EXHIBIT 10.40
QUANEX CORPORATION
EMPLOYEE SAVINGS PLAN
AMENDMENT AND RESTATEMENT
EFFECTIVE JANUARY 1, 1998
QUANEX CORPORATION EMPLOYEE SAVINGS PLAN
THIS AGREEMENT adopted by Quanex Corporation, a Delaware corporation
(the "Sponsor"),
WITNESSETH:
WHEREAS, effective April 1, 1986, the Sponsor established Quanex
Corporation Employee Savings Plan (the "Plan").
WHEREAS, the Plan is intended to be a profit sharing plan;
WHEREAS, the Sponsor desires to amend and restate the Plan;
NOW, THEREFORE, the Plan is hereby amended and restated in its entirety
as set forth below.
TABLE OF CONTENTS
SECTION
ARTICLE I - DEFINITIONS
Account.........................................................................1.01
Active Service..................................................................1.02
Affiliated Employer.............................................................1.03
Annual Compensation.............................................................1.04
Annuity Starting Date...........................................................1.05
Beneficiary or Beneficiaries....................................................1.06
Board...........................................................................1.07
Code............................................................................1.08
Committee.......................................................................1.09
Considered Compensation.........................................................1.10
Contribution....................................................................1.11
Direct Rollover.................................................................1.12
Disability......................................................................1.13
Distributee.....................................................................1.14
Eligible Retirement Plan........................................................1.15
Eligible Rollover Distribution..................................................1.16
Employee........................................................................1.17
Employer or Employers...........................................................1.18
Entry Date......................................................................1.19
ERISA...........................................................................1.20
Five Percent Owner..............................................................1.21
Highly Compensated Employee.....................................................1.22
Hour of Service.................................................................1.23
Leased Employee.................................................................1.24
Maternity or Paternity Absence..................................................1.25
Nonforfeitable Interest.........................................................1.26
Non-Highly Compensated Employee.................................................1.27
Participant.....................................................................1.28
Period of Service...............................................................1.29
Period of Severance.............................................................1.30
Plan............................................................................1.31
Plan Year.......................................................................1.32
Qualified Domestic Relations Order..............................................1.33
Regulation......................................................................1.34
Required Beginning Date.........................................................1.35
Retirement Age..................................................................1.36
Rollover Contribution...........................................................1.37
Separation From Service.........................................................1.38
Severance From Service Date.....................................................1.39
Servers Service.................................................................1.40
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Sponsor.........................................................................1.41
Spouse..........................................................................1.42
Sponsor Stock...................................................................1.43
Trust...........................................................................1.44
Trustee.........................................................................1.45
Valuation Date..................................................................1.46
ARTICLE II - ELIGIBILITY
Eligibility Requirements........................................................2.01
Early Participation for Rollover Purposes.......................................2.02
Eligibility Upon Reemployment...................................................2.03
Cessation of Participation......................................................2.04
Recommencement of Participation.................................................2.05
ARTICLE III - CONTRIBUTIONS
Salary Deferral Contributions...................................................3.01
After-Tax Contributions.........................................................3.02
Matching Contributions..........................................................3.03
Supplemental Contributions......................................................3.04
Rollover Contributions and Plan-to-Plan Transfers...............................3.05
QNECS - Extraordinary Employer Contributions....................................3.06
Restoration Contributions.......................................................3.07
Nondeductible Contributions Not Required........................................3.08
Form of Payment of Contributions................................................3.09
Deadline for Payment of Employer Contributions..................................3.10
Return of Contributions for Mistake,
Disqualification or Disallowance of Deduction.............................3.11
ARTICLE IV - ALLOCATION AND VALUATION OF ACCOUNTS
Information Statements from Employer............................................4.01
Allocation of Salary Deferral Contributions.....................................4.02
Allocation of After-Tax Contributions...........................................4.03
Allocation of Matching Contributions............................................4.04
Allocation of Supplemental Contributions........................................4.05
Allocation of QNECs.............................................................4.06
Allocation of Forfeitures.......................................................4.07
Valuation of Accounts...........................................................4.08
No Rights Unless Otherwise Prescribed...........................................4.09
ARTICLE V - BENEFITS
Retirement Benefit..............................................................5.01
Death Benefit...................................................................5.02
Distribution Method.............................................................5.03
Immediate Payment of Small Amount Upon Separation From Service..................5.04
Direct Rollover Option..........................................................5.05
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Distribution Upon Disposition of Assets or a Subsidiary.........................5.06
Time of Distribution............................................................5.07
Consent to Distribution.........................................................5.08
Information Provided to Participants............................................5.09
Designation of Beneficiary......................................................5.10
Distributions to Disabled Persons...............................................5.11
Distributions Pursuant to Qualified Domestic Relations Orders...................5.12
Claims Procedure................................................................5.13
ARTICLE VI - IN-SERVICE DISTRIBUTIONS
In-Service Financial Hardship Distributions.....................................6.01
In-Service Distributions of After-Tax Contributions,
Matching Contributions and Supplemental Contributions.....................6.02
Method of Payment...............................................................6.03
In-Service Distributions for Certain Former Participants........................6.04
ARTICLE VII - VESTING
ARTICLE VIII - FORFEITURES AND RESTORATIONS
Forfeiture on Termination of Participation......................................8.01
Restoration of Forfeited Amounts................................................8.02
Forfeitures by Lost Participants or Beneficiaries...............................8.03
ARTICLE IX - ACTIVE SERVICE
General.........................................................................9.01
Disregard of Certain Service....................................................9.02
Certain Brief Absences Counted as Active Service................................9.03
Service Credit Required by Law..................................................9.04
Special Maternity or Paternity Absence Rules....................................9.05
Employment Records Conclusive...................................................9.06
ARTICLE X -- INVESTMENT ELECTIONS
Investment Funds Established...................................................10.01
Election Procedures Established................................................10.02
ARTICLE XI - ADOPTION OF PLAN BY OTHER EMPLOYERS
Adoption Procedure.............................................................11.01
No Joint Venture Implied.......................................................11.02
All Trust Assets Available to Pay All Benefits.................................11.03
Qualification a Condition Precedent to Adoption and Continued Participation....11.04
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ARTICLE XII - AMENDMENT AND TERMINATION
Right to Amend and Limitations Thereon.........................................12.01
Mandatory Amendments...........................................................12.02
Withdrawal of Employer.........................................................12.03
Termination of Plan............................................................12.04
Partial or Complete Termination or Complete Discontinuance of Contributions....12.05
ARTICLE XIII- MISCELLANEOUS
Plan Not an Employment Contract................................................13.01
Benefits Provided Solely From Trust............................................13.02
Assignments Prohibited.........................................................13.03
Requirements Upon Merger or Consolidation of Plans.............................13.04
Gender of Words Used...........................................................13.05
Severability...................................................................13.06
Reemployed Veterans............................................................13.07
Limitations on Legal Actions...................................................13.08
Governing Law..................................................................13.09
APPENDIX A - LIMITATIONS ON CONTRIBUTIONS
APPENDIX B - TOP-HEAVY REQUIREMENTS
APPENDIX C - ADMINISTRATION OF THE PLAN
APPENDIX D - FUNDING
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ARTICLE I
DEFINITIONS
The words and phrases defined in this Article shall have the meaning
set out in the definition unless the context in which the word or phrase appears
reasonably requires a broader, narrower or different meaning.
1.01 "ACCOUNT" means all ledger accounts pertaining to a Participant
which are maintained by the Committee to reflect the Participant's interest in
the Trust. The Committee shall establish the following Accounts and any
additional Accounts that the Committee considers necessary to reflect the entire
interest of the Participant in the Trust. Each of the Accounts listed below and
any additional Accounts established by the Committee shall reflect the
Contributions or amounts transferred to the Trust, if any, and the appreciation
or depreciation of the assets in the Trust and the income earned or loss
incurred on the assets in the Trust attributable to the Contributions and/or
other amounts transferred to the Account.
(a) Salary Deferral Contribution Account - the Participant's
before-tax contributions, if any, made pursuant to Section 3.01.
(b) After-Tax Contribution Account - the Participant's
after-tax contributions, if any, made pursuant to Section 3.02.
(c) Matching Contribution Account - the Employer's matching
contributions, if any, made pursuant to Section 3.03.
(d) Supplemental Contribution Account - the Employer's
contributions, if any, made pursuant to Section 3.04.
(e) QNEC Account - the Employer's contributions, known as
"qualified nonelective employer contributions", made as a means of passing the
actual deferral percentage test of section 401(k) of the Code.
(f) Rollover Account - funds transferred from another
qualified plan or individual retirement account for the benefit of a
Participant.
1.02 "ACTIVE SERVICE" means the Periods of Service which are counted
for eligibility and vesting purposes as calculated under Article IX.
1.03 "AFFILIATED EMPLOYER" means the Employer and any employer which is
a member of the same controlled group of corporations within the meaning of
section 414(b) of the Code or which is a trade or business (whether or not
incorporated) which is under common control (within the meaning of section
414(c) of the Code), which is a member of an affiliated service group (within
the meaning of section 414(m) of the Code) with the Employer, or which is
required to be aggregated with the Employer under section 414(o) of the Code.
For purposes of the limitation on allocations contained in Appendix A, the
definition of Affiliated Employer is modified by substituting the phrase "more
than 50 percent" in place of the phrase "at least 80 percent" each place the
latter phrase appears in section 1563(a)(1) of the Code.
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1.04 "ANNUAL COMPENSATION" means the Employee's wages from the
Affiliated Employers as defined in section 3401(a) of the Code for purposes of
federal income tax withholding at the source (but determined without regard to
any rules that limit the remuneration included in wages based on the nature or
location of the employment or the services performed) modified by including
elective contributions under a cafeteria plan maintained by an Affiliated
Employer that are excludable from the Employee's gross income pursuant to
section 125 of the Code, elective contributions under a qualified transportation
fringe benefit plan maintained by an Affiliated Employer that are excludable
from the Employee's gross income pursuant to section 132(f) of the Code and
elective contributions made on behalf of the Employee to any plan maintained by
an Affiliated Employer that is qualified under or governed by section 401(k),
408(k), or 403(b) of the Code. Except for purposes of Section A.4.1 of Appendix
A of the Plan, Annual Compensation in excess of $150,000.00 (as adjusted by the
Secretary of Treasury) shall be disregarded. If the Plan Year is ever less than
12 months, the $150,000.00 limitation (as adjusted by the Secretary of Treasury)
will be prorated by multiplying the limitation by a fraction, the numerator of
which is the number of months in the Plan Year, and the denominator of which is
12. Effective January 1, 1997, the family aggregation rules previously contained
in section 401(a)(17) of the Code are disregarded.
1.05 "ANNUITY STARTING DATE" means the first day of the first period
for which an amount is payable as an annuity, or in the case of a benefit
payable in the form of a lump sum, the date on which the Trustee disburses the
lump sum.
1.06 "BENEFICIARY" OR "BENEFICIARIES" means the person or persons, or
the trust or trusts created for the benefit of a natural person or persons or
the Participant's or former Participant's estate, designated by the Participant
or former Participant to receive the benefits payable under the Plan upon his
death.
1.07 "BOARD" or "BOARD OF DIRECTORS" means the board of directors of
the Sponsor.
1.08 "CODE" means the Internal Revenue Code of 1986, as amended from
time to time.
1.09 "COMMITTEE" means the committee appointed by the Sponsor to
administer the Plan.
1.10 "CONSIDERED COMPENSATION" means Annual Compensation paid to a
Participant by an Affiliated Employer for a Plan Year, reduced by all of the
following items (even if includable in gross income): all reimbursements or
other expense allowances (such as the payment of moving expenses or automobile
mileage reimbursements), cash and noncash fringe benefits (such as the use of an
automobile owned by the Employer, club memberships, tax gross-ups, attendance
and safety awards, fitness reimbursements, housing allowances, financial
planning benefits and Beneflex dollars), deferred compensation (such as amounts
realized upon the exercise of a nonqualified stock option or upon the premature
disposition of an incentive stock option, pay for accrued vacation upon
Separation From Service, amounts realized when restricted property or other
property held by a Participant either becomes freely transferable or no longer
subject to a substantial risk of forfeiture under section 83 of the Code), and
welfare benefits (such as severance pay). An Employee's Considered Compensation
paid to him during any period in which he is not eligible to participate in the
Plan under Article II shall be
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disregarded. Considered Compensation in excess of $150,000.00 as adjusted by the
Secretary of Treasury for increases in the cost of living in accordance with
section 401(a)(17)(B) of the Code shall be disregarded. If the Plan Year is ever
less than 12 months, the $150,000.00 limitation (as adjusted by the Secretary of
Treasury) will be prorated by multiplying the limitation by a fraction, the
numerator of which is the number of months in the Plan Year, and the denominator
of which is 12.
1.11 "CONTRIBUTION" means the total amount of contributions made under
the terms of the Plan. Each specific type of Contribution shall be designated by
the type of contribution made as follows:
(a) Salary Deferral Contribution - a before-tax contribution
made by the Employer pursuant to the Employee's salary deferral agreement.
(b) After-Tax Contribution - an after-tax contribution made by
the Employee.
(c) Matching Contribution - a contribution made by the
Employer pursuant to Section 3.03.
(d) Supplemental Contribution - a contribution made by the
Employer pursuant to Section 3.04.
(e) QNEC - an extraordinary contribution, known as a
"qualified nonelective employer contribution", made by the Employer as a means
of passing the actual deferral percentage test of section 401(k) of the Code or
the actual contribution percentage test of section 401(m) of the Code.
(f) Rollover Contribution - a contribution made by a
Participant which consists of any part of an eligible rollover distribution (as
defined in section 402 of the Code) from a qualified employee trust described in
section 401(a) of the Code.
1.12 "DIRECT ROLLOVER" means a payment by the Plan to the Eligible
Retirement Plan specified by the Distributee.
1.13 "DISABILITY" means a mental or physical disability which, in the
opinion of a physician selected by the Committee, shall prevent the Participant
from earning a reasonable livelihood with any Affiliated Employer and which can
be expected to result in death or which has lasted or can be expected to last
for a continuous period of not less than 12 months and which: (a) was not
contracted, suffered or incurred while the Participant was engaged in, or did
not result from having engaged in, a felonious criminal enterprise; (b) did not
result from alcoholism or addiction to narcotics; and (c) did not result from an
injury incurred while a member of the Armed Forces of the United States for
which the Participant receives a military pension.
1.14 "DISTRIBUTEE" means an Employee or former Employee. In addition,
the Employee's or former Employee's surviving Spouse and the Employee's or
former Employee's Spouse or former Spouse who is the alternate payee under a
Qualified Domestic Relations Order, are Distributees with regard to the interest
of the Spouse or former Spouse.
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1.15 "ELIGIBLE RETIREMENT PLAN" means an individual retirement account
described in section 408(a) of the Code, an individual retirement annuity
described in section 408(b) of the Code, an annuity plan described in section
403(a) of the Code, or a qualified trust described in section 401(a) of the
Code, that accepts the Distributee's Eligible Rollover Distribution. However, in
the case of an Eligible Rollover Distribution to the surviving Spouse, an
Eligible Retirement Plan is an individual retirement account or individual
retirement annuity.
1.16 "ELIGIBLE ROLLOVER DISTRIBUTION" as defined in section 402 of the
Code means any distribution of all or any portion of the balance to the credit
of the Distributee, except that an Eligible Rollover Distribution does not
include: (a) any distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for the life (or life
expectancy) of the Distributee or the joint lives (or joint life expectancies)
of the Distributee and the Distributee's Beneficiary, or for a specified period
of ten years or more; (b) any distribution to the extent the distribution is
required under section 401(a)(9) of the Code; (c) the portion of any
distribution that is not includable in gross income (determined without regard
to the exclusion for net unrealized appreciation with respect to employer
securities); and, effective for distributions after December 31, 1998, (d) any
financial hardship distribution described in section 401(k)(2) of the Code from
a Participant's Salary Deferral Contribution Account or from the Participant's
QNEC Account (to the extent that QNECs were treated as Section 401(k)
Contributions under Appendix A).
1.17 "EMPLOYEE" means, except as otherwise specified in this Section,
all common law employees of an Affiliated Employer and all Leased Employees.
1.18 "EMPLOYER" OR "EMPLOYERS" means the Sponsor and any other business
organization that adopts the Plan.
1.19 "ENTRY DATE" means the first day of each calendar quarter, January
1, April 1, July 1, and October 1.
1.20 "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time.
1.21 "FIVE PERCENT OWNER" means an Employee who is a five percent owner
as defined in section 416(i) of the Code.
1.22 "HIGHLY COMPENSATED EMPLOYEE" means, effective January 1, 1997, an
Employee or an Affiliated Employer who, during the Plan Year or the preceding
Plan Year, (a) was at any time a Five Percent Owner at any time during the Plan
Year or the preceding Plan Year or (b) had Annual Compensation from the
Affiliated Employers in excess of $80,000.00 (as adjusted from time to time by
the Secretary of the Treasury) for the preceding Plan Year.
1.23 "HOUR OF SERVICE" means each hour that an Employee is paid or
entitled to payment by an Affiliated Employer for the performance of duties.
1.24 "LEASED EMPLOYEE" means, effective January 1, 1997, any person who
(a) is not a common law employee of an Affiliated Employer, (b) pursuant to an
agreement between an Affiliated Employer and any other person, has performed
services for an Affiliated Employer (or
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for an Affiliated Employer and related persons determined in accordance with
section 414(n)(6) of the Code) on a substantially full-time basis for a period
of at least one year and (c) performs the services under primary direction and
control of the recipient.
1.25 "MATERNITY OR PATERNITY ABSENCE" means a period in which an
Employee is absent from work (a) by reason of the pregnancy of the 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 the
child by the Employee, or (d) for purposes of caring for such child for a period
immediately following such birth or placement for adoption.
1.26 "NONFORFEITABLE INTEREST" means a Participant's nonforfeitable
interest in amounts credited to his Account determined in accordance with
Article VII.
1.27 "NON-HIGHLY COMPENSATED EMPLOYEE" means an Employee who is not a
Highly Compensated Employee.
1.28 "PARTICIPANT" means an Employee who is eligible to participate in
the Plan under the provisions of Article II.
1.29 "PERIOD OF SERVICE" means a period of employment with an
Affiliated Employer which commences on the later of (1) April 1, 1986 or (2) the
day on which an Employee performs his initial Hour of Service or performs his
initial Hour of Service after he Xxxxxx Service, whichever is applicable, and
ends on the date the Employee subsequently Xxxxxx Service.
1.30 "PERIOD OF SEVERANCE" means the period of time commencing on the
Employee's Severance From Service Date and ending on the date the Employee
subsequently performs an Hour of Service.
1.31 "PLAN" means the
Quanex Corporation
Employee Savings Plan, as
amended from time to time.
1.32 "PLAN YEAR" means the calendar year.
1.33 "QUALIFIED DOMESTIC RELATIONS ORDER" means a qualified domestic
relations order as defined in section 414(p) of the Code.
1.34 "REGULATION" means the Department of Treasury regulation
specified, as it may be changed from time to time.
1.35 "REQUIRED BEGINNING DATE" means:
(a) effective January 1, 2001, in the case of an individual
who is not a Five Percent Owner in the Plan Year that ends in the calendar year
in which he attains age 70 1/2, the Required Beginning Date is April 1 of the
calendar year following the later of (1) the calendar year in which the
individual attains age 70 1/2, or (2) the calendar year in which the individual
incurs a Separation From Service;
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(b) in the case of an individual who is a Five Percent Owner
in the Plan Year that ends in the calendar year in which he attains age 70 1/2,
the Required Beginning Date is April 1 of the calendar year following the
calendar year in which he attains age 70 1/2.;
(c) notwithstanding subsection(a), in the case of an
individual who attained age 70 1/2 prior to January 1, 2001, the Required
Beginning Date is April 1 of the calendar year following the calendar year in
which the individual attained age 70 1/2.
1.36 "RETIREMENT AGE" means age 65.
1.37 "ROLLOVER CONTRIBUTION" means the amount contributed by a
Participant of the Plan which consists of any part of an Eligible Rollover
Distribution from a qualified employee trust described in section 401(a) of the
Code.
1.38 "SEPARATION FROM SERVICE" means an individual's termination of
employment with an Affiliated Employer without commencing or continuing
employment with (a) any other Affiliated Employer or (b) any other entity under
circumstances where, under Regulations and Internal Revenue Service rulings, the
individual is not deemed to have incurred a Separation From Service within the
meaning of Section 401(k)(2) of the Code.
1.39 "SEVERANCE FROM SERVICE DATE" means the earlier of the date of the
Employee's Separation From Service, or the first anniversary of the date on
which the Employee is absent from service (with or without pay) for any reason
other than his Separation From Service or a Maternity or Paternity Absence, such
as vacation, holiday, sickness, or leave of absence. The Severance From Service
Date of an Employee who is absent beyond the first anniversary of his first day
of absence by reason of a Maternity or Paternity Absence is the second
anniversary of the first day of the absence.
1.40 "XXXXXX SERVICE" means the occurrence of a Participant's Severance
From Service Date.
1.41 "SPONSOR" means
Quanex Corporation, a Delaware corporation.
1.42 "SPOUSE" means the person to whom the Participant or former
Participant is married under applicable local law. In addition, to the extent
provided in a Qualified Domestic Relations Order, a surviving former spouse of a
Participant or former Participant will be treated as the Spouse of the
Participant or former Participant, and to the same extent any current spouse of
the Participant or former Participant will not be treated as a Spouse of the
Participant or former Participant.
1.43 "SPONSOR STOCK" means the common stock of the Sponsor or such
other publicly-traded stock of an Affiliated Employer as meets the requirements
of section 407(d)(5) of ERISA with respect to the Plan.
1.44 "TRUST" means the trust estate created to fund the Plan.
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1.45 "TRUSTEE" means collectively one or more persons or corporations
with trust powers which have been appointed by the initial Sponsor and have
accepted the duties of Trustee and any successor appointed by the Sponsor.
1.46 "VALUATION DATE" means each business day of the Plan Year.
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ARTICLE II
ELIGIBILITY
2.01 ELIGIBILITY REQUIREMENTS. Each Employee who is employed by an
Employer shall be eligible to participate in the Plan beginning on the Entry
Date that occurs with or next follows the date on which the Employee completes
three months of Active Service. However, an Employee who is included in a unit
of Employees covered by a collective bargaining agreement between the Employees'
representative and the Employer shall be excluded, even if he has met the
requirements for eligibility, if there has been good faith bargaining between
the Employer and the Employees' representative pertaining to retirement benefits
and the agreement does not require the Employer to include such Employees in the
Plan. In addition, a Leased Employee shall not be eligible to participate in the
Plan unless the Plan's qualified status is dependent upon coverage of the Leased
Employee. Effective February 1, 2000, an Employee who is compensated on an
hourly rated basis for services rendered at the Sponsor's MacSteel-Arkansas
Division is not eligible to participate in the Plan. An Employee who is employed
by the Sponsor at one of the Sponsor's Xxxxxxx divisions, the Sponsor's
Fabricated Products division or the Sponsor's Piper Impact division is not
eligible to participate in the Plan. An Employee who is a nonresident alien
(within the meaning of section 7701(b) of the Code) and receives no earned
income (within the meaning of section 911(d)(2) of the Code) from any Affiliated
Employer that constitutes income from sources within the United States (within
the meaning of section 861(a)(3) of the Code) is not eligible to participate in
the Plan. An Employee who is a nonresident alien (within the meaning of section
7701(b) of the Code) and who does receive earned income (within the meaning of
section 911(d)(2) of the Code) from any Affiliated Employer that constitutes
income from sources within the United States (within the meaning of section
861(a)(3) of the Code) all of which is exempt from United States income tax
under an applicable tax convention is not eligible to participate in the Plan.
During any period in which an individual is classified by an Employer as an
independent contractor with respect to such Employer, the individual is not
eligible to participate in the Plan (even if he is subsequently reclassified by
the Internal Revenue Service as a common law employee of the Employer and the
Employer acquiesces to the reclassification). Finally, an Employee who is
employed outside the United States is not eligible to participate in the Plan
unless the Committee elects to permit him to participate in the Plan.
2.02 EARLY PARTICIPATION FOR ROLLOVER PURPOSES. An Employee who
satisfies the eligibility requirements specified in Section 2.01 other than the
service requirement shall be eligible to make Rollover Contributions to the Plan
on the Entry Date next following (not coincident with) the date on which he
completes an Hour of Service.
2.03 ELIGIBILITY UPON REEMPLOYMENT. If an Employee incurs a Separation
From Service prior to the date he initially begins participating in the Plan, he
shall be eligible to begin participation in the Plan on the later of the date he
would have become a Participant if he did not incur a Separation From Service or
the date on which he performs an Hour of Service after he incurs a Separation
From Service. Subject to Section 2.04, once an Employee becomes a Participant,
his eligibility to participate in the Plan shall continue until he Xxxxxx
Service.
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2.04 CESSATION OF PARTICIPATION. An individual who has become a
Participant will cease to be a Participant on the earliest of the date on which
he (a) Xxxxxx Service, (b) is transferred from the employ of an Employer to the
employ of an Affiliated Employer that has not adopted the Plan, (c) becomes
included in a unit of employees covered by a collective bargaining agreement
that does not require coverage of those employees under the Plan, (d) becomes a
Leased Employee, or (e) becomes included in another classification of Employees
who, under the terms of the Plan, are not eligible to participate. Under these
circumstances, the Participant's Account becomes frozen; he cannot contribute to
the Plan or share in the allocation of any Contributions for the frozen period.
However, his Accounts shall continue to share in any Plan income allocable to
his Accounts during the frozen period of time.
2.05 RECOMMENCEMENT OF PARTICIPATION. A former Participant will again
become a Participant on the day on which he again becomes included in a
classification of Employees that, under the terms of the Plan, is eligible to
participate.
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ARTICLE III
CONTRIBUTIONS
3.01 SALARY DEFERRAL CONTRIBUTIONS. Each Employer shall make a Salary
Deferral Contribution in an amount equal to the amount by which the Considered
Compensation of its Employees who are Participants was reduced on a pre-tax
basis pursuant to salary deferral agreements. Any such salary deferral agreement
shall be an agreement in a form satisfactory to the Committee to prospectively
receive Considered Compensation from the Employer in a reduced amount and to
have the Employer contribute an amount equal to the amount of the reduction to
the Trust on account of the Participant. Any such salary deferral agreement
shall be revocable in accordance with its terms, provided that no revocation
shall be retroactive or permit payment to the Participant of the amount required
to be contributed to the Trust. A Participant's right to benefits attributable
to Salary Deferral Contributions made to the Plan on his behalf shall be
nonforfeitable.
The maximum amount a Participant may elect to reduce his Considered
Compensation under his salary deferral agreement and have contributed to the
Plan on a pre-tax basis shall be determined by the Committee, in its sole
discretion from time to time. The election to have Salary Deferral Contributions
made, the ability to change the rate of Salary Deferral Contributions, the right
to suspend Salary Deferral Contributions, and the manner of commencing new
Salary Deferral Contributions shall be permitted under any uniform method
determined by the Committee from time to time.
3.02 AFTER-TAX CONTRIBUTIONS. To the extent permitted by the Committee,
each Participant may make voluntary after-tax contributions to the Plan through
payroll deductions or in a lump sum in cash. A Participant's right to benefits
attributable to After-Tax Contributions made to the Plan on his behalf shall be
nonforfeitable.
The maximum amount a Participant may elect to contribute to the Plan on
an after-tax basis shall be determined by the Committee from time to time. The
election to have After-Tax Contributions made, the ability to change the rate of
After-Tax Contributions, the right to suspend After-Tax Contributions, and the
manner of commencing new After-Tax Contributions shall be permitted under any
uniform method determined by the Committee from time to time.
3.03 MATCHING CONTRIBUTIONS. Each Employer will make a Matching
Contribution on behalf of each of its Employees who is a Participant in an
amount equal to 50 percent of the first five percent of such Participant's
Considered Compensation contributed to the Plan pursuant to such Participant's
Salary Deferral Contributions and After-Tax Contributions for the Plan Year.
3.04 SUPPLEMENTAL CONTRIBUTIONS. Each Employer may contribute for a
Plan Year a Supplemental Contribution to be allocated among Participants in such
amount, if any, as shall be determined by the Employer. The rate of the
Supplemental Contribution need not be uniform among all divisions of the
Employer.
3.05 ROLLOVER CONTRIBUTIONS AND PLAN-TO-PLAN TRANSFERS. The Committee
may permit Rollover Contributions by Participants and/or direct transfers to or
from another qualified
III-1
plan on behalf of Participants from time to time. If Rollover Contributions
and/or direct transfers to or from another qualified plan are permitted, the
opportunity to make those contributions and/or direct transfers must be made
available to Participants on a nondiscriminatory basis. For this purpose only,
all Employees who are included in a classification of Employees who are eligible
to participate in the Plan shall be considered to be Participants of the Plan
even though they may not have met the Active Service requirements for
eligibility. However, they shall not be entitled to elect to have Salary
Deferral Contributions made or to share in Employer Contributions or forfeitures
unless and until they have met the requirements for eligibility, contributions
and allocations. A Rollover Contribution shall not be accepted unless it is
directly rolled over to the Plan in a rollover described in section 401(a)(31)
of the Code. A Participant shall not be permitted to make a Rollover
Contribution if the property he intends to contribute is for any reason
unacceptable to the Trustee. A Participant's right to benefits attributable to
his Rollover Contributions made to the Plan shall be nonforfeitable.
3.06 QNECS - EXTRAORDINARY EMPLOYER CONTRIBUTIONS. Any Employer may
make a QNEC in such amount, if any, as shall be determined by it. A
Participant's right to benefits attributable to QNECs made to the Plan on his
behalf shall be nonforfeitable. In no event will QNECs be distributed before
Salary Deferral Contributions may be distributed from the Plan.
3.07 RESTORATION CONTRIBUTIONS. The Employer shall, for each Plan Year,
make a restoration contribution in an amount equal to the sum of (a) such
amount, if any, as shall be necessary to fully restore all Matching Contribution
Accounts and Supplemental Contribution Accounts required to be restored pursuant
to the provisions of Section 8.02 after the application of all forfeitures
available for such restoration; plus (b) an amount equal in value to the value
of forfeited benefits required to be restored under Section 8.03, after the
application of all forfeitures available for such restoration.
3.08 NONDEDUCTIBLE CONTRIBUTIONS NOT REQUIRED. Notwithstanding any
other provision of the Plan, no Employer shall be required to make any
contribution that would be a "nondeductible contribution" within the meaning of
section 4972 of the Code.
3.09 FORM OF PAYMENT OF CONTRIBUTIONS. Contributions may be paid to the
Trustee either in cash or in qualifying employer securities (as such term is
defined in section 407(d) of ERISA) or any combination thereof, provided that
payment may not be made in any form constituting a prohibited transaction under
section 4975 of the Code or section 406 of ERISA.
3.10 DEADLINE FOR PAYMENT OF CONTRIBUTIONS. Salary Deferral
Contributions and After-Tax Contributions shall be paid to the Trustee in
installments. The installment for each payroll period shall be paid as soon as
administratively feasible. The Matching Contributions, Supplemental
Contributions and QNECs for a Plan Year shall be paid to the Trustee in one or
more installments, as the Employer may from time to time determine; provided,
however, that such contributions may not be paid later than the time prescribed
by law (including extensions thereof) for filing the Employer's income tax
return for its taxable year ending with or within such Plan Year.
3.11 RETURN OF CONTRIBUTIONS FOR MISTAKE, DISQUALIFICATION OR
DISALLOWANCE OF DEDUCTION. Subject to the limitations of section 415 of the
Code, the assets of the Trust shall not
III-2
revert to any Employer or be used for any purpose other than the exclusive
benefit of Participants, former Participants and their Beneficiaries and the
reasonable expenses of administering the Plan except:
(a) any Employer Contribution made because of a mistake of
fact may be repaid to the Employer within one year after the payment of the
Contribution; and
(b) all Employer Contributions are conditioned upon their
deductibility under section 404 of the Code; therefore, to the extent the
deduction is disallowed, the Contributions may be repaid to the Employer within
one year after the disallowance.
The Employer has the exclusive right to determine if a Contribution or
any part of it is to be repaid or is to remain as a part of the Trust except
that the amount to be repaid is limited, if the Contribution is made by mistake
of fact or if the deduction for the Contribution is disallowed, to the excess of
the amount contributed over the amount that would have been contributed had
there been no mistake or over the amount disallowed. Earnings which are
attributable to any excess contribution cannot be repaid. Losses attributable to
an excess contribution must reduce the amount that may be repaid. All repayments
of Contributions made due to a mistake of fact or with respect to which a
deduction is disallowed are limited so that the balance in a Participant's or
former Participant's Account cannot be reduced to less than the balance that
would have been in the Participant's or former Participant's Account had the
mistaken amount or the amount disallowed never been contributed.
III-3
ARTICLE IV
ALLOCATION AND VALUATION OF ACCOUNTS
4.01 INFORMATION STATEMENTS FROM EMPLOYER. Upon request by the
Committee, the Employer shall provide the Committee with a schedule setting
forth the amount of its Salary Deferral Contribution, Supplemental Contribution,
QNEC, and restoration contribution; the names of its Participants, the number of
years of Active Service of each of its Participants, the amount of Considered
Compensation and Annual Compensation paid to each Participant, and the amount of
Considered Compensation and Annual Compensation paid to all its Participants.
Such schedules shall be conclusive evidence of such facts.
4.02 ALLOCATION OF SALARY DEFERRAL CONTRIBUTIONS. The Committee or its
designee shall allocate the Salary Deferral Contribution among the Participants
by allocating to each Participant the amount by which his Considered
Compensation was reduced pursuant to a salary deferral agreement (as described
in Section 3.01) and shall credit each such Participant's share to his Salary
Deferral Contribution Account.
4.03 ALLOCATION OF AFTER-TAX CONTRIBUTIONS. The Committee or its
designee shall allocate After-Tax Contributions made by a Participant in the
amount of such After-Tax Contributions and shall credit such After-Tax
Contributions to the Participants After-Tax Contribution Account.
4.04 ALLOCATION OF MATCHING CONTRIBUTIONS. The Committee or its
designee shall separately allocate the Matching Contribution made by an Employer
among the Employer's Participants in the proportion which the matched Salary
Deferral Contributions and matched After-Tax Contributions of each such
Participant bears to the total matched Salary Deferral Contributions and matched
After-Tax Contributions of all such Participants. Each Participant's
proportionate share shall be credited to his Matching Contribution Account.
4.05 ALLOCATION OF SUPPLEMENTAL CONTRIBUTIONS. For each Plan Year, the
Committee or its designee shall allocate the Supplemental Contribution made by
an Employer among the Participants who are employed by the Employer during the
Plan Year, based upon each such Participant's Considered Compensation paid by
the Employer as compared to the Considered Compensation for all such
Participants employed by the Employer and eligible for the allocation.
4.06 ALLOCATION OF QNECS. The Committee or its designee shall
separately allocate the QNEC among the Non-Highly Compensated Employees who are
Participants based upon each such Participant's Considered Compensation as
compared to the Considered Compensation of all such Participants.
4.07 ALLOCATION OF FORFEITURES. At the time a forfeiture occurs
pursuant to Article VIII, Section A.3.2 of Appendix A or Section A.3.3 of
Appendix A, the amount forfeited will first be used to reinstate any Account
required to be reinstated under Article VIII, and any remaining amount will be
applied to reduce the Employer's obligation to make future Matching
Contributions or Supplemental Contributions. However, in no event will amounts
forfeited pursuant to Section A.3.2 or Section A.3.3 of Appendix A be allocated
to the Accounts of Participants whose Matching Contributions are forfeited
pursuant to Section A.3.2 or Section A.3.3 of Appendix A.
IV-1
4.08 VALUATION OF ACCOUNTS. A Participant's or former Participant's
Accounts shall be valued by the Trustee at fair market value on each Valuation
Date. The earnings and losses attributable to any asset in the Trust will be
allocated solely to the Account of the Participant or former Participant on
whose behalf the investment in the asset was made. In determining the fair
market value of the Participants' or former Participant's Accounts, the Trustee
shall utilize such sources of information as it may deem reliable including, but
not limited to, stock market quotations, statistical evaluation services,
newspapers of general circulation, financial publications, advice from
investment counselors or brokerage firms, or any combination of sources which in
the opinion of the Trustee will provide the price such assets were last traded
at on a registered stock exchange; provided, however, that with respect to
regulated investment company shares, the Trustee shall rely exclusively on
information provided to it by the investment adviser to such funds.
4.09 NO RIGHTS UNLESS OTHERWISE PRESCRIBED. No allocations,
adjustments, credits, or transfers shall ever vest in any Participant or former
Participant any right, title, or interest in the Trust except at the times and
upon the terms and conditions set forth in the Plan.
IV-2
ARTICLE V
BENEFITS
5.01 RETIREMENT BENEFIT. Upon his Separation From Service, a
Participant or former Participant is entitled to receive his Nonforfeitable
Interest in his Account balances.
5.02 DEATH BENEFIT. If a Participant or former Participant dies, the
death benefit payable to his Beneficiary shall be the Participant's
Nonforfeitable Interest in 100 percent of the remaining amount of his Account
balances.
5.03 DISTRIBUTION METHOD. Any distribution under the Plan shall be made
in the form of a cash lump sum.
5.04 IMMEDIATE PAYMENT OF SMALL AMOUNT UPON SEPARATION FROM SERVICE.
Each Participant or former Participant whose Nonforfeitable Interest in his
Account balance at the time of a distribution to him on account of his
Separation From Service is, in the aggregate, less than or equal to $5,000.00,
shall be paid in the form of an immediate single sum cash payment and/or as a
Direct Rollover, as elected by him under section 5.05. However, if a Distributee
who is subject to this Section 5.04 does not furnish instructions in accordance
with Plan procedures to directly roll over his Plan benefit within 45 days after
he has been given direct rollover forms, he will be deemed to have elected to
receive an immediate lump sum cash distribution of his entire Plan benefit. If a
Participant's or former Participant's Nonforfeitable Interest in his Account
balance payable upon his Separation From Service is zero (because he has no
Nonforfeitable Interest in his Account balance), he will be deemed to receive an
immediate distribution of his entire Nonforfeitable Interest in his Account
balance.
5.05 DIRECT ROLLOVER OPTION. To the extent required under Regulations,
a Distributee has the right to direct that any portion of his Eligible Rollover
Distribution will be directly paid to an Eligible Retirement Plan specified by
him that will accept the Eligible Rollover Distribution.
5.06 DISTRIBUTION UPON DISPOSITION OF ASSETS OR A SUBSIDIARY. A
Participant or former Participant who is employed by an Employer that is a
corporation is entitled to receive a lump sum cash distribution of his
Nonforfeitable Interest in his Account balance in the event of the sale or other
disposition by the Employer of at least 85 percent of all of the assets used by
the Employer in a trade or business of the Employer to an unrelated corporation
if (a) the Employer continues to maintain the Plan after the disposition and (b)
in connection with the disposition the Participant or former Participant is
transferred to the employ of the corporation acquiring the assets
A Participant or former Participant is entitled to receive a lump sum
cash distribution of his Nonforfeitable Interest in his Account balance in the
event of the sale or other disposition by the Sponsor of its interest in a
subsidiary (within the meaning of Section 409(d)(3) of the Code) to an unrelated
entity or individual if (a) the Sponsor continues to maintain the Plan after the
disposition and (b) in connection with the disposition the Participant continues
employment with the subsidiary.
V-1
The selling Employer is treated as continuing to maintain the Plan
after the disposition only if the purchaser does not maintain the Plan after the
disposition. A purchaser is considered to maintain the Plan if it adopts the
Plan, becomes an employer whose employees accrue benefits under the Plan, or 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
transaction that is subject to Section 414(1)(1) of the Code. An unrelated
corporation, entity or individual is one that is not required to be aggregated
with the selling Employer under Section 414(b), (c), (m), or (o) of the Code
after the sale or other disposition.
If a Participant's Nonforfeitable Interest in his Account balance is
$5,000.00 or less on the date of the disposition, the Committee will direct the
Trustee to pay to the Participant, a lump sum cash distribution of his
Nonforfeitable Interest in his Account balance as soon as administratively
practicable following the disposition and any Internal Revenue Service approval
of the distribution that the Committee deems advisable to obtain.
If a Participant's Nonforfeitable Interest in his Account balance is
more than $5,000.00 on the date of the disposition, he may elect (1) to receive
a lump sum cash distribution of his Nonforfeitable Interest in his Account
balance as soon as administratively practicable following the disposition and
receipt of any Internal Revenue Service approval of the distribution that the
Committee deems advisable to obtain, or (2) he may elect to defer receipt of his
Nonforfeitable Interests in his Account balance until the first day of the month
coincident with or next following the date that he attains Retirement Age. In
the manner and at the time required under Regulations, the Committee will
provide the Participant with a notice of his right to defer receipt of his
Account balance described in Section 5.09.
However, no distribution shall be made to a Participant under this
Section 5.06 after the end of the second calendar year following the calendar
year in which the disposition occurred. In addition, no distribution shall be
made under this Section unless it is a lump sum distribution within the meaning
of section 402(e)(4)(D) of the Code, without regard to subclauses (I), (II),
(III), and (IV) of clause (i) thereof.
5.07 TIME OF DISTRIBUTION. Notwithstanding any other provision of the
Plan, any benefit payable under the Plan shall be distributed in compliance with
the following provisions:
(a) DISTRIBUTION DEADLINES FOR PARTICIPANTS OR FORMER
PARTICIPANTS WHO ARE 70 1/2 OR OLDER. If a Participant or former Participant
attains 70 1/2, the Participant or former Participant must elect to receive the
distribution required under section 401(a)(9) of the Code in one lump sum which
must be paid by his Required Beginning Date.
(b) DISTRIBUTION DEADLINE FOR DEATH BENEFITS. If a Participant
or former Participant dies before the distribution of his Plan benefit has
commenced, his entire interest shall be distributed within five years after his
death.
(c) LIMITATIONS ON DEATH BENEFITS. Benefits payable under the
Plan shall not be provided in any form that would cause a Participant's death
benefit to be more than incidental. Any distribution required to satisfy the
incidental benefit requirement shall be considered a required distribution for
purposes of section 401(a)(9) of the Code.
V-2
(d) COMPLIANCE WITH SECTION 401(a)(9). All distributions under
the Plan will be made in accordance with the requirements of section 401(a)(9)
of the Code and all Regulations promulgated thereunder. The provisions of the
Plan reflecting section 401(a)(9) of the Code override any distribution options
in the Plan inconsistent with such Section.
(e) COMPLIANCE WITH SECTION 401(a)(14). Unless the Participant
or former Participant otherwise elects, the payment of benefits under the Plan
to the Participant or former Participant will begin not later than the 60th day
after the close of the Plan Year in which occurs the latest of (a) the date on
which the Participant or former Participant attains the later of age 62 or
Retirement Age, (b) the tenth anniversary of the year in which the Participant
or former Participant commenced participation in the Plan, or (c) the
Participant's or former Participant's Separation From Service.
5.08 CONSENT TO DISTRIBUTION. Notwithstanding any other provision of
the Plan, no benefit shall be distributed or commence to be distributed to a
Participant or former Participant prior to his attainment of the later of age 62
or Retirement Age without his consent, unless the benefit is payable immediately
under Section 5.04. Any such consent shall be valid only if given not more than
90 days prior to the Participant's or former Participant's Annuity Starting Date
and after his receipt of the notice regarding benefits described in Section
5.09(a).
5.09 INFORMATION PROVIDED TO PARTICIPANTS. Information regarding the
form of benefits available under the Plan shall be provided to Participants or
former Participants in accordance with the following provisions:
(a) General Information. The Sponsor shall provide each
Participant or former Participant with a written general explanation of the
Participant's or former Participant's right, if any, to defer receipt of the
distribution.
(b) Time for Giving Notice. The written general explanation or
description regarding any optional forms of benefit available under the Plan
shall be provided to a Participant or former Participant no less than 30 days
and no more than 90 days before his Annuity Starting Date unless he legally
waives this requirement.
5.10 DESIGNATION OF BENEFICIARY. Each Participant and former
Participant has the right to designate and to revoke the designation of his
Beneficiary or Beneficiaries. Each designation or revocation must be evidenced
by a written document in the form required by the Committee, signed by the
Participant or former Participant and filed with the Committee. If no
designation is on file at the time of a Participant's or former Participant's
death or if the Committee determines that the designation is ineffective, the
designated Beneficiary shall be the Participant's or former Participant's
Spouse, if living, or if not, the executor, administrator or other personal
representative of the Participant's or former Participant's estate. If a
Participant or former Participant is considered to be married under local law,
his designation of any Beneficiary, other than his Spouse, shall not be valid
unless the Spouse acknowledges in writing that the Spouse understands the effect
of the Participant's or former Participant's beneficiary designation and
consents to it. The consent must be to a specific Beneficiary. The written
acknowledgement and consent must be filed with the Committee, signed by the
Spouse and at least two witnesses, one of whom must be a member of the Committee
or a notary public.
V-3
However, if the Spouse cannot be located or there exist other circumstances as
described in sections 401(a)(11) and 417(a)(2) of the Code, the requirement of
the Participant's or former Participant's Spouse's acknowledgement and consent
may be waived. If a Beneficiary other than the Participant's or former
Participant's Spouse is named, the designation shall become invalid if the
Participant or former Participant is later determined to be married under local
law, the Participant's or former Participant's missing Spouse is located or the
circumstances which resulted in the waiver of the requirement of obtaining the
consent of his Spouse no longer exist.
5.11 DISTRIBUTIONS TO DISABLED PERSONS. If the Committee determines
that any person to whom a payment is due is unable to care for his affairs
because of physical or mental disability, it shall have the authority to cause
the payments to be made to the Spouse, brother, sister or other person the
Committee determines to have incurred, or to be expected to incur, expenses for
that person unless a prior claim is made by a qualified guardian or other legal
representative. The Committee and the Trustee shall not be responsible to
oversee the application of those payments. Payments made pursuant to this power
shall be a complete discharge of all liability under the Plan and the Trust and
the obligations of the Employer, the Trustee, the Trust and the Committee.
5.12 DISTRIBUTIONS PURSUANT TO QUALIFIED DOMESTIC RELATIONS ORDERS. The
Committee will instruct the Trustee to pay benefits in accordance with the terms
of any order that has been determined, in accordance with Plan procedures, to be
a Qualified Domestic Relations Order. A Qualified Domestic Relations Order may
require the payment of an immediate cash lump sum to an alternate payee even if
the Participant or former Participant is not then entitled to receive an
immediate payment of Plan benefits.
5.13 CLAIMS PROCEDURE. When a benefit is due, the Participant, former
Participant or Beneficiary should submit his claim to the person or office
designated by the Committee to receive claims. Under normal circumstances, a
final decision shall be made as to a claim within 90 days after receipt of the
claim. If the Committee notifies the claimant in writing during the initial
90-day period, it may extend the period up to 180 days after the initial receipt
of the claim. The written notice must contain the circumstances necessitating
the extension and the anticipated date for the final decision. If a claim is
denied during the claims period, the Committee must notify the claimant in
writing. The denial must include the specific reasons for it, the Plan
provisions upon which the denial is based, and the claims review procedure. If
no action is taken during the claims period, the claim is treated as if it were
denied on the last day of the claims period.
If a Participant's, former Participant's or Beneficiary's claim is
denied and he wants a review, he must apply to the Committee in writing. That
application may include any comment or argument the claimant wants to make. The
claimant may either represent himself or appoint a representative, either of
whom has the right to inspect all documents pertaining to the claim and its
denial. The Committee may schedule any meeting with the claimant or his
representative that it finds necessary or appropriate to complete its review.
The request for review must be filed within 60 days after the denial.
If it is not, the denial becomes final. If a timely request is made, the
Committee must make its decision, under normal circumstances, within 60 days of
the receipt of the request for review. However, if the
V-4
Committee notifies the claimant prior to the expiration of the initial review
period, it may extend the period of review up to 120 days following the initial
receipt of the request for a review. All decisions of the Committee must be in
writing and must include the specific reasons for their action and the Plan
provisions on which their decision is based. If a decision is not given to the
claimant within the review period, the claim is treated as if it were denied on
the last day of the review period.
V-5
ARTICLE VI
IN-SERVICE DISTRIBUTIONS
6.01 IN-SERVICE FINANCIAL HARDSHIP DISTRIBUTIONS.
(a) General. Prior to his Separation From Service, a
Participant is entitled to receive a distribution from his Salary Deferral
Contribution Account (except for income that was not credited to his Salary
Deferral Account as of December 31, 1988), his Rollover Account, his After-Tax
Contribution Account, his Nonforfeitable Interest in his Matching Contribution
Account and his Nonforfeitable Interest in his Supplemental Contribution Account
in the event of an immediate and heavy financial need incurred by the
Participant and the Committee's determination that the withdrawal is necessary
to alleviate that hardship.
(b) Permitted Reasons For Financial Hardship Distributions. A
distribution shall be made on account of financial hardship only if the
distribution is for: (i) expenses for medical care described in section 213(d)
of the Code previously incurred by the Participant, the Participant's Spouse, or
any dependents of the Participant (as defined in section 152 of the Code) or
necessary for these persons to obtain medical care described in section 213(d)
of the Code, (ii) costs directly related to the purchase (excluding mortgage
payments) of a principal residence for the Participant, (iii) payment of tuition
and related educational fees for the next 12 months of post-secondary education
for the Participant, his Spouse, children, or dependents (as defined in section
152 of the Code), (iv) payments necessary to prevent the eviction of the
Participant from his principal residence or foreclosure on the mortgage of the
Participant's principal residence, or (v) any other event added to this list by
the Commissioner of Internal Revenue.
(c) Amount. A distribution to satisfy an immediate and heavy
financial need shall not be made in excess of the amount of the immediate and
heavy financial need of the Participant and the Participant must have obtained
all distributions, other than hardship distributions, and all nontaxable (at the
time of the loan) loans currently available under all plans maintained by the
Employer. The amount of a Participant's immediate and heavy financial need
includes any amounts necessary to pay any federal, state or local income taxes
or penalties reasonably anticipated to result from the financial hardship
distribution.
(d) Suspension of Participation in Certain Benefit Programs.
The Participant's hardship distribution shall terminate his right to have the
Employer make any Salary Deferral Contributions on his behalf until the next
time Salary Deferral Contributions are permitted after the lapse of 12 months
following the hardship distribution and his timely filing of a written request
to resume his Salary Deferral Contributions. In addition, for 12 months after he
receives a hardship distribution from the Plan, the Participant is prohibited
from making elective contributions and employee contributions to or under all
other qualified and nonqualified plans of deferred compensation maintained by
the Employer, including stock option plans, stock purchase plans and Code
section 401(k) cash or deferred arrangements that are part of cafeteria plans
described in section 125 of the Code. However, the Participant is not prohibited
from making contributions to a health or welfare benefit plan, including one
that is part of a cafeteria plan within the meaning of section 125 of the Code.
VI-1
(e) Resumption of Salary Deferral Contributions. When the
Participant resumes Salary Deferral Contributions, he cannot have the Employer
make any Salary Deferral Contributions in excess of the limit in section 402(g)
of the Code for that taxable year reduced by the amount of Salary Deferral
Contributions made by the Employer on the Participant's behalf during the
taxable year of the Participant in which he received the hardship distribution.
(f) Order of Distributions. Financial hardship distributions
will be made in the following order: First withdrawals will be made from the
Participant's After-Tax Contribution Account, then from his Rollover
Contribution Account, then from his Matching Contribution Account, then from his
Supplemental Contribution Account and finally, from his Salary Deferral
Contribution Account. A Participant shall not be entitled to receive a financial
hardship distribution of any amount credited to his QNEC Account.
6.02 IN-SERVICE DISTRIBUTION OF AFTER-TAX CONTRIBUTIONS, MATCHING
CONTRIBUTIONS AND SUPPLEMENTAL CONTRIBUTIONS. Each Participant shall be entitled
to withdraw a portion or all of his After-Tax Contribution Account and his
Nonforfeitable Interest in his Matching Contribution Account and his
Supplemental Contribution Account. However, the minimum amount of the
distribution permitted under this Section 6.02 shall be the lesser of $1,000.00
or the total amount which could otherwise be distributed under this Section
6.02. Also, a Participant may make a withdrawal of a portion of his
Nonforfeitable Interest in his Matching Contribution Account and his
Supplemental Contribution Account only if the Participant has been a Participant
in this Plan for five or more years or the amounts withdrawn from the Matching
Contribution Account and his Supplement Contribution Account have been credited
to his Account for a minimum of two years. A Participant may not make another
distribution request under this Section 6.02 until such Participant has made
After-Tax Contributions and/or Salary Deferral Contributions for a period of
twelve months or more after receiving his most recent distribution pursuant to
this Section 6.02.
6.03 METHOD OF PAYMENT. Any distribution made pursuant to this Article
VI will be paid in the form of a cash lump sum.
6.04 IN-SERVICE DISTRIBUTIONS FOR CERTAIN FORMER PARTICIPANTS. Former
Participants who are described in Section 5.06 shall be entitled to receive
distributions pursuant to this Article VI under the same terms and conditions as
are applicable to Participants.
VI-2
ARTICLE VII
VESTING
A Participant or former Participant has a fully nonforfeitable interest
in his entire Account balance when he (a) incurs a Disability on or prior to the
date of his Separation From Service, (b) attains his Normal Retirement Age on or
prior to the date of his Separation From Service, or (c) incurs a Separation
From Service due to death. A Participant or former Participant shall at all
times have a fully nonforfeitable interest in amounts credited to his Salary
Deferral Contribution Account, QNEC Account, Rollover Account and After-Tax
Contribution Account. A Participant or former Participant shall have a
nonforfeitable interest in the following percentage of amounts credited to his
Matching Contribution Account and his Supplemental Contribution Account:
Years of Active Service Completed by the
Participant or Former Participant Vested Percentage
---------------------------------------- -----------------
Less than one............................................. 0
One but less than two..................................... 20
Two but less than three................................... 40
Three but less than four.................................. 60
Four but less than five................................... 80
Five or more.............................................. 100
Subject to the possible application of Section B.2.3 of Appendix B or
Section 12.05, except as specified above, a Participant or former Participant
has no vested interest in his Account balance and shall not be entitled to any
benefits under the Plan upon or following his Separation From Service.
VII-1
ARTICLE VIII
FORFEITURES AND RESTORATIONS
8.01 FORFEITURE ON TERMINATION OF PARTICIPATION.
(a) If as a result of his Separation From Service a
Participant or former Participant receives (or is deemed to receive under
Section 5.04), a distribution of his entire Nonforfeitable Interest in the Plan
not later than the end of the second Plan Year following the Plan Year in which
his Separation From Service occurs, the remaining nonvested portion of his
Account balance will be immediately forfeited upon the distribution.
(b) If a Participant or former Participant neither receives
nor is deemed to receive a distribution as a result of his Separation From
Service, the nonvested portion of his Account balance will be permanently
forfeited (with no right of reinstatement under Section 8.02) on the later of
the date of his Separation From Service or the date on which he has incurred a
Period of Severance of five consecutive years.
8.02 RESTORATION OF FORFEITED AMOUNTS. If a Participant or former
Participant who forfeited any portion of his Account balance pursuant to the
provisions of Section 8.01 subsequently performs an Hour of Service, then the
following provisions shall apply:
(a) Repayment Requirement. The Participant's Account balance
(unadjusted for gains or losses subsequent to the forfeiture) shall be restored
if he repays to the Trustee the full amount of any distribution with respect to
which the forfeiture arose prior to the earlier of (1) the date on which he
incurs a Period of Severance of five years commencing after his distribution, or
(2) the fifth anniversary of the first date on which the Participant
subsequently performs his first Hour of Service after his Separation From
Service. A Participant who is deemed to have received a distribution under
Section 5.04 (because he had no Nonforfeitable Interest in his Account balance)
will be deemed to have repaid his Account balance upon his reemployment if he is
reemployed before the earlier of the dates specified in clauses (1) and (2) in
the preceding sentence.
(b) Amount Restored. The amount to be restored under the
preceding provisions of this Section 8.02 shall be the dollar value of the
Account balance, both the amount distributed and the amount forfeited. The
Participant's Account balance shall be restored as soon as administratively
practicable after the later of the date the Participant first performs an Hour
of Service after his Separation From Service or the date on which any required
repayment is completed.
(c) No Other Basis for Restoration. Except as otherwise
provided above, a Participant's Account balance shall not be restored after it
has been forfeited pursuant to Section 8.01.
VIII-1
8.03 FORFEITURES BY LOST PARTICIPANTS OR BENEFICIARIES. If a person who
is entitled to a distribution cannot be located during a reasonable search after
the Committee has initially attempted making payment, his Account balance shall
be forfeited. However, if at any time prior to the termination of the Plan and
the complete distribution of the Trust assets, the missing former Participant or
Beneficiary files a claim with the Committee for the forfeited Account balance,
that Account balance shall be reinstated (without adjustment for trust income or
losses during the period of forfeiture) effective as of the date of the receipt
of the claim.
VIII-2
ARTICLE IX
ACTIVE SERVICE
9.01 GENERAL. For purposes of determining an Employee's eligibility to
participate in the Plan and his nonforfeitable interest in his Account balance,
the Employee shall receive credit for Active Service commencing on the later of
(1) April 1, 1986 or (2) the date he first performs an Hour of Service and
ending on his Severance From Service Date. If an Employee Xxxxxx Service, he
shall recommence earning Active Service when he again performs an Hour of
Service. If an Employee performs an Hour of Service within twelve months after
his Severance From Service Date, the intervening Period of Severance shall be
counted as Active Service. When determining an Employee's Active Service, all
Periods of Service, whether or not completed consecutively, shall be aggregated
on a per-day basis. In aggregating Active Service, thirty days shall be counted
as one month and 365 days shall be counted as one year of Active Service. Except
to the extent expressly provided otherwise in the Plan, an Employee shall be
granted credit for all Periods of Service with Affiliated Employers (including
Periods of Service performed while the Employee is not eligible to participate
in the Plan because he does not satisfy the requirements of Section 2.01).
9.02 DISREGARD OF CERTAIN SERVICE. If an Employee incurs a Separation
From Service at a time when he does not have a Nonforfeitable Interest in a
portion of his Matching Contribution Account balance or his Supplemental
Contribution Account balance and his Period of Severance continues for a
continuous period of five years or more, the Period of Service completed by the
Employee before the Period of Severance shall not be taken into account as
Active Service, if his Period of Severance equals or exceeds his Period of
Service, whether or not consecutive, completed before the Period of Severance.
9.03 CERTAIN BRIEF ABSENCES COUNTED AS ACTIVE SERVICE. If an Employee
performs an Hour of Service within 365 days after he Xxxxxx Service, the
intervening Period of Severance shall be counted as a Period of Service.
9.04 SERVICE CREDIT REQUIRED BY LAW. An Employee will be granted credit
for Active Service for time he is not actively performing services for an
Affiliated Employer the extent required under federal law. An Employee will be
granted credit for Active Service for services performed for a predecessor
employer to the extent required by section 414(a) of the Code and Regulations
issued thereunder.
9.05 SPECIAL MATERNITY OR PATERNITY ABSENCE RULES. Except as specified
below, the period of time between (a) the first anniversary of the first day of
a Maternity or Paternity Absence of an Employee and (b) the second anniversary
of the first day of the absence shall not be counted as a Period of Severance or
as Active Service. However, if the Employee returns to active employment with an
Affiliated Employer prior to the expiration of twelve months following the
earlier of (1) the date of his Separation From Service or (2) the second
anniversary of the first day of his Maternity or Paternity Absence, he shall be
granted Active Service for the entire period of his Maternity or Paternity
Absence.
IX-1
9.06 EMPLOYMENT RECORDS CONCLUSIVE. The employment records of the
Employer shall be conclusive for all determinations of Active Service.
IX-2
ARTICLE X
INVESTMENT ELECTIONS
10.01 INVESTMENT FUNDS ESTABLISHED. It is contemplated that the assets
of the Plan shall be invested in such categories of assets as may be determined
from time to time by the Committee and announced and made available on an equal
basis to all Participants and former Participants. In accordance with procedures
established by the Committee, each Participant and former Participant may
designate the percentage of his Account to be invested in each investment fund
available under the Plan. Up to one hundred percent of the Trust assets may be
invested in Sponsor Stock.
10.02 ELECTION PROCEDURES ESTABLISHED. The Committee shall, from time
to time, establish rules to be applied in a nondiscriminatory manner as to all
matters relating to the administration of the investment of funds including, but
not limited to, the following:
(a) the percentage of a Participant's or former Participant's
Account as it exists, from time to time, that may be transferred from one fund
to another and the limitations based on amounts, percentages, time, or
frequency, if any, on such transfers;
(b) the percentage of a Participant's future contributions,
when allocated to his Account, that may be invested in any one or more funds and
the limitations based upon amounts, percentages, time, or frequency, if any, on
such investments in various funds;
(c) the procedures for making investment elections and
changing existing investment elections;
(d) the period of notice required for making investment
elections and changing existing investment elections;
(e) the handling of income and change of value in funds when
funds are in the process of being transferred between investment funds and to
investment funds; and
(f) all other matters necessary to permit the orderly
operation of investment funds within the Plan.
When the Committee changes any previous applicable rule, it shall state the
effective time of the change and the procedures for complying with any such
change. Any change shall remain effective until such date as stated in the
change, or if none is stated, then until revoked or changed in a like manner.
X-1
ARTICLE XI
ADOPTION OF PLAN BY OTHER EMPLOYERS
11.01 ADOPTION PROCEDURE. Any business organization may, with the
approval of the Board, adopt the Plan by:
(a) a certified resolution or consent of the board of
directors of the adopting Employer or an executed adoption instrument (approved
by the board of directors of the adopting Employer) agreeing to be bound as an
Employer by all the terms, conditions and limitations of the Plan except those,
if any, specifically described in the adoption instrument; and
(b) providing all information required by the Committee and
the Trustee.
11.02 NO JOINT VENTURE IMPLIED. The document which evidences the
adoption of the Plan by an Employer shall become a part of the Plan. However,
neither the adoption of the Plan and the Trust by an Employer nor any act
performed by it in relation to the Plan and the Trust shall ever create a joint
venture or partnership relation between it and any other Employer.
11.03 ALL TRUST ASSETS AVAILABLE TO PAY ALL BENEFITS. The Accounts of
Participants employed by the Employers that adopt the Plan shall be commingled
for investment purposes. All assets in the Trust shall be available to pay
benefits to all Participants employed by any Employer.
11.04 QUALIFICATION A CONDITION PRECEDENT TO ADOPTION AND CONTINUED
PARTICIPATION. The adoption of the Plan and the Trust by a business organization
is contingent upon and subject to the express condition precedent that the
initial adoption meets all statutory and regulatory requirements for
qualification of the Plan and the exemption of the Trust that are applicable to
it and that the Plan and Trust continue in operation to maintain their qualified
and exempt status. In the event the adoption fails to initially qualify, the
adoption shall fail retroactively for failure to meet the condition precedent
and the portion of the Trust assets applicable to the adoption shall be
immediately returned to the adopting business organization and the adoption
shall be void ab initio. In the event the adoption as to a given business
organization later becomes disqualified and loses its exemption for any reason,
the adoption shall fail retroactively for failure to meet the condition
precedent and the portion of the Trust assets allocable to the adoption by that
business organization shall be immediately spun off, retroactively as of the
last date for which the Plan qualified, to a separate trust for its sole benefit
and an identical but separate Plan shall be created, retroactively effective as
of the last date the Plan as adopted by that business organization qualified,
for the benefit of the Participants covered by that adoption.
XI-1
ARTICLE XII
AMENDMENT AND TERMINATION
12.01 RIGHT TO AMEND AND LIMITATIONS THEREON. The Sponsor has the sole
right to amend the Plan. An amendment may be made by a certified resolution or
consent of the Board, or by an instrument in writing executed by the appropriate
officer of the Sponsor. The amendment must describe the nature of the amendment
and its effective date. No amendment shall:
(a) vest in an Employer any interest in the Trust;
(b) cause or permit the Trust assets to be diverted to any
purpose other than the exclusive benefit of the present, former or future
Participants and their Beneficiaries except under the circumstances described in
Section 3.11;
(c) decrease the Account of any Participant or former
Participant, or eliminate an optional form of payment in violation of section
411(d)(6) of the Code; or
(d) change the vesting schedule to one which would result in a
Participant's or former Participant's Nonforfeitable Interest in his Account
balance (determined as of the later of the date of the adoption of the amendment
or of the effective date of the amendment) of any Participant or former
Participant being less than his Nonforfeitable Interest computed under the Plan
without regard to the amendment. If the Plan's vesting schedule is amended or if
the Plan is deemed amended by an automatic change to or from a top-heavy vesting
schedule, each Participant or former Participant who has at least three years of
Active Service as of the date of the amendment or change shall have his
nonforfeitable percentage computed under the Plan without regard to the
amendment or the change if that results in a higher Nonforfeitable Interest in
his Account balance.
Each Employer shall be deemed to have adopted any amendment made by the
Sponsor unless the Employer notifies the Committee of its rejection in writing
within 30 days after it receives a copy of the amendment. A rejection shall
constitute a withdrawal from the Plan by that Employer unless the Sponsor
acquiesces in the rejection.
12.02 MANDATORY AMENDMENTS. The Contributions of each Employer to the
Plan are intended to be:
(a) deductible under the applicable provisions of the Code;
(b) except as otherwise prescribed by applicable law, exempt
from the Federal Social Security Act;
(c) except as otherwise prescribed by applicable law, exempt
from with- holding under the Code; and
(d) excludable from any Employee's regular rate of pay, as
that term is defined under the Fair Labor Standards Act of 1938, as amended.
XII-1
The Sponsor shall make any amendment necessary to carry out this
intention, and it may be made retroactively.
12.03 WITHDRAWAL OF EMPLOYER. An Employer may withdraw from the Plan
and the Trust if the Sponsor does not acquiesce in its rejection of an amendment
or by giving written notice of its intent to withdraw to the Committee. The
Committee shall then determine the portion of the Trust assets that is
attributable to the Participants employed by the withdrawing Employer and shall
notify the Trustee to segregate and transfer those assets to the successor
trustee when it receives a designation of the successor from the withdrawing
Employer.
A withdrawal shall not terminate the Plan and the Trust with respect to
the withdrawing Employer, if the Employer either appoints a successor trustee
and reaffirms the Plan and the Trust as its new and separate plan and trust
intended to qualify under section 401(a) of the Code, or establishes another
plan and trust intended to qualify under section 401(a) of the Code.
The determination of the Committee, in its sole discretion, of the
portion of the Trust assets that is attributable to the Participants employed by
the withdrawing Employer shall be final and binding upon all parties; and, the
Trustee's transfer of those assets to the designated successor Trustee shall
relieve the Trustee of any further obligation, liability or duty to the
withdrawing Employer, the Participants employed by that Employer and their
Beneficiaries, and the successor trustee.
12.04 TERMINATION OF PLAN. The Sponsor may terminate the Plan and the
Trust with respect to all Employers by executing and delivering to the Committee
and the Trustee, a notice of termination, specifying the date of termination.
12.05 PARTIAL OR COMPLETE TERMINATION OR COMPLETE DISCONTINUANCE OF
CONTRIBUTIONS. Without regard to any other provision of the Plan, if there is a
partial or total termination of the Plan or there is a complete discontinuance
of the Employer's Contributions, each of the affected Participants shall
immediately have a fully Nonforfeitable Interest in his Account as of the end of
the last Plan Year for which a substantial Employer Contribution was made and in
any amounts later allocated to his Account. If the Employer then resumes making
substantial Contributions at any time, the appropriate vesting schedule shall
again apply to all amounts allocated to each affected Participant's Account
beginning with the Plan Year for which they were resumed.
XII-2
ARTICLE XIII
MISCELLANEOUS
13.01 PLAN NOT AN EMPLOYMENT CONTRACT. The maintenance of the Plan and
the Trust is not a contract between any Employer and its Employees which gives
any Employee the right to be retained in its employment. Likewise, it is not
intended to interfere with the rights of any Employer to discharge any Employee
at any time or to interfere with the Employee's right to terminate his
employment at any time.
13.02 BENEFITS PROVIDED SOLELY FROM TRUST. All benefits payable under
the Plan shall be paid or provided for solely from the Trust. No Employer
assumes any liability or responsibility to pay any benefit provided by the Plan.
13.03 ASSIGNMENTS PROHIBITED. No principal or income payable or to
become payable from the Trust Fund shall be subject to anticipation or
assignment by a Participant, former Participant or Beneficiary to attachment by,
interference with, or control of any creditor of a Participant, former
Participant or Beneficiary; or to being taken or reached by any legal or
equitable process in satisfaction of any debt or liability of a Participant,
former Participant, or Beneficiary prior to its actual receipt by the
Participant, former Participant or Beneficiary. Any attempted conveyance,
transfer, assignment, mortgage, pledge, or encumbrance of any Trust assets, any
part of it, or any interest in it by a Participant, former Participant or
Beneficiary prior to distribution shall be void, whether that conveyance,
transfer, assignment, mortgage, pledge, or encumbrance is intended to take place
or become effective before or after any distribution of Trust assets or the
termination of the Trust itself. The Trustee shall never under any circumstances
be required to recognize any conveyance, transfer, assignment, mortgage, pledge
or encumbrance by a Participant , former Participant, or Beneficiary of the
Trust, any part of it, or any interest in it, or to pay any money or thing of
value to any creditor or assignee of a Participant, former Participant or
Beneficiary for any cause whatsoever. These prohibitions against the alienation
of a Participant's Account shall not apply to a Qualified Domestic Relations
Order or to a voluntary revocable assignment of benefits not in excess of ten
percent of the amount of any payment from the Plan if such assignment complies
with Regulations issued under section 401(a)(13) of the Code. Further, effective
for judgments, orders and decrees issued, and settlement agreements entered
into, on or after August 5, 1997, these prohibitions shall not apply to any
offset of a Participant's or former Participant's benefits provided under a Plan
against an amount that the Participant or former Participant is ordered or
required to pay to the Plan if--(a) the order or requirement to pay arises--(1)
under a judgment of conviction for a crime involving the Plan, (2) under a civil
judgment (including a consent order or decree) entered by a court in an action
brought in connection with an alleged violation of part 4 of subtitle B of title
I of ERISA, or (3) pursuant to a settlement agreement between the Secretary of
Labor and the Participant or former Participant in connection with a violation
(or alleged violation) of part 4 of subtitle B of ERISA by a fiduciary or any
other person, and (b) the judgment, order, decree, or settlement agreement
expressly provides for the offset of all or part of the amount ordered or
required to be paid to the Plan against the Participant's or former
Participant's benefits provided under the Plan.
XIII-1
13.04 REQUIREMENTS UPON MERGER OR CONSOLIDATION OF PLANS. The Plan
shall not merge or consolidate with or transfer any assets or liabilities to any
other plan unless each Participant would receive a benefit immediately after the
merger, consolidation, or transfer which is equal to or greater than the benefit
he would have been entitled to receive immediately before the merger,
consolidation, or transfer (if the Plan had then terminated).
13.05 GENDER OF WORDS USED. If the context requires it, words of one
gender when used in the Plan shall include the other gender, and words used in
the singular or plural shall include the other.
13.06 SEVERABILITY. Each provision of this Agreement may be severed. If
any provision is determined to be invalid or unenforceable, that determination
shall not affect the validity or enforceability of any other provision.
13.07 REEMPLOYED VETERANS. Effective January 12, 1994, the requirements
of the Uniformed Services Employment and Reemployment Rights Act of 1994 will be
complied with in the operation of the Plan in the manner permitted under section
414(u) of the Code.
13.08 LIMITATIONS ON LEGAL ACTIONS. No person may bring an action
pertaining to the Plan or Trust until he has exhausted his administrative claims
and appeal remedies identified in section 5.13. Further, no person may bring an
action pertaining to a claim for benefits under the Plan or the Trust following
90 days after the Committee's final denial of his claim for benefits.
13.09 GOVERNING LAW. The provisions of the Plan shall be construed,
administered, and governed under the laws of the United States unless the
specific matter in question is governed by state law in which event the laws of
the State of
Texas shall apply.
XIII-2
IN WITNESS WHEREOF,
Quanex Corporation has caused this Agreement to be
executed this 31st day of August, 2001, in multiple counterparts, each of which
shall be deemed to be an original, to be effective the 1st day of January, 1998,
except for those provisions which have an earlier effective date provided by
law, or as otherwise provided under applicable provisions of the Plan.
QUANEX CORPORATION
By: /s/ Xxxx X. Xxxxxxx
-------------------------------------
Title: Vice President Human Resources and
Administration
APPENDIX A
LIMITATIONS ON CONTRIBUTIONS AND ALLOCATIONS
PART A.1 DEFINITIONS
DEFINITIONS. As used herein the following words and phrases have the
meaning attributed to them below:
A.1.1 "ACTUAL CONTRIBUTION RATIO" shall mean the ratio of Section
401(m) Contributions actually paid into the Trust on behalf of an Employee for a
Plan Year to the Employee's Annual Compensation for the same Plan Year. For this
purpose, Annual Compensation for any portion of the Plan Year in which the
Employee was not an eligible Employee (as defined in Section A.2.4) will not be
taken into account.
A.1.2 "ACTUAL DEFERRAL PERCENTAGE" means, for a specified group of
Employees for a Plan Year, the average of the ratios (calculated separately for
each Employee in the group) of the amount of Section 401(k) Contributions
actually paid into the Trust on behalf of the Employee for the Plan Year to the
Employee's Annual Compensation for the Plan Year.
A.1.3 "ACTUAL DEFERRAL RATIO" means the ratio of Section 401(k)
Contributions actually paid into the Trust on behalf of an Employee for a Plan
Year to the Employee's Annual Compensation for the same Plan Year. For this
purpose, Annual Compensation for any portion of the Plan Year in which the
Employee was not an eligible Employee (as defined in Section A.2.3) will not be
taken into account.
A.1.4 "ANNUAL ADDITIONS" means the sum of the following amounts
credited on behalf of a Participant for the Limitation Year: (a) Employer
contributions, (b) Employee contributions and (c) forfeitures. Excess 401(k)
Contributions for a Plan Year are treated as Annual Additions for that Plan Year
even if they are corrected through distribution. Excess Deferrals that are
timely distributed as set forth in Section A.3.1 will not be treated as Annual
Additions.
A.1.5 "CONTRIBUTION PERCENTAGE" shall mean, for a specified group of
Employees for a Plan Year, the average of the ratios (calculated separately for
each Employee in the group) of the amount of Section 401(m) Contributions
actually paid into the Trust on behalf of the Employee for the Plan Year to the
Employee's Annual Compensation for the Plan Year.
A.1.6 "EXCESS AGGREGATE 401(m) CONTRIBUTIONS" means, with respect to
any Plan Year, the excess of (a) the aggregate amount of Section 401(m)
Contributions actually paid into the Trust on behalf of Highly Compensated
Employees for the Plan Year over (b) the maximum amount of those contributions
permitted under the limitations set out in the first sentence of Section A.2.4.
A.1.7 "EXCESS AMOUNT" shall mean the excess of the Annual Additions
credited to the Participant's Account for the Limitation Year over the Maximum
Permissible Amount.
A.1.8 "EXCESS 401(k) CONTRIBUTIONS" means, with respect to any Plan
Year, the excess of (a) the aggregate amount of Section 401(k) Contributions
actually paid to the Trustee on behalf of Highly Compensated Employees for the
Plan Year over (b) the maximum amount of those contributions permitted under the
limitations set out in the first sentence of Section A.2.3.
A.1.9 "LIMITATION YEAR" shall mean the Plan Year. All qualified plans
maintained by any Affiliated Employer must use the same Limitation Year. If the
Limitation Year is amended to a different 12-consecutive month period, the new
Limitation Year must begin on a date within the Limitation Year in which the
amendment is made.
A-1
A.1.10 "MAXIMUM PERMISSIBLE AMOUNT" shall mean the lesser of (a) the
dollar limitation in effect under section 415(c)(1)(A) of the Code for the
Limitation Year, or (b) 25 percent of the Participant's Annual Compensation for
the Limitation Year. The Annual Compensation limitation referred to in clause
(b) of the immediately preceding sentence shall not apply to any contribution
for medical benefits (within the meaning of section 401(h) or section
419(A)(f)(2) of the Code) that is otherwise treated as an Annual Addition under
section 415(l)(1) or section 419(A)(d)(2) of the Code. If a short Limitation
Year is created because of an amendment changing the Limitation Year to a
different 12-consecutive month period, the Maximum Permissible Amount shall not
exceed the dollar limitation in effect under section 415(c)(1)(A) of the Code
multiplied by a fraction, the numerator of which is the number of months in the
short Limitation Year, and the denominator of which is 12.
A.1.11 "SECTION 401(k) CONTRIBUTIONS" means the sum of Salary Deferral
Contributions made on behalf of the Participant during the Plan Year, and QNECs
that the Employer elects to have treated as section 401(k) Contributions
pursuant to section 401(k)(3)(d)(ii) of the Code.
A.1.12 "SECTION 401(m) CONTRIBUTIONS" shall mean the sum of Matching
Contributions and After-Tax Contributions made on behalf of the Participant
during the Plan Year and other amounts that the Employer elects to have treated
as Section 401(m) Contributions pursuant to section 401(m)(3)(B) of the Code.
However, Matching Contributions and Salary Deferral Contributions that the
Employer could otherwise elect to have treated as Section 401(m) Contributions
are not Section 401(m) Contributions to the extent that they are used to enable
the Plan to satisfy the minimum contribution requirements of section 416 of the
Code.
PART A.2 LIMITATIONS ON CONTRIBUTIONS
A.2.1 LIMITATIONS BASED UPON DEDUCTIBILITY AND THE MAXIMUM ALLOCATION
PERMITTED TO A PARTICIPANT'S ACCOUNT. Notwithstanding any other provision of the
Plan, no Employer shall make any contribution that would be a nondeductible
contribution within the meaning of section 4972 of the Code or that would cause
the limitation on allocations to each Participant's Account under section 415 of
the Code and Section A.4.1 to be exceeded.
A.2.2 DOLLAR LIMITATION UPON SALARY DEFERRAL CONTRIBUTIONS. The maximum
Salary Deferral Contribution that a Participant may elect to have made on his
behalf during the Participant's taxable year may not, when added to the amounts
deferred under other plans or arrangements described in sections 401(k), 408(k)
and 403(b) of the Code, exceed $7,000 (as adjusted by the Secretary of
Treasury). For purposes of applying the requirements of Section A.2.3, Excess
Deferrals shall not be disregarded merely because they are Excess Deferrals or
because they are distributed in accordance with this Section. However, Excess
Deferrals made to the Plan on behalf of Non-Highly Compensated Employees are not
to be taken into account under Section A.2.3.
A.2.3 LIMITATION BASED UPON ACTUAL DEFERRAL PERCENTAGE. Effective for
Plan Years commencing on or after January 1, 1997, the Actual Deferral
Percentage for eligible Highly Compensated Employees for any Plan Year must bear
a relationship to the Actual Deferral Percentage for all other eligible
Employees for (1) the preceding Plan Year in the case of testing for Plan Years
commencing on or after January 1, 2001, or (2) the current Plan Year in the case
of testing for Plan Years commencing prior to January 1, 2001, which meets
either of the following tests:
(a) the Actual Deferral Percentage of the eligible Highly
Compensated Employees is not more than the Actual Deferral Percentage
of all other eligible Employees multiplied by 1.25; or
(b) the excess of the Actual Deferral Percentage of the
eligible Highly Compensated Employees over that of all other eligible
Employees is not more than two percentage points, and the Actual
Deferral Percentage of the eligible Highly Compensated Employees is not
more than the Actual Deferral Percentage of all other eligible
Employees multiplied by two.
A-2
For purposes of this test an eligible Employee is an Employee who is
directly or indirectly eligible to make Salary Deferral Contributions for all or
part of the Plan Year. A person who is suspended from making Salary Deferral
Contributions because he has made a withdrawal is an eligible Employee. If no
Salary Deferral Contributions are made for an eligible Employee, the Actual
Deferral Ratio that shall be included for him in determining the Actual Deferral
Percentage is zero. If the Plan and any other plan or plans which include cash
or deferred arrangements are considered as one plan for purposes of section
401(a)(4) or 410(b) of the Code, the cash or deferred arrangements included in
the Plan and the other plans shall be treated as one plan for purposes of this
Section. If any Participant who is a Highly Compensated Employee is a
participant in any other cash or deferred arrangements of the Employer, when
determining the deferral percentage of such Participant, all such cash or
deferred arrangements are treated as one plan for these dates.
Notwithstanding the foregoing, effective for Plan Years commencing on
or after January 1, 1998, an individual who is not a Highly Compensated Employee
and who has not satisfied the minimum age and service requirements of section
410(a)(1)(A) of the Code will not be treated as an eligible Employee for
purposes of this Section A.2.3 if the Sponsor elects to apply section
410(b)(4)(3) of the Code in determining whether the Plan meets the requirements
of section 401(k)(3) of the Code.
A Salary Deferral Contribution will be taken into account under the
Actual Deferral Percentage test of section 401(k) of the Code and this Section
for a Plan Year only if it relates to Considered Compensation that either would
have been received by the Employee in the Plan Year (but for the deferral
election) or is attributable to services performed by the Employee in the Plan
Year and would have been received by the Employee within 2 1/2 months after the
close of the Plan Year (but for the deferral election). In addition, a Section
401(k) Contribution will be taken into account under the Actual Deferral
Percentage test of section 401(k) of the Code and this Section for a Plan Year
only if it is allocated to an Employee as of a date within that Plan Year. For
this purpose a Section 401(k) Contribution is considered allocated as of a date
within a Plan Year if the allocation is not contingent on participation or
performance of services after such date and the Section 401(k) Contribution is
actually paid to the Trust no later than 12 months after the Plan Year to which
the Section 401(k) Contribution relates.
Failure to correct Excess 401(k) Contributions by the close of the Plan
Year following the Plan Year for which they were made will cause the Plan's cash
or deferred arrangement to be disqualified for the Plan Year for which the
Excess 401(k) Contributions were made and for all subsequent years during which
they remain in the Trust. Also, the Employer will be liable for a ten percent
excise tax on the amount of Excess 401(k) Contributions unless they are
corrected within 2 1/2 months after the close of the Plan Year for which they
were made.
For the Plan Year that commences on January 1, 2001, the Actual
Deferral Percentage of persons who are not Highly Compensated Employees will be
determined by taking into account only (1) Salary Deferral Contributions for
such persons that were taken into account for purposes of the actual deferral
percentage test set forth in section 401(k) of the Code and this Section A.2.3
for the Plan Year that commenced on January 1, 2000 and (2) QNECS that were
allocated to the Accounts of such persons for the Plan Year that commenced on
January 1, 2000 but that were not used to satisfy the actual deferral percentage
test set forth in section 401(k) of the Code and this Section A.2.3 or the
actual contribution percentage test set forth in section 401(m) of the Code and
Section A.2.4 for the Plan Year that commenced on January 1, 2000.
A.2.4 LIMITATION BASED UPON CONTRIBUTION PERCENTAGE. Effective for Plan
Years commencing on or after January 1, 1997, the Contribution Percentage for
eligible Highly Compensated Employees for any Plan Year must bear a relationship
to the Actual Contribution Percentage for all other eligible Employees for (1)
the preceding Plan Year in the case of testing for Plan Years commencing on or
after January 1, 2001, or (2) the current Plan Year in the case of testing for
Plan Years commencing prior to January 1, 2001, which meets either of the
following tests:
(a) the Contribution Percentage for all other eligible
Employees multiplied by 1.25; or
(b) the lesser of the Contribution Percentage for all other
eligible Employees multiplied by two, or the Contribution Percentage
for all other eligible Employees plus two percentage points.
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For purposes of this test an eligible Employee is an Employee who is
directly or indirectly eligible to receive an allocation of Matching
Contributions for all or part of the Plan Year. Except as provided below, an
Employee who would be eligible to receive an allocation of Matching
Contributions but for his election not to participate is an eligible Employee.
An Employee who would be eligible to receive an allocation of Matching
Contributions but for the limitations on his Annual Additions imposed by section
415 of the Code is an eligible Employee.
Notwithstanding the foregoing, effective for Plan Years commencing on
or after January 1, 1998, an individual who is not a Highly Compensated Employee
and who has not satisfied the minimum age and service requirements of section
410(a)(1)(A) of the Code will not be treated as an eligible Employee for
purposes of this Section A.2.4 if the Sponsor elects to apply section
410(b)(4)(B) of the Code in determining whether the Plan meets the requirements
of section 401(m)(2) of the Code.
If no Section 401(m) Contributions are made on behalf of an eligible
Employee the Actual Contribution Ratio that shall be included for him in
determining the Contribution Percentage is zero. If the Plan and any other plan
or plans to which Section 401(m) Contributions are made are considered as one
plan for purposes of section 401(a)(4) or 410(b) of the Code, the Plan and those
plans are to be treated as one. The Actual Contribution Ratio of a Highly
Compensated Employee who is eligible to participate in more than one plan of an
Affiliated employer to which employee or matching contributions are made is
calculated by treating all the plans in which the Employee is eligible to
participate as one plan. However, plans that are not permitted to be aggregated
under Regulation section 1.410(m)-1(b)(3)(ii) are not aggregated for this
purpose.
A Matching Contribution will be taken into account under this Section
for a Plan Year only if (1) it is allocated to the Employee's Account as of a
date within the Plan Year, (2) it is paid to the Trust no later than the end of
the 12-month period beginning after the close of the Plan Year, and (3) it is
made on behalf of an Employee on account of his Salary Deferral Contributions
for the Plan Year.
At the election of the Employer, a Participant's Salary Deferral
Contributions, and XXXXx made on behalf of the Participant during the Plan Year
shall be treated as Section 401(m) Contributions that are Matching Contributions
provided that the conditions set forth in Regulation section 1.401(m)-1(b)(5)
are satisfied. Salary Deferral Contributions may not be treated as Matching
Contributions for purposes of the contribution percentage test set forth in this
Section unless such contributions, including those taken into account for
purposes of the test set forth in this Section, satisfy the actual deferral
percentage test set forth in Section A.2.3. Moreover, Salary Deferral
Contributions and QNECs may not be taken into account for purposes of the test
set forth in this Section to the extent that such contributions are taken into
account in determining whether any other contributions satisfy the actual
deferral percentage test set forth in Section A.2.3. Finally, Salary Deferral
Contributions and QNECs may be taken into account for purposes of the test set
forth in this Section only if they are allocated to the Employee's Account as of
a date within the Plan Year being tested within the meaning of Regulation
section 1.401(k)-1(b)(4).
Failure to correct Excess Aggregate 401(m) Contributions by the close
of the Plan Year following the Plan Year for which they were made will cause the
Plan to fail to be qualified for the Plan Year for which the Excess Aggregate
401(m) Contributions were made and for all subsequent years during which they
remain in the Trust. Also, the Employer will be liable for a ten percent excise
tax on the amount of Excess Aggregate 401(m) Contributions unless they are
corrected within 2 1/2 months after the close of the Plan Year for which they
were made.
For the Plan Year that commences on January 1, 2001, the Contribution
Percentage of persons who are not Highly Compensated Employees will be
determined by taking into account only (1) After-Tax Contributions made on
behalf of those persons during the Plan Year that commenced on January 1, 2000,
(2) Matching Contributions made on behalf of such persons that were taken into
account for purposes of the actual contribution percentage test set forth in
section 401(m) of the Code and this Section A.2.4 for the Plan Year that
commenced on January 1, 2000 and (3) QNECS that were allocated to the Accounts
of such persons for the Plan Year that commenced on January 1, 2000 but that
were not used to satisfy the actual deferral percentage test set forth in
section 401(k) of the Code and Section A.2.3 or the actual contribution
percentage that set forth in section 401(m) of the Code and this Section A.2.4
for the Plan Year that commenced on January 1, 2000.
A-4
A.2.5 ALTERNATIVE LIMITATION BASED UPON ACTUAL DEFERRAL PERCENTAGE AND
CONTRIBUTION PERCENTAGE. If the second alternative permitted in Sections A.2.3
and A.2.4 is used for both the actual deferral percentage test and the
contribution percentage test the following additional limitation on Salary
Deferral Contributions shall apply. The Actual Deferral Percentage plus the
Contribution Percentage of the eligible Highly Compensated Employees cannot
exceed the greater of (a) or (b), where
(a) is the sum of:
(i) 1.25 times the greater of the Actual Deferral
Percentage or the Contribution Percentage of the eligible
Non-Highly Compensated Employees for the preceding Plan Year,
and
(ii) the lesser of (x) two percentage points plus the
lesser of the Actual Deferral Percentage or the Contribution
Percentage of the eligible Non-Highly Compensated Employees
for the preceding Plan Year or (y) two times the lesser of the
Actual Deferral Percentage or the Contribution Percentage of
the group of eligible Non-Highly Compensated Employees for the
preceding Plan Year; and
(b) is the sum of:
(i) 1.25 times the lesser of the Actual Deferral
Percentage or the Contribution Percentage of the eligible
Non-Highly Compensated Employees for the preceding Plan Year,
and
(ii) the lesser of (x) two percentage points plus the
greater of the Actual Deferral Percentage or the Contribution
Percentage of the eligible Non-Highly Compensated Employees
for the preceding Plan Year or (y) two times the greater of
the Actual Deferral Percentage or the Contribution Percentage
of the group of eligible Non-Highly Compensated Employees for
the preceding Plan Year.
Notwithstanding the foregoing, the references in this Section A.2.5 to
"the preceding Plan Year" shall be deemed to be references to "the current Plan
Year" in the case of testing for Plan Years commencing prior to January 1, 2001.
PART A.3 CORRECTION PROCEDURES FOR ERRONEOUS CONTRIBUTIONS
A.3.1 EXCESS DEFERRAL FAIL SAFE PROVISION. As soon as practical after
the close of each Plan Year, the Committee shall determine if there would be any
Excess Deferrals. If there would be an Excess Deferral by a Participant, the
Excess Deferral as adjusted by any earnings or losses, will be distributed to
the Participant no later than April 15 following the Participant's taxable year
in which the Excess Deferral was made. The income allocable to the Excess
Deferrals for the taxable year of the Participant shall be determined by
multiplying the income for the taxable year of the Participant allocable to
Salary Deferral Contributions by a fraction. The numerator of the fraction is
the amount of the Excess Deferrals made on behalf of the Participant for the
taxable year. The denominator of the fraction is the Participant's total Salary
Deferral Account balance as of the beginning of the taxable year plus the
Participant's Salary Deferral Contributions for the taxable year.
A.3.2 ACTUAL DEFERRAL PERCENTAGE FAIL SAFE PROVISION. As soon as
practicable after the close of each Plan Year, the Committee shall determine
whether the Actual Deferral Percentage for the Highly Compensated Employees
would exceed the limitation set forth in Section A.2.3. If the limitation would
be exceeded for a Plan Year, before the close of the following Plan Year (a) the
amount of Excess 401(k) Contributions for that Plan Year (and any income
allocable to those contributions as calculated in the specific manner required
by Section A.3.5) shall be distributed or (b) the Employer may make a QNEC which
it elects to have treated as a Section 401(k) Contribution. However, in the case
of testing for any Plan Year that commences on or after January 1, 2001, a QNEC
shall not be taken into account for purposes of the test set forth in section
401(k) of the Code and Section A.2.3 for such Plan Year unless it is made and
allocated by the close of such Plan Year.
A-5
The amount of Excess 401(k) Contributions to be distributed shall be
determined in the following manner:
First, the Plan will determine how much the Actual Deferral Ratio of
the Highly Compensated Employee with the highest Actual Deferral Ratio would
have to be reduced to satisfy the Actual Deferral Percentage Test or cause such
Actual Deferral Ratio to equal the Actual Deferral Ratio of the Highly
Compensated Employee with the next highest Actual Deferral Ratio. If a lesser
reduction would enable the Plan to satisfy the Actual Deferral Percentage Test,
only this lesser reduction may be made. Second, this process is repeated until
the Actual Deferral Percentage Test is satisfied. The amount of Excess 401(k)
Contributions is equal to the sum of these hypothetical reductions multiplied,
in each case, by the Highly Compensated Employee's Annual Compensation.
Then, effective for Plan Years that commence on or after January 1,
1997, the total amount of Excess 401(k) Contributions shall be distributed on
the basis of the respective amounts attributable to each Highly Compensated
Employee. The Highly Compensated Employees subject to the actual distribution
are determined using the "dollar leveling method." The Salary Deferral
Contributions of the Highly Compensated Employee with the greatest dollar amount
of Salary Deferral Contributions and other contributions treated as Section
401(k) Contributions for the Plan Year are reduced by the amount required to
cause that Highly Compensated Employee's Salary Deferral Contributions to equal
the dollar amount of the Salary Deferral Contributions and other contributions
treated as Section 401(k) Contributions for the Plan Year of the Highly
Compensated Employee with the next highest dollar amount. This amount is then
distributed to the Highly Compensated Employee with the highest dollar amount.
However, if a lesser reduction, when added to the total dollar amount already
distributed under this Section A.3.2, would equal the total Excess 401(k)
Contributions, the lesser reduction amount shall be distributed. This process
shall be continued until the amount of the Excess 401(k) Contributions have been
distributed.
QNECs will be treated as Section 401(k) Contributions only if: (a) the
conditions described in Regulation section 1.401(k)-1(b)(5) are satisfied and
(b) they are allocated to Participants' Accounts as of a date within that Plan
Year and are actually paid to the Trust no later than the end of the 12-month
period immediately following the Plan Year to which the contributions relate. If
the Employer makes a QNEC that it elects to have treated as a Section 401(k)
Contribution, the Contribution will be in an amount necessary to satisfy the
Actual Deferral Percentage test and will be allocated first to those Non-Highly
Compensated Employees who had the lowest Actual Deferral Ratio.
Any distributions of the Excess 401(k) Contributions for any Plan Year
are to be made to Highly Compensated Employees on the basis of the amount of
contributions by, or on behalf of, each Highly Compensated Employee. The amount
of Excess 401(k) Contributions to be distributed for any Plan Year must be
reduced by any excess Salary Deferral Contributions previously distributed for
the taxable year ending in the same Plan Year. To the extent that Excess Section
401(k) Contributions are distributed pursuant to this Section A.3.2, the
Matching Contributions made with respect to those Excess Section 401(k)
Contributions shall be forfeited.
A.3.3 CONTRIBUTION PERCENTAGE FAIL SAFE PROVISION. If the limitation
set forth in Section A.2.4 would be exceeded for any Plan Year any one or more
of the following corrective action shall be taken before the close of the
following Plan Year as determined by the Committee in its sole discretion: (a)
the amount of the Excess Aggregate 401(m) Contributions for that Plan Year (and
any income allocable to those Contributions as calculated in the manner set
forth in Section A.3.5) shall be forfeited or (b) the Employer may make a QNEC
which it elects to have treated as a Section 401(m) Contribution. However, in
the case of testing for any Plan Year that commences on or after January 1,
2001, a QNEC shall not be taken into account for purposes of the test set forth
in section 401(m) of the Code and Section A.2.4 for such Plan Year unless it is
made and allocated by the close of such Plan Year.
The amount of Excess Aggregate 401(m) Contributions to be distributed
shall be determined in the following manner:
First, the Plan will determine how much the Actual Contribution Ratio
of the Highly Compensated Employee with the highest Actual Contribution Ratio
would have to be reduced to satisfy the Actual Contribution Percentage Test or
cause such Actual Contribution Ratio to equal the Actual Contribution Ratio of
the Highly
A-6
Compensated Employee with the next highest Actual Contribution Ratio. If a
lesser reduction would enable the Plan to satisfy the Actual Contribution
Percentage Test, only this lesser reduction may be made. Second, this process is
repeated until the Actual Contribution Test is satisfied. The amount of Excess
Aggregate 401(m) Contributions is equal to the sum of these hypothetical
reductions multiplied, in each case, by the Highly Compensated Employee's Annual
Compensation.
Then, effective for the Plan Years that commence on or after January 1,
1997, the total amount of Excess Aggregate 401(m) Contributions shall be
forfeited on the basis of the respective amounts attributable to each Highly
Compensated Employee. The Highly Compensated Employees subject to the
forfeitures are determined using the "dollar leveling method." The After-Tax
Contributions and Matching Contributions of the Highly Compensated Employee with
the greatest dollar amount of After-Tax Contributions and Matching Contributions
and other contributions treated as matching contributions for the Plan Year are
reduced by the amount required to cause that Highly Compensated Employee's
After-Tax Contributions and Matching Contributions and other contributions
treated as Section 401(m) Contributions for the Plan Year to equal the dollar
amount of the After-Tax Contributions and Matching Contributions and other
contributions treated as Section 401(m) Contributions for the Plan Year of the
Highly Compensated Employee with the next highest dollar amount. This amount is
then forfeited from the Account of the Highly Compensated Employee with the
highest dollar amount. However, if a lesser reduction, when added to the total
dollar amount already forfeited under this Section A.3.3, would equal the total
Excess Aggregate 401(m) Contributions, the lesser reduction amount shall be
forfeited. This process shall be continued until the amount of the Excess
Aggregate 401(m) Contributions have been forfeited.
A.3.4 ALTERNATIVE LIMITATION FAIL SAFE. As soon as practicable after
the close of each Plan Year, the Committee shall determine whether the
alternative limitation would be exceeded. If the limitation would be exceeded
for any Plan Year, before the close of the following Plan Year the Actual
Deferral Percentage or Contribution Percentage of the eligible Highly
Compensated Employees, or a combination of both, shall be reduced by
distributions made in the manner described in the Regulations. These
distributions shall be in addition to and not in lieu of distributions required
for Excess 401(k) Contributions and Excess Aggregate 401(m) Contributions.
A.3.5 INCOME ALLOCABLE TO EXCESS 401(k) CONTRIBUTIONS AND EXCESS
AGGREGATE 401(m) CONTRIBUTIONS. The income allocable to Excess 401(k)
Contributions for the Plan Year shall be determined by multiplying the income
for the Plan Year allocable to Section 401(k) Contributions by a fraction. The
numerator of the fraction shall be the amount of Excess 401(k) Contributions
made on behalf of the Participant for the Plan Year. The denominator of the
fraction shall be the Participant's total Account balance attributable to
Section 401(k) Contributions as of the beginning of the Plan Year plus the
Participant's Section 401(k) Contributions for the Plan Year. The income
allocable to Excess Aggregate 401(m) Contributions for a Plan Year shall be
determined by multiplying the income for the Plan Year allocable to Section
401(m) Contributions by a fraction. The numerator of the fraction shall be the
amount of Excess Aggregate 401(m) Contributions made on behalf of the
Participant for the Plan Year. The denominator of the fraction shall be the
Participant's total Account balance attributable to Section 401(m) Contributions
as of the beginning of the Plan Year plus the Participant's Section 401(m)
Contributions for the Plan Year.
PART A.4 LIMITATION ON ALLOCATIONS
A.4.1 BASIC LIMITATION ON ALLOCATIONS. The Annual Additions which may
be credited to a Participant's Accounts under the Plan for any Limitation Year
will not exceed the Maximum Permissible Amount reduced by the Annual Additions
credited to a Participant's Account for the same Limitation Year under any other
qualified defined contribution plans maintained by any Affiliated Employer. If
the Annual Additions with respect to the Participant under such other qualified
defined contribution plans are less than the Maximum Permissible Amount and the
Employer Contribution that would otherwise be contributed or allocated to the
Participant's Accounts under the Plan would cause the Annual Additions for the
Limitation Year to exceed this limitation, the amount contributed or allocated
under the Plan will be reduced so that the Annual Additions under all qualified
defined contribution plans maintained by any Affiliated Employer for the
Limitation Year will equal the Maximum Permissible Amount. If the Annual
Additions with respect to the Participant under such other qualified defined
contribution plans maintained by any Affiliated Employer in the aggregate are
equal to or greater than the Maximum Permissible Amount, no amount will be
contributed or allocated to the Participant's Account under the Plan for the
Limitation Year. Effective as of
A-7
January 1, 1987, until January 1, 2000 (the effective date of the repeal of
section 415(e) of the Code) a permanent adjustment shall be made to the defined
contribution fraction for purposes of applying the limitation of section 415(e)
of the Code to the Plan. The adjustment is to permanently subtract from the
defined contribution numerator an amount equal to the product of (1) the sum of
the defined contribution fraction plus the defined benefit fraction as of the
determination date minus one, times (2) the denominator of the defined
contribution fraction as of the determination date. For this purpose, the
determination date is December 31, 1986. Both fractions in clauses (1) and (2)
above are computed in accordance with section 415 of the Code as amended by the
Tax Reform Act of 1986 and section 1106(i)(3) of the Tax Reform Act of 1986.
A.4.2 ESTIMATION OF MAXIMUM PERMISSIBLE AMOUNT. Prior to determining
the Participant's actual Annual Compensation for the Limitation Year, the
Employer may determine the Maximum Permissible Amount on the basis of a
reasonable estimation of the Participant's Annual Compensation for such
Limitation Year, uniformly determined for all Participants similarly situated.
As soon as is administratively feasible after the end of the Limitation Year,
the Maximum Permissible Amount for the Limitation Year shall be determined on
the basis of the Participant's actual Annual Compensation for such Limitation
Year.
A.4.3 ATTRIBUTION OF EXCESS AMOUNTS. If a Participant's Annual
Additions under the Plan and all other qualified defined contribution plans
maintained by any Affiliated Employer result in an Excess Amount, the total
Excess Amount shall be attributed to the Plan.
A.4.4 TREATMENT OF EXCESS AMOUNTS. If an Excess Amount attributed to
the Plan is held or contributed as a result of or because of (i) the allocation
of forfeitures, (ii) reasonable error in estimating a Participant's Considered
Compensation, (iii) reasonable error in calculating the maximum Salary Deferral
Contribution that may be made with respect to a Participant under section 415 of
the Code or (iv) any other facts and circumstances which the Commissioner of
Internal Revenue finds to be justified, the Excess Amount shall be reduced as
follows:
(a) First, the Excess Amount shall be reduced to the extent
necessary by distributing to the Participant all Salary Deferral
Contributions together with their earnings. These distributed amounts
are disregarded for purposes of the testing and limitations contained
in this Appendix A.
(b) Second, if the Participant is still employed by the
Employer at the end of the Limitation Year, then such Excess Amounts
shall not be distributed to the Participant, but shall be reallocated
to a suspense account and shall be reapplied to reduce future Employer
Contributions (including any allocation of forfeitures) under the Plan
for such Participant in the next Limitation Year, and for each
succeeding Limitation Year, if necessary.
(c) If, after application of paragraph (b) of this Section, an
Excess Amount still exists, and the Participant is not still employed
by the Employer at the end of the Limitation Year, then such Excess
Amounts in the Participant's Accounts shall not be distributed to the
Participant, but shall be reallocated to a suspense account and shall
be reapplied to reduce future Employer Contributions (including
allocation of any forfeitures), for all remaining Participants in the
next Limitation Year and each succeeding Limitation Year if necessary.
(d) If a suspense account is in existence at any time during
the Limitation Year pursuant to this Section, it will not participate
in the allocation of the Trust Fund's investment gains and losses. If a
suspense account is in existence at any time during a particular
Limitation Year, all amounts in the suspense account must be allocated
and reallocated to Participants' Accounts before any Employer
Contribution may be made to the Plan for that Limitation Year. Excess
Amounts may not be distributed to Participants or former Participants.
If the Plan is terminated while a suspense account described in this
Section is in existence, the amount in such suspense account shall
revert to the Employer(s) to which it is attributable.
A-8
APPENDIX B
TOP-HEAVY REQUIREMENTS
PART B.1 DEFINITIONS
DEFINITIONS. As used herein, the following words and phrases have the
meaning attributed to them below:
B.1.1 "AGGREGATE ACCOUNTS" means the total of all Account balances
derived from Employer Contributions and Rollover Contributions.
B.1.2 "AGGREGATION GROUP" means (a) each plan of the Employer or any
Affiliated Employer in which a Key Employee is a Participant and (b) each other
plan of the Employer or any Affiliated Employer which enables any plan in (a) to
meet the requirements of either section 401(a)(4) or 410 of the Code. Any
Employer may treat a plan not required to be included in the Aggregation Group
as being a part of the group if the group would continue to meet the
requirements of section 401(a)(4) and 410 of the Code with that plan being taken
into account.
B.1.3 "DETERMINATION DATE" means for a given Plan Year the last day of
the preceding Plan Year or in the case of the first Plan Year the last day of
that Plan Year.
B.1.4 "KEY EMPLOYEE" means, effective January 1, 1997, an Employee or
former or deceased Employee or Beneficiary of an Employee who at any time during
the Plan Year or any of the four preceding Plan Years is (a) an officer of an
Employer or any Affiliated Employer having Annual Compensation greater than 50
percent of the annual addition limitation of section 415(b)(1)(A) of the Code
for the Plan Year, (b) one of the ten employees having Annual Compensation from
an Employer or any Affiliated Employer of greater than 100 percent of the annual
addition limitation of section 415(c)(1)(A) of the Code for the Plan Year and
owning or considered as owning (within the meaning of section 318 of the Code)
the largest interest in an Employer or any Affiliated Employer, treated
separately, (c) a Five Percent Owner of an Employer or any Affiliated Employer,
treated separately, or (d) a one percent owner of an Employer or any Affiliated
Employer, treated separately, having Annual Compensation from an Employer or any
Affiliated Employer of more than $150,000.00. For this purpose no more than 50
employees or, if lesser, the greater of three employees or ten percent of the
employees shall be treated as officers. Section 416(i) of the Code shall be used
to determine percentage of ownership. For the purpose of the test set out in (b)
above, if two or more employees have the same interest in an Employer, the
employee with the greater Annual Compensation from the Employer shall be treated
as having the larger interest.
B.1.5 "NON-KEY EMPLOYEE" means any Employee who is not a Key Employee.
B.1.6 "TOP-HEAVY PLAN" means any plan which has been determined to be
top-heavy under the test described in Appendix B of the Plan.
PART B.2 APPLICATION
B.2.1 APPLICATION. The requirements described in this Appendix B shall
apply to each Plan Year that the Plan is determined to be a Top-Heavy Plan.
B.2.2 TOP-HEAVY TEST. If on the Determination Date the Aggregate
Accounts of Key Employees in the Plan exceed 60 percent of the Aggregate
Accounts of all Employees in the Plan, the Plan shall be a Top-Heavy Plan for
that Plan Year. In addition, if the Plan is required to be included in an
Aggregation Group and that group is a top-heavy group, the Plan shall be treated
as a Top-Heavy Plan. An Aggregation Group is a top-heavy group if on the
Determination Date the sum of (a) the present value of the cumulative accrued
benefits for Key Employees under all defined benefit plans in the Aggregation
Group which contains the Plan, plus (b) the total of all of the accounts of Key
Employees under all defined contribution plans included in the Aggregation Group
(which contains the Plan) is more than 60 percent of a similar sum determined
for all employees covered in the Aggregation Group which contains the Plan.
B-1
In applying the above tests, the following rules shall apply:
(a) in determining the present value of the accumulated
accrued benefits for any Employee or the amount in the account of any
Employee, the value or amount shall be increased by all distributions
made to or for the benefit of the Employee under the Plan during the
five-year period ending on the Determination Date;
(b) all rollover contributions made after December 31, 1983 by
the Employee to the Plan shall not be considered by the Plan for either
test;
(c) if an Employee is a Non-Key Employee under the plan for
the Plan Year but was a Key Employee under the plan for another prior
Plan Year, his Account shall not be considered;
(d) benefits shall not be taken into account in determining
the top-heavy ratio for any Employee who has not performed services for
the Employer during the last five-year period ending upon the
Determination Date; and
(e) the accrued benefits of any Employee who is not a Key
Employee shall be determined (i) under the method which is used for
accrual purposes for all plans of the Affiliated Employers, or (ii) if
there is no method prescribed in clause (i), as if such benefit accrued
not more rapidly than the slowest accrual rate permitted under section
411(b)(1)(C) of the Code.
B.2.3 VESTING RESTRICTIONS IF PLAN BECOMES TOP-HEAVY. If a Participant
has at least one Hour of Service during a Plan Year when the Plan is a Top-Heavy
Plan, he shall either vest under each of the normal vesting provisions of the
Plan or under the following vesting schedule, whichever is more favorable:
Percentage of Amount Invested
In Accounts Containing
Completed Years of Active Service Employer Contributions
--------------------------------- -----------------------------
Less than two years..............................................0
Two years but less than three years.............................20
Three years but less than four years............................40
Four years but less than five years.............................60
Five years but less than six years..............................80
Six years or more..............................................100
If the Plan ceases to be a Top-Heavy Plan, this requirement shall no longer
apply. After that date, the normal vesting provisions of the Plan shall be
applicable to all subsequent Contributions by the Employer.
B.2.4. MINIMUM CONTRIBUTIONS IF PLAN BECOMES TOP-HEAVY. If the Plan is
a Top-Heavy Plan and the normal allocation of the Employer Contribution and
forfeitures is less than five percent of any Non-Key Employee Participant's
Annual Compensation, the Committee, without regard to the normal allocation
procedures, shall allocate the Employer Contribution and the forfeitures among
the Participants who are Non-Key Employees and who are in the employ of the
Employer at the end of the Plan Year in proportion to each such Participant's
Annual Compensation until each Non-Key Employee Participant has had an amount
equal to five percent of his Annual Compensation allocated to his Account. At
that time, any more Employer Contributions or forfeitures shall be allocated
under the normal allocation procedures described earlier in the Plan. Amounts
that may be treated as Section 401(k) Contributions made on behalf of Non-Key
Employees may not be included in determining the minimum contribution required
under this Section to the extent that they are treated as Section 401(k)
Contributions for purposes of the Actual Deferral Percentage test.
B-2
In applying this restriction, the following rules shall apply:
(a) Each Employee who is eligible for participation (without
regard to whether he has made mandatory contributions, if any are
required, or whether his compensation is less than a stated amount)
shall be entitled to receive an allocation under this Section; and
(b) All defined contribution plans required to be included in
the Aggregation Group shall be treated as one plan for purposes of
meeting the three percent maximum; this required aggregation shall not
apply if the Plan is also required to be included in an Aggregation
Group which includes a defined benefit plan and the Plan enables that
defined benefit plan to meet the requirements of sections 401(a)(4) or
410 of the Code.
B.2.5 DISREGARD OF GOVERNMENT PROGRAMS. If the Plan is a Top-Heavy
Plan, it must meet the vesting and benefit requirements described in this
Article without taking into account contributions or benefits under Chapter 2 of
the Code (relating to the tax on self-employment income), Chapter 21 of the Code
(relating to the Federal Insurance Contributions Act), Title II of the Social
Security Act, or any other Federal or State law.
B.2.6 MODIFICATION OF THE SECTION 415(e) LIMIT IF PLAN BECOMES
TOP-HEAVY. For Plan Years beginning before January 1, 2000, in any Plan Year
that the Plan is a Top-Heavy Plan the limitations in section 415(e) of the Code
and Appendix A of the Plan shall be applied by substituting the number "1.00"
for the number "1.25" wherever it appears therein. Such substitution shall not
cause a reduction in any accrued benefit attributable to contributions for a
Plan Year prior to the Plan Year in which the Plan is a Top-Heavy Plan.
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APPENDIX C
ADMINISTRATION OF THE PLAN
C.1 APPOINTMENT, TERM, RESIGNATION, AND REMOVAL. The Board shall
appoint a Committee of not less than two persons, the members of which shall
serve until their resignation, death, or removal. The Sponsor shall notify the
Trustee in writing of its composition from time to time. Any member of the
Committee may resign at any time by giving written notice of such resignation to
the Sponsor. Any member of the Committee may be removed by the Board, with or
without cause. Vacancies in the Committee arising by resignation, death,
removal, or otherwise shall be filled by such persons as may be appointed by the
Board.
C.2 POWERS. The Committee shall have exclusive responsibility for the
administration of the Plan, according to the terms and provisions of this
document, and shall have all powers necessary to accomplish such purposes,
including, but not by way of limitation, the right, power, and authority:
(a) to make rules and regulations for the administration of
the Plan which are not inconsistent with the terms and provisions
thereof, provided such rules and regulations are evidenced in writing;
(b) to construe all terms, provisions, conditions, and
limitations of the Plan; and its construction thereof made in good
faith and without discrimination in favor of or against any Participant
or former Participant shall be final and conclusive on all parties at
interest;
(c) to correct any defect, supply any omission, or reconcile
any inconsistency which may appear in the Plan in such manner and to
such extent as it shall deem expedient to carry the Plan into effect
for the greatest benefit of all parties at interest, and its judgment
in such matters shall be final and conclusive as to all parties at
interest;
(d) to select, employ, and compensate from time to time such
consultants, actuaries, accountants, attorneys, and other agents and
employees as the Committee may deem necessary or advisable for the
proper and efficient administration of the Plan, and any agent, firm,
or employee so selected by the Committee may be a disqualified person,
but only if the requirements of section 4975(d) of the Code have been
met;
(e) to resolve all questions relating to the eligibility of
Employees to become Participants, and to determine the period of Active
Service and the amount of Considered Compensation upon which the
benefits of each Participant shall be calculated;
(f) to resolve all controversies relating to the
administration of the Plan, including but not limited to (1)
differences of opinion arising between the Employer and a Participant
or former Participant, and (2) any questions it deems advisable to
determine in order to promote the uniform and nondiscriminatory
administration of the Plan for the benefit of all parties at interest;
(g) to direct and instruct or to appoint an investment manager
or managers which would have the power to direct and instruct the
Trustee in all matters relating to the preservation, investment,
reinvestment, management, and disposition of the Trust assets;
provided, however, that the Committee shall have no authority that
would prevent the Trustee from being an "agent independent of the
issuer," as that term is defined in Rule 10b-18 promulgated under the
Securities Exchange Act of 1934, at any time that the Trustee's failure
to maintain such status would result in the Sponsor or any other person
engaging in a "manipulative or deceptive device or contrivance" under
the provisions of Rule 10b-6 of such Act;
(h) to direct and instruct the Trustee in all matters relating
to the payment of Plan benefits and to determine a Participant's or
former Participant's entitlement to a benefit should he appeal a denial
of his claim for a benefit or any portion thereof; and
C-1
(i) to delegate such of its clerical and recordation duties
under the Plan as it may deem necessary or advisable for the proper and
efficient administration of the Plan.
C.3 ORGANIZATION. The Committee shall select from among its members a
chairman, who shall preside at all of its meetings, and shall select a
secretary, without regard as to whether that person is a member of the
Committee, who shall keep all records, documents, and data pertaining to its
supervision of the administration of the Plan.
C.4 QUORUM AND MAJORITY ACTION. A majority of the members of the
Committee shall constitute a quorum for the transaction of business, and the
vote of a majority of the members present at any meeting will decide any
question brought before that meeting. In addition, the Committee may decide any
question by a vote, taken without a meeting, of a majority of its members.
C.5 SIGNATURES. The chairman, the secretary, and any one or more of the
members of the Committee to which the Committee has delegated the power, shall
each, severally, have the power to execute any document on behalf of the
Committee, and to execute any certificate or other written evidence of the
action of the Committee. The Trustee, after being notified of any such
delegation of power in writing, shall thereafter accept and may rely upon any
document executed by such member or members as representing the action of the
Committee until the Committee files with the Trustee a written revocation of
that delegation of power.
C.6 DISQUALIFICATION OF COMMITTEE MEMBERS. A member of the Committee
who is also a Participant of the Plan shall not vote or act upon any matter
relating solely to himself.
C.7 DISCLOSURE TO PARTICIPANTS. The Committee shall make available to
each Participant, former Participant, and Beneficiary for his examination such
records, documents, and other data as are required under ERISA, but only at
reasonable times during business hours. No Participant, former Participant, or
Beneficiary shall have the right to examine any data or records reflecting the
compensation paid to any other Participant, former Participant, or Beneficiary,
and the Committee shall not be required to make any data or records available
other than those required by ERISA.
C.8 STANDARD OF PERFORMANCE. The Committee and each of its members
shall use the care, skill, prudence, and diligence under the circumstances then
prevailing that a prudent man acting in a like capacity and familiar with such
matters would use in conducting his business as the administrator of the Plan;
shall, when exercising its power to direct investments, diversify the
investments of the Plan so as to minimize the risk of large losses, unless under
the circumstances it is clearly prudent not to do so; and shall otherwise act in
accordance with the provisions of the Plan and ERISA.
C.9 LIABILITY OF ADMINISTRATIVE COMMITTEE AND LIABILITY INSURANCE. No
member of the Committee shall be liable for any act or omission of any other
member of the Committee, the Trustee, any investment manager, or any Participant
or former Participant who directs the investment of his Account or other agent
appointed by the Committee except to the extent required by the terms of ERISA,
and any other applicable state or federal law, which liability cannot be waived.
No Participant of the Committee shall be liable for any act or omission on his
own part except to the extent required by the terms of ERISA, and any other
applicable state or federal law, which liability cannot be waived. In this
connection, each provision hereof is severable and if any provision is found to
be void as against public policy, it shall not affect the validity of any other
provision hereof.
Further, it is specifically provided that the Trustee may, at the
direction of the Committee, purchase out of the Trust assets insurance for the
members of the Committee and any other fiduciaries appointed by the Committee,
and for the Trust itself to cover liability or losses occurring by reason of the
act or omission of any one or more of the members of the Committee or any other
fiduciary appointed by them under the Plan, provided such insurance permits
recourse by the insurer against the members of the Committee or the other
fiduciaries concerned in the case of a breach of a fiduciary obligation by one
or more members of the Committee or other fiduciary covered thereby.
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C.10 BONDING. No member of the Committee shall be required to give bond
for the performance of his duties hereunder unless required by a law which
cannot be waived.
C.11 COMPENSATION. The Committee shall serve without compensation for
their services, but shall be reimbursed by the Employers for all expenses
properly and actually incurred in the performance of their duties under the Plan
unless the Employers elect to have such expenses paid out of the Trust assets.
C.12 PERSONS SERVING IN DUAL FIDUCIARY ROLES. Any person, group of
persons, corporations, firm, or other entity may serve in more than one
fiduciary capacity with respect to the Plan, including the ability to serve both
as a successor trustee and as a member of the Committee.
C.13 ADMINISTRATOR. For all purposes of ERISA, the administrator of the
Plan within the meaning of ERISA shall be the Sponsor. The Sponsor shall have
final responsibility for compliance with all reporting and disclosure
requirements imposed with respect to the Plan under any federal or state law, or
any regulations promulgated thereunder.
C.14 NAMED FIDUCIARY. The members of the Committee shall be the "named
fiduciary" for purposes of section 402(a)(1) of ERISA, and as such shall have
the authority to control and manage the operation and administration of the
Plan, except to the extent such authority and control is allocated or delegated
to other parties pursuant to the terms of the Plan.
C.15 STANDARD OF JUDICIAL REVIEW OF COMMITTEE ACTIONS. The Committee
has full and absolute discretion in the exercise of each and every aspect of its
authority under the Plan, including without limitation, the authority to
determine any person's right to benefits under the Plan, the correct amount and
form of any such benefits; the authority to decide any appeal; the authority to
review and correct the actions of any prior administrative committee; and all of
the rights, powers, and authorities specified in this Appendix and elsewhere in
the Plan. Notwithstanding any provision of law or any explicit or implicit
provision of this document or, any action taken, or ruling or decision made, by
the Committee in the exercise of any of its powers and authorities under the
Plan will be final and conclusive as to all parties other than the Sponsor or
Trustee, including without limitation all Participants, former Participants and
Beneficiaries, regardless of whether the Committee or one or more members
thereof may have an actual or potential conflict of interest with respect to the
subject matter of such action, ruling, or decision. No such final action,
ruling, or decision of the Committee will be subject to de novo review in any
judicial proceeding; and no such final action, ruling, or decision of the
Committee may be set aside unless it is held to have been arbitrary and
capricious by a final judgment of a court having jurisdiction with respect to
the issue.
C.16 INDEMNIFICATION OF COMMITTEE BY THE SPONSOR. The Sponsor shall
indemnify and hold harmless the Committee, the Committee members, and any
persons to whom the Committee has allocated or delegated its responsibilities in
accordance with the provisions hereof, as well as any other fiduciary who is
also an officer, director, or Employee of an Employer, and hold each of them
harmless from and against all claims, loss, damages, expense, and liability
arising from their responsibilities in connection with the administration of the
Plan which is not otherwise paid or reimbursed by insurance, unless the same
shall result from their own willful misconduct.
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APPENDIX D
FUNDING
D.1 BENEFITS PROVIDED SOLELY BY TRUST. All benefits payable under the
Plan shall be paid or provided for solely from the Trust, and the Employer
assumes no liability or responsibility therefor.
D.2 FUNDING OF PLAN. The Plan shall be funded by one or more separate
Trusts. If more than one Trust is used, each Trust shall be designated by the
name of the Plan followed by a number assigned by the Committee at the time the
Trust is established.
D.3 INCORPORATION OF TRUST. Each Trust is a part of the Plan. All
rights or benefits which accrue to a person under the Plan shall be subject also
to the terms of the agreements creating the Trust or Trusts and any amendments
to them which are not in direct conflict with the Plan.
D.4 AUTHORITY OF TRUSTEE. Each Trustee shall have full title and legal
ownership of the assets in the separate Trust which, from time to time, is in
his separate possession. No other Trustee shall have joint title to or joint
legal ownership of any asset in one of the other Trusts held by another Trustee.
Each Trustee shall be governed separately by the trust agreement entered into
between the Employer and that Trustee and the terms of the Plan without regard
to any other agreement entered into between any other Trustee and the Employer
as a part of the Plan.
D.5 ALLOCATION OF RESPONSIBILITY. To the fullest extent permitted under
section 405 of ERISA, the agreements entered into between the Employer and each
of the Trustees shall be interpreted to allocate to each Trustee its specific
responsibilities, obligations and duties so as to relieve all other Trustees
from liability either through the agreement, Plan or ERISA, for any act of any
other Trustee which results in a loss to the Plan because of his act or failure
to act.
D.6 TRUSTEE'S FEES AND EXPENSES. The Trustee shall receive for its
services as Trustee hereunder the compensation which from time to time may be
agreed upon by the Sponsor and the Trustee. All of such compensation, together
with the expenses incurred by the Trustee in connection with the administration
of this Trust, including fees for legal services rendered to the Trustee, all
other charges and disbursements of the Trustee, and all other expenses of the
Plan shall be charged to and deducted from the Trust Fund, unless the Sponsor
elects in writing to have any part or all of such compensation, expenses,
charges, and disbursements paid directly by the Sponsor. The Trustee shall
deduct from and charge against the Trust assets any and all taxes paid by it
which may be levied or assessed upon or in respect of the Trust hereunder or the
income thereof, and shall equitably allocate the same among the several
Participants and former Participants.
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