-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, R5dSF6iKsjUN24ynFq90i/gL93kHBwfoYYV398CMV4Acp2vJg3sZlsg5OHJuQHsl RAfflY0+NHNoYJ2alKl2Dw== 0000082811-98-000013.txt : 19980331 0000082811-98-000013.hdr.sgml : 19980331 ACCESSION NUMBER: 0000082811-98-000013 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 8 FILED AS OF DATE: 19980327 EFFECTIVENESS DATE: 19980327 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: REGAL BELOIT CORP CENTRAL INDEX KEY: 0000082811 STANDARD INDUSTRIAL CLASSIFICATION: GENERAL INDUSTRIAL MACHINERY & EQUIPMENT [3560] IRS NUMBER: 390875718 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-8 SEC ACT: SEC FILE NUMBER: 333-48815 FILM NUMBER: 98577149 BUSINESS ADDRESS: STREET 1: 200 STATE ST CITY: BELOIT STATE: WI ZIP: 53511 BUSINESS PHONE: 6083648800 MAIL ADDRESS: STREET 1: 200 STATE STREET CITY: BELOIT STATE: WI ZIP: 53511-6254 FORMER COMPANY: FORMER CONFORMED NAME: BELOIT TOOL CORP DATE OF NAME CHANGE: 19730522 FORMER COMPANY: FORMER CONFORMED NAME: RECORD A PUNCH CORP DATE OF NAME CHANGE: 19690320 S-8 1 Registration No. 33 - _____________ As filed with the Securities and Exchange Commission on March 27, 1998 _____________________________________________________________________________ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM S - 8 REGISTRATION STATEMENT Under The Securities Act of 1933 ____________________ REGAL-BELOIT CORPORATION (Exact name of registrant as specified in its charter) Wisconsin 39-0875718 (State of Incorporation) (I.R.S. Employer Identification Number) 200 State Street Beloit, WI 53511 (Address of principal executive offices, including Zip Code) ____________________ MARATHON ELECTRIC SALARIED EMPLOYEES' 401(k) SAVINGS PLAN (Full Title of the Plan) ____________________ James L. Packard Chairman, President and CEO Regal-Beloit Corporation 200 State Street Beloit WI 53511 (Name and address of agent for service) (608) 364-8800 (Telephone Number, including area code, of agent for service) ____________________ CALCULATION OF REGISTRATION FEE _____________________________________________________________________________ Proposed Title of securities Amount to maximum aggregate Amount of to be registered be registered offering price (1) registration fee _____________________________________________________________________________ Interests in Marathon (2) $10,000,000 $2,950.00 Electric Salaried Employees' 401(k) Savings Plan ___________________________________________________________________________ (1) Computed pursuant to Rule 457(h), only with respect to the estimated aggregate employee contributions through December 31, 2007. (2) An indeterminate number of shares as may be purchased from time to time at market prices for allocation to the accounts of employees participating in the Plan. Based on a market price of $ 31.50 on March 23, 1998, and based on estimated aggregate employee contributions allocated to the Company Stock Fund of $10,000,000 through December 31, 2007, a maximum of 317,460 shares would need to be registered at this time. PART I INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS The document or documents containing the information specified in Part I are not required to be filed with the Securities and Exchange Commission (the "Commission") as part of this Form S-8 Registration Statement. PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENTS Item 3. Incorporation of Documents by Reference --------------------------------------- The following documents filed with the Securities and Exchange Commission (the "Commission") are incorporated herein by reference: 1. The Company's annual report filed on Form 10-K for the year ended December 31, 1997. 2. The Company's Current Reports on form 8-K filed as Exhibits 2.1 and 2.2 dated April 10, 1997 and 2.3 dated August 8, 1997. 3. The Company's proxy statement filed on Schedule 14A dated March 13, 1998. 4. The description of the Company's Common Stock as set forth in Article 3 of the Articles of Amendment to the Articles of Incorporation filed as Exhibit B to the 1994 Proxy Statement. 5. Bylaws of the Registrant filed as Exhibit C to the 1994 Proxy Statement. 6. Agreement and Plan of Merger by and between the Registrant and Regal-Beloit Corporation, dated as of April 18, 1994 filed as Exhibit A to Annual Meeting Proxy Statement of Regal-Beloit Corporation dated March 11, 1994. 7. Agreement and Plan of Merger among the Registrant, Regal-Beloit Acquisition Corp., and Marathon Electric Manufacturing Corporation dated as of February 26, 1997, as amended and restated March 17, 1997 and March 26, 1997 filed as Exhibit 2.1 on Regal-Beloit Corporation's Form 8-K dated April 10,1997. 8. Credit Agreement among Registrant, Bank of America Illinois, M&I Marshall & Ilsley Bank and the Other Financial Institutions Party hereto dated as of March 26, 1997; Schedule 2.01 Guaranty Agreements dated March 26, 1997; and Promissory Notes dated March 26, 1997 filed as Exhibit 2.2 on Regal-Beloit Corporation's Form 8-K dated April 10, 1997. 9. Amended and Restated Credit Agreement Dated as of May 30, 1997 among Registrant, Bank of America Illinois, as Documentation Agent, M&I Marshall & Ilsley Bank, as Administrative Agent and Letter of Credit Issuing Bank, Firstar Bank Milwaukee, N.A., Harris Trust and Savings Bank and The Northern Trust Company, as Co-Agents, and The Other Financial Institutions Party Hereto Arranged by Bancamerica Securities, Inc. As Syndication Agent; Disclosure Schedules and Attached Exhibits; and Promissory Note filed as Exhibit 2.3 to Regal-Beloit Corporation's Quarterly Report on Form 10-Q dated August 8, 1997. 10. The Company's Registration Statement on Form S-8 dated October 28, 1988, Registration No. 33-25233. All documents subsequently filed by the Company and the Plan pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as amended, (the "Exchange Act") prior to the filing of a post-effective amendment which indicates that all securities offered hereby have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference herein and to be a part hereof from the date of the filing of such documents. Item 4. Description of Securities ------------------------- The securities being offered pursuant to the Registration consist of participation interests in the Plan which consist of the Company's common stock at $.01 par value and a cash component. These securities are purchased by employees through payroll deferral and have been previously registered by the Company for purchase on the open market. Item 5. Interests of Named Experts and Counsel -------------------------------------- Not applicable. Item 6. Indemnification of Directors and Officers ----------------------------------------- Under provisions of Sections 180.0850 to 180.0859 of the Wisconsin Business Corporation Law and Article VIII of the Bylaws of the Company, directors, officers and persons controlling the Company are indemnified by the Company under certain circumstances for certain liabilities and expenses. In addition, officers and directors of the Company are insured, under a policy of insurance paid for by the Company, under certain circumstances for certain liabilities and expenses. Item 7. Exemption from Registration Claimed ----------------------------------- Not applicable Item 8. Exhibits -------- The Exhibit Index immediately preceding the exhibits is incorporated herein by reference. Item 9. Undertakings ------------ The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by section 10(a)(3) of the Securities Act of 1933, as amended (the Securities Act ); (ii) To reflect in the prospectus any facts or event arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement. (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; Provided however, that paragraphs (a)(1)(i) and (a)(1)(ii) of this section do not apply if the registration statement is on Form S-3, Form S-8 or From 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 Exchange Act that are incorporated by reference in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act, 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. (4) If the registrant is a foreign private issuer, to file a post- effective amendment to the registration statement to include any financial statements required by 3-19 of Regulation S-X at the start of any delayed offering or throughout a continuous offering. Financial statements and information otherwise required by Section 10(a)(3) of the Securities Act need not be furnished, provided that the registrant includes in the prospectus, by means of a post- effective amendment, financial statements required pursuant to this paragraph (a)(4) and other information necessary to ensure that all other information in the prospectus is at least as current as the date of those financial statements. Notwithstanding the foregoing, with respect to registration statement on Form F-3, a post-effective amendment need not be filed to include financial statements and information required by Section 10(a)(3) of the Securities Act or Rule 3-19 of Regulation S-X if such financial statements and information are contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to section 13 or section 15(d) of the Exchange Act that are incorporated by reference in the Form F-3. (b) That, for the purposes of determining any liability under the Securities Act, each filing of the registrant's annual report pursuant to section 13(a) or section 15(d) of the Exchange Act (and where applicable, each filing of an employee benefit plan's annual report pursuant to section 15(d) of the Exchange Act) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (h) Insofar as indemnification for liabilities arising under the Securities Act 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 Securities 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 Securities Act and will be governed by the final adjudication of such issue.
EXHIBIT INDEX Exhibit No. Description Page No. - ---------- ----------- ------- 4.1 Marathon Electric Salaried Employees' 401(k) Savings Plan effective January 1, 1982, as amended through February 1,1998. 4.2 Marathon Electric Master Trust Agreement effective January 1, 1992, as amended April 18, 1995. 4.3 Regal-Beloit Corporation Master Trust Agreement, effective November 1, 1997. 23.1 Consent of Wipfli Ullrich Bertelson LLP. 24.1 Powers of Attorney (Signature page of this Registration) 24.2 Signature of Marshall & Ilsley Trust Company (Trustee) 99 Internal Revenue Service determination letter of tax qualified status
EX-4.1 2 EXHIBIT 4.1 MARATHON ELECTRIC SALARIED EMPLOYEES 401(k) SAVINGS PLAN (As Amended Through February 1, 1998) MARATHON ELECTRIC SALARIED 401(k) EMPLOYEES' SAVINGS PLAN Table of Contents ----------------- ARTICLE I. DEFINED TERMS Section 1.01. Definitions ARTICLE II. ELIGIBILITY Section 2.01. Eligibility Section 2.02. Participation Section 2.03. Inactive Status Section 2.04. Return to Active Status ARTICLE III. CONTRIBUTIONS Section 3.01. Participant Contributions Section 3.02. Change in Amount of Participant Contributions Section 3.03. Suspension of Contributions Section 3.04. Employer's Basic Contribution Section 3.05. Additional Employer Contributions Section 3.06. Withdrawal of Participant Contribution Account and Deposits Account Section 3.07. Withdrawal of Employer Contribution Account Section 3.08. Contributions to Participant IRA Account Section 3.09. Non-Reversion of Employer Contributions Section 3.10. Rollover Contributions Section 3.11. Actual Contribution Percentage Test ARTICLE IV. ALLOCATIONS TO PARTICIPANT'S ACCOUNTS Section 4.01. Individual Accounts Section 4.02. Allocation of Income Section 4.03. Allocation of Employer Contributions Section 4.04. Allocation of Participant Contributions and Deposits Section 4.05. Allocation and Disposition of Forfeitures Section 4.06. Maximum Additions Section 4.07. Investment Election ARTICLE V. BENEFITS Section 5.01. Retirement Benefits Section 5.02. Death Benefits Section 5.03. Disability Benefits Section 5.04. Severance Benefits Section 5.05. Payment of Benefits Section 5.06. Distribution of Participant IRA Account Section 5.07. Payments to Minors or Incompetents Section 5.08. Nonalienation of Benefits Section 5.09. Loans to Participants Section 5.10. Direct Rollovers ARTICLE VI. ADMINISTRATION Section 6.01. Allocation of Responsibility Among Fiduciaries for Plan and Trust Administration Section 6.02. Administrative Committee Section 6.03. Plan Administrator Section 6.04. Authority of Plan Administrator Section 6.05. Use of Professional Services Section 6.06. Fees and Expenses Section 6.07. Claims Procedure Section 6.08. Trustee s Responsibilities Section 6.09. Fiduciary Insurance and Indemnification Section 6.10. Agent for Service of Process Section 6.11. Allocation of Fiduciary Responsibility Section 6.12. Selection of Investment Managers Section 6.13. Liability for Breach of Co-Fiduciary Section 6.14. Communications ARTICLE VII. RIGHTS RESERVED BY EMPLOYER Section 7.01. Employer's Interest in Plan Section 7.02. Amendment Section 7.03. Termination ARTICLE VIII. SUCCESSOR EMPLOYER AND MERGER OR CONSOLIDATION OF PLANS Section 8.01. Successor Employer Section 8.02. Merger or Transfer of Plan Assets Section 8.03. Adoption of Plan by Affiliate ARTICLE IX. MISCELLANEOUS Section 9.01. Nonguarantee of Employment Section 9.02. Action by Company Section 9.03. Plan Binding on Successors Section 9.04. Construction Section 9.05. Titles Section 9.06. Form of Written Notice Section 9.07. Top-Heavy Restrictions Section 9.08. Prior Plan MARATHON ELECTRIC SALARIED EMPLOYEES' 401(k) SAVINGS PLAN Marathon Electric Manufacturing Corporation, a Wisconsin corporation, originally adopted the Marathon Electric Salaried Employees' Savings Plan ("Plan") as of January 1, 1982. The Plan was restated effective January 1, 1984 in order to reflect all amendments made to it since its adoption and to bring it into compliance with the Tax Equity and Fiscal Responsibility Act of 1982, the Tax Reform Act of 1984, the Retirement Equity Act of 1984 and various other regulatory changes. This restatement effective January 1, 1987 is designed to add a "cash or deferred" arrangement pursuant to Section 401(k) of the Internal Revenue Code and to comply with the Tax Reform Act of 1986 and changes the name of the Plan to Marathon Electric Salaried Employees' 401(k) Savings Plan. ARTICLE I. DEFINED TERMS ------------------------- Section 1.01. Definitions. As used in the Plan, the following --------------------------- terms shall have the meanings hereinafter set forth: (a) "Affiliate" shall mean any Employer and each other corporation, trade or business which is a member of the controlled group to which the Company belongs, as determined by Section 414(b) and (c) of the Code. (b) "Beneficiary" shall mean a person or persons (natural or otherwise) or organization or organizations designated by a Member pursuant to Section 5.02 hereof to receive any death benefit which shall be payable under the Plan. (c) "Break in Service" shall mean a twelve consecutive month period, during which an Employee is credited with no Hours of Service, which begins on the Employee's Severance of Employment Date. (d) "Certified Leave of Absence" is any absence of any Employee from active service of an Affiliate which is not treated as a Termination of Employment. In granting a Certified Leave of Absence, all Employees in similar circumstances will be treated alike. Any Employee in the military service of the United States, whether as a volunteer or by induction, shall be deemed to have received a Certified Leave of Absence for such period as may be required by applicable state or federal law regarding veterans' reemployment rights. (e) "Code" shall mean the Internal Revenue Code of 1986, as amended, and reference to a particular section shall also include any successor section or sections. (f) "Committee" shall mean the Marathon Electric Pension and Savings Plans Committee acting and appointed in accordance with the terms and conditions of Article VI. (g) "Company" shall mean Marathon Electric Manufacturing Corporation, a Wisconsin corporation. (h) "Compensation" shall mean a Member's base salary, commissions earned on sales, overtime premiums, shift differentials, any Deposits hereunder, any salary or wage reduction contributions to a welfare plan sponsored by the Company intended to qualify under Section 125 of the Internal Revenue Code, but shall exclude bonuses and any other extraordinary remuneration. Effective January 1, 1989, the maximum annual compensation utilized herein for any Employee (to include in addition the Employee's spouse and lineal descendants who are under age 19 as of the close the Plan Year in the case of Employees who are 5% owners or in the group of the ten Employees paid the highest compensation for the year) shall be $200,000 ($150,000 effective January 1, 1994) (or such higher amount permitted pursuant to applicable regulations). (i) "Deferred Retirement Date" of a Member shall mean the date on which a Member retires if such Member continued as an Employee after the date on which he would otherwise have attained, his Normal Retirement Date. (j) "Deposits" shall mean amounts designated under the Plan by Participants pursuant to Article III which are contributed by the Employers in lieu of payment of an equal amount to the Participant as compensation. "Matched Deposits" are subject to certain matching by Employer contributions and "Unmatched Deposits" are not. (k) "Deposits Account" (hereinafter sometimes referred to collectively with the Member's Employer Contribution, Participant Contribution and IRA Accounts as "Accounts") shall mean the account maintained for a Member to record pre-tax contributions made after March 31, 1987 and adjustments thereto. (l) "Early Retirement Date" shall mean the date prior to the Normal Retirement Date on which a Member who has attained age fifty-five and completed one hundred twenty months of Vesting Service, incurs a Termination of Employment. (m) "Effective Date" shall mean January 1, 1982. (n) "Employee" shall mean a person receiving remuneration for personal services rendered to an Employer who satisfies the common law definition of an "employee", and: 1. who is compensated in whole or in part on a salaried basis, including both exempt and non-exempt employees; and 2. who is a resident or citizen of the United States of America; and 3. who is not in a collective bargaining unit with which an Employer has a bargaining agreement unless such agreement specifically provides that persons in such unit shall be covered by the Plan; and 4. who is not an active participant or eligible to become an active participant upon completion of age and/or service requirements under any qualified plan to which an Employer is making contributions on his behalf, other than the Marathon Electric Salaried Employees' Pension Plan, the Marathon Electric Lebanon Hourly Employees' Pension Plan and the Marathon Electric West Plains Hourly Pension Plan. (o) "Employer" shall mean the Company, Marathon Special Products Corporation, Lima Electric Co., Inc. and any other Affiliate which adopts the Plan in accordance with Section 8.03. (p) "Employer Contribution Account" (hereinafter sometimes referred to collectively with a Members Participant Contribution, Deposits, and IRA Accounts as "Accounts") shall be the account maintained for a Member to record his share of the Company's contributions pursuant to Sections 3.04 and 3.05, forfeitures and adjustments thereto. (q) "ERISA" shall mean Public Law No. 93-406, the Employee Retirement Income Security Act of 1974, as may be amended from time to time. (r) "Fiscal Year" of the Plan and the Employers shall mean the twelve month period beginning on January 1 and ending on December 31. (s) "Hour of Service" shall mean each hour for which an Employee is directly or indirectly paid or entitled to payment by an Affiliate (1) for the performance of duties during the applicable computation period, (2) on account of a period of time during which no duties are performed, or (3) as back pay, irrespective of mitigation of damages; and, for purposes of determining a Break in Service, shall include those normally scheduled working hours during which an Employee is on a Certified Leave of Absence. Hours of Service credited to an Employee for periods of time during which the Employee is directly or indirectly paid but performs no duties shall be credited in accordance with Department of Labor Regulations 29 C.F.R. 2530.200-2(b) and (c). (t) "Inactive Participant" shall mean a Member described in Section 2.03. (u) "Investment Fund" shall mean the investment funds described and provided for in Section 4.07. (v) "Member" shall mean a Participant or an Inactive Participant who has one or more Accounts which has not yet been fully distributed. (w) "Normal Retirement Date" shall mean a Member's sixty-fifth (65th) birthday. (x) "Participant" shall mean an Employee who is eligible to participate in the Plan and who is making Deposits or contributions to his Participant Contribution Account in accordance with Section 3.01. (y) "Participant Contribution Account" (hereinafter sometimes referred to collectively with the Member's Employer Contribution, Deposits, and Participant IRA Accounts as "Accounts") shall mean the account maintained for a Member to record after-tax contributions made prior to April 1, 1987 and adjustments thereto. (z) "Participant IRA Account" (hereinafter sometimes referred to collectively with the Member's Employer Contribution, Deposits, and Participant Contribution Accounts as "Accounts") shall mean the account maintained for a Member to record voluntary contributions made by the Member for tax years prior to January l, 1987 pursuant to Section 3.08 and adjustments thereto. (aa) "Pay Period" shall mean that portion of the calendar year used by the Employers for the processing and payment of Compensation, but in no event shall any Pay Period exceed thirty-one days. (bb) "Permanently Disabled" shall mean any physical or mental condition which renders a Member totally and permanently disabled, as evidenced by eligibility for and receipt of disability benefits under the federal Social Security Act. (cc) "Plan" shall mean the Marathon Electric Salaried Employees' 401(k) Savings Plan as restated herein which was formerly known as the Marathon Electric Salaried Employees' Savings Plan. (dd) "Plan Administrator" shall mean the Employee selected by the Committee pursuant to Section 6.03. (ee) "Plan Year" shall mean the twelve month period beginning on January 1 and ending on December 31. (ff) "Severance of Employment Date" shall mean the first to occur of (1) the date of the Member's Termination of Employment or (2) the date immediately following the last day of the first twelve month period during which the Member has not been credited with at least one Hour of Service. (gg) "Termination of Employment" shall mean for any Employee the first to occur of the following: (i) his last day of active employment if he becomes a member of the armed forces and fails to return within ninety (90) days of his discharge or separation from active duty, or if he re-enlists in the armed forces, (ii) his last day of active employment if he does not return to work upon the expiration of a leave of absence, (iii) the date he has been continuously laid-off commencing on or after January 1, 1982 for over twelve months, or (iv) the date he resigns, retires, is discharged, or dies. (hh) "Trust" shall mean the Marathon Electric Master Pension Trust adopted effective January 1, 1982 and as may be amended and in effect from time to time, between the Company and the Trustee. (ii) "Trustee" shall mean M&I Marshall & Ilsley Bank or any successor or successors thereto appointed by the Committee to hold and administer the Trust. (jj) "Valuation Date" shall mean the last day of each calendar month, or such more frequent dates as the Plan Administrator may determine is administratively appropriate. (kk) "Vested" shall mean that a Member has a nonforfeitable right to a benefit based upon the balance of his Employer Contribution Account, by meeting one of the following requirements: (1) The member has completed 36 months of participation in the Plan. Subject to the provisions of (A), (B) and (C), below, each Member shall be credited with one month of participation for each whole or partial calendar month during the period which begins on the date on which the Member first performed an Hour of Service after having become a Participant pursuant to Section 2.02 and ends on the Member's Severance of Employment Date. (A) If a Member who has incurred a Severance of Employment Date once again becomes an Employee and performs at least one Hour of Service before the first anniversary of such Date, the Member shall, in addition to the months of participation credited under (1) above, be credited with one month of participation for each whole or partial calendar month which elapsed between the date of such Hour of Service and his Severance of Employment Date. (B) An Employee who again becomes a Member following a Break in Service and who had accrued thirty-six (36) months of participation prior to his Break in Service shall be credited with such months of participation upon becoming a Participant. (C) An Employee who again becomes a Member following a Break in Service and who had not accrued thirty-six (36) months of participation prior to his Break in Service shall be credited with his pre-break months of participation upon becoming a Participant if either (A) the period of Break in Service is less than the period of participation accrued prior to the first day of Break in Service or (B) the Break in Service did not extend for at least six (6) consecutive years; otherwise, his vesting shall be determined only by his post-break participation. (2) The Member has completed 60 months of service. For purposes of this paragraph (2), the following rules shall apply: (A) A "month of service" shall mean each whole or partial calendar month during the period which begins on the date on which the Member first performed an Hour of Service and ends on the Member's Severance of Employment Date; and (B) The rules outlined in (1)(A) through (C) above shall apply but "sixty (60) months of Service" replaces thirty-six (36) months of "participation" and a rehired Member is credited with Service pursuant to such provisions, even if he is not an Employee or a Participant following his reemployment. ARTICLE II. ELIGIBILITY ----------------------- Section 2.01. Eligibility. Each Employee shall be eligible --------------------------- to become a Participant as of the first day of the first full Pay Period which begins on the date coincident with or immediately subsequent to the later of (1) the Employee s twenty-first (21st) birthday or (2) the date that is twelve (12) calendar months subsequent to his first day of employment. Effective with respect to Employees whose employment with the Employer or an Affiliate first commences after December 31, 1994, the Employee will be eligible to participate only if he has completed 1,000 or more Hours of Service during the twelve month period commencing on his first day of employment and, if he does not complete 1,000 hours of service or more during that period the employee shall be eligible to become a Participant as of the first day of the first full Pay Period which begins on or after the January 1 following a calendar year in which he does complete 1,000 or more Hours of Service. Section 2.02. Participation. Subject to the provisions of ----------------------------- Section 2.04, 3.06 and 3.07, each eligible Employee shall become a Participant as of the first day of the first Pay Period in which he has (1) satisfied the eligibility requirements of Section 2.01 and (2) submitted a request to the Plan Administrator an application and payroll deduction authorization form specifying a contribution level as provided for in Section 3.01; provided, however, that an Employee who does not elect to become a Participant prior to the first Pay Period in which he was eligible shall become a Participant as of the first Pay Period beginning on or after the first of the month next following the submission of applicable requests under (2) above. Section 2.03. Inactive Status. ------------------------------- A Participant shall become an Inactive Participant upon the first to occur of the following: (a) Employment by an Affiliate in a classification other than as described in Section 1.01(m); (b) A Termination of Employment; (c) The effective date of any election filed under Section 3.03; (d) The effective date of any election filed under Section 3.06; or (e) The effective date of any election filed under Section 3.07. Section 2.04. Return to Active Status. (a) An Inactive -------------------------------------- Participant described in Section 2.03(a) or (b) who is reemployed as an Employee shall become a Participant upon again satisfying the requirements of Section 2.02. (b) An Inactive Participant described in Section 2.03(c) may once again become a Participant pursuant to Section 2.02 upon the expiration of the period described in Section 3.03(c). (c) An Inactive Participant described in Section 2.03(d) may once again become a Participant pursuant to Section 2.02 upon the expiration of the period described in Section 3.06(e). (d) An Inactive Participant described in Section 2.03(e) may once again become a Participant pursuant to Section 2.02 upon the expiration of the period described in Section 3.07(f). ARTICLE III. CONTRIBUTIONS --------------------------- Section 3.01. Participant Contributions. (a) Matched ----------------------------------------- Contributions. Each Pay Period, each Participant shall deposit in his Participant Contribution Account by means of payroll deduction an amount equal to zero, one, two, three, four or five percent (0%, 1%, 2%, 3%, 4% or 5%) of his Compensation for such Pay Period, as determined by his payroll deduction authorization submitted to the Plan Administrator. Such amounts will be subject to matching by Employer contributions and forfeitures under Sections 4.03 and 4.05 hereof. (b) Unmatched Contributions. Each Pay Period, each Participant ----------------------- may deposit in his Participant Contribution Account by means of payroll deduction an amount equal to a whole percentage of his Compensation for each such Pay Period as determined by his payroll deduction authorization submitted to the Plan Administrator, which percentage is not less than six percent (6%) nor more than fifteen percent (15%). Such amounts will not be subject to matching by Employer Contributions or forfeitures. (c) Contributions pursuant to subsections (a) and (b) above shall be deducted from the Participant's remuneration during the Pay Period by the Employer and shall be paid over to the Trustee within an administratively reasonable period following the Pay Period, but not later than the fifteenth day of the month following the end of the Pay Period. (d) All such deposits and any adjustments thereto shall be fully vested and nonforfeitable at all times and shall be distributed to the Participant in accordance with Sections 3.06 or 5.05. Section 3.02. Change in Amount of Participant Contributions. ------------------------------------------------------------- (a) Upon notice to the Plan Administrator no later than the 20th day of any month, each Participant may change the amount of his Deposits effective as of the first day of the first Pay Period which begins on or after the first day of the following month. (b) In order to guarantee the favorable tax treatment of Deposits hereunder pursuant to Section 401(k) of the Code or to ensure compliance with Section 415 of the Code, the Plan Administrator in its discretion may prospectively decrease the rate of Deposits of any Participant at any time or, to the extent permitted by the Code and applicable regulations, direct the Trustee to return Deposits to any Participant. (c) Effective for any Plan Year after December 31, 1986, no Participant shall contribute Deposits in excess of $7,000 (or such higher amount permitted by regulations to reflect cost of living increases) in any Plan Year, and the actual deferral percentage for highly compensated employees as defined in Code Section 414(q) shall not exceed the actual deferral percentage for non-highly compensated employees by more than the greater of: (i) the actual deferral percentage of the non-highly compensated employees multiplied by l.25, or (ii) the actual deferral percentage of the non-highly compensated employees plus two percentage points, subject to a maximum of the actual deferral percentage of the non-highly compensated employees multiplied by 2.0. Section 3.03. Suspension of Contributions. Each Participant ------------------------------------------- shall be permitted to revoke any Deposit authorization pursuant to Section 2.02 upon written notice to the Plan Administrator; provided, however, that: (a) Not more than one such revocation shall be effective in any Plan Year; (b) The Employee shall be deemed ineligible to become a Participant for a period which begins on the effective date of such revocation and ends on the first day of the first Pay Period which begins not less than six (6) months from the effective date of such revocation. Section 3.04. Employer's Basic Contribution. (a) Each --------------------------------------------- Employer shall make a basic contribution to the Plan of an amount which will be equal to fifty cents ($.50) for each one dollar ($1.00) of matched contributions pursuant to Section 3.01(a) contributed during the Plan Year by its Participants who qualify to receive an allocation of such Employer's contributions pursuant to Section 4.03(a). (b) The Employers' basic contribution for each Pay Period shall be paid to the Trustee for deposit in the Trust on or before the fifteenth day of the month following the month in which each such Pay Period ends. Section 3.05. Additional Employer Contributions. (a) As of ------------------------------------------------- the close of each Plan Year, each Employer shall contribute such amount as will be equal to a percentage of the total of matched contributions made during the Plan Year pursuant to Section 3.01(a) by its Participants who qualify to receive an allocation of such Employer's contributions pursuant to Section 4.03(b), which percentage is set forth opposite the Pre-Tax Profits as a percentage of the Net Worth at the beginning of the Fiscal Year in the table below: Pre-Tax Profits Percentage of Participant as Percentage Contributions to be of Net Worth Contributed by the Employers --------------- ---------------------------- 0 - 15.99% 0% 16 - 16.99% 5% 17 - 18.99% 10% 19 - 20.99% 15% 21 - 22.99% 20% 23 - 23.99% 25% 24 - 24.99% 30% 25 - 25.99% 35% 26 - 26.99% 40% 27 - 27.99% 50% 28 - 28.99% 60% 29 - 29.99% 70% 30 - 30.99% 80% 31 - 31.99% 90% 32 - and above 100% (b) The Employers' additional contributions for each Plan Year shall be paid to the Trustee for deposit in the Trust not later than the time prescribed by law, including any extensions thereof, for filing the Company's federal income tax return for such Plan Year. (c) For purposes of this Section, "Pre-Tax Profits" shall mean the consolidated earnings before provision for income taxes in any Fiscal Year determined upon the basis of the Company's books of account; provided, however, that life insurance proceeds in excess of book value of the respective policies and all other extraordinary credits or changes to income not arising from usual business operations shall be disregarded. The Company shall determine "Pre-Tax Profits," including extraordinary items to be disregarded, regardless of how presented in the consolidated statement of earnings, for each Fiscal Year and such determination shall be final and conclusive for all purposes hereunder. (d) For purposes of this Section, "Net Worth" shall mean total shareholders' equity on the Affiliates' consolidated balance sheet, including common shares, additional paid in capital, retained earnings and treasury shares as determined by the Company in accordance with generally accepted accounting principles. Section 3.06. Withdrawal of Participant Contribution Account -------------------------------------------------------------- and Deposits Account. Subject to subsection (f) below, a Member may - -------------------- withdraw all or a portion of his Participant Contribution Account and Deposits Account in accordance with the following: (a) The Member must file a written election with the Plan Administrator specifying the amount to be withdrawn. (b) The effective date of each withdrawal election shall be within an administratively reasonable processing period following receipt of the election by the Plan Administrator. (c) Distribution of withdrawn amounts shall be made by the Trustee as soon as administratively feasible, but generally no later than forty-five (45) days subsequent to the effective date of the election hereunder. If less than all of a Participant Contribution Account and/or Deposits Account is to be withdrawn, the Trustee shall, to the extent possible, make all distributions on a pro rata basis from the Investment Funds in which such Accounts are then invested. All such distributions shall be made first from the Member's own contributions, then from the income thereon then from the Member's Deposits, and finally from the income thereon. (d) No more than one withdrawal election shall be effective in any Plan Year with respect to the Member's Participant Contributions Account and no more than one withdrawal election shall be effective in any Plan Year with respect to the Member's Deposits Account. (e) A Participant shall become an Inactive Participant as of the close of business on the last day of the Pay Period coincident with or immediately preceding the effective date of the withdrawal election and shall be ineligible to resume Participant status for a period of six (6) months from such date. Effective for withdrawals on or after January 1, 1988, this six (6) month suspension rule shall be deleted. (f) No withdrawal prior to Termination of Employment shall be permitted from a Participant's Deposits Account except for a Participant who is either over age fifty-nine and one-half (59-1/2) or makes a showing of financial hardship, subject to such rules as the Committee shall establish. For purposes of this Section, a withdrawal shall be deemed to be on account of a financial hardship if the distribution is for: (i) unreimbursed medical expenses described in Code Section 213(d) previously incurred by the Member, the Member's spouse or any dependents of the Member (as defined in Code Section 152) or necessary for such individuals to obtain medical care described in Code Section 213(d); (ii) costs directly related to the purchase (excluding mortgage payments) of a principal residence for the Member; (iii) payment of tuition and related educational fees for the next twelve (12) months or quarter of post- secondary education for the Member or the Member's spouse or dependents; or (iv) payments necessary to prevent the eviction of the Member from his principal residence or foreclosure on the mortgage of the Member's principal residence. The hardship withdrawal (i) shall be limited to the amount of the financial hardship, including any amounts necessary to pay any income taxes or penalties reasonably anticipated to result from the withdrawal and (ii) shall be made only after the Member takes all permitted loans and distributions hereunder and pursuant to any other plan maintained by the Employers. A hardship withdrawal may not include earnings credited after December 31, 1988 to a Member's Deposits. Any Member who makes a withdrawal under this Section shall have his Deposits and any other elective contributions or employee contributions under this Plan or any other plan of deferred compensation maintained by the Employer (both qualified and nonqualified) automatically suspended for a period of twelve (12) months following such withdrawal. The amount that such a Member may contribute as Deposits for the calendar year following such withdrawal shall not exceed the amount described in Section 402(g) for such year, reduced by the amount of such Member's actual Deposits for the calendar year in which the withdrawal occurred. Section 3.07. Withdrawal of Employer Contribution Account. ----------------------------------------------------------- A Member may withdraw all or a portion of his Employer Contribution Account in accordance with the following: (a) The Member must file a written election with the Plan Administrator specifying the amount to be withdrawn. (b) The effective date of each withdrawal election shall be within an administratively reasonable processing period following receipt of the election by the Plan Administrator. (c) No amounts representing Employer contributions and adjustments thereto which have been held by the Trust for a period of less than thirty-six (36) months can be withdrawn by the Member; provided, however, that this restriction shall not apply in the case of a hardship as defined in Section 3.06(f), and a withdrawal under this Section will be required prior to a hardship withdrawal from the Deposits Account. (d) Distribution of withdrawn amounts shall be made by the Trustee as soon as administratively feasible, but generally no later than forty-five (45) days subsequent to the effective date of the election hereunder. If less than all of the Employer Contribution Account is to be withdrawn, the Trustee shall, to the extent possible, make all distributions on a pro rata basis from the Investment Funds in which such Account is then invested. (e) Not more than one withdrawal election shall be effective in any Plan Year. (f) A Participant shall become an Inactive Participant as of the close of business on the last day of the Pay Period coincident with or immediately preceding the effective date of the withdrawal election and shall be ineligible to resume Participant status for a period of twelve (12) months from such date. Section 3.08. Contributions to Participant IRA Account. -------------------------------------------------------- (a) Prior to January 1, 1987, an Employee who was eligible to become a Member could elect to make voluntary contributions to his Participant IRA Account (as of any date on which he could then become a Participant pursuant to Sections 2.01 and 2.02). No such contributions are permitted after December 31, 1986. (b) An Employee may withdraw all or a portion of the balance in his IRA Account in accordance with the following: (1) The Employee must file a written election with the Plan Administrator specifying the amount to be withdrawn. (2) The effective date of each withdrawal election shall be within an administratively reasonable processing period following receipt of the election by the Plan Administrator. (3) Distribution of withdrawn amounts shall be made by the Trustee as soon as administratively feasible, but in no event later than thirty (30) days subsequent to the effective date of the election hereunder. If less than all of a Participant's IRA Account is to be withdrawn, the Trustee shall, to the extent possible, make all distributions on a pro rata basis from the Investment Funds in which such Account is then invested. (4) Not more than one withdrawal election shall be made in any Plan Year. (c) Upon Termination of Employment, the balance credited to an Employee's Participant IRA Account shall be distributed in accordance with the provisions of Section 5.06. Section 3.09. Non-Reversion of Employer Contributions. ------------------------------------------------------- (a) Subject to the provisions of paragraphs (b) and (c) below, contributions to the Plan shall not inure to the benefit of the Employers and shall be held for the exclusive benefit of the Members and Beneficiaries hereunder. (b) Adoption of the Plan and Trust are expressly conditioned on qualification as a tax qualified plan and trust under Sections 401(a) and 501(a) of the Code, respectively. In the event that the Plan and Trust shall fail to qualify as a tax qualified Plan and Trust, all contributions made by the Employers and Members to such date shall be returned to the Employers and the Members, respectively, by the Trustee. Upon the return of all such contributions, the Plan shall terminate and the Employers and any and all other fiduciaries shall be discharged from all obligations under this instrument. (c) Contributions made by an Employer by a mistake of fact shall revert to the Employer if such return is made within one year after the payment of such mistaken contribution. To the extent that a contribution is disallowed as a deduction to an Employer, such contribution shall revert to the Employer if such return is made within one year of the disallowance of the deduction. Section 3.10. Rollover Contributions. (a) Each Member shall -------------------------------------- be entitled to transfer to his Participant Contribution Account his voluntary contribution account, if any, under the Marathon Electric Profit-Sharing Retirement Plan; provided, however, that an election to make such transfer must be made on or before January 31, 1982 and, provided further, that such contribution shall not be deemed a Participant contribution for purposes of allocations of the Employer's basic or additional contribution pursuant to Sections 3.04 and 3.05 or as a Participant contribution for purposes of the maximum limitations of Section 4.06. (b) The Plan Administrator may, in his discretion, direct the Trustee to accept benefits (in the form of cash) of any Participant arising out of his participation in an employee pension benefit plan qualified under Section 401 or 403 of the Code to the extent that such benefits constitute an eligible rollover distribution under Section 402(c)(4) of the Code (not in excess of the amount permitted under Section 402(c)(2) of the Code) or the proceeds from a rollover individual retirement account under Section 408(d)(3) of the Code. For investment purposes the Trustee shall commingle the transferred benefits with the Member's Participant Contribution Account. Any amount so transferred shall be treated for all purposes of the Plan as fully vested and shall be given special designation by the Trustee in order to provide for the proper administration of the Plan. Section 3.11. Actual Contribution Percentage Test. For each --------------------------------------------------- Plan Year commencing after December 31, 1986, the actual contribution percentage of Section 3.01(a) and (b) Participant contributions and Employer contributions under Section 3.04 and 3.05 allocated for highly compensated employees shall not exceed the actual contribution percentage for non-highly compensated employees by more than the greater of: (i) the actual contribution percentage of the non-highly compensated employees multiplied by l.25, or (ii) the actual contribution percentage of the non-highly compensated employees plus two percentage points, subject to a maximum of the actual contribution percentage of the non-highly compensated employees multiplied by 2.0. In order to ensure compliance with Sections 401(m) and 415 of the Code, the Plan Administrator in its discretion may prospectively decrease the rate of Employer match or, to the extent permitted by the Code and applicable regulations, direct the Trustee to refund Participant contributions, forfeit non-vested Employer contributions, or to distribute vested Employer contributions. ARTICLE IV. ALLOCATIONS TO PARTICIPANT'S ACCOUNTS --------------------------------------------------- Section 4.01. Individual Accounts. The Plan Administrator ----------------------------------- shall direct the Trustee to create and maintain adequate records of the interest in the Plan of each Member and Beneficiary. Such records shall be in the form of individual Employer Contribution, Participant Contribution, Participant Deposits and Participant IRA Accounts and credits and charges shall be made to such Accounts in the manner herein described. The maintenance of individual Accounts is for accounting purposes only and an allocation of the assets held in the Trust to each Account shall not be required. Distribution and withdrawals made from an Account shall be charged to the Account as of the date paid. Section 4.02. Allocation of Income. As of each Valuation ------------------------------------ Date, the Trustee shall value each Investment Fund under Section 4.07(e) hereof and proportionately adjust each Participant's Accounts invested in such Fund to reflect the effect of income received, any change in fair market value (whether realized or unrealized), expenses and all other transactions during the month respecting such Fund. Such valuation and adjustment shall be accomplished by recognizing the beginning balances, any distributions, any participant loans, Participant Deposits, rollovers, Employer Contributions and loan repayments. Section 4.03. Allocation of Employer Contributions. Contributions --------------------------------------------------- made by an Employer which are attributable to the Plan Year shall be allocated as follows: (a) Basic Contribution. Contributions made by the Employers ------------------ pursuant to Section 3.04 shall be allocated to each Participant's Employer Contribution Account on the basis of fifty cents ($.50) for each one dollar ($l.00) of Matched Deposits by the Participant. (b) Additional Contribution. Contributions made by the ----------------------- Employers pursuant to Section 3.05 shall be allocated as of the close of the Plan Year to the Employer Contribution Account of each Member who (1) made a matched contribution pursuant to Section 3.01(a) to his Participant Contribution Account and/or Matched Deposits to his Deposits Account during the year and (2) was an Employee on the last day of the Plan Year or who retired (within the meaning of Section 5.01), became Permanently Disabled or died during the Plan Year. Such allocation shall be based upon the ratio that each eligible Member's matched contributions and Deposits for the Plan Year bear to the total matched contributions and Deposits made by all eligible Members during the Plan Year. Section 4.04. Allocation of Participant Contributions and Deposits. -------------------------------------------------------------------- Contributions made by Participants shall be allocated to each Member's Participant Contribution Account and Deposits to the Deposits Account in accordance with the Member's election as of an administratively reasonable date following receipt by the Trustee. Section 4.05. Allocation and Disposition of Forfeitures. Upon Termination of Employment, the unvested portion of a Member's Employer Contribution Account (the conditional forfeiture ) shall be held in a suspense account to be allocated in accordance with the provisions of this section: (a) If the Member is reemployed prior to incurring a Break in Service, the conditional forfeiture held in the suspense account as adjusted by gains or losses, shall automatically be reinstated to his Employer Contribution Account. (b) If a conditional forfeiture is not reinstated pursuant to (a), the amount held in the suspense account, as adjusted for gains or losses, shall be allocated to the Employer Contribution Account of other eligible Members as of the last day of the Plan Year in which the Member incurs a Break in Service. Amounts which become available for redistribution during a Plan Year pursuant to this Section shall be allocated and credited, as of the last day of such Plan Year, to the Employer Contribution Accounts of Members eligible under Section 4.03(b) based on the ratio that each such Member s matched contributions pursuant to Section 3.01(a) and Deposits for such Plan Year bear to the total matched contributions and Deposits made by all eligible Members' during such Plan Year. Any such forfeiture on or before December 31, 1984 shall be final. Any such forfeiture thereafter shall only become final after six (6) consecutive years of Break in Service. In the event a Member or former Member is reemployed after one year of Break in Service but before six (6) consecutive years of Break in Service, the amount allocated pursuant to this subsection shall be reinstated to the Member s account from other forfeitures or, if necessary, from a special Employer Contribution. Section 4.06. Maximum Additions. (a) Notwithstanding the --------------------------------- other provisions of this Plan, annual additions to the account of any Member for a Plan Year shall not exceed the lesser of: (i) thirty thousand dollars ($30,000) as adjusted pursuant to Section 415(c)(1) (A) and (d)(1) of the Code; or (ii) twenty-five percent (25%) of the Member's total compensation (as defined in Section 415(c) of the Code) for such Plan Year. The term "annual additions" as used in this subsection shall mean the amount of the Employer's contributions and forfeitures for the Plan Year allocated to the account of the Member, plus the Participant's Deposits and contributions for the Plan Year. (b) If a Member also participates in another qualified defined contribution plan maintained by the Employer, then the sum of his annual additions (as defined in subsection (c) of Section 415 of the Code) under this Plan and under such other plan shall not exceed the limitations described in subsection (a) of this Section. Further, if a Member also participates in a defined benefit pension plan maintained by the Employer, the sum of (i) and (ii) below shall not exceed one (1.0): (i) the sum of the projected annual benefits of the Member under all qualified defined benefit plans of the Employer determined as of any December 31, divided by the lesser of (A) the product of 1.4 times the maximum benefit allowable under Section 415 (b)(1)(B) of the Code for such year, or (B) the product of 1.25 times the dollar limitation in effect for such year under Section 415 (b)(1)(A) of the Code, plus (ii) the sum of all annual additions to the Member's accounts under this Plan and all other defined contribution plans maintained by the Employer, as of such December 31, divided by the sum of the lesser of the following amounts for such year and each prior year of service with the Employer: (A) the product of 1.4 times the maximum annual additions allowable for such year under Section 415(c)(1)(B) of the Code, as applicable, or (B) the product of 1.25 times the dollar limitation in effect for such year under Section 415(c)(1)(A) of the Code. (c) In the event that either of the rules set forth in subsection (a) and (b) of this Section would otherwise be violated after all adjustments in accrued benefits provided for in any defined benefit pension plan of the Employer, there shall be deducted from such Member's account and returned to the Member such portion of his own contributions for the Plan Year together with the earnings thereon, as shall be necessary to satisfy such requirement. If the requirements are still not satisfied then, there shall be deducted from the Member s account and reallocated to other eligible Member's accounts in the manner described in Section 4.03(b), such amount as may be necessary to satisfy both of such rules; provided that if such reallocation to the accounts of other Members is not possible as the result of the application of this Section, then the reallocable amounts shall be credited to a suspense account subject to the following conditions: (i) amounts in the suspense account shall be allocated at such time, including termination of the Plan or complete discontinuance of Employer contributions, as the foregoing limitations permit, (ii) no investment gains or losses shall be allocated to the suspense account, (iii) no further Employer contributions shall be permitted until the foregoing limitations permit their allocation to Members accounts, and (iv) upon termination of the Plan any unallocable amounts in the suspense account shall revert to the Employer. Section 4.07. Investment Election. (a) Each Member shall, on ----------------------------------- or before the date he first becomes a Participant, file a written election with the Plan Administrator specifying, in increments of ten percent (10%), the Investment Fund or Funds in which all contributions to his (1) Employer and Participant Contribution Accounts and (2) Participant IRA Accounts shall be invested. (b) Not more frequently then every thirty days, each Member may elect, in 10% increments, to change his investment election as to the Investment Fund or Funds in which the balance of his Accounts shall be invested. Such election shall be made in such manner and pursuant to such rules as the Plan Administrator may establish. A Member's election shall remain in effect until changed. The Committee is hereby authorized to further modify the timing and method of investment election changes pursuant to rules of uniform application. (c) In addition to all other authority and power conferred on the Plan Administrator to administer and interpret the provisions of the Plan, the Plan Administrator shall have the specific authority to establish rules and regulations which govern the rights of Members to make the elections herein described and the procedures, including the determination of the validity of any election, to be followed in the administration of this Section 4.07. (d) The Committee may, from time to time, establish, modify or terminate one or more Investment Funds for the purpose of providing investment media for the assets of the Trust. The general investment objectives of each such Fund shall be as herein described, provided, however, that such descriptions shall be intended only as a general description of the investment purpose and objective of each such Investment Fund and shall not prohibit the Trustee or any investment manager from altering, at any given time, the specific investments held by such Investment Fund if such change is, in the opinion of such fiduciary, necessary to meet applicable standards under ERISA or would not be contrary to the general purpose of such Investment Fund. The Committee is further specifically authorized to allocate, in whole or in such increments as it deems appropriate, the responsibility of asset management of one or more Investment Funds to or among the Trustee and one or more investment managers appointed pursuant to Section 6.09; provided, however, that where more than one fiduciary has been charged with the investment of a separable portion of any Investment Fund, allocations to Member's accounts under this Article IV shall be made on the basis of the Investment Fund as a whole and no Member shall have the right to elect which such fiduciary shall manage the assets held in his Accounts. (e) The Investment Funds of the Trust shall be as follows: (1) The "Equity Fund", which shall be invested primarily in equity securities unless the Trustee or investment manager appointed with respect to such Fund, shall, in its discretion, deem such investment balance to be imprudent under the circumstances, in which case, such Fund may be invested in non-equity securities or other property, including commercial paper, certificates of deposits and interest bearing securities and other similar investments. (2) The "Fixed Income Fund," which shall be invested wholly in non-equity securities such as commercial paper, certificates of deposits, commercial or government notes, bonds or other investments of a similar nature, or which may, in the Committee's discretion, be invested in whole or in part in (A) a contract issued by a legal reserve life insurance company authorized to do business in the State of Wisconsin and one or more other states providing for the guarantee of principal and the payment of interest thereon or (B) a common, pooled, diversified or consolidated fund qualified for tax exemption under the appropriate provisions of the Code, and maintained by a bank or other financial institution (including the Trustee, any investment manager or any affiliate of either) for the purpose of investing assets held in trust under plans qualified under said Code, which fund invests in one or more contracts issued by a legal reserve life insurance company authorized to do business in the State of Wisconsin and one or more other states providing for the guarantee of principal and the payment of interest thereon. Any instrument governing a fund described in (B) shall be deemed to be incorporated in and made a part of this Plan as fully and to all intents and purposes as if set forth herein at length Notwithstanding anything herein to the contrary, the Fixed Income Fund shall not, in any event, be invested in equity securities such as common or preferred stock. (3) The "Balanced Fund," which shall be invested in a diversified portfolio of equity securities, highly rated, fixed- income securities and cash-equivalent instruments, with a focus on long-term investments to attain capital growth and current income. (4) The "Employer Stock Fund" which shall be invested in the common stock of Regal-Beloit Corporation (or its successor). A portion of the Employer Stock Fund may be temporarily invested in short-term bonds, money market funds, and similar investments pending investment in the stock of Regal-Beloit corporation (or its successor). (5) Such other fund or funds as the Committee may establish from time to time including, but not limited to, any common, pooled, diversified or consolidated fund qualified for tax exemption under the appropriate provisions of the Code and maintained by a bank or other financial institution (including the Trustee, any investment manager or any affiliate of either) for purpose of investing assets held in trust under plans qualified under said Code. Any instrument governing such a fund shall be deemed to be incorporated herein and made a part of this Plan and the Trust as fully and to all intents and purposes as if set forth herein at length. ARTICLE V. BENEFITS ------------------- Section 5.01. Retirement Benefits. (a) Normal Retirement ---------------------------------- Benefit. Upon attaining his Normal Retirement Date a Member shall have a fully vested interest in his Employer Contribution Account and any subsequent additions thereto. (b) Deferred Retirement Benefit. If a Member continues in the employment of an Employer after attaining his Normal Retirement Date, he shall continue to participate in the Plan until his Deferred Retirement Date. In the event of such deferred retirement, the Trustee shall defer distribution of the accounts of the Member. (c) Early Retirement Benefit. Upon attaining his Early Retirement Date, a Member shall have a fully vested interest in his Employer Contribution Account and any subsequent additions thereto. The Trustee shall proceed as though the Member had retired at his Normal Retirement Date; provided, however, that prior to actual retirement a Member shall elect, subject to the consent of the Committee, that payment of benefits shall start on his Early Retirement Date, on his Normal Retirement Date, or on any intervening date. (d) The retirement benefits described above, as well as the Member's Participant Contribution Account and Deposits Account, shall be distributed in accordance with Section 5.05. Section 5.02. Death Benefits. (a) Upon the death of a Member ------------------------------ prior to retirement (within the meaning of Section 5.01 or 5.03), or in the event of the death of a retired or terminated Member prior to the complete distribution of the benefit to which he was entitled under Section 5.01, 5.03 or 5.04, the Beneficiary of such Member shall be entitled to receive a death benefit based upon the balance of the Member's undistributed Employer and Participant Contribution Accounts. Payments shall be made in a form specified in Section 5.05. (b) A Member shall have the right to designate the Beneficiary of his Employer and Participant Accounts by written direction to the Plan Administrator on a form supplied by the Plan Administrator. Such designation shall be revocable by the Member by filing a similar written direction with the Plan Administrator naming a new Beneficiary, and in case of more than one such filing, the most recent designation shall prevail. Notwithstanding the foregoing, effective August 23, 1984, in the event the Member is married at the time of his death, the Beneficiary shall be the Member's spouse at such time unless such spouse consented in writing to the designation of an alternative Beneficiary after notice of the spouse's rights and such consent is witnessed (i) by a Plan representative appointed by the Plan Administrator or (ii) by a notary public. In the absence of a valid designation, or, in the event the Beneficiary should predecease the Member and no contingent Beneficiary has been designated, the Beneficiary shall be deemed to be the Member's spouse, if living at the Member's death, otherwise, the Member's estate. Section 5.03. Disability Benefits. If, prior to Termination ----------------------------------- of Employment, a Member becomes Permanently Disabled, his participation in the Plan shall cease and he shall be entitled to, in lieu of any other benefit payable hereunder, a disability retirement benefit based upon the balance of his Employer Contribution Account and Deposits Account as well as any subsequent additions thereto. Payments to a Permanently Disabled Member, including the balance of his Participant Contribution Account, shall be made in accordance with Section 5.05. Section 5.04. Severance Benefits. When a Member ceases to be an ---------------------------------- Employee for reasons other than retirement (within the meaning of Section 5.01), permanent disability or death, he shall be entitled to receive a severance benefit based upon the balance of his Employer Contribution Account, if he is Vested pursuant to Subsection 1.01(kk) on the effective date of his Termination of Employment. Payment of severance benefits hereunder, including distribution of the Member's Participant Contribution Account and Deposits Account, shall be made in a lump sum as soon as reasonably administratively feasible following the Member's Termination of Employment, but in no event later than sixty (60) days after the end of the Plan Year. Section 5.05. Payment of Benefits. (a) Benefits payable ----------------------------------- hereunder shall consist of the balance of the Member's Participant Contribution Account, Deposits Account, and Employer Contribution Account. Subject to subsection (b) below, upon Termination of Employment, a Member terminating pursuant to Section 5.01 or 5.03 or a Beneficiary entitled to benefits pursuant to Section 5.02 shall file an election with the Plan Administrator specifying that benefits be paid in a form described below; provided, however, that if a Member or Beneficiary files no election as to the manner in which benefits are to be paid, he shall be deemed to have elected that his benefit be distributed pursuant to (i) below: (i) In a lump sum, the value of which shall be determined as of the Valuation Date immediately preceding such distribution; or (ii) In forty (40) quarterly installments, provided however, that such period shall not exceed the joint life expectancies of the Member and his spouse, if any. In the event this option is selected, the unpaid balance shall receive an allocation of income in accordance with the provisions of Section 4.02. The amount of each such quarterly payment shall be equal to the product obtained by multiplying the Member's Accounts balances as of any quarterly payment date by a fraction, the numerator of which is one and the denominator of which is equal to forty less the number of quarterly installments previously paid to the Member. The amount which a Member or Beneficiary is entitled to receive at any time and from time to time may be paid in cash or in securities, or in any combination thereof, provided that the fair market value of any assets distributed in kind shall be equivalent to the fair market value of a distribution made entirely in cash. (b) Payment shall be made under subsection (a)(i) or commenced under (a)(ii) above within sixty (60) days after the end of the Plan Year in which the applicable event occurred. Notwithstanding anything herein to the contrary: (i) except with respect to death benefits, no lump sum cash distribution in excess of $5,000 (or such other amount provided in Code Section 411(a)(11)(A)) shall be made after December 31, 1997, without the consent of the Member to the extent required by law; but (ii) for any Member who is a five percent (5%) owner of an Employer as defined in Section 416 of the Code, and effective January 1, 1989 for all Members, benefits shall commence no later than the April 1 after the end of the calendar year in which the Member attained age 70-1/2, even if he is still employed. Unless the member elects a lump sum or installment payout, distribution during employment shall equal the minimum amount required by Code Section 401(a)(9); and (iii) any death benefits shall be paid within five (5) years of the Member's death unless payments have commenced under subsection (a)(ii) above or unless the Participant's spouse is the Beneficiary, in which case the spouse can elect benefit payments pursuant to subsection (a) above. Section 5.06. Distribution of Participant IRA Account. Subject ------------------------------------------------------- to a Member's right of withdrawal under Section 3.08(f), the balance held in a Member's Participant IRA Account shall be distributed in a lump sum if Section 5.04 is applicable or, if Section 5.05 is applicable, in such form described in Section 5.05 as the Member or Beneficiary shall elect. Section 5.07. Payments to Minors or Incompetents. Whenever, -------------------------------------------------- in the Committee's opinion, a person entitled to receive any payment of a benefit hereunder is under a legal disability or is incapacitated in any way so as to be unable to manage his financial affairs, the Committee may direct the Trustee to make payments to such person or to his legal representative or the Committee may direct the Trustee to apply the payment for the benefit of such person in such manner as the Committee considers advisable. Any payment of a benefit or installment thereof in accordance with the provisions of this section shall be a complete discharge of any liability for the making of such payment under the provisions of the Trust. Section 5.08 Nonalienation of Benefits. Benefits payable to ---------------------------------------- a Member or Beneficiary under the Plan shall not be subject in any manner to the claims of his creditors or others and may not be assigned or alienated and any attempt to assign or alienate such benefits shall be void. Notwithstanding the foregoing, the Plan Administrator may recognize a qualified domestic relations order with respect to child support, alimony payments, or marital property rights if such order contains sufficient information for the Plan Administrator to determine that it meets the applicable requirements of Section 414(p) of the Code. The Plan Administrator shall establish written procedures concerning the notification of interested parties and the determination of the validity of such orders. A distribution pursuant to a qualified domestic relations order may be made in a lump sum at a time when a distribution would not otherwise be permitted under the terms of the Plan. Section 5.09. Loans to Participants. (a) A Participant may ------------------------------------- borrow against the Participant's Accounts provided, however, that at no time shall the total balance of any loans outstanding exceed the greater of (i) the lesser of (A) $50,000, or (B) one-half of the value of the vested Participant's Accounts (excluding any Participant IRA Account) as of the Valuation Date preceding his application. All loans shall be approved in writing by the Plan Administrator or his delegate and shall bear a reasonable rate of interest as determined by the Plan Administrator. The term of the loan shall be such period as may be agreed upon by the Participant and the Plan Administrator, but in no event shall exceed five (5) years in duration, except that a loan used to acquire the Participant's principal residence may be ten (10) years in duration. Substantially level amortization of such loan over its period shall be required, with payment not less frequent than quarterly. Every loan applicant shall receive a clear statement of the charges involved in each loan transaction, including the dollar amount and annual interest rate or the finance charge. (b) Upon written application to the Plan Administrator, a Borrower may apply for a loan against his Vested Accounts; provided, however, that no loan request shall be for less than One Thousand Dollars ($1,000.00), no more than one loan may be outstanding at any time and at no time shall a loan exceed the lesser of (i) Fifty Thousand Dollars ($50,000.00), reduced by the highest balance of any other Plan loan to the Borrower outstanding during the preceding twelve (12) months or (ii) fifty percent (50%) of the Borrower's Vested Accounts (excluding any Participant IRA Account). The Borrower's Accounts will be valued as of the Valuation Date coincident with or immediately preceding receipt of his loan application form and will be reduced by any withdrawals, and increased by any contributions received, following such Valuation Date. All loans must be approved in writing by the Plan Administrator and shall bear interest at a rate commensurate with the rate which would be charged by commercial lenders for similar loans in accordance with Department of Labor Regulation Section 2550.408b-1 as determined by the Plan Administrator. (c) Repayment of all loans shall be by payroll deduction and shall be made so as to provide substantially level amortization of the loan over its term. The term of the loan shall be such period as may be agreed upon by the Borrower and the Plan Administrator in terms of whole years, but in no event shall exceed five (5) years in duration unless the loan is for the purchase of a home for the Borrower, in which case the term may be up to ten (10) years. All loans shall be due and payable upon the Borrower's termination of employment, if applicable. Every loan applicant shall receive a clear statement of charges involved in each loan transaction, including the dollar amount and annual interest rate or the finance charge. (d) Amounts loaned to a Borrower pursuant to Subsection (a) above shall be deducted from the Borrower's account for purposes of the allocation of Trust Fund earnings under Section 4.02 hereof. All loans made pursuant to this Section 5.09 shall be investments for the benefit of the Borrower s account to be treated as a segregated loan account; all interest and principal paid thereon shall be credited to the Borrower's account. (e) In the event that the Borrower fails to make two (2) or more consecutive payments, or in the event that the Borrower fails to repay the loan in full within sixty (60) days after termination of employment, the loan shall be in default. The Plan Administrator shall notify the Borrower in writing of the default. If the Borrower fails to cure the default by making all necessary payments within thirty (30) days of such written notice, the Plan Administrator may direct the Trustee to charge the total amount of such loan (including accrued interest), or any portion thereof from the portion of the Borrower's account, at such time as will not risk disqualification of the Plan, and such account shall be reduced by said amount. Notwithstanding the foregoing, failure to repay a loan during a leave of absence for illness, family leave or military service shall not cause a default prior to the original due date of the loan, and the loan shall be re-amortized over the original loan period upon the Borrower's return from leave. All loans shall be secured by the Borrower's Vested Accounts, up to the amount of the Borrower's indebtedness plus interest. (f) In the sole discretion of the Plan Administrator, limitations on the number, dollar amount, and repayment of loans hereunder shall be imposed on a uniform and nondiscriminatory basis, together with any other rules and regulations deemed appropriate, including the assessment of a processing fee against the Borrower's account. Section 5.10. Direct Rollovers. This Section deals with -------------------------------- Members' and beneficiaries rights to distribution in the form of a direct rollover. (a) 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 Plan, a distributee may elect, at the time and in the manner prescribed by the Committee, to have any portion of an eligible rollover distribution paid directly to an eligible retirement plan specified by the distributee in a direct rollover. (b) Definitions. For purposes of this Section, the following definitions apply: (i) 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: 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; any distribution to the extent such distribution is required under section 401(a)(9) of the Code; and the portion of any distribution that is not includible in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities). (ii) 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. (iii) 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. (iv) Direct rollover: A direct rollover is a payment --------------- by the Plan to the eligible retirement plan specified by the distributee. ARTICLE VI. ADMINISTRATION --------------------------- Section 6.01. Allocation of Responsibility Among Fiduciaries for ------------------------------------------------------------------ Plan and Trust Administration. The Board, Committee, Plan Administrator and - ----------------------------- Trustee shall be "Named Fiduciaries" within the meaning of Section 402(a)(2) of ERISA. The Named Fiduciaries shall have only those specific powers, duties, responsibilities and obligations as are specifically given them under this Plan or the trust agreement. In general the Board shall have the sole authority to appoint and remove the members of the Committee, and to amend or terminate the Plan in whole or in part. The Committee shall be responsible for the general administration of the Plan, for appointing and removing the Plan Administrator, Trustee and any investment managers, for monitoring the performance of the Plan Administrator, Trustee and any investment managers, and for determining a funding policy and investment objectives for the Plan. The Plan Administrator shall have the responsibility for the administration of this Plan, which responsibility is specifically described in this Plan. The Trustee shall have the sole responsibility for the administration of the trust agreement and the management of the assets held thereunder, except to the extent such responsibility is delegated to any investment managers in accordance with such trust agreement. Each Named Fiduciary may rely upon any direction, information or action of any other Named Fiduciary as being proper, and is not required to inquire into the propriety of any such direction, information or action. It is intended under this Plan that each Named Fiduciary shall be responsible for the proper exercise of his own powers, duties, responsibilities and obligations under this Plan and shall not be responsible for any act or failure to act of another Named Fiduciary. An individual may serve in more than one fiduciary capacity hereunder. Section 6.02. Administrative Committee. (a) The general ---------------------------------------- responsibility for carrying out the provisions of the Plan shall be placed in an Administrative Committee ("Committee") of not less than three officers, directors, or employees of the Employers or any Affiliate thereof appointed from time to time by the Board. The Committee may appoint from its number such officers and/or subcommittees with such powers as it shall determine and may authorize one or more of its number or any agent to execute or deliver any instrument or make any payment on its behalf. The Committee may designate and allocate any fiduciary responsibility to one or more of its members or to any other person or persons. It may retain counsel, employ agents and provide for clerical, accounting and actuarial services as it may require. The foregoing sentence shall in no way affect the duty and obligation of the Plan Administrator to retain such services in connection with the carrying out of his duties and to designate an enrolled actuary and independent, qualified public accountant as provided in Section 6.05 hereof. (b) The Committee shall hold meetings upon such notice, at such place and at such times as it may from time to time determine. A meeting may be held in any manner as may be determined by the Committee, but in any event, where all members are not physically present, the actions of the Committee shall be reduced to writing and sent to all members within ten (10) days of the date of such meeting. (c) A majority of the Committee shall constitute a quorum, and any action which the Plan authorizes or requires the Committee to take shall require the written approval or the affirmative vote of a majority of its members. (d) Members of the Committee shall not be paid any compensation from the assets of the Plan. (e) Subject to the provisions of the Plan, the Committee may from time to time establish rules for the transaction of its business. The determination of the Committee as to any disputed question pertaining to the Plan shall be conclusive. (f) Any member of the Committee may resign by delivering his written resignation to the Board. Any member of the Committee may be removed by the Board, and such removal shall be effective at such time as is provided for by the Board. Notice of such removal shall be conveyed to the member so removed in the manner provided by the Board. (g) In addition, the Committee shall have the following specific duties and responsibilities under the Plan: (i) To designate one person (and if it so elects remove and appoint another), to be the "Plan Administrator" within the meaning of Section 3(16)(A) of ERISA; (ii) To determine a funding policy and investment objectives; provided, however, that in accomplishing the foregoing, the Committee shall not be deemed to be superseding, restricting or otherwise modifying the exclusive investment authority and discretion that may have been delegated to the Trustee or any investment managers; (iii) To adopt such procedures as the Committee may deem appropriate and advisable to monitor and review the performance of any investment managers so as to determine whether the Plan assets have been managed in accordance with the funding policy and objectives established by the Committee and with the requirements relating to the fiduciary duties and responsibilities to exercise prudence, to diversify investment of Plan assets and to refrain from engaging in certain "prohibited transactions" that are detailed in ERISA; (iv) To obtain such periodic written reports or other accounting as the Committee may desire from such investment managers in regard to the performance of their respective delegated duties and responsibilities and to meet semi-annually, or at such other intervals as the Committee may determine, with such investment managers for the purpose of reviewing and evaluating such reports or other accountings with them; (v) To prepare a written report with respect to the Committee's review and evaluation of the performance of such investment managers, including therein any findings and conclusions of the Committee concerning the propriety and/or advisability of either retaining or removing and replacing any such investment manager, such report to be made at least annually and at such other time that the Committee deems necessary and advisable; and (vi) To monitor the performance of the Plan Administrator on an annual or more frequent basis as the Committee deems necessary and advisable. Section 6.03. Plan Administrator. The Plan Administrator shall ---------------------------------- be responsible for the day-to-day administration of the Plan and the duties and obligations imposed on the Plan Administrator by ERISA, except to the extent these duties are specifically allocated otherwise by the Plan or the Plan Administrator. The Plan Administrator shall serve at the pleasure of the Committee. The resignation of the Plan Administrator shall be effective upon the delivery of his written resignation to the Committee. Upon the Plan Administrator s death, resignation or removal, the Committee shall name his successor. Section 6.04 Authority of Plan Administrator. Unless otherwise ---------------------------------------------- specifically provided herein, the Plan Administrator shall have full and complete authority to: (i) formulate, issue and apply rules and regulations; (ii) interpret and apply the provisions of the Plan; (iii) make appropriate determinations and calculations; (iv) authorize and direct distributions or benefit payments; (v) adopt and prescribe the use of necessary forms; and (vi) prepare and file reports, notices, and any other documents relating to the Plan which may be required by law. The Plan Administrator shall exercise any authority allocated to him hereunder in any manner consistent with ERISA and the applicable provisions of the Plan. Section 6.05 Use of Professional Services. The Plan Administrator ------------------------------------------- may allocate fiduciary duties to any other person or persons. He may employ agents and provide for clerical services as he may require, and, subject to the approval of the Committee, retain counsel. Section 6.06 Fees and Expenses. Where the Plan Administrator -------------------------------- utilizes services as provided in Section 6.05, he shall review the fees and other cost for these services and shall, subject to the approval of the Committee, authorize the payment of such fees and costs. Such fees and costs and other expenses incurred or authorized by the Plan Administrator shall be paid by the Employers or from the Plan assets as determined by the Committee. Section 6.07 Claims Procedure. A Participant or Beneficiary may ------------------------------- file with the Plan Administrator a claim with respect to a benefit payable from the Plan. Any such claim shall be filed in writing stating the nature of the claim, the facts supporting the claim, the amount claimed and the name and address of the claimant. The Plan Administrator, within ninety (90) days (or 180 days if special circumstances require an extension of time for processing the claim and the Plan Administrator notifies the claimant of such extension prior to ninety (90) days from the date of the initial filing of the claim) after receipt of the notice, shall render a written decision on the claim. If the claim shall be denied, either in whole or in part, the decision shall include the specific reason or reasons for the denial; specific reference to the pertinent Plan provision or provisions which is the basis for the denial; a description of any additional material or information necessary for the claimant to perfect the claim and an explanation why the information or material is necessary; and appropriate information as to the steps to be taken if the Participant or Beneficiary wishes to appeal the Plan Administrator's decision. The claimant may file with the Plan Administrator, within sixty (60) days after receiving such notification from him, a written notice of request for review of the Plan Administrator's decision. The review shall be made by the Committee. In order that the Committee may expeditiously decide such appeal, the written notice of appeal should contain (i) a statement of the ground(s) for the appeal, (ii) a specific reference to the pertinent Plan provision or provisions on which the appeal is based, (iii) a statement of the argument(s) and authority (if any) supporting each ground for the appeal, and (iv) any other pertinent documents or comments which the claimant desires to submit in support of his appeal. The Committee shall render a written decision on the claim which shall include the specific reasons for the decision and a reference to the pertinent Plan Provisions on which the decision was based within sixty (60) days (or 120 days if special circumstances require an extension of time for processing the claim and the Plan Administrator notifies the claimant of such extension prior to sixty (60) days from the date of the initial filing of the claim) after receipt of the documents requested for review. A copy of the Committee's decision shall be mailed promptly to the claimant. If a Participant or Beneficiary shall not file written notice with the Plan Administrator or the Committee at the times set forth above, the Participant or Beneficiary shall have waived all benefits other than as set forth in the notice from the Plan Administrator. The foregoing claims procedure shall be the only method by which claims of Participants, former Participants or Beneficiaries shall be decided under this Plan. Oral communications by potential claimants to the Plan Administrator or his delegate shall have no force and effect hereunder. Section 6.08 Trustee's Responsibilities. The duties, authority ----------------------------------------- and responsibility of any Trustee, insurance company, investment manager or other person handling all or any part of the Plan assets shall include and be limited to the duties, authority, and responsibility expressly set forth in a written agreement between the Committee or Company and any such Trustee, insurance company, investment manager or other person. Section 6.09. Fiduciary Insurance and Indemnification. The ------------------------------------------------------- Company or any affiliated corporation shall maintain and keep in force such insurance as the Plan Administrator shall, subject to the approval of the Committee, determine to insure and protect the directors, officers, employees of the Company or any affiliate thereof and any appropriately authorized delegates or appointees of them against any and all claims, damages, liability, loss, cost or expense (including attorneys' fees) arising out of or resulting from (including failure to act with respect to) any responsibility, duty, function or activity of any such person in relation to the Plan, including without limitation, the Committee, the members of the Committee, the Plan Administrator and directors, officers and employees of the Employers or any subsidiary or affiliate thereof performing responsibilities, duties, functions, and/or actions at the direction or under the authority of any of the foregoing. In lieu of and/or as a supplement and in addition to the insurance referred to in the foregoing sentence, the Employers and any affiliated corporation shall indemnify and hold harmless its directors, officers and employees against any and all claims, damages, liability, loss, cost or expense (including attorneys' fees) arising out of or resulting from (including failure to act with respect to) any responsibility, duty, function or activity of any such person in relation to the Plan (or trust agreement, if applicable) including without limitation the Committee, the members of the Committee, the Plan Administrator, and directors, officers and employees of the Employers or any affiliate thereof performing responsibilities, duties, functions and/or actions at the direction or under the authority of any of the foregoing; provided, however, that no such indemnification shall extend to any matter as to which it shall have been adjudged by any court of competent jurisdiction that such person or persons have acted in bad faith or was guilty of gross negligence in the performance of his or their duties unless such Court shall, in view of all the circumstances of the case, determine that such person is fairly and reasonably entitled to indemnification. Section 6.10. Agent for Service of Process. The Plan -------------------------------------------- Administrator is hereby designated as the agent for service of legal process with respect to all matters pertaining to the Plan. Section 6.11. Allocation of Fiduciary Responsibility. This ------------------------------------------------------ Article VI provides for "Named Fiduciaries" as required by Section 402(a)(1) of ERISA and a procedure for the allocation of responsibilities as required by Section 402(b)(2) of ERISA. If the Board or Committee allocates responsibility as herein provided, such Named Fiduciaries shall not be responsible for the actions of the person(s) to whom the responsibility is allocated except as provided in Section 405(c)(2) of ERISA. However, if the Plan Administrator delegates duties hereunder, such delegation shall be made subject to the express condition that the Plan Administrator retains full and exclusive authority over and responsibility for any activities of such person or persons. Section 6.12. Selection of Investment Managers. If the Committee ------------------------------------------------ appoints one or more investment managers pursuant to Section 6.01 hereof, upon the acceptance by the investment manager of the fiduciary duty incident to such appointment, such manager shall be solely liable for all investment actions taken concerning the Plan assets which are subject to his management. The Committee shall monitor the investment performance of the investment manager(s) with respect to the Plan assets in accordance with the procedure set forth in Section 6.02 hereof. Section 6.13. Liability for Breach of Co-Fiduciary. The members ---------------------------------------------------- of the Board and the Committee and the Plan Administrator, shall not be liable for the acts of commission or omission of another fiduciary unless (i) such member knowingly participated or knowingly attempted to conceal the act or omission of another fiduciary and he knew the act or omission was a breach of fiduciary responsibility by the other fiduciary; or (ii) such member has knowledge of a breach by the other fiduciary and shall not make reasonable efforts to remedy the breach; or (iii) such member s breach of his own fiduciary responsibility permitted the other fiduciary to commit a breach. Section 6.14 Communications. All requests, appeals, elections ----------------------------- and other communications to the Plan Administrator shall be in writing and shall be made by transmitting the same via the U.S. Mail, certified, return receipt requested, addressed as follows: Marathon Electric Manufacturing Corporation Post Office Box 8003 100 East Randolph Street Wausau, Wisconsin. 54402-8003 Attention: Plan Administrator ARTICLE VII. RIGHTS RESERVED BY EMPLOYER ----------------------------------------- Section 7.01. Employer's Interest in Plan. The Plan is created ------------------------------------------- and shall be maintained for the exclusive benefit of Members and their Beneficiaries as a qualified Plan under Section 401(a) and 501(a) of the Code. Subject to the provisions of Section 3.09, in no event shall the Employers have any right, claim, or beneficial or reversionary interest in any assets of the Plan. Section 7.02. Amendment. The Company reserves the right, by ------------------------- action of its Board of Directors, to amend the Plan at any time, and from time to time, effective as of any specified current, prior, or later date; provided, however, that no such amendment shall vest an Employer with any right, title or interest in or to the assets of the Plan, divest Members or their Beneficiaries of any credits to their Accounts (except to the extent necessary to conform the Plan to the requirements of any applicable future legislation, rule of law, or regulations), or allow any part of the assets of the Plan to be used for, or diverted to, purposes other than for the exclusive benefit of the Members and their Beneficiaries within the meaning of the Code. Section 7.03. Termination. (a) The Plan shall continue until --------------------------- terminated under the provisions of this Section 7.03. The Company reserves the right to terminate the Plan by action of its Board of Directors and by giving prior written notice to that effect to the Trustee. In the event that the Company shall be judicially declared bankrupt or insolvent or shall be dissolved, the Plan shall terminate immediately unless provision is made for a successor to the Company to continue the Plan, in which event such successor shall be substituted for the Company hereunder. (b) Upon the termination or partial termination of the Plan or in the event that contributions to the Plan are discontinued, the interest of each Member included by such event shall be fully vested and nonforfeitable and benefits shall be distributed in accordance with Article V as if the Plan had continued in existence, and, for purposes of effecting such distribution, the Trust shall continue as a legal entity at least until all such vested benefits have been distributed. In the event that contributions to the Plan are discontinued as a result of merger or consolidation of the Company with one or more other corporations, and the interest of each Member who elects to continue as an Employee of the successor corporation is transferred to an employee benefit plan established by such successor corporation, pursuant to the provisions of Section 8.02, such transfer of Participant's Accounts shall not be deemed to be a termination of the Plan. (c) An Employer may terminate its participation in the Plan by action of its board of directors. ARTICLE VIII. SUCCESSOR EMPLOYER AND ------------------------------------ MERGER OR CONSOLIDATION OF PLANS -------------------------------- Section 8.01. Successor Employer. In the event of the ---------------------------------- dissolution, merger, consolidation or reorganization of an Employer, provision may be made by which the Plan will be continued by the successor; and, in that event, such successor shall be substituted for the Employer under the Plan. The substitution of the successor shall constitute an assumption of all obligations of the Employer by the successor and the successor shall have all of the powers, duties and responsibilities of the Employer under the Plan. Section 8.02 Merger or Transfer of Plan Assets. 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 to another trust held under any other employee benefit plan maintained or to be established for the benefit of all or some of the Members of the Plan, the assets of the Trust applicable to such Members shall be transferred to the trust of the other plan only if: (a) Each Member would (if either the 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 the Plan had then terminated; (b) Resolutions of the Board of Directors of the Company under the Plan, or of any new or successor employer of the affected Members, shall authorize such transfer of assets; and, in the case of the new or successor employer of the affected Members, its resolutions shall include an assumption in the new employer's plan, and (c) Such other plan and trust are qualified under Section 401(a) and 501(a) of the Code. Section 8.03. Adoption of Plan by Affiliate. In the event the --------------------------------------------- Company and an Affiliate desire to include the Affiliate as an Employer, such Affiliate shall become a party to the Plan after: (a) adoption of the Plan by its board of directors for the benefit of its eligible Employees, effective as of the date specified in such adoption; (b) appropriate action by the Board of Directors of the Company authorizing such adoption; (c) filing with the Committee a certified copy of such resolutions to that effect, and such other instrument or instruments as the Committee may require; and (d) the Committee's filing with the Trustee of a copy of such resolutions, together with a certified copy of a resolution of the Committee approving such adoption. ARTICLE IX. MISCELLANEOUS -------------------------- Section 9.01. Nonguarantee of Employment. Nothing contained in ------------------------------------------ the Plan shall be construed as a contract of employment between any Employer and any Employee, or as a right of any Employee to be continued in the employment of an Employer, or as a limitation of the right of the Employers to discharge any of their Employees, with or without cause. Section 9.02. Action by Company. Any action by the Company under --------------------------------- this Trust may be by resolution of its Board of Directors, or by any officer or officers duly authorized by resolution of said Board to take such action. Section 9.03 Plan Binding on Successors. The Plan shall be ----------------------------------------- binding upon all persons entitled to benefits hereunder, and upon their respective heirs and legal representatives; upon the Employers, their successors and assigns; and upon the Trustee and any successor or additional Trustees. Section 9.04. Construction. Except when otherwise indicated by --------------------------- the context, any masculine terminology herein shall also include feminine, and the definition of any term herein in singular shall also include the plural. Section 9.05. Titles. Article and Section titles are included --------------------- for reference purposes only, and in the event of a conflict between a title and its respective text, the text shall control. Section 9.06. Form of Written Notice. Whenever written notice -------------------------------------- by a Member or Beneficiary is required, such notice shall be effective only if given on a form provided or approved by the Plan Administrator. Section 9.07. Top-Heavy Restrictions. (a) Notwithstanding any -------------------------------------- provision to the contrary herein, in accordance with Code Section 416, if the Plan is a top-heavy plan for any Plan Year, then the provisions of this Section shall be applicable. The Plan is "top-heavy" for a Plan Year if as of the last day of the preceding Plan Year, (or the last day of the Plan's first Plan Year, whichever is applicable, i.e., the Plan's "determination date"), the total present value of the accrued benefits of key employees (as defined in Code Section 416(i)(1) and applicable regulations) exceeds sixty percent (60%) of the total present value of the accrued benefits of all employees under the Plan (excluding those of former key employees) (as such amounts are computed pursuant to Section 416(g) and applicable regulations using the interest and actuarial assumptions used for the actuarial funding report for the valuation date or, if none, the immediately preceding report) unless such plan can be aggregated with other plans maintained by the applicable controlled group in either a permissive or required aggregation group and such group as a whole is not top-heavy. In addition, a plan is top-heavy if it is part of a required aggregation group which is top-heavy. Any plan of a controlled group may be included in a permissive aggregation group as long as together they satisfy the Code Sections 401(a)(4) or 410 discrimination requirements. The present values of aggregated plans are determined separately as of each plan's determination date and the results aggregated for the determination dates which fall in the same calendar year. A "controlled group" for purposes of this Section includes any group of employers aggregated pursuant to Code Sections 414 (b), (c) or (m). The calculation of the present value shall be done as of a valuation date which for a defined contribution plan is the determination date and for a defined benefit plan is the date as of which funding calculations are generally made within the twelve (12) month period ending on the determination date. (b) If the Plan is top-heavy in a Plan Year, the maximum annual compensation utilized herein for any employee for such year shall be two hundred thousand dollars ($200,000) (or such higher amount permitted pursuant to applicable regulations due to cost of living increases), provided that no benefit accrued as of the determination date shall be diminished on account of this provision. (c) If a defined contribution plan is top-heavy in a Plan Year, non-key employee participants who have not separated from service at the end of such Plan Year will receive allocations of employer contributions and forfeitures equal to the lesser of three percent (3%) of compensation (as defined in Code Section 415) for such year or the percentage of compensation allocated on behalf of the key employee for whom such percentage was the highest for such year. If a defined benefit plan is top-heavy in a Plan Year and no defined contribution plan is maintained, the employer- derived accrued benefit on a life only basis commencing at the normal retirement age of each non-key employee shall be at least equal to a percentage of the highest average compensation for five (5) consecutive years, excluding any years after such Plan permanently ceases to be top-heavy, such percentage being the lesser of (i) twenty percent (20%) or (ii) two percent (2%) times the years of service after December 31, 1983, in which a Plan Year ends in which a Plan is top-heavy. If the controlled group maintains both a defined contribution plan and a defined benefit plan which cover the same non-key employee, such employee will only be entitled to the defined benefit plan minimum. (d) If the controlled group maintains a defined benefit plan and a defined contribution plan which both cover one or more of the same key employees, and if such plans are top-heavy, then the limitation stated in a separate provision of this Plan with respect to the Code Section 415(e) maximum benefit limitations shall be amended to refer to a 1.0 adjustment on the dollar limitation rather than a 1.25 adjustment. This provision shall not apply if the Plan is not "super top-heavy" and if the minimum benefit requirements of this Section are met when three percent (3%) is changed to four percent (4%), two percent (2%) is changed to three percent (3%), and twenty percent (20%) is changed to an amount not greater than thirty percent (30%) which equals twenty percent (20%) plus one percent (1%) for each year such plan is top-heavy. A plan is super top-heavy if the ratio referred to in subsection (a) above results in a percentage in excess of ninety percent (90%) rather than a percentage in excess of sixty percent (60%). Section 9.08. Prior Plan. Effective January 1, 1995, this Plan -------------------------- shall assume the assets and liabilities of the Marathon Electric-York 401(k) Savings Plan (as applied to salaried Employees). EX-4.2 3 EXHIBIT 4.2 MARATHON ELECTRIC MASTER PENSION TRUST TABLE OF CONTENTS ----------------- Page ---- ARTICLE I. PARTICIPATING PLANS AND DEFINITIONS Section 1.01. Participating Plans. Section 1.02. Plan Definitions. Section 1.03. Other Definitions. Section 1.04. Gender, Number and Other Term Construction. ARTICLE II. ESTABLISHMENT, CONTINUATION AND PURPOSE OF TRUST Section 2.01. Establishment and Continuation. Section 2.02. Trustee Acceptance. Section 2.03. Purpose. ARTICLE III. PAYMENTS FROM FUND Section 3.01. Trustee's Duty. ARTICLE IV. INVESTMENT OF FUND ASSETS Section 4.01. Appointment of Investment Manager. Section 4.02. Establishment of Manager's Account. Section 4.03. Trustee as Investment Manager. Section 4.04. Authority of Investment Manager. Section 4.05. Transactions for Manager Accounts. Section 4.06. Responsibility of Trustee. Section 4.07. Temporary Investment of Cash Reserves. Section 4.08. Review of Investment Managers. Section 4.09. Plan Funding Policy. ARTICLE V. TRUSTEE POWERS Section 5.01. General Powers. Section 5.02. Employer Securities and Real Property. Section 5.03. Investment in Real Property. ARTICLE VI. TAXES, EXPENSES, TRUSTEE COMPENSATION AND RETURNS TO EMPLOYERS Section 6.01. Taxes. Section 6.02. Expenses and Trustee Compensation. Section 6.03. Amounts Returnable to Employers. Page ---- ARTICLE VII. VALUATION OF TRUST FUND Section 7.01. Separate Plan Accounts. Section 7.02. Valuation of Trust Fund. Section 7.03. Accounting for Contributions. Section 7.04. Valuation Date. Section 7.05. Withdrawal of a Plan. Section 7.06. Accounting for Income, Expenses, Appreciation and Depreciation. ARTICLE VIII. REPORTS AND ACCOUNTINGS Section 8.01. Audit of Trustee Accounts. Section 8.02. For Each Plan. Section 8.03. Trust Fund. Section 8.04. Settlement of Trustee Accounts. ARTICLE IX. COMMUNICATIONS Section 9.01. Investment Manager. Section 9.02. Administrator and Investment Committee. Section 9.03. Board and Company. Section 9.04. Reliance on Written Communications. Section 9.05. Plan Documents. ARTICLE X. FIDUCIARIES AND TRUSTEE LIABILITY Section 10.01. Named and Other Fiduciaries. Section 10.02. Allocation of Fiduciary Responsibilities. Section 10.03. Trustee Liability. ARTICLE XI. SUCCESSOR TRUSTEE Section 11.01. Removal or Resignation of Trustee. Section 11.02. Successor Trustee of Trust Fund. ARTICLE XII. AMENDMENT OF TERMINATION Section 12.01. Amendment or Termination of Trust Agreement. Section 12.02. Termination or Partial Termination of Plans. ii Page ---- ARTICLE XIII. MISCELLANEOUS Section 13.01. No Assignment of Interest. Section 13.02. Responsibility of Insurer. Section 13.03. Wisconsin Law to Govern. Section 13.04. Illegality. Section 13.05. Waiver of Notice. Section 13.06. Counterparts. Section 13.07. Successors and Assigns. iii MARATHON ELECTRIC MASTER PENSION TRUST -------------------- THIS TRUST AGREEMENT made and entered into this 1 day of January, 1982, by and between MARATHON ELECTRIC MANUFACTURING CORPORATION, a Wisconsin corporation, (hereinafter called "Company"), and M&I MARSHALL & ILSLEY BANK, a Wisconsin banking corporation, (hereinafter called "Trustee"); W I T N E S S E T H: WHEREAS, in order to provide retirement benefits for certain of its employees, the Company has heretofore established certain employee pension benefit plans known as the Marathon Electric Profit Sharing Retirement Plan (hereinafter referred to as the "Profit Sharing Plan") and the Retirement Plan for Salaried Non-Exempt Employees of Marathon Electric Manufacturing Corporation (hereinafter referred to as the "Non-Exempt Plan") which are intended to qualify under Section 401(a) of the Internal Revenue Code of 1954, as amended; and WHEREAS, immediately prior to the execution hereof, the Profit Sharing Plan has been funded by a trust fund maintained under the Marathon Electric Profit Sharing Retirement Trust Agreement of which the trustee has recently been named successor trustee; and WHEREAS, immediately prior to the execution hereof the Non-Exempt Plan has been funded by Group Annuity Contract GA-2592 issued by Aetna Life Insurance Company; and WHEREAS, effective January 1, 1982, the assets and liabilities of the Profit Sharing Plan and the Non-Exempt Plan are going to be merged into a new plan known as the Marathon Electric Salaried Employees Pension Plan and an additional new plan will be adopted known as the Marathon Electric Salaried Employees' Savings Plan (hereinafter collectively referred to as the "Plans", or in reference to each as the "Plan"); and WHEREAS, the Company has determined that it is desirable to place into one trust known as the Marathon Electric Master Pension Trust (hereinafter called "Trust"), any assets attributable to the Plans and to such other plans as the Company may from time to time designate to use this Trust as a funding medium for the investment of such assets; and WHEREAS, the Marathon Electric Profit Sharing Retirement Trust Agreement reserves to the Company, by action of the Board, the right to amend same; NOW, THEREFORE, the Company and the Trustee do hereby agree to the amendment and restatement of such agreement in its entirety effective as of January 1, 1982 to and continue as follows: 2 ARTICLE I. PARTICIPATING PLANS AND DEFINITIONS ----------------------------------------------- Section 1.01 Participating Plans. (a) The Plans for which the ----------------------------------- Company has determined, as of January 1, 1982, to use this Trust as a funding medium are the Marathon Electric Salaried Employees' Pension Plan and the Marathon Electric Salaried Employees' Savings Plan. (b) In addition to the Plans referred to in subsection (a) of this Section, the Committee may at any time designate this Trust as a funding medium for any other qualified employee benefit plan of an Employer by filing with the Trustee a certified copy of the resolution evidencing such designation. An Employer other than the Company whose plan is so designated shall likewise file with the Trustee a certified copy of a resolution of its board of directors evidencing its adoption of this Trust to fund, in whole or in part, that plan, which action shall constitute delegation of full and exclusive authority to the Company to take on behalf of such Employer all necessary and appropriate actions respecting this Trust, including, but not limited to, the amendment, modification, or termination thereof. Any qualified employee benefit plan designated, subsequent to the execution date hereof, to use this Trust as a funding medium shall be deemed to be included within the term "Plan" for all purposes of this Trust Agreement upon the effective date of the requisite resolution(s). Thereafter, the Trustee shall receive and hold as a part of the Trust Fund, subject to the terms and conditions of this Trust Agreement, any deposits made to it under such Plan by or at the direction of the Employer. Any Employer other than the Company with a Plan funded, in whole or in part, under this Trust need not be a party signatory to this Trust Agreement. (c) The Committee may cease having this Trust serve as a funding medium for any of the Plans by filing with the Trustee a certified copy of the resolution to such effect. Thereupon, the Trustee shall segregate the share of the Trust Fund allocable to such Plan and make disposition thereof in accordance with the Committee s directions. Section 1.02 Plan Definitions. The following words and phrases ------------------------------- when used herein shall have the following respective meanings, unless the context clearly indicates otherwise. 3 (a) "Administrator" means David L. Eisenreich or any successor thereto appointed pursuant to the provisions of the Plans. (b) "Board" means the Board of Directors of the Company. (c) "Company" means Marathon Electric Manufacturing Corporation, a Wisconsin corporation. (d) "Code" means the Internal Revenue Code of 1954, as interpreted and applied by regulations and rulings issued pursuant thereto, all as amended and in effect from time to time. (e) "Committee" means the Marathon Electric Pension and Savings Plans Committee established and appointed by the Board to perform such duties with respect to the Trust and its administration as provided herein and as the Board may from time to time delegate to the Committee. (f) "Contract" means any insurance contract between the Trustee and an insurer that may be established and held as part of the Trust Fund to provide for payment of benefits under any Plan. (g) "Employer" means the Company and any domestic subsidiary or affiliated corporation of the Company designated by the Committee which has adopted and maintains one or more of the Plans. (h) "ERISA" means the Employee Retirement Income Security Act of 1974, as interpreted and applied by regulations and rulings issued pursuant thereto, all as amended and in effect from time to time. (i) "Insurer" means any insurance company designated by the Committee which issues a Contract. (j) "Investment Manager" means any person, committee, insurance company, corporation, partnership or association which is authorized under this Trust Agreement to direct the investment and reinvestment of all or any portion of the assets of the Trust Fund in accordance with Article IV hereof, and which satisfies ERISA's definition of the term "investment manager". (k) "Manager's Account" means the portion of the Trust Fund over which one Investment Manager exercises discretion with respect to the 4 investment and reinvestment thereof or, with respect to any Plan with multiple investment funds controlled by one or more Investment Managers, each separate and distinct investment fund under such Plan. (l) "Plan" means an employee benefit plan of an employer which has been designated in accordance with Section 1.01 hereof to be funded, in whole or in part, under this Trust and which qualifies under the applicable Code provisions as evidenced by an Internal Revenue Service determination to that effect that exists at or is received subsequent to the time of such designation; provided, however, that this meaning shall be assigned to such employee benefit plan only while such designation is in full force and effect. (m) "Trust" means the Marathon Electric Master Pension Trust as embodied in this Trust Agreement. (n) "Trust Agreement" means this document executed by and between the Company and the Trustee as the same may, from time to time, be modified, altered or amended by the Board in accordance with Section 12.01 hereof. (o) "Trust Fund" means all Plan assets held by the Trustee under this Trust, including the earnings, income, additions and appreciation thereon and thereto, less the payments which at the time of reference shall have been made by the Trustee as authorized under this Trust Agreement. (p) "Trustee" means the M&I Marshall & Ilsley Bank, a Wisconsin banking corporation with trust powers, or any successor thereto, appointed by the Committee pursuant to Section 11.02 hereof to hold and administer this Trust in accordance with this Trust Agreement. Section 1.03. Other Definitions. Any term that is defined in ---------------------------------- the Plans shall have in this Trust Agreement the same meaning assigned to it in the Plans, unless the context hereof clearly indicates a different meaning. Section 1.04 Gender, Number and Other Term Construction. ---------------------------------------------------------- Wherever any words are used herein in the masculine, they shall be construed as though they were used in the feminine in all cases where they would so apply, and wherever any words herein are used in the singular or the plural they shall 5 be construed as though they were used in the plural or the singular, as the case may be, in all cases where they would so apply. The words "hereof", "herein", hereunder and other similar compounds of the word here shall mean and refer to the entire Trust Agreement and not to any particular Article or Section. Titles of Articles and Sections hereof are for general information only, and the Trust Agreement is not to be construed by reference thereto. ARTICLE II. ESTABLISHMENT, CONTINUATION --------------------------------------- AND PURPOSE OF TRUST -------------------- Section 2.01. Establishment and Continuation. ------------------------------------------------ To fund the Employer's Plans listed in Section 1.01(a) and those subsequently designated in accordance with Section 1.01(b) hereof, effective January 1, 1982 the Company hereby establishes with the Trustee this Trust which continues as a part thereof the trust and annuity contract created under any such Plan prior to the date on which, and to the extent that, this Trust is adopted as a funding medium for such Plan in lieu of such trust and annuity contract, subject, however, only to the terms and conditions of this Trust Agreement. Section 2.02. Trustee Acceptance. The Trustee hereby accepts the ----------------------------------- Trust Fund consisting of the total assets of the Plans listed in Section 1.01(a) as of January 1, 1982, together with such additional sums of money and other property acceptable to the Trustee as shall from time to time be paid or delivered to the Trustee, including, but not limited to, contributions under the Plans and such sums of money and other property which may be transferred to the Trustee by an insurance company or by any other trustee of any trust created to fund any Plan, and such earnings, income, additions and appreciation thereon and thereto as may occur from time to time. The Trustee shall hold the Trust Fund in trust and deal with it solely in accordance with the express terms and conditions of this Trust Agreement. Section 2.03. Purpose. This Trust is for the sole purpose of ------------------------ accumulating and distributing the Trust Fund to provide benefits under the provisions of the Plans as from time to time amended or modified. Except for that part of the Trust Fund which may be required to pay taxes and administration expenses as provided in Sections 6.01 and 6.02 hereof and which may be returned to an Employer pursuant to Section 6.03 hereof, at no time prior to the satisfaction of all liabilities with respect to the participants and their beneficiaries under any Plan, shall any part of the corpus or income attributable to such Plan be used for or diverted to purposes other than for the exclusive benefit of such participants and their beneficiaries and defraying the reasonable expenses of administering such Plan and this Trust. ARTICLE III. PAYMENTS FROM FUND --------------------------------- Section 3.01. Trustee's Duty. It shall be the duty of the Trustee ------------------------------- hereunder to make payments out of the Trust Fund to such persons or accounts (including any disbursing accounts which may be with the Trustee or any affiliate thereof) in such manner, at such times and in such amounts as may be specified in written directions received from time to time by the Trustee from the Administrator, which may include directions to the Trustee to pay benefits under any Plan through the purchase of one or more annuities under an individual or group annuity contract from a designated insurance carrier. Any such direction to the Trustee for payments out of the Trust Fund shall be in writing, signed by the Administrator or its duly authorized representative, and shall designate the Plan to which such direction is applicable. Unless the assets of the applicable Plan are segregated for investment purposes pursuant to Section 7.06 hereof or unless otherwise directed by the Administrator, payments shall be made by the Trustee from the Manager's Account subject to the Trustee's investment discretion, or, if the funds in such account are insufficient for such distribution, from the Manager's Account of any Investment Manager. The Trustee shall be fully protected in acting in good faith, without prior inquiry or investigation, to make payments out of the Trust Fund in accordance with such written direction, and amounts paid pursuant to any such direction shall thereafter no longer constitute a part of the Trust Fund. Should any payments made by the Trustee out of the Trust Fund be unclaimed, the Trustee shall notify the Administrator or its representative who had directed such payments to be made, and shall dispose of such payments as the Administrator or representative shall then direct. Except as provided above in this Section, the Trustee shall not be responsible in any way with respect to the determination, computation, payment or application of any benefit under any Plan or any other matter affecting the operation and administration of such Plan. ARTICLE IV. INVESTMENT OF FUND ASSETS -------------------------------------- Section 4.01. Appointment of Investment Manager. --------------------------------------------------- The Committee may appoint one or more Investment Managers to manage and control the investment and reinvestment of one or more Manager's Accounts. The Trustee, until notified in writing to the contrary, shall be fully protected in relying upon any written notice received from the Committee regarding the appointment of an Investment Manager. Such notice shall specify the effective date of the Investment Manager's appointment and the portion of the Trust Fund constituting its Manager's Account as determined in accordance with Section 4.02 hereof. The Trustee shall also be provided with copies of the resolution of the Committee appointing such Investment Manager and any agreement with it respecting such appointment; provided, however, that the Trustee shall not be required to be a party to such agreement except in the case of such an agreement under which the Trustee is to be an Investment Manager and/or where the Administrator, pursuant to the Committee's direction, requests the Trustee to enter into an agency and custody agreement with any Investment Manager which will also be the depositary and custodian of the Trust Fund assets allocated to its Manager's Account or into an insurance contract with an insurance company designated as an Investment Manager hereunder that may be established to serve as an investment or funding vehicle of the Trust Fund; provided further, that the terms and conditions of the appointment, authority, retention and removal of the Investment Manager shall be the sole responsibility of the Committee. During any period when an insurance company that is an Insurer is appointed and serving as an Investment Manager hereunder, the acts or omissions by such insurance company and its responsibilities in its capacity as an Insurer shall be separate and distinct from the acts or omissions of it and its responsibilities in its capacity as an Investment Manager, the same as if two different and unrelated entities were involved. Section 4.02. Establishment of Manager's Account. --------------------------------------------------- The Committee may direct the Trustee from time to time to allocate and reallocate the assets held in the Trust Fund into one or more Manager's Accounts which shall bear such designation as may be specified in such direction. At the time of the first allocation and of each reallocation, such direction may also specify the part, if any, of a Plan's assets held in the Trust Fund to be apportioned to each Manager's Account, and the Committee may reapportion all or any part of such assets of each Plan between or among the Manager's Accounts from time to time. Section 4.03. Trustee as Investment Manager. (a) It is recognized ---------------------------------------------- that the Trustee may be appointed as an Investment Manager pursuant to Section 4.01 hereof. The Trustee shall be deemed to be the Investment Manager with respect to any assets held in the Trust Fund which have not been allocated pursuant to Section 4.02 hereof to the Manager's Account of an Investment Manager other than the Trustee. In addition, whenever the Committee provides the Trustee with written notification that the appointment of an Investment Manager other than the Trustee has been terminated, the Trustee shall then be deemed to be the Investment Manager of the assets in the Manager's Account of the terminated Investment Manager until a new Investment Manager other than the Trustee has been appointed and qualified. Any portion of the Trust Fund assets as to which at any time the Trustee has been appointed or is deemed to be the Investment Manager shall constitute a separate Manager's Account of the Trustee for all purposes of this Trust Agreement. (b) Unless the Company elects to execute a separate agreement, the terms and conditions of this Trust Agreement shall be deemed to prescribe the authority, responsibilities, and duties of the Trustee whenever it serves in the capacity of an Investment Manager except that, with respect to such service, Sections 4.06 and 9.01 hereof shall have no effect and shall be disregarded. During the period of any such service, the acts and omissions by the Trustee and its responsibility in its capacity as Trustee shall be separate and distinct from the acts or omissions by it and its responsibility in its capacity as an Investment Manager, the same as if two different and unrelated entities were involved. Section 4.04. Authority of Investment Manager. An Investment ------------------------------------------------ Manager shall have the exclusive authority and discretion with respect to the investment and reinvestment of the Manager's Account under its management and control and, pursuant to such authority and discretion, may either direct the Trustee, from time to time and at any time, as to the exercise of its powers under Section 5.01(a)- (e) hereof that may be necessary or appropriate to carry out such authority and discretion or, where such Investment Manager has custody of the Trust Fund assets allocated to its Manager's Account, exercise such powers itself as may be necessary or appropriate to carry out such authority and discretion as is prescribed by any agreement with it respecting such custodianship and/or its appointment as an Investment Manager. The Trustee and any Investment Manager in whom fiduciary responsibility is vested for the management and control of any Manager's Account shall each exercise its fiduciary responsibility respecting its own Manager's Account, including without limitation any responsibility for diversification imposed by ERISA, as if its own Manager's Account constituted the entirety of the Trust Fund. In the event that there is more than one Investment Manager, the Committee shall be responsible for the overall diversification of the entire Trust Fund; the Trustee shall advise the Committee at any time that it is aware of a question that should be considered in fulfilling such responsibility. Section 4.05. Transactions for Manager Accounts. -------------------------------------------------- All transactions for a Manager s Account related to the purchase, sale, or other disposal of assets therein shall be made upon such terms and conditions and from and through such principals and agents as the Investment Manager assigned to that Manager's Account shall direct from time to time and at any time. Any Investment Manager, from time to time and at any time, may issue orders for the purchase or sale of securities directly to a broker or dealer. When such order involves securities that are or will be in the custody of the Trustee, written notification of the issuance of each such order shall be given promptly to the Trustee by such Investment Manager, and the execution of each such order shall be confirmed by the broker or dealer to such Investment Manager and to the Trustee. Such notification and confirmation shall be authority to the Trustee to receive securities purchased against payment therefor and to deliver securities sold against receipt of the proceeds therefrom, as the case may be. Section 4.06. Responsibility of Trustee. Unless the Trustee ------------------------------------------ participates knowingly in, or knowingly undertakes to conceal an act or omission of an Investment Manager which the Trustee knows or would reasonably be expected to know is a breach of fiduciary duty by an Investment Manager, the Trustee shall not be liable for any act or omission of such Investment Manager, and shall not be under any obligation to invest or otherwise manage the assets of the Manager's Account under the management and control of such Investment Manager. Without limiting the generality of the foregoing, the Trustee shall not be liable by reason of its taking or refraining from taking, at the direction of an Investment Manager, any action pursuant to Sections 4.04 and 4.05 hereof, or pursuant to a notification and confirmation of an order to purchase or sell securities issued by an Investment Manager, nor shall the Trustee be liable by reason of its refraining from taking any action because of the failure of an Investment Manager to give such direction or order. The Trustee shall be under no duty to question or to make inquiries as to any direction or order or failure to give direction or order by an Investment Manager. So long as the designation of an Investment Manager for a Manager's Account remains in effect, the Trustee shall be under no duty to make any review of the investments acquired for and/or held in such Manager's Account at the direction or order of the Investment Manager and shall be under no duty to make any recommendations with respect to disposing of or continuing to retain any such investment. Section 4.07. Temporary Investment of Cash Reserves. ------------------------------------------------------ With respect to cash reserves of its Manager's Account, an Investment Manager shall have the discretionary authority, which authority may, from time to time and at any time, be delegated to the Trustee, to temporarily invest and reinvest such cash reserves in debt securities (including obligations of the Government of the United States and variable amount demand notes) payable on demand or having maturities not exceeding one (1) year or, subject to the provisions of Section 5.01(a) hereof respecting certain common, pooled, diversified, or consolidated funds, in interests of any such fund that is created and maintained by such Investment Manager or the Trustee from time to time for the collective short-term investment of the cash reserves in trusts for employee benefit plans qualified under the applicable provisions of the Code; provided, however, that, unless and until written delegation of such authority is received by the Trustee, it shall have no obligation or responsibility to so invest and reinvest the cash reserves of the Manager's Account of such Investment Manager except that the Trustee shall be deemed to have been delegated such authority with respect to any Manager's Account as to which it may be the Investment Manager. Section 4.08. Review of Investment Managers. The function of --------------------------------------------- monitoring, reviewing and evaluating the performance of an Investment Manager and the Trustee shall be the responsibility of the Committee. The Trustee shall provide such reports, information, cooperation and assistance to the Committee as it may, from time to time and at any time, request and require to enable it to fulfill and/or exercise its duties, responsibilities, powers and rights with respect to the aforementioned function. Section 4.09. Plan Funding Policy. The Committee shall ----------------------------------- determine the funding policy and method required by ERISA for each Plan to the extent such policy and method are not set forth in such Plan and shall communicate its determination in this regard to the Trustee and each Investment Manager. In addition to determining the allocation and reallocation of the Trust Fund's assets among Manager's Accounts as provided by Section 4.02 hereof, the Committee shall determine each Manager's Account's allocable share of each Employer's and, if any, the participants' respective contributions to any Plan; provided, however, that, where any such contributions to a Plan must be allocated to a particular Manager's Account because of an explicit provision of such Plan to that effect and/or a participant's investment direction specifically permitted thereunder, such provision and/or direction shall govern such allocation without any approval thereof by the Committee being required. ARTICLE V. TRUSTEE POWERS -------------------------- Section 5.01. General Powers. Subject to the direction and ------------------------------- control of an Investment Manager as provided in Article IV hereof, the Trustee is authorized and empowered: (a) to invest and reinvest the assets of the Trust Fund, without distinction between principal and income, in shares, stocks, securities or other evidences of ownership (whether common or preferred), bonds, notes, debentures or other obligations of every description (whether or not secured by mortgages on real or personal property or other collateral wherever situated), including any part interest in a bond, note or mortgage (whether or not insured), trade acceptances or other commercial paper, loans or deposits at interest on call or on time (whether or not secured by collateral and/or maintained with the Trustee, an Investment Manager or any affiliate of either), savings and/or checking accounts maintained by a bank or other financial institution (including the Trustee, any Investment Manager or any affiliate of either), and any other property or part interest in property, real or personal, domestic or foreign (whether or not productive of income or consisting of wasting assets), including interests in any common, pooled, diversified or consolidated fund qualified for tax exemption under the appropriate provisions of the Code, and maintained by a bank or other financial institution (including the Trustee, any Investment Manager or any affiliate of either) for the purpose of investing assets held in trust under plans qualified under said Code, which fund may be designated by an Investment Manager, from time to time and at any time, whereupon, during the effective period of such designation, any instrument governing such fund shall be deemed to be incorporated in and made a part of this Trust Agreement as fully and to all intents and purposes as if set forth herein at length; (b) to sell, exchange, convey, transfer or dispose of and also to grant options with respect to, any property, whether real or personal, at any time held by the Trustee, and any sale may be made by private contract or by public auction, and 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; (c) to retain, manage, operate, repair and improve and to mortgage or lease for any period (including any renewal or extension thereof) any real estate held by the Trustee; (d) to compromise, compound, settle or submit to arbitration any debt, claim or other obligation due from third persons to it or to third persons from it, as Trustee hereunder, and to reduce the rate of interest on, to extend or otherwise modify, or to foreclose upon default or otherwise enforce or refrain from enforcing any such obligation; (e) to vote, subject to Section 5.02 hereof, upon any stocks, bonds or other securities held in the Trust Fund; to give general or special proxies or powers of attorney with or without power of substitution; to buy, sell, or exercise any conversion or redemption privileges, subscription rights or other options appurtenant to such stocks, bonds or other securities and to make any payments incidental thereto; to deposit such stocks, bonds or other securities in any voting trust or with protective or like committee or depositary designated thereby; to join in any protective agreement; to join in, dissent from or oppose the reorganization, recapitalization, consolidation, sale or merger of corporations or properties in which it may be interested as Trustee, upon such terms and conditions as it may deem wise, and to accept any securities which may be issued upon any such reorganization, recapitalization, consolidation, sale or merger, and thereafter to hold the same; and in general to exercise any of the powers and rights of an owner with respect to any stocks, bonds, securities or other property held in the Trust Fund; (f) to own any Contract with an Insurer, and to exercise any option, privilege or benefit in connection therewith, including, without limitation, the right to collect and receive the proceeds and all dividends or other distributions thereon; to surrender any such Contract for cash; to change the persons to whom and the manner in which the proceeds of any such Contract shall be paid; to convert any such Contract from one form to another; to sell or assign any such Contract; to execute all necessary receipts and releases to any Insurer; to purchase one or more annuities under the terms of a group annuity contract; and to compromise or adjust any claim arising out of any such Contract; (g) to make, execute, acknowledge and deliver any and all deeds, leases, assignments, documents of transfer and conveyance and any and all other instruments that may be necessary or appropriate to carry out the powers herein granted; (h) to enforce any right, obligation or claim in its discretion and in general to protect in any way the interests of the Trust Fund, either before or after default, and in case it shall consider such action for the best interests of the Trust Fund, in its discretion, to abstain from the enforcement of any right, obligation, or claim or to abandon any property, whether real or personal, which at any time may be held by it; (i) to borrow or raise moneys for the purpose of this Trust in such amount and upon such terms and conditions as the Trustee in its discretion may deem advisable; and for any sums so borrowed to issue its promissory note as Trustee and to secure the repayment thereof by pledging all or any part of the Trust Fund; and no person loaning money to the Trustee shall be bound to see the application of the money loaned or to inquire into the validity, expediency or propriety of any such borrowing; (j) to cause any investments of the Trust Fund to be registered in, or transferred into, its name as Trustee or the name of its nominees or to retain them unregistered or in form permitting transferability by delivery, but the books and records of the Trustee shall at all times show that all such investments are part of the Trust Fund and the Trustee shall be absolutely liable for any loss occasioned by the acts of its nominees with respect to investments registered in the name of its nominees and for any other failure to fulfill its responsibilities for safe custody and disposition of the Trust Fund in accordance with the terms and conditions of this Trust Agreement; (k) from time to time, to employ such legal, actuarial, accounting, investment, and other assistants as it may deem necessary for administering the Trust Fund; in any case in which the Trustee employs any such assistant, it shall retain exclusive authority and discretion for administration and operation of the Trust Fund; (l) to organize and incorporate under the laws of any state it may deem advisable one or more corporations and to acquire an interest in any such corporation that it may have so organized and incorporated for the purpose of acquiring and holding title to any property, interest or rights that the Trustee is authorized to acquire under this Section; and (m) to do all acts which it may deem necessary or proper and to exercise any and all powers of the Trustee under this Trust Agreement upon such terms and conditions as to it may deem for the best interests of the Trust Fund and the participants of the Plans. Section 5.02. Employer Securities and Real Property. ------------------------------------------------------ (a) Notwithstanding any provision in this Trust Agreement to the contrary, the assets of the Trust Fund may be invested and reinvested in any security and/or real property of an Employer only to the extent that such investment and reinvestment is permitted under ERISA. It shall be the responsibility of the Committee, based upon information and advice provided by the Trustee, to insure at all times that ERISA's percentage limitations with respect to such investment and reinvestment are not exceeded and to provide from time to time each Investment Manager with such information as may be necessary and appropriate to preclude any such investment and reinvestment for its Manager's Account from resulting in such limitations being exceeded. Section 5.03. Investment in Real Property. In the event that -------------------------------------------- any investment is made by an Investment Manager in real property, then the Trustee shall have the right to request, as a condition precedent to its executing any documents or paying over any Trust Fund assets in connection with such transaction, receipt of (i) a certified appraisal that the property has a value at least equal to the transaction price and that the property is in the form and condition described in such documents, and (ii) an opinion of counsel (who may be counsel to the Investment Manager) that such documents are in proper form for execution by the Trustee, that such deed or document has been or will be properly recorded under all applicable laws and that appropriate policies adequately insuring this Trust against loss for any reason (including a defect in title) have been procured in the name of the Trustee. In addition, the Investment Manager shall provide the Trustee, upon request, with current appraisals of such property which may be relied upon by the Trustee for all valuation and accounting purposes under this Trust Agreement. ARTICLE VI. TAXES, EXPENSES, TRUSTEE ------------------------------------- COMPENSATION AND RETURNS TO EMPLOYERS ------------------------------------- Section 6.01. Taxes. The Trustee, after receiving the written ---------------------- approval of the Committee, shall pay from the Trust Fund all taxes of any and all kinds whatsoever that may be levied or assessed under existing or future laws upon the Trust Fund or the income thereof and, in its discretion, may contest the validity or the amount of any such taxes. The payment of any such taxes shall be allocated and charged to any particular Plan in the manner provided in Section 6.02 hereof for allocating and charging administrative expenses. Section 6.02 Expenses and Trustee Compensation. Unless they ------------------------------------------------- are paid by an Employer, the Trustee shall pay from the Trust Fund all reasonable expenses incurred in the administration of this Trust and any Plan, including, but not limited to, actuarial, legal and accounting fees, brokerage commissions and costs, such Trustee compensation and fees as shall be agreed upon in writing between the Committee and the Trustee, and such fees, costs, and other expenses that the Committee may certify in writing to the Trustee for payment from the Trust Fund. Unless the Committee otherwise directs pursuant to Section 7.06 hereof, any expenses paid from the Trust Fund shall be charged against the Trust Fund as a whole. Section 6.03 Amounts Returnable to Employers. ----------------------------------------------- (a) In the case of a contribution to any Plan that is made by an Employer by a mistake of fact, as certified to by such Employer's consulting actuaries, independent public accountants and/or legal counsel, such contribution shall, upon written direction of the Administrator, be returned to such Employer within one (1) year after the payment of such contribution. (b) If a contribution to any Plan by an Employer is expressly conditioned on either the initial qualification of such Plan or the deductibility of such contribution under the applicable provisions of the Code and if such Plan does not so qualify or the deduction is disallowed, in whole or in part, then such contribution shall, upon written direction of the Administrator, be returned to such Employer within one (1) year after the date of denial of initial qualification of such Plan or disallowance of the deduction, as the case may be, provided, however, that, in the latter instance, such contribution shall be returned to such Employer only to the extent of such disallowance, provided further that the provisions of this subsection (b) shall not be effective and operative to the extent such provisions would cause the disqualification of any Plan, result in any Employer contribution being disallowed or otherwise contravene any provision of law, but to the extent such provisions may be effective and operative, each Employer hereby declares its intention and action that every contribution by it to any Plan shall be conditional upon such initial qualification or such deductibility, as the case may be. (c) In the case of the termination of any Plan of an Employer which is a defined benefit plan under ERISA, any residual assets of such terminated Plan may be distributed to such Employer at the written direction and in the discretion of the Administrator (or of a trustee appointed upon the application of the Pension Benefit Guaranty Corporation) if all liabilities of such terminated Plan to participants and their beneficiaries have been satisfied and the distribution does not contravene any provision of law. The certificate of an enrolled actuary engaged by such Administrator pursuant to ERISA stating there are residual assets of such terminated Plan remaining in the Trust Fund after all liabilities of such terminated Plan to participants and their beneficiaries have been satisfied shall be conclusive evidence of that fact. Notwithstanding the foregoing provisions of this subsection (c), prior to any distribution to such Employer, any assets of such terminated Plan attributable to employee contributions shall, at the written direction of the Administrator (or of a trustee appointed upon the application of the Pension Benefit Guaranty Corporation) be equitably distributed to the employees who made such contributions (or their beneficiaries) in accordance with their rate of contribution. ARTICLE VII. VALUATION OF TRUST FUND ------------------------------------- Section 7.01. Separate Plan Accounts. The Trustee shall --------------------------------------- maintain separate accounts reflecting each Plan's allocable share in any Manager's Account, any Contract and the Trust Fund as a whole, and no amount attributable to one Plan may be used to satisfy the liabilities of any other Plan. For this purpose, the Trustee shall determine, as of each Valuation Date (as defined in Section 7.04 hereof), the value of the assets of each Manager's Account, each Contract and the total Trust Fund and each such allocable share in accordance with the procedures set forth in this Article VII. In addition, for the convenience of the Company, the Committee may request the Trustee from time to time to include in any Plan's account other assets that do not constitute part of the Trust Fund for the purposes of determining the value of all of the assets of such Plan, in which event the Trustee shall be fully protected in relying upon any certified appraisal or other form of valuation submitted to it by any person controlling such other assets. Section 7.02. Valuation of Trust Fund. (a) The share allocable ---------------------------------------- to each Plan in the Trust Fund and in each Manager's Account shall be expressed in such manner as the Trustee and the Committee shall from time to time agree, provided that each Plan's allocable share reflect the current market value of the applicable assets. No Plan shall have any right, title or interest in or to any specific asset of the Trust Fund, but each shall have an undivided allocable share equal to the dollar value of the Trust Fund allocable to it as herein provided. The Trustee shall not issue any certificate or other documentation representing any such allocable share or any part thereof. (b) In the case of a contribution allocated to a Manager's Account, the Trustee shall allocate to the allocable share of the Plan with respect to which such contribution is made a value as of the time of the contribution equal to the amount contributed. (c) In the case of a withdrawal from a Manager's Account, the Trustee shall pay the amount withdrawn and shall reduce the allocable share of the Plan with respect to which such withdrawal is made by a value at the time of the withdrawal equal to the amount withdrawn. (d) In determining the allocable share of each Plan in any Contract held in the Trust Fund, the Trustee may rely upon whatever form of valuation and statement such allocation has been most recently submitted to it by the Insurer of such Contract as of any Valuation Date. The Trustee shall adjust such valuation and statement to reflect any transaction between it and such Insurer which may have occurred between the date of such valuation and statement and the Valuation Date involved. Section 7.03 Accounting for Contributions. The Committee shall -------------------------------------------- notify the Trustee as to each Plan's allocable share of any and all cash or other property initially or at any time contributed by an Employer to the Trustee or transferred to it from the trustees of predecessor plans or from predecessor trustees. The Trustee shall keep separate accounts of the shares of the Trust Fund allocable to such Plan, expressed in accordance with Section 7.02 hereof. Section 7.04 Valuation Date. The Trustee shall determine the ------------------------------ value of the Trust Fund as of an initial date and as of any subsequent dates which may be agreed upon between it and the Committee and also regularly as of the last day of each calendar month after the Trust Fund is established (hereinafter called "Valuation Dates"). Section 7.05 Withdrawal of a Plan. Subject to the provisions of ------------------------------------ Section 7.02(c) and 7.04 hereof, the allocable share of any Plan may be withdrawn from the Trust Fund and transferred to any successor trustee, insurance company or successor funding medium upon the written direction to the Trustee by the Committee. Any such written direction of the Committee shall identify the Plan to which the withdrawal direction relates, so that the Trustee may adjust its separate accounting for the share of the Trust Fund allocable to such Plan accordingly. Section 7.06 Accounting for Income, Expenses, Appreciation and ----------------------------------------------------------------- Depreciation. The Trustee shall allocate any income, expenses, or - ------------ appreciation or depreciation in the value of each Manager's Account among the Plans participating in such Manager's Account in proportion to the value of each Plan's participation, as determined in accordance with Section 7.02 hereof, in such Manager's Account as of the last day of the applicable valuation period. ARTICLE VIII. REPORTS AND ACCOUNTINGS -------------------------------------- Section 8.01 Audit of Trustee Accounts. The Trustee shall keep ---------------------------------------- accurate and detailed accounts of all investments, receipts, disbursements and other transactions hereunder for the Trust Fund (including any Manager's Account and any Contract) and all accounts, books and records relating thereto shall be open to inspection and audit at all reasonable times during business hours of the Trustee by any person or persons designated by the Committee. Section 8.02 For Each Plan. (a) With respect to each Plan, within ----------------------------- ninety (90) days after the end of each calendar year, the Trustee shall prepare and deliver to the Committee a statement of the accounts and proceedings of the Plan's account for such year, including any assets outside the Trust Fund for which the Committee has directed accounting by the Trustee pursuant to Section 7.01 hereof. Each such statement shall be certified as accurate by appropriate officers of the Trustee and, with respect to each Plan, for the year in question shall contain such detailed information as is required by ERISA and the Code to be included in any annual report to be filed by the Administrator for such Plan with the Secretary of the U.S. Department of Labor (hereinafter called "Secretary") and the Internal Revenue Service. Such statement shall also contain such other information as may be reasonably required by the Administrator to enable it to comply with ERISA, the Code and other applicable law. The Committee shall, from time to time, advise the Trustee in writing as to the specific information that is to be contained in such statement which shall be in a form satisfactory to the Committee. (b) If some or all of the assets of the Trust Fund are held in any common, pooled, diversified or consolidated fund maintained by a bank or similar financial institution as provided in Section 5.01(a) hereof or in a Contract or in some other separate account maintained by an insurance carrier or a separate trust maintained by a bank or similar financial institution, as trustee, any statement provided under subsection (a) of this Section shall include the most recent annual statement of assets and liabilities of such fund, and in the case of a Contract or such other separate account or a separate trust, such other information as shall be required to be included in any annual report to be filed with the Secretary and the Internal Revenue Service. (c) In addition, as soon as practicable after withdrawal from the Trust Fund of the allocable share of any Plan or termination, in whole or in part, of any Plan, the Trustee shall file with the Committee a written account of all its transactions relating to such Plan during the period from the last previous accounting to the date of such withdrawal or termination, including the information described in subsection (a) and (b) of this Section. Section 8.03 Trust Fund. Within ninety (90) days after the end ------------------------- of each calendar year, the Trustee shall prepare and deliver to the Committee a statement of the accounts and proceedings of the Trust Fund (which statement shall include substatements showing the accounts and proceedings of each Manager's Account and each Contract) for such year. Each such statement (and each such substatement) shall be in a form satisfactory to the Committee, and shall contain a listing of all receipts and disbursements and all investments and other transactions in the Trust Fund (and in each Manager's Account and each Contract) during the year, shall set forth the assets and liabilities aggregated by categories and valued at fair market value, shall set forth the assets at cost to the Trust Fund, shall specify the rate of return, and shall contain such additional information as shall be agreed upon by the Trustee and the Committee. In addition to the foregoing, the Trustee shall provide to the Committee such additional reports, information, cooperation and assistance as the Administrator, the Company and/or the Committee may, from time to time and at any time, request and require in connection with their operation and functions. Section 8.04 Settlement of Trustee Accounts. Unless the Committee ---------------------------------------------- notifies the Trustee in writing of its objections to and disapproval of any statement of accounts of the Trustee within six (6) months of the Committee's receipt thereof, such statement shall be deemed approved by the Company. In case of any disapproval of any statement of accounts of the Trustee, an audit of such statement shall be made by an independent certified public accountant appointed by the Committee, unless a corrected statement shall have been rendered to the Committee and approved in writing by it. Upon completion of such audit, the inaccuracies in such statement so audited, if any, shall be corrected to conform to such audit and a corrected statement shall be delivered by the Trustee to the Committee. Any such corrected statement shall stand approved as the statement of account of the Trustee as to all matters embraced therein, without further approval. An approved or corrected statement of account shall constitute an account stated between the Trustee and the Company as to all matters embraced in such statement, and shall be binding and conclusive upon all persons interested in the Trust Fund to the same extent as if the account of the Trustee had been settled and allowed in a proceeding for judicial settlement of its accounts in any court of competent jurisdiction, to which all such persons had been made parties; provided, however, that no such statement of accounts nor the Committee's approval thereof shall be deemed to relieve the Trustee of any liability which may be imposed upon it for violation of a specific provision of ERISA and/or the Code; provided further that nothing contained in this Trust Agreement shall be deemed to deprive the Trustee and/or the Company of the right to have a judicial settlement of the Trustee's accounts. ARTICLE IX. COMMUNICATIONS --------------------------- Section 9.01 Investment Manager. Each Investment Manager shall, ---------------------------------- from time to time, furnish the Trustee with the name and specimen signature of any person authorized to direct the Trustee on its behalf under this Trust Agreement. The Trustee shall have the right to request that all directions and orders from the Investment Manager be in writing and shall assume no liability hereunder for failure to act pursuant to such directions and orders unless and until they are received in a form satisfactory to it. Section 9.02 Administrator and Investment Committee. The names ----------------------------------------------------- of the members of the Administrator and the Committee and of any person authorized to act on behalf of such Administrator and/or Committee hereunder shall be certified to the Trustee by the Company, together with the specimen signature of each such person. Section 9.03 Board and Company. Any action required or permitted --------------------------------- under this Trust Agreement to be taken by the Board shall be evidenced by a Board resolution certified to the Trustee by the secretary or assistant secretary of the Company under its corporate seal. Whenever the provisions of this Trust Agreement require or permit any action to be taken by the Administrator or the Committee without Board action, such action shall be evidenced by a certificate signed by any member of the Administrator or the Committee whom the Company has identified, with the specimen signature of such member, to the Trustee. Section 9.04 Reliance on Written Communications. Until -------------------------------------------------- appropriate written evidence to the contrary is received by the Trustee, it shall be fully protected in relying upon and acting in accordance with any written notice, instruction, direction, certificate, resolution or other communication believed by it in good faith to be genuine and to be signed and/or certified by any proper person, and the Trustee shall be under no duty to make any investigation or inquiry as to the truth or accuracy of any statement contained therein. Until notified in writing to the contrary, the Trustee shall have the right to assume that there has been no change in the identity or authority of any person previously certified to it under this Article. Section 9.05 Plan Documents. The Administrator shall provide the ------------------------------ Trustee with copies of all documents constituting any Plan at the time such Plan is designated in accordance with Section 1.01 hereof to be funded, in whole or in part, under this Trust as well as any other document amending or supplementing such Plan promptly following its adoption. The Trustee shall be entitled to rely upon the Administrator s attention to this obligation and shall be under no duty to inquire of the Administrator as to the existence of any documents not provided by the Administrator under this Section. ARTICLE X. FIDUCIARIES AND TRUSTEE LIABILITY -------------------------------------------- Section 10.01. Named and Other Fiduciaries. The Board, the --------------------------------------------- Administrator, and the Committee are named Fiduciaries within the meaning of ERISA with respect to each Plan and, to the extent of such Plan's assets held in the Trust Fund, this Trust. The Trustee is a named fiduciary with respect to the Trust and, to the extent a Plan s assets are held in the Trust Fund, such Plan. Each Investment Manager is a fiduciary within the meaning of ERISA with respect to its Manager's Account and, insofar as the assets in that Manager's Account are concerned this Trust and each Plan whose benefits are funded, in whole or in part, by such assets. Section 10.02. Allocation of Fiduciary Responsibilities. The ---------------------------------------------------------- fiduciary responsibilities (within the meaning of ERISA) allocated to each fiduciary designated in Section 10.01 hereof shall consist of the responsibilities, duties, authority, and discretion of such fiduciary which are expressly provided in this Trust Agreement and any related documents, including but not limited to any agreement with an Investment Manager and any Plan document. Each such fiduciary may obtain the services of such legal, actuarial, accounting, investment and other assistants as it deems appropriate, any of whom may be assistants who also render services to any other such fiduciary, any Plan and/or any Employer, provided, however, that where such services are obtained, such fiduciary shall not be deemed to have delegated any of its fiduciary responsibilities to any such assistant but shall retain full and complete authority over and responsibility for any activities of such assistant. Sectoion 10.03. Trustee Liability. The Trustee shall not be ------------------------------------ liable for the making, retention, or sale of any investment or reinvestment made by it as herein provided or for any loss to or diminution of the Trust Fund, or for anything done or omitted to be done by it, except as and only to the extent that such action constitutes a violation of a specific provision of ERISA and/or the Code. The Trustee shall not be liable for any act which is not included within its power hereunder and which has been done pursuant to the proper written direction of the Company, the Board, the Administrator, the Committee, or any Investment Manager, except as and only to the extent that such action constitutes a violation of a specific provision of ERISA and/or the Code. The Trustee shall be under no duty to determine whether the amount of any contribution to any Plan is in accordance with the terms thereof or to collect or enforce payment of any such contribution. The Trustee shall not be required to give any bond or other security for the faithful performance of its duties and responsibilities under this Trust Agreement, except as may be required from time to time under ERISA. ARTICLE XI. SUCCESSOR TRUSTEE ------------------------------ Section 11.01 Removal or Resignation of Trustee. The Trustee -------------------------------------------------- may be removed by the Committee at any time upon thirty (30) days' notice in writing to the Trustee, or upon notice acceptable to the Trustee. The Trustee may resign at any time upon one hundred twenty (120) days' notice in writing to the Committee, or upon shorter notice acceptable to the Committee. In the event of such removal or resignation, the Trustee shall have the right to have its accounts settled as provided in Section 8.04 hereof. Section 11.02 Successor Trustee of Trust Fund. Upon Such ------------------------------------------------ removal or resignation of the Trustee, the Committee shall either (i) appoint a successor trustee who shall have the same powers and duties as those conferred upon the Trustee hereunder and, upon acceptance of such appointment by the successor trustee, the Trustee shall assign, transfer and pay over to such successor trustee the funds and properties then constituting the Trust Fund, or (ii) establish an alternative funding medium and the Trustee shall assign, transfer and pay over to the Trust Fund, as then constituted, upon the directions of the Committee. The Trustee is authorized, however, to reserve a reasonable amount for payments of its fees and expenses in connection with the settlement of its account or otherwise, and any balance of such reserve remaining after the payment of such reasonable fees and expenses shall be paid over to the successor trustee or alternative funding medium, as the case may be. Notwithstanding any provision of the Plans or this Trust Agreement to the contrary, the Trustee is hereby authorized to invest and reinvest such reserve in any investment or investment vehicle appropriate for the temporary investment of cash reserves as provided in Section 4.07 hereof. (b) If for any reason the Committee cannot or does not act in the event of the resignation or removal of the Trustee, as hereinabove provided, the Trustee may apply to a court of competent jurisdiction for the appointment of a successor trustee. Any expenses incurred by the Trustee in connection therewith shall be deemed to an expense of administration payable in accordance with Section 6.02 hereof. ARTICLE XII. AMENDMENT Of TERMINATION -------------------------------------- Section 12.01 Amendment or Termination of Trust Agreement. ------------------------------------------------------------ The Company reserves the right at any time and from time to time by action of the Board to modify or amend in whole or in part any or all of the provisions of this Trust Agreement by notice thereof in writing delivered to the Trustee, or to terminate this Trust Agreement upon thirty (30) days' prior notice in writing delivered to the Trustee; provided, however, that no modification or amendment which affects the rights, duties or responsibilities of the Trustee may be made without the Trustee's consent. Section 12.02 Termination or Partial Termination of Plans. ------------------------------------------------------------ In the event of the termination or partial termination of any Plan, the Trustee shall dispose of the assets of such Plan or allocable portion thereof in the manner provided in such Plan and as may be directed by the Administrator subsequent to the Trustee's receipt of a copy of any approval of such termination or partial termination which may be required from any federal government agency or other authority under ERISA and/or the Code. Upon such termination or partial termination of any Plan, the Trustee shall have the right to have its accounts settled as provided in Section 8.04 hereof. ARTICLE XIII. MISCELLANEOUS ---------------------------- Section 13.01 No Assignment of Interest. No interest in, and no ------------------------------------------ rights or claims to, any of the assets of the Trust Fund shall be assignable in anticipation of payment either by voluntary or involuntary act or by operation of law, or be liable in any way for the debts, obligations or defaults of any participant or beneficiary of a Plan. Any attempt at assignment or other disposition of such assets shall be void. Section 13.02 Responsibility of Insurer. No Insurer which may ------------------------------------------ issue any Contract held as part of the Trust Fund shall be obliged to inquire into the terms of the Trust Agreement or be responsible for any action of any Employer, the Board, the Administrator, the Committee, any Investment Manager or the Trustee. No such Insurer shall be obligated to see to the distribution or further application of any proceeds paid by it to the Trustee or paid in accordance with the written direction of the Trustee. Section 13.03 Wisconsin Law to Govern. Notwithstanding the -------------------------------------- location of the Trustee or the situs of any portion of the Trust Fund, this Trust Agreement shall be construed and enforced and its validity determined according to the laws of the State of Wisconsin, and all provisions hereof shall be administered according to such laws, to the extent such laws are not preempted by federal laws. Section 13.04 Illegality. In case any provision of this Trust --------------------------- Agreement shall be held illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts of this Trust Agreement which shall then be construed and enforced as if such illegal or invalid provision had never been inserted herein. Section 13.05 Waiver of Notice. Any notice required under this --------------------------------- Trust Agreement may be waived by the party or person entitled thereto. Section 13.06 Counterparts. This Trust Agreement may be executed ----------------------------- in a number of counterparts, each of which shall be deemed an original, and such counterparts shall constitute but one and the same instrument and may be sufficiently evidenced by any one counterpart. Section 13.07 Successors and Assigns. This Trust Agreement shall be binding and insure to the benefit of the successors and assigns of the Company and the Trustee, respectively. IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to be executed and attested in duplicate originals by their respective officers thereunto duly authorized, and their corporate seals to be hereunto affixed, as of the day and year first above written. MARATHON ELECTRIC MANUFACTURING CORPORATION By____________________________________ Attest________________________________ [CORPORATE SEAL] M&I MARSHALL & ILSLEY BANK, as Trustee By____________________________________ Attest________________________________ [CORPORATE SEAL] EX-4.3 4 EXHIBIT 4.3 MASTER TRUST AGREEMENT This Agreement made as of November 1, 1997, between Regal-Beloit Corporation, (hereinafter referred to as the "Company") and MARSHALL & ILSLEY TRUST COMPANY, a Wisconsin banking corporation (hereinafter referred to as the "Trustee"). WITNESSETH: WHEREAS, the Company and certain of its affiliated and subsidiary corporations listed in Appendix A attached hereto (which affiliated and subsidiary corporations shall hereinafter be referred to singularly or collectively as the "Corporation" or the "Corporations") have established certain pension retirement and other employee benefit plans for the exclusive benefit of their respective eligible employees and the beneficiaries thereof (which plans shall hereinafter be referred to as the "Separate Plans"), each of which Separate Plans is listed in Appendix A attached hereto and constitutes a qualified pension plan within the meaning of Section 401 (a) of the Internal Revenue Code, as amended; and WHEREAS, on November 1, 1997, the Company established a master trust; WHEREAS, under the terms of each of the Separate Plans, the Company and the Corporations have, pursuant to the terms of the Separate Plans, entered into a trust agreement or agreements establishing certain trusts thereunder (which trusts shall hereinafter be referred to as the "Separate Trusts"), each of which Separate Trust is listed in Appendix A attached hereto and constitutes a trust exempt from tax under Section 501 (a) of the Internal Revenue Code, as amended, by reason of forming a part of a Separate Plan qualified under Section 401 (a) of said Code, as amended; and WHEREAS, the Company and the Corporation now desire to establish a single master trust for, among other purposes, the collective investment of the assets of the Separate Trusts and such additional property as may from time to time be contributed thereto under the terms of the Separate Plans, which master trust is intended to be exempt from tax under Section 501 (a) of the Internal Revenue Code, as amended, by reason of its forming a part of plans qualified under Section 401 (a) of the Internal Revenue Code, as amended; and WHEREAS, the assets of the separate master trust so transferred to the aforesaid master trust, together with such additional property as may from time to time be contributed hereto under the terms of the Separate Plans, shall be invested,reinvested and administered by the Trustee as a single trust under the Separate Plans; and WHEREAS, the Trustee is willing to hold such assets and to invest, reinvest and administer the same pursuant to the terms of this Master Trust Agreement; NOW, THEREFORE, in consideration of the premises and of the mutual covenants herein contained, the Company and the Trustee do hereby covenant and agree as follows: ARTICLE ONE 1.01 The Company hereby establishes with the Trustee a Master Trust consisting of such sums of money and such property acceptable to the Trustee as shall from time to time be paid or delivered to the Trustee and the earnings and profits thereon. All such money and property, all investments made therewith and proceeds thereof and all earnings and profit thereon, less the payments or other distributions which, at the time of reference, shall have been made by the Trustee, as authorized herein, and referred to herein as the "Master Fund", or the "Fund," and shall be held by the Trustee, in trust, and dealt with in accordance with the provision of the Agreement. 1.02 When the assets of each Separate Trust are transferred to the Trustee, the Separate Trusts shall cease to exist as separate trusts and shall be considered to continue hereafter as a single trust hereunder. ARTICLE TWO 2.01 Each of the Separate Plans shall be a Participating Plan hereunder. 2.02 Any other Plan may be funded in whole or in part through the Master Trust and become a Participating Plan thereby only if all of the following conditions have been met: a. The Company, or a Corporation has established the Plan; b. The Plan is qualified under Section 401 (a) of the Internal Revenue Code of 1986, as amended; c. The Master Trust is exempt from taxation under Section 501 (a) of the Internal Revenue Code of 1986, as amended; d. The Master Trust (as then in effect and as the same may be amended from time to time) has been duly adopted as a trust under the Plan and in the case of a Corporation, the Company has consented thereto; e. The Master Trust is maintained at all times as a domestic trust in the United States; and f. The Company is duly authorized under the Plan to exercise on behalf of such Plan all of the authority vested in it by the terms of this Master Trust. 2.03 When the Master Trust is adopted as a trust under the Plan of any Corporation, such Corporation shall be bound by the decisions, instructions, actions and directions of the Company under this Agreement and the Trustee shall be fully protected by the Company and such Corporation in relying upon such decisions, instructions, actions and directions of the Company. The Trustee shall not be required to give notice to or obtain the consent of any such Corporation with respect to any action which is taken by the Trustee pursuant to this Agreement, and the Company shall have the sole authority to enforce this Agreement on behalf of any such Corporation. 2.04 Responsibility for the management and control of the assets of Plans utilizing the Master Trust as a funding medium (including the power to acquire or dispose of such assets) may be vested at the discretion of the Company in the Trustee and/or in one or more Investment Managers appointed by the Company. That portion of the fund for which the Trustee shall have such responsibility is hereinafter referred to as the "Discretionary Fund." Any portion of the Master Fund over which an Investment Manager shall have such responsibility is hereinafter referred to as a "Directed Fund." Allocation of assets of the Fund between or among any Discretionary or Directed Funds shall be determined by the Company. Further, the Company, being a named fiduciary for this purpose, reserves the right to itself to direct the Trustee respecting the management and control of certain assets of specified Plans (including the power to acquire or dispose of such assets) and such portion of the Master Fund over which the Company shall have such responsibility is hereinafter referred to as the "Company Directed Fund." The Company may direct the Trustee to hold all or any part of the assets from time to time constituting the Company Directed Fund separate and apart from the assets of the Master Fund. For efficiency or convenience of investment or administration, the Master Fund or the Discretionary, Directed or Company Directed Fund may be divided into such one or more sub-funds as the Company or the Trustee may deem advisable. For the purpose of this Agreement, "Investment Manager" shall mean an investment adviser registered under the Investment Advisers Act of 1940, a bank (other than the Trustee) as defined in the Act, or an insurance company qualified to perform investment management services under the laws of more than one State, which shall have acknowledged in writing to the Company that it is a fiduciary with respect to all Participating Plans, and which shall have the power to manage, acquire and dispose of Plan assets. 2.05 The Trustee shall maintain a separate account reflecting the equitable share in the Master Fund of each Participating Plan. The equitable shares in the Master Fund of the respective present Participating Plans as of November 1, 1997 shall be proportionate to the fair market values of the assets allocable to such Plans under the Separate Trusts, as certified by the Company to the Trustee. Thereafter, for the purpose of determining the equitable shares of Participating Plans, the Trustee shall determine the value of the assets of the Master Fund as of the last day of each month and as of such other dates as the Trustee may deem appropriate or the Company may direct. In addition, for the convenience of the company, the Company may request the Trustee to include in such account assets which do not constitute part of the Master Fund or are held by the Trustee in a segregated Company Directed Fund, for the purposes of determining the value of all of the assets of such Participating Plans. Assets shall be valued attheir market values at the close of business on the date of valuation, or, in the absence of readily ascertainable market values, at such values as the Trustee shall determine in accordance with methods consistently followed and uniformly applied. Anything herein to the contrary notwithstanding, with respect to assets constituting part of a Directed Fund hereunder or in the event that assets which do not constitute part of the Master Fund or which are held by the Trustee in a segregated Company Directed Fund are included in such valuation or account at the request of the Company, the Trustee may rely for all purposes of this Agreement, including for the purpose of determining the value of such assets as of any monthly or other valuation date, on any certified appraisal or other form of valuation submitted to it by the Investment Manager, the Company, or by the person or persons controlling such assets. 2.06 Except as provided in Section 3.01 (c), the Trustee shall not be required to maintain any separate records or accounts with respect to any participant in (or beneficiary of) any Participating Plan which is of the defined benefit type, and any such records or accounts required to be maintained pursuant to the terms of any such Plan shall be maintained by the Company or by the appropriate committee, entity or person(s) directly charged with such responsibility under the individual Participating Plan. 2.07 By entering into this Agreement, the Trustee does not assume any responsibility or undertake any duty to enforce payment of any contribution to any Participating Plan, any responsibility for the adequacy of the Fund or the funding standards adopted by the sponsor of any Participating Plan to meet or discharge any pension or other liabilities under such Plan, or (except as otherwise required by law) any responsibility under the terms of this Agreement for the management or control of any Directed Funds or Company Directed Funds. No duties or obligations shall be imposed upon the Trustee unless they have been specifically undertaken by the express terms of this Agreement. 2.08 Except as may otherwise be permitted by law, at no time prior to the satisfaction of all liabilities with respect to participants and their beneficiaries under any Participating Plan shall any part of the equitable share of such Participating Plan in the Master Fund be used for, or diverted to, any purposes other than for the exclusive benefit of such participants and their beneficiaries, and for defraying reasonable expenses of administering such Plans. ARTICLE THREE 3.01 The Trustee shall: a. hold, invest and reinvest the Discretionary Fund as provided in Article Four in accordance with the powers and discretion contained in or referred to in Article Seven; b. settle purchases and sales for any Directed Fund upon the instructions of the Investment Manager as provided in Article Five or in the case of a Company Directed Fund, upon the instructions of the Company; c. pay moneys on the order of the Company, including when the Company shall so order, payments directly to or for the benefit of the participants and their beneficiaries, or to an insurance company to provide, by the purchase of an annuity contract, or otherwise, for the payment of benefits and the Trustee shall keep records of any and all such payments so directed and provide such tax advices or governmental forms and reports as shall from time to time be agreed upon between the Company and the Trustee; and d. transfer any portion of the Master Fund on the order of the Company to any insurance company or other trustee to provide an alternative or additional funding medium or investment vehicle for the management and/or control of Participating Plan assets. 3.02 Any orders pursuant to subparagraphs (c) and (d) of Section 3.01 may, but need not specify the application to be made of moneys so ordered, and the Trustee may charge such distribution against any portion of the Master Fund, as the Company may direct. The Trustee may assume that any such orders are not contrary to any applicable law. The Trustee shall not be responsible in any way respecting the determination, computation, payment or application of any benefit or payment which it is ordered to make, or for the form, terms or issuer of any insurance contract which it is directed to purchase with assets of the Fund (whether or not such contract is purchased to provide primarily for the payment of benefits under any Participating Plan or primary as an investment vehicle or funding medium), for performing any functions under any insurance contract which it may be directed to purchase and hold as Contract Holder thereunder (other than the execution of any documents incidental thereto on the instruction of the Company), or for the terms of any trust agreement under which any trustee to which it shall deliver any assets of the Fund on the order of the Company is acting, or for any other matter affecting the administration of a Plan by the Company, or any other person or persons to whom responsibility for Plan administration is allocated or delegated pursuant to the terms of a Participating Plan. 3.03 Any power or duty of the Company hereunder shall be exercised by the Board of Directors of the Company or by such other person or persons as are authorized to exercise such powers or duties as certified by the Company in writing to the Trustee. The Trustee shall be entitled to rely upon any such certification by the Company. The Trustee shall be fully protected in continuing to rely on such certification until a subsequent certification is filed with the Trustee. ARTICLE FOUR 4.01 The Trustee shall invest and reinvest the Discretionary Fund as a single fund without distinction between principal and income in such investments and at such time or times and in such shares and proportions as it, in its absolute discretion, shall deem advisable; except that, the Trustee is authorized to hold in the Discretionary Fund uninvested cash awaiting investment and such additional cash balances as it shall deem reasonable or necessary to meet anticipated distributions from or administrative costs of any Participating Plan or the Fund, without incurring any liability for the payment of interest on such cash, notwithstanding that the Trustee or an affiliate thereof may accrue interest on such cash balances. The Trustee shall discharge the foregoing powers and discretion in accordance with the funding policy and guidelines established by the Company from time to time and communicated in writing to the Trustee. The Trustee shall have no responsibility with respect to the formulation of any funding, investment or diversification policy embodied in any such direction. If the Company has exercised its discretion to vest responsibility for the management and control of any portion of the Master Fund in one or more Investment Managers or in itself as to a Company Directed Fund, or if the Master Fund is not the only funding medium under a Participating Plan, any trustee (including the Trustee), Investment Manager or other person in whom fiduciary responsibility is vested for the management and control of any Plan assets shall exercise its fiduciary responsibilities with respect to such Plan assets, including without limitation any responsibility of diversification imposed by Section 404 (a) (1) (C) of the Employee Retirement Income Security Act of 1974 ("ERISA"), as if the assets allocated to it constituted the entirety of the Plan assets. The Company or some other fiduciary named by it shall be responsible for the overall diversification of the entire Master Fund. 4.02 The Trustee may in its discretion invest and reinvest in either (i) any fund created and administered by it, as the trustee thereof, for the collective investment of the assets of employee benefit trusts or otherwise, as long as such collective investment fund is a qualified trust under the applicable provisions of the Internal Revenue Code (and while any portion of the Fund is so invested such collective investment fund shall constitute part of the Participating Plans, and the instrument creating such fund shall constitute part of this Master Trust Agreement) or (ii) the shares of any mutual fund including any such fund from which the Trustee or any affiliate thereof receives an investment management fee or any other fee. ARTICLE FIVE 5.01 The investment and reinvestment of any Directed Fund established under this Agreement shall be under the exclusive management and control of the Investment Manager appointed by the Company. The Trustee shall not be a party to any agreement with the Investment Manager, and the terms and conditions of appointment, authority and retention of the Investment Manager shall be the sole responsibility of the Company. The Company shall certify in writing to the Trustee: a. that it has appointed an Investment Manager with respect to each Participating Plan; and b. the assets of the fund to be allocated to the Directed Fund which such Investment Manager shall have responsibility. The Company shall also furnish to the Trustee a certification by such Investment Manager that it is an "Investment Manager" as such term is defined in Section 2.04 of this Agreement. The Investment Manager shall furnish the Trustee from time to time with the names and signatures of those persons authorized to direct the Trustee on its behalf hereunder. The Trustee shall be fully protected in continuing on its behalf hereunder. The Trustee shall be fully protected in continuing to rely on the certification provided by an Investment Manager as to such authorized persons until a subsequent certification is filed with the Trustee. The Trustee shall have the right to request that all directions by an Investment Manager pursuant to this Agreement be in writing and shall assume no liability hereunder for failure to act pursuant to such directions unless and until it shall receive directions in a form satisfactory to it. 5.02 All transactions in or from a Directed Fund related to the acquisition or disposal of assets, as well as all purchases and sales of assets, shall be made upon such terms and conditions and from or through such principals and agents, as the Investment Manager shall direct. No directed transactions shall be executed through the facilities of the Trustee except in those instances where the Trustee shall make available its facilities solely for the purposes of temporary investment of cash reserves of a Directed Fund. (However, nothing herein shall confer any authority or obligation upon the Trustee to invest or reinvest the cash balances of any Directed Fund unless and until it receives directions from the Investment Manager.) 5.03 Supervision of the Investment Manager shall be the exclusive responsibility of the Company. Therefore, the Trustee shall have no duty to review any direction or any securities or other property held in any Directed Fund or to make suggestions to the Investment Manager or the Company with respect to the exercise or non-exercise of any power by the Investment Manager. The Trustee shall be fully protected in acting or omitting to act in accordance with or in the absence of the written directions of the Investment Manager or of the Company respecting any Company Directed Fund and shall be under no liability for any loss of any kind which may result by reason of any action taken or omitted by it in good faith in accordance with any such direction or by reason of inaction in the absence of such written directions. 5.04 The Trustee shall not be deemed to have any responsibility to manage and control any asset held in a Directed Fund or Company Directed Fund upon the resignation or removal of an Investment Manager or withdrawal by the Company of its control as to a Company Directed Fund unless and until it has been notified in writing by the Company of its withdrawals of control as to a Company Directed Fund or that the Investment Manager's authority has terminated and that such Directed Fund or Company Directed Fund assets are to be integrated with the Discretionary Fund. Such notice shall not be deemed effective until a reasonable period after it has been received by the Trustee. In the event that the assets of a Directed Fund or Company Directed Fund shall become integrated at any time with the Discretionary Fund, the Trustee shall not be liable for any losses to the Master Retirement Fund resulting from the disposition of any investment made by an Investment Manager or the Company or for the holding for any illiquid or unmarketable securities or the holding of any other asset acquired by the Investment Manager or the Company if the Trustee is unable to dispose of such investments because of any Securities Laws restrictions or if any orderly liquidation of such investment is impractical under prevailing conditions, or for failure to comply with any investment or diversification limitations imposed by the Company pursuant to the power reserved to it under Section 4.01 or for any other violation of the terms of this Agreement, the Participating Plans or applicable law or laws as a result of the addition of Directed Fund or Company Directed Fund assets to the Discretionary Fund. 5.05 The Trustee shall not be liable for the acts or omissions of any Investment Manager constituting a breach of the Investment Manager's duties unless it shall have been judicially determined that the Trustee knowingly participated in, or knowingly undertook to conceal, such act or omission, knowing such act or omission constituted a breach of the Investment Manager's duties hereunder. ARTICLE SIX 6.01 Without in any way limiting the powers and discretions conferred upon the Investment Manager by the other provisions of this Agreement or by law, any Investment Manager appointed hereunder shall have the following powers and discretions with respect to the Directed Fund subject to its management and control, and, upon the directions of such Investment Manager, the Trustee shall 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 such powers and discretions: a. to sell, exchange, convey, transfer or otherwise dispose of any property constituting the Directed Fund by privatecontract or at public auction, and no person dealing with the Investment Managers or 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; b. to enter into contract or to make commitments either alone or in concert with others to sell at any future date any property acquired for the Directed Fund or to purchase at any future date any property which it may be authorized to acquire under this Agreement; c. to purchase part interests in real property or in mortgages on real property, wherever such real property may be situated; d. to lease to others for any term without regard to the duration of this Trust any real property or part interest in real property held in the Directed Fund; e. to delegate to a manager or the holder or holders of a majority interest in any real property or mortgage on real property at any time constituting a part of the Directed fund, the management and operation of any part interest in such real property or mortgage and the authority to sell such real property or mortgage or otherwise carry out the decisions of such manager or holder or holders of such majority interest; f. to vote upon any stocks, bonds or other securities; to give general or special proxies or powers of attorney with or without power or substitution rights or other options and to make any payments incidental thereto; 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 stock, bonds, securities or other property held in the Directed Fund. g. to convert, redeem, exchange for other securities or other property any securities or property held by it, or to write covered call options against securities held by it or other forms of options directly related to any such call options outstanding; and h. to invest, in the case of any Investment Manager which is a bank or trust company, through the medium of any fund created and administered by such Investment Manager for the collective investment of the assets of employee benefit trusts or otherwise, or in the case of any Investment Manager, to invest through the medium of any similar collective investment fund created and administered by the Trustee hereof which serves as a vehicle for the temporary investment of reserves of participating trusts, so long as in either case such collective investment fund is a qualified trust under the applicable provisions of the Internal Revenue Code (and while any portion of the assets of the Participating Plans is so invested, such collective investment fund shall constitute part of the Separate Plans, and the instrument creating such fund shall constitute part of this Master Trust). 6.02 In the event that any investment is made by an Investment Manager in real property, then the Trustee shall have the right to request as a condition precedent to its executing any documents or paying over any trust assets in connection with such transactions, that it received a certified appraisal that the property has a value at least equal to the transaction price and that the property is in the form and condition described in such documents, and, further, that it receive an opinion of counsel (who may be counsel to the Investment Manager) that such documents are in proper form for execution by the Trustee, that such deed or document has been or will be properly recorded under all applicable Recording Acts, and that appropriate policies adequately insuring the trust against loss for any reason (including a defect in title) have been procured in the name of the Trustee. In addition, the Investment Manager shall provide the Trustee, upon request, with the current appraisals of such property which shall be relied upon by the Trustee for all valuation and accounting purposes under this Agreement. 6.03 The Company, as to any Company Directed Fund, shall be vested with all of the powers and discretion vested in an Investment Manager by Section 6.01 and, in addition, may specifically direct the acquisition, holding or sale of employer securities or employer real property which are "qualifying" within the meaning of the subject to all the limitations of ERISA, except that employer securities or employer real property may be held to the extent permitted under Section 414 (c) (2) or any other transitional rule or applicable exemption under ERISA. ARTICLE SEVEN 7.01 The Trustee, with respect to the Discretionary Fund, shall be vested with all of the powers and discretions vested in the Investment Manager by Section 6.01. 7.02 In addition, the Trustee is hereby authorized respecting the Master Fund in its discretion: a. to register any securities held in the Fund in its own name or in the name of a nominee and to hold any investment in bearer form, and to combine certificates representing such investments with certificates of the same issue held by the Trustee in other fiduciary capacities or to deposit or to arrange for the deposit of such securities in any qualified central depository or clearing corporation even though, when so deposited, such securities may be merged and held in bulk in the name of the nominee of such depository with other securities deposited therein by any other person, or to deposit or arrange for the deposit of any securities issued by the United States Government, or an agency or instrumentality thereof, with a federal reserve bank, but the books and records of the Trustee shall at the times show that all such investments are part of the Master Fund; b. to employ suitable agents, depositories and counsel, domestic or foreign, and to charge their reasonable expenses and compensation against the fund; c. to borrow money, with or without payment of interest, from any source as may be necessary or advisable to effectuate the purpose of the Master Fund on such terms and conditions as the Trustee, in its absolute discretion, may deem advisable; d. to deposit any funds of the trust in interest bearing account deposits maintained by or savings certificates issued by the Trustee, in its separate corporate capacity, or in any other banking institution affiliated with the Trustee; e. to compromise or otherwise adjust all claims in favor of or against the Fund subject to Company approval; f. to organize corporations under the laws of any state for the purpose of acquiring or holding title to any property for the fund or to request the Company to appoint another trustee for such purpose; g. to make any distribution or transfer of the Discretionary Fund assets in cash or inkind as the Trustee and, in furtherance thereof, to value such assets, which valuation shall be subject to the approval of the Company. ARTICLE EIGHT 8.01 The Trustee shall keep accurate and detailed accounts of all investments, receipts, disbursements and other transactions hereunder for the Master Fund (including any Directed Fund or Company Directed Fund) and all accounts, books and records relating thereto shall be open to inspection and audit at all reasonable times by any persons designated by the Company. In addition, within ninety (90) days following the close of each fiscal year, and within ninety (90) days after the removal or resignation of the Trustee, the Trustee shall file with the Company a written accounting setting forth all receipts and disbursements of the Fund and all investments and other transactions effected by it upon its own authority or pursuant to the directions of any Investment Manager or the Company as herein provided during such fiscal year or during the period from the close of the last fiscal year to the date of such removal or resignation. Within sixty (60) days from the date of filing such annual or other account, the Trustee, if requested by the Company, will also serve copies of such account upon any persons designated by the Company as having administrative responsibility with respect to any Participating Plan. Upon the expiration of two hundred ten (210) days from the date of filing such account, the Trustee shall be forever released and discharged from all liability and accountability to the Company or any person upon whom the Trustee has served a copy of the account with respect to the accuracy of such accounting, except with aspect to any such acts or transactions as to which the Company or any person upon whom the account has been served shall within such two hundred ten (210) day period file with the Trustee specific written objections. To the extent, if any, that the Trustee shall be required to value the assets of any Directed Fund or Company Directed Fund for any purpose, including any accounting as provided in this section 8.01, the Trustee may rely for all purposes of this Agreement on any certified appraisal or other form of valuation submitted to it by the party responsible for the management and control of such Fund. 8.02 Except to the extent that Sections 502 and 504 of ERISA, as the same may be amended from time to time, may provide otherwise, in order to protect the Master Trust from the expenses which might otherwise be incurred, no one other than the Company may require the Trustee to account or may institute an action or preceding against the Trustee or the Fund. However, nothing herein shall in any way limit the Trustee's right to bring any action or proceeding to settle its account or for such other relief as it may deem appropriate. 8.03 The Trustee may from time to time consult with counsel, who may be counsel to the Company, with respect to any questions arising as to the construction of this Agreement or any action to be taken hereunder and the Trustee shall be fully protected, to the extent permitted by law, in acting in good faith upon the advice of counsel. ARTICLE NINE 9.01 Any expenses incurred by the Trustee in connection with its administration of this Trust, including fees for legal services rendered to the Trustee, provided the Trustee gives written notice served to the Company prior to the retaining of such legal service, (whether or not rendered in connection with a judicial or administrative proceeding and whether or not incurred while it is acting as Trustee), such compensation to the Trustee as may be agreed upon from time to time between the Trustee and the Company, and all other proper charges and disbursements of the Trustee, shall be paid from the Master Fund unless paid by the Company. The Company shall reimburse the Trustee for any such expenses if for any reason such expenses cannot be paid out of the Fund. The Company may direct the Trustee to pay from the Master Fund the fees of any Investment Manager appointed pursuant to Section 5.01 and other proper administration expenses of any Participating Plan, including but not limited to actuarial fees. All taxes of any and all kinds whatsoever that may be levied or assessed under existing or future laws upon the Master Fund or the income thereof shall be paid from the Master Fund. Any amount paid from the Master Fund which is specifically allocable to a particular Participating Plan or Plans shall be charged against the equitable shares of such Participating Plan or Plans; any amount paid from the Fund which is allocable to all of the Participating Plans shall be charged against the Fund as a whole. ARTICLE TEN 10.01 Subject to the provisions of Section 3.03, whenever the provisions of this Agreement require or permit any action to be taken by the Company or any Corporation, such action may be taken by the Board of Directors of the entity taking the same or by any person authorized to act on behalf of such entity by such Board of Directors. Any resolution adopted by the Board of Directors of any corporation shall be certified to the Trustee by the Secretary or an Assistant Secretary of such Corporation under its corporate seal, and the Trustee may rely upon any resolution so certified until revoked or modified by a further resolution similarly certified to the Trustee. 10.02 The Company shall furnish the Trustee from time to time with a certificate of its Secretary or an Assistant Secretary as to the names and signatures of all persons authorized to issue orders, requests, instructions and objections to the Trustee pursuant to the provisions of this Agreement. 10.03 All orders, requests, instructions and objections of any of the persons authorized to act in accordance with the provisions of this Agreement may be required by the Trustee, to the extent practical, to be in writing, but the Trustee shall be fully protected in acting in accordance with either such written instructions or oral instructions received by the Trustee in good faith. 10.04 The Trustee shall have the right to assume in the absence of written notice to the contrary, that no event constituting a change in the authority of any person or terminating any Investment Manager's authority has occurred. ARTICLE ELEVEN 11.01 If Marshall & llsley Trust Company is at any time acting as a successor Trustee or succeeds to responsibilities hereunder for management of plan assets with respect to the Fund (or any portion thereof), the Company hereby agrees to hold Marshall & Ilsley Trust Company harmless from and against all taxes, expenses (including counsel fees), liabilities, claims, damages, actions, suits or other charges incurred by or assessed against it as successor Trustee, as a direct or indirect result of any act or omission of a predecessor trustee or any other person who, prior to Marshall & Ilsley Trust Company's acceptance as Trustee, was charged under any agreement affecting Fund assets for investment responsibility with respect to such assets. ARTICLE TWELVE 12.01 Upon receipt of notice from the Company of the termination, the disqualification under Section 401 (a) of the Code, or the withdrawal from this Master Trust, of any Participating Plan or any part thereof, the Trustee shall withdraw and segregate the share of the assets of the Fund allocable to such Participating Plan or part thereof and shall either dispose of such segregated share in accordance with the directions of the Company or continue to hold such segregated share, in trust, as a separate trust governed by the same provisions as this Agreement, except that if such segregated share is equal to an entire Participating Plan in the Fund, the entity or successor thereto which had established such Participating Plan shall thereafter be deemed to be "the Company" for all purposes of the Agreement. If such segregated share is less than the entire equitable share of a Participating Plan in the Fund, the Company shall certify to the Trustee, that portion of the equitable share of such Participating Plan attributable to the participants and their beneficiaries on whose account such assets are to be segregated. 12.02 The Company reserves the right at any time and from time to time to terminate or to amend, in whole or in part, any or all of the provisions of this Agreement by notice thereof in writing delivered to the Trustee; provided that, no such amendment which affects the rights, duties or responsibilities of the Trustee may be made without its consent, and provided further that, except as may be otherwise allowed under Section 403(c) of ERISA (it being the Company's intent that all contributions by it or any Corporation to any Participating Plan be conditioned as allowed in said Section), no instrument of termination or amendment shall authorize or permit, at any time prior to the satisfaction of all liabilities with respect to the participants and their beneficiaries under the Plans, any part of the corpus or income of the Fund to be used for or diverted to purposes other than for the exclusive benefit of such participants and their beneficiaries. 12.03 In the event of the termination of the Trust as above provided (or of all the Participating Plans), the Trustee shall continue to administer the Fund as hereinabove provided until all of the purposes for which it has been established have been accomplished or dispose of the Fund after the payment or other provision of all expenses incurred in the administration and termination of the Trust (including any compensation to which the Trustee may be entitled), all in accordance with the written order of the Company or any successor thereto. Until the final distribution of such Fund, the Trustee shall continue to have and may exercise all of the powers and discretions conferred upon it by this Agreement. 12.04 The Trustee may be removed by the Company at any time upon thirty (30) days notice in writing to the Trustee. The Trustee may resign at any time upon thirty (30) days' notice in writing to the Company. Upon such removal or resignation of the Trustee, the Company shall appoint a successor trustee and, upon acceptance of such appointment by the successor trustee, the Trustee shall assign, transfer and pay over to such successor trustee the Fund, as then constituted, upon the directions of the Company. The Trustee is authorized, however, to reserve such amount as to it may seem advisable for payments of its fees and expenses in connection with the settlement of its account or otherwise, and any balance of such reserve remaining after the payment of such fees and expenses shall be paid over to the successor trustee or alternative funding medium, as the case may be. Notwithstanding any provision of the Plans or this Agreement to the contrary, the Trustee is hereby authorized to invest and reinvest such reserves in any investment or investment vehicle (including any collective investment fund described in Section 4.02) appropriate for the temporary investment of each cash reserves of trusts. If for any reason the Company cannot or does not act in the event of the resignation or removal of the Trustee, as hereinabove provided, the Trustee may apply to a court of competent jurisdiction for the appointment of a successor Trustee or for instructions. Any expenses incurred by the Trustee in connection therewith shall be paid from the Fund as an expense of administration. 12.05 Anything hereinabove to the contrary notwithstanding, the Trustee may condition its delivery, transfer or distribution or any asset under this Article upon the Trustee s receiving assurance satisfactory to it that the approval of appropriate governmental or other authorities has been secured and that all notices and other procedures required by applicable law have been accomplished. ARTICLE THIRTEEN 13.01 To the extent that State Law shall not have been preempted by the provisions of ERISA or any other laws of the United States heretofore or hereafter enacted, as the same may be amended from time to time, this Agreement shall be administered, construed and enforced according to the laws of the State of Wisconsin. ARTICLE FOURTEEN 14.01 The Company shall provide the Trustee with copies of all documents constituting the Participating Plans at the time this Agreement is executed by the Company or adopted under any other plan, as provided in Article Two, and all other documents amending or supplementing the Participating Plan promptly upon their adoption. The Trustee shall be entitled to rely upon the Company s attention to this obligation and shall be under no duty to inquire of the Company as to the existence of any documents not provided by the Company hereunder. ARTICLE FIFTEEN 15.01 Pursuant to a resolution by its Board of Directors and in consideration of the Trustee s agreeing to enter into this Agreement, the Company hereby agrees to hold harmless Marshall & Ilsley Trust Company, individually and as Trustee under this Agreement, and Marshall & Ilsley Trust Company directors, officers, and employees from and against all amounts including without limitation, taxes, expenses (including reasonable counsel fees), liabilities, claims, damages, actions, suits or other charges, incurred by or assessed against Marshall & Ilsley Trust Company, individually or as Trustee, or its directors, officers, or employees, (i) as a direct or indirect result of anything done in good faith, or alleged to have been done, by or on behalf of Marshall & Ilsley Trust Company in reliance upon the directions of the company, any Investment Manager appointed by the Company, or any person or committee authorized to act on behalf of the Company or to appoint such Investment Manager under any Participating Plan, or anything omitted to be done in good faith, or alleged to have been omitted, in the absence of such directions, or (ii) as a direct or indirect result of the failure of the Company or such person or a committee, as a co-fiduciary under said Plans, directly or through its agents, to adequately, carefully and diligently discharge its responsibilities with respect to the selection, supervision and /or retention of any Investment Manager. 15.02 The Company further agrees that the undertakings made in this Article of this Agreement shall binding on its successors or assigns and shall survive termination, amendment or restatement of this Agreement or the resignation or removal of the Trustee, and that this Article shall be construed as a contract between the Company and the Trustee according to the laws of the State of Wisconsin in effect from time to time. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective authorized officer-s and their corporate seals to be affixed as of the date first above set forth. REGAL-BELOIT CORPORATION Kenneth F. Kaplan ----------------------- BY: Kenneth F. Kaplan TITLE: VP, CFO & Secretary Fritz Hollenbach ---------------------- ATTEST: Fritz Hollenbach TITLE: VP Human Resources MARSHALL & ILSLEY TRUST COMPANY William F. Grow --------------------- BY: William F. Grow TITLE: Vice President APPENDIX A 1. Regal-Beloit Corporation Profit Sharing Trust 2. Regal-Beloit Corporation Personal Savings Trust 3. Marathon Electric Salaried Employees 401(k) Savings Plan 4. Marathon Electric Hourly 401(k) Savings Plan 5. Regal-Beloit Corporation Savings & Protection Plan EX-23.1 5 Exhibit 23.1 Consent of Wipfli Ullrich Bertelson LLP CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in the Registration Statement (Form S-8) pertaining to the Marathon Electric Salaried Employees' 401(k) Savings Plan of our report dated August 28, 1997, with respect to the financial statements and schedules of the Plan included in the Annual Report for the year ended December 31, 1996. Wipfli Ullrich Bertelson LLP ---------------------------- Wipfli Ullrich Bertelson LLP March 27, 1998 Wausau, Wisconsin EX-24.1 6 Exhibit 24.1 Powers of Attorney Signature Page of This Registration SIGNATURES The Registrant. Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all the requirements for filing on Form S-8 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Beloit, State of Wisconsin, on this 27th day of March, 1998. REGAL-BELOIT CORPORATION REGISTRANT By: JAMES L. PACKARD --------------------- James L. Packard Chairman, President and Chief Executive Officer POWERS OF ATTORNEY Each person whose signature appears below constitutes and appoints James L. Packard and Kenneth F. Kaplan, and each of them, as his or her true and lawful attorneys-in-fact and agents with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this registration statement, and to file the same with all exhibits thereto, and other documents in connection therewith, with the Commission and any state of the U.S., granting unto said attorneys-in-fact and agents full power and authority to do and perform each act and thing requisite and necessary to be done, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
Signature Title Date --------- ----- ---- JAMES L. PACKARD - ----------------------- Chairman, President and March 27, 1998 James L. Packard Chief Executive Officer KENNETH F. KAPLAN - ----------------------- Secretary, Vice President March 27, 1998 Kenneth F. Kaplan and Chief Financial Officer HENRY W. KNUEPPEL - ----------------------- Executive Vice President March 27, 1998 Henry W. Knueppel Director FRANK E. BAUCHIERO - ----------------------- Director March 27, 1998 Frank E. Bauchiero J. REED COLEMAN - ----------------------- Director March 27, 1998 J. Reed Coleman JOHN M. ELDRED - ----------------------- Director March 27, 1998 John M. Eldred STEPHEN N. GRAFF - ----------------------- Director March 27, 1998 Stephen N. Graff G. FREDERICK KASTEN JR. - ----------------------- Director March 27, 1998 G. Frederick Kasten, Jr. WILLIAM W. KEEFER - ----------------------- Director March 27, 1998 William W. Keefer JOHN A. MCKAY - ----------------------- Director March 27, 1998 John A. McKay
The Plan. Pursuant to the requirements of the Securities Act of 1933, the Plan has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Beloit, State of Wisconsin, on March 27, 1998. REGAL-BELOIT CORPORATION PLAN By: JAMES L. PACKARD ---------------- James L. Packard Plan Sponsor EX-24.2 7 Exhibit 24.2 Signature of Marshall & Ilsley Trust Company Trustee Pursuant to the requirements of the Securities Act of 1933, the trustees have caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Milwaukee, State of Wisconsin, on this 27th day of March, 1998. MARATHON ELECTRIC SALARIED EMPLOYEES' 401(K) SAVINGS PLAN By: WILLIAM P GROW ------------------------------ William P. Grow, Vice President Marshall & Ilsley Trust Company, Trustee EX-99 8 Exhibit 99 Internal Revenue Service Determination Letter of Tax Qualified Status INTERNAL REVENUE SERVICE DEPARTMENT OF THE TREASURY DISTRICT DIRECTOR 1100 COMMERCE STREET DALLAS TX 75242 Employer Identification Number: 39-0449780 Date: January 6, 1996 File Folder Number: 390006347 Person to Contact: FRANK HIGGINS MARATHON ELECTRIC MANUFACTURING Contact Telephone Number: CORPORATION (312) 886-9587 100 E RANDOLPH STREET Plan Name: WAUSAU WI 54401-2568 SALARIED EES 401K SAVINGS PLAN Plan Number: 008 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 23, 1994. This plan has been mandatorily disaggregated, permissively aggregated, or restructured to satisfy the nondiscrimination requirements. This plan satisfies the minimum coverage requirements on the basis of the average benefit test in Section 410(b)(2) of the Code. This letter is issued under Rev. Proc. 93-39 and considers the amendments required by the Tax Reform Act of 1986 excepts as otherwise specified in this letter. 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. 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, Bobby E. Scott -------------- Bobby E. Scott District Director -----END PRIVACY-ENHANCED MESSAGE-----