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As filed with the Securities and Exchange Commission on June 10, 1994
Registration No. 33-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
QUANEX CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 38-1872178
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1900 WEST LOOP SOUTH, SUITE 1500 77027
HOUSTON, TEXAS (Zip Code)
(Address of Principal Executive Offices)
NICHOLS-HOMESHIELD
401(K) SAVINGS PLAN
(Full title of the plan)
WAYNE M. ROSE
QUANEX CORPORATION
1900 WEST LOOP SOUTH, SUITE 1500
HOUSTON, TEXAS 77027
(Name and address of agent for service)
(713) 961-4600
(Telephone number, including area code, of agent for service)
Copies to:
HARVA R. DOCKERY, ESQ.
FULBRIGHT & JAWORSKI L.L.P.
1301 MCKINNEY, SUITE 5100
HOUSTON, TEXAS 77010-3095
CALCULATION OF REGISTRATION FEE
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Proposed
maximum Proposed maximum Amount of
Amount to be offering price aggregate registration
Title of securities to be registered registered per share offering price fee
------------------------------------ ------------ -------------- ---------------- ------------
Common Stock, $.50 par value . . . . . 100,000(1) $20.125(2) $2,012,500 $694
Rights to purchase Series A Junior
Participating Preferred Stock . . . . . 100,000(1)
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(1) Estimated number of shares that could be purchased with the participant
contributions registered hereunder, based upon the price of the Common
Stock set forth herein.
(2) Pursuant to Rule 457(h), the proposed maximum offering price is estimated,
solely for the purpose of determining the registration fee, on the basis
of the average high and low prices of the Common Stock on the New York
Stock Exchange Composite Tape on June 7, 1994.
******************
In addition, pursuant to Rule 416(c) under the Securities Act of 1933, this
Registration Statement also covers an indeterminate amount of interests to be
offered or sold pursuant to the 401(k) savings plan described herein.
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PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. Incorporation of Documents by Reference.
Quanex Corporation (the "Company" or "Registrant") and the
Nichols-Homeshield 401(k) Savings Plan (the "Plan") incorporate by reference in
this Registration Statement the following documents:
(a) The Registrant's annual report on Form 10-K
for the year ended October 31, 1993, and the Plan's latest
annual report.
(b) The Registrant's quarterly reports on Form
10-Q for the quarters ended January 31, 1994, and April 30,
1994.
(c) All other reports filed by the Registrant and
the Plan pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), since
October 31, 1993.
(d) The description of the Registrant's common
stock, $.50 par value (the "Common Stock"), which is contained
in the Prospectus dated January 12, 1981, included in the
Registrant's Registration Statement (Registration No. 2-70313)
and filed with the Securities and Exchange Commission (the
"Commission") pursuant to Rule 424(b) of the Securities Act of
1933, as amended (the "Securities Act").
(e) The description of the rights to purchase
Series A Junior Participating Preferred Stock (the "Rights")
is set forth in the Amended and Restated Certificate of
Designation, Preferences and Rights, filed as Exhibit 1 to
Amendment No. 1 to the Registrant's Form 8-A dated April 28,
1989.
All documents subsequently filed by the Registrant or the Plan
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, subsequent
to the date of the filing hereof and prior to the filing of a post-effective
amendment which indicates that all securities offered have been sold or which
deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference in this Registration Statement and to be a part
hereof from the date of the filing of such documents.
ITEM 4. Description of Securities.
Not applicable.
ITEM 5. Interests of Named Experts and Counsel.
Not applicable.
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ITEM 6. Indemnification of Directors and Officers.
Section 145 of the General Corporation Law of the State of
Delaware provides that a corporation has the power to indemnify a director,
officer, employee or agent of the corporation and certain other persons serving
at the request of the corporation in related capacities against amounts paid
and expenses incurred in connection with an action or proceeding to which he
is, or is threatened to be made, a party by reason of such position, if such
person shall have acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the corporation, and, in any
criminal proceeding, if such person had no reasonable cause to believe his
conduct was unlawful; provided that, in the case of actions brought by or in
the right of the corporation, no indemnification shall be made with respect to
any matter as to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the adjudicating court
determines that such indemnification is proper under the circumstances.
The Registrant's Restated Certificate of Incorporation, as
amended, eliminates the personal monetary liability of a director to the
Registrant and its stockholders for breach of his fiduciary duty of care as a
director to the extent currently allowed under the Delaware General Corporation
Law. Article XVII of the Registrant's Restated Certificate of Incorporation
provides that a director of the Registrant shall not be personally liable to
the Registrant or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Registrant or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) based on the payment of an improper dividend or
an improper repurchase of the Registrant's stock under Section 174 of the
General Corporation Law of the State of Delaware, or (iv) for any transaction
from which the director derived an improper personal benefit.
The Bylaws of the Registrant provide that, under certain
circumstances, the Registrant is required to indemnify any person who was, is,
or is threatened to be made a party in any action, suit or proceeding because
such person is or was a director or officer of the Registrant. The
Registrant's Bylaws were amended in February 1987 to provide for
indemnification by the Registrant of its officers and directors to the fullest
extent authorized by the General Corporation Law of the State of Delaware.
This right to indemnification under the Registrant's Bylaws is a contract
right, and requires the Registrant to provide for the payment of expenses in
advance of the final disposition of any suit or proceeding brought against the
director or officer of the Registrant in his official capacity as such,
provided that such director or officer delivers to the Registrant an
undertaking to repay any amounts advanced if it is ultimately determined that
such director or officer is not entitled to indemnification. The Registrant
also maintains a directors' and officers' liability insurance policy.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or persons controlling
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been informed that in the opinion of the Commission, such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
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ITEM 7. Exemption from Registration Claimed.
Not applicable.
ITEM 8. Exhibits.
4.1 Certificate of Incorporation of the Registrant, as
amended, filed as Exhibit 3.1 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended
October 31, 1987, and incorporated herein by
reference.
4.2 Amended and Restated Bylaws of the Registrant, as
amended through October 21, 1992, filed as Exhibit
3.2 to the Registrant's Annual Report on Form 10-K
for the fiscal year ended October 31, 1992, and
incorporated herein by reference.
4.3 Form of Registrant's Common Stock certificate, filed
as Exhibit 4.1 to the Registrant's Quarterly Report
on Form 10-Q for the quarter ended April 30, 1987,
and incorporated herein by reference.
4.4 Amended and Restated Rights Agreement between the
Registrant and Manufacturers Hanover Trust Company,
as Rights Agent, filed as Exhibit 1 to Amendment No.
1 to the Registrant's Form 8-A dated April 28, 1989,
and incorporated herein by reference.
4.5 Amended and Restated Certificate of Designation,
Preferences and Rights of the Registrant's Series A
Junior Participating Preferred Stock, filed as
Exhibit 1 to Amendment No. 1 to the Registrant's Form
8-A dated April 28, 1989, and incorporated herein by
reference.
4.6 Certificate of Designations of the Registrant's 6.88%
Cumulative Convertible Exchangeable Preferred Stock,
liquidation preference $250 per share, filed as
Exhibit 19.1 to the Registrant's Quarterly Report on
Form 10-Q for the quarter ended April 30, 1992, and
incorporated herein by reference.
4.7 Form of Indenture relating to the Registrant's 6.88%
Cumulative Subordinated Debentures due 2007 between
the Registrant and Chemical Bank, as Trustee, filed
as Exhibit 19.2 to the Registrant's Quarterly Report
on Form 10-Q for the quarter ended April 30, 1992,
and incorporated herein by reference.
4.8 Form of Certificate of 6.88% Cumulative Convertible
Exchangeable Preferred Stock, liquidation preference
$250 per share, filed as Exhibit 19.3 to the
Registrant's Quarterly Report on Form 10-Q for the
quarter ended April 30, 1992, and incorporated herein
by reference.
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4.9 Deposit Agreement, relating to Depositary Convertible
Exchangeable Preferred Shares between the Registrant
and Chemical Bank, filed as Exhibit 19.4 to the
Registrant's Quarterly Report on Form 10-Q for the
quarter ended April 30, 1992, and incorporated herein
by reference.
4.10 Form of Depositary Receipt for Depositary Convertible
Exchangeable Preferred Shares, filed as Exhibit 19.6
to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended April 30, 1992, and incorporated
herein by reference.
4.11 Note Agreement dated July 25, 1990, among the
Registrant and the Purchasers listed therein,
regarding the sale of $125,000,000 of the
Registrant's 10.77% Senior Notes due August 23, 2000,
filed as Exhibit 4.1 to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended July 31,
1990, and incorporated herein by reference.
4.12 Revolving Credit and Letter of Credit Agreement dated
as of December 4, 1990, among the Registrant and the
Banks listed therein relating to a $40,000,000
revolving credit, filed as Exhibit 4.7 to the
Registrant's Annual Report on Form 10-K for the year
ended October 31, 1991, and incorporated herein by
reference.
4.13 Second Amendment to the Revolving Credit and Letter
of Credit Agreement dated as of April 15, 1992, filed
as Exhibit 4.13 to the Registrant's Registration
Statement on Form S-3 (Registration No. 33-47282),
and incorporated herein by reference.
4.14 Third and Fourth Amendments to the Revolving Credit
and Letter of Credit Agreement dated as of February
12, 1993, and April 1, 1993, respectively, filed as
Exhibit 19 to the Registrant's Quarterly Report on
Form 10-Q for the quarter ended April 30, 1993, and
incorporated herein by reference.
4.15 Form of Trust Agreement between the Registrant and
Fidelity Management Trust Company, amended as of
January 1, 1993, July 15, 1993, February 1, 1994,
April 1, 1994, and July 1, 1994.
4.16 Form of Nichols-Homeshield 401(k) Savings Plan, as
amended.
5.1 Copy of Internal Revenue Service determination letter
that the Plan is qualified under Section 401 of the
Internal Revenue Code of 1986, as amended.
23.1 Consent of Deloitte & Touche.
25.1 Power of attorney (contained on page 7 hereof).
The Registrant hereby undertakes to submit any and all amendments to
the Plan to the Internal Revenue Service ("IRS") in a timely manner and will
make all changes required by the IRS in order to qualify the Plan.
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ITEM 9. Undertakings.
A. The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or
sales are being made, a post-effective amendment to this
Registration Statement:
(i) To include any prospectus required
by Section 10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any
facts or events arising after the effective date of
this Registration Statement (or the most recent
post-effective amendment hereof) which, individually
or in the aggregate, represent a fundamental change
in the information set forth in this Registration
Statement; and
(iii) To include any material information
with respect to the plan of distribution not
previously disclosed in this Registration Statement
or any material change to such information in this
Registration Statement;
Provided, however, that paragraphs (i) and (ii) do
not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed by the Registrant pursuant to Section
13 or 15(d) of the Exchange Act that are incorporated by
reference in this 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 herein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of the
offering.
B. The undersigned Registrant hereby undertakes that,
for 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 this Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
herein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
C. Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the
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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 of 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.
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints Robert C. Snyder and Wayne M.
Rose, and each of them, either one of whom may act without joinder of the
other, his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any or all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, and each of them, or the substitute
or substitutes of any or all of them, may lawfully do or cause to be done by
virtue hereof.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Houston, State of Texas, on the 31st day of
May, 1994.
QUANEX CORPORATION
By /s/ Robert C. Snyder
---------------------------------
Robert C. Snyder
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Robert C. Snyder President, Chief Executive May 31, 1994
------------------------------- Officer and Director
Robert C. Snyder (Principal Executive Officer)
/s/ Wayne M. Rose Vice President and May 31, 1994
------------------------------- Chief Financial Officer
Wayne M. Rose (Principal Financial Officer)
/s/ Viren M. Parikh Controller (Principal May 31, 1994
------------------------------- Accounting Officer)
Viren M. Parikh
/s/ Carl E. Pfeiffer Chairman of the Board May 31, 1994
-------------------------------
Carl E. Pfeiffer
/s/ Gerald B. Haeckel Director May 31, 1994
-------------------------------
Gerald B. Haeckel
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/s/ Donald J. Morfee Director May 31, 1994
-------------------------------
Donald J. Morfee
/s/ John D. O'Connell Director May 31, 1994
-------------------------------
John D. O'Connell
/s/ Michael J. Sebastian Director May 31, 1994
-------------------------------
Michael J. Sebastian
/s/ Robert L. Walker Director May 31, 1994
-------------------------------
Robert L. Walker
/s/ Fred J. Broad Director May 31, 1994
-------------------------------
Fred J. Broad
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The Plan. Pursuant to the requirements of the Securities Act
of 1933, the Administrative Committee of the Plan has duly caused this
Registration Statement to be signed on its behalf by the undersigned members of
such committee, thereunto duly authorized, in the City of Houston, State of
Texas, on May 31, 1994.
NICHOLS-HOMESHIELD
401(K) SAVINGS PLAN
By /s/ Robert C. Snyder
---------------------------------
Robert C. Snyder
By /s/ Vernon E. Oechsle
---------------------------------
Vernon E. Oechsle
By /s/ Wayne M. Rose
----------------------------------
Wayne M. Rose
By /s/ Joseph K. Peery
----------------------------------
Joseph K. Peery
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EXHIBIT INDEX
Exhibit Number Description Page Number
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4.1 Certificate of Incorporation of the Registrant, as
amended, filed as Exhibit 3.1 to the Registrant's
Annual Report on Form 10-K for the fiscal year
ended October 31, 1987, and incorporated herein by
reference.
4.2 Amended and Restated Bylaws of the Registrant, as
amended through October 21, 1992, filed as Exhibit
3.2 to the Registrant's Annual Report on Form 10-K
for the fiscal year ended October 31, 1992, and
incorporated herein by reference.
4.3 Form of Registrant's Common Stock certificate, filed
as Exhibit 4.1 to the Registrant's Quarterly Report
on Form 10-Q for the quarter ended April 30, 1987,
and incorporated herein by reference.
4.4 Amended and Restated Rights Agreement between the
Registrant and Manufacturers Hanover Trust
Company, as Rights Agent, filed as Exhibit 1 to
Amendment No. 1 to the Registrant's Form 8-A
dated April 28, 1989, and incorporated herein by
reference.
4.5 Amended and Restated Certificate of Designation,
Preferences and Rights of the Registrant's Series
A Junior Participating Preferred Stock, filed as
Exhibit 1 to Amendment No. 1 to the Registrant's
Form 8-A dated April 28, 1989, and
incorporated herein by reference.
4.6 Certificate of Designations of the Registrant's
6.88% Cumulative Convertible Exchangeable
Preferred Stock, liquidation preference $250 per
share, filed as Exhibit 19.1 to the Registrant's
Quarterly Report on Form 10-Q for the quarter
ended April 30, 1992, and incorporated herein by
reference.
4.7 Form of Indenture relating to the Registrant's
6.88% Cumulative Subordinated Debentures due
2007 between the Registrant and Chemical Bank,
as Trustee, filed as Exhibit 19.2 to the
Registrant's Quarterly Report on Form 10-Q for
the quarter ended April 30, 1992, and incorporated
herein by reference.
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4.8 Form of Certificate of 6.88% Cumulative
Convertible Exchangeable Preferred Stock,
liquidation preference $250 per share, filed as
Exhibit 19.3 to the Registrant's Quarterly Report
on Form 10-Q for the quarter ended April 30,
1992, and incorporated herein by reference.
4.9 Deposit Agreement, relating to Depositary
Convertible Exchangeable Preferred Shares between
the Registrant and Chemical Bank, filed as Exhibit
19.4 to the Registrant's Quarterly Report on Form
10-Q for the quarter ended April 30, 1992, and
incorporated herein by reference.
4.10 Form of Depositary Receipt for Depositary
Convertible Exchangeable Preferred Shares, filed
as Exhibit 19.6 to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended April 30,
1992, and incorporated herein by reference.
4.11 Note Agreement dated July 25, 1990, among the
Registrant and the Purchasers listed therein,
regarding the sale of $125,000,000 of the
Registrant's 10.77% Senior Notes due August 23,
2000, filed as Exhibit 4.1 to the Registrant's
Quarterly Report on Form 10-Q for the quarter
ended July 31, 1990, and incorporated herein
by reference.
4.12 Revolving Credit and Letter of Credit Agreement
dated as of December 4, 1990, among the Registrant
and the Banks listed therein relating to a
$40,000,000 revolving credit, filed as Exhibit 4.7
to the Registrant's Annual Report on Form 10-K
for the year ended October 31, 1991, and
incorporated herein by reference.
4.13 Second Amendment to the Revolving Credit and
Letter of Credit Agreement dated as of April 15,
1992, filed as Exhibit 4.13 to the Registrant's
Registration Statement on Form S-3
(Registration No. 33-47282), and incorporated herein
by reference.
4.14 Third and Fourth Amendments to the Revolving Credit
and Letter of Credit Agreement dated as of
February 12, 1993, and April 1, 1993, respectively,
filed as Exhibit 19 to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended
April 30, 1993, and incorporated herein by
reference.
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4.15 Form of Trust Agreement between the Registrant
and Fidelity Management Trust Company amended as
of January 1, 1993, July 15, 1993, February 1,
1994, April 1, 1994, and July 1, 1994.
4.16 Form of Nichols-Homeshield 401(k) Savings Plan, as
amended.
5.1 Copy of Internal Revenue Service determination
letter that the Plan is qualified under Section
401 of the Internal Revenue Code of 1986, as
amended.
23.1 Consent of Deloitte & Touche.
25.1 Power of attorney (contained on page 7 hereof).
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Exhibit 4.15
Trust Agreement
Between
Quanex Corporation
And
Fidelity Management Trust Company
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NICHOLS-HOMESHIELD 401(K) SAVINGS PLAN
TRUST
----------------------------------------------
Dated as of March 31, 1992
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TABLE OF CONTENTS
Section Page
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1 Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2 Exclusive Benefit and Reversion of
Sponsor Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3 Disbursements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(a) Directions from Administrator
(b) Limitations
4 Investment of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(a) Selection of Investment Options
(b) Available Investment Options
(c) Participant Direction
(d) Mutual Funds
(e) Notes
(f) Reliance of Trustee on Directions
(g) Trustee Powers
5 Recordkeeping to Be Performed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(a) General
(b) Accounts
(c) Inspection and Audit
(d) Effect of Plan Amendment
(e) Returns, Reports and Information
6 Compensation and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7 Directions and Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(a) Identity of Administrator and Named Fiduciary
(b) Directions from Administrator
(c) Directions from Named Fiduciary
(d) Co-Fiduciary Liability
(e) Indemnification
(f) Survival
8 Resignation or Removal of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(a) Resignation
(b) Removal
9 Successor Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(a) Appointment
(b) Acceptance
(c) Corporate Action
10 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
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TABLE OF CONTENTS
(Continued)
Section Page
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11 Resignation, Removal, and Termination Notices . . . . . . . . . . . . . . . . . . . . . 13
12 Duration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
13 Amendment or Modification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
14 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(a) Employment of Affiliates as Agents for Trustee
(b) Entire Agreement
(c) Waiver
(d) Successors and Assigns
(e) Partial Invalidity
(f) Section Headings
(g) Single Trust
(h) Withdrawal
(i) Definition of Named Fiduciary
15 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(a) Massachusetts Law Controls
(b) Trust Agreement Controls
Schedules
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A. Recordkeeping Services
B. Fee Schedule
C. Investment Options
D. Sponsor's Authorization Letter
E. Named Fiduciary's Authorization Letter
F. IRS Determination Letter or Opinion of Counsel
G. Telephone Exchange Procedures
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TRUST AGREEMENT, dated as of the thirty-first day of March, 1992,
between Quanex Corporation, a Delaware corporation, having an office at 1900
West Loop South, Houston, TX 77027 (the "Sponsor"), and FIDELITY MANAGEMENT
TRUST COMPANY, a Massachusetts trust company, having an office at 82 Devonshire
Street, Boston, Massachusetts 02109 (the "Trustee").
WITNESSETH:
WHEREAS, the Sponsor has previously sponsored the Nichols-Homeshield
401(k) Savings Plan (the "Plan") for the exclusive benefit of its employees who
qualify and their beneficiaries; and
WHEREAS, the Board of Directors of Quanex Corporation has resolved to
amend, restate and continue the Nichols-Homeshield 401(k) Savings Plan Trust in
the form of the trust agreement between Fidelity Management Trust Company (the
"Trust"); and
WHEREAS, the Administrative Committee of the Sponsor (the "Named
Fiduciary") is the named fiduciary of the Plan (within the meaning of section
402(a) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")); and
WHEREAS, the Trustee is willing to hold and invest the aforesaid plan
assets in trust among several investment options selected by the Named
Fiduciary; and
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WHEREAS, the Sponsor wishes to have the Trustee perform certain
ministerial recordkeeping functions under the Plan; and
WHEREAS, the Sponsor (the "Administrator") is the administrator of the
Plan (within the meaning of section 3(16)(A) of ERISA); and
WHEREAS, the Trustee is willing to perform recordkeeping services for
the Plan if the services are purely ministerial in nature and are provided
within a framework of plan provisions, guidelines and interpretations conveyed
in writing to the Trustee by the Administrator.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and agreements set forth below, the Sponsor and the Trustee
agree as follows:
Section 1. Trust. The Sponsor hereby establishes the Nichols-Homeshield 401(k)
Savings Plan Trust (the "Trust"), with the Trustee. The Trust shall consist of
an initial contribution of money or other property acceptable to the Trustee in
its sole discretion, made by the Sponsor or transferred from a previous trustee
under the Plan, such additional sums of money and Sponsor Stock (hereinafter
defined) as shall from time to time be delivered to the Trustee under the Plan,
all investments made therewith and proceeds thereof, and all earnings and
profits thereon, less the payments that are made by the Trustee as provided
herein, without distinction between principal and income. The Trustee hereby
accepts the Trust on the terms and conditions set forth in this Agreement. In
accepting this Trust, the Trustee shall be accountable for the assets received
by it, subject to the terms and conditions of this Agreement.
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Section 2. Exclusive Benefit and Reversion of Sponsor Contributions.
Except as provided under applicable law, no part of the Trust may be used for,
or diverted to, purposes other than the exclusive benefit of the participants
in the Plan or their beneficiaries prior to the satisfaction of all liabilities
with respect to the participants and their beneficiaries. However, Quanex
Corporation retains the right provided in the Plan to have Trust assets revert
to them upon a mistake of fact or disallowance of a deduction based upon any
contribution to the Trust.
Section 3. Disbursements.
(a) Directions from Administrator. The Trustee shall make
disbursements in the amounts and in the manner that the Administrator directs
from time to time in writing. The Trustee shall have no responsibility to
ascertain any direction's compliance with the terms of the Plan or of any
applicable law or the direction's effect for tax purposes or otherwise; nor
shall the Trustee have any responsibility to see to the application of any
disbursement.
(b) Limitations. The Trustee shall not be required to make any
disbursement in excess of the net realizable value of the assets of the Trust
at the time of the disbursement. The Trustee shall not be required to make any
disbursement in cash unless the Administrator has provided a written direction
as to the assets to be converted to cash for the purpose of making the
disbursement.
Section 4. Investment of Trust.
(a) Selection of Investment Options. The Trustee shall have no
responsibility for the selection of investment options under the Trust and
shall not render investment advice to any person in connection with the
selection of such options.
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(b) Available Investment Options. The Named Fiduciary shall direct
the Trustee as to what investment options Plan participants may invest in,
subject to the following limitations. The Named Fiduciary may determine to
offer as investment options only (i) securities issued by the investment
companies advised by Fidelity Management & Research Company ("Mutual Funds"),
(ii) equity securities issued by the Sponsor or an affiliate which are
publicly-traded and which are "qualifying employer securities" within the
meaning of section 407(d)(5) of ERISA ("Sponsor Stock"), (iii) notes evidencing
loans to Plan participants in accordance with the terms of the Plan, and (iv)
guaranteed annuity contracts heretofore entered into by the Sponsor or
predecessor trustee and specifically identified on a Schedule attached hereto
("Existing GICs"), and (v) collective investment funds maintained by the
Trustee for qualified plans; provided, however, that the Named Fiduciary hereby
directs the Trustee to continue to hold such Existing GICs until the Named
Fiduciary directs otherwise, it being expressly understood that such direction
is given in accordance with Section 403(a) of ERISA; and provided, further,
that the Trustee shall be considered a fiduciary with investment discretion
only with respect to Plan assets that are invested in guaranteed investment
contracts chosen by the Trustee or in collective investment funds maintained by
the Trustee for qualified plans.
(c) Participant Direction. Each Plan participant shall direct the
Trustee in which investment option(s) to invest the assets in the participant's
individual accounts and the Trustee must comply with any such directions unless
it is clear on the direction's face that the actions to be taken under the
direction would be prohibited by the fiduciary duty rules of Section 404(a) of
ERISA or would be contrary to the terms of the Plan or this Agreement. Such
directions may be made by Plan participants by use of the telephone exchange
system maintained for such purposes by the Trustee or its agent, in accordance
with written Telephone Exchange Guidelines attached hereto as Schedule "G". If
a Plan participant makes an oral investment via the telephone exchange system,
the Trustee will return to that participant a written confirmation of that
direction. Any
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directions made by a Participant using the telephone exchange system shall be
treated as a direction made in writing by the Named Fiduciary for purposes of
Section 7 hereafter. In the event that the Trustee fails to receive a proper
direction, the assets shall be invested in the securities of the Mutual Fund
set forth for such purpose on Schedule "C", until the Trustee receives a proper
direction.
(d) Mutual Funds. Trust investments in Mutual Funds shall be
subject to the following limitations:
(i) Execution of Purchases and Sales. Purchases
and sales of Mutual Funds (other than for Exchanges) shall be made on the date
on which the Trustee receives from the Sponsor in good order all information
and documentation necessary to accurately effect such purchases and sales (or
in the case of a purchase, the subsequent date on which the Trustee has
received a wire transfer of funds necessary to make such purchase). Exchanges
of Mutual Funds shall be made in accordance with the Telephone Exchange
Guidelines attached hereto as Schedule "G".
(ii) Voting. At the time of mailing of notice of
each annual or special stockholders' meeting of any Mutual Fund, the Trustee
shall send a copy of the notice and all proxy solicitation materials to each
Plan participant who has shares of the Mutual Fund credited to the
participant's accounts, together with a voting direction form for return to the
Trustee or its designee. The participant shall have the right to direct the
Trustee as to the manner in which the Trustee is to vote the shares credited to
the participant's accounts (both vested and unvested). The Trustee shall vote
the shares as directed by the participant. The Trustee shall not vote shares
for which it has received no directions from the participant. With respect to
all rights other than the right to vote, the Trustee shall follow the
directions of the participant and if no such
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directions are received, the directions of the Named Fiduciary. The Trustee
shall have no duty to solicit directions from participants.
(e) Notes. The Administrator shall act as the Trustee's agent for
the purpose of holding all trust investments in participant loan notes and
related documentation and as such shall (i) hold physical custody of and keep
safe the notes and other loan documents, (ii) collect and remit all principal
and interest payments to the Trustee, (iii) keep the proceeds of such loans
separate from the other assets of the Administrator and clearly identify such
assets as Plan assets, (iv) advise the Trustee of the date, amount and payee of
the checks to be drawn representing loans, and (v) cancel and surrender the
notes and other loan documentation when a loan has been paid in full.
(f) Reliance of Trustee on Directions. (i) The Trustee shall not
be liable for any loss, or by reason of any breach, which arises from any
participant's exercise or non-exercise of rights under this Section 4 over the
assets in the participant's accounts.
(ii) The Trustee shall not be liable for any loss,
or by reason of any breach, which arises from the Named Fiduciary's exercise or
non-exercise of rights under this Section 4, unless it was clear on their face
that the actions to be taken under the Named Fiduciary's directions were
prohibited by the fiduciary duty rules of section 404(a) of ERISA or were
contrary to the terms of the Plan or this Agreement.
(g) Trustee Powers. The Trustee shall have the following powers
and authority:
(i) Subject to paragraphs (b), (c), and (d) of
this Section 4, to sell, exchange, convey, transfer, or otherwise dispose of
any property held in the Trust, by private contract or at public auction. No
person dealing with the Trustee shall be bound to see to the application of the
purchase money or other property delivered to the
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Trustee or to inquire into the validity, expediency, or propriety of any such
sale or other disposition.
(ii) Subject to paragraphs (b) and (c) of this
Section 4, to invest in guaranteed investment contracts and short term
investments (including interest bearing accounts with the Trustee or money
market mutual funds advised by affiliates of the Trustee) and in collective
investment funds maintained by the Trustee for qualified plans, in which case
the provisions of each collective investment fund in which the Trust is
invested shall be deemed adopted by the Sponsor and the provisions thereof
incorporated as a part of this Trust as long as the fund remains exempt from
taxation under Sections 401(a) and 501(a) of the Internal Revenue Code of 1986,
as amended.
(iii) To cause any securities or other property
held as part of the Trust to be registered in the Trustee's own name, in the
name of one or more of its nominees, or in the Trustee's account with the
Depository Trust Company of New York and to hold any investments in bearer
form, but the books and records of the Trustee shall at all times show that all
such investments are part of the Trust.
(iv) To keep that portion of the Trust in cash or
cash balances as the Named Fiduciary or Administrator may, from time to time,
deem to be in the best interest of the Trust.
(v) To make, execute, acknowledge, and deliver
any and all documents of transfer or conveyance and to carry out the powers
herein granted.
(vi) To take any action, whether by legal
proceeding, compromise, or otherwise, as the Trustee in its sole discretion
believes to be in the best interest of the Trust if there is a default in the
payment of any principal or income of the Trust at any time.
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(vii) To employ legal, accounting, clerical, and
other assistance as may be required in carrying out the provisions of this
Agreement and to pay their reasonable expenses and compensation from the Trust
if not paid by the Sponsor.
(viii) To do all other acts that are in accordance
with the powers granted to the Trustee under common law, the applicable state
trust law and other applicable statutes.
(ix) The Trustee is not required to take any legal
action to collect, preserve or maintain any Trust property unless it has been
indemnified either by the Trust itself, with the approval of the administrative
committee of the Plan, or by the Sponsor. Any property acquired by the Trustee
through the enforcement or compromise of any claim or claims that has as
Trustee of this Trust will become a part of the Trust.
Section 5. Recordkeeping to Be Performed.
(a) General. The Trustee shall perform those recordkeeping
functions described in Schedule "A" attached hereto. These recordkeeping
functions shall be performed within the framework of the Administrator's
written directions regarding the Plan's provisions, guidelines and
interpretations.
(b) Accounts. The Trustee shall keep accurate accounts of all
investments, receipts, disbursements, and other transactions hereunder, and
shall report the value of the assets held in the Trust as of the last day of
each fiscal quarter of the Plan and, if not on the last day of a fiscal
quarter, the date on which the Trustee resigns or is removed as provided in
Section 8 of this Agreement or is terminated as provided in Section 10 (the
"Reporting Date"). Within thirty (30) days following each Reporting Date or
within sixty (60) days in the case of a Reporting Date caused by the
resignation or removal of the Trustee, or the termination of this Agreement,
the Trustee shall file with
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the Administrator a written account setting forth all investments, receipts,
disbursements, and other transactions effected by the Trustee between the
Reporting Date and the prior Reporting Date, and setting forth the value of the
Trust as of the Reporting Date. Except as otherwise required under ERISA, upon
the expiration of six (6) months from the date of filing such account with the
Administrator, the Trustee shall have no liability or further accountability to
anyone with respect to the propriety of its acts or transactions shown in such
account, except with respect to such acts or transactions as to which the
Sponsor shall within such six (6) month period file with the Trustee written
objections.
(c) Inspection and Audit. All records generated by the Trustee in
accordance with paragraphs (a) and (b) shall be open to inspection and audit,
during the Trustee's regular business hours prior to the termination of this
Agreement, by the Administrator or any person designated by the Administrator.
Upon the resignation or removal of the Trustee or the termination of this
Agreement, the Trustee shall provide to the Administrator, at no expense to
the Sponsor, in the format regularly provided to the Administrator, a statement
of each participant's accounts as of the resignation, removal, or termination,
and the Trustee shall provide to the Administrator or the Plan's new
recordkeeper such further records as are reasonable, at the Sponsor's expense.
(d) Effect of Plan Amendment. The Trustee's provision of the
recordkeeping services set forth in this Section 5 shall be conditioned on the
Sponsor delivering to the Trustee a copy of any amendment to the Plan as soon
as administratively feasible following the amendment's adoption, with, if
requested, an IRS determination letter or an opinion of counsel substantially
in the form of Schedule "F" covering such amendment, and on the Administrator
providing the Trustee on a timely basis with all the information the
Administrator deems necessary for the Trustee to perform the recordkeeping
services and such other information as the Trustee may reasonably request.
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(e) Returns, Reports and Information. The Administrator shall be
responsible for the preparation and filing of all returns, reports, and
information required of the Trust or Plan by law. The Trustee shall provide the
Administrator with such information as the Administrator may reasonably request
to make these filings. The Administrator shall also be responsible for making
any disclosures to Participants required by law including, without limitation,
such disclosures as may be required under federal or state truth-in-lending
laws with regard to Participant loans.
Section 6. Compensation and Expenses. Within thirty (30) days of receipt of the
Trustee's bill, which shall be computed and billed in accordance with Schedule
"B" attached hereto and made a part hereof, as amended from time to time, the
Sponsor shall send to the Trustee a payment in such amount. All expenses of the
Trustee relating directly to the acquisition and disposition of investments
constituting part of the Trust, and all taxes of any kind whatsoever that may
be levied or assessed under existing or future laws upon or in respect of the
Trust or the income thereof, shall be a charge against and paid from the
appropriate Plan participants' accounts.
Section 7. Directions and Indemnification.
(a) Identity of Administrator and Named Fiduciary. The Trustee
shall be fully protected in relying on the fact that the Named Fiduciary and
the Administrator under the Plan are the individuals or persons named as such
above or such other individuals or persons as the Sponsor may notify the
Trustee in writing.
(b) Directions from Administrator. Whenever the Administrator
provides a direction to the Trustee, the Trustee shall not be liable for any
loss, or by reason of any breach, arising from the direction if the direction
is contained in a writing (or is oral and immediately confirmed in a writing)
signed by any individual whose name and signature have been submitted (and not
withdrawn) in writing to the Trustee by the Administrator in
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the form attached hereto as Schedule "D", provided the Trustee reasonably
believes the signature of the individual to be genuine, unless it is clear on
the direction's face that the actions to be taken under the direction would be
prohibited by the fiduciary duty rules of Section 404(a) of ERISA or would be
contrary to the terms of the Plan or this Agreement.
(c) Directions from Named Fiduciary. Whenever the Named Fiduciary
or Sponsor provides a direction to the Trustee, the Trustee shall not be liable
for any loss, or by reason of any breach, arising from the direction (i) if the
direction is contained in a writing (or is oral and immediately confirmed in a
writing) signed by any individual whose name and signature have been submitted
(and not withdrawn) in writing to the Trustee by the Named Fiduciary in the
form attached hereto as Schedule "E" and (ii) if the Trustee reasonably
believes the signature of the individual to be genuine, unless it is clear on
the direction's face that the actions to be taken under the direction would be
prohibited by the fiduciary duty rules of section 404(a) of ERISA or would be
contrary to the terms of the Plan or this Agreement.
(d) Co-Fiduciary Liability. In any other case, the Trustee shall
not be liable for any loss, or by reason of any breach, arising from any act or
omission of another fiduciary under the Plan except as provided in section
405(a) of ERISA.
(e) Indemnification. The Sponsor shall indemnify the Trustee
against, and hold the Trustee harmless from, any and all loss, damage, penalty,
liability, cost, and expense, including without limitation, reasonable
attorneys' fees and disbursements, that may be incurred by, imposed upon, or
asserted against the Trustee by reason of any claim, regulatory proceeding, or
litigation arising from any act done or omitted to be done by any individual or
person with respect to the Plan or Trust, excepting only any and all loss,
etc., arising from the Trustee's breach of its fiduciary duties under ERISA.
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(f) Survival. The provisions of this Section 7 shall survive the
termination of this Agreement.
Section 8. Resignation or Removal of Trustee.
(a) Resignation. The Trustee may resign at any time upon sixty
(60) days' notice in writing to the Sponsor, unless a shorter period of notice
is agreed upon by the Sponsor.
(b) Removal. The Sponsor may remove the Trustee at any time upon
sixty (60) days' notice in writing to the Trustee, unless a shorter period of
notice is agreed upon by the Trustee.
Section 9. Successor Trustee.
(a) Appointment. If the office of Trustee becomes vacant for any
reason, the Sponsor may in writing appoint a successor trustee under this
Agreement. The successor trustee shall have all of the rights, powers,
privileges, obligations, duties, liabilities, and immunities granted to the
Trustee under this Agreement. The successor trustee and predecessor trustee
shall not be liable for the acts or omissions of the other with respect to the
Trust.
(b) Acceptance. When the successor trustee accepts its appointment
under this Agreement, title to and possession of the Trust assets shall
immediately vest in the successor trustee without any further action on the
part of the predecessor trustee. The predecessor trustee shall execute all
instruments and do all acts that reasonably may be necessary or reasonably may
be requested in writing by the Sponsor or the successor trustee to vest title
to all Trust assets in the successor trustee or to deliver all Trust assets to
the successor trustee.
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(c) Corporate Action. Any successor of the Trustee or successor
trustee, through sale or transfer of the business or trust department or the
Trustee or successor trustee, or through reorganization, consolidation, or
merger, or any similar transaction, shall, upon consummation of the
transaction, become the successor trustee under this Agreement.
Section 10. Termination. This Agreement may be terminated at any time by the
Sponsor upon sixty (60) days' notice in writing to the Trustee. On the date of
the termination of this Agreement, the Trustee shall forthwith transfer and
deliver to such individual or entity as the Sponsor shall designate, all cash
and assets then constituting the Trust. If, by the termination date, the
Sponsor has not notified the Trustee in writing as to whom the assets and cash
are to be transferred and delivered, the Trustee may bring an appropriate
action or proceeding for leave to deposit the assets and cash in a court of
competent jurisdiction. The Trustee shall be reimbursed by the Sponsor for all
costs and expenses of the action or proceeding including, without limitation,
reasonable attorneys' fees and disbursements.
Section 11. Resignation, Removal, and Termination Notices. All notices of
resignation, removal, or termination under this Agreement must be in writing
and mailed to the party to which the notice is being given by certified or
registered mail, return receipt requested, to the Sponsor c/o Wayne M. Rose,
Vice President - Chief Financial Officer, Quanex Corporation, 1900 West Loop
South, Suite 1500, Houston, TX 77027, and to the Trustee c/o John M. Kimpel,
Fidelity Investments, 82 Devonshire Street, Boston, Massachusetts 02109, or to
such other addresses as the parties have notified each other of in the
foregoing manner.
Section 12. Duration. This Trust shall continue in effect without limit as to
time, subject, however, to the provisions of this Agreement relating to
amendment, modification, and termination thereof.
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Section 13. Amendment or Modification. This Agreement may be amended or
modified at any time and from time to time only by an instrument executed
by both the Sponsor and the Trustee. Notwithstanding the foregoing, to reflect
increased operating costs the Trustee may once each calendar year amend
Schedule "B" without the Sponsor's consent upon seventy-five (75) days written
notice to the Sponsor.
Section 14. General.
(a) Employment of Affiliates as Agents for Trustee. The Sponsor
acknowledges and authorizes that the Trustee may employ its affiliates to act
as its agent in the performance of its responsibilities under this Agreement.
In particular, the Sponsor specifically acknowledges and authorizes that the
Trustee may employ Fidelity Investments Institutional Operations Company or its
successor to perform recordkeeping functions under this Agreement. The expenses
and compensation of any such agent shall be paid by the Trustee out of its fees
described in Schedule "B" attached hereto.
(b) Entire Agreement. This Agreement contains all of the terms
agreed upon between the parties with respect to the subject matter hereof.
(c) Waiver. No waiver by either party of any failure or refusal to
comply with an obligation hereunder shall be deemed a waiver of any other or
subsequent failure or refusal to so comply.
(d) Successors and Assigns. The stipulations in this Agreement
shall inure to the benefit of, and shall bind, the successors and assigns of
the respective parties.
(e) Partial Invalidity. If any term or provision of this Agreement
or the application thereof to any person or circumstances shall, to any extent,
be invalid or unenforceable, the remainder of this Agreement, or the
application of such term or
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provision to persons or circumstances other than those as to which it is held
invalid or unenforceable, shall not be affected thereby, and each term and
provision of this Agreement shall be valid and enforceable to the fullest
extent permitted by law.
(f) Section Headings. The headings of the various sections and
subsections of this Agreement have been inserted only for the purposes of
convenience and are not part of this Agreement and shall not be deemed in any
manner to modify, explain, expand or restrict any of the provisions of this
Agreement.
(g) Single Trust. The Trust will be a single trust within the
meaning of Section 414(l) of the Internal Revenue Code of 1986, as amended,
with respect to Quanex Corporation and any other employer that adopts the Trust
with the consent of Quanex Corporation and the Trustee. All Trust assets will
be available to pay the benefits of all such employers' eligible employees and
their beneficiaries.
(h) Withdrawal. The employers that adopt this Trust may withdraw
from the Trust by giving 60 days written notice of their intent to withdraw to
Quanex Corporation and the Trustee.
The administrative committee of the Plan will then determine, within
sixty (60) days following the receipt of the notice, the portion of the Trust
that is attributable to the members employed by the withdrawing employer and
shall forward a copy of the determination to the Trustee. Upon receipt of the
determination, the Trustee will segregate those assets attributable to the
members employed by the withdrawing employer and will transfer those assets to
the successor Trustee or Trustees when it receives a designation of such
successor from the withdrawing employer.
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The withdrawal from the Trust will not terminate the Plan or Trust
with respect to the withdrawing employer. Instead, the employer shall, as soon
as practical, either appoint a successor Trustee or Trustees and reaffirm this
Trust as a new and separate trust intended to fund the Plan which is qualified
under Section 401(a) of the Code or establish another defined contribution plan
and trust intended to qualify under Section 401(a) of the Code.
The determination of the administrative committee of the Plan, in its
sole discretion, of the portion of the Trust that is attributable to the
members employed by the withdrawing employer will be final and binding upon all
parties at interest; and, the Trustee's transfer of those assets to the
designated successor Trustee shall relieve the Trustee of any further
obligation, liability or duty to the withdrawing employer, the members employed
by that employer and their beneficiaries, and the successor Trustee or
Trustees.
(i) Definition of Named Fiduciary. The Sponsor is the Named
Fiduciary of the Plan within the meaning of ERISA Section 402(a)(2). The Plan
participants arc Named Fiduciaries within the meaning of ERISA Section
402(a)(2) solely with regard to their exercise of such pass through voting and
tender offer rights.
Section 15. Governing Law.
(a) Massachusetts Law Controls. This Agreement is being made in
the Commonwealth of Massachusetts, and the Trust shall be administered as a
Massachusetts trust. The validity, construction, effect, and administration of
this Agreement shall be governed by and interpreted in accordance with the laws
of the Commonwealth of Massachusetts, except to the extent those laws are
superseded under section 514 of ERISA.
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(b) Trust Agreement Controls. The Trustee is not a party to the
Plan, and in the event of any conflict between the provisions of the Plan and
the provisions of this Agreement, the provisions of this Agreement shall
control.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized officers as of the day and year first
above written.
QUANEX CORPORATION
Attest: /s/ JOSEPH K. PEERY By /s/ WAYNE M. ROSE
Assistant Secretary Vice President
FIDELITY MANAGEMENT TRUST
COMPANY
Attest: /s/ DOUGLAS O. KORB By /s/ JOHN P. O'RILEY JR.
Assistant Clerk Senior Vice President
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Schedule "A"
RECORDKEEPING SERVICES
Administration
* Establishment and maintenance of participant account and election
percentages.
* Maintenance of six plan investment options:
- Fidelity Money Market Trust: Retirement Money Market
Portfolio
- Fidelity U.S. Bond Index Portfolio
- Fidelity Balanced Fund
- Fidelity Growth & Income Portfolio
- Fidelity Magellan Fund
- Fidelity Contrafund
* Maintenance of four money classifications:
- Salary Deferral Contribution Account
- Supplemental Employer Contribution Account
- Rollover Account
- Qualified Non-elective Employer Contribution Account
* Processing of mutual fund trades.
The Trustee will provide only the recordkeeping services set forth on
this Schedule "A" and no others.
Processing
* Monthly processing of contribution data.
* Daily processing of transfers and changes of future allocations.
* Monthly processing of withdrawals.
Other
* Monthly trial balance
* Quarterly administrative reports
* Quarterly participant statements
* 1099-Rs
* Participant Loans
* Performance of section 401(k) limitation testing upon request. In
order to obtain this service, the client shall be required to provide
the information identified in the Fidelity Discrimination Testing
Package Guidelines.
QUANEX CORPORATION FIDELITY MANAGEMENT TRUST COMPANY
By /s/ WAYNE M. ROSE 3/3/92 By /s/ JOHN P. O'RILEY JR. 3/13/92
Date Senior Vice President Date
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Schedule "B"
FEE SCHEDULE
Recordkeeping Fees
Annual Participant Fee $20.00 per participant*, subject to
a $7,500 per year minimum, billed
and payable quarterly.
Loan Fees Establishment fee of $10.00 per loan
account; annual fee of $15.00 per
loan account.
Other Fees: extraordinary expenses resulting from large numbers of
simultaneous manual transactions or from errors not caused by
Fidelity.
* This fee will be imposed pro rata for each calendar quarter, or any
part thereof, that it remains necessary to keep a participant's
account(s) as part of the Plan's records, e.g., vested, deferred,
forfeiture, top-heavy and terminated participants who must remain on
file through calendar year-end for 1099-R reporting.
Trustee Fees
To the extent that assets are invested in Mutual Funds, 0.02% per year
payable pro rata quarterly on the basis of such assets in the Trust as
of the calendar quarter's last valuation date, but no less than
$2,500.00 nor more than $5,000.00.
QUANEX CORPORATION FIDELITY MANAGEMENT TRUST COMPANY
By /s/ WAYNE M. ROSE 3/3/92 By /s/ JOHN P. O'RILEY JR. 3/13/92
Date Senior Vice President Date
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Schedule "C"
INVESTMENT OPTIONS
In accordance with Section 4(b), the Named Fiduciary hereby directs
the Trustee that participants' individual accounts may be invested in the
following investment options:
- Fidelity Money Market Trust: Retirement Money Market
Portfolio
- Fidelity U.S. Bond Index Portfolio
- Fidelity Balanced Fund
- Fidelity Growth & Income Portfolio
- Fidelity Magellan Fund
- Fidelity Contrafund
The mutual fund advised by Fidelity Management & Research Company
referred to in Section 4(c) shall be Fidelity Money Market Trust: Retirement
Money Market Portfolio.
QUANEX CORPORATION
By /s/ WAYNE M. ROSE 3/3/92
Date
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Quanex Corporation
1900 West Loop South (LOGO)
Suite 1500 Houston, TX 77027
(713) 961-4600
February 17, 1992
Ms. Jacqueline W. McCarthy
Fidelity Investments Institutional Operations Company
82 Devonshire Street
Boston, MA 02109
RE: Nichols-Homeshield 401(k) Savings Plan Trust
Dear Ms. McCarthy:
This letter is sent to you in accordance with Section 7(b) of the
Trust Agreement, dated as of March 31, 1992, between Quanex
Corporation and Fidelity Management Trust Company. We hereby designate
Carl E. Pfeiffer, Robert C. Snyder, Wayne M. Rose, and Joseph K.
Peery, as the individuals who may provide directions upon which
Fidelity Management Trust Company shall be fully protected in relying.
Only one such individual need provide any direction. The signature of
each designated individual is set forth below and certified to be
such.
You may rely upon each designation and certification set forth in this
letter until we deliver to you written notice of the termination of
authority of a designated individual.
Very truly yours,
QUANEX CORPORATION
By: /s/ WAYNE M. ROSE
/s/ CARL E. PFEIFFER
Carl E. Pfeiffer
/s/ ROBERT C. SNYDER
Robert C. Snyder
/s/ WAYNE M. ROSE
Wayne M. Rose
/s/ JOSEPH K. PEERY
Joseph K. Peery
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Quanex Corporation
1900 West Loop South (LOGO)
Suite 1500 Houston, TX 77027
(713) 961-4600
February 17, 1992
Ms. Jacqueline W. McCarthy
Fidelity Investments Institutional Operations Company
82 Devonshire Street
Boston, MA 02109
RE: Nichols-Homeshield 401(k) Savings Plan Trust
Dear Ms. McCarthy:
This letter is sent to you in accordance with Section 7(c) of the
Trust Agreement, dated as of March 31, 1992, between Quanex
Corporation and Fidelity Management Trust Company. We hereby designate
Carl E. Pfeiffer, Robert C. Snyder, Wayne M. Rose, and Joseph K.
Peery, as the individuals who may provide directions upon which
Fidelity Management Trust Company shall be fully protected in relying.
Only one such individual need provide any direction. The signature of
each designated individual is set forth below and certified to be
such.
You may rely upon each designation and certification set forth in this
letter until we deliver to you written notice of the termination of
authority of a designated individual.
Very truly yours,
QUANEX CORPORATION
By: /s/ WAYNE M. ROSE
/s/ CARL E. PFEIFFER
Carl E. Pfeiffer
/s/ ROBERT C. SNYDER
Robert C. Snyder
/s/ WAYNE M. ROSE
Wayne M. Rose
/s/ JOSEPH K. PEERY
Joseph K. Peery
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Schedule "G"
TELEPHONE EXCHANGE PROCEDURES
The following telephone exchange procedures are currently employed by Fidelity
Investments Retirement Services Company (FIRSCO).
Telephone exchange hours are 8:30 a.m. (EST) to 8:00 p.m. (EST) on each
business day. A "business day" is any day on which the New York Stock Exchange
is open.
FIRSCO reserves the right to change these telephone exchange procedures at its
discretion.
Mutual Funds
Exchanges Between Mutual Funds
Participants may call on any business day to exchange between the
mutual funds. If the request is received before 4:00 p.m. (EST), it
will receive that day's trade date. Calls received after 4:00 p.m.
(EST) will be processed on a next day basis.
QUANEX CORPORATION
By /s/ WAYNE M. ROSE 3/3/92
Date
24
27
FIRST AMENDMENT TO TRUST AGREEMENT BETWEEN
FIDELITY MANAGEMENT TRUST COMPANY AND
QUANEX CORPORATION
THIS FIRST AMENDMENT, dated as of the first day of January, 1993, by
and between Fidelity Management Trust Company (the "Trustee") and Quanex
Corporation (the "Sponsor"),
WITNESSETH:
WHEREAS, the Trustee and the Sponsor heretofore entered into a trust
agreement dated March 31, 1992, with regard to the Nichols-Homeshield 401(k)
Savings Plan (the "Plan"); and
WHEREAS, the Trustee and the Sponsor now desire to amend said trust
agreement as provided for in Section 13 thereof;
NOW THEREFORE, in consideration of the above premises the Trustee and
the Sponsor hereby amend the trust agreement by:
(1) Amending and restating the "investment options" portion of
Schedule "A" and Schedule "C" to read as follows:
- Fidelity Money Market Trust:Retirement
Government Money Market Portfolio
- Fidelity Balanced Fund
- Fidelity Growth & Income Portfolio
- Fidelity Magellan Fund
- Fidelity Contrafund
- Fidelity Short Intermediate Government
Portfolio
IN WITNESS HEREOF, the Trustee and the Sponsor have caused this First
Amendment to be executed by their duly authorized officers effective as of the
day and year first above written.
QUANEX CORPORATION FIDELITY MANAGEMENT
TRUST COMPANY
By /s/ WAYNE M. ROSE 12/15/92 By /s/ JOHN P. O'RILEY JR. 12/22/92
Date Senior Vice President Date
28
SECOND AMENDMENT TO TRUST AGREEMENT BETWEEN
FIDELITY MANAGEMENT TRUST COMPANY AND
QUANEX CORPORATION
THIS SECOND AMENDMENT, dated as of the 15th day of July 1993 by and
between Fidelity Management Trust Company (the "Trustee") and Quanex
Corporation (the "Sponsor"):
WITNESSETH:
WHEREAS, the Trustee and the Sponsor heretofore entered into a trust
agreement dated March 31, 1992, with regard to the Nichols-Homeshield 401(k)
Savings Plan (the "Plan"); and
WHEREAS, the Trustee and the Sponsor now desire to amend said trust
agreement as provided for in Section 13 thereof;
NOW THEREFORE, in consideration of the above premises the Trustee and
the Sponsor hereby amend the trust agreement by:
(1) Amending and restating the "investment options" portion of
Schedule "A" and Schedule "C" to read as follows:
- Fidelity Money Market Trust:Retirement
Government Money Market Portfolio
- Fidelity Balanced Fund
- Fidelity Growth & Income Portfolio
- Fidelity Magellan Fund
- Fidelity Contrafund
- Fidelity Short Intermediate Government
Portfolio
- Fidelity Overseas Fund
IN WITNESS WHEREOF, the Trustee and the Sponsor have caused this
Second Amendment to be executed by their duly authorized officers effective as
of the day and year first above written.
QUANEX CORPORATION FIDELITY MANAGEMENT
TRUST COMPANY
By /s/ JOSEPH K. PEERY By /s/ JOHN P. O'RILEY JR. 6/30/93
Date Senior Vice President Date
29
REVISED
THIRD AMENDMENT TO TRUST AGREEMENT BETWEEN
FIDELITY MANAGEMENT TRUST COMPANY AND
QUANEX CORPORATION
THIS THIRD AMENDMENT, dated as of February 1, 1994, by and between
Fidelity Management Trust Company (the "Trustee") and Quanex Corporation (the
"Sponsor"): and
WITNESSETH:
WHEREAS, the Trustee and the Sponsor heretofore entered into a trust
agreement dated March 31, 1992, with regard to the Nichols-Homeshield 401(k)
Savings Plan (the "Plan"): and
WHEREAS, the Trustee and the Sponsor now desire to amend said trust
agreement as provided for in Section 13 thereof;
NOW THEREFORE, in consideration of the above premises the Trustee and
the Sponsor hereby amend the trust agreement by:
* Amending Section 4 by replacing Section 4(e), In its entirety,
with the following:
Notes. The Administrator shall act as the Trustee's
agent for the purpose of holding all trust investments in
participant loan notes and related documentation and as such
shall (i) hold physical custody of and keep safe the notes and
other loan documents, (ii) collect and remit all principal and
Interest payments to the Trustee, (iii) keep the proceeds of
such loans separate from the other assets of the Administrator
and clearly identify such assets as Plan assets and (iv)
cancel and surrender the notes and other loan documentation
when a loan has been paid in full. To originate a participant
loan, the Plan participant shall notify the Trustee of the
request by use of the Telephone Exchange System. The Trustee
shall determine, based on the current value of the Plan
participant's account, the amount available for the loan. The
Plan participant shall then direct the Trustee regarding the
amount to be borrowed and the term or period for repayment.
Based on the most recent interest rate supplied by the Sponsor
in accordance with the terms of the Plan, the Trustee shall
advise the Plan participant of such interest rate, as well as
the installment payment amounts. The Trustee shall forward the
loan document to the Plan participant for execution and
submission for approval to the Administrator. The
Administrator shall have the responsibility for instructing
the Trustee as to whether the Administrator has approved the
loan via remote access. The Trustee shall send the loan
proceeds to the Administrator or to the Plan participant in
accordance with the directions from the Administrator. In all
cases, such approval by the Administrator shall be made within
30 days of the Plan participant's initial request (the
origination date).
* Amending Schedule "B" to reflect the Loan Fee as follows:
Loan Fees Establishment fee of $35.00 per loan
account; annual fee of $15.00 per
loan account.
IN WITNESS WHEREOF, the Trustee and the Sponsor have caused this Third
Amendment to be executed by their duly authorized officers effective as of the
day and year first above written.
QUANEX CORPORATION FIDELITY MANAGEMENT TRUST COMPANY
By /s/ JOSEPH K. PEERY By /s/ JOHN P. O'RILEY JR. 2/9/94
Date Senior Vice President Date
30
FOURTH AMENDMENT TO TRUST AGREEMENT BETWEEN
FIDELITY MANAGEMENT TRUST COMPANY AND
QUANEX CORPORATION
THIS FOURTH AMENDMENT, dated as of the 1st day of April, 1994, by and
between Fidelity Management Trust Company (the "Trustee") and Quanex
Corporation (the "Sponsor"); and
WITNESSETH:
WHEREAS, the Trustee and the Sponsor heretofore entered into a trust
agreement dated March 31, 1992, with regard to the Nichols-Homeshield 401(k)
Savings Plan (the "Plan"); and
WHEREAS, the Trustee and the Sponsor now desire to amend said trust
agreement as provided for in Section 13 thereof;
NOW THEREFORE, in consideration of the above premises the Trustee and
the Sponsor hereby amend the trust agreement by:
(1) Amending and restating the "investment options" portion of
Schedules "A" and "C", to read as follows:
- Fidelity Magellan Fund
- Fidelity Overseas Fund
- Fidelity Puritan Fund
- Fidelity Money Market Trust:Retirement
Government Money Market Portfolio
- Fidelity Growth & Income Portfolio
- Fidelity Short Intermediate Government
Portfolio
- Fidelity Contrafund
- Fidelty Balanced Fund
(2) Amending and restating Schedules "D" and "E", as attached.
IN WITNESS WHEREOF, the Trustee and the Sponsor have caused this
Fourth Amendment to be executed by their duly authorized officers effective as
of the day and year first above written.
QUANEX CORPORATION FIDELITY MANAGEMENT TRUST COMPANY
By /s/ ROBERT C. SNYDER 3/30/94 By /s/ JOHN P. O'RILEY JR. 4/5/94
Date Senior Vice President Date
31
SCHEDULE D
QUANEX CORPORATION
1900 WEST LOOP SOUTH, SUITE 1500
HOUSTON, TX 77027
(713) 961-4600
March 31, 1994
Re: Nichols-Homeshield 401(k) Savings Plan Trust
================================================================================
Ms. Jacqueline W. McCarthy
Fidelity Investments Institutional Operations Company
82 Devonshire Street
Boston, Massachusetts 02109
Dear Ms. McCarthy:
This letter is sent to you in accordance with Section 7(b) of the
Trust Agreement, dated as of April 1, 1991, between Quanex Corporation and
Fidelity Management Trust Company. We hereby designate Robert C. Snyder, Vernon
E. Oechsle, Wayne M. Rose, and Joseph K. Peery, as the individuals who may
provide directions upon which Fidelity Management Trust Company shall be fully
protected in relying. Only one such individual need provide any direction. The
signature of each designated individual is set forth below and certified to be
such.
You may rely upon each designation and certification set forth in this
letter until we deliver to you written notice of the termination of authority
of a designated individual.
Very truly yours,
QUANEX CORPORATION
By: /s/ JOSEPH K. PEERY
Assistant Secretary
/s/ ROBERT C. SNYDER
Robert C. Snyder
/s/ VERNON E. OECHSLE
Vernon E. Oechsle
/s/ WAYNE M. ROSE
Wayne M. Rose
/s/ JOSEPH K. PEERY
Joseph K. Peery
32
SCHEDULE E
QUANEX CORPORATION
1900 WEST LOOP SOUTH, SUITE 1500
HOUSTON, TX 77027
(713) 961-4600
March 31, 1994
Re: Nichols-Homeshield 401(k) Savings Plan Trust
================================================================================
Ms. Jacqueline W. McCarthy
Fidelity Investments Institutional Operations Company
82 Devonshire Street
Boston, Massachusetts 02109
Dear Ms. McCarthy:
This letter is sent to you in accordance with Section 7(c) of the
Trust Agreement, dated as of April 1, 1991, between Quanex Corporation and
Fidelity Management Trust Company. We hereby designate Robert C. Snyder, Vernon
E. Oechsle, Wayne M. Rose, and Joseph K. Peery, as the individuals who may
provide directions upon which Fidelity Management Trust Company shall be fully
protected in relying. Only one such individual need provide any direction. The
signature of each designated individual is set forth below and certified to be
such.
You may rely upon each designation and certification set forth in this
letter until we deliver to you written notice of the termination of authority
of a designated individual.
Very truly yours,
QUANEX CORPORATION
By: /s/ JOSEPH K. PEERY
Assistant Secretary
/s/ ROBERT C. SNYDER
Robert C. Snyder
/s/ VERNON E. OECHSLE
Vernon E. Oechsle
/s/ WAYNE M. ROSE
Wayne M. Rose
/s/ JOSEPH K. PEERY
Joseph K. Peery
33
FIFTH AMENDMENT TO TRUST AGREEMENT BETWEEN
FIDELITY MANAGEMENT TRUST COMPANY AND
QUANEX CORPORATION
THIS FIFTH AMENDMENT, dated as of the first day of July, 1994, by and
between Fidelity Management Trust Company (the "Trustee") and Quanex
Corporation (the "Sponsor");
WITNESSETH:
WHEREAS, the Trustee and the Sponsor heretofore entered into a trust
agreement dated March 31, 1992, with regard to the Nichols-Homeshield 401(k)
Savings Plan (the "Plan"); and
WHEREAS, the Trustee and the Sponsor now desire to amend said trust
agreement as provided for in Section 13 thereof;
WHEREAS, the Sponsor now desires, and hereby directs the Trustee, in
accordance with Section 7(c), to liquidate all participant balances held in the
Fidelity Short Intermediate Government Portfolio on July 1, 1994 and to invest
the proceeds in the Fidelity Money Market Trust:Retirement Government Money
Market Portfolio. The parties hereto agree that the Trustee shall have no
discretionary authority with respect to this sale and transfer directed by the
Sponsor. Any variation from the procedure described herein may be instituted
only at the express written directions of the Sponsor; and
NOW THEREFORE, in consideration of the above premises the Trustee and the
Sponsor hereby amend the trust agreement by:
(1) Amending Section 4 by adding two new subsections, Section 4(h) and
4(i), respectively, to read as follows:
(h) Sponsor Stock. Trust investments in Sponsor Stock shall be
subject to the following limitations:
(i) Acquisition Limit. Pursuant to the Plan, the Trust may be
invested in Sponsor Stock to the extent necessary to comply with
investment directions under Section 4(c) of this Agreement. Up to
100 percent (100%) of the Trust assets may be so invested in Sponsor
Stock.
(ii) Fiduciary Duty of Named Fiduciary. The Named Fiduciary
shall continually monitor the suitability under the fiduciary duty
rules of section 404(a)(1) of ERISA (as modified by section 404(a)(2)
of ERISA) of acquiring and holding Sponsor Stock. The Trustee shall
not be liable for any loss, or by reason of any breach, which arises
from the directions of the Named Fiduciary with respect to the
acquisition and holding of Sponsor Stock, unless it is clear on
their face that the actions to be taken under those directions would
be prohibited by the foregoing fiduciary duty rules or would be
contrary to the terms of the Plan or this Agreement.
(iii) Execution of Purchases and Sales. (A) Purchases and sales
of Sponsor Stock (other than for exchanges) shall be made on the
open market on
34
the date on which the Trustee receives from the Sponsor in good order
all information and documentation necessary to accurately effect such
purchases and sales (or, in the case of purchases, the subsequent
date on which the Trustee has received a wire transfer of the funds
necessary to make such purchases). Exchanges of Sponsor Stock shall
be made in accordance with the Telephone Exchange Guidelines attached
hereto as Schedule "G". Such general rules shall not apply in the
following circumstances:
(1) If the Trustee is unable to determine the
number of shares required to be purchased or sold on such day; or
(2) If the Trustee is unable to purchase or sell the
total number of shares required to be purchased or sold on
such day as a result of market conditions; or
(3) If the Trustee is prohibited by the Securities and
Exchange Commission, the New York Stock Exchange, or any other
regulatory body from purchasing or selling any or all of the
shares required to be purchased or sold on such day.
In the event of the occurrence of the circumstances described
in (1), (2), or (3) above, the Trustee shall purchase or sell
such shares as soon as possible thereafter and shall determine
the price of such purchases or sales to be the average purchase
or sales price of all such shares purchased or sold,
respectively. The Trustee may follow directions from the Named
Fiduciary to deviate from the above purchase and sale procedures
provided that such direction is made in writing by the Named
Fiduciary.
(B) Use of an Affiliated Broker. The Sponsor hereby authorizes the
Trustee to use Fidelity Brokerage Services, Inc. ("FBSI") to provide
brokerage services in connection with any purchase or sale of Sponsor
Stock in accordance with directions from Plan participants. FBSI shall
execute such directions directly or through its affiliate, National
Financial Services Company ("NFSC"). The provision of brokerage services
shall be subject to the following:
(i) As consideration for such brokerage services, the
Sponsor agrees that FBSI shall be entitled to remuneration under this
authorization provision in the amount of five cents ($.05) commission
on each share of Sponsor Stock up to 10,000 shares in a singular
transaction, four cents ($.04) commission on each share of Sponsor
Stock from 10,001 to 20,000 shares in a singular transaction, and
three and one-half cents ($.035) commission on each share of Sponsor
Stock in excess of 20,000 shares in a singular transaction. Any change
in such remuneration may be made only by a signed agreement between
Sponsor and Trustee.
(ii) Following the procedures set forth in Department of
Labor Prohibited Transaction Class Exemption 86-128, the Trustee has
provided the Sponsor with the following documents: (1) a description
of FBSI's brokerage placement practices; (2) a copy of PTCE 86-128;
and (3) a form by which the Sponsor may terminate this authorization
to use a broker affiliated with the Trustee. The Trustee will, within
the time periods specified in PTCE 86-128, provide the Sponsor with
the confirmations and reports required under PTCE 86-128.
35
(iii) Any successor organization of FBSI, through
reorganization, consolidation, merger or similar transactions, shall,
upon consummation of such transaction, become the successor broker in
accordance with the terms of this authorization provision.
(iv) The Trustee and FBSI shall continue to rely on this
authorization provision until notified to the contrary. The Sponsor
reserves the right to terminate this authorization upon sixty (60)
days written notice to FBSI (or its successor) and the Trustee, in
accordance with Section 11 of this Agreement.
(iv) Securities Law Reports. The Named Fiduciary shall be
responsible for filing all reports required under Federal or state
securities laws with respect to the Trust's ownership of Sponsor
Stock, including, without limitation, any reports required under
section 13 or 16 of the Securities Exchange Act of 1934, and shall
immediately notify the Trustee in writing of any requirement to stop
purchases or sales of Sponsor Stock pending the filing of any report.
The Trustee shall provide to the Named Fiduciary such information on
the Trust's ownership of Sponsor Stock as the Named Fiduciary may
reasonably request in order to comply with Federal or state securities
laws.
(v) Voting and Tender Offers. Notwithstanding any other
provision of this Agreement the provisions of this Section shall
govern the voting and tendering of Sponsor Stock. The Sponsor, after
consultation with the Trustee, shall provide and pay for all printing,
mailing, tabulation and other costs associated with the voting and
tendering of Sponsor Stock.
(A) Voting.
(1) When the issuer of the Sponsor Stock prepares for any
annual meeting, the Sponsor shall notify the Trustee thirty (30)
days in advance of the intended record date and shall cause a
copy of all proxy solicitation materials to be sent to the
Trustee. Based on these materials the Trustee shall prepare a
voting instruction form. At the time of mailing of notice of
each annual or special stockholders' meeting of the issuer of
the Sponsor Stock, the Sponsor shall cause a copy of the notice
and all proxy solicitation materials to be sent to each Plan
participant, together with the foregoing voting instruction form
to be returned to the Trustee or its designee. The form shall
show the number of full and fractional shares of Sponsor Stock
credited to the participant's accounts. The Sponsor shall
provide the Trustee with a copy of any materials provided to the
participants and shall certify to the Trustee that the materials
have been mailed or otherwise sent to participants.
(2) Each participant shall have the right to direct the
Trustee as to the manner in which the Trustee is to vote that
number of shares of Sponsor Stock credited to the participant's
accounts (both vested and unvested). Directions from a
participant to the Trustee concerning the voting of Sponsor
Stock shall be communicated in writing, or by mailgram or
similar means. These directions shall be held in confidence by
the Trustee and shall not be divulged to the Sponsor, or any
officer or employee thereof, or any other person. Upon its
receipt of the directions, the Trustee shall vote the shares of
Sponsor Stock as directed by the participant. The Trustee shall
vote shares of Sponsor Stock credited to a participant's
accounts for which it has received no
36
directions from the participant in the same proportion on each
issue as it votes those shares for which it received voting
instructions from participants.
(3) The Trustee shall vote that number of shares of Sponsor
Stock not credited to participants' accounts which is determined
by multiplying the total number of shares not credited to
participants' accounts by a fraction of which the numerator is
the number of shares of Sponsor Stock credited to participants'
accounts for which the Trustee received voting directions from
participants and of which the denominator is the total number of
shares of Sponsor Stock credited to participants' accounts. The
Trustee shall vote those shares of Sponsor Stock not credited to
participants' accounts which are to be voted by the Trustee
pursuant to the foregoing formula in the same proportion on each
issue as it votes those shares credited to participants'
accounts for which it received voting directions from
participants. The Trustee shall not vote the remaining shares of
Sponsor Stock not credited to participants' accounts.
(B) Tender Offers.
(1) Upon commencement of a tender offer for any securities
held in the Trust that are Sponsor Stock, the Sponsor shall
notify each Plan participant of the tender offer and utilize its
best efforts to timely distribute or cause to be distributed to
the participant the same information that is distributed to
shareholders of the issuer of Sponsor Stock in connection with
the tender offer, and, after consulting with the Trustee, shall
provide and pay for a means by which the participant may direct
the Trustee whether or not to tender the Sponsor Stock credited
to the participant's accounts (both vested and unvested). The
Sponsor shall provide the Trustee with a copy of any material
provided to the participants and shall certify to the Trustee
that the materials have been mailed or otherwise sent to
participants.
(2) Each participant shall have the right to direct the
Trustee to tender or not to tender some or all of the shares of
Sponsor Stock credited to the participant's accounts (both
vested and unvested). Directions from a participant to the
Trustee concerning the tender of Sponsor Stock shall be
communicated in writing, or by mailgram or such similar means as
is agreed upon by the Trustee and the Sponsor under the
preceding paragraph. These directions shall be held in
confidence by the Trustee and shall not be divulged to the
Sponsor, or any officer or employee thereof, or any other person
except to the extent that the consequences of such directions
are reflected in reports regularly communicated to any such
persons in the ordinary course of the performance of the
Trustee's services hereunder. The Trustee shall tender or not
tender shares of Sponsor Stock as directed by the participant.
To the extent that Plan participants fail to affirmatively
direct the Trustee to tender shares of Sponsor Stock credited to
their accounts, those Plan participants will be deemed to have
instructed the Trustee not to tender those shares. Accordingly,
the Trustee shall not tender shares of Sponsor Stock credited to
a participant's accounts for which it has received no directions
from the participant.
(3) The Trustee shall tender that number of shares of
Sponsor Stock not credited to participants' accounts which is
determined by multiplying the total number of shares of Sponsor
Stock not credited to participants' accounts by a fraction of
which the numerator is the number of shares of Sponsor Stock
credited to participants' accounts for which the Trustee
37
has received directions from participants to tender (which
directions have not been withdrawn as of the date of this
determination) and of which the denominator is the total number
of shares of Sponsor Stock credited to participants' accounts.
(4) A participant who has directed the Trustee to tender
some or all of the shares of Sponsor Stock credited to the
participant's accounts may, at any time prior to the tender
offer withdrawal date, direct the Trustee to withdraw some or
all of the tendered shares, and the Trustee shall withdraw the
directed number of shares from the tender offer prior to the
tender offer withdrawal deadline. Prior to the withdrawal
deadline, if any shares of Sponsor Stock not credited to
participants' accounts have been tendered, the Trustee shall
redetermine the number of shares of Sponsor Stock that would be
tendered under Section 4(e)(v)(B)(3) if the date of the
foregoing withdrawal were the date of determination, and
withdraw from the tender offer the number of shares of Sponsor
Stock not credited to participants' accounts necessary to reduce
the amount of tendered Sponsor Stock not credited to
participants' accounts to the amount so redetermined. A
participant shall not be limited as to the number of directions
to tender or withdraw that the participant may give to the
Trustee.
(5) A direction by a participant to the Trustee to tender
shares of Sponsor Stock credited to the participant's accounts
shall not be considered a written election under the Plan by the
participant to withdraw, or have distributed, any or all of his
withdrawable shares. The Trustee shall credit to each account of
the participant from which the tendered shares were taken the
proceeds received by the Trustee in exchange for the shares of
Sponsor Stock tendered from that account. Pending receipt of
directions (through the Administrator) from the participant or
the Named Fiduciary, as provided in the Plan, as to which of the
remaining investment options the proceeds should be invested in,
the Trustee shall invest the proceeds in the Mutual Fund
described in Schedule "C".
(vi) Shares Credited. For all purposes of this Section, the
number of shares of Sponsor Stock deemed "credited" to a participant's
accounts shall be determined as of the last preceding valuation date.
The trade date is the date the transaction is valued, provided,
however, that in the case of a reallocation from mutual funds to
Sponsor Stock, the date on which the Sponsor Stock is traded is the
valuation date immediately following the date the mutual funds being
reallocated are valued.
(vii) General. With respect to all rights other than the
right to vote, the right to tender, and the right to withdraw shares
previously tendered, in the case of Sponsor Stock credited to a
participant's accounts, the Trustee shall follow the directions of the
participant and if no such directions are received, the directions of
the Named Fiduciary. The Trustee shall have no duty to solicit
directions from participants. With respect to all rights other than
the right to vote and the right to tender, in the case of Sponsor
Stock not credited to participants' accounts, the Trustee shall follow
the directions of the Named Fiduciary.
(viii) Conversion. All provisions in this Section 4(h)
shall also apply to any securities received as a result of a
conversion of Sponsor Stock.
38
(i) Commingled Pool Investments. To the extent that the Named
Fiduciary selects as an investment option the Managed Income Portfolio
of the Fidelity Group Trust for Employee Benefit Plans (the "Group
Trust"), the Sponsor hereby (A) agrees to the terms of the Group Trust
and adopts said terms as a part of this Agreement and (B) acknowledges
that it has received from the Trustee a copy of the Group Trust, the
Declaration of Separate Fund for the Managed Income Portfolio of the
Group Trust, and the Circular for the Managed Income Portfolio.
(2) Amending and restating the "investment options" portion of Schedule
"A", to read as follows:
-Fidelity Magellan Fund
-Fidelity Overseas Fund
-Fidelity Puritan Fund
-Fidelity Money Market Trust:Retirement Government Money Market
Portfolio
-Fidelity Growth & Income Portfolio
-Fidelity Contrafund
-Fidelity Balanced Fund
-Managed Income Portfolio
-Sponsor Stock
(3) Amending and restating Schedules "B", "C", and "G" as attached.
IN WITNESS WHEREOF, the Trustee and the Sponsor have caused this
Fifth Amendment to be executed by their duly authorized officers effective as
of the day and year first above written.
QUANEX CORPORATION FIDELITY MANAGEMENT TRUST
COMPANY
By __________________________ By _____________________________
Date Senior Vice President Date
39
Schedule "B"
FEE SCHEDULE
- Annual Participant Fee $20.00 per participant*, subject to a $7,500
per year minimum, billed and payable
quarterly.
- Loan Fee Establishment fee of $35.00 per loan account;
annual fee of $15.00 per loan account.
- Remote Access (optional) $ 1,000 per year, plus a monthly charge for
TYMNET usage.
- Other Fees: extraordinary expenses resulting from large numbers of
simultaneous manual transactions or from errors not caused by Fidelity.
* This fee will be imposed pro rata for each calendar quarter, or any part
thereof, that it remains necessary to maintain a participant's account(s)
as part of the Plan's records, e.g., vested, deferred, forfeiture,
top-heavy and terminated participants who must remain on file through
calendar year-end for 1099-R reporting purposes.
Trustee Fees
- To the extent that assets are invested in Mutual Funds, 0.02% per year
payable pro rata quarterly on the basis of such assets in the Trust as of
the calendar quarter's last valuation date, but no less than $2,500.00
nor more than $5,000.00 per year.
- To the extent that assets are invested in Sponsor Stock, 0.25% of such
assets in the Trust payable pro rata quarterly on the basis of such assets
as of the calendar quarter's last valuation date.
- The minimum total Trustee fee is $10,000.
QUANEX CORPORATION FIDELITY MANAGEMENT TRUST
COMPANY
By __________________________ By _____________________________
Date Senior Vice President Date
40
Schedule "C"
INVESTMENT OPTIONS
In accordance with Section 4(b), the Named Fiduciary hereby directs the
Trustee that participants' individual accounts may be invested in the following
investment options:
-Fidelity Magellan Fund
-Fidelity Overseas Fund
-Fidelity Puritan Fund
-Fidelity Money Market Trust:Retirement Government Money Market
Portfolio
-Fidelity Growth & Income Portfolio
-Fidelity Contrafund
-Fidelity Balanced Fund
-Managed Income Portfolio
-Sponsor Stock
The mutual fund advised by Fidelity Management & Research Company referred
to in Section 4(c) and 4(h)(v)(B)(5) shall be Fidelity Money Market
Trust: Retirement Government Money Market Portfolio.
QUANEX CORPORATION
By ___________________________
Date
41
Schedule "G"
TELEPHONE EXCHANGE PROCEDURES
The following telephone exchange procedures are currently employed by Fidelity
Institutional Retirement Services Company (FIRSCO).
Telephone exchange hours are 8:30 a.m. (ET) to 8:00 p.m. (ET) on each business
day. A "business day" is any day on which the New York Stock Exchange is open.
FIRSCO reserves the right to change these telephone exchange procedures at its
discretion.
Mutual Funds
Exchanges Between Mutual Funds
Participants may call on any business day to exchange between the mutual
funds. If the request is received before 4:00 p.m. (ET), it will receive
that day's trade date. Calls received after 4:00 p.m. (ET) will be
processed on a next day basis.
Company Stock
Exchanges from Mutual Funds to Company Stock
Company Stock exchanges are processed on a monthly cycle. Participants who
wish to exchange out of a mutual fund into Company Stock may call between
the 1st and the 15th of the month. No calls will be accepted after 4:00
p.m. (ET) on the 15th (or previous business day if the 15th is not a
business day).
Mutual fund shares are sold on the 15th of the month (or the previous
business day if the 15th is not a business day) and the Company Stock is
purchased within two (2) business days after the date on which the mutual
fund shares are sold.
Exchanges from Company Stock to Mutual Funds
Participants who wish to exchange out of Company Stock into mutual funds
may call between the 1st and the 15th of the month. No calls will be
accepted after 4:00 p.m. (ET) on the 15th (or previous business day if the
15th is not a business day).
The Company Stock is sold on the 16th (or the next business day if the 16th
is not a business day) and the subsequent purchase into mutual funds will
take place five (5) business days later. This allows for settlement of the
stock trade at the custodian and the corresponding transfer to Fidelity.
Orders for sales of Company Stock must be share specific.
Managed Income Portfolio
Exchanges Between Mutual Funds and Managed Income Portfolio
Participants who wish to exchange out of a mutual fund into the Managed
Income Portfolio of the Fidelity Group Trust for Employee Benefit Plans
(the "Group Trust") may call on any business day. If the request is
received before 4:00 p.m. (ET), it will receive that day's trade date.
Calls received after 4:00 p.m. (ET) will be processed on a next day basis.
42
Exchanges from Managed Income Portfolio to Company Stock
Participants who wish to exchange out of the Managed Income Portfolio into
Company Stock may call between the 1st and the 15th of the month. No calls
will be accepted after 4:00 p.m. (ET) on the 15th (or previous business day
if the 15th is not a business day).
Managed Income Portfolio shares are sold on the 15th of the month (or the
previous business day if the 15th is not a business day) and the Company
Stock is purchased within two (2) business days after the date on which the
Managed Income Portfolio shares are sold.
Exchanges from Company Stock to Managed Income Portfolio
Participants who wish to exchange out of Company Stock into the Managed
Income Portfolio may call between the 1st and the 15th of the month. No
calls will be accepted after 4:00 p.m. (ET) on the 15th (or previous
business day if the 15th is not a business day).
The Company Stock is sold on the 16th (or the next business day if the 16th
is not a business day) and the subsequent purchase into the Managed Income
Portfolio will take place five (5) business days later. This allows for
settlement of the stock trade at the custodian and the corresponding
transfer to Fidelity. Orders for sales of Company Stock must be share
specific.
Exchange Restrictions
Participants will not be permitted to make direct transfers out of the
Managed Income Portfolio into a competing fund. Participants who wish to
exchange out of the Managed Income Portfolio into a competing fund, must
first exchange into a non-competing fund for a period of 90 days.
QUANEX CORPORATION
By __________________________
Date
43
SCHEDULE E
QUANEX CORPORATION
1900 West Loop South, Suite 1500
Houston, Texas 77027
(713) 961-4600
March 31, 1994
Re: Nichols-Homeshield 401(k) Savings Plan Trust
Ms. Jacqueline W. McCarthy
Fidelity Investments Institutional Operations Company
82 Devonshire Street
Boston, Massachusetts 02109
Dear Ms. McCarthy:
This letter is sent to you in accordance with Section 7(c) of the Trust
Agreement, dated as of April 1, 1991, between Quanex Corporation and Fidelity
Management Trust Company. We hereby designate Robert C. Snyder, Vernon E.
Oechsle, Wayne M. Rose, and Joseph K. Peery, as the individuals who may provide
directions upon which Fidelity Management Trust Company shall be fully
protected in relying. Only one such individual need provide any direction. The
signature of each designated individual is set forth below and certified to be
such.
You may rely upon each designation and certification set forth in this
letter until we deliver to you written notice of the termination of authority
of a designated individual.
Very truly yours,
QUANEX CORPORATION
By: /s/ JOSEPH K. PEERY
_________________________
Joseph K. Peery
Assistant Secretary
/s/ ROBERT C. SNYDER
______________________
Robert C. Snyder
/s/ VERNON E. OECHSLE
______________________
Vernon E. Oechsle
/s/ WAYNE M. ROSE
______________________
Wayne M. Rose
/s/ JOSEPH K. PEERY
______________________
Joseph K. Peery
1
Exhibit 4.16
NICHOLS-HOMESHIELD
401(K) SAVINGS PLAN
2
TABLE OF CONTENTS
Section
ARTICLE I - DEFINITIONS
Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1
Active Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2
Actual Deferral Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3
Actual Deferral Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4
Affiliated Employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5
Aggregate Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.6
Aggregation Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.7
Allocation Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.8
Annual Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.9
Annual Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.10
Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.11
Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.12
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.13
Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.14
Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.15
Determination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.16
Disability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.17
Earnings Before Interest and Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.18
Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.19
Employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.20
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.21
Excess 401(k) Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.22
Family Member . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.23
Highly Compensated Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.24
Hour of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.25
Key Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.26
Member . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.27
Non-Highly Compensated Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.28
Non-Key Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.29
Period of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.30
Period of Severance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.31
Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.32
Plan Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.33
Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.34
Retired Member . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.35
Retirement Age . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.36
-i-
3
Rollover Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.37
Section 401(k) Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.38
Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.39
Severs Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.40
Sponsor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.41
Top-Heavy Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.42
Transferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.43
Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.44
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.45
Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.46
Valuation Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.47
ARTICLE II - ACTIVE SERVICE
When Active Service Begins . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1
Aggregation of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2
Eligibility Computation Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
Periods of Service of Less Than One Year . . . . . . . . . . . . . . . . . . . . . . . . . 2.4
Service Prior to Severance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
Periods of Severance Due to Child Birth or Adoption . . . . . . . . . . . . . . . . . . . 2.6
Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7
Employment Records Conclusive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.8
Coverage of Certain Previously Excluded Employees . . . . . . . . . . . . . . . . . . . . 2.9
Military Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.10
Special Transitional Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.11
Credit for Service with Alumi-Brite Corporation . . . . . . . . . . . . . . . . . . . . . 2.12
ARTICLE III - ELIGIBILITY RULES
Eligibility Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1
Special Rule for Salary Deferral Contributions . . . . . . . . . . . . . . . . . . . . . . 3.2
Eligibility Upon Reemployment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3
Frozen Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4
ARTICLE IV - CONTRIBUTIONS
Rollover Contributions and Plan to Plan Transfers . . . . . . . . . . . . . . . . . . . . 4.1
Employer Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2
$7,000 Limit on Salary Deferral
Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3
Actual Deferral Percentage for Highly
Compensated Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4
-ii-
4
Special Actual Deferral Percentage Rules for
Family Members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.5
Distributions of Income Allocable to Excess
401(k) Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.6
Payment of Employer Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.7
Return of Contributions for Mistake, Disqualification
or Disallowance of Deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.8
ARTICLE V - PARTICIPATION
Allocation of Rollover Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1
Allocation of Employer Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2
Forfeiture on Termination of Participation . . . . . . . . . . . . . . . . . . . . . . . . 5.3
Limitation on Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.4
Valuation of Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.5
Interim Valuation of Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.6
Maintenance of Investment Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.7
Rights of Members in Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.8
ARTICLE VI - BENEFITS
Valuation of Accounts for Withdrawals and Distributions . . . . . . . . . . . . . . . . . 6.1
Death Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2
Retirement Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3
Disability Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4
Severance Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5
Distributions to Divorced Spouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.6
Withdrawals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.7
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.8
Forfeiture by Lost Members or Beneficiaries; Escheat . . . . . . . . . . . . . . . . . . . 6.9
Claims Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.10
Timing and Form of All Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11
Mandatory Rules Applicable to All Distributions . . . . . . . . . . . . . . . . . . . . . 6.12
No Duplication of Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.13
Designation of Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.14
Distributions to Disabled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.15
ARTICLE VII - TOP-HEAVY REQUIREMENTS
Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1
Top-Heavy Test . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2
Vesting Restrictions if Plan Becomes Top-Heavy . . . . . . . . . . . . . . . . . . . . . . 7.3
-iii-
5
Minimum Contributions if Plan Becomes Top-Heavy . . . . . . . . . . . . . . . . . . . . . 7.4
Coverage Under Multiple Top-Heavy Plans . . . . . . . . . . . . . . . . . . . . . . . . . 7.5
Restrictions if Plan Becomes Super Top-Heavy . . . . . . . . . . . . . . . . . . . . . . . 7.6
ARTICLE VIII - ADMINISTRATION OF THE PLAN
Appointment, Term of Service & Removal . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1
Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.2
Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.3
Quorum and Majority Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.4
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.5
Disqualification of Committee Member . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.6
Disclosure to Members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.7
Standard of Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.8
Liability of Committee and Liability Insurance . . . . . . . . . . . . . . . . . . . . . . 8.9
Exemption from Bond . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.10
Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.11
Persons Serving in Dual Fiduciary Roles . . . . . . . . . . . . . . . . . . . . . . . . . 8.12
Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.13
ARTICLE IX - TRUST FUND AND CONTRIBUTIONS
Funding of Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.1
Incorporation of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.2
Authority of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.3
Allocation of Responsibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.4
ARTICLE X - ADOPTION OF PLAN BY OTHER EMPLOYERS
Adoption Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.1
No Joint Venture Implied . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.2
All Trust Assets Available to Pay All Benefits . . . . . . . . . . . . . . . . . . . . . . 10.3
Qualification a Condition Precedent to Adoption and
Continued Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.4
ARTICLE XI - AMENDMENT AND TERMINATION
Right to Amend and Limitations Thereon . . . . . . . . . . . . . . . . . . . . . . . . . . 11.1
Mandatory Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.2
Withdrawal of Employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.3
Termination of Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.4
Partial or Complete Termination or Complete
-iv-
6
Discontinuance of Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.5
Continuance Permitted Upon Sale or Transfer of Assets . . . . . . . . . . . . . . . . . . 11.6
Distributions Upon Termination of the Plan . . . . . . . . . . . . . . . . . . . . . . . . 11.7
Modes of Distribution Upon Termination . . . . . . . . . . . . . . . . . . . . . . . . . . 11.8
Distributions to Highly Compensated Employees and
Former Employees Must Not Discriminate . . . . . . . . . . . . . . . . . . . . . . . . 11.9
ARTICLE XII - MISCELLANEOUS
Plan Not An Employment Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.1
Benefits Provided Solely From Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.2
Anti-Alienation Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.3
Requirements Upon Merger or Consolidation of Plans . . . . . . . . . . . . . . . . . . . . 12.4
Gender of Words Used . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.5
Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.6
Governing Law; Parties to Legal Actions . . . . . . . . . . . . . . . . . . . . . . . . . 12.7
-v-
7
NICHOLS-HOMESHIELD
401(K) SAVINGS PLAN
Quanex Corporation, Nichols-Homeshield, Inc. and Quanex
Metals, Inc. have entered into the following Agreement:
W I T N E S S E T H:
WHEREAS, on December 12, 1987, Nichols-Homeshield, Inc.
established the Nichols-Homeshield, Inc. and Participating Companies Salaried
Employees Profit Sharing Retirement Plan effective October 1, 1987; and
WHEREAS, on October 1, 1987, Nichols-Homeshield, Inc.
established the Nichols-Homeshield, Inc. 401(k) Savings Plan effective October
1, 1987; and
WHEREAS, Gulf Wire Corporation adopted the Nichols-Homeshield,
Inc. and Participating Companies Salaried Employees Profit Sharing Retirement
Plan and the Nichols-Homeshield, Inc. 401(k) Savings Plan effective April 1,
1989; and
WHEREAS, Nichols-Homeshield, Inc. has determined to merge the
Nichols-Homeshield, Inc. and Participating Companies Salaried Employees Profit
Sharing Retirement Plan into the Nichols-Homeshield, Inc. 401(k) Savings Plan
effective November 1, 1991; and
WHEREAS, Nichols-Homeshield, Inc. has determined to completely
amend, restate and continue the Nichols-Homeshield, Inc. and Participating
Companies Salaried Employees Profit Sharing Retirement Plan and the
Nichols-Homeshield, Inc. 401(k) Savings Plan without a gap or lapse in
coverage, time or effect which would cause any Member to become fully vested or
entitled to a distribution, in order to (a) effect numerous technical changes
for the benefit of eligible employees and beneficiaries, and (b) to ensure the
plans' qualifications under the applicable provisions of the Internal Revenue
Code of 1986, as amended, and the Employee Retirement Income Security Act of
1974, as amended; and
WHEREAS, Quanex Metals, Inc. has determined to adopt the
merged plans under the form of this instrument effective April 1, 1991;
WHEREAS, on January 1, 1992, employees of Nichols-Homeshield,
Inc. will be transferred to the employ of Quanex Corporation;
WHEREAS, Quanex Corporation is desirous of assuming the
liabilities of this plan and the responsibilities as Sponsor of this plan
effective January 1, 1992;
8
WHEREAS, effective January 1, 1992, the parties have
determined to change the name of this plan to "Nichols- Homeshield 401(k)
Savings Plan"; and
WHEREAS, it is intended that other business organizations may
adopt this plan and its related trust for the exclusive benefit of their
employees and their employees' beneficiaries;
NOW, THEREFORE, this Agreement is entered into in order to set
forth the terms of the plan which are as follows:
9
ARTICLE I
DEFINITIONS
The words and phrases defined in this Article shall have the
meaning set out in the definition unless the context in which the word or
phrase appears reasonably requires a broader, narrower or different meaning.
1.1 "ACCOUNT" means all ledger accounts pertaining to a
Member which are maintained by the Committee to reflect the Member's interest
in the Trust Fund. The Committee shall establish the following Accounts and
any additional Accounts that the Committee considers necessary to reflect the
entire interest of the Member in the Trust Fund. Each of the Accounts listed
below and any additional Accounts established by the Committee shall reflect
the Contributions or amounts transferred to the Trust Fund, if any, and the
appreciation or depreciation of the assets in the Trust Fund and the income
earned or loss incurred on the assets in the Trust Fund attributable to the
Contributions and/or other amounts transferred to the Account.
(a) Salary Deferral Contribution Account -- Member's
before-tax contributions.
(b) Supplemental Employer Contribution Account -- The
Employer's profit sharing contributions.
(c) Qualified Nonelective Employer Contribution Account
-- The Employer's contributions made as a means of passing the Actual
Deferral Percentage test.
(d) Rollover Account -- Funds transferred from another
qualified plan or IRA account for the benefit of a Member.
1.2 "ACTIVE SERVICE" means the Periods of Service which
are counted for either eligibility or vesting purposes as calculated under
Article II.
1.3 "ACTUAL DEFERRAL PERCENTAGE" means for a specified
group of Employees for a Plan Year the average of the ratios (calculated
separately for each Employee in the group) of the amount of Section 401(k)
Contributions actually paid into the Trust on behalf of the Employee for that
Plan Year to the Employee's Annual Compensation for the same Plan Year earned
while the Employee was a Member.
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1.4 "ACTUAL DEFERRAL RATIO" means for an Employee the
ratio of Section 401(k) Contributions actually paid into the Trust on behalf of
the Employee for a Plan Year to the Employee's Annual Compensation for the same
Plan Year.
1.5 "AFFILIATED EMPLOYER" means an employer which is a
member of the same controlled group of corporations within the meaning of
Section 414(b) of the Code or which is a trade or business (whether or not
incorporated) which is under common control (within the meaning of Section
414(c) of the Code), which is a member of an affiliated service group (within
the meaning of Section 414(m) of the Code) with the Employer, or which is
required to be aggregated with the Employer under Section 414(o) of the Code.
1.6 "AGGREGATE ACCOUNTS" means the total of all Account
balances derived from Employer Contributions and Rollover Contributions.
1.7 "AGGREGATION GROUP" means (a) each plan of the
Employer or any Affiliated Employer in which a Key Employee is a Member and (b)
each other plan of the Employer or any Affiliated Employer which enables any
plan in (a) to meet the requirements of either Section 401(a)(4) or 410 of the
Code. Any Employer may treat a plan not required to be included in the
Aggregation Group as being a part of the group if the group would continue to
meet the requirements of Section 401(a)(4) and 410 of the Code with that plan
being taken into account.
1.8 "ALLOCATION PERIOD" means the period beginning on the
day following a Valuation Date or Special Valuation Date and ending on the
immediately succeeding Valuation Date or Special Valuation Date.
1.9 "ANNUAL ADDITIONS" means (a) Employer Discretionary
Contributions, (b) Salary Deferral Contributions, (c) forfeitures and (d)
amounts described in Sections 415(l)(1) and 419A(d)(2) of the Code having to do
with individual medical accounts (but these amounts shall be subject to only
the dollar limitation and not to the 25% Annual Compensation limitation).
Excess 401(k) Contributions for a Plan Year are treated as Annual Additions for
that Plan Year even if they are corrected through distribution. Excess
Deferrals that are timely distributed as set forth in Section 4.3 will not be
treated as Annual Additions.
1.10 "ANNUAL COMPENSATION" means for purposes of Section
5.4 of the Plan, as to each Member wages as defined in Section 3401(a) of the
Code for purposes of income tax withholding at the source but determined
without regard to any rules that limit the remuneration included in wages based
on the nature or location of the employment or the services performed.
Annual Compensation means, when used in determining an
Employee's Actual Deferral Ratio and when used to determine if a person is a
Highly Compensated Employee or a Key Employee the same as it does for purposes
of applying Section 415 of the Code as
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modified by including elective contributions under a cafeteria plan governed by
Section 125 of the Code and contributions to any plan qualified under Section
401(k), 408(k) or 403(b) of the Code. However, for purposes of determining an
Employee's Actual Deferral Ratio, Annual Compensation shall include only
compensation earned during the portion of the Plan Year that the Employee was
eligible to participate in the Plan.
For purposes of determining the amount of and allocating
Supplemental Employer Contributions for Members who receive salaried
remuneration, "Annual Compensation" means the same as it does when used to
determine if a person is a Highly Compensated Employee, as modified by
excluding the following items (even if includable in gross income): all
bonuses, reimbursements or other expense allowances, fringe benefits (cash and
noncash), moving expenses, deferred compensation (such as amounts realized from
the exercise of a nonqualified stock option or when restricted property or
other property held by a Member either becomes freely transferable or no longer
subject to a substantial risk of forfeiture under Code Section 83, or amounts
realized from the sale exchange or other disposition of an incentive stock
option) and welfare benefits (such as severance pay and vacation pay).
For purposes of determining the amount of and allocating
Supplemental Employer Contributions for Members who receive hourly
remuneration, "Annual Compensation" means the same as it does when used for
purposes of determining the amount of and allocating Supplemental Employer
Contributions for Members who receive salaried remuneration, as modified by
including all bonuses.
For purposes of determining the amount of and allocating
Salary Deferral Contributions, Annual Compensation means the same as it does
when used for purposes of determining the amount of and allocating Supplemental
Employer Contributions for Members who receive salaried remuneration. However,
field bonuses paid to Non-Highly Compensated Employees under the Improshare or
Productivity Improvement programs shall be included in Annual Compensation for
this purpose. A management bonus that is paid annually will not be included in
Annual Compensation for this purpose.
All Annual Compensation, without regard to its definition, in
excess of $200,000 (as adjusted by the Secretary of the Treasury) shall be
disregarded. In determining the Annual Compensation of a Member for purposes
of this limitation, the rules of Section 414(q)(6) of the Code shall apply to
an Employee who is related to an Employee or owner of an Employer, except that
the term Family Member shall include only the spouse of the Member and any
lineal descendants of the Member who have not attained age 19 before the close
of the Plan Year. If as a result of the application of this rule, the adjusted
$200,000 limitation is exceeded, the limitation shall be prorated among the
affected Members in proportion to each Member's Annual Compensation as
determined under this Section prior to the application of this limitation.
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1.11 "BENEFICIARY" or "BENEFICIARIES" means the person or
persons, or the trust or trusts created for the benefit of a natural person or
persons or the Member's or retired Member's estate, designated by the Member or
retired Member to receive the benefits payable under this Plan upon his death.
1.12 "BOARD OF DIRECTORS" means the board of directors,
the executive committee or other body given management responsibility for the
Sponsor.
1.13 "CODE" means the Internal Revenue Code of 1986, as
amended from time to time.
1.14 "COMMITTEE" means the committee appointed by the
Sponsor to administer the Plan.
1.15 "CONTRIBUTION" means the total amount of
contributions made under the terms of this Plan. Each specific type of
Contribution shall be designated by the type of contribution made as follows:
(a) Salary Deferral Contribution -- Contributions made by
the Employer under the Employee's salary deferral agreement.
(b) Supplemental Employer Contribution -- Profit sharing
contributions made by the Employer out of Net Earnings.
(c) Qualified Nonelective Employer Contribution --
Contributions made by the Employer as a means of passing the Actual
Deferral Percentage test.
(d) Rollover Contribution - Contributions made by a
Member which are transfers from a prior qualified plan or IRA account.
1.16 "DETERMINATION DATE" means for a given Plan Year the
last day of the preceding Plan Year or in the case of the first Plan Year the
last day of that Plan Year.
1.17 "DISABILITY" means a mental or physical disability
which, in the opinion of a physician selected by the Committee, shall prevent
the Member from earning a reasonable livelihood with the Employer or any
Affiliated Employer and which can be expected to result in death or which has
lasted or can be expected to last for a continuous period of not less than 12
months and which: (a) was not contracted, suffered or incurred while the Member
was engaged in, or did not result from having engaged in, a felonious criminal
enterprise; (b) did not result from alcoholism or addiction to narcotics; and
(c) did not result from an injury incurred while a member of the Armed Forces
of the United States for which the Member receives a military pension.
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1.18 "EARNINGS BEFORE INTEREST AND TAXES" means gross
margin minus selling expenses and general administrative expenses but before
interest income or expense and income taxes determined on a consolidated basis
for the Sponsor's aluminum facilities and Quanex Metals, Inc. However,
Earnings Before Interest and Taxes shall not be reduced for contributions made
under this Plan.
1.19 "EMPLOYEE" means, except as otherwise specified in
this Section, all common law employees of the Sponsor who are working at one of
the Nichols-Homeshield Divisions, and all common law employees of any other
Employer. However, employees working outside of the United States will not be
considered Employees unless the Committee elects to continue to cover them in
this Plan. In addition, all leased employees (as defined in Section 414(n) of
the Code) will not be considered Employees unless the Plan's qualified status
is dependent upon coverage of the leased employees.
1.20 "EMPLOYER" or "EMPLOYERS" means the Sponsor and any
other business organization which has adopted this Plan.
1.21 "ERISA" means the Employee Retirement Incom
Security Act of 1974, as amended from time to time.
1.22 "EXCESS 401(K) CONTRIBUTIONS" means, with respect to
any Plan Year, the excess of (a) the aggregate amount of Section 401(k)
Contributions actually paid into the Trust on behalf of Highly Compensated
Employees for the Plan Year over (b) the maximum amount of those contributions
permitted under the limitations set out in the first sentence of Section 4.4 of
the Plan. To calculate the amount of Excess 401(k) Contributions the Actual
Deferral Ratio of the Highly Compensated Employee with the highest Actual
Deferral Ratio is reduced to equal the ratio of the Highly Compensated Employee
with the next highest Actual Deferral Ratio. However, if a lesser reduction
would enable the Plan to pass the Actual Deferral Percentage test, only that
lesser reduction may be made. This leveling process is repeated until the
Actual Deferral Percentage test is satisfied.
1.23 "FAMILY MEMBER" means the spouse and lineal
ascendants or descendants and the spouses of those lineal ascendants or
descendants of a 5% owner or of a Highly Compensated Employee who is one of the
10 employees receiving the greatest Annual Compensation from the Employers
during the Plan Year.
1.24 "HIGHLY COMPENSATED EMPLOYEE" means an Employee who,
during the Plan Year or the preceding Plan Year, (a) was at any time a 5%
owner, (b) received Annual Compensation from the Employers in excess of $75,000
(as adjusted from time to time by the Secretary of the Treasury), (c) received
Annual Compensation from the Employers in excess of $50,000 (as adjusted from
time to time by the Secretary of the Treasury) and was within the 20% of
employees of the Employer and Affiliated Employers who were the highest paid
for the
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Plan Year, or (d) was at any time an officer and received Annual Compensation
in excess of 50% of the annual addition limitation of Section 415(b)(1)(A) of
the Code. For this purpose no more than 50 employees or, if lesser, the
greater of three employees or 10% of the employees shall be treated as
officers, excluding those Employees who may be excluded in determining the top
paid group. If no officer has Annual Compensation in excess of 50% of the
annual limitation of Section 415(b)(1)(A) of the Code, the highest paid officer
for the year shall be treated as a Highly Compensated Employee. If a Member
did not fall within (b), (c) or (d), without regard to this sentence, for the
Plan Year preceding the Plan Year of the determination, he will not be treated
as falling within (b), (c) or (d) for the Plan Year of the determination unless
he is a member of the group consisting of the 100 employees paid the greatest
Annual Compensation during that Plan Year. For this purpose the determination
of the top paid 100 employees will be made using Section 414(q) of the Code and
its Regulations. A former Member will be treated as a Highly Compensated
Employee if he was a Highly Compensated Employee when he severed Service or he
was a Highly Compensated Employee at any time after attaining age 55.
If an Employee is, during the Plan Year or the preceding Plan
Year, a Family Member of a Highly Compensated Employee who is one of the 10
most highly compensated Employees ranked on the basis of Annual Compensation
paid by the Employer during such year, then the Family Member and the top-ten
highly compensated Employee shall be aggregated. In such case, the Family
Member and top-ten highly compensated Employee will be treated as a single
Employee receiving Annual Compensation and Plan Contributions equal to the sum
of such Annual Compensation and Contributions of the Family Member and top-ten
highly compensated Employee.
1.25 "HOUR OF SERVICE" means an hour for which an
Employee is paid or is entitled to payment for performance of duties with the
Employer or an Affiliated Employer.
1.26 "KEY EMPLOYEE" means an Employee or former or
deceased Employee or Beneficiary of an Employee who at any time during the Plan
Year or any of the four preceding Plan Years is (a) an officer of an Employer
or any Affiliated Employer having Annual Compensation greater than 50% of the
annual addition limitation of Section 415(b)(1)(A) of the Code for the Plan
Year, (b) one of the 10 employees having Annual Compensation from an Employer
or any Affiliated Employer of greater than 100% of the annual addition
limitation of Section 415(c)(1)(A) of the Code for the Plan Year and owning or
considered as owning (within the meaning of Section 318 of the Code) the
largest interest in an Employer or any Affiliated Employer, treated separately,
(c) a 5% owner of an Employer or any Affiliated Employer, treated separately,
or (d) a 1% owner of an Employer or any Affiliated Employer, treated
separately, having Annual Compensation from an Employer or any Affiliated
Employer of more than $150,000. For this purpose no more than 50 employees or,
if lesser, the greater of three employees or 10% of the employees shall be
treated as officers. Section 416(i) of the Code shall be used to determine
percentage of ownership. For the purpose of the test set out in (b) above,
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if two or more employees have the same interest in an Employer, the employee
with the greater Annual Compensation from the Employer shall be treated as
having the larger interest.
1.27 "MEMBER" means the person or persons employed by an
Employer during the Plan Year and eligible to participate in this Plan.
1.28 "NON-HIGHLY COMPENSATED EMPLOYEE" means an Employee
of the Employer who is neither a Highly Compensated Employee nor a Family
Member of a Highly Compensated Employee.
1.29 "NON-KEY EMPLOYEE" means any Employee who is not a
Key Employee.
1.30 "PERIOD OF SERVICE" means a period of employment
with an Employer or Affiliated Employer which commences on the day on which an
Employee performs his initial Hour of Service or performs his initial Hour of
Service upon returning to the employ of the Employer or an Affiliated Employer,
whichever is applicable, and ends on the date the Employee Severs Service.
1.31 "PERIOD OF SEVERANCE" means the period of time
commencing on the date an Employee Severs Service and ending on the date the
Employee again performs an Hour of Service.
1.32 "PLAN" means this Plan, including all subsequent
amendments.
1.33 "PLAN YEAR" means the calendar year. The Plan Year
shall be the fiscal year of this Plan.
1.34 "REGULATION" means the Internal Revenue Service
regulation specified, as it may be changed from time to time.
1.35 "RETIRED MEMBER" means a person who was at one time
a Member who received allocations of Contributions and who has now retired
under the terms of this Plan but still has an Account.
1.36 "RETIREMENT AGE" means 65 years of age. Once a
Member has attained his Retirement Age he shall be 100% vested at all times.
1.37 "ROLLOVER CONTRIBUTION" means the amount contributed
by a Member of this Plan which consists of: (a) any part of a distribution the
Member received from an individual retirement account which consists entirely
of property that was initially contributed to the individual retirement account
from a distribution received out of a qualified total distribution from a
qualified employee trust described in Section 401(a) or 403(a) of the Code
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together with the earnings on that property or (b) any part of a distribution
or proceeds from the sale of any part of the property that the Member received
in excess of his own Contributions and in excess of any amounts previously
distributed to the Member and not includable in gross income from any
distribution out of a qualified employee trust described in Section 401(a) or
403(a) of the Code.
1.38 "SECTION 401(K) CONTRIBUTIONS" means the sum of
Salary Deferral Contributions made on behalf of the Member during the Plan Year
and other amounts that the Employer elects to have treated as Section 401(k)
Contributions pursuant to Code Section 401(k)(3)(d)(ii) to the extent that
those other amounts are not used to enable the Plan to satisfy the minimum
contribution requirements of Section 416 of the Code.
1.39 "SERVICE" means the period or periods that a person
is paid or is entitled to payment for performance of duties with the Employer
or an Affiliated Employer.
1.40 "SEVERS SERVICE" means the earlier of the following
events: (a) the Employee's quitting, retiring, dying or being discharged, (b)
the completion of a period of 365 continuous days in which the Employee remains
absent from Service (with or without pay) for any reason other than quitting,
retiring, dying or being discharged, such as vacation, holiday, sickness,
disability, leave of absence, layoff or any other absence or (c) the second
anniversary of the commencement of a continuous period of absence occasioned by
the reason of the pregnancy of the Employee, the birth of a child of the
Employee, the placement of a child with the Employee in connection with the
adoption of the child by the Employee or the caring for the child for a period
commencing immediately after the child's birth or placement.
1.41 "SPONSOR" means, effective January 1, 1992, Quanex
Corporation or any other business organization which assumes the primary
responsibility for maintaining this Plan with the consent of the last preceding
Sponsor.
1.42 "TOP-HEAVY PLAN" means any plan which has been
determined to be top-heavy under the test described in Article VII of this
Plan.
1.43 "TRANSFERRED" means, when used with respect to an
Employee, the termination of employment with one Employer and the
contemporaneous commencement of employment with another Employer.
1.44 "TRUST" means the one or more trust estates created
to fund this Plan.
1.45 "TRUSTEE" means collectively one or more persons or
corporations with trust powers which have been appointed by the initial Sponsor
and have accepted the duties of Trustee and any and all successor or successors
appointed by the Sponsor or successor Sponsor.
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1.46 "TRUST FUND" means all of the trust estates
established under the terms of this Plan to fund this Plan, whether held to
fund a particular group of Accounts or held to fund all of the Accounts of
Members, collectively.
1.47 "VALUATION DATE" means the day or days each Plan
Year selected by the Committee on which the Trust Fund is to be valued which
cannot be less frequent than annually. One or more Accounts may have different
Valuation Dates from other Accounts. The Valuation Date must be announced to
all Members and shall remain the same until changed by the Committee and
announced to the Members. Until changed by the Committee, the Valuation Dates
shall be March 31, June 30, September 30 and December 31 of each Plan Year.
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ARTICLE II
ACTIVE SERVICE
2.1 WHEN ACTIVE SERVICE BEGINS. For purposes of
eligibility and vesting, Active Service begins when an Employee first performs
an Hour of Service for an Employer or an Affiliated Employer. Once an Employee
has begun Active Service for purposes of eligibility or vesting and Severs
Service he shall recommence Active Service for those purposes when he again
performs an Hour of Service for an Employer or an Affiliated Employer.
2.2 AGGREGATION OF SERVICE. When determining an
Employee's Active Service, all Periods of Service, whether or not completed
consecutively, shall be aggregated on a per day basis. For purposes of
eligibility and vesting, only full years of Active Service shall be counted.
In aggregating Active Service, 30 days shall be counted as one month and 12
months shall be counted as one year. No fractional years shall be counted for
purposes of eligibility or vesting.
2.3 ELIGIBILITY COMPUTATION PERIODS. For the purpose of
determining eligibility and vesting, the initial period shall begin on the day
the Employee first performs an Hour of Service simultaneously with Active
Service beginning and each future year shall begin on the anniversary of that
date.
2.4 PERIODS OF SERVICE OF LESS THAN ONE YEAR. If an
Employee performs an Hour of Service within 12 months after he Severs Service,
the intervening Period of Severance shall be counted as a Period of Service.
2.5 SERVICE PRIOR TO SEVERANCE. If an Employee Severs
Service at a time when he does not have any vested right to amounts credited to
his Employer Discretionary Contribution Account and the Period of Severance
continues for a continuous period of five years or more, the Period of Service
completed by the Employee before the Period of Severance shall not be taken
into account if his Period of Severance equals or exceeds his Period of
Service, whether or not consecutive, completed before the Period of Severance.
2.6 PERIODS OF SEVERANCE DUE TO CHILD BIRTH OR ADOPTION.
If the period of time between the first anniversary of the first day of an
absence from Service by reason of the pregnancy of the Employee, the birth of a
child of the Employee, the placement of a child with the Employee in connection
with the adoption of the child by the Employee or for purposes for caring for
the child for a period beginning immediately following the birth or placement
and the second anniversary of the first day of the absence occurs during or
after the first Plan Year beginning after December 31, 1984, it shall neither
be counted as a Period of Service nor of Severance.
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2.7 TRANSFERS. If an Employee of one Employer is
Transferred to the service of another Employer, his Active Service shall not be
interrupted and he shall continue to be in Active Service for purposes of
eligibility, vesting and allocation of Contributions and/or forfeitures. If an
Employee is Transferred to the service of an Affiliated Employer that has not
adopted the Plan he shall not have Severed Service; however, even though he
shall continue to be in Active Service for eligibility and vesting purposes he
shall not receive any allocation of Contributions or forfeitures.
2.8 EMPLOYMENT RECORDS CONCLUSIVE. The employment
records of the Employer shall be conclusive for all determinations of Active
Service.
2.9 COVERAGE OF CERTAIN PREVIOUSLY EXCLUDED EMPLOYEES.
Any Employee who is no longer excludable because he or she is no longer
included in a unit of Employees covered by a collective bargaining agreement
between the Employees' representative and the Employer where retirement
benefits were the subject of good faith bargaining shall immediately become
eligible for membership if he meets the eligibility requirements. All his
Service with the Employer or any Affiliated Employer shall be counted as Active
Service for eligibility and vesting purposes.
2.10 MILITARY SERVICE. A Member who leaves the employ of
an Employer to enter the armed services of the United States shall not be
deemed to have broken his continuous employment if he returns to employment
with an Employer within 90 days after his separation from military service
without employment elsewhere. The Member, however, shall be awarded Active
Service for eligibility and vesting purposes but only such Active Service as is
required by law for an allocation of Contributions and/or forfeitures.
2.11 SPECIAL TRANSITIONAL RULE. Any person who was an
Employee before this Agreement is signed will have all or a portion of his
Active Service figured under the provisions of the Plan in effect before this
Agreement if that method of calculating service is more beneficial for the
Employee than the method otherwise set out in this Article II.
2.12 CREDIT FOR SERVICE WITH ALUMI-BRITE CORPORATION.
For purposes of determining an Employee's Active Service for eligibility to
participate and vesting, up to five years of his service with Alumi-Brite
Corporation will be counted as Active Service under the Plan.
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ARTICLE III
ELIGIBILITY RULES
3.1 ELIGIBILITY REQUIREMENTS. Each Employee shall be
eligible to participate in this Plan beginning on the entry date which occurs
with or next follows the date on which the Employee completes one year of
Active Service. However, all Employees who are included in a unit of Employees
covered by a collective bargaining agreement between the Employees'
representative and the Employer shall be excluded, even if they have met the
requirements for eligibility, if there has been good faith bargaining between
the Employer and the Employees' representative pertaining to retirement
benefits and the agreement does not require the Employer to include such
Employees in this Plan. The Plan's entry dates will be January 1, April 1,
July 1 and October 1 of each Plan Year.
3.2 SPECIAL RULE FOR SALARY DEFERRAL CONTRIBUTIONS. An
Employee will be eligible to participate in the cash or deferred arrangement
portion of the Plan for all purposes relating to Salary Deferral Contributions
on the entry date next following the date that he completes an Hour of Service.
3.3 ELIGIBILITY UPON REEMPLOYMENT. If an Employee
Severs Service with the Employer for any reason after fulfilling the
eligibility requirements but prior to the date he initially begins
participating in the Plan, the Employee shall be eligible to begin
participation in this Plan on the day he first completes an Hour of Service
upon his return to employment with an Employer. Once an Employee has become
eligible to be a Member, his eligibility shall continue until he Severs
Service. A former Member shall be eligible to recommence participation in this
Plan on the first day he completes an Hour of Service upon his return to
employment with an Employer.
3.4 FROZEN PARTICIPATION. An Employee employed by an
Affiliated Employer, which has not adopted this Plan, cannot actively
participate in this Plan even though he accrues Active Service. Likewise, if
an Employee: (a) is transferred from an Employer to an Affiliated Employer
which has not adopted this Plan, or (b) is a Member of this Plan when he is
excluded under the provisions of a collective bargaining agreement his
participation becomes inactive. Under these circumstances, the Member's
Account becomes frozen and he cannot contribute to the Plan nor can he share in
the allocation of any Employer Contribution or forfeitures for the period after
he is transferred. However, his Accounts shall continue to share in any
appreciation or depreciation of the Trust Fund and in any income earned or
losses incurred by the Trust Fund during the period of time that he is employed
by an Affiliated Employer which has not adopted this Plan, or is excluded from
covered employment under the provisions of a collective bargaining agreement.
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ARTICLE IV
CONTRIBUTIONS
4.1 ROLLOVER CONTRIBUTIONS AND PLAN TO PLAN TRANSFERS.
The Committee may permit Rollover Contributions by Members and/or direct
transfers to or from another qualified plan on behalf of Members from time to
time. If Rollover Contributions and/or direct transfers to or from another
qualified plan are permitted, the opportunity to make those Contributions must
be made available to all Members on a nondiscriminatory basis. For this
purpose, all Employees of an Employer shall be considered to be Members of the
Plan even though they may not have met the eligibility requirements. However,
they shall not be entitled to contribute to the Plan, share in Employer
Contributions or share in forfeitures unless and until they have met the
requirements for eligibility, Contributions and allocations.
A Rollover Contribution shall not be accepted unless it is
made on or before the 60th day after the Member received the distribution and
it met one of the following requirements: (a) the distribution, when made from
a qualified employee plan, must have met the requirements of a lump sum
distribution, or (b) it was part or all of a distribution which was made within
one taxable year of the Member because of the termination of a qualified plan
or a complete discontinuance of contributions. A complete discontinuance of
contributions occurs, for this purpose, on the day the Internal Revenue Service
is notified that all contributions to the plan have been completely
discontinued. A direct transfer of assets from another qualified plan shall
not be accepted if it was at any time part of (a) a defined benefit plan (as
defined in Section 401(a) or 414(j) of the Code), (b) a defined contribution
plan (as defined in Sections 401(a) and 414(i) of the Code) which is subject to
the minimum funding standards of Section 412 of the Code, (c) any other
qualified plan which has joint and survivor annuity benefits or qualified
preretirement survivor annuity benefits as described in Section 417 of the
Code, or (d) which would require a distribution or withdrawal in a form not
permitted under this Plan.
Rollover Contributions shall have no effect upon the amount
permitted to be allocated to a Member's Account under Section 415 of the Code.
4.2 EMPLOYER CONTRIBUTIONS. Each Employer shall
contribute for each Plan Year the following amounts:
(a) an amount, which when added to previously unapplied
and unallocated forfeitures, shall equal the amounts which have been
forfeited by Members who have become entitled to have their forfeited
amounts restored;
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(b) an amount equal to the value of all forfeited
benefits for Members who formerly could not be located, upon receipt
of claims by those Members;
(c) an amount which is equal to the amount, if any,
necessary to fulfill the Top-Heavy Plan requirements found in Article
VII if the Plan is determined to be a Top-Heavy Plan;
(d) the amount by which the Member's Annual Compensation
is reduced as a result of a salary deferral agreement for the Plan
Year; and
(e) the amount, if any, which is designated by the Board
of Directors to be the Qualified Nonelective Employer Contribution for
the Plan Year.
Effective October 1, 1991, if during the fiscal year of the
Sponsor immediately preceding an Allocation Period the Sponsor had positive
Earnings Before Interest and Taxes each Employer shall contribute for such
Allocation Period an amount, if any, which is designated by the Board of
Directors to be the Supplemental Employer Contribution for the Allocation
Period. The Supplemental Employer Contribution for Members who receive
salaried remuneration shall be equal to 6 1/2% of such Members' Annual
Compensation for the Allocation Period. The Supplemental Employer Contribution
for Members who receive hourly remuneration shall not exceed an amount equal to
6 1/2% of such Members' Annual Compensation for the Allocation Period. The
rate of the Supplemental Employer Contribution need not be uniform among all
divisions of the Employer.
The election to have Salary Deferral Contributions made, the
ability to change the rate of Salary Deferral Contributions, the right to
suspend Salary Deferral Contributions, and the manner of commencing new Salary
Deferral Contributions shall be permitted under any uniform method determined
from time to time by the Committee.
The amount of the Employer's Contributions described above
cannot exceed the lesser of: (i) a sum equal to 15% of the total Annual
Compensation paid during its taxable year ending with or within the Plan Year
to all Members plus the maximum amount deductible under the "carryover"
provisions of the Code which relate to contributions in previous years of less
than the maximum amount deductible or (ii) the sum which may be allocated to
the Members' Accounts without violating the limitations of Section 415 of the
Code.
4.3 $7,000 LIMIT ON SALARY DEFERRAL CONTRIBUTIONS. The
maximum Salary Deferral Contribution that a Member may elect to have made on
his behalf during the Member's taxable year may not, when added to the amounts
deferred under other plans or arrangements described in Code Sections 401(k),
408(k) and 403(b) exceed $7,000 (as adjusted by the Secretary of Treasury). If
this dollar limitation is exceeded during any taxable year of the Member, the
excess of the amounts deferred on behalf of the Member under plans or
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arrangements described in Code Sections 401(k), 408(k) and 403(b) during the
Member's taxable year over the dollar limitation (the "Excess Deferral") as
adjusted by any earnings or losses thereon will be distributed to the Member no
later than April 15 following the Member's taxable year in which the Excess
Deferral was made.
The income allocable to Excess Deferrals for the taxable year
of the Member shall be determined by multiplying the income for the taxable
year of the Member allocable to Salary Deferral Contributions by a fraction.
The numerator of the fraction is the amount of Excess Deferrals made on behalf
of the Member for the taxable year. The denominator of the fraction is the
Member's total Salary Deferral Account balance as of the beginning of the
taxable year plus the Member's Salary Deferral Contributions for the Plan Year.
For purposes of applying the requirements of Code Sections 4.4
and 7.2, Excess Deferrals will not be disregarded merely because they are
Excess Deferrals or because they are distributed in accordance with this
Section. However, Excess Deferrals made to the Plan on behalf of Non-Highly
Compensated Employees are not to be taken into account under Section 4.4.
4.4 ACTUAL DEFERRAL PERCENTAGE FOR HIGHLY COMPENSATED
EMPLOYEES. The Actual Deferral Percentage for Highly Compensated Employees for
any Plan Year must bear a relationship to the Actual Deferral Percentage for
all other eligible Employees for the Plan Year which meets either of the
following tests:
(a) The Actual Deferral Percentage of the Highly
Compensated Employees is not more than the Actual Deferral Percentage
of all other eligible Employees multiplied by 1.25; or
(b) The excess of the Actual Deferral Percentage of the
Highly Compensated Employees over that of all other eligible
Employees is not more than two percentage points, and the Actual
Deferral Percentage of the Highly Compensated Employees is not more
than the Actual Deferral Percentage of all other eligible Employees
multiplied by two.
For purposes of this test an eligible Employee is an Employee who is eligible
to make Salary Deferral Contributions for all or part of a Plan Year. A person
who is suspended from making Salary Deferral Contributions because he has made
a withdrawal is an eligible Employee. If no Salary Deferral Contributions are
made for an eligible Employee the deferral ratio that will be included for him
in determining the Actual Deferral Percentage is zero. If this Plan and any
other plan or plans which include cash or deferred arrangements are considered
as one plan for purposes of Section 401(a)(4) or 410(b) of the Code, the cash
or deferred arrangements included in this Plan and the other plans shall be
treated as one plan for these tests. If any Highly Compensated Employee is a
Member of this Plan and any other cash or deferred arrangements
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of the Employer, when determining the deferral percentage of the Employee, all
of the cash or deferred arrangements are treated as one.
As soon as practicable after the close of each Plan Year, the
Committee shall determine whether the Actual Deferral Percentage for the Highly
Compensated Employees would exceed the limitation. If the limitation would be
exceeded for a Plan Year, before the close of the following Plan Year (a) the
amount of Excess 401(k) Contributions for that Plan Year (and any income
allocable to those Contributions as calculated in the specific manner required
by Section 4.6) shall be distributed, or (b) the Employer may make a Qualified
Nonelective Employer Contribution which is treated as a Section 401(k)
Contribution and allocated only to those Members who are Non-Highly Compensated
Employees. Any distributions of the Excess 401(k) Contributions for any Plan
Year are to be made to Highly Compensated Employees on the basis of the
respective portions of the Excess 401(k) Contributions attributable to each of
them. The amount of Excess 401(k) Contributions to be distributed for any Plan
Year must be reduced by any excess Salary Deferral Contributions previously
distributed for the taxable year ending in the same Plan Year.
Failure to correct Excess 401(k) Contributions by the close of
the Plan Year following the Plan Year for which they were made will cause the
Plan to fail to be a qualified cash or deferred arrangement for the Plan Year
for which the Excess Contributions were made and for all subsequent years they
remain in the Trust. Also, the Employer will be liable for a 10% excise tax on
the amount of Excess Contributions unless they are corrected within 2 1/2
months after the close of the Plan Year for which they were made.
4.5 SPECIAL ACTUAL DEFERRAL PERCENTAGE RULES FOR FAMILY
MEMBERS. If a Member is a Highly Compensated Employee and a Family Member, the
combined Actual Deferral Ratio for the family group (which is treated as one
Highly Compensated Employee) must be determined by combining the Section 401(k)
Contributions and Annual Compensation of all the eligible Family Members. If
an Employee is required to be aggregated as a member of more than one family
group in the Plan, all eligible Employees who are members of those family
groups that include that Employee are aggregated as one family group. The
correction of Excess 401(k) Contributions of a Highly Compensated Employee
whose Actual Deferral Ratio is determined under the family aggregation rules is
accomplished by reducing the Actual Deferral Ratio and allocating the Excess
401(k) Contributions for the family group among the Family Members in
proportion to the Section 401(k) Contributions of each Family Member that is
combined to determine the Actual Deferral Ratio. These family aggregation
rules do not apply to Non-Highly Compensated Employees.
4.6 DISTRIBUTIONS OF INCOME ALLOCABLE TO EXCESS 401(K)
CONTRIBUTIONS. The income allocable to Excess 401(k) Contributions for the
Plan Year shall be determined by multiplying the income for the Plan Year
allocable to Salary Deferral Contributions by a fraction. The numerator of the
fraction is the amount of Excess 401(k) Contributions made on
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behalf of the Member for the Plan Year. The denominator of the fraction is the
Member's total Account balance attributable to Section 401(k) Contributions as
of the beginning of the Plan Year plus the Member's Section 401(k)
Contributions for the Plan Year.
4.7 PAYMENT OF EMPLOYER CONTRIBUTIONS. The Salary
Deferral Contributions are to be paid to the Trustee in installments. The
installment for each payroll period is to be paid within 30 days after the end
of the payroll period and shall be in an amount equal to the amount by which
all Members' Annual Compensation was reduced for the period. The Supplemental
Employer Contribution and the Qualified Nonelective Employer Contribution for a
Plan Year must be paid into the Trust Fund in one or more installments not
later than the time prescribed by law for filing the Employer's federal income
tax return (including extensions) for its taxable year for which it is to take
the deduction. If the Contribution is paid after the last day of the
Employer's taxable year but prior to the date it files its tax return
(including extensions), it shall be treated as being received by the Trustee on
the last day of the taxable year if (a) the Employer notifies the Trustee in
writing that the payment is being made for that taxable year or (b) the
Employer claims the Contribution as a deduction on its federal income tax
return for the taxable year.
4.8 RETURN OF CONTRIBUTIONS FOR MISTAKE, DISQUALIFICATION
OR DISALLOWANCE OF DEDUCTION. Subject to the limitations of Section 415 of the
Code, the assets of the Trust shall not revert to any Employer or be used for
any purpose other than the exclusive benefit of the Members and their
Beneficiaries and the reasonable expenses of administering the Plan except:
(a) any Contribution made because of a mistake of fact
may be repaid to the Employer within one year after the payment of the
Contribution;
(b) any Contribution conditioned upon the Plan's initial
qualification under Section 401 of the Code or the initial
qualification of an Employer's adoption of the Plan, if later, may be
repaid to the Employer within one year after the date of denial of the
initial qualification of the Plan or of its adoption by the Employer;
and
(c) any and all Employer Contributions are conditioned
upon their deductibility under Section 404 of the Code; therefore, to
the extent the deduction is disallowed, the Contributions may be
repaid to the Employer within one year after the disallowance.
The Employer has the exclusive right to determine if a
Contribution or any part of it is to be repaid or is to remain as a part of the
Trust Fund except that the amount to be repaid is limited, if the Contribution
is made by mistake of fact or if the deduction for the Contribution is
disallowed, to the excess of the amount contributed over the amount that would
have been contributed had there been no mistake or over the amount disallowed.
Earnings
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which are attributable to any excess contribution cannot be repaid. Losses
attributable to an excess contribution must reduce the amount that may be
repaid. All repayments of mistaken Contributions or Contributions which are
disallowed are limited so that the balance in a Member's Account cannot be
reduced to less than the balance that would have been in the Member's Account
had the mistaken amount or the amount disallowed never been contributed.
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ARTICLE V
PARTICIPATION
5.1 ALLOCATION OF ROLLOVER CONTRIBUTIONS. If Rollover
Contributions are permitted, the Committee shall allocate each Member's
Rollover Contribution to his Rollover Account as of the date it is contributed.
5.2 ALLOCATION OF EMPLOYER CONTRIBUTIONS. As of the end
of each Plan Year, the Committee shall:
(a) allocate the Employer Contribution, if any, which is
required to restore the nonvested portion of the Employer Accounts of
Members who had previously forfeited that nonvested portion on the
date they terminated employment but who qualified for the restoration
of that amount during the Plan Year;
(b) allocate the Employer Contribution, if any, which is
required to restore the Accounts of those Members whose distributions
were forfeited because of the Committee's inability to contact the
Members previously but who have filed a claim for their Accounts
during the Plan Year;
(c) allocate the Employer Contribution, if any, which is
necessary to fulfill the Top-Heavy Plan requirements found in Article
VII if the Plan is determined to be a Top-Heavy Plan; and
(d) allocate the Qualified Nonelective Employer
Contribution for the Plan Year, if any, among the Non-Highly
Compensated Employees who are Members on the last day of the Plan Year
based upon each such Member's Annual Compensation as compared to the
Annual Compensation of all such Members.
As of the end of each Allocation Period, the Committee shall
allocate the Supplemental Employer Contribution for the Allocation Period, if
any, among the Members who are eligible to participate and who are employed by
one of the Employers or Affiliated Employers during the Allocation Period based
upon each Member's Annual Compensation paid by the Employer as compared to the
Annual Compensation of all Members employed by the Employer or Affiliated
Employer and eligible for the allocation.
If a Member has been Transferred during the Plan Year, the
Member shall be entitled to have allocated to him a portion of the Supplemental
Employer Contribution based
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upon his Annual Compensation for the Plan Year earned from all of the Employers
for which a Supplemental Employer Contribution was made.
5.3 FORFEITURE ON TERMINATION OF PARTICIPATION. If as a
result of terminating his participation in the Plan a former Member receives a
distribution of his entire vested interest in his Accounts, the nonvested
amount in his Accounts is immediately forfeited. However, if the Member is
reemployed, all of his Accounts containing Employer Contributions (unadjusted
for subsequent gains or losses) shall be restored if he repays to the Trustee
within five years of the date of distribution that portion of the distribution
which was derived from Employer Contributions.
If a former Member who has a vested interest in his Accounts
containing Employer Contributions received no distribution or a distribution of
less than the full amount of the Member's entire vested interest as a result of
his termination of participation in the Plan, the nonvested amount in his
Accounts is immediately forfeited. However, his Accounts containing Employer
Contributions (unadjusted for subsequent gains or losses) shall be restored if
he resumes employment with the Employer prior to incurring five consecutive one
year Periods of Severance. A Member who received no distribution of Employer
Contributions because he had no vested interest shall be treated as if he
received a distribution of his entire vested interest and as if his entire
vested interest was less than $3,500. A distribution shall be treated as if it
were made as a result of termination of participation in the Plan if it is made
not later than the end of the second Plan Year following the Plan Year in which
the Member's termination occurs.
At the time a forfeiture occurs, the amount forfeited shall
first be used to reinstate any Account required to be reinstated under this
Section and any remaining amount shall be used to reduce future Employer
Contributions.
5.4 LIMITATION ON ALLOCATION. Under no circumstances
shall the Annual Additions to an individual Member's Account in any Plan Year
exceed the lesser of (a) $30,000 or, if greater, 25% of the dollar limitation
in effect under Section 415(b)(1)(A) of the Code, or (b) 25% of the Annual
Compensation paid or made available to the Member.
If the Employer maintains a defined benefit plan in which the
Member participates, the sum of the following described defined benefit
fraction and defined contribution fraction for the Plan Year cannot exceed one.
The defined benefit fraction to be used is a fraction, in which the numerator
is the Member's projected annual benefit under the plan computed as of the end
of the Plan Year and in which the denominator is the lesser of: (a) the
product of 1.25 multiplied by the dollar limitation then in effect under
Section 415(b)(1)(A) of the Code for that Plan Year or (b) the product of 1.40
multiplied by the amount which may be taken into account under Section
415(b)(1)(B) of the Code with respect to the Member for the Plan Year. The
defined contribution fraction to be used is a fraction in which the numerator
is
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the sum of the Annual Additions to the Member's Account determined for the Plan
Year and for each prior Plan Year and in which the denominator is the sum of
the lesser of the following amounts determined for the Plan Year and for each
prior Plan Year that the Member was employed by the Employer: (a) the product
of 1.25 multiplied by the dollar limitation then in effect under Section
415(c)(1)(A) of the Code for that Plan Year, determined without regard to
subsection (c)(6), and (b) the product of 1.40 multiplied by the amount which
can be taken into account under Section 415(c)(1)(B) of the Code with respect
to the Member for the Plan Year. If the sum of the two fractions exceeds one,
the Member's projected annual benefit under the defined benefit plan shall be
reduced until the sum equals one.
The limitation year for Section 415 shall be the Plan Year
unless the Employer affirmatively, by resolution, designates another limitation
year. In that event, the different limitation year shall be used instead of
the Plan Year in applying the tests.
In order to compute the defined benefit fraction and the
defined contribution fraction, all defined contribution plans (whether
terminated or not) of the Employer shall be treated as one defined contribution
plan and all defined benefit plans (whether terminated or not) of the Employer
shall be treated as one defined benefit plan.
If the Employer has Affiliated Employers, the Employer and all
Affiliated Employers shall be considered a single employer in applying the
limitations described in this Section.
No Employee or Employer Contributions shall be made to this
Plan which cannot be allocated to the Accounts of Members without exceeding the
limits of Section 415 of the Code.
If despite this prohibition, an amount in excess of the limits
of Section 415 of the Code is held or contributed as a result of the allocation
of forfeitures, a reasonable error in estimating a Member's Annual
Compensation, a reasonable error in calculating the maximum Salary Deferral
Contribution that may be made with respect to a Member under Section 415 of the
Code or because of other facts and circumstances which the Commissioner of
Internal Revenue finds to be justified, the excess shall be reduced as follows:
(a) first, all Employee After Tax Contributions and
Salary Deferral Contributions in excess of the limits of Section 415
of the Code shall be returned to the Member;
(b) second, if the Member is still employed by the
Employer at the end of the Plan Year, any remaining excess funds shall
be placed in an unallocated suspense account to be applied to reduce
future Employer Contributions for that Member for as many Plan Years
as are necessary to exhaust the suspense account
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in keeping with the amounts which would otherwise be allocated to that
Member's Account; and
(c) third, if the Member is not employed by the Employer
at the end of the Plan Year, the remaining excess funds shall be
placed in an unallocated suspense account to reduce future Employer
Contributions for all remaining Members for as many Plan Years as are
necessary to exhaust the suspense account.
If the Plan terminates prior to the exhaustion of the suspense
account, the remaining amount shall revert to the Employer.
5.5 VALUATION OF TRUST FUND. The Trustee shall value the
Trust Fund on its Valuation Date at its then fair market value, but without
regard to any Contributions made to the Plan after the preceding Valuation
Date, shall determine the amount of income earned or losses suffered by the
Trust Fund and shall determine the appreciation or depreciation of the Trust
Fund since the preceding Valuation Date. The Committee shall separate the
Trust Fund into the various investment funds or accounts in which it is held,
if more than one, and shall then allocate as of the Valuation Date the income
earned and losses suffered and the appreciation or depreciation in the assets
of the Trust Fund for the period since the last preceding Valuation Date. The
allocation shall be among the Members and former Members who have undistributed
Account balances based upon a Member's Account balance in each of the various
investment funds or accounts, if more than one, as of the last Valuation Date
increased by 50% of the amount of Contributions made to the investment fund on
behalf of the Member since the last Valuation Date and reduced, as appropriate,
by amounts used from the investment fund or account or Trust to make a
withdrawal or distribution or any other transaction which is properly
chargeable to the Member's Account during the period since the last Valuation
Date. In lieu of the allocation method described above the Committee may by
resolution elect to use a unit allocation method, a separate account method or
any other equitable method if it announces the method of allocation to the
Members prior to the beginning of the period during which it is first used.
5.6 INTERIM VALUATION OF TRUST FUND. If at any time in
the interval between Valuation Dates, one or more withdrawals or one or more
distributions are to be made and the Committee determines that an interim
allocation is necessary to prevent discrimination against those Members and
former Members who are not receiving funds, the Trustee is to perform a
valuation of a portion or all of the Trust Fund as of a date selected by the
Committee which is administratively practical and near the date of withdrawals
or distributions in the same manner as it would if it were a scheduled
Valuation Date. That date may be before or after any particular distribution
or withdrawal. The Committee shall then allocate as of that date any income or
loss and any appreciation or depreciation to the various Accounts of each of
the Members in the same manner as it would if it were a scheduled Valuation
Date. Then, without
V-4
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regard to the language in Section 6.1, all withdrawals or distributions made
after that date and prior to the next Valuation Date, even though the event
causing it occurred earlier, shall be based upon the Accounts as adjusted by
the interim valuation.
5.7 MAINTENANCE OF INVESTMENT FUNDS. The Committee may:
(a) maintain commingled and/or separate Trusts for some or all Members, (b)
establish separate investment funds which may be elected by some or all
Members, (c) permit some or all individual Members to elect their own
investments, or (d) permit a combination of (a), (b) and (c), from time to
time. Once the Committee has selected or changed the mode of investments, it
shall establish rules pertaining to its administration, including but not
limited to: selection of forms, rules for making selections effective,
establishing the frequency of permitted changes, the minimum percentage in any
investment, and all other necessary or appropriate regulations.
The Committee may direct the Trustee to hold funds in cash or
near money awaiting investment or to sell assets and hold the proceeds in cash
or near money awaiting reinvestment when establishing, using or changing
investment modes. For this purpose the funds may be held in cash or invested
in short-term investments such as certificates of deposit, U.S. Treasury bills,
savings accounts, commercial paper, demand notes, money market funds, any
common, pooled or collective funds which the Trustee or any other corporation
may now have or in the future may adopt for short-term investments and any
other similar assets which may be offered by the federal government, national
or state banks (whether or not serving as Trustee) or any savings and loan
association.
5.8 RIGHTS OF MEMBERS IN TRUST FUND. No allocation,
adjustment, credit or transfer shall ever vest in any Member any right, title
or interest in the Trust Fund except at the times and upon the terms and
conditions specified in this Plan. The Trust Fund shall, as to all Accounts of
all Members, be a commingled fund.
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ARTICLE VI
BENEFITS
6.1 VALUATION OF ACCOUNTS FOR WITHDRAWALS AND
DISTRIBUTIONS. For the purpose of making a distribution or withdrawal, a
Member's Accounts shall be his Accounts as valued as of the Valuation Date
which is coincident with or next follows the event which caused the
distribution or withdrawal, adjusted for Contributions, distributions and
withdrawals, if any, made between the Valuation Date and that event. The
amount of a Plan benefit payable for any reason will be reduced by the unpaid
balance of a loan to a Member or Beneficiary.
6.2 DEATH BENEFIT. If a Member or retired Member dies,
the death benefit payable to the Member's spouse or designated Beneficiary or
Beneficiaries shall be 100% of the remaining amount in all of his Accounts as
of the day he dies.
6.3 RETIREMENT BENEFIT. A Member may retire on the first
day of any month after he attains his Retirement Age. If a Member retires, he
is entitled to receive 100% of all of his Accounts as of the day he retires.
6.4 DISABILITY BENEFIT. If a Member's employment with an
Employer is terminated and the Committee determines he is suffering from a
Disability, he is entitled to receive 100% of all of his Accounts as of the day
he terminated because of his Disability.
6.5 SEVERANCE BENEFIT. If a Member severs employment
with the Employer and all Affiliated Employers for any reason other than death,
retirement or disability, he is entitled to receive (a) 100% of all of his
Accounts, except his Supplemental Employer Contribution Account, and (b) that
percentage of his Supplemental Employer Contribution Account, if any, as shown
in the vesting schedule below, as of the day he severs employment.
Percentage of Amount Invested
In Accounts Containing
Completed Years of Active Service Employer Contributions
- --------------------------------- ----------------------
Less than one year . . . . . . . . . . . . . . . . . . . . . . 0%
One year but less than two years . . . . . . . . . . . . . . . 20%
Two years but less than three years . . . . . . . . . . . . . . 40%
Three years but less than four years . . . . . . . . . . . . . 60%
Four years but less than five years . . . . . . . . . . . . . . 80%
Five years or more . . . . . . . . . . . . . . . . . . . . . . 100%
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6.6 DISTRIBUTIONS TO DIVORCED SPOUSE. If the Committee
determines that a judgment, decree or order relating to child support, alimony
payments or marital property rights of the spouse, former spouse, child or
other dependent of the Member is a qualified domestic relations order which
complies with a state's domestic relations law or community property law and
Section 414(p) of the Code or is a domestic relations order entered before
January 1, 1985, the Committee may direct the Trustee to distribute the awarded
property to the person named in the award but only in the manner permitted
under this Plan. To be a qualified domestic relations order, the order must
clearly specify: (a) the name and last known mailing address of the Member and
each alternate payee under the order, (b) the amount or percentage of the
Member's benefits to be paid from the Plan to each alternate payee or the
manner in which the amount or percentage can be determined, (c) the number of
payments or periods for which the order applies, (d) the plan to which the
order applies, and (e) all other requirements set forth in Section 414(p) of
the Code. If a distribution is made at a time when the Member is not fully
vested, a separate subaccount shall be created for the remaining portion of
each Account which was not fully vested. That subaccount shall then remain
frozen: that is, no further contributions of any form and no forfeitures shall
be allocated to the subaccount; however, it shall receive its proportionate
share of trust appreciation or depreciation and income earned on or losses
incurred by the Trust Fund. To determine the Member's vested interest in each
subaccount at any future time, the Committee shall add back to the subaccount
at that time the amount that was previously distributed under the qualified
domestic relations order, shall multiply the reconstituted subaccount by the
vesting percentage, and shall then subtract the amount that was previously
distributed. The remaining amount is the Member's vested interest in the
subaccount at that time.
6.7 WITHDRAWALS. Only the following withdrawals may be
made during employment:
(a) A Member is entitled to receive a withdrawal from his
Salary Deferral Contribution Account, his vested interest in his
Employer Discretionary Contribution Account and his Rollover Account
in the event of an immediate and heavy financial need incurred by the
Member and the Committee's determination that the withdrawal is
necessary to alleviate that hardship.
A distribution shall be made on account of financial hardship
only if the distribution is for: (i) Expenses for medical care
described in Section 213(d) of the Code previously incurred by the
Member, the Member's spouse, or any dependents of the Member (as
defined in Section 152 of the Code) or necessary for these persons to
obtain medical care described in Section 213(d) of the Code, (ii)
costs directly related to the purchase (excluding mortgage payments)
of a principal residence for the Member, (iii) payment of tuition and
related educational fees for the next 12 months of post-secondary
education for the Member, his or her spouse, children, or dependents
(as defined in Section 152
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of the Code), (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, or (v) any other event added to this
list by the Commissioner of Internal Revenue.
A distribution to satisfy an immediate and heavy financial
need shall not be made in excess of the amount of the immediate and
heavy financial need of the Member and the Member must have obtained
all distributions, other than hardship distributions, and all
nontaxable (at the time of the loan) loans currently available under
all plans maintained by the Employer. The amount of a Member's
immediate and heavy financial need includes any amounts necessary to
pay any federal, state or local income taxes or penalties reasonably
anticipated to result from the financial hardship distribution.
Effective for withdrawal requests made on or after January 1,
1992, the Member's hardship distribution shall terminate his or her
right to make any Employee After-Tax Contributions or to have the
Employer make any Salary Deferral Contributions on his or her behalf
until the next time Employee After-Tax Contributions and Salary
Deferral Contributions are permitted after the lapse of 12 months
following the hardship distribution and his or her timely filing of a
written request to resume his or her Employee After-Tax Contributions
or Salary Deferral Contributions. Even then, if the Member resumes
Contributions in his next taxable year he cannot have the Employer
make any Salary Deferral Contributions in excess of the limit in
Section 402(g) of the Code for that taxable year reduced by the
amount of Salary Deferral Contributions made by the Employer on the
Member's behalf during the taxable year of the Member in which he
received the hardship distribution. In addition, for 12 months after
he receives a hardship distribution from this Plan the Member is
prohibited from making elective contributions and employee
contributions to all other qualified and nonqualified plans of deferred
compensation maintained by the Employer, including stock option plans,
stock purchase plans and Code Section 401(k) cash or deferred
arrangements that are part of cafeteria plans described in Section
125 of the Code. However, the Member is not prohibited from making
mandatory employee contributions to a defined benefit plan, or
contributions to a health or welfare benefit plan, including one that
is part of a cafeteria plan within the meaning of Section 125 of the
Code.
Financial hardship withdrawals will be made in the following
order: First withdrawals will be made from the Member's Supplemental
Employer Contribution Account, then from his Rollover Account, and
finally, from his or her Salary Deferral Contribution Account. A
Member shall not be entitled to make a financial hardship withdrawal
of any amount credited to his Qualified
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Nonelective Employer Contribution Account, or of any income that is
not allocable or credited to the Member's Salary Deferral Contribution
Account as of December 31, 1988.
(b) A Member may withdraw part or all of his vested Account
balance on or after the date that he attains age 59-1/2.
6.8 LOANS. The Committee may direct the Trustees to make
loans to Members and Beneficiaries who have a vested interest in the Plan. The
Loan Committee established by the Committee will be responsible for
administering the Plan loan program. All loans will comply with the following
requirements:
(a) All loans will be made solely from the Member's or
Beneficiary's Account.
(b) Loans will be available on a nondiscriminatory basis
to all Beneficiaries, and to all Members who have participated in the
Plan for at least one year.
(c) Loans will not be made for less than $1,000.
(d) The maximum amount of a loan may not exceed the
lesser of (A) $50,000, or (B) one-half of the present value of the
person's vested Account balance under the Plan.
(e) Any loan from the Plan will be evidenced by a note or
notes (signed by the person applying for the loan) having such
maturity, bearing such rate of interest, and containing such other
terms as the Loan Committee will require by uniform and
nondiscriminatory rules consistent with this Section and proper
lending practices.
(f) All loans will bear a reasonable rate of interest
which will be established by the Loan Committee. In determining the
proper rate of interest to be charged, at the time any loan is made or
renewed, the Loan Committee will contact at least two of the largest
banks in the geographic location in which the Member or Beneficiary
resides to determine what interest rate the banks would charge for a
similar loan taking into account the collateral offered.
(g) Each loan will be fully secured by a pledge of the
borrowing person's vested Account balance. No more than fifty percent
(50%) of the person's vested Account balance (determined immediately
after the origination of the loan) will be considered as security for
any loan.
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(h) The term of the loan will not be less than 18 months.
Generally, the term of the loan will not be more than 5 years. The
Loan Committee may agree to a longer term (but not more than 7 years)
only if such term is otherwise reasonable and the proceeds of the loan
are to be used to acquire a dwelling which will be used within a
reasonable time (determined at the time the loan is made) as the
principal residence of the borrowing person.
(i) The loan agreement will require level amortization
over the term of the loan. A Member's loan agreement will also
require that loan repayments be made through payroll deductions.
(j) If a person fails to make a required payment within
30 days of the due date set forth in the loan agreement, the loan will
be in default. No distribution under the Plan will be made to a
person until all loans to him by the Trustee are fully paid. If the
person is otherwise entitled to a distribution while he still has an
unpaid loan balance, then the Loan Committee will direct the Trustee
to foreclose on the person's Account to the extent necessary to pay
off the person's unpaid loan balance. If after the Trustee forecloses
on the person's Account and the person still has an unpaid loan
balance, the person will continue to be liable for and continue to
make payments on the balance still due from him.
(k) No Plan loan will be made to anyone who has an unpaid
Plan loan balance.
(l) No amount that is pledged as collateral for a Plan
loan to a Participant will be available for withdrawal before he has
fully repaid his loan.
(m) All interest payments made pursuant to the terms of
the loan agreement will be credited to the borrowing person's Account
and will not be considered as general earnings of the Trust Fund to be
allocated to other Members.
6.9 FORFEITURE BY LOST MEMBERS OR BENEFICIARIES; ESCHEAT.
If a person who is entitled to a distribution cannot be located during a search
period of 60 days after the Trustee has initially attempted making payment,
that person's Account shall be forfeited. However, if at any time prior to the
termination of this Plan and the
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complete distribution of the Trust Fund, the former Member or Beneficiary files
a claim with the Committee for the forfeited benefit, that benefit shall be
reinstated (without adjustment for trust income or losses during the forfeited
period) effective as of the date of the receipt of the claim. As soon as
appropriate following the Employer's Contribution of the reinstated amount, it
shall be paid to the former Member or Beneficiary in a single sum. If the Plan
is joined as a party to any escheat proceeding involving a forfeited amount,
the Plan shall comply with the final judgment and shall treat the judgment as
if it were a claim filed by the former Member or Beneficiary and shall pay in
accordance with that judgment.
6.10 CLAIMS PROCEDURE. When a benefit is due, the Member
or Beneficiary should submit his claim to the person or office designated by
the Committee to receive claims. Under normal circumstances, a final decision
shall be made as to a claim within 90 days after receipt of the claim. If the
Committee notifies the claimant in writing during the initial 90 day period, it
may extend the period up to 180 days after the initial receipt of the claim.
The written notice must contain the circumstances necessitating the extension
and the anticipated date for the final decision. If a claim is denied during
the claims period, the Committee must notify the claimant in writing. The
denial must include the specific reasons for it, the Plan provisions upon which
the denial is based, and the claims review procedure. If no action is taken
during the claims period, the claim is treated as if it were denied on the last
day of the claims period.
If a Member's or Beneficiary's claim is denied and he wants a
review, he must apply to the Committee in writing. That application may
include any comment or argument the claimant wants to make. The claimant may
either represent himself or appoint a representative, either of whom has the
right to inspect all documents pertaining to the claim and its denial. The
Committee may schedule any meeting with the claimant or his representative that
it finds necessary or appropriate to complete its review.
The request for review must be filed within 90 days after the
denial. If it is not, the denial becomes final. If a timely request is made,
the Committee must make its decision, under normal circumstances, within 60
days of the receipt of the request for review. However, if the Committee
notifies the claimant prior to the expiration of the initial review period, it
may extend the period of review up to 120 days following the initial receipt of
the request for a review. All decisions of the Committee must be in writing
and must include the specific reasons for their action and the Plan provisions
on which their decision is based. If a decision is not given to the claimant
within the review period, the claim is treated as if it were denied on the last
day of the review period.
6.11 TIMING AND FORM OF ALL DISTRIBUTIONS. Distributions
shall be made only in cash unless an asset held in the Trust cannot be sold by
the distribution date or can only be sold at less than its appraised value, in
which event part or all of the distribution may be made in kind. Distribution
shall be made in a lump sum payment.
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Any benefit held for distribution past one or more Valuation
Dates shall continue to share in the appreciation or depreciation of the Trust
Fund and in the income earned or losses incurred by the Trust Fund until the
last Valuation Date which occurs with or next precedes the date distribution is
made.
If the benefit to be distributed plus all prior Plan payments
to the Member is $3,500 or less, the benefit shall be distributed in the form
of a lump sum distribution within one year after the Member becomes entitled to
the benefit. If the benefit plus all prior Plan payments to the Member is
greater than $3,500 and the Member consents to the distribution, the benefit
must be paid or begin to be paid within one year after the Member becomes
entitled to the benefit. If the benefit plus all prior Plan payments to the
Member is greater than $3,500 and the Member fails to consent to the
distribution, the distribution shall not be made without the Member's consent
until he attains normal Retirement Age or age 62, whichever is later. In any
event, if the Member dies, the surviving spouse may require payments to begin
within a reasonable time.
At the election of a Member, a distribution may be paid to him
in two payments. The first payment will be equal to 80% of the Member's vested
Account balance as of the last Plan valuation performed prior to the date that
he Severs Service. The second payment will be an amount equal to the
undistributed vested balance of the Member's Account including earnings and
losses credited to his Account as of the Valuation Date immediately preceding
the date that he Severs Service based upon the entire vested amount that was
credited to his Account as of such Valuation Date. Both such payments shall be
made as soon as administratively practicable following the date that the Member
elects to receive them and in any event shall be made within the same taxable
year of the Member.
If a portion of the Member's Account is payable to a
designated Beneficiary the payment must be made not later than one year after
the Member's death. If the surviving spouse is the Beneficiary, the payment
may be delayed so as to be made on the date on which the Member would have
attained age 70 1/2. If payment is postponed and the surviving spouse dies
before payment is made, the surviving spouse shall be treated as the Member for
purposes of this paragraph.
6.12 MANDATORY RULES APPLICABLE TO ALL DISTRIBUTIONS. All
distributions must comply with Section 401(a)(9) and (14) of the Code.
Therefore, unless the distribution fits within one of the exceptions below the
distribution must be made NO LATER than the earlier of (a) or (b): (a) the
60th day after the latest of the end of the Plan Year in which: (i) the Member
attains his Retirement Age, (ii) occurs the 10th anniversary of the year in
which the Member began participation, or (iii) the Member terminates employment
with the Employer and all Affiliated Employers unless the Member consents to a
later time, OR (b) April 1st of the calendar year following the calendar year
in which the Member attains age 70 1/2. If a Member attains age 70 1/2, the
Member must receive the required distribution within that time limit in
VI-7
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one lump sum. The following are exceptions to the general mandatory
distribution rule: (a) if a Member was 70 1/2 before January 1, 1988, and
neither is nor has been a 5% owner at any time during the Plan Year ending with
or within the calendar year in which the Member became 66 1/2 or any subsequent
Plan Year, the distribution does not have to be made until the April 1
following the calendar year in which the Member retires; (b) if a Member was
70 1/2 before January 1, 1988, and was then or later becomes a 5% owner, the
distribution does not have to be made until the April 1 following the earlier
of the calendar year with or within which ends the Plan Year in which the
Member becomes a 5% owner or the calendar year in which the Member retires; and
(c) if a Member made a designation before January 1, 1984 which complied with
Section 401(a)(9) of the Code before its amendment by the Tax Reform Act of
1984, the distribution does not have to be made until the time described in the
designation.
6.13 NO DUPLICATION OF BENEFITS. There shall be no
duplication of benefits under this Plan. Without regard to any other language
in this Plan, all distributions and withdrawals are to be subtracted from a
Member's Account as of the date of the distribution or withdrawal. Thus, if
the Member has received one distribution or withdrawal and is ever entitled to
another distribution or withdrawal, the prior distribution or withdrawal is to
be taken into account.
6.14 DESIGNATION OF BENEFICIARY. Each Member has the
right to designate and to revoke the designation of his Beneficiary or
Beneficiaries. Each designation or revocation must be evidenced by a written
document in the form required by the Committee, signed by the Member and filed
with the Committee. If no designation is on file at the time of a Member's
death or if the Committee determines that the designation is ineffective, the
designated Beneficiary shall be the Member's spouse, if living, or if not, the
executor, administrator or other personal representative of the Member's
estate.
If a Member is considered to be married under local law, the
Member's designation of any Beneficiary, other than the Member's spouse, shall
not be valid unless the spouse acknowledges in writing that he or she
understands the effect of the Member's beneficiary designation and consents to
it. The consent must be to a specific Beneficiary. The written
acknowledgement and consent must be filed with the Committee, signed by the
spouse and at least two witnesses, one of whom must be a member of the
Committee or a notary public. However, if the spouse cannot be located or
there exist other circumstances as described in Sections 401(a)(11) and
417(a)(2) of the Code, the requirement of the Member's spouse's acknowledgement
and consent may be waived. If a Beneficiary other than the Member's spouse is
named, the designation shall become invalid if the Member is later determined
to be married under local law, the Member's missing spouse is located or the
circumstances which resulted in the waiver of the requirement of obtaining the
consent of the Member's spouse no longer exist.
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6.15 DISTRIBUTIONS TO DISABLED. If the Committee
determines that any person to whom a payment is due is unable to care for his
affairs because of physical or mental disability, it shall have the authority
to cause the payments to be made to the spouse, brother, sister or other person
the Committee determines to have incurred, or to be expected to incur, expenses
for that person unless a prior claim is made by a qualified guardian or other
legal representative. The Committee and the Trustee shall not be responsible
to oversee the application of those payments. Payments made pursuant to this
power shall be a complete discharge of all liability under the Plan and Trust
and the obligations of the Employer, the Trustee, the Trust Fund and the
Committee.
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ARTICLE VII
TOP-HEAVY REQUIREMENTS
7.1 APPLICATION. The requirements described in this
Article shall apply to each Plan Year that this Plan is determined to be a
Top-Heavy Plan under the test set out in the following Section.
7.2 TOP-HEAVY TEST. If on the Determination Date the
Aggregate Accounts of Key Employees in the Plan exceeds 60% of the Aggregate
Accounts of all Employees in the Plan, this Plan shall be a Top-Heavy Plan for
that Plan Year. In addition, if this Plan is required to be included in an
Aggregation Group and that group is a top-heavy group, this Plan shall be
treated as a Top-Heavy Plan. An Aggregation Group is a top-heavy group if on
the Determination Date the sum of (a) the present value of the cumulative
accrued benefits for Key Employees under all defined benefit plans in the
Aggregation Group which contains this Plan, plus (b) the total of all of the
accounts of Key Employees under all defined contribution plans included in the
Aggregation Group (which contains this Plan) is more than 60% of a similar sum
determined for all employees covered in the Aggregation Group which contains
this Plan.
In applying the above tests, the following rules shall apply:
(a) in determining the present value of the accumulated
accrued benefits for any Employee or the amount in the account of any
Employee, the value or amount shall be increased by all distributions
made to or for the benefit of the Employee under the Plan during the
five-year period ending on the Determination Date;
(b) all rollover contributions made after December 31,
1983 by the Employee to the plan shall not be considered by the plan
for either test;
(c) if an Employee is a Non-Key Employee under the plan
for the Plan Year but was a Key Employee under the plan for another
prior Plan Year, his account shall not be considered; and
(d) benefits shall not be taken into account in
determining the top-heavy ratio for any Employee who has not performed
services for the Employer during the last five-year period ending upon
the Determination Date.
7.3 VESTING RESTRICTIONS IF PLAN BECOMES TOP-HEAVY. If a
Member has at least one Hour of Service during a Plan Year when the Plan is a
Top-Heavy Plan, he shall either vest under each of the normal vesting
provisions of the Plan or under the following vesting schedule, whichever is
more favorable:
VII-1
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Percentage of Amount Invested
In Accounts Containing
Completed Years of Active Service Employer Contributions
- --------------------------------- ----------------------
Less than two years . . . . . . . . . . . . . . . . . . . . . 0%
Two years but less than three years . . . . . . . . . . . . . 20%
Three years but less than four years . . . . . . . . . . . . 40%
Four years but less than five years . . . . . . . . . . . . . 60%
Five years but less than six years . . . . . . . . . . . . . 80%
Six years or more . . . . . . . . . . . . . . . . . . . . . . 100%
If the Plan ceases to be a Top-Heavy Plan, this requirement shall no longer
apply. After that date, the normal vesting provisions of the Plan shall be
applicable to all subsequent Contributions by the Employer.
7.4 MINIMUM CONTRIBUTIONS IF PLAN BECOMES TOP-HEAVY. If
this Plan is a Top-Heavy Plan and the normal allocation of the Employer
Contribution and forfeitures is less than 3% of any Non-Key Employee Member's
Annual Compensation, the Committee, without regard to the normal allocation
procedures, shall allocate the Employer Contribution and the forfeitures among
the Members who are in the employ of the Employer at the end of the Plan Year
in proportion to each Member's Annual Compensation as compared to the total
Annual Compensation of all Members for that Plan Year until each Non-Key
Employee Member has had an amount equal to the lesser of (i) the highest rate
of Contribution applicable to any Key Employee, or (ii) 3% of his Annual
Compensation allocated to his Account. At that time, any more Employer
Contributions or forfeitures shall be allocated under the normal allocation
procedures described earlier in this Plan. Salary Deferral Contributions made
on behalf of Key Employees are included in determining the highest rate of
Employer Contributions. Salary Deferral Contributions made on behalf of
Non-Key Employees are not included for that purpose. Amounts that may be
treated as Section 401(k) Contributions made on behalf of Non-Key Employees may
not be included in determining the minimum contribution required under this
Section to the extent that they are treated as Section 401(k) Contributions for
purposes of the Actual Deferral Percentage test.
In applying this restriction, the following rules shall apply:
(a) Each Employee who is eligible for membership (without
regard to whether he has made mandatory contributions, if any are
required, or whether his compensation is less than a stated amount)
shall be entitled to receive an allocation under this Section; and
(b) All defined contribution plans required to be
included in the Aggregation Group shall be treated as one plan for
purposes of meeting the 3% maximum; this
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required aggregation shall not apply if this Plan is also required to
be included in an Aggregation Group which includes a defined benefit
plan and this Plan enables that defined benefit plan to meet the
requirements of Sections 401(a)(4) or 410 of the Code.
7.5 COVERAGE UNDER MULTIPLE TOP-HEAVY PLANS. If this
Plan is a Top-Heavy Plan, it must meet the vesting and benefit requirements
described in this Article without taking into account contributions or benefits
under Chapter 2 of the Code (relating to tax on self-employment income),
Chapter 21 of the Code (relating to Federal Insurance Contributions Act), Title
II of the Social Security Act or any other Federal or State law.
If a Non-Key Employee is covered by both a Top-Heavy defined
contribution plan and a defined benefit plan, he shall receive the defined
benefit minimum, offset by the benefits provided under the defined contribution
plan.
7.6 RESTRICTIONS IF PLAN BECOMES SUPER TOP-HEAVY. If the
Plan is determined to be a Top-Heavy Plan, the number "1.00" must be
substituted for the number "1.25" when applying the limitations of Section 415
of the Code to this Plan, unless the Plan would not be a Top-Heavy Plan if
"90%" were substituted for "60%" and the Employer Contribution for the Plan
Year for each Non-Key Employee, who is a Member, is not less than 4% of the
Member's Annual Compensation.
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ARTICLE VIII
ADMINISTRATION OF THE PLAN
8.1 APPOINTMENT, TERM OF SERVICE & REMOVAL. The Board of
Directors shall appoint a Committee to administer this Plan. The members shall
serve until their resignation, death or removal. Any member may resign at any
time by mailing a written resignation to the Board of Directors. Any member
may be removed by the Board of Directors, with or without cause. Vacancies may
be filled by the Board of Directors from time to time.
8.2 POWERS. The Committee is a fiduciary. It has the
exclusive responsibility for the general administration of the Plan and Trust,
and has all powers necessary to accomplish that purpose, including but not
limited to the following rights, powers, and authorities:
(a) To make rules for administering the Plan and Trust so
long as they are not inconsistent with the terms of the Plan;
(b) To construe all provisions of the Plan and Trust;
(c) To correct any defect, supply any omission, or
reconcile any inconsistency which may appear in the Plan or Trust;
(d) To select, employ, and compensate at any time any
consultants, actuaries, accountants, attorneys, and other agents and
employees the Committee believes necessary or advisable for the proper
administration of the Plan and Trust; any firm or person selected may
be a disqualified person but only if the requirements of Section
4975(d) of the Code have been met;
(e) To determine all questions relating to eligibility,
Active Service, Compensation, allocations and all other matters
relating to benefits or Members' entitlement to benefits;
(f) To determine all controversies relating to the
administration of the Plan and Trust, including but not limited to any
differences of opinion arising between an Employer and the Trustee or
a Member, or any combination of them and any questions it believes
advisable for the proper administration of the Plan and Trust;
(g) To direct or to appoint an investment manager or
managers who can direct the Trustee in all matters relating to the
investment, reinvestment and management of the Trust Fund;
VIII-1
45
(h) To direct the Trustee in all matters relating to the
payment of Plan benefits; and
(i) To delegate any clerical or recordation duties of the
Committee as the Committee believes is advisable to properly
administer the Plan and Trust.
The actions of the Committee in exercising all of the rights, powers, and
authorities set out in this Section and all other Sections of this Plan, when
performed in good faith and in its sole judgment, shall be final, conclusive
and binding on all parties.
8.3 ORGANIZATION. The Committee may select, from among
its members, a chairman, and may select a secretary. The secretary need not be
a member of the Committee. The secretary shall keep all records, documents and
data pertaining to its administration of the Plan and Trust.
8.4 QUORUM AND MAJORITY ACTION. A majority of the
Committee constitutes a quorum for the transaction of business. The vote of a
majority of the members present at any meeting shall decide any question
brought before that meeting. In addition, the Committee may decide any
question by a vote, taken without a meeting, of a majority of its members.
8.5 SIGNATURES. The chairman, the secretary and any one
or more of the members of the Committee to which the Committee has delegated
the power shall each, severally, have the power to execute any document on
behalf of the Committee, and to execute any certificate or other written
evidence of the action of the Committee. The Trustee, after it is notified of
any delegation of power in writing, shall accept and may rely upon any document
executed by the appropriate member or members as representing the action of the
Committee until the Committee files a written revocation of that delegation of
power with the Trustee.
8.6 DISQUALIFICATION OF COMMITTEE MEMBER. A member of
the Committee who is also a Member of this Plan shall not vote or act upon any
matter relating solely to himself.
8.7 DISCLOSURE TO MEMBERS. The Committee shall make
available to each Member and Beneficiary for his examination those records,
documents and other data required under ERISA, but only at reasonable times
during business hours. No Member or Beneficiary has the right to examine any
data or records reflecting the compensation paid to any other Member or
Beneficiary. The Committee is not required to make any other data or records
available other than those required by ERISA.
8.8 STANDARD OF PERFORMANCE. The Committee and each of
its members shall use the care, skill, prudence and diligence under the
circumstances then prevailing that a prudent man, acting in a like capacity and
familiar with such matters, would use in conducting his
VIII-2
46
business as the administrator of the Plan, shall, when exercising its power to
direct investments, diversify the investments of the Plan so as to minimize the
risk of large losses, unless under the circumstances it is clearly prudent not
to do so, and shall otherwise comply with the provisions of this Plan and
ERISA.
8.9 LIABILITY OF COMMITTEE AND LIABILITY INSURANCE. No
member of the Committee shall be liable for any act or omission of any other
member of the Committee, the Trustee, any investment manager appointed by the
Committee or any other agent appointed by the Committee unless required by the
terms of ERISA or another applicable state or federal law under which liability
cannot be waived. No member of the Committee shall be liable for any act or
omission of his own unless required by ERISA or another applicable state or
federal law under which liability cannot be waived.
If the Committee directs the Trustee to do so, it may purchase
out of the Trust Fund insurance for the members of the Committee, for any other
fiduciaries appointed by the Committee and for the Trust Fund itself to cover
liability or losses occurring because of the act or omission of any one or more
of the members of the Committee or any other fiduciary appointed under this
Plan. But, that insurance must permit recourse by the insurer against the
members of the Committee or the other fiduciaries concerned if the loss is
caused by breach of a fiduciary obligation by one or more members of the
Committee or other fiduciary.
8.10 EXEMPTION FROM BOND. No member of the Committee is
required to give bond for the performance of his duties unless required by a
law which cannot be waived.
8.11 COMPENSATION. The Committee shall serve without
compensation but shall be reimbursed by the Employer for all expenses properly
incurred in the performance of their duties unless the Sponsor elects to have
those expenses paid from the Trust Fund. Each Employer shall pay that part of
the expense as determined by the Committee in its sole judgment.
8.12 PERSONS SERVING IN DUAL FIDUCIARY ROLES. Any person,
group of persons, corporations, firm or other entity, may serve in more than
one fiduciary capacity with respect to this Plan, including serving as both
Trustee and as a member of the Committee.
8.13 ADMINISTRATOR. For all purposes of ERISA, the
administrator of the Plan is the Sponsor. The administrator has the final
responsibility for compliance with all reporting and disclosure requirements
imposed under all applicable federal or state laws and regulations.
VIII-3
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ARTICLE IX
TRUST FUND AND CONTRIBUTIONS
9.1 FUNDING OF PLAN. This Plan shall be funded by one or
more separate Trusts. If more than one Trust is used, each Trust shall be
designated by the name of the Plan followed by a number assigned by the
Committee at the time the Trust is established.
9.2 INCORPORATION OF TRUST. Each Trust is a part of this
Plan. All rights or benefits which accrue to a person under this Plan shall be
subject also to the terms of the agreements creating the Trust or Trusts and
any amendments to them which are not in direct conflict with this Plan.
9.3 AUTHORITY OF TRUSTEE. Each Trustee shall have full
title and legal ownership of the assets in the separate Trust which, from time
to time, is in his separate possession. No other Trustee shall have joint
title to or joint legal ownership of any asset in one of the other Trusts held
by another Trustee. Each Trustee shall be governed separately by the trust
agreement entered into between the Employer and that Trustee and the terms of
this Plan without regard to any other agreement entered into between any other
Trustee and the Employer as a part of this Plan.
9.4 ALLOCATION OF RESPONSIBILITY. To the fullest extent
permitted under Section 405 of ERISA, the agreements entered into between the
Employer and each of the Trustees shall be interpreted to allocate to each
Trustee its specific responsibilities, obligations and duties so as to relieve
all other Trustees from liability either through the agreement, this Plan or
ERISA, for any act of any other Trustee which results in a loss to the Plan
because of his act or failure to act.
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ARTICLE X
ADOPTION OF PLAN BY OTHER EMPLOYERS
10.1 ADOPTION PROCEDURE. Any business organization may,
with the approval of the Board of Directors, adopt this Plan by:
(a) A certified resolution or consent of the board of
directors of the adopting Employer or an executed adoption instrument
(approved by the board of directors of the adopting Employer) agreeing
to be bound as an Employer by all the terms, conditions and
limitations of this Plan except those, if any, specifically described
in the adoption instrument; and
(b) Providing all information required by the Committee
and the Trustee.
An adoption may be retroactive to the beginning of a Plan Year
if these conditions are complied with on or before the last day of that Plan
Year.
10.2 NO JOINT VENTURE IMPLIED. The document which
evidences the adoption of the Plan by an Employer shall become a part of this
Plan. However, neither the adoption of this Plan and its related Trust Fund by
an Employer nor any act performed by it in relation to this Plan and its
related Trust Fund shall ever create a joint venture or partnership relation
between it and any other Employer.
10.3 ALL TRUST ASSETS AVAILABLE TO PAY ALL BENEFITS. The
Accounts of Members employed by the Employers which adopt this Plan shall be
commingled for investment purposes. All assets in the Trust Fund shall be
available to pay benefits to all Members employed by any Employer which is an
Affiliated Employer with the first Employer.
10.4 QUALIFICATION A CONDITION PRECEDENT TO ADOPTION AND
CONTINUED PARTICIPATION. The adoption of this Plan and the Trust or Trusts
used to fund this Plan by a business organization is contingent upon and
subject to the express condition precedent that the initial adoption meets all
statutory and regulatory requirements for qualification of the Plan and the
exemption of the Trust or Trusts and that the Plan and the Trust or Trusts that
are applicable to it continue in operation to maintain their qualified and
exempt status. In the event the adoption fails to initially qualify and be
exempt, the adoption shall fail retroactively for failure to meet the condition
precedent and the portion of the Trust Fund applicable to the adoption shall be
immediately returned to the adopting business organization and the adoption
shall be void ab initio. In the event the adoption as to a given business
organization later becomes disqualified and loses its exemption for any reason,
the adoption shall fail retroactively for failure to meet
X-1
49
the condition precedent and the portion of the Trust Fund allocable to the
adoption by that business organization shall be immediately spun off,
retroactively as of the last date for which the Plan qualified, to a separate
Trust for its sole benefit and an identical but separate Plan shall be created,
retroactively effective as of the last date the Plan as adopted by that
business organization qualified, for the benefit of the Members covered by that
adoption.
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ARTICLE XI
AMENDMENT AND TERMINATION
11.1 RIGHT TO AMEND AND LIMITATIONS THEREON. The Sponsor
has the sole right to amend this Plan. An amendment may be made by a certified
resolution or consent of the Board of Directors, or by an instrument in writing
executed by the appropriate officer of the Sponsor. The amendment must
describe the nature of the amendment and its effective date. No amendment
shall:
(a) Vest in an Employer any interest in the Trust Fund;
(b) Cause or permit the Trust Fund to be diverted to any
purpose other than the exclusive benefit of the present or future
Members and their Beneficiaries except under the circumstances
described in Section 4.8;
(c) Decrease the Account of any Member or eliminate an
optional form of payment;
(d) Increase substantially the duties or liabilities of
the Trustee without its written consent; or
(e) Change the vesting schedule to one which would result
in the nonforfeitable percentage of the Account derived from Employer
Contributions (determined as of the later of the date of the adoption
of the amendment or of the effective date of the amendment) of any
Member being less than the nonforfeitable percentage computed under
the Plan without regard to the amendment. If the Plan's vesting
schedule is amended, if the Plan is amended in any other way that
affects the computation of the Member's nonforfeitable percentage, or
if the Plan is deemed amended by an automatic change to or from a
Top-Heavy vesting schedule, each Member with at least three years of
Service may elect, within a reasonable period after the adoption of the
amendment or the change, to have the nonforfeitable percentage computed
under the Plan without regard to the amendment or the change. The
election period shall begin no later than the date the amendment is
adopted or deemed to be made and shall end no later than the latest of
the following dates: (1) 60 days after the date the amendment is
adopted or deemed to be made, (2) 60 days after the date the amendment
becomes effective, or (3) 60 days after the day the Member is issued
written notice of the amendment.
XI-1
51
Each Employer shall be deemed to have adopted any amendment
made by the Sponsor unless the Employer notifies the Committee of its rejection
in writing within 30 days after it receives a copy of the amendment. A
rejection shall constitute a withdrawal from this Plan by that Employer unless
the Sponsor acquiesces in the rejection.
11.2 MANDATORY AMENDMENTS. The Contributions of each
Employer to this Plan are intended to be:
(a) Deductible under the applicable provisions of the
Code;
(b) Except as otherwise prescribed by applicable law,
exempt from the Federal Social Security Act;
(c) Except as otherwise prescribed by applicable law,
exempt from withholding under the Code; and
(d) Excludable from any Employee's regular rate of pay,
as that term is defined under the Fair Labor Standards Act of 1938, as
amended.
The Sponsor shall make any amendment necessary to carry out
this intention, and it may be made retroactively.
11.3 WITHDRAWAL OF EMPLOYER. An Employer may withdraw
from this Plan and its related Trust Fund if the Sponsor does not acquiesce in
its rejection of an amendment or by giving written notice of its intent to
withdraw to the Committee. The Committee shall then determine the portion of
the Trust Fund that is attributable to the Members employed by the withdrawing
Employer and shall notify the Trustee to segregate and transfer those assets to
the successor Trustee or Trustees when it receives a designation of the
successor from the withdrawing Employer.
A withdrawal shall not terminate the Plan and its related
Trust Fund with respect to the withdrawing Employer, if the Employer either
appoints a successor Trustee or Trustees and reaffirms this Plan and its
related Trust Fund as its new and separate plan and trust intended to qualify
under Section 401(a) of the Code, or establishes another plan and trust
intended to qualify under Section 401(a) of the Code.
The determination of the Committee, in its sole discretion, of
the portion of the Trust Fund that is attributable to the Members employed by
the withdrawing Employer shall be final and binding upon all parties; and, the
Trustee's transfer of those assets to the designated successor Trustee shall
relieve the Trustee of any further obligation, liability or duty to the
withdrawing Employer, the Members employed by that Employer and their
Beneficiaries, and the successor Trustee or Trustees.
XI-2
52
11.4 TERMINATION OF PLAN. The Sponsor may terminate this
Plan and its related Trust Fund with respect to all Employers by executing and
delivering to the Committee and the Trustee, a notice of termination,
specifying the date of termination. Any Employer may terminate this Plan and
its related Trust Fund with respect to itself by executing and delivering to
the Trustee a notice of termination, specifying the date of termination.
Likewise, this Plan and its related Trust Fund shall automatically terminate
with respect to any Employer if there is a general assignment by that Employer
to or for the benefit of its creditors, or a liquidation or dissolution of that
Employer without a successor. Upon the termination of this Plan as to an
Employer, the Trustee shall distribute to each Member employed by the
terminating Employer the amount certified by the Committee to be due the
Member.
The Employer should apply to the Internal Revenue Service for
a determination letter with respect to its termination, and the Trustee should
not distribute the Trust Funds until a determination is received. However,
should it decide that a distribution before receipt of the determination letter
is necessary or appropriate it should retain sufficient assets to cover any tax
that may become due upon that determination.
11.5 PARTIAL OR COMPLETE TERMINATION OR COMPLETE
DISCONTINUANCE OF CONTRIBUTIONS. Without regard to any other provision of this
Plan, if there is a partial or total termination of this Plan or there is a
complete discontinuance of the Employer's Contributions, each of the affected
Members shall immediately become 100% vested in his Account as of the end of
the last Plan Year for which a substantial Employer Contribution was made and
in any amounts later allocated to his Account. If the Employer then resumes
making substantial Contributions at any time, the appropriate vesting schedule
shall again apply to all amounts allocated to each affected Member's Account
beginning with the Plan Year for which they were resumed.
11.6 CONTINUANCE PERMITTED UPON SALE OR TRANSFER OF
ASSETS. An Employer's participation in this Plan and its related Trust Fund
shall not automatically terminate if it consolidates or merges and is not the
surviving corporation, sells substantially all of its assets, is a party to a
reorganization and its Employees and substantially all of its assets are
transferred to another entity, liquidates, or dissolves, if there is a
successor organization. Instead, the successor may assume and continue this
Plan and its related Trust Fund by executing a direction, entering into a
contractual commitment or adopting a resolution providing for the continuance
of the Plan and its related Trust Fund. Only upon the successor's rejection of
this Plan and its related Trust Fund or its failure to respond to the
Employer's, the Sponsor's or the Trustee's request that it affirm its
assumption of this Plan within 90 days of the request shall this Plan
automatically terminate. In that event the appropriate portion of the Trust
Fund shall be distributed exclusively to the Members or their Beneficiaries as
soon as possible. If there is a disposition to an unrelated entity of
substantially all of the assets used by the Employer in a trade or business or
a disposition by the Employer of its interest in a subsidiary, the Employer may
make a lump sum distribution from the Plan if it continues the Plan after the
disposition; but the
XI-3
53
distribution can only be made for those Members who continue employment with
the acquiring entity.
11.7 DISTRIBUTIONS UPON TERMINATION OF THE PLAN. A Member
is entitled to receive a lump sum distribution on account of the termination of
the Plan if the Employer and all Affiliated Employers do not establish or
maintain a successor plan within the period ending 12 months after all assets
are distributed from the Plan. A distribution on account of the termination of
the Plan may be made only in the form of a lump sum payment. Therefore, if a
Member's Account balance plus all prior Plan payments to the Member is more
than $3,500 and the Member does not consent to receive an immediate lump sum
payment on account of the termination of the Plan the Member will not receive a
Plan distribution on account of the termination of the Plan. His Plan benefit
will be payable in the future on account of a distribution event other than the
termination of the Plan.
If the Plan is terminated and does not offer an annuity option
(purchased from a commercial provider) and the Employer or an Affiliated
Employer maintains another defined contribution plan the Member's Account
balance may be transferred to the other plan without his consent if he does not
consent to an immediate lump sum distribution from the Plan.
For purposes of this Section the term "successor plan" means a
defined contribution plan other than an employee stock ownership plan as
defined in Section 4975(e) or 409 of the Code or a simplified employee pension
plan as defined in Section 408(k) of the Code. However, the term successor
plan does not include any plan in which fewer than two percent of the Plan
Members were eligible to participate during the 24 month period beginning 12
months before the time of Plan termination.
11.8 MODES OF DISTRIBUTION UPON TERMINATION. All modes of
distribution permitted by this Plan must be available for all distributions to
Members upon termination of this Plan.
11.9 DISTRIBUTIONS TO HIGHLY COMPENSATED EMPLOYEES AND
FORMER EMPLOYEES MUST NOT DISCRIMINATE. Upon termination of the Plan, the
benefit payable to each Highly Compensated Employee or former Employee is
limited to a benefit that is nondiscriminatory under Section 401(a)(4) of the
Code.
XI-4
54
ARTICLE XII
MISCELLANEOUS
12.1 PLAN NOT AN EMPLOYMENT CONTRACT. The adoption and
maintenance of this Plan and its related Trust Fund is not a contract between
any Employer and its Employees which gives any Employee the right to be
retained in its employment. Likewise, it is not intended to interfere with the
rights of any Employer to discharge any Employee at any time or to interfere
with the Employee's right to terminate his employment at any time.
12.2 BENEFITS PROVIDED SOLELY FROM TRUST. All benefits
payable under this Plan shall be paid or provided for solely from the Trust
Fund. No Employer assumes any liability or responsibility to pay any benefit
provided by the Plan.
12.3 ANTI-ALIENATION PROVISIONS. No principal or income
payable or to become payable from the Trust Fund shall be subject: to
anticipation or assignment by a Member or by a Beneficiary to attachment by,
interference with, or control of any creditor of a Member or Beneficiary, or to
being taken or reached by any legal or equitable process in satisfaction of any
debt or liability of a Member or Beneficiary prior to its actual receipt by the
Member or Beneficiary. An attempted conveyance, transfer, assignment,
mortgage, pledge, or encumbrance of the Trust Fund, any part of it, or any
interest in it by a Member or Beneficiary prior to distribution shall be void,
whether that conveyance, transfer, assignment, mortgage, pledge, or encumbrance
is intended to take place or become effective before or after any distribution
of Trust assets or the termination of this Trust Fund itself. The Trustee
shall never under any circumstances be required to recognize any conveyance,
transfer, assignment, mortgage, pledge or encumbrance by a Member or
Beneficiary of the Trust Fund, any part of it, or any interest in it, or to pay
any money or thing of value to any creditor or assignee of a Member or
Beneficiary for any cause whatsoever. These prohibitions against the
alienation of a Member's Account shall not apply to qualified domestic
relations orders or domestic relations orders entered prior to January 1, 1985.
12.4 REQUIREMENTS UPON MERGER OR CONSIDERATION OF PLANS.
This Plan shall not merge or consolidate with or transfer any assets or
liabilities to any other plan unless each Member would (if the 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).
12.5 GENDER OF WORDS USED. If the context requires it,
words of one gender when used in this Plan shall include the other genders, and
words used in the singular or plural shall include the other.
XII-1
55
12.6 SEVERABILITY. Each provision of this Agreement may
be severed. If any provision is determined to be invalid or unenforceable,
that determination shall not affect the validity or enforceability of any other
provision.
12.7 GOVERNING LAW; PARTIES TO LEGAL ACTIONS. The
provisions of this Plan shall be construed, administered, and governed under
the laws of the State of Illinois and, to the extent applicable, by the laws of
the United States. The Trustee or any Employer may at any time initiate a
legal action or proceeding for the settlement of the account of the Trustee, or
for the determination of any question or for instructions. The only necessary
parties to that action or proceeding are the Trustee and the Employer
concerned. However, any other person or persons may be included as parties
defendant at the election of the Trustee and the Employer.
IN WITNESS WHEREOF, Quanex Corporation, Nichols-Homeshield,
Inc. and Quanex Metals, Inc. have caused this Agreement to be executed this
_______ day of ___________________, 1991, in multiple counterparts, each of
which shall be deemed to be an original, to be effective the 1st day of
January, 1989, except for those provisions which have an earlier effective date
provided by law, or as otherwise provided under applicable provisions of this
Plan.
QUANEX CORPORATION
By___________________________
_____________________________
Title
NICHOLS-HOMESHIELD, INC.
By___________________________
_____________________________
Title
QUANEX METALS, INC.
By___________________________
_____________________________
Title
XII-2
56
FIRST AMENDMENT TO THE
NICHOLS-HOMESHIELD 401(K) SAVINGS PLAN
THIS AGREEMENT by Quanex Corporation (the "Sponsor"),
W I T N E S S E T H:
WHEREAS, the Sponsor has executed and maintains a qualified
plan entitled "Nichols-Homeshield 401(k) Savings Plan" (the "Plan"); and
WHEREAS, the Sponsor retained the right to amend the Plan
from time to time;
WHEREAS, the Internal Revenue Service has authorized a model
amendment to comply with the new legislation affecting distributions from
qualified plans; and
WHEREAS, the Board of Directors of the Sponsor, in order to
adopt the model amendment so as to comply with the new law, approved
resolutions to amend the Plan;
NOW, THEREFORE, the Sponsor declares that the Plan is hereby
amended, effective as of January 1, 1993, as follows:
A new Article XIII is added to the Plan to provide as set
forth in the substitute pages attached hereto which shall be inserted
into the Plan.
IN WITNESS WHEREOF, the Sponsor has executed this Agreement
this _____ day of September 1993.
QUANEX CORPORATION
By______________________
57
ARTICLE XII - MISCELLANEOUS
Plan Not An Employment Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.1
Benefits Provided Solely From Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.2
Anti-Alienation Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.3
Requirements Upon Merger or Consolidation of Plans . . . . . . . . . . . . . . . . . . . . 12.4
Gender of Words Used . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.5
Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.6
Governing Law; Parties to Legal Actions . . . . . . . . . . . . . . . . . . . . . . . . . 12.7
ARTICLE XIII - DIRECT ROLLOVERS
Distributions Made On or After January 1, 1993 . . . . . . . . . . . . . . . . . . . . . . 13.1
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.2
-v-
58
ARTICLE XIII
DIRECT ROLLOVERS
13.1 Distributions Made On or After January 1, 1993. This
Article 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 Article, a distributee may
elect, at the time and in the manner prescribed by the plan administrator, to
have any portion of an eligible rollover distribution paid directly to an
eligible retirement plan specified by the distributee in a direct rollover.
13.2 Definitions.
(a) 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).
(b) 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.
(c) 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.
(d) Direct Rollover: A direct rollover is a payment
by the plan to the eligible retirement plan specified by the distributee.
XIII-1
59
SECOND AMENDMENT TO
NICHOLS-HOMESHIELD 401(K) SAVINGS PLAN
THIS AGREEMENT by Quanex Corporation, a corporation (the
"Sponsor"),
W I T N E S S E T H:
WHEREAS, on December 19, 1991, the Sponsor executed the
Agreement known as "Nichols-Homeshield 401(k) Savings Plan" (the "Plan"); and
WHEREAS, the Sponsor retained the right in Section 11.1 of the
Plan to amend the Plan from time to time; and
WHEREAS, the Board of Directors of the Sponsor has approved
resolutions to amend the Plan;
NOW, THEREFORE, the Sponsor agrees that the Plan is hereby
amended as follows:
(1) Effective January 1, 1993, Section 1.37 of the Plan
is completely amended to provide as follows:
1.37 "ROLLOVER CONTRIBUTION" means the amount contributed
by a Member of this Plan which consists of any part of an eligible
rollover distribution (as defined in Section 402 of the Code) from a
qualified employee trust described in Section 401(a) of the Code.
(2) Effective January 1, 1993, Section 4.1 of the Plan is
completely amended to provide as follows:
4.1 ROLLOVER CONTRIBUTIONS AND PLAN TO PLAN TRANSFERS.
The Committee may permit Rollover Contributions by Members and/or
direct transfers to or from another qualified plan on behalf of
Members from time to time. If Rollover Contributions and/or direct
transfers to or from another qualified plan are permitted, the
opportunity to make those contributions and/or direct transfers must
be made available to Members on a nondiscriminatory basis. For this
purpose, all Employees of an Employer shall be considered to be
Members of the Plan even though they may not have met the eligibility
requirements. However, they shall not be entitled to contribute to
the Plan, share
60
in Employer Contributions or share in forfeitures unless and until
they have met the requirements for eligibility, contributions and
allocations. A Rollover Contribution shall not be accepted unless it
is made on or before the 60th day after the Member received the
distribution or it is directly rolled over to this Plan in a rollover
described in Section 401(a)(31) of the Code. A Member shall not be
permitted to make a Rollover Contribution if the property he intends
to contribute is for any reason unacceptable to the Trustee. A
Rollover Contribution Account shall be established for any Employee
who makes a Rollover Contribution.
A direct transfer of assets from another qualified plan in a
transfer subject to the requirements of Section 414(l) of the Code
shall not be accepted if it was at any time part of (a) a defined
benefit plan (as defined in Section 401(a) or 414(j) of the Code), (b)
a defined contribution plan (as defined in Sections 401(a) and 414(i)
of the Code) which is subject to the minimum funding standards of
Section 412 of the Code, (c) any other qualified plan which has joint
and survivor annuity benefits or qualified preretirement survivor
annuity benefits as described in Section 417 of the Code, or (d) a
plan which permits a distribution or withdrawal in a form not
permitted under this Plan.
(3) Effective with respect to loans made on or after June 1, 1994,
Section 6.8 of the Plan is hereby completely amended to provide as follows:
6.8 LOANS. The Committee may direct the Trustees to make
loans to Members (and Beneficiaries who are "parties in interest"
within the meaning of ERISA) who have a vested interest in the Plan.
The Loan Committee established by the Committee will be responsible
for administering the Plan loan program. All loans will comply with
the following requirements:
(a) All loans will be made solely from the Member's or
Beneficiary's Account.
(b) Loans will be available on a nondiscriminatory basis
to all Beneficiaries who are "parties in interest" within the meaning
of ERISA, and to all Members.
(c) Loans will not be made for less than $1,000.
(d) The maximum amount of a loan may not exceed the
lesser of (A) $50,000 reduced by the person's highest outstanding loan
balance from the Plan during the preceding one year period, or (B)
one-half of the present value of the person's vested Account balance
under the Plan determined as of the date on which the loan is approved
by the Loan Committee.
-2-
61
(e) Any loan from the Plan will be evidenced by a note or
notes (signed by the person applying for the loan) having such
maturity, bearing such rate of interest, and containing such other
terms as the Loan Committee will require by uniform and
nondiscriminatory rules consistent with this Section and proper
lending practices.
(f) All loans will bear a reasonable rate of interest
which will be established by the Loan Committee. In determining the
proper rate of interest to be charged, at the time any loan is made or
renewed, the Loan Committee will contact at least two of the largest
banks in the geographic location in which the Member or Beneficiary
resides to determine what interest rate the banks would charge for a
similar loan taking into account the collateral offered.
(g) Each loan will be fully secured by a pledge of the
borrowing person's vested Account balance. No more than fifty percent
(50%) of the person's vested Account balance (determined immediately
after the origination of the loan) will be considered as security for
any loan.
(h) The term of the loan will not be less than 18 months.
Generally, the term of the loan will not be more than 5 years. The
Loan Committee may agree to a longer term (but not more than 7 years)
only if such term is otherwise reasonable and the proceeds of the loan
are to be used to acquire a dwelling which will be used within a
reasonable time (determined at the time the loan is made) as the
principal residence of the borrowing person.
(i) The loan agreement will require level amortization
over the term of the loan. A Member's loan agreement will also
require that loan repayments be made through payroll deductions.
(j) If a person fails to make a required payment within
30 days of the due date set forth in the loan agreement, the loan will
be in default.
(k) If a Member has an outstanding loan from the Plan at
the time he terminates employment with the Employer and all Affiliated
Employers, the outstanding loan principal balance and any accrued but
unpaid interest will become immediately due in full. The Member will
have the right to immediately pay the Trustee that amount. If the
Member fails to repay the loan, the Trustee will foreclose on the loan
and the Member will be deemed to have received a Plan distribution of
the amount foreclosed upon.
(l) If a Beneficiary defaults on his loan, the Trustee
will foreclose on the loan and the Beneficiary will be deemed to have
received a Plan distribution of the amount foreclosed upon.
(m) No person shall be entitled to apply for a new Plan
loan until at least 90 days have transpired since he fully repaid his
last loan from the Plan.
-3-
62
(n) No amount that is pledged as collateral for a Plan
loan to a Participant will be available for withdrawal before he has
fully repaid his loan.
(o) All interest payments made pursuant to the terms of
the loan agreement will be credited to the borrowing person's Account
and will not be considered as general earnings of the Trust Fund to be
allocated to other Members.
(4) Effective January 1, 1994, by adding thereto the
following new Article XIV:
ARTICLE XIV
LIMITATION ON COMPENSATION
COMPENSATION LIMITATION. In addition to other applicable
limitations set forth in the Plan, and notwithstanding any other
provision of the Plan to the contrary, for Plan years beginning on or
after January 1, 1994, the annual compensation of each employee taken
into account under the Plan shall not exceed the OBRA '93 annual
compensation limit. The OBRA '93 annual compensation limit is
$150,000, as adjusted by the Commissioner for increases in the cost of
living in accordance with Section 401(a)(17)(B) of the Internal Revenue
Code. The cost-of-living adjustment in effect for a calendar year
applies to any period, not exceeding 12 months, over which compensation
is determined (determination period) beginning in such calendar year.
If a determination period consists of fewer than 12 months, the OBRA
'93 annual compensation limit will be multiplied by a fraction, the
numerator of which is the number of months in the determination period,
and the denominator of which is 12.
For Plan years beginning on or after January 1, 1994, any
reference in this Plan to the limitation under Section 401(a)(17) of
the Code shall mean the OBRA '93 annual compensation limit set forth in
this provision.
If compensation for any prior determination period is taken
into account in determining an employee's benefits accruing in the
current Plan Year, the compensation for that prior determination period
is subject to the OBRA '93 annual compensation limit in effect for that
prior determination period. For this purpose, for determination
periods beginning before the first day of the first Plan Year beginning
on or after January 1, 1994, the OBRA '93 annual compensation limit is
$150,000.
-4-
63
IN WITNESS WHEREOF, the Sponsor has caused this Agreement to be
executed this _____ day of________________ 1994.
QUANEX CORPORATION
By ______________________________
Title ___________________________
-5-
1
EXHIBIT 5.1
INTERNAL REVENUE SERVICE DEPARTMENT OF THE TREASURY
DISTRICT DIRECTOR
P.O. BOX A-3617 DPN20-6
CHICAGO, IL 60690
Employer Identification Number:
Dated Nov 7 1990 73-0776025
File Folder Number:
NICHOLS-HOMESHIELD INC. 360015577
C/O RICHARD P BOGATTO Person to Contact:
FULBRIGHT AND JAWORSKI WARREN BUSSE
1301 MCKINNEY SUITE 5100 Contact Telephone Number:
HOUSTON, TX 77010-3095 (312) 886-9580
Plan Name:
401K SAVINGS PLAN
Plan Number: 006
Dear Applicant:
We have made a favorable determination on your plan, identified above,
based on the information supplied. Please keep this letter in your permanent
records.
Continued qualification of the plan under its present form will depend on
its effect in operation. (See section 1.401-1(b)(3) of the Income Tax
Regulations.) We will review the status of the plan in operation periodically.
The enclosed document explains the significance of this favorable
determination letter, points out some features that may affect the qualified
status of your employee retirement plan, and provides information on the
reporting requirements for your plan. It also describes some events that
automatically nullify it. It is very important that you read the publication.
This letter relates only to the status of your plan under the Internal
Revenue Code. It is not a determination regarding the effect of other federal
or local statutes.
This determination is subject to your adoption of the proposed amendments
submitted in your letter dated October 25 1990. The proposed amendments should
be adopted on or before the date prescribed by the regulations under Code
section 401(b).
This determination expresses an opinion on whether the amendments(s),
in and of itself, affects the continued qualified status of the plan under Code
section 401 and the exempt status of the related trust under section 501(a). It
is not an opinion on the qualification of the plan as a whole and the exempt
status of the related trust as a whole.
This determination letter is applicable for the amendment(s) adopted on
August 9 1990.
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.
2
NICHOLS-HOMESHIELD INC.
If you have questions concerning this matter, please contact the person
whose name and telephone number are shown above.
Sincerely yours,
/s/ R. S. WINTRODE, JR.
R. S. Wintrode, Jr.
District Director
Enclosures:
Publication 794
PWBA 515
Addendum
3
NICHOLS-HOMESHIELD INC.
This determination letter also applies to amendments adopted January 11, 1989,
March 29, 1990 and August 22, 1990.
1
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the Registration Statement of
Quanex Corporation on Form S-8 of our report dated November 24, 1993,
incorporated by reference in the Annual Report on Form 10-K of Quanex
Corporation for the year ended October 31, 1993.
/s/ Deloitte & Touche
DELOITTE & TOUCHE
Houston, Texas
June 9, 1994
