Document:

Exhibit
10.1

 

PIPER
IMPACT 401(k) PLAN

 

 

Amendment and Restatement

Effective January 1, 2002

 

 

PIPER
IMPACT 401(k) PLAN

 

THIS AGREEMENT
adopted by Quanex Corporation, a Delaware corporation,

 

W I T N E S S E T
H:

 

WHEREAS, effective
April 1, 1995, Piper Impact, Inc., a Tennessee corporation (the “Prior
Employer”) established the Piper Impact 401(k) Plan (the “Plan”);

 

WHEREAS, effective
as of March 29, 1996, Piper Impact, Inc., a Delaware corporation, purchased
substantially all of the assets of the Prior Employer;

 

WHEREAS, on August
9, 1996, Piper Impact, Inc., a Delaware corporation, assumed sponsorship of the
Plan and the Prior Employer terminated its participation in the Plan;

 

WHEREAS, Quanex
Corporation, a Delaware corporation, hereby assumes sponsorship of the Plan
effective as of January 1, 2002.

 

WHEREAS, the Plan
is intended to be a profit sharing plan; and

 

WHEREAS, Quanex
Corporation desires to amend and restate the Plan;

 

NOW, THEREFORE, the
Plan is hereby amended and restated in its entirety as set forth below.

 

 

TABLE
OF CONTENTS

 

	
   

  	
  Section

  
	
  ARTICLE I - DEFINITIONS

  	
   

  
	
   

  	
   

  
	
  Account

  	
  1.01

  
	
  Active Service

  	
  1.02

  
	
  Affiliated
  Employer

  	
  1.03

  
	
  Annual
  Compensation

  	
  1.04

  
	
  Annuity
  Starting Date

  	
  1.05

  
	
  Applicable Distribution
  Period

  	
  1.06

  
	
  Beneficiary or
  Beneficiaries

  	
  1.07

  
	
  Board

  	
  1.08

  
	
  Catch-up Eligible
  Participant

  	
  1.09

  
	
  Claimant

  	
  1.10

  
	
  Code

  	
  1.11

  
	
  Committee

  	
  1.12

  
	
  Considered
  Compensation

  	
  1.13

  
	
  Contribution

  	
  1.14

  
	
  Direct Rollover

  	
  1.15

  
	
  Disability

  	
  1.16

  
	
  Distributee

  	
  1.17

  
	
  Distribution Calendar Year

  	
  1.18

  
	
  Eligible
  Employee

  	
  1.19

  
	
  Eligible
  Retirement Plan

  	
  1.20

  
	
  Eligible Rollover
  Distribution

  	
  1.21

  
	
  Employee

  	
  1.22

  
	
  Employer
  or Employers

  	
  1.23

  
	
  Entry Date

  	
  1.24

  
	
  ERISA

  	
  1.25

  
	
  Final Section
  401(a)(9) Regulations

  	
  1.26

  
	
  Five
  Percent Owner

  	
  1.27

  
	
  Forfeitable
  Interest

  	
  1.28

  
	
  Highly Compensated Employee

  	
  1.29

  
	
  Hour of Service

  	
  1.30

  
	
  Leased Employee

  	
  1.31

  
	
  Maternity or Paternity
  Absence

  	
  1.32

  
	
  Nonforfeitable
  Interest

  	
  1.33

  
	
  Non-Highly Compensated
  Employee

  	
  1.34

  
	
  Participant

  	
  1.35

  
	
  Period of
  Service

  	
  1.36

  
	
  Period of
  Severance

  	
  1.37

  
	
  Plan

  	
  1.38

  
	
  Plan Year

  	
  1.39

  
	
  Qualified Domestic
  Relations Order

  	
  1.40

  

 

i

 

	
  Regulation

  	
  1.41

  
	
  Required
  Beginning Date

  	
  1.42

  
	
  Retirement Age

  	
  1.43

  
	
  Rollover
  Contribution

  	
  1.44

  
	
  Section 401(a)(9)
  Beneficiary

  	
  1.45

  
	
  Separation
  From Service

  	
  1.46

  
	
  Severance From Service Date

  	
  1.47

  
	
  Severs Service

  	
  1.48

  
	
  Sponsor

  	
  1.49

  
	
  Sponsor Stock

  	
  1.50

  
	
  Spouse

  	
  1.51

  
	
  Trust

  	
  1.52

  
	
  Trustee

  	
  1.53

  
	
  Valuation Date

  	
  1.54

  
	
   

  	
   

  
	
  ARTICLE II – ELIGIBILITY

  	
   

  
	
   

  	
   

  
	
  Eligibility
  Requirements

  	
  2.01

  
	
  Early
  Participation for Rollover Purposes

  	
  2.02

  
	
  Eligibility Upon
  Reemployment

  	
  2.03

  
	
  Cessation of Participation

  	
  2.04

  
	
  Recommencement of
  Participation

  	
  2.05

  
	
   

  	
   

  
	
  ARTICLE III –
  CONTRIBUTIONS

  	
   

  
	
   

  	
   

  
	
  Salary Deferral
  Contributions

  	
  3.01

  
	
  Catch-up Salary
  Deferral Contributions

  	
  3.02

  
	
  After-Tax
  Contributions

  	
  3.03

  
	
  Matching
  Contributions

  	
  3.04

  
	
  Supplemental Contributions

  	
  3.05

  
	
  Rollover
  Contributions and Plan-to-Plan Transfers

  	
  3.06

  
	
  QNECS –
  Extraordinary Employer Contributions

  	
  3.07

  
	
  Restoration Contributions

  	
  3.08

  
	
  Restorative
  Payments

  	
  3.09

  
	
  Nondeductible
  Contributions Not Required

  	
  3.10

  
	
  Form of Payment of
  Contributions

  	
  3.11

  
	
  Deadline for
  Payment of Contributions

  	
  3.12

  
	
  Return
  of Contributions for Mistake, Disqualification or Disallowance of Deduction

  	
  3.13

  
	
   

  	
   

  
	
  ARTICLE IV – ALLOCATION
  AND VALUATION OF ACCOUNTS

  	
   

  
	
   

  	
   

  
	
  Information
  Statements from Employer

  	
  4.01

  
	
  Allocation
  of Salary Deferral Contributions

  	
  4.02

  
	
  Allocation
  of Catch-up Salary Deferral Contributions

  	
  4.03

  
	
  Allocation of
  After-Tax Contributions

  	
  4.04

  
	
  Allocation of
  Matching Contributions

  	
  4.05

  
	
  Allocation of
  Supplemental Contributions

  	
  4.06

  
	
  Allocation
  of QNECs

  	
  4.07

  

 

ii

 

	
  Allocation of Forfeitures

  	
  4.08

  
	
  Valuation
  of Accounts

  	
  4.09

  
	
  No Rights Unless
  Otherwise Prescribed

  	
  4.10

  
	
   

  	
   

  
	
  ARTICLE V - BENEFITS

  	
   

  
	
   

  	
   

  
	
  Retirement
  Benefit

  	
  5.01

  
	
  Death Benefit

  	
  5.02

  
	
  Distribution
  Method

  	
  5.03

  
	
  Immediate
  Payment of Small Amount Upon Separation From Service

  	
  5.04

  
	
  Direct
  Rollover Option

  	
  5.05

  
	
  Consent
  to Distribution

  	
  5.06

  
	
  Information
  Provided to Participants

  	
  5.07

  
	
  Time
  of Distributions

  	
  5.08

  
	
  Designation of Beneficiary

  	
  5.09

  
	
  Distributions
  to Minors and Incapacitated Persons

  	
  5.10

  
	
  Distributions
  Pursuant to Qualified Domestic Relations Orders

  	
  5.11

  
	
  Claims
  Review Procedures; Claims Appeal Procedures

  	
  5.12

  
	
  Disability
  Benefit Claims Review and Appeal Procedures

  	
  5.13

  
	
   

  	
   

  
	
  ARTICLE VI – IN-SERVICE
  DISTRIBUTIONS

  	
   

  
	
   

  	
   

  
	
  In-Service
  Financial Hardship Distributions

  	
  6.01

  
	
  Age 591⁄2
  Distributions

  	
  6.02

  
	
  Method of
  Payment

  	
  6.03

  
	
   

  	
   

  
	
  ARTICLE VII – LOANS

  	
   

  
	
   

  	
   

  
	
  ARTICLE VIII – VESTING

  	
   

  
	
   

  	
   

  
	
  ARTICLE IX – FORFEITURES
  AND RESTORATIONS

  	
   

  
	
   

  	
   

  
	
  Forfeiture
  on Termination of Participation

  	
  9.01

  
	
  Restoration of
  Forfeited Amounts

  	
  9.02

  
	
  Forfeitures
  by Lost Participants or Beneficiaries

  	
  9.03

  
	
   

  	
   

  
	
  ARTICLE X – ACTIVE SERVICE

  	
   

  
	
   

  	
   

  
	
  General

  	
  10.01

  
	
  Disregard of Certain
  Service

  	
  10.02

  
	
  Certain
  Brief Absences Counted as Active Service

  	
  10.03

  
	
  Service Credit Required
  by Law

  	
  10.04

  
	
  Special
  Maternity or Paternity Absence Rules

  	
  10.05

  
	
  Employment Records
  Conclusive

  	
  10.06

  
	
  Special Transitional Rule

  	
  10.07

  
	
  Credit for Service
  With Piper Impact, Inc., a Tennessee Corporation

  	
  10.08

  

 

iii

 

	
  ARTICLE XI – INVESTMENT
  ELECTIONS

  	
   

  
	
   

  	
   

  
	
  Investment Funds
  Established

  	
  11.01

  
	
  Election Procedures
  Established

  	
  11.02

  
	
   

  	
   

  
	
  ARTICLE XII – ADOPTION
  OF PLAN BY OTHER EMPLOYERS

  	
   

  
	
   

  	
   

  
	
  Adoption
  Procedure

  	
  12.01

  
	
  No
  Joint Venture Implied

  	
  12.02

  
	
  All Trust
  Assets Available to Pay All Benefits

  	
  12.03

  
	
  Qualification
  a Condition Precedent to Adoption and Continued Participation

  	
  12.04

  
	
   

  	
   

  
	
  ARTICLE XIII –
  AMENDMENT AND TERMINATION

  	
   

  
	
   

  	
   

  
	
  Right to Amend
  and Limitations Thereon

  	
  13.01

  
	
  Mandatory
  Amendments

  	
  13.02

  
	
  Withdrawal
  of Employer

  	
  13.03

  
	
  Termination
  of Plan

  	
  13.04

  
	
  Partial
  or Complete Termination or Complete Discontinuance of Contributions

  	
  13.05

  
	
   

  	
   

  
	
  ARTICLE XIV–
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  
	
  Plan Not an Employment
  Contract

  	
  14.01

  
	
  Benefits Provided
  Solely From Trust

  	
  14.02

  
	
  Assignments
  Prohibited

  	
  14.03

  
	
  Requirements
  Upon Merger or Consolidation of Plans

  	
  14.04

  
	
  Gender
  of Words Used

  	
  14.05

  
	
  Severability

  	
  14.06

  
	
  Reemployed
  Veterans

  	
  14.07

  
	
  Limitations on Legal
  Actions

  	
  14.08

  
	
  Governing Law

  	
  14.09

  
	
  APPENDIX A - LIMITATIONS
  ON CONTRIBUTIONS AND ALLOCATIONS

  	
   

  
	
  APPENDIX B - TOP-HEAVY
  REQUIREMENTS

  	
   

  
	
  APPENDIX C –
  ADMINISTRATION OF THE PLAN

  	
   

  
	
  APPENDIX D – FUNDING

  	
   

  

 

iv

 

ARTICLE I

 

DEFINITIONS

 

The words and phrases
defined in this Article shall have the meaning set out in the definition unless
the context in which the word or phrase appears reasonably requires a broader,
narrower or different meaning.

 

1.01                           “Account” means all ledger
accounts pertaining to a Participant or former Participant which are maintained
by the Committee to reflect the Participant’s or former Participant’s interest
in the Trust.  The Committee shall
establish the following Accounts and any additional Accounts that the Committee
considers necessary to reflect the entire interest of the Participant or former
Participant in the Trust.  Each of the
Accounts listed below and any additional Accounts established by the Committee
shall reflect the Contributions or amounts transferred to the Trust, if any,
and the appreciation or depreciation of the assets in the Trust and the income
earned or loss incurred on the assets in the Trust attributable to the
Contributions and/or other amounts transferred to the Account.

 

(a)                                  Salary
Deferral Contribution Account – the Participant’s or former
Participant’s before-tax contributions, if any, made pursuant to Section 3.01.

 

(b)                                 Catch-up
Salary Deferral Contribution Account – the Participant’s or former
Participant’s before-tax contributions, if any, made pursuant to Section 3.02.

 

(c)                                  After-Tax
Contribution Account – the Participant’s or former Participant’s
after-tax contributions, if any, made pursuant to Section 3.03.

 

(d)                                 Matching
Contribution Account – the Employer’s matching contributions, if
any, made pursuant to Section 3.04.

 

(e)                                  Supplemental
Contribution Account – the Employer’s contributions, if any, made
pursuant to Section 3.05.

 

(f)                                    QNEC Account
– the Employer’s contributions, known as “qualified nonelective employer
contributions”, made as a means of passing the actual deferral percentage test
set forth in section 401(k) of the Code or the actual contribution percentage
test set forth in section 401(m) of the Code.

 

(g)                                 Rollover
Account –  funds transferred
from another qualified plan or individual retirement account for the benefit of
a Participant or former Participant.

 

1.02                           “Active Service” means the Periods
of Service which are counted for eligibility and vesting purposes as calculated
under Article X.

 

1.03                           “Affiliated Employer” means the Employer and any employer which
is a member of the same controlled group of corporations within the meaning of
section 414(b) of the Code or which is a trade or business (whether or not
incorporated) which is under common control (within the meaning of
section 414(c) of the Code), which is a member of an affiliated service 

 

I-1

 

group (within the meaning
of section 414(m) of the Code) with the Employer, or which is required to
be aggregated with the Employer under section 414(o) of the Code.  For purposes of the limitation on
allocations contained in Appendix A, the definition of Affiliated Employer is
modified by substituting the phrase “more than 50 percent” in place of the
phrase “at least 80 percent” each place the latter phrase appears in section
1563(a)(1) of the Code.

 

1.04                           “Annual Compensation” means the Employee’s wages from the
Affiliated Employers as defined in section 3401(a) of the Code for purposes of
federal income tax withholding at the source (but determined without regard to
any rules that limit the remuneration included in wages based on the nature or
location of the employment or the services performed) modified by including
elective contributions under a cafeteria plan maintained by an Affiliated
Employer that are excludable from the Employee’s gross income pursuant to
section 125 of the Code, elective contributions under a qualified
transportation fringe benefit plan maintained by an Affiliated Employer that
are excludable from the Employee’s gross income pursuant to section 132(f)
of the Code and elective contributions made on behalf of the Employee to any
plan maintained by an Affiliated Employer that is qualified under or governed
by section 401(k), 408(k), or 403(b) of the Code.  Except for purposes of Section A.4.1 of Appendix A of the Plan,
Annual Compensation in excess of $200,000.00 (as adjusted by the Secretary of
Treasury for increases in the cost of living) will be disregarded.  If the Plan Year is ever less than twelve
months, the $200,000.00 limitation (as adjusted by the Secretary of Treasury
for increases in the cost of living) will be prorated by multiplying the
limitation by a fraction, the numerator of which is the number of months in the
Plan Year, and the denominator of which is twelve (12).

 

1.05                           “Annuity
Starting Date” means the first day of the first period for
which an amount is payable as an annuity, or in the case of a benefit payable
in the form of a lump sum, the date on which the Trustee disburses the lump
sum.

 

1.06                           “Applicable Distribution Period”
means as follows:

 

(a)                                  Distributions
During the Participant’s or former Participant’s Life.  For Distribution Calendar Years commencing
on or after January 1, 2003, up to and including the Distribution Calendar Year
that includes the Participant’s or former Participant’s death, the “Applicable
Distribution Period” is the Participant’s or former Participant’s
life expectancy determined using the Uniform Lifetime Table in Regulation
section 1.401(a)(9)-9 for his age as of his birthday in the relevant
Distribution Calendar Year.  However, if
the Participant’s or former Participant’s sole Section 401(a)(9)
Beneficiary for the entire Distribution Calendar Year is his Spouse, for
distributions during his lifetime, his “Applicable Distribution Period” shall not
be less than the joint life expectancy of him and his Spouse using his and his
Spouse’s attained ages as of his and his Spouse’s birthdays in the Distribution
Calendar Year.

 

(b)                                 Distributions
after the Participant’s or former Participant’s Death.  Effective for Distribution Calendar Years
commencing on or after January, 1, 2003, if a Participant or former Participant
dies on or after his Required Beginning Date, the “Applicable Distribution Period”
for Distribution Calendar Years after the Distribution Calendar Year containing
the Participant’s or former Participant’s date of death is the longer of the
remaining life expectancy of his Section 401(a)(9) Beneficiary (if any)
determined in accordance with the Final Section 401(a)(9) Regulations
(calculated by using the age of the Section 401(a)(9) 

 

I-2

 

Beneficiary in the year
following the year of the former Participant’s death, reduced by one for each
subsequent year) or the remaining life expectancy of the  former Participant determined in accordance
with the Final Section 401(a)(9) Regulations (calculated by using the age of
the former Participant in the year of death, reduced by one or each subsequent year).  However, if the former Participant’s
surviving Spouse is the former Participant’s sole Section 401(a)(9)
Beneficiary, the remaining life expectancy of the surviving Spouse is
calculated for each Distribution Calendar Year after the year of the former
Participant’s death using the surviving Spouse’s age as the surviving Spouse’s
birthday in that year; and for distribution calendar years after the year of
the surviving Spouse’s death, the remaining life expectancy of the surviving
Spouse is calculated using the age of the surviving Spouse as of the surviving
Spouse’s birthday in the calendar year of the surviving Spouse’s death, reduced
by one for each subsequent calendar year.

 

(c)                                  Distribution
Calendar Years Commencing Before January 1, 2003.  For Distribution Calendar Years commencing
before January 1, 2003, “Applicable Distribution Period” means the
period of time computed in accordance with the applicable rules specified in
Section 5.08(g).

 

1.07                           “Beneficiary” or “Beneficiaries” means the person or persons, or the trust
or trusts created for the benefit of a natural person or persons or the
Participant’s or former Participant’s estate, designated by the Participant or
former Participant to receive the benefits payable under the Plan upon his
death.

 

1.08                           “Board” means the board of
directors of the Sponsor.

 

1.09                           “Catch-up Eligible Participant” means a Participant
who is age 50 or who is projected to attain the age of 50 by December 31 of the
applicable Plan Year.

 

1.10                           “Claimant”
means a Participant, former Participant or Beneficiary, as applicable.

 

1.11                           “Code” means the Internal
Revenue Code of 1986, as amended from time to time.

 

1.12                           “Committee” means the committee
appointed by the Sponsor to administer the Plan.

 

1.13                           “Considered Compensation” 
means Annual Compensation paid to a Participant by an Affiliated
Employer for a Plan Year, reduced 
by all of the following items (even if includable in gross income): all
reimbursements or other expense allowances (such as the payment of moving
expenses or automobile mileage reimbursements), cash and noncash fringe
benefits (such as the use of an automobile owned by the Employer, club
memberships, tax gross-ups, attendance and safety awards, fitness
reimbursements, housing allowances and financial planning benefits), deferred
compensation (such as amounts realized upon the exercise of a nonqualified
stock option or upon the premature disposition of an incentive stock option,
pay for accrued vacation upon Separation From Service, and amounts realized
when restricted property or other property held by a Participant either becomes
freely transferable or no longer subject to a substantial risk of forfeiture
under section 83 of the Code), overtime, and welfare benefits (such as
severance pay).  An Employee’s Considered
Compensation paid to him during any period in which he is not eligible to
participate in the Plan under Article II shall be disregarded.

 

I-3

 

Considered Compensation
in excess of $200,000.00 (as adjusted by the Secretary of Treasury for increases
in the cost of living) will be disregarded. 
If the Plan Year is ever less than twelve months, the $200,000.00
limitation (as adjusted by the Secretary of Treasury for increases in the cost
of living) will be prorated by multiplying the limitation by a fraction, the
numerator of which is the number of months in the Plan Year, and the
denominator of which is twelve (12).

 

1.14                           “Contribution” means the total
amount of contributions made under the terms of the Plan.  Each specific type of Contribution shall be
designated by the type of contribution made as follows:

 

(a)                                  Salary
Deferral Contribution – a before-tax contribution made by the
Employer pursuant to Section 3.01 and the Employee’s salary deferral agreement.

 

(b)                                 Catch-up
Salary Deferral Contribution – a contribution made by the Employer
pursuant to Section 3.02 and the Participant’s salary deferral agreement.

 

(c)                                  After-Tax
Contribution – an after-tax contribution made by the Employee
pursuant to Section 3.03.

 

(d)                                 Matching
Contribution – a contribution made by the Employer pursuant to
Section 3.04.

 

(e)                                  Supplemental
Contribution – a contribution made by the Employer pursuant to
Section 3.05.

 

(f)                                    QNEC
– an extraordinary contribution, known as a “qualified nonelective employer
contribution”,  made by the Employer as
a means of passing the actual deferral percentage test set forth in section
401(k) of the Code or the actual contribution percentage test set forth in  section 401(m) of the Code.

 

(g)                                 Rollover
Contribution - a contribution made by a Participant which consists
of any part of an eligible rollover distribution (as defined in section 402 of
the Code) from a qualified employee trust described in section 401(a) of
the Code.

 

1.15                           “Direct Rollover” means a payment by
the Plan to the Eligible Retirement Plan specified by the Distributee.

 

1.16                           “Disability” means a mental or physical
disability which, in the opinion of a physician selected by the Committee,
shall prevent the Participant or former Participant from earning a reasonable
livelihood with any Affiliated Employer and which can be expected to result in
death or which has lasted or can be expected to last for a continuous period of
not less than 12 months and which: (a) was not contracted, suffered or incurred
while the Participant or former Participant was engaged in, or did not result
from having engaged in, a felonious criminal enterprise; (b) did not result
from alcoholism or addiction to narcotics; and (c) did not result from an
injury incurred while a member of the Armed Forces of the United States for
which the Participant or former Participant receives a military pension.

 

I-4

 

1.17                           “Distributee”
means an Employee or former Employee. 
In addition, the Employee’s or former Employee’s surviving Spouse and
the Employee’s or former Employee’s Spouse or former Spouse who is the
alternate payee under a Qualified Domestic Relations Order, are Distributees
with regard to the interest of the Spouse or former Spouse.

 

1.18                           “Distribution
Calendar Year” means a calendar year for which a minimum
distribution is required to be made to a Participant or former Participant
under section 401(a)(9) of the Code and Department of Treasury Regulations
thereunder.  If a Participant’s or
former Participant’s Required Beginning Date is April 1 of the calendar year
following the calendar year in which he attains age 701⁄2, his first Distribution
Calendar Year is the calendar year in which he attains age 701⁄2.  If a Participant’s or former Participant’s
Required Beginning Date is April 1 of the calendar year following the calendar
year in which h incurs a Separation From Service, his first Distribution
Calendar Year is the calendar year in which he incurs a Separation From
Service.

 

1.19                           “Eligible
Employee” means an Employee who (1) is employed by the
Sponsor, or (2) is employed by Quanex Corporation, a Delaware corporation,
primarily in connection with its Piper Impact division.

 

1.20                           “Eligible
Retirement Plan” means (a) an individual retirement account
described in section 408(a) of the Code, (b) an individual retirement annuity
described in section 408(b) of the Code (other than an endowment contract), (c)
an annuity plan described in section 403(a) of the Code, (d) a qualified plan
described in section 401(a) of the Code that is a defined contribution plan
that accepts the Distributee’s Eligible Rollover Distribution, (e) an eligible
deferred compensation plan described in section 457(b) of the Code that is
maintained by an eligible employer described in section 457(e)(1)(A) of the
Code but only if the plan agrees to separately account for amounts rolled into
such plan, or (f) an annuity contract described in section 403(b) of the Code.

 

1.21                           “Eligible Rollover Distribution”
means any distribution of all or any portion of the balance to the credit of
the Distributee, except that an Eligible Rollover Distribution does not
include:  (a) any distribution that is
one of a series of substantially equal periodic payments (not less frequently
than annually) made for the life (or life expectancy) of the Distributee or the
joint lives (or joint life expectancies) of the Distributee and the
Distributee’s Beneficiary, or for a specified period of ten years or more; (b)
any distribution to the extent the distribution is required under section
401(a)(9) of the Code; (c) the portion of any distribution that is not
includable in gross income (determined without regard to the exclusion for net
unrealized appreciation with respect to employer securities) unless the
Eligible Retirement Plan to which the distribution is transferred (a) agrees to
separately account for amounts so transferred, including separately accounting
for the portion of such distribution which is not includable in gross income or
(b) is an individual retirement account described in section 408(a) of the Code
or an individual retirement annuity described in section 408(b) of the Code
(other than an endowment contract); and, (d) a distribution from any of the
Participant’s Accounts due to a financial hardship of the Participant.

 

1.22                           “Employee”
means, except as otherwise specified in this Section, all common law employees
of an Affiliated Employer and all Leased Employees.

 

I-5

 

1.23                           “Employer”
or “Employers” means the Sponsor and any other business
organization that adopts the Plan.

 

1.24                           “Entry Date”
means the first day of each calendar quarter, January 1, April 1, July 1, and
October 1.

 

1.25                           “ERISA”
means the Employee Retirement Income Security Act of 1974, as amended from time
to time.

 

1.26                           “Final Section 401(a)(9) Regulations”
means the final Department of Treasury Regulations issued under section
401(a)(9) of the Code which were published in the Federal Register on April 17,
2002.

 

1.27                           “Five
Percent Owner” means an Employee who is a five percent owner
as defined in section 416(i) of the Code.

 

1.28                           “Forfeitable
Interest” means a Participant’s or former Participant’s
Forfeitable Interest in amounts credited to his Account determined in
accordance with Article VIII.

 

1.29                           “Highly
Compensated Employee” means an Employee or an Affiliated
Employer who, during the Plan Year or the preceding Plan Year, (a) was at
any time a Five Percent Owner at any time during the Plan Year or the preceding
Plan Year or (b) had Annual Compensation from the Affiliated Employers in
excess of $80,000.00 (as adjusted from time to time by the Secretary of the
Treasury) for the preceding Plan Year.

 

1.30                           “Hour of
Service” means each hour that an Employee is paid or
entitled to payment by an Affiliated Employer for the performance of duties.

 

1.31                           “Leased
Employee” means any person who (a) is not a common law
employee of an Affiliated Employer, (b) pursuant to an agreement between
an Affiliated Employer and any other person, has performed services for an
Affiliated Employer (or for an Affiliated Employer and related persons
determined in accordance with section 414(n)(6) of the Code) on a substantially
full-time basis for a period of at least one year and (c) performs the
services under primary direction and control of the recipient.

 

1.32                           “Maternity or Paternity Absence”
means a period in which an Employee is absent from work (a) by reason of the
pregnancy of the Employee, (b) by reason of the birth of a child of the
Employee, (c) by reason of the placement of a child with the Employee in
connection with the adoption of the child by the Employee, or (d) for purposes
of caring for such child for a period immediately following such birth or
placement for adoption.

 

1.33                           “Nonforfeitable
Interest” means a Participant’s or former Participant’s
nonforfeitable interest in amounts credited to his Account determined in
accordance with Article VIII.

 

1.34                           “Non-Highly Compensated Employee”
means an Employee who is not a Highly Compensated Employee.

 

I-6

 

1.35                           “Participant”
means an Employee who is eligible to participate in the Plan under the
provisions of Article II.

 

1.36                           “Period of
Service” means a period of employment with an Affiliated
Employer which commences on the day on which an Employee performs his initial
Hour of Service or performs his initial Hour of Service after he Severs
Service, whichever is applicable, and ends on the date the Employee
subsequently Severs Service.

 

1.37                           “Period of
Severance” means the period of time commencing on the
Employee’s Severance From Service Date and ending on the date the Employee
subsequently performs an Hour of Service.

 

1.38                           “Plan”
means the Piper Impact 401(k) Plan, as amended from time to time.

 

1.39                           “Plan Year”
means the calendar year.

 

1.40                           “Qualified Domestic Relations Order”
means a qualified domestic relations order as defined in section 414(p) of the
Code.

 

1.41                           “Regulation”
means the Department of Treasury regulation specified, as it may be changed
from time to time.

 

1.42                           “Required
Beginning Date” means:

 

(a)                                  in
the case of an individual who is not a Five Percent Owner in the Plan Year that
ends in the calendar year in which he attains age 701⁄2, the Required Beginning
Date is April 1 of the calendar year following the later of (1) the
calendar year in which the individual attains age 701⁄2, or (2) the calendar
year in which the individual incurs a Separation From Service; and

 

(b)                                 in
the case of an individual who is a Five Percent Owner in the Plan Year that
ends in the calendar year in which he attains age 701⁄2, the Required Beginning
Date is April 1 of the calendar year following the calendar year in which
he attains age 701⁄2.

 

1.43                           “Retirement
Age” means the time the Participant or former Participant
attains the age of 65.

 

1.44                           “Rollover
Contribution” means the amount contributed by a Participant
which consists of any part of an Eligible Rollover Distribution from a
qualified employee trust described in section 401(a) of the Code other
than an amount that is not includable in the Participant’s gross income.

 

1.45                           “Section
401(a)(9) Beneficiary” means an individual who is a
Participant’s or former Participant’s Beneficiary on the date of the
Participant’s or former Participant’s death and (unless the Beneficiary dies
after the date of the Participant’s or former Participant’s death and before
September 30 of the following calendar year following the calendar year of the
Participant’s or former Participant’s death. 
If the Participant’s or former Participant’s Beneficiary is a trust, an
individual beneficiary of the trust may be a Section 401(a)(9) 

 

I-7

 

Beneficiary of the
Participant or former Participant if the requirements of Regulation Section
1.401(a)(9)-4 or satisfied.

 

1.46                           “Separation
From Service” means an individual’s termination of
employment with an Affiliated Employer without commencing or continuing
employment with (a) any other Affiliated Employer.

 

1.47                           “Severance From Service Date”
means the earlier of the date of the Employee’s Separation From Service, or the
first anniversary of the date on which the Employee is absent from service
(with or without pay) for any reason other than his Separation From Service or
a Maternity or Paternity Absence, such as vacation, holiday, sickness, or leave
of absence.  The Severance From Service
Date of an Employee who is absent beyond the first anniversary of his first day
of absence by reason of a Maternity or Paternity Absence is the second
anniversary of the first day of the absence.

 

1.48                           “Severs
Service” means the occurrence of a Participant’s or former
Participant’s Severance From Service Date.

 

1.49                           “Sponsor”
means Quanex Corporation, a Delaware corporation.

 

1.50                           “Sponsor Stock”
means the common stock of the Sponsor or such other publicly-traded stock of an
Affiliated Employer as meets the requirements of section 407(d)(5) of ERISA
with respect to the Plan.

 

1.51                           “Spouse”
means the person to whom the Participant or former Participant is married under
applicable local law.  In addition, to
the extent provided in a Qualified Domestic Relations Order, a surviving former
spouse of a Participant or former Participant will be treated as the Spouse of
the Participant or former Participant, and to the same extent any current spouse
of the Participant or former Participant will not be treated as a Spouse of the
Participant or former Participant.  For
purposes of Section 5.08, a former Spouse to whom all or a portion of a
Participant’s or former Participant’s Plan benefit is payable under a Qualified
Domestic Order shall, to that extent, be treated as a Spouse or surviving
Spouse regardless of whether the Qualified Domestic Relations Order
specifically provides that the former Spouse is to be treated as the Spouse for
purposes of Sections 401(a)(11) and 417 of the Code.

 

1.52                           “Trust”
means the trust estate created to fund the Plan.

 

1.53                           “Trustee”
means collectively one or more persons or corporations with trust powers which
have been appointed by the initial Sponsor and have accepted the duties of
Trustee and any successor appointed by the Sponsor.

 

1.54                           “Valuation
Date” means each business day of the Plan Year.

 

I-8

 

ARTICLE II

 

ELIGIBILITY

 

2.01                           Eligibility Requirements.  Each Eligible Employee who is employed by an
Employer shall be eligible to participate in the Plan beginning on the Entry
Date that occurs with or next follows the date on which the Employee completes
90 days of Active Service.  However, an
Employee who is included in a unit of Employees covered by a collective
bargaining agreement between the Employees’ representative and the Employer
shall be excluded, even if he has met the requirements for eligibility, if
there has been good faith bargaining between the Employer and the Employees’
representative pertaining to retirement benefits and the agreement does not
require the Employer to include such Employees in the Plan.  In addition, a Leased Employee shall not be
eligible to participate in the Plan unless the Plan’s qualified status is
dependent upon coverage of the Leased Employee.  An Employee who is a nonresident alien (within the meaning of
section 7701(b) of the Code) and receives no earned income (within the meaning
of section 911(d)(2) of the Code) from any Affiliated Employer that
constitutes income from sources within the United States (within the meaning of
section 861(a)(3) of the Code) is not eligible to participate in the
Plan.  An Employee who is a nonresident
alien (within the meaning of section 7701(b) of the Code) and who does
receive earned income (within the meaning of section 911(d)(2) of the Code)
from any Affiliated Employer that constitutes income from sources within the
United States (within the meaning of section 861(a)(3) of the Code) all of which
is exempt from United States income tax under an applicable tax convention is
not eligible to participate in the Plan. 
During any period in which an individual is classified by an Employer as
an independent contractor with respect to such Employer, the individual is not
eligible to participate in the Plan (even if he is subsequently reclassified by
the Internal Revenue Service as a common law employee of the Employer and the
Employer acquiesces to the reclassification). 
Finally, an Employee who is employed outside the United States is not
eligible to participate in the Plan unless the Committee elects to permit him
to participate in the Plan.

 

2.02                           Early Participation for Rollover Purposes.  An Employee who satisfies the eligibility
requirements specified in Section 2.01 other than the service requirement shall
be eligible to make Rollover Contributions to the Plan on the Entry Date next
following (not coincident with) the date on which he completes an Hour of
Service.

 

2.03                           Eligibility Upon Reemployment.  If an Employee incurs a Separation From
Service prior to the date he initially begins participating in the Plan, he
shall be eligible to begin participation in the Plan on the later of the date
he would have become a Participant if he did not incur a Separation From
Service or the date on which he performs an Hour of Service after he incurs a
Separation From Service.  Subject to
Section 2.04, once an Employee becomes a Participant, his eligibility to
participate in the Plan shall continue until he Severs Service.

 

2.04                           Cessation of Participation.  An individual who has become a Participant
will cease to be a Participant on the earliest of the date on which he (a)
Severs Service, (b) is transferred from the employ of an Employer to the employ
of an Affiliated Employer that has not adopted the Plan, (c) becomes included
in a unit of employees covered by a collective bargaining agreement that does
not require coverage of those employees under the Plan, (d) becomes a Leased
Employee, or (e) becomes included in another classification of Employees who,
under 

 

II-1

 

the terms of the Plan,
are not eligible to participate.  Under
these circumstances, the Participant’s Account becomes frozen; he cannot
contribute to the Plan or share in the allocation of any Contributions for the
frozen period.  However, his Accounts
shall continue to share in any Plan income allocable to his Accounts during the
frozen period of time.

 

2.05                           Recommencement of Participation.  A former Participant will again become a
Participant on the day on which he again becomes included in a classification
of Employees that, under the terms of the Plan, is eligible to participate.

 

II-2

 

ARTICLE III

 

CONTRIBUTIONS

 

3.01                           Salary Deferral Contributions.  Each Employer shall make a Salary Deferral
Contribution in an amount equal to the amount by which the Considered
Compensation of its Employees who are Participants was reduced on a pre-tax
basis pursuant to salary deferral agreements (excluding amounts of Considered
Compensation deferred pursuant to Section 3.02 that are properly characterized
as Catch-up Salary Deferral Contributions). 
Any such salary deferral agreement shall be an agreement in a form satisfactory
to the Committee to prospectively receive Considered Compensation from the
Employer in a reduced amount and to have the Employer contribute an amount
equal to the amount of the reduction to the Trust on account of the
Participant.  Any such salary deferral
agreement shall be revocable in accordance with its terms, provided that no
revocation shall be retroactive or permit payment to the Participant of the
amount required to be contributed to the Trust.  A Participant’s or former Participant’s right to benefits
attributable to Salary Deferral Contributions made to the Plan on his behalf
shall be nonforfeitable.

 

The maximum amount a
Participant may elect to reduce his Considered Compensation under his salary
deferral agreement and have contributed to the Plan on a pre-tax basis shall be
determined by the Committee, in its sole discretion from time to time.  The election to have Salary Deferral
Contributions made, the ability to change the rate of Salary Deferral
Contributions, the right to suspend Salary Deferral Contributions, and the
manner of commencing new Salary Deferral Contributions shall be permitted under
any uniform method determined by the Committee from time to time.

 

3.02                           Catch-up Salary Deferral Contributions.  The Employer shall make a Catch-up Salary
Deferral Contribution in an amount equal to the amounts by which its Catch-up
Eligible Participants’ Considered Compensation was reduced as a result of
salary deferral agreements authorizing Catch-up Salary Deferral Contributions
(to the extent that their deferrals are properly characterized as Catch-up
Salary Deferral Contributions).  Any
such salary deferral agreement shall be an agreement in a form satisfactory to
the Committee to prospectively receive Considered Compensation from the Employer
in a reduced amount and to have the Employer contribute an amount equal to the
amount of the reduction to the Trust on behalf of the Catch-up Eligible
Participant.  Further, any such salary
deferral agreement shall be revocable in accordance with its terms, provided
that no revocation shall be retroactive or permit payment to the Catch-up
Eligible Participant of the amount required to be contributed to the
Trust.  A Participant’s or former
Participant’s right to benefits derived from Catch-up Salary Deferral
Contributions made to the Plan on his behalf shall be nonforfeitable.

 

Catch-up Salary Deferral
Contributions on behalf of a Catch-up Eligible Participant shall be permitted
to the extent that the Catch-up Salary Deferral Contributions do not exceed the
lesser of (a) the “applicable dollar amount” under section 414(v) of the Code
for the Plan Year (as adjusted from time to time by the Secretary of Treasury),
or (b) an amount equal to the Catch-up Eligible Participant’s Annual
Compensation for the Plan Year minus the Catch-up Eligible Participant’s Salary
Deferral Contributions for the Plan Year.

 

III-1

 

A final determination as
to whether amounts deferred under the Plan by a Catch-up Eligible Participant
are properly characterized as Salary Deferral Contributions or Catch-up Salary
Deferral Contributions for a Plan Year shall be made as of the end of the Plan
Year.  To the extent that amounts
deferred under the Plan on a pre-tax basis at the election of a Catch-up
Eligible Participant exceed the least of (a) the lowest statutory limit on
Salary Deferral Contributions (including limits imposed under sections
401(a)(30) and 415 of the Code), (b) the maximum limitation on Salary Deferral
Contributions, if any, imposed by the Committee pursuant to Section 3.01, or
(c) the highest amount of Salary Deferral Contributions on behalf of the
Catch-up Eligible Participant that may be retained in the Plan under the rules
of section 401(k)(8)(C) of the Code, the amounts deferred shall be
characterized as Catch-up Salary Deferral Contributions.  Any amounts deferred under the Plan  on a pre-tax basis at the election of a
Participant that are not properly characterized as Catch-up Salary Deferral
Contributions pursuant to the rules of the preceding sentence shall be
characterized as Salary Deferral Contributions for all purposes under the Plan.

 

3.03                           After-Tax Contributions.  To the extent permitted by the Committee, each Participant may
make voluntary after-tax contributions to the Plan through payroll deductions
or in a lump sum in cash.  A
Participant’s or former Participant’s right to benefits attributable to
After-Tax Contributions made to the Plan on his behalf shall be nonforfeitable.

 

The maximum amount a
Participant may elect to contribute to the Plan on an after-tax basis shall be
determined by the Committee from time to time. 
The election to have After-Tax Contributions made, the ability to change
the rate of After-Tax Contributions, the right to suspend After-Tax
Contributions, and the manner of commencing new After-Tax Contributions shall
be permitted under any uniform method determined by the Committee from time to
time.

 

3.04                           Matching Contributions.  Each Employer will make a Matching
Contribution on behalf of each of its Employees who is a Participant in an
amount equal to 25 percent of the first six percent of such Participant’s
Considered Compensation for the Plan Year contributed to the Plan pursuant to
such Participant’s Salary Deferral Contributions and/or After-Tax Contributions
through October 1, 2002.  Effective
October 1, 2002, each Employer will make a Matching Contribution on behalf of
each of its Employees who is a Participant in an amount equal to 50 percent of
the first five percent of Considered Compensation for the Plan Year contributed
to the Plan pursuant to such Participant’s Salary Deferral Contribution and/or
After-Tax Contributions on and after October 1, 2002.

 

3.05                           Supplemental Contributions.  Each Employer may contribute for a Plan Year
a Supplemental Contribution in such amount, if any, as shall be determined by
the Employer.  The rate of the
Supplemental Contribution need not be uniform among all divisions and plants of
the Employer.

 

3.06                           Rollover Contributions and Plan-to-Plan Transfers.  The Committee may permit Rollover
Contributions by Participants and/or direct transfers to or from another
qualified plan on behalf of Participants from time to time.  If Rollover Contributions and/or direct
transfers to or from another qualified plan are permitted, the opportunity to
make those contributions and/or direct transfers must be made available to
Participants on a nondiscriminatory basis. 
For this purpose only, all Employees who are included in a classification
of Employees who are 

 

III-2

 

eligible to participate
in the Plan shall be considered to be Participants of the Plan even though they
may not have met the Active Service requirements for eligibility.  However, they shall not be entitled to elect
to have Salary Deferral Contributions made or to share in Employer
Contributions or forfeitures unless and until they have met the requirements
for eligibility, contributions and allocations.  A Rollover Contribution shall not be accepted unless it is
directly rolled over to the Plan in a rollover described in
section 401(a)(31) of the Code.  A
Participant shall not be permitted to make a Rollover Contribution if the
property he intends to contribute is for any reason unacceptable to the Trustee.  A Participant’s or former Participant’s
right to benefits attributable to his Rollover Contributions made to the Plan
shall be nonforfeitable.

 

3.07                           QNECS - Extraordinary Employer Contributions.  Any Employer may make a QNEC in
such amount, if any, as shall be determined by it.  A Participant’s or former Participant’s right to benefits
attributable to QNECs made to the Plan on his behalf shall be
nonforfeitable.  In no event will QNECs
be distributed before Salary Deferral Contributions may be distributed from the
Plan.

 

3.08                           Restoration Contributions.  The Employer shall, for each Plan
Year, make a restoration contribution in an amount equal to the sum of (a) such
amount, if any, as shall be necessary to fully restore all Matching
Contribution Accounts and Supplemental Contribution Accounts required to be
restored pursuant to the provisions of Section 8.02 after the application of
all forfeitures available for such restoration; plus (b) an amount equal in
value to the value of forfeited benefits required to be restored under Section
8.03, after the application of all forfeitures available for such restoration.

 

3.09                           Restorative Payments.  If due to an oversight or inadvertent error
an Employer fails to make a Contribution to the Plan on behalf of an Employee,
as soon as administratively practicable following the Employee’s discovery of
the error, the Employer shall make a restorative payment to the Plan on behalf
of the Employee in an amount equal to the amount of required Contributions the
Employer should have made to the Plan on behalf of the Employee plus interest
thereon (both determined in a manner that is consistent with then current
guidance from the Department of Treasury concerning such restorative payments)
after the application of forfeitures available for such restoration.

 

3.10                           Nondeductible Contributions Not Required.  Notwithstanding any other provision of the
Plan, no Employer shall be required to make any contribution that would be a
“nondeductible contribution” within the meaning of section 4972 of the Code.

 

3.11                           Form of Payment of Contributions.  Contributions may be paid to the
Trustee either in cash or in qualifying employer securities (as such term is
defined in section 407(d) of ERISA) or any combination thereof, provided that
payment may not be made in any form constituting a prohibited transaction under
section 4975 of the Code or section 406 of ERISA.

 

3.12                           Deadline for Payment of Contributions.  Salary Deferral Contributions and Catch-up
Salary Deferral Contributions shall be paid to the Trustee in
installments.  The installment for each
payroll period shall be paid as soon as administratively feasible.  The Matching Contributions, Supplemental
Contributions and QNECs for a Plan Year shall be paid to the Trustee in one or
more installments, as the Employer may from time to time determine; 

 

III-3

 

provided, however, that
such contributions may not be paid later than the time prescribed by law
(including extensions thereof) for filing the Employer’s income tax return for
its taxable year ending with or within such Plan Year.

 

3.13                           Return of Contributions for Mistake, Disqualification
or Disallowance of Deduction. 
Subject to the limitations of section 415 of the Code, the assets
of the Trust shall not revert to any Employer or be used for any purpose other
than the exclusive benefit of Participants, former Participants and their
Beneficiaries and the reasonable expenses of administering the Plan except:

 

(a)                                  any
Employer Contribution made because of a mistake of fact may be repaid to the
Employer within one year after the payment of the Contribution; and

 

(b)                                 all
Employer Contributions are conditioned upon their deductibility under
section 404 of the Code; therefore, to the extent the deduction is
disallowed, the Contributions may be repaid to the Employer within one year
after the disallowance.

 

The Employer has the
exclusive right to determine if a Contribution or any part of it is to be
repaid or is to remain as a part of the Trust except that the amount to be
repaid is limited, if the Contribution is made by mistake of fact or if the
deduction for the Contribution is disallowed, to the excess of the amount
contributed over the amount that would have been contributed had there been no
mistake or over the amount disallowed. 
Earnings which are attributable to any excess contribution cannot be
repaid.  Losses attributable to an
excess contribution must reduce the amount that may be repaid.  All repayments of Contributions made due to
a mistake of fact or with respect to which a deduction is disallowed are
limited so that the balance in a Participant’s or former Participant’s Account
cannot be reduced to less than the balance that would have been in the
Participant’s or former Participant’s Account had the mistaken amount or the
amount disallowed never been contributed.

 

III-4

 

ARTICLE IV

 

ALLOCATION AND VALUATION OF ACCOUNTS

 

4.01                           Information Statements from Employer.  Upon request by the Committee,
the Employer shall provide the Committee with a schedule setting forth the
amount of its Salary Deferral Contribution, Supplemental Contribution, QNEC,
and restoration contribution; the names of its Participants, the number of
years of Active Service of each of its Participants and former Participants ,
the amount of Considered Compensation and Annual Compensation paid to each
Participant and former Participant, and the amount of Considered Compensation
and Annual Compensation paid to all its Participants and former
Participants.  Such schedules shall be
conclusive evidence of such facts.

 

4.02                           Allocation of Salary Deferral Contributions.  The Committee or its designee shall allocate
the Salary Deferral Contribution among the Participants by allocating to
each  Participant the amount by which
his Considered Compensation was reduced pursuant to a salary deferral agreement
(as described in Section 3.01) and shall credit each such Participant’s
share to his Salary Deferral Contribution Account.

 

4.03                           Allocation of Catch-up Salary Deferral Contribution.  The Committee shall allocate the Catch-up
Salary Deferral Contribution among the Participants by allocating to each  Participant the amount by which his
Considered Compensation was reduced pursuant to a salary deferral agreement
under Section 3.02 and shall credit each such Participant’s share to his
Catch-up Salary Deferral Contribution Account.

 

4.04                           Allocation of After-Tax Contributions.  The Committee or its designee shall allocate
After-Tax Contributions made by a Participant in the amount of such After-Tax
Contributions and shall credit such After-Tax Contributions to the
Participant’s After-Tax Contribution Account.

 

4.05                           Allocation of Matching Contributions.  The Committee or its designee shall
separately allocate the Matching Contribution made by an Employer among the
Employer’s Participants in the proportion which the matched Salary Deferral
Contributions, matched Catch-up Salary Deferral Contributions, and matched
After-Tax Contributions of each such Participant bear to the total matched
Salary Deferral Contributions and matched After-Tax Contributions of all such
Participants.  Each Participant’s
proportionate share shall be credited to his Matching Contribution Account.

 

4.06                           Allocation of Supplemental Contributions.  For each Plan Year, the Committee or its
designee shall allocate the Supplemental Contribution made by an Employer among
the Participants who are employed by the Employer during the Plan Year and
working at or in connection with a particular plant or division of the
Employer, based upon each such Participant’s Considered  Compensation paid by the Employer as
compared to the Considered Compensation for all such Participants employed by
the Employer.

 

4.07                           Allocation of QNECs. 
The  Committee or its
designee shall separately allocate the QNEC among the Non-Highly Compensated
Employees who are Participants based upon 

 

IV-1

 

each such Participant’s
Considered Compensation as compared to the Considered Compensation of all such
Participants.

 

4.08                           Allocation of Forfeitures.  At the time a forfeiture occurs pursuant to
Article VIII, Section A.3.2 of Appendix A or Section A.3.3 of Appendix A, the
amount forfeited will first be used to reinstate any Account required to be
reinstated under Article VIII, and any remaining amount will be applied to
reduce the Employer’s obligation to make future Matching Contributions or
Supplemental Contributions.  However, in
no event will amounts forfeited pursuant to Section A.3.2 or Section A.3.3 of
Appendix A be allocated to the Accounts of Participants whose Matching
Contributions are forfeited pursuant to Section A.3.2 or Section A.3.3 of
Appendix A.

 

4.09                           Valuation of Accounts.  A Participant’s or former Participant’s
Accounts shall be valued by the Trustee at fair market value on each Valuation
Date.  The earnings and losses
attributable to any asset in the Trust will be allocated solely to the Account
of the Participant or former Participant on whose behalf the investment in the
asset was made.  In determining the fair
market value of the Participant’s or former Participant’s Accounts, the Trustee
shall utilize such sources of information as it may deem reliable including,
but not limited to, stock market quotations, statistical evaluation services,
newspapers of general circulation, financial publications, advice from
investment counselors or brokerage firms, or any combination of sources which
in the opinion of the Trustee will provide the price such assets were last
traded at on a registered stock exchange; provided, however, that with respect
to regulated investment company shares, the Trustee shall rely exclusively on
information provided to it by the investment adviser to such funds.

 

4.10                           No Rights Unless Otherwise Prescribed.  No allocations, adjustments, credits, or
transfers shall ever vest in any Participant or former Participant any right,
title, or interest in the Trust except at the times and upon the terms and
conditions set forth in the Plan.

 

IV-2

 

ARTICLE V

 

BENEFITS

 

5.01                           Retirement Benefit.  Upon his Separation From Service, a
Participant or former Participant is entitled to receive his Nonforfeitable
Interest in his Account balances.

 

5.02                           Death Benefit.  If a Participant or former Participant dies, the death benefit
payable to his Beneficiary shall be the Participant’s Nonforfeitable Interest
in 100 percent of the remaining amount of his Account balances.

 

5.03                           Distribution Method.  Subject to Section 5.10, any distribution under the Plan shall be
made in the form of a single sum in cash.

 

5.04                           Immediate Payment of Small Amount Upon Separation From
Service.  Each
Participant or  former  Participant whose Nonforfeitable Interest in
his Account balance at the time of a distribution to him on account of his
Separation From Service is, in the aggregate, less than or equal to $5,000.00,
shall be paid in the form of an immediate single sum cash payment and/or as a
Direct Rollover, as elected by him under section 5.05.  However, if a Distributee who is subject to
this Section 5.04 does not furnish instructions in accordance with Plan
procedures to directly roll over his Plan benefit within 45 days after he has
been given direct rollover forms, he will be deemed to have elected to receive
an immediate lump sum cash distribution of his entire Plan benefit.  If a Participant’s or former Participant’s
Nonforfeitable Interest in his Account balance payable upon his Separation From
Service is zero (because he has no Nonforfeitable Interest in his Account
balance), he will be deemed to receive an immediate distribution of his entire
Nonforfeitable Interest in his Account balance.

 

5.05                           Direct Rollover Option.  To the extent required under Regulations, a
Distributee has the right to direct that any portion of his Eligible Rollover
Distribution will be directly paid to an Eligible Retirement Plan specified by
him that will accept the Eligible Rollover Distribution.

 

5.06                           Consent to Distribution.  Notwithstanding any other provision of the
Plan, no benefit shall be distributed or commence to be distributed to a
Participant or former Participant prior to his attainment of the later of
age 62 or Retirement Age without his consent, unless the benefit is
payable immediately under Section 5.04. 
Any such consent shall be valid only if given not more than 90 days
prior to the Participant’s or former Participant’s Annuity Starting Date and
after his receipt of the notice regarding benefits described in Section
5.09(a).

 

5.07                           Information Provided to Participants.  Information regarding the form of benefits
available under the Plan shall be provided to Participants or former
Participants in accordance with the following provisions:

 

(a)                                  General
Information.  Except as
otherwise provided in paragraph (c), the Sponsor shall provide each Participant
or former Participant with a written general explanation or description of (1)
the eligibility conditions and other material features of the optional forms of
benefit available under the Plan, (2) the relative values of the optional forms
of benefit available 

 

V-1

 

under the Plan, and (3)
the Participant’s  or former
Participant’s right, if any, to defer receipt of the distribution.

 

(b)                                 Time for
Giving Notice.  The written
general explanation or description regarding any optional forms of benefit
available under the Plan shall be provided to a Participant or former
Participant no less than 30 days and no more than 90 days before his Annuity
Starting Date unless he legally waives this requirement.

 

(c)                                  Exception
for Participants with Small Benefit Amounts.  Notwithstanding the preceding provisions of
this Section, no information regarding any optional forms of benefit otherwise
available under the Plan shall be provided to the Participant or former
Participant if his benefit is payable in a single sum under Section 5.04.

 

5.08                           Required Distributions. Notwithstanding
any other provision of the Plan, all benefits payable under the Plan shall be
distributed, or commence to be distributed, in compliance with the following
provisions:

 

(a)                                  Required Distributions for Certain
Persons Who are 701⁄2 or Older. 
Unless a Participant’s or former Participant’s entire
Nonforfeitable Interest in his Plan benefit is distributed to him in a single
sum no later than his Required Beginning Date or in the form of an annuity
purchased from an insurance company, the Participant’s or former Participant’s
Nonforfeitable Interest in his Plan benefit must begin to be distributed, not
later than his Required Beginning Date, over the life of the Participant or
former Participant, or the joint lives of the Participant or former Participant
and his Section 401(a)(9) Beneficiary, or over a period not extending beyond
the life expectancy of the Participant or former Participant or the joint and
last survivor expectancy of the Participant or former Participant and his
Section 401(a)(9) Beneficiary.  The
distribution required to be made on or before the Participant’s or former Participant’s
Required Beginning Date shall be the distribution required for his first
Distribution Calendar Year.  The minimum
required distribution for other Distribution Calendar Years, including the
required minimum distribution for the Distribution Calendar Year in which the
Participant’s or former Participant’s Required Beginning Date occurs must be
made on or before December 31 of that Distribution Calendar Year.  In the case of a benefit payable in a form
other than a single sum or an annuity purchased from an insurance company, the
amount that must be distributed for a Distribution Calendar Year is an amount
equal to the amount specified in Paragraph (b) of this Section 5.08.

 

(b)                                 Required Minimum Distributions.  If a Participant’s or former Participant’s
Required Beginning Date is before the date on which he incurs a Separation From
Service, the Participant or former Participant (if he is then alive) must be
paid either the entire amount credited to his Account or annual distributions
from the Plan in the amounts required under section 401(a)(9) of the Code and
Regulations thereunder commencing no later than his Required Beginning Date
until his entire interest under the Plan has been distributed under this
Article V.  The distribution required to
be made on or before the Participant’s or former Participant’s Required
Beginning Date shall be the distribution required for his first Distribution
Calendar Year.  The minimum required
distribution for other Distribution Calendar Years, including the required minimum
distribution for the Distribution Calendar Year in which the Participant’s or
former Participant’s Required Beginning Date occurs must be made on or before 

 

V-2

 

December 31 of that
Distribution Calendar Year.  The amount
that must be distributed for a Distribution Calendar Year is an amount equal to
(1) the Participant’s or former Participant’s Account balance as of the last
Valuation Date in the calendar year immediately preceding the Distribution Calendar
Year, increased by any contributions or forfeitures allocated and made to the
Account during such immediately preceding calendar year after the Valuation
Date, and decreased by distributions made during such immediately preceding
calendar year after the Valuation Date, divided by (2) the Participant’s or
former Participant’s Applicable Distribution Period.

 

(c)                                  Distribution Deadline for Death
Benefit When Participant or Former Participant Dies Before His Distributions
Begin.  If a Participant
or former Participant dies before the date distribution of his Nonforfeitable
Interest in his Plan benefit begins, his entire Nonforfeitable Interest in his
Plan benefit will be distributed, or begin to be distributed, to his Section
401(a)(9) Beneficiary no later than as follows:

 

(i)                                     If
the Participant’s or former Participant’s surviving Spouse is the Participant’s
or former Participant’s sole Section 401(a)(9) Beneficiary, then distributions
to the surviving Spouse will begin by December 31 of the calendar year
immediately following the calendar year in which the Participant or former
Participant died, or by December 31 of the calendar year in which the
Participant or former Participant would have attained age 70 1/2 , if later.

 

(ii)                                  If
the Participant’s or former Participant’s surviving Spouse is not the
Participant’s or former Participant’s sole Section 401(a)(9) Beneficiary and
the payment of Plan death benefits to the Section 401(a)(9) Beneficiary will
not be in the form of a single sum or a commercial annuity, then distributions
to the Section 401(a)(9) Beneficiary will begin by December 31 of the
calendar year immediately following the calendar year in which the Participant
or former Participant died.

 

(iii)                               If
the Participant’s or former Participant’s surviving Spouse is the Participant’s
or former Participant’s sole Section 401(a)(9) 
Beneficiary, and the payment of a Plan death benefit to the Section
401(a)(9) Beneficiary will be in the form of a single sum, then the
Participant’s or former Participant’s entire Nonforfeitable Interest in his
Plan benefit will be distributed by December 31 of the calendar year containing
the fifth anniversary of the Participant’s or former Participant’s death.

 

(iv)                              If
there is no Section 401(a)(9) Beneficiary as of September 30 of the
calendar year following the calendar year of the Participant’s or former
Participant’s death, then the Participant’s or former Participant’s entire
Nonforfeitable Interest in his Plan benefit will be distributed by
December 31 of the calendar year containing the fifth anniversary of the
Participant’s or former Participant’s death.

 

(v)                                 If
the Participant’s or former Participant’s surviving Spouse is the Participant’s
or former Participant’s sole Section 401(a)(9) Beneficiary and the surviving
Spouse dies after the Participant or former Participant but before
distributions to the surviving Spouse begin, this Section 5.08(e), other than
Section 5.08(e)(1), will apply as if the surviving Spouse were the Participant.

 

V-3

 

Unless the Participant’s
or former Participant’s interest is distributed in the form of an annuity or in
a single sum on or before the Required Beginning Date, as of the first
Distribution Calendar Year distributions will be made in accordance with
Paragraph (b) of this Section 5.08.

 

(d)                                 Distribution of Death Benefit When
Participant or Former Participant Dies On or After His Required Beginning Date.  If a Participant or former
Participant dies on or after his Required Beginning Date, his Plan benefit must
be distributed to his Section 401(a)(9) Beneficiary at least as rapidly as the
method of payment of minimum required distributions being used as of the date
of his death.

 

(e)                                  Limitations on Death Benefits.  Benefits payable under the Plan shall not be
provided in any form that would cause a Participant’s or former Participant’s
death benefit to be more than incidental. Any distribution required to satisfy
the incidental benefit requirement shall be considered a required distribution
for purposes of section 401(a)(9) of the Code.

 

(f)                                    Requirements in the Case of a
Commercial Annuity.  If a
Participant’s or former Participant’s Nonforfeitable Interest in his Plan
benefit is distributed in the form of an annuity purchased from an insurance
company, distributions under the annuity contract will be made in accordance
with the requirements of section 401(a)(9) of the Code and Department of
Treasury Regulations.

 

(g)                                 Compliance with Section 401(a)(9).  All distributions under the Plan will be
made in accordance with the requirements of section 401(a)(9) of the Code and
all Regulations promulgated thereunder, including, effective January 1,
2001, until January 1, 2003, Regulations that were proposed in January of 2001
but not including Regulations that were proposed prior to January of 2001; and
including, effective January 1, 2003, the Final Section 401(a)(9) Regulations,
including sections 1.401(a)(9)-1 through 1.401(a)(9)-9 of the Final Section
401(a)(9) Regulations.  The provisions
of the Plan reflecting section 401(a)(9) of the Code override any distribution
options in the Plan inconsistent with section 401(a)(9) of the Code.

 

(h)                                 Compliance with Section 401(a)(14).  Unless
the Participant or former Participant otherwise elects, the payment of benefits
under the Plan to the Participant or former Participant will begin not later
than the 60th day after the close of the Plan Year in which occurs the latest
of (a) the date on which the Participant or former Participant attains the
later of age 62 or  Retirement Age, (b)
the tenth anniversary of the year in which the Participant or former
Participant commenced participation in the Plan, or (c) the Participant’s or
former Participant’s Separation From Service.

 

5.09                           Designation of Beneficiary.  Each Participant and former Participant has
the right to designate and to revoke the designation of his Beneficiary or
Beneficiaries.  Each designation or
revocation must be evidenced by a written document in the form required by the
Committee, signed by the Participant or former Participant and filed with the
Committee.  If no designation is on file
at the time of a Participant’s or former Participant’s death or if the
Committee determines that the designation is ineffective, the designated
Beneficiary shall be the Participant’s or former Participant’s Spouse, if
living, or if not, the executor, administrator or other personal representative
of the Participant’s or former Participant’s estate.  If a Participant 

 

V-4

 

or former Participant is
considered to be married under local law, his designation of any Beneficiary,
other than his Spouse, shall not be valid unless the Spouse acknowledges in
writing that the Spouse understands the effect of the Participant’s or former
Participant’s beneficiary designation and consents to it.  The consent must be to a specific
Beneficiary.  The written
acknowledgement and consent must be filed with the Committee, signed by the
Spouse and at least two witnesses, one of whom must be a Participant of the
Committee or a notary public.  However,
if the Spouse cannot be located or there exist other circumstances as described
in sections 401(a)(11) and 417(a)(2) of the Code, the requirement of the
Participant’s or former Participant’s Spouse’s acknowledgement and consent may
be waived.  If a Beneficiary other than
the Participant’s or former Participant’s Spouse is named, the designation
shall become invalid if the Participant or former Participant is later
determined to be married under local law, the Participant’s or former
Participant’s missing Spouse is located or the circumstances which resulted in
the waiver of the requirement of obtaining the consent of his Spouse no longer
exist.

 

5.10                           Distributions to Minors and Incapacitated Persons.  If the Committee determines that any person
to whom a payment is due is a minor or is unable to care for his affairs
because of physical or mental disability, it shall have the authority to cause
the payments to be made to the Spouse, brother, sister or other person the
Committee determines to have incurred, or to be expected to incur, expenses for
that person unless a prior claim is made by a qualified guardian or other legal
representative.  The Committee and the
Trustee shall not be responsible to oversee the application of those
payments.  Payments made pursuant to
this power shall be a complete discharge of all liability under the Plan and
the Trust and the obligations of the Employer, the Trustee, the Trust and the
Committee.

 

5.11                           Distributions Pursuant to Qualified Domestic Relations
Orders. 
The Committee will instruct the Trustee to pay benefits in accordance
with the terms of any order that has been determined, in accordance with Plan
procedures, to be a Qualified Domestic Relations Order.  A Qualified Domestic Relations Order may
require the payment of an immediate cash lump sum to an alternate payee even if
the Participant or former Participant is not then entitled to receive an
immediate payment of Plan benefits.

 

5.12                           Claims Review Procedures; Claims Appeal Procedures.

 

(a)                                  Claims Review Procedures.  When a benefit is due, the Claimant should
submit a claim to the Committee.  Under
normal circumstances, the Committee will make a final decision as to a claim
within 90 days after receipt of the claim. 
If the Committee notifies the Claimant in writing during the initial
90-day period, it may extend the period up to 180 days after the initial
receipt of the claim.  The written
notice must indicate the circumstances necessitating the extension and the
anticipated date for the final decision. 
If a claim is denied during the claims period, the Committee must notify
the Claimant in writing, and the written notice must set forth in a manner
calculated to be understood by the Claimant:

 

(i)                                     the
specific reason or reasons for denial;

 

(ii)                                  specific
reference to the Plan provisions on which the denial is based;

 

V-5

 

(iii)                               a
description of any additional material or information necessary for the Claimant
to perfect the claim and an explanation of why such material or information is
necessary; and

 

(iv)                              an
explanation of the Plan claims review procedures and time limits, including a
statement of the Claimant’s right to bring a civil action under section 502(a)
of ERISA.

 

If a decision is not
given to the Claimant within the claims review period, the claim is treated as
if it were denied on the last day of the claims review period.

 

(b)                                 Claims Appeals Procedures.
If a Claimant’s claim made pursuant to Section 5.12(a) is denied and he wants a
review, he must apply to the Committee in writing.  That application can include any arguments, written comments,
documents, records, and other information relating to the claim for
benefits.  In addition, the Claimant is
entitled to receive on request and free of charge reasonable access to and
copies of all information relevant to the claim.  For this purpose, “relevant” means information that was relied on
in making the benefit determination or that was submitted, considered or
generated in the course of making the determination, without regard to whether
it was relied on, and information that demonstrates compliance with the Plan’s
administrative procedures and safeguards for assuring and verifying that Plan
provisions are applied consistently in making benefit determinations.  The Committee must take into account all
comments, documents, records, and other information submitted by the Claimant
relating to the claim, without regard to whether the information was submitted
or considered in the initial benefit determination.  The Claimant may either represent himself or appoint a
representative, either of whom has the right to inspect all documents
pertaining to the claim and its denial. 
The Committee can schedule any meeting with the Claimant or his
representative that it finds necessary or appropriate to complete its review.

 

(c)                                  This
Section 5.12 does not apply in connection with determinations as to whether a
Participant or former Participant has incurred a Disability.  Rather, such determinations shall be subject
to the procedures specified in Section 5.13.

 

5.13                           Disability Benefit Claims Review and Appeal Procedures.

 

(a)                                  Disability Benefit Initial
Determination Procedure. 
In the case of a claim for Disability benefits, the Claimant should
submit a claim to the office designated by the Committee to receive claims.
Under normal circumstances, the Committee shall notify the Claimant of any
Disability claims denial (wholly or partially) within 45 days after receipt of
the claim.

 

The
Committee retains the authority to unilaterally extend the initial 45 day
Disability claims determination period by a period not to exceed an additional
30 days, if the Committee determines that such extension is necessary due to
matters beyond the control of the Committee. 
If the initial Disability claims determination period is extended by the
unilateral action of the Committee, the Committee shall, prior to the
expiration of the initial 45 day Disability claims determination period, notify
the Claimant in writing of 

 

V-6

 

the extension and of the
circumstances requiring the extension of the Disability claims determination
period.

 

If,
prior to the end of the first 30-day extension, the Committee determines that,
due to matters beyond the control of the Plan, a decision cannot be rendered
within the extension period, the Disability claims determination period may be
extended for an additional 30 days, provided the Committee, prior to the expiration
of the first 30-day extension period, notifies the Claimant in writing of the
circumstances requiring the extension and the date on which the Plan expects to
render a decision.  In the case of any
notice extending the Disability claims determination period, the notice must be
in writing and shall specifically explain the standards on which the
entitlement to a benefit is based; the unresolved issues that prevent a
determination on a claim; additional information that is needed to resolve
those issues; and, if additional information is required from the Claimant, a
statement as to the amount of time the Claimant has to supply that information.

 

Calculation of Time Periods.   The period of time within which a
Disability benefit determination is required to be made shall begin on that
date the claim is filed in accordance with this Section, without regard to
whether all the information necessary to make the Disability benefits
determination accompanies the filing. 
In the event the Disability claims determination period is extended due
to the Claimant’s failure to submit information necessary to such
determination, the Disability claims determination period shall be tolled from
the date on which the notification of the extension is sent to the Claimant until
the date on which the Claimant responds to the request for additional
information.  The Claimant shall be
afforded at least 45 days from receipt of the notice of extension to provide
the specified information.  If the
Claimant fails to supply the specified information within the 45-day period,
the claim determination process shall continue and the specified information
shall be deemed not to exist.

 

(b)                                 Disability Claims Appeal Procedure.  If a Claimant’s claim for a
Disability benefit is denied (in whole or in part), he is entitled to a full
and fair review of that denial.  A full
and fair review of a Disability benefit claim denial shall provide the Claimant
with 180 days from the receipt of any adverse claim determination to appeal the
denial.  If the Claimant does not file
an appeal within 180 days of the adverse claim determination, such denial
becomes final.

 

Under
the full and fair review, the Claimant shall be afforded an opportunity to
submit written comments, documents, records, and other information relating to
the claim for benefits to the reviewing fiduciary.  The Claimant shall be entitled to receive upon request and free
of charge reasonable access to and copies of all information relevant to the
claim. For purposes of a Disability benefit claim denial, the term “relevant”
shall mean information that was relied on in making the benefit determination
or that was submitted, considered or generated in the course of making the
determination, without regard to whether it was relied on, and information that
demonstrates compliance with the Plan’s administrative procedures and
safeguards for assuring and verifying that Plan provisions are applied
consistently in making benefit determinations. 
For this purpose, the term “relevant” shall also include a statement of
policy or guidance with respect to 

 

V-7

 

the Plan concerning the
Disability benefit for the diagnoses of the Claimant, without regard to whether
such advice or statement was relied upon in making the claims
determination.  The review of a benefit
claim denial shall not afford any deference to the initial adverse claim
determination.

 

The
review of the Disability claims denial shall be conducted by the appropriate
named fiduciary who is neither the named fiduciary who made the
initial adverse claim determination nor subordinate to such individual.

 

In
reviewing a denial of a claim for a Disability benefit, in which the denial was
based in whole or in part on medical judgement, the appropriate named fiduciary
shall consult with a health care professional who has appropriate training and
experience in the field of medicine involved in the medical judgement.  The health care professional consulted upon
review of an adverse benefit claim denial shall be neither the health care
professional that was consulted in connection with the adverse benefit
determination that is the subject of the appeal nor a subordinate of any
such individual.  The reviewing
fiduciary shall provide the identification of the medical or vocational experts
whose advice was obtained on behalf of the Plan in connection with Claimant’s
Disability benefit claim denial, without regard as to whether the advice was
relied upon in making the benefit determination.

 

The
appropriate reviewing fiduciary must take into account all comments, documents,
records, and other information submitted by the Claimant relating to the claim,
without regard as to whether the information was submitted or considered in the
initial benefit determination.  The Claimant
may either represent himself or appoint a representative, either of whom has
the right to inspect all documents pertaining to the claim and its denial.  The reviewing fiduciary can schedule any
meeting with the Claimant or his representative that it finds necessary or
appropriate to complete its review.

 

If a
timely request is made, the reviewing fiduciary shall notify the Claimant of
the determination upon appeal within 45 days after receipt of the request for
review (without regard to whether all the information necessary to make the
benefit determination accompanies the filing). 
The reviewing fiduciary retains the authority to unilaterally extend the
initial 45-day review period by a period not to exceed an additional 45 days,
if the fiduciary determines that special circumstances exist requiring
additional time for reviewing the claim. 
If the initial review period is extended by the unilateral action of the
appropriate reviewing fiduciary, the fiduciary shall, prior to the expiration
of the initial 45 day review period, notify the Claimant in writing of the
extension.  The written notice of
extension shall identify the special circumstances necessitating the extension
and provide the anticipated date by which the Plan expects to render the determination
on review.

 

Calculation of Time Periods Upon Appeal.   The period of time within which a
determination on a Disability claims appeal is required to be made shall begin
on that date the appeal is filed in accordance with this Section, without regard
to whether all the information necessary to make the Disability benefits
determination accompanies the 

 

V-8

 

filing.  In the event the Disability claims review
period is extended due to the Claimant’s failure to submit information
necessary to such determination, the Disability claims review period shall be
tolled from the date on which the notification of the extension is sent to the
Claimant until the date on which the Claimant responds to the request for
additional information.  The Claimant
shall be afforded at least 45 days from receipt of the notice of extension to
provide the requested information.  If
the Claimant fails to supply the requested information within the 45-day
period, the claims review process shall continue and the specified information
shall be deemed not to exist.

 

The
reviewing fiduciary shall provide the Claimant with a written notice of the
Plan’s benefit determination upon review. 
The notice shall set forth the specific reasons for its action, the Plan
provisions on which its decision is based, and a statement that the Claimant is
entitled to receive, upon request and free of charge, reasonable access to, and
copies of, all documents, records, and other information relevant to the
Claimant’s claim for benefits, and a statement of the Claimant’s right to bring
an action under section 502(a) of ERISA. 
The notice shall also include the following statement,

 

“You and the Plan may have other
voluntary alternative dispute resolution options, such as mediation.  One way to find out what may be available is
to contact your local U.S. Department of Labor Office and your State insurance
regulatory agency.”

 

If a
decision is not given to the Claimant within the review period, the claim is
treated as if it were denied on the last day of the review period.

 

The
request for review must be filed within 90 days after the denial.  If it is not, the denial becomes final.  If a timely request is made, the reviewing
fiduciary must make its decision, under normal circumstances, within 60 days of
the receipt of the request for review. 
However, if the reviewing fiduciary notifies the Claimant prior to the
expiration of the initial review period, it may extend the period of review up
to 120 days following the initial receipt of the request for a review.  The written notice must indicate the
circumstances necessitating the extension and the anticipated date for the
final decision.  All decisions of the
reviewing fiduciary must be in writing and must include the specific reasons
for its action, the Plan provisions on which its decision is based, and a
statement that the Claimant is entitled to receive, upon request and free of
charge, reasonable access to, and copies of, all documents, records, and other
information relevant to the Claimant’s claim for benefits, and a statement of
the Claimant’s right to bring an action under section 502(a) of ERISA.  If a decision is not given to the Claimant
within the review period, the claim is treated as if it were denied on the last
day of the review period.

 

V-9

 

ARTICLE VI

 

IN-SERVICE DISTRIBUTIONS

 

6.01                           In-Service Financial Hardship Distributions.

 

(a)                                  General.  Prior to his Separation From Service, a
Participant is entitled to receive a distribution from his Salary Deferral
Contribution Account (except for income that was not credited to his Salary
Deferral Account as of December 31, 1988), his Catch-up Salary Deferral
Contribution Account (except for income credited to his Catch-up Salary
Deferral Contribution Account), his Rollover Account, his After-Tax
Contribution Account, his Nonforfeitable Interest in his Matching Contribution
Account and his Nonforfeitable Interest in his Supplemental Contribution
Account in the event of an immediate and heavy financial need incurred by the
Participant and the Committee’s determination that the withdrawal is necessary
to alleviate that hardship.

 

(b)                                 Permitted
Reasons For Financial Hardship Distributions.  A distribution shall be made on account of
financial hardship only if the distribution is for:  (i) expenses for medical care described in
section 213(d) of the Code previously incurred by the Participant, the
Participant’s Spouse, or any dependents of the Participant (as defined in
section 152 of the Code) or necessary for these persons to obtain medical
care described in section 213(d) of the Code, (ii) costs directly
related to the purchase (excluding mortgage payments) of a principal residence
for the Participant, (iii) payment of tuition and related educational fees
for the next 12 months of post-secondary education for the Participant, his
Spouse, children, or dependents (as defined in section 152 of the Code),
(iv) payments necessary to prevent the eviction of the Participant from
his principal residence or foreclosure on the mortgage of the Participant’s
principal residence, or (v) any other event added to this list by the
Commissioner of Internal Revenue.

 

(c)                                  Amount.  A distribution to satisfy an immediate and
heavy financial need shall not be made in excess of the amount of the immediate
and heavy financial need of the Participant and the Participant must have
obtained all distributions, other than hardship distributions, and all
nontaxable (at the time of the loan) loans currently available under all plans
maintained by the Employer.  The amount
of a Participant’s immediate and heavy financial need includes any amounts
necessary to pay any federal, state or local income taxes or penalties
reasonably anticipated to result from the financial hardship distribution.

 

(d)                                 Suspension
of Participation in Certain Benefit Programs.  The Participant’s hardship distribution
shall terminate his right to have the Employer make any Salary Deferral
Contributions on his behalf until the next time Salary Deferral Contributions
are permitted after (1) the lapse of 12 months following the hardship
distribution and (2) his timely filing of a written request to resume his
Salary Deferral Contributions.  In addition,
for 12 months after he receives a hardship distribution from the Plan, the
Participant is prohibited from making elective contributions and employee
contributions to or under all other qualified and nonqualified plans of
deferred compensation maintained by the Employer, including stock option plans,
stock purchase plans and Code section 401(k) cash or deferred arrangements
that are part of cafeteria plans described in section 125 of the
Code.  However, the Participant is not 

 

VI-1

 

prohibited from making contributions to a health or welfare benefit
plan, including one that is part of a cafeteria plan within the meaning of
section 125 of the Code.

 

(e)                                  Order of
Distributions.  Financial
hardship distributions will be made in the following order:  First withdrawals will be made from the
Participant’s After-Tax Contribution Account, then from his Rollover
Contribution Account, then from his Matching Contribution Account, then from
his Supplemental Contribution Account, then from his Salary Deferral
Contribution Account, and finally, from his Catch-up Salary Deferral
Contribution Account.  A Participant
shall not be entitled to receive a financial hardship distribution of any
amount credited to his QNEC Account.

 

6.02                           Age 591⁄2 Distributions.  Prior to his Separation From
Service, a Participant may withdraw part or all of his Nonforfeitable Interest
in his Account balances on or after the date that he attains age 591⁄2
..

 

6.03                           Method of Payment.  A distribution made pursuant to this Article VI will be paid
in the form of a single sum in cash.

 

VI-2

 

ARTICLE VII

 

LOANS

 

The Committee may direct the Trustees to make loans to
Participants (and Beneficiaries who are “parties in interest” within the meaning
of ERISA) who have Nonforfeitable Interests in their Account balances.  The Loan Committee established by the
Committee will be responsible for administering the Plan loan program.  All loans will comply with the following
requirements:

 

(a)                                  All
loans will be made solely from the Participant’s or Beneficiary’s Account.

 

(b)                                 Loans
will be available on a nondiscriminatory basis to all Beneficiaries who are
“parties in interest” within the meaning of ERISA, and to all Participants.

 

(c)                                  Loans
will not be made for less than $1,000.00.

 

(d)                                 The
maximum amount of a loan may not exceed the lesser of (A) $50,000.00
reduced by the person’s highest outstanding loan balance from the Plan during
the preceding one-year period, or (B) one-half of the person’s Nonforfeitable
Interest in his Account balance under the Plan determined as of the date on
which the loan is approved by the Loan Committee.

 

(e)                                  Any
loan from the Plan will be evidenced by a note or notes (signed by the person
applying for the loan) having such maturity, bearing such rate of interest, and
containing such other terms as the Loan Committee will require by uniform and
nondiscriminatory rules consistent with this Section and proper lending
practices.

 

(f)                                    All
loans will bear a reasonable rate of interest which will be established by the
Loan Committee.

 

(g)                                 
Each loan will be fully secured by a pledge of the borrowing person’s
Nonforfeitable Interest in his Account balance.  No more than 50 percent of the person’s Nonforfeitable Interest
in his Account balance (determined immediately after the origination of the
loan) will be considered as security for any loan.

 

(h)                                 The
term of the loan will not be less than 18 months.  Generally, the term of the loan will not be more than five
years.  The Loan Committee may agree to
a longer term (but not more than seven years) only if such term is otherwise
reasonable and the proceeds of the loan are to be used to acquire a dwelling
which will be used within a reasonable time (determined at the time the loan is
made) as the principal residence of the borrowing person.

 

(i)                                     A
Participant’s loan agreement will also require that loan repayments be made
through payroll deductions.

 

(j)                                     If
a person fails to make a required payment within 30 days of the due date set
forth in the loan agreement, the loan will be in default.

 

VII-1

 

(k)                                  If
a Participant or former Participant has an outstanding loan from the Plan at
the time of his Separation From Service, the outstanding loan principal balance
and any accrued but unpaid interest will become immediately due in full.  The Participant or former Participant will
have the right to immediately pay the Trustee that amount.  If the Participant or former Participant
fails to repay the loan, the Trustee will foreclose on the loan and the
Participant will be deemed to have received a Plan distribution of the amount
foreclosed upon.  The Trustee will not
foreclose upon a Participant’s or former Participant’s Salary Deferral
Contribution Account, Catch-up Salary Deferral Contribution Account or QNEC
Account until the Participant’s Separation From Service.

 

(l)                                     If
a Beneficiary defaults on his loan, the Trustee will foreclose on the loan and
the Beneficiary will be deemed to have received a Plan distribution of the
amount foreclosed upon.

 

(m)                               No
person shall be entitled to apply for a new Plan loan until at least 90 days
have transpired since he fully repaid his last loan from the Plan.

 

(n)                                 No
amount that is pledged as collateral for a Plan loan to a Participant will be
available for withdrawal before he has fully repaid his loan.

 

(o)                                 All
interest payments made pursuant to the terms of the loan agreement will be
credited to the borrowing person’s Account and will not be considered as
general earnings of the Trust Fund to be allocated to other Participants.

 

(p)                                 The
terms of each Plan loan agreement will require substantially level amortization
of the loan (with payments not less frequently than quarterly) over the term of
the loan.  However, the level
amortization requirement will not apply for a period, not longer than one year
(or such longer period as may apply under the Uniformed Services Employment and
Reemployment Rights Act of 1994 that an eligible borrower is on a bona fide
leave of absence, either without pay from the Employer or at a rate of pay
(after income and employment tax withholding) that is less than the amount of
the installment payments required under the terms of the loan.  However, the loan (including interest that
accrues during the leave of absence) must be repaid by the five-year loan
maturity deadline specified in paragraph (h) above (unless the loan was a home
loan described in paragraph (h) above), and the amount of the installments due
after the leave ends (or, if earlier, after the first anniversary of the leave
or such longer period as may apply under the Uniformed Services Employment and
Reemployment Rights Act of 1994) must not be less than the amount required
under the terms of the original loan.

 

VII-2

 

ARTICLE VIII

 

VESTING

 

A Participant or former Participant has a fully
Nonforfeitable Interest in his entire Account balance when he (a) incurs a
Disability on or prior to the date of his Separation From Service, (b) attains
his Normal Retirement Age on or prior to the date of his Separation From
Service, or (c) incurs a Separation From Service due to death.  A Participant or former Participant shall at
all times have a fully Nonforfeitable Interest in amounts credited to his
Salary Deferral Contribution Account, his Catch-up Salary Deferral Contribution
Account, his QNEC Account, his Rollover Account and his After-Tax Contribution
Account.  Prior to October 1, 2003, a
Participant or former Participant shall have a Nonforfeitable Interest in the
following percentage of amounts credited to his Matching Contribution Account
and his Supplemental Contribution Account:

 

	
  Years of Active Service Completed by the

  Participant or Former Participant

  	
   

  	
  Vested
  Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Less than two

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Two but less
  than three

  	
   

  	
  20

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Three but less
  than four

  	
   

  	
  40

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Four but less
  than five

  	
   

  	
  60

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Five but less
  than six

  	
   

  	
  80

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Six or more

  	
   

  	
  100

  	
   

  

 

If he is still an Employee on October 1, 2003, a
Participant of former Participant will have a Nonforfeitable Interest in the
following percentage of amounts credited to his Matching Contribution Account
and his Supplemental Contribution Account effective October 1, 2003:

 

	
  Years of Active Service Completed by the

  Participant or Former Participant

  	
   

  	
  Vested
  Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Less than one

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  One but less
  than two

  	
   

  	
  20

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Two but less
  than three

  	
   

  	
  40

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Three but less
  than four

  	
   

  	
  60

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Four but less
  than five

  	
   

  	
  80

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Five or more

  	
   

  	
  100

  	
   

  

 

VIII-1

 

Subject to the possible application of Section B.2.3
of Appendix B or Section 13.05, except as specified above, a Participant or
former Participant has a Forfeitable Interest in his Account balance and shall
not be entitled to any benefits under the Plan upon or following his Separation
From Service.

 

VIII-2

 

ARTICLE IX

 

FORFEITURES AND RESTORATIONS

 

9.01                           Forfeiture on Termination of Participation.

 

(a)                                  If
as a result of his Separation From Service a Participant or former Participant
receives (or is deemed to receive under Section 5.04), a distribution of his
entire Nonforfeitable Interest in his Account balance not later than the end of
the second Plan Year following the Plan Year in which his Separation From
Service occurs, the remaining Forfeitable Interest in his Account balance will
be immediately forfeited upon the distribution.

 

(b)                                 If
a Participant or former Participant neither receives nor is deemed to receive a
distribution as a result of his Separation From Service, his Forfeitable
Interest in his Account balance will be permanently forfeited (with no right of
reinstatement under Section 9.02) on the later of the date of his Separation From
Service or the date on which he has incurred a Period of Severance of five
consecutive years.

 

9.02                           Restoration of Forfeited Amounts.  If a Participant or former Participant who
forfeited any portion of his Account balance pursuant to the provisions of
Section 9.01 subsequently performs an Hour of Service, then the following
provisions shall apply:

 

(a)                                  Repayment
Requirement.  The
Participant’s Account balance (unadjusted for gains or losses subsequent to the
forfeiture) shall be restored if he repays to the Trustee the full amount of
any distribution with respect to which the forfeiture arose prior to the earlier
of (1) the date on which he incurs a Period of Severance of five years
commencing after his distribution, or (2) the fifth anniversary of the
first date on which the Participant subsequently performs his first Hour of
Service after his Separation From Service. 
A Participant who is deemed to have received a distribution under
Section 5.04 (because he had no Nonforfeitable Interest in his Account balance)
will be deemed to have repaid his Account balance upon his reemployment if he
is reemployed before the earlier of the dates specified in clauses (1) and (2)
in the preceding sentence.

 

(b)                                 Amount
Restored.  The amount to be
restored under the preceding provisions of this Section 9.02 shall be the
dollar value of the Account balance, both the amount distributed and the amount
forfeited.  The Participant’s Account
balance shall be restored as soon as administratively practicable after the
later of the date the Participant first performs an Hour of Service after his
Separation From Service or the date on which any required repayment is
completed.

 

(c)                                  No Other
Basis for Restoration.  Except
as otherwise provided above, a Participant’s Account balance shall not be
restored after it has been forfeited pursuant to Section 9.01.

 

9.03                           Forfeitures by Lost Participants or Beneficiaries.  If a person who is entitled to a
distribution cannot be located during a reasonable search after the Committee
has initially attempted making payment, his Account balance shall be
forfeited.  However, if at any time
prior to the termination of the Plan and the complete distribution of the Trust
assets, the missing 

 

IX-1

 

former Participant or Beneficiary files a claim with
the Committee for the forfeited Account balance, that Account balance shall be
reinstated (without adjustment for trust income or losses during the period of
forfeiture) effective as of the date of the receipt of the claim.

 

IX-2

 

ARTICLE X

 

ACTIVE SERVICE

 

10.01                     General.  For
purposes of determining an Employee’s eligibility to participate in the Plan
and his Nonforfeitable Interest in his Account balance, the Employee shall
receive credit for Active Service commencing on the date he first performs an
Hour of Service and ending on his Severance From Service Date.  If an Employee Severs Service, he shall
recommence earning Active Service when he again performs an Hour of Service.  When determining an Employee’s Active
Service, all Periods of Service, whether or not completed consecutively, shall
be aggregated on a per-day basis.  In
aggregating Active Service, 365 days shall be counted as one year of Active
Service.  Except to the extent expressly
provided otherwise in the Plan, an Employee shall be granted credit for all
Periods of Service with Affiliated Employers (including Periods of Service
performed while the Employee is not eligible to participate in the Plan because
he does not satisfy the requirements of Section 2.01).

 

10.02                     Disregard of Certain Service.  If an Employee incurs a Separation From
Service at a time when he does not have a Nonforfeitable Interest in a portion
of his Matching Contribution Account balance or his Supplemental Contribution
Account balance and his Period of Severance continues for a continuous period
of five years or more, the Period of Service completed by the Employee before
the Period of Severance shall not be taken into account as Active Service, if
his Period of Severance equals or exceeds his Period of Service, whether or not
consecutive, completed before the Period of Severance.

 

10.03                     Certain Brief Absences Counted as Active Service.  If an Employee performs an Hour of Service
within 365 days after he Severs Service, the intervening Period of Severance
shall be counted as a Period of Service.

 

10.04                     Service Credit Required by Law.  An Employee will be granted
credit for Active Service for time he is not actively performing services for
an Affiliated Employer to the extent required under federal law.  An Employee will be granted credit for
Active Service for services performed for a predecessor employer to the extent
required by section 414(a) of the Code and Regulations issued thereunder.

 

10.05                     Special Maternity or Paternity Absence Rules.  Except as specified below, the
period of time between (a) the first anniversary of the first day of a
Maternity or Paternity Absence of an Employee and (b) the second anniversary of
the first day of the absence shall not be counted as a Period of Severance or
as Active Service.  However, if the
Employee returns to active employment with an Affiliated Employer prior to the
expiration of twelve months following the earlier of (1) the date of his
Separation From Service  or (2) the
second anniversary of the first day of his Maternity or Paternity Absence, he
shall be granted Active Service for the entire period of his Maternity or
Paternity Absence.

 

10.06                     Employment Records Conclusive.  The employment records of the
Employer shall be conclusive for all determinations of Active Service.

 

X-1

 

10.07                     Special Transitional Rule.  Any person who was an Employee before
March 1, 1997,  will have all or a
portion of his Active Service figured under the provisions of the Plan in
effect before March 1, 1997, if that method of calculating service is more
beneficial for the Employee than the method otherwise set out in this Article
II.

 

10.08                     Credit for Service With Piper Impact, Inc. a
Tennessee Corporation .  For
purposes of determining an Employee’s Active Service for eligibility to
participate and vesting, his service with Piper Impact, Inc., a Tennessee
corporation will be counted as Active Service under the Plan.

 

X-2

 

ARTICLE XI

 

INVESTMENT ELECTIONS

 

11.01                     Investment Funds Established.  It is contemplated that the assets of the
Plan shall be invested in such categories of assets as may be determined from
time to time by the Committee and announced and made available on an equal
basis to all Participants and former Participants.  In accordance with procedures established by the Committee, each
Participant and former Participant may designate the percentage of his Account
to be invested in each investment fund available under the Plan.  Up to one hundred percent of the Trust
assets may be invested in Sponsor Stock.

 

11.02                     Election Procedures Established.  The Committee shall, from time to time,
establish rules to be applied in a nondiscriminatory manner as to all matters
relating to the administration of the investment of funds including, but not
limited to, the following:

 

(a)                                  the
percentage of a Participant’s or former Participant’s Account as it exists,
from time to time, that may be transferred from one fund to another and the
limitations based on amounts, percentages, time, or frequency, if any, on such
transfers;

 

(b)                                 the
percentage of a Participant’s future contributions, when allocated to his
Account, that may be invested in any one or more funds and the limitations
based upon amounts, percentages, time, or frequency, if any, on such
investments in various funds;

 

(c)                                  the
procedures for making investment elections and changing existing investment
elections;

 

(d)                                 the
period of notice required for making investment elections and changing existing
investment elections;

 

(e)                                  the
handling of income and change of value in funds when funds are in the process
of being transferred between investment funds and to investment funds; and

 

(f)                                    all
other matters necessary to permit the orderly operation of investment funds
within the Plan.

 

When the Committee changes any previous applicable rule, it shall state
the effective time of the change and the procedures for complying with any such
change.  Any change shall remain
effective until such date as stated in the change, or if none is stated, then
until revoked or changed in a like manner.

 

XI-1

 

ARTICLE XII

 

ADOPTION OF PLAN BY OTHER EMPLOYERS

 

12.01                     Adoption Procedure.  Any business organization may, with the approval of the Board,
adopt the Plan by:

 

(a)                                  a
certified resolution or consent of the board of directors of the adopting
Employer or an executed adoption instrument (approved by the board of directors
of the adopting Employer) agreeing to be bound as an Employer by all the terms,
conditions and limitations of the Plan except those, if any, specifically
described in the adoption instrument; and

 

(b)                                 providing
all information required by the Committee and the Trustee.

 

12.02                     No Joint Venture Implied.  The document which evidences the adoption of
the Plan by an Employer shall become a part of the Plan.  However, neither the adoption of the Plan
and the Trust by an Employer nor any act performed by it in relation to the
Plan and the Trust shall ever create a joint venture or partnership relation
between it and any other Employer.

 

12.03                     All Trust Assets Available to Pay All Benefits.  The Accounts of Participants employed by the
Employers that adopt the Plan shall be commingled for investment purposes.  All assets in the Trust shall be available
to pay benefits to all Participants employed by any Employer.

 

12.04                     Qualification a Condition Precedent to Adoption and
Continued Participation. 
The adoption of the Plan and the Trust by a business organization is
contingent upon and subject to the express condition precedent that the initial
adoption meets all statutory and regulatory requirements for qualification of
the Plan and the exemption of the Trust that are applicable to it and that the
Plan and Trust continue in operation to maintain their qualified and exempt
status.  In the event the adoption fails
to initially qualify, the adoption shall fail retroactively for failure to meet
the condition precedent and the portion of the Trust assets applicable to the
adoption shall be immediately returned to the adopting business organization
and the adoption shall be void ab initio. 
In the event the adoption as to a given business organization later
becomes disqualified and loses its exemption for any reason, the adoption shall
fail retroactively for failure to meet the condition precedent and the portion
of the Trust assets allocable to the adoption by that business organization
shall be immediately spun off, retroactively as of the last date for which the
Plan qualified, to a separate trust for its sole benefit and an identical but
separate Plan shall be created, retroactively effective as of the last date the
Plan as adopted by that business organization qualified, for the benefit of the
Participants covered by that adoption.

 

XII-1

 

ARTICLE XIII

 

AMENDMENT AND TERMINATION

 

13.01                     Right to Amend and Limitations Thereon.  The Sponsor has the sole right to amend the
Plan.  An amendment may be made by a
certified resolution or consent of the Board, or by an instrument in writing
executed by the appropriate officer of the Sponsor.  The amendment must describe the nature of the amendment and its
effective date.  No amendment shall:

 

(a)                                  vest
in an Employer any interest in the Trust;

 

(b)                                 cause
or permit the Trust assets to be diverted to any purpose other than the
exclusive benefit of the present, former or future Participants and their
Beneficiaries except under the circumstances described in Section 3.12;

 

(c)                                  decrease
the Account of any Participant or former Participant, or eliminate an optional
form of payment in violation of section 411(d)(6) of the Code; or

 

(d)                                 change
the vesting schedule to one which would result in a Participant’s or former
Participant’s Nonforfeitable Interest in his Account balance (determined as of
the later of the date of the adoption of the amendment or of the effective date
of the amendment) of any Participant or former Participant being less than his
Nonforfeitable Interest computed under the Plan without regard to the
amendment.  If the Plan’s vesting
schedule is amended or if the Plan is deemed amended by an automatic change to
or from a top-heavy vesting schedule, each Participant or former Participant
who has at least three years of Active Service as of the date of the amendment
or change shall have his nonforfeitable percentage computed under the Plan
without regard to the amendment or the change if that results in a higher
Nonforfeitable Interest in his Account balance.

 

Each Employer shall be deemed to have adopted any
amendment made by the Sponsor unless the Employer notifies the Committee of its
rejection in writing within 30 days after it receives a copy of the
amendment.  A rejection shall constitute
a withdrawal from the Plan by that Employer unless the Sponsor acquiesces in
the rejection.

 

13.02                     Mandatory Amendments.  The Contributions of each Employer to the
Plan are intended to be:

 

(a)                                  deductible
under the applicable provisions of the Code;

 

(b)                                 except
as otherwise prescribed by applicable law, exempt from the Federal Social
Security Act;

 

(c)                                  except
as otherwise prescribed by applicable law, exempt from with- holding under the
Code; and

 

(d)                                 excludable
from any Employee’s regular rate of pay, as that term is defined under the Fair
Labor Standards Act of 1938, as amended.

 

XIII-1

 

The Sponsor shall make any amendment necessary to
carry out this intention, and it may be made retroactively.

 

13.03                     Withdrawal of Employer.  An Employer may withdraw from the Plan and
the Trust if the Sponsor does not acquiesce in its rejection of an amendment or
by giving written notice of its intent to withdraw to the Committee.  The Committee shall then determine the
portion of the Trust assets that is attributable to the Participants employed
by the withdrawing Employer and shall notify the Trustee to segregate and
transfer those assets to the successor trustee when it receives a designation
of the successor from the withdrawing Employer.

 

A withdrawal shall not terminate the Plan and the
Trust with respect to the withdrawing Employer, if the Employer either appoints
a successor trustee and reaffirms the Plan and the Trust as its new and
separate plan and trust intended to qualify under section 401(a) of the
Code, or establishes another plan and trust intended to qualify under
section 401(a) of the Code.

 

The determination of the Committee, in its sole
discretion, of the portion of the Trust assets that is attributable to the
Participants employed by the withdrawing Employer shall be final and binding
upon all parties; and, the Trustee’s transfer of those assets to the designated
successor Trustee shall relieve the Trustee of any further obligation,
liability or duty to the withdrawing Employer, the Participants employed by
that Employer and their Beneficiaries, and the successor trustee.

 

13.04                     Termination of Plan.  The Sponsor may terminate the Plan and the
Trust with respect to all Employers by executing and delivering to the
Committee and the Trustee, a notice of termination, specifying the date of
termination.

 

13.05                     Partial or Complete Termination or Complete
Discontinuance of Contributions.  Without regard to any other provision of the Plan, if there is a
partial or total termination of the Plan or there is a complete discontinuance
of the Employer’s Contributions, each of the affected Participants shall
immediately have a fully Nonforfeitable Interest in his Account as of the end
of the last Plan Year for which a substantial Employer Contribution was made
and in any amounts later allocated to his Account.  If the Employer then resumes making substantial Contributions at
any time, the appropriate vesting schedule shall again apply to all amounts
allocated to each affected Participant’s Account beginning with the Plan Year
for which they were resumed.

 

XIII-2

 

ARTICLE XIV

 

MISCELLANEOUS

 

14.01                     Plan Not an Employment Contract.  The maintenance of the Plan and the Trust is
not a contract between any Employer and its Employees which gives any Employee
the right to be retained in its employment. 
Likewise, it is not intended to interfere with the rights of any
Employer to discharge any Employee at any time or to interfere with the
Employee’s right to terminate his employment at any time.

 

14.02                     Benefits Provided Solely From Trust.  All benefits payable under the Plan shall be
paid or provided for solely from the Trust. 
No Employer assumes any liability or responsibility to pay any benefit
provided by the Plan.

 

14.03                     Assignments Prohibited.  No principal or income payable or to become
payable from the Trust Fund shall be subject to anticipation or assignment by a
Participant, former Participant or Beneficiary to attachment by, interference
with, or control of any creditor of a Participant, former Participant or
Beneficiary; or to being taken or reached by any legal or equitable process in
satisfaction of any debt or liability of a Participant, former Participant, or
Beneficiary prior to its actual receipt by the Participant, former Participant
or Beneficiary.  Any attempted
conveyance, transfer, assignment, mortgage, pledge, or encumbrance of any Trust
assets, any part of it, or any interest in it by a Participant, former
Participant or Beneficiary prior to distribution shall be void, whether that
conveyance, transfer, assignment, mortgage, pledge, or encumbrance is intended
to take place or become effective before or after any distribution of Trust
assets or the termination of the Trust itself. 
The Trustee shall never under any circumstances be required to recognize
any conveyance, transfer, assignment, mortgage, pledge or encumbrance by a
Participant , former Participant, or Beneficiary of the Trust, any part of it,
or any interest in it, or to pay any money or thing of value to any creditor or
assignee of a Participant, former Participant or Beneficiary for any cause
whatsoever.  These prohibitions against
the alienation of a Participant’s Account shall not apply to a Qualified
Domestic Relations Order or to a voluntary revocable assignment of benefits not
in excess of ten percent of the amount of any payment from the Plan if such
assignment complies with Regulations issued under section 401(a)(13) of the
Code.  Further, effective for judgments,
orders and decrees issued, and settlement agreements entered into, on or after
August 5, 1997, these prohibitions shall not apply to any offset of a Participant’s
or former Participant’s benefits provided under a Plan against an amount that
the Participant or former Participant is ordered or required to pay to the Plan
if–(a) the order or requirement to pay arises–(1) under a judgment of
conviction for a crime involving the Plan, (2) under a civil judgment
(including a consent order or decree) entered by a court in an action brought
in connection with an alleged violation of part 4 of subtitle B of title I of
ERISA, or (3) pursuant to a settlement agreement between the Secretary of Labor
and the Participant or former Participant in connection with a violation (or
alleged violation) of part 4 of subtitle B of ERISA by a fiduciary or any other
person, and (b) the judgment, order, decree, or settlement agreement expressly
provides for the offset of all or part of the amount ordered or required to be
paid to the Plan against the Participant’s or former Participant’s benefits
provided under the Plan.

 

XIV-1

 

14.04                     Requirements Upon Merger or Consolidation of Plans.  The Plan shall not merge or consolidate with
or transfer any assets or liabilities to any other plan unless each Participant
and former Participant would receive a benefit immediately after the merger,
consolidation, or transfer which is equal to or greater than the benefit he
would have been entitled to receive immediately before the merger,
consolidation, or transfer (if the Plan had then terminated).

 

14.05                     Gender of Words Used.  If the context requires it, words of one
gender when used in the Plan shall include the other gender, and words used in
the singular or plural shall include the other.

 

14.06                     Severability.  Each provision of this Agreement may be severed.  If any provision is determined to be invalid
or unenforceable, that determination shall not affect the validity or
enforceability of any other provision.

 

14.07                     Reemployed  Veterans. The
requirements of the Uniformed Services Employment and Reemployment Rights Act
of 1994 will be complied with in the operation of the Plan in the manner
permitted under section 414(u) of the Code.

 

14.08                     Limitations on Legal Actions.  No person may bring an action pertaining to
the Plan or Trust until he has exhausted his administrative claims and appeal
remedies identified in Sections 5.12 and 5.13. 
Further, no person may bring an action pertaining to a claim for
benefits under the Plan or the Trust following 180 days after the Committee’s
final denial of his claim for benefits.

 

14.09                     Governing Law.  The provisions of the Plan shall be
construed, administered, and governed under the laws of the United States
unless the specific matter in question is governed by state law in which event
the laws of the State of Texas shall apply.

 

XIV-2

 

IN WITNESS WHEREOF, Quanex Corporation and
Piper Impact, Inc. have caused this Agreement to be executed this 30th
day of December, 2002, in multiple counterparts, each of which shall be deemed
to be an original, to be effective the 1st day of January, 2002, except for those
provisions which have an earlier effective date provided by law, or as
otherwise provided under applicable provisions of the Plan.

 

	
   

  	
  QUANEX
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PIPER
  IMPACT, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title

  	
   

  	
   

  
					

 

 

APPENDIX
A

 

LIMITATIONS ON CONTRIBUTIONS AND
ALLOCATIONS

 

PART A.1  Definitions

 

Definitions.  As used herein the following words and phrases have the meaning
attributed to them below:

 

A.1.1                    “Actual Contribution Ratio”
shall mean the ratio of Section 401(m) Contributions actually paid into
the Trust on behalf of an Employee for a Plan Year to the Employee’s Annual
Compensation for the same Plan Year. 
For this purpose, Annual Compensation for any portion of the Plan Year
in which the Employee was not an eligible Employee (as defined in Section
A.2.4) will not be taken into account.

 

A.1.2                    “Actual
Deferral Percentage” means, for a specified group of
Employees for a Plan Year, the average of the ratios (calculated separately for
each Employee in the group) of the amount of Section 401(k) Contributions
actually paid into the Trust on behalf of the Employee for the Plan Year to the
Employee’s Annual Compensation for the Plan Year.

 

A.1.3                    “Actual
Deferral Ratio” means the ratio of Section 401(k)
Contributions actually paid into the Trust on behalf of an Employee for a Plan
Year to the Employee’s Annual Compensation for the same Plan Year.  For this purpose, Annual Compensation for
any portion of the Plan Year in which the Employee was not an eligible Employee
(as defined in Section A.2.3) will not be taken into account.

 

A.1.4                    “Annual
Additions”  means
the sum of the following amounts credited on behalf of a Participant for the
Limitation Year:  (a) Employer
contributions excluding Catch-up Salary Deferral Contributions and including
Salary Deferral Contributions, (b) Employee after-tax contributions, and (c)
forfeitures.  For this purpose, Employee
contributions are determined without regard to any rollover contributions (as
defined in sections 402(c), 403(a)(4), 403(b)(8), 408(d)(3) and 457(e)(16) of
the Code without regard to employee contributions to a simplified employee
pension which are excludable from gross income under section 408(k)(6) of the
Code).  Excess 401(k) Contributions for
a Plan Year are treated as Annual Additions for that Plan Year even if they are
corrected through distribution.  Excess
Deferrals that are timely distributed as set forth in Section A.3.1 will not be
treated as Annual Additions.

 

A.1.5                    “Contribution Percentage”
shall mean, for a specified group of Employees for a Plan Year, the average of
the ratios (calculated separately for each Employee in the group) of the amount
of Section 401(m) Contributions actually paid into the Trust on behalf of
the Employee for the Plan Year to the Employee’s Annual Compensation for the
Plan Year.

 

A.1.6                    “Excess
Aggregate 401(m) Contributions” means, with respect to
any Plan Year, the excess of (a) the aggregate amount of
Section 401(m) Contributions actually paid into the Trust on behalf of
Highly Compensated Employees for the Plan Year over (b) the maximum amount
of those contributions permitted under the limitations set out in the first
sentence of Section A.2.4.

 

A.1.7                    “Excess Amount” shall
mean the excess of the Annual Additions credited to the Participant’s Account
for the Limitation Year over the Maximum Permissible Amount.

 

A.1.8                    “Excess
401(k) Contributions” means, with respect to any Plan
Year, the excess of (a) the aggregate amount of Section 401(k)
Contributions actually paid to the Trustee on behalf of Highly Compensated
Employees for the Plan Year over (b) the maximum amount of those
contributions permitted under the limitations set out in the first sentence of
Section A.2.3.

 

A.1.9                    “Limitation Year”
shall mean the Plan Year.  All qualified
plans maintained by any Affiliated Employer must use the same Limitation
Year.  If the Limitation Year is amended
to a different 12 - consecutive 

 

A-1

 

month period, the
new Limitation Year must begin on a date within the Limitation Year in which
the amendment is made.

 

A.1.10              “Maximum Permissible Amount”
means the lesser of (1) $40,000.00 as adjusted by the Secretary of Treasury for
increases in the cost of living or (2) 100 percent of the Participant’s Annual
Compensation for the Limitation Year. 
The Annual Compensation limitation referred to in clauses (2) of the
immediately preceding sentences shall not apply to any contribution for medical
benefits (within the meaning of section 401(h) or section 419A(f)(2)
of the Code) that is otherwise treated as an Annual Addition under
section 415(l)(1) or section 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 dollar limitation in effect under section 415(c)(1)(A) of the Code
multiplied by a fraction, the numerator of which is the number of months in the
short Limitation Year, and the denominator of which is 12.

 

A.1.11              “Section
401(k) Contributions” means the sum of Salary Deferral
Contributions made on behalf of the Participant during the Plan Year, and QNECs
that the Employer elects to have treated as section 401(k) Contributions
pursuant to section 401(k)(3)(d)(ii) of the Code.

 

A.1.12              “Section 401(m) Contributions”
shall mean the sum of Matching Contributions and After-Tax Contributions made
on behalf of the Participant during the Plan Year and other amounts that the
Employer elects to have treated as Section 401(m) Contributions pursuant
to section 401(m)(3)(B) of the Code.

 

PART A.2  Limitations on Contributions

 

A.2.1                    Limitations
Based upon Deductibility and the Maximum Allocation Permitted to a
Participant’s Account. 
Notwithstanding any other provision of the Plan, no Employer shall make
any contribution that would be a nondeductible contribution within the meaning
of section 4972 of the Code or that would cause the limitation on allocations
to each Participant’s Account under section 415 of the Code and Section A.4.1
to be exceeded.

 

A.2.2                    Dollar
Limitation upon Salary Deferral Contributions.  The maximum Salary Deferral Contribution
that a Participant may elect to have made on his behalf during a calendar year
may not, when added to his elective deferrals under other plans or arrangements
which are both (1) described in sections 401(k), 403(b), 408(k) and 408(p)(2)
of the Code and (2) maintained by the Employer or an Affiliated Employer,
exceed the amount of the limitation in effect under section 402(g)(1) of the
Code for the Participant’s taxable year beginning in such calendar year.  For purposes of applying the requirements of
Section A.2.3, Excess Deferrals shall not be disregarded merely because
they are Excess Deferrals or because they are distributed in accordance with
this Section.  However, Excess Deferrals
made to the Plan on behalf of Non-Highly Compensated Employees are not to be
taken into account under Section  A.2.3.

 

A.2.3                    Limitation
Based upon Actual Deferral Percentage.  The Actual Deferral Percentage for eligible Highly Compensated
Employees for any Plan Year must bear a relationship to the Actual Deferral
Percentage for all other eligible Employees for the preceding Plan Year which
meets either of the following tests:

 

(a)                                  the
Actual Deferral Percentage of the eligible Highly Compensated Employees is not
more than the Actual Deferral Percentage of all other eligible Employees
multiplied by 1.25; or

 

(b)                                 the
excess of the Actual Deferral Percentage of the eligible Highly Compensated
Employees over that of all other eligible Employees is not more than two
percentage points, and the Actual Deferral Percentage of the eligible Highly
Compensated Employees is not more than the Actual Deferral Percentage of all
other eligible Employees multiplied by two.

 

For purposes of this test an eligible Employee is an
Employee who is directly or indirectly eligible to make Salary Deferral
Contributions for all or part of the Plan Year.  A person who is suspended from making Salary Deferral
Contributions because he has made a withdrawal is an eligible Employee.  If no Salary Deferral 

 

A-2

 

Contributions are made for an eligible Employee, the Actual Deferral
Ratio that shall be included for him in determining the Actual Deferral
Percentage is zero.  If the Plan and any
other plan or plans which include cash or deferred arrangements are considered
as one plan for purposes of section 401(a)(4) or 410(b) of the Code, the
cash or deferred arrangements included in the Plan and the other plans shall be
treated as one plan for purposes of this Section.  If any Participant who is a Highly Compensated Employee is a
participant in any other cash or deferred arrangements of the Employer, when determining
the deferral percentage of such Participant, all such cash or deferred
arrangements are treated as one plan for these dates.

 

Notwithstanding the foregoing, an individual who is
not a Highly Compensated Employee and who has not satisfied the minimum age and
service requirements of section 410(a)(1)(A) of the Code will not
be treated as an eligible Employee for purposes of this Section A.2.3 if the
Sponsor elects to apply section 410(b)(4)(3) of the Code in determining whether
the Plan meets the requirements of section 401(k)(3) of the Code.

 

A Salary Deferral Contribution will be taken into
account under the Actual Deferral Percentage test of section 401(k) of the
Code and this Section for a Plan Year only if it relates to Considered
Compensation that either would have been received by the Employee in the Plan
Year (but for the deferral election) or is attributable to services performed
by the Employee in the Plan Year and would have been received by the Employee
within 21⁄2 months after the close of the Plan Year (but for the deferral election).  In addition, a Section 401(k)
Contribution will be taken into account under the Actual Deferral Percentage
test of section 401(k) of the Code and this Section for a Plan Year
only if it is allocated to an Employee as of a date within that Plan Year.  For this purpose a Section 401(k)
Contribution is considered allocated as of a date within a Plan Year if the
allocation is not contingent on participation or performance of services after
such date and the Section 401(k) Contribution is actually paid to the
Trust no later than 12 months after the Plan Year to which the
Section 401(k) Contribution relates.

 

Failure to correct Excess 401(k) Contributions by the
close of the Plan Year following the Plan Year for which they were made will
cause the Plan’s cash or deferred arrangement to be disqualified for the Plan
Year for which the Excess 401(k) Contributions were made and for all subsequent
years during which they remain in the Trust. 
Also, the Employer will be liable for a ten percent excise tax on the
amount of Excess 401(k) Contributions unless they are corrected within 21⁄2
months after the close of the Plan Year for which they were made.

 

A.2.4                    Limitation
Based upon Contribution Percentage.  The Contribution
Percentage for eligible Highly Compensated Employees for any Plan Year must
bear a relationship to the Actual Contribution Percentage for all other
eligible Employees for the preceding Plan Year which meets either of
the following tests:

 

(a)                                  the
Contribution Percentage for all other eligible Employees multiplied by 1.25; or

 

(b)                                 the
lesser of the Contribution Percentage for all other eligible Employees
multiplied by two, or the Contribution Percentage for all other eligible
Employees plus two percentage points.

 

For purposes of this test an eligible Employee is an
Employee who is directly or indirectly eligible to receive an allocation of
Matching Contributions for all or part of the Plan Year.  Except as provided below, an Employee who
would be eligible to receive an allocation of Matching Contributions but for
his election not to participate is an eligible Employee.  An Employee who would be eligible to receive
an allocation of Matching Contributions but for the limitations on his Annual
Additions imposed by section 415 of the Code is an eligible Employee.

 

Notwithstanding the foregoing, an individual who is
not a Highly Compensated Employee and who has not satisfied the minimum age and
service requirements of section 410(a)(1)(A) of the Code will not
be treated as an eligible Employee for purposes of this Section A.2.4 if the
Sponsor elects to apply section 410(b)(4)(B) of the Code in determining whether
the Plan meets the requirements of section 401(m)(2) of the Code.

 

If no Section 401(m) Contributions are made on
behalf of an eligible Employee the Actual Contribution Ratio that shall be
included for him in determining the Contribution Percentage is zero.  If the Plan and any other plan or plans to
which Section 401(m) Contributions are made are considered as one plan for
purposes of section 401(a)(4) or 410(b) of the Code, the Plan and those
plans are to be treated as one.  The
Actual Contribution 

 

A-3

 

Ratio of a Highly Compensated Employee who is eligible to participate
in more than one plan of an Affiliated employer to which employee or matching
contributions are made is calculated by treating all the plans in which the
Employee is eligible to participate as one plan.  However, plans that are not permitted to be aggregated under
Regulation section 1.410(m) - 1(b)(3)(ii) are not aggregated for this
purpose.

 

A Matching Contribution will be taken into account
under this Section for a Plan Year only if (1) it is allocated to the
Employee’s Account as of a date within the Plan Year, (2) it is paid to the
Trust no later than the end of the 12-month period beginning after the close of
the Plan Year, and (3) it is made on behalf of an Employee on account of
his Salary Deferral Contributions for the Plan Year.

 

At the election of the Employer, a Participant’s
Salary Deferral Contributions, and QNECs made on behalf of the Participant
during the Plan Year shall be treated as Section 401(m) Contributions that
are Matching Contributions provided that the conditions set forth in Regulation
section 1.401(m)-1(b)(5) are satisfied. 
Salary Deferral Contributions may not be treated as Matching
Contributions for purposes of the contribution percentage test set forth in
this Section unless such contributions, including those taken into account
for purposes of the test set forth in this Section, satisfy the actual deferral
percentage test set forth in Section A.2.3.  Moreover, Salary Deferral Contributions and QNECs may not be
taken into account for purposes of the test set forth in this Section to
the extent that such contributions are taken into account in determining
whether any other contributions satisfy the actual deferral percentage test set
forth in Section A.2.3.  Finally,
Salary Deferral Contributions and QNECs may be taken into account for purposes
of the test set forth in this Section only if they are allocated to the
Employee’s Account as of a date within the Plan Year being tested within the
meaning of Regulation section 1.401(k)-1(b)(4).

 

Failure to correct Excess Aggregate 401(m)
Contributions by the close of the Plan Year following the Plan Year for which
they were made will cause the Plan to fail to be qualified for the Plan Year
for which the Excess Aggregate 401(m) Contributions were made and for all
subsequent years during which they remain in the Trust.  Also, the Employer will be liable for a ten
percent excise tax on the amount of Excess Aggregate 401(m) Contributions
unless they are corrected within 21⁄2 months after the close of the Plan Year for
which they were made.

 

PART A.3  Correction Procedures For Erroneous
Contributions

 

A.3.1                    Excess
Deferral Fail Safe Provision. 
As soon as practical after the close of each Plan Year, the Committee
shall determine if there would be any Excess Deferrals.  If there would be an Excess Deferral by a
Participant, the Excess Deferral as adjusted by any earnings or losses, will be
distributed to the Participant no later than April 15 following the
Participant’s taxable year in which the Excess Deferral was made.  The income allocable to the Excess Deferrals
for the taxable year of the Participant shall be determined by multiplying the
income for the taxable year of the Participant allocable to Salary Deferral
Contributions by a fraction.  The
numerator of the fraction is the amount of the Excess Deferrals made on behalf
of the Participant for the taxable year. 
The denominator of the fraction is the Participant’s total Salary
Deferral Account balance as of the beginning of the taxable year plus the
Participant’s Salary Deferral Contributions for the taxable year.

 

A.3.2                    Actual
Deferral Percentage Fail Safe Provision.  As soon as
practicable after the close of each Plan Year, the Committee shall determine
whether the Actual Deferral Percentage for the Highly Compensated Employees
would exceed the limitation set forth in Section A.2.3.  If the limitation would be exceeded for a
Plan Year, before the close of the following Plan Year (a) the amount of Excess
401(k) Contributions for that Plan Year (and any income allocable to those
contributions as calculated in the specific manner required by
Section A.3.5) shall be distributed or (b) the Employer may make a
QNEC which it elects to have treated as a Section 401(k)
Contribution.  However, a QNEC shall not
be taken into account for purposes of the test set forth in section 401(k) of
the Code and Section A.2.3 for such Plan Year unless it is made and
allocated by the close of such Plan Year.

 

The amount of Excess 401(k) Contributions to be
distributed shall be determined in the following manner:

 

First, the Plan will determine how much the Actual
Deferral Ratio of the Highly Compensated Employee with the highest Actual
Deferral Ratio would have to be reduced to satisfy the Actual Deferral
Percentage Test or cause such Actual Deferral Ratio to equal the Actual
Deferral Ratio of the Highly Compensated Employee with the next highest Actual
Deferral Ratio.  If a lesser reduction
would enable the Plan to satisfy the Actual Deferral 

 

A-4

 

Percentage Test, only this lesser reduction may be made.  Second, this process is repeated until the
Actual Deferral Percentage Test is satisfied. 
The amount of Excess 401(k) Contributions is equal to the sum of these
hypothetical reductions multiplied, in each case, by the Highly Compensated
Employee’s Annual Compensation.

 

Then, the total amount of Excess 401(k) Contributions
shall be distributed on the basis of the respective amounts attributable to
each Highly Compensated Employee.  The
Highly Compensated Employees subject to the actual distribution are determined
using the “dollar leveling method.”  The
Salary Deferral Contributions of the Highly Compensated Employee with the
greatest dollar amount of Salary Deferral Contributions and other contributions
treated as Section 401(k) Contributions for the Plan Year are reduced by the
amount required to cause that Highly Compensated Employee’s Salary Deferral
Contributions to equal the dollar amount of the Salary Deferral Contributions
and other contributions treated as Section 401(k) Contributions for the Plan
Year of the Highly Compensated Employee with the next highest dollar amount.
This amount is then distributed to the Highly Compensated Employee with the
highest dollar amount.  However, if a
lesser reduction, when added to the total dollar amount already distributed
under this Section A.3.2, would equal the total Excess 401(k) Contributions,
the lesser reduction amount shall be distributed.  This process shall be continued until the amount of the Excess
401(k) Contributions have been distributed.

 

QNECs will be treated as Section 401(k)
Contributions only if:  (a) the conditions described in Regulation
section 1.401(k)-1(b)(5) are satisfied and (b) they are allocated to
Participants’ Accounts as of a date within that Plan Year and are actually paid
to the Trust no later than the end of the 12-month period immediately following
the Plan Year to which the contributions relate.  If the Employer makes a QNEC that it elects to have treated as a
Section 401(k) Contribution, the Contribution will be in an amount
necessary to satisfy the Actual Deferral Percentage test and will be allocated
first to those Non-Highly Compensated Employees who had the lowest Actual
Deferral Ratio.

 

Any distributions of the Excess 401(k) Contributions
for any Plan Year are to be made to Highly Compensated Employees on the basis
of the amount of contributions by, or on behalf of, each Highly Compensated
Employee.  The amount of Excess 401(k)
Contributions to be distributed for any Plan Year must be reduced by any excess
Salary Deferral Contributions previously distributed for the taxable year
ending in the same Plan Year.  To the
extent that Excess Section 401(k) Contributions are distributed pursuant to
this Section A.3.2, the Matching Contributions made with respect to those
Excess Section 401(k) Contributions shall be forfeited.

 

A.3.3                    Contribution
Percentage Fail Safe Provision. 
If the limitation set forth in Section A.2.4 would be exceeded for
any Plan Year any one or more of the following corrective action shall be taken
before the close of the following Plan Year as determined by the Committee in
its sole discretion: (a) the amount of the Excess Aggregate 401(m)
Contributions for that Plan Year (and any income allocable to those
Contributions as calculated in the manner set forth in Section A.3.5)
shall be forfeited or (b) the Employer may make a QNEC which it elects to have
treated as a Section 401(m) Contribution. 
However, a QNEC shall not be taken into account for purposes of the test
set forth in section 401(m) of the Code and Section A.2.4 for such Plan Year
unless it is made and allocated by the close of such Plan Year.

 

The amount of Excess Aggregate 401(m) Contributions to
be distributed shall be determined in the following manner:

 

First, the Plan will determine how much the Actual
Contribution Ratio of the Highly Compensated Employee with the highest Actual
Contribution Ratio would have to be reduced to satisfy the Actual Contribution
Percentage Test or cause such Actual Contribution Ratio to equal the Actual
Contribution Ratio of the Highly Compensated Employee with the next highest
Actual Contribution Ratio.  If a lesser
reduction would enable the Plan to satisfy the Actual Contribution Percentage
Test, only this lesser reduction may be made. 
Second, this process is repeated until the Actual Contribution Test is
satisfied.  The amount of Excess
Aggregate 401(m) Contributions is equal to the sum of these hypothetical
reductions multiplied, in each case, by the Highly Compensated Employee’s
Annual Compensation.

 

Then, the total amount of Excess Aggregate 401(m)
Contributions shall be forfeited on the basis of the respective amounts
attributable to each Highly Compensated Employee.  The Highly Compensated Employees 

 

A-5

 

subject to the forfeitures are determined using the “dollar leveling
method.” The After-Tax Contributions and the Matching Contributions of the
Highly Compensated Employee with the greatest dollar amount of After-Tax
Contributions and the Matching Contributions and other contributions treated as
Section 401(m) Contributions for the Plan Year are reduced by the amount
required to cause that Highly Compensated Employee’s After-Tax Contributions
and Matching Contributions and other contributions treated as Section 401(m)
Contributions for the Plan Year to equal the dollar amount of the After-Tax
Contributions and the Matching Contributions and other contributions treated as
Section 401(m) Contributions for the Plan Year of the Highly Compensated
Employee with the next highest dollar amount. This amount is then forfeited
from the Account of the Highly Compensated Employee with the highest dollar
amount. However, if a lesser reduction, when added to the total dollar amount
already forfeited under this Section A.3.3, would equal the total Excess
Aggregate 401(m) Contributions, the lesser reduction amount shall be forfeited.
This process shall be continued until the amount of the Excess Aggregate 401(m)
Contributions have been forfeited.

 

A.3.4                    Alternative
Limitation Fail Safe.  As
soon as practicable after the close of each Plan Year, the Committee shall
determine whether the alternative limitation would be exceeded.  If the limitation would be exceeded for any
Plan Year, before the close of the following Plan Year the Actual Deferral
Percentage or Contribution Percentage of the eligible Highly Compensated
Employees, or a combination of both, shall be reduced by distributions made in
the manner described in the Regulations. 
These distributions shall be in addition to and not in lieu of
distributions required for Excess 401(k) Contributions and Excess Aggregate
401(m) Contributions.

 

A.3.5                    Income
Allocable to Excess 401(k) Contributions and Excess Aggregate 401(m)
Contributions.  The income
allocable to Excess 401(k) Contributions for the Plan Year shall be determined
by multiplying the income for the Plan Year allocable to Section 401(k)
Contributions by a fraction.  The
numerator of the fraction shall be the amount of Excess 401(k) Contributions
made on behalf of the Participant for the Plan Year.  The denominator of the fraction shall be the Participant’s total
Account balance attributable to Section 401(k) Contributions as of the
beginning of the Plan Year plus the Participant’s Section 401(k)
Contributions for the Plan Year.  The
income allocable to Excess Aggregate 401(m) Contributions for a Plan Year shall
be determined by multiplying the income for the Plan Year allocable to
Section 401(m) Contributions by a fraction.  The numerator of the fraction shall be the amount of Excess
Aggregate 401(m) Contributions made on behalf of the Participant for the Plan
Year.  The denominator of the fraction
shall be the Participant’s total Account balance attributable to
Section 401(m) Contributions as of the beginning of the Plan Year plus the
Participant’s Section 401(m) Contributions for the Plan Year.

 

PART A.4  Limitation on Allocations

 

A.4.1                    Basic
Limitation on Allocations. 
The Annual Additions which may be credited to a Participant’s Accounts
under the Plan for any Limitation Year will not exceed the Maximum Permissible
Amount reduced by the Annual Additions credited to a Participant’s Account for
the same Limitation Year under any other qualified defined contribution plans
maintained by any Affiliated Employer. 
If the Annual Additions with respect to the Participant under such other
qualified defined contribution plans are less than the Maximum Permissible
Amount and the Employer Contribution that would otherwise be contributed or
allocated to the Participant’s Accounts under the Plan would cause the Annual
Additions for the Limitation Year to exceed this limitation, the amount
contributed or allocated under the Plan will be reduced so that the Annual
Additions under all qualified defined contribution plans maintained by any Affiliated
Employer for the Limitation Year will equal the Maximum Permissible
Amount.  If the Annual Additions with
respect to the Participant under such other qualified defined contribution
plans maintained by any Affiliated Employer in the aggregate are equal to or
greater than the Maximum Permissible Amount, no amount will be contributed or
allocated to the Participant’s Account under the Plan for the Limitation Year.

 

A.4.2                    Estimation
of Maximum Permissible Amount. 
Prior to determining the Participant’s actual Annual Compensation for
the Limitation Year, the Employer may determine the Maximum Permissible Amount
on the basis of a reasonable estimation of the Participant’s Annual
Compensation for such Limitation Year, uniformly determined for all Participants
similarly situated.  As soon as is
administratively feasible after the end of the Limitation Year, the Maximum
Permissible Amount for the Limitation Year shall be determined on the basis of
the Participant’s actual Annual Compensation for such Limitation Year.

 

A-6

 

A.4.3                    Attribution
of Excess Amounts.  If a
Participant’s Annual Additions under the Plan and all other qualified defined
contribution plans maintained by any Affiliated Employer result in an Excess
Amount, the total Excess Amount shall be attributed to the Plan.

 

A.4.4                    Treatment of
Excess Amounts.  If an Excess
Amount attributed to the Plan is held or contributed as a result of or because
of (i) the allocation of forfeitures, (ii) reasonable error in estimating a
Participant’s Considered Compensation, (iii) reasonable error in calculating
the maximum Salary Deferral Contribution that may be made with respect to a
Participant under section 415 of the Code or (iv) any other facts and
circumstances which the Commissioner of Internal Revenue finds to be justified,
the Excess Amount shall be reduced as follows:

 

(a)                                  First,
the Excess Amount shall be reduced to the extent necessary by distributing to
the Participant all Salary Deferral Contributions together with their
earnings.  These distributed amounts are
disregarded for purposes of the testing and limitations contained in this
Appendix A.

 

(b)                                 Second,
if the Participant is still employed by the Employer at the end of the
Limitation Year, then such Excess Amounts shall not be distributed to the
Participant, but shall be reallocated to a suspense account and shall be
reapplied to reduce future Employer Contributions (including any allocation of
forfeitures) under the Plan for such Participant in the next Limitation Year,
and for each succeeding Limitation Year, if necessary.

 

(c)                                  If,
after application of paragraph (b) of this Section, an Excess Amount still
exists, and the Participant is not still employed by the Employer at the end of
the Limitation Year, then such Excess Amounts in the Participant’s Accounts
shall not be distributed to the Participant, but shall be reallocated to a
suspense account and shall be reapplied to reduce future Employer Contributions
(including allocation of any forfeitures), for all remaining Participants in
the next Limitation Year and each succeeding Limitation Year if necessary.

 

(d)                                 If
a suspense account is in existence at any time during the Limitation Year
pursuant to this Section, it will not participate in the allocation of the
Trust Fund’s investment gains and losses. 
If a suspense account is in existence at any time during a particular
Limitation Year, all amounts in the suspense account must be allocated and
reallocated to Participants’ Accounts before any Employer Contribution may be
made to the Plan for that Limitation Year. 
Excess Amounts may not be distributed to Participants or former
Participants.  If the Plan is terminated
while a suspense account described in this Section is in existence, the
amount in such suspense account shall revert to the Employer(s) to which it is
attributable.

 

A-7

 

APPENDIX
B

 

TOP – HEAVY REQUIREMENTS

 

PART B.1  Definitions

 

Definitions.  As used herein, the following words and phrases have the meaning
attributed to them below:

 

B.1.1                      “Aggregate Accounts”
means the total of all account balances.

 

B.1.2                      “Aggregation Group”
means (a) each plan of the Employer or any Affiliated Employer in which a
Key Employee is a Participant and (b) each other plan of the Employer or
any Affiliated Employer which enables any plan in (a) to meet the requirements
of either section 401(a)(4) or 410 of the Code.  Any Employer may treat a plan not required to be included in the
Aggregation Group as being a part of the group if the group would continue to
meet the requirements of section 401(a)(4) and 410 of the Code with that
plan being taken into account.

 

B.1.3                      “Determination
Date” means for a given Plan Year the last day of the
preceding Plan Year or in the case of the first Plan Year the last day of that
Plan Year.

 

B.1.4                      “Key Employee” means an Employee or former
Employee (including a deceased Employee) who at any time during the Plan Year
is (a) an officer of any Affiliated Employer having Annual Compensation greater
than $130,000.00 (as adjusted by the Secretary of Treasury from time to time
for increases in the cost of living), (b) a Five Percent Owner of any
Affiliated Employer, treated separately, or (c) a One Percent Owner of any
Affiliated Employer, treated separately, having Annual Compensation greater
than $150,000.00.  For this purpose no
more than fifty (50) employees or, if lesser, the greater of three (3)
employees of ten percent (10%) of the employees shall be treated as officers.

 

For purposes of determining the number of officers
taken into account, the following employees shall be excluded:  (1) employees who have not completed six (6)
months of Vesting Service, (2) employees who normally work less than seventeen
and one-half (17-1/2) hours per week, (3) employees who normally work not more
than six (6) months during any year, (4) employees who have not attained the
age of twenty-one (21), and (5) except to the extent provided in Regulations,
employees who are included in a unit of employees covered by an agreement which
the Secretary of Labor finds to be a collective bargaining agreement between
employee representatives and an Affiliated Employer.  Section 416(i) of the Code shall be used to determine percentage
of ownership.

 

The determination of who is a Key Employee will be
made in accordance with section 416(i) of the Code and applicable Regulations.

 

B.1.5                      “Non-Key
Employee” means any Employee who is not a Key Employee.

 

B.1.6                      “Top-Heavy
Plan” means any plan which has been determined to be
top-heavy under the test described in Appendix B of the Plan.

 

PART B.2  Application

 

B.2.1                      Application.  The requirements described in
this Appendix B shall apply to each Plan Year that the Plan is determined to be
a Top-Heavy Plan.

 

B.2.2                      Top-Heavy
Test.  If on the
Determination Date the Aggregate Accounts of Key Employees in the Plan exceed
60 percent of the Aggregate Accounts of all Employees in the Plan, the Plan
shall be a Top-Heavy Plan for that Plan Year. 
In addition, if the Plan is required to be included in an Aggregation
Group and that group is a top-heavy group, the Plan shall be treated as a
Top-Heavy Plan.  An Aggregation Group is
a top-heavy group if on the Determination Date the sum of (a) the present
value of the cumulative accrued benefits for Key Employees under all defined
benefit plans in the Aggregation Group which contains the Plan, plus
(b) the total of all of the 

 

B-1

 

accounts of Key
Employees under all defined contribution plans included in the Aggregation
Group (which contains the Plan) is more than 60 percent of a similar sum
determined for all employees covered in the Aggregation Group which contains
the Plan.

 

In applying the above tests, the following rules shall
apply:

 

(a)                                                     in
determining the present value of the accumulated accrued benefits for any
Employee or the amount in the account of any Employee, the value or amount
shall be increased by all distributions made to or for the benefit of the
Employee under the Plan after his Separation From Service and during the
one-year period ending on the Determination Date;

 

(b)                                                    in
determining the present value of the accumulated accrued benefits for any
Employee or the amount in the account of any Employee, the value or amount
shall be increased by all distributions made to or for the benefit of the
Employee under the Plan prior to his Separation From Service and during the
five-year period ending on the Determination Date;

 

(c)                                                     all
rollover contributions made by the Employee to the Plan shall not be considered
by the Plan for either test;

 

(d)                                                    if
an Employee is a Non-Key Employee under the Plan for the Plan Year but was a
Key Employee under the Plan for a prior Plan Year, his Account shall not be
considered; and

 

(e)                                                     notwithstanding
any other provision of the Plan, benefits shall not be taken into account in
determining the top-heavy ratio for any Employee who has not performed services
for the Employer during the last one-year period ending upon the Determination
Date.

 

B.2.3                      Vesting
Restrictions if Plan Becomes Top-Heavy. 
If a Participant has at least one Hour of Service during a
Plan Year when the Plan is a Top-Heavy Plan, he shall either vest under each of
the normal vesting provisions of the Plan or under the following vesting schedule,
whichever is more favorable:

 

	
  Completed
  Years of Active Service

  	
   

  	
  Vested
  Percentage of Amount

  Vested In Accounts Containing

  Employer Contributions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Less than two
  years

  	
   

  	
  0

  	
   

  
	
  Two years but
  less than three years

  	
   

  	
  20

  	
   

  
	
  Three years but
  less than four years

  	
   

  	
  40

  	
   

  
	
  Four years but
  less than five years

  	
   

  	
  60

  	
   

  
	
  Five years but
  less than six years

  	
   

  	
  80

  	
   

  
	
  Six years or
  more

  	
   

  	
  100

  	
   

  

 

If the Plan ceases to be a Top-Heavy Plan, this requirement shall no
longer apply.  After that date, the
normal vesting provisions of the Plan shall be applicable to all subsequent
Contributions by the Employer.

 

For purposes of this Section B.2.3 Years of Active
Service shall be determined under the rules of section 411(a)(4), (5) and (6)
of the Code except that Years of Active Service beginning prior to January 1,
1984 and Years of Active Service for any Plan Year for which the Plan was not
top-heavy shall be disregarded.  Also,
any Year of Active Service shall be disregarded to the extent that such Year of
Active Service occurs during a Plan Year when the Plan benefits (within the
meaning of section 410(b) of the Code) no Key Employee or former Key Employee.

 

B.2.4                      Minimum
Contributions if Plan Becomes Top-Heavy. 
If the Plan is a Top-Heavy Plan and the normal allocation of
the Employer Contribution and forfeitures is less than five percent of any
Non-Key Employee Participant’s Annual Compensation, the Committee, without
regard to the normal allocation procedures, shall allocate the Employer
Contribution and the forfeitures among the Participants who are Non-Key
Employees and 

 

B-2

 

who are in the
employ of the Employer at the end of the Plan Year in proportion to each such
Participant’s Annual Compensation until each Non-Key Employee Participant has
had an amount equal to five percent of his Annual Compensation allocated to his
Account.  At that time, any more
Employer Contributions or forfeitures shall be allocated under the normal
allocation procedures described earlier in the Plan.  Amounts that may be treated as Section 401(k) Contributions
made on behalf of Non-Key Employees may not be included in determining the
minimum contribution required under this Section to the extent that they are
treated as Section 401(k) Contributions for purposes of the Actual
Deferral Percentage test.

 

In applying this restriction, the following rules
shall apply:

 

(a)                                  Each
Employee who is eligible for participation (without regard to whether he has
made mandatory contributions, if any are required, or whether his compensation
is less than a stated amount) shall be entitled to receive an allocation under
this Section; and

 

(b)                                 All
defined contribution plans required to be included in the Aggregation Group
shall be treated as one plan for purposes of meeting the three percent maximum;
this required aggregation shall not apply if the Plan is also required to be
included in an Aggregation Group which includes a defined benefit plan and the
Plan enables that defined benefit plan to meet the requirements of
sections 401(a)(4) or 410 of the Code.

 

B.2.5                      Disregard of
Government Programs.  If the
Plan is a Top-Heavy Plan, it must meet the vesting and benefit requirements
described in this Article without taking into account contributions or benefits
under Chapter 2 of the Code (relating to the tax on self-employment
income), Chapter 21 of the Code (relating to the Federal Insurance
Contributions Act), Title II of the Social Security Act, or any other
Federal or State law.

 

B-3

 

APPENDIX
C

 

ADMINISTRATION OF THE PLAN

 

C.1                               Appointment,
Term, Resignation, and Removal. 
The Board shall appoint a Committee of not less than two persons, the
members of which shall serve until their resignation, death, or removal.  The Sponsor shall notify the Trustee in
writing of its composition from time to time. Any member of the Committee may
resign at any time by giving written notice of such resignation to the Sponsor.
Any member of the Committee may be removed by the Board, with or without cause.
Vacancies in the Committee arising by resignation, death, removal, or otherwise
shall be filled by such persons as may be appointed by the Board.

 

C.2                               Powers.  The Committee shall have exclusive
responsibility for the administration of the Plan, according to the terms and
provisions of this document, and shall have all powers necessary to accomplish
such purposes, including, but not by way of limitation, the right, power, and
authority:

 

(a)                                  to
make rules and regulations for the administration of the Plan which are not
inconsistent with the terms and provisions thereof, provided such rules and
regulations are evidenced in writing;

 

(b)                                 to
construe all terms, provisions, conditions, and limitations of the Plan; and
its construction thereof made in good faith and without discrimination in favor
of or against any Participant or former Participant shall be final and
conclusive on all parties at interest;

 

(c)                                  to
correct any defect, supply any omission, or reconcile any inconsistency which
may appear in the Plan in such manner and to such extent as it shall deem
expedient to carry the Plan into effect for the greatest benefit of all parties
at interest, and its judgment in such matters shall be final and conclusive as
to all parties at interest;

 

(d)                                 to
select, employ, and compensate from time to time such consultants, actuaries,
accountants, attorneys, and other agents and employees as the Committee may
deem necessary or advisable for the proper and efficient administration of the
Plan, and any agent, firm, or employee so selected by the Committee may be a
disqualified person, but only if the requirements of section 4975(d) of
the Code have been met;

 

(e)                                  to
resolve all questions relating to the eligibility of Employees to become
Participants, and to determine the period of Active Service and the amount of
Considered Compensation upon which the benefits of each Participant shall be
calculated;

 

(f)                                    to
resolve all controversies relating to the administration of the Plan, including
but not limited to (1) differences of opinion arising between the Employer and
a Participant or former Participant, and (2) any questions it deems advisable
to determine in order to promote the uniform and nondiscriminatory
administration of the Plan for the benefit of all parties at interest;

 

(g)                                 to
direct and instruct or to appoint an investment manager or managers which would
have the power to direct and instruct the Trustee in all matters relating to
the preservation, investment, reinvestment, management, and disposition of the
Trust assets; provided, however, that the Committee shall have no authority
that would prevent the Trustee from being an “agent independent of the issuer,”
as that term is defined in Rule 10b-18 promulgated under the Securities
Exchange Act of 1934, at any time that the Trustee’s failure to maintain such
status would result in the Sponsor or any other person engaging in a
“manipulative or deceptive device or contrivance” under the provisions of Rule
10b-6 of such Act;

 

(h)                                 to
direct and instruct the Trustee in all matters relating to the payment of Plan
benefits and to determine a Participant’s or former Participant’s entitlement
to a benefit should he appeal a denial of his claim for a benefit or any
portion thereof; and

 

C-1

 

(i)                                     to
delegate such of its clerical and recordation duties under the Plan as it may
deem necessary or advisable for the proper and efficient administration of the
Plan.

 

C.3                               Organization.  The Committee shall select from among its
members a chairman, who shall preside at all of its meetings, and shall select
a secretary, without regard as to whether that person is a member of the
Committee, who shall keep all records, documents, and data pertaining to its
supervision of the administration of the Plan.

 

C.4                               Quorum and
Majority Action.  A majority
of the members of the Committee shall constitute a quorum for the transaction
of business, and the vote of a majority of the members present at any meeting
will decide any question brought before that meeting. In addition, the
Committee may decide any question by a vote, taken without a meeting, of a
majority of its members.

 

C.5                               Signatures.  The chairman, the secretary, and any one or
more of the members of the Committee to which the Committee has delegated the
power, shall each, severally, have the power to execute any document on behalf
of the  Committee, and to execute any
certificate or other written evidence of the action of the Committee. The Trustee,
after being notified of any such delegation of power in writing, shall
thereafter accept and may rely upon any document executed by such member or
members as representing the action of the Committee until the Committee files
with the Trustee a written revocation of that delegation of power.

 

C.6                               Disqualification
of Committee Participants.  A
member of the Committee who is also a Participant of the Plan shall not vote or
act upon any matter relating solely to himself.

 

C.7                               Disclosure
to Participants.  The
Committee shall make available to each Participant, former Participant, and
Beneficiary for his examination such records, documents, and other data as are
required under ERISA, but only at reasonable times during business hours. No
Participant, former Participant, or Beneficiary shall have the right to examine
any data or records reflecting the compensation paid to any other Participant,
former Participant, or Beneficiary, and the Committee shall not be required to
make any data or records available other than those required by ERISA.

 

C.8                               Standard of
Performance.  The Committee
and each of its members shall use the care, skill, prudence, and diligence
under the circumstances then prevailing that a prudent man acting in a like
capacity and familiar with such matters would use in conducting his business as
the administrator of the Plan; shall, when exercising its power to direct
investments, diversify the investments of the Plan so as to minimize the risk
of large losses, unless under the circumstances it is clearly prudent not to do
so; and shall otherwise act in accordance with the provisions of the Plan and
ERISA.

 

C.9                               Liability of
Administrative Committee and Liability Insurance.  No member of the Committee shall be liable
for any act or omission of any other Participant of the Committee, the Trustee,
any investment manager, or any Participant or former Participant who directs
the investment of his Account or other agent appointed by the Committee except
to the extent required by the terms of ERISA, and any other applicable state or
federal law, which liability cannot be waived. No member of the Committee shall
be liable for any act or omission on his own part except to the extent required
by the terms of ERISA, and any other applicable state or federal law, which
liability cannot be waived. In this connection, each provision hereof is
severable and if any provision is found to be void as against public policy, it
shall not affect the validity of any other provision hereof.

 

Further, it is specifically provided that the Trustee
may, at the direction of the Committee, purchase out of the Trust assets
insurance for the members of the Committee and any other fiduciaries appointed
by the Committee, and for the Trust itself to cover liability or losses
occurring by reason of the act or omission of any one or more of the members of
the Committee or any other fiduciary appointed by them under the Plan, provided
such insurance permits recourse by the insurer against the members of the
Committee or the other fiduciaries concerned in the case of a breach of a
fiduciary obligation by one or more members of the Committee or other fiduciary
covered thereby.

 

C-2

 

C.10                         Bonding.  No member of the Committee shall be required
to give bond for the performance of his duties hereunder unless required by a
law which cannot be waived.

 

C.11                         Compensation.  The Committee shall serve without
compensation for their services, but shall be reimbursed by the Employers for
all expenses properly and actually incurred in the performance of their duties
under the Plan unless the Employers elect to have such expenses paid out of the
Trust assets.

 

C.12                         Persons
Serving in Dual Fiduciary Roles. 
Any person, group of persons, corporations, firm, or other entity may
serve in more than one fiduciary capacity with respect to the Plan, including
the ability to serve both as a successor trustee and as a Participant of the
Committee.

 

C.13                         Administrator.  For all purposes of ERISA, the administrator
of the Plan within the meaning of ERISA shall be the Sponsor. The Sponsor shall
have final responsibility for compliance with all reporting and disclosure
requirements imposed with respect to the Plan under any federal or state law,
or any regulations promulgated thereunder.

 

C.14                         Named
Fiduciary.  The members of
the Committee shall be the “named fiduciary” for purposes of
section 402(a)(1) of ERISA, and as such shall have the authority to
control and manage the operation and administration of the Plan, except to the
extent such authority and control is allocated or delegated to other parties
pursuant to the terms of the Plan.

 

C.15                         Standard of
Judicial Review of Committee Actions.  The Committee has full and absolute discretion in the exercise of
each and every aspect of its authority under the Plan, including without
limitation, the authority to determine any person’s right to benefits under the
Plan, the correct amount and form of any such benefits; the authority to decide
any appeal; the authority to review and correct the actions of any prior administrative
committee; and all of the rights, powers, and authorities specified in this
Appendix and elsewhere in the Plan. 
Notwithstanding any provision of law or any explicit or implicit
provision of this document, any action taken, or ruling or decision made, by
the Committee in the exercise of any of its powers and authorities under the
Plan will be final and conclusive as to all parties other than the Sponsor or
Trustee, including without limitation all Participants, former Participants and
Beneficiaries, regardless of whether the Committee or one or more members
thereof may have an actual or potential conflict of interest with respect to
the subject matter of such action, ruling, or decision.  No such final action, ruling, or decision of
the Committee will be subject to de novo review in any judicial proceeding; and
no such final action, ruling, or decision of the Committee may be set aside
unless it is held to have been arbitrary and capricious by a final judgment of
a court having jurisdiction with respect to the issue.

 

C.16                         Indemnification
of Committee by the Sponsor. 
The Sponsor shall indemnify and hold harmless the Committee, the
Committee members, and any persons to whom the Committee has allocated or
delegated its responsibilities in accordance with the provisions hereof, as
well as any other fiduciary who is also an officer, director, or Employee of an
Employer, and hold each of them harmless from and against all claims, loss,
damages, expense, and liability arising from their responsibilities in
connection with the administration of the Plan which is not otherwise paid or
reimbursed by insurance, unless the same shall result from their own willful
misconduct.

 

C-3

 

APPENDIX
D

 

FUNDING

 

D.1                              Benefits
Provided Solely by Trust. 
All benefits payable under the Plan shall be paid or provided for solely
from the Trust, and the Employer assumes no liability or responsibility
therefor.

 

D.2                              Funding of
Plan.  The Plan shall be
funded by one or more separate Trusts. 
If more than one Trust is used, each Trust shall be designated by the
name of the Plan followed by a number assigned by the Committee at the time the
Trust is established.

 

D.3                              Incorporation
of Trust.  Each Trust is a
part of the Plan.  All rights or
benefits which accrue to a person under the Plan shall be subject also to the
terms of the agreements creating the Trust or Trusts and any amendments to them
which are not in direct conflict with the Plan.

 

D.4                              Authority of
Trustee.  Each Trustee shall have
full title and legal ownership of the assets in the separate Trust which, from
time to time, are in his separate possession. 
No other Trustee shall have joint title to or joint legal ownership of
any asset in one of the other Trusts held by another Trustee.  Each Trustee shall be governed separately by
the trust agreement entered into between the Employer and that Trustee and the
terms of the Plan without regard to any other agreement entered into between
any other Trustee and the Employer as a part of the Plan.

 

D.5                              Allocation
of Responsibility.  To the
fullest extent permitted under section 405 of ERISA, the agreements
entered into between the Employer and each of the Trustees shall be interpreted
to allocate to each Trustee its specific responsibilities, obligations and
duties so as to relieve all other Trustees from liability either through the
agreement, Plan or ERISA, for any act of any other Trustee which results in a
loss to the Plan because of his act or failure to act.

 

D.6                              Trustee’s
Fees and Expenses.  The
Trustee shall receive for its services as Trustee hereunder the compensation
which from time to time may be agreed upon by the Sponsor and the Trustee.  All of such compensation, together with the
expenses incurred by the Trustee in connection with the administration of this
Trust, including fees for legal services rendered to the Trustee, all other
charges and disbursements of the Trustee, and all other expenses of the Plan
shall be charged to and deducted from the Trust Fund, unless the Sponsor elects
in writing to have any part or all of such compensation, expenses, charges, and
disbursements paid directly by the Sponsor. 
The Trustee shall deduct from and charge against the Trust assets any
and all taxes paid by it which may be levied or assessed upon or in respect of
the Trust hereunder or the income thereof, and shall equitably allocate the
same among the several Participants and former Participants.

 

D-1Exhibit
10.2

 

QUANEX
CORPORATION

EMPLOYEE
SAVINGS PLAN

 

Amendment and Restatement

Effective January 1, 2002

 

 

QUANEX
CORPORATION EMPLOYEE SAVINGS PLAN

 

THIS AGREEMENT adopted by Quanex
Corporation, a Delaware corporation (the “Sponsor”),

 

W I T N E S S E T H:

 

WHEREAS, effective April 1, 1986, the
Sponsor established Quanex
Corporation Employee Savings Plan (the “Plan”);

 

WHEREAS, the Plan is intended to be a
profit sharing plan; and

 

WHEREAS, the Sponsor desires to amend and
restate the Plan;

 

NOW, THEREFORE, the Plan is hereby amended
and restated in its entirety as set forth below.

 

 

TABLE OF
CONTENTS

 

	
   

  	
  Section

  
	
  ARTICLE I - DEFINITIONS

  	
   

  
	
   

  	
   

  
	
  Account

  	
  1.01

  
	
  Active Service

  	
  1.02

  
	
  Affiliated
  Employer

  	
  1.03

  
	
  Annual
  Compensation

  	
  1.04

  
	
  Annuity
  Starting Date

  	
  1.05

  
	
  Applicable Distribution
  Period

  	
  1.06

  
	
  Beneficiary or
  Beneficiaries

  	
  1.07

  
	
  Board

  	
  1.08

  
	
  Catch-up
  Eligible Participant

  	
  1.09

  
	
  Claimant

  	
  1.10

  
	
  Code

  	
  1.11

  
	
  Committee

  	
  1.12

  
	
  Considered
  Compensation

  	
  1.13

  
	
  Contribution

  	
  1.14

  
	
  Direct Rollover

  	
  1.15

  
	
  Disability

  	
  1.16

  
	
  Distributee

  	
  1.17

  
	
  Distribution Calendar Year

  	
  1.18

  
	
  Eligible
  Employee

  	
  1.19

  
	
  Eligible
  Retirement Plan

  	
  1.20

  
	
  Eligible Rollover
  Distribution

  	
  1.21

  
	
  Employee

  	
  1.22

  
	
  Employer
  or Employers

  	
  1.23

  
	
  Entry Date

  	
  1.24

  
	
  ERISA

  	
  1.25

  
	
  Final Section
  401(a)(9) Regulations

  	
  1.26

  
	
  Five Percent
  Owner

  	
  1.27

  
	
  Forfeitable
  Interest

  	
  1.28

  
	
  Highly Compensated Employee

  	
  1.29

  
	
  Hour of Service

  	
  1.30

  
	
  Leased Employee

  	
  1.31

  
	
  Maternity or Paternity
  Absence

  	
  1.32

  
	
  Nonforfeitable
  Interest

  	
  1.33

  
	
  Non-Highly Compensated Employee

  	
  1.34

  
	
  Participant

  	
  1.35

  
	
  Period of
  Service

  	
  1.36

  
	
  Period of
  Severance

  	
  1.37

  
	
  Plan

  	
  1.38

  
	
  Plan Year

  	
  1.39

  
	
  Qualified Domestic
  Relations Order

  	
  1.40

  

 

i

 

	
  Regulation

  	
  1.41

  
	
  Required
  Beginning Date

  	
  1.42

  
	
  Retirement Age

  	
  1.43

  
	
  Rollover
  Contribution

  	
  1.44

  
	
  Section 401(a)(9) Beneficiary

  	
  1.45

  
	
  Separation
  From Service

  	
  1.46

  
	
  Severance From Service Date

  	
  1.47

  
	
  Severs Service

  	
  1.48

  
	
  Sponsor

  	
  1.49

  
	
  Sponsor Stock

  	
  1.50

  
	
  Spouse

  	
  1.51

  
	
  Trust

  	
  1.52

  
	
  Trustee

  	
  1.53

  
	
  Valuation Date

  	
  1.54

  
	
   

  	
   

  
	
  ARTICLE II - ELIGIBILITY

  	
   

  
	
   

  	
   

  
	
  Eligibility
  Requirements

  	
  2.01

  
	
  Early
  Participation for Rollover Purposes

  	
  2.02

  
	
  Eligibility Upon
  Reemployment

  	
  2.03

  
	
  Cessation of Participation

  	
  2.04

  
	
  Recommencement of
  Participation

  	
  2.05

  
	
   

  	
   

  
	
  ARTICLE III – CONTRIBUTIONS

  	
   

  
	
   

  	
   

  
	
  Salary Deferral
  Contributions

  	
  3.01

  
	
  Catch-up Salary
  Deferral Contributions

  	
  3.02

  
	
  After-Tax
  Contributions

  	
  3.03

  
	
  Matching
  Contributions

  	
  3.04

  
	
  Supplemental Contributions

  	
  3.05

  
	
  Rollover Contributions
  and Plan-to-Plan Transfers

  	
  3.06

  
	
  QNECS – Extraordinary Employer Contributions

  	
  3.07

  
	
  Restoration Contributions

  	
  3.08

  
	
  Restorative
  Payments

  	
  3.09

  
	
  Nondeductible
  Contributions Not Required

  	
  3.10

  
	
  Form of Payment of
  Contributions

  	
  3.11

  
	
  Deadline for
  Payment of Contributions

  	
  3.12

  
	
  Return of
  Contributions for Mistake, Disqualification or Disallowance of Deduction

  	
  3.13

  
	
   

  	
   

  
	
  ARTICLE IV – ALLOCATION AND VALUATION OF
  ACCOUNTS

  	
   

  
	
   

  	
   

  
	
  Information
  Statements from Employer

  	
  4.01

  
	
  Allocation
  of Salary Deferral Contributions

  	
  4.02

  
	
  Allocation
  of Catch-up Salary Deferral Contributions

  	
  4.03

  
	
  Allocation
  of After-Tax Contributions

  	
  4.04

  
	
  Allocation
  of Matching Contributions

  	
  4.05

  
	
  Allocation of Supplemental
  Contributions

  	
  4.06

  
	
  Allocation
  of QNECs

  	
  4.07

  

 

ii

 

	
  Allocation of Forfeitures

  	
  4.08

  
	
  Valuation
  of Accounts

  	
  4.09

  
	
  No Rights Unless
  Otherwise Prescribed

  	
  4.10

  
	
   

  	
   

  
	
  ARTICLE V - BENEFITS

  	
   

  
	
   

  	
   

  
	
  Retirement Benefit

  	
  5.01

  
	
  Death Benefit

  	
  5.02

  
	
  Distribution Method

  	
  5.03

  
	
  Immediate Payment of Small
  Amount Upon Separation From Service

  	
  5.04

  
	
  Direct Rollover Option

  	
  5.05

  
	
  Time of Distribution

  	
  5.06

  
	
  Consent to Distribution

  	
  5.07

  
	
  Information Provided to
  Participants

  	
  5.08

  
	
  Designation of
  Beneficiary

  	
  5.09

  
	
  Distributions to
  Minors and Incapacitated Persons

  	
  5.10

  
	
  Distributions Pursuant
  to Qualified Domestic Relations Orders

  	
  5.11

  
	
  Claims Review Procedures; Claims Appeal
  Procedures

  	
  5.12

  
	
  Disability
  Benefit Claims Review and Appeal Procedures

  	
  5.13

  
	
   

  	
   

  
	
  ARTICLE VI – IN-SERVICE DISTRIBUTIONS

  	
   

  
	
   

  	
   

  
	
  In-Service Financial
  Hardship Distributions

  	
  6.01

  
	
  In-Service
  Distributions of After-Tax Contributions, Matching Contributions and
  Supplemental Contributions

  	
  6.02

  
	
  Method of Payment

  	
  6.03

  
	
   

  	
   

  
	
  ARTICLE VII – VESTING

  	
   

  
	
   

  	
   

  
	
  ARTICLE VIII – FORFEITURES AND
  RESTORATIONS

  	
   

  
	
   

  	
   

  
	
  Forfeiture on
  Termination of Participation

  	
  8.01

  
	
  Restoration of
  Forfeited Amounts

  	
  8.02

  
	
  Forfeitures by
  Lost Participants or Beneficiaries

  	
  8.03

  
	
   

  	
   

  
	
  ARTICLE IX – ACTIVE SERVICE

  	
   

  
	
   

  	
   

  
	
  General

  	
  9.01

  
	
  Disregard of Certain
  Service

  	
  9.02

  
	
  Certain Brief Absences
  Counted as Active Service

  	
  9.03

  
	
  Service Credit
  Required by Law

  	
  9.04

  
	
  Special
  Maternity or Paternity Absence Rules

  	
  9.05

  
	
  Employment
  Records Conclusive

  	
  9.06

  
	
   

  	
   

  
	
  ARTICLE X – INVESTMENT ELECTIONS

  	
   

  
	
   

  	
   

  
	
  Investment
  Funds Established

  	
  10.01

  
	
  Election
  Procedures Established

  	
  10.02

  

 

iii

 

	
  ARTICLE XI – ADOPTION OF PLAN BY OTHER
  EMPLOYERS

  	
   

  
	
   

  	
   

  
	
  Adoption
  Procedure

  	
  11.01

  
	
  No Joint
  Venture Implied

  	
  11.02

  
	
  All Trust Assets Available
  to Pay All Benefits

  	
  11.03

  
	
  Qualification a
  Condition Precedent to Adoption and Continued Participation

  	
  11.04

  
	
   

  	
   

  
	
  ARTICLE XII – AMENDMENT AND TERMINATION

  	
   

  
	
   

  	
   

  
	
  Right to Amend and Limitations
  Thereon

  	
  12.01

  
	
  Mandatory Amendments

  	
  12.02

  
	
  Withdrawal of Employer

  	
  12.03

  
	
  Termination of Plan

  	
  12.04

  
	
  Partial or Complete Termination
  or Complete Discontinuance of Contributions

  	
  12.05

  
	
   

  	
   

  
	
  ARTICLE XIII– MISCELLANEOUS

  	
   

  
	
   

  	
   

  
	
  Plan Not an Employment
  Contract

  	
  13.01

  
	
  Benefits Provided Solely From
  Trust

  	
  13.02

  
	
  Assignments Prohibited

  	
  13.03

  
	
  Requirements Upon
  Merger or Consolidation of Plans

  	
  13.04

  
	
  Gender of Words Used

  	
  13.05

  
	
  Severability

  	
  13.06

  
	
  Reemployed Veterans

  	
  13.07

  
	
  Limitations on Legal
  Actions

  	
  13.08

  
	
  Governing Law

  	
  13.09

  
	
   

  	
   

  
	
  APPENDIX A - LIMITATIONS ON CONTRIBUTIONS
  AND ALLOCATIONS

  	
   

  
	
   

  	
   

  
	
  APPENDIX B - TOP-HEAVY REQUIREMENTS

  	
   

  
	
   

  	
   

  
	
  APPENDIX C – ADMINISTRATION OF THE PLAN

  	
   

  
	
   

  	
   

  
	
  APPENDIX D – FUNDING

  	
   

  

 

iv

 

ARTICLE I

 

DEFINITIONS

 

The words and phrases defined in this Article shall
have the meaning set out in the definition unless the context in which the word
or phrase appears reasonably requires a broader, narrower or different meaning.

 

1.01         “Account” means all ledger accounts pertaining to a
Participant or former Participant which are maintained by the Committee to
reflect the Participant’s or former Participant’s interest in the Trust.  The Committee shall establish the following
Accounts and any additional Accounts that the Committee considers necessary to
reflect the entire interest of the Participant or former Participant in the
Trust.  Each of the Accounts listed
below and any additional Accounts established by the Committee shall reflect
the Contributions or amounts transferred to the Trust, if any, and the
appreciation or depreciation of the assets in the Trust and the income earned
or loss incurred on the assets in the Trust attributable to the Contributions
and/or other amounts transferred to the Account.

 

(a)           Salary
Deferral Contribution Account – the Participant’s or former
Participant’s before-tax contributions, if any, made pursuant to Section 3.01.

 

(b)           Catch-up Salary Deferral Account – the
Participant’s or former Participant’s before-tax contributions, if any, made
pursuant to Section 3.02.

 

(c)           After-Tax Contribution Account – the
Participant’s or former Participant’s after-tax contributions, if any, made
pursuant to Section 3.03.

 

(d)           Matching
Contribution Account – the Employer’s matching contributions, if
any, made pursuant to Section 3.04.

 

(e)           Supplemental
Contribution Account – the Employer’s contributions, if any, made
pursuant to Section 3.05.

 

(f)            QNEC Account
– the Employer’s contributions, known as “qualified nonelective employer
contributions”, made as a means of passing the actual deferral percentage test
set forth in section 401(k) of the Code or the actual contribution percentage
test set forth in section 401(m) of the Code.

 

(g)           Rollover
Account –  funds transferred
from another qualified plan or individual retirement account for the benefit of
a Participant or former Participant.

 

1.02         “Active Service” means the Periods
of Service which are counted for eligibility and vesting purposes as calculated
under Article IX.

 

1.03         “Affiliated Employer” means the Employer
and any employer which is a member of the same controlled group of corporations
within the meaning of section 414(b) of the Code or which is a trade or
business (whether or not incorporated) which is under common control (within
the meaning of section 414(c) of the Code), which is a member of an
affiliated service

 

I-1

 

group (within the meaning of section 414(m) of the Code) with the
Employer, or which is required to be aggregated with the Employer under section
414(o) of the Code.  For purposes of the
limitation on allocations contained in Appendix A, the definition of Affiliated
Employer is modified by substituting the phrase “more than 50 percent” in place
of the phrase “at least 80 percent” each place the latter phrase appears in
section 1563(a)(1) of the Code.

 

1.04         “Annual Compensation” means the
Employee’s wages from the Affiliated Employers as defined in section 3401(a) of
the Code for purposes of federal income tax withholding at the source (but
determined without regard to any rules that limit the remuneration included in
wages based on the nature or location of the employment or the services
performed) modified by including elective contributions under a cafeteria plan
maintained by an Affiliated Employer that are excludable from the Employee’s
gross income pursuant to section 125 of the Code, elective contributions under
a qualified transportation fringe benefit plan maintained by an Affiliated
Employer that are excludable from the Employee’s gross income pursuant to section 132(f)(4)
of the Code and elective contributions made on behalf of the Employee to any
plan maintained by an Affiliated Employer that is qualified under or governed
by section 401(k), 408(k), or 403(b) of the Code.  Except for purposes of Section A.4.1 of Appendix A of the Plan,
Annual Compensation in excess of $200,000.00 (as adjusted by the Secretary of
Treasury for increases in the cost of living) will be disregarded.  If the Plan Year is ever less than twelve
months, the $200,000.00 limitation (as adjusted by the Secretary of Treasury
for increases in the cost of living) will be prorated by multiplying the
limitation by a fraction, the numerator of which is the number of months in the
Plan Year, and the denominator of which is twelve (12).

 

1.05         “Annuity Starting Date” means
the first day of the first period for which an amount is payable as an annuity,
or in the case of a benefit payable in the form of a lump sum, the date on
which the Trustee disburses the lump sum.

 

1.06         “Applicable Distribution Period”
means:

 

(a)           Distributions During the Participant’s or former
Participant’s Life.  For
Distribution Calendar Years commencing on or after January 1, 2003, up to and
including the Distribution Calendar Year that includes the Participant’s or
former Participant’s death, the “Applicable Distribution Period” is the
Participant’s or former Participant’s life expectancy determined using the
Uniform Lifetime Table in Regulation section 1.401(a)(9)-9 for his age as of
his birthday in the relevant Distribution Calendar Year.  However, if the Participant’s or former
Participant’s sole Section 401(a)(9) Beneficiary for the entire Distribution
Calendar Year is his Spouse, for distributions during his lifetime, his “Applicable
Distribution Period” shall not be less than the joint life
expectancy of him and his Spouse using his and his Spouse’s attained ages as of
his and his Spouse’s birthdays in the Distribution Calendar Year.

 

(b)           Distributions after the Participant’s or former
Participant’s Death. 
Effective for Distribution Calendar Years commencing on or after January, 1,
2003, if a Participant or former Participant dies on or after his Required
Beginning Date, the “Applicable Distribution Period” for
Distribution Calendar Years after the Distribution Calendar Year containing the
Participant’s or former Participant’s date of death is the longer of the
remaining life expectancy of his Section 401(a)(9) Beneficiary (if any)
determined in accordance with the Final Section 401(a)(9) Regulations
(calculated by using the age of the Section 401(a)(9) Beneficiary

 

I-2

 

in the year following the year of the former
Participant’s death, reduced by one for each subsequent year) or the remaining
life expectancy of the  former Participant
determined in accordance with the Final Section 401(a)(9) Regulations
(calculated by using the age of the former Participant in the year of death,
reduced by one or each subsequent year). 
However, if the former Participant’s surviving Spouse is the former
Participant’s sole Section 401(a)(9) Beneficiary, the remaining life expectancy
of the surviving Spouse is calculated for each Distribution Calendar Year after
the year of the former Participant’s death using the surviving Spouse’s age as
the surviving Spouse’s birthday in that year; and for distribution calendar
years after the year of the surviving Spouse’s death, the remaining life
expectancy of the surviving Spouse is calculated using the age of the surviving
Spouse as of the surviving Spouse’s birthday in the calendar year of the
surviving Spouse’s death, reduced by one for each subsequent calendar year.

 

(c)           Distribution Calendar Years Commencing Before January
1, 2003.  For Distribution
Calendar Years commencing before January 1, 2003, “Applicable Distribution Period”
means the period of time computed in accordance with the applicable rules
specified in Section 5.06(g).

 

1.07         “Beneficiary” or “Beneficiaries” means the person or
persons, or the trust or trusts created for the benefit of a natural person or
persons or the Participant’s or former Participant’s estate, designated by the
Participant or former Participant to receive the benefits payable under the
Plan upon his death.

 

1.08         “Board” or “Board of Directors” means the board of directors of the
Sponsor.

 

1.09         “Catch-up Eligible Participant”
means a Participant who is age 50 or who is projected to attain the age of 50
by December 31 of the applicable Plan Year.

 

1.10         “Claimant” means a Participant,
former Participant or Beneficiary, as applicable.

 

1.11         “Code” means the Internal Revenue Code of 1986, as amended
from time to time.

 

1.12         “Committee” means the committee appointed by the
Sponsor to administer the Plan.

 

1.13         “Considered Compensation”  means Annual Compensation paid to a Participant
by an Affiliated Employer for a Plan Year, reduced 
by all of the following items (even if includable in gross income): all
reimbursements or other expense allowances (such as the payment of moving
expenses or automobile mileage reimbursements), cash and noncash fringe
benefits (such as the use of an automobile owned by the Employer, club
memberships, tax gross-ups, attendance and safety awards, fitness
reimbursements, housing allowances, financial planning benefits and Beneflex
dollars), deferred compensation (such as amounts realized upon the exercise of
a nonqualified stock option or upon the premature disposition of an incentive
stock option, pay for accrued vacation upon Separation From Service, amounts
realized when restricted property or other property held by a Participant
either becomes freely transferable or no longer subject to a substantial risk
of forfeiture under section 83 of the Code), and welfare benefits (such as
severance pay).  An Employee’s
Considered Compensation paid to him during any period in which he is not
eligible to participate in the Plan under Article II shall be

 

I-3

 

disregarded.  Considered
Compensation in excess of $200,000.00 (as adjusted by the Secretary of Treasury
for increases in the cost of living) will be disregarded.  If the Plan Year is ever less than twelve
months, the $200,000.00 limitation (as adjusted by the Secretary of Treasury
for increases in the cost of living) will be prorated by multiplying the limitation
by a fraction, the numerator of which is the number of months in the Plan Year,
and the denominator of which is twelve (12).

 

1.14         “Contribution” means the total
amount of contributions made under the terms of the Plan.  Each specific type of Contribution shall be
designated by the type of contribution made as follows:

 

(a)           Salary
Deferral Contribution – a before-tax contribution made by the
Employer pursuant to Section 3.01 and the Employee’s salary deferral agreement.

 

(b)           Catch-up Salary Deferral Contribution – a
contribution made by the Employer pursuant to Section 3.02 and the
Participant’s salary deferral agreement.

 

(c)           After-Tax Contribution – an after-tax
contribution made by the Employee.

 

(d)           Matching
Contribution – a contribution made by the Employer pursuant to
Section 3.04.

 

(e)           Supplemental
Contribution – a contribution made by the Employer pursuant to
Section 3.05.

 

(f)            QNEC
– an extraordinary contribution, known as a “qualified nonelective employer
contribution”,  made by the Employer as
a means of passing the actual deferral percentage test set forth in section
401(k) of the Code or the actual contribution percentage test set forth in
section 401(m) of the Code.

 

(g)           Rollover
Contribution – a contribution made by a Participant which consists
of any part of an eligible rollover distribution (as defined in section 402 of
the Code) from a qualified employee trust described in section 401(a) of the
Code.

 

1.15         “Direct Rollover” means a payment by
the Plan to the Eligible Retirement Plan specified by the Distributee.

 

1.16         “Disability”
means a mental or physical disability which, in the opinion of a physician
selected by the Committee, shall prevent the Participant or former Participant
from earning a reasonable livelihood with any Affiliated Employer and which can
be expected to result in death or which has lasted or can be expected to last
for a continuous period of not less than 12 months and which: (a) was not
contracted, suffered or incurred while the Participant or former Participant
was engaged in, or did not result from having engaged in, a felonious criminal
enterprise; (b) did not result from alcoholism or addiction to narcotics; and
(c) did not result from an injury incurred while a member of the Armed Forces
of the United States for which the Participant or former Participant receives a
military pension.

 

I-4

 

1.17         “Distributee” means an Employee
or former Employee.  In addition, the
Employee’s or former Employee’s surviving Spouse and the Employee’s or former
Employee’s Spouse or former Spouse who is the alternate payee under a Qualified
Domestic Relations Order, are Distributees with regard to the interest of the
Spouse or former Spouse.

 

1.18         “Distribution Calendar Year”
A calendar year for which a minimum distribution is required to be made to a
Participant or former Participant under section 401(a)(9) of the Code and
Department of Treasury Regulations thereunder. 
If a Participant’s or former Participant’s Required Beginning Date is April
1 of the calendar year following the calendar year in which he attains age 701⁄2,
his first Distribution Calendar Year is the calendar year in which he attains
age 701⁄2.  If a Participant’s or former
Participant’s Required Beginning Date is April 1 of the calendar year following
the calendar year in which he incurs a Separation From Service, his first
Distribution Calendar Year is the calendar year in which he incurs a Separation
From Service.

 

1.19         “Eligible Employee” means
an Employee who is classified by the Employer as (1) working at the Sponsor’s
Corporate Office in Houston, Texas; (2) working at or for the Sponsor’s
MACSTEEL group office in Jackson, Michigan and compensated on a salaried basis;
(3) working at or for the Sponsor’s MACSTEEL operating unit in Jackson,
Michigan and compensated on a salaried basis; (4) working at or for the
Sponsor’s MACSTEEL operating unit in Fort Smith, Arkansas and compensated on a
salaried basis; or (5) working at or for the Sponsor’s MACSTEEL Heat Treating
operating unit in Huntington, Indiana.

 

1.20         “Eligible Retirement Plan” means
(a) an individual retirement account described in section 408(a) of the Code,
(b) an individual retirement annuity described in section 408(b) of the Code
(other than an endowment contract), (c) an annuity plan described in section
403(a) of the Code, (d) a qualified plan described in section 401(a) of the
Code that is a defined contribution plan that accepts the Distributee’s
Eligible Rollover Distribution, (e) an eligible deferred compensation plan
described in section 457(b) of the Code that is maintained by an eligible
employer described in section 457(e)(1)(A) of the Code but only if the plan
agrees to separately account for amounts rolled into such plan, or (f) an
annuity contract described in section 403(b) of the Code.

 

1.21         “Eligible Rollover Distribution”
means any distribution of all or any portion of the balance to the credit of
the Distributee, except that an Eligible Rollover Distribution does not
include:  (a) any distribution that is
one of a series of substantially equal periodic payments (not less frequently
than annually) made for the life (or life expectancy) of the Distributee or the
joint lives (or joint life expectancies) of the Distributee and the
Distributee’s Beneficiary, or for a specified period of ten years or more; (b)
any distribution to the extent the distribution is required under section
401(a)(9) of the Code; (c) the portion of any distribution that is not
includable in gross income (determined without regard to the exclusion for net
unrealized appreciation with respect to employer securities) unless the
Eligible Retirement Plan to which the distribution is transferred (1) agrees to
separately account for amounts so transferred, including separately accounting
for the portion of such distribution which is not includable in gross income or
(2) is an individual retirement account described in section 408(a) of the Code
or an individual retirement annuity described in section 408(b) of the Code
(other than an endowment contract); and, (d) a distribution from any of the
Participant’s Accounts due to a financial hardship of the Participant.

 

I-5

 

1.22         “Employee” means, except as
otherwise specified in this Section, all common law employees of an Affiliated
Employer and all Leased Employees.

 

1.23         “Employer” or “Employers”
means the Sponsor and any other business organization that adopts the Plan.

 

1.24         “Entry Date” means the first day
of each calendar quarter, January 1, April 1, July 1, and October 1.

 

1.25         “ERISA” means the Employee Retirement
Income Security Act of 1974, as amended from time to time.

 

1.26         “Final Section 401(a)(9) Regulations”
means the final Department of Treasury Regulations issued under section 401(a)(9)
of the Code which were published in the Federal Register on April 17, 2002.

 

1.27         “Five Percent Owner” means
an Employee who is a five percent owner as defined in section 416(i) of the
Code.

 

1.28         “Forfeitable Interest”
means a Participant’s or former Participant’s nonforfeitable interest in
amounts credited to his Account determined in accordance with Article VII.

 

1.29         “Highly Compensated Employee”
means an Employee or an Affiliated Employer who, during the Plan Year or the
preceding Plan Year, (a) was at any time a Five Percent Owner at any time
during the Plan Year or the preceding Plan Year or (b) had Annual
Compensation from the Affiliated Employers in excess of $80,000.00 (as adjusted
from time to time by the Secretary of the Treasury) for the preceding Plan
Year.

 

1.30         “Hour of Service” means each
hour that an Employee is paid or entitled to payment by an Affiliated Employer
for the performance of duties.

 

1.31         “Leased Employee” means any
person who (a) is not a common law employee of an Affiliated Employer,
(b) pursuant to an agreement between an Affiliated Employer and any other
person, has performed services for an Affiliated Employer (or for an Affiliated
Employer and related persons determined in accordance with section 414(n)(6) of
the Code) on a substantially full–time basis for a period of at least one
year and (c) performs the services under primary direction and control of
the recipient.

 

1.32         “Maternity or
Paternity Absence” means a period in which an
Employee is absent from work (a) by reason of the pregnancy of the Employee,
(b) by reason of the birth of a child of the Employee, (c) by reason of the
placement of a child with the Employee in connection with the adoption of the
child by the Employee, or (d) for purposes of caring for such child for a
period immediately following such birth or placement for adoption.

 

1.33         “Nonforfeitable Interest” means
a Participant’s or former Participant’s nonforfeitable interest in amounts
credited to his Account determined in accordance with Article VII.

 

I-6

 

1.34         “Non–Highly Compensated Employee”
means an Employee who is not a Highly Compensated Employee.

 

1.35         “Participant”
means an Employee who is eligible to participate in the Plan under the provisions
of Article II.

 

1.36         “Period of Service” means a
period of employment with an Affiliated Employer which commences on the later
of (1) April 1, 1986 or (2) the day on which an Employee performs his initial
Hour of Service or performs his initial Hour of Service after he Severs
Service, whichever is applicable, and ends on the date the Employee
subsequently Severs Service.

 

1.37         “Period of Severance”
means the period of time commencing on the Employee’s Severance From Service
Date and ending on the date the Employee subsequently performs an Hour of
Service.

 

1.38         “Plan” means the Quanex Corporation
Employee Savings Plan, as amended from time to time.

 

1.39         “Plan Year” means the calendar
year.

 

1.40         “Qualified Domestic Relations
Order” means a domestic relations order which the Committee
has determined constitutes a qualified domestic relations order within the
meaning of section 414(p) of the Code.

 

1.41         “Regulation” means the Department
of Treasury regulation specified, as it may be changed from time to time.

 

1.42         “Required Beginning Date”
means:

 

(a)           in the case of an individual who is
not a Five Percent Owner in the Plan Year that ends in the calendar year in
which he attains age 701⁄2, the Required Beginning Date is April 1 of the
calendar year following the later of (1) the calendar year in which the
individual attains age 701⁄2, or (2) the calendar year in which the
individual incurs a Separation From Service;

 

(b)           in the case of an individual who is a
Five Percent Owner in the Plan Year that ends in the calendar year in which he
attains age 701⁄2, the Required Beginning Date is April 1 of the calendar
year following the calendar year in which he attains age 701⁄2; and

 

(c)           notwithstanding subsection (a), in
the case of an individual who attained age 701⁄2 prior to January 1, 2001, the
Required Beginning Date is April 1 of the calendar year following the
calendar year in which the individual attained age 701⁄2.

 

1.43         “Retirement Age” means age 65.

 

1.44         “Rollover Contribution”
means the amount contributed by a Participant of the Plan which consists of any
part of an Eligible Rollover Distribution from a qualified employee

 

I-7

 

trust described in section 401(a) of the Code other than an amount
that is not includable in the Participant’s gross income.

 

1.45         “Section 401(a)(9) Beneficiary”
means an individual who is a Participant’s or former Participant’s Beneficiary
on the date of the Participant’s or former Participant’s death and (unless the
Beneficiary dies after the date of the Participant’s or former Participant’s
death and before September 30 of the following calendar year without
disclaiming benefits under the Plan) who remains a Beneficiary as of September
30 of the calendar year following the calendar year of the Participant’s or
former Participant’s death.  If the
Participant’s or former Participant’s Beneficiary is a trust, an individual
beneficiary of the trust may be a Section 401(a)(9) Beneficiary of the
Participant or former Participant if the requirements of Regulation Section
1.401(a)(9)-4 are satisfied

 

1.46         “Separation From Service”
means an individual’s termination of employment with an Affiliated Employer without
commencing or continuing employment with any other Affiliated Employer.

 

1.47         “Severance From Service Date”
means the earlier of the date of the Employee’s Separation From Service, or the
first anniversary of the date on which the Employee is absent from service
(with or without pay) for any reason other than his Separation From Service or
a Maternity or Paternity Absence, such as vacation, holiday, sickness, or leave
of absence.  The Severance From Service
Date of an Employee who is absent beyond the first anniversary of his first day
of absence by reason of a Maternity or Paternity Absence is the second
anniversary of the first day of the absence.

 

1.48         “Severs Service” means the
occurrence of a Participant’s or former Participant’s Severance From Service
Date.

 

1.49         “Sponsor” means Quanex Corporation,
a Delaware corporation.

 

1.50         “Spouse” means the person to whom the
Participant or former Participant is married under applicable local law.  In addition, to the extent provided in a
Qualified Domestic Relations Order, a surviving former spouse of a Participant
or former Participant will be treated as the Spouse of the Participant or
former Participant, and to the same extent any current spouse of the
Participant or former Participant will not be treated as a Spouse of the
Participant or former Participant. For purposes of Section 5.06, a former
Spouse to whom all or a portion of a Participant’s or former Participant’s Plan
benefit is payable under a Qualified Domestic Order shall, to that extent, be
treated as a Spouse or surviving Spouse regardless of whether the Qualified
Domestic Relations Order specifically provides that the former Spouse is to be
treated as the Spouse for purposes of Sections 401(a)(11) and 417 of the Code.

 

1.51         “Sponsor Stock” means the
common stock of the Sponsor or such other publicly-traded stock of an
Affiliated Employer as meets the requirements of section 407(d)(5) of ERISA
with respect to the Plan.

 

1.52         “Trust” means the trust estate created
to fund the Plan.

 

I-8

 

1.53         “Trustee” means collectively one or
more persons or corporations with trust powers which have been appointed by the
initial Sponsor and have accepted the duties of Trustee and any successor
appointed by the Sponsor.

 

1.54         “Valuation Date” means each
business day of the Plan Year.

 

I-9

 

ARTICLE II

ELIGIBILITY

 

2.01         Eligibility
Requirements.  Each
Eligible Employee shall be eligible to participate in the Plan beginning on the
Entry Date that occurs with or next follows the date on which the Eligible
Employee completes 90 days of Active Service. 
However, an Employee who is included in a unit of Employees covered by a
collective bargaining agreement between the Employees’ representative and the
Employer shall be excluded, even if he has met the requirements for
eligibility, if there has been good faith bargaining between the Employer and
the Employees’ representative pertaining to retirement benefits and the
agreement does not require the Employer to include such Employees in the Plan.  In addition, a Leased Employee shall not be
eligible to participate in the Plan unless the Plan’s qualified status is
dependent upon coverage of the Leased Employee.  An Employee who is a nonresident alien (within the meaning of
section 7701(b) of the Code) and receives no earned income (within the meaning
of section 911(d)(2) of the Code) from any Affiliated Employer that
constitutes income from sources within the United States (within the meaning of
section 861(a)(3) of the Code) is not eligible to participate in the
Plan.  An Employee who is a nonresident
alien (within the meaning of section 7701(b) of the Code) and who does receive
earned income (within the meaning of section 911(d)(2) of the Code) from any
Affiliated Employer that constitutes income from sources within the United
States (within the meaning of section 861(a)(3) of the Code) all of which is
exempt from United States income tax under an applicable tax convention is not
eligible to participate in the Plan. 
During any period in which an individual is classified by an Employer as
an independent contractor with respect to such Employer, the individual is not
eligible to participate in the Plan (even if he is subsequently reclassified by
the Internal Revenue Service as a common law employee of the Employer and the
Employer acquiesces to the reclassification). 
Finally, an Employee who is employed outside the United States is not
eligible to participate in the Plan unless the Committee elects to permit him
to participate in the Plan.

 

2.02         Early Participation for Rollover Purposes.  An Employee who satisfies the eligibility
requirements specified in Section 2.01 other than the service requirement shall
be eligible to make Rollover Contributions to the Plan on the Entry Date next
following (not coincident with) the date on which he completes an Hour of
Service.

 

2.03         Eligibility
Upon Reemployment. 
If an Employee incurs a Separation From Service prior to the date he
initially begins participating in the Plan, he shall be eligible to begin
participation in the Plan on the later of the date he would have become a
Participant if he did not incur a Separation From Service or the date on which
he performs an Hour of Service after he incurs a Separation From Service.  Subject to Section 2.04, once an Employee
becomes a Participant, his eligibility to participate in the Plan shall
continue until he Severs Service.

 

2.04         Cessation of
Participation.  An
individual who has become a Participant will cease to be a Participant on the
earliest of the date on which he (a) Severs Service, (b) is transferred from
the employ of an Employer to the employ of an Affiliated Employer that has not
adopted the Plan, (c) becomes included in a unit of employees covered by a
collective bargaining agreement that does not require coverage of those employees
under the Plan, (d) becomes a Leased Employee, or (e) becomes included in
another classification of Employees who, under

 

II-1

 

the terms of the Plan, are not eligible to participate.  Under these circumstances, the Participant’s
Account becomes frozen; he cannot contribute to the Plan or share in the
allocation of any Contributions for the frozen period.  However, his Accounts shall continue to
share in any Plan income allocable to his Accounts during the frozen period of
time.

 

2.05         Recommencement
of Participation.  A
former Participant will again become a Participant on the day on which he again
becomes included in a classification of Employees that, under the terms of the
Plan, is eligible to participate.

 

II-2

 

ARTICLE III

CONTRIBUTIONS

 

3.01         Salary
Deferral Contributions. 
Each Employer shall make a Salary Deferral Contribution in an amount
equal to the amount by which the Considered Compensation of its Employees who
are Participants was reduced on a pre–tax basis pursuant to salary
deferral agreements (excluding amounts of Considered Compensation deferred
pursuant to Section 3.02 that are properly characterized as Catch-up Salary
Deferral Contributions).  Any such
salary deferral agreement shall be an agreement in a form satisfactory to the
Committee to prospectively receive Considered Compensation from the Employer in
a reduced amount and to have the Employer contribute an amount equal to the
amount of the reduction to the Trust on account of the Participant.  Any such salary deferral agreement shall be
revocable in accordance with its terms, provided that no revocation shall be
retroactive or permit payment to the Participant of the amount required to be
contributed to the Trust.  A
Participant’s or former Participant’s right to benefits attributable to Salary
Deferral Contributions made to the Plan on his behalf shall be nonforfeitable.

 

The maximum amount a Participant may elect to reduce
his Considered Compensation under his salary deferral agreement and have
contributed to the Plan on a pre–tax basis shall be determined by the
Committee, in its sole discretion from time to time.  The election to have Salary Deferral Contributions made, the
ability to change the rate of Salary Deferral Contributions, the right to
suspend Salary Deferral Contributions, and the manner of commencing new Salary
Deferral Contributions shall be permitted under any uniform method determined
by the Committee from time to time.

 

3.02         Catch-up Salary Deferral Contributions.  The Employer shall make a Catch-up Salary
Deferral Contribution in an amount equal to the amounts by which its Catch-up
Eligible Participants’ Considered Compensation was reduced as a result of
salary deferral agreements authorizing Catch-up Salary Deferral Contributions
(to the extent that their deferrals are properly characterized as Catch-up
Salary Deferral Contributions).  Any
such salary deferral agreement shall be an agreement in a form satisfactory to the
Committee to prospectively receive Considered Compensation from the Employer in
a reduced amount and to have the Employer contribute an amount equal to the
amount of the reduction to the Trust on behalf of the Catch-up Eligible
Participant.  Further, any such salary
deferral agreement shall be revocable in accordance with its terms, provided
that no revocation shall be retroactive or permit payment to the Participant of
the amount required to be contributed to the Trust.  A Participant’s or former Participant’s right to benefits derived
from Catch-up Salary Deferral Contributions made to the Plan on his behalf
shall be nonforfeitable.

 

Catch-up Salary Deferral Contributions on behalf of a
Catch-up Eligible Participant shall be permitted to the extent that the
Catch-up Salary Deferral Contributions do not exceed the lesser of (a) the
“applicable dollar amount” under section 414(v) of the Code for the Plan Year
(as adjusted from time to time by the Secretary of Treasury), or (b) an amount
equal to the Participant’s Annual Compensation for the Plan Year minus the
Catch-up Eligible Participant’s Salary Deferral Contributions for the Plan
Year.

 

III-1

 

A final determination as to whether amounts deferred
under the Plan by a Catch-up Eligible Participant are properly characterized as
Salary Deferral Contributions or Catch-up Salary Deferral Contributions for a
Plan Year shall be made as of the end of the Plan Year.  To the extent that amounts deferred under
the Plan on a pre-tax basis at the election of a Catch-up Eligible Participant
exceed the least of (a) the lowest statutory limit on Salary Deferral
Contributions (including limits imposed under sections 401(a)(30) and 415 of
the Code), (b) the maximum limitation on Salary Deferral Contributions, if any,
imposed by the Committee pursuant to Section 3.01, or (c) the highest amount of
Salary Deferral Contributions on behalf of the Catch-up Eligible Participant
that may be retained in the Plan under the rules of section 401(k)(8)(C) of the
Code, the amounts deferred shall be characterized as Catch-up Salary Deferral
Contributions.  Any amounts deferred
under the Plan  on a pre-tax basis at
the election of a Catch-up Eligible Participant that are not properly characterized
as Catch-up Salary Deferral Contributions pursuant to the rules of the
preceding sentence shall be characterized as Salary Deferral Contributions for
all purposes under the Plan.

 

3.03         After–Tax
Contributions. 
To the extent permitted by the Committee, each Participant may make
voluntary after–tax contributions to the Plan through payroll deductions
or in a lump sum in cash.  A
Participant’s or former Participant’s right to benefits attributable to After–Tax
Contributions made to the Plan on his behalf shall be nonforfeitable.

 

The maximum amount a
Participant may elect to contribute to the Plan on an after–tax basis
shall be determined by the Committee from time to time.  The election to have After–Tax
Contributions made, the ability to change the rate of After–Tax
Contributions, the right to suspend After–Tax Contributions, and the
manner of commencing new After–Tax Contributions shall be permitted under
any uniform method determined by the Committee from time to time.

 

3.04         Matching
Contributions.  Each Employer will make a Matching Contribution on behalf of each
of its Employees who is a Participant in an amount equal to 50 percent of
the first five percent of such Participant’s Considered Compensation contributed
to the Plan pursuant to such Participant’s Salary Deferral Contributions and
After–Tax Contributions for the Plan Year.

 

3.05         Supplemental
Contributions. 
Each Employer may contribute for a Plan Year a Supplemental Contribution
to be allocated among Participants in such amount, if any, as shall be
determined by the Employer.   The rate
of the Supplemental  Contribution need
not be uniform among all divisions of the Employer.

 

3.06         Rollover
Contributions and Plan–to–Plan Transfers.  The Committee may permit Rollover
Contributions by Participants and/or direct transfers to or from another
qualified plan on behalf of Participants from time to time.  If Rollover Contributions and/or direct
transfers to or from another qualified plan are permitted, the opportunity to
make those contributions and/or direct transfers must be made available to
Participants on a nondiscriminatory basis. 
For this purpose only, all Employees who are included in a
classification of Employees who are eligible to participate in the Plan shall
be considered to be Participants of the Plan even though they may not have met
the Active Service requirements for eligibility.  However, they shall not be entitled to elect to have Salary
Deferral Contributions made or to share in Employer Contributions or
forfeitures unless and until they have met the requirements for eligibility,
contributions and allocations.  A
Rollover Contribution shall not be accepted unless it is directly

 

III-2

 

rolled over to the Plan in a rollover described in
section 401(a)(31) of the Code.  A
Participant shall not be permitted to make a Rollover Contribution if the
property he intends to contribute is for any reason unacceptable to the
Trustee.  A Participant’s or former
Participant’s right to benefits attributable to his Rollover Contributions made
to the Plan shall be nonforfeitable.

 

3.07         QNECS - Extraordinary Employer
Contributions.  Any Employer
may make a QNEC in such amount, if any, as shall be determined by it.  A Participant’s or former Participant’s
right to benefits attributable to QNECs made to the Plan on his behalf shall be
nonforfeitable.  In no event will QNECs
be distributed before Salary Deferral Contributions may be distributed from the
Plan.

 

3.08         Restoration
Contributions.  The
Employer shall, for each Plan Year, make a restoration contribution in an
amount equal to the sum of (a) such amount, if any, as shall be necessary to
fully restore all Matching Contribution Accounts and Supplemental Contribution
Accounts required to be restored pursuant to the provisions of Section 8.02
after the application of all forfeitures available for such restoration; plus
(b) an amount equal in value to the value of forfeited benefits required to be
restored under Section 8.03, after the application of all forfeitures available
for such restoration.

 

3.09         Restorative
Payments.  If due to an
oversight or inadvertent error an Employer fails to make a Contribution to the
Plan on behalf of a Participant or former Participant, as soon as
administratively practicable following the Employer’s discovery of the error,
the Employer shall make a restorative payment to the Plan on behalf of the
Participant or former Participant in an amount equal to the amount of required
Contributions the Employer should have made to the Plan on behalf of the
Participant or former Participant plus interest thereon (both determined in a
manner that is consistent with then current guidance from the Department of
Treasury concerning such restorative payments) after the application of forfeitures
available for such restoration.

 

3.10         Nondeductible Contributions Not Required.  Notwithstanding any other provision of the
Plan, no Employer shall be required to make any contribution that would be a
“nondeductible contribution” within the meaning of section 4972 of the Code.

 

3.11         Form of
Payment of Contributions.  Contributions
may be paid to the Trustee either in cash or in qualifying employer securities
(as such term is defined in section 407(d) of ERISA) or any combination
thereof, provided that payment may not be made in any form constituting a
prohibited transaction under section 4975 of the Code or section 406 of ERISA.

 

3.12         Deadline for Payment of Contributions.  Salary Deferral Contributions, Catch-up
Salary Deferral Contributions, and After-Tax Contributions shall be paid to the
Trustee in installments.  The
installment for each payroll period shall be paid as soon as administratively
feasible.  The Matching Contributions,
Supplemental Contributions and QNECs for a Plan Year shall be paid to the
Trustee in one or more installments, as the Employer may from time to time
determine; provided, however, that such contributions may not be paid later
than the time prescribed by law (including extensions thereof) for filing the
Employer’s income tax return for its taxable year ending with or within such
Plan Year.

 

III-3

 

3.13         Return of Contributions for Mistake,
Disqualification or Disallowance of Deduction.  Subject to the limitations of
section 415 of the Code, the assets of the Trust shall not revert to any
Employer or be used for any purpose other than the exclusive benefit of
Participants, former Participants and their Beneficiaries and the reasonable
expenses of administering the Plan except:

 

(a)           any
Employer Contribution made because of a mistake of fact may be repaid to the
Employer within one year after the payment of the Contribution; and

 

(b)           all
Employer Contributions are conditioned upon their deductibility under
section 404 of the Code; therefore, to the extent the deduction is
disallowed, the Contributions may be repaid to the Employer within one year
after the disallowance.

 

The Employer has the exclusive right to determine if a
Contribution or any part of it is to be repaid or is to remain as a part of the
Trust except that the amount to be repaid is limited, if the Contribution is
made by mistake of fact or if the deduction for the Contribution is disallowed,
to the excess of the amount contributed over the amount that would have been contributed
had there been no mistake or over the amount disallowed.  Earnings which are attributable to any
excess contribution cannot be repaid. 
Losses attributable to an excess contribution must reduce the amount
that may be repaid.  All repayments of
Contributions made due to a mistake of fact or with respect to which a
deduction is disallowed are limited so that the balance in a Participant’s or
former Participant’s Account cannot be reduced to less than the balance that
would have been in the Participant’s or former Participant’s Account had the
mistaken amount or the amount disallowed never been contributed.

 

III-4

 

ARTICLE IV

 

ALLOCATION AND VALUATION OF ACCOUNTS

 

4.01         Information Statements from Employer.  Upon request by the Committee,
the Employer shall provide the Committee with a schedule setting forth the
amount of its Salary Deferral Contribution, Supplemental Contribution, QNEC,
and restoration contribution; the names of its Participants, the number of
years of Active Service of each of its Participants and former Participants,
the amount of Considered Compensation and Annual Compensation paid to each
Participant and former Participant, and the amount of Considered Compensation
and Annual Compensation paid to all its Participants and former
Participants.  Such schedules shall be
conclusive evidence of such facts.

 

4.02         Allocation of Salary Deferral Contributions.  The Committee or its designee shall allocate
the Salary Deferral Contribution among the Participants by allocating to
each  Participant the amount by which
his Considered Compensation was reduced pursuant to a salary deferral agreement
(as described in Section 3.01) and shall credit each such Participant’s
share to his Salary Deferral Contribution Account.

 

4.03         Allocation
of Catch-up Salary Deferral Contribution.  The Committee shall allocate the Catch-up
Salary Deferral Contribution among the Participants by allocating to each  Participant the amount by which his
Considered Compensation was reduced pursuant to a salary deferral agreement
under Section 3.02 and shall credit each such Participant’s share to his
Catch-up Salary Deferral Contribution Account.

 

4.04         Allocation
of After-Tax Contributions.  The Committee or its designee shall allocate
After-Tax Contributions made by a Participant in the amount of such After-Tax
Contributions and shall credit such After-Tax Contributions to the
Participant’s After-Tax Contribution Account.

 

4.05         Allocation
of Matching Contributions.  The Committee or its designee shall separately allocate the
Matching Contribution made by an Employer among the Employer’s Participants in
the proportion which the matched Salary Deferral Contributions matched Catch-up
Salary Deferral Contributions, and matched After–Tax Contributions of
each such Participant bear to the total matched Salary Deferral Contributions,
matched Catch-up Salary Deferral Contributions, and matched After–Tax
Contributions of all such Participants. 
Each Participant’s proportionate share shall be credited to his Matching
Contribution Account.

 

4.06         Allocation
of Supplemental Contributions.  For each Plan Year, the Committee or its designee shall allocate
the Supplemental Contribution made by an Employer among the Participants who
are employed by the Employer during the Plan Year, based upon each such
Participant’s Considered  Compensation
paid by the Employer as compared to the Considered Compensation for all such
Participants employed by the Employer and eligible for the allocation.

 

4.07         Allocation
of QNECs.  The  Committee or its designee shall separately
allocate the QNEC among the Non–Highly Compensated Employees who are
Participants based upon

 

IV-1

 

each such Participant’s Considered Compensation as compared to the
Considered Compensation of all such Participants.

 

4.08         Allocation
of Forfeitures.  At the
time a forfeiture occurs pursuant to Article VIII, Section A.3.3 of Appendix A,
the amount forfeited will first be used to reinstate any Account required to be
reinstated under Article VIII, and any remaining amount will be applied to
reduce the Employer’s obligation to make future Matching Contributions or
Supplemental Contributions.  However, in
no event will amounts forfeited pursuant to Section A.3.3 of Appendix A be
allocated to the Accounts of Participants whose Matching Contributions are
forfeited pursuant to Section A.3.3 of Appendix A.

 

4.09         Valuation of
Accounts.  A
Participant’s or former Participant’s Accounts shall be valued by the Trustee
at fair market value on each Valuation Date. 
The earnings and losses attributable to any asset in the Trust will be
allocated solely to the Account of the Participant or former Participant on
whose behalf the investment in the asset was made.  In determining the fair market value of the Participant’s or
former Participant’s Accounts, the Trustee shall utilize such sources of
information as it may deem reliable including, but not limited to, stock market
quotations, statistical evaluation services, newspapers of general circulation,
financial publications, advice from investment counselors or brokerage firms,
or any combination of sources which in the opinion of the Trustee will provide
the price such assets were last traded at on a registered stock exchange;
provided, however, that with respect to regulated investment company shares,
the Trustee shall rely exclusively on information provided to it by the
investment adviser to such funds.

 

4.10         No Rights Unless Otherwise Prescribed.  No allocations, adjustments, credits, or
transfers shall ever vest in any Participant or former Participant any right,
title, or interest in the Trust except at the times and upon the terms and
conditions set forth in the Plan.

 

IV-2

 

ARTICLE V

BENEFITS

 

5.01         Retirement Benefit.  Upon his Separation From Service, a
Participant or former Participant is entitled to receive his Nonforfeitable
Interest in his Account balances.

 

5.02         Death Benefit.  If a Participant or former Participant dies,
the death benefit payable to his Beneficiary shall be the Participant’s
Nonforfeitable Interest in 100 percent of the remaining amount of his Account
balances.

 

5.03         Distribution Method.  Any distribution under the Plan shall be
made in the form of a single sum in cash.

 

5.04         Immediate Payment of
Small Amount Upon Separation From Service.  Each Participant or 
former  Participant whose
Nonforfeitable Interest in his Account balance at the time of a distribution to
him on account of his Separation From Service is, in the aggregate, less than
or equal to $5,000.00, shall be paid in the form of an immediate single sum
cash payment and/or as a Direct Rollover, as elected by him under section
5.05.  However, if a Distributee who is
subject to this Section 5.04 does not furnish instructions in accordance with
Plan procedures to directly roll over his Plan benefit within 45 days after he
has been given direct rollover forms, he will be deemed to have elected to
receive an immediate lump sum cash distribution of his entire Plan
benefit.  If a Participant’s or former
Participant’s Nonforfeitable Interest in his Account balance payable upon his
Separation From Service is zero (because he has no Nonforfeitable Interest in
his Account balance), he will be deemed to receive an immediate distribution of
his entire Nonforfeitable Interest in his Account balance.

 

5.05         Direct Rollover
Option.  To the extent
required under Regulations, a Distributee has the right to direct that any
portion of his Eligible Rollover Distribution will be directly paid to an
Eligible Retirement Plan specified by him that will accept the Eligible
Rollover Distribution.

 

5.06         Required Distributions.  Notwithstanding any other provision of the
Plan, any benefit payable under the Plan shall be distributed, or commence to
be distributed, in compliance with the following provisions:

 

(a)           Required Distributions for Certain Persons Who are 701⁄2 or Older.  Unless a Participant’s or former
Participant’s entire Nonforfeitable Interest in his Plan benefit is distributed
to him in a single sum no later than his Required Beginning Date or in the form
of an annuity purchased from an insurance company, the Participant’s or former
Participant’s Nonforfeitable Interest in his Plan benefit must begin to be
distributed, not later than his Required Beginning Date, over the life of the
Participant or former Participant, or the joint lives of the Participant or
former Participant and his Section 401(a)(9) Beneficiary, or over a period not
extending beyond the life expectancy of the Participant or former Participant
or the joint and last survivor expectancy of the Participant or former
Participant and his Section 401(a)(9) Beneficiary.  The distribution required to be made on or before the
Participant’s or former Participant’s Required Beginning Date shall be the
distribution required for his first Distribution

 

V-1

 

Calendar Year. 
The minimum required distribution for other Distribution Calendar Years,
including the required minimum distribution for the Distribution Calendar Year
in which the Participant’s or former Participant’s Required Beginning Date
occurs must be made on or before December 31 of that Distribution Calendar
Year.  In the case of a benefit payable
in a form other than a single sum or an annuity purchased from an insurance
company, the amount that must be distributed for a Distribution Calendar Year
is an amount equal to the amount specified in Paragraph (b) of this Section
5.06.

 

(b)           Required Minimum Distributions.  If a Participant’s or former Participant’s
Required Beginning Date is before the date on which he incurs a Separation From
Service, the Participant or former Participant (if he is then alive) must be
paid either the entire amount credited to his Account or annual distributions
from the Plan in the amounts required under section 401(a)(9) of the Code and
Regulations thereunder commencing no later than his Required Beginning Date
until his entire interest under the Plan has been distributed under this
Article X.  The distribution required to
be made on or before the Participant’s or former Participant’s Required
Beginning Date shall be the distribution required for his first Distribution
Calendar Year.  The minimum required
distribution for other Distribution Calendar Years, including the required
minimum distribution for the Distribution Calendar Year in which the
Participant’s or former Participant’s Required Beginning Date occurs must be
made on or before December 31 of that Distribution Calendar Year.  The amount that must be distributed for a
Distribution Calendar Year is an amount equal to (1) the Participant’s or
former Participant’s Account balance as of the last Valuation Date in the
calendar year immediately preceding the Distribution Calendar Year, increased
by any contributions or forfeitures allocated and made to the Account during
such immediately preceding calendar year after the Valuation Date, and
decreased by distributions made during such immediately preceding calendar year
after the Valuation Date, divided by (2) the Participant’s or former
Participant’s Applicable Distribution Period.

 

(c)           Distribution Deadline for Death Benefit When Participant or Former
Participant Dies Before His Distributions Begin.  If a Participant or former Participant dies
before the date distribution of his Nonforfeitable Interest in his Plan benefit
begins, his entire Nonforfeitable Interest in his Plan benefit will be
distributed, or begin to be distributed, to his Section 401(a)(9) Beneficiary
no later than as follows:

 

(1)           If the Participant’s or former
Participant’s surviving Spouse is the Participant’s or former Participant’s
sole Section 401(a)(9) Beneficiary, then distributions to the surviving Spouse
will begin by December 31 of the calendar year immediately following the
calendar year in which the Participant or former Participant died, or by
December 31 of the calendar year in which the Participant or former
Participant would have attained age 70 1/2 , if later.

 

(2)           If the Participant’s or former
Participant’s surviving Spouse is not the Participant’s or former Participant’s
sole Section 401(a)(9) Beneficiary and the payment of Plan death benefits to
the Section 401(a)(9) Beneficiary will not be in the form of a single sum or a
commercial annuity, then distributions to the Section 401(a)(9) Beneficiary
will begin by December 31 of the calendar year immediately following the
calendar year in which the Participant or former Participant died.

 

V-2

 

(3)           If the Participant’s or former
Participant’s surviving Spouse is the Participant’s or former Participant’s
sole Section 401(a)(9)  Beneficiary, and
the payment of a Plan death benefit to the Section 401(a)(9) Beneficiary will
be in the form of a single sum, then the Participant’s or former Participant’s
entire Nonforfeitable Interest in his Plan benefit will be distributed by
December 31 of the calendar year containing the fifth anniversary of the
Participant’s or former Participant’s death.

 

(4)           If there is no Section 401(a)(9)
Beneficiary as of September 30 of the calendar year following the calendar
year of the Participant’s or former Participant’s death, then the Participant’s
or former Participant’s entire Nonforfeitable Interest in his Plan benefit will
be distributed by December 31 of the calendar year containing the fifth
anniversary of the Participant’s or former Participant’s death.

 

(5)           If the Participant’s or former
Participant’s surviving Spouse is the Participant’s or former Participant’s
sole Section 401(a)(9) Beneficiary and the surviving Spouse dies after the
Participant or former Participant but before distributions to the surviving
Spouse begin, this Section 5.06(c), other than Section 5.06(c)(1), will apply
as if the surviving Spouse were the Participant.

 

Unless the Participant’s
or former Participant’s interest is distributed in the form of an annuity or in
a single sum on or before the Required Beginning Date, as of the first
Distribution Calendar Year distributions will be made in accordance with
Paragraph (b) of this Section 5.06.

 

(d)           Distribution of Death Benefit When Participant or Former Participant
Dies On or After His Required Beginning Date.  If a Participant or former
Participant dies on or after his Required Beginning Date, his Plan benefit must
be distributed to his Section 401(a)(9) Beneficiary at least as rapidly as the
method of payment of minimum required distributions being used as of the date
of his death.

 

(e)           Limitations on Death Benefits.  Benefits payable under the Plan shall not be provided in any form
that would cause a Participant’s or former Participant’s death benefit to be
more than incidental. Any distribution required to satisfy the incidental
benefit requirement shall be considered a required distribution for purposes of
section 401(a)(9) of the Code.

 

(f)            Requirements in the Case of a Commercial Annuity.  If a Participant’s or former Participant’s
Nonforfeitable Interest in his Plan benefit is distributed in the form of an
annuity purchased from an insurance company, distributions under the annuity
contract will be made in accordance with the requirements of section 401(a)(9)
of the Code and Department of Treasury Regulations.

 

(g)           Compliance with Section 401(a)(9).  All distributions under the Plan will be
made in accordance with the requirements of section 401(a)(9) of the Code and
all Regulations promulgated thereunder, including, effective January 1,
2001, until January 1, 2003, Regulations that were proposed in January of 2001
but not including Regulations that were proposed prior to January of 2001; and
including, effective January 1, 2003, the Final Section 401(a)(9) Regulations,
including sections 1.401(a)(9)-1 through 1.401(a)(9)-9 of the Final

 

V-3

 

Section 401(a)(9) Regulations. 
The provisions of the Plan reflecting section 401(a)(9) of the Code
override any distribution options in the Plan inconsistent with section
401(a)(9) of the Code.

 

(h)           Compliance with Section 401(a)(9).  Unless the Participant or former Participant
otherwise elects, the payment of benefits under the Plan to the Participant or
former Participant will begin not later than the 60th day after the
close of the Plan Year in which occurs the latest of (a) the date on which the
Participant or former Participant attains the later of age 62 or Retirement
Age, (b) the tenth anniversary of the year in which the Participant or former
Participant commenced participation in the Plan, or (c) the Participant’ or
former Participant’s Separation From Service.

 

5.07         Consent to
Distribution. 
Notwithstanding any other provision of the Plan, no benefit shall be
distributed or commence to be distributed to a Participant or former
Participant prior to his attainment of the later of age 62 or Retirement
Age without his consent, unless the benefit is payable immediately under
Section 5.04.  Any such consent shall be
valid only if given not more than 90 days prior to the Participant’s or former
Participant’s Annuity Starting Date and after his receipt of the notice
regarding benefits described in Section 5.08(a).

 

5.08         Information Provided to
Participants.  Information
regarding the form of benefits available under the Plan shall be provided to
Participants or former Participants in accordance with the following
provisions:

 

(a)           General
Information.  The Sponsor
shall provide each Participant or former Participant with a written general
explanation of the Participant’s or former Participant’s right, if any, to
defer receipt of the distribution.

 

(b)           Time for
Giving Notice.  The written
general explanation or description regarding any optional forms of benefit
available under the Plan shall be provided to a Participant or former
Participant no less than 30 days and no more than 90 days before his Annuity Starting
Date unless he legally waives this requirement.

 

(c)           Exception
for Participants with Small Benefit Amounts. 
Notwithstanding the preceding provisions of the Section, no
information regarding any optional forms of benefit otherwise available under the
Plan shall be provided to the Participant or former Participant if his benefit
is payable in a single sum under Section 5.04.

 

5.09         Designation of
Beneficiary.  Each
Participant and former Participant has the right to designate and to revoke the
designation of his Beneficiary or Beneficiaries.  Each designation or revocation must be evidenced by a written
document in the form required by the Committee, signed by the Participant or
former Participant and filed with the Committee.  If no designation is on file at the time of a Participant’s or
former Participant’s death or if the Committee determines that the designation
is ineffective, the designated Beneficiary shall be the Participant’s or former
Participant’s Spouse, if living, or if not, the executor, administrator or
other personal representative of the Participant’s or former Participant’s
estate.  If a Participant or former
Participant is considered to be married under local law, his designation of any
Beneficiary, other than his Spouse, shall not be valid unless the Spouse
acknowledges in writing

 

V-4

 

that the Spouse understands the effect of the Participant’s or former
Participant’s beneficiary designation and consents to it.  The consent must be to a specific
Beneficiary.  The written
acknowledgement and consent must be filed with the Committee, signed by the
Spouse and at least two witnesses, one of whom must be a member of the
Committee or a notary public.  However,
if the Spouse cannot be located or there exist other circumstances as described
in sections 401(a)(11) and 417(a)(2) of the Code, the requirement of the
Participant’s or former Participant’s Spouse’s acknowledgement and consent may
be waived.  If a Beneficiary other than
the Participant’s or former Participant’s Spouse is named, the designation
shall become invalid if the Participant or former Participant is later
determined to be married under local law, the Participant’s or former
Participant’s missing Spouse is located or the circumstances which resulted in
the waiver of the requirement of obtaining the consent of his Spouse no longer
exist.

 

5.10         Distributions to Minors
and Incapacitated Persons. 
If the Committee determines that any person to whom a payment is due is
a minor or is unable to care for his affairs because of physical or mental
disability, it shall have the authority to cause the payments to be made to the
Spouse, brother, sister or other person the Committee determines to have
incurred, or to be expected to incur, expenses for that person unless a prior
claim is made by a qualified guardian or other legal representative.  The Committee and the Trustee shall not be
responsible to oversee the application of those payments.  Payments made pursuant to this power shall
be a complete discharge of all liability under the Plan and the Trust and the
obligations of the Employer, the Trustee, the Trust and the Committee.

 

5.11         Distributions
Pursuant to Qualified Domestic Relations Orders.  The Committee will instruct the Trustee to pay
benefits in accordance with the terms of any order that has been determined, in
accordance with Plan procedures, to be a Qualified Domestic Relations
Order.  A Qualified Domestic Relations
Order may require the payment of an immediate cash lump sum to an alternate
payee even if the Participant or former Participant is not then entitled to
receive an immediate payment of Plan benefits.

 

5.12         Claims Review
Procedures; Claims Appeal Procedures.

 

(a)           Claims Review Procedures.  When a benefit is due, the Claimant should submit a claim to the
Committee.  Under normal circumstances,
the Committee will make a final decision as to a claim within 90 days after
receipt of the claim.  If the Committee
notifies the Claimant in writing during the initial 90-day period, it may
extend the period up to 180 days after the initial receipt of the claim.  The written notice must indicate the
circumstances necessitating the extension and the anticipated date for the
final decision.  If a claim is denied
during the claims period, the Committee must notify the Claimant in writing,
and the written notice must set forth in a manner calculated to be understood
by the Claimant:

 

(i)            the
specific reason or reasons for denial;

 

(ii)           specific
reference to the Plan provisions on which the denial is based;

 

V-5

 

(iii)          a
description of any additional material or information necessary for the
Claimant to perfect the claim and an explanation of why such material or
information is necessary; and

 

(iv)          an
explanation of the Plan claims review procedures and time limits, including a
statement of the Claimant’s right to bring a civil action under section 502(a)
of ERISA.

 

If a decision is not given to the Claimant within the
claims review period, the claim is treated as if it were denied on the last day
of the claims review period.

 

(b)           Claims Appeals Procedures. If a Claimant’s claim made
pursuant to Section 5.12(a) is denied and he wants a review, he must apply to
the Committee in writing.  That application
can include any arguments, written comments, documents, records, and other
information relating to the claim for benefits.  In addition, the Claimant is entitled to receive on request and
free of charge reasonable access to and copies of all information relevant to
the claim.  For this purpose, “relevant”
means information that was relied on in making the benefit determination or
that was submitted, considered or generated in the course of making the determination,
without regard to whether it was relied on, and information that demonstrates
compliance with the Plan’s administrative procedures and safeguards for
assuring and verifying that Plan provisions are applied consistently in making
benefit determinations.  The Committee
must take into account all comments, documents, records, and other information
submitted by the Claimant relating to the claim, without regard to whether the
information was submitted or considered in the initial benefit
determination.  The Claimant may either
represent himself or appoint a representative, either of whom has the right to
inspect all documents pertaining to the claim and its denial.  The Committee can schedule any meeting with
the Claimant or his representative that it finds necessary or appropriate to
complete its review.

 

(c)           This Section 5.12 does not apply in
connection with determinations as to whether a Participant or former
Participant has incurred a Disability. 
Rather, such determinations shall be subject to the procedures specified
in Section 5.13.

 

5.13         Disability
Benefit Claims Review and Appeal Procedures.

 

(a)           Disability Benefit Initial Determination Procedure.  In the case of a claim for Disability
benefits, the Claimant should submit a claim to the office designated by the
Committee to receive claims. Under normal circumstances, the Committee shall
notify the Claimant of any Disability claims denial (wholly or partially)
within 45 days after receipt of the claim.

 

The Committee retains the
authority to unilaterally extend the initial 45 day Disability claims
determination period by a period not to exceed an additional 30 days, if the
Committee determines that such extension is necessary due to matters beyond the
control of the Committee.  If the
initial Disability claims determination period is extended by the unilateral
action of the Committee, the Committee shall, prior to the expiration of the
initial 45 day Disability claims determination period, notify the Claimant in
writing of

 

V-6

 

the extension and of the
circumstances requiring the extension of the Disability claims determination
period.

 

If, prior to the end of
the first 30-day extension, the Committee determines that, due to matters
beyond the control of the Plan, a decision cannot be rendered within the
extension period, the Disability claims determination period may be extended
for an additional 30 days, provided the Committee, prior to the expiration of
the first 30-day extension period, notifies the Claimant in writing of the
circumstances requiring the extension and the date on which the Plan expects to
render a decision.  In the case of any
notice extending the Disability claims determination period, the notice must be
in writing and shall specifically explain the standards on which the entitlement
to a benefit is based; the unresolved issues that prevent a determination on a
claim; additional information that is needed to resolve those issues; and, if
additional information is required from the Claimant, a statement as to the
amount of time the Claimant has to supply that information.

 

Calculation of Time Periods.   The period of time within which a
Disability benefit determination is required to be made shall begin on that
date the claim is filed in accordance with this Section, without regard to
whether all the information necessary to make the Disability benefits
determination accompanies the filing. 
In the event the Disability claims determination period is extended due
to the Claimant’s failure to submit information necessary to such determination,
the Disability claims determination period shall be tolled from the date on
which the notification of the extension is sent to the Claimant until the date
on which the Claimant responds to the request for additional information.  The Claimant shall be afforded at least 45
days from receipt of the notice of extension to provide the specified
information.  If the Claimant fails to
supply the specified information within the 45-day period, the claim determination
process shall continue and the specified information shall be deemed not to
exist.

 

(b)           Disability Claims Appeal Procedure. 
If a Claimant’s claim for a Disability benefit is denied (in
whole or in part), he is entitled to a full and fair review of that
denial.  A full and fair review of a
Disability benefit claim denial shall provide the Claimant with 180 days from
the receipt of any adverse claim determination to appeal the denial.  If the Claimant does not file an appeal
within 180 days of the adverse claim determination, such denial becomes final.

 

Under the full and fair
review, the Claimant shall be afforded an opportunity to submit written
comments, documents, records, and other information relating to the claim for
benefits to the reviewing fiduciary. 
The Claimant shall be entitled to receive upon request and free of
charge reasonable access to and copies of all information relevant to the
claim. For purposes of a Disability benefit claim denial, the term “relevant”
shall mean information that was relied on in making the benefit determination
or that was submitted, considered or generated in the course of making the
determination, without regard to whether it was relied on, and information that
demonstrates compliance with the Plan’s administrative procedures and
safeguards for assuring and verifying that Plan provisions are applied
consistently in making benefit determinations. 
For this purpose, the term “relevant” shall also include a statement of
policy or guidance with respect to

 

V-7

 

the Plan concerning the
Disability benefit for the diagnoses of the Claimant, without regard to whether
such advice or statement was relied upon in making the claims
determination.  The review of a benefit
claim denial shall not afford any deference to the initial adverse claim
determination.

 

The review of the
Disability claims denial shall be conducted by the appropriate named fiduciary
who is neither
the named fiduciary who made the initial adverse claim determination nor
subordinate to such individual.

 

In reviewing a denial of
a claim for a Disability benefit, in which the denial was based in whole or in
part on medical judgement, the appropriate named fiduciary shall consult with a
health care professional who has appropriate training and experience in the
field of medicine involved in the medical judgement.  The health care professional consulted upon review of an adverse
benefit claim denial shall be neither the health care professional that
was consulted in connection with the adverse benefit determination that is the
subject of the appeal nor a subordinate of any such
individual.  The reviewing fiduciary
shall provide the identification of the medical or vocational experts whose
advice was obtained on behalf of the Plan in connection with Claimant’s
Disability benefit claim denial, without regard as to whether the advice was
relied upon in making the benefit determination.

 

The appropriate reviewing
fiduciary must take into account all comments, documents, records, and other
information submitted by the Claimant relating to the claim, without regard as
to whether the information was submitted or considered in the initial benefit
determination.  The Claimant may either
represent himself or appoint a representative, either of whom has the right to inspect
all documents pertaining to the claim and its denial.  The reviewing fiduciary can schedule any meeting with the
Claimant or his representative that it finds necessary or appropriate to
complete its review.

 

If a timely request is
made, the reviewing fiduciary shall notify the Claimant of the determination
upon appeal within 45 days after receipt of the request for review (without
regard to whether all the information necessary to make the benefit
determination accompanies the filing). 
The reviewing fiduciary retains the authority to unilaterally extend the
initial 45-day review period by a period not to exceed an additional 45 days,
if the fiduciary determines that special circumstances exist requiring
additional time for reviewing the claim. 
If the initial review period is extended by the unilateral action of the
appropriate reviewing fiduciary, the fiduciary shall, prior to the expiration
of the initial 45 day review period, notify the Claimant in writing of the
extension.  The written notice of extension
shall identify the special circumstances necessitating the extension and
provide the anticipated date by which the Plan expects to render the
determination on review.

 

Calculation of Time Periods Upon Appeal.   The period of time within which a determination
on a Disability claims appeal is required to be made shall begin on that date
the appeal is filed in accordance with this Section, without regard to whether
all the information necessary to make the Disability benefits determination
accompanies the

 

V-8

 

filing.  In the
event the Disability claims review period is extended due to the Claimant’s
failure to submit information necessary to such determination, the Disability
claims review period shall be tolled from the date on which the notification of
the extension is sent to the Claimant until the date on which the Claimant
responds to the request for additional information.  The Claimant shall be afforded at least 45 days from receipt of
the notice of extension to provide the requested information.  If the Claimant fails to supply the
requested information within the 45-day period, the claims review process shall
continue and the specified information shall be deemed not to exist.

 

The reviewing fiduciary
shall provide the Claimant with a written notice of the Plan’s benefit
determination upon review.  The notice
shall set forth the specific reasons for its action, the Plan provisions on
which its decision is based, and a statement that the Claimant is entitled to
receive, upon request and free of charge, reasonable access to, and copies of,
all documents, records, and other information relevant to the Claimant’s claim
for benefits, and a statement of the Claimant’s right to bring an action under
section 502(a) of ERISA.  The notice
shall also include the following statement,

 

“You and the Plan may have other voluntary alternative
dispute resolution options, such as mediation. 
One way to find out what may be available is to contact your local U.S.
Department of Labor Office and your State insurance regulatory agency.”

 

If a decision is not
given to the Claimant within the review period, the claim is treated as if it
were denied on the last day of the review period.

 

The request for review
must be filed within 90 days after the denial. 
If it is not, the denial becomes final. 
If a timely request is made, the reviewing fiduciary must make its
decision, under normal circumstances, within 60 days of the receipt of the
request for review.  However, if the reviewing
fiduciary notifies the Claimant prior to the expiration of the initial review
period, it may extend the period of review up to 120 days following the initial
receipt of the request for a review. 
The written notice must indicate the circumstances necessitating the
extension and the anticipated date for the final decision.  All decisions of the reviewing fiduciary
must be in writing and must include the specific reasons for its action, the
Plan provisions on which its decision is based, and a statement that the
Claimant is entitled to receive, upon request and free of charge, reasonable
access to, and copies of, all documents, records, and other information
relevant to the Claimant’s claim for benefits, and a statement of the
Claimant’s right to bring an action under section 502(a) of ERISA.  If a decision is not given to the Claimant
within the review period, the claim is treated as if it were denied on the last
day of the review period.

 

V-9

 

ARTICLE VI

IN-SERVICE DISTRIBUTIONS

 

6.01         In-Service Financial
Hardship Distributions.

 

(a)           General.  Prior to his Separation From Service, a
Participant is entitled to receive a distribution from his Salary Deferral
Contribution Account (except for income that was not credited to his Salary
Deferral Account as of December 31, 1988), his Catch-up Salary Deferral
Contribution Account (except for income credited to his Catch-up Salary
Deferral Contribution Account), his Rollover Account, his After-Tax Contribution
Account, his Nonforfeitable Interest in his Matching Contribution Account and
his Nonforfeitable Interest in his Supplemental Contribution Account in the
event of an immediate and heavy financial need incurred by the Participant and
the Committee’s determination that the withdrawal is necessary to alleviate
that hardship.

 

(b)           Permitted
Reasons For Financial Hardship Distributions.  A distribution shall be made on account of
financial hardship only if the distribution is for:  (i) expenses for medical care described in
section 213(d) of the Code previously incurred by the Participant, the
Participant’s Spouse, or any dependents of the Participant (as defined in
section 152 of the Code) or necessary for these persons to obtain medical
care described in section 213(d) of the Code, (ii) costs directly
related to the purchase (excluding mortgage payments) of a principal residence
for the Participant, (iii) payment of tuition and related educational fees
for the next 12 months of post–secondary education for the Participant,
his Spouse, children, or dependents (as defined in section 152 of the
Code), (iv) payments necessary to prevent the eviction of the Participant
from his principal residence or foreclosure on the mortgage of the
Participant’s principal residence, or (v) any other event added to this
list by the Commissioner of Internal Revenue.

 

(c)           Amount.  A distribution to satisfy an immediate and
heavy financial need shall not be made in excess of the amount of the immediate
and heavy financial need of the Participant and the Participant must have
obtained all distributions, other than hardship distributions, and all
nontaxable (at the time of the loan) loans currently available under all plans
maintained by the Employer.  The amount
of a Participant’s immediate and heavy financial need includes any amounts
necessary to pay any federal, state or local income taxes or penalties
reasonably anticipated to result from the financial hardship distribution.

 

(d)           Suspension
of Participation in Certain Benefit Programs.  The Participant’s hardship distribution
shall terminate his right to have the Employer make any Salary Deferral
Contributions on his behalf until the next time Salary Deferral Contributions
are permitted after (1) the lapse of 12 months following the hardship
distribution, and (2) his timely filing of a written request to resume his
Salary Deferral Contributions.  In
addition, for 12 months after he receives a hardship distribution from the
Plan, the Participant is prohibited from making elective contributions and
employee contributions to or under all other qualified and nonqualified plans
of deferred compensation maintained by the Employer, including stock option
plans, stock purchase plans and Code section 401(k) cash or deferred
arrangements that are part of cafeteria plans described in section 125 of
the Code.  However, the Participant is
not

 

VI-1

 

prohibited from making contributions to a health or welfare benefit
plan, including one that is part of a cafeteria plan within the meaning of
section 125 of the Code.

 

(e)           Order of
Distributions.  Financial
hardship distributions will be made in the following order:  First withdrawals will be made from the
Participant’s After-Tax Contribution Account, then from his Rollover
Contribution Account, then from his Matching Contribution Account, then from
his Supplemental Contribution Account, then from his Salary Deferral
Contribution Account, and finally, from his Catch-up Salary Deferral
Contribution Account.  A Participant
shall not be entitled to receive a financial hardship distribution of any
amount credited to his QNEC Account.

 

6.02         In-Service
Distribution of After-Tax Contributions, Matching Contributions and
Supplemental Contributions.  Each
Participant shall be entitled to withdraw a portion or all of his After-Tax
Contribution Account and his Nonforfeitable Interest in his Matching
Contribution Account and his Supplemental Contribution Account.  However, the minimum amount of the
distribution permitted under this Section 6.02 shall be the lesser of $1,000.00
or the total amount which could otherwise be distributed under this Section
6.02.  Also, a Participant may make a
withdrawal of a portion of his Nonforfeitable Interest in his Matching
Contribution Account and his Supplemental Contribution Account only if the
Participant has been a Participant in this Plan for five or more years or the
amounts withdrawn from the Matching Contribution Account and his Supplement
Contribution Account have been credited to his Account for a minimum of two
years.  A Participant may not make
another distribution request under this Section 6.02 until such Participant has
made After-Tax Contributions and/or Salary Deferral Contributions for a period
of twelve months or more after receiving his most recent distribution pursuant
to this Section 6.02.

 

6.03         Method of Payment.  Any distribution made pursuant to this
Article VI will be paid in the form of a single sum in cash.

 

VI-2

 

ARTICLE VII

VESTING

 

A Participant or former Participant has a fully
Nonforfeitable Interest in his entire Account balance when he (a) incurs a
Disability on or prior to the date of his Separation From Service,
(b) attains his Normal Retirement Age on or prior to the date of his
Separation From Service, or (c) incurs a Separation From Service due to
death.  A Participant or former
Participant shall at all times have a fully Nonforfeitable Interest in amounts
credited to his Salary Deferral Contribution Account, his Catch-up Salary
Deferral Contribution Account, his QNEC Account, his Rollover Account and his
After-Tax Contribution Account.  A
Participant or former Participant shall have a Nonforfeitable Interest in the
following percentage of amounts credited to his Matching Contribution Account
and his Supplemental Contribution Account:

 

	
  Years of
  Active Service Completed by the

  Participant or Former Participant

  	
   

  	
  Vested
  Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Less than one

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  One but less
  than two

  	
   

  	
  20

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Two but less
  than three

  	
   

  	
  40

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Three but less
  than four

  	
   

  	
  60

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Four but less
  than five

  	
   

  	
  80

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Five or more

  	
   

  	
  100

  	
   

  

 

Subject to the possible application of Section B.2.3
of Appendix B or Section 12.05, except as specified above, a Participant or former
Participant has no Forfeitable Interest in his Account balance and shall not be
entitled to any benefits under the Plan upon or following his Separation From
Service.

 

VII-1

 

ARTICLE VIII

FORFEITURES AND RESTORATIONS

 

8.01         Forfeiture
on Termination of Participation.

 

(a)           If as a result of his Separation From
Service a Participant or former Participant receives (or is deemed to receive
under Section 5.04), a distribution of his entire Nonforfeitable Interest in
his Account balance not later than the end of the second Plan Year following
the Plan Year in which his Separation From Service occurs, the remaining
Forfeitable Interest in his Account balance will be immediately forfeited upon
the distribution.

 

(b)           If a Participant or former
Participant neither receives nor is deemed to receive a distribution as a
result of his Separation From Service, his Forfeitable Interest in his Account
balance will be permanently forfeited (with no right of reinstatement under
Section 8.02) on the later of the date of his Separation From
Service or the date on which he has incurred a Period of Severance of five
consecutive years.

 

8.02         Restoration
of Forfeited Amounts.  If
a Participant or former Participant who forfeited any portion of his Account
balance pursuant to the provisions of Section 8.01 subsequently performs an
Hour of Service, then the following provisions shall apply:

 

(a)           Repayment Requirement.  The Participant’s Account balance (unadjusted for
gains or losses subsequent to the forfeiture) shall be restored if he repays to
the Trustee the full amount of any distribution with respect to which the
forfeiture arose prior to the earlier of (1) the date on which he
incurs a Period of Severance of five years commencing after his distribution,
or (2) the fifth anniversary of the first date on which the Participant
subsequently performs his first Hour of Service after his Separation From
Service.  A Participant who is deemed to
have received a distribution under Section 5.04 (because he had no
Nonforfeitable Interest in his Account balance) will be deemed to have repaid
his Account balance upon his reemployment if he is reemployed before the
earlier of the dates specified in clauses (1) and (2) in the preceding sentence.

 

(b)           Amount Restored. 
The amount to be restored under the preceding provisions of
this Section 8.02 shall be the dollar value of the Account balance, both the
amount distributed and the amount forfeited. 
The Participant’s Account balance shall be restored as soon as
administratively practicable after the later of the date the Participant first
performs an Hour of Service after his Separation From Service or the date on
which any required repayment is completed.

 

(c)           No Other Basis for Restoration.  Except as otherwise provided
above, a Participant’s Account balance shall not be restored after it has been
forfeited pursuant to Section 8.01.

 

8.03         Forfeitures
by Lost Participants or Beneficiaries.  If a person who is entitled to a distribution cannot be located
during a reasonable search after the Committee has initially attempted making
payment, his Account balance shall be forfeited.  However, if at any time prior to the termination of the Plan and
the complete distribution of the Trust assets, the missing

 

VIII-1

 

former Participant or Beneficiary files a claim with
the Committee for the forfeited Account balance, that Account balance shall be
reinstated (without adjustment for trust income or losses during the period of
forfeiture) effective as of the date of the receipt of the claim.

 

VIII-2

 

ARTICLE IX

ACTIVE SERVICE

 

9.01         General.  For purposes of determining an
Employee’s eligibility to participate in the Plan and his Nonforfeitable
Interest in his Account balance, the Employee shall receive credit for Active
Service commencing on the later of (1) April 1, 1986 or (2) the date he first
performs an Hour of Service and ending on his Severance From Service Date.  If an Employee Severs Service, he shall
recommence earning Active Service when he again performs an Hour of
Service.  If an Employee performs an
Hour of Service within twelve months after his Severance From Service Date, the
intervening Period of Severance shall be counted as Active Service.  When determining an Employee’s Active
Service, all Periods of Service, whether or not completed consecutively, shall
be aggregated on a per-day basis.  In
aggregating Active Service, thirty days shall be counted as one month and 365
days shall be counted as one year of Active Service.  Except to the extent expressly provided otherwise in the Plan, an
Employee shall be granted credit for all Periods of Service with Affiliated
Employers (including Periods of Service performed while the Employee is not
eligible to participate in the Plan because he does not satisfy the
requirements of Section 2.01).

 

9.02         Disregard of Certain
Service.  If an Employee
incurs a Separation From Service at a time when he does not have a
Nonforfeitable Interest in a portion of his Matching Contribution Account
balance or his Supplemental Contribution Account balance and his Period of
Severance continues for a continuous period of five years or more, the Period
of Service completed by the Employee before the Period of Severance shall not
be taken into account as Active Service, if his Period of Severance equals or
exceeds his Period of Service, whether or not consecutive, completed before the
Period of Severance.

 

9.03         Certain
Brief Absences Counted as Active Service.  If an Employee performs an Hour of Service
within 365 days after he Severs Service, the intervening Period of Severance
shall be counted as a Period of Service.

 

9.04         Service
Credit Required by Law. 
An Employee will be granted credit for Active Service for
time he is not actively performing services for an Affiliated Employer to the
extent required under federal law.  An
Employee will be granted credit for Active Service for services performed for a
predecessor employer to the extent required by section 414(a) of the Code and
Regulations issued thereunder.

 

9.05         Special
Maternity or Paternity Absence Rules.  Except as specified below, the period of time between
(a) the first anniversary of the first day of a Maternity or Paternity Absence
of an Employee and (b) the second anniversary of the first day of the absence
shall not be counted as a Period of Severance or as Active Service.  However, if the Employee returns to active
employment with an Affiliated Employer prior to the expiration of twelve months
following the earlier of (1) the date of his Separation From Service  or (2) the second anniversary of the first
day of his Maternity or Paternity Absence, he shall be granted Active Service
for the entire period of his Maternity or Paternity Absence.

 

IX-1

 

9.06         Employment
Records Conclusive.  The
employment records of the Employer shall be conclusive for all determinations
of Active Service.

 

IX-2

 

ARTICLE X

INVESTMENT ELECTIONS

 

10.01       Investment
Funds Established.  It is contemplated that the assets of the Plan shall be invested
in such categories of assets as may be determined from time to time by the
Committee and announced and made available on an equal basis to all
Participants and former Participants. 
In accordance with procedures established by the Committee, each
Participant and former Participant may designate the percentage of his Account
to be invested in each investment fund available under the Plan.  Up to one hundred percent of the Trust
assets may be invested in Sponsor Stock.

 

10.02       Election
Procedures Established.  The Committee shall, from time to time, establish rules to be
applied in a nondiscriminatory manner as to all matters relating to the
administration of the investment of funds including, but not limited to, the
following:

 

(a)           the
percentage of a Participant’s or former Participant’s Account as it exists,
from time to time, that may be transferred from one fund to another and the
limitations based on amounts, percentages, time, or frequency, if any, on such
transfers;

 

(b)           the
percentage of a Participant’s future contributions, when allocated to his
Account, that may be invested in any one or more funds and the limitations
based upon amounts, percentages, time, or frequency, if any, on such
investments in various funds;

 

(c)           the
procedures for making investment elections and changing existing investment
elections;

 

(d)           the
period of notice required for making investment elections and changing existing
investment elections;

 

(e)           the
handling of income and change of value in funds when funds are in the process
of being transferred between investment funds and to investment funds; and

 

(f)            all
other matters necessary to permit the orderly operation of investment funds
within the Plan.

 

When the Committee changes any previous applicable rule, it shall state
the effective time of the change and the procedures for complying with any such
change.  Any change shall remain
effective until such date as stated in the change, or if none is stated, then
until revoked or changed in a like manner.

 

X-1

 

ARTICLE XI

ADOPTION OF PLAN BY OTHER EMPLOYERS

 

11.01       Adoption
Procedure. 
Any business organization may, with the approval of the Board, adopt the
Plan by:

 

(a)           a
certified resolution or consent of the board of directors of the adopting
Employer or an executed adoption instrument (approved by the board of directors
of the adopting Employer) agreeing to be bound as an Employer by all the terms,
conditions and limitations of the Plan except those, if any, specifically
described in the adoption instrument; and

 

(b)           providing
all information required by the Committee and the Trustee.

 

11.02       No Joint
Venture Implied. 
The document which evidences the adoption of the Plan by an Employer
shall become a part of the Plan. 
However, neither the adoption of the Plan and the Trust by an Employer
nor any act performed by it in relation to the Plan and the Trust shall ever
create a joint venture or partnership relation between it and any other
Employer.

 

11.03       All Trust Assets
Available to Pay All Benefits. 
The Accounts of Participants employed by the Employers that adopt the
Plan shall be commingled for investment purposes.  All assets in the Trust shall be available to pay benefits to all
Participants employed by any Employer.

 

11.04       Qualification a Condition
Precedent to Adoption and Continued Participation.  The adoption of the Plan and the Trust by a
business organization is contingent upon and subject to the express condition
precedent that the initial adoption meets all statutory and regulatory
requirements for qualification of the Plan and the exemption of the Trust that
are applicable to it and that the Plan and Trust continue in operation to
maintain their qualified and exempt status. 
In the event the adoption fails to initially qualify, the adoption shall
fail retroactively for failure to meet the condition precedent and the portion
of the Trust assets applicable to the adoption shall be immediately returned to
the adopting business organization and the adoption shall be void ab
initio.  In the event the adoption as to
a given business organization later becomes disqualified and loses its
exemption for any reason, the adoption shall fail retroactively for failure to
meet the condition precedent and the portion of the Trust assets allocable to
the adoption by that business organization shall be immediately spun off,
retroactively as of the last date for which the Plan qualified, to a separate
trust for its sole benefit and an identical but separate Plan shall be created,
retroactively effective as of the last date the Plan as adopted by that
business organization qualified, for the benefit of the Participants covered by
that adoption.

 

XI-1

 

ARTICLE XII

AMENDMENT AND TERMINATION

 

12.01       Right to Amend and
Limitations Thereon.  The
Sponsor has the sole right to amend the Plan. 
An amendment may be made by a certified resolution or consent of the
Board, or by an instrument in writing executed by the appropriate officer of
the Sponsor.  The amendment must
describe the nature of the amendment and its effective date.  No amendment shall:

 

(a)           vest
in an Employer any interest in the Trust;

 

(b)           cause
or permit the Trust assets to be diverted to any purpose other than the
exclusive benefit of the present, former or future Participants and their
Beneficiaries except under the circumstances described in Section 3.13;

 

(c)           decrease
the Account of any Participant or former Participant, or eliminate an optional
form of payment in violation of section 411(d)(6) of the Code; or

 

(d)           change
the vesting schedule to one which would result in a Participant’s or former
Participant’s Nonforfeitable Interest in his Account balance (determined as of
the later of the date of the adoption of the amendment or of the effective date
of the amendment) of any Participant or former Participant being less than his Nonforfeitable
Interest computed under the Plan without regard to the amendment.  If the Plan’s vesting schedule is amended or
if the Plan is deemed amended by an automatic change to or from a top–heavy
vesting schedule, each Participant or former Participant who has at least three
years of Active Service as of the date of the amendment or change shall have
his nonforfeitable percentage computed under the Plan without regard to the
amendment or the change if that results in a higher Nonforfeitable Interest in
his Account balance.

 

Each Employer shall be deemed to have adopted any
amendment made by the Sponsor unless the Employer notifies the Committee of its
rejection in writing within 30 days after it receives a copy of the
amendment.  A rejection shall constitute
a withdrawal from the Plan by that Employer unless the Sponsor acquiesces in
the rejection.

 

12.02       Mandatory Amendments.  The Contributions of each Employer to the
Plan are intended to be:

 

(a)           deductible
under the applicable provisions of the Code;

 

(b)           except
as otherwise prescribed by applicable law, exempt from the Federal Social
Security Act;

 

(c)           except
as otherwise prescribed by applicable law, exempt from with- holding under the
Code; and

 

(d)           excludable
from any Employee’s regular rate of pay, as that term is defined under the Fair
Labor Standards Act of 1938, as amended.

 

XII-1

 

The Sponsor shall make any amendment necessary to
carry out this intention, and it may be made retroactively.

 

12.03       Withdrawal of
Employer.  An Employer may
withdraw from the Plan and the Trust if the Sponsor does not acquiesce in its
rejection of an amendment or by giving written notice of its intent to withdraw
to the Committee.  The Committee shall
then determine the portion of the Trust assets that is attributable to the
Participants employed by the withdrawing Employer and shall notify the Trustee
to segregate and transfer those assets to the successor trustee when it
receives a designation of the successor from the withdrawing Employer.

 

A withdrawal shall not terminate the Plan and the
Trust with respect to the withdrawing Employer, if the Employer either appoints
a successor trustee and reaffirms the Plan and the Trust as its new and
separate plan and trust intended to qualify under section 401(a) of the
Code, or establishes another plan and trust intended to qualify under
section 401(a) of the Code.

 

The determination of the Committee, in its sole
discretion, of the portion of the Trust assets that is attributable to the
Participants employed by the withdrawing Employer shall be final and binding
upon all parties; and, the Trustee’s transfer of those assets to the designated
successor Trustee shall relieve the Trustee of any further obligation,
liability or duty to the withdrawing Employer, the Participants employed by
that Employer and their Beneficiaries, and the successor trustee.

 

12.04       Termination of Plan.  The Sponsor may terminate the Plan and the
Trust with respect to all Employers by executing and delivering to the
Committee and the Trustee, a notice of termination, specifying the date of
termination.

 

12.05       Partial or Complete
Termination or Complete Discontinuance of Contributions.  Without regard to any other provision of the
Plan, if there is a partial or total termination of the Plan (within the
meaning of section 411 of the Code) or there is a complete discontinuance of
the Employer’s Contributions (within the meaning of section 411 of the Code),
each of the affected Participants shall immediately have a fully Nonforfeitable
Interest in his Account as of the end of the last Plan Year for which a
substantial Employer Contribution was made and in any amounts later allocated
to his Account.  If the Employer then resumes
making substantial Contributions at any time, the appropriate vesting schedule
shall again apply to all amounts allocated to each affected Participant’s
Account beginning with the Plan Year for which they were resumed.

 

XII-2

 

ARTICLE XIII

MISCELLANEOUS

 

13.01       Plan Not an
Employment Contract.  The
maintenance of the Plan and the Trust is not a contract between any Employer
and its Employees which gives any Employee the right to be retained in its
employment.  Likewise, it is not
intended to interfere with the rights of any Employer to discharge any Employee
at any time or to interfere with the Employee’s right to terminate his
employment at any time.

 

13.02       Benefits Provided
Solely From Trust.  All
benefits payable under the Plan shall be paid or provided for solely from the
Trust.  No Employer assumes any
liability or responsibility to pay any benefit provided by the Plan.

 

13.03       Assignments Prohibited.  No principal or income payable or to become
payable from the Trust Fund shall be subject to anticipation or assignment by a
Participant, former Participant or Beneficiary to attachment by, interference
with, or control of any creditor of a Participant, former Participant or
Beneficiary; or to being taken or reached by any legal or equitable process in
satisfaction of any debt or liability of a Participant, former Participant, or
Beneficiary prior to its actual receipt by the Participant, former Participant
or Beneficiary.  Any attempted
conveyance, transfer, assignment, mortgage, pledge, or encumbrance of any Trust
assets, any part of it, or any interest in it by a Participant, former
Participant or Beneficiary prior to distribution shall be void, whether that
conveyance, transfer, assignment, mortgage, pledge, or encumbrance is intended
to take place or become effective before or after any distribution of Trust
assets or the termination of the Trust itself. 
The Trustee shall never under any circumstances be required to recognize
any conveyance, transfer, assignment, mortgage, pledge or encumbrance by a
Participant , former Participant, or Beneficiary of the Trust, any part of it,
or any interest in it, or to pay any money or thing of value to any creditor or
assignee of a Participant, former Participant or Beneficiary for any cause
whatsoever.  These prohibitions against
the alienation of a Participant’s Account shall not apply to a Qualified
Domestic Relations Order or to a voluntary revocable assignment of benefits not
in excess of ten percent of the amount of any payment from the Plan if such
assignment complies with Regulations issued under section 401(a)(13) of the
Code.  Further, effective for judgments,
orders and decrees issued, and settlement agreements entered into, on or after
August 5, 1997, these prohibitions shall not apply to any offset of a
Participant’s or former Participant’s benefits provided under a Plan against an
amount that the Participant or former Participant is ordered or required to pay
to the Plan if—(a) the order or requirement to pay arises—(1) under a judgment
of conviction for a crime involving the Plan, (2) under a civil judgment
(including a consent order or decree) entered by a court in an action brought
in connection with an alleged violation of part 4 of subtitle B of title I of
ERISA, or (3) pursuant to a settlement agreement between the Secretary of Labor
and the Participant or former Participant in connection with a violation (or
alleged violation) of part 4 of subtitle B of ERISA by a fiduciary or any other
person, and (b) the judgment, order, decree, or settlement agreement expressly
provides for the offset of all or part of the amount ordered or required to be
paid to the Plan against the Participant’s or former Participant’s benefits
provided under the Plan.

 

XIII-1

 

13.04       Requirements Upon Merger
or Consolidation of Plans. 
The Plan shall not merge or consolidate with or transfer any assets or
liabilities to any other plan unless each Participant and former Participants
would receive a benefit immediately after the merger, consolidation, or
transfer which is equal to or greater than the benefit he would have been
entitled to receive immediately before the merger, consolidation, or transfer
(if the Plan had then terminated).

 

13.05       Gender of Words Used.  If the context requires it, words of one
gender when used in the Plan shall include the other gender, and words used in
the singular or plural shall include the other.

 

13.06       Severability.  Each provision of this Agreement may be
severed.  If any provision is determined
to be invalid or unenforceable, that determination shall not affect the
validity or enforceability of any other provision.

 

13.07       Reemployed  Veterans.
The requirements of the Uniformed Services Employment and Reemployment Rights
Act of 1994 will be complied with in the operation of the Plan in the manner
permitted under section 414(u) of the Code.

 

13.08       Limitations on Legal
Actions.  No person may bring
an action pertaining to the Plan or Trust until he has exhausted his
administrative claims and appeal remedies identified in Section 5.12 and
5.13.  Further, no person may bring an
action pertaining to a claim for benefits under the Plan or the Trust following
180 days after the Committee’s final denial of his claim for benefits.

 

13.09       Governing Law.  The provisions of the Plan shall be
construed, administered, and governed under the laws of the United States
unless the specific matter in question is governed by state law in which event
the laws of the State of Texas shall apply.

 

XIII-2

 

IN WITNESS WHEREOF, Quanex Corporation has
caused this Agreement to be executed this 30th day of December, 2002, in
multiple counterparts, each of which shall be deemed to be an original, to be
effective the 1st day of January, 2002, except for those provisions which have
an earlier effective date provided by law, or as otherwise provided under
applicable provisions of the Plan.

 

	
   

  	
  QUANEX
  CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Paul J. Giddens

  
	
   

  	
   

  	
  Name:   Paul
  J. Giddens

  
	
   

  	
   

  	
  Title:     Vice
  President Human Resources and Administration

  

 

XIII-3

 

APPENDIX A

LIMITATIONS ON CONTRIBUTIONS AND ALLOCATIONS

 

PART A.1  Definitions

 

Definitions.  As used herein the following words and phrases have the meaning
attributed to them below:

 

A.1.1       “Actual Contribution Ratio” shall mean the
ratio of Section 401(m) Contributions actually paid into the Trust on
behalf of an Employee for a Plan Year to the Employee’s Annual Compensation for
the same Plan Year.  For this purpose,
Annual Compensation for any portion of the Plan Year in which the Employee was
not an eligible Employee (as defined in Section A.2.4) will not be taken into
account.

 

A.1.2       “Actual Deferral Percentage”
means, for a specified group of Employees for a Plan Year, the average of the
ratios (calculated separately for each Employee in the group) of the amount of
Section 401(k) Contributions actually paid into the Trust on behalf of the
Employee for the Plan Year to the Employee’s Annual Compensation for the Plan
Year.

 

A.1.3       “Actual Deferral Ratio” means
the ratio of Section 401(k) Contributions actually paid into the Trust on
behalf of an Employee for a Plan Year to the Employee’s Annual Compensation for
the same Plan Year. For this purpose, Annual Compensation for any portion of
the Plan Year in which the Employee was not an eligible Employee (as defined in
Section A.2.3) will not be taken into account.

 

A.1.4       “Annual Additions”  means the sum of the following amounts
credited on behalf of a Participant for the Limitation Year:  (a) Employer contributions excluding
Catch-up Salary Deferral Contributions and including Salary Deferral
Contributions, (b) Employee after-tax contributions, and (c) forfeitures.  For this purpose, Employee contributions are
determined without regard to any rollover contributions (as defined in sections
402(c), 403(a)(4), 403(b)(8), 408(d)(3) and 457(e)(16) of the Code without
regard to employee contributions to a simplified employee pension which are
excludable from gross income under section 408(k)(6) of the Code).  Excess 401(k) Contributions for a Plan Year
are treated as Annual Additions for that Plan Year even if they are corrected
through distribution.  Excess Deferrals
that are timely distributed as set forth in Section A.3.1 will not be treated
as Annual Additions.

 

A.1.5       “Contribution Percentage” shall mean, for a
specified group of Employees for a Plan Year, the average of the ratios
(calculated separately for each Employee in the group) of the amount of Section 401(m)
Contributions actually paid into the Trust on behalf of the Employee for the
Plan Year to the Employee’s Annual Compensation for the Plan Year.

 

A.1.6       “Excess Aggregate 401(m) Contributions”
means, with respect to any Plan Year, the excess of (a) the aggregate
amount of Section 401(m) Contributions actually paid into the Trust on
behalf of Highly Compensated Employees for the Plan Year over (b) the
maximum amount of those contributions permitted under the limitations set out in
the first sentence of Section A.2.4.

 

A.1.7       “Excess Amount” shall mean the excess of the
Annual Additions credited to the Participant’s Account for the Limitation Year
over the Maximum Permissible Amount.

 

A.1.8       “Excess 401(k) Contributions”
means, with respect to any Plan Year, the excess of (a) the aggregate
amount of Section 401(k) Contributions actually paid to the Trustee on
behalf of Highly Compensated Employees for the Plan Year over (b) the
maximum amount of those contributions permitted under the limitations set out
in the first sentence of Section A.2.3.

 

A.1.9       “Limitation Year” shall mean the Plan
Year.  All qualified plans maintained by
any Affiliated Employer must use the same Limitation Year.  If the Limitation Year is amended to a
different 12–consecutive

 

A-1

 

month period, the
new Limitation Year must begin on a date within the Limitation Year in which
the amendment is made.

 

A.1.10     “Maximum Permissible Amount” means the lesser
of (1) $40,000.00 as adjusted by the Secretary of Treasury for increases in the
cost of living or (2) 100 percent of the Participant’s Annual Compensation for
the Limitation Year.  The Annual
Compensation limitation referred to in clauses (2) of the immediately preceding
sentences shall not apply to any contribution for medical benefits (within the
meaning of section 401(h) or section 419A(f)(2) of the Code) that is
otherwise treated as an Annual Addition under section 415(l)(1)
or section 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 dollar limitation in effect under
section 415(c)(1)(A) of the Code multiplied by a fraction, the numerator
of which is the number of months in the short Limitation Year, and the
denominator of which is 12.

 

A.1.11     “Section 401(k) Contributions”
means the sum of Salary Deferral Contributions made on behalf of the
Participant during the Plan Year, and QNECs that the Employer elects to have
treated as section 401(k) Contributions pursuant to section 401(k)(3)(d)(ii) of
the Code.

 

A.1.12     “Section 401(m) Contributions” shall mean
the sum of Matching Contributions and After–Tax Contributions made on
behalf of the Participant during the Plan Year and other amounts that the
Employer elects to have treated as Section 401(m) Contributions pursuant
to section 401(m)(3)(B) of the Code.

 

PART
A.2  Limitations on
Contributions

 

A.2.1       Limitations Based upon Deductibility and
the Maximum Allocation Permitted to a Participant’s Account.  Notwithstanding any other provision of the
Plan, no Employer shall make any contribution that would be a nondeductible
contribution within the meaning of section 4972 of the Code or that would cause
the limitation on allocations to each Participant’s Account under section 415
of the Code and Section A.4.1 to be exceeded.

 

A.2.2       Dollar Limitation upon Salary Deferral
Contributions.  The maximum
Salary Deferral Contribution that a Participant may elect to have made on hib
behalf during a calendar year may not, when added to his elective deferrals
under other plans or arrangements which are both (1) described in sections
401(k), 403(b), 408(k) and 408(p)(2) of the Code and (2) maintained by the
Employer or an Affiliated Employer, exceed the amount of the limitation in
effect under section 402(g)(1) of the Code for the Participant’s taxable year
beginning in such calendar year.  For
purposes of applying the requirements of Section A.2.3, Excess Deferrals
shall not be disregarded merely because they are Excess Deferrals or because
they are distributed in accordance with this Section.  However, Excess Deferrals made to the Plan on behalf of Non–Highly
Compensated Employees are not to be taken into account under Section 
A.2.3.

 

A.2.3       Limitation Based upon Actual Deferral
Percentage.  The Actual
Deferral Percentage for eligible Highly Compensated Employees for any Plan Year
must bear a relationship to the Actual Deferral Percentage for all other
eligible Employees for the preceding Plan Year which meets either of
the following tests:

 

(a)           the Actual Deferral Percentage of the
eligible Highly Compensated Employees is not more than the Actual Deferral
Percentage of all other eligible Employees multiplied by 1.25; or

 

(b)           the excess of the Actual Deferral
Percentage of the eligible Highly Compensated Employees over that of all other
eligible Employees is not more than two percentage points, and the Actual
Deferral Percentage of the eligible Highly Compensated Employees is not more
than the Actual Deferral Percentage of all other eligible Employees multiplied
by two.

 

For purposes of this test
an eligible Employee is an Employee who is directly or indirectly eligible to
make Salary Deferral Contributions for all or part of the Plan Year.  A person who is suspended from making Salary
Deferral Contributions because he has made a withdrawal is an eligible
Employee.  If no Salary Deferral

 

A-2

 

Contributions are made for an eligible Employee, the Actual Deferral
Ratio that shall be included for him in determining the Actual Deferral
Percentage is zero.  If the Plan and any
other plan or plans which include cash or deferred arrangements are considered
as one plan for purposes of section 401(a)(4) or 410(b) of the Code, the
cash or deferred arrangements included in the Plan and the other plans shall be
treated as one plan for purposes of this Section.  If any Participant who is a Highly Compensated Employee is a
participant in any other cash or deferred arrangements of the Employer, when
determining the deferral percentage of such Participant, all such cash or
deferred arrangements are treated as one plan for these dates.

 

Notwithstanding the foregoing, an individual who is
not a Highly Compensated Employee and who has not satisfied the minimum age and
service requirements of section 410(a)(1)(A) of the Code will not
be treated as an eligible Employee for purposes of this Section A.2.3 if the
Sponsor elects to apply section 410(b)(4)(3) of the Code in determining whether
the Plan meets the requirements of section 401(k)(3) of the Code.

 

A Salary Deferral Contribution will be taken into
account under the Actual Deferral Percentage test of section 401(k) of the
Code and this Section for a Plan Year only if it relates to Considered
Compensation that either would have been received by the Employee in the Plan
Year (but for the deferral election) or is attributable to services performed
by the Employee in the Plan Year and would have been received by the Employee
within 21⁄2 months after the close of the Plan Year (but for the deferral
election).  In addition, a
Section 401(k) Contribution will be taken into account under the Actual
Deferral Percentage test of section 401(k) of the Code and this
Section for a Plan Year only if it is allocated to an Employee as of a
date within that Plan Year.  For this
purpose a Section 401(k) Contribution is considered allocated as of a date
within a Plan Year if the allocation is not contingent on participation or
performance of services after such date and the Section 401(k)
Contribution is actually paid to the Trust no later than 12 months after the
Plan Year to which the Section 401(k) Contribution relates.

 

Failure to correct Excess 401(k) Contributions by the
close of the Plan Year following the Plan Year for which they were made will
cause the Plan’s cash or deferred arrangement to be disqualified for the Plan
Year for which the Excess 401(k) Contributions were made and for all subsequent
years during which they remain in the Trust. 
Also, the Employer will be liable for a ten percent excise tax on the
amount of Excess 401(k) Contributions unless they are corrected within 21⁄2
months after the close of the Plan Year for which they were made.

 

A.2.4       Limitation Based upon Contribution
Percentage.  The Contribution Percentage for eligible
Highly Compensated Employees for any Plan Year must bear a relationship to the
Actual Contribution Percentage for all other eligible Employees for the preceding
Plan Year which meets either of the following tests:

 

(a)           the Contribution Percentage for all
other eligible Employees multiplied by 1.25; or

 

(b)           the lesser of the Contribution
Percentage for all other eligible Employees multiplied by two, or the
Contribution Percentage for all other eligible Employees plus two percentage
points.

 

For purposes of this test an eligible Employee is an
Employee who is directly or indirectly eligible to receive an allocation of
Matching Contributions for all or part of the Plan Year.  Except as provided below, an Employee who
would be eligible to receive an allocation of Matching Contributions but for
his election not to participate is an eligible Employee.  An Employee who would be eligible to receive
an allocation of Matching Contributions but for the limitations on his Annual
Additions imposed by section 415 of the Code is an eligible Employee.

 

Notwithstanding the foregoing, an individual who is
not a Highly Compensated Employee and who has not satisfied the minimum age and
service requirements of section 410(a)(1)(A) of the Code will not
be treated as an eligible Employee for purposes of this Section A.2.4 if the
Sponsor elects to apply section 410(b)(4)(B) of the Code in determining whether
the Plan meets the requirements of section 401(m)(2) of the Code.

 

If no Section 401(m) Contributions are made on
behalf of an eligible Employee the Actual Contribution Ratio that shall be
included for him in determining the Contribution Percentage is zero.  If the Plan and any other plan or plans to
which Section 401(m) Contributions are made are considered as one plan for
purposes of section 401(a)(4) or 410(b) of the Code, the Plan and those
plans are to be treated as one.  The
Actual Contribution

 

A-3

 

Ratio of a Highly Compensated Employee who is eligible to participate
in more than one plan of an Affiliated employer to which employee or matching
contributions are made is calculated by treating all the plans in which the
Employee is eligible to participate as one plan.  However, plans that are not permitted to be aggregated under
Regulation section 1.410(m)–1(b)(3)(ii) are not aggregated for this
purpose.

 

A Matching Contribution will be taken into account
under this Section for a Plan Year only if (1) it is allocated to the
Employee’s Account as of a date within the Plan Year, (2) it is paid to
the Trust no later than the end of the 12-month period beginning after the
close of the Plan Year, and (3) it is made on behalf of an Employee on
account of his Salary Deferral Contributions for the Plan Year.

 

At the election of the Employer, a Participant’s
Salary Deferral Contributions, and QNECs made on behalf of the Participant
during the Plan Year shall be treated as Section 401(m) Contributions that
are Matching Contributions provided that the conditions set forth in Regulation
section 1.401(m)–1(b)(5) are satisfied.  Salary Deferral Contributions may not be treated as Matching
Contributions for purposes of the contribution percentage test set forth in
this Section unless such contributions, including those taken into account
for purposes of the test set forth in this Section, satisfy the actual deferral
percentage test set forth in Section A.2.3.  Moreover, Salary Deferral Contributions and QNECs may not be
taken into account for purposes of the test set forth in this Section to
the extent that such contributions are taken into account in determining
whether any other contributions satisfy the actual deferral percentage test set
forth in Section A.2.3.  Finally,
Salary Deferral Contributions and QNECs may be taken into account for purposes
of the test set forth in this Section only if they are allocated to the
Employee’s Account as of a date within the Plan Year being tested within the meaning
of Regulation section 1.401(k)–1(b)(4).

 

Failure to correct Excess Aggregate 401(m)
Contributions by the close of the Plan Year following the Plan Year for which
they were made will cause the Plan to fail to be qualified for the Plan Year
for which the Excess Aggregate 401(m) Contributions were made and for all
subsequent years during which they remain in the Trust.  Also, the Employer will be liable for a ten
percent excise tax on the amount of Excess Aggregate 401(m) Contributions
unless they are corrected within 21⁄2 months after the close of the Plan Year for
which they were made.

 

PART
A.3  Correction
Procedures For Erroneous Contributions

 

A.3.1       Excess Deferral Fail Safe Provision.  As soon as practical after the close of each
Plan Year, the Committee shall determine if there would be any Excess
Deferrals.  If there would be an Excess
Deferral by a Participant, the Excess Deferral as adjusted by any earnings or
losses, will be distributed to the Participant no later than April 15
following the Participant’s taxable year in which the Excess Deferral was
made.  The income allocable to the
Excess Deferrals for the taxable year of the Participant shall be determined by
multiplying the income for the taxable year of the Participant allocable to
Salary Deferral Contributions by a fraction. 
The numerator of the fraction is the amount of the Excess Deferrals made
on behalf of the Participant for the taxable year.  The denominator of the fraction is the Participant’s total Salary
Deferral Account balance as of the beginning of the taxable year plus the
Participant’s Salary Deferral Contributions for the taxable year.

 

A.3.2       Actual Deferral Percentage Fail Safe
Provision.  As soon as practicable after the close of each
Plan Year, the Committee shall determine whether the Actual Deferral Percentage
for the Highly Compensated Employees would exceed the limitation set forth in
Section A.2.3.  If the limitation
would be exceeded for a Plan Year, before the close of the following Plan Year
(a) the amount of Excess 401(k) Contributions for that Plan Year (and any
income allocable to those contributions as calculated in the specific manner
required by Section A.3.5) shall be distributed or (b) the Employer
may make a QNEC which it elects to have treated as a Section 401(k)
Contribution.  However, a QNEC shall not
be taken into account for purposes of the test set forth in section 401(k) of
the Code and Section A.2.3 for such Plan Year unless it is made and
allocated by the close of such Plan Year.

 

The amount of Excess 401(k) Contributions to be
distributed shall be determined in the following manner:

 

First, the Plan will determine how much the Actual
Deferral Ratio of the Highly Compensated Employee with the highest Actual
Deferral Ratio would have to be reduced to satisfy the Actual Deferral
Percentage Test or cause such Actual Deferral Ratio to equal the Actual
Deferral Ratio of the Highly Compensated Employee with the next highest Actual
Deferral Ratio.  If a lesser reduction
would enable the Plan to satisfy the Actual Deferral

 

A-4

 

Percentage Test, only this lesser reduction may be made.  Second, this process is repeated until the
Actual Deferral Percentage Test is satisfied. 
The amount of Excess 401(k) Contributions is equal to the sum of these
hypothetical reductions multiplied, in each case, by the Highly Compensated
Employee’s Annual Compensation.

 

Then, the total amount of Excess 401(k) Contributions
shall be distributed on the basis of the respective amounts attributable to
each Highly Compensated Employee.  The
Highly Compensated Employees subject to the actual distribution are determined
using the “dollar leveling method.”  The
Salary Deferral Contributions of the Highly Compensated Employee with the
greatest dollar amount of Salary Deferral Contributions and other contributions
treated as Section 401(k) Contributions for the Plan Year are reduced by the
amount required to cause that Highly Compensated Employee’s Salary Deferral
Contributions to equal the dollar amount of the Salary Deferral Contributions
and other contributions treated as Section 401(k) Contributions for the Plan
Year of the Highly Compensated Employee with the next highest dollar amount.
This amount is then distributed to the Highly Compensated Employee with the
highest dollar amount.  However, if a
lesser reduction, when added to the total dollar amount already distributed
under this Section A.3.2, would equal the total Excess 401(k) Contributions,
the lesser reduction amount shall be distributed.  This process shall be continued until the amount of the Excess
401(k) Contributions have been distributed.

 

QNECs will be treated as Section 401(k)
Contributions only if:  (a) the conditions described in Regulation
section 1.401(k)–1(b)(5) are satisfied and (b) they are allocated to
Participants’ Accounts as of a date within that Plan Year and are actually paid
to the Trust no later than the end of the 12–month period immediately
following the Plan Year to which the contributions relate.  If the Employer makes a QNEC that it elects
to have treated as a Section 401(k) Contribution, the Contribution will be
in an amount necessary to satisfy the Actual Deferral Percentage test and will
be allocated first to those Non–Highly Compensated Employees who had the
lowest Actual Deferral Ratio.

 

Any distributions of the Excess 401(k) Contributions
for any Plan Year are to be made to Highly Compensated Employees on the basis
of the amount of contributions by, or on behalf of, each Highly Compensated
Employee.  The amount of Excess 401(k)
Contributions to be distributed for any Plan Year must be reduced by any excess
Salary Deferral Contributions previously distributed for the taxable year
ending in the same Plan Year.  To the
extent that Excess Section 401(k) Contributions are distributed pursuant to
this Section A.3.2, the Matching Contributions made with respect to those
Excess Section 401(k) Contributions shall be forfeited.

 

A.3.3       Contribution Percentage Fail Safe
Provision.  If the limitation
set forth in Section A.2.4 would be exceeded for any Plan Year any one or
more of the following corrective action shall be taken before the close of the
following Plan Year as determined by the Committee in its sole discretion:
(a) the amount of the Excess Aggregate 401(m) Contributions for that Plan
Year (and any income allocable to those Contributions as calculated in the
manner set forth in Section A.3.5) shall be forfeited or (b) the Employer
may make a QNEC which it elects to have treated as a Section 401(m) Contribution.  However a QNEC shall not be taken into
account for purposes of the test set forth in section 401(m) of the Code and
Section A.2.4 for such Plan Year unless it is made and allocated by the close
of such Plan Year.

 

The amount of Excess Aggregate 401(m) Contributions to
be distributed shall be determined in the following manner:

 

First, the Plan will determine how much the Actual
Contribution Ratio of the Highly Compensated Employee with the highest Actual
Contribution Ratio would have to be reduced to satisfy the Actual Contribution
Percentage Test or cause such Actual Contribution Ratio to equal the Actual
Contribution Ratio of the Highly Compensated Employee with the next highest
Actual Contribution Ratio.  If a lesser
reduction would enable the Plan to satisfy the Actual Contribution Percentage
Test, only this lesser reduction may be made. 
Second, this process is repeated until the Actual Contribution Test is
satisfied.  The amount of Excess
Aggregate 401(m) Contributions is equal to the sum of these hypothetical
reductions multiplied, in each case, by the Highly Compensated Employee’s
Annual Compensation.

 

Then, the total amount of Excess Aggregate 401(m)
Contributions shall be forfeited on the basis of the respective amounts
attributable to each Highly Compensated Employee.  The Highly Compensated Employees

 

A-5

 

subject to the forfeitures are determined using the “dollar leveling
method.” The After-Tax Contributions and Matching Contributions of the Highly
Compensated Employee with the greatest dollar amount of After-Tax Contributions
and Matching Contributions and other contributions treated as matching
contributions for the Plan Year are reduced by the amount required to cause
that Highly Compensated Employee’s After-Tax Contributions and Matching
Contributions and other contributions treated as Section 401(m) Contributions
for the Plan Year to equal the dollar amount of the After-Tax Contributions and
Matching Contributions and other contributions treated as Section 401(m)
Contributions for the Plan Year of the Highly Compensated Employee with the
next highest dollar amount. This amount is then forfeited from the Account of
the Highly Compensated Employee with the highest dollar amount. However, if a lesser
reduction, when added to the total dollar amount already forfeited under this
Section A.3.3, would equal the total Excess Aggregate 401(m) Contributions, the
lesser reduction amount shall be forfeited. This process shall be continued
until the amount of the Excess Aggregate 401(m) Contributions have been
forfeited.

 

A.3.4       Alternative Limitation Fail Safe.  As soon as practicable after the close of
each Plan Year, the Committee shall determine whether the alternative
limitation would be exceeded.  If the
limitation would be exceeded for any Plan Year, before the close of the
following Plan Year the Actual Deferral Percentage or Contribution Percentage
of the eligible Highly Compensated Employees, or a combination of both, shall
be reduced by distributions made in the manner described in the
Regulations.  These distributions shall
be in addition to and not in lieu of distributions required for Excess 401(k)
Contributions and Excess Aggregate 401(m) Contributions.

 

A.3.5       Income Allocable to Excess 401(k) Contributions
and Excess Aggregate 401(m) Contributions.  The income allocable to Excess 401(k) Contributions for the Plan
Year shall be determined by multiplying the income for the Plan Year allocable
to Section 401(k) Contributions by a fraction.  The numerator of the fraction shall be the amount of Excess
401(k) Contributions made on behalf of the Participant for the Plan Year.  The denominator of the fraction shall be the
Participant’s total Account balance attributable to Section 401(k)
Contributions as of the beginning of the Plan Year plus the Participant’s
Section 401(k) Contributions for the Plan Year.  The income allocable to Excess Aggregate 401(m) Contributions for
a Plan Year shall be determined by multiplying the income for the Plan Year
allocable to Section 401(m) Contributions by a fraction.  The numerator of the fraction shall be the
amount of Excess Aggregate 401(m) Contributions made on behalf of the
Participant for the Plan Year.  The
denominator of the fraction shall be the Participant’s total Account balance
attributable to Section 401(m) Contributions as of the beginning of the
Plan Year plus the Participant’s Section 401(m) Contributions for the Plan
Year.

 

PART
A.4  Limitation on
Allocations

 

A.4.1       Basic Limitation on Allocations.  The Annual Additions which may be credited
to a Participant’s Accounts under the Plan for any Limitation Year will not
exceed the Maximum Permissible Amount reduced by the Annual Additions credited
to a Participant’s Account for the same Limitation Year under any other
qualified defined contribution plans maintained by any Affiliated
Employer.  If the Annual Additions with
respect to the Participant under such other qualified defined contribution
plans are less than the Maximum Permissible Amount and the Employer
Contribution that would otherwise be contributed or allocated to the
Participant’s Accounts under the Plan would cause the Annual Additions for the
Limitation Year to exceed this limitation, the amount contributed or allocated
under the Plan will be reduced so that the Annual Additions under all qualified
defined contribution plans maintained by any Affiliated Employer for the
Limitation Year will equal the Maximum Permissible Amount.  If the Annual Additions with respect to the
Participant under such other qualified defined contribution plans maintained by
any Affiliated Employer in the aggregate are equal to or greater than the
Maximum Permissible Amount, no amount will be contributed or allocated to the
Participant’s Account under the Plan for the Limitation Year.

 

A.4.2       Estimation of Maximum Permissible Amount.  Prior to determining the Participant’s
actual Annual Compensation for the Limitation Year, the Employer may determine
the Maximum Permissible Amount on the basis of a reasonable estimation of the
Participant’s Annual Compensation for such Limitation Year, uniformly
determined for all Participants similarly situated.  As soon as is administratively feasible after the end of the
Limitation Year, the Maximum Permissible Amount for the Limitation Year shall
be determined on the basis of the Participant’s actual Annual Compensation for
such Limitation Year.

 

A-6

 

A.4.3       Attribution of Excess Amounts.  If a Participant’s Annual Additions under
the Plan and all other qualified defined contribution plans maintained by any
Affiliated Employer result in an Excess Amount, the total Excess Amount shall
be attributed to the Plan.

 

A.4.4       Treatment of Excess Amounts.  If an Excess Amount attributed to the Plan
is held or contributed as a result of or because of (i) the allocation of
forfeitures, (ii) reasonable error in estimating a Participant’s Considered
Compensation, (iii) reasonable error in calculating the maximum Salary Deferral
Contribution that may be made with respect to a Participant under
section 415 of the Code or (iv) any other facts and circumstances which
the Commissioner of Internal Revenue finds to be justified, the Excess Amount
shall be reduced as follows:

 

(a)           First, the Excess Amount shall be
reduced to the extent necessary by distributing to the Participant all Salary
Deferral Contributions together with their earnings.  These distributed amounts are disregarded for purposes of the
testing and limitations contained in this Appendix A.

 

(b)           Second, if the Participant is still
employed by the Employer at the end of the Limitation Year, then such Excess
Amounts shall not be distributed to the Participant, but shall be reallocated
to a suspense account and shall be reapplied to reduce future Employer Contributions
(including any allocation of forfeitures) under the Plan for such Participant
in the next Limitation Year, and for each succeeding Limitation Year, if
necessary.

 

(c)           If, after application of paragraph
(b) of this Section, an Excess Amount still exists, and the Participant is not
still employed by the Employer at the end of the Limitation Year, then such
Excess Amounts in the Participant’s Accounts shall not be distributed to the
Participant, but shall be reallocated to a suspense account and shall be
reapplied to reduce future Employer Contributions (including allocation of any
forfeitures), for all remaining Participants in the next Limitation Year and
each succeeding Limitation Year if necessary.

 

(d)           If a suspense account is in existence
at any time during the Limitation Year pursuant to this Section, it will not
participate in the allocation of the Trust Fund’s investment gains and
losses.  If a suspense account is in
existence at any time during a particular Limitation Year, all amounts in the
suspense account must be allocated and reallocated to Participants’ Accounts
before any Employer Contribution may be made to the Plan for that Limitation
Year.  Excess Amounts may not be
distributed to Participants or former Participants.  If the Plan is terminated while a suspense account described in
this Section is in existence, the amount in such suspense account shall
revert to the Employer(s) to which it is attributable.

 

A-7

 

APPENDIX B

TOP–HEAVY REQUIREMENTS

 

PART
B.1  Definitions

 

Definitions.  As used herein, the following words and phrases have the meaning
attributed to them below:

 

B.1.1       “Aggregate Accounts” means the total of all
account balances.

 

B.1.2       “Aggregation Group” means (a) each plan
of the Employer or any Affiliated Employer in which a Key Employee is a
Participant and (b) each other plan of the Employer or any Affiliated
Employer which enables any plan in (a) to meet the requirements of either
section 401(a)(4) or 410 of the Code.  Any Employer may treat a plan not required to be included in the
Aggregation Group as being a part of the group if the group would continue to
meet the requirements of section 401(a)(4) and 410 of the Code with that
plan being taken into account.

 

B.1.3       “Determination Date” means for a
given Plan Year the last day of the preceding Plan Year or in the case of the
first Plan Year the last day of that Plan Year.

 

B.1.4       “Key Employee” means “Key Employee”
means an Employee or former Employee (including a deceased Employee) who at any
time during the Plan Year is (a) an officer of any Affiliated Employer having
Annual Compensation greater than $130,000.00 (as adjusted by the Secretary of
Treasury from time to time for increases in the cost of living), (b) a Five
Percent Owner of any Affiliated Employer, treated separately, or (c) a One
Percent Owner of any Affiliated Employer, treated separately, having Annual
Compensation greater than $150,000.00. 
For this purpose no more than fifty (50) employees or, if lesser, the
greater of three (3) employees or ten percent (10%) of the employees shall be
treated as officers.

 

For purposes of determining the number of officers
taken into account, the following employees shall be excluded:  (1) employees who have not completed six (6)
months of Vesting Service, (2) employees who normally work less than seventeen
and one-half (17-1/2) hours per week, (3) employees who normally work not more
than six (6) months during any year, (4) employees who have not attained the
age of twenty-one (21), and (5) except to the extent provided in Regulations,
employees who are included in a unit of employees covered by an agreement which
the Secretary of Labor finds to be a collective bargaining agreement between
employee representatives and an Affiliated Employer.  Section 416(i) of the Code shall be used to determine percentage
of ownership.

 

The determination of who is a Key Employee will be
made in accordance with section 416(i) of the Code and applicable Regulations.

 

B.1.5       “Non-Key Employee” means any
Employee who is not a Key Employee.

 

B.1.6       “Top-Heavy Plan” means any plan
which has been determined to be top-heavy under the test described in Appendix
B of the Plan.

 

PART
B.2  Application

 

B.2.1       Application.  The requirements described in this Appendix B shall
apply to each Plan Year that the Plan is determined to be a Top–Heavy
Plan.

 

B.2.2       Top-Heavy Test.  If on the Determination Date the
Aggregate Accounts of Key Employees in the Plan exceed 60 percent of the
Aggregate Accounts of all Employees in the Plan, the Plan shall be a Top–Heavy
Plan for that Plan Year.  In addition,
if the Plan is required to be included in an Aggregation Group and that group
is a top–heavy group, the Plan shall be treated as a Top–Heavy
Plan.  An Aggregation Group is a top–heavy
group if on the Determination Date the sum of (a) the present value of the
cumulative accrued benefits for Key Employees under all defined benefit plans
in the Aggregation Group which contains the Plan, plus (b) the total of
all of the

 

B-1

 

accounts of Key
Employees under all defined contribution plans included in the Aggregation
Group (which contains the Plan) is more than 60 percent of a similar sum
determined for all employees covered in the Aggregation Group which contains
the Plan.

 

In applying the above tests, the following rules shall
apply:

 

(a)                  in
determining the present value of the accumulated accrued benefits for any
Employee or the amount in the account of any Employee, the value or amount
shall be increased by all distributions made to or for the benefit of the
Employee under the Plan after his Separation From Service and during the
one-year period ending on the Determination Date;

 

(b)                 in determining
the present value of the accumulated accrued benefits for any Employee or the
amount in the account of any Employee, the value or amount shall be increased
by all distributions made to or for the benefit of the Employee under the Plan
prior to his Separation From Service and during the five-year period ending on
the Determination Date;

 

(c)                  all rollover
contributions made by the Employee to the Plan shall not be considered by the
Plan for either test;

 

(d)                 if an Employee
is a Non–Key Employee under the Plan for the Plan Year but was a Key
Employee under the Plan for a prior Plan Year, his Account shall not be
considered; and

 

(e)                  notwithstanding
any other provision of the Plan, benefits shall not be taken into account in
determining the top-heavy ratio for any Employee who has not performed services
for the Employer during the last one-year period ending upon the Determination
Date.

 

B.2.3       Vesting Restrictions if Plan Becomes
Top-Heavy.  If a Participant
has at least one Hour of Service during a Plan Year when the Plan is a Top–Heavy
Plan, he shall either vest under each of the normal vesting provisions of the
Plan or under the following vesting schedule, whichever is more favorable:

 

	
  Completed
  Years of Active Service

  	
   

  	
  Vested
  Percentage of Amount

  In Accounts Containing

  Employer Contributions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Less than two
  years

  	
   

  	
  0

  	
   

  
	
  Two years but
  less than three years

  	
   

  	
  20

  	
   

  
	
  Three years but
  less than four years

  	
   

  	
  40

  	
   

  
	
  Four years but
  less than five years

  	
   

  	
  60

  	
   

  
	
  Five years but
  less than six years

  	
   

  	
  80

  	
   

  
	
  Six years or
  more

  	
   

  	
  100

  	
   

  

 

If the Plan ceases to be a Top–Heavy Plan, this requirement shall
no longer apply.  After that date, the
normal vesting provisions of the Plan shall be applicable to all subsequent
Contributions by the Employer.

 

For purposes of this Section B.2.3 Years of Active
Service shall be determined under the rules of section 411(a)(4), (5) and (6)
of the Code except that Years of Active Service beginning prior to January 1,
1984 and Years of Active Service for any Plan Year for which the Plan was not
top-heavy shall be disregarded.  Also,
any Year of Active Service shall be disregarded to the extent that such Year of
Active Service occurs during a Plan Year when the Plan benefits (within the
meaning of section 410(b) of the Code) no Key Employee for former Key Employee.

 

B.2.4       Minimum Contributions if Plan Becomes
Top-Heavy.  If the Plan is a
Top-Heavy Plan and the normal allocation of the Employer Contribution and
forfeitures is less than five percent of any Non-Key Employee Participant’s
Annual Compensation, the Committee, without regard to the normal allocation
procedures, shall allocate the Employer Contribution and the forfeitures among
the Participants who are Non-Key Employees and

 

B-2

 

who are in the
employ of the Employer at the end of the Plan Year in proportion to each such
Participant’s Annual Compensation until each Non–Key Employee Participant
has had an amount equal to five percent of his Annual Compensation allocated to
his Account.  At that time, any more
Employer Contributions or forfeitures shall be allocated under the normal
allocation procedures described earlier in the Plan.  Amounts that may be treated as Section 401(k) Contributions
made on behalf of Non-Key Employees may not be included in determining the
minimum contribution required under this Section to the extent that they are
treated as Section 401(k) Contributions for purposes of the Actual
Deferral Percentage test.

 

In applying this restriction, the following rules
shall apply:

 

(a)           Each Employee who is eligible for
participation (without regard to whether he has made mandatory contributions,
if any are required, or whether his compensation is less than a stated amount)
shall be entitled to receive an allocation under this Section; and

 

(b)           All defined contribution plans
required to be included in the Aggregation Group shall be treated as one plan
for purposes of meeting the three percent maximum; this required aggregation
shall not apply if the Plan is also required to be included in an Aggregation
Group which includes a defined benefit plan and the Plan enables that defined
benefit plan to meet the requirements of sections 401(a)(4) or 410 of the
Code.

 

B.2.5       Disregard of Government Programs.  If the Plan is a Top–Heavy Plan, it
must meet the vesting and benefit requirements described in this Article
without taking into account contributions or benefits under Chapter 2 of
the Code (relating to the tax on self–employment income), Chapter 21
of the Code (relating to the Federal Insurance Contributions Act), Title II
of the Social Security Act, or any other Federal or State law.

 

B-3

 

APPENDIX C

ADMINISTRATION OF THE PLAN

 

C.1          Appointment, Term, Resignation, and
Removal.  The Board shall
appoint a Committee of not less than two persons, the members of which shall
serve until their resignation, death, or removal.  The Sponsor shall notify the Trustee in writing of its
composition from time to time. Any member of the Committee may resign at any
time by giving written notice of such resignation to the Sponsor. Any member of
the Committee may be removed by the Board, with or without cause. Vacancies in
the Committee arising by resignation, death, removal, or otherwise shall be
filled by such persons as may be appointed by the Board.

 

C.2          Powers.  The Committee shall have exclusive
responsibility for the administration of the Plan, according to the terms and
provisions of this document, and shall have all powers necessary to accomplish
such purposes, including, but not by way of limitation, the right, power, and
authority:

 

(a)           to make rules and regulations for the
administration of the Plan which are not inconsistent with the terms and
provisions thereof, provided such rules and regulations are evidenced in
writing;

 

(b)           to construe all terms, provisions,
conditions, and limitations of the Plan; and its construction thereof made in
good faith and without discrimination in favor of or against any Participant or
former Participant shall be final and conclusive on all parties at interest;

 

(c)           to correct any defect, supply any
omission, or reconcile any inconsistency which may appear in the Plan in such
manner and to such extent as it shall deem expedient to carry the Plan into
effect for the greatest benefit of all parties at interest, and its judgment in
such matters shall be final and conclusive as to all parties at interest;

 

(d)           to select, employ, and compensate
from time to time such consultants, actuaries, accountants, attorneys, and
other agents and employees as the Committee may deem necessary or advisable for
the proper and efficient administration of the Plan, and any agent, firm, or
employee so selected by the Committee may be a disqualified person, but only if
the requirements of section 4975(d) of the Code have been met;

 

(e)           to resolve all questions relating to
the eligibility of Employees to become Participants, and to determine the
period of Active Service and the amount of Considered Compensation upon which
the benefits of each Participant shall be calculated;

 

(f)            to resolve all controversies
relating to the administration of the Plan, including but not limited to (1)
differences of opinion arising between the Employer and a Participant or former
Participant, and (2) any questions it deems advisable to determine in order to
promote the uniform and nondiscriminatory administration of the Plan for the
benefit of all parties at interest;

 

(g)           to direct and instruct or to appoint
an investment manager or managers which would have the power to direct and
instruct the Trustee in all matters relating to the preservation, investment,
reinvestment, management, and disposition of the Trust assets; provided,
however, that the Committee shall have no authority that would prevent the
Trustee from being an “agent independent of the issuer,” as that term is
defined in Rule 10b-18 promulgated under the Securities Exchange Act of 1934,
at any time that the Trustee’s failure to maintain such status would result in
the Sponsor or any other person engaging in a “manipulative or deceptive device
or contrivance” under the provisions of Rule 10b-6 of such Act;

 

(h)           to direct and instruct the Trustee in
all matters relating to the payment of Plan benefits and to determine a
Participant’s or former Participant’s entitlement to a benefit should he appeal
a denial of his claim for a benefit or any portion thereof; and

 

C-1

 

(i)            to delegate such of its clerical and
recordation duties under the Plan as it may deem necessary or advisable for the
proper and efficient administration of the Plan.

 

C.3          Organization.  The Committee shall select from among its
members a chairman, who shall preside at all of its meetings, and shall select
a secretary, without regard as to whether that person is a member of the
Committee, who shall keep all records, documents, and data pertaining to its
supervision of the administration of the Plan.

 

C.4          Quorum and
Majority Action.  A majority
of the members of the Committee shall constitute a quorum for the transaction of
business, and the vote of a majority of the members present at any meeting will
decide any question brought before that meeting. In addition, the Committee may
decide any question by a vote, taken without a meeting, of a majority of its
members.

 

C.5          Signatures.  The chairman, the secretary, and any one or
more of the members of the Committee to which the Committee has delegated the
power, shall each, severally, have the power to execute any document on behalf
of the  Committee, and to execute any
certificate or other written evidence of the action of the Committee. The
Trustee, after being notified of any such delegation of power in writing, shall
thereafter accept and may rely upon any document executed by such member or
members as representing the action of the Committee until the Committee files
with the Trustee a written revocation of that delegation of power.

 

C.6          Disqualification
of Committee Members.  A
member of the Committee who is also a Participant of the Plan shall not vote or
act upon any matter relating solely to himself.

 

C.7          Disclosure
to Participants.  The
Committee shall make available to each Participant, former Participant, and
Beneficiary for his examination such records, documents, and other data as are
required under ERISA, but only at reasonable times during business hours. No
Participant, former Participant, or Beneficiary shall have the right to examine
any data or records reflecting the compensation paid to any other Participant,
former Participant, or Beneficiary, and the Committee shall not be required to
make any data or records available other than those required by ERISA.

 

C.8          Standard of
Performance.  The Committee
and each of its members shall use the care, skill, prudence, and diligence
under the circumstances then prevailing that a prudent man acting in a like
capacity and familiar with such matters would use in conducting his business as
the administrator of the Plan; shall, when exercising its power to direct
investments, diversify the investments of the Plan so as to minimize the risk
of large losses, unless under the circumstances it is clearly prudent not to do
so; and shall otherwise act in accordance with the provisions of the Plan and
ERISA.

 

C.9          Liability of
Administrative Committee and Liability Insurance.  No member of the Committee shall be liable
for any act or omission of any other member of the Committee, the Trustee, any
investment manager, or any Participant or former Participant who directs the
investment of his Account or other agent appointed by the Committee except to
the extent required by the terms of ERISA, and any other applicable state or
federal law, which liability cannot be waived. No Participant of the Committee
shall be liable for any act or omission on his own part except to the extent
required by the terms of ERISA, and any other applicable state or federal law,
which liability cannot be waived. In this connection, each provision hereof is
severable and if any provision is found to be void as against public policy, it
shall not affect the validity of any other provision hereof.

 

Further, it is specifically provided that the Trustee
may, at the direction of the Committee, purchase out of the Trust assets
insurance for the members of the Committee and any other fiduciaries appointed
by the Committee, and for the Trust itself to cover liability or losses
occurring by reason of the act or omission of any one or more of the members of
the Committee or any other fiduciary appointed by them under the Plan, provided
such insurance permits recourse by the insurer against the members of the
Committee or the other fiduciaries concerned in the case of a breach of a
fiduciary obligation by one or more members of the Committee or other fiduciary
covered thereby.

 

C-2

 

C.10        Bonding.  No member of the Committee shall be required
to give bond for the performance of his duties hereunder unless required by a
law which cannot be waived.

 

C.11        Compensation.  The Committee shall serve without
compensation for their services, but shall be reimbursed by the Employers for
all expenses properly and actually incurred in the performance of their duties
under the Plan unless the Employers elect to have such expenses paid out of the
Trust assets.

 

C.12        Persons
Serving in Dual Fiduciary Roles. 
Any person, group of persons, corporations, firm, or other entity may
serve in more than one fiduciary capacity with respect to the Plan, including
the ability to serve both as a successor trustee and as a member of the
Committee.

 

C.13        Administrator.  For all purposes of ERISA, the administrator
of the Plan within the meaning of ERISA shall be the Sponsor. The Sponsor shall
have final responsibility for compliance with all reporting and disclosure
requirements imposed with respect to the Plan under any federal or state law,
or any regulations promulgated thereunder.

 

C.14        Named
Fiduciary.  The members of
the Committee shall be the “named fiduciary” for purposes of
section 402(a)(1) of ERISA, and as such shall have the authority to
control and manage the operation and administration of the Plan, except to the
extent such authority and control is allocated or delegated to other parties
pursuant to the terms of the Plan.

 

C.15        Standard of
Judicial Review of Committee Actions.  The Committee has full and absolute discretion in the exercise of
each and every aspect of its authority under the Plan, including without
limitation, the authority to determine any person’s right to benefits under the
Plan, the correct amount and form of any such benefits; the authority to decide
any appeal; the authority to review and correct the actions of any prior
administrative committee; and all of the rights, powers, and authorities
specified in this Appendix and elsewhere in the Plan.  Notwithstanding any provision of law or any explicit or implicit
provision of this document, any action taken, or ruling or decision made, by
the Committee in the exercise of any of its powers and authorities under the
Plan will be final and conclusive as to all parties other than the Sponsor or
Trustee, including without limitation all Participants, former Participants and
Beneficiaries, regardless of whether the Committee or one or more members
thereof may have an actual or potential conflict of interest with respect to
the subject matter of such action, ruling, or decision.  No such final action, ruling, or decision of
the Committee will be subject to de novo review in any judicial proceeding; and
no such final action, ruling, or decision of the Committee may be set aside
unless it is held to have been arbitrary and capricious by a final judgment of
a court having jurisdiction with respect to the issue.

 

C.16        Indemnification
of Committee by the Sponsor. 
The Sponsor shall indemnify and hold harmless the Committee, the
Committee members, and any persons to whom the Committee has allocated or
delegated its responsibilities in accordance with the provisions hereof, as
well as any other fiduciary who is also an officer, director, or Employee of an
Employer, and hold each of them harmless from and against all claims, loss,
damages, expense, and liability arising from their responsibilities in
connection with the administration of the Plan which is not otherwise paid or
reimbursed by insurance, unless the same shall result from their own willful misconduct.

 

C-3

 

APPENDIX D

 

FUNDING

 

D.1          Benefits Provided Solely by Trust.  All benefits payable under the Plan shall be
paid or provided for solely from the Trust, and the Employer assumes no
liability or responsibility therefor.

 

D.2          Funding of Plan.  The Plan shall be funded by one or more
separate Trusts.  If more than one Trust
is used, each Trust shall be designated by the name of the Plan followed by a
number assigned by the Committee at the time the Trust is established.

 

D.3          Incorporation of Trust.  Each Trust is a part of the Plan.  All rights or benefits which accrue to a
person under the Plan shall be subject also to the terms of the agreements
creating the Trust or Trusts and any amendments to them which are not in direct
conflict with the Plan.

 

D.4          Authority of Trustee.  Each Trustee shall have full title and legal ownership of the
assets in the separate Trust which, from time to time, are in his separate
possession.  No other Trustee shall have
joint title to or joint legal ownership of any asset in one of the other Trusts
held by another Trustee.  Each Trustee
shall be governed separately by the trust agreement entered into between the
Employer and that Trustee and the terms of the Plan without regard to any other
agreement entered into between any other Trustee and the Employer as a part of
the Plan.

 

D.5          Allocation of Responsibility.  To the fullest extent permitted under
section 405 of ERISA, the agreements entered into between the Employer and
each of the Trustees shall be interpreted to allocate to each Trustee its
specific responsibilities, obligations and duties so as to relieve all other
Trustees from liability either through the agreement, Plan or ERISA, for any
act of any other Trustee which results in a loss to the Plan because of his act
or failure to act.

 

D.6          Trustee’s Fees and Expenses.  The Trustee shall receive for its services
as Trustee hereunder the compensation which from time to time may be agreed
upon by the Sponsor and the Trustee. 
All of such compensation, together with the expenses incurred by the
Trustee in connection with the administration of this Trust, including fees for
legal services rendered to the Trustee, all other charges and disbursements of
the Trustee, and all other expenses of the Plan shall be charged to and
deducted from the Trust Fund, unless the Sponsor elects in writing to have any
part or all of such compensation, expenses, charges, and disbursements paid
directly by the Sponsor.  The Trustee
shall deduct from and charge against the Trust assets any and all taxes paid by
it which may be levied or assessed upon or in respect of the Trust hereunder or
the income thereof, and shall equitably allocate the same among the several
Participants and former Participants.

 

D-1

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