0001068800-01-500267.txt : 20011009 0001068800-01-500267.hdr.sgml : 20011009 ACCESSION NUMBER: 0001068800-01-500267 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 11 FILED AS OF DATE: 20011003 EFFECTIVENESS DATE: 20011003 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PEABODY ENERGY CORP CENTRAL INDEX KEY: 0001064728 STANDARD INDUSTRIAL CLASSIFICATION: BITUMINOUS COAL & LIGNITE SURFACE MINING [1221] IRS NUMBER: 134004153 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: S-8 SEC ACT: 1933 Act SEC FILE NUMBER: 333-70910 FILM NUMBER: 1751721 BUSINESS ADDRESS: STREET 1: 701 MARKET ST CITY: ST LOUIS STATE: MO ZIP: 63101-1826 BUSINESS PHONE: 3143423400 MAIL ADDRESS: STREET 1: 701 MARKET ST CITY: ST LOUIS STATE: MO ZIP: 63101-1826 FORMER COMPANY: FORMER CONFORMED NAME: P&L COAL HOLDINGS CORP DATE OF NAME CHANGE: 19980623 S-8 1 forms8.txt PEABODY HOLDING COMPANY, INC. FORM S-8 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 3, 2001 REGISTRATION NO. 333-______ =============================================================================== UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------------- FORM S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ---------------------- PEABODY ENERGY CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 13-4004153 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 701 MARKET STREET ST. LOUIS, MISSOURI 63101-1826 (Address of principal executive offices) (Zip Code) ---------------------- PEABODY HOLDING COMPANY, INC. EMPLOYEE RETIREMENT ACCOUNT AND LEE RANCH COAL COMPANY RETIREMENT AND SAVINGS PLAN FOR SALARIED EMPLOYEES AND LEE RANCH COAL COMPANY RETIREMENT AND SAVINGS PLAN FOR HOURLY EMPLOYEES AND WESTERN SURFACE AGREEMENT-UMWA 401(k) PLAN (Full titles of the Plans) JEFFERY L. KLINGER, ESQ. PEABODY ENERGY CORPORATION 701 MARKET STREET ST. LOUIS, MISSOURI 63101-1826 PHONE: (314) 342-3400 ---------------------- Copy to: THOMAS A. LITZ, ESQ. THOMPSON COBURN LLP ONE FIRSTAR PLAZA ST. LOUIS, MISSOURI 63101 PHONE: (314) 552-6000 CALCULATION OF REGISTRATION FEE ===========================================================================================================================
Proposed Maximum Proposed Maximum Title of Securities to be Amount to be Offering Price Aggregate Offering Amount of Registration Registered Registered(1) Per Share(2) Price(2) Fee --------------------------------------------------------------------------------------------------------------------------- Common Stock, $0.01 par value . . . . 200,000 shares $23.60 $4,720,000 $1,180 =========================================================================================================================== (1) Includes an indeterminate amount of plan interests pursuant to Rule 416(c). (2) Estimated solely for purposes of computing the Registration Fee pursuant to the provisions of Rule 457(h), based upon the average of the high and low sale prices of the common stock, $0.01 par value, of the Registrant as reported on the New York Stock Exchange on September 27, 2001.
=============================================================================== The undersigned Registrant hereby files this Registration Statement on Form S-8 (this "Registration Statement") with respect to making available for investment by participants under the Peabody Holding Company, Inc. Employee Retirement Account, the Lee Ranch Coal Company Retirement and Savings Plan for Salaried Employees, the Lee Ranch Coal Company Retirement and Savings Plan for Hourly Employees and the Western Surface Agreement-UMWA 401(k) Plan (collectively, the "Plans") up to 200,000 shares of Peabody Energy Corporation (the "Registrant") common stock, $0.01 par value (the "Common Stock"), to be purchased in the open market. PART II INFORMATION REQUIRED IN THIS REGISTRATION STATEMENT Item 3. Incorporation of Certain Documents by Reference. ----------------------------------------------- The following documents filed by the Registrant with the Securities and Exchange Commission are incorporated herein by reference: (i) The Registrant's Annual Report on Form 10-K for the fiscal year ended March 31, 2001, as amended by Form 10-K/A, dated July 3, 2001; (ii) The Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2001; (iii) The Registrant's Current Report on Form 8-K filed on July 31, 2001; and (iv) The description of the Registrant's Common Stock contained in the Registrant's Registration Statement on Form S-1, filed on February 12, 2001, and any amendment or report filed for the purposes of updating such description. All documents filed by the Registrant pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as amended, after the date of this Registration Statement and prior to the filing of a post-effective amendment which indicates that all securities offered hereby have been sold or which deregisters all securities remaining unsold, shall be deemed to be incorporated by reference in this Registration Statement and to be made a part hereof from the date of filing of such documents. Any statements contained herein or in a document incorporated herein by reference shall be deemed to be modified or superseded for purposes of this Registration Statement to the extent that a statement contained in a subsequently filed document incorporated herein by reference modifies or supersedes such document. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Registration Statement. Where any document or part thereof is incorporated by reference in this Registration Statement, the Registrant will provide without charge to each person to whom a Prospectus with respect to any of the Plans is delivered, upon written or oral request of such person, a copy of any and all of the information incorporated by reference in this Registration Statement, excluding exhibits unless such exhibits are specifically incorporated by reference. Item 6. Indemnification of Directors and Officers. ----------------------------------------- Section 145 of the Delaware General Corporation Law provides that, among other things, a corporation may indemnify directors and officers as well as other employees and agents of the corporation against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement in connection with specified actions, suits or proceedings, whether civil, criminal, administrative or - 2 - investigative (other than action by or in the right of the corporation, a "derivative action"), if they acted in good faith and in a manner they reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe their conduct was unlawful. A similar standard is applicable in the case of derivative actions, except that indemnification only extends to expenses (including attorneys' fees) incurred in connection with the defense or settlement of such actions, and the statute requires court approval before there can be any indemnification where the person seeking indemnification has been found liable to the corporation. The statute provides that it is not exclusive of other indemnification that may be granted by a corporation's bylaws, disinterested director vote, stockholder vote, agreement or otherwise. Article Sixth of the Registrant's amended and restated certificate of incorporation and Article IV of the Registrant's amended and restated by-laws require indemnification to the fullest extent permitted by Delaware law. The Registrant has also obtained officers' and directors' liability insurance which insures against liabilities that officers and directors of the Registrant, in such capacities, may incur. The Registrant's amended and restated certificate of incorporation requires the advancement of expenses incurred by officers or directors in relation to any action, suit or proceeding. Section 102(b)(7) of the Delaware General Corporation Law permits a corporation to provide in its certificate of incorporation that a director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duties as a director, except for liability (i) for any transaction from which the director derives an improper personal benefit, (ii) for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law (certain illegal distributions) or (iv) for any breach of a director's duty of loyalty to the corporation or its stockholders. Article Eleven of the Registrant's amended and restated certificate of incorporation includes such a provision. Item 8. Exhibits. -------- See Exhibit Index on page 9 hereof. Item 9. Undertakings. ------------ (a) The undersigned registrant hereby undertakes: (1) To file, during any period in which offers and sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of this registration statement (or the most recent post-effective amendment thereof), which, individually or in the aggregate, represent a fundamental change in the information set forth in this registration statement; (iii) To include any material information with respect to the plan of distribution previously disclosed in this registration statement or any material change to such information in this registration statement; - 3 - provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if this registration statement is on Form S-3, Form S-8 or Form F-3, and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in this registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in this registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. - 4 - SIGNATURES The Registrant. Pursuant to the requirements of the Securities Act -------------- of 1933, as amended, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of St. Louis, State of Missouri, as of the 28th day of September, 2001. PEABODY ENERGY CORPORATION By /s/ Irl F. Engelhardt --------------------------------------- Irl F. Engelhardt Chief Executive Officer POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Irl F. Engelhardt, Richard A. Navarre and Jeffery L. Klinger, and each of them, the undersigned's true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for the undersigned and in the undersigned's name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement on Form S-8 with respect to the Peabody Holding Company, Inc. Employee Retirement Account, the Lee Ranch Coal Company Retirement and Savings Plan for Salaried Employees, the Lee Ranch Coal Company Retirement and Savings Plan for Hourly Employees and the Western Surface Agreement-UMWA 401(k) Plan, and to file the same, with exhibits and any and all other documents filed with respect thereto, with the Securities and Exchange Commission (or any other governmental or regulatory authority), granting unto said attorneys- in-fact and agents, and each of them, full power and authority to do and to perform each and every act and thing requisite and necessary to be done in ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their substitute or substitutes may lawfully do or cause to be done by virtue hereof. - 5 - Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities and on the date indicated.
SIGNATURE TITLE DATE --------- ----- ---- /s/ Irl F. Engelhardt Chairman, Chief Executive September 28, 2001 --------------------------------- Officer and Director Irl F. Engelhardt (PRINCIPAL EXECUTIVE OFFICER) /s/ Richard M. Whiting President, Chief Operating September 28, 2001 --------------------------------- Officer and Director Richard M. Whiting /s/ Richard A. Navarre Executive Vice President and September 28, 2001 --------------------------------- Chief Financial Officer Richard A. Navarre (PRINCIPAL FINANCIAL OFFICER AND PRINCIPAL ACCOUNTING OFFICER) /s/ Henry E. Lentz Vice President, Assistant September 28, 2001 --------------------------------- Secretary and Director Henry E. Lentz /s/ Roger H. Goodspeed Director September 28, 2001 --------------------------------- Roger H. Goodspeed /s/ Alan H. Washkowitz Director September 28, 2001 --------------------------------- Alan H. Washkowitz /s/ Bernard J. Duroc-Banner Director September 28, 2001 --------------------------------- Bernard J. Duroc-Banner /s/ William E. James Director September 28, 2001 --------------------------------- William E. James /s/ Charles W. Mueller Director September 28, 2001 --------------------------------- Charles W. Mueller /s/ Felix Herlihy Director September 28, 2001 --------------------------------- Felix Herlihy
- 6 - The Plans. Pursuant to the requirements of the Securities Act of --------- 1933, as amended, the administrators of the Peabody Holding Company, Inc. Employee Retirement Account have duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, as of the 3rd day of October, 2001. PEABODY HOLDING COMPANY, INC. EMPLOYEE RETIREMENT ACCOUNT By: /s/ Richard M. Whiting -------------------------------------- Richard M. Whiting, Administrator By: /s/ Roger B. Walcott, Jr. -------------------------------------- Roger B. Walcott, Jr., Administrator By: /s/ Jeffery L. Klinger -------------------------------------- Jeffery L. Klinger, Administrator By: /s/ Sharon D. Fiehler -------------------------------------- Sharon D. Fiehler, Administrator Pursuant to the requirements of the Securities Act of 1933, as amended, the administrators of the Lee Ranch Coal Company Retirement and Savings Plan for Salaried Employees have duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, as of the 3rd day of October, 2001. LEE RANCH COAL COMPANY RETIREMENT AND SAVINGS PLAN FOR SALARIED EMPLOYEES By: /s/ Steven W. Dylla -------------------------------------- Steven W. Dylla, Administrator By: /s/ Sharon D. Fiehler -------------------------------------- Sharon D. Fiehler, Administrator By: /s/ Janis K. Johnston -------------------------------------- Janis K. Johnston, Administrator By: /s/ Edward L. Sullivan -------------------------------------- Edward L. Sullivan, Administrator - 7 - Pursuant to the requirements of the Securities Act of 1933, as amended, the administrators of the Lee Ranch Coal Company Retirement and Savings Plan for Hourly Employees have duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, as of the 3rd day of October, 2001. LEE RANCH COAL COMPANY RETIREMENT AND SAVINGS PLAN FOR HOURLY EMPLOYEES By: /s/ Steven W. Dylla --------------------------------------- Steven W. Dylla, Administrator By: /s/ Sharon D. Fiehler --------------------------------------- Sharon D. Fiehler, Administrator By: /s/ Janis K. Johnston --------------------------------------- Janis K. Johnston, Administrator By: /s/ Edward L. Sullivan --------------------------------------- Edward L. Sullivan, Administrator Pursuant to the requirements of the Securities Act of 1933, as amended, the administrators of the Western Surface Agreement-UMWA 401(k) Plan have duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, as of the 3rd day of October, 2001. WESTERN SURFACE AGREEMENT-UMWA 401(k) PLAN By: Peabody Western Coal Company, Administrator By: /s/ Steven F. Schaab -------------------------------------- Steven F. Schaab, Vice President By: Seneca Coal Company, Administrator By: /s/ Steven F. Schaab -------------------------------------- Steven F. Schaab, Vice President By: Big Sky Coal Company, Administrator By: /s/ Steven F. Schaab -------------------------------------- Steven F. Schaab, Vice President - 8 - EXHIBIT INDEX ------------- EXHIBIT NO. ----------- 4.1 Third Amended and Restated Certificate of Incorporation of Peabody Energy Corporation (Incorporated by reference to Exhibit 3.1 of the Registrant's Form S-1 Registration Statement No. 333-55412). 4.2 Amended and Restated By-Laws of Peabody Energy Corporation (Incorporated by reference to Exhibit 3.2 of the Registrant's Form S-1 Registration Statement No. 333-55412). 4.3 Senior Note Indenture dated as of May 18, 1998 between the Registrant and State Street Bank and Trust Company, as Senior Note Trustee (Incorporated by reference to Exhibit 4.1 of the Registrant's Form S-4 Registration Statement No. 333-59073). 4.4 Senior Subordinated Note Indenture dated as of May 18, 1998 between the Registrant and State Street Bank and Trust Company, as Senior Subordinated Note Trustee (Incorporated by reference to Exhibit 4.2 of the Registrant's Form S-4 Registration Statement No. 333-59073). 4.5 First Supplemental Senior Note Indenture dated as of May 19, 1998 among the Guaranteeing Subsidiary (as defined therein), the Registrant, the other Senior Note Guarantors (as defined in the Senior Note Indenture) and State Street Bank and Trust Company, as Senior Note Trustee (Incorporated by reference to Exhibit 4.3 of the Registrant's Form S-4 Registration Statement No. 333-59073). 4.6 First Supplemental Senior Subordinated Note Indenture dated as of May 19, 1998 among the Guaranteeing Subsidiary (as defined therein), the Registrant, the other Senior Subordinated Note Guarantors (as defined in the Senior Subordinated Note Indenture) and State Street Bank and Trust Company, as Senior Subordinated Note Trustee (Incorporated by reference to Exhibit 4.4 of the Registrant's Form S-4 Registration Statement No. 333-59073). 4.7 Notation of Senior Subsidiary Guarantee dated as of May 19, 1998 among the Senior Note Guarantors (as defined in the Senior Note Indenture) (Incorporated by reference to Exhibit 4.5 of the Registrant's Form S-4 Registration Statement No. 333-59073). 4.8 Notation of Subordinated Subsidiary Guarantee dated as of May 19, 1998 among the Senior Note Guarantors (as defined in the Senior Subordinated Note Indenture) (Incorporated by reference to Exhibit 4.6 of the Registrant's Form S-4 Registration Statement No. 333-59073). - 9 - EXHIBIT NO. ----------- 4.9 Senior Note Registration Rights Agreement dated as of May 18, 1998 between the Registrant and Lehman Brothers Inc. (Incorporated by reference to Exhibit 4.7 of the Registrant's Form S-4 Registration Statement No. 333-59073). 4.10 Senior Subordinated Note Registration Rights Agreement dated as of May 18, 1998 between the Registrant and Lehman Brothers Inc. (Incorporated by reference to Exhibit 4.8 of the Registrant's Form S-4 Registration Statement No. 333-59073). 4.11 Second Supplemental Senior Note Indenture dated as of December 31, 1998 among the Guaranteeing Subsidiary (as defined therein), the Registrant, the other Senior Note Guarantors (as defined in the Senior Note Indenture) and State Street Bank and Trust Company, as Senior Note Trustee (Incorporated by reference to Exhibit 4.9 of the Registrant's Form 10-Q for the quarter ended December 31, 1999). 4.12 Second Supplemental Senior Subordinated Note Indenture dated as of December 31, 1998 among the Guaranteeing Subsidiary (as defined therein), the Registrant, the other Senior Subordinated Note Guarantors (as defined in the Senior Subordinated Note Indenture) and State Street Bank and Trust Company, as Senior Subordinated Note Trustee (Incorporated by reference to Exhibit 4.10 of the Registrant's Form 10-Q for the quarter ended December 31, 1999). 4.13 Third Supplemental Senior Note Indenture dated as of June 30, 1999 among the Guaranteeing Subsidiary (as defined therein), the Registrant, the other Senior Note Guarantors (as defined in the Senior Note Indenture) and State Street Bank and Trust Company, as Senior Note Trustee (Incorporated by reference to Exhibit 4.11 of the Registrant's Form 10-Q for the quarter ended December 31, 1999). 4.14 Third Supplemental Senior Subordinated Note Indenture dated as of June 30, 1999 among the Guaranteeing Subsidiary (as defined therein), the Registrant, the other Senior Subordinated Note Guarantors (as defined in the Senior Subordinated Note Indenture) and State Street Bank and Trust Company, as Senior Subordinated Note Trustee (Incorporated by reference to Exhibit 4.12 of the Registrant's Form 10-Q for the quarter ended December 31, 1999). 4.15 Fourth Supplemental Senior Note Indenture dated as of February 16, 2000 among the Guaranteeing Subsidiary (as defined therein), the Registrant, the other Senior Note Guarantors (as defined in the Senior Note Indenture) and State Street Bank and Trust Company, as Senior Note Trustee (Incorporated by reference to Exhibit 4.13 of the Registrant's Form S-3 Registration Statement No. 333-67250). - 10 - EXHIBIT NO. ----------- 4.16 Fourth Supplemental Senior Subordinated Note Indenture dated as of February 16, 2000 among the Guaranteeing Subsidiary (as defined therein), the Registrant, the other Senior Subordinated Note Guarantors (as defined in the Senior Subordinated Note Indenture) and State Street Bank and Trust Company, as Senior Subordinated Note Trustee (Incorporated by reference to Exhibit 4.14 of the Registrant's Form S-3 Registration Statement No. 333-67250). 4.17 Fifth Supplemental Senior Note Indenture dated as of March 27, 2000 among the Guaranteeing Subsidiary (as defined therein), the Registrant, the other Senior Note Guarantors (as defined in the Senior Note Indenture) and State Street Bank and Trust Company, as Senior Note Trustee (Incorporated by reference to Exhibit 4.15 of the Registrant's Form S-3 Registration Statement No. 333-67250). 4.18 Fifth Supplemental Senior Subordinated Note Indenture dated as of March 27, 2000 among the Guaranteeing Subsidiary (as defined therein), the Registrant, the other Senior Subordinated Note Guarantors (as defined in the Senior Subordinated Note Indenture) and State Street Bank and Trust Company, as Senior Subordinated Note Trustee (Incorporated by reference to Exhibit 4.16 of the Registrant's Form S-3 Registration Statement No. 333-67250). 4.19 Specimen of stock certificate representing Peabody Energy Corporation's common stock, $.01 par value (Incorporated by reference to Exhibit 4.13 of the Registrant's Form S-1 Registration Statement No. 333-55412). 5.1 Opinion of Thompson Coburn LLP as to the legality of the securities being registered. 5.2 Internal Revenue Service determination letter that the Peabody Holding Company, Inc. Employee Retirement Account is qualified under Section 401 of the Internal Revenue Code. 5.3 Internal Revenue Service determination letter that the Lee Ranch Coal Company Retirement and Savings Plan for Salaried Employees is qualified under Section 401 of the Internal Revenue Code. 5.4 Internal Revenue Service determination letter that the Lee Ranch Coal Company Retirement and Savings Plan for Hourly Employees is qualified under Section 401 of the Internal Revenue Code. 5.5 Internal Revenue Service determination letter that the Western Surface Agreement-UMWA 401(k) Plan is qualified under Section 401 of the Internal Revenue Code. - 11 - 23.1 Consent of Thompson Coburn LLP (included in Exhibit 5.1). 23.2 Consent of Ernst & Young LLP, Independent Auditors. 24.1 Power of Attorney (set forth on signature page hereto). 99.1 Peabody Holding Company, Inc. Employee Retirement Account. 99.2 Lee Ranch Coal Company Retirement and Savings Plan for Salaried Employees. 99.3 Lee Ranch Coal Company Retirement and Savings Plan for Hourly Employees. 99.4 Western Surface Agreement-UMWA 401(k) Plan. - 12 - EX-5.1 3 ex5p1.txt OPINION RE LEGALITY EXHIBIT 5.1 ----------- [Letterhead of Thompson Coburn LLP] Peabody Energy Corporation 701 Market Street St. Louis, Missouri 63101-1826 Re: Peabody Holding Company, Inc. Employee Retirement Account, the Lee Ranch Coal Company Retirement and Savings Plan for Salaried Employees, the Lee Ranch Coal Company Retirement and Savings Plan for Hourly Employees and the Western Surface Agreement-UMWA 401(k) Plan Ladies and Gentlemen: With reference to the Registration Statement on Form S-8 (the "Registration Statement") being filed with the Securities and Exchange Commission pursuant to the Securities Act of 1933, as amended, on October 3, 2001, by Peabody Energy Corporation, a Delaware corporation (the "Company"), with respect to making available for investment by participants under the Peabody Holding Company, Inc. Employee Retirement Account, the Lee Ranch Coal Company Retirement and Savings Plan for Salaried Employees, the Lee Ranch Coal Company Retirement and Savings Plan for Hourly Employees and the Western Surface Agreement-UMWA 401(k) Plan (collectively, the "Plans") up to 200,000 shares of the Company's common stock, $0.01 par value (the "Shares"), to be purchased in the open market, together with an indeterminate amount of interests to be offered and sold pursuant to the Plans, we have examined such corporate records of the Company, such laws and such other information as we have deemed relevant, including the Company's Third Amended and Restated Certificate of Incorporation, By-Laws, and resolutions adopted by the Board of Directors of Peabody Holding Company, Inc., Peabody Western Coal Company, Seneca Coal Company and Big Sky Coal Company and the partners of Peabody Natural Resources Company, respectively, relating to such open market purchases of the Shares for the accounts of participants in the applicable Plan, the written documents constituting each of the Plans, certificates received from state officials and statements we have received from officers and representatives of the Company. In delivering this opinion, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals, the conformity to the originals of all documents submitted to us as certified, photostatic or conformed copies, the authenticity of originals of all such latter documents, and the correctness of statements submitted to us by officers and representatives of the Company. Based solely on the foregoing, we are of the opinion that: 1. The Company is duly incorporated and is validly existing under the laws of the State of Delaware; and 2. The Shares to be purchased in the open market for the accounts of participants in the Plans have been duly authorized by the Company and, when sold in accordance with the Plans, will be duly and validly issued and will be fully paid and nonassessable. We consent to the filing of this opinion as an exhibit to the Registration Statement. We further consent to the filing of copies of this opinion with agencies of such states and other jurisdictions as you deem necessary in the course of complying with the laws of the states and jurisdictions regarding the sale of the Shares in accordance with the Plans. Very truly yours, /s/ Thompson Coburn LLP EX-5.2 4 ex5p2.txt IRS DETERMINATION LETTER EXHIBIT 5.2 ----------- INTERNAL REVENUE SERVICE DEPARTMENT OF THE TREASURY DISTRICT DIRECTOR P.O. BOX A-38J7 DPN20-6 CHICAGO, IL 60690 RECEIVED OCT 06 1995 Employer Identification Number: Date: SEP 29 1995 13-2871045 File Folder Number PEABODY HOLDING COMPANY, INC. 430002114 c/o BRIAN W. BERGLUND Person to Contact: 211 N. BROADWAY, SUITE 3600 TECHNICAL SCREENER ST. LOUIS, MO 63102 Contact Telephone Number: (312) 435-1040 Plan Name: SAVINGS & LONG-TERM INVESTMENT PLAN FOR SALARIED EMP Plan Number: 002 Dear Applicant: We have made a favorable determination on your plan, identified above, based on the information supplied. Please keep this letter in your permanent records. Continued qualification of the plan under its present form will depend on its effect in operation. (See section 1.401-1(b)(3) of the Income Tax Regulations.) We will review the status of the plan in operation periodically. The enclosed document explains the significance of this favorable determination letter, points out some features that may affect the qualified status of your employee retirement plan, and provides information on the reporting requirements for your plan. It also describes some events that automatically nullify it. It is very important that you read the publication. This letter relates only to the status of your plan under the Internal Revenue Code. It is not a determination regarding the effect of other federal or local statutes. This determination letter is applicable for the amendment(s) adopted on december 31, 1994. This determination letter is also applicable for the amendment(s) adopted on march 28, 1995. This plan has been mandatorily disaggregated, permissively aggregated, or restructured to satisfy the nondiscrimination requirements. This plan satisfies the nondiscrimination in amount requirement of section 1.401(a)(4)-1(b)(2) of the regulations on the basis of a design-based safe harbor described in the regulations. This letter is issued under Rev. Proc. 93-39 and considers the amendments required by the Tax Reform Act of 1986 except as otherwise specified in this letter. This plan satisfies the nondiscriminatory current availability requirements of section 1.401(a)(4)-4(b) of the regulations with respect to those benefits, rights, and features that are currently available to all employees - 2 - Peabody Holding Company, Inc. in the plan's coverage group. For this purpose, the plan's coverage group consists of those employees treated as currently benefiting for purposes of demonstrating that the plan satisfies the minimum coverage requirements of section 410(b) of the Code. This letter may not be relied upon with respect to whether the plan satisfies the qualification requirements as amended by the Uruguay Round Agreements Act, Pub. L. 103-465. We have sent a copy of this letter to your representative as indicated in the power of attorney. If you have questions concerning this matter, please contact the person whose name and telephone number are shown above. Sincerely yours, /s/ Robert W. Brock Robert W. Brock District Director Enclosures: Publication 794 EX-5.3 5 ex5p3.txt IRS DETERMINATION LETTER EXHIBIT 5.3 ----------- INTERNAL REVENUE SERVICE DEPARTMENT OF THE TREASURY DISTRICT DIRECTOR 31 HOPKINS PLAZA BALTIMORE, MD 21201-0000 Employer Identification Number: Date: JAN 02 1996 51-0332232 File Folder Number: HANSON NATURAL RESOURCES COMPANY 521047499 C/O HANSON INDUSTRIES Person to Contact: C/O A. DOUGLAS P. CRAIG, ESQ. SYLVAN J OPPENHEIMER CRAIG & ELLS Contact Telephone Number: 28 WEST 44TH STREET, SUITE 1603 (410) 962-3645 NEW YORK, NY 10036 Plan Name: LEE RANCH COAL CO. RETIREMENT AND SAVINGS PLAN FOR SALARIED EMPLOYEE Plan Number: 103 Dear Applicant: We have made a favorable determination on your plan, identified above, based on the information supplied. Please keep this letter in your permanent records. Continued qualification of the plan under its present form will depend on its effect in operation. (See section 1.401-1(b)(3) of the Income Tax Regulations.) We will review the status of the plan in operation periodically. The enclosed document explains the significance of this favorable determination letter, points out some features that may affect the qualified status of your employee retirement plan, and provides information on the reporting requirements for your plan. It also describes some events that automatically nullify it. It is very important that you read the publication. This letter relates only to the status of your plan under the Internal Revenue Code. It is not a determination regarding the effect of other federal or local statutes. This determination is subject to your adoption of the proposed amendments submitted in your letter dated December 4, 1995. The proposed amendments should be adopted on or before the date prescribed by the regulations under Code section 401(b). This determination is also subject to your adoption of the proposed amendments submitted in your letter(s) dated December 11, 1995. These proposed amendments should also be adopted on or before the date prescribed by the regulations under Code Section 401(b). This determination letter is applicable for the amendment(s) adopted on December 31, 1993. This determination letter is applicable for the plan adopted on October 1, 1993. This plan has been mandatorily disaggregated, permissively aggregated, or restructured to satisfy the nondiscrimination requirements. This letter is issued under Rev. Proc. 93-39 and considers the amendments Letter 835 (DO/CG) -2- HANSON NATURAL RESOURCES COMPANY required by the Tax Reform Act of 1986 except as otherwise specified in this letter. This plan satisfies the nondiscriminatory current availability requirements of section 1.401(a)(4)-4(b) of the regulations with respect to those benefits, rights, and features that are currently available to all employees in the plan's coverage group. For this purpose, the plan's coverage group consists of those employees treated as currently benefiting for purposes of demonstrating that the plan satisfies the minimum coverage requirements of section 410(b) of the Code. This letter may not be relied upon with respect to whether the plan satisfies the qualification requirements as amended by the Uruguay Round Agreements Act, Pub. L. 103-465. We have sent a copy of this letter to your representative as indicated in the power of attorney. If you have questions concerning this matter, please contact the person whose name and telephone number are shown above. Sincerely yours, /s/ Paul M. Hunington District Director Enclosure(s) Publication 794 Letter 835 (DO/CG) EX-5.4 6 ex5p4.txt IRS DETERMINATION LETTER EXHIBIT 5.4 ----------- INTERNAL REVENUE SERVICE DEPARTMENT OF THE TREASURY DISTRICT DIRECTOR 31 HOPKINS PLAZA BALTIMORE, MD 21201-0000 Employer Identification Number: Date: JAN 02 1996 51-0332232 File Folder Number: HANSON NATURAL RESOURCES COMPANY 521047499 C/O HANSON INDUSTRIES Person to Contact: C/O A. DOUGLAS P. CRAIG, ESQ SYLVAN J OPPENHEIMER C/O CRAIG & ELLS Contact Telephone Number: 28 WEST 44TH ST., SUITE 1603 (410) 962-3645 NEW YORK, NY 10036 Plan Name: LEE RANCH COAL COMPANY RETIREMENT & SAVINGS PLAN FOR HOURLY EMPLOYEES Plan Number: 203 Dear Applicant: We have made a favorable determination on your plan, identified above, based on the information supplied. Please keep this letter in your permanent records. Continued qualification of the plan under its present form will depend on its effect in operation. (See section 1.401-1(b)(3) of the Income Tax Regulations.) We will review the status of the plan in operation periodically. The enclosed document explains the significance of this favorable determination letter, points out some features that may affect the qualified status of your employee retirement plan, and provides information on the reporting requirements for your plan. It also describes some events that automatically nullify it. It is very important that you read the publication. This letter relates only to the status of your plan under the Internal Revenue Code. It is not a determination regarding the effect of other federal or local statutes. This determination is subject to your adoption of the proposed amendments submitted in your letter dated December 4, 1995. The proposed amendments should be adopted on or before the date prescribed by the regulations under Code section 401(b). This determination applies to plan year(s) beginning after December 31, 1992. This determination letter is applicable for the amendment(s) adopted on December 31, 1993. This determination letter is also applicable for the amendment(s) adopted on October 1, 1993. This plan has been mandatorily disaggregated, permissively aggregated, or restructured to satisfy the nondiscrimination requirements. This letter is issued under Rev. Proc. 93-39 and considers the amendments required by the Tax Reform Act of 1986 except as otherwise specified in this letter. Letter 835 (DO/CG) -2- HANSON NATURAL RESOURCES COMPANY This plan satisfies the nondiscriminatory current availability requirements of section 1.401(a)(4)-4(b) of the regulations with respect to those benefits, rights, and features that are currently available to all employees in the plan's coverage group. For this purpose, the plan's coverage group consists of those employees treated as currently benefiting for purposes of demonstrating that the plan satisfies the minimum coverage requirements of section 410(b) of the Code. This letter may not be relied upon with respect to whether the plan satisfies the qualification requirements as amended by the Uruguay Round Agreements Act, Pub. L. 103-465. We have sent a copy of this letter to your representative as indicated in the power of attorney. If you have questions concerning this matter, please contact the person whose name and telephone number are shown above. Sincerely yours, /s/ Paul M. Hunington District Director Enclosure(s) Publication 794 Letter 835 (DO/CG) EX-5.5 7 ex5p5.txt IRS DETERMINATION LETTER EXHIBIT 5.5 ----------- INTERNAL REVENUE SERVICE DEPARTMENT OF THE TREASURY DISTRICT DIRECTOR P. O. BOX 2508 CINCINNATI, OH 45201 Employer Identification Number: Date: MAR 26 1998 86-0766626 DLN: PEABODY WESTERN COAL COMPANY 17007245072007 C/O LLEWELLYN SALE III Person to Contact: BRYAN CAVE LLP MARGARET M. SAITO 211 NORTH BROADWAY SUITE 3600 Contact Telephone Number: ST LOUIS, MO 63102 (213) 725-2531 Plan Name: PEABODY WESTERN-UMWA 401(K) PLAN Plan Number: 001 Dear Applicant: We have made a favorable determination on your plan, identified above, based on the information supplied. Please keep this letter in your permanent records. Continued qualification of the plan under its present form will depend on its effect in operation. (See section 1.401-1(b)(3) of the Income Tax Regulations.) We will review the status of the plan in operation periodically. The enclosed document explains the significance of this favorable determination letter, points out some events that may affect the qualified status of your employee retirement plan, and provides information on the reporting requirements for your plan. It also describes some events that automatically nullify it. It is very important that you read the publication. This letter relates only to the status of your plan under the Internal Revenue Code. It is not a determination regarding the effect of other federal or local statutes. This determination letter is applicable for the amendment(s) adopted on July 25, 1997. This determination letter is applicable for the plan adopted on August 1, 1996. This plan satisfies the minimum coverage and nondiscrimination requirements of sections 410(b) and 401(a)(4) of the Code because the plan benefits only collectively bargained employees or employees treated as collectively bargained employees. This letter is issued under Rev. Proc. 93-39 and considers the amendments required by the Tax Reform Act of 1986 except as otherwise specified in this letter. Except as otherwise specified this letter may not be relied upon with respect to whether the plan satisfies the qualification requirements as amended by the Uruguay Round Agreements Act, Pub. L. 103-465 and by the Small Business Job Protection Act of 1996 (SBJPA), Pub. L. 104-108, other than the requirements of Code section 401(a)(26). Letter 835 (DO/CG) -2- PEABODY WESTERN COAL COMPANY The information on the enclosed addendum is an integral part of this determination. Please be sure to read and keep it with this letter. We have sent a copy of this letter to your representative as indicated in the power of attorney. If you have questions concerning this matter, please contact the person whose name and telephone number are shown above. Sincerely yours, /s/ District Director Enclosures: Publication 794 Reporting & Disclosure Guide for Employee Benefit Plans Addendum Letter 835 (DO/CG) -3- PEABODY WESTERN COAL COMPANY This plan also satisfies the requirements of Code section 401(k). Letter 835 (DO/CG) EX-23.2 8 ex23p2.txt INDEPENDENT AUDITORS' CONSENT EXHIBIT 23.2 ------------ CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference of our report, dated April 20, 2001, except for the fourth paragraph of Note 1 as to which the date is May 17, 2001, in the Registration Statement on Form S-8 pertaining to the Peabody Holding Company, Inc. Employee Retirement Account, the Lee Ranch Coal Company Retirement and Savings Plan for Salaried Employees, the Lee Ranch Coal Company Retirement and Savings Plan for Hourly Employees and the Western Surface Agreement-UMWA 401(k) Plan, with respect to the consolidated financial statements and schedule of Peabody Energy Corporation included in its Annual Report on Form 10-K/A for the year ended March 31, 2001 filed with the Securities and Exchange Commission. ERNST & YOUNG LLP /s/ Ernst & Young LLP St. Louis, Missouri September 27, 2001 EX-99.1 9 ex99p1.txt EMPLOYEE RETIREMENT ACCOUNT EXHIBIT 99.1 ------------ PEABODY HOLDING COMPANY, INC. EMPLOYEE RETIREMENT ACCOUNT TABLE OF CONTENTS
PAGE ---- SECTION 1 - NAME OF PLAN....................................................................1 SECTION 2 - DEFINITIONS.....................................................................2 2.1. Board...............................................................................2 2.2. Break In Service....................................................................2 2.3. Code................................................................................2 2.4. Committee...........................................................................2 2.5. Company.............................................................................2 2.6. Compensation........................................................................2 2.7. Controlled Group....................................................................2 2.8. Days Of Service.....................................................................2 2.9. Disability Retirement Date..........................................................3 2.10. Employee...........................................................................3 2.11. Employer...........................................................................3 2.12. Five Percent Owner.................................................................3 2.13. Highly Compensated Employee........................................................4 2.14. Hours Of Employment................................................................4 2.15. Non-Highly Compensated Employee....................................................4 2.16. Normal Retirement Date.............................................................4 2.17. Patriot Plan.......................................................................4 2.18. Participant........................................................................4 2.19. Plan Administrator.................................................................4 2.20. Plan Year..........................................................................5 2.21. Powder River Plan..................................................................5 2.22. Pro-Rated Salary...................................................................5 2.23. Qualified Plan.....................................................................5 2.24. Service Period.....................................................................5 2.25. Severance Date.....................................................................5 2.26. Severance Period...................................................................6 2.27. Trustee............................................................................6 2.28. Valuation Date.....................................................................6 2.29. Years of Service...................................................................6 SECTION 3 - ELIGIBILITY.....................................................................7 3.1. Prior Participants..................................................................7 3.2. New Participants....................................................................7 3.3. Former Participants.................................................................7 3.4. Cessation Of Participation..........................................................7 SECTION 4 - CONTRIBUTIONS...................................................................8 4.1. Basic Payroll Reduction Contributions...............................................8 4.2. Additional Payroll Reduction Contributions..........................................8 4.3. Maximum Payroll Reduction Contribution..............................................8 4.4. Employer Matching Contributions.....................................................8 4.5. Performance Contributions...........................................................9 4.6. Elections...........................................................................9 4.7. Changes In And Suspension Of Payroll Reductions.....................................9 4.8. Tax Deductions.....................................................................10 4.9. Rollover Contributions And Transfers...............................................10 SECTION 5 - LOANS AND WITHDRAWALS..........................................................12 5.1. Loans..............................................................................12 5.2. Withdrawals........................................................................12 5.3. Vesting After Withdrawals..........................................................14 SECTION 6 - DISTRIBUTIONS OF EXCESS AMOUNTS................................................15 6.1. Distribution Of Excess Elective Deferrals..........................................15 6.2. Limitations On Pre-Tax Contributions For Highly Compensated Employees..............15 6.3. Limitations On Matching Contributions For Highly Compensated Employees.............15 6.4. Limitations On Multiple Use Of Alternative Limitation..............................16 6.5. Special Definitions................................................................16 SECTION 7 - ALLOCATION.....................................................................17 7.1. Establishment Of Accounts..........................................................17 7.2. Allocation Of Earnings Or Losses...................................................17 SECTION 8 - INVESTMENT OF ACCOUNTS.........................................................18 8.1. Investment Funds...................................................................18 8.2. Participant's Selection Of Investment Fund.........................................18 8.3. Transfers Between Investment Funds.................................................18 8.4. Custody, Registration and Voting of Securities.....................................18 SECTION 9 - DISTRIBUTIONS AT RETIREMENT....................................................19 9.1. Normal Retirement Distributions....................................................19 9.2. Optional Method Of Distribution....................................................19 9.3. Required Minimum Distributions.....................................................19 9.4. Required Beginning Date............................................................19 SECTION 10 - DISTRIBUTIONS AT DISABILITY...................................................20 10.1. Distributions Upon Disability.....................................................20 10.2. Determination Of Disability.......................................................21 10.3. Notification Of Eligibility To Receive And Consent To Disability Benefits.........21 SECTION 11 - DISTRIBUTIONS AT TERMINATION OF EMPLOYMENT (VESTING)..........................22 11.1. Distributions Upon Termination Of Employment......................................22 11.2. Determination Of Vested Portion...................................................23 ii 11.3. Forfeitures.......................................................................23 11.4. Notification Of Eligibility To Receive And Consent To Vested Benefits.............24 SECTION 12 - DISTRIBUTIONS AT DEATH........................................................25 12.1. Distributions Upon Death..........................................................25 12.2. Distribution To Spouse............................................................25 12.3. Designation Of Beneficiary........................................................25 12.4. Beneficiary Not Designated........................................................25 12.5. Spousal Consent To Designation Of Beneficiary.....................................25 SECTION 13 - LEAVES OF ABSENCE AND TRANSFERS...............................................27 13.1. Military Leave Of Absence.........................................................27 13.2. Maternity Or Paternity Absence....................................................28 13.3. Other Leaves Of Absence...........................................................29 13.4. Transfers.........................................................................29 SECTION 14 - TRUSTEE.......................................................................31 SECTION 15 - ADMINISTRATION................................................................32 15.1. Appointment Of Committee..........................................................32 15.2. Construction......................................................................32 15.3. Decisions And Delegation..........................................................32 15.4. Meetings..........................................................................32 15.5. Duties Of The Committee...........................................................32 15.6. Records Of The Committee..........................................................33 15.7. Expenses..........................................................................33 SECTION 16 - CLAIM PROCEDURE...............................................................34 16.1. Claim.............................................................................34 16.2. Claim Decision....................................................................34 16.3. Request For Review................................................................34 16.4. Review On Appeal..................................................................35 SECTION 17 - AMENDMENT AND TERMINATION.....................................................36 17.1. Amendment.........................................................................36 17.2. Termination; Discontinuance Of Contributions......................................36 SECTION 18 - MISCELLANEOUS.................................................................37 18.1. Participants' Rights..............................................................37 18.2. Spendthrift Clause................................................................37 18.3. Delegation Of Authority By Employer...............................................37 18.4. Distributions To Minors...........................................................37 18.5. Construction Of Plan..............................................................37 18.6. Gender, Number And Headings.......................................................38 18.7. Separability Of Provisions........................................................38 18.8. Diversion Of Assets...............................................................38 18.9. Service Of Process................................................................38 18.10. Merger...........................................................................38 iii 18.11. Benefit Limitation...............................................................38 18.12. Commencement Of Benefits.........................................................40 18.13. Qualified Domestic Relations Order...............................................40 18.14. Written Explanation Of Rollover Treatment........................................42 18.15. Leased Employees.................................................................42 18.16. Special Distribution Option......................................................43 18.17. Limitations On Special Distribution Option.......................................44 18.18. Waiver Of 30-Day Period..........................................................44 SECTION 19 - TOP-HEAVY DEFINITIONS.........................................................45 19.1. Accrued Benefits..................................................................45 19.2. Beneficiaries.....................................................................45 19.3. Determination Date................................................................45 19.4. Former Key Employee...............................................................45 19.5. Key Employee......................................................................45 19.6. Non-Key Employee..................................................................45 19.7. Permissive Aggregation Group......................................................46 19.8. Required Aggregation Group........................................................46 19.9. Super Top-Heavy Group.............................................................46 19.10. Top-Heavy Compensation...........................................................46 19.11. Top-Heavy Group..................................................................46 SECTION 20 - TOP-HEAVY RULES...............................................................48 20.1. Special Top-Heavy Rules...........................................................48 20.2. Adjustments In Section 415 Limits.................................................48
iv PEABODY HOLDING COMPANY, INC. EMPLOYEE RETIREMENT ACCOUNT SECTION 1 - NAME OF PLAN This Plan shall be known as the "Peabody Holding Company, Inc. Employee Retirement Account." The Plan will be considered a profit sharing plan even though contributions are not dependent on profits. SECTION 2 - DEFINITIONS 2.1. Board. ----- "Board" means the board of directors of the Company or of any successor by merger, purchase or otherwise. 2.2. Break In Service. ---------------- "Break in Service" means any twelve consecutive month Severance Period. 2.3. Code. ---- "Code" means the Internal Revenue Code of 1986, as amended. 2.4. Committee. --------- "Committee" means the Committee appointed pursuant to Section 15.1. 2.5. Company. ------- "Company" means the Peabody Holding Company, Inc. 2.6. Compensation. ------------ "Compensation" means base pay plus overtime received by an Employee during the Plan Year after he or she becomes a Participant for services rendered with respect to the Employer. Such amount shall include all amounts contributed to a cafeteria plan which meets the requirements of Section 125 of the Code. Such amount shall not include Employer contributions under this Plan or benefits under any other Qualified Plan. The Compensation of each Participant taken into account under the Plan for any Plan Year shall not exceed $160,000 (as adjusted in accordance with Section 415(d) of the Code). 2.7. Controlled Group. ---------------- "Controlled Group" means the Company and all other entities required to be aggregated with the Company under Sections 414(b), (c), or (m) of the Code or regulations issued pursuant to Section 414(o) of the Code. For purposes of Section 18.11, in determining which entities shall be aggregated under Section 414(b) or (c) of the Code, the modifications made by Section 415(h) of the Code shall be applied. 2.8. Days Of Service. --------------- "Days of Service" means the total number of days in a person's Service Periods, whether or not such periods were completed consecutively. Days of Service shall also include the number of days in all Severance Periods, if any, in which: 2 (a) The Employee severs from service by reason of quit, discharge or retirement and immediately prior to such quit, discharge or retirement was not absent from service if the Employee performs an Hour of Employment within twelve months of the date of such severance; or (b) Notwithstanding (a) above, the Employee severs from service by reason of quit, discharge or retirement during an absence from service of twelve months or less for any reason other than a quit, discharge, retirement or death if the Employee performs an Hour of Employment within twelve months of the date on which the Employee was first absent from service. 2.9. Disability Retirement Date. -------------------------- "Disability Retirement Date" means the date on which a Participant is determined by the Committee to be permanently and totally disabled in accordance with Section 10.2 and has terminated his or her employment. 2.10. Employee. -------- "Employee" means any person who is (i) classified by the Employer as a full-time employee or as a part-time employee who is regularly scheduled to work at least 20 hours per week and (ii) is compensated on a salaried basis and (iii) is on a U.S. dollar payroll or is a U.S. citizen and (iv) is employed by the Employer, but excluding a non-resident alien, or a member of a collective bargaining unit for which either (a) a separate retirement plan has been established pursuant to collective bargaining negotiations, or (b) no separate plan has been established after collective bargaining has included discussion of retirement benefits, unless such collective bargaining provided for coverage under this Plan. 2.11. Employer. -------- "Employer" means the Company, Patriot Coal Company L.P., Powder River Coal Company or any other member of the Controlled Group which has, with the consent of the Board, adopted the Plan. 2.12. Five Percent Owner. ------------------ "Five Percent Owner" means any person who owns (or is considered as owning within the meaning of Section 318 of the Code) more than five percent of the outstanding stock of any corporation in the Controlled Group or stock possessing more than five percent of the total combined voting power of all stock of any corporation in the Controlled Group or who owns more than five percent of the capital or profits interest of any unincorporated entity in the Controlled Group. 3 2.13. Highly Compensated Employee. --------------------------- Highly Compensated Employee means any Participant who (i) was a Five-Percent Owner at any time during either the determination year or the look-back year; or (ii) received compensation within the meaning of Code Section 415(c)(3) from the Employer in excess of $80,000 (as adjusted pursuant to Code Section 415(d)) during the look-back year and, if the Employer so elects for the look-back year, was in the top-paid group of Employees for such look-back year. For purposes of Section 6, the determination year shall be the Plan Year, and the look-back year shall be the 12 month period immediately preceding the determination year. The determination of who is a Highly Compensated Employee, including the determination of the number and identity of Employees in the top-paid group and the compensation that is considered, will be made in accordance with Code Section 414(q) and the regulations thereunder. 2.14. Hours Of Employment. ------------------- "Hours of Employment" means an hour for which a person is directly or indirectly paid, or entitled to payment, by the Employer for the performance of duties. 2.15. Non-Highly Compensated Employee. ------------------------------- Non-Highly Compensated Employee means any Employee who is not a Highly Compensated Employee but who is eligible to participate in the Plan. 2.16. Normal Retirement Date. ---------------------- "Normal Retirement Date" means the date on which a Participant terminates his or her employment with the Employer (except by death or permanent and total disability as defined in Section 10.2) provided such date is on or after (a) his attainment of age 62 or (b) such Participant's "Normal Retirement Date" under a Qualified Plan maintained by the Employer which is a defined benefit plan, whichever come first. 2.17. Patriot Plan. ------------ "Patriot Plan" means the Patriot Coal Company Savings and Long-Term Investment Plan as in effect prior to October 1, 1997. 2.18. Participant. ----------- "Participant" means an Employee who has satisfied the eligibility requirements of Section 3 and who has not become a former Participant under Section 3.4. 2.19. Plan Administrator. ------------------ "Plan Administrator" means the Committee. 4 2.20. Plan Year. --------- "Plan Year" means the 12-month period commencing on January 1 and ending on December 31. 2.21. Powder River Plan. ----------------- "Powder River Plan" means the Powder River Coal Company Savings and Long-Term Investment Plan for Salaried Employees as in effect prior to October 1, 1997. 2.22. Pro-Rated Salary. ---------------- "Pro-Rated Salary" means a Participant's base salary determined as of the last day of the Employer's fiscal year, multiplied by a fraction, the numerator of which is the number of months and fractions thereof during which the Participant was an Employee during such fiscal year, and the denominator of which is 12. For purposes of this calculation only, a person shall not be considered an "Employee" during any period during which he or she is (a) on salary continuance for disability, (b) receiving accrued vacation or other similar amounts following retirement under the Employer's retirement program, or (c) on a leave of absence described in Section 13.3. The Pro-Rated Salary of each Participant taken into account under the Plan for any Plan Year, based on the fiscal year ending in such Plan Year, shall not exceed $160,000 (as adjusted in accordance with Section 415(d) of the Code). 2.23. Qualified Plan. -------------- "Qualified Plan" means any plan qualified under Section 401 of the Code. For purposes of Sections 19 and 20 only, the term "Qualified Plan" also means a simplified employee pension described in Section 408(k) of the Code. 2.24. Service Period. -------------- "Service Period" means the period of time commencing on the date on which a person performs an Hour of Employment with the Employer and ending on the person's Severance Date. If a person's employment with the Employer is terminated when he or she has no nonforfeitable right to a benefit derived from Employer contributions under the Plan and the number of years of his or her Severance Period equals or exceeds the greater of (a) 5 or (b) the number of years of his or her Service Period prior to such termination of employment, the Service Period prior to the termination of employment will be disregarded. 2.25. Severance Date. -------------- "Severance Date" means the date on which the earliest of the following occurs: (a) A person employed by the Employer quits, retires, is discharged or dies or 5 (b) The first anniversary of the first date of a period in which the person is not credited with Days of Service and remains absent from service with the Employer (with or without pay) for any reason other than quit, retirement, discharge or death. 2.26. Severance Period. ---------------- "Severance Period" means the period of time commencing the day after a person's Severance Date and ending on the day before the person performs an Hour of Employment. 2.27. Trustee. ------- "Trustee" means the insurer or trustee or any successor trustee appointed pursuant to Section 14 hereof. 2.28. Valuation Date. -------------- "Valuation Date" means each business day (effective September 1, 1999, any business day the New York Stock Exchange is open for trading). 2.29. Years of Service. ---------------- "Years of Service" for the period prior to October 1, 1997 shall be determined under the terms of the Plan prior to such date as determined by the Employer's records. For the period on and after October 1, 1997, a Participant shall be credited with one Year of Service for each 365 Days of Service on and after October 1, 1997. 6 SECTION 3 - ELIGIBILITY 3.1. Prior Participants. ------------------ Each person who was a Participant in the Plan on March 31, 1999, shall continue to be a Participant on April 1, 1999. 3.2. New Participants. ---------------- On and after April 1, 1999, each Employee not described in Section 3.1 shall become a Participant hereunder as of his or her date of hire. If a person is not an Employee as of his date of hire, he or she shall not become a Participant until the day he or she becomes an Employee. 3.3. Former Participants. ------------------- A former Participant who is reemployed by the Employer shall become a Participant on the date he or she is reemployed as an Employee. 3.4. Cessation Of Participation. -------------------------- A person shall cease to be a Participant and shall become a former Participant when he or she (a) has ceased to be employed by the Employer, and (b) has no undistributed account balances under the Plan. 7 SECTION 4 - CONTRIBUTIONS 4.1. Basic Payroll Reduction Contributions. ------------------------------------- Except for those individuals described in the next sentence, a Participant may elect to have up to 7% (except for a Participant employed by Powder River Coal Company, in which case 6%) of his or her Compensation contributed by the Employer to the Plan on a pre-tax basis through payroll reductions. Each Participant who was a participant in the Patriot Plan on September 30, 1997 may elect to have up to 4% of his or her Compensation contributed by the Employer to the Plan on a pre-tax basis through payroll reductions. Each Participant shall elect in accordance with the rules and procedures established by the Committee in increments of 1% the percentage of his or her Compensation under this Section to be credited to his or her account as described under 7.1. 4.2. Additional Payroll Reduction Contributions. ------------------------------------------ A Participant who has elected to have 7% (6% for Participants employed by Powder River Coal Company) of his or her Compensation contributed by the Employer to the Plan under Section 4.1 may elect to have up to an additional 9% (13% for Participants employed by Powder River Coal Company) of his or her Compensation contributed by the Employer to the Plan on a pre-tax basis or after-tax basis through payroll reductions. A Participant who was a participant in the Patriot Plan on September 30, 1997 and who has elected to have 4% of his or her Compensation contributed by the Employer to the Plan under Section 4.1 may elect to have up to an additional 12% of his or her Compensation contributed by the Employer to the Plan on a pre-tax or after-tax basis through payroll reductions. Each Participant shall elect in accordance with the rules and procedures established by the Committee in increments of 1% the percentage of his or her Compensation under this Section to be credited to his or her account as described under 7.1. 4.3. Maximum Payroll Reduction Contribution. -------------------------------------- The maximum amount which may be contributed to the Plan by a Participant on a pre-tax basis under Sections 4.1 and 4.2 and any other Qualified Plan maintained by the Employer in any calendar year is limited to $10,000 (or such higher amount prescribed by applicable law). If a Participant's pre-tax contributions reach this maximum, the Committee shall stop the Participant's payroll reduction contributions for the remainder of the calendar year. 4.4. Employer Matching Contributions. ------------------------------- Prior to January 1, 2001, the Employer will contribute to the Plan an amount equal to 50% of the amount by which each Participant elects to have his or her Compensation reduced under Section 4.1. Beginning January 1, 2001, except with respect to those Participants described in the next sentence, the Employer will contribute to the Plan an amount equal to 100% of the first 3% of his or her Compensation that a Participant elects to have contributed to the Plan under Section 4.1 plus 75% of the next 4% of his or her Compensation that a Participant elects to have contributed to the Plan under Section 4.1. With respect to each Participant who is employed either by Patriot Coal Company, L.P. or Powder River Coal Company on and after January 1, 2001 the Employer will continue to contribute to the Plan an amount equal to 50% of 8 the amount by which such Participant elects to have his or her Compensation reduced under Section 4.1. Any contributions made pursuant to this Section 4.4 shall be paid to the Trustee as soon as practicable following the 15th day and the last business day of each month. 4.5. Performance Contributions. ------------------------- In addition to any contributions made by the Employer pursuant to Section 4.4, the Employer will contribute an additional amount if the Employer meets or exceeds certain performance targets established by the Board on an annual basis. If the maximum performance target established by the Board for the Employer's fiscal year is met or exceeded, the Employer will contribute to the Plan on behalf of each Participant (other than a Participant employed by Powder River Coal Company or Patriot Coal Company, L.P.) who is employed on the last day of such fiscal year an amount equal to 4% of the Participant's Pro-Rated Salary. If the Employer meets the minimum performance target established by the Board for the Employer's fiscal year but does not meet the maximum performance target, the Employer will contribute to the Plan on behalf of each Participant who is employed on the last day of such fiscal year a percentage of such Participant's Pro-Rated Salary to be determined by the Board (which percentage shall be less than 4% of the Participant's Pro-Rated Salary) based on the Employer's overall performance in relation to the maximum and minimum performance target ranges. Any contributions paid on account of the performance of the Employer pursuant to this Section 4.5 shall be paid to the Trustee as soon as practicable following the determination of whether the Employer has met or exceeded the applicable performance targets. 4.6. Elections. --------- Each election by a Participant under Sections 4.1 and 4.2 shall be effective until suspended or amended. Each election shall be effective only when made in accordance with the rules and procedures established by the Committee. 4.7. Changes In And Suspension Of Payroll Reductions. ----------------------------------------------- 4.7.1. Changes In Payroll Reductions. ----------------------------- Each Participant's payroll reduction percentage under Sections 4.1 and 4.2 shall continue in effect until the Participant shall change such percentage. A Participant may at any time in his or her discretion change such percentage in accordance with the rules and procedures established by the Committee. 4.7.2. Suspension Of Payroll Reductions. -------------------------------- A Participant may at any time suspend his or her contributions in accordance with the rules and procedures established by the Committee. 9 4.7.2.1. Suspension Of Payroll Reductions During --------------------------------------- Government Or Military Service. ------------------------------ Suspension of a Participant's contributions shall be permitted during any period of military service, or of government service approved by the Employer, regardless of the duration of such period. 4.7.2.2. Resumption Of Payroll Reductions After -------------------------------------- Suspension. ---------- Except as provided in Section 5.2, a Participant who has suspended his or her contributions under Section 4.7.2 may at any time resume his or her contributions in accordance with the rules and procedures established by the Committee. 4.8. Tax Deductions. -------------- All Employer contributions are made conditioned upon their deductibility for Federal income tax purposes under Section 404 of the Code. Amounts contributed by an Employer shall be returned to the Employer from the Plan by the Trustee under the following circumstances: (a) If a contribution was made by an Employer by a mistake of fact, the excess of the amount of such contribution over the amount that would have been contributed had there been no mistake of fact shall be returned to the Employer within one year after the payment of the contribution; and (b) If an Employer makes a contribution which is not deductible under Section 404 of the Code, such contribution (but only to the extent disallowed) shall be returned to the Employer within one year after the disallowance of the deduction. Earnings attributable to the contribution shall not be returned to the Employer, but losses attributable to such excess contribution shall be deducted from the amount to be returned. In the event (a) or (b) above apply, the Employer will distribute any salary reduction amounts returned to the Employer (less any losses) to the Employees who elected to reduce their salary by such amounts. 4.9. Rollover Contributions And Transfers. ------------------------------------ The Committee may direct the Trustee to accept from or on behalf of an Employee any cash (or, prior to September 1, 1999, other assets) the receipt of which would constitute a rollover contribution as defined in Section 408(d)(3)(A)(ii) of the Code or an eligible rollover contribution as defined in Section 402(c)(4) of the Code which is excludable from income under Section 402(c)(1) of the Code. The Committee may also direct the Trustee to accept from the trustee of another Qualified Plan a direct transfer of cash or other assets which does not constitute an eligible rollover contribution. Notwithstanding the preceding sentence, the Trustee may not accept the direct transfer of any assets from any Qualified Plan which would cause the Plan to be subject to the requirements of Section 401(a)(11) of the Code. Any contributions under this Section shall be segregated in a separate account and shall be fully 10 vested at all times. Such amounts shall not be considered as a contribution by a Participant for purposes of Sections 4.1 or 18.11. 11 SECTION 5 - LOANS AND WITHDRAWALS 5.1. Loans. ----- Upon the application of a Participant under such procedures as established by the Committee, the Committee as administrator of the loan program, in accordance with its uniform nondiscriminatory policy, shall direct the Trustee to make a loan or loans to such Participant, provided, however, that no loan shall be made if immediately after the loan the unpaid balance of all loans by this Plan and all other plans maintained by the Controlled Group to the Participant would exceed the lesser of: (a) $50,000 or (b) 50% of the vested portion of the Participant's accounts under this Plan. Notwithstanding the foregoing, the $50,000 limitation in (a) above shall be reduced by the highest outstanding balance for the one-year period ending on the day before a new loan is made minus the outstanding balance of existing loans to the Participant on the date of the new loan. 5.2. Withdrawals. ----------- 5.2.1. Regular Withdrawals. ------------------- A Participant in the employment of the Employer may, in accordance with the rules and procedures established by the Committee, make a withdrawal from his or her Savings Regular Account which has been held by the Plan for 24 months or more, his vested Company Savings Account which has been held by the Plan for 24 months or more, or his or her After Tax-Unmatched Account. A Participant must withdraw his or her entire After Tax-Unmatched Account before withdrawing any amounts from his or her After Tax-Matched Account or Company Savings Account. The minimum amount of any withdrawal under this Section shall be $500, unless the account contains less than $500, in which event the Participant must withdraw the entire balance in his or her account. 5.2.2. Special Withdrawals. ------------------- A Participant in the employment of the Employer may withdraw the entire amount in his or her After Tax-Matched Account (i.e., with no 24-month holdback) in ---- accordance with the rules and procedures established by the Committee. In the event of a withdrawal under this Section of any amounts from the Participant's After Tax-Matched Account which have been held in such account for less than 24 months, the Participant's right to make contributions under the Plan shall be suspended for a period of six months following the Valuation Date following the month in which the special withdrawal is made. 12 5.2.3. Hardship Withdrawals. -------------------- A Participant in the employment of the Employer may, in accordance with the rules and procedures established by the Committee, withdraw his or her contributions to his or her Pre Tax-Matched Account or Pre Tax-Unmatched Account as well as all or any part of his or her Rollover Account, the vested portion of his or her Company Savings Account which has been held by the Plan for less than 24 months, and the vested portion of his or her Company Investment Account, if the Participant demonstrates a substantial hardship to the Committee. The Committee will grant a distribution on account of hardship only if the distribution is made on account of an immediate and heavy financial need of the Participant and is necessary to satisfy such financial need. 5.2.3.1. Determination of Immediate and Heavy ------------------------------------ Financial Need. -------------- A distribution will be deemed to be made on account of an immediate and heavy financial need of the Participant only if the distribution is on account of: (a) expenses for medical care described in Section 213(d) of the Code previously incurred by the Participant, the Participant's spouse or any of the Participant's dependents (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; (b) costs directly related to the purchase (excluding mortgage payments) of a principal residence of the Participant; (c) the payment of tuition and related educational fees (excluding expenses for room and board) for the next 12 months of post-secondary education for the Participant, the Participant's spouse, or the Participant's children or dependents (as defined in Section 152 of the Code); or (d) payments necessary to prevent the eviction of the Participant from his or her principal residence or foreclosure on the mortgage of the Participant's principal residence. 5.2.3.2. Amount Necessary To Satisfy Financial ------------------------------------- Need. ---- A distribution will be deemed to be necessary to satisfy an immediate and heavy financial need of a Participant if the following requirements are satisfied: (a) The distribution is not in excess of the amount of the immediate and heavy financial need of the Participant (which may include any amounts necessary to pay any federal, state or local income tax or penalties reasonably anticipated to result from the distribution); and 13 (b) The Participant has 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 Controlled Group. In addition a Participant who receives a hardship withdrawal will be unable to make pre-tax contributions or after-tax contributions to the Plan or any other qualified or nonqualified plan of deferred compensation maintained by the Controlled Group, including stock option and stock purchase plans and a cash or deferred arrangement that is part of a cafeteria plan within the meaning of Section 125 of the Code (but not the cafeteria plan itself), for a period of twelve months after the Valuation Date as of which the hardship distribution is made. Moreover, the maximum amount of a Participant's pre-tax contributions to the Plan or any other plan maintained by the Controlled Group for the calendar year following the calendar year of the hardship withdrawal may not exceed $10,000 (or such higher amount prescribed by applicable law) reduced by the amount of such Participant's pre-tax contributions for the calendar year of the hardship withdrawal. 5.2.4. Age 59 1/2 Withdrawals. ---------------------- A Participant in the employment of the Employer who has attained age 59 1/2 may, in accordance with the rules and procedures established by the Committee, make a withdrawal from his or her Rollover Account, Pre Tax-Unmatched Account, Pre Tax-Matched Account, the vested portion of his or her Company Investment Account and Performance Contribution Account. The minimum amount of any withdrawal under this Section shall be $500, unless the account contains less than $500, in which event the Participant must withdraw the entire balance in his or her account. 5.3. Vesting After Withdrawals. ------------------------- If a withdrawal under Section 5.2 is made by a Participant whose Company Investment or Regular Account was not 100% vested at the time of such withdrawal, then the Employer shall separately record the portion of his or her Company Investment or Regular Account which was not vested at the time of the withdrawal, and the vested amount of such portion from time to time shall equal an amount ("X") determined by the following formula: X = P(AB + (R X D)) - (R X D) For purposes of applying such formula: "P" is the vested percentage at the relevant time; "AB" is the account balance at the relevant time; "D" is the amount previously withdrawn by the Participant; and "R" is the ratio of the account balance at the relevant time to the account balance after the withdrawal. If a person who has received a withdrawal hereunder is subsequently entitled to an allocation of Employer contributions, the Employer shall separately record such contributions and vesting with respect to such contributions shall be in accordance with Section 11.2. 14 SECTION 6 - DISTRIBUTIONS OF EXCESS AMOUNTS 6.1. Distribution Of Excess Elective Deferrals. ----------------------------------------- If a Participant's elective deferrals for any calendar year exceed $10,000 (or such higher amount prescribed by applicable law), then the Participant may file an election form prescribed by the Committee with the Employer designating in writing the amount of such excess elective deferrals to be distributed from this Plan. Any such election form must be filed with the Employer no later than the first March 1 following the close of such calendar year in order for the Employer to act on it. If such an election form is timely filed, the Trustee shall distribute to the Participant the amount of such excess elective deferrals which the Participant has allocated to this Plan together with any income or less any loss allocable to such amount on or before the first April 15 following the close of such calendar year. In the case of a Highly Compensated Employee, any matching contributions which were contributed on account of the elective deferrals being distributed will be forfeited, even if such matching contributions are vested. For purposes of the preceding sentence, the income or loss allocable to such excess amount will be determined under such reasonable method as the Committee shall establish, provided the method does not discriminate in favor of Highly Compensated Employees, is used consistently for all Participants and for all corrective distributions under the Plan for the Plan Year, and is used by the Plan for allocating income to Participants' accounts. 6.2. Limitations On Pre-Tax Contributions For Highly ----------------------------------------------- Compensated Employees. ---------------------- The Committee is authorized to reduce to the extent necessary the maximum deferral percentage under Sections 4.1 and 4.2 for Highly Compensated Employees, prior to the close of the Plan Year if the Committee reasonably believes that such reduction is necessary to prevent the Plan from failing Code Section 401(k)(3). Such adjustments shall be made in accordance with rules prescribed by the Committee. If the Plan fails to satisfy Code Section 401(k)(3), the Plan shall correct the failure within 12 months after the last day of such Plan Year under any method or combination of methods allowed under Code Section 401(k)(8) or Treasury Regulation Section 1.401(k)-1(f), taking into account any adjustments necessary due to changes to Code Section 401(k)(8)(C) that are not reflected in the regulations. For purposes of this Section 6.2, effective for years beginning after December 31, 1996, the actual deferral percentage of Non-Highly Compensated Employees shall be determined as of the Plan Year preceding the Plan Year for which the Plan must satisfy one of the tests in Code Section 401(k)(3), unless the Employer elects to determine such actual deferral percentage as of the Plan Year for which the Plan must satisfy one of the tests in Code Section 401(k)(3). Any such election shall not be changed except as provided by the Secretary of the Treasury. 6.3. Limitations On Matching Contributions For Highly ------------------------------------------------ Compensated Employees. ---------------------- The Committee is authorized to reduce to the extent necessary the maximum amount of matching contributions under Section 4.4 and after-tax contributions contributed on behalf of any Highly Compensated Employee prior to the close of the Plan Year if the Committee reasonably believes that such adjustment is necessary to prevent the Plan from failing Code 15 Section 401(m)(2). Such reduction shall be made in accordance with rules prescribed by the Committee. If the Plan fails to satisfy Code Section 401(m)(2), the Plan shall correct the failure within 12 months after the last day of such Plan Year under any method or combination of methods allowed under Treasury Regulation 1.401(m)-1(e), taking into account any adjustments necessary due to changes to Code Section 401(m)(6)(c) that are not reflected in the regulations. For purposes of this Section 6.3, effective for years beginning after December 31, 1996, the actual contribution percentage of Non-Highly Compensated Employees shall be determined as of the Plan Year preceding the Plan Year for which the Plan must satisfy one of the tests in Code Section 401(m)(2), unless the Employer elects to determine such actual contribution percentage as of the Plan Year for which the Plan must satisfy one of the tests in Code Section 401(m)(2). Any such election shall not be changed except as provided by the Secretary of the Treasury. 6.4. Limitations On Multiple Use Of Alternative Limitation. ----------------------------------------------------- 6.4.1. Determination Of Multiple Use. ----------------------------- The Committee will determine whether or not multiple use of the Alternative Limitation has occurred. Such determination will be made in accordance with Section 401(m)(9) of the Code. 6.4.2. Correction Of Multiple Use. -------------------------- If a multiple use of the Alternative Limitation occurs, the Committee shall correct such multiple use by reducing the Actual Contribution Percentages of Highly Compensated Employees in the manner set forth in Section 6.3 so that there is no multiple use of the Alternative Limitation. 6.5. Special Definitions. ------------------- All terms used in this Section 6 shall have the meaning given such terms in Code Sections 401(k) and 401(m) and the regulations thereunder. 6.5.1. Plan Restructuring. ------------------ The Plan may be disaggregated under Section 1.410(b)-6(b)(3) and Section 1.410(b)-7(c)(3) of the Treasury Regulations for any Plan Year in order to pass the actual contribution percentage and actual deferral percentages tests set forth in this Section. 16 SECTION 7 - ALLOCATION 7.1. Establishment Of Accounts. ------------------------- The Committee shall establish and maintain for each Participant a Pre Tax-Matched Account, a Pre Tax-Unmatched Account, an After Tax-Matched Account, an After Tax-Unmatched Account, a Company Savings Account, a Company Investment Account, a Performance Contribution Account, and a Rollover Account. All amounts by which an Employee elects to have his or her salary reduced under Section 4.1 on a pre-tax basis shall be credited to his or her Pre Tax-Matched Account, all amounts by which an Employee elects to have his or her salary reduced under Section 4.1 on an after-tax basis shall be credited to his or her After Tax-Matched Account, all amounts by which an Employee elects to have his or her salary reduced under Section 4.2 on a pre-tax basis shall be credited to his or her Pre Tax-Unmatched Account, all amounts by which an Employee elects to have his or her salary reduced on an after-tax basis under Section 4.2 shall be credited to his or her After Tax-Unmatched Account, all Employer contributions under Section 4.4 with respect to Pre Tax-Matched Contributions shall be credited to his or her Company Investment Account, all Employer contributions under Section 4.4 with respect to After Tax-Matched Contributions shall be credited to his or her Company Savings Account, all Employer contributions under Section 4.5 shall be credited to his or her Performance Contribution Account, and all direct transfer and rollover amounts received on behalf of a Participant under Section 4.9 shall be credited to his or her Rollover Account. 7.2. Allocation Of Earnings Or Losses. -------------------------------- All appreciation or depreciation in the fair market value of the investment funds shall be allocated to accounts based on account balances on each Valuation Date. 17 SECTION 8 - INVESTMENT OF ACCOUNTS 8.1. Investment Funds. ---------------- Prior to May 19, 1998, Employer contributions made under Section 4.4 were invested solely in The Energy Group PLC American Depository Receipts. Effective May 19, 1998, a Participant may invest all of his or her accounts in such funds as are made available from time to time under the Plan. 8.2. Participant's Selection Of Investment Fund. ------------------------------------------ Each Participant shall designate in 1% increments the percentages of contributions under Section 4.1 and 4.2 for such Plan Year allocable to his or her accounts which are to be invested among the applicable investment funds. Such a designation shall be made in accordance with the rules and procedures established by Committee. Any such designation shall continue in effect for successive Plan Years unless changed in the same manner by the Participant. 8.3. Transfers Between Investment Funds. ---------------------------------- A Participant may elect in accordance with the rules and procedures established by the Committee to transfer all or any portion of his or her accounts in an investment fund to any other investment fund. Such transfers shall be subject to such reasonable requirements as may be established by the Trustee. 8.4. Custody, Registration and Voting of Securities. ---------------------------------------------- All securities acquired by the Trustee shall be held in the possession of the Trustee until disposed of pursuant to the provisions of the Plan. Any shares of stock may be registered in the name of the Trustee or its nominee. The Trustee shall have all voting rights with respect to such shares and may, in its discretion, vote such shares itself or by such proxy as it may select. 18 SECTION 9 - DISTRIBUTIONS AT RETIREMENT 9.1. Normal Retirement Distributions. ------------------------------- Upon a Participant's Normal Retirement Date, the Participant's accounts shall become fully vested (if not already fully vested) and shall be distributed to him or her. 9.2. Optional Method Of Distribution. ------------------------------- In lieu of distribution of his or her accounts in a lump sum, a Participant may elect in accordance with the rules and procedures established by the Committee, to have his or her accounts distributed in substantially equal payments over a period of time not less than 2 years and not more than 10 years. In the event that a Participant who elects this optional form of benefit dies before the entire amount in his or her accounts has been distributed, distribution will continue to be made to such Participant's surviving spouse, if any, or designated beneficiary, unless such Participant's surviving spouse or beneficiary elects to receive such remaining amounts in a lump sum. 9.3. Required Minimum Distributions. ------------------------------ Notwithstanding anything to the contrary contained in the Plan, the entire interest of a Participant will be distributed in accordance with Section 401(a)(9) of the Code and the regulations thereunder beginning no later than the Participant's Required Beginning Date as determined under Section 9.4 below. 9.4. Required Beginning Date. ----------------------- The Required Beginning Date of a Participant shall be: (a) in the case of a Participant who is not a Five Percent Owner with respect to the Plan Year ending in the calendar year in which the Participant attains age 70-1/2, the April 1 following the calendar year in which occurs the later of the date the Participant attains age 70-1/2 and the date on which the Participant terminates employment; or (b) in the case of a Participant who is a Five Percent Owner with respect to the Plan Year ending in the calendar year in which the Participant attains age 70-1/2, the April 1 following the calendar year in which the Participant attains age 70-1/2. Each Participant shall have the right to withdraw all or any portion of his or her accounts beginning on the April 1 following the calendar year in which the Participant reaches age 70-1/2. 19 SECTION 10 - DISTRIBUTIONS AT DISABILITY 10.1. Distributions Upon Disability. ----------------------------- If a Participant becomes permanently and totally disabled while in the employment of the Employer, his accounts shall become fully vested (if not already fully vested), and shall be distributed to him or her in a lump sum, unless the Participant elects an optional form of benefit described in Section 9.2, in accordance with Sections 10.1.1, 10.1.2, 10.1.3, and 10.1.4 below. 10.1.1. Distributions Of $5,000 Or Less. ------------------------------- Distribution to a Participant who has terminated employment at his or her Disability Retirement Date and whose vested account balances are less than or equal to $5,000 shall be made in a lump sum. 10.1.2. Distributions In Excess Of $5,000. --------------------------------- In the event that the vested account balances of a Participant who has terminated employment at his or her Disability Retirement Date exceed $5,000, such Participant shall receive the notice described in Section 10.3.1. If the Participant consents to the distribution of his or her accounts in the manner required under Section 10.3.2 within 90 days after receiving the notice, distribution of his or her accounts will be made in accordance with his or her election. 10.1.3. Failure To Consent To Distribution. ---------------------------------- In the event that a Participant whose vested account balances exceed $5,000 does not consent to the distribution of his or her accounts in accordance with subsection 10.1.2 above when first eligible to do so, his accounts shall be distributed to him or her within 60 days following his or her attainment of age 62. Notwithstanding the preceding, such Participant may notify the Employer at any time following his or her Disability Retirement Date that he or she wants to receive the notice described in Section 10.3.1. If such Participant consents to the distribution of his or her accounts in the manner required under Section 10.3.2 within 90 days after receiving the notice, distribution of his or her accounts will be made in accordance with his or her election. 10.1.4. Valuation. --------- A distribution under Sections 10.1.1, 10.1.2, or 10.1.3 shall be based on the value of the Participant's accounts as of the date such distribution is being made. 10.1.5. Deemed Termination. ------------------ A Participant who is permanently and totally disabled as described in Section 10.2 while in the employment of the Employer shall be deemed to have terminated such employment on the date the Committee determines that he or she is permanently and totally disabled. 20 10.2. Determination Of Disability. --------------------------- A Participant shall be considered permanently and totally disabled only if he is disabled by reason of a disability for which he becomes eligible for benefits under the Employer's long term disability plan. 10.3. Notification Of Eligibility To Receive And Consent To ----------------------------------------------------- Disability Benefits. ------------------- 10.3.1. Notice. ------ In the event that the vested account balances of a Participant to be distributed pursuant to Section 10.1 exceed $5,000, such Participant shall receive notification of: (a) the material features and the relative values of his or her benefits under the optional forms of benefit available under the Plan; and (b) his right to defer receipt of disability benefits. 10.3.2. Consent. ------- The Participant's consent to the distribution of disability benefits must be: (a) made after the Participant receives the notice described in the preceding sentence; and (b) made within 90 days after he or she receives the notice (or a summary of such notice). 21 SECTION 11 - DISTRIBUTIONS AT TERMINATION OF EMPLOYMENT (VESTING) 11.1. Distributions Upon Termination Of Employment. -------------------------------------------- A Participant whose employment with the Employer is terminated prior to the earliest of his or her death, Disability Retirement Date or Normal Retirement Date shall receive the vested portion of his accounts in a lump sum, unless the Participant elects an optional form of benefit described in Section 9.2, in accordance with Sections 11.1.1, 11.1.2, 11.1.3, and 11.1.4 below. 11.1.1. Distributions Of $5,000 Or Less. ------------------------------- Distribution to a Participant who has terminated employment prior to his or her death, Disability Retirement Date or Normal Retirement Date and whose vested account balances are less than or equal to $5,000 shall be made in a lump sum within 60 days after the Valuation Date coinciding with or next following the date he or she terminates employment, provided he or she is not an Employee on such date. 11.1.2. Distributions In Excess Of $5,000. --------------------------------- In the event that the vested account balances of a Participant who has terminated employment prior to his or her death, Disability Retirement Date or Normal Retirement Date exceed $5,000, such Participant shall receive the notice described in Section 11.4.1. If the Participant consents to the distribution of his or her accounts in the manner required under Section 11.4.2 within 90 days after receiving the notice, distribution of his or her accounts will be made in accordance with his or her election. 11.1.3. Failure To Consent To Distribution. ---------------------------------- In the event that a Participant whose vested account balances exceed $5,000 does not consent to the distribution of his or her accounts in accordance with subsection 11.1.2 above when first eligible to do so, his accounts shall be distributed to him or her within 60 days after his attainment of age 70 1/2. Notwithstanding the preceding, such Participant may notify the Employer at any time after his or her termination that he or she wants to receive the notice described in Section 11.4.1. If such Participant consents to the distribution of his or her accounts in the manner required under Section 11.4.2 within 90 days after receiving the notice, distribution of his or her accounts will be made in accordance with his or her election. 11.1.4. Valuation. --------- A distribution under Sections 11.1.1, 11.1.2 or 11.1.3 shall be based on the value of the Participant's accounts as of the Valuation Date as of which such distribution is being made. 22 11.2. Determination Of Vested Portion. ------------------------------- (a) A Participant's Pre Tax-Matched Account, Pre Tax-Unmatched Account, After Tax-Matched Account, After Tax- Unmatched Account, Performance Contribution Account, and Rollover Account shall be 100% vested and nonforfeitable at all times. (b) The portion of a Participant's Company Savings Account and Company Investment Account which shall be vested and nonforfeitable shall be determined in accordance with the following schedule: Years of Service Percentage of Account Vested ---------------- ---------------------------- Less than 2 0% 2 25% 3 50% 4 75% 5 or more 100% (c) Notwithstanding paragraph (b) above, the accounts of Participants who were employed by Patriot Coal Company L.P. on December 1, 1995 shall be 100% vested and nonforfeitable at all times. (d) Notwithstanding any provision herein to the contrary, a Participant's accounts shall be 100% vested and nonforfeitable upon such Participant's death, Normal Retirement Date or Disability Retirement Date. 11.3. Forfeitures. ----------- The nonvested portion of the Company Savings and Investment Accounts of a Participant whose employment with the Employer is terminated prior to the earliest of his or her death, Disability Retirement Date, or Normal Retirement Date shall be forfeited immediately when such Participant has both terminated employment and received a distribution of his or her entire vested account balances or when such Participant incurs five consecutive one-year Breaks in Service, whichever first occurs. The nonvested amounts shall be placed in a separate account until forfeited and shall be credited with an allocation of earnings and losses pursuant to Section 7.2. If the Participant is not employed again by the Employer on the date a forfeiture occurs under this Section, any forfeited amounts plus earnings and losses thereon shall be used to reduce future Employer contributions. Following such forfeiture, the Participant shall be 100% vested in the balance, if any, of his or her accounts. If a Participant terminates employment with no vested interest in his or her Company Savings and Investment Accounts, such Participant shall be treated as receiving a distribution of the vested portion of his or her Company Savings and Investment Accounts on the last day of the Plan Year in which his or her termination occurs, provided he or she is not employed by the Employer on such date. If a person who has incurred a forfeiture hereunder is reemployed by the Employer during a Plan Year before he or she has incurred five consecutive Breaks in Service, the amount in his or her account balance which was forfeited shall be restored without adjustment for any 23 subsequent gains or losses. Restoration will first be made out of any unallocated forfeitures and, if such forfeitures are insufficient to restore such person's account balance, restoration shall be made through an Employer contribution. If such a restoration is made, the restored amount shall be maintained as a separate account, and the vested portion of such account from time to time shall equal an amount ("X") determined by the following formula: X = P (AB + (R x D)) - (R x D) For purposes of applying such formula: "P" is the vested percentage at the relevant time; "AB" is the account balance at the relevant time; "D" is the amount previously distributed to the Participant upon his or her termination of employment; and "R" is the ratio of the account balance at the relevant time to the amount of the account balance which was restored. If an amount is restored to a person under this Section, separate Company Savings and Investment Accounts shall be maintained for allocations made after his or her reemployment and vesting with respect to such accounts shall be in accordance with Section 11.2. 11.4. Notification Of Eligibility To Receive And Consent To ----------------------------------------------------- Vested Benefits. ---------------- 11.4.1. Notice. ------ In the event that the vested account balances of a Participant to be distributed pursuant to Section 11.1 exceed $5,000, such Participant shall receive notification of: (a) the material features and the relative values of his or her benefits under the optional forms of benefit available under the Plan; and (b) his right to defer receipt of vested benefits. 11.4.2. Consent. ------- The Participant's consent to the distribution of the vested portion of his or her accounts must be: (a) made after the Participant receives the notice described in the preceding sentence; and (b) made within 90 days before the Valuation Date as of which distribution to the Participant is to be made. 24 SECTION 12 - DISTRIBUTIONS AT DEATH 12.1. Distributions Upon Death. ------------------------ Upon the death of a Participant while in the employment of the Employer, the Participant's accounts shall become fully vested (if not already fully vested) and shall be distributed in a lump sum to his or her spouse or beneficiaries in accordance with Sections 12.2, 12.3 and 12.4. Upon the death of a Participant after termination of his or her employment with the Employer, the vested portion of the Participant's remaining account balances shall be distributed in a lump sum to his or her spouse or beneficiaries in accordance with Sections 12.2, 12.3 and 12.4. Any distribution hereunder shall be based on the value of the Participant's accounts as of the date such distribution is made. 12.2. Distribution To Spouse. ---------------------- Upon the death of a Participant, the entire balance of his or her accounts shall be distributed to his or her surviving spouse, if any, unless the surviving spouse has consented in the manner required under Section 12.5 to a designated beneficiary and one or more designated beneficiaries survives the Participant. 12.3. Designation Of Beneficiary. -------------------------- Each Participant shall have the right to name and change primary and contingent beneficiaries under the Plan in accordance with the rules and procedures established by the Committee. If upon the death of the Participant, the Participant has no surviving spouse or the Participant's surviving spouse has consented to the designation of a beneficiary in the manner required under Section 12.5, the vested balance of his or her accounts shall be divided among the primary or contingent beneficiaries designated by such Participant who survive the Participant. 12.4. Beneficiary Not Designated. -------------------------- In the event the Participant has no surviving spouse and has either failed to designate a beneficiary or no designated beneficiary survives him or her, the amounts otherwise payable to a beneficiary under the provisions of this Section shall be paid to the Participant's executor or administrator. 12.5. Spousal Consent To Designation Of Beneficiary. --------------------------------------------- The spouse of a Participant may consent in writing to the designation of a beneficiary other than the spouse or to a change in the designation of a beneficiary other than the spouse. The spouse's consent must acknowledge the effect of such designation of an alternate beneficiary (or change in the alternate beneficiary) and must be witnessed by a notary public or Plan representative. Any such consent must be filed with the Committee in order to be effective. 25 No consent need be obtained in the event the Participant has no spouse or the Participant's spouse cannot be located. In this event, the Participant must certify in accordance with the rules and procedures established by the Committee that he or she has no spouse or that his or her spouse cannot be located in order for his or her beneficiary designation to be effective. 26 SECTION 13 - LEAVES OF ABSENCE AND TRANSFERS 13.1. Military Leave Of Absence. ------------------------- So long as The Uniformed Services Employment and Reemployment Rights Act of 1994 ("USERRA") or any similar law shall remain in force, providing for reemployment rights for all persons in military service, as therein defined, an Employee who leaves the employment of the Employer for military service in the Armed Forces of the United States, as defined in such Act from time to time in force, shall, for all purposes of this Plan, be considered as having been in the employment of the Employer, with the time of his or her service in the military credited to his or her Service; provided that upon such Employee being discharged from the military service of the United States he or she applies for re-employment with the Employer and takes all other necessary action to be entitled to, and to be otherwise eligible for, reemployment rights, as provided by USERRA, or any similar law from time to time in force. 13.1.1. Rights With Respect To Payroll Reduction ---------------------------------------- Contributions. ------------- Any Employee who is reemployed while entitled to veterans' reemployment rights under USERRA and who has either (i) suspended his or her contributions during military service, or (ii) made less than the maximum amount of contributions permitted by this Section during his or her period of military service, shall be permitted to make the contributions described in Sections 4.1 and 4.2 to the Plan with respect to the period of his or her military service during the period which begins on the Employee's date of reemployment with the Employer and ends upon the earlier of: (a) the period equal to three times the Employee's period of military service; and (b) five years. The maximum amount of contributions which the Employee can make during this period shall be the maximum amount of contributions that he or she would have been permitted to make to the Plan during the period of military service if the individual had continued to be employed by the Employer during such period and received Compensation during such period equal to the Compensation the Employee would have received during the period of military service had the Employee worked for the Employer during such period. If the Compensation the Employee would have received during the period was not reasonably certain, the Employee's average Compensation from the Employer during the 12 month period immediately preceding the period of military service shall be deemed to be such Compensation. If the Employer makes a contribution under Section 4.4 during a period when an Employee was on military leave of absence and if the Employee later returns to employment and makes the contributions described in Sections 4.1 and 4.2 for this period, the Employer shall make such matching contributions on behalf of the Employee as would have been made had the Employee's contributions actually been made during the period of his or her military service. 27 13.1.2. Performance Contributions. ------------------------- An Employee who is on a leave of absence on account of military service described in this Section which commenced during the Plan Year, but before the last day of the Employer's fiscal year ending in such Plan Year, will share in the allocation of Performance Contributions under Section 4.5 for such Plan Year, but will not share in such allocations for any subsequent Plan Year ending before the Employee's return from such military leave. If the Employee is reemployed while entitled to veterans' reemployment rights under USERRA, the Employer shall make Performance Contributions under Section 4.5 on behalf of the Employee for each partial and full Plan Year in the Employee's period of military service for which the Employee did not receive a contribution. Such contributions shall be equal to the amount of contributions which would have been made had the Employee continued to be employed by the Employer during such military service and shall be determined as though the Employee received Compensation equal to the amount the Employee would have received if he or she were not in military service. If the Compensation the Employee would have received but for such military service is not reasonably certain, the Employee's average Compensation from the Employer during the 12 month period immediately preceding the period of military service shall be deemed to be such Compensation. 13.1.3. Treatment Of Contributions. -------------------------- Contributions under this Section will be taken into account for purposes of the limitations of Sections 402(g) or 415 in the year to which the contributions relate, not the year in which the contributions are made. In addition, such contributions will not cause the Plan to be treated as failing to meet the requirements of Code Sections 401(a)(4), 401(a)(26), 401(k)(3), 401(m), 410(b) or 416. Notwithstanding any provision of this Plan to the contrary, contributions, benefits and service credit with respect to qualified military service will be provided in accordance with Code Section 414(u). Loan repayments will be suspended under this Plan during a period of qualified military service as permitted under Code Section 414(u)(4). 13.2. Maternity Or Paternity Absence. ------------------------------ In the case of any Employee who is absent from work (a) by reason of the pregnancy of the individual, (b) by reason of the birth of a child of the individual, (c) by reason of the placement of a child with the individual in connection with the adoption of such child by such individual, or (d) for purposes of caring for such child for a period beginning immediately following such birth or placement, 28 the Employee shall be credited with Days of Service following the date such absence begins until the first anniversary of such date solely for purposes of determining whether a Break in Service has occurred. In order to receive credit under this Section, an Employee must furnish to the Employer information establishing (i) that the absence from work is for one of the reasons described in this Section and (ii) the number of days for which the Employee was absent. 13.3. Other Leaves Of Absence. ----------------------- An Employee on an Employer-approved leave of absence not described in Section 13.1 above shall for all purposes of this Plan be considered as having continued in the employment of the Employer for the period of such leave, provided that the Employee returns to the active employment of the Employer before or at the expiration of such leave. Such approved leaves of absence shall be given on a uniform, non-discriminatory basis in similar fact situations. Notwithstanding any other provision of the Plan, a Participant (other than a Participant employed by Powder River Coal Company or Patriot Coal Company, L.P.) who is on an Employer-approved leave of absence will share in the allocations of Employer contributions under Section 4.5 for the Plan Year in which such leave of absence begins but will not share in such allocations for any subsequent Plan Year ending before the Participant's return from such leave of absence. 13.4. Transfers. --------- In the event that: (a) a Participant is transferred to employment with a member of the Controlled Group in a status as a non-Employee; or (b) a person is transferred from employment with a member of the Controlled Group in a status as a non-Employee to employment with the Employer under circumstances making such person an Employee; or (c) a person was employed by a member of the Controlled Group in a status as a non-Employee, terminated his or her employment and was subsequently employed by the Employer as an Employee; or (d) a Participant was employed by the Employer as an Employee, terminated his or her employment and was subsequently employed by a member of the Controlled Group in a status as a non-Employee; then the following provisions of this Subsection shall apply: (a) transfer to employment with a member of the Controlled Group as a non-Employee shall not be considered termination of employment with the Employer, and such transferred person shall continue to be entitled to the benefits provided in the Plan, as modified by this Section; 29 (b) employment with a member of the Controlled Group by a non-Employee will be deemed to be employment by the Employer, but only with respect to employment during any period that such member of the Controlled Group is required to be aggregated with the Company pursuant to Code Sections 414(b), (c) or (m); (c) amounts earned from a member of the Controlled Group by a non-Employee shall not constitute Compensation hereunder; (d) termination of employment with a member of the Controlled Group which has not adopted the Plan by a person entitled to benefits under this Plan (other than to transfer to employment with another member of the Controlled Group) shall be considered as termination of employment with the Employer; (e) all other terms and provisions of this Plan shall fully apply to such person and to any benefits to which he may be entitled hereunder. Notwithstanding anything in this Plan to the contrary, a Participant who is no longer employed by a member of the Controlled Group which includes the Company as a member shall be considered a terminated Employee. 30 SECTION 14 - TRUSTEE The Company shall select a Trustee to hold and administer the assets of the Plan and shall enter into a trust agreement with such Trustee. The Company may change the Trustee from time to time subject to the terms of the trust agreement. 31 SECTION 15 - ADMINISTRATION 15.1. Appointment Of Committee. ------------------------ The Board shall appoint a Committee of one (1) or more persons who shall serve without remuneration at the pleasure of the Board. Upon death, resignation, removal or inability of a member of the Committee to continue, the Board shall appoint a successor. The Committee shall appoint its own Chairman from among the regular members of the Committee and shall also appoint a Secretary who may be, but need not be, a member of the Committee. If, at any time, the Board has not appointed a Committee, or there is no Committee, then the Company shall have all of the duties, responsibilities, powers and authorities given to the Committee. 15.2. Construction. ------------ The Committee shall have the discretionary authority to construe, interpret and administer all provisions of the Plan and to determine a Participant's eligibility for benefits on a uniform, non-discriminatory basis in similar fact situations. Any decision of a majority of the then members of the Committee shall govern. 15.3. Decisions And Delegation. ------------------------ A decision of the Committee may be made by a written document signed by a majority of the members of the Committee or by majority vote at a meeting of the Committee. The Secretary of the Committee shall keep all records of meetings and of any action by the Committee and any and all other records desired by the Committee. The Committee may appoint such agents, who need not be members of the Committee, as it may deem necessary for the effective exercise of its duties, and may, to the extent not inconsistent herewith, delegate to such agents any powers and duties, both ministerial and discretionary, as the Committee may deem expedient or appropriate. No member of the Committee shall make any decision or take any action covering exclusively his or her own benefits under the Plan. All such matters shall be decided by a majority of the remaining members of the Committee or, in the event of inability to obtain a majority, by the Board. 15.4. Meetings. -------- The Committee shall hold meetings upon such notice, at such place or places and at such times as the Committee may determine. Meetings may be called by the Chairman or any member of the Committee. A majority of the Committee shall constitute a quorum for the transaction of business. 15.5. Duties Of The Committee. ----------------------- The Committee shall, as part of its general duty to supervise and administer the Plan, direct the Trustee specifically in writing in regard to: 32 (a) distribution payments, including the names of the payees, the amounts to be paid and the time or times when payments shall be made; (b) any other payments which the Trustee is not authorized to make without direction in writing by the Committee; and (c) preparation of an annual report for the Company, as of the end of each Plan Year, in such form as the Company may require. 15.6. Records Of The Committee. ------------------------ All acts and determinations of the Committee shall be duly recorded by the Secretary thereof (or under his or her supervision), and all such records, together with such other documents as may be necessary for the proper administration of the Plan, shall be preserved in the custody of such Secretary. Such records and documents shall at all times be open for inspection and copying by any person designated by the Board. 15.7. Expenses. -------- Any expense incurred by the Committee or the Trustee with respect to employment of agents, attorneys or other persons, including expenses incurred in maintaining the qualified status of the Plan and the exempt status of the related trust shall be paid from the assets of such trust unless paid by the Employer. 33 SECTION 16 - CLAIM PROCEDURE 16.1. Claim. ----- A Participant or beneficiary or other person who believes that he or she is being denied a benefit to which he or she is entitled (hereinafter referred to as "Claimant") may file a written request for such benefit with the Committee, setting forth his or her claim. The request must be addressed to: The Committee, Peabody Holding Company, Inc. Employee Retirement Account, 701 Market Street, Suite 700, St. Louis, Missouri 63101. 16.2. Claim Decision. -------------- Upon receipt of a claim, the Chairman of the Committee shall advise the Claimant that a reply will be forthcoming within 90 days and shall in fact deliver such reply in writing within such period. The Chairman may, however, extend the reply period for an additional 90 days for reasonable cause. If the claim is denied in whole or in part, the Chairman will render a written opinion using language calculated to be understood by the Claimant setting forth: (a) the specific reason or reasons for the denial; (b) specific references to pertinent Plan provisions on which the denial is based; (c) a description of any additional material or information necessary for the Claimant to perfect the claim and an explanation why such material or such information is necessary; (d) appropriate information as to the steps to be taken if the Claimant wishes to submit the claim for review; and (e) the time limits for requesting a review under Section 16.3 and a review under Section 16.4. 16.3. Request For Review. ------------------ Within 60 days after the receipt by the Claimant of the written opinion described above, the Claimant may request in writing that the determination of the Chairman be reviewed by the full Committee. Such request must be addressed to: The Committee, Peabody Holding Company, Inc. Employee Retirement Account, 701 Market, St. Louis, Missouri 63101. The Claimant or his or her duly authorized representative may, but need not, review the pertinent documents and submit issues and comments in writing for consideration by the Committee. If the Claimant does not request a review of the Chairman's determination by the Committee within such 60-day period, he or she shall be barred and estopped from challenging the Committee's determination. 34 16.4. Review On Appeal. ---------------- Within 60 days after the Committee's receipt of a request for review, it will review the Committee's determination. After considering all materials presented by the Claimant, the Committee will render a written opinion, written in a manner calculated to be understood by the Claimant, setting forth the specific reasons for the decision and containing specific references to the pertinent Plan provisions on which the decision is based. If special circumstances require that the 60-day time period be extended, the Committee will so notify the Claimant and will render the decision as soon as possible but not later than 120 days after receipt of the request for review. The Committee shall possess and exercise discretionary authority to make determinations as to a Participant's eligibility for benefits and to construe the terms of the Plan. Any decision of a majority of the members of the Committee shall govern. The decision of the Committee shall be final and non-reviewable unless found to be arbitrary and capricious by a court of competent review. Such decision will be binding upon the Employer and the Claimant. 35 SECTION 17 - AMENDMENT AND TERMINATION 17.1. Amendment. --------- The Company shall have the right, by a resolution adopted by action of the Board or anyone to whom corporate authority to amend the Plan has been delegated by the Board, at any time and from time to time to amend, in whole or in part, any or all of the provisions of the Plan. No such amendment, however, shall authorize or permit any part of the assets of the Plan (other than such part as is required to pay taxes and administration expenses of the Plan) to be used for or diverted to purposes other than for the exclusive benefit of the Participants or their beneficiaries; no such amendment shall cause any reduction in the amount credited to any Participant's account or cause or permit any portion of the assets of the Plan to revert to or become the property of the Employer. 17.2. Termination; Discontinuance Of Contributions. -------------------------------------------- The Company shall have the right at any time to terminate this Plan. Upon termination, partial termination, or complete discontinuance of contributions, all Participants' accounts (or, in the case of a partial termination, the accounts of all affected Participants) shall become fully vested, and shall not thereafter be subject to forfeiture. 36 SECTION 18 - MISCELLANEOUS 18.1. Participants' Rights. -------------------- Neither the establishment of the Plan hereby created, nor any modification thereof, nor the creation of any fund or account, nor the payment of any benefits, shall be construed as giving to any Participant or other person any legal or equitable right against the Employer, any officer or Employee thereof, the Trustee or the Board except as herein provided. Under no circumstances shall the terms of employment of any Participant be modified or in any way affected hereby. 18.2. Spendthrift Clause. ------------------ Except as provided in Section 5.1, no benefit or beneficial interest provided under the Plan shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge, either voluntary or involuntary, and any attempt to so alienate, anticipate, sell, transfer, assign, pledge, encumber or charge the same shall be null and void. No such benefit or beneficial interest shall be liable for or subject to the debts, contracts, liabilities, engagements, or torts of any person to whom such benefits or funds are or may be payable. Notwithstanding the above, a Participant's benefit will be offset against any amount he or she is ordered or required to pay to the Plan pursuant to an order or requirement which arises under a judgment of conviction for a crime involving the Plan, under a civil judgment entered by a court in an action involving a fiduciary breach, or pursuant to a settlement agreement between the Participant and the Department of Labor or the Pension Benefit Guaranty Corporation. Any such offset shall be made pursuant to Section 206(d) of ERISA. 18.3. Delegation Of Authority By Employer. ----------------------------------- Whenever the Employer, under the terms of this Plan, is permitted or required to do or perform any act, it shall be done and performed by any officer duly authorized by the board of directors of the Employer. 18.4. Distributions To Minors. ----------------------- In the event that any portion of the Plan becomes distributable to a minor or other person under legal disability (as determined by the laws of the jurisdiction in which he or she then resides), the Committee shall direct that such distribution be made to the legal representative of such minor or other person. 18.5. Construction Of Plan. -------------------- This Plan shall be construed according to the laws of the State of Missouri, and all provisions of the Plan shall be administered according to the laws of such state. 37 18.6. Gender, Number And Headings. --------------------------- Whenever any words are used herein in the masculine gender, they shall be construed as though they were also used in the feminine gender in all cases where they would so apply, and wherever any words are used herein in the singular form, they shall be construed as though they were also used in the plural form in all cases where they would so apply. Headings of Sections and Subsections are inserted for convenience of reference, constitute no part of the Plan and are not to be considered in the construction of the Plan. 18.7. Separability Of Provisions. -------------------------- If any provision of this Plan shall be for any reason invalid or unenforceable, the remaining provisions shall nevertheless be carried into effect. 18.8. Diversion Of Assets. ------------------- No part of the assets of the Plan shall be used for, or diverted to, purposes other than the exclusive benefit of Participants or their beneficiaries. Except as provided in Section 4.8, the Employer shall have no beneficial interest in the assets of the Plan and no part of the assets of the Plan shall revert or be repaid to the Employer, directly or indirectly. 18.9. Service Of Process. ------------------ The General Counsel of the Company shall constitute the Plan's agent for service of process. 18.10. Merger. ------ In the event of any merger or consolidation with, or transfer of assets or liabilities to, any other plan, each Participant shall (as if the Plan had then terminated) receive a benefit immediately after the merger, consolidation or transfer which is equal to or greater than the benefit he or she would have been entitled to receive immediately before the merger, consolidation or transfer (if the Plan had then terminated). 18.11. Benefit Limitation. ------------------ (a) Notwithstanding any other provision hereof, and except as provided in Section 13.1, the amounts allocated to a Participant during the Limitation Year under the Plan and allocated to the Participant under any other defined contribution plan to which the Company or any other member of the Controlled Group has contributed shall be proportionately reduced, to the extent necessary, so that the Annual Addition does not exceed the least of: (1) $30,000; or (2) 25% of the Participant's remuneration from the Company or any member of the Controlled Group during the Limitation Year; or (3) such other limits set forth in Section 415 of the Code. 38 The amount set forth in subparagraph (1) above shall automatically be adjusted to reflect adjustments made by applicable law. Remuneration for purposes of this Section means remuneration as defined in Treasury Regulation Section 1.415-2(d) and shall also include the deferrals described in Code Section 415(c)(3)(D). (b) For purposes of this Section, Limitation Year means the 12 month period commencing on January 1 and ending on December 31. (c) Prior to January 1, 2000, the amounts allocated to a Participant during the Limitation Year under this Plan, and allocated to such Participant under any other defined contribution plan to which the Company or any member of the Controlled Group has contributed and which has the same Limitation Year as the Plan, shall be proportionately reduced to the extent necessary, so that the sum of the defined benefit plan fraction and the defined contribution plan fraction does not exceed the limits set forth in Section 415(e) of the Code. (d) If as a result of the allocation of forfeitures, a reasonable error in estimating a Participant's remuneration, a reasonable error in determining the amount of elective deferrals (within the meaning of Section 402(g)(3) of the Code) that may be made with respect to a Participant under the limits of Section 415 of the Code or other limited facts and circumstances, the Annual Additions under the Plan for a particular Participant exceed the limitations in this Section, the excess amounts will not be deemed Annual Additions for the Limitation Year and will be treated as follows: (1) First, the portion of the excess attributable to amounts by which a Participant elected to have his or her salary reduced under Sections 4.1 and 4.2 (together with any income or less any loss allocable to such amounts) shall be returned to such Participant to the extent that the return would reduce the excess amount in the Participant's accounts, such amount to be returned on or before the April 15 following the close of such Limitation Year. (2) Second, any Employer matching contributions which are attributable to the contributions returned in (1) above shall be held in a suspense account and used to reduce Employer contributions otherwise due under Section 4. (3) Third, to the extent required to reduce the excess amount, other Employer contributions under Section 4 shall be held in a suspense account and used to reduce Employer contributions otherwise due under Section 4. (e) For purposes of this Section, Annual Additions means the sum for the Limitation Year of Employer contributions, Employee contributions (determined without regard to any rollover contributions as defined in Sections 402(a)(5), 403(a)(4), 403(b)(8) and 408(d)(3) of the Code and without regard to Employee contributions to a simplified employee pension plan which are excludable from gross income under Section 408(k)(6) of the Code) and forfeitures. 39 18.12. Commencement Of Benefits. ------------------------ (a) Notwithstanding any other Section of the Plan, the payment of benefits under the Plan to the Participant will begin not later than the 60th day after the close of the Plan Year in which the last of the following occurs: (1) the date on which the Participant attains age 62; or (2) the 10th anniversary of the date on which the Participant commenced participation in the Plan; or (3) the Participant's termination of employment with the Employer. (b) Notwithstanding Subsection (a) or any other provision of the Plan, if the amount of payment cannot be ascertained, or if it is not possible to make payment because the Committee cannot locate the Participant after making reasonable efforts to do so, a retroactive payment may be made no later than 60 days after the earliest date on which the amount of such payment can be ascertained or the date on which the Participant is located, whichever is applicable. (c) If the Committee is unable to locate any person entitled to receive distribution from an account hereunder, such account shall be forfeited and used to reduce Employer contributions on the date two years after (1) the date the Committee sends by certified mail a notice concerning the benefits to such person at his or her last known address or (2) the Committee determines that there is no last known address. If an account is forfeited under this Section and a person otherwise entitled to the account subsequently files a claim with the Committee during any Plan Year, before any allocations for such Plan Year are made the account will be restored to the amount which was forfeited without regard to any earnings or losses that would have been allocated. Such restoration shall first be taken out of forfeitures which have not been allocated and if such forfeitures are insufficient to restore such person's account balance, restoration shall be made by an Employer contribution to the Plan. 18.13. Qualified Domestic Relations Order. ---------------------------------- Notwithstanding anything in the Plan to the contrary, benefits may be distributed in accordance with the terms of a Qualified Domestic Relations Order ("QDRO"). For this purpose a QDRO is any Domestic Relations Order determined by the Employer to be a Qualified Domestic Relations Order within the meaning of Section 414(p) of the Code pursuant to this Section. (a) A Domestic Relations Order means a judgment, decree, or order (including the approval of a property settlement agreement) which 40 (1) relates to the provision of child support, alimony payments, or marital property rights to a spouse, former spouse, child or other dependent of a Participant, (2) is made pursuant to a state domestic relations law, and (3) creates or recognizes the existence of an Alternate Payee's right, or assigns to the Alternate Payee the right, to receive all or a portion of the benefits of the Participant under the Plan. An "Alternate Payee" includes any spouse, former spouse, child, or other dependent of a Participant who is designated by the Domestic Relations Order as having a right to receive all or a portion of the benefits payable under the Plan with respect to the concerned Participant. (b) To be a QDRO, the Domestic Relations Order must meet the specifications set forth in Section 414(p) of the Code and must clearly specify the following: (1) Name and last known mailing address of the Participant. (2) Name and last known mailing address of each Alternate Payee covered by the Domestic Relations Order. (3) The amount or the percentage of the Participant's benefit to be paid to each Alternate Payee, or the manner in which such amount or percentage is to be determined. (4) The number of payments or period to which the Domestic Relations Order applies. (5) Each plan to which the Domestic Relations Order applies. (c) The status of any Domestic Relations Order as a QDRO shall be determined under the following procedures: (1) Promptly upon receiving a Domestic Relations Order, the Employer will (A) refer the Domestic Relations Order to legal counsel for the Plan to render an opinion within 90 days (or such earlier period as shall be provided by applicable law) whether the Domestic Relations Order is a QDRO, and (B) notify the affected Participant and any Alternate Payee of the receipt by the Plan of the Domestic Relations Order and of this procedure. 41 (2) Promptly upon receiving the determination made by the Plan's legal counsel of the status of the Domestic Relations Order, the affected Participant and each Alternate Payee (or any representative designated by an Alternate Payee by written notice to the Employer) shall be furnished a copy of such determination. The notice of determination shall state (A) whether the Plan's legal counsel has determined that the Domestic Relations Order is a QDRO, and (B) once such legal counsel determines whether the Domestic Relations Order constitutes a QDRO, that the Employer will commence any payments currently due under the Plan to the person or persons entitled thereto after the expiration of a period of 60 days commencing on the date of the mailing of the notice unless prior thereto the Employer receives notice of the institution of legal proceedings disputing the determination. The Employer shall, as soon as practical after such 60 day period, ascertain the dollar amount currently payable to each payee pursuant to the Plan and the QDRO, and any such amounts shall be disbursed by the Plan. (3) If there is a dispute on the status of a Domestic Relations Order as a QDRO, there shall be a delay in making payments. The Employer shall direct that the amounts otherwise payable be held in a separate account within the Plan. If within 18 months thereafter, the Domestic Relations Order is determined not to be a valid QDRO, or the status of the Domestic Relations Order has not been finally determined, the segregated or escrow amounts (including interest thereon) shall be paid to the person or persons who would have been entitled to such amounts if there had been no Domestic Relations Order. Any determination thereafter that the Domestic Relations Order is a QDRO shall be applied prospectively only. (d) If a Domestic Relations Order requires payment to an Alternate Payee in an immediate lump sum, the order shall not lose its status as a Qualified Domestic Relations Order merely because of the immediate lump sum provision. 18.14. Written Explanation Of Rollover Treatment. ----------------------------------------- The Employer shall, when making an eligible rollover distribution, provide an explanation (or summary thereof) to the recipient of such distribution of his or her right to roll over such distribution to an eligible retirement plan and, if applicable, his or her right to the special five or ten-year averaging and capital gains tax treatment in the Code. Such explanation (or summary) will be provided to the recipient in accordance with rules prescribed by the Internal Revenue Service. 18.15. Leased Employees. ---------------- Any person who is a leased employee (within the meaning of Section 414(n) of the Code) of any member of the Controlled Group shall be treated for all purposes of the Plan as 42 if he or she were employed by a member of the Controlled Group which has not adopted the Plan. 18.16. Special Distribution Option. --------------------------- Notwithstanding any provision of the Plan to the contrary that would otherwise limit a Distributee's (as hereinafter defined) election under this Section, a Distributee may elect, at the time and in the manner prescribed by the Committee, to have any portion of an Eligible Rollover Distribution (as hereinafter defined) paid directly to an Eligible Retirement Plan (as hereinafter defined) specified by the Distributee in a Direct Rollover. (a) An Eligible Rollover Distribution is 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: (1) 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 designated beneficiary, or for a specified period of ten years or more; (2) any distribution to the extent such distribution is required under Section 401(a)(9) of the Code; (3) 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 (4) effective January 1, 2000, any hardship distribution described in Section 401(k)(2)(B)(i)(IV) of the Code. (b) An Eligible Retirement Plan is (1) an individual retirement account described in Section 408(a) of the Code, (2) an individual retirement annuity described in Section 408(b) of the Code, (3) an annuity plan described in Section 403(a) of the Code, or (4) 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 a surviving spouse, an Eligible Retirement Plan is only an individual retirement account or individual retirement annuity. (c) A Distributee includes 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 43 Domestic Relations Order, as defined in Section 414(p) of the Code, are Distributees with regard to the interest of the spouse or former spouse. (d) A Direct Rollover payment is a payment by the Plan to the Eligible Retirement Plan specified by the Distributee. 18.17. Limitations On Special Distribution Option. ------------------------------------------ (a) Effective prior to September 1, 1999, notwithstanding the provisions of the immediately preceding Section entitled Special Distribution Option, the amount which may be paid directly to the trustee of another eligible retirement plan under such Section shall be no less than the lesser of $500 or the total amount of the Eligible Rollover Distribution which would otherwise be includable in the Participant's taxable income, and no amount shall be so paid unless the amount of such distributions in any calendar year which are otherwise eligible for such payment are reasonably expected to total $200 or more. (b) The Employer shall provide notice of the special distribution option described in the preceding Section to the Participant in accordance with rules prescribed by the Internal Revenue Service. 18.18. Waiver Of 30-Day Period. ----------------------- A Participant who receives the notice (or summary) described in Section 10.3.1 or 11.4.1 will simultaneously receive the notice (or summary) described in Section 18.14 and will be given the opportunity to consider for at least 30 days after such notices (or summaries) are provided the decision of whether or not to elect a Direct Rollover (as described in Section 18.16) and whether or not to elect to defer receipt of his or her vested benefit. A Participant may waive such opportunity to consider such elections for at least 30 days by making an election before the 30 day time period has elapsed. Notwithstanding any provision herein to the contrary, the Employer may distribute a Participant's vested benefit pursuant to his or her distribution election forms at any time following such Participant's waiver of the opportunity to consider such elections for at least 30 days. 44 SECTION 19 - TOP-HEAVY DEFINITIONS 19.1. Accrued Benefits. ---------------- "Accrued Benefits" means "the present value of accrued benefits" as that phrase is defined under regulations issued under Section 416 of the Code. For purposes of Sections 19 and 20 hereof, the Accrued Benefits of any Participant (other than a Key Employee) shall be determined under the single accrual rate used by all Qualified Plans of the Employer which are defined benefit plans, or if there is no single accrual rate, Accrued Benefits shall be determined as accruing no more rapidly than the slowest rate permitted under Section 411(b)(1)(C) of the Code. 19.2. Beneficiaries. ------------- "Beneficiaries" means the person or persons to whom the share of a deceased Participant's accounts are payable. 19.3. Determination Date. ------------------ "Determination Date" means for a Plan Year the last day of the preceding Plan Year. 19.4. Former Key Employee. ------------------- "Former Key Employee" means any person presently or formerly employed by the Controlled Group (and the Beneficiaries of such person) who during the Plan Year is not classified as a Key Employee but who was classified as a Key Employee in a previous Plan Year; provided, however, that a person who has not performed any services for the Controlled Group at any time during the five year period ending on the Determination Date (and the Beneficiaries of any such person) shall not be considered a Former Key Employee. 19.5. Key Employee. ------------ "Key Employee" means any person presently or formerly employed by the Controlled Group (and the Beneficiaries of such person) who is a "key employee" as that term is defined in Section 416(i) of the Code and the regulations thereunder; provided, however, that a person who has not performed any services for the Controlled Group at any time during the five year period ending on the Determination Date (and the Beneficiaries of any such person) shall not be considered a Key Employee. For purposes of determining whether a person is a Key Employee, the definition of Top Heavy Compensation shall be applied. 19.6. Non-Key Employee. ---------------- "Non-Key Employee" means any person presently or formerly employed by the Controlled Group (and the Beneficiaries of such person) who is not a Key Employee or a Former Key Employee; provided, however, that a person who has not performed any services for the Controlled Group at any time during the five year period ending on the Determination Date (and the Beneficiaries of any such person) shall not be considered a Non-Key Employee. 45 19.7. Permissive Aggregation Group. ---------------------------- "Permissive Aggregation Group" means each Qualified Plan of the Controlled Group in the Required Aggregation Group plus each other Qualified Plan which is not part of the Required Aggregation Group but which satisfies the requirements of Sections 401(a)(4) and 410 of the Code when considered together with the Required Aggregation Group. 19.8. Required Aggregation Group. -------------------------- "Required Aggregation Group" means each Qualified Plan (including any terminated Qualified Plan) of the Controlled Group in which a Key Employee participates during the Plan Year containing the Determination Date or any of the four preceding Plan Years and each other Qualified Plan (including any terminated Qualified Plan) of the Controlled Group which during this period enables any Qualified Plan (including any terminated Qualified Plan) in which a Key Employee participates to meet the requirements of Section 401(a)(4) or 410 of the Code. 19.9. Super Top-Heavy Group. --------------------- "Super Top-Heavy Group" means, for a Plan Year beginning prior to January 1, 2000, the Required Aggregation Group if, and only if, the sum of the Accrued Benefits (valued as of the Determination Date for such Plan Year) under all Qualified Plans (including any terminated Qualified Plans) in the Required Aggregation Group for Key Employees exceeds 90% of the sum of the Accrued Benefits (valued as of such Determination Date) under all Qualified Plans (including any terminated Qualified Plans) in the Required Aggregation Group for all Key Employees and Non-Key Employees; provided, however, that the Required Aggregation Group will not be a Super Top-Heavy Group for a Plan Year if the sum of the Accrued Benefits (valued as of the Determination Date for such Plan Year) under all Qualified Plans (including any terminated Qualified Plans) in the Required Aggregation Group for Key Employees does not exceed 90% of the sum of the Accrued Benefits (valued as of such Determination Date) under all Qualified Plans in the Permissive Aggregation Group for all Key Employees and Non-Key Employees. If the Qualified Plans in the Required or Permissive Aggregation Group have different Determination Dates, the Accrued Benefits under each such Plan shall be calculated separately, and the Accrued Benefits as of Determination Dates for such Plans that fall within the same calendar year shall be aggregated. 19.10. Top-Heavy Compensation. ---------------------- "Top-Heavy Compensation" means compensation within the meaning of Section 415 of the Code. 19.11. Top-Heavy Group. --------------- "Top-Heavy Group" means, for a Plan Year, the Required Aggregation Group if, and only if, the sum of the Accrued Benefits (valued as of the Determination Date for such Plan Year) under all Qualified Plans (including any terminated Qualified Plans) in the Required Aggregation Group for Key Employees exceeds 60% of the sum of the Accrued Benefits (valued as of such Determination Date) under all Qualified Plans (including any terminated Qualified 46 Plans) in the Required Aggregation Group for all Key Employees and Non-Key Employees; provided, however, that the Required Aggregation Group will not be a Top-Heavy Group for a Plan Year if the sum of the Accrued Benefits (valued as of the Determination Date for such Plan Year) under all Qualified Plans (including any terminated Qualified Plans) in the Required Aggregation Group for Key Employees does not exceed 60% of the sum of the Accrued Benefits (valued as of such Determination Date) under all Qualified Plans in the Permissive Aggregation Group for all Key Employees and Non-Key Employees. If the Qualified Plans in the Required or Permissive Aggregation Group have different Determination Dates, the Accrued Benefits under each such Plan shall be calculated separately, and the Accrued Benefits as of Determination Dates for such Plans that fall within the same calendar year shall be aggregated. 47 SECTION 20 - TOP-HEAVY RULES 20.1. Special Top-Heavy Rules. ----------------------- If for any Plan Year the Plan is part of a Top-Heavy Group, then, effective as of the first day of such Plan Year the following provisions shall apply to Participants who accrue an Hour of Employment on or after the first day of such Plan Year to read as follows: 20.1.1. Minimum Allocation. ------------------ A new Section 7.3 is added as follows: 7.3 Minimum Allocation if Plan is part of ------------------------------------- Top-Heavy Group. --------------- Notwithstanding the foregoing, for each Plan Year in which the Plan is part of a Top-Heavy Group, the sum of the Employer contributions and forfeitures allocated under the Plan to the account of each Non-Key Employee who is both a Participant and Employee on the last day of such Plan Year shall be at least equal to the lesser of three percent of such Non-Key Employee's Top-Heavy Compensation for such Plan Year or the largest percentage of Top-Heavy Compensation allocated to the account of any Key Employee; provided, however, that if for any Plan Year a Non-Key Employee is a Participant in both this Plan and one or more defined contribution plans, the Employer need not provide the minimum allocation described in the preceding sentence for such Non-Key Employee if the Employer satisfies the minimum allocation requirement of Section 416(c)(2)(B) of the Code for the Non-Key Employee in such other defined contribution plans. Amounts which a Non-Key Employee or Key Employee elects to contribute on a pre-tax basis to a Qualified Plan which meets the requirements of Section 401(k) of the Code shall be considered an Employer contribution for purposes of Section 19.11; provided, however, that such pre-tax contributions made by Non-Key Employees may not be taken into account in determining the minimum allocation provided under this Section. In addition, matching contributions made on behalf of Non-Key Employees may not be taken into account in determining the minimum allocation provided under this Section. 20.2. Adjustments In Section 415 Limits. --------------------------------- If for any Plan Year beginning prior to January 1, 2000 the Plan is part of a Super Top-Heavy Group, or the Plan is part of a Top-Heavy Group and fails to provide an allocation of Employer contributions and forfeitures on behalf of each Non-Key Employee who is both a Participant and Employee on the last day of such Plan Year equal to at least the lesser of four percent of each such Non-Key Employee's Top-Heavy Compensation or the largest percentage of Top-Heavy Compensation allocated on behalf of any Key Employee for the Plan Year, effective as of the first day of such Plan Year the adjustments to the limits in Section 18.11 set forth in Section 416(h) of the Code shall be applied. 48 EX-99.2 10 ex99p2.txt RETIREMENT AND SAVINGS PLAN FOR SALARIED EMPLOYEES EXHIBIT 99.2 ------------ THE LEE RANCH COAL COMPANY RETIREMENT AND SAVINGS PLAN FOR SALARIED EMPLOYEES LEE RANCH COAL COMPANY RETIREMENT AND SAVINGS PLAN -------------------------------------------------- FOR SALARIED EMPLOYEES ---------------------- WHEREAS, Hanson Natural Resources Company ("Company") acquired the assets of Lee Ranch Coal Mine from Santa Fe Pacific Minerals Corporation effective June 25, 1993 pursuant to an asset exchange agreement; and WHEREAS, the Company agreed to adopt a plan similar to the Santa Fe Pacific Coal Corporation Retirement and Savings Plan for Salaried Employees for its Lee Ranch Coal Company Division Salaried employees; and WHEREAS, the Company desires to adopt the Lee Ranch Coal Company Retirement and Savings Plan for Salaried Employees ("Plan") effective as of June 25, 1993; NOW, THEREFORE, effective as of June 25, 1993 the Plan is adopted to read as follows: LEE RANCH COAL COMPANY RETIREMENT AND SAVINGS PLAN -------------------------------------------------- FOR SALARIED EMPLOYEES ---------------------- TABLE OF CONTENTS PAGE ---- ARTICLE I ......................................................... 1 Section 1.1 ................................................. 1 Section 1.2 ................................................. 1 ARTICLE II - Definitions .......................................... 1 Section 2.1 "Accounts" ..................................... 1 Section 2.2 "Affiliated Company" ........................... 1 Section 2.3 "Average Contribution Percentage" .............. 2 Section 2.4 "Beneficiary" ................................. 2 Section 2.5 "Code" ......................................... 2 Section 2.6 "Company" ...................................... 2 Section 2.7 "Compensation" ................................ 2 Section 2.8 "Deferred Contributions" ....................... 3 Section 2.9 "Deferred Contributions Account" ............... 3 Section 2.10 "Early Retirement" ............................. 3 Section 2.11 "Employee" ..................................... 3 Section 2.12 "Employer Contributions Account" ............... 3 Section 2.13 "ERISA" ........................................ 3 Section 2.14 "Named Fiduciary" ............................... 3 Section 2.15 "Highly Compensated Employee" .................. 3 Section 2.16 "Normal Retirement Date" ....................... 4 Section 2.17 "Participant" .................................. 4 Section 2.18 "Participant Contributions Account" ............ 4 Section 2.19 "Participation Service" ........................ 5 Section 2.20 "Plan" ......................................... 5 Section 2.21 "Plan Administrator" .......................... 5 Section 2.22 "Plan Year" .................................... 5 Section 2.23 "Qualified Joint and Survivor Annuity" ......... 5 Section 2.24 "Total Disability" ............................. 5 Section 2.25 "Trustee" ...................................... 6 Section 2.26 "Valuation Date" ............................... 6 Section 2.27 "Vesting Service" .............................. 6 ARTICLE III - Employees Entitled to Participate ................... 6 Section 3.1 ................................................. 6 Section 3.2 ................................................. 7 Section 3.3 ................................................. 7 Section 3.4 ................................................. 7 ARTICLE II - Contributions ........................................ 7 Section 4.1 ................................................. 7 Section 4.2 ................................................. 8 Section 4.3 ................................................. 8 Section 4.4 ................................................. 8 -i- Section 4.5 ................................................. 10 Section 4.6 ................................................. 10 Section 4.7 ................................................. 10 Section 4.8 ................................................. 10 Section 4.9 ................................................. 11 ARTICLE V - Investment of Contributions ........................... 12 Section 5.1 ................................................. 12 Section 5.2 ................................................. 12 Section 5.3 ................................................. 12 ARTICLE VI - Vesting .............................................. 12 Section 6.1 ................................................. 12 Section 6.2 ................................................. 12 Section 6.3 ................................................. 13 Section 6.4 ................................................. 13 Section 6.5 ................................................. 13 ARTICLE VII - Withdrawals Prior to Termination of Employment ....................................... 14 Section 7.1 ................................................. 14 Section 7.2 ................................................. 14 Section 7.3 ................................................. 17 ARTICLE VIII - Distributions Other Than Withdrawals ............... 17 Section 8.1 ................................................. 17 Section 8.2 ................................................. 18 Section 8.3 ................................................. 20 Section 8.6 ................................................. 21 Section 8.7 ................................................. 21 Section 8.8 ................................................. 22 ARTICLE IX - Termination of Employment ............................ 22 Section 9.1 ................................................. 22 Section 9.2 ................................................. 23 ARTICLE X - Administration ........................................ 23 Section 10.1 ................................................. 23 Section 10.2 Committee's Administrative Powers .............. 24 Section 10.3 Information to be Provided to Participants and Others ...................... 24 Section 10.4 ................................................. 24 Section 10.5 ................................................. 25 Section 10.6 Employment of Advisors and Staff ............... 25 Section 10.7 Fiduciary Duties ............................... 25 Section 10.8 Indemnification ................................ 25 ARTICLE XI - Provisions Respecting the Company .................... 26 Section 11.1 Amendment of Plan .............................. 26 Section 11.2 Missouri Law to Govern ......................... 27 Section 11.3 Intent ......................................... 27 -ii- ARTICLE XII - Termination of Plan ................................. 27 ARTICLE XIII - Miscellaneous Provisions ........................... 28 Section 13.1 ................................................. 28 Section 13.2 ................................................. 28 Section 13.3 ................................................. 28 Section 13.4 ................................................. 29 Section 13.5 ................................................. 29 Section 13.6 ................................................. 29 Section 13.7 ................................................. 29 Section 13.8 ................................................. 30 Section 13.9 ................................................. 30 Section 13.10 Top Heavy Rules ................................ 30 ARTICLE XIV - Loans ............................................... 33 Section 14.1 ................................................. 33 Section 14.2 ................................................. 34 Section 14.3 ................................................. 35 Section 14.4 ................................................. 35 Section 14.5 ................................................. 36 Section 14.6 ................................................. 36 Section 14.7 ................................................. 36 Section 14.8 ................................................. 36 Section 14.9 ................................................. 37 Section 14.10 ................................................. 37 Section 14.11 ................................................. 37 Section 14.12 ................................................. 37 Section 14.13 ................................................. 38 ARTICLE XV - Rollovers and Transfers .............................. 38 Section 15.1 Rollovers ....................................... 38 Section 15.2 Trustee Transfers From Other Qualified Plans ........................................ 38 Section 15.3 Trustee Transfers to Other Qualified Plans ........................................ 38 Section 15.4 Definitions .................................... 39 -iii- ARTICLE I --------- Section 1.1 This employee savings plan shall be known as "The Lee Ranch Coal Company Retirement and Savings Plan for Salaried Employees." Section 1.2 This Plan shall be effective as of June 25, 1993, the Closing Date of the Asset Exchange Agreement between the Company and Santa Fe Pacific Minerals Corporation ("Effective Date"). ARTICLE II ---------- DEFINITIONS ----------- When used in this Plan, the following terms shall have the meanings set forth below unless a different meaning is plainly required by the context: Section 2.1 "Accounts" shall mean a Participant's Deferred Contributions Account, Employer Contributions Account, and Participant Contributions Account, if any. Accounts shall also mean his "Rollover Account" which means a Participant's interest in the Plan's assets composed of Rollover Contributions on or after January 1, 1993 allocated to the Participant under the Plan, plus all income and gains credited to, and minus all losses, expenses, withdrawals and distributions charged to, such Account; and "Trustee Transfer Account," which means a Participant's interest in the Plan's assets composed of a Trustee Transfer (other than Rollover contributions) on or after January 1, 1993 allocated to the Participant under the Plan, plus all income and gains credited to, and minus all losses, expenses, withdrawals and distributions charged to, such Account. Section 2.2 "Affiliated Company" shall mean every corporation (including the Company) which is a member of a controlled group of corporations (within the meaning of Section 414(b) of the Code), which includes the Company. "Affiliated Company" shall also mean any trade or business under common control with an Affiliated Company within the meaning of Section 414(c) of the Code. For purposes of Section 4.9, the modification of Sections 414(b) and 414(c) of the Code by Section 415(b) of the Code is incorporated. -1- Section 2.3 "Average Contribution Percentage" means, for a specified group of eligible Employees for a Plan Year, the average of the ratios for each Employee of: (a) the amount of Deferred Contributions (or the total of Employee Contributions plus Company Contributions) actually payable to the Trustee under the Plan on behalf of each such Employee for such Plan Year, to (b) such Employee's Compensation for such Plan Year. Section 2.4 "Beneficiary" shall mean any individual, trust or other recipient named by a Participant to receive benefits payable hereunder upon his death, or the spouse, children or estate of the Participant, all as provided in Section 8.2 hereof. Section 2.5 "Code" shall mean the Internal Revenue Code of 1986, as amended. Section 2.6 "Company" shall mean Hanson Natural Resources Company. Section 2.7 "Compensation" shall mean the total of salary, wages and displacement or make-up allowances, and any deferrals made under this Plan, and any cafeteria plan which meets the requirements of Section 125 of the Code, excluding overtime, bonuses, severance benefits, payments while on a leave of absence other than for short-term illness, unused vacation pay, business expense reimbursements, any income realized for federal tax purposes as a result of group life insurance, other employee benefit plans or the grant or exercise of an option to acquire stock, payments made under any company Long-Term Disability Plan paid to a Participant by the Company, and amounts deferred under a non-qualified salary deferral plan. Notwithstanding anything in the preceding sentence to the contrary, the amount deemed to be "Compensation" with respect to any particular Participant shall not in any event exceed $200,000 during any Plan Year. In determining the Compensation of a Participant for purposes of this limitation, the rules of Section 414(q)(6) of the Code shall apply, except that in applying such rules, the term "family" shall include only the spouse of the Participant and any lineal descendants of the Participant who have not attained age 19 before the close of the Plan Year. If, as a result of the application of such rules, the $200,000 limitation is exceeded, then the limitation shall be pro rated among the affected individuals in proportion to each such individual's Compensation as determined under this Section prior to the application of this limitation. The $200,000 limitation is -2- subject to cost-of-living adjustments made by the Secretary of the Treasury or his delegate. Section 2.8 "Deferred Contributions" shall mean Contributions made on behalf of a Participant pursuant to his election pursuant to Section 4.2(1) hereof. Section 2.9 "Deferred Contributions Account" shall mean that portion of a Participant's interest in this Plan which is attributable to Deferred Contributions made on his behalf hereunder. Section 2.10 "Early Retirement" shall mean retirement prior to the Participant's Normal Retirement Date pursuant to the terms of any qualified retirement plan maintained by an Affiliated Company. Section 2.11 "Employee" shall mean any person employed by the Lee Ranch Coal Company Division of the Company who is permanently assigned to a salaried position not subject to a collective agreement (other than any agency shop agreement). Section 2.12 "Employer Contributions Account" shall mean that portion of a Participant's interest in this Plan which is attributable to Employer Contributions made at any time hereunder other than Deferred Contributions made on his behalf pursuant Section 4.2 hereof. Section 2.13 "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended. Section 2.14 "Named Fiduciary" shall mean the Plan Administrator. Section 2.15 "Highly Compensated Employee" means an Employee who is eligible to participant in this Plan and who during the current Plan Year or the preceding Plan year (a) at any time owned (or was considered as owning within the meaning of Section 318 of the Code) more than 5% of the outstanding stock of the Company or stock possessing more than 5% of the total combined voting power of all stock of the Company; or (b) received compensation from an Affiliated Company in excess of $96,368; (in 1993, adjusted in subsequent years from time to time in accordance with regulations or rulings under Section 414(q) of the Code); or -3- (c) received compensation in excess of $64,245 (in 1993, adjusted in subsequent years from time to time in accordance with regulations or rulings under Section 414(q) of the Code) and was in the group consisting of the top 20% of Employees when ranked on the basis of compensation paid during such year); or (d) was at any time an officer of an Affiliated company and received compensation greater than 150% of the amount in effect under Section 415(b)(1)(A) of the Code for such Plan year ($115,641 in 1993, adjusted in subsequent years as determined in accordance with regulations prescribed by the Secretary of the Treasury or his delegate pursuant to the provisions of Section 415(d) of the Code). For purposes of this section, (a) "Compensation" means compensation within the meaning of Treasury Regulation 1.415-2(d) without regard to Sections 125, 402(a)(8) and 402(h)(1)(B) of the Code. (b) A former Employee shall also be treated as a Highly Compensated Employee for a Plan Year if such former Employee terminated employment prior to such Plan Year and was a Highly Compensated Employee for either the Plan Year in which he terminated employment or any Plan Year ending on or after his 55th birthday. (c) An Employee who performs no service for the Company during a Plan Year (for example, an employee who is on an authorized leave of absence throughout the Plan Year) shall be treated as having terminated employment in the Plan Year in which he last performed services for the Company. Section 2.16 "Normal Retirement Date" shall be the earlier of (i) a Participant's 65th birthday or (ii) the first day of the month following the later of his 62nd birthday and his completion of 30 years of service with an Affiliated Company. Section 2.17 "Participant" shall mean an Employee who meets the eligibility requirements set forth in Article III hereof and who has taken all of the steps required by said Article III. Section 2.18 "Participant Contributions Account" shall mean that portion of a Participant's interest in this Plan -4- which is attributable to his Basic Participant Contributions and Voluntary Participant Contributions made prior to July 1, 1983, any other employee contributions made prior to July 1, 1984, any Supplemental Contributions made hereunder prior to January 1, 1987, and Participant Contributions made pursuant to Section 4.2(2) of the Santa Fe Pacific Coal Corporation Retirement and Savings Plan for Salaried Employees. Section 2.19 "Participation Service" means the completion of thirty (30) days compensated service in a salaried position determined from the Employee's date of hire. Participation Service shall be determined and reported by the Company. Compensated service shall include any hours the Employee is on a leave of absence granted by the Company or an Affiliated Company with or without pay and shall include back pay, irrespective of mitigation or damages, awarded or agreed to be paid to him by the Company or an Affiliated Company. A Participant's service prior to the Effective Date with the Santa Fe Pacific Coal Corporation and its Affiliated Companies (determined by substituting Santa Fe Pacific Coal Corporation for Company in Section 2.6) shall be deemed employment by the Company for purposes of the Plan. Section 2.20 "Plan" shall mean the Lee Ranch Coal Company Retirement and Savings Plan for Salaried Employees set forth in and by this document and all subsequent amendments thereto. Section 2.21 "Plan Administrator" shall mean the Benefits Administration Committee designated by the Board of Directors of the Company as described in Article X herein. Section 2.22 "Plan Year" shall be the calendar year. Section 2.23 "Qualified Joint and Survivor Annuity" shall mean an annuity for the life of the Participant with a survivor annuity for the life his spouse which is neither (i) less than one-half, nor (ii) greater than, the amount of the annuity payable for the joint lives of the Participant and his spouse. Section 2.24 "Total Disability" shall mean a Participant's eligibility for benefits under the Lee Ranch Coal Company Long Term Disability Plan. Total Disability shall be deemed to exist only when a written application has been filed with the Company or his designee by or on behalf of such Participant and when such Total Disability is certified to the Company or his designee by a licensed physician approved by the Company or his designee. -5- Section 2.25 "Trustee" shall mean the trustee under any trust agreement established between the Company and the Trustee for the purpose of implementing the Plan, or a legal reserve life insurance company organized or incorporated under the laws of any one of the United States of America and duly licensed in the jurisdiction specified in Section 11.2, whichever is applicable. Whenever the term Trustee in this Plan refers to a life insurance company, contributions shall be held and invested pursuant to a group annuity contract where required by law, and the insurer shall not be subject to the rules and requirements generally applicable to trustees of qualified plans. Section 2.26 "Valuation Date" shall mean the daily valuations which shall be used hereunder for purposes of determining account values. Section 2.27 "Vesting Service" shall mean the number of Plan Years in which the Employee is compensated for at least 1,000 hours of work by the Company or any Affiliated Company in any capacity. In determining whether or not the 1,000 hour requirement has been met, an Employee will be credited with 190 hours for any month in which he receives compensation for one or more hours. Compensated hours shall include any hour during which the Employee is on a leave of absence granted by the Company or an Affiliated Company with or without pay and shall also include back pay, irrespective of mitigation of damages, awarded or agreed to be paid to him by the Company or an Affiliated Company, computed in conformity with the Employee's basis of compensation at the time to which the award or agreement pertains. A Participant's service prior to the Effective Date with the Santa Fe Pacific Coal Corporation and its Affiliated Companies (determined by substituting Santa Fe Pacific Coal Corporation for Company in Section 2.6) shall be deemed employment by the Company for purposes of the Plan. The singular form of any word shall include the plural and the masculine gender shall include the feminine wherever necessary for the proper interpretation of this Plan. ARTICLE III ----------- EMPLOYEES ENTITLED TO PARTICIPATE --------------------------------- Section 3.1 Each Employee who was a Participant in the Santa Fe Pacific Coal Company Retirement and Savings Plan for Salaried Employees immediately before the Effective Date shall become a Participant on the Effective Date. -6- Each other Employee shall be eligible to become a Participant as of the first day of any month after having completed his Participation Service. Section 3.2 In the event any Employee's employment with the Company is terminated prior to the Employee's becoming eligible to be a Participant hereunder, service before such termination of employment shall be taken into account for eligibility purposes until the Employee has completed his Participation Service after his reemployment. In the event any Employee's employment with the Company is terminated after the Employee has become eligible to participate but has chosen not to do so, or any Participant's employment with the Company is terminated, and such Employee or Participant is thereafter rehired, he shall be eligible for subsequent participation as of his date of rehire. Section 3.3 The Company shall notify all Employees of their eligibility, and shall give them an opportunity to become Participants. Section 3.4 To become a Participant, an Employee must meet the above requirements of this Article and execute and deliver to the Company in accordance with procedures established by the Company and the Plan Administrator a written election form indicating his desire to have a portion of his Compensation contributed to the Plan as Deferred Contributions or his desire to make Participant Contributions to the Plan. He must specify his chosen rate of Contributions and authorize the Company to make regular payroll deductions of any Participant Contributions. In addition, the Employee must make an investment election as described in Article V hereof. No Employee shall become a Participant until he has met the above requirements. Elections shall be processed by the Company, in accordance with established procedures, as soon as reasonably practicable after their receipt, but will always be effective on the first day of a month. ARTICLE IV ---------- CONTRIBUTIONS ------------- Section 4.1 For the purpose of investing contributions under this Plan, the Company shall establish one or more trusts or enter into one or more group annuity contracts with one or more insurers, or may establish a combination of one or more trusts or insurance contracts. The Company shall have the responsibility for selecting the Trustees hereunder. -7- Section 4.2 Each Employee who is eligible to participate in the Plan may elect to (1) have his Compensation reduced by a whole percentage and to have the amount by which his Compensation is reduced contributed to the Plan by the Company on his behalf as Deferred Contributions, and (2) contribute a whole percentage of his Compensation to the Plan as Participant Contributions, provided that the total amount of Deferred Contributions plus Participant Contributions may not exceed 12 percent of a Participant's Compensation. Section 4.3 Election forms, provided by the Plan Administrator, shall be distributed by the Company to all eligible Employees. All elections shall apply to Compensation to be received after the election becomes effective. Any eligible Employee who fails to return a properly completed election form in a timely manner to the Company shall be deemed to have elected to have all of his Compensation included in his regular paycheck. Section 4.4 Notwithstanding any other provisions of the Plan to the contrary, the Deferred Contributions to the Plan on behalf of Highly Compensated Employees shall be limited to the extent necessary to ensure that the Average Contribution Percentage for Highly Compensated Employees for any Plan Year bears such a relationship to the Average Contribution Percentage for all other eligible Employees for such Plan Year that either of the tests set forth below is satisfied. Similarly the total of Participant Contributions plus Employer Contributions to the Plan on behalf of each Highly Compensated Employee shall be limited to the extent necessary to ensure that the Average Contribution Percentage for Highly Compensated Employees for any Plan Year bears such a relationship to the Average Contribution Percentage for all other eligible Employees for such Plan Year that either of the tests set forth below is satisfied. (a) The Average Contribution Percentage for the group of Highly Compensated Employees is not more than the Average Contribution Percentage of all other eligible Employees multiplied by 1.25; or (b) The excess of the Average Contribution Percentage for the group of Highly Compensated Employees over that of all other eligible Employees is not more than two percentage points, and the Average Contribution Percentage for the group of Highly Compensated Employees is not more than the Average -8- Contribution Percentage of all other eligible Employees multiplied by 2. The greater of (a) or (b) is illustrated in the table below: If the Average Contribution Then the Maximum Average Percentage of Employees Contribution Percentage of Other Than Highly Highly Compensated Employees Compensated Employees is (the Limitation Percentage) is --------------------------- ------------------------------ 1% 2.0% 2 4.0 3 5.0 4 6.0 5 7.0 6 8.0 7 9.0 8 10.0 9 11.25 10 12.0 (Sec. 4.2 limit) 11 12.0 (Sec. 4.2 limit) 12 12.0 (Sec. 4.2 limit) Test (a) must be satisfied with respect to either Deferred Contributions, or with respect to the total of Participant Contributions plus Employee Contributions. If the Plan Administrator determines that the limitations set forth in this section would be exceeded for the Plan Year, then the Plan Administrator shall reduce to the Limitation Percentage described in the foregoing table the percentage amount of Deferred Contributions (or the total percentage amount of Deferred Contributions plus Employer Contributions) of each Highly Compensated Employee whose Deferred Contribution percentage is more than the Limitation Percentage (or whose Participant Contribution plus Employer Contribution percentage gives rise to a percentage in excess of the Limitation Percentage). The Plan Administrator shall have the authority to establish a lower Limitation Percentage if, in the discretion of the Plan Administrator, this would be beneficial to the Plan by ensuring compliance with the safe-harbor provisions of Sections 401(k)(3)(A) and 401(m)(2) of the Code. The reduced percentage for each such Highly Compensated Employee shall be substituted for his actual elected percentages and shall represent the percentage of his Compensation that shall be paid into the Plan on his behalf. The amount of any reduction which is necessary shall be included in the Participant's regular paycheck or, in the case of Deferred Contributions and at the election of the Participant, contributed to the Plan as Participant Contributions. -9- Section 4.5 Participant Contributions shall be made by means of payroll deductions and the amounts so deducted shall be paid monthly or as soon as reasonable practicable without interest to the Trustee by the Company and shall be credited to the Participant's Participant Contributions Account. Section 4.6 The Participant may elect to suspend Contributions or change his rate or rates of Contributions as of the first day of any month after he has been a Participant for at least three months but not more frequently than once in any three month period. The change shall be limited to those rates described in Section 4.2 of this Article. The Participant's election to suspend or change his rate of Contributions must be made in writing to the Company. Such an election shall be processed by the Company as soon as reasonably practicable after its receipt. Section 4.7 If the Participant elects to suspend all of his Contributions, he may elect to resume Contributions subject to the limitations contained in Section 4.8 of this Article. An election to resume Contributions must be made in writing to the Company and will be processed as soon as reasonably practicable after its receipt. Section 4.8 Notwithstanding anything contained herein to the contrary, the Deferred Contributions made to a Participant's Deferred Contributions Account plus any amount that a Participant elects to defer under any other qualified cash or deferred arrangement for any Plan Year shall not exceed $7,000, and the total Contributions made and forfeitures allocated to the Company, Participant and Deferred Contributions Accounts of a Participant for any Plan Year shall not exceed the lesser of $30,000, or 25% of the Participant's compensation as defined in Treasury Regulation Section 1.415-2(d)(1). The $7,000 and $30,000 limitations are subject to cost-of-living adjustments made by the Secretary of the Treasury or his delegate. If contributions exceed the applicable limitations set forth above, any Participant Contributions for the Plan Year which cause the excess (and the income thereon) shall be returned to the Participant by April 1 of the following Plan Year. Notwithstanding the foregoing, contributions with respect to any Participant may be further reduced to the extent necessary, as determined by the Committee, to prevent disqualification of the Plan under Section 415 of the Code, which imposes additional limitations on the benefits payable to Participants who also may be participating in another tax-qualified pension, profit-sharing, savings or stock bonus plan maintained by the Company or an Affiliated Company. -10- For purposes of this limitation, all defined benefit plans of the Company and all Affiliated Companies, whether or not terminated, are to be treated as one defined benefit plan and all defined contribution plans of the Company and all Affiliated Companies, whether or not terminated, are to be treated as one defined contribution plan. The Plan Administrator may decide, in its sole discretion, under which of said Plans such a Participant's benefits are to be limited and, if it is under this Plan, shall advise affected Participants of any additional limitations on their annual contributions required by this paragraph. The Plan Administrator may elect to compute the defined contribution fraction for years ending after December 31, 1982, by using the special transitional rule set forth in Section 415(e)(6) of the Code. Section 4.9 All Company contributions are made conditioned upon their deductibility for Federal income tax purposes under Section 404 of the Code. Amounts contributed by the Company shall be returned to the Company from the Plan by the Trustee under the following circumstances: (a) If a contribution was made by the Company by a mistake of fact, the excess of the amount of such contribution over the amount that would have been contributed had there been no mistake of fact shall be returned to the Company within one year after the payment of the contribution; and (b) If the Company makes a contribution which is not deductible under Section 404 of the Code, such contribution (but only to the extent disallowed) shall be returned to the Company within one year after the disallowance of the deduction; and (c) If the Plan does not initially qualify under Section 401 of the Code, contributions by the Company shall be returned within one year after the date of denial of qualification of the Plan. Earnings attributable to the contribution shall not be returned to the Company, but losses attributable to such excess contribution shall be deducted from the amount to be returned. In the event (a) and (b) above apply, the Company will distribute any Employee Contributions and Deferred Contributions returned to the Company (less any losses) to the Employees who contributed such amounts. -11- ARTICLE V --------- INVESTMENT OF CONTRIBUTIONS --------------------------- Section 5.1 Contributions to the Plan shall be invested in investment funds maintained by The Vanguard Group of Investment Companies in accordance with rules adopted by the Administration Committee. The Plan Administrator shall obtain descriptions of the investment choices available for the purpose of informing Participants with respect thereto. The selection of investment choices is the sole responsibility of each Participant, and no employee or representative of the Company is authorized to make any recommendation to any Participant with respect to his investment choices. Section 5.2 Prior to the date the Employee becomes a Participant hereunder, he must make an investment election which will apply to the investment of all contributions made with respect to him. Separate investment elections with respect to Deferred Contributions, Employer Contributions, and Participant Contributions may not be made. If a Participant wishes to utilize more than one Fund, he shall notify the Company in writing as to the percentage of the contributions to be invested in each Fund. Section 5.3 A Participant may in accordance with rules prescribed by the Plan Administrator elect to change his investment election. ARTICLE VI ---------- VESTING ------- Section 6.1 The Participant's interest in his Deferred Contributions Account and his Participant Contributions Account shall be fully vested in him at all times. Section 6.2 The Participant's interest in his Employer Contributions Account shall become fully vested in him at the earliest of the following dates: (a) The date of the Participant's death while employed by an Affiliated Company. (b) The date the Participant incurs Total Disability while employed by an Affiliated Company. (c) The Participant's Normal Retirement Date. -12- (d) The date the Participant actually retires or terminates at a time when eligible to retire from active service with the Company and any Affiliated Companies pursuant to the terms of any qualified retirement plan maintained by the Company. (e) The date of termination of this Plan or the date of complete cessation of Employer Contributions hereunder. Section 6.3 Prior to the date that the Participant's interest in his Employer Contributions Account becomes fully vested in accordance with Section 6.2 of this Article, the Participant shall have a current fully vested interest as determined in accordance with the following schedule: Number of Years Vested of Vesting Service Percentage ------------------ ---------- Less than 1 year 0% 1 year but less than 2 years 20% 2 years but less than 3 years 40% 3 years but less than 4 years 60% 4 years but less than 5 years 80% 5 years or more 100% Section 6.4 In the event a Participant transfers from the Company to an Affiliated Company, or from a salaried position to a non-salaried position with an Affiliated Company, the Participant shall have a vested interest in his Employer Contributions Account as if the Participant had remained an employee of the Company. Section 6.5 No amendment to the vesting provisions or merger of another plan into this Plan shall deprive a Participant of his nonforfeitable right accrued under this Plan or any other plan to the date of any such amendment or merger. In the event of an amendment to the Plan or the merger of another plan into this Plan which directly or indirectly affects the computation of a Participant's nonforfeitable percentage under this Plan or another plan, each Participant with at least 5 years of service with an Affiliated Company may irrevocably elect to have his nonforfeitable percentage computed under this Plan without regard to such amendment or merger. Such election may be made in writing to the Plan Administrator any time after the adoption of any such amendment or merger, provided, however, that the election period shall end no earlier than the latest of 60 days following the date the amendment or merger is adopted or effective or the date the -13- Participant is given written notification of the amendment or merger by the Company or Plan Administrator. ARTICLE VII ----------- WITHDRAWALS PRIOR TO TERMINATION OF EMPLOYMENT ---------------------------------------------- Section 7.1 A Participant may, at any time after he has been a Participant for at least three months, and prior to the distribution of his Participant Contributions Account, but not more frequently than once in any three-month period, elect to withdraw an amount equal to all or a specified portion of the value of his Participant Contributions Account. The Participant's election to withdraw must be made in writing to the Company. Such request must specify the total amount elected to be withdrawn from his Participant Contributions Account. Each such withdrawal election shall be processed as soon as reasonably practicable and shall be given effect as of the Valuation Date. The funds shall be withdrawn on a pro rata basis from all Funds. If the value of an Investment Account as of the actual date of withdrawal is lower than the value upon which the Participant shall have based his withdrawal election, it is hereby provided that, in the event of such an occurrence, the total amount to be actually withdrawn from the Account shall be limited to the value of the Account attributable to the Participant's Participant Contributions on the Valuation Date of such withdrawal. Section 7.2 A Participant may, at any time after he has been a Participant for at least three months and prior to the distribution of his Deferred Contributions Account or his Employer Contributions Account, but not more frequently than once in any three-month period, and with the consent of the Plan Administrator, request the withdrawal of an amount equal to his vested Employer Contributions Account and his Deferred Contributions Account, provided, however, that no such withdrawal shall be permitted unless the Participant's Participant Contributions Account is then or has previously been completely withdrawn by the Participant, and, further provided that no withdrawal from a Participant's Deferred Contributions Account shall be permitted unless the Participant has previously withdrawn or is requesting to withdraw all of his Employer Contributions Account which is vested. Amounts representing income which are credited to a Participant's Deferred Contributions Account after December 31, 1988, may not be withdrawn. -14- The Participant's request to withdraw must be made in writing to the Plan Administrator. The basis for the Plan Administrator consenting to or refusing to consent to the Participant's request shall be that of demonstrated hardship. For purposes of this section a hardship exists only if there is an immediate and heavy financial need of the Participant and a withdrawal under this section is necessary to satisfy such financial need. The determination of whether a Participant has an immediate and heavy financial need is to be made on the basis of all relevant facts and circumstances. A financial need shall not fail to qualify as immediate and heavy merely because such need was reasonably foreseeable or voluntarily incurred by the Participant. A withdrawal request will be deemed to be made on account of an immediate and heavy financial need of the Participant if the request is on account of: (1) 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); (2) Costs directly related to the purchase of a principal residence of a Participant; (3) Payment of tuition and related educational fees for the next 12 months of post-secondary education for the Participant, or Participant's spouse, children, or dependents (as defined in Section 152 of the Code); (4) The need to prevent the eviction of the Participant from his principal residence or foreclosure on the mortgage of the Participant's principal residence; or (5) Other definitions of deemed immediate and heavy financial needs promulgated by the Commissioner of Internal Revenue through the publication of revenue rulings, notices, and other documents of general applicability. In addition, the amount of the immediate and heavy financial need may include an amount needed to pay state or local income taxes or penalties reasonably anticipated to result from a distribution for any of the foregoing reasons utilizing such tax -15- rates and procedures as established by the Administration Committee. A withdrawal will not be treated as necessary to satisfy an immediate and heavy financial need of a Participant unless all of the following requirements are satisfied: (1) The Participant states in writing that the withdrawal is not in excess of the amount of the immediate and heavy financial need of the Participant, (2) The Participant has obtained all distributions, other than hardship distributions, and all nontaxable loans currently available under all plans maintained by the Company, (3) The Participant's Deferred Contributions and Participant Contributions will be suspended for 12 months after receipt of the hardship withdrawal, and (4) The Participant may not elect Deferred Contributions for the Participant's taxable year immediately following the taxable year of the hardship withdrawal in excess of the applicable limit under Section 402(g) of the Code for such next taxable year less the amount of such Participant's Deferred Contributions for the taxable year of the hardship withdrawal. The Plan Administrator may accept the written statement of the Participant as to his financial resources unless it has reason to believe the statement is in error. No withdrawal from a Participant's Deferred Contributions Account shall be permitted unless a complete withdrawal of the Participant's Employer Contributions Account is insufficient to defray the hardship expense. Each such withdrawal shall be processed as soon as reasonably practicable. The total amount to be so withdrawn shall be that specified in such written notice and such withdrawal shall be made from the Funds on a pro rata basis. If the value of an Investment Account, as of the actual date of withdrawal, potentially may be lower than the value upon which the Participant shall have based his withdrawal election, and upon which the Plan Administrator shall have based its consent, it is hereby provided that, in the event of such occurrence: (a) The total amount to be so withdrawn shall be limited to the value of the Participant's Deferred Contributions Account and his vested interest in -16- his Employer Contributions Account, as of the date of such withdrawal, excluding the value of his Employer Contributions which are attributable to Employer Contributions which have not yet vested pursuant to Section 6.3, and (b) The total amount to be actually withdrawn from the Investment Account shall be limited to the value of the Investment Account attributable to the Participant's Deferred Contributions Account and his vested interest in his Employer Contributions Account. Section 7.3 Amounts withdrawn by a Participant may not be returned to this Plan. If a Participant has an outstanding Plan Loan pursuant to Article XIV, no withdrawal shall be permitted which would reduce the Participant's vested interest in his Accounts below the amount due with respect to such loan. ARTICLE VIII ------------ DISTRIBUTIONS OTHER THAN WITHDRAWALS ------------------------------------ Section 8.1 Upon the termination of the Participant's employment with the Company by reason of his attainment of his Normal Retirement Date, actual retirement from active service pursuant to the terms of any qualified retirement plan maintained by the Company and upon termination of employment at a time when eligible to retire, or by reason of his incurring Total Disability, the Participant shall be entitled to a distribution of the value of his Accounts. If the Participant continues in the employ of the Company beyond his Normal Retirement Date, distribution of his Accounts shall be deferred until his actual retirement. Payment of the Participant's benefits at retirement or upon incurring Total Disability shall be in a lump sum or as an immediate annuity purchased on a unisex basis or in a combination of such methods of payment. The Plan Administrator shall obtain from the Trustee descriptions of the forms of immediate annuity available for the purpose of informing Participants thereof at least 90 days prior to the earliest date their annuity may commence due to retirement. The forms of immediate annuity available shall always include a qualified joint and survivor annuity within the meaning of the Code and ERISA ("Qualified Joint and Survivor Annuity"). The Participant shall select the method or methods of payment of benefits from those available, provided, however, no method of payment providing for a guaranteed number of monthly payments may be selected which would assure payments beyond the actuarial life expectancy of the Participant and his spouse determined on a joint and survivorship basis and further provided that the annuity selected shall comply with the terms of Code -17- Section 401(a)(9) and the regulations thereunder. After the occurrence of the distribution event, payment of such benefits shall be made or shall commence to be made as soon as reasonably practicable after the Participant's Normal Retirement Date, or, if later, the date of his actual retirement or the date of submission of forms requesting such distribution. A Participant may elect, after the termination of his employment, to receive a distribution of the value of his Accounts in any method or methods described in this section as soon as reasonably practicable after the date the Trustee receives from the Company such written notice of distribution as shall be required by the Trustee. If a Participant is married and wishes to elect a life annuity other than a Qualified Joint and Survivor Annuity under the preceding sentence, he must submit to the Plan administrator his spouse's written consent to such distribution in accordance with Sections 8.3, 8.5 and 8.6. Notwithstanding the foregoing provisions of this section, if, upon the occurrence of the distribution event the value of the Participant's Accounts does not exceed $3,500, the payment of the Participant's benefits shall be in a single sum, in cash, as soon as reasonably practicable after the date the Trustee receives from the Company such written notice of distribution as shall be required by the Trustee. Notwithstanding any provision herein to the contrary, but subject to the requirements of ERISA and the Code, any distribution hereunder shall be subject to the terms and conditions of any investment contract or arrangement established with respect to the investment of Plan Assets. Section 8.2 An election of any method or methods of payment made by a Participant in accordance with Section 8.1 may be revoked by the Participant and a subsequent election made at any time prior to the 30th day preceding the Participant's annuity starting date provided that spousal consent is obtained in the same manner as would be required if the new election was the original election. Any election or revocation of a previous election must be made in writing and submitted to the Plan Administrator. Upon the death of a Participant prior to the termination of his employment with an Affiliated Company, a distribution of the deceased Participant's account shall be made to his designated Beneficiary. Upon the death of a Participant after termination of his employment with an Affiliated Company, a distribution of the vested portion of the deceased Participant's account, if any, shall be made to his designated Beneficiary unless the Participant shall have elected to receive an annuity in accordance with Section 8.1 and the first monthly payment of such an annuity shall have become due and payable to the Participant. Any death benefits payable upon the death of a -18- Participant after the date such an annuity was due to commence shall be as provided in the particular form of annuity which was payable to the Participant. The Participant shall have the unrestricted right to designate the Beneficiary to receive the death benefits to which he is entitled hereunder, and to change any such designation. Each such designation for death benefits shall be evidenced by a written instrument filed with the Company in accordance with procedures established by the Plan Administrator and signed by the Participant. If a Participant is married and wishes to designate a beneficiary other than his spouse or change to a beneficiary other than his spouse, he must submit his spouse's written consent, executed and witnessed by a plan representative or a notary public. If no such designation is on file with the Company at the time of the death of the Participant, or if for any reason such designation is defective, then the Participant's spouse, if living, his children, if living, or his estate, in that order of preference, shall be conclusively deemed to be the Beneficiary designated to receive such benefit. Payment of the death benefits shall be in any method or methods described in Section 8.1 of this Article as shall be chosen by the Beneficiary. Payment of such death benefits shall be made or shall commence to be made as soon as practicable after the date the Trustee shall have been informed of the Participant's death. If benefits remain to be paid to a Participant at a time when the Plan Administrator is unable to locate the Participant or his Beneficiary, the Plan Administrator shall cause the Participant's benefits to be distributed or paid to the person or persons who can be located in the following priority: (a) In the event of a missing Participant, benefits will be distributed to the Participant's Beneficiary; (b) In the event the Participant and all Beneficiaries are missing, benefits will be distributed to the Participant's spouse; (c) After unsuccessful attempts have been made by the Plan Administrator to locate persons described in the priority categories set forth above, the benefits of the Participant or of any Beneficiary will be disposed of in any manner permitted by law which the Plan Administrator considers to be fair and equitable. A substitute beneficiary will not be determined under this Section with respect to a missing Participant or missing Beneficiary unless the Participant or Beneficiary, as the case may be, has failed to claim the Participant's account balances or notify the Plan Administrator of his whereabouts within three -19- years after the Plan Administrator notifies such Participant or Beneficiary of his entitlement to benefits at his last post office address filed with the Plan Administrator. Section 8.3 The election of an annuity form of benefit (other than a Qualified Joint and Survivor Annuity) by a married Participant will be effective only if the spouse of the Participant consents to such election in writing within the 90 day period ending on the Valuation Date as of which the distribution is made. The spouse's consent must: (a) designate a form of benefits which may not be changed without further spousal consent; (b) be irrevocable and acknowledge the effect of such election; and (c) be witnessed by a Plan representative or a notary public. Any such consent must be filed with the Company in order to be effective. No consent need be obtained in the event the Participant has no spouse or the Participant's spouse cannot be located. In this event, the Participant must certify on a form provided by the Plan Administrator that he has no spouse or that his spouse cannot be located in order for his election of an optional form of benefit to be effective. Section 8.4 If the amount of a payment or distribution required to commence on a date determined under this article cannot be ascertained by such date, or if it is not possible to make such payment or distribution on such date because the Plan Administrator has been unable to locate the Participant after making reasonable efforts to do so, a payment or distribution may be made no later than 60 days after the earliest date on which the amount of such payment or distribution can be ascertained under the Plan or the date on which the Participant is located (whichever is applicable). Section 8.5 In the event that the vested account balances of a Participant to be distributed exceed (or at the time of any prior distribution exceeded) $3,500, such Participant shall receive from the Plan Administrator, during a period beginning not more than 90 days and ending not less than 30 days before the Valuation Date as of which distribution is to be made, a written notification of: (a) the material features and the relative values of the optional forms of benefits under the Plan, (b) the terms and conditions of the Qualified Joint and Survivor Annuity and the financial effect upon -20- the Participant's benefit in terms of dollars per benefit payment, (c) the Participant's right to make, and the effect of, an election out of the Qualified Joint and Survivor Annuity, (d) in the case of a married Participant, the rights of the Participant's spouse with respect to any such election, (e) the right of the Participant to make, and the effect of, a revocation of any such election before the commencement of benefits, and (f) the right, if any, of the Participant to defer receipt of a distribution. Section 8.6 The Participant's consent to the distribution of the vested portion of his accounts must be: (1) in writing; (2) made after the Participant receives the written notice described in the preceding sentence; and (3) made within 90 days before the Valuation Date as of which distribution to the Participant is to be made. Section 8.7 A Participant who remains employed by the Company until age 70-1/2 must begin receiving a distribution of his accounts in accordance with Section 401(a)(9) of the Code and the regulations thereunder beginning no later than his Required Beginning Date. As long as such a Participant remains employed by the Company, any subsequent amounts which are allocated to such Participant's accounts shall be subject to subsections (a) and (b) below: (a) in the case of a Participant who had elected at his Required Beginning Date either an Automatic Survivor Benefit or an annuity contract payable for such Participant's life, the Plan Administrator shall direct the Trustee to apply such subsequent amounts for the purchase of an addition to the respective Automatic Survivor Benefit or life annuity on or before December 31 of each subsequent calendar year. -21- (b) In the case of a Participant who had elected at his Required Beginning Date to receive distribution of his accounts in the form of a lump sum, the Trustee shall distribute such subsequent amounts on or before December 31 of each subsequent calendar year in the form of a lump sum. Section 8.8 The Required Beginning Date of a Participant who had attained age 70-1/2 before January 1, 1988, and who is not a five percent owner described in Section 2.15(a), at any time after the first day of the Plan Year in which he attained age 66-1/2 shall be the April 1st following the calendar year in which he terminates employment. The Required Beginning Date of any other Participant shall be the April 1st following the calendar year in which the Participant attains age 70-1/2. ARTICLE IX ---------- TERMINATION OF EMPLOYMENT ------------------------- Section 9.1 Upon the termination of a Participant's employment in any capacity with any and all Affiliated Companies prior to his Normal Retirement Date, other than by reason of Total Disability, early retirement or his death; the value of the Participant's vested interest in his Accounts, as determined in accordance with Article VI, hereof, shall be paid as soon as reasonably practicable after the Participant's Normal Retirement Date in any method or methods described in Section 8.1, unless the Participant makes an election pursuant to the following sentence. A Participant may elect to receive a distribution of the value of his Accounts in any method or methods described in Section 8.1 as soon as reasonably practicable after the date the Trustee receives from the Company such written notice of distribution as shall be required by the Trustee. Notwithstanding the foregoing provisions of this section, if, upon the termination of Participant's employment, the value of his Accounts does not exceed $3,500, the payment of the Participant's benefits shall be in a single sum in cash, as soon as reasonably practicable after the Trustee receives from the Company such written notice of distribution as shall be required by the Trustee. Notwithstanding any provision herein to the contrary, but subject to the requirements of ERISA and the Code, any distribution hereunder shall be subject to the terms and conditions of any investment contract or arrangement established with respect to the investment of Plan Assets. -22- Section 9.2 If the Participant's employment with any and all Affiliated Companies is terminated in accordance with Section 9.1 of this Article, then the Participant shall forfeit the value of that portion of his Employer Contributions Account in which he was not vested. Thereafter, if such person is rehired as an Employee prior to a period of five consecutive Plan Years, beginning with the Plan Year in which the Participant's employment is terminated, during which the Participant is not employed by an Affiliated Company on the last day of each such Plan Year, he shall be entitled to make repayment to the Plan of the aggregate amount of his Employer Contributions Account distributed to him, on all Distribution Date(s) at any time before such employee incurs such five-year period. Upon making repayment in a single payment of the fair market value of the aggregate Employer Contributions Account distributed to him, the amount repaid shall be credited to the Participant's Employer Contributions Account and the fair market value, as of the Distribution Date, of the Employer Contributions Account which was forfeited shall be reinstated to such Account. The amounts required to restore such Participant's Employer Contributions Account under this Section 9.2 shall be charged against the Plan's unallocated forfeitures, and if insufficient, be made up from additional Company contributions. For purposes of the preceding paragraphs, any Plan Year in which a Participant is absent from work on the last day of the Plan Year, (i) by reason of the pregnancy of the Employee, (ii) by reason of the birth of a child of the Employee, (iii) by reason of the placement of a child with the Employee in connection with adoption of such child by such Employee, or (iv) for purposes of caring for such child for a period beginning immediately following such birth or placement, shall be disregarded. Any amounts forfeited by Participants shall be used to offset future Company contributions under this Plan except as otherwise provided in this Section 9.2 or in Article XII hereof. ARTICLE X --------- ADMINISTRATION -------------- Section 10.1 The Plan shall be administered by the Benefits Administration Committee designated by the Board of Directors of the Company. The Committee shall be the "Plan Administrator" and the "Named Fiduciary" within the meaning of Title I of ERISA. The Committee may delegate from time to time ministerial duties to the Vice President-Human Resources of the Company. From time to time, the Committee shall certify to the Trustee, the person or persons designated by the Plan Administrator to give notifications, instructions or advice to the Trustee. The Committee shall be entitled to rely upon certificates of or communications from the Company or from the -23- Trustee as to information pertinent to any calculation or determination under the Plan. Section 10.2 Committee's Administrative Powers. The Committee shall --------------------------------- have full power and authority, within the limits provided by the Plan. The Committee shall have discretionary authority to administer, to construe and interpret the Plan, to decide all questions of eligibility, and to make all other determinations deemed necessary or advisable for the administration of the Plan. (a) To determine all questions arising concerning the construction and interpretation of the Plan and in its administration, including, but not by way of limitation, the determination of the rights or eligibility under the Plan of Employees and Participants and their Beneficiaries; (b) To adopt such rules and regulations as it may deem reasonably necessary for the proper and efficient administration of the Plan consistent with its purposes; (c) To enforce the Plan, in accordance with its terms; and (d) To do all other acts, in its judgment necessary or desirable, for the proper and advantageous administration of the Plan. The Committee shall act with or without a meeting by the vote or concurrence of a majority of its members; but no member of the Committee who is a Participant shall take part in any Committee action or any matter that has particular reference to his own interest hereunder. The Committee shall administer this Plan and discharge its responsibilities hereunder in a uniform and nondiscriminatory manner as to all Participants. Section 10.3 Information to be Provided to Participants and Others. ----------------------------------------------------- The Plan Administrator shall see that books of account are kept which shall show all receipts and disbursements and a complete record of the operation of the Plan, including records of the accounts of individual Participants. At least once in each year, the Plan Administrator shall cause to be furnished to each Participant a statement indicating on the basis of the latest available information the status of the Participant's Account. Section 10.4 The Plan Administrator will direct the Trustee to make investments under the contract or contracts in -24- accordance with the investment selections made by the Participants pursuant to Article V hereof. Section 10.5 In any case where the provisions of this Plan require the consent or approval by the Plan Administrator of an election or request made by an Employee, Participant or Beneficiary in order to make such election or request effective, the Plan Administrator shall act on such election or request as promptly as shall be reasonable in the circumstances. In any case where action by the Trustee is necessary in order to make operative an effective election or request made by an Employee, Participant or Beneficiary, it shall be the responsibility of the Plan Administrator to transmit such election or request to the Trustee in writing and as promptly as shall be reasonable in the circumstances. The Trustee shall not be obliged to take action with respect to any particular election or request unless the Trustee shall have received the election or request in such form and detail as shall reasonably be required by the Trustee. Section 10.6 Employment of Advisors and Staff. The Plan Administrator -------------------------------- may employ accountants, legal counsel, consultants, and any other persons or organizations it deems necessary or proper to assist it in the performance or its duties under the Plan. Section 10.7 Fiduciary Duties. The Plan Administrator shall discharge ---------------- its duties solely in the interest of the Participants and Beneficiaries and for the exclusive purpose of providing benefits to Participants and their Beneficiaries. They shall discharge their duties with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with the like aims. Section 10.8 Indemnification. Except as provided by law, the Company, --------------- its directors, officers, employees and agents and the Plan Administrator, or any of them, shall not incur any personal liability for the breach of any responsibility, obligation or duty in connection with any act done or omitted to be done in good faith in the management and administration of the Plan and the investment and handling of the accounts and shall be indemnified and held harmless by the Company from and against any such personal liability including all expenses reasonably incurred in its or their defense in case the Company fails to provide such defense. -25- ARTICLE XI ---------- PROVISIONS RESPECTING THE COMPANY --------------------------------- Section 11.1 Amendment of Plan. This Plan may be amended at any time ----------------- and from time to time by resolution of the Board of Directors of the Company. Such power of amendment shall under no circumstances include the right to reinvest or otherwise transfer any interest in or to the accounts, or any income therefrom, to the Company; nor shall the power of amendment include the right, in any way or to any extent, to divest any Participant of the interest in his accounts to which he would be entitled if he had terminated his service immediately before such amendment; provided, however, that if a favorable determination letter shall not be received upon the initial submission to the Internal Revenue Service that the Plan as herein set forth or as amended meets the requirements of Sections 401(a), 401(k) and 501(a) of the Code, the Company may, at its option, amend the Plan in any manner which will result in a favorable determination letter being issued by the Internal Revenue Service or the Company may withdraw all contributions made by it and the Plan shall then terminate with the same effect as if it had never been adopted, provided further that the rights, duties or responsibilities of the Trustee shall not be substantially changed without its written consent. Neither shall such power of amendment be exercised in any way which would or could give to any Participant or Beneficiary any right or thing of exchangeable value in advance of the receipt of distributions hereunder. There shall be no merger or consolidation of part or all of the Plan with, or any transfer of part or all of its assets or liabilities to, any other plan or trust ("Other Plan") unless, pursuant to the terms of such merger, consolidation or transfer, each Participant and Beneficiary in the Plan whose interests are so merged, consolidated or transferred into, with, or to the Other Plan would (if the Other Plan were then terminated) receive a benefit immediately after such merger, consolidation or transfer which would be equal to or greater than the benefit he would have been entitled to receive immediately before such merger, consolidation or transfer (if the Plan were then terminated). Shortly after the Effective Date, the Santa Fe Pacific Coal Company Retirement and Savings Plan for Salaried Employees will transfer certain assets to the Plan by spinoff and immediate merger with the Plan. All elections, beneficiary designations and characterizations of accounts under the Santa Fe Pacific Coal Retirement and Savings Plan for Salaried Employees Plan prior to the Effective Date will be effective with respect to persons employed by the Company as of the Effective Date. Notwithstanding the foregoing provisions of this Section, this Plan may be amended in any manner whatsoever, with prospective or -26- retroactive effect, for the purpose of qualifying it under, or complying with, any provision of the Code or ERISA. Section 11.2 Missouri Law to Govern. This Plan shall be construed ---------------------- and regulated and its validity and effect and the rights hereunder of all parties interested shall at all times be determined, and this Plan shall be administered, in accordance with the laws of the State of Missouri, subject, however, to applicable provisions of any federal law. Section 11.3 Intent. The Company intends that this Plan, as amended ------ from time to time, shall constitute a qualified plan under the provisions of Sections 401(a) and (k) of the Code. The Company intends that this Plan shall continue to be maintained for the above purposes indefinitely, subject, however, to the rights reserved to amend and terminate the Plan as set forth herein. Nothing contained in this Plan shall be construed as disqualifying any Employee of the Company from any benefits under any other plan or program to which such Employee would be entitled in the absence of this Plan. ARTICLE XII ----------- TERMINATION OF PLAN ------------------- The Company may terminate this Plan at any time, such termination to become effective at the time specified in a written notice to the Trustee. Notice of such termination shall be given to the Participants as soon as practicable after notice is given to the Trustee. In the event of the dissolution, merger, consolidation or reorganization of the Company, provision may be made by which the Plan and trust will be continued by the successor; and, in that event, such successor shall be substituted for the Company under the Plan. The substitution of the successor shall constitute an assumption of Plan liabilities by the successor and the successor shall have all the powers, duties and responsibilities of the Company under the Plan. Upon a termination of the Plan, the Company shall make no further contributions to the trust and the Trustee shall effect such liquidation of the assets of the trust as may be necessary or desirable to make a distribution thereof and distribute to each Participant or Beneficiary within a reasonable time after such termination (subject to delay in the event of administrative difficulties) the interest in the Fund to which he is entitled. Upon a complete or partial termination of the Plan, all accounts of affected Participants shall be fully vested and nonforfeitable. -27- ARTICLE XIII ------------ MISCELLANEOUS PROVISIONS ------------------------ Section 13.1 This Plan is created for the exclusive benefit of Employees of the Company and their Beneficiaries. If any provision of this Plan is subject to more than one interpretation, then among those interpretations which are possible, that one shall always be given to this Plan and each and every one of its provisions which will be consistent with this Plan being a qualified plan within the meaning of Section 401 of the Code, and ERISA, or as they may be amended or replaced by any sections of the federal law of like intent and purpose. Section 13.2 Except as provided by the terms of Article III and Article XI hereof, no funds contributed hereunder or any assets of this Plan shall ever revert to, or be used or enjoyed by, the Company or any successor of the Company, nor shall any such funds or assets ever be used other than for the benefit of the Participants or the Beneficiaries of such Participants. Section 13.3 No right or interest of any Participant of the Plan shall be assignable or transferable in whole or in part, either directly or by operation of law or otherwise, including, but in no way limited to, execution, levy, garnishment, attachment, pledge or bankruptcy, and no right or interest of any Participant in the Plan shall be liable for or subject to any obligation or liability of such Participant, including claims for alimony or the support of any Participant's spouse. Notwithstanding any other provisions of this Plan, an alternate payee under a qualified domestic relations order as determined in accordance with Section 206 of ERISA shall be entitled, within 180 days from the date the alternate payee receives written notification that the Company has made such a determination, to elect to receive any benefits to which the alternate payee is entitled payable in accordance with the distribution provisions set forth in Article VIII of this Plan in full satisfaction of any liability of the Plan to such person. Earnings on the benefits awarded the Alternate Payee by the court order shall accrue between the date specified for division of the Participant's account and the date the Alternate Payee's account is opened, only to the extent provided in the court order. Payment of the benefits from the Alternate Payee's account shall be made or shall commence to be made as established by court order or if not so specified, as of the Valuation Date coincident with or next following the Participant's Normal Retirement Date or actual retirement date, whichever is later. An alternate payee may make withdrawals pursuant to Article VII of the Plan. -28- Section 13.4 Any person claiming entitlement to benefits in an amount other than that received shall have the right after review and denial, in whole or in part, of such claim by the Vice President-Human Resources to a review of such denial by the Plan Administrator. Such review shall be initiated by the written request therefor by such person filed with the Plan Administrator within 60 days after receipt by the person of the denial by the Vice President-Human Resources. The written request shall state the nature of the claim, the facts in support thereof and the amount claimed, and may include a demand for a personal hearing before the Plan Administrator as well as for reasonable access to the pertinent data upon which denial of the claim by the Vice President-Human Resources was based, which demands shall not be unreasonably denied. The Plan Administrator shall conduct its review of the claim within 60 days after receipt of the written request of such person and furnish, within such time, to the claimant written notice of its decision, including therein specific reasons and references to pertinent Plan provisions upon which decision is based. Section 13.5 Copies of the Plan and any amendments thereto will be on file at the principal office of the Company where they may be examined by any Participant or any other person entitled to benefits under the Plan. Section 13.6 If any person entitled to benefits under the Plan is under a legal disability or, in the Plan Administrator's opinion, is incapacitated in any way so as to be unable to manage his or her financial affairs, the Plan Administrator may direct the payment of such benefits to such person's legal representative or to a relative or friend of such person or such person's benefit, or the Plan Administrator may direct the application of such benefits for the benefit of such person in any manner which the Plan Administrator may select that is permitted by federal law and is consistent with the Plan. Any payments made in accordance with the foregoing provisions of this section shall be a full and complete discharge of any liability for such payments. Section 13.7 None of the establishment of the Plan, any modification thereof, the creation of any fund or account, or the payment of any benefits shall be construed as giving to any Participant or other person any legal or equitable right against the Company, the Plan Administrator or any Trustee except as provided herein. Under no circumstances shall the maintenance of this Plan constitute a contract of employment or shall the terms of employment of any Participant be modified or in any way affected hereby. Accordingly, participation in the Plan will not give any Participant a right to be retained in the employ of the Company. Neither the Plan Administrator nor any Company in any way guarantees any assets of the Plan from loss or depreciation or any payment to any person. The liability of the Plan -29- Administrator or the Company as to any payment or distribution of benefits under the Plan is limited to the available assets of the trust fund. Section 13.8 In any action or preceding regarding any Plan assets, any Plan benefits or the administration of the Plan, employees or former employees of the Company, their beneficiaries and any other persons claiming to have an interest in the Plan shall not be necessary parties and shall not be entitled to any notice of process. Any final judgment which is not appealed or appealable and which may be entered in any such action or proceeding shall be binding and conclusive on the parties hereto and on all persons having or claiming to have any interest in the Plan. To the extent permitted by law, if a legal action is begun against the Plan Administrator, the Company, or any Trustee by or on behalf of any person and such action results adversely to such persons, or if a legal action arises because of conflicting claims to a Participant's or other person's benefit, the cost of the Company, the Plan Administrator, or the Trustee of defending the action will be charged to the sums, if any, which were involved in the action or were payable to the Participant or the other person concerned. Acceptance of participation in the Plan shall constitute a release of the Company and the Plan Administrator, any trustee and their agents from any and all liability and obligation not involving willful misconduct or gross neglect to the extent permitted by applicable law. Notwithstanding any other provisions of the Plan, if the Plan Administrator is required by a final court order to distribute the benefits of a Participant other than in a manner required under the Plan, then the Plan Administrator shall cause the participant's benefits to be distributed in a manner consistent with such final court order. The Plan Administrator shall not be required to comply with the requirements of a final court order in any action in which the Plan Administrator, a Trustee, the Plan or the trust was not a party. Section 13.9 If any provisions of the Plan shall be held illegal or invalid for any reason, such illegality shall not affect the remaining provisions of the Plan, and the Plan shall be construed and enforced as if such illegal and invalid provisions had never been set forth in the Plan. Section 13.10 Top Heavy Rules. --------------- (a) If the Plan is or ever becomes "top-heavy" as determined under subsection (b), the following special rules shall apply. (1) If the Plan is top-heavy for a Plan Year, each Participant who is an Employee on the last day of the Plan Year shall receive an -30- allocation of Employer Contributions and forfeitures equal to the product of a the Participant's compensation while an active Participant - during the Plan Year, and b the lesser of 3% or the ratio of Employer Contributions plus - Deferred Contributions to compensation with respect to the key employee (as defined in subsection (c)) whose ratio is highest for the year. For purposes of this Section, compensation shall mean the total amount of wages, tips and other compensation shown on an Employee's Form W-2 for the Year, provided, however, that compensation in excess of $200,000 (or such other amount prescribed in Section 416(d) of the Code) shall be disregarded. All non-key Employees who are Participants in the Plan and who have not separated from service by the end of the Plan Year shall receive an allocation pursuant to this subsection. A non-key Employee shall not fail to receive an allocation pursuant to this subsection because he fails to elect Deferred Contributions or Employee Contributions for the Year. Notwithstanding any other provisions of the Plan, a non-key Employee shall not forfeit any allocations made pursuant to this subsection because of a withdrawal of Deferred Contributions or Employee Contributions. If a Participant also participates in a defined benefit plan maintained by the Company or an Affiliated Company which is top-heavy, the minimum allocation percentage specified in this subsection shall be increased to 5% of compensation. This sentence shall not apply to the extent that the Participant participates in any other plan or plans of the Company or an Affiliated Company which provide that the defined -31- benefit minimum allocation or benefit applicable to top-heavy plans will be provided by such other plan or plans. (b) This Plan is "top-heavy" for a Plan Year if, as of the last day of the preceding Plan Year, or, in the case of the first Plan Year of the Plan, the last day of such Plan Year (the "Determination Date") the amount credited to the Accounts of Key Employees (as defined in subsection (c)) exceeds 60% of the amount credited to the Accounts of all Participants (except former key Employees). Notwithstanding the foregoing, the Plan shall be top heavy if, as of the determination date described above, it is included in an "aggregation group" which is a "top-heavy group," as those terms are defined in Section 416(g)(2) of the Code. For purposes of determining whether this Plan is top heavy, the aggregate distributions (without interest thereon) made under the Plan to a Participant during the 5-year period ending on the determination date shall be taken into account if the Participant's account or benefit is otherwise taken in account in determining whether the Plan is top heavy. (c) A Participant shall be a "key Employee" if, during the Plan Year in question or any of the four preceding Plan Years, he is: (1) an officer of the Company (but no more than fifty Employees or, if less, the greater of three Employees or ten percent of all Employees) shall be taken into account, as specified by the Plan Administrator; (2) one of the ten Employees owning (or considered as owning within the meaning of Section 318 of the Code) the largest interest in the Company or an Affiliated Company; -32- (3) a five percent (5%) owner of the Company or an Affiliated Company; or (4) a one percent (1%) or more owner of the Company or an Affiliated Company having an annual compensation from the Company or an Affiliated Company of more than $150,000. (d) If, the Plan is top-heavy for a Plan Year, then for purposes of computing the Maximum Additions described in Section 4.9, the defined benefit plan fraction and the defined contribution plan fraction, described in the fifth and sixth paragraphs of Section 4.9, shall be computed by substituting the number 1.0 for the number 1.25 wherever it appears in those two paragraphs. The Company may elect to disregard the preceding sentence if, as of the last day of the preceding Plan Year, the amount credited to the Accounts of key Employees does not exceed 90% of the amount credited to the Accounts of all Participants (except former key Employees). If the Company makes the election described in the preceding sentence, the minimum allocation percentage specified in subsection (a) shall be increased to 4% of compensation for all Participants and 7-1/2% for Participants who also participate in a defined benefit plan maintained by the Company or an Affiliated Company which is top-heavy. ARTICLE XIV ----------- LOANS ----- Section 14.1 A Participant may borrow from the Plan, subject to the following provisions of this Article XIV and to such additional standards as the Plan Administrator may adopt, by making prior written application to the Plan Administrator. A Participant seeking a loan hereunder must submit a written application (hereinafter referred to as the "completed application") which shall (i) specify the terms pursuant to which the loan is requested to be made, including the requested -33- effective date, (ii) authorize the repayment of the loan through payroll deductions, (iii) provide such information and documentation as the Plan Administrator shall require, and (iv) include a promissory note, duly executed by the Participant, granting a security interest in his or her entire interest in the Plan to secure the loan. Section 14.2 Any loan to a Participant under this Article XIV shall be subject to the following requirements: (a) The loan may not exceed the lesser of (i) $50,000 or (ii) 50 percent of the value of the Participant's vested interest in his Accounts, including the vested portion of the Employer Contributions Account, provided that the amount of the loan shall be further limited so that the monthly repayment does not exceed 25 percent of the Participant's Compensation. The maximum loan amount of $50,000 otherwise available to a Participant is reduced by the excess, if any, of the highest outstanding balance of Plan loans to the Participant during the one-year period ending on the day before the loan is made over the outstanding balance of loans from the Plan on the date when the loan is made. (b) The loan must be at least $1,000, or in $500 increments above $1,000. (c) The loan shall provide for a fixed rate of interest for the entire term of the loan. The applicable interest rate for Plan loans shall be the Prime Rate published in the Wall Street Journal at the beginning of the current calendar quarter plus 1% provided that the Plan Administrator may in its discretion establish a different method of establishing the interest rate consistent with the provisions of Section 4975(d)(1) of the Code and other applicable legal requirements. (d) The loan shall be for a term of one, two, three, four or five years. (e) Notwithstanding the five year limit is Section 14.2(d), any loan used to acquire or construct any dwelling unit which, within a reasonable time, is to be used as the principal residence of the Participant may be for a term of up to 15 years; provided that the term must be a multiple of 12 months. -34- (f) The Plan Administrator shall establish standards in accordance with ERISA and the Code and such rules as it deems necessary which shall be uniformly applicable to all Participants similarly situated and shall govern the Plan Administrator's approval or disapproval of completed applications. The terms for each loan shall be set solely in accordance with this Section and such standards adopted by the Plan Administrator in accordance with Section 14.4. Such standards may prescribe minimum repayment periods, a maximum and minimum loan amount (within the limitations specified above) and other relevant factors. (g) Each time a Participant takes a loan, he shall not be permitted to take a subsequent loan under the Plan until three months after the prior loan has been repaid in full. (i) Except as otherwise provided by the Plan Administrator, a Participant may not take a loan in the same month, or the three month period subsequent to the month in which a withdrawal request was submitted or a distribution made. Section 14.3 (a) Each loan shall be evidenced by a promissory note executed by the Participant and payable to the Trustee, due and payable in full not later than the earliest of: (i) a fixed maturity date meeting the requirements of Section 14.2(d) or (e) above; (ii) the Participant's death; or (iii) the time which the Participant ceases to be an Employee. (b) The promissory note shall provide for the payment of equal monthly installments of principal and interest on the unpaid balance of principal at the fixed annual rate set forth in Section 14.2(c) on the date the note is executed. The note shall further provide that the monthly payments shall be through semi-monthly payroll deductions. (c) The promissory note shall evidence such additional terms as are required by this Section 14.2 or by the Plan Administrator. Section 14.4 The Plan Administrator shall, in accordance with its established standards, review and approve or disapprove a completed application as soon as practicable after -35- its receipt thereof, and shall promptly notify the applying Participant of such approval or disapproval. In the event the Trustee shall advise the Plan Administrator that is not reasonably able, in the interests of Participants, to prudently distribute the necessary amounts to satisfy all Participants' completed applications in accordance with this Article 14, the amount to be made available to each Participant shall be reduced in proportion to the ratio which the aggregate amount that the Trustee has advised the Plan Administrator may prudently be so distributed, bears to the aggregate amount sought by all Participants' completed applications. Section 14.5 A Participant shall first borrow from his available Participant Contributions Account. If the Participant's Participant Contributions Account is not sufficient to fund the loan, the Participant shall next borrow from his vested Employer Contributions Account. If the loan exceeds the sum of the Participant Contributions Account and the vested Employer Contributions Account balances, the Participant shall borrow the balance of the loan from his Deferred Contributions Account. Section 14.6 Each loan shall be made only from the Accounts of the borrowing Participant and shall be treated as an investment of the Participant's Accounts from which the Participant's loan was funded. Section 14.7 Each loan to a Participant under this Article XIV shall be repaid in level monthly amounts over a period meeting the requirements of Section 14.2 hereof. The monthly installments must be paid through automatic semi-monthly payroll deductions, except as provided by the Plan Administrator. No prepayment of any loan shall be permitted within 12 months from the date of the loan, except if the Participant is in default and the loan is accelerated pursuant to Section 14.11 and 14.12 hereof or otherwise permitted by the Plan Administrator. After the expiration of one year from the date of the loan, a Participant may elect to prepay the entire balance of the loan. A Participant may request a subsequent loan after full repayment of a prior loan, subject to the maximum loan amount set forth in Section 14.2(a) hereof. No partial prepayments will be permitted except with the written consent of the Plan Administrator. All loan repayments made through payroll deductions shall be transmitted by the Company to the Trustee as soon as practicable after such amounts are withheld. Section 14.8 Each loan repayment of principal and interest will be allocated to the Participant's Accounts in the same proportion from which the loan was funded as provided in Section 14.5 hereof. -36- Section 14.9 Repayment of any loan under the Plan shall be secured by the Participant's promissory note and his entire interest in the Plan. Section 14.10 If a Participant with an outstanding loan takes an authorized leave of absence or incurs a temporary disability so the regular monthly installment payments cannot be made on a semi-monthly payroll deduction basis, the Participant will be required to make the regular monthly payments of principal and interest at the time and place established by the Plan Administrator. Section 14.11 If any time prior to the full repayment of a loan to a Participant under the Plan, the Participant should cease to be a Participant by reason of his or her retirement, death, severance from employment, change to hourly status, or otherwise, or the Plan should terminate, or any event of default otherwise occurs under the documents evidencing the loan; the unpaid balance owed by the Participant on the loan shall be due and payable in full immediately without notice or demand. If the Participant does not repay the full amount of the unpaid balance within the time established by the Plan Administrator, no Employee Contributions or Deferred Contributions shall be made to the Participant's Accounts and the Plan Administrator may take whatever steps it deems necessary to collect the unpaid balance of the loan plus any accrued interest. The amount of the distribution otherwise payable to the Participant or the amount of the Participant's vested interest in his Accounts, (or, in the case of his death, to his Beneficiary) shall be reduced by the amount of outstanding principal and interest on the loan at the time of such distribution and applied in satisfaction of the Participant's loan obligations. To the extent that the reduction in the amount of the distribution or the reduction in the Participant's vested interest is sufficient to discharge the Participant's total outstanding liability under the loan, such reduction shall constitute a completed discharge of all liability of the Participant to the Plan for the loan. In the event that the reduction in this Section 14.11 is not sufficient to fully discharge the Participant's obligation under the loan, the Participant, his heirs, successors and assigns shall be liable for the payment of the remaining amounts due under the loan and such Participant, his heirs, successors or assigns shall make payment upon notice by the Plan Administrator. Section 14.12 Notwithstanding anything to the contrary contained herein, each loan shall be made only in accordance with the regulations and rulings of the Internal Revenue Service and other applicable state or federal laws. The Plan Administrator shall act in its sole discretion to ascertain whether the requirements of such laws, regulations, and rulings have been met. -37- Section 14.13 Except as otherwise provided in this Section 14.13, no loan shall be made to any Participant who has terminated employment with the Company on the date the loan is made. However, loans shall be made available subject to the terms of this Article XIV, to interested parties as defined in Section 3(14) of the Employee Retirement Income Act of 1974, even if such interested party is no longer an Employee. ARTICLE XV ---------- ROLLOVERS AND TRANSFERS ----------------------- Section 15.1 Rollovers. The Plan Administrator is authorized to accept --------- a Rollover Contribution that exceeds Two Hundred Dollars ($200.00) from an Employee in cash, even if he or she is not yet a Participant. The Employee shall furnish satisfactory evidence that the amount is eligible for rollover treatment. A Rollover Contribution must be paid to the Plan Administrator in cash within sixty (60) days after the date received by the Employee from a qualified plan. Such amounts shall be posted to the Employee's Rollover Account by the Plan Administrator as of the date received by the Plan Administrator. If it is later determined that an amount transferred pursuant to the above paragraph did not in fact qualify as a Rollover Contribution, the balance credited to the Employee's Rollover Account shall immediately be (1) segregated from all other Plan assets, (2) treated as a non-qualified trust established by and for the benefit of the Employee, and (3) distributed to the Employee. Any such non-qualifying rollover shall be deemed never to have been a part of the Plan. Section 15.2 Trustee Transfers From Other Qualified Plans. The Plan may ------------------------------------------- receive assets in cash or in kind that exceed Two Hundred Dollars ($200.00) from another qualified plan. The Trustee may refuse the receipt of any transfer if; 1. the Plan Administrator finds the in-kind assets unacceptable, 2. instructions for posting amounts to Participants' Accounts are incomplete, 3. any amounts are not exempted by Section 401(a)(11)(B) of the Code from the annuity requirements of Section 417 of the Code, or 4. any amounts include benefits protected by Section 411(d)(6) of the Code which would not be preserved under applicable Plan provisions. -38- Such amounts shall be posted to the appropriate Accounts of Participants as of the date received by the Plan Administrator. Section 15.3 Trustee Transfer to Other Qualified Plans. With respect ----------------------------------------- to any payment hereunder which constitutes an eligible rollover distribution in excess of Two Hundred Dollars ($200.00) (within the meaning of Section 402(c)(4) of the Code), a Participant (or beneficiary) may direct the Plan Administrator to have such payment paid in the form of a single Trustee Transfer, provided the Plan Administrator receives written notice of such direction with specific instructions as to the eligible retirement plan as defined in Section 401(a)(31)(D) to which the Trustee Transfer is to be made on or prior to the applicable notice date for payment. Section 15.4 Definitions. For purposes of this Article, the following ----------- terms shall apply: "Rollover Contributions" means a rollover contribution as described in Section 402(c) of the Code (or its predecessor). "Trustee Transfer" means (a) a transfer to the Trustee of an amount by the trustee of a retirement plan qualified for tax-favored treatment under Section 401(a) of the Code or by the trustee(s) of a trust forming part of such a plan, which plan provides for such transfer; or (b) a transfer from the Plan Administrator of an amount for the benefit of a Participant to the custodian of an eligible retirement plan within the meaning of Section 402(c)(8)(B) of the Code, provided such plan provides for the receipt of such transfers. IN WITNESS WHEREOF, the Company has caused the Plan to be executed by one of its duly authorized officers this 1 day of Oct , 1993. -- ----------------- HANSON NATURAL RESOURCES COMPANY By /s/ signature ----------------------------------- [ATTEST] /s/ signature ------------------------------- -39- EX-99.3 11 ex99p3.txt RETIREMENT AND SAVINGS PLAN FOR HOURLY EMPLOYEES EXHIBIT 99.3 ------------ LEE RANCH COAL COMPANY RETIREMENT AND SAVINGS PLAN FOR HOURLY EMPLOYEES TABLE OF CONTENTS ARTICLE I. DEFINITIONS.......................................................... 1 SECTION 1-1. "Affiliated Company"............................................ 1 SECTION 1-2. "Authorized Leave of Absence"................................... 1 SECTION 1-3. "Average Contribution Percentage"............................... 1 SECTION 1-4. "Beneficiary"................................................... 1 SECTION 1-5. "Benefits Administration Committee"............................. 2 SECTION 1-6. "Board"......................................................... 2 SECTION 1-7. "Code".......................................................... 2 SECTION 1-8. "Company"....................................................... 2 SECTION 1-9. "Company Contribution Account".................................. 2 SECTION 1-10. "Compensation".................................................. 2 SECTION 1-11. "Deferred Contribution Account"................................. 3 SECTION 1-12. "Disability".................................................... 3 SECTION 1-13. "Effective Date"................................................ 3 SECTION 1-14. "Employee"...................................................... 3 SECTION 1-15. "Employee Contribution Account"................................. 3 SECTION 1-16. "Fiduciaries"................................................... 3 SECTION 1-17. "Former Participant"............................................ 3 SECTION 1-18. "Highly Compensated Employee"................................... 3 SECTION 1-19. "Hours of Service".............................................. 5 SECTION 1-20. "Income"........................................................ 6 SECTION 1-21. "Participant"................................................... 6 SECTION 1-22. "Participation"................................................. 6 SECTION 1-23. "Plan".......................................................... 7 SECTION 1-24. "Plan Year"..................................................... 7 SECTION 1-25. "Service"....................................................... 7 SECTION 1-26. "Trustee"....................................................... 7 SECTION 1-27. "Valuation Date"................................................ 7 SECTION 1-28. ................................................................ 7 ARTICLE II. PARTICIPATION........................................................ 8 SECTION 2-1. Eligibility..................................................... 8 SECTION 2-2. Severance of Employment......................................... 8 SECTION 2-3. Elections by Employees.......................................... 8 SECTION 2-4. Service......................................................... 8 SECTION 2-5. Participation upon Reemployment................................. 9 ARTICLE III. CONTRIBUTIONS TO THE FUND............................................ 11 SECTION 3-1. Fund............................................................ 11 SECTION 3-2. Elective Contributions.......................................... 11 SECTION 3-3. Company Contributions........................................... 13 SECTION 3-4. Maximum Contributions........................................... 14 SECTION 3-5. Authorized Leaves of Absence.................................... 15 SECTION 3-6. Tax Deductions.................................................. 15 i LEE RANCH COAL COMPANY RETIREMENT AND SAVINGS PLAN FOR HOURLY EMPLOYEES ARTICLE IV. ALLOCATIONS AND ACCOUNTING............................................ 16 SECTION 4-1. Allocation of Contributions...................................... 16 SECTION 4-2. Investment Choices............................................... 16 SECTION 4-3. Investment Elections............................................. 16 SECTION 4-4. Changes in Investment Elections.................................. 16 SECTION 4-5. Disposition and Allocation of Forfeitures........................ 17 SECTION 4-6. Nature of Participants' Rights in the Fund....................... 17 ARTICLE V. DISTRIBUTIONS......................................................... 20 SECTION 5-1. In the Event of the Death of a Participant....................... 20 SECTION 5-2. Retirement....................................................... 20 SECTION 5-3. Disability....................................................... 21 SECTION 5-4. Other Severance of Employment.................................... 21 SECTION 5-5. Withdrawals of Employee Contributions............................ 22 SECTION 5-6. Hardship Withdrawals............................................. 23 SECTION 5-7. Notice........................................................... 25 SECTION 5-8. Consent.......................................................... 26 SECTION 5-9. Distributions in Kind............................................ 26 ARTICLE VI. THE COMPANY........................................................... 27 SECTION 6-1. The Company's Interest in the Plan............................... 27 SECTION 6-2. Examination of Plan Documents.................................... 27 SECTION 6-3. Payment with Respect to Incapacitated Participants or Beneficiaries.................................................. 27 SECTION 6-4. No Employment or Benefit Guaranty................................ 27 SECTION 6-5. Litigation....................................................... 28 SECTION 6-6. Severability..................................................... 28 SECTION 6-7. Amendment of Plan................................................ 28 ARTICLE VII. THE TRUSTEE........................................................... 30 SECTION 7-1. The Trustee...................................................... 30 SECTION 7-2. Allocation of Responsibility Among Fiduciaries for Plan and Trust Administration........................................... 30 ARTICLE VIII. THE BENEFITS ADMINISTRATION COMMITTEE................................. 32 SECTION 8-1. Membership....................................................... 32 SECTION 8-2. Plan Administrator............................................... 32 SECTION 8-3. Proceedings of the Benefits Administration Committee............. 32 SECTION 8-4. Construction of Terms and Provisions of the Plan................. 32 SECTION 8-5. Resolution of Disputes........................................... 33 ii LEE RANCH COAL COMPANY RETIREMENT AND SAVINGS PLAN FOR HOURLY EMPLOYEES ARTICLE IX. TERMINATION OR MERGER OF THE PLAN..................................... 34 SECTION 9-1. Termination or Merger of the Plan................................ 34 ARTICLE X. LOANS................................................................. 36 SECTION 10-1. Participant Loans................................................ 36 SECTION 10-2. Loan Requirements................................................ 36 SECTION 10-3. Promissory Note.................................................. 38 SECTION 10-4. Loan Request..................................................... 38 SECTION 10-5. Source of Loan................................................... 38 SECTION 10-6. Loan as Individual Asset of Borrowing Participant................ 38 SECTION 10-7. Repayment of Loans............................................... 39 SECTION 10-8. Allocations of Repayments........................................ 39 SECTION 10-9. Loan Secured by Participant's Accounts........................... 39 SECTION 10-10. Leave of Absence................................................. 39 SECTION 10-11. Acceleration of Loan............................................. 39 SECTION 10-12. Compliance with Applicable Laws.................................. 40 SECTION 10-13. Loans Limited to Employees....................................... 40 ARTICLE XI. TOP HEAVY RULES....................................................... 41 SECTION 11-1. Top Heavy Rules.................................................. 41 ARTICLE XII. ROLLOVERS AND TRANSFERS............................................... 45 SECTION 12-1. Rollovers........................................................ 45 SECTION 12-2. Trustee Transfers From Other Qualified Plans..................... 45 SECTION 12-3. Trustee Transfer to Other Qualified Plans........................ 45 SECTION 12-4. Definitions...................................................... 46
iii ARTICLE I. DEFINITIONS SECTION 1-1. "AFFILIATED COMPANY" means any corporation which is a member of a controlled group of corporations (within the meaning of Section 414(b) of the Code) with the Company. Affiliated Company shall also mean any trade or business under common control with the Company or an Affiliated Company within the meaning of Section 414(c) of the Code. SECTION 1-2. "AUTHORIZED LEAVE OF ABSENCE" means any absence authorized by the Company under the Company's standard personnel practices. SECTION 1-3. "AVERAGE CONTRIBUTION PERCENTAGE" means, for a specified group of eligible Employees for a year, the average of the ratios for each Employee of: (a) the amount of Deferred Contributions (or the total of Employee Contributions plus Company Contributions) actually made to the Plan on behalf of each such Employee for such year, to (b) such Employee's Compensation for such year. In calculating the Average Contribution Percentage, the total of Employee Contributions plus Company Contributions for a Highly Compensated Employee shall be determined by treating all cash or deferred arrangements in which a Highly Compensated Employee is eligible to participate (other than those which may not be permissively aggregated) as a single plan and by treating all plans subject to Section 401(m) of the Code in which the Highly Compensated Employee is eligible to participate as a single plan. In the case of a Highly Compensated Employee who is either a 5% owner or one of the ten most Highly Compensated Employees and is thereby subject to the family aggregation rules of section 414(q)(6) of the Code, the Average Contribution Percentage for the family group (which is treated as one Highly Compensated Employee) shall be the Average Contribution Percentage determined by combining the contributions and Compensation of all eligible family members. Except to the extent taken into account by reason of the preceding sentence, the contributions and Compensation of all family members shall be disregarded in determining the Average Contribution Percentage. SECTION 1-4. "BENEFICIARY" means a person or persons (natural or otherwise) designated by a Participant to receive any death benefit which shall be payable under the Plan. Such beneficiary designation shall be made on the application form provided for in Section 2-3, and each Participant shall have the right to change his Beneficiary at any time. The Beneficiary of a married Participant shall be his spouse unless the Participant has submitted to the Company on a Form designated by the Benefits Administration Committee the written consent of his spouse, witnessed by a Plan representative or notary public, to designate a different Beneficiary. In the event no Beneficiary is designated in the case of an unmarried Participant, or if no designated Beneficiary shall survive the Participant, Beneficiary shall mean the Participant's estate. SECTION 1-5. "BENEFITS ADMINISTRATION COMMITTEE" means the committee consisting of the persons appointed under the provisions of Article VIII to administer the Plan. SECTION 1-6. "BOARD" mean the Board of Directors of the Company. SECTION 1-7. "CODE" mean the Internal Revenue Code of 1986, as amended. SECTION 1-8. "COMPANY" means Hanson Natural Resources Company, and any other corporations affiliated with the Company which, with the consent of the Company, participate in this Plan. SECTION 1-9. "COMPANY CONTRIBUTION ACCOUNT" means the account maintained for a Participant to record his share of the contributions of the Company, other than Deferred Contributions, and adjustments related thereto. SECTION 1-10. "COMPENSATION" shall mean a Participant's earned income, wages, salaries, fees for professional service and other amounts received for personal services actually rendered in the course of employment with the Company (excluding commissions paid to salesmen, compensation for services on the basis of a percentage of profits, commissions on insurance premiums, tips, severance benefits, unused vacation pay, and bonuses) and also excluding the following: (a) Employer contributions to a non-qualified plan of deferred compensation to the extent contributions are not included in the gross income of the Employee for the taxable year in which contributed, or on behalf of an Employee to a Simplified Employee Pension Plan to the extent such contributions are deductible under Section 219(b)(7) of the Code, and any distributions from a plan of deferred compensation whether or not includable in the gross income of the Employee when distributed; (b) Amounts realized from the exercise of a non-qualified stock option, or when restricted stock (or property) held by an Employee becomes 2 freely transferable or is no longer subject to a substantial risk of forfeiture; and (c) Amounts realized from the sale, exchange or other disposition of stock acquired under a qualified or incentive stock option. Compensation for any limitation year is the compensation actually paid or includable in gross income during such year. Notwithstanding the foregoing, in no event shall the annual compensation of any Employee under the Plan for the Plan Year exceed $150,000 (adjusted at the same time and manner as under Section 415(d) of the Code). SECTION 1-11. "DEFERRED CONTRIBUTION ACCOUNT" means the account maintained for a Participant to record his share of the Deferred Contributions of the Company and adjustments related thereto. SECTION 1-12. "DISABILITY" means a Participant's permanent and total incapacity for engaging in any employment for the Company for physical or mental reasons. Disability shall be deemed to exist only when a written application has been filed with the Company or its designee by or on behalf of a Participant and when such total disability is certified to the Company or its designee by a licensed physician approved by the Company or its designee. SECTION 1-13. "EFFECTIVE DATE" means the June 25, 1993 closing date of the Asset Exchange Agreement. SECTION 1-14. "EMPLOYEE" means any regular hourly paid employee of the Lee Ranch Coal Company Division of the Company. SECTION 1-15. "EMPLOYEE CONTRIBUTION ACCOUNT" means the account maintained for a Participant to record his contributions and adjustments related thereto. SECTION 1-16. "FIDUCIARIES" means the Company, the Benefits Administration Committee and the Trustee, but only with respect to the specific responsibilities of each for the Plan and trust administration, all as described in Section 7-2. SECTION 1-17. "FORMER PARTICIPANT" means a Participant whose employment with the Company has terminated but who has an account balance under the Plan which has not been paid in full. SECTION 1-18. "HIGHLY COMPENSATED EMPLOYEE" means a highly compensated active employee or a highly compensated former employee. 3 A highly compensated active employee includes any employee who performs service for an Affiliated Company during the determination year and who, during the look-back year, (a) received compensation from an Affiliated Company in excess of $75,000 (as adjusted pursuant to Section 415(d) of the Code); (b) received compensation from an Affiliated Company in excess of $50,000 (as adjusted pursuant to Section 415(d) of the Code) and was a member of the top-paid group (within the meaning of Section 414(q)(4) of the Code) for such year; or (c) was an officer of an Affiliated Company and received compensation during such year that is greater than 50% of the dollar limitation in effect under Section 415(b)(1)(A) of the Code. The term Highly Compensated Employee also includes (a) employees who are both (i) described in the preceding sentence if the term "determination year" is substituted for the term "look-back year" and (ii) the employee is one of the 100 employees who received the most compensation from an Affiliated Company during the determination year; and (b) employees who are 5% owners (within the meaning of Section 414(q)(1)(A) of the Code) at any time during the look-back year or the determination year. For purposes of (c) above, no more than 50 employees (or, if lesser, the greater of three employees or 10% of employees), excluding those employees who may be excluded in determining the top-paid group, shall be treated as officers. If no officer has satisfied the compensation requirement of (c) above during either a determination year or a look-back year, the highest paid officer for such year shall be treated as a Highly Compensated Employee. For purposes of this Section, the determination year shall be the Plan Year for which the determination of which Employees are Highly Compensated Employees is being made. The look-back year shall be the twelve-month period immediately preceding the determination year. 4 A highly compensated former employee includes any employee who separated from service (or was deemed to have separated) prior to the determination year, performs no service for an Affiliated Company during the determination year, and was a highly compensated active employee for either the separation year or any determination year ending on or after the employee's 55th birthday. An employee who performs no service for an Affiliated Company during a determination year (for example, an employee who is on an authorized leave of absence throughout the year) shall be treated as having terminated employment in the year in which he last performed services for an Affiliated Company. If an employee is, during a determination or look-back year, a family member of either a 5% owner who is an active or former employee or a Highly Compensated Employee who is one of the ten most Highly Compensated Employees ranked on the basis of compensation paid by an Affiliated company during such year, then the family member and the 5% owner or top-ten Highly Compensated Employee shall be aggregated. In such case, the family member and 5% owner or top-ten Highly Compensated Employee shall be treated as a single employee receiving compensation and Plan contributions or benefits equal to the sum of such compensation and contributions or benefits of the family member and 5% owner or top-ten Highly Compensated Employee. For purposes of this Section, family member includes the spouse, lineal ascendants and descendants of the employee or former employee and the spouses of such lineal ascendants and descendants. The determination of who is a Highly Compensated Employee, including the determinations of the number and identity of employees in the top-paid group, the top 100 employees, the number of employees treated as officers and the compensation that is considered, will be made in accordance with Section 414(q) of the Code and the regulations thereunder. For purposes of this definition of Highly Compensated Employee, "compensation" shall mean compensation within the meaning of Section 415(c)(3) of the Code including elective or salary reduction contributions to a cafeteria plan, cash or deferred arrangement or tax-sheltered annuity. SECTION 1-19. "HOURS OF SERVICE" means: (a) Each hour for which an Employee is paid, or entitled to payment, for the performance of duties for the Company, (b) Up to 501 hours for any single continuous period during which the Employee performs no duties but 5 is directly or indirectly paid or entitled to payment by the Company (regardless of whether employment has terminated) due to vacation, holiday, illness, incapacity including disability, lay-off, jury duty, military duty or leave of absence; excluding, however, any period for which payment is made or due under this Plan or under a plan maintained solely for the purposes of complying with workmen's compensation or unemployment compensation or disability insurance laws, or solely to reimburse the Employee for medical or medically-related expenses. An Employee shall be deemed to be directly or indirectly paid, or entitled to payment by the Company regardless of whether such payment is (i) made by or due from the Company directly or (ii) made indirectly through a trust fund, insurer or other entity to which the Company contributes or pays premiums. (c) Each hour for which back pay, irrespective of mitigation of damages, is either awarded or agreed to by the Company, without duplication of hours provided above, and subject to the 501-hour restriction for periods described in the foregoing subparagraph (b). The foregoing provisions shall be administered in accordance with Department of Labor Regulation Section 2530.200b-2. In addition to, but not in duplication of, the foregoing provisions, an Employee shall receive service and credited service for any period of paid leave of absence. SECTION 1-20. "INCOME" means the net gain or loss of the Plan from investments, as reflected by interest payments, dividends, realized and unrealized gains and losses on securities, other investment transactions and expenses paid from the Plan. SECTION 1-21. "PARTICIPANT" means an Employee participating in the Plan in accordance with the provisions of Section 2-1. SECTION 1-22. "PARTICIPATION" means the period commencing as of the date an Employee becomes a Participant and ending on the date his employment with the Company terminates. 6 SECTION 1-23. "PLAN" means the Lee Ranch Coal Company Retirement and Savings Plan for Hourly Employees, as set forth herein, as amended from time to time. SECTION 1-24. "PLAN YEAR" means the 12-month period commencing on January 1 and ending on December 31. SECTION 1-25. "SERVICE" means a Participant's period of employment with the Company determined in accordance with Section 2-4. SECTION 1-26. "TRUSTEE" means the trustee under any trust agreement established between the Company and a trustee for the purpose of implementing the Plan or a legal reserve life insurance company organized or incorporated under the laws of any one of the United States of America and duly licensed in New Mexico, whichever is applicable. SECTION 1-27. "VALUATION DATE" means the daily valuations used hereunder for purposes of determining account values. SECTION 1-28. The masculine gender, where appearing in the Plan shall be deemed to include the feminine gender, unless the context clearly indicates to the contrary. The words "hereof", "herein", "hereunder" and other similar compounds of the word "here" shall mean and refer to the entire Plan and not to any particular provision or section. 7 ARTICLE II. PARTICIPATION SECTION 2-1. ELIGIBILITY. Each Employee who was a participant in the Santa Fe Pacific Coal Company Retirement and Savings Plan for Hourly Employees immediately before the Effective Date shall continue to be a Participant on the Effective Date. Each other Employee shall be eligible to participate in the Plan upon the completion of a 12-month period, computed with reference to the date on which the Employee's employment commenced, and anniversaries thereof, during which the Employee has not less than 1,000 Hours of Service. Any Employee eligible to become a Participant may commence participation as of the beginning of the first pay period of the month following the date he becomes eligible to participate. SECTION 2-2. SEVERANCE OF EMPLOYMENT. Any Employee, whose employment with the Company and all Affiliated Companies has been severed prior to his eligibility to participate in this Plan, and later resumed, shall be deemed a new Employee as of the date of his reemployment, and shall meet the eligibility requirements of Section 2-1 as a new Employee to be eligible to participate in this Plan, except as provided in Section 2-5. For the purpose of this Section 2-2, employment shall not be deemed to have been severed nor shall its permanency be affected by the fact that an Employee has been on an Authorized Leave of Absence for a period not exceeding six months, or has been on sick leave, or injured and on leave granted by the Company. The Company's records as to employment, severance, leave of absence, return, cessation of Compensation and cause of severance, shall be final and conclusive upon all parties. SECTION 2-3. ELECTIONS BY EMPLOYEES. Each eligible Employee who wishes to participate in the Plan shall complete a form or forms furnished by the Company. Such form shall specify (a) the Beneficiary selected by the Employee to receive death benefits, (b) the employee's election to contribute to the Plan, or to have the Company contribute to the Plan on his behalf a percentage of his Compensation (as provided for in Section 3-2), and (c) the Employee's investment election as described in Article IV. SECTION 2-4. SERVICE. Service shall include service with an Affiliated Company. A transfer of an Employee from the Company to any Affiliated Company shall not constitute a 8 termination of employment. In the event of such a transfer, the Employee's account shall remain as part of the Plan. A Participant's Service prior to the Effective Date with the Santa Fe Pacific Coal Corporation and its Affiliated Companies (determined by substituting Santa Fe Pacific Coal Corporation for Company in Section 1-1) shall be deemed employment by the Company for purposes of the Plan. SECTION 2-5. PARTICIPATION UPON REEMPLOYMENT. Participation in the Plan shall cease upon termination of employment with the Company or an Affiliated Company. Termination of employment includes retirement, death, voluntary or involuntary termination of employment, unauthorized absence, and a failure to return to active employment with the Company by the date on which an Authorized Leave of Absence expired. Upon the reemployment of any person who had previously been employed by the Company, the following rules shall apply in determining his participation in the Plan. If the reemployed Employee was eligible to participate in the Plan during his prior period of employment, he shall be entitled to participate in the Plan as of the beginning of the first pay period of the month following his date of reemployment, and participation shall be retroactive to the date of reemployment, provided, however, that if the reemployed Employee was not a Participant in the Plan during his prior period of employment, and if he incurred a one-year break in service, he must meet the requirements of Section 2-1 for participation in the Plan as if he were a new Employee. If the reemployed Employee was not eligible to participate in the Plan during his prior period of employment, his prior service shall be taken into account in determining whether he meets the requirements of Section 2-1 for participation in the Plan unless he incurred a one-year Break in Service. A one-year Break in Service occurs when an Employee has not completed more than 500 Hours of Service in a 12-consecutive month period beginning on an anniversary of the Employee's employment commencement date following his termination of employment. In the case of an Employee who is absent from work for any period (i) by reason of pregnancy of the Employee, (ii) by reason of the birth of a child of the Employee, (iii) by reason of the placement of a child with the Employee in connection with the adoption of such child by such Employee, or (iv) for purposes of caring for such child for a period beginning immediately 9 following such birth or placement, for purposes of determining whether a one-year break in service has occurred, Hours of Service shall include (a) the Hours of Service which otherwise would normally have been credited to such Employee but for such absence, or (b) in any case in which such hours cannot be determined, eight hours of service per day of such absence, provided, however, that the total number of hours treated as Hours of Service under this sentence by reason of any such pregnancy or placement shall not exceed 501 hours. The hours described in the preceding sentence shall be treated as Hours of Service (i) only in the Plan Year in which the absence from work began if an Employee would be prevented from incurring a one-year break in service in such Plan Year solely because the period of absence is treated as Hours of Service as provided in the preceding sentence, or (ii) in any other case, in the immediately following Plan Year. No credit will be given pursuant to the preceding two sentences unless the Employee furnishes to the Benefits Administration Committee timely information to establish that the absence from work is for the reasons referred to in the first sentence of this paragraph, and the number of days for which there was such an absence. 10 ARTICLE III. CONTRIBUTIONS TO THE FUND SECTION 3-1. FUND. "Fund" shall mean all monies, securities, retirement income, annuity contracts, and all other property held by the Trustee under the terms of this Plan, and shall consist of the contributions and investments and reinvestments thereof, and accruals thereto, and shall be held and administered by the Trustee as a single trust, without distinction between principal and income. SECTION 3-2. ELECTIVE CONTRIBUTIONS. A Participant may elect to (a) have his Compensation reduced by a whole percentage and to have the amount of such reduction contributed to the Plan by the Company on his behalf as Deferred Contributions, and (2) contribute a whole percentage of his Compensation to the Plan as Employee Contributions, provided that the total amount of Deferred Contributions plus Employee Contributions may not exceed twelve percent (12%) of a Participant's Compensation. Election forms provided by the Benefits Administration Committee shall be distributed by the Company to all eligible Employees. All elections shall apply to compensation received after the election becomes effective. Any eligible Employee who fails to return a properly completed election form in a timely manner to the Company shall be deemed to have elected to have all of his Compensation included in his regular paycheck. Any other provisions of the Plan to the contrary notwithstanding, the Deferred Contributions to the Plan on behalf of eligible Highly Compensated Employees shall be limited to the extent necessary to ensure that the Average Contribution Percentage for eligible Highly Compensated Employees for any Plan Year bears such a relationship to the Average Contribution Percentage for all other eligible Employees for such Plan Year that either of the following tests is satisfied. Similarly, the total of Employee Contributions plus Company Contributions to the Plan on behalf of each eligible Highly Compensated Employee shall be limited to the extent necessary to ensure that the Average Contribution Percentage for eligible Highly Compensated Employees for any Plan Year bears such a relationship to the Average Contribution Percentage for 11 all other eligible Employees for such Plan Year that either of the following tests is satisfied. (1) the Average Contribution Percentage for the group of eligible Highly Compensated Employees is not more than the Average Contribution Percentage of all other eligible Employees multiplied by 1.25; or (2) the excess of the Average Contribution Percentage for the group of eligible Highly Compensated Employees over that of all other eligible Employees is not more than two percentage points, and the Average Contribution Percentage for the group of eligible Highly Compensated Employees is not more than the Average Contribution Percentage of all other eligible Employees multiplied by 2. The greater of (1) or (2) is illustrated in the table below:
If the Average Contribution Then the Maximum Average Percentage of Employees Contribution Percentage other than Highly of Highly Compensated Employees Compensated Employees is (the Limitation Percentage) is --------------------------- ------------------------------- 1% 2 % 2 4.0 3 5.0 4 6.0 5 7.0 6 8.0 7 9.0 8 10.0 9 11.25 10 12.0 (Section 3-2 limit) 11 12.0 (Section 3-2 limit) 12 12.0 (Section 3-2 limit)
All contributions that are made under two or more plans that are aggregated for purposes of Section 401(a)(4) and Section 410(b) (other than Section 410(b)(2)(A)(ii)) of the Code shall be treated as made under a single plan, and if two or more plans are permissively aggregated for purposes of Section 401(k) or Section 401(m) of the Code, the aggregated plans must also satisfy Section 401(a)(4) and Section 410(b) of the Code as though they are a single plan. Notwithstanding the preceding provisions of this Section, multiple use may not be made of alternative test (2) above in violation of Section 401(m)(9)(A) of the Code or the Treasury Regulations promulgated thereunder. 12 If the Benefits Administration Committee determines that the limitations set forth in this Section would be exceeded for the Plan Year, then the Benefits Administration Committee shall reduce to the Limitation Percentage described in the foregoing table the percentage amount of Deferred Contributions (or the total percentage amount of Employee Contributions plus Company Contributions) of each eligible Highly Compensated Employee whose Deferred Contribution percentage is more than the Limitation Percentage (or whose Employee Contribution plus Company Contribution percentage gives rise to a percentage in excess of the Limitation Percentage). The Benefits Administration Committee shall have the authority to establish a lower Limitation Percentage if, in the discretion of the Committee, this would be beneficial to the Plan by ensuring compliance with the safe-harbor provisions of Sections 401(k)(3)(A) and 401(m)(2) of the Code. The reduced percentage of each eligible Highly Compensated Employee shall be substituted for his actual elected percentages and shall represent the percentage of his Compensation that shall be paid into the Plan on his behalf. The amount of any reduction which is necessary shall be included in the Participant's regular paycheck or, in the case of Deferred Contributions and at the election of the Participant, contributed to the Plan as Employee Contributions. Employee Contributions shall be made by means of payroll deductions. Deferred Contributions and Employee Contributions shall be paid to the Trustee at such time or times as may be convenient to the Company, but not less frequently than once every month and shall be credited to the Participant's Deferred Contributions Account and Employee Contributions Account, respectively. A Participant may elect to suspend his Employee Contributions and/or his Deferred Contributions or change his rate or rates of Employee Contributions and/or Deferred Contributions at any time, but not more frequently than once in any three month period. A Participant's election to suspend or change his rate of Employee and/or Deferred Contributions must be made in writing to the Company. Such an election shall be processed by the Company as soon as reasonably practicable after its receipt. SECTION 3-3. COMPANY CONTRIBUTIONS. To the extent that the year-to-date net income or retained income of the Company is sufficient, the Company shall make Company Contributions to the Plan in regard to Participants which shall be credited to the Participants' Company Contributions Accounts. The amount of the Company Contribution to be made with respect to any Participant shall be equal to 100% of the Deferred Contributions up to three percent (3%) of Compensation actually 13 made on behalf of such Participant. Company Contributions shall be paid to the Trustee at such time or times as may be convenient to the Company, but not less frequently than once every month. In the event that the year-to-date net income or retained income of the Company is insufficient to fund all Company Contribution Accounts relating to all Participants at a 100% level, no Company Contributions shall be made to the Company Contributions Accounts. SECTION 3-4. MAXIMUM CONTRIBUTIONS. Notwithstanding anything contained herein to the contrary, the Deferred Contributions made to a Participant's Deferred Contribution Account, plus any amount that a Participant elects to defer under any other qualified cash or deferred arrangement for any Plan Year, shall not exceed $7,000, and the total contributions made to the Accounts of a Participant, plus any other amounts which constitute annual additions to such Participant's accounts pursuant to the Code, shall not exceed the lesser of $30,000 or 25% of the Participant's Compensation for such year. The $7,000 and $30,000 limitations are subject to cost-of-living adjustments made by the Secretary of the Treasury or his delegate. If contributions exceed the applicable limitations set forth above, any Employee Contributions for the Plan Year which cause the excess shall be returned to the Participant. Notwithstanding the foregoing, contributions with respect to any Participant may be further reduced to the extent necessary, as determined by the Benefits Administration Committee, to prevent disqualification of the Plan under Section 415 of the Code, which imposes additional limitations on the benefits payable to Participants who also may be participating in another tax-qualified pension, profit-sharing, savings or stock bonus plan maintained by the Company or an Affiliated Company. For purposes of this Section, the modification of Sections 414(b) and (c) of the Code by Section 415(b) of the Code is incorporated. For purposes of this limitation, all defined benefit plans of the Company and all Affiliated Companies, whether or not terminated, are to be treated as one defined benefit plan, and all defined contribution plans of the Company and all Affiliated Companies, whether or not terminated, are to be treated as one defined contribution plan. Benefits under defined benefit plans shall be limited before contributions to defined contribution plans, such as this Plan, are limited. For purposes of computing the limitations described or referred to in this section, the 14 relevant limitation year shall be the Plan Year, which is the calendar year. SECTION 3-5. AUTHORIZED LEAVES OF ABSENCE. During an Authorized Leave of Absence, a Participant shall continue to be a Participant in the Plan and shall retain his interest in the Fund, but no Contributions shall be made to his Accounts during such Authorized Leave of Absence. Should a Participant fail to return to the employment of the Company within three days after the expiration of an Authorized Leave of Absence, he shall be deemed to have terminated his employment with the Company as of the expiration of such three day period. SECTION 3-6. TAX DEDUCTIONS. All Company contributions are made conditioned upon their deductibility for Federal income tax purposes under Section 404 of the Code. Amounts contributed by the Company shall be returned to the Employer from the Plan by the Trustee under the following circumstances: (a) If a contribution was made by the Company by a mistake of fact, the excess of the amount of such contribution over the amount that would have been contributed had there been no mistake of fact shall be returned to the Company within one year after the payment of the contribution; and (b) If the Company makes a contribution which is not deductible under Section 404 of the Code, such contribution (but only to the extent disallowed) shall be returned to the Company within one year after the disallowance of the deduction. Earnings attributable to the contribution shall not be returned to the Company, but losses attributable to such excess contribution shall be deducted from the amount to be returned. In the event (a) or (b) above apply, the Company will distribute any Employee Contributions and Deferred Contributions returned to the Company (less any losses) to the Employees who contributed such amounts. 15 ARTICLE IV. ALLOCATIONS AND ACCOUNTING SECTION 4-1. ALLOCATION OF CONTRIBUTIONS. All contributions shall be credited to Participants' accounts upon remittance to the Trustee. The Benefits Administration Committee shall create and maintain adequate records to disclose the interest in the trust of each Participant, former Participant and Beneficiary. Such records shall be in the form of individual accounts, and credits and charges shall be made to such accounts in the manner herein described. A Participant may have three separate accounts: a Company Contribution Account, an Employee Contribution Account, and a Deferred Contribution Account. The Company Contribution Account shall be divided into subaccounts reflecting contributions with respect to periods prior to January 1, 1994 (the "Pre-1994 Company Contribution Subaccount") and a subaccount reflecting contributions on and after January 1, 1994 (the "Post-1993 Company Contribution Subaccount"). The maintenance of individual accounts is only for accounting purposes, and a segregation of the assets of the trust to each account shall not be required. Distributions and withdrawals made from an account shall be charged to the account as of the date paid. The assets of the trust shall constitute a single fund in which each Participant shall have an undivided proportionate interest. SECTION 4-2. INVESTMENT CHOICES. Contributions to the Plan shall be invested in investment funds maintained by The Vanguard Group of Investment Companies or in a fund invested in Hanson PLC ADRs ("Hanson Fund") in accordance with rules adopted by the Benefits Administration Committee. The Benefits Administration Committee shall obtain descriptions of the investment choices available for the purpose of informing Participants with respect thereto. The selection of investment choices is the sole responsibility of each Participant, and no employee or representative of the Company or any Affiliated Company is authorized to make any recommendation to any Participant with respect to his investment choices. SECTION 4-3. INVESTMENT ELECTIONS. Prior to the date an Employee becomes a Participant hereunder, he must make an investment election which will apply to the investment of all contributions made by or with respect to him except the Post-1993 Company Contribution Subaccount. Separate investment elections with respect to Deferred Contributions, Company Contributions and Employee Contributions may not be made. If a Participant wishes to utilize more than one Fund, he must notify the Company in writing as to the percentage of the contributions to be invested in each Fund. Such percentages must be either 25% or an exact 16 multiple of 25%, i.e., 25%, 50%, 75% or 100%. Amounts in the Post-1993 Company Contribution Subaccount shall be invested exclusively in the Hanson Fund. SECTION 4-4. CHANGES IN INVESTMENT ELECTIONS. A Participant may elect to change his investment election in accordance with rules prescribed by the Benefits Administration Committee but may not transfer amounts in the Post-1993 Company Contribution Subaccount out of the Hanson Fund. SECTION 4-5. DISPOSITION AND ALLOCATION OF FORFEITURES. If a Participant terminates his employment prior to his attainment of age 65 and receives a distribution of his entire vested interest in the Plan or has five consecutive one-year breaks in service, any non-vested portion of his Company Contribution Account shall be forfeited immediately and used first to restore previously forfeited amounts of other Participants as provided for below. Any forfeited amounts not required for this Purpose shall be allocated to the accounts of other Participants in the ratio that each Participant's account balances bear to the account balances of all Participants on the first Valuation Date of each Plan Year. If the Participant resumes employment with the Company before he has five consecutive one-year breaks in service, the non-vested benefit shall be restored to the Participant's accounts in the Fund. The preceding sentence shall not apply to a Participant unless such Participant repays to the trust any amount previously distributed to him in a single sum on or before the earlier of five years after the first date on which the Participant was re-employed or the close of the first period of five consecutive one-year breaks in service commencing after the distribution. The Company shall restore previously forfeited amounts under this paragraph first by applying current forfeitures as provided in the preceding paragraph, and if such amounts are insufficient, by contributing the necessary additional amounts. SECTION 4-6. NATURE OF PARTICIPANTS' RIGHTS IN THE FUND. The interest of any Participant and Beneficiary of any Participant in the Fund and trust shall in no event be subject to sale, assignment, hypothecation or transfer by such Participant or Beneficiary, and each Participant or Beneficiary is hereby prohibited from anticipating, encumbering, assigning or in any manner alienating his interest in this Plan and its assets, and is and shall be without power to do so. Nor shall the interest of any Participant or Beneficiary be liable or subject to debts, liabilities or obligations of the Participant or Beneficiary, nor shall the same, or any part thereof, be subject to any judgment, execution, attachment, garnishment, or other legal processes 17 against such Participant or Beneficiary. Nor shall any Participant have any right of any kind whatsoever with respect to the trust Fund, or any estate or interest therein or with respect to any other property or rights, other than the right to receive such distributions as are lawfully made out of the Fund, as and when the same respectively are due and payable under the terms of this Plan. This Section shall apply to the creation, assignment, or recognition of a right to any benefit payable with respect to a Participant pursuant to a domestic relations order, unless such order is determined to be a "qualified domestic relations order." In the event an alternate payee receives an interest in a Participant's accounts in the Fund pursuant to ERISA Section 206, the payment of such benefits shall be made or shall commence to be made as established by court order. Notwithstanding any other provision of this Plan, an alternate payee under a qualified domestic relations order, as determined in accordance with Section 206 of ERISA, shall be entitled within 180 days from the date the alternate payee receives written notification that the Company has made such a determination, to elect to receive any benefits to which the alternate payee is entitled, payable in accordance with the distribution provisions set forth in Article V of this Plan, in full satisfaction of any liability of the Plan to such person. Earnings on the benefits awarded the Alternate Payee by the court order shall accrue between the date specified for division of the Participant's accounts in the Fund and the date the Alternate Payee's account is opened, only to the extent provided in the court order. An alternate payee may make withdrawals pursuant to Sections 5-5 and 5-6 of the Plan. Notwithstanding any provisions of this Plan to the contrary, the Plan will recognize a "qualified domestic relations order" which shall be a judgment, decree or order (including approval of a property settlement agreement) that meets the requirements of (a), (b) and (c) below: (a) the order relates to child support, alimony, property rights to a spouse, former spouse, child or dependent of a Participant and is issued pursuant to a state domestic relations law; (b) the order includes (1) the name and address of the Participant and alternate payee, (2) the amount or percentage of benefits payable to the alternate payee (or the manner in which the amount or percentage is to be determined), (3) the period or number of payments involved, and (4) the exact name of the plan to which the order applies; and 18 (c) the order does not require a type or form of benefit or option not otherwise offered under the Plan, does not require the Plan to provide increased benefits (determined on an actuarial basis) and does not affect benefits already the subject of a previous qualified domestic relations order. Subsection (c) above shall be interpreted to mean that an order can require a distribution of the portion of a Participant's interest in the Fund that could be immediately withdrawn upon proper application. Notwithstanding Subsection (c) above, an alternate payee may elect any form of payment to which the Participant would be entitled at the time of the alternate payee's benefit commencement. The Benefits Administration Committee shall notify any Participant and alternate payee of the receipt of any order by the Plan and shall inform such Participant and alternate payee of the Plan's procedures for determining whether the order meets the requirements described above in this Section 4-6. Such procedures shall comply with the requirements set forth in Section 414(p) of the Code and Section 206(d) of ERISA. 19 ARTICLE V. DISTRIBUTIONS SECTION 5-1. IN THE EVENT OF THE DEATH OF A PARTICIPANT. Upon the death of a Participant, the full value of his interest in the Fund shall be paid to his Beneficiary in a single sum as soon as practicable after such Valuation Date, but in no event later than five years after the Participant's death. SECTION 5-2. RETIREMENT. A Participant's normal retirement date shall be his 65th birthday. A Participant who has attained the age of 65 years shall be entitled to receive the full value of his interest in the Fund. The Participant shall receive such amount under any of the following methods as elected by the Participant in writing prior to his retirement: Option 1: A single sum payment on or before ninety days after attaining age 65 of the full amount to which he is entitled. Option 2: A payment on the tenth day of February of each of the three succeeding calendar years next following the calendar year in which he attained age 65, of one-third of the amount to which he is entitled. Option 3: A payment on the tenth day of February of each of the ten succeeding calendar years next following the calendar year in which he attained age 65, of one-tenth of the amount to which he is entitled. If no election is made, distribution shall take place in accordance with Option 1, and shall in no event take place later than the 60th day after the close of the year in which the Participant attains age 65. Options 2 and 3 shall be available only if the Participant's interest in the Fund is at least $3,500.00 at the time of his retirement. If a Participant selects Option 2 or 3 and dies prior to receiving all of the sums to which he is entitled, the balance remaining in the hands of the Trustee shall be paid by the Trustee to the Beneficiary of such decedent in single sum within thirty days after receipt by the Trustee of written notice of his death. A Participant eligible for retirement at age 65 may continue in the employ of the Company. Nevertheless, payment of 20 benefits under this Section shall commence upon attainment of age 65 unless the Participant shall have elected prior to attaining age 65 to continue as a Participant in this Plan. If he should so elect, the interest of the Participant in the Fund shall not be distributed to him until his actual retirement, at which time distribution shall be made as in the case of retirement at age 65 as hereinabove provided. Notwithstanding anything to the contrary contained in the Plan, the entire interest of a Participant will be distributed in accordance with Section 401(a)(9) of the Code and the regulations thereunder beginning no later than the Participant's Required Beginning Date as determined below. Minimum distributions will be made based on the life expectancy of such Participant. For purposes of determining the amount of such minimum distribution the Participant's life expectancy will be recalculated annually. Notwithstanding the preceding, a Participant may elect, at any time prior to his Required Beginning Date, to receive the entire amount of his accounts in a lump sum. If such an election is made, the Participant will receive, on or before December 31 of each subsequent calendar year, a lump sum distribution of any subsequent amounts allocated to his accounts. The Required Beginning Date of a Participant who attained age 70-1/2 before January 1, 1988 and who was not a person described in Section 11-1(c)(3) at any time after the first day of the Plan Year in which he attained age 66-1/2 shall be the April 1 following the calendar year in which he terminates employment. The Required Beginning Date of a person described in Section 11-1(c)(3) shall be the later of December 31, 1987, or the April 1 following the calendar year in which the person described in Section 11-1(c)(3) attains age 70-1/2. The Required Beginning Date of any other Participant shall be the later of April 1, 1990, or the April 1 following the calendar year in which the Participant attains age 70-1/2. SECTION 5-3. DISABILITY. In the case of a Participant who incurs Disability, the full value of his interest in the Fund shall be paid to the Participant in a single sum on or before 90 days after the later of his attainment of age 65 or the termination of his employment, but in no event later than April 1 of the calendar year following the calendar year in which the Participant attains age 70-1/2. Such a Participant may elect to receive an immediate distribution of the full value of his interest in the Fund as if he had retired. A Participant who makes the election described in this section may elect to receive his distribution pursuant to any of the options described in Section 5-2. SECTION 5-4. OTHER SEVERANCE OF EMPLOYMENT. In the event that a Participant, prior to attaining age 65, and for 21 reasons other than Disability, ceases to be employed by the Company or an Affiliated Company, he shall be entitled to receive the full value of his Deferred Contribution and Employee Contribution Accounts plus the vested percentage of his Company Contribution Account. A Participant's vested percentage in his Company Contribution Account shall be determined in accordance with the following schedule.
Number of Years of Service Vested Percentage -------------------------- ----------------- Less than one year 0% 1 year but less than 2 years 20% 2 years but less than 3 years 40% 3 years but less than 4 years 60% 4 years but less than 5 years 80% 5 years or more 100%
Years of Service shall mean the number of Plan Years in which an Employee is compensated for at least 1,000 Hours of Service by the Company or an Affiliated Company in any capacity. If a Participant becomes entitled to receive a distribution under this Section, the amount to which he is entitled shall be paid to the Participant in a single sum on or before 90 days after his attainment of age 65, but in no event later than the 60th day after the close of the Year in which he attains age 65. A Participant may elect to receive any amounts which he becomes entitled to receive under this Section in a single sum as soon as practicable subsequent to termination of his employment. If a Participant's employment is terminated, but he is reemployed prior to the time when he would be entitled to a distribution of his interest in the Fund pursuant to this election, he shall not receive a distribution, and shall be entitled to participate in the Plan. Notwithstanding the preceding provisions of this Section, if the amount to which a Participant is entitled upon the termination of his employment does not exceed $3,500, such amount shall be paid to him in a single sum as soon as practicable subsequent to the termination of his employment. SECTION 5-5. WITHDRAWALS OF EMPLOYEE CONTRIBUTIONS. A Participant may, at any time after he has been a Participant for at least three months, and prior to the distribution of his 22 Employee Contribution Account, but not more frequently than once in any three-month period, request the withdrawal of all or a specified portion of his Employee Contribution Account. The Participant's request to withdraw must be made in writing to the Company. Such request must specify the total amount requested to be withdrawn from the Participant's Employee Contribution Account. Any withdrawal under this Section shall be made from the Funds on a pro rata basis. Each such withdrawal election shall be processed as soon as reasonably practicable. If the value of a Participant's Employee Contribution Accounts, as of the actual date of withdrawal, is lower than the value upon which the Participant based his withdrawal election, the amount actually withdrawn shall be limited to the value of such account on the Valuation Date of such withdrawal. SECTION 5-6. HARDSHIP WITHDRAWALS. A Participant may, at any time after he has been a Participant for at least three months, and prior to the distribution of his Deferred Contribution Account or his Company Contribution Account, but not more frequently than once in any three-month period, and with the consent of the Benefits Administration Committee, request the withdrawal of all or a specified portion of his vested Company Contribution Account and his Deferred Contribution Account, provided, however, that no such withdrawal shall be permitted unless the Participant's Employee Contribution Account is then or has previously been completely withdrawn and further provided that no withdrawal from a Participant's Deferred Contribution Account shall be permitted unless the Participant has previously withdrawn or is requesting to withdraw all of his vested Company Contribution Account. Amounts representing income which are credited to a Participant's Deferred Contribution Account after December 31, 1988, may not be withdrawn. The Participant's request to withdraw must be made in writing to the Company. Such request must specify both the total amount requested to be withdrawn from the Participant's Company Contribution Account (and subaccount) and Deferred Contribution Account. Each such withdrawal election shall be processed as soon as reasonably practicable and shall be given effect as of a Valuation Date. If the value of a Participant's vested accounts, as of the actual date of withdrawal, is lower than the value upon which the Participant based his withdrawal election, the amount actually withdrawn from the accounts shall be limited to the value of such accounts on the Valuation date of such withdrawal. 23 The basis for the Benefits Administration Committee consenting to or refusing to consent to the Participant's request shall be that of demonstrated hardship. For purposes of this section, a hardship exists only if there is an immediate and heavy financial need of the Participant and a withdrawal under this Section is necessary to satisfy such financial need. The determination of whether a Participant has an immediate and heavy financial need is to be made on the basis of all relevant facts and circumstances. A financial need shall not fail to qualify as immediate and heavy merely because such need was reasonably foreseeable or voluntarily incurred by the Participant. A withdrawal request will be deemed to be made on account of an immediate and heavy financial need of the Participant if the request is on account of: (1) Medical expenses described in Section 213(d) of the Code incurred by the Participant, the Participant's spouse, or any dependents of the Participant (as defined in Section 152 of the Code); (2) Purchase (excluding mortgage payments) of a principal residence for the Participant; (3) Payment of tuition for the next 12 months of post-secondary education for the Participant, his spouse, children, or dependents; (4) The need to prevent the eviction of the Participant from his principal residence or foreclosure on the mortgage of the Participant's principal residence; or (5) Other definitions of deemed immediate and heavy financial needs promulgated by the Commissioner of Internal Revenue through the publication of revenue rulings, notices, and other documents of general applicability. A withdrawal will not be treated as necessary to satisfy an immediate and heavy financial need of a Participant unless all of the following requirements are satisfied: (1) The Participant states in writing that the withdrawal is not in excess of the amount of the immediate and heavy financial need of the Participant, 24 (2) The Participant has obtained all distributions, other than hardship distributions, and all nontaxable loans currently available under all plans maintained by the Company, (3) The Participant's Deferred Contribution and Employee Contributions will be suspended for 12 months after receipt of the hardship withdrawal, and (4) The Participant may not make Deferred Contributions for the Participant's taxable year immediately following the taxable year of the hardship withdrawal in excess of the applicable limit under Section 402(g) of the Code for such next taxable year less the amount of such Participant's Deferred Contributions for the taxable year of the hardship withdrawal. The Benefits Administration Committee may accept the written statement of the Participant as to his financial resources unless it has reason to believe the statement is in error. The Benefits Administration Committee shall have the right to request any additional information or documentation which it deems necessary or desirable to assist it in its determination as to whether a hardship exists, or as may be required to maintain the qualified status of the Plan. No withdrawal from a Participant's Deferred Contribution Account shall be permitted unless a complete withdrawal of the Participant's Employee Contribution Account is insufficient to defray the hardship. If a Participant has an outstanding Plan Loan pursuant to Article XI, no withdrawal shall be permitted which would reduce the Participant's vested interest in his Accounts below the sum of the outstanding principal balance of the loan plus any interest to be accrued with respect to such loan. Amounts withdrawn by a Participant may not be returned to the Plan. SECTION 5-7. NOTICE. In the event that the vested account balances of a Participant to be distributed pursuant to Section 5-3 or 5-4 exceed (or at the time of any prior distribution exceeded) $3,500, such Participant shall receive from the Benefits Administration Committee, during a period beginning not more than 90 days and ending not less than 30 days before the Valuation Date as of which distribution is to be made, a written notification of: 25 (1) the value of his benefits under the Plan; and (2) his right to defer receipt of vested benefits. SECTION 5-8. CONSENT. The Participant's consent to the distribution of the vested portion of his accounts must be: (1) in writing; (2) made after the Participant receives the written notice described in the preceding sentence; and (3) made within 90 days before the Valuation Date as of which distribution to the Participant is to be made. If the Participant elects to receive benefits before 30 days have elapsed since his receipt of the Notice described in Section 5-7, he will be deemed to have waived his right to such 30-day notice. SECTION 5-9. DISTRIBUTIONS IN KIND. At least 30 days prior to actual distribution, a Participant may elect that any distribution pursuant to Sections 5-1, 5-2, 5-3 or 5-4 from accounts invested in the Hanson Fund be distributed in whole units of Hanson PLC ADRs and cash for any fractional units. 26 ARTICLE VI. THE COMPANY SECTION 6-1. THE COMPANY'S INTEREST IN THE PLAN. This Plan is created and shall be maintained for the exclusive benefit of participating Employees and is intended to qualify as an employee's profit-sharing trust under the provisions of Section 401 of the Code. Nothing contained herein, however, shall be construed so as to impair the right of the Company to see to the proper administration of the Plan according to its terms. SECTION 6-2. EXAMINATION OF PLAN DOCUMENTS. Copies of the Plan and any amendments thereto will be on file at the principal office of the Company where they may be examined by any Participant or any other person entitled to benefits under the Plan. SECTION 6-3. PAYMENT WITH RESPECT TO INCAPACITATED PARTICIPANTS OR BENEFICIARIES. If any person entitled to benefits under the Plan is under a legal disability or, in the opinion of the Benefits Administration Committee, is incapacitated in any way so as to be unable to manage his financial affairs, the Benefits Administration Committee may direct the payment of such benefits to such person's legal representative or to a relative or friend of such person for such person's benefit, or the Benefits Administration Committee may direct the application of such benefits for the benefit of such person in any manner which the Benefits Administration Committee may select that is permitted by federal law and is consistent with the Plan. Any payments made in accordance with the foregoing provisions of this section shall be a full and complete discharge of any liability for such payments. SECTION 6-4. NO EMPLOYMENT OR BENEFIT GUARANTY. None of the establishment of the Plan, any modification thereof, the creation of any fund or account, or the payment of any benefits shall be construed as giving to any Participant or other person any legal equitable right against the Company, the Benefits Administration Committee or any Trustee except as provided herein. Under no circumstances shall the maintenance of this Plan constitute a contract of employment or shall the terms of employment of any participant be modified or in any way affected hereby, Accordingly, participation in the Plan will not give any Participant a right to be retained in the employ of the Company or any Affiliated Company. Neither the Benefits Administration Committee nor the Company in any way guarantees any assets of the Plan from loss or depreciation or any payment to any person. The liability of the Benefits Administration Committee or the Company 27 as to any payment or distribution of benefits under the Plan is limited to the available assets of the trust fund. SECTION 6-5. LITIGATION. In any action or proceeding regarding any Plan assets, any Plan benefits or the administration of the Plan, employees or former employees of the company, their beneficiaries, and any other persons claiming to have an interest in the Plan, shall not be necessary parties and shall not be entitled to any notice of process. Any final judgment which is not appealed or appealable and which may be entered in any such action or proceeding shall be binding and conclusive on the parties hereto and on all persons having or claiming to have any interest in the Plan. To the extent permitted by law, if a legal action is begun against the Benefits Administration Committee, the Company, or any Trustee by or on behalf of any person and such action results adversely to such persons, or if a legal action arises because of conflicting claims to the Participant's or other person's benefit, the cost of the Company, the Benefits Administration Committee, or the Trustee of defending the action will be charged to the sums, if any, which were involved in the action or were payable to the Participant or the other person concerned. Acceptance of participation in the Plan shall constitute a release of the Company, the Benefits Administration Committee, any Trustee and their agents from any and all liability and obligation not involving willful misconduct or gross neglect of the extent permitted by applicable law. Notwithstanding any other provisions of the Plan, if the Benefits Administration Committee is required by a final court order to distribute the benefits of a Participant other than in a manner required under the Plan, then the Benefits Administration Committee shall cause the Participant's benefits to be distributed in a manner consistent with such final court order. The Benefits Administration Committee shall not be required to comply with the requirements of a final court order in any action in which the Benefits Administration Committee, a Trustee, the Plan or the trust was not a party. SECTION 6-6. SEVERABILITY. If any provisions of the Plan shall be held illegal or invalid for any reason, such illegality or invalidity shall not affect the remaining provisions of the Plan, and the Plan shall be construed and enforced as if such illegal and invalid provisions had never been set forth in the Plan. SECTION 6-7. AMENDMENT OF THE PLAN. This Plan may be amended at any time, and from time to time, by resolution of the Board of Directors of the Company. The Plan, as amended, shall apply to the Participants and the Company, unless a participating company elects to withdraw from the Plan. Such power of 28 amendment shall under no circumstances include the right to reinvest or otherwise transfer any interest in or to the accounts, or any income therefrom, to the Company; nor shall the power of amendment include the right, in any way or to any extent, to divest any Participant of the interest in his accounts to which he would be entitled if he had terminated his service immediately before such amendment; provided further that the rights, duties or responsibilities of the Trustee shall not be substantially changed without its written consent. Neither shall such power of amendment be executed in any way which would or could give to any Participant or Beneficiary any right or thing of exchangeable value in advance of the receipt of distributions hereunder. Notwithstanding the foregoing provisions of this section, this Plan may be amended in any manner whatsoever, with prospective or retroactive effect, for the purpose of qualifying it under, or complying with, any provision of the Code or ERISA. The Company intends that this Plan, as amended from time to time, shall constitute a qualified Plan under the provisions of Section 401(a) and (k) of the Code as amended. The Company intends that this Plan shall continue to be maintained for the above purposes indefinitely, subject, however, to the rights reserved in the Company to amend and terminate the Plan as set forth herein. Nothing contained in this Plan shall be construed as disqualifying any Employee of the Company from any benefits under any other plan or program to which such Employee would be entitled in the absence of this Plan. 29 ARTICLE VII. THE TRUSTEE SECTION 7-1. THE TRUSTEE. For purposes of investing contributions under this Plan, the Company shall establish one or more trusts or enter into one or more group annuity contracts with one or more insurers, or may establish a combination of one or more trusts or insurance contracts. The Company shall have the responsibility for selecting the Trustee(s) and/or insurer(s) hereunder and may establish alternative funds for the purpose of investing amounts derived from contributions hereunder pursuant to Participants' elections. SECTION 7-2. ALLOCATION OF RESPONSIBILITY AMONG FIDUCIARIES FOR PLAN AND TRUST ADMINISTRATION. The Fiduciaries shall have only those specific powers, duties, responsibilities and obligations as are specifically given them under this Plan or any trust agreement with respect to this Plan. In general, the Company shall have the sole responsibility for making the contributions provided for under Section 3-3, and the Company shall have the sole authority to appoint and remove the Trustee, members of the Benefits Administration Committee, and to amend or terminate, in whole or in part, this Plan or the trust. The Benefits Administration Committee shall have the sole responsibility for the administration of this Plan. The Trustee shall have the sole responsibility for the administration of the trust and the management of the assets held under the trust, all as specifically provided in the trust. Each fiduciary warrants that any directions given, information furnished, or action taken by it shall be in accordance with the provisions of the Plan or the trust, as the case may be, authorizing or providing for such direction, information or action. Furthermore, each fiduciary may rely upon such direction, information or action of another fiduciary as being proper under this Plan or the trust, and is not required under this Plan or the trust to inquire into the propriety of any such direction, information or action. It is intended under this Plan and the trust that each fiduciary shall be responsible for the proper exercise of its own powers, duties, responsibilities and obligations under this Plan and the trust and shall not be responsible for any act or failure to act of another fiduciary. The Company shall indemnify and hold harmless each member of its Board of Directors, the Benefits Administration Committee and each of its officers and employees from and against any and all liability, loss, costs, charges, expenses, claims and demands of every kind and character arising out of, or in any way resulting from, the acts, omissions or conduct of any such persons in the management, operation and administration of the 30 Plan and the trust which any of them may suffer, incur or sustain, except that the Company shall not indemnify and hold harmless any such person who, with respect to such acts, omissions or conduct, is guilty of willful misconduct or lack of good faith. In addition, the Plan or the Company may purchase fiduciary liability insurance for any Board of Directors of the Company, for the Benefits Administration Committee, and their members and for the officers and employees of the Company. 31 ARTICLE VIII. THE BENEFITS ADMINISTRATION COMMITTEE SECTION 8-1. MEMBERSHIP. The Benefits Administration Committee shall consist of three or more members, who shall be selected by the Board of Directors of the Company. The Board of Directors shall designate one member of the Benefits Administration Committee who shall be chairman. The Board of Directors of the Company may at any time remove any of the members of the Benefits Administration Committee and may appoint other members to serve. Likewise, in the event of the death, resignation or incapacity of a member of the Benefits Administration Committee, a successor shall be selected by the Board of Directors to serve in his place. Each member of the Benefits Administration Committee shall serve on the Benefits Administration Committee until such time as he shall resign, die, become incapacitated, or be removed by the Board of Directors. The members of the Benefits Administration Committee shall not receive any compensation for their services as members of the Benefits Administration Committee. The Benefits Administration Committee shall be bonded in accordance with the requirements of ERISA. SECTION 8-2. PLAN ADMINISTRATOR. The Benefits Administration Committee shall be the Plan Administrator and shall supervise and direct the Trustee in the management and administration of the Fund in accordance with the terms and provisions of the Plan. SECTION 8-3. PROCEEDINGS OF THE BENEFITS ADMINISTRATION COMMITTEE. The Benefits Administration Committee shall meet and act as a body and the individual members of the Benefits Administration Committee shall have no powers and duties as such, except that the Benefits Administration Committee may appoint a member or members or other parties to keep the records and file such reports and notices as required. On all matters, the decision of the majority of the members of the Benefits Administration Committee shall control; provided, however, if the members of the Benefits Administration Committee are equally divided upon any matter or question requiring their joint action, then the decision of the chairman with respect thereto shall control. SECTION 8-4. CONSTRUCTION OF TERMS AND PROVISIONS OF THE PLAN. The members of the Benefits Administration Committee shall have discretionary authority to construe, interpret and 32 administer the terms and provisions of this Plan. The construction and interpretation of this Plan by the Benefits Administration Committee shall be binding and conclusive on all parties. SECTION 8-5. RESOLUTION OF DISPUTES. In the event a dispute arises regarding the rights of an Employee, Participant or Beneficiary under the terms of this Plan, the decision of the Benefits Administration Committee shall be final and binding, subject to review as provided below. The Benefits Administration Committee shall within ninety (90) days provide a notice in writing to any person whose claim for benefits under this Plan has been denied, setting forth the specific reasons for such denial, specific references to the Plan provisions on which the denial was based and an explanation of the procedure for review of the denial. Such person, or his duly authorized representative, may appeal to the Benefits Administration Committee for a review of the denial by sending to the Benefits Administration Committee a written request for review within sixty (60) days after receiving notice of the denial. The request for review shall set forth all grounds on which it is based, together with supporting facts and evidence which the claimant deems pertinent, and the Benefits Administration Committee shall give the claimant the opportunity to review pertinent documents in preparing the request. The Benefits Administration Committee may require the claimant to submit such additional facts, documents or other material as it deems necessary or advisable in making the review. Within sixty (60) days after the receipt of the request for review, the Benefits Administration Committee shall communicate to the Claimant written notice of its decision, including therein specific reasons and references to pertinent Plan provisions upon which the decision is based. 33 ARTICLE IX. TERMINATION OR MERGER OF THE PLAN SECTION 9-1. TERMINATION OR MERGER OF THE PLAN. The Company may terminate this Plan at any time, such termination to become effective at the time specified in a written notice to the Trustee. Notice of such termination shall be given to the Participants as soon as practicable after notice is given to the Trustee. In the event of the dissolution, merger, consolidation or reorganization of the Company, provision may be made by which the Plan and trust will be continued by the successor; and, in that event, such successor shall be substituted for the Company under the Plan. The substitution of the successor shall constitute an assumption of Plan liabilities by the successor and the successor shall have all of the powers, duties and responsibilities of the Company under the Plan. In the event of any merger or consolidation of the Plan with, or transfer in whole or in part of the assets and liabilities of the trust fund to another trust fund held under any other plan of deferred compensation maintained or to be established for the benefit of all or some of the Participants of this plan, the assets of the Trust applicable to such Participants shall be transferred to the other trust fund only if: (a) each Participant would (if either this Plan or the other plan then terminated) 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 this Plan had then terminated); (b) resolutions of the Board of Directors of the Company under this Plan, or of any new or successor employer of the affected Participants, shall authorize such transfer of assets; and, in the case of the new or successor employer of the affected Participants, its resolutions shall include an assumption of liabilities with respect to such Participants' inclusion in the new employer's plan; and (c) such other plan and trust are qualified under Sections 401(a) and 501(a) of the Code. Upon a termination of the Plan, the Company shall make no further contributions to the trust and the Trustee shall 34 effect such liquidation of the assets of the trust as may be necessary or desirable to make distribution thereof and distribute to each Participant or Beneficiary within a reasonable time after such termination (subject to delay in the event of administrative difficulties) the interest in the Fund to which he is entitled. Upon a complete or partial termination of the Plan, all accounts shall be fully vested and nonforfeitable. 35 ARTICLE X. LOANS SECTION 10-1. PARTICIPANT LOANS. A Participant may borrow from the Plan, subject to the following provisions of this Article and to such additional standards as the Benefits Administration Committee may adopt, by making prior written application to the Benefits Administration Committee. A Participant seeking a loan hereunder must submit a written application (hereinafter referred to as the "completed application") which shall (i) specify the terms pursuant to which the loan is requested to be made, including the requested effective date, (ii) authorize the repayment of the loan through payroll deductions, (iii) provide such information and documentation as the Benefits Administration Committee shall require, and (iv) include a promissory note, duly executed by the Participant, granting a security interest in 50% of the value of the Participant's vested interest in his accounts in the Plan to secure the loan. SECTION 10-2. LOAN REQUIREMENTS. Any loan to a Participant under this Article shall be subject to the following requirements: (a) The loan may not exceed the lesser of $50,000 or 50 percent of the value of the Participant's vested interest in his accounts; provided that the amount of the loan shall be further limited so that the monthly repayment does not exceed 25% of the Participant's Compensation. The maximum loan amount of $50,000 otherwise available to a Participant is reduced by the excess, if any, of the highest outstanding balance of Plan loans to the Participant during the one-year period ending on the day before the loan is made over the outstanding balance of loans from the Plan on the date when the loan is made. (b) The loan must be at least $1,000, or in $500 increments above $1,000. (c) The loan shall provide for a fixed rate of interest for the entire term of the loan. The applicable interest rate for Plan loans shall be the current estimated blended fixed interest rate for Fixed Income Fund or the Prime Rate published in the Wall Street Journal at the beginning of the current calendar quarter plus 1%, whichever is higher, provided that the Benefits Administration Committee may in its discretion establish a 36 different method of establishing the interest rate consistent with the provisions of Section 4975(d)(1) of the Code and other applicable legal requirements. Should the Prime Rate be published as a range in the Wall Street Journal, the Prime Rate shall be deemed to be the midpoint of the published range. (d) The loan shall be for a term of one, two, three, four or five years. (e) Notwithstanding the five year limit in Section 10-2(d), any loan used to acquire or construct any dwelling unit which, within a reasonable time, is to be used as the principal residence of the Participant may be for a term of up to 15 years; provided that the term must be a multiple of 12 months. (f) The Benefits Administration Committee shall establish standards in accordance with ERISA and the Code and such rules as it deems necessary which shall be uniformly applicable to all Participants similarly situated and shall govern the Benefits Administration Committee's approval or disapproval of completed applications. The terms for each loan shall be set solely in accordance with this Section and such standards adopted by the Benefits Administration Committee in accordance with Section 10-4. Such standards may prescribe minimum repayment periods, a maximum and minimum loan amount (within the limitations specified above), and other relevant factors. (g) Each time a Participant takes a loan, he shall not be permitted to take a subsequent loan under the Plan until three months after the prior loan has been repaid in full, but in no event shall a Participant be permitted to obtain more than one loan in a twelve month period from the date of the approval of the last outstanding loan. (h) Except as otherwise provided by the Benefits Administration Committee, a Participant may not take a loan in the same month, or the month subsequent to the month in which a withdrawal request was submitted or a distribution made. 37 SECTION 10-3. PROMISSORY NOTE. (a) Each loan shall be evidenced by a promissory note executed by the Participant and payable to the Trustee, due and payable in full not later than the earliest of: (i) a fixed maturity date meeting the requirements of Section 10-2(d) or (e) above; (ii) the Participant's death; or (iii) the time which the Participant ceases to be an Employee. (b) The promissory note shall provide for the payment of equal monthly installments of principal and interest on the unpaid balance of principal at the fixed annual rate set forth in Section 10-2(c) on the date the note is executed. The note shall further provide that the monthly payments shall be through payroll deductions. (c) The promissory note shall evidence such additional terms as are required by this Section or by the Benefits Administration Committee. SECTION 10-4. LOAN REQUEST. The Benefits Administration Committee shall, in accordance with its established standards, review and approve or disapprove a completed application as soon as practicable after its receipt thereof, and shall promptly notify the applying Participant of such approval or disapproval. In the event the Trustee shall advise the Benefits Administration Committee that it is not reasonably able, in the interests of Participants, to prudently distribute the necessary amounts from the Fund to satisfy all Participants' completed applications in accordance with this Article, the amount to be made available to each Participant shall be reduced in proportion to the ratio which the aggregate amount that the Trustee has advised the Benefits Administration Committee may prudently be so distributed, bears to the aggregate amount sought by all Participants' completed applications. SECTION 10-5. SOURCE OF LOAN. A Participant shall first borrow from his available Employee Contribution Account. If the Participant's Employee Contribution Account is not sufficient to fund the loan, the Participant shall next borrow from his vested Pre-1994 Company Contribution Subaccount. If the loan exceeds the sum of the Employee Contribution Account and the vested Pre-1994 Company Contribution Subaccount balances, the Participant shall next borrow from his Deferred Contribution Account. Lastly, the Participant shall borrow from his vested Post-1993 Company Contribution Subaccount. 38 SECTION 10-6. LOAN AS INDIVIDUAL ASSET OF BORROWING PARTICIPANT. Each loan shall be made only from the accounts of the borrowing Participant and shall be treated as an investment of the Participant's accounts from which the Participant's loan was funded. SECTION 10-7. REPAYMENT OF LOANS. Each loan to a Participant under this Article shall be repaid in level monthly amounts over a period meeting the requirements of Section 10-2. The monthly installments must be paid through automatic payroll deductions, except as provided by the Benefits Administration Committee. A Participant may request a subsequent loan after full repayment of a prior loan, subject to the maximum loan amount set forth in Section 10-2(a). All loan repayments made through payroll deductions shall be transmitted by the Company to the Trustee as soon as practicable after such amounts are withheld. Any repayment of a loan from the Post-1993 Company Contribution Subaccount shall be invested in the Hanson Fund in the same proportion as the proportion of the loan which is attributable to the Post-1993 Company Contribution Subaccount. SECTION 10-8. ALLOCATIONS OF REPAYMENTS. Each loan repayment of principal and interest will be allocated to the Participant's accounts in the same proportion from which the loan was funded as provided in Section 10-5 hereof. SECTION 10-9. LOAN SECURED BY PARTICIPANT'S ACCOUNTS. Repayment of any loan under the Plan shall be secured by his promissory note and the Participant's vested interest in his accounts. SECTION 10-10. LEAVE OF ABSENCE. If a Participant with an outstanding loan takes an authorized leave of absence or incurs a temporary disability so the regular monthly installment payments cannot be made on a payroll deduction basis, the Participant will be required to make the regular monthly payments of principal and interest at the time and place established by the Benefits Administration Committee. SECTION 10-11. ACCELERATION OF LOAN. If any time prior to the full repayment of a loan to a Participant under the Plan, the Participant should cease to be a Participant by reason of his or her retirement, death, severance from employment, change to salaried status, or otherwise, or the Plan should terminate, or any event of default otherwise occurs under the documents evidencing the loan; the unpaid balance owed by the Participant on the loan shall be due and payable in full immediately without notice or demand. If the Participant does not repay the full amount of the unpaid balance within the time established by the Benefits Administration Committee, no 39 Contributions shall be made to the Participant's accounts, and the Plan Administrator may take whatever steps it deems necessary to collect the unpaid balance of the loan plus any accrued interest. The amount of the distribution otherwise payable to the Participant or the amount of the Participant's interest in his accounts, (or, in the case of his death, to his Beneficiary) shall be reduced by the amount of outstanding principal and interest on the loan at the time of such distribution and applied in satisfaction of the Participant's loan obligations. To the extent that the reduction in the amount of the distribution or the reduction in the Participant's interest is sufficient to discharge the Participant's total outstanding liability under the loan, such reduction shall constitute a complete discharge of all liability of the Participant to the Plan for the loan. In the event that the reduction in this Section 10-11 is not sufficient to fully discharge the Participant's obligation under the loan, the Participant, his heirs, successors and assigns shall be liable for the payment of the remaining amounts due under the loan, and such Participant, his heirs, successors or assigns shall make payment upon notice by the Administration committee. SECTION 10-12. COMPLIANCE WITH APPLICABLE LAWS. Notwithstanding anything to the contrary contained herein, each loan shall be made only in accordance with the regulations and rulings of the Internal Revenue Service and other applicable state or federal laws. The Benefits Administration Committee shall act in its sole discretion to ascertain whether the requirement of such laws, regulations, and rulings have been met. SECTION 10-13. LOANS LIMITED TO EMPLOYEES. Except as otherwise provided in this Section 10-13, no loan shall be made to any Participant who has terminated employment with the Company on the date the loan is made. However, loans shall be made available subject to the terms of this Article X, to interested parties as defined in Section 3(14) of the Employee Retirement Income Act of 1974, even if such interested party is no longer an Employee. 40 ARTICLE XI. TOP HEAVY RULES SECTION 11-1. TOP HEAVY RULES. (a) If the Plan is or ever becomes "top-heavy" as determined under subsection (b), the following special rules shall apply: (1) If the Plan is top-heavy for a year, each Participant who is an Employee on the last day of the Plan Year shall receive a contribution from the Company equal to the product of: a) the Participant's compensation while an active Participant during the Plan Year, and b) the lesser of 3% or the ratio of Deferred Contributions to compensation with respect to the key Employee (as defined in subsection (c)) whose ratio is highest for the year. For purposes of this section, compensation shall mean the total amount of wages, tips and other compensation shown on an employee's Form W-2 for the Plan Year, provided, however, that compensation in excess of $150,000 (adjusted at the same time and manner as under Section 415(d) of the Code) shall be disregarded. All non-key employees who are Participants in the Plan and who have not separated from service by the end of the Plan Year shall receive an allocation pursuant to this subsection. A non-key Employee shall not fail to receive an allocation pursuant to this subsection because he fails to elect Deferred Contributions or Employee Contributions for the Plan Year. If a Participant also participates in a defined benefit plan maintained by the Company or any Affiliated Company which is top-heavy, the minimum allocation percentage specified in this subsection shall be increased to 5% of compensation. This sentence shall not apply to the extent that the Participant participates in any other plan or 41 plans of the Company or an Affiliated Company which provide that the defined benefit minimum allocation or benefit applicable to top-heavy plans will be provided by such other plan or plans. (2) All Company-provided benefits shall become fully vested upon completion of three Years of Service. (b) This Plan is "top-heavy" for a Plan Year if, as of the last day of the preceding Plan Year or, in the case of the first Plan Year of the Plan, the last day of such Plan Year (the "determination date"), the amount credited to the accounts of Key Employees (as defined in subsection (c)) exceeds 60% of the amount credited to the accounts of all Participants (except former Key Employees). Notwithstanding the foregoing, the Plan shall be top heavy if, as of the determination date described above, it is included in an "aggregation group" which is a "top heavy group." "Aggregation group" means the group of plans, if any, that includes both the group of plans that are aggregated on a required basis or a permissive basis (in the sole discretion of the Benefits Administration Committee) in accordance with the following: (1) Required Aggregation Group. The Aggregation Group shall include: a) each employee benefit plan of the Company or an Affiliated Company qualified under Section 401(a) for the Code in which a key Employee is a participant, and b) each other qualified plan which enables any plan described in (a) to meet the nondiscrimination and participation requirement of Section 401(a)(4) and Section 410 of the Code. (2) Permissive Aggregation Group. The Aggregation Group may include any one or more other such plans of the Company or an Affiliated Company, provided that after the inclusion of such other plan or plans the Aggregation Group would continue to meet the 42 nondiscrimination and participation requirements of Section 401(a)(4) and Section 410 of the Code with such other plan or plans taken into account. The term "top-heavy group" means any aggregation group if (1) the sum (as of the determination date described above) of a) the present value of the cumulative accrued benefits for key Employees under all defined benefits plans included in such group, and b) the aggregate of the accounts of key Employees under all defined contribution plans included in such group, (2) exceed 60 percent of a similar sum determined for all Employees. For purposes of determining whether this Plan is top heavy, the aggregate distributions (without interest thereon) made under the Plan to a Participant during the 5-year period ending on the determination date shall be taken into account if the Participant's account or benefit is otherwise taken in account in determining whether the Plan is top heavy. If any individual has not performed services for the Company at any time during the five-year period ending on the determination date, the account of such individual shall not be taken into account for purposes of determining whether this plan is top-heavy. (c) A Participant shall be a "Key Employee" if, during the Plan Year in question or any of the four preceding Plan Years, he is: (1) an officer of the Company having Compensation greater than 50% of the amount in effect under Section 415(b)(1)(A) of the Code (but no more than fifty Employees or, if less, the greater of three Employees or ten percent of all Employees) shall be taken into account, as specified by the Benefits Administration Committee; (2) one of the ten Employees owning (or considered as owning within the meaning of 43 Section 318 of the Code) the largest interest in the Company; (3) a five percent (5%) owner of the Company; or (4) a one percent (14) or more owner of the Company having an annual compensation from the Company of more than $150,000. (d) If the Plan is top-heavy for a Plan Year, then for purposes of computing the maximum additions described in Section 4-4 and Section 415 of the Code, the defined benefit plan fraction and the defined contribution plan fraction, shall be computed by substituting the number 1.0 for the number 1.25. The Company may elect to disregard the preceding sentence if, as of the last day of the preceding Plan Year, the amount credited to the accounts of Key Employees does not exceed 90% of the amount credited to the accounts of all Participants (except former Key Employees). If the Company makes the election described in the preceding sentence, the minimum allocation percentage specified in subsection (a) shall be increased to 4% of compensation for all Participants and 7 1/2% for Participants who also participate in a defined benefit plan maintained by the Company or an Affiliated Company which is top-heavy. 44 ARTICLE XII. ROLLOVERS AND TRANSFERS SECTION 12-1. ROLLOVERS. The Plan Administrator is authorized to accept a Rollover Contribution from an Employee in cash, even if he or she is not yet a Participant. The Employee shall furnish satisfactory evidence that the amount is eligible for rollover treatment. A Rollover Contribution must be paid to the Plan Administrator in cash within sixty (60) days after the date received by the Employee from a qualified plan. Such amounts shall be posted to the Employee's Rollover Account by the Plan Administrator as of the date received by the Plan Administrator. If it is later determined that an amount transferred pursuant to the above paragraph did not in fact qualify as a Rollover Contribution, the balance credited to the Employee's Rollover Account shall immediately be (1) segregated from all other Plan assets, (2) treated as a non-qualified trust established by and for the benefit of the Employee, and (3) distributed to the Employee. Any such nonqualifying rollover shall be deemed never to have been a part of the Plan. SECTION 12-2. TRUSTEE TRANSFERS FROM OTHER QUALIFIED PLANS. The Plan may receive assets in cash or in kind from another qualified plan. The Trustee may refuse the receipt of any transfer if; 1. the Plan Administrator finds the in-kind assets unacceptable, 2. instructions for posting amounts to Participants' Accounts are incomplete, 3. any amounts are not exempted by Section 401(a)(11)(B) of the Code from the annuity requirements of Section 417 of the Code, or 4. any amounts include benefits protected by Section 411(d)(6) of the Code which would not be preserved under applicable Plan provisions. Such amounts shall be posted to the appropriate Accounts of Participants as of the date received by the Plan Administrator. SECTION 12-3. TRUSTEE TRANSFER TO OTHER QUALIFIED PLANS. With respect to any payment hereunder which constitutes an eligible rollover distribution (within the meaning of Section 402(c)(4) of the Code), a Participant (or beneficiary) may direct 45 the Plan Administrator to have such payment paid in the form of a Trustee Transfer, provided the Plan Administrator receives written notice of such direction with specific instructions as to the eligible retirement plan as defined in Section 401(a)(31)(D) to which the Trustee Transfer is to be made on or prior to the applicable notice date for payment. SECTION 12-4. DEFINITIONS. For purposes of this Article, the following terms shall apply: "Rollover Contributions" means a rollover contribution as described in Section 402(c) of the Code (or its predecessor). "Trustee Transfer" means (a) a transfer to the Trustee of an amount by the trustee of a retirement plan qualified for tax-favored treatment under Section 401(a) of the Code or by the trustee(s) of a trust forming part of such a plan, which plan provides for such transfer; or (b) a transfer from the Plan Administrator of an amount for the benefit of a Participant to the custodian of an eligible retirement plan within the meaning of Section 402(c)(8)(B) of the Code, provided such plan provides for the receipt of such transfers. IN WITNESS WHEREOF, the Company has caused the Plan to be executed by one of its duly authorized officers this 31st day of December, 1993. ----- --------- HANSON NATURAL RESOURCES COMPANY By: /s/ signature ---------------------------------------- [ATTEST] /s/ Cindy Ann Brinks ---------------------------------------- 46 EX-99.4 12 ex99p4.txt EXHIBIT 99.4 ------------ BASIC PLAN DOCUMENT 04 TABLE OF CONTENTS SECTION ONE: DEFINITIONS 1.01 Adoption Agreement .....................................................................................1 1.02 Basic Plan Document ....................................................................................1 1.03 Beneficiary ............................................................................................1 1.04 Break in Eligibility Service............................................................................1 1.05 Break in Vesting Service................................................................................1 1.06 Code....................................................................................................1 1.07 Compensation............................................................................................1 1.08 Custodian...............................................................................................3 1.09 Disability..............................................................................................3 1.10 Early Retirement Age ...................................................................................3 1.11 Earned Income ..........................................................................................3 1.12 Effective Date..........................................................................................3 1.13 Eligibility Computation Period..........................................................................3 1.14 Employee................................................................................................3 1.15 Employer................................................................................................3 1.16 Employer Contribution...................................................................................3 1.17 Employment Commencement Date............................................................................3 1.18 Employer Profit Sharing Contribution....................................................................3 1.19 Entry Dates.............................................................................................4 1.20 ERISA...................................................................................................4 1.21 Forfeiture..............................................................................................4 1.22 Fund....................................................................................................4 1.23 Highly Compensated Employee.............................................................................4 1.24 Hours of Service........................................................................................4 1.25 Individual Account......................................................................................5 1.26 Investment Fund ........................................................................................5 1.27 Key Employee............................................................................................5 1.28 Leased Employee.........................................................................................5 1.29 Nondeductible Employee Contributions....................................................................5 1.30 Normal Retirement Age...................................................................................6 1.31 Owner-Employee..........................................................................................6 1.32 Participant.............................................................................................6 1.33 Plan....................................................................................................6 1.34 Plan Administrator......................................................................................6 1.35 Plan Year...............................................................................................6 1.36 Prior Plan..............................................................................................6 1.37 Prototype Sponsor ......................................................................................6 1.38 Qualifying Participant..................................................................................6 1.39 Related Employer........................................................................................6 1.40 Related Employer Participation Agreement................................................................6 1.41 Self-Employed Individual................................................................................6 1.42 Separate Fund ..........................................................................................6 1.43 Taxable Wage Base.......................................................................................6 1.44 Termination of Employment ..............................................................................6 1.45 Top-Heavy Plan..........................................................................................7 1.46 Trustee.................................................................................................7 1.47 Valuation Date..........................................................................................7 1.48 Vested..................................................................................................7 1.49 Year of Eligibility Service.............................................................................7 1.50 Year of Vesting Service.................................................................................7 SECTION TWO: ELIGIBILITY AND PARTICIPATION 2.01 Eligibility To Participate .............................................................................7 2.02 Plan Entry .............................................................................................7 2.03 Transfer to or From Ineligible Class ...................................................................8 2.04 Return as a Participant After Break in Eligibility Service .............................................8 2.05 Determinations Under This Section ......................................................................8 2.06 Terms of Employment ....................................................................................8 2.07 Special Rules Where Elapsed Time Method Is Being Used ..................................................8 2.08 Election Not To Participate ............................................................................9 SECTION THREE: CONTRIBUTIONS 3.01 Employer Contributions..................................................................................9 3.02 Nondeductible Employee Contributions ..................................................................11 3.03 Rollover Contributions ................................................................................12 3.04 Transfer Contributions ................................................................................12 3.05 Limitation on Allocations .............................................................................12 SECTION FOUR: INDIVIDUAL ACCOUNTS OF PARTICIPANTS AND VALUATION 4.01 Individual Accounts ...................................................................................16 4.02 Valuation of Fund .....................................................................................16 4.03 Valuation of Individual Accounts ......................................................................16 4.04 Modification of Method for Valuing Individual Accounts ................................................17 4.05 Segregation of Assets .................................................................................17 4.06 Statement of Individual Accounts ......................................................................17 SECTION FIVE: TRUSTEE OR CUSTODIAN 5.01 Creation of Fund ......................................................................................17 5.02 Investment Authority ..................................................................................17 5.03 Financial Organization Custodian or Trustee Without Full Trust Powers .................................17 5.04 Financial Organization Trustee With Full Trust Powers and Individual Trustee ..........................18 5.05 Division of Fund Into Investment Funds ................................................................19 5.06 Compensation and Expenses .............................................................................20 5.07 Not Obligated to Question Data ........................................................................20 5.08 Liability For Withholding on Distributions ............................................................20 5.09 Resignation or Removal of Trustee (or Custodian) ......................................................20 5.10 Degree of Care - Limitations of Liability .............................................................20 5.11 Indemnification of Prototype Sponsor and Trustee (or Custodian) .......................................21 5.12 Investment Managers ...................................................................................21 5.13 Matters Relating to Insurance .........................................................................21 5.14 Direction of Investments by Participant ...............................................................22 SECTION SIX: VESTING AND DISTRIBUTION 6.01 Distribution To Participant ...........................................................................22 6.02 Form of Distribution to a Participant .................................................................25 6.03 Distributions Upon the Death of a Participant..........................................................26 6.04 Form of Distribution to Beneficiary ...................................................................27 6.05 Joint and Survivor Annuity Requirements ...............................................................27 6.06 Distribution Requirements .............................................................................30 6.07 Annuity Contracts .....................................................................................33 6.08 Loans to Participants .................................................................................33 6.09 Distribution in Kind ..................................................................................34 6.10 Direct Rollovers of Eligible Rollover Distributions ...................................................35 6.11 Procedure for Missing Participants or Beneficiaries ...................................................35 SECTION SEVEN: CLAIMS PROCEDURE 7.01 Filing a Claim for Plan Distributions .................................................................35 7.02 Denial of Claim .......................................................................................35 7.03 Remedies Available ....................................................................................36 SECTION EIGHT: PLAN ADMINISTRATOR 8.01 Employer is Plan Administrator ........................................................................36 8.02 Powers and Duties of the Plan Administrator ...........................................................36 8.03 Expenses and Compensation .............................................................................37 8.04 Information from Employer .............................................................................37 SECTION NINE: AMENDMENT AND TERMINATION 9.01 Right of Prototype Sponsor to Amend the Plan ..........................................................37 9.02 Right of Employer to Amend the Plan. ..................................................................37 9.03 Limitation on Power to Amend ..........................................................................38 9.04 Amendment of Vesting Schedule .........................................................................38 9.05 Permanency.............................................................................................38 9.06 Method and Procedure for Termination...................................................................38 9.07 Continuance of Plan by Successor Employer..............................................................38 9.08 Failure of Plan Qualification..........................................................................38 SECTION TEN: MISCELLANEOUS 10.01 State Community Property Laws..........................................................................39 10.02 Headings...............................................................................................39 10.03 Gender and Number......................................................................................39 10.04 Plan Merger or Consolidation...........................................................................39 10.05 Standard of Fiduciary Conduct..........................................................................39 10.06 General Undertaking Of All Parties.....................................................................39 10.07 Agreement Binds Heirs, Etc.............................................................................39 10.08 Determination Of Top-Heavy Status......................................................................39 10.09 Special Limitations for Owner-Employees................................................................41 10.10 Inalienability of Benefits.............................................................................41 10.11 Cannot Eliminate Protected Benefits....................................................................41 SECTION ELEVEN: 401(k) PROVISIONS 11.100 Definitions............................................................................................41 11.101 Actual Deferral Percentage (ADP).......................................................................42 11.102 Aggregate Limit........................................................................................42 11.103 Average Contribution Percentage (ACP)..................................................................42 11.104 Contributing Participant...............................................................................42 11.105 Contribution Percentage................................................................................42 11.106 Contribution Percentage Amounts........................................................................42 11.107 Elective Deferrals.....................................................................................42 11.108 Eligible Participant ..................................................................................43 11.109 Excess Aggregate Contributions ........................................................................43 11.110 Excess Contributions ..................................................................................43 11.111 Excess Elective Deferrals .............................................................................43 11.112 Matching Contribution .................................................................................43 11.113 Qualified Nonelective Contributions....................................................................43 11.114 Qualified Matching Contributions.......................................................................43 11.115 Qualifying Contributing Participant....................................................................43 11.200 Contributing Participant...............................................................................43 11.201 Requirements to Enroll as a Contributing Participant...................................................44 11.202 Changing Elective Deferral Amounts.....................................................................44 11.203 Ceasing Elective Deferrals.............................................................................44 11.204 Return as a Contributing Participant After Ceasing Elective Deferrals..................................44 11.205 Certain One-Time Irrevocable Elections.................................................................44 11.300 Contributions .........................................................................................44 11.301 Contributions By Employer .............................................................................44 11.302 Matching Contributions ................................................................................44 11.303 Qualified Nonelective Contributions ...................................................................45 11.304 Qualified Matching Contributions ......................................................................45 11.305 Nondeductible Employee Contributions ..................................................................45 11.400 Nondiscrimination Testing .............................................................................45 11.401 Actual Deferral Percentage Test (ADP) .................................................................45 11.402 Limits on Nondeductible Employee Contributions and Matching Contributions .............................46 11.500 Distribution Provisions ...............................................................................47 11.501 General Rule ..........................................................................................47 11.502 Distribution Requirements .............................................................................47 11.503 Hardship Distribution .................................................................................48 11.504 Distribution of Excess Elective Deferrals .............................................................48 11.505 Distribution of Excess Contributions ..................................................................49 11.506 Distribution of Excess Aggregate Contributions ........................................................49 11.507 Recharacterization ....................................................................................50 11.508 Distribution of Elective Deferrals if Excess Annual Additions..........................................50 11.600 Vesting................................................................................................50 11.601 100% Vesting on Certain Contributions .................................................................50 11.602 Forfeitures and Vesting of Matching Contributions .....................................................50
QUALIFIED RETIREMENT PLAN AND TRUST Defined Contribution Basic Plan Document 04 ---------------------------------------------------------------------------- SECTION ONE DEFINITIONS The following words and phrases when used in the Plan with initial capital letters shall, for the purpose of this Plan, have the meanings set forth below unless the context indicates that other meanings are intended: 1.01 ADOPTION AGREEMENT Means the document executed by the Employer through which it adopts the Plan and Trust and thereby agrees to be bound by all terms and conditions of the Plan and Trust. 1.02 BASIC PLAN DOCUMENT Means this prototype Plan and Trust document. 1.03 BENEFICIARY Means the individual or individuals designated pursuant to Section 6.03(A) of the Plan. 1.04 BREAK IN ELIGIBILITY SERVICE Means a 12 consecutive month period which coincides with an Eligibility Computation Period during which an Employee fails to complete more than 500 Hours of Service (or such lesser number of Hours of Service specified in the Adoption Agreement for this purpose). 1.05 BREAK IN VESTING SERVICE Means a Plan Year (or other vesting computation period described in Section 1.50) during which an Employee fails to complete more than 500 Hours of Service (or such lesser number of Hours of Service specified in the Adoption Agreement for this purpose). 1.06 CODE Means the Internal Revenue Code of 1986 as amended from time-to-time. 1.07 COMPENSATION A. Basic Definition For Plan Years beginning on or after January 1, 1989, the following definition of Compensation shall apply: As elected by the Employer in the Adoption Agreement (and if no election is made, W-2 wages will be deemed to have been selected), Compensation shall mean one of the following: 1. W-2 wages. Compensation is defined as information required to be reported under Sections 6041 and 6051, and 6052 of the Code (Wages, tips and other compensation as reported on Form W-2). Compensation is defined as wages within the meaning of Section 3401(a) of the Code and all other payments of compensation to an Employee by the Employer (in the course of the Employer's trade or business) for which the Employer is required to furnish the Employee a written statement under Sections 6041(d) and 6051(a)(3), and 6052 of the Code. Compensation must be determined without regard to any rules under Section 3401(a) that limit the remuneration included in wages based on the nature or location of the employment or the services performed (such as the exception for agricultural labor in Section 3401(a)(2)). 2. Section 3401(a) wages. Compensation is defined as wages within the meaning of Section 3401(a) of the Code, for the purposes of income tax withholding at the source but determined without regard to any rules that limit the remuneration included in wages based on the nature or location of the employment or the services performed (such as the exception for agricultural labor in Section 3401(a)(2)). 3. 415 safe-harbor compensation. Compensation is defined as wages, salaries, and fees for professional services and other amounts received (without regard to whether or not an amount is paid in cash) for personal services actually rendered in the course of employment with the Employer maintaining the Plan to the extent that the amounts are includible in gross income (including, but not limited to, commissions paid salesmen, compensation for services on the basis of a percentage of profits, commissions on insurance premiums, tips, bonuses, fringe benefits, and reimbursements or other expense allowances under a nonaccountable plan (as described in 1.62-2(c)), and excluding the following: a. Employer contributions to a plan of deferred compensation which are not includible in the Employee's gross income for the taxable year in which contributed, or employer contributions under a simplified employee pension plan to the extent such contributions are deductible by the Employee, or any distributions from a plan of deferred compensation; 2 b. Amounts realized from the exercise of a nonqualified stock option, or when restricted stock (or property) held by the Employee either becomes freely transferable or is no longer subject to a substantial risk of forfeiture; c. Amounts realized from the sale, exchange or other disposition of stock acquired under a qualified stock option; and d. Other amounts which received special tax benefits, or contributions made by the Employer (whether or not under a salary reduction agreement) towards the purchase of an annuity contract described in Section 403(b) of the Code (whether or not the contributions are actually excludable from the gross income of the Employee). For any Self-Employed Individual covered under the Plan, Compensation will mean Earned Income. B. Determination Period And Other Rules Compensation shall include only that Compensation which is actually paid to the Participant during the determination period. Except as provided elsewhere in this Plan, the determination period shall be the Plan Year unless the Employer has selected another period in the Adoption Agreement. If the Employer makes no election, the determination period shall be the Plan Year. Unless otherwise indicated in the Adoption Agreement, Compensation shall include any amount which is contributed by the Employer pursuant to a salary reduction agreement and which is not includible in the gross income of the Employee under Sections 125, 402(e)(3), 402(h)(1)(B) or 403(b) of the Code. Where this Plan is being adopted as an amendment and restatement to bring a Prior Plan into compliance with the Tax Reform Act of 1986, such Prior Plan's definition of Compensation shall apply for Plan Years beginning before January 1, 1989. C. Limits On Compensation For years beginning after December 31, 1988 and before January 1, 1994, the annual Compensation of each Participant taken into account for determining all benefits provided under the Plan for any determination period shall not exceed $200,000. This limitation shall be adjusted by the Secretary at the same time and in the same manner as under Section 415(d) of the Code, except that the dollar increase in effect on January 1 of any calendar year is effective for Plan Years beginning in such calendar year and the first adjustment to the $200,000 limitation is effective on January 1, 1990. For Plan Years beginning on or after January 1, 1994, the annual Compensation of each Participant taken into account for determining all benefits provided under the Plan for any Plan Year shall not exceed $150,000, as adjusted for increases in the cost-of-living in accordance with Section 401(a)(17)(B) of the Internal Revenue Code. The cost-of-living adjustment in effect for a calendar year applies to any determination period beginning in such calendar year. If the period for determining Compensation used in calculating an Employee's allocation for a determination period is a short Plan Year (i.e., shorter than 12 months), the annual Compensation limit is an amount equal to the otherwise applicable annual Compensation limit multiplied by a fraction, the numerator of which is the number of months in the short Plan Year, and the denominator of which is 12. In determining the Compensation of a Participant for purposes of this limitation, the rules of Section 414(q)(6) of the Code shall apply, except in applying such rules, the term "family" shall include only the spouse of the Participant and any lineal descendants of the Participant who have not attained age 19 before the close of the year. If, as a result of the application of such rules the adjusted $200,000 limitation is exceeded, then (except for purposes of determining the portion of Compensation up to the integration level, if this Plan provides for permitted disparity), the limitation shall be prorated among the affected individuals in proportion to each such individual's Compensation as determined under this Section prior to the application of this limitation. If Compensation for any prior determination period is taken into account in determining an Employee's allocations or benefits for the current determination period, the Compensation for such prior determination period is subject to the applicable annual Compensation limit in effect for that prior period. For this purpose, in determining allocations in Plan Years beginning on or after January 1, 1989, the annual Compensation limit in effect for determination periods beginning before that date is $200,000. In addition, in determining allocations in Plan Years beginning on or after January 1, 1994, the annual Compensation limit in effect for determination periods beginning before that date is $150,000. 3 1.08 CUSTODIAN Means an entity specified in the Adoption Agreement as Custodian or any duly appointed successor as provided in Section 5.09. 1.09 DISABILITY Unless the Employer has elected a different definition in the Adoption Agreement, Disability means the inability to engage in any substantial, gainful activity by reason of any medically determinable physical or mental impairment that 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. The permanence and degree of such impairment shall be supported by medical evidence. 1.10 EARLY RETIREMENT AGE Means the age specified in the Adoption Agreement. The Plan will not have an Early Retirement Age if none is specified in the Adoption Agreement. 1.11 EARNED INCOME Means the net earnings from self-employment in the trade or business with respect to which the Plan is established, for which personal services of the individual are a material income-producing factor. Net earnings will be determined without regard to items not included in gross income and the deductions allocable to such items. Net earnings are reduced by contributions by the Employer to a qualified plan to the extent deductible under Section 404 of the Code. Net earnings shall be determined with regard to the deduction allowed to the Employer by Section 164(f) of the Code for taxable years beginning after December 31, 1989. 1.12 EFFECTIVE DATE Means the date the Plan becomes effective as indicated in the Adoption Agreement. However, as indicated in the Adoption Agreement, certain provisions may have specific effective dates. Further, where a separate date is stated in the Plan as of which a particular Plan provision becomes effective, such date will control with respect to that provision. 1.13 ELIGIBILITY COMPUTATION PERIOD An Employee's initial Eligibility Computation Period shall be the 12 consecutive month period commencing on the Employee's Employment Commencement Date. The Employee's subsequent Eligibility Computation Periods shall be the 12 consecutive month periods commencing on the anniversaries of his or her Employment Commencement Date; provided, however, if pursuant to the Adoption Agreement, an Employee is required to complete one or less Years of Eligibility Service to become a Participant, then his or her subsequent Eligibility Computation Periods shall be the Plan Years commencing with the Plan Year beginning during his or her initial Eligibility Computation Period. An Employee does not complete a Year of Eligibility Service before the end of the 12 consecutive month period regardless of when during such period the Employee completes the required number of Hours of Service. 1.14 EMPLOYEE Means any person employed by an Employer maintaining the Plan or of any other employer required to be aggregated with such Employer under Sections 414(b), (c), (m) or (o) of the Code. The term Employee shall also include any Leased Employee deemed to be an Employee of any Employer described in the previous paragraph as provided in Section 414(n) or (o) of the Code. 1.15 EMPLOYER Means any corporation, partnership, sole-proprietorship or other entity named in the Adoption Agreement and any successor who by merger, consolidation, purchase or otherwise assumes the obligations of the Plan. A partnership is considered to be the Employer of each of the partners and a sole-proprietorship is considered to be the Employer of a sole proprietor. Where this Plan is being maintained by a union or other entity that represents its member Employees in the negotiation of collective bargaining agreements, the term Employer shall mean such union or other entity. 1.16 EMPLOYER CONTRIBUTION Means the amount contributed by the Employer each year as determined under this Plan. 1.17 EMPLOYMENT COMMENCEMENT DATE An Employee's Employment Commencement date means the date the Employee first performs an Hour of Service for the Employer. 1.18 EMPLOYER PROFIT SHARING CONTRIBUTION Means an Employer Contribution made pursuant to the Section of the Adoption Agreement titled "Employer Profit Sharing Contributions." The Employer may make Employer Profit Sharing Contributions without regard to current or accumulated earnings or profits. 4 1.19 ENTRY DATES Means the first day of the Plan Year and the first day of the seventh month of the Plan Year, unless the Employer has specified different dates in the Adoption Agreement. 1.20 ERISA Means the Employee Retirement Income Security Act of 1974 as amended from time-to-time. 1.21 FORFEITURE Means that portion of a Participant's Individual Account derived from Employer Contributions which he or she is not entitled to receive (i.e., the nonvested portion). 1.22 FUND Means the Plan assets held by the Trustee for the Participants' exclusive benefit. 1.23 HIGHLY COMPENSATED EMPLOYEE The term Highly Compensated Employee includes highly compensated active employees and highly compensated former employees. A highly compensated active employee includes any Employee who performs service for the Employer during the determination year and who, during the look-back year: (a) received Compensation from the Employer in excess of $75,000 (as adjusted pursuant to Section 415(d) of the Code); (b) received Compensation from the Employer in excess of $50,000 (as adjusted pursuant to Section 415(d) of the Code) and was a member of the top-paid group for such year; or (c) was an officer of the Employer and received Compensation during such year that is greater than 50% of the dollar limitation in effect under Section 415(b)(1)(A) of the Code. The term Highly Compensated Employee also includes: (a) Employees who are both described in the preceding sentence if the term "determination year" is substituted for the term "look-back year" and the Employee is one of the 100 Employees who received the most Compensation from the Employer during the determination year; and (b) Employees who are 5% owners at any time during the look-back year or determination year. If no officer has satisfied the Compensation requirement of (c) above during either a determination year or look-back year, the highest paid officer for such year shall be treated as a Highly Compensated Employee. For this purpose, the determination year shall be the Plan Year. The look-back year shall be the 12 month period immediately preceding the determination year. A highly compensated former employee includes any Employee who separated from service (or was deemed to have separated) prior to the determination year, performs no service for the Employer during the determination year, and was a highly compensated active employee for either the separation year or any determination year ending on or after the Employee's 55th birthday. If an Employee is, during a determination year or look-back year, a family member of either a 5% owner who is an active or former Employee or a Highly Compensated Employee who is one of the 10 most Highly Compensated Employees ranked on the basis of Compensation paid by the Employer during such year, then the family member and the 5% owner or top 10 Highly Compensated Employee shall be aggregated. In such case, the family member and 5% owner or top 10 Highly Compensated Employee shall be treated as a single Employee receiving Compensation and Plan contributions or benefits equal to the sum of such Compensation and contributions or benefits of the family member and 5% owner or top 10 Highly Compensated Employee. For purposes of this Section, family member includes the spouse, lineal ascendants and descendants of the Employee or former Employee and the spouses of such lineal ascendants and descendants. The determination of who is a Highly Compensated Employee, including the determinations of the number and identity of Employees in the top-paid group, the top 100 Employees, the number of Employees treated as officers and the Compensation that is considered, will be made in accordance with Section 414(q) of the Code and the regulations thereunder. 1.24 HOURS OF SERVICE - Means A. Each hour for which an Employee is paid, or entitled to payment, for the performance of duties for the Employer. These hours will be credited to the Employee for the computation period in which the duties are performed; and B. Each hour for which an Employee is paid, or entitled to payment, by the Employer on account of a period of time during which no duties are performed (irrespective of whether the employment relationship has terminated) due to vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty or leave of absence. No more than 501 Hours of Service will be credited under this paragraph for any single continuous period (whether or not such period occurs in a single computation period). Hours under this paragraph shall be calculated and credited pursuant to Section 2530.200b-2 of the Department of Labor Regulations which is incorporated herein by this reference; and 5 C. Each hour for which back pay, irrespective of mitigation of damages, is either awarded or agreed to by the Employer. The same Hours of Service will not be credited both under paragraph (A) or paragraph (B), as the case may be, and under this paragraph (C). These hours will be credited to the Employee for the computation period or periods to which the award or agreement pertains rather than the computation period in which the award, agreement, or payment is made. D. Solely for purposes of determining whether a Break in Eligibility Service or a Break in Vesting Service has occurred in a computation period (the computation period for purposes of determining whether a Break in Vesting Service has occurred is the Plan Year or other vesting computation period described in Section 1.50), an individual who is absent from work for maternity or paternity reasons shall receive credit for the Hours of Service which would otherwise have been credited to such individual but for such absence, or in any case in which such hours cannot be determined, 8 Hours of Service per day of such absence. For purposes of this paragraph, an absence from work for maternity or paternity reasons means an absence (1) by reason of the pregnancy of the individual, (2) by reason of a birth of a child of the individual, (3) by reason of the placement of a child with the individual in connection with the adoption of such child by such individual, or (4) for purposes of caring for such child for a period beginning immediately following such birth or placement. The Hours of Service credited under this paragraph shall be credited (1) in the Eligibility Computation Period or Plan Year or other vesting computation period described in Section 1.50 in which the absence begins if the crediting is necessary to prevent a Break in Eligibility Service or a Break in Vesting Service in the applicable period, or (2) in all other cases, in the following Eligibility Computation Period or Plan Year or other vesting computation period described in Section 1.50. E. Hours of Service will be credited for employment with other members of an affiliated service group (under Section 414(m) of the Code), a controlled group of corporations (under Section 414(b) of the Code), or a group of trades or businesses under common control (under Section 414(c) of the Code) of which the adopting Employer is a member, and any other entity required to be aggregated with the Employer pursuant to Section 414(o) of the Code and the regulations thereunder. Hours of Service will also be credited for any individual considered an Employee for purposes of this Plan under Code Sections 414(n) or 414(o) and the regulations thereunder. F. Where the Employer maintains the plan of a predecessor employer, service for such predecessor employer shall be treated as service for the Employer. G. The above method for determining Hours of Service may be altered as specified in the Adoption Agreement. 1.25 INDIVIDUAL ACCOUNT Means the account established and maintained under this Plan for each Participant in accordance with Section 4.01. 1.26 INVESTMENT FUND Means a subdivision of the Fund established pursuant to Section 5.05. 1.27 KEY EMPLOYEE Means any person who is determined to be a Key Employee under Section 10.08. 1.28 LEASED EMPLOYEE Means any person (other than an Employee of the recipient) who pursuant to an agreement between the recipient and any other person ("leasing organization") has performed services for the recipient (or for the recipient 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 such services are of a type historically performed by Employees in the business field of the recipient Employer. Contributions or benefits provided a Leased Employee by the leasing organization which are attributable to services performed for the recipient Employer shall be treated as provided by the recipient Employer. A Leased Employee shall not be considered an Employee of the recipient if: (1) such employee is covered by a money purchase pension plan providing: (a) a nonintegrated employer contribution rate of at least 10% of compensation, as defined in Section 415(c)(3) of the Code, but including amounts contributed pursuant to a salary reduction agreement which are excludable from the employee's gross income under Section 125, Section 402(e)(3), Section 402(h)(1)(B) or Section 403(b) of the Code, (b) immediate participation, and (c) full and immediate vesting; and (2) Leased Employees do not constitute more than 20% of the recipient's nonhighly compensated work force. 1.29 NONDEDUCTIBLE EMPLOYEE CONTRIBUTIONS Means any contribution made to the Plan by or on behalf of a Participant that is included in the Participant's gross income in the year in which made and that is maintained under a separate account to which earnings and losses are allocated. 6 1.30 NORMAL RETIREMENT AGE Means the age specified in the Adoption Agreement. However, if the Employer enforces a mandatory retirement age which is less than the Normal Retirement Age, such mandatory age is deemed to be the Normal Retirement Age. If no age is specified in the Adoption Agreement, the Normal Retirement Age shall be age 65. 1.31 OWNER - EMPLOYEE Means an individual who is a sole proprietor, or who is a partner owning more than 10% of either the capital or profits interest of the partnership. 1.32 PARTICIPANT Means any Employee or former Employee of the Employer who has met the Plan's eligibility requirements, has entered the Plan and who is or may become eligible to receive a benefit of any type from this Plan or whose Beneficiary may be eligible to receive any such benefit. 1.33 PLAN Means the prototype defined contribution plan adopted by the Employer. The Plan consists of this Basic Plan Document plus the corresponding Adoption Agreement as completed and signed by the Employer. 1.34 PLAN ADMINISTRATOR Means the person or persons determined to be the Plan Administrator in accordance with Section 8.01. 1.35 PLAN YEAR Means the 12 consecutive month period which coincides with the Employer's fiscal year or such other 12 consecutive month period as is designated in the Adoption Agreement. 1.36 PRIOR PLAN Means a plan which was amended or replaced by adoption of this Plan document as indicated in the Adoption Agreement. 1.37 PROTOTYPE SPONSOR Means the entity specified in the Adoption Agreement that makes this prototype plan available to employers for adoption. 1.38 QUALIFYING PARTICIPANT Means a Participant who has satisfied the requirements described in Section 3.01(B)(2) to be entitled to share in any Employer Contribution (and Forfeitures, if applicable) for a Plan Year. 1.39 RELATED EMPLOYER Means an employer that may be required to be aggregated with the Employer adopting this Plan for certain qualification requirements under Sections 414(b), (c), (m) or (o) of the Code (or any other employer that has ownership in common with the Employer). A Related Employer may participate in this Plan if so indicated in the Section of the Adoption Agreement titled "Employer Information" or if such Related Employer executes a Related Employer Participation Agreement. 1.40 RELATED EMPLOYER PARTICIPATION AGREEMENT Means the agreement under this prototype Plan that a Related Employer may execute to participate in this Plan. 1.41 SELF-EMPLOYED INDIVIDUAL Means an individual who has Earned Income for the taxable year from the trade or business for which the Plan is established; also, an individual who would have had Earned Income but for the fact that the trade or business had no net profits for the taxable year. 1.42 SEPARATE FUND Means a subdivision of the Fund held in the name of a particular Participant representing certain assets held for that Participant. The assets which comprise a Participant's Separate Fund are those assets earmarked for him or her and those assets subject to the Participant's individual direction pursuant to Section 5.14. 1.43 TAXABLE WAGE BASE Means, with respect to any taxable year, the contribution and benefit base in effect under Section 230 of the Social Security Act at the beginning of the Plan Year. 1.44 TERMINATION OF EMPLOYMENT A Termination of Employment of an Employee of an Employer shall occur whenever his or her status as an Employee of such Employer ceases for any reason other than death. An Employee who does not return to work for the Employer on or before the expiration of an authorized leave of absence from such Employer shall be deemed to have incurred a Termination of Employment when such leave ends. 7 1.45 TOP-HEAVY PLAN This Plan is a Top-Heavy Plan for any Plan Year if it is determined to be such pursuant to Section 10.08. 1.46 TRUSTEE Means an individual, individuals or corporation specified in the Adoption Agreement as Trustee or any duly appointed successor as provided in Section 5.09. Trustee shall mean Custodian in the event the financial organization named as Trustee does not have full trust powers. 1.47 VALUATION DATE Means the date or dates as specified in the Adoption Agreement. If no date is specified in the Adoption Agreement, the Valuation Date shall be the last day of the Plan Year and each other date designated by the Plan Administrator which is selected in a uniform and nondiscriminatory manner when the assets of the Fund are valued at their then fair market value. 1.48 VESTED Means nonforfeitable, that is, a claim which is unconditional and legally enforceable against the Plan obtained by a Participant or the Participant's Beneficiary to that part of an immediate or deferred benefit under the Plan which arises from a Participant's Years of Vesting Service. 1.49 YEAR OF ELIGIBILITY SERVICE Means a 12 consecutive month period which coincides with an Eligibility Computation Period during which an Employee completes at least 1,000 Hours of Service (or such lesser number of Hours of Service specified in the Adoption Agreement for this purpose). An Employee does not complete a Year of Eligibility Service before the end of the 12 consecutive month period regardless of when during such period the Employee completes the required number of Hours of Service. 1.50 YEAR OF VESTING SERVICE Means a Plan Year during which an Employee completes at least 1,000 Hours of Service (or such lesser number of Hours of Service specified in the Adoption Agreement for this purpose). Notwithstanding the preceding sentence, where the Employer so indicates in the Adoption Agreement, vesting shall be computed by reference to the 12 consecutive month period beginning with the Employee's Employment Commencement Date and each successive 12 month period commencing on the anniversaries thereof. In the case of a Participant who has 5 or more consecutive Breaks in Vesting Service, all Years of Vesting Service after such Breaks in Vesting Service will be disregarded for the purpose of determining the Vested portion of his or her Individual Account derived from Employer Contributions that accrued before such breaks. Such Participant's prebreak service will count in vesting the postbreak Individual Account derived from Employer Contributions only if either: (A) such Participant had any Vested right to any portion of his or her Individual Account derived from Employer Contributions at the time of his or her Termination of Employment; or (B) upon returning to service, the number of consecutive Breaks in Vesting Service is less than his or her number of Years of Vesting Service before such breaks. Separate subaccounts will be maintained for the Participant's prebreak and postbreak portions of his or her Individual Account derived from Employer Contributions. Both subaccounts will share in the gains and losses of the Fund. Years of Vesting Service shall not include any period of time excluded from Years of Vesting Service in the Adoption Agreement. In the event the Plan Year is changed to a new 12-month period, Employees shall receive credit for Years of Vesting Service, in accordance with the preceding provisions of this definition, for each of the Plan Years (the old and new Plan Years) which overlap as a result of such change. SECTION TWO ELIGIBILITY AND PARTICIPATION 2.01 ELIGIBILITY TO PARTICIPATE Each Employee of the Employer, except those Employees who belong to a class of Employees which is excluded from participation as indicated in the Adoption Agreement, shall be eligible to participate in this Plan upon the satisfaction of the age and Years of Eligibility Service requirements specified in the Adoption Agreement. 2.02 PLAN ENTRY A. If this Plan is a replacement of a Prior Plan by amendment or restatement, each Employee of the Employer who was a Participant in said Prior Plan before the Effective Date shall continue to be a Participant in this Plan. B. An Employee will become a Participant in the Plan as of the Effective Date if the Employee has met the eligibility requirements of Section 2.01 as of such date. After the Effective Date, each Employee shall become a Participant 8 on the first Entry Date following the date the Employee satisfies the eligibility requirements of Section 2.01 unless otherwise indicated in the Adoption Agreement. C. The Plan Administrator shall notify each Employee who becomes eligible to be a Participant under this Plan and shall furnish the Employee with the application form, enrollment forms or other documents which are required of Participants. The eligible Employee shall execute such forms or documents and make available such information as may be required in the administration of the Plan. 2.03 TRANSFER TO OR FROM INELIGIBLE CLASS If an Employee who had been a Participant becomes ineligible to participate because he or she is no longer a member of an eligible class of Employees, but has not incurred a Break in Eligibility Service, such Employee shall participate immediately upon his or her return to an eligible class of Employees. If such Employee incurs a Break in Eligibility Service, his or her eligibility to participate shall be determined by Section 2.04. An Employee who is not a member of the eligible class of Employees will become a Participant immediately upon becoming a member of the eligible class provided such Employee has satisfied the age and Years of Eligibility Service requirements. If such Employee has not satisfied the age and Years of Eligibility Service requirements as of the date he or she becomes a member of the eligible class, such Employee shall become a Participant on the first Entry Date following the date he or she satisfies those requirements unless otherwise indicated in the Adoption Agreement. 2.04 RETURN AS A PARTICIPANT AFTER BREAK IN ELIGIBILITY SERVICE A. Employee Not Participant Before Break - If an Employee incurs a Break in Eligibility Service before satisfying the Plan's eligibility requirements, such Employee's Years of Eligibility Service before such Break in Eligibility Service will not be taken into account. B. Nonvested Participants - In the case of a Participant who does not have a Vested interest in his or her Individual Account derived from Employer Contributions, Years of Eligibility Service before a period of consecutive Breaks in Eligibility Service will not be taken into account for eligibility purposes if the number of consecutive Breaks in Eligibility Service in such period equals or exceeds the greater of 5 or the aggregate number of Years of Eligibility Service before such break. Such aggregate number of Years of Eligibility Service will not include any Years of Eligibility Service disregarded under the preceding sentence by reason of prior breaks. If a Participant's Years of Eligibility Service are disregarded pursuant to the preceding paragraph, such Participant will be treated as a new Employee for eligibility purposes. If a Participant's Years of Eligibility Service may not be disregarded pursuant to the preceding paragraph, such Participant shall continue to participate in the Plan, or, if terminated, shall participate immediately upon reemployment. C. Vested Participants - A Participant who has sustained a Break in Eligibility Service and who had a Vested interest in all or a portion of his or her Individual Account derived from Employer Contributions shall continue to participate in the Plan, or, if terminated, shall participate immediately upon reemployment. 2.05 DETERMINATIONS UNDER THIS SECTION The Plan Administrator shall determine the eligibility of each Employee to be a Participant. This determination shall be conclusive and binding upon all persons except as otherwise provided herein or by law. 2.06 TERMS OF EMPLOYMENT Neither the fact of the establishment of the Plan nor the fact that a common law Employee has become a Participant shall give to that common law Employee any right to continued employment; nor shall either fact limit the right of the Employer to discharge or to deal otherwise with a common law Employee without regard to the effect such treatment may have upon the Employee's rights under the Plan. 2.07 SPECIAL RULES WHERE ELAPSED TIME METHOD IS BEING USED This Section 2.07 shall apply where the Employer has indicated in the Adoption Agreement that the elapsed time method will be used. When this Section applies, the definitions of year of service, break in service and hour of service in this Section will replace the definitions of Year of Eligibility Service, Year of Vesting Service, Break in Eligibility Service, Break in Vesting Service and Hours of Service found in the Definitions Section of the Plan (Section One). For purposes of determining an Employee's initial or continued eligibility to participate in the Plan or the Vested interest in the Participant's Individual Account balance derived from Employer Contributions, (except for periods of service which may be disregarded on account of the "rule of parity" described in Sections 1.50 and 2.04) an Employee will receive credit for the aggregate of all time period(s) commencing with the Employee's first day of employment or reemployment and ending on the date a break in service begins. The first day of employment or reemployment is the first day the Employee performs an hour of service. An Employee will also receive credit for any period of severance of less than 12 consecutive months. Fractional periods of a year will be expressed in terms of days. 9 For purposes of this Section, hour of service will mean each hour for which an Employee is paid or entitled to payment for the performance of duties for the Employer. Break in service is a period of severance of at least 12 consecutive months. Period of severance is a continuous period of time during which the Employee is not employed by the Employer. Such period begins on the date the Employee retires, quits or is discharged, or if earlier, the 12 month anniversary of the date an which the Employee was otherwise first absent from service. In the case of an individual who is absent from work for maternity or paternity reasons, the 12 consecutive month period beginning on the first anniversary of the first date of such absence shall not constitute a break in service. For purposes of this paragraph, an absence from work for maternity or paternity reasons means an absence (1) by reason of the pregnancy of the individual, (2) by reason of the birth of a child of the individual, (3) by reason of the placement of a child with the individual in connection with the adoption of such child by such individual, or (4) for purposes of caring for such child for a period beginning immediately following such birth or placement. Each Employee will share in Employer Contributions for the period beginning on the date the Employee commences participation under the Plan and ending on the date on which such Employee severs employment with the Employer or is no longer a member of an eligible class of Employees. If the Employer is a member of an affiliated service group (under Section 414(m) of the Code), a controlled group of corporations (under Section 414(b) of the Code), a group of trades or businesses under common control (under Section 414(c) of the Code), or any other entity required to be aggregated with the Employer pursuant to Section 414(o) of the Code, service will be credited for any employment for any period of time for any other member of such group. Service will also be credited for any individual required under Section 414(n) or Section 414(o) to be considered an Employee of any Employer aggregated under Section 414(b), (c), or (m) of the Code. 2.08 ELECTION NOT TO PARTICIPATE This Section 2.08 will apply if this Plan is a nonstandardized plan and the Adoption Agreement so provides. If this Section applies, then an Employee or a Participant may elect not to participate in the Plan for one or more Plan Years. The Employer may not contribute for an Employee or Participant for any Plan Year during which such Employee's or Participant's election not to participate is in effect. Any election not to participate must be in writing and filed with the Plan Administrator. The Plan Administrator shall establish such uniform and nondiscriminatory rules as it deems necessary or advisable to carry out the terms of this Section, including, but not limited to, rules prescribing the timing of the filing of elections not to participate and the procedures for electing to re-participate in the Plan. An Employee or Participant continues to earn credit for vesting and eligibility purposes for each Year of Vesting Service or Year of Eligibility Service he or she completes and his or her Individual Account (if any) will share in the gains or losses of the Fund during the periods he or she elects not to participate. SECTION THREE CONTRIBUTIONS 3.01 EMPLOYER CONTRIBUTIONS A. Obligation to Contribute - The Employer shall make contributions to the Plan in accordance with the contribution formula specified in the Adoption Agreement. If this Plan is a profit sharing plan, the Employer shall, in its sole discretion, make contributions without regard to current or accumulated earnings or profits. B. Allocation Formula and the Right to Share in the Employer Contribution - 1. General - The Employer Contribution for any Plan Year will be allocated or contributed to the Individual Accounts of Qualifing Participants in accordance with the allocation or contribution formula specified in the Adoption Agreement. The Employer Contribution for any Plan Year will be allocated to each Participant's Individual Account as of the last day of that Plan Year. Any Employer Contribution for a Plan Year must satisfy Section 401(a)(4) and the regulations thereunder for such Plan Year. 2. Qualifying Participants - A Participant is a Qualifying Participant and is entitled to share in the Employer Contribution for any Plan Year if the Participant was a Participant on at least one day during the Plan Year and satisfies any additional conditions specified in the Adoption Agreement. If this Plan is a standardized plan, unless the Employer specifies more favorable conditions in the Adoption Agreement, a Participant will not be a qualifying Participant for a Plan Year if he or she incurs a Termination of Employment during such Plan Year with not more than 500 Hours of Service if he or she is not an Employee on the last day of the Plan Year. The determination of whether a Participant is entitled to share in the Employer Contribution shall be made as of the last day of each Plan Year. 10 3. Special Rules for Integrated Plans - This Plan may not allocate contributions based on an integrated formula if the Employer maintains any other plan that provides for allocation of contributions based on an integrated formula that benefits any of the same Participants. If the Employer has selected the integrated contribution or allocation formula in the Adoption Agreement, then the maximum disparity rate shall be determined in accordance with the following table. MAXIMUM DISPARITY RATE
Top-Heavy Nonstandardized and Integration Level Money Purchase Profit Sharing Non-Top-Heavy Profit Sharing ------------------------------------------------------------------------------------------------------------------------------------ Taxable Wage Base (TWB) 5.7% 2.7% 5.7% More than $0 but not more than 20% of TWB 5.7% 2.7% 5.7% More than 20% of TWB but not more than 80% of TWB 4.3% 1.3% 4.3% More than 80% of TWB but not more than TWB 5.4% 2.4% 5.4%
C. Allocation of Forfeitures - Forfeitures for a Plan Year which arise as a result of the application of Section 6.01(D) shall be allocated as follows: 1. Profit Sharing Plan - If this is a profit sharing plan, unless the Adoption Agreement indicates otherwise, Forfeitures shall be allocated in the manner provided in Section 3.01(B) (for Employer Contributions) to the Individual Accounts of Qualifying Participants who are entitled to share in the Employer Contribution for such Plan Year. Forfeitures shall be allocated as of the last day of the Plan Year during which the Forfeiture arose (or any subsequent Plan Year if indicated in the Adoption Agreement). 2. Money Purchase Pension and Target Benefit Plan - If this Plan is a money purchase plan or a target benefit plan, unless the Adoption Agreement indicates otherwise, Forfeitures shall be applied towards the reduction of Employer Contributions to the Plan. Forfeitures shall be allocated as of the last day of the Plan Year during which the Forfeiture arose (or any subsequent Plan Year if indicated in the Adoption Agreement). D. Timing of Employer Contribution - The Employer Contribution for each Plan Year shall be delivered to the Trustee (or Custodian, if applicable) not later than the due date for filing the Employer's income tax return for its fiscal year in which the Plan Year ends, including extensions thereof. E. Minimum Allocation for Top-Heavy Plans - The contribution and allocation provisions of this Section 3.01(E) shall apply for any Plan Year with respect to which this Plan is a Top-Heavy Plan. 1. Except as otherwise provided in (3) and (4) below, the Employer Contributions and Forfeitures allocated on behalf of any Participant who is not a Key Employee shall not be less than the lesser of 3% of such Participant's Compensation or (in the case where the Employer has no defined benefit plan which designates this Plan to satisfy Section 401 of the Code) the largest percentage of Employer Contributions and Forfeitures, as a percentage of the first $200,000 ($150,000 for Plan Years beginning after December 31, 1993), (increased by any cost of living adjustment made by the Secretary of Treasury or the Secretary's delegate) of the Key Employee's Compensation, allocated on behalf of any Key Employee for that year. The minimum allocation is determined without regard to any Social Security contribution. The Employer may, in the Adoption Agreement, limit the Participants who are entitled to receive the minimum allocation. This minimum allocation shall be made even though under other Plan provisions, the Participant would not otherwise be entitled to receive an allocation, or would have received a lesser allocation for the year because of (a) the Participant's failure to complete 1,000 Hours of Service (or any equivalent provided in the Plan), or (b) the Participant's failure to make mandatory Nondeductible Employee Contributions to the Plan, or (c) Compensation less than a stated amount. 2. For purposes of computing the minimum allocation, Compensation shall mean Compensation as defined in Section 1.07 of the Plan and shall exclude any amounts contributed by the Employer pursuant to a salary reduction agreement and which is not includible in the gross income of the Employee under Sections 125, 402(e)(3), 402(h)(1)(B) or 403(b) of the Code even if the Employer has elected to include such contributions in the definition of Compensation used for other purposes under the Plan. 11 3. The provision in (1) above shall not apply to any Participant who was not employed by the Employer on the last day of the Plan Year. 4. The provision in (1) above shall not apply to any Participant to the extent the Participant is covered under any other plan or plans of the Employer and the Employer has provided in the adoption agreement that the minimum allocation or benefit requirement applicable to Top-Heavy Plans will be met in the other plan or plans. 5. The minimum allocation required under this Section 3.01(E) and Section 3.01(F)(1) (to the extent required to be nonforfeitable under Code Section 416(b)) may not be forfeited under Code Section 411(a)(3)(B) or 411(a)(3)(D). F. Special Requirements for Paired Plans - The Employer maintains paired plans if the Employer has adopted both a standardized profit sharing plan and a standardized money purchase pension plan using this Basic Plan Document. 1. Minimum Allocation - When the paired plans are top-heavy, the top-heavy requirements set forth in Section 3.01(E)(1) of the Plan shall apply. a. Same eligibility requirements. In satisfying the top-heavy minimum allocation requirements set forth in Section 3.01(E) of the Plan, if the Employees benefiting under each of the paired plans are identical, the top-heavy minimum allocation shall be made to the money purchase pension plan. b. Different eligibility requirements. In satisfying the top-heavy minimum allocation requirements set forth in Section 3.01(E) of the Plan, if the Employees benefiting under each of the paired plans are not identical, the top-heavy minimum allocation will be made to both of the paired plans. A Participant is treated as benefiting under the Plan for any Plan Year during which the Participant received or is deemed to receive an allocation in accordance with Section 1.410(b)-3(a). 2. Only One Plan Can Be Integrated - If the Employer maintains paired plans, only one of the Plans may provide for the disparity in contributions which is permitted under Section 401(l) of the Code. In the event that both Adoption Agreements provide for such integration, only the money purchase pension plan shall be deemed to be integrated. G. Return of the Employer Contribution to the Employer Under Special Circumstances - Any contribution made by the Employer because of a mistake of fact must be returned to the Employer within one year of the contribution. In the event that the Commissioner of Internal Revenue determines that the Plan is not initially qualified under the Code, any contributions made incident to that initial qualification by the Employer must be returned to the Employer within one year after the date the initial qualification is denied, but only if the application for qualification is made by the time prescribed by law for filing the Employer's return for the taxable year in which the Plan is adopted, or such later date as the Secretary of the Treasury may prescribe. In the event that a contribution made by the Employer under this Plan is conditioned on deductibility and is not deductible under Code Section 404, the contribution, to the extent of the amount disallowed, must be returned to the Employer within one year after the deduction is disallowed. H. Omission of Participant 1. If the Plan is a money purchase plan or a target benefit plan and, if in any Plan Year, any Employee who should be included as a Participant is erroneously omitted and discovery of such omission is not made until after a contribution by the Employer for the year has been made and allocated, the Employer shall make a subsequent contribution to include earnings thereon, with respect to the omitted Employee in the amount which the Employer would have contributed with respect to that Employee had he or she not been omitted. 2. If the Plan is a profit sharing plan, and if in any Plan Year, any Employee who should be included as a Participant is erroneously omitted and discovery of such omission is not made until after the Employer Contribution has been made and allocated, then the Plan Administrator must re-do the allocation (if a correction can be made) and inform the Employee. Alternatively, the Employer may choose to contribute for the omitted Employee the amount to include earnings thereon, which the Employer would have contributed for the Employee. 3.02 NONDEDUCTIBLE EMPLOYEE CONTRIBUTIONS This Plan will not accept Nondeductible Employee Contributions and matching contributions for Plan Years beginning after the Plan Year in which this Plan is adopted by the Employer. Nondeductible Employee Contributions for Plan Years beginning after December 31, 1986, together with any matching contributions as defined in Section 401(m) of the Code, will be limited so as to meet the nondiscrimination test of Section 401(m) of the Code. 12 A separate account will be maintained by the Plan Administrator for the Nondeductible Employee Contributions of each Participant. A Participant may, upon a written request submitted to the Plan Administrator withdraw the lesser of the portion of his or her Individual Account attributable to his or her Nondeductible Employee Contributions or the amount he or she contributed as Nondeductible Employee Contributions. Nondeductible Employee Contributions and earnings thereon will be nonforfeitable at all times. No Forfeiture will occur solely as a result of an Employee's withdrawal of Nondeductible Employee Contributions. The Plan Administrator will not accept deductible employee contributions which are made for a taxable year beginning after December 31, 1986. Contributions made prior to that date will be maintained in a separate account which will be nonforfeitable at all times. The account will share in the gains and losses of the Fund in the same manner as described in Section 4.03 of the Plan. No part of the deductible employee contribution account will be used to purchase life insurance. Subject to Section 6.05, joint and survivor annuity requirements (if applicable), the Participant may withdraw any part of the deductible employee contribution account by making a written application to the Plan Administrator. 3.03 ROLLOVER CONTRIBUTIONS If so indicated in the Adoption Agreement, an Employee may contribute a rollover contribution to the Plan. The Plan Administrator may require the Employee to submit a written certification that the contribution qualifies as a rollover contribution under the applicable provisions of the Code. If it is later determined that all or part of a rollover contribution was ineligible to be rolled into the Plan, the Plan Administrator shall direct that any ineligible amounts, plus earnings attributable thereto, be distributed from the Plan to the Employee as soon as administratively feasible. A separate account shall be maintained by the Plan Administrator for each Employee's rollover contributions which will be nonforfeitable at all times. Such account will share in the income and gains and losses of the Fund in the manner described in Section 4.03 and shall be subject to the Plan's provisions governing distributions. The Employer may, in a uniform and nondiscriminatory manner, only allow Employees who have become Participants in the Plan to make rollover contributions. 3.04 TRANSFER CONTRIBUTIONS If so indicated in the Adoption Agreement, the Trustee (or Custodian, if applicable) may receive any amounts transferred to it from the trustee or custodian of another plan qualified under Code Section 401(a). If it is later determined that all or part of a transfer contribution was ineligible to be transferred into the Plan, the Plan Administrator shall direct that any ineligible amounts, plus earnings attributable thereto, be distributed from the Plan to the Employee as soon as administratively feasible. A separate account shall be maintained by the Plan Administrator for each Employee's transfer contributions which will be nonforfeitable at all times. Such account will share in the income and gains and losses of the Fund in the manner described in Section 4.03 and shall be subject to the Plan's provisions governing distributions. Notwithstanding any provision of this Plan to the contrary, to the extent that any optional form of benefit under this Plan permits a distribution prior to the Employee's retirement, death, Disability, or severance from employment, and prior to Plan termination, the optional form of benefit is not available with respect to benefits attributable to assets (including the post-transfer earnings thereon) and liabilities that are transferred, within the meaning of Section 414(l) of the Internal Revenue Code, to this Plan from a money purchase pension plan qualified under Section 401(a) of the Internal Revenue Code (other than any portion of those assets and liabilities attributable to voluntary employee contributions). The Employer may, in a uniform and nondiscriminatory manner, only allow Employees who have become Participants in the Plan to make transfer contributions. 3.05 LIMITATION ON ALLOCATIONS A. If the Participant does not participate in, and has never participated in another qualified plan maintained by the Employer or a welfare benefit fund, as defined in Section 419(e) of the Code maintained by the Employer, or an individual medical account, as defined in Section 415(l)(2) of the Code, or a simplified employee pension plan, as defined in Section 408(k) of the Code, maintained by the Employer, which provides an annual addition as defined in Section 3.08(E)(1), the following rules shall apply: 1. The amount of annual additions which may be credited to the Participant's Individual Account for any limitation year will not exceed the lesser of the maximum permissible amount or any other limitation contained in this Plan. If the Employer Contribution that would otherwise be contributed or allocated to the Participant's Individual Account would cause the annual additions for the limitation year to exceed the maximum permissible amount, the amount contributed or allocated will be reduced so that the annual additions for the limitation year will equal the maximum permissible amount. 13 2. Prior to determining the Participant's actual Compensation for the limitation year, the Employer may determine the maximum permissible amount for a Participant on the basis of a reasonable estimation of the Participant's Compensation for the limitation year, uniformly determined for all Participants similarly situated. 3. As soon as is administratively feasible after the end of the limitation year, the maximum permissible amount or the limitation year will be determined on the basis of the Participant's actual Compensation for the limitation year. 4. If pursuant to Section 3.05(A)(3) or as a result of the allocation of Forfeitures there is an excess amount, the excess will be disposed of as follows: a. Any Nondeductible Employee Contributions, to the extent they would reduce the excess amount, will be returned to the Participant; b. If after the application of paragraph (a) an excess amount still exists, and the Participant is covered by the Plan at the end of the limitation year, the excess amount in the Participant's Individual Account will be used to reduce Employer Contributions (including any allocation of Forfeitures) for such Participant in the next limitation year, and each succeeding limitation year if necessary; c. If after the application of paragraph (b) an excess amount still exists, and the Participant is not covered by the Plan at the end of a limitation year, the excess amount will be held unallocated in a suspense account. The suspense account will be applied 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 a limitation year pursuant to this Section, it will participate in the allocation of the 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' Individual Accounts before any Employer Contributions or any Nondeductible Employee Contributions may be made to the Plan for that limitation year. Excess amounts may not be distributed to Participants or former Participants. B. If, in addition to this Plan, the Participant is covered under another qualified master or prototype defined contribution plan maintained by the Employer, a welfare benefit fund maintained by the Employer, an individual medical account maintained by the Employer, or a simplified employee pension maintained by the Employer that provides an annual addition as defined in Section 3.05(E)(1), during any limitation year, the following rules apply: 1. The annual additions which may be credited to a Participant's Individual Account under this Plan for any such limitation year will not exceed the maximum permissible amount reduced by the annual additions credited to a Participant's Individual Account under the other qualified master or prototype plans, welfare benefit funds, individual medical accounts and simplified employee pensions for the same limitation year. If the annual additions with respect to the Participant under other qualified master or prototype defined contribution plans, welfare benefit funds, individual medical accounts and simplified employee pensions maintained by the Employer are less than the maximum permissible amount and the Employer Contribution that would otherwise be contributed or allocated to the Participant's Individual Account under this Plan would cause the annual additions for the limitation year to exceed this limitation, the amount contributed or allocated will be reduced so that the annual additions under all such plans and funds for the limitation year will equal the maximum permissible amount. If the annual additions with respect to the Participant under such other qualified master or prototype defined contribution plans, welfare benefit funds, individual medical accounts and simplified employee pensions in the aggregate are equal to or greater than the maximum permissible amount, no amount will be contributed or allocated to the Participant's Individual Account under this Plan for the limitation year. 2. Prior to determining the Participant's actual Compensation for the limitation year, the Employer may determine the maximum permissible amount for a Participant in the manner described in Section 3.05(A)(2). 3. As soon as is administratively feasible after the end of the limitation year, the maximum permissible amount for the limitation year will be determined on the basis of the Participant's actual Compensation for the limitation year. 14 4. If, pursuant to Section 3.05(B)(3) or as a result of the allocation of Forfeitures a Participant's annual additions under this Plan and such other plans would result in an excess amount for a limitation year, the excess amount will be deemed to consist of the annual additions last allocated, except that annual additions attributable to a simplified employee pension will be deemed to have been allocated first, followed by annual additions to a welfare benefit fund or individual medical account, regardless of the actual allocation date. 5. If an excess amount was allocated to a Participant on an allocation date of this Plan which coincides with an allocation date of another plan, the excess amount attributed to this Plan will be the product of, a. the total excess amount allocated as of such date, times b. the ratio of (i) the annual additions allocated to the Participant for the limitation year as of such date under this Plan to (ii) the total annual additions allocated to the Participant for the limitation year as of such date under this and all the other qualified prototype defined contribution plans. 6. Any excess amount attributed to this Plan will be disposed in the manner described in Section 3.05(A)(4). C. If the Participant is covered under another qualified defined contribution plan maintained by the Employer which is not a master or prototype plan, annual additions which may be credited to the Participant's Individual Account under this Plan for any limitation year will be limited in accordance with Sections 3.05(B)(1) through 3.05(B)(6) as though the other plan were a master or prototype plan unless the Employer provides other limitations in the Section of the Adoption Agreement titled "Limitation on Allocation - More Than One Plan." D. If the Employer maintains, or at any time maintained, a qualified defined benefit plan covering any Participant in this Plan, the sum of the Participant's defined benefit plan fraction and defined contribution plan fraction will not exceed 1.0 in any limitation year. The annual additions which may be credited to the Participant's Individual Account under this Plan for any limitation year will be limited in accordance with the Section of the Adoption Agreement titled "Limitation on Allocation - More Than One Plan." E. The following terms shall have the following meanings when used in this Section 3.05: 1. Annual additions: The sum of the following amounts credited to a Participant's Individual Account for the limitation year: a. Employer Contributions, b. Nondeductible Employee Contributions, c. Forfeitures, d. amounts allocated, after March 31, 1984, to an individual medical account, as defined in Section 415(l)(2) of the Code, which is part of a pension or annuity plan maintained by the Employer are treated as annual additions to a defined contribution plan. Also amounts derived from contributions paid or accrued after December 31, 1985, in taxable years ending after such date, which are attributable to post-retirement medical benefits, allocated to the separate account of a key employee, as defined in Section 419A(d)(3) of the Code, under a welfare benefit fund, as defined in Section 419(e) of the Code, maintained by the Employer are treated as annual additions to a defined contribution plan, and e. allocations under a simplified employee pension. For this purpose, any excess amount applied under Section 3.05(A)(4) or 3.05(B)(6) in the limitation year to reduce Employer Contributions will be considered annual additions for such limitation year. 2. Compensation: Means Compensation as defined in Section 1.07 of the Plan except that Compensation for purposes of this Section 3.05 shall not include any amounts contributed by the Employer pursuant to a salary reduction agreement and which is not includible in the gross income of the Employee under Sections 125, 402(e)(3), 402(h)(1)(B) or 403(b) of the Code even if the Employer has elected to include such contributions in the definition of Compensation used for other purposes under the Plan. Further, any other exclusion the Employer has elected (such as the exclusion of certain types of pay or pay earned before the Employee enters the Plan) will not apply for purposes of this Section. Notwithstanding the preceding sentence, Compensation for a Participant in a defined contribution plan who is permanently and totally disabled (as defined in Section 22(e)(3) of the Code) is the Compensation such Participant would have received for the limitation year if the Participant had been paid at the rate of Compensation paid immediately before becoming permanently and totally disabled; such imputed Compensation for the disabled Participant may be taken into account only if the Participant is not a Highly 15 Compensated Employee (as defined in Section 414(q) of the Code) and contributions made on behalf of such Participant are nonforfeitable when made. 3. Defined benefit fraction: A fraction, the numerator of which is the sum of the Participant's projected annual benefits under all the defined benefit plans (whether or not terminated) maintained by the Employer, and the denominator of which is the lesser of 125% of the dollar limitation determined for the limitation year under Section 415(b) and (d) of the Code or 140% of the highest average compensation, including any adjustments under Section 415(b) of the Code. Notwithstanding the above, if the Participant was a Participant as of the first day of the first limitation year beginning after December 31, 1986, in one or more defined benefit plans maintained by the Employer which were in existence on May 6, 1986, the denominator of this fraction will not be less than 125% of the sum of the annual benefits under such plans which the Participant had accrued as of the close of the last limitation year beginning before January 1, 1987, disregarding any changes in the terms and conditions of the plan after May 5, 1986. The preceding sentence applies only if the defined benefit plans individually and in the aggregate satisfied the requirements of Section 415 of the Code for all limitation years beginning before January 1, 1987. 4. Defined contribution dollar limitation: $30,000 or if greater, one-fourth of the defined benefit dollar limitation set forth in Section 415(b)(1) of the Code as in effect for the limitation year. 5. Defined contribution fraction: A fraction, the numerator of which is the sum of the annual additions to the Participant's account under all the defined contribution plans (whether or not terminated) maintained by the Employer for the current and all prior limitation years (including the annual additions attributable to the Participant's nondeductible employee contributions to all defined benefit plans, whether or not terminated, maintained by the Employer, and the annual additions attributable to all welfare benefit funds, as defined in Section 419(e) of the Code, individual medical accounts, and simplified employee pensions, maintained by the Employer), and the denominator of which is the sum of the maximum aggregate amounts for the current and all prior limitation years of service with the Employer (regardless of whether a defined contribution plan was maintained by the Employer). The maximum aggregate amount in any limitation year is the lesser of 125% of the dollar limitation determined under Section 415(b) and (d) of the Code in effect under Section 415(c)(1)(A) of the Code or 35% of the Participant's Compensation for such year. If the Employee was a Participant as of the end of the first day of the first limitation year beginning after December 31, 1986, in one or more defined contribution plans maintained by the Employer which were in existence on May 6, 1986, the numerator of this fraction will be adjusted if the sum of this fraction and the defined benefit fraction would otherwise exceed 1.0 under the terms of this Plan. Under the adjustment, an amount equal to the product of (1) the excess of the sum of the fractions over 1.0 times (2) the denominator of this fraction, will be permanently subtracted from the numerator of this fraction. The adjustment is calculated using the fractions as they would be computed as of the end of the last limitation year beginning before January 1, 1987, and disregarding any changes in the terms and conditions of the Plan made after May 5, 1986, but using the Section 415 limitation applicable to the first limitation year beginning on or after January 1, 1987. The annual addition for any limitation year beginning before January 1, 1987, shall not be recomputed to treat all Nondeductible Employee Contributions as annual additions. 6. Employer: For purposes of this Section 3.05, Employer shall mean the Employer that adopts this Plan, and all members of a controlled group of corporations (as defined in Section 414(b) of the Code as modified by Section 415(h)), all commonly controlled trades or businesses (as defined in Section 414(c) as modified by Section 415(h)) or affiliated service groups (as defined in Section 414(m)) of which the adopting Employer is a part, and any other entity required to be aggregated with the Employer pursuant to regulations under Section 414(o) of the Code. 7. Excess amount: The excess of the Participant's annual additions for the limitation year over the maximum permissible amount. 8. Highest average compensation: The average compensation for the three consecutive years of service with the Employer that produces the highest average. 9. Limitation year: A calendar year, or the 12-consecutive month period elected by the Employer in the Adoption Agreement. All qualified plans maintained by the 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. 10. Master or prototype plan: A plan the form of which is the subject of a favorable opinion letter from the Interna1 Revenue Service. 16 11. Maximum permissible amount: The maximum annual addition that may be contributed or allocated to a Participant's Individual Account under the Plan for any limitation year shall not exceed the lesser of: a. the defined contribution dollar limitation, or b. 25% of the Participant's Compensation for the limitation year. The compensation limitation referred to in (b) shall not apply to any contribution for medical benefits (within the meaning of Section 401(h) or Section 419A(f)(2) of the Code) which is otherwise treated as an annual addition under Section 415(l)(1) or 419A(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 will not exceed the defined contribution dollar limitation multiplied by the following fraction: Number of months in the short limitation year --------------------------------------------- 12 12. Projected annual benefit: The annual retirement benefit (adjusted to an actuarially equivalent straight life annuity if such benefit is expressed in a form other than a straight life annuity or qualified joint and survivor annuity) to which the Participant would be entitled under the terms of the Plan assuming: a. the Participant will continue employment until Normal Retirement Age under the Plan (or current age, if later), and b. the Participant's Compensation for the current limitation year and all other relevant factors used to determine benefits under the Plan will remain constant for all future limitation years. Straight life annuity means an annuity payable in equal installments for the life of the Participant that terminates upon the Participant's death. SECTION FOUR INDIVIDUAL ACCOUNTS OF PARTICIPANTS AND VALUATION 4.01 INDIVIDUAL ACCOUNTS A. The Plan Administrator shall establish and maintain an Individual Account in the name of each Participant to reflect the total value of his or her interest in the Fund. Each Individual Account established hereunder shall consist of such subaccounts as may be needed for each Participant including: 1. a subaccount to reflect Employer Contributions and Forfeitures allocated on behalf of a Participant; 2. a subaccount to reflect a Participant's rollover contributions; 3. a subaccount to reflect a Participant's transfer contributions; 4. a subaccount to reflect a Participant's Nondeductible Employee Contributions; and 5. a subaccount to reflect a Participant's deductible employee contributions. B. The Plan Administrator may establish additional accounts as it may deem necessary for the proper administration of the Plan, including, but not limited to, a suspense account for Forfeitures as required pursuant to Section 6.01(D). 4.02 VALUATION OF FUND The Fund will be valued each Valuation Date at fair market value. 4.03 VALUATION OF INDIVIDUAL ACCOUNTS A. Where all or a portion of the assets of a Participant's Individual Account are invested in a Separate Fund for the Participant, then the value of that portion of such Participant's Individual Account at any relevant time equals the sum of the fair market values of the assets in such Separate Fund, less any applicable charges or penalties. B. The fair market value of the remainder of each Individual Account is determined in the following manner: 1. First, the portion of the Individual Account invested in each Investment Fund as of the previous Valuation Date is determined. Each such portion is reduced by any withdrawal made from the applicable Investment Fund to or for the benefit of a Participant or the Participant's Beneficiary, further reduced by any amounts forfeited by the Participant pursuant to Section 6.01(D) and further reduced by any transfer to another Investment Fund since the previous Valuation Date and is increased by any amount transferred from another Investment Fund since the previous Valuation Date. The resulting amounts are the net Individual Account portions invested in the Investment Funds. 17 2. Secondly, the net Individual Account portions invested in each Investment Fund are adjusted upwards or downwards, pro rata (i.e., ratio of each net Individual Account portion to the sum of all net Individual Account portions) so that the sum of all the net Individual Account portions invested in an Investment Fund will equal the then fair market value of the Investment Fund. Notwithstanding the previous sentence, for the first Plan Year only, the net Individual Account portions shall be the sum of all contributions made to each Participant's Individual Account during the first Plan Year. 3. Thirdly, any contributions to the Plan and Forfeitures are allocated in accordance with the appropriate allocation provisions of Section 3. For purposes of Section 4, contributions made by the Employer for any Plan Year but after that Plan Year will be considered to have been made on the last day of that Plan Year regardless of when paid to the Trustee (or Custodian, if applicable). Amounts contributed between Valuation Dates will not be credited with investment gains or losses until the next following Valuation Date. 4. Finally, the portions of the Individual Account invested in each Investment Fund (determined in accordance with (1), (2) and (3) above) are added together. 4.04 MODIFICATION OF METHOD FOR VALUING INDIVIDUAL ACCOUNTS If necessary or appropriate, the Plan Administrator may establish different or additional procedures (which shall be uniform and nondiscriminatory) for determining the fair market value of the Individual Accounts. 4.05 SEGREGATION OF ASSETS If a Participant elects a mode of distribution other than a lump sum, the Plan Administrator may place that Participant's account balance into a segregated Investment Fund for the purpose of maintaining the necessary liquidity to provide benefit installments on a periodic basis. 4.06 STATEMENT OF INDIVIDUAL ACCOUNTS No later than 270 days after the close of each Plan Year, the Plan Administrator shall furnish a statement to each Participant indicating the Individual Account balances of such Participant as of the last Valuation Date in such Plan Year. SECTION FIVE TRUSTEE OR CUSTODIAN 5.01 CREATION OF FUND By adopting this Plan, the Employer establishes the Fund which shall consist of the assets of the Plan held by the Trustee (or Custodian, if applicable) pursuant to this Section 5. Assets within the Fund may be pooled on behalf of all Participants, earmarked on behalf of each Participant or be a combination of pooled and earmarked. To the extent that assets are earmarked for a particular Participant, they will be held in a Separate Fund for that Participant. No part of the corpus or income of the Fund may be used for, or diverted to, purposes other than for the exclusive benefit of Participants or their Beneficiaries. 5.02 INVESTMENT AUTHORITY Except as provided in Section 5.14 (relating to individual direction of investments by Participants), the Employer, not the Trustee (or Custodian, if applicable), shall have exclusive management and control over the investment of the Fund into any permitted investment. Notwithstanding the preceding sentence, a Trustee may make an agreement with the Employer whereby the Trustee will manage the investment of all or a portion of the Fund. Any such agreement shall be in writing and set forth such matters as the Trustee deems necessary or desirable. 5.03 FINANCIAL ORGANIZATION CUSTODIAN OR TRUSTEE WITHOUT FULL TRUST POWERS This Section 5.03 applies where a financial organization has indicated in the Adoption Agreement that it will serve, with respect to this Plan, as Custodian or as Trustee without full trust powers (under applicable law). Hereinafter, a financial organization Trustee without full trust powers (under applicable law) shall be referred to as a Custodian. The Custodian shall have no discretionary authority with respect to the management of the Plan or the Fund but will act only as directed by the entity who has such authority. A. Permissible Investments - The assets of the Plan shall be invested only in those investments which are available through the Custodian in the ordinary course of business which the Custodian may legally hold in a qualified plan and which the Custodian chooses to make available to Employers for qualified plan investments. Notwithstanding the preceding sentence, the Prototype Sponsor may, as a condition of making the Plan available to the Employer, limit the types of property in which the assets of the Plan may be invested. 18 B. Responsibilities of the Custodian - The responsibilities of the Custodian shall be limited to the following: 1. To receive Plan contributions and to hold, invest and reinvest the Fund without distinction between principal and interest; provided, however, that nothing in this Plan shall require the Custodian to maintain physical custody of stock certificates (or other indicia of ownership of any type of asset) representing assets within the Fund; 2. To maintain accurate records of contributions, earnings, withdrawals and other information the Custodian deems relevant with respect to the Plan; 3. To make disbursements from the Fund to Participants or Beneficiaries upon the proper authorization of the Plan Administrator; and 4. To furnish to the Plan Administrator a statement which reflects the value of the investments in the hands of the Custodian as of the end of each Plan Year and as of any other times as the Custodian and Plan Administrator may agree. C. Powers of the Custodian - Except as otherwise provided in this Plan, the Custodian shall have the power to take any action with respect to the Fund which it deems necessary or advisable to discharge its responsibilities under this Plan including, but not limited to, the following powers: 1. To invest all or a portion of the Fund (including idle cash balances) in time deposits, savings accounts, money market accounts or similar investments bearing a reasonable rate of interest in the Custodian's own savings department or the savings department of another financial organization; 2. To vote upon any stocks, bonds, or other securities; to give general or special proxies or powers of attorney with or without power of substitution; to exercise any conversion privileges or subscription fights and to make any payments incidental thereto; to oppose, or to consent to, or otherwise participate in, corporate reorganizations or other changes affecting corporate securities, and to pay any assessment or charges in connection therewith; and generally to exercise any of the powers of an owner with respect to stocks, bonds, securities or other property; 3. To hold securities or other property of the Fund in its own name, in the name of its nominee or in bearer form; and 4. To make, execute, acknowledge, and deliver any and all documents of transfer and conveyance and any and all other instruments that may be necessary or appropriate to carry out the powers herein granted. 5.04 FINANCIAL ORGANIZATION TRUSTEE WITH FULL TRUST POWERS AND INDIVIDUAL TRUSTEE This Section 5.04 applies where a financial organization has indicated in the Adoption Agreement that it will serve as Trustee with full trust powers. This Section also applies where one or more individuals are named in the Adoption Agreement to serve as Trustee(s). A. Permissible Investments - The Trustee may invest the assets of the Plan in property of any character, real or personal, including, but not limited to the following: stocks, including shares of open-end investment companies (mutual funds); bonds; notes; debentures; options; limited partnership interests, mortgages; real estate or any interests therein; unit investment trusts; Treasury Bills, and other U.S. Government obligations; common trust funds, combined investment trusts, collective trust funds or commingled funds maintained by a bank or similar financial organization (whether or not the Trustee hereunder); savings accounts, time deposits or money market accounts of a bank or similar financial organization (whether or not the Trustee hereunder); annuity contracts; life insurance policies; or in such other investments as is deemed proper without regard to investments authorized by statute or rule of law governing the investment of trust funds but with regard to ERISA and this Plan. Notwithstanding the preceding sentence, the Prototype Sponsor may, as a condition of making the Plan available to the Employer, limit the types of property in which the assets of the Plan may be invested. B. Responsibilities of the Trustee - The responsibilities of the Trustee shall be limited to the following: 1. To receive Plan contributions and to hold, invest and reinvest the Fund without distinction between principal and interest; provided, however, that nothing in this Plan shall require the Trustee to maintain physical custody of stock certificates (or other indicia, of ownership) representing assets within the Fund; 2. To maintain accurate records of contributions, earnings, withdrawals and other information the Trustee deems relevant with respect to the Plan; 3. To make disbursements from the Fund to Participants or Beneficiaries upon the proper authorization of the Plan Administrator; and 19 4. To furnish to the Plan Administrator a statement which reflects the value of the investments in the hands of the Trustee as of the end of each Plan Year and as of any other times as the Trustee and Plan Administrator may agree. C. Powers of the Trustee - Except as otherwise provided in this Plan, the Trustee shall have the power to take any action with respect to the Fund which it deems necessary or advisable to discharge its responsibilities under this Plan including, but not limited to, the following powers: 1. To hold any securities or other property of the Fund in its own name, in the name of its nominee or in bearer form; 2. To purchase or subscribe for securities issued, or real property owned, by the Employer or any trade or business under common control with the Employer but only if the prudent investment and diversification requirements of ERISA are satisfied; 3. To sell, exchange, convey, transfer or otherwise dispose of any securities or other property held by the Trustee, by private contract or at public auction. No person dealing with the Trustee shall be bound to see to the application of the purchase money or to inquire into the validity, expediency, or propriety of any such sale or other disposition, with or without advertisement; 4. To vote upon any stocks, bonds, or other securities; to give general or special proxies or powers of attorney with or without power of substitution; to exercise any conversion privileges or subscription rights and to make any payments incidental thereto; to oppose, or to consent to, or otherwise participate in, corporate reorganizations or other changes affecting corporate securities, and to delegate discretionary powers, and to pay any assessments or charges in connection therewith; and generally to exercise any of the powers of an owner with respect to stocks, bonds, securities or other property; 5. To invest any part or all of the Fund (including idle cash balances) in certificates of deposit, demand or time deposits, savings accounts, money market accounts or similar investments of the Trustee (if the Trustee is a bank or similar financial organization), the Prototype Sponsor or any affiliate of such Trustee or Prototype Sponsor, which bear a reasonable rate of interest; 6. To provide sweep services without the receipt by the Trustee of additional compensation or other consideration (other than reimbursement of direct expenses properly and actually incurred in the performance of such services); 7. To hold in the form of cash for distribution or investment such portion of the Fund as, at any time and from time-to-time, the Trustee shall deem prudent and deposit such cash in interest bearing or noninterest bearing accounts; 8. To make, execute, acknowledge, and deliver any and all documents of transfer and conveyance and any and all other instruments that may be necessary or appropriate to carry out the powers herein granted; 9. To settle, compromise, or submit to arbitration any claims, debts, or damages due or owing to or from the Plan, to commence or defend suits or legal or administrative proceedings, and to represent the Plan in all suits and legal and administrative proceedings; 10. To employ suitable agents and counsel, to contract with agents to perform administrative and recordkeeping duties and to pay their reasonable expenses, fees and compensation, and such agent or counsel may or may not be agent or counsel for the Employer; 11. To cause any part or all of the Fund, without limitation as to amount, to be commingled with the funds of other trusts (including trusts for qualified employee benefit plans) by causing such money to be invested as a part of any pooled, common, collective or commingled trust fund (including any such fund described in the Adoption Agreement) heretofore or hereafter created by any Trustee (if the Trustee is a bank), by the Prototype Sponsor, by any affiliate bank of such a Trustee or by such a Trustee or the Prototype Sponsor, or by such an affiliate in participation with others; the instrument or instruments establishing such trust fund or funds, as amended, being made part of this Plan and trust so long as any portion of the Fund shall be invested through the medium thereof; and 12. Generally to do all such acts, execute all such instruments, initiate such proceedings, and exercise all such rights and privileges with relation to property constituting the Fund as if the Trustee were the absolute owner thereof. 5.05 DIVISION OF FUND INTO INVESTMENT FUNDS The Employer may direct the Trustee (or Custodian) from time-to-time to divide and redivide the Fund into one or more Investment Funds. Such Investment Funds may include, but not be limited to, Investment Funds representing the assets under the control of an investment manager pursuant to Section 5.12 and Investment Funds representing investment 20 options available for individual direction by Participants pursuant to Section 5.14. Upon each division or redivision, the Employer may specify the part of the Fund to be allocated to each such Investment Fund and the terms and conditions, if any, under which the assets in such Investment Fund shall be invested. 5.06 COMPENSATION AND EXPENSES The Trustee (or Custodian, if applicable) shall receive such reasonable compensation as may be agreed upon by the Trustee (or Custodian) and the Employer. The Trustee (or Custodian) shall be entitled to reimbursement by the Employer for all proper expenses incurred in carrying out his or her duties under this Plan, including reasonable legal, accounting and actuarial expenses. If not paid by the Employer, such compensation and expenses may be charged against the Fund. All taxes of any kind that may be levied or assessed under existing or future laws upon, or in respect of, the Fund or the income thereof shall be paid from the Fund. 5.07 NOT OBLIGATED TO QUESTION DATA The Employer shall furnish the Trustee (or Custodian, if applicable) and Plan Administrator the information which each party deems necessary for the administration of the Plan including, but not limited to, changes in a Participant's status, eligibility, mailing addresses and other such data as may be required. The Trustee (or Custodian) and Plan Administrator shall be entitled to act on such information as is supplied them and shall have no duty or responsibility to further verify or question such information. 5.08 LIABILITY FOR WITHHOLDING ON DISTRIBUTIONS The Plan Administrator shall be responsible for withholding federal income taxes from distributions from the Plan, unless the Participant (or Beneficiary, where applicable) elects not to have such taxes withheld. The Trustee (or Custodian) or other payor may act as agent for the Plan Administrator to withhold such taxes and to make the appropriate distribution reports, if the Plan Administrator furnishes all the information to the Trustee (or Custodian) or other payor it may need to do withholding and reporting. 5.09 RESIGNATION OR REMOVAL OF TRUSTEE (OR CUSTODIAN) The Trustee (or Custodian, if applicable) may resign at any time by giving 30 days advance written notice to the Employer. The resignation shall become effective 30 days after receipt of such notice unless a shorter period is agreed upon. The Employer may remove any Trustee (or Custodian) at any time by giving written notice to such Trustee (or Custodian) and such removal shall be effective 30 days after receipt of such notice unless a shorter period is agreed upon. The Employer shall have the power to appoint a successor Trustee (or Custodian). Upon such resignation or removal, if the resigning or removed Trustee (or Custodian) is the sole Trustee (or Custodian), he or she shall transfer all of the assets of the Fund then held by such Trustee (or Custodian) as expeditiously as possible to the successor Trustee (or Custodian) after paying or reserving such reasonable amount as he or she shall deem necessary to provide for the expense in the settlement of the accounts and the amount of any compensation due him or her and any chargeable against the Fund for which he or she may be liable. If the Funds as reserved are not sufficient for such purpose, then he or she shall be entitled to reimbursement from the successor Trustee (or Custodian) out of the assets in the successor Trustee's (or Custodian's) hands under this Plan. If the amount reserved shall be in excess of the amount actually needed, the former Trustee (or Custodian) shall return such excess to the successor Trustee (or Custodian). Upon receipt of the transferred assets, the successor Trustee (or Custodian) shall thereupon succeed to all of the powers and responsibilities given to the Trustee (or Custodian) by this Plan. The resigning or removed Trustee (or Custodian) shall render an accounting to the Employer and unless objected to by the Employer within 30 days of its receipt, the accounting shall be deemed to have been approved and the resigning or removed Trustee (or Custodian) shall be released and discharged as to all matters set forth in the accounting. Where a financial organization is serving as Trustee (or Custodian) and it is merged with or bought by another organization (or comes under the control of any federal or state agency), that organization shall serve as the successor Trustee (or Custodian) of this Plan, but only if it is the type of organization that can so serve under applicable law. Where the Trustee or Custodian is serving as a nonbank trustee or custodian pursuant to Section 1.401-12(n) of the Income Tax Regulations, the Employer will appoint a successor Trustee (or Custodian) upon notification by the Commissioner of Internal Revenue that such substitution is required because the Trustee (or Custodian) has failed to comply with the requirements of Section 1.401-12(n) or is not keeping such records or making such returns or rendering such statements as are required by forms or regulations. 5.10 DEGREE OF CARE - LIMITATIONS OF LIABILITY The Trustee (or Custodian) shall not be liable for any losses incurred by the Fund by any direction to invest communicated by the Employer, Plan Administrator, investment manager appointed pursuant to Section 5.12 or any Participant or Beneficiary. The Trustee (or Custodian) shall be under no liability for distributions made or other action taken or not taken at the written direction of the Plan Administrator. It is specifically understood that the Trustee (or Custodian) shall have no duty or responsibility with respect to the determination of matters pertaining to the eligibility of any Employee to 21 become a Participant or remain a Participant hereunder, the amount of benefit to which a Participant or Beneficiary shall be entitled to receive hereunder, whether a distribution to Participant or Beneficiary is appropriate under the terms of the Plan or the size and type of any policy to be purchased from any insurer for any Participant hereunder or similar matters; it being understood that all such responsibilities under the Plan are vested in the Plan Administrator. 5.11 INDEMNIFICATION OF PROTOTYPE SPONSOR AND TRUSTEE (OR CUSTODIAN) Notwithstanding any other provision herein, and except as may be otherwise provided by ERISA, the Employer shall indemnify and hold harmless the Trustee (or Custodian, if applicable) and the Prototype Sponsor, their officers, directors, employees, agents, their heirs, executors, successors and assigns, from and against any and all liabilities, damages, judgments, settlements, losses, costs, charges, or expenses (including legal expenses) at any time arising out of or incurred in connection with any action taken by such parties in the performance of their duties with respect to this Plan, unless there has been a final adjudication of gross negligence or willful misconduct in the performance of such duties. Further, except as may be otherwise provided by ERISA, the Employer will indemnify the Trustee (or Custodian) and Prototype Sponsor from any liability, claim or expense (including legal expense) which the Trustee (or Custodian) and Prototype Sponsor shall incur by reason of or which results, in whole or in part, from the Trustee's (or Custodian's) or Prototype Sponsor's reliance on the facts and other directions and elections the Employer communicates or fails to communicate. 5.12 INVESTMENT MANAGERS A. Definition of Investment Manager - The Employer may appoint one or more investment managers to make investment decisions with respect to all or a portion of the Fund. The investment manager shall be any firm or individual registered as an investment adviser under the Investment Advisers Act of 1940, a bank as defined in said Act or an insurance company qualified under the laws of more than one state to perform services consisting of the management, acquisition or disposition of any assets of the Plan. B. Investment Manager's Authority - A separate Investment Fund shall be established representing the assets of the Fund invested at the direction of the investment manager. The investment manager so appointed shall direct the Trustee (or Custodian, if applicable) with respect to the investment of such Investment Fund. The investments which may be acquired at the direction of the investment manager are those described in Section 5.03(A) (for Custodians) or Section 5.04(A) (for Trustees). C. Written Agreement - The appointment of any investment manager shall be by written agreement between the Employer and the investment manager and a copy of such agreement (and any modification or termination thereof) must be given to the Trustee (or Custodian). The agreement shall set forth, among other matters, the effective date of the investment manager's appointment and an acknowledgement by the investment manager that it is a fiduciary of the Plan under ERISA. D. Concerning the Trustee (or Custodian) - Written notice of each appointment of an investment manager shall be given to the Trustee (or Custodian) in advance of the effective date of such appointment. Such notice shall specify which portion of the Fund will constitute the Investment Fund subject to the investment manager's direction. The Trustee (or Custodian) shall comply with the investment direction given to it by the investment manager and will not be liable for any loss which may result by reason of any action (or inaction) it takes at the direction of the investment manager. 5.13 MATTERS RELATING TO INSURANCE A. If a life insurance policy is to be purchased for a Participant, the aggregate premium for certain life insurance for each Participant must be less than a certain percentage of the aggregate Employer Contributions and Forfeitures allocated to a Participant's Individual Account at any particular time as follows: 1. Ordinary Life Insurance - For purposes of these incidental insurance provisions, ordinary life insurance contracts are contracts with both nondecreasing death benefits and nonincreasing premiums. If such contracts are purchased, less than 50% of the aggregate Employer Contributions and Forfeitures allocated to any Participant's Individual Account will be used to pay the premiums attributable to them. 2. Term and Universal Life Insurance - No more than 25% of the aggregate Employer Contributions and Forfeitures allocated to any Participant's Individual Account will be used to pay the premiums on term life insurance contracts, universal life insurance contracts, and all other life insurance contracts which are not ordinary life. 3. Combination - The sum of 50% of the ordinary life insurance premiums and all other life insurance premiums will not exceed 25% of the aggregate Employer Contributions and Forfeitures allocated to any Participant's Individual Account. 22 If this Plan is a profit sharing plan, the above incidental benefits limits do not apply to life insurance contracts purchased with Employer Contributions and Forfeitures that have been in the Participant's Individual Account for at least 2 full Plan Years, measured from the date such contributions were allocated. B. Any dividends or credits earned on insurance contracts for a Participant shall be allocated to such Participant's Individual Account. C. Subject to Section 6.05, the contracts on a Participant's life will be converted to cash or an annuity or distributed to the Participant upon commencement of benefits. D. The Trustee (or Custodian, if applicable) shall apply for and will be the owner of any insurance contract(s) purchased under the terms of this Plan. The insurance contract(s) must provide that proceeds will be payable to the Trustee (or Custodian), however, the Trustee (or Custodian) shall be required to pay over all proceeds of the contract(s) to the Participant's designated Beneficiary in accordance with the distribution provisions of this Plan. A Participant's spouse will be the designated Beneficiary of the proceeds in all circumstances unless a qualified election has been made in accordance with Section 6.05. Under no circumstances shall the Fund retain any part of the proceeds. In the event of any conflict between the terms of this Plan and the terms of any insurance contract purchased hereunder, the Plan provisions shall control. E. The Plan Administrator may direct the Trustee (or Custodian) to sell and distribute insurance or annuity contracts to a Participant (or other party as may be permitted) in accordance with applicable law or regulations. 5.14 DIRECTION OF INVESTMENTS BY PARTICIPANT If so indicated in the Adoption Agreement, each Participant may individually direct the Trustee (or Custodian, if applicable) regarding the investment of part or all of his or her Individual Account. To the extent so directed, the Employer, Plan Administrator, Trustee (or Custodian) and all other fiduciaries are relieved of their fiduciary responsibility under Section 404 of ERISA. The Plan Administrator shall direct that a Separate Fund be established in the name of each Participant who directs the investment of part or all of his or her Individual Account. Each Separate Fund shall be charged or credited (as appropriate) with the earnings, gains, losses or expenses attributable to such Separate Fund. No fiduciary shall be liable for any loss which results from a Participant's individual direction. The assets subject to individual direction shall not be invested in collectibles as that term is defined in Section 408(m) of the Code. The Plan Administrator shall establish such uniform and nondiscriminatory rules relating to individual direction as it deems necessary or advisable including, but not limited to, rules describing (1) which portions of Participant's Individual Account can be individually directed; (2) the frequency of investment changes; (3) the forms and procedures for making investment changes; and (4) the effect of a Participant's failure to make a valid direction. The Plan Administrator may, in a uniform and nondiscriminatory manner, limit the available investments for Participants' individual direction to certain specified investment options (including, but not limited to, certain mutual funds, investment contracts, deposit accounts and group trusts). The Plan Administrator may permit, in a uniform and nondiscriminatory manner, a Beneficiary of a deceased Participant or the alternate payee under a qualified domestic relations order (as defined in Section 414(p) of the Code) to individually direct in accordance with this Section. SECTION SIX VESTING AND DISTRIBUTION 6.01 DISTRIBUTION TO PARTICIPANT A. Distributable Events 1. Entitlement to Distribution - The Vested portion of a Participant's Individual Account shall be distributable to the Participant upon (1) the occurrence of any of the distributable events specified in the Adoption Agreement; (2) the Participant's Termination of Employment after attaining Normal Retirement Age; (3) the termination of the Plan; and (4) the Participant's Termination of Employment after satisfying any Early Retirement Age conditions. If a Participant separates from service before satisfying the Early Retirement Age requirement, but has satisfied the service requirement, the Participant will be entitled to elect an early retirement benefit upon satisfaction of such age requirement. 2. Written Request: When Distributed - A Participant entitled to distribution who wishes to receive a distribution must submit a written request to the Plan Administrator. Such request shall be made upon a form provided by the Plan Administrator. Upon a valid request, the Plan Administrator shall direct the Trustee (or Custodian, if applicable) to commence distribution no later than the time specified in the Adoption Agreement for this purpose and, if not specified in the Adoption Agreement, then no later than 90 days following the later of: 23 a. the close of the Plan Year within which the event occurs which entitles the Participant to distribution; or b. the close of the Plan Year in which the request is received. 3. Special Rules for Withdrawals During Service - If this is a profit sharing plan and the Adoption Agreement so provides, a Participant may elect to receive a distribution of all or part of the Vested portion of his or her Individual Account, subject to the requirements of Section 6.05 and further subject to the following limits: a. Participant for 5 or more years. An Employee who has been a Participant in the Plan for 5 or more years may withdraw up to the entire Vested portion of his or her Individual Account. b. Participant for less than 5 years. An Employee who has been a Participant in the Plan for less than 5 years may withdraw only the amount which has been in his or her Individual Account attributable to Employer Contributions for at least 2 full Plan Years, measured from the date such contributions were allocated. However, if the distribution is on account of hardship, the Participant may withdraw up to his or her entire Vested portion of the Participant's Individual Account. For this purpose, hardship shall have the meaning set forth in Section 6.01(A)(4) of the Code. 4. Special Rules for Hardship Withdrawals - If this is a profit sharing plan and the Adoption Agreement so provides, a Participant may elect to receive a hardship distribution of all or part of the Vested portion of his or her Individual Account, subject to the requirements of Section 6.05 and further subject to the following limits: a. Participant for 5 or more years. An Employee who has been a Participant in the Plan for 5 or more years may withdraw up to the entire Vested portion of his or her Individual Account. b. Participant for less than 5 years. An Employee who has been a Participant in the Plan for less than 5 years may withdraw only the amount which has been in his or her Individual Account attributable to Employer Contributions for at least 2 full Plan Years, measured from the date such contributions were allocated. For purposes of this Section 6.01(A)(4) and Section 6.01(A)(3) hardship is defined as an immediate and heavy financial need of the Participant where such Participant lacks other available resources. The following are the only financial needs considered immediate and heavy: expenses incurred or necessary for medical care, described in Section 213(d) of the Code, of the Employee, the Employee's spouse or dependents; the purchase (excluding mortgage payments) of a principal residence for the Employee; payment of tuition and related educational fees for the next 12 months of post-secondary education for the Employee, the Employee's spouse, children or dependents; or the need to prevent the eviction of the Employee from, or a foreclosure on the mortgage of, the Employee's principal residence. A distribution will be considered as necessary to satisfy an immediate and heavy financial need of the Employee only if. 1) The employee has obtained all distributions, other than hardship distributions, and all nontaxable loans under all plans maintained by the Employer; 2) The distribution is not in excess of the amount of an immediate and heavy financial need (including amounts necessary to pay any federal, state or local income taxes or penalties reasonably anticipated to result from the distribution). 5. One-Time In-Service Withdrawal Option - If this is a profit sharing plan and the Employer has elected the onetime in-service withdrawal option in the Adoption Agreement, then Participants will be permitted only one inservice withdrawal during the course of such Participants employment with the Employer. The amount which the Participant can withdraw will be limited to the lesser of the amount determined under the limits set forth in Section 6.01(A)(3) or the percentage of the Participant's Individual Account specified by the Employer in the Adoption Agreement. Distributions under this Section will be subject to the requirements of Section 6.05. 6. Commencement of Benefits - Notwithstanding any other provision, unless the Participant elects otherwise, distribution of benefits will begin no later than the 60th day after the latest of the close of the Plan Year in which: a. the Participant attains Normal Retirement Age; b. occurs the 10th anniversary of the year in which the Participant commenced participation in the Plan; or c. the Participant incurs a Termination of Employment. 24 Notwithstanding the foregoing, the failure of a Participant and spouse to consent to a distribution while a benefit is immediately distributable, within the meaning of Section 6.02(B) of the Plan, shall be deemed to be an election to defer commencement of payment of any benefit sufficient to satisfy this Section. B. Determining the Vested Portion - In determining the Vested portion of a Participant's Individual Account, the following rules apply: 1. Employer Contributions and Forfeitures - The Vested portion of a Participant's Individual Account derived from Employer Contributions and Forfeitures is determined by applying the vesting schedule selected in the Adoption Agreement (or the vesting schedule described in Section 6.01(C) if the Plan is a Top-Heavy Plan). 2. Rollover and Transfer Contributions - A Participant is fully Vested in his or her rollover contributions and transfer contributions. 3. Fully Vested Under Certain Circumstances - A Participant is fully Vested in his or her Individual Account if any of the following occurs: a. the Participant reaches Normal Retirement Age; b. the Plan is terminated or partially terminated; or c. there exists a complete discontinuance of contributions under the Plan. Further, unless otherwise indicated in the Adoption Agreement, a Participant is fully Vested if the Participant dies, incurs a Disability, or satisfies the conditions for Early Retirement Age (if applicable). 4. Participants in a Prior Plan - If a Participant was a participant in a Prior Plan on the Effective Date, his or her Vested percentage shall not be less than it would have been under such Prior Plan as computed on the Effective Date. C. Minimum Vesting Schedule for Top-Heavy Plans - The following vesting provisions apply for any Plan Year in which this Plan is a Top-Heavy Plan. Notwithstanding the other provisions of this Section 6.01 or the vesting schedule selected in the Adoption Agreement (unless those provisions or that schedule provide for more rapid vesting), a Participant's Vested portion of his or her Individual Account attributable to Employer Contributions and Forfeitures shall be determined in accordance with the vesting schedule elected by the Employer in the Adoption Agreement (and if no election is made the 6 year graded schedule will be deemed to have been elected) as described below:
6 YEAR GRADED 3 YEAR CLIFF Years of Years of Vesting Service Vested Percentage Vesting Service Vested Percentage --------------- ----------------- --------------- ----------------- 1 0 1 0 2 20 2 0 3 40 3 100 4 60 5 80 6 100
This minimum vesting schedule applies to all benefits within the meaning of Section 411(a)(7) of the Code, except those attributable to Nondeductible Employee Contributions including benefits accrued before the effective date of Section 416 of the Code and benefits accrued before the Plan became a Top-Heavy Plan. Further, no decrease in a Participant's Vested percentage may occur in the event the Plan's status as a Top-Heavy Plan changes for any Plan Year. However, this Section 6.01(C) does not apply to the Individual Account of any Employee who does not have an Hour of Service after the Plan has initially become a Top-Heavy Plan and such Employee's Individual Account attributable to Employer Contributions and Forfeitures will be determined without regard to this Section. If this Plan ceases to be a Top-Heavy Plan, then in accordance with the above restrictions, the vesting schedule as selected in the Adoption Agreement will govern. If the vesting schedule under the Plan shifts in or out of top-heavy status, such shift is an amendment to the vesting schedule and the election in Section 9.04 applies. D. Break In Vesting Service and Forfeitures - If a Participant incurs a Termination of Employment, any portion of his or her Individual Account which is not Vested shall be held in a suspense account. Such suspense account shall share in any increase or decrease in the fair market value of the assets of the Fund in accordance with Section 4 of the Plan. The disposition of such suspense account shall be as follows: 25 1. Breaks in Vesting Service - If a Participant neither receives nor is deemed to receive a distribution pursuant to Section 6.01(D)(3) or (4) and the Participant returns to the service of the Employer before incurring 5 consecutive Breaks in Vesting Service, there shall be no Forfeiture and the amount in such suspense account shall be recredited to such Participant's Individual Account. 2. Five Consecutive Breaks in Vesting Service - If a Participant neither receives nor is deemed to receive a distribution pursuant to Section 6.01(D)(3) or (4) and the Participant does not return to the service of the Employer before incurring 5 consecutive Breaks in Vesting Service, the portion of the Participant's Individual Account which is not Vested shall be treated as a Forfeiture and allocated in accordance with Section 3.01(C). 3. Cash-out of Certain Participants - If the value of the Vested portion of such Participant's Individual Account derived from Nondeductible Employee Contributions and Employer Contributions does not exceed $3,500, the Participant shall receive a distribution of the entire Vested portion of such Individual Account and the portion which is not Vested shall be treated as a Forfeiture and allocated in accordance with Section 3.01(C). For purposes of this Section, if the value of the Vested portion of a Participant's Individual Account is zero, the Participant shall be deemed to have received a distribution of such Vested Individual Account. A Participant's Vested Individual Account balance shall not include accumulated deductible employee contributions within the meaning of Section 72(o)(5)(B) of the Code for Plan Years beginning prior to January 1, 1989. 4. Participants Who Elect to Receive Distributions - If such Participant elects to receive a distribution, in accordance with Section 6.02(B), of the value of the Vested portion of his or her Individual Account derived from Nondeductible Employee Contributions and Employer Contributions, the portion which is not Vested shall be treated as a Forfeiture and allocated in accordance with Section 3.01(C). 5. Re-employed Participants - If a Participant receives or is deemed to receive a distribution pursuant to Section 6.01(D)(3) or (4) above and the Participant resumes employment covered under this Plan, the Participant's Employer-derived Individual Account balance will be restored to the amount on the date of distribution if the Participant repays to the Plan the full amount of the distribution attributable to Employer Contributions before the earlier of 5 years after the first date on which the Participant is subsequently re-employed by the Employer, or the date the Participant incurs 5 consecutive Breaks in Vesting Service following the date of the distribution. Any restoration of a Participant's Individual Account pursuant to Section 6.01(D)(5) shall be made from other Forfeitures, income or gain to the Fund or contributions made by the Employer. E. Distribution Prior to Full Vesting - If a distribution is made to a Participant who was not then fully Vested in his or her Individual Account derived from Employer Contributions and the Participant may increase his or her Vested percentage in his or her Individual Account, then the following rules shall apply: 1. a separate account will be established for the Participant's interest in the Plan as of the time of the distribution, and 2. at any relevant time the Participant's Vested portion of the separate account will be equal to an amount determined by the formula: X = P (AB + (R x D)) - (R x D) where "P" is the Vested percentage at the relevant time, "AB" is the separate account balance at the relevant time; "D" is the amount of the distribution; and "R" is the ratio of the separate account balance at the relevant time to the separate account balance after distribution. 6.02 FORM OF DISTRIBUTION TO A PARTICIPANT A. Value of Individual Account Does Not Exceed $3,500 - If the value of the Vested portion of a Participant's Individual Account derived from Nondeductible Employee Contributions and Employer Contributions does not exceed $3,500, distribution from the Plan shall be made to the Participant in a single lump sum in lieu of all other forms of distribution from the Plan as soon as administratively feasible. B. Value of Individual Account Exceeds $3,500 1. If the value of the Vested portion of a Participant's Individual Account derived from Nondeductible Employee Contributions and Employer Contributions exceeds (or at the time of any prior distribution exceeded) $3,500, and the Individual Account is immediately distributable, the Participant and the Participant's spouse (or where either the Participant or the spouse died, the survivor) must consent to any distribution of such Individual Account. The consent of the Participant and the Participant's spouse shall be obtained in writing within the 90-day period ending on the annuity starting date. The annuity starting date is the first day of the first period for which an amount is paid as an annuity or any other form. The Plan Administrator shall notify the Participant and the Participant's spouse of the right to defer any distribution until the Participant's Individual Account is no longer immediately distributable. Such notification shall include a general description of the material features, and an explanation of the relative values of, the optional forms of benefit available under the Plan in a manner that would satisfy the notice requirements of Section 417(a)(3) of the Code, and shall be provided no less than 30 days and no more than 90 days prior to the annuity starting date. 26 If a distribution is one to which Sections 401(a)(11) and 417 of the Internal Revenue Code do not apply, such distribution may commence less than 30 days after the notice required under Section 1.41l(a)-11(c) of the Income Tax Regulations is given, provided that: a. the Plan Administrator clearly informs the Participant that the Participant has a right to a period of at least 30 days after receiving the notice to consider the decision of whether or not to elect a distribution (and, if applicable, a particular distribution option), and b. the Participant, after receiving the notice, affirmatively elects a distribution. Notwithstanding the foregoing, only the Participant need consent to the commencement of a distribution in the form of a qualified joint and survivor annuity while the Individual Account is immediately distributable. Neither the consent of the Participant nor the Participant's spouse shall be required to the extent that a distribution is required to satisfy Section 401(a)(9) or Section 415 of the Code. In addition, upon termination of this Plan if the Plan does not offer an annuity option (purchased from a commercial provider), the Participant's Individual Account may, without the Participant's consent, be distributed to the Participant or transferred to another defined contribution plan (other than an employee stock ownership plan as defined in Section 4975(e)(7) of the Code) within the same controlled group. An Individual Account is immediately distributable if any part of the Individual Account could be distributed to the Participant (or surviving spouse) before the Participant attains or would have attained if not deceased) the later of Normal Retirement Age or age 62. 2. For purposes of determining the applicability of the foregoing consent requirements to distributions made before the first day of the first Plan Year beginning after December 31, 1988, the Vested portion of a Participant's Individual Account shall not include amounts attributable to accumulated deductible employee contributions within the meaning of Section 72(o)(5)(B) of the Code. C. Other Forms of Distribution to Participant - If the value of the Vested portion of a Participant's Individual Account exceeds $3,500 and the Participant has properly waived the joint and survivor annuity, as described in Section 6.05, the Participant may request in writing that the Vested portion of his or her Individual Account be paid to him or her in one or more of the following forms of payment: (1) in a lump sum; (2) in installment payments over a period not to exceed the life expectancy of the Participant or the joint and last survivor life expectancy of the Participant and his or her designated Beneficiary; or (3) applied to the purchase of an annuity contract. Notwithstanding anything in this Section 6.02 to the contrary, a Participant cannot elect payments in the form of an annuity if the Retirement Equity Act safe harbor rules of Section 6.05(F) apply. 6.03 DISTRIBUTIONS UPON THE DEATH OF A PARTICIPANT A. Designation of Beneficiary - Spousal Consent - Each Participant may designate, upon a form provided by and delivered to the Plan Administrator, one or more primary and contingent Beneficiaries to receive all or a specified portion of the Participant's Individual Account in the event of his or her death. A Participant may change or revoke such Beneficiary designation from time to time by completing and delivering the proper form to the Plan Administrator. In the event that a Participant wishes to designate a primary Beneficiary who is not his or her spouse, his or her spouse must consent in writing to such designation, and the spouse's consent must acknowledge the effect of such designation and be witnessed by a notary public or plan representative. Notwithstanding this consent requirement, if the Participant establishes to the satisfaction of the Plan Administrator that such written consent may not be obtained because there is no spouse or the spouse cannot be located, no consent shall be required. Any change of Beneficiary will require a new spousal consent. B. Payment to Beneficiary - If a Participant dies before the Participant's entire Individual Account has been paid to him or her, such deceased Participant's Individual Account shall be payable to any surviving Beneficiary designated by the Participant, or, if no Beneficiary survives the Participant, to the Participant's estate. C. Written Request: When Distributed - A Beneficiary of a deceased Participant entitled to a distribution who wishes to receive a distribution must submit a written request to the Plan Administrator. Such request shall be made upon a form provided by the Plan Administrator. Upon a valid request, the Plan Administrator shall direct the Trustee (or Custodian) to commence distribution no later than the time specified in the Adoption Agreement for this purpose and if not specified in the Adoption Agreement, then no later than 90 days following the later of: 1. the close of the Plan Year within which the Participant dies; or 2. the close of the Plan Year in which the request is received. 27 6.04 FORM OF DISTRIBUTION TO BENEFICIARY A. Value of Individual Account Does Not Exceed $3,500 - If the value of the Participant's Individual Account derived from Nondeductible Employee Contributions and Employer Contributions does not exceed $3,500, the Plan Administrator shall direct the Trustee (or Custodian, if applicable) to make a distribution to the Beneficiary in a single lump sum in lieu of all other forms of distribution from the Plan. B. Value of Individual Account Exceeds $3,500 - If the value of a Participant's Individual Account derived from Nondeductible Employee Contributions and Employer Contributions exceeds $3,500 the preretirement survivor annuity requirements of Section 6.05 shall apply unless waived in accordance with that Section or unless the Retirement Equity Act safe harbor rules of Section 6.05(F) apply. However, a surviving spouse Beneficiary may elect any form of payment allowable under the Plan in lieu of the preretirement survivor annuity. Any such payment to the surviving spouse must meet the requirements of Section 6.06. C. Other Forms of Distribution to Beneficiary - If the value of a Participant's Individual Account exceeds $3,500 and the Participant has properly waived the preretirement survivor annuity, as described in Section 6.05 (if applicable) or if the Beneficiary is the Participant's surviving spouse, the Beneficiary may, subject to the requirements of Section 6.06, request in writing that the Participant's Individual Account be paid as follows: (1) in a lump sum; or (2) in installment payments over a period not to exceed the life expectancy of such Beneficiary. 6.05 JOINT AND SURVIVOR ANNUITY REQUIREMENTS A. The provisions of this Section shall apply to any Participant who is credited with at least one Hour of Eligibility Service with the Employer on or after August 23, 1984, and such other Participants as provided in Section 6.05(G). B. Qualified Joint and Survivor Annuity - Unless an optional form of benefit is selected pursuant to a qualified election within the 90-day period ending on the annuity starting date, a married Participant's Vested account balance will be paid in the form of a qualified joint and survivor annuity and an unmarried Participant's Vested account balance will be paid in the form of a life annuity. The Participant may elect to have such annuity distributed upon attainment of the earliest retirement age under the Plan. C. Qualified Preretirement Survivor Annuity - Unless an optional form of benefit has been selected within the election period pursuant to a qualified election, if a Participant dies before the annuity starting date then the Participant's Vested account balance shall be applied toward the purchase of an annuity for the life of the surviving spouse. The surviving spouse may elect to have such annuity distributed within a reasonable period after the Participant's death. D. Definitions 1. Election Period - The period which begins on the first day of the Plan Year in which the Participant attains age 35 and ends on the date of the Participant's death. If a Participant separates from service prior to the first day of the Plan Year in which age 35 is attained, with respect to the account balance as of the date of separation, the election period shall begin on the date of separation. Pre-age 35 waiver - A Participant who will not yet attain age 35 as of the end of any current Plan Year may make special qualified election to waive the qualified preretirement survivor annuity for the period beginning on the date of such election and ending on the first day of the Plan Year in which the Participant will attain age 35. Such election shall not be valid unless the Participant receives a written explanation of the qualified preretirement survivor annuity in such terms as are comparable to the explanation required under Section 6.05(E)(1). Qualified preretirement survivor annuity coverage will be automatically reinstated as of the first day of the Plan Year in which the Participant attains age 35. Any new waiver on or after such date shall be subject to the full requirements of this Section 6.05. 2. Earliest Retirement Age - The earliest date on which, under the Plan, the Participant could elect to receive retirement benefits. 3. Qualified Election - A waiver of a qualified joint and survivor annuity or a qualified preretirement survivor annuity. Any waiver of a qualified joint and survivor annuity or a qualified preretirement survivor annuity shall not be effective unless: (a) the Participant's spouse consents in writing to the election, (b) the election designates a specific Beneficiary, including any class of beneficiaries or any contingent beneficiaries, which may not be changed without spousal consent (or the spouse expressly permits designations by the Participant without any further spousal consent); (c) the spouse's consent acknowledges the effect of the election; and (d) the spouse's consent is witnessed by a plan representative or notary public. Additionally, a Participant's waiver of the qualified joint and survivor annuity shall not be effective unless the election designates a form of benefit payment which may not be changed without spousal consent (or the spouse expressly permits designations by the Participant without any further spousal consent). If it is established to the satisfaction of a plan representative that there is no spouse or that the spouse cannot be located, a waiver will be deemed a qualified election. 28 Any consent by a spouse obtained under this provision (or establishment that the consent of a spouse may not be obtained) shall be effective only with respect to such spouse. A consent that permits designations by the Participant without any requirement of further consent by such spouse must acknowledge that the spouse has the right to limit consent to a specific Beneficiary, and a specific form of benefit where applicable, and that the spouse voluntarily elects to relinquish either or both of such rights. A revocation of a prior waiver may be made by a Participant without the consent of the spouse at any time before the commencement of benefits. The number of revocations shall not be limited. No consent obtained under this provision shall be valid unless the Participant has received notice as provided in Section 6.05(E) below. 4. Qualified Joint and Survivor Annuity - An immediate annuity for the life of the Participant with a survivor annuity for the life of the spouse which is not less than 50% and not more than 100% of the amount of the annuity which payable during the joint lives of the Participant and the spouse and which is the amount of benefit which can be purchased with the Participant's vested account balance. The percentage of the survivor annuity under the Plan shall be 50% (unless a different percentage is elected by the Employer in the Adoption Agreement). 5. Spouse (surviving spouse) - The spouse or surviving spouse of the Participant, provided that a former spouse will be treated as the spouse or surviving spouse and a current spouse will not be treated as the spouse or surviving spouse to the extent provided under a qualified domestic relations order as described in Section 414(p) of the Code. 6. Annuity Starting Date - The first day of the first period for which an amount is paid as an annuity or any other form. 7. Vested Account Balance - The aggregate value of the Participant's Vested account balances derived from Employer and Nondeductible Employee Contributions (including rollovers), whether Vested before or upon death, including the proceeds of insurance contracts, if any, on the Participant's life. The provisions of this Section 6.05 shall apply to a Participant who is Vested in amounts attributable to Employer Contributions, Nondeductible Employee Contributions (or both) at the time of death or distribution. E. Notice Requirements 1. In the case of a qualified joint and survivor annuity, the Plan Administrator shall no less than 30 days and not more than 90 days prior to the annuity starting date provide each Participant a written explanation of: (a) the terms and conditions of a qualified joint and survivor annuity; (b) the Participant's right to make and the effect of an election to waive the qualified joint and survivor annuity form of benefit; (c) the rights of a Participant's spouse; and (d) the right to make, and the effect of, a revocation of a previous election to waive the qualified joint and survivor annuity. 2. In the case of a qualified preretirement annuity as described in Section 6.05(C), the Plan Administrator shall provide each Participant within the applicable period for such Participant a written explanation of the qualified preretirement survivor annuity in such terms and in such manner as would be comparable to the explanation provided for meeting the requirements of Section 6.05(E)(1) applicable to a qualified joint and survivor annuity. The applicable period for a Participant is whichever of the following periods ends last: (a) the period beginning with the first day of the Plan Year in which the Participant attains age 32 and ending with the close of the Plan Year preceding the Plan Year in which the Participant attains age 35; (b) a reasonable period ending after the individual becomes a Participant; (c) a reasonable period ending after Section 6.05(E)(3) ceases to apply to the Participant; and (d) a reasonable period ending after this Section 6.05 first applies to the Participant. Notwithstanding the foregoing, notice must be provided within a reasonable period ending after separation from service in the case of a Participant who separates from service before attaining age 35. For purposes of applying the preceding paragraph, a reasonable period ending after the enumerated events described in (b), (c) and (d) is the end of the two-year period beginning one year prior to the date the applicable event occurs, and ending one year after that date. In the case of a Participant who separates from service before the Plan Year in which age 35 is attained, notice shall be provided within the two-year period beginning one year prior to separation and ending one year after separation. If such a Participant thereafter returns to employment with the Employer, the applicable period for such Participant shall be redetermined. Notwithstanding the other requirements of this Section 6.05(E), the respective notices prescribed by this Section 6.05(E), need not be given to a Participant if (a) the Plan "fully subsidizes" the costs of a qualified joint and survivor annuity or qualified preretirement survivor annuity, and (b) the Plan does not allow the Participant to waive the qualified joint and survivor annuity or qualified preretirement survivor annuity and does not allow a married Participant to designate a nonspouse beneficiary. For purposes of this Section 6.05(E)(3), a plan fully subsidizes the costs of a benefit if no increase in cost, or decrease in benefits to the Participant may result from the Participant's failure to elect another benefit. 29 F. Retirement Equity Act Safe Harbor Rules 1. If the Employer so indicates in the Adoption Agreement, this Section 6.05(F) shall apply to a Participant in a profit sharing plan, and shall always apply to any distribution, made on or after the first day of the first Plan Year beginning after December 31, 1988, from or under a separate account attributable solely to accumulated deductible employee contributions, as defined in Section 72(o)(5)(B) of the Code, and maintained on behalf of a Participant in a money purchase pension plan, (including a target benefit plan) if the following conditions are satisfied: a. the Participant does not or cannot elect payments in the form of a life annuity; and b. on the death of a Participant, the Participant's Vested account balance will be paid to the Participant's surviving spouse, but if there is no surviving spouse, or if the surviving spouse has consented in a mariner conforming to a qualified election, then to the Participant's designated Beneficiary. The surviving spouse may elect to have distribution of the Vested account balance commence within the 90-day period following the date of the Participant's death. The account balance shall be adjusted for gains or losses occurring after the Participant's death in accordance with the provisions of the Plan governing the adjustment of account balances for other types of distributions. This Section 6.05(F) shall not be operative with respect to a Participant in a profit sharing plan if the plan is a direct or indirect transferee of a defined benefit plan, money purchase plan, a target benefit plan, stock bonus, or profit sharing plan which is subject to the survivor annuity requirements of Section 401(a)(11) and Section 417 of the code. If this Section 6.05(F) is operative, then the provisions of this Section 6.05 other than Section 6.05(G) shall be inoperative. 2. The Participant may waive the spousal death benefit described in this Section 6.05(F) at any time provided that no such waiver shall be effective unless it satisfies the conditions of Section 6.05(D)(3) (other than the notification requirement referred to therein) that would apply to the Participant's waiver of the qualified preretirement survivor annuity. 3. For purposes of this Section 6.05(F), Vested account balance shall mean, in the case of a money purchase pension plan or a target benefit plan, the Participant's separate account balance attributable solely to accumulated deductible employee contributions within the meaning of Section 72(o)(5)(B) of the Code. In the case of a profit sharing plan, Vested account balance shall have the same meaning as provided in Section 6.05(D)(7). G. Transitional Rules 1. Any living Participant not receiving benefits on August 23, 1984, who would otherwise not receive the benefits prescribed by the previous subsections of this Section 6.05 must be given the opportunity to elect to have the prior subsections of this Section apply if such Participant is credited with at least one Hour of Service under this Plan or a predecessor plan in a Plan Year beginning on or after January 1, 1976, and such Participant had at least 10 Years of Vesting Service when he or she separated from service. 2. Any living Participant not receiving benefits on August 23, 1984, who was credited with at least one Hour of Service under this Plan or a predecessor plan on or after September 2, 1974, and who is not otherwise credited with any service in a Plan Year beginning on or after January 1, 1976, must be given the opportunity to have his or her benefits paid in accordance with Section 6.05(G)(4). 3. The respective opportunities to elect (as described in Section 6.05(G)(1) and (2) above) must be afforded to the appropriate Participants during the period commencing on August 23, 1984, and ending on the date benefits would otherwise commence to said Participants. 4. Any Participant who has elected pursuant to Section 6.05(G)(2) and any Participant who does not elect under Section 6.05(G)(1) or who meets the requirements of Section 6.05(G)(1) except that such Participant does not have at least 10 Years of Vesting Service when he or she separates from service, shall have his or her benefits distributed in accordance with all of the following requirements if benefits would have been payable in the form of a life annuity: a. Automatic Joint and Survivor Annuity - If benefits in the form of a life annuity become payable to a married Participant who: (1) begins to receive payments under the Plan on or after Normal Retirement Age; or (2) dies on or after Normal Retirement Age while still working for the Employer; or 30 (3) begins to receive payments on or after the qualified early retirement age; or (4) separates from service on or after attaining Normal Retirement Age (or the qualified early retirement age) and after satisfying the eligibility requirements for the payment of benefits under the Plan and thereafter dies before beginning to receive such benefits; then such benefits will be received under this Plan in the form of a qualified joint and survivor annuity, unless the Participant has elected otherwise during the election period. The election period must begin at least 6 months before the Participant attains qualified early retirement age and ends not more than 90 days before the commencement of benefits. Any election hereunder will be in writing and may be changed by the Participant at any time. b. Election of Early Survivor Annuity - A Participant who is employed after attaining the qualified early retirement age will be given the opportunity to elect, during the election period, to have a survivor annuity payable on death. If the Participant elects the survivor annuity, payments under such annuity must not be less than the payments which would have been made to the spouse under the qualified joint and survivor annuity if the Participant had retired on the day before his or her death. Any election under this provision will be in writing and may be changed by the Participant at any time. The election period begins on the later of (1) the 90th day before the Participant attains the qualified early retirement age, or (2) the date on which participation begins, and ends on the date the Participant terminates employment. C. For purposes of Section 6.05(G)(4): 1. Qualified early retirement age is the latest of; a. the earliest date, under the Plan, on which the Participant may elect to receive retirement benefits, b. the first day of the 120th month beginning before the Participant reaches Normal Retirement Age, or c. the date the Participant begins participation. 2. Qualified joint and survivor annuity is an annuity for the life of the Participant with a survivor annuity for the life of the spouse as described in Section 6.05(D)(4) of this Plan. 6.06 DISTRIBUTION REQUIREMENTS A. General Rules 1. Subject to Section 6.05 Joint and Survivor Annuity Requirements, the requirements of this Section shall apply to any distribution of a Participant's interest and will take precedence over any inconsistent provisions of this Plan. Unless otherwise specified, the provisions of this Section 6.06 apply to calendar years beginning after December 31, 1984. 2. All distributions required under this Section 6.06 shall be determined and made in accordance with the Income Tax Regulations under Section 401(a)(9), including the minimum distribution incidental benefit requirement of Section 1.401(a)(9)-2 of the proposed regulations. B. Required Beginning Date - The entire interest of a Participant must be distributed or begin to be distributed no later than the Participant's required beginning date. C. Limits on Distribution Periods - As of the first distribution calendar year, distributions, if not made in a single sum, may only be made over one of the following periods (or a combination thereof): 1. the life of the Participant, 2. the life of the Participant and a designated Beneficiary, 3. a period certain not extending beyond the life expectancy of the Participant, or 4. a period certain not extending beyond the joint and last survivor expectancy of the Participant and a designated Beneficiary. D. Determination of Amount to be Distributed Each Year - If the Participant's interest is to be distributed in other than a single sum, the following minimum distribution rules shall apply on or after the required beginning date: 31 1. Individual Account a. If a Participant's benefit is to be distributed over (1) a period not extending beyond the life expectancy of the Participant or the joint life and last survivor expectancy of the Participant and the Participant's designated Beneficiary or (2) a period not extending beyond the life expectancy of the designated Beneficiary, the amount required to be distributed for each calendar year, beginning with distributions for the first distribution calendar year, must at least equal the quotient obtained by dividing the Participant's benefit by the applicable life expectancy. b. For calendar years beginning before January 1, 1989, if the Participant's spouse is not the designated Beneficiary, the method of distribution selected must assure that at least 50% of the present value of the amount available for distribution is paid within the life expectancy of the Participant. c. For calendar years beginning after December 31, 1988, the amount to be distributed each year, beginning with distributions for the first distribution calendar year shall not be less than the quotient obtained by dividing the Participant's benefit by the lesser of (1) the applicable life expectancy or (2) if the Participant's spouse is not the designated Beneficiary, the applicable divisor determined from the table set forth in Q&-A-4 of Section 1.401(a)(9)-2 of the Proposed Income Tax Regulations. Distributions after the death of the Participant shall be distributed using the applicable life expectancy in Section 6.05(D)(1)(a) above as the relevant divisor without regard to proposed regulations 1.401(a)(9)-2. d. The minimum distribution required for the Participant's first distribution calendar year must be made on or before the Participant's required beginning date. The minimum distribution for other calendar years, including the minimum distribution for the distribution calendar year in which the Employee's required beginning date occurs, must be made on or before December 31 of that distribution calendar year. 2. Other Forms - If the Participant's benefit is distributed in the form of an annuity purchased from an insurance company, distributions thereunder shall be made in accordance with the requirements of Section 401(a)(9) of the Code and the regulations thereunder. E. Death Distribution Provisions 1. Distribution Beginning Before Death - If the Participant dies after distribution of his or her interest has begun, the remaining portion of such interest will continue to be distributed at least as rapidly as under the method of distribution being used prior to the Participant's death. 2. Distribution Beginning After Death - If the Participant dies before distribution of his or her interest begins, distribution of the Participant's entire interest shall be completed by December 31 of the calendar year containing the fifth anniversary of the Participant's death except to the extent that an election is made to receive distributions in accordance with (a) or (b) below: a. if any portion of the Participant's interest is payable to a designated Beneficiary, distributions may be made over the life or over a period certain not greater than the life expectancy of the designated Beneficiary commencing on or before December 31 of the calendar year immediately following the calendar year in which the Participant died; b. if the designated Beneficiary is the Participant's surviving spouse, the date distributions are required to begin in accordance with (a) above shall not be earlier than the later of (1) December 31 of the calendar year immediately following the calendar year in which the Participant dies or (2) December 31 of the calendar year in which the Participant would have attained age 70th. If the Participant has not made an election pursuant to this Section 6.05(E)(2) by the time of his or her death, the Participant's designated Beneficiary must elect the method of distribution no later than the earlier of (1) December 31 of the calendar year in which distributions would be required to begin under this Section 6.05(E)(2), or (2) December 31 of the calendar year which contains the fifth anniversary of the date of death of the Participant. If the Participant has no designated Beneficiary, or if the designated Beneficiary does not elect a method of distribution. distribution of the Participant's entire interest must be completed by December 31 of the calendar year containing the fifth anniversary of the Participant's death. 3. For purposes of Section 6.06(E)(2) above, if the surviving spouse dies after the Participant, but before payments to such spouse begin, the provisions of Section 6.06(E)(2). with the exception of paragraph (b) therein, shall be applied as if the surviving spouse were the Participant. 4. For purposes of this Section 6.06(E), any amount paid to a child of the Participant will be treated as if it had been paid to the surviving spouse if the amount becomes payable to the surviving spouse when the child reaches the age of majority. 32 5. For purposes of this Section 6.06(E), distribution of a Participant's interest is considered to begin on the Participant's required beginning date (or, if Section 6,06(E)(3) above is applicable, the date distribution is required to begin to the surviving spouse pursuant to Section 6.06(E)(2) above). If distribution in the form of an annuity irrevocably commences to the Participant before the required beginning date, the date distribution is considered to begin is the date distribution actually commences. F. Definitions 1. Applicable Life Expectancy - The life expectancy (or joint and last survivor expectancy) calculated using the attained age of the Participant (or designated Beneficiary) as of the Participant's (or designated Beneficiary's) birthday in the applicable calendar year reduced by one for each calendar year which has elapsed since the date life expectancy was first calculated. If life expectancy is being recalculated, the applicable life expectancy shall be the life expectancy as so recalculated. The applicable calendar year shall be the first distribution calendar year, and if life expectancy is being recalculated such succeeding calendar year. 2. Designated Beneficiary - The individual who is designated as the Beneficiary under the Plan in accordance with Section 401(a)(9) of the Code and the regulations thereunder. 3. Distribution Calendar Year - A calendar year for which a minimum distribution is required. For distributions beginning before the Participant's death, the first distribution calendar year is the calendar year immediately preceding the calendar year which contains the Participant's required beginning date. For distributions beginning after the Participant's death, the first distribution calendar year is the calendar year in which distributions are required to begin pursuant to Section 6.05(E) above. 4. Life Expectancy - Life expectancy and joint and last survivor expectancy are computed by use of the expected return multiples in Tables V and VI of Section 1.72-9 of the Income Tax Regulations. Unless otherwise elected by the Participant (or spouse, in the case of distributions described in Section 6.05(E)(2)(b) above) by the time distributions are required to begin, life expectancies shall be recalculated annually. Such election shall be irrevocable as to the Participant (or spouse) and shall apply to all subsequent years. The life expectancy of a nonspouse Beneficiary may not be recalculated. 5. Participant's Benefit a. The account balance as of the last valuation date in the valuation calendar year (the calendar year immediately preceding the distribution calendar year) increased by the amount of any Contributions or Forfeitures allocated to the account balance as of dates in the valuation calendar year after the valuation date and decreased by distributions made in the valuation calendar year after the valuation date. b. Exception for second distribution calendar year. For purposes of paragraph (a) above, if any portion of the minimum distribution for the first distribution calendar year is made in the second distribution calendar year on or before the required beginning date, the amount of the minimum distribution made in the second distribution calendar year shall be treated as if it had been made in the immediately preceding distribution calendar year. 6. Required Beginning Date a. General Rule - The required beginning date of a Participant is the first day of April of the calendar year following the calendar year in which the Participant attains age 70 1/2. b. Transitional Rules - The required beginning date of a Participant who attains age 70 1/2 before January 1. 1988, shall be determined in accordance with (1) or (2) below: (1) Non 5% Owners - The required beginning date of a Participant who is not a 5% owner is the first day of April of the calendar year following the calendar year in which the later of retirement or attainment of age 70 1/2 occurs. (2) 5% Owners - The required beginning date of a Participant who is a 5% owner during any year beginning after December 31, 1979, is the first day of April following the later of: (a) the calendar year in which the Participant attains age 70 1/2, or 33 (b) the earlier of the calendar year with or within which ends the Plan Year in which the Participant becomes a 5% owner, or the calendar year in which the Participant retires. The required beginning date of a Participant who is not a 5% owner who attains age 70 1/2 during 1988 and who has not retired as of January 1, 1989, is April 1, 1990. (c) 5% Owner - A Participant is treated as a 5% owner for purposes of this Section 6.06(F)(6) if such Participant is a 5% owner as defined in Section 416(i) of the Code (determined in accordance with Section 416 but without regard to whether the Plan is top-heavy) at any time during the Plan Year ending with or within the calendar year in which such owner attains age 66 1/2 or any subsequent Plan Year. (d) Once distributions have begun to a 5% owner under this Section 6.06(F)(6) they must continue to be distributed, even if the Participant ceases to be a 5% owner in a subsequent year. G. Transitional Rule 1. Notwithstanding the other requirements of this Section 6.06 and subject to the requirements of Section 6.05, Joint and Survivor Annuity Requirements, distribution on behalf of any Employee, including a 5% owner, may be made in accordance with all of the following requirements (regardless of when such distribution commences): a. The distribution by the Fund is one which would not have qualified such Fund under Section 401(a)(9) of the Code as in effect prior to amendment by the Deficit Reduction Act of 1984. b. The distribution is in accordance with a method of distribution designated by the Employee whose interest in the Fund is being distributed or, if the Employee is deceased, by a Beneficiary of such Employee. c. Such designation was in writing, was signed by the Employee or the Beneficiary, and was made before January 1, 1984. d. The Employee had accrued a benefit under the Plan as of December 31, 1983. e. The method of distribution designated by the Employee or the Beneficiary specifies the time at which distribution will commence, the period over which distributions will be made, and in the case of any distribution upon the Employee's death, the Beneficiaries of the Employee listed in order of priority. 2. A distribution upon death will not be covered by this transitional rule unless the information in the designation contains the required information described above with respect to the distributions to be made upon the death of the Employee. 3. For any distribution which commences before January 1, 1994, but continues after December 31, 1983, the Employee, or the Beneficiary, to whom such distribution is being made, will be presumed to have designated the method of distribution under which the distribution is being made if the method of distribution was specified in writing and the distribution satisfies the requirements in Sections 6.06(G)(1)(a) and (e). 4. If a designation is revoked, any subsequent distribution must satisfy the requirements of Section 401(a)(9) of the Code and the regulations thereunder. If a designation is revoked subsequent to the date distributions are required to begin, the Plan must distribute by the end of the calendar year following the calendar year in which the revocation occurs the total amount not yet distributed which would have been required to have been distributed to satisfy Section 401(a)(9) of the Code and the regulations thereunder, but for the Section 242(b)(2) election. For calendar years beginning after December 31, 1988, such distributions must meet the minimum distribution incidental benefit requirements in Section 1.401(a)(9)-2 of the Proposed Income Tax Regulations. Any changes in the designation will be considered to be a revocation of the designation. However, the mere substitution or addition of another Beneficiary (one not named in the designation) under the designation will not be considered to be a revocation of the designation, so long as such substitution or addition does not alter the period over which distributions are to be made under the designation, directly or indirectly (for example, by altering the relevant measuring life). In the case in which an amount is transferred or rolled over from one plan to another plan, the rules in Q&A J-2 and Q&A J-3 shall apply. 6.07 ANNUITY CONTRACTS Any annuity contract distributed under the Plan (if permitted or required by this Section 6) must be nontransferable. The terms of any annuity contract purchased and distributed by the Plan to a Participant or spouse shall comply with the requirements of the Plan. 6.08 LOANS TO PARTICIPANTS If the Adoption Agreement so indicates, a Participant way receive a loan from the Fund, subject to the following rules: A. Loans shall be made available to all Participants on a reasonably equivalent basis. 34 B. Loans shall not be made available to Highly Compensated Employees (as defined in Section 414(q) of the Code) in an amount greater than the amount made available to other Employees. C. Loans must be adequately secured and bear a reasonable interest rate. D. No Participant loan shall exceed the present value of the Vested portion of a Participant's Individual Account. E. A Participant must obtain the consent of his or her spouse, if any, to the use of the Individual Account as security for the loan. Spousal consent shall be obtained no earlier than the beginning of the 90 day period that ends on the date on which the loan is to be so secured. The consent must be in writing, must acknowledge the effect of the loan, and must be witnessed by a plan representative or notary public. Such consent shall thereafter be binding with respect to the consenting spouse or any subsequent spouse with respect to that loan. A new consent shall be required if the account balance is used for renegotiation, extension, renewal, or other revision of the loan. Notwithstanding the foregoing, no spousal consent is necessary if, at the time the loan is secured, no consent would be required for a distribution under Section 417(a)(2)(B). In addition, spousal consent is not required if the Plan or the Participant is not subject to Section 401(a)(11) at the time the Individual Account is used as security, or if the total Individual Account subject to the security is less than or equal to $3,500. F. In the event of default, foreclosure on the note and attachment of security will not occur until a distributable event occurs in the Plan. Notwithstanding the preceding sentence, a Participant's default on a loan will be treated as a distributable event and as soon as administratively feasible after the default, the Participant's Vested Individual Account will be reduced by the lesser of the amount in default (plus accrued interest) or the amount secured. If this Plan is a 401(k) plan, then to the extent the loan is attributable to a Participant's Elective Deferrals, Qualified Nonelective Contributions or Qualified Matching Contributions, the Participant's Individual Account will not be reduced unless; the Participant has attained age 59 1/2 or has another distributable event. A Participant will be deemed to have consented to the provision at the time the loan is made to the Participant. G. No loans will be made to any shareholder-employee or Owner-Employee. For purposes of this requirement, a shareholder-employee means an employee or officer of an electing small business (Subchapter S) corporation who owns (or is considered as owning within the meaning of Section 318(a)(1) of the Code), on any day during the taxable year of such corporation, more than 5% of the outstanding stock of the corporation. If a valid spousal consent has been obtained in accordance with 6.08(E), then, notwithstanding any other provisions of this Plan, the portion of the Participant's Vested Individual Account used as a security interest held by the Plan by reason of a loan outstanding to the Participant shall be taken into account for purposes of determining the amount of the account balance payable at the time of death or distribution, but only if the reduction is used as repayment of the loan. If less than 100% of the Participant's Vested Individual Account (determined without regard to the preceding sentence) is payable to the surviving spouse, then the account balance shall be adjusted by first reducing the Vested Individual Account by the amount of the security used as repayment of the loan, and then determining the benefit payable to the surviving spouse. To avoid taxation to the Participant, no loan to any Participant can be made to the extent that such loan when added to the outstanding balance of all other loans to the Participant would exceed the lesser of (a) $50,000 reduced by the excess (if any) of the highest outstanding balance of loans during the one year period ending on the day before the loan is made, over the outstanding balance of loans from the Plan on the date the loan is made, or (b) 50% of the present value of the nonforfeitable Individual Account of the Participant or, if greater, the total Individual Account up to $10,000. For the purpose of the above limitation, all loans from all plans of the Employer and other members of a group of employers described in Sections 414(b), 414(c), and 414(m) of the Code are aggregated. Furthermore, any loan shall by its terms require that repayment (principal and interest) be amortized in level payments, not less frequently than quarterly, over a period not extending beyond 5 years from the date of the loan, unless such loan is used to acquire a dwelling unit which within a reasonable time (determined at the time the loan is made) will be used as the principal residence of the Participant. An assignment or pledge of any portion of the Participant's interest in the Plan and a loan, pledge, or assignment with respect to any insurance contract purchased under the Plan, will be treated as a loan under this paragraph. The Plan Administrator shall administer the loan program in accordance with a written document. Such written document shall include, at a minimum, the following: (i) the identity of the person or positions authorized to administer the Participant loan program; (ii) the procedure for applying for loans; (iii) the basis on which loans will be approved or denied; (iv) limitations (if any) on the tapes and amounts of loans offered; (v) the procedure under the program for determining a reasonable rate of interest; (vi) the types of collateral which may secure a Participant loan; and (vii) the events constituting default and the steps that will be taken to preserve Plan assets in the event of such default. 6.09 DISTRIBUTION IN KIND The Plan Administrator may cause any distribution under this Plan to be made either in a form actually held in the Fund, or in cash by converting assets other than cash into cash, or in any combination of the two foregoing ways. 35 6.10 DIRECT ROLLOVERS OF ELIGIBLE ROLLOVER DISTRIBUTIONS A. Direct Rollover Option This Section applies to distributions made on or after January 1, 1993. Notwithstanding any provision of the Plan to the contrary that would otherwise limit a distributee's election under this Section, a distributee may elect, at the time and in the manner prescribed by the Plan Administrator, to have any portion of an eligible rollover distribution that is equal to at least $500 paid directly to an eligible retirement plan specified by the distributee in a direct rollover. B. Definitions 1. Eligible rollover distribution - An eligible rollover distribution is 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 designated Beneficiary, or for a specified period of ten years or more; b. any distribution to the extent such distribution is required under Section 401(a)(9) of the Code; c. the portion of any other distribution that is not includible in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities); and d. any other distribution(s) that is reasonably expected to total less than $200 during a year. 2. Eligible retirement plan - An eligible retirement plan is 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. 3. Distributee - A distributee includes 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, as defined in Section 414(p) of the Code, are distributees with regard to the interest of the spouse or former spouse. 4. Direct rollover - A direct rollover is a payment by the Plan to the eligible retirement plan specified by the distributee. 6.11 PROCEDURE FOR MISSING PARTICIPANTS OR BENEFICIARIES The Plan Administrator must use all reasonable measures to locate Participants or Beneficiaries who are entitled to distributions from the Plan. In the event that the Plan Administrator cannot locate a Participant or Beneficiary who is entitled to a distribution from the Plan after using all reasonable measures to locate him or her, the Plan Administrator may, consistent with applicable laws, regulations and other pronouncements under ERISA, use any reasonable procedure to dispose of distributable plan assets, including any of the following: (1) establish a bank account for and in the name of the Participant or Beneficiary and transfer the assets to such bank account, (2) purchase an annuity contract with the assets in the name of the Participant or Beneficiary, or (3) after the expiration of 5 years after the benefit becomes payable, treat the amount distributable as a Forfeiture and allocate it in accordance with the terms of the Plan and if the Participant or Beneficiary is later located, restore such benefit to the Plan. SECTION SEVEN CLAIMS PROCEDURE 7.01 FILING A CLAIM FOR PLAN DISTRIBUTIONS A Participant or Beneficiary who desires to make a claim for the Vested portion of the Participant's Individual Account shall file a written request with the Plan Administrator on a form to be furnished to him or her by the Plan Administrator for such purpose. The request shall set forth the basis of the claim. The Plan Administrator is authorized to conduct such examinations as may be necessary to facilitate the payment of any benefits to which the Participant or Beneficiary may be entitled under the terms of the Plan. 7.02 DENIAL OF CLAIM Whenever a claim for a Plan distribution by any Participant or Beneficiary has been wholly or partially denied, the Plan Administrator must furnish such Participant or Beneficiary written notice of the denial within 60 days of the date the original claim was filed. This notice shall set forth the specific reasons for the denial, specific reference to pertinent Plan provisions on which the denial is based, a description of any additional information or material needed to perfect the claim, an explanation of why such additional information or material is necessary and an explanation of the procedures for appeal. 36 7.03 REMEDIES AVAILABLE The Participant or Beneficiary shall have 60 days from receipt of the denial notice in which to make written application for review by the Plan Administrator. The Participant or Beneficiary may request that the review be in the nature of a hearing. The Participant or Beneficiary shall have the right to representation, to review pertinent documents and to submit comments in writing. The Plan Administrator shall issue a decision on such review within 60 days after receipt of an application for review as provided for in Section 7.02. Upon a decision unfavorable to the Participant or Beneficiary, such Participant or Beneficiary shall be entitled to bring such actions in law or equity as may be necessary or appropriate to protect or clarify his or her right to benefits under this Plan. SECTION EIGHT PLAN ADMINISTRATOR 8.01 EMPLOYER IS PLAN ADMINISTRATOR A. The Employer shall be the Plan Administrator unless the managing body of the Employer designates a person or persons other than the Employer as the Plan Administrator and so notifies the Trustee (or Custodian, if applicable). The Employer shall also be the Plan Administrator if the person or persons so designated cease to be the Plan Administrator. The Employer may establish an administrative committee that will carry out the Plan Administrator's duties. Members of the administrative committee may allocate the Plan Administrator's duties among themselves. B. If the managing body of the Employer designates a person or persons other than the Employer as Plan Administrator, such person or persons shall serve at the pleasure of the Employer and shall serve pursuant to such procedures as such managing body may provide. Each such person shall be bonded as may be required by law. 8.02 POWERS AND DUTIES OF THE PLAN ADMINISTRATOR A. The Plan Administrator may, by appointment, allocate the duties of the Plan Administrator among several individuals or entities. Such appointments shall not be effective until the party designated accepts such appointment in writing. B. The Plan Administrator shall have the authority to control and manage the operation and administration of the Plan. The Plan Administrator shall administer the Plan for the exclusive benefit of the Participants and their Beneficiaries in accordance with the specific terms of the Plan. C. The Plan Administrator shall be charged with the duties of the general administration of the Plan, including, but not limited to, the following: 1. To determine all questions of interpretation or policy in a manner consistent with the Plan's documents and the Plan Administrator's construction or determination in good faith shall be conclusive and binding on all persons except is otherwise provided herein or by law. Any interpretation or construction shall be done in a nondiscriminatory manner and shall be consistent with the intent that the Plan shall continue to be deemed a qualified plan under the terms of Section 401(a) of the Code, as amended from time-to-time, and shall comply with the terms of ERISA, as amended from time-to-time; 2. To determine all questions relating to the eligibility of Employees to become or remain Participants hereunder; 3. To compute the amounts necessary or desirable to be contributed to the Plan; 4. To compute the amount and kind of benefits to which a Participant or Beneficiary shall be entitled under the Plan and to direct the Trustee (or Custodian, if applicable) with respect to all disbursements under the Plan, and, when requested by the Trustee (or Custodian), to furnish the Trustee (or Custodian) with instructions, in writing, on matters pertaining to the Plan and the Trustee (or Custodian) may rely and act thereon; 5. To maintain all records necessary for the administration of the Plan; 6. To be responsible for preparing and filing such disclosure and tax forms as may be required from time-to-time by the Secretary of Labor or the Secretary of the Treasury; and 7. To furnish each Employee, Participant or Beneficiary such notices, information and reports under such circumstances as may be required by law. D. The Plan Administrator shall have all of the powers necessary or appropriate to accomplish his or her duties under the Plan, including, but not limited to, the following: 1. To appoint and retain such persons as may be necessary to carry out the functions of the Plan Administrator; 37 2. To appoint and retain counsel, specialists or other persons as the Plan Administrator deems necessary or advisable in the administration of the Plan; 3. To resolve all questions of administration of the Plan; 4. To establish such uniform and nondiscriminatory rules which it deems necessary to carry out the terms of the Plan; 5. To make any adjustments in a uniform and nondiscriminatory manner which it deems necessary to correct any arithmetical or accounting errors which may have been made for any Plan Year; and 6. To correct any defect, supply any omission or reconcile any inconsistency in such manner and to such extent as shall be deemed necessary or advisable to carry out the purpose of the Plan. 8.03 EXPENSES AND COMPENSATION All reasonable expenses of administration including, but not limited to, those involved in retaining necessary professional assistance may be paid from the assets of the Fund. Alternatively, the Employer may, in its discretion, pay any or all such expenses. Pursuant to uniform and nondiscriminatory rules that the Plan Administrator may establish from time-to-time, administrative expenses and expenses unique to a particular Participant may be charged to a Participant's Individual Account or the Plan Administrator may allow Participants to pay such fees outside of the Plan. The Employer shall furnish the Plan Administrator with such clerical and other assistance as the Plan Administrator may need in the performance of his or her duties. 8.04 INFORMATION FROM EMPLOYER To enable the Plan Administrator to perform his or her duties, the Employer shall supply full and timely information to the Plan Administrator (or his or her designated agents) on all matters relating to the Compensation of all Participants, their regular employment, retirement, death, Disability or Termination of Employment, and such other pertinent facts as the Plan Administrator (or his or her agents) may require. The Plan Administrator shall advise the Trustee (or Custodian, if applicable) of such of the foregoing facts as may be pertinent to the Trustee's (or Custodian's) duties under the Plan. The Plan Administrator (or his or her agents) is entitled to rely on such information as is supplied by the Employer and shall have no duty or responsibility to verify such information. SECTION NINE AMENDMENT AND TERMINATION 9.01 RIGHT OF PROTOTYPE SPONSOR TO AMEND THE PLAN A. The Employer, by adopting the Plan, expressly delegates to the Prototype Sponsor the power, but not the duty, to amend the Plan without any further action or consent of the Employer as the Prototype Sponsor deems necessary for the purpose of adjusting the Plan to comply with all laws and regulations governing pension or profit sharing plans. Specifically, it is understood that the amendments may be made unilaterally by the Prototype Sponsor. However, it shall be understood that the Prototype Sponsor shall be under no obligation to amend the Plan documents and the Employer expressly waives any rights or claims against the Prototype Sponsor for not exercising this power to amend. For purposes of Prototype Sponsor amendments, the mass submitter shall be recognized as the agent of the Prototype Sponsor. If the Prototype Sponsor does not adopt the amendments made by the mass submitter, it will no longer be identical to or a minor modifier of the mass submitter plan. B. An amendment by the Prototype Sponsor shall be accomplished by giving written notice to the Employer of the amendment to be made. The notice shall set forth the text of such amendment and the date such amendment is to be effective. Such amendment shall take effect unless within the 30 day period after such notice is provided, or within such shorter period as the notice may specify, the Employer gives the Prototype Sponsor written notice of refusal to consent to the amendment. Such written notice of refusal shall have the effect of withdrawing the Plan as a prototype plan and shall cause the Plan to be considered an individually designed plan. The right of the Prototype Sponsor to cause the Plan to be amended shall terminate should the Plan cease to conform as a prototype plan as provided in this or any other section. 9.02 RIGHT OF EMPLOYER TO AMEND THE PLAN The Employer may (1) change the choice of options in the Adoption Agreement; (2) add overriding language in the Adoption Agreement when such language is necessary to satisfy Section 415 or Section 416 of the Code because of the required aggregation of multiple plans; and (3) add certain model amendments published by the Internal Revenue Service which specifically provide that their adoption will not cause the Plan to be treated as individually designed. An Employer that amends the Plan for any other reason, including a waiver of the minimum funding requirement under Section 412(d) of the Code, will no longer participate in this prototype plan and will be considered to have an individually designed plan. An Employer who wishes to amend the Plan to change the options it has chosen in the Adoption Agreement must complete and deliver a new Adoption Agreement to the Prototype Sponsor and Trustee (or Custodian, if applicable). Such amendment shall become effective upon execution by the Employer and Trustee (or Custodian). 38 The Employer further reserves the right to replace the Plan in its entirety by adopting another retirement Plan which the Employer designates as a replacement plan. 9.03 LIMITATION ON POWER TO AMEND No amendment to the Plan shall be effective to the extent that it has the effect of decreasing a Participant's accrued benefit. Notwithstanding the preceding sentence, a Participant's Individual Account may be reduced to the extent permitted under Section 412(c)(8) of the Code. For purposes of this paragraph, a plan amendment which has the effect of decreasing a Participant's Individual Account or eliminating an optional form of benefit with respect to benefits attributable to service before the amendment shall be treated as reducing an accrued benefit. Furthermore, if the vesting schedule of a Plan is amended, in the case of an Employee who is a Participant as of the later of the date such amendment is adopted or the date it becomes effective, the Vested percentage (determined as of such date) of such Employee's Individual Account derived from Employer Contributions will not be less than the percentage computed under the Plan without regard to such amendment. 9.04 AMENDMENT OF VESTING SCHEDULE If the Plan's vesting schedule is amended, or the Plan is amended in any way that directly or indirectly affects the computation of the Participant's Vested percentage, or if the Plan is deemed amended by an automatic change to or from a top-heavy vesting schedule, each Participant with at least 3 Years of Vesting Service with the Employer may elect, within the time set forth below, to have the Vested percentage computed under the Plan without regard to such amendment. For Participants who do not have at least 1 Hour of Service in any Plan Year beginning after December 31, 1988, the preceding sentence shall be applied by substituting "5 Years of Vesting Service" for "3 Years of Vesting Service" where such language appears. The Period during which the election may be made shall commence with the date the amendment is adopted or deemed to be made and shall end the later of: A. 60 days after the amendment is adopted; B. 60 days after the amendment becomes effective; or C. 60 days after the Participant is issued written notice of the amendment by the Employer or Plan Administrator. 9.05 PERMANENCY The Employer expects to continue this Plan and make the necessary contributions thereto indefinitely, but such continuance and payment is not assumed as a contractual obligation. Neither the Adoption Agreement nor the Plan nor any amendment or modification thereof nor the making of contributions hereunder shall be construed as giving any Participant or any person whomsoever any legal or equitable right against the Employer, the Trustee (or Custodian, if applicable) the Plan Administrator or the Prototype Sponsor except as specifically provided herein, or as provided by law. 9.06 METHOD AND PROCEDURE FOR TERMINATION The Plan may be terminated by the Employer at any time by appropriate action of its managing body. Such termination shall be effective on the date specified by the Employer. The Plan shall terminate if the Employer shall be dissolved, terminated, or declared bankrupt. Written notice of the termination and effective date thereof shall be given to the Trustee (or Custodian), Plan Administrator, Prototype Sponsor, Participants and Beneficiaries of deceased Participants, and the required filings (such as the Form 5500 series and others) must be made with the Internal Revenue Service and any other regulatory body as required by current laws and regulations. Until all of the assets have been distributed from the Fund, the Employer must keep the Plan in compliance with current laws and regulations by (a) making appropriate amendments to the Plan and (b) taking such other measures as may be required. 9.07 CONTINUANCE OF PLAN BY SUCCESSOR EMPLOYER Notwithstanding the preceding Section 9.06, a successor of the Employer may continue the Plan and be substituted in the place of the present Employer. The successor and the present Employer (or, if deceased, the executor of the estate of a deceased Self-Employed Individual who was the Employer) must execute a written instrument authorizing such substitution and the successor must complete and sign a new plan document. 9.08 FAILURE OF PLAN QUALIFICATION If the Plan fails to retain its qualified status, the Plan will no longer be considered to be part of a prototype plan, and such Employer can no longer participate under this prototype. In such event, the Plan will be considered an individually designed plan. 39 SECTION TEN MISCELLANEOUS 10.01 STATE COMMUNITY PROPERTY LAWS The terms and conditions of this Plan shall be applicable without regard to the community property laws of any state. 10.02 HEADINGS The headings of the Plan have been inserted for convenience of reference only and are to be ignored in any construction of the provisions hereof. 10.03 GENDER AND NUMBER Whenever any words are used herein in the masculine gender they shall be construed as though they were also used in the feminine gender in all cases where they would so apply, and whenever any words are used herein in the singular form they shall be construed as though they were also used in the plural form in all cases where they would so apply. 10.04 PLAN MERGER OR CONSOLIDATION In the case of any merger or consolidation of the Plan with, or transfer of assets or liabilities of such Plan to, any other plan, each Participant shall be entitled to receive benefits immediately after the merger, consolidation, or transfer (if the Plan had then terminated) which are equal to or greater than the benefits he or she would have been entitled to receive immediately before the merger, consolidation, or transfer (if the Plan had then terminated). The Trustee (or Custodian) has the authority to enter into merger agreements or agreements to directly transfer the assets of this Plan but only if such agreements are made with trustees or custodians of other retirement plans described in Section 401(a) of the Code. 10.05 STANDARD OF FIDUCIARY CONDUCT The Employer, Plan Administrator, Trustee and any other fiduciary under this Plan shall discharge their duties with respect to this Plan solely in the interests of Participants and their Beneficiaries and with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent man acting in like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims. No fiduciary shall cause the Plan to engage in any transaction known as a "prohibited transaction" under ERISA. 10.06 GENERAL UNDERTAKING OF ALL PARTIES All parties to this Plan and all persons claiming any interest whatsoever hereunder agree to perform any and all acts and execute any and all documents and papers which may be necessary or desirable for the carrying out of this Plan and any of its provisions. 10.07 AGREEMENT BINDS HEIRS, ETC. This Plan shall be binding upon the heirs, executors, administrators, successors and assigns, as those terms shall apply to any and all parties hereto, present and future. 10.08 DETERMINATION OF TOP-HEAVY STATUS A. For any Plan Year beginning after December 31, 1983, this Plan is a Top-Heavy Plan if any of the following conditions exist: 1. If the top-heavy ratio for this Plan exceeds 60% and this Plan is not part of any required aggregation group or permissive aggregation group of plans. 2. If this Plan is part of a required aggregation group of plans but not part of a permissive aggregation group and the top-heavy ratio for the group of plans exceeds 60%. 3. If this Plan is a part of a required aggregation group and part of a permissive aggregation group of plans and the top-heavy ratio for the permissive aggregation group exceeds 60%. For purposes of this Section 10.08, the following terms shall have the meanings indicated below: B. Key Employee - Any Employee or former Employee (and the Beneficiaries of such Employee) who at any time during the determination period was an officer of the Employer if such individual's annual compensation exceeds 50% of the dollar limitation under Section 415(b)(1)(A) of the Code, an owner (or considered an owner under Section 318 of the Code) of one of the 10 largest interests in the Employer if such individual's compensation exceeds 100% of the dollar limitation under Section 415(c)(1)(A) of the Code, a 5% owner of the Employer, or a 1% owner of the Employer who has an annual compensation of more than $150,000. Annual compensation means compensation as defined in Section 415(c)(3) of the Code, but including amounts contributed by the Employer pursuant to a salary reduction agreement which are excludable from the Employee's gross income under Section 125, Section 402(e)(3), Section 402(h)(1)(B) or Section 403(b) of the Code. The determination period is the Plan Year containing the determination date and the 4 preceding Plan Years. The determination of who is a Key Employee will be made in accordance with Section 416(i)(1) of the Code and the regulations thereunder. 40 C. Top-heavy ratio 1. If the Employer maintains one or more defined contribution plans (including any simplified employee Pension plan) and the Employer has not maintained any defined benefit plan which during the 5-year period ending on the determination date(s) has or has had accrued benefits, the top-heavy ratio for this Plan alone or for the required or permissive aggregation group as appropriate is a fraction, the numerator of which is the sum of the account balances of all Key Employees as of the determination date(s) (including any part of any account balance distributed in the 5-year period ending on the determination date(s)), and the denominator of which is the sum of all account balances (including any part of any account balance distributed in the 5-year period ending on the determination date(s)), both computed in accordance with Section 416 of the Code and the regulations thereunder. Both the numerator and the denominator of the top-heavy ratio are increased to reflect any contribution not actually made as of the determination date, but which is required to be taken into account on that date under Section 416 of the Code and the regulations thereunder. 2. If the Employer maintains one or more defined contribution plans (including any simplified employee pension plan) and the Employer maintains or has maintained one or more defined benefit plans which during the 5-year period ending on the determination date(s) has or has had any accrued benefits, the top-heavy ratio for any required or permissive aggregation group as appropriate is a fraction, the numerator of which is the sum of account balances under the aggregated defined contribution plan or plans for all Key Employees, determined in accordance with (1) above, and the present value of accrued benefits under the aggregated defined benefit plan or plans for all Key Employees as of the determination date(s), and the denominator of which is the sum of the account balances under the aggregated defined contribution plan or plans for all Participants, determined in accordance with (1) above, and the present value of accrued benefits under the defined benefit plan or plans for all Participants as of the determination date(s), all determined in accordance with Section 416 of the Code and the regulations thereunder. The accrued benefits under a defined benefit plan in both the numerator and denominator of the top-heavy ratio are increased for any distribution of an accrued benefit made in the 5-year period ending on the determination date. 3. For purposes of (1) and (2) above, the value of account balances and the present value of accrued benefits will be determined as of the most recent valuation date that falls within or ends with the 12-month period ending on the determination date, except as provided in Section 416 of the Code and the regulations thereunder for the first and second plan years of a defined benefit plan. The account balances and accrued benefits of a Participant (a) who is not a Key Employee but who was a Key Employee in a Prior Year, or (b) who has not been credited with at least one Hour of Service with any employer maintaining the plan at any time during the 5-year period ending on the determination date will be disregarded. The calculation of the top-heavy ratio, and the extent to which distributions, rollovers, and transfers are taken into account will be made in accordance with Section 416 of the Code and the regulations thereunder. Deductible employee contributions will not be taken into account for purposes of computing the top-heavy ratio. When aggregating plans the value of account balances and accrued benefits will be calculated with reference to the determination dates that fall within the same calendar year. The accrued benefit of a Participant other than a Key Employee shall be determined under (a) the method, if any, that uniformly applies for accrual purposes under all defined benefit plans maintained by the Employer, or (b) if there is no such method, as if such benefit accrued not more rapidly than the slowest accrual rate permitted under the fractional rule of Section 411(b)(1)(C) of the Code. 4. Permissive aggregation group: The required aggregation group of plans plus any other plan or plans of the Employer which, when considered as a group with the required aggregation group, would continue to satisfy the requirements of Sections 401(a)(4) and 410 of the Code. 5. Required aggregation group: (a) Each qualified plan of the Employer in which at least one Key Employee participates or participated at any time during the determination period (regardless of whether the Plan has terminated), and (b) any other qualified plan of the Employer which enables a plan described in (a) to meet the requirements of Sections 401(a)(4) or 410 of the Code. 6. Determination date: For any Plan Year subsequent to the first Plan Year, the last day of the preceding Plan Year. For the first Plan Year of the Plan, the last day of that year. 7. Valuation date: For purposes of calculating the top-heavy ratio, the valuation date shall be the last day of each Plan Year. 8. Present value: For purposes of establishing the "present value" of benefits under a defined benefit plan to compute the top-heavy ratio, any benefit shall be discounted only for mortality and interest based on the interest rate and mortality table specified for this purpose in the defined benefit plan, unless otherwise indicated in the Adoption Agreement. 41 10.09 SPECIAL LIMITATIONS FOR OWNER-EMPLOYEES If this Plan provides contributions or benefits for one or more Owner-Employees who control both the business for which this Plan is established and one or more other trades or businesses, this Plan and the plan established for other trades or businesses must, when looked at as a single plan, satisfy Sections 401(a) and (d) of the Code for the employees of those trades or businesses. If the Plan provides contributions or benefits for one or more Owner-Employees who control one or more other trades or businesses, the employees of the other trades or businesses must be included in a plan which satisfies Sections 401(a) and (d) of the Code and which provides contributions and benefits not less favorable than provided for Owner-Employees under this Plan. If an individual is covered as an Owner-Employee under the plans of two or more trades or businesses which are not controlled and the individual controls a trade or business, then the contributions or benefits of the employees under the plan of the trade or business which is controlled must be as favorable as those provided for him or her under the most favorable plan of the trade or business which is not controlled. For purposes of the preceding paragraphs, an Owner- Employee, or two or more Owner-Employees, will be considered to control a trade or business if the Owner-Employee, or two or more Owner-Employees, together: (1) own the entire interest in a unincorporated trade or business, or (2) in the case of a partnership, own more than 50% of either the capital interest or the profit interest in the partnership. For purposes of the preceding sentence, an Owner-Employee, or two or more Owner-Employees, shall be treated as owning any interest in a partnership which is owned, directly or indirectly, by a partnership which such Owner-Employee, or such two or more Owner-Employees, are considered to control within the meaning of the preceding sentence. 10.10 INALIENABILITY OF BENEFITS No benefit or interest available hereunder will be subject to assignment or alienation, either voluntarily or involuntarily. The preceding sentence shall also apply to the creation, assignment, or recognition of a right to any benefit payable with respect to a Participant pursuant to a domestic relations order, unless such order is determined to be a qualified domestic relations order, as defined in Section 414(p) of the Code. Generally, a domestic relations order cannot be a qualified domestic relations order until January 1, 1985. However, in the case of a domestic relations order entered before such date, the Plan Administrator: (1) shall treat such order as a qualified domestic relations order if such Plan Administrator is paying benefits pursuant to such order on such date, and (2) may treat any other such order entered before such date as a qualified domestic relations order even if such order does not meet the requirements of Section 414(p) of the Code. Notwithstanding any provision of the Plan to the contrary, a distribution to an alternate payee under a qualified domestic relations order shall be permitted even if the Participant affected by such order is not otherwise entitled to a distribution and even if such Participant has not attained earliest retirement age as defined in Section 414(p) of the Code. 10.11 CANNOT ELIMINATE PROTECTED BENEFITS Pursuant to Section 411(d)(6) of the Code, and the regulations thereunder, the Employer cannot reduce, eliminate or make subject to Employer discretion any Section 41l(d)(6) protected benefit. Where this Plan document is being adopted to amend another plan that contains a protected benefit not provided for in this document, the Employer may attach a supplement to the Adoption Agreement that describes such protected benefit which shall become part of the Plan. SECTION ELEVEN 401(k) PROVISIONS In addition to Sections 1 through 10, the provisions of this Section 11 shall apply if the Employer has established a 401(k) cash or deferred arrangement (CODA) by completing and signing the appropriate Adoption Agreement. 11.100 DEFINITIONS The following words and phrases when used in the Plan with initial capital letters shall, for the purposes of this Plan, have the meanings set forth below unless the context indicates that other meanings are intended. 42 11.101 ACTUAL DEFERRAL PERCENTAGE (ADP) Means, for a specified group of Participants for a Plan Year, the average of the ratios (calculated separately for each Participant in such group) of (1) the amount of Employer Contributions actually paid over to the Fund on behalf of such Participant for the Plan Year to (2) the Participant's Compensation for such Plan Year (taking into account only that Compensation paid to the Employee during the portion of the Plan Year he or she was an eligible Participant, unless otherwise indicated in the Adoption Agreement). For purposes of calculating the ADP, Employer Contributions on behalf of any Participant shall include: (1) any Elective Deferrals made pursuant to the Participant's deferral election, (including Excess Elective Deferrals of Highly Compensated Employees), but excluding (a) Excess Elective Deferrals of Non-highly Compensated Employees that arise solely from Elective Deferrals made under the Plan or plans of this Employer and (b) Elective Deferrals that are taken into account in the Contribution Percentage test (provided the ADP test is satisfied both with and without exclusion of these Elective Deferrals); and (2) at the election of the Employer, Qualified Nonelective Contributions and Qualified Matching Contributions. For purposes of computing Actual Deferral Percentages, an Employee who would be a Participant but for the failure to make Elective Deferrals shall be treated as a Participant on whose behalf no Elective Deferrals are made. 11.102 AGGREGATE LIMIT Means the sum of (1) 125% of the greater of the ADP of the Participants who are not Highly Compensated Employees for the Plan Year or the ACP of the Participants who are not Highly Compensated Employees under the Plan subject to Code Section 401(m) for the Plan Year beginning with or within the Plan Year of the CODA; and (2) the lesser of 200% or two plus the lesser of such ADP or ACP. "Lesser" is substituted for "greater" in "(1)" above, and "greater" is substituted for "lesser" after "two plus the" in "(2)" if it would result in a larger Aggregate Limit. 11.103 AVERAGE CONTRIBUTION PERCENTAGE (ACP) Means the average of the Contribution Percentages of the Eligible Participants in a group. 11.104 CONTRIBUTING PARTICIPANT Means a Participant who has enrolled as a Contributing Participant pursuant to Section 11.201 and on whose behalf the Employer is contributing Elective Deferrals to the Plan (or is making Nondeductible Employee Contributions). 11.105 CONTRIBUTION PERCENTAGE Means the ratio (expressed as a percentage) of the Participant's Contribution Percentage Amounts to the Participant's Compensation for the Plan Year (taking into account only the Compensation paid to the Employee during the portion of the Plan Year he or she was an eligible Participant, unless otherwise indicated in the Adoption Agreement). 11.106 CONTRIBUTION PERCENTAGE AMOUNTS Means the sum of the Nondeductible Employee Contributions, Matching Contributions, and Qualified Matching Contributions made under the Plan on behalf of the Participant for the Plan Year. Such Contribution Percentage Amounts shall not include Matching Contributions that are forfeited either to correct Excess Aggregate Contributions or because the contributions to which they relate are Excess Deferrals, Excess Contributions, Excess Aggregate Contributions or excess annual additions which are distributed pursuant to Section 11.508. If so elected in the Adoption Agreement, the Employer may include Qualified Nonelective Contributions in the Contribution Percentage Amount. The Employer also may elect to use Elective Deferrals in the Contribution Percentage Amounts so long as the ADP test is met before the Elective Deferrals are used in the ACP test and continues to be met following the exclusion of those Elective Deferrals that are used to meet the ACP test. 11.107 ELECTIVE DEFERRALS Means any Employer Contributions made to the Plan at the election of the Participant, in lieu of cash compensation, and shall include contributions made pursuant to a salary reduction agreement or other deferral mechanism. With respect to any taxable year, a Participant's Elective Deferral is the sum of all Employer contributions made on behalf of such Participant pursuant to an election to defer under any qualified CODA as described in Section 401(k) of the Code, any simplified employee pension cash or deferred arrangement as described in Section 402(h)(1)(B), any eligible deferred compensation plan under Section 457, any plan as described under Section 501(c)(18), and any Employer contributions made on the behalf of a Participant for the purchase of an annuity contract under Section 403(b) pursuant to a salary reduction agreement. Elective Deferrals shall not include any deferrals properly distributed is excess annual additions. No Participant shall be permitted to have Elective Deferrals made under this Plan, or any other qualified plan maintained by the Employer, during any taxable year, in excess of the dollar limitation contained in Section 402(g) of the Code in effect at the beginning of such taxable year. Elective Deferrals may not be taken into account for purposes of satisfying the minimum allocation requirement applicable to Top-Heavy Plans described in Section 3.01(E). 43 11.108 ELIGIBLE PARTICIPANT Means any Employee who is eligible to make a Nondeductible Employee Contribution or an Elective Deferral (if the Employer takes such contributions into account in the calculation of the Contribution Percentage), or to receive a Matching Contribution (including Forfeitures thereof) or a Qualified Matching Contribution. If a Nondeductible Employee Contribution is required as a condition of participation in the Plan, any Employee who would be a Participant in the Plan if such Employee made such a contribution shall be treated as an Eligible Participant on behalf of whom no Nondeductible Employee Contributions are made. 11.109 EXCESS AGGREGATE CONTRIBUTIONS Means, with respect to any Plan Year, the excess of: A. The aggregate Contribution Percentage Amounts taken into account in computing the numerator of the Contribution Percentage actually made on behalf of Highly Compensated Employees for such Plan Year, over B. The maximum Contribution Percentage Amounts permitted by the ACP test (determined by reducing contributions made on behalf of Highly Compensated Employees in order of their Contribution Percentages beginning with the highest of such percentages). Such determination shall be made after first determining Excess Elective Deferrals pursuant to Section 11.111 and then determining Excess Contributions pursuant to Section 11. 110. 11.110 EXCESS CONTRIBUTIONS Means, with respect to any Plan Year, the excess of: A. The aggregate amount of Employer Contributions actually taken into account in computing the ADP of Highly Compensated Employees for such Plan Year, over B. The maximum amount of such contributions permitted by the ADP test (determined by reducing contributions made on behalf of Highly Compensated Employees in order of the ADPs, beginning with the highest of such percentages). 11.111 EXCESS ELECTIVE DEFERRALS Means those Elective Deferrals that are includible in a Participant's gross income under Section 402(g) of the Code to the extent such Participant's Elective Deferrals for a taxable year exceed the dollar limitation under such Code section. Excess Elective Deferrals shall be treated as annual additions under the Plan, unless such amounts are distributed no later than the first April 15 following the close of the Participant's taxable year. 11.112 MATCHING CONTRIBUTION Means an Employer Contribution made to this or any other defined contribution plan on behalf of a Participant on account of an Elective Deferral or a Nondeductible Employee Contribution made by such Participant under a plan maintained by the Employer. Matching Contributions may not be taken into account for purposes of satisfying the minimum allocation requirement applicable to Top-Heavy Plans described in Section 3.01(E). 11.113 QUALIFIED NONELECTIVE CONTRIBUTIONS Means contributions (other than Matching Contributions or Qualified Matching Contributions) made by the Employer and allocated to Participants' Individual Accounts that the Participants may not elect to receive in cash until distributed from the Plan; that are nonforfeitable when made; and that are distributable only in accordance with the distribution provisions that are applicable to Elective Deferrals and Qualified Matching Contributions. Qualified Nonelective Contribution may be taken into account for purposes of satisfying the minimum allocation requirement applicable to Top-Heavy Plans described in Section 3.01(E). 11.114 QUALIFIED MATCHING CONTRIBUTIONS Means Matching Contributions which are subject to the distribution and nonforfeitability requirements under Section 401(k) of the Code when made. 11.115 QUALIFYING CONTRIBUTING PARTICIPANT Means a Contributing Participant who satisfies the requirements described in Section 11.302 to be entitled to receive a Matching Contribution (and Forfeitures, if applicable) for a Plan Year. 11.200 CONTRIBUTING PARTICIPANT 44 11.201 REQUIREMENTS TO ENROLL AS A CONTRIBUTING PARTICIPANT A. Each Employee who satisfies the eligibility requirements specified in the Adoption Agreement may enroll as a Contributing Participant as of any subsequent Entry Date (or earlier if required by Section 2.03) specified in the Adoption Agreement for this purpose. A Participant who wishes to enroll as a Contributing Participant must complete, sign and file a salary reduction agreement (or agreement to make Nondeductible Employee Contributions) with the Plan Administrator. B. Notwithstanding the times set forth in Section 11.201 (A) as of which a Participant may enroll as a Contributing Participant, the Plan Administrator shall have the authority to designate, in a nondiscriminatory manner, additional enrollment times during the 12 month period beginning on the Effective Date (or the date that Elective Deferrals may commence, if later) in order that an orderly first enrollment might be completed. In addition, if the Employer has indicated in the Adoption Agreement that Elective Deferrals may be based on bonuses, then Participants shall be afforded a reasonable period of time prior to the issuance of such bonuses to elect to defer them into the Plan. 11.202 CHANGING ELECTIVE DEFERRAL AMOUNTS A Contributing Participant may modify his or her salary reduction agreement (or agreement to make Nondeductible Employee Contributions) to increase or decrease (within the limits placed on Elective Deferrals (or Nondeductible Employee Contributions) in the Adoption Agreement) the amount of his or her Compensation deferred into the Plan. Such modification may only be made as of the dates specified in the Adoption Agreement for this purpose, or as of any other more frequent date(s) if the Plan Administrator permits in a uniform and nondiscriminatory manner. A Contributing Participant who desires to make such a modification shall complete, sign and file a new salary reduction agreement (or agreement to make Nondeductible Employee Contribution) with the Plan Administrator. The Plan Administrator may prescribe such uniform and nondiscriminatory rules it deems appropriate to carry out the terms of this Section. 11.203 CEASING ELECTIVE DEFERRALS A Participant may cease Elective Deferrals (or Nondeductible Employee Contributions) and thus withdraw as a Contributing Participant as of the dates specified in the Adoption Agreement for this purpose (or as of any other date if the Plan Administrator so permits in a uniform and nondiscriminatory manner) by revoking the authorization to the Employer to make Elective Deferrals (or Nondeductible Employee Contributions) on his or her behalf. A Participant who desires to withdraw as a Contributing Participant shall give written notice of withdrawal to the Plan Administrator at least thirty days (or such lesser period of days as the Plan Administrator shall permit in a uniform and nondiscriminatory manner) before the effective date of withdrawal. A Participant shall cease to be a Contributing Participant upon his or her Termination of Employment, or an account of termination of the Plan. 11.204 RETURN AS A CONTRIBUTING PARTICIPANT AFTER CEASING ELECTIVE DEFERRALS A Participant who has withdrawn as a Contributing Participant under Section 11.203 (or because the Participant has taken a hardship withdrawal pursuant to Section 11.503) may not again become a Contributing Participant until the dates set forth in the Adoption Agreement for this purpose, unless the Plan Administrator, in a uniform and nondiscriminatory manner, permits withdrawing Participants to resume their status as Contributing Participants sooner. 11.205 CERTAIN ONE-TIME IRREVOCABLE ELECTIONS This Section 11.205 applies where the Employer has indicated in the Adoption Agreement that an Employee may make a one-time irrevocable election to have the Employer make contributions to the Plan on such Employee's behalf. In such event, an Employee may elect, upon the Employee's first becoming eligible to participate in the Plan, to have contributions equal to a specified amount or percentage of the Employee's Compensation (including no amount of Compensation) made by the Employer on the Employee's behalf to the Plan (and to any other plan of the Employer) for the duration of the Employee's employment with the Employer. Any contributions made pursuant to a one-time irrevocable election described in this Section are not treated as made pursuant to a cash or deferred election, are not Elective Deferrals and are not includible in an Employee's gross income. The Plan Administrator shall establish such uniform and nondiscriminatory procedures as it deems necessary or advisable to administer this provision. 11.300 CONTRIBUTIONS 11.301 CONTRIBUTIONS BY EMPLOYER The Employer shall make contributions to the Plan in accordance with the contribution formulas specified in the Adoption Agreement. 11.302 MATCHING CONTRIBUTIONS The Employer may elect to make Matching Contributions under the Plan on behalf of Qualifying Contributing Participants as provided in the Adoption Agreement. To be a Qualifying Contributing Participant for a Plan Year, the Participant must make Elective Deferrals (or Nondeductible Employee Contributions, if the Employer has agreed to match such contributions) for the Plan Year, satisfy any age and Years of Eligibility Service requirements that are specified for Matching Contributions in the Adoption Agreement and also satisfy any additional conditions set forth in the Adoption Agreement for this purpose. In a uniform and nondiscriminatory manner, the Employer may make Matching 45 Contributions at the same time as it contributes Elective Deferrals or at any other time as permitted by laws and regulations. 11.303 QUALIFIED NONELECTIVE CONTRIBUTIONS The Employer may elect to make Qualified Nonelective Contributions under the Plan on behalf of Participants as provided in the Adoption Agreement. In addition, in lieu of distributing Excess Contributions as provided in Section 11.505 of the Plan, or Excess Aggregate Contributions as provided in Section 11.506 of the Plan, and to the extent elected by the Employer in the Adoption Agreement, the Employer may make Qualified Nonelective Contributions on behalf of Participants who are not Highly Compensated Employees that are sufficient to satisfy either the Actual Deferral Percentage test or the Average Contribution Percentage test, or both, pursuant to regulations under the Code. 11.304 QUALIFIED MATCHING CONTRIBUTIONS The Employer may elect to make Qualified Matching Contributions under the Plan on behalf of Participants as provided in the Adoption Agreement. 11.305 NONDEDUCTIBLE EMPLOYEE CONTRIBUTIONS Notwithstanding Section 3.02, if the Employer so allows in the Adoption Agreement, a Participant may contribute Nondeductible Employee Contributions to the Plan. If the Employer has indicated in the Adoption Agreement that Nondeductible Employee Contributions will be mandatory, then the Employer shall establish uniform and nondiscriminatory rules and procedures for Nondeductible Employee Contributions as it deems necessary and advisable including, but not limited to, rules describing in amounts or percentages of Compensation Participants may or must contribute to the Plan. A separate account will be maintained by the Plan Administrator for the Nondeductible Employee Contributions for each Participant. A Participant may, upon a written request submitted to the Plan Administrator, withdraw the lesser of the portion of his or her Individual Account attributable to his or her Nondeductible Employee Contributions or the amount he or she contributed as Nondeductible Employee Contributions. Nondeductible Employee Contributions and earnings thereon will be nonforfeitable at all times. No Forfeiture will occur solely as a result of an Employee's withdrawal of Nondeductible Employee Contributions. 11.400 NONDISCRIMINATION TESTING 11.401 ACTUAL DEFERRAL PERCENTAGE TEST (ADP) A. Limits on Highly Compensated Employees - The Actual Deferral Percentage (hereinafter "ADP") for Participants who are Highly Compensated Employees for each Plan Year and the ADP for Participants who are not Highly Compensated Employees for the same Plan Year must satisfy one of the following tests: 1. The ADP for Participants who are Highly Compensated Employees for the Plan Year shall not exceed the ADP for Participants who are not Highly Compensated Employees for the same Plan Year multiplied by 1.25; or 2. The ADP for Participants who are Highly Compensated Employees for the Plan Year shall not exceed the ADP for Participants who are not Highly Compensated Employees for the same Plan Year multiplied by 2.0 provided that the ADP for Participants who are Highly Compensated Employees does not exceed the ADP for Participants who are not Highly Compensated Employees by more than 2 percentage points. B. Special Rules 1. The ADP for any Participant who is a Highly Compensated Employee for the Plan Year and who is eligible to have Elective Deferrals (arid Qualified Nonelective Contributions or Qualified Matching Contributions, or both, if treated as Elective Deferrals for purposes of the ADP test) allocated to his or her Individual Accounts under two or more arrangements described in Section 401(k) of the Code, that are maintained by the Employer, shall be determined as if such Elective Deferrals (and, if applicable, such Qualified Nonelective Contributions or Qualified Matching Contributions, or both) were made under a single arrangement. If a Highly Compensated Employee participates in two or more cash or deferred arrangements that have different Plan Years, all cash or deferred arrangements ending with or within the same calendar year shall be treated as a single arrangement. Notwithstanding the foregoing, certain plans shall be treated as separate if mandatorily disaggregated under regulations under Section 401(k) of the Code. 46 2. In the event that this Plan satisfies the requirements of Sections 401(k), 401(a)(4), or 410(b) of the Code Only if aggregated with one or more other plans, or if one or more other plans satisfy the requirements of such sections of the Code only if aggregated with this Plan, then this Section 11.401 shall be applied by determining the ADP of Employees as if all such plans were a single plan. For Plan Years beginning after December 31, 1989, plans may be aggregated in order to satisfy Section 401(k) of the Code only if they have the same Plan Year. 3. For purposes of determining the ADP of a Participant who is a 5% owner or one of the 10 most highly paid Highly Compensated Employees, the Elective Deferrals (and Qualified Nonelective Contributions or Qualified Matching Contributions, or both, if treated as Elective Deferrals for purposes of the ADP test) and Compensation of such Participant shall include the Elective Deferrals (and, if applicable, Qualified Nonelective Contributions and Qualified Matching Contributions, or both) and Compensation for the Plan Year of family members (as defined in Section 414(q)(6) of the Code). Family members, with respect to such Highly Compensated Employees, shall be disregarded as separate Employees in determining the ADP both for Participants who are not Highly Compensated Employees and for Participants who are Highly Compensated Employees. 4. For purposes of determining the ADP test, Elective Deferrals, Qualified Nonelective Contributions and Qualified Matching Contributions must be made before the last day of the 12 month period immediately following the Plan Year to which contributions relate. 5. The Employer shall maintain records sufficient to demonstrate satisfaction of the ADP test and the amount of Qualified Nonelective Contributions or Qualified Matching Contributions, or both, used in such test. 6. The determination and treatment of the ADP amounts of any Participant shall satisfy such other requirements as may be prescribed by the Secretary of the Treasury. 7. If the Employer elects to take Qualified Matching Contributions into account as Elective Deferrals for purposes of the ADP test, then (subject to such other requirements as may be prescribed by the Secretary of the Treasury) unless otherwise indicated in the Adoption Agreement, only the amount of such Qualified Matching Contributions that are needed to meet the ADP test shall be taken into account. 8. In the event that the Plan Administrator determines that it is not likely that the ADP test will be satisfied for a particular Plan Year unless certain steps are taken prior to the end of such Plan Year, the Plan Administrator may require Contributing Participants who are Highly Compensated Employees to reduce their Elective Deferrals for such Plan Year in order to satisfy that requirement. Said reduction shall also be required by the Plan Administrator in the event that the Plan Administrator anticipates that the Employer will not be able to deduct all Employer Contributions from its income for Federal income tax purposes. 11.402 LIMITS ON NONDEDUCTIBLE EMPLOYEE CONTRIBUTIONS AND MATCHING CONTRIBUTIONS A. Limits on Highly Compensated Employees - The Average Contribution Percentage (hereinafter "ACP") for Participants who are Highly Compensated Employees for each Plan Year and the ACP for Participants who are not Highly Compensated Employees for the same Plan Year must satisfy one of the following tests: 1. The ACP for Participants who are Highly Compensated Employees for the Plan Year shall not exceed the ACP for Participants who are not Highly Compensated Employees for the same Plan Year multiplied by 1.25; or 2. The ACP for Participants who are Highly Compensated Employees for the Plan Year shall not exceed the ACP for Participants who are not Highly Compensated Employees for the same Plan Year multiplied by 2, provided that the ACP for the Participants who are Highly Compensated Employees does not exceed the ACP for Participants who are not Highly Compensated Employees by more than 2 percentage points. B. Special Rules 1. Multiple Use - If one or more Highly Compensated Employees participate in both a CODA and a plan subject to the ACP test maintained by the Employer and the sum of the ADP and ACP of those Highly Compensated Employees subject to either or both tests exceeds the Aggregate Limit, then, as elected in the Adoption Agreement, the ACP or the ADP of those Highly Compensated Employees who also participate in a CODA will be reduced (beginning with such Highly Compensated Employee whose ACP (or ADP, if elected) is the highest) so that the limit is not exceeded. The amount by which each Highly Compensated Employee's Contribution Percentage Amounts (or ADP, if elected) is reduced shall be treated as an Excess Aggregate Contribution (or Excess Contribution, if elected). The ADP and ACP of the Highly Compensated Employees are determined after any corrections required to meet the ADP and ACP tests. Multiple use does not occur if the ADP and ACP of the Highly Compensated Employees does not exceed 1.25 multiplied by the ADP and ACP of the Participants who are not Highly Compensated Employees. 47 2. For purposes of this Section 11.402, the Contribution Percentage for any Participant who is a Highly Compensated Employee and who is eligible to have Contribution Percentage Amounts allocated to his or her Individual Account under two or more plans described in Section 401(a) of the Code, or arrangements described in Section 401(k) of the Code that are maintained by the Employer, shall be determined as if the total of such Contribution Percentage Amounts was made under each plan. If a Highly Compensated Employee participates in two or more cash or deferred arrangements that have different plan years, all cash or deferred arrangements ending with or within the same calendar year shall be treated as a single arrangement. Notwithstanding the foregoing, certain plans shall be treated as separate if mandatorily disaggregated under regulations under Section 401(m) of the Code. 3. In the event that this Plan satisfies the requirements of Sections 401(m), 401(a)(4) or 410(b) of the Code only if aggregated with one or more other plans, or if one or more other plans satisfy the requirements of such Sections of the Code only if aggregated with this Plan, then this Section shall be applied by determining the Contribution Percentage of Employees as if all such plans were a single plan. For Plan Years beginning after December 31, 1989, plans may be aggregated in order to satisfy Section 401(m) of the Code only if they have the same Plan Year. 4. For purposes of determining the Contribution Percentage of a Participant who is a 5% owner or one of the 10 most highly paid Highly Compensated Employees, the Contribution Percentage Amounts and Compensation of such Participant shall include the Contribution Percentage Amounts and Compensation for the Plan Year of family members, (as defined in Section 414(q)(6) of the Code). Family members, with respect to Highly Compensated Employees, shall be disregarded as separate Employees in determining the Contribution Percentage both for Participants who are not Highly Compensated Employees and for Participants who are Highly Compensated Employees. 5. For purposes of determining the Contribution Percentage test, Nondeductible Employee Contributions are considered to have been made in the Plan Year in which contributed to the Fund. Matching Contributions and Qualified Nonelective Contributions will be considered made for a Plan Year if made no later than the end of the 12 month period beginning on the day after the close of the Plan Year. 6. The Employer shall maintain records sufficient to demonstrate satisfaction of the ACP test and the amount of Qualified Nonelective Contributions or Qualified Matching Contributions, or both, used in such test. 7. The determination and treatment of the Contribution Percentage of any Participant shall satisfy such other requirements as may be prescribed by the Secretary of the Treasury. 8. If the Employer elects to take Qualified Nonelective Contributions into account as Contribution Percentage Amounts for purposes of the ACP test, then (subject to such other requirements as may be prescribed by the Secretary of the Treasury) unless otherwise indicated in the Adoption Agreement, only the amount of such Qualified Nonelective Contributions that are needed to meet the ACP test shall be taken into account. 9. If the Employer elects to take Elective Deferrals into account as Contribution Percentage Amounts for purposes of the ACP test, then (subject to such other requirements as may be prescribed by the Secretary of the Treasury) unless otherwise indicated in the Adoption Agreement, only the amount of such Elective Deferrals that are needed to meet the ACP test shall be taken into account. 11.500 DISTRIBUTION PROVISIONS 11.501 GENERAL RULE Distributions from the Plan are subject to the provisions of Section 6 and the provisions of this Section 11. In the event of a conflict between the provisions of Section 6 and Section 11 the provisions of Section 11 shall control. 11.502 DISTRIBUTION REQUIREMENTS Elective Deferrals, Qualified Nonelective Contributions, and Qualified Matching Contributions, and income allocable to each are not distributable to a Participant or his or her Beneficiary or Beneficiaries, in accordance with such Participant's or Beneficiary or Beneficiaries' election, earlier than upon separation from service, death or disability. Such amounts may also be distributed upon: A. Termination of the Plan without the establishment of another defined contribution plan, other than an employee stock ownership plan (as defined in Section 4975(e) or Section 409 of the Code) or a simplified employee pension plan as defined in Section 408(k). 48 B. The disposition by a corporation to an unrelated corporation of substantially all of the assets (within the meaning of Section 409(d)(2) of the Code used in a trade or business of such corporation if such corporation continues to maintain this Plan after the disposition, but only with respect to Employees who continue employment with the corporation acquiring such assets. C. The disposition by a corporation to an unrelated entity of such corporation's interest in a subsidiary (within the meaning of Section 409(d)(3) of the Code) if such corporation continues to maintain this Plan, but only with respect to Employees who continue employment with such subsidiary. D. The attainment of age 59 1/2 in the case of a profit sharing plan. E. If the Employer has so elected in the Adoption Agreement, the hardship of the Participant as described in Section 11.503. All distributions that may be made pursuant to one or more of the foregoing distributable events are subject to the spousal and Participant consent requirements (if applicable) contained in Section 401(a)(11) and 417 of the Code. In addition, distributions after March 31, 1988, that are triggered by any of the first three events enumerated above must be made in a lump sum. 11.503 HARDSHIP DISTRIBUTION A. General - If the Employer has so elected in the Adoption Agreement, distribution of Elective Deferrals (and any earnings credited to a Participant's account as of the end of the last Plan Year, ending before July 1, 1989) may be made to a Participant in the event of hardship. For the purposes of this Section, hardship is defined as an immediate and heavy financial need of the Employee where such Employee lacks other available resources. Hardship distributions are subject to the spousal consent requirements contained in Sections 401(a)(11) and 417 of the Code. B. Special Rules 1. The following are the only financial needs considered immediate and heavy: expenses incurred or necessary for medical care, described in Section 213(d) of the Code, of the Employee, the Employee's spouse or dependents; the purchase (excluding mortgage payments) of a principal residence for the Employee; payment of tuition and related educational fees for the next 12 months of post-secondary education for the Employee, the Employee's spouse, children or dependents; or the need to prevent the eviction of the Employee from, or a foreclosure on the mortgage of, the Employee's principal residence. 2. A distribution will be considered as necessary to satisfy an immediate and heavy financial need of the Employee only if. a. The Employee has obtained all distributions, other than hardship distributions, and all nontaxable loans under all plans maintained by the Employer; b. All plans maintained by the Employer provide that the Employee's Elective Deferrals (and Nondeductible Employee Contributions) will be suspended for 12 months after the receipt of the hardship distribution; c. The distribution is not in excess of the amount of an immediate and heavy financial need (including amounts necessary to pay any Federal, state or local income taxes or penalties reasonably anticipated to result from the distribution); and d. All plans maintained by the Employer provide that the Employee may not make Elective Deferrals for the Employee's taxable year immediately following the taxable year of the hardship distribution in excess of the applicable limit under Section 402(g) of the Code for such taxable year less the amount of such Employee's Elective Deferrals for the taxable year of the hardship distribution. 11.504 DISTRIBUTION OF EXCESS ELECTIVE DEFERRALS A. General Rule - A Participant may assign to this Plan any Excess Elective Deferrals made during a taxable year of the Participant by notifying the Plan Administrator on or before the date specified in the Adoption Agreement of the amount of the Excess Elective Deferrals to be assigned to the Plan. A Participant is deemed to notify the Plan Administrator of any Excess Elective Deferrals that arise by taking into account only those Elective Deferrals made to this Plan and any other plans of the Employer. Notwithstanding any other provision of the Plan, Excess Elective Deferrals, plus any income and minus any loss allocable thereto, shall be distributed no later than April 15 to any Participant to whose Individual Account Excess Elective Deferrals were assigned for the preceding year and who claims Excess Elective Deferrals for such taxable year. 49 B. Determination of Income or Loss - Excess Elective Deferrals shall be adjusted for any income or loss up to the date of distribution. The income of loss allocable to Excess Elective Deferrals is the sum of: (1) income or loss allocable to the Participant's Elective Deferral account for the taxable year multiplied by a fraction, the numerator of which is such Participant's Elective Deferrals for the year and the denominator is the Participant's Individual Account balance attributable to Elective Deferrals without regard to any income or loss occurring during such taxable year; and (2) 10% of the amount determined under (1) multiplied by the number of whole calendar months between the end of the Participant's taxable year and the date of distribution, counting the month of distribution if distribution occurs after the 15th of such month. Notwithstanding the preceding sentence, the Plan Administrator may compute the income or loss allocable to Excess Elective Deferrals in the manner described in Section 4 (i.e., the usual manner used by the Plan for allocating income or loss to Participants' Individual Accounts), provided such method is used consistently for all Participants and for all corrective distributions under the Plan for the Plan Year. 11.505 DISTRIBUTION OF EXCESS CONTRIBUTIONS A. General Rule - Notwithstanding any other provision of this Plan, Excess Contributions, plus any income and minus any loss allocable thereto, shall be distributed no later than the last day of each Plan Year to Participants to whose Individual Accounts such Excess Contributions were allocated for the preceding Plan Year. If such excess amounts are distributed more than 2 1/2 months after the last day of the Plan Year in which such excess amounts arose, a 10% excise tax will be imposed on the Employer maintaining the Plan with respect to such amounts. Such distributions shall be made to Highly Compensated Employees on the basis of the respective portions of the Excess Contributions attributable to each of such Employees. Excess Contributions of Participants who are subject to the family member aggregation rules shall be allocated among the family members in proportion to the Elective Deferrals (and amounts treated as Elective Deferrals) of each family member that is combined to determine the combined ADP. Excess Contributions (including the amounts recharacterized) shall be treated as annual additions under the Plan. B. Determination of Income or Loss - Excess Contributions shall be adjusted for any income or loss up to the date of distribution. The income or loss allocable to Excess Contributions is the sum of: (1) income or loss allocable to Participant's Elective Deferral account (and, if applicable, the Qualified Nonelective Contribution account or the Qualified Matching Contributions account or both) for the Plan Year multiplied by a fraction, the numerator of which is such Participant's Excess Contributions for the year and the denominator is the Participant's Individual Account balance attributable to Elective Deferrals (and Qualified Nonelective Contributions or Qualified Matching Contributions, or both, if any of such contributions are included in the ADP test) without regard to any income or loss occurring during such Plan Year; and (2) 10% of the amount determined under (1) multiplied by the number of whole calendar months between the end of the Plan Year and the date of distribution, counting the month of distribution if distribution occurs after the 15th of such month. Notwithstanding the preceding sentence, the Plan Administrator may compute the income or loss allocable to Excess Contributions in the manner described in Section 4 (i.e., the usual manner used by the Plan for allocating income or loss to Participants' Individual Accounts), provided such method is used consistently for all Participants and for all corrective distributions under the Plan for the Plan Year. C. Accounting for Excess Contributions - Excess Contributions shall be distributed from the Participant's Elective Deferral account and Qualified Matching Contribution account (if applicable) in proportion to the Participant's Elective Deferrals and Qualified Matching Contributions (to the extent used in the ADP test) for the Plan Year. Excess Contributions shall be distributed from the Participant's Qualified Nonelective Contribution account only to the extent that such Excess Contributions exceed the balance in the Participant's Elective Deferral account and Qualified Matching Contribution account. 11.506 DISTRIBUTION OF EXCESS AGGREGATE CONTRIBUTIONS A. General Rule - Notwithstanding any other provision of this Plan, Excess Aggregate Contributions, plus any income and minus any loss allocable thereto, shall be forfeited, if forfeitable, or if not forfeitable, distributed no later thin the last day of each Plan Year to Participants to whose accounts such Excess Aggregate Contributions were allocated for the preceding Plan Year. Excess Aggregate Contributions of Participants who are subject to the family member aggregation rules shall be allocated among the family members in proportion to the Employee and Matching Contributions (or amounts treated as Matching Contributions) of each family member that is combined to determine the combined ACP. If such Excess Aggregate Contributions are distributed more than 2 1/2 months after the last day of the Plan Year in which such excess amounts arose, a 10% excise tax will be imposed on the Employer maintaining the Plan with respect to those amounts. Excess Aggregate Contributions shall be treated as annual additions under the Plan. B. Determination of Income or Loss - Excess Aggregate Contributions shall be adjusted for any income or loss up to the date of distribution. The income or loss allocable to Excess Aggregate Contributions is the sum of: (1) income or loss allocable to the Participant's Nondeductible Employee Contribution account, Matching Contribution account (if any, and if all amounts therein are not used in the ADP test) and, if applicable, Qualified Nonelective Contribution account and Elective Deferral account for the Plan Year multiplied by a fraction, the numerator of which is such Participant's Excess Aggregate Contributions for the year and the denominator is the Participant's Individual Account balance(s) attributable to Contribution Percentage Amounts without regard to any income or loss occurring during such Plan Year; and (2) 10% of the amount determined under (1) multiplied by the number of whole calendar months between the end of the Plan Year and the date of distribution, counting the month of distribution if distribution occurs after the 15th of such month. Notwithstanding the preceding sentence, the Plan Administrator may compute the income or loss allocable to Excess Aggregate Contributions in the manner described 50 in Section 4 (i.e., the usual manner used by the Plan for allocating income or loss to Participants' Individual Accounts), provided such method is used consistently for all Participants and for all corrective distributions under the Plan for the Plan Year. C. Forfeitures of Excess Aggregate Contributions - Forfeitures of Excess Aggregate Contributions may either be reallocated to the accounts of Contributing Participants who are not Highly Compensated Employees or applied to reduce Employer Contributions, as elected by the Employer in the Adoption Agreement. D. Accounting for Excess Aggregate Contributions - Excess Aggregate Contributions shall be forfeited, if forfeitable or distributed on a pro rata basis from the Participant's Nondeductible Employee Contribution account, Matching Contribution account, and Qualified Matching Contribution account (and, if applicable, the Participant's Qualified Nonelective Contribution account or Elective Deferral account, or both). 11.507 RECHARACTERIZATION A Participant may treat his or her Excess Contributions as an amount distributed to the Participant and then contributed by the Participant to the Plan. Recharacterized amounts will remain nonforfeitable and subject to the same distribution requirements as Elective Deferrals. Amounts may not be recharacterized by a Highly Compensated Employee to the extent that such amount in combination with other Nondeductible Employee Contributions made by that Employee would exceed any stated limit under the Plan on Nondeductible Employee Contributions. Recharacterization must occur no later than two and one-half months after the last day of the Plan Year in which such Excess Contributions arose and is deemed to occur no earlier than the date the last Highly Compensated Employee is informed in writing of the amount recharacterized and the consequences thereof. Recharacterized amounts will be taxable to the Participant for the Participant's tax year in which the Participant would have received them in cash. 11.508 DISTRIBUTION OF ELECTIVE DEFERRALS IF EXCESS ANNUAL ADDITIONS Notwithstanding any other provision of the Plan, a Participant's Elective Deferrals shall be distributed to him or her to the extent that the distribution will reduce an excess annual addition (as that term is described in Section 3.05 of the Plan). 11.600 VESTING 11.601 100% VESTING ON CERTAIN CONTRIBUTIONS The Participant's accrued benefit derived from Elective Deferrals, Qualified Nonelective Contributions, Nondeductible Employee Contributions, and Qualified Matching Contributions is nonforfeitable. Separate accounts for Elective Deferrals, Qualified Nonelective Contributions, Nondeductible Employee Contributions, Matching Contributions, and Qualified Matching Contributions will be maintained for each Participant. Each account will be credited with the applicable contributions and earnings thereon. 11.602 FORFEITURES AND VESTING OF MATCHING CONTRIBUTIONS Matching Contributions shall be Vested in accordance with the vesting schedule for Matching Contributions in the Adoption Agreement. In any event, Matching Contributions shall be fully Vested at Normal Retirement Age, upon the complete or partial termination of the profit sharing plan, or upon the complete discontinuance of Employer Contributions. Notwithstanding any other provisions of the Plan, Matching Contributions or Qualified Matching Contributions must be forfeited if the contributions to which they relate are Excess Elective Deferrals, Excess Contributions, Excess Aggregate Contributions or excess annual additions which are distributed pursuant to Section 11.508. Such Forfeitures shall be allocated in accordance with Section 3.01(C). When a Participant incurs a Termination of Employment, whether a Forfeiture arises with respect to Matching Contributions shall be determined in accordance with Section 6.01(D). 51