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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934
FOR THE FISCAL YEAR ENDED MARCH 31, 1997
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 33-6967
HALTER MARINE GROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 75-2656828
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
39503
13085 SEAWAY ROAD, GULFPORT, (ZIP CODE)
MISSISSIPPI
(ADDRESS OF PRINCIPAL EXECUTIVE
OFFICES)
Registrant's telephone number, including area code: (601) 896-0029
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
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NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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<S> <C>
Common Stock, $.01 par value American Stock Exchange
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT
None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Exchange Act during the
past 12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes [X] No [_]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definite proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [_]
The aggregate market value of the Common Shares held by nonaffiliates of the
Registrant as of May 1, 1997 was approximately $332,100,000, based on the
closing price per share as reported by the American Stock Exchange.
Common Shares outstanding as of May 1, 1997: 18,450,000.
Portions of the Proxy Statement with respect to the 1997 annual Meeting of
Shareholders are incorporated by reference in Part III, Items 10, 11, 12 and
13 of this report.
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PART I
ITEMS 1 AND 2: BUSINESS
FORWARD LOOKING STATEMENTS
See "Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations--Disclosure Regarding Forward Looking Statements" for a
discussion of forward looking statements contained in this report.
GENERAL
Halter Marine Group, Inc. is a Delaware corporation incorporated on June 24,
1996 to serve as the parent of a new consolidated group that formerly
conducted the business of construction, repair and conversion of primarily
ocean-going vessels for the governmental and commercial markets for Trinity
Industries, Inc. ("Trinity"). On September 26, 1996, Halter Marine Group, Inc.
and subsidiaries (collectively, the "Company") completed an initial public
offering of 16.7% of its stock (18.7% after the underwriters exercised their
overallotment option). On March 31, 1997, Trinity distributed all of the
remaining stock of the Company to its stockholders.
The Company is the seventh largest shipbuilder in the United States and the
largest U.S. builder of small to medium sized (from 50 to 400 feet) ocean-
going ships. The Company specializes in the construction, repair and
manufacturing of a wide variety of vessels for government, energy, commercial
and other markets. Its principal products include offshore support vessels,
offshore double hull tank barges, offshore tugs, harbor tugs, towboats, oil
spill recovery vessels, oceanographic research and survey ships, high speed
patrol boats, ferries and luxurious megayachts. The Company has built more
than 2,000 of these vessels in the past 40 years. At March 31, 1997, the
Company had eleven shipyards (including one that currently is idle), all of
which are strategically located along the Gulf Coast from Louisiana to
Florida.
On April 4, 1997, the Company acquired a 51% interest in and obtained an
option to acquire the remaining 49% of Texas Drydock, Inc. (TDI), a leading
marine repair and manufacturing company for mobile offshore drilling units. On
May 16, 1997, the Company acquired the remaining 49% interest in TDI.
INDUSTRY OVERVIEW
The U.S. shipbuilding industry has two distinct markets: (i) contracts with
domestic and foreign governments, principally the U.S. Navy, and (ii)
contracts with domestic and international commercial customers.
Private U.S. shipbuilders generally fall into two categories: (i) the six
largest shipbuilders capable of building large scale vessels for the U.S. Navy
and (ii) other shipyards that build small to medium sized vessels for
governmental and commercial markets. Each of the six largest shipbuilders
builds substantially larger vessels than the Company. Included in the second
category are a number of shipbuilders, including the Company, that are capable
of building vessels up to 400 feet. This category also includes several
hundred companies engaged in shipbuilding and repair activities in the United
States, all of which management believes are smaller than the Company, having
one or two shipyards and specializing in the construction or repair of one or
a small number of types of vessels.
In general, during the 1990's the U.S. shipbuilding industry has been
characterized by a substantial excess capacity because of the significant
decline in U.S. Navy shipbuilding spending and the difficulties experienced by
U.S. shipbuilders in competing successfully for international commercial
projects against foreign shipyards, many of which are heavily subsidized by
their governments. As a result of these factors, many shipyards closed or were
reduced in size. Competition among the remaining U.S. shipbuilders for
domestic commercial projects is intense.
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BUSINESS STRATEGY
The Company's strategy has been to maintain its position as one of the most
cost-efficient shipyards in the United States, making it a low cost provider
of a wide variety of products to diversified markets. In recent years the
Company has included within its strategic objectives, a focus on increasing
its product offerings and facilities through internal expansion and asset
acquisitions or business combinations. The Company intends to consider, in the
future, business opportunities that it believes promote this business
strategy.
PRODUCTS AND MARKETS
The Company specializes in the construction, repair, and conversion of a
wide variety of vessels for government, energy, commercial and other markets.
A. Government
The Company builds specialized vessels for the U.S. Navy, foreign nations,
and state and local governments. Its broad range of products for government
customers include oceanographic research and survey ships, high speed patrol
boats, tugs, landing craft, and passenger/vehicle ferries for local and ocean
operations.
Fiscal 1997 revenue from the Company's government customers was $216
million, representing approximately 53% of total revenue. Revenue from
contracts with the U.S. Navy accounted for approximately 37.4% of revenue
during fiscal 1997. The continuation of any U.S. Navy shipbuilding program is
dependent upon the continuing availability of Congressional appropriations of
that program. With the end of the Cold War and the pressure of domestic budget
constraints, overall U.S. Navy spending for new vessel construction has
declined significantly since 1991.
The Company's construction backlog of vessels for government customers was
$251 million, or 53% of total backlog, at March 31, 1997.
B. Energy
The Company's products sold to customers servicing the energy industry
include offshore supply vessels and large anchor handling tug/supply vessels
(collectively OSV's), tug boats and double hull ocean going fuel barges, and
the construction, conversion and repair of drilling rigs.
Included in revenue for fiscal year 1997 was $86 million, or 21% of total
revenue, related to construction of marine products for customers in the
energy industry.
At March 31, 1997, the Company had $156 million, or 33% of its total
backlog, from customers in the energy industry.
C. Commercial
Principal products constructed for commercial customers include harbor and
ocean going tugs, tow boats, non-energy related deckbarges and hopper barges.
Revenue from products constructed for these customers during fiscal 1997 were
$81 million, representing 20% of total revenue.
Under the terms of a separation agreement with Trinity, the Company is
prohibited from building barges that compete with those built by Trinity,
except with the approval of Trinity. Such barges include inland hopper and
tank barges. The four year non-competition period begins on the date the
Company ceases to build such barges. As of this date, the Company is
continuing to build barges with the approval of Trinity. Revenue from
contracts for inland hopper barges and inland tank barges was approximately
$20 million, or 5% of total revenue in fiscal 1997.
The Company's commercial backlog at March 31, 1997 was $49 million, or 10%
of total backlog.
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D. Other
The Company's other products and services include the repair and conversion
of vessels, the construction of luxurious megayachts that the Company sells
under the name "Trinity Yachts" and associated marine products such as mud
tanks. Revenue from other products were approximately $24 million during
fiscal 1997, representing 6% of total contract revenue. The Company's backlog
of other products was approximately $22 million at March 31, 1997.
OPERATIONS
The Company conducts its shipbuilding and repair and conversion operations
at ten active shipyards. The Company also owns a shipyard in Panama City,
Florida that was closed when it was acquired. The Panama City yard is not
currently operational but may be reopened, if justified by customer demand.
The Company's shipyards employ advanced manufacturing techniques, including
modular construction methods, advanced welding techniques, panel line
fabrication, computerized plasma arc metal cutting and automated sandblasting
and painting. The Company's multiple shipyards, and large engineering team
provide the Company significant flexibility and efficiency in manufacturing a
wide variety of vessels. The Company believes that these factors, together
with its skilled and experienced work force, make the Company one of the most
versatile and cost-efficient shipbuilders in the United States.
The Company's shipyards are well maintained facilities. The Company spent
$14.5 million on capital improvements for its existing facilities during
fiscal 1997, and has budgeted over $20 million for capital improvements
(excluding acquisitions) during fiscal 1998. Approximately $10 million of the
budgeted expenditures are being spent at the Company's Pascagoula facility in
order to accommodate the construction of mobile offshore drilling units, as
well as vessels, at the facility.
ENGINEERING
The Company maintains a large marine engineering department, consisting of
approximately 150 employees, 30 of whom are engineers or naval architects. The
Company's engineering department has been instrumental in helping the Company
maintain its reputation as an innovative shipyard. On occasion, the Company
subcontracts to other engineering firms some of its engineering requirements.
MATERIALS AND SUPPLIES
The principal materials used by the Company in its shipbuilding, conversion
and repair businesses are standard steel shapes, steel plate and paint. Other
materials used in large quantities include aluminum, steel pipe, electrical
cable and fittings. The Company also purchases component parts such as
propulsion systems, boilers, generators and other equipment. All these
materials and parts are currently available in adequate supply from domestic
and foreign sources. The Company's Equitable and Gulfport shipyards are
located on rail lines and typically obtain materials and supplies by rail,
truck or barge. The remainder of the Company's shipyards ordinarily obtain
materials and supplies by truck. The Company seeks to obtain favorable pricing
and payment terms for its purchases by coordinating purchases among all of its
shipyards and buying in large quantities. The Company has not engaged, and
does not presently intend to engage, in hedging transactions with respect to
its purchase requirements for materials. Management believes that the Company
will continue to be able to obtain steel at relatively favorable prices.
SALES AND MARKETING
The Company's marketing efforts are geographically centralized at the
Company's headquarters in Gulfport, Mississippi, although some salesmen live
in other states. The Company's Gulfport Sales and Marketing
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Department consists of a commercial section, which employs six persons, and an
international marketing section, which employs four persons. The Company also
has arrangements with certain sales agents in various foreign countries that
assist the Company with its international marketing efforts. The Company's
Government Projects Department includes 11 persons who engage in marketing and
sales activities.
COMPETITION
The Company competes for domestic commercial shipbuilding contracts
principally with approximately 10 to 15 U.S. shipbuilders. The number and
identity of competitors on particular projects vary greatly, depending on the
type of vessel and size of project. The Company competes for foreign
commercial shipbuilding contracts principally with numerous shipyards in
several countries, many of whom are heavily subsidized by their governments.
Competition for both U.S. and foreign commercial contracts is intense.
CONTRACT STRUCTURE AND PRICING
The Company's contracts for vessels generally are obtained through a
competitive bid process.
Most of the contracts entered into by the Company, whether commercial or
governmental, are fixed-price contracts under which the Company retains all
cost savings on completed contracts but is also liable for the full amount of
all cost overruns. A limited number of the Company's contracts with the U.S.
Navy are fixed-price incentive contracts, which provide for sharing between
the government and the Company of cost savings and cost overruns based
primarily on a specified formula that compares the contract target cost with
actual cost. In addition, such fixed-price incentive contracts generally
provide for payment of escalation of costs based on published indices relating
to the shipbuilding industry. Although all cost savings are shared under
fixed-price incentive contracts, costs overruns in excess of a specified
amount must be borne entirely by the Company. Under government regulations,
certain costs, including certain financing costs, portions of research and
development costs and certain marketing expenses, are not allowable costs
under fixed-price incentive contracts. The Company's only current U.S. Navy
fixed-price incentive contracts relate to three oceanographic survey and
research ships. Two of these vessels have been delivered to and accepted by
the U.S. Navy and the remaining vessel is scheduled for delivery during the
first quarter of fiscal 1998.
Contracts with the U.S. Navy are subject to termination by the government
either for its convenience or upon default by the Company. If the termination
is for the government's convenience, the contracts provide for payment upon
termination for items delivered to and accepted by the government, payment of
the Company's costs incurred plus the costs of settling and paying claims by
terminated subcontractors, other settlement expenses and a reasonable profit.
INSURANCE
The Company maintains insurance against property damage caused by fire,
explosion and similar catastrophic events that may result in physical damage
or destruction to the Company's premises or properties. The Company also
maintains general liability and product liability insurance in amounts it
deems appropriate for its business.
Some of the Company's contracts require a performance bond. The Company has
arranged a facility with a group of insurance companies to provide these bonds
when required.
EMPLOYEES
As of March 31, 1997, the Company had 2,720 employees of which 633 were
salaried and 2,087 were employed on a hourly basis. None of the Company's
employees is represented by any collective bargaining unit.
REGULATION
Environmental Regulation
The Company is subject to extensive and changing Environmental Laws,
including laws and regulations that relate to air and water quality, impose
limitations on the discharge of pollutants into the environment and
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establish standards for the treatment, storage and disposal of toxic and
hazardous wastes. Stringent fines and penalties may be imposed for non-
compliance with these Environmental Laws. Additionally, these laws require the
acquisition of permits or other governmental authorizations before undertaking
certain activities, limit or prohibit other activities because of protected
areas or species and impose substantial liabilities for pollution related to
Company operations or properties. The Company's operations are potentially
affected by the federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"). CERCLA (also known as the
"Superfund" law) imposes liability (without regard to fault) on certain
categories of persons for particular costs related to releases of hazardous
substances at a facility into the environment which causes natural resource
damages. Because industrial operations have been conducted at some of the
Company's properties by the Company and previous owners and operators for many
years, various materials from these operations might have been disposed of at
such properties. This could result in obligations under Environmental Laws,
such as requirements to remediate environmental impacts. In addition, the
Company performs a tank cleaning and gas-freeing operation at its Gretna
facility that involves removal of residual fumes from vapor spaces in barges.
There are risks associated with the operation, including possible explosion
and emission of hazardous substances to the environment. The Company has taken
actions deemed by it to be appropriate to minimize these risks.
The federal Resource Conservation and Recovery Act ("RCRA") and similar
state laws regulate the generation, treatment, storage, disposal, and other
handling of solid wastes, with the most stringent regulations applying to
solid wastes that are considered hazardous wastes. RCRA also may impose
stringent requirements on the closure, and the post-closure care, of
facilities where hazardous waste was treated, disposed of or stored. The
Company generates solid waste, including hazardous and non-hazardous waste, in
connection with its routine operations. Management believes that the Company's
wastes are handled properly under RCRA.
Amendments to the federal Clean Air Act in 1990 resulted in numerous changes
which the Environmental Protection Agency and similar state agencies fully
implemented by regulations. The Company does not expect these Clean Air Act
amendments to result in material expenses at its properties, but the amount of
increased expenses, if any, resulting from such amendments is not presently
determinable.
Health and Safety Matters
The Company's facilities and operations are governed by laws and
regulations, including the federal Occupational Safety and Health Act,
relating to worker health and workplace safety. The Company believes that
appropriate precautions are taken to protect employees and others from
workplace injuries and harmful exposure to materials handled and managed at
its facilities.
Jones Act
The Jones Act requires that all vessels transporting products between U.S.
ports must be constructed in U.S. shipyards, owned and crewed by U.S. citizens
and registered under U.S. law, thereby eliminating competition from foreign
shipbuilders with respect to vessels to be constructed for the U.S. coastwise
trade. Many customers elect to have vessels constructed at U.S. shipyards,
even if such vessels are intended for international use, in order to maintain
flexibility to use such vessels in the U.S. coastwise trade in the future.
Last year a legislative bill seeking to substantially modify the provisions of
the Jones Act mandating the use of ships constructed in the United States for
U.S. coastwise trade was introduced in Congress, however it did not pass.
Similar bills seeking to rescind or substantially modify the Jones Act and
eliminate or adversely affect the competitive advantages it affords to U.S.
shipbuilders have been introduced in Congress from time to time and are
expected to be introduced in the future. Any recission or material
modification of the Jones Act could adversely affect the Company's future
prospects because many foreign shipyards with which the Company competes are
heavily subsidized by their governments.
OPA '90
Demand for double hull carriers has been created by OPA '90, which generally
requires U.S. and foreign vessels carrying fuel and certain other hazardous
cargos and entering U.S. ports to have double hulls by 2015.
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OPA '90 established a phase-out schedule that began January 1, 1995 for all
existing single hull vessels based on the vessel's age and gross tonnage. The
Company estimates that OPA '90 will require 66 barges engaged in domestic
trade to be retrofitted or replaced by 2005 and another 22 such barges to be
retrofitted or replaced by 2010.
Title XI Loan Guarantee Amendments and OECD
In late 1993, Congress amended the loan guarantee program under Title XI of
the Merchant Marine Act of 1936 ("MARAD"), to permit MARAD to guarantee loan
obligations of foreign vessel owners who construct new vessels in the United
States. As a result of these amendments, MARAD was authorized to guarantee
loan obligations of foreign owners for foreign-flagged vessels that are built
in U.S. shipyards on terms generally more advantageous than available under
guarantee or subsidy programs of foreign countries. Under the OECD Accord,
which was negotiated in December 1994, among the United States, the European
Union, Finland, Japan, Korea, Norway and Sweden (which collectively control
over 75% of the market share for worldwide vessel construction), the Title XI
guarantee program will be required to be amended, once the OECD Accord is
ratified by the United States, to eliminate the competitive advantages
provided by the 1993 amendments to Title XI. In December 1995, a subcommittee
of the Ways and Means Committee of the U.S. House of Representatives passed a
bill providing for the implementation of the OECD Accord and elimination of
the competitive advantages provided by the 1993 amendments to Title XI. To
date, such bill has not been approved by either the U.S. House of
Representatives or the U.S. Senate. If the OECD Accord is ratified by the U.S.
and Japan (the only remaining parties to the OECD Accord that have not yet
ratified the OECD Accord), the OECD Accord would virtually eliminate all
direct and indirect governmental shipbuilding subsidies by the party nations.
Despite the fact that the OECD Accord will require the elimination of the
competitive advantages provided to U.S. shipbuilders by the 1993 amendments to
Title XI, management believes that the OECD Accord should significantly
improve the ability of U.S. shipbuilders to compete successfully for
international commercial contracts with foreign shipbuilders, many of which
currently are heavily subsidized by their governments. Some of the
governmental subsidies to foreign shipbuilders currently range as high as 25%
of the vessel construction cost.
PROPERTIES
Equitable New Orleans Shipyard and Trinity Yachts Shipyard
The Equitable shipyard is located on the Industrial Canal in New Orleans,
Louisiana. The yard has the capacity to build vessels up to the following
dimensions: 350 foot length; 90 foot beam; 25 foot water depth; and 110 foot
height. The shipyard has over 225,000 square feet of under-cover production
facilities which include a fabrication shop, a yacht fabricating building,
mold loft, pipe shop, carpentry shop, electrical shop and a machine shop. The
facility has two crawler cranes, one barge mounted crane and 12 track mounted
overhead cranes. The shipyard is served by direct rail access. The Company
occupies the shipyard under a lease that expires on December 31, 2016.
Generally, either party may terminate the lease upon one year's advance
notice. The Company's Trinity Yachts shipyard is a segregated portion of the
Equitable New Orleans shipyard.
Gretna Machine & Iron Works Shipyard
The Gretna shipyard is located in Harvey, Louisiana. The yard has the
capacity to build vessels up to the following dimensions: 600 foot length; 95
foot beam; 5.5 foot water depth; and 70 foot height. The shipyard contains
over 15,500 square feet of under-cover production facilities which include a
fabrication shop, mold loft, carpentry shop and electrical shop. The facility
has two graving docks, one with a length of 700 feet and the other with a
length of 300 feet, and has three crawler cranes, two track mounted gantry
cranes and two tower cranes. The Company occupies the shipyard pursuant to two
leases, which are renewable by the Company until 2026.
Halter Moss Point Shipyard
The Halter Moss Point shipyard is located in Moss Point, Mississippi. The
yard has the capacity to build vessels up to the following dimensions: 400
foot length; 85 foot beam; 18 foot water depth; and 85 foot height.
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The facility consists of approximately 58 acres of property with 61,500 square
feet of shops, offices and warehouses and 60,165 square feet of outside
concrete construction platforms. The facility has six crawler cranes and six
track mounted gantry cranes.
Lockport Shipyard
The Lockport shipyard is located in Lockport, Louisiana. The yard has the
capacity to build vessels up to the following dimensions: 310 foot length; 80
foot beam; 10 foot water depth; and 68 foot height. The facility contains over
35,000 square feet of under-cover production facilities which include a
fabrication shop, mold loft, pipe shop, carpentry shop, electrical shop and a
machine shop and has 46,000 square feet of outside concrete construction
platforms and a 16,000 square foot warehouse. The yard has four crawler cranes
and six track mounted gantry cranes.
Moss Point Marine Shipyard
The Moss Point Marine shipyard is located in Escatawpa, Mississippi. The
yard has the capacity to build vessels up to the following dimensions: 420
foot length; 85 foot beam; 14 foot water depth; and 44 foot height. The yard
contains over 35,000 square feet of under-cover production facilities which
include a fabrication shop, mold loft, carpentry shop, electrical shop and
warehouse, and has 40,000 square feet of outside construction platforms. The
yard has four crawler cranes and nine track mounted gantry cranes.
Gulfport Shipyard
The Gulfport shipyard is located in Gulfport, Mississippi. The yard has the
capacity to build vessels up to the following dimensions: 360 foot length; 80
foot beam; 12 foot water depth; and 90 foot height. The facility consists of
113 acres on Bernard Bayou Industrial Park and includes an environmentally
controlled 38,000 square foot sandblasting and painting facility and 400,000
square feet of under-cover production facilities. The yard has 116,500 square
feet of outside concrete erection ways, two crawler cranes, 15 track mounted
overhead cranes, two track mounted gantry cranes and two tower cranes. The
shipyard is served by direct rail access.
Panama City Shipyard
The Panama City shipyard is located in Panama City, Florida. The yard
contains over 35,000 square feet of under-cover production facilities which
include a fabrication shop, mold loft, carpentry shop, electrical shop and
warehouse. The yard has the capacity to build vessels up to the following
dimensions: 420 foot length; 75 foot beam; 14 foot water depth; and 44 foot
height. The facility has not been operational since its acquisition by the
Company in 1992.
Gulf Coast Fabrication Shipyard
The Gulf Coast Fabrication shipyard is located in Pearlington, Mississippi.
The facility contains over 15,000 square feet of under-cover production
facilities which include a shear, mechanical press, electrical shop and
warehouse. The facility has a 460 foot graving dock. The yard has the capacity
to build vessels up to the following dimensions: 460 foot length; 140 foot
beam; 12 foot water depth; and unlimited height. The yard has two crawler
cranes, two track mounted gantry cranes and one tower crane.
Gulf Repair Shipyard
The Gulf Repair shipyard is located on the Industrial Canal across from the
Company's Equitable New Orleans shipyard. The facility contains 72,000 square
feet of under-cover production facilities which include a fabrication shop,
pipe shop, carpentry shop, electrical shop and a machine shop. The facility
has a 586 foot dry dock with 20,000 ton capacity, a 200 foot dry dock with
3,750 ton capacity, a 285 foot drydock with 3,700 ton capacity, a 162 foot
drydock with 1,500 ton capacity, and a 240 foot drydock with 5,000 ton
capacity. The yard
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has the capacity to build vessels up to the following dimensions: 325 foot
length; 120 foot beam; 21 foot water depth; and 137 foot height. The yard has
one crawler crane, seven track mounted gantry cranes and two barge mounted
cranes. The Company occupies the shipyard pursuant to a lease that expires on
December 31, 2016.
Pascagoula Shipyard
The Pascagoula shipyard was acquired by the Company in 1995 and is located
in Pascagoula, Mississippi. The yard consists of approximately 88 acres of
property and has the capacity to build vessels up to the following dimensions:
800 foot length; 115 foot beam; 20 foot water depth; and unlimited height. The
yard has over 42,000 square feet of under-cover production facilities which
include a fabrication shop, paint shop, maintenance shop, and warehouse. The
yard has a 900 foot slip for wet dock work and a 300 ton shore mounted crane.
The yard has three crawler cranes and two track mounted gantry cranes. A major
expansion is underway at the Pascagoula yard, which will significantly
increase its production capacity.
Corporate Headquarters
The Company's corporate headquarters are located at the same site as the
Company's Gulfport shipyard. The headquarters occupy approximately 39,660
square feet of such site. The Company's engineering headquarters are located
one-half mile from the corporate headquarters and contains approximately
33,600 square feet of offices and a separate secure office for classified
work.
ITEM 3: LEGAL PROCEEDINGS
The Company is involved in various claims and lawsuits incidental to its
business. In the opinion of management, these claims and suits in the
aggregate will not have a material adverse effect on the Company's business,
financial condition, results of operations or liquidity.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the
fourth quarter of fiscal 1997.
ITEM 4A: EXECUTIVE OFFICERS OF THE REGISTRANT
Executive Officers of the Company
The executive officers of the company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<C> <C> <S>
John Dane III....................... 46 Chairman, President and Chief
Executive Officer since September,
1996. President of the Company since
1987. Employed 1987.
Rick S. Rees........................ 44 Director since September, 1996.
Executive Vice President since April,
1997. President, Maritime Holdings,
Inc. from September, 1996 to April,
1997. President Maritime Capital
Corporation, 1989 to 1996. Employed
1997.
Vincent R. Almerico................. 56 Senior Vice President, Overseas
Operations since April, 1997. Senior
Vice President since 1992. Employed
1987.
Wayne J. Bourgeois.................. 42 Senior Vice President, Operations
since August, 1996. Vice President
from 1994 to August, 1996. Employed
1977.
</TABLE>
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<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<C> <C> <S>
Richard T. McCreary................. 41 Senior Vice President, Administration
since April, 1997. From April 1995 to
1997, President Gulf Division,
Maritrans Operating Partners. From
1990 to 1995 Vice President
Operations, Canal Barge Company, Inc.
Employed 1997.
Sidney C. Mizell.................... 54 Senior Vice President, Sales and
Marketing since August, 1996. Vice
President, Sales and Marketing, 1988-
1996. Employed 1988.
Anil Raj............................ 46 Senior Vice President, Government
Projects since August, 1996. Vice
President, Government Projects from
1994 to 1996. Employed 1987.
Harvey B. Walpert................... 64 Senior Vice President, Corporate
Affairs since August, 1996. Senior
Vice President, Administration from
1992-1996. Employed 1978.
Keith L. Voigts..................... 53 Senior Vice President, Finance since
April, 1997. Vice President, Finance
1995-1996. Chief Financial Officer,
Healthcare Communications, Inc. 1994-
1995. From 1991 to 1994 owner of KLV
Group, an accounting, consulting and
investments firm. Employed 1995.
J. J. French, Jr.................... 66 Secretary since 1996. President of
Joe French & Associates, a
Professional Corporation, attorneys,
since 1993. For at least five years
prior thereto, employed by Locke
Purnell Rain Harrell, a Professional
Corporation, attorneys.
</TABLE>
There are no family relationships between the officers of the Company. The
Company's officers are elected annually by the Board of Directors and serve
for one-year terms or until their successors are elected.
ITEM 5: MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
The approximate number of holders of the Company's common stock as of a
recent date is incorporated herein by reference from "Voting Securities and
Stockholders" in the definitive proxy statement for the Company's 1997 Annual
Meeting of Stockholders. The following table sets forth the high and low
closing sales price of the Company's common stock as reported on the American
Stock Exchange Composite Tape. The first day of trading for the Company's
stock was September 26, 1996.
Fiscal Year 1997
<TABLE>
<CAPTION>
QUARTER HIGH LOW
------- ------ ------
<S> <C> <C>
Second $12.25 $11.75
Third 15.00 11.50
Fourth 18.00 13.50
</TABLE>
The Company has paid no dividends.
9
<PAGE>
ITEM 6: SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth selected consolidated financial data for the
Company as of the dates and for the periods indicated. The selected
consolidated balance sheet data as of March 31, 1997, 1996 and 1995 and
consolidated income statement data for the fiscal years ended March 31, 1997,
1996, 1995 and 1994 have been derived from the audited consolidated financial
statements of the Company and the selected consolidated balance sheet data as
of March 31, 1994 and 1993 and consolidated income statement data for the
fiscal year ended March 31, 1993 have been derived from unaudited financial
information of the Company but in the opinion of management includes all
adjustments necessary for a fair presentation of the financial information.
The selected consolidated financial data set forth below should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Consolidated Financial Statements and
related notes included elsewhere in this report.
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
--------------------------------------------
1997 1996 1995 1994 1993
-------- ------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Contract revenue earned.......... $406,797 254,294 250,586 275,310 304,385
Cost of revenue earned........... 355,209 214,559 207,398 228,833 259,819
-------- ------- ------- ------- -------
Gross profit..................... 51,588 39,735 43,188 46,477 45,566
Selling, general and
administrative expenses......... 21,361 15,911 13,471 12,874 12,363
-------- ------- ------- ------- -------
Operating income................. 30,227 23,824 29,717 33,603 32,203
Interest expense................. 3,232 3,268 3,844 1,902 1,937
Other, net....................... (8) (11) (5) (33) (24)
-------- ------- ------- ------- -------
Income before income taxes....... 27,003 20,567 25,878 31,734 30,290
Provision for income taxes....... 10,887 8,102 10,170 12,227 10,704
-------- ------- ------- ------- -------
Net income....................... $ 16,116 12,465 15,708 19,507 19,586
======== ======= ======= ======= =======
Net income per share (pro forma
for 1996) (1)................... $ 0.88 0.70
NET CASH PROVIDED (REQUIRED) BY:
Operating activities............. $ 12,488 23,742 14,803 (28,175) 51,841
Investing activities............. $(14,491) (15,687) (10,443) (3,440) (8,546)
Financing activities............. $ 8,410 (7,907) (4,057) 31,300 (43,292)
OTHER DATA:
EBITDA (2)....................... $ 38,134 30,579 35,136 38,266 36,762
Depreciation and amortization.... $ 7,899 6,744 5,414 4,630 4,535
Capital expenditures (3)......... $ 14,491 5,568 6,337 3,529 5,064
<CAPTION>
MARCH 31,
--------------------------------------------
1997 1996 1995 1994 1993
-------- ------- ------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital.................. $ 85,534 36,601 40,855 31,296 8,972
Total assets..................... $209,411 141,374 124,271 120,784 94,056
Long-term debt (4)............... $ 52,000 25,000 25,000 25,000 25,000
Total equity..................... $ 93,301 66,743 54,278 38,570 19,063
BACKLOG DATA..................... $478,803 431,292 244,229 256,965 293,770
</TABLE>
- --------
(1) Shares outstanding for 1996 have been assumed to be 18,000,000 (the total
number of shares issued to Trinity and the public as a result of the
initial public offering, exclusive of the underwriters' overallotment
option of 450,000 shares) for purposes of calculating pro forma net income
per share.
(2) EBITDA (earnings before interest, taxes, depreciation and amortization
expense) is presented here not as a measure of operating results, but
rather as a measure of the Company's operating performance and ability to
service debt. EBITDA should not be construed as an alternative to
operating income (determined in accordance with GAAP) as an indicator of
the Company's operating performance or as an alternative to cash flows
from operating activities (determined in accordance with GAAP) as a
measure of liquidity. EBITDA measures presented herein may not be
comparable to similarly titled measures of other companies.
(3) Excludes payments for business acquisitions.
(4) Prior to March 31, 1997, long-term debt represented intercompany notes due
to Trinity.
10
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
The Company is the seventh largest shipbuilder, and the largest builder of
small to medium sized ocean-going ships and barges and inland tow boats, in
the United States. The Company, which has built more than 2,000 vessels in the
past 40 years, specializes in the construction, repair and conversion of a
wide variety of vessels for the government, energy, commercial and other
markets. The Company's principal products include offshore support vessels,
offshore double hull tank barges, large offshore tug boats and oil spill
recovery vessels for commercial use and oceanographic survey and research
ships, high speed patrols boats and ferries for government use. At March 31,
1997, the Company had eleven shipyards (including one that currently is idle),
which are strategically located along the Gulf Coast from Louisiana to
Florida. On April 4, 1997, the Company acquired a 51% interest in Texas
Drydock, Inc. ("TDI") and on May 16, 1997 acquired the remaining 49% interest.
TDI is a leading marine repair and manufacturing company for mobile offshore
drilling and workover units.
As of March 31, 1997, the Company had firm contracts with an aggregate
remaining value of approximately $479 million (excluding unexercised options
held by customers), covering a total of 174 vessels (including 105 inland
hopper barges). Of this contract value, approximately $251 million was
attributable to contracts to build ships for the Company's government
customers, including the U.S. Navy, foreign governments and state and local
governments. The Company anticipates that approximately $416 million of the
aggregate remaining value of the firm contracts as of March 31, 1997 will be
filled during fiscal 1998.
The shipbuilding industry is a highly competitive industry. In general,
during the 1990's, the U.S. shipbuilding industry has been characterized by
substantial excess capacity, resulting in substantial pressure on pricing and
profit margins.
Revenue derived from the construction of U.S. Navy vessels accounted for
approximately 37.4%, 47.3% and 38.8% of the Company's revenue in fiscal 1997,
1996 and 1995, respectively. There can be no assurance that the Company will
be successful in obtaining new U.S. Navy contracts, all of which are
competitively bid. The U.S. Navy has options for vessels with a total
potential contract value of $118 million. There is no assurance that the U.S.
Navy will exercise any or all of its options. Overall U.S. Navy spending for
new vessel construction has declined significantly since 1991. Although the
Company believes that the small to medium sized U.S. Navy vessels for which it
competes are less likely to be cut back and, in some cases, do not require
specific Congressional appropriations, the Company generally expects revenue
and gross profit attributable to its current and any future U.S. Navy
contracts to decline over the next several years. Such decreases, if not
offset by increased revenue and profit from contracts with other customers,
could have a material adverse effect on the Company's business, financial
condition, results of operations and liquidity.
All of the Company's commercial contracts and a substantial majority of its
government contracts to build ships are currently performed on a fixed-price
basis. The Company attempts to cover anticipated increased costs of labor and
materials through an estimation of such costs, which is reflected in the
original contract price. Despite these attempts, however, the revenue, costs
and gross profit realized on a fixed-price contract may vary from the
estimated amounts because of changes in job conditions and in labor and plant
productivity over the contract term or other unanticipated changes. As a
result, the Company may experience reduced profitability or losses on
projects; however, historically cost overruns on fixed price contracts have
not been a significant problem for the Company.
The Company uses the percentage of completion method to account for its
contracts in process. Under this method, revenues from construction contracts
are measured by the percentage of labor hours incurred as compared to
estimated total labor hours for each contract. The timing of recognition of
revenues and expenses for financial reporting purposes may differ materially
from the timing of actual cash flows from contract payments received and
expenses paid. Provisions for estimated losses on uncompleted contracts are
made in the period in which such losses are determined.
11
<PAGE>
The Company believes it is well positioned to take advantage of the expected
upturn in the market for new offshore support vessels. The Company expects
that substantial orders for new offshore support vessels may be made in the
next several years due to the demand for larger vessels to support deep water
oil and gas exploration and production activities, as well as the substantial
worldwide fleet attrition over the past ten years and the aging of the
remaining fleet. The Company currently has fourteen offshore support vessels
under contract, of which twelve contracts have been entered into since July 1,
1996. The Company also has outstanding options for eight additional vessels,
and is bidding on a number of potential orders for such vessels. The timing of
the expected upturn in the offshore support market will depend principally
upon conditions in the offshore oil and gas industry, particularly an increase
in drilling activity and dayrates for offshore support vessels, which in turn
depend upon oil and gas prices and demand. No assurances can be given
regarding the timing or magnitude of an upturn in the market for offshore
support vessels.
The Company also expects to capitalize on the anticipated increase in
offshore tank barge construction and conversion resulting from OPA '90 and the
aging of the worldwide fleet. The Company currently has three offshore double
hull tank barges under construction. In addition, the Company is bidding on a
number of other barge construction projects.
Pursuant to the provisions of a separation agreement with Trinity, the
Company will be prohibited, for four years plus an additional period under
certain circumstances after the separation from Trinity, from engaging in
Trinity businesses, which include the construction of inland hopper barges and
inland tank barges. Under special arrangements with Trinity, the Company has
built a limited number of such vessels. Revenue related to this business were
$19.9 million, $26.2 million and $13.3 million for fiscal years 1997, 1996 and
1995, respectively. The Company's gross profit (loss) from such activities was
$2.2 million, $3.1 million and ($0.9) million for fiscal years 1997, 1996 and
1995, respectively. The Company's management does not believe that the
restrictions imposed pursuant to the Separation Agreement will have a material
adverse effect on the Company's business, financial condition, results of
operations or liquidity.
Shipyards in certain portions of southern Louisiana, including the Company's
Lockport yard, are experiencing severe shortages of skilled shipyard labor.
This labor shortage has resulted in increased costs of labor at this shipyard
and may in the future limit the Company's ability to expand operations at such
shipyard. The areas in which the Company's other shipyards are located are not
currently experiencing any such labor shortages, although no assurances can be
given regarding whether shortages will be experienced at other shipyards in
the future.
The principal materials used by the Company in its shipbuilding, conversion
and repair businesses are standard steel shapes, steel plate and paint. Other
materials used in large quantities include aluminum, steel pipe, electrical
cable and fittings. The Company has not engaged, and does not presently intend
to engage, in hedging transactions with respect to its purchase requirements
for materials.
The Company's selling, general and administrative costs have increased after
the separation from Trinity because of new and additional costs the Company
has incurred as a result of becoming a stand-alone enterprise and because of
its significant revenue growth. However, as a result of increased revenue,
these expenses were 5.3% of revenue as compared to 6.3% of revenue in fiscal
1996.
All statements (other than statements of historical fact) contained in the
Company's Annual Report, including the President's Letter to Stockholders, and
in this Form 10-K, including statements in this "Management's Discussion and
Analysis of Financial Condition and Results of Operations" concerning the
Company's financial position and liquidity, results of operations, prospects
for U.S. Navy contracts, ability to take advantage of new vessel construction
and conversion opportunities, labor supply and costs, selling, general and
administrative costs and other matters, are forward looking statements.
Forward-looking statements in this document generally are accompanied by words
such as "anticipate," "believe," "estimate" or "expect" or similar statements.
Although the Company believes that the expectations reflected in such forward
looking statements are reasonable, no assurance can be given that such
expectations will prove correct. Factors that could
12
<PAGE>
cause the Company's results to differ materially from the results discussed in
such forward looking statements include risks such as lack of independent
operating history, dependence on U.S. Navy contracts, potential conflicts of
interest with Trinity after the Separation, intense competition and
contractual, labor, regulatory and other risks in the shipbuilding industry
and risks relating to the market for offshore support vessels and offshore
double hull tank barges. All forward looking statements in this document are
expressly qualified in their entirety by the cautionary statements in this
paragraph.
RESULTS OF OPERATIONS
The following table sets forth certain statement of income information as a
percentage of the Company's revenue for the periods indicated:
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
--------------------------------------------
1997 1996 1995
-------------- -------------- --------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
------ ------- ------ ------- ------ -------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Contract revenue earned:
Government (1)................... $215.8 53.1% $135.7 53.4% $150.1 59.9%
Energy (2)....................... 86.0 21.1 54.4 21.4 53.1 21.2
Other commercial (3)............. 81.4 20.0 49.4 19.4 16.2 6.4
Other (4)........................ 23.5 5.8 14.8 5.8 31.3 12.5
</TABLE>
- --------
(1) Consists of revenue from the Company's government customers, including the
U.S. Navy, state and local governments and foreign governments.
(2) Consists of revenue from the construction or conversion of vessels for
customers in energy related businesses. Vessels include offshore support
vessels, offshore double-hull barges and tank barges.
(3) Consists of revenue from the Company's commercial customers and include
vessels such as tugboats, hopper barges, inland tow boats and other
vessels.
(4) Consists of revenue from customers for the construction of yachts, vessel
repairs and assorted marine products.
Fiscal 1997 Compared with Fiscal 1996
Contract revenue increased 60.0% to $406.8 million in the fiscal year ended
March 31, 1997 compared with $254.3 million in the fiscal year ended March 31,
1996. An increase in revenue from all customer groups was experienced.
Specifically, government revenue increased by $80.1 million or 59.0%; energy
revenue increased by $31.6 million or 58.1%; commercial revenue increased by
$32.0 million or 64.8%; and other revenue increased by $8.7 million or 58.8%.
Major new government contracts included a large ferry for a state government
and a US Navy oceanographic research vessel. The increase in energy revenue
was principally a result of increased construction of offshore support
vessels. The increase in other commercial revenue occurred in part from the
construction of five casino barges. The increase in other revenue was a result
of a $9.2 million increase in revenue from yacht construction as well as
increased repair and conversion business.
The gross profit margin decreased to 12.7% in fiscal 1997 compared to 15.6%
in fiscal 1996. This decrease is attributable, in part, to the favorable
margin received on a major contract in fiscal 1996. The Company did not
replace that contract with a similarly performing contract in 1997. Further,
fiscal 1997 gross profit was favorably impacted by a reduction in the workers
compensation reserve. This benefit was substantially offset by specific
writedowns in work in process inventory. In addition, in fiscal 1997,
contracts with energy customers had lower than normal margins reflecting the
Company's efforts to regain entry into a previously dormant market. It is
expected that the lower than normal margins earned on some offshore support
vessels will continue into fiscal 1998.
13
<PAGE>
Selling, general and administrative expenses increased to $21.4 million in
fiscal 1997, an increase of $5.5 million over fiscal 1996. These expenses
amounted to 5.3% of revenue in fiscal 1997 compared to 6.3% of revenue in
fiscal 1996. The increase in dollar costs can be attributed to the general
overall growth of the Company and the new and additional costs the Company
incurred as a result of becoming a stand alone enterprise. Specifically,
salaries and employee benefit costs increased by $2.6 million, primarily as a
result of increased personnel, and research and development costs increased by
$1.2 million resulting from lower billings to the U.S. Government for such
costs as compared to fiscal 1996.
The Company's construction backlog increased 11% to $478.8 million at March
31, 1997 compared to $431.3 million at March 31, 1996. Energy related backlog
increased by $108.6 million and other backlog increased by $9.0 million. The
increase in energy backlog is attributable to new contracts to build offshore
support vessels. The increase in other backlog was attributable to new
contracts to build megayachts. The above increases were offset by a decrease
in government related backlog of $59 million and commercial related backlog of
$11.2 million. The decrease in government backlog was primarily due to revenue
recognition during fiscal 1997 on a U.S. Navy contract to build two barracks
barges and the State of Alaska contract to build a 383 foot ferry. The
decrease in commercial backlog is due primarily to completion of large coal
barge in fiscal 1997.
Fiscal 1996 Compared with Fiscal 1995
Contract revenue earned increased 1.5% to $254.3 million in the fiscal year
ended March 31, 1996 compared with $250.6 million in the fiscal year ended
March 31, 1995. Commercial revenue increased by $33.2 million. The increase
was primarily due to the inclusion of results of the Gulf Coast Fabrication
shipyard for a full year in fiscal 1996 compared to five months in fiscal 1995
and new contracts for tug boats. Energy related revenue increased by $1.4
million due primarily to increased tank barge production. These increases were
offset by decreases in other revenue ($16.5 million) and governmental revenue
($14.4 million). These decreases were attributable to the completion of casino
vessel contracts and patrol vessel contracts for the Philippine government.
Gross profit margin declined in fiscal 1996 to 15.6% of contract revenue
earned compared to 17.2% in fiscal 1995. The decrease in the gross profit
margin principally resulted from (i) the substantial completion in fiscal 1995
of certain contracts for the construction of large U.S. Navy vessels under
which the Company achieved higher than anticipated profitability that was
recognized in later stages of the contracts, (ii) wage increases at the
Lockport shipyard and (iii) reduced margins resulting from the re-entry of
certain Company shipyards into the general commercial market following the
completion of casino vessel construction contracts.
Selling, general and administrative expenses increased 18.1% to $15.9
million during fiscal 1996 from $13.5 million in fiscal 1995. Such increase
resulted principally from the addition of new employees, normal salary
increases for existing employees and increased selling efforts relating to
foreign shipbuilding contracts.
Interest expense decreased 15.0% to $3.3 million during fiscal 1996 from
$3.8 million during fiscal 1995 due to lower levels of intercompany
borrowings. Historically, Trinity charged the Company interest on outstanding
intercompany balances at market rates based on Trinity's borrowing costs.
Taxes decreased approximately 20.3% to $8.1 million in fiscal 1996 from
$10.2 million in fiscal 1995. See Note 10 of Notes to Consolidated Financial
Statements.
Total backlog increased 76.6% to $431.1 million at March 31, 1996 compared
to $244.2 million at March 31, 1995. Government backlog increased by $137.4
million, commercial backlog increased by $36.1 million, other backlog
increased by $13.0 million and energy related backlog increased minimally by
$0.6 million.
The increase in governmental backlog was attributable to contracts awarded
in fiscal 1996 for the construction of a 383 foot ferry for the State of
Alaska, the construction of two barracks barges for the U.S. Navy, and the
construction of a large ocean surveillance vessel for the U.S. Navy. The
increase in commercial backlog was primarily due to new contracts awarded the
Company to build tugs, hopper barges and other barges. The increase in other
backlog was attributable to new contracts awarded to build megayachts.
14
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal needs for capital are the funding of ongoing
shipbuilding operations, capital expenditures and acquisitions. The Company's
principal sources of liquidity during fiscal 1997 were cash provided by
operating activities, borrowings from a revolving line of credit and a sale of
stock to the public. Cash flows during 1997 from these sources were $12
million from operating activities, $52 million from financial institutional
borrowings, and $35 million from an initial public offering. These sources
were used primarily to pay taxes and intercompany loans of $79 million in the
aggregate to Trinity.
In September 1996, the Company entered into a long term financial
arrangement with a group of banks ("Credit Facility") which provides a $135
million revolving line of credit for general corporate purposes and working
capital. All amounts outstanding under the Credit Facility will become payable
on September 30, 1999. Of the total amount available, $10 million is set aside
for use as a letter of credit in conjunction with the Company's captive
insurance subsidiary with all other letters of credit issued being limited to
$50 million. The interest rate is 0.625% to 1.25% over the London Interbank
Offering Rate ("LIBOR"), or the base rate (as defined), depending on the
Company's choice. The range of rates over LIBOR is set quarterly, depending on
the ratio of the Company's borrowed debt to EBITDA (as defined). Under the
loan agreement, the Company is obligated to pay certain fees, including an
annual commitment fee in an amount of .25% to .375% of the unused portion of
the commitment. The loan agreement contains certain restrictive covenants,
including minimum net worth requirements and the encumbering of assets. In
addition, the Company, among other things, is required to maintain certain
financial ratios, including an interest coverage ratio (as defined), a debt
service coverage ratio (as defined) and a current ratio (as defined). At March
31, 1997, the Company was obligated to the group of banks for $52 million
under the Credit Facility.
Prior to the Separation from Trinity, a significant portion of the Company's
existing contracts for the construction, repair or conversion of vessels
required that the Company's performance be guaranteed by Trinity, by a surety
company or other third party pursuant to a contract bid or performance bond,
letter of credit or similar obligation. These guarantees, bonds, letters of
credit and similar obligations will remain in effect until they expire and
Trinity will remain liable for the obligations on the same basis as any other
guarantor. The Company has indemnified Trinity against any liability under
these obligations. For the protection of Trinity in the event Trinity is
called upon to satisfy any such obligations, Trinity has been granted security
interests in certain assets of the Company which relate to the Company's
contracts from which such obligations arise and possesses the rights to
complete performance of any such contract on behalf of the Company in the
event of nonperformance by the Company. Such rights and remedies are similar
to the rights possessed by surety companies that have issued performance bonds
on behalf of the Company. The Company has arranged to obtain its own contract
bid and performance bonds, letters of credit and similar obligations in
connection with its business since September 26, 1996. The Company believes
that amounts available under the Credit Facility and bonding commitment will
be adequate to meet these obligations as they are required. As of March 31,
1997, the total of all of the Company's outstanding performance obligations
was approximately $132.5 million.
The Company made capital expenditures, including construction in process, of
$14.5 million and $5.6 million in fiscal 1997 and 1996, respectively. The
Company currently has budgeted over $20 million (excluding acquisitions) for
planned capital projects at its current operating facilities for fiscal 1998,
including $10 million for projects at its Pascagoula shipyard. When completed,
the Pascagoula shipyard will be a state of the art manufacturing facility for
offshore drilling rigs and vessels. The Company is currently exploring, with
the assistance of the Mississippi Business Finance Corporation and the Jackson
County Economic Development Board, the possibility of financing the proposed
improvements at the Pascagoula facility through the issuance of industrial
revenue bonds. It is possible that the Company may decide in fiscal 1998 to
reopen its Panama City yard which is currently inactive. Such a decision to
reopen this yard in fiscal 1998 would depend upon the market demand for the
Company's products. Should such a decision be made, expenditures necessary to
reopen the yard are estimated to be approximately $3 million and are not
currently budgeted for fiscal 1998.
15
<PAGE>
On May 16, 1997, the Company completed its 100% acquisition of Texas
Drydock, Inc. ("TDI") for a total price of $46.4 million. TDI is a leading
marine repair and manufacturing company for mobile offshore drilling rigs and
workover units. It operates six shipyards in southeast Texas. Of the total
purchase price, $27.0 million has been financed by issuing promissory notes
due January 5, 1998 to the former owners of TDI, and approximately $19.4
million was paid in cash utilizing the Company's credit facility. In addition,
$3.5 million was advanced to TDI for certain non-recurring operating expenses
related to the sale and $1.1 million was advanced for asset acquisitions. The
Company is exploring various alternative long-term financing strategies that
will repay the borrowings incurred in connection with the TDI acquisition as
well as other borrowings related to the Company's capital expansion plans.
The Company believes that cash flow from operations, together with funds
available under the Credit Facility, new permanent financing and the
possibility of revenue bonds, will be sufficient to fund its requirements for
working capital, capital expenditures, acquisitions and other capital needs
for at least the next 12 months.
INFLATION AND CHANGING PRICES
The Company does not believe that general price inflation has had a
significant impact on the Company's results of operations during the periods
presented. To the extent that the effects of inflation are not offset by
improvements in manufacturing and purchasing efficiency and labor
productivity, the Company generally has been able to take such effects into
account in pricing its contracts with customers. There can be no assurance,
however, that inflation will not have a material effect on the Company's
business in the future.
16
<PAGE>
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Auditors.......................................... 18
Consolidated Balance Sheets............................................. 19
Consolidated Income Statements.......................................... 20
Consolidated Statements of Stockholders' Equity......................... 21
Consolidated Statements of Cash Flows................................... 22
Notes to Consolidated Financial Statements.............................. 23
</TABLE>
17
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Stockholders
Halter Marine Group, Inc.
We have audited the accompanying consolidated balance sheets of Halter
Marine Group, Inc. and Subsidiaries as of March 31, 1997 and 1996, and the
related consolidated statements of income, stockholders' equity, and cash
flows for each of the three years in the period ended March 31, 1997. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Halter Marine
Group, Inc. and Subsidiaries at March 31, 1997 and 1996, and the consolidated
results of their operations and their cash flows for each of the three years
in the period ended March 31, 1997 in conformity with generally accepted
accounting principles.
ERNST & YOUNG LLP
New Orleans, Louisiana
May 8, 1997, except for
Note 15, as to
which the date is May 16,
1997
18
<PAGE>
HALTER MARINE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
MARCH 31
----------------
1997 1996
-------- -------
ASSETS
------
<S> <C> <C>
Current Assets:
Cash........................................................ $ 7,079 672
Contract receivables........................................ 36,053 8,340
Due from affiliate.......................................... 11,513 --
Costs and estimated earnings in excess of billings on
uncompleted contracts...................................... 77,704 67,905
Inventories................................................. 10,827 6,063
Deferred income taxes....................................... -- 2,865
Other current assets........................................ 4,501 387
-------- -------
Total current assets...................................... 147,677 86,232
Property, plant and equipment, net............................ 61,449 54,857
Other assets.................................................. 285 285
-------- -------
$209,411 141,374
======== =======
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<S> <C> <C>
Current Liabilities:
Accounts payable and accrued liabilities.................... $ 39,290 3,799
Due to affiliate............................................ -- 17,519
Income taxes payable to affiliate........................... -- 15,785
Billings in excess of costs and estimated earnings on
uncompleted contracts...................................... 19,956 12,528
Deferred income taxes....................................... 2,897 --
-------- -------
Total current liabilities................................. 62,143 49,631
Long-term debt................................................ 52,000 --
Long-term note to an affiliate................................ -- 25,000
Other noncurrent liabilities.................................. 1,967 --
Stockholders' equity:
Common stock, $.01 par value; authorized 50,000 shares;
issued 18,450 shares....................................... 185 --
Preferred stock, authorized 50,000 shares; issued, none..... -- --
Additional paid-in capital.................................. 84,213 --
Retained earnings........................................... 8,903 --
Stockholder's net investment................................ -- 66,743
-------- -------
Total equity.............................................. 93,301 66,743
-------- -------
$209,411 141,374
======== =======
</TABLE>
See accompanying notes to consolidated financial statements.
19
<PAGE>
HALTER MARINE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31
--------------------------
1997 1996 1995
-------- ------- -------
<S> <C> <C> <C>
Contract revenue earned............................ $406,797 254,294 250,586
Cost of revenue earned............................. 355,209 214,559 207,398
-------- ------- -------
Gross profit..................................... 51,588 39,735 43,188
Selling, general and administrative expenses....... 21,361 15,911 13,471
-------- ------- -------
Operating income................................. 30,227 23,824 29,717
Other (income) expenses:
Interest expense................................. 3,232 3,268 3,844
Other, net....................................... (8) (11) (5)
-------- ------- -------
3,224 3,257 3,839
-------- ------- -------
Income before income taxes......................... 27,003 20,567 25,878
Provision (benefit) for income taxes:
Current.......................................... 5,125 15,785 9,836
Deferred......................................... 5,762 (7,683) 334
-------- ------- -------
10,887 8,102 10,170
-------- ------- -------
Net income......................................... $ 16,116 12,465 15,708
======== ======= =======
Net income per share (pro forma for 1996).......... $ 0.88 0.70
======== =======
Weighted average shares outstanding (pro forma for
1996)............................................. 18,255 18,000
</TABLE>
See accompanying notes to consolidated financial statements.
20
<PAGE>
HALTER MARINE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONAL STOCKHOLDER'S
COMMON PAID-IN RETAINED NET
STOCK CAPITAL EARNINGS INVESTMENT TOTAL
------ ---------- -------- ------------- -------
<S> <C> <C> <C> <C> <C>
Balance, March 31, 1994...... $ 38,570 $38,570
Net income................. 15,708 15,708
-------- -------
Balance, March 31, 1995...... 54,278 54,278
Net income................. 12,465 12,465
-------- -------
Balance, March 31, 1996...... 66,743 66,743
Net income prior to initial
public offering........... 7,213 7,213
Debt assumed from parent... (25,000) (25,000)
Proceeds from initial
public offering........... $185 $35,257 -- 35,442
Transfer to additional
paid-in capital........... -- 48,956 (48,956) --
Net income subsequent to
initial public offering... -- -- $8,903 -- 8,903
---- ------- ------ -------- -------
Balance, March 31, 1997...... $185 $84,213 $8,903 $ -- $93,301
==== ======= ====== ======== =======
</TABLE>
See accompanying notes to consolidated financial statements.
21
<PAGE>
HALTER MARINE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31
--------------------------
1997 1996 1995
-------- ------- -------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income........................................ $16,116 12,465 15,708
Adjustments to reconcile net income to net cash
provided (required) by operating activities:
Depreciation and amortization.................... 7,899 6,744 5,414
Deferred provision (benefit) for income taxes.... 5,762 (7,683) 334
Net equipment transfers from affiliates.......... -- (7,776) (1,120)
Changes in assets and liabilities:
(Increase) decrease in contract receivables..... (27,713) (1,053) 19,954
(Increase) decrease in costs and estimated
earnings in excess of billings on uncompleted
contracts...................................... (9,799) 3,120 (12,825)
(Increase) decrease in inventories.............. (4,764) 455 (3,823)
(Increase) decrease in other current assets..... (4,114) 107 (341)
Increase in accounts payable and accrued
liabilities.................................... 35,491 420 1,132
Increase (decrease) in income taxes payable to
affiliate...................................... (15,785) 5,949 (3,221)
Increase (decrease) in billings in excess of
costs and estimated earnings on uncompleted
contracts...................................... 7,428 10,994 (6,409)
Increase in other noncurrent liabilities........ 1,967 -- --
-------- ------- -------
Total adjustments.............................. (3,628) 11,277 (905)
-------- ------- -------
Net cash provided by operating activities........ 12,488 23,742 14,803
-------- ------- -------
Cash flows from investing activities:
Capital expenditures.............................. (14,491) (5,568) (6,337)
Payments for acquisitions......................... -- (10,119) (4,106)
-------- ------- -------
Net cash required by investing activities........ (14,491) (15,687) (10,443)
-------- ------- -------
Cash flows from financing activities:
Net proceeds from sale of stock................... 35,442 -- --
Net repayments to parent.......................... (79,032) (7,907) (4,057)
Net borrowings under line of credit............... 52,000 -- --
-------- ------- -------
Net cash provided (required) by financing
activities...................................... 8,410 (7,907) (4,057)
-------- ------- -------
Net increase in cash............................... 6,407 148 303
Cash at beginning of year.......................... 672 524 221
-------- ------- -------
Cash at end of year................................ $ 7,079 672 524
======== ======= =======
Cash paid for interest............................. $ 1,586 -- --
======== ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
22
<PAGE>
HALTER MARINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
1. GENERAL INFORMATION
Halter Marine Group, Inc. is a Delaware corporation incorporated on June 24,
1996 to serve as the parent of a new consolidated group that formerly
conducted the business of construction, repair and conversion of primarily
ocean-going vessels for the governmental and commercial markets for Trinity
Industries, Inc. ("Trinity"). On September 26, 1996, Halter Marine Group, Inc.
and subsidiaries (collectively, the "Company") completed an initial public
offering of 16.7% of its stock (18.7% after the underwriters exercised their
overallotment option). On March 31, 1997, Trinity distributed all of the
remaining stock of the Company to its stockholders. As part of the
transactions related to the spin-off, the Company assumed $25 million of
indebtedness of Trinity associated with the Company's businesses.
2. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of Presentation
The consolidated financial statements include the accounts of Halter Marine
Group, Inc. and its wholly owned subsidiaries and have been prepared using
Trinity's historical basis in the assets and liabilities of the Company. All
significant intercompany accounts and transactions have been eliminated. The
consolidated financial statements reflect the results of operations, financial
condition and cash flows of the Company as a component of Trinity prior to
October 1, 1996 and those results may not be indicative of actual results of
operations and financial position of the Company under other ownership.
Management believes that the consolidated income statements include a
reasonable allocation of the administrative costs incurred by Trinity on the
Company's behalf prior to October 1, 1996. These costs include payroll
services, benefits administration, and cash management. The allocations of
such costs to the Company were approximately $1.8 million and $1.7 million in
1996 and 1995, respectively, and approximately $1.2 million for the six months
ended September 30, 1996.
Additionally, prior to the initial public offering, the Company provided
administrative services for Trinity's Inland Marine division in the areas of
accounting, human resources, marketing and public relations. The allocation of
such costs to the Inland Marine division were approximately $2.6 million and
$2.0 million in 1996 and 1995, respectively, and approximately $1.6 million
for the six months ended September 30, 1996.
(b) Estimates
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
(c) Construction contracts
The Company uses the percentage of completion method to account for its
contracts in process. Under this method, revenues of construction contracts
are measured by the percentage of labor hours incurred to date to estimated
total labor hours for each contract. Management considers expended labor hours
to be the best available measure of progress on these contracts. Changes in
estimated profitability may result in revisions to income and costs and are
recognized in the period in which the revisions are determined. Provisions for
estimated losses on uncompleted contracts are made in the period in which such
losses are determined. Other changes, including those arising from contract
penalty provisions, and final contract settlements are recognized in the
period in which the revisions are determined.
Contract costs include all direct material and labor costs and those
indirect costs related to contract performance, such as indirect labor,
supplies, tools, repairs and depreciation costs. Selling, general and
administrative costs are charged to expense as incurred.
23
<PAGE>
HALTER MARINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The asset, "Costs and estimated earnings in excess of billings and
uncompleted contracts," represents revenues recognized in excess of amounts
billed. The liability, "Billings in excess of costs and estimated earnings on
uncompleted contracts," represents billings in excess of revenues recognized.
For income tax purposes, the Company reports contract profits as earned
under the percentage of completion capitalized cost method as originally
prescribed by the Tax Reform Act of 1986 and subsequently modified by the
Revenue Act of 1987 and the Technical and Miscellaneous Revenue Act of 1988.
(d) Inventories
Inventories, which consist primarily of steel and other marine vessel
components, are valued at the lower of cost or market. Inventory cost is
determined principally on the specific identification method. Market is
replacement cost or net realizable value.
(e) Depreciation
Additions to property, plant and equipment are recorded at cost.
Depreciation and amortization are generally computed by the straight-line
method on the estimated useful lives of the assets which range from 3 to 30
years for buildings and improvements and 2 to 28 years for machinery and
equipment. The costs of ordinary maintenance and repair are charged to
expense, while renewals and major replacements are capitalized.
(f) Allocation of expenses
Indirect manufacturing costs are allocated on the basis of labor hours
incurred on the respective contracts.
(g) Income taxes
The Company files a consolidated federal income tax return. The Company
accounts for income taxes using the liability method. Temporary differences
occur between the financial reporting and tax bases of assets and liabilities.
Deferred tax assets and liabilities are recorded for these differences based
on enacted tax rates and laws that will be in effect when the differences are
expected to reverse.
(h) Net income per share
Net income per share has been computed based on the weighted average number
of shares outstanding during each period presented. Shares outstanding for
1996 have been assumed to be 18,000,000 (the total number of shares issued to
Trinity and the public as a result of the initial public offering, exclusive
of the underwriters' overallotment option of 450,000 shares) for purposes of
calculating pro forma net income per share. Pro forma net income for the year
ended March 31, 1996 was $12.7 million and reflected a reduction in interest
expense, net of tax, resulting from the use of the net proceeds of the
offering to retire outstanding debt to Trinity as of the beginning of the
period.
(i) Stock-based compensation
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-
Based Compensation," (SFAS 123) encourages, but does not require companies to
record compensation cost for stock-based employee compensation plans at fair
value. The Company has chosen to continue to account for stock-based
compensation using the intrinsic value method prescribed in Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees,"
and related Interpretations. Accordingly, compensation cost for stock options
is measured as the excess, if any, of the quoted market price of the Company's
stock at the date of the grant over the amount an employee must pay to acquire
the stock (see Note 8).
24
<PAGE>
HALTER MARINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(j) New Accounting Standard
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standard (SFAS) No. 128, "Earnings Per Share", which
is required to be adopted for the quarter ended December 31, 1997. At that
time, the Company will be required to change the method currently used to
compute earnings per share and present both basic earnings per share and
diluted earnings per share. All prior periods will be restated. Under the new
requirements for calculating basic earnings per share, the dilutive effect of
stock options will be excluded. The change is expected to result in an
increase in primary earnings per share (basic earnings per share when SFAS No.
128 is adopted) for the year ended March 31, 1997 of $0.01 per share. The
change will have no impact on pro forma primary earnings per share for the
year ended March 31, 1996. The Company was not previously required to present
diluted earnings per share. For the year ended March 31, 1997, diluted
earnings per share would have been $0.88 if the Company had been required to
adopt SFAS No. 128.
3. BUSINESS ACQUISITIONS
The Company made certain business acquisitions during fiscal 1996 and 1995.
All have been accounted for by the purchase method. The operations of these
companies have been included in the consolidated financial statements from the
effective dates of the acquisitions.
In fiscal 1996, the Company acquired the assets of American Marine
Corporation (now known as Halter Gulf Repair) and CBI-Con, Inc. (now known as
Halter Pascagoula). The assets of these businesses are utilized in the
manufacture and repair of marine products. The aggregate purchase price of
approximately $10.1 million was allocated entirely to the assets acquired.
Contribution of these acquisitions to revenues and operating profit during
fiscal 1996 is not material.
In fiscal 1995, the Company acquired 100% of the common stock of Gulf Coast
Fabrication, Inc., a company engaged in the manufacture and repair of marine
vessels. The purchase price of approximately $4.1 million was allocated
entirely to assets acquired.
See Note 15, "Subsequent Event," for a discussion of the acquisition of
Texas Drydock, Inc.
4. COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS
<TABLE>
<CAPTION>
MARCH 31
----------------
1997 1996
-------- -------
(IN THOUSANDS)
<S> <C> <C>
Costs incurred on uncompleted contracts........................ $555,918 479,811
Estimated earnings............................................. 103,565 110,558
-------- -------
659,483 590,369
Less billings to date.......................................... 601,735 534,992
-------- -------
$ 57,748 55,377
======== =======
Included in accompanying balance sheet under the following
captions:
Costs and estimated earnings in excess of billings on
uncompleted contracts....................................... $ 77,704 67,905
Billings in excess of costs and estimated earnings on
uncompleted contracts....................................... 19,956 12,528
-------- -------
$ 57,748 55,377
======== =======
</TABLE>
25
<PAGE>
HALTER MARINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
5. PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
1997 1996
------- ------
<S> <C> <C>
Land............................................................. $ 8,427 5,686
Buildings and improvements....................................... 26,929 23,660
Machinery and equipment.......................................... 53,118 58,874
Construction in progress......................................... 12,696 3,688
------- ------
101,170 91,908
Less accumulated depreciation.................................... 39,721 37,051
------- ------
Property, plant and equipment, net............................... $61,449 54,857
======= ======
</TABLE>
6. LONG-TERM DEBT
The Company has a revolving credit agreement, totaling $135 million, with a
group of banks. All amounts outstanding under this revolving credit agreement
will become payable on September 30, 1999. Of the total amount, $10 million is
set aside for use as a letter of credit in conjunction with the Company's
captive insurance subsidiary. All other letters of credit issued are limited
to $50 million. The interest rate is 0.625% to 1.25% over the London Interbank
Offered Rate (LIBOR), or the base rate (as defined), depending on the
Company's choice. The range of rates over LIBOR is set quarterly, depending on
the ratio of the Company's borrowed debt to EBITDA (as defined).
Under the credit agreement, the Company is obligated to pay certain fees,
including an annual commitment fee in an amount ranging from 0.25% to 0.375%
of the unused portion of the commitment. The loan agreement contains certain
restrictive covenants, including minimum net worth requirements and the
encumbering of assets. In addition, the Company, among other things, is
required to maintain certain financial ratios, including an interest coverage
ratio (as defined), a debt service coverage ratio (as defined), and a current
ratio (as defined).
At March 31, 1997, the Company was obligated to the banks for $50 million
under the line of credit.
The fair value of the Company's long-term debt approximates its recorded
value.
7. RELATED PARTY TRANSACTIONS
John Dane III, Chief Executive Officer and Chairman of the Company, acquired
25% of the stock of United States Marine, Inc. ("USMI") in June 1996. Mr. Dane
has the option to acquire up to an additional 50% of the stock of USMI over
the next five years. USMI manufactures custom composite marine products for
various customers and performs services for the Company as a subcontractor
with respect to the production of high speed composite vessels for the U.S.
Navy. During fiscal 1997, 1996 and 1995, the Company paid USMI fees of
approximately $7.2 million, $5.5 million and $3.9 million, respectively, for
subcontractor services.
Subsequent to its initial public offering, the Company repaid to Trinity its
intercompany balance, including $21.6 million for income taxes and $25.0
million in debt assumed by the Company from Trinity. Such amounts aggregated
approximately $79.0 million.
As of March 31, 1997, the Company had a receivable from Trinity of $11.5
million, representing the year-end settlement of excess amounts of income tax
estimates paid to Trinity during the year, the settlement of the Company's
portion of assets in Trinity's captive insurance subsidiary, and various other
intercompany charges and credits.
26
<PAGE>
HALTER MARINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Upon completion of the initial public offering, the Company and Trinity
entered into various agreements for the purpose of establishing the terms
governing their on-going arrangements and relationships. These agreements
contained various provisions including a non-compete provision, a provision
regarding the settlement of income tax matters and a provision related to the
settlement of other transactions between the Company and Trinity. The Company
expects to settle the income tax matters and other transactions during fiscal
year 1998. The agreements are not expected to have a significant impact on the
Company's business, financial position, results of operations or liquidity.
8. STOCK OPTIONS
On September 24, 1996 the Company established the 1996 Stock Option and
Incentive Plan (the "1996 Plan") which provides for awards to employees and
directors in the form of grants of stock options, stock appreciation rights,
restricted or non-restricted stock or units denominated in stock (collectively
referred to as "Awards"). All stock options granted under the 1996 Plan vest
in equal annual amounts over a five-year period and expire 10 years from the
date of grant. The 1996 Plan also provides that shares of common stock which
are the subject of awards that are forfeited or terminated, expire
unexercised, are settled in cash in lieu of common stock or in a manner such
that all or some of the shares covered thereby are not issued or are exchanged
for Awards that do not involve common stock will again immediately become
available for Awards under the 1996 Plan.
Following is a summary of the option activity during the year ended March
31, 1997:
<TABLE>
<CAPTION>
SHARES PRICE*
--------- ------
<S> <C> <C>
Options at beginning of year.................................. -- --
Granted..................................................... 250,000 $11.00
Canceled.................................................... -- --
--------- ------
Outstanding at end of year.................................... 250,000 $11.00
========= ======
Exercisable at end of year.................................... -- --
Available for grant........................................... 1,150,000
</TABLE>
- --------
* Weighted average exercise price for the year.
The Company accounts for options granted under the 1996 Plan as prescribed
by the provisions of APB 25 and, accordingly, no compensation expense has been
recognized for stock options granted. Had compensation expense for the 1996
Plan been determined based on the fair value at the grant dates consistent
with the method of SFAS 123, the Company's net income and net income per share
would have been reduced to the pro forma amounts indicated below. For purposes
of these pro forma disclosures, the estimated fair value of the options
granted in fiscal 1997 is amortized to expense over the options' vesting
period.
<TABLE>
<CAPTION>
MARCH 31, 1997
(IN THOUSANDS, EXCEPT
EARNINGS PER SHARE)
---------------------
<S> <C>
Net income:
As reported....................................... $16,116
Pro forma......................................... $15,912
Net income per share:
As reported....................................... $ 0.88
Pro forma......................................... $ 0.87
</TABLE>
The weighted average grant date fair value of options granted during the
year ended March 31, 1997 was $6.81. The fair value of options was calculated
by using the Black-Scholes option pricing model using the following weighted
average assumptions for fiscal year activity: risk free interest rate of
5.98%, expected life of 7 years, expected volatility of .801 and no dividend
yield.
27
<PAGE>
HALTER MARINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Because the Company's employee stock options have characteristics
significantly different from those of traded options, and because changes in
the subjective input assumptions can materially affect the fair value
estimate, in management's opinion, the existing model does not necessarily
provide a reliable single measure of the fair value of its employee stock
options.
9. EMPLOYEE BENEFIT PLANS
The Company's employees are included in a pension plan which provides income
and death benefits for eligible employees. The Company's policy is to fund
retirement costs accrued but only to the extent such amounts are deductible
for income tax purposes. Plan assets include cash, short-term debt securities,
and other investments. Benefits are based on years of credited service and
compensation.
Net periodic pension expense includes the following components (in
thousands):
<TABLE>
<CAPTION>
YEAR ENDED
MARCH 31
------------
1997 1996
---- ------
<S> <C> <C>
Service cost-benefits earned during the period.................... $807 598
Interest cost on projected benefit obligation..................... 501 386
Actual return on assets........................................... 143 (1,112)
Net amortization and deferral..................................... (603) 699
---- ------
Net periodic pension expense...................................... $848 571
==== ======
</TABLE>
Amounts recognized in the Company's consolidated balance sheet follows (in
thousands):
<TABLE>
<CAPTION>
MARCH 31
--------------
1997 1996
------- -----
<S> <C> <C>
Actuarial present value of benefit obligation:
Vested benefit obligation..................................... $ 3,946 3,484
======= =====
Accumulated benefit obligation................................ $ 4,875 4,452
======= =====
Projected benefit obligation.................................... $ 6,644 6,306
Plan assets at fair value....................................... 5,437 5,931
------- -----
Projected benefit obligation in excess of plan assets........... (1,207) (375)
Unrecognized net asset at April 1, 1996......................... (42) (75)
Unrecognized net loss........................................... 1,903 1,741
------- -----
Prepaid pension expense......................................... $ 654 1,291
======= =====
</TABLE>
Assumptions used for the valuation of the projected benefit obligation for
1997 and 1996 were a discount rate of 7.75%, an increase in compensation
levels of 4.75% and an expected long-term rate of return on assets of 9.00%.
The Company has a contributory 401(k) plan in which employees of the Company
may participate. Under the plan, eligible employees are allowed to make
voluntary pre-tax contributions which are matched, up to certain limits, by
the Company. Expenses related to this plan approximated $896 and $614 in 1997
and 1996, respectively.
The Company incurred expense of $875 in 1995 applicable to its pension and
401(k) plans.
28
<PAGE>
HALTER MARINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
10. INCOME TAXES
The Company is included in the consolidated federal income tax return of
Trinity. Trinity has periodically charged the Company amounts representing
applicable estimated income tax payments that the Company would have been
obligated to pay if it had filed a separate tax return. The Company and
Trinity have entered into a tax allocation agreement under which the Company
and Trinity have agreed upon the allocation of certain tax liabilities and
related matters. For years ending after March 31, 1997, the Company will file
its own consolidated income tax returns.
The significant components of the provision (benefit) for income taxes
follow:
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31
----------------------
1997 1996 1995
------- ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Current
Federal................................................ $ 3,440 13,475 8,174
State.................................................. 1,685 2,310 1,662
------- ------ ------
5,125 15,785 9,836
Deferred
Federal................................................ 4,771 (6,692) 334
State.................................................. 991 (991) --
------- ------ ------
5,762 (7,683) 334
------- ------ ------
Total................................................ $10,887 8,102 10,170
======= ====== ======
</TABLE>
Deferred income tax was provided in the financial statements for temporary
differences between financial and taxable income. The components of deferred
tax liabilities and assets follow:
<TABLE>
<CAPTION>
MARCH 31
---------------
1997 1996
------- ------
(IN THOUSANDS)
<S> <C> <C>
Deferred tax liabilities:
Excess of tax depreciation over financial statement
depreciation............................................... $(3,555) (2,771)
Profits on long-term contracts recorded on the percentage of
completion method for financial statement purposes and
related items.............................................. (257) --
Pensions and other benefits................................. (640) (711)
Other....................................................... (62) (50)
------- ------
Total deferred tax liabilities............................ (4,514) (3,532)
------- ------
Deferred tax assets:
Profits on long-term contracts recorded on the percentage of
completion method for financial statement purposes......... -- 5,406
Reserve for unpaid insurance claims......................... 1,617 --
State taxes................................................. -- 991
------- ------
Total deferred tax assets................................. 1,617 6,397
------- ------
Net deferred tax asset (liability)............................ $(2,897) 2,865
======= ======
</TABLE>
29
<PAGE>
HALTER MARINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
A reconciliation between the effective tax rate and the statutory tax rate
is as follows:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Statutory rate................................................ 35.0% 35.0% 35.0%
State taxes................................................... 4.1 4.2 4.2
Other......................................................... 1.2 0.2 0.1
---- ---- ----
Effective tax rate............................................ 40.3% 39.4% 39.3%
==== ==== ====
</TABLE>
11. STOCKHOLDER RIGHTS PLAN
The Company has adopted a stockholder rights plan under which one right is
assigned to each share of common stock. Each right entitles the stockholder to
purchase from the Company one one-hundredth of a share of Series A Preferred
Stock at an exercise price to be determined by the Board when the rights are
issued. The rights are not exercisable or detachable from the common stock
until ten business days after a person acquires beneficial ownership of 15% or
more of the common stock or if a person or group commences a tender or
exchange offer upon consummation of which that person or group would
beneficially own 15% or more of the common stock.
If any person becomes a beneficial owner of 15% or more of the common stock
other than pursuant to an offer, as defined, for all shares determined by
certain directors to be fair to the stockholders and otherwise in the best
interests of both the Company and its stockholders (other than by reason of
share purchases by the Company), each right not owned by that person or
related parties enables its holder to purchase, at the right's then current
exercise price, shares of the Company's common stock having a calculated value
of twice the right's exercise price.
The rights, which are subject to adjustment, may be redeemed by the Company
at a price of one cent per right at any time prior to their expiration ten
years from issuance or the point at which they become exercisable.
12. SIGNIFICANT CUSTOMERS
Revenue related to fiscal 1997 and 1996 includes revenue from the U.S. Navy
which totaled approximately 37% and 47% of total revenue in each respective
year.
In fiscal 1995, revenue from the U.S. Navy and the Phillipine government
accounted for 38.8% and 10.2%, respectively, of total revenue. Also, in fiscal
1995, revenue from foreign governments accounted for 13.6% of total revenue.
13. COMMITMENTS AND CONTINGENCIES
The Company is involved in various claims and lawsuits incidental to its
business. In the opinion of management, these claims and suits in the
aggregate will not have a material adverse effect on the Company's financial
position, results of operations or liquidity.
Prior to September 30, 1996, Trinity had guaranteed certain contract
performance obligations of the Company. These guarantees, bonds, letters of
credit and similar obligations will remain in effect until they expire and
Trinity will remain liable until that time as any other guarantor. The Company
has indemnified Trinity for any losses incurred by Trinity under this
arrangement.
Subsequent to September 30, 1996, the Company obtained its own contract bid
and performance bonds, letters of credit and similar obligations in connection
with its business. As of March 31, 1997, the total of all outstanding
performance obligations was approximately $132.5 million.
30
<PAGE>
HALTER MARINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
14. SUPPLEMENTARY UNAUDITED QUARTERLY DATA
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
------- ------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Year ended March 31, 1997:
Contract revenue earned................... $85,981 94,457 112,496 113,863
Gross profit.............................. $11,286 12,779 12,558 14,965
Net income................................ $ 3,342 3,871 4,192 4,711
Net income per share ..................... $ 0.19 0.22 0.23 0.26
Year ended March 31, 1996:
Contract revenue earned................... $72,008 53,904 56,625 71,757
Gross profit.............................. $11,132 7,943 10,848 9,812
Net income................................ $ 3,669 2,419 3,757 2,620
Pro forma net income per share............ $ 0.20 0.13 0.21 0.15
</TABLE>
15. SUBSEQUENT EVENT
On April 4, 1997, the Company acquired a 51% interest in and obtained an
option to acquire the remaining 49% of Texas Drydock, Inc. (TDI), a company
engaged principally in the construction, conversion and repair of offshore oil
drilling rigs. The purchase price was approximately $19.4 million and
coincident with the acquisition, the Company advanced TDI approximately $4.5
million for working capital and a fixed asset acquisition. All amounts were
paid in cash. On May 16, 1997, the Company acquired the remaining 49% of TDI
for $27 million. A substantial portion of the total purchase price will be
allocated to cost in excess of net assets acquired.
31
<PAGE>
ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANT ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None
PART III
ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS
Information concerning Directors and Executive Officers is incorporated by
reference from the Proxy Statement for the annual Meeting of Stockholders to
be held July 15, 1997.
ITEM 11: EXECUTIVE COMPENSATION
Information concerning executive compensation is incorporated by reference
from the proxy statement described in Item 10 of this report.
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information concerning security ownership of certain beneficial owners and
management is incorporated by reference from the proxy statement described in
Item 10 of this report.
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information concerning certain relationships and related transactions is
incorporated by reference from the proxy statement described in Item 10 of
this report.
PART IV
ITEM 14: EXHIBITS, FINANCIAL STATEMENTS SCHEDULES, AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
3.1*** --Form of Restated Certificate of Incorporation of Halter Marine
Group, Inc. (the "Company"), as amended
3.2*** --Form of Amended and Restated Bylaws of the Company
3.3*** --Form of Certificate of Designations of Series A Junior
Participating Preferred Stock of the Company
4.1*** --Form of Certificate evidencing Common Stock
10.1*** --Intentionally Omitted
10.2*** --Form of Separation Agreement between the Company and Trinity
Industries, Inc.
10.3*** --Intentionally Omitted
10.4*** --Form of Tax Sharing and Tax Benefit Reimbursement Agreement
between the Company and Trinity Industries, Inc.
10.5*** --Form of Trademark License Agreement between the Company and
Trinity Industries, Inc.
10.6*** --Form of Rights Agreement between the Company and The Bank of New
York, as Rights Agent
10.7*** --Form of Noncompetition Agreement between the Company and John
Dane III
10.8*** --Form of Credit Agreement among the Company and certain Lenders
10.9*** --Form of Inland Barge Agreement between Halter Marine, Inc. and
Trinity Marine Products, Inc.
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.10*** --Form of Executive Severance Agreement between the Company and
various Executive Officers. The Agreement between the Company and
John Dane III is included herein as an example.
10.11 --Intentionally Omitted
to
10.16
10.17 --Intentionally Omitted
to
10.29
10.30*** --Form of Indemnity and Security Agreement between Trinity
Industries, Inc. and the Company
10.31*** --Exchange Agreement between Trinity Industries, Inc. and the Company
10.32*** --Assumption Agreement between Trinity Industries, Inc. and the
Company
10.33** --Form of Amended and Restated 1996 Stock Option and Incentive Plan
10.34* --Form of Amended and Restated Revolving Credit Agreement effective
December 31, 1996, among the Company and certain Lenders
10.35* --Form of Consent of Lenders and First Amendment to Amended and
Restated Revolving Credit Agreement, effective April 4, 1997 among
the Company and certain Lenders
10.36* --Form of Amended and Restated Consent of Lenders and First Amendment
of Amended and Restated Revolving Credit Agreement entered into May
15, 1997, effective April 4, 1997 among the Company and certain
Lenders
10.37* --Form of 401(k) profit Sharing Plan of the Company
10.38* --Form of Pension Plan of the Company
21*** --Subsidiaries of the Company
27* --Financial Data Schedule
</TABLE>
- --------
* Filed herewith
** Filed as Exhibit A to the 1997 Proxy Statement and incorporated herein by
reference.
*** Incorporated by reference to the same exhibits in Amendment No. 3 to the
Registration Statement (Registration No. 333-6967) filed on September 23,
1996 with the Securities and Exchange Commission.
(b) Financial Statement Schedules
Copies of Consolidated Financial Statements are included within Form
10-K and are incorporated herein by reference (See Index To
Consolidated Financial Statements at page 18 of Form 10-K).
Financial Statement Schedules other than the Financial Statements have
been omitted because the required information is contained in the
consolidated financial statements and notes thereto or because such
schedules are not required or applicable.
(c) Reports on Form 8-K
The following Forms 8-K were filed with the Securities and Exchange
Commission during the fourth quarter of fiscal 1997 on the dates indicated:
1. Announcement of the agreement to acquire, subject to Board approval,
51% of the common stock of Texas Drydock, Inc. filed on February 14,
1997.
2. Announcement of the declaration of a property distribution of fifteen
million shares of common stock of the Company by Trinity to its
shareholders filed on March 13, 1997.
3. Announcement of the completion of the property distribution of
fifteen million shares of common stock of the Company by Trinity to
its shareholders filed on March 31, 1997.
33
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934. THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
HALTER MARINE GROUP, INC.
By: /s/ John Dane, III
By __________________________________
John Dane, III
Chairman, President and Chief
Executive Officer
Date: June 19, 1997
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT IN THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ John Dane, III Chairman, President, Chief June 19, 1997
____________________________________ Executive Officer and
John Dane, III Director
/s/ Keith L. Voigts Sr. Vice President of June 19, 1997
____________________________________ Finance and Chief Financial
Keith L. Voigts Officer (Principal Financial
and Accounting Officer)
/s/ Kenneth W. Lewis Director June 19, 1997
____________________________________
Kenneth W. Lewis
/s/ Daniel J. Mortimer Director June 19, 1997
____________________________________
Daniel J. Mortimer
/s/ Rick S. Rees Director June 19, 1997
____________________________________
Rick S. Rees
</TABLE>
34
<PAGE>
EXHIBIT 10.34
______________________________________________________________________________
______________________________________________________________________________
AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
Effective December 31, 1996
BY AND AMONG
HALTER MARINE GROUP, INC.
as Borrower,
THE BANKS NAMED HEREIN,
as Banks,
and
WHITNEY NATIONAL BANK,
as Agent
______________________________________________________________________________
______________________________________________________________________________
<PAGE>
AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
-----------------------------------------------
THIS AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT (this "Agreement") is
effective the 31st day of December, 1996, and is made and entered into by and
among HALTER MARINE GROUP, INC., a Delaware corporation ("Borrower") and the
undersigned Banks, including Whitney National Bank in its capacity as a Bank
hereunder and as Agent for the Banks under this Agreement.
WITNESSETH:
WHEREAS, the Borrower, Whitney, First National Bank of Commerce, Hibernia
National Bank, NBD Bank and The Bank of Nova Scotia entered into a Revolving
Credit Agreement, effective as of September 30, 1996, which provided for
revolving loans to the Borrower in an aggregate principal amount not to exceed
the Revolving Credit Commitment of One Hundred Five Million Dollars
($105,000,000.00), a swing line from Whitney in an aggregate principal amount
not to exceed Five Million Dollars ($5,000,000.00) as part of the Revolving
Credit Commitment, and the issuance of letters of credit for the account of the
Borrower and its Subsidiaries from time to time during the Letter of Credit
Period in an amount not to exceed at any one time outstanding the aggregate
amount of Sixty Million Dollars ($60,000,000.00) as part of the Revolving Credit
Commitment;
WHEREAS, the Revolving Credit Agreement was amended by that certain First
Amendment to Revolving Credit Agreement by and among the Borrower, Whitney,
First National Bank of Commerce, Hibernia National Bank, NBD Bank and The Bank
of Nova Scotia effective as of September 30, 1996 and by that certain Second
Amendment to Revolving Credit Agreement by and among Borrower, Whitney, First
National Bank of Commerce, Hibernia National Bank, NBD Bank and The Bank of Nova
Scotia effective as of October 1, 1996 (collectively, the "Original Credit
Agreement"); and
WHEREAS, the parties desire to amend and restate the Original Credit
Agreement to provide for additional Banks and to increase the Revolving Credit
Commitment to the principal amount of One Hundred Thirty Five Million Dollars
($135,000,000.00).
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby mutually promise and agree as follows:
SECTION l. TERM.
- ------------------
The "Term" of this Agreement shall commence on the effective date hereof
and shall end on September 30, 1999, unless extended from time to time with the
unanimous
<PAGE>
consent of the Banks as provided in Section 3.6 hereof and unless earlier
terminated pursuant to the terms hereof.
SECTION 2. DEFINITIONS.
- -------------------------
2.1 Definitions. In addition to the terms defined elsewhere in this
Agreement or in any Exhibit or Schedule hereto, when used in this Agreement, the
following terms shall have the following meanings (such meanings shall be
equally applicable to the singular and plural forms of the terms used, as the
context requires):
Acquisition shall mean the purchase, merger with or other acquisition by
Borrower or any Subsidiary of (i) the stock or other equity interest (in whole
or in part) in any entity, which, after such Acquisition will be a Subsidiary,
(ii) all or substantially all of the assets of any such entity, or (iii) a
shipyard, ship building facility or any other facility consistent with the
Company Business.
Acquisition Indebtedness shall mean, without duplication, any Indebtedness,
other than the Loans, issued, incurred or provided by the Borrower or any
Subsidiary for Acquisitions.
Affiliate shall mean any Person (a) which directly or indirectly through
one or more intermediaries controls, is controlled by or is under common control
of or with Borrower or any Subsidiary, (b) which beneficially owns or holds or
has the power to direct the voting power of twenty percent (20%) or more of any
class of capital stock of Borrower or any Subsidiary, (c) which has twenty
percent (20%) or more of any class of its capital stock (or, in the case of a
Person which is not a corporation, twenty percent (20%) or more of its equity
interest) beneficially owned or held, directly or indirectly, by Borrower or any
Subsidiary, or (d) who is a director, officer or employee of Borrower or any
Subsidiary. For purposes of this definition, "control" shall mean the power to
direct the management and policies of a Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise.
Agent shall mean Whitney National Bank in its capacity as agent for the
Banks hereunder and its successors in such capacity.
Applicable Margin shall mean, the rate of interest per annum shown in the
applicable column below:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Level I Level II Level III Level IV
-------- --------- ---------- --------
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
If Ratio of Average Consolidated greater than or equal to 2.0 less than 2.0 less than 1.5 less than 1.0
Total Debt to Consolidated greater than 1.5 greater than 1.0
EBITDA is or equal to or equal to
- ------------------------------------------------------------------------------------------------------------------------------------
Applicable Margin 1.25% 1.00% .750% .625%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Provided Trinity maintains ownership of over 50% of the outstanding common stock
of Borrower, the Applicable Margins for Level I, II, and III will be reduced by
.250% from the effective date hereof until April 1, 1997 (the "Trinity
Discount") and (ii) from the effective date of this Agreement until April 1,
1997, the Applicable Margin shall be the Applicable Margin for Level II (subject
to any Trinity Discount). The Applicable Margin shall be adjusted on the first
day of each March, June, September and December (or, if such day is not a
Business Day, on the next succeeding Business Day), based on the ratio of
Average Consolidated Total Debt for the immediately preceding fiscal quarter to
Consolidated EBITDA for the immediately preceding four (4) fiscal quarters. If
Borrower should fail to deliver in a timely manner a certificate required under
Section 8.1(a)(vi) hereof, then, until Borrower shall have provided such
certificate, it shall be presumed that the ratio of Average Consolidated Total
Debt for the immediately preceding fiscal quarter to Consolidated EBITDA for the
immediately preceding four (4) fiscal quarters was greater than 2.0 (and, from
the date of the delivery of such certificate, the Applicable Margin shall be
determined by reference to such certificate).
Assignment Agreement shall mean any of those certain Assignment Agreements
described in Section 11.15 herein.
Assumed Trinity Indebtedness shall mean $25,000,000.00 of indebtedness of
Trinity assumed by Borrower.
Average Consolidated Total Debt shall mean, for each fiscal quarter, the
sum of the Consolidated Total Debt as of the end of each day during such quarter
divided by 90.
Bank(s) shall mean each bank listed on the signature pages hereof, and its
successors and assigns.
Base Rate shall mean the interest rate per annum, determined on any day,
equal to the greater of: (i) the Prime Rate then in effect or (ii) the sum of
the Fed Funds Rate then in effect plus One-Half of One Percent (.50%).
Base Rate Loan shall mean any Loan bearing interest at the Base Rate.
Borrower's Obligations shall mean, without duplication, any and all
present and future indebtedness (including, without limitation, principal,
interest, fees, collection costs and expenses, attorneys' fees and other
amounts), liabilities and obligations (including, without limitation,
reimbursement obligations with respect to Letters of Credit issued by any one or
more Banks under this Agreement for the account of Borrower or any Subsidiary)
of Borrower to the Agent and/or any one or more of the Banks evidenced by or
arising under this Agreement, the Notes, the Letter of Credit Application(s),
and/or any of the other Transaction Documents.
<PAGE>
Business Day shall mean (a) any day except a Saturday, Sunday or legal
holiday observed by the Agent or by commercial banks in New Orleans, Louisiana;
and (b) relative to the making, continuing, prepaying or repaying of any LIBOR
Loans, any day on which dealings in U.S. Dollars are carried on in the London
interbank market.
Capital Expenditure shall mean any expenditure which, as determined in
accordance with GAAP, is required to be capitalized on the balance sheet of the
Person making the same, but excluding (i) expenditures for the restoration or
replacement of fixed assets to the extent funded out of the proceeds of an
insurance policy and (ii) Acquisitions.
Capitalized Lease shall mean any lease of Property, whether real and/or
personal, by a Person as lessee which as determined in accordance with GAAP is
required to be capitalized on the balance sheet of such Person.
Capitalized Lease Obligations of any Person shall mean, as of the date of
any determination thereof, the amount at which the aggregate rental obligations
due and to become due under all Capitalized Leases under which such Person is a
lessee would be reflected as a liability on a balance sheet of such Person as
determined in accordance with GAAP.
CERCLA shall mean the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, 42 U.S.C. (S)(S)9601 et seq., and as the same may
from time to time be further amended, and shall include any and all regulations
issued pursuant thereto.
Change in Control shall mean the existence at any time of the board of
directors of Borrower (the "Board of Directors") which does not contain (i) John
Dane III or (ii) either (A) a majority of the voting members nominated by
Trinity, (B) such other members of the Board of Directors nominated by John Dane
III who together with John Dane III constitute a majority of the voting members,
or (C) any combination thereof.
Code shall mean the Internal Revenue Code of 1986, as amended, and any
successor statute of similar import, together with the regulations thereunder,
in each case as in effect from time to time. References to sections of the Code
shall be construed to also refer to any successor sections.
Commitment shall mean, with respect to each Bank, the sum of such Bank's
Revolving Credit Commitment, and its Swing Line Commitment, if any.
Company Business shall mean the (i) construction, repair and conversion
of ocean-going and inland vessels (other than inland hopper barges and inland
tank barges and the construction of accessories for such barges, except for such
barge construction and related work as allowed under the non-competition
covenants of the Separation and
<PAGE>
Related Agreements) (ii) the production of any component of or accessory to any
such ocean-going or inland vessel, (iii) any other similar type of production,
construction or manufacturing, (iv) any financing related to the sale of any of
the Borrower's or any Subsidiary's products, and (v) any other activities
ancillary to the foregoing.
Consolidated Current Assets shall mean, as of any date for which it is
being determined, all amounts which would, as determined in conformity with
GAAP, be included under current assets on a consolidated balance sheet of
Borrower and its Subsidiaries as at such date.
Consolidated Current Liabilities shall mean, as of any date for which it
is being determined, all amounts which would, as determined in conformity with
GAAP, be included under current liabilities on a consolidated balance sheet of
Borrower and its Subsidiaries as at such date.
Consolidated Debt Service Coverage Ratio shall mean, for any period, the
ratio of (a) Consolidated EBITDA minus Capital Expenditures of Borrower or any
Subsidiary during such period minus all federal, state, local and/or foreign
income taxes paid by Borrower or any Subsidiary payable with respect of such
period, to (b) Consolidated Interest Expense plus Consolidated Scheduled
Principal Payments plus the principal portion of Capitalized Lease Obligations
payable by Borrower or any Subsidiary in respect of such period.
Consolidated EBIT shall mean, for the period in question, the sum of (a)
Consolidated Net Income during such period plus (b) to the extent deducted in
determining Consolidated Net Income, the sum of (i) Consolidated Interest
Expense during such period, plus (ii) all provisions for any federal, state,
local and/or foreign income taxes made by Borrower or any Subsidiary during such
period (whether paid or deferred), all determined on a consolidated basis as
determined in accordance with GAAP.
Consolidated EBITDA shall mean, for any period, the sum of the following:
(a) Consolidated Net Income during such period plus (b) to the extent deducted
in determining Consolidated Net Income, the sum of (i) Consolidated Interest
Expense during such period, plus (ii) all provisions for any federal, state,
local and/or foreign income taxes made by Borrower or any Subsidiary during such
period (whether paid or deferred) plus (iii) all depreciation and amortization
expenses and all other non-cash items of Borrower or any Subsidiary during such
period, all determined on a consolidated basis as determined in accordance with
GAAP.
Consolidated Funded Debt shall mean, as of any date of determination
thereof, (a) all Indebtedness of Borrower or any Subsidiary, other than
Borrower's Obligations, which matures in not less than twelve months from the
date of incurrence, whether or not represented by bonds, debentures, notes or
other securities, for the repayment of money borrowed or for the payment of the
purchase price of property or assets purchased, (b) all
<PAGE>
Borrower's Obligations, (c) all Indebtedness of Borrower or any Subsidiary,
which matures in not less than twelve months from the date of incurrence,
secured by any mortgage, pledge, security interest or lien existing on property
owned by Borrower or any Subsidiary, whether or not the Indebtedness secured
thereby shall have been assumed by the owner thereof, (d) all Capitalized Lease
Obligations of Borrower or any Subsidiary, and (e) all obligations of Borrower
or any Subsidiary, contingent or otherwise, relative to the face amount of all
letters of credit (as may be reduced pursuant to their terms), whether or not
drawn.
Consolidated Interest Coverage Ratio shall mean, as of any date for which
it is being determined, the ratio of Consolidated EBIT to Consolidated Interest
Expense.
Consolidated Interest Expense shall mean, for the period in question,
without duplication, all gross interest expense of Borrower and its Subsidiaries
(including, without limitation, all commissions, discounts and/or related
amortization and other fees and charges owed by Borrower and its Subsidiaries
with respect to letters of credit and bankers' acceptance financing, the net
costs associated with interest swap obligations of Borrower and its
Subsidiaries, capitalized interest expense, the interest portion of Capitalized
Lease Obligations and the interest portion of any deferred payment obligation)
during such period, all determined on a consolidated basis as determined in
accordance with GAAP.
Consolidated Net Income and Consolidated Net Loss shall mean, for the
period in question, the after-tax net income or loss of Borrower and its
Subsidiaries during such period, determined on a consolidated basis as
determined in accordance with GAAP, but excluding in any event the following:
(i) any net gain or net loss (net of expenses and taxes applicable
thereto) for such period resulting from the sale, transfer or other disposition
of fixed or capital assets as determined by GAAP;
(ii) any gains or losses resulting from any reappraisal, revaluation
or write-up or write-down of assets;
(iii) any equity of Borrower or any Subsidiary in the undistributed
earnings of any corporation which is not a Subsidiary and is not accounted for
on the equity method as determined in accordance with GAAP;
(iv) undistributed earnings of any Subsidiary to the extent that the
declaration or payment of dividends or other distributions by such Subsidiary is
not at the time permitted by the terms of its charter documents or any
agreement, document, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to such Subsidiary;
(v) gains or losses from the acquisition or disposition of
Investments;
<PAGE>
(vi) gains from the retirement or extinguishment of Debt;
(vii) gains on collections from insurance policies or settlements (net
of premiums paid or other expenses incurred with respect to such gains during
the fiscal period in which the gain occurs, to the extent such premiums or other
expenses are not already reflected in Consolidated Net Income for such fiscal
period); and
(viii) any gains or losses during such period from any change in
accounting principles, from any discontinued operations or the disposition
thereof or from any prior period adjustments; and
(ix) any extraordinary gains and/or losses;
all determined in accordance with GAAP. If the preceding calculation results in
a number less than zero such amount shall be considered a Consolidated Net Loss.
Consolidated Scheduled Principal Payments shall mean, for the period in
question, without duplication, all scheduled principal payments of Borrower and
its Subsidiaries on Indebtedness for the applicable period, all determined on a
consolidated basis as determined in accordance with GAAP.
Consolidated Tangible Net Worth shall mean at a particular date, the
excess, if any, of (a) all amounts which would be included under shareholders'
equity on a consolidated balance sheet of the Borrower determined in accordance
with GAAP (including, without limitation, capital stock, additional paid-in-
capital and retained earnings) at such date minus (b) all assets of Borrower,
determined on a consolidated basis at such date, that would be classified as
intangible assets in accordance with GAAP, but in any event including, without
limitation, the following intangible assets: unamortized organization and
reorganization expense, patents, trade or service marks, franchises, trade names
and goodwill.
Consolidated Total Debt shall mean, as of the date of any determination
thereof, all Debt of Borrower and its Subsidiaries as of such date, determined
on a consolidated basis as determined in accordance with GAAP.
Consolidation Transactions shall mean (i) the transfer to Borrower of the
stock of each subsidiary of Trinity that has assets and liabilities related to
the Company Business, including without limitation, the stock of the
Subsidiaries listed on Schedule 7.8 attached hereto, (ii) the transfer to
Subsidiaries of Borrower of certain assets and liabilities of Trinity related to
the Company Business, including without limitation the shipyards and other
property listed on Schedule 7.12 attached hereto, and all related real estate,
leases, equipment, inventory and receivables, and (iii) the assumption by
Borrower of the Assumed Trinity Indebtedness.
<PAGE>
Continuing Guarantee shall mean the unlimited continuing guarantee of all
of Borrower's Obligations executed now or at any time hereafter by each
Subsidiary other than Offshore and delivered to Agent, in the form of Exhibit C
attached hereto and incorporated herein by reference.
Default shall mean any event or condition the occurrence of which would,
with the lapse of time or the giving of notice or both, become an Event of
Default as defined in Section 9 hereof.
Debt of any Person shall mean, as of the date of determination thereof, the
sum of (a) all Indebtedness of such Person for borrowed money or which has been
incurred to acquire Property plus (b) all Capitalized Lease Obligations of such
Person.
Disbursement Date shall have the meaning ascribed thereto in Section 4.3.
Distribution in respect of any corporation shall mean:
(a) dividends or other distributions of cash, stock, assets or other
property on or in respect of any shares of any class of stock of such
corporation; and
(b) the redemption, repurchase or other acquisition of any shares of
any class of any stock of such corporation or of any warrants, rights or other
options to purchase any such stock (except when solely in exchange for such
stock).
Environmental Claim shall mean any administrative, regulatory or judicial
action, judgment, order, consent decree, suit, demand, demand letter, claim,
Lien, notice of noncompliance or violation, investigation or other proceeding
arising (a) pursuant to any Environmental Law or governmental or regulatory
approval issued under any such Environmental Law, (b) from the presence, use,
generation, storage, treatment, Release, threatened Release, disposal,
remediation or other existence of any Hazardous Substance, (c) from any removal,
remedial, corrective or other response action pursuant to an Environmental Law
or the order of any Governmental Authority, (d) from any third party seeking
damages, contribution, indemnification, cost recovery, compensation, injunctive
or other relief in connection with a Hazardous Substance or arising from alleged
injury or threat of injury to health, safety, natural resources or the
environment or (e) from any Lien against any Property owned, leased or operated
by Borrower or any Subsidiary in favor of any governmental or regulatory
authority or agency in connection with a Release, threatened Release or disposal
of a Hazardous Substance.
Environmental Law shall mean any federal, state or local statute, law,
rule, regulation, order, consent decree, judgment, permit, license, code, deed
restriction, common law, treaty, convention, ordinance or other governmental
requirement relating to public health, safety or the environment, including,
without limitation, those relating to Releases, discharges or emissions to air,
water, land or groundwater, to the use of groundwater, to the use and handling
of polychlorinated biphenyls or asbestos, to the disposal, treatment, storage or
management of hazardous or solid waste, Hazardous
<PAGE>
Substances or crude oil, or any fraction thereof, to exposure to toxic or
hazardous materials, to the handling, transportation, discharge or release of
gaseous or liquid Hazardous Substances, in each case applicable to any of the
Property owned, leased or operated by Borrower or any Subsidiary or the
operation, construction or modification of any such Property, including, without
limitation, the following: CERCLA, the Solid Waste Disposal Act, as amended by
the Resource Conservation and Recovery Act of 1976 and the Hazardous and Solid
Waste Amendments of 1984, the Hazardous Materials Transportation Act, as
amended, the Federal Water Pollution Control Act, as amended by the Clean Water
Act of 1976, the Safe Drinking Water Control Act, the Clean Air Act of 1966, as
amended, the Toxic Substances Control Act of 1976, the Occupational Safety and
Health Act of 1977, as amended, the Emergency Planning and Community Right-to-
Know Act of 1986, the National Environmental Policy Act of 1975, the Oil
Pollution Act of 1990 and any similar or implementing state or local law, and
any state or local statute and any further amendments to these laws providing
for financial responsibility for cleanup or other actions with respect to the
Release or threatened Release of Hazardous Substances or crude oil, or any
fraction thereof and all rules and regulations promulgated thereunder.
ERISA shall mean the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA shall be construed to also refer to any successor sections.
ERISA Affiliate shall mean any corporation, trade or business that is,
along with Borrower and any Subsidiary, a member of a controlled group of
corporations or a controlled group of trades or businesses, as described in
Sections 414(b) and 414(c), respectively, of the Code or Section 4001 of ERISA.
Event of Default shall have the meaning ascribed thereto in Section 9.
Fed Funds Rate shall mean, for any day, the rate per annum (rounded
upwards, if necessary to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business Day next
succeeding such day, provided that (a) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business Day,
and (b) if no such rate is so published on such next succeeding Business Day,
the Federal Funds Rate for such day shall be the average rate charged to the
Agent on such day on such transactions.
GAAP shall mean generally accepted accounting principles at the time in the
United States.
<PAGE>
Governmental Authority shall mean any sovereign state or nation or
government, any state or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
Governmental Contract shall have the meaning ascribed thereto in Section
7.20.
Guarantee by any Person shall mean any obligation (other than endorsements
of negotiable instruments for deposit or collection in the ordinary course of
business), contingent or otherwise, of such Person guaranteeing, or in effect
guaranteeing, any Indebtedness, liability, dividend or other obligation of any
other Person (the "primary obligor") in any manner, whether directly or
indirectly, including, without limitation, all obligations incurred through an
agreement, contingent or otherwise, by such Person: (a) to purchase such
Indebtedness or obligation or any Property or assets constituting security
therefor, (b) to advance or supply funds (i) for the purchase or payment of such
Indebtedness or obligation, (ii) to maintain working capital or other balance
sheet condition or otherwise to advance or make available funds for the purchase
or payment of such Indebtedness or obligation, (iii) to lease property or to
purchase securities or other property or services primarily for the purpose of
assuring the owner of such Indebtedness or obligation of the ability of the
primary obligor to make payment of the Indebtedness or obligation or (iv)
otherwise to assure the owner of the Indebtedness or obligation of the primary
obligor against loss in respect thereof. For the purposes of all computations
made under this Agreement, a Guarantee in respect of any Indebtedness for
borrowed money shall be deemed to be Indebtedness equal to the then outstanding
principal amount of such Indebtedness for borrowed money which has been
guaranteed or such lesser amount to which the maximum exposure of the guarantor
shall have been specifically limited, and a Guarantee in respect of any other
obligation or liability or any dividend shall be deemed to be Indebtedness equal
to the maximum aggregate amount of such obligation, liability or dividend or
such lesser amount to which the maximum exposure of the guarantor shall have
been specifically limited. Guarantee when used as a verb shall have a
correlative meaning.
Hazardous Substance shall mean any hazardous or toxic material, substance
or waste, pollutant or contaminant which is regulated under any Environmental
Law, including, without limitation, any material, substance or waste which is:
(a) defined as a hazardous substance under Section 311 of the Federal Water
Pollution Control Act (33 U.S.C. (S)(S)1317), as amended; (b) regulated as a
hazardous waste under Section 1004 or Section 3001 of the Federal Solid Waste
Disposal Act, as amended by the Resource Conservation and Recovery Act (42
U.S.C. (S)(S)6901 et seq.), as amended; (c) defined as a hazardous substance
under Section 101 of the Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. (S)(S)9601 et seq.), as amended; or (d) defined or
regulated as a hazardous substance or hazardous waste under any rules or
regulations promulgated under any of the foregoing statutes.
<PAGE>
Indebtedness shall mean, with respect to any Person, without duplication,
all indebtedness, liabilities and obligations of such Person, and in any event
shall include all (i) obligations of such Person for borrowed money or which
have been incurred to acquire Property, (ii) obligations secured by any Lien on,
or payable out of the proceeds of production from, any Property or assets owned
by such Person, whether or not such Person has assumed or become liable for the
payment of such obligations, (iii) indebtedness, liabilities and obligations of
third parties, including joint ventures and partnerships of which such Person is
a venturer or general partner, recourse to which may be had against such Person,
(iv) obligations created or arising under any conditional sale or other title
retention agreement with respect to Property acquired by such Person,
notwithstanding the fact that the rights and remedies of the seller, lender or
lessor under such agreement in the event of default are limited to repossession
or sale of such Property, (v) Capitalized Lease Obligations of such Person, (vi)
indebtedness, liabilities and obligations of such Person under Guarantees and
(vii) all obligations of such Person, contingent or otherwise, relative to the
face amount of all letters of credit (as may be reduced pursuant to their
terms), whether or not drawn.
Indemnitees shall have the meaning ascribed thereto in Section 11.4.
Intercompany Note shall mean debt in the aggregate amount of $25,000,000.00
that Borrower paid on behalf of Trinity.
Interest Period shall mean with respect to each LIBOR Loan:
(i) initially, the period commencing on the date of such Loan and
ending 1, 2, 3 or 6 months thereafter (or such other period agreed upon in
writing by Borrower and all of the Banks), as the Borrower may elect in the
applicable Notice of Borrowing; and
(ii) thereafter, each period commencing on the last day of the next
preceding Interest Period applicable to such Loan and ending 1, 2, 3 or 6 months
thereafter (or such other period agreed upon in writing by Borrower and all of
the Banks), as Borrower may elect pursuant to Section 5.1;
provided that:
(iii) subject to clause (iv) below, if any Interest Period would
otherwise end on a day which is not a Business Day, such Interest Period shall
be extended to the next succeeding Business Day unless such Business Day falls
in another calendar month, in which case such Interest Period shall end on the
immediately next preceding Business Day; and
(iv) no Interest Period for a LIBOR Loan shall extend beyond the last
day of the Revolving Credit Period.
<PAGE>
Initial Offering shall mean the initial sale by Borrower of at least
3,000,000 shares of common stock of Borrower.
Investment shall mean any investment by Borrower or any Subsidiary in any
Person, whether payment therefor is made in cash or capital stock of Borrower or
any Subsidiary, and whether such investment is by acquisition of stock or
Indebtedness, or by loan, advance, transfer of property out of the ordinary
course of business, capital contribution, equity or profit sharing interest,
extension of credit on terms other than those normal in the ordinary course of
business, Guarantee or otherwise becoming liable (contingently or otherwise) in
respect of the Indebtedness of any Person, or otherwise.
Issuer shall have the meaning ascribed thereto in Section 4.
Letter of Credit and Letters of Credit shall have the meanings ascribed
thereto in Section 4.1(a).
Letter of Credit Application shall mean an application and agreement for
standby letter of credit in substantially the form of Exhibit D attached hereto
and incorporated herein by reference executed by Borrower and any Subsidiary (if
the Letter of Credit is to be for the account of a Subsidiary) and delivered to
a Bank pursuant to Section 4.1(a), as the same may from time to time be amended
modified, extended or renewed.
Letter of Credit Commitment shall have the meaning ascribed thereto in
Section 4.1 (a).
Letter of Credit Commitment Fee shall have the meaning ascribed thereto in
Section 4.1(c).
Letter of Credit Loan and Letter of Credit Loans shall have the meaning
ascribed thereto in Section 4.3.
Letter of Credit Period shall mean the period commencing on the effective
date hereof and ending September 30, 1999.
Letter of Credit Request shall have the meaning ascribed thereto in Section
4.1 (a).
LIBOR Base Rate means, for an Interest Period, (a) the LIBOR Index Rate for
such Interest Period, if such rate is available, and (b) if the LIBOR Index Rate
cannot be determined, the arithmetic average of the rates of interest per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) at which deposits in
U.S. dollars in immediately available funds are offered to the Agent at 11:00
a.m. (New Orleans time), or as soon thereafter as practicable, three (3)
Business Days before the beginning of such Interest Period by two (2) or more
major banks in the London interbank market selected by the Agent for a period
equal to such Interest Period and in an amount equal or comparable to the
principal amount of the LIBOR Loan scheduled to be made available by the Banks.
<PAGE>
As used herein, "LIBOR Index Rate" means, for any Interest Period, the London
interbank offered rate per annum (rounded upwards, if necessary, to the next
higher one hundred-thousandth of a percentage point) for deposits in U.S.
Dollars for a period equal to such Interest Period, which appears on the
Telerate Page 3875 as of 9:00 a.m. (New Orleans time) on the day three Business
Days before the commencement of such Interest Period.
LIBOR Loan shall mean a loan bearing interest at the LIBOR Rate.
LIBOR Rate shall mean (a) the quotient of the (i) LIBOR Base Rate divided
by (ii) one minus the applicable LIBOR Reserve Percentage plus (b) the
Applicable Margin. The LIBOR Rate shall be adjusted automatically on and as of
the effective date of any change in the LIBOR Reserve Percentage and Agent shall
notify Borrower and Banks of any such change.
LIBOR Reserve Percentage shall mean for any day the percentage (including
any supplemental percentage applied on a marginal basis or any other reserve
requirement having a similar effect), expressed as a decimal, which is in effect
on the first day of the applicable Interest Period, as prescribed by the Board
of Governors of the Federal Reserve System (or any successor) under Regulation D
(or any other then applicable regulation of the Board of Governors (or any
successor)) with respect to "Eurocurrency Liabilities".
Lien shall mean any interest in Property securing an obligation owed to, or
a claim by, a Person other than the owner of the Property, whether such interest
is based on common law, statute or contract, including, without limitation, any
security interest, mortgage, deed of trust, pledge, assignment, judgment lien or
other lien or encumbrance of any kind or nature whatsoever, any conditional sale
or trust receipt, and any consignment or bailment for security purposes. The
term "Lien" shall include reservations, exceptions, encroachments, easements,
servitudes, rights-of-way, covenants, conditions, restrictions, leases and other
title exceptions and encumbrances affecting Property.
Loans shall collectively mean the Revolving Credit Loans, the Swing Loans,
and the Letter of Credit Loans, with each being a Loan, and shall include all
principal, interest, attorneys' fees and costs owed thereon.
Material Adverse Effect shall mean a material adverse effect on the
Properties, assets, liabilities, business, operations, prospects, income or
condition (financial or otherwise) of Borrower and its Subsidiaries taken as a
whole.
Moody's shall mean Moody's Investors Service, Inc.
Multi-Employer Plan shall mean a "multi-employer plan" as defined in
Section 4001(a)(3) of ERISA which is maintained for employees of Borrower, any
Subsidiary or
<PAGE>
any ERISA Affiliate or to which Borrower, any Subsidiary of Borrower or any
ERISA Affiliate has contributed in the past or currently contributes.
Non-Competition Agreement shall mean the Non-Competition Agreement between
Borrower and John Dane, III, dated as of October 1, 1996.
Notes shall mean all of the Revolving Credit Notes and the Swing Line Note.
Notice of Borrowing shall have the meaning ascribed thereto in Section 3.3.
Obligor shall mean Borrower, each Subsidiary and each other Person who is
or shall at any time hereafter become primarily or secondarily liable on any of
Borrower's Obligations.
Occupational Safety and Health Laws shall mean the Occupational Safety and
Health Act of 1970, as amended, and any other federal, state or local statute,
law, ordinance, code, rule,regulation, order or decree regulating, relating to
or imposing liability or standards of conduct concerning employee health and/or
safety, as now or at any time hereafter in effect.
Offshore shall mean Offshore Marine Indemnity Company, with Taxpayer
Identification Number 75-2674011.
Offshore Commitment shall mean an aggregate amount not to exceed the face
amount of $10,000,000.00.
Operating Lease shall mean any lease of Property, whether real and/or
personal, by a Person as lessee which is not a Capitalized Lease.
Operating Lease Obligations of any Person shall mean, as of any date for
which it is being determined, all of the rental obligations due and to become
due in less than twelve months from the date of determination thereof under all
Operating Leases under which such Person is a lessee.
PBGC shall mean the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
Pension Plan shall mean a "pension plan," as such term is defined in
Section 3(2) of ERISA, which is established or maintained by Borrower, any
Subsidiary or any ERISA Affiliate, and includes, without limitation, a Multi-
Employer Plan.
Permitted Liens shall mean any of the following:
(a) Liens for property taxes and assessments or governmental charges
or levies, provided that payment thereof is not at the time required by Section
8.1(d);
<PAGE>
(b) (i) Deposits to secure the performance of bids, tenders or trade
contracts, or to secure statutory obligations, surety or appeal bonds or other
Liens of like general nature incurred in the ordinary course of business and not
in connection with the borrowing of money or the acquisition of inventory or
other Property and (ii) Liens (other than any Liens imposed by ERISA) arising in
the ordinary course of business or incidental to the ownership of Properties and
assets (including Liens in connection with worker's compensation, unemployment
insurance and other like laws, carrier's, mechanic's, materialmen's,
repairmen's, vendor's, warehousemen's and attorneys' liens and statutory
landlords' liens); provided in each case (x) the obligation secured is not
overdue or, if overdue, is being contested in good faith by appropriate actions
or proceedings being diligently conducted and for which adequate provision as
determined in accordance with GAAP has been made, (y) payment thereof is not at
the time required by Section 8.1(d) or 8.1(e), and (z) if the obligations
secured thereby are in excess of $50,000.00, Agent is provided written notice of
such Lien within twenty days of when the Lien becomes overdue;
(c) Survey exceptions, issues with regard to the merchantability of
title, easements or reservations, or rights of others for rights-of-way,
servitudes, utilities and other similar purposes, or zoning or other
restrictions as to the use of real properties, which could not reasonably be
expected to have a Material Adverse Effect;
(d) Liens permitted by the Required Banks in writing;
(e) Liens granted in the ordinary course of business on vessels under
construction in favor of the purchaser or owner of such vessels (or lenders to
such purchasers or owners);
(f) Liens reflected on Schedule 2.1(a) attached hereto in existence as
of the effective date hereof, and any extensions, renewals and refinancings
thereof (provided that any such refinancing shall not increase the principal
indebtedness secured thereby without the prior written consent of the Required
Banks);
(g) Liens on Properties in respect of judgments or awards, the
Indebtedness with respect to which is permitted by Section 8.2(a)(vi);
(h) non-perfected Liens in favor of Fireman's Fund Insurance Company
pursuant to a bonding company indemnity agreement in customary form; and
(i) non-perfected Liens in favor of Trinity in existence on October 1,
1996, to secure its contingent liability under parent guarantees, letters of
credit, bank guarantees or other similar obligations related to existing
construction contracts or outstanding bid proposals of Borrower or any
Subsidiary to the extent such Liens would customarily be required by a bonding
company in like circumstances.
<PAGE>
Person shall mean any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation,
institution, entity or government (whether national, federal, state, county,
city, municipal or otherwise, including, without limitation, any
instrumentality, division, agency, body or department thereof).
Prime Rate shall mean the interest rate announced from time to time by
Citibank, N.A. at its main office in New York as its "prime rate" on commercial
loans (which rate shall fluctuate as and when said prime rate shall change).
Property shall mean any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible. Properties shall mean the
plural of Property. For purposes of this Agreement, Borrower and each
Subsidiary shall be deemed to be the owner of any Property which it has acquired
or holds subject to a conditional sale agreement, financing lease or other
arrangement pursuant to which title to the Property has been retained by or
vested in some other Person for security purposes.
Pro Rata Share shall mean with respect to each Bank, the percentage amount
equal to the sum of such Bank's Revolving Credit Commitment, divided by the sum
of all of the Banks' Revolving Credit Commitments.
RCRA shall mean the Solid Waste Disposal Act, as amended by the Resource
Conservation and Recovery Act of 1976 and Hazardous and Solid Waste Amendments
of 1984, 42 U.S.C. (S)(S)6901 et seq., and any future amendments, and shall
include any and all regulations issued pursuant thereto.
Regulation D shall mean Regulation D of the Board of Governors of the
Federal Reserve System, as amended.
Regulatory Change shall have the meaning ascribed thereto in Section 5.9.
Release shall mean any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping or disposing into
the environment, including, without limitation, the abandonment or discarding of
barrels, drums, containers, tanks and/or other receptacles containing or
previously containing any Hazardous Substance.
Reportable Event shall have the meaning given to such term in ERISA.
Reserves Loan shall have the meaning ascribed to such term in 6.3(g).
Required Banks shall mean at any time Banks having Sixty-Six and Two Thirds
Percent (66 2/3 %) of the aggregate amount of Loans and the face amount of
Letters of Credit then outstanding or, if no Loans or Letters of Credit are then
outstanding,
<PAGE>
Sixty-Six and Two Thirds Percent (66 2/3%) of the total Commitments of all of
the Banks.
Responsible Officer shall mean the chief executive officer, president,
chief operating officer, chief financial officer or chief accounting officer of
Borrower or any other officer of Borrower involved in the financial
administration or controllership function of Borrower.
Restricted Investment shall mean any Investment, or any expenditure or any
incurrence of any liability to make any expenditure for an Investment, other
than:
(a) Guarantees, loans and/or advances by Borrower or a Subsidiary to
any Subsidiary in which all of the issued and outstanding shares of stock is
owned by Borrower and/or any Subsidiaries; provided that, neither Borrower nor
any Subsidiary will make any Guarantee, loan and/or advance to Offshore other
than (i) in connection with Letters of Credit issued for the account of Offshore
pursuant to this Agreement and (ii) repayment of the Reserves Loan;
(b) Guarantees, loans and/or advances by (i) any Subsidiary other than
Offshore to Borrower which are subordinated in writing to the payment of the
Borrower's Obligations in form and substance satisfactory to the Required Banks
or (ii) Offshore to Borrower relating to the Reserves Loan;
(c) Direct obligations of the United States of America or any
instrumentality or agency thereof, the payment of which is unconditionally
guaranteed by the United States of America or any instrumentality or agency
thereof (all of which Investments must mature within twelve (12) months from the
time of acquisition thereof);
(d) Investments in readily marketable commercial paper which, at the
time of acquisition thereof by Borrower or any Subsidiary, is rated investment
grade or better by S&P or Moody's and which matures within 270 days from the
date of acquisition thereof, provided that the issuer of such commercial paper
shall, at the time of acquisition of such commercial paper, have a senior long-
term debt rating of at least A by S&P and Moody's;
(e) Negotiable certificates of deposit or negotiable bankers
acceptances issued by (i) any of the Banks or (ii) any other bank or trust
company organized under the laws of the United States of America or any state
thereof, which bank or trust company (other than the Banks to which such
restrictions shall not apply) is a member of both the Federal Deposit Insurance
Corporation and the Federal Reserve System and is rated B or better by Thompson
Bank Watch Service (all of which Investments must mature within twelve (12)
months from the time of acquisition thereof);
(f) Repurchase agreements, which shall be collateralized for at least
100% of face value, issued by (i) any of the Banks or (ii) any other bank or
trust company
<PAGE>
organized under the laws of the United States or any state thereof, which bank
or trust company (other than the Banks to which such restrictions shall not
apply) is a member of both the Federal Deposit Insurance Corporation and the
Federal Reserve System and is rated B or better by Thompson Bank Watch Service
(all of which Investments must mature within twelve (12) months from the time of
acquisition thereof);
(g) Investments in mutual funds the investments of which are limited
to direct obligations of the United States of America or any instrumentality or
agency thereof, the payment of which is unconditionally guaranteed by the United
States of America or any instrumentality or agency thereof;
(h) Investments existing as of the effective date hereof as described
in Schedule 7.17, and any future retained earnings in respect thereof;
(i) Guarantees, loans or advances other than in the ordinary course
of business to officers or employees of Borrower or a Subsidiary in the
aggregate principal amount of up to $500,000.00 at any one time outstanding;
(j) Acquisitions through (i) the issuance of stock (or the use of the
proceeds from the sale of stock) of the Borrower or of any Subsidiary (other
than through the use of proceeds from the Initial Offering), (ii) the issuance,
incurrence or provision of Indebtedness as allowed by Section 8.2(a)(xiii) of
this Agreement, (iii) with the consent of the Required Banks, the use of Loan
proceeds, or (iv) any combination of the foregoing; and
(k) Investments representing all or a portion of the sales price for
property sold to another Person in the ordinary course of business.
Revolving Credit Commitment shall mean for each Bank, subject to
termination or reduction as set forth in Section 3.5, the principal amount set
forth as the Revolving Credit Commitment for such Bank next to its name on the
signature pages hereof, which commitments in the aggregate equal the principal
amount of $135,000,000.00.
Revolving Credit Loan and Revolving Credit Loans shall have the meanings
ascribed thereto in Section 3.1.
Revolving Credit Notes shall have the meaning ascribed thereto in Section
3.4(a).
Revolving Credit Period shall mean the period commencing on the effective
date of this Agreement and ending September 30, 1999, unless extended from time
to time with the unanimous consent of the Banks as provided in Section 3.6
hereof.
S&P shall mean Standard and Poor's Ratings Group.
<PAGE>
Separation and Related Agreements shall mean the Separation Agreement,
Barge Agreement, Insurance Agreement, Tax Allocation Agreement and the Trademark
License Agreement between Borrower and Trinity dated as of October 1, 1996.
Subsidiary shall mean (a) any corporation of which more than fifty percent
(50%) of the issued and outstanding capital stock entitled to vote for the
election of directors (other than by reason of default in the payment of
dividends) is at the time owned directly or indirectly by Borrower or any
Subsidiary of Borrower, or (b) any partnership, limited liability company,
business trust, or any other similar entity of which more than fifty percent
(50%) of the voting interests is at the time owned directly or indirectly by
Borrower or any Subsidiary of Borrower.
Swing Loans and Swing Loan shall have the meanings ascribed thereto in
Section 3.2.
Swing Line Note shall have the meaning ascribed thereto in Section 3.2.
Swing Line Commitment shall mean the aggregate principal amount of
$5,000,000.00 at any one time outstanding.
Telerate Page 3875 means the display designated as "Page 3875" of the Dow
Jones Telerate Service (or such other page as may replace Page 3875 on that
service or such other service as may be nominated by the British Bankers'
Association as the information vendor for the purpose of displaying British
Bankers' Association Interest Settlement Rates for U.S. Dollar Deposits).
Term shall have the meaning ascribed thereto in Section 1.
Total Revolver Outstandings shall mean the sum of (i) the aggregate
principal amount of all outstanding Revolving Credit Loans, plus (ii) the
aggregate principal amount of all outstanding Swing Loans plus (iii) the
aggregate principal amount of all outstanding Letter of Credit Loans plus (iv)
the aggregate undrawn face amount of all outstanding Letters of Credit.
Transaction Documents shall mean this Agreement, the Notes, the Letter of
Credit Application(s), the Continuing Guarantees, and all other agreements,
documents and instruments heretofore, now or hereafter delivered to the Agent or
any of the Banks with respect to or in connection with or pursuant to this
Agreement, any Loans made hereunder or thereunder, any Letters of Credit issued
hereunder or thereunder, or any other of Borrower's Obligations, and executed by
or on behalf of Borrower or any Subsidiary, all as the same may from time to
time be amended, modified, extended or renewed.
<PAGE>
Trinity shall mean Trinity Industries, Inc., a Delaware corporation, with
Taxpayer Identification Number 75-0225040, and any subsidiaries thereof (except
for the Borrower and the Subsidiaries).
U. S. Governmental Authority shall mean the United States of America,
any political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to the United States of America.
Whitney shall mean Whitney National Bank, a national banking association,
in its individual corporate capacity as a Bank hereunder and the lender of the
Swing Loans.
2.2 Accounting Terms and Determinations. Except as otherwise specified
herein, all accounting terms used herein shall be interpreted, all accounting
determinations hereunder shall be made and all financial statements required to
be delivered hereunder shall be prepared as determined in accordance with GAAP
as in effect from time to time, applied on a basis consistent (except for
changes accompanied by a concurrence from Borrower's independent certified
public accountants) with the most recent audited financial statements of
Borrower delivered to the Banks.
SECTION 3. THE REVOLVING CREDIT LOANS.
- --------------------------------------
3.1 Revolving Credit Commitments. Subject to the terms and conditions set
forth in this Agreement and so long as no Default or Event of Default under this
Agreement has occurred and is continuing, during the Revolving Credit Period,
each Bank severally agrees to lend to Borrower from time to time (individually,
a "Revolving Credit Loan" and collectively, the "Revolving Credit Loans")
amounts not to exceed, in the aggregate at any one time outstanding, the lesser
of: (a) such Bank's Revolving Credit Commitment, or (b) such Bank's Pro Rata
Share of the sum of the total Revolving Credit Commitments of all of the Banks
minus the aggregate principal amount of all outstanding Letter of Credit Loans
minus the aggregate undrawn face amount of all outstanding Letters of Credit
minus the principal amount of any outstanding Swing Loans. Each Revolving
Credit Loan under this Section 3.1 shall be made from the several Banks ratably
in proportion to their respective Pro Rata Shares, and may be made as either (x)
a Base Rate Loan, (y) a LIBOR Loan, or (z) any combination thereof, as
determined by Borrower with notice thereof to Agent pursuant to Section 3.3.
Each Revolving Credit Loan under this Section 3.1 which is a Base Rate Loan
shall be for an aggregate principal amount of at least $1,000,000.00 or any
larger multiple of $100,000.00. Each Revolving Credit Loan under this Section
3.1 which is a LIBOR Loan shall be for an aggregate principal amount of at least
$5,000,000.00 or any larger multiple of $500,000.00. Within the foregoing
limits, Borrower may borrow under this Section 3.1, prepay under Section 5.4(a)
or 5.4(b) and reborrow at any time during the Revolving Credit Period under this
Section 3.1. The failure of any Bank to make any Revolving Credit Loan required
under
<PAGE>
this Agreement shall not release any other Bank from its obligation to make
Revolving Credit Loans as provided herein.
3.2 The Swing Line. Subject to all of the terms and conditions hereof and
so long as no Default or Event of Default under this Agreement has occurred and
is continuing, Whitney agrees to make loans to Borrower (individually, a "Swing
Loan" and collectively, the "Swing Loans") which shall not in the aggregate at
any time outstanding exceed the lesser of (i) the Swing Line Commitment, or (ii)
the difference between the Revolving Credit Commitments of all of the Banks and
the amount of the Revolving Credit Loans, the aggregate principal amount of all
outstanding Letter of Credit Loans and the undrawn face amount of Letters of
Credit then outstanding hereunder at the time of computation. The Swing Loans
shall be available to Borrower and may be availed of by Borrower from time to
time, and borrowings thereunder may be repaid and used again during the period
ending on the last day of the Revolving Credit Period. All Swing Loans shall be
made hereunder only as Base Rate Loans. The Swing Loans shall be evidenced by
the Swing Line Note of Borrower dated as of the effective date hereof (the
"Swing Line Note") payable to the order of Whitney in the amount of the Swing
Line Commitment and being in the form attached hereto as Exhibit B.
3.3 Method of Borrowing.
(a) With respect to each Revolving Credit Loan, Borrower shall give
notice (a "Notice of Borrowing") to the Agent by 11:00 a.m. (New Orleans time)
on the day of each Base Rate Loan, and by 11:00 a.m. (New Orleans Time) at least
three (3) Business Days before each LIBOR Loan, specifying:
(i) the date of such Revolving Credit Loan, which shall be a Business
Day,
(ii) the aggregate principal amount of such Revolving Credit Loan,
(iii) whether such Loan is to be a Base Rate Loan or a LIBOR Loan, or
a combination thereof,
(iv) in the case of a LIBOR Loan, the duration of the initial Interest
Period applicable thereto, subject to the provisions of the definition of
Interest Period,
(v) that on the date of, and after giving effect to, such Revolving
Credit Loan, no Default or Event of Default under this Agreement has occurred
and is continuing, and
(vi) that on the date of, and after giving effect to, such Revolving
Credit Loan, all of the representations and warranties of Borrower contained in
Section 7 of this Agreement (other than any representations and warranties
regarding Trinity) and in the other Transaction Documents are true and correct
in all material respects as if made on and as of the date of such Revolving
Credit Loan.
<PAGE>
A Notice of Borrowing shall not be required in connection with a Base Rate Loan
pursuant to Section 5.7 or 5.8.
(b) Upon receipt of a Notice of Borrowing given to it, the Agent shall
notify each Bank by 1:00 p.m. (New Orleans time) on the date of receipt of such
Notice of Borrowing by the Agent (which must be a Business Day) of the contents
thereof and of such Bank's ratable share of such Revolving Credit Loan. A
Notice of Borrowing shall not be revocable by Borrower.
(c) Not later than 3:00 p.m. (New Orleans time) on the date of each
Revolving Credit Loan, each Bank shall make available its Pro Rata Share of such
Revolving Credit Loan, in federal or other funds immediately available in New
Orleans, Louisiana, to the Agent at its address specified in or pursuant to
Section 11.7. Agent shall not be required to make any amount available to
Borrower hereunder except to the extent it shall have received such amounts from
the Banks as set forth herein, provided, however, that unless the Agent shall
have been notified by a Bank prior to the date a Revolving Credit Loan is to be
made hereunder that such Bank does not intend to make its Pro Rata Share of such
Revolving Credit Loan available to the Agent, the Agent may assume that such
Bank has made such Pro Rata Share available to the Agent on such date, and the
Agent may in reliance upon such assumption make available to the Borrower a
corresponding amount. If such corresponding amount is not in fact made
available to the Agent by such Bank and the Agent has made such amount available
to the Borrower, the Agent shall be entitled to receive such amount from such
Bank forthwith upon its demand, together with interest thereon in respect of
each day during the period commencing on the date such amount was made available
to the Borrower and ending on but excluding the date the Agent recovers such
amount from the Bank at a rate per annum equal to the effective rate charged to
the Agent for overnight federal funds transactions with member banks of the
Federal Reserve System for each day as determined by the Agent (or in the case
of a day which is not a Business Day, then for the preceding Business Day).
Unless the Agent determines that any applicable condition specified in Section 6
has not been satisfied, the Agent will make the funds so received from the Banks
available to Borrower thereafter as of 3:30 p.m. New Orleans time at the Agent's
aforesaid address by crediting such funds to a demand deposit account (or such
other account mutually agreed upon in writing between Agent and Borrower) of
Borrower with the Agent.
(d) With respect to each Swing Loan, Borrower shall give Whitney prior
notice (which may be written or oral but which must be given prior to 2:00 p.m.
New Orleans time on the date of the Swing Loan) of the amount and date of each
Swing Loan and, subject to all of the terms and conditions hereof, the proceeds
of such Swing Loan shall be made available to Borrower on the date of request at
the offices of the Agent in New Orleans, Louisiana. Anything contained in the
foregoing to the contrary notwithstanding, (i) the obligation of Whitney to make
Swing Loans shall be subject to all of the terms and conditions of this
<PAGE>
Agreement, and (ii) Whitney shall not be obligated to make more than one Swing
Loan to Borrower during any day.
3.4 Revolving Credit Notes.
(a) The Revolving Credit Loans of each Bank to Borrower during the
Revolving Credit Period shall be evidenced by Revolving Credit Note of Borrower
dated the effective date hereof and payable to the order of such Bank in a
principal amount equal to its Revolving Credit Commitment in substantially the
form of Exhibit A attached hereto (with appropriate insertions) (as the same may
from time to time be amended, modified extended or renewed, the "Revolving
Credit Notes").
(b) Upon receipt of each Bank's Revolving Credit Note pursuant to
Section 3.l(a), the Agent shall mail such Revolving Credit Note by overnight
express delivery to such Bank. Each Bank shall record, and prior to any transfer
of its Revolving Credit Note may endorse on the schedules forming a part
thereof, appropriate notations to evidence the date and amount of each Revolving
Credit Loan made by it during the Revolving Credit Period and the date and
amount of each payment of principal made by Borrower with respect thereto. Each
Bank is hereby irrevocably authorized by Borrower so to endorse its Revolving
Credit Note and to attach to and make a part of any such Revolving Credit Note a
continuation of any such schedule as and when required; provided, however that
the obligation of Borrower to repay each Revolving Credit Loan actually made
hereunder shall be absolute and unconditional, notwithstanding any failure of
any Bank to endorse or any mistake by any Bank in connection with endorsement on
the schedules attached to its respective Revolving Credit Note. The internal
records of each Bank shall constitute for all purposes prima facie evidence of
(i) the amount of principal and interest owing on the Revolving Credit Loans
from time to time, (ii) the amount of each Revolving Credit Loan made to the
Borrower and (iii) the amount of each principal and/or interest payment received
by the Banks on the Revolving Credit Loans.
3.5 Termination or Reduction of Commitments. Borrower may, upon three (3)
Business Days' prior written notice to the Agent, terminate entirely at any
time, or proportionately reduce from time to time on a pro rata basis among the
Banks based on their respective Revolving Credit Commitments by an aggregate
amount of $1,000,000.00 or any larger multiple of $500,000.00 the unused
portions of the Revolving Credit Commitments; provided, however, that (i) at no
time shall the Revolving Credit Commitments be reduced to a figure less than the
Total Revolver Outstandings, (ii) at no time shall the Revolving Credit
Commitments be reduced to a figure greater than zero but less than $5,000,000.00
and (iii) any such termination or reduction shall be permanent and Borrower
shall have no right to thereafter reinstate or increase, as the case may be, the
Revolving Credit Commitment of any Bank. Borrower agrees to pay to the Agent for
the benefit of and disbursement to the Banks a reduction fee on the effective
date of each reduction in the Revolving Credit Commitments pursuant to this
Section 3.5 equal to 1/10 of 1% of the amount of each such reduction.
<PAGE>
3.6 Maturity. All Revolving Credit Loans and all Swing Loans not paid
prior to the last day of the Revolving Credit Period, together with all accrued
and unpaid interest thereon and all fees and other amounts owing by Borrower to
the Banks with respect thereto, shall be due and payable on the last day of the
Revolving Credit Period. Each year of the Revolving Credit Period, during the
period commencing on October 1st and ending on December 1st, Borrower may
request that the Revolving Credit Period be extended for up to one year from the
end of the then applicable Revolving Credit Period. Upon the unanimous consent
of the Banks, which consent may be withheld in the discretion of any of the
Banks, the Revolving Credit Period (and the Term of this Agreement) shall be so
extended, provided that Borrower and the Subsidiaries shall execute such
documentation as Banks shall require to evidence such extension. The Banks
agree to provide Borrower with a response to any such request for an extension
of the Revolving Credit Period within 60 days following receipt thereof;
provided that, the failure of the Banks, or any one or more of them, to provide
a response within such 60 day period shall not be construed to constitute
consent to such an extension on the part of any of the Banks.
3.7 Special Swing Loan Provisions.
(a) All Swing Loans shall be payable with accrued interest thereon
solely to Whitney for its own account. Upon the earlier to occur of (i) seven
days after the making of any Swing Loan or (ii) at any time at the discretion of
Whitney, Borrowers shall repay all of such Swing Loans in cash by 1:00 p.m., New
Orleans time the following Business Day, or make a Revolving Credit Loan in an
amount at least equal to the aggregate outstanding principal amount of all Swing
Loans, together with all accrued interest thereon, and shall apply the proceeds
of such Revolving Credit Loans to repay in its entirety the aggregate
outstanding principal amount of all Swing Loans, together with accrued interest
thereon to the date of such repayment.
(b) In the event that any portion of any Swing Loan is not repaid as
set forth above, Whitney shall promptly notify Agent and Agent shall promptly,
and in no event later than 5:00 p.m., New Orleans time, two Business Days
thereafter, notify each Bank in writing of the unreimbursed amount of such Swing
Loan and of such Bank's Pro-Rata Share of such unreimbursed amount. Each of the
Banks shall make a Revolving Credit Loan in an amount equal to such Bank's Pro-
Rata Share of the unreimbursed amount of such Swing Loan, together with accrued
unpaid interest thereon (to the extent that there is availability under the
Revolving Credit Commitments), and pay the proceeds thereof, in immediately
available funds, directly to Whitney, not later than 1:00 p.m., New Orleans
time, on the next Business Day after the date such Bank is notified by the
Agent. Revolving Credit Loans made by the Banks to repay unreimbursed Swing
Loans pursuant to this subsection shall constitute Revolving Credit Loans
hereunder, initially shall be Base Rate Loans and shall be subject to all of the
provisions of this Agreement concerning Revolving Credit Loans, except that such
Revolving Credit Loans shall be made upon demand by the Agent as set forth above
rather than upon notice by Borrower and shall be made, notwithstanding anything
in this Agreement to the contrary, without
<PAGE>
regard to satisfaction of conditions precedent to the making of Revolving Credit
Loans set forth in Section 3 of this Agreement; provided however, that no Bank
shall be obligated to make such Revolving Credit Loans if, prior to the date of
such notice from Agent to Banks, Whitney had received written notice from the
Agent or any Bank of the existence and continuance of a Default or an Event of
Default or Whitney had actual knowledge of the existence and continuance of a
Default or an Event of Default.
(c) Each Bank's obligation to make Revolving Credit Loans in the
amount of its Pro-Rata Share of any unreimbursed Swing Loan pursuant hereto is
several, and not joint or joint and several. The failure of any Bank to perform
its obligation to make a Revolving Credit Loan in the amount of such Bank's Pro-
Rata Share of any unreimbursed Swing Loan will not relieve any other Bank of its
obligation hereunder to make a Revolving Credit Loan in the amount of such other
Bank's Pro-Rata Share of such unreimbursed Swing Loan. Any Bank may but shall
have no obligation to any Person to assume all or any portion of any non-
performing Bank's obligation to make a Revolving Credit Loan in the amount of
such Bank's Pro-Rata Share of such unreimbursed Swing Loan. The Borrower agrees
to accept the Revolving Credit Loans hereinabove provided, whether or not such
Loans could have been made pursuant to the terms of Section 3 hereof or any
other Section of this Agreement.
(d) In the event, for whatever reason, the Agent determines that the
Banks are not able to, or that it could be disadvantageous for the Banks to,
advance their respective Pro-Rata Share of Revolving Credit Loans for the
purpose of refunding Swing Loans as required hereunder, then each of the Banks
(subject to the provisions of this Section 3.7) absolutely and unconditionally
agrees to purchase and take from Whitney on demand an undivided participation
interest in Swing Loans outstanding in an amount equal to their respective Pro-
Rata Share of such Swing Loans.
SECTION 4. LETTERS OF CREDIT.
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4.1 Letter of Credit Commitment.
(a) Subject to the terms and conditions of this Agreement, during the
Letter of Credit Period of this Agreement, and so long as no Default or Event of
Default under this Agreement has occurred and is continuing (provided, however,
that Issuer shall have no liability to any of the other Banks for issuing a
Letter of Credit after the occurrence of any Default or Event of Default under
this Agreement unless Issuer has previously received notice in writing to Issuer
by Borrower, the Agent or any of the other Banks of the occurrence of such
Default or Event of Default), each Bank, except The Sumitomo Bank Limited,
hereby agrees, upon the request of and as determined by Agent, to issue
irrevocable standby letters of credit for the account of Borrower or for the
account of Borrower and any Subsidiary (individually, a "Letter of Credit" and
collectively, the "Letters of Credit") (the "Letter of Credit Commitment") in an
amount and for the term specifically requested by Borrower by notice in writing
to such Bank in
<PAGE>
the form of Exhibit E attached hereto and incorporated herein by reference (a
"Letter of Credit Request") at least three (3) Business Days prior to the
requested issuance thereof; provided, however, that:
(i) Borrower, and if the Letter of Credit is to be issued for the
account of Borrower and a Subsidiary, such Subsidiary, shall have executed and
delivered to Issuer a Letter of Credit Application with respect to such Letter
of Credit, with Borrower and any Subsidiary executing same to be jointly,
severally and solidarily liable thereunder;
(ii) the term of any such Letter of Credit shall not extend beyond the
last day of the Letter of Credit Period;
(iii) any Letter of Credit may only be utilized to guaranty or support
the payment of obligations of Borrower or any Subsidiary to third parties
incurred in the ordinary course of business;
(iv) the Total Revolver Outstandings shall not at any one time exceed
the sum of One Hundred Thirty Five Million Dollars ($135,000,000.00);
(v) the sum of (A) the aggregate undrawn face amount of all
outstanding Letter(s) of Credit issued for the account of Borrower or for the
account of Borrower and any Subsidiary other than Offshore plus (B) the
aggregate principal amount of all outstanding Letter of Credit Loans arising out
of Letter(s) of Credit issued for the account of Borrower or for the account of
Borrower and any Subsidiary other than Offshore shall not at any one time exceed
the sum of Fifty Million Dollars ($50,000,000.00);
(vi) the text of any such Letter of Credit is provided to Issuer no
less than three (3) Business Days prior to the requested issuance date, the
terms and conditions of which must be acceptable to Issuer; and
(vii) The aggregate face amount of Letter(s) of Credit issued for the
account of Borrower and Offshore shall not at any time exceed the Offshore
Commitment.
("Issuer" shall mean the Bank that issues a Letter of Credit.)
Banks and Borrower acknowledge and agree that pursuant to the Original
Credit Agreement Agent issued an irrevocable standby letter of credit for the
account of Borrower on October 28, 1996 in the principal amount of $613,275.00
for the benefit of Aquamaster-Rauma Ltd. with an expiry date of April 15, 1997.
Banks and Borrower further acknowledge and agree that such letter of credit
together with any other letters of credit issued pursuant to the Original Credit
Agreement shall be deemed outstanding Letters of Credit under this Agreement and
shall be governed by the terms and provisions of this Agreement.
<PAGE>
(b) The Issuer will make available the original of each Letter of Credit to
the beneficiary thereof (and will promptly provide each of the Banks and the
Agent with a copy of such Letter of Credit).
(c) For each Letter of Credit, Borrower (or any Subsidiary that executed
the Letter of Credit Application) hereby further agrees to pay to the Agent for
the account of the Issuer and the Banks an annual nonrefundable commitment fee
payable quarterly in an amount equal to the rate per annum equal to the then
current Applicable Margin for LIBOR Loans (excluding the Trinity Discount and
calculated on an actual day, 360 day year basis) times the face amount (taking
into account any scheduled increases or decreases therein during the period in
question) of each such Letter of Credit issued hereunder ("Letter of Credit
Commitment Fee"), which Letter of Credit Commitment Fee shall be due and payable
in arrears with respect to each Letter of Credit on the last Business Day of
each calendar quarter during the term of each respective Letter of Credit and on
the termination thereof (whether at its stated maturity or earlier). Borrower
further agrees to pay (or cause any Subsidiary for which the Letter of Credit
was issued to pay) to Issuer all reasonable administrative fees of Issuer in
connection with the issuance, maintenance, modification (if any) and
administration of each Letter of Credit and standard negotiation charges upon
demand from time to time. Each of the Banks shall be entitled to its Pro Rata
Share of any Letter of Credit Commitment Fees, but the Banks shall have no right
to share in any administrative fees paid by Borrower (or any Subsidiary) to
Issuer in connection with any of the Letters of Credit. In addition to the
Letter of Credit Commitment Fee, for each Letter of Credit, Borrower hereby
further agrees to pay (or arrange for any Subsidiary that executed the Letter of
Credit Application to pay) to the Agent, solely for the account of the Issuer,
an annual nonrefundable commitment fee in an amount equal to 1/8 of 1% of the
undrawn face amount of each such Letter of Credit issued hereunder, which such
fee shall be due and payable upon issuance of such Letter of Credit and annually
thereafter.
(d) If the proposed beneficiary of a Letter of Credit will not accept any
Bank as the Issuer of such Letter of Credit, Agent will request a financial
institution selected by such beneficiary and acceptable to the Agent to confirm
such Letter of Credit, with Borrower to be responsible for any and all fees
incurred as a result of such confirmation.
4.2 Participation by Other Banks.
(a) Upon the issuance of a Letter of Credit, each Bank shall share the
obligation represented by each such Letter of Credit so issued, in an amount
equal to such Bank's Pro Rata Share. The participation of each Bank in each
Letter of Credit shall be automatic. Each Bank shall make available to the
Issuer, regardless of whether any Default or Event of Default shall have
occurred and is continuing, an amount equal to its respective Pro Rata Share of
each drawing on each Letter of Credit in same day or immediately available funds
not later than 11:00 a.m. New Orleans time on each Disbursement Date (as
hereinafter defined) for each such drawing. In the event that any Bank fails to
make available to the Issuer the amount of such Bank's Pro Rata Share of any
drawing on a Letter of Credit as provided herein, the Issuer shall be entitled
to
<PAGE>
recover such amount on demand from such Bank together with interest at the daily
average Federal Funds Rate for the first two Business Days after the
Disbursement Date and thereafter at the Base Rate.
(b) The Issuer shall distribute to each Bank that has paid all amounts
payable by it under this Section 4.2 with respect to any Letter of Credit issued
by the Issuer such Bank's Pro Rata Share of all payments received by the Issuer
from the Borrower in reimbursement of drawings honored by Issuer under such
Letter of Credit when such payments are received.
4.3 Disbursements. The Issuer shall notify the Borrower and the Agent
promptly of the presentment for payment of any Letter of Credit (on the date of
presentment, if possible, and otherwise on the next Business Day, it being
agreed that such notice may be made by phone), together with notice of the date
(the with "Disbursement Date") such payment shall be made, and the Agent will
promptly notify the Banks of such matters. Subject to the terms and provisions
of such Letter of Credit, the Issuer shall make such payment to the beneficiary
(or its designee) of such Letter of Credit. Prior to 1:00 p.m. New Orleans time
on the Disbursement Date Borrower shall reimburse (or cause any Subsidiary for
which the Letter of Credit was issued to reimburse) Issuer and the Banks (to
the extent each Bank has paid its Pro Rata Share of such drawing) for all
amounts which have been disbursed under such Letter of Credit. In the event a
payment under a Letter of Credit is made without same day receipt of payment
from Borrower in accordance with this Section 4.3, such payment shall constitute
a loan (individually a "Letter of Credit Loan" and collectively, the "Letter of
Credit Loans") by Issuer and/or Banks (to the extent each Bank has paid its Pro
Rata Share of such drawing) to Borrower. All Letter of Credit Loans shall
accrue interest at the Base Rate and shall be payable on demand. The Issuer
shall distribute to each Bank that has paid all amounts payable by it under
Section 4.2 with respect to a Letter of Credit such Bank's Pro Rata share of all
interest and other amounts received by Issuer from Borrower (or any Subsidiary)
under the Letter of Credit Loan relating to such Letter of Credit.
4.4 Reimbursement. Borrower's obligation under Section 4.3 to reimburse
the Issuer and the Banks with respect to each drawing under each Letter of
Credit (including interest thereon) (to the extent each Bank has paid its Pro
Rata Share of such drawing), and each Bank's obligation to fund each drawing
shall be absolute and unconditional under any and all circumstances and
irrespective of any setoff, counterclaim, or defense to payment which Borrower
or any Bank may have or have had against any Bank, the Borrower or any
beneficiary of a Letter of Credit, including, without limitation, any defense
based upon the occurrence of any Default or Event of Default, any draft, demand
or certificate or other document presented under a Letter of Credit proving to
be forged, fraudulent, invalid or insufficient, or any failure to apply or
misapplication by the beneficiary of the proceeds of any disbursement, or the
legality, validity, form, regularity, or enforceability of such Letter of
Credit.
<PAGE>
4.5 Replacement or Collateralization of Letters of Credit.
Notwithstanding any provision contained in this Agreement or any of the Letter
of Credit Applications to the contrary, upon the occurrence of any Event of
Default under this Agreement, at Agent's option and without demand or further
notice to Borrower, an amount equal to the aggregate undrawn face amount of all
Letter(s) of Credit then outstanding shall be deemed (as between Issuer and
Borrower) to have been paid or disbursed by Issuer (notwithstanding that such
amounts may not in fact have been so paid or disbursed by Issuer), and Letter of
Credit Loan(s) to Borrower in such amounts to have been made and accepted by
Borrower, which Letter of Credit Loan(s) shall be immediately due and payable.
Each Bank shall receive its Pro Rata Share of all interest and other amounts due
with respect to such Letter of Credit Loan(s) when paid by Borrower to Issuer.
In lieu of the foregoing, at the election of Agent, Borrower shall, upon Agent's
demand, deliver to Issuer cash or other collateral acceptable to Issuer, in its
sole and absolute discretion, having a value, as determined by Issuer, at least
equal to the aggregate undrawn face amount of all outstanding Letters of Credit
issued by Issuer. Any such collateral and/or any amounts received by Issuer
pursuant to this Section 4.5 shall be held by Issuer in a separate account at
Issuer appropriately designated as a cash collateral account in relation to this
Agreement and the Letter of Credit and retained by Issuer as collateral security
for the payment of the Borrower's Obligations. Cash amounts delivered to Issuer
pursuant to the foregoing requirements of this Section 4.5 shall be invested, at
the request and for the account of Borrower, in investments of a type and nature
and with a term acceptable to Issuer. Such amounts, including in the case of
cash amounts invested in the manner set forth above, any investment realized
thereon, shall not be used by Issuer to pay any amounts drawn or paid under or
pursuant to any Letter of Credit, but may be applied to reimburse Issuer for
drawings or payments under or pursuant to the Letters of Credit which Issuer has
paid, or if no such reimbursement is required shall be delivered to the Agent
for application to such other of Borrower's Obligations as Agent shall
determine. Any amounts remaining in any cash collateral account established
pursuant to this Section 4.5 after the payment in full of all of the Borrower's
Obligations and the expiration or cancellation of all of the Letters of Credit
shall be returned to Borrower (after deduction of Issuer's expenses, if any).
4.6 Nature of Reimbursement Obligations. Borrower shall assume all risks
of the acts, omissions, or misuse of any Letter of Credit by the beneficiary
thereof. Except to the extent of its own gross negligence or wilful misconduct,
the Issuer shall not be responsible for:
(a) the form, validity, sufficiency, accuracy, genuineness, or legal effect
of any Letter of Credit or any document submitted by any party in connection
with the application for and issuance of a Letter of Credit, even if it should
in fact prove to be in any or all respects invalid, insufficient, inaccurate,
fraudulent, or forged;
(b) the form, validity, sufficiency, accuracy, genuineness, or legal effect
of any instrument transferring or assigning or purporting to transfer or assign
a Letter of Credit or the rights or benefits thereunder or proceeds thereof in
whole or in part;
<PAGE>
(c) failure of the beneficiary to comply fully with conditions required
(except the presentment of any required documents, as set forth in the
applicable Letter of Credit, to the Issuer) in order to demand payment under a
Letter of Credit;
(d) errors, omissions, interruptions, or delays in transmission or delivery
of any information or messages, by mail, cable, telegraph, telex, or otherwise;
(e) any loss or delay in the transmission or otherwise of any document or
draft required in order to make a disbursement under a Letter of Credit or of
the proceeds thereof;
(f) errors in interpretation of technical terms;
(g) any misapplication by a beneficiary of the proceeds of any disbursement
under any Letter of Credit; or
(h) any consequences arising from causes beyond the control of the Issuer
including, without limitation, acts of any Governmental Authority.
None of the foregoing shall affect, impair, or prevent the vesting of any
of the rights or powers granted to the Issuer hereunder.
4.7 Indemnity.
In addition to amounts payable as elsewhere provided in this Section IV,
Borrower hereby agrees to protect, indemnify, pay and save Issuer harmless from
and against any and all claims, demands, liabilities, damages, losses, costs,
charges and expenses (including reasonable attorneys' fees) which Issuer may
incur or be subject to as a consequence, direct or indirect, of (i) the issuance
of the Letters of Credit, other than as a result of (y) the gross negligence or
wilful misconduct of the Issuer or (z) the Issuer's failure to pay under any
Letter of Credit after the presentation to it of a request complying with the
terms and conditions of the Letter of Credit, or (ii) the failure of the Issuer
to honor a drawing under any Letter of Credit as a result of any act or
omission, whether rightful or wrongful, of any present or future de jure or de
facto Governmental Authority.
SECTION 5. GENERAL PROVISIONS FOR ALL LOANS.
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5.1 Duration of Interest Periods and Selection of Interest Rates.
(a) The commencement date and duration of the initial Interest Period
for each LIBOR Loan shall be as specified in the applicable Notice of Borrowing.
Borrower shall elect the duration of each subsequent Interest Period applicable
to such LIBOR Loan, and the interest rate to be applicable during such
subsequent Interest Period (and,
<PAGE>
Borrower shall have the option (x) in the case of any Base Rate Loan, to elect
that such Loan become a LIBOR Loan and the Interest Period to be applicable
thereto or (y) in the case of any LIBOR Loan, to elect that such Loan become a
Base Rate Loan), by giving notice of such election to the Agent by 11:00 a.m.
(New Orleans time) on the day of, in the case of the election of the Base Rate,
by 11:00 a.m. (New Orleans time) at least three (3) Business Days before, in the
case of the election of the LIBOR Rate, the end of the immediately preceding
Interest Period applicable thereto, if any; provided, however, that
notwithstanding the foregoing, in addition to and without limiting the rights
and remedies of the Agent and the Banks under Section 9 hereof, so long as any
Default or Event of Default under this Agreement has occurred and is continuing,
Borrower shall not be permitted to renew any LIBOR Loan as a LIBOR Loan or to
convert any Base Rate Loan into a LIBOR Loan. By 1:00 p.m. (New Orleans time) on
the date of receipt of each such notice of conversion or continuation of a Loan
from Borrower, Agent shall notify each Bank of the contents thereof and of such
Bank's ratable share of such Loan. A notice by Borrower under this Section
5.1(a) shall not be revocable by Borrower. All LIBOR Loans, whether by
conversion or by an advance, shall be in a principal amount of at least
$5,000,000.00 or multiples of $500,000.00 in excess thereof. All Loans which
bear interest at a particular LIBOR Rate for a particular Interest Period shall
constitute a single LIBOR Loan.
(b) If the Agent does not receive a notice of election for the
continuation of a LIBOR Loan for a subsequent Interest Period pursuant to
subsection (a) above within the applicable time limits specified therein,
Borrower shall be deemed to have elected to convert such LIBOR Loan on the last
day of the current Interest Period with respect thereto to a Base Rate Loan in
the principal amount of such expiring LIBOR Loan on such date.
(c) Notwithstanding the foregoing, the duration of each Interest
Period shall be subject to the provisions of the definition of Interest Period.
(d) Borrower hereby authorizes the Agent to rely on telephonic,
telegraphic, telecopy, telex or written instructions believed by the Agent in
good faith to have been sent or delivered by any person identifying himself or
herself as John Dane III, Keith L. Voigts or John J. Siben II (or any other
person from time to time authorized to act on behalf of Borrower pursuant to a
resolution adopted by the Board of Directors of Borrower and certified by the
Secretary of Borrower and delivered to the Agent) with respect to any request to
make a Loan or a repayment hereunder, or to convert any Base Rate Loan or LIBOR
Loan to any other type of Loan available hereunder, and on any signature which
the Agent in good faith believes to be genuine. Borrower shall be bound thereby
in the same manner as if such person was actually authorized or such signature
was genuine. Borrower also hereby agrees to indemnify the Agent and each of the
Banks and to hold the Agent and each of the Banks harmless from and against any
and all claims, demands, damages, liabilities, losses, costs and expenses
(including, without limitation, reasonable attorneys' fees and expenses)
relating to or arising out of or in
<PAGE>
connection with the acceptance of instructions for making or converting Loans or
making repayments hereunder.
5.2 Interest Rates; Interest Payments.
(a) Each Base Rate Loan shall bear interest on the outstanding
principal amount thereof, for each day from the date such Loan is made until it
becomes due, at a rate per annum equal to the Base Rate. Such interest shall be
payable on all such Loans quarterly in arrears on the last day of each quarter
(or the immediate subsequent Business Day if any such last day is not a Business
Day), commencing on the first day after such Base Rate Loan is made, and at
maturity. Any overdue principal of and, to the extent permitted by law, overdue
interest on, any Base Rate Loan shall bear interest, payable on demand, for each
day until paid at a rate per annum equal to the sum of two percent (2%) plus the
rate otherwise in effect for such day.
(b) Each LIBOR Loan shall bear interest on the outstanding principal
amount thereof for each Interest Period applicable thereto at a rate per annum
equal to the applicable LIBOR Rate; provided that if any LIBOR Loan or any
portion thereof shall, as a result of clause (iv) of the definition of Interest
Period, have an Interest Period of less than 30 days, such portion shall bear
interest during such Interest Period at the rate applicable to Base Rate Loans
during such period. Interest shall be payable for each Interest Period on the
last day thereof, unless the duration of the applicable Interest Period exceeds
three (3) months, in which case such interest shall be payable at the end of the
first three (3) months of such Interest Period and on the last day of such
Interest Period. Any overdue principal of and, to the extent permitted by law,
overdue interest on, any LIBOR Loan shall bear interest, payable on demand, for
each day until paid, at a rate per annum equal to the sum of two percent (2%)
plus the higher of (i) the LIBOR Rate for the immediately preceding Interest
Period applicable to such LIBOR Loan or (ii) the rate applicable to Base Rate
Loans for such day; provided that, the rate of interest shall not exceed the
maximum rate of interest permitted under La. R.S. 9:3509. Upon the earlier of
April 1, 1997 or the day that Trinity ceases to own over 50% of the outstanding
common stock of Borrower, if the Trinity Discount was used to calculate the then
effective LIBOR Rate, then the LIBOR Rate then in effect shall increase,
effective the next Business Day, to the LIBOR Rate that would have been in
effect without the Trinity Discount.
(c) The Agent shall (in accordance with this Agreement) determine each
interest rate applicable to the Loans hereunder. The Agent shall give prompt
notice to Borrower and the Banks by telecopy, telex or cable of each rate of
interest so determined, and its determination thereof shall be conclusive in the
absence of manifest error. Any change in the Base Rate shall become effective
as of the opening of business on the day on which such change in the Base Rate
shall occur.
5.3 Fees.
<PAGE>
(a) Borrower shall pay to Agent for the account of the Banks, in
arrears, on the last day of March, June, September and December in each year
(or, if such day is not a Business Day, in the next succeeding Business Day) and
on the last day of the Revolving Credit Period, a commitment fee (the
"Commitment Fee") determined as set forth herein. The Commitment Fee shall be a
percentage of the unused Revolving Credit Commitments of all of the Banks during
the preceding fiscal quarter, or portion thereof, which unused Revolving Credit
Commitments shall be arrived at by dividing the sum of the unused Revolving
Credit Commitments of the Banks for each day of that quarter as of the close of
each day, by 90. The Commitment Fee (i) if Borrower's ratio of Average
Consolidated Total Debt for the immediately preceding fiscal quarter to
Consolidated EBITDA for the immediately preceding four (4) fiscal quarters is
greater than or equal to 2.0, shall be equal to 1/4 of .50% of the unused
Revolving Credit Commitments of all of the Banks during such fiscal quarter,
(ii) if Borrower's ratio of Average Consolidated Total Debt for the immediately
preceding fiscal quarter to Consolidated EBITDA for the immediately preceding
four (4) fiscal quarters is less than 2.0 but greater than or equal to 1.5,
shall be equal to 1/4 of .375% of the unused Revolving Credit Commitments of all
of the Banks during such fiscal quarter, (iii) if Borrower's ratio of Average
Consolidated Total Debt for the immediately preceding fiscal quarter to
Consolidated EBITDA for the immediately preceding four (4) fiscal quarters is
less than 1.5 but greater than or equal to 1.0, shall be equal to 1/4 of .25% of
the unused Revolving Credit Commitments of all of the Banks during such fiscal
quarter, or (iv) if Borrower's ratio of Average Consolidated Total Debt for the
immediately preceding fiscal quarter to Consolidated EBITDA for the immediately
preceding four (4) fiscal quarters is less than 1.0, shall be equal to 1/4 of
.175% of the unused Revolving Credit Commitments of all of the Banks during such
fiscal quarter. Upon receipt, Agent shall promptly pay each Bank its Pro Rata
Share of any such Commitment Fee paid by Borrower. The unused Revolving Credit
Commitments shall be defined as the total of (x) the Revolving Credit
Commitments of all of the Banks, minus (y) (1) all outstanding Revolving Credit
Loans, plus (2) all outstanding Letter of Credit Loans, plus (3) the aggregate
undrawn face amount of all outstanding Letters of Credit.
(b) Borrower shall pay to Agent an agreed upon annual fee. Borrower
shall pay a one time commitment fee to the Banks equal to 1/8 of 1% of the total
Revolving Credit Commitments, of which $131,250.00 has been paid and the balance
of which is payable upon execution of this Agreement.
5.4 Early Payments.
(a) Borrower may, upon notice to the Agent specifying that it is
paying its Revolving Credit Loans which are Base Rate Loans, pay without penalty
or premium such Base Rate Loans in whole at any time, or from time to time in
part in amounts aggregating $1,000,000.00, or any larger multiple of
$100,000.00; provided, however, that in no event may Borrower make a partial
payment of Base Rate Loans which results in the total outstanding Revolving
Credit Loans which are Base Rate Loans being greater than zero
<PAGE>
but less than $1,000,000.00. Each such optional payment shall be applied to pay
the Base Rate Loans of the several Banks in proportion to their respective
Revolving Credit Commitments.
(b) Borrower may, upon at least one (1) Business Day's notice to the
Agent specifying that it is paying its Revolving Credit Loans which are LIBOR
Loans, pay without penalty or premium on the last day of any Interest Period its
LIBOR Loans to which such Interest Period applies, in whole, or in part in
amounts aggregating $1,000,000.00 or any larger multiple of $100,000.00, by
paying the principal amount to be paid together with all accrued and unpaid
interest thereon to and including the date of payment; provided, however, that
in no event may Borrower make a partial payment of LIBOR Loans which results in
the total outstanding Revolving Credit Loans which are LIBOR Loans with respect
to which a given Interest Period applies being greater than zero but less than
$1,000,000.00. Each such optional payment shall, subject to Section 5.6, be
applied to pay such LIBOR Loans of the several Banks in proportion to their
respective Revolving Credit Commitments.
(c) Upon receipt of a notice of payment pursuant to any of Sections
5.4(a) through (b) above, the Agent shall promptly notify each Bank of the
contents thereof and of such Bank's ratable share of such payment and such
notice shall not thereafter be revocable by Borrower.
(d) Borrower may, upon notice to the Whitney specifying that it is
paying its Swing Loan, pay without penalty or premium such Swing Loan in whole
at any time, or in part from time to time.
5.5 General Provisions as to Payments. Borrower shall make each payment
of principal of, and interest on, the Loans and of fees and all other amounts
payable hereunder, not later than 12:00 noon (New Orleans time) on the date when
due (2:00 p.m. New Orleans Time in the case of payments on the Swing Loans), in
federal or other funds immediately available in New Orleans, Louisiana, to the
Agent at its address referred to in Section 11.7. The Agent will promptly
distribute to each Bank in immediately available funds its ratable share of each
such payment received by the Agent for the account of the Banks, provided,
however, that payments of principal, interest and fees with respect to the Swing
Line Note and the Swing Loans shall be retained by Whitney for its own account.
Whenever any payment of principal of, or interest on, the Loans or of fees shall
be due on a day which is not a Business Day, the date for payment thereof shall
be extended to the next succeeding Business Day, except that in the case of
LIBOR Loans such payment dates shall be subject to the definition of Interest
Period. If the date for any payment of principal is extended by operation of
law or otherwise, interest thereon, at the then applicable rate, shall be
payable for such extended time.
5.6 Funding Losses. Notwithstanding any provision contained herein to the
contrary, if Borrower makes any payment of principal with respect to any LIBOR
Loan (pursuant to Sections 3.1, 5.4, 9 or otherwise) on any day other than the
last day of the
<PAGE>
Interest Period applicable thereto, or if Borrower fails to borrow or pay any
LIBOR Loan after notice has been given to the Agent in accordance with Section
3.3, 5.1 or 5.4(b), Borrower shall reimburse each Bank on demand for any
resulting losses and expenses incurred by it, including, without limitation, any
losses incurred in obtaining, liquidating or employing deposits from third
parties, but excluding loss of margin for the period after any such payment,
provided that such Bank shall have delivered to Borrower a certificate as to the
amount of such losses and expenses.
5.7 Basis for Determining Interest Rate Inadequate or Unfair. If with
respect to any Interest Period, the Agent determines that either adequate and
reasonable means do not exist for ascertaining the LIBOR Rate for any Interest
Period, or it becomes impractical for Agent or any Bank to obtain funds to make
or maintain any borrowing bearing interest at the LIBOR Rate, or Agent or any
Bank shall have determined that the LIBOR Rate will not adequately and fairly
reflect the cost to Agent or any Bank of making, maintaining, or funding a
proposed borrowing that Borrower has requested to bear interest at the LIBOR
Rate, then the Agent shall forthwith give notice thereof to Borrower and the
Banks, whereupon until the Agent notifies Borrower that the circumstances giving
rise to such suspension no longer exist, (a) the obligations of the Banks to
make LIBOR Loans shall be suspended, and (b) Borrower shall repay in full the
then outstanding principal amount of each of its LIBOR Loans together with all
accrued and unpaid interest thereon, on the last day of the then current
Interest Period applicable to such Loan, or convert the then outstanding
principal amount of each of its LIBOR Loans to a Base Rate Loan on the last day
of the then current Interest Period applicable to each such LIBOR Loan.
5.8 Illegality. If, after the effective date of this Agreement, the
adoption of any applicable law, rule or regulation, or any change therein, or
any change in the interpretation or administration thereof by any governmental
or regulatory authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Bank with any
request or directive (whether or not having the force of law) of any such
governmental or regulatory authority, central bank or comparable agency shall
make it unlawful or impossible for any Bank to make, maintain or fund its LIBOR
Loans to Borrower and such Bank shall so notify the Agent, the Agent shall
forthwith give written notice thereof to the other Banks and Borrower. If Agent
provides Borrower with such written notice, Borrower shall repay in full the
then outstanding principal amount of each of its LIBOR Loans from such Bank,
together with all accrued and unpaid interest thereon, on either (a) the last
day of the then current Interest Period applicable to such LIBOR Loan if such
Bank may lawfully continue to maintain and fund such LIBOR Loan to such day or
(b) within fifteen (15) days of the receipt of such notice if such Bank may not
lawfully continue to fund and maintain such LIBOR Loan to such day.
Concurrently with repaying each LIBOR Loan of such Bank, Borrower may borrow a
Base Rate Loan in an equal principal amount from such Bank, and, if Borrower so
elects, such Bank shall make such a Base Rate Loan to Borrower.
<PAGE>
5.9 Increased Cost.
(a) If after the effective date hereof, the adoption of any applicable
law, rule or regulation, or any change therein, or any change in the
interpretation or administration thereof by any Governmental Authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Bank with any request or directive (whether or not
having the force of law) of any such Governmental Authority, central bank or
comparable agency (a "Regulatory Change"):
(A) shall subject any Bank to any tax, duty or other charge with
respect to its LIBOR Loans, its Revolving Credit Notes or its obligation to
make LIBOR Loans hereunder, or shall change the basis of taxation of
payments to any Bank of the principal of or interest on its LIBOR Loans or
any other amounts due under this Agreement in respect of its LIBOR Loans or
its obligation to make LIBOR Loans (except for taxes on or changes in the
rate of tax on the overall net income of such Bank); or
(B) shall impose, modify or deem applicable any reserve (including,
without limitation, any reserve imposed by the Board of Governors of the
Federal Reserve System), special deposit, capital or similar requirement
against assets of, deposits with or for the account of, or credit extended
or committed to be extended by, any Bank or shall, with respect to any Bank
or the Interbank Eurodollar market, impose, modify or deem applicable any
other condition affecting its LIBOR Loans, its Revolving Credit Notes or
its obligation to make LIBOR Loans;
and the result of any of the foregoing is to increase the cost to (or in the
case of Regulation D, to impose a cost on or increase the cost to) such Bank of
making or maintaining any LIBOR Loan, or to reduce the amount of any sum
received or receivable by such Bank under this Agreement or under its Notes with
respect thereto, by an amount deemed by such Bank, in its good faith judgment,
to be material, and if such Bank is not otherwise fully compensated for such
increase in cost or reduction in amount received or receivable by virtue of the
inclusion of the reference to LIBOR Reserve Percentage in the calculation of the
interest rate applicable to LIBOR Loans, then, within fifteen (15) days after
notice by such Bank to Borrower together with a copy of the official notice of
the applicable change in law (if applicable) and a work sheet showing how the
change in cost or reduction or increase in amount received or receivable was
calculated (with a copy to the Agent and all of the other Banks), Borrower shall
pay for the account of such Bank as additional interest, such additional amount
or amounts as will compensate such Bank for such increased cost or reduction.
Each Bank will promptly notify Borrower, the Agent and all of the other Banks of
any event of which it has knowledge, occurring after the effective date hereof,
which will entitle such Bank to compensation pursuant to this Section. In
determining such amount or amounts, such Bank may use any reasonable averaging
and attribution methods.
<PAGE>
(b) If any Bank demands compensation under this Section, Borrower may
at any time, upon at least three (3) Business Days' prior notice to such Bank
and the Agent, repay in full its then outstanding LIBOR Loans, as the case may
be, of such Bank, together with all accrued and unpaid interest thereon to the
date of prepayment and any funding losses and other amounts due under Section
5.6. Concurrently with repaying such LIBOR Loans of such Bank, Borrower may
borrow from such Bank a Base Rate Loan in an amount equal to the aggregate
principal amount of such LIBOR Loans, and, if Borrower so elects, such Bank
shall make such a Base Rate Loan to Borrower.
5.10 Base Rate Loans Substituted for Affected LIBOR Loans. If notice has
been given by a Bank pursuant to Section 5.7 or 5.8 or by Borrower pursuant to
Section 5.9(b) requiring LIBOR Loans of any Bank to be repaid, then, unless and
until such Bank notifies Borrower that the circumstances giving rise to such
repayment no longer apply, all Loans which would otherwise be made by such Bank
to Borrower as LIBOR Loans shall be made instead as Base Rate Loans. Such Bank
shall notify Borrower if and when the circumstances giving rise to such
repayment no longer apply.
5.11 Capital Adequacy. If, after the effective date of this Agreement, any
Bank shall have determined that the adoption of any applicable law, rule,
regulation or treaty regarding capital adequacy, or any change therein, or any
change in the interpretation or administration thereof by any Governmental
Authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by such Bank with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or will have the effect of
reducing the rate of return on such Bank's capital in respect of any Letter of
Credit or its obligations hereunder to a level below that which such Bank could
have achieved but for such adoption, change or compliance (taking into
consideration such Bank's policies with respect to capital adequacy), then from
time to time Borrower shall pay to such Bank within fifteen (15) days of a
written demand such additional amount or amounts as will compensate such Bank
for such reduction. In determining such amount or amounts, such Bank may use
any reasonable averaging and attribution methods. Each Bank will promptly
notify the Borrower of any event occurring after the effective date hereof of
which it has knowledge which will entitle such Bank to compensation pursuant to
this section 5.11
5.12 Survival of Provisions. All provisions relating to reimbursement to
any Bank of amounts sufficient to protect the yield to such Bank with respect to
the Loans, including, without limitation, Sections 5.7, 5.8 and 5.9 hereof,
shall survive the payment of the Notes and the termination of this Agreement.
5.13 Discretion of Bank as to Manner of Funding. Notwithstanding any
provision contained in this Agreement to the contrary, each of the Banks shall
be entitled to fund and maintain its funding of all or any part of its LIBOR
Loans in any manner it elects, it being understood, however, that for purposes
of this Agreement all
<PAGE>
determinations hereunder (including, without limitation, the determination of
each Bank's funding losses and expenses under Section 5.6) shall be made as if
such Bank had actually funded and maintained each LIBOR Loan through the
purchase of deposits having a maturity corresponding to the maturity of the
applicable Interest Period relating to the applicable LIBOR Loan and bearing an
interest rate equal to the applicable LIBOR Rate.
5.14 Computation of Interest. Interest on Base Rate Loans hereunder shall
be computed on the basis of a year of 360 days and paid for the actual number of
days elapsed (including the first day but excluding the last day). Interest on
LIBOR Loans shall be computed on the basis of a year of 360 days and paid for
the actual number of days elapsed, calculated as to each Interest Period from
and including the first day thereof but excluding the last day thereof.
SECTION 6. PRECONDITIONS TO LOANS AND LETTERS OF CREDIT.
- --------------------------------------------------------
6.1 Initial Revolving Credit Loan, Initial Swing Loan or Letter of Credit.
Notwithstanding any provision contained herein to the contrary, none of the
Banks shall have any obligation to make the initial Revolving Credit Loan
hereunder, Whitney shall have no obligation to make the initial Swing Loan
hereunder, and the Banks shall have no obligation to issue a Letter of Credit
hereunder unless the Agent shall have received on the effective date hereof:
(a) This Agreement and the Notes, each executed by a duly authorized
officer or Borrower;
(b) The Continuing Guarantee by each Subsidiary (other than Offshore),
each executed by a duly authorized officer of such Subsidiary;
(c) A copy of resolutions of the Board of Directors of Borrower, duly
adopted, which authorize the execution, delivery and performance of this
Agreement, the Notes, the Letter of Credit Application(s) and the other
Transaction Documents delivered at or prior to the closing, certified by the
Chief Executive Officer and the Secretary or an Assistant Secretary of Borrower;
(d) A copy of resolutions of the Board of Directors of each
Subsidiary, duly adopted, which authorize the execution, delivery and
performance of the Continuing Guarantee and the Letter of Credit Application(s)
executed by such Subsidiary (other than Offshore), certified by the Chief
Executive Officer and the Secretary or an Assistant Secretary of such
Subsidiary;
(e) An incumbency certificate, executed by the Secretary or an
Assistant Secretary of Borrower, which shall identify by name and title and bear
the signatures of all of the officers of Borrower executing any of the
Transaction Documents delivered at or prior to the closing;
<PAGE>
(f) An incumbency certificate, executed by the Secretary or an
Assistant Secretary of each Subsidiary (other than Offshore), which shall
identify by name and title and bear the signatures of the officer of such
Subsidiary executing the Continuing Guarantee of such Subsidiary delivered at or
prior to the closing;
(g) An opinion of McGlinchey Stafford Lang, a Professional Limited
Liability Company special counsel for Borrower and the Subsidiaries relating to
the Transaction Documents and such other matters as the Banks may reasonably
require and satisfactory in form and substance to the Agent;
(h) Payment of Agent's costs and expenses as provided for in Section
11.3 and payment to Agent of the fees required under Sections 5.3(a) and (b)
herein; and
(i) All documents executed or submitted pursuant hereto by or on
behalf of Borrower of any of its Subsidiaries shall be satisfactory in form and
substance to the Agent and its counsel; and the Agent and its counsel shall have
received all information, approvals, opinions, documents or other instruments as
the Agent or its counsel may reasonably request.
Any one or more of the conditions set forth above which have not been
satisfied by Borrower on or prior to the effective date hereof shall not be
deemed permanently waived unless Agent and the Banks shall waive the same in a
writing which expressly states that the waiver is permanent, and, in all cases
in which the waiver is not stated to be permanent, Agent and the Banks may at
any time subsequent thereto insist upon compliance and satisfaction of any such
condition as a condition to any new Revolving Credit Loan advance and/or to the
requested conversion of any interest rate on any outstanding Loan hereunder, and
Banks shall have no obligation to make any such advance or to convert any such
interest rate until all such conditions have been satisfied.
6.2 All Loans. Notwithstanding any provision contained herein to the
contrary, none of the Banks shall have any obligation to make any further
Revolving Credit Loan hereunder or to convert any Loan to a LIBOR Loan or to
extend any LIBOR Loan for a new Interest Period, and Whitney shall have no
obligation to make any further Swing Loan hereunder, unless:
(a) With respect to any new Revolving Credit Loan advance, the Agent
shall have received a Borrowing Notice for such Revolving Credit Loan as
required by Section 3.3;
(b) With respect to any conversion of a Loan to or continuation of
any Loan as a LIBOR Loan, the Agent shall have received the notice for such
conversion or continuation as required by Section 5.1;
<PAGE>
(c) On the date of and immediately after giving effect to such
Revolving Credit Loan, such Swing Loan or such interest rate conversion or
extension, no Default or Event of Default under this Agreement shall have
occurred and be continuing;
(d) No change in the Properties, assets, liabilities, business,
operations, prospects, income or condition (financial or otherwise) of Borrower
and its Subsidiaries taken as a whole and having a Material Adverse Effect shall
have occurred since the effective date of this Agreement and be continuing; and
(e) Except for subsequent changes consented to by the Required Banks
after the effective date hereof, all of the representations and warranties of
Borrower contained in Section 7 of this Agreement (other than the
representations and warranties relating to Trinity) and in the other Transaction
Documents shall be true and correct in all material respects on and as of the
date of such Revolving Credit Loan, such Swing Loan or such interest rate
conversion or continuation as if made on and as of the date of such Revolving
Credit Loan, such Swing Loan or such interest rate conversion or continuation.
Each request for a Revolving Credit Loan by Borrower hereunder, each
request for a Swing Loan by Borrower hereunder and each request by Borrower to
convert any Loan to or continue any Loan as a LIBOR Loan shall be deemed to be a
representation and warranty by Borrower on the date of such Revolving Credit
Loan, such Swing Loan or such conversion or continuation, as the case may be, as
to the facts specified in clauses (c), (d) and (e) of this Section 6.2.
6.3 Letters of Credit. Notwithstanding any provision contained herein to
the contrary, Issuer shall have no obligation to issue any Letter of Credit
after the effective date hereof unless:
(a) Issuer shall have received a Letter of Credit Request for such
Letter of Credit as required by Section 4.1(a);
(b) Issuer shall have received a Letter of Credit Application for such
Letter of Credit as required by Section 4.1(a), duly executed by an authorized
officer of Borrower and of a Subsidiary (if such Letter of Credit is for the
account of such Subsidiary) as account party;
(c) Borrower shall have complied with all of the procedures and
requirements set forth in Section 4.1;
(d) On the date of and immediately after the issuance of such Letter
of Credit, no Default or Event of Default under this Agreement shall have
occurred and be continuing;
<PAGE>
(e) No change in the Properties, assets, liabilities, business,
operations, prospects, income or condition (financial or otherwise) of Borrower
and its Subsidiaries taken as a whole and having a Material Adverse Effect shall
have occurred since the effective date of this Agreement and be continuing;
(f) Except for subsequent changes consented to by the Required Banks
after the effective date hereof, all of the representations and warranties of
Borrower contained in Section 7 of this Agreement (other than the
representations and warranties relating to Trinity) and in the other Transaction
Documents shall be true and correct in all material respects on and as of the
date of the issuance of such Letter of Credit as if made on and as of the date
of the issuance of such Letter of Credit;
(g) Issuer shall have no obligation to issue any Letter of Credit for
the account of Offshore unless (i) Offshore shall have funded one or more loans
to Borrower which in the aggregate are equal to no less than the face amount of
all Letters of Credit issued for the account of Offshore (collectively, the
"Reserves Loan") pursuant to documents satisfactory to Agent and (ii) Agent
shall have received an opinion of counsel for Offshore acceptable to Agent
relating to such loan and such loan documents satisfactory in form and substance
to Agent; and
(h) Bank shall have received such other documents, certificates and
agreements as it may reasonably request.
Each request for the issuance of a Letter of Credit by Borrower hereunder shall
be deemed to be a representation and warranty by Borrower on the date of the
issuance of such Letter of Credit as to the facts specified in clauses (d), (e)
and (f) of this Section 6.3.
SECTION 7. REPRESENTATIONS AND WARRANTIES.
- ------------------------------------------
Borrower hereby represents and warrants to each of the Banks that:
7.1 Corporate Existence and Power. Borrower and each Subsidiary: (a) is
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization; (b) has all requisite powers and all
governmental and regulatory licenses, authorizations, consents and approvals
required to carry on its business as now conducted; and (c) is qualified to
transact business as a foreign entity in, and is in good standing under the laws
of, all states in which it is required by applicable law to maintain such
qualification and good standing except for those states in which the failure to
qualify or maintain good standing could not reasonably be expected to have a
Material Adverse Effect.
7.2 Corporate Authorization. The execution, delivery and performance by
Borrower of this Agreement, the Notes, the Letter of Credit Application(s) and
the other Transaction Documents are within the corporate powers of Borrower and
have been duly authorized by all necessary corporate action.
<PAGE>
7.3 Binding Effect. This Agreement, the Notes and the other Transaction
Documents executed contemporaneously with the execution of this Agreement have
been duly executed and delivered by Borrower and constitute the legal, valid and
binding obligations of Borrower enforceable in accordance with their respective
terms, except as such enforceability may be limited by bankruptcy, insolvency or
other similar laws affecting creditors' rights generally and by general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law) and the Letter of Credit Application(s) and
any future Transaction Documents not executed contemporaneously with the
execution of this Agreement, when executed and delivered in accordance with this
Agreement, will constitute the legal, valid and binding obligations of Borrower
enforceable in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency or other similar laws
affecting creditors' rights generally and by general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
7.4 Financial Statements. Borrower has furnished each of the Banks with
the following financial statements: (1) the consolidated balance sheets and
statements of income, retained earnings and cash flows of Borrower and its
Subsidiaries as of March 31, 1996, all certified by Borrower's independent
certified public accountants, which financial statements have been prepared as
determined in accordance with GAAP consistently applied; and (2) unaudited
consolidated balance sheets and statements of income, retained earnings and cash
flows of Borrower and its Subsidiaries as of June 30, 1996, certified by the
Vice President of Borrower as being true and correct to the best of his
knowledge and as being prepared in accordance with standard accounting practices
of the Borrower and its Subsidiaries consistently applied. Borrower further
represents and warrants to each of the Banks that: (1) said balance sheets and
their accompanying notes fairly present the condition, respectively, of Borrower
and its Subsidiaries as of the dates thereof; (2) there has been no material
adverse change in the condition or operation, financial or otherwise, of
Borrower or any of its Subsidiaries since June 30, 1996; and (3) neither
Borrower nor any Subsidiaries had, as of the respective dates of such financial
statements, any material direct or contingent liabilities which are not
disclosed on said financial statements or the notes thereto (to the extent such
disclosure is required by GAAP).
7.5 Litigation. There is no action, proceeding or claim pending or, to
the knowledge of Borrower, threatened against Borrower or any Subsidiary before
any court, arbitrator or any governmental, regulatory or administrative body,
agency or official (including, but not limited to, any ERISA plan administrator)
which, if adversely determined against Borrower or any Subsidiary, could
reasonably be expected to have a Material Adverse Effect or which would need to
be disclosed, as determined in accordance with GAAP, in Borrower's or any
Subsidiary's financial statements. Neither Borrower nor any Subsidiary is in
default with respect to any order, writ, injunction, decision or decree of any
court, arbitrator or any governmental, regulatory or administrative body, agency
or official, a default under which could reasonably be
<PAGE>
expected to have a Material Adverse Effect. As of the effective date hereof,
there are no outstanding judgments against Borrower or any Subsidiary.
7.6 ERISA. Borrower and each Subsidiary are in compliance in all material
respects with the applicable provisions of ERISA and the Code (pertaining to any
Pension Plan), and have not engaged in, or permitted to exist or occur, any
condition, event or transaction which could result in the incurrence by Borrower
or any Subsidiary or ERISA Affiliate of any liability, fine or penalty which
would have a Material Adverse Effect.
7.7 Tax Payment. There is no proposed, asserted or assessed tax
deficiency against Borrower or any of its Subsidiaries which, if adversely
determined, could reasonably be expected to have a Material Adverse Effect.
7.8 Subsidiaries. Borrower has no Subsidiaries other than as identified
on Schedule 7.8 attached hereto, as the same may from time to time be amended,
modified or supplemented as provided herein. The capital stock of each
Subsidiary is duly authorized, validly issued and fully paid and nonassessable
and is owned solely by Borrower. Except as disclosed on Schedule 7.8 attached
hereto, neither Borrower nor any of its Subsidiaries, individually or
collectively, owns or holds, directly or indirectly, any capital stock or equity
security of, or any equity interest in, any corporation or business other than
Borrower's Subsidiaries. Borrower may at any time amend, modify or supplement
Schedule 7.8 by notifying the Agent in writing of any changes thereto, including
any formation, acquisition, merger or liquidation of Subsidiaries or any change
in the capitalization of any Subsidiary, in each case, in accordance with the
terms of this Agreement and provided that any such new Subsidiary shall, within
thirty (30) days of the creation or acquisition of such Subsidiary, execute and
deliver to Agent for the benefit of all the Banks a Continuing Guarantee in form
of Exhibit C annexed hereto and made a part hereof.
7.9 Compliance With Other Instruments; None Burdensome. Neither Borrower
nor any Subsidiary is a party to any contract or agreement or subject to any
charter or other corporate or other restriction which could have a Material
Adverse Effect and which is not disclosed on Borrower's or any Subsidiary's
financial statements heretofore submitted to the Banks; none of the execution
and delivery by Borrower and the Subsidiaries of the Transaction Documents, the
consummation of the transactions therein contemplated, the consummation of the
Consolidation Transactions, the execution and delivery by Borrower of the
Separation and Related Agreements, or the consummation of the transactions
therein contemplated, has violated or will violate any law, rule, regulation,
order, writ, judgment, injunction, decree or award binding on Borrower or any
Subsidiary, or any of the provisions of Borrower's or any Subsidiary's
Certificate of Incorporation or Bylaws or any of the provisions of any
indenture, agreement, document, instrument or undertaking to which Borrower or
any Subsidiary is a party or subject, or by which it or its Property is bound,
or conflict with or constitute a default thereunder or result in the creation or
imposition of any Lien pursuant to the terms of any such indenture, agreement,
document, instrument or undertaking (other than in
<PAGE>
favor of the Agent and/or the Banks pursuant to the Transaction Documents). No
order, consent, approval, license, authorization or validation of, or filing,
recording or registration with, or exemption by, any Governmental Authority, or
any other Person is required to authorize, or is required in connection with,
the execution, delivery or performance of, or the legality, validity, binding
effect or enforceability of, any of the Transaction Documents that has not
already been obtained.
7.10 Other Debt, Guarantees, Capitalized Leases. Except as disclosed on
Schedule 7.10 attached hereto as of the effective date of this Agreement, and
except for Debt incurred or made on or after the effective date hereof as
permitted under Section 8.2(a) and the other provisions of this Agreement,
neither Borrower nor any Subsidiary of Borrower is a borrower, guarantor or
obligor with respect to any Debt or Guarantees.
7.11 Labor Matters. Neither Borrower nor any Subsidiary is a party to any
labor dispute which could reasonably be expected to have a Material Adverse
Effect. There are no strikes or walkouts relating to any labor contract to
which Borrower or any Subsidiary is subject which could reasonably be expected
to have a Material Adverse Effect. Hours worked and payments made to the
employees of Borrower and its Subsidiaries have not been in violation of the
Fair Labor Standards Act or any other applicable law dealing with such matters
which could reasonably be expected to have a Material Adverse Effect. Except as
described on Schedule 7.11 attached hereto, all payments due from Borrower or
any Subsidiary, or for which any claim may be made against any of them, in
respect of wages, employee health and welfare insurance and/or other benefits
have been paid or accrued as a liability on their respective books as determined
in accordance with GAAP.
7.12 Title to Property. Borrower and each Subsidiary has good recordable
and marketable title in fee simple to or valid leasehold interests in all of the
shipyards and other property listed on Schedule 7.12 attached hereto, has good
recordable and marketable title in fee simple to or valid leasehold interests in
all its other real (immovable) property, and has good title to or valid
leasehold interests in all its other property (other than property held under
Capital Leases) material to its business and none of such property is subject to
any Lien other than Permitted Liens.
7.13 Regulation U. Borrower is not engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of Regulation U of The
Board of Governors of the Federal Reserve System, as amended) and no part of the
proceeds of any Loan will be used, whether directly or indirectly, and whether
immediately, incidentally or ultimately (i) to purchase or carry margin stock or
to extend credit to others for the purpose of purchasing or carrying margin
stock, or to refund or repay indebtedness originally incurred for such purpose
or (ii) for any purpose which entails a violation of, or which is inconsistent
with, the provisions of any of the Regulations of The Board of Governors of the
Federal Reserve System, including, without limitation, Regulations G, U, T or X
thereof, as amended. If requested by any of the Banks, Borrower shall furnish
to the
<PAGE>
Agent a statement in conformity with the requirements of Federal Reserve
Form U-1 referred to in Regulation U.
7.14 Investment Company Act of 1940: Public Utility Holding Company Act of
1935. Borrower is not an "investment company" as that term is defined in, and is
not otherwise subject to regulation under, the Investment Company Act of 1940,
as amended. Borrower is not a "holding company" as that term is defined in, and
is not otherwise subject to regulation under, the Public Utility Holding Company
Act of 1935, as amended.
7.15 Patents, Licenses, Trademarks, Etc. Borrower and each of its
Subsidiaries have all permits, certificates, licenses (including patent and
copyright licenses), approvals and other authorizations required in connection
with the operation of their businesses, except those which the failure to have
could not reasonably be expected to have a Material Adverse Effect. There is no
pending or, to Borrower's actual knowledge, threatened litigation, or
arbitration in which it is alleged that Borrower or any Subsidiary has violated
or breached any patents, licenses, trademarks, trademark rights, trade names,
trade name rights and copyrights which could reasonably be expected to have a
Material Adverse Effect.
7.16 Environmental and Safety and Health Matters. Except as disclosed on
Schedule 7.16 attached hereto: (i) the operations of Borrower and each
Subsidiary comply in all respects with (A) all applicable lawfully promulgated,
enacted, entered or finalized Environmental Laws and (B) all applicable lawfully
promulgated, enacted, entered or finalized Occupational Safety and Health Laws,
which the failure to comply with could reasonably be expected to have a Material
Adverse Effect; (ii) none of the operations of Borrower or any Subsidiary are
subject to any Environmental Claim or any judicial, governmental, regulatory or
administrative proceeding alleging the violation of any Occupational Safety and
Health Law, which, if adversely determined, could reasonably be expected to have
a Material Adverse Effect; (iii) to Borrower's actual knowledge, none of the
operations of Borrower or any Subsidiary is the subject of any material federal
or state investigation evaluating whether any remedial action is needed to
respond to any unsafe or unhealthful condition at any premises of Borrower or
such Subsidiary; (iv) neither Borrower nor any Subsidiary has filed any notice
under any Environmental Law or Occupational Safety and Health Law (pertaining to
a matter which has not been resolved) reporting (A) any past or present
spillage, disposal or Release into the environment of, or treatment, storage or
disposal of, any Hazardous Substance or any other hazardous, toxic or dangerous
waste, substance or constituent or other substance which could reasonably be
expected to have a Material Adverse Effect, or (B) any unsafe or unhealthful
condition at any premises of Borrower or such Subsidiary which could reasonably
be expected to have a Material Adverse Effect; and (v) neither Borrower nor any
Subsidiary has to its actual knowledge any contingent liability which could
reasonably be expected to have a Material Adverse Effect in connection with (A)
any spillage, disposal or Release into the environment of, or otherwise with
respect to, any Hazardous Substances or any other hazardous, toxic or dangerous
waste, substance or
<PAGE>
constituent or other substance or (B) any unsafe or unhealthful environmental
condition at any premises of Borrower or such Subsidiary.
7.17 Investments. Except as disclosed on Schedule 7.17 attached hereto
neither Borrower nor any Subsidiary has any Restricted Investments.
7.18 No Default. No Default or Event of Default under this Agreement has
occurred and is continuing and no event has occurred which with the giving of
notice or the passage of time would constitute a Default or an Event of Default.
There is no existing default or event of default (and no event has occurred
which with the giving of notice or the passage of time would constitute a
default or an event of default) under or with respect to any indenture,
contract, agreement, lease or other instrument to which Borrower or any
Subsidiary is a party or by which Borrower, any Subsidiary or any Property of
Borrower or any Subsidiary is bound or affected, a default under which could
reasonably be expected to have a Material Adverse Effect. Neither Borrower nor
any Subsidiary of Borrower is in violation of any applicable statute, law, rule,
regulation or ordinance of the United States of America, of any state, city,
town, municipality, county or of any other jurisdiction, or of any agency
thereof, a violation of which could reasonably be expected to have a Material
Adverse Effect.
7.19 No Burdensome Restrictions. No agreement or obligation of Borrower or
any of its Subsidiaries in effect on the effective date hereof and no statute,
law, rule, regulation or ordinance of the United States of America, of any
state, city, town, municipality, county or of any other jurisdiction, or of any
agency thereof, on the effective date hereof materially adversely affects
Borrower or any Subsidiary, or insofar as Borrower may reasonably foresee may
have an Material Adverse Effect.
7.20 Government Contracts. Neither Borrower, any Subsidiary nor Trinity
has ever been barred from contracting (as a first tier or any level of
subcontractor) for or bidding on any contract with or for any U. S. Governmental
Authority (each a "Government Contract" and collectively, the "Government
Contracts") or had a Government Contract canceled or terminated for default by
Borrower, Trinity or any Subsidiary, as the case may be. Neither Borrower, any
Subsidiary nor Trinity is currently barred from (or has received notice that it
is under investigation with respect to a possible bar or may be barred from)
bidding on or entering into any Government Contract. None of Borrower's or any
Subsidiary's current or backlogged Government Contracts have been forfeited or
canceled for the convenience of any Governmental Authority or for the default of
the Borrower, any Subsidiary or Trinity, as the case may be. Neither the
Borrower, any Subsidiary nor Trinity has been given notice (i) that any such
contract may be or will be canceled for the convenience of any Governmental
Authority or a default by Borrower, Trinity or any Subsidiary, as the case may
be, (ii) that a major Borrower, Trinity or any Subsidiary program or contract
will be eliminated or substantially reduced or suspended, (iii) requiring or
resulting in, loss of use or substantial impairment or interference of use by
Borrower or any Subsidiary, as the case may be, of any facilities owned by any
Governmental Authority, or (iv) that any relevant budget authority or
<PAGE>
contract authority has been exceeded with respect to any material Government
Contract which in any such case is likely to have a Material Adverse Effect.
Neither the Borrower nor any Subsidiary has had to absorb cost overruns on any
Government Contracts. Neither the Borrower nor any Subsidiary anticipates
incurring cost overruns on any Government Contracts which would have a Material
Adverse Effect.
7.21 Disclosure. Neither this Agreement nor any of the Exhibits or
Schedules hereto nor any certificate or other data furnished to the Agent or any
of the Banks in writing by or on behalf of Borrower or any Subsidiary either in
connection with the transactions contemplated by this Agreement or in connection
with the Initial Offering, contains any untrue or incorrect statement of a
material fact or omits to state a material fact necessary to make the statements
contained herein or therein not misleading.
7.22 Assumed Trinity Indebtedness and the Intercompany Note. The Assumed
Trinity Indebtedness and Intercompany Note have been paid and satisfied in full.
7.23 Initial Offering. The proceeds from the Initial Offering which were
payable to Borrower were used to pay income tax liabilities of Borrower with the
balance used to pay the Borrower's Indebtedness to the Banks.
7.24 Separation and Related Agreements. The Separation and Related
Agreements and the Non-Competition Agreement are in force and effect.
SECTION 8. COVENANTS.
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8.1 Affirmative Covenants of Borrower. Borrower covenants and agrees
that, so long as (i) any of the Banks has any obligation to make any Loan
hereunder or to issue any Letter of Credit hereunder, (ii) any Letter of Credit
remains outstanding or (iii) any of Borrower's Obligations (excluding any
continuing indemnity obligations beyond the Term of this Agreement or any
earlier termination hereof) remain unpaid:
(a) Information. Borrower will deliver to each of the Banks:
(i) as soon as available and in any event within ninety (90) days
after the end of each fiscal year of Borrower, consolidated balance sheets
of Borrower and its Subsidiaries as of the end of such fiscal year and the
related consolidated statements of income, stockholders equity and cash
flows for such fiscal year, setting forth in each case, in comparative
form, the figures for the previous fiscal year, all such financial
statements to be prepared as determined in accordance with GAAP and
reported on by and accompanied by the unqualified opinion of independent
certified public accountants of nationally recognized standing selected by
Borrower, together with (1) a certificate from such accountants to the
effect that, in making the examination necessary for the signing of such
annual audit report, such accountants have not become aware of any Default
or Event of Default that has occurred and is continuing, or, if such
accountants have become
<PAGE>
aware of any such event, describing it and the steps, if any, being taken
to cure it (such accountants, however, shall not be liable to anyone by
reason of their failure to obtain knowledge of any Default or Event of
Default which would not be disclosed in the course of an audit conducted in
accordance with generally accepted auditing standards) and (2) computations
evidencing Borrower's compliance with the financial covenants contained
in Sections 8.1(m)(i) through (v) of this Agreement as calculated on a
consolidated basis for Borrower and its Subsidiaries;
(ii) as soon as available and in any event within forty-five (45) days
after the end of each of the first three (3) fiscal quarters of each fiscal
year of Borrower, consolidated balance sheets of Borrower and its
Subsidiaries as of the end of such fiscal quarter and the related
consolidated statements of income, retained earnings and cash flows for
such fiscal quarter and for the portion of Borrower's fiscal year ended at
the end of such fiscal quarter, setting forth in each case in comparative
form, the figures for the corresponding fiscal quarter and the
corresponding portion of Borrower's previous fiscal year, all in reasonable
detail;
(iii) promptly upon transmission thereof, copies of all such financial
statements, proxy statements, notices and reports as Borrower or any
Subsidiary shall send to its stockholders and copies of all registration
statements (without exhibits) and all reports which Borrower or any
Subsidiary files with the Securities and Exchange Commission (or any
governmental body or agency succeeding to the functions of the Securities
and Exchange Commission);
(iv) simultaneously with the delivery of each set of financial
statements referred to in clauses (i) and (ii) above, a certificate of the
principal financial officer of Borrower in the form attached hereto as
Exhibit G and incorporated herein by reference, accompanied by supporting
financial work sheets where appropriate, (A) evidencing Borrower's
compliance with the financial covenants contained in Sections 8.l(m)(i)
through (v) of this Agreement as calculated on a consolidated basis for
Borrower and its Subsidiaries, (B) stating whether there exists on the date
of such certificate any Default or Event of Default and, if any Default or
Event of Default then exists, setting forth the details thereof and the
action which Borrower is taking or proposes to take with respect thereto,
(C) certifying that all of the representations and warranties of Borrower
contained in this Agreement, as the same shall have been from time to time
updated by Borrower in writing to Agent (provided such updating shall not
relieve Borrower from its obligation to comply with all covenants contained
herein), are true and correct in all material respects on and as of the
date of such certificate as if made on the date of such certificate, and
(D) stating the aggregate remaining value of the firm shipbuilding
contracts of Borrower and its Subsidiaries (excluding intercompany
contracts (but including such barge construction and related work to be
subcontracted from Trinity under the Separation and Related Agreements) and
excluding unexercised options or rights under contracts pursuant to which
the
<PAGE>
other contracting party(s) may require additional performance by the
Borrower or any Subsidiary);
(v) promptly upon receipt thereof, any reports submitted to Borrower
or any Subsidiary (other than reports previously delivered pursuant to
Sections 8.l(a)(i) and (ii) above) by independent accountants in connection
with any annual, interim or special audit made by them of the books of
Borrower or any Subsidiary;
(vi) as soon as possible and in any event within 45 days after the end
of each fiscal quarter, a computation of the ratio of Average Consolidated
Total Debt for the immediately preceding fiscal quarter to Consolidated
EBITDA for the immediately preceding four (4) fiscal quarters; and
(vii) with reasonable promptness, such further information regarding
the business, affairs and financial condition of Borrower or any Subsidiary
as Bank may from time to time reasonably request.
Each of the Banks is hereby authorized to deliver a copy of any
financial statement or other information made available by Borrower or any
Subsidiary to any regulatory authority having jurisdiction over such Bank,
pursuant to any request therefor.
(b) Payment of Indebtedness. Borrower will, and it will cause each of
its Subsidiaries to pay and discharge any and all Indebtedness payable or
Guaranteed by Borrower or such Subsidiary, as the case may be, and any interest
or premium thereon, when due in accordance with the agreement, document or
instrument relating to such Indebtedness or Guarantee, provided, however, that
neither Borrower nor any Subsidiary shall be required to pay any such
Indebtedness or Guarantee (excluding Borrower' s Obligations) which is being
contested in good faith and by appropriate proceedings being diligently
conducted and for which provision in accordance with GAAP has been made, except
that Borrower or such Subsidiary of Borrower, as the case may be, shall pay or
cause to be paid any such Indebtedness or Guarantee forthwith upon the
commencement of proceedings to foreclose any Lien which is attached as security
therefor, unless such foreclosure is stayed by the filing of an appropriate
bond.
(c) Maintenance of Books and Records, Consultations and Inspections.
Borrower will, and it will cause each of its Subsidiaries to, maintain books and
records as determined in accordance with GAAP and in which full, true and
correct entries shall be made of all dealings and transactions in relation to
its business and activities. Borrower will, and it will cause each of its
Subsidiaries to, permit the Agent and each of the Banks (and any Person
appointed by the Agent or any of the Banks to whom the Borrower does not
reasonably object) to discuss the affairs, finances and accounts of Borrower and
each Subsidiary with the officers of Borrower and each Subsidiary and their
independent public accountants, all at such reasonable times and as often as the
Agent or any of the Banks may from time to time reasonably request.
<PAGE>
Subject to any confidentiality and/or security clearance restrictions applicable
to Borrower's or any Subsidiary's records, Borrower will also permit, and will
cause each Subsidiary to permit, inspection of its Properties, books and records
by the Agent during
<PAGE>
normal business hours and at other reasonable times. Agent may be accompanied by
representatives of any of the Banks during any such inspections. Borrower will
reimburse the Agent upon demand for all costs and expenses incurred by the Agent
in connection with any such inspection conducted by the Agent while any Default
or Event of Default under this Agreement has occurred and is continuing. A
representative of Borrower may be present during any such inspection, provided
that a particular representative's availability or unavailability shall not
inhibit or delay such inspection. Borrower shall permit the Agent to communicate
directly with Borrower's independent public accountants and to discuss the
affairs, finances and accounts of the Borrower and the Subsidiaries at such
reasonable times and intervals and to such reasonable extent as the Agent may
request. A representative of Borrower may be present and/or participate in any
such communication with Borrower's accountants, provided that a particular
representative's availability or unavailability shall not inhibit or delay such
communication.
(d) Payment of Taxes. Borrower will, and it will cause each of its
Subsidiaries to, duly file all federal, state and local income tax returns and
all other tax returns and reports of Borrower or such Subsidiary, as the case
may be, which are required to be filed and duly pay and discharge promptly all
taxes, assessments and other governmental charges imposed upon it or any of its
Property; provided, however, that neither Borrower nor any Subsidiary shall be
required to pay any such tax, assessment or other governmental charge the
payment of which is being contested in good faith and by appropriate proceedings
being diligently conducted and for which adequate provision as determined in
accordance with GAAP has been made, except that Borrower or such Subsidiary, as
the case may be, shall pay or cause to be paid all such taxes, assessments and
governmental charges forthwith upon the commencement of proceedings to foreclose
any Lien which is attached as security therefor, unless such foreclosure is
stayed by the filing of an appropriate bond.
(e) Payment of Claims. Borrower will, and it will cause each of its
Subsidiaries to, promptly pay and discharge (i) all trade accounts payable in
accordance with usual and customary business practices and (ii) all claims for
work, labor or materials which if unpaid might become a Lien upon any of its
Property or assets; provided, however, that neither Borrower nor any Subsidiary
shall be required to pay any such account payable or claim the payment of which
is being contested in good faith and by appropriate proceedings being diligently
conducted and for which adequate provision as determined in accordance with GAAP
has been made, except that Borrower or such Subsidiary, as the case may be,
shall pay or cause to be paid all such accounts payable and claims forthwith
upon the commencement of proceedings to foreclose any Lien which is attached as
security therefor, unless such foreclosure is stayed by the filing of an
appropriate bond.
(f) Corporate Existence. Borrower will, and it will cause each of
its Subsidiaries to, do all things necessary to (i) preserve and keep in full
force and effect at all times its corporate or other existence and all permits,
licenses, franchises and other rights material to its business, and (ii) be duly
qualified to do business in all
<PAGE>
jurisdictions where the nature of its business or its ownership of Property
requires such qualification except for those states in which the failure to
qualify could not reasonably be expected to have a Material Adverse Effect.
(g) Maintenance of Property. Borrower will, and it will cause each of
its Subsidiaries to, at all times, preserve and maintain all of the Property
useful and necessary in the conduct of its business in adequate working order
(taking into consideration the condition of any such Property in existence at
the time of the Initial Offering), ordinary wear and tear excepted.
(h) Compliance with Laws, Regulations, Etc. Borrower will, and it
will cause each of its Subsidiaries to, comply with any and all laws, ordinances
and governmental and regulatory rules and regulations to which Borrower or such
Subsidiary, as the case may be, is subject (including, without limitation, the
Federal Acquisition Regulations, 48 C.F.R. Chapters 1 through 68) except where
noncompliance would not have a Material Adverse Effect, and maintain any and all
licenses, permits, franchises and other governmental and regulatory
authorizations necessary to the ownership of its Properties or to the conduct of
its business, which violation or failure to obtain could reasonably be expected
to have a Material Adverse Effect.
(i) Environmental Matters. Borrower will, and it will cause each of
its Subsidiaries to, at all times comply with all requirements and agreements
contained in Section 11.4 hereof. Borrower will, and will cause each of its
Subsidiaries to, at all times comply with all Environmental Laws which the
failure to comply with could reasonably be expected to have a Material Adverse
Effect. Borrower shall give the Agent and each of the Banks prompt written
notice of (i) any Environmental Claim or any other action or investigation with
respect to the existence or potential existence of any Hazardous Substances
instituted or threatened with respect to Borrower or any Subsidiary or any of
the Properties or facilities owned, leased or operated by Borrower or any
Subsidiary that could result in liability in excess of $250,000.00 and (ii) any
condition or occurrence on any of the Properties or facilities owned, leased or
operated by Borrower or any Subsidiary which constitutes a material violation by
Borrower or any Subsidiary of any lawfully promulgated, enacted, entered or
finalized Environmental Laws or which gives rise to a reporting obligation or
requires pursuant to an order of a Governmental Authority (the "Order") removal
or remediation by Borrower or any Subsidiary under any lawfully promulgated,
enacted, entered or finalized Environmental Laws. Such notice shall in either
case be accompanied by Borrower's plan with respect to removal or remediation
and Borrower agrees to take all action which is required by the Order or any
lawfully promulgated, enacted, entered or finalized Environmental Law in
connection with such action, investigation, condition or occurrence in
accordance with such plan with due diligence and to fulfill the requirements of
any Order or lawfully promulgated, enacted, entered or finalized Environmental
Law as promptly as possible and in all events within the time required by any
Order. Borrower shall promptly provide the Agent and each of the Banks with
copies of all material documentation relating thereto, and such other material
information with respect to environmental matters as the Agent or any of the
Banks may reasonably request from time to time.
<PAGE>
(j) ERISA Compliance. If Borrower, any Subsidiary or any ERISA
Affiliate shall have any Pension Plan, Borrower, such Subsidiary or such ERISA
Affiliate, as the case may be, shall comply in all respects with all
requirements of ERISA and the Code relating to such Pension Plan, with which the
failure to comply could have a Material Adverse Effect. Without limiting the
generality of the foregoing, unless Borrower shall have received the prior
written consent of the Required Banks to the contrary (which consent shall not
be unreasonably withheld), Borrower will not, and it will not cause or permit
any Subsidiary or any ERISA Affiliate to:
(i) permit any Pension Plan maintained by Borrower, any
Subsidiary or any ERISA Affiliate to engage in any nonexempt "prohibited
transaction," as such term is defined in Section 4975 of the Code which
could have a Material Adverse Effect;
(ii) permit any Pension Plan maintained by Borrower, any
Subsidiary or any ERISA Affiliate to incur any "accumulated funding
deficiency", as such term is defined in Section 302 of ERISA, 29 U.S.C. (S)
1082, whether or not waived, which could have a Material Adverse Effect;
(iii) allow the termination of any Pension Plan in a manner which
could result in the imposition of a Lien on any Property of Borrower, any
Subsidiary or any ERISA Affiliate pursuant to Section 4068 of ERISA, 29
U.S.C. (S) 1368; or
(iv) take any action which would constitute a complete or partial
withdrawal from a Multi-Employer Plan within the meaning of Sections 4203
or 4205 of Title IV of ERISA, which could have a Material Adverse Effect.
(k) Notices. Borrower will notify the Agent in writing of any of the
following within three (3) Business Days after learning of the occurrence
thereof, describing the same and, if applicable, the steps being taken by the
Person(s) affected with respect thereto:
(i) the occurrence of any Default or Event of Default under this
Agreement:
(ii) the occurrence of any default or event of default by
Borrower, any Subsidiary or any other Obligor under any note, indenture,
loan agreement, mortgage, deed of trust, security agreement, lease or other
similar agreement, document or instrument to which Borrower, any Subsidiary
or any other Obligor, as the case may be, is a party or by which it is
bound or to which it is subject which evidences or secures Indebtedness in
an outstanding principal amount of $1,000,000.00 or more in the aggregate
for all such defaulted agreements;
(iii) the institution of any litigation, arbitration proceeding
or governmental or regulatory proceeding affecting Borrower, any other
Obligor or any Subsidiary, whether or not considered to be covered by
insurance, in which
<PAGE>
the prayer or claim for relief seeks recovery of an amount in excess of
$1,000,000.00 (or, if no dollar amount is specified in the prayer or claim
for relief, in which there is a reasonable likelihood of recovery of an
amount in excess of $1,000,000.00) or any form of equitable relief;
(iv) the entry of any judgment or decree against Borrower, any
other Obligor or any Subsidiary which, when aggregated with any other such
judgments or decrees then entered and unsatisfied, exceed $1,000,000.00 in
the aggregate;
(v) the occurrence of a Reportable Event with respect to any
Pension Plan; the filing of a notice of intent to terminate a Pension Plan
by Borrower, any ERISA Affiliate or any Subsidiary; the institution of
proceedings to terminate a Pension Plan by the PBGC or any other Person;
the withdrawal in a "complete withdrawal" or a "partial withdrawal" as
defined in Sections 4203 and 4205, respectively, of ERISA by Borrower, any
ERISA Affiliate or any Subsidiary from any Multi-Employer Plan; or the
incurrence of any material increase in the contingent liability of Borrower
or any Subsidiary with respect to any "employee welfare benefit plan" as
defined in Section 3(1) of ERISA which covers retired employees and their
beneficiaries;
(vi) the occurrence of any event that is reasonably likely to
have a Material Adverse Effect: and
(vii) any notices required to be provided pursuant to other
provisions of this Agreement that do not otherwise provide a time frame in
which such notice is to be provided and notice of the occurrence of such
other events as the Agent may from time to time reasonably specify.
(l) Insurance. Borrower will, and it will cause each of its
Subsidiaries to, insure all of its Property of the character usually insured by
corporations engaged in the same or similar businesses with properties in
similar geographic areas, against loss or damage of the kind customarily insured
against by such corporations, and carry adequate liability insurance and other
insurance of a kind and in amount(s) generally carried by such corporations.
All insurance required by this Section 8.1(1) shall be with insurers rated A-VII
or better by A.M. Best Company (or accorded a similar rating by another
nationally or internationally recognized insurance rating agency of similar
standing if A.M. Best Company is not then in the business of rating insurers or
rating foreign insurers) or such other insurers as may from time to time be
reasonably acceptable to the Required Banks, except to the extent that Borrower
may obtain insurance from its Subsidiary, Offshore Marine Indemnity Company, for
(i) workers compensation insurance and (ii) property and casualty insurance so
long as Reliance National Insurance Company or any other insurance company rated
A-VII or better by A.M. Best Company assumes any coverage written above
$250,000.00 on each policy written by Offshore Marine Indemnity Company. All
such insurance may be subject to reasonable deductible amounts. Borrower shall
deliver to the Agent a certificate of insurance upon the annual renewal of such
policies specifying the details of all insurance
<PAGE>
then in effect; together with a certificate of an officer of Borrower that all
premiums then due have been paid.
(m) Financial Covenants.
(i) Minimum Consolidated Interest Coverage. Borrower will have
and maintain a Consolidated Interest Coverage Ratio for each fiscal quarter
(calculated as of the last day of each fiscal quarter) of at least 4.00 to
1.
(ii) Minimum Consolidated Debt Service Coverage. Borrower will
have and maintain a Consolidated Debt Service Coverage Ratio for each
fiscal quarter (calculated as of the last day of each fiscal quarter) of at
least 1.35 to 1.
(iii) Maximum Consolidated Funded Debt to Consolidated EBITDA.
Borrower will have and maintain a ratio of Consolidated Funded Debt as of
the end of each fiscal quarter to Consolidated EBITDA for the immediately
preceding four (4) fiscal quarters (including the fiscal quarter ending on
such date) which is less than or equal to 3.50 to 1.
(iv) Minimum Current Ratio. Borrower will at all times have and
maintain a ratio of Consolidated Current Assets to Consolidated Current
Liabilities at the end of each fiscal quarter of at least 1.25 to 1.
(v) Minimum Consolidated Tangible Net Worth. Borrower will not
permit Consolidated Tangible Net Worth at the end of any fiscal quarter to
be less than $75,000,000.00 plus 50% of Consolidated Net Income (without
giving any effect to any losses), excluding any Consolidated Net Income due
to non-cash accounting adjustments, for each fiscal quarter ending on or
after December 31, 1996 plus 50% of the net cash proceeds received by the
Borrower from any sale of stock of the Borrower or any Subsidiary (other
than the Initial Offering) through any public offering within the meaning
of the Securities Act of 1933.
(n) Further Assurances. Borrower and each Subsidiary will execute and
deliver to the Agent, at any time and from time to time, any and all further
agreements, documents and instruments, and take any and all further actions
which may be required under applicable law, or which the Agent may from time to
time reasonably request, in order to effectuate the transactions contemplated by
this Agreement and the other Transaction Documents.
(o) Accountant. Borrower shall give each of the Banks prompt notice
of any change of Borrower's independent certified public accountants and a copy
of the Form 8-K relating thereto filed with the Securities and Exchange
Commission. Borrower shall at all times utilize independent certified public
accountants of nationally recognized standing reasonably acceptable to the
Required Banks.
<PAGE>
(p) Subsidiaries. Borrower shall not create any Subsidiaries without
the prior written consent of Agent; provided that, the provisions of this
Section 8.1(p) shall not require the Agent's consent for the formation of
wholly-owned direct Subsidiaries of Borrower or any Subsidiary. Borrower
covenants and agrees that in the event Borrower or any Subsidiary shall create
or acquire any new Subsidiary or Subsidiaries at any time after the effective
date hereof, that Borrower shall cause each such Subsidiary to execute a
Continuing Guarantee pursuant to Section 7.8 of this Agreement.
(q) Agreements. Neither Borrower nor any Subsidiary will default
under any indenture, contract, agreement, lease or other instrument to which
Borrower or any Subsidiary is a party or by which Borrower, any Subsidiary or
any Property of Borrower or any Subsidiary is bound or affected, a default under
which could reasonably be expected to have a Material Adverse Effect.
(r) Offshore Marine Indemnity Company. Offshore shall maintain a
relationship with Reliance National Insurance Company or any other insurance
company rated A-VII or better by A.M. Best Company whereby such insurance
company will assume any coverage written above $250,000.00 on each policy
written by Offshore.
8.2 Negative Covenants of Borrower. Borrower covenants and agrees
that, so long as (i) any of the Banks has any obligation to make any Loan
hereunder or to issue any Letter of Credit hereunder, (ii) any Letter of Credit
remains outstanding or (iii) any of Borrower's Obligations remain unpaid, unless
the prior written consent of the Required Banks is obtained:
(a) Limitation on Indebtedness. Borrower will not, and it will not
cause or permit any of its Subsidiaries to, incur or be obligated on any
Indebtedness, either directly or indirectly, by way of Guarantee, suretyship or
otherwise, other than:
(i) the Borrower's Obligations to the Agent and the Banks;
(ii) the Swing Loans from Whitney;
(iii) Indebtedness existing as of the effective date hereof and
listed on Schedule 7.10 attached hereto and Indebtedness relating to the
employee benefit plans;
(iv) Indebtedness described in clause (a) or (b) of the defined term
Restricted Investment of this Agreement;
(v) Indebtedness in respect of taxes, assessments, governmental
charges or levies and claims for labor, materials and supplies to the extent
that payment therefor shall not at the time be required to be made in accordance
with the provisions of Section 8.1(d) or Section 8.1(e);
<PAGE>
(vi) Indebtedness in respect of judgments or awards that have been in
force for less than the applicable period for taking an appeal and for which
adequate provision as determined in accordance with GAAP has been made so long
as execution is not levied thereunder and in respect of which Borrower or any
Subsidiary shall at the time in good faith be prosecuting an appeal or
proceedings for review and a suspensive appeal bond in the full amount of such
judgment or award shall have been obtained by Borrower or such Subsidiary with
respect thereto;
(vii) current liabilities of Borrower or any Subsidiary of Borrower
incurred in the ordinary course of business not incurred through (A) the
borrowing of money, or (B) the obtaining of credit except for credit on an open
account basis customarily extended and in fact extended in connection with
normal purchases of goods and services;
(viii) endorsements for collection, deposits or negotiation and
warranties of products or services, in each case incurred in the ordinary course
of business;
(ix) Indebtedness in respect of performance, surety or appeal bonds
obtained in the ordinary course of Borrower's or any Subsidiary's business and
in connection with transactions in the ordinary course of Borrower's or any
Subsidiary's business;
(x) Indebtedness under commodity price swaps, commodity price caps and
commodity price collar and floor agreements, and similar agreements or
arrangements designed to protect against or manage fluctuations in commodity
prices with respect to any steel commodities bought and consumed in the ordinary
course of business of Borrower and its Subsidiaries in amounts and on terms
consistent with industry standard practices for hedging such future commodities
requirements of Borrower and its Subsidiaries;
(xi) Indebtedness for any permitted declared and unpaid Distributions
on Borrower's stock;
(xii) Indebtedness in respect of the Separation Agreement and Related
Agreements;
(xiii) With the consent of the Required Banks, Acquisition
Indebtedness not otherwise permitted by this Section 8.2(a);
(xiv) Indebtedness, other than Acquisition Indebtedness, not
otherwise permitted by this Section 8.2(a) in an amount not to exceed
$10,000,000.00 in the aggregate at any one time outstanding for Borrower and all
Subsidiaries of Borrower; and
(xv) Indebtedness, in an amount not to exceed $30,000,000.00 in the
aggregate at any one time outstanding for Borrower and all its Subsidiaries, in
respect
<PAGE>
of guarantees issued in support of customer financing of down payments and other
similar amounts relating to Exim Bank or other similar construction financing,
which guarantees do not exceed 20% of the purchase price of the subject vessel.
(b) Limitation on Liens. Borrower will not, and will not cause or
permit any of its Subsidiaries to, create, incur or assume, or suffer to be
incurred or to exist, any Lien on any Property or assets of Borrower or any
Subsidiary, whether now owned or hereafter acquired, or upon any income or
profits therefrom, except for Permitted Liens.
(c) Consolidation, Merger, Sale of Assets, Dissolution, Etc. Borrower
will not, and will not cause or permit any of its Subsidiaries to, (i) directly
or indirectly, merge into or with or consolidate with any other Person or permit
any other Person to merge into or with or consolidate with it, or (ii) sell,
assign, lease, transfer, abandon or otherwise dispose of any of its Property
(including, without limitation, any shares of capital stock of a Subsidiary
owned by Borrower or another Subsidiary), except for (A) sales of inventory or
vessels in the ordinary course of business, (B) sales in the ordinary course of
business of those items excluded from the definition of Restricted Investments,
(C) sales of fixed assets having a book value in an aggregate amount not to
exceed ten percent (10%) of the book value of Borrower's total assets as of the
end of the fiscal quarter immediately preceding any such sale, so long as such
asset sales shall be sold to third party buyers in arms-length transactions on
reasonable terms and so long as the net proceeds thereof are used solely to
purchase other fixed assets which are consistent with the Company Business
within a reasonable time or to pay any principal due on the Loans, or (D) other
sales of fixed assets having a book value not to exceed $3,500,000.00 in the
aggregate in any fiscal year.
(d) Sale and Leaseback Transactions. Borrower will not, and it will
not cause or permit any of its Subsidiaries to, enter into any arrangement,
directly or indirectly, whereby Borrower or any Subsidiary of Borrower shall in
one or more related transactions sell, transfer or otherwise dispose of any
Property owned by Borrower or any Subsidiary of Borrower and then rent or lease,
as lessee, such Property or any part thereof for a period or periods which in
the aggregate would exceed twelve (12) months from the date of commencement of
the lease term.
(e) Sale or Discount of Accounts. Borrower will not, and it will not
cause or permit any of its Subsidiaries to, sell or discount any of its
receivables (whether represented by a note, account, general intangible or
chattel paper) other than in the ordinary course of its business.
(f) Transactions with Affiliates. Except for the Separation and
Related Agreements, any transactions required thereby, and any transactions
required by the Consolidation Transactions, Borrower will not, and it will not
cause or permit any of its Subsidiaries to, enter into or be a party to any
transaction or arrangement with any Affiliate (including, without limitation,
the purchase from, sale to or exchange of Property with, or the rendering of any
service by or for, any Affiliate), except in the ordinary course of business and
pursuant to the reasonable requirements of Borrower's or such Subsidiary's
business and upon fair and reasonable terms no less favorable to
<PAGE>
Borrower or such Subsidiary than would be obtained in a comparable arm's length
transaction with a Person not an Affiliate.
(g) Changes in Nature of Business. Borrower will not, and it will not
cause or permit any of its Subsidiaries to, engage in any business if, as a
result, the general nature of the business which would then be engaged in by
Borrower and its Subsidiaries, considered as a whole, would be substantially
changed from the Company Business.
(h) Fiscal Year. Borrower will not, and it will not cause or permit
any of its Subsidiaries to, change its fiscal year.
(i) Distributions. Borrower will not, and it will not cause or permit
any of its Subsidiaries to, declare or incur any liability to make any
Distribution, except Distributions by any Subsidiary to Borrower.
(j) Pension Plans. Borrower will not, and it will not cause or permit
any of its Subsidiaries to, (a) permit any condition to exist in connection with
any Pension Plan which might constitute grounds for the PBGC to institute
proceedings to have such Pension Plan terminated or a trustee appointed to
administer such Pension Plan or (b) engage in, or permit to exist or occur, any
other condition, event or transaction with respect to any Pension Plan which
could result in the incurrence by Borrower, any Subsidiary or any ERISA
Affiliate of any liability, fine or penalty which could reasonably be expected
to have a Material Adverse Effect.
(k) Change in Management. Borrower will not terminate or make any
substantial change in the duties of John Dane III, without the approval of the
Required Banks.
(l) Restricted Investments. Borrower will not, and it will not cause
or permit any of its Subsidiaries to, directly or indirectly, make any
Restricted Investments.
(m) Ownership of Subsidiaries. Borrower will not cause or permit any
of its Subsidiaries to (i) authorize or issue any new types, varieties or
classes of capital stock or any bonds or debentures, subordinated or otherwise,
or any stock warrants or options, (ii) authorize or issue any additional shares
of any existing class of capital stock, (iii) declare any stock dividends or
stock splits or (iv) take any other action which could, directly or indirectly,
decrease Borrower's ownership interest in any of its Subsidiaries.
(n) Capital Expenditures. Borrower and its Subsidiaries will not
incur Capital Expenditures in excess of $12,000,000.00 in the aggregate for
Borrower and its Subsidiaries taken as a whole, in any one fiscal year.
(o) Change in Control. Borrower shall not allow any Change in Control
to occur.
<PAGE>
(p) Operating Lease Obligations . Borrower and its Subsidiaries shall
not at any one time have Operating Lease Obligations in excess of $8,000,000.00
in the aggregate for Borrower and its Subsidiaries taken as a whole.
8.3 Use of Proceeds. Borrower covenants and agrees that (i) the
proceeds of the Revolving Credit Loans and Swing Loans will be used solely for
working capital purposes, any specific purposes permitted under this Agreement,
and other general corporate purposes of Borrower; (ii) no part of the proceeds
of any Loan will be used in violation of any applicable law or regulation; and
(iii) no part of the proceeds of any Loan will be used, whether directly or
indirectly, and whether immediately, incidentally or ultimately (A) to purchase
or carry margin stock or to extend credit to others for the purpose of
purchasing or carrying margin stock, or to refund or repay indebtedness
originally incurred for such purpose or (B) for any purpose which entails a
violation of, or which is inconsistent with, the provisions of any of the
Regulations of The Board of Governors of the Federal Reserve System, including,
without limitation, Regulations G, U, T or X thereof, as amended.
SECTION 9. EVENTS OF DEFAULT.
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If any of the following (each of the following herein sometimes called an
"Event of Default") shall occur and be continuing:
9.1 Borrower shall fail to pay any of Borrower's Obligations other than
principal or interest within five (5) Business Days after the date the same
shall first become due and payable, whether by reason of demand, maturity,
acceleration or otherwise;
9.2 (a) Borrower shall fail to pay any of Borrower's Obligations for the
repayment of interest three (3) Business Days after the date the same shall
become due and payable, whether by reason of demand, maturity, acceleration or
otherwise;
(b) Borrower shall fail to pay any of Borrower's Obligations for the
repayment of principal as and when the same shall become due and payable,
whether by reason of demand, maturity, acceleration or otherwise;
9.3 Any representation or warranty of Borrower or any Subsidiary made in
this Agreement, in any other Transaction Document to which Borrower or any
Subsidiary is a party or in any certificate, agreement, instrument or statement
furnished or made or delivered pursuant hereto or thereto or in connection
herewith or therewith, shall prove to have been untrue or incorrect in any
material respect when made or effected;
9.4 Borrower shall fail to perform or observe any term, covenant or
provision contained in Section 8.1(l), Section 8.1(m), Section 8.2 or Section
8.3;
9.5 Borrower shall fail to perform or observe any term, covenant or
provision contained in Section 8.1(a) and any such failure shall remain
unremedied for five (5)
<PAGE>
Business Days after the earlier of (i) notice of such default is given to
Borrower by the Agent or (ii) a Responsible Officer of Borrower obtaining
knowledge of such default;
9.6 Borrower shall fail to perform or observe any other term, covenant or
provision contained in this Agreement (other than those specified in Sections
9.1, 9.2, 9.3, 9.4 or 9.5 above or elsewhere in this Section 9) and any such
failure shall remain unremedied for thirty (30) days after the earlier of (i)
written notice of default is given to Borrower by the Agent or any of the Banks
or (ii) a Responsible Officer of Borrower obtaining knowledge of such default;
9.7 This Agreement or any of the other Transaction Documents shall at any
time for any reason cease to be in full force and effect or shall be declared to
be null and void by a court of competent jurisdiction, or if the validity or
enforceability thereof shall be contested or denied by Borrower or any
Subsidiary, or if the transactions completed hereunder or thereunder shall be
contested by Borrower or any Subsidiary or if Borrower or any Subsidiary shall
deny that it has any or further liability or obligation hereunder or thereunder.
9.8 Borrower, any Subsidiary or any other Obligor shall (i) voluntarily
commence any proceeding or file any petition seeking relief under Title 11 of
the United States Code or any other federal, state or foreign bankruptcy,
insolvency, receivership, liquidation or similar law, (ii) consent to the
institution of, or fail to contravene in a timely and appropriate manner, any
such proceeding or the filing of any such petition, (iii) apply for or consent
to the appointment of a receiver, trustee, custodian, sequestrator or similar
official of itself, himself or herself or of a substantial part of its Property
or assets, (iv) file an answer admitting the material allegations of a petition
filed against itself in any such proceeding, (v) make a general assignment for
the benefit of creditors, (vi) become unable, admit in writing its inability or
fail generally to pay its debts as they become due or (vii) take any corporate
or other action for the purpose of effecting any of the foregoing;
9.9 An involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (i) relief
in respect of Borrower, any Subsidiary or any other Obligor, or of a substantial
part of the Property or assets of Borrower, any Subsidiary or any other Obligor,
under Title 11 of the United States Code or any other federal, state or foreign
bankruptcy, insolvency, receivership, liquidation or similar law, (ii) the
appointment of a receiver, trustee, custodian, sequestrator or similar official
of Borrower, any Subsidiary or any other Obligor or of a substantial part of the
Property or assets of Borrower, any Subsidiary or any other Obligor or (iii) the
winding-up or liquidation of Borrower, any Subsidiary or any other Obligor; and
such proceeding or petition shall continue undismissed for sixty (60)
consecutive days or an order or decree approving or ordering any of the
foregoing shall be entered;
9.10 Any of the Letter of Credit Applications shall at any time for
any reason cease to be in full force and effect or shall be declared to be null
and void by a court of competent jurisdiction, or if the validity or
enforceability of any of the Letter of Credit Applications shall be contested or
denied by Borrower or any Subsidiary, or if Borrower
<PAGE>
or any Subsidiary shall deny that it has any further liability or obligation
under any of the Letter of Credit Applications or if Borrower or any Subsidiary
shall fail to comply with or observe any of the terms, provisions or conditions
contained in any of the Letter of Credit Applications;
9.11 Borrower, any Subsidiary or any other Obligor shall be declared by any
of the Banks to be in default on, or pursuant to the terms of, (1) any other
present or future obligation to such Bank(s), including, without limitation, any
other loan, line of credit, revolving credit, guaranty or letter of credit
reimbursement obligation, or (2) any other present or future agreement
purporting to convey to such Bank(s) a Lien upon any Property or assets of
Borrower, such Subsidiary, or such other Obligor, as the case may be;
9.12 The occurrence of any default or event of default under or within the
meaning of any agreement, document or instrument evidencing, securing,
guaranteeing the payment of or otherwise relating to any Indebtedness of
Borrower or any Subsidiary for borrowed money (other than the Borrower's
Obligations) having an aggregate outstanding principal balance in excess of One
Million Five Hundred Thousand Dollars ($1,500,000.00);
9.13 One or more judgments, decrees, arbitration awards or rulings
(including without limitation, rulings of the Board of Contract Appeals, the
General Accounting Office the Defense Contract Audit Agency or the appropriate
Contracting Office of the United States Navy) shall be entered against the
Borrower or any Subsidiary involving in the aggregate a liability (not paid or
fully covered by insurance) of $1,500,000.00 or more and all such judgments,
decrees, awards, and rulings shall not have been vacated, paid, discharged,
stayed or suspensively appealed within thirty days from the entry thereof;
9.14 Any of the following events shall occur with respect to any Pension
Plan (a) the institution by Borrower, any ERISA Affiliate or any Subsidiary of
steps to terminate any Pension Plan if, as a result of such termination,
Borrower, such ERISA Affiliate or such Subsidiary, as the case may be, could be
required to make a contribution to such Pension Plan, or could incur a liability
or obligation to such Pension Plan or any of its participants or beneficiaries,
in the aggregate in excess of Two Million Five Hundred Thousand Dollars
($2,500,000.00), (b) the institution by the PBGC of steps to terminate any
Pension Plan, or (c) a contribution failure occurs with respect to any Pension
Plan sufficient to give rise to a Lien under Section 302 (f) of ERISA;
9.15 At any time, Borrower and its Subsidiaries fail to have firm
shipbuilding contracts (excluding intercompany contracts (but including such
barge construction and related work to be subcontracted from Trinity under the
Separation and Related Agreements) and excluding unexercised options or rights
under contracts pursuant to which the other contracting party(s) may require
additional performance by the Borrower or any Subsidiary) with an aggregate
remaining value of at least $200,000,000.00, for at least forty-five (45)
consecutive days;
9.16 If (i) Borrower or any of its Subsidiaries is debarred or suspended
from contracting (as a first tier or any level of subcontractor) for, bidding
on, or entering into a
<PAGE>
Government Contract, or receives notice of a proposed suspension of or
disbarment from acquiring or performing a Government Contract, or (ii) if a
current or backlogged Government Contract is forfeited or terminated for the
default by Borrower or any Subsidiary, as the case may be; or
9.17 If Borrower or any Subsidiary is unable to obtain performance bonds to
secure new or proposed vessel construction contracts;
THEN, and in each such event (other than an event described in Sections
9.1, 9.2, 9.8 or 9.9), the Agent shall, if requested in writing by the Required
Banks, and may, in its sole and absolute discretion, upon the oral request of
the Required Banks, declare that the obligation of the Banks to make Loans under
this Agreement and to issue Letters of Credit under this Agreement have
terminated, whereupon such obligations of the Banks shall be immediately and
forthwith terminated, and the Agent shall, if requested in writing by the
Required Banks, and may, in its sole and absolute discretion, upon the oral
request of the Required Banks, declare the entire outstanding principal balance
of and all accrued and unpaid interest on the Notes and all of the other Loans
under this Agreement and all of the other Borrower's Obligations to be forthwith
due and payable, whereupon all of the unpaid principal balance of and all
accrued and unpaid interest on the Notes and all of the other Loans under this
Agreement and all such other Borrower's Obligations shall become and be
immediately due and payable, without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by Borrower, and
the Agent and each of the Banks may exercise any and all other rights and
remedies which they may have under any of the other Transaction Documents or
under applicable law; provided, however, that upon the occurrence of any event
described in Sections 9.1, 9.2, 9.8 or 9.9, the obligation of the Banks to make
Loans under this Agreement and to issue Letters of Credit under this Agreement
shall automatically terminate and the entire outstanding principal balance of
and all accrued and unpaid interest on the Notes and all of the other Loans
under this Agreement and all of the other Borrower's Obligations shall
automatically become immediately due and payable, without presentment, demand,
protest or further notice of any kind, all of which are hereby expressly waived
by Borrower, and the Agent and each of the Banks may exercise any and all other
rights and remedies which they may have under any of the other Transaction
Documents or under applicable law.
Agent, on behalf of the Banks, shall provide Trinity with written notice of
any Event of Default prior to declaring the Loans and all of the other
Borrower's Obligations to be forthwith due and payable as a result of such Event
of Default and notwithstanding any provision in this Agreement to the contrary,
Trinity shall have three (3) Business Days from the receipt of such notice to
cure any such Event of Default; provided that (i) the provisions of this
paragraph shall only apply so long as Trinity is the owner of at least 50% of
the outstanding shares of the common stock of Borrower, (ii) Banks shall not
have any obligation to make any Loans or to issue any Letters of Credit during
the period any Event of Default shall have occurred and is continuing, (iii)
unless Trinity cures such Event of Default during said cure period, upon the
expiration of said cure period, Agent and Banks shall have the right to exercise
any and all of their rights and remedies herein provided, including, without
limitation, the right to declare the entire outstanding
<PAGE>
principal balance of and all accrued and unpaid interest on the Notes and all of
the other Loans under this Agreement and all of the other Borrower's Obligations
to be forthwith due and payable, whereupon all of the unpaid principal balance
of and all accrued and unpaid interest on the Notes and all of the other Loans
under this Agreement and all such other Borrower's Obligations shall become and
be immediately due and payable, without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by Borrower, and
the Agent and each of the Banks may exercise any and all other rights and
remedies which they may have under any of the other Transaction Documents or
under applicable law.
SECTION 10. AGENT.
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10.1 Appointment. Whitney is hereby appointed by the Banks as Agent under
this Agreement, the Notes and the other Transaction Documents. The Agent agrees
to act as such upon the express conditions contained in this Agreement.
10.2 Powers. The Agent shall have and may exercise such powers hereunder
as are specifically delegated to the Agent by the terms of this Agreement and
the other Transaction Documents, together with such powers as are reasonably
incidental thereto. The Agent shall have no implied duties to the Banks, nor
any obligation to the Banks to take any action under this Agreement or any of
the other Transaction Documents, except any action specifically provided by this
Agreement or any of the other Transaction Documents to be taken by the Agent.
Without limiting the generality of the foregoing, the Agent shall not be
required to take any action with respect to any Default or Event of Default,
except as expressly provided in Section 9.
10.3 General Immunity. Neither the Agent nor any of its directors,
officers, employees, agents or advisors shall be liable to any of the Banks for
any action taken or not taken by it (i) with the consent or at the request of
the Required Banks or (ii) in the absence of its own gross negligence or willful
misconduct.
10.4 No Responsibility for Loans, Recitals, Etc. Neither the Agent nor any
of its directors, officers, employees, agents or advisors shall (i) be
responsible for or have any duty to ascertain, inquire into or verify any
recitals, reports, statements, representations, warranties or representations
contained in this Agreement or any of the other Transaction Documents or
furnished pursuant hereto or thereto; (ii) be responsible for any Loans or
Letters of Credit hereunder (except in Agent's capacity as a Bank hereunder with
respect to its Pro Rata Share thereof pursuant to the terms of this Agreement
and except for the Swing Loans), (iii) be bound to ascertain or inquire as to
the performance or observance of any of the terms of this Agreement or any of
the other Transaction Documents; (iv) be responsible for the satisfaction of any
condition specified in Section 6, except receipt of items required to be
delivered to the Agent; or (v) be responsible for the validity, effectiveness,
genuineness or enforceability of this Agreement or any of the other Transaction
Documents; or (vi) be responsible for the creation, attachment or perfection of
any security interests or liens purported to be granted to the Agent or any of
the Banks pursuant to this Agreement or any of the other Transaction Documents.
The Agent shall not incur any liability by acting in reliance upon any notice,
consent, certificate, statement
<PAGE>
or other writing (which may be a bank wire, telex, telecopy or similar writing)
believed by it to be genuine or to be signed by the proper party or parties.
10.5 Right to Indemnity. Notwithstanding any other provision contained in
this Agreement to the contrary, to the extent Borrower fails to reimburse the
Agent pursuant to Section 11.3, Section 11.4 or Section 11.5, or if any Default
or Event of Default shall occur under this Agreement, the Banks shall ratably in
accordance with their respective Pro Rata Shares of the aggregate amount of
Loans and Letters of Credit then outstanding, or if no Loans or Letters of
Credit are then outstanding, their respective Pro Rata Shares of the total
Commitments of all of the Banks, indemnify the Agent and hold it harmless from
and against any and all liabilities, losses (except losses occasioned solely by
failure of Borrower to make any payments or to perform any obligations required
by this Agreement (other than those described in Sections 11.3, 11.4 and 11.5),
the Notes, the Letter of Credit Applications or any of the other Transaction
Documents), costs and/or expenses, including, without limitation, any
liabilities, losses, costs and/or expenses arising from the failure of any Bank
to perform its obligations hereunder or in respect of this Agreement and also
including, without limitation, reasonable attorneys' fees and expenses, which
the Agent may incur, directly or indirectly, in connection with this Agreement,
the Notes or any of the other Transaction Documents, or any action or
transaction related hereto or thereto; provided only that the Agent shall not be
entitled to such indemnification for any losses, liabilities, costs and/or
expenses directly and solely resulting from its own gross negligence or willful
misconduct. This indemnity shall be a continuing indemnity, contemplates all
liabilities, losses, costs and expenses related to the execution, delivery and
performance of this Agreement, the Notes and the other Transaction Documents,
and shall survive the satisfaction and payment of the Loans, the expiration or
other termination of the Letters of Credit and the termination of this
Agreement.
10.6 Action Upon Instructions of Required Banks. The Agent agrees, upon
the written request of the Required Banks, to take any action of the type
specified in this Agreement or any of the other Transaction documents as being
within the Agent's rights, duties, powers or discretion. Notwithstanding the
foregoing, the Agent shall be fully justified in failing or refusing to take any
action hereunder, unless it shall first be indemnified to its satisfaction by
the Banks pro rata against any and all liabilities, losses, costs and expenses
(including, without limitation, attorneys' fees and expenses) which may be
incurred by it by reason of taking or continuing to take any such action, other
than any liability which may arise out of Agent's gross negligence or willful
misconduct. The Agent shall in all cases be fully protected in acting, or in
refraining from acting, hereunder in accordance with written instructions signed
by the Required Banks, and such instructions and any action taken or failure to
act pursuant thereto shall be binding on all of the Banks and on all holders of
the Notes. In the absence of a request by the Required Banks, the Agent shall
have authority, in its sole discretion, to take or not to take any action,
unless this Agreement or any of the other Transaction Documents specifically
requires the consent of the Required Banks or of all of the Banks.
10.7 Reliance on Documents; Employment of Agents and Counsel. The Agent
shall be entitled to rely upon any note, notice, consent, certificate,
affidavit, letter,
<PAGE>
telegram, statement, paper or document believed by it to be genuine and correct
and to have been signed or sent by the proper person or persons. The Agent may
execute any of its duties as Agent hereunder by or through employees, agents,
and attorneys-in-fact and shall not be answerable to the Banks for the default
or misconduct of any such agents or attorneys-in-fact selected by it in good
faith and with reasonable care, except as to money or securities received by it
or its authorized agents. The Agent shall be entitled to advice and opinion of
legal counsel concerning all legal matters and all matters pertaining to the
duties of the Agent.
10.8 May Treat Payee as Owner. The Agent may deem and treat the payee of
any Note as the owner thereof for all purposes hereof unless and until a written
notice of the assignment or transfer thereof shall have been filed with the
Agent pursuant to Section 11.15. Any request, authority or consent of any
person, firm or corporation who at the time of making such request or giving
such authority or consent is the holder of any such Note shall be conclusive and
binding on any subsequent holder, transferee or assignee of such Note or of any
Note issued in exchange therefor.
10.9 Agent's Reimbursement. Each Bank agrees to reimburse the Agent pro
rata in accordance with its Pro Rata Share for any out-of-pocket expenses not
reimbursed by Borrower (a) for which the Agent is entitled to reimbursement by
the Borrower under this Agreement or any of the other Transaction Documents and
(b) for any other out-of-pocket expenses incurred by the Agent on behalf of the
Banks, in connection with the preparation, execution, delivery, amendment,
modification, extension, renewal, administration and/or enforcement of this
Agreement and/or any of the other Transaction Documents.
10.10 Rights as a Bank. With respect to its commitment, the Loans made by
it and the Notes issued to it, the Agent shall have the same rights and powers
hereunder as any Bank and may exercise the same as though it were not the Agent,
and the terms "Bank" and "Banks" shall, unless the context otherwise indicates,
include the Agent in its individual capacity. The Agent may accept deposits
from, lend money to and generally engage in any kind of banking or trust
business with the Borrower as if it were not the Agent.
10.11 Independent Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon the Agent or any other Bank and based on
the financial statements referred to in Section 7.4 and such other documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement and the other Transaction Documents. Each
Bank also acknowledges that it will, independently and without reliance upon the
Agent or any other Bank and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement and the other Transaction
Documents.
10.12 Resignation of Agent. Subject to the appointment of a successor
Agent, the Agent may resign as Agent for the Banks under this Agreement and the
other Transaction Documents at any time by thirty (30) days notice in writing to
the Banks. Such
<PAGE>
resignation shall take effect upon appointment of such successor Agent. The
Required Banks shall have the right to appoint a successor Agent (and if no
Default or Event of Default then exists hereunder, such appointment shall be
with the consent of the Borrower, which consent shall not be unreasonably
withheld), and the successor Agent shall be entitled to all of the rights of,
and vested with the same powers as, the original Agent under this Agreement and
the other Transaction Documents. Resignation by the Agent shall not affect or
impair the rights of the Agent under Sections 10.5 and 10.9 hereof with respect
to all matters preceding such resignation. Any successor Agent must be a
national banking association or a bank chartered in any State of the United
States and having at least $200,000,000.00 in capital and surplus.
10.13 Removal of Agent. Subject to the appointment of a successor Agent,
the Banks (by a unanimous vote of all Banks other than the Bank then acting as
the Agent hereunder), may remove the Agent for the Banks under this Agreement
and the other Transaction Documents at any time by thirty (30) days' notice in
writing to the Agent. Such removal shall take effect upon appointment of such
successor Agent. The Required Banks shall have the right to appoint a successor
Agent who shall be entitled to all of the rights of, and vested with the same
powers as, the original Agent under this Agreement and the other Transaction
Documents. If no Default or Event of Default then exists hereunder, then the
decision to remove the Agent and the subsequent appointment of a successor Agent
shall both be made only with the consent of the Borrower (which consent will not
be unreasonably withheld). The removal of the Agent shall not affect or impair
the rights of the Agent under Sections 10.5 and 10.9 hereof with respect to all
matters preceding such removal. Any successor Agent must be a national banking
association or a bank chartered in any State of the United States and having at
least $200,000,000.00 in capital and surplus.
10.14 Duration of Agency. The agency established by Section 10.1 hereof
shall continue, and Sections 10.1 through and including this Section 10.14 shall
remain in full force and effect, until all of the Borrowers' Obligations shall
have been paid in full and the Banks' commitments to make Loans, issue Letters
of Credit and/or extend credit to or for the benefit of the Borrower shall have
terminated or expired.
SECTION 11. GENERAL.
- ---------------------
11.1 No Waiver. No failure or delay by the Agent or any of the Banks in
exercising any right, remedy, power or privilege hereunder or under any other
Transaction Document shall operate as a waiver thereof; nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The remedies provided
herein and in the other Transaction Documents are cumulative and not exclusive
of any remedies provided by law. Nothing herein contained shall in any way
affect the right of any of the Banks to exercise any statutory or common law
right of banker's lien or setoff.
11.2 Right of Setoff. Upon the occurrence and during the continuance of
any Event of Default, each of the Banks is hereby authorized at any time and
from time to time, without notice to Borrower (any such notice being expressly
waived by Borrower) and to the fullest extent permitted by law, to setoff and
apply any and all deposits
<PAGE>
(general or special, time or demand, provisional or final) at any time held by
such Bank(s) and any and all other indebtedness at any time owing by such
Bank(s) to or for the credit or account of Borrower against any and all of
Borrower's Obligations irrespective of whether or not such Bank(s) shall have
made any demand hereunder or under any of the other Transaction Documents and
although such obligations may be contingent or unmatured. Each of the Banks
agrees to promptly notify Borrower after any such setoff and application made by
such Bank(s), provided, however, that the failure to give such notice shall not
affect the validity of such setoff and application. The rights of the Banks
under this Section 11.2 are in addition to any other rights and remedies
(including, without limitation, other rights of setoff) which the Banks may
have. Nothing contained in this Agreement or any other Transaction Document
shall impair the right of any of the Banks to exercise any right of setoff or
counterclaim it may have against Borrower and to apply the amount subject to
such exercise to the payment of indebtedness of Borrower unrelated to this
Agreement or the other Transaction Documents.
11.3 Cost and Expenses. Borrower agrees, whether or not any Loan is made
hereunder or any Letter of Credit is issued hereunder, to pay the Agent upon
demand (i) all out-of-pocket costs and expenses and all reasonable attorneys'
fees of the Agent in connection with the preparation, documentation,
negotiation, execution, amendment, modification, extension and/or renewal of
this Agreement, the Notes, the Letter of Credit Application(s) and the other
Transaction Documents, (ii) all out-of-pocket costs and expenses and all
reasonable attorneys' fees of the Agent in connection with the preparation of
any waiver or consent hereunder or under any other Transaction Documents, (iii)
if an Event of Default occurs, all out-of-pocket costs and expenses and all
reasonable attorneys' fees incurred by the Agent and each of the Banks in
connection with such Event of Default and collection and other enforcement
proceedings resulting therefrom, (iv) all out-of-pocket costs and expenses and
all reasonable attorneys' fees incurred by the Agent in connection with the
enforcement of any rights and/or remedies of the Agent or any of the Banks to
collect any of the Borrower's Obligations, and (v) all other reasonable
attorneys' fees and out-of-pocket costs and expenses incurred by the Agent
relating to or arising out of or in connection with this Agreement or any of the
other Transaction Documents. Borrower further agrees to pay or reimburse the
Agent and each of the Banks for any stamp or other taxes which may be payable
with respect to the execution, delivery, recording and/or filing of this
Agreement, the Notes, the Letter of Credit Application(s) or any of the other
Transaction Documents. All of the obligations of Borrower under this Section
11.3 shall survive the satisfaction and payment of Borrower's Obligations and
the termination of this Agreement.
11.4 Environmental Indemnity. Borrower hereby agrees to indemnify the Agent
and each of the Banks and hold the Agent and each of the Banks and any holder(s)
of the Notes, and the officers, directors, employees, agents and affiliates of
the Agent, each of the Banks and such holder(s) (collectively, the
"Indemnitees") harmless from and against any and all losses, liabilities,
damages, injuries, costs, expenses and claims of any and every kind whatsoever
(including, without limitation, reasonable court costs and attorneys' fees and
expenses) which at any time or from time to time may be paid, incurred or
suffered by the Indemnitees, with respect to or as a direct or indirect result
of
<PAGE>
the violation by Borrower or any Subsidiary of any Environmental Laws; or with
respect to, or as a direct or indirect result of the presence on or under, or
the escape, seepage, leakage, spillage, discharge, emission or Release from,
properties owned or operated by Borrower and/or any Subsidiary of any Hazardous
Substances or any other hazardous or toxic waste, substance or constituent or
other substance (including, without limitation, any losses, liabilities,
damages, injuries, costs, expenses or claims asserted or arising under the
Environmental Laws); and the provisions of and undertakings and indemnification
set out in this Section 11.4 shall survive the satisfaction and payment of
Borrower's Obligations and the termination of this Agreement; provided that
Borrower shall have no obligation to an Indemnitee hereunder with respect to
indemnified liabilities arising from the gross negligence or willful misconduct
of that Indemnitee.
11.5 General Indemnity. In addition to the payment of expenses pursuant to
Section 11.3, whether or not the transactions contemplated hereby shall be
consummated, Borrower hereby agrees to indemnify, pay and hold Indemnitees
harmless from and against any and all other liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, claims, costs, expenses and
disbursements of any kind or nature whatsoever (including, without limitation,
the reasonable fees and disbursements of counsel for such Indemnitees in
connection with any investigative, administrative or judicial proceeding
commenced or threatened, whether or not such Indemnitees shall be designated a
party thereto), that may be imposed on, incurred by or asserted against the
Indemnitees, in any manner relating to or arising out of this Agreement, any of
the other Transaction Documents or any other agreement, document or instrument
executed and delivered by Borrower or any other Obligor in connection herewith
or therewith, the statements contained in any commitment letters delivered by
the Agent or any of the Banks, the agreement of any of the Banks to make the
Loans hereunder, the agreement of Banks to issue the Letters of Credit hereunder
or the use or intended use of the proceeds of any Loan hereunder (collectively,
the "Indemnified Liabilities"); provided that Borrower shall have no obligation
to an Indemnitee hereunder with respect to indemnified liabilities arising from
the gross negligence or willful misconduct of that Indemnitee. To the extent
that the undertaking to indemnify, pay and hold harmless set forth in the
preceding sentence may be unenforceable because it is violative of any law or
public policy, Borrower shall contribute the maximum portion that it is
permitted to pay and satisfy under applicable law to the payment and
satisfaction of all indemnified liabilities incurred by the Indemnitees or any
of them. The provisions of the undertakings and indemnification set out in this
Section 11.5 shall survive satisfaction and payment of Borrower's Obligations
and the termination of this Agreement. No provision contained in this Section
11.5 shall affect any rights the Borrower may have against any Bank which
defaults under this Agreement or is intended to indemnify any such Agent or Bank
which defaults under this Agreement (but only such Agent or Bank that defaults
under this Agreement) for any such Indemnified Liabilities arising from such
defaulting Bank's action.
11.6 Authority to Act. The Agent shall be entitled to act on any notices
and instructions (telephonic or written) believed by the Agent in good faith to
have been sent or delivered by any person identifying himself or herself as John
Dane III, John J. Siben II or Keith L. Voigts (or any other person from time to
time authorized to act on behalf of
<PAGE>
Borrower pursuant to a resolution adopted by the Board of Directors of Borrower
and certified by the Secretary of Borrower and delivered to the Agent),
regardless of whether such notice or instruction was in fact delivered by such
person, and Borrower hereby agrees to indemnify the Agent and hold the Agent
harmless from and against any and all losses and expenses, if any, ensuing from
any such action.
11.7 Notices. Any notice, request, demand, consent, confirmation or other
communication hereunder shall be in writing and delivered in person or sent by
telecopy or registered or certified mail, return receipt requested and postage
prepaid, to the applicable party at its address or telecopy number set forth on
the signature pages hereof, or at such other address or telecopy number as any
party hereto may designate as its address for communications hereunder by notice
so given. Such notices shall be deemed effective on the day on which delivered
or sent if delivered in person or sent by telecopy, or on the third (3rd)
Business Day after the day on which mailed, if sent by registered or certified
mail; provided, however, that notices to the Agent under Section 3 shall not be
effective until actually received by the Agent.
11.8 CONSENT TO JURISDICTION. BORROWER IRREVOCABLY SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF ANY LOUISIANA STATE COURT OR ANY UNITED STATES OF
AMERICA COURT SITTING IN THE EASTERN DISTRICT OF LOUISIANA, AS THE AGENT MAY
ELECT, IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT. BORROWER HEREBY IRREVOCABLY AGREES
THAT ALL CLAIMS IN RESPECT TO SUCH SUIT, ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN ANY OF SUCH COURTS. BORROWER IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH BORROWER MAY NOW OR HEREAFTER HAVE
TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY
SUCH COURT, AND BORROWER FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. BORROWER AUTHORIZES THE SERVICE OF PROCESS UPON BORROWER BY
REGISTERED MAIL SENT TO BORROWER AT ITS ADDRESS SET FORTH IN SECTION 11.7.
11.9 Sharing of Payments. The Banks agree among themselves that except as
otherwise expressly set forth herein, in the event that any of the Banks shall
directly or indirectly obtain any payment (whether voluntary, involuntary,
through the exercise of any right of setoff, banker's lien or counterclaim,
through the realization, collection, sale or liquidation of any collateral or
otherwise) on account of or in respect of any of the Loans or other Borrower's
Obligations in excess of its Pro Rata Share of all such payments, such Bank(s)
shall immediately purchase from the other Bank(s) participations in the Loans or
other Borrower's Obligations owed to such other Bank(s) in such amounts, and
make such other adjustments from time to time, as shall be equitable to the end
that the Banks share such payment ratably in accordance with their respective
Pro Rata Shares of the outstanding Loans and other Borrower's Obligations. The
Banks further agree among themselves that if any such excess payment to a Bank
shall be
<PAGE>
rescinded or must otherwise be restored, the other Bank(s) which shall have
shared the benefit of such payment shall, by repurchase of participation
theretofore sold, or otherwise, return its share of that benefit to the Bank
whose payment shall have been rescinded or otherwise restored. Borrower agrees,
to the fullest extent it may effectively do so under applicable law, that any
holder of a participation in any of the Borrower's Obligations, whether or not
acquired pursuant to the foregoing arrangements, may exercise rights of setoff,
banker's lien or counterclaim and other rights with respect to such
participation as fully as if such holder of a participation were a direct
creditor of Borrower in the amount of such participation. If under any
applicable bankruptcy, insolvency or other similar law any of the Banks receives
a secured claim in lieu of a setoff to which this Section 11.9 would apply, such
Bank(s) shall, to the extent practicable, exercise their rights in respect of
such secured claim in a manner consistent with the rights of the Bank(s)
entitled under this Section 11.9 to share in the benefits of any recovery of
such secured claim.
11.10 Governing Law. This Agreement, the Notes, the Letter of Credit
Application(s) and all of the other Transaction Documents shall be governed by
and construed in accordance with the internal laws of the State of Louisiana.
11.11 Amendments and Waivers. Any provision of this Agreement, the Notes,
the Letter of Credit Application(s) or any of the other Transaction Documents
may be amended or waived if, but only if, such amendment or waiver is in writing
and is signed by Borrower and the Required Banks (and, if the rights or duties
of the Agent in its capacity as Agent are affected thereby, by the Agent);
provided that no such amendment or waiver shall, unless signed by all of the
Banks, (i) increase the Commitment of any Bank, (ii) reduce the principal amount
of or rate of interest on any Loan or any fees hereunder, (iii) postpone the
date fixed for any payment of principal of or interest on any Loan or any fees
hereunder, (iv) change the Pro Rata Share of the Commitments or of the aggregate
principal amount of Loans or Letters of Credit of any Bank, (v) release any
collateral for Borrower's Obligations, or (vi) change the number of Banks which
shall be required for the Banks or any of them to take any action or obligations
under this Section or any other provision of this Agreement including this
Section 11.11.
11.12 References: Headings for Convenience. Unless otherwise specified
herein, all references herein to Section numbers refer to Section numbers of
this Agreement, all references herein to Exhibits A, B, C, D, E, F. G and H
refer to annexed Exhibits A, B, C, D, E, F, G and H which are hereby
incorporated herein by reference and all references herein to Schedules 2.1(a),
7.8, 7.10, 7.11, 7.12, 7.16, and 7.17 refer to annexed Schedules 2.1(a), 7.8,
7.10, 7.11, 7.12, 7.16, and 7.17 which are hereby incorporated herein by
reference. The Section headings are furnished for the convenience of the
parties and are not to be considered in the construction or interpretation of
this Agreement.
11.13 Subsidiary or Property Reference. Each covenant, representation and
warranty which is stated to be applicable to any Subsidiary or any Property of
Borrower or any Subsidiary shall be construed to apply to any Subsidiary or any
Property which Borrower or any Subsidiary acquired pursuant to the Consolidation
Transactions.
<PAGE>
11.14 Successors and Assigns, Participations.
(a) The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns,
except that Borrower may not assign or otherwise transfer any of its rights or
delegate any of its obligations under this Agreement. Any Bank may sell
participations in its Notes and its rights under this Agreement in whole or in
part to any commercial bank organized under the laws of the United States or any
state thereof that is a member of both the Federal Deposit Insurance Corporation
and the Federal Reserve System without the consent of Borrower or the Agent so
long as each agreement pursuant to which any such participation is granted
provides that no such participant shall have any rights under this Agreement or
any other Transaction Document (the participants' rights against the Bank
granting its participation to be those set forth in the Participation Agreement
between the participant and such Bank), and such selling Bank shall retain the
sole right to approve or disapprove any amendment, modification or waiver of any
provision of this Agreement or any of the other Transaction Documents. Each
such participant shall be entitled to the benefits of the yield protection
provisions hereof to the extent such Bank would have been so entitled had no
such participation been sold.
(b) Any Bank which, in accordance with Section 11.14(a), grants a
participation in any of its rights under this Agreement or its Notes shall give
prompt notice thereof to the Agent and Borrower.
(c) Unless otherwise agreed to by Borrower in writing, no Bank shall, as
between Borrower and that Bank, be relieved of any of its obligations under this
Agreement as a result of such Bank's granting of a participation in all or any
part of such Bank's Notes or all or any part of such Bank's rights under this
Agreement.
11.15 Assignment Agreements. Each Bank may, from time to time, with the
consent of the Borrower and Agent (which will not in any instance be
unreasonably withheld), sell or assign a pro rata part of all of the
indebtedness evidenced by the Notes then owed by it together with an equivalent
proportion of its obligation to make Loans hereunder and the credit risk
incidental to the Letters of Credit pursuant to an Assignment Agreement
substantially in the form of Exhibit H attached hereto, executed by the
assignor, the assignee and the Borrower, which agreements shall specify in each
instance the portion of the indebtedness evidenced by the Notes which is to be
assigned to each such assignee and the portion of the Commitments of the
assignor and the credit risk incidental to the Letters of Credit (which portions
shall be equivalent) to be assumed by it (the "Assignment Agreements"), provided
that the Borrower may in its sole discretion withhold its consent to any
assignment by a Bank of less than all of its Commitments if as a result thereof
the assignor will have Commitments hereunder of less than one half of its
assigned Commitments or the assignee will have Commitments hereunder of less
than $3,500,000.00 or, after giving effect thereto, there would be more than 10
Banks, further provided that nothing herein contained shall restrict, or be
deemed to require any consent as a condition to, or require payment of any fee
in connection with, any sale, discount or pledge by any Bank of any Note or
other obligation hereunder to a Federal reserve bank. Upon the execution of each
Assignment Agreement by the assignor, the assignee and the
<PAGE>
Borrower and consent thereto by the Agent (i) such assignee shall thereupon
become a "Bank" for all purposes of this Agreement with a Commitment in the
amount set forth in such Assignment Agreement and with all the rights, powers
and obligations afforded a Bank hereunder, (ii) the assignor shall have no
further liability for funding the portion of its Commitments assumed by such
other Bank and (iii) the address for notices to such Bank shall be as specified
in the Assignment Agreement, and the Borrower shall execute and deliver Notes to
the assignee Bank in the amount of its Commitments and new Notes to the assignor
Bank in the amount of its Commitments after giving effect to the reduction
occasioned by such assignment, all such Notes to constitute "Notes" for all
purposes of this Agreement, and there shall be paid to the Agent, as a condition
to such assignment, an administration fee of $2,500 plus any out-of-pocket costs
and expenses incurred by it in effecting such assignment, such fee to be paid by
the assignor or the assignee as they may mutually agree, but under no
circumstances shall any portion of such fee be payable by or charged to the
Borrower.
11.16 Binding Agreement. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns;
provided, however, that Borrower may not assign or delegate any of its rights or
obligations under this Agreement.
11.17 NO ORAL AGREEMENTS, ENTIRE AGREEMENT. ORAL AGREEMENTS OR COMMITMENTS
TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT,
INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT, ARE NOT ENFORCEABLE. TO
PROTECT BORROWER, THE AGENT AND THE BANKS FROM MISUNDERSTANDING OR
DISAPPOINTMENT, ANY AGREEMENT REACHED BY BORROWER, THE AGENT AND THE BANKS
COVERING SUCH MATTERS ARE CONTAINED IN THIS AGREEMENT AND THE OTHER TRANSACTION
DOCUMENTS, WHICH AGREEMENT AND OTHER TRANSACTION DOCUMENTS ARE A COMPLETE AND
EXCLUSIVE STATEMENT OF THE AGREEMENT AMONG BORROWER, THE AGENT AND THE BANKS,
EXCEPT AS BORROWER, THE AGENT AND THE BANKS MAY LATER AGREE IN WRITING TO MODIFY
THEM. THIS AGREEMENT EMBODIES THE ENTIRE AGREEMENT AND UNDERSTANDING BETWEEN THE
PARTIES HERETO AND SUPERSEDES ALL PRIOR AGREEMENTS AND UNDERSTANDINGS (ORAL OR
WRITTEN) RELATING TO THE SUBJECT MATTER HEREOF.
11.18 Severability. In the event any one or more of the provisions
contained in this Agreement should be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby.
11.19 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
<PAGE>
11.20 Resurrection of Borrower's Obligations. To the extent that any of
the Banks receives any payment on account of any of Borrower's Obligations, and
any such payment(s) or any part thereof are subsequently invalidated, declared
to be fraudulent or preferential, set aside, subordinated and/or required to be
repaid to a trustee, receiver or any other Person under any bankruptcy act,
state or federal law, common law or equitable cause, then, to the extent of such
payment(s) received, Borrower's Obligations or part thereof intended to be
satisfied and any and all Liens upon or pertaining to any Property or assets of
Borrower and theretofore created and/or existing in favor of such Bank(s) as
security for the payment of such Borrower's Obligations shall be revived and
continue in full force and effect, as if such payment(s) had not been received
by such Bank(s) and applied on account of Borrower's Obligations.
11.21 Independence of Covenants. All of the covenants contained in this
Agreement and the other Transaction Documents shall be given independent effect
so that if a particular action, event or condition is prohibited by any one of
such covenants, the fact that it would be permitted by an exception to, or
otherwise be in compliance within the provisions of, another covenant shall not
avoid the occurrence of a Default or Event of Default if such action is taken,
such event occurs or such condition exists.
11.22 Confidentiality. The Agent and each of the Banks shall keep
confidential any information delivered, made available or otherwise conveyed by
the Borrower, any of its Subsidiaries or Trinity in connection with this
Agreement and the transactions contemplated hereby; provided that, the
provisions of this Section 11.22 shall not be construed to prohibit Agent or
any Bank from disclosing any information to (i) Agent or any Bank (or any
attorneys, agents or consultants of Agent or any Bank), (ii) any participant or
assignee or prospective participant or assignee of any Bank (so long as such
participant or assignee or prospective participant or assignee agrees to be
bound by the provisions of this Section 11.22), or (iii) any Person as required
by law, regulation or court order.
11.23 Certain Indemnification Procedures. Notwithstanding any provision to
the contrary contained in this Agreement, in the event Borrower is obligated to
defend the Agent or any of the Banks under the terms of this Agreement, Borrower
shall be entitled, at is option, to assume the defense of such action on behalf
of such indemnified party or parties with counsel which is selected by Borrower
and reasonably acceptable to such indemnified parties. In no event shall
Borrower: (i) be required to employ more than one (1) firm of attorneys in
defense of any matter where Borrower is required to defend the Agent or any of
the Banks, but nothing contained herein shall prevent Borrower from employing
multiple firms of attorneys, at its option; or (ii) be liable for any legal fees
and expenses in excess of the reasonable fees and expenses of the one (1) firm
of attorneys whether or not selected by Borrower pursuant to clause (i) of this
Section 11.23 and the fees and expenses of any additional firms employed by
Borrower pursuant to said clause (i) (provided that Borrower shall not have the
right to challenge the reasonableness of the fees of any firm of attorneys
selected by Borrower).
<PAGE>
11.24. Conflicting Provisions. In the event any of the terms and
provisions of this Agreement conflict with any terms and provisions contained in
any other Transaction Document, the terms and provisions of this Agreement shall
govern.
TO END OF PAGE INTENTIONALLY LEFT BLANK
<PAGE>
IN WITNESS WHEREOF, Borrower, the Agent and the Banks have executed this
Amended and Restated Revolving Credit Agreement effective as of the 31st day of
December, 1996.
HALTER MARINE GROUP, INC.
BY: _________________________
ITS: _________________________
13085 Seaway Road
Gulfport, MS 39503
Telecopy number: (601) 897-4888
Revolving Credit Commitment: WHITNEY NATIONAL BANK
$35,000,000.00
BY: _________________________
ITS: _________________________
228 St. Charles Avenue
New Orleans, LA 70130
Telecopy number: (504) 552-4622
Revolving Credit Commitment: FIRST NATIONAL BANK OF
$10,000,000.00 COMMERCE
BY: _________________________
ITS: _________________________
Energy Services Dept., 2nd Fl.
210 Baronne Street
New Orleans, LA 70112
Telecopy number: (504) 561-1316
Revolving Credit Commitment: HIBERNIA NATIONAL BANK
$20,000,000.00
BY: _________________________
ITS: _________________________
313 Carondelet Street
New Orleans, LA 70130
Telecopy number: (504) 533-5434
<PAGE>
Revolving Credit Commitment: NBD BANK
$15,000,000.00
BY: _________________________
ITS: _________________________
Corporate Credit, 2nd Fl.
611 Woodward Avenue
Detroit, MI 48226
Telecopy number: (313) 225-2649
Revolving Credit Commitment: THE BANK OF NOVA SCOTIA
$15,000,000.00
BY: _________________________
ITS: _________________________
600 Peachtree Street NE
Suite 2700
Atlanta, GA 30308
Telecopy number: (404) 888-8998
Revolving Credit Commitment: BANK ONE, LOUISIANA, N.A.
$15,000,000.00
BY: _________________________
ITS: _________________________
201 St. Charles Avenue
Suite 1410
New Orleans, LA 70170
Telecopy number:
Revolving Credit Commitment: THE BANK OF TOKYO -
$15,000,000.00 MITSUBISHI, LTD.
BY: _________________________
ITS: _________________________
2001 Ross Avenue, LB118
3150 Trammel Crow Center
Dallas, TX 75201
Telecopy number: (214) 954-1007
<PAGE>
Revolving Credit Commitment: THE SUMITOMO BANK LIMITED
$10,000,000.00
BY: _________________________
ITS: _________________________
BY: _________________________
ITS: _________________________
909 Fannin, Suite 3750
Houston, TX 77010
Telecopy number: (713) 759-1419
<PAGE>
EXHIBIT 10.35
CONSENT OF BANKS AND FIRST AMENDMENT TO AMENDED AND
RESTATED REVOLVING CREDIT AGREEMENT
This Consent of Banks and First Amendment to Amended and Restated Revolving
Credit Agreement, is effective the 4th day of April, 1997, and is made and
entered into by and among HALTER MARINE GROUP, INC., a Delaware corporation
("Borrower") and the undersigned Banks, including Whitney National Bank in its
capacity as a Bank and as Agent for the Banks under the Amended and Restated
Revolving Credit Agreement (which is hereinafter described).
WHEREAS, the parties hereto entered into an Amended and Restated Revolving
Credit Agreement, effective December 31, 1996 (the "Revolving Credit
Agreement");
WHEREAS, the parties hereto desire to amend the Revolving Credit Agreement;
WHEREAS, Borrower has requested the Banks to consent to Borrower obtaining
a Loan for the acquisition of an interest in additional Subsidiaries and the
Banks are willing to consent thereto subject to the provisions hereof; and
WHEREAS, Borrower intends to approach the Banks in the future about the
incurrence of a Loan or other Indebtedness in order to purchase the balance of
the outstanding capital stock of such Subsidiaries but Borrower recognizes that
further consents of the Required Banks are required in order for Borrower to
incur any such Loan or other Indebtedness and/or to purchase such additional
stock.
NOW THEREFORE, for good and adequate consideration the receipt of which is
hereby acknowledged, the parties hereto do hereby agree as follows:
1. As used herein, capitalized terms not defined herein shall have the
meanings attributed to them in the Revolving Credit Agreement.
2. The Banks do hereby consent to the purchase by Halter Marine, Inc.
("Halter-Nevada"), a Nevada Corporation and wholly owned Subsidiary of Borrower,
and consent to the use of Nineteen Million Three Hundred Seventy-Two Thousand
Five Hundred Dollars ($19,372,500.00) in Loan proceeds (the "$19,372,500.00
Loan") obtained by Borrower for the purchase of (a) Fifty-One Thousand (51,000)
shares of capital stock of Maritime Holdings, Inc.("MHI"), a Delaware
Corporation, for the price and sum of Fifteen Million Four Hundred Ninety-Eight
Thousand Dollars ($15,498,000.00) and (b) One Hundred Two (102) shares of the
capital stock of Texas Drydock, Inc. ("TDI"), a Texas Corporation, for the price
and sum of Three Million Eight Hundred Seventy-Four Thousand Five Hundred
Dollars ($3,874,500.00) (collectively, the "MHI and Texas Drydock Acquisition").
3. The consent of the Banks to the MHI and Texas Drydock Acquisition is
subject to Borrower paying and Borrower agrees to pay, within three (3) months
after the effective date of this Consent of Banks and First Amendment to Amended
and Restated Revolving Credit Agreement, the $19,372,500.00 Loan incurred for
the MHI and Texas Drydock Acquisition through the incurrence of a future Loan or
other Indebtedness (in each case, in accordance with the terms of the Revolving
Credit Agreement). Borrower acknowledges and agrees that the further consent of
the Required Banks is required in order for Borrower to incur any such future
<PAGE>
Loan or other Indebtedness described in this Paragraph 3 which consent shall not
be unreasonably withheld.
4. The parties hereto do hereby amend and restate the definition of
"Company Business" in the Revolving Credit Agreement to read as follows:
Company Business shall mean (i) the construction, repair and conversion of
ocean-going and inland vessels, (ii) the construction, repair and
conversion of drilling rigs, barges and vessels, (iii) the production of
any component of or accessory to any such ocean-going or inland vessel or
drilling rig, barge or vessel, (iv) any other similar type of production,
construction or manufacturing, (v) any financing related to the sale of any
of the Borrower's or any Subsidiary's products, and (vi) any other
activities ancillary to the foregoing.
5. The parties hereto do hereby amend and restate the definition of
"Subsidiary" in the Revolving Credit Agreement to read as follows:
Subsidiary shall mean (a) any corporation of which more than fifty percent
(50%) of the issued and outstanding capital stock entitled to vote for the
election of directors (other than by reason of default in the payment of
dividends) is at the time owned directly or indirectly by Borrower and/or
any one or more Subsidiary of Borrower, or (b) any partnership, limited
liability company, business trust, or any other similar entity of which
more than fifty percent (50%) of the voting interests is at the time owned
directly or indirectly by Borrower and/or any one or more Subsidiary of
Borrower, and specifically including, but not limited to, each of the
entities described on Schedule 7.8 hereto.
6. The parties hereto do hereby amend and restate Section 7.8 of the
Revolving Credit Agreement to read as follows:
7.8 Subsidiaries. There are no Subsidiaries other than as identified on
Schedule 7.8 attached hereto, as the same may from time to time be amended,
modified or supplemented as provided herein. The capital stock of each
Subsidiary is duly authorized, validly issued and fully paid and
nonassessable and, except for Maritime Holdings, Inc. and Texas Drydock,
Inc., is owned solely by Borrower and/or any one or more Subsidiaries.
Except as disclosed on Schedule 7.8 attached hereto, neither Borrower nor
any of its Subsidiaries, individually or collectively, owns or holds,
directly or indirectly, any capital stock or equity security of, or any
equity interest in, any corporation or business. Borrower may at any time
amend, modify or supplement Schedule 7.8 by notifying the Agent in writing
of any changes thereto, including any formation, acquisition, merger or
liquidation of Subsidiaries or any change in the capitalization of any
Subsidiary, in each case, in accordance with the terms of this Agreement
and provided that any such new Subsidiary shall, within thirty (30) days of
the creation or acquisition of such Subsidiary, execute and deliver to
Agent for the benefit of all the Banks a Continuing Guarantee in form of
Exhibit C annexed hereto and made a part hereof.
7. Notwithstanding Sections 7.8 and 8.1(p) of the Revolving Credit
Agreement and the definition of "Continuing Guarantee" in the Revolving Credit
Agreement, MHI, TDI, and
2
<PAGE>
TDI International, Ltd. ("TDI International"), a Cayman Islands corporation,
shall not be required to execute a Continuing Guarantee unless and until MHI or
TDI become wholly owned Subsidiaries of Borrower and/or any one or more
Subsidiaries.
8. Advances or loans from Borrower and/or any one or more Subsidiaries to
MHI, TDI and/or TDI International shall not be considered a Restricted
Investment so long as (a) such advances and loans are represented by a
promissory note, (b) such advances and loans do not in the aggregate at any one
time exceed the MHI Borrowing Base and (c) the advances and loans to TDI
International do not in the aggregate at any one time exceed Five Million
Dollars ($5,000,000.00). The "MHI Borrowing Base" shall mean the sum of Thirty
Million Dollars ($30,000,000.00) less the sum of (a) the aggregate amount of all
loans and advances outstanding from Borrower and/or any one or more Subsidiaries
to MHI, TDI and/or TDI International (including principal, interest and any
fees) plus (b) the aggregate principal amount of all outstanding Letter of
Credit Loans arising out of Letter(s) of Credit securing or guaranteeing
obligations of or performance by MHI, TDI and/or TDI International plus (c) the
aggregate undrawn face amount of all outstanding Letter(s) of Credit securing or
guaranteeing obligations of or performance by MHI, TDI and/or TDI International.
9. The parties hereto do hereby amend Section 4.1(a) of the Revolving
Credit Agreement to add the following additional restrictions regarding the
issuance of Letters of Credit:
(viii) the sum of (A) the aggregate undrawn face amount of all outstanding
Letter(s) of Credit securing or guaranteeing obligations of or
performance by MHI, TDI and/or TDI International plus (B) the
aggregate principal amount of all outstanding Letter of Credit
Loans arising out of Letter(s) of Credit securing or guaranteeing
obligations of or performance by MHI, TDI and/or TDI International
shall not at any one time exceed the sum of Thirty Million Dollars
($30,000,000.00); and
(ix) the sum of (A) the aggregate undrawn face amount of all outstanding
Letter(s) of Credit securing or guaranteeing obligations of or
performance by TDI International plus (B) the aggregate principal
amount of all outstanding Letter of Credit Loans arising out of
Letter(s) of Credit securing or guaranteeing obligations of or
performance by TDI International shall not at any one time exceed
the sum of Five Million Dollars ($5,000,000.00).
10. The parties hereto do hereby amend and restate Section 4.1(a)(vii) of
the Revolving Credit Agreement to read as follows:
(vii) the sum of (A) the aggregate undrawn face amount of all outstanding
Letter(s) of Credit securing or guaranteeing obligations of or
performance by Offshore plus (B) the aggregate principal amount of
all outstanding Letter of Credit Loans arising out of Letter(s) of
Credit securing or guaranteeing obligations of or performance by
Offshore shall not at any one time exceed the Offshore Commitment.
3
<PAGE>
11. Within ten (10) of the effective date hereof Borrower shall furnish
Agent with the following:
(a) A Stock Pledge Agreement (the "Stock Pledge Agreement") by Halter-
Nevada whereby Halter-Nevada grants Agent for the benefit of the Banks
a first pledge and security interest in the stock of MHI and TDI owned
by Halter-Nevada, which Stock Pledge Agreement shall be in such form
as Agent may reasonably require;
(b) Such resolutions and certificates of Halter-Nevada and its officers
and such opinions of McGlinchey Stafford, a Professional Limited
Liability Company, or other counsel acceptable to Agent, relating to
the execution, delivery and performance by Halter-Nevada of the Stock
Pledge Agreement and the perfection and priority of the security
interest created thereby as may be required by Agent and satisfactory
in form and substance to the Agent;
(c) Such resolutions and certificates of Borrower and its officers
relating to the execution, delivery and performance by Borrower of
this Consent of Banks and First Amendment to Amended and Restated
Revolving Credit Agreement as may be required by Agent and
satisfactory in form and substance to the Agent; and
(d) An agreement by the Subsidiaries which executed Continuing Guarantees
in such form as Agent may require consenting to the execution of this
Consent of Banks and First Amendment to Amended and Restated Revolving
Credit Agreement together with such resolutions and certificates of
such Subsidiaries and its officers relating thereto as may be required
by Agent and satisfactory in form and substance to the Agent.
12. An amended and restated Schedule 7.8 to the Revolving Credit Agreement
is annexed hereto.
13. An amended and restated Schedule 7.12 to the Revolving Credit
Agreement is annexed hereto.
14. In connection with the foregoing and only in connection with the
foregoing, the Revolving Credit Agreement is hereby amended, but in all other
respects all of the terms, conditions and provisions of the Revolving Credit
Agreement remain unaffected.
15. This Consent of Banks and First Amendment to Amended and Restated
Revolving Credit Agreement may be executed in two or more counterparts, and it
shall not be necessary that the signatures of all parties hereto be contained on
any one counterpart hereof; each counterpart shall be deemed an original, but
all of which together shall constitute one and the same instrument.
TO THE END OF PAGE INTENTIONALLY LEFT BLANK
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be duly
executed.
HALTER MARINE GROUP, INC.
BY: /s/ KEITH L. VOIGTS
_______________________________
ITS: Senior Vice President - Finance
_______________________________
13085 Seaway Road
Gulfport, MS 39503
Telecopy number: (601) 897-4888
WHITNEY NATIONAL BANK
BY: /s/ SIGNATURE APPEARS HERE
_______________________________
ITS: Assistant Vice President
_______________________________
228 St. Charles Avenue
New Orleans, LA 70130
Telecopy number: (504) 552-4622
FIRST NATIONAL BANK OF COMMERCE
BY: /s/ JOHN C. CUMMING
_______________________________
ITS: Assistant Vice President
_______________________________
Energy Services Dept., 2nd Fl.
210 Baronne Street
New Orleans, LA 70112
Telecopy number: (504) 561-1316
HIBERNIA NATIONAL BANK
BY: /s/ SIGNATURE APPEARS HERE
_______________________________
ITS: Vice President
_______________________________
313 Carondelet Street
New Orleans, LA 70130
Telecopy number: (504) 533-5434
THE FIRST NATIONAL BANK OF CHICAGO
BY: /s/ CORY M. OLSON
_______________________________
ITS: Vice President
_______________________________
One First National Plaza
Suite 0324
10th Floor
Chicago, IL 60670
Telecopy number: (312) 732-3055
THE BANK OF NOVA SCOTIA
BY: /s/ V. C. H. ASHBY
_______________________________
ITS: Senior Manager Loan Operations
_______________________________
600 Peachtree Street NE
Suite 2700
Atlanta, GA 30308
Telecopy number: (404) 888-8998
BANK ONE, LOUISIANA, N.A.
BY: /s/ LYNN RICHARD
_______________________________
ITS: Vice President
_______________________________
201 St. Charles Avenue
Suite 1410
New Orleans, LA 70170
Telecopy number: (504) 558-1279
THE BANK OF TOKYO--MITSUBISHI, LTD.
BY: _________________________
ITS: _________________________
2001 Ross Avenue, LB118
3150 Trammel Crow Center
Dallas, TX 75201
Telecopy number: (214) 954-1007
5
<PAGE>
Schedule 7.8
List of Subsidiaries
1. Halter Marine, Inc. (a Nevada corporation)
2. Equitable Shipyards, Inc.
3. Gretna Machine and Iron Works, Inc.
4. Gulf Coast Fabrication, Inc.
5. Halter Marine, Inc. (a Louisiana corporation)
6. Halter Marine Services, Inc.
7. Halter Marine Gulf Repair, Inc.
8. Halter Marine Gulfport, Inc.
9. Halter Marine Panama City, Inc.
10. Halter Marine Pascagoula, Inc.
11. Trinity Yachts, Inc.
12. Washington Marine Fabricators, Inc.
13. Offshore Marine Indemnity Company
14. Maritime Holdings, Inc.
15. Texas Drydock, Inc.
16. TDI International, Ltd.
6
<PAGE>
EXHIBIT 10.36
AMENDED AND RESTATED CONSENT OF BANKS AND FIRST AMENDMENT
TO AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
This Amended and Restated Consent of Banks and First Amendment to
Amended and Restated Revolving Credit Agreement is entered into on this 15th day
of May, 1997, effective the 4th day of April, 1997, and is made and entered into
by and among HALTER MARINE GROUP, INC., a Delaware corporation ("Borrower") and
the undersigned Banks, including Whitney National Bank in its capacity as a Bank
and as Agent for the Banks under the Amended and Restated Revolving Credit
Agreement (which is hereinafter described) and constitutes an amendment and
restatement of the Consent of Banks and First Amendment to Amended and Restated
Revolving Credit Agreement, effective April 4, 1997.
WHEREAS, the parties hereto entered into an Amended and Restated
Revolving Credit Agreement, effective December 31, 1996 (the "Revolving Credit
Agreement");
WHEREAS, Borrower has requested the Banks to consent to one of its
Subsidiaries purchasing additional Subsidiaries and to the incurrence of
Indebtedness in connection therewith.
NOW THEREFORE, for good and adequate consideration the receipt of which
is hereby acknowledged, the parties hereto do hereby agree as follows:
1. As used herein, capitalized terms not defined herein shall have the
meanings attributed to them in the Revolving Credit Agreement.
2. The Banks do hereby consent to the purchase by Halter Marine, Inc.
("Halter-Nevada"), a Nevada Corporation and wholly owned Subsidiary of Borrower,
and consent to the use of Nineteen Million Three Hundred Seventy-Two Thousand
Five Hundred Dollars ($19,372,500.00) in Loan proceeds (the "$19,372,500.00
Loan") obtained by Borrower for the purchase of (a) Fifty-ONe Thousand (51,000)
shares of capital stock of Maritime Holdings, Inc. ("MHI"), a Delaware
Corporation, for the price and sum of Fifteen Million Four Hundred Ninety-Eight
Thousand Dollars ($15,498,000.00) and (b) One Hundred Two (102) shares of the
capital stock of TExas Drydock, Inc. ("TDI"), a Texas Corporation, for the price
and sum of Three Million Eight Hundred Seventy-Four Thousand Five Hundred
Dollars ($3,874,500.00) (collectively, the "MHI and TExas Drydock Acquisition").
3. The consent of the Banks to the MHI and Texas Drydock Acquisition is
subject to Borrower paying and Borrower agrees to pay, within six (6) months
after the effective date of this Amended and Restated Consent of Banks and First
Amendment to Amended and Restated Revolving Credit Agreement, the $19,372,500.00
Loan incurred for the MHI and Texas Drydock Acquisition through the incurrence
of a future Loan or other Indebtedness (in each case, in accordance with the
terms of the Revolving Credit Agreement). Borrower acknowledges and agrees that
the further consent of the Required Banks is required in order for Borrower to
incur any such future Loan or other Indebtedness described in this Paragraph 3
which consent shall not be unreasonably withheld.
4. The Banks do hereby further consent to the purchase by Halter-Nevada
of Forty-Nine Thousand (49,000) shares of capital stock of MHI and Ninety-Eight
(98) shares of capital stock of TDI, for the total price and sum of Twenty-Seven
Million Dollars ($27,000,000.00). The Banks do hereby further consent to
Halter-Nevada incurring Indebtedness in favor of the
<PAGE>
sellers (including the note payable to the escrow agent) of such shares of MHI
and TDI set forth in this paragraph 4 in the amount of Twenty-Seven Million
Dollars ($27,000,000.00) bearing interest at the rate of seven and one-tenth (7
1/10%) percent per annum and due and payable on January 15, 1998 (such
Indebtedness, as it may be amended, renewed, replaced or refinanced, other than
through a Loan, shall be referred to as the "Seller Indebtedness"). Borrower
represents and warrants that after the purchases of MHI and TDI stock set forth
in paragraphs 2 and 4 hereof, Halter-Nevada will be the holder and owner of all
of the issued and outstanding stock of MHI and TDI. Borrower acknowledges and
agrees that the further consent of the Required Banks is required in order for
Borrower to incur any future Loan or other Indebtedness to pay off the Seller
Indebtedness which consent shall not be unreasonably withheld.
5. The parties hereto do hereby amend and restate the definition of
"Company Business" in the Revolving Credit Agreement to read as follows:
Company Business shall mean (i) the construction, repair and conversion
of ocean-going and inland vessels, (ii) the construction, repair and
conversion of drilling rigs, barges and vessels, (iii) the production of
any component of or accessory to any such ocean-going or inland vessel
or drilling rig, barge or vessel, (iv) any other similar type of
production, construction or manufacturing, (v) any financing related to
the sale of any of the Borrower's or any Subsidiary's products, and (vi)
any other activities ancillary to the foregoing.
6. The parties hereto do hereby amend and restate the definition of
"Subsidiary" in the Revolving Credit Agreement to read as follows:
Subsidiary shall mean (a) any corporation of which more than fifty
percent (50%) of the issued and outstanding capital stock entitled to
vote for the election of directors (other than by reason of default in
the payment of dividends) is at the time owned directly or indirectly by
Borrower and/or any one or more Subsidiary of Borrower, or (b) any
partnership, limited liability company, business trust, or any other
similar entity of which more than fifty percent (50%) of the voting
interests is at the time owned directly or indirectly by Borrower and/or
any one or more Subsidiary of Borrower, and specifically including, but
not limited to, each of the entities described on Schedule 7.8 hereto.
7. The parties hereto do hereby amend and restate Section 7.8 of the
Revolving Credit Agreement to read as follows:
7.8 Subsidiaries. There are no Subsidiaries other than as identified on
Schedule 7.8 attached hereto, as the same may from time to time be
amended, modified or supplemented as provided herein. The capital stock
of each Subsidiary is duly authorized, validly issued and fully paid and
nonassessable and is owned solely by Borrower and/or any one or more
Subsidiaries. Except as disclosed on Schedule 7.8 attached hereto and
TDI International, Ltd.'s interest in TDI Nass International, W.L.L.,
neither Borrower nor any of its Subsidiaries, individually or
collectively, owns or holds, directly or indirectly, any capital stock
or equity security of, or any equity interest in, any corporation or
business. Borrower may at any time amend, modify or supplement Schedule
7.8 by notifying the Agent in writing of any changes thereto, including
any formation, acquisition, merger or liquidation of Subsidiaries or any
change in the
2
<PAGE>
capitalization of any Subsidiary, in each case, in accordance with the
terms of this Agreement and provided that any such new Subsidiary shall,
within thirty (30) days of the creation or acquisition of such
Subsidiary, execute and deliver to Agent for the benefit of all the
Banks a Continuing Guarantee in form of Exhibit C annexed hereto and
made a part hereof.
8. Borrower represents and warrants that TDI International, Ltd. owns
Forty-Nine (49%) percent of TDI Nass International, W.L.L., a limited liability
company organized under the laws of Bahrain. Investments by Borrower and/or any
one or more Subsidiaries in TDI Nass International, W.L.L. shall not be
considered Restricted Investments so long as the amount of such Investments in
TDI Nass International, W.W.L. made after the effective date hereof does not in
the aggregate exceed Five Million Dollars ($5,000,000.00).
9. The parties hereto do hereby amend and restate Section 4.1(a)(vii)
of the Revolving Credit Agreement to read as follows:
(vii) the sum of (A) the aggregate undrawn face amount of all
outstanding Letter(s) of Credit securing or guaranteeing
obligations of or performance by Offshore plus (B) the aggregate
principal amount of all outstanding Letter of Credit Loans
arising out of Letter(s) of Credit securing or guaranteeing
obligations of or performance by Offshore shall not at any one
time exceed the Offshore Commitment.
10. Within ten (10) days of the execution date hereof Borrower shall
furnish Agent with the following:
(a) Continuing Guarantees executed by MHI, TDI and TDI International,
Ltd.
(b) Such resolutions and certificates of MHI, TDI and TDI International,
Ltd. and their officers relating to the execution, delivery and
performance by MHI, TDI and TDI International, Ltd. of Continuing
Guarantees and such opinions of McGlinchey Stafford, a Professional
Limited Liability Company, or other counsel acceptable to Agent,
relating to the execution, delivery and performance by MHI and TDI
of Continuing Guarantees as may be required by Agent and
satisfactory in form and substance to the Agent;
(c) Such resolutions and certificates of Borrower and its officers
relating to the execution, delivery and performance by Borrower of
this Amended and Restated Consent of Banks and First Amendment to
Amended and Restated Revolving Credit Agreement as may be required
by Agent and satisfactory in form and substance to the Agent; and
(d) An agreement by the Subsidiaries (except MHI, TDI and TDI
International, Ltd.) in such form as Agent may require consenting to
the execution of this Amended and Restated Consent of Banks and
First Amendment to Amended and Restated Revolving Credit Agreement
together with such resolutions and certificates of such Subsidiaries
and their officers relating thereto as may be required by Agent and
satisfactory in form and substance to the Agent.
3
<PAGE>
10. An amended and restated Schedule 7.8 to the Revolving Credit
Agreement is annexed hereto.
11. An amended and restated Schedule 7.12 to the Revolving Credit
Agreement is annexed hereto.
12. In connection with the foregoing and only in connection with the
foregoing, the Revolving Credit Agreement is hereby amended, but in all other
respects all of the terms, conditions and provisions of the Revolving Credit
Agreement remain unaffected.
13. This Amended and Restated Consent of Banks and First Amendment to
Amended and Restated Revolving Credit Agreement may be executed in two or more
counterparts, and it shall not be necessary that the signatures of all parties
hereto be contained on any one counterpart hereof; each counterpart shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
TO THE END OF PAGE INTENTIONALLY LEFT BLANK
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
duly executed.
HALTER MARINE GROUP, INC. THE FIRST NATIONAL BANK OF CHICAGO
BY: __________________________ BY: Signature Appears Here
ITS: __________________________ ITS: First Vice President
13085 Seaway Road One First National Plaza
Gulfport, MS 39503 Suite 0324
Telecopy number: (601) 897-4888 10th Floor
Chicago, IL 60670
WHITNEY NATIONAL BANK Telecopy number: (312) 732-3055
BY: __________________________ THE BANK OF NOVA SCOTIA
ITS: __________________________
228 St. Charles Avenue
New Orleans, LA 70130 BY: Signature Appears Here
Telecopy number: (504) 552-4622 ITS: Senior Manger Loan Operator
600 Peachtree Street NE
Suite 2700
FIRST NATIONAL BANK OF COMMERCE Atlanta, GA 30308
Telecopy number: (404) 888-8998
BY: Signature Appears Here
ITS: Relationship Manager BANK ONE, LOUISIANA, N.A.
Energy Services Dept., 2nd Fl.
210 Baroone Street
New Orleans, LA 70112 BY: Lynn Richard
Telecopy number: (504) 561-1316 ITS: Vice President
201 St. Charles Avenue
Suite 1410
HIBERNIA NATIONAL BANK New Orleans, LA 70170
Telecopy number:
BY: Signature Appears Here THE BANK OF TOKYO-MITSUBISHI, LTD.
ITS: V.P.
313 Carondelet Street
New Orleans, LA 70130
Telecopy number: (504) 533-5434 BY: ________________________
ITS: ________________________
2001 Ross Avenue, LB118
3150 Trammel Crow Center
Dallas, TX 75201
Telecopy number: (214) 954-1007
5
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THE SUMITOMO BANK LIMITED
BY: _____________________
ITS: _____________________
BY: _____________________
ITS: _____________________
909 Fannin, Suite 3750
Houston, TX 77010
Telecopy number: (713) 759-1419
6
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EXHIBIT 10.37
ANCILLARY TRUST
AGREEMENT
UNDER THE
HALTER MARINE GROUP, INC.
401(K) PROFIT SHARING PLAN
<PAGE>
TABLE OF CONTENTS
ARTICLE I PURPOSE
ARTICLE II CONSTRUCTION
SECTION 2.1. GENERAL
SECTION 2.2 APPLICABLE LAW
ARTICLE III ASSETS AND INVESTMENTS
SECTION 3.1. ANCILLARY TRUST ASSETS
SECTION 3.2. INVESTMENT OF ASSETS
ARTICLE IV DUTIES AND POWERS
SECTION 4.1. DUTIES
SECTION 4.2. POWERS OF ANCILLARY TRUSTEE
SECTION 4.3. VOTING OF SHARES OF COMPANY STOCK
SECTION 4.4. TENDER OR EXCHANGE
ARTICLE V VALUATION OF ASSETS AND ACCOUNTING
SECTION 5 1. VALUATION OF ASSETS
SECTION 5.2. ACCOUNTING
ARTICLE VI AMENDMENT AND MERGER
SECTION 6.1. RESERVATION OF RIGHT TO AMEND AND RESTRICTIONS
THEREON
SECTION 6.2. AMENDMENT PROCEDURE
SECTION 6.3. MERGER OR CONSOLIDATION
ARTICLE VII IDENTITY OF TRUSTEE
SECTION 1.1. GENERAL
SECTION 7.2. RESIGNATION, REMOVAL AND SUCCESSOR ANCILLARY
TRUSTEE
SECTION 7.3. INDEMNIFICATION OF ANCILLARY TRUSTEE
ARTICLE VIII MISCELLANEOUS
SECTION 8.1. ANCILLARY TRUSTEE'S COMPENSATION AND
EXPENSES
SECTION 8.2. APPOINTMENT OF CUSTODIAN
SECTION 8.3. TAXES
SECTION 8.4. RECORDS
SECTION 8.5. ACCEPTANCE BY ANCILLARY TRUSTEE
SECTION 8.6. AGREEMENT BINDING
SECTION 8.7. GENERAL RESTRICTIONS
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ANCILLARY TRUST AGREEMENT
UNDER THE
HALTER MARINE GROUP, INC. 401(K) PROFIT SHARING PLAN
THIS ANCILLARY TRUST AGREEMENT, made and entered into as of the 1st day of
January, 1997 by and between HALTER MARINE GROUP, INC., a Delaware corporation
(hereinafter referred to as the "Employer"), and RELIANCE TRUST COMPANY, a trust
company organized under the laws of the State of Georgia (hereinafter sometimes
referred to as the "Ancillary Trustee");
Statement of Purpose
--------------------
The Employer sponsors the Halter Marine Group, Inc. 401(k) Profit Sharing
Plan (the "Plan") for its eligible employees. One of the Plan's investment
funds is a fund (the "Company Stock Fund") whose principal investment purpose is
to invest in the common stock of the Employer. The Employer's matching
contributions to the Plan and certain Participant after-tax and pre-tax
contributions to the Plan are invested in the Company Stock Fund. The Plan's
assets that comprise the Company Stock Fund are held in the Ancillary Trust.
WHEREAS, The Chase Manhatten Bank, N.A. and Metropolitan Life Insurance
Company have previously entered into an agreement with the employer to provide
services to the plan with The Chase Manhatten Bank, N.A. serving a Trustee for
Plan assets other than the Company Stock Fund and Metropolitan Life Insurance
Company serving as an agent of the Trustee and Ancillary Trustee.
NOW, THEREFORE, the parties hereto agree that the Ancillary Trust Agreement
dated January 1, 1997 to consist of the following Articles I through VIII:
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ARTICLE I
PURPOSE
This Ancillary Trust Agreement is effective January 1, 1997 and is
established and maintained under the Halter Marine Group, Inc. 401(k) Profit
Sharing Plan (the "Plan"). The Ancillary Trust is a part of the Plan and shall
be maintained for the exclusive benefit of the Participants and their
Beneficiaries, as provided in the Plan and this Ancillary Trust Agreement, for
the purpose of:
(i) receiving, holding and investing the assets of the Plan that
comprise the Company Stock Fund; and
(ii) distributing and transferring the assets of the Company Stock Fund
to Participants and their Beneficiaries and to the other Trust(s) maintained
under the Plan, when and as provided in the Plan and the Ancillary Trust
Agreement.
It shall be impossible for any part of the assets of the Ancillary Trust to be
diverted to or used for purposes other than the exclusive benefit of the
Participants or their Beneficiaries except as provided in the Plan or the
Ancillary Trust and permitted qualified plans and trusts under ERISA and the
Code; provided, that subject to the foregoing, the Employer shall have the right
to alter, modify, amend or terminate the Ancillary Trust or this Ancillary Trust
Agreement at any time.
ARTICLE II
CONSTRUCTION
SECTION 2.1 GENERAL.
(a) Construction. In the construction of this Ancillary Trust Agreement,
reference is made to the definitions, terms and provisions of the Plan as set
forth in (i) that certain Adoption Agreement between the Employer and Metlife
Security Life Insurance Company of Louisiana and the accompanying Defined
Contribution Basic Plan Document as the same may be amended from
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time to time, and the terms used in this Ancillary Trust Agreement shall have
the same meanings as given the terms in said Adoption Agreement and Plan
Document and Trust Agreement unless the context clearly indicates otherwise.
Whenever used in this Ancillary Trust Agreement, unless the context clearly
indicates otherwise, the singular shall include the plural and the plural the
singular. The conjunction "or" shall include both the conjunctive and
disjunctive, and the adjective "any" shall mean one or more or all. References
to the masculine gender are for convenience of expression only and shall refer
to the other genders as well. Article, section and paragraph headings have been
inserted for convenience of reference only and are to be ignored in any
construction of the provisions of this Ancillary Trust Agreement. If any
provision of this Ancillary Trust Agreement, as amended from time to time, shall
be for any reason invalid or unenforceable, the remaining provisions shall
nevertheless be valid, enforceable and fully effective.
(b) Intent. It is the intent of the parties that the Plan shall at all
times be a qualified profit-sharing plan under Section 401(a) of the Code and
that the Ancillary Trust shall at all times be exempt from taxation under
Section 501(a) of the Code. This Ancillary Trust Agreement shall be construed
and interpreted to effectuate such intent.
SECTION 2.2. APPLICABLE LAW. This Ancillary Trust Agreement and the
Ancillary Trust herein provided for shall be construed, administered, regulated
and governed in all respects under and by the laws of the United States to the
extent applicable and, to the extent such laws are not applicable, by the laws
of the State of Georgia.
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ARTICLE III
ASSETS AND INVESTMENTS
SECTION 3.1 ANCILLARY TRUST ASSETS. The assets of the Ancillary Trust shall
consist of all of the assets of the Plan that from time to time comprise the
Company Stock Fund: that is, the assets of the Plan representing:
(i) the Regular Matching Contribution Accounts of Participants
(including without limitation the Employer's matching contributions under the
Plan, whether made in the form of Company Stock or cash), except those
Regular Matching Contribution Accounts (or portions thereof) that are
invested in the Plan's other investment funds in accordance with the Plan's
provisions and procedures governing account investments; and
(ii) such other Participant accounts (or portions thereof) as are
invested in the Company Stock Fund in accordance with those provisions and
procedures.
SECTION 3.2 INVESTMENT OF ASSETS.
(a) Investment Authority. The Committee shall have the power and authority
to appoint one or more Investment Managers with full power and authority to
direct the investment of all or a portion of the assets of the Company Stock
Fund. Any response to a tender or exchange offer for Company Stock held in the
Company Stock Fund shall be as provided in section 4.4. To the extent that the
Ancillary Trustee is not directed to purchase, sell or retain specific
investments by a duly appointed and authorized Investment Manager and the
provisions of Section 4.4 do not apply, the Ancillary Trustee shall have
absolute power, authority and discretion with respect to the investment and
reinvestment of the assets of the Company Stock Fund. To the maximum extent
permitted by applicable law, no trustee of any assets of the Plan other than the
Company Stock Fund, or any other fiduciary with respect to the Plan, shall be
responsible for any investment decisions made with respect to the Company Stock
Fund by such Investment Manager, Participant or Beneficiary, or the Ancillary
Trustee (as the case may be).
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(b) Principal Investment Purpose. All of the assets held from time to time
under the Ancillary Trust shall be invested in, and shall comprise, the Company
Stock Fund. The primary purpose of the Company Stock Fund is to invest in
shares of Company Stock, and therefore the assets of the Company Stock Fund may
be completely invested in shares of Company Stock.
(c) Other Investments. A portion of the Company Stock Fund need not be
invested in Company Stock. Such portion shall consist of:
(i) assets being temporarily held in cash or other investments pending
investment in Company Stock, including the Employer's matching contributions
paid to the Ancillary Trust in cash, and cash dividends paid on shares of
Company Stock; and
(ii) such amount as the Ancillary Trustee, in consultation with the
Committee, deems necessary to meet the immediate payment, transfer and
distribution obligations of the Company Stock Fund, including benefit
payments to Participants and their Beneficiaries and transfers for investment
in the other trust(s) maintained under the Plan.
The portion of the Ancillary Trust not invested in Company Stock shall be (i)
invested and reinvested in debt obligations of the type and kind described below
and/or (ii) held in cash or cash equivalent. Such investments shall be selected
with a view towards minimal fluctuations in principal value and otherwise
primarily on the basis of their income returns consistent with investment
quality, but such returns need not be fixed or limited. Such investments may
include, but not be limited to:
(1) direct obligations of the United States government or other obligations
fully guaranteed by the United States as to payment of principal and interest,
including United States treasury bills or related investments;
(2) obligations of the United States governmental agencies whether or not
guaranteed by the United States government;
(3) notes (including revolving type notes), debentures, bonds,
dollar-denominated commercial paper or certificates of deposit, including
certificates of deposit issued by, or accounts or other deposits in, banks,
savings and loan associations and other financial institutions (including those
of First Union or its affiliates to the extent permitted by ERISA);
(4) guaranteed investment contracts and similar policies and contracts
issued by insurance companies that provide for fixed or minimum rates of return
during stated periods of time; and
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(5) other debt obligations and other investments of the type and character
as more specially enumerated above.
(d) Restrictions. In no event, however, shall:
(i) the assets of the Ancillary Trust be invested in any "employer
real property" within the meaning of ERISA except to the extent permitted by
applicable law;
(ii) the indicia of ownership of any assets of the Ancillary Trust be
maintained outside the jurisdiction of the district courts of the United
States; or
(iii) the Ancillary Trustee, or any other fiduciary under the Plan, or
the Ancillary Trust knowingly engage in any transaction prohibited by ERISA.
ARTICLE IV
DUTIES AND POWERS
SECTION 4.1. DUTIES.
(a) General. The Ancillary Trustee shall have the powers, duties and
responsibilities specifically or by necessary implication set forth in this
Ancillary Trust Agreement including, without limitation, the following:
(i) to manage and control the assets of the Ancillary Trust pursuant
to the Plan and this Ancillary Trust Agreement and to prepare and submit the
financial information with respect to said assets (including the valuations
thereof) agreed to between the Ancillary Trustee and the Employer or required
to be furnished to the Committee, the Employer, any Participant and
Beneficiary or any regulatory authority under ERISA;
(ii) to make distributions from the Ancillary Trust in accordance with
the directions of the Advisory Committee; and
(iii) to receive, hold, manage, convert, sell, exchange, invest,
reinvest, disburse, distribute or otherwise deal with all of the assets now
or hereafter held by the Ancillary Trustee, together with all contributions
by the Employer to the Ancillary Trust and other transfers of Plan assets to
the Ancillary Trust and the income and gains therefrom, in the manner and for
the uses and purposes provided in this Ancillary Trust Agreement.
All requests, directions, requisitions for monies, certifications and
instructions by the Committee to the Ancillary Trustee shall be in writing,
signed by such person or persons as may be designated from
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<PAGE>
time to time by the Committee, and the Ancillary Trustee shall act and shall be
fully protected in acting in accordance with such requests, directions,
requisitions, certifications and instructions. If the members of the Committee
are the same as the individuals serving as the Ancillary Trustee, however, then
any specific instructions otherwise required by the Plan or this Ancillary Trust
Agreement from the Committee to any Ancillary Trustee shall not be required.
The Committee need not specify the application to be made of any monies, and the
Ancillary Trustee shall be fully protected in making payments of monies upon
requisition of the Committee and shall be charged with no responsibility
whatsoever respecting the application of such monies or for the administration
of the Plan. The Employer shall promptly furnish to the Ancillary Trustee from
time to time certificates of its Secretary or an Assistant Secretary evidencing
the appointment and termination of office of the members of the Committee,
together with specimens of their signatures, and the Committee shall likewise
furnish certificates evidencing the designation of the person or persons
authorized to act on behalf of the Committee (together with a specimen of the
signature of any person who is not a member of the Committee), and for all
purposes hereunder the Ancillary Trustee shall be conclusively entitled to rely
upon such certificates as evidence of the identity and authority of the persons
as disclosed thereby.
(b) Limitation. Except to the extent provided in this Ancillary Trust
Agreement or the Plan and as otherwise required by applicable law, the Ancillary
Trustee shall not be responsible for the administration of the Plan nor for the
acts or omissions of any other fiduciary (or agent thereof) with respect to the
Plan unless:
(i) the Ancillary Trustee participants knowingly in, or knowingly
undertakes to conceal, an act or omission of such other fiduciary, knowing
such act or omission is a breach of trust;
(ii) by the Ancillary Trustee's breach of fiduciary duty in the
administration of its specific responsibilities, the Ancillary Trustee knowingly
enables such other fiduciary to commit a breach of trust; or
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(iii) the Ancillary Trustee has knowledge of a breach of trust by
another fiduciary and fails to make reasonable efforts under the circumstances
to remedy such breach of trust.
SECTION 4.2. POWERS OF ANCILLARY TRUSTEE. The Ancillary Trustee, in addition
to and not in modification of or limitation of all of the Ancillary Trustee's
common law and statutory authority, but subject to the provisions of Section
3.2, Section 4.3 and Section 4.4 of this Ancillary Trust Agreement with respect
to the investments of the Ancillary Trust and the voting of the shares of
Company Stock held hereunder, shall have all of the following powers with regard
to all property which shall at any time and from time to time form a part of the
assets of the Ancillary Trust:
(i) to sell, exchange, convey, transfer, borrow, mortgage, pledge,
lease (with or without option to purchase and whether or not such lease may
extend beyond the term of the Ancillary Trust), or otherwise dispose of the
same, without the approval of any court and without obligation upon any
person dealing with the Ancillary Trustee to see to the application of any
money or other property delivered to it;
(ii) to purchase, or subscribe for, any securities or other property
and to retain the same in Ancillary Trust;
(iii) to sell at public or private sale, for cash or upon credit, with
or without security, and upon such other terms and conditions as the
Ancillary Trustee may consider advisable, or otherwise to dispose of any
property, both real and personal, tangible or intangible, in which the
Ancillary Trust may from time to time be invested; and to grant options to
purchase any of the stock or securities in which the Ancillary Trust may be
invested from time to time and to acquire options to purchase stock or
securities identical to those for which the Ancillary Trustee has previously
granted an option to purchase;
(iv) to vote any stocks, bonds or other securities; to give general or
special proxies or powers of attorney with or without power of substitution;
to exercise any conversion privileges, subscription rights or other options,
and to make any payments incidental thereto; to oppose or to consent to, or
otherwise participate in, corporate reorganizations or other changes
affecting corporate securities; and generally to exercise any or all of the
powers of an owner with respect to stocks, bonds, securities or other
property held as a part of the Ancillary Trust;
(v) for convenience of administration, or to facilitate transfers of
securities, to cause any stocks, securities or other property, including real
property, at any time held by the Ancillary Trustee to be registered or held
in the name of the Ancillary Trustee or of the nominee or nominees of the
Ancillary Trustee without disclosure of the Ancillary Trust or to
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take and keep any securities unregistered in such form that they will pass by
delivery, but no such registration or holdings shall relieve the Ancillary
Trustee from responsibility for the acts of any nominee or nominees selected
by it, or from its responsibility for the safe custody of any such stocks,
securities or other property;
(vi) to collect the principal and income of the Ancillary Trust as the
same shall become due and payable and to give binding receipt therefor, and
if at any time-there shall be a default in the payment of such principal or
income, or any part thereof, to take such action, whether by legal
proceedings, compromise or otherwise, as the Ancillary Trustee, in its
discretion, shall deem to be in the best interest of the Ancillary Trust; any
property acquired by the Ancillary Trustee under judicial sale, or otherwise,
in the enforcement or compromise of any such claim or claims, shall be and
become a part of the Ancillary Trust and dealt with as such by the Ancillary
Trustee;
(vii) to keep such portion of the Ancillary Trust in cash as the
Ancillary Trustee may, from time to time, deem to be in the best interest of
the Ancillary Trust, without liability for interest thereon;
(viii) to make, execute, acknowledge, and deliver any and all documents
of transfer and conveyance and any and all other instruments that may be
necessary or appropriate to carry out the powers herein granted.
(ix) to settle and compromise any claims, debts or damages due or
owing to or from the Ancillary Trust, and to commence or defend suits or
legal and administrative proceedings; and
(x) to employ suitable agents and counsel (who may be counsel for the
Employer), and to pay their reasonable compensation and expenses out of the
assets of the Ancillary Trust (unless paid by the Employer).
SECTION 4.3. VOTING OF SHARES OF COMPANY STOCK.
(a) Voting Rights. All shares of Company Stock held by the Ancillary Trust
shall be voted by the Ancillary Trustee only in accordance with the provisions
of this Section 4.3. Each Participant (or Beneficiary) will be entitled to
direct the Ancillary Trustee as to the manner in which shares of Company Stock
attributable to his Accounts will be voted. For purposes of this Section 4.3,
the number of shares attributable to an Account of a Participant (or
Beneficiary) shall be the product obtained by multiplying (i) the number of
shares of Company Stock then held by the Ancillary Trust by (ii) a fraction, the
numerator of which is the value of such Account as of the most recent valuation
date for Accounts under Section 10.14 of the Plan, and the denominator of which
is
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the aggregate of such values for all Accounts of all Participants (and
Beneficiaries) such fraction, however, shall disregard any Account, or portion
thereof, that is not invested in the Company Stock Fund. The shares that are
attributable to the Account of a Participant (or Beneficiary) who does not give
instructions to the Ancillary Trustee shall be voted (including abstention) in
the same proportion as the total shares attributable to the Accounts of the
Participants (and Beneficiaries) who give voting instructions to the Ancillary
Trustee are voted.
(b) Information to Participants. The Employer shall provide or cause to be
provided to each Participant (or Beneficiary) who is entitled to direct the
Ancillary Trustee as to the manner in which shares of Company Stock will be
voted with the proxy statement and other materials provided to shareholders of
the Company in connection with each shareholder meeting, together with a form
upon which the Participant (or Beneficiary) shall have the right to give
confidential voting instructions to the Ancillary Trustee. If proxies are
solicited by a person other than the Company, however, the Employer shall
deliver to the Ancillary Trustee a list of the names and addresses of the
Participants (or Beneficiaries) showing the number of shares of Company Stock
attributable to each Participant's Accounts and shall date and certify the
accuracy of such information; and the Ancillary Trustee shall provide each
Participant (or Beneficiary) with the proxy statement and other materials
prepared by such person. Each Participant (or Beneficiary) shall be informed
that if he fails to return the voting instruction form, the shares whose voting
he is entitled to direct will be proportionally voted based on Participant (and
Beneficiary) voting instructions actually received. Each Participant (or
Beneficiary) shall also be informed that his voting directions will be
confidential.
(c) Expenses. The Ancillary Trustee shall have the right to require payment
in advance by the Employer and any other person soliciting proxies of all
reasonably anticipated expenses
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associated with the distribution of information to and the processing of
instructions received from the Participants (or Beneficiaries).
(d) No Recommendations. The Ancillary Trustee shall not express any opinion
or give any advice or recommendation to any Participant (or Beneficiary)
concerning the matters subject to vote, and the Ancillary Trustee shall have no
authority or responsibility to do so.
(e) Confidentiality. The Ancillary Trustee shall make such arrangements as
may be necessary to ensure that the voting instruction forms are returned by
Participants (or their Beneficiaries) to a person independent of the Employer,
who will tabulate the instructions and inform the Ancillary Trustee of the
result. The Ancillary Trustee shall require such person to not reveal or
release any individual Participant (or Beneficiary) voting instructions to the
Employer or their respective officers, directors, employees or representatives.
The Ancillary Trustee may, however, request such person to the Employer at its
request of the number of shares of Company Stock for which voting instructions
have been received at a given point in time and the manner in which such shares
will be voted when the votes are cast by the Ancillary Trustee. The Employer
shall honor the confidentiality of the Participant (or Beneficiary) voting
instructions to the Ancillary Trustee.
(f) Participant as Named Fiduciary. Each Participant (or Beneficiary) shall
be a named fiduciary of the Plan for the purpose of providing directions as to
the voting of shares of Company Stock pursuant to these provisions.
SECTION 4.4. TENDER OF EXCHANGE.
(a) Tender Rights. In the event that there should be a tender or exchange
offer for Company Stock, the Ancillary Trustee shall respond to such offer only
in accordance with these provisions. Each Participant (or Beneficiary) will be
entitled to direct the Ancillary Trustee as to the manner in which the Ancillary
Trustee will respond to such offer with respect to shares of Company Stock
attributable to his Accounts. For purposes of this Section 4.4, the number of
shares attributable to an Account of a Participant (or Beneficiary) shall be the
product obtained by
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multiplying (i) the number of shares of Company Stock then held by the Ancillary
Trust by (ii) a fraction, the numerator of which is the value of such Account as
of the most recent valuation date for Accounts under Section 10.14 of the Plan,
and the denominator of which is the aggregate of such values for all Accounts of
all Participants (and Beneficiaries). Such fraction, however, shall disregard
any Account, or portion thereof, that is not invested in the Company Stock Fund.
The shares attributable to the Account of a Participant (or Beneficiary) who
does not give instructions to the Ancillary Trustee shall be tendered or not
tendered in the same proportion as the total shares attributable to the Accounts
of the Participants (and Beneficiaries) who give tender instructions to the
Ancillary Trust are tendered and not tendered.
(b) Information to Ancillary Trustee. The Employer shall deliver to the
Ancillary Trustee a list of the names and addresses of the Participants (or
Beneficiaries) showing the number of shares of Company Stock attributable to
each Participant's Accounts and shall date and certify the accuracy of such
information.
(c) Information to Participants. The Ancillary Trustee shall provide each
Participant (or Beneficiary) who is entitled to direct the Ancillary Trustee as
to the manner in which the Ancillary Trustee will respond to such offer with the
description of the terms and conditions of the offer and other materials
provided to shareholders in connection with the offer, together with a form upon
which the Participant (or Beneficiary) shall have the right to provide
confidential instructions to the Ancillary Trustee as to the manner in which to
respond to such offer. Each Participant (or Beneficiary) shall be informed that
if he fails to return the tender instruction form, the shares whose tender he is
entitled to direct will be proportionally tendered and not tendered based on
Participant
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(and Beneficiary) tender instructions actually received. Each Participant (or
Beneficiary) shall also be informed that his tender directions will be
confidential.
(d) Expenses. The Ancillary Trustee shall have the right to require payment
in advance by the Employer and the person making the tender offer of all
reasonably anticipated expenses associated with the distribution of information
to and the processing of instructions received from the Participants (or
Beneficiary).
(e) No Recommendations. The Ancillary Trustee shall not express any opinion
or give any advice or recommendation to any Participant (or Beneficiary)
concerning the tender offer, and the Ancillary Trustee shall have no authority
or responsibility to do so.
(f) Confidentiality. The Ancillary Trustee shall make such arrangements as
may be necessary to ensure that the tender instruction forms are returned by
Participants (or their Beneficiaries) to a person independent of the Employer,
who will tabulate the instructions and inform the Ancillary Trustee of the
result. The Ancillary Trustee shall require such person to not reveal or
release any individual Participant (or Beneficiary) tender instructions to, the
Employer or their respective officers, directors, employees or representatives.
The Ancillary Trustee may, however, request such person to inform the Employer
at its request of the number of shares of Company Stock for which tender
instructions have been received at a given point in time and whether such shares
will be tendered by the Ancillary Trustee. The Employer shall honor the
confidentiality of the Participant (or Beneficiary) tender instructions to the
Ancillary Trustee.
(g) Participant as Named Fiduciary. Each Participant (or Beneficiary) shall
be a named fiduciary of the Plan for the purpose of providing directions as to
the manner of responding to a tender or exchange offer for shares of Company
Stock pursuant to these provisions.
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ARTICLE V
VALUATION OF ASSETS AND ACCOUNTING
SECTION 5.1. VALUATION OF ASSETS. The assets of the Ancillary Trust shall be
valued as of the Accounting Date on the last day of each Plan Year and at such
other time(s) as the Plan requires the Trust Fund to be valued at the then
existing fair market value, or in the absence of a readily ascertainable fair
market value, at such values as the Ancillary Trustee shall determine in
accordance with methods consistently followed and uniformly applied. The
Ancillary Trustee shall be responsible for the valuations of the assets of the
Ancillary Trust hereunder.
SECTION 5.2. ACCOUNTINGS. The Ancillary Trustee, as soon as practicable
after each Accounting Date and after such other date(s) during the Plan Year as
the Ancillary Trustee and the Committee shall agree, shall cause a full account
of the administration of the Ancillary Trust hereunder during the accounting
period then ended to be rendered to the Committee and shall furnish to the
Committee such information as is necessary for the timely preparation of the
statements, returns, reports and information required to be submitted, filed or
distributed by the Committee within sufficient time to permit the Committee-to
cause to be prepared and distributed or filed such statements, returns, reports
and information.
ARTICLE VI
AMENDMENT AND MERGER
SECTION 6.1. RESERVATION OF RIGHT TO AMEND AND RESTRICTIONS THEREON. The
Employer reserves and shall have the right at any time, and from time to time to
amend, modify or alter, in whole or in part, any of the terms and provisions of
the Ancillary Trust and this Ancillary Trust Agreement, and any such amendment
may be retroactive to the extent not
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prohibited by applicable law; provided, however, no amendment shall authorize or
permit any part of the Ancillary Trust to be used for or diverted to purposes
other than the exclusive benefit of the Participants and their Beneficiaries or
shall have the effect of revesting in the Employer any part of the assets of the
Ancillary Trust unless such amendment is permitted or required by laws governing
qualified plans and such amendment does not affect the status of the Plan as a
qualified plan under the Code or the status of the Ancillary Trust as a
tax-exempt trust under the Code.
SECTION 6.2. AMENDMENT PROCEDURE. Any amendment to this Ancillary Trust
Agreement shall be effected by written instrument between the Employer and the
Ancillary Trustee, which amendment shall become a part of this Ancillary Trust
Agreement; provided, however, if the Ancillary Trustee is unwilling or unable to
execute such amendment, it may resign or be removed by the Employer.
SECTION 6.3. MERGER OR CONSOLIDATION. The Plan and its trusts (including the
Ancillary Trust) shall not be merged or consolidated with any other plan and
trust, nor shall the assets or liabilities of the Plan and trusts be transferred
to any other plan and trust, unless the benefit which each Participant would
receive immediately after such merger, consolidation or transfer if the Plan and
trusts had then terminated is equal to or grater than the benefit such
Participant would have been entitled to receive immediately before such merger,
consolidation or transfer if the Plan and trusts had then terminated.
ARTICLE VII
IDENTITY OF TRUSTEE
SECTION 7.1. GENERAL. The Ancillary Trustee shall at any time consist of one
(1) or more persons (who may be individuals and/or entities) appointed by the
Employer. Any such person
15
<PAGE>
may, but need not be, an employee of the Employer or its affiliates, a
Participant or a member of the Committee. A person who is the Ancillary Trustee
or who is one of two or more persons constituting the Ancillary Trustee (a
"Co-Ancillary Trustee") shall serve as such until death (if applicable),
resignation or removal. If and while there are Co-Ancillary Trustees, they
shall adopt such rules and procedures for their service as such as they deem
appropriate, but such rules and procedures shall not delegate fiduciary
responsibility (except as otherwise permitted in the Plan or this Ancillary
Trust Agreement) and shall require them to act by majority vote.
SECTION 7.2. RESIGNATION, REMOVAL AND SUCCESSOR ANCILLARY TRUSTEE.
(a) Resignation. Any person who is serving as a Co-Ancillary Trustee or as
the sole person constituting the Ancillary Trustee may resign from the Ancillary
Trust at any time by giving thirty (30) days advance written notice to the
Employer and the Committee. Upon such resignation's becoming effective, at the
request of the Employer on the Committee the person so resigning shall render to
the Employer or the Committee a full account of the administration of the
Ancillary Trust during the period following that covered by the last accounting,
and shall perform all acts necessary to transfer and deliver the assets of the
Ancillary and all information and data relating to such administration to his
successor or to any remaining Co-Ancillary Trustee(s).
(b) Removal. The Employer may remove the Ancillary Trustee or any or all
Co-Ancillary Trustee(s) at any time upon written notice to the person(s) being
removed. In the event of such removal, said person(s) shall be under the same
duty to account and to transfer and deliver the assets of the Ancillary Trust
and all information and data relating to such administration of the Ancillary
Trust as provided in Section 7.2(a) in case of a resignation.
16
<PAGE>
(c) Successor. In the event of a vacancy in a Co-Ancillary Trusteeship of
the Ancillary Trust, the Employer:
(i) may designate and appoint a successor Co-Ancillary Trustee of the
Ancillary Trust, in which case such successor Co-Ancillary Trustee shall have
all the rights and powers herein conferred upon the Co-Ancillary Trustee he
is replacing; or
(ii) may elect not to appoint a successor Co-Ancillary Trustee and
authorize the remaining Co-Ancillary Trustee(s) to discharge all of the
duties and responsibilities of the Ancillary Trustee, in which event such
remaining Co-Ancillary Trustee(s) shall have all the rights and powers herein
conferred upon the original Ancillary Trustee.
In the event of a vacancy in the Ancillary Trusteeship of the Ancillary Trust
occurring at any time because of the resignation or removal of all Co-Ancillary
Trustees or otherwise, the Employer shall designate and appoint a qualified
successor Ancillary Trustee. Any such successor shall have all the rights and
powers herein conferred upon the original Ancillary Trustee.
SECTION 7.3 INDEMNIFICATION OF ANCILLARY TRUSTEE. The Employer hereby
indemnifies each person serving as an Ancillary Trustee, to the extent permitted
by law, against any personal liability or expense resulting from his service as
such, except for liability or expense incurred by reason of his own willful
misconduct.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1. ANCILLARY TRUSTEE COMPENSATION AND EXPENSES. The Ancillary
Trustee, if and to the extent not employees of the Employer or affiliate
thereof, shall be paid such reasonable compensation as shall from time to time
be agreed upon by the Ancillary Trustee and the Employer. In addition, the
Ancillary Trustee shall be reimbursed for any reasonable expenses, including
reasonable counsel fees, incurred by the Ancillary Trustee in the administration
of the Ancillary Trust hereunder. Said Ancillary Trustee's compensation (if
any) and other expenses
17
<PAGE>
of administering the Ancillary Trust hereunder shall be paid from the assets of
the Ancillary Trust unless the Employer pays such fees and expenses.
SECTION 8.2. APPOINTMENT OF CUSTODIAN. The Employer may appoint a Custodian
with respect to all or any assets of the Ancillary Trust. Any Custodian's
duties and responsibilities shall be as set forth in an appropriate written
custodial agreement between the Employer, the Ancillary Trustee and the
Custodian.
The Custodian may (but need not be) an individual or entity who is a fiduciary
with respect to the Plan because of noncustodial duties and responsibilities
under the Plan. If a Plan fiduciary serves as Custodian, the person's fiduciary
status shall not imply or result in any fiduciary relationship or responsibility
with respect to the Ancillary Trust or the Ancillary Trust assets subject to the
custodial relationship, and such fiduciary's duties with respect to the
Ancillary Trust shall be limited to those custodial duties provided in the
Custodial Agreement.
SECTION 8.3 TAXES. The Ancillary Trustee shall pay out of the Ancillary
Trust assets all taxes imposed or levied with respect the other Ancillary trust
or any part thereof, under existing or future laws, and in its discretion may
contest the validity or amount of any tax, assessment, claim or demand with
respect to the Ancillary Trust or any part thereof.
SECTION 8.4. RECORDS. The Ancillary Trustee shall keep accurate and detailed
accounts of all investments, receipts, disbursements and other transactions
hereunder. All accounts, books and records relating thereto shall be open to
inspection by any person or persons designated by the Committee or the Employer
at any reasonable time.
18
<PAGE>
SECTION 8.5. ACCEPTANCE BY ANCILLARY TRUSTEE. The Ancillary Trustee, by
joining in the execution of this Ancillary Trust Agreement, signifies its
acceptance of the Ancillary Trust created hereunder.
SECTION 8.6. AGREEMENT BINDING. This Agreement and all amendments hereafter
adopted shall be binding upon the parties hereto, their successors and assigns,
and upon the Participants and their Beneficiaries, heirs, executors,
administrators, personal representatives and assigns.
SECTION 8.7. GENERAL RESTRICTIONS. Neither the Ancillary Trustee nor any
fiduciary with respect to the Plan shall exercise any power, make any
investment, engage in any act or transaction or take any other action whatever
that shall cause or result in:
(i) the Ancillary Trust losing its status as a trust exempt from
taxation under the Code;
(ii) the Plan losing its status as a qualified plan under the Code; or
(iii) a transaction which is prohibited the Ancillary Trust under ERISA.
IN WITNESS WHEREOF, the Employer and the Ancillary Trustee have
executed this Ancillary Trust Agreement as of the day and year
first above written.
HALTER MARINE GROUP, INC.
By: /s/ KEITH L. VOIGTS
----------------------------------
Vice President
----------------------------------
[Signing officer's name and title]
RELIANCE TRUST COMPANY
By: /s/ WILARD HARLOW
----------------------------------
Senior Vice President
----------------------------------
[Signing officer's name and title]
19
<PAGE>
HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
METLIFE SECURITY INSURANCE COMPANY OF LOUISIANA
METLIFE DEFINED CONTRIBUTION GROUP PROGRAM
401(K) PLAN ADOPTION AGREEMENT
FOR
HALTER MARINE GROUP, INC. 401(K) PROFIT SHARING PLAN
NON-STANDARDIZED 401(K)
FORM 009
NOVEMBER 29, 1994
(C) Copyright 1994, MetLife Security Insurance Company of Louisiana
All rights reserved.
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METLIFE DEFINED CONTRIBUTION GROUP
<PAGE>
HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
----
PART A - GENERAL INFORMATION
A.1 EMPLOYER INFORMATION............................................ 1
A.2 ADOPTION OR AMENDMENT OF PLAN................................... 2
A.3 PLAN YEAR....................................................... 3
PART B - ELIGIBILITY, SERVICE AND ENTRY DATES
B.1 ELIGIBILITY..................................................... 4
B.2 SERVICE RULES................................................... 5
B.3 ENTRY DATES..................................................... 7
PART C - CONTRIBUTIONS
C.1 PARTICIPANT SAVINGS CONTRIBUTIONS............................... 8
C.2 EMPLOYER MATCHING CONTRIBUTIONS................................. 10
C.3 EMPLOYER PROFIT SHARING CONTRIBUTIONS........................... 15
C.4 PLAN COMPENSATION............................................... 18
C.5 FORFEITURES..................................................... 21
C.6 QUALIFIED MATCHING AND NON-ELECTIVE CONTRIBUTIONS............... 21
C.7 EMPLOYER SECURITIES............................................. 22
C.8 INVESTMENT DIRECTION............................................ 22
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METLIFE DEFINED CONTRIBUTION GROUP
i
<PAGE>
HALTER MARINE GROUP, INC.
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PART D - VESTING, LOANS, WITHDRAWALS AND RETIREMENT DATES
D.1 VESTING......................................................... 23
D.2 LOANS........................................................... 25
D.3 IN-SERVICE WITHDRAWALS.......................................... 26
D.4 RETIREMENT DATES................................................ 30
D.5 PLAN DISTRIBUTIONS.............................................. 30
PART E - MISCELLANEOUS
E.1 PLAN ADMINISTRATOR.............................................. 32
E.2 AMENDMENT PROCEDURES............................................ 32
E.3 ADMINISTRATIVE MATTERS.......................................... 33
E.4 TOP-HEAVY STATUS................................................ 33
E.5 PRESENT VALUE................................................... 33
E.6 RESPONSIBILITIES OF EMPLOYER.................................... 34
E.7 TRUST AGREEMENT................................................. 34
E.8 IRS OPINION LETTER; OTHER PLANS................................. 34
PART F - SIGNATURES
F.1 EMPLOYER SIGNATURE.............................................. 36
F.2 ADOPTION BY RELATED EMPLOYERS................................... 36
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METLIFE DEFINED CONTRIBUTION GROUP
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HALTER MARINE GROUP, INC.
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APPENDIX A
FUNDING VEHICLES
1. Program Funding Vehicles 1
2. Other Funding Vehicles 2
APPENDIX B
ADMINISTRATIVE MATTERS
(1) Changes in Participants' 401(k) or After-Tax
Savings Contributions Elections 3
(2) Discontinuance of 401(k) and/or After-Tax
Savings Contributions 3
(3) Change of Investments 4
(4) Change in Investment of Future Contributions 5
(5) Payroll Dates 6
(6) In-Service Withdrawals 6
(7) Withdrawals by Terminated Participants 7
(8) Automatic Joint And Survivor Annuity 7
(9) Recordkeeping Expenses 8
(10) 404(c) Compliance 9
(11) Employer Status 9
(12) Withdrawal Sequence 9
(13) Prior Plan Contributions 10
APPENDIX C
EMPLOYER SECURITIES (ADMINISTRATIVE MATTERS) 13
APPENDIX D
PARTICIPANT LOAN PROGRAM 15
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METLIFE DEFINED CONTRIBUTION GROUP
iii
<PAGE>
HALTER MARINE GROUP, INC.
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By signing this Adoption Agreement, the Employer is adopting or amending a
401(k) Plan for the benefit of its eligible employees. The terms of the
Employer's Plan are contained in the METLIFE SECURITY INSURANCE COMPANY OF
LOUISIANA/METLIFE DEFINED CONTRIBUTION GROUP PROGRAM Defined Contribution Basic
Plan Document and in this Adoption Agreement.
<TABLE>
<CAPTION>
<S> <C>
The name of this plan is the Halter Marine Group, Inc. 401(k) Profit Sharing Plan
(insert name)
</TABLE>
PART A - GENERAL INFORMATION
A.1 EMPLOYER INFORMATION
Name of Employer: Halter Marine Group, Inc.
Address: 13085 Seaway Rd.
Gulport, MS 39505
Type of business entity: [ ] Sole Proprietorship [ ] Partnership
[X] Corporation [ ] S Corporation
[ ] Other (specify)
Employer tax identification number: 75-2429106
Last day of Employer's taxable year: 12/31
Name and telephone number
of contact person: Leonard Morgan (601) 897-4895
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METLIFE DEFINED CONTRIBUTION GROUP
1
<PAGE>
HALTER MARINE GROUP, INC.
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A.2 ADOPTION OR AMENDMENT OF PLAN
By signing this Adoption Agreement the Employer
[X] adopts a new Plan.
[ ] amends and restates the following Plan which is not an earlier METLIFE
SECURITY INSURANCE COMPANY OF LOUISIANA/METLIFE DEFINED CONTRIBUTION
GROUP PROGRAM Adoption Agreement (insert name and effective date of
prior Plan):
-------------------------------
-------------------------------
[ ] amends and restates an earlier METLIFE SECURITY INSURANCE COMPANY OF
LOUISIANA/METLIFE DEFINED CONTRIBUTION GROUP PROGRAM Adoption
Agreement for this 401(k) Plan.
The effective date of this (Check one) [X] plan or [ ] amendment is:
January 1, 1997 (Cannot be earlier than the first day of the Plan year in
which the Employer signs this Adoption Agreement, except as provided in the
following sentence).
If this is an amendment of a plan or an amendment and restatement of an
earlier METLIFE SECURITY INSURANCE COMPANY OF LOUISIANA/METLIFE DEFINED
CONTRIBUTION GROUP PROGRAM adoption agreement, and such amendment is
adopted no later than the last day of the Plan Year beginning on or after
January 1, 1994, sections marked by an asterisk (*) will be effective as of
the first day of the Plan year beginning after December 31, 1992.
NOTE: PARTICIPANT SAVINGS CONTRIBUTIONS MAY NOT BEGIN PRIOR TO THE DATE
THIS PLAN IS ADOPTED.
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METLIFE DEFINED CONTRIBUTION GROUP
2
<PAGE>
HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
A.3 PLAN YEAR
Plan year will mean:
[ ] the 12-consecutive month period which coincides with the
limitation year.
[X] the 12-consecutive month period commencing on April 1, 1997
(Insert date) and each anniversary thereof.
The limitation year is the calendar year unless another 12-month period is
selected below:
[ ] the limitation year will be from _____________ to _____________.
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METLIFE DEFINED CONTRIBUTION GROUP
3
<PAGE>
HALTER MARINE GROUP, INC.
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PART B - ELIGIBILITY, SERVICE AND ENTRY DATES
B.1 ELIGIBILITY
Specify any service and/or age requirements for eligibility below.
WAIVER OF REQUIREMENTS FOR NEW OR AMENDED PLAN.
[ ] Not Applicable.
[X] Each employee employed on the effective date is automatically eligible
to participate. Employees hired after the effective date are eligible
upon satisfying any service and/or age requirements specified below.
[ ] Each employee employed on the amendment date is automatically eligible
to participate. Employees hired after the amendment date are eligible
upon satisfying any service and/or age requirements specified below.
/*/[ ] The service and/or age requirements specified below are waived in
the following enrollment periods conducted during each Plan Year:
_______________________
SERVICE.
An employee must fulfill the following service requirement to become a
participant:
Minimum service 0 months. (Not more than 12 months.)
_____ days.
IF THE YEAR(S) OF SERVICE SELECTED IS OR INCLUDES A FRACTIONAL YEAR, AN
EMPLOYEE WILL NOT BE REQUIRED TO COMPLETE ANY SPECIFIED NUMBER OF HOURS OF
SERVICE TO RECEIVE CREDIT FOR SUCH FRACTIONAL YEAR.
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METLIFE DEFINED CONTRIBUTION GROUP
4
<PAGE>
HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
AGE.
An employee must fulfill the following age requirement to become a
participant:
Minimum age 18. (Not greater than 21.)
CLASS EXCLUSIONS. The following classes of employees are not eligible to
participate (this may include employees of a related employer):
N/A
---------------------------
---------------------------
B.2 SERVICE RULES
(a) Select one of the methods of measuring service below.
[X] ELAPSED TIME METHOD. An employee's service will be determined using
the elapsed time method.
[ ] HOURS OF SERVICE METHOD. An employee's service will be determined by
counting hours of service.
The employee must complete _____ hours of service during a computation
period to be credited with a year of service. (Insert number; cannot
exceed 1,000.)
Hours of Service. An employee is credited with his actual hours of
service. However, if the Employer checks one of the following boxes,
an employee is credited with the number of hours specified:
[ ] 10 hours per day
[ ] 45 hours per week
[ ] 95 hours per half month
[ ] 190 hours per month
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METLIFE DEFINED CONTRIBUTION GROUP
5
<PAGE>
HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
(b) COMPUTATION PERIODS.
For eligibility and vesting purposes, computation periods are used to
measure an employee's years of service.
[ ] If checked, these rules apply:
(i) For eligibility purposes, an employee's computation periods
are his first employment year, the first plan year beginning
within his first employment year, and subsequent plan years.
(ii) For all other purposes, an employee's computation periods
are plan years.
[ ] If checked, computation periods are an employee's employment
years.
(c) PREDECESSOR EMPLOYERS.
Service with predecessor employers will only be treated as service
with the Employer if such predecessor employers are listed below:
Trinity Marine Group
(d) RELATED EMPLOYERS.
Years of service with the entities related to the employer in the
manner described in Code (S) 414(b), (c), (m), or (o) shall include
years before such entities were so related only if such entities are
listed below:
N/A
---------------------------
------------------------
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METLIFE DEFINED CONTRIBUTION GROUP
6
<PAGE>
HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
B.3 ENTRY DATES
[X] If checked, the effective or amendment date of the Plan is also an
entry date.
Indicate the plan's entry dates:
[ ] MONTHLY ENTRY DATES. The first day of each month is an entry date.
[X] QUARTERLY ENTRY DATES. The first day of each of the first, fourth,
seventh and tenth months of the plan year is an entry date.
[ ] SEMI-ANNUAL ENTRY DATES. The first day of each of the first and
seventh months of the plan year is an entry date.
ENTRY DATE FOR SAVINGS CONTRIBUTIONS.
An employee may elect to start making savings contributions on any entry
date on or after the date he satisfies any minimum age and service
requirements.
ENTRY DATE FOR EMPLOYER PROFIT SHARING CONTRIBUTIONS.
Each employee will become a participant for purposes of any Employer profit
sharing contributions on the entry date when he first satisfies any minimum
age and service requirements.
OPTION FOR INITIAL ENTRY.
[ ] If checked, the requirement that an employee must wait until the entry
date after his completion of any age or service requirements is waived
for initial entry. Therefore,
. Savings Contributions. An employee may elect to start making
savings contributions on the date he satisfies any minimum age
and service requirements, or on any subsequent entry date.
. Employer Profit Sharing Contributions. An employee will become a
participant on the date he satisfies any minimum age and service
requirements.
- --------------------------------------------------------------------------------
METLIFE DEFINED CONTRIBUTION GROUP
7
<PAGE>
HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
PART C - CONTRIBUTIONS
C.1 PARTICIPANT SAVINGS CONTRIBUTIONS
TYPES OF PARTICIPANT SAVINGS CONTRIBUTIONS; MINIMUM CONTRIBUTIONS.
[ ] Not Applicable.
Eligible employees may make savings contributions as follows:
(IN NO EVENT MAY THE MINIMUM CONTRIBUTION EXCEED 3% OF PLAN COMPENSATION.)
[X] 401(k) savings contributions with a minimum contribution of 2 % of
plan compensation.
[ ] After-tax savings contributions with a minimum contribution of
____ % of plan compensation.
[ ] 401(k) savings contributions and after-tax savings contributions, at
the election of the participant, with an overall minimum contribution
not to exceed ____ % of plan compensation.
OPTIONAL PARTICIPANT SAVINGS CONTRIBUTIONS FROM BONUS PAYMENTS.
/*/A participant may also make [X] 401(k) savings contributions and/or [ ]
after-tax savings contributions from a bonus payment, subject to the
following limits:
[ ] Not Applicable.
[ ] A flat dollar amount not to exceed $ _____;
[X] A percentage of the bonus amount not to exceed 15 %.
[ ] The lesser of $ _____ or _____ % of the participant's bonus
amount.
[ ] The greater of $ _____ or _____ % of the participant's bonus
amount.
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METLIFE DEFINED CONTRIBUTION GROUP
8
<PAGE>
HALTER MARINE GROUP, INC.
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LIMITATIONS ON AMOUNT OF PARTICIPANT SAVINGS CONTRIBUTIONS.
Except as otherwise required by applicable law, an employee's savings
contributions in a Plan year will be limited to the following percentages
of the employee's Plan Compensation for the year:
[ ] Not Applicable.
[X] 401(k) savings contributions: 15 % of Plan Compensation.
/*/[ ] After-tax savings contributions: _____ % of Plan Compensation.
/*/[ ] Overall limit on 401(k) and after-tax savings contributions: _____
% of Plan Compensation.
OPTION TO SUBSTITUTE AFTER-TAX CONTRIBUTIONS FOR 401(K) CONTRIBUTIONS.
[ ] /*/If checked, any participant whose 401(k) savings contributions are
suspended by the $ 7,000 (as adjusted) limit may elect to substitute
after-tax savings contributions for 401(k) savings contributions for
the remainder of the plan year. (This box may only be checked if the
plan permits both 401(k) savings contributions and after-tax savings
contributions).
- --------------------------------------------------------------------------------
METLIFE DEFINED CONTRIBUTION GROUP
9
<PAGE>
HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
C.2 EMPLOYER MATCHING CONTRIBUTIONS
[ ] Not Applicable.
[X] The Employer will make matching contributions in accordance with the
following provisions.
AMOUNT.
Check and complete one of the following:
[ ] MATCHING CONTRIBUTION FORMULA. The Employer will make a matching
contribution equal to ____ cents for each one dollar of a
participant's matchable savings contributions. However, the Employer
will not make matching contributions on a participant's savings
contributions above ___% of the participant's plan compensation to a
maximum of $ _____.
[ ] The Employer will make a matching contribution equal to the following
formula, specified in the blanks below.
Matching Contribution For each one dollar
(insert desired amount of of a Participant's
Employer's matching Savings Contributions
contribution) up to
------------------------- ---------------------
=========================c =====================%
=========================c =====================%
========================= =====================%
=========================c =====================%
=========================c =====================%
- --------------------------------------------------------------------------------
METLIFE DEFINED CONTRIBUTION GROUP
10
<PAGE>
HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
[ ] The Employer will make a matching contribution equal to the following
formula specified in the blanks below:
Matching Contribution for each For a Participant's
one dollar of the Participant's [ ] Plan Compensation
matchable savings contributions equal to
(insert desired amount of [ ] Contribution
Employer's matching contribution) equal to
--------------------------------- --------------------
============================c $===================
============================c $===================
============================c $===================
============================c $===================
============================c $===================
DISCRETIONARY SUPPLEMENTARY MATCHING CONTRIBUTIONS.
[ ] If checked, in any Plan year, the Employer in its discretion may make
a supplemental matching contribution in addition to the matching
amount elected ABOVE.
[X] /*/DISCRETIONARY MATCHING CONTRIBUTION. The Employer may make
matching contributions in an amount determined each Plan year on
behalf of each participant who makes matchable savings contributions.
Discretionary matching contributions will be allocated in accordance
with any one of the methods specified in the Plan.
- --------------------------------------------------------------------------------
METLIFE DEFINED CONTRIBUTION GROUP
11
<PAGE>
HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
MATCHABLE SAVINGS.
The Employer will make a matching contribution on the following participant
savings contributions: (Check one or both)
[X] 401(k) savings contributions.
[ ] After-tax savings contributions.
/*/For purposes of determining matchable savings contributions, 401(k)
savings contributions and/or after-tax savings contributions shall include
all such contributions from whatever source collected, except the
following:
[ ] 401(k) savings contributions and/or after-tax savings contributions
derived from payroll deductions.
[ ] 401(k) savings contributions and/or after-tax savings contributions
derived from bonus payments.
[ ] 401(k) savings contributions derived from other arrangements,
including cafeteria plans.
/*/REGULAR MATCHING CONTRIBUTION PERIODS. With respect to matching
contributions determined under a Matching Contribution formula or that are
Discretionary Matching Contributions, the Employer will make such a
matching contribution for each matching period. The matching period will
be the following:
[ ] Plan Year. [ ] Quarterly.
[ ] Pay Period. [ ] Semi-annually.
[X] Monthly.
DISCRETIONARY SUPPLEMENTARY MATCHING CONTRIBUTION PERIODS. The Employer
will make a discretionary supplementary matching contribution for each
matching period. The matching period will be the following:
[X] Plan Year. [ ] Quarterly.
[ ] Pay Period. [ ] Semi-annually.
[ ] Monthly.
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METLIFE DEFINED CONTRIBUTION GROUP
12
<PAGE>
HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
/*/OPTIONAL EMPLOYMENT REQUIREMENT. A participant must satisfy the
following requirements as of the end of each matching period in order to be
eligible to receive matching contributions that are determined under a
Matching Contribution formula or that are Discretionary Matching
Contributions:
[ ] A participant must be employed by the Employer on the last day of the
regular matching contribution period to share in the allocation of
Employer matching contributions for such period.
[ ] A participant must have completed at least ______ hours of service
(cannot exceed 1,000) during the Plan year to share in the allocation
of matching contributions for the Plan year. (CAN ONLY BE ELECTED IF
THE REGULAR MATCHING CONTRIBUTION PERIOD IS THE PLAN YEAR).
[ ] A participant must be employed by the Employer on the last day of the
Plan year and must have completed at least ______ hours of service
(cannot exceed 1,000) to share in the allocation of matching
contributions for the Plan year. (CAN ONLY BE ELECTED IF THE REGULAR
MATCHING CONTRIBUTION PERIOD IS THE PLAN YEAR).
EXCEPTION. A PARTICIPANT WHOSE EMPLOYMENT WITH THE EMPLOYER ENDS BECAUSE
OF HIS RETIREMENT, DISABILITY, OR DEATH DURING THE REGULAR MATCHING
CONTRIBUTION PERIOD IS NOT REQUIRED TO FULFILL THE FOREGOING EMPLOYMENT
REQUIREMENT TO SHARE IN THE ALLOCATION OF MATCHING CONTRIBUTIONS FOR THE
REGULAR MATCHING CONTRIBUTION PERIOD.
[X] A participant who was employed at any point during the regular
matching contribution period is entitled to share in the allocation of
matching contributions for the regular matching contribution period.
- --------------------------------------------------------------------------------
METLIFE DEFINED CONTRIBUTION GROUP
13
<PAGE>
HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
OPTIONAL EMPLOYMENT REQUIREMENT FOR DISCRETIONARY SUPPLEMENTARY MATCHING
CONTRIBUTIONS.
[X] A participant must be employed by the Employer on the last day of the
discretionary supplementary matching contribution period to share in
the allocation of discretionary supplementary matching contributions
for such period.
[ ] A participant must have completed at least ________ hours of service
(cannot exceed 1,000) during the Plan year to share in the allocation
of discretionary supplementary matching contributions for the Plan
year. (CAN ONLY BE ELECTED IF THE DISCRETIONARY SUPPLEMENTARY
MATCHING CONTRIBUTION PERIOD IS THE PLAN YEAR).
[ ] A participant must be employed by the Employer on the last day of the
Plan year and must have completed at least _________ hours of service
(cannot exceed 1,000) to share in the allocation of discretionary
supplementary matching contributions for the Plan year. (CAN ONLY BE
ELECTED IF THE DISCRETIONARY SUPPLEMENTARY MATCHING CONTRIBUTION
PERIOD IS THE PLAN YEAR).
EXCEPTION. A PARTICIPANT WHOSE EMPLOYMENT WITH THE EMPLOYER ENDS BECAUSE
OF HIS RETIREMENT, DISABILITY, OR DEATH DURING THE DISCRETIONARY
SUPPLEMENTARY MATCHING CONTRIBUTION PERIOD IS NOT REQUIRED TO FULFILL THE
FOREGOING EMPLOYMENT REQUIREMENT TO SHARE IN THE ALLOCATION OF
DISCRETIONARY SUPPLEMENTARY MATCHING CONTRIBUTIONS FOR THE DISCRETIONARY
SUPPLEMENTARY MATCHING CONTRIBUTION PERIOD.
[ ] A participant who was employed at any point during a discretionary
supplementary matching contribution period is entitled to share in the
allocation of discretionary supplementary matching contributions for
the discretionary supplementary matching contribution period.
- --------------------------------------------------------------------------------
METLIFE DEFINED CONTRIBUTION GROUP
14
<PAGE>
HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
C.3 EMPLOYER PROFIT SHARING CONTRIBUTIONS
CONTRIBUTION
[X] Not Applicable.
[ ] For each plan year the employer will contribute an amount (if any) the
employer determines either in its discretion or by a specific formula
as elected by filling out the boxes below. Such employer
contributions are called profit-sharing contributions even though the
employer is not required to have current profits or accumulated
earnings to make such a contribution.
[ ] DISCRETIONARY CONTRIBUTION FORMULA. For each plan year the
employer will contribute such amount (if any) as the employer
determines in its discretion.
[ ] PERCENTAGE CONTRIBUTION FORMULA. For each plan year the employer
will contribute _____% of a participant's plan compensation.
[ ] /*/UNIT CONTRIBUTION FORMULA. For each plan year, the employer
will contribute and allocate $ _____ per (Check applicable box)
[ ] hour, [ ] week, or [ ] month for each eligible employee.
[ ] /*/MINIMUM CONTRIBUTION FORMULA. If the employer makes a profit-
sharing contribution for the plan year, the employer will
contribute and allocate: (Check one) [ ] a minimum flat dollar
amount of $ _____; or [ ] a minimum percentage of _____ % of each
participant's plan compensation for each participant who is
entitled to share in the allocation of profit sharing
contributions for such plan year.
- --------------------------------------------------------------------------------
METLIFE DEFINED CONTRIBUTION GROUP
15
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HALTER MARINE GROUP, INC.
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CONTRIBUTION PERIOD. The Employer will make a profit-sharing contribution
for each contribution period. The contribution period will be the
following:
[ ] Plan Year.
[ ] Pay Period.
[ ] Monthly.
[ ] Quarterly.
[ ] Semi-annually.
ALLOCATION
Employer profit sharing contributions will be allocated in accordance with
the box checked below.
[ ] NON-INTEGRATED ALLOCATION FORMULA. Employer profit sharing
contributions for a plan year are allocated under the non-integrated
formula described in the plan document.
[ ] INTEGRATED ALLOCATION FORMULA. Employer profit sharing contributions
for a plan year are allocated under the integrated formula described
in the plan document.
- --------------------------------------------------------------------------------
METLIFE DEFINED CONTRIBUTION GROUP
16
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HALTER MARINE GROUP, INC.
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EMPLOYMENT REQUIREMENT FOR AN ALLOCATION.
[ ] Not Applicable.
[ ] A participant who was employed at any point during the contribution
period is entitled to share in the allocation of profit sharing
contributions for such period.
(Check one or both of the following)
[ ] A participant must be employed by the Employer on the last day of the
contribution period to share in the allocation of profit sharing
contributions for such period.
[ ] A participant must have completed _____ hours of service (cannot
exceed 1,000) with the employer during the plan year to share in the
allocation of profit sharing contributions for such plan year. (Can
only be elected if the contribution period is the Plan year).
EXCEPTION. A PARTICIPANT WHOSE EMPLOYMENT WITH THE EMPLOYER ENDS BECAUSE
OF HIS RETIREMENT, DISABILITY OR DEATH DURING THE PLAN YEAR IS NOT REQUIRED
TO FULFILL THE FOREGOING EMPLOYMENT REQUIREMENT TO SHARE IN THE ALLOCATION
OF PROFIT SHARING CONTRIBUTIONS FOR SUCH PLAN YEAR.
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METLIFE DEFINED CONTRIBUTION GROUP
17
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HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
C.4 PLAN COMPENSATION
(a) IN GENERAL. For all purposes, a participant's plan compensation means
all amounts included in the definition of compensation checked below,
which are paid to him by the employer, except as modified in (b), (c)
and/or (d). However, plan compensation may not exceed $200,000, as
adjusted for cost-of-living increases (for Plan Years beginning after
December 31, 1988 and before January 1, 1994) or $150,000, as adjusted
for cost-of-living increases in accordance with Section 401(a)(17)(B)
of the Code (for Plan Years beginning after December 31, 1993).
[X] Wages, Tips and Other Compensation as reported on Form W-2.
[ ] Compensation will mean 3401(a) wages.
[ ] Compensation will mean 415 safe harbor compensation.
PARTICIPANT STATUS. Unless checked below, plan compensation shall be
limited to the period in which an employee is eligible to participate
in the plan.
[ ] For purposes of determining a participant's allocation of the
employer profit sharing contribution for the plan year, plan
compensation shall be considered whether or not an employee is
eligible to participate.
[ ] For purposes of applying the ACP/ADP tests, plan compensation
shall be considered whether or not an employee is eligible to
participate.
DETERMINATION PERIOD. Unless checked below, plan compensation shall
be based on compensation paid to the participant during the plan year.
[ ] Plan compensation shall be based on compensation which is
actually paid to the participant during the calendar year ending
with or within the plan year.
FOR EMPLOYEES WHOSE DATE OF HIRE IS LESS THAN 12 MONTHS BEFORE THE END
OF THE 12-MONTH PERIOD DESIGNATED, PLAN COMPENSATION WILL BE
DETERMINED OVER THE PLAN YEAR.
(b) EXCLUSIONS. If checked below, a participant's plan compensation
excludes the
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METLIFE DEFINED CONTRIBUTION GROUP
18
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HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
following checked items:
NOTE: THE EXCLUSION OF BONUSES, COMMISSIONS, OVERTIME AND/OR OTHER
ITEMS MAY NOT BE PERMITTED IF SUCH EXCLUSION(S) WOULD RESULT IN USING
BY MORE THAN A DE MINIMIS AMOUNT A HIGHER PERCENTAGE OF TOTAL
COMPENSATION FOR HIGHLY COMPENSATED EMPLOYEES THAN FOR NON-HIGHLY
COMPENSATED EMPLOYEES. ALSO, DO NOT EXCLUDE ANY ITEMS (OTHER THAN A
DOLLAR CAP WHICH IS ABOVE THE SOCIAL SECURITY WAGE BASE IN EFFECT FOR
THAT YEAR) IF YOU ELECTED PROFIT SHARING CONTRIBUTIONS WITH AN
INTEGRATED ALLOCATION FORMULA.
[ ] bonuses
[ ] commissions
[ ] overtime
[ ] compensation in excess of $___________ for any plan year (INSERT
DESIRED AMOUNT; CANNOT EXCEED $150,000 AS ADJUSTED FOR COST-OF-
LIVING INCREASES.)
[ ] other items (specify): ________________________
(c) ELECTIVE DEFERRALS. Except for purposes of determining the amount of a
participant's savings contributions and their related employer
matching contributions, plan compensation
[X] shall include
[ ] shall NOT include
employer contributions made pursuant to a salary reduction agreement
or other arrangement which are not includible in gross income of the
employee under Code sections 125, 402(e)(3), 402(h) or 403(b).
- --------------------------------------------------------------------------------
METLIFE DEFINED CONTRIBUTION GROUP
19
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HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
(d) SAFE HARBOR EXCLUSIONS
[X] Compensation will be reduced by the following items (whether or
not includable in gross income): reimbursements or other expense
allowances, fringe benefits (cash and noncash), moving expenses,
and, except for amounts included under (c) above, deferred
compensation and welfare benefits.
[ ] Compensation will NOT be reduced by the following items (whether
or not includable in gross income): reimbursements or other
expense allowances, fringe benefits (cash and noncash), moving
expenses, deferred compensation, and welfare benefits.
NOTE: THE EXCLUSION OF THE ITEMS IN (D) DESCRIBED ABOVE AUTOMATICALLY
SATISFIES THE NONDISCRIMINATORY DEFINITION OF COMPENSATION REQUIREMENT
WITHOUT FURTHER TESTING. IF YOU WANT TO AVOID THE NEED FOR TESTING THE
DEFINITION OF COMPENSATION FOR DISCRIMINATION, YOU MUST CHECK ONE OF THE
DEFINITIONS IN (A), MAKE ONE OF THE SELECTIONS IN (C) AND ONE OF THE
SELECTIONS IN (D). DO NOT SELECT (B) IF YOU DO NOT WANT TO TEST YOUR
DEFINITION OF COMPENSATION FOR DISCRIMINATION!
- --------------------------------------------------------------------------------
METLIFE DEFINED CONTRIBUTION GROUP
20
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HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
C.5 FORFEITURES
Indicate the method for disposing of forfeitures.
[ ] Not Applicable.
[ ] /*/EXPENSE REDUCTION. If checked, any forfeitures arising during a
plan year will first be applied to reduce administrative expenses
properly payable by the plan and will then be applied in accordance
with the election made below.
[X] CONTRIBUTION REDUCTION. Any forfeitures occurring during a plan year
will be used first to reduce the amount the employer must contribute
for the matching contribution. Any remaining forfeitures will be
allocated as an additional employer profit sharing contribution, if
the employer elected such contributions in C.3 above. If the employer
did not elect profit sharing contributions, any remaining forfeitures
will be allocated as a non-integrated profit sharing contribution.
[ ] REALLOCATION. Any forfeitures occurring during a plan year will be
allocated as an additional employer profit sharing contribution, if
the employer elected such contributions in C.3 above. If the employer
did not elect profit sharing contributions, any forfeitures occurring
during a plan year will be allocated as a non-integrated profit
sharing contribution.
C.6 QUALIFIED MATCHING AND NON-ELECTIVE CONTRIBUTIONS
Qualified Matching Contributions will be taken into account as Elective
Deferrals for purposes of calculating the Actual Deferral Percentages to
the lower paid group to the extent needed to satisfy the ADP test.
Qualified Non-elective Contributions will be taken into account as Elective
Deferrals for purposes of calculating the Actual Deferral Percentages to
the lower paid group to the extent needed to satisfy the ADP test and/or
will be taken into account as employer matching contributions for purposes
of calculating the Actual Contribution Percentages to the lower paid group
to the extent needed to satisfy the ACP test.
- --------------------------------------------------------------------------------
METLIFE DEFINED CONTRIBUTION GROUP
21
<PAGE>
HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
C.7 EMPLOYER SECURITIES.
[ ] Not Applicable.
[X] The employer will permit investment in qualifying employer securities
up to 100% of Plan assets.
/*/ C.8 INVESTMENT DIRECTION
Unless checked below, participants will exercise investment direction
over 100% of the assets in all of the accounts under the plan.
[ ] The employer will exercise investment direction over the following
accounts: (INDICATE PERCENTAGE AND ACCOUNT)
-----------------------------
-----------------------------
- --------------------------------------------------------------------------------
METLIFE DEFINED CONTRIBUTION GROUP
22
<PAGE>
HALTER MARINE GROUP, INC.
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PART D - VESTING, LOANS, WITHDRAWALS AND RETIREMENT DATES
D.1 VESTING
100% VESTING IN SAVINGS CONTRIBUTIONS.
Participants are 100% vested at all times in their savings contributions
account (401(k) savings contributions and/or after-tax savings
contributions).
VESTING IN EMPLOYER MATCHING CONTRIBUTIONS.
Participants are vested in employer matching contributions (if any) on
their behalf in accordance with Option 3 below.
(INSERT 1, 2, OR 3; IF LEFT BLANK, OPTION 1 - FULL VESTING WILL APPLY).
VESTING IN EMPLOYER PROFIT SHARING CONTRIBUTIONS.
Participants are vested in employer profit sharing contributions (if any)
on their behalf in accordance with Option ___ below.
(INSERT 1, 2, OR 3; IF LEFT BLANK, OPTION 1 - FULL VESTING WILL APPLY).
If different vesting options are chosen for Employer matching contributions
and Employer profit sharing contributions, then one of the options must be
Option 1.
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METLIFE DEFINED CONTRIBUTION GROUP
23
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HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
VESTING OPTIONS.
The following vesting options are available:
OPTION 1 - FULL VESTING. Participants are 100% vested at all times.
OPTION 2 - CLIFF VESTING. Participants are 100% vested after
completing ___ years of service (Insert number; cannot be greater than
5). For top-heavy plan years, 3 year cliff vesting applies if more
favorable than the elected schedule.
OPTION 3 - GRADED VESTING. Participants are vested in accordance with
the following vesting schedule. (A participant's vested percentage is
the percentage in column (2) or the percentage in column (3),
whichever is greater. Spaces left blank are treated as zeros). For
top-heavy plan years, the schedule in column (3), accelerated by one
year, applies if more favorable than the elected schedule.
(1) (2) (3)
Minimum
Years Vested Required
of Service Percentage Percentage
----------- ---------- ----------
Less than 1 0 0%
At least 1 25 0%
At least 2 50 0%
At least 3 75 20%
At least 4 100 40%
At least 5 --- 60%
At least 6 --- 80%
At least 7 100% 100%
- --------------------------------------------------------------------------------
METLIFE DEFINED CONTRIBUTION GROUP
24
<PAGE>
HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
YEARS OF SERVICE EXCLUDED IN DETERMINING VESTED PERCENTAGES.
[X] Not Applicable.
(CHECK ONE, BOTH, OR NONE.)
[ ] Years completed before the effective date of this plan (or a
predecessor plan).
[ ] Years completed before the participant's ____ birthday (insert
birthday not greater than 18th).
D.2 LOANS
[ ] Loans to participants from the plan are NOT permitted.
[X] Loans to participants from the plan are permitted.
/*/[X] Employees who have made rollover contributions to the Plan but have
not yet satisfied the Plan's eligibility requirements may take loans
from their rollover contributions accounts.
[ ] Employees who have made rollover contributions to the Plan but
have not yet satisfied the Plan's eligibility requirements may
not take loans from their rollover contributions accounts.
- --------------------------------------------------------------------------------
METLIFE DEFINED CONTRIBUTION GROUP
25
<PAGE>
HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
D.3 IN-SERVICE WITHDRAWALS
The following provisions will govern the availability of in-service
withdrawals from a participant's accounts. See Article 12 of the plan
document for additional details, including definitions and limitations.
(a) 401(K) SAVINGS CONTRIBUTIONS.
[ ] /*/A participant may NOT make in-service withdrawals of 401(k)
savings contributions.
[X] A participant may make an in-service withdrawal of 401(k)
savings contributions for a financial hardship. ANY SUCH
WITHDRAWAL IS SUBJECT TO A 12-MONTH SUSPENSION OF 401(K)
CONTRIBUTIONS AND AFTER-TAX CONTRIBUTIONS (IF APPLICABLE).
[X] The suspension of 401(k) savings contributions and after-tax
savings contributions will NOT apply to withdrawals made
after a participant attains age 59 1/2.
[ ] The suspension of 401(k) savings contributions and after-tax
savings contributions applies to withdrawals made after a
participant attains age 59 1/2.
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METLIFE DEFINED CONTRIBUTION GROUP
26
<PAGE>
HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
(b) AFTER-TAX SAVINGS CONTRIBUTIONS.
[ ] /*/A participant may NOT make withdrawals from after-tax savings
contributions.
[ ] A participant may make withdrawals from after-tax savings
contributions for any reason.
[ ] If checked, a participant who makes withdrawals of after-tax
savings contributions may not make 401(k) savings
contributions and after-tax savings contributions for a
period of ______ months (insert number, cannot exceed 12).
/*/[ ] The suspension of 401(k) savings contributions and
after-tax savings contributions will NOT apply to
withdrawals made after a participant attains age
59 1/2.
/*/[ ] The suspension of 401(k) savings contributions and
after-tax savings contributions applies to
withdrawals made after a participant attains age
59 1/2.
- --------------------------------------------------------------------------------
METLIFE DEFINED CONTRIBUTION GROUP
27
<PAGE>
HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
(c) EMPLOYER MATCHING CONTRIBUTIONS.
[X] A participant may NOT make withdrawals from employer matching
contributions.
[ ] A participant may make withdrawals from employer matching
contributions for a FINANCIAL HARDSHIP ONLY.
[ ] A participant may make withdrawals from employer matching
contributions for ANY REASON.
[ ] A participant who makes withdrawals from employer matching
contributions may not make 401(k) savings contributions and
after-tax savings contributions for a period of ______ months
(insert number, cannot exceed 12).
/*/[ ] The suspension of 401(k) savings contributions and after-
tax savings contributions will not apply to withdrawals
made after a participant attains age 59 1/2.
/*/[ ] The suspension of 401(k) savings contributions and after-
tax savings contributions applies to withdrawals made
after a participant attains age 59 1/2.
(d) EMPLOYER PROFIT SHARING CONTRIBUTIONS.
[ ] A participant may NOT make withdrawals from employer profit
sharing contributions.
[ ] A participant may make withdrawals from employer profit sharing
contributions for FINANCIAL HARDSHIP only.
[ ] A participant may make withdrawals from employer profit sharing
contributions for ANY REASON.
- --------------------------------------------------------------------------------
METLIFE DEFINED CONTRIBUTION GROUP
28
<PAGE>
HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
(e) ROLLOVER CONTRIBUTIONS.
[ ] /*/A participant may NOT make withdrawals from rollover
contributions.
[X] /*/A participant may make withdrawals from rollover
contributions for any reason.
/*/[X] Employees who have made rollover contributions to the
Plan but have not yet satisfied the Plan's eligibility
requirements may make withdrawals from their rollover
contributions accounts.
/*/[ ] Employees who have made rollover contributions to the
Plan but have not yet satisfied the Plan's eligibility
requirements may NOT make withdrawals from their rollover
contributions accounts.
(f) WITHDRAWALS ON AND AFTER AGE 59 1/2 FOR ANY REASON.
/*/[X] Withdrawals will continue only for the same reasons as
indicated in subsections (a), (b), (c), (d), or (e).
[ ] Notwithstanding subsections (a) [ ], (b) [ ], (c) [ ], (d) [
], and/or (e) [ ], upon attaining age 59 1/2, participants may
make withdrawals from their accounts FOR ANY REASON (up to the
vested percentage of each such account).
- --------------------------------------------------------------------------------
METLIFE DEFINED CONTRIBUTION GROUP
29
<PAGE>
HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
D.4 RETIREMENT DATES
NORMAL RETIREMENT.
A participant will be fully vested and may retire upon reaching age 65
(CANNOT EXCEED 65).
DISABILITY RETIREMENT.
A participant will be fully vested and may retire before normal retirement
upon becoming disabled.
EARLY RETIREMENT.
[ ] Not Allowed.
[X] A participant will be fully vested and may retire prior to normal
retirement upon reaching age 55 or, if later, completing 4 years of
service.
D.5 PLAN DISTRIBUTIONS
/*/CASH-OUT OF ACCOUNT BALANCE. If a Participant's total account balance
does not exceed $3,500, then upon termination of employment, retirement
following normal or early retirement date, or the occurrence of a
disability retirement, the Employer
[X] Will distribute the Participant's account balance as soon as
practicable in the form of a single sum.
[ ] Will delay distribution of the Participant's account balance until the
Participant requests (or is required to begin to receive) a
distribution under the Plan.
- --------------------------------------------------------------------------------
METLIFE DEFINED CONTRIBUTION GROUP
30
<PAGE>
HALTER MARINE GROUP, INC.
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/*/CONDITIONS ON DISTRIBUTIONS PAYABLE TO HIGHLY COMPENSATED EMPLOYEES.
[X] No Restriction.
[ ] No distribution in the form of a single sum may be made following
termination of employment prior to early or normal retirement date
with respect to a participant who is or was a highly compensated
employee, unless such participant executes a covenant not to compete
in a form acceptable to the employer. This box may not be checked
unless this plan is newly adopted or, if an amended plan, the
distribution of account balances in the form of a single sum upon
termination of employment before normal or early retirement age was
not permitted.
WITHDRAWALS TO TERMINATING PARTICIPANTS.
[X] Not Allowed.
[ ] Any participant who has terminated employment with the employer and
has not attained the plan's Required Beginning Date may make
withdrawals of all or any portion of his vested account balance.
/*/DISTRIBUTIONS TO MISSING PERSONS. If the Plan Administrator is unable
to locate any person to whom an account balance under this plan is required
to be distributed under the plan or by law, the plan administrator shall
dispose of such person's account balance as follows:
[ ] The plan administrator shall deposit such person's vested account
balance into a federally-insured interest-bearing bank account for the
benefit of such person.
[X] Such person's account balance shall be forfeited in accordance with
Section C.5 Forfeitures of this adoption agreement, subject to
reinstatement if such person files a claim for benefits, the plan is
required to commence distribution to such person pursuant to Section
401(a)(9) of the Code or upon the termination of the plan.
- --------------------------------------------------------------------------------
METLIFE DEFINED CONTRIBUTION GROUP
31
<PAGE>
HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
PART E - MISCELLANEOUS
E.1 PLAN ADMINISTRATOR
The employer is the legal plan administrator under ERISA. Specify one or
more officers, partners or employees of the employer to perform the
functions of the plan administrator.
John Dane, President & CEO John Dane
-----------------------------------------------------------------------
Name Signature
Vincent Almerico, Senior Vice President Vincent Almerico
-----------------------------------------------------------------------
Name Signature
Keith Voigts, Sr. Vice President,
Corp. Finance Keith Voigts
-----------------------------------------------------------------------
Name Signature
Cliff Cooley, Director of Human Resources Cliff Cooley
-----------------------------------------------------------------------
Name Signature
Leonard Morgan, Manager of EE Benefits Leonard Morgan
-----------------------------------------------------------------------
Name Signature
Each person selected should submit a specimen signature above (add
additional specimen signatures, if necessary). Any such appointment may be
changed by written notice.
- --------------------------------------------------------------------------------
METLIFE DEFINED CONTRIBUTION GROUP
32
<PAGE>
HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
E.2 AMENDMENT PROCEDURES
Unless otherwise provided below, the Employer may amend this Plan by having
a person authorized by its Board of Directors complete a new adoption
agreement following formal action of the Board of Directors. If another
method of amending the plan is desired, please complete the following:
1. The following person(s) is (are) authorized to amend the Plan:
see section E.1 above
______________________
2. The Plan may be amended in accordance with the following procedure:
At least 3 members of the Benefits committee must approve.
______________________
E.3 ADMINISTRATIVE MATTERS
The plan administrator may establish rules governing such matters as the
timing and frequency of changes in participants' 401(k) savings
contributions or after-tax savings contributions elections, changes in
participants' investment elections, loans or in-service withdrawals by
participants, and the like, by so specifying in an appendix to this
adoption agreement.
- --------------------------------------------------------------------------------
METLIFE DEFINED CONTRIBUTION GROUP
33
<PAGE>
HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
E.4 TOP-HEAVY STATUS
Unless one of the optional top-heavy testing rules is elected below, the
top-heavy tests are applied each year to determine whether the plan is top-
heavy. If the plan is top-heavy, the requirements for top-heavy plans
apply for that year (SEE ARTICLE 14 OF THE PLAN DOCUMENT), and there may be
a requirement for minimum contributions on behalf of certain participants
in addition to employer matching and/or profit sharing contributions. If
the plan is not top-heavy for a plan year, the requirements do not apply
for that year.
[ ] ASSUMED TOP-HEAVY. If checked, the plan is treated as if it is always
top-heavy and the requirements for top-heavy plans apply each plan
year.
[X] ONCE TOP-HEAVY, ALWAYS TOP-HEAVY. If checked, the top-heavy tests are
applied to determine whether the plan is top-heavy for a plan year.
If the plan is not top-heavy, the requirements for top-heavy plans do
not apply. If the plan is top-heavy, the requirements for top-heavy
plans apply for that year and for all subsequent plan years whether or
not the plan is actually top-heavy under the top-heavy tests; no
further testing is needed.
E.5 PRESENT VALUE
For purposes of establishing present value to compute the TOP HEAVY RATIO,
any benefit shall be discounted only for mortality and interest under the
value set forth in Section 14.2(h) of the plan unless based on the
following:
Interest Rate: ________________________%
Mortality Table: ________________________
- --------------------------------------------------------------------------------
METLIFE DEFINED CONTRIBUTION GROUP
34
<PAGE>
HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
E.6 RESPONSIBILITIES OF EMPLOYER
THE EMPLOYER UNDERSTANDS AND AGREES THAT, BY ESTABLISHING THIS PLAN, IT IS
THE "PLAN ADMINISTRATOR" AND IT WILL BE ASSUMING CERTAIN DUTIES AND
RESPONSIBILITIES UNDER TAX AND OTHER LAWS AS EMPLOYER MAINTAINING THE PLAN
AND AS PLAN ADMINISTRATOR FOR WHICH NEITHER THE TRUSTEE NOR THE SPONSOR
WILL BE RESPONSIBLE.
THE EMPLOYER WARRANTS THAT IT HAS OBTAINED LEGAL AND TAX ADVICE TO THE
EXTENT THE EMPLOYER DEEMS NECESSARY BEFORE SIGNING THIS ADOPTION AGREEMENT.
E.7 TRUST AGREEMENT
By signing this adoption agreement, the employer establishes a trust to
carry out the purposes of the plan. The terms of the trust, which is to be
signed separately, are contained in the METLIFE SECURITY INSURANCE COMPANY
OF LOUISIANA/METLIFE DEFINED CONTRIBUTION GROUP PROGRAM trust agreement
which is incorporated by reference into this adoption agreement.
E.8 IRS OPINION LETTER; OTHER PLANS
THE EMPLOYER MAY NOT RELY ON THE OPINION LETTER ISSUED BY THE NATIONAL
OFFICE TO SHOW THAT THIS NON-STANDARDIZED PROTOTYPE PLAN IS QUALIFIED UNDER
CODE SECTION 401. TO OBTAIN ASSURANCE OF PLAN QUALIFICATION, THE EMPLOYER
MUST FILE AN APPLICATION WITH THE APPROPRIATE IRS KEY DISTRICT FOR A
DETERMINATION THAT THIS PLAN IS QUALIFIED.
If the employer adopts or maintains any other plan including a welfare
benefit fund, as defined in Code Section 419(e) which provides post-
retirement medical benefits allocated to separate accounts for key
employees, as defined in Code Section 419(d)(3) or an individual medical
account, as defined in Code Section 415(e)(2) under which amounts are
treated as annual additions with respect to any participant in this plan,
the interaction of the plans may require special provisions to coordinate
limits on contributions and benefits and top-heavy minimum contributions
and benefits.
- --------------------------------------------------------------------------------
METLIFE DEFINED CONTRIBUTION GROUP
35
<PAGE>
HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
A. If the participant is covered under another qualified defined
contribution plan maintained by the employer, other than a master or
prototype plan, provide the method under which the plans will limit
total annual additions to the maximum permissible amount, and will
properly reduce any excess amounts, in a manner that precludes
employer discretion.
[X] the provisions of section 13.3 through 13.6 of Article 13 will
apply as if the other plan were a master or prototype plan.
[ ] Other (specify):
-----------------------------
-----------------------------
-----------------------------
B. If the participant is or has ever been a participant in a defined
benefit plan maintained by the employer, provide the method you will
use to satisfy Code Section 415(e). Such language must preclude
employer discretion.
-----------------------------
-----------------------------
THIS ADOPTION AGREEMENT MAY BE USED ONLY IN CONJUNCTION WITH BASIC PLAN DOCUMENT
NO. 01.
- --------------------------------------------------------------------------------
METLIFE DEFINED CONTRIBUTION GROUP
36
<PAGE>
HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
PART F - SIGNATURES
F.1 EMPLOYER SIGNATURE
Name of employer Halter Marine Group, Inc.
Signed Leonard Morgan
---------------------------
Print name and title Leonard Morgan, Manager of EE Benefits
Date _______________________
F.2 ADOPTION BY RELATED EMPLOYERS
A requirement for continuing IRS qualification of this plan is that all
employees of employers related to the employer must be eligible for
participation unless such employees are excluded as a class under Section
B.1 of this adoption agreement. For this purpose, employers are considered
related if they are part of a controlled group (within the meaning of Code
Section 414(b) or (c)) or affiliated service group (within the meaning of
Code Section 414(m)) with the employer, or are aggregated with the employer
in accordance with regulations under Code Section 414(o).
By signing the adoption agreement, the employer represents that all such
related employers listed below have adopted the plan (add additional
signature pages if necessary). If other employers become related
employers, the employer understands that they must also adopt the plan,
unless the plan is amended specifically to exclude employees of such
employers.
The following employer adopts the plan:
Name of related employer ____________________________________________
Employer identification number ______________________________________
Signed ______________________________________________________________
Print name and title ________________________________________________
Date ________________________________________________________________
- --------------------------------------------------------------------------------
METLIFE DEFINED CONTRIBUTION GROUP
37
<PAGE>
HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
The identifying number for the METLIFE SECURITY INSURANCE COMPANY OF LOUISIANA
Defined Contribution Basic Plan document is 01 and for this adoption agreement
is 009. The sponsor of the prototype plan is METLIFE SECURITY INSURANCE COMPANY
OF LOUISIANA, 72 EAGLE ROCK AVENUE, EAST HANOVER, NEW JERSEY 10010, (201) 515-
1579. The sponsor will notify you if the sponsor amends or discontinues this
prototype plan.
THE EMPLOYER SHOULD INSURE THAT THIS ADOPTION AGREEMENT HAS BEEN FILLED OUT
COMPLETELY AND PROPERLY. FAILURE TO DO SO MAY RESULT IN PLAN DISQUALIFICATION.
- --------------------------------------------------------------------------------
METLIFE DEFINED CONTRIBUTION GROUP
1
<PAGE>
HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
APPENDIX A
FUNDING VEHICLES
1. PROGRAM FUNDING VEHICLES
A. METLIFE FUNDING OPTIONS
[ ] Guaranteed Fixed Income Account
[X] MetLife Guaranteed Fixed Income Account
[ ] MetLife Real Estate Account
[ ] MetLife Stock Market Index Guarantee Account
B. MUTUAL FUNDS SOLD THROUGH METLIFE SECURITIES, INC.
[X] SSR Equity Income Fund
C. SELF DIRECTED BROKERAGE ACCOUNT (SDA)
[ ] SDA
2. OUTSIDE FUNDING VEHICLES
[X] Company Stock Fund (Complete Appendix C)
[X] LOOMIS SAYLES SMALL CAP FUND
[X] FOUNDERS BALANCED FUND
[X] OAKMARK FUND
[X] WARBURG PINCUS INTERNATIONAL EQUITY FUND
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METLIFE DEFINED CONTRIBUTION GROUP
1
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HALTER MARINE GROUP, INC.
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APPENDIX B
ADMINISTRATIVE MATTERS
(1) CHANGES IN PARTICIPANTS' 401(K) OR AFTER-TAX SAVINGS CONTRIBUTIONS
ELECTIONS
Subject to the Plan's limitations and restrictions on the amount of 401(k)
and/or after-tax savings contributions by a Participant, a Participant may
commence, increase, decrease or resume after a discontinuance, his/her
401(k) and/or after-tax savings contributions, by making formal application
as required by the Plan Administrator. Any such change will be effective as
follows: (Choose one)
[ ] As of the first day of the first payroll period which is at least
_____ days (Insert period, for example 30 days) after the Participant
files his/her change form.
[X] As of the first day of the first payroll period coinciding with or
next following the first day of each quarter (Insert month, plan year
quarter, plan year, etc.) which is at least 30 days (Insert period,
for example 30 days) after the Participant files his/her change form.
[ ] Other (Describe) ___________________________________________________
The maximum number of such changes by a Participant is as follows:
[ ] No Limit.
[X] 1__ (Insert number, for example 1) per quarter (Insert period).
(2) DISCONTINUANCE OF 401(K) AND/OR AFTER-TAX SAVINGS CONTRIBUTIONS
A Participant who is making 401(k) and/or after-tax savings contributions
may discontinue them by making formal application as required by the Plan
Administrator. Any such discontinuance will be effective as of the first
day of the first payroll period which is at least 30 days (Insert period,
for example 30 days) after the Participant makes such application.
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METLIFE DEFINED CONTRIBUTION GROUP
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HALTER MARINE GROUP, INC.
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(3) TRANSFERS
A Participant may change the investment of amounts already in his/her Plan
accounts by making formal application as required by the Plan
Administrator. PROCESSING OF ONE CHANGE MUST BE COMPLETED BEFORE A
PARTICIPANT MAY MAKE ANOTHER CHANGE. Any such change will be processed as
follows: (Choose one)
(a) [X] Daily, using the Benephone service and being connected with a
MetLife Representative.
[X] Automated transfers through Benephone. (Only available
if your Plan can access Same Day Trading).
(b) [ ] As soon as reasonably practicable after the Participant files
his/her change form, provided that the Participant must file the
change form at least ____ days (Insert period, for example 30
days) beforehand.
(c) [ ] As soon as reasonably practicable after the first day of the
______ (Insert period, for example month, quarter, year) which is
at least _____ days (Insert period, for example 30 days) after
the Participant files his/her change form.
The maximum number of such changes by a Participant is as follows:
[X] No Limit.
[ ] _____ (Insert number, for example 1) per __________ (Insert
period, either month, calendar quarter, calendar half, etc.)
PLEASE NOTE FOR SAME DAY TRADING: TRANSFERS WILL BE TRADED AT THE NET
ASSET VALUE OR UNIT VALUE AT THE CLOSE OF BUSINESS OF THE CURRENT BUSINESS
DAY ONLY IF INSTRUCTIONS ARE BOTH RECEIVED AND PROCESSED BY 4:00 P.M.
EASTERN TIME.
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METLIFE DEFINED CONTRIBUTION GROUP
3
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HALTER MARINE GROUP, INC.
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(4) CHANGE IN INVESTMENT OF FUTURE CONTRIBUTIONS
A Participant may change the investment of future contributions to his/her
accounts by making formal application as required by the Plan
Administrator. PROCESSING OF ONE CHANGE MUST BE COMPLETED BEFORE A
PARTICIPANT MAY MAKE ANOTHER CHANGE. Any such change will be processed as
follows:
(a) [X] Daily, using the Benephone system and being connected to a
MetLife Representative.
[X] Automated through Benephone. (Only available if your
Plan can access Same Day Trading).
CHANGE WILL ONLY AFFECT CONTRIBUTIONS TAKEN FROM PAY PERIODS ON OR AFTER
THE DATE OF CHANGE.
(b) [X] As soon as reasonably practicable after the Participant files
his/her change form, provided that the Participant must file the
change form at least 30 days (Insert period, for example 30 days)
beforehand.
(c) [ ] As soon as reasonably practicable after the first day of the
______ (Insert period, for example month, quarter, year) which is
at least ____ days (Insert period, for example 30 days) after the
Participant files his/her change form.
The maximum number of such changes by a Participant is as follows:
[X] No Limit. (Must be elected if "Automated through Benephone".)
[ ] __________ (Insert number, for example 1) per __________ (Insert
period, either month, calendar quarter, calendar half, etc.).
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METLIFE DEFINED CONTRIBUTION GROUP
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HALTER MARINE GROUP, INC.
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(5) PAYROLL DATES
[ ] Not Applicable.
[X] The date of the first payroll under MDCG will be January 1, 1997
[ ] The first payroll tape or diskette will be received at MetLife on
_______________
(Insert approximate date) for the payroll period(s) ending
as of ________________ (Insert approximate date).
(6) IN-SERVICE WITHDRAWALS
If in-service withdrawals are provided for in Section D.3 of this Adoption
Agreement, a Participant may request an in-service withdrawal from his/her
Plan accounts by making formal application as required by the Plan
Administrator. Any such in-service withdrawals are subject to the
limitations and restrictions specified by the Plan (including limitations
on the maximum in-service withdrawal balance and approval by the Plan
Administrator in the case of hardship withdrawals). Payment of an in-
service withdrawal will be processed as follows: (Choose one)
[X] As soon as reasonably practicable after the Participant makes formal
application, provided that the Participant must make such application
30 days (Insert period, for example 30 days) beforehand.
[ ] As soon as reasonably practicable after the first day of the _____
(Insert period, for example month, quarter, year) which is at least
__ days (Insert period, for example 30 days) after the Participant
makes formal application.
The maximum number of in-service withdrawals by a Participant is as
follows:
[ ] No Limit.
[X] 1 (Insert number, for example 1) per year (Insert period).
The minimum amount of an in-service withdrawal will be the lesser of:
(a) $500; or
(b) in the case of an in-service withdrawal for financial hardship, the
amount necessary to meet the hardship.
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HALTER MARINE GROUP, INC.
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The maximum amount of an in-service withdrawal will be the lesser of:
(a) in the case of an in-service withdrawal for financial hardship, the
amount necessary to meet the hardship,
(b) $_________ (Indicate dollar restriction on total vested account
balance and/or any particular contribution type).
(c) _________% (Indicate percentage of the total vested account balance
and/or any restrictions on withdrawing a particular contribution
type).
(7) WITHDRAWALS BY TERMINATED PARTICIPANTS
[X] Not Applicable.
[ ] Participants who have separated from service and have left all or a
portion of their account balance in the Plan will be allowed to take
unscheduled withdrawals from their accounts. The number of such
withdrawals will be limited to:
[ ] No Limit.
[ ] __________ (Insert number) per ________ (Insert period).
(8) AUTOMATIC JOINT AND SURVIVOR ANNUITY
[ ] The automatic form of distribution for married Participants is the
Joint & Survivor Annuity unless otherwise elected by the Participant,
with spousal consent. (THIS BOX MUST BE CHECKED IF PLAN PREVIOUSLY
PROVIDED THE JOINT & SURVIVOR ANNUITY AUTOMATICALLY, FOR MARRIED
PARTICIPANTS).
[X] Not Applicable; the automatic form of distribution is a lump sum
payout unless otherwise elected by the Participant.
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METLIFE DEFINED CONTRIBUTION GROUP
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HALTER MARINE GROUP, INC.
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(9) RECORDKEEPING EXPENSES
[X] To be paid directly by the Employer.
[ ] To be deducted from Participants' account balances in the following
manner:
[ ] FLAT DOLLAR AMOUNT. Expenses will be deducted from each
Participant's account prorata across all contributions types and
investment funds. The flat dollar amount will be calculated by
dividing the total expense amount by the total number of
Participant records in the Plan at the time the allocation is
made. (Approximations may be used).
[ ] RATIO METHOD. Expenses will be deducted from each Participant's
account prorata across all contribution types and investment
funds in the ratio that each Participant's account balance bears
to all Participant's account balances in the Plan at the time the
allocation is made.
The expense allocation will be processed: (Choose one)
[ ] Quarterly
[ ] Semi-Annual
[ ] Annual
[ ] Other (Describe) ______________________________________________
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METLIFE DEFINED CONTRIBUTION GROUP
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HALTER MARINE GROUP, INC.
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(10) 404(C) COMPLIANCE
[ ] The Employer does not wish to seek ERISA Section 404(c) compliance.
[X] The Employer wishes to comply with ERISA Section 404(c) as of
January 1, 1997 (Insert date, not earlier then current date).
[ ] The Employer had previously complied with ERISA Section 404(c) as of
(Insert date) and wishes to continue compliance under the
MetLife Defined Contribution Group program.
(11) EMPLOYER STATUS
[X] Employer is not a part of a controlled group and/or affiliated service
group as defined in Code Section 414(b), (c), (m) or (o).
[ ] Employer is part of a controlled group and/or affiliated service group
as defined in Code Section 414(b), (c), (m) or (o).
[ ] All members of the controlled group and/or affiliated service
group are included under this Plan.
(12) WITHDRAWAL SEQUENCE
Under the MetLife Defined Contribution Group program in-service withdrawals
are normally taken from contribution types in order of "easiest access" to
"most difficult access", while loan withdrawals are made in the reverse
order.
An example of the sequence of contribution types for an in-service
withdrawal might be: Supplemental After-Tax, Basic After Tax, Rollover,
Employer Profit Sharing, Employer Match, Supplemental Pre-Tax, Basic Pre-
Tax.
For loans the withdrawal sequence might be: Basic Pre-Tax, Supplemental
Pre-Tax, Employer Match, Employer Profit Sharing, Rollover, After-Tax
Basic, After-Tax Supplemental.
THE ORDER IS DETERMINED BY THE EMPLOYER AND APPLIED TO ALL PARTICIPANTS'
ACCOUNTS. PLEASE DISCUSS THE WITHDRAWAL SEQUENCES TO BE USED FOR YOUR PLAN
WITH YOUR METLIFE PENSION ADMINISTRATOR.
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METLIFE DEFINED CONTRIBUTION GROUP
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HALTER MARINE GROUP, INC.
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(13) PRIOR PLAN CONTRIBUTIONS (Prior to 01/01/97 (Insert date))
[ ] Not Applicable.
[X] Employer and/or employee contributions were permitted prior to the
effective date of this amendment. Therefore, complete the following
for each contribution type. ERISA ANTI-CUTBACK REGULATIONS PROHIBIT
CHANGING THE PROVISIONS OF PRIOR CONTRIBUTIONS IF THE CHANGES APPLY
MORE RESTRICTIVE CONDITIONS TO SUCH PRIOR CONTRIBUTIONS.
(a) 401(K) SAVINGS CONTRIBUTIONS.
[ ] Not Applicable. [X] Will continue. [ ] Will not continue.
[ ] Will be subject to all the same provisions of this Adoption
Agreement.
[ ] Will not be subject to the same provisions of this Adoption
Agreement. Instead, (Specify differences, particularly for in-
service withdrawals, loans and vesting) ______________________
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(b) AFTER-TAX CONTRIBUTIONS.
[X] Not Applicable. [ ] Will continue. [ ] Will not continue.
[ ] Will be subject to all the same provisions of this Adoption
Agreement.
[ ] Will not be subject to the same provisions of this Adoption
Agreement. Instead, (Specify differences, particularly for in-
service withdrawals, loans, vesting) __________________________
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METLIFE DEFINED CONTRIBUTION GROUP
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HALTER MARINE GROUP, INC.
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(c) EMPLOYER MATCHING CONTRIBUTIONS.
[ ] Not Applicable. [X] Will continue. [ ] Will not continue.
[ ] Will be subject to all the same provisions of this Adoption
Agreement.
[ ] Will not be subject to the same provisions of this Adoption
Agreement. Instead, (Specify differences, particularly for in-
service withdrawals, loans, vesting) __________________________
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(d) EMPLOYER PROFIT SHARING CONTRIBUTIONS.
[ ] Not Applicable. [ ] Will continue. [X] Will not continue.
[ ] Will be subject to all the same provisions of this Adoption
Agreement.
[ ] Will not be subject to the same provisions of this Adoption
Agreement. Instead, (Specify differences, particularly for in-
service withdrawals, loans, vesting) ___________________________
(e) INVESTMENT OF PRIOR PLAN ASSETS.
[ ] All into the Short Term Fixed Income Account until the conversion
is completed. As of the conversion, Participants' existing
account balances will be invested in accordance with the
investment elections chosen by Participants for their future
contributions and in effect at the time of the conversion.
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METLIFE DEFINED CONTRIBUTION GROUP
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HALTER MARINE GROUP, INC.
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[X] Into the "same type" of investment funds offered under the Plan
prior to the effective date of this Adoption Agreement. The
Employer has determined the "same investment types" to be:
From: To:
GIC & Putnam U.S. MetLife Guaranteed Fixed
Government Income Trust Income Fund
------------------------ --------------------------------
Putnam Growth & Income SSR Equity Income Fund
------------------------ --------------------------------
Putnam Voyager Fund Loomis Sayles Small Cap Growth
------------------------ --------------------------------
Trinity Stock Halter Marine Stock Fund
------------------------ --------------------------------
[ ] Other (Specify) _______________________________________________
_______________________________________________________________
_______________________________________________________________
(f) EFFECTIVE DATES.
Original Plan Effective Date:__________________________________
Effective Date of changeover to MetLife Defined Contribution
Group program: January 1, 1997
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METLIFE DEFINED CONTRIBUTION GROUP
11
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HALTER MARINE GROUP, INC.
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APPENDIX C
EMPLOYER SECURITIES
(ADMINISTRATIVE MATTERS)
1. [ ] Plan does not provide for an Employer Company Stock Option (If
checked do not complete the rest of this Appendix).
2. [X] Plan provides for an Employer Company Stock Option.
(A) THE TRUSTEE FOR THE COMPANY STOCK FUND IS:
Reliance Trust Company
(B) COMPANY STOCK IS VALUED:
[X] Daily [ ] Semi Annual
[ ] Monthly [ ] Annual
[ ] Quarterly [ ] Other
(C) INVESTMENT OF COMPANY STOCK: (Choose ALL that apply)
[ ] Employer matching contributions must be initially deposited
to the Company Stock Option. Thereafter, Participants:
[ ] may [ ] may not
transfer such contributions to other funding option.
[ ] Employer profit sharing contributions must be initially
deposited to the Company Stock Option. Thereafter,
Participants:
[ ] may [ ] may not
transfer such contributions to other funding options.
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METLIFE DEFINED CONTRIBUTION GROUP
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HALTER MARINE GROUP, INC.
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[X] Participants may direct the investment of 401(k) and/or after
tax contributions and/or rollover accounts into the Company
Stock Option.
[ ] Participants may not direct the investment of 401(k) and/or
after-tax contributions an/or rollover accounts into the
Company Stock Option.
[X] All contribution types may be directed to the Company Stock
Option, at the Participant's election.
(D) DISTRIBUTIONS FROM THE COMPANY STOCK OPTION
[ ] All distributions may be made in cash or in kind, at the
Participant's option.
[X] All distributions will only be made in cash.
[ ] In-service withdrawals and/or loans will only be made in
cash.
[ ] Distributions upon separation of service will be made in
cash or in kind, at the Participant's option.
[ ] No in-service withdrawals and/or loans my be made from the
Company Stock Option.
(E) COMPANY STOCK IS:
[ ] Privately held
[X] Publicly held and listed on the: American Stock Exchange
(Insert name(s) of stock exchange(s) and symbol(s)).
(F) DIVIDENDS:
[X] Not Applicable.
[ ] Yes, where dividends are: (Choose one)
[ ] Reinvested in cash.
[ ] Reinvested in shares.
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METLIFE DEFINED CONTRIBUTION GROUP
13
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HALTER MARINE GROUP, INC.
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METLIFE DEFINED CONTRIBUTION GROUP
14
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HALTER MARINE GROUP, INC.
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APPENDIX D
PARTICIPANT LOAN PROGRAM
Under Section D.2 of the Adoption Agreement the Halter Marine Group, Inc. 401(k)
Profit Sharing Plan permits loans to be made to all parties-in-interest. A
Participant may request a loan from his/her Plan accounts by making formal
application, as required by the Plan Administrator. Before any loan is made,
Section 12.5 of the Plan requires that a written loan program be established
which sets forth the rules and guidelines for making Participant loans. This
APPENDIX shall serve as the required written loan program. In addition, the
Plan Administrator may use this to serve as, or supplement, any required notice
of the loan program to parties-in-interest. The provisions of this loan program
are to be effective as of January 1, 1997.
1. Loans are available to active Participants, former Participants who are
parties-in-interest and beneficiaries who are parties-in-interest, as
defined by ERISA Section 3(14) and, if elected in D.2 of the Adoption
Agreement, employees who have made rollover contributions to the Plan but
have not yet satisfied the Plan eligibility requirements.
The Plan Administrator is authorized to administer the Participant loan
program. All applications for loans shall be made by a Participant in the
manner which the Plan Administrator makes available for such purpose, as
indicated below:
[ ] Loans may ONLY be requested by paper application.
[X] Loans may be requested by electronic OR paper application.
The Promissory Note/Disclosure Statement will be
[ ] produced by the Plan Administrator and signed by the
Participant prior to the Participant's receipt of the loan check.
(With this option all loan checks MUST be sent to the Plan
Administrator for delivery to Participants.)
[X] printed on the check stub and deemed to be signed when the
Participant negotiates the loan check. Neither MetLife nor the
Trustee will maintain copies of the loan notes. (With this
option the Plan Administrator must also select one of the
following alternatives.)
[X] Loan checks will be mailed directly to Participants at the
addresses held on MetLife's recordkeeping system.
[ ] Loan checks will be mailed to the Employer who will then
be responsible for their delivery to Participants.
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METLIFE DEFINED CONTRIBUTION GROUP
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HALTER MARINE GROUP, INC.
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2. All loan applications shall be considered by the Plan Administrator within
a reasonable time after the Participant makes formal application. Such
formal application shall be limited only to paper request if the
Participant is required to provide supporting information deemed necessary
by the Plan Administrator.
Payment of a loan will be processed as follows: (May choose more than one)
[X] If by paper application, as soon as reasonably practicable after
the Participant files his/her loan request documents, provided
that the Participant file such documents at least 30 days (Insert
period, for example 30 days) beforehand.
[ ] If by paper application, as soon as reasonably practicable after
the first day of the _____________ (Insert period: month, quarter,
year, etc.) which is at least ________ days (Insert period, for
example 30 days) after the Participant files his/her loan request
documents.
[X] If by electronic application, within 5 business days following
electronic request.
3. The Plan Administrator shall determine whether a Participant qualifies for
a loan, applying such criteria as a commercial lender of funds would apply
in like circumstances with respect to the Participant. Such criteria shall
include, but need not be limited to, the creditworthiness of the
Participant and his/her general ability to repay the loan, whether adequate
security has been provided for the loan, and whether the Participant
agrees, as a condition for receiving the loan, to make repayments through
direct, after-tax payroll deductions.
Loans will be approved provided: (Choose one)
[ ] If there are any conditions you wish to impose (OTHER THAN A SERVICE
REQUIREMENT) you must let potential applicants know what they are; for
example, the person has not gone bankrupt in the past or if they are
in arrears on any current commercial loan. (If this option is
elected, loans may NOT be requested by electronic application.)
___________________________________________
[ ] The Participant has been employed by the Employer for a period of at
least ___________ (insert period, for example 6 months, one year,
etc.).
[X] No limitations.
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HALTER MARINE GROUP, INC.
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Loans shall be granted: (Choose one)
[ ] Only in the event of a Participant's hardship or for the purpose of
enabling a Participant to meet certain specified financial situations.
For this purpose, a loan shall be authorized in the event of:
significant health expenses or loss of income resulting from a
prolonged illness, disability or death of the Participant or a member
of his/her immediate family; establishing the principal residence of
the Participant; or payment for a college education (including
graduate studies) for the Participant or his/her dependents. The Plan
Administrator shall determine whether a Participant qualifies for a
loan under this paragraph. (If this option is elected, loans may NOT
be requested by electronic application.)
[X] For any reason considered valid by commercial lenders in the
geographic locale where the Participant resides and/or at the location
of the plant employing the Participant.
4. With regard to any loan made pursuant to this program, the following
rule(s) and limitation(s) shall apply, in addition to such other
requirements set forth in the Plan and this program:
(A) The maximum number of loan requests by a Participant is 1 (Insert
number, for example 1) per __________ (Insert period, for example
plan year).
(B) The maximum number of loans to a Participant that may be outstanding
at any one time is: (Total cannot exceed 3)
[ ] 1 personal and/or home loans
[ ] ___ personal loans and ______________ home loans
(C) The maximum term for a personal loan will be five years. If a
Participant requests a loan for the acquisition of a principal
residence of the Participant, then the maximum repayment period may
be no more than 5 . (Not more than 30 years.)
(D) The minimum term for loans will be ____________________. (Indicate
period in whole months; for example 1 year, 6 months, etc.)
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METLIFE DEFINED CONTRIBUTION GROUP
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HALTER MARINE GROUP, INC.
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(E) The minimum amount of each loan is $1,000. (Not more than $1,000.)
(F) The maximum amount of a loan cannot exceed the lesser of 50% of the
Participant's vested accrued account or $50,000 less the highest
outstanding total loan balances during the previous 12 month period,
or a lower maximum of: (Insert any other restrictions, for example:
the amount of the loan cannot exceed 50% of the Participant's vested
Employer Contribution Account.) ______
Restrict to EE$ only, ER$ is included in amount available.
(G) All loans made pursuant to this program shall be considered a
directed investment from the account(s) of the Participant maintained
under the Plan. Principal and interest will be amortized over the
duration of the loan. All payments of principal and interest made by
the Participant shall be credited only to the account(s) of such
Participant.
(H) Loans may only be prepaid in full and may not be prepaid prior to the
date on which the twelfth monthly payment has been made. If the term
of the loan is for a period of twelve months or less, the loan may
[ ] be prepaid in full at any time.
[X] NOT be prepaid.
(I) Loan amounts will be withdrawn from a Participant's account first by
contribution type (based on the withdrawal sequence for loans elected
by the Employer) and then pro rata across all funding options in
which the applicable contribution type is invested.
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HALTER MARINE GROUP, INC.
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(J) Loan repayments of principal and interest will be reinvested in
accordance with the investment instructions then in effect for new
contributions being made on behalf of the Participant at that time.
If loan repayments are being made for a Participant who is not making
new contributions, such loan repayments will be invested in
accordance with the last investment instructions in effect prior to
the Participant's cessation of new contributions. Repayments will be
deposited to contribution types in the reverse order from which the
loan was withdrawn.
(K) Loan repayments
[ ] may
[X] may not
be suspended for up to one year because of a leave of absence which
is either unpaid or where the Participant's rate of pay after income
and employment tax withholding is less than the amount of the
installment payment required under the terms of the loan note. If
loan repayments are allowed to be suspended, then upon the earlier of
the Participant's return to employment with the Employer or a period
of one year, loan repayments will again commence in amounts which
will be NO LESS than the amounts of the loan payments made
immediately prior to the period of suspension and which will allow
the loan to be fully repaid by the date originally scheduled.
(L) Section 201.08(1) of the Florida Statutes imposes an excise tax
(Florida Documentary Stamp Tax) on promissory notes or "assignments
of salaries, wages or other compensation made, executed, delivered,
sold, transferred or assigned" in Florida. The tax is 35 cents for
each $100 and portion thereof, of the amount of the loan.
[ ] The Plan Administrator has determined that this tax IS NOT
applicable to loans negotiated in the State of Florida.
[X] The Plan Administrator has determined that this tax IS
applicable to loans negotiated in the State of Florida. (If
checked complete the following)
[X] Tax will be deducted from participant's account after the
loan is processed.
[ ] Tax will be charged to the Plan Administrator.
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METLIFE DEFINED CONTRIBUTION GROUP
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HALTER MARINE GROUP, INC.
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5. Any loan granted or renewed under this program shall bear a reasonable rate
of interest. In determining such rate of interest, the Plan shall require
a rate of return commensurate with the prevailing interest rate charged on
similar commercial loans under like circumstances by persons in the
business of lending money. Such prevailing interest rate standard shall
permit the Plan Administrator to consider factors pertaining to the
opportunity for gain and risk of loss that a professional lender would
consider on a similar arms-length transaction.
In establishing the rate of interest, the Plan Administrator shall conduct
a reasonable and prudent inquiry with professional lenders in the same
geographic locale where the Participant resides and/or at the location of
the plant employing the Participant to determine such prevailing interest
rate for loans under like circumstances, or may elect to use the rate of
interest established by the Trustee.
The interest rate for the lifetime of the loan will be set as of the close
of the last business day of the month preceding each quarter (Insert
period, for example month, calendar quarter, etc.), and will be based on
the Prime Rate set by Chase Manhattan Bank (Insert name of commercial
lender) plus 1 % (Insert percentage).
6. The Plan shall require that adequate security be provided by the
Participant before a loan is granted. For this purpose, the Plan shall
consider a Participant's interest under the Plan to be adequate security,
subject to such limitations as are imposed by Section 12.5(c) and (d) of
the Plan. It shall be the policy of the Plan not to make loans which
require security other than the Participant's vested interest in the Plan.
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METLIFE DEFINED CONTRIBUTION GROUP
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HALTER MARINE GROUP, INC.
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7. A default shall occur upon the failure of a Participant to pay interest and
principal due:
[X] within 90 days (Insert period, for example 90 days) after
missing a payment.
[ ] by the end of the calendar quarter following the calendar
quarter in which payment is missed.
In such event, the outstanding balance of the loan shall be immediately due
and payable and will become taxable to the Participant to the extent that
the outstanding amount consists of taxable monies. However, since the
Participant's account balance is the security for the defaulted loan, the
Plan Administrator shall defer enforcement of its security interest until a
distributable event occurs. If default of a loan has not occurred prior to
termination of employment for any reason, then the Plan Administrator's
election below will determine whether or not the loan is immediately due
and payable upon such termination of employment.
[X] If an active Participant has an outstanding loan balance and leaves
employment for any reason, then such outstanding loan balance is
immediately due and payable. (Participants should be advised to seek
counsel concerning the tax implications.)
[ ] If an active Participant has an outstanding loan balance and leaves
employment for any reason then such outstanding loan balance may
continue to be repaid according to the same repayment schedule in
effect prior to separation of service, as long as the terminated
Participant leaves all or a portion of his/her account balance in the
Plan. (IF THIS OPTION IS CHOSEN, THE PLAN ADMINISTRATOR MUST AGREE
THAT LOAN REPAYMENTS MAY ONLY BE SUBMITTED TO METLIFE THROUGH EMPLOYER
GENERATED INPUT. METLIFE WILL NOT ACCEPT CHECKS FROM INDIVIDUAL
PARTICIPANTS OR FORMER PARTICIPANTS).
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HALTER MARINE GROUP, INC.
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8. The MetLife Defined Contribution Group program may charge a non-refundable
loan application fee of $50 at the time a loan is requested. Such fee will
be:
[ ] charged to the Plan Administrator. The Plan Administrator may,
at its discretion, charge this loan fee back to the Participant.
However, in doing so the Plan Administrator assumes the
responsibility of collecting payment from individual
Participants, cashing such checks and wiring the payment (or
sending a Company check) to MetLife at the time the Plan is
billed. METLIFE WILL NOT ACCEPT INDIVIDUAL PARTICIPANT CHECKS AS
PAYMENT FOR LOAN APPLICATION FEES.
[X] charged to the Participant and deducted from his/her account
after the loan is processed.
Adopted this 19th day of December, 1996. This loan program may be amended from
time to time by a writing signed by all parties hereto.
Leonard Morgan
_______________________________________________________________________________
Plan Administrator's Signature
Leonard Morgan, Manager of EE Benefits
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Plan Administrator's Name and Title (Please print or type)
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METLIFE DEFINED CONTRIBUTION GROUP
21
<PAGE>
METROPOLITAN LIFE INSURANCE COMPANY
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PROTOTYPE PLAN
TRUST AGREEMENT
FOR
HALTER MARINE GROUP, INC.
October 6, 1995
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METLIFE DEFINED CONTRIBUTION GROUP
<PAGE>
HALTER MARINE GROUP, INC.
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TABLE OF CONTENTS
ARTICLE
FIRST Acceptance of Property 2
SECOND Investment Powers 3
THIRD Payments 6
FOURTH Administrative Powers 7
FIFTH Insurance Contracts 9
SIXTH Fiduciary Standards 11
SEVENTH Prohibition of Diversion 12
EIGHTH Hold Harmless 13
NINTH Accounts 14
TENTH Committee 16
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METLIFE DEFINED CONTRIBUTION GROUP
<PAGE>
HALTER MARINE GROUP, INC.
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TABLE OF CONTENTS
(continued)
ARTICLE
ELEVENTH Resignation of Trustee 16
TWELFTH Amendment 17
THIRTEENTH Termination 18
FOURTEENTH Plan-to-Plan Transfers; Rollovers 19
FIFTEENTH Adopting Employers 20
SIXTEENTH Alienation 21
SEVENTEENTH Bond 21
EIGHTEENTH Successors 21
NINETEENTH Communications 22
TWENTIETH Governing Law 23
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METLIFE DEFINED CONTRIBUTION GROUP
<PAGE>
HALTER MARINE GROUP, INC.
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TRUST AGREEMENT
(Prototype Plan)
WHEREAS, On January 1, 1997, Halter Marine Group, Inc. hereinafter
referred to as the "Employer", adopted the Halter Marine Group, Inc. 401(k)
Profit Sharing Plan hereinafter referred to as the "Plan", under the MetLife
Defined Contribution Group program, for the purpose of providing retirement and
related benefits to eligible employees of the Employer and their beneficiaries;
and
WHEREAS, the Committee for the Plan, the members of which are "named
fiduciaries" as defined in the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), (which named fiduciaries are hereinafter referred to as
the "Committee") has general responsibility for administration of the Plan and
for reviewing the investment performance of the Trust thereunder; and
WHEREAS, the Plan calls for the establishment of a Trust to which
contributions are to be made by the Employer and Plan participants to be held by
the Trustee and to be managed, invested and reinvested for the exclusive benefit
of such participants and their beneficiaries; and
WHEREAS, the Plan and Trust are intended to qualify as a Plan and Trust
which meet the applicable requirements of Section 401(a) and 501(a) of the
Internal Revenue Code of 1986, as amended, hereinafter referred to as the
"Code"; and
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METLIFE DEFINED CONTRIBUTION GROUP
1
<PAGE>
HALTER MARINE GROUP, INC.
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WHEREAS, the Employer now desires to enter into an Agreement of Trust,
pursuant to the Plan and the MetLife Defined Contribution Group program, and to
appoint THE CHASE MANHATTAN BANK, N.A., a corporation organized and existing
under the laws of the State of New York, having its principal place of business
at 770 Broadway, New York, New York, 10003-9598 as Trustee thereof; and
WHEREAS, The Chase Manhattan Bank, N.A. and Metropolitan Life Insurance
Company have previously entered into an agreement whereby Metropolitan Life
Insurance Company serves as the agent for The Chase Manhattan Bank, N.A. with
respect to all trustee duties, responsibilities and functions required to be
performed under the MetLife Defined Contribution Group program; and
NOW, THEREFORE, the Employer hereby appoints The Chase Manhattan Bank,
N.A. as the "Trustee" of the Trust, hereinafter referred to as the "Trust Fund,"
acknowledges and agrees that Metropolitan Life Insurance Company shall serve as
the Trustee's agent ("Agent") thereunder, and the Employer and the Trustee
hereby enter into this Trust Agreement to read as follows.
FIRST: Acceptance of Property. The Trustee or its Agent shall accept
such cash and other property as is tendered to the Trust Fund as contributions
hereunder, and as is acceptable to it, but shall not be under any duty to
require the Employer or any other adopting Employer to contribute to the Trust
Fund or to determine whether the amount of any contribution has been
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METLIFE DEFINED CONTRIBUTION GROUP
2
<PAGE>
HALTER MARINE GROUP, INC.
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correctly computed under the terms of the Plan. In no event shall the Trustee or
its Agent be considered a party to the Plan. The Trustee and its Agent shall
have only such duties with respect to the Plan as are set forth in this Trust
Agreement.
SECOND: Investment Powers. (a) Subject to paragraph (b) the Trustee or
its Agent may invest and reinvest the principal and income of the Trust Fund,
without distinction between principal and income, in such securities or other
property, real or personal, within or without the United States, as it in its
sole discretion shall deem proper including, without limitations, interests and
part interests in any bond and mortgage or note and mortgage and interests and
part interests in certificates of deposit, commercial paper and other short-term
or demand obligations, secured or unsecured, whether issued by governmental or
quasi-governmental agencies or corporations or by any firm or corporation,
capital, common and preferred, voting and nonvoting stock (regardless of
dividend or earnings record), including shares of mutual funds and to hold such
securities or property in one or more funds. The Trustee or its Agent may, in
its sole discretion, keep such portion of the Trust Fund in cash and cash
balances or hold all or any portion of the Trust Fund in savings accounts,
certificates of deposit, and other types of time or demand deposits with any
financial institution or quasi-financial institution, either domestic or foreign
(including any such institution operated or maintained by the Trustee in its
corporation capacity) as the Trustee may from time to time determine to be in
the best interests of the Trust Fund. Notwithstanding the foregoing, unless
otherwise authorized by ERISA or by
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METLIFE DEFINED CONTRIBUTION GROUP
3
<PAGE>
HALTER MARINE GROUP, INC.
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regulations promulgated by the Secretary of the Department of Labor, the Trustee
shall maintain the indicia of ownership of all securities or other investments
within the jurisdiction of the District Courts of the United States.
To the maximum extent permitted by law, the Trustee or its Agent shall
not be liable for the acquisition, retention or disposition of any assets of the
Trust Fund or for any loss to or diminution of such assets unless due to the
Trustee's or its Agent's own willful misconduct, bad faith, or failure to use
due care.
(b) The Trustee or its Agent will invest the assets of the Plan as
directed by the Committee or Employer in accordance with the relevant provisions
of the Basic Plan Document and the Adoption Agreement or any other applicable
agreement between the Employer and the Plan. In so doing, the Trustee and its
Agent will be a Directed Trustee; the Trustee or its Agent will have no
responsibility for carrying out such investment directions and will have no
liability for any loss or diminution in value occasioned thereby.
(c) The Committee may appoint one or more "investment managers", as
defined in Section 3(38) of ERISA. Any investment manager so appointed shall be
(i) an investment adviser registered as such under the Investment Advisers Act
of 1940, (ii) a bank, or (iii) an insurance company qualified to perform
investment management services under the laws of more than one state of the
United States. The Committee shall notify the Trustee or its Agent of any such
appointment by delivering to the Trustee or its Agent an executed copy of the
instrument
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METLIFE DEFINED CONTRIBUTION GROUP
4
<PAGE>
HALTER MARINE GROUP, INC.
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under which the investment manager is appointed and evidencing the investment
manager's acceptance of such appointment, an acknowledgment by the investment
manager that it is a fiduciary of the Plan, and a certificate evidencing the
investment manager's current registration under the Investment Advisers Act of
1940 or other appropriate qualification. The Committee shall specify to the
Trustee or its Agent the portion of the Trust Fund which shall be subject to
such investment management.
The Trustee or its Agent shall invest and reinvest the portion of the Trust Fund
subject to such investment management only to the extent and in the manner
directed by the investment manager in writing. During the term of such
appointment, the Trustee or its Agent shall have no liability for the acts or
omissions of such investment manager, and except as provided in the preceding
sentence, shall be under no obligation to invest or otherwise manage the portion
of the Trust Fund subject to such investment management. The Trustee or its
Agent may maintain separate accounts within the Trust Fund for the assets of the
Trust Fund subject to such investment management. The Committee may terminate
its appointment of an investment manager at any time and shall notify the
Trustee or its Agent in writing of such termination. To the maximum extent
permitted by ERISA, the Trustee and its Agent shall be protected in assuming
that the appointment of an investment manager remains in effect until it is
otherwise notified in writing by the Committee.
In the event that the investment manager appointed hereunder is a bank
or a trust
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METLIFE DEFINED CONTRIBUTION GROUP
5
<PAGE>
HALTER MARINE GROUP, INC.
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company, or an affiliate of a bank or a trust company, the Trustee or its Agent
shall, upon the direction of the Committee, transfer funds to such bank, trust
company, or affiliate for investment through the medium of any fund created and
administered by such bank, trust company, or affiliate, acting as trustee
therefor, for the collective investment of the assets of employee benefit
trusts, provided that such fund is qualified under the applicable provisions of
the Code and while any portion of the assets are so invested, such fund shall
constitute part of the applicable Plan or Plans, and the instrument creating
such fund shall constitute part of this Trust. In order to implement the
provisions of this paragraph, the Trustee and its Agent are authorized to enter
into any required ancillary trust, agency or other type of agreement with an
investment manager, or its affiliate, as described in the preceding sentence.
Nothing in this provision shall preclude the Committee from investing
Plan assets in mutual funds.
THIRD: Payments. Subject to the provisions of Article THIRTEENTH hereof,
the Trustee or its Agent shall from time to time transfer cash or other property
from the Trust Fund to such persons, including an insurance company or companies
or a receiving or paying agent designated by the Committee, at such addresses,
in such amounts, for such purposes and in such manner as the Committee may
direct, provided that such transfer is administratively feasible, and the
Trustee and its Agent shall incur no liability for any such payment made at the
direction of the Committee. The Committee shall be solely responsible to insure
that any payment made
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METLIFE DEFINED CONTRIBUTION GROUP
6
<PAGE>
HALTER MARINE GROUP, INC.
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at its direction conforms with the provisions of the Plan, the provisions of
this Trust Agreement and ERISA, and the Trustee or its Agent shall have no duty
to determine the rights or benefits of any person in the Trust Fund or under the
Plan or to inquire into the right or power of the Committee to direct any such
payment.
FOURTH: Administrative Powers. The Trustee or its Agent is authorized to
exercise from time to time, in its sole discretion, the following powers with
respect to any property, real or personal, of the Trust Fund, it being intended
that these powers be construed in the broadest possible manner:
(1) power to engage legal counsel, including counsel to the Employer or
the Trustee or its Agent, and any other suitable agents, and to consult with
such counsel or agents with respect to the construction of this Trust Agreement,
the administration of the Trust Fund, and the duties of the Trustee or its Agent
hereunder and to appoint any such agents to carry out any of the duties and
responsibilities of the Trustee hereunder;
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METLIFE DEFINED CONTRIBUTION GROUP
7
<PAGE>
HALTER MARINE GROUP, INC.
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(2) power to commence or defend suits or legal proceedings and to
represent the Trust Fund in all suits or legal proceedings; to settle,
compromise or submit to arbitration any claims, debts or damages due or owing to
or from the Trust Fund, provided that the Trustee or its Agent shall notify the
Committee of all such suits, legal proceedings and claims and, except in the
case of a suit, legal proceeding or claim involving solely the Trustee's or its
Agent's action or omissions to act, shall obtain the written consent of the
Committee before settling, compromising or submitting to binding arbitration any
claim, suit or legal proceeding of any nature whatsoever.
(3) power, upon the written direction of the Committee, to enter into
any contract or policy with an insurance company or companies, including the
Trustee's Agent, for the purpose of insurance coverage or otherwise, provided
that, except as provided in Article THIRD, the Trustee shall be the sole owner
of all such contracts or policies and all such contracts or policies shall be
held as assets of the Trust Fund;
(4) power to make, execute and deliver, as Trustee, any and all deeds,
leases, notes, bonds, guarantees, mortgages, conveyances, contracts, waivers,
releases or other instruments in writing necessary or proper for the
accomplishment of any of the foregoing powers;
(5) power to transfer assets of the Trust Fund to a successor trustee as
provided in Article ELEVENTH; and lastly
(6) power to exercise, generally, any of the powers which an individual
owner might
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METLIFE DEFINED CONTRIBUTION GROUP
8
<PAGE>
HALTER MARINE GROUP, INC.
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exercise in connection with property either real, personal or mixed held by the
Trust Fund, and to do all other acts that the Trustee or its Agent may deem
necessary or proper to carry out any of the powers set forth in this Article
FOURTH or otherwise in the best interests of the Trust Fund.
Notwithstanding the foregoing, in the event that an investment manager
is appointed pursuant to Article SECOND hereof, such investment manager shall
exercise such of the powers enumerated in this Article FOURTH and otherwise
contained in this Trust Agreement with respect to the portion of the Trust Fund
subject to its control as may be specified in the instrument under which the
investment manager was appointed and to hold and retain any securities or other
property which it may so acquire.
FIFTH: Insurance Contracts. The Trustee or its Agent may, at the
direction of the Committee, (i) enter into one or more contracts issued by an
insurance company, including such contracts providing for investment in a
separate account maintained by an insurance company, (ii) transfer to any such
insurance company a portion of the Trust Fund in accordance with any such
contracts, and (iii) hold any such contracts as a part of the Trust Fund until
directed otherwise by the Committee. The Committee shall give such direction to
the Trustee or its Agent by delivering to the Trustee or its Agent a copy of the
action of the Committee, signed by at least 2 members thereof, which shall
specifically refer to this Article FIFTH and direct the Trustee or its Agent to
so act. The Committee may direct the Trustee or its Agent to (i) request
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METLIFE DEFINED CONTRIBUTION GROUP
9
<PAGE>
HALTER MARINE GROUP, INC.
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any information from any such insurance company necessary or appropriate to make
an investment decision, (ii) demand or accept withdrawals or other distributions
under any such contracts, (iii) exercise or not to exercise any rights, powers,
privileges and options under any such contracts and (iv) assign, amend, modify
or terminate any such contracts. The Trustee or its Agent shall take no action
with respect to any such contracts except at the direction of the Committee. The
Trustee or its Agent shall incur no liability for complying with or failing to
comply with any direction of the Committee unless the Trustee's or its Agent's
action is contrary to ERISA or contrary to the Trustee's or its Agent's duties
and responsibilities under this Trust Agreement. Any insurance company issuing
any contracts as hereinabove described may deal with the Trustee or its Agent as
the absolute owner of any such contracts and need not inquire as to the
authority of the Trustee or its Agent to act with regard to such contracts. Any
such insurance company may accept and rely upon any communication from the
Trustee or its Agent which is signed by an officer of the Trustee or its Agent.
For purposes of this Trust Agreement, any such insurance company shall be
considered to be an investment manager with regard to the assets of the Plan
subject to its control. In no event shall the underlying assets of such
insurance company in which such contracts are invested be considered assets of
the Plan or part of the Trust Fund.
SIXTH: Fiduciary Standards. The Trustee or its Agent (or any investment
manager,
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METLIFE DEFINED CONTRIBUTION GROUP
10
<PAGE>
HALTER MARINE GROUP, INC.
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agent, or trustee, appointed pursuant to Article SECOND or FOURTH hereof) shall
(i) discharge its duties hereunder with 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 the conduct of an
enterprise of a like character and with like aims; (ii) subject to the
investment funds specified in the Plan, if any, and to the extent required by
ERISA, diversify the investments of the Trust Fund so as to minimize the risk of
large losses, unless under the circumstances it is clearly prudent not to do so;
and (iii) discharge its duties in accordance with the provisions of the Plan and
this Trust Agreement insofar as such provisions are consistent with ERISA.
The Trustee or its Agent (or any investment manager, agent or trustee
appointed pursuant to Article SECOND or FOURTH hereof) shall not engage in any
transaction which it knows or should know violates Section 406 of ERISA.
Notwithstanding the foregoing, the Trustee or its Agent (or any investment
manger, agent or trustee appointed pursuant to Article SECOND or FOURTH hereof)
may, in accordance with any appropriate exemption provided under ERISA or upon
the approval of the Secretary of the Department of Labor, enter into any
transaction otherwise prohibited under Section 406 of ERISA. The Trustee or its
Agent shall not be responsible for the administration of the Plan, for
determining the funding policy of the Plan or the adequacy of the Trust Fund to
meet the discharge liabilities under the Plan. Except as otherwise provided in
Article EIGHTH, the Trustee or its Agent shall not be responsible for any
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METLIFE DEFINED CONTRIBUTION GROUP
11
<PAGE>
HALTER MARINE GROUP, INC.
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failure of the Committee, the Plan Administrator, or the Employer to discharge
any of their respective responsibilities with respect to the Plan nor be
required to enforce payment of any contributions to the Trust Fund.
SEVENTH: Prohibition of Diversion.
(a) At no time prior to the satisfaction of all liabilities with respect
to participants in the Plan and their beneficiaries shall any part of the corpus
or income of the Trust fund be used for, or diverted to, purposes other than for
the exclusive benefit of such participants ad their beneficiaries. Except as
provided in paragraphs (b), (c) and (d) below, and Article TWELFTH, the assets
of the Trust Fund shall never inure to the benefit of the Employer and shall be
held for the exclusive purpose of providing benefits to participants in the Plan
and their beneficiaries and defraying the reasonable expenses of administering
the Plan.
(b) In the case of a contribution that is made by the Employer by a
mistake of fact, paragraph (a) above shall not prohibit the return to the
Employer of such contribution at the direction of the Committee within one year
after the payment of the contribution.
(c) If a contribution by the Employer is expressly conditioned upon the
deductibility of the contribution under Section 404 of the Code, then to the
extent such deduction is disallowed, paragraph (a) above shall not prohibit the
return to the Employer of such contribution at the direction of the Committee,
to the extent disallowed, within one year after the date of such disallowance.
Contributions which are not deductible in the taxable year in which made but are
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METLIFE DEFINED CONTRIBUTION GROUP
12
<PAGE>
HALTER MARINE GROUP, INC.
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deductible in subsequent taxable years shall not be considered to be disallowed
for purposes of this paragraph (c).
(d) If a contribution by the Employer is expressly conditioned on
initial qualification of the Plan under Section 401 of the Code, and if the Plan
does not so qualify, then paragraph (a) above shall not prohibit the return to
the Employer of such contribution at the direction of the Committee within one
year after the date of denial of such initial qualification of the Plan to the
extent permitted by ERISA and the Code.
EIGHTH: Hold Harmless. To the maximum extent permitted by ERISA and
other applicable law, the Trustee or its Agent shall not be liable for and the
Employer shall indemnify the Trustee or its Agent against, and agrees to hold
the Trustee or its Agent harmless from, all liabilities and claims (including
attorney's fees and expenses in defending against such liabilities and claims)
against the Trustee or its Agent, arising from the Trustee's or its Agent's
performance of its duties in conformance with the terms of the Plan and this
Trust Agreement, including any liability and claim arising with regard to the
provisions of Article SECOND, unless such liability or claim results from the
willful misconduct, bad faith or failure to use due care by the Trustee or its
Agent. To the maximum extent permitted by ERISA and other applicable law, the
Trustee or its Agent shall not be liable for acting or not acting in accordance
with any written direction of the Committee or an investment manager designated
under Article SECOND or, where an investment manager has been designated,
failing to act in the absence
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METLIFE DEFINED CONTRIBUTION GROUP
13
<PAGE>
HALTER MARINE GROUP, INC.
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of any such direction, including, without limitation, any claim or liability
that may be asserted against the Trustee or its Agent on account of failure to
receive securities purchased, or failure to deliver securities sold pursuant to
orders issued by an investment manager, and the Employer shall indemnify the
Trustee and its Agent against, and agrees to hold the Trustee and its Agent
harmless from, all such liabilities and claims (including attorney's fees and
expenses in defending against such liabilities and claims) unless such
liabilities and claims result from the willful misconduct, bad faith or failure
to use due care of the Trustee or its Agent. The foregoing indemnification shall
also apply to liabilities and claims against the Trustee or its Agent arising
from any breach of fiduciary responsibility by fiduciary other than the Trustee
or its Agent, unless the Trustee or its Agent (i) participates knowingly in or
knowingly undertakes to conceal such breach, (ii) has enabled such fiduciary to
commit such breach by its failure to exercise its fiduciary duties under ERISA,
or (iii) has actual knowledge of such breach and fails to take reasonable
remedial action to remedy such breach.
NINTH: Accounts. The Trustee or its Agent shall keep records of all
transactions relating to the Trust Fund, which shall be made available at all
reasonable times to persons designated by the Board of Directors of the Employer
or as may be required by law. The Trustee or its Agent shall render an
accounting to the Employer and the Committee at least annually. The Committee
may approve such account on behalf of itself and the Employer by an instrument
in writing delivered to the Trustee or its Agent. If the Committee does not file
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METLIFE DEFINED CONTRIBUTION GROUP
14
<PAGE>
HALTER MARINE GROUP, INC.
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with the Trustee or its Agent objections to any such account within 120 days
after its receipt, the Committee shall be deemed to have approved such account
on behalf of itself and the Employer. In such case, or upon the written approval
of the Committee of any such account, the Trustee and its Agent shall, to the
extent permitted by law, be discharged from all liability to the Committee for
their acts or failures to act described in such account. Except to the extent
otherwise provided by ERISA or other applicable law, no person, other than the
Employer or the Committee, may require an accounting or bring any action against
the Trustee or its Agent with respect to the Trust Fund. The Trustee or its
Agent shall render to the Committee, at least quarterly, a statement of the
Trust Fund assets and their values and, whenever a contribution is made to the
Trust Fund other than in cash, a statement of the value of such property on the
date it is received by the Trustee or its Agent.
Nothing contained in this Trust Agreement or in the Plan shall deprive
the Trustee or its Agent of the right to have a judicial settlement of its
accounts. In any proceeding for a judicial settlement of the accounts of the
Trustee or its Agent or for instructions with regard to the Trust Fund, the only
necessary parties thereto in addition to the Trustee and its Agent as
appropriate shall be the Committee. If the Trustee or its Agent so elects, it
may join as a party or parties defendant any other person or persons.
TENTH: Committee. The Committee shall certify to the Trustee and its
Agent the names of the persons from time to time constituting the Committee or
otherwise authorized to
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METLIFE DEFINED CONTRIBUTION GROUP
15
<PAGE>
HALTER MARINE GROUP, INC.
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act on behalf of the Committee as agents thereof. All directions to the Trustee
or its Agent by the Committee shall be in writing, and shall be properly
certified by a member thereof (or 2 members thereof if Article FIFTH is
applicable). The Trustee and its Agent shall be entitled to rely, without
further inquiry, upon all such written directions received from the Committee.
ELEVENTH: Resignation of Trustee. The Trustee and its Agent may resign
at any time by giving sixty (60) days written notice to the Employer. The Board
of Directors of the Employer may remove the Trustee and its Agent at any time by
giving sixty (60) days written notice to the Trustee and its Agent. In the case
of the resignation or removal of the Trustee and its Agent, the Board of
Directors of the Employer shall appoint a successor trustee who shall have the
same powers and duties as those conferred upon the Trustee and its Agent. Upon
the resignation or removal of the Trustee and its Agent and the appointment of a
successor trustee, the Trustee or its Agent shall account for the administration
of the Trust Fund up to the date of its resignation or removal in the manner
provided in Article NINTH hereof and, upon the approval or deemed approval of
such account, the Trustee or its Agent shall transfer to the successor trustee
all of the assets then constituting the Trust Fund and the Trustee and its Agent
shall, to the maximum extent permitted by ERISA, be forever released and
discharged from all liability and accountability with respect to the propriety
of its acts and transactions. The Trustee or its Agent may, in its sole
discretion, transfer such assets prior to the completion of such accounting if
the Employer agrees thereto in writing, such writing to include such limitations
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METLIFE DEFINED CONTRIBUTION GROUP
16
<PAGE>
HALTER MARINE GROUP, INC.
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on the Trustee's or its Agent's liability therefor as the Trustee or its Agent
may deem appropriate. The term "Trustee" as used in this agreement shall be
deemed to apply to any successor trustee acting hereunder. The successor
trustee, and any successor to the trust business of the Trustee by merger,
consolidation or otherwise, shall have all the powers given the originally named
Trustee and its Agent. No successor trustee shall be personally liable for any
act or omission of any predecessors. Except as otherwise provided by ERISA or
other applicable law, the receipt of the successor trustee and the approval of
the Trustee's final account by the Committee in the manner provided in Article
NINTH shall constitute a full and complete discharge to the Trustee and its
Agent.
TWELFTH: Amendment. The Board of Directors of the Employer may amend
all or any part of this Trust Agreement at any time provided, however, that any
amendment shall not be effective until the instrument of amendment has been
agreed to and executed by the Trustee or its Agent. Any such amendment or
modification of this Trust Agreement may be retroactive if necessary or
appropriate to qualify or maintain the Trust Fund as a part of a plan and trust
exempt from Federal income taxation under Sections 401(a) and 501(a) of the
Code, the provisions of ERISA, or any other applicable provisions of Federal or
state law, as now in effect or hereafter amended or adopted, and any regulations
issued thereunder, including, without limitation, any regulations issued by the
United States Treasury Department or the United States
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METLIFE DEFINED CONTRIBUTION GROUP
17
<PAGE>
HALTER MARINE GROUP, INC.
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Department of Labor.
Notwithstanding anything contained in this Article TWELFTH to the
contrary, no amendment shall divert any part of the Trust Fund to, and no part
of the Trust Fund shall be used for, any purpose other than for the exclusive
purpose of providing benefits to participants and their beneficiaries.
THIRTEENTH: Termination. This Trust Agreement and the Trust Fund hereby
created may be terminated at any time by the Board of Directors of the Employer
by written notice, delivered to the Trustee or its Agent. Upon receipt of such
notice of termination, the Trustee or its Agent shall, after payment of all
expenses incurred in the administration of the Trust Fund and such compensation
as the Trustee or its Agent may be entitled to, and upon approval of the
appropriate governmental or quasi-governmental authorities (if such approval
shall be required under applicable law), then distribute the Trust Fund in cash
or in kind to such persons or entities, including the Employer, at such time and
in such amounts as the Committee shall direct, which direction shall be in
conformity with the provisions of the Plan and ERISA.
FOURTEENTH: Plan-to-Plan Transfers; Rollovers. The Trustee or the Agent
may transfer all of the property representing a participant's vested interest in
the Plan to the trustees of any trust qualified under Section 401(a) of the Code
or to an IRA. The Trustee or its Agent may make such a transfer only at the
direction of the Committee.
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METLIFE DEFINED CONTRIBUTION GROUP
18
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HALTER MARINE GROUP, INC.
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To the extent permitted by the Plan, the Trustee or its Agent may accept
as part of the Trust Fund such property as is acceptable to the Trustee or its
Agent which represents a participant's retirement benefits transferred from a
trust qualified under Section 401(a) of the Code or transferred from the
participant as a permissible rollover under Section 402(c)(4), 403(a)(4) or
408(d)(3) of the Code. The Trustee or its Agent may accept such transfer only at
the direction of the Committee. The amount of such benefits shall at all times
be separately accounted for by the Employer. A participant shall at all times be
fully vested in any property so transferred as a rollover to the Trust Fund.
Such property shall be distributed to the participant or his beneficiary at the
direction of the Committee within the time required for distribution of his
retirement benefits under the applicable provisions of the Plan.
FIFTEENTH: Adopting Employers. An affiliated corporation of the Employer
which has adopted the Plan in accordance with its terms shall become a party to
this Agreement by delivering to the Employer and the Trustee or its Agent a
certified copy of a resolution of its Board of Directors to the effect that it
agrees to adopt the Plan, to become a party to this Trust Agreement, and to be
bound by all the terms and conditions of the Plan and this Trust Agreement. The
Employer shall have the sole authority to enforce this Trust Agreement on behalf
of any such affiliated corporation and the Trustee or its Agent shall in no
event be required to deal with any such affiliated corporation except by dealing
with the Employer, acting
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METLIFE DEFINED CONTRIBUTION GROUP
19
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HALTER MARINE GROUP, INC.
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as agent for such affiliated corporation. Irrespective of the number of
affiliated corporations which may become parties to this Trust Agreement, the
Trustee or its Agent shall in all respects invest and administer the Trust Fund
as a single fund for investment and accounting purposes without allocation of
any part of the Trust Fund as between the Employer and any such affiliated
corporation.
An affiliated corporation which has adopted the Plan shall cease to be
a party to this Trust Agreement upon the Employer delivering to the Trustee or
its Agent a certified copy of a resolution of such affiliated corporation's
Board of Directors terminating its participation in the Plan. In such event, or
in the event of the merger, consolidation, sale of property or stock,
separation, reorganization or liquidation of the Employer or of any such
affiliated corporation, or in the event of the establishment, modification or
continuance of any other retirement plan which separately or in conjunction with
this Plan qualifies under Section 401(a) of the Code, the Trustee or its Agent
shall continue to hold the portion of the Trust Fund which is attributable to
the participation in the Plan of the employees and their beneficiaries affected
by such termination or by such transaction, and this Trust Agreement shall
continue in force with respect to such portion, until otherwise directed by the
Committee, in accordance with the provisions of the Plan and ERISA.
SIXTEENTH: Alienation. No interest in the Trust Fund shall be
assignable or subject to anticipation, sale, transfer, mortgage, pledge, charge,
garnishment, attachment,
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METLIFE DEFINED CONTRIBUTION GROUP
20
<PAGE>
HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
bankruptcy or encumbrance or levy of any kind, and the Trustee or its Agent
shall not recognize any attempt to assign, sell, transfer, mortgage, pledge,
charge, garnish, attach or otherwise encumber the same except to the extent that
such attempt is made pursuant to a court order determined by the Committee to be
a qualified domestic relations order, as defined in Section 414 of the Code and
Section 206 of ERISA.
SEVENTEENTH: Bond: The Trustee or its Agent shall not be required to
give any bond or any other security for the faithful performance of its duties
under this Trust Agreement except as required by law.
EIGHTEENTH: Successors. This Trust Agreement shall be binding upon the
respective successors and assigns of the Employer and the Trustee. Any
corporation which shall, by merger, consolidation, purchase or otherwise,
succeed to substantially all the trust business of the Trustee shall, upon such
succession, and without any appointment or other action by any person, be and
become successor Trustee hereunder.
NINETEENTH: Communications. Communications to the Employer or the
Committee shall be addressed to the Employer or to the Committee in care of the
Employer, as the case may be, at Halter Marine Group, Inc., 13085 Seaway Rd.,
Gulfport, MS 39505; provided, however, that upon the Employer's written request
such communications shall be sent to such other address as the Employer may
specify.
Communications to the Trustee or its Agent shall be addressed to:
- --------------------------------------------------------------------------------
METLIFE DEFINED CONTRIBUTION GROUP
21
<PAGE>
HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
Metropolitan Life Insurance Company
72 Eagle Rock Avenue - 3rd Floor
East Hanover, New Jersey 07936
Attention: Chet Wydrinski
provided; however, that upon the Trustee's or its Agent's written request, such
communications shall be sent to such other address as the Trustee or its Agent
may specify. No communication shall be binding on the Employer or the Trustee or
its Agent until it is received by the Employer or the Trustee or its Agent.
TWENTIETH: Governing Law. This Trust Agreement shall be construed in
accordance with ERISA and, to the extent not preempted by ERISA, the laws of the
State of New York.
IN WITNESS WHEREOF the Employer and the Trustee or its Agent have
executed this instrument this ____ day of _______________, 199__.
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METLIFE DEFINED CONTRIBUTION GROUP
22
<PAGE>
HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
TWENTIETH: Governing Law. This Trust Agreement shall be construed in
accordance with ERISA and, to the extent not preempted by ERISA, the laws of the
State of New York.
IN WITNESS WHEREOF the Employer and the Trustee or its Agent have
executed this instrument this 19th day of December, 1996.
THE CHASE MANHATTAN HALTER MARINE GROUP, INC.
BANK, N.A.
By: /s/ Chet Wydrinski By: /s/ Keith L. Voigts
------------------------------- ----------------------------------
Title: Assistant Vice President Title: Sr. Vice President, Finance
ATTEST: ATTEST:
By: /s/ Elizabeth Griffin By:
------------------------------- ----------------------------------
Title: Secretary Title:
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METLIFE DEFINED CONTRIBUTION GROUP
23
<PAGE>
METROPOLITAN LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
SERVICE AGREEMENT
for
HALTER MARINE GROUP, INC. 401(K) PROFIT SHARING PLAN
DATE
METLIFE DEFINED CONTRIBUTION GROUP
- --------------------------------------------------------------------------------
<PAGE>
HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
THE METLIFE DEFINED CONTRIBUTION GROUP SERVICE AGREEMENT
1. EMPLOYER INFORMATION; RETENTION OF METLIFE
NAME: HALTER MARINE GROUP. INC.
---------------------------------------------------------------------
ADDRESS: 13085 SEAWAY RD., GULFPORT, MS 39505
------------------------------------------------------------------
EMPLOYER TAXPAYER ID NUMBER: 75-2429106
----------------------------------------------
NAME OF PLAN(S): HALTER MARINE GROUP, INC. 401(K) PROFIT SHARING PLAN
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
NAME AND PHONE NUMBER
OF CONTACT PERSON(S): LEONARD MORGAN, H.R. MANAGER
-----------------------------------------------------
(601) 896-0029
-----------------------------------------------------
-----------------------------------------------------
AGREEMENT EFFECTIVE DATE: JANUARY 1, 1997
-------------------------------------------------
The above-named Employer (the "Employer") retains Metropolitan Life Insurance
Company ("MetLife") to perform recordkeeping and other services provided under
this Agreement in connection with the Employer's qualified plan(s) identified
above, which may include plans established using master or prototype qualified
plan documents furnished by MetLife or other plans (the "Plan"). The Contact
Person(s) listed above act(s) on the Employer's behalf until the Employer
notifies MetLife otherwise in writing.
- --------------------------------------------------------------------------------
METLIFE DEFINED CONTRIBUTION GROUP 1
<PAGE>
HALTER MARINE GROUP, INC.
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2. FUNDING VEHICLES
2.1 The funding vehicles available under the program and for which MetLife
will perform services include guaranteed interest type contracts
("GICs") issued by MetLife, separate accounts made available by MetLife
or its affiliates mutual funds sold by MetLife Securities, Inc.
Other funding vehicles may be included under the Plan if listed on
APPENDIX A/PART 2 and agreed to, in writing, by MetLife. Such written
consent is deemed granted upon MetLife's execution of this Agreement. If
the Plan currently has GICs from other insurers, those may be held until
maturity.
All future contributions to the MetLife Guaranteed Fixed Income Account
as well as monies payable due to the maturity of previously issued GICs
will be funded only by MetLife GICs.
2.2 The Employer is solely responsible for the selection of funding
vehicles. The Employer's funding vehicle choices are indicated in
APPENDIX A.
2.3 MetLife makes available a Trustee under the MetLife Defined Contribution
Group program ("Trustee"). The agreement between the Employer and
Trustee are contained in a separate trust agreement. The Trustee is a
directed trustee, subject to the directions of the Employer and/or the
participants. Shares of mutual funds purchased under the program as well
as assets in any MetLife separate accounts and/or any GICs (whether or
not they are MetLife contracts) are held in the name of the Trustee,
which is the record owner of such shares and contracts.
If the Employer makes available a company stock funding vehicle
("Company Stock Fund") under the Plan, the Employer must obtain the
services of its own trustee for such stock funding vehicle.
2.4 The Employer acknowledges that all contributions to mutual funds and
MetLife separate account funding vehicles under the Plan are aggregated
with the contributions of other employers who participate under the
program.
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METLIFE DEFINED CONTRIBUTION GROUP 2
<PAGE>
HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
3. METLIFE'S SERVICES
MetLife will provide one or more of the following services for the Plan as
agreed to by the Employer and MetLife.
3.1 PLAN ESTABLISHMENT SERVICES
If the Plan is not a master or prototype plan sponsored by MetLife, the
Employer is solely responsible for ensuring that the Plan is timely
amended and is being operated in accordance with applicable law.
If the Plan is a master or prototype plan sponsored by MetLife, MetLife
will review the adoption agreement(s) and other materials completed by
the Employer and/or participants to determine that the adoption
agreement(s) are complete and that participants' funding choices are in
conformity with the Plan. However, the Employer is solely responsible
for ensuring that the Plan is complete and is being operated in
accordance with applicable law.
MetLife will not commence to perform services under this Agreement until
the Plan and applicable amendments are executed by the Employer. The
Employer will obtain its own legal and tax counsel before signing the
Plan or amendments.
3.2 RECORDKEEPING AND RELATED REPORTING SERVICES
(a) Maintain a record for each participant's account and update such
account records as necessary to reflect all changes affecting such
accounts that are communicated to MetLife. Such records will include
information concerning contribution classifications as set forth in
APPENDIX B.
(b) Allocate contributions and any forfeitures arising under the Plan,
if specified in the Plan, to participants in accordance with the
terms of the Plan and the information provided by the Employer,
subject to the applicable limitations of the Internal Revenue Code
of 1986, as amended ("Code"). Allocate contributions and any
forfeitures, if specified in the Plan, on behalf of participants
among the funding vehicles available under the Plan in accordance
with the instructions applicable to or for those participants.
(c) Post any withdrawals, loans, and/or transfers and/or future
allocation changes among funding vehicles. Post any dividends,
interest or other earnings to participants' accounts.
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METLIFE DEFINED CONTRIBUTION GROUP 3
<PAGE>
HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
(d) Value each participant's account as of each Business Day. A
"Business Day" is a day on which MetLife's Home Office, the New York
Stock Exchange, and MetLife's New York bank are all open for
business. Transactions may only be processed as of a Business Day.
(e) With respect to assets in "Outside Funding Vehicles" listed in
APPENDIX A/Part 2 and/or non-MetLife GICs, MetLife may establish
special rules concerning the processing of contributions,
disbursements, loans, transfers, and/or distributions affecting such
assets and valuation of such assets.
If a Company Stock Fund is offered under the Plan, the Employer
acknowledges that it is responsible for maintaining a sufficient
cash reserve to cover participant transactions (transfers,
withdrawals and distributions.) If cash is not sufficient, MetLife
will delay processing all transactions.
(f) SUBJECT TO ANY SPECIAL RULES FOR NON-METLIFE FUNDING VEHICLES,
INCLUDING A COMPANY STOCK FUND AND ANY NON-METLIFE GICS, METLIFE
WILL PROVIDE THE EMPLOYER AND ITS PARTICIPANTS WITH A VOICE RESPONSE
SERVICE ("BENEPHONE (R)") WHICH INCLUDES: (I) THE ABILITY TO
COMMUNICATE CERTAIN INFORMATION (SUCH AS ACCOUNT BALANCES BY FUNDING
VEHICLE AND AMOUNTS AVAILABLE FOR LOAN AND WITHDRAWAL); (II) THE
ABILITY TO TRANSFER EXISTING ACCOUNT BALANCES AND/OR CHANGE
ALLOCATIONS OF FUTURE CONTRIBUTIONS AMONG FUNDING VEHICLES; (III)
THE ABILITY TO MAKE CERTAIN LOAN WITHDRAWALS AND IN SERVICE
WITHDRAWALS IN ACCORDANCE WITH THE ADMINISTRATIVE PROCEDURES
ESTABLISHED BY THE EMPLOYER AND AGREED TO BY METLIFE; AND (IV) THE
ABILITY TO HAVE EMPLOYEES ENROLL IN THE PLAN AND/OR DESIGNATE THE
PERCENTAGE OF ELECTIVE DEFERRALS AND/OR AFTER-TAX CONTRIBUTIONS THEY
ELECT TO HAVE DEDUCTED FROM THEIR PAY EACH PAY PERIOD. THESE
SERVICES WILL BE AVAILABLE 24 HOURS A DAY, SEVEN DAYS A WEEK, EXCEPT
SUNDAYS BETWEEN 7:00 A.M. AND 3:00 P.M., EASTERN TIME AND CAN BE
ACCESSED DIRECTLY VIA TOLL-FREE TOUCH-TONE TELEPHONE LINES.
ADDITIONALLY FROM 9:00 A.M. TO 6:00 P.M. EASTERN TIME ON ANY
BUSINESS DAY METLIFE REPRESENTATIVES WILL BE AVAILABLE TO PROVIDE
THESE SERVICES VIA TOLL-FREE TELEPHONE LINES. METLIFE SHALL MAINTAIN
TAPED RECORDINGS REFLECTING ALL
- --------------------------------------------------------------------------------
METLIFE DEFINED CONTRIBUTION GROUP 4
<PAGE>
HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
TRANSACTIONS WHICH ARE PROCESSED THROUGH METLIFE REPRESENTATIVES.
(g) Provide each participant with quarterly statements, as specified in
APPENDIX D, in MetLife's standard format. A participant's statement
shall show the amount credited to the participant's account and such
other MetLife standard format information as the Employer and MetLife
agree upon.
(h) Provide to the Employer those reports mutually agreed to by the
Employer and MetLife.
3.3. DISBURSEMENT SERVICES
(a) Process withdrawals by and/or distributions to participants and/or
beneficiaries in accordance with instructions from the Employer
following Plan provisions. Where applicable, perform federal and
state (where appropriate) income tax withholding and issue Form 1O99R
to report any such distributions to participants and the Internal
Revenue Service. This service includes remittance of federal and
applicable state withholding amounts by the MetLife Tax Department.
(b) Process and disburse loans to participants in accordance with
instructions from the Employer following Plan provisions.
3.4 REPORTING AND DISCLOSURE SERVICES
(a) If MetLife prototype documents are used, provide copies of a Summary
Plan Description of the Plan for the Employer (or other plan
administrator) to review and, following review, to distribute to
participants.
(b) Provide Schedule A for Form 5500 to the Employer (or other plan
administrator) and other information to assist in completing the
Annual Return/Report of the Plan to be filed with the IRS on a
timely.
- --------------------------------------------------------------------------------
METLIFE DEFINED CONTRIBUTION GROUP 5
<PAGE>
HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
(c) Provide, on a timely basis, information to assist the Employer (or
other plan administrator) in completing a Summary Annual Report of the
Plan. The Employer will be responsible for drafting the Summary Annual
Report and distributing it to participants.
3.5 TAX COMPLIANCE SERVICES
(a) Based on the participant information for which MetLife keeps records
and provided that the Employer has furnished MetLife with all the data
it requests in the proper medium and format on a timely basis, perform
tests to determine the Plan's compliance with applicable limits under
Code Sections 401(a)(30), 401(k) and/or 401(m), and communicate the
results of such tests to the Employer. Information required from the
Employer includes, but is not limited to, those individuals classified
under Code Section 414(q) as highly compensated employees and non-
highly compensated employees, as well as all eligible non-participants
as described under Code Section 410(b).
(b) Based on the participant information for which MetLife keeps records
and only if information needed from the Employer is timely received by
MetLife in the proper medium and format, calculate and process all
corrective distributions from the Plan required to comply with Code
Section 402(g) on or before April 15th of the calendar year next
following the calendar year in which the excess deferrals were made.
(c) Based on participant information for which MetLife keeps records and
only if information needed from Employer is timely received by MetLife
in the proper medium and format, calculate and process all corrective
distributions from the Plan required to comply with Code Section
401(k) and/or 401(m) on or before 2 1/2 months after the end of the
Plan year in which the excess contributions were made, unless a later
date has been agreed to by the Employer and MetLife.
(d) Based on participant information for which MetLife keeps records and
only if information needed from the Employer is received by MetLife in
the proper medium and format, process corrective distributions from
the Plan which are determined by the Employer as necessary to comply
with Code Section 415(c).
- --------------------------------------------------------------------------------
METLIFE DEFINED CONTRIBUTION GROUP 6
<PAGE>
HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
(e) At the Employer's request and upon MetLife's consent thereto, and
provided that the Employer furnishes MetLife with all data it requests
in the proper medium and format, MetLife will consult with the
Employer concerning the Plan's compliance with the applicable limits
of Code Sections 404 and/or 415. (MetLife may charge an additional fee
for providing such consulting services).
(f) Based on the participant information for which MetLife keeps records
and only if information needed from the Employer is timely received by
MetLife in the proper medium and format, calculate and process all
distributions required to be made from the Plan to satisfy the
requirements of Code Section 401(a)(9).
(g) MetLife will not perform any other tax compliance services, for
example, top-heavy testing pursuant to Code Section 416 or minimum
coverage testing pursuant to Code Section 410(b), other than those
listed in Section 3.5 of this Agreement.
3.6 LICENSED SOFTWARE
Grant to Employer a limited, non-exclusive, non-transferable license to
use the software described in APPENDIX C ("Licensed Software"). The
conditions and agreements under which such Licensed Software may be used
are also specified in APPENDIX C.
4. METLIFE'S PROCEDURES
4.1 MetLife will commence services for the Plan under this Agreement after
receipt and review of all necessary documentation. If any document or
information is missing, incomplete or improperly filled out, commencement
of services for the Plan may be delayed until the omissions or errors have
been corrected.
4.2 MetLife will process transactions in accordance with this Agreement and
the Employer's instructions received by MetLife. The Employer's
instructions (as well as any other materials submitted by the Employer to
MetLife) will be specified in the form of a tape, diskette or other
computer readable media or
- --------------------------------------------------------------------------------
METLIFE DEFINED CONTRIBUTION GROUP 7
<PAGE>
HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
in writing in a format determined by MetLife. The format will include
information concerning contribution classifications set forth in APPENDIX
B. If any instructions received by MetLife are incomplete, improperly
filled out or ambiguous such that a transaction on behalf of a participant
cannot be processed, MetLife will attempt to resolve the matter as soon as
practicable.
4.3 Generally, contributions will be processed among the funding vehicles,
according to their terms and conditions, on the Business Day following the
day that MetLife has reconciled the contribution amounts with data
received from the Employer and has received the funds.
GENERALLY, TRANSFERS AND DISBURSEMENTS (LOANS, WITHDRAWALS AND
DISTRIBUTIONS) WILL BE MADE ACCORDING TO THE TERMS AND CONDITIONS
APPLICABLE TO THE FUNDING VEHICLES AND TRADED AT THE NET ASSET VALUES
AND/OR UNIT VALUES AT THE CLOSE OF BUSINESS ON THE CURRENT BUSINESS DAY IF
SUCH INSTRUCTIONS ARE RECEIVED AND PROCESSED BEFORE THAT DAY'S CLOSE OF
BUSINESS FOR THE NEW YORK STOCK EXCHANGE (GENERALLY, 4:00 P.M. EASTERN
TIME). IF INSTRUCTIONS FOR TRANSFERS AND DISBURSEMENTS ARE RECEIVED AND
PROCESSED AFTER THE DAY'S CLOSE OF BUSINESS FOR THE NEW YORK STOCK
EXCHANGE (GENERALLY, 4:00 P.M. EASTERN TIME) OR ON A NON-BUSINESS DAY,
THEY WILL GENERALLY BE TRADED ON THE FOLLOWING BUSINESS DAY.
A participant's transfer request, or change in allocation for future
contributions request, or disbursement request will not be honored if the
participant has a previous request outstanding. A transfer or disbursement
may also be delayed in the event there is an insufficiency of liquid
assets to effect the transaction.
4.4 Pending the completion of the processing of contributions, MetLife will
not request the wire transfer. When MetLife has reconciled contribution
amounts with data received from the Employer, MetLife will request a wire
transfer for the amount of the contribution. If contributions are made by
check, MetLife will cash the check when it is received. However, such
contributions will not be invested to the participants' accounts until
MetLife has reconciled the contribution amount on the check with the data
received from the Employer.
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METLIFE DEFINED CONTRIBUTION GROUP 8
<PAGE>
HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
4.5 In processing transactions, including transactions described in Section
3.2 (f) of this Agreement, MetLife is acting as the agent of the Trustee
to whom participants and their beneficiaries may give investment
instructions. MetLife shall comply with any such instructions and will use
its best efforts to effect transactions in accordance with this Section 4,
but generally no later than 5 Business Days after receipt. However,
MetLife does not guarantee the execution of any transaction on any
particular day, and MetLife (and its subsidiaries and affiliates) will
have no liability for any loss or diminution in value which may occur if
transactions are not executed on a particular day.
4.6 If the Employer and MetLife agree that participants may give telephone
instructions directly to MetLife representatives in connection with
certain Plan activities, then MetLife will implement those instructions on
the same terms as specified herein, as if the instructions had come from
the Employer. The Employer acknowledges that MetLife reserves the right to
refuse any telephone instructions which are not in accordance with
MetLife's standard operating procedures. A participant's request will not
be honored if the participant has a previous request outstanding.
Telephone instructions given directly to MetLife representatives will be
recorded.
4.7 If the Employer and MetLife agree that participants may give electronic
telephone instructions in connection with certain Plan activities, then
MetLife will implement those instructions on the same terms as specified
herein, as if the instructions had come from the Employer. Electronic
transactions will be accomplished solely by pressing the appropriate
buttons on a touch-tone telephone, without the assistance of a MetLife
representative on the telephone with the participant. Transactions done in
this manner will be electronically recorded by MetLife. A participant's
request will not be honored if the participant has a previous request
outstanding. MetLife and the Employer will employ reasonable procedures to
confirm that instructions communicated electronically about a
participant's account are genuine.
4.8 A written acknowledgement of any Plan activity transacted via telephone
instruction to a MetLife representative or electronic telephone
instruction will generally be mailed to participants within 10 Business
Days after the transaction has been processed.
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METLIFE DEFINED CONTRIBUTION GROUP 9
<PAGE>
HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
4.9 The Employer acknowledges that the authorizations, instructions and
restrictions contained in this Section 4 continue until MetLife receives
written notice of any change or revocation.
5. FEES
5.1 As consideration for its services, the Employer will pay MetLife's fees:
The Fee Schedule shown in APPENDIX D lists the current fees in effect.
5.2 MetLife may increase its fees upon 60 days' advance written notice to the
Employer. However, no such fee increase will take effect before the first
anniversary of the effective date of this Agreement. Notwithstanding the
preceding, if the Employer subsequently amends the Plan resulting in
other services to be performed by MetLife which are not specifically
detailed in this Agreement or if the Employer requests any change in
MetLife's services, MetLife may immediately increase its fees as of the
effective date of such Plan amendment or change in services, upon mutual
agreement between MetLife and the Employer.
5.3 If MetLife decides to lower its fees, it may do so immediately without
the required 60 days notice.
5.4 If any of MetLife's written reports, including participant statements,
are incorrect and require correction as a result of incomplete or
incorrect data or information provided by the Employer then, in addition
to MetLife's regular fees, Employer will pay MetLife its costs to prepare
such corrected participant statements, reports or other written materials
as reasonably determined by MetLife based upon the cost of the time and
materials involved. MetLife will obtain the consent of Employer prior to
making any such corrections.
5.5 The Employer will pay MetLife its fees within 30 days of MetLife's bill
to the Employer. Fees will be billed on a quarterly basis.
- --------------------------------------------------------------------------------
METLIFE DEFINED CONTRIBUTION GROUP 10
<PAGE>
HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
5.6 If the Employer does not pay MetLife's fees, MetLife, in its discretion,
may receive payment from the trust. MetLife will allocate such fees to
the accounts of participants or to the funding vehicles in which the
accounts are invested in a manner which reasonably reflects the accounts
and funding vehicles that generated such fees. Approximations may be
used whenever it is not feasible to allocate such fees on an exact
basis. MetLife will notify the Employer prior to making this deduction.
6. EMPLOYER RESPONSIBILITIES
6.1 The Employer acknowledges that it is the "plan administrator" of the
Plan for purposes of the Employee Retirement Income Security Act of
1974, as amended ("ERISA") and the Code and agrees to undertake the
duties of plan administrator unless the Employer has appointed a third
party to serve as plan administrator. Employer acknowledges that MetLife
will not agree to be appointed or serve as plan administrator and
acknowledges that the plan administrator, not MetLife, is responsible
for meeting the reporting and disclosure requirements of ERISA and the
Code. The Employer acknowledges that it is the "named fiduciary" (as
defined by ERISA) for the Plan and assumes all duties of such office.
6.2 The Employer will furnish MetLife with all the information it needs to
perform its services, including Plan documents and any amendments
thereto, at the time of their execution. If the Plan is subsequently
amended to result in services to be performed by MetLife which are not
specifically detailed in this Agreement, then MetLife retains the right
to refuse to perform services under this Agreement.
MetLife will not be responsible for: (a) the accuracy of the information
provided by the Employer, (b) any services, participant statements or
reports based upon inaccurate information from the Employer, or (c)
failure to provide any services, participant statements or reports
because of the Employer's failure to provide accurate information on a
timely basis.
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METLIFE DEFINED CONTRIBUTION GROUP 11
<PAGE>
HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
6.3 MetLife will only furnish materials, including mutual fund prospectuses,
for funding vehicles listed under APPENDIX A/PART 1 to the Employer for
distribution to participants. The Employer will be responsible for
distributing such materials to participants before participants complete
any instructions concerning the funding vehicles into which their Plan
account(s) will be invested.
6.4 The Employer acknowledges that MetLife will have no responsibility
whatsoever with respect to any funding vehicles listed under APPENDIX
A/Part 2 other than acting as a recordkeeper, which is acting solely on
the Employer's instructions. The Employer will be responsible for
distributing any sales material in connection with any funding vehicles
listed under APPENDIX A/Part 2, unless otherwise agreed to by MetLife and
the Employer.
6.5 The Employer agrees to inform participants of the information concerning
MetLife's procedures, as described in Section 4 of this Service
Agreement.
6.6 If the Employer has adopted the MetLife Basic Plan Document with
non standardized Adoption Agreement 009, 010 or 018, then the Employer is
responsible for obtaining IRS determination letters with respect to the
Plan's qualification. In this regard the Employer will be filing as an
adopter of a prototype plan.
If the Plan is not a master or prototype plan sponsored by MetLife, or if
an Employer has adopted the MetLife Basic Plan Document with any of the
MetLife Adoption Agreements where such Basic Plan Document and Adoption
Agreements have been amended so that they no longer comply, in form, with
the documents originally filed by MetLife with the IRS, then the Employer
will be solely responsible for obtaining the IRS qualification of the
Plan and maintaining such qualification in the future. In this regard,
the Employer is filing as the adopter of an individually designed plan.
6.7 If loans are made available under the Plan and the Plan requires such
loans to be secured with a promissory note signed by the participant,
then the Employer will be responsible for obtaining and retaining such
signed promissory note prior to releasing the loan amount to the
participant.
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METLIFE DEFINED CONTRIBUTION GROUP 12
<PAGE>
HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
6.8 The Employer will be solely responsible for determining the
"qualification" of a domestic relations order. In this regard, MetLife
as recordkeeper for the Plan, will follow the Employer's direction for
establishment and distribution of an alternate payee's account. The
Employer agrees to indemnify and hold MetLife harmless from any adverse
tax consequences or other liability to the Plan which may result from
following such direction of the Employer.
6.9 The Employer will be solely responsible for determining the beneficiary
or beneficiaries to whom payment of a participant's account is to be
made. Additionally, the Employer will be solely responsible for
providing participants with the Special Tax Notice, qualified joint and
survivor annuity notice and/or pre-retirement survivor annuity notice on
a timely basis and ensuring that any applicable participant waivers
and/or spousal consent are obtained before any payment from a
participant account is made. In this regard, MetLife as recordkeeper for
the Plan, will follow the Employer's direction for distribution. The
Employer agrees to indemnify and hold MetLife harmless from any adverse
tax consequences or other liability to the Plan which may result from
following such direction of the Employer.
6.10 Requirements of the Plan needed to satisfy Labor Reg. Section
2550.404(c)-1 will be the responsibility of the Employer, unless the
Employer and MetLife agree otherwise.
7. WARRANTY AND LIMITATION OF REMEDY AND LIABILITY
7.1 MetLife does not warrant that its services hereunder will be
uninterrupted or error free; but MetLife does agree that such services
will be provided without any willful misconduct, negligence, bad faith,
or failure to use due care on its part. For purposes of this Agreement,
negligence means a failure to use reasonable diligence and the degree of
skill and judgment possessed by one experienced in furnishing comparable
services to savings plans of similar size with characteristics similar
to those of the Plan. MetLife's liability under this warranty is limited
to the obligation to correct any errors in service attributable solely
to MetLife without additional charge to the Employer.
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METLIFE DEFINED CONTRIBUTION GROUP 13
<PAGE>
HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
7.2 Any modifications to these services made by anyone other than MetLife
shall cancel this warranty as to such services.
7.3 EXCEPT AS PROVIDED IN THIS AGREEMENT, METLIFE MAKES NO WARRANTIES EITHER
EXPRESSED OR IMPLIED, AS TO ITS SERVICES, AND EXPRESSLY DISCLAIMS ALL
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR ANY PARTICULAR
PURPOSE.
7.4 MetLife agrees to reimburse the Employer for any actual losses, including
interest and/or earnings or losses attributable to Plan assets, it
suffers as a direct result of any negligence, willful misconduct, bad
faith or failure to use due care by MetLife in providing services under
this Agreement. Except as otherwise provided in the preceding sentence,
the Employer agrees that METLIFE'S LIABILITY IN CONNECTION WITH ANY SUCH
NEGLIGENCE, WILLFUL MISCONDUCT, BAD FAITH OR FAILURE TO USE DUE CARE WILL
NOT INCLUDE LOST PROFITS, PENALTIES, FINES, DIRECT, SPECIAL, INCIDENTAL
OR CONSEQUENTIAL OR PUNITIVE DAMAGES WHETHER OR NOT FORESEEABLE.
8. METLIFE'S LIABILITY; INDEMNIFICATION
8.1 The Employer agrees that MetLife's duties under this Agreement are
intended to be ministerial in nature and do not involve the exercise of
discretion with respect to Plan recordkeeping or the management and
administration of the Plan. MetLife has no responsibility or liability
for the Employer's selection of funding vehicles for the Plan or for any
participant's selection of the funding vehicles in which his or her
account is invested, or for any loss or diminution in value occasioned
thereby.
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METLIFE DEFINED CONTRIBUTION GROUP 14
<PAGE>
HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
8.2 MetLife accepts no liability for the operation of the Plan or for the
ability of the Plan to pay any particular amount of benefits. MetLife
takes no responsibility whatsoever for the validity, tax qualification or
tax effect of the Plan except that, where the Plan is established using
master or prototype documents furnished by MetLife, MetLife agrees that
such documents in form comply with the requirements for qualification
under Code Section 401(a) (or will comply with such requirements by the
required date for compliance). MetLife's only obligation is to perform
its services in accordance with this Agreement.
8.3 The Employer will defend, indemnify and hold MetLife, its subsidiaries,
affiliates, employees, officers and directors harmless from any and all
loss, damage, penalty, liability, cost and expense incurred by, imposed
upon or asserted against them by any person, including the Employer, its
affiliates, officers, employees, agents or subcontractors, by reason of
any claim, judicial or regulatory proceeding arising from any act or
failure to act in connection with the services provided under this
Agreement, except where such loss, damage, penalty, liability, cost or
expense was a consequence of MetLife's or such other person(s) willful
misconduct, negligence, bad faith, or failure to use due care.
8.4 MetLife will have no duty or obligation to defend against any legal
action or proceeding brought by a participant with respect to the Plan.
However, at the Employer's request and expense, MetLife will make
available to the Employer or its counsel, such evidence relevant to such
action or proceeding as MetLife may have as a result of its services
hereunder.
8.5 In the event of any claim, suit or proceeding by a third party against
MetLife that is subject to indemnification under this Section 8, MetLife
will give prompt written notice to the Employer and the Employer may
assume the defense thereof by counsel of its selection. If the Employer
does not assume the defense of any such claim, suit, or proceeding,
MetLife will defend with counsel of its choice and the Employer will pay
MetLife for all costs (including attorney's fees) MetLife incurs thereby.
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METLIFE DEFINED CONTRIBUTION GROUP 15
<PAGE>
HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
9. TERMINATION
9.1 This Agreement, effective as of the date indicated on page 1, may be
terminated upon 90 days written notice from either party to the other,
specifying the date of termination. If mutually agreed to in writing by
MetLife and the Employer, an earlier date of termination of the
Agreement may be specified.
9.2 Upon termination of this Agreement, MetLife will cease to provide the
services described in this Agreement and the Employer will cease using
MetLife's master or prototype plan documents and trust arrangement made
available under the MetLife Defined Contribution Group program. The
Employer acknowledges that any GICs entered into with MetLife must be
held in accordance with the terms of the Group Annuity Contracts.
9.3 Upon termination of this Agreement, MetLife will send the Employer a
copy of MetLife's records concerning the Plan or will send such copy to
another party named by the Employer. A charge may be imposed if the
Employer requests that records be sent in other than MetLife's standard
format.
10. DELAYS OR FAILURES
Neither party will be liable for any delay or failure in performance of this
Agreement resulting directly or indirectly from any cause beyond the control
of that party, including, without limitation, acts of nature, governmental
actions, fire, labor difficulty, shortages, civil disturbances,
transportation problems, interruptions or unavailability of power or other
utilities, unavailability of communications facilities, or failure of
MetLife's suppliers.
11. SURVIVAL
The provisions set forth in Sections 7.1, 7.2, 7.3, 7.4, 8.1, 8.2, 8.3, 8.4
and 8.5 will survive the termination of this Agreement for six (6) years.
Termination will not affect the Employer's obligation to pay fees, and any
interest, due for services provided through the date of termination.
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METLIFE DEFINED CONTRIBUTION GROUP 16
<PAGE>
HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
12. SERVICE GUARANTEE
Notwithstanding any provision of this Agreement, the following Service
Guarantee supersedes anything inconsistent with those provisions: IF FOR ANY
REASON THE EMPLOYER IS NOT SATISFIED WITH METLIFE'S RECORDKEEPING SERVICES
RENDERED IN CONNECTION WITH THIS AGREEMENT, THE EMPLOYER MAY DEDUCT 20%
(TWENTY PERCENT) OF THE CHARGES FOR THE PERIOD APPEARING ON ITS NEXT BILL.
THE EMPLOYER ONLY HAS TO MARK THE REDUCTION ON THE BILL AND INDICATE THE
PROBLEM ON THE FACE OF THE BILL SO THAT IT MAY BE RESOLVED.
13. WAIVER; ASSIGNMENT; AMENDMENT; GOVERNING LAW
13.1 The failure of either party to strictly enforce any provision of this
Agreement shall not operate as a waiver of such provision or release
either party from its obligations under this Agreement strictly in
accordance with such provision.
13.2 Neither MetLife nor the Employer may assign this Agreement without the
written consent of the other party.
13.3 This Agreement may be amended only by a written amendment signed by
both parties.
13.4 This Agreement will be governed by the laws of the State of New York
except to the extent that federal law may preempt or supersede such
state law.
13.5 This Agreement constitutes the entire Agreement between the parties and
supersedes all previous oral and written statements concerning its
subject matter.
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METLIFE DEFINED CONTRIBUTION GROUP 17
<PAGE>
HALTER MARINE GROUP, INC.
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14. SERVICE AGREEMENT SIGNATURES
EMPLOYER
By: Halter Marine Group, Inc.
----------------------------------------------------------------------
/S/ KEITH L. VOIGTS
KEITH L. VOIGTS
SR. VICE PRESIDENT, FINANCE
----------------------------------------------------------------------
PRINT NAME AND TITLE
Dated: DECEMBER 19, 1996
----------------------------------------------------------------------
METROPOLITAN LIFE INSURANCE COMPANY
By: CHET WYDRINSKI
----------------------------------------------------------------------
CHET WYDRINSKI, ASST. V.P.
----------------------------------------------------------------------
PRINT NAME AND TITLE
Dated: 1/14/97
----------------------------------------------------------------------
- --------------------------------------------------------------------------------
METLIFE DEFINED CONTRIBUTION GROUP 18
<PAGE>
HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
APPENDIX A
FUNDING VEHICLES
1. PROGRAM FUNDING VEHICLES
A. METLIFE FUNDING OPTIONS
[ ] Guaranteed Fixed Income Account
[X] MetLife Guaranteed Fixed Income Account
[ ] MetLife Real Estate Account
[ ] MetLife Stock Market Index Guarantee Account
B. MUTUAL FUNDS SOLD BY METLIFE SECURITIES, INC.
[X] SSR Equity Income Fund
[ ]
[ ]
[ ]
C. SELF DIRECTED BROKERAGE ACCOUNT (SDA) FUND
[ ] SDA
2. OUTSIDE FUNDING VEHICLES
[X] Company Stock
[X] Loomis Sayles Small Cap Fund
--------------------------------------------------------------------
[X] Founders Balanced Fund
--------------------------------------------------------------------
[X] Oakmark Fund
--------------------------------------------------------------------
[X] Warbury Pincus International Equity Fund
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METLIFE DEFINED CONTRIBUTION GROUP 19
<PAGE>
HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
APPENDIX B
CONTRIBUTION CLASSIFICATIONS
Each participant record will be maintained with the following contribution
classifications:
Basic Before-Tax 401(k) Contributions
Supplemental Before-Tax 401(k) Contributions
Employer Matching Contributions
Employer Profit Sharing Contributions
Rollover Contributions
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METLIFE DEFINED CONTRIBUTION GROUP 20
<PAGE>
HALTER MARINE GROUP, INC.
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APPENDIX C
LICENSE AGREEMENT
1. MetLife hereby grants to the Employer a limited, non-exclusive, non-
transferable license to use the software described in paragraph 2 of this
APPENDIX C ("Licensed Software"), solely for the purpose of conducting
Employer's internal business affairs during the term of this License
Agreement. Paragraph 2 may be modified at MetLife's sole discretion to
include additional software products from time to time. If additional
software products are added to paragraph 2, MetLife will send them to the
Employer and the Employer will have thirty (30) days in which either to
accept or reject the new additional software products. If the Employer
accepts the additional software products, their use will be governed by the
terms of this License Agreement. If the Employer rejects the additional
software products, the Employer must send the rejected software and a
notice to MetLife indicating such rejection within the thirty (30) day
period. Failure to reject any product shall constitute acceptance of the
product and the terms under which it may be used. For the purpose of this
License Agreement, "Employer's internal business affairs" is: (1) access by
Employer's employees to simulated benefit information in an interactive
fashion through the use of personal computers; (2) access by the Employer
to a data entry screen for participant contributions through the use of
personal computers; or (3) use by the Employer to enter and transmit
savings plan and related data. Employer will not use the Licensed Software
for any other purpose, including without limitation, on a time-sharing or
facilities management basis, or to operate a service bureau. For the
purpose of this License Agreement, the term "Licensed Software" shall mean
and include MetLife's proprietary computer software (object code form only)
described in paragraph 2, including but not limited to, screens, code,
information, documentation, in whatever form of medium, as well as all
ideas, concepts, techniques, designs, and inventions embodied in said
information and documentation as well as generated by or arising from this
information or documentation.
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METLIFE DEFINED CONTRIBUTION GROUP 21
<PAGE>
HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
Employer acknowledges that the Licensed Software is the property and a trade
secret of and copyrighted by MetLife and that this License Agreement grants
Employer no title or rights of ownership in the Licensed Software. Employer
further agrees that all right, title and interest in the Licensed Software,
including all rights under the Copyright Act, together with all copies
thereof, is vested entirely in MetLife and no other permission to use is to
be implied other than that expressly stated herein. Employer shall not have
the right to modify or enhance the Licensed Software, in any manner
whatsoever unless MetLife, in its sole discretion, has given its written
permission in advance of such action.
2. SOFTWARE AVAILABLE TO METLIFE SAVINGS PLAN PROGRAM CLIENTS
(A) TAX BENEFITS AND CUMULATIVE SAVINGS PROJECTION MODEL
This software shows the monetary advantages of investment in a savings
plan. The software offers the user the ability to illustrate potential
tax savings, potential savings accumulation over time, and different loan
scenarios.
(B) CONTRIBUTION DISKETTE
This customized diskette allows MetLife to receive company savings plan
contribution information and related information in a format that is
compatible with MetLife's computer system.
3. CONFIDENTIALITY OF METLIFE LICENSED SOFTWARE INFORMATION
Employer recognizes that the Licensed Software, and all copies thereof, are
and shall remain proprietary and trade secret to MetLife, developed and owned
solely by MetLife. In that connection, Employer warrants that Employer will
keep the Licensed Software in Employer's exclusive possession and in
strictest confidence at all times, and will not, except as permitted by this
License Agreement, use, disclose, reproduce, or otherwise reveal the Licensed
Software to any third parties. Employer further agrees not to exploit,
modify, disassemble, decompile, reverse engineer, duplicate or prepare
derivative works based upon the Licensed Software, or assist others in doing
so.
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METLIFE DEFINED CONTRIBUTION GROUP 22
<PAGE>
HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
4. RIGHTS TO COPY AND TO FORM UPDATED WORKS
(a) Employer may make five (5) copies of the Tax Benefits and Cumulative
Savings Projection Model Licensed Software for Employer's internal use
only. Once this limit is reached the prior express written consent of
MetLife is required to make additional copies of the Licensed Software.
(b) With reference to copies it makes of the Licensed Software, Employer
agrees to reproduce any of MetLife's copyright notices and any
proprietary legends appearing thereon and to include the same on all
copies it makes in whole or in part. If MetLife's copyright notice
appears in machine readable form, Employer agrees to reproduce such
notice in such form in which it appears to the extent it is physically
possible to do so.
5. LICENSE WARRANTY
METLIFE REPRESENTS AND WARRANTS THAT IT HAS THE RIGHT AND POWER TO ENTER INTO
THIS AGREEMENT, AND TO GRANT THE LICENSES AND RIGHTS GRANTED HEREUNDER, AND
THAT TO THE BEST OF ITS KNOWLEDGE AND BELIEF, THERE ARE NO OUTSTANDING
ASSIGNMENTS, GRANTS, LICENSES, ENCUMBRANCES, OBLIGATIONS OR AGREEMENTS TO
WHICH IT IS A PARTY OR BY WHICH IT IS BOUND, WHICH ARE INCONSISTENT WITH THIS
AGREEMENT.
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METLIFE DEFINED CONTRIBUTION GROUP 23
<PAGE>
HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
6. TERMINATION OF LICENSE
This License Agreement shall be in force as long as the Service Agreement
between MetLife and the Employer is in effect.
Upon the termination of this License Agreement, the license to use the
Software described herein and all other rights granted hereunder to Employer
shall immediately cease, and Employer shall immediately:
(a) Return the Licensed Software to MetLife together with all code and
documentation, respecting the Licensed Software, which were delivered to
Employer by MetLife under this Agreement.
(b) Purge all copies of the Licensed Software or any portion thereof from all
personal or other computers and from any computer storage medium or
device on which Employer has placed or permitted others to place the
Licensed Software; and
(c) Upon request, confirm in writing to MetLife that Employer has complied
with all of its obligations under this Section.
MetLife shall have the right to terminate the license to use the software
described in this Agreement prior to the termination of the Service Agreement
without further obligation or liability to Employer if Employer commits any
breach of the License Agreement and fails to remedy such breach within thirty
(30) days after receipt of written notice by MetLife of such breach or if a
claim is made that the software infringes a U.S. patent or copyright.
EMPLOYER RECOGNIZES THAT IRREPARABLE HARM CAN BE
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METLIFE DEFINED CONTRIBUTION GROUP 24
<PAGE>
HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
OCCASIONED TO METLIFE BY THE UNAUTHORIZED DISCLOSURE, REPRODUCTION OR USE OF
THE LICENSED SOFTWARE AND THAT MONETARY DAMAGES WILL BE INADEQUATE TO
COMPENSATE METLIFE FOR SUCH BREACH. THE EMPLOYER AGREES THAT IN THE EVENT
OF SUCH BREACH OF THIS LICENSE AGREEMENT, METLIFE SHALL BE ENTITLED TO A
PRELIMINARY INJUNCTION AND AN ORDER OF SEIZURE AND IMPOUNDMENT UNDER
SECTION 503 OF THE COPYRIGHT ACT (OR ANY COMPARABLE PROVISION OF STATE OR
FEDERAL LAW THEN APPLICABLE) BASED UPON AN EX PARTE APPLICATION TO PROTECT
AND RECOVER THE LICENSED SOFTWARE AND THE EMPLOYER WILL NOT OBJECT TO THE
ENTRY OF AN INJUNCTION OR OTHER EQUITABLE RELIEF AGAINST EMPLOYER ON THE
BASIS OF AN ADEQUATE REMEDY AT LAW OR OTHER REASON. THIS REMEDY SHALL BE IN
ADDITION TO ANY OTHER REMEDIES AVAILABLE TO METLIFE.
7. PATENT AND COPYRIGHT INDEMNITY AS TO METLIFE'S LICENSED SOFTWARE
MetLife agrees to defend at its expense any suits against Employer based upon
a claim that the Licensed Software infringes a U.S. patent or copyright, and
to pay costs and damages finally awarded in any such suit, provided that
MetLife is notified promptly in writing of the suit and, at its expense, is
given sole control of said suit and all reasonable assistance from Employer
in defense of the same.
8. DISCLAIMER AS TO LICENSED SOFTWARE
METLIFE PROVIDES AND LICENSES THE LICENSED SOFTWARE ON AN "AS IS" BASIS.
EXCEPT AS SPECIFICALLY SET FORTH IN THIS AGREEMENT, METLIFE MAKES NO
WARRANTIES EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO, THOSE CONCERNING
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. METLIFE WILL NOT BE
LIABLE TO EMPLOYER FOR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL
DAMAGES.
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METLIFE DEFINED CONTRIBUTION GROUP 25
<PAGE>
HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
9. SURVIVAL
The provisions set forth in Sections 3, 4, 6, and 8 of this APPENDIX C will
survive the termination of this License Agreement for three (3) years and
those set forth in Section 7 of this APPENDIX C will survive such
termination for five (5) years.
10. LICENSE AGREEMENT SIGNATURES
EMPLOYER
By: Halter Marlin Group, Inc.
---------------------------------------------------------------------
/S/ KEITH L. VOIGTS
KEITH L. VOIGTS, SR. VICE PRESIDENT, FINANCE
---------------------------------------------------------------------
PRINT NAME AND TITLE
Dated: DECEMBER 19, 1996
METROPOLITAN LIFE INSURANCE COMPANY
By: CHET WYDRINSKI
---------------------------------------------------------------------
CHET WYDRINSKI, ASST. V.P.
---------------------------------------------------------------------
PRINT NAME AND TITLE
Dated: 1/14/97
---------------------------------------------------------------------
- --------------------------------------------------------------------------------
METLIFE DEFINED CONTRIBUTION GROUP 26
<PAGE>
HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
APPENDIX D
FEE SCHEDULE
. Annual fee to provide recordkeeping and administrative services is $28.00 per
participant.
SUMMARY OF SERVICES
. Prototype Plan Document and assistance in choosing Plan Provisions,
. New Plan installation: analysis and establishment of plan provisions on our
system,
. Range of quality funding options,
. Trusteeship with Chase Manhattan Bank, N.A. (excludes company stock),
. No increase in the Total Annual Recordkeeping/Administration Fee or the Fees
for Additional Participants through December 31, 1998. Optional Services Not
Included,
. Comprehensive employee communications and enrollment package. The per
participant fee assumes 24 days of education/enrollment meetings per year. If
Halter Marine utilizes less than 24 days of meetings, the per participant fee
will be reduced accordingly,
. PC Modeling Software for Tax Savings, Loan and Investment Illustrations,
. Semi-Annual on-site Enrollment Meetings,
. Summary Plan Description,
. Assigned Primary Administrator and Back-Up Administrator,
. Assigned Account Executive/Consultant,
. Disbursement (check and documentation) mailed directly to participant's
residence,
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METLIFE DEFINED CONTRIBUTION GROUP 27
<PAGE>
HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
SUMMARY OF SERVICES (CONT'D)
. Ongoing Administrative and Investment Review Meetings,
. Administration manual,
. Comprehensive management and participant reports,
. Quarterly statements mailed directly to the participant's residence,
. Loan, Withdrawal and Distribution Processing,
. Preparing and Filing of Forms 1099
. Preparation of Signature Ready Form 5500, Summary Annual Report (SAR) and
related tax reporting,
. Semi-Annual 401(k)/401(m) Nondiscriminating Testing,
. Assistance regarding and Legislative changes. Plan Sponsor support relative
to Plan Design, IRS and ERISA issues,
. 800 number support with interactive voice response and Customer Service
Representatives.
OPTIONAL SERVICES
. Manual data entry - $2.50 per entry (e.g. contributions, fund elections...),
. Customized video for enrollment - approximately $7,500,
. Processing of additional input tapes or diskettes - $75 per tape or diskette,
. Additional 401(k)/401(m) nondiscrimination tests - $750 per test,
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METLIFE DEFINED CONTRIBUTION GROUP 28
<PAGE>
HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
OPTIONAL SERVICES (CONT'D)
. Calculations and refund of excess contributions - $25 per participant,
. Special allocations (e.g. profit sharing, expenses ) - $250 per allocation,
. Special mailing (e.g. Federal Express) and handling - at cost,
. Special reports and processing - $75 per hour,
. IRS prototype plan filing fees, if any - at cost,
. Metlife Prototype Plan Document is properly adopted and executed,
. Information is consolidated and provided from a single source to MetLife and
submitted 12 times per year via electronic media in our prescribed format,
. All reports, statements and other plan sponsor communications are sent to and
handled through one client location,
. MetLife will provide two 401(k)/401(m) nondiscrimination tests each year
based upon receipt of the necessary information from the plan sponsor. The
data includes a list the highly compensated individuals as defined by the
Internal Revenue Service and all information required by the tests for
eligible participating and non-participating employees.
PLEASE CONSULT US IF YOU DESIRE ANY CHANGES IN THE ABOVE ASSUMPTIONS AS THEY MAY
RESULT IN AN INCREASE OR DECREASE IN THE FEES QUOTED.
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METLIFE DEFINED CONTRIBUTION GROUP 29
<PAGE>
HALTER MARINE GROUP, INC.
- --------------------------------------------------------------------------------
SERVICE GUARANTEE
If for any reason you are not completely satisfied with our service, just notify
us by indicating the problem on your next bill, and you can reduce your bill for
the period by 20%. All that we ask is that you let us know what the problem was
so we can correct it.
No if, ands or buts.
PLAN CONVERSION
PLAN CONVERSION:
. Analysis of existing Plan
. Establish plan provisions on the MetLife's recordkeeping system Fee: $5,000
assumes receipt of fully reconciled data from prior recordkeeper.
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METLIFE DEFINED CONTRIBUTION GROUP 30
<PAGE>
METLIFE SECURITY INSURANCE COMPANY OF LOUISIANA
METLIFE DEFINED CONTRIBUTION GROUP PROGRAM
DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
November 29, 1994
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METLIFE DEFINED CONTRIBUTION GROUP
<PAGE>
DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
- --------------------------------------------------------------------------------
Page
----
INDEX OF TERMS.......................................................... viii-ix
ARTICLE 1 INTRODUCTION
1.1 Establishment of Plan.............................................. 1
1.2 Plan Documents..................................................... 1
1.3 Paired Plans....................................................... 1
ARTICLE 2 DEFINITIONS
2.1 Actual Deferral Percentage......................................... 2
2.2 Adoption agreement................................................. 2
2.3 Average Monthly Compensation....................................... 2
2.4 Beneficiary........................................................ 2
2.5 Code............................................................... 2
2.6 Effective Date..................................................... 3
2.7 Elective Deferrals................................................. 3
2.8 Employee........................................................... 3
2.9 Employer........................................................... 4
2.10 ERISA.............................................................. 4
2.11 Excess Aggregate Contributions..................................... 4
2.12 Excess Contributions............................................... 5
2.13 Excess Elective Deferrals or Excess 401(k) Savings Contributions... 5
2.14 Level Funding Amount............................................... 5
2.15 Owner-employee..................................................... 5
2.16 Participant........................................................ 5
2.17 Plan............................................................... 5
2.18 Plan administrator................................................. 6
2.19 Plan Compensation.................................................. 6
2.20 Plan year.......................................................... 8
2.21 Qualified Matching Contributions................................... 8
2.22 Qualified Non-elective Contributions............................... 8
2.23 Self-employed individual........................................... 9
2.24 Shareholder-employee............................................... 9
2.25 Sponsor............................................................ 9
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METLIFE DEFINED CONTRIBUTION GROUP
i
<PAGE>
DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
- --------------------------------------------------------------------------------
2.26 Target Benefit..................................................... 9
2.27 Trust.............................................................. 9
2.28 Trustee............................................................ 9
2.29 Straight Life Annuity.............................................. 9
ARTICLE 3 DEFINITIONS AND RULES RELATING TO SERVICE
PART A: HOURS OF SERVICE METHOD
3A.1 Applicability of Part A............................................ 10
3A.2 Year of Service.................................................... 10
3A.3 Hour of Service.................................................... 10
3A.4 One-Year Break in Service.......................................... 12
3A.5 Employment Years Defined........................................... 12
3A.6 Eligibility Computation Period..................................... 13
3A.7 Vesting Computation Period......................................... 13
3A.8 Counting Years of Service for Participation........................ 13
3A.9 Years of Service for Vesting....................................... 14
3A.10 Service With Other Organizations.................................. 14
PART B: ELAPSED TIME METHOD
3B.1 Applicability of Part B............................................ 15
3B.2 Service............................................................ 15
3B.3 Definitions Relating to Service.................................... 15
3B.4 Certain Service Before Eligibility Disregarded..................... 17
3B.5 Service for Vesting................................................ 17
3B.6 Service With Other Organizations................................... 18
ARTICLE 4 PARTICIPATION
4.1 Eligible Employees................................................. 19
4.2 Age and Service Requirements....................................... 19
4.3 Participation...................................................... 20
4.4 Termination of Participation....................................... 21
4.5 Re-entry of Former Participant..................................... 21
4.6 Transfers.......................................................... 21
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METLIFE DEFINED CONTRIBUTION GROUP
ii
<PAGE>
DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
- --------------------------------------------------------------------------------
ARTICLE 5 EMPLOYEE 401(k) SAVINGS CONTRIBUTIONS:
AVERAGE DEFERRAL PERCENTAGE TEST
5.1 Eligibility....................................................... 22
5.2 Limits on Amount.................................................. 22
5.3 Procedures........................................................ 23
5.4 Collection of 401(k) Savings Contributions........................ 24
5.5 Savings Contributions Account..................................... 24
5.6 401(k) Limits..................................................... 24
5.7 Deferral Percentage............................................... 26
5.8 Higher and Lower Paid Groups Defined.............................. 29
5.9 Monitoring Participants' Deferral Percentages; Adjustments........ 31
5.10 Treatment of Participant Who Reaches $7,000 Limit................. 35
ARTICLE 6 AFTER-TAX EMPLOYEE SAVINGS CONTRIBUTIONS;
AVERAGE CONTRIBUTION PERCENTAGE TEST
6.1 Eligibility....................................................... 36
6.2 Limits on Amount.................................................. 36
6.3 Procedures; Plan Administrator Rules.............................. 36
6.4 Collection of After-Tax Employee Contributions.................... 36
6.5 After-Tax Employee Contributions Account.......................... 37
6.6 401(m) Limits..................................................... 37
6.7 Contribution Percentage Defined................................... 37
6.8 Special Rules..................................................... 39
6.9 Additional Limits for Plans Subject to Both 401(k) and 401(m)
Limits............................................................ 42
ARTICLE 7 ROLLOVERS AND DEDUCTIBLE EMPLOYEE
CONTRIBUTIONS
7.1 Rollover Contributions............................................ 43
7.2 Qualified Voluntary Employee Contributions........................ 44
7.3 Withdrawals....................................................... 45
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METLIFE DEFINED CONTRIBUTION GROUP
iii
<PAGE>
DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
- --------------------------------------------------------------------------------
ARTICLE 8 EMPLOYER CONTRIBUTIONS; AMOUNT AND ALLOCATION
8.1 Amount of Employer Contribution................................... 46
8.2 Profit-Sharing Plans.............................................. 46
8.3 Money Purchase Pension Plans...................................... 48
8.4 Target Benefit Plans.............................................. 49
8.5 Employer Matching Contributions................................... 50
8.6 Persons Entitled to Share in Allocations.......................... 53
8.7 Allocation Rules.................................................. 54
8.8 Determination of Level Funding Amount............................. 59
ARTICLE 9 BENEFITS UPON RETIREMENT OR DISABILITY
9.1 Retirement Dates.................................................. 62
9.2 Disability Retirement............................................. 63
9.3 Retirement Benefits............................................... 63
9.4 Method of Payment................................................. 65
9.5 Married Participants.............................................. 66
9.6 Unmarried Participants............................................ 69
9.6A. Direct Rollover Requirements...................................... 70
9.7 Distribution Requirements......................................... 71
9.8 Required Beginning Date........................................... 73
9.9 Transitional Rule................................................. 74
9.10 Date Benefit Payments Begin....................................... 75
9.11 Annuities Nontransferable......................................... 76
ARTICLE 10 BENEFITS UPON DEATH
10.1 Benefits upon Death............................................... 77
10.2 Method of Payment................................................. 79
10.3 Qualified Preretirement Survivor Annuity.......................... 79
10.4 Limitation on Installment or Annuity Payment of Death Benefits.... 81
10.5 Beneficiary....................................................... 85
10.6 Safe Harbor Rules................................................. 86
10.7 Transitional Rules................................................ 87
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METLIFE DEFINED CONTRIBUTION GROUP
iv
<PAGE>
DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
- -------------------------------------------------------------------------------
ARTICLE 11 TERMINATION OF EMPLOYMENT AND VESTED INTEREST
11.1 Vested Interest in Accrued Benefit............................... 90
11.2 Changes in Vesting Schedule...................................... 90
11.3 Payment of Vested Interest....................................... 90
11.4 Forfeiture of Non-Vested Interest................................ 91
11.5 Protections Upon Resumption of Employment........................ 91
11.6 Calculating Vested Interest After Account Distribution........... 91
ARTICLE 12 IN-SERVICE DISTRIBUTIONS AND WITHDRAWALS; LOANS
12.1 Withdrawal of After-Tax Contributions............................ 92
12.2 In-Service Withdrawals from Profit Sharing Plans................. 93
12.3 In-Service Withdrawals from 401(k) plans......................... 94
12.4 In-Service Withdrawals from Money Purchase Plan or Target Benefit
Plan............................................................. 97
12.5 Loans............................................................ 97
ARTICLE 13 MAXIMUM LIMITATIONS ON ALLOCATIONS
13.1 Section 415 Definitions.......................................... 101
13.2 No Participation in Other Qualified Plans........................ 106
13.3 Participation in Other Qualified Master or Prototype Defined
Contribution Plans............................................... 107
13.4 Participation In Another Qualified Plan, Other Than Master or
Prototype Plans.................................................. 107
13.5 Estimated Limitation............................................. 107
13.6 Apportionment Between Plans...................................... 108
13.7 Excess Amounts................................................... 108
13.8 Defined Benefit and Defined Contribution Plan.................... 109
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DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
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ARTICLE 14 TOP-HEAVY PROVISIONS
14.1 Application of Article.......................................... 110
14.2 Top-Heavy Definitions........................................... 110
14.3 Minimum Allocation.............................................. 113
14.4 Apportionment of Minimum Benefits Between Multiple Plans........ 114
14.5 Minimum Vesting Schedule........................................ 114
14.6 Top Heavy Adjustments in Section 415 Fractions.................. 114
14.7 Additional Provisions For Paired Defined Contribution and
Defined Benefit Plans........................................... 115
ARTICLE 15 ACCOUNTS AND INVESTMENTS
15.1 Separate Accounts............................................... 117
15.2 Investment Media; Participant Investment Directions............. 117
15.3 Rules for Exercise of Investment Options........................ 119
15.4 Segregated Accounts............................................. 119
15.5 Life Insurance Contracts........................................ 120
15.6 Mutual Fund Shares.............................................. 121
15.7 Expenses........................................................ 123
ARTICLE 16 ADMINISTRATION OF THE PLAN
16.1 Plan Administrator.............................................. 124
16.2 Administration of Plan.......................................... 124
16.3 Reporting and Disclosure........................................ 125
16.4 Records......................................................... 125
16.5 Compensation and Expenses....................................... 125
16.6 Claims Procedure................................................ 125
16.7 More than One Employer.......................................... 126
ARTICLE 17 AMENDMENT, TERMINATION OR MERGER OF PLAN
17.1 Amendment by Sponsor............................................ 127
17.2 Amendment by Employer........................................... 127
17.3 Restrictions on Amendments...................................... 128
17.4 Termination of Plan............................................. 129
17.5 Disposition and Termination of Trust............................ 129
17.6 Merger of Plans................................................. 129
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DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
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ARTICLE 18 TRANSFERS FROM OR TO OTHER QUALIFIED PLANS
18.1 Transfers from Another Plan of the Employer....................... 130
18.2 Transfers to Other Plans.......................................... 130
ARTICLE 19 MISCELLANEOUS
19.1 Prohibited Diversion.............................................. 131
19.2 Failure to Attain or Retain Qualification......................... 131
19.3 Nonalienation..................................................... 131
19.4 Qualified Domestic Relations Orders............................... 131
19.5 Limitation on Rights Created by Plan.............................. 133
19.6 Allocation of Responsibilities.................................... 133
19.7 Return of Contributions........................................... 133
19.8 Current Address of Payee.......................................... 134
19.9 Controlled Group.................................................. 134
19.10 Affiliated Service Groups......................................... 134
19.11 Other Aggregated Groups........................................... 134
19.12 Leased Employees.................................................. 135
19.13 Control of Trades or Businesses by Owner Employee................. 135
19.14 Application of Plan's Terms....................................... 136
19.15 Rules of Construction............................................. 137
19.16 Governing Law..................................................... 137
19.17 Payment for Minor or Incompetent.................................. 137
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DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
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INDEX OF TERMS
--------------
The items listed below are defined, explained or clarified in the plan
sections or articles indicated.
Adoption agreement............................. 2.2
Allocation rules............................... 8.7
Annual additions............................... 13.1(a)
Beneficiary.................................... 2.4, 10.5
Code........................................... 2.5
Claims procedure............................... 16.6
Compensation for Purposes of Code Section 415.. 13.1(b)
(See also "plan compensation")
Contribution percentage........................ 6.7
Deferral percentage............................ 5.7
Eligible employee.............................. 4.1
Employee....................................... 2.8
Employer....................................... 2.9, 13.1(c)
ERISA.......................................... 2.10
Excess 401(k) savings contributions............ 5.9(a)
Financial hardship............................. 12.2(b), 12.3(c)
401(k) limits.................................. 5.2, 5.6, 6.9
401(m) limits.................................. 6.2, 6.6, 6.9
Hour of service................................ 3A.3
Higher paid group.............................. 5.8(a)
Limitation year................................ 13.1(h)
Loans.......................................... 12.5
Lower paid group............................... 5.8(b)
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DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
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Method of payment........................... 9.4,10.2
One-year break in service................... 3A.4
Owner-employee.............................. 2.15
Paired plans................................ 1.3
Participant................................. 2.16
Participation............................... Article 4,4.3
Plan........................................ 2.17
Plan administrator.......................... Article 16,2.18
Plan compensation........................... 2.19, 8.7(e)
Plan service................................ Article 3
Plan year................................... 2.20
Qualified domestic relations orders......... 19.4
Qualified joint and survivor annuity........ 9.5(a)
Qualified voluntary employee contributions.. 7.2
Retirement dates............................ 9.1,9.2
Rollover contributions...................... 7.1
Segregated accounts......................... 15.4
Self-employed individual.................... 2.23
Shareholder-employee........................ 2.24
Sponsor..................................... 2.25
Top-heavy definitions....................... 14.2
Trust....................................... 2.27
Trustee..................................... 2.28
Vested interest............................. 11.1,3A.9,3B.5
Withdrawals................................. Article 12,7.3
Year of service............................. 3A.2
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DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
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ARTICLE 1
INTRODUCTION
1.1 Establishment of Plan. The employer established this plan under the
name specified in the adoption agreement.
1.2 Plan Documents. The plan consists of this defined contribution basic
plan document, the adoption agreement executed by the employer, and the related
trust instrument, as each may be amended from time to time.
In this basic plan document, cross references that are arabic numbers
are to an article or section of this document, and cross references that begin
with a capital letter are to the adoption agreement.
1.3 Paired Plans.
(a) Two or more plans established using this basic plan document (or
the sponsor's defined benefit basic plan document) and standardized adoption
agreements may be paired plans. The Code requirements for qualification of
multiple plans will automatically be satisfied for paired plans, and the
employer who complies with the plans' provisions may rely upon their
qualification without obtaining individual determination letters from the
Internal Revenue Service.
(b) The requirements for paired plans are as follows:
(i) Each plan uses one of the sponsor's pairable standardized adoption
agreements. The following are pairable standardized adoption agreements:
adoption agreements numbered (a) 001, 002, and 003, (b) 007 and 008, (c) 011,
012, 013 and 014, (d) 019 and 020 under this basic plan document; and adoption
agreement numbered 002 and 004 under the defined benefit basic plan document
(basic plan document 02).
(ii) Only one of such plans is (a) an integrated profit sharing plan,
(b) a non-integrated profit sharing plan, (c) a money purchase pension plan, or
(d) a defined benefit pension plan.
(iii) Only one of such plans is integrated with Social Security.
(iv) Each adoption agreement specifies the employer's other paired
plan(s).
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DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
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ARTICLE 2
DEFINITIONS
A word or term defined in this article (or in any other article) will have
the same meaning throughout the plan unless the context clearly requires a
different meaning.
2.1 Actual Deferral Percentage (ADP) shall mean, for a specified group of
participants for a Plan Year, the average of the ratios (calculated separately
for each participant in such group) of (1) the amount of employer contributions
actually paid over to the trust on behalf of such participant for the plan year
to (2) the participant's compensation for such Plan Year (limited to the portion
of the plan year in which an employee was a participant, unless otherwise
provided in the adoption agreement). Employer contributions on behalf of any
participant shall include: (1) any elective deferrals made pursuant to the
participant's deferral election, including excess elective deferrals of members
of the higher paid group, but excluding (a) Excess Elective Deferrals of the
lower paid group that arise solely from elective deferrals made under the plan
or plans of this employer and (b) elective deferrals that are taken into account
in the contribution percentage test (provided the ADP test is satisfied both
with and without exclusion of these elective deferrals); and (2) at the election
of the employer, qualified non-elective contributions and qualified matching
contributions. For purposes of computing actual deferral percentages, an
employee who would be a participant but for the failure to make elective
deferrals shall be treated as a participant on whose behalf no elective
deferrals are made.
2.2 Adoption agreement means the METLIFE SECURITY INSURANCE COMPANY OF
LOUISIANA/METLIFE DEFINED CONTRIBUTION GROUP PROGRAM adoption agreement
executed by the employer to establish or amend the employer's plan and its
related trust and to specify optional provisions as part of the employer's plan.
2.3 Average Monthly Compensation means the monthly Plan Compensation of a
Participant averaged over the period specified in the Adoption Agreement.
2.4 Beneficiary means an individual or entity designated by a participant
or beneficiary, or by the plan, to receive any benefit payable upon the death of
the participant or beneficiary.
2.5 Code means the Internal Revenue Code of 1986, as amended.
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2.6 Effective Date shall mean the date specified in the adoption agreement,
but no earlier than the first day of the plan year in which the adoption
agreement is executed, except as otherwise provided in this section. In the
event that this plan is an amended plan, the effective date of the following
provisions shall be determined as follows: (a) Section 8.2(b) is effective on
the later of the first day of the plan year beginning in 1986 or the initial
effective date of the employer's adoption of this plan; (b) Sections 2.11, 2.12,
2.13, 2.21, 2.22, 5.6, 5.7, 5.8, 5.9, 5.10, 6.6, 6.7, and 6.8 are effective on
the later of the first day of the plan year beginning in 1987 or the initial
effective date of the employer's adoption of the plan; (c) Sections 6.9, 8.6(f),
8.7(d) and 11.2 are effective on the later of the first day of the plan year
beginning in 1989 or the initial effective date of the employer's adoption of
the plan; and (d) paragraphs (1) and (2) of section 13.1(b) are effective for
plan years beginning after September 19, 1991. In addition, if a section of the
plan or the adoption agreement specifies an effective date, such provision shall
be effective on the later of the date specified in such section or the initial
effective date of the employer's adoption of the plan.
2.7 Elective Deferrals (or 401(k) savings contributions) shall mean any
employer contributions made to the plan at the election of the participant, in
lieu of cash compensation, and shall include contributions made pursuant to a
salary reduction agreement or other deferral mechanism. With respect to any
taxable year, a participant's Elective Deferral is the sum of all employer
contributions made on behalf of such participant pursuant to an election to
defer under any qualified CODA as described in section 401(k) of the Code, any
simplified employee pension cash or deferred arrangement as described in section
402(h)(1)(B), any eligible deferred compensation plan under section 457, any
plan as described under section 501(c)(18), and any employer contributions made
on the behalf of a participant for the purchase of an annuity contract under
section 403(b) pursuant to a salary reduction agreement. Elective Deferrals
shall not include any deferrals properly distributed as Excess Amounts.
2.8 Employee means (i) a person employed by the employer and, (ii) an
employee of any other employer required to be aggregated under Code Section
414(b), (c), (m) or (a) with the employer maintaining the plan, or (iii) an
individual described in Section 19.12 who is deemed to be an employee of any
such employer under Code Sections 414(n) or 414(o). Employee includes a self-
employed individual.
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2.9 Employer means the employer named in Part A of the adoption agreement
and any other employer which has joined the plan.
No employer may adopt a standardized plan unless each related employer
that is part of the same controlled group (as defined in Section 19.9) or the
same affiliated service group (as defined in Section 19.10), or that is
aggregated under Section 19.11, with the employer designated in Part A of the
adoption agreement joins the plan. The failure of any such related employer to
join the plan will cause it to be considered a nonstandardized plan so that the
employers may not rely upon the plan's qualification under Code Section 401(a)
unless they obtain an individual determination letter to such effect from the
Internal Revenue Service.
In this plan, the term employer will refer to the employer named in
Part A of the adoption agreement, to each adopting employer individually, or to
all employers in the aggregate, as the context may require. General rules of
construction appear in Section 16.7, "More Than One Employer."
2.10 ERISA means the Employee Retirement Income Security Act of 1974, as
amended.
2.11 Excess Aggregate Contributions shall mean, with respect to any Plan
Year, the excess of:
a. The aggregate Contribution Percentage Amounts taken into account in
computing the numerator of the Contribution Percentage actually made on behalf
of Higher Paid Group for such Plan Year, over
b. The maximum Contribution Percentage Amounts permitted by the ACP
test (determined by reducing contributions made on behalf of members of the
Higher Paid Group in order of their Contribution Percentages beginning with the
highest of such percentages).
Such determination shall be made after first determining Excess
Elective Deferrals pursuant to section 5.9(b) and then determining Excess
Contributions pursuant to section 5.9(a).
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2.12 Excess Contributions shall mean, with respect to any Plan Year, the
excess of:
a. The aggregate amount of employer contributions actually taken into
account in computing the ADP of Higher Paid Group for such Plan Year, over
b. The maximum amount of such contributions permitted by the ADP test
(determined by reducing contributions made on behalf of Higher Paid Group in
order of the ADPs, beginning with the highest of such percentages).
2.13 Excess Elective Deferrals or Excess 401(k! Savings Contributions shall
mean those Elective Deferrals or 401(k) savings contributions that are
includible in a participant's gross income under section 402(g) of the Code to
the extent such participant's Elective Deferrals or 401(k) savings contributions
for a taxable year exceed the dollar limitation under such Code section. Excess
Elective Deferrals or Excess 401(k) Savings Contributions shall be treated as
annual additions under the plan unless such amounts are distributed no later
than the first April 15 following the close of the participant's taxable year.
2.14 Level Funding Amount means that level annual amount necessary to fund
a Participant's Target Benefit, using the factors specified in the Adoption
Agreement.
2.15 Owner-employee means an individual who is the sole proprietor (if the
employer is a proprietorship), or who is a partner owning more than 10 percent
of either the capital or profits interest (if the employer is a partnership).
2.16 Participant means an employee who has become a participant in the plan
and whose participation has not ended.
A Participant is treated as benefiting under the Plan for any Plan
Year during which the Participant received or is deemed to receive an allocation
in accordance with section 1.410(b)-3(a).
2.17 Plan means the employer's plan as set forth in this METLIFE SECURITY
INSURANCE COMPANY OF LOUISIANA basic plan document and the adoption agreement
signed by the employer, including all amendments to either document.
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DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
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2.18 Plan administrator means the person or persons designated in the
adoption agreement as plan administrator to control and manage the operation and
administration of the employer's plan as provided in Article 16.
2.19 Plan Compensation.
(a) General Definition. A participant's plan compensation for a plan
year means compensation as that term is defined in Section 13.1(b) of the Plan,
as modified in the adoption agreement. Solely for purposes of determining the
amount of a participant's 401(k) savings contributions, after-tax savings
contributions and their related matching contributions, plan compensation shall
include employer contributions made pursuant to a salary reduction agreement or
other arrangement which are not includible in the gross income of the
participant under Code Sections 125, 402(e)(3), 402(h)(1)(B) or 403(b).
Compensation shall include only that compensation which is actually paid to the
participant during the determination period. Except as provided elsewhere in the
Plan, the determination period shall be the period elected by the Employer in
the Adoption Agreement. If the Employer makes no election, the determination
period shall be the Plan Year. For a self-employed individual, plan compensation
means his earned income.
Notwithstanding the above, except with respect to determining the
amount of a participant's 401(k) savings contributions, after-tax savings
contributions and their related matching contributions, Compensation shall
include any amount which is contributed by the Employer pursuant to a salary
reduction agreement or other arrangement and which is not includible in the
gross income of the Employee under sections 125, 402(e)(3), 402(h)(1)(B), or
403(b) of the Code, (if elected by the Employer in the Adoption Agreement).
For purposes of this subsection, earned income means net earnings from
self employment in the trade or business with respect to which the plan is
established, for which the personal services of the individual are a material
income producing factor. Net earnings will be determined without regard to items
excluded from gross income and the deductions allocable to such items. Net
earnings are reduced by contributions by the employer to a qualified plan to the
extent deductible under Code Section 404. Net earnings shall be determined with
regard to the deduction allowed to the taxpayer by Code Section 164(f) for
taxable years beginning after December 31, 1989.
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DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
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For years beginning on or after January 1, 1989, and before January 1,
1994, the annual compensation of each participant taken into account for
determining all benefits provided under the plan for any year shall not exceed
S200,000. This limitation shall be adjusted by the Secretary at the same time
and in the same manner as under section 415(d) of the Code, except that the
dollar increase in effect on January 1 of any calendar year is effective for
years beginning in such calendar year and the first adjustment to the $200,000
limitation is effected on January 1, 1990.
For Plan Years beginning on or after January 1, 1994, the annual
compensation of each Participant taken into account for determining all benefits
provided under the Plan for any Plan Year shall not exceed $150,000, as adjusted
for increases in the cost-of-living in accordance with section 401(a)(17)(B) of
the Code. The cost-of-living adjustment in effect for a calendar year applies to
any determination period beginning in such calendar year.
If the determination period consists of fewer than 12 months, the
annual compensation limit is an amount equal to the otherwise applicable annual
compensation limit multiplied by a fraction, the numerator of which is the
number of months in the short plan year, and the denominator of which is 12.
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DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
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In determining the compensation of a participant for purposes of this
limitation, the rules of section 414(q)(6) of the Code shall apply, except in
applying such rules, the term "family" shall include only the spouse of the
Participant and any lineal decedents of the Participant who have not attained
age 19 before the close of the year. If, as a result of the application of such
rules the adjusted annual compensation limitation is exceeded, then (except for
purposes of determining the portion of compensation up to the integration level
if this plan provides for permitted disparity), the limitation shall be prorated
among such affected individuals in proportion to each such individual's
compensation as determined under this section prior to the application of this
limitation. If compensation for any prior determination period is taken into
account in determining an employee's allocations or benefits for the current
Plan Year, the compensation for such prior year is subject to the applicable
annual compensation limit in effect for that prior year. For this purpose, for
years beginning before January 1, 1990, the applicable annual compensation
limit is $200,000. In addition, in determining allocations in Plan Years
beginning on or after January 1, 1994, the annual compensation limit in effect
for determination periods beginning before that date is $150,0(}0.
(b) Exception. For purposes of Article 13 (Code Section 415 limits),
the foregoing definition of plan compensation will not apply (see Section
13.1(b) for the applicable definition).
2.20 Plan year means the calendar year unless another plan year is
specified in the adoption agreement.
2.21 Qualified Matching Contributions shall mean employer matching
contributions which are subject to the distribution and nonforfeitability
requirements of Code Section 401(k) when made.
2.22 Qualified Non-elective Contributions shall mean contributions (other
than Matching Contributions or Qualified Matching Contributions) made by the
employer and allocated to participants' accounts that the participants may not
elect to receive in cash until distributed from the plan; that are
nonforfeitable when made; and that are distributable only in accordance with the
distribution provisions that are applicable to Elective Deferrals and Qualified
Matching Contributions.
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2.23 Self-employed individual means an individual who has earned income for
the taxable year from the trade or business for which the plan is established
(or who would have had earned income but for the fact that the trade or business
had no net profits for the taxable year).
2.24 Shareholder-employee in any year means an employee or officer of an S
CORPORATION (AS defined in Code Section 1361(a)) who owns, directly or
indirectly, more THAN FIVE PERCENT OF the outstanding stock of the employer
during such year.
2.25 Sponsor means METLIFE SECURITY INSURANCE COMPANY OF LOUISIANA or its
successor.
2.26 Target Benefit means the monthly benefit set forth in the Adoption
Agreement, which, when annualized, shall be the basis for calculating the Level
Funding Amount, but may be more or less than the benefit actually payable upon
retirement, death, disability, or termination of employment.
2.27 Trust means the trust established under the instrument entitled
METLIFE DEFINED CONTRIBUTION GROUP PROGRAM Trust Agreement for the payment of
the benefits provided by the plan or such custodial accounts or annuity
contracts which meet the requirements of Code Section 401(f).
2.28 Trustee means the trustee named in the trust agreement to serve as
trustee under the plan, or any successor trustee serving under the Trust
Agreement.
2.29 Straight Life Annuity means an annuity payable in equal installments
for the life of the Participant and that terminates upon the Participant's
death.
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ARTICLE 3
DEFINITIONS AND RULES RELATING TO SERVICE
PART A: HOURS OF SERVICE METHOD
3A.1 Applicability of Part A. The definitions and rules in this Part A of
Article 3 will apply unless in the adoption agreement the employer elected to
have employees' service determined entirely or partly using the elapsed time
method.
3A.2 Year of Service. A year of service of an employee is a 12 consecutive
month computation period in which he completes at least 1,000 hours of service,
or a smaller number of hours specified in the adoption agreement.
3A.3 Hour of Service.
(a) Except as provided in subsection (b) below, an employee's hours of
service will be counted by giving the employee credit for:
(i) each hour for which he is paid, or entitled to payment, for the
performance of duties for the employer. These hours will be credited to him for
the computation period in which the duties are performed; and
(ii) each hour for which he is paid, or entitled to payment, by the
employer on account of a period of time during which no duties are performed
(regardless of whether the employment relationship has terminated) due to
vacation, holiday, illness, incapacity (including disability), layoff, jury
duty, military duty or leave of absence. No more than 501 hours of service will
be credited under this subsection (ii) for any single continuous period (whether
or not such period occurs within a single computation period). Hours under this
subsection (ii) will he calculated and credited under Department of Labor
Regulations, 29 C.F.R. (S)2530.200-2(b) and (c), which are incorporated herein
by this reference; and
(iii) each hour for which back pay, regardless of mitigation of
damages, is either awarded or agreed to by the employer. The same hours of
service will not be credited both under subsection (i) or subsection (ii), as
the case may be, and under this subsection (iii). These hours will be credited
to the employee for the computation period or periods to which the award or
agreement pertains rather than the computation period in which the award,
agreement or payment is made.
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(iv) In addition to hours credited to an employee under subsections
(i) through (iii) above, he will be credited with the number of hours (not
exceeding 40 for a full week or a pro rata portion of 40 for a partial week) he
normally would have worked except for the fact that he was absent on one of the
following types of unpaid absence: (A) leave of absence for a period authorized
by the employer under a leave policy applied uniformly to all employees,
provided he returns to service with the employer at or before the expiration of
such period; or (B) leave of absence for service in the armed forces of the
United States, provided he returns to service with the employer within the
period during which his reemployment rights are protected by law.
(v) Solely for purposes of determining whether a one-year break in
service, as defined in section 3A.4, has occurred in a computation period, an
employee who is absent from work for maternity or paternity reasons will receive
credit for the hours of service which would otherwise have been credited to such
employee but for such absence, (or in any case in which such hours cannot be
determined, eight hours of service per day of such absence). For purposes of
this subsection (v), an absence from work for maternity or paternity reasons
means an absence (A) by reason of the pregnancy of the employee, (B) by reason
of a birth of a child of the employee, (C) by reason of the placement of a child
with the employee in connection with the employee's adoption of such child, or
(D) for purposes of caring for such child for a period beginning immediately
following such birth or placement. The hours of service credited under this
subsection (v) will be credited (A) in the computation period in which the
absence begins if the crediting is necessary to prevent a one-year break in
service in that period, or (B) in all other cases, in the following computation
period if necessary to prevent a one-year break in service in that computation
period.
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(b) If the employer so elects in the adoption agreement, an employee
will be credited with the number of hours of service specified in this
subsection (b) for a period if the employee would have been credited with at
least one hour of service during such period under subsection (a) above:
(i) 10 hours of service per day;
(ii) 45 hours of service per week;
(iii) 95 hours of service per semi-monthly payroll period; or
(iv) 190 hours of service per month.
Only one such method may be elected and it must apply to all employees.
3A.4 One-Year Break in Service. A one-year break in service of an employee
is a 12-consecutive month computation period during which he completes one-half
or fewer of the number of hours of service required for a year of service under
Section 3A.2. The 12-month computation period will be the same period used to
determine a year of service under Section 3A.6 or Section 3A.7.
3A.5 Employment Years Defined. Employment years of an employee are
12-consecutive month periods beginning on the date he first completes an hour of
service and on subsequent anniversaries of such date.
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3A.6 Eligibility Computation Period. For purposes of determining whether an
employee has completed the service requirement (if any) for participation:
(a) The initial computation period will be his first employment year.
(b) Subsequent computation periods will be either (i) his subsequent
employment years, or (ii) if the adoption agreement so specifies, plan years
beginning with the plan year that starts during his first employment year
regardless of whether the employee is entitled to be credited with 1,000 hours
of service during his first employment year. For purposes of clause (ii) of the
preceding sentence, an employee who is credited with 1,000 hours of service in
both his first employment year and the plan year that starts during his first
employment year will (unless his employment year and the plan year coincide) be
credited with two years of service for purposes of eligibility to participate.
(c) If an employee has a one-year break in service, his 12-consecutive
month eligibility computation periods will begin with his first employment year
after such break. If necessary for purposes of measuring years of service for
participation, subsequent 12-consecutive month computation periods will be
either (i) if the adoption agreement so specifies under subsection (b)(i) above,
subsequent employment years, or otherwise (ii) plan years beginning with the
plan year which begins during his first employment year after such break.
3A.7 Vesting Computation Period. For purposes of computing an employee's
nonforfeitable right to his employer contributions account, an employee's
computation periods will be either (a) plan years, or (b) if the adoption
agreement so specifies, employment years.
3A.8 Counting Years of Service for Participation. All of an employee's
years of service with the employer are counted toward meeting the plan's
participation eligibility requirement (if any), except that, if the plan
provides for 100% vesting after two years or less of service, service before a
one-year break in service which occurs before the "employee satisfies the plan's
requirement for eligibility will be disregarded unless the adoption agreement
specifies otherwise. However, the preceding sentence will not apply if the
employer's plan is a 401(k) plan.
If the service requirement to become a participant as specified in the
adoption agreement includes a fractional year, an employee will not be required
to complete any minimum number of hours of service to receive credit for such
fractional year.
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3A.9 Years of Service for Vesting. For purposes of determining a
participant's vested percentage, all of his years of service will be counted,
except that, if the adoption agreement specifically so provides, the following
years of service will not be counted:
(a) years of service completed before age 18;
(b) years of service before the employer maintained this plan or a
predecessor plan.
A plan is a predecessor plan if it was terminated on or after the date it
was required to comply with ERISA and within five years before or after the
effective date of this plan. A plan is not treated as a predecessor plan with
respect to an employee unless he was a participant in such plan.
3A.10 Service With Other Organizations.
(a) To determine whether an employee is a participant and to determine
his vested percentage, he will receive credit for hours of service under Section
3A.3 with the following entities (or as a leased employee under Code Section
414(n)) or Code section 414(o) as if those hours of service were credited to the
employee for service with the employer: any member of an affiliated service
group (under Code Section 414(m)) including the employer, any corporation which
is included in a controlled group of corporations (under Code Section 414(b))
with the employer or any unincorporated trade or business which is under common
control (under Code Section 414(c)) with the employer, and any entity required
to be aggregated with the employer under Code Section 414(o). Service credited
under this subsection (a) shall be limited to the period that the other entities
were related to the employer in the manner described in the applicable Code
section, unless the employer has elected in the adoption agreement to recognize
service with any such entity for any period prior to the time such relationship
commenced.
(b) If the employer maintains a plan of a predecessor employer,
service with the predecessor employer will be treated as service with the
employer.
(c) If not treated as service with the employer under subsection (b)
above, service with any entity specifically so designated in the adoption
agreement will be treated as service with the employer.
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PART B: ELAPSED TIME METHOD
3B.1 Applicability of Part B. If in the METLIFE SECURITY INSURANCE COMPANY
OF LOUISIANA/METLIFE DEFINED CONTRIBUTION GROUP PROGRAM adoption agreement the
employer elected to have employees' service determined entirely or partly using
the elapsed time method, then to that extent the definitions and rules in this
Part B will apply.
3B.2 Service.
(a) In General. Service of an employee includes all of the following:
(i) any period of his employment, whether or not continuous;
(ii) for a reemployed employee, any period of severance provided that
his reemployment date occurs within one year after his severance date.
(b) Years of Service. To determine an employee's years of plan
service, all of his plan service will be aggregated and each 365 days of such
aggregated plan service will constitute one year of plan service. If any
provision of the plan calls for completion of a fractional year of plan service,
such fraction of 365 days of his aggregated plan service will satisfy the
provision; for example, if one-half year of plan service is required, then such
requirement will be met when the employee's aggregated plan service equals 183
days.
3B.3 Definitions Relating to Service.
(a) Employment. An employee's employment means his service as an
employee, beginning on his employment date or reemployment date and ending on
his severance date.
(b) Employment Date. An employee's employment date or reemployment
date is the date on which he first completes an hour of service.
(c) Reemployment Date. In the case of an employee who has a period of
severance which is not taken into account under Section 3B.2(a) (ii), the
reemployment date is the date on which he first completes an hour of service
after such period of severance.
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(d) Period of Severance. A period of severance of an employee means a
period beginning on his severance date and, if applicable, ending on his
reemployment date.
In the case of an employee who is absent from work for maternity or
paternity reasons, the 12-consecutive month period beginning on the first
anniversary of the first date of such absence will not constitute a period of
severance. For purposes of this paragraph, an absence from work for maternity or
paternity reasons means an absence (1) by reason of the pregnancy of the
employee, (2) by reason of the birth of a child of the employee, (3) by reason
of the placement of a child with the employee in connection with the employee's
adoption of such child, or (4) for purposes of caring for such child for a
period beginning immediately following such birth or placement.
Each employee will share in employer contributions for the period
beginning on the date the employee commences participation under the plan and
ending on the date on which such employee severs employment with the employer or
is no longer a member of an eligible class of employees.
If the employer is a member of an affiliated service group (under
section 414(m)), a controlled group of corporations (under section 414(b)), a
group of trades or businesses under common control (under section 414(c)) or any
other entity required to be aggregated with the employer pursuant to section
414(o) and the regulations thereunder, service will be credited for any
employment for any period of time for any other member of such group. Service
will also be credited for any individual required under section 414(n) or
section 414(o) and the regulations thereunder to be considered an employee of
any employer aggregated under section 414(b), (c), or (m).
(e) Severance Date. An employee's severance date is the earlier of:
(i) the date on which he quits, retires, is discharged or dies, or
(ii) the first anniversary of the first day of a period during which
he is absent (with or without compensation) from performing duties for the
employer for any reason other than quit, retirement, discharge or death, such as
vacation, holiday, sickness, leave of absence or layoff.
(f) Hour of Service. For purposes of this Part B of Article 3, an hour
of service is an hour for which the employee is paid or entitled to payment for
the performance of duties for the employer.
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3B.4 Certain Service Before Eligibility Disregarded. If the plan provides
for 100% vesting after two years or less of plan service, plan service will be
disregarded if it was completed before a period of severance of one year or more
which occurs before the employee satisfied the plan's service requirement for
eligibility. However, this section does not apply if the employer's plan is a
401(k) plan.
3B.5 Service for Vesting. For purposes of determining a participant's
vested percentage, all of his service will be counted except that, if the
adoption agreement so provides, the following service will not be counted:
(a) service completed before age 18;
(b) service before the employer maintained this plan or a predecessor
plan.
A plan is a predecessor plan if it was terminated on or after the date
it was required to comply with ERISA and within five years before or after the
effective date of this plan. A plan is not treated as a predecessor plan with
respect to an employee unless he was a participant in such plan.
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3B.6 Service With Other Organizations.
(a) To determine whether an employee is a participant and to
determine his vested percentage, service with the following entities (or as a
leased employee under Code Section 414(n)) will count as service with the
employer: any member of an affiliated service group (under Code Section
414(m)), any corporation which is included in a controlled group of corporations
(under Section Code 414(b)) with the employer, any unincorporated trade or
business which is under common control (under Section Code 414(c)) with the
employer, and any entity aggregated with the employer under Code Section
414(o)). Service credited under this subsection (a) shall be limited to the
period that the other entities were related to the employer in the manner
described in the applicable Code section, unless the employer has elected in the
adoption agreement to recognize service with any such entity for any period
prior to the time such relationship commenced.
(b) If the employer maintains a plan of a predecessor employer,
service with the predecessor employer will be treated as service with the
employer.
(c) If not treated as plan service with the employer under subsection
(b) above, service with any entity specifically so designated in the adoption
agreement will be treated as service with the employer.
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ARTICLE 4
PARTICIPATION
4.1 Eligible Employees. Each employee is eligible to participate in the
plan (an eligible employee) unless he is not eligible. An employee is not
eligible (a noneligible employee) if:
(a) he is employed in a unit covered by a collective bargaining
agreement between the employer and employee representatives where retirement
benefits were the subject of good faith bargaining with the employer and the
agreement does not call for his inclusion in the plan and if less than two
percent of the employees of the employer who are covered pursuant to that
agreement are professionals as defined in section 1.410(b)9(g) of the proposed
regulations; the term "employee representatives" does not include any
organization more than half of whose members are employees who are owners,
officers or executives of the employer; or
(b) he is a nonresident alien and receives no compensation from the
employer which constitutes income from sources within the United States; or
(c) he is a member of a class of employees explicitly excluded from
eligibility in the adoption agreement; or
(d) he is an owner-employee explicitly excluded from eligibility in
the adoption agreement; or
(e) he terminates employment during the plan year with not more than
500 hours of service and is not employed as of the last day of the plan year.
4.2 Age and Service Requirements. Any minimum age and service requirements
are set forth in the METLIFE SECURITY INSURANCE COMPANY OF LOUISIANA/METLIFE
DEFINED CONTRIBUTION GROUP PROGRAM adoption agreement.
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The minimum service requirement may not exceed one year of service (one-
half year in the case of a plan with annual entry dates); however, if the
employer's plan provides for full and immediate vesting after two years or less
of service, the minimum service requirement may not exceed two years of service
(one and one-half years in the case of a plan with annual entry dates). The
Employer shall elect in Section B.2 of the Adoption Agreement whether to use the
"Hours of Service" method or the "Elapsed Time" method.
The minimum age requirement may not exceed 21 (20-1/2 in the case of a plan
with annual entry dates).
4.3 Participation.
(a) Each employee who, on the effective date of the plan, is an
eligible employee and has fulfilled the plan's age and service requirements (if
any) will become a participant as of such date.
(b) Each employee (other than one who is a participant under
subsection (a) above) will become a participant on the entry date when he is an
eligible employee and satisfies the plan's age and service requirements (if
any).
(c) Unless specified otherwise in the adoption agreement, the entry
dates will be the first day of the first and seventh months of the plan year
(January 1 and July 1 for calendar year plans). If the adoption agreement
provides for additional or other entry dates, the entry dates will be as so
specified; provided that the first day of the plan year will always be an entry
date.
(d) If the employer's plan permits employee 401(k) savings
contributions or after-tax employee contributions, each employee who has become
a participant under the preceding subsections of this section will be eligible
to make 401(k) savings contributions and/or after-tax employee contributions
subject to the applicable provisions of the plan and the adoption agreement, and
such an employee will be considered a participant even if he elects not to make
401(k) savings contributions or after-tax employee contributions. However, an
employee may not make 401(k) savings contributions and/or after-tax employee
contributions before the date the employer signs the adoption agreement.
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4.4 Termination of Participation. An employee's participation will end when
he is no longer an eligible employee due either to a change in his employment
status or to the termination of his service as an employee because of
disability, death, retirement or any other reason.
4.5 Re-entry of Former Participant. If a former participant returns to
service with the employer as an eligible employee, he will resume participation
in the plan immediately upon his return.
4.6 Transfers.
(a) If a non-eligible employee who satisfies the plan's age and
service requirements (if any) for participation becomes an eligible employee due
to a change in his employment status, he will become a participant immediately
if he would have become a participant on a previous entry date had he always
been an eligible employee.
(b) If a participant becomes ineligible due to a change in his
employment status but has not incurred a break in service, such employee will be
a participant again immediately upon returning to an eligible class of employees
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ARTICLE 5
EMPLOYEE 401(k) SAVINGS CONTRIBUTIONS:
AVERAGE DEFERRAL PERCENTAGE TEST
5.1 Eligibility. If the MetLife Security Insurance Company of Louisiana
adoption agreement so provides, an employee who meets the requirements of
Section 4.3 may elect to make 401(k) savings contributions by payroll deduction
and, if the adoption agreement so provides, by deduction from a bonus payment
under Code Section 401(k). 401(k) savings contributions are voluntary and no
employee is required to make such contributions.
5.2 Limits on Amount.
(a) In General. Unless otherwise elected in the adoption agreement,
the minimum amount of 401(k) savings contributions the participant may elect is
1 percent of his plan compensation. His 401(k) savings contributions in any plan
year may not exceed whichever of the following is smallest: (a) the maximum
amount permitted under Section 5.6 for an employee in the higher-paid group; (b)
the maximum amount that, with other amounts allocated to his accounts hereunder,
does not violate the limitations on annual additions under Article 13; or (c)
any maximum or other limitation imposed by the plan administrator.
In addition, 401(k) savings contributions by a participant during a
taxable year may not exceed the dollar limitation contained in section 402(g) of
the Code in effect at the beginning of such taxable year.
(b) Hardship Withdrawals. Notwithstanding Section 5.1 and subsection
(a) above, a participant who makes a hardship withdrawal under Section 12.3 may
not make 401(k) savings contributions or after-tax employee contributions
hereunder (or under any other plan maintained by the employer) for a period of
12 months following the date of the in-service withdrawal. Also, in the taxable
year following the date of the withdrawal, such a participant may not make
401(k) savings contributions which, when added to his 401(k) savings
contributions during the taxable year of the withdrawal, exceed the amount
specified in the second paragraph of subsection (a) above.
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(c) Nonforfeitability. The participants accrued benefit from elective
deferrals, qualified non-elective contributions, employee after-tax
contributions and qualified matching contributions is non-forfeitable.
(d) Distribution Requirements. Elective deferrals are subject to the
distribution requirements of Code Section 401(k)(2)(B).
5.3 Procedures. The participant must file a written election form with the
plan administrator indicating the amount of 401(k) savings contributions he
wishes to make and agreeing to reduce his compensation by such amount. Subject
to any rules specified in the adoption agreement or established by the plan
administrator or sponsor, a participant may increase, decrease, discontinue or
resume his 401(k) savings contributions during a plan year by filing an
appropriate form with the plan administrator. A discontinuance of 401(k) savings
contributions will be effective as soon as reasonably practicable after the plan
administrator's receipt of the participant's election form. An increase or
decrease of 401(k) savings contributions, or a resumption after a
discontinuance, will be effective in accordance with any rules specified in the
adoption agreement or established by the plan administrator or sponsor.
No change under the preceding paragraph may cause a participant's 401(k)
savings contributions to exceed the maximum provided for under Section 5.2.
Either the plan administrator or the sponsor may establish reasonable rules
of uniform application governing participants' elections and changes. Such rules
may include the number and frequency of elections or changes during any plan
year, effective dates for elections or changes (for example, the first day of
the payroll period coinciding with or next following the applicable election or
change date), cutoff dates for timely filing of elections or changes, and other
rules to facilitate operation of this article.
Notwithstanding the preceding, an eligible employee will be permitted to
change his election at least once each year.
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5.4 Collection of 401(k) Savings Contributions. The employer will collect
participants' 401(k) savings contributions using payroll or other procedures,
including deductions from bonus payments, if elected in the adoption agreement.
The employer will transfer the amounts collected to the trustee as of the
earliest date when such contributions can reasonably be segregated from the
employer's general assets, but not later than 90 days from the date on which
such amounts would otherwise have been payable to the participant in cash.
For purposes of Code Section 414(h), it is specifically provided that
participants' 401(k) savings contributions under this article are employer
contributions.
5.5 Savings Contributions Account. A participant's 401(k) savings
contributions will be credited to his 401(k) savings contributions account. Such
account will be fully vested and nonforfeitable at all times.
5.6 401(k) Limits.
(a) As of the last day of each plan year, the average of the
individual deferral percentages (ADP) of the higher paid group (such average is
called the HDP in this section) may not exceed the average of the individual
deferral percentages (ADP) of the lower paid group (such average is called the
LDP in this section) by more than the amount specified in the following table:
If LDP is: HDP may not exceed:
---------- -------------------
less than 2% two times LDP
2% but less two percentage points more
than 8% than LDP
8% or higher 1.25 times LDP
The determination and treatment of participants' deferral percentages will
be subject to the requirements of any applicable regulations. As provided in
such regulations, if the only employees eligible to make 401(k) savings
contributions under this plan (and any other plan which must be aggregated with
this plan under such regulations) are in the higher paid group, this plan will
be deemed to meet the requirements of this Section 5.6.
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See Section 6.9 for additional 401(k) limits that may be applicable in
certain situations.
(b) Special Rules:
1. The ADP for any participant who is in the High Paid Group for the
Plan Year and who is eligible to have Elective Deferrals (and qualified non-
elective contributions or qualified matching contributions, or both, if treated
as elective deferrals for purposes of the ADP test) allocated to his accounts
under two or more arrangements described in Code section 401(k), that are
maintained by the employer, shall be determined as if such elective deferrals
(and, if applicable, such qualified non-elective contributions or qualified
matching contributions, or both) were made under a single arrangement. If a
Higher paid employee participates in two or more cash or deferred arrangements
that have different Plan Years, all cash or deferred arrangements ending with or
within the same calendar year shall be treated as a single arrangement.
2. In the event that this plan satisfies the requirements of sections
401(k), 401(a)(4), or 410(b) of the Code only if aggregated with one or more
other plans, or if one or more other plans satisfy the requirements of such
sections of the Code only if aggregated with this plan, then this section shall
be applied by determining the ADP of employees as if all such plans were a
single plan. For plan years beginning after December 31, 1989, plans may be
aggregated in order to satisfy Code section 401(k) only if they have the same
Plan Year.
3. For purposes of determining the ADP of a participant who is a 5-
percent owner or one of the ten most highly-paid Higher Paid employees, the
elective deferrals (and qualified non-elective contributions or qualified
matching contributions, or both, if treated as elective deferrals for purposes
of the ADP test) and Compensation of such participant shall include the elective
deferrals (and, if applicable, qualified non-elective contributions and
qualified matching contributions, or both) and compensation for the Plan Year of
Family members (as defined in section 414(q)(6) of the Code). Family members,
with respect to such higher paid group employees, shall be disregarded as
separate employees in determining the ADP both for participants who are in the
lower paid group and for participants who are in the higher paid group.
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4. For purposes of determining the ADP test, elective deferrals,
qualified non-elective contributions and qualified matching Contributions must
be made before the last day of the twelve-month period immediately following the
Plan Year to which contributions relate.
5. The employer shall maintain records sufficient to demonstrate
satisfaction of the ADP test and the amount of qualified non-elective
contributions or qualified matching contributions, or both, used in such test.
6. The determination and treatment of the ADP amounts of any
participant shall satisfy such other requirements as may be prescribed by the
Secretary of the Treasury.
5.7 Deferral Percentage.
(a) Basic Definition. For purposes of Section 5.6, the deferral
percentage of a participant for a plan year means his 401(k) savings
contributions for such year computed as a percentage of his plan compensation
for such year (to the nearest one-hundredth of a percentage point). If an
employee is eligible to participate in 401(k) savings contributions but has not
elected to make such contributions, he will nevertheless be taken into account
as having made zero 401(k) savings contributions.
Notwithstanding the preceding paragraph, in the plan administrator's
discretion, 401(k) savings contributions of a participant in the lower paid
group will not be included when determining his deferral percentage to the
extent that the requirements of Section 5.6 are met without taking such
contributions into account, and such contributions may be used in performing the
401(m) tests if applicable to the employer's plan. See Section 6.7(b).
(b) Employer Profit Sharing Contributions. If the employer's plan
provides for employer profit sharing contributions and such contributions meet
the requirements of this subsection (b), then, subject to the requirements of
applicable regulations, the plan administrator may elect to treat all or part of
such contributions as if they were 401(k) savings contributions for purposes of
subsection (a) above.
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Employer profit sharing contributions meet the requirements of this
subsection (b) if they are allocated to participants using a nonintegrated
allocation formula, they are always fully vested when made, and they are subject
to the limitations on distribution of Code Section 401(k)(2)(b) (which means
that they are not available for in-service withdrawals before age 59-1/2). Also,
any employer profit sharing contributions not treated as 401(k) savings
contributions under the preceding paragraph must be nondiscriminatory.
The employer may make qualified Non-elective Contributions under the
plan solely on behalf of employees in the lower paid group in an amount as are
needed to meet the actual deferral percentage test. Notwithstanding any
provision in this plan to the contrary, the Employer may, in its absolute
discretion, selectively allocate Qualified Non-Elective Contributions on behalf
of any one or a number of employees in the lower paid group.
In addition, in lieu of distributing Excess Contributions as provided
in section 5.9(a) of the plan, or Excess Aggregate Contributions as provided in
section 6.8(d)(iii) of the plan, the employer may make qualified Non-elective
Contributions on behalf of any one or a number of lower paid group Employees to
an extent that is sufficient to satisfy either the ADP test or the Average
Contribution Percentage test, or both, pursuant to regulations under the Code.
The employer may elect in the adoption agreement to make Qualified
Non-elective Contributions in addition to those required to satisfy the Actual
Deferral Percentage Test or the Actual Contribution Percentage Test. Such
Qualified Non-elective Contributions shall be referred to as Supplemental
Qualified Non-elective Contributions. The employer may elect in the Adoption
Agreement to allocate Supplemental Qualified Non-elective Contributions among
all participants in the plan or solely among those participants in the lower-
paid group. The amount of Supplemental Qualified Non-elective Contributions
shall be determined in accordance with the employer's election in the Adoption
Agreement.
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(c) Employer Matching Contributions. If the employer's plan provides
for employer matching contributions, such contributions will not be included in
determining a participant's deferral percentage under subsection (a) above.
However, if such contributions meet the requirements of this subsection (c), and
if the requirements of applicable regulations are met, the plan administrator
may elect to treat all or part of such contributions as if they were 401(k)
savings contributions for purposes of subsection (a) above. The plan
administrator might elect to include such contributions, for example, if the
employer elected either a dollar cap on matching contributions or a graded
percentage for matching contributions with a higher match on the lower
percentages of savings contributions (i.e., a bottom loaded match).
Employer matching contributions meet the requirements of this
subsection (c) if they are always fully vested when made, and they are subject
to the limitations on distribution of Code Section 401(k)(2)(B) (which means
that they are not available for in-service withdrawals before age 59-1/2).
Employer matching contributions which are used in determining an
employee's deferral percentage under subsection (a) above will not be used in
determining his contribution percentage under Section 6.7.
Qualified Matching Contributions will be taken into account as
Elective Deferrals for purposes of calculating the actual Deferral Percentages,
subject to such other requirements as may be prescribed by the Secretary of the
Treasury and shall be made as are needed to meet the actual Deferral Percentage
test. The employer will make Qualified Matching Contributions to the plan solely
on behalf of participants who are lower paid group employees who make either
401(k) savings contributions and/or employee after-tax contributions to the
plan. Notwithstanding any provision in this Plan to the contrary, the Employer
may, in its absolute discretion, selectively allocate Qualified Matching
Contributions on behalf of any one or a number of employees in the lower paid
group.
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(d) If an employee in the higher paid group makes 401(k) savings
contributions or if employer profit sharing contributions or employer matching
contributions that are used in determining such an employee's deferral
percentage under subsection (a) above are made on his behalf to another plan
maintained by the employer, his deferral percentage will be determined as if all
such 401(k) savings contributions and employer profit sharing contributions and
employer matching contributions (whichever may be applicable) were made under a
single plan.
Notwithstanding the foregoing, certain plans shall be treated as
separate if mandatorily disaggregated under regulations under Code Section
401(k).
The employer may elect in the adoption agreement to make Qualified
Matching Contributions in addition to those required to satisfy the Actual
Deferral Percentage Test. Such Qualified Matching Contributions shall be
referred to as Supplemental Qualified Matching Contributions. The employer may
elect in the Adoption Agreement to allocate Supplemental Qualified Matching
Contributions among all participants in the plan who make matchable savings
contributions or solely among those participants in the lower-paid group who
make matchable savings contributions. The amount of Supplemental Qualified Non-
elective Contributions shall be determined in accordance with the employer's
election in the Adoption Agreement.
5.8 Higher and Lower Paid Groups Defined.
(a) An employee who is eligible to make 401(k) savings contributions
is in the higher paid group for a plan year if during such plan year or the
preceding plan year (i) he owns (or is considered to own within the meaning of
Code Section 318) more than 5% of the outstanding stock of the employer or more
than 5% of the capital or profits interest in the employer, (ii) his plan
compensation (before reduction for 401(k) savings contributions) exceeds
$75,000, (iii) his plan compensation (before reduction for 401(k) savings
contributions) exceeds $50,000 and he is in the highest paid 20 percent of all
employees, or (iv) he is an officer of the employer having annual plan
compensation greater than 50% of the amount in effect under Code Section
415(b)(1)(A) for such plan year. The $75,000 and the $50,000 amounts in the
preceding sentence will be adjusted in accordance with Code Section 414(q). A
former employee who was a member of the higher paid group either when such
employee terminated employment with the employer or at any time after such
employee reached age 55 will continue to be treated as a member of the higher
paid group.
(b) If an employee eligible to make 401(k) savings contributions is
not in the higher paid group for a plan year, then he is in the lower paid
group.
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(c) In determining which employees are in the higher paid group under
subsection (a) above, the following special rules will apply:
(i) No more than the lesser of (A) 50 employees or (B) the greater of
10% of employees or three employees will be included in the higher paid group as
officers under subsection (a)(iv) above. However, if no officer meets the
criteria of subsection (a)(iv) above, the highest paid officer will be included
under such subsection.
(ii) If an employee is included in the higher paid group under
subsection (a)(ii), (iii) or (iv) for the current plan year but was not so
included for the preceding plan year, he will be in the higher paid group for
the current plan year only if he is one of the 100 highest paid employees for
the current plan year.
(iii) A family member of either (A) a 5% owner under subsection (a)(i)
above, or (B) one of the 10 highest paid employees in the higher paid group
under subsection (a) above will not be considered an employee for purposes of
Section 5.6. Plan compensation of such person and any 401(k) savings
contributions by or (if applicable) employer matching or profit sharing
contributions on behalf of such person will be attributed to the higher paid
group member to the extent provided in applicable regulations. Also, the
adjustment of a higher paid group participant's 401(k) savings contributions
under Section 5.9 will be performed by adjusting the 401(k) savings
contributions of the participant and his family member(s) as and to the extent
required in applicable regulations. For this purpose, a family member means the
employee's spouse and his lineal ascendants or descendants (and their spouses).
(iv) For purposes of determining how many employees there are (and
hence how many are in the highest paid 20 percent or are officers), an employee
will be disregarded if he has not completed 6 months of service with the
employer, he normally works less than 17-1/2 hours per week or 6 months during
any year, he is under age 21, he is in a unit covered by an agreement which the
Secretary of Labor finds to be a collective bargaining agreement between
employee representatives and the employer (except to the extent provided in
regulations), or he is a nonresident alien with no U.S. source income.
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METLIFE DEFINED CONTRIBUTION GROUP
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DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
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5.9 Monitoring Participants' Deferral Percentages; Adjustments. The plan
administrator (or an administrative services provider - which may be the trustee
or the sponsor - retained by the plan administrator to perform participant
recordkeeping and other administrative duties) will monitor participants'
deferral percentages to insure compliance with the requirements of Section 5.6
above. Any adjustments in participants' elections or actual 401(k) savings
contributions necessary to meet the requirements of Section 5.6 will be made as
follows. The plan administrator will reduce the deferral percentage of the
participant (or participants) in the higher paid group with the highest deferral
percentage until it reaches the deferral percentage of the participant (or
participants) in the higher paid group with the next highest deferral
percentage; next the plan administrator will reduce the deferral percentages of
both or all such participants until they reach that of the participant with the
then next highest deferral percentage; and so on. The foregoing reductions will
be made only to the extent necessary to meet the requirements of Section 5.6.
(a) Excess Contributions. The plan administrator will adjust 401(k)
savings contributions elections by participants in the higher paid group in
accordance with the preceding paragraph at such time or times before or during a
plan year as the plan administrator deems advisable to insure that the
requirements of Section 5.6 are met as of the last day of the plan year.
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DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
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If, notwithstanding the preceding sentence, the requirements of
Section 5.6 are not met as of the last day of a plan year, such adjustments may
be made after the end of a plan year in one or a combination of the following
ways: (i) paying to a participant the amount of his excess contributions plus
earnings (or losses) on such excess, (ii) recharacterizing the excess
contributions of such a participant as after-tax employee contributions during
such year, or (iii) in the employer's discretion, by making an employer
contribution that meets the requirements of Section 5.7(b) on behalf of
employees in the lower paid group (or all employees, if provided in the adoption
agreement) in the amount needed so that the requirements of Section 5.6 are met.
For purposes of the preceding sentence, excess contributions means 401(k)
savings contributions by a participant in the higher paid group in excess of the
amount that would satisfy the requirements of Section 5.6 above. Also, for
purposes of such sentence, any such payment or recharacterization of excess
contributions will be designated as such by the employer, and will be made by
the end of the succeeding plan year to avoid plan disqualification (and must be
made within 2-1/2 months after the end of the current plan year to avoid an
excise tax on the employer equal to 10 percent of the excess). However, the
amount to be paid or recharacterized will be reduced by any amounts relating to
such plan year previously withdrawn by the participant under Section 5.11. For
purposes of clause (ii) of such sentence, recharacterizing will be available
only if the adoption agreement is a non-standardized adoption agreement and
permits after-tax employee contributions.
Excess Contributions shall be allocated to Participants who are
subject to the family member aggregation rules of section 414(q)(6) of the Code
in proportion to the Elective Deferrals (and amounts treated as Elective
Deferrals) of each family member that is combined to determine the combined ADP.
A participant may treat his or her Excess Contributions as an amount
distributed to the participant and then contributed by the participant to the
plan. Recharacterized amounts will remain nonforfeitable and subject to the same
distribution requirements as Elective Deferrals. Amounts may not be
recharacterized by a higher paid group Employee to the extent that such amount
in combination with other Employee Contributions made by that employee would
exceed any stated limit under the plan on Employee Contributions.
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METLIFE DEFINED CONTRIBUTION GROUP
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DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
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Recharacterization must occur no later than two and one-half months
after the last day of the Plan Year in which such Excess Contributions arose and
is deemed to occur no earlier than the date the last higher paid group Employee
is informed of the amount recharacterized and the consequences thereof.
Recharacterized amounts will be taxable to the participant for the participant's
tax year in which the participant would have received them in cash.
Determination of Income or Loss: Excess Contributions shall be
adjusted for any income or loss for the plan year in which such contributions
were made. Income or loss attributable to the period between the end of the plan
year and the date of distribution will be disregarded in determining income or
loss.
Accounting for Excess Contributions: Excess Contributions shall be
distributed from the participant's Elective Deferral account and Qualified
Matching Contribution account (if applicable) in proportion to the participant's
Elective Deferrals and Qualified Matching Contributions (to the extent used in
the ADP test) for the Plan Year. Excess Contributions shall be distributed from
the participant's Qualified Non-elective Contribution account only to the extent
that such Excess Contributions exceed the balance in the participant's Elective
Deferral account and Qualified Matching Contribution account.
A distribution of excess contributions under this section may be made
notwithstanding any otherwise applicable restrictions or spousal consent
requirements on in-service withdrawals or distributions.
Any excess contributions distributed under this subsection will
nevertheless be considered as annual additions for purposes of applying the
limitations of Article 13.
The plan administrator will maintain records to show that the plan met
the requirements of Section 5.6 (and Section 6.6) for each plan year (including
records that show the extent to which employer profit sharing contributions
and/or matching contributions and/or 401(k) savings contributions were used in
performing the tests).
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METLIFE DEFINED CONTRIBUTION GROUP
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DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
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(b) Excess Elective Deferrals. A Participant may assign to this plan
any excess Elective Deferrals made during a taxable year of the participant by
notifying the plan administrator on or before March 1 following such taxable
year of the amount of the excess Elective Deferrals to be assigned to the plan.
A participant is deemed to notify the plan administrator of any Excess Elective
Deferrals that arise by taking into account only those Elective Deferrals made
to this plan and any other plans of this employer.
Notwithstanding any other provision of the plan, Excess Elective
Deferrals, plus any income and minus any loss allocable thereto, shall be
distributed no later than April 15 to any participant to whose account Excess
Elective Deferrals were assigned for the preceding year and who claims Excess
Elective Deferrals for such taxable year.
Determination of income or loss: Excess Elective Deferrals shall be
adjusted for any income or loss for the plan year in which such contributions
were made. Income or loss attributable to the period between the end of the plan
year and the date of distribution will be disregarded in determining income or
loss.
A withdrawal of an excess under this section may be made
notwithstanding any otherwise applicable restrictions or spousal consent
requirement on in-service withdrawals.
Any amounts withdrawn under this section will nevertheless be
considered as annual additions for purposes of applying the limitations of
Article 13 unless such amounts are distributed no later than the first April 15
following the close of the participant's taxable year.
The amount of any 401(k) savings contributions to be withdrawn under
this section will be reduced by any amounts previously distributed or
recharacterized under Section 5.9.
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METLIFE DEFINED CONTRIBUTION GROUP
34
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DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
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5.10 Treatment of Participant Who Reaches $7,000 Limit.
(a) If a participant makes 401(k) savings contributions in a calendar
year equal to $7,000 as adjusted in accordance with Code Section 402(g)), his
401(k) savings contributions will immediately cease.
(b) This subsection (b) applies if the following conditions exist: (i)
the employer's plan provides for employer matching contributions; (ii) the
participant made savings contributions at a rate higher (as a percentage of his
plan compensation) than the maximum rate for matching, as set forth in the
adoption agreement; and (iii) the participant reaches the $7,000 limit (as so
adjusted) during the plan year.
If the foregoing conditions exist, for purposes of employer matching
contributions, the participant will be treated as if he made savings
contributions at the maximum rate for matching starting on January 1 until he
would have reached the $7,000 limit (or his termination of plan participation,
if earlier).
(c) If participants are allowed to make after-tax employee
contributions, and the adoption agreement so provides, any participant whose
savings contributions are limited in accordance with this section, may elect to
make after-tax employee contributions in lieu of 401(k) savings contributions
for the remainder of the plan year.
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METLIFE DEFINED CONTRIBUTION GROUP
35
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DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
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ARTICLE 6
AFTER-TAX EMPLOYEE SAVINGS CONTRIBUTIONS;
AVERAGE CONTRIBUTION PERCENTAGE TEST
6.1 Eligibility. If the METLIFE SECURITY INSURANCE COMPANY OF LOUISIANA
adoption agreement so provides, an employee who meets the requirements of
Section 4.3 may elect to make after-tax employee contributions by payroll
deduction and, if the adoption agreement so provides, by deduction from a bonus
payment. After-tax employee contributions are voluntary and no employee will be
required to make such contributions. Employee contributions and earnings thereon
are nonforfeitable at all times.
6.2 Limits on Amount. Unless otherwise elected in the adoption agreement,
the minimum amount of after-tax employee contributions the employee may elect is
1 percent of his plan compensation. His after-tax employee contributions for any
plan year may not exceed whichever of the following is the smallest: (a) the
maximum amount permitted under Section 6.6 for an employee in the higher-paid
group; (b) the maximum amount that, with other amounts allocated to his accounts
hereunder, does not violate the limitations on annual additions under Article
13; (c) any maximum or other limitation imposed by the plan administrator.
See the first sentence of Section 5.2(b) for an additional restriction
on after-tax employee contributions that applies in certain cases to
participants who made a hardship withdrawal.
6.3 Procedures; Plan Administrator Rules. The procedures for electing and
changing after-tax employee contributions, and plan administrator rules
therefore, will be similar to those described in Section 5.3.
6.4 Collection of After-Tax Employee Contributions. The employer will
collect participants' after-tax employee contributions using payroll or other
procedures, including deductions from bonus payments, if elected in the adoption
agreement. The employer will transfer the amounts collected to the trustee as of
the earliest date on which such contributions can reasonably be segregated from
the employer's general assets, but not later than 90 days from the date on which
such amounts are received by the employer or the date on which such amounts
would otherwise have been payable to the participant in cash.
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METLIFE DEFINED CONTRIBUTION GROUP
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DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
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6.5 After-Tax Employee Contributions Account. A participant's after-tax
employee contributions will be credited to his after-tax employee contributions
account. Such account will be fully vested and nonforfeitable at all times.
6.6 401(m) Limits. As of the last day of each plan year, the average of the
individual contribution percentages of the higher-paid group (ACP) (such average
is called the HCP in this section) may not exceed the average of the individual
contribution percentages of the lower-paid group (ACP) (such average is called
the LCP in this section) by more than the amount specified in the following
table:
The determination and treatment of participants' contribution percentages
will be subject to the requirements of any applicable regulations. As provided
in such regulations, if the only employees eligible to make after-tax employee
contributions or to receive employer matching contributions under this plan (and
any other plan which must be aggregated with this plan under such regulations)
are in the higher paid group, this plan will be deemed to meet the requirements
of this Section 6.6.
See Section 6.9 for additional 401(m) limits that may be applicable in
certain situations.
6.7 Contribution Percentage Defined.
(a) Basic Definition. For purposes of this section, the contribution
percentage of a participant for a plan year means the sum of any after-tax
employee contributions he makes for such year and any employer matching
contributions on his behalf for such year (Contribution Percentage Amounts),
computed as a percentage of his plan compensation for such year (limited to the
portion of the plan year in which an employee was a participant, unless
otherwise elected in the adoption agreement) (to the nearest one-hundredth of a
percentage point). The average of the individual contribution percentages will
be referred to as the Average Contribution Percentage (ACP). However, employer
matching contributions will not be included if they were used in determining the
participant's deferral percentage under Section 5.7(c). If an employee is
eligible to make after-tax employee contributions but has not elected to make
such contributions, he will nevertheless be taken into account as having made
zero after-tax employee contributions.
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METLIFE DEFINED CONTRIBUTION GROUP
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DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
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In computing the Average Contribution Percentage (ACP), the employer
shall take into account and include as contribution percentage amounts, elective
deferrals and qualified non-elective contributions under this plan or any other
plan of the employer, as provided by the regulations for the Plan Year. Such
Contribution Percentage Amounts shall not include Matching Contributions that
are forfeited either to correct Excess Aggregate Contributions or because the
contributions to which they relate are Excess Deferrals, Excess Contributions,
or Excess Aggregate Contributions. The amount of qualified non-elective
contributions that are made under Section 5.7 and taken into account for
purposes of calculating the average contribution percentage, subject to such
other requirements as may be prescribed by the Secretary of the Treasury, shall
be such qualified non-elective contributions that are needed to meet the average
contributions percentage test. The amount of Elective Deferrals taken into
account as Contribution Percentage Amounts for purposes of calculating the
Average Contribution Percentage, subject to such other requirements as may be
prescribed by the Secretary of the Treasury, shall be such elective deferrals
that are needed to meet the Average Contribution Percentage Test.
(b) Employee 401(k! Savings Contributions. If the employer's plan
provides for employee 401(k) savings contributions, such contributions by a
participant in the lower paid group will be included in determining his
contribution percentage to the extent that, under the second paragraph of
Section 5.7(a), such contributions are not used in determining his deferral
percentage.
(c) Employer Profit Sharing Contributions. If the employer's plan
provides for employer profit sharing contributions that meet the requirements of
Section 5.7(b), such contributions on behalf of a participant will be included
in determining his contribution percentage to the extent that, under the first
paragraph of Section 5.7(b), such contributions are not used in determining his
deferral percentage.
(d) The higher-paid group and the lower-paid group are defined in
Section 5.8(a) and (b) (including the special rules in Section 5.8(c)).
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METLIFE DEFINED CONTRIBUTION GROUP
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<PAGE>
DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
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6.8 Special Rules.
(a) The contribution percentage of an employee in the higher paid
group who makes after-tax employee contributions or for whom employer matching
contributions are made (or for whom employer profit sharing contributions or
elective deferrals or qualified nonelective contributions which are used in
determining such employee's contribution percentage are made) to any other
qualified plan maintained by the employer will be determined as if all such
after-tax employee contributions and employer matching contributions (and, if
applicable, employer profit-sharing contributions or elective deferrals or
qualified nonelective contributions) were made under a single plan.
In addition, if the employer's plan meets the requirements of Code
Sections 401(m), 401(a)(4) or 410(b) only if aggregated with one or more other
plans, or if one or more other plans meet the requirements of such sections of
the Code only if aggregated with the employer's plan, then the contribution
percentage of a participant will be determined by treating all such plans as a
single plan. For plan years beginning after December 31, 1989, plans may be
aggregated in order to satisfy section 401(m) of the Code only if they have the
same Plan Year.
(b) The plan administrator will monitor and adjust participants'
contribution percentages to insure compliance with the requirements of Section
6.6. Such monitoring and adjustments will be accomplished under procedures
similar to those specified in the first paragraph of Section 5.9.
(c) Compliance with Section 6.6 will be determined after taking into
account any amounts paid to participants, first under Section 5.9(b).
(d) (i) If necessary, the plan administrator will reduce the after-tax
employee contributions and if applicable employer matching contributions (and,
if applicable in determining such participant's contribution percentage, his
401(k) savings contributions or employer profit sharing contributions on his
behalf) for a participant in the higher paid group by such amount as may be
necessary to meet the requirements of Section 6.6. Any reductions under the
preceding sentence will apply pro rata to such contributions.
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METLIFE DEFINED CONTRIBUTION GROUP
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DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
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(ii) Any reduction in employer matching contributions will be effected
by forfeiting the necessary amount if forfeitable. Otherwise, such reduction
will be effected by distributing the necessary amount (plus earnings) to the
participant. Any reduction in a participant's after-tax employee contributions
(or, if applicable, 401(k) savings contributions) will be effected by
distributing the necessary amount (plus earnings) to the participant. Any such
distribution may be made notwithstanding any otherwise applicable restrictions
or spousal consent requirements on in-service distributions.
Any amount forfeited under this subsection (ii) will be treated in
accordance with Section 8.4(c); provided that no such forfeiture will ever be
reallocated to the accounts of participants in the higher paid group.
(iii) Excess Aggregate Contributions. Notwithstanding any other
provision of this plan, Excess Aggregate Contributions, plus any income and
minus any loss allocable thereto, shall be forfeited, if forfeitable, or if not
forfeitable, distributed no later than the last day of each Plan Year to
participants to whose accounts such Excess Aggregate Contributions were
allocated for the preceding Plan Year. Excess Aggregate Contributions shall be
allocated to participants who are subject to the family member aggregation rules
of section 414(q)(6) of the Code among the family members in proportion to the
Employee and Matching Contributions (or amounts treated as Matching
Contributions) of each family member that is combined to determine the combined
ACP. If such Excess Aggregate Contributions are distributed more than 2-1/2
months after the last day of the Plan Year in which such excess amounts arose, a
ten (10) percent excise tax will be imposed on the employer maintaining the plan
with respect to those amounts. Excess Aggregate Contributions shall be treated
as annual additions under the plan.
Determination of Income or Loss: Excess Aggregate Contributions shall
be adjusted for any income or loss for the plan year in which such contributions
were made. Income or loss allocable to the period between the end of the plan
year and the date of distribution will be disregarded in determining income or
loss.
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METLIFE DEFINED CONTRIBUTION GROUP
40
<PAGE>
DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
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Forfeitures of Excess Aggregate Contributions: Forfeitures of Excess
Aggregate Contributions shall be applied to reduce employer contributions for
the plan year. If the excess exceeds employer contributions, forfeitures of
excess aggregate contributions shall be allocated after all other forfeitures
under the plan, to the Matching Contributions account of each lower paid group
participant who made 401(k) savings contributions or employee after-tax
contributions in the ratio which each such participant's compensation bears to
the total compensation of all such participants for such plan year.
Accounting for Excess Aggregate Contributions: Excess Aggregate
Contributions shall be forfeited, if forfeitable or distributed on a pro-rata
basis from the participant's Employee Contribution account, Matching
Contribution account, and Qualified Matching Contribution account (and, if
applicable, the participant's Qualified Non-elective Contribution account or
Elective Deferral account, or both).
(e) Multiple Use: If one or more higher paid group employees
participate in both a CODA and a plan subject to the ACP test maintained by the
employer and the sum of the ADP and ACP of those higher paid group employees
subject to either or both tests exceeds the Combined Limit, then the ACP of
those higher paid group employees who also participate in a CODA will be reduced
(beginning with such higher paid group employee whose ACP is the highest) so
that the limit is not exceeded. The amount by which each higher paid group
employee's Contribution Percentage Amounts is reduced shall be treated as an
Excess Aggregate Contribution. The ADP and ACP of the higher paid group
employees are determined after any corrections required to meet the ADP and ACP
tests. Multiple use does not occur if either the ADP or ACP of the higher paid
group employees does not exceed 1.25 multiplied by the ADP and ACP of the lower
paid group employees or such other limitations pursuant to regulations under the
Code.
(f) For purposes of determining the Contribution Percentage test,
Employee after-tax Contributions are considered to have been made in the Plan
Year in which contributed to the trust. Matching Contributions and Qualified
Non-elective Contributions will be considered made for a Plan Year if made no
later than the end of the twelve-month period beginning on the day after the
close of the Plan Year.
(g) The determination and treatment of the Contribution Percentage of
any participant shall satisfy such other requirements as may be prescribed by
the Secretary of the Treasury.
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METLIFE DEFINED CONTRIBUTION GROUP
41
<PAGE>
DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
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6.9 Additional Limits for Plans Subject to Both 401(k) and 401(m) Limits.
(a) Applicability of this Section. This section will apply if this
plan (or any other plan which is aggregated with this plan under applicable
regulations) provides for both 401(k) savings contributions and either after-tax
employee contributions or employer matching contributions) (or both) on behalf
of any employee in the higher paid group. If so, the limitations specified in
subsection (b) below will apply in addition to the limitations set forth in
Sections 5.6 and 6.6.
(b) Combined Limit. The sum of the HDP under Sections 5.6 and 5.7 and
the HCP under Sections 6.6 and 6.7 cannot exceed the sum of the following:
(i) 125 percent of the LDP (under Sections 5.6 and 5.7) or the
LCP (under Sections 6.6 and 6.7); and
(ii) two percentage points more than such LDP or such LCP, whichever
is not used in (i), but in no event more than twice such smaller amount.
(c) Correction of Violation. If the sum of the HDP and the HCP exceed
the limit specified in subsection (b), the employer will first reduce the
contribution percentages of participants in the higher paid group in accordance
with Section 6.8(d), and will second reduce the deferral percentages of
participants in the higher paid group in accordance with Section 5.9, to the
extent necessary to meet subsection (b). Subject to the multiple use rules of
Section 6.8(e), the employer may limit the participants affected by such
reductions to those participants who are subject to both the 401(k) limits and
the 401(m) limits. If any other plan maintained by the employer is also taken
into account in applying the limits specified in this section, the employer may
designate the plan which will be involved in correcting any violation of the
limits.
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METLIFE DEFINED CONTRIBUTION GROUP
42
<PAGE>
DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
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ARTICLE 7
ROLLOVERS AND DEDUCTIBLE EMPLOYEE CONTRIBUTIONS
7.1 Rollover Contributions.
(a) (i) With the approval of the plan administrator, an employee may
make a rollover transfer to the plan of cash in an amount which constitutes (i)
an eligible rollover distribution (as defined in Section 402(c)(4) or Section
403(a)(4) of the Code) or (ii) a rollover contribution (as defined in Section
408(d)(3) of the Code). Any amounts rolled over to this plan from an individual
retirement account or annuity must consist solely of amounts originally
transferred to such account or annuity from another qualified plan and may not
include any nondeductible contributions by the employee to such account or
annuity.
(ii) With the approval of the plan administrator, an employee may
cause any amount to he transferred directly to the trustee of this plan from the
trustee or custodian of a qualified plan or annuity or individual retirement
account or annuity in a trustee-to-trustee transfer. In the case of such
transfers, amounts consisting of the following will be accounted for separately:
employer contributions to a defined benefit or money purchase plan, employer
contributions to a profit-sharing or 401(k) plan, employee 401(k) savings
contributions, after-tax employee contributions, and qualified voluntary
employee contributions. The employee will be responsible for providing the plan
administrator with records that will reflect such amounts separately.
(b) The employer, the plan administrator and the trustee have no
responsibility for determining the propriety of, proper amount or time of, or
status as a tax free transaction of any transfer under subsection (a) above.
(c) If an employee who is not yet a participant makes a transfer under
subsection (a) above, he will be considered to be a participant with respect to
administering such transferred amount only. He will not be a participant for any
other purpose of the plan until he completes the requirements for participation
under Article 4. If elected in the adoption agreement, such an employee may take
loans secured by his rollover contribution account.
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METLIFE DEFINED CONTRIBUTION GROUP
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DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
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(d) The employer or plan administrator in its discretion may direct
the return to the employee (or the retransfer to another trustee or custodian
designated by the employee) of any transfer to the extent that such return is
deemed necessary to insure the continued qualification of this plan under Code
Section 401(a) or that holding such contribution hereunder would be
administratively burdensome.
(e) The plan administrator will maintain a rollover account in the
name of each employee who makes a rollover contribution under this section, and
will credit such rollover to his rollover account as soon as practicable after
receipt thereof by the trustee. The plan administrator will maintain a transfer
account in the name of each employee on whose behalf a trustee-to-trustee
transfer is made under this section, and will credit such transferred amount to
his transfer account as soon as practicable after receipt thereof by the
trustee. Any amounts separately accounted for under a transfer account will be
separately accounted for hereunder as subaccounts within the employee's transfer
account. An employee's rollover account and all amounts credited thereto
(including earnings) will be fully vested and nonforfeitable at all times. An
employee's transfer account and all amounts credited thereto (including
earnings) will be fully vested and nonforfeitable at all times.
7.2 Qualified Voluntary Employee Contributions.
(a) The provisions of this section apply if the employer's execution
of the adoption agreement constitutes the amendment and restatement of an
existing qualified plan under which participants made qualified voluntary
employee contributions for taxable years before 1987.
(b) Any such qualified voluntary employee contributions by a
participant will be held in a separate subaccount for such participant within
his rollover account which will be fully vested and nonforfeitable at all times.
(c) No part of a participant's qualified voluntary employee
contributions account will be used to purchase life insurance or will be taken
into account in determining the participant's eligibility for or the amount of
any loan hereunder to the participant.
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<PAGE>
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7.3 Withdrawals.
(a) Amounts. Unless the adoption agreement otherwise provides, a
participant may upon reasonable advance written notice to the plan administrator
withdraw all or any portion of his rollover account or qualified voluntary
employee contributions subaccount. If the adoption agreement so provides, an
employee who is not yet a participant and has made a rollover contribution may
withdraw all or any portion of his rollover account. The plan administrator may
establish reasonable minimum withdrawal amounts.
Notwithstanding the preceding paragraph, amounts separately accounted
for under a transfer account will be subject to restrictions on withdrawal as
follows (unless the plan from which such amounts were transferred imposes more
or less restrictive conditions upon in-service withdrawals): employer
contributions to a defined benefit or money purchase plan are not available for
in-service withdrawal; employee 401(k) savings contributions are available for
in-service withdrawal only under Section 12.3; employer contributions to a
401(k) plan which were used in determining the deferral percentages of
participants are not available for in-service withdrawal; other employer
contributions to a profit-sharing plan, after-tax employee contributions and
qualified voluntary employee contributions are available for in-service
withdrawal.
(b) Payment. Any withdrawal under this section will be paid to the
participant as soon as practicable after the valuation date following the plan
administrator's receipt of the participant's withdrawal form; however, the plan
administrator may approve an earlier payment of all or some of the amount to be
withdrawn if such earlier payment would not be detrimental to the interests of
the other participants. Unless limited by the investment vehicle, the
investments to be liquidated to pay such withdrawal to the participant will be
liquidated pro rata from the participant's accounts.
(c) Qualified Voluntary Employee Contributions. If a participant has
not attained age 59 1/2 and is not disabled at the time he makes a withdrawal or
receives a distribution from his qualified voluntary employee contributions
account, he will be subject to a federal income tax penalty unless he completes
a valid rollover transfer to a qualified plan or individual retirement plan
within 60 days after the date of distribution.
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METLIFE DEFINED CONTRIBUTION GROUP
45
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DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
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ARTICLE 8
EMPLOYER CONTRIBUTIONS; AMOUNT AND ALLOCATION
8.1 Amount of Employer Contribution.
(a) For each plan year that the plan is in effect, the employer will
contribute in cash the amount (if any) determined according to the provisions of
this article. If, due to miscalculation or error, the employer's contribution
exceeds the amount prescribed or determined by the employer, such excess may, at
the election of the employer, be treated as a contribution for the succeeding
plan year or years.
(b) The employer's contribution may be paid in a single sum or
installments, but the total amount will be paid to the trustee not later than
the time (including extensions thereof) prescribed by law for filing the
employer's federal income tax return for its taxable year beginning with or
within the plan year.
8.2 Profit-Sharing Plans. If the employer's plan is a profit-sharing plan,
the following provisions will apply:
(a) Amount. Unless specified otherwise in the adoption agreement, for
each plan year the employer will contribute whatever amount (if any) the
employer determines in its discretion; the employer will not be obligated to
contribute any particular amount in a plan year or to make any contribution at
all in any particular plan year. However, if in the adoption agreement the
employer elected a formula for determining the contribution for a plan year, the
employer will contribute the amount determined under such formula. Such a
formula may include the contribution of a flat dollar amount to the account of
each participant who is eligible to share in the allocation of the employer's
contribution. If in the adoption agreement, the employer elected to make a
minimum contribution, the employer will contribute the amount of such minimum
contribution.
If elected in the adoption agreement, for each contribution period the
employer will contribute an amount which will equal the contribution the
employer determined to make for all participants entitled to receive an
allocation for such period in the MetLife Security Insurance Company of
Louisiana adoption agreement.
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The plan administrator will select a contribution period, which may be
the plan year or a period shorter than the plan year such as each month, three
months (quarterly), four months (tri-annual) or six months (semi-annual).
Employer contributions for a contribution period will be transferred to the
trustee within a reasonable time after the end of such period. However, the
total amount of the employer's contributions for a plan year will be paid to the
trustee by the time specified in Section 8.1(b).
(b) Source of Contributions. Unless the METLIFE SECURITY INSURANCE
COMPANY OF LOUISIANA adoption agreement provides otherwise, the employer's
contribution for any year will not be limited to the employer's net profits for
such year or its accumulated earnings.
(c) Persons Entitled to Share in Contributions. The persons entitled
to share in any employer contributions for a plan year are described in Section
8.6.
(d) Crediting Employer Contributions: Allocation Formula. Any employer
contributions for a plan year will be credited to the employer contributions
accounts of each person entitled to share therein (determined under Section 8.6)
in accordance with Section 8.7.
(e) Forfeitures. Forfeitures will be disposed of in accordance with
the employer's election under the adoption agreement. Subject to Section 11.4,
forfeitures will be released as soon as practicable following the participant's
separation from service.
(f) Employer Contributions Account. The plan administrator will
maintain a separate employer contributions account for each participant.
Employer contributions allocated to a participant will be credited to his
employer contributions account. No forfeitures will occur solely as a result of
an employee's withdrawal of employee contributions.
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8.3 Money Purchase Pension Plans. If the employer's plan is a money
purchase pension plan, the following provisions will apply:
(a) Amount. For each contribution period the employer will contribute
an amount which will equal the contribution required for all participants
entitled to receive an allocation for such period under the contribution formula
elected by the employer in the MetLife Security Insurance Company of Louisiana
adoption agreement.
The plan administrator will select a contribution period, which may be
the plan year or a period shorter than the plan year such as each month, three
months (quarterly), four months (tri-annual) or six months (semi-annual).
Employer contributions for a contribution period will be transferred to the
trustee within a reasonable time after the end of such period. However, the
total amount of the employer's contributions for a plan year will be paid to the
trustee by the time specified in Section 8.1(b).
(b) Persons Entitled to Share in Contributions. The persons entitled
to receive an allocation of employer contributions for a contribution period are
described in Section 8.6. However, if the adoption agreement provides for a
contribution period more frequent than the plan year, a participant may be
required to have completed a minimum period of service and/or be an employee on
the last day of a contribution period (or to have left employment during such
period because of retirement, death or disability) in order to receive an
employer contribution for such period.
(c) Crediting Employer Contributions: Allocation Formula. Employer
contributions for a contribution period will be credited to the employer
contributions accounts of each person entitled to share therein (determined
under Section 8.6) in accordance with the allocation formula selected in Section
8.7.
(d) Forfeitures. Any forfeitures occurring during a contribution
period will be disposed of in accordance with the employer's election under the
adoption agreement. No forfeitures will occur solely as a result of an
employee's withdrawal of employee contributions. Subject to section 11.4,
forfeitures will be released as soon as practicable following the participant's
separation from service.
(e) Employer Contributions Account. The plan administrator will
maintain a separate employer contributions account for each participant.
Employer contributions allocated to a participant will be credited to his
employer contributions account.
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DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
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8.4 Target Benefit Plans. If the employer's plan is a target benefit plan,
the following provisions will apply:
(a) Amount. For each plan year the employer will contribute on behalf
of each participant entitled to receive an allocation for such year, the level
funding amount which is projected to be necessary to fund his target benefit
(determined under Section 8.8). The employer's contribution will be equal to the
sum of the level funding amounts projected as necessary to fund the target
benefits of all participants entitled to receive an allocation for such year.
(b) Persons Entitled to Share in Contributions. The persons entitled
to receive an allocation of employer contributions for a plan year are described
in Section 8.6.
(c) Crediting Employer Contributions: Allocation Formula. Employer
contributions equal to the level funding amount (determined under Section 8.8)
for a plan year will be credited to the employer contributions accounts of each
person entitled to share therein (determined under Section 8.6).
(d) Forfeitures. Any forfeitures occurring during a plan year will be
used solely to reduce employer contributions for such plan year. No forfeitures
will occur solely as a result of an employee's withdrawal of employee
contributions. Subject to Section 11.4, forfeitures will be released as soon as
practicable following the participant's separation from service.
(e) Employer Contribution Account. The plan administrator will
maintain a separate employer contribution account for each participant. Employer
contributions allocated to a participant will be credited to his employer
contribution account.
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8.5 Employer Matching Contributions.
(a) Matching Contributions. Matching Contribution shall mean an
employer contribution made to this or any other defined contribution plan on
behalf of a participant on account of an Employee after tax Contribution made by
such participant, or on account of a participant's Elective Deferral, under a
plan maintained by the employer. Notwithstanding the foregoing, in the case of a
standardized plan, a matching contribution shall mean an employer contribution
made to such plan on behalf of a Participant on account of a Participant's
Elective Deferral, under such Plan. If specified in the adoption agreement, for
each matching period the employer will make a matching contribution in cash on
behalf of each participant who made 401(k) savings contributions and/or after-
tax employee contributions during such matching period. However, if the adoption
agreement so provides, a participant will be required to have completed a
minimum period of service and/or be an employee on the last day of a matching
period (or to have left employment during such period because of retirement,
death or disability) in order to receive an employer matching contribution for
such period.
The amount of such matching contribution will be as specified in the
adoption agreement. However, (a) matching contributions on behalf of
participants in the higher-paid group will be made only to the extent that such
contributions do not cause the average of the deferral percentages or the
contribution percentages of such participants to exceed the limits provided
under Section 5.6 or 6.6 (whichever may be applicable); and (b) the employer
will not make a matching contribution with respect to any 401(k) savings
contributions or after-tax employee contributions that are distributed to the
participant under Section 5.9 or Section 6.8, or with respect to any 401(k)
savings contributions that are recharacterized as after-tax employee
contributions under Section 5.9 (unless under the terms of the employer's plan
such after-tax employee contributions would also be matched).
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If the employer has selected a discretionary matching contribution
formula in the adoption agreement, such contributions shall be allocated under
one or more of the following methods: (a) each eligible participant shall
receive an equal allocation as a percentage of the participant's matchable
savings contributions during such plan year or matching period; (b) each
eligible participant in the lower-paid group shall receive an equal allocation
as a percentage of such participant's matchable savings contributions during
such plan year or matching period, and each eligible participant in the higher-
paid group shall receive an equal allocation as a percentage of such
participant's matchable savings contributions during such plan year or matching
period, provided that the percentage of matchable savings contributions
allocated to the eligible participants in the lower-paid group is greater than
the percentage of matchable savings contributions allocated to the eligible
participants in the higher paid group; (c) such contributions will be allocated
solely among the eligible participants in the lower-paid group as an equal
percentage of such participant's matchable savings contributions during such
plan year or matching period; or (d) two or more salary ranges will be
established such that the employer matching contribution as a percentage of plan
compensation which is allocated to the participants in the lowest salary range
is the greatest and the allocation of employer matching contributions as a
percentage of plan compensation decreases as the salary ranges increase. The
employer may limit discretionary matching contributions to a specified
percentage of each participant's matchable savings contributions, to a specified
percentage of each Participant's Plan Compensation or to a specified dollar
amount.
The plan administrator will select the matching period, which may be
the plan year or a period shorter than the plan year such as each month, three
months (quarterly), four months (tri-annual) or six months (semi-annual).
Matching contributions for a matching period will be transferred to the trustee
within a reasonable time after the end of such period. However, the total amount
of the employer's matching contributions for a plan year will be paid to the
trustee by the time specified in Section 8.1(b).
Matching Contributions shall be vested in accordance with the vesting
schedule selected in the adoption agreement. In any event, Matching
Contributions shall be fully vested at normal retirement age, upon the complete
or partial termination of the profit-sharing plan, or upon the complete
discontinuance of employer contributions.
Forfeitures of Matching Contributions, other than Excess Aggregate
Contributions, shall be made in accordance with section 8.2.
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(b) Matching Contributions Account. The plan administrator will
maintain a matching contributions account for each participant for whom the
employer makes a matching contribution. Matching contributions on behalf of the
participant for a matching period will be credited to his matching contributions
account.
(c) Use of Forfeitures. Forfeitures occurring during a matching
period, will be applied according to the method specified in the adoption
agreement. Forfeitures of Excess Aggregate Contributions shall be made in
accordance with Section 6.8(d)(iii).
If the forfeitures occurring in a matching period exceed the amount of
employer matching contributions required for such period, the excess will be
carried over and applied in the succeeding period. However, no such amounts will
be carried over to a succeeding plan year. Any forfeitures not applied at the
end of a plan year will be applied in accordance with the adoption agreement.
(d) Source of Contributions. Unless specified otherwise in the
adoption agreement, the employer will make the matching contributions required
under this section regardless of whether the employer has current or accumulated
profits.
(e) Supplemental Profit Sharing Contributions. If in the METLIFE
SECURITY INSURANCE COMPANY OF LOUISIANA/METLIFE DEFINED CONTRIBUTION GROUP
PROGRAM adoption agreement the employer elects profit sharing contributions or
supplemental contributions, the employer may make such contributions. Such
contributions (if any) are in addition to any matching contributions the
employer makes. Such contributions will be allocated to separate employer profit
sharing contributions accounts on behalf of participants in accordance with the
adoption agreement and Section 8.2, except that any forfeitures from such
accounts will be applied in accordance with subsection (c) above instead of
Section 8.2(e).
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8.6 Persons Entitled to Share in Allocations.
(a) Application of this Section. The rules in this section will
determine which persons are entitled to an allocation of employer contributions
for a plan year under a profit-sharing, a target benefit, or a money purchase
pension plan or of employer supplemental profit-sharing contributions under a
401(k) plan. See Section 8.5(a) for entitlement to an employer matching
contribution.
(b) Last Day of Plan Year Rule. If provided in the adoption agreement,
a person will not be entitled to an allocation of employer contributions unless
he was still an active employee at the end of the plan year.
(c) Year of Service Rule. If provided in the adoption agreement, a
person will not be entitled to an allocation of employer contributions unless
during such plan year he completed at least 1,000 hours of service (or such
smaller number of hours of service as is specified in the adoption agreement for
a year of service). In the case of a person who first became an employee during
a plan year, the number of hours of service required will be prorated based on
the date when he became an employee.
(d) Last Day of Plan Year and Year of Service. If provided in the
adoption agreement, a person will not be entitled to an allocation of employer
contributions unless he satisfies the requirements of subsections (b) and (c) as
of the end of the plan year.
(e) Exception. The requirements of subsections (b), (c) and (d) above
will not apply to a person who terminated employment with the employer during
the plan year because of retirement, death or disability.
(f) Standardized Plans. Notwithstanding the above, if selected in the
adoption agreements, in a standardized plan, all participants in the plan are
entitled to receive an allocation of employer contributions, unless they have
less than or equal to 500 hours of service and are not employed on the last day
of the plan year.
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8.7 Allocation Rules.
(a) Application of this Section. This section governs the allocation
of employer contributions for a plan year under a profit sharing or money
purchase pension plan or employer supplemental profit-sharing contributions
under a 401(k) plan. See Section 8.4(C) for the allocation of employer
contributions under a target benefit plan (and any forfeitures used to reduce
employer contributions) and Section 8.5(a) for the allocation of employer
matching contributions (and any forfeitures used to reduce employer matching
contributions).
As used in this section, the term participant includes any person
entitled to share in the allocation of employer contributions (and/or
forfeitures) for the plan year.
(b) Minimum Contribution Formula. If in the adoption agreement the
employer elected a minimum contribution formula, employer contributions (and any
forfeitures) will be allocated first so that each participant (or, if elected in
the adoption agreement, each participant who is not a key employee - as defined
in Section 14.2(a)) receives the minimum contribution required under such
formula.
(c) Non-Integrated Formula. If in the adoption agreement the employer
elected a non-integrated formula, employer contributions will be allocated so
that each participant who is entitled to receive an allocation of the employer's
contribution receives an equal contribution as either a percentage of his plan
compensation or a flat dollar amount for the plan year (employer contributions
to a profit-sharing plan or employer supplemental profit-sharing contributions
to a 401(k) plan), or so that each participant receives the percentage of his
plan compensation for the plan year specified in the adoption agreement (money
purchase pension plan). However, notwithstanding the above, if selected in the
adoption agreement, a nonstandardized plan may require a participant to satisfy
the requirements of subsection (b), (c), or (d) of Section 8.6.
(d) Integrated Formula.
(i) Notwithstanding any section of the plan to the contrary, this
subsection (i) applies to the allocation of employer contributions under a
profit-sharing plan or employer supplemental profit-sharing contributions to a
401(k) plan where the employer elected an integrated formula in the adoption
agreement. However, the integrated formula shall not be taken into account with
respect to 401(k) plan contributions. Employer contributions for the plan year
plus any forfeitures will be allocated to participant's accounts as follows:
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Step One: Contributions and forfeitures will be allocated to each
participant's account in the ratio that each participant's total compensation
bears to all participants' total compensation, but not in excess of 3% of each
participant's compensation.
Step Two: Any contributions and forfeitures remaining after the
allocation in Step One will be allocated to each participant's account in the
ratio that each participant's compensation for the plan year in excess of the
integration level bears to the excess compensation of all participants but not
in excess of 3% of each Participant's Plan Compensation. For purposes of this
Step Two, in the case of any Participant who has exceeded the cumulative
permitted disparity limit described below, such Participant's total Plan
Compensation for the Plan Year will be taken into account.
Step Three: Any contributions and forfeitures remaining after the
allocation in Step Two will be allocated to each participant's account in the
ratio that the sum of each participant's total compensation and compensation in
excess of the integration level bears to the sum of all participants total
compensation and compensation in excess of the integration level, but not in
excess of the profit-sharing maximum disparity rate. For purposes of this Step
Three, in the case of any Participant who has exceeded the cumulative permitted
disparity limit described below, two times such Participant's total Plan
Compensation for the Plan Year will be taken into account.
Step Four: Any remaining employer contributions or forfeitures will be
allocated to each participant's account in the ratio that each participant's
total compensation for the plan year bears to all participants' total
compensation for that year.
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Except as otherwise provided in the adoption agreement, the
profit-sharing maximum disparity rate will be equal to 2.7% If the adoption
agreement so provides, the profit-sharing maximum disparity rate will be equal
to the lesser of:
(A) 2.7%; or
(B) the applicable percentage determined in accordance with the
table below:
If the integration level
the applicable
is more than but not more than percentage is:
------------ ----------------- --------------
$0 X* 2.7%
X* 80% of TWB 1.3%
80% of TWB Y** 2.4%
*X = the greater of $ 10,000 or 20 percent of the TWB
**Y = any amount more than 80% of the TWB but less than 100% of the TWB.
TWB = the Social Security Taxable Wage Base.
(ii) This subsection (ii) applies to the allocation of employer
contributions under a money purchase pension plan where the employer elected an
integrated formula in the adoption agreement. Such allocations will be performed
so that each participant receives the percentage of his total plan compensation
for the plan year specified in the adoption agreement (the "base contribution
percentage"), plus a percentage and not to exceed the lesser of the base
contribution percentage or the money purchase maximum disparity rate of such
participant's compensation in excess of the integration level.
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Except as otherwise provided in the adoption agreement, the money
purchase maximum disparity rate is 5.7%. If the adoption agreement so provides,
the money purchase maximum disparity rate will be equal to the lesser of:
(A) 2.7%; or
(B) the applicable percentage determined in accordance with the
table below:
If the integration level
the applicable
is more than but not more than percentage is:
------------ ----------------- --------------
$0 X* 2.7%
X* 80% of TWB 1.3%
80% of TWB Y** 2.4%
*X = the greater of $ 10,000 or 20 percent of the TWB
**Y = any amount more than 80% of the TWB but less than 100% of the TWB.
TWB = the Social Security Taxable Wage Base.
(iii) Unless the employer elects a lower maximum disparity rate in (i)
or (ii) above, the integration level shall be equal to the taxable wage base.
The taxable wage base is the maximum amount of earnings which may be considered
as wages for a year under section 3121(a)(1) of the Code in effect as of the
beginning of the plan year.
(iv) Overall Permitted Disparity Limits.
(A) Annual Overall Permitted Disparity Limit. Notwithstanding
the preceding paragraphs, for any Plan Year this Plan benefits any Participant
who benefits under another qualified plan or simplified employee pension, as
defined in Section 408(k) of the Code, maintained by the Employer that provides
for permitted disparity (or imputes disparity), Employer contributions and
forfeitures will he allocated to the account of each Participant who either
completes more than 500 hours of service during the Plan Year or who is employed
on the last day of the Plan Year in the ratio that such Participant's total Plan
Compensation bears to the total Plan Compensation of all Participants.
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(B) Cumulative Permitted Disparity Limit. Effective for Plan
Years beginning on or after January 1, 1995, the cumulative permitted disparity
limit for a Participant is 35 total cumulative permitted disparity years. Total
cumulative permitted disparity years means the number of years credited to the
Participant for allocation or accrual purposes under this Plan, any other
qualified plan or simplified employee pension plan (whether or not terminated)
ever maintained by the Employer. For purposes of determining the Participant's
cumulative permitted disparity limit, all years ending in the same calendar year
are treated as the same year. If the Participant has not benefited under a
defined benefit or target benefit plan for any year beginning on or after
January 1, 1994, the Participant has no cumulative permitted disparity limit.
(e) Plan Compensation. For purposes of determining allocations to a
participant's account under this section (and, if applicable, under Section
8.5(c)) plan compensation means the participant's plan compensation for the plan
year under Section 2.19, adjusted as follows:
(i) Unless otherwise provided in the adoption agreement,
excluding any plan compensation paid to the participant before he became a
participant under Section 4.3 or after he ceased to be a participant under
Section 4.4.
(ii) Excluding any plan compensation during the plan year above
the cap (if any) specified in the adoption agreement.
(iii) Excluding any items of plan compensation specified in the
adoption agreement. However, no items of plan compensation will be excluded if
the effect of such exclusion would be to use for plan purposes a higher
percentage of the total plan compensation of employees in the higher paid group
than the percentage of total plan compensation used for plan purposes for
employees in the lower paid group.
Notwithstanding subsections (ii) and (iii) above, no items of
compensation will be excluded if in the adoption agreement the employer elects
an integrated formula for allocations to participants' accounts (provided that
the employer may in the adoption agreement elect a dollar cap on compensation
which is above the Social Security wage base for such year).
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8.8 Determination of Level Funding Amount. For purposes of determining a
Participant's Target Benefit, a Participant's years of projected participation
under the Plan is the sum of (1) and (2), where (1) is the number of years
during which the Participant benefited under this Plan beginning with the latest
of: (a) the first Plan Year in which the Participant benefited under the Plan,
(b) the first Plan Year taken into account in the Target Benefit formula, and
(c) any Plan Year immediately following a Plan Year in which the Plan did not
satisfy the safe harbor for target benefit plans in Regulations section
1.401(a)(4)-8(b)(3), and ending with the last day of the current Plan Year, and
(2) is the number of years, if any, subsequent to the current Plan Year through
the end of the Plan Year in which the Participant attains normal retirement age.
For purposes of this definition of years of projected participation, if
this Plan is a prior safe harbor plan, the Plan is deemed to satisfy the safe
harbor for target benefit plans in Regulations Section 1.401(a)(4)-8(b)(3) and a
Participant is treated as benefiting under the Plan in any Plan Year beginning
prior to January 1, 1994. A prior safe harbor plan is a plan that (1) was
adopted and in effect on September 19, 1991, (2) which on that date contained a
stated benefit formula that took into account service prior to that date, and
(3) satisfied the applicable nondiscrimination requirements for target benefit
plans for those prior years. For purposes of determining whether a Plan
satisfies the applicable nondiscrimination requirements for target benefit plans
for Plan Years beginning before January 1, 1994, no amendments after September
19, 1991, other than amendments necessary to satisfy section 401(1) of the Code,
will be taken into account. For purposes of this Section, Average Annual
Compensation means the average of a Participant's annual Plan Compensation, as
defined in Section 2.19, over the three-year consecutive Plan Year period ending
in the current year or in any prior year that produces the highest average. If
the Participant has less than three years of participation in this Plan, Plan
Compensation is averaged over the Participant's total period of participation.
For each Plan Year, the Employer will contribute for each Participant who
is eligible to receive an allocation, the annual Level Funding Amount calculated
below. The annual Level Funding Amount with respect to a Participant will be
determined each year as follows:
Step 1: Calculate the present value of the Participant's Target
Benefit, as set forth in the Adoption Agreement (assuming a normal retirement
date of age 65) by multiplying the Target Benefit by the applicable factor in
Table I of the Appendix to the Adoption Agreement.
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Step 2: Calculate the excess, if any, of the amount determined in
Step 1 over the "theoretical reserve."
Step 3: Amortize the result in Step 2 by multiplying it by the
applicable factor from Table II. For the Plan Year in which the Particpant
attains normal retirement age and for any subsequent Plan Year, the applicable
factor is 1.0.
For purposes of this section, the theoretical reserve is determined
according to (i) and (ii) below:
(i) Initial Theoretical Reserve. A Participant's theoretical
reserve as of the last day of the Participant's first year of projected
participation (year 1) is zero. However, if this Plan is a prior safe harbor
plan with a stated benefit formula that takes into account Plan Years prior to
the first plan year this Plan satisfies the safe harbor in Regulations section
1.401(a)(4)-8(b)(3)(c), the initial theoretical reserve is determined as
follows:
(A) Calculate as of the last day of the Plan Year immediately
preceding year 1 the present value of the Target Benefit, using the actuarial
assumptions, the provisions of the Plan, and the Participant's Plan Compensation
as of such date. For a Participant who is beyond normal retirement age during
year 1, the Target Benefit will be determined using the actuarial assumptions,
the provisions of the Plan, and the Participant's Plan Compensation as of such
date, except that the straight life annuity factor used in that determination
will be the factor applicable for the Participant's normal retirement age.
(B) Calculate as of the last day of the Plan Year immediately
preceding year 1 the present value of future employer contributions, i.e., the
contributions due each Plan Year using the actuarial assumptions, the provisions
of the Plan (disregarding those provisions of the Plan providing for the
limitations of section 415 of the Code or the minimum contributions under
section 416 of the Code), and the Participant's Plan Compensation as of such
date, beginning with year 1 through the end of the Plan Year in which the
Participant attains normal retirement age.
(C) Subtract the amount determined in (B) from the amount
determined in (A).
(ii) Accumulate the initial theoretical reserve determined in (i)
and the Employer contributions (as limited by Section 415 of the Code, but
without regard to any required minimum contributions under Section 416 of the
Code) for each
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Plan Year beginning in year 1 up through the last day of the current Plan Year
(excluding contribution(s) (if any) for the current Plan Year) using the Plan's
interest assumption in effect for each such year. In any Plan Year following the
Plan Year in which the Participant attains normal retirement age, the
accumulation is calculated using an interest rate of O%. For purposes of
determining the level of annual Employer contributions necessary to fund the
Target Benefit, the calculations in (i) and (ii) above will be made as of the
last day of each Plan Year, on the basis of the Participant's age on the
Participant's last birthday, using the interest rate in effect on the last day
of the prior Plan Year.
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ARTICLE 9
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BENEFITS UPON RETIREMENT OR DISABILITY
--------------------------------------
9.1 Retirement Dates.
(a) Normal Retirement Date. A participant may retire on his normal
retirement date. His normal retirement date is his 65th birthday unless the
employer specifies another date in the adoption agreement; any other date may
not be later than his 65th birthday or, if later, the 5th anniversary of the
first day of the plan year in which he commenced participation. If a
participant's normal retirement date is the date he completes a specified number
of years of participation, years of participation in any predecessor plan will
be counted toward meeting the requirement.
If, for plan years beginning before January 1, 1988, normal retirement
age was determined with reference to the anniversary of the participation
commencement date (more than 5 but not to exceed 10 years), the anniversary date
for participants who first commenced participation under the plan before the
first plan year beginning on or after January 1, 1988, shall be the earlier of
(A) the tenth anniversary of the date the participant commenced participation in
the plan (or such anniversary as had been elected by the employer, if less than
10) or (B) the fifth anniversary of the first day of the first plan year
beginning on or after January 1, 1988. The participation commencement date is
the first day of the first plan year in which the participant commenced
participation in the plan.
(b) Early Retirement Date. If the employer selects an early retirement
provision in the adoption agreement, a participant may retire on any date on or
after he meets the age and service requirements specified in the adoption
agreement for early retirement. A participant who terminates his employment
after having satisfied the service but not the age requirement for early
retirement specified in the adoption agreement will become eligible to receive
early retirement benefits upon satisfaction of the age requirement.
(c) Late Retirement Date. If a participant continues in employment
after his normal retirement date, he may continue to make 401(k) savings
contributions and/or after-tax employee contributions (if applicable in the
employer's plan) until his later retirement date, and he will continue to share
in employer contributions and forfeitures in accordance with the plan's
allocation formula until his late retirement date.
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9.2 Disability Retirement.
(a) A participant will be considered to have retired if he leaves the
employer's service because of total and permanent disability. Total and
permanent disability means a permanent physical or mental impairment which
prevents the participant from engaging in any substantial gainful occupation or
employment. The permanence and degree of such impairment shall be supported by
medical evidence.
(b) The plan administrator will determine whether a participant has a
total and permanent disability under uniform rules of general application, and
the plan administrator's determination will be final.
9.3 Retirement Benefits.
(a) A participant who retires will be fully vested and will receive
benefit payments based upon the total amount credited to his account. The
participant will receive: (i) in the case of a single sum payment, the total
amount credited to his accounts at the date the distribution is made; (ii) in
the case of an annuity contract, such total amount will be used to purchase such
annuity contract; or (iii) in the case of installment payments, the first such
installment will be based on such total amount, and subsequent installments will
be based on the total amount credited to the participant's accounts at the date
of each such installment.
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(b) The date of distribution to a retired participant (or the date of
the first installment payment to the retired participant) will he the earliest
practicable date after the valuation date coincident with or next following
either (i) the participant's retirement date or, (ii) such later date as the
participant designates, subject to the required distribution date rules of
Section 9.8. However, if the participant's account balance(s) exceed $3,500
distribution before normal retirement date will not be made (or installment
payments will not commence) unless the participant and his spouse consents
thereto in accordance with applicable regulations.
(c) The consent of the participant and the participant's spouse shall
be obtained in writing within the 90-day period ending on the annuity starting
date. The annuity starting date is the first day of the first period for which
an amount is paid as an annuity or any other form. The plan administrator shall
notify the participant and the participant's spouse of the right to defer any
distribution until the participant's account balance is no longer immediately
distributable. Such notification shall include a general description of the
material features, and an explanation of the relative values of, the optional
forms of benefit available under the plan in a manner that would satisfy the
notice requirements of section 417(a)(3), and shall be provided no less than 30
days and no more than 90 days prior to the annuity starting date. However,
distribution may commence less than 30 days after the notice described in the
preceding sentence is given, provided the distribution is one to which sections
401(a)(11) and 417 of the Code do not apply, the plan administrator clearly
informs the Participant that the Participant has a right to a period of at least
30 days after receiving the notice to consider the decision of whether or not to
elect a distribution (and, if applicable, a particular distribution option), and
the Participant, after receiving the notice, affirmatively elects a
distribution.
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Notwithstanding the foregoing, only the participant need consent to
the commencement of a distribution in the form of a qualified joint and survivor
annuity while the account balance is immediately distributable. (Furthermore, if
payment in the form of a qualified joint and survivor annuity is not required
with respect to the participant pursuant to section 10.6 of the plan, only the
participant need consent to the distribution of an account balance that is
immediately distributable.) Neither the consent of the participant nor the
participant's spouse shall be required to the extent that a distribution is
required to satisfy section 401(a)(9) or section 415 of the Code. In addition,
upon termination of this plan if the plan does not offer an annuity option
(purchased from a commercial provider) and if the employer or any entity within
the same controlled group as the employer does not maintain another defined
contribution plan (other than an employee stock ownership plan as defined in
section 4975(e)(7) of the Code), the participant's account balance may, without
the participant's consent, be distributed to the participant. However, if any
entity within the same controlled group as the employer maintains another
defined contribution plan (other than an employee stock ownership plan as
defined in section 4975(e)(7) of the Code) then the participant's account
balance will be transferred, without the participant's consent, to the other
plan if the participant does not consent to an immediate distribution.
An account balance is immediately distributable if any part of the
account balance could be distributed to the participant (or surviving spouse)
before the participant attains or would have attained if not deceased) the later
of normal retirement age or age 62.
9.4 Method of Payment. Subject to the rules specified in this article, a
participant's retirement benefit will be paid to him in one or more of the
following methods, as elected by the participant:
(a) one or more payments within one taxable year of the participant;
(b) approximately equal monthly, quarterly, semi-annual or annual
installments over a period certain not exceeding the life expectancy of the
participant or the joint life and last survivor expectancy of the participant
and his designated beneficiary;
(c) applied toward the purchase of a fixed annuity contract with
payments over a period of time not exceeding the lifetime of the participant or
the lifetimes of the participant and his designated beneficiary.
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9.5 Married Participants.
(a) Qualified Joint and Survivor Annuity. Except in the case of a
participant in an exempt profit sharing or 401(k) plan (as defined in subsection
(d) below) or in the case of a participant with a small account (as defined in
subsection (e) below), retirement benefits to a married participant will be paid
in the form of the purchase and delivery of a qualified joint and survivor
annuity unless the participant elects otherwise in writing during the 90-day
period ending on the annuity starting date. The participant may elect to have
such annuity distributed upon attainment of the earliest retirement age under
the plan. The earliest retirement age is the earliest date on which, under the
plan, the participant could elect to receive retirement benefits. Such an
election must be accompanied by his spouse's qualified consent (other than the
participant's election of a joint and survivor annuity giving the spouse a 50%
or greater su~vivorship interest). At any time before the commencement of
benefits, the participant may make and revoke such an election without limit as
to the number of elections. The making of such an election requires his spouse's
qualified consent; revocation of such an election does not.
A qualified joint and survivor annuity is an immediate annuity for the
life of the participant with a survivor annuity for the life of the
participant's spouse which is 50 percent of the amount of the annuity payable
during the joint lives of the participant and the participant's spouse. The
qualified joint and survivor annuity is the amount of benefit that can be
purchased with the participant's vested interest in his accounts.
(b) Joint and Survivor Notice.
(i) The plan administrator will provide each married participant
no less than 30 days and no more than 90 days prior to the annuity starting date
with a written explanation of: the terms and conditions of a qualified joint and
survivor annuity; the participant's right to make and the effect of an election
to waive the qualified joint and survivor annuity form of benefit; the rights of
a participant's spouse; and the right to make, and the effect of, a revocation
of a previous election to waive the qualified joint and survivor annuity.
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(ii) Notwithstanding the other requirements of the notice requirements
prescribed by this section and section 10.3 with respect to a preretirement
qualified retirement annuity; notice need not be given to a participant if (1)
the plan "fully subsidizes" the costs of a qualified joint and survivor annuity
or qualified preretirement survivor annuity, and (2) the plan does not allow the
participant to waive the qualified joint and survivor annuity or qualified
preretirement survivor annuity and does not allow a married participant to
designate a nonspouse beneficiary. For purposes of this section, a plan fully
subsidizes the costs of a benefit if no increase in cost, or decrease in
benefits to the participant may result from the participant's failure to elect
another benefit.
(c) Qualified Consent. A waiver of a qualified joint and survivor
annuity or a qualified preretirement survivor annuity. Any waiver of a qualified
joint and survivor annuity or a qualified preretirement survivor annuity shall
not be effective unless: (a) the participant's spouse consents in writing to the
election; (b) the election designates a specific beneficiary, including any
class of beneficiaries or any contingent beneficiaries, which may not be changed
without spousal consent (or the spouse expressly permits designations by the
participant without any further spousal consent); (c) the spouse's consent
acknowledges the effect of the election; and (d) the spouse's consent is
witnessed by a plan representative or notary public. Additionally, a
participant's waiver of the qualified joint and survivor annuity shall not be
effective unless the election designates a form of benefit payment which may not
be changed without spousal consent (or the spouse expressly permits designations
by the participant without any further spousal consent). If it is established to
the satisfaction of a plan representative that there is no spouse or that the
spouse cannot be located, a waiver will be deemed a qualified consent.
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Any consent by a spouse obtained under this provision (or
establishment that the consent of a spouse may not be obtained) shall be
effective only with respect to such spouse. A consent that permits designations
by the participant without any requirement of further consent by such spouse
must acknowledge that the spouse has the right to limit consent to a specific
beneficiary, and a specific form of benefit where applicable, and that the
spouse voluntarily elects to relinquish either or both of such rights. A
revocation of a prior waiver may be made by a participant without the consent of
the spouse at any time before the commencement of benefits. The number of
revocations shall not be limited. No consent obtained under this provision shall
be valid unless the participant has received notice as provided in Section
9.5(b) with respect to a qualified joint and survivor annuity or Section 10.3(b)
with respect to a qualified preretirement survivor annuity.
The requirement for a qualified consent is waived if the participant
establishes to the plan administrator's satisfaction that there is no spouse or
that the spouse cannot be located or under other circumstances described in
regulations under Code Section 417. The requirement of a qualified consent is
also waived for any election or revocation by a participant which has the effect
of increasing the survivorship interest of the spouse.
(d) Exempt Profit Sharing Plans. Is a plan which meets the Safe Harbor
Rules under Section 10.6. In a profit sharing plan or 401(k) plan, the sole
beneficiary of a married participant in the event of his death before retirement
benefits commence is his spouse, unless his spouse has agreed otherwise in a
qualified consent (as defined in subsection (c) above) (see Section 10.5(a)).
Therefore, such a plan is exempt from the qualified joint and survivor annuity
requirement of subsection (a) above. Under an exempt profit sharing or 401(k)
plan, a participant will receive his retirement benefit in the form of a lump
sum payment under Section 9.4(a) unless the participant elects otherwise.
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However, a profit sharing or 401(k) plan is not exempt from the
qualified joint and survivor annuity requirement if the participant in fact
elects an annuity form of payment under Section 9.4(c). Also a profit sharing or
401(k) plan is not exempt from such requirement with respect to any participant
for whom the plan is a direct or indirect transferee of a defined benefit
pension plan, a money purchase pension plan (including a target benefit plan) or
a stock bonus or profit sharing plan which provides for a life annuity form of
payment to the participant; however, this plan will not be treated as a
transferee plan solely by reason of a rollover from any such other plan. In
addition, a profit sharing plan will not be considered exempt unless the
participant's spouse is the beneficiary of any insurance on the participant's
life, unless his spouse agrees otherwise in a qualified consent.
(e) Small Account Defined. A small account is an account with a vested
balance that does not exceed $3,500. In applying the $3,500 rule, all accounts
or portions of accounts from which the claimant is entitled to payment are added
together except for accounts attributable to qualified voluntary employee
contributions. If the present value of a participant's account balance is zero,
such participant shall be deemed to have received a distribution of such vested
account balance. Except as otherwise provided in the adoption agreement, a small
account will be distributed as soon as practicable following termination of
employment or retirement in the form of a single sum payment.
(f) Transition Rules. The provisions of this section apply to any
participant who is credited with at least one hour of service on or after
August 23, 1984. They apply to any other participant in accordance with section
10.7 who was credited with at least one hour of service between September 1,
1974, and August 23, 1984 (a transition participant).
9.6 Unmarried Participants. Except in the case of an exempt profit sharing
or 401(k) plan (as defined in Section 9.5(d)) or as provided in Section 9.5(f),
unless the participant elects otherwise, benefits to an unmarried participant
will be paid in the form of an annuity providing periodic payments for the
lifetime of the participant in the amount that can be purchased with the
participant's vested interest in his accounts.
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9.6A. Direct Rollover Requirements. This Section applies to distributions
made on or after January 1, 1993.
(a) Election to Make Direct Rollover. Notwithstanding any provision
of the plan to the contrary that would otherwise limit a distributee's election
under this Article, a distributee may elect, at the time and in the manner
prescribed by the plan administrator, to have any portion of an eligible
rollover distribution paid directly to an eligible retirement plan specified by
the distributee in a direct rollover.
(b) Definitions.
(1) Eligible rollover distribution. An eligible rollover
distribution is any distribution of all or any portion of the balance to the
credit of the distributee, except that an eligible rollover distribution does
not include: any distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for the life (or life
expectancy) of the distributee or the joint lives (or joint life expectancies)
of the distributee and the distributee's designated beneficiary, or for a
specified period of ten years or more; any distribution to the extent such
distribution is required under section 401(a)(9) of the Code; and the portion of
any distribution that is not includible in gross income (determined without
regard to the exclusion for net unrealized appreciation with respect to employer
securities); and any other distribution(s) that is reasonably expected to total
less than $200 during a year.
(2) Eligible retirement plan. An eligible retirement plan is an
individual retirement account described in section 408(a) of the Code, an
individual retirement annuity described in section 408(b) of the Code, an
annuity plan described in section 403(a) of the Code, or a qualified plan
described in section 401(a) of the Code, that accepts the distributee's eligible
rollover distribution. However, in the case of an eligible rollover distribution
to the surviving spouse, an eligible retirement plan is an individual retirement
account or individual retirement annuity.
(3) Distributee. A distributee includes an employee or former
employee. In addition, the employee's or former employee's surviving spouse and
the employee's or former employee's spouse or former spouse who is the alternate
payee under a qualified domestic relations order, as defined in section 414(p)
of the Code, are distributees with regard to the interest of the spouse or
former spouse.
(4) Direct rollover. A direct rollover is a payment by the plan
to the eligible retirement plan specified by the distributee.
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9.7 Distribution Requirements.
Rules Applicable to Installment Pavrnents. The following rules will
apply to benefits payable in the form of installments under Section 9.4(b).
Life expectancy of the participant and the participant's spouse is
calculated as of the required beginning date (see Section 9.8) or if elected by
the participant (or the spouse, if required) by the time distributions are
required to begin, will be recalculated annually thereafter. The life expectancy
of a designated beneficiary other than the participant's spouse will be
calculated as of the required distribution date and payments for any 12
consecutive month period after such date will be based on such life expectancy
less the number of whole years passed since such date. Life expectancy and joint
and last survivor expectancy are computed using the return multiples in Section
1.72-9 of the Income Tax Regulations.
(a) (1) Subject to 9.5, Joint and Survivor Annuity Requirements, the
requirements of this article shall apply to any distribution of a participant's
interest and will take precedence over any inconsistent provisions of this plan.
Unless otherwise specified, the provisions of this article apply to calendar
years beginning after December 31, 1984.
(2) All distributions required under this article shall be
determined and made in accordance with the proposed regulations under section
401(a)(9), including the minimum distribution incidental benefit requirement of
section 1.401(a)(9)-2 of the proposed federal income tax regulations.
(b) Required beginning date. The entire interest of a participant must
be distributed or begin to be distributed no later than the participant's
required beginning date.
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(c) Limits on Distribution Periods. As of the first distribution
calendar year, distributions, if not made in a single-sum, may only be made over
one of the following periods (or a combination thereof):
(i) the life of the participant,
(ii) the life of the participant and a designated beneficiary,
(iii) a period certain not extending beyond the life expectancy
of the participant, or
(iv) a period certain not extending beyond the joint and last
survivor expectancy of the participant and a designated beneficiary.
(d) (1) Determination of amount to be distributed each year. If the
participant's interest is to be distributed in other than a single sum, the
following minimum distribution rules shall apply on or after the required
beginning date.
(d) (2) Individual account.
(a) If a participant's benefit is to be distributed over (1)
a period not extending beyond the life expectancy of the participant or the
joint life and last survivor expectancy of the participant and the participant's
designated beneficiary or (2) a period not extending beyond the life expectancy
of the designated beneficiary, the amount required to be distributed for each
calendar year beginning with distributions for the first distribution calendar
year, must at least equal the quotient obtained by dividing the participant's
benefit by the applicable life expectancy.
(b) For calendar years beginning before January 1, 1989, if
the participant's spouse is not the designated beneficiary, the method of
distribution selected must assure that at least 50% of the present value of the
amount available for distribution is paid within the life expectancy of the
participant.
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(c) For calendar years beginning after December 31, 1988,
the amount to be distributed each year, beginning with distributions for the
first distribution calendar year shall not be less than the quotient obtained by
dividing the participant's benefit by the lesser of (1) the applicable life
expectancy or (2) if the participant's spouse is not the designated beneficiary,
the applicable divisor determined from the table set forth in Q&A-4 of section
1.401(a)(9)-2 of the proposed regulations. Distributions after the death of the
participant shall be distributed using the applicable life expectancy in section
9.7(d)(2)(a) above as the relevant divisor without regard to Proposed
Regulations section 1.401(a)(9)-2.
(d) The minimum distribution required for the participant's
first distribution calendar year must be made on or before the participant's
required beginning date. The minimum distribution for other calendar years,
including the minimum distribution for the distribution calendar year in which
the employee's required beginning date occurs, must be made on or before
December 31 of that distribution calendar year.
(d) (3) Other Forms.
(a) If the participant's benefit is distributed in the form
of an annuity purchased from an insurance company, distributions thereunder
shall be made in accordance with the requirements of Section 401(a)(9) of the
Code and the proposed regulations thereunder.
9.8 Required Beginning Date. Distribution to any participant (whether
active, retired or otherwise terminated) must be made, or installment or annuity
payments must begin, no later than April 1 following the calendar year in which
he reaches age 70 1/2 (the required beginning date). See Section 10.4(c) for
definitions.
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9.9 Transitional Rule.
(a) In General. This section will apply if the employer's execution oF
the adoption agreement constitutes an amendment and restatement of an existing
plan that was in effect before 1984, and with respect to which one or more
participants had made the designations described in this section.
Notwithstanding the requirements of Sections 9.7, but subject to the spousal
protection and small benefits provisions of Section 9.5, distributions on behalf
of any employee may be made provided that each of the following requirements is
satisfied (regardless of when such distribution commences):
(i) the distribution is one which would not have disqualified
the plan under Code Section 401(a)(9) as in effect before amendment by the
Deficit Reduction Act of 1984;
(ii) the distribution is in accordance with a method of
distribution designated by the employee whose interest in the plan is being
distributed or, if the employee is deceased, by a beneficiary of such employee;
(iii) such designation was in writing, was signed by the employee
or the beneficiary, and was made before January 1, 1984;
(iv) the employee had accrued a benefit under the plan as of
December 31, 1983; and
(v) the method of distribution designated by the employee or the
beneficiary specifies the time at which distribution will commence, the period
over which distributions will be made, and in the case of any distribution upon
the employee's death, the beneficiaries of the employee listed in order of
priority.
(b) Distributions on Death. A distribution upon death will not be
covered by this transitional rule unless the designation contains the
information described in subsection (a) above with respect to the distributions
to be made upon the death of the employee.
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(c) Presumption of Designation. For any distribution which commenced
before January 1, 1984, and continued after December 31, 1983, the employee, or
the beneficiary, to whom such distribution is being made will be presumed to
have designated the method of distribution under which the distribution is being
made if the method of distribution was specified in writing and the distribution
satisfies the requirement in subsections (a)(i) and (v) above.
(d) Revocation of Designation. If such a designation is revoked, any
subsequent form of distribution must satisfy the requirements of Code Section
401(a)(9) and the proposed regulations thereunder as in effect at the time of
distribution. If a designation is revoked subsequent to the date distributions
are required to begin, the plan must distribute by the end of the calendar year
following the calendar year in which the revocation occurs the total amount not
yet distributed which would have been required to have been distributed to
satisfy section 401(a)(9) of the Code and the proposed regulations thereunder,
but for the section 242(b)(2) election. For calendar years beginning after
December 31, 1988, such distributions must meet the minimum distribution
incidental benefit requirements in section 1.401(a)(9)-2 of the proposed
regulations. Any changes in the original or a subsequent designation will be
considered to be a revocation of the designation. However, the mere substitution
or addition of another beneficiary (one not named in the designation) under the
designation will not be considered to be a revocation of the designation, so
long as such substitution or addition does not alter directly or indirectly the
period over which distributions are to be made under the designation (for
example, by altering the relevant measuring life). In the case in which an
amount is transferred or rolled over from one plan to another plan, the rules in
Q&A J-2 and Q&A J-3 in section 1.401(a)(9) of the proposed regulations shall
apply.
9.10 Date Benefit Payments Begin. Unless the participant elects otherwise
(but subject to the required distribution date rule in Section 9.7),
distribution of benefits under the plan will begin no later than the 60th day
following the close of the plan year in which the latest of the following events
occurs:
(a) the termination of the participant's employment with the employer;
(b) the participant attains age 65 or the participant's normal
retirement date, if earlier;
(c) the tenth anniversary of the year in which the participant began
participation in the plan.
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Notwithstanding the foregoing, the failure of a participant and spouse
to consent to a distribution while a benefit is immediately distributable,
within the meaning of section 9.3 of the plan, shall be deemed to be an election
to defer commencement of payment of any benefit sufficient to satisfy this
section.
9.11 Annuities Nontransferable. Any annuity contract distributed to a
participant, spouse or beneficiary under the plan must be nontransferable. The
terms of any annuity contract purchased and distributed by the plan to a
participant or spouse shall comply with the requirements of this Plan.
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ARTICLE 10
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BENEFITS UPON DEATH
-------------------
10.1 Benefits upon Death.
(a) Death During Employment After Retirement.
(1) In General. If a participant dies while employed by the
employer or after retirement (including disability retirement), his beneficiary
will receive: (i) in the case of a single sum payment, the total amount credited
to the participant's accounts at the date distribution is made; (ii) in the case
of an annuity contract, such total amount will be used to purchase such annuity
contract; or (iii) in the case of installment payments, the first such
installment will be based on such total amount, and subsequent installments will
be based on the total amount credited to the participant's accounts at the date
of each such installment.
(2) Special Rule for Accounts Invested in Certain Annuity
Contracts. If all or any portion of the participant's account is invested in an
annuity contract, and the terms of the contract so provide, the participant's
beneficiary will receive a death benefit equal to the sum of (a) the total
amount credited to the participant's accounts which is not invested in such
annuity contract as of the distribution date and (b) the greatest of: (i) the
total amount credited to the participant under the contract at the date
distribution is made; (ii) the excess of the total contributions to the contract
over total withdrawals from the contract; or (iii) the highest amount credited
to the contract as of the end of the calendar year in which any fifth
anniversary of the initial acquisition of the contract occurred. This paragraph
(2) will become effective on the date that a contract providing for such death
benefit is acquired.
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(b) Death After Other Termination of Employment. If a participant dies
after termination of employment for any reason other than retirement (including
disability retirement), his beneficiary will receive death benefits determined
as follows:
(i) If the participant died before forfeiture of the nonvested
portion of his accounts under Section 11.4, the vested amount in the
participant's accounts will be determined and the balance will be forfeited
immediately, death benefits will be based upon the vested amounts remaining
after such forfeiture, and such amount will be applied as provided in subsection
(a) above.
(ii) if the participant died after forfeiture of the nonvested
portion of his accounts under Section 11.4, death benefits will be based upon
the vested amounts remaining after such forfeiture, and such amount (reduced by
any prior payments to the participant before his death) will be applied as
provided in subsection (a) above.
(c) Date of Distribution. The date of distribution to a beneficiary
(or the date of the first installment payment to the beneficiary) will be the
earliest practicable date after the valuation date coincident with or next
following either (i) the date when the plan administrator has received such
evidence of the participant's death and such evidence of the beneficiary's (or
beneficiaries') right to receive such distribution as the plan administrator
deems necessary, or (ii) such later date as the beneficiary designates, subject
to Section 10.4. However, where the participant's spouse is the beneficiary
under Section 10.5(a), payment will be made within 90 days after the
participant's death (unless under the circumstances, 90 days is unreasonably
short); however, the spouse may elect to defer payment until after the valuation
date next following the participant's death.
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10.2 Method of Payment. Subject to the requirements of Section 10.3, death
benefits will be paid in one or a combination of the following methods:
(a) one or more payments within one taxable year of the beneficiary;
(b) approximately equal monthly, quarterly, semi-annual or annual
installments over a period certain permitted under Section 10.4;
(c) applied toward the purchase of a fixed annuity contract providing
for payments over a period permitted under Section 10.4.
The method of payment will be elected by the beneficiary unless the
participant in his designation of beneficiary form designated the form of
payment.
10.3 Qualified Preretirement Survivor Annuity.
(a) Unless an optional form of benefit has been selected within the
election period pursuant to a qualified consent as defined in 9.5(c) if a
participant dies before the annuity starting date then the participant's vested
account balance shall be applied toward the purchase of an annuity for the life
of the surviving spouse. The surviving spouse may elect to have such annuity
distributed within a reasonable period after the participant's death.
(b) Notice. In the case of a qualified preretirement survivor annuity
as described in section (a), the plan administrator shall provide each
participant within the applicable period for such participant a written
explanation of the qualified preretirement survivor annuity in such terms and in
such manner as would be comparable to the explanation provided for meeting the
requirements of section 9.5(b)(i) applicable to a qualified joint and survivor
annuity.
The applicable period for a participant is whichever of the following
periods ends last: (i) the period beginning with the first day of the plan year
in which the participant attains age 32 and ending with the close of the plan
year preceding the plan year in which the participant attains age 35; (ii) a
reasonable period ending after the individual becomes a participant; (iii) a
reasonable period ending after section 9.5(b)(ii) ceases to apply to the
participant; (iv) a reasonable period ending after this article first applies to
the participant. Notwithstanding the foregoing, notice must be provided within a
reasonable period ending after separation from service in the case of a
participant who separates from service before attaining age 35.
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For purposes of applying the preceding paragraph, a reasonable period
ending after the enumerated events described in (ii), (iii) and (iv) is the end
of the two-year period beginning one year prior to the date the applicable event
occurs, and ending one year after that date. In the case of a participant who
separates from service before the plan year in which age 35 is attained, notice
shall be provided within the two-year period beginning one year prior to
separation and ending one year after separation. If such a participant
thereafter returns to employment with the employer, the applicable period for
such participant shall be redetermined.
(c) Definitions. For purposes of Section 10.3, the following
definitions shall apply:
(1) Election period: The period which begins on the first day of
the plan year in which the participant attains age 35 and ends on the date of
the participant's death. If a participant separates from service prior to the
first day of the plan year in which age 35 is attained, with respect to the
account balance as of the date of separation, the election period shall begin on
the date of separation.
Pre-age 35 waiver: A participant who will not yet attain age
35 as of the end of any current plan year may make a special qualified election
to waive the qualified preretirement survivor annuity for the period beginning
on the date of such election and ending on the first day of the plan year in
which the participant will attain age 35. Such election shall not be valid
unless the participant receives a written explanation of the qualified
preretirement survivor annuity in such terms as are comparable to the
explanation required under section 9.5(b)(i). Qualified preretirement survivor
annuity coverage will be automatically reinstated as of the first day of the
plan year in which the participant attains age 35. Any new waiver on or after
such date shall be subject to the full requirements of this article.
(2) Spouse (surviving spouse): The spouse or surviving spouse of
the participant, provided that a former spouse will be treated as the spouse or
surviving spouse and a current spouse will not be treated as the spouse or
surviving spouse to the extent provided under a qualified domestic relations
order as described in section 414(p) of the Code.
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(3) Annuity starting date: The first day of the first period for
which an amount is paid as an annuity or any other form.
(4) Vested account balance: The aggregate value of the
participant's vested account balances derived from employer and employee
contributions (including rollovers), whether vested before or upon death,
including the proceeds of insurance contracts, if any, on the participant's
life. The provisions of this article shall apply to a participant who is vested
in amounts attributable to employer contributions, employee contributions (or
both) at the time of death or distribution.
10.4 Limitation on Installment or Annuity Payment of Death Benefits.
(a) In General. This section 10.4 governs payment of death benefits
where the form of payment is not covered by an election made before
January 1, 1984 by a participant or beneficiary as described in Section 9.9.
(b) Death Distribution Provisions.
(1) Distribution beginning before death. If the participant dies
after distribution of his or her interest has begun, the remaining portion of
such interest will continue to be distributed at least as rapidly as under the
method of distribution being used prior to the participant's death.
(2) Distribution beginning after death. If the participant dies
before distribution of his or her interest begins distribution of the
participant's entire interest shall be completed by December 31 of the calendar
year containing the fifth anniversary of the participant's death except to the
extent that an election is made to receive distributions in accordance with (a)
or (b) below:
(a) if any portion of the participant's interest is payable to
a designated beneficiary, distributions may be made over the life or over a
period certain not greater than the life expectancy of the designated
beneficiary commencing on or before December 31 of the calendar year immediately
following the calendar year in which the participant died;
(b) if the designated beneficiary is the participant's
surviving spouse, the date distributions are required to begin in accordance
with (2)(a) above shall not be earlier than the later of (1) December 31 of the
calendar year immediately following the calendar year in which the participant
died and (2) December 31 of the calendar year in which the participant would
have attained age 70 1/2.
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If the participant has not made an election pursuant to this
section 10.4(b)(2) by the time of his or her death, the participant's designated
beneficiary must elect the method of distribution no later than the earlier of
(1) December 31 of the calendar year in which distributions would be required to
begin under this section, or (2) December 31 of the calendar year in which
contains the fifth anniversary of the date of death of the participant. If the
participant has no designated beneficiary, or if the designated beneficiary does
not elect a method of distribution, distribution of the participant's entire
interest must be completed by December 31 of the calendar year containing the
fifth anniversary of the participant's death.
(3) For purposes of Section 10.4(b)(2) above, if the surviving
spouse dies after the participant, but before payments to such spouse begin, the
provisions of section 10.4(b)(2) with the exception of paragraph (b) therein,
shall be applied as if the surviving spouse were the participant.
(4) For purposes of this section 10.4(b), any amount paid to a
child of the participant will be treated as if it had been paid to the surviving
spouse if the amount becomes payable to the surviving spouse when the child
reaches the age of majority.
(5) For the purposes of this section 10.4(b), distribution of a
participant's interest is considered to begin on the participant's required
beginning date (or, if section 10.4(b)(3) above is applicable, the date
distribution is required to begin to the surviving spouse pursuant to section
10.4(b)(2) above). If distribution in the form of an annuity irrevocably
commences to the participant before the required beginning date, the date
distribution is considered to begin is the date distribution actually commences.
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(c) Definitions for this section and section 9.7.
(1) Applicable life expectancy. The life expectancy (or joint and
last survivor expectancy) calculated using the attained age of the participant
(or designated beneficiary as of the participant's (or designated beneficiary's)
birthday in the applicable calendar year reduced by one for each calendar year
which has elapsed since the date life expectancy was first calculated. If life
expectancy is being recalculated, the applicable life expectancy shall be the
life expectancy as so recalculated. The applicable calendar year shall be the
first distribution calendar year, and if life expectancy is being recalculated
such succeeding calendar year.
(2) Designated beneficial. The individual who is designated as
the beneficiary under the plan in accordance with section 401(a)(9) and the
proposed regulations thereunder.
(3) Distribution calendar year. A calendar year for which a
minimum distribution is required. For distributions beginning before the
participant's death, the first distribution calendar year is the calendar year
immediately preceding the calendar year which contains the participant's
required beginning date. For distributions beginning after the participant's
death, the first distribution calendar year is the calendar year in which
distributions are required to begin pursuant to section 10.4(b) above.
(4) Life expectancy. Life expectancy and joint and last survivor
expectancy are computed by use of the expected return multiples in Tables V and
VI of section 1.72-9 of the federal income tax regulations.
Unless otherwise elected by the participant (or spouse, in the
case of distributions described in section 10.4(b)(2) above) by the time
distributions are required to begin, life expectancies shall be recalculated
annually. Such election shall be irrevocable as to the participant (or spouse)
and shall apply to all subsequent years. The life expectancy of a nonspouse
beneficiary may not be recalculated.
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(5) Participant's benefit.
(a) The account balance as of the last valuation date in the
calendar year immediately preceding the distribution calendar year (valuation
calendar year) increased by the amount of any contributions or forfeitures
allocated to the account balance as of dates in the valuation calendar year
after the valuation date and decreased by distributions made in the valuation
calendar year after the valuation date.
(b) Exception for second distribution calendar year. For
purposes of paragraph (a) above, if any portion of the minimum distribution for
the first distribution calendar year is made in the second distribution calendar
year on or before the required beginning date, the amount of the minimum
distribution made in the second distribution calendar year shall be treated as
if it had been made in the immediately preceding distribution calendar year.
(6) Required beginning date.
(a) General rule. The required beginning date of a participant
is the first day of April of the calendar year following the calendar year in
which the participant attains age 70 1/2.
(b) Transitional rules. The required beginning date of a
participant who attains age 70 1/2 before January 1, 1988, shall be determined
in accordance with (1) or (2) below:
(1) Non-5-percent owners. The required beginning date of a
participant who is not a 5-percent owner is the first day of April of the
calendar year following the calendar year in which the later of retirement or
attainment of age 70 1/2 occurs.
(2) 5-percent owners. The required beginning date of a
participant who is a 5-percent owner during any year beginning after
December 31, 1979, is the first day of April following the later of:
(i) the calendar year in which the participant attains
age 70 1/2, or
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(ii) the earlier of the calendar year with or within
which ends the plan year in which the participant becomes a 5-percent owner, or
the calendar year in which the participant retires.
The required beginning date of a participant who is
not a 5-percent owner who attains age 70 1/2 during 1988 and who has not retired
as of January 1, 1989, is April 1, 1990.
(c) 5-percent owner. A participant is treated as a 5-percent owner
for purposes of this section if such participant is a 5-percent owner as defined
in section 416(i) of the Code (determined in accordance with section 416 but
without regard to whether the plan is top-heavy) at any time during the plan
year ending with or within the calendar year in which such owner attains age
66 1/2 or any subsequent plan year.
(d) Once distributions have begun to a 5-percent owner under this
section, they must continue to be distributed, even if the participant ceases to
be a 5-percent owner in a subsequent year.
10.5 Beneficiary.
(a) Designation of Beneficiary and Method of Payment. A participant
may designate one or more beneficiaries on a form or other instrument filed
with, and acceptable to, the plan administrator, and may revoke or change such
designation in like manner at any time. The beneficiary may elect the form of
payment under Section 10.2 (subject to the requirements of Section 10.3);
however, the participant may in the designation of beneficiary form or other
instrument specify the form of payment (subject to Section 10.3) and death
benefits will be paid in such form. If a beneficiary is permitted to elect the
method of payment of a benefit payable to him, he may designate one or more
beneficiaries to receive any amount remaining undistributed at his death.
Notwithstanding the preceding paragraph, in an exempt profit sharing
plan or 401(k) plan as described in section 9.5(d), the sole beneficiary of a
married participant is the participant's spouse, unless the spouse consents or
has consented to the designation of another beneficiary in a qualified consent
(as defined in Section 9.5(c)).
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(b) Payment in Absence of Designation of Beneficiary. Any portion of a
participant's death benefit which is not disposed of by a designation of
beneficiary, for any reason whatsoever, will be paid to the participant's spouse
if the spouse survives him, otherwise to the participant's estate in a lump sum.
(c) Payment Under Prior Designation of Beneficiary. The plan
administrator will be fully protected in directing payment in accordance with a
prior designation of beneficiary if such direction (i) is given before receipt
by the plan administrator of a later designation or (ii) is due to the inability
of the plan administrator to verify the authenticity of a later designation.
10.6 Safe Harbor Rules.
(a) This section shall apply to a participant in a profit-sharing plan
and 401(k) plan, and to any distribution, made on or after the first day of the
first plan year beginning after December 31, 1988, from or under a separate
account attributable solely to accumulated deductible employee contributions, as
defined in section 72(o)(5)(B) of the Code, and maintained on behalf of a
participant in a money purchase pension plan, (including a target benefit plan)
if the following conditions are satisfied:
(1) the participant does not or cannot elect payments in the form
of a life annuity; and
(2) on the death of a participant, the participant's vested
account balance will be paid to the participant's surviving spouse, but if there
is no surviving spouse, or if the surviving spouse has consented in a manner
conforming to a qualified election, then to the participant's designated
beneficiary. The surviving spouse may elect to have distribution of the vested
account balance commence within the 90-day period following the date of the
participant's death. The account balance shall be adjusted for gains or losses
occurring after the participant's death in accordance with the provisions of the
plan governing the adjustment of account balances for other types of
distributions. This section 10.6 shall not be operative with respect to a
participant in a profit-sharing plan or 401(k) plan if the plan is a direct or
indirect transferee of a defined benefit plan, money purchase plan, a target
benefit plan, stock bonus, or profit-sharing plan which is subject to the
survivor annuity requirements of section 401(a)(11) and section 417 of the Code.
If this section 10.6 is operative, then the provisions of section 10.3 shall be
inoperative.
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(b) The participant may waive the spousal death benefit described in
this section at any time provided that no such waiver shall be effective unless
it satisfies the conditions of section 9.5(c) that would apply to the
participant's waiver of the qualified preretirement survivor annuity.
(c) For purposes of this section 10.6, vested account balance shall
mean, in the case of a money purchase pension plan or a target benefit plan, the
participant's separate account balance attributable solely to accumulated
deductible employee contributions within the meaning of section 72(o)(5)(B) of
the Code. In the case of a profit-sharing plan, vested account balance shall
have the same meaning as provided in section 10.3(c)(4).
10.7 Transitional Rules.
(a) Any living participant not receiving benefits on August 23, 1984,
who would otherwise not receive the benefits prescribed by the previous sections
of this article must be given the opportunity to elect to have the prior
sections of this article and section 9.5 apply if such participant is credited
with at least one hour of service under this plan or a predecessor plan in a
plan year beginning on or after January 1, 1976, and such participant had at
least 10 years of vesting service when he or she separated from service.
(b) Any living participant not receiving benefits on August 23, 1984,
who was credited with at least one hour of service under this plan or a
predecessor plan on or after September 2, 1974, and who is not otherwise
credited with any service in a plan year beginning on or after January 1, 1976,
must be given the opportunity to have his or her benefits paid in accordance
with section (d) of 10.7.
(c) The respective opportunities to elect (as described in sections
(a) and (b) above) must be afforded to the appropriate participants during the
period commencing on August 23, 1984, and ending on the date benefits would
otherwise commence to said participants.
(d) Any participant who has elected pursuant to section (b) of this
article and any participant who does not elect under section (a) or who meets
the requirements of section (a) except that such participant does not have at
least 10 years of vesting service when he or she separates from service, shall
have his or her benefits distributed in accordance with all of the following
requirements if benefits would have been payable in the form of a life annuity:
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(i) Automatic joint and survivor annuity. If benefits in the form
of a life annuity become payable to a married participant who:
(1) begins to receive payments under the plan on or after
normal retirement age; or
(2) dies on or after normal retirement age while still
working for the employer; or
(3) begins to receive payments on or after the qualified early
retirement age; or
(4) separates from service on or after attaining normal
retirement age (or the qualified early retirement age) and after satisfying the
eligibility requirements for the payment of benefits under the plan and
thereafter dies before beginning to receive such benefits;
then such benefits will be received under this plan in the
form of a qualified joint and survivor annuity, unless the participant has
elected otherwise during the election period. The election period must begin at
least 6 months before the participant attains qualified early retirement age and
end not more than 90 days before the commencement of benefits. Any election
hereunder will be in writing and may be changed by the participant at any time.
(ii) Election of early survivor annuity. A participant who is
employed after attaining the qualified early retirement age will be given the
opportunity to elect, during the election period, to have a survivor annuity
payable on death. If the participant elects the survivor annuity, payments under
such annuity must not be less than the payments which would have been made to
the spouse under the qualified joint and survivor annuity if the participant had
retired on the day before his or her death. Any election under this provision
will be in writing and may be changed by the participant at any time. The
election period begins on the later of (1) the 90th day before the participant
attains the qualified early retirement age, or (2) the date on which
participation begins, and ends on the date the participant terminates
employment.
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(iii) For purposes of this section (d):
(a) Qualified early retirement age is the latest of:
(i) the earliest date, under the plan, on which the
participant may elect to receive retirement benefits,
(ii) the first day of the 120th month beginning before
the participant reaches normal retirement age, or
(iii) the date the participant begins participation.
(b) Qualified joint and survivor annuity is an annuity for
the life of the participant with a survivor annuity for the life of the spouse
as described in plan section 9.5(a).
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ARTICLE 11
TERMINATION OF EMPLOYMENT AND VESTED INTEREST
11.1 Vested Interest in Accrued Benefit.
(a) Vesting Schedule. A participant will have a vested and
nonforfeitable interest in that percentage of his employer contributions account
or matching contributions account determined under the vesting schedule
specified in the adoption agreement.
(b) Full Vesting. Regardless of a participant's vesting under the
vesting schedule, the participant becomes fully vested in his employer
contributions account or matching contributions account upon the earlier of (i)
his attaining his normal retirement date while he is still employed by the
employer; (ii) his attaining his early retirement date as specified in the
adoption agreement while he is still employed by the employer; or (iii) upon
disability retirement under Section 9.2, or upon his death while he is still an
employee.
11.2 Changes in Vesting Schedule. After the adoption of any amendment that
changes the vesting schedule or that directly or indirectly affects the
computation of a participant's vested percentage, or any shift in or out of a
vesting schedule because of a plan's top-heavy status, any participant having
three or more years of service will have his vested percentage determined under
whichever schedule gives him the higher vested percentage.
11.3 Payment of Vested Interest. A participant's vested interest in his
accrued benefit will be paid to him, or payments will begin, on a date elected
by the participant and will be paid to him following his separation from service
in one or more of the methods described in Section 9.4 as elected by the
participant. The participant's election as to either time or form of payment
will be subject to the rules, other than sections 9.1, 9.2, and 9.3 of Article
9. In the case of (a) a newly adopted plan or (b) an amendment or restatement
that deferred all distributions until the participant's early or normal
retirement date, the adoption agreement may provide that no distribution in the
form of a single sum shall be made to a highly compensated employee prior to his
early or normal retirement date, unless such employee executes a covenant not to
compete in a form acceptable to the employer.
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11.4 Forfeiture of Non-Vested Interest. A participant will forfeit the non-
vested portion of his account balance on the day after he incurs a period of
five consecutive one-year breaks in service (or, if the employer's plan counts
service for vesting purposes using the elapsed time rules of Article 3B, a
period of severance of 60 months in length). The plan administrator may release
the non-vested portion of a participant's account balance as a forfeiture on the
earlier of the day he receives a distribution of his vested account balance or
the day after he incurs a one-year break in service. However, if a participant
resumes employment before a period of five consecutive one-year breaks in
service (or a period of severance of 60 months in length, as the case may be)
has been incurred, the non-vested portion of such participant's account shall be
restored.
11.5 Protections Upon Resumption of Employment. A former participant who
returns to employment with the employer after a period of one or more one-year
breaks in service will nevertheless receive credit for all his prior years of
service for vesting and accrual purposes.
11.6 Calculating Vested Interest After Account Distribution. Where a
participant's employer contributions account or matching contributions account
is charged with a withdrawal or distribution at a time when he is not fully
vested in such account, the remaining balance of the participant in such account
will be credited to a separate account within the participant's employer
contributions account or matching contributions account, or accounting records
will be maintained in a manner which has the same effect as establishing a
separate account. The participant's vested interest in any such separate account
at any subsequent time will be equal to an amount ("Y") determined by the
formula:
y = P(AB + D) - D
where P is his vested percentage at such time; AB is the account balance in such
separate account at such time; and D is the amount of the withdrawal or
distribution. The term remaining balance as used in this section means a
participant's interest in his employer contributions account or matching
distribution remaining after a withdrawal or distribution of a portion or all of
his vested interest therein.
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ARTICLE 12
IN-SERVICE DISTRIBUTIONS AND WITHDRAWALS; LOANS
12.1 Withdrawal of After-Tax Contributions.
(a) Amount. Except as otherwise provided in the adoption agreement, a
participant whose employment has not terminated may upon reasonable advance
notice to the plan administrator (and spousal consent, if applicable) withdraw
all or any portion of his after-tax employee contributions account to the extent
not previously withdrawn.
(b) Payment and Plan Administrator Rules. Any withdrawal under this
section will be paid to the participant as soon as practicable after the
valuation date next following the plan administrator's receipt of the
participant's withdrawal request; however the plan administrator may approve an
earlier payment of some or all of the amount to be withdrawn if such earlier
payment would not be detrimental to the interests of the other participants. If
elected in the adoption agreement, notwithstanding Sections 5.1 and 6.1, a
participant who makes an in-service withdrawal under this section may not make a
401(k) savings contribution or after-tax employee contribution for a period of
up to 12 months following the date of such in-service withdrawal. However, the
employer may elect in the adoption agreement to limit the suspension of after-
tax employee contributions to in-service withdrawals made prior to the date that
the participant attains age 59 1/2.
The plan administrator or the sponsor may establish reasonable minimum
or maximum withdrawal amounts and reasonable limitations on the frequency or
number of withdrawals during a plan year. No forfeitures will occur solely as a
result of an employee's making of an in-service withdrawal.
(c) Separate Contract. For purposes of Code Section 72, a
participant's after-tax employee contributions account attributable to post-1986
after-tax employee contributions will be accounted for separately and will be
treated as a separate contract under the plan for income tax purposes.
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(d) Special Rules. If the employer's execution of the adoption
agreement constitutes the amendment and restatement of an existing plan to which
one or more participants made after-tax contributions before 1987, such
contributions will be accounted for separately, and for federal income tax
purposes any withdrawals or distributions from the plan will be deemed to be a
withdrawal or distribution of such contributions until they are exhausted.
12.2 In-Service Withdrawals from Profit Sharing Plans.
(a) In General. This section applies only if the employer's plan is a
profit sharing plan (other than a 401(k) plan). To the extent provided in the
adoption agreement, a participant whose employment has not terminated may make
withdrawals from his accounts. The adoption agreement may limit such in-service
withdrawals to financial hardship situations, or, as long as the requirements
set forth in section 12.2(c) are met, may permit in-service withdrawals for
reasons other than financial hardship.
Notwithstanding the preceding paragraph, an in-service withdrawal will
be permitted under the following circumstances: (i) termination of the plan
without the establishment of a successor plan; (ii) the sale or other
disposition to an unrelated entity of at least 85 percent of the assets used by
the employer in a trade or business, provided the employee continues in
employment with the purchaser of the assets; or (iii) the sale or other
disposition to an unrelated entity of a subsidiary of the employer, provided the
employee continues in employment with the subsidiary.
(b) Financial Hardship. For purposes of this section, financial
hardship means any of the circumstances specified in Section 12.3(c).
The request for a hardship withdrawal under this section will be in
writing on such form as the plan administrator may prescribe and will be filed
with the plan administrator. The plan administrator may require a participant to
submit such information or other evidence as is necessary to make the
determination of financial hardship. The plan administrator may rely upon the
accuracy of any information or materials submitted by the participant. The plan
administrator will determine the existence of a financial hardship and the
amount necessary to meet such financial hardship, and any such determination
will be binding on the participant.
(c) Amount. A participant may withdraw the amount he specifies,
provided that a withdrawal may not exceed the smallest of whichever the
following limitations applies:
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(i) the participant's total vested account balances;
(ii) in the case of a hardship withdrawal, the amount determined
by the plan administrator as necessary to meet the participant's financial
hardship; or
(iii) in the case of a non-hardship withdrawal, the amount
attributable to employer contributions which have been on deposit in the plan
for at least two years; provided that this limitation will apply only to
employees who have been participants in the plan for less than five years. The
limitation in this Section 12.2(c)(iii) will not apply to withdrawals after a
participant has attained age 59-1/2 if such withdrawals are permitted in the
adoption agreement.
(d) Spousal Consent to In-Service Withdrawals. Unless the plan is an
exempt profit sharing plan (as defined in Section 9.5(d)), a married
participant's spouse must consent to an in-service withdrawal under this section
in a qualified consent meeting the requirements of Section 9.5(c).
(e) Payment and Plan Administrator Rules. Provisions governing the
payment of a withdrawal under this section and plan administrator rules for such
withdrawals are found at Section 12.1(b).
12.3 In-Service Withdrawals from 401(k) plans.
(a) In General. This section applies only if the employer's plan is a
401(k) plan. Except as otherwise provided in the adoption agreement, a
participant whose employment has not terminated may make withdrawals from his
accounts subject to the limitations of this section and the adoption agreement.
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(b) Availability and Amount. The availability and amount of in-service
withdrawals will be subject to the restrictions specified below.
(i) 401(k) Savings Contributions Account. A participant may make
in-service withdrawals from his 401(k) savings contributions account in the
event of financial hardship only. The maximum withdrawal from the participant's
401(k) savings contributions account is the smaller of the amount of his 401(k)
savings contributions, without earnings or investment gains (except any income
allocable to 401(k) savings contributions as of December 31, 1988), or the
amount needed to alleviate his financial hardship.
(ii) Employer Contributions and Matching Contributions Accounts.
To the extent provided in the adoption agreement, a participant may make
in-service withdrawals from his employer contributions account (employer
supplemental profit-sharing contributions) and/or matching contributions
account. The adoption agreement may limit such in-service withdrawals to
financial hardship situations, or may permit in-service withdrawals for reasons
other than financial hardship; there may be different rules for withdrawals from
employer contributions accounts and matching contributions accounts.
If elected in the adoption agreement, notwithstanding sections 5.1
and 6.1, a participant who makes an in-service withdrawal under this section may
not make a 401(k) savings contribution or after-tax employee contribution for a
period of up to 12 months following such in-service withdrawal. However, the
employer may elect in the adoption agreement to limit the suspension of employer
contributions or matching contributions to in-service withdrawals made prior to
the date that the participant attains age 59 1/2.
The maximum in-service withdrawal from a participant's employer
contributions account or matching contributions account is determined under the
same limitations set forth in Section 12.2(c).
(c) Financial Hardship.
(i) An in-service withdrawal will be on account of financial
hardship only if the participant has an immediate and heavy financial need and
the withdrawal is necessary to meet the need.
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METLIFE DEFINED CONTRIBUTION GROUP
95
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DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
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(ii) A withdrawal will be deemed to be on account of an immediate
and heavy need if it is occasioned by (A) a deductible medical expense (within
the meaning of Code Section 213(d)) incurred by or necessary for the participant
or his spouse, children or dependent; (B) purchase of the participant's
principal residence (not including mortgage payments); (C) tuition and related
educational fees for the next 12 months of post-secondary education for the
participant or his spouse, child or dependent; (D) rent or mortgage payments to
prevent the participant's eviction from or the foreclosure of the mortgage on
his principal residence; or (E) such other event or circumstance as the Internal
Revenue Service permits.
(iii) A withdrawal will be deemed necessary to satisfy the
participant's financial needs if either (A) the participant has made all non-
hardship withdrawals and obtained all nontaxable loans available under all of
the employer's qualified retirement plan; and each such other plan which
provides for 401(k) savings contribution contains restrictions similar to those
in Section 5.2(b); or (B) the participant satisfies such other requirements as
may be prescribed by the Internal Revenue Service.
(iv) A participant must establish to the plan administrator's
satisfaction both that the participant has an immediate and heavy financial need
and that the withdrawal is necessary to meet the need (including amounts
necessary to pay any federal, state or local income taxes or penalties
reasonably anticipated to result from the distribution), as provided in
subsections (ii) and (iii) above.
A participant's application for a hardship withdrawal will be in
writing on such form and containing such information (or other evidence or
materials establishing the participant's financial hardship) as the plan
administrator may require. The plan administrator's determination of the
existence of and the amount needed to meet a financial hardship will be binding
on the participant.
(d) Notwithstanding subsection (b) above,
(i) to the extent provided in the adoption agreement, a
participant may make in-service withdrawals from his 401(k) plan accounts after
he has reached age 59-1/2; and
(ii) a participant may make in-service withdrawals from his
401(k) accounts under the circumstances described in the second paragraph of
12.2(a).
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METLIFE DEFINED CONTRIBUTION GROUP
96
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DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
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(e) Miscellaneous. The spousal consent requirements are as specified
in Section 12.2(d), and the payment procedures and plan administrator rules for
withdrawals are as specified in Section 12.1(b).
12.4 In-Service Withdrawals from Money Purchase Plan or Target Benefit
Plan. In-service withdrawals are not permitted from employer contribution
accounts under a money purchase plan or a target benefit plan.
12.5 Loans. If the METLIFE SECURITY INSURANCE COMPANY OF LOUISIANA/METLIFE
DEFINED CONTRIBUTION GROUP PROGRAM adoption agreement so provides, loans will be
available from the plan. If loans are available, the plan administrator will
establish guidelines and procedures for loans from the plan to participants in
specific instances, which guidelines may include limitations on the number of
loans that may be outstanding to a participant at any time or on the frequency
of loans. Each loan must be approved by the plan administrator and must conform
to the loan guidelines and procedures. The guidelines and procedures must be
formulated and administered so that they conform with ERISA Section 408(b)(1)
and ERISA Reg. (S)2550.408-1(d). In addition, the following requirements of this
Section must be satisfied.
(a) Loans are available to all participants and any other person
required by the Department of Labor and the Code on a reasonably equivalent
basis. However, no loan will be made to a participant who is an owner-employee
or a shareholder employee unless such person has at his expense has obtained an
administrative exemption from ERISA's prohibited transaction rules from the
Department of Labor with respect to such loan (unless the Department of Labor
has issued a prohibited transaction class exemption covering such loans). Any
loan will be evidenced by a promissory note or other writing permitted under
applicable law signed by the participant.
(b) Loans shall not be made available to highly compensated employees
(as defined in section 5.8 of the Plan) in an amount greater than the amount
made available to other employees.
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METLIFE DEFINED CONTRIBUTION GROUP
97
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DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
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(c) Loans are adequately secured and bear a reasonable rate of
interest. However, no more than 50% of a participant's nonforfeitable accrued
benefit may be pledged as collateral.
Each loan hereunder will be a participant-directed investment for the
benefit of the participant requesting such loan; accordingly, any default in the
repayment of principal or interest of any loan hereunder will reduce the amount
available for distribution to such participant (or his beneficiary). Thus, any
loan hereunder will be effectively and adequately secured by the participant's
accounts.
(d) (i) No participant loan exceeds the amount of 50% of the
participant's vested account balances (excluding his qualified voluntary
employee contributions account, if any).
Also, the maximum loan (including outstanding loans) will depend upon
the vested amount in a participant's accounts (excluding his qualified voluntary
contributions account, if any) as of the valuation date immediately preceding
the date when the loan is made, determined under the following table:
Vested Amount in Accounts Maximum Loan
------------------------- ------------
0-$100,000 50% of vested accounts
Over $100,000 $50,000
The $50,000 maximum loan limit in the above table will be reduced by treating
the highest outstanding loan balance during the one-year period ending on the
date of the current loan as being outstanding on such date.
(ii) Except as provided in the next sentence, the maximum term of
a loan will be five years. If a participant requests a loan for the acquisition
of the principal residence of the participant, the maximum repayment period will
be determined by reference to bank loans for the same purpose.
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METLIFE DEFINED CONTRIBUTION GROUP
98
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DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
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(e) Except for a profit sharing plan or a 401(k) plan (which are
exempt from the spousal consent requirements - see Section 9.5(d)), a
participant obtains the consent of his or her spouse, if any, within the 90 day
period before the time the account balance is used as security for the loan. A
new consent is required if the account balance is used as security for any
increase in the loan balance, for renegotiation, extension, renewal, or other
revision of the loan. However, spousal consent is not necessary if the total
amount of loans outstanding hereunder does not exceed $3,500. The consent will
comply with the requirements of Section 9.5(c). The consent of any subsequent
spouse will not be necessary in order to foreclose the plan's security interest
in the participant's account balance if the participant's then spouse validly
consented to the original use of the account balance as security (or if the
participant was unmarried at such time).
If a valid spousal consent has been obtained in accordance with this
section, then, notwithstanding any other provision of this plan, the portion of
the participant's vested account balance used as a security interest held by the
plan by reason of a loan outstanding to the participant shall be taken into
account for purposes of determining the amount of the account balance payable at
the time of death or distribution, but only if the reduction is used as
repayment of the loan. If less than 100% of the participant's vested account
balance (determined without regard to the preceding sentence) is payable to the
surviving spouse, then the account balance shall be adjusted by first reducing
the vested account balance by the amount of the security used as repayment of
the loan, and then determining the benefit payable to the surviving spouse.
(f) The plan administrator may require a participant to agree to repay
the principal and interest of a loan through regular payroll deduction payments
from the participant's compensation. The plan administrator may establish back-
up repayment procedures for participants who do not make payroll deduction
repayment; except as may otherwise be permitted under Treasury regulations, any
such back-up procedures will provide for substantially level amortization
payments made quarterly or more frequently.
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METLIFE DEFINED CONTRIBUTION GROUP
99
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DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
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If a participant defaults on any payment of interest or principal of a
loan hereunder or defaults upon any other obligation relating to such loan, the
plan administrator may take (or direct the trustee to take) such action or
actions as it determines to be necessary to protect the interest of the plan.
Such actions may include commencing legal proceedings against the participant,
or foreclosing on any security interest in the participant's account or other
security given in connection with a loan hereunder. In the event of a default,
foreclosure on the participant's note and attachment of one or more of the
participant's accounts given as security will not occur until a distributable
event occurs in the plan.
An assignment or pledge of any portion of the participant's interest
in the plan and a loan, pledge, or assignment with respect to any insurance
contract purchased under the plan, will be treated as a loan under this section.
(g) In the case of any participant with one or more loans outstanding
hereunder, the amount available for distribution to such participant (or his
beneficiary) will consist of the participant's vested account balance(s) (not
including the outstanding principal and accrued but unpaid interest on such
loans), plus the notes representing such loans.
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METLIFE DEFINED CONTRIBUTION GROUP 100
<PAGE>
DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
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ARTICLE 13
MAXIMUM LIMITATIONS ON ALLOCATIONS
13.1 Section 415 Definitions. For purposes of this Article 13, the
following definitions apply:
(a) Annual additions means the sum of the following amounts allocated
on behalf of a participant for a limitation year:
(i) all employer contributions (including compensation reduction
amounts under any profit-sharing plan with a qualified compensation reduction
feature under Code Section 401(k)),
(ii) all forfeitures, and
(iii) all after-tax employee contributions.
For this purpose, any excess amount applied under Section 13.7 to
reduce employer contributions will be considered annual additions for such
limitation year.
(iv) Amounts allocated after March 31, 1984, to an individual
medical account (as defined in Code Section 415(1)(2)) which is part of a
pension or annuity plan maintained by the employer are treated as annual
additions to a defined contribution plan. Also, amounts derived from
contributions paid or accrued after December 31, 1985, in taxable years ending
after such date which are attributable to post-retirement medical benefits
allocated to the separate account of a key employee (as defined in Code Section
419A(d)(3) under a welfare benefit fund (as defined in Code Section 419(e))
maintained by the employer, are treated as annual additions to a defined
contribution plan.
(b) Compensation. As elected by the employer in the adoption agreement
compensation shall mean all of the participant's compensation as defined below,
except that elective deferrals, etc., will not be included even if they are for
other plan purposes. However, elective deferrals will not be included for Code
section 415 compensation or the top-heavy minimum at plan section 14.3(b):
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METLIFE DEFINED CONTRIBUTION GROUP 101
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DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
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(1) Information required to be reported under sections 6041, 6051,
and 6052 of the Code. (Wages, Tips and Other Compensation as reported on Form
W-2) Compensatin is defined as wages as defined in section 3401(a) and all other
payments of compensation to an employee by the employer (in the course of the
employer's trade or business) for which the employer is required to furnish and
employee a written statement under sections 6041(d), 6051(a)(3) and 6052 of the
Code. Compensation must be determined without regard to any rules under section
3401(a) that limit the remuneration included in wages based on the nature or
location of the employment or the services performed (such as the exception for
agricultural labor in section 3401(a)(2)).
(2) Section 3401(a) wages. Compensation is defined as wages within the
meaning of section 3401(a) for the purposes of income tax withholding at the
source but determined without regard to any rules that limit the remuneration
included in wages based on the nature or location of the employment or the
services performed (such as the exception for agricultural labor in section
3401(a)(2)).
(3) 415 safe-harbor compensation. Compensation is defined as wages,
salaries, and fees for professional services and other amounts received (without
regard to whether or not an amount is paid in cash) for personal services
actually rendered in the course of employment with the employer maintaining the
plan to the extent that the amounts are includable in gross income (including,
but not limited to, commissions paid salesmen, compensation for services on the
basis of a percentage of profits, commissions on insurance premiums, tips,
bonuses, fringe benefits, and reimbursements, or other expense allowances under
a nonaccountable plan (as described in Reg. Sec. 1.62-2(c))), and excluding the
following:
(i) employer contributions to a plan of deferred compensation
which are not includible in the employee's gross income for the taxable year in
which contributed, or employer contributions under a simplified employee pension
plan to the extent such contributions are deductible by the employee, or any
distributions from a plan of deferred compensation;
(ii) amounts realized from the exercise of a non-qualified stock
option or when restricted stock (or property) held by the employee either
becomes freely transferable or is no longer subject to a substantial risk of
forfeiture;
(iii) amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified stock option; and
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METLIFE DEFINED CONTRIBUTION GROUP 102
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DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
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(iv) other amounts which received special tax benefits or
contributions made by the employer (whether or not under a salary reduction
agreement) towards the purchase of an annuity described in Section 403(b) of the
Code (whether or not the amounts are actually excludable from the gross income
of the employee).
(4) For any self-employed individual compensation will mean
earned income.
(5) For limitation years beginning after December 31, 1991, for
purposes of applying the limitations of this article, compensation for a
limitation year is the compensation actually paid or includible in gross income
during such year.
Notwithstanding the preceding sentence, compensation for a
participant who is permanently and totally disabled (as defined in Section
22(e)(3) of the Code) is the compensation such participant would have received
for the limitation year if the participant had been paid at the rate of
compensation paid immediately before becoming permanently and totally disabled;
such imputed compensation for the disabled participant may be taken into account
only if the participant is not a highly compensated employee (as defined in
Section 5.8 of the Plan) and contributions made on behalf of such participant
are nonforfeitable when made.
(c) Employer means the employer that adopts this plan and all members
of a controlled group of corporations (as defined in Section 414(b) of the Code
as modified by Section 415(h)), all trades or businesses (whether or not
incorporated) which are under common control as defined in Section 414(c) of the
Code as modified by Section 415(h)), all affiliated service groups (as defined
in Section 414(m) of the Code) of which the adopting employer is a part, and all
entities aggregated with the employer under Code Section 414(o).
(d) Defined benefit fraction for any year means a fraction:
(i) whose numerator is the sum of the participant's projected annual
benefits under all the defined benefit plans (whether or not terminated)
maintained by the employer, and
(ii) whose denominator of which is the lesser of 125 percent of the
dollar limitation determined for the limitation year under sections 415(b) and
(d) of the Code or 140 percent of the highest average compensation, including
any adjustments under section 415(b) of the Code.
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METLIFE DEFINED CONTRIBUTION CROUP 103
<PAGE>
DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
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Notwithstanding the above, if the participant was a participant as of
the first day of the first limitation year beginning after December 31, 1986, in
one or more defined benefit plans maintained by the employer which were in
existence on May 6, 1986, the denominator of this fraction will not be less than
125 percent of the sum of the annual benefits under such plans which the
participant had accrued as of the close of the last limitation year beginning
before January 1, 1987, disregarding any changes in the terms and conditions of
the plan after May 5, 1986. The preceding sentence applies only if the defined
benefit plans individually and in the aggregate satisfied the requirements of
section 415 for all limitation years beginning before January 1, 1987.
(e) Defined contribution fraction for any year means a fraction:
(i) whose numerator is the sum of the annual additions to the
participant's account under all the defined contribution plans (whether or not
terminated) maintained by the employer for the current and all prior limitation
years (including the annual additions attributable to the participant's
nondeductible employee contributions to all defined benefit plans, whether or
not terminated, maintained by the employer and the annual additions attributable
to all welfare benefit funds (as defined in Section 419(e) of the Code) and
individual medical accounts as defined in section 415(1)(2) of the Code, and
(ii) whose denominator is the sum of the maximum aggregate amounts for
the current and all prior limitation years of service with the employer
(regardless of whether a defined contribution plan was maintained by the
employer). The maximum aggregate amount in any limitation year is the lesser of
(A) 1.25 multiplied by the dollar limitation determined under sections 415(b)
and (d) of the Code, or (B) 35% of the participant's compensation for such
year.
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METLIFE DEFINED CONTRIBUTION GROUP 104
<PAGE>
DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
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If the employee was a participant as of the end of the first day of
the first limitation year beginning after December 31, 1986, in one or more
defined contribution plans maintained by the employer which were in existence on
May 6, 1986, the numerator of the defined contribution fraction will be adjusted
if the sum of the defined contribution fraction and the defined benefit fraction
would otherwise exceed 1.0 under the terms of this plan. Under the adjustment an
amount equal to the product of (i) the excess of the sum of the fractions over
1.0 times (ii) the denominator of the defined contribution fraction will be
permanently subtracted from the numerator of the defined contribution fraction.
The adjustment is calculated using the fractions as they would be computed as of
the end of the last limitation year beginning before January 1, 1987, and
disregarding any changes in the terms and conditions of the plan made after May
5, 1986, but using the section 415 limitation applicable to the first limitation
year beginning on or after January 1, 1987. The annual addition for any
limitation year beginning before January 1, 1987 shall not be recomputed to
treat all employee contributions as annual additions.
(f) Excess amount means the excess of the participant's annual
additions for the limitation year over the maximum permissible amount.
(g) Highest average compensation means the average compensation for
the three consecutive years of plan service with the employer that produce the
highest average.
(h) Limitation year means the calendar year or another 12-consecutive
month period elected by the employer in the adoption agreement. All qualified
plans of the employer must use the same limitation year. If the limitation year
is amended to a different 12-consecutive month period, the new limitation year
must begin on a date within the limitation year in which the amendment is made
(or any other 12-consecutive month period adopted for all plans of the employer
pursuant to a written resolution adopted by the employer).
(i) Master or prototype plan means a plan the form of which is the
subject of a favorable opinion letter from the Internal Revenue Service.
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METLIFE DEFINED CONTRIBUTION GROUP 105
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DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
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(j) Maximum permissible amount. The maximum annual addition that may
be contributed or allocated to a participant's account under the plan for any
limitation year shall not exceed the lesser of (i) the defined contribution
dollar limitation or (ii) 25 percent of the participant's compensation for the
limitation year. The compensation limitation referred to in (ii) shall not apply
to any contribution for medical benefits (within the meaning of section 401(h)
or section 419A(f)(2) of the Code) which is otherwise treated as an annual
addition under section 415(1)(1) or 419A(d)(2) of the Code. If a short
limitation year is created because of an amendment changing the limitation year
to a different 12 consecutive month period, the maximum permissible amount for
the short limitation year will not exceed the amount set forth in clause (i) of
the preceding sentence multiplied by a fraction whose numerator is the number of
months in the short limitation year and whose denominator is 12.
(k) Projected annual benefit means the annual retirement benefit
(adjusted to an actuarially equivalent straight life annuity if such benefit is
expressed in a form other than a straight life annuity or qualified joint and
survivor annuity) to which the participant would be entitled under the terms of
the plan assuming his employment continues until normal retirement age under the
plan (or current age, if later), and his compensation for the current limitation
year and all other relevant factors used to determine benefits under the plan
will remain constant for all future limitation years.
(1) Defined contribution dollar limitation means $30,000 or if
greater, one-fourth of the deemed benefit dollar limitation set forth in section
415(b)(1) of the Code as in effect for the limitation year.
13.2 No Participation in Other Qualified Plans. If the participant does not
participate in, and has never participated in another qualified plan or a
welfare benefit fund, as defined in Code Section 419(e), maintained by the
employer, or an individual medical account, as defined in section 415(1)(2) of
the Code, maintained by the employer, which provides an annual addition as
defined in section 13.1(a), the amount of annual additions which may be
allocated under this plan on a participant's behalf for a limitation year may
not exceed the lesser of the maximum permissible amount or any other limitation
contained in this plan. If the employer contribution that would otherwise be
contributed or allocated to the participant's account would cause the annual
additions for the limitation year to exceed the maximum permissible amount, the
amount contributed or allocated will be reduced under Section 13.7 so that the
annual additions for the limitation year will equal the maximum permissible
amount.
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METLIFE DEFINED CONTRIBUTION GROUP 106
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DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
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13.3 Participation in Other Qualified Master or Prototype Defined
Contribution Plans. If, in addition to this plan, the participant is covered
under any other qualified master or prototype defined contribution plan
maintained by the employer or a welfare benefit fund (as defined in Code Section
419(e)) maintained by the employer or an individual medical account as deemed in
Code Section 415(1)(2), maintained by the employer which provides an annual
addition as defined in Section 13.1 during any limitation year, the amount of
annual additions which may be credited under this plan on a participant's behalf
for a limitation year may not exceed the maximum permissible amount, reduced by
the sum of any annual additions allocated to the participant's accounts for the
same limitation year under such other defined contribution plans and welfare
benefit funds. If the annual additions with respect to the participant under
other defined contribution plans and welfare benefit funds maintained by the
employer are less that the maximum permissible amount and the employer
contribution that would otherwise be contributed or allocated to the
participant's account under this plan would cause the annual additions for the
limitation year to exceed this limitation, the amount contributed or allocated
will be reduced so that the annual additions under all such plans and funds for
the limitation year will equal the maximum permissible amount. If the annual
additions with respect to the participant under such other defined contribution
plans and welfare benefit funds in the aggregate are equal to or greater than
the maximum permissible amount, no amount will be contributed or allocated to
the participant's account under this plan for the limitation year.
13.4 Participation In Another Qualified Plan, Other Than Master or
Prototype Plans. If the participant is covered by another plan which is a
qualified defined contribution plan other than a master or prototype plan,
annual additions allocated under this plan on behalf of any participant will be
limited in accordance with the provisions of Section 13.3 through 13.6, as
though the other plan were a master or prototype plan, unless the employer
provides other limitations in the adoption agreement.
13.5 Estimated Limitation. Before determining a participant's actual
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. Any employer contribution (including allocation
of forfeitures) based on estimated annual compensation will be reduced by any
excess amounts carried over from prior years. As soon as administratively
feasible after the end of the limitation year, the maximum permissible amount
for the limitation year will be determined on the basis of the participant's
actual compensation for such limitation year.
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METLIFE DEFINED CONTRIBUTION GROUP 107
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DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
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13.6 Apportionment Between Plans.
(a) If pursuant to section 13.5 or as a result of the allocation of
forfeitures, a participant's annual additions under this plan and such other
plans would result in an excess amount for a limitation year, the excess amount
will be deemed to consist of the annual additions last allocated, except that
annual additions attributable to a welfare benefit fund or individual medical
account will be deemed to have been allocated first regardless of the actual
allocation date.
(b) If, in the application of Section 13.3, an excess amount was
allocated to a participant on an allocation date of this plan which coincides
with an allocation date of another plan, the excess amount attributed to this
plan will be the product of:
(i) the total excess amount allocated as of such date, times
(ii) the ratio of (A) annual additions allocated to the
participant for the limitation year as of such date under this plan, to (B) the
total annual additions allocated to the participant for the limitation year as
of such date under this and all other qualified master or prototype defined
contribution plans.
(c) Any excess amounts attributed to this plan will be disposed of as
provided in Section 13.7.
13.7 Excess Amounts. If there is an excess amount with respect to a
participant for a limitation year, such excess amount will be disposed of as
follows:
(a) Any elective deferrals or after tax employee contributions will be
returned to the participant to the extent that the distribution or return would
reduce the excess amounts in the participant's account.
(b) If after the application of subsection (a) an excess amount still
exists, and the participant is covered by the plan at the end of the limitation
year, the excess amount in the participant's account will be used to reduce
employer contributions (including any allocation of forfeitures) for such
participant in the next limitation year, and each succeeding year if necessary.
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METLIFE DEFINED CONTRIBUTION GROUP 108
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DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
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(c) If after the application of subsection (a) an excess amount still
exists and the participant is not covered by the plan at the end of a limitation
year, the excess amounts will be held unallocated in a suspense account. The
suspense account will be applied 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. Any such
suspense account will not participate in the allocation of the trust's
investment gains and losses.
(d) If a suspense account is in existence at any time during a
particular limitation year, all amounts in the suspense account must be
allocated and reallocated to participants' accounts before any employer or any
employee contributions may be made to the plan for that limitation year. Excess
amounts may not be distributed to participants or former participants.
13.8 Defined Benefit and Defined Contribution Plan. If the employer
maintains or at any time maintained, a qualified defined benefit plan (other
than a defined benefit plan which is a paired plan with this plan) covering any
participant in this plan, the sum of the participant's defined benefit plan
fraction and defined contribution plan fraction will not exceed 1.0 in any
limitation year. The annual additions which may be credited to the participant's
account under this plan for any limitation year will be limited in accordance
with the adoption agreement.
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METLIFE DEFINED CONTRIBUTION GROUP 109
<PAGE>
DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
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ARTICLE 14
TOP-HEAVY PROVISIONS
14.1 Application of Article. If the plan is or becomes top-heavy in any
plan year beginning after December 31, 1983, the provisions of this Article 14
will supersede any conflicting provision in the plan or adoption agreement
(except provisions added or attached to the adoption agreement to coordinate the
top-heavy minimum contributions or benefits with another plan of the employer).
14.2 Top-Heavy Definitions.
(a) Key employee means any employee or former employee (and the
beneficiaries of such employee) who at any time during the determination period
was (i) an officer of the employer if such individual's annual compensation
exceeds 50 percent of the dollar limitation under Code Section 415(b)(1)(A);
(ii) an owner (or considered an owner under Section 318 of the Code) of one of
the ten largest interests in the employer if such individual's compensation
exceeds 100 percent of the dollar limitation under Section 415(c)(1)(A) of the
Code; (iii) a 5-percent owner of the employer; or (iv) a 1 percent owner of the
employer who has an annual compensation of more than $150,000. Annual
compensation means compensation as defined in section C of the Adoption
Agreement, but including amounts contributed by the employer pursuant to a
salary reduction agreement which are excludible from the employee's gross income
under section 125, section 402(e)(3), section 402(h)(1)(B) or section 403(b) of
the Code. The determination period is the plan year containing the determination
date and the 4 preceding plan years. The determination of who is a key employee
will be made in accordance with Section 416(i)(1) of the Code and the
regulations thereunder.
(b) Top-heavy plan means this plan if any of the following conditions
exist for any plan year:
(i) If the top-heavy ratio for this plan exceeds 60% and this
plan is not part of any required aggregation group or permissive aggregation
group of plans.
(ii) If this plan is a part of a required aggregation group of
plans but not part of a permissive aggregation group and the top-heavy ratio for
the group of plans exceeds 60%.
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(iii) If this plan is a part of a required aggregation group and part
of a permissive aggregation group of plans and the top-heavy ratio for the
permissive aggregation group exceeds 60%.
(c) Top-heavy ratio means the following:
(i) If the employer maintains one or more defined contribution plans
(including any simplified employee pension plan) and the employer has not
maintained any defined benefit plan which during the 5-year period ending on the
determination date(s) has or has had accrued benefits, the top-heavy ratio for
this plan alone or for the required or permissive aggregation group as
appropriate is a fraction, the numerator of which is the sum of the account
balances of all key employees as of the determination date(s) (including any
part of any account balance distributed in the 5-year period ending on the
determination date(s)), and the denominator of which is the sum of all account
balances (including any part of any account balance distributed in the 5-year
period ending on the determination date(s)), both computed in accordance with
Section 416 of the Code and the regulations thereunder. Both the numerator and
denominator of the top heavy ratio are increased to reflect any contribution not
actually made as of the determination date but which is required to be taken
into account on that date under Section 416 of the Code and the regulations
thereunder.
(ii) If the employer maintains one or more defined contribution plans
(including any simplified employee pension plan) and the employer maintains or
has maintained one or more defined benefit plans which during the 5-year period
ending on the determination date(s) has or has had any accrued benefits, the
top-heavy ratio for any required or permissive aggregation group as appropriate
is a fraction, the numerator of which is the sum of account balances under the
aggregated defined contribution plan or plans for all key employees, determined
in accordance with (i) above, and the present value of accrued benefits under
the aggregated defined benefit plan or plans for all key employees as of the
determination date(s), and the denominator of which is the sum of the account
balances under the aggregated defined contribution plan or plans for all
participants determined in accordance with (i) above, and the present value of
accrued benefits under the aggregated defined benefit plan or plans for all
participants as of the determination date(s), all determined in accordance with
Section 416 of the Code and the regulations thereunder. The accrued benefits
under a defined benefit plan in both the numerator and denominator of the top-
heavy ratio are increased for any distribution of an accrued benefit made in the
5-year period ending on the determination date.
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(iii) For purposes of (i) and (ii) above the value of account
balances and the present value of accrued benefits will be determined as of the
most recent valuation date that falls within or ends with the 12 month period
ending on the determination date, except as provided in Code Section 416 and the
regulations thereunder for the first and second plan years of a defined benefit
plan. The account balances and accrued benefits of a participant who is not a
key employee but who was a key employee in a prior year, or who has not been
employed by any employer maintaining the plan at any time during the 5-year
period ending on the determination date will be disregarded. The calculation of
the top-heavy ratio, and the extent to which distributions, rollovers, and
transfers are taken into account will be made in accordance with Code Section
416 and the regulations thereunder. Qualified voluntary employee contributions
will not be taken into account for purposes of computing the top heavy ratio.
When aggregating plans, the value of account balances and accrued benefits will
be calculated with reference to the determination dates that fall within the
same calendar year.
The accrued benefit of a participant other than a key employee
shall be determined under (a) the method, if any, that uniformly applies for
accrual purposes under all defined benefit plans maintained by the employer, or
(b) if there is no such method, as if such benefit accrued not more rapidly than
the slowest accrual rate permitted under the fractional rule of section
411(b)(1)(C) of the Code.
(d) Permissive aggregation group means the required aggregation group
of plans plus any other plan of the employer which, when considered as a group
with the required aggregation group, would continue to satisfy the requirements
of Code Sections 401(a)(4) and 410.
(e) Required aggregation group means (i) each qualified plan of the
employer in which at least one key employee participates or participated at any
time during the determination period (regardless of whether the plan has
terminated), and (ii) any other qualified plan of the employer which enables a
plan described in subsection (i) to meet the requirements of Code Sections
401(a)(4) or 410.
(f) Determination date for any plan year subsequent to the first plan
year means the last day of the preceding plan year, and for the first plan year
of the plan, the last day of that year.
(g) Valuation date is the date as of which account balances or accrued
benefits are valued for purposes of calculating the top-heavy ratio. The
valuation date is the determination date.
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(h) Present value of benefits for purposes of computing the top-heavy
ratio will be discounted only for mortality and interest. Unless adopted
otherwise, the following factors will apply: five percent interest and the
UP-1984 mortality table.
14.3 Minimum Allocation.
(a) Except as otherwise provided in (3) and (4) below, the employer
contributions and forfeitures allocated on behalf of any participant who is not
a key employee shall not be less than the lesser of (i) 3% of such participant's
compensation, or (ii) in the case where the employer has no defined benefit plan
which designates this plan to satisfy Section 401 of the Code, the largest
percentage of employer contributions and forfeitures, as a percentage of the key
employee's compensation, as limited by section 401(a)(17) of the Code, allocated
on behalf of any key employee for that year. The minimum allocation is
determined without regard to any social security contribution. This minimum
allocation shall be made even though, under other plan provisions, the
participant would not otherwise be entitled to receive an allocation or would
have received a lesser allocation for the year because of the participant's
failure to complete any required amount of service (or any equivalent provided
in the plan), the participant's failure to make mandatory employee contributions
to the plan or compensation less than a stated amount. However, this section
does not apply to any participant who was not employed by the employer on the
last day of the plan year. Neither Elective Deferrals nor Matching Contributions
may be taken into account for the purpose of satisfying the minimum top-heavy
contribution requirement.
(b) For purposes of computing the minimum allocation, compensation
will mean plan compensation as defined in Section C of the Adoption Agreement as
limited by section 401(a)(17) of the Code. Compensation for this purpose will
include any compensation to a participant during a plan year before he became a
participant or after he ceased to be a participant.
(c) The minimum allocation required (to the extent required to be
nonforfeitable under Code Section 416(b)) may not be forfeited under Code
Section 411(a)(3)(B) or 411(a)(3)(D)
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14.4 Apportionment of Minimum Benefits Between Multiple Plans.
(a) To prevent duplication of the minimum allocation required under
Section 14.3(a) above, if any participant in this plan is covered under any
other defined contribution plan or plans of the employer (whether or not such
plans are paired plans), the required minimum allocation will be satisfied first
from the money purchase plan, if any, and the minimum required allocation from
the profit-sharing plan (or plans) will be reduced by the minimum allocation
provided under the money purchase plan.
(b) The provisions in Section 14.3(a) will not apply to any
participant to the extent the participant is covered under a defined benefit
plan (or plans) of the employer and the employer has provided in the adoption
agreement that the minimum allocation or benefit requirement applicable to top-
heavy plans will be met in the other plan or plans.
14.5 Minimum Vesting Schedule. For any plan year in which this plan is top-
heavy, one of the top-heavy vesting schedules elected by the employer in the
adoption agreement will automatically apply to the plan. The top-heavy vesting
schedule applies to all accrued benefits within the meaning of Section 411(a)(7)
of the Code except those attributable to 401(k) savings contributions or after-
tax employee contributions, including benefits accrued before the effective date
of Code Section 416 and benefits accrued before the plan became top-heavy.
Further, no decrease in a participant's nonforfeitable percentage may occur in
the event the plan's status as top-heavy changes for any plan year. However,
this section does not apply to the account balances of any employee who does not
have an hour of service after the plan has initially become top-heavy and such
employee's account balance attributable to employer contributions and
forfeitures will be determined without regard to this section.
14.6 Top Heavy Adjustments in Section 415 Fractions. If the plan is a top-
heavy plan for any plan year, the denominators of the defined benefit fraction
and the defined contribution fraction will be determined for a plan year by
substituting "1.0" for "1.25" each time it appears in Section 13.1, unless the
employer provides in the adoption agreement for the additional top heavy minimum
benefit requirements of Code Section 416(h) and provided further that this plan
is not super top-heavy. This plan is super top-heavy in any plan year if it
would be top-heavy under Section 14.2(b) substituting 90% for 60% wherever 60%
appears.
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14.7 Additional Provisions For Paired Defined Contribution and Defined
Benefit Plans.
(a) This section is applicable if the employer has adopted paired
plans of the sponsor which include a defined benefit plan and one or more
defined contribution plans.
(b) (i) This subsection (b) will apply in any plan year for which the
plan is top-heavy but not super top-heavy unless in the adoption agreement for
the employer's paired defined benefit plan, the employer has elected to apply
the defined benefit fraction and the defined contribution fraction in all plan
years by substituting "1.0" for "1.25" in each place it appears in Section 13.1.
(ii) The defined contribution plan employer contributions and
forfeitures allocated on behalf of any participant who is not a key employee
will not be less than the amount provided in (A) below unless in the adoption
agreement for the employer's paired defined benefit plan the employer elects to
provide the top-heavy minimum accrued benefit in such defined benefit plan and
to have (B) below apply in this plan:
(A) For each non-key employee who is not a participant in
paired defined benefit plan, 4% of his compensation; or for each non-key
employee who is also a participant in the paired defined benefit plan, 7-1/2%
of his compensation.
(B) For each non-key employee who is not a participant in
the paired defined benefit plan, 4% of his compensation; or for each plan, no
minimum contribution (because he will receive the 3% minimum accrued benefit
under the paired defined benefit plan).
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(c) (i) This subsection (c) will apply in any plan year in which the
plan is super top-heavy or in all plan years if in the adoption agreement for
the employer's paired defined benefit plan, the employer has elected to apply
the defined benefit fraction and the defined contribution fraction in all plan
years by substituting "1.0" for "1.25" in each place it appears in Section 13.1.
(ii) The defined contribution plan employer contributions and
forfeiture allocated on behalf of any participant who is not a key employee will
not be less than the amount provided in (A) below unless in the adoption
agreement for the employer's paired defined benefit plan the employer elects to
provide the top-heavy minimum accrued benefit in such defined benefit plan and
to have (B) below apply in this plan:
(A) For each non-key employee who is not a participant in
paired defined benefit plan, 3% of his compensation; or for each non-key
employee who is also a participant in the paired defined benefit plan, 5% of his
compensation.
(B) For each non-key employee who is not a participant in
the paired defined benefit plan, 3% of his compensation; or for each non-key
employee who is also a participant in the paired defined benefit plan, no
minimum contribution (because he will receive the 2% minimum accrued benefit
under the paired defined benefit plan).
(d) Provisions similar to Sections 14.3(b) and (c) and 14.4(a) will
apply to minimum allocations under this section.
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ARTICLE 15
ACCOUNTS AND INVESTMENTS
15.1 Separate Accounts.
(a) The plan administrator shall create and maintain separate accounts
for each participant's 401(k) savings contributions, after-tax employee
contributions, employer contributions, matching employer contributions, and
rollover contributions (and any qualified voluntary employee contributions); a
participant's rollover account may contain subaccounts as provided in Section
7.1(a)(ii). Earnings will be credited to such accounts (and subaccounts) in
accordance with the provisions of this article. Such accounts will be primarily
for accounting purposes and will not restrict the operation of the trust or
require separate earmarked investments for any account; however, specific
investments may be earmarked to participants' accounts if a permitted investment
medium under Section 15.2 so provides.
(b) The plan administrator may itself maintain records of
participants' accounts or the plan administrator may arrange for such records to
be maintained by an outside service provider (which may be the sponsor or
trustee or a contractor of the sponsor or trustee). If the plan administrator
arranges with a service provider to maintain records of participants' accounts,
the plan administrator will provide such information as is necessary for the
service provider to maintain such accounts as required herein.
15.2 Investment Media; Participant Investment Directions.
(a) The METLIFE SECURITY INSURANCE COMPANY OF LOUISIANA/METLIFE
DEFINED CONTRIBUTION GROUP PROGRAM may impose requirements concerning the
investment media or vehicles in which contributions to the employer's plan must
be invested, and the employer agrees to observe such requirements as a condition
of participating in this prototype plan.
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(b) Subject to any requirements imposed under subsection (a) above,
permissible investment media may include, but are not limited to, contracts
issued by an insurance company (including such contracts providing for
investments in a separate account maintained by the insurance company),
segregated accounts invested in one or more of savings or notice accounts,
deposits in or certificates issued by a bank, insurance or annuity contracts,
assets specified by the participant (Section 15.4), or shares of one or more
investment companies or mutual funds (Section 15.6). In addition, if elected in
the adoption agreement, the plan may invest in qualifying employer securities as
permitted under ERISA Section 407(d)(3).
(c) Unless the adoption agreement otherwise provides, the employer
shall have the sole discretion to direct the investment of the employer's
contributions to a money purchase plan or target benefit plan among the
permissible investment media. Unless the adoption agreement otherwise provides,
participants shall have the sole discretion to direct the investment of all
contributions to a profit-sharing plan or 401(k) plan among the permissible
investment media.
(d) Subject to the sponsor's requirements under subsection (a) above,
the employer will determine the investment of any account over which the
participant does not exercise investment control under subsection (c) above. In
making such investment determinations, the employer will establish investment
policies or rules of general application which do not discriminate among
participants.
(e) This subsection will apply where participants' accounts under the
employer's plan are commingled for investment purposes (in contrast to
segregated accounts whose valuation is governed by Section 15.4). In such a
case, the assets of the plan (or each separate investment fund thereunder
consisting of investments in a particular investment vehicle) will be valued at
their fair market value as of each valuation date. As of each valuation date,
the investment earnings and gains or losses in asset value since the preceding
valuation date will be allocated to participants' accounts in the plan (or in
each separate investment fund) in proportion to the balance in each such account
as a fraction of the aggregate account balances as of the preceding valuation
date. The last business day of the plan year is a valuation date; the sponsor or
employer may designate other valuation dates.
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15.3 Rules for Exercise of Investment Options. Any designation of
investments by participants will be subject to nondiscriminatory general rules
established by the plan administrator or the METLIFE DEFINED CONTRIBUTION GROUP
PROGRAM; such rules may include:
(a) restrictions on the minimum amount or percentage of any
contribution which may be placed in any particular investment medium;
(b) restrictions on the use of different amounts or percentages for
different types of contributions;
(c) minimums or maximums (or both) on the amount which may be invested
or transferred to or from any particular investment medium; and
(d) restrictions on the time and frequency of designations, changes in
designations and transfers from one investment medium to another including the
required advance notice.
These rules may differ for different types of contributions. The
effective date of any change in a participant's election respecting allocation
of contributions among investment options or any transfer from one option to
another must coincide with a valuation date for each option.
15.4 Segregated Accounts.
(a) The provisions of this section will apply to the extent that the
sponsor or employer designates segregated accounts as permitted investment
media. A segregated account is one in which all or a portion of one or more of a
participant's accounts are invested in individual investments which are not
commingled with investments for other participants' accounts. Examples of
investments for segregated accounts include, but are not limited to, interest
bearing savings or notice accounts or certificates or other savings instruments
maintained or issued by a bank or other thrift institution, life insurance or
annuity contracts issued by a life insurance company authorized to issue such
contracts in the state, or self-directed investment accounts. Earnings and
investment gains and losses of assets held in a segregated account and dividends
or credits earned on insurance contracts will be credited solely to such
account.
(b) Where the employer designates self-directed accounts as a
permissible investment medium, the participant will be subject to such
administrative rules and restrictions on permissible investments as the sponsor
may impose. However, such rules and restrictions will not conflict with the
terms of this plan.
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(c) The last business day of the plan year is a valuation date for
segregated accounts. The sponsor or employer may designate other valuation
dates. The trustee will determine the fair market value of the plan's segregated
accounts as of each valuation date and will report such value of the plan
administrator. Each participant with a self-directed account will arrange for a
statement of the value of the assets therein as of each valuation date and will
provide such statement to the trustee; the trustee may rely upon such statement
in making the valuations referred to in the preceding sentence.
15.5 Life Insurance Contracts. Where the METLIFE DEFINED CONTRIBUTION GROUP
PROGRAM permits and the employer designates life insurance contracts as
permissible investment media, such contracts will be treated as segregated
investments held in a segregated account under Section 15.4, and the following
restrictions and rules will apply:
(a) Ownership of Contract. The trustee, if the Plan is trusteed, or
custodian, if the Plan has a custodial account, shall apply for and will be the
owner of any insurance contract purchased under the terms of this Plan. The
insurance contract(s) must provide that proceeds will be payable to the trustee
(or custodian, if applicable), however, the trustee (or custodian) shall be
required to pay over all proceeds of the contract(s) to the participant's
beneficiary in accordance with the distribution provisions of this plan. A
participant's spouse will be the designated beneficiary of the proceeds in all
circumstances unless a qualified election has been made in accordance with
section 9.5, Joint and Survivor Annuity Requirements, if applicable. Under no
circumstances will the trust (or custodial account) retain any part of the
proceeds.
Any dividends or credits earned on life insurance contracts will be
allocated to the account of the participant derived from employer contributions
in which the contract is held.
(b) Limits on Amounts.
(i) Ordinary life - For purposes of this subsection, ordinary
life insurance contracts are contracts with both nondecreasing death benefits
and nonincreasing premiums. If such contracts are purchased, less than 1/2 of
the aggregate employer contributions allocated to the participant will be used
to pay the premiums attributable to them.
(ii) Term and universal life - no more than 1/4 of the aggregate
employer contributions allocated to the participant will be used to pay the
premiums on term life insurance contracts, universal life insurance contracts,
and all other life insurance contracts which are not ordinary life.
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(iii) Combination - The sum of 1/2 of the ordinary life
insurance premiums and all other life insurance premiums will not exceed 1/4 of
the aggregate employer contributions allocated to the participant.
(c) Distributions. Upon commencement of benefits, life insurance
contracts on a participant's life will be converted to cash or an annuity and
distributed to the participant, subject to the plan's provisions on
distributions.
(d) Conflicts. In the event of any conflict between the terms of this
plan and the terms of any insurance contract hereunder, the plan provisions will
control.
(e) Transaction with Participant. The purchase and sale of policies
between a participant and the trustee will be permitted in conformance with the
applicable class exemption from prohibited transactions issued by the Department
of Labor.
15.6 Mutual Fund Shares.
(a) The provisions of this section will apply to the extent that the
sponsor or employer designates share of one or more investment companies or
mutual funds as permitted investment media.
(b) The trustee will as soon as reasonably practicable after receipt
of a contribution invest such contribution in shares and fractional shares of
such mutual funds in accordance with the investment instructions applicable to
such contribution.
(c) Upon receipt of instructions to transfer an amount invested in one
mutual fund to another mutual fund, the trustee will as soon as reasonably
practicable thereafter redeem sufficient shares of one mutual fund and purchase
shares of the other mutual fund in order to carry out such instructions; such
transfer may be carried out by exchange or shares if permitted by the mutual
funds involved.
(d) Upon receipt of instructions to redeem shares, the trustee will
redeem shares in one or more mutual funds as instructed in order to make a cash
disbursement, whether a plan distribution or withdrawal, loan, payment of
expenses or otherwise.
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(e) The trustee will reinvest all dividends and capital gains or other
distributions received on shares of a mutual fund in additional shares of such
fund; where permitted such investment will be carried out by the trustee's
electing to receive such dividends and distributions in the form of additional
shares.
(f) All mutual fund shares purchased, received, redeemed or exchanged
by the trustee under the foregoing subsections of this section will be credited
to or debited from the appropriate account as directed by the plan
administrator. All such transactions will be effected at the current public
offering price or net asset value of the mutual fund shares or as otherwise
described in the then current prospectus pertaining to such mutual fund.
(g) Investment income and gains or losses in value of each mutual fund
in which participants' accounts are invested will automatically and continuously
be credited or debited as a function of the net asset value of the shares of
such fund and the reinvestment of dividends and other distributions in
additional shares of such fund. Accordingly, to the extent that the assets of
the employer's plan are invested in shares of such mutual funds, each business
day will be a valuation date.
With respect to mutual funds which are not open end funds, the last
business day of the plan year is a valuation date. The employer may designate
other valuation dates with the consent of the trustee. The trustee will
determine the fair market value of the shares of such mutual funds as of each
valuation date and will report such value to the plan administrator.
(h) The trustee will deliver to the plan administrator any notices of
shareholder meetings, proxy and proxy-soliciting materials, prospectuses and
annual or other reports to shareholders received by the trustee relating to
shares of a mutual fund held in the trust fund. The plan administrator will in
turn deliver such items to each participant whose account is invested in such
shares. Within the time limit imposed by the trustee or the plan administrator,
each participant may indicate in writing how the shares credited to his accounts
are to be voted. The plan administrator will deliver such written instructions
to the trustee who will vote the shares in the manner indicated.
Alternatively, arrangements may be made whereby the mutual fund or
investment company sends any such materials directly to the participant and the
participant sends voting instructions directly to the mutual fund or investment
company.
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15.7 Expenses. Any fees and expenses will be paid by the employer unless it
elects not to pay any or all such fees and expenses; in such event, any fee or
expense not paid by the employer will be paid from the trust and will be
allocated to the accounts of participants or to collective investment funds in
which accounts are invested in a manner which reasonably reflects the accounts
and investment funds that generated such fees and expenses. Approximations may
be used whenever it is not feasible to allocate such expenses on an exact basis.
The employer may reimburse the trust for any fees and expenses paid by the
trust. Such reimbursement shall not be deemed to be a contribution for purposes
of Code Sections 404 and 415.
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ARTICLE 16
ADMINISTRATION OF THE PLAN
16.1 Plan Administrator. The employer will be the plan administrator for
purposes of ERISA, and any reference in this document or the adoption agreement
to the plan administrator means the employer. The employer may in the adoption
agreement designate an individual or a group of individuals acting as a
committee to act of the employer's behalf in carrying out its duties as plan
administrator. Such persons may, but need not, be plan participants or
employees, partners, or officers of the employer. The employer will notify the
trustee of any such appointment. The employer may remove any such individual or
committee member at any time with or without cause, by filing written notice of
his removal with the trustee. Any such individual or committee member may resign
at any time by filing his written resignation with the employer and the trustee.
A vacancy however arising, will be filled by the employer.
If the employer does not appoint an individual or committee to act for the
employer, the employer will carry out the responsibilities of the plan
administrator. If the employer is a sole proprietorship, in the event of the
sole proprietor's death, his executor or administrator will be the plan
administrator. If the employer is a partnership, in the event of the death of
all the partners, the executor or administrator of the last to die will be the
plan administrator.
16.2 Administration of Plan. The plan administrator is a named fiduciary of
the plan and will be the agent for receiving service of legal process on the
plan. He will control and manage the operation and administration of the plan
and will have all powers and authority necessary or appropriate to carry out its
provisions. He will interpret and apply all terms of the plan to particular
cases or circumstances. He will make all final determinations concerning
eligibility and status of employees, participants, vested interests, the right
to benefits and all other rights hereunder, and all other matters concerning
plan administration and interpretation. All determinations and actions of the
plan administrator are conclusive and binding upon the employer, employees,
beneficiaries, and all other persons, except as otherwise provided herein or by
law. The plan administrator will exercise his powers in a non-discriminatory
manner and will apply uniform administrative rules of general application to
insure that persons in similar circumstances are treated alike.
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16.3 Reporting and Disclosure. The plan administrator will prepare file,
submit, distribute or make available any documents, plan descriptions, reports,
statements, forms or other information to any government agency, employee,
former employee, or beneficiary as may be required by law or by the plan.
16.4 Records. The plan administrator will record his acts and decisions,
and will prepare and maintain all data and records necessary or helpful to the
plan's administration. The employer will supply all information required by the
plan administrator to administer the plan, and the plan administrator may rely
upon the accuracy of such information.
16.5 Compensation and Expenses. The plan administrator will serve without
compensation unless otherwise determined by the employer, but no employee of the
employer will be compensated for his service as plan administrator. All
reasonable expenses of operating and administering the plan will be paid by the
employer or from the assets of the trust fund, as provided in Section 15.7. Such
expenses include the compensation of all persons employed or retained by the
plan administrator (such as attorneys, accountants, actuaries, or other
consultants or specialists), premiums for insurance or bonds protecting the plan
or trust and required by law or deemed advisable by the plan administrator, and
all other fees, expenses or costs of plan administration.
16.6 Claims Procedure. Any request for benefits (the claim) by a
participant or his beneficiary (the claimant) will be filed in writing with the
plan administrator. Within a reasonable period after receipt of a claim, the
plan administrator will provide written notice to any claimant whose claim has
been wholly or party denied, including:
(a) the reasons for denial;
(b) the plan provisions on which the denial is based;
(c) any additional material or information necessary to perfect the
claim and the reasons it is necessary; and
(d) the plan's claims review procedure.
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DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
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A claimant will be given a full and fair review by the plan
administrator of the denial of his claim if he makes a written request for
review within sixty (60) days after notification of the denial. The claimant may
review pertinent documents and may submit issues and comments in writing. The
plan administrator will render a written decision on review promptly and will
include specific reasons for the decision and references to the plan provisions
on which the decision is based.
16.7 More than One Employer. If more than one employer has adopted the
plan, the employer designated in Part A of the adoption agreement will be
considered the employer for purposes of exercising certain powers and
administrative duties. In joining the plan, other employers delegate authority
to such employer to complete and select options in the adoption agreement and to
select permissible investment media under Article 15; to designate the plan
administrator and any other fiduciary; to amend or terminate the plan without a
separate written instrument from each joining employer, provided that any such
amendment or termination must apply equally to all adopting employers; to
determine the appropriate basis under which plan administrative expenses will be
shared or to redelegate that authority to the plan administrator; and to take,
or redelegate authority to the plan administrator to take, such other action as
may be necessary for the efficient and proper administration of the plan. Each
joining employer will retain the authority to terminate the plan for its own
employees. However, any amendment or termination of the plan which does not
uniformly apply to all members of a controlled group or affiliated service group
or other aggregated group (within the meaning of Sections 19.9, 19.10 and 19.11
hereof) will cause any standardized plan to be considered a non-standardized
plan so that the employers may not rely upon the plan's qualification under Code
Section 401(a) unless they obtain a determination letter to such effect from the
Internal Revenue Service.
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METLIFE DEFINED CONTRIBUTION GROUP 126
<PAGE>
DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
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ARTICLE 17
AMENDMENT, TERMINATION OR MERGER OF PLAN
17.1 Amendment by Sponsor. The sponsor may amend any or all provisions of
this prototype plan at any time without obtaining the consent of the employer,
and the employer (and each other adopting employer) hereby expressly delegates
authority to amend this plan to the sponsor. For purposes of sponsoring
organization amendments, the mass submitter shall be recognized as the agent of
the sponsoring organization. If the sponsoring organization does not adopt the
amendments made by the mass submitter, it will no longer be identical to or a
minor modifier of the mass submitter plan.
17.2 Amendment by Employer. Except for (a) changes of design options
selected in the adoption agreement, (b) amendments stated in the adoption
agreement which allow the plan to satisfy Section 415 of the Code or to avoid
duplication of minimums under Section 416 of the Code because of the required
aggregation of multiple plans, and (c) adding certain model amendments published
by the Internal Revenue Service which specifically provide that their adoption
will not cause the plan to be treated as individually designed, if the Employer
amends the plan or non-elective portions of the adoption agreement, for any
other reason, it will no longer participate in this prototype plan, but will be
considered to have an individually designed plan. Except as otherwise provided
in the Adoption Agreement, the Employer may amend this plan by having a person
authorized by its Board of Directors complete a new Adoption Agreement following
formal action of the Board of Directors approving the adoption of such
amendment. If the employer is not a corporation, the partners or sole proprietor
shall be authorized to approve an amendment to this plan by formal action and
authorize an individual to complete a new Adoption Agreement incorporating the
amendment.
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METLIFE DEFINED CONTRIBUTION GROUP 127
<PAGE>
DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
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17.3 Restrictions on Amendments. No amendment under Section 17.1 or 17.2
will:
(a) cause or permit any part of the assets of the trust to be diverted
to purposes other than the exclusive benefit of participants and their
beneficiaries, or cause or permit any portion of such assets to revert to or
become the property OF THE employer;
(b) retroactively deprive any participant of any benefit to which he
was entitled hereunder by reason of contributions made by the employer or the
participant before the amendment, unless such amendment is necessary to conform
the trust or plan to, or satisfy the conditions of any law, governmental
regulation or ruling or to permit the plan and trust to meet the requirements of
Sections 401(a) and 501(a) of the Code;
(c) decrease a participant's account balance, except to the extent
permitted under Section 412(c)(8) of the Code. For purposes of this paragraph, a
plan amendment which has the effect of decreasing a participant's account
balance or eliminating an optional form of benefit, with respect to benefits
attributable to service before the amendment shall be treated as reducing an
accrued benefit;
(d) if the vesting schedule of a plan is amended, for an employee who
is a participant as of the later of the date such amendment is adopted or the
date it becomes effective, cause the nonforfeitable percentage (determined as of
such date) of such employee's right to his employer-derived accrued benefit to
be less than his percentage computed under the plan without regard to such
amendment; also, in the event of an amendment affecting the vesting schedule of
the employer's plan, any participant with three or more years of service will
have his vesting determined under the pre-amendment vesting schedule if this
would result in such participant having a greater vested interest than under the
amended vesting schedule. For participants who do not have at least 1 hour of
service in any plan year beginning after December 31, 1988, the preceding
sentence shall be applied by substituting "5 years of service" for "3 years of
service" where such language appears;
(e) eliminate an optional form of distribution in violation of Code
Section 411; or
(f) increase or otherwise affect the duties, liabilities or rights of
the trustee unless the trustee consents thereto in writing.
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<PAGE>
DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
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17.4 Termination of Plan. The employer has established this plan with the
bona fide expectation and intention that it will continue to make contributions
indefinitely. However, circumstances not now foreseen or beyond the control of
the employer may make it impossible or inadvisable for the employer to continue
the plan. The employer may, therefore, in its discretion, discontinue
contributions or terminate the plan completely or partially at any time with
respect to its employees by delivering to the trustee a notice of complete or
partial termination specifying the date of termination of the plan and in the
case of a partial termination the participants affected by such partial
termination. The employer will be deemed to have completely terminated the plan
in the case of (a) complete discontinuance of contributions or (b) termination
of the employer's legal existence. The employer will incur no liability to any
person as a result of any discontinuance of contributions or complete or partial
termination of the plan. In the event of a termination or partial termination of
the plan, or in the event of complete discontinuance of contributions under a
profit-sharing plan, the account balance of each affected employee will be fully
vested and nonforfeitable.
17.5 Disposition and Termination of Trust.
(a) Upon complete or partial termination of the plan, the plan
administrator will determine subject to the joint and survivor rules of this
plan, whether to direct the trustee to continue to hold the accounts of
participants affected by the termination or partial termination, to disburse
them as immediate benefit payments, to purchase immediate or deferred annuity
contracts, or to follow any other procedure he deems advisable. The trustee will
follow the directions of the plan administrator.
(b) The trust created hereunder will terminate when all the assets of
the trust have been distributed.
17.6 Merger of Plans. A merger or consolidation with, or transfer of assets
or liabilities to, any other plan will be permitted only if the benefit each
participant would receive if the plan were terminated immediately after the
merger, consolidation or transfer is not less than the benefit he would have
received if the plan had terminated immediately before the merger, consolidation
or transfer.
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METLIFE DEFINED CONTRIBUTION GROUP 129
<PAGE>
DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
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ARTICLE 18
TRANSFERS FROM OR TO OTHER QUALIFIED PLANS
18.1 Transfers from Another Plan of the Employer.
(a) Notwithstanding any other provision hereof, the employer may cause
to be transferred to the trustee all or any of the assets held (whether by a
trustee, custodian, or otherwise) under any other defined contribution which
satisfies the requirements of Section 401(a) of the Code and which is maintained
by the employer for the benefit of any of the participants hereunder. If the
trustee is keeping separate accounts for each participant, any such assets so
transferred will be accompanied by instructions from the employer or plan
administrator naming the participants for whose benefit such assets have been
transferred and showing separately the respective contributions by the employer
and by the participants and the current value of the assets attributable
thereto.
(b) Upon receipt of any assets transferred to it under subsection (a),
the trustee may sell any non-cash assets and invest the proceeds and any cash
transferred to it. The trustee will make appropriate credits to the proper
accounts in accordance with the employer's or plan administrator's instructions.
18.2 Transfers to Other Plans. Upon the request of the employer, the
trustee will transfer an amount designated by the employer to the trustee or
custodian of any other qualified plan under which plan participants are covered.
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METLIFE DEFINED CONTRIBUTION GROUP 130
<PAGE>
DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
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ARTICLE 19
MISCELLANEOUS
19.1 Prohibited Diversion. Except as provided in Section 19.6, no portion
of the corpus or income of the trust will be used or diverted to purposes other
than for the exclusive benefit of participants, former participants and their
beneficiaries, and to defray administrative expenses of the plan and trust.
However, payment of sales charges, administrative expenses and taxes from the
trust assets is expressly permitted.
19.2 Failure to Attain or Retain Qualification. If the employer's plan
fails to attain or retain qualification, such plan will no longer participate in
this prototype plan and will be considered an individually designed plan.
19.3 Nonalienation. No benefit or interest of any participant, former
participant or beneficiary hereunder will be subject to assignment or
alienation, either voluntary or involuntary. This section applies to the
creation, assignment or recognition of a right to any benefit payable with
respect to a participant pursuant to a domestic relations order unless such
order is determined to be a qualified domestic relations order under Section
19.4 below, or any domestic relations order entered before January 1, 1985.
19.4 Qualified Domestic Relations Orders
(a) A qualified domestic relations order (QDRO) is a judgment, decree,
or order which meets the requirements of Code Section 414(p). An alternate payee
is an individual named in the QDRO who is to receive some or all of the
participant's benefit.
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METLIFE DEFINED CONTRIBUTION GROUP 131
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DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
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(b) Upon receipt of an order which appears to be a QDRO, the plan
administrator will notify the participant involved and each alternate payee
under the order (and under any previous QDRO covering the participant's
benefits). The plan administrator will determine whether the order is a QDRO and
will notify each affected individual of his determination. In general, the
plan's claims procedure rules under Section 16.6 apply to this determination and
any subsequent determination relating to the order. In applying these rules, an
individual who is or may be an alternate payee enjoys the status of a claimant.
However, the plan administrator may take any action or delay contemplated in
Code Section 414(p) and the regulations under it, whether or not contemplated in
the plan's claims procedure rules.
(c) To the maximum extent permitted by law, the plan administrator's
determination that an order is or is not a QDRO is final. Any subsequent change
in this determination is applied only prospectively, unless the plan
administrator rules otherwise.
(d) Certain conflicts between a domestic relations order and the
plan's provisions will cause the order to fail to be a QDRO. However, once an
order is determined to be a QDRO, the provisions of the QDRO take precedence
over any conflicting provisions of the plan.
(e) Except as otherwise provided under the terms of the QDRO, all
benefits under a QDRO will be payable in the form of a single sum commencing as
soon as practicable after the plan administrator determines that a domestic
relations order is a QDRO. For purposes of determining the accounts from which
benefits under a QDRO will be distributed, the trustee will distribute a pro
rata amount from each of the participant's employer contribution, after-tax
employee contribution, savings contribution, matching contribution, rollover
contribution, and all other accounts maintained on behalf of the participant,
unless the QDRO otherwise provides. To the extent provided in a QDRO (assuming
that the QDRO does not provide for the form of distribution described in the
preceding sentence), a former spouse will be treated as the spouse or surviving
spouse of a participant for purposes of the spousal protection and any other
relevant provisions of the plan.
(f) A domestic relations order entered before January 1, 1985, will be
treated as a QDRO if payment of benefits pursuant to the order has commenced as
of that date. At the plan administrator's discretion, it may be treated as a
QDRO if payment of benefits has not commenced as of that date, even though the
order does not satisfy the requirement of Code Section 414(p).
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METLIFE DEFINED CONTRIBUTION GROUP 132
<PAGE>
DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
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19.5 Limitation on Rights Created by Plan.
(a) The adoption and maintenance of the plan and trust will not be
construed to give a participant the right to continue in the employ of the
employer or to interfere with the right of the employer to discharge, lay off or
discipline a participant at any time, or give the employer the right to require
any participant to remain in its employ or to interfere with the participant's
right to terminate his employment.
(b) The adoption and maintenance of the plan and trust, the creation
of any account or the payment of any benefit will not be construed as creating
any legal or equitable right against the employer or the trust except as this
plan specifically provides.
(c) The employer, the trustee, the plan administrator and the sponsor
do not guaranty the payment of benefits hereunder and benefits will be paid only
to the extent of the assets of the trust. It is a condition of participation in
the plan that each participant (and his beneficiary or anyone else claiming
through him) will look only to the assets of the trust for the payment of any
benefit to which he or his beneficiary or other person is entitled.
19.6 Allocation of Responsibilities. The employer, the trustee and the plan
administrator will each have only those duties and responsibilities specifically
allocated to each of them under the plan. There will be no joint fiduciary
responsibility between or among fiduciaries unless specifically stated
otherwise. Any person may serve in more than one fiduciary capacity.
19.7 Return of Contributions.
(a) If the Commissioner of Internal Revenue determines that the plan
is not initially qualified under the Code, any contribution made conditionally
subject to such initial qualification will be returned to the employer if demand
therefor is made within one year after the date initial qualification is denied,
but only if application for a determination concerning the plan's initial
qualification was made within the time prescribed by law for filing the
employer's tax return for the taxable year in which the plan was adopted or
within such longer time as the Secretary of the Treasury may prescribe.
(b) All employer contributions are conditioned upon their
deductibility under Code Section 404. A contribution which is made because of a
mistake of fact or the deduction of which is disallowed, will be returned to the
employer within one year thereafter.
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METLIFE DEFINED CONTRIBUTION GROUP 133
<PAGE>
DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
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(c) If the trustee is keeping separate accounts for each participant,
participants' accounts will be adjusted in accordance with instructions from the
plan administrator to the trustee to reflect any returns under this Section
19.6.
19.8 Current Address of Payee. The plan administrator shall make reasonable
efforts to locate any participant, beneficiary, or alternate payee to whom
benefits are required to be paid under the terms of the plan or applicable law.
If, as a result of the exercise of reasonable efforts to locate any such person,
the plan administrator is unable to locate such person, the plan administrator
shall dispose of such person's account balance in the manner specified in the
adoption agreement. If disposition of any person's account balance under any one
or more of the methods described in this section is impracticable or would
adversely affect the qualification of the plan, the plan administrator may
substitute any other reasonable method, in its sole discretion, which is
consistent with the qualification requirements of Subchapter D of the Code. If a
benefit is forfeited because the Participant or beneficiary cannot be found,
such benefit will be reinstated if a claim is made by the Participant or
beneficiary.
19.9 Controlled Group. Except as provided in Section 4.1(c), all employees
of all corporations which are members of a controlled group of corporations (as
defined in Section 414(b) of the Code) and all employees of all trades or
businesses, whether or not incorporated, which are under common control (as
defined in Section 414(c) of the Code) will be treated as employed by a single
employer.
19.10 Affiliated Service Groups. All employees of all members of an
affiliated service group (as defined in Section 414(m) of the Code) will be
treated as employed by a single employer.
19.11 Other Aggregated Groups. Employees of employers which are aggregated
in accordance with regulations under Code Section 414(o) will be treated as
employed by one employer to the extent provided in such regulations.
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METLIFE DEFINED CONTRIBUTION GROUP 134
<PAGE>
DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
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19.12 Leased Employees. Any leased employee shall be treated as an employee
of the recipient employer.
The term "leased employee" means any person (other than an employee of
the recipient) who pursuant to an agreement between the recipient and any other
person ("leasing organization") has performed services for the recipient (or for
the recipient and related persons determined in accordance with section
414(n)(6) of the Code) on a substantially full time basis for a period of at
least one year, and such services are of a type historically performed by
employees in the business field of the recipient employer. Contributions or
benefits provided a leased employee by the leasing organization which are
attributable to services performed for the recipient employer shall be treated
as provided by the recipient employer.
A leased employee shall not be considered an employee of the recipient
if: (i) such employee is covered by a money purchase pension plan providing: (1)
a nonintegrated employer contribution rate of at least 10 percent of
compensation, as defined in section 415(c)(3) of the Code, but including amounts
contributed pursuant to a salary reduction agreement which are excludable from
the employee's gross income under section 125, section 402(e)(3), section
402(h)(1)(B) or section 403(b) of the Code, (2) immediate participation, and (3)
full and immediate vesting; and (ii) leased employees do not constitute more
than 20 percent of the recipient's nonhighly compensated workforce.
19.13 Control of Trades or Businesses by Owner Employee.
(a) If this plan provides contributions or benefits for one or more
owner-employees who control both the business for which this plan is established
and one or more other trades or businesses, this plan and the plan established
for other trades or businesses must, when looked at as a single plan, satisfy
Sections 401(a) and (d) of the Code for the employees of this and all other
trades or businesses.
(b) If the plan provides contributions or benefits for one or more
owner-employees who control one or more other trades or businesses, the
employees of the other trades or businesses must be included in a plan which
satisfies Sections 401(a) and (d) and which provides contributions and benefits
not less favorable than those provided for owner-employees under this plan.
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<PAGE>
DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
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(c) If an individual is covered as an owner-employee under the plans
of two or more trades or businesses which are not controlled and the individual
controls a trade or business, then the contributions or benefits of the
employees under the plan of the trades or businesses which are controlled must
be as favorable as those provided for him under the most favorable plan of the
trade or business which is not controlled.
(d) For purposes of this section an owner-employee, or two or more
owner-employees, will be considered to control a trade or business if the owner-
employee or two or more owner-employees together:
(i) own the entire interest in an unincorporated trade or
business, or
(ii) in the case of a partnership, own more than 50 percent of
either the capital interest or the profits interest in the partnership.
For purposes of the preceding sentence, an owner-employee or two
or more owner-employees shall be treated as owning any interest in a partnership
which is owned directly or indirectly by a partnership which such owner-
employee, or such two or more owner-employees are considered to control within
the meaning of the preceding sentence.
19.14 Application of Plan's Terms.
(a) If an employee retired, died or otherwise terminated his service
before the effective date of the employer's plan, the employee and his
beneficiaries will receive no benefits and will have no rights under the plan.
(b) If an employee retires, dies or otherwise terminates his service
on or after the effective date of the employer's plan, the benefits and rights
of the employee and his beneficiaries will be determined in accordance with the
terms of the plan that are in effect on the date of such termination of service.
(c) The allocations to a participant's account for any year of
reference will be determined in accordance with the terms of the plan that are
in effect for such year.
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METLIFE DEFINED CONTRIBUTION GROUP 136
<PAGE>
DEFINED CONTRIBUTION BASIC PLAN DOCUMENT
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19.15 Rules of Construction.
(a) This plan is intended to qualify as a profit sharing plan or a
pension plan under Section 401(a) of the Code to be an eligible individual
account plan as defined in Section 407(d)(3) of ERISA, and to comply with all
applicable requirements of both statutes. The terms of the plan will be
construed to carry out this intent.
(b) A word or phrase defined or explained in any section has the same
meaning throughout the plan unless the context indicates otherwise.
(c) Where the context so requires the masculine includes the feminine,
the singular includes the plural, and the plural includes the singular.
(d) Unless the context indicates otherwise, the words "herein",
"hereof", "hereunder", and words of similar import refer to the plan as a whole
and not only to the section in which they appear.
(e) Headings and titles are for convenience only, and the text will
control in all matters.
(f) Reference to any section of the Code or ERISA includes reference
to a similar provision of a successor statute.
19.16 Governing Law. To the extent that state law applies, the provisions
of the plan will be construed enforced and administered according to the laws of
the state where the principal offices of the trustee are located.
19.17 Payment for Minor or Incompetent. In the event that any amount is
payable under the plan to a minor or to any person deemed by the plan
administrator or a court of competent jurisdiction to be incompetent, either
mentally or physically, such payment shall be made for the benefit of such minor
or incompetent person by payment to a person who has been designated by a court
of competent jurisdiction to receive such amount.
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METLIFE DEFINED CONTRIBUTION GROUP 137
<PAGE>
EXHIBIT 10.38
HALTER MARINE GROUP
PENSION PLAN
EFFECTIVE OCTOBER 1, 1996
<PAGE>
TABLE OF CONTENTS
<TABLE>
ARTICLE I
<S> <C>
GENERAL.................................................................... 2
1.01 Purpose........................................................ 2
1.02 Exclusive Benefit of Employees................................. 2
ARTICLE II
DEFINITIONS................................................................ 2
2.01 ACCRUED BENEFIT................................................ 2
2.02 ACTIVE PARTICIPANT............................................. 2
2.03 ACTUAL RETIREMENT.............................................. 2
2.04 ACTUARIAL EQUIVALENT........................................... 2
2.05 AFFILIATE...................................................... 3
2.06 AUTHORIZED LEAVE OF ABSENCE.................................... 3
2.07 BASIC PENSION.................................................. 3
2.08 BENEFICIARY.................................................... 4
2.09 BOARD.......................................................... 4
2.10 BREAK IN SERVICE............................................... 4
2.11 CODE........................................................... 4
2.12 COMMITTEE or PENSION COMMITTEE................................. 4
2.13 COMPANY........................................................ 4
2.14 COMPENSATION................................................... 4
2.15 CREDITED SERVICE............................................... 5
2.16 DEATH BENEFIT.................................................. 5
2.17 EARLY RETIREMENT............................................... 5
2.18 EARLY RETIREMENT DATE.......................................... 6
2.19 EFFECTIVE DATE................................................. 6
2.20 ELAPSED-TIME EMPLOYMENT........................................ 6
2.21 ELIGIBLE EMPLOYEE.............................................. 6
2.22 EMPLOYEE....................................................... 6
2.23 EMPLOYER or PARTICIPATING EMPLOYER............................. 7
2.24 EMPLOYMENT COMMENCEMENT DATE................................... 7
2.25 ERISA.......................................................... 7
2.26 EXTENDED ABSENCE EMPLOYEE...................................... 7
2.27 FIDUCIARY or SPECIFIED FIDUCIARY............................... 8
2.28 FINAL MONTHLY COMPENSATION..................................... 8
2.29 HOUR OF SERVICE................................................ 8
2.30 HOURLY-WAGE EMPLOYEE........................................... 9
2.31 LATE RETIREMENT DATE........................................... 9
2.32 LATE RETIREMENT................................................ 9
2.33 NORMAL RETIREMENT DATE......................................... 9
2.34 NORMAL RETIREMENT.............................................. 9
2.35 PARTICIPANT.................................................... 9
2.36 PLAN........................................................... 9
2.37 PLAN YEAR...................................................... 9
2.38 RE-EMPLOYMENT COMMENCEMENT DATE................................ 9
2.39 RETIRED PARTICIPANT............................................ 9
2.40 SERVICE........................................................ 10
2.41 SEVERANCE FROM SERVICE......................................... 10
2.42 SPOUSE......................................................... 10
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
2.43 TERMINATED PARTICIPANT.......................................... 10
2.44 TRUST........................................................... 10
2.45 TRUSTEE......................................................... 10
2.46 TRUST FUND...................................................... 10
ARTICLE III
PARTICIPATION AND SERVICE................................................... 11
3.01 Participation................................................... 11
3.02 Service and Credited Service.................................... 11
3.03 Transfer From or To Job as an Employee.......................... 14
3.04 Employment by More Than One Participating
Employer........................................................ 15
3.05 Special Rules for Certain Participants in
Trinity Industries, Inc. Marine Group Pension
Plan............................................................ 16
ARTICLE IV
CONTRIBUTIONS............................................................... 17
4.01 Employer Contributions.......................................... 17
4.02 Participant Contributions....................................... 17
4.03 Cost............................................................ 17
4.04 Payment of Contributions........................................ 17
4.05 Reversion....................................................... 18
ARTICLE V
RETIREMENT.................................................................. 18
5.01 Normal Retirement Date.......................................... 18
5.02 At Early Retirement Date........................................ 18
5.03 At Late Retirement Date......................................... 19
ARTICLE VI
DEATH....................................................................... 19
6.01 Prior to Actual Retirement or Other Severance
from Service.................................................... 19
6.02 After Actual Retirement or Other Severance
From Service.................................................... 20
6.03 Earliest Retirement Date........................................ 20
6.04 No Duplication of Benefit....................................... 21
ARTICLE VII
OTHER SEVERANCE FROM SERVICE................................................ 21
7.01 Benefits........................................................ 21
7.02 Effect of Prior Distribution.................................... 21
7.03 Early Retirement Age............................................ 22
7.04 Terminated Participant's Address................................ 22
7.05 Payment of Terminated Participant's Benefits.................... 22
7.06 Limitation Amount............................................... 23
7.07 Deemed Cashout.................................................. 23
</TABLE>
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<PAGE>
ARTICLE VIII
<TABLE>
<S> <C>
SETTLEMENT OPTIONS-DISTRIBUTION OF BENEFITS.................................................... 23
8.01 When Payable.................................................................... 23
8.02 Basic Pension................................................................... 24
8.03 Optional Pensions............................................................... 25
8.04 Directed Transfer of Eligible Rollover Distributions............................ 26
8.05 Mandatory Distribution of Retirement Benefits................................... 27
8.06 One-Time Election for Commencement of Normal Retirement Income at Normal
Retirement Date While Continuing in Employment.................................. 32
8.07 Suspension of Benefits After Retirement......................................... 32
8.08 Preservation of Protected Benefits and Optional Forms of Benefit under
Merged Plans.................................................................... 33
ARTICLE IX
PLAN TERMINATION............................................................................... 33
9.01 Right to Terminate.............................................................. 33
9.02 Partial Termination............................................................. 34
9.03 Liquidation of Trust Fund....................................................... 34
9.04 Manner of Distribution.......................................................... 37
9.05 Residual Amounts................................................................ 38
ARTICLE X
SUCCESSOR EMPLOYER AND MERGER OR CONSOLIDATION OF PLANS........................................ 38
10.01 Successor Employer.............................................................. 38
10.02 Merger or Consolidation of Plans................................................ 38
ARTICLE XI
RESTRICTIONS ON BENEFITS PAYABLE TO HIGHLY COMPENSATED PARTICIPANTS............................ 39
11.01 Restrictions.................................................................... 39
11.02 Effectiveness................................................................... 40
ARTICLE XII
ADMINISTRATION................................................................................. 40
12.01 Allocation of Responsibility Among Specified Fiduciaries for Plan and Trust
Administration.................................................................. 40
12.02 Appointment of Committee........................................................ 41
12.03 Claims Procedure................................................................ 42
12.04 Records and Reports............................................................. 42
12.05 Other Committee Powers and Duties............................................... 42
12.06 Rules and Decisions............................................................. 43
12.07 Committee Procedures............................................................ 44
12.08 Authorization of Benefit Payments............................................... 44
12.09 Application and Forms for Benefits.............................................. 45
12.10 Facility of Payment............................................................. 45
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
12.11 Indemnification................................................................. 45
12.12 Beneficiary Designations........................................................ 45
12.13 Diligence to Locate............................................................. 46
ARTICLE XIII
FIDUCIARY RESPONSIBILITY....................................................................... 46
13.01 Fiduciary....................................................................... 46
13.02 Fiduciary Responsibility........................................................ 47
13.03 Liability for Breach by Co-fiduciary............................................ 47
ARTICLE XIV
AMENDMENT, MODIFICATION OR TERMINATION OF PLAN................................................. 48
14.01 Change.......................................................................... 48
14.02 Modification.................................................................... 48
14.03 Adoption by Others.............................................................. 48
14.04 Recovery........................................................................ 49
ARTICLE XV
MAXIMUM BENEFITS AND TOP-HEAVY PROVISIONS...................................................... 49
15.01 Maximum Benefit................................................................. 49
15.02 Top-Heavy Provisions............................................................ 54
ARTICLE XVI
MISCELLANEOUS.................................................................................. 58
16.01 Nonguarantee of Employment...................................................... 58
16.02 Rights to Trust Assets.......................................................... 59
16.03 Nonalienation of Benefits....................................................... 59
16.04 Release......................................................................... 59
16.05 Certain Social Security Increases............................................... 59
16.06 Titles, Gender and Number....................................................... 60
16.07 Construction.................................................................... 60
16.08 Counterparts.................................................................... 60
16.09 Return of Contributions......................................................... 60
16.10 Duplication of Benefits Prohibited.............................................. 60
</TABLE>
-iv-
<PAGE>
HALTER MARINE GROUP
PENSION PLAN
On this _______ day of _____________________, 1996, HALTER MARINE GROUP,
INC., a corporation organized and existing under the laws of the State of
Delaware (the "Company"), hereby adopts the HALTER MARINE GROUP PENSION PLAN,
effective October 1, 1996 or as otherwise specified herein:
W I T N E S S E T H :
WHEREAS, the Company wishes to establish a defined benefit pension plan for
certain of its eligible employees; and
WHEREAS, the Company has authorized the execution of this agreement
intended to establish a defined benefit pension plan, known as the Halter
Marine Group Pension Plan (the "Plan"); and
WHEREAS, the Company has authorized the execution of the Halter Marine
Group Pension Trust (the "Trust") for the purpose of carrying out the terms of
the Plan and which Trust is intended to form a part of the Plan; and
WHEREAS, it is intended that the Plan and Trust meet the requirements of
Sections 401(a) and 501(a) of the Internal Revenue Code of 1986, as amended, and
the requirements of the Employee Retirement Income Security Act of 1974, as
amended; and
WHEREAS, the provisions of this Plan shall apply solely to an employee who
terminates employment with the Company, or with any affiliate of the Company
which adopts this Plan, on or after the effective date of this Plan;
NOW, THEREFORE, in consideration of the premises HALTER MARINE GROUP, INC.
hereby agrees as follows:
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<PAGE>
ARTICLE I
GENERAL
-------
1.01 Purpose
-------
The purpose of the Plan is to provide retirement benefits to the
eligible employees of the Company and of any affiliate of the Company
which adopts this Plan, as hereinafter provided.
1.02 Exclusive Benefit of Employees
------------------------------
The Plan (including the Trust) is established for the exclusive
benefit of the eligible employees of each Participating Employer (as
hereinafter defined). It is intended that none of the Trust corpus or
income shall revert to any Participating Employer, except as otherwise
provided under Sections 9.05 and 16.09 hereof.
ARTICLE II
DEFINITIONS
-----------
The following words and phrases, when used herein, unless their context clearly
indicates otherwise, shall have the following respective meanings:
2.01 ACCRUED BENEFIT means the monthly benefits to which a Participant is
entitled under the Plan, as computed in accordance with Section 5.01
as a Basic Pension using Compensation and Credited Service as of the
applicable date of calculation.
2.02 ACTIVE PARTICIPANT means an Employee who meets the eligibility
requirements set forth in Section 3.01 of this Plan but who has not
incurred a Severance from Service.
2.03 ACTUAL RETIREMENT means the retirement of a Participant under the
terms of this Plan, irrespective of whether such retirement is Normal
Retirement, Early Retirement or Late Retirement.
2.04 ACTUARIAL EQUIVALENT means the equality in value of aggregate amounts
expected to be received under different forms of payment based on the
interest rate and mortality assumptions, in effect on the date as of
which the benefit is to commence, as such assumptions are defined
below, unless otherwise specifically provided in the Plan:
-2-
<PAGE>
(a) The interest rate used for purposes of computing alternative
periodic forms of benefits or a single-sum payment shall be seven
percent (7%).
(b) The present value of a single-sum payment (except a death
benefit) shall be the present value calculated using the
applicable mortality table and the applicable interest rate. The
applicable mortality table is the table prescribed by the
Secretary of Treasury under Section 417(e)(3) of the Code.
Except as otherwise provided below, the applicable interest rate
is the average annual rate of interest on 30-year Treasury
securities for November of the year preceding the Plan Year
during which the distribution is paid.
(c) In determining Actuarial Equivalence for all purposes of Section
15.02, the mortality assumptions used shall be based on the
applicable mortality table described in paragraph (b) of this
Section.
2.05 AFFILIATE means any company (other than an Employer) which is (i) a
member of a controlled group of corporations (as defined in Section
414(b) of the Code) which includes an Employer; (ii) a trade or
business (whether or not incorporated) which is under common control
(as defined in Section 414(c) of the Code) with an Employer; (iii) an
organization (whether or not incorporated) which is a member of an
affiliated service group (as defined in Section 414(m) of the Code)
which includes an Employer; or (iv) any other entity required to be
aggregated with an Employer pursuant to Section 414(o) of the Code.
2.06 AUTHORIZED LEAVE OF ABSENCE means any absence (including military
leave) authorized by a Participating Employer under its standard
personnel practices, uniformly applied, and in accordance with
applicable federal law (other than ERISA); provided, however, that no
absence shall be considered an Authorized Leave of Absence unless the
Employee returns to employment immediately (in the case of military
leave, within the 90-day period after his discharge or release or
within the period prescribed by applicable law, whichever is longer)
upon the expiration of such absence.
2.07 BASIC PENSION means either the MARRIED BASIC PENSION or UNMARRIED
BASIC PENSION, as applicable. The MARRIED BASIC PENSION means the
monthly pension computed in accordance with Section 5.01 hereof and
payable to a Participant described in Section 8.02(2)hereof pursuant
to the form described in such Section 8.02(2). The UNMARRIED BASIC
PENSION means the monthly pension
-3-
<PAGE>
computed in accordance with Section 5.01 hereof and payable to a
Participant described in Section 8.02(1) hereof pursuant to the form
described in such Section 8.02(1).
2.08 BENEFICIARY means any person or fiduciary designated by a Participant
who is or may become entitled to receive any Death Benefit payable
under the provisions of this Plan. A Beneficiary who becomes entitled
to a benefit under the Plan shall remain a Beneficiary under the Plan
until the Trustee has fully distributed the benefits to the
Beneficiary. A Beneficiary's right to information or data concerning
the Plan, and the respective duties of the Committee and the Trustee
to provide to the Beneficiary information or data concerning the Plan,
shall not arise until the Beneficiary first becomes entitled to
receive a benefit under the Plan. For purposes of determining whether
the Plan is a Top-Heavy Plan, a Beneficiary of a deceased Participant
shall be considered a Key Employee or a Non-Key Employee in accordance
with applicable Treasury Regulations.
2.09 BOARD means the Board of Directors of the Company, or any person or
committee duly authorized to act for and represent the Board.
2.10 BREAK IN SERVICE means a Severance from Service having a duration of
at least twelve (12) continuous months, as more particularly described
in Section 3.02(2) (d) hereof.
2.11 CODE means the Internal Revenue Code of 1986, as amended from time to
time.
2.12 COMMITTEE or PENSION COMMITTEE means the persons appointed under the
provisions of Article XII hereof to administer the Plan.
2.13 COMPANY means Halter Marine Group, Inc., a corporation organized and
existing under the laws of the State of Delaware, or its successor or
successors.
2.14 COMPENSATION means the total of all amounts paid to a Participant by
his Employer for personal services as reported on the Participant's
Federal Income Tax Withholding Statement (Form W-2) plus any amounts
not included in the Participant's gross income pursuant to Section 125
or 401(k) of the Code, but excluding (i) any other contributions made
under this Plan or any other plan of deferred compensation, (ii)
tuition reimbursement payments, (iii) moving expense payments, (iv)
excess life insurance imputed income, (v) income from non-qualified
stock options, (vi) automobile allowance payments, (vii) medical
allowance payments, (viii) safe driving bonuses, (ix) employee awards,
(x) lodging allowance payments,
-4-
<PAGE>
(xi) tool allowance payments, (xii) road expense reimbursement
payments, (xiii) commuting allowance payments, (xiv) meal allowance
payments, (xv) third-party sick pay, (xvi) attendance/safety bonuses,
(xvii) travel allowances, (xviii) company automobile, and (xix) such
other similar amounts as the Committee may from time to time exclude
in its sole discretion. Any compensation in excess of $150,000 (as
automatically increased in accordance with Treasury Department
regulations to reflect cost-of-living adjustments), shall not be
considered Compensation under this Plan. In applying the limitations
described above, in the case of a highly compensated employee who is
subject to the aggregation rules of Section 414(q) (6) of the Code
because such Participant is either a 5% owner of an Employer or one of
the 10 highest paid highly compensated employees, such highly
compensated employee and his family members shall be treated as a
single Participant; provided, however, that "family member" shall mean
the Participant's spouse and any lineal descendants who have not
attained age 19 before the close of the year. If, as a result of the
application of these rules, the limitation is exceeded, then the
limitation shall be prorated among the Participant and family members
in proportion to the Compensation of each prior to the application of
the limitation. Notwithstanding the preceding provisions of this
Section 2.14, in the case of a Participant who is an Hourly-Wage
Employee, no more than $30,000 of annual compensation shall be taken
into account.
2.15 CREDITED SERVICE means the period of a Participant's employment
considered in the determination of the amount of benefit payable to or
on behalf of a Participant in accordance with Section 3.02.
2.16 DEATH BENEFIT means the total that is payable under the provisions of
this Plan, by reason of the death of a Participant, to such
Participant's Spouse or other Beneficiary.
2.17 EARLY RETIREMENT means the Actual Retirement of a Participant on the
first day of the month coinciding with or immediately following the
earlier of (1) the date when such Participant has thirty (30) or more
Years of Service and shall have reached or passed his fifty-fifth
(55th) birthday, (2) the date when such Participant has twenty-five
(25) or more Years of Service and shall have reached or passed his
sixtieth (60th) birthday or (3) the date when such Participant has
twenty (20) or more Years of Service and shall have reached or passed
his sixty-second (62) birthday. Notwithstanding the foregoing, Early
Retirement means, with respect to a Participant described in Section
3.05 hereof, the earlier of (1) the date the Participant satisfies the
requirements for Early
-5-
<PAGE>
Retirement under the merged plan, or (2) the date the Participant
satisfies the requirements of this Section 2.17.
2.18 EARLY RETIREMENT DATE means the date on which a Participant has taken
Early Retirement.
2.19 EFFECTIVE DATE of this Plan means October 1, 1996 or as otherwise
herein specified.
2.20 ELAPSED-TIME EMPLOYMENT means, with respect to an Employee, the period
beginning on his Employment Commencement Date (or Re-employment
Commencement Date, as the case may be) and ending on the date of his
Severance from Service. Such period shall be determined without regard
to the actual number of Hours of Service completed by the Employee
during such period.
2.21 ELIGIBLE EMPLOYEE means an Employee--
(a) whose wages from the Employer are subject to withholding for
purposes of Federal income taxes and for purposes of the Federal
Insurance Contributions Act,
(b) who is not included in a unit of employees covered by a
collective bargaining agreement unless, in the execution of such
agreement, retirement benefits under this Plan were the subject
of good-faith bargaining,
(c) who is not a Leased Employee (as defined in Section 2.22 hereof),
(d) who is not classified as a project status employee, and
(e) who is not an employee or within a class of employees designated
on Appendix I, attached hereto,
Notwithstanding the foregoing, the term "Eligible Employee" shall not
include any individual who is a participant, or is eligible to become
a participant, in a defined benefit pension plan (other than this
Plan) maintained by a Participating Employer. In addition, the term
"Eligible Employee" may be revised from time to time by the Pension
Committee, pursuant to duly adopted resolutions, to include other
individuals employed by the Company.
2.22 EMPLOYEE means any individual currently employed by an Employer
maintaining the Plan or by any other employer
-6-
<PAGE>
required to be aggregated with the Employer under Code Sections
414(b), (c), (m) or (o).
The Plan treats any Leased Employee as an Employee. A Leased Employee
is an individual (i) who otherwise is not an Employee of an Employer,
(ii) who, pursuant to a leasing agreement between the Employer and any
other person, has performed services for the Employer (or for the
Employer and any persons related to the Employer within the meaning of
Code Section 144(a) (3)) on a substantially full-time basis for at
least one (1) year, and (iii) who performs services historically
performed by Employees in the Employer's business field. The
Compensation of a Leased Employee includes compensation from the
leasing organization which is attributable to services performed for
the Employer.
Notwithstanding the foregoing, a Leased Employee shall not be treated
as an Employee of an Employer if the leasing organization covers the
Leased Employee in a Safe Harbor Plan and, prior to the application of
this exception, twenty percent (20%) or less of the Employer's
Employees (other than highly compensated employees, as defined in the
Code) are Leased Employees. A Safe Harbor Plan is a money purchase
pension plan providing immediate participation, full and immediate
vesting, and a nonintegrated contribution formula equal to at least
ten percent (10%) of the employees "compensation" (defined in Code
Section 415(c) (3) and including salary deferrals) without regard to
employment by the leasing organization on a specified date.
2.23 EMPLOYER or PARTICIPATING EMPLOYER means the Company; Equitable
Shipyards, Inc.; Gretna Machine & Ironworks, Inc.; Gulf Coast
Fabrication, Inc.; Halter Marine, Inc.; Halter Marine Services, Inc.;
Trinity Gulf Repair, Inc.; Trinity Marine Gulfport, Inc.; Trinity
Marine Panama City, Inc.; Trinity Marine Pascagoula, Inc.; Trinity
Yachts, Inc.; and Washington Marine Fabricators, Inc.; or any other
entity affiliated with the Company which, with the consent of the
Company by appropriate resolutions, has adopted this Plan.
2.24 EMPLOYMENT COMMENCEMENT DATE means the first date on which an Employee
completes an Hour of Service.
2.25 ERISA means Public Law No. 93-406, the Employee Retirement Income
Security Act of 1974, as amended from time to time.
2.26 EXTENDED ABSENCE EMPLOYEE means any Employee whose absence from
employment with the Employers is attributable to (i) the Employee's
pregnancy, (ii) the birth of the Employee's child, (iii) the placement
of a
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<PAGE>
child with the Employee in connection with the adoption of the child
by the Employee, or (iv) the care of a child by the Employee during
the period immediately following such child's birth to, or placement
with, the Employee.
2.27 FIDUCIARY or SPECIFIED FIDUCIARY means any Participating Employer, the
Committee, and the Trustee, but only with respect to the specific
responsibilities of each for Plan and Trust administration, all as
described in Section 12.01.
2.28 FINAL MONTHLY COMPENSATION means a Participant's monthly average
Compensation during the five (5) consecutive calendar years of his
employment which provide the highest average out of his ten (10)
completed calendar years of employment with the Employers immediately
preceding the earlier of his Normal Retirement Date, death, or other
Severance from Service; provided, however, that in the case of a
Participant who has been employed by the Employers for a period of
less than five (5) calendar years immediately preceding the earlier of
his Normal Retirement Date, death, or other Severance from Service,
"Final Monthly Compensation" shall mean his monthly average
compensation during his total completed calendar years of active
employment with the Employers. For these purposes, (i) any calendar
year in which a Participant received no Compensation shall be
disregarded, and (ii) in determining monthly average Compensation,
only those months during which the Participant received Compensation
shall be taken into account.
2.29 HOUR OF SERVICE means, with respect to an Employee, any hour for which
(1) such Employee is paid, or entitled to payment, by a Participating
Employer for the performance of duties;
(2) such Employee is paid, or entitled to payment, by a Participating
Employer on account of a period of time during which he performs
no duties (irrespective of whether the employment relationship
has terminated) due to vacation, holiday, illness, incapacity,
jury duty or any Authorized Leave of Absence (other than military
leave); or
(3) back pay is, or is agreed to be, awarded to such Employee by a
Participating Employer.
The rules stated in Department of Labour Regulations Sections
2530.200b-2(b) and (c) shall be applied, where relevant, in computing
Hours of Service under this Plan.
-8-
<PAGE>
Hours of Service shall be determined from records maintained by each
Employer; provided, however, that an Employer may elect to determine
Hours of Service for any classification of Employees which is
reasonable, non-discriminatory and consistently applied, on the basis
that Hours of Service include forty-five (45) Hours of Service for
each week or portion thereof during which an Employee is credited with
one (1) Hour of Service.
2.30 HOURLY-WAGE EMPLOYEE means an individual compensated on an hourly-wage
basis (exclusive of office or clerical workers).
2.31 LATE RETIREMENT DATE means the first day of any calendar month
coinciding with or next following the date of Actual Retirement of an
Active Participant who remains in active service subsequent to his
Normal Retirement Date.
2.32 LATE RETIREMENT means the Actual Retirement of a Participant on his
Late Retirement Date.
2.33 NORMAL RETIREMENT DATE for each Participant shall be the first day of
the calendar month coinciding with or immediately following his sixty-
fifth (65th) birthday or if later, the fifth (5th) anniversary of the
Participant's Employment Commencement Date; provided, however, that
the Normal Retirement Date of any Participant whose employment
commenced after attainment of age sixty (60) years shall be the later
of age sixty-five (65) years or the fifth (5th) anniversary of the
date on which such participation commenced.
2.34 NORMAL RETIREMENT means the Actual Retirement of a Participant on his
Normal Retirement Date.
2.35 PARTICIPANT means any Active Participant, Retired Participant,
Terminated Participant, or any one or more thereof.
2.36 PLAN means the Halter Marine Group Pension Plan, the Plan set forth
herein, as amended from time to time.
2.37 PLAN YEAR means the period beginning April 1 and ending on the next
succeeding March 31.
2.38 RE-EMPLOYMENT COMMENCEMENT DATE means the first date on which an
Employee completes an Hour of Service on his return to the employment
of a Participating Employer after a Break in Service.
2.39 RETIRED PARTICIPANT means a once Active Participant who is currently
receiving, or is entitled to receive, retirement benefits from the
Trust under the terms of the Plan by reason of Actual Retirement.
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<PAGE>
2.40 SERVICE means the period of a Participant's employment considered in
the determination of his vested interest hereunder and his eligibility
herein for Early Retirement, in accordance with Section 3.02.
2.41 SEVERANCE FROM SERVICE means, with respect to an Employee, the later
of (1) or (2) where--
(1) is the earlier of (a) the date on which he quits, or is
discharged from, the employment of the Participating Employers,
or the date of his Actual Retirement or death, or (b) the first
anniversary of the first date of a period in which he remains
absent from the employment of the Participating Employers, with
or without pay, for any reason other than one specified in (a),
such as vacation, holiday, sickness, Authorized Leave of Absence
or layoff; and
(2) is, in the case of an Extended Absence Employee, the second
anniversary of such Employee's absence.
For purposes of paragraph (1)(b) of this Section, an Employee shall be
treated as on layoff status only if (i) such Employee's employment has
been terminated because of an involuntary reduction in workforce and
(ii) such Employee returns to active employment within a twelve (12)-
month period beginning on the date of such termination of employment.
2.42 SPOUSE means the spouse of a Participant who is and has been legally
married to the Participant under the laws of the jurisdiction in which
the marriage was contracted for a period of at least one (1) year
ending on the earlier of (i) the date of the Participant's death or
(ii) the date on which his benefits hereunder commence.
2.43 TERMINATED PARTICIPANT means a once Active Participant who incurs a
Severance from Service for a reason other than Actual Retirement or
death. Except as otherwise provided in Article VII hereof, a
Terminated Participant shall forfeit all benefits under this Plan.
2.44 TRUST means the Halter Marine Group Pension Plan Trust, as amended
from time to time.
2.45 TRUSTEE means the corporation or individuals appointed by the Company
to administer the Trust.
2.46 TRUST FUND means the cash, securities and other property held by the
Trustee pursuant to the terms of the Trust.
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<PAGE>
ARTICLE III
PARTICIPATION AND SERVICE
-------------------------
3.01 Participation
-------------
An Eligible Employee shall become a Participant in this Plan as
follows:
(1) Any Eligible Employee as of the Effective Date who has both
attained the age of eighteen (18) years and completed a twelve
(12)-month computation period beginning on his Employment
Commencement Date (or anniversaries thereof) and ending prior
to the Effective Date of not less than one thousand (1,000) Hours
of Service shall become a Participant on the Effective Date.
(2) The participation of any Eligible Employee not described above
shall commence on the date as of which he has both attained the
age of eighteen (18) years (or such younger age as may be
required by applicable legislation) and completed a twelve (12)-
month computation period ending prior to said date and beginning
on his Employment Commencement Date (or anniversaries thereof) of
not less than one thousand (1,000) Hours of Service.
An Active Participant who incurs a Severance from Service and who is
subsequently re-employed by a Participating Employer shall immediately
re-enter the Plan as an Active Participant on the date of his
re-employment.
The Committee is hereby authorized to identify, in writing on Appendix
I, those Employees or classes of Employees employed at a location of
an Employer who are not eligible to participate in the Plan. The
Committee is further authorized and directed to revise Appendix I, or
to have Appendix I revised by the appropriate person designated by the
Committee, to reflect any necessary additions and deletions thereto as
soon as administratively possible following such identification by the
Committee. Revisions to Appendix I shall require the adoption of a
Plan amendment and, notwithstanding the provisions of Section 14.01
hereof, the Board of Directors of the Company hereby delegates to the
Committee (or the Committee's authorized representative) the authority
to execute such an amendment from time to time.
3.02 Service and credited Service
----------------------------
A Participant's Service and Credited Service shall be determined in
accordance with the following:
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<PAGE>
(1) In General. Subject to the Break in Service provisions of
----------
paragraph (4) of this Section 3.02, an Employee's Service and
Credited Service shall equal the total of his Elapsed-time
Employment. Service shall be counted in years and days, and
Credited Service shall be counted in years and completed months.
(2) Transfers from Affiliates. In the event that an Employee who at
-------------------------
any time was employed by an Affiliate either commences
employment with a Participating Employer, or returns to the
employment of a Participating Employer, then, except as otherwise
provided below, such Employee shall receive Service (but not
Credited Service) with respect to the period of his employment
with such Affiliate (to the extent not credited under paragraph
(3) of this Section 3.02)). In applying the provisions of the
preceding sentence--
(a) such Employee shall not receive Service with respect to any
period of employment with such Affiliate completed prior to
the date on which such Affiliate became an Affiliate;
(b) the amount of such Service shall be determined in accordance
with paragraph (1) of this Section 3.02, as if such
Affiliate were a Participating Employer; and
(c) if such Employee incurs a Break in Service (as defined in
paragraph (4) of this Section 3.02, and determined as if
such Affiliate were a Participating Employer) prior to his
commencement of employment with the Participating Employer
or return to the employment of the Participating Employer,
then the amount of such Employee's Service attributable to
the period of his employment with such Affiliate shall be
determined in accordance with paragraph (4) of this Section
3.02.
In determining any benefit of such Employee under this Plan, his
Compensation and Final Monthly Compensation shall be calculated
as if all Affiliates were Participating Employers.
(3) Transfers to Affiliate. In the event that a Participant who at
----------------------
any time was employed by a Participating Employer either
commences employment with an Affiliate, or returns to the
employment of an Affiliate, then, except as otherwise provided
below, such Participant shall receive Service (but
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<PAGE>
not Credited Service) with respect to the period of his
employment with such Affiliate (to the extent not credited under
paragraph (2) of this section 3.02). In applying the provisions
of the preceding sentence--
(a) the amount of such Service shall be determined in accordance
with paragraph (1) of this Section 3.02, as if such
Affiliate were a Participating Employer; and
(b) if such Participant incurs a Break in Service (as defined in
paragraph (4) of this Section 3.02 and determined as if such
Affiliate were a Participating Employer) prior to his
commencement of employment with the Affiliate or return to
the employment of the Affiliate, then the amount of such
Participant's Service attributable to his prior period of
employment with the participating Employer shall be
determined in accordance with paragraph (4) of this Section
3.02.
In determining any benefit of such Participant under this Plan,
his Compensation and Final Monthly Compensation shall be
calculated as if all Affiliates were Participating Employers. In
addition, except as otherwise provided in Section 9.03, such
Participant shall receive no benefits under this Plan prior to
the date on which he incurs a Severance from Service, determined
as if all Affiliates were Participating Employers.
(4) Break in Service. An Employee who incurs a Severance from Service
----------------
and who fails to complete at least one (1) Hour of Service during
the twelve (12)-month period beginning on the date of such
Severance from Service shall have a Break in Service. If, during
the twelve (12)-month period beginning on the date of an
Employee's Severance from Service, the Employee shall return to
the employment of a Participating Employer by completing at least
one (1) Hour of Service within such twelve (12)-month period,
then such Employee will not have a Break in Service and shall
receive Service (but not Credited Service) for the period
beginning on the date of his Severance from Service and ending on
the date of his re-employment; provided, however, that in the
case of an Employee who is absent from the employment of the
Participating Employers for a reason specified in Section 2.41
(1) (b) hereof and who, prior to the first anniversary of the
first date of such absence incurs a Severance from Service for a
reason
-13-
<PAGE>
specified in Section 2.41 (1) (a) hereof, such Employee shall
receive Service only if he completes at least one (1) Hour of
Service within the twelve (12)-month period beginning on the
first date of such absence and shall receive such Service only
for the period beginning on the first day of such absence and
ending on the date of his re-employment. Upon incurring a Break
in Service, an Employee's rights and benefits under the Plan
shall be determined in accordance with his Service, Credited
Service and Compensation at the time of the Break in Service. For
a Participant who, at the time of a Break in Service, satisfied
any requirements of this Plan for vested benefits, his pre-break
Service and Credited Service shall, upon his Re-employment
Commencement Date, be restored in determining his rights and
benefits under the Plan. For an Employee who, at the time of a
Break in Service, had not fulfilled such requirements, periods of
pre-break Service and Credited Service shall, upon his Re-
employment Commencement Date, be restored only if the consecutive
periods of Break in Service were less than the greater of sixty
(60) months or the total periods of pre-break Service or Credited
Service, as the case may be.
(5) Special Rule for Extended Absence Employees. Notwithstanding the
-------------------------------------------
preceding provisions of this Section 3.02, in the case of an
Extended Absence Employee defined in Section 2.26 hereof, the
period between the first and second anniversaries of such
Employee's absence shall, under no circumstances, be treated as a
period of Service or Credited Service.
3.03 Transfer From or To Job as an Employee
--------------------------------------
It is contemplated that an individual who is an Eligible Employee as
defined in Section 2.21 hereof may be transferred to a job provided by
an Employer which will result in his no longer being an Eligible
Employee as defined in such Section, and, conversely, that an
individual employed by an Employer who is not an Eligible Employee as
defined in Section 2.21 hereof may be transferred to a job provided by
an Employer which will result in his being an Eligible Employee as
defined in such Section. The eligibility of such and individual for
benefits hereunder, and/or the amount of benefit payable to him or on
his behalf, shall be determined in accordance with the following
provisions:
(1) If an individual who is an Eligible Employee as defined in
Section 2.21 hereof ceases to be an Eligible Employee as defined
in such Section, then
-14-
<PAGE>
he shall receive Service (but not Credited Service) for the
period of his continued employment with the Employers. Except
as otherwise provided in Section 9.03, such individuals shall
receive no benefits under this Plan prior to the date on which he
incurs a Severance from Service. For purposes of determining his
Accrued benefit, his Final Monthly Compensation shall be computed
by reference to the period ending with the date of his Severance
From Service.
(2) If an individual who is not an Employee as defined in Section
2.21 hereof is transferred to a job as an Eligible Employee as
defined in such Section, he shall become a Participant hereunder
as of the date of such transfer if he had satisfied the
requirements of Section 3.01 hereof; provided, however, that in
determining whether he had satisfied such requirements, such
individual shall be credited with Hours of Service completed
prior to the date of transfer. Such individual shall receive
Service (but not Credited Service) for his period of employment
with the Employers prior to the date of such transfer. For
purposes of determining his Accrued Benefit, his Final Monthly
Compensation shall be determined by including his period of
employment with the Employers prior to the date of such transfer.
(3) If a Participant is entitled to a benefit under the Plan and any
other qualified defined benefit plan maintained by the Employer
for individuals who do not qualify as Eligible Employees as
defined in Section 2.21 hereof as of his date of Severance from
Service, the administrators of the plans may, by mutual
agreement, provide for payment of the entire monthly income or
other benefit from one trust fund with appropriate reimbursement
to the trustee of the trust fund from which the benefits are to
be paid by transfer of funds equal to the single-sum value of the
benefits payable under the other plan to the trust fund from
which benefits actually will be paid.
3.04 Employment by More Than One Participating Employer
--------------------------------------------------
In the event that a Participant has been or is employed by more than
one Participating Employer as of his Severance from Service, his
benefit under the Plan, if any, shall be computed by applying the
benefit formulas as if all the Employers were a single Employer;
provided, however, there must be a proper allocation (taking into
account the Credited Service and Compensation applicable to each
Employer) of the costs of the resulting benefits
-15-
<PAGE>
among the Employers by which such Participant has been or is employed.
3.05 Special Rules for Certain Participants in Trinity Industries, Inc.
------------------------------------------------------------------
Marine Group Pension Plan
-------------------------
Notwithstanding any provision to the contrary herein contained, the
following special rules shall apply with respect to any Employee as of
October 11, 1996 who immediately prior to October 1, 1996 was an
active participant (including a participant on an authorized leave of
absence, but not including a participant on layoff status) in the
Trinity Industries, Inc. Marine Group Pension Plan (the "Trinity
Marine Plan") maintained by Trinity Industries, Inc.:
(1) Such Employee shall become a Participant in this Plan on October
1, 1996.
(2) Such Employee shall be credited with Service under Section 3.02
hereof only for periods of employment completed on and after
October 1, 1996. In addition, (a) such Employee shall receive
Service with respect to periods of employment completed prior to
October 1, 1996, and credited to such Employee under the Trinity
Marine Plan in calculating his vested interest under such Trinity
Marine Plan, and (b) such Employee's vested percentage as
determined pursuant to Section 7.01 hereof shall not be less than
the vested percentage he would have had under the Trinity Marine
Plan, based on the vesting provisions of the Trinity Marine Plan
as in effect on September 30, 1996 and his years of Service
(including Service credited under (a) of this paragraph).
(3) Such Employee's Accrued Benefit under this Plan shall be based on
(a) credited service completed prior to October 1, 1996 and
calculated in accordance with the Trinity Marine Plan and (b)
Credited Service granted for periods of employment completed on
and after October 1, 1996 and calculated in accordance with the
provisions of this Plan. Notwithstanding the preceding provisions
of this paragraph (3), under no circumstances shall such
Employee's Accrued Benefit be less than his Accrued Benefit
determined under the benefit formula of the Trinity Marine Plan
as of September 30, 1996, taking into account all periods of
employment which were or would have been credited to such
Employee under the Trinity Marine Plan in calculating his accrued
benefit under such Trinity Marine Plan as of September 30, 1996.
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<PAGE>
ARTICLE IV
CONTRIBUTIONS
-------------
4.01 Employer Contributions
----------------------
Each Participating Employer shall make periodic contributions
necessary to meet the cost of the Plan with respect to its
Participants. The Pension Committee shall, each Plan Year, determine
the contributions to be made to this Plan by all Participating
Employers for such Year. All such contributions shall be delivered to
the Trustee.
4.02 Participant Contributions
-------------------------
Participants are neither required nor permitted to make contributions
to the Plan.
4.03 Cost
----
All contributions will be subject to ERISA and to the Code, and all
regulations promulgated thereunder, and subject to any other
appropriate governmental regulatory authority, and will be declared
paid within the time permitted by law.
All contributions to this Plan by an Employer shall consist of amounts
sufficient, as determined by the Pension Committee under the funding
policy it has established, and consistent with the minimum funding
standards of ERISA, to provide the benefits that will accrue under
this Plan, unless because of business hardship, the Secretary of the
Treasury of the United States shall waive the minimum standards as
provided in Section 4.04. Contributions may be in cash or kind;
provided, however, that contributions may be made in kind only if such
contributions qualify under the Code (and the rules, regulations and
guidelines promulgated thereunder) and under any other appropriate
governmental regulatory authority, and are acceptable to the Trustee.
All credits under this Plan due to Trust Fund earnings in excess of
the assumed return on assets, together with all gains, forfeitures, or
other experience adjustments shall be used to reduce the cost of the
Plan.
4.04 Payment of Contributions
------------------------
Contributions by an Employer for a particular Plan Year shall be
delivered to the Trustee no later than two and one-half (2-1/2) months
after the close of the Employer's fiscal year with respect to which
such contributions are made, or within such longer period, not to
exceed six (6) additional months, as may be permitted under
regulations
-17-
<PAGE>
of the Secretary of the Treasury of the United States. However, if,
under such regulations, a waiver of a particular Plan Year's
contributions shall have been granted for substantial business
hardship, the time limits of this Section 4.04 shall be disregarded.
4.05 Reversion
---------
Except as otherwise provided in Section 9.05 and 16.09 hereof, under
no circumstances shall any Participating Employer recover any assets
of the Trust Fund. No assets of the Trust Fund shall be diverted to
any purpose other than (1) the exclusive benefit of the Participants
or their Beneficiaries, and (2) defraying reasonable expenses of
administering the Plan and Trust.
ARTICLE V
RETIREMENT
----------
5.01 Normal Retirement Date
----------------------
An Active Participant who attains his Normal Retirement Date shall be
fully vested in his Accrued Benefit. In the event of such
Participant's Normal Retirement, he shall be entitled to a monthly
benefit equal to the product of (1) times (2), where--
(1) is the lesser of (i) the number of his years of Credited Service
(and fractions thereof, rounded off to whole months); or (ii) if
the Participant is an Hourly-Wage Employee, twenty (20); and
(2) is three-fourths of one percent (.75%) of his Final Monthly
Compensation.
5.02 At Early Retirement Date
------------------------
An Active Participant who elects to retire on his Early Retirement
Date shall remain fully vested in his Accrued Benefit and shall
receive a monthly benefit to commence on his Early Retirement Date in
an amount equal to his Accrued Benefit reduced on an Actuarially
Equivalent basis for the period by which the starting date of pension
payments precedes his Normal Retirement Date; provided, however, that
the Participant may elect to defer commencement of benefits until his
Normal Retirement Date or until such earlier date which is prior to
his Normal Retirement Date and subsequent to his Early Retirement
Date, and, in the event of such election to defer, his monthly benefit
shall be determined under the provisions of Article VII hereof.
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<PAGE>
5.03 At Late Retirement Date
-----------------------
(1) If a Participant remains in the employ of a Participating
Employer after his Normal Retirement Date, he shall be fully
vested in his Accrued Benefit as of such Normal Retirement Date,
but, except as otherwise provided in Section 8.06 hereof, shall
not be entitled to receive any payment of retirement benefits
from this Plan until his Actual Retirement. Such Participant
shall continue to accrue benefits after his Normal Retirement
Date if his Accrued Benefit would increase because of additional
Credited Service or Compensation. Such Participant's Accrued
Benefit at Actual Retirement Date shall be the greater of (i) his
Accrued Benefit earned at his Normal Retirement Date, increased
by interest for the period beginning on his Normal Retirement
Date and ending on the date of his Actual Retirement, where all
computations shall be on the basis of the interest and mortality
assumptions used to determine Actuarial Equivalence as of his
Normal Retirement Date; or (ii) his Accrued Benefit, determined
as of the date of his Actual Retirement, taking into account
Credited Service and Compensation earned after his Normal
Retirement Date. Such benefit shall be payable in accordance with
the provisions of Article VIII.
(2) The Accrued Benefit for any Participant who remains in the employ
of a Participating Employer after the Required Beginning Date
defined in Section 8.05 shall be reduced by the Actuarial
Equivalent of the total distributions made to the Participant as
of the close of each Plan Year during which distribution is made,
and recalculated as of each January 1 following the Required
Beginning Date.
ARTICLE VI
DEATH
-----
6.01 Prior to Actual Retirement or Other Severance from Service
----------------------------------------------------------
In the event of the death of an Active Participant who is vested in
his Accrued Benefit, his Spouse will be entitled to receive a Death
Benefit equal to fifty percent (50%) of the monthly benefit to which
the Participant would have been entitled at his earliest retirement
date, determined as if his benefits had commenced on such date and
were payable pursuant to the form specified in Section 8.02(2) hereof.
-19-
<PAGE>
Such benefit shall be paid in the form of a life annuity and, in the
case of a Participant who dies prior to his earliest retirement date,
shall commence no later than such earliest retirement date; provided
that, with the consent of the Committee, the Participant's Spouse may
elect that the value of such Death Benefit be paid in any Actuarially
Equivalent form of payment. Any such form of payment must be
distributed in accordance with the provisions of Section 8.05 hereof.
6.02 After Actual Retirement or Other Severance From Service
-------------------------------------------------------
In the event of the death of a Retired Participant or a Terminated
Participant who is vested in his Accrued Benefit, the following
provisions shall apply:
(1) Before Commencement of Benefits. If the Participant dies before
-------------------------------
his benefits have commenced, then (i) if the Participant is a
Retired Participant, his Spouse shall be entitled to the monthly
benefit to which such Spouse would have been entitled under
Section 8.02(2) hereof had the Participant's benefits commenced
on the day immediately prior to the date of his death; or (ii) if
the Participant is a Terminated Participant, his Spouse shall be
entitled to fifty percent (50%) of the monthly benefit to which
such Participant would have been entitled at his earliest
retirement date, determined as if he had survived to his earliest
retirement date and had retired on the day immediately prior to
the date of his death, with his benefits payable at his earliest
retirement date in the form specified in Section 8.02(2) hereof.
(2) After Commencement of Benefits. If the Participant dies after
------------------------------
his benefits have commenced, the only benefit payable on behalf
of such Participant shall be the benefit, if any, payable under
the form of pension which is in effect in accordance with Section
8.02 or which the Participant had elected under Section 8.03.
6.03 Earliest Retirement Date
------------------------
For purposes of this Article VI, a Participant's "earliest retirement
date" shall be his Early Retirement Date, determined solely by
reference to the earliest age requirement for Early Retirement;
provided that, in the case of a Participant who terminates employment
before satisfying the service requirement for Early Retirement, such
Participant's "earliest retirement date" shall be his Normal
Retirement Date.
-20-
<PAGE>
6.04 No Duplication of Benefit
-------------------------
Notwithstanding the foregoing, with respect to a Participant who is
entitled to a Death Benefit under this Plan and one or more other
qualified defined benefit pension plans maintained by the Employers,
the total amount of Death Benefit payable to the Participant under
this Plan shall be offset (but not below zero) by the value of the
death benefits payable under such other plans.
ARTICLE VII
OTHER SEVERANCE FROM SERVICE
----------------------------
7.01 Benefits
--------
When a Participant incurs a Severance from Service for reasons other
than death or Actual Retirement, such Terminated Participant shall be
entitled to a monthly retirement income to commence on his Normal
Retirement Date (or on such earlier date specified in Section 7.03
below) in an amount equal the product of--
(1) the Participant's Vested Percentage (as specified in the Vesting
Schedule described in subsection (4)) based on his years of
Service as of the date of his Severance from Service, multiplied
by
(2) his Accrued Benefit on the date of his Severance from Service.
(3) A transfer from one Participating Employer to another
Participating Employer or from a Participating Employer to an
Affiliate shall not constitute a Severance from Service for these
purposes.
(4) The following Vesting Schedule shall apply:
Years of Services Vested Percentage
----------------- -----------------
Less than 5 years 0%
5 years or more 100%
7.02 Effect of Prior Distribution
----------------------------
(1) In the event that a Terminated Participant receives payment of
the present value of his vested Accrued Benefit (determined under
Section 7.01 hereof) and later is re-employed by a Participating
Employer and re-commences participation in the Plan as an Active
Participant, then--
-21-
<PAGE>
(a) if the Participant had voluntarily elected payment of such
Accrued Benefit, the Credited Service attributable to the
Participant's prior period of employment shall, subject to
the provisions of paragraph (2) of this Section 7.02, be
forfeited; or
(b) if the Participant had not voluntarily elected payment of
such Accrued Benefit and had received payment of the present
value of his entire Accrued Benefit, the Credited Service
attributable to the Participant's prior period of employment
shall, subject to the provisions of paragraph (2) of this
Section 7.02, be forfeited.
(2) Notwithstanding the provisions of paragraph (1), above, if a
Terminated Participant is re-employed by an Employer and if, by
the end of a 5-year period beginning on his Re-employment
Commencement Date, he repays to the Trustee the full amount of
his previous payments (with interest equal to the lesser of (i)
five percent (5%), or (ii) interest computed on the basis of the
interest and mortality assumptions used for the actuarial
valuation of the Trust Fund coincident with or immediately
preceding his Re-employment Commencement Date), then the Credited
Service attributable to his prior period of employment shall not
be forfeited and shall be fully restored.
7.03 Early Retirement Age
--------------------
In the event a Terminated Participant who is entitled to a benefit
under Section 8.01 above has, at the time of his Severance from
Service, completed the Service requirement for Early Retirement, but
not the age requirement, such Terminated Participant shall, upon
application, be entitled to request commencement of such benefit as of
the first day of any month coincident with or next following his
attainment of the required age, with such benefit reduced for early
payment as described in Section 5.02.
7.04 Terminated Participant's Address
--------------------------------
It shall be the obligation of a Terminated Participant to keep the
Pension Committee informed of his current address.
7.05 Payment of Terminated Participant's Benefits
--------------------------------------------
Except as otherwise provided in Section 7.03, payment of a benefit to
a Terminated Participant shall commence at
-22-
<PAGE>
the time such Terminated Participant would have been entitled to
benefits had he continued in active employment to the earlier of his
Normal Retirement Date or death, with such benefit to be payable
pursuant to the provisions of Sections 8.01 and 8.02 hereof; provided
that a Terminated Participant who incurs a Break in Service prior to
April 1, 1998, the present value of whose Accrued Benefit under this
Plan (plus, in the case of a Participant described in Section 3.05
hereof, any accrued benefit to which he may be entitled under the
Terminated Plan referred to in Section 3.05 of the Trinity Marine
Plan) is Ten Thousand Dollars ($10,000.00) or less, may elect that the
present value of his Accrued Benefit be paid to him in a lump sum as
soon as administratively feasible after the end of the Plan Year in
which he incurs such Break in Service, with such election to be made
on a form or forms provided by the Pension Committee for this purpose.
7.06 Limitation Amount
-----------------
Notwithstanding anything herein to the contrary, if the present value
of (i) a Terminated Participant's vested Accrued Benefit under this
Plan, plus (ii) in the case of a Participant described in Section 3.05
hereof, any accrued benefit to which he may be entitled under the
Terminated Plan referred to in Section 3.05 of the Trinity Marine
Plan, is less than Three thousand five hundred dollars ($3,500.00),
such benefit, to the extent not payable pursuant to the annuity
contract referred to in paragraph (4) of Section 3.05 of the Trinity
Marine Plan, shall be paid in a lump sum as soon as practicable after
the end of the Plan Year in which such Participant has incurred a
Break in Service (as defined in Section 3.02(2) (d) hereof).
7.07 Deemed Cashout
--------------
A Terminated Participant who incurs a Severance from Service without a
Vested Percentage in his Accrued Benefit pursuant to Section 7.01
hereof shall be deemed to have received a distribution of zero dollars
on the date of such Severance from Service.
ARTICLE VIII
SETTLEMENT OPTIONS-DISTRIBUTION OF BENEFITS
-------------------------------------------
8.01 When Payable
------------
No Participant or his Beneficiary shall receive any payment under this
Plan until the occurrence of one of the following events:
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<PAGE>
(1) the Participant's Normal, Early or Late Retirement;
(2) the death of the Participant;
(3) the Participant's Break in Service; and
(4) the termination of this Plan.
In no event shall any Participant have any interest in the Trust Fund
except as provided in this Plan and the Trust.
8.02 Basic Pension
-------------
(1) Unmarried Basic Pension. Subject to the provisions of Section
-----------------------
8.03 hereof, each Participant entitled to a distribution as
herein provided and who does not have a Spouse on the date of
which payment of his benefits begins, shall receive an Unmarried
Basic Pension, consisting of monthly payments during the life of
the Participant.
(2) Married Basic Pension. (a) Automatic Payment. Each Participant
--------------------- -----------------
who is entitled to a distribution as herein provided and who has
a Spouse on the date on which payment of his benefits begins
shall receive a Married Basic Pension, consisting of a "qualified
joint and survivor annuity". The qualified joint and survivor
annuity is a form of payment under which a modified monthly
amount is payable to the Participant for his life, and, upon his
death, fifty percent (50%) of such monthly amount is payable to
his Spouse, if surviving, for the remainder of the Spouse's life.
The modification shall be such that the Married Basic Pension is
Actuarially Equivalent to the Unmarried Basic Pension the
Participant would have received if he were not married on the
date on which payment of his benefits begins.
(b) Election. (i) When Made. Notwithstanding the provisions of
------------------------
subparagraph (a) of this paragraph (2), a Participant
described in such subparagraph (a) may, in lieu of the
qualified joint and survivor annuity, elect to receive his
benefits as an Unmarried Basic Pension or in any other
optional form provided under Section 8.03; provided,
however, that such election shall be effective only if the
Participant's Spouse consents to such election in an
instrument acknowledging the effect of such election. The
election described in the preceding sentence shall be made
in writing on forms provided by the Pension Committee for
-24-
<PAGE>
this purpose and within the ninety (90)-day period ending
on the benefits commencement date. Any election made during
such period may be revoked in writing prior to the end of
such period.
(ii) Materials to be Furnished. The Pension Committee shall
-------------------------
furnish to a Participant described in subparagraph (a) of
this paragraph (2) a written explanation of the terms and
financial effect of the qualified joint and survivor
annuity, the circumstances under which it will be provided
unless an election is made not to receive benefits in such
form, and the availability of the election described in
clause (i) of this subparagraph (b). The materials described
in this clause (ii) shall be furnished to such Participant
within a reasonable time prior to the benefits commencement
date but, in all events, neither earlier than ninety (90)
days nor later than thirty (30) days prior thereto.
8.03 Optional Pensions
-----------------
In the event a Participant prefers a mode of payment other than one
described in Section 8.02 hereof, he may request in writing that the
Pension Committee distribute his benefits under one of the following
options (which must be Actuarially Equivalent to the Basic Pension):
(1) By monthly payments to be made to such Participant for life, with
or without a minimum guaranteed period or a Death Benefit;
(2) By payment in the form of a joint and survivor annuity where the
survivor's annuity shall be fifty percent (50%), sixty-six and
two-thirds percent (66-2/3%), seventy-five percent (75%) or one
hundred percent (100%) of the amount paid to the Participant
during the joint lives of the Participant and his surviving
annuitant.
(3) In the case of a Participant or Beneficiary who incurs a
Severance from Service prior to April 1, 1998 (or any Beneficiary
of such Participant), the present value of whose Accrued Benefit
under this Plan (plus, in the case of a Participant described in
Section 3.05 hereof, any accrued benefit to which he may be
entitled under the Terminated Plan referred to in Section 3.05 of
the Trinity Marine Plan) is Ten Thousand Dollars ($10,000.00) or
less, by payment of the present value of his Accrued Benefit in
the form of a lump sum.
-25-
<PAGE>
In no event shall the form of payment have a guaranteed period of
payment running beyond the then life expectancy of the Participant or
the joint life expectancy of the Participant and his Beneficiary
designated in accordance with Section 12.12. Except as provided in
Article VI hereof, no Death Benefit shall be payable under any one of
the foregoing optional pensions in the event that the Participant dies
prior to the date on which his benefits hereunder commence. In
addition, no election made by a Participant under this Section 8.03
shall be given effect if such election would cause the present value
of the payments to be made to such Participant to be fifty percent
(50%) or less than the present value of the total payments to be made
to the Participant and his Beneficiary.
8.04 Directed Transfer of Eligible Rollover Distributions
----------------------------------------------------
(1) General. Notwithstanding any provision of the Plan to the
-------
contrary that would otherwise limit a "Distributee's" election
under this Section, a "Distributee" may elect, at the time and in
the manner prescribed by the Committee, to have any portion of an
"Eligible Rollover Distribution" paid directly to an "Eligible
Retirement Plan" specified by the "Distributee" in a "Direct
Rollover," as each such term is hereinafter defined.
(2) Eligible Rollover Distribution. An Eligible Rollover Distribution
------------------------------
is any distribution of all or any portion of the balance to the
credit of the Distributee, except that an Eligible Rollover
Distribution does not include: (a) any distribution that is one
of a series of substantially equal periodic payments made not
less frequently than annually for the life (or life expectancy)
of the Distributee (or the joint lives or joint life expectancies
of the Distributee) and the Distributee's designated Beneficiary,
or for a specified period of ten years or more; (b) any
distribution to the extent that such distribution is required
under Code Section 401 (a)(9); and (c) the portion of any
distribution that is not includable in the recipient's gross
income.
(3) Eligible Retirement Plan. An Eligible Retirement Plan is an
------------------------
individual retirement account described in section 408(a) of the
Code, an individual retirement annuity described in Section
408(b) of the Code, an annuity plan described in section 403(a)
of the Code, or a qualified trust described in section 401(a) of
the Code, that accepts the Distributee's Eligible Rollover
Distribution. However, in the case of an Eligible Rollover
-26-
<PAGE>
Distribution to a Participant's surviving spouse, an Eligible
Retirement Plan is an individual retirement account or individual
retirement annuity.
(4) Distributee. A Distributee includes an Employee or former
-----------
Employee. In addition, the surviving spouse of an Employee or
former Employee and the spouse or former spouse of an Employee or
former Employee, if such spouse or former spouse is an alternate
payee under a qualified domestic relations order, as defined in
section 414(p) of the Code, are Distributees with regard to the
interest of such spouse, surviving spouse or former spouse.
(5) Direct Rollover. A Direct Rollover is a payment by the Plan to an
---------------
Eligible Retirement Plan specified by the Distributee.
8.05 Mandatory Distribution of Retirement Benefits
---------------------------------------------
(1) In General. Subject to the provisions of this Section 8.05,
----------
commencement of a benefit will, unless the Participant elects
otherwise in writing, begin not later than the 60th day after the
later of (i) the close of the Plan Year in which the Participant
attains his Normal Retirement Date or (ii) the close of the Plan
Year which contains the date on which the Participant incurs a
Severance from Service.
For purposes of this Section, life expectancy and joint and last
survivor expectancy are to be computed by the use of the return
multiples contained in Section 1.72-9 of the Income Tax
Regulations.
All distributions required under this Section will be determined
and made in accordance with the Income Tax Regulations issued
under Code Section 401(a)(9).
(2) Mandatory Distribution to Participant. Payment of a Participant's
-------------------------------------
benefits must begin no later than the April 1 immediately
following the calendar year in which he attains age 70-1/2 years
("Required Beginning Date"). A Participant's benefits must either
be distributed in the calendar year containing his Required
Beginning Date or must be paid over a period not exceeding one of
the following periods:
(a) the lifetime of the Participant;
-27-
<PAGE>
(b) the lifetime of the last survivor of the Participant and the
Participant's designated Beneficiary;
(c) the life expectancy of the Participant; or
(d) the joint life and last survivor expectancy of the
Participant and the Participant's designated Beneficiary.
(3) Determination of Amount To Be Distributed Each Year. If the
---------------------------------------------------
Participant's interest is to be paid in the form of annuity
distributions under the Plan, payments under the annuity must
satisfy the following requirements:
(a) The annuity distributions must be paid in periodic payments
made at intervals no longer than one year;
(b) The distribution period must be over a life (or lives) or
over a period certain not longer than a life expectancy or
joint life and last survivor expectancy described in Code
Section 401(a) (9) (A) (ii) or 401(a) (9) (B) (iii),
whichever is applicable;
(c) The life expectancy or joint life and last survivor
expectancy for purposes of determining the period certain
must be determined without recalculation of life expectancy;
(d) Once payments have begun over a period certain, the period
certain may not be lengthened even if the period certain is
shorter than the maximum permitted;
(e) Payments must either be non-increasing or increase only as
follows:
(i) in accordance with any percentage increase in a
specified and generally recognized cost-of-living
index;
(ii) to the extent of the reduction in the amount of the
payment to the Participant necessary to provide for a
survivor benefit upon death, but only if the
Beneficiary whose life was being used to determine
the distribution period described in paragraph (2) of
this Section dies and the payments continue
-28-
<PAGE>
otherwise according to that Section over the life of
the Participant; or
(iii) because of an increase in benefits under the Plan.
(f) If the annuity is a life annuity (or a life annuity with a
period certain not exceeding 20 years), the amount which
must be distributed on or before the Participant's Required
Beginning Date will be the payment which is required for one
payment interval. The second payment need not be made until
the end of the next payment interval even if that payment
interval ends in the next calendar year. Payment intervals
are the periods for which payments are received--e.g.,
bimonthly, monthly, semiannually or annually.
If the annuity is a period certain annuity without a life
contingency or is a life annuity with a period certain
exceeding 20 years, periodic payments for each year must be
combined and treated as an annual amount. The amount which
must be distributed by the Participant's Required Beginning
Date (or, in the case of distributions after the
Participant's death, the date distributions are required to
begin pursuant to paragraph (4) of this Section) is the
annual amount for the first calendar year of distribution.
The annual amount for other calendar years of distribution,
including the annual amount for the calendar year in which
the Participant's Required Beginning Date occurs, must be
distributed on or before December 31 of the calendar year
for which the distribution is required.
(g) Purchased annuities are subject to the following additional
conditions:
(i) Unless the Participant's spouse is the designated
Beneficiary, if the Participant's interest is being
distributed in the form of a period certain annuity
without a life contingency, the period certain as of
the beginning of the first calendar year of
distribution may not exceed the applicable period
determined using the table set forth in Q&A-5 of
Treasury Regulation Section 1.401(a) (9)-2.
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(ii) If the Participant's interest is being distributed in
the form of a joint and survivor annuity for the
joint lives of the Participant and a non-spouse
Beneficiary, annuity payments to be made on or after
the Participant's Required Beginning Date to the
designated Beneficiary after the Participant's death
must not at any time exceed the applicable percentage
of the annuity payment for the period that would have
been payable to the Participant using the table set
forth in Q&A-6 of Treasury Regulation Section
1.401(a) (9)-2.
(h) Any additional benefits accruing to the Participant after
his Required Beginning Date must be distributed as a
separate and identifiable component of the annuity beginning
with the first payment interval ending in the calendar year
in which the amount accrues.
(i) Any part of the Participant's interest which is in the form
of an individual account must be distributed in a manner
satisfying the requirements of Code Section 401(a) (9) and
the regulations thereunder.
(4) Mandatory Distribution to Beneficiaries. (a) If a Participant
---------------------------------------
dies after distribution of his interest has begun, the remaining
portion of the interest must continue to be distributed at least
as rapidly as under the method of distribution being used before
the Participant's death.
(b) If the Participant dies before distribution of his interest
begins, the Participant's entire interest must be
distributed no later than five years after the Participant's
death except that the Participant may elect that--
(i) if any portion of the Participant's interest is
payable to a non-spouse designated Beneficiary, such
portion be distributed in substantially equal
installments over the lifetime or over a period
certain no greater than the life expectancy of the
designated Beneficiary. Distributions must begin no
later than December 31 of the calendar year
immediately following the calendar year in which the
Participant dies; or
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(ii) if any portion of the Participant's interest is
payable to the Participant's spouse, such portion be
distributed in substantially equal installments over
the lifetime or over a period certain no greater than
the life expectancy of the spouse. Such distribution
must commence no later than the later of (i) December
31 of the calendar year immediately following the
calendar year in which the Participant dies or (ii)
December 31 of the calendar year in which the
Participant would have attained age 70-1/2. If the
spouse dies before payments begin, distributions
shall be made as if the spouse had been the
Participant.
If a Participant does not make an election pursuant to this
subparagraph (b) by the date of his death, the Participant's
designated Beneficiary may elect the method of distribution no
later than the earlier of December 31 of the calendar year in
which distributions would be required to begin under this section
or December 31 of the calendar year which contains the fifth
anniversary of the date of death of the Participant. If the
Participant has no designated Beneficiary, or if the designated
Beneficiary does not elect a method of distribution, distribution
of the Participant's entire interest must be completed by
December 31 of the calendar year containing the fifth anniversary
of the Participant's death.
(5) Special Rules. For purposes of this Section 8.05--
-------------
(a) the life expectancy of a surviving spouse may be
recalculated annually; however, in the case of any other
designated Beneficiary, life expectancy will be calculated
at the time payment first begins without further
recalculation;
(b) any amount paid to a child of the Participant will be
treated as if it had been paid to the Participant's
surviving spouse if the amount becomes payable to such
surviving spouse when the child reaches the age of
majority; and
(c) distribution of a Participant's interest is considered to
begin on the Participant's Required Beginning Date or, if
the surviving spouse dies before payments begin, the date on
which distribution is required to begin to the
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surviving spouse. If distribution in the form of an annuity
described above irrevocably commences to the Participant
before the Required Beginning Date, the date distribution
is considered to begin is the date distribution actually
commences.
8.06 One-Time Election for Commencement of Normal Retirement Income at
-----------------------------------------------------------------
Normal Retirement Date While Continuing in Employment
-----------------------------------------------------
An Active Participant who continues in the employ of the Employers
after his Normal Retirement Date may elect irrevocably and on a one-
time only basis to start receiving his benefits at any time on or
after such Normal Retirement Date, subject to the distribution
requirements of Sections 8.02 and 8.03, with such benefits to be
payable from and after the date of election. Any additional benefit
accruals that such Participant is entitled to receive because of his
continued employment shall be determined as of his Late Retirement
Date or Required Beginning Date, as defined in Section 8.05, whichever
is earlier, and no adjustment in the payments to such Participant
shall be made prior thereto. If the Participant continues employment
beyond his Required Beginning Date, a recalculation of the
Participant's retirement benefit payments shall be made as of each
January 1 following such date until the January 1 following the
January 1 on or immediately after the Participant's Late Retirement
Date. In determining the additional retirement benefit payable to any
such Participant, the Actuarial Equivalent of the retirement benefit
payments that he has received shall be applied as an offset against
such additional benefit (but such offset shall not result in a
reduction of the retirement benefit payable to the Participant below
the amount that he was receiving prior to his Actual Retirement Date).
8.07 Suspension of Benefits After Retirement
---------------------------------------
The following provisions shall apply in the case of a Participant
who is re-employed after his Early, Normal or Late Required:
(1) Before Normal Retirement Date. In the event the Participant is
-------------------------------
re-employed by an Employer or an Affiliate after commencement of
retirement benefits but prior to his Normal Retirement Date, his
benefit payments shall be suspended during such period of
re-employment. Upon the Participant's subsequent retirement or
termination of employment, he will be entitled to a benefit under
Section 5.01, 5.02, 5.03, 6.01 or 6.02 of the Plan, whichever is
applicable, using his Compensation and
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Credited Service during both his previous period of employment
and his period of re-employment but his Accrued Benefit for
purposes of determining the benefit payable under Section 5.01,
5.02, 5.03, 6.01 or 6.02 of the Plan upon his subsequent
retirement or termination of service shall not be less than his
Accrued Benefit as of his previous date of retirement and the
benefit payable under such applicable section of the Plan upon
his subsequent retirement or termination of employment shall be
reduced on an Actuarially Equivalent basis by an amount equal to
the sum of the retirement income payments which he received prior
to his date of re-employment.
(2) After Normal Retirement Date. In the event the Participant is
-----------------------------
re-employed by an Employer after commencement of retirement
benefits and after his Normal Retirement Date, benefit payments
shall continue in the same form and manner as in effect
immediately prior to his re-employment date. A re-employed
Participant who has one (1) hour of Service in any such Plan Year
shall participate in the additional accrual of benefits under the
Plan.
8.08 Preservation of Protected Benefits and Optional Forms of Benefit
----------------------------------------------------------------
Under Merged Plans
------------------
An amendment (including any merger with another plan) may not decrease
a Participant's Accrued Benefit, except to the extent permitted under
Code Section 412(c)(8), and may not reduce or eliminate Code Section
411(d)(6) protected benefits, determined immediately prior to the
adoption date (or, if later, the effective date) of the amendment. An
amendment reduces or eliminates Code Section 411(d)(6) protected
benefits if the amendment has the effect of either (i) eliminating or
reducing an early retirement benefit or a retirement-type subsidy (as
defined in Income Tax Regulations) or (ii) except as provided in
Income Tax Regulations, eliminating an optional form of benefit. The
Pension Committee shall disregard an amendment to the extent that
application of the amendment would fail to satisfy the requirements of
this Section 8.08.
ARTICLE IX
PLAN TERMINATION
----------------
9.01 Right to Terminate
------------------
In accordance with the procedures set forth in this Article IX, the
Company, acting through the Board, may
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terminate the Plan at any time. Subject to applicable requirements, if
any, of ERISA governing termination of" Employee Pension Benefit
Plans, "the Company, acting through the Board, shall direct and
require the Trustee to liquidate the Trust Fund, or the applicable
portion thereof, in accordance with the provisions of this Article IX.
9.02 Partial Termination
-------------------
Upon termination of the Plan with respect to a group of Participants
which constitutes a partial termination of the plan, the Trustee shall
allocate and segregate for the benefit of such Participants the
proportionate interest of such Participants in the Trust Fund. Such
proportionate interest shall be determined by an independent,
government enrolled actuary. Such actuary shall make this
determination on the basis of the contributions made, the provisions
of this Article, and such other considerations as the actuary deems
appropiate. The Employers, the Trustee and the Pension Commitee shall
have no responsibililty with respect to the determination of any such
proportionate interest.
The funds so allocated and segregated shall be used by the Trustee
to pay benefits to or on behalf of such Participants in accordance
with Section 9.03.
9.03 Liquidation of Trust Fund
-------------------------
Upon termination of the Plan with respect to all Participants, or upon
termination of the Plan with respect to a group of Participants
constituting a partial termination of the Plan, each such
Participant's Accrued Benefit, based on his Credited Service and
Compensation prior to the date of termination, shall become fully
vested and nonforfeitable; provided, however, that the Participant's
recourse against the Trust Fund for satisfaction of such
nonforfeitable benefit shall be limited by the extent to which such
benefit is funded. In the case of Participants described in Section
3.05 hereof, the annuity contracts described in Section 3.05(4) of the
Trinity Marine Plan shall be distributed to all affected Participants
in complete satisfaction of all benefits described in Section 3.05(3)
(a) of such Trinity Marine Plan. The remaining assets of the Trust
Fund, or the remaining portion thereof segregated in accordance with
Section 9.02, shall be liquidated (after provision is made for the
expenses of liquidation) by the payment or provision for the payment
of benefits (other than those described in Section 3.05(3) (a) of the
Trinity Marine Plan) in the following order of preference.
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<PAGE>
(1) Certain benefits Payable Three Years Prior to Termination.
----------------------------------------------------------
The available assets of the Trust Fund shall first be allocated
to provide benefits that became payable three (3) or more years
before the effective date of Plan termination, or that could have
become payable at the beginning of such three-year period had the
Participant not deferred the commencement of his benefits by
failing to elect earlier commencement or that could have become
payable had a Participant's retirement a immediately prior
to the beginning of such three-year period, provided that
(a) The portion of the benefits payable to a Participant or the
Beneficiary of a Participant (or that could have been
payable) shall be based on the provisions of the Plan in
effect five (5) years prior to the effective date of Plan
termination; and for this purpose, the first Plan Year in
which an amendment became effective, or was adopted, if
later, shall constitute the first year an amendment was in
effect; and further provided that,
(b) if the benefits payable under the Plan had been reduced,
either by amendment or due to the form in which the benefits
are being paid, during the three-year period ending on the
effective date of Plan termination, then the lowest benefit
in pay status during such three-year period shall be
considered the benefit in pay status for purposes of this
category.
(2) Other benefits Eligible for Termination Insurance.
--------------------------------------------------
To the extent that the amount of a benefit has not been provided
under paragraph (1) , above, the remaining assets shall be
allocated to provide any benefits provided under the Plan for a
Participant whose employment terminated prior to the effective
date of Plan termination, or any immediate deferred benefit
that would have been payable to or on behalf of a Participant had
his employment been severed for a reason other than death on the
effective date of Plan termination; provided that the amount of
benefits to be provided under this paragraph (2) shall be the
sum of the following:
(a) the portion of the benefits payable to a Participant or the
Beneficiary of a Participant (or that could have been
payable) based on the provisions of the Plan in effect five
(5) years prior to the effective date of
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<PAGE>
Plan termination; and for this purpose, the first Plan Year in
which an amendment became effective, or was adopted if later,
shall constitute the first year an amendment was in effect; plus
(b) the portion of the benefits payable to a Participant or the
Beneficiary of a Participant which would have been included in
(a) above had the Plan or a Plan amendment been in effect five
(5) years prior to the effective date of Plan termination,
determined as the greater of (i) twenty percent (20%)for each
Plan Year (less than five) that the Plan or an amendment thereto
was in effect, multiplied by the amount that would have been
included under subparagraph (a) for such Participant or
Beneficiary had the Plan or the amendment been in effect for five
(5) Plan Years as of the effective date of Plan termination or
(ii) $20 for each Plan Year (less than five) that the Plan or
amendment thereto was in effect; provided that,
(c) no benefit payable under this paragraph (2) to a Participant or
Beneficiary shall exceed an amount with an actuarially eqivalent
value of a monthly benefit in the form of a life-only annuity
commencing a age sixty-five (65) equal to Seven hundred fifty
dollars ($750.00) multiplied by a fraction, the numerator of
which is the contribution and benefit base determined under
Section 230 of the Social Security Act in effective date of Plan
termination and the denominator of which is the contribution and
benefit base in effect in calendar year 1974.
(3) Other Vested Benefits. To the extent that the amount of a benefit has
---------------------
not provided under paragraphs (1) and (2), above, the remaining assets
shall be allocated to provide the benefits payable under the Plan to
or on behalf of a Participant whose employment was severed prior to
the effective date of Plan termination, in the following order of
preference:
(a) to any Participant who had retired prior to the effective
date of Plan termination under Section 5.01 or 5.03 or who
was eligible to retire on the effective date of Plan
termination under any of said Sections;
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<PAGE>
(b) to any Participant who had retired prior to the effective
date of Plan termination under Section 5.02, or who was
eligible to retire on the effective date of Plan termination
under said Section; or
(c) to any Participant whose employment had terminated prior to
the effective date of Plan termination with entitlement to a
vested benefit under Section 7.01, or who would have been
eligible for a vested benefit under said Section had his
employment terminated on the effective date of Plan
termination.
(4) Other Benefits. To the extent that the amount of a benefit has
--------------
not been provided under paragraphs (1), (2) and (3) above, the
remaining assets shall be allocated to provide the benefits
accrued under the Plan, without regard to the satisfaction of the
vesting requirements of this Plan, with respect to each
Participant whose employment had not been severed as of the
effective date of Plan termination, according to the respective
actuarial value of each such Participant's Accrued Benefit.
If the assets of the Trust Fund applicable to any of the above
categories are insufficient to provide full benefits for all persons
in such group, the benefits otherwise payable to such persons shall be
reduced proportionately. An independent, government-enrolled actuary
shall calculate the allocation of the assets of the Trust Fund in
accordance with the above priority categories, and certify his
calculations to the Company, the Pension Committee, and the Trustee.
No liquidation of assets and payment of benefits (or provisions
therefor) shall actually be made by the Trustee until after it is
advised by the Company in writing that the applicable requirements, if
any, of ERISA governing termination of "Employee Pension Benefit
Plans" have been, or are being, complied with or that appropriate
authorizations, waivers, exemptions or variances have been, or are
being, obtained.
9.04 Manner of Distribution
----------------------
Subject to the foregoing provisions of this Article IX, any
distribution after termination of the Plan may be made, in whole or in
part, to the extent that no discrimination in value results, in cash,
in securities or other assets in kind, or in nontransferable annuity
contracts, as the Pension Committee in its discretion shall determine;
provided, that any such distribution shall be subject to the
provisions of Section 8.02 hereof.
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9.05 Residual Amounts
----------------
In no event shall any Participating Employer receive any amounts from
the Trust Fund upon termination of the Plan, except that, and
notwithstanding any other provision of the Plan, such Employer shall
receive such amounts, if any, as may remain after the satisfaction of
all liabilities of the Plan and arising out of any variations between
actual requirements and expected actuarial requirements.
Article X
SUCCESSOR EMPLOYER AND MERGER
OR CONSOLIDATION OF PLANS
-------------------------
10.01 Successor Employer
------------------
In the event of the dissolution, merger, consolidation or
reorganization of Participating Employer, provision may be made by
which the Plan and Trust will be continued by the successor; and, in
that event, such successor shall be substituted for such Employer
under the Plan. The substitution of the successor shall constitute an
assumption of the Plan liabilities by the successor and the successor
shall have all of the powers, duties and responsibilities of such
Employer under the Plan. Nothing in this Section 10.01 shall be
construed so as to require continuation of the Plan and Trust by a
successor.
10.02 Merger or Consolidation of Plans
--------------------------------
In this event of any merger or consolidation of the Plan with, or
transfer in whole or in part of the assets and liabilities of the
Trust Fund to another trust fund held under any other plan of deferred
compensation maintained or to be established for the benefit of all or
some of the Participants of this Plan, the assets of the Trust Fund
applicable to such Participants shall be transferred to the other
trust fund only if:
(1) each Participant would (if either this plan or the other Plan
then terminated) receive a benefit immediately after the merger,
consolidation or transfer which is equal to or greater than the
benefit he would have been entitled to receive immediately before
the merger, consolidation or transfer (if this Plan had then
terminated);
(2) resolutions of the Board shall authorize such transfer of assets;
and
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<PAGE>
(3) such other plan and trust are qualified under Sections 401(a) and
501(a) of the Code.
ARTICLE XI
RESTRICTIONS ON BENEFITS PAYABLE
TO HIGHLY COMPENSATED PARTICIPANTS
----------------------------------
11.01 Restrictions
------------
This Section sets forth the limitations applicable to Employer
contributions which may be used for he benefits of certain Employees
as required by Treasury Department regulations.
(1) This Section shall apply to an Employee who is a highly
compensated employee within the meaning of Section 414(q) of the
Code or a highly compensated former employee within the meaning
of Section 414(q)(9) of the Code and is within the group of
twenty-five (25) such highly compensated employees and highly
compensated former employees with the greatest compensation in
the current or any prior Year.
(2) The annual payments to an Employee subject to this Section 11.01
shall not exceed an amount equal in each Year to the payments
that would be made on behalf of the Employee under--
(a) a straight line annuity that is the actuarial equivalent of
the Accrued Benefit and other benefits to which the Employee
is entitled under the Plan (other than a Social Security
supplement), and
(b) the amount of the payments that the Employee is entitled to
receive under a Social Security supplement.
The term "benefit" includes, among other benefits, any Death
Benefit not provided for by insurance on the Employee's life.
(3) The restrictions of Section 11.01(2) shall not apply if any one
of the following requirements is satisfied:
(a) after payment to an Employee subject to this Section 11.01
of all benefits payable to such Employee under the Plan, the
value of Plan assets equals or exceeds one hundred ten
percent (110%) of the value of current
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<PAGE>
liabilities, as defined in Section 412(1)(7) of the Code;
(b) the value of the benefits payable under the Plan to an
Employee subject to this Section 11.01 is less than one
percent (1%) of the value of current liabilities before
distribution; or
(c) the value of benefits payable under the Plan to an Employee
subject to this Section 11.01 does not exceed Three thousand
five hundred dollars ($3,500.00) as determined under Section
8.06 hereof.
For purposes of this Section 11.01(3), an Employer may use the
value of current liabilities as reported on schedule B of the
Employee's most recent, timely filed Form 5500 or Form 5500 C/R,
or, alternatively, an Employer may determine current liabilities
as of a later date; provided, however, that the value of Plan
assets and the value of current liabilities must be determined as
of the same date.
(4) Notwithstanding the above provisions of this Section 11.01, in
the event of Plan termination, the benefit of any highly
compensated employee and former highly compensated employee shall
be limited to a benefit that is nondiscriminatory under Section
401(a)(4) of the Code and Treasury Department regulations
thereunder
(5) The provisions of this Section 11.01 shall apply separately as to
each Employer.
11.02 Effectiveness
-------------
The limitations and restrictions set forth in this Article XI shall
automatically become inoperative and of no effect upon a ruling by the
Internal Revenue Service that they are not required.
ARTICLE XII
ADMINISTRATION
--------------
12.01 Allocation of Responsibility Among Specified Fiduciaries for Plan and
---------------------------------------------------------------------
Trust Administration
--------------------
The Specified Fiduciaries shall have only those specific powers,
duties, responsibilities and obligations as are specifically given
them under this Plan or the Trust. In
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<PAGE>
general, the Employers shall have the sole responsibility for making
the contributions provided for under Section 4.01. In addition, the
Company shall have the sole authority to appoint and remove the
Trustee, members of the Committee and any Investment Manager which may
be provided for under the Trust and to amend or terminate, in whole or
in part, this Plan or the Trust; provided, however, that any one
Participating Employer may terminate its participation in the Plan.
The Committee shall have the sole responsibilitiy for the
administration of this Plan, which responsibility is specifically
described in this Plan and the Trust. The Trustee shall have
responsibility for the administration of the Trust and the management
of the assets held under the Trust, to the extent provided in the
Trust. Each Fiduciary warrants that any directions given, information
furnished, or action taken by it shall be in accordance with the
provisions of the Plan or the Trust, as the case may be, authorizing
or providing for such direction, information or action. Futhermost,
each Fiduciary may rely upon any such direction, information or action
of another Fiduciary as being proper under this Plan or the Trust, and
is not required under this Plan or the Trust to inquire into the
propriety of any such direction, information or action. It is intended
under this Plan and the Trust that each Fiduciary shall be responsible
for the proper exercise of its own powers, duties, responsibilities
and obligations under this Plan and the Trust and, expect as provided
in Section 13.03, shall not be responsible for any act or failure to
act of another Fiducary. No Fiduciary guarantees the Trust Fund in any
manner against investment loss or depreciation in asset value.
12.02 Appointment of Committee
------------------------
The Plan will be administered by a Pension Committee appointed by the
Board, consisting of a chairman and not more than six (6) additional
members. The Pension Committee so appointed shall have responsibility
for the administration of this Plan and, to the extent specified by
the Board, any other plan maintained by an Employer. Each member may,
but need not, be a director, officer, or Employee of an Employer, and
each such member shall be appointed the Board to serve until his
successor shall be appointed by in like manner. An individual member
of the Committee may resign by delivering his written resignation to
the Board and to the other members of the Committee. The Board may
remove an individual member of the Committee by so notifying the
member and the other Committee members in writing. Vacancies on the
Committee shall be filled by action of the Board. All usual and
reasonable expenses of the Committee (including the premiums payable
with respect to any bond under which the
-41-
<PAGE>
Committee members may be required by law to serve) may be paid in
whole or in part by the Employees, and any expenses not paid by the
Employees shall be paid by the Trustee out of the principal or income
of the Trust Fund. Any members of the Committee who are Employees
shall not receive compensation with respect to their services for the
Committee.
12.03 Claims Procedure
----------------
The Committee shall make all determinations as to the right of any
person to a benefit. Any denial by the Committee of a claim for
benefits under the Plan by a Participant or Beneficiary shall be
stated in writing by the Committee and delivered or mailed to the
Participant or Beneficiary; and such notice shall set forth the
specific reasons for the denial, written to the best of the
Committee's ability in a manner that may be understood without legal
or actuarial counsel. In addition, the Committee shall afford a
reasonable opportunity to any Participant or Beneficiary whose claim
for benefits has been denied for a review of the decision denying the
claim.
12.04 Records and Reports
-------------------
The Committee shall exercise such authority and responsibility as it
deems appropriate in order to comply with ERISA and governmental
regulations issued thereunder relating to records of Service, Credited
Service, Accrued Benefits and the percentages of such Benefits which
are nonforfeitable under the Plan, notifications to Participants,
annual registration with the Internal Revenue Service, annual reports
to the Department of Labor, and reports to the Pension Benefit
Guaranty Corporation.
12.05 Other Committee Powers and Duties
---------------------------------
The Committee shall have such duties and powers as may be necessary to
discharge its duties hereunder, including, but not by way of
limitation, the following:
(1) to construe and interpret the Plan, decide all questions of
eligibility and determine the amount, manner and time of
payment of any benefits hereunder;
(2) to prescribe procedures to be followed by Participants or
Beneficiaries filing applications for benefits;
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<PAGE>
(3) to prepare and distribute, in such manner as the Committee
determines to be appropriate, information explaining the
Plan;
(4) to receive from the Employers and from Participants such
information as shall be necessary for the proper administration
of the Plan;
(5) to furnish each Employer, upon request, such annual reports
with respect to the administration of the Plan as are reasonable
and appropriate;
(6) to receive, review and keep on file (as it deems convenient or
proper) reports of the financial condition, and of the receipts
and disbursements, of the Trust Fund from the Trustee;
(7) to appoint or employ (either directly or through its secretary)
individuals to assist in the administration of the Plan and any
other agents it deems advisable, including legal and actuarial
counsel;
(8) to receive and review the periodic valuation of the Plan
made by the Plan's actuary; and
(9) to direct the Trustee from time to time with respect to the
investment and reinvestment of any part or all of the assets of
the Trust Fund and with respect to the retention of any asset,
including cash.
With respect to the directive authority set forth in paragraph
(9) above, the Committee shall be under no obligation to exercise such
authority.
The Committee shall have no power to add to, subtract from or modify
any of the terms of the Plan, or to change or add to any benefits
provided by the Plan, or to waive or fail to apply any requirements of
eligibility for a benefit under the Plan.
12.06 Rules and Decisions
-------------------
The Committee, or the secretary of the Committee in the absence of a
full Committee meeting, shall have the authority to make such rules
and regulations and to take such action as may be necessary to carry
out the provisions of the Plan. The Committee may delegate any part of
its authority and duties as it deems expedient. All rules and
decisions of the Committee shall be uniformly and consistently applied
to all Participants in similar circumstances. When making a
determination or calculation, the Committee shall be entitled to rely
upon
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<PAGE>
information furnished by a Participant or Beneficiary, the Employers,
the legal counsel of an Employer, any actuary servicing the Plan, or
the Trustee.
12.07 Committee Procedures
--------------------
The Committee may act at a meeting or in writing without a meeting.
The Committee shall elect one of its members as Chairman, appoint a
secretary, who may or may not be a Committee member, and advise the
Trustee of such actions in writing. Any written memorandum signed by
the secretary or any member of the Committee or one or more
individuals who have been authorized to perform specific acts on
behalf of the Committee shall have the same force and effect as a
formal resolution adopted in open meeting. Minutes of all meetings of
the Committee and a record of any action taken by the Committee shall
be kept in written form, such record to be kept by the secretary
appointed by the Committee. The secretary of the Committee may, from
time to time, give to the Trustee any order, direction, consent or
advice required under the terms of the Trust, and the Trustee shall be
entitled to rely on any instrument delivered to it and signed by the
secretary or any other authorized member of the Committee as
evidencing the action of the Committee. The Committee may adopt such
bylaws and regulations as it deems desirable for the conduct of its
affairs. All decisions of the Committee shall be made by the vote of
the majority including actions in writing taken without a meeting. A
dissenting Committee member who, within a reasonable time after he has
knowledge of any action or failure to act by the majority, registers
his dissent in writing delivered to the other Committee members, the
Employers and the Trustee, shall not be responsible for any such
action or failure to act. A member of the Committee may not vote or
decide upon any matter relating solely to himself or vote in any case
in which his individual right or claim to any benefit under the Plan
is involved. If in any case in which an individual Committee member is
so disqualified to act, the remaining members cannot agree, the Board
will appoint a temporary substitute member to exercise all of the
powers of a qualified member concerning the matter with respect to
which the disqualified member is not qualified to act.
12.08 Authorization of Benefit Payments
---------------------------------
The Committee shall issue directions to the Trustee concerning all
benefits which are to be paid from the Trust Fund pursuant to the
provisions of the Plan, and warrants that all such directions are in
accordance with this Plan.
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<PAGE>
12.09 Application and Forms for Benefits
----------------------------------
The Committee may require a Participant to complete and file with the
Committee an application for a benefit and all other forms approved by
the Committee, and to furnish all pertinent information requested by
the Committee. The Committee may rely upon all such information so
furnished it, including the Participant's current mailing address. The
failure by a Participant to file a claim for benefits will not result
in the forfeiture of any benefits which are otherwise nonforfeitable
under this Plan.
12.10 Facility of Payment
-------------------
Whenever, in the Committee's opinion, a person entitled to receive any
payment of a benefit or installment thereof hereunder is under a legal
disability or is incapacitated in any way so as to be unable to manage
his financial affairs, the Committee may direct the Trustee to make
payments to such person or to his legal representative or to a
relative or friend of such person for his benefit, or the Committee
may direct the Trustee to apply the payment for the benefit of such
person in such manner as the Committee considers advisable. Any
payment of a benefit or installment thereof in accordance with the
provisions of this Section shall be a complete discharge of any
liability for the making of such payment under the provisions of the
Plan.
12.11 Indemnification
---------------
The Employers shall indemnify and hold harmless each member of the
Committee against all loss, cost, expenses or damages, including
attorneys' fees and court costs: (a) occasioned by any act or omission
to act in connection with the responsibility of such member for the
administration of this Plan; (b) arising under or by virtue of the
provisions of Part 4, Subtitle B, Title I or ERISA; provided, however,
that the Employers shall not indemnify and hold harmless any such
member against any loss, cost, expenses and damages occasioned by the
gross negligence or willful misconduct of such member.
12.12 Beneficiary Designations
------------------------
Subject to the provisions of Article VI hereof, each Participant shall
have the right at any time to designate, and rescind or change any
designation of, a primary and a contingent Beneficiary or
Beneficiaries to receive benefits in the event of his death. If a
Participant's benefits are payable pursuant to any form of joint and
survivor annuity, the Participant's joint annuitant shall be deemed
his designated Beneficiary. If there is no
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<PAGE>
designated Beneficiary (other than a joint annuitant) alive when a
Death Benefit becomes payable,the benefit shall be paid, in the
discretion of the Committee, either (i) to the estate of the
Participant or (ii) to any one or more of the Participant's heirs at-
law, and in whatever form the Committee shall determine. If a primary
Beneficiary (other than a joint annuitant) dies before receiving Death
Benefits to which he is entitled, the balance of such payments shall
be paid to the contingent Beneficiary. If there is no contingent
Beneficiary, or if the contingent Beneficiary dies before receiving
all Death Benefits payments to which he is entitled, the balance of
such payments shall be paid, in the discretion of the Committee,
either (i) to the estate of the Participant or (ii) to any one or more
of the Participant's heirs-at-law, and in whatever form the Committee
shall determine. Neither a Participating Employer nor the Trustee (in
its capacity as such) shall be named as Beneficiary. A designation or
change of Beneficiary shall be made in writing on such form or forms
as the Committee may require. The designation, by a married
Participant, of a Beneficiary other than his spouse shall require the
consent of such spouse.
12.13 Diligence to Locate
-------------------
It shall be the duty of the Pension Committee to use reasonable
diligence to locate and to pay a Retired Participant or a Terminated
Participant when any payment becomes due hereunder. The sending of a
letter by certified mail, postage prepaid, to the Participant's
address last known to the Pension Committee shall be deemed reasonable
diligence.
ARTICLE XIII
FIDUCIARY RESPONSIBILITY
------------------------
13.01 Fiduciary
---------
The term "fiduciary" means any person who
(1) exercises any discretionary authority or control over the
management or the Plan and Trust or the management or disposition
of its assets;
(2) renders investments advice for a fee with respect to the funds or
property of the Trust or has the authority to do so; or
(3) has any discretionary authority or responsibility in the
administration of the Plan and Trust.
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<PAGE>
13.02 Fiduciary Responsibility
------------------------
A fiduciary shall discharge his or its duties with respect to the Plan
and Trust solely in the interest of the Participants and
Beneficiaries; and
(1) for the exclusive purpose of:
(a) providing benefits to Participants and their Beneficiaries;
and
(b) defraying reasonable expenses of administering the Plan and
Trust;
(2) with 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 the conduct
of an enterprise of a like character and with like aims;
(3) if applicable, by diversifying the investments of the Trust so as
to minimize the risk of large losses, unless under the
circumstances it is clearly prudent not to do so; and
(4) in accordance with the documents and instruments governing the
Plan and Trust, insofar as such documents and instruments are
consistent with the provisions of ERISA.
13.03 Liability for Breach by Co-fiduciary
------------------------------------
A fiduciary shall be liable for a breach of fiduciary responsibility
by another fiduciary in the following circumstances:
(1) if he participates knowingly in, or knowingly undertakes to
conceal, an act or omission of such other fiduciary, knowing such
act or omission is a is a breach;
(2) if, by his failure to comply with Section 13.02 in the
administration of his specific responsibilities which give rise
to his status as a fiduciary, he has enabled such other fiduciary
to commit a breach; or
(3) if he has knowledge of a breach by such other fiduciary, unless
he makes reasonable efforts under the circumstances to remedy the
breach
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<PAGE>
ARTICLE XIV
AMENDMENT, MODIFICATION OR TERMINATION OF PLAN
----------------------------------------------
14.01 Change
------
It is the intention of the Employers to continue the Plan and Trust
indefinitely; however, the Company reserves the right to amend or
modify this Plan at any time or from time to time, or to terminate
this Plan at any time, by action of the Board. Notwithstanding
anything to the contrary, in order to qualify this Plan under Section
401(a) of the Code, any amendment may, to the extent provided in
Section 401(b) of such Code, be made retroactively if necessary to
bring this Plan into conformity with Internal Revenue laws and
regulations.
14.02 Modification
------------
Unless made to secure the approval of the Internal Revenue Service or
other governmental bureau or agency, no amendment or modification
hereof by the Company shall--
(1) operate retroactively to reduce or divest the then vested
interest of any Participant or Beneficiary in any Accrued
Benefit, or to reduce or divest any benefit then payable
hereunder, unless all Participants and Beneficiaries then having
an Accrued Benefit affected thereby shall consent to such
amendments or modifications, or
(2) change the duties or responsibilities of the Trustee without the
written consent of the Trustee.
Each such amendment shall be in writing signed by a duly authorized
officer of the Company and shall become effective upon delivery
thereof to the Trustee.
14.03 Adoption by Others
------------------
Any Affiliate of the Company may adopt this Plan and thereby become a
Participating Employer; provided, however, that the Board approves
such adoption; provided, further, that the administrative powers and
control of the Company as provided herein shall not be deemed
diminished under the Plan by reason of the adoption of the Plan by any
other Participating Employer, and such administrative powers and
control granted in Section 12.01 hereof to the Company with respect to
the appointment of the Committee and other matters shall apply only
with respect to the Company and not to any other Participating
Employer; provided, further, that each Participating Employer shall
have the obligation to
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<PAGE>
pay the contributions for its own Employees and no other Participating
Employer shall have such obligation, and any failure by a
Participating Employer to satisfy its obligations under the Plan shall
have no effect on any other Participating Employer. No Employee shall
receive Service or Credited Service for any period of his employment
with a Participating Employer completed prior to the date on which
such Participating Employer is included in a "controlled group of
corporations" (as determined pursuant to Section 2.05 hereof) within
which the Company is also included; provided, however, that the Board
may, from time to time, provide otherwise with respect to all
Employees of a given Participating Employer.
14.04 Recovery
--------
Anything in this Plan to the contrary notwithstanding, none of the
funds deposited with the Trustee hereunder may be used other than
for the exclusive benefit of the Participants and their Beneficiaries
and for the payment of the normal expenses in connection with this
Plan. Under no circumstances shall an Employer recover any amount
from the Trust except as provided in Section 9.05 and 16.09. All
losses incurred by the Trust Fund and the expenses of administering
this Plan not paid by the Participating Employers shall be charged to
the Trust Fund and any such losses or expenses may be covered by
additional contributions of the Participating Employers.
ARTICLE XV
MAXIMUM BENEFITS AND TOP-HEAVY PROVISIONS
-----------------------------------------
15.01 Maximum Benefit
---------------
Nothwithstanding anything contained herein to the contrary, the
benefit payable to a Participant shall be subject to the following:
(1) When expressed as a monthly pension, a benefit shall not exceed
the lesser of $7,500 (the "Dollar Limitation"), or 100% of the
Participant's "average monthly compensation," during the three
(3) consecutive calendar years when the total Compensation paid
to him was the highest (the "Compensation Limitation"),
subject to the following:
(a) The maximum shall apply to the pension payable to the
Participant either pursuant to the qualified joint and
survivor form described in Section 8.02 hereof or pursuant
to an option
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<PAGE>
described in Section 8.03 hereof where the contingent
annuitant is the Participant's Spouse; but if the pension is
payable in a form other than the foregoing and other than a
single-life pension, the maximum shall apply to the single-
life pension which is the Actuarial Equivalent of such
pension.
(b) If benefits begin prior to the Participant's Social Security
Retirement Age, but on or after age sixty-two (62), the
Dollar Limitation shall be determined as follows:
(i) If a Participant's Social Security Retirement Age is
age sixty-five (65), the Dollar Limitation for benefits
commencing on or after age sixty-two (62) is determined
by reducing the Dollar Limitation by 5/9 of one percent
for each month by which benefits commence before the
month in which the Participant attains age sixty-five
(65).
(ii) If a Participant's Social Security Retirement Age is
greater than age sixty-five (65), the Dollar Limitation
for benefits commencing on or after age sixty-two (62)
is determined by reducing the Dollar Limitation by 5/9
of one percent for the first thirty-six (36) months and
5/12 of one percent for each of the additional months,
up to twenty-four (24) months, by which benefits
commence before the month in which the Participant
attains the Social Security Retirement Age.
If benefits commence prior to age sixty-two (62), the Dollar
Limitation shall be the Actuarial Equivalent of an annual
benefit beginning at age sixty-two (62), as determined
above, reduced for each month by which benefits commence
before the month in which the Participant attains age sixty-
two (62). For purposes of this Section 15.01(1) (b),
Actuarial Equivalent shall have the same meaning as defined
in Section 5.02 hereof, except that the interest rate
assumption shall not be less than the greater of five
percent (5%) or the rate derived under Section 5.02 for
determining early retirement benefits. For purposes of this
Section 15.01(1)(b), in determining Actuarial Equivalence,
the interest rate assumption shall not be less
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<PAGE>
than the greater of five percent (5%) or the rate
determined under Section 5.02 for determining early
retirement benefits.
For purposes of this Section 15.01(1)(b) and 15.01(1)(c),
"Social Security Retirement Age" shall mean the age used as
the retirement age under Section 216(1) of the Social
Security Act, applied without regard to the age increase
factor and as if the early retirement age under Section
216(1)(2) of the Act were sixty-two (62).
(c) If a pension begins after the Social Security Retirement
Age, the maximum Dollar Limitation shall be the Actuarial
Equivalent of the Dollar Limitation where the Dollar
Limitation is deemed to be a pension commencing at the
Social Security Retirement Age. For purposes of this
Section 15.01(1)(c), Actuarial Equivalent shall have the
same meaning as defined in Section 2.04 hereof, except that
the interest rate assumptions shall be equal to five percent
(5%). For purposes of this Section 15.01(1)(c), "Social
Security Retirement Age" shall have the same meaning as for
Section 15.01(1)(b) above.
(d) If the Participant has fewer than ten (10) years of
participation in the Plan, the Dollar Limitation shall be
multiplied by a fraction, the numerator of which is his
years of participation in the Plan and the denominator of
which is ten (10), but not less than 1/10 of the Dollar
Limitation.
(e) If the Participant has fewer than ten (10) years of
Credited Service, the Compensation Limitation shall be
multiplied by a fraction, of which the numerator is his
Credited Service and the denominator is ten (10), but not
less than 1/10 of the Compensation Limitation.
(f) For all purposes of this Plan, the maximum Dollar Limitation
of $7,500 shall be automatically increased as permitted by
Treasury Department regulations to reflect cost-of-living
adjustments. As a result of such an adjustment, a pension
which had been limited by the provisions of this Section in
a previous Plan Year may be increased with respect to future
payments to the lesser of the adjusted Dollar Limitation
amount or the amount of pension which would have been
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<PAGE>
payable under this Plan without regard to the provisions of
this Section 15.01.
(g) For purposes of this Section 15.01, a Participant's "total
compensation" includes earned income, wages, salaries, fees
for professional service and other amounts received for
personal services actually rendered in the course of
employment with the Employer (including, but not limited to,
commissions paid salesmen, compensation for services on the
basis of a percentage of profits, commissions on insurance
premiums, tips, and bonuses) and excluding the following:
(i) Employer contributions to a plan of deferred
compensation to the extent contributions are not included in
gross income of the Participant for the taxable year in
which contributed, or on behalf of a Participant to a
simplified employee pension plan to the extent such
contributions are deductible under Section 219(b)(7) of the
Code, and any distributions from a plan of deferred
compensation whether or not includable in the gross income
of the Participant when distributed; (ii) amounts realized
from the exercise of a non-qualified stock option, or when
restricted stock (or property) held by a Participant becomes
freely transferable or is no longer subject to a substantial
risk of forfeiture; (iii) amounts realized from the sale,
exchange or other disposition of stock acquired under a
qualified stock option; (iv) other amounts which receive
special tax benefits, or contributions made by the Employer
(whether or not under a salary reduction agreement) for the
purchase of a 403(b) annuity contract (whether or not the
contributions are excludable from the gross income of the
Participant); and (v) compensation for a year in excess of
$150,000 (as automatically increased in accordance with
Treasury Department regulations to reflect cost-of-living
adjustments).
(2) Notwithstanding the foregoing, the otherwise permissible annual
benefits for any Participant under this Plan may be further
reduced to the extent necessary, as determined by the Committee,
to prevent disqualification of the Plan under Section 415 of the
Code, which imposes the following additional limitations of the
benefits payable to Participants who also may be
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<PAGE>
participating in another tax qualified pension, profit sharing,
savings or stock bonus plan of the Employers: If an individual is
a Participant at any time in both a defined benefit plan and a
defined contribution plan maintained by the Employers, the sum of
the defined benefit plan fraction and the defined contribution
plan fraction for any Plan Year may not exceed 1.0. The defined
benefit plan fraction for any Plan Year is a fraction, the
numerator of which is the Participant's projected annual benefit
under the Plan (determined at the close of the Plan Year) and the
denominator of which is the lesser of (i) 1.25 multiplied by the
Dollar Limitation, as adjusted, or (ii) 1.4 multiplied by the
Compensation Limitation. The defined contribution plan fraction
for any Plan Year is a fraction, the numerator of which is the
sum of the annual additions to the Participant's accounts in such
Plan Year and for all prior Plan Years and the denominator of
which is the sum of the applicable maximum amounts of annual
additions which could have been made under section 415(c) of the
Code for such Plan Year and for all prior years of such
Participant's employment (assuming for this purpose, that said
Section 415(c) had been in effect during such prior years). The
applicable amount for any Plan Year shall be equal to the lesser
of (i) 1.25 multiplied by the dollar limitation in effect for
such Plan Year under Section 415(c)(1)(A) of the Code, or (ii)
1.4 multiplied by twenty-five percent (25%) of the Participant's
total annual Compensation for such Plan Year.
(3) For purposes of the above limitation, all defined benefit plans
of the Employers, whether or not terminated, are to be treated as
one defined benefit plan and all defined contribution plans of
the Employers, whether or not terminated, are to be treated as
one defined contribution plan. The extent to which the benefit
payable under this Plan shall be reduced as compared to the
extent to which the annual benefit under any other defined
benefit plans or defined contribution plans shall be reduced in
order to achieve compliance with the limitations of Section 415
of the Code shall be determined by the Committee in such a manner
so as to maximize the aggregate benefits payable to such
Participant. If such reduction is under this Plan, the Committee
shall advise affected participants of any additional limitation
on their annual benefits required by this paragraph.
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<PAGE>
(4) The above limitations are intended to comply with the provisions
of Section 415 of the Code so that the maximum benefits provided
by plans of the Employers shall be exactly equal to the maximum
amounts allowed under Section 415 of the Code and Treasury
Department regulations thereunder. If there is any discrepancy
between the provisions of this Section 15.01 and the provisions
of Section 415 of the Code and Treasury Department regulations
thereunder, such discrepancy shall be resolved in such a way as
to give full effect to the provisions of Section 415 of such
Code.
(5) For purposes of the Plan, the "Limitation Year" shall be the
calendar year.
15.02 Top-Heavy Provisions
--------------------
The following provisions shall become effective in any Plan Year
beginning on or after the Effective Date in which the Plan is
determined to be a Top-Heavy Plan:
(1) Determination of Top-Heavy. The Plan will be considered a Top-
--------------------------
Heavy Plan for the Plan Year if, as of the last day of the
preceding Plan Year (the "determination date"), (1) the present
value of the Accrued Benefits of Participants who are Key
Employees (as defined in Section 416(i) of the Code) exceeds
sixty percent (60%) of the present value of the Accrued Benefits
of all Participants (the "60% Test"), or (2) the Plan is part of
a required aggregation group (within the meaning of Section
416(g)(2) of the Code) and the required aggregation group is top-
heavy. However, and notwithstanding the results of the 60% test,
the Plan shall not be considered a Top-Heavy Plan for any Plan
Year in which the Plan is a part of a required or permissive
aggregation group (within the meaning of Section 416(g)(2) or the
Code) which is not top-heavy; provided that, if any aggregation
group consists of two or more defined benefit plans, the same
actuarial assumptions must be used with respect to all such plans
and must be specified in such plans. For purposes of the "60%
Test" for any Plan Year, (i) Accrued Benefits shall be those
amounts calculated as of the first day of the Plan Year ending on
the determination date and the present value of those amount
shall be based on the actuarial assumptions used in the actuarial
valuation made as of the first of such Plan Year; (ii) the value
of the Accrued Benefits of individuals who are former Key
Employees shall not be taken into account; and (iii) the value of
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<PAGE>
the Accrued Benefits of individuals who have not rendered
services to the Employer for the five (5)-year period
ending on the determination date shall not be taken into
account. Section 416(g)(2) of the Code, referred to above,
provides as follows:
"(2) AGGREGATION - For purposes of this subsection
(A) Aggregation Group--
(i) Required Aggregation - The term 'aggregation
group' means--
(I) each plan of the employer in which a key
employee is a participant;
(II) each other plan of the employer which
enables any plan described in subclause
(I) to meet the requirements of section
401(a) (4) or 410; and
(III) any plan terminated by the employer
within five years of the determination
date of the plan year in question that
would, but for the fact that it was
terminated, be described in subclause
(I) or (II). For purposes of section
416, a terminated plan is one that has
been formerly terminated, has ceased
crediting service for benefit accruals
and vesting, and has been or is
distributing all plan assets to
participants of their beneficiaries
as soon as administratively feasible.
(ii) Permissive Aggregation - The employer may
treat any plan not required to be included in
an aggregation group under clause (i) as
being part of such group if such group would
continue to meet the requirements of section
401(a) (4) and 410 with such plan being taken
into account.
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<PAGE>
(B) Top-Heavy Group--The term 'top-heavy group'
means any aggregation group if-
(i) the sum (as of the determination date)
of-
(I) the present value of the cumulative
accrued benefits for key employees
under all defined benefit plans
included in such group, and
(II) the aggregate of the accounts of
key employees under all defined
contribution plans included in such
group,
(ii) exceeds 60 percent of a similar sum
determined for all employees."
For purposes of this Section 15.02(1), a "Key Employee" is an
Employee as defined in Section 416(i)(1) of the Code and Treasury
Department regulations thereunder. Generally, and Employee or
former Employee (as well as each of his Beneficiaries) is
considered a Key Employee if he, at any time during the Plan Year
or any of the preceding four (4) Plan Years, is or has been --
(a) an officer of the Employer (as that term is defined in
Treasury Department regulations under Section 416 of the
Code) having annual Compensation greater than 50 percent of
the amount in effect under Section 415(b)(1)(A) of the Code
for any such Plan Year.
(b) one of the ten (10) Employees having annual Compensation
from the Employer for a Plan Year greater than the dollar
limitation in effect under Section 415(c)(1)(A) of the Code
for the calender year in which such Plan Year ends and
owning (or considered as owning within the meaning of
Section 318 of the Code) the largest interests in the
Employer.
(c) a "five percent owner" of the Employer. A "five percent
owner" is any person who owns (or is considered as owning
within the meaning of Section 318 of the Code) more than
five percent (5%) of the outstanding stock of the Employer
or stock possessing more than five precent (5%) of the total
combined voting power of all stock of the Employer or, in
the case of an unincorporated business, any person who owns
more that five percent (5%) of the capital or profits
interest
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<PAGE>
in the Employer. In determining percentage ownership
hereunder, employers that would otherwise be aggregated
under Sections 414(b), (c), and (m) of the Code shall be
treated as separate employers.
(d) a "one percent owner" of the Employer having an annual
Compensation from the Employer of more than $150,000. "One
percent owner" means any person who owns (or is considered
as owning within the meaning of Section 318 of the Code)
more than one percent (1%) of the outstanding stock of the
Employer or stock possessing more than one percent (1%) of
the total combined voting power of all stock of the Employer
or, in the case of an unincorporated business, any person
who owns more than one percent (1%) of the capital or
profits interest in the Employer. In determining percentage
ownership hereunder,employers that would otherwise be
aggregated under Sections 414(b), (c), and (m) of the Code
shall be treated as separate employers. However, in
determining whether an individual has Compensation of more
than $150,000, Compensation from each employer required to
be aggregated under Sections 414(b), (c), and (m) of the
Code shall be taken into account.
The determination of Compensation shall be made without regard to
Sections 125, 402(a)(8), 402(h)(1)(B) of the Code and, in the
case of Employer contributions made pursuant to a salary
reduction agreement, without regard to Section 403(b) of the
Code. For purposes of this Section 15.02, a non-Key Employee
shall mean any Employee who is not a Key Employee.
(2) Minimum Benefits. Notwithstanding the provisions of Section
----------------
5.01, for any Year during which the Plan is deemed a Top-Heavy
Plan, the minimum pension for a Participant terminating
employment at or after his Normal Retirement Date, and the
minimum Accrued Benefit, payable at Normal Retirement Date, for a
Participant who terminates employment prior thereto with
entitlement to a pension, shall be equal to the product of (i) 2%
of his average monthly earnings during his five (5) highest-paid
consecutive calendar years of Credited Service multiplied by (ii)
each of the first ten (10) years of his Credited Service after
March 31, 1984 in which the Plan is a Top-Heavy Plan.
(3) Minimum Vesting. Notwithstanding the provisions of Section 7.01,
---------------
a Terminated Participant shall have a vested interest in his
Accrued Benefit (or, in the case of a Participant described in
Section 3.05, that
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<PAGE>
portion of his Accrued Benefit described in paragraph (3)(b) of
such Section) if, while the Plan is a Top-Heavy Plan, his
employment is terminated before death or Retirement after he has
completed at least two (2) years of Service. The vested
percentage shall be determined in accordance with the following
table:
<TABLE>
<CAPTION>
Years of Service Vested Percentage
---------------- -----------------
<S> <C>
2 but less than 3 20%
3 but less than 4 40%
4 but less than 5 60%
5 or more 100%
</TABLE>
(4) Change in Top-Heavy Status. If the Plan becomes a Top-Heavy Plan
--------------------------
and subsequently ceases to be such, the vesting schedule in
paragraph (3) of this Section shall continue to apply with
respect to any Participant who had at least three (3) years of
Service as of March 31 in the last Plan Year of top-heaviness.
For other Participants, said schedule shall apply only to their
Accrued Benefits as of such March 31.
(5) Impact on Maximum Benefits. For any Plan year in which the Plan
--------------------------
is a Top-Heavy Plan, Section 15.02 shall be read by substituting
the number "1.00" for the number "1.25" wherever it appears
therein; provided, however, that, where the Plan is not a "Super"
Top-Heavy Plan (as defined in Section 416(h) (2) (B) of the
Code), no such substitution shall occur if, for such Plan Year,
the minimum benefits determined pursuant to paragraph (2) of this
Section are determined by reference to 3%, in lieu of 2%, of
average monthly compensation.
(6) "Compensation" Defined. The term "Compensation" as used in this
----------------------
Section 15.02 shall have the same meaning as that set forth in
Section 15.02(1) (g) hereof.
ARTICLE XVI
MISCELLANEOUS
-------------
16.01 Nonguarantee of Employment
--------------------------
Nothing contained in this Plan shall be construed as a contract
of employment between an Employer and any Employee, or as a right
of any Employee to be continued in the employment of an Employer,
or as a limitation of the right of an Employer to discharge any
of its Employees, with or without cause.
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<PAGE>
16.02 Rights to Trust Assets
----------------------
No Employee shall have any right to or interest in any assets of the
Trust Fund upon termination or his employment or otherwise, except as
provided from time to time under this Plan and then only to the extent
of the benefits payable under the Plan to such Employee out of the
assets of the Trust Fund. Except as otherwise provided under Title IV
of ERISA, all payments of benefits as provided for in this Plan shall
be made solely out of the assets of the Trust Fund and none of the
Specified Fiduciaries shall be liable therefore in any manner.
16.03 Nonalienation of Benefits
-------------------------
Except to the extent subject to a "qualified domestic relations
order" as defined in Section 414(p) of the Code, benefits payable
under this Plan shall not be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, charge,
garnishment, execution, or levy of any kind, either voluntary or
involuntary, prior to actually being received by the person entitled
to the benefit under the terms of the Plan, and any attempt to
anticipate, alienate, sell, transfer, assign, pledge, encumber,
charge, or otherwise dispose of any right to benefits payable
hereunder, shall be void. The Trust Fund shall not in any manner be
liable for, or subject to, the debts, contracts, liabilities,
engagements or torts of any person entitled to benefits hereunder.
16.04 Release
-------
Distributions to a Participant or Beneficiary, except persons under
legal disability, shall be made only to such Participant or
Beneficiary upon his personal receipt or endorsement, and no interest
in the Trust Fund, or any part thereof, shall be assignable in
anticipation of payment, either by voluntary or involuntary act or by
operation of law.
16.05 Certain Social Security Increases
---------------------------------
In the case of a Participant, or the Beneficiary of a Participant, who
is receiving benefits under this Plan, or in the case of a Terminated
Participant who has a vested right to benefits hereunder, such
benefits shall not be decreased by reason of any increase in the
benefit levels payable under Title II of the Social Security Act or in
the wage base under Title II; provided that such increase occurs after
the date of the Participant's Severance from Service.
-59-
<PAGE>
16.06 Titles, Gender and Number
-------------------------
Article, Section or other headings, as used in this Plan, do not
constitute a part of this Plan and in no way alter the construction of
the provisions hereof. Such headings are inserted merely for ease of
reading and convenience of reference. Words used herein in the
masculine gender include the feminine gender and vice versa, unless
the context clearly indicates otherwise. Words used in the singular or
in the plural include the plural or singular unless the context
clearly indicates otherwise. The use of the words "herein," "hereof,"
and other similar compounds of the word "here" shall mean and refer to
the entire Plan and not to any particular provision or Section.
16.07 Construction
------------
This Plan shall be construed, whenever possible, to be in conformity
with the Code and with ERISA. To the extent not in conflict with the
preceding sentence, the construction of this Plan shall be governed
by, and its validity determined under, the laws of the State of Texas.
In the event any provision hereof is declared invalid, all other
provisions shall remain in effect.
16.08 Counterparts
------------
This Plan may be executed in any number of counterparts, each of which
shall constitute one and the same agreement.
16.09 Return of Contributions
-----------------------
Notwithstanding any provision to the contrary herein contained, and as
expressly provided in Section 403(c) (2) of ERISA, upon an Employer's
request, a contribution which was made by a mistake of fact, or
conditioned upon the deductibility of the contribution under Section
404 of such Code, shall be returned to the Employer within one (1)
year after the payment of the contribution, or the disallowance of the
deduction (to the extent disallowed), whichever is applicable.
16.10 Duplication of Benefits Prohibited
----------------------------------
If a former Participant again becomes a Participant, no duplication of
such Participant's benefit shall occur because of Credited Service he
had completed prior to his most recent period of Credited Service.
-60-
<PAGE>
IN TESTIMONY WHEREOF, HALTER MARINE GROUP, INC. has caused this instrument
to be executed in its name and on its behalf on this 21st day of October, 1996,
effective as of October 1, 1996.
HALTER MARINE GROUP, INC.
By: /s/ John Dane
---------------------------
Title: President & CEO
------------------------
ATTEST:
/s/ Janice C. Rogers
- -------------------------
-61-
<PAGE>
Joined by EQUITABLE SHIPYARDS, INC. on this 21st day of October, 1996,
effective as of October 1, 1996.
EQUITABLE SHIPYARDS, INC.
By: /s/ John Dane
--------------------------------
Title: President & CEO
-----------------------------
ATTEST:
/s/ Janice C. Rogers
- ---------------------------
Joined by GRETNA MACHINE & IRONWORKS, INC. on this 21st day of October,
1996, effective as of October 1, 1996.
GRETNA MACHINE & IRONWORKS, INC.
By: /s/ John Dane
--------------------------------
Title: President & CEO
-----------------------------
ATTEST:
/s/ Janice C. Rogers
- ---------------------------
Joined by GULF COAST FABRICATION, INC. on this 21st day of October, 1996,
effective as of October 1, 1996.
GULF COAST FABRICATION, INC.
By: /s/ John Dane
--------------------------------
Title: President & CEO
-----------------------------
ATTEST:
/s/ Janice C. Rogers
- ---------------------------
-62-
<PAGE>
Joined by HALTER MARINE, INC. on this 21st day of October, 1996, effective
as of October 1, 1996.
HALTER MARINE, INC.
By: /s/ John Dane
--------------------------------
Title: President & CEO
-----------------------------
ATTEST:
/s/ Janice C. Rogers
- ---------------------------
Joined by HALTER MARINE SERVICES, INC. on this 21st day of October, 1996,
effective as of October 1, 1996.
HALTER MARINE SERVICES, INC.
By: /s/ John Dane
--------------------------------
Title: President & CEO
-----------------------------
ATTEST:
/s/ Janice C. Rogers
- ---------------------------
Joined by TRINITY GULF REPAIR, INC. on this 21st day of October, 1996,
effective as of October 1, 1996.
TRINITY GULF REPAIR, INC.
By: /s/ John Dane
--------------------------------
Title: President & CEO
-----------------------------
ATTEST:
/s/ Janice C. Rogers
- -----------------------------
-63-
<PAGE>
Joined by TRINITY MARINE GULFPORT, INC. on this 21st day of October, 1996,
effective as of October 1, 1996.
TRINITY MARINE GULFPORT, INC.
By: /s/ John Dane
----------------------------------
Title: PRESIDENT & CEO
--------------------------------
ATTEST:
/s/ Janice C. Rogers
- -----------------------------
Joined by TRINITY MARINE PANAMA CITY, INC. on this 21st day October, 1996,
---- -------
effective as of October 1, 1996.
TRINITY MARINE PANAMA CITY, INC.
By:/s/ John Dane
------------------------------------
Title: PRESIDENT & CEO
---------------------------------
ATTEST:
/s/ Janice C. Rogers
- -----------------------------
Joined by TRINITY MARINE PASCAGOULA, INC. on this 21st day of October,
1996, effective as of October 1, 1996.
TRINITY MARINE PASCAGOULA, INC.
By:/s/ John Dane
------------------------------------
Title: PRESIDENT & CEO
---------------------------------
ATTEST:
/s/ Janice C. Rogers
- -----------------------------
-64-
<PAGE>
Joined by TRINITY YACHTS, INC. on this 21st day of October, 1996, effective
--- -------
as of October 1, 1996.
TRINITY YACHTS, INC.
By: /s/ John Dane
------------------------------------
Title: PRESIDENT & CEO
---------------------------------
ATTEST:
/s/ Janice C. Rogers
- -----------------------------
Joined by WASHINGTON MARINE FABRICATORS, INC. on this 21st day of October,
---- -------
1996, effective as of October 1, 1996.
WASHINGTON MARINE FABRICATORS, INC.
By: /s/ John Dane
------------------------------------
Title: PRESIDENT & CEO
---------------------------------
ATTEST:
/s/ Janice C. Rogers
- -----------------------------
-65-
<PAGE>
THE STATE OF Mississippi (S)
------------
(S)
COUNTY OF Jackson (S)
------------
This instrument was acknowledged before me on the 21st day of October,
1996, by John Dane III, President & CEO of HALTER MARINE GROUP, INC., a
Delaware corporation, on behalf of said corporation.
/s/ DeVeta Elaine Morris
----------------------------
Notary Public in and for the
State of Mississippi
My Commission Expires:
[NOTARY STAMP APPEARS HERE]
THE STATE OF Mississippi (S)
------------
(S)
COUNTY OF Jackson (S)
------------
This instrument was acknowledged before me on the 21st day of October,
1996, by John Dane III, President & CEO of EQUITABLE SHIPYARDS, INC., a
Louisiana corporation, on behalf of said corporation.
/s/ DeVeta Elaine Morris
----------------------------
Notary Public in and for the
State of Mississippi
My Commission Expires:
[NOTARY STAMP APPEARS HERE]
-66-
<PAGE>
THE STATE OF Mississippi (S)
------------
(S)
COUNTY OF Jackson (S)
------------
This instrument was acknowledged before me on the 21st day of October,
1996, by John Dane III, President & CEO of GRETNA MACHINE & IRONWORKS., a
Louisiana on behalf of said corporation.
/s/ DeVeta Elaine Morris
----------------------------
Notary Public in and for the
State of Mississippi
My Commission Expires:
[NOTARY STAMP APPEARS HERE]
THE STATE OF Mississippi (S)
------------
(S)
COUNTY OF Jackson (S)
------------
This instrument was acknowledged before me on the 21st day of October,
1996, by John Dane III, President & CEO of GULF COAST FRABRICATION, INC., a
Mississippi corporation, on behalf of said corporation.
Mississippi corporation, on behalf of said corporation.
/s/ DeVeta Elaine Morris
----------------------------
Notary Public in and for the
State of Mississippi
My Commission Expires:
[NOTARY STAMP APPEARS HERE]
-67-
<PAGE>
THE STATE OF Mississippi (S)
------------
(S)
COUNTY OF Jackson (S)
------------
This instrument was acknowledged before me on the 21st day of October,
1996, by John Dane III, President & CEO of HALTER MARINE, INC., a Louisiana
corporation, on behalf of said corporation.
/s/ DeVeta Elaine Morris
----------------------------
Notary Public in and for the
State of Mississippi
My Commission Expires:
[NOTARY STAMP APPEARS HERE]
THE STATE OF Mississippi (S)
------------
(S)
COUNTY OF Jackson (S)
------------
This instrument was acknowledged before me on the 21st day of October,
1996, by John Dane III, President & CEO of HALTER MARINE SERVICES, INC., a
Mississippi corporation, on behalf of said corporation.
/s/ DeVeta Elaine Morris
----------------------------
Notary Public in and for the
State of Mississippi
My Commission Expires:
[NOTARY STAMP APPEARS HERE]
-68-
<PAGE>
THE STATE OF Mississippi (S)
------------
(S)
COUNTY OF Jackson (S)
------------
This instrument was acknowledged before me on the 21st day of October,
1996, by John Dane III, President & CEO of TRINITY GULF REPAIR, INC., a
Delaware corporation, on behalf of said corporation.
/s/ DeVeta Elaine Morris
----------------------------
Notary Public in and for the
State of Mississippi
My Commission Expires:
[NOTARY STAMP APPEARS HERE]
THE STATE OF Mississippi (S)
------------
(S)
COUNTY OF Jackson (S)
------------
This instrument was acknowledged before me on the 21st day of October,
1996, by John Dane III, President & CEO of TRINITY MARINE GULFPORT, INC., a
Nevada corporation, on behalf of said corporation.
/s/ DeVeta Elaine Morris
----------------------------
Notary Public in and for the
State of Mississippi
My Commission Expires:
[NOTARY STAMP APPEARS HERE]
-69-
<PAGE>
THE STATE OF Mississippi (S)
-----------
(S)
COUNTY OF Jackson (S)
-----------
This instrument was acknowledged before my on the 21st day of October,
1996, by John Dane III President & CEO of TRINITY MARINE PANAMA CITY, INC.,
a Delaware corporation, on behalf of said corporation.
/s/ DeVeta Elaine Morris
----------------------------
Notary Public in and for the
State of Mississippi
My Commission Expires:
[NOTARY STAMP APPEARS HERE]
THE STATE OF Mississippi (S)
-----------
(S)
COUNTY OF Jackson (S)
-----------
This instrument was acknowledged before my on the 21st day of October,
1996, by John Dane III, President & CEO of TRINITY MARINE PASCAGOULA, INC.,
a Delaware corporation, on behalf of said corporation.
/s/ DeVeta Elaine Morris
----------------------------
Notary Public in and for the
State of Mississippi
My Commission Expires:
[NOTARY STAMP APPEARS HERE]
-70-
<PAGE>
THE STATE OF Mississippi (S)
-----------
(S)
COUNTY OF Jackson (S)
-----------
This instrument was acknowledged before me on the 21st day of October,
1996, by John Dane III President & CEO of TRINITY YACHTS INC., a Delaware
corporation, on behalf of said corporation.
/s/ DeVeta Elaine Morris
----------------------------
Notary Public in and for the
State of Mississippi
My Commission Expires:
[NOTARY STAMP APPEARS HERE]
THE STATE OF Mississippi (S)
-----------
(S)
COUNTY OF Jackson (S)
-----------
This instrument was acknowledged before my on the 21st day of October,
1996, by John Dane III President & CEO of WASHINGTON MARINE FABRICATORS, INC.,
a Washington corporation, on behalf of said corporation.
/s/ DeVeta Elaine Morris
----------------------------
Notary Public in and for the
State of Mississippi
My Commission Expires:
[NOTARY STAMP APPEARS HERE]
-71-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM HALTER
MARINE GROUP, INC. AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS-MARCH 31,
1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> MAR-31-1997
<CASH> 7,079
<SECURITIES> 0
<RECEIVABLES> 36,053
<ALLOWANCES> 0
<INVENTORY> 88,531
<CURRENT-ASSETS> 147,677
<PP&E> 101,170
<DEPRECIATION> 39,721
<TOTAL-ASSETS> 209,411
<CURRENT-LIABILITIES> 62,143
<BONDS> 0
0
0
<COMMON> 185
<OTHER-SE> 93,116
<TOTAL-LIABILITY-AND-EQUITY> 209,411
<SALES> 406,797
<TOTAL-REVENUES> 406,797
<CGS> 355,209
<TOTAL-COSTS> 355,209
<OTHER-EXPENSES> 21,353
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,232
<INCOME-PRETAX> 27,003
<INCOME-TAX> 10,887
<INCOME-CONTINUING> 16,116
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,116
<EPS-PRIMARY> 0.88
<EPS-DILUTED> 0.88
</TABLE>
