SECURITY RESERVE PLAN. For Employees of The International Metals Reclamation Company, Inc.

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1 SECURITY RESERVE PLAN For Employees of The International Metals Reclamation Company, Inc. October 1,

2 Table of Contents Highlights of the Inmetco Security Reserve Plan WHAT'S IN A NAME?...3 WHO IS ELIGIBLE...4 HOW TO ENROLL...4 HOW MUCH YOU CAN CONTRIBUTE...4 CONTRIBUTIONS ARE IMMEDIATELY VESTED, including Company Match!...5 THE BENEFIT OF BEFORE-TAX SAVINGS...6 HOW YOU CAN INVEST YOUR SAVINGS AND YOUR COMPANY MATCHING CONTRIBUTIONS...8 HOW YOU CAN ACCESS YOUR MONEY BEFORE RETIREMENT...10 OPTIONS AT RETIREMENT...13 OPTIONS AT TERMINATION OF EMPLOYMENT...14 HOW YOUR ACCOUNT IS TAXED...15 HOW YOU CAN KEEP TRACK OF YOUR ACCOUNT...16 This Summary Plan Description (SPD) only explains the key features of the Inmetco Security Reserve Plan as amended effective January 1, 2002 and reflects the provisions of EGTRRA (Economic Growth and Tax Relief Reconciliation Act of 2001) The official plan document and trust agreement, which are more detailed, govern the operation of the Plan. If there is a conflict between the information in this SPD and the Plan document or trust agreement, the Plan document or trust agreement will govern. If you have questions, please contact your local benefits administrator. 2

3 If there was an easy way to save money, would you be interested? Better yet, if there was an easy way to earn company matching funds and reduce your taxes while you were saving money, would you be interested? Well, read on. The Inmetco Security Reserve Plan (SRP) is an excellent way for you to supplement your Inco pension. The Plan can also help you make the most of day-to-day tax and savings advantages. Consider what it has to offer: Flexible contribution rates - you can contribute 1% to 16% of your gross pay each year. The choice is yours. In addition, if you are age 50 or older during the year, you may contribute extra before-tax contributions. (See page 4.) Company Contributions - when you contribute to the SRP, Inmetco matches 100% of your contributions up to 3% of gross pay and 50% of your contributions on the next 2% of gross pay. This company contribution is immediately vested. (See p. 5.) Tax Advantage your before-tax contributions, company matching contributions, and all investment earnings are generally not subject to income tax while they remain in the plan. In addition, depending on your income, you may be eligible for a tax credit if you contribute on a before-tax basis. (See page 6.) Investment Options - you direct how your money is invested in any of the ten available funds. (See page 9.) So are you interested yet? With company contributions, tax advantages, flexible contribution rates, investment options, withdrawal and loan privileges, shouldn t you consider saving in the SRP? WHAT'S IN A NAME? Our savings plan, the Inmetco Security Reserve Plan ("SRP"), which is a retirement savings and investment plan, is commonly called a "401(k) plan". So, what does 401(k) mean? 401(k) is a section of the IRS code that allows before-tax savings. Because of its tax benefits, Section 401(k) of the Internal Revenue Code is now a familiar part of most major companies' benefit programs. Effective January 2001, the SRP became a special type of 401(k) plan called a safe harbor plan and will continue as a safe harbor plan until you are notified otherwise. A safe harbor plan provides a matching contribution, which meets certain statutory requirements under the Internal Revenue Code and is not subject to discrimination testing for certain contributions. This means that pre-tax and employer matching contributions will not be subject to cutback or refund based on annual testing results. Withdrawals - you may take money out from the plan under certain conditions. Loans - you may borrow a portion of your plan account. 3

4 WHO IS ELIGIBLE If you are an active employee of INMETCO, you are eligible to participate in the Inmetco Security Reserve Plan on the first day of the month following your date of hire or on the first day of any month thereafter. If you are a leased employee, you are not eligible to participate. HOW TO ENROLL This plan is voluntary, so you must complete an Enrollment Form and a Beneficiary Form to participate in the plan. On these forms, you will: elect the percentage of gross pay deduction you wish to make on a before -tax and/or after-tax basis elect your investments name your beneficiary To obtain these forms or for more information on enrollment, please contact your local Benefits Administrator. Designating a Beneficiary A beneficiary is the person you designate to receive your plan account in the event of your death. If you are married or marry in the future, your spouse is automatically your beneficiary unless you choose someone else and obtain your spouse's written, notarized consent. HOW MUCH YOU CAN CONTRIBUTE You may contribute from 1% to 16% of your gross pay. Gross pay refers to your total compensation which include any amounts that are deferred under a 401(k) plan or medical premium conversion/fle xible spending account (Section 125 plan) and includes other W-2 items like overtime, bonuses and premium pay. Basic Contribution. The first 5% of your contributions is your basic contribution and is eligible for company matching contributions. Additional Voluntary Contribution. The contributions above 5% are called additional voluntary contributions. You may contribute an additional 1% to 11% of your gross pay, subject to IRS limitations, which is not eligible to be matched by the Company. Age 50 or older Before-Tax Catch Up Contributions Under the provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), if you are age 50 or older during the year, you may be able to make extra before -tax catch-up contributions of $1,000 to make -up for lost time in preparing for retirement. The catchup contributions will increase annually to a maximum of $5,000 in 2006 and will be indexed for inflation in $500 increments thereafter. Please note that the catch-up contribution would be allowed only after you reach your maximum before-tax amount for the year under the Plan. 4

5 TYPES OF CONTRIBUTIONS There are two types of contributions that may be made to your account by payroll deduction: before-tax contribution and after-tax contribution. Subject to IRS limits, you decide whether your contributions will be before-tax, after-tax, or a combination of both. As an employee, you may also rollover your vested account balance (including after-tax employee contributions) from a qualified plan in which you participated at a previous employer or Individual Retirement Account (IRA). Before-Tax Contribution [401(K)] You may contribute on a before-tax basis; the law limits the dollar amount you may contribute. In 2002, under the provisions of EGTRRA (Economic Growth and Tax Relief Reconciliation Act of 2001) the maximum amount you can contribute to all 401(k) plans under which you are covered is $11,000 with $1,000 a year increases through After 2006, the limit will be indexed for inflation in $500 increments. If you are age 50 or older during the year, you may be able to contribute an extra $1,000 in before-tax catch-up contributions with $1,000 a year increases through After 2006, the limit will be indexed for inflation in $500 increments. (See page 4.) Before -tax contributions are deducted from your paycheck and deposited into your account before federal, and in most cases (depending on where you live) state and local income taxes are withheld. Taxes are deferred until you receive a distribution from the Plan. You are required to pay Social Security taxes on your before-tax contributions. Your elected before-tax contribution rate will be applied in full to your before -tax contributions. Once you reach the maximum before -tax contribution amount for the year, any excess contributions will automatically spill over into your after-tax contributions unless you call the T. Rowe Price Plan Account Line ( ) to change your election. After-Tax Contribution After-tax contributions are deducted from your pay after taxes and then deposited into your account. So, there is no immediate tax advantage. However, you won't owe taxes on these contributions when you receive them from the Plan since you already paid taxes on them as part of your pay. (Further, all earnings on these contributions are tax deferred until you receive them from the Plan.) Withdrawals of after-tax monies are governed by Plan provisions. Rollover Contribution Rollover contribution is your vested account balance from a qualified plan of your previous employer or IRA that you elect to transfer into the Inmetco Security Reserve Plan. You may change your contribution rate, type of contribution, and/or age 50 before-tax catch-up contribution as often as once a month by calling the T. Rowe Price Plan Account Line ( ) no later than the 25 th day of the month for changes to be effective the first day of the following month. If the 25 th falls on a holiday or weekend, the deadline will be the day before such holiday or weekend. CONTRIBUTIONS ARE IMMEDIATELY VESTED, including Company Match! Inmetco matches 100% of your contributions up to 3% of gross pay, and 50% of your contributions on the next 2% of gross pay and these contributions are immediately vested. The Company has made regular Plan contributions since the SRP began and currently intends to make regular Plan contributions in the future under the formula described above. But Plan provisions and the Internal Revenue Code do provide Inmetco with the right to change or limit future contributions level or discontinue the match should it feel that it is necessary to do so. 5

6 THE BENEFIT OF BEFORE- TAX SAVINGS To give you a better idea of the differences between saving on a before-tax and after-tax basis, here's an example: Limits on Contributions Annual additions to your account, which include before-tax (but excludes age 50 catch-up contributions), after-tax and company matching contributions, may not exceed the lesser of either $40,000 (periodically adjusted for inflation in $1,000 increments) or 100% of your total compensation, including overtime, bonuses, premium pay and amounts deferred under a 401(k) plan or medical premium conversion/flexible spending account (Section 125 plan). You are also subject to the IRS annual maximum compensation limit for purposes of the Plan. For 2002, this amount is $200,000. After 2002, the limit will be indexed in $5,000 increments. If you are a highly compensated employee, your after-tax contributions could be limited to satisfy IRS non-discrimination test limits. Excess contributions and allocable earnings may be returned to you within 2-1/2 months after the end of the Plan Year. (These contributions are not covered by the safe harbor plan design, which eliminates testing for pre-tax contributions and company match contributions.) A highly compensated employee is defined by compensation limits set by the IRS on an annual basis. Assume you are married, earn $30,000 per year, contribute 5% of your gross pay to the Plan, file jointly with two exemptions in 2002, use the standard deduction and are in the 15% tax bracket. Before-Tax Contributions After-Tax Contributions Annual Earnings $30,000 $30,000 Before-Tax Contributions 1, Adjusted Gross Income $28,500 $30,000 Federal Income Tax 1,961 2,186 After-Tax Contributions 000 1,500 Adjusted Annual Pay $26,539 $26,314 Increase in Take-Home Pay $ 225 Whether you contribute on a before-tax or aftertax basis, the amount you contribute to your savings is the same: $1,500 a year. However, before-tax contributions reduce your current taxes and increase your take-home pay by $225. Tax Credit for Low and Moderate-Income Savers Under EGTRRA, in addition to the exclusion from taxable income for before-tax contribution, you may be eligible to reduce the federal income tax you pay dollar-for-dollar depending on your income. It would apply to the first $2,000 in contributions reduced by certain distributions. The credit will be calculated on a percentage of the contribution (up to the maximum of $2,000) using the income parameters in the following table. Tax Credit Individual Tax Filing Head of Household Joint Tax Filing 50% $0 - $15,000 $0 - $22,500 $0 - $30,000 20% $15,001 - $22,501 - $30,001 - $16,250 $24,375 $32,500 10% $16,251 - $24,376 - $32,501 - $25,000 $37,500 $50,000 6

7 Inmetco Security Reserve Plan Advantage Here's an example of how much the company contributions can add to your savings, compared with a more traditional savings account or fund. Assume you earn $30,000 and contribute 5% of your gross pay to the Plan: Traditional Savings Account Inmetco Security Reserve Plan You save 5% of pay $1500 $1,500 Inmetco contributes 000 1,200 Total $1,500 $2,700 As you can see, with the Inmetco Security Reserve Plan your savings grow immediately with the company match fully vested. (This means you cannot forfeit it if you terminate employment or for any other reason.) The Power of Compounding Compounding of earnings has a dramatic effect on how contributions grow. Consider Jim and Matt Jim begins saving $100 a month at age 21 and stops 15 years later when he turns 36. Matt saves the same amount each month, but he doesn't begin until he is 35. He saves for 30 years and stops when he reaches 65. Earnings in this example are 7%, compounded annually, on each account. Here are the results when both Jim and Matt reach age 65. Jim Matt How Your Money Grows By participating in the Plan, you can save on a favorable tax-deferred basis. Contributions made by Inmetco help your account balance grow faster. Of course, the amount held for you in the Plan will be subject to federal and state or local income taxes, if applicable, when it is distributed - except for any after-tax contributions that you made. Assuming similar investment returns after investment expenses, the compounding of earnings (illustrated below), and the tax deferral on investment earnings over the long term can be expected to provide you with a larger accumulation at retirement than saving outside the Plan. You must remember that the Plan does not guarantee any level of growth or investment earnings. The example at right is for illustration purposes only. Start Age Ending Age Total Contributions $18,000 $36,000 Years Contributed Value of Account at Age 65 $240,000 $120,000 Although Jim contributed for only half as long as Matt ---- and contributed only half as much --- his age-65 balance is twice as large as Matt's. That's because Jim's money had more time to grow --- more years for his interest to earn interest. 7

8 HOW YOU CAN INVEST YOUR SAVINGS AND YOUR COMPANY MATCHING CONTRIBUTIONS Both your contributions and company matching contributions will be invested for you by professional investment managers in one or a combination of ten available funds based on your direction. You may divide your contributions among the funds. You may also change the allocation of your existing account balance. Your account consists of your before-tax and/or after-tax contributions, company matching contributions and any investment earnings/losses. For example, you may choose to invest 20% of your account balance in one fund and 40% in each of two other funds. You may request changes to your investment allocations on a daily basis without any percentage restrictions. This Plan is a participant-directed account plan described in Section 404(c) of The Employee Retirement Income Security Act of 1974 (ERISA) which means that you control investment of your account. Although the Plan's fiduciaries are responsible for selecting the available investment funds, only you are responsible for deciding how to invest your account among these funds. Inmetco also intends to allow you to vote proxies for mutual fund shares in your account to the maximum extent feasible. Balancing Risk and Reward You may be tempted to lower your risk by choosing only the least aggressive investments. However, keep in mind when you decrease the risk over the short-term, you increase another risk - the risk that you will not have enough money when it's time to retire because safer investments may not always keep up with the rate of inflation. The key is to balance the potential risk and reward in any investments you make, taking into account your years until retirement, other assets and your risk tolerance. The Plan permits investment advisory fees, trustee fees, as well as certain other costs and expenses incurred in Plan administration, to be charged to the assets of the respective funds. (See your prospectus for a description of mutual fund fees payable to the fund s advisers and other service providers.) 8

9 Investment Choices The following is a description of each investment option available under the Plan including each investment s objectives and risk factors. For more detailed information, you should consult the prospectus or other official description for each fund. You may also wish to consult your financial advisor about your investment choices, since Inmetco cannot give you personal financial advice. T. Rowe Price Stable Value Fund This fund seeks to preserve your principal investment and offers competitive income consistent with the preservation of principal. It invests in investment contracts issued by high quality insurance companies and banks as rated by T. Rowe Price Associates, Inc., the advisers to the fund s sponsor. This fund tries to keep its unit price steady at $1, although it is not guaranteed. This fund is not insured nor guaranteed by the U.S. government or its agencies. T. Rowe Price Spectrum Income This fund takes a diversified approach to income. It may invest in 5 U.S. bond funds, 2 international bond funds, a money market fund and an income oriented stock fund. This diversification may lower the risk of the fund. T. Rowe Price Equity Index Trust This trust seeks long term growth. It invests heavily in the 500 stocks that make up the S & P 500 Index. T. Rowe Price Mid-Cap Growth This fund seeks long term growth. It invests in the common stocks of medium sized companies. The companies may experience dynamic growth but are no longer considered emerging growth companies. T. Rowe Price Dividend Growth Fund - This fund seeks current income and long term growth. It invests in dividend paying stocks that have good prospects for increasing their dividends. T. Rowe Price Blue Chip Growth This fund seeks long term growth by investing in large and medium sized blue chip growth companies that are well established and have the potential for above average growth. Wasatch Hoisington US Treasury Fund This fund is designed for long term investors seeking income and capital appreciation. This fund invests in US Treasury securities and seeks to provide a rate of return that exceeds the rate of inflation. The portfolio will use the entire range of maturities offered in order to take advantage of the manager s assessment of economic and interest rate trends. Vanguard/Wellington Fund This fund seeks to conserve capital and to provide moderate long-term capital growth and moderate income. It invests approximately 60% to 70% in dividend paying stocks of established large and medium sized companies that are undervalued but whose prospects are improving. Morgan Stanley Institutional International Equity Fund, Class B This fund seeks long term capital appreciation by investing primarily in equity securities of non-u.s. issuers. The fund uses a bottom up, value driven approach, investing primarily in developed countries. (See your fund booklet for a description of special considerations applicable when investing in companies outside the United States.) T. Rowe Price Small Cap Growth Fund This fund seeks high long-term growth. It invests in dividend paying stocks that have good prospects for increasing their dividends. 9

10 HOW YOU CAN ACCESS YOUR MONEY BEFORE RETIREMENT Your SRP is primarily a retirement savings plan. However, if you need money before that time for an emergency or a large expense, you may be able to take a loan or make a withdrawal. In both instances, spousal consent is required if you are married. IF YOU NEED A LOAN - If you are currently employed by Inmetco or any affiliate, you may apply for a loan from your SRP account balance. All applications will be subject to the following restrictions: the minimum loan amount is $1,000; the maximu m allowable amount is the lesser of: 1. 50% of your balance 2. $50,000 less the highest principal outstanding balance over the previous 12 months only one outstanding loan is allowed at any time Your loan repayments will be made by regular payroll deduction over a period of months. If you will not be receiving any pay from a participating company due to a Companyapproved unpaid leave of absence, disability, lay-off period or transfer to a non-u.s. location, you will be required to make loan repayments in U.S. dollars by certified check and send them directly to T. Rowe Price PST 41 (P.O. Box 17215, Baltimore, MD ). As an active employee, you may prepay at any time only by making a one-time full payment of your entire remaining balance. Your account will be assigned as collateral for your loan. The interest rate on your loan will be based on Prime Rate plus 1% as published in the Wall Street Journal (MONEY RATES) on the last business day of the month prior to your loan application date. A T. Rowe Price loan processing fee, currently at $50.00, will be charged for each new loan and will be deducted from your account. The money you borrow for your loan comes from your SRP accounts in this order: Your 401(k) accounts Your company matching contributions and earnings The earnings on your pre-87 after-tax contributions, if any Your post-1986 after-tax contributions and earnings, if any Your pre-1987 after-tax contributions, if any As you pay back your loan, your payments are deposited into your SRP accounts in the reverse order from which they were withdrawn, allocated in accordance with your current investment election. Your loan shall be taken proportionately from the different investment funds of your account and the amount of your loan will not participate in any other earnings of the Plan except for the interest earned on your loan. If your loan account is not kept to current status within a reasonable period (not exceeding 90 days) following the due date of a month s repayment amount, your outstanding loan balance will be defaulted and there may be a taxable event in the year of default. Once you incur a loan default while you are an active employee in the Inco controlled group of companies, you may be denied a request for any future loan. If you terminate employment with all affiliated companies, you may make a onetime partial or full prepayment of your outstanding loan balance. If you defer your account balance to age 65, your outstanding loan balance will be deemed a taxable distribution in the year you defer unless you make a one-time partial or full payment of your entire remaining balance within 90 days. Likewise, if you elected lump sum pay out, your taxable distribution will include the amount of your outstanding loan. Under these circumstances, you will receive tax forms and you will be responsible for payment of applicable taxes and penalties. You will not be required to pay taxes twice on any defaulted amount. It will not be included in the taxable amount of subsequent distributions. Loan repayments may continue to be made from severance pay. 10

11 IF YOU NEED TO WITHDRAW - There are two types of withdrawals - regular and hardship. Under both circumstances, the amount of withdrawal will be based on your account balance. Regular Withdrawals For regular withdrawals, there are limits on what portion of your account you can withdraw, as well as resulting restrictions as follows: Regular Withdrawals from your Inmetco Security Reserve Plan Account What Portion of Account 5% - 100% of your additional after-tax voluntary contributions and earnings Up to 100% of your total account balance When Available After two (2) years of participation and every two (2) years after most recent withdrawal After 60 months of participation and every 60 months from initial withdrawal thereafter. A second withdrawal may be made less than 60 months after an initial withdrawal if : Less than maximum was withdrawn, or; Participant attains age 59-1/2 subsequent to the date of the initial withdrawal Restrictions None 401(k) accounts, post-2000 company match contributions and related earnings are excluded if participant is less than 59-1/2. Hardship Withdrawals You may withdraw all or part of your before-tax contributions and related pre-1989 earnings prior to your attaining age 59-1/2, in the event of a financial hardship as specified by the IRS. Post company match contributions and related earnings, however, are not eligible for hardship withdrawal. You are not required to complete any minimum period of participation. A financial hardship means that you have an immediate and heavy financial need that cannot be satisfied from your other financial resources and that you have obtained all other distributions and loans available under this Plan or other plans of Inmetco or any Affiliate. Financial hardships under the Plan cover the following: purchase of your principal residence payment of tuition, related educational fees, and room and board expenses of postsecondary education for you, your spouse or your dependents for the next twelve months payments necessary to prevent your eviction or to avoid foreclosure on the mortgage of your principal residence payments of certain unreimbursed extraordinary medical expenses The amo unt you withdraw on account of a hardship will be limited to the amount you need to satisfy the financial need, and at your option, may include an additional 25% of the taxable distribution to provide for income taxes and penalties imposed on the withdrawal by the IRS. The hardship withdrawal amount is not eligible for rollover. You should note that if you take a hardship withdrawal, you would not be able to contribute to the Plan again for 6 months. You will have to call up the T. Rowe Price Plan Account Line ( ) to reinstate your contribution elections at the end of the 6-month period. 11

12 Required Minimum Distribution If you are age 70-1/2 and still have an account in the Plan, federal law requires that you receive a minimum distribution of your account balance no later than April 1 following the calendar year in which you reach age 70-1/2 or terminate employment whichever is later. (However, the Plan permits us to require pay out at age 65 if you have already terminated employment.) If payments do not begin at the time provided by federal law, or you are not paid enough to satisfy the tax law s minimum distribution requirements, a 50% penalty tax will be levied on the portion of your account (determined by IRS guidelines) that should have been paid to you. If you are affected by this requirement, you will be notified. If you are still an active employee, you may elect not to receive the minimum distribution and therefore will not be subject to the 50% penalty tax. 12

13 OPTIONS AT RETIREMENT At retirement, you may elect (with your spouse s consent, if married) to receive the value of your account balance in one or more of the following forms: 1. Immediate lump sum distribution paid directly to you; rollover of your distribution into an IRA or another qualified plan 2. Annuity and/or installments (annuities may be purchased if eligible to retire immediately or qualify for Deferred Early Service retirement at termination of employment) If your account balance, including any outstanding loan balance, is more than $5,000, you may also elect to leave your money in the Plan up to age 65 (Any rollover account from a prior employer or IRA will be excluded in this determination). If you do not get the required spousal consent to receive your benefit in a different form during the 90 day period prior to benefit commencement, your account balance will be paid automatically in the form of a 50 percent joint and survivor annuity (without a guarantee period). Once you are eligible to retire immediately under the Inco Retirement Plan or qualify for Deferred Early Service Retirement at termination of employment, so long as it is permitted by law, you may transfer all or a portion of your account into the defined contribution portion of the Inco Retirement Plan at any time after the earlier of age 50 or 30 years of service for purchase of a form of life annuity as follows: Term certain & life When you retire, your annuity will provide you with a fixed monthly level payment for your lifetime; and if you die before the end of your term certain (15-20 years, depending on your age at benefit commencement), such fixed monthly level payments will continue to your beneficiary up to the end of your years certain. If the beneficiary is your estate, a total distribution will be made. 50%, 75% or 100% joint & survivor life (with your spouse or another beneficiary) When you retire, your annuity will provide you with a fixed monthly level payment for your lifetime; and if you die, based on your election, your surviving joint annuitant will receive either 50%, 75% or 100% of the fixed amount for life. Payments are made only to you and your joint annuitant. 50%, 75% or 100% joint & survivor with term certain (with your spouse or another beneficiary) When you retire, your annuity will provide you with a fixed monthly level payment for your lifetime; and if you die before the end of your term certain (15 20 years, depending on your age at benefit commencement), your joint survivor will receive 100% of the fixed amount up to the end of the years certain. Thereafter, your joint survivor will receive, based on your election, either 50%, 75% or 100% of the fixed amount for life. If your joint survivor dies before the end of the years certain, the contingent beneficiary will receive payments up to the end of the years certain with no payments thereafter. If the contingent beneficiary is your estate, a total distribution will be made. 50%, 75% or 100% joint & survivor with cash refund (with your spouse or another beneficiary) When you retire, your annuity will provide you with a fixed monthly level payment for your lifetime, and if you die, based on your election, your joint survivor with receive either 50%, 75% or 100% of the fixed amount for life. If and when both you and your joint survivor die, a final amount will be paid to your contingent beneficiary equal to any excess of the gross consideration for the annuity over the sum of the annuity payments previously paid to you and your joint survivor. If your contingent beneficiary is your estate, a total distribution will be made. If you decide to transfer your account balance into the Retirement Plan for purchase of one of the life annuities mentioned above with your spouse s consent, you will receive a supplemental benefit equal to 25 percent of the portion of your account that you transfer into the Inco Retirement Plan, subject to a lifetime cap for post-1994 account accumulations, thus providing you with an even greater lifetime monthly benefit once you start receiving payments. If you elect to purchase an annuity after retirement or other termination of employment, the 25 percent supplemental benefit 13

14 will further be limited to your account balance at termination of employment. In addition to the above, certain annual deferred installment payments (not eligible for the 25% subsidy) may be available upon request to participants eligible to purchase annuities. At the time you purchase your term certain & life and joint & survivor life annuities, subject to availability from the insurers providing annuities (currently CIGNA and METLIFE) and IRS rules, you may elect the method of payment to your spouse beneficiary if you die prior to the commencement of annuity payments. Your spouse beneficiary may either receive a total distribution or receive the scheduled payments based on your election. For other beneficiary(ies), a total distribution will be made. The IRS imposes certain limits on periods over which benefits are payable (to insure that most of the benefit is payable over your lifetime), which may, in certain circumstances, require faster payments than those described above. You will be notified if these limits affect your requested payment form. You are entitled to at least 30 days preceding benefit commencement to consider distribution information and whether or not to waive (with spousal consent) the joint and survivor annuity unless you waive this period under IRS rules. OPTIONS AT TERMINATION OF EMPLOYMENT When you terminate employment with all affiliated companies or become totally disabled, you have the option of a total account distribution paid directly to you, or a rollover or transfer of your distribution into an IRA or another qualified plan. If you qualify for Deferred Early Service Retirement at termination, you may also elect the Annuity and/or Installments Option as discussed under Options at Retirement. If your total account value, including any outstanding loan balance, is more than $5,000, you may defer payment of your account to age 65. Any rollover account from a prior employer or IRA will be excluded in this determination.. IF YOU ARE LAID OFF If you are an hourly employee and you are laid off, you may request lay-off payments from any portion of your non-401(k) account balance, except the portion representing post-2000 company matching contributions. Before-tax contributions and related earnings and post-2000 company matching contributions can only be paid one year following your lay-off, provided you were not re-employed or you have failed to accept re-employment during that one-year period (or if you have a hardship or attain age 59-1/2). IF A BUSINESS IS SOLD If you are an employee of a subsidiary or unit that is sold to an unrelated buyer, and the buyer does not assume the plan assets, you may be entitled to receive a distribution. 14

15 HOW YOUR ACCOUNT IS TAXED Under current law, your before-tax 401(k) contributions, Inmetco's contributions and investment earnings on all contributions (beforetax, after-tax and company matching) are not taxable as long as they remain in the Plan. When you receive a distribution* from the Plan, either due to an in-service regular withdrawal, retirement, termination or permanent disability, you will be subject to federal income tax and a mandatory 20% federal income tax withholding on the taxable portion, unless you directly roll it over into an IRA or into another qualified plan. The after-tax portion of your distribution is also eligible for rollover. Hardship withdrawals are not eligible for rollover. If a distribution is made to your spouse on account of your death or to your ex-spouse pursuant to a qualified domestic relations order, the taxable portion will also be subject to a mandatory 20% federal income tax withholding unless directly rolled over into an IRA or another qualified plan. Distributions to beneficiaries other than your spouse are not eligible for rollover and are not subject to the mandatory 20% federal income tax withholding. Your choice of payment distribution will affect the tax you owe. If you choose a direct rollover: Your taxable distribution will not be taxed in the current year and no income tax will be withheld. Your taxable distribution will be made directly to your IRA or, if you choose, to another employer plan that accepts your rollover. Your taxable distribution will be taxed later when you take it out of the IRA or the employer plan. * Does not include annuity payments or installments over more than 10 years or hardship distributions. You will not qualify for favorable forward averaging or capital gains treatment on distributions from an IRA (available for certain lump sum distributions from the SRP to participants who attained age 50 by January 1, 1986) Any after-tax contribution in the distribution will be paid directly to you unless you elect to roll it over. If you choose a direct payment to you: You will receive only 80% of the taxable portion of your distribution because the Plan is required to withhold 20% of the taxable amount and send it to the IRS as income tax withholding to be credited against your taxes. Your taxable distribution will be taxed in the year you receive payment, unless you roll it over. You may be able to use special tax rules that could reduce the tax you owe. However, if you receive the taxable distribution before age 59-1/2, you may also have to pay an additional 10% penalty tax. You can roll over the taxable portion of the distribution made directly to you by paying it to your IRA or to another employer plan that accepts your rollover within 60 days of receiving the payment. The amount rolled over will not be taxed until you take it out of the IRA or employer plan. If you want to roll over 100% of the taxable portion of your distribution into an IRA or an employer plan, you must find other money to replace the 20% that was withheld. If you roll over only the 80% that you received, you will be taxed on the 20% that is withheld and not rolled over. This is just general tax information and is not a substitute for consulting your tax advisor. 15

16 10% Penalty Tax In addition to income taxes, your distribution that is not rolled over into an IRA or another qualified plan is also subject to a 10% penalty if you receive taxable money before age 59-1/2 unless payment is made on account of: termination of employment at age 55 or over unreimbursed medical expenses that exceed 7.5% of your adjusted gross income payment to an alternate payee under a qualified domestic relations order disability, or death commencement of installment or annuity payments More details concerning your options and federal income tax treatment will be provided when you apply for an in-service withdrawal or distribution. Since the tax laws are complicated and are subject to change, we recommend that you consult your tax advisor before receiving a distribution. HOW YOU CAN KEEP TRACK OF YOUR ACCOUNT You will receive a statement of your account on a quarterly basis. Your statement of account will include the following information: the amount of money you contributed by type (before-tax or after-tax) and by fund; the amount of money that Inmetco contributed by fund the earnings/losses on your investment(s) by fund the amount of any transfer within the funds the amount of any withdrawals, i.e., regular/hardship, loan, annuity the total market value of your account the amount of any loan balance the amount attributable to company matching contributions made under the safe harbor provisions 16

17 ADDRESSES AND RELATED INFORMATION The address and Employer Identification Number of INMETCO are as follows: Company and Address The International Reclamation Metals Reclamation Company, Inc. P. O. Box 720 Ellwood City, PA Employer I.D. # (Sponsor) The Plan Administrator which is designated as the agent for service of legal process is: Board of Administration for Retirement and Savings Plans of Inco and Subsidiaries c/o International Nickel Inc. Park 80 West, Plaza Two Saddle Brook NJ Telephone: (201) The name and address of the trustee for Inmetco Security Reserve Plan are as follows: T. Rowe Price Trust Company 100 East Pratt Street Baltimore, MD The number assigned to the Plan for IRS filing is 007. The T. Rowe Price Plan Number assigned to the Inmetco Security Reserve Plan is Assignment of Benefits Your benefits under the Plans are solely for you (or your beneficiary). Generally, they cannot be assigned to anyone else, and are not subject to garnishment or attachment. However, the Plan will honor qualified domestic relations orders issued by a court relating to provisions for child support, alimony payments, or marital property rights. If the Company receives such an order, you will be notified of how it will be handled with respect to your benefits. Future of the Plan While the Company expects to continue the Plan indefinitely, it reserves the right to amend or terminate it at any time. In the event of termination, you do have certain guarantees. If the SRP is terminated or contributions are dis continued permanently, normally your account balance would either be paid out or transferred to a successor plan. However, the plan may be frozen in which case your account will remain in the trust until you terminate employment or otherwise qualify to receive your benefits. Sometimes, a plan must be frozen because of IRS technical restrictions. A temporary suspension of SRP matching contributions would not be a termination for purposes of these rules. The Plan is a "defined contribution plan" under the Employee Retirement Income Security Act of Although the Plan is a profit sharing plan, contributions are not limited to profits or retained earnings. The financial records of the Inmetco Security Reserve Plan are maintained on a calendar year basis. (The Plan Year is the calendar year.) Because defined contribution plans are not eligible for such insurance, the benefits provided under the Plan are not insured by the Pension Benefit Guaranty Corporation under Title V of the Employee Retirement Income Security Act of Service of legal process may be made upon the Plan Administrator or trustee. 17

18 Your Right to Appeal If you (or your beneficiary) believe you have been denied any benefit to which you are entitled or any other rights you may have under the Plan, you may request a review of your claim by writing directly to the Plan Administrator. The Plan Administrator must notify you within 90 days if any claim for benefits is denied. In special cases where the Plan Administrator needs more time to decide, it may notify you and take up to 90 additional days. The Plan Administrator will send you a written statement explaining in detail the reasons for any denial. You will be told what Plan provisions or documents apply and what information you should provide if you wish to appeal the decision. You would then have the right to ask the Plan Administrator to review your claim. You must make your request in writing to the Plan Administrator within 60 days after your claim was denied. You may have a representative at this review. The Plan Administrator will give you a written notice of its decision, which is final, within 60 days. In special cases, the Plan Administrator may notify you of the reasons why additional time is needed to resolve your appeal, within another 60 days. Unless you receive a notice of a claim or appeal decision within the time limits above, you may proceed as if the claim or appeal had been denied. Your Rights As A Participant As a participant in the Inmetco Security Reserve Plan, you are entitled to certain rights and protections under the Employee Retirement Income Security Act of 1974 (ERISA), as outlined in the following statement adapted from regulations of the U.S. Department of Labor. We don t expect that you will ever have to resort to legal action to enforce your rights under ERISA, since we make every effort to comply with the law. However, U.S. govern ment regulations require that we provide you with a copy of this ERISA Rights Statement. ERISA provides that all Plan participants shall be entitled to: Examine, without charge, at the Plan Administrator s office and at other specified locations, such as work sites, all Plan documents, including insurance contracts and copies of all documents filed by the Plan with the Internal Revenue Service and U.S. Department of Labor, such as detailed annual reports and Plan descriptions. Obtain copies of all Plan documents and other Plan information upon written request to the Plan Administrator. The Administrator may make a reasonable charge for the copies. Receive a summary of the Plan s annual financial report. The Plan Administrator is required by law to furnish each participant with a copy of this summary annual report. Obtain a statement telling you whether you have a right to receive a pension at normal retirement age and if so, what your benefits would be at normal retirement age if you stop working under the Plan now. If you do not have a right to a pension, the statement will tell you how many more years you have to work to get a right to a pension. This statement must be requested in writing and is not required to be given more than once a year. The Plan must provide the statement free of charge. Obtain, once a year, a statement of the total benefits accrued and the nonforfeitable benefits, if any, or the earliest date on which benefits will become non-forfeitable. The Plan may require a written request for this statement, but it must provide the statement free of charge. 18

19 In addition to creating rights for Plan participants, ERISA imposes duties upon the people who are responsible for the operation of employee benefit plans. The people who operate your Plan, called fiduciaries of the Plan, have a duty to do so prudently and in the interest of you and other Plan participants and beneficiaries. No one, including your employer or any other person, may fire you or otherwise discriminate against you in any way to prevent you from obtaining a pension benefit or exercising your rights under ERISA. If your claim for a pension benefit is denied in whole or in part, you must receive a written explanation of the reason for the denial. You have the right to have the Plan review and reconsider your claim. Under ERISA, there are steps you can take to enforce the above rights. For instance, if you request materials from the Plan and do not receive them within 30 days, you may file suit in a federal court. In such a case, the court may require the Plan Administrator to provide the materials and pay you up to $110 a day until you receive the materials, unless the materials were not sent because of reasons beyond the control of the Administrator. If your claim for benefits is denied and you have been through the appropriate Plan appeals procedure, you may file suit in a state or federal court. If it should happen that Plan fiduciaries misuse the Plan s money, or if you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor, or you may file suit in a federal court. In addition to deciding what damages, if any, should be awarded, the court will decide who should pay court costs and legal fees. If you are successful, the court may order the person you have sued to pay these costs and fees. If you lose, the court may order you to pay these costs and fees, if for example, it finds your claim is frivolous. If you have any questions about your Plan, you should contact the Plan Administrator. If you have any questions about this statement or about your rights under ERISA, you should contact the nearest Area Office of the U.S. Labor- Management Services Administration, Department of Labor. 19

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