1994, which appears on
page 19 of the 1993 Annual Report to Shareholders of Scott Paper Company, which
is incorporated by reference in Scott Paper Company's Annual Report on Form 10-K
for the year ended December 25, 1993. We also consent to the incorporation by
reference of our report on the Financial Statement Schedules, which appears on
page 18 of such Annual Report on Form 10-K. We also consent to the incorporation
by reference in the Registration Statement of our reports dated June 29, 1994
appearing on page 3 of the Annual Report of the Scott Paper Company Salaried
Investment Plan on Form 11-K for the year ended December 31, 1993 and on page 3
of the Annual Report of the Scott Paper Company Hourly Investment Plan on Form
11-K for the year ended December 31, 1993.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Philadelphia, Pennsylvania
October 24, 1994
<PAGE>
Exhibit 24
----------
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS that each of the undersigned individuals, in
his or her position as a Director of Scott Paper Company, does hereby nominate,
constitute and appoint J. P. Murtagh, S. D. Ford and F. W. Bubb, III, or any one
of them, as his or her agents or agent and attorneys or attorney in fact, in his
or her name to execute on behalf of Scott Paper Company a Registration
Statement, or Statements, to be filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, in connection with the
registration under said Act of the securities to be offered under the Scott
Paper Company Salaried Investment Plan and the Scott Paper Company Hourly
Investment Plan, the authority herein given to include execution of amendments
to any part of any such Registration Statement, and generally to do and perform
all things necessary to be done in the premises as fully and effectually in all
respects as the undersigned could do if personally present.
IN WITNESS WHEREOF, each of the undersigned has executed this Power of
Attorney this 19th day of July 1994.
/s/ William A. Andres /s/ J. Richard Leaman, Jr.
- ------------------------------ ------------------------------
William A. Andres J. Richard Leaman, Jr.
/s/ Jack J. Crocker /s/ Richard K. Lochridge
- ------------------------------ ------------------------------
Jack J. Crocker Richard K. Lochridge
/s/ Albert J. Dunlap /s/ Bruce K. MacLaury
- ------------------------------ ------------------------------
Albert J. Dunlap Bruce K. MacLaury
/s/ John F. Fort, III /s/ Claudine B. Malone
- ------------------------------ ------------------------------
John F. Fort, III Claudine B. Malone
/s/ Peter Harf /s/ Gary L. Roubos
- ------------------------------ ------------------------------
Peter Harf Gary L. Roubos
/s/ Paula Stern
------------------------------
Paula Stern
