-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, J/94/ZlxFdqI404GgV7UdiKmJlVkAL521VRIErSfzGN3cwxwbs0whip3XcQUqvqZ L87zuee+WP5hwOF6Eswmpw== 0000921895-98-000769.txt : 19980925 0000921895-98-000769.hdr.sgml : 19980925 ACCESSION NUMBER: 0000921895-98-000769 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 19980924 EFFECTIVENESS DATE: 19980924 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: WHX CORP CENTRAL INDEX KEY: 0000106618 STANDARD INDUSTRIAL CLASSIFICATION: STEEL WORKS, BLAST FURNACES ROLLING MILLS (COKE OVENS) [3312] IRS NUMBER: 133768097 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-8 SEC ACT: SEC FILE NUMBER: 333-64217 FILM NUMBER: 98714413 BUSINESS ADDRESS: STREET 1: 110 EAST 59TH ST STREET 2: 30TH FL CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 2123555200 MAIL ADDRESS: STREET 1: 1134 MARKET STREET CITY: WHEELING STATE: WV ZIP: 26003 FORMER COMPANY: FORMER CONFORMED NAME: WHEELING PITTSBURGH CORP DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: WHEELING PITTSBURGH STEEL CORP DATE OF NAME CHANGE: 19910130 FORMER COMPANY: FORMER CONFORMED NAME: WHEELING STEEL CORP DATE OF NAME CHANGE: 19690202 S-8 1 FORM S-8 As filed with the Securities and Exchange Commission on September 24, 1998 Registration No. 333- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------------- FORM S-8 REGISTRATION STATEMENT Under The Securities Act of 1933 ---------------------- WHX CORPORATION DELAWARE 13-3768097 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 110 EAST 59TH STREET 10022 NEW YORK, NEW YORK (Zip Code) (Address of principal executive offices) WHX CORPORATION 1997 DIRECTORS STOCK OPTION PLAN 1991 INCENTIVE AND NONQUALIFIED STOCK OPTION PLAN OF WHEELING-PITTSBURGH CORPORATION HANDY & HARMAN 401(K) RETIREMENT PLAN (Full title of the plan) RONALD LABOW CHAIRMAN OF THE BOARD WHX CORPORATION 110 EAST 59TH STREET NEW YORK, NEW YORK 10022 (Name and address of agent for service) (212)355-5200 (Telephone number, including area code, of agent for service) WITH A COPY TO: STEVEN WOLOSKY, ESQ., OLSHAN GRUNDMAN FROME & ROSENZWEIG LLP 505 PARK AVENUE, NEW YORK, NEW YORK 10022 (212) 753-7200 Approximate date of proposed sales pursuant to the plan: FROM TIME TO TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
CALCULATION OF REGISTRATION FEE ================================================================================================================================ Proposed Proposed maximum maximum Title of Amount offering aggregate Amount of securities to be price offering registration to be registered registered(1) per share price fee - -------------------------------------------------------------------------------------------------------------------------------- Common Stock par value, .01 per share.................... 400,000(2) $12.30(2) $4,920,000(2) $1,451.40(2) - -------------------------------------------------------------------------------------------------------------------------------- Common Stock par value, $.01 per share.................... 1,000,000(3) $14.03(3) $14,030,000(3) $4,138.85(3) - -------------------------------------------------------------------------------------------------------------------------------- Common Stock par value, $.01 per share.................... 500,000(4) $12.50(4) $6,250,000(4) $1,843.75(4) ================================================================================================================================
(1) 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 employee benefit plan(s) described herein. There are also registered hereby such indeterminate number of shares of Common Stock as may become issuable by reason of the operation of the anti-dilution provisions of the plans and the options. (2) Includes 150,000 shares with respect to which options were granted at an exercise price of $11.8125 and 30,000 shares with respect to which options were granted at an exercise price of $13.25. An additional 220,000 shares are to be offered at prices not presently determined. Pursuant to Rule 457(h), the offering price for these additional shares is estimated solely for the purpose of determining the registration fee and is based on the $12.50 per share average high and low prices of the Common Stock on the New York Stock Exchange on September 21, 1998. (3) Includes 349,708 shares with respect to which options were granted at an exercise price of $16.625, 57,607 shares with respect to which options were granted at an exercise price of $13.8125 and 10,000 shares with respect to which options were granted at an exercise price of $13.3125. An additional 582,685 shares are to be offered at prices not presently determined. Pursuant to Rule 457(h), the offering price for these additional shares is estimated solely for the purpose of determining the registration fee and is based on the $12.50 per share average high and low prices of the Common Stock on the New York Stock Exchange on September 21, 1998. (4) Estimated pursuant to Rule 457(h) solely for purposes of computing the registration fee and is based on the $12.50 per share average high and low prices of the Common Stock on the New York Stock Exchange on September 21, 1998. -2- SUBJECT TO COMPLETION, DATED SEPTEMBER 24, 1998 PROSPECTUS 1,900,000 SHARES WHX CORPORATION Common Stock ($.01 par value) This Prospectus relates to the reoffer and resale by certain selling shareholders (the "Selling Shareholders") of shares (the "Shares") of the Common Stock, $.01 par value (the "Common Stock"), of WHX Corporation (the "Company") that may be issued by the Company to the Selling Shareholders upon the exercise of outstanding stock options granted pursuant to the 1997 Directors Stock Option Plan (the "Directors Plan"), the 1991 Incentive and Non-Qualified Stock Option Plan (the "1991 Plan") of the Company or pursuant to the Handy & Harman 401(k) Retirement Plan (the "401(k) Plan"). The offer and sale of the Shares to the Selling Shareholders were previously registered under the Securities Act of 1933, as amended (the "Securities Act"). With respect to the Shares that may be issued to any of the Selling Shareholders or additional persons who may be deemed affiliates under the Directors Plan, the 1991 Plan and the 401(k) Plan, this Prospectus also relates to certain Shares underlying options which have not as of this date been granted. If and when such options are granted, the Company will distribute a Prospectus Supplement as required by the Act. The Shares are being reoffered and resold for the account of the Selling Shareholders and the Company will not receive any of the proceeds from the resale of the Shares. The Selling Shareholders have advised the Company that the resale of their Shares may be effected from time to time in one or more transactions on the New York Stock Exchange, in negotiated transactions or otherwise at market prices prevailing at the time of the sale or at prices otherwise negotiated. See "Plan of Distribution." The Company will bear all expenses in connection with the preparation of this Prospectus. The Common Stock of the Company is traded on the New York Stock Exchange under the symbol "WHX." On September 21, 1998, the closing price for the Common Stock, as reported by the New York Stock Exchange, was $12.625. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The date of this Prospectus is _______, 1998. -3- AVAILABLE INFORMATION The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission"). Such reports, proxy statements and other information can be inspected and copied at the public reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549; Northwest Atrium Center, Suite 1400, 500 West Madison Street, Chicago, Illinois 60661; and Seven World Trade Center, 13th Floor, New York, New York 10048. Copies of such material can be obtained from the Public Reference Section of the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. TABLE OF CONTENTS AVAILABLE INFORMATION........................................................4 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE..............................5 GENERAL INFORMATION..........................................................6 RISK FACTORS.................................................................6 USE OF PROCEEDS.............................................................12 SELLING SHAREHOLDERS........................................................12 PLAN OF DISTRIBUTION........................................................13 LEGAL MATTERS...............................................................13 EXPERTS.....................................................................13 ADDITIONAL INFORMATION......................................................13 -4- INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The Company's Annual Report on Form 10-K for the year ended December 31, 1997 and Form 10-Q for the quarters ended March 31, 1998 and June 30, 1998 are incorporated by reference in this Prospectus and shall be deemed to be a part hereof. All documents subsequently filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the termination of this offering, are deemed to be incorporated by reference in this Prospectus and shall be deemed to be a part hereof from the date of filing of such documents. The description of the Company's Common Stock is contained in the Company's Registration Statement on Form 8-B filed June 24, 1994. The Company hereby undertakes to provide without charge to each person to whom a copy of this Prospectus has been delivered, on the written or oral request of any such person, a copy of any or all of the documents referred to above which have been or may be incorporated in this Prospectus by reference, other than exhibits to such documents. Written requests for such copies should be directed to Marvin Olshan, Secretary, WHX Corporation, 110 East 59th Street, New York, New York 10022. Oral requests should be directed to such officer (telephone number (212) 355-5200). ------------------------ No dealer, salesman or other person has been authorized to give any information or to make any representations other than those contained in this Prospectus in connection with the offer made hereby, and, if given or made, such information or representations must not be relied upon as having been authorized by the Company or any Selling Shareholder. This Prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, the securities offered hereby to any person in any state or other jurisdiction in which such offer or solicitation is unlawful. The delivery of this Prospectus at any time does not imply that information contained herein is correct as of any time subsequent to its date. -5- GENERAL INFORMATION The Company is a holding company that has been structured to acquire and operate a diverse group of businesses on a decentralized basis, with a corporate staff providing strategic direction and support. The Company's primary businesses currently are Handy & Harman ("H&H"), a diversified manufacturing company whose strategic business segments encompass, among others, specialty wire and tubing, and precious metals plating, stamping and fabrication, and Wheeling-Pittsburgh Corporation ("WPC"), a vertically integrated manufacturer of value-added and flat rolled steel products. The Company's other businesses include Unimast Incorporated ("Unimast"), a leading manufacturer of steel framing and other products for commercial and residential construction and WHX Entertainment Corp., a co-owner of a racetrack and video lottery facility located in Wheeling, West Virginia. The Company believes that its businesses are characterized by leading positions in their respective niches resulting from low cost structures, strong managements, high quality and service, and extensive offerings of value-added products. The Company's principal executive offices are located at 110 East 59th Street, New York, New York 10022. The Company's telephone number at such location is (212) 355-5200. The Shares offered hereby were or will be purchased by the Selling Shareholders upon exercise of options granted to them or are issued by the Company pursuant to the 401(k) Plan and will be sold for the account of the Selling Shareholders. RISK FACTORS SIGNIFICANT OUTSTANDING INDEBTEDNESS OF THE COMPANY The Company has substantial indebtedness and debt service requirements. At June 30, 1998, the Company's total consolidated indebtedness was $987.3 million (excluding margin borrowings). Additionally, the Company's subsidiaries have significant additional borrowing capacity under their respective outstanding credit facilities. The Company's level of indebtedness will have several important effects on its future operations, including the following: (a) a significant portion of the Company's cash flow from operations will be dedicated to the payment of interest on and principal of its indebtedness and will not be available for other purposes; (b) the financial covenants and other restrictions contained in the $350.0 million of 10 1/2% Senior Notes issued by the Company on April 7, 1998, the $275.0 million of 9 1/4% Senior Notes issued by WPC on November 26, 1997 (the "WPC 9 1/4 Notes"), the WPSC Revolving Credit Facility with Citibank, N.A. which provides for borrowing for general corporate purposes of up to $150.0 million, and with a $35.0 million sublimit for letters of credit (the "WPSC Revolving Credit Facility"), a $50.0 million letter of credit facility with Citibank, N.A. and a revolving credit facility between H&H and several financial institutions as lenders and Citibank, N.A. as administrative agent(the "H&H Revolving Credit Facility"), require the Company's subsidiaries and H&H, as the case may be, to meet certain financial tests and limit its or their ability to borrow additional funds or to dispose of assets; and (c) the Company's ability to obtain additional financing in the future for working capital, postretirement health care and pension funding, capital expenditures, acquisitions, general corporate purposes or other purposes may be impaired. The Company's ability to make scheduled payments or to refinance its debt obligations will depend upon its future financial and operating performance, which will be affected by prevailing economic conditions and financial, business and other factors, certain of which are beyond its control. There can be no assurance that the Company's operating results, cash flow and capital resources will be sufficient for payment of its indebtedness in the future. In the absence of such operating results and resources, the Company could face substantial liquidity problems and might be required to dispose of material assets or operations to meet its debt service and -6- other obligations, and there can be no assurance as to the timing of such sales or the proceeds that the Company could realize therefrom. If the Company has difficulty in servicing its indebtedness, it may be forced to take actions such as reducing or delaying planned expansion and capital expenditures, selling assets, restructuring or refinancing its indebtedness or seeking additional equity capital. There can be no assurance that any of these strategies could be effected on satisfactory terms, if at all. An inability of the Company's subsidiaries to meet the financial covenants contained in their indebtedness instruments could result in an acceleration of amounts due thereunder. In the event the Company's subsidiaries are unable to make required payments or otherwise comply with the terms of its indebtedness, the holders of such indebtedness could accelerate the obligations of the Company thereunder, which could result in the Company being forced to seek protection under applicable bankruptcy laws or in an involuntary bankruptcy proceeding being brought against the Company. If it becomes necessary for the Company to refinance all or a portion of its indebtedness on or prior to maturity there can be no assurance that the Company will be able to effect such refinancing on commercially reasonable terms or at all. A portion of the Company's outstanding indebtedness, including all borrowings under the WPSC Revolving Credit Facility, the H&H Revolving Credit Facility and the WPC Term Loan Agreement, bears interest at floating rates. As a result, the Company's results of operations and ability to service its indebtedness will be affected by future fluctuations in interest rates. IMPACT OF STRIKE; RESUMPTION OF OPERATIONS WPC's ten-month strike, which ended in August 1997 (the "Strike"), has had a material adverse effect on WPC's and the Company's results of operations and may continue to adversely affect WPC and the Company for the near future. The Company reported losses for the fourth quarter of 1996 and each of the quarters of 1997 of $34.6 million, $40.7 million, $31.1 million, $91.4 million and $36.5 million, respectively. Included in the losses for the third and fourth quarters of 1997 are pre-tax charges of $88.9 and $3.8 million, respectively, primarily associated with the costs attributable to the New Labor Agreement. The Company reported net income for the first two quarters of 1998 of $1.1 million and $14.1 million, respectively, and net income of $8.9 million for the second quarter of 1998. Although WPC is currently producing and shipping near its pre-Strike production levels and shipping close to its historical mix of products, there can be no assurance that such levels will be maintained. SENSITIVITY OF RESULTS OF OPERATIONS TO REALIZED STEEL PRICES The Company's results of operations are significantly affected by relatively small variations (on a percentage basis) in the realized sales prices of WPC's products, which, in turn, depend upon both the prevailing prices for steel and the demand for particular products. During the first nine months of 1996, WPC shipped approximately 1.9 million tons, and realized an average sales price per ton of approximately $514. A one percent decrease in this average realized price would have resulted in a decrease in net sales and operating income of approximately $9.8 million. WPC sells approximately 75% of its products at spot prices (including shipments to joint ventures Wheeling-Nisshin, Inc. ("W- N") and Ohio Coatings Company ("OCC") under supply contracts at prices approximating spot prices). WPC believes its percentage of sales at spot prices is higher than that of many of its domestic integrated competitors. WPC therefore may be affected by steel price decreases more quickly than many of WPC's competitors. -7- POSSIBILITY OF MONETARY AND INJUNCTIVE PENALTIES IN CONNECTION WITH SEC ENFORCEMENT ACTION On March 31, 1997, the Company through SB Acquisition Corp. ("SB Acquisition"), a wholly-owned subsidiary, commenced a tender offer for shares of Dynamics Corporation of America, Inc. ("DCA"), a NYSE-listed company. On April 14, 1997, DCA commenced an action against the Company in the United States District Court for the District of Connecticut, alleging, among other things, that the Company's tender offer violated Section 14(d) of the Exchange Act and the rules thereunder (the "DCA Action"). The Company denied all allegations and contested the action. On April 29, 1997, Judge Gerard L. Goettel of the United States District Court, District of Connecticut, issued an order granting a motion for a preliminary injunction filed by DCA against the Company and SB Acquisition. The District Court found that the disclosure contained in the Company's tender offer materials to DCA shareholders was improper because (i) it stated that under certain circumstances the Company "may be required" to comply with Section 912(b) of the New York Business Corporation Law and a provision in DCA's charter, instead of disclosing that the Company "will be required" to do so and (ii) it failed to disclose the Company's future plans in the event that it was prohibited from merging with DCA for five years. The Court (i) directed the Company and SB Acquisition to make "further and complete disclosures" pertaining to those subjects described above and (ii) specified that such tender offer be extended for an additional twenty days. This order was promptly complied with in all respects by WHX and SB Acquisition. The DCA Action was later discontinued by stipulation between the parties. On April 8, 1997, the Commission entered an Order Directing Private Investigation concerning possible violations of Sections 14(d) and 14(e) of the Exchange Act and Rules 14d-10(a)(1) and 14e-1(b) thereunder in connection with the Company's tender offer for DCA. The Company fully cooperated with this investigation. The Staff of the Division of Enforcement of the Commission (the "SEC Enforcement Staff") has advised the Company's counsel that the Commission has authorized the initiation of administrative proceedings seeking a cease and desist order pertaining to alleged violations of Section 14(d)(4) of the Exchange Act and Rule 14d-10(a)(1) based on the Company's inclusion of a "record holder condition" in the DCA tender offer. This condition was removed by the Company shortly after the tender offer began and after the Commission had granted authority to the SEC Enforcement Staff to seek injunctive relief. The SEC Enforcement Staff also has advised the Company's counsel that the Commission authorized the initiation of administrative proceedings seeking a cease and desist order and disgorgement of profits, pertaining to alleged violations of Section 14(d)(4) of the Exchange Act and Rules 14d-6(d) and 14d-4(c) in connection with the Company's closing of the DCA tender offer on June 13, 1997. The SEC Enforcement Staff has asserted that the decision to close the DCA tender offer and purchase approximately 10% of DCA's outstanding shares was a material change in the conditions of such offer, including its "poison pill condition," "New York Business Corporation Law condition" (NY BCL Section912(b)) and "interfering transaction condition," each of which was effected without adequate notice to DCA shareholders. According to the SEC Enforcement Staff, the tender offer's conditions precluded the Company from closing as long as (i) DCA's "poison pill" remained in place, even if the Company acquired shares insufficient to trigger the "poison pill", (ii) the New York Business Corporation Law condition could affect the intended merger with DCA, and (iii) DCA's merger agreement with another company, CTS Corporation, remained in place. On June 25, 1998, the Commission instituted an administrative proceeding against the Company alleging that it had violated certain Commission rules in connection with the tender offer for DCA commenced on March 31, 1997 through SB Acquisition Corp. (the "Offer"). Specifically, the Order instituting Proceedings (the "Order") alleges that, in its initial form, the Offer violated the "All Holders Rule," Rule 14d-10(a)(1) under the Exchange Act, based on the Company's inclusion of a "record holder condition" in the Offer. No shareholder had -8- tendered any shares at the time the condition was removed. The Order further alleges that the Company violated Rules 14d-4(c) and 14d-6(d) under the Exchange Act upon expiration of the Offer, by allegedly waiving material conditions to the Offer without prior notice to shareholders and purchasing the approximately 10.6% of DCA's outstanding shares tendered pursuant to the offer. The SEC does not claim that the Offer was intended to or in fact defrauded any investor. The Order institutes proceedings to determine whether the Commission should enter an order requiring the Company (a) to cease and desist from committing or causing any future violation of the rules alleged to have been violated and (b) to pay approximately $1.3 million in disgorgement of profits. The Company has filed an Answer denying any violations and seeking dismissal of the proceeding. Although there can be no assurance that an adverse decision will not be rendered, the Company intends to vigorously defend against the SEC's charges. JOINT VENTURE OBLIGATIONS WPC has certain commitments and contingent obligations with respect to the OCC joint venture including the following: (i) WPC is required, along with Dong Yang Tinplate Ltd. ("Dong Yang"), to contribute additional funds to OCC to cover its pro rata share of any cost overruns and working capital needs of OCC to the extent that OCC is unable to otherwise finance such amounts (the Company anticipates that its pro rata share of such funding obligations will be between $5.0 million and $10.0 million through December 31, 1998) and (ii) WPC is jointly and severally liable, together with Dong Yang, to contribute to OCC, either as a loan or a capital contribution, amounts sufficient to cure certain defaults and violations of certain financial covenants of OCC under OCC's borrowing facility if such violations should occur. The facility currently has a maximum availability of $17.0 million. OCC is negotiating to increase such borrowing facility from $17.0 million to $20.0 million and in connection therewith Dong Yang and WPC may agree to jointly and severally guarantee all of such obligations. SUBSTANTIAL CAPITAL EXPENDITURE REQUIREMENTS WPC operates in a capital intensive industry. From 1993 through 1997, WPC's capital expenditures totalled approximately $289.3 million. This level of capital expenditures was used to maintain productive capacity, improve productivity and upgrade selected facilities to meet competitive requirements and maintain compliance with environmental laws and regulations, including the Clean Air Act Amendments of 1990. The Company anticipates that WPC will fund its capital expenditures in 1998 from cash on hand, funds available from an agreement to sell, up to $75.0 million on a revolving basis, an undivided percentage ownership in a designated pool of accounts receivable generated by WPC (the "Receivables Facility") and the WPSC Revolving Credit Facility and funds generated by operations. Prior to the resolution of the Strike, WPC had delayed most capital expenditures at the Strike-affected plants. The Company anticipates that WPC's capital expenditures will approximate depreciation, on average, over the next few years. There can be no assurance that the Company or WPC will have adequate funds from operations to make all required capital expenditures or that the amount of future capital expenditures will be commensurate with historical averages. UNCERTAINTY OF IMPACT OF FUTURE COLLECTIVE BARGAINING AGREEMENTS; POSSIBILITY OF STRIKES As of December 31, 1997, the United Steelworkers of America (the "USWA") represented approximately 73% of the Company's employees. In August 1997, WPC and the USWA entered into the New Labor Agreement, which expires on September 1, 2002. There can be no assurance as to the results of negotiations of future collective bargaining agreements, whether future collective bargaining agreements will be negotiated without production interruptions or the possible impact of future collective bargaining agreements, or the negotiations thereof, on the -9- Company's financial condition and results of operations. In addition, there can be no assurance that strikes will not occur in the future in connection with labor negotiations or otherwise. TRANSACTIONS WITH SUBSIDIARIES WHX and WPC are jointly and severally obligated to make certain payments to WPSC pursuant to the terms of a keepwell agreement entered into in connection with the WPSC Revolving Credit Facility to maintain certain financial ratios of WPSC. WPC has agreed to indemnify WHX with respect to any payments made by WHX on account of WHX's obligations under such keepwell agreement. From time to time, there may be intercompany indebtedness between WHX and WPC, resulting from, among other things, the Tax Sharing Agreement between WPC and WHX (the "Tax Sharing Agreement"), providing for the manner of determining payments with respect to federal income tax liabilities and benefits arising during all periods in which it has been or will be a wholly-owned subsidiary of WHX. To the extent WHX has net liabilities due WPC, it may ultimately be required to satisfy such obligations. If WPC is obligated to reimburse WHX for keepwell payments, WPC's obligation to repay such advances is subordinated to the repayment obligations on the WPC 9 1/4% Notes. CYCLICALITY Historically, steel industry performance has been cyclical in nature, reflecting changes in industry capacity as well as the cyclicality of many of the principal markets it serves, including the automotive, appliance and construction industries. Although total domestic steel industry capacity was substantially reduced during the 1980s through extensive restructuring, and demand has been particularly strong since 1993, with domestic steel industry earnings strong during the 1994-1997 period, there can be no assurance that demand will continue at current levels or that the addition of new minimills and recent restarts of previously idled domestic facilities will not adversely impact pricing and margins. Additionally, the business operations and profitability of H&H are also affected by general economic conditions, including the cyclicality of many of the principal markets H&H serves, including the automotive, appliance and construction industries. A significant economic downturn could have a material adverse impact on the profitability of H&H. POSSIBLE FLUCTUATIONS IN THE COST OF RAW MATERIALS WPC's operations require substantial amounts of raw materials, including various types of iron ore pellets, steel scrap, coal, zinc, oxygen, natural gas and electricity. The price and availability of these raw materials are subject to steel industry and general market conditions affecting supply and demand. Furthermore, worldwide competition in the steel industry has frequently limited the ability of steel producers to raise finished product prices to recover higher raw material costs. WPC's future profitability may be adversely affected to the extent it is unable to pass on higher raw material costs to its customers. In addition, the Company owns a substantial inventory of precious metals, including gold, silver and palladium group metals, the prices of which fluctuate on a daily basis. A significant decline in the prices of some or all of these metals could have an adverse impact on the financial results of the Company. -10- COMPETITION The domestic steel industry is highly competitive. Despite significant reductions in raw steel production capacity by major domestic producers in the 1980s, partially offset by the recent minimill capacity additions and joint ventures, the domestic industry continues to be threatened by excess world capacity. WPC faces increasing competitive pressures from other domestic integrated producers, minimills and processors. Processors compete with WPC in the areas of slitting, cold rolling and coating. Minimills are generally smaller volume steel producers that use ferrous scrap metals as their basic raw material. Compared to integrated producers, minimills, which rely on less labor and capital intensive steel production methods, have certain advantages. Since minimills typically are not unionized, they have more flexible work rules that have resulted in lower employment costs per net ton shipped. Since 1989, significant flat rolled minimill capacity has been constructed and these minimills now compete with integrated producers in product areas that traditionally have not faced significant competition from minimills. In addition, there is significant additional flat rolled minimill capacity under construction or announced with various planned commissioning dates in 1998 and 1999. Near term, these minimills and processors are expected to compete with WPC primarily in the commodity flat rolled steel market. In the long-term, such minimills and processors may also compete with WPC in producing value-added products. In addition, the increased competition in commodity product markets may influence certain integrated producers to increase product offerings to compete with WPC's custom products. During the early 1990s, the domestic steel market experienced significant increases in imports of foreign produced flat rolled products. The level of imports, however, after declining somewhat in late 1995 and early 1996, increased in 1997. The strength of the U.S. dollar and economy, as well as the strength of foreign economies, can significantly affect the import/export trade balance for flat rolled steel products. The status of the trade balance may significantly affect the ability of the new minimill capacity to come on-line without disrupting the domestic flat rolled steel market. Wheeling Corrugating and WPC's other fabricating operations compete in a large number of regional markets with numerous other fabricating operations, most of which are independent of the major integrated manufacturers. Independent fabricators generally are able to acquire flat rolled steel products, their basic raw material, at prevailing market prices. There are few barriers to entry into the manufacture of fabricated products in certain individual markets currently served by Wheeling Corrugating (although the geographic breadth of the markets served by Wheeling Corrugating would be hard to replicate). Other competitors, including domestic integrated producers and minimills, may decide to manufacture fabricated products and compete with Wheeling Corrugating in its markets. Such competition may negatively affect prices that may be obtained in certain markets by WPC for its fabricated products. Many of Wheeling Corrugating's competitors do not have a unionized workforce and, therefore, may have lower operating costs than Wheeling Corrugating. Materials such as aluminum, cement, composites, glass and plastics compete as substitutes for steel in many markets. COSTS OF COMPLYING WITH ENVIRONMENTAL STANDARDS The Company, including WPC, and other steel producers have become subject to increasingly stringent environmental standards imposed by Federal, state and local environmental laws and regulations. WPC has expended, and can be expected to be required to expend in the future, significant amounts for installation of environmental control facilities, remediation of environmental conditions and other similar matters. The costs of complying with such stringent environmental -11- standards as the new ambient air quality standards for ozone and PM2.5 as well as the climate change treaty negotiations may cause WPC and other domestic steel producers to be competitively disadvantaged vis-a-vis foreign steel producers and producers of steel substitutes, who may be subject to less stringent standards. WPC has also been identified as a potentially responsible party at five "Superfund" sites and has been alleged to be a potentially responsible party at two other "Superfund" sites. The Superfund law imposes strict, joint and several liability upon potentially responsible parties. USE OF PROCEEDS The Company will receive the exercise price of the options when exercised by the holders thereof or the issuance of shares under the 401(k) Plan. Such proceeds will be used for working capital purposes by the Company. The Company will not receive any of the proceeds from the reoffer and resale of the Shares by the Selling Shareholders. SELLING SHAREHOLDERS This Prospectus relates to the reoffer and resale of Shares issued or that may be issued to the Selling Shareholders under the 1997 Plan, the 1991 Plan or the 401(K) Plan. The following table sets forth (i) the number of shares of Common Stock owned by each Selling Shareholder at September 1, 1998, (ii) the number of Shares to be offered for resale by each Selling Shareholder and (iii) the number and percentage of shares of Common Stock to be held by each Selling Shareholder after completion of the offering.
Number of shares of Common Stock/ Number of shares of Number of Percentage of Class to Common Stock Owned at Shares to be be Owned After Offered for Completion of the Name September 1, 1998 Resale Offering(1) - ----------------------------------- -------------------------- ----------------- -------------------------- Neil D. Arnold (2) 26,666(3) 30,000(10) 26,666/* Paul W. Bucha(5) 26,666(3) 30,000(10) 26,666/* Robert A. Davidow(5) 126,737(7) 30,000(10) 126,737/* William Goldsmith(6) 37,333(3) 30,000(10) 37,333/* Marvin L. Olshan(5) 38,333(7) 30,000(10) 38,333/* Raymond S. Troubh(2) 34,666(8) 30,000(10) 34,666/* James G. Bradley(9) 0 260,000(10) 0/0
* Less than 1%. (1) Assumes that all Common Stock offered by the Selling Stockholders is sold and that no other shares of Common Stock owned by the Selling Stockholders are sold. (2) Has been a Director of the Company since 1992. (3) Consists of shares issuable upon the exercise of options presently exercisable or exercisable within 60 days hereof. (4) Has been a Director of the Company since 1993. (5) Has been a Director of the Company since 1991. (6) Has been a Director of the Company since 1987. (7) Consists of shares issuable upon the exercise of options presently exercisable or exercisable within 60 days hereof. (8) Consists of shares issuable upon the exercise of options presently exercisable or exercisable within 60 days hereof. (9) Has been Executive Vice President of the Company and President and Chief Executive Officer of WPSC since April 1998. (10) Includes shares issuable upon the exercise of options which are not presently exercisable within 60 days hereof. -12- PLAN OF DISTRIBUTION It is anticipated that all of the Shares will be offered by the Selling Shareholders from time to time in the open market, either directly or through brokers or agents, or in privately negotiated transactions. The Selling Shareholders have advised the Company that they are not parties to any agreement, arrangement or understanding as to such sales. LEGAL MATTERS Certain legal matters in connection with the issuance of the Shares offered hereby have been passed upon for the Company by Olshan Grundman Frome & Rosenzweig LLP, New York, New York 10022. Marvin L. Olshan, a member of Olshan Grundman Frome & Rosenzweig LLP, is a director and secretary of the Company. Marvin L. Olshan and other members of Olshan Grundman Frome & Rosenzweig LLP own shares of Common Stock and hold options to purchase Common Stock of the Company. EXPERTS The financial statements incorporated in this Registration Statement on Form S-8 by reference to the Annual Report on Form 10-K of WHX Corporation for the year ended December 31, 1997, and the audited historical financial statements included within Item 7(a) of WHX Corporation's Form 8-K dated April 14, 1998, have been audited by various independent accountants. The companies and periods covered by these audits are indicated in the individual accountants' reports. Such financial statements have been so included in reliance on the reports of the various independent accountants given on the authority of such firms as experts in auditing and accounting. ADDITIONAL INFORMATION The Company has filed with the Securities and Exchange Commission three Registration Statements on Form S-8 under the Securities Act with respect to the Shares offered hereby. For further information with respect to the Company and the securities offered hereby, reference is made to the Registration Statements. Statements contained in this Prospectus as to the contents of any contract or other document are not necessarily complete, and in each instance, reference is made to the copy of such contract or document filed as an exhibit to the Registration Statements, each such statement being qualified in all respects by such reference. -13- PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents filed with the Securities and Exchange Commission (the "Commission") are incorporated herein by reference and made a part hereof: (a) The Company's annual report on Form 10-K for the fiscal year ended December 31, 1997, as amended; (b) The Company's quarterly reports on Form 10-Q for the three months ended March 31, 1998 and June 30, 1998; and (c) The Company's current reports on Form 8-K dated June 22, 1998, June 10, 1998, April 14, 1998 and March 31, 1998. The description of the Common Stock contained in the Company's Registration Statement on Form 8-B filed June 24, 1994. All reports and other documents subsequently filed by the Company pursuant to Sections 13, 14 and 15(d) of the Securities Exchange Act of 1934, as amended, prior to the filing of a post-effective amendment which indicates that all securities offered hereby have been sold or which deregisters all securities remaining unsold, shall be deemed to be incorporated by reference herein and to be a part hereof from the date of the filing of such reports and documents. ITEM 4. DESCRIPTION OF SECURITIES Not applicable. ITEM 5. INTEREST OF NAMED EXPERTS AND COUNSEL Marvin Olshan, a member of Olshan Grundman Frome & Rosenzweig LLP, is a director and Secretary of the Company and owns 1,000 shares of Common Stock of the Company and options to purchase 70,000 shares of Common Stock. Steven Wolosky, also a member of Olshan Grundman Frome & Rosenzweig LLP, is Assistant Secretary of the Company and holds options to purchase 23,500 shares of Common Stock. ITEM 6. INDEMNIFICATION OF OFFICERS AND DIRECTORS The Company was incorporated in Delaware. Article NINTH, Section A of the Certificate of Incorporation of the Company provides as follows: NINTH: A. A director of the Corporation shall not be personally liable to the Corporation 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 Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law (the "GCL"), or (iv) for any transaction from which the director derived an improper personal benefit. If the GCL is amended to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the GCL, as so amended. Any repeal or modification of this Section A by the stockholders of the Corporation shall not adversely affect any right or protection of a director of the II-1 Corporation with respect to events occurring prior to the time of such repeal or modification. Article NINTH, Section B of the Certificate of Incorporation of the Company provides as follows: B. (1) Each person who was or is made a party or is threatened to be made a party to or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a "proceeding"), by reason of the fact that he or she or a person of whom he or she is the legal representative is or was a director, officer or employee of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether the basis of such proceedings is alleged action in an official capacity as a director, officer, employee or agent or in any other capacity while serving as a director, officer, employee or agent, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the GCL as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than said law permitted the Corporation to provide prior to such amendment), against all expense, liability and loss (including attorney's fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by such person in connection therewith and such indemnification shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of his or her heirs, executors and administrators; provided, however, that except as provided in paragraph (2) of this Section B with respect to proceedings seeking to enforce rights to indemnification, the Corporation shall indemnify any such person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person only if such proceeding (or part thereof) was authorized by the Board of Directors of the Corporation. The right to indemnification conferred in this Section B shall be a contract right and shall include the right to be paid by the Corporation the expenses incurred in defending any such proceeding in advance of its final disposition; provided, however, that if the GCL requires, the payment of such expenses incurred by a director or officer in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such person while a director or officer, including, without limitation, service to an employee benefit plan) in advance of the final disposition of a proceeding, shall be made only under delivery to the Corporation of an undertaking by or on behalf of such director or officer, to repay all amounts so advanced if it shall ultimately be determined that such director or officer is not entitled to be indemnified under this Section B or otherwise. (2) If a claim under paragraph (1) of this Section B is not paid in full by the Corporation within thirty days after a written claim has been received by the Corporation, the claimant may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such claim. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required undertaking, if any is required, has been tendered to the Corporation) that the Claimant has not met the standards of conduct which make it permissible under the GCL for the Corporation to indemnify the claimant for the amount claimed, but the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including its Board of Directors, independent legal counsel II-2 or stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the GCL, nor an actual determination by the Corporation (including its Board of Directors, independent legal counsel or stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct. (3) The right to indemnification and the payment of expenses incurred in defending a proceeding in advance of its final disposition conferred in this Section B shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provision of the certificate of incorporation, By-Law, agreement, vote of stockholders or disinterested directors or otherwise. (4) The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the General Corporation Law of the State of Delaware. (5) The Corporation may, to the extent authorized from time to time by the Board of Directors, grant rights to indemnification, and rights to be paid by the Corporation the expenses incurred in defending any proceeding in advance of its final disposition, to any agent of the Corporation to the fullest extent of the provisions of this Section B with respect to the indemnification and advancement of expenses of directors, officers and employees of the Corporation. See Item 9(c) below for information regarding the position of the Commission with respect to the effect of any indemnification for liabilities arising under the Securities Act of 1933, as amended. Section 145 of the Delaware General Corporation Law provides as follows: (a) A corporation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than action by or in the right of the corporation) by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with such action, suit or proceeding if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the person's conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that the person's conduct was unlawful. II-3 (b) A corporation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by the person in connection with the defense or settlement of such action or suit if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper. (c) To the extent that a director, officer, employee or agent of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in subsections (a) and (b) of this section, or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith. (d) Any indemnification under subsections (a) and (b) of this section (unless ordered by a court) shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because the person has met the applicable standard of conduct set forth in subsections (a) and (b) of this section. Such determination shall be made (1) by a majority vote of the directors who are not parties to such action, suit or proceeding, even though less than a quorum, or (2) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion or (3) by the stockholders. (e) Expenses (including attorneys' fees) incurred by an officer or director in defending any civil, criminal, administrative or investigative action, suit or proceeding may be paid by the corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the corporation as authorized in this section. Such expenses (including attorneys' fees) incurred by other employees and agents may be so paid upon such terms and conditions, if any, as the board of directors deems appropriate. (f) The indemnification and advancement of expenses provided by, or granted pursuant to, the other subsections of this section shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office. (g) A corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request II-4 of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the corporation would have the power to indemnify him against such liability under this section. (h) For purposes of this section, references to "the corporation" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under this section with respect to the resulting or surviving corporation as he would have with respect to such constituent corporation if its separate existence had continued. (i) For purposes of this section, references to "other enterprises" shall include employee benefit plans; references to "fines" shall include any excise taxes assessed on a person with respect to any employee benefit plan; and references to "serving at the request of the corporation" shall include any service as a director, officer, employee or agent of the corporation which imposes duties on, or involves services by, such director, officer, employee, or agent with respect to any employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interests of the corporation" as referred to in this section. (j) The indemnification and advancement of expenses provided by, or granted pursuant to, this section shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. (k) The Court of Chancery is hereby vested with exclusive jurisdiction to hear and determine all actions for advancement of expenses or indemnification brought under this section or under any bylaw, agreement, vote of stockholders or disinterested directors, or otherwise. The Court of Chancery may summarily determine a corporation's obligation to advance expenses (including attorneys' fees). The Company maintains a directors and officers insurance and company reimbursement policy. The policy insures directors and officers against unindemnified loss arising from certain wrongful acts in their capacities and reimburses the Company for such loss for which the Company has lawfully indemnified the directors and officers. The policy contains various exclusions, none of which relate to the offering hereunder. The Company also has agreements with its directors and officers providing for the indemnification thereof under certain circumstances. II-5 ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED Not applicable. ITEM 8. EXHIBITS *4(a) - Certificate of Incorporation of the Company (Exhibit 3.2 to Registrant's Registration Statement on Form S-4 filed May 12, 1994) (Reg. No. 33-53591) (the "Merger Proxy")). *4(b) - Bylaws of the Company (Exhibit 3.4 to the Merger Proxy). 4(c) - Handy & Harman's 401(k) Retirement and Savings Plan. *4(d) - The Company's 1991 Incentive and Nonqualified Stock Option Plan (Exhibit 4(c)) to the Company's Registration Statement on Form S-8 filed with the Commission (Reg. No. 33-53037). 4(e) - Amendment No. 3 to the Company's 1991 Incentive and Nonqualified Stock Option Plan. 4(f) - The Company's 1997 Directors Stock Option Plan. 5 - Opinion of Olshan Grundman Frome & Rosenzweig LLP. 23(a) - Consent of PricewaterhouseCoopers LLP, independent public accountants. 23(b) - Consent of KPMG Peat Marwick LLP, independent public accountants. *24(b) - Consent of Olshan Grundman Frome & Rosenzweig LLP (included in its opinion filed as Exhibit 5). 25 - Powers of Attorney (included on page II-11). - ------------------ * Indicates exhibits incorporated by reference herein. 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 of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement; II-6 provided, however, that paragraphs (i) and (ii) above 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 Securities Exchange Act of 1934 that are incorporated by reference in the Registration Statement; (2) That, for the purposes of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; and (3) To remove from registration by means of a post-effective amendment any of the securities being registered that remain unsold at the termination of the offering. B. The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in this Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. C. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 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 a controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue. D. The undersigned registrant hereby undertakes to deliver or cause to be delivered with the prospectus, to each person to whom the prospectus is sent or given, a copy of the registrant's latest annual report to stockholders that is incorporated by reference in the prospectus and furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of 1934; and, where interim financial information required to be presented by Article 3 of Regulation S-X is not set forth in the prospectus, to deliver, or cause to be delivered to each person to whom the prospectus is sent or given, the latest quarterly report that is specifically incorporated by reference in the prospectus to provide such interim financial information. II-7 E. The undersigned registrant hereby undertakes that it has submitted the plan and any amendments thereto to the Internal Revenue Service ("IRS") in a timely manner and has made or will make all changes required by the IRS in order to qualify the plan. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, State of New York, on this 21st day of September, 1998. WHX CORPORATION /S/ RONALD LABOW ----------------------------------------- Ronald LaBow, Principal Executive Officer POWER OF ATTORNEYS AND SIGNATORIES Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities and on the date indicated. Each of the undersigned officers and directors of the Registrant hereby constitutes and appoints Ronald LaBow and Marvin Olshan, and each of them singly, as true and lawful attorneys-in-fact and agents with full power of substitution and resubstitution, for him in his name in any and all capacities, to sign any and 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 and to prepare any and all exhibits thereto, and other documents in connection therewith, and to make any applicable state securities law or blue sky filings, granting unto said attorneys-in-fact and agents, full power and authority to do and perform each and every act and thing requisite or necessary to be done to enable the Registrant to comply with the provisions of the Securities Act of 1933, as amended, and all requirements of the Securities and Exchange Commission, 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, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof. SIGNATURE TITLE DATE --------- ----- ---- /S/ RONALD LABOW Director (Principal Executive September 21, 1998 - ---------------------- Officer) Ronald LaBow /S/ ARNOLD NANCE (Principal Financial Officer September 21, 1998 - ---------------------- and Principal Accounting Arnold Nance Officer) /S/ NEIL D. ARNOLD Director September 21, 1998 - ---------------------- Neil D. Arnold /S/ PAUL W. BUCHA Director September 21, 1998 - ---------------------- Paul W. Bucha II-8 /S/ ROBERT A. DAVIDOW Director September 21, 1998 - ---------------------- Robert A. Davidow /S/ WILLIAM GOLDSMITH Director September 21, 1998 - ---------------------- William Goldsmith /S/ MARVIN OLSHAN Director September 21, 1998 - ---------------------- Marvin Olshan /S/ RAYMOND S. TROUBH Director September 21, 1998 - ---------------------- Raymond S. Troubh II-9 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the members of the Handy & Harman Savings Plan Administrative Committee have duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, State of New York, on this 23rd day of September, 1998. /S/ PAUL E. DIXON ----------------- Paul E. Dixon EX-4.(C) 2 401(K) RETIREMENT AND SAVINGS PLAN XX ================================================================================ T. ROWE PRICE TRUST COMPANY 401(K) RETIREMENT PLAN ADOPTION AGREEMENT - -------------------------------------------------------------------------------- This Handy & Harman Savings Plan is the continuation of the Handy & Harman Employee Stock Purchase Plan as heretofore amended and restated effective January 1, 1987 and now as amended and restated effective May 1, 1991. - -------------------------------------------------------------------------------- 1. PLAN DATA. NA (a) New Plan. (Fill out (a) or (b) and (c), (d), (e) and (f) (1) The name of the Plan and Trust shall be ___________________ (2) The Effective Date of the Plan and Trust is: (Should be the first day of the Plan Year in which the Plan is adopted). (3) The Plan Year End is ____________, the Limitation Year End is __________ - -------------------------------------------------------------------------------- (b) Amended and Restated Plan. (1) Name of Plan: HANDY & HARMAN SAVINGS PLAN (2) Date Adopted: DECEMBER 22, 1983 Effective Date: JANUARY 1, 1983 (3) Effective Date of Amended Plan: MAY 1, 1991 (4) The Plan Year End is 12/31, the Limitation Year End is 12/31 - -------------------------------------------------------------------------------- (c) Employer shall mean: Employer shall also mean the following Employer(s) associated under sections 414(b), 414(c) or 414(m) of the Code: HANDY & HARMAN, EACH CORPORATION AS TO WHICH HANDY & HARMAN IS THE SUCCESSOR, AND ANY OTHER CORPORATION MORE THAN 50% OF WHOSE OUTSTANDING VOTING STOCK IS OWNED, DIRECTLY OR INDIRECTLY, BY HANDY & HARMAN. - -------------------------------------------------------------------------------- (d) Employer's Taxable Year End: DECEMBER 31, ___________________ - -------------------------------------------------------------------------------- (e) Employer's Tax ID#: 13-5129420 - -------------------------------------------------------------------------------- (f) The Employer is: /X/ a corporate entity / /a non-corporate entity / /a corporation electing Subchapter S treatment. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2. ELIGIBILITY. NOTE: If the year(s) of service selected is or (Plan Section 2.2) includes a fractional (Plan Section 2.2) year, an employee will not be required to complete any specified number of hours of service to receive credit for such fractional year. (a) All Employees shall be eligible to participate in this Plan in accordance with the provisions of Article II of the Plan, except the following: / / Employees who have not attained age 21; /X/ Employees who have not completed 3 months (not to exceed 12 months) of service; / / Employees who have not completed one (1) Year of Service. /X/ Employees included in a unit of Employees covered by a collective bargaining agreement, if retirement benefits were the subject of good faith bargaining between the Employer and Employee representatives. Employee representatives do not include any organization more than half of whose members are Employees who are owners, officers, or executives of the Employer; /X/ Employees who are nonresident aliens and who receive no earned income from the Employer which constitutes income from sources within the United States. / / Employees included in the following job classifications: / / Hourly Employees / / Salaried Employees /X/ Employees of the following Employers under sections 414(b), 414(c) or 414(m) of the Code: BIGELOW COMPONENTS CORPORATION (#22-1599735) Note: If no entries are made above, all Employees shall be eligible to participate in the Plan on the earlier of the Effective Date or the Entry Date coincident with or next following date of employment. - -------------------------------------------------------------------------------- -2- - -------------------------------------------------------------------------------- (b) The Entry Dates shall be: (Plan Section 1.21) (1) /X/ The first day of the Plan Year and the first day of the seventh (7th) month in the Plan Year; (2) / / The first day of the Plan Year and the first day of each month thereafter. (3) / / The first day of each Plan Year and the first day of each month thereafter. - -------------------------------------------------------------------------------- 3. CREDITING OF (a) Service shall be credited based on the SERVICE. following method (Choose(1) or (2)): (Plan Section 2.3) (1) / / HOURS OF SERVICE - Under this method, a "Year of Service" is a 12 consecutive month period during which the employee completes at least 1,000 hours. Hours of Service will be determined on the basis of the method selected below. Only one method may be selected. The method selected will be applied to all employees covered under the plan. (i) / / On the basis of actual hours for which an employee is unpaid or entitled to payment. (ii) / / On the basis of days worked. An employee will be credited with ten (10) hours of service if under Section 1.25 of the Plan such employee would be credited with at least one (1) hour of service during the day. (iii / / On the basis of weeks worked. An employee will be credited with forty-five (45) hours of service if under Section 1.25 of the Plan such employee would be credited with at least one (1) hour of service during the week. (iv) / / On the basis of semimonthly payroll periods. An employee will be credited with ninety-five (95) hours of service if under Section 1.25 of the Plan such employee would be credited with at least one (1) hour of service during the semimonthly payroll period. (v) / / On the basis of months worked. An employee will be credited with one hundred ninety (190) hours of service if under Section 1.25 of the Plan such employee would be credited with at least one (1) hour of service during the month. - -------------------------------------------------------------------------------- -3- - -------------------------------------------------------------------------------- (2) /X/ Elapsed Time. Under this method, Service is measured from --- - date of employment to date of termination and a Period of Service shall include any Period of Severance of less than 12 consecutive months. (Plan Section 1.15) (b) Service with Predecessor Employer. (Plan Section 2.3) (1) /X/ No credit will be given for services with a predecessor Employer; or (2) / / Credit will be given for service with the following predecessor Employer: Note: The plan provides that if this is a continuation of a Predecessor Plan, Service under the Predecessor Plan must be counted. - -------------------------------------------------------------------------------- 4. COMPENSATION. (a) Compensation will mean all of (Plan Section 1.9) each Participant's /X/ W-2 earnings / / compensation (as that term is defined in section 415(c)(3) of the Code) which is actually paid to the Participant during /X/ the Plan Year / / the taxable year ending with or within the Plan Year / / the limitation year ending with or within the Plan Year, (b) Compensation /X/ shall include / / shall not include Employer Contributions made pursuant to a salary reduction agreement which are not includible in the gross income of the Employee under sections 125, 402(a)(8), 402(h) or 403(b) of the Code. - -------------------------------------------------------------------------------- -4- - -------------------------------------------------------------------------------- 5. CALENDAR YEAR The Employer may elect to use the calendar ELECTION FOR year to determine whether an Employee is a DETERMINING Highly Compensated Employee in the look-back HIGHLY year (as determined in Treasury Regulations COMPENSATED under section 414(q) of the Code) calculation. EMPLOYEE. The calendar year used will be the calendar (Plan Section 1.24) year ending with or within the determination year (as defined in the regulations under section 414(q) of the Code). The determination year shall be the months (if any) in the current Plan Year which end of the calendar look-back year. If the Employer elects to make the calendar year calculation election with respect to any Plan, entity or arrangement, such election must apply with respect to all plans, entities and arrangements of the Employer. /X/ Employer elects to use the calendar year to determine whether an Employee is a Highly Compensated Employee in the look-back year. - -------------------------------------------------------------------------------- 6. CONTRIBUTIONS. Note: Employer Contributions, Elective (Choose (a), (b), Deferrals and Matching Contributions (c), (d) and/or (e)): in the aggregate may not exceed 15% of all Participants' Compensation. (a) /X/ Discretionary Employer Contributions. (Plan Section 3.2(b)) The Employer may contribute to the Plan each year such amount as determined by Employer resolution. If no resolution is adopted, then 0% of Participants' Compensation. - -------------------------------------------------------------------------------- (b) /X/ Qualified Non-Elective Contributions. (1) The Employer (Choose one): /X/ will make / / will not make Qualified Non-Elective Contributions to the Plan. If the Employer does make such contributions to the Plan, then the amount of such contributions for each Plan Year shall be (Choose one): (i) / / ____% (not to exceed 15%) of the Compensation of all Participants eligible to share in the allocation. (ii) / / ____% of the net profits, but in no event more than [$______] for any Plan Year. (iii) /X/ An amount determined by the Employer. - -------------------------------------------------------------------------------- (2) Allocation of Qualified Non-Elective Contributions shall be made to the accounts of (Choose one): (i) / / All Participants. (ii) /X/ Only Non-Highly Compensated Participants. - -------------------------------------------------------------------------------- -5- - -------------------------------------------------------------------------------- (3) Allocation of Qualified Non-Elective Contributions shall be made (Choose one): (i) /X/ In the ratio which each Participant's Compensation for the Plan Year bears to the total Compensation of all Participants for such Plan Year. (ii) / / In the ratio which each Participant's Compensation not in excess of [$_____] for the Plan Year bears to the total Compensation of all Participants not in excess of [$____] for such Plan year. - -------------------------------------------------------------------------------- (c) /X/ Elective Deferrals. (Choose (1) and/or (2): NA (1) CASH OR DEFERRED OPTION. (Plan Section 3.1(b)) Choose (i) and/or (ii)): (i) / / The Employer may make Discretionary Employer Contributions to the Plan in such amount as determined by Employer Resolution. If no resolution is adopted, then ___% of a Participant's Compensation. A Participant may elect to receive __% of his allocable share of such contributions in cash or defer such amount under the Plan. (ii) / / A Participant may base Elective Deferrals on cash bonuses that, at the Participant's election, may be received in cash or deferred under the Plan. - -------------------------------------------------------------------------------- (2) Salary Deferrals. (Plan Section 3.1(a)) (Choose (i), and/or (ii) or (iii)): (i) /X/ A Participant may elect to defer an amount not in excess of 10% of his or her compensation in accordance with a salary reduction agreement signed by such Participant. (ii) / / A Participant may elect to defer an amount not in excess of $_____ of his or her compensation in accordance with a salary reduction agreement signed by such Participant. (iii) / / A Participant may elect to defer an amount not in excess of $7,000, as adjusted for cost of living increases pursuant to regulations prescribed by the Secretary of the Treasury under section 415(d) of the Code, of his or her compensation in accordance with a salary reduction agreement signed by such Participant. NOTE: A Participant's total Elective Deferrals during any calendar year shall not exceed $7,000 (as adjusted for cost-of-living increases as defined in Plan Section 1.10). - -------------------------------------------------------------------------------- -6- - -------------------------------------------------------------------------------- (d) /X/ Employer Matching Contributions. (Plan Section 3.2(a)) (1) The Employer shall make Matching Contributions to the Plan on behalf of (Choose (i) or (ii), and/or (iii)): (i) /X/ All Participants who make Elective Deferrals; (ii) / / All Participants who are Non-Highly Compensated Employees and who make Elective Deferrals; (iii / / All Participants who make Voluntary Employee Contributions (after-tax contributions). - -------------------------------------------------------------------------------- (2) Matching Contributions will be (Choose (i) or (ii)): (i) /X/ Nonforfeitable when made; (ii) / / Subject to the vesting schedule applicable to Employer Contributions other than Elective Deferrals and Qualified Non-Elective Contributions. (3) The Employer shall contribute and allocate to each Participant's Matching Contributions Account an amount equal to (Choose (i) and/or (ii)): (i) /X/ 50% of the Participant's Elective Deferrals. (ii) / / __% of the Participant's Employee Contributions. The Employer shall not match amounts provided above in excess of [$N/A], or in excess of [2]% of the Participant's Compensation. - -------------------------------------------------------------------------------- N/A (e) Qualified Matching Contributions. (1) The Employer will make Qualified Matching Contributions to the Plan on behalf of (Choose one): (i) / / all Participants (ii) / / all Participants who are Non-Highly Compensated Employees who make (Choose one or both): (i) / / Elective Deferrals; (ii) / / Voluntary Employee Contributions to the Plan. -7- - -------------------------------------------------------------------------------- (2) The Employer shall contribute and allocate to each Participant's Qualified Matching Contributions Account an amount equal to (Choose one (i) and/or (ii)): (i) / / ___% of the Participant's Elective Deferrals; (ii) / / ___% of the Voluntary Employee Contributions. The Employer shall not match amounts provided above in excess of [$____], or in excess of [____]% of the Participant's Compensation. - -------------------------------------------------------------------------------- (f) Voluntary Employee Contributions (Plan Section 3.3) (Choose (1) or (2)): (1) / / A Participant may make Voluntary Employee Contributions to the Plan for a Plan Year not in excess of ___% of Compensation. (2) /X/ Voluntary Employee Contributions shall not be permitted. NOTE: If the Employer wishes to utilize Recharacterization (3.7(e)), he must choose option (1). - -------------------------------------------------------------------------------- (g) Contributions Made Out of Net Profits (Plan Section 3.4) (Choose (1) or (2)): (1) /X/ The Employer shall make all contributions to the Plan without regard to current or accumulated earnings and profits for the taxable year ending with or within the Plan Year. (2) / / The Employer shall make all contributions to the Plan to the extent such Employer has current or accumulated earnings and profits for the taxable year ending with or within the Plan Year. N/A (h) Pursuant to Section 13.1(b) of the Plan, an Employer may amend the Plan to add such language as is necessary to satisfy Code sections 415 and 416. - -------------------------------------------------------------------------------- -8- - -------------------------------------------------------------------------------- (i) Actual Deferral Percentage Test. (Plan Section 3.7) (1) Qualified Matching Contributions and Qualified Non-Elective Contributions may be taken into account as Elective Deferrals for purposes of calculating the Actual Deferral Percentages. In determining Elective Deferrals for the purpose of the ADP test, the Employer shall include (Choose, as appropriate): (i) /X/ Qualified Matching Contributions; (ii)/X/ Qualified Non- Elective Contributions under this Plan or any other plan of the Employer, as provided by regulations under the Code. (2) The amount of Qualified Matching Contributions made under Section 3.2(d) of the Plan and taken into account as Elective Deferrals for purposes of calculating the Actual Deferral Percentage, subject to such other requirements as may be prescribed by the Secretary of the Treasury, shall be: (i) / / all such Qualified Matching Contributions. (ii)/X/ such Qualified Matching Contributions that are needed to meet the Actual Deferral Percentage test stated in Section 3.7 of the Plan. - -------------------------------------------------------------------------------- (3) The amount of Qualified Non-Elective Contributions made under Section 3.7(f) of this Plan and taken into account as Elective Deferrals for purposes calculating the Actual Deferral Percentage, subject to such other requirements as may be prescribed by the Secretary of the Treasury, shall be: (i) / / all such Qualified Non-Elective Contributions. (ii)/X/ Such Qualified Non-Elective Contributions that are needed to meet the Actual Deferral Percentage test stated in Section 3.7 of the Plan. - -------------------------------------------------------------------------------- -9- - -------------------------------------------------------------------------------- (j) Actual Contribution Percentage Test. (Plan Section 3.8) (1) In computing the Average Contribution Percentage, the Employer shall take into account and include as Contribution Percentage Amounts: (i) /X/ Elective Deferrals; (ii) /X/ Qualified Non-Elective Contributions under this Plan or any other plan of the Employer, as provided by regulations. (2) The amount of Qualified Non-Elective Contributions that are made under Section 3.7(f) of this Plan and taken into account as Contribution Percentage Amounts for purposes of calculating the Average Contribution Percentage, subject to such other requirements as may be prescribed by the Secretary of the Treasury, shall be: (i) / / All such Qualified Non-Elective Contributions. (ii)/X/ Such Qualified Non-Elective Contributions that are needed to meet the Average Contribution Percentage test stated in Section 3.8 of the Plan. - -------------------------------------------------------------------------------- (3) The amount of Elective Deferrals made under Section 3.1 of the Plan and taken into account as Contribution Percentage Amounts for purposes of calculating the Average Contribution Percentage, subject to such other requirements as may be prescribed by the Secretary of the Treasury, shall be: (i) / / All such Elective Deferrals. (ii) /X/ Such Elective Deferrals that are needed to meet the Average Contribution Percentage test stated in Section 3.8 of the Plan. - -------------------------------------------------------------------------------- -10- - -------------------------------------------------------------------------------- 7. ALLOCATION OF NOTE: Discretionary Employer Contributions EMPLOYER shall be allocated to a Participant's CONTRIBUTIONS account in the same proportion as such Participant's Compensation bears to the Compensation of all participants. (Plan Section 3.2(b) (Choose (a), (b) or (c)): (a) / / A Participant shall be eligible to share in Discretionary Employer Contributions for the Plan Year only if he: (1) retires, dies, or becomes totally and permanently disabled; or (2) completes 1,000 Hours of Service and is employed on the last day of the Plan Year. (b) / / A Participant shall share in Discretionary Employer Contributions for the Plan Year in which he terminates employment prior to the last day of the Plan Year provided such Participant has completed 1,000 Hours of Service. (c)/X/ If the Employer has elected to credit service under elapsed time, a Participant shall share in Discretionary Contributions if such Participant is employed on the last day of the Plan Year. - -------------------------------------------------------------------------------- 8. FORFEITURES. (a) Forfeiture of Discretionary Employer Contributions under Section 6.4(c) of the Plan shall be (Choose (1) or (2)): NA (1) / / Used to reduce Employer Contributions. (2) / / Allocated among other Participants in the same proportion that each Participant's Compensation for the Plan Year bears to the Compensation of all Participants for such Plan Year. (b) Excess Aggregate Contributions under Section 3.8(d) of the Plan shall be (Choose (1) or (2)): (1) / / Forfeited and used to reduce Employer Contributions. (2) / / Forfeited and allocated, after all other forfeitures under the Plan, to each Participant's Matching Contribution Account in the same proportion that each Participant's Compensation for the Plan Year bears to the total Compensation of all Participants for such Plan Year. Such forfeitures SHALL NOT be allocated to the account of any Highly Compensated Employee. NOTE: If Matching Contributions are nonforfeitable when made, this provision (b) shall not apply and Excess Aggregate Contributions will be distributed in accordance with Section 3.8(d) of the Plan. - -------------------------------------------------------------------------------- -11- - -------------------------------------------------------------------------------- 9. ROLLOVERS AND PLAN- (a) Rollovers TO-PLAN TRANSFERS. (Plan Section 3.6) (1) /X/ The Plan permits rollovers. (Choose (a) and/or (b)): (2) // The Plan does not permit rollovers. (b) Plan-to-Plan Transfers (1) /X/ The Plan permits plan-to-plan transfers. (2) / / The Plan does not permit plan-to- plan transfers. - -------------------------------------------------------------------------------- -12- - -------------------------------------------------------------------------------- 10. BENEFITS. A Participant shall be 100% vested in his Accrued Benefit upon satisfying the Normal or Early retirement age under the Plan. (a) Normal Retirement Age/Date (Plan Section 1.32; 1.33) (Choose (1) or (2)): (1) /X/ The date on which a Participant reaches age 65 (not more than 65 or less than 55). If no age is indicated, normal retirement age shall be 65. (2) / / The later of the date Participant reaches age _____ (not more than 65) or ________ (not more than 5th) anniversary of the day the Participant commenced participation in the Plan. (The participation commencement date is the first day of the first Plan Year in which the Participant commenced participation in the Plan.) (b) Early Retirement Date. (Plan Section 6.1(b)) (Choose (1) or (2)): --- (1) /X/ The date on which a Participant reaches age 60 (not less than 55) and completes 10 years of service (not more than 15). (2) / / Early Retirement will not be permitted under the Plan. (c) Method of Distribution. (Plan Section 7.2) Subject to Section 7.4 of the Plan, Benefits under the Plan shall be paid under the following method, or methods (Chose (1), (2), and/or (3)): (1) /X/ Lump sum; (2) / / Periodic Installments; (3) / / A paid-up annuity contract. NOTE: If this is a continuation of an existing plan, you MAY NOT eliminate a form of benefit previously offered under the prior plan. - -------------------------------------------------------------------------------- -13- - -------------------------------------------------------------------------------- (d) Special Distributions. (Plan Section 6.5) In addition to distributions made upon separation from service, death or disability, distributions shall be permitted upon (Choose any or all options): (1) /X/ Termination of the Plan without the establishment of a successor plan; (2) /X/ As soon as administratively feasible after the sale, to an entity that is not an Affiliated Employer, of substantially all of the assets used by the Employer in the trade or business in which the Participant is employed; (3) /X/ As soon as administratively feasible after the sale, to an entity that is not an Affiliate Employer, of an incorporated Affiliated Employer's interest in a subsidiary; (4) / / Attainment of age 59 1/2 by the Participant; (5) /X/ Hardship of the Participant. - -------------------------------------------------------------------------------- 11. LOANS TO With the consent of the Trustee, loans PARTICIPANTS (Choose (a) or (b)): (Article 10) (a) /X/ will be permitted not exceeding 50% (not more than 50%) of the present value of the Participant's vested accrued benefit. (b) / / will not be permitted. - -------------------------------------------------------------------------------- -14- - -------------------------------------------------------------------------------- 12. VESTING. If a Participant terminates employment for (Plan Section 6.4) reasons other than retirement, death or disability, the vested portion of his Employer Contributions Accounts (and Matching Contributions Account to the extent applicable to Section 6(d) of this Adoption Agreement) shall be determined in accordance with the following schedule (Choose (a), (b) or (c)): (a) / / YEARS OF SERVICE VESTED PERCENTAGE 1 year _____% 2 years _____% 3 years _____% 4 years _____% 5 or more years 100 % (b) / / YEARS OF SERVICE VESTED PERCENTAGE 1 year _____% 2 years _____% 3 years(at least 20%) _____% 4 years(at least 40%) _____% 5 years(at least 60%) _____% 6 years(at least 80%) _____% 7 or more years 100 % (c) /X/ 100% full and immediate Vesting - -------------------------------------------------------------------------------- -15- - -------------------------------------------------------------------------------- 13. EMPLOYER SECURITIES. (a) The Plan may invest in Qualifying Employer Securities, within the meaning of Section 407(d)(5) of ERISA, in accordance with the following (Choose (1) and/or (2) or (3) below): (1) /X/ Up to 100% of the following accounts may be invested in Qualifying Employer Securities in accordance with directions of the Administrator, and subject to the terms of the Plan and the Trust Agreement (Choose one or more as applicable): (i) /X/ Discretionary Employer Contributions Account; (ii) /X/ Employer Matching Contributions Accounts; (iii) /X/ Qualified Non-Elective Contributions Account. NA (2) / / Participants may direct that up to 100% of the following accounts be invested in Qualifying Employer Securities, subject to rules and regulations established by the Administrator, the Trustee and/or the Sponsor (Choose one or more as applicable): (i) / / Discretionary Employer Contributions Account; (ii) / / Elective Deferral Account; (iii) / / Employer Matching Contributions Account; (iv) / / Rollover/Transfer Account; (v) / / Voluntary Employee Contributions Account; (vi) / / Qualified Non-Elective Contributions Account. (3) / / Investment in Qualifying Employer Securities will not be allowed. - -------------------------------------------------------------------------------- -16- - -------------------------------------------------------------------------------- (b) If the Employer selects (1) or (2) in paragraph (a) above, then voting and tender offer rights with respect to Qualifying Employer Securities shall be delegated and exercised as follows (Choose one): (1) / / The Administrator shall direct the Trustee as to the voting of all Qualifying Employer Securities and as to all rights in the event of a tender offer involving such Qualifying Employer Securities. The Trustee shall have no responsibility to exercise voting or tender offer rights in the absence of directions from the Administrator. (2) /X/ Each Participant shall be entitled to direct the Administrator as to the voting and tender offer rights involving Qualifying Employer Securities held in such Participant's Plan Account, and the Administrator shall follow or cause the Trustee to follow such Participant directions. If a Participant fails to provide the Administrator with directions as to voting or tender offer rights, the Administrator shall exercise those rights as it determines in its discretion and shall direct the Trustee accordingly. The Administrator shall provide to Participants copies of all notices, prospectuses, financial statements, proxies and proxy-soliciting materials relating to Qualifying Employer Securities held in such Participant's Plan Account and shall establish reasonable procedures and rules for the exercise by Participants of voting and tender offer rights referred to herein. Under no circumstances shall the Trustee have any responsibility in respect of voting or tender offer rights involving Qualifying Employer Securities except the responsibility to deliver to the Administrator notices, prospectuses, financial statements, proxies and proxy- soliciting materials as provided in the Trust Agreement. - -------------------------------------------------------------------------------- 14. INVESTMENT (a) /X/ The plan permits Participants to DIRECTION designate what percentage of all (Plan Section 4.6(c)) contributions made on their behalf (Choose (a) or (b)): (including any voluntary employee contributions, any plan-to-plan transfers ------ (Choose (a) or (b)): or rollover amounts) will be invested in the various ------ Investment Options as defined in Section 1.27 of the Plan. Participants may make or change such designations by giving written notice to the Employer. Reasonable restrictions may be imposed on this privilege by the Employer or the Sponsor for purposes of administrative convenience. (b) / / The Plan does not permit Participants to select their Investment Options. - -------------------------------------------------------------------------------- -17- - -------------------------------------------------------------------------------- 15. TOP HEAVY If for any year the Plan is determined to PROVISIONS. be Top Heavy, the following provisions shall (Plan Section 11) become effective. (a) Participants who are eligible to receive the minimum allocation provided by Section 11.4 of the Plan shall receive a minimum allocation of contributions and forfeitures under this Plan equal to three percent (3%) of Compensation, or if lesser, the largest percentage of Compensation allocated on behalf of any Key Employee for the Plan Year. (b) If the Participant also participates in another qualified defined contribution plan maintained by the Employer, the required minimum allocation shall be provided (Choose (1) or (2)): (1) /X/ under this Plan. (2) / / under another qualified plan maintained by the Employer. Specify name of the Plan: (c) If employees are covered under both a Top Heavy defined benefit plan and defined contribution plan of the Employer, the denominators of the defined benefit and defined contribution fractions (as described in Section 5.4 of the Plan) shall be computed by substituting a factor of 1.0 for 1.25. However, if the Top Heavy ratio (as described in Section 11.2 of the Plan) does not exceed 90%, the Employer may use a factor of 1.25 in the fractions provided a minimum contribution of 4% is provided to Participants participating only in the defined contribution plan, and a minimum of 3% (up to 30%) is provided to Participants participating only in the defined benefit plan, and provided one of the following is used to satisfy the minimum contribution requirements for Participants participating in both the defined contribution and defined benefit plans (Choose (1), (2) or (3)): (1) /X/ a minimum benefit of 3% per year of service (up to 30%) is provided in the defined benefit plan; (2) / / a minimum contribution of 71/2% is provided in the defined contribution plan; (3) / / a minimum contribution of 4% is provided in the defined contribution plan and a minimum benefit of 3% per year of service (up to 30%) is provided in the defined benefit plan. - -------------------------------------------------------------------------------- -18- - -------------------------------------------------------------------------------- In the event that the Top Heavy ratio exceeds 90%, a factor of 1.0 shall always be applied when computing the defined benefit and defined contribution fractions. The minimum contribution requirements for Participants participating in both the defined contribution and defined benefit plans would be as follows (Choose (1), (2) or (3)): (1) /X/ a minimum benefit of 2% per year of service (up to 20%) is provided in the defined benefit plan; (2) / / a minimum contribution of 5% is provided in the defined contribution plan; (3) / / a minimum contribution of 3% is provided in the defined contribution plan and a minimum benefit of 2% per year of service (up to 20%) is provided in the defined benefit plan. NA (d) For any Plan Year in which this Plan is Top Heavy, the following vesting schedule will automatically apply to the Plan (Plan Section 11.5) (Choose (1) or (2)): (1) / / PERIOD OF SERVICE VESTED PERCENTAGE 1 year.....................0% 2 years...................20% 3 years...................40% 4 years...................60% 5 years...................80% 6 years..................100% (2) / / PERIOD OF SERVICE VESTED PERCENTAGE 1 year.....................0% 2 years....................0% 3 years..................100% - -------------------------------------------------------------------------------- -19- - -------------------------------------------------------------------------------- If the vesting schedule under the Plan shifts in or out of the above schedule for any Plan Year because of the Plan's Top Heavy status, such shift is an amendment to the vesting schedule and the election in Section 6.4(e) of the Plan applies. (e) Valuation Date: For purposes of computing the Top Heavy Ratio, the valuation date shall be 12/31 of each year. (f) The present value: For purposes of establishing present value of defined benefit plans' accrued benefits required to be aggregated with this Plan to compute the Top Heavy Ratio, any benefit shall be discounted only for mortality and interest based on the following: Interest rate 8% Mortality table UP-84 - -------------------------------------------------------------------------------- -20- - -------------------------------------------------------------------------------- 16. ALLOCATION If you maintain or ever maintained another LIMITATION qualified Plan in which any Participant in this Plan is (or was) a Participant or could become a Participant, the Employer must also complete this section if it maintains a welfare benefit fund, as defined in section 419(e) of the Code, or an individual medical account, as defined in section 415(1)(2) of the Code, under which amounts are treated as annual additions with respect to any Participant in this Plan. (a) If the Participant is covered under another qualified defined contribution plan maintained by the Employer, other than a master or prototype plan (Choose one): / / The provisions of (a) through (f) of Section 5.2 of the Plan will apply as if the other plan were a master or prototype plan. /X/ Provide on an attachment, the method under which the plans will limit total annual additions to the maximum permissible amount, and will properly reduce any excess amounts, in a manner that precludes Employer discretion. (b) If the Participant is or has ever been a Participant in a defined benefit plan maintained by the Employer (Plan Section 5.3) (Choose (1) or (2)): (1) / / In any Limitation Year, the Annual Addition credited to the Participant under this Plan may not cause the sum of the defined benefit plan fraction and the defined contribution plan fraction to exceed 1.0. If the Employer Contributions that otherwise would be allocated to the Participant's Account during such year would cause the 1.0 limitation to be exceeded, the allocation will be reduced so that the sum of the fractions equals 1.0. Any contributions not allocated because of the preceding sentence will be allocated to the remaining Participants under the allocation formula under the Plan. If the 1.0 limitation is exceeded, such excess amount will be reduced in accordance with Section 5.1 of the Plan. (2) /X/ On an attachment, provide the method under which the plan involved will satisfy the 1.0 limitation in a manner that precludes Employer discretion. (c) The limitation year is the following 12 consecutive month period: JANUARY 1 to DECEMBER 31. - -------------------------------------------------------------------------------- 17. ADMINISTRATIVE (a) /X/ Administrative expenses shall be paid EXPENSE. by the Employer (Plan Section 12.5) (Choose (a) or (b)): (b) / / Administrative expenses shall be charged against the accounts of all Participants unless allocable to the accounts of a specific Participant. - -------------------------------------------------------------------------------- -21- - -------------------------------------------------------------------------------- 18. PLAN ADMINISTRATION. The administrator of the Plan shall be (Plan Section 12.4) (Choose (a), (b), (c) or (d)): NOTE: T. Rowe Price Trust Company may not be appointed Plan Administrator. (a) / / The Trustee; (b) / / The Employer; (c) / / Retirement Plan Committee; (d) /X/ Other (complete the following). Name: HANDY&HARMAN SAVINGS PLAN ADMINISTRATIVE COMMITTEE Address: 850 THIRD AVENUE, NEW YORK, NEW YORK 10022 NOTE: If no Plan Administrator is indicated above, the Employer shall be deemed the Plan Administrator. If additional space is required to specify an elective feature under the Plan, please attach additional pages as needed and use the format set forth below. Each supplementary page should be numbered, and the total number of pages indicated on the last page of the Adoption Agreement The following is hereby made part of Provision ____ of the Adoption Agreement. Initials of Employer's Authorized Representative:_____________ Initials of Trustee(s):______________ Supplementary page number:_____________ - -------------------------------------------------------------------------------- 19. THE TRUSTEES. The Employer hereby appoints the following to serve as Trustee(s) (Plan Section 1.46): Name: T. ROWE PRICE TRUST COMPANY Address: 100 EAST PRATT STREET BALTIMORE, MD 21202 /S/ AILENE ZEIGLER /S/ ILLEGIBLE Witness [Signature of] Trustee Dated: 7-23-91 - -------------------------------------------------------------------------------- -22- - -------------------------------------------------------------------------------- Name: ___________________________________ Address: ___________________________________ ___________________________________ ___________ _____________________ Witness [Signature of] Trustee Dated: - -------------------------------------------------------------------------------- Name: ___________________________________ Address: ___________________________________ ___________________________________ ____________ _____________________ Witness [Signature of] Trustee Dated: - -------------------------------------------------------------------------------- -23- - -------------------------------------------------------------------------------- 20. EMPLOYER SIGNATURE. The Employer acknowledges receipt of the current prospectus of the --- Investment Options designated by the Employer for its initial investments under the Plan and represents that it has delivered a copy thereof to each Participant in the Plan, and that it will deliver to each Participant making contributions and each new Participant, a copy of the then current prospectus of such Investment Options. The Employer further represents that the information in this Adoption Agreement shall become effective only when approved and countersigned by the Trustee. The right to reject this Adoption Agreement for any reason is reserved. Note: An Employer who adopts this Plan may not rely on the Opinion Letter issued by the National Office of the Internal Revenue Service as evidenced that this Plan is qualified under section 401 of the Code. Such adopting Employer should apply to the appropriate Key District Director of Internal Revenue for a determination letter in order to obtain reliance. This Adoption Agreement may be used only in conjunction with basic plan document #01. Failure to properly fill out this Adoption Agreement may result in disqualification of the Plan The sponsoring organization will inform the Employer of any amendments to the Plan or the discontinuance or abandonment of the Plan. Employees with inquiries regarding the adoption of the Plan, the sponsoring organization's intended meaning of any Plan provisions, or the effect of the Opinion Letter should call: Sponsoring Organization/Authorized Representative: Name: T. Rowe Price Trust Company, Inc. Address: 100 East Pratt Street Baltimore, Maryland 21202 Telephone Number: This Adoption Agreement consists of 16 pages. IN WITNESS WHEREOF, the Employer has caused this Adoption Agreement to be executed by its duly authorized officers this 29TH day of APRIL , 1991 Attest:HANDY & HARMAN [Name of] Employer - -------------------------------------------------------------------------------- -24- - -------------------------------------------------------------------------------- By: /S/ STEPHEN B. MUDD Title: VICE PRESIDENT & TREASURER - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- -25- - -------------------------------------------------------------------------------- The following is hereby made part of Provision 16 of the Adoption Agreement. Initials of Employer's Authorized Representative: Illegible Initials of Trustee(s): SJZ Supplementary page number: 16 Handy & Harman maintains other qualified defined contribution plans. To the extent that the annual additions to all defined contribution plans would exceed the maximum permissible amount, the annual addition to the other defined contribution plans, not this Plan, will be limited so the maximum amount will not be exceeded. Handy & Harman maintains qualified defined benefit plans. To the extent that the 1.0 limitation would otherwise be exceeded, the benefit under the defined benefit plans will be limited so that the 1.0 limitation will not be exceeded. -26- This document incorporates the first and second amendments with provisions effective January 1, 1993 and January 1, 1994, respectively. ARTICLE I. DEFINITIONS 1.1 ACCRUED BENEFIT. The balance in a Participant's or Beneficiary's account, including contributions, forfeitures, income, expenses, gains and losses (whether or not realized) allocated or attributable thereto, which account shall consist of its pro rata proportion of all commingled Trust assets or any Trust assets separately earmarked therefore. Said account balance shall be determined as of the most recent Valuation Date. Each Accrued Benefit shall be divided into one or more of the following subaccounts, to the extent applicable: (a) Discretionary Employer Contributions Account; (b) Elective Deferral Account; (c) Employer Matching Contributions Account; (d) Rollover/Transfer Account; (e) Voluntary Employee Contributions Account; (f) Qualified Non-Elective Contributions Account; (g) Qualified Matching Contributions. The foregoing accounts, which are designated as functional accounts, are derived from the source of the funds contributed thereto, whereas the accounts referred to as Segregated Accounts are investment accounts, derived from the investment of the functional account. 1.2 ACTIVE PARTICIPANT. Any Participant on whose behalf contributions are being made to the Plan. 1.3 ADMINISTRATOR OR PLAN ADMINISTRATOR. The person, persons or entity designated by the Employer pursuant to Article XII to administer and operate the Plan. 1.4 ADOPTION AGREEMENT. The document executed by the Employer and Trustee by which the Employer adopts this Plan and the Trust Agreement forming a part thereof and wherein the Employer selects from the options contained therein certain provisions relating to the operation of the Plan. The Adoption Agreement shall be incorporated into and form an integral part of the Plan and the Trust Agreement. 1.5 AFFILIATED EMPLOYER. The Employer and any corporation which is a member of a controlled group of corporations (as defined in section 414(b) of the Code) which includes the Employer, any trade or business (whether or not incorporated) which is under common control (as defined in section 414(c) of the Code) with the Employer, any organization (whether or not incorporated) which is a member of an affiliated service group (as defined in section 414(m) of the Code) which includes the Employer, and any other entity required to be aggregated with the Employer pursuant to regulations under section 414(o) of the Code. 1.6 BENEFICIARY. The person or persons so designated by the Participant to receive his benefits under the Plan in the event of his death. 1.7 BREAK IN SERVICE. An Eligibility Computation Period or Vesting Computation Period in which an Employee fails to complete more than 500 Hours of Service with the Employer. 1.8 CODE. The Internal Revenue Code of 1986, as amended. 1.9 COMPENSATION. As elected by the Employer in the Adoption Agreement, Compensation will mean all of each Participant's (a) W-2 earnings or (b) Compensation (as that term is defined in section 415(c)(3) of the Code). For any Self-Employed Individual covered under the Plan, Compensation will mean Earned Income. Compensation shall include only that Compensation which is actually paid to the Participant during the applicable period. Except as provided elsewhere in this Plan, the applicable period shall be the period elected by the Employer in the Adoption Agreement. If the Employer makes no election, the applicable period shall be the Plan Year. -2- Notwithstanding the above, if elected by the Employer in the Adoption Agreement, Compensation shall include any amount which is contributed by the Employer pursuant to a salary reduction agreement and which is not includible in the gross income of the Employee under section 125, 402(e)(3), 402(h) or 403(b) of the Code. The annual Compensation of each Participant taken into account under the Plan for any year shall not exceed $200,000, as adjusted by the Secretary of Treasury at the same time and in the same manner as under section 415(d) of the Code. If, as a result of the application of such rules, the adjusted $200,000 limitation is exceeded, then (except for purposes of determining the portion of Compensation up to the integration level if this Plan provides for permitted disparity) the limitation shall be prorated among the affected individuals in proportion to each such individual's Compensation as determined under this Section prior to the application of this limitation. In determining the Compensation of a Participant for purposes of this limitation, the rules of section 414(q)(6) of the Code shall apply, except in applying such rules, the term "family" shall include only the spouse of the Participant and any lineal descendants of the Participant who have not attained age 19 before the close of the year. 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 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 that 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. -3- 1.10 COST OF LIVING INCREASE. An automatic increase (without necessity of Plan amendment) in a dollar value set forth or described in the Plan, for the purpose of reflecting increases in the cost of living to the extent prescribed in or pursuant to regulations under section 415(d) of the Code. 1.11 COVERED EMPLOYEE. Any Employee eligible to participate in the Plan pursuant to the Adoption Agreement. 1.12 DISTRIBUTION DATE. The date on which a Participant reaches retirement, dies while in the active employ of the Employer, becomes totally and permanently disabled, or otherwise terminates employment at a time when he is 100% vested in his Accrued Benefit. In the case of a Participant who terminates employment for reasons other than retirement, death or disability, at a time when he is less than 100% vested in his Accrued Benefit, his Distribution Date shall be the first to occur of his death following termination or the last day of the Plan Year in which he incurs five consecutive one-year Breaks in Service. 1.13 EARNED INCOME. The annual net earnings from self-employment in the trade or business with respect to which the Plan is established, provided that personal services of the individual are a material income-producing factor. Net earnings will be determined without regard to items not included in gross income and the deductions allocable to such items. Net earnings are reduced by contributions by the Employer to a qualified plan to the extent deductible under section 404 of the Code. Earned Income will in all events be defined in a way which complies with section 401(c)(2) of the Code and other applicable provisions of the Code. Net earnings shall be determined with regard to the deduction allowed to the Employer by section 164(f) of the Code for taxable years beginning after December 31, 1989. 1.14 EFFECTIVE DATE. The effective date shall be the Effective Date provided in the Adoption Agreement. 1.15 ELAPSED TIME. If an Employer elects to use Elapsed Time in the Adoption Agreement, the following definitions shall replace the otherwise required Year of Service and Break in Service definitions. For purposes of this Section, Hour of Service shall mean each hour for which -4- an Employee is paid or entitled to payment for the performance of duties for the Employer. (a) Break in Service is a Period of Severance of at least 12 consecutive months. (b) Period of Severance is a continuous period of time during which the Employee is not employed by the Employer. Such period begins on the date the Employee retires, quits or is discharged, or if earlier, the 12 month anniversary of the date on which the Employee was otherwise first absent from Service. (c) For purposes of determining an Employee's initial or continued eligibility to participate in the Plan or the nonforfeitable interest in the Participant's account balance derived from Employer contribution (except for periods of Service which may be disregarded on account of the "rule of parity" described in Section 2.4(b)), an Employee will receive credit for the aggregate of all time period(s) commencing with the Employee's first day of employment or reemployment and ending on the date a Break in Service begins. The first day of employment is the first day the Employee performs an Hour of Service. An Employee will also receive credit for any Period of Severance of less than 12 consecutive months. Fractional periods of a year will be expressed in terms of days. (d) In the case of an individual who is absent from work for maternity or paternity reasons, the 12 consecutive month period beginning on the first anniversary of the first date of such absence shall not constitute a Break in Service. For purposes of this paragraph, an absence from work for maternity or paternity reasons means an absence (i) by reason of the pregnancy of the individual, (ii) by reason of the birth of a child of the individual, (iii) by reason of the placement of a child with the individual in connection with the adoption of such child by such individual, or (iv) for purposes of caring for such child for a period beginning immediately following such birth or placement. (e) Each employee will share in Employer contributions for the period beginning on the date the Employee commences participation under the Plan and ending on the date on which such Employee severs employment with the Employer or is no longer a member of an eligible class of Employees. (f) If the Employer is a member of an affiliated service group (under section 414(m) of the Code), a controlled group of corporations (under section 414(b) of the Code), or a group of trades or businesses under common control (under section 414(c) of the Code) or any other entity required to be aggregated with the Employer pursuant to section 414(o) of the Code and the regulations thereunder, Service will be credited for any employment for any period of time for any other member of such group. Service will also be credited for any individual required under section 414(n) or (o) of the Code and the regulations thereunder to be -5- considered an Employee of any Employer aggregated under section 414(b), (c) or (m) of the Code. 1.16 ELECTIVE DEFERRAL ACCOUNT. The portion of a Participant's Accrued Benefit which consists of contributions made to the Plan during the Plan Year by the Employer at the election of the Participant, in lieu of cash Compensation and shall include contributions made pursuant to a salary reduction agreement. 1.17 ELIGIBILITY COMPUTATION PERIOD. The 12 consecutive month period used for purposes of determining Years of Service and Breaks in Service for eligibility to participate. An Employee's initial Eligibility Computation Period shall be the 12 consecutive month period beginning with the day the Employee first performs an Hour of Service. Subsequent Eligibility Computation Periods, if needed, will coincide with the 12 month anniversary of that day. 1.18 EMPLOYEE. Any person, including a Self-Employed Individual, employed by the Employer maintaining the Plan or of any other Employer required to be aggregated with such Employer under section 414(b), (c), (m) or (o) of the Code and shall include Leased Employees within the meaning of section 414(n)(2) or (o) of the Code. Notwithstanding the foregoing, if such Leased Employees constitute less than twenty percent of the Employer's non-highly compensated work force within the meaning of section 414(n)(5)(C)(ii) of the Code, the term "Employee" shall not include those Leased Employees covered by a plan described in section 414(n)(5) of the Code unless otherwise provided by the terms of the Plan. 1.19 EMPLOYER. The entity that establishes or maintains the Plan, any successor to such entity and any Affiliated Employer. 1.20 EMPLOYER CONTRIBUTION ACCOUNTS. The portion of a Participant's Accrued Benefit consisting of his Employer Matching Contributions Account and his Discretionary Employer Contributions Account. -6- 1.21 ENTRY DATE. The Effective Date shall be the first Entry Date, thereafter the first day of each Plan Year and the first day of the seventh month of each Plan Year unless the Employer elects in the Adoption Agreement such dates which are more frequent. 1.22 ERISA. The Employee Retirement Income Security Act of 1974, as amended. 1.23 FAMILY MEMBER. An Employee's spouse and lineal ascendants or descendants and the spouses of such lineal ascendants or descendants. 1.24 HIGHLY COMPENSATED EMPLOYEE. The term Highly Compensated Employee includes active Highly Compensated Employees and former Highly Compensated Employees. An active Highly Compensated Employee includes any Employee who performs Service for the Employer during the determination year and who, during the look-back year: (i) received Compensation from the Employer in excess of $75,000 (as adjusted pursuant to section 415(d) of the Code); (ii) received Compensation from the Employer in excess of $50,000 (as adjusted pursuant to section 415(d) of the Code) and was a member of the top-paid group for such year; or (iii) was an officer of the Employer and received Compensation during such year that is greater than 50% of the dollar limitation in effect under section 415(b)(1)(A) of the Code. The term Highly Compensated Employee also includes: (i) Employees who are both described in the preceding sentence if the term "determination year" is substituted for the term "look-back year" and the Employee is one of the 100 Employees who received the most Compensation from the Employer during the determination year; and (ii) Employees who are 5 percent owners at any time during the look-back year or determination year. If no officer has satisfied the Compensation requirement of (iii) above during either a determination year or look-back year, the highest paid officer for such year shall be treated as a Highly Compensated Employee. For this purpose, the determination year shall be the Plan Year. The look-back year shall be the twelve month period immediately preceding the determination year. A former Highly Compensated Employee includes any Employee who separated from Service (or was deemed to have separated) prior to the determination year, performs no Service for the Employer during the determination year and was a highly compensated -7- active Employee for either the separation year or any determination year ending on or after the Employee's 55th birthday. If an Employee is, during a determination year or look-back year, a Family Member of either a 5-percent owner who is an active or former Employee or a Highly Compensated Employee who is one of the 10 most Highly Compensated Employees ranked on the basis of Compensation paid by the Employer during such year, then the Family Member and the 5-percent owner or top ten Highly Compensated Employee shall be aggregated. In such case, the Family Member and 5-percent owner or top ten Highly Compensated Employee shall be treated as a single Employee receiving Compensation and Plan contributions or benefits equal to the sum of such Compensation and contributions or benefits of the Family Member and 5 percent owner or top ten Highly Compensated Employee. For purposes of this Section, Family Member includes the spouse, lineal ascendants and descendants of the Employee or former Employee and the spouses of such lineal ascendants and descendants. The determination of who is a Highly Compensated Employee, including the determinations of the number and identity of Employees in the top-paid group, the top 100 Employees, the number of Employees treated as officers and the Compensation that is considered, will be made in accordance with section 414(q) of the Code and the regulations thereunder. The Employer may elect to use the calendar year to determine whether an Employee is a Highly Compensated Employee in the look-back year (as defined in Treasury Regulations under section 414(q) of the Code) calculation. The calendar year used will be the calendar year ending with or within the determination year (as defined in the regulations under section 414(q) of the Code). The determination year shall be the months (if any) in the current Plan Year which follow the end of the calendar look-back year. If the Employer elects to make the calendar year calculation election with respect to any plan, entity or arrangement, such election must apply with respect to all plans, entities and arrangements of the Employer. 1.25 HOUR OF SERVICE. (a) An Hour of Service shall mean and include each hour for which an Employee is compensated by the Employer, or is entitled to be so compensated, for Services rendered by him to the Employer. These hours will be credited to the Employee for the computation period in which the duties are performed. (b) An Hour of Service shall also mean and include each hour for which an Employee is compensated by the Employer, or is entitled to be so compensated, on account of a period of time during which no Services are rendered by him to the Employer (regardless of whether the Employee shall have ceased to be an Employee) due to -8- vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty or leave of absence. No more than five hundred and one (501) Hours of Service shall be credited pursuant to this subparagraph (b) on account of any single continuous period during which an Employee renders no Services to the Employer (whether or not such period occurs in a single computation period). Hours under this paragraph will be calculated and credited pursuant to section 2530.200b-2 of the Department of Labor Regulations which are incorporated herein by this reference. (c) An Hour of Service shall also mean and include each hour for which back pay, without regard to mitigation of damages, has been awarded or agreed to by the Employer. The same Hours of Service shall not be credited both under subparagraph (a) or subparagraph (b), whichever shall be applicable, and also under this subparagraph (c). The hours will be credited to the Employee for the computation period or periods to which the award or agreement pertains rather than the computation period in which the award, agreement or payment is made. Hours of Service will be credited for employment with other members of an affiliated service group (under section 414(m) of the Code), a controlled group of corporations (under section 414(b) of the Code), or a group of trades or businesses under common control (under section 414(c) of the Code), of which the adopting Employer is a member, and any other entity required to be aggregated with the Employer pursuant to section 414(o) of the Code and the regulations thereunder. Hours of Service will also be credited for any individual considered an Employee under section 414(n) or (o) of the Code, and regulations thereunder. Solely for purposes of determining whether a Break in Service for participation and vesting purposes has occurred in a computation period, an individual who is absent from work for maternity or paternity reasons shall receive credit for the Hours of Service which would otherwise have been credited to such individual but for such absence, or in any case in which such hours cannot be determined, eight (8) Hours of Service per day of such absence. For purposes of this paragraph, an absence from work for maternity or paternity reasons means an absence (i) by reason of the pregnancy of the individual, (ii) by reason of a birth of a child of the individual, (iii) by reason of the placement of a child with the individual in connection with the adoption of such child by such individual, or (iv) for purposes of caring for such child for a period beginning immediately following such birth or placement. The Hours of Service credited under this paragraph shall be credited only (i) in the computation period in which the absence begins if the crediting is necessary to prevent a Break in Service in that period, or (ii) in all other cases, in the following computation period. -9- Hours of Service will be determined on the basis of the method selected in the Adoption Agreement. 1.26 INACTIVE PARTICIPANT. Any Employee or former Employee who has ceased to be an Active Participant and on whose behalf an account is maintained under the Plan. 1.27 INVESTMENT OPTIONS. Any regulated investment companies registered under the Investment Company Act of 1940 whose investment adviser is T. Rowe Price Associates, Inc. or any successor thereto, any common trust funds or collective investment fund of the Sponsor qualified under sections 401 and 501 of the Code, and any other funding vehicle (including, but not limited to, limited partnership interests which receives investment advice from T. Rowe Price Associates, Inc. or an affiliate) made available to the Plan by T. Rowe Price Associates, Inc. or any of its affiliates which the Employer permits under the terms of the Plan. 1.28 LEASED EMPLOYEE. Any person (other than an Employee of the recipient) who, pursuant to an agreement between the recipient and any other person ("leasing organization"), has performed Services for the recipient (or for the recipient and related persons determined in accordance with section 414(n)(6) of the Code) on a substantially full time basis for a period of at least one (1) year and such Services are of a type historically performed by Employees in the business field of the recipient Employer. Any Leased Employee shall be treated as an Employee of the recipient Employer. However, contributions or benefits provided by the leasing organization which are attributable to Service performed for the recipient Employer shall be treated as provided by the recipient Employer. The preceding sentence shall not apply to any Leased Employee if Leased Employees do not constitute more than twenty percent (20%) of the Employer's non-highly compensated force and, if such Employee is covered by a money purchase pension plan providing: (a) a nonintegrated Employer contribution rate of at least ten percent (10%) of Compensation as defined in section 415(c)(3) of the Code, but including amounts contributed by the Employer pursuant to a salary reduction agreement which are excludible from the Employee's gross income under section 125, 402(e)(3), 402(h) or 403(b) of the Code, (b) full and immediate vesting, and (c) each Employee of the leasing organization (other than Employees who perform substantially all of their Services for the leasing organization) immediately participate in the Plan. Item (c) shall not apply to any individual whose Compensation from the leasing organization in each Plan Year during the 4-year period ending with the Plan Year is less than $1,000. -10- 1.29 MATCHING CONTRIBUTIONS. The portion of a Participant's Accrued Benefit consisting of contributions to the Plan made by the Employer and allocated to a Participant's account by reason of the Participant's Elective Deferrals or Voluntary Employee Contributions. 1.30 NET PROFITS. Current and accumulated earnings of the Employer, before federal and state taxes and contributions to this Plan or any other qualified plan. 1.31 NON-HIGHLY COMPENSATED EMPLOYEE. An Employee of the Employer who is neither a Highly Compensated Employee nor a Family Member. 1.32 NORMAL RETIREMENT AGE. The age selected in the Adoption Agreement. If the Employer enforces a mandatory retirement age, the Normal Retirement Age is the lesser of that mandatory age or the age specified in the Adoption Agreement. 1.33 NORMAL RETIREMENT DATE. The date on which a Participant attains age 65 unless otherwise specified in the Adoption Agreement. 1.34 OWNER-EMPLOYEE. A sole proprietor, if the Employer is a sole proprietorship, or a partner who owns either more than ten percent (10%) of the capital interests or more than ten percent (10%) of the profits interests, if the Employer is a partnership. 1.35 PARTICIPANT. Any Covered Employee of the Employer who has met the eligibility requirements as specified in the Adoption Agreement. 1.36 PERIOD OF SERVICE. Under Elapsed Time, the period of time commencing on the date on which an Employee is first credited with an Hour of Service or, if applicable, the first date following a Period of Severance on which an Employee is credited with an Hour of Service and ending on the next following Severance Date. -11- PAGE> 1.37 PLAN. The retirement plan set forth herein and the Adoption Agreement as amended from time to time. 1.38 PLAN YEAR. The twelve (12) consecutive month period designated by the Employer in the Adoption Agreement. 1.39 QUALIFIED NON-ELECTIVE CONTRIBUTIONS. Contributions (other than Matching Contributions) made by the Employer and allocated to the Participant's account that the Participant may not elect to receive in cash until distributed from the Plan and which are subject to the distribution restrictions as provided in Article VI of said Plan. 1.40 ROLLOVER/TRANSFER ACCOUNT. The portion of a Participant's Accrued Benefit established in accordance with Section 3.6 of the Plan. 1.41 SEGREGATED ACCOUNT. That portion of a Participant's Accrued Benefit which, pending distribution, is segregated from the remainder of the Trust and placed in a money market fund sponsored by T. Rowe Price Associates, Inc. All income earned by the Segregated Account shall be deemed to be part thereof and distributable therewith and there may be charged thereto in addition to any directly attributable fees and expenses, a pro rata portion of total Trust fees and expenses. 1.42 SELF-EMPLOYED INDIVIDUAL. An individual who has Earned Income for the taxable year from the trade, business or partnership with respect to which the Plan is established; also, an individual who would have had Earned Income but for the fact the trade, business or partnership had no Net Profits for the taxable year. 1.43 SERVICE. Under Elapsed Time, the sum of an Employee's Periods of Service beginning with the Employee's employment or re-employment date. Service shall be measured in years where three hundred sixty-five (365) days of Service equals one whole Year of Service. Service for purposes of eligibility to participate in the Plan shall be determined in accordance with -12- Section 2.3 of the Plan. Service for purposes of determining nonforfeitable rights under the Plan shall be determined in accordance with Section 6.4 of the Plan. 1.44 SEVERANCE DATE. Under Elapsed Time the earlier of (a) the date an Employee terminates, is discharged, retires or dies, or (b) the first anniversary of the date an Employee is absent from the employ of the Employer for any reason other than an approved leave of absence granted in writing by the Employer, according to a uniform rule applied without discrimination, provided the Employee returns to the employ of the Employer upon completion of the leave. Notwithstanding the foregoing, an Employee who terminates Service to enter the military service of the United States shall not suffer a Severance Date as of such date provided (a) such Employee's employment rights are protected by Federal law and (b) such Employee returns to employment with the Employer within the period required by law for preservation of his rights. Under such circumstances, an Employee shall receive credit for Service for his earlier period of absence. If the Employee does not return to Service within the time prescribed by law, then the date he terminated employment shall be his Severance Date. 1.45 SPONSOR. The Sponsor of this Plan shall be T. Rowe Price Trust Company. 1.46 TRUST AGREEMENT. The agreement between the Employer and the Trustees under which the assets of the Plan are held, administered and managed. 1.47 TRUSTEE. The individual or corporate Trustee or Trustees under the Trust Agreement as they may be constituted from time to time. Such Trustee or Trustees shall be named in the Adoption Agreement. 1.48 VALUATION DATE. The last day of each Plan Year and such other dates as may be necessary for the proper administration of the Plan. 1.49 VESTING COMPUTATION PERIOD. For purpose of computing an Employee's nonforfeitable right to the account balance derived from Employer contributions, Years of Service and Breaks in Service will be measured by the Plan Year. -13- 1.50 VOLUNTARY EMPLOYEE CONTRIBUTIONS ACCOUNT. That portion of a Participant's Accrued Benefit derived from voluntary nondeductible Employee contributions to the Plan. 1.51 YEAR OF SERVICE. An Eligibility Computation Period, Vesting Computation Period or Plan Year, whichever is applicable, during which an Employee completes at least one thousand (1,000) Hours of Service (whether or not continuous). ARTICLE II. ELIGIBILITY AND PARTICIPATION 2.1 ACTIVE PARTICIPATION. Each Covered Employee shall be eligible to participate in the Plan on the Entry Date coincident with or next following the date on which such Covered Employee satisfies the eligibility requirements set forth in the Adoption Agreement. 2.2 EXCLUSION OF CERTAIN EMPLOYEES. To the extent provided in the Adoption Agreement, the following Employees may be excluded from participation in the Plan; (a) Employees not meeting the age and Service requirements, (b) Employees who are included in a unit of Employees covered by a collective bargaining agreement between Employee representatives and one or more Employers, if there is evidence that retirement benefits were the subject of good faith bargaining between such Employee representatives and such Employer or Employers. For this purpose, the term "Employee representatives" does not include any organization where more than one half of the membership is comprised of owners, officers and executives of the Employer, (c) Employees who are nonresident aliens and who receive no Earned Income from the Employer which constitutes income from sources within the United States, and (d) Employees included in certain ineligible job classifications. In the event an Employee who is not a member of the eligible class of Employees becomes a member of the eligible class, such Employee shall participate immediately if such Employee has satisfied the minimum age and Service requirements as provided in the Adoption Agreement. -14- In the event a Participant is no longer a member of an eligible class of Employees and becomes ineligible to participate, but has not incurred a Break in Service, such Employee shall participate immediately upon returning to an eligible class of Employees. If such Participant incurs a Break in Service, eligibility to participate will be determined under Section 2.4 of the Plan. 2.3 CREDITING SERVICE FOR INITIAL ELIGIBILITY. (a) If the Employer has elected in the Adoption Agreement to credit Service based on the Elapsed Time method, then, for purposes of initial eligibility, Service shall be measured from the date on which the Employee is first credited with an Hour of Service and ending with the anniversary of such date. A Period of Service shall include any Period of Severance of less than 12 consecutive months. (b) If the Employer has elected in the Adoption Agreement to credit Service based on Hours of Service, then, for purposes of initial eligibility, a Year of Service is a 12 consecutive month period, beginning with the day on which the Employee first performs an Hour of Service and anniversaries thereof, during which the Employee completes at least 1,000 Hours of Service. To the extent provided in the Adoption Agreement, Service with a predecessor Employer shall be deemed Service with the Employer for purposes of this Plan. If this Plan is a continuation of a predecessor Employer's plan, Service with the predecessor Employer may not be disregarded for purposes of this Plan. 2.4 RE-EMPLOYMENT. (a) A former Participant shall become a Participant immediately upon returning to the employ of the Employer if such former Participant has a nonforfeitable right to all or a portion of the account balance derived from Employer contributions at the time of termination from Service. (b) A former Participant who did not have a nonforfeitable right to any portion of the account balance derived from Employer contributions at the time of termination from Service shall be considered a new Employee for eligibility purposes if the number of consecutive 1- year Breaks in Service, or Periods of Severance if the Employer has elected Elapsed Time, equals or exceeds the greater of five (5) or the aggregate number of Years of Service before such Breaks in Service or Periods of Severance. If such former Participant's Years of Service prior to termination from Service may not be disregarded pursuant to the preceding sentence, such former Participant shall participate immediately upon re-employment. -15- 2.5 RESTORATION OF FORFEITURE. If the re-employed Participant: (a) was less than 100% vested in his Employer Contribution Accounts when he terminated employment, (b) received a distribution of the vested portion, if any, of his Employer Contribution Accounts pursuant to Section 7.6(b) of the Plan, and (c) resumed his status as a Covered Employee before having incurred five (5) consecutive 1-year Breaks in Service the full amount of the forfeiture which occurred (unadjusted for gains or losses in the interim) pursuant to Section 7.7 of the Plan shall be restored to his Accrued Benefit. If the Participant had no vested interest in the portion of his Employer Contribution Accounts, the restoration shall be made as of the date of resumption of status as a Covered Employee. Notwithstanding any other Plan provisions regarding utilization of forfeitures, the restored forfeiture shall be derived from forfeitures arising in the Plan Year in which the restoration occurs. However, the Employer may, and in the absence of available forfeitures shall, make a separate contribution to the Plan for the purpose of restoring the forfeiture, which separate contribution may be made without regard to the availability of current and/or accumulated earnings and profits, and shall be made not later than the end of the Plan Year following the Plan Year in which the resumption of employment by the Participant occurred. The restoration shall not be deemed to be Annual Additions for purposes of Article V of the Plan. 2.6 WAIVER OF PARTICIPATION. The Employer may grant a waiver of participation to any Employee who so requests. Whether or not such waiver shall be granted, and the terms and conditions (including duration) thereof, shall be made in accordance with written and objective rules and shall be applied in a uniform and nondiscriminatory manner. Notwithstanding the foregoing, any Employee who has met the Plan's eligibility requirements shall be considered an "Eligible Participant" for purposes of Sections 3.7 and 3.8 of the Plan. ARTICLE III. CONTRIBUTIONS 3.1 ELECTIVE DEFERRAL CONTRIBUTIONS. To the extent provided in the Adoption Agreement and subject to the limitation on Annual Additions as described in Article V of the Plan, for any Plan Year: (a) PARTICIPANT ELECTION. Participant may elect to defer, in the form of Employer contributions to the Plan on his behalf, Compensation that would otherwise be paid to him, but for the deferral of such Compensation, an amount expressed as a percentage (within the limits provided in the Adoption Agreement) of his Compensation as he shall elect in writing on a form prescribed by the Employer. Such salary deferral contributions shall be accomplished through the direct reduction of Compensation in each payroll period during which the election is in -16- effect. A Participant may elect to increase, decrease or discontinue his salary deferral contributions by submitting a written request to the Employer on a form prescribed by such Employer. The Employer shall pay to the Trustee all salary deferral contributions no later than thirty (30) days after the payroll period for which such contributions were deducted. A separate account shall be established for each Participant and such Participant's salary deferral contributions, as adjusted for withdrawals thereof, investment gain and losses, and income or expenses, shall constitute such Participant's Elective Deferral Account. A Participant shall at all times have a nonforfeitable interest in his Elective Deferral Account. (b) ELECTIVE DEFERRALS. Any Employer contributions made to the Plan at the election of the Participant, in lieu of cash Compensation, and shall include contributions made pursuant to a salary reduction agreement or other deferral mechanism. With respect to any taxable year, a Participant's Elective Deferral is the sum of all Employer contributions made on behalf of such Participant pursuant to an election to defer under any qualified CODA as described in section 401 (k) of the Code, and simplified Employer pension or cash deferred arrangement as described in section 402(h)(1)(B) of the Code, any eligible deferred compensation plan under section 457 of the Code, any plan described under section 501(c)(18) of the Code, and any Employer contributions made on the behalf of Participant for the purchase of an annuity contract under section 403(b) of the Code pursuant to a salary reduction agreement. Elective Deferrals shall not include any deferrals properly distributed as excess Annual Additions. (c) LIMITATION ON ELECTIVE DEFERRALS. No Participant shall be permitted to have Elective Deferrals made under this Plan, or any other qualified plan maintained by the Employer, during any taxable year, in excess of the dollar limitation contained in section 402(g) of the Code in effect at the beginning of such taxable year. Notwithstanding any other provisions of the Plan, the Employer may distribute to the Participant, not later than April 15 following the calendar year to which the deferral is attributable, any deferral in excess of the aforesaid limit together with any income (or minus any loss) allocable thereto. A Participant is deemed to notify the Plan Administrator of any Excess Elective Deferrals that arise by taking into account only those Elective Deferrals made to this Plan and any other plans of this Employer. Excess Deferrals that are distributed after April 15 are includible in the Participant's gross income in both the taxable year in which deferred and the taxable year in which distributed. The Employer may also distribute to Participant any deferrals, together with any income allocable thereto which the Participant has advised the Employer (in writing by March 1) represent excess deferrals because of amounts deferred by the Participant during the preceding -17- calendar year under any other plans or arrangements described in section 401(k), 408(k) or 403(b) of the Code. For purposes of the above, "Excess Elective Deferrals" shall mean those Elective Deferrals that are includible in a Participant's gross income under section 402(g) of the Code to the extent such Participant's Elective Deferrals for a taxable year exceed the dollar limitation under such Code section. Excess Elective Deferrals shall be treated as Annual Additions under the Plan, unless such amounts are distributed no later than the first April 15 following the close of Participant's taxable year. Determination of income or loss: Excess Elective Deferrals shall be adjusted for any income or loss. The income or loss allocable to Excess Elective Deferrals is the income or loss allocable to the Participant's Elective Deferral Account for the taxable year multiplied by a fraction, the numerator of which is such Participant's Excess Elective Deferrals for the year and the denominator is the Participant's account balance attributable to Elective Deferrals without regard to any income or loss occurring during such taxable year. 3.2 EMPLOYER CONTRIBUTIONS. (a) EMPLOYER MATCHING. To the extent provided in the Adoption Agreement, and subject to the limitation on Annual Additions as described in Article V of the Plan, for any Plan Year, the Employer shall contribute to the Plan on behalf of each eligible Participant an amount, in the form of "Matching Contributions", equal to a percentage of such Participant's Elective Deferral Contributions and/or Voluntary Employee Contributions. Separate subaccounts shall be established to account for and distinguish Matching Contributions made on account of Elective Deferral Contributions and Voluntary Employee Contributions. Matching Contributions made to such subaccount on behalf of a Participant, as adjusted for withdrawals thereof, investment gain and losses, and income or expenses, shall constitute such Participant's Employer Matching Contributions Account. A Participant's eligibility to share in Employer Matching Contributions for a Plan Year shall be determined in accordance with the Adoption Agreement. To the extent provided in the Adoption Agreement, any Matching Contributions made under this Section 3.2(a) on behalf of such Participant during the Plan Year, which are attributable to Excess Deferrals, shall be deemed forfeited. Matching Contributions shall be vested in accordance with Section 6(d)(2) of the Adoption Agreement. In any event, Matching Contributions shall be fully vested at Normal Retirement Age, upon the complete or partial termination of the profit sharing plan, or upon the complete discontinuance of Employer contributions. -18- Matching Contributions attributable to excess deferrals will be forfeited and applied in the same manner as forfeitures under Section 8(b) of the Adoption Agreement. (b) OTHER EMPLOYER CONTRIBUTIONS. To the extent provided in the Adoption Agreement, and subject to the limitation on Annual Additions as described in Article V of the Plan, for any Plan Year, the Employer may make a discretionary contribution to the Plan in such amount as the Employer may determine. Any such Employer contribution shall be allocated to each eligible Participant's Discretionary Employer Contributions Account in the same proportion as such Participant's Compensation bears to the Compensation of all Participants. Discretionary Employer Contributions made on behalf of a Participant, as adjusted for withdrawals thereof, investment gain and losses, and income or expenses, shall constitute such Participant's Discretionary Employer Contributions Account. A Participant's eligibility to share in Employer Discretionary contributions shall be determined in accordance with the Adoption Agreement. (c) PAYMENT. All Employer contributions made pursuant to this Section 3.2 of the Plan shall become due on the last day in such Plan Year, unless actually paid prior thereto. The Employer shall pay to the Trustee all Employer contributions not later than the due date (including extensions) of the Employer's federal income tax return for the taxable year ending with or within the Plan Year. (d) QUALIFIED MATCHING CONTRIBUTIONS. If elected by the Employer in the Adoption Agreement, the Employer will make Qualified Matching Contributions to the Plan. "Qualified Matching Contributions" shall mean Matching Contributions which are subject to the distribution and nonforfeitability requirements under 401(k) of the Code when made. A separate account shall be established for that portion of a Participant's Accrued Benefit attributable to such Qualified Matching Contributions and each separate account, as adjusted for withdrawals thereof, investment gain and losses and income or expenses shall constitute such Participant's Qualified Matching Contributions Account. A Participant shall at all times have a nonforfeitable interest in his Qualified Matching Contributions Account. The Employer shall pay to the Trustee all Qualified Matching Contributions no later than thirty (30) days after the close of the Plan Year for which such contributions are deemed to be made, or such other time as provided in applicable regulations under the Code. 3.3 VOLUNTARY EMPLOYEE CONTRIBUTIONS. To the extent provided in the Adoption Agreement and subject to the limitation on Annual Additions as described in Article V of the Plan, for any Plan Year, a Participant shall be -19- permitted to make voluntary nondeductible Employee contributions to the Plan. Such Participant's voluntary nondeductible Employee contributions, as adjusted for withdrawals thereof, investment gain and losses and income or expenses shall constitute such Participant's Voluntary Employee Contributions Account. A Participant's Voluntary Employee Contributions may be made through payroll deduction or in any other manner acceptable to the Employer. A Participant shall at all times have a nonforfeitable interest in his Voluntary Employee Contributions Account. 3.4 CONTRIBUTION LIMITATION. To the extent provided in the Adoption Agreement, the Employer shall make all contributions to the Plan without regard to current or accumulated earnings and profits for the taxable year or years ending with or within such Plan Year. Not withstanding the foregoing, the Plan shall continue to be designed to qualify as a profit sharing plan for purposes of sections 401(a), 402 and 417 of the Code. In no event shall Employer contributions in the aggregate exceed fifteen percent (15%) of all Participants' Compensation or such greater amount deductible for federal income tax purposes under section 404 of the Code. 3.5 PAYROLL TAXES. The Employer shall withhold from the Compensation of each Participant, any FICA or other payroll taxes as the Employer determines necessary with respect to salary deferral contributions. 3.6 ROLLOVERS AND PLAN-TO-PLAN TRANSFERS. To the extent provided in the Adoption Agreement, a Covered Employee may pay over to the Trust an amount which constitutes a qualified rollover contribution under section 402(a)(5) or 408(d)(3) of the Code. Also, to the extent provided in the Adoption Agreement, the Trustee may accept a direct transfer of funds, which meets the requirements of 1.411(d)-(6), from, or make a direct transfer of funds to, a plan which the Trustee reasonably believes to be qualified under section 401(a) of the Code in which a Covered Employee was, is or will become, as the case may be, a Participant. Any such rollover or transfer to the Plan shall constitute a part of the Covered Employee's Accrued Benefit under the Plan, shall be accounted for separately and shall be fully vested at all times. If a rollover or transfer is made by or on behalf of a Covered Employee who has not yet become a Participant, his Rollover or Transfer Account shall constitute his entire Accrued Benefit (and his sole interest in the Plan) and he shall not be considered to be a Participant for any other purpose of the Plan until he meets the eligibility requirements specified in the Adoption Agreement. -20- 3.7 AVERAGE ACTUAL DEFERRAL PERCENTAGE TEST UNDER SECTION401(K) OF THE CODE. (a) GENERAL TESTS. Notwithstanding any other provisions in the Plan, for any Plan Year, the Employer shall be permitted to limit the amount which may be deferred by any Highly Compensated Employee (as defined in Article I of the Plan) to the extent necessary to ensure that the Plan satisfies one of the following tests: (i) The Average Actual Deferral Percentage for Eligible Participants who are Highly Compensated Employees for the Plan Year shall not exceed the Average Actual Deferral Percentage for Eligible Participants who are Non-Highly Compensated Employees for the Plan Year multiplied by 1.25; or (ii) the Average Actual Deferral Percentage for Eligible Participants who are Highly Compensated Employees for the Plan Year shall not exceed the Average Actual Percentage for Eligible Participants who are Non-Highly Compensated Employees for the Plan Year multiplied by two (2), provided that the Average Actual Deferral Percentage for Eligible Participants who are Highly Compensated Employees does not exceed the Average Actual Deferral Percentage for Eligible Participants who are Non-Highly Compensated Employees by more than two (2) percentage points. (b) DEFINITIONS. For purposes of this Section 3.7 of the Plan, the following definitions shall apply: (i) ACTUAL DEFERRAL PERCENTAGE (ADP) shall mean, for a specified group of -------------------------- Participants for a Plan Year, the average of the ratio (calculated separated for each Participant in such group) of (1) the amount of Employer contributions actually paid over to the Trust on behalf of such Participant for the Plan Year to (2) Participant's Compensation for such Plan Year (whether or not the Employee was a Participant for the entire Plan Year). Employer contributions on behalf of any Participant shall include: (1) any Elective Deferrals made pursuant to the Participant's deferral election (including Excess Elective Deferrals of Highly Compensated Employees), but excluding (a) Excess Elective Deferrals of Non-Highly Compensated Employees that arise solely from Elective Deferrals made under the Plan or plans of this Employer, and (b) Elective Deferrals that are taken into account in the Contribution Percentage test (provided the ADP test is satisfied both with and without exclusion of these Elective Deferrals); and (2) at the election of the Employer, Qualified Non- Elective Contributions and Qualified Matching Contributions. For purposes of computing Actual Deferral Percentages, an Employee who would be a Participant but for the failure to make Elective Deferrals shall be treated as a Participant on whose behalf no Elective Deferrals are made. -21- (ii) AVERAGE ACTUAL DEFERRAL PERCENTAGE shall mean the average (expressed as a percentage) of the Actual Deferral Percentages of the Eligible Participants in a group of either Highly Compensated Employees or Non- Highly Compensated Employees. (iii) Eligible Participant shall mean any Employee of the Employer who is otherwise eligible under the Adoption Agreement to have Elective Deferrals or Qualified Non-Elective Contributions allocated to his account for the Plan Year. (c) SPECIAL RULES. The following special rules shall apply for purposes of Section 3.7: (i) For purposes of this Section 3.7 of the Plan, the Actual Deferral Percentage for any Eligible Participant who is a Highly Compensated Employee for the Plan Year and who is eligible to have Elective Deferrals or Qualified Non-Elective Contributions or Qualified Matching Contributions allocated to his account under two or more plans, or arrangements, described in section 401(k) of the Code that are maintained by the Employer or an Affiliated Employer shall be determined as if all such Elective Deferrals, Qualified Non-Elective Contributions and Qualified Matching Contributions were made under a single arrangement. If a Highly Compensated Employee participates in two or more cash or deferred arrangements that have different Plan Years, all cash or deferred arrangements ending with or within the same calendar year shall be treated as a single arrangement. (ii) For purposes of determining the Actual Deferral Percentage of a Participant who is a 5-percent owner or one of the ten most highly paid Highly Compensated Employees, the Elective Deferrals (and Qualified Non-Elective Contributions or Qualified Matching Contributions or both, if treated as Elective Deferrals for purposes of the ADP test) and Compensation of such Participant shall include the Elective Deferrals (and if applicable, Qualified Non-Elective Contributions and Qualified Matching Contributions or both) and Compensation for the Plan Year of Family Members (as defined in section 414(q)(6) of the Code). Family Members, with respect to such Highly Compensated Employees, shall be disregarded as separate Employees in determining the Actual Deferral Percentage both for Participants who are Non-Highly Compensated Employees and for Participants who are Highly Compensated Employees. (iii) For purposes of determining the ADP test, Elective Deferrals, Qualified Non-Elective Contributions and Qualified Matching Contributions must be made before the last day of the twelve-month period immediately following the Plan Year to which contributions relate. -22- (iv) The Employer shall maintain records sufficient to demonstrate satisfaction of the ADP test and the amount of Qualified Non-Elective Contributions or Qualified Matching Contributions, or both, used in such test. (v) The determination and treatment of the Elective Deferrals, Qualified Non-Elective Contributions, Qualified Matching Contributions and Actual Deferral Percentage of any Participant shall satisfy such other requirements as may be prescribed by the Secretary of the Treasury. (vi) In the event that this Plan satisfies the requirements of section 401(k), 401(a)(4) or 410(b) of the Code only if aggregated with one or more other plans, or if one or more other plans satisfy the requirements of such sections of the Code only if aggregated with this Plan, then this Section shall be applied by determining the ADP of Employees as if all such plans were a single plan. For Plan Years beginning after December 31, 1989, plans may be aggregated in order to satisfy section 401(k) of the Code only if they have the same Plan Year. (d) DISTRIBUTION OF EXCESS CONTRIBUTIONS. Notwithstanding any other provisions of this ------------------------------------ Plan, Excess Contributions, plus any income and minus any loss allocable thereto, shall be distributed no later than the last day of each Plan Year to Participants to whose accounts such Excess Contributions were allocated for the preceding Plan Year. If such excess amounts are distributed more that 2 1/2months after the last day of the Plan Year in which such excess amounts arose, a ten percent (10%) excise tax will be imposed on the Employer maintaining the Plan with respect to such amounts. Such distributions shall be made to Highly Compensation Employees on the basis of the respective portions of the Excess Contributions attributable to each of such Employees. Excess Contributions shall be allocated to Participants who are subject to the Family Member aggregation rules of section 414(q)(6) of the Code in the manner prescribed by the regulations. Excess Contributions of Participants who are subject to the Family Member aggregation rules shall be allocated among the Family Members in proportion to the Elective Deferrals (and amounts treated as Elective Deferrals) of each Family Member that is combined to determine the combined ADP. Excess Contributions (including the amounts recharacterized) shall be treated as Annual Additions under the Plan. Determination of Income or Loss: Excess Contributions shall be adjusted for any income or loss. The income or loss allocable to Excess Contributions is the income or loss allocable to the Participant's Elective Deferral Account (and, if applicable, the Qualified Non-Elective Contributions Account or the Qualified Matching Contributions Account or both) for the Plan Year multiplied by a fraction, the numerator of which is such Participant's Excess Contributions for the year and the -23- denominator is the Participant's account balance attributable to Elective Deferrals (and Qualified Non- Elective Contributions or Qualified Matching Contributions, or both, if any of such contributions are included in the ADP test) without regard to any income or loss occurring during such Plan Year. Accounting for Excess Contributions: Excess Contributions shall be distributed from the Participant's Elective Deferral Account and Qualified Matching Contributions Account (if applicable) in proportion to the Participant's Elective Deferrals and Qualified Matching Contributions (to the extent used in the ADP test) for the Plan Year. Excess Contributions shall be distributed from the Participant's Qualified Non-Elective Contributions Account only to the extent that such Excess Contributions exceed the balance in the Participant's Elective Deferral Account and Qualified Matching Contributions Account. Definition: "Excess Contributions" shall mean, with respect to any Plan Year, the excess of: (i) The aggregate amount of Employer contributions actually taken into account in computing the ADP of Highly Compensated Employees for such Plan Year, over (ii) The maximum amount of such contributions permitted by the ADP test (determined by reducing contributions made on behalf of Highly Compensated Employees in order of the ADPs, beginning with the highest of such percentages). (e) RECHARACTERIZATION. If the Employer elects to allow Voluntary Employee ------------------ Contributions in the Adoption Agreement Section 6(e)(1), a Participant may treat his or her Excess Contributions as an amount distributed to the Participant and then contributed by the Participant to the Plan. Recharacterized amounts will remain nonforfeitable and subject to the same distribution requirements as Elective Deferrals. Amounts may not be recharacterized by a Highly Compensated Employee to the extent that such amount in combination with other Employee Contributions made by that Employee would exceed any stated limit under the Plan on Employee Contributions. Recharacterization must occur no later than 2 1/2 months after the last day of the Plan Year in which such Excess Contributions arose and is deemed to occur no earlier than the date the last Highly Compensated Employee is informed in writing of the amount recharacterized and the consequences thereof. Recharacterized amounts will be taxable to the Participant for the Participant's tax year in which the Participant would have received them in cash. -24- (f) QUALIFIED NON-ELECTIVE CONTRIBUTIONS. In lieu of distributing Excess Contributions ------------------------------------ as provided in Section 3.7(d) above, and to the extent provided in the Adoption Agreement, the Employer may make Qualified Non-Elective Contributions on behalf of Employees as provided in the Adoption Agreement. In addition, in lieu of distributing Excess Aggregate Contributions as provided in Section 3.8 of the Plan, and to the extent elected by the Employer in the Adoption Agreement, the Employer may make Qualified Non-Elective Contributions on behalf of Non-Highly Compensated Employees that are sufficient to satisfy either the Actual Deferral Percentage test or the Average Contribution Percentage test, or both, pursuant to regulations under the Code. Definition: "Qualified Non-Elective Contributions" shall mean contributions (other than Matching Contributions or Qualified Matching Contributions) made by the Employer and allocated to Participant's accounts that the Participant may not elect to receive in cash until distributed from the Plan, that are nonforfeitable when made and that are distributable only in accordance with the distribution provisions that are applicable to Elective Deferrals and Qualified Matching Contributions. 3.8 LIMITATIONS ON EMPLOYEE CONTRIBUTIONS AND EMPLOYER MATCHING CONTRIBUTIONS. (a) GENERAL TESTS. Notwithstanding any other provisions in the Plan, for any Plan Year, the Employer shall be permitted to limit the contributions, as described in Sections 3.2(a) and 3.3 of the Plan, for any Highly Compensated Employee to the extent necessary to ensure that the Plan satisfies one of the following tests: (i) the Average Contribution Percentage for Eligible Participants who are Highly Compensated Employees for the Plan Year shall not exceed the Average Contribution Percentage for Eligible Participants who are Non-Highly Compensated Employees for the Plan Year multiplied by 1.25; or (ii) the Average Contribution Percentage for Eligible Participants who are Highly Compensated Employees for the Plan Year shall not exceed the Average Contribution Percentage for Eligible Participants who are Non-Highly Compensated Employees for the Plan Year multiplied by 2, provided that the Average Contribution Percentage for Eligible Participants who are Highly Compensated Employees does not exceed the Average Contribution Percentage for Eligible Participants who are Non-Highly Compensated Employees by more than two (2) percentage points. -25- (b) DEFINITIONS. For purposes of this Section 3.8 of the Plan, the following definitions shall apply: (i) AVERAGE CONTRIBUTION PERCENTAGE (ACP) shall mean the average (expressed as a percentage) of the Contribution Percentages of the Eligible Participants in a group. (ii) CONTRIBUTION PERCENTAGE shall mean the ratio (expressed as a percentage) of the Participant's Contribution Percentage Amounts to the Participant's Compensation for the Plan Year (whether or not the Employee was a Participant for the entire Plan Year). (iii) ELIGIBLE PARTICIPANT shall mean any Employee who is eligible to make -------------------- Employee Contributions or an Elective Deferral (if the Employer takes such contributions into account in the calculation of the Contribution Percentage) or to receive a Matching Contribution (including forfeitures) or a Qualified Matching Contribution. If an Employee Contribution is required as a condition of participation in the Plan, any Employee who would be a Participant in the Plan if such Employee made such a contribution shall be treated as an Eligible Participant on behalf of whom no Employee Contributions are made. (iv) AGGREGATE LIMIT shall mean the sum of (1) 125% of the greater of the Average Deferral Percentage of the Non-Highly Compensated Employees for the Plan Year or the Average Contribution Percentage of Non-Highly Compensated Employees under the Plan subject to section 401(m) of the Code for the Plan Year beginning with or within the Plan Year of the CODA and (2) the lesser of 200% or two plus the lesser of such Average Deferral Percentage or Average Contribution Percentage. (v) CONTRIBUTIONS PERCENTAGE AMOUNTS shall mean the sum of the Employee -------------------------------- Contributions, Matching Contributions and Qualified Matching Contributions (to the extent not taken into account for purposes of the Average Deferral Percentage test) made under the Plan on behalf of the Participant for the Plan Year. Such Contribution Percentage Amounts shall not include Matching Contributions that are forfeited either to correct Excess Aggregate Contributions or because the contributions to which they relate are Excess Deferrals, Excess Contributions or Excess Aggregate Contributions. If so elected in the Adoption Agreement, the Employer may include Qualified Non-Elective Contributions in the Contribution Percentage Amounts. The Employer also may elect to use Elective Deferrals in the Contribution Percentage Amounts so long as the Average Deferral Percentage test is met before the Elective Deferrals are used in the Actual Deferral Percentage test and continues to be met following the -26- exclusion of those Elective Deferrals that are used to meet the Actual Deferral Percentage test. (vi) EMPLOYEE CONTRIBUTION shall mean any contribution made to the Plan by or on behalf of a Participant that is included in the Participant's gross income in the year in which made and that is maintained under a separate account to which earnings and losses are allocated. (vii) MATCHING CONTRIBUTION shall mean an Employer contribution made to this or any other defined contribution plan on behalf of a Participant on account of an Employee Contribution made by such Participant, or on account of a Participant's Elective Deferral, under a plan maintained by the Employer. (c) SPECIAL RULES. The following special rules shall apply for purposes of Section 3.8: (i) For purposes of this Section 3.8 of the Plan, the Contribution Percentage for any Eligible Participant who is a Highly Compensated Employee for the Plan Year and who is eligible to make Employee Contributions, or to receive Matching Employer Contributions, allocated to his account under two or more plans described in section 401(a) of the Code or arrangements described in section 401(k) of the Code that are maintained by the Employer or an Affiliated Employer shall be determined as if all such contributions were made under a single plan. If a Highly Compensated Employee participates in two or more cash or deferred arrangements that have different Plan Years, all cash or deferred arrangements ending with or within the same calendar year shall be treated as a single arrangement. (ii) In the event that this Plan satisfies the requirements of section 401(m), 401(a)(4) or 410(b) of the Code only if aggregated with one or more other plans, or if one or more other plans satisfy the requirements of section 410(b) of the Code only if aggregated with this Plan, then this Section 3.8 of the Plan shall be applied by determining the contribution percentages of Eligible Participants as if all such plans were a single plan. For Plan Years beginning after December 31, 1989, plans may be aggregated in order to satisfy section 401(m) of the Code only if they have the same Plan Year. (iii) For purposes of determining the Contribution Percentage of a Participant who is a 5-percent owner or one of the ten most highly paid Highly Compensated Employees, the Contribution Percentage Amounts and Compensation of such Participant shall include the Contribution Percentage Amounts and Compensation for the Plan Year of Family Members, as defined in section 414(q)(6) of the Code. Family Members with respect to Highly Compensated Employees, shall be disregarded as separate -27- Employees in determining the Contribution Percentage for Participants who are Non-Highly Compensated Employees and for Participants who are Highly Compensated Employees. (iv) The determination and treatment of the Contribution Percentage of any Participant shall satisfy such other requirements as may be prescribed by the Secretary of the Treasury. (v) Multiple Use: If one or more Highly Compensated Employees participate in both a CODA and a plan subject to the Average Contribution Percentage test maintained by the Employer and the sum of the Average Deferral Percentage and Average Contribution Percentage of those Highly Compensated Employees subject to either or both test exceeds the Aggregate Limit, then the Average Contribution Percentage of those Highly Compensated Employees who also participate in a CODA will be reduced (beginning with such Highly Compensated Employee whose Average Contribution Percentage is the highest) so that the limit is not exceeded. The amount by which each Highly Compensated Employee's Contribution Percentage Amounts is reduced shall be treated as an Excess Aggregate Contribution. The Average Deferral Percentage and Average Contribution Percentage of the Highly Compensated Employees are determined after any corrections required to meet the Average Deferral Percentage and Average Contribution Percentage tests. Multiple use does not occur if both the Average Deferral Percentage and Average Contribution Percentage of the Highly Compensated Employees does not exceed 1.25 multiplied by the Average Deferral Percentage and Average Contribution Percentage of the Non-Highly Compensated Employees. (vi) For purposes of determining the Contribution Percentage test, Employee Contributions are considered to have been made in the Plan Year in which contributed to the Trust. Matching Contributions and Qualified NonElective Contributions will be considered made for a Plan Year if made no later than the end of the twelve-month period beginning on the day after the close of the Plan Year. (vii) The Employer shall maintain records sufficient to demonstrate satisfaction of the ACP test and the amount of Qualified Non-Elective Contributions or Qualified Matching Contributions, or both, used in such test. (d) DISTRIBUTION OF EXCESS AGGREGATE CONTRIBUTIONS. Notwithstanding any other provision of this Plan, Excess Aggregate Contributions, plus any income and minus any loss allocable thereto, shall be forfeited, if forfeitable, or if not forfeitable, distributed no later than the last day of each Plan Year to Participants to whose accounts such Excess Aggregate Contributions were allocated for the -28- preceding Plan Year. Excess Aggregate Contributions shall be allocated to Participants who are subject to the Family Member aggregation rules of section 414(q)(6) of the Code in the manner prescribed by the regulations. Excess Aggregate Contributions of Participants who are subject to the Family Member aggregation rules shall be allocated among Family Members in proportion to the Employee and Matching Contributions (or amounts treated as Matching Contributions) of each Family Member that is combined to determine the combined ACP. If such Excess Aggregate Contributions are distributed more than 2 1/2 months after the last day of the Plan Year in which such excess amounts arose, a ten percent (10%) excess tax will be imposed on the Employer maintaining the Plan with respect to those amounts. Excess Aggregate Contributions shall be treated as Annual Additions under the Plan. Determination of Income or Loss: Excess Aggregate Contributions shall be adjusted for any income or loss. The income or loss allocable to Excess Aggregate Contributions is the income or loss allocable to the Voluntary Qualified Employee Contribution Account, Matching Contribution Account (if any, and if all amounts therein are not used in the ADP test) and, if applicable, Qualified Non-Elective Contributions Account and Elective Deferral Account for the Plan Year multiplied by a fraction, the numerator of which is such Participant's Excess Aggregate Contributions for the year and the denominator is the Participant's account balance(s) attributable to Contribution Percentage Amounts without regard to any income or loss occurring during such Plan Year. Forfeitures of Excess Aggregate Contributions: Forfeitures of Excess Aggregate Contributions may either be reallocated to the accounts of Non-Highly Compensated Employees or applied to reduce Employer contributions, as elected by the Employer in Section 8(b) of the Adoption Agreement. Accounting for Excess Aggregate Contributions: Excess Aggregate Contributions shall be forfeited, if forfeitable, or distributed on a pro rata basis from the Voluntary Employee Contributions Account, Matching Contribution Account and Qualified Matching Contributions Account (and, if applicable, the Participant's Qualified Non-Elective Contributions Account or Elective Deferral Account, or both). Definitions: "Excess Aggregate Contributions" shall mean, with respect to any Plan Year, the excess of: (i) The aggregate Contribution Percentage Amounts taken into account in computing the numerator of the Contribution Percentage actually made on behalf of Highly Compensated Employees for such Plan Year, over -29- (ii) The maximum Contribution Percentage Amounts permitted by the ACP test (determined by reducing contributions made on behalf of Highly Compensated Employees in order of their Contribution Percentages beginning with the highest of such percentages). Such determination shall be made after first determining Excess Elective Deferrals pursuant to Section 3.1 and then determining Excess Contributions pursuant to Section 3.7. ARTICLE IV. ALLOCATION OF FUNDS 4.1 ALLOCATION OF EMPLOYER CONTRIBUTIONS. Employer Contributions made pursuant to Section 3.2 of the Plan shall be allocated in accordance with the Adoption Agreement. 4.2 ALLOCATION OF NET EARNINGS OR LOSSES OF THE TRUST. Subject to the provisions of Section 3.1 of the Trust Agreement, as of each Valuation Date, the net earnings or losses of the Trust including capital gains and losses whether or not realized, since the preceding Valuation Date shall be allocated to the Accrued Benefit of all Participants (or Beneficiaries) in accordance with the ratio which the Accrued Benefit of each Participant bears to the aggregate of all such Accrued Benefits. Segregated Accounts shall be valued separately and earnings and losses of each Segregated Account shall be determined through separate annual valuations. 4.3 VALUATIONS. In determining the earnings or losses of the Trust, as of each Valuation Date the Trust shall be valued at fair market value. 4.4 ACCOUNTING FOR DISTRIBUTIONS. All withdrawals of Participant contributions, all distributions made to a Participant or his Beneficiary, and any transfers to another qualified plan shall be charged to the appropriate subaccount of the Participant's Accrued Benefit. 4.5 SEPARATE ACCOUNTS. A separate account shall be established and maintained to reflect the Accrued Benefit for each Participant, with subaccounts to separately show the division described in Section 1.1 of the Plan. -30- 4.6 INVESTMENT OF FUNDS. (a) INVESTMENT CONTROL. Subject to the provisions of subsections (b) and (c)below and only to the extent accepted by the Trustee, the management and control of the Trust shall be vested in the Trustee. (b) INVESTMENT LIMITATIONS. The Trustee shall invest all funds received from the Employer and all Fund earnings in the Investment Options in the manner from time to time directed in writing by the Employer, provided that (i) if the T. Rowe Price Trust Company is Trustee, one hundred percent (100%) of the total contributions and any earnings thereon must be invested in the Investment Options, or (ii) if the Trustee is other than the T. Rowe Price Trust Company, no more than fifty percent (50%) of the total contributions received by the Trustee and earnings thereon may be invested in assets, as described in the Trust Agreement, other than the Investment Options. (c) PARTICIPANT DIRECTED INVESTMENTS. If provided in the Adoption Agreement, Participants, subject to such reasonable restrictions as the Employer or Sponsor may impose for administrative convenience, may designate what percentage of all contributions will be invested in the Investment Options provided that (i) if the T. Rowe Price Trust Company is the Trustee, one hundred percent (100%) of the total contributions and any earnings thereon must be invested in the Investment Options, or (ii) if the Trustee is other than the T. Rowe Price Trust Company, no more than fifty percent (50%) of the total contributions received by the Trustee and earnings thereon may be invested in assets as described in the Trust Agreement, other than the Investment Options. The Employer must complete a schedule of Participant designations. (d) PARTICIPANT ELECTION. If the Adoption Agreement provides for Participant directed investments, and if a Participant does not make a written designation of an Investment Option, the Employer shall direct the Trustee to invest all amounts held or received on account of such Participant in the Investment Option which in the opinion of the Employer best protects principal. (e) EMPLOYER SECURITIES. If provided in the Adoption Agreement, the Employer and/or Participants may direct that contributions will be invested in Qualifying Employer Securities (within -31- the meaning of section 407(d)(5) of ERISA), subject to such restrictions as the Employer, the Trustee or the Sponsor may impose for administrative convenience or legal compliance. The Employer and/or Participants, as the case may be, must provide such directions in a form satisfactory to the Sponsor. If agreed to in writing between the Sponsor and the Employer, contributions invested in Qualifying Employer Securities shall not be considered in applying the limits on investments set forth in subsections (b) and (c) above. (f) FACILITATION. Notwithstanding any instruction from any Participant for investment of funds in an Investment Option as provided for herein, the Trustee shall have the right to hold uninvested any amounts intended for investment until such time as investment may be made in accordance with subsection (b), (c) or (e) above and the Trust Agreement. ARTICLE V. LIMITATION ON ALLOCATIONS 5.1 PARTICIPANTS NOT COVERED UNDER OTHER PLANS. (a) If the Participant does not participate in, and has never participated in another qualified plan maintained by the Employer, or a welfare benefit fund (as defined in section 419(e) of the Code) maintained by the Employer, or an individual medical account (as defined in section 415(1)(2) of the Code), maintained by the Employer, which provides an Annual Addition (as defined in Section 5.4 below), the amount of Annual Additions which may be credited to the Accrued Benefit of the Participant for any Limitation Year shall not exceed the lesser of the Maximum Permissible Amount or any other limitation contained in this Plan. If contributions for and/or allocations to the Accrued Benefit of the Participant would cause the Annual Additions for the Limitation Year to exceed the Maximum Permissible Amount, the amount contributed or allocated will be reduced to the extent that the Annual Additions for the Limitation Year will equal the Maximum Permissible Amount. (b) Prior to determining a Participant's actual Compensation for the Limitation Year, the Employer may determine the Maximum Permissible Amount for the Participant on the basis of a reasonable estimation of the Participant's Compensation for the Limitation Year, uniformly determined for all Participants similarly situated. (c) As soon as is administratively feasible after the end of the Limitation Year, the Maximum Permissible Amount for the Limitation Year will be determined on the basis of the Participant's actual Compensation for the Limitation Year. -32- (d) If, for any Limitation Year the maximum Annual Additions is exceeded by reason of allocation of forfeitures, a reasonable error in estimating a Participant's Compensation, a reasonable error in determining the amount of Elective Deferrals or under other limited facts and circumstances approved by the Internal Revenue Service, then, any such excess shall be disposed of in the following order: (i) any Voluntary Employee Contributions, and any income attributable thereto, to the extent they would reduce the excess amount, shall be returned to the Participant; (ii) any deferrals, and any income attributable thereto, to the extent they would reduce the excess amount, shall be returned to the Participant; (iii) if after the application of paragraph (i) an excess amount still exists, and the Participant is covered by the Plan at the end of the Limitation Year, the excess amount in the Participant's account shall be used to reduce Employer contributions (including any allocation of forfeitures) for such Participant in the next Limitation Year, and each succeeding Limitation Year, if necessary; (iv) if after the application of paragraph (i) an excess amount still exists, and the Participant is not covered by the Plan at the end of the Limitation Year, the excess amount shall be held unallocated in a suspense account. The suspense account shall be used to reduce future Employer contribution (including allocation of any forfeitures) for all remaining Participants in the next Limitation Year, and each succeeding Limitation Year if necessary; (v) if a suspense account is in existence at any time during the Limitation Year pursuant to this Section, no investment gains or losses or other income may be allocated to such suspense account, and amounts held in the account may not be distributed to the Participants or Beneficiaries. Any balance which may be in the account upon termination of the Plan shall revert to the Employer. If a suspense account is in existence at any time during a particular Limitation Year, all amounts in the suspense account must be allocated and reallocated to Participants' accounts before any Employer or any Employee contributions may be made to the Plan for that Limitation Year. Excess amounts may not be distributed to Participants or former Participants. 5.2 PARTICIPANTS COVERED UNDER OTHER DEFINED CONTRIBUTION PLANS. (a) This Section applies if, in addition to this Plan, the Participant is covered under another qualified master or prototype defined contribution plan maintained by the Employer, a welfare benefit fund (as defined in section 419(e) of the Code) -33- maintained by the Employer, or an individual medical account (as defined in section 415(1)(2) of the Code) maintained by the Employer, which provides an Annual Addition as defined in Section 5.4(a), during any Limitation Year. The Annual Additions which may be credited to the Accrued Benefit of a Participant under this Plan for any such Limitation Year shall not exceed the Maximum Permissible Amount reduced by the Annual Additions credited to the Accrued Benefit of a Participant under the other plans and welfare benefit funds for the same Limitation Year. If the Annual Additions with respect to the Participant under other defined contribution plans and welfare funds maintained by the Employer are less than the Maximum Permissible Amount and the Employer contributions that would otherwise be contributed or allocated to the Accrued Benefit of the Participant under this Plan would cause the Annual Additions for the Limitation Year to exceed the Maximum Permissible Amount, the amount contributed or allocated will be reduced so that the Annual Additions under all plans and funds for the Limitation Year shall equal the Maximum Permissible Amount. If Annual Additions with respect to the Participant under such other defined contribution plans and welfare benefit funds in the aggregate are equal to or greater than the Maximum Permissible Amount, no amount will be contributed or allocated to the Accrued Benefit of the Participant under this Plan for the Limitation Year. (b) Prior to determining the Participant's actual Compensation for the Limitation Year, the Employer may determine the Maximum Permissible Amount for a Participant in the manner described in Section 5.1(b). (c) As soon as administratively feasible after the end of the Limitation Year, the Maximum Permissible Amount for the Limitation Year shall be determined on the basis of the Participant's actual Compensation for the Limitation Year. (d) If pursuant to Section 5.2(c) or as a result of the allocation of forfeitures, a Participant's Annual Additions under this Plan and such other plans would result in an excess amount for a Limitation Year, the excess amount shall be deemed to consist of the Annual Additions last allocated, except that Annual Additions attributable to a welfare benefit fund or individual medical account will be deemed to have been allocated first regardless of the actual allocation date. (e) If an excess amount was allocated to a Participant on an allocation date of this Plan which coincides with an allocation date of another plan, the excess amount attributed to this Plan will be the product of: (i) the total excess amount allocated as of such date, (ii) the ratio of (1) the Annual Additions allocated to the Participant for the Limitation Year as of such date under this Plan to (2) the total Annual -34- Additions allocated to the Participant for the Limitation Year as of such date under this and all the other qualified master or prototype defined contribution plans. (f) Any excess amount attributed to this Plan shall be disposed of in the manner described in Section 5.1(d). (g) If the Participant is covered under another qualified defined contribution plan maintained by the Employer which is not a master or prototype plan, Annual Additions which may be credited to the Participant's account under this Plan for any Limitation Year will be limited in accordance with Sections (a) through (f) above as though the other plan were a master or prototype plan unless the Employer provides other limitations in Section 16 of the Adoption Agreement. 5.3 PARTICIPANTS COVERED UNDER BOTH DEFINED BENEFIT AND DEFINED CONTRIBUTION PLANS. If the Employer maintains, or at any time maintained, a qualified defined benefit plan covering any Participant in this Plan, the sum of the Participant's Defined Benefit Fraction and Defined Contribution Fraction shall not exceed 1.0 in any Limitation Year. The Annual Additions which may be credited to the Accrued Benefit of a Participant under this Plan for any Limitation Year will be limited in accordance with Section 16 of the Adoption Agreement. 5.4 DEFINITIONS. For purposes of Section 5.1 through 5.3, the following definitions shall apply: (a) ANNUAL ADDITIONS for a Limitation Year shall mean the sum of; (i) Employer Contributions, (ii) Employee Contributions, (iii) forfeitures, and (iv) amounts allocated, after March 31, 1984, to an individual medical account, as defined in section 415(1)(2) of the Code, which is part of a pension or annuity plan maintained by the Employer, are treated as Annual Additions to a defined contribution plan. Also amounts derived from contributions paid or accrued after December 31, 1985, in taxable years ending after such date, which are attributable to post-retirement medical benefits, allocated to the separate account of a Key Employee, as defined in section 419A(d)(3) of the Code, under a welfare benefit fund, -35- as defined in section 419(e) of the Code, maintained by the Employer are treated as Annual Additions to a defined contribution plan. For this purpose, any excess amount applied under Section 5.1 or 5.2 in the Limitation Year to reduce Employer contributions will be considered Annual Additions for such Limitation Year. (b) COMPENSATION shall mean a Participant's Earned Income, wages, salaries and fees for professional services and other amounts received for personal services actually rendered in the course of employment with the Employer maintaining the Plan (including, but not limited to, commissions paid salesmen, Compensation for services on the basis of a percentage of profits, commissions on insurance premiums, tips and bonuses), and excluding the following: (i) Employer contributions to a plan of deferred Compensation which are not includible in the Employee's gross income for the taxable year in which contributed, or Employer contributions under a simplified Employee pension plan to the extent such contributions are deductible by the Employee, or any distributions from a plan of deferred Compensation; (ii) amounts realized from the exercise of a non-qualified stock option, or when restricted stock (or property) held by the Employee either becomes freely transferable or is no longer subject to a substantial risk of forfeiture; (iii) amounts realized from the sale, exchange or other disposition of stock acquired under a qualified stock option; and (iv) other amounts which received special tax benefits, or contributions made by the Employer (whether or not under a salary reduction agreement) towards the purchase of an annuity described in section 403(b) of the Code (whether or not the amounts are actually excludible from the gross income of the Employee). For purposes of applying the limitations of this Article, Compensation for a Limitation Year is the Compensation actually paid or includible in gross income during such year. Notwithstanding the above, Compensation for a Participant who is permanently and totally disabled (as defined in section 22(e)(3) of the Code) is the Compensation such Participant would have received for the Limitation Year if the Participant had been paid at the rate of Compensation paid immediately before becoming permanently and totally disabled; such imputed Compensation for the disabled Participant may be taken into account only if the Participant is not a -36- Highly Compensated Employee (as defined in section 414(q) of the Code) and contributions made on behalf of such Participant are nonforfeitable when made. (c) DEFINED BENEFIT FRACTION shall mean a fraction, the numerator of which is the sum of the Participant's projected annual benefit under all defined benefit plans (whether or not terminated) maintained by the Employer, and the denominator of which is the lesser of one hundred twenty-five percent (125%) of the dollar limitation in effect for the Limitation Year under section 415(b) and (d) of the Code or one hundred forty percent (140%) of the Highest Average Compensation including any adjustments under section 415(b) of the Code. Notwithstanding the above, if the Participant was a Participant as of the first day of the first Limitation Year beginning after December 31, 1986, in one or more defined benefit plans maintained by the Employer which were in existence on May 6, 1986, the denominator of this fraction will not be less than 125% of the sum of the annual benefits under such plans which the Participant had accrued as of the close of the last Limitation Year beginning before January 1, 1987, disregarding any changes in the terms and conditions of the Plan after May 5, 1986. The preceding sentence applies only if the defined benefit plans individually and in the aggregate satisfied the requirements of section 415 of the Code for all Limitation Years beginning before January 1, 1987. (d) DEFINED CONTRIBUTION DOLLAR LIMITATION shall mean $30,000 or if greater, one fourth of the defined benefit dollar limitation set forth in section 415(b)(1) of the Code as in effect for the Limitation Year. (e) DEFINED CONTRIBUTION FRACTION shall mean a fraction, the numerator of which is the ----------------------------- sum of the Annual Additions to the Participant's account under all defined contribution plans (whether or not terminated) maintained by the Employer for the current and all prior Limitation Years (including the Annual Additions attributable to the Participant's nondeductible Employee Contributions to all defined benefit plans, whether or not terminated, maintained by the Employer and the Annual Additions attributable to all welfare benefit funds, as defined in section 419(e) of the Code, and individual medical accounts, as defined in section 415(1)(2) of the Code, maintained by the Employer), and the denominator of which is the sum of the maximum aggregate amount for the current and all prior Limitation Years of Service with the Employer (regardless of whether a defined contribution plan was maintained by the Employer). The maximum aggregate amount in any Limitation Year is the lesser of one hundred twenty-five percent (125%) of the dollar limitation determined under section 415(b) and (d) of the Code in effect under section 415(c)(1)(A) of the Code or thirty-five percent (35%) of the Participant's Compensation for such year. -37- If the Employee was a Participant as of the end of the first day of the first Limitation Year beginning after December 31, 1986, in one or more defined contribution plans maintained by the Employer which were in existence on May 6, 1986, the numerator of this fraction will be adjusted if the sum of this fraction and the defined benefit fraction would otherwise exceed 1.0 under the terms of this Plan. Under the adjustment, an amount equal to the product of (1) the excess of the sum of the fractions over 1.0 times (2) the denominator of this fraction, will be permanently subtracted from the numerator of this fraction. The adjustment is calculated using the fractions as they would be computed as of the end of the last Limitation Year beginning before January 1, 1987, and disregarding any changes in the terms and conditions of the Plan made after May 5, 1986, but using the section 415 limitation applicable to the first Limitation Year beginning on or after January 1, 1987. Annual Additions for any Limitation Year beginning before January 1, 1987, shall not be recomputed to treat all Employee Contributions as an Annual Addition. (f) EMPLOYER shall mean the Employer that adopts this Plan, and all members of a -------- controlled group of corporations (as defined in section 414(b) of the Code as modified by section 415(h) of the Code), all commonly controlled trades or businesses (as defined in section 414(c) of the Code as modified by section 415(h) of the Code) or affiliated service groups (as defined in section 414(m) of the Code) of which the adopting Employer is a part and any other entity required to be aggregated with the Employer pursuant to regulations under section 414(o) of the Code. (g) EXCESS AMOUNT shall mean the excess of the Participant's Annual Additions for the Limitation Year over the Maximum Permissible Amount. (h) HIGHEST AVERAGE COMPENSATION shall mean the average Compensation for the three consecutive Years of Service (as measured by the Limitation Year) with the Employer that produces the highest average. (i) LIMITATION YEAR shall mean a calendar year, or the 12 consecutive month period elected by the Employer in the Adoption Agreement. All qualified plans maintained by the Employer must use the same Limitation Year. If the Limitation Year is amended to a different 12 consecutive month period, the new Limitation Year must begin on a date within the Limitation Year in which the amendment is made. (j) MASTER OR PROTOTYPE PLAN shall mean a plan the form of which is the subject of a favorable opinion letter from the Internal Revenue Service. -38- (k) MAXIMUM PERMISSIBLE AMOUNT shall mean the maximum Annual Additions that may be contributed or allocated to a Participant's account under this Plan for any Limitation Year shall not exceed the lesser of: (i) the defined contribution dollar limitation, or (ii) twenty-five percent (25%) of the Participant's Compensation for the Limitation Year. The Compensation limitation referred to in (ii) above shall not apply to any contribution for medical benefits (within the meaning of section 401(h) or 419A(f)(2) of the Code) which is otherwise treated as an Annual Addition under section 415(l)(1) or 419A(d)(2) of the Code. If a short Limitation Year is created because of an amendment changing the Limitation Year to a different 12 consecutive month period, the Maximum Permissible Amount shall not exceed the defined contribution dollar limitation, multiplied by the following fraction: NUMBER OF MONTHS IN THE SHORT LIMITATION YEAR 12 (l) Projected Annual Benefit shall mean the annual retirement benefit (adjusted to an actuarially equivalent straight life annuity if such benefit is expressed in a form other than a straight life annuity or qualified joint and survivor annuity) to which a Participant would be entitled under the terms of the Plan assuming: (i) the Participant will continue employment until the Normal Retirement Age under the Plan (or current age if later), and (ii) the Participant's Compensation for the current Limitation Year and all other relevant factors used to determine benefits under the Plan remain constant for all future Limitation Years. 5.5 CONTROL OF TRADES OR BUSINESSES BY OWNER-EMPLOYEE. If this Plan provides contributions or benefits for one or more Owner-Employees who control both the business for which this Plan is established and one or more other trades or businesses, this Plan and the plan established for other trades or businesses must, when looked at as a single plan, satisfy section 401(a) and (d) of the Code for the Employees of this and all other trades or businesses. If the Plan provides contributions or benefits for one or more Owner-Employees who control one or more other trades or businesses, the Employees of the other trades or -39- businesses must be included in a plan which satisfies section 401(a) and (d) of the Code and which provides contributions and benefits not less favorable than provided for Owner-Employees under this Plan. If an individual is covered as an Owner-Employee under the plans of two or more trades or businesses which are not controlled and the individual controls a trade or business, then the contributions or benefits of the Employees under the plan of the trades or businesses which are controlled must be as favorable as those provided for him under the most favorable plan of the trade or business which is not controlled. For purposes of the preceding paragraphs, an Owner Employee, or two or more Owner-Employees, will be considered to control a trade or business if the Owner Employee, or two or more Owner-Employees together: (a) own the entire interest in an unincorporated trade or business, or (b) in the case of a partnership, own more than 50% of either the capital interest or the profits interest in the partnership. For purposes of the preceding sentence, an Owner-Employee, or two or more Owner-Employees shall be treated as owning any interest in a partnership which is owned, directly or indirectly, by a partnership which such Owner-Employee, or such two or more Owner-Employees, are considered to control within the meaning of the preceding sentence. ARTICLE VI. ENTITLEMENT TO BENEFITS 6.1 RETIREMENT. A Participant shall be deemed to have reached retirement upon his termination of employment on or after the first to occur of the following events: (a) NORMAL RETIREMENT. Upon reaching his Normal Retirement Date as determined in accordance with the Adoption Agreement. (b) EARLY RETIREMENT. To the extent provided in the Adoption Agreement, upon reaching his Early Retirement Date as determined in accordance with the Adoption Agreement. As of his Distribution Date, a retired Participant shall be entitled to the full value of his Accrued Benefit, which shall be deemed to be one hundred percent (100%) vested and nonforfeitable upon reaching his Normal Retirement Date (or Early Retirement Date if -40- provided in the Adoption Agreement) whether or not the Participant continues his employment with the Employer beyond such date. 6.2 DISABILITY. In the event that a Participant, at any time prior to his retirement or other termination of employment with the Employer, shall become totally and permanently disabled, and if proof of such disability satisfactory to the Employer is furnished (which proof shall include a written statement of a licensed physician appointed or approved by the Employer), then, as of his Distribution Date, such Participant shall be entitled to the full value of his Accrued Benefit which shall be deemed to be one hundred percent (100%) vested and nonforfeitable. For purposes of this Section 6.2, total and permanent disability shall mean the inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or to last for a continuous period of at least twelve (12) months. 6.3 DEATH. In the event of the death of a Participant prior to his retirement, disability or other termination of employment with the Employer, the full value of his Accrued Benefit, which shall be deemed to be one hundred percent (100%) vested and nonforfeitable shall become payable (according to the provisions of Article VII of the Plan), to his designated Beneficiary, upon submission of proof of death satisfactory to the Employer. 6.4 TERMINATION OF EMPLOYMENT. In the event a Participant terminates employment with the Employer for any reason other than retirement, disability or death, such Participant shall become entitled to the vested portion of his Accrued Benefit, payable according to the provisions of Article VII of the Plan, which shall be determined as follows: (a) A Participant shall at all times be one hundred percent (100%) vested in the portion of his Accrued Benefit derived from his Elective Deferral Account, Voluntary Employee Contributions Account, Qualified Non-Elective Contributions Account, Qualified Matching Contributions Account and Rollover or Transfer Account. (b) A Participant's vested and nonforfeitable interest in the portion of his Accrued Benefit derived from his Employer Contribution Accounts shall be determined in accordance with the vesting schedule selected by the Employer in the Adoption Agreement. If no vesting schedule is selected in the Adoption Agreement, a Participant shall be considered 100% vested in all portions of his Accrued Benefit. -41- (c) In the event of a termination of employment as described in this Section 6.4 at a time when a Participant's vested interest in his Employer Contribution Account is less than 100%, then, as of the forfeiture date set forth in Section 7.7 of the Plan, that portion which shall not have been vested shall be forfeited and used either to reduce Employer Contributions or reallocated among the accounts of other Participants as determined in the Adoption Agreement. (d) In order to determine the vested interest of a Participant after a Break in Service, the following shall apply: (i) If the Employer has elected in the Adoption Agreement to credit Service based on Elapsed Time, then, for purposes of the vesting schedule selected in the Adoption Agreement, the crediting of Service shall be subject to the following: (1) If a Participant who has voluntarily terminated employment or has been discharged by the Employer returns to employment and is credited with an Hour of Service on or before incurring a Period of Severance (consisting of less than 12 consecutive months), the Participant will receive credit for the time elapsed during such absence; (2) If a Participant is absent for a reason other than termination or discharge and then voluntarily terminates or is discharged, the date on which the Participant must first be credited with an Hour of Service to receive credit for the time elapsed during such absence is the first anniversary of the first day of absence; (3) If a Participant has a Period of Severance of five (5) years or more, then Service after such Period of Severance shall not be taken into account for purposes of determining the nonforfeitable percentage of the Participant's Accrued Benefit derived from Employer contributions which accrued prior to such Period of Severance. (ii) If the Employer has elected in the Adoption Agreement to credit Service based on Hours of Service and Years of Service, then, for purposes of the vesting schedule selected in the Adoption Agreement, the crediting of Service shall be determined as follows: (1) In the case of a Participant who has five (5) consecutive 1-year Breaks in Service, all Years of Service after such Breaks in Service shall be disregarded for purposes of determining the Participant's vested Accrued Benefit derived from Employer contributions which -42- accrued before such breaks, but both pre-break and post-break Service shall count for purposes of determining the Participant's vested Accrued Benefit derived from Employer contributions accruing after such breaks. Both accounts shall share in the earnings and losses of the Trust; (2) In the case of a Participant who does not have five (5) consecutive 1-year Breaks in Service, both the pre-break and post-break Service shall count in determining both the Participant's pre-break and post-break vested Accrued Benefit derived from Employer contributions. (e) If the Plan's vesting schedule is amended, or the Plan is amended in any way that directly or indirectly affects the computation of the Participant's nonforfeitable percentage or if the Plan is deemed amended by an automatic change to or from a Top Heavy vesting schedule, each Participant with at least 3 Years of Service with the Employer may elect to have the nonforfeitable percentage computed under the Plan without regard to such amendment or change. The period during which the election may be made shall commence with the date the amendment is adopted or deemed to be made and shall end on the latest of: (i) 60 days after the amendment is adopted; (ii) 60 days after the amendment becomes effective; or (iii) 60 days after the Participant is issued written notice of the amendment by the Employer or Plan Administrator. 6.5 OTHER PERMITTED DISTRIBUTIONS. (a) HARDSHIP. In addition to the in-service withdrawals described in Section 7.8 and subject to the provisions of Section 8.4 of the Plan, where applicable, to the extent provided in the Adoption Agreement, distributions of Elective Deferrals or the vested portion of Employer Contribution Accounts may be made on account of financial hardship if the distribution is necessary in light of the immediate and heavy financial needs of the Participant. Notwithstanding the preceding, for Plan Years beginning after December 31, 1988, amounts attributable to Qualified Non-Elective Contributions and Qualified Matching Contributions may not be distributed merely on account of hardship. Also, income allocated to Elective Deferrals after December 31, 1988 may not be distributed on account of hardship. Distribution of Elective Deferrals (and earnings thereon accrued as of December -43- 31, 1988) may be made to a Participant in the event of hardship. For purposes of this Section, hardship is defined as an immediate and heavy financial need of the Employee where such Employee lacks other available resources. Hardship distributions are subject to the spousal consent requirements contained in sections 401(a)(11) and 417 of the Code. (i) The following are the only financial needs considered immediate and heavy: deductible medical expenses (within the meaning of section 213(d) of the Code) of the Employee, the Employee's spouse, children or dependents; the purchase (excluding mortgage payments) of a principal residence of the Employee; payment of tuition and related educational fees for the next twelve months of post-secondary education for the Employee, the Employee's spouse, children or dependents; or the need to prevent the eviction of the Employee from, or a foreclosure on the mort gage of, the Employee's principal residence. (ii) A distribution will be considered as necessary to satisfy an immediate and heavy financial need of the Employee only if: (1) The Employee has obtained all distributions, other than hardship distributions, and all nontaxable loans under all plans maintained by the Employer; (2) All plans maintained by the Employer provide that the Employee's Elective Deferrals (and Employee Contributions) will be suspended for twelve months after the receipt of the hardship distribution; (3) The distribution is not in excess of the amount of an immediate and heavy financial need (including amounts necessary to pay any federal, state or local income taxes or penalties reasonably anticipated to result from the distribution); and (4) All plans maintained by the Employer provide that the Employee may not make Elective Deferrals for the Employee's taxable year immediately following the taxable year of the hardship distribution in excess of the applicable limit under section 402(g) of the Code for such taxable year less the amount of such Employee's Elective Deferrals for the taxable year of the hardship distribution. (iii) Processing of applications and distributions of amounts under this Section, on account of a bona fide financial hardship, must be made as soon as administratively feasible. (b) ATTAINMENT OF AGE 59 1/2. -44- To the extent provided in the Adoption Agreement, a Participant shall be permitted to withdraw all or a portion of his vested Accrued Benefit under the Plan, on or after the attainment of age 59 1/2. (c) DISTRIBUTION UPON PLAN TERMINATION. To the extent provided in the Adoption Agreement the full value of a Participant's Accrued Benefit shall be distributed to the Participant (or his Beneficiary) as soon as administratively feasible after the termination of the Plan, provided that neither the Employer nor an Affiliated Employer maintains a successor plan. If the Employer does not elect this option in the Adoption Agreement, the provisions under Section 13.2 of the Plan shall apply. (d) DISTRIBUTION UPON SALE OF ASSETS. To the extent provided in the Adoption Agreement Section 10(d), the full value of a Participant's Accrued Benefit may at Participant's discretion be distributed to the Participant as soon as administratively feasible after the sale, to an entity that is not an Affiliated Employer, of substantially all of the assets used by the Employer in the trade or business in which the Participant is employed. If such entity continues to maintain this Plan, this provision shall apply with respect to Employees who continue employment with the entity acquiring such assets. (e) DISTRIBUTION UPON SALE OF SUBSIDIARY. To the extent provided in the Adoption Agreement Section 10(d), the full value of a Participant's Accrued Benefit may at the Participant's discretion be distributed to the Participant as soon as administratively feasible after the sale, to an entity that is not an Affiliated Employer, of an incorporated Affiliated Employer's interest in a subsidiary of which the Participant is employed. If such entity continues to maintain this Plan, this provision shall apply with respect to Employees who continue employment with such subsidiary. ARTICLE VII. DISTRIBUTION OF BENEFITS 7.1 GENERAL. Except as otherwise provided in Article VIII, Joint and Survivor Annuity Requirements, the requirements of this Article shall apply to any distribution of a Participant's interest and will take precedence over any inconsistent provisions of this Plan. Unless otherwise specified, the provisions of this Article apply to calendar years beginning after December 31, 1984. -45- All distributions required under this Article shall be determined and made in accordance with the Income Tax Regulations under section 401(a)(9), including the minimum distribution incidental benefit requirement of section 1.401(a)(9)-2 of the regulations. 7.2 METHOD OF DISTRIBUTION. To the extent provided in the Adoption Agreement, and subject to the provisions of Article VIII of the Plan, a Participant may elect to have his Accrued Benefit distributed in the following manner; (a) lump sum; (b) monthly, quarterly or annual installments; (c) a paid-up annuity contract for the Participant and/or his Beneficiary (any annuity contract distributed under the Plan shall be issued so as to be nontransferable). Payment of benefits may be made in cash or in kind at the Participant's discretion. In the absence of an election by the Participant, distribution will be made in a lump sum payment. The Plan Administrator will instruct the Trustee as to the insurer and the form of any annuity contract to be purchased and the terms of any annuity contract purchased and distributed by the Plan to a Participant or spouse shall comply with the requirements of this Plan. 7.3 INSTALLMENT PAYMENTS. If all or any portion of a Participant's Accrued Benefit is to be paid in installments, the Participant shall determine the period over which such installments shall be paid. In the discretion of the Employer, the total amount to be so distributed shall either: (a) continue to be invested in those assets currently retained in the Trust, in which case any income, gain or loss attributable thereto (but not Employer contributions or forfeitures) shall be reflected in the installment distributions, or (b) be transferred to a Segregated Account. 7.4 DISTRIBUTION REQUIREMENTS. (a) COMMENCEMENT OF BENEFITS. (i) Unless the Participant elects otherwise, distribution of benefits will begin no later than the 60th day after the latest of the close of the Plan Year in which: (1) the Participant attains age 65 (or the Normal Retirement Age specified in the Plan, if earlier); -46- (2) occurs the 10th anniversary of the year in which the Participant commenced participation in the Plan; or (3) the Participant terminates Service with the Employer. (ii) Notwithstanding the foregoing, the failure of a Participant and spouse to consent to a distribution while a benefit is immediately distributable within the meaning of Section 7.6 of the Plan, shall be deemed to be an election to defer commencement of payment of any benefit sufficient to satisfy this Section. (b) LIMITS ON SETTLEMENT OPTIONS. As of the first distribution calendar year, distributions, if not made in a single sum, may only be made over one of the following periods (or a combination thereof); (i) the life of the Participant, (ii) the life of the Participant and a designated Beneficiary, (iii) a period certain not extending beyond the life expectancy of the Participant, or (iv) a period certain not extending beyond the joint life and last survivor expectancy of the Participant and a designated Beneficiary. (c) MINIMUM AMOUNTS TO BE DISTRIBUTED. If the Participant's interest is to be distributed in other than a single sum, the following minimum distribution rules shall apply on or after the required beginning date: (i) INDIVIDUAL ACCOUNT. (1) If a Participant's benefit is to be distributed over (a) a period not extending beyond the life expectancy of the Participant or the joint life and last survivor expectancy of the Participant and the Participant's designated Beneficiary or (b) a period not extending beyond the life expectancy of the designated Beneficiary, the amount required to be distributed for each calendar year, beginning with distributions for the first distribution calendar year, must at least equal the quotient obtained by dividing the Participant's benefit by the applicable life expectancy. -47- (2) For calendar years beginning before January 1, 1989, if the Participant's spouse is not the designated Beneficiary, the method of distribution selected must assure that at least 50% of the present value of the amount available for distribution is paid within the life expectancy of the Participant. (3) For calendar years beginning after December 31, 1988, the amount to be distributed each year, beginning with distributions for the first distribution calendar year shall not be less than the quotient obtained by dividing the Participant's benefit by the lesser of (a) the applicable life expectancy or (b) if the Participant's spouse is not the designated Beneficiary, the applicable divisor determined from the table set forth in Q&A-4 of section 1.401(a)(9)-2 of the Income Tax Regulations. Distributions after the death of the Participant shall be distributed using the applicable life expectancy in Section 7.4(c)(i) above as the relevant divisor without regard to regulations section 1.401(a)(9)-2. (4) The minimum distribution required for the Participant's first distribution calendar year must be made on or before the Participant's required beginning date. The minimum distribution for other calendar years, including the minimum distribution for the distribution calendar year in which the Employee's required beginning date occurs, must be made on or before December 31 of that distribution calendar year. (ii) Other forms. If the Participant's benefit is distributed in the form of an annuity purchased from an insurance company, distributions thereunder shall be made in accordance with the requirements of section 401(a)(9) of the Code and the regulations thereunder. 7.5 DISTRIBUTION OF DEATH BENEFITS. (a) METHOD OF DISTRIBUTIONS. (i) If the Participant dies after distribution of his or her interest has begun, the remaining portion of such interest will continue to be distributed at least as rapidly as under the method of distribution being used prior to the Participant's death. (ii) If the Participant dies before distribution of his or her interest begins, distribution of the Participant's entire interest shall be completed by -48- December 31 of the calendar year containing the fifth anniversary of the Participant's death except to the extent that an election is made to receive distributions in accordance with (1) or (2) below: (1) if any portion of the Participant's interest is payable to a designated Beneficiary, distributions may be made over the life or over a period certain not greater than the life expectancy of the designated Beneficiary commencing on or before December 31 of the calendar year immediately following the calendar year in which the Participant died; (2) if the designated Beneficiary is the Participant's surviving spouse, the date distributions are required to begin in accordance with (1) above shall not be earlier than the later of (a) December 31 of the calendar year immediately following the calendar year in which the Participant died and (b) December 31 of the calendar year in which the Participant would have attained age 70 1/2. If the Participant has not made an election pursuant to this Section (ii) by the time of his or her death, the Participant's designated Beneficiary must elect the method of distribution no later than the earlier of (a) December 31 of the calendar year in which distributions would be required to begin under this Section, or (b) December 31 of the calendar year which contains the fifth anniversary of the date of death of the Participant. If the Participant has no designated Beneficiary, or if the designated Beneficiary does not elect a method of distribution, distribution of the Participant's entire interest must be completed by December 31 of the calendar year containing the fifth anniversary of the Participant's death. (iii) For purposes of Section 7.5(a)(ii) above, if the surviving spouse dies after the Participant, but before payments to such spouse begin, the provisions of Section 7.5(a)(ii), with the exception of paragraph (2) therein, shall be applied as if the surviving spouse were the Participant. (iv) For purposes of this Section 7.5, any amount paid to a child of the Participant will be treated as if it had been paid to the surviving spouse if the amount becomes payable to the surviving spouse when the child reaches the age of majority. (v) For the purposes of this Section 7.5, distribution of a Participant's interest is considered to begin on the Participant's required beginning date (or, if Section 7.5(a)(iii) above is applicable, the date distribution is required to begin to the surviving spouse pursuant to Section 7.5(a)(ii) above). If -49- distribution in the form of an annuity described in Section 7.4(c)(i)(2) above irrevocably commences to the Participant before the required beginning date, the date distribution is considered to begin is the date distribution actually commences. (b) DEFINITIONS. (i) APPLICABLE LIFE EXPECTANCY. The life expectancy (or joint life and last --------------------------- survivor expectancy) is calculated using the attained age of the Participant (or designated Beneficiary) as of the Participant's (or designated Beneficiary's) birthday in the applicable calendar year reduced by one for each calendar year which has elapsed since the date life expectancy was first calculated. If life expectancy is being recalculated, the applicable life expectancy shall be the life expectancy as so recalculated. The applicable calendar year shall be the first distribution calendar year, and if life expectancy is being recalculated, such succeeding calendar year. If annuity payments commence in accordance with Section 7.4(c)(i)(2) before the required beginning date, the applicable calendar year is the year such payments commence. If distribution is in the form of an immediate annuity purchased after the Participant's death with the Participant's remaining interest, the applicable calendar year is the year of purchase. (ii) DESIGNATED BENEFICIARY. The individual who is designated as the Beneficiary under the Plan in accordance with section 401(a)(9) of the Code and the regulations thereunder. (iii) DISTRIBUTION CALENDAR YEAR. A calendar year for which a minimum --------------------------- distribution is required. For distributions beginning before the Participant's death, the first distribution calendar year is the calendar year immediately preceding the calendar year which contains the Participant's required beginning date. For distributions beginning after the Participant's death, the first distribution calendar year is the calendar year in which distributions are required to begin pursuant to Section 7.5(a) above. (iv) LIFE EXPECTANCY. Life expectancy and joint life and last survivor ---------------- expectancy are computed by use of the expected return multiples in Tables V and VI of section 1.72-9 of the Income Tax Regulations. Unless otherwise elected by the Participant (or spouse, in the case of distributions described in Section 7.5(a)(ii)(2) above) by the time distributions are required to begin, life expectancies shall be recalculated annually. Such election shall be irrevocable as to the Participant (or spouse) and shall apply to all subsequent years. The life expectancy of a nonspouse Beneficiary may not be recalculated. -50- (v) PARTICIPANT'S BENEFIT. (1) The account balance as of the last Valuation Date in the calendar year immediately preceding the distribution calendar year (valuation calendar year) increased by the amount of any contributions or forfeitures allocated to the account balance as of dates in the valuation calendar year after the Valuation Date and decreased by distributions made in the valuation calendar year after the Valuation Date. (2) Exception for second distribution calendar year. For purposes of paragraph (1) above, if any portion of the minimum distribution for the first distribution calendar year is made in the second distribution calendar year on or before the required beginning date, the amount of the minimum distribution made in the second distribution calendar year shall be treated as if it has been made in the immediately preceding distribution calendar year. (vi) REQUIRED BEGINNING DATE. (1) GENERAL RULE. The required beginning date of a Participant is the first day of April of the calendar year following the calendar year in which the Participant attains age 70 1/2. (2) TRANSITIONAL RULES. The required beginning date of a Participant who attains age 70 1/2 before January 1, 1988, shall be determined in accordance with (a) or (b) below: (A) NON-5-PERCENT OWNERS. The required beginning date of a Participant who is not a 5-percent owner is the first day of April of the calendar year following the calendar year in which the later of retirement or attainment of age 70 1/2 occurs. (B) 5-PERCENT OWNERS. The required beginning date of a Participant who is a 5-percent owner during any year beginning after December 31, 1979, is the first day of April following the later of: i) the calendar year in which the Participant attains age 70 1/2 or ii) the earlier of the calendar year with or within which ends the Plan Year in which the Participant becomes -51- a 5-percent owner, or the calendar year in which the Participant retires. The required beginning date of a Participant who is not a 5-percent owner who attains age 70 1/2 during 1988 and who has not retired as of January 1, 1989, is April 1, 1990. (3) 5-PERCENT OWNER. A Participant is treated as a 5-percent owner for purposes of this Section if such Participant is a 5- percent owner as defined in section 416(i) of the Code (determined in accordance with section 416 of the Code but without regard to whether the Plan is Top Heavy) at any time during the Plan Year ending with or within the calendar year in which such owner attains age 66 1/2 or any subsequent Plan Year. (4) DISTRIBUTIONS BEGUN. Once distributions have begun to a 5-percent owner under this Section, they must continue to be distributed, even if the Participant ceases to be a 5-percent owner in a subsequent year. (c) TRANSITIONAL RULE. (i) Notwithstanding the other requirements of this Article and subject to the requirements of Article VIII of the Plan, distribution on behalf of any Employee, including a 5-percent owner, may be made in accordance with all of the following requirements (regardless of when such distribution commences): (1) The distribution by the Trust is one which would not have disqualified such Trust under section 401(a)(9) of the Code as in effect prior to amendment by the Deficit Reduction Act of 1984; (2) The distribution is in accordance with a method of distribution designated by the Employee whose interest in the Trust is being distributed or, if the Employee is deceased, by a Beneficiary of such Employee; (3) Such designation was in writing, was signed by the Employee or the Beneficiary, and was made before January 1, 1984; (4) The Employee had accrued a benefit under the Plan as of December 31, 1983; -52- (5) The method of distribution designated by the Employee or the Beneficiary specifies the time at which distribution will commence, the period over which distributions will be made, and in the case of Employee listed in order of priority. (ii) A distribution upon death will not be covered by this transitional rule unless the information in the designation contains the required information described above with respect to the distributions to be made upon the death of the Employee. (iii) For any distribution which commences before January 1, 1984, but continues after December 31, 1983, the Employee, or the Beneficiary, to whom such distribution is being made, will be presumed to have designated the method of distribution under which the distribution is being made if the method of distribution was specified in writing and the distribution satisfies the requirements in 7.5(c)(i)(1) and (5). (iv) If a designation is revoked, any subsequent distribution must satisfy the requirements of section 401(a)(9) of the Code and the regulations thereunder. If a designation is revoked subsequent to the date distributions are required to begin, the Trust must distribute by the end of the calendar year following the calendar year in which the revocation occurs the total amount not yet distributed which would have been required to have been distributed to satisfy section 401(a)(9) of the Code and the regulations thereunder, but for the section 242(b)(2) election. For calendar years beginning after December 31, 1988, such distributions must meet the minimum distribution incidental benefit requirements in section 1.401(a)(9)-2 of the Income Tax Regulations. Any changes in the designation will be considered to be a revocation of the designation. However, the mere substitution or addition of another Beneficiary (one not named in the designation) under the designation will not be considered to be a revocation of the designation, so long as such substitution or addition does not alter the period over which distributions are to be made under the designation, directly or indirectly (for example, by altering the relevant measuring life). In the case in which an amount is transferred or rolled over from one plan to another plan, the rules in Q&A J-2 and Q&A J-3 shall apply. 7.6 DISTRIBUTION UPON TERMINATION OF EMPLOYMENT AND RESTRICTIONS ON IMMEDIATE DISTRIBUTION. If the value of a Participant's vested account balance derived from Employer and Employee Contributions exceeds (or at the time of any prior distribution exceeded) $3,500, and the account balance is immediately distributable, the Participant and the -53- Participant's spouse (or where either the Participant or the spouse has died, the survivor) must consent to any distribution of such account balance. The consent of the Participant and the Participant's spouse shall be obtained in writing within the 90-day period ending on the annuity starting date. The annuity starting date is the first day of the first period for which an amount is paid as an annuity or any other form. The Plan Administrator shall notify the Participant and the Participant's spouse of the right to defer any distribution until the Participant's account balance is no longer immediately distributable. Such notification shall include a general description of the material features, and an explanation of the relative values of the optional forms of benefit available under the Plan, in a manner that would satisfy the notice requirements of section 417(a)(3) of the Code, and shall be provided no less than 30 days and no more than 90 days prior to the annuity starting date. Notwithstanding the foregoing, only the Participant needs consent to the commencement of a distribution in the form of a qualified joint and survivor annuity while the account balance is immediately distributable. (Furthermore, if payment in the form of a qualified joint and survivor annuity is not required with respect to the Participant pursuant to Section 8.6 of the Plan, only the Participant needs consent to the distribution of an account balance that is immediately distributable.) Neither the consent of the Participant nor the Participant's spouse shall be required to the extent that a distribution is required to satisfy section 401(a)(9) or 415 of the Code. In addition, upon termination of this Plan, if the Plan does not offer an annuity option (purchased from a commercial provider), the Participant's account balance may, without the Participant's consent, be distributed to the Participant or transferred to another defined contribution plan (other than an employee stock ownership plan as defined in section 4975(e)(7) of the Code) within the same controlled group. An account balance is immediately distributable if any part of the account balance could be distributed to the Participant (or surviving spouse) before the Participant attains (or would have attained if not deceased) the later of Normal Retirement Age or age 62. For purposes of determining the applicability of the foregoing consent requirements to distributions made before the first day of the first Plan Year beginning after December 31, 1988, the Participant's vested account balance shall not include amounts attributable to accumulated deductible Employee Contributions within the meaning of section 72(o)(5)(B) of the Code. In the absence of an election to receive an immediate distribution, the Participant's Accrued Benefit shall, in the discretion of the Employer, remain invested in the commingled Trust assets or be transferred to a Segregated Account. The following provisions shall apply to termination benefits: (a) The distribution of benefits to a Participant who has reached his Distribution Date by reason of a termination of employment other than retirement, disability or death -54- shall be deferred until the first date the Participant would have been eligible for retirement under the Plan unless the Participant elects to commence distribution of such benefits at an earlier date. Prior to the commencement of benefits, the deferred benefits shall, in the discretion of the Employer, remain invested in the commingled Trust assets or be transferred to a Segregated Account. (b) If the vested portion of the Accrued Benefit of a Participant who terminates employment for reasons other than retirement, disability or death is less than 100%, so that his Distribution Date does not coincide with the date on which he ceases to be an Employee, such Accrued Benefit shall, in the discretion of the Employer, remain invested in the commingled assets of the Trust or be transferred to a Segregated Account pending distribution. The Participant may elect to receive the vested portion of his Accrued Benefit at any time prior to the Distribution Date. (c) If a Participant separates from service before satisfying the age requirement for early retirement, but has satisfied the Service requirement, the Participant will be entitled to elect an early retirement benefit upon satisfaction of such age requirement. 7.7 FORFEITURE AND SPECIAL VESTING FORMULA. If the vested portion of the Accrued Benefit of a Participant who terminates employment for reasons other than retirement, disability or death, as described in Article VI of the Plan, is less than 100% and such Participant receives a distribution of the vested portion of his Accrued Benefit, forfeiture of the nonvested portion of his Accrued Benefit shall occur (subject to restoration pursuant to Section 2.5 of the Plan) as of the date on which the distribution is made. If upon termination of employment, a Participant has no vested interest in his Accrued Benefit, forfeiture of his entire Accrued Benefit shall occur (subject to restoration pursuant to Section 2.5 of the Plan) as of the date of termination of employment. In any other case involving a termination described in Section 7.5(a), forfeiture of the nonvested portion of the terminated Participant's Accrued Benefit shall occur as of the earliest of: (a) his date of death following termination of employment, or (b) the last day of the Plan Year in which he incurs 5-consecutive 1-year Breaks in Service. If a Participant terminates Service, and the value of the Participant's vested account balance derived from Employer and Participant contributions is not greater than $3,500, the Participant will receive a distribution of the value of the entire vested portion of such account balance and the nonvested portion will be treated as a forfeiture. For purposes of Section 6.5, if a distribution is made at a time when a Participant has a nonforfeitable right to less than 100% of the account balance derived from Employer contributions and the Participant may increase the nonforfeitable percentage in the -55- account, a separate account shall be established for the Participant's Employer Contributions Accounts as of the time of the distribution, and at any relevant time the vested portion of the separate account shall be equal to an amount determined by the formula: P(AB+(RXD))-(RXD) For purposes of applying the formula, P is the vested percentage at the relevant time, AB is the separate account balance at the relevant time, D is the amount of the distribution, R is the ratio of the separate account balance at the relevant time to the separate account balance after distribution, and the relevant time is the Participant's Distribution Date. 7.8 DISTRIBUTION FROM EMPLOYEE CONTRIBUTIONS ACCOUNTS. (a) VOLUNTARY EMPLOYEE CONTRIBUTIONS. A Participant who has made Voluntary Employee Contributions to the Plan may withdraw such contributions at such times as permitted by the Employer by submitting a written request to the Employer specifying the amount to be withdrawn. A distribution from the Participant's Voluntary Employee Contributions Account shall be calculated on a pro rata basis; thus, such distribution shall be considered in part a return of contributions and in part earnings on such contributions. However, if on May 5, 1986, Voluntary Employee Contributions were available for distribution, under the terms of the Plan, prior to separation of Service, then the pro rata rules will not apply to Voluntary Employee Contributions made prior to January 1, 1987. The Participant may designate whether the distribution is to be made from pre-1987 or post-1986 contributions. (b) ROLLOVER/TRANSFER ACCOUNTS. A Participant may withdraw any amount from his Rollover/Transfer Account, not in excess of the value of his account, at such times as permitted by the Employer by submitting a written request to the Employer specifying the amount to be withdrawn. Subject to the provisions of this Section 7.8 and Section 6.5(a) of the Plan, the Participant's Voluntary Employee Contributions Account and Rollover/Transfer Account shall be payable at the same time, in the same manner, and, in the event of death, to the same Beneficiary as is his Elective Deferral and Employer Contributions Accounts. 7.9 DIRECT ROLLOVER. (a) APPLICABILITY. -56- This Section applies to distributions made on or after January 1, 1993. Notwithstanding any provision of the Plan to the contrary that would otherwise limit a distributee's election under this 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. (b) DEFINITIONS. (i) ELIGIBLE ROLLOVER DISTRIBUTION. An eligible rollover distribution is any ------------------------------- distribution of all or any portion of the balance to the credit of the distributee, except that an eligible rollover distribution does not include any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the distributee or the joint lives (or joint life expectancies) of the distributee and the distributee's designated Beneficiary, or for a specified period of ten years or more; any distribution to the extent such distribution is required under section 401(a)(9) of the Code; and the portion of any distribution that is not includible in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to Employer securities). (ii) ELIGIBLE RETIREMENT PLAN. An eligible retirement plan is an individual ------------------------- retirement account described in section 408(a) of the Code, an individual retirement annuity described in section 408(b) of the Code, an annuity plan described in section 403(a) of the Code, or a qualified trust described in section 401(a) of the Code, that accepts the distributee's eligible rollover distribution. However, in the case of an eligible rollover distribution to the surviving spouse, an eligible retirement plan is an individual retirement account or individual retirement annuity. (iii) DISTRIBUTEE. A distributed 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 retirement order, as described in section 414(p) of the Code, are distributees with regard to the interest of the spouse or former spouse. (iv) DIRECT ROLLOVER. A direct rollover is a payment by the plan to the eligible retirement plan specified by the distributee. -57- ARTICLE VIII. JOINT AND SURVIVOR ANNUITY REQUIREMENTS The provisions of this Article shall take precedence over any conflicting provisions of the Plan. 8.1 APPLICABILITY. Except as provided with respect to certain profit sharing plans in Section 8.6 of this Article, the provisions of this Article shall apply to any Participant who is credited with at least one Hour of Service with the Employer on or after August 23, 1984, and such other Participants as provided in Section 8.7. 8.2 QUALIFIED JOINT SURVIVOR ANNUITY. Unless an optional form of benefit is selected pursuant to a qualified election within the 90-day period ending on the annuity starting date, a married Participant's vested account balance will be paid in the form of a Qualified Joint and Survivor Annuity and an unmarried Participant's vested account balance will be paid in the form of a life annuity. The Participant may elect to have such annuity distributed upon attainment of the earliest retirement age under the Plan. 8.3 QUALIFIED PRERETIREMENT SURVIVOR ANNUITY. Unless an optional form of benefit has been selected within the election period pursuant to a qualified election, if a Participant dies before his annuity starting date, then the Participant's vested account balance shall be applied toward the purchase of an annuity for the life of the surviving spouse. The surviving spouse may elect to have such annuity distributed immediately after the Participant's death. 8.4 DEFINITIONS. (a) ELECTION PERIOD. The period which begins on the first day of the Plan Year in which the Participant attains age 35 and ends on the date of the Participant's death. If a Participant separates from Service prior to the first day of the Plan Year in which age 35 is attained, with respect to the account balance as of the date of separation, the election period shall begin on the date of separation. (b) EARLIEST RETIREMENT AGE. The earliest date on which, under the Plan, the Participant could elect to receive retirement benefits. (c) QUALIFIED ELECTION. A waiver of a Qualified Joint and Survivor Annuity or a Qualified Preretirement Survivor Annuity. Any waiver of a Qualified Joint and Survivor Annuity or a Qualified Preretirement Survivor Annuity shall not be effective unless: (i) the Participant's spouse consents in writing to the election; (ii) -58- the election designates a specific Beneficiary, including any class of Beneficiaries or any contingent Beneficiaries, which may not be changed without spousal consent (or the spouse expressly permits designations by the Participant without any further spousal consent); (iii) the spouse's consent acknowledges the effect of the election; and (iv) the spouse's consent is witnessed by a Plan representative or notary public. Additionally, a Participant's waiver of the Qualified Joint and Survivor Annuity shall not be effective unless the election designates a form of benefit payment which may not be changed without spousal consent (or the spouse expressly permits designations by the Participant without any further spousal consent). If it is established to the satisfaction of a Plan representative that there is no spouse or that the spouse cannot be located, a waiver will be deemed a qualified election. Any consent by a spouse obtained under this provision (or establishment that the consent of a spouse may not be obtained) shall be effective only with respect to such spouse. A consent that permits designations by the Participant without any requirement of further consent by such spouse must acknowledge that the spouse has the right to limit consent to a specific Beneficiary, and a specific form of benefit where applicable, and that the spouse voluntarily elects to relinquish either or both of such rights. A revocation of a prior waiver may be made by a Participant without the consent of the spouse at any time before the commencement of benefits. The number of revocations shall not be limited. No consent obtained under this provision shall be valid unless the Participant has received notice as provided in Section 8.5 below. (d) QUALIFIED JOINT AND SURVIVOR ANNUITY. An immediate annuity for the life of the Participant with a survivor annuity for the life of the spouse which is not less than 50% and not more than 100% of the amount of the annuity which is payable during the joint lives of the Participant and the spouse and which is the amount of benefit which can be purchased with the Participant's vested account balance. The percentage of the survivor annuity under the Plan shall be 50%. (e) SPOUSE (SURVIVING SPOUSE). The spouse or surviving spouse of the Participant, provided that a former spouse will be treated as the spouse or surviving spouse (and a current spouse will not be treated as the spouse or surviving spouse to the extent provided) under a qualified domestic relations order as described in section 414(p) of the Code. (f) ANNUITY STARTING DATE. The first day of the first period for which an amount is paid as an annuity or any other form. (g) VESTED ACCOUNT BALANCE. The aggregate value of the Participant's vested account balances derived from Employer and Employee contributions (including rollovers), whether vested before or upon death, including the proceeds of insurance -59- contracts, if any, on the Participant's life. The provisions of this Article shall apply to a Participant who is vested in amounts attributable to Employer contributions, Employee contributions or both at the time of death or distribution. 8.5 NOTICE REQUIREMENTS. (a) In the case of a Qualified Joint and Survivor Annuity as described in Section 8.4(d) of this Article, the Plan Administrator shall no less than 30 days and no more than 90 days prior to the annuity starting date provide each Participant a written explanation of: (i) the terms and conditions of a Qualified Joint and Survivor Annuity; (ii) the Participant's right to make and the effect of an election to waive the Qualified Joint and Survivor Annuity form of benefit; (iii) the rights of a Participant's spouse; and (iv) the right to make, and the effect of, a revocation of a previous election to waive the Qualified Joint and Survivor Annuity. (b) In the case of a Qualified Preretirement Survivor Annuity as described in Section 8.3 of this Article, the Plan Administrator shall provide each Participant within the applicable notice period a written explanation of the Qualified Preretirement Survivor Annuity in such terms and in such manner as would be comparable to the explanation provided for meeting the requirements of Section 8.5(a) applicable to a Qualified Joint and Survivor Annuity. The applicable notice period means with respect to a Participant, whichever of the following periods ends last: (i) the period beginning with the first day of the Plan Year in which the Participant attains age 32 and ending with the close of the Plan Year preceding the Plan Year in which the Participant attains age 35, (ii) a reasonable period ending after the individual becomes a Participant, (iii) a reasonable period ending after notice is required because of the cessation of a benefit subsidy as described in subsection (c) below, (iv) a reasonable period ending after this Article first applies to the Participant, (v) a reasonable period after separation from Service in the case of a Participant who separates before attaining age 35. For purposes of applying the preceding paragraph, a reasonable period ending after the enumerated events described in (ii), (iii) and (iv) is the end of the two-year period beginning one year prior to the date the applicable event occurs, and ending one year after that date. In the case of a Participant who separates from Service before the Plan Year in which -60- age 35 is attained, notice shall be provided within the two-year period beginning one year prior to separation and ending one year after separation. If such a Participant thereafter returns to employment with the Employer, the applicable period for such Participant shall be redetermined. (c) Notwithstanding the other requirements of this Section 8.5, the respective notices prescribed by this Section need not be given to a Participant if (i) the Plan "fully subsidizes" the costs of a Qualified Joint and Survivor Annuity or Qualified Preretirement Survivor Annuity and (ii) the Plan does not allow the Participant to waive the Qualified Joint and Survivor Annuity or Qualified Preretirement Annuity and does not allow a married Participant to designate a nonspouse Beneficiary. For purposes of this Section 8.5(c), a plan fully subsidizes the costs of a benefit if no increase in cost or decrease in benefits to the Participant may result from the Participant's failure to elect another benefit. (d) If a distribution is one to which sections 401(a)(11) and 417 of the Internal Revenue Code do not apply, such distribution may commence less than 30 days after the notice required under section 1.411(a)-11(c) of the Income Tax Regulations is given, provided that (i) the Plan Administrator clearly informs the Participant that the Participant has a right to a period of at least 30 days after receiving the notice to consider the decision of whether or not to elect a distribution (and, if applicable, a particular distribution option), and (ii) the Participant, after receiving the notice, affirmatively elects a distribution. 8.6 SPECIAL RULE FOR PROFIT SHARING PLANS. (a) This Section shall apply to a Participant in a profit sharing plan, and to any distribution, made on or after the first day of the first Plan Year beginning after December 31, 1988, from or under a separate account attributable solely to accumulated deductible Employee Contributions, as defined in section 72(o)(5) of the Code, and maintained on behalf of a Participant in a money purchase pension plan (including a target benefit plan) if the following conditions are satisfied: (i) the Participant cannot or does not elect payments in the form of a life annuity, and (ii) on the death of the Participant, the Participant's vested account balance will be paid to the Participant's surviving spouse, but if there is no surviving spouse, or, if the surviving spouse has already consented in a manner conforming to a qualified election, then to the Participant's designated Beneficiary. The surviving spouse may elect to have distribution of the vested account balance commence within the 90-day period following the date of the Participant's death. The account balance shall be adjusted for gains or losses occurring after the Participant's death in accordance with the provisions of the Plan governing the adjustment of account balances for other types of distributions. However, this Section 8.6 shall not be operative with respect to the Participant if it is determined that this profit sharing plan is a direct or indirect transferee of a defined benefit plan, money purchase -61- pension plan (including a target benefit plan), stock bonus or profit sharing plan which is subject to the survivor annuity requirement of sections 401(a)(11) and 417 of the Code. The preceding sentence shall apply only with respect to asset transfers completed after December 31, 1984, and if the transferred assets and income thereon are accounted for separately, then such sentence shall apply only with respect to the transferred assets (and income thereon). If this Section is operative, then except to the extent otherwise provided in Section 8.7 the other provisions of this Article shall be inoperative. (b) The Participant may waive the spousal death benefit described in this Section at any time provided that no such waiver shall be effective unless it satisfies the conditions (described in Section 8.4(c)) that would apply to the Participant's waiver of the Qualified Preretirement Survivor Annuity. (c) For purposes of this Section 8.6, vested account balances shall mean, in the case of a money purchase pension plan or a target benefit plan, the participant's separate account balance attributable solely to accumulated deductible Employee contributions within the meaning of section 72(o)(5)(B) of the Code. In the case of a profit sharing plan, vested account balance shall have the same meaning as provided in Section 8.4(g). 8.7 TRANSITIONAL RULES. (a) Any living Participant not receiving benefits on August 23, 1984, who would otherwise not receive the benefits prescribed by the previous Sections of this Article must be given the opportunity to elect to have the prior Sections of this Article apply if such Participant is credited with at least one Hour of Service under this Plan or a predecessor plan in a Plan Year beginning on or after January 1, 1976, and such Participant had at least 10 years of vesting Service when he or she separated from Service. (b) Any living Participant not receiving benefits on August 23, 1984, who was credited with at least one Hour of Service under this Plan or a predecessor plan on or after September 2, 1974, and who is not otherwise credited with any Service in a Plan Year beginning on or after January 1, 1976, must be given the opportunity to have his or her benefits paid in accordance with Section 8.7(d) of this Article. (c) The respective opportunities to elect (as described in Section 8.7(a) and 8.7(b) above) must be afforded to the appropriate Participants during the period commencing on August 23, 1984, and ending on the date benefits would otherwise commence to said Participants. -62- (d) Any Participant who has elected pursuant to Section 8.7(b) of this Article and any Participant who does not elect under Section 8.7(a) or who meets the requirements of Section 8.7(a) except that such Participant does not have at least 10 years of vesting Service when he or she separates from Service, shall have his or her benefits distributed in accordance with all of the following requirements if benefits would have been payable in the form of a life annuity. (i) AUTOMATIC JOINT AND SURVIVOR ANNUITY. If benefits in the form of a life annuity become payable to a married Participant who: (1) begins to receive payments under the Plan on or after Normal Retirement Age; or (2) dies on or after Normal Retirement Age while still working for the Employer; or (3) begins to receive payments on or after the qualified early retirement age; or (4) separates from Service on or after attaining Normal Retirement Age (or the qualified early retirement age) and after satisfying the eligibility requirements for the payment of benefits under the Plan and thereafter dies before beginning to receive such benefits; then such benefits will be received under this Plan in the form of a Qualified Joint and Survivor Annuity, unless the Participant has elected otherwise during the election period. The election period must begin at least 6 months before the Participant attains qualified early retirement age and end not more than 90 days before the commencement of benefits. Any election hereunder will be in writing and may be changed by the Participant at any time. (ii) ELECTION OR EARLY SURVIVOR ANNUITY. A Participant who is employed after ----------------------------------- attaining the qualified early retirement age will be given the opportunity to elect, during the election period, to have a survivor annuity payable on death. If the Participant elects the survivor annuity, payments under such annuity must not be less than the payments which would have been made to the spouse under the Qualified Joint and Survivor Annuity if the Participant had retired on the day before his or her death. Any election under this provision will be in writing and may be changed by the Participant at any time. The election period begins on the later of (1) the 90th day before the Participant attains the qualified early retirement age, or (2) the date on which Participation begins, and ends on the date the Participant terminates employment. -63- (iii) DEFINITIONS. For purposes of this Section 8.7(d) of the Plan, ------------ (1) Qualified early retirement age is the latest of: (a) the earliest date, under the Plan, on which the Participant may elect to receive retirement benefits, (b) first day of the 120th month beginning before the Participant reaches Normal Retirement Age, or (c) the date the Participant begins participation. (2) Qualified Joint and Survivor Annuity is an annuity for the life of the Participant with a survivor annuity for the life of the spouse as described in Section 8.4 of this Article. ARTICLE IX. BENEFICIARY AND PARTICIPANT INFORMATION 9.1 DESIGNATION OF BENEFICIARY. Each Participant from time to time may designate any person or persons (who may be named contingently or successively) to receive any benefits payable under the Plan upon or after his death, and any such designation may be changed from time to time by the Participant by filing a new designation. Each designation will revoke all prior designations made by the Participant, shall be in writing in the form prescribed by the Employer and shall be effective only when the written designation is filed with the Employer during his lifetime. In the absence of a valid Beneficiary designation (except in conjunction with the election of a form of benefit payment which does not require the designation of a specific Beneficiary) or if, at the time any benefit becomes payable to a Beneficiary, there is no living Beneficiary so designated by the Participant to receive the benefit, the Employer shall direct the Trustee to distribute such benefit to the Participant's spouse, if then living. If there is no surviving spouse, then the benefit shall be paid to the Participant's then living descendants, if any, per stirpes, otherwise to the Participant's then living parents or parents, equally, otherwise to the Participant's estate. 9.2 INFORMATION TO BE FURNISHED BY PARTICIPANT AND BENEFICIARIES. Any communications, addressed to a Participant or Beneficiary at his last post office address filed with the Employer, shall be binding on the Participant or Beneficiary for all purposes of the Plan. Except for the Employer's sending of a registered letter to the last known address, neither the Trustees nor the Employer shall be obliged to search for any Participant or Beneficiary. -64- If a benefit is forfeited because the Participant or Beneficiary cannot be found, such benefit will be reinstated if a claim is made by the Participant or Beneficiary. ARTICLE X. LOANS TO PARTICIPANTS To the extent provided in the Adoption Agreement, and subject to the consent of the Trustee, the Plan Administrator shall establish a loan program under which: (1) Loans shall be made available to all Participants and Beneficiaries on a reasonably equivalent basis. (2) Loans shall not be made available to Highly Compensated Employees (as defined in section 414(q) of the Code) in an amount greater than the amount made available to other Employees. (3) Loans must be adequately secured and bear a reasonable interest rate. (4) No Participant loan shall exceed 50% of the present value of the Participant's vested Accrued Benefit if T. Rowe Price Trust Company is the Trustee. If T. Rowe Price Trust Company is not the Trustee, no Participant loan shall exceed the present value of the Participant's vested Accrued Benefit. (5) A Participant must obtain the consent of his or her spouse, if any, to use of the account balance as security for the loan. Spousal consent shall be obtained no earlier than the beginning of the 90-day period that ends on the date on which the loan is to be so secured. The consent must be in writing, must acknowledge the effect of the loan and must be witnessed by a plan representative or notary public. Such consent shall thereafter be binding with respect to the consenting spouse or any subsequent spouse with respect to that loan. A new consent shall be required if the account balance is used for renegotiation, extension, renewal or other revision of the loan. (6) In the event of default, foreclosure on the note and attachment of security will not occur until a distributable event occurs in the Plan. (7) No loans will be made to any shareholder-Employee or Owner-Employee. For purposes of this requirement, a shareholder-Employee means an Employee or officer of an electing small business (Subchapter S) corporation who owns (or is considered as owning within the meaning of section 318(a)(1) of the Code), on any day during the taxable year of such corporation, more than 5% of the outstanding stock of the corporation. If a valid spousal consent has been obtained in accordance with (5), then, notwithstanding any other provision of this Plan, the portion of the Participant's -65- vested account balance used as a security interest held by the Plan by reason of a loan outstanding to the Participant shall be taken into account for purposes of determining the amount of the account balance payable at the time of death or distribution, but only if the reduction is used as repayment of the loan. If less than 100% of the Participant's vested account balance (determined without regard to the preceding sentence) is payable to the surviving spouse, then the account balance shall be adjusted by first reducing the vested account balance by the amount of the security used as repayment of the loan, and then determining the benefit payable to the surviving spouse. No loan to any Participant or Beneficiary can be made to the extent that such loan when added to the outstanding balance of all other loans to the Participant or Beneficiary would exceed the lesser of (a) $50,000 reduced by the excess (if any) of the highest outstanding balance of loans during the one year period ending on the day before the loan is made, over the outstanding balance of loans from the Plan on the date the loan is made, or (b) one-half the present value of the nonforfeitable Accrued Benefit of the Participant. For the purpose of the above limitation, all loans from all plans of the Employer and other members of a group of Employers described in section 414(b), (c), (m) and (o) of the Code are aggregated. Furthermore, any loan shall by its terms require that repayment (principal and interest) be amortized in level payments, not less frequently than quarterly, over a period not extending beyond five years from the date of the loan, unless such loan is used to acquire a dwelling unit which within a reasonable time (determined at the time the loan is made) will be used as the principal residence of the Participant. An assignment or pledge of any portion of the Participant's interest in the Plan and a loan, pledge or assignment with respect to any insurance contract purchased under the Plan, will be treated as a loan under this paragraph. ARTICLE XI. TOP HEAVY PROVISIONS 11.1 APPLICABILITY. Notwithstanding any other provisions of the Plan or Adoption Agreement to the contrary, if for any Plan Year the Plan becomes a Top Heavy Plan, the requirements of this Article XI of the Plan shall be applied for such Plan Year. 11.2 DEFINITIONS. The following terms shall have the following meanings in the determination of whether or not the Plan is a Top Heavy Plan: (a) DETERMINATION DATE. For any Plan Year subsequent to the first Plan Year, the last day of the preceding Plan Year. For the first Plan Year of the Plan, the last day of that year. -66- (b) EMPLOYER. The Employer who adopted this Plan and any other Employer some or all of whose Employees participate in this Plan or in a retirement plan which is aggregated with this Plan as part of a permissive or required aggregation group. (c) EMPLOYER GROUP. A group of Employers who, for purposes of section 416 of the Code, are treated as a single Employer under section 414(b), (c) or (m) of the Code. (d) KEY EMPLOYEE. Any Employee or former Employee (and the Beneficiaries of such ------------- Employee) who, at any time during the determination period, was an officer of the Employer if such individual's annual Compensation exceeds 50% of the dollar limitation under section 415(b)(1)(A) of the Code, an owner (or considered an owner under section 318 of the Code) of one of the ten largest interests in the Employer if such individual's Compensation exceeds 100% of the dollar limitation under section 415(c)(1)(A) of the Code, a 5-percent owner of the Employer, or a l-percent owner of the Employer who has annual Compensation of more than $150,000. Annual Compensation means Compensation as defined in section 415(c)(3) of the Code, but including amounts contributed by the Employer pursuant to a salary reduction agreement which are excludible from the Employee's gross income under section 125, 402(e)(3), 402(h) or 403(b) of the Code. The determination period is the Plan Year containing the Determination Date and the 4 preceding Plan Years. The determination of who is a Key Employee will be made in accordance with section 416(i)(1) of the Code and the regulations thereunder. (e) NON-KEY EMPLOYEE. Any Employee or former Employee (or Beneficiaries of such Employee) who is not considered to be a Key Employee. (f) PERMISSIVE AGGREGATION GROUP. The required aggregation group of plans plus any other plan or plans of the Employer which, when considered as a group with the required aggregation group, would continue to satisfy the requirements of sections 401(a)(4) and 410 of the Code. (g) PRESENT VALUE. Present value shall be based only on the interest and mortality rates specified in the Adoption Agreement. (h) REQUIRED AGGREGATION GROUP. (i) Each qualified plan of the Employer in which at least one Key Employee participates or participated at any time during the determination period (regardless of whether the plan has terminated), and (ii) any other qualified plan of the Employer which enables a plan described in (i) to meet the requirements of section 401(a)(4) or 410 of the Code. -67- (i) TOP HEAVY PLAN. For any Plan Year beginning after December 31, 1983, this Plan is Top Heavy if any of the following conditions exist: (i) If the Top Heavy Ratio for this Plan exceeds 60% and this Plan is not pan of any required aggregation group or permissive aggregation group of plans. (ii) If this Plan is a pan of a required aggregation group of plans but not part of a permissive aggregation group and the Top Heavy Ratio for the group of plans exceeds 60%. (iii) If this Plan is a part of a required aggregation group and part of a permissive aggregation group of plans and the Top Heavy Ratio for the permissive aggregation group exceeds 60%. (j) TOP HEAVY RATIO. (i) If the Employer maintains one or more defined contribution plans (including any Simplified Employee Pension Plan) and the Employer has not maintained any defined benefit plan which during the 5-year period ending on the determination date(s) has or has had Accrued Benefits, the Top Heavy Ratio for this Plan alone or for the required or permissible aggregation group as appropriate is a fraction, the numerator of which is the sum of the account balances of all Key Employees as of the determination date(s) (including any part of any account balance distributed in the 5-year period ending on the determination date(s)), and the denominator of which is the sum of all account balances (including any part of any account balance distributed in the 5-year period ending on the determination date(s)), both computed in accordance with section 416 of the Code and the regulations thereunder. Both the numerator and denominator of the Top Heavy Ratio are increased to reflect any contribution not actually made as of the determination date, but which is required to be taken into account on that date under section 416 of the Code and the regulations thereunder. (ii) If the Employer maintains one or more defined contribution plans (including any Simplified Employee Pension Plan) and the Employer maintains or has maintained one or more defined benefit plans which during the 5-year period ending on the determination date(s) has or has had any Accrued Benefits, the Top Heavy Ratio for any required or permissive aggregation group as appropriate is a fraction, the numerator of which is the sum of account balances under the aggregated defined contribution plan or plans for all Key Employees, determined in accordance with (a) above, and the present value of Accrued Benefits under the aggregated defined -68- benefit plan or plans for all Key Employees as of the determination date(s), and the denominator of which is the sum of the account balances under the aggregated defined contribution plan or plans for all Participants, determined in accordance with (a) above, and the present value of Accrued Benefits under the defined benefit plan or plans for all Participants as of the determination date(s), all determined in accordance with section 416 of the Code and the regulations thereunder. The Accrued Benefits under a defined benefit plan in both the numerator and denominator of the Top Heavy Ratio are increased for any distribution of an Accrued Benefit made in the five-year period ending on the determination date. (iii) For purposes of (i) and (ii) above, the value of account balances and the present value of Accrued Benefits will be determined as of the most recent Valuation Date that falls within or ends with the 12 month period ending on the determination date, except as provided in section 416 of the Code and the regulations thereunder for the first and second Plan Years of a defined benefit plan. The account balances and Accrued Benefits of a Participant (1) who is not a Key Employee but who was a Key Employee in a prior year, or (2) who has not been credited with at least one Hour of Service with any Employer maintaining the Plan at any time during the 5-year period ending on the determination date will be disregarded. The calculation of the Top Heavy Ratio, and the extent to which distributions, rollovers, nondeductible Employee contributions and transfers are taken into account will be made in accordance with section 416(g) of the Code and the regulations thereunder. When aggregating plans, the value of account balances and Accrued Benefits will be calculated with reference to the determination dates that fall within the same calendar year. The Accrued Benefit of a Participant other than a Key Employee shall be determined under (1) the method, if any, that uniformly applies for accrual purposes under all defined benefit plans maintained by the Employer, or (2) if there is no such method, as if such benefit accrued not more rapidly than the slowest accrual rate permitted under the fractional rule of section 411(b)(1)(C) of the Code. (k) VALUATION DATE. The date elected by the Employer in Section 15(e) of the Adoption Agreement as of which account balances or Accrued Benefits are valued for purposes of calculating the Top Heavy Ratio. 11.3 MINIMUM COMPENSATION. For any Plan Year in which the Plan is Top Heavy, only the first $200,000 (or such larger amount as may be prescribed by the Secretary of Treasury or his delegate) of a -69- Participant's annual Compensation shall be taken into account for purposes of determining Employer contributions under the Plan. 11.4 MINIMUM ALLOCATION. (a) Except as otherwise provided in (c) and (d) below, the Employer contributions and forfeitures allocated on behalf of any Participant who is not a Key Employee shall not be less than the lesser of three percent of such Participant's Compensation or in the case where the Employer has no defined benefit plan which designates this Plan to satisfy section 401 of the Code, the largest percentage of Employer contributions (including any salary deferral contribution) and forfeitures, as a percentage of the first $200,000 of the Key Employee's Compensation, allocated on behalf of any Key Employee for that year. The minimum allocation is determined without regard to any Social Security contribution. This minimum allocation shall be made even though, under other plan provisions, the Participant would not otherwise be entitled to receive an allocation, or would have received a lesser allocation for the year because of (i) the Participant's failure to complete 1,000 Hours of Service (or any equivalent provided in the Plan), (ii) the Participant's failure to make mandatory Employee contributions (including elective deferral contributions) to the Plan, or (iii) Compensation less than a stated amount. Neither Elective Deferrals nor Matching Contributions may be taken into account for the purpose of satisfying the minimum Top Heavy contribution requirements. (b) For purposes of computing the minimum allocation, Compensation will mean Compensation as defined in Section 1.9 of the Plan. (c) The provision in (a) above shall not apply to any Participant who was not employed by the Employer on the last day of the Plan Year. (d) The provision in (a) above shall not apply to any Participant to the extent the Participant is covered under any other plan or plans of the Employer and the Employer has provided in Section 15 of the Adoption Agreement that the minimum allocation or benefit requirement applicable to Top Heavy plans will be met in the other plan or plans. (e) The minimum allocation or benefit requirement applicable to Top Heavy plans (to the extent required to be nonforfeitable under section 416(b) of the Code) may not be forfeited under section 411(a)(3)(B) or 411(a)(3)(D) of the Code. If Employees are covered under both a Top Heavy defined benefit plan and defined contribution plan of the Employer, the denominators of the defined benefit and defined contribution fractions (as described in Section 5.4 of the Plan) shall be computed by substituting a factor of 1.0 for 1.25. -70- However, if the Top Heavy Ratio (as described in Section 11.2 of this Article) does not exceed 90%, the Employer may use a factor of 1.25 in the fractions provided one of the following is used to satisfy the minimum contribution requirements: (i) a minimum benefit of 3% per Year of Service (up to 30%) is provided in the defined benefit plan; (ii) a minimum contribution of 7 1/2% is provided in the defined contribution plan; or (iii) a minimum contribution of 4% is provided in the defined contribution plan and a minimum benefit of 3% per Year of Service (up to 30%) is provided in the defined benefit plan. In the event that the Top Heavy Ratio exceeds 90%, a factor of 1.0 shall always be applied when computing the defined benefit and defined contribution fractions. 11.5 VESTING. For any Plan Year in which this Plan is Top Heavy, one of the minimum vesting schedules as elected by the Employer in the Adoption Agreement will automatically apply to the Plan. The minimum vesting schedule applies to all benefits within the meaning of section 411(a)(7) of the Code except those attributable to Employee contributions, including benefits accrued before the Effective Date of section 416 of the Code and benefits accrued before the Plan became Top Heavy. Further, no decrease in a Participant's nonforfeitable percentage may occur in the event the Plan's status as Top Heavy changes for any Plan Year. However, this Section does not apply to the account balances of any Employee who does not have an Hour of Service after the Plan has initially become Top Heavy and such Employee's account balance attributable to Employer contributions and forfeitures will be determined without regard to this Section. ARTICLE XII. ADMINISTRATION OF THE PLAN 12.1 DUTIES AND RESPONSIBILITY OF FIDUCIARIES: ALLOCATION OF FIDUCIARY RESPONSIBILITY. A fiduciary to the Plan shall have only those specific powers, duties, responsibilities and obligations as are explicitly given him under the Plan and Trust Agreement. In general, the Employer shall have the sole responsibility for making contributions to the Plan required under Article III of the Plan, appointing the Trustee and the Plan Administrator, and determining the funds available for investment under the Plan. The Plan Administrator shall have the sole responsibility for the administration of the Plan, as more fully described in Section 12.2. It is intended that each fiduciary shall be responsible only for the proper exercise of his own powers, duties, responsibilities and obligations under the Plan and Trust Agreement, and shall not be responsible for any act or failure to act of -71- another fiduciary. A fiduciary may serve in more than one fiduciary capacity with respect to the Plan. 12.2 POWERS AND RESPONSIBILITIES OF THE PLAN ADMINISTRATOR. (a) ADMINISTRATION OF THE PLAN. The Plan Administrator shall have all powers --------------------------- necessary to administer the Plan, including the power to construe and interpret the Plan documents; to decide all questions relating to an individual's eligibility to participate in the Plan; to determine the amount, manner and timing of any distribution of benefits or withdrawal under the Plan; to approve and insure the repayment of any loan to a Participant under the Plan; to resolve any claim for benefits in accordance with Section 12.7; and to appoint or employ advisors, including legal counsel, to render advice with respect to any of the Plan Administrator's responsibilities under the Plan. Any construction interpretation or application of the Plan by the Plan Administrator shall be final, conclusive and binding. All actions by the Plan Administrator shall be taken pursuant to uniform standards applied to all persons similarly situated. The Plan Administrator shall have no power to add to, subtract from or modify any of the terms of the Plan, or to change or add to any benefits provided by the Plan, or to waive or fail to apply any requirements of eligibility for a benefit under the Plan. (b) RECORDS AND REPORTS. The Plan Administrator shall be responsible for maintaining -------------------- sufficient records to reflect the Eligibility Computation Periods in which an Employee is credited with one or more Years of Service for purposes of determining his eligibility to participate in the Plan, and the Compensation of each Participant for purposes of determining the amount of contributions that may be made by or on behalf of the Participant under the Plan. The Plan Administrator shall be responsible for submitting all required reports and notifications relating to the Plan to Participants or their Beneficiaries, the Internal Revenue Service and the Department of Labor. (c) FURNISHING TRUSTEE WITH INSTRUCTIONS. The Plan Administrator shall be responsible for furnishing the Trustee with written instructions regarding all contributions to the Trust, all distributions to Participants and all loans to Participants. In addition, the Plan Administrator shall be responsible for furnishing the Trustee with any further information respecting the Plan which the Trustee may request for the performance of its duties or for the purpose of making any returns to the Internal Revenue Service or Department of Labor as may be required of the Trustee. (d) RULES AND DECISIONS. The Plan Administrator may adopt such rules as it deems necessary, desirable or appropriate in the administration of the Plan. All rules and decisions of the Plan Administrator shall be applied uniformly and consistently to all Participants in similar circumstances. When making a determination or calculation, the Plan Administrator shall be entitled to rely upon information -72- furnished by a Participant or Beneficiary, the Employer, the legal counsel of the Employer or the Trustee. (e) APPLICATION AND FORMS FOR BENEFITS. The Plan Administrator may require a Participant or Beneficiary to complete and file with it an application for a benefit, and to furnish all pertinent information requested by it. The Plan Administrator may rely upon all such information so furnished to it, including the Participant's or Beneficiary's current mailing address. 12.3 ALLOCATION OF DUTIES AND RESPONSIBILITIES. The Plan Administrator may by written instrument allocate among its members or Employees any of its duties and responsibilities not already allocated under the Plan or may designate persons other than members or Employees to carry out any of the Plan Administrator's duties and responsibilities under the Plan. Any such duties or responsibilities thus allocated must be described in the written instrument. If a person other than an Employee of the Employer is so designated, such person must acknowledge in writing his acceptance of the duties and responsibilities allocated to him. 12.4 APPOINTMENT OF THE PLAN ADMINISTRATOR. The Employer shall designate in the Adoption Agreement the Plan Administrator who shall administer the Employer's Plan. Such Plan Administrator may consist of an individual, a committee of two or more individuals, whether or not, in either such case, the individual or any of such individuals are Employees of the Employer, a consulting firm or other independent agent, the Trustee (with its consent) or the Employer itself. Except as the Employer shall otherwise expressly determine, the Plan Administrator shall be charged with the full power and the responsibility for administering the Plan in all its details. If no Plan Administrator has been appointed by the Employer, or if the person designated as Plan Administrator by the Employer is not serving as such for any reason, the Employer shall be deemed to be the Plan Administrator of the Plan. The Plan Administrator may be removed by the Employer, or may resign by giving notice in writing to the Employer, and in the event of the removal, resignation or death, or other termination of Service by the Plan Administrator, the Employer shall, as soon as practicable, appoint a successor Plan Administrator, such successor thereafter to have all of the rights, privileges, duties and obligations of the predecessor Plan Administrator. 12.5 EXPENSES. The Employer shall pay all expenses authorized and incurred by the Plan in the administration of the Plan (including Trustee's fees) except to the extent such expenses are paid from the Trust. 12.6 LIABILITIES. -73- The Plan Administrator and each person to whom duties and responsibilities have been allocated pursuant to Section 12.3 may be indemnified and held harmless by the Employer with respect to any alleged breach of responsibilities performed or to be performed hereunder. The Employer and each Affiliated Employer shall indemnify and hold harmless the Sponsor against all claims, liabilities, fines and penalties and all expenses reasonably incurred by or imposed upon him (including, but not limited to, reasonable attorney's fees) which arise as a result of actions or failure to act in connection with the operation and administration of the Plan. 12.7 CLAIMS PROCEDURE. (a) FILING A CLAIM. Any Participant or Beneficiary under the Plan may file a written claim for a Plan benefit with the Plan Administrator or with a person named by the Plan Administrator to receive claims under the Plan. (b) NOTICE OF DENIAL OF CLAIM. In the event of a denial or limitation of any benefit or payment due to or requested by any Participant or Beneficiary under the Plan ("claimant"), claimant shall be given a written notification containing specific reasons for the denial or limitation of his benefit. The written notification shall contain specific reference to the pertinent Plan provisions on which the denial or limitation of his benefit is based. In addition, it shall contain a description of any other material or information necessary for the claimant to perfect a claim, and an explanation of why such material or information is necessary. The notification shall further provide appropriate information as to the steps to be taken if the claimant wishes to submit his claim for review. This written notification shall be given to a claimant within 90 days after receipt of his claim by the Plan Administrator unless special circumstances require an extension of time for processing the claim. If such an extension of time for processing is required, written notice of the extension shall be furnished to the claimant prior to the termination of said 90-day period, and such notice shall indicate the special circumstances which make the postponement appropriate. (c) RIGHT OF REVIEW. In the event of a denial or limitation of his benefit, the claimant or his duly authorized representative shall be permitted to review pertinent documents and to submit to the Plan Administrator issues and comments in writing. In addition, the claimant or his duly authorized representative may make a written request for a full and fair review of his claim and its denial by the Plan Administrator; provided, however, that such written request must be received by the Plan -74- Administrator (or its delegate to receive such requests) within 60 days after receipt by the claimant of written notification of the denial or limitation of the claim. The 60-day requirement may be waived by the Plan Administrator in appropriate cases. (d) DECISION ON REVIEW. A decision shall be rendered by the Plan Administrator within 60 days after the receipt of the request for review, provided that where special circumstances require an extension of time for processing the decision, it may be postponed on written notice to the claimant (prior to the expiration of the initial 60-day period) for an additional 60 days after the receipt of such request for review. Any decision by the Plan Administrator shall be furnished to the claimant in writing and shall set forth the specific reasons for the decision and the specific Plan provisions on which the decision is based. (e) COURT ACTION. No Participant or Beneficiary shall have the right to seek judicial review of a denial of benefits, or to bring any action in any court to enforce a claim for benefits prior to filing a claim for benefits or exhausting his rights to review under this Section 12.7. ARTICLE XIII. AMENDMENT, TERMINATION AND MERGER 13.1 AMENDMENTS. (a) The Employer expressly recognizes the authority of the Sponsor to amend this Plan and Trust from time to time, except with respect to elections of the Employer in the Adoption Agreement, and the Employer shall be deemed to have consented to any such amendment. The Employer shall receive a written instrument indicating the amendment of the Plan and Trust and such amendment shall become effective as of the Effective Date of such instrument. No such amendment shall in any way impair, reduce or affect any Participant's vested and nonforfeitable rights in the Trust. (b) The Employer may (i) change the choice of options in the Adoption Agreement, (ii) add overriding language in the Adoption Agreement when such language is necessary to satisfy section 415 or 416 of the Code because of the required aggregation of multiple plans, and (iii) add certain model amendments published by the Internal Revenue Service which specifically provide that their adoption will not cause the Plan to be treated as individually designed. An Employer that amends the Plan for any other reason, including a waiver of the minimum funding requirement under section 412(d) of the Code, will no longer participate in this -75- master or prototype plan and will be considered to have an individually designed plan. The sponsoring organization may amend any part of the Plan. In the case of a mass submitter plan, the mass submitter shall amend the plan on behalf of the sponsoring organization. If the sponsoring organization does not adopt the amendment made by the mass submitter, it will no longer be identical to or a minor modifier of the mass submitter plan. (c) No amendment to the Plan shall be effective to the extent that it has the effect of decreasing a Participant's Accrued Benefit. Notwithstanding the preceding sentence, a Participant's account balance may be reduced to the extent permitted under section 412(c)(8) of the Code. For purposes of this paragraph, a plan amendment which has the effect of decreasing a Participant's account balance or eliminating an optional form of benefit, with respect to benefits attributable to Service before the amendment shall be treated as reducing an Accrued Benefit. Furthermore, if the vesting schedule of a plan is amended, in the case of an Employee who is a Participant as of the later of the date such amendment is adopted or the date it becomes effective, the nonforfeitable percentage (determined as of such date) of such Employee's right to his Employer-derived Accrued Benefit will not be less than his percentage computed under the Plan without regard to such amendment. 13.2 PLAN TERMINATION: DISCONTINUANCE OF EMPLOYER CONTRIBUTIONS. (a) The Employer may terminate the Plan at any time in whole or in part. In the event of the dissolution, merger, consolidation or reorganization of the Employer, the Plan shall automatically terminate and the Trust shall be liquidated as provided in paragraph (b) below unless the Plan is continued by a successor Employer in accordance with Section 13.3. (b) Upon the complete or partial termination of the Plan or the complete discontinuance of Employer contributions under the Plan, the Accrued Benefit of all Participants affected thereby shall become fully vested and nonforfeitable, and the Plan Administrator shall direct the Trustee to distribute assets remaining in the Trust, after payment of any expenses properly chargeable thereto, to Participants or their Beneficiaries. The sponsoring organization may amend any part of the Plan. For purposes of sponsoring organization amendment, the mass submitter shall be recognized as the agent of the sponsoring organization. If the sponsoring organization does not adopt the amendment made by the mass submitter, it will no longer be identical to or a minor modifier of the mass submitter plan. -76- 13.3 SUCCESSOR EMPLOYER. In the event of the dissolution, merger, consolidation or reorganization of the Employer, provision may be made by which the Plan and Trust shall be continued by the successor Employer, in which case such successor Employer shall be substituted for the Employer under the Plan. The substitution of the successor Employer shall constitute an assumption of Plan liabilities by the successor Employer, and the successor Employer shall have all powers, duties and responsibilities of the Employer under the Plan. 13.4 MERGER, CONSOLIDATION OR TRANSFER. In the event of a merger or consolidation of the Plan with, or transfer of assets or liabilities of the Plan to, any other plan of deferred compensation maintained or to be established for the benefit of all or some of the Participants of the Plan, the transaction shall be structured so that each Participant 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 the Participant would have been entitled to receive immediately before the merger, consolidation or transfer (if this Plan had then terminated). ARTICLE XIV. MISCELLANEOUS PROVISIONS 14.1 EXCLUSIVE BENEFIT OF PARTICIPANTS AND BENEFICIARIES. (a) All assets of the Trust shall be retained for the exclusive benefit of Participants and their Beneficiaries, and shall be used only to pay benefits to such persons or to pay reasonable fees and expenses of the Trust and of the administration of the Plan. The assets of the Trust shall not revert to the benefit of the Employer, except as otherwise specifically provided in Section 14.1(b). (b) Contributions to the Trust under this Plan are subject to the following conditions: (i) If a contribution or any part thereof is made to the Trust by the Employer under a mistake of fact, such contribution or part thereof shall be returned to the Employer within one year after the date the contribution is made; (ii) In the event that the Commissioner of Internal Revenue determines that the Plan is not initially qualified under the Internal Revenue Code, any contribution made incident to that initial qualification by the Employer must be returned to the Employer within one year after the date the initial qualification is denied, but only if the application for the qualification is made by the time prescribed by law for filing the Employer's return for the taxable year in which the Plan is adopted, or such later date as the Secretary of the Treasury may prescribe; and -77- (iii) Contributions to the Trust are specifically conditioned on their deductibility under the Code and, to the extent a deduction is disallowed for any such contribution, such amount shall be returned to the Employer within one year after the date of the disallowance of the deduction. 14.2 NONGUARANTEE OF EMPLOYMENT. Nothing contained in this Plan shall be construed as a contract of employment between the Employer and any Employee, or as a right of any Employee to be continued in the employment of the Employer, or as a limitation of the right of the Employer to discharge any of its Employees, with or without cause. 14.3 RIGHTS TO TRUST ASSETS. No Employee, Participant or Beneficiary shall have any right to, or interest in, any assets of the Trust upon termination of employment or otherwise, except as provided under the Plan. All payments of benefits under the Plan shall be made solely out of the assets of the Trust. 14.4 NONALIENATION OF BENEFITS. Except as provided under Article X of the Plan, with respect to Plan loans, benefits payable under the Plan shall not be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, charge, garnishment, execution or levy of any kind, voluntary or involuntary; provided, however, that the Trustee shall not be hereby precluded from complying with a qualified domestic relations order described in section 414(p) of the Code, or any domestic relations order entered before January 1, 1985, requiring deduction from distributions to a recipient in pay status for alimony or support payments. Any attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber, charge or otherwise dispose of any right to benefits payable hereunder shall be void. The Trust shall not in any manner be liable for, or subject to, the debts, contracts, liabilities, engagements or torts of any person entitled to benefits hereunder. 14.5 GENDER. The use of the masculine pronoun shall extend to and include the feminine gender wherever appropriate, the use of the singular shall include the plural and the use of the plural shall include the singular wherever appropriate. 14.6 TITLES AND HEADINGS. The titles or headings of the respective Articles and Sections are inserted merely for convenience and shall be given no legal effect. -78- 14.7 FAILURE OF EMPLOYER'S PLAN TO QUALIFY. If the Employer's Plan fails to attain or retain qualification, such Plan will no longer participate in this Prototype Plan and will be considered an individually designed plan. 14.8 COMPLIANCE WITH LAWS, RULES AND REGULATIONS. If any of the provisions of this Plan or of the Trust Agreement are at any time in any way inconsistent with any laws of the United States of America or the laws of any state if not preempted by ERISA, or any regulations of the Internal Revenue Service, U.S. Department of Labor, or any other Federal or state regulatory authority, in a manner that adversely affects the qualified status of the Plan under section 401(a) of the Code or the tax-exempt status of the Trust under section 501(a) of the Code, or may result in any civil penalties under ERISA or any other law, then the Employer, the Administrator and the Trustee shall comply with the requirements of such laws or regulations, rather than with the provisions of the Plan and Trust which are inconsistent therewith. The Employer, Administrator and Trustee shall incur no liability for following such laws, rules or regulations. -79- 401(K) RETIREMENT PLAN TRUST AGREEMENT The Employer has established a Plan to provide retirement, death and disability benefits for eligible Employees and their Beneficiaries pursuant to section 401 of the Internal Revenue Code of 1986, as amended. As part of the Plan, the Employer has requested such person or persons (individual, corporate or other entity), as may be designated in the Adoption Agreement, to serve as Trustee pursuant to the Trust established for the investment of contributions under the Plan upon the terms and conditions set forth in this Agreement. Unless the context of this Trust Agreement clearly indicates otherwise, the terms defined in Article I of the Plan entered into by the Employer, of which this Trust Agreement forms a part, shall, when used herein, have the same meaning as in said Plan. ARTICLE I. ACCOUNTS 1.1 ESTABLISHING ACCOUNTS. The Trustee shall open and maintain a trust account for the Plan and, as part thereof, Participant's accounts for such individuals as the Administrator shall, from time to time, give written notice to the Trustee as being Participants in the Plan. The Trustee shall also open and maintain such other accounts as may be appropriate or desirable to aid in the administration of the Plan. A separate account shall be maintained for each Participant and shall be credited with the contributions made and any forfeitures allocated to each such Participant pursuant to the Plan (and all earnings thereon). The Trustee shall open and maintain as a part of the Trust a separate account for each Participant who makes required or voluntary contributions, each such account to be credited with the Participant's required or voluntary contributions (and all earnings attributable to such contributions). 1.2 CHARGES AGAINST ACCOUNTS. Upon receipt of written instructions from the Administrator, the Trustee shall charge the appropriate account of the Participant for any withdrawals or distributions made under the Plan and any forfeiture of unvested interests attributable to Employer contributions which may be required under the Plan. The Administrator will give written instructions to the Trustee specifying the manner in which Employer contributions and any forfeiture of the nonvested portion of accounts, as allocated by the Administrator in accordance with the provisions of the Plan, are to be credited to the various accounts maintained for Participants. -80- 1.3 PROSPECTUS TO BE PROVIDED. The Administrator shall ensure that a Participant who makes a required or voluntary contribution has previously received or receives a copy of the then current prospectus relating to the Investment Options. Delivery of such a required or voluntary contribution, pursuant to the provisions of the Plan by the Administrator to the Trustee, shall entitle the Trustee to assume that the Participant has received such a prospectus. ARTICLE II. RECEIPT OF CONTRIBUTIONS The Trustee shall accept and hold in the trust contributions made by the Employer and Participants under the Plan. The Administrator shall give written instructions to the Trustee specifying the specific Participants' accounts to which contributions are to be credited, the amount of each such credit which is attributable to Employer contributions and the amount, if any, which is attributable to the Participants required or voluntary contributions. If written instructions are not received by the Trustee, or if such instructions are received but are deemed by the Trustee to be unclear, upon notice to the Employer, the Trustee may elect to hold all or part of any such contribution in cash, without liability for rising security prices or distributions made, pending receipt by it from the Administrator of written instructions or other clarification. If any contributions or earnings are less than any minimum which the then current prospectus for the Investment Options require, the Trustee may hold the specified portion of contribution or earnings in cash, without interest, until such time as the proper amount has been contributed or earned so that the investment in the Investment Options required under the Plan may be made. ARTICLE III. INVESTMENT POWERS OF THE TRUSTEE 3.1 INVESTMENT OF TRUST ASSETS. The Trustee shall invest the amount of each contribution made hereunder and all earnings thereon in full and fractional shares of the Investment Options in accordance with the current prospectus for such Investment Option, in such amounts and proportions as shall from time to time be designated by the Administrator, or the Participant if the Plan so permits, on forms provided by T. Rowe Price Associates, Inc. or a subsidiary thereof, and shall credit such Investment Options to the accounts of each Participant on whose behalf or by whom the contributions are made and any forfeitures are allocated. All dividends and capital gain distributions received on the Investment Options held by the Trustee in each account, shall, if received in cash, be reinvested in such Investment Options in accordance with the current prospectus for such Investment Option and shall in any event be credited to such account. The Trustee shall deliver, or cause to be executed and -81- delivered, to the Administrator all notices, prospectuses, financial statements, proxies and proxy soliciting materials relating to the Investment Options held hereunder. The Trustee shall not vote any of the shares of the Investment Options held hereunder, except in accordance with the written instructions of the Administrator. If no such written instructions are received, such shares shall not be voted. The obligations of the Trustee hereunder may be delegated by it as provided in Sections 9.1 and 9.2 hereof. The Trustee shall sell shares and purchase shares in the Investment Options to accomplish any change in investments desired by the Employer as indicated on any amended Plan or other instruction in accordance with the terms of the Plan. 3.2 DIRECTED INVESTMENTS. With respect to any directions received by the Trustee with regard to the investment of Employer and Participant contributions, designating the investments to be made in the Investment Options by Participants, the Trustee is authorized and empowered to make and deal with such investments as provided in such direction and shall have in connection with such investments all powers herein provided. 3.3 GENERAL INVESTMENT POWERS. To the extent that the Trustee is not given appropriate directions with respect to investments, then, the Trustee shall be authorized and empowered to invest and reinvest all of the funds in any of the Investment Options which, in the opinion of the Trustee, offers reasonable possibilities for preservation of capital. 3.4 OTHER POWERS OF THE TRUSTEE. The Trustee is authorized and empowered with respect to the Trust: (a) subject to the requirement of investment in shares of the Investment Options, the Trustee may sell, exchange, convey, transfer or otherwise dispose of, either at public or private sale, any property, any time held by it, for such consideration and on such terms and conditions as to credit or otherwise as the Trustee may deem best; (b) subject to the provisions of Section 3.1 hereof to vote in person or by proxy any shares of the Investment Options held by it and to join in, or to dissent from, and to oppose, the reorganization, consolidation, liquidation, sale or merger of corporation or properties in which it may be interested as Trustee, upon such terms and conditions as it may deem wise; -82- (c) to make, execute, acknowledge and deliver any and all documents of transfer and conveyance and any and all other instruments that may be necessary or appropriate to carry out the powers herein granted; (d) to register any investment held in the Trust in its own name, in the name of the Trust or in the name of a nominee, and to hold any investment 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; (e) to employ suitable agents and counsel (who may also be counsel for the Employer) and to pay their reasonable expenses and Compensation; (f) to borrow or raise monies for the purpose of the Trust from any source and for any sum so borrowed, to issue its promissory note as Trustee, and to secure the repayment thereof by pledging all or any part of the Trust, but nothing herein contained shall obligate the Trustee to render itself liable individually for the amount of any such borrowing; and no person loaning money to the Trustee shall be bound to see to the application of money loaned or to inquire into the validity, expedience or propriety of any such borrowing; and (g) if any dispute shall arise as to the persons to whom payments and the delivery of any monies or property shall be made by the Trustee or the amounts thereof, to retain such payments and/or postpone such delivery until actual adjudication of such dispute shall have been made in a court of competent jurisdiction or until the Trustee shall be indemnified against loss to his satisfaction. Each and all of the foregoing powers may be exercised without court order or approval. No one dealing with the Trustee need inquire concerning the validity or propriety of anything that is done or need see to the application of any money paid or property transferred to or upon the order of the Trustee. 3.5 GENERAL POWERS. The Trustee shall have all of the powers necessary or desirable to do all acts, take all such proceedings and exercise all such rights and privileges, whether or not expressly authorized herein, which it may deem necessary or proper for the administration and protection of the property of the Trust and to accomplish any action provided for in the Plan. 3.6 EMPLOYER SECURITIES. If provided in the Adoption Agreement, the Administrator and/or Participants in the Plan may direct that all or a portion of the Fund be invested in Qualifying Employer Securities within the meaning of section 407(d)(5) of the Employee Retirement Income Security Act -83- of 1974, as amended, and the Trustees shall follow the proper directions of the Administrator and/or Participants as to such investment. The Trustee shall be fully entitled to rely upon the directions of the Administrator and/or Participants as to investment in Qualifying Employer Securities and the Employer shall indemnify and hold harmless the Trustee against any and all claims, liabilities and expenses arising out of or related to such directions and the acquisition and retention of Qualifying Employer Securities pursuant thereto. As a condition of acquiring or retaining Qualifying Employer Securities pursuant to this Section 3.6, the Trustee may, in its discretion, require assurances satisfactory to it that the acquisition and holding of such Qualifying Employer Securities will not constitute prohibited transactions under section 406 of ERISA, or under section 4975 of the Code. The Trustee shall have no responsibility to exercise voting rights, or rights in the event of a tender offer, with respect to Qualifying Employer Securities held by it. All such rights shall be exercised by the Administrator, as a "named fiduciary" of the Plan or, if the Adoption Agreement so provides, by Plan Participants. The Trustee shall deliver, or cause to be executed and delivered to the Administrator, all notices, prospectuses, financial statements, proxies and proxy-soliciting materials relating to Qualifying Employer Securities held by it. ARTICLE IV. DISTRIBUTIONS FROM A PARTICIPANT'S ACCOUNT Distributions from the Trust shall be made by the Trustee in accordance with proper written directions of the Administrator in accordance with the provisions of Articles VII and VIII of the Plan, and the Administrator shall have the sole responsibility for determining that the directions given conform to provisions of the Plan and applicable law, including (without limitation) responsibility for calculating the vested interests of the Participants, for calculating the amounts payable to a Participant pursuant to Article VII of the Plan, and for determining the proper person to whom benefits are payable under the Plan. ARTICLE V. REPORTS OF THE TRUSTEE AND THE ADMINISTRATOR The Trustee shall keep accurate and detailed records of all receipts, investments, disbursements and other transactions required to be performed hereunder with respect to the Trust. Not later than ninety (90) days after the close of each Plan Year (or after the Trustee's resignation or removal pursuant to Article XI hereof), the Trustee shall file with -84- the Administrator a written report reports reflecting the receipts, disbursements and other transactions effected by it with respect to the Trust during such Plan Year (or period ending with such resignation or removal) and the assets and liabilities of the Trust at the close of such Plan Year. Such report or reports shall be open to inspection by any Participant for a period of one hundred eighty (180) days immediately following the date on which it is filed with the Administrator. Except as otherwise prescribed by ERISA, upon the expiration of such one hundred eighty (180) day period, the Trustee shall be forever released and discharged from all liability and accountability to anyone with respect to its acts, transactions, duties, obligations or responsibilities as shown in or reflected by such report, except with respect to any such acts or transactions as to which the Administrator shall have filed written objections with the Trustee within such one hundred eighty (180) day period, and except for willful misconduct or lack of good faith on the part of the Trustee. ARTICLE VI. TRUSTEE'S FEES AND EXPENSES OF THE TRUST The Trustee's fees for performing its duties hereunder shall be such reasonable amounts as shall be established by it from time to time. The Trustee will furnish the Administrator with its current schedule of fees and shall give written notice to the Administrator whenever its fees are changed or revised. Such fees, any taxes of any kind whatsoever which may be levied or assessed upon or in respect of the Trust, and any and all expenses incurred by the Trustee in the performance of its duties, including fees for legal services rendered to the Trustee, shall, unless paid by the Employer, be paid from the Trust in the manner provided for in the Plan. All fees of the Trustee and taxes and other expenses charged to a Participant's account will be collected by the Trustee from the amount of any contribution to be credited or distribution to be charged to such account or, if there are no such contributions or distributions, shall be paid by redeeming or selling assets credited to such accounts. ARTICLE VII. DUTIES OF THE EMPLOYER AND THE ADMINISTRATOR 7.1 INFORMATION AND DATA TO BE FURNISHED THE TRUSTEE. In addition to making the contributions called for in Article II hereof, the Employer, through the Administrator, agrees to furnish the Trustee with such information and data relative to the Plan as is necessary for the proper administration of the Trust established hereunder. -85- 7.2 LIMITATION OF DUTIES. Neither the Employer nor any of its officers, directors or partners nor the Administrator shall have any duties or obligations with respect to this Trust Agreement, except those expressly set forth herein and in the Plan. ARTICLE VIII. LIABILITY OF THE TRUST (a) The Trustee shall not be responsible in any way for the collection of contributions provided for under the Plan, the adequacy of the assets of the Plan to meet the Plan's obligation, the propriety of any contribution, the purpose or the propriety of any distribution made pursuant to Article VII thereof or of any allocation of contributions or forfeitures, or any other action or nonaction taken pursuant to the Administrator's request. The Trustee shall not be responsible for the administration of the Plan, its validity or effect, or the qualification of the Plan under the Code. The Trustee shall be under no duty to take any action other than as herein specified with respect to the Trust unless the Administrator shall furnish the Trustee with instructions in proper form and such instructions shall have been specifically agreed to by the Trustee in writing; or to defend or engage in any suit with respect to the Trust unless the Trustee shall have first agreed in writing to do so and shall have been fully indemnified to the satisfaction of the Trustee. The Trustee, unless it knows that the instruction constitutes a breach of the Administrator's duties or responsibilities under the Plan, may conclusively rely upon and shall be protected in acting upon any written order from the Administrator or any other notice, request, consent, certificate or other instrument or paper believed by it to be genuine and to have been properly executed and, so long as it acts in good faith, in taking or omitting to take any other action. (b) The Employer shall indemnify and save the Trustee (including its affiliates, representatives and agents) harmless from and against any liability, cost or other expense, including, but not limited to, the payment of attorneys' fees that the Trustee may incur in connection with this Agreement or the Plan unless such liability, cost or other expenses (whether direct or indirect) arises from the Trustee's own willful misconduct or gross negligence. The Employer recognizes that a burden of litigation may be imposed upon the Trustee as a result of some act or transaction for which it has no responsibility or over which it has no control under this Agreement. Therefore, the Employer agrees to indemnify and hold harmless and, if requested, defend the Trustee (including its affiliates, representatives and agents) from any expenses (including counsel fees, liabilities, claims, damages, actions, suits or other charges) incurred by the Trustee in prosecuting or defending against any such litigation. -86- (c) The Trustee shall not be liable for, and the Employer will indemnify and hold harmless the Trustee (including its affiliates, representatives and agents) from and against all liability or expense (including counsel fees) because of (i) any investment action taken or omitted by the Trustee in accordance with any direction of the Employer or Participant, or investment inaction in the absence of directions from the Employer or a Participant or (ii) any investment action taken by the Trustee pursuant to an order to purchase or sell securities placed by the Employer or a Participant directly with a broker, dealer or issuer. It is understood that although, when the Trustee is subject to the direction of the Employer or a Participant, the Trustee will perform certain ministerial duties with respect to the opinion of the Trust subject to such direction (the "Directed Fund"). Such duties do not involve the exercise of any discretionary authority or other authority to manage and control assets of the Directed Fund and will be performed in the normal course of business by officers and Employees of the Trustee or its affiliates, representatives or agents who may be unfamiliar with investment management. It is agreed that the Trustee is not undertaking any duty or obligation, express or implied, to review, and will not be deemed to have any knowledge of or responsibility with respect to, any transaction involving the investment of the Directed Fund as a result of the performance of its ministerial duties. Therefore, in the event that "knowledge" of the Trustee shall be a prerequisite of imposing a duty upon or determining liability of the Trustee under the Plan or this Trust or any law or regulation regulating the conduct of the Trustee, with respect to the Directed Fund, as a result of any act or omission of the Employer of any Participant, or as a result of any transaction engaged in by any of them, then the receipt and processing of investment orders or other documents relating to Plan assets by an officer or other Employee of the Trustee or its affiliates, representatives or agents engaged in the performance of purely ministerial functions shall not constitute "knowledge" of the Trustee. ARTICLE IX. DELEGATION OF POWERS 9.1 DELEGATION BY THE TRUSTEE. The Trustee may delegate, by instrument in writing, to a person(individual, corporate or other entity) appointed as agent or custodian by it, any of the powers or functions of the Trustee hereunder other than the investment of the Trust assets, including(without limitation): (a) custodianship of all or any part of the assets of the Trust; (b) maintaining and accounting for the Trust and for Participants and other accounts as a part thereof; -87- (c) distribution of benefits as directed by the Administrator; and (d) preparation of the annual report on the status of the Trust. The agent or custodian so appointed may act as agent for the Trustee, without investment responsibility, for fees to be mutually agreed upon by the Employer and the agent or custodian and paid in the same manner as Trustees' fees. The Trustee shall not be responsible for any act or omission of the agent or custodian arising from any such delegation, except to the extent provided in Article VIII hereof. If the Plan has more than one (1) Trustee, then fiduciary duties may be allocated among such Trustees. 9.2 DELEGATION WITH EMPLOYER APPROVAL. The Trustee and the Employer may, by mutual agreement, arrange for the delegation by the Trustee to the Administrator or any agent of the Employer of any powers or functions of the Trustee hereunder other than the investment and custody of the Trust assets. The Trustee shall not be responsible for any act or omission of such person or persons arising from any such delegation, except to the extent provided in Article VIII hereof. ARTICLE X. AMENDMENT As provided in Article XIII of the Plan, and subject to the limitations set forth therein, the Plan and Trust Agreement may be amended at any time, in whole or in part, by the Employer. No amendment to the Plan or Trust Agreement shall place any greater burden on the Trustee without the Trustee's written consent. ARTICLE XI. RESIGNATION OR REMOVAL OF TRUSTEE The Trustee may resign at any time upon thirty (30) days' notice in writing to the Employer, and may be removed by the Employer at any time upon thirty (30) days' notice in writing to the Trustee. Upon such resignation or removal, the Employer shall appoint a successor Trustee or Trustees. Upon receipt by the Trustee of written acceptance of such appointment by the successor Trustee, the Trustee shall transfer and pay over to such successor the assets of the Trust and all records pertaining thereto, provided that any successor Trustee shall agree not to dispose of any such records without the Trustee's consent. The successor Trustee shall be entitled to rely on all accounts, records and other documents received by it from the Trustee, and shall not incur any liability whatsoever for such reliance. The Trustee is authorized, however, to reserve such sum of money or -88- property as it may deem advisable for payment of all its fees, Compensation, costs and expenses, or for payment of any other liabilities constituting a charge on or against the assets of the Trust or on or against the Trustee, with any balance or of such reserve remaining after the payment of all such items to be paid over to the successor Trustee. Upon the assignment, transfer and payment over of the assets of the Trust, and obtaining a receipt thereof from the successor Trustee, the Trustee shall be released and discharged for any and all claims, demands, duties and obligations arising out of the Trust and its management thereof, excepting only claims based upon the Trustee's willful misconduct or lack of good faith. The successor Trustee shall hold the assets paid over to it under terms similar to those of an agreement that qualifies under section 401 of the Code. If within thirty (30) days after the Trustee's resignation or removal, the Employer has not appointed a successor Trustee which has accepted such appointment, the Trustee shall, unless it elects to terminate the Trust pursuant to Article XII hereof, appoint such successor itself. ARTICLE XII. TERMINATION OF THE TRUST AGREEMENT 12.1 TERM OF THE TRUST AGREEMENT. This Trust Agreement shall continue so long as the Plan is in full force and effect. If the Plan ceases to be in full force and effect, this Trust Agreement shall thereupon terminate unless expressly extended by the Employer. 12.2 TERMINATION BY THE TRUSTEE. The Trustee may elect to terminate the Agreement if within thirty (30) days after its resignation or removal pursuant to Article XI the Employer has not appointed a successor Trustee which has accepted such appointment. Termination of the Agreement shall be effected by distributing all assets thereof to the Participants or other persons entitled thereto pursuant to the direction of the Administrator (or in the absence of such direction, as determined by the Trustee) as provided in Article VII of the Plan, subject to the Trustee's right to reserve Trusts as provided in Article XI hereof. Upon the completion of such distribution, the Trustee shall be relieved from all further liability with respect to all amounts so paid, other than any liability arising out of the Trustee's willful misconduct or lack of good faith. 12.3 FAILURE OF INITIAL QUALIFICATION. Anything herein to the contrary notwithstanding, if a final determination letter is received from the Internal Revenue Service that the Plan as herein set forth or as amended prior to the receipt of such ruling does not qualify under sections 401 and 501 of the Code as to the Employer for the first taxable year for which it has been adopted by the Employer, -89- the Employer, at its option, may withdraw all contributions theretofore made by it and any income earned thereon, less all expenses incurred, at the then current value thereof, and the Plan shall thereupon terminate and all rights of each Participant or his Beneficiary in the contributions made on his behalf by the Employer shall cease and come to an end. In the event of termination of the Plan pursuant to this Article there shall also be forthwith paid to each Participant the then value, if any, of his salary reduction, Rollover/Transfer and Voluntary Employee Contributions Accounts. In the event of the receipt of such an adverse determination letter and the termination of the Plan as to an Employer, no Participant or Beneficiary of a Participant shall have a right or claim against the Trust or to any benefit under the Plan, and no benefits shall be paid to any Participant former Participant or his Beneficiary. ARTICLE XIII. MISCELLANEOUS 13.1 NO DIVERSION OF ASSETS. At no time shall it be possible for any part of the assets of the Trust to be used for or diverted to purposes other than for the exclusive benefit of Participants and their Beneficiaries or revert to the Employer, except as specifically provided in the Plan or this Trust Agreement. 13.2 NOTICES. Any notice from the Trustee to the Employer or from the Employer to the Trustee provided for in this Plan and Trust Agreement shall be effective if sent by first class mail at their respective last address of record. 13.3 MULTIPLE TRUSTEES. In the event that there shall be two (2) or more Trustees serving hereunder, any action taken or decision made by any such Trustees may be taken or made by a majority of them with the same effect as if all had joined therein, if there be more than two (2), or unanimously if there be two (2). 13.4 CONFLICT WITH PLAN. In the event of any conflict between the provisions of the Plan and those of this Trust Agreement, the former shall prevail. -90- 13.5 APPLICABLE LAW. This Trust Agreement shall be construed in accordance with the laws of the state where the Trustee has its principal place of business. -91- EX-4.(E) 3 AMENDMENT NO. 3 TO 1991 INCENTIVE STOCK PLAN AMENDMENT NO.3 TO THE 1991 INCENTIVE AND NONQUALIFIED STOCK OPTION PLAN OF WHEELING-PITTSBURGH CORPORATION (as adopted by WHX Corporation) 1. The 1991 Incentive and Nonqualified Stock Option Plan (the "Plan") is hereby amended, subject to stockholder approval of this Agreement within one (1) year of the date hereof, as follows: Section 4 of the Plan is hereby amended in its entirety to read as follows: "4. STOCK RESERVED FOR THE PLAN. Subject to adjustment as provided in Section 7 hereof, a total of three and one-half million (3,500,000) shares of common stock, $.01 par value ("Stock"), of the Company shall be subject to the Plan. The shares of Stock subject to the Plan shall consist of unissued shares or previously issued shares reacquired and held by the Company or any Subsidiary of the Company, and such amount of shares of Stock shall be and is hereby reserved for such purpose. Any of such shares of Stock which may remain unsold and which are not subject to outstanding Options at the termination of the Plan shall cease to be reserved for the purpose of the Plan, but until termination of the Plan the Company shall at all times reserve a sufficient number of shares of Stock to meet the requirements of the Plan. Should any Option expire or be cancelled prior to its exercise in full or should the number of shares of Stock to be delivered upon the exercise in full of an Option be reduced for any reason, the shares of Stock theretofore subject to such Option may again be subject to an Option under the Plan." 2. Except as amended hereby, the Plan shall remain in full force and effect. Dated as of April 23, 1998 EX-4.(F) 4 1997 DIRECTORS STOCK OPTION PLAN WHX CORPORATION 1997 DIRECTORS STOCK OPTION PLAN ARTICLE I PURPOSE The purpose of the WHX Corporation 1997 Directors Stock Option Plan (the "Plan") is to secure for WHX Corporation and its stockholders the benefits arising from stock ownership by its directors. The Plan will provide a means whereby such directors may purchase shares of the common stock, $.01 par value, of WHX Corporation pursuant to options granted in accordance with the Plan. ARTICLE II DEFINITIONS The following capitalized terms used in the Plan shall have the respective meanings set forth in this Article: 2.1 "Board" shall mean the Board of Directors of WHX Corporation. 2.2 "Chairman" shall mean the duly appointed Chairman of any standing Committee of the Board. 2.3 "Committee" shall mean a duly appointed standing committee of the Board. 2.4 "Company" shall mean WHX Corporation. 2.5 "Director" shall mean any person who is a member of the Board of Directors of the Company. 2.6 "Eligible Person" shall be any Director who is not a full or part-time Employee of the Company, except the Chairman of the Board shall not be an Eligible Person. 2.7 "Exercise Price" shall mean the price per Share at which an Option may be exercised. 2.8 "Fair Market Value" shall mean the closing sale price of a Share as reported on the New York Stock Exchange Composite Tape on the day preceding the Grant Date or on the preceding such date if no Shares were traded on such Grant Date. If the Shares are not reported on the New York Stock Exchange or on another national securities exchange, Fair Market Value shall be deemed to be the average of the high bid and asked prices of the Shares on the over-the-counter market on the Grant Date, or the next preceding date on which the last prices were recorded. 2.9 "Grant Date" shall mean the Initial Grant Date or any other date that an Option shall be granted pursuant to the Plan as appropriate. 2.10 "Initial Grant Date" shall mean the date of the 1997 Annual Meeting of Stockholders. 2.11 "Option" shall mean an Option to purchase Shares granted pursuant to the Plan. 2.12 "Option Agreement" shall mean the written agreement described in Article VI herein. 2.13 "Permanent Disability" shall mean the condition of an Eligible Person who is unable to participate as a member of the Board by reason of any medically determined physical or mental impairment which can be expected to result in death or which can be expected to last for a continuous period of not less than twelve (12) months. 2.14 "Purchase Price" shall be the Exercise Price multiplied by the number of whole Shares with respect to which an Option may be exercised. 2.15 "Shares" shall mean shares of common stock $.01 par value of the Company. 2.16 "Subsequent Grant Date" shall mean the date of each annual meeting of the stockholders of the Company following the Initial Grant Date, provided that the Eligible Person served as a Director during the period between the Initial Grant Date and Subsequent Grant Date and between Subsequent Grant Dates, as the case may be. ARTICLE III ADMINISTRATION 3.1 GENERAL. This Plan shall be administered by the Board in accordance with the express provisions of this Plan. 3.2 POWERS OF THE BOARD. The Board shall have full and complete authority to adopt such rules and regulations and to make all such other determinations not inconsistent with the Plan as may be necessary for the administration of the Plan. -2- ARTICLE IV SHARES SUBJECT TO PLAN Subject to adjustment in accordance with Article IX an aggregate of 400,000 Shares is reserved for issuance under this Plan. Shares sold under this Plan may be either authorized, but unissued Shares or reacquired Shares. If an Option, or any portion thereof, shall expire or terminate for any reason without having been exercised in full, the unpurchased Shares covered by such Option shall be available for future grants of Options. ARTICLE V GRANTS 5.1 INITIAL GRANTS. On the Initial Grant Date, each Eligible Person shall receive the grant of an Option to purchase 25,000 Shares. 5.2 SUBSEQUENT GRANTS TO DIRECTORS. On each Subsequent Grant Date, each Eligible Person shall receive the grant of an Option to purchase 5,000 Shares, provided that the grant of Options hereunder to an Eligible Person who is a Director shall not exceed 40,000 Shares. 5.3 COMPLIANCE WITH RULE 16B-3. The terms for the grant of Options to an Eligible Person may only be changed if permitted under Rule 16b-3 of the Securities Exchange Act of 1934, as amended, and accordingly the formula for the grant of Options may not be changed or otherwise modified more than once in any six month period. ARTICLE VI TERMS OF OPTION Each Option shall be evidenced by a written Option Agreement executed by the Company and the Eligible Person which shall specify the Grant Date, the number of Shares subject to the Option, the Exercise Price which shall be the Fair Market Value on the day preceding the Grant Date and shall also include or incorporate by reference the substance of all of the following provisions and such other provisions consistent with this Plan as the Board may determine. 6.1 TERM. The term of the Option shall be ten (10) years from the Grant Date of each Option, subject to earlier termination in accordance with Articles VI and X. 6.2 RESTRICTION ON EXERCISE. Options shall be exercisable at such time or times and subject to such terms and -3- conditions as shall be determined by the Board at grant, provided, however, that except in the case of the Eligible Person's death, Permanent Disability or removal as a Director without cause, or failure to stand for reelection, upon which events the Option will become immediately exercisable, unless a longer vesting period is otherwise determined by the Board at grant; Options shall be exercisable as follows: up to one-third of the aggregate Shares purchasable under an Option shall be exercisable commencing one year after the Grant Date, an additional one-third of the Shares purchasable under an Option shall be exercisable commencing two years after the Grant Date and the balance commencing on the third anniversary from the Grant Date. The Board may waive such installment exercise provision at any time in whole or in part based on performance and/or such other factors as the Board may determine in its sole discretion, provided, however, that no Option shall be exercisable until more than six months have elapsed from the Grant Date. 6.3 EXERCISE PRICE. The Exercise Price for each Share subject to an Option shall be the Fair Market Value of the Share as determined in Section 2.8 herein. 6.4 MANNER OF EXERCISE. An Option shall be exercised in accordance with its terms, by delivery of a written notice of exercise to the Company and payment of the full purchase price of the Shares being purchased. An Eligible Person may exercise an Option with respect to all or less than all of the Shares for which the Option may then be exercised, but an Eligible Person must exercise the Option in full Shares. 6.5 PAYMENT. The Purchase Price of Shares purchased pursuant to an Option or portion thereof, may be paid: (a) in United States Dollars, in cash or by check, bank draft or money order payable to the Company; (b) by delivery of Shares already owned by an Eligible Person with an aggregate Fair Market Value on the date of exercise equal to the Purchase Price, subject to the provisions of Section 16(b) of the Securities Exchange Act of 1934; (c) through the written election of the Eligible Person to have Shares withheld by the Company from the Shares otherwise to be received with such withheld Shares having an aggregate Fair Market Value on the date of exercise equal to the Purchase Price. 6.6 TRANSFERABILITY. No Option shall be transferable otherwise than by will or the laws of descent and distribution; PROVIDED HOWEVER, that to the extent the option agreement -4- provisions do not disqualify such option for exemption under Rule 16b-3 under the Securities Exchange Act of 1934, as amended, Options may be transferable during an Optionee's lifetime to immediate family members of an Optionee, partnerships in which the only partners are members of the Optionee's immediate family, and trusts established solely for the benefit of such immediate family members. An Option shall be exercisable during the Eligible Person's lifetime only by the Eligible Person, his guardian, legal representative or permitted transferee. 6.7 TERMINATION OF SERVICE. If an Eligible Person's service as a Director terminates for any reason, an Option held on the date of termination may be exercised in whole or in part at any time within one (1) year after the date of such termination (but in no event after the term of the Option expires) and shall thereafter terminate. ARTICLE VII GOVERNMENT AND OTHER REGULATIONS 7.1 DELIVERY OF SHARES. The obligation of the Company to issue or transfer and deliver Shares for exercised Options under the Plan shall be subject to all applicable laws, regulations, rules, orders and approvals which shall then be in effect. 7.2 HOLDING OF STOCK AFTER EXERCISE OF OPTION. The Option Agreement shall provide that the Eligible Person, by accepting such Option, represents and agrees, for the Eligible Person and his permitted transferees hereunder that none of the Shares purchased upon exercise of the Option shall be acquired with a view to any sale, transfer or distribution of the Shares in violation of the Securities Act of 1933, as amended (the "Act") and the person exercising an Option shall furnish evidence satisfactory to that Company to that effect, including an indemnification of the Company in the event of any violation of the Act by such person. Notwithstanding the foregoing, the Company in its sole discretion may register under the Act the Shares issuable upon exercise of the Options under the Plan. ARTICLE VIII WITHHOLDING TAX The Company may in its discretion, require an Eligible Person to pay to the Company, at the time of exercise of an Option an amount that the Company deems necessary to satisfy its obligations to withhold federal, state or local income or other taxes (which for purposes of this Article includes an Eligible Person's FICA obligation) incurred by reason of such exercise. When the exercise of an Option does not give rise to the -5- obligation to withhold federal income taxes on the date of exercise, the Company may, in its discretion, require an Eligible Person to place Shares purchased under the Option in escrow for the benefit of the Company until such time as federal income tax withholding is required on amounts included in the Eligible Person's gross income as a result of the exercise of an Option. At such time, the Company, in its discretion, may require an Eligible Person to pay to the Company an amount that the Company deems necessary to satisfy its obligation to withhold federal, state or local taxes incurred by reason of the exercise of the Option, in which case the Shares will be released from escrow upon such payment by an Eligible Person. ARTICLE IX ADJUSTMENTS 9.1 PROPORTIONATE ADJUSTMENTS. If the outstanding Shares are increased, decreased, changed into or exchanged into a different number or kind of Shares or securities of the Company through reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction, an appropriate and proportionate adjustment shall be made to the maximum number and kind of Shares as to which Options may be granted under this Plan. A corresponding adjustment changing the number or kind of Shares allocated to unexercised Options or portions thereof, which shall have been granted prior to any such change, shall likewise be made. Any such adjustment in the outstanding Options shall be made without change in the Purchase Price applicable to the unexercised portion of the Option with a corresponding adjustment in the Exercise Price of the Shares covered by the Option. Notwithstanding the foregoing, there shall be no adjustment for the issuance of Shares on conversion of notes, preferred stock or exercise of warrants or Shares issued by the Board for such consideration as the Board deems appropriate. 9.2 DISSOLUTION OR LIQUIDATION. Upon the dissolution or liquidation of the Company, or upon a reorganization, merger or consolidation of the Company with one or more corporations as a result of which the Company is not the surviving corporation, or upon a sale of substantially all of the property or more than 80% of the then outstanding Shares of the Company to another corporation, the Company shall give to each Eligible Person at the time of adoption of the plan for liquidation, dissolution, merger or sale either (1) a reasonable time thereafter within which to exercise the Option prior to the effective date of such liquidation or dissolution, merger or sale, or (2) the right to exercise the Option as to an equivalent number of Shares of stock of the corporation succeeding the Company or acquiring its -6- business by reason of such liquidation, dissolution, merger, consolidation or reorganization. ARTICLE X AMENDMENT OR TERMINATION OF PLAN 10.1 AMENDMENTS. The Board may at any time amend or revise the terms of the Plan, provided no such amendment or revision shall, unless appropriate stockholder approval of such amendment or revision is obtained: (a) increase the maximum number of Shares which may be sold pursuant to Options granted under the Plan, except as permitted under the provisions of Article IX; (b) change the minimum Exercise Price set forth in Article VI; (c) increase the maximum term of Options provided for in Article VI; or (d) permit the granting of Options to any one other than as provided in Article V. 10.2 TERMINATION. The Board at any time may suspend or terminate this Plan. This Plan, unless sooner terminated, shall terminate on the tenth (10th) anniversary of its adoption by the Board. No Option may be granted under this Plan while this Plan is suspended or after it is terminated. 10.3 HOLDER OF CONSENT. No amendment, suspension or termination of the Plan shall, without the consent of the holder of Options, alter or impair any rights or obligations under any Option theretofore granted under the Plan. ARTICLE XI MISCELLANEOUS PROVISIONS 11.1 PRIVILEGE OF STOCK OWNERSHIP. No Eligible Person entitled to exercise any Option granted under the Plan shall have any of the rights or privileges of a stockholder of the Company with respect to any Shares issuable upon exercise of an Option until certificates representing the Shares shall have been issued and delivered. 11.2 PLAN EXPENSES. Any expenses incurred in the administration of the Plan shall be borne by the Company. -7- 11.3 USE OF PROCEEDS. Payments received from an Eligible Person upon the exercise of Options shall be used for general corporate purposes of the Company. 11.4 GOVERNING LAW. The Plan has been adopted under the laws of the State of Delaware. The Plan and all Options which may be granted hereunder and all matters related thereto, shall be governed by and construed and enforceable in accordance with the laws of the State of Delaware as it then exists. ARTICLE XII STOCKHOLDER APPROVAL This Plan is subject to approval, at a duly held stockholders' meeting within twelve (12) months after the date the Board approves this Plan, by the affirmative vote of holders of a majority of the voting Shares of the Company represented in person or by proxy and entitled to vote at the meeting. Options may be granted, but not exercised, before such stockholder approval. If the shareholders fail to approve the Plan within the required time period, any Options granted under this Plan shall be void, and no additional Options may thereafter be granted. -8- EX-5 5 OPINION OF OLSHAN GRUNDMAN FROME & ROSENZWEIG LLP Olshan Grundman Frome & Rosenzweig LLP 505 Park Avenue New York, New York 10022 (212) 753-7200 September 23, 1998 Securities and Exchange Commission 450 Fifth Street, N.W. Judiciary Plaza Washington, D.C. 20549 Re: WHX Corporation REGISTRATION STATEMENT ON FORM S-8 Gentlemen: Reference is made to the Registration Statement on Form S-8 dated the date hereof (the "Registration Statement"), filed with the Securities and Exchange Commission by WHX Corporation, a Delaware corporation (the "Company"). The Registration Statement relates to an aggregate of 1,500,000 shares (the "Shares") of common stock, par value $.01 per share (the "Common Stock"). The Shares will be issued and sold by the Company in accordance with Handy & Harman's 401(K) Retirement Plan, the Company's 1997 Directors Stock Option Plan and the Company's 1991 Incentive and Nonqualified Stock Option Plan (the "Plans"). We advise you that we have examined originals or copies certified or otherwise identified to our satisfaction of the Certificate of Incorporation and By-laws of the Company, minutes of meetings of the Board of Directors and stockholders of the Company, the Plans, the documents to be sent or given to participants in the Plans (the "Prospectuses") and such other documents, instruments and certificates of officers and representatives of the Company and public officials, and we have made such examination of the law, as we have deemed appropriate as the basis for the opinion hereinafter expressed. In making such examination, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals, and the conformity to original documents of documents submitted to us as certified or photostatic copies. Based upon the foregoing, we are of the opinion that the Shares, when issued and paid for in accordance with the terms and conditions set forth in the Prospectuses, will be duly and validly issued, fully paid and non-assessable. We are members of the bar of the State of New York. Accordingly, this opinion is limited to the federal laws of the United States, the laws of the State of New York and the General Corporation Law of the State of Delaware. We advise you that Marvin L. Olshan, a member of this firm, is a Director and Secretary of the Company and owns 1,000 shares, and options to purchase 70,000 shares, of Common Stock of the Company. Steven Wolosky, also a member of this firm, is Assistant Secretary of the Company and holds, directly or indirectly, options to purchase 23,500 shares of Common Stock of the Company. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to this firm under the caption "Legal Matters" in the prospectus constituting a part of the Registration Statement. Very truly yours, /S/ OLSHAN GRUNDMAN FROME & ROSENZWEIG LLP ------------------------------------------ OLSHAN GRUNDMAN FROME & ROSENZWEIG LLP EX-23.(A) 6 CONSENT OF INDEPENDENT ACCOUNTANTS EXHIBIT 23(a) CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in this Registration Statement on Form S-8 of our report dated February 10, 1998, except as to Note R, which is as of March 1, 1998, and our report dated February 12, 1998, which appear on pages 25 and 52, respectively, of WHX Corporation's Annual Report on Form 10-K for the year ended December 31, 1997. /s/ PricewaterhouseCoopers LLP - ------------------------------ PricewaterhouseCoopers LLP Pittsburgh, PA September 23, 1998 EX-23.(B) 7 CONSENT OF INDEPENDENT AUDITORS EXHIBIT 23(b) CONSENT OF INDEPENDENT AUDITORS The Board of Directors and Shareholders WHX Corporation: We consent to the incorporation by reference in the Registration Statement on Form S-8 of WHX Corporation of our report relating to the consolidated balance sheets of Handy & Harman and Subsidiaries as of December 31, 1997 and 1996, and the related consolidated statements of income, shareholders' equity and cash flows for each of the years in the three-year period ended December 31, 1997, dated February 9, 1998, except as to Note 11, which is as of March 1, 1998, which report appears in the December 31, 1997 annual report on Form 10-K of Handy & Harman. /s/ KPMG Peat Marwick LLP - ------------------------- KPMG Peat Marwick LLP New York, New York September 24, 1998 -----END PRIVACY-ENHANCED MESSAGE-----