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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
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FOR FISCAL YEAR ENDED OCTOBER 31, 1995 COMMISSION FILE NUMBER 1-5407
WHITTAKER CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 95-4033076
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
1955 N. SURVEYOR AVENUE 93063
SIMI VALLEY, CALIFORNIA (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE
OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (805) 526-5700
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH
REGISTERED
Common Stock, par value $.01 per share New York Stock Exchange
Pacific Stock Exchange
Series A Participating Cumulative New York Stock Exchange
Preferred Stock Purchase Rights Pacific Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
NONE
(TITLE OF CLASS)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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 ((S)229.405 of the Securities Exchange Act of 1934) is
not contained herein, and will not be contained, to the best of registrant's
knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K. [_]
State the aggregate market value of the voting stock held by nonaffiliates of
the Registrant: $178,675,097 as of December 29, 1995.
Indicate the number of shares outstanding of each of the Registrant's classes
of common stock, as of the latest practicable date: 8,588,982 shares of Common
Stock as of December 29, 1995.
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DOCUMENTS INCORPORATED BY REFERENCE
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WHERE
DOCUMENT INCORPORATED
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Definitive Proxy Statement for the Annual Meeting of Part III
Stockholders to be held March 22, 1996 to be filed
pursuant to Section 14(a) of the Securities Exchange
Act of 1934 (the "Proxy Statement")
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PART I
ITEM 1. BUSINESS.
GENERAL
Whittaker Corporation ("Whittaker" or the "Company") was incorporated in
California in 1947 and became a Delaware corporation in 1986. Whittaker
maintains its principal executive and administrative offices at 1955 N.
Surveyor Avenue, Simi Valley, California 93063 (telephone number 805-526-5700).
The Company has been active during fiscal 1995 in the aerospace business,
including defense electronics, and has used its electronics technologies and
expertise and the acquisition in April 1995 of Hughes LAN Systems, Inc., which
has been renamed Whittaker Communications, Inc., to expand into data networking
and communications markets. During the past five years, the Company was also
active in biotechnology businesses. Set forth below is a description of the
current business of the Company.
The Company develops specialized aerospace and electronic technologies to
create products and customer solutions for aircraft, defense, communications
and industrial markets. The Company's products and services are developed and
produced by two business segments: Aerospace, which manufactures and markets
proprietary fuel, hydraulic and pneumatic fluid control valves and fire
detection system products fitted on aircraft, ground-based gas turbines, and
other industrial installations, and designs, develops and sells a wide array of
highly reliable defense electronics products and systems; and Communications,
which designs, develops, and markets a comprehensive line of data networking
products and services including intelligent wiring concentrators, Ethernet and
Asynchronous Transfer Mode ("ATM") switches and wide area network ("WAN")
access devices and provides a full range of network design, consulting,
integration and support services. For the fiscal year ended October 31, 1995,
total Company sales were $159.5 million, of which 81% were generated by the
Aerospace segment and 19% were generated by the Communications segment.
Aerospace Segment
The business and operations of the Aerospace segment are conducted by the
Company's Aerospace Group, which consists of the Company's aircraft, defense
electronics, industrial products, and federal sector product lines.
PRODUCTS
Principal applications and representative products of the Company's Aerospace
segment include:
Fluid and Pneumatic Controls. The Company designs and manufactures a broad
range of fluid control devices for both commercial and military aircraft. The
products are designed to control pneumatic, hydraulic and fuel flows in
aircraft systems. In commercial applications, they are used on virtually all
Boeing, McDonnell Douglas, and AirBus commercial aircraft, and virtually all
other aircraft and jet engines manufactured in the world, with the exception of
those manufactured in the former Communist countries. In addition, commercial
and industrial applications include ground refueling devices for airports and
valving systems, heat exchangers, and fuel skids for land gas turbine power
plants, off-shore oil platforms, and petrochemical complexes. In military
applications, the products are used on military transports, bombers,
helicopters, fighters and landing craft. Both commercial and military
applications include aircraft turbine engines built by General Electric and
Pratt & Whitney. Sales of fluid and pneumatic control products were $59.5
million in fiscal 1995, $52.9 million in fiscal 1994, and $43.0 million in
fiscal 1993.
Fire and Overheat Detectors. The Company designs and manufactures continuous
length pneumatic fire and overheat detectors as well as optical flame and smoke
detectors and systems for commercial and military aircraft and gas turbine
engines. This equipment is widely used on a broad spectrum of aircraft
manufactured by Boeing, AirBus, McDonnell Douglas, Northrop Grumman and many
smaller manufacturers, as well as on small naval vessels, helicopters, and
railcars. The aircraft range from large commercial transports to small commuter
aircraft, private twin engine airplanes, helicopters, military fighters and
transport aircraft. The fire
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and overheat detectors are used on aircraft engines manufactured by General
Electric, Pratt & Whitney and Rolls Royce. Industrial applications of such
products include complete fire protection systems for vehicles, turbine powered
pumping and electric power generation applications, as well as large scale
systems to protect oil platforms and refineries. Sales of fire and overheat
detectors and systems were $21.8 million in fiscal 1995, and $10.5 million in
fiscal 1994, the year during which the Company acquired the business.
Command, Control and Communications. The Company designs and manufactures
electronic systems for command, control and communications, including display
and analysis systems, digital data links, signal data converters, tactical
simulation systems, and wide-band encrypted secure voice and data systems that
permit secure communications. The Company also has developed modular software
that is designed to be portable to any real-time operating system. A user-
friendly, window-based display and a unique table-driven architecture provide
easy interface between various equipment and facilitate the addition of new
equipment. Sales of command, control and communications systems were $18.9
million in fiscal 1995, $24.5 million in fiscal 1994, and $29.8 million in
fiscal 1993.
Radio Frequency/Survivability Systems. The Company designs radar
countermeasure systems and electronic combat systems that provide radar and
proximity fuse jamming using an internally developed radio frequency memory
unit. Experience in technique development was used to invent a proprietary
monopulse radar countermeasures generator that is applicable to most modern
jamming systems. Also based on this experience, the Company is under contract
with the United States Army to develop enhancements to a Company-designed and
produced electronic protection system (the Shortstop Electronic Protection
System) that prematurely detonates incoming artillery, mortar, and other
proximity-fused weapons, providing significant protection to personnel and
facilities. A Company-designed radar system (TBMEWS) detects tactical ballistic
missiles, such as the SCUD, and allows early warning for the civilian
population and for deployment of weapons. Other ground-based radar surveillance
and tracking systems of the Company, including replicas of enemy radar systems,
are used in tactical training.
Data Managers. The Company provides a unique combination of hardware and
software that interfaces very high speed computers with lower speed computers
as well as storage disks, recorders and other peripherals. The data manager
allows simultaneous input and output of large amounts of data, facilitating
real time analysis and storage. Data managers provide this capability in
applications for jet engine data recording, transfer of video data in
simulators, and command and control applications.
Other Electronics Products. The Company designs and manufactures high
reliability silicon dioxide insulated coaxial and multiple conductor cable
systems which permit broad-band data transmission and control function
operation in extreme environments. Atmospheric monitoring systems are provided
for timely warning of emergency conditions. Applications for these technologies
include signal transmission and control functions inside nuclear power plants
and reactors, power and control monitoring and electronic valve control at oil
refineries, extreme environmental condition cable applications near jet
engines, and critical connections in airborne electronic countermeasure
systems. The Company also designs and manufactures expendable high-energy-
density batteries utilized primarily for missile and space applications. These
applications require watt seconds of energy and demand the highest availability
and reliability due to their critical functions. The Company supplies these
batteries to meet the extreme environmental requirement of airborne
applications.
PRODUCT DEVELOPMENT
In August 1994, the Company was awarded a $10.9 million cost-reimbursement
contract from the United States Army to develop three new versions of the
Company's previously developed battlefield electronic countermeasures system,
capable of detonating incoming artillery and mortar rounds, designated the
Shortstop Electronic Protection System ("SEPS"). During 1995, the Company met
performance requirements and developed three full scale SEPS development
models. The contract did not contribute a material amount of revenue to the
Company in 1995, but successful development of the new SEPS versions slated for
delivery starting late in fiscal 1996 could, subject to all of the risks and
uncertainties that apply to military procurement generally, as discussed below,
result in subsequent SEPS production contracts, which could then have a
material effect on the Company's sales. There can be no assurance, however,
whether or when any such contracts would be awarded.
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The Company is discussing with various foreign governments the potential sale
and installation of a Company-designed radar system that detects tactical
ballistic missiles and allows early warning for the civilian population and for
deployment of weapons. There are currently no firm commitments for the system
at this date. If the discussions result in an agreement, annual sales of
defense electronics products could increase materially. Because of the
uncertainties of the military procurement processes of foreign governments, the
need for the foreign government to provide budget authority for the potential
procurement, and all the uncertainties that apply to military procurement
generally, as discussed below, there can be no assurance that an agreement will
be reached or, if reached, what the contract price would be.
The Aerospace segment spent $3.4 million, $2.7 million, and $1.7 million on
research and development activities in fiscal 1995, 1994, and 1993,
respectively.
MARKETS AND CUSTOMERS
Sales to commercial customers, including foreign customers, were the major
contributor to Aerospace sales and profit in 1995. In past years, the principal
contributor to sales and profit for the Aerospace segment had been the United
States Government and its prime contractors. Sales directly or indirectly to
the United States Government, primarily under military procurement contracts,
continued to decrease as a percentage of Aerospace sales, dropping to 41% of
sales in 1995, compared to 49% in 1994 and 68% in 1993. Export sales to
customers outside the United States continued to increase, representing 23% of
Aerospace sales for 1995, compared to 20% in 1994 and 11% in 1993.
The Company has been able to achieve increased sales of its aircraft fluid
and pneumatic control devices over the past three years despite relatively low
new aircraft build rates. Increased emphasis has been placed on expanding sales
from overhaul repairs, retrofits, upgrades and spare components to end-users
such as airlines, cargo carriers, maintenance stations, military bases and
government agencies. New aircraft production now appears to be on the rise,
which may further contribute to an improved business climate for these Company
products. The Company has also positioned itself for continued growth in the
Aerospace segment by expanding its product offerings through acquisitions and
growth in related markets, including fire and overheat detection equipment and
industrial markets. During fiscal 1995, the Company also marketed its aircraft
fluid control and other aerospace products to manufacturers of industrial,
land-based gas turbines, which are similar to jet engines. The Company intends
to continue to do so. In certain geographic areas and certain products, sales
are often made indirectly through independent representatives or distributors.
Companies engaged in supplying military equipment to the United States
Government are subject to competition, changes in the continuing availability
of Congressional appropriations, changes in contract timing and scheduling,
complexity of designs and the potential for obsolescence, and other changes
which may result from world events. Contracts with the United States Government
are subject to termination for the convenience of the Government if deemed in
its best interests. Contracts which are terminated for convenience generally
provide for payments to a contractor for its costs and for fees or profits
related to work accomplished through the date of termination.
BACKLOG
At October 31, 1995, Aerospace backlog totaled $66.9 million (compared to
$69.3 million at October 31, 1994), of which $9.8 million is not expected to be
filled within fiscal 1996. Aerospace backlog includes no unfunded amounts
relating to government contracts.
COMPETITION
The military and commercial industries in which the Aerospace segment
operates are generally highly competitive, with competition centering on price,
as well as product performance and product support. Competitors of the Company
in such markets may have substantially greater financial resources, research
and design capabilities, and manufacturing capacity.
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Communications Segment
The business and operations of the Communications segment are conducted by
Whittaker Communications, Inc. ("WCI"), which was acquired by the Company in
April of 1995. WCI designs, develops, and markets a comprehensive line of
networking products which allow its customers a migration path from their
existing legacy infrastructures to new and emerging data networking
architectures. In addition, WCI provides a full range of network design,
consulting, integration and support services for small businesses or large
enterprise-wide solutions.
The Local Area Network ("LAN") market was born in the 1980's as mainframe
dominance was being seriously challenged by departmental minicomputers
supporting multiple users through terminals and personal computers.
Decentralized computing brought many advantages, but limitations on sharing
information and communicating quickly became evident. LANs provided the
foundation for cooperative computing concepts, better resource sharing, and the
further dissemination of computing power throughout businesses, government
agencies and schools. In the 1990's, new applications such as digital imaging,
client/server, and multimedia have begun to tax the bandwidth of early LAN
technologies such as Ethernet and Token Ring. Switching hubs are replacing
shared Ethernet and Token Ring networks. New technologies such as 100 megabit
per second ("Mbps") Fast Ethernet connectivity from the server to the desktop
and ATM are critical to keep up with the demands of emerging applications.
PRODUCTS
WCI has created a high-speed switching product line and integrated service
offering that empowers users to successfully navigate the rapid changes in the
local and wide area network marketplaces. WCI provides network managers with a
migration path that preserves investment in legacy LANs and software while
providing practical and upgradeable products and support for emerging high-
speed network standards. With products ranging from a chassis-based enterprise
hub, a robust management network platform, and an ATM switch, WCI provides a
global high-performance networking solution. WCI's product family provides
seamless bandwidth solutions in three key high-speed networking scenarios: as a
workgroup accelerator; as the backbone of a campus network; and as the core of
a global network.
Principal applications and representative products of the Company's
Communications segment include:
Enterprise Hub--WCI's Enterprise Hub, available in five- and fourteen-slot
chassis designs, incorporates a distributed ATM cell-switching fabric in its
architecture, which offers scalable bandwidth, high reliability, low cost of
entry, and an incremental and modular upgrade to ATM technology. The Enterprise
Hub integrates Ethernet, Token Ring, and Fiber Distributed Data Interface
("FDDI") wiring concentration, bridging, edge routing, and ATM cell relay
technology in a hot-swappable, modular high-performance system. Among the key,
single-slot modules that WCI has designed and markets are:
Model 908 ATM Network Interface Module, which provides ATM backbones
between Enterprise Hubs and to ATM workgroup switches, as well as User
Network Interface (UNI)-based connections to workstations and servers. The
Model 908 integrates any mix of legacy LANs, switched workgroups, server
clusters, and workstations with ATM.
Model 708 ATM Ethernet Switch Module, which provides a full 10 Mbps of
bandwidth per port to boost performance for workgroup LANs, servers and
high-performance workstations and switches Ethernet packets locally between
its eight 10BASE-T ports. Traffic destined for other ATM modules,
Enterprise Hubs and workgroup switches is converted to ATM cells and
forwarded using virtual circuit mapping.
Sales of the Company's Enterprise Hub and integrated modules were $23.4
million in fiscal 1995, reflecting activity for the six-month period since the
business was acquired by the Company.
Enterprise Network Access Switch (ENAS(TM))--WCI's ENAS, configured with a 5-
or 20-slot chassis, provides data integration for high-speed ATM services.
Achieving speeds of up to 155 Mbps, the ENAS integrates legacy
telecommunications for high-speed conversion to ATM by converting Ethernet and
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signals from their source media to ATM signals, linking existing LANs to the
ATM WAN. The ENAS is a LAN/WAN edge device that can be used as a wide area ATM
switch or as an interface between LANs and the ATM WAN switch.
Integration and Support--WCI also provides a full range of integration and
support with full turn-key networking solution to its customers, including the
integration of third-party products and services with the Company's own
products and services.
PRODUCT DEVELOPMENT
WCI's product development efforts are primarily focused on its strategic
product lines: LAN connectivity (both Ethernet and Token Ring), ATM switching
technology development, Ethernet switching, 100 Mbps Ethernet technology and
advanced network management software. WCI's core networking technologies create
opportunities to leverage its engineering investments and develop more
integrated products for simpler, more innovative networking solutions for
customers. WCI plans to invest in emerging technologies for use in existing and
future products, as well as to improve and enhance existing products to extend
their lifecycles, reduce manufacturing costs and increase functionality.
In addition to the development of custom Application Specific Integrated
Circuits ("ASICs") to improve performance, increase reliability and reduce
costs, WCI is investing in the following areas: Fast Ethernet (100 Mbps
Ethernet), ATM capabilities on both LAN and WAN, Ethernet switching, Integrated
Service Digital Network ("ISDN") and Frame Relay connectivity. These efforts
are directed at simplifying network management, providing remote connectivity
and increased network performance. WCI spent $4.3 million on research and
development activities since its acquisition by the Company in fiscal 1995.
The industry in which WCI competes is subject to rapid technological
developments, evolving industry standards, changes in customer requirements and
frequent new product introductions and enhancements. As a result, WCI's success
in part depends upon its ability, on a cost-effective and timely basis, to
continue to enhance its existing products and to develop and introduce new
products that take advantage of technological advances. There can be no
assurance that WCI will be able to successfully develop new products to address
new industry transmission standards and technological changes or to respond to
new product announcements by others or that such products will achieve market
acceptance.
MARKETS AND CUSTOMERS
With installations at over 300 major hospitals domestically, WCI has
established a specialization as a network provider for the healthcare industry.
WCI also has a strong presence in the public sector as well as in
manufacturing, education, finance and government. WCI currently has 6,000
systems installed worldwide, 1,000 of which are ATM-based.
Worldwide, WCI also serves its customers through indirect channels. Indirect
channels include systems integrators, value-added resellers, distributors,
resellers, and original equipment manufacturers (OEMs). WCI's multi-channel
sales strategy encourages broad market coverage, by allowing WCI's sales
personnel to create demand for its products while giving customers the
flexibility to choose the most appropriate delivery option. WCI maintains sales
offices in France, the United Kingdom, Germany and Mexico. In fiscal 1995,
approximately 44% of WCI's sales arose from exports to customers outside the
United States.
MANUFACTURING AND SUPPLIERS
WCI's primary production activities are conducted at its Santa Clara,
California facilities. Purchasing, mechanical assembly, burn-in, testing, final
assembly, and quality assurance functions are performed at this facility. WCI
also procures certain products and subassemblies through subcontractors.
Products manufactured by WCI are warranted for periods of 90 days for software
and one year for hardware.
Components purchased by WCI are generally available from multiple suppliers.
However, certain components may be available from sole sources. The inability
to obtain certain components could require WCI to redesign or delay shipments
of several of its data networking products. WCI has sought to establish
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close relationships with sole-source suppliers and/or to build up inventory of
such components; however, there can be no assurance that production would not
be interrupted due to the unavailability of components. WCI believes that its
inventory levels of these components are adequate for its currently forecasted
needs.
PATENTS, LICENSES AND RELATED MATTERS
WCI relies on U.S. and foreign patents, copyrights, trademarks and trade
secrets to establish and maintain proprietary rights in its technology and
products. There can be no assurance that any of these patents would be upheld
as valid if litigated. Although WCI believes that its patents and applications
have value, it also believes that its competitive position depends primarily on
the innovative skills, technological expertise and management abilities of its
employees.
Many of WCI's products are designed to include software or other intellectual
property licensed from third parties. WCI actively seeks to license software
that promotes the compatibility of its products with industry standards,
including standard protocols and architectures. The loss of rights in software
or other intellectual property licensed from a third party and designed into a
particular product might disrupt or delay WCI's distribution of that product.
Although it may be necessary in the future to seek or renew licenses relating
to various aspects of its products, WCI believes that, based upon past
experience and standard industry practice, such licenses generally could be
obtained on commercially reasonable terms.
BACKLOG
WCI manufactures its products based upon its forecast of the demand of its
customers worldwide and maintains inventories of finished products in advance
of receiving firm orders from its customers. Product orders are generally
placed by the customer on an as-needed basis and products are usually shipped
within one to four weeks after receipt of an order. Such orders generally may
be canceled or rescheduled by the customer without significant penalty.
Accordingly, WCI does not maintain a substantial backlog, and backlog as of any
particular date may not be indicative of actual sales in any succeeding period.
At October 31, 1995, WCI backlog totaled $15.2 million, all of which is
expected to be filled in fiscal 1996.
COMPETITION
Data networking encompasses both on-premises (i.e., desktop connectivity
devices, internetworking platforms and wiring hubs) and off-premises (i.e.,
WAN) technologies. WCI participates primarily in designing, manufacturing and
marketing on-premises equipment, and is entering the off-premises point-of-
presence market with its ENAS product. WCI's competitors typically compete in
one or more segments of the data networking market. These companies are using
their resources and technical expertise to improve and expand their product
lines in an effort to gain market share. The industry recently has witnessed a
wave of merger, acquisition and strategic partnering activity as many of these
companies seek to provide broader networking solutions.
Competition in the network systems business, formerly characterized by niche-
based competitors focused on a single industry segment, is shifting toward more
broad-based suppliers offering multiple product lines. This has been achieved
through mergers and acquisitions, joint marketing agreements, and internally
developed products. This industry consolidation, and the convergence of hub,
switching and routing technologies on single platforms, will likely continue,
intensifying competition among a small group of companies with broad product
offerings. Principal competitors in the network systems products market include
Bay Networks, Cabletron, 3Com, UB Networks and Cisco Systems.
Several of WCI's competitors have greater name recognition, more extensive
engineering, manufacturing and marketing capabilities, and greater financial,
technological and personnel resources than those available to WCI. There can be
no assurance that WCI will be able to compete successfully in the future with
existing or new competitors.
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DISCONTINUED OPERATIONS
In October 1991, the Company spun off its biotechnology business as
BioWhittaker, Inc. In addition, since the beginning of the Company's
divestiture program in 1989, the Company has sold its Anjac/Doron, Duall/Wind,
Chemical Coatings, Heico Chemicals, Park Chemical, Ram Chemicals, Specialty
Chemicals, Technibilt, Water Management, Whittaker Metals, Winters Industries
and Yardney Electric Corporation units. The divestiture program has been
substantially completed. Remaining to be divested is a 996-acre parcel of land
formerly used, until 1987, by the Company's former Bermite division, a
discontinued technology unit. The land is located in the City of Santa Clarita,
California, approximately 35 miles from downtown Los Angeles. In September
1995, the city granted the entitlements necessary to develop this property as a
mixed-use, residential, commercial, and light industrial development. The
Company has reached agreement in principle with City staff on a development
agreement with the City, which among other things, would extend the ten-year
life of the entitlements to 20 years. In January 1996, the City Council granted
preliminary approval to the agreement. Final approval is not expected before
February 1996, but there can be no assurance that final approval will be
obtained. See Note 3 to Consolidated Financial Statements in Part II, Item 8 of
this Form 10-K for information about the parcel remaining to be divested.
ACQUISITIONS
On April 24, 1995, the Company acquired the stock of Hughes LAN Systems,
Inc., from Hughes Electronics Corporation for a purchase price consisting of
$16.0 million in cash, subject to certain adjustments, a $15.0 million
convertible subordinated note and deferred cash payments not to exceed $25.0
million. The deferred cash payments are payable over the years 1996 to 1999 and
are based on the sales of WCI hubs, hub products, and derivatives. The
subsidiary was renamed Whittaker Communications, Inc. The Company intends to
continue its previously announced strategy of growth by selective acquisitions
that complement the Company's existing businesses and product lines. See Note 2
to Consolidated Financial Statements in Part II, Item 8 of this Form 10-K for
additional information regarding acquisitions.
ENVIRONMENTAL
Compliance with Federal, state and local provisions which have been enacted
or adopted regulating the discharge of materials into the environment, or
otherwise relating to the protection of the environment, has had no material
effect upon the capital expenditures, earnings or competitive position of the
Company, nor is the Company estimating any material capital expenditures for
environmental control facilities in fiscal 1996 or 1997.
EMPLOYEE RELATIONS
As of October 31, 1995, the Company employed approximately 950 persons in its
businesses, about 11% of whom were represented by labor organizations. The
Company believes that it has generally good relations with its employees.
ITEM 2. PROPERTIES.
The Company's corporate headquarters are located in its facilities in Simi
Valley, California, which consist of approximately 276,000 square feet in three
buildings owned by the Company. The Company owns a 30,000 square foot
production facility in Colorado.
The Company also leases three facilities in California which consist of
approximately 305,000 square feet under leases that expire from March 1997 to
January 1999. The Company has an option to renew certain of these leases for
various terms. Approximately half of the square footage is used for
manufacturing, engineering, and product development while the remainder is used
for sales, marketing, and other general and administrative support.
The Company also leases and occupies sales and technical support offices
throughout the United States, as well as in Europe and Mexico.
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The Company believes that, in general, its plants and equipment are
adequately maintained, in good operating condition and adequate for the
Company's present needs. The Company regularly upgrades and modernizes its
facilities and equipment, and expands its facilities as necessary to meet
customer requirements.
ITEM 3. LEGAL PROCEEDINGS.
ENVIRONMENTAL MATTERS
As a result primarily of the activities of its discontinued operations, the
Company is a potentially responsible party in a number of actions filed under
the Comprehensive Environmental Response Compensation and Liability Act of 1980
("CERCLA"). CERCLA, also known as "Superfund," is the main Federal law enacted
to address public health and environmental concerns arising with respect to
past treatment and disposal of hazardous substances. The Company also is a
potentially responsible party in a number of actions brought under state laws
patterned after CERCLA.
CERCLA and such other state laws provide for the imposition of clean-up
liability on anyone who arranges for the disposal or treatment of hazardous
substances at designated sites. Accordingly, anyone who generates hazardous
substances may be a potentially responsible party if the treatment, storage, or
disposal facility that handles the substances becomes the subject of an
environmental clean-up under such laws. This is true even if the treatment,
storage, or disposal facility has the proper licenses and permits issued by
appropriate governmental authorities and treats, stores, or disposes of the
hazardous substances in accordance with the terms of such licenses and permits.
The various state environmental agencies and the U.S. Environmental Protection
Agency take the position under these environmental laws that all responsible
parties are jointly and severally liable for the costs of cleaning up sites
subject to their jurisdiction and for any environmental damages caused by the
treatment or disposal of hazardous substances at such sites.
In nearly all of the environmental matters in which the Company is involved,
the Company contributed a very small amount (generally much less than 1%) of
the total wastes treated or disposed of at these various treatment or disposal
facilities and participates as a so-called "de minimis" party. De minimis
parties are generally allowed to settle their potential liability for clean-up
activities by agreeing with the state or Federal environmental authorities and
the other, larger responsible parties to bear a share of the past and estimated
future clean-up costs based on the volume of the waste each de minimis party
contributed, plus a "premium" or "multiplier." These premiums or multipliers
are designed to allow for the uncertainty of estimates of future costs and the
desirability of settling liability early to avoid so-called transaction costs,
i.e., the legal, consulting, and other expenses, which tend to consume a
significant amount of the funds actually spent on the resolution of
environmental matters.
Where the Company does not qualify for such treatment, the Company's
potential liability on a particular environmental matter could be significant,
or the Company believes that the premium or multiplier for a de minimis
settlement is unreasonable, the Company may elect to participate in the
settlement or remediation activities as, or on the same basis as, a major
party, generally paying its allocated share of remediation expenses and
transaction costs as they are incurred, often over several years.
In addition to the CERCLA and similar actions described above, the Company
also, from time to time, conducts or participates in remedial investigations
and clean-up activities at facilities currently or formerly occupied by its
operating units. In the most significant of these sites, the Company has "clean
closed" 13 of 14 facilities regulated under the Resource Conservation and
Recovery Act at its former Bermite division in Santa Clarita, California. The
Company is currently working to close the 14th of such facilities and to
complete an investigation of the entire property in anticipation of the
development of the property for a planned mixed-use residential and commercial
development.
The Company's Denver, Colorado-based Power Storage Systems unit has been
cited by the City of Denver for violations arising from its failure to have a
waste water discharge permit for a sink used in the brazing operations of a
satellite welding facility. The Company believes it has defenses to many of the
8
<PAGE>
allegations cited in the notice of violation from the City of Denver.
Discussions with the City to settle this matter were successful during fiscal
1995. The Company and the City are completing documentation and implementation
of the settlement, which is not expected to have a material adverse effect on
the Company.
In 1995, the Company made cash expenditures of approximately $1.4 million on
environmental matters. This amount was charged to reserves for environmental
contingencies which were previously established as part of the Company's
divestiture and restructuring program for discontinued operations.
OTHER LEGAL MATTERS
There are also various other claims and suits pending against the Company.
Based on an evaluation, which included consultation with counsel concerning the
legal and factual issues involved, the Company is of the opinion that such
claims and suits pending against the Company, including the environmental
matters discussed above, will not have a material adverse effect, singly or in
the aggregate, on the financial position of the Company. See Note 10 of Notes
to Consolidated Financial Statements in Part II, Item 8 of this Form 10-K.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT.
The following table sets forth the names, ages and positions of the current
executive officers of the Registrant.
<TABLE>
<CAPTION>
NAME AGE POSITIONS
---- --- ---------
<C> <C> <S>
Thomas A. Brancati.................. 60 Chief Executive Officer, President,
and Chief Operating Officer
Jack C. Cannady..................... 63 Vice President
Richard Levin....................... 45 Vice President, Chief Financial
Officer and Secretary
John K. Otto........................ 41 Treasurer
</TABLE>
Mr. Brancati was President of the Company's Electronics Systems unit from
1987 until 1993, when he was elected President and Chief Operating Officer of
the Company, as well as a Director. Effective January 1, 1995, Mr. Brancati
became Chief Executive Officer of the Company.
Mr. Cannady was Vice President of the Company's Electronics Systems unit from
1989 until his appointment as a Vice President of the Company in June 1994.
Mr. Levin joined Whittaker in May 1994, at which time he was appointed Vice
President, Chief Financial Officer and Secretary. From 1978 until joining
Whittaker, Mr. Levin was a practicing attorney with the law firm of Stutman,
Treister & Glatt.
Mr. Otto joined Whittaker in 1983 as Whittaker's Manager of Banking and Cash.
He was named Assistant Treasurer in 1986 and Treasurer in 1988.
The term of office of each executive officer will expire at the next annual
meeting of the Board of Directors, which is scheduled to be held March 22,
1996.
9
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER
MATTERS.
PRINCIPAL MARKETS
The Common Stock is listed on the New York Stock Exchange and the Pacific
Stock Exchange (Symbol: WKR). The Series A Participating Cumulative Preferred
Stock Purchase Rights are listed on the New York Stock Exchange and the
Pacific Stock Exchange, and, at the present time, trade with the Common Stock
and are not separately transferable. The Series D Participating Convertible
Preferred Stock (the "Series D Preferred Stock") is not listed or traded on
any exchange. See Note 6 of Notes to Consolidated Financial Statements in Part
II, Item 8 of this Form 10-K.
COMMON STOCKHOLDERS
As of December 31, 1995 there were 5,498 registered holders of the Common
Stock.
COMMON STOCK PRICES
The following table sets forth the high and low sales prices of the Common
Stock during Whittaker's two most recent fiscal years.
<TABLE>
<CAPTION>
QUARTER ENDED
----------------------------------------------------------------------------
JANUARY 31 APRIL 30 JULY 31 OCTOBER 31
---------------- ---------------- ---------------- ----------------
HIGH LOW HIGH LOW HIGH LOW HIGH LOW
------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1994................ 16 5/8 12 17 7/8 13 1/2 15 5/8 13 5/8 20 15 5/8
1995................ 20 5/8 16 1/8 21 1/8 17 3/8 24 5/8 20 23 1/8 18
</TABLE>
DIVIDENDS
Dividends of $0.25 were declared on each share of Series D Preferred Stock,
for each quarter of the Company's two most recent fiscal years. Dividends of
$1.25 were declared on each share of the $5.00 Cumulative Convertible
Preferred Stock ("$5.00 Preferred Stock") for each quarter of fiscal 1994 and
for the first two quarters of fiscal 1995. On April 28, 1995, all of the
outstanding shares of $5.00 Preferred Stock were redeemed or converted into
Common Stock. No dividends have been declared on the Common Stock during the
two most recent fiscal years.
Under the Company's current credit facility with a group of banks, there are
restrictions that materially limit the amount of cash dividends that may be
paid on the Common Stock. The Company may pay cash dividends on the Common
Stock if the Company satisfies a minimum tangible net worth requirement and
meets a cash flow test measured at the end of the fiscal quarter immediately
preceding the payment of the dividend, and the cumulative amount of all cash
dividends paid on the Common Stock does not exceed $100,000 plus 20% of the
net income of the Company determined on a cumulative basis from January 30,
1995 through the end of the fiscal quarter immediately preceding the payment
of the dividend. In the foreseeable future, in light of the Company's strategy
of using earnings from operations to fund growth internally and by selective
acquisitions, the Company's present intention is to refrain from paying cash
dividends on the Common Stock even if the Company is able to do so under its
current credit facility. See Note 5 of Notes to Consolidated Financial
Statements in Part II, Item 8 of this Form 10-K for further description of the
Company's credit facility.
TRANSFER AGENT AND REGISTRAR FOR COMMON STOCK
CHEMICAL MELLON SHAREHOLDER SERVICES
Four Station Square
Third Floor
Pittsburgh, Pennsylvania 15219
RIGHTS AGENT FOR SERIES A PARTICIPATING CUMULATIVE PREFERRED STOCK PURCHASE
RIGHTS
MELLON BANK N.A.
Post Office Box 444
Pittsburgh, Pennsylvania 15230
10
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA.
WHITTAKER CORPORATION
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Sales............................ $159,479 $126,448 $115,386 $159,915 $158,510
Income from continuing opera-
tions, before
accounting change............... $ 7,865 $ 10,061 $ 7,698 $ 13,377 $ 11,374
Cumulative effect of accounting
change.......................... -- -- $ 1,512 -- --
Income (loss) from discontinued
operations...................... -- -- $ (1,954) $ 2,300 $ 11,201
Net income....................... $ 7,865 $ 10,061 $ 7,256 $ 15,677 $ 22,575
Earnings (loss) per share
Continuing operations, before
accounting change............. $ .82 $ 1.06 $ .81 $ 1.42 $ 1.27
Accounting change.............. -- -- .16 -- --
Discontinued operations........ -- -- (.21) .24 1.26
Net income..................... $ .82 $ 1.06 $ .76 $ 1.66 $ 2.53
Average common and common equiva-
lent shares outstanding (in
thousands)...................... 9,625 9,502 9,491 9,407 8,884
Dividends per common share....... -- -- -- -- --
OTHER DATA
Working capital.................. $ 73,501 $ 79,983 $ 73,924 $ 85,926 $ 58,969
Total assets..................... $250,959 $209,307 $201,869 $218,279 $199,344
Long-term debt................... $ 70,694 $ 54,742 $ 56,782 $ 66,644 $ 54,920
Stockholders' equity............. $102,424 $ 93,950 $ 83,748 $ 75,200 $ 58,470
Current ratio.................... 2.46:1 3.18:1 2.77:1 2.74:1 2.10:1
Capital additions................ $ 6,400 $ 2,500 $ 1,300 $ 2,200 $ 2,000
Stockholders of record........... 5,500 5,700 7,100 8,500 8,800
</TABLE>
11
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION.
RESULTS OF OPERATIONS
Comparison of 1995 to 1994
Sales for the Company for fiscal 1995 were $159.5 million, an increase of
$33.0 million (26.1%) over fiscal 1994. Sales increased in 1995 largely as a
result of the Company's acquisitions of a data networking and communications
business in April 1995, which contributed $30.5 million to 1995 sales, and an
aerospace business in March of 1994. In the aggregate, the acquired businesses
and product lines accounted for $52.3 million of 1995 sales, compared to $10.5
million in 1994, reflecting the implementation of the Company's previously
announced strategy of growth by selective acquisitions to complement the
Company's existing businesses and product lines. Management expects that the
acquired businesses and product lines will contribute to sales in fiscal 1996
at least at the annual rate at which they contributed in fiscal 1995.
The acquisitions offset decreases in government sales and termination
claims. In the first quarter of 1994, $4.0 million of sales were recognized
related to the partial settlement of a termination claim against a defense
electronics products customer. An additional, final settlement of $1.1 million
was recognized in the second quarter of 1995.
The Company has been able to achieve increased sales of its aircraft fluid
and pneumatic control devices over the past three years despite relatively low
new aircraft build rates. Increased emphasis has been placed on expanding
sales from overhaul repairs, retrofits, upgrades and spare components to end-
users such as airlines, cargo carriers, maintenance stations, military bases
and government agencies. New aircraft production now appears to be on the
rise, which may further contribute to an improved business climate for these
Company products. The Company has also positioned itself for continued growth
in the Aerospace segment by expanding its product offerings through
acquisitions and growth in related markets, including fire and overheat
detection equipment and industrial markets. During fiscal 1995, the Company
also marketed its aircraft fluid control and other aerospace products to
manufacturers of industrial, land-based gas turbines, which are similar to jet
engines. The Company intends to continue to do so.
A reduced United States defense budget has contributed to both the decline
in sales to the U.S. government and delays in the receipt of new contract
bookings in the Aerospace segment. The outlook for future sales is difficult
to predict given the uncertainties related to the defense budget and related
reductions and terminations of U.S. Government defense contracts. Any negative
effect on Aerospace segment sales related to this uncertainty may be offset in
the future by contracts for new, technologically advanced electronic defense
systems, new commercial products, and sales of aerospace and electronic
products into industrial markets. Thus, past Company performance may not be a
reliable indicator of future performance.
Gross margin for the Company increased in fiscal 1995 to $69.5 million, or
43.6% of sales, from $53.2 million, or 42.0% of sales in fiscal 1994. Gross
margin for the Communications segment was 44.5% in fiscal 1995. Gross margin
for the Aerospace segment increased to 43.4% of sales from 42.0% of sales in
fiscal 1994. Affecting the comparability of the years are three items which
had a net positive impact of $5.0 million on Aerospace gross margin in 1995,
compared to $4.1 million in 1994. The first item is recognition in 1995 of
$1.8 million of gross margin related to the Company's insurance claim for
earthquake damage brought about by the January 17, 1994 Northridge, California
earthquake. The second item is recognition in 1995 of $2.1 million of gross
margin related to the Company's defined benefit pension plan, while related
gross margin in 1994 was $0.6 million. This actuarially determined pension
income is the result of an expected return on plan assets which exceeded the
interest cost on the projected benefit obligation. The last item is a
termination claim settlement which contributed $1.1 million of gross margin in
1995, compared to $3.5 million in 1994. When the effects of these items are
removed from both years, Aerospace segment gross margin as a percentage of
sales is 40.4% in 1995 compared to 40.1% in 1994.
Engineering expenses for the Company as a percentage of sales increased to
4.9% in 1995 from 2.2% in 1994. This increase is due to the inclusion of six
months of results of the Communications segment in 1995. Management expects
engineering expenses as a percentage of sales to increase further in fiscal
1996 to reflect
12
<PAGE>
full year operating results of the Communications segment. Engineering
expenses as a percentage of sales in the Aerospace segment increased to 2.7%
in 1995, from 2.2% in 1994, due to up-front costs related to its industrial
business product lines.
Selling, general and administrative expenses for the Company as a percentage
of sales increased to 24.8% in 1995 from 24.1% in 1994. In 1995, the Aerospace
segment received a $1.3 million earthquake recovery which was reflected as a
reduction in selling, general and administrative expenses. Excluding the
effects of the termination claim included in 1994 and 1995 revenues, as well
as the earthquake recovery in 1995, the Aerospace segment's selling, general
and administrative expenses as a percentage of sales increased to 19.5% in
1995 from 19.3% in 1994. The Communications segment of the business spends
more on salespeople and marketing programs, as a percentage of sales, than the
Aerospace segment. Consequently, the inclusion of six months of Communications
segment results has increased the overall percentage for the Company.
Management expects selling, general, and administrative expenses to increase
further in fiscal 1996 to reflect full year operating results of the
Communications segment.
During the second quarter of 1995, concurrent with the acquisition of WCI, a
charge to earnings was recorded related to acquired in-process research and
development. The effect was to reduce net income for the second quarter and
the year by $1.9 million, or $0.20 per share. During the third quarter of
1995, a charge to earnings was recorded to reflect restructuring actions at
WCI, along with expenses associated with combining a substantial portion of
the Company's Beaverton, Oregon operation into the WCI operation in Santa
Clara, California. The effect was to reduce net income for the third quarter
and year by $0.2 million, or $0.02 per share.
Interest expense increased to $5.9 million for fiscal 1995 from $4.0 million
in fiscal 1994 primarily as a result of higher interest rates and incremental
debt from the purchase of WCI.
Comparison of 1994 to 1993
Sales for fiscal 1994 increased 9.6% to $126.4 million from fiscal 1993
sales of $115.4 million. Sales increased in 1994 in part as a result of the
Company's acquisition of a telecommunications business in July 1993, two
aircraft fluid control product lines in the fourth quarter of fiscal 1993, and
an aerospace business in March of 1994. The acquisitions offset decreases in
government sales. In the aggregate, the acquired businesses and product lines
accounted for $27.5 million of 1994 sales, compared to $1.7 million in 1993.
The aerospace business acquired in March 1994 contributed $10.5 million to
1994 sales.
The increased sales in fiscal 1994 also included the recognition of $4.0
million of sales during the first quarter of 1994 related to the partial
settlement of a termination claim against a defense electronics products
customer. Sales of defense electronics products were adversely affected during
the first and second quarters of fiscal 1994 by the January 17 Northridge,
California earthquake and by delays in the receipt of new contract bookings.
Gross margin increased in fiscal 1994 to $53.2 million, or 42.0% of sales,
from $44.2 million, or 38.3% of sales in fiscal 1993. The increase was due
primarily to a product mix that included a higher portion of after-market
aircraft fluid control products. Also contributing to the increase in gross
margin in 1994 was $3.5 million of gross margin resulting from the partial
termination claim settlement described above, under which the Company recorded
as revenue $4.0 million, with an associated cost of sale of $0.5 million. The
increase in gross margin was offset partially by lower margins in radio
frequency/survivability products resulting primarily from a higher mix of
cost-plus contracts in 1994 compared to 1993 and, to some degree, from the
effects of the interruption of the business and damage caused by the January
17 Northridge, California earthquake.
As a percentage of sales, engineering, selling and general and
administrative expenses increased from 24.7% in fiscal 1993 to 26.2% in fiscal
1994. The increase primarily was the result of additional expenses of the
acquired aerospace business, and executive bonus payments made for 1994
compared to limited payments made for 1993. The increase was offset partially
by income associated with the Company's defined benefit pension plan.
13
<PAGE>
General
In fiscal 1995, 1994, and 1993, approximately 34%, 49%, and 68%,
respectively, of the Company's sales were directly or indirectly attributable
to the United States Government. All of these sales, with the exception of a
minor amount in 1995, relate to the Aerospace segment. Companies engaged in
supplying military equipment to the United States Government are subject to
competition, changes in the continuing availability of Congressional
appropriations, changes in contract timing and scheduling, complexity of
designs and the potential for obsolescence, and other changes which may result
from world events. A loss of Government business, although not anticipated by
the Company, could have a material adverse effect on the Company's operations.
In August 1994, the Company was awarded a $10.9 million cost-reimbursement
contract from the United States Army to develop three new versions of the
Company's previously developed battlefield electronic countermeasures system,
capable of detonating incoming artillery and mortar rounds, designated the
Shortstop Electronic Protection System ("SEPS"). During 1995, the Company met
performance requirements and developed three full scale SEPS development
models. The contract did not contribute a material amount of revenue to the
Company in 1995, but successful development of the new SEPS versions slated for
delivery starting late in fiscal 1996 could, subject to all of the risks and
uncertainties that apply to military procurement generally, as discussed above,
result in subsequent SEPS production contracts, which could then have a
material effect on the Company's sales. There can be no assurance, however,
whether or when any such contracts would be awarded.
The Company is discussing with various foreign governments the potential sale
and installation of a Company-designed radar system that detects tactical
ballistic missiles and allows early warning for the civilian population and for
deployment of weapons. There are currently no firm commitments for the system
at this date. If the discussions result in an agreement, annual sales of
defense electronics products could increase materially. Because of the
uncertainties of the military procurement processes of foreign governments, the
need for the foreign government to provide budget authority for the potential
procurement, and all the uncertainties that apply to military procurement
generally, as discussed above, there can be no assurance that an agreement will
be reached or, if reached, what the contract price would be.
FINANCIAL CONDITION
At October 31, 1995, the Company's debt totaled $76.7 million, which
consisted of $29.5 million of loans under a revolving bank credit facility,
$31.3 million under a bank term loan, a $15.0 million convertible subordinated
note, and $0.9 million of other debt. In addition, there were $12.9 million of
letters of credit outstanding under the revolving credit facility. On January
24, 1995, the Company and a group of banks entered into a credit agreement
which consists of a $65.0 million revolving credit facility with a three-year
term expiring in January 1998 and a term loan that is being repaid in quarterly
installments over five years. Interest on loans outstanding under the credit
agreement are based, at the Company's option, on LIBOR or the agent bank's
prime rate. The annual interest rate based on LIBOR may range between LIBOR
plus 1.0% and LIBOR plus 1.875%, and the annual interest rate based on the
prime rate may range between prime and prime plus 0.50%. The agreement includes
financial covenants with respect to financial leverage, cash flow, and tangible
net worth. Proceeds from the credit facility were used at closing to repay
$55.5 million of loans outstanding under a prior credit facility and will be
used in the future to fund working capital and acquisitions.
The Company's ratio of long-term debt, including the current portion, to
capitalization (stockholders' equity plus debt) was 42.8% at October 31, 1995,
compared to 39.1% at the end of 1994. While stockholders' equity increased by
$8.5 million for the year, reflecting a $7.9 million contribution from 1995 net
income and $0.6 million from net exercises of employee stock options and
related tax benefits, debt increased by $16.5 million. This increase in debt
resulted from the additional debt used to finance the acquisition of WCI, which
was partially offset by cash from operations.
14
<PAGE>
Cash flow provided by operations in fiscal 1995 was $20.8 million, compared
to $21.6 million in fiscal 1994. The reduction in operating cash flow in 1995
compared to 1994 resulted from the buildup of recoverable income taxes not yet
received in cash, which caused a $4.8 million decrease, and a decrease in net
income of $2.2 million. These reductions were substantially offset by
increased cash flows from operating assets and liabilities and an increase in
non-cash expenses. Cash used in investing activities was $39.5 million in
fiscal 1995, which included $31.0 million for the acquisition of WCI and
capital expenditures of $6.4 million. During fiscal 1994, the Company used
cash of $13.0 million to make acquisitions and had capital additions of $2.5
million. Cash flow provided by financing activities was $15.4 million in
fiscal 1995, primarily the result of the issuance of a convertible
subordinated note to finance the acquisition of WCI, while $2.6 million of
cash was used in fiscal 1994, primarily to reduce debt.
The Company expects to receive a net income tax refund of $5.2 million, plus
interest of approximately $5 million, under an agreement reached with the
Internal Revenue Service closing the audit of the Company's 1987 and 1988
income tax returns. The refund is subject to approval by the Congressional
Joint Committee on Taxation, which is not expected until the second quarter of
fiscal 1996.
Included in accounts receivable at the end of fiscal 1995 are no significant
claims related to certain United States Government prime contracts and
subcontracts compared to $5.6 million at the end of fiscal 1994. An additional
claim of $1.6 million is included in other assets at the end of fiscal 1995.
These claims have been recorded in accordance with generally accepted
accounting principles to the extent of contract costs incurred. These costs
were incurred in connection with customer caused delays and disruptions,
errors in technical data, a partial termination for convenience and other
unanticipated causes. These claims were filed for amounts aggregating $13.7
million at October 31, 1995, compared to $31.8 million at year-end 1994,
substantially in excess of amounts recorded. While the outcome of these claims
presently cannot be determined, in the opinion of the Company and its counsel
the recorded amount is a reasonable estimate of the minimum amount expected to
be collected. These claims are subject to negotiation and audit by the U.S.
Government, the prime contractor customer, or both, and are presently at
various stages of negotiation, litigation or appeal.
During the third quarter of fiscal 1994, the Company submitted a claim to
its insurance carriers to recover the costs of repair and replacement of
assets and for the costs of business interruption brought about by the January
17 Northridge, California earthquake. A final settlement in the amount of $8.3
million was reached in the third quarter of fiscal 1995, and full payment has
been received.
Capital expenditures for fiscal 1995 were $6.4 million, compared to $2.5
million in fiscal 1994 and $1.3 million in fiscal 1993. The increase in fiscal
1995 reflects various costs associated with the relocation of the Company's
headquarters office from leased space into an existing owned manufacturing
facility, as well as upgrades to engineering equipment. At October 31, 1995,
there were approximately $0.5 million of approved capital expenditures
outstanding for the replacement and upgrade of existing plant and equipment at
the Company's various facilities. Funds for these and other capital
expenditures are expected to be provided from operations. Capital expenditures
are subject to limitations by covenants contained in the Company's credit
agreement. It is anticipated that the amounts under the covenants will be
sufficient to allow the Company to continue to maintain and upgrade existing
facilities.
The Company intends to continue its previously announced strategy of growth
by selective acquisitions that complement the Company's core businesses,
financed by cash from operations and from borrowings under its revolving
credit facility and, where appropriate, by issuance of new debt or equity
securities of the Company. The Company intends to pursue its acquisition
strategy with careful regard for profitability and the Company's need for
liquidity. There can be no assurance, however, that any acquisitions will
occur or that an acquisition that does occur will not adversely affect the
Company's net income or liquidity.
15
<PAGE>
As a result primarily of the activities of its discontinued operations, the
Company is a potentially responsible party in a number of actions filed under
the Comprehensive Environmental Response Compensation and Liability Act of 1980
(CERCLA). See further discussion in Item 3 of this Form 10-K.
See Note 10 of Notes to Consolidated Financial Statements in Part II, Item 8
of this Form 10-K for information regarding commitments and contingencies.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA.
16
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Stockholders and Board of Directors of Whittaker Corporation
We have audited the accompanying consolidated balance sheets of Whittaker
Corporation as of October 31, 1995 and 1994, and the related consolidated
statements of income, stockholders' equity, and cash flows for each of the
three years in the period ended October 31, 1995. 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 consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Whittaker Corporation at October 31, 1995 and 1994, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended October 31, 1995, in conformity with generally accepted accounting
principles.
As discussed in Note 7 to the consolidated financial statements, in 1993 the
Company changed its method of accounting for income taxes.
ERNST & YOUNG LLP
Los Angeles, California
December 14, 1995
17
<PAGE>
WHITTAKER CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
OCTOBER 31,
----------------------------
1995 1994 1993
-------- -------- --------
(DOLLARS IN THOUSANDS
EXCEPT FOR PER SHARE
AMOUNTS)
<S> <C> <C> <C>
Sales............................................ $159,479 $126,448 $115,386
Costs and expenses
Cost of sales.................................. 89,974 73,286 71,139
Engineering and development.................... 7,741 2,720 1,700
Selling, general and administrative............ 39,608 30,429 26,835
Acquired in-process research and development... 3,250 -- --
Restructuring costs............................ 382 -- --
-------- -------- --------
Operating income................................. 18,524 20,013 15,712
Interest expense................................. (5,897) (3,967) (3,731)
Interest income.................................. 568 568 712
Other expense.................................... (169) (82) (181)
-------- -------- --------
Income from continuing operations before provi-
sion for taxes and
cumulative effect of accounting change.......... 13,026 16,532 12,512
Provision for taxes.............................. 5,161 6,471 4,814
-------- -------- --------
Income from continuing operations before cumula-
tive effect of accounting change................ 7,865 10,061 7,698
Cumulative effect as of November 1, 1992 of
change in method of
accounting for income taxes..................... -- -- 1,512
Loss from discontinued operations................ -- -- (1,954)
-------- -------- --------
Net income....................................... $ 7,865 $ 10,061 $ 7,256
======== ======== ========
Earnings per share
Continuing operations before cumulative effect
of accounting change.......................... $ 0.82 $ 1.06 $ 0.81
Cumulative effect of accounting change......... -- -- 0.16
Loss from discontinued operations.............. -- -- (0.21)
-------- -------- --------
Net income..................................... $ 0.82 $ 1.06 $ 0.76
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
18
<PAGE>
WHITTAKER CORPORATION
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
AT OCTOBER 31,
------------------
1995 1994
-------- --------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
CURRENT ASSETS
Cash........................................................ $ 161 $ 3,507
Receivables................................................. 65,394 65,292
Inventories................................................. 39,518 32,013
Prepaid expenses............................................ 2,053 2,475
Income taxes recoverable.................................... 1,452 66
Deferred income taxes....................................... 15,151 13,395
-------- --------
Total Current Assets...................................... 123,729 116,748
PROPERTY, PLANT AND EQUIPMENT
Land and land improvements.................................. 5,770 6,426
Buildings and improvements.................................. 27,503 27,742
Equipment................................................... 44,381 34,729
Construction in progress.................................... 405 1,376
-------- --------
78,059 70,273
Less accumulated depreciation and amortization.............. (36,641) (33,506)
-------- --------
41,418 36,767
-------- --------
OTHER ASSETS
Goodwill, net of amortization............................... 33,414 19,604
Other intangible assets, net of amortization................ 10,585 2,336
Notes and other noncurrent receivables...................... 4,218 3,682
Other noncurrent assets..................................... 10,480 4,681
Assets held for sale........................................ 27,115 25,489
-------- --------
85,812 55,792
-------- --------
$250,959 $209,307
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
19
<PAGE>
WHITTAKER CORPORATION
CONSOLIDATED BALANCE SHEETS
LIABILITIES & STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
AT OCTOBER 31,
-----------------
1995 1994
-------- --------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
CURRENT LIABILITIES
Current maturities of long-term debt.......................... $ 6,048 $ 5,540
Accounts payable.............................................. 14,650 10,713
Accrued liabilities........................................... 29,530 20,512
-------- --------
Total Current Liabilities................................... 50,228 36,765
-------- --------
OTHER LIABILITIES
Long-term debt................................................ 70,694 54,742
Other noncurrent liabilities.................................. 11,340 11,880
Deferred income taxes......................................... 16,273 11,970
-------- --------
Total Other Liabilities..................................... 98,307 78,592
-------- --------
Commitments and contingencies (Notes 3, 9, and 10)
STOCKHOLDERS' EQUITY
Capital Stock:
Preferred Stock, par value $1 per share, authorized
5,000,000 shares--
$5.00 Cumulative Convertible Preferred Stock, outstanding 0
shares at
October 31, 1995 and 2,185 shares at October 31, 1994..... -- 2
Series D Participating Convertible Preferred Stock, out-
standing 895.18 shares at October 31, 1995 and October 31,
1994...................................................... 1 1
Common Stock, authorized 40,000,000 shares--
Par value, $.01 per share, outstanding 8,588,982 shares at
October 31, 1995 and 8,486,174 shares at October 31, 1994. 86 85
Additional paid-in capital.................................... 19,261 17,787
Retained earnings............................................. 83,076 76,075
-------- --------
Total Stockholders' Equity.................................. 102,424 93,950
-------- --------
$250,959 $209,307
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
20
<PAGE>
WHITTAKER CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
OCTOBER 31,
----------------------------
1995 1994 1993
-------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Continuing Operations--
Net income..................................... $ 7,865 $ 10,061 $ 7,698
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Depreciation and amortization................ 8,065 5,658 5,078
Net periodic pension cost (income)........... (2,720) (782) 1,363
Acquired in-process research and development. 3,250 -- --
Income taxes recoverable..................... (1,386) 3,416 (3,482)
Deferred taxes............................... 2,899 2,913 (24)
Cumulative effect of accounting change....... -- -- 1,512
Changes in operating assets and liabilities:
Receivables................................ 8,860 5,555 24,521
Inventories and prepaid expenses........... (427) (2,372) 2,305
Accounts payable and other liabilities..... (5,650) (2,889) (23,541)
-------- -------- --------
Total from continuing operations............... 20,756 21,560 15,430
-------- -------- --------
Discontinued Operations--
Net loss....................................... -- -- (1,954)
-------- -------- --------
Net cash provided by operating activities........ 20,756 21,560 13,476
-------- -------- --------
INVESTING ACTIVITIES
Businesses acquired.............................. (31,013) (12,992) (12,969)
Business sold.................................... -- -- 3,519
Purchase of property, plant and equipment........ (6,376) (2,545) (1,297)
Collections of notes receivable.................. 1,147 2,553 52
Increase in assets held for sale................. (1,626) (851) --
Other items, net................................. (1,631) (1,748) 1,252
-------- -------- --------
Net cash used by investing activities............ (39,499) (15,583) (9,443)
-------- -------- --------
FINANCING ACTIVITIES
Issuance of convertible subordinated debt........ 15,000 -- --
Issuance of other debt........................... 56,960 -- --
Reduction of debt................................ (55,500) (2,862) (6,855)
Reduction (increase) in deferred debt costs...... (808) 119 492
Dividends paid................................... (4) (12) (12)
Purchases of common stock........................ (1,094) -- --
Proceeds from shares issued under stock option
plans........................................... 843 115 (310)
-------- -------- --------
Net cash provided (used) by financing activities. 15,397 (2,640) (6,685)
-------- -------- --------
Net increase (decrease) in cash.................. (3,346) 3,337 (2,652)
Cash at beginning of year........................ 3,507 170 2,822
-------- -------- --------
Cash at end of year.............................. $ 161 $ 3,507 $ 170
======== ======== ========
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest....................................... $ 5,079 $ 3,780 $ 5,515
======== ======== ========
Income taxes................................... $ 1,424 $ 3,918 $ 5,930
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
21
<PAGE>
WHITTAKER CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE THREE YEARS ENDED OCTOBER 31, 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
PREFERRED
STOCK COMMON STOCK ADDITIONAL
-------------- -------------- PAID-IN RETAINED
$5.00 SERIES D SHARES AMOUNT CAPITAL EARNINGS TOTAL
----- -------- ------ ------ ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT NOVEMBER 1,
1992................... $ 2 $ 1 8,167 $82 $13,643 $61,472 $ 75,200
Net income.............. -- -- -- -- -- 7,256 7,256
Cash dividends--pre-
ferred stock........... -- -- -- -- -- (12) (12)
Shares issued under
stock option plans..... -- -- 305 3 2,377 (2,690) (310)
Income tax benefits from
stock options
exercised.............. -- -- -- -- 1,614 -- 1,614
--- --- ----- --- ------- ------- --------
BALANCE AT OCTOBER 31,
1993................... 2 1 8,472 85 17,634 66,026 83,748
Net income.............. -- -- -- -- -- 10,061 10,061
Cash dividends--pre-
ferred stock........... -- -- -- -- -- (12) (12)
Shares issued under
stock option plans..... -- -- 14 -- 115 -- 115
Income tax benefits from
stock options
exercised.............. -- -- -- -- 38 -- 38
--- --- ----- --- ------- ------- --------
BALANCE AT OCTOBER 31,
1994................... 2 1 8,486 85 17,787 76,075 93,950
Net income.............. -- -- -- -- -- 7,865 7,865
Cash dividends--pre-
ferred stock........... -- -- -- -- -- (4) (4)
Conversion of preferred
stock.................. (2) -- 4 -- (7) -- (9)
Shares issued under
stock option plans..... -- -- 154 1 842 -- 843
Purchases of common
stock ................. -- -- (55) -- (225) (860) (1,085)
Income tax benefits from
stock options
exercised.............. -- -- -- -- 864 -- 864
--- --- ----- --- ------- ------- --------
BALANCE AT OCTOBER 31,
1995................... $-- $ 1 8,589 $86 $19,261 $83,076 $102,424
=== === ===== === ======= ======= ========
</TABLE>
The accompanying notes are an integral part of these statements.
22
<PAGE>
WHITTAKER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) Principles of Consolidation: The consolidated financial statements
include the accounts of the Company and its subsidiaries. All significant
intercompany accounts and transactions have been eliminated in consolidation.
(B) Inventories: Inventories are stated at the lower of cost or market. Cost
has been determined principally on the first-in, first-out (FIFO) method.
Inventories consisted of the following:
<TABLE>
<CAPTION>
OCTOBER 31,
----------------
1995 1994
------- -------
(IN THOUSANDS)
<S> <C> <C>
Raw materials........................................... $23,518 $18,391
Work in process......................................... 11,500 11,643
Finished goods.......................................... 3,332 1,174
Costs relating to long-term contracts................... 2,287 805
Unliquidated progress billings.......................... (1,119) --
------- -------
$39,518 $32,013
======= =======
</TABLE>
(C) Intangibles: Goodwill is amortized using the straight-line method over
periods ranging from 20 to 40 years. Other intangible assets principally relate
to acquired intangibles and include patents, technology, and customer lists.
Amortization is recorded on a straight-line basis, generally over periods
ranging from 5 to 15 years.
Accumulated amortization of goodwill and of other intangible assets at
October 31, 1995 amounted to $2,722,000 and $6,906,000, respectively, and at
October 31, 1994 amounted to $1,852,000 and $5,858,000, respectively.
(D) Property and Depreciation: Property, plant and equipment is recorded at
cost. Depreciation is computed principally by use of the straight-line method
based upon the estimated useful lives of such assets, ranging from four to
thirty years. Depreciation of leasehold improvements is computed on a straight-
line basis over the shorter of the estimated useful lives of the improvements
or the terms of the leases.
(E) Revenue Recognition: For the majority of its operations, the Company
recognizes revenues upon shipment of its product or upon completion of the
services it renders. The Company accrues estimated warranty and installation
costs at the time of shipment. The Company generally uses the percentage-of-
completion method for recognition of revenues and profits on significant long-
term contracts.
(F) Engineering and Development Costs: Company-sponsored engineering and
development costs are expensed as incurred. Costs related to engineering and
development contracts are included in inventory and charged to cost of goods
sold upon recognition of related revenue.
(G) Earnings Per Share: Earnings per share have been computed based on the
weighted average number of common and common equivalent shares outstanding
during the periods, after deducting from net income the dividend requirements
on the $5.00 Cumulative Convertible Preferred Stock. Common stock equivalents
include Series D Participating Convertible Preferred Stock and dilutive
employee stock options, calculated using the treasury stock method.
Fully diluted earnings per share include the additional potential dilutive
effect of employee stock options. The inclusion of additional shares assuming
the conversion of the convertible subordinated debt would have been
antidilutive. Fully diluted earnings per share are not presented because the
calculations result in dilution of less than 3%.
(H) Reclassification: Certain previously reported amounts have been
reclassified to conform to the current period presentation.
23
<PAGE>
WHITTAKER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
(I) New Accounting Standard: In March of 1995, the Financial Accounting
Standards Board issued a new standard, "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to be Disposed Of," (SFAS 121). The
Company will not be required to adopt this standard until the first quarter of
fiscal 1997. The Company does not expect adoption of this standard to have a
material effect on its consolidated financial statements.
NOTE 2. ACQUISITIONS
On April 24, 1995, the Company acquired all of the stock of Hughes LAN
Systems, Inc., a subsidiary of Hughes Electronics Corporation. The subsidiary
was renamed Whittaker Communications, Inc. ("WCI") and is a designer and
manufacturer of high speed switching and Asynchronous Transfer Mode ("ATM")
compatible local area network communication hubs and network management
software systems. WCI was acquired for a purchase price of $16.0 million in
cash, subject to certain adjustments, and a $15.0 million convertible
subordinated note. The 7% convertible subordinated note is due on May 1, 2005,
and is convertible to the Company's common stock at a price of $24.25 per
share. The agreement also provides for contingent deferred payments, not to
exceed $25 million, over the years 1996 to 1999 based on future sales of WCI's
hub products and derivatives.
The acquisition was accounted for as a purchase and accordingly, the purchase
price was allocated to the net assets acquired based upon their estimated fair
market values. Goodwill amounted to $14.2 million, which will be amortized on a
straight-line basis over twenty years. Other intangible assets which resulted
from the acquisition include developed technology with a value of $3.3 million
and a customer list with a value of $5.6 million which will be amortized on a
straight-line basis over periods ranging from five to fifteen years. Acquired
in-process research and development valued at $3.3 million was expensed at the
acquisition date. The Company also assumed liabilities of $18.1 million at the
acquisition date.
The accompanying consolidated statements of income reflect the operating
results of WCI since the effective date of the acquisition. The following
unaudited pro forma information has been prepared assuming that this
acquisition had taken place at the beginning of the respective periods, after
giving effect to certain pro forma adjustments, including additional
amortization expense as a result of goodwill and other intangible assets,
increased interest expense on acquisition debt, and related tax effects. The
pro forma results are summarized below (in thousands except per share amounts):
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Net sales.............................................. $181,455 $170,269
Net income............................................. 4,029 (1,728)
Earnings (loss) per share.............................. 0.42 (0.20)
</TABLE>
These pro forma results have been prepared for comparative purposes only and
may not be indicative of the results of operations which actually would have
occurred had the combination been in effect at the beginning of the respective
periods or of future results of operations of the consolidated entities.
The Company acquired other businesses for $13.0 million in cash during each
of fiscal 1994 and fiscal 1993. The acquisitions were accounted for under the
purchase method, and in the year of acquisition the results of operations for
1994 and 1993 include sales of $10.5 million and $1.7 million, respectively,
related to these businesses. These acquisitions resulted in goodwill of $5.6
million and $6.9 million in 1994 and 1993, respectively.
NOTE 3. DISCONTINUED OPERATIONS
The 1993 loss from discontinued operations consists of pretax charges of $3.5
million as settlement of a patent infringement case and a $0.7 million
provision for ongoing costs related to previously discontinued
24
<PAGE>
WHITTAKER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 3. DISCONTINUED OPERATIONS--(CONTINUED)
operations, partially offset by the receipt of $1.0 million of interest related
to the resolution of tax issues associated with previously discontinued
operations. The tax benefit relating to the loss from discontinued operations
was $1.2 million.
Assets held for sale at October 31, 1995 and October 31, 1994 include $25.1
million and $23.7 million, respectively, of land formerly used by a
discontinued technology unit. The Company has obtained entitlements--the right
granted by political authorities to develop real property--for the land. Assets
held for sale are carried at the lower of cost or net realizable value.
In connection with the discontinuance of various businesses, the Company
remains liable for certain retained obligations and for certain future claims,
principally environmental and product liability. The noncurrent portion of such
items is included in "Other Noncurrent Liabilities" in the balance sheet.
NOTE 4. RECEIVABLES
Receivables consisted of the following:
<TABLE>
<CAPTION>
OCTOBER 31,
----------------
1995 1994
------- -------
(IN THOUSANDS)
<S> <C> <C>
Trade accounts receivable--billed....................... $38,303 $30,107
Trade accounts receivable--unbilled..................... 25,457 33,867
Other receivables....................................... 2,810 2,619
Allowance for doubtful accounts......................... (1,176) (1,301)
------- -------
Total receivables....................................... $65,394 $65,292
======= =======
</TABLE>
Unbilled receivables represent recoverable costs and accrued profits, not
billable to customers at the balance sheet date, which are generally billable
upon product delivery and acceptance and/or completion of milestones. All
amounts are reduced by appropriate progress billings. Amounts representing
retainages under contracts are not material. Claims subject to further
negotiations and which may not be collected within one year are not significant
at October 31, 1995. A claim in the amount of $1.6 million which was included
in unbilled receivables at October 31, 1994, has been reclassified to other
long-term assets in 1995 because resolution is not expected within the next
year.
NOTE 5. LONG-TERM DEBT
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
OCTOBER 31,
---------------------------------
1995 1994
---------------- ----------------
(IN THOUSANDS)
INTEREST INTEREST
AMOUNT RATE AMOUNT RATE
------- -------- ------- --------
<S> <C> <C> <C> <C>
Borrowings under revolving credit facility... $29,500 7.6% $42,500 6.1%
Borrowings under term loan................... 31,250 7.5% 16,500 6.4%
Other note, payable semiannually to 1999,
with interest at the lesser of 10% or 65% of
prime....................................... 659 5.7% 859 5.0%
7% convertible subordinated note due May 1,
2005 (Note 2)............................... 15,000 7.0% -- --
Capitalized lease obligations payable in va-
rying monthly or quarterly installments
through 1999, with interest rates ranging to
9.67% (Note 9).............................. 333 8.8% 423 8.8%
------- -------
76,742 60,282
Less current maturities...................... 6,048 5,540
------- -------
$70,694 $54,742
======= =======
</TABLE>
25
<PAGE>
WHITTAKER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 5. LONG-TERM DEBT--(CONTINUED)
Maturities of long-term debt are as follows for the periods stated:
<TABLE>
<CAPTION>
YEAR ENDING
OCTOBER 31 (IN THOUSANDS)
----------- --------------
<S> <C>
1996...................... $ 6,048
1997...................... 7,057
1998...................... 37,567
1999...................... 8,820
2000...................... 2,250
</TABLE>
On January 24, 1995, the Company and a group of banks entered into a credit
agreement which consists of a $65.0 million revolving credit facility with a
three-year term expiring in January 1998 and a term loan that is being repaid
in quarterly installments over five years. Interest on loans outstanding under
the credit agreement are based, at the Company's option, on LIBOR or the agent
bank's prime rate. The annual interest rate based on LIBOR may range between
LIBOR plus 1.0% and LIBOR plus 1.875%, and the annual interest rate based on
the prime rate may range between prime and prime plus .50%. The Company is
obligated to pay letter of credit fees which may range between .625% per annum
and 2.0% per annum on the aggregate amount of outstanding letters of credit,
and commitment fees which may range between .25% per annum and .375% per annum
on the unused amount of the revolving credit facility. The agreement includes
financial covenants with respect to financial leverage, cash flow, and tangible
net worth. Proceeds from the credit facility were used to pay off and cancel a
prior credit facility and will be used going forward to fund working capital
and acquisitions. The Company's obligations under the credit agreement are
secured by shares of stock of subsidiaries of the Company, accounts receivable,
inventory, and other assets of the Company and its subsidiaries.
On April 24, 1995, the Company issued a $15 million 7.0% convertible
subordinated note to Hughes Electronics Corporation, with a scheduled maturity
on May 1, 2005. The note is convertible at the option of the holders into
common stock of the Company at a conversion price of $24.25 per share, interest
is payable semiannually, and the note is redeemable, at the option of the
Company, at any time with no premium. The note prohibits the Company from
paying dividends or redeeming its capital stock if its tangible net worth is
less than $15 million.
At October 31, 1995, there were $12.9 million of letters of credit
outstanding under the revolving credit facility.
NOTE 6. CAPITAL STOCK
On April 28, 1995, all the outstanding shares of $5.00 Cumulative Convertible
Preferred Stock were either redeemed or converted into Common Stock. Each share
of the $5.00 Cumulative Convertible Preferred Stock was voting, cumulative and
convertible into 1.854 shares of Common Stock plus $74.16 in cash, was
redeemable, at the Company's option, at $100 per share and was entitled to
preference of $100 per share upon voluntary liquidation and $50 per share upon
involuntary liquidation. Each share of Series D Participating Convertible
Preferred Stock is nonvoting, cumulative and, in connection with a qualifying
transfer, convertible into 326.531 shares of Common Stock. Holders of the
Series D Participating Convertible Preferred Stock, of which there is presently
only one, are entitled to a $1.00 per share liquidation preference and to the
greater of $.25 per share per quarter or any dividends paid in respect of the
number of shares of Common Stock underlying each share of Series D
Participating Convertible Preferred Stock. The Board of Directors is authorized
to issue preferred stock in series, to fix dividend rates, conversion rights,
voting rights, rights and terms of redemption and liquidation preferences, and
to increase or decrease the number of shares of any series.
26
<PAGE>
WHITTAKER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 6. CAPITAL STOCK--(CONTINUED)
Common Stock reserved for issuance at October 31, 1995 was as follows:
<TABLE>
<CAPTION>
SHARES IN
THOUSANDS
---------
<S> <C>
For conversion of Series D Participating Convertible Preferred
Stock........................................................... 292
For stock options................................................ 2,457
For conversion of 7% subordinated note........................... 619
-----
3,368
=====
</TABLE>
On December 16, 1994, the Board of Directors adopted, and on March 24, 1995,
the shareholders approved, an amendment to the Whittaker Corporation Long-Term
Stock Incentive Plan (1989) (the "1989 Plan"), that increased from 1,000,000 to
2,000,000 the number of shares of Common Stock of the Company which may be made
subject to stock options and other awards authorized by the 1989 Plan.
The Company had reserved 2,456,903 shares of Common Stock at October 31, 1995
for future issuances under the 1989 Plan, as well as a prior stock option plan
for employees, and a non-employee director stock option plan. Options to
purchase Common Stock generally are conditioned upon continued employment,
expire from five to ten years after the grant date, and become exercisable in
whole or in part either commencing with the second year or upon the attainment
of certain predetermined goals, or both. The following information for the
three years ended October 31, 1995 relates to options granted from 1981 through
1995 under the plans.
<TABLE>
<CAPTION>
OPTIONS
OUTSTANDING PRICE RANGE
------------ --------------
IN THOUSANDS
<S> <C> <C>
Balance, October 31, 1992........................... 1,467 2.41 to 12.94
Options granted................................... 325 12.00 to 15.06
Options canceled or expired....................... (69) 5.24 to 14.50
Options exercised................................. (472) 2.41 to 12.00
-----
Balance, October 31, 1993........................... 1,251 2.41 to 15.06
Options granted................................... 191 14.19 to 16.37
Options canceled or expired....................... (61) 6.32 to 16.37
Options exercised................................. (14) 4.10 to 15.06
-----
Balance, October 31, 1994........................... 1,367 2.41 to 16.37
Options granted................................... 544 18.00 to 22.50
Options canceled or expired....................... (35) 15.06 to 22.25
Options exercised................................. (154) 3.82 to 18.63
-----
Balance, October 31, 1995........................... 1,722 2.41 to 22.50
=====
</TABLE>
At October 31, 1995, options for 1,143,777 shares were exercisable.
The Company also had reserved 618,557 shares of Common Stock at October 31,
1995 for possible conversion of the 7% convertible subordinated note at the
option of the holders.
The Company's Stockholder Rights Plan gives each holder of the Company's
Common Stock one right for each share of Common Stock held. Each right entitles
the holder to purchase from the Company 1/100 of a share of a new series of the
Company's preferred stock (Series A Participating Cumulative Preferred Stock)
at an exercise price of $125 per 1/100 of a share. The rights will become
exercisable and will detach from the Common Stock 10 days after any person or
group acquires 25% or more of the Company's Common
27
<PAGE>
WHITTAKER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 6. CAPITAL STOCK--(CONTINUED)
Stock, or 10 business days after any person or group commences a tender or
exchange offer which, if consummated, would result in that person or group
owning at least 25% of the Company's Common Stock.
If any person acquires 25% or more of the Company's Common Stock, each right
will entitle the holder, other than the acquiring person, to purchase for the
exercise price Common Stock of the Company with a value of twice the exercise
price. In addition, if following an acquisition by any person or group of 25%
or more of the Company's Common Stock, the Company is involved in a merger or
other business combination transaction, or sells more than 50% of its assets or
earning power to any person, each right will entitle the holder, other than the
acquiring person, to purchase for the exercise price Common Stock of the
acquiring person with a value of twice the exercise price.
The Company may redeem the rights at $.01 per right at any time until the
tenth day after any person or group has acquired 25% or more of its Common
Stock. The rights will expire November 29, 1998, unless earlier redeemed. The
Stockholder Rights Plan may be supplemented or amended at the direction of the
Company without the approval of the holders of rights, except as otherwise set
forth in the Stockholder Rights Plan. At October 31, 1995, 150,000 preferred
shares were reserved for these rights.
NOTE 7. INCOME TAXES
Effective November 1, 1992 the Company changed its method of accounting for
income taxes from the deferred method to the liability method required by
Statement of Financial Accounting Standards No. 109, (SFAS 109) "Accounting for
Income Taxes." The cumulative effect of adopting Statement 109 as of November
1, 1992 was to increase net income by $1,512,000.
Income tax expense (benefit) relating to continuing operations consists of
the following:
<TABLE>
<CAPTION>
YEARS ENDED OCTOBER
31,
----------------------
1995 1994 1993
------- ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Current provision--
U.S. Federal....................................... $(1,154) $1,247 $ (468)
State.............................................. 527 1,100 717
------- ------ ------
(627) 2,347 249
Deferred provision--
U.S. Federal....................................... 5,634 4,124 4,392
State.............................................. 154 -- 173
------- ------ ------
5,788 4,124 4,565
------- ------ ------
Provision for taxes.................................. $ 5,161 $6,471 $4,814
======= ====== ======
</TABLE>
Foreign income taxes were not material.
28
<PAGE>
WHITTAKER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 7. INCOME TAXES--(CONTINUED)
The tax expense is different than the amount computed by applying the U.S.
federal income tax rate to income before income taxes. The reasons for these
differences are as follows:
<TABLE>
<CAPTION>
YEARS ENDED OCTOBER 31,
-------------------------
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
U.S. federal statutory rate..................... 34.2% 34.4% 34.0%
State taxes, net of U.S. federal income tax ben-
efit........................................... 3.4% 4.3% 4.7%
Goodwill amortization........................... 1.8% -- --
Other items..................................... 0.2% 0.4% (0.3%)
------- ------- -------
Effective Tax Rate.............................. 39.6% 39.1% 38.4%
======= ======= =======
</TABLE>
Deferred income taxes reflect the net tax effects of temporary differences
between the reported amounts of assets and liabilities in the financial
statements and the amounts used for income tax purposes. Significant components
of the Company's deferred tax assets and liabilities at October 31 are as
follows:
<TABLE>
<CAPTION>
1995 1994
------- -------
(IN THOUSANDS)
<S> <C> <C>
Deferred tax assets:
Receivables valuation.................................... $ 1,416 $ 1,395
Inventory valuation...................................... 4,033 4,030
Self-Insurance reserves.................................. 1,737 2,142
Pending refund from federal tax audit.................... 5,160 4,031
Reserves for discontinued operations..................... 848 1,348
Other.................................................... 7,160 7,028
------- -------
Total before valuation allowance........................... 20,354 19,974
Valuation allowance........................................ (490) (757)
------- -------
Net deferred tax assets.................................... 19,864 19,217
------- -------
Deferred tax liabilities:
Excess of tax over book depreciation..................... 3,450 3,070
Assets held for sale..................................... 6,148 5,937
Intangible assets........................................ 1,977 --
Pension costs............................................ 1,822 780
Other.................................................... 7,589 8,005
------- -------
$20,986 $17,792
======= =======
</TABLE>
The Company expects to receive a net tax refund of $5.2 million under an
agreement reached with the Internal Revenue Service closing the audit of the
1987 and 1988 income tax returns. This refund is subject to approval by the
Congressional Joint Committee on Taxation.
The change in the valuation allowance from 1994 to 1995 is the result of
changes in temporary differences which impact the deferred state income tax
provision.
NOTE 8. EMPLOYEE BENEFIT PLANS
Prior to October 31, 1994, most of the Company's domestic employees were
covered by the Whittaker Corporation Employees' Pension Plan (the "Pension
Plan"), its noncontributory defined benefit pension plan. The benefits are
based on years of service and the employee's highest compensation for five
consecutive years during the last ten years of credited service.
29
<PAGE>
WHITTAKER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 8. EMPLOYEE BENEFIT PLANS--(CONTINUED)
Effective October 31, 1994, the Company amended the Pension Plan to "freeze"
benefits for all participants: adjustments for changes in credited years of
service ceased on October 31, 1994 and adjustments for changes in remuneration
ceased on December 31, 1994. The effect of the amendment was to reduce the
Pension Plan's projected benefit obligation at October 31, 1994 by $3,877,000.
The amount was fully absorbed by unrecognized net losses at October 31, 1994
related to the Pension Plan and accordingly, no curtailment gain was
recognized. Vested service continues to accrue in accordance with applicable
Pension Plan provisions, and Pension Plan funding will continue until such time
that the Pension Plan is terminated and all benefit obligations are satisfied.
The Company funds the Pension Plan in accordance with the Employee Retirement
Income Security Act of 1974, as amended (ERISA).
The following table sets forth the Pension Plan's funded status and amounts
recognized in the Company's consolidated balance sheet:
<TABLE>
<CAPTION>
OCTOBER 31,
--------------------
1995 1994
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including vested bene-
fits of $123,543 in 1995 and $112,821 in 1994......... $(124,457) $(114,149)
========= =========
Projected benefit obligation for service rendered to
date.................................................. $(124,457) $(114,149)
Plan assets at fair value, primarily publicly traded
stocks and fixed
income securities....................................... 126,278 115,488
--------- ---------
Plan assets in excess of projected benefit obligation.... 1,821 1,339
Items not yet recognized in earnings:
Unrecognized net (gain)/loss........................... 2,999 1,688
Unrecognized net transition asset at November 1, 1985
net of amortization................................... (212) (1,139)
--------- ---------
Net prepaid pension cost recorded in the consolidated
balance sheet........................................... $ 4,608 $ 1,888
========= =========
</TABLE>
The weighted average discount rates used in determining the actuarial present
value of the projected benefit obligation were 7.0% and 8.0%, respectively, at
October 31, 1995 and 1994. The expected long-term rate of return on plan assets
was 8.75% for the years ended October 31, 1995, 1994, and 1993. As a result of
the amendment described above, there are no projected increases in future
compensation levels.
The Company also sponsors unfunded supplemental nonqualified executive and
director plans. At October 31, 1995, the projected benefit obligation for those
plans totaled $5,180,000, of which $873,000 is subject to later amortization.
The remaining $4,306,000 is accrued as a liability in the consolidated balance
sheet.
Effective November 1, 1994, the Company amended its defined contribution
401(k) plan and renamed it the Whittaker Partnership Plan ("Partnership Plan").
The amendment provides for new investment alternatives, added a profit sharing
component to Company contributions to the Partnership Plan, and allows certain
rollover contributions from other qualified plans. The Partnership Plan
contains a matched savings provision that permits pretax employee
contributions. Participants can contribute from 1% to 12% of compensation and
receive a maximum matching employer contribution of 50% on up to 6% of their
annual compensation.
In addition to matching of employee contributions, beginning with fiscal
1995, the Company has recorded as expense amounts which may range from 0% to
7.5% of eligible employee compensation, based on the attainment of specified
financial goals by participating divisions of the Company. The Partnership Plan
30
<PAGE>
WHITTAKER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 8. EMPLOYEE BENEFIT PLANS--(CONTINUED)
covers most of the Company's employees, excluding those employed by WCI. WCI
sponsors a defined contribution 401(k) plan covering a majority of its domestic
employees under which participants can make pretax contributions of up to 15%
of eligible compensation and receive a matching contribution of 75% on up to 6%
of their eligible compensation.
Total pension and retirement expense was as follows:
<TABLE>
<CAPTION>
YEARS ENDED OCTOBER 31,
----------------------------
1995 1994 1993
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Cost components of funded defined benefit
plan:
Service cost--benefits earned during the pe-
riod....................................... $ 490 $ 2,253 $ 2,674
Interest cost on projected benefit obliga-
tion....................................... 8,658 8,723 9,108
Actual return on plan assets................ (20,204) 5,086 (24,989)
Net amortization and deferral............... 8,336 (16,844) 14,570
-------- -------- --------
Net periodic pension cost (income) for funded
defined benefit plan......................... (2,720) (782) 1,363
Cost for unfunded defined benefit plans....... 549 644 529
Cost for defined contribution plans........... 2,983 708 849
-------- -------- --------
Total pension and retirement plan expense..... $ 812 $ 570 $ 2,741
======== ======== ========
</TABLE>
NOTE 9. LEASED ASSETS AND LEASE COMMITMENTS
Whittaker has various leases covering real property and equipment.
Property, Plant and Equipment includes $183,000 at October 31, 1995 and
$242,000 at October 31, 1994 for leases that have been capitalized. The
amortization of these assets is included in depreciation expense.
Future minimum payments under capital leases and under noncancellable
operating leases, net of rentals to be received from existing noncancellable
operating subleases, as of October 31, 1995, were as follows:
<TABLE>
<CAPTION>
CAPITAL OPERATING
YEARS ENDED OCTOBER 31, LEASES LEASES
----------------------- ------- ---------
(IN THOUSANDS)
<S> <C> <C>
1996.................................................. $123 1,394
1997.................................................. 123 1,335
1998.................................................. 123 1,103
1999.................................................. 10 253
2000.................................................. -- 10
2001 and subsequent................................... -- --
---- ------
Total commitments....................................... 379 $4,095
======
Amounts representing interest........................... 46
----
Present value of net minimum lease payments............. $333
====
</TABLE>
Rental expense of continuing operations for operating leases, net of rental
income from subleases, was as follows:
<TABLE>
<CAPTION>
YEARS ENDED OCTOBER 31, (IN THOUSANDS)
----------------------- -------------
<S> <C>
1995.................... $2,292
1994.................... 1,710
1993.................... 1,627
</TABLE>
31
<PAGE>
WHITTAKER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 10. COMMITMENTS AND CONTINGENCIES
In certain years, after evaluating the availability and cost of insurance,
the Company did not purchase insurance for certain risks, including workers'
compensation and product liability. Consequently, the Company is without
insurance for various risks, including product liability for certain products
it manufactured. The Company currently has workers' compensation insurance and
product liability insurance for products it currently manufactures. The
Company's insurance carriers have taken the position that in certain cases the
Company is uninsured for environmental matters, a position that the Company
disputes in certain instances.
As a result primarily of the activities of its discontinued operations, the
Company is a potentially responsible party in a number of actions filed under
the Comprehensive Environmental Response Compensation and Liability Act of 1980
("CERCLA"). CERCLA, also known as "Superfund," is the main Federal law enacted
to address public health and environmental concerns arising with respect to the
past treatment and disposal of hazardous substances. The Company is also a
potentially responsible party in a number of other actions brought under state
laws patterned after CERCLA. In nearly all of these matters, the Company
contributed a small amount (generally less than 1%) of the total treated or
disposed of waste.
At October 31, 1995, the Company had provided for its aggregate liability
related to various claims, including uninsured risks and potential claims in
connection with the environmental matters noted above. The amounts provided on
the Company's books for contingencies, including environmental matters, are
recorded at gross amounts. Because of the uncertainty with respect to the
amount of probable insurance recoveries, these potential insurance recoveries
are not taken into account as a reduction of those amounts provided unless an
insurance carrier has agreed to such coverage. The Company does not anticipate
that these matters will have a material adverse effect on the Company's
financial position or on its ability to meet its working capital and capital
expenditure needs. Although the Company has recorded estimated liabilities for
contingent losses, including uninsured risks and claims in connection with
environmental matters, in accordance with generally accepted accounting
principles, the absence of or denial of various insurance coverages and the
filing of future environmental claims which are unknown to the Company at this
time represent a potential exposure for the Company, and the net income of the
Company in future periods could be adversely affected if uninsured losses in
excess of amounts recorded were to be incurred.
NOTE 11. QUARTERLY FINANCIAL DATA (UNAUDITED)
Summarized quarterly financial data for 1995 and 1994 follow (in millions of
dollars except for per share amounts):
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER YEAR
------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C>
1995
Sales.................................... $26.7 $31.7 $44.3 $56.8 $159.5
Cost of sales............................ 16.0 19.1 23.1 31.8 90.0
Net income............................... 1.7 0.2 1.8 4.2 7.9
Earnings per share....................... $0.18 $0.02 $0.18 $0.44 $ 0.82
1994
Sales.................................... $25.8 $28.8 $33.1 $38.7 $126.4
Cost of sales............................ 14.2 17.5 19.4 22.2 73.3
Net income............................... 1.7 1.9 2.9 3.6 10.1
Earnings per share....................... $0.18 $0.20 $0.31 $0.37 $ 1.06
</TABLE>
32
<PAGE>
WHITTAKER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 12. DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used by the Company in estimating
its fair value disclosures for financial instruments:
Long-term debt: The carrying amounts of the Company's borrowings
approximate their fair value. The Company's bank credit facility is a
variable rate facility that reprices frequently.
Notes receivable: The carrying amounts of the Company's notes receivable
approximate their fair value.
NOTE 13. BUSINESS SEGMENTS
The Company develops specialized aerospace and electronic technologies to
create products and customer solutions for aircraft, defense, communications
and industrial markets. The Company operates in two business segments:
Aerospace, which designs, manufactures, and distributes a wide variety of
fluid control devices and fire detection systems, as well as defense
electronics products and systems, and Communications, which designs, develops,
and markets a comprehensive line of networking products and services. Prior to
fiscal year 1995, the Company's communications operations were not material
enough to comprise a separate business segment.
Operating profit is total revenue less operating expenses. General corporate
expenses have not been allocated to the business segments and are shown as a
separate expense element of operating profit to reconcile to consolidated
operating income. Identifiable assets are those assets used in the Company's
operations in each industry. Corporate assets are principally cash, notes
receivable, deferred income taxes, and assets held for sale.
Information about Whittaker's operations by business segment at October 31,
1995, 1994, and 1993 and for the years then ended follows (in millions):
<TABLE>
<CAPTION>
DEPRECIATION AND
OPERATING IDENTIFIABLE AMORTIZATION CAPITAL
SALES PROFIT ASSETS EXPENSE EXPENDITURES
------ --------- ------------ ---------------- ------------
<S> <C> <C> <C> <C> <C>
1995
Aerospace........ $129.0 $29.2 $143.8 $5.8 $4.8
Communications... 30.5 (3.4) 46.9 2.1 0.7
Corporate........ -- (7.3) 60.3 0.2 0.9
------ ----- ------ ---- ----
Consolidated..... $159.5 $18.5 $251.0 $8.1 $6.4
====== ===== ====== ==== ====
1994
Aerospace........ $126.4 $26.8 $153.5 $5.4 $2.5
Corporate........ -- (6.8) 55.8 0.3 --
------ ----- ------ ---- ----
Consolidated..... $126.4 $20.0 $209.3 $5.7 $2.5
====== ===== ====== ==== ====
1993
Aerospace........ $115.4 $22.9 $147.1 $4.8 $1.3
Corporate........ -- (7.2) 54.8 0.3 --
------ ----- ------ ---- ----
Consolidated..... $115.4 $15.7 $201.9 $5.1 $1.3
====== ===== ====== ==== ====
</TABLE>
Communications operating profit for fiscal 1995 reflects the writeoff of
$3.3 million of in-process research and development cost, which was recorded
as an expense at the acquisition date.
In fiscal 1995, 1994, and 1993 approximately 34%, 49%, and 68%,
respectively, of Whittaker's sales from continuing operations were directly or
indirectly to the United States Government. All of those sales, with the
exception of a minor amount in 1995, were attributable to the Aerospace
segment. In fiscal 1995, 1994 and 1993 approximately 27%, 20% and 11%,
respectively, of Whittaker's sales arose from exports to customers outside the
United States, primarily in Europe and the Middle East. Approximately 26% of
the Company's accounts receivable are from the U.S. Government, and the
balance is primarily from commercial customers, prime defense contractors with
the U.S. Government, and foreign customers.
33
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information called for by Item 10 is incorporated by reference to the
information under the following captions in the Proxy Statement:
CAPTION
Election of Directors--Directors
Compliance with Section 16(a) of the Securities Exchange Act
Certain of the information called for by Item 10 with respect to executive
officers of the Registrant appears as Item 4A in Part I of this Report.
ITEM 11. EXECUTIVE COMPENSATION.
The information called for by Item 11 is incorporated by reference to the
information under the following caption in the Proxy Statement:
CAPTION
Election of Directors--Executive Compensation and Other Information
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information called for by Item 12 is incorporated by reference to the
information under the following caption in the Proxy Statement:
CAPTION
Equity Securities and Principal Holders Thereof
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information called for by Item 13 is incorporated by reference to the
information under the following caption in the Proxy Statement:
CAPTION
Election of Directors--Directors
34
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
The following documents are filed as part of this report:
<TABLE>
<CAPTION>
PAGE
REFERENCE
FORM 10-K
---------
<S> <C>
(A-1) FINANCIAL STATEMENTS:
Report of Independent Auditors....................................... 17
Consolidated Statements of Income for the three years ended October
31, 1995............................................................ 18
Consolidated Balance Sheets as of October 31, 1995 and 1994.......... 19
Consolidated Statements of Cash Flows for the three years ended Octo-
ber 31, 1995........................................................ 21
Consolidated Statements of Stockholders' Equity for the three years
ended October 31, 1995.............................................. 22
Notes to Consolidated Financial Statements........................... 23
</TABLE>
(A-2) FINANCIAL STATEMENT SCHEDULES:
All supplemental schedules are omitted as inapplicable or because the
required information is included in the Consolidated Financial Statements or
the Notes to Consolidated Financial Statements.
(A-3) EXHIBITS:*
<TABLE>
<C> <S>
3.1 Restated Certificate of Incorporation (Exhibit 3.1 to Form 10-K
for fiscal year ended October 31, 1989), as amended on March
16, 1990.
3.2 Restated Bylaws (Exhibit 3.2 to Form 10-K for fiscal year ended
October 31, 1989), as amended on September 30, 1994 (Exhibit
3.2 to Form 10-K for fiscal year ended
October 31, 1994).
4.1 Reference is made to Exhibit 3.1.
4.2 Reference is made to Exhibit 3.2.
4.3 Rights Agreement dated as of November 18, 1988 between
Registrant and Manufacturers Hanover Trust Company (currently
being performed by Mellon Bank N.A. as rights agent)
concerning Series A Participating Cumulative Preferred Stock
Purchase Rights (Exhibits 1 and 2 to Form 8-A filed on
November 23, 1988), as amended as of June 28, 1989 (Exhibit
4.4 to Form 10-K for fiscal year ended October 31, 1989).
4.4 Certificate of Designation of Series D Participating
Convertible Preferred Stock (Exhibit 4.2 to Form S-4,
Registration No. 33-29028), as amended on March 16, 1990.
4.5 7% Convertible Subordinated Note dated April 24, 1995 (Exhibit
10.1 to Form 8-K, dated May 8, 1995).
4.6 Registration Rights Agreement dated April 24, 1995 between
Registrant and Hughes Electronics Corporation (Exhibit 10.1 to
Form 8-K, dated May 8, 1995).
(Other instruments defining the rights of holders of long-term
debt are not filed because the total amount of securities
authorized under any such instrument does not exceed 10% of
the consolidated total assets of Registrant. Registrant hereby
agrees to furnish a copy of any such instrument to the
Commission upon request.)
10.1 Amended and Restated 1977 Nonqualified Stock Option Plan
(Exhibit 10.5 to Form 10-K for fiscal year ended October 31,
1982).**
10.2 Restated 1980 Nonqualified Stock Option Plan (Exhibit 10.7 to
Form 10-K for fiscal year ended October 31, 1982).**
10.3 Whittaker Corporation 1992 Stock Option Plan for Non-Employee
Directors (Exhibit 10.4 to Form 10-K for fiscal year ended
October 31, 1991).**
10.4 1981 Incentive and Nonqualified Stock Option Plan, as amended
January 22, 1982 (Exhibit 10.7 to Form 10-K for fiscal year
ended October 31, 1981), and as amended June 26, 1987 (Exhibit
10.6 to Form 10-K for fiscal year ended October 31, 1987).**
</TABLE>
35
<PAGE>
<TABLE>
<C> <S>
10.5 Directors' Deferred Compensation Plan dated February 1983
(Exhibit 10.9 to Form 10-K for fiscal year ended October 31,
1984), as amended on May 18, 1990 (Exhibit 10.7 to Form 10-K
for fiscal year ended October 31, 1990).**
10.6 Restated Directors' Retirement Plan effective as of August 2,
1985 (Exhibit 10.10 to Form 10-K for fiscal year ended October
31, 1990).**
10.7 Whittaker Corporation Long-Term Stock Incentive Plan (1989)
(Annex 1 to Form S-8, Registration No. 33-35762), as amended
and restated as of December 16, 1994.
(Form S-8, Registration No. 33-58323)**
10.8 Whittaker Corporation Supplemental Retirement and Disability
Trust Agreement dated November 23, 1988 (Exhibit 10.13 to Form
10-K for fiscal year ended October 31, 1988).**
10.9 Draft of Whittaker Corporation Supplemental Executive
Retirement Plan, dated as of January 1, 1996.**
10.10 Amendment and Restatement of Whittaker Corporation Employees'
Pension Plan dated December 22, 1994, as amended December 15,
1995.**
10.11 Whittaker Corporation Partnership Plan (formerly the Whittaker
Corporation Savings and Stock Investment Plan), as amended and
restated effective November 1, 1994.**
10.12 Credit Agreement dated as of January 23, 1995 among Registrant,
NationsBank of Texas, N.A., as Agent, and certain other
financial institutions as signatories thereto (Exhibit 10.8 to
Form 10-K for fiscal year ended October 31, 1994).
10.13 First Amendment to Credit Agreement dated as of April 21, 1995
among Registrant, NationsBank of Texas, N.A., as Agent, and
certain other financial institutions as signatories thereto.
10.14 Stock Purchase Agreement dated as of March 23, 1995 between
Registrant and Hughes Aircraft Company, as amended on April
24, 1995 (Exhibit 10.1 to Form 8-K dated May 8, 1995).
11. Calculation of earnings per share for the three years ended
October 31, 1995.
21. Subsidiaries of the Registrant.
23. Consent of Independent Auditors.
27. Financial Data Schedule.
</TABLE>
- --------
* Exhibits followed by a parenthetical reference are incorporated by reference
to the document described therein. Upon written request to the Secretary of
the Company, a copy of any exhibit referred to above will be furnished
without charge.
** Management contract or compensatory plan or arrangement required to be filed
as an exhibit to this Form 10-K.
(B) REPORTS ON FORM 8-K:
During the quarter ended October 31, 1995, the Company did not file any
reports on Form 8-K.
36
<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.
WHITTAKER CORPORATION
By Richard Levin
___________________________________
(Richard Levin,
Vice President)
Date January 24, 1996
__________________________________
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of Registrant
and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
Thomas A. Brancati Director and Principal )
____________________________________ Executive Officer )
(Thomas A. Brancati) )
)
Richard Levin Principal )
____________________________________ Financial Officer )
(Richard Levin) )
)
Joseph F. Alibrandi Director )
____________________________________ )
(Joseph F. Alibrandi) )
)
George H. Benter, Jr. Director )
____________________________________ )
(George H. Benter, Jr.) )
) January 24, 1996
)
Jack L. Hancock Director )
____________________________________ )
(Jack L. Hancock) )
)
Edward R. Muller Director )
____________________________________ )
(Edward R. Muller) )
)
Gregory T. Parkos Director )
____________________________________ )
(Gregory T. Parkos) )
)
Malcolm T. Stamper Director )
____________________________________ )
(Malcolm T. Stamper) )
</TABLE>
37
<PAGE>
EXHIBIT 3.1
CERTIFICATE OF CORRECTION
OF
CERTIFICATE OF DESIGNATION
OF
WHITTAKER CORPORATION
Whittaker Corporation, a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), does hereby certify as follows:
FIRST: That the Certificate of Designation of Series D Participating
Convertible Preferred Stock of Whittaker Corporation filed in the office of the
Secretary of State of Delaware on June 28, 1989 (the "Series D Certificate of
Designation") has been found to be an inaccurate in certain respects and,
therefore, requires correction pursuant to Section 103(f) of the General
Corporation Law of the State of Delaware, 8 Del. C. Section 103(f).
SECOND: The Series D Certificate of Designation (i) incorrectly stated in
Section 2(B) that the quarterly dividend amount was $1.00 per share and (ii)
failed to specify in Section 2(C) when dividends begin to accrue in the event
that there is no record date for the first Quarterly Dividend Payment Date. The
aforementioned Series D Certificate of Designation is hereby corrected
accordingly to replace Section 2(B) and (C) with the following:
(B) The Corporation shall declare a dividend or distribution on the
Preferred Stock as provided in paragraph (A) of this Section immediately after
it declares a dividend or distribution on the Common Stock (other than as
described in clauses (i) and (ii) of the second sentence of such paragraph (A));
provided that, in the event no dividend or distribution shall have been declared
on the Common Stock during the period between any Quarterly Dividend Payment
Date and the next subsequent Quarterly Dividend Payment Date (or, with respect
to the first Quarterly Dividend Payment Date, the period between the first
issuance of any share or fraction of a share of the Preferred Stock and such
first Quarterly Dividend Payment Date), a dividend of $0.25 per share on the
Preferred Stock shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.
<PAGE>
(C) Dividends shall begin to accrue and the cumulative on outstanding
shares of Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares unless (i) the date of issue of such
shares is on or prior to the record date for the first Quarterly Dividend
Payment Date or there is no record date for the first Quarterly Dividend Payment
Date, in either of which events dividends on such shares shall begin to accrue
from the date of issue of such shares or (ii) the date of issue is a Quarterly
Dividend Payment Date or is a date after the record date for the determination
of holders of shares of Preferred Stock entitled to receive a quarterly dividend
and before such Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends
paid on shares of Preferred Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such shares shall be allocated
pro rata on a share-by-share basis among all shares of Preferred Stock at the
time outstanding. The Board of Directors may fix a record date for the
determination of holders of shares of Preferred Stock entitled to receive
payment of a dividend or distribution declared thereon, which record date shall
not be more than 60 days prior to the date fixed for the payment thereof.
IN WITNESS WHEREOF, said Whittaker Corporation has caused its corporate
seal to be hereunto affixed and this certificate to be signed by Edward R.
Muller, a Vice President of the Corporation, and Nadine D. Leonsky, an Assistant
Secretary this 7th day of March 1990.
WHITTAKER CORPORATION
By /s/ Edward R. Muller
---------------------------------------
Edward R. Muller
Vice President
Attest:
/s/ Nadine D. Leonsky
- ----------------------------
Assistant Secretary
-2-
<PAGE>
EXHIBIT 4.4
CERTIFICATE OF CORRECTION
OF
CERTIFICATE OF DESIGNATION
OF
WHITTAKER CORPORATION
Whittaker Corporation, a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), does hereby certify as follows:
FIRST: That the Certificate of Designation of Series D Participating
Convertible Preferred Stock of Whittaker Corporation filed in the office of the
Secretary of State of Delaware on June 28, 1989 (the "Series D Certificate of
Designation") has been found to be an inaccurate in certain respects and,
therefore, requires correction pursuant to Section 103(f) of the General
Corporation Law of the State of Delaware, 8 Del. C. Section 103(f).
SECOND: The Series D Certificate of Designation (i) incorrectly stated in
Section 2(B) that the quarterly dividend amount was $1.00 per share and (ii)
failed to specify in Section 2(C) when dividends begin to accrue in the event
that there is no record date for the first Quarterly Dividend Payment Date. The
aforementioned Series D Certificate of Designation is hereby corrected
accordingly to replace Section 2(B) and (C) with the following:
(B) The Corporation shall declare a dividend or distribution on the
Preferred Stock as provided in paragraph (A) of this Section immediately after
it declares a dividend or distribution on the Common Stock (other than as
described in clauses (i) and (ii) of the second sentence of such paragraph (A));
provided that, in the event no dividend or distribution shall have been declared
on the Common Stock during the period between any Quarterly Dividend Payment
Date and the next subsequent Quarterly Dividend Payment Date (or, with respect
to the first Quarterly Dividend Payment Date, the period between the first
issuance of any share or fraction of a share of the Preferred Stock and such
first Quarterly Dividend Payment Date), a dividend of $0.25 per share on the
Preferred Stock shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.
<PAGE>
(C) Dividends shall begin to accrue and the cumulative on outstanding
shares of Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares unless (i) the date of issue of such
shares is on or prior to the record date for the first Quarterly Dividend
Payment Date or there is no record date for the first Quarterly Dividend Payment
Date, in either of which events dividends on such shares shall begin to accrue
from the date of issue of such shares or (ii) the date of issue is a Quarterly
Dividend Payment Date or is a date after the record date for the determination
of holders of shares of Preferred Stock entitled to receive a quarterly dividend
and before such Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends
paid on shares of Preferred Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such shares shall be allocated
pro rata on a share-by-share basis among all shares of Preferred Stock at the
time outstanding. The Board of Directors may fix a record date for the
determination of holders of shares of Preferred Stock entitled to receive
payment of a dividend or distribution declared thereon, which record date shall
not be more than 60 days prior to the date fixed for the payment thereof.
IN WITNESS WHEREOF, said Whittaker Corporation has caused its corporate
seal to be hereunto affixed and this certificate to be signed by Edward R.
Muller, a Vice President of the Corporation, and Nadine D. Leonsky, an Assistant
Secretary this 7th day of March 1990.
WHITTAKER CORPORATION
By /s/ Edward R. Muller
---------------------------------------
Edward R. Muller
Vice President
Attest:
/s/ Nadine D. Leonsky
- ----------------------------
Assistant Secretary
-2-
<PAGE>
EXHIBIT 10.9
WHITTAKER CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
<PAGE>
WHITTAKER CORPORATION
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
ARTICLE I - INTRODUCTION
1.01 Purpose I-1
1.02 Effective Date and Term I-1
1.03 Participation I-1
1.04 Participation Agreement I-1
1.05 Applicability of ERISA I-1
ARTICLE II - DEFINITIONS II-1
2.01 Affiliated Company II-1
2.02 Average Monthly Compensation II-1
2.03 Benefit Accrual Percentage II-1
2.04 Board; Board of Directors II-1
2.05 Change in Control II-1
2.06 Code II-2
2.07 Committee II-2
2.08 Compensation II-2
2.09 Covered Employer II-2
2.10 Defined Benefit Plan II-3
2.11 Early Retirement II-3
2.12 Effective Date II-3
2.13 ERISA II-3
2.14 50% Joint and Survivor Annuity II-3
2.15 401(k) Plan II-3
2.16 Full-Time Employment II-3
2.17 Normal Benefit Date II-3
2.18 Normal Benefit Form II-3
2.19 Normal Retirement II-4
2.20 Participant II-4
2.21 Payment Commencement Date II-4
2.22 Plan II-4
2.23 Retirement; Retirement Date II-4
2.24 Service Years II-4
2.25 Single Life Annuity II-5
2.26 Specified Rate II-5
2.27 Sponsor II-5
2.28 Spouse II-5
2.29 Termination II-5
2.30 Termination Date II-5
2.31 Termination for Cause II-6
</TABLE>
i
<PAGE>
WHITTAKER CORPORATION
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
ARTICLE III - ADMINISTRATION OF THE PLAN III-1
3.01 Administration III-1
3.02 Board and Committee Authority; Rules and Regulations III-1
3.03 Appointment of Agents III-1
3.04 Leave of Absence III-2
3.05 Actuarial Assumptions III-2
ARTICLE IV - BENEFITS IV-1
4.01 Eligibility and Vesting IV-1
4.02 Form of Supplemental Benefit IV-1
4.03 Payment of Supplemental Benefit IV-2
4.04 Monthly Annuity Amount IV-2
4.05 Target Monthly Benefit IV-2
4.06 Monthly Offset Amount IV-2
4.07 Special Rules for Early Retirement IV-6
4.08 Termination of Plan Participation IV-7
4.09 Disability IV-7
4.10 Change of Control IV-8
4.11 Termination for Cause IV-8
ARTICLE V - DEATH OF A PARTICIPANT V-1
5.01 Termination by Reason of Death V-1
5.02 Form and Payment of Death Benefit V-1
5.03 Monthly Death Benefit Amount V-1
ARTICLE VI - MISCELLANEOUS PROVISIONS VI-1
6.01 Payments During Incapacity VI-1
6.02 Prohibition Against Assignment VI-1
6.03 Binding Effect VI-1
6.04 No Transfer of Interest VI-1
6.05 Amendment or Termination of the Plan VI-2
6.06 No Right to Employment VI-2
6.07 Notices VI-2
6.08 Governing Law VI-3
6.09 Titles and Headings; Gender of Terms VI-3
6.10 Severability VI-3
6.11 Tax Effect of Plan VI-3
6.12 Entire Agreement VI-4
</TABLE>
ii
<PAGE>
WHITTAKER CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
ARTICLE I
INTRODUCTION
1.01 PURPOSE. This Whittaker Corporation Supplemental Executive
-------
Retirement Plan is hereby established by the Board of Directors of the Sponsor
to enable the Sponsor and such Affiliated Companies to attract, retain and
motivate selected executives of the Sponsor and such Affiliated Companies by
providing to such executives certain additional retirement income as more fully
set forth herein.
1.02 EFFECTIVE DATE AND TERM. This plan is adopted effective as of
-----------------------
January 1, 1996, and shall continue in effect until terminated by the Board of
Directors.
1.03 PARTICIPATION. Participation in this Plan is open only to those
-------------
executives of the Sponsor or any Affiliated Company who are selected for
participation in the Plan by the President of the Sponsor and approved by the
Board of Directors. The participation in this Plan by any such executive, and
the payment of any benefits under this Plan to any such executive, shall be
governed by the terms of this Plan and by the terms of the Participation
Agreement entered into by such executive with respect to this Plan pursuant to
Section 1.04 hereof.
1.04 PARTICIPATION AGREEMENT. As a condition to the commencement of
-----------------------
participation in this Plan, each executive selected and approved for
participation in the Plan as provided in Section 1.03 hereof shall enter into an
agreement covering such executive's participation in the Plan (a "Participation
Agreement"), which agreement shall be executed by the Sponsor and such executive
and, if such executive is employed by an Affiliated Company, such Affiliated
Company. Each Participation Agreement shall include such terms and conditions
relating to the executive's participation in the Plan as the President of the
Sponsor may deem appropriate, subject to Board approval.
1.05 APPLICABILITY OF ERISA. This Plan is intended to be a "top-hat"
----------------------
plan -that is, an unfunded plan maintained primarily for the purpose of
providing deferred compensation to a select group of management or highly
compensated employees within the meaning of ERISA.
I-1
<PAGE>
ARTICLE II
DEFINITIONS
2.01 AFFILIATED COMPANY. "Affiliated Company" means only Whittaker
------------------
Corporation, a Delaware corporation, and such other affiliates, if any, of the
Sponsor as the Board may from time to time expressly designate as having the
status of an Affiliated Company for purposes of this Plan.
2.02 AVERAGE MONTHLY COMPENSATION. "Average Monthly Compensation" means,
----------------------------
with respect to any Participant and as of any date of reference (the
"Determination Date"), the quotient obtained by dividing (a) the highest
aggregate amount of Compensation earned by such Participant during any
consecutive 36-month period prior to (or ending on) such Determination Date, by
(b) a factor of 36. Notwithstanding the preceding sentence, in the case of a
Participant who, as of any applicable Determination Date, has not been employed
by one or more Covered Employers during at least the consecutive 36-month period
ending on such Determination Date, such participant's Average Monthly
Compensation as of such Determination Date shall be the quotient obtained by
dividing (i) the total amount of Compensation earned by such Participant prior
to (and including) such Determination Date, by (ii) a factor equal to the number
of months prior to (and including) such Determination Date during which such
Participant was employed by a Covered Employer.
2.03 BENEFIT ACCRUAL PERCENTAGE. "Benefit Accrual Percentage" means, with
--------------------------
respect to any Participant and as of any date of reference, the percentage
obtained by multiplying (a) 60%, by (b) a fraction (not to exceed 1) having a
numerator equal to such Participant's Service Years (determined as of such
reference date), and having a denominator equal to the greater of fifteen years
or the total number of Service Years such Participant would have if such
Participant continued in the employ of Sponsor uninterrupted through Normal
Retirement.
2.04 BOARD; BOARD OF DIRECTORS. "Board" and "Board of Directors" each
-------------------------
mean the board of directors of the Sponsor.
2.05 CHANGE IN CONTROL. "Change in Control" means (1) any consolidation
-----------------
or merger of the Sponsor in which the Sponsor is not the surviving corporation,
other than a merger of the Sponsor in which the holders of common stock or
assets of the Sponsor immediately prior to the
II-1
<PAGE>
merger have the same proportionate ownership of the surviving corporation
immediately after the merger; or (2) any sale, lease exchange or other transfer
(in one transaction or a series of related transactions) of all, or
substantially all, of the assets of the Sponsor; or (3) during any period of two
consecutive years, the individuals who at the beginning of such period
constitute the Board of Directors of the Sponsor cease for any reason to
constitute at least a majority thereof, unless the election, or the nomination
for election by the Sponsor's shareholders, of each new director was approved by
a vote of at least two-thirds of the directors still in office who were
directors at the beginning of that period; or (4) the acquisition after the date
hereof by any person (as such term is used in section 13(d) and 14(d) of the
Securities and Exchange Act of 1934, as amended, but excluding the Sponsor and
any Affiliated Company) that results in such person holding directly or
indirectly 20% or more of the combined voting power of the then outstanding
securities of the Sponsor as a result of a tender or exchange offer, open market
purchase(s), privately-negotiated purchase(s) or otherwise; or (5) the
acquisition by any person(s), firm(s), or corporation(s) of direct or indirect
ownership of 20% or more of the assets of the Sponsor which do not own at least
10% of the assets of the Sponsor as of January 1, 1996.
2.06 CODE. "Code" means the Internal Revenue Code of 1986, as amended.
----
2.07 COMMITTEE. "Committee" means the committee (if any) that the Board
---------
appoints to administer this Plan as set forth in Section 3.01 hereof, provided,
however, the Committee shall contain at least one non-employee.
2.08 COMPENSATION. "Compensation" means, with respect to any Participant,
------------
the base salary paid to such Participant by any Covered Employer, including any
amounts not currently includible in such Participant's gross income by reason of
any amount deferred for the period pursuant to any non-qualified deferred
compensation arrangement between the Participant and any Covered Employer or,
Code Section 402(e)(3) and/or Code Section 125. Except as provided in the
following sentence, Compensation shall also include any annual or other short
term bonus paid by any Covered Employer to a Participant other than any bonus
paid to a Participant who is a division manager. Notwithstanding the foregoing,
the Committee shall have the sole and absolute discretion to determine, at the
time of any award under a bonus plan, or the payment of any bonus, that such
bonus does not constitute Compensation for purposes of this Plan.
2.09 COVERED EMPLOYER. "Covered Employer" means and includes both (a) the
----------------
Sponsor, and (b) any Affiliated Company.
II-2
<PAGE>
2.10 DEFINED BENEFIT PLAN. "Defined Benefit Plan" means the Whittaker
--------------------
Corporation Employees' Pension Plan, which was frozen effective as of October
31, 1994.
2.11 EARLY RETIREMENT. "Early Retirement" means, with respect to any
----------------
Participant, any Retirement of such Participant other than Normal Retirement,
which occurs on or after the date Participant has attained age 55 and completed
at least 10 Service Years.
2.12 EFFECTIVE DATE. "Effective Date" means January 1, 1996.
--------------
2.13 ERISA. "ERISA" means the Employee Retirement Income Security Act of
-----
1974, as amended.
2.14 50% JOINT AND SURVIVOR ANNUITY. "50% Joint and Survivor Annuity"
------------------------------
means an annuity which (a) provides a specified level monthly benefit during the
life of the primary beneficiary, and (b) following the death of the primary
beneficiary, provides a level monthly benefit to, and during the remaining life
of, such primary beneficiary's surviving spouse (if any) equal to 50% of the
monthly benefit provided to such primary beneficiary.
2.15 401(K) PLAN. "401(k) Plan" means the Whittaker Corporation
-----------
Partnership Plan, as such Plan is in effect as of the Effective Date hereof and
as it may be amended from time to time hereafter.
2.16 FULL-TIME EMPLOYMENT. "Full-Time Employment" means, with respect to
--------------------
any Participant, any employment or independent contractor relationship with any
organization or person, whether or not the Sponsor or an Affiliated Company,
pursuant to which such Participant performs services on a regular and continuous
basis, provided, however, that any such relationship shall not constitute Full-
Time Employment unless the Participant devotes at least an average of 35 hours
per week to the performance of services pursuant to such relationship. For
purposes of determining as of any given date whether the Participant meets the
35-hour requirement set forth in the preceding sentence, no more than the three-
month period immediately preceding such given date shall be taken into account.
2.17 NORMAL BENEFIT DATE. "Normal Benefit Date" means, with respect to
-------------------
any Participant, the ninetieth (90th) day immediately following the day upon
which such Participant attains (or is expected to attain) age 65.
2.18 NORMAL BENEFIT FORM. "Normal Benefit Form" means a Single Life
-------------------
Annuity, starting at age 65.
II-3
<PAGE>
2.19 NORMAL RETIREMENT. "Normal Retirement" means, with respect to any
-----------------
Participant, any Retirement of such Participant having a Retirement Date which
falls on or after the date such Participant attains age 65.
2.20 PARTICIPANT. "Participant" means any executive of the Sponsor or any
-----------
Affiliated Company who is selected and approved for participation in this Plan
as provided in Section 1.03 hereof and who has executed a Participation
Agreement as required under Section 1.04 hereof.
2.21 PAYMENT COMMENCEMENT DATE. "Payment Commencement Date" means, with
-------------------------
respect to any Participant, the ninetieth (90th) day after the earlier of (a)
such Participant's Retirement Date, or (b) the later to occur of (i) such
Participant's Termination Date and (ii) age 65.
2.22 PLAN. "Plan" means this Whittaker Corporation Supplemental Executive
----
Retirement Plan adopted as of the Effective Date hereof and as it may be amended
from time to time.
2.23 RETIREMENT; RETIREMENT DATE. "Retirement" occurs with respect to any
---------------------------
Participant only if and when such Participant permanently ceases, for whatever
reason (whether voluntary or involuntary and including death or Disability), all
Full-Time Employment. The temporary cessation of a Participant's Full-Time
Employment shall not constitute Retirement. The cessation of a Participant's
Full-Time Employment shall be deemed to be temporary if, following such
cessation, such Participant commences (or intends to commence) actively seeking
Full-Time Employment; provided, however, that if such Participant subsequently
abandons his search (or intended search) for Full-Time Employment prior to
obtaining such Full-Time Employment, such Participant shall be deemed to incur
Retirement at the time of such abandonment. The determination as to whether
(and when) a Participant incurs Retirement shall be made solely by the Board
based on such evidence as the Board, in its discretion, deems appropriate. Such
evidence may, but is not required to include a representation of Retirement
presented to the Board by the Participant. If, following a determination by the
Board that a Participant has incurred Retirement, such participant recommences
Full-Time Employment, such Participant shall nevertheless be deemed for all
purposes of this Plan to have incurred Retirement in accordance with the Board's
original determination. A Participant's "Retirement Date" shall be the first
day, as determined by the Board, on which such Participant meets the
requirements of Retirement as set forth in this Section 2.23.
II-4
<PAGE>
2.24 SERVICE YEARS. "Service Years" means with respect to any
-------------
Participant, the whole number of complete years (disregarding any incomplete
year) elapsing during the single, period commencing on the date such Participant
initially commenced employment with any Covered Employer and ending on such
Participant's final Termination Date. In the case of any Participant who (a)
commenced employment with a Covered Employer, (b) terminated such employment,
and (c) prior to the Effective Date hereof, re-commenced employment with any
Covered Employer, such Participant shall be credited with Service Years for
those periods prior to the Effective Date hereof during which he was actually
employed by any Covered Employer notwithstanding the fact that such pre-
Effective Date employment with such covered Employer(s) was not continuous.
Except as otherwise provided in Section 3.04 hereof (concerning leaves of
absence), it is intended that a Participant shall cease earning Service Years
upon his incurring any Termination after the Effective Date hereof, regardless
of whether such Participant is thereafter employed by the Sponsor, an affiliate
of the Sponsor or any Affiliated Company. Notwithstanding the foregoing, in the
case of a Participant whose Termination is due to a Disability the period
commencing with such Disability and ending at the earliest of (i) attainment of
age 65, (ii) return to Full-Time Employment, or (iii) the death of the
Participant shall continue to be credited as Service Years.
2.25 SINGLE LIFE ANNUITY. "Single Life Annuity" means an annuity which
-------------------
provides a specified level monthly benefit until the death of the beneficiary.
2.26 SPECIFIED RATE. "Specified Rate" means an interest rate equal to 8%
--------------
per annum, or such other annual interest rate as the Board may from time to time
designate as the Specified Rate, with any such designation to be given effect
only on a prospective basis.
2.27 SPONSOR. "Sponsor" means Whittaker Corporation, a Delaware
-------
corporation.
2.28 SPOUSE. "Spouse" means, with respect to any Participant, only that
------
person (if any) to whom such Participant is married as of such Participant's
Termination Date, provided, however, that a person who has been married to a
Participant for less than one year as of such Participant's Termination Date
shall not be deemed to be the "Spouse" of such Participant.
2.29 TERMINATION. "Termination" means the voluntary or involuntary
-----------
termination of a Participant's employment with the Sponsor and all Affiliated
Companies for any reason (including Disability or death). The determination as
to whether a Participant's Termination constitutes Retirement shall be made by
the Board in accordance with the provisions of Section 2.23 hereof.
II-5
<PAGE>
2.30 TERMINATION DATE. "Termination Date" means, with respect to any
----------------
Participant, the effective date of such Participant's Termination.
2.31 TERMINATION FOR CAUSE. "Termination for Cause" means, with respect
---------------------
to any Participant, a Termination incurred by such Participant as a result of
any one or more of the following causes :
(a) The Participant's substantial neglect of his duties and
responsibilities as an employee of the Sponsor or any Affiliated
Company;
(b) The Participant's theft or other misappropriation of, or any
malfeasance with respect to, any property of the Sponsor or any
Affiliated Company;
(c) A conviction of the Participant for any criminal offense, whether or
not involving property of the Sponsor or any Affiliated Company, but
only if the Board reasonably believes such conviction may adversely
affect either (i) the reputation of the Sponsor or any Affiliated
Company, or (ii) the Participant's ability to effectively perform his
duties and responsibilities as an employee of the Sponsor or any
Affiliated Company;
(d) The Participant's use of illegal drugs or alcohol to an extent that
such use interferes with his ability to perform, in an acceptable
manner, his duties and responsibilities as an employee of the Sponsor
or any Affiliated Company;
(e) The Participant's solicitation of business on behalf of, or diversion
of business to, any competitor of the Sponsor or any Affiliated
Company with whom the Participant expects to become employed or
otherwise associated following such Participant's Termination.
II-6
<PAGE>
ARTICLE III
ADMINISTRATION OF THE PLAN
3.01 ADMINISTRATION. This Plan shall be administered by the Board of
--------------
Directors, provided however, that the Board may, in its discretion, delegate the
administration of this Plan to a Committee composed of at least three
individuals appointed from time to time by the Board. Any member of the Board
or the Committee may be a Participant in this Plan, provided however, that any
action to be taken by the Board or Committee solely with respect to the
particular interest in this Plan of a Board or Committee member who is also a
Participant in this Plan shall be taken by the remaining members of the Board or
Committee.
3.02 BOARD AND COMMITTEE AUTHORITY; RULES AND REGULATIONS. The Board
----------------------------------------------------
shall have discretionary authority to (a) make, amend, interpret and enforce all
appropriate rules and regulations for the administration of the Plan, and (b)
decide or resolve, in its discretion, any and all questions, including
interpretations of the Plan, as may arise in connection with the Plan. If a
Committee is appointed by the Board pursuant to Section 3.01 hereof to
administer the Plan, such Committee shall have authority to take or approve, in
its discretion, all such actions relating to the Plan (including, without
limitation, actions described in the preceding sentence) as may be taken or
approved by the Board; provided, however, that the Committee shall have no
authority (i) to approve executives for participation in the Plan, (ii) to
approve the terms of any Participation Agreement, (iii) to amend or terminate
the Plan, or (iv) to terminate a Participant's participation in the Plan
pursuant to Section 4.08 hereof. Notwithstanding the preceding sentence, the
Board may, by written notice to the Committee, withdraw all or any part of the
Committee's authority at any time, in which case such withdrawn authority shall
immediately revest in the Board. Any decision or action of the Board (and,
subject to the limitations set forth herein above, any decision or action of the
Committee, if appointed) in respect of any question arising out of or in
connection with the administration, interpretation and application of this Plan
and the rules and regulations promulgated hereunder shall be final, conclusive
and binding upon all persons having any interest in the Plan.
3.03 APPOINTMENT OF AGENTS. In the administration of this Plan, the Board
---------------------
and/or the Committee may from time to time employ agents (which may include
officers and/or employees of
III-1
<PAGE>
the Sponsor) and delegate to them such administrative duties as the Board or the
Committee (as applicable) deems appropriate.
3.04 LEAVE OF ABSENCE. In the event the Participant takes a leave of
----------------
absence from active employment with the Sponsor or any Affiliated Company, the
Board shall determine, in its discretion, (a) whether such leave of absence
shall be deemed to constitute a Termination for purposes of this Plan, and (b)
if such leave of absence is not deemed to constitute a Termination under this
Plan, whether such Participant shall continue to earn Service Years during such
leave of absence notwithstanding the provisions of Section 2.24 hereof. The
Board shall establish such standards and procedures as may be necessary so that,
with respect to any determinations made by the Board pursuant to either clause
(a) or clause (b) of the preceding sentence, Participants in substantially
similar circumstances shall be treated substantially alike.
3.05 ACTUARIAL ASSUMPTIONS. In any case in which it is necessary to make
---------------------
actuarial adjustments in order to carry out the provisions of this Plan
(including, without limitation, the provisions requiring the determination of an
actuarially equivalent benefit under Section 4.02 hereof), the following rules
shall apply:
(a) The interest/discount rate assumed in making such actuarial
adjustments shall be a fixed rate equal to the Specified Rate then in
effect at the time such actuarial adjustments are calculated; and,
(b) The mortality table used in making such actuarial adjustments shall
be the 1971 Unisex Group Annuity Table (85% of male rate and 15% of
female rate).
III-2
<PAGE>
ARTICLE IV
BENEFITS
4.01 ELIGIBILITY AND VESTING. Except as otherwise provided in Section
-----------------------
4.11 and Article V hereof, upon incurring Termination, a Participant shall
receive a supplemental benefit under this Plan (a "Supplemental Benefit"), which
Supplemental Benefit shall be paid to the extent vested, in such form and
amounts, and at such times, as provided under this Plan. Notwithstanding the
foregoing, and except as otherwise provided in Sections 4.09 and 4.10 hereof, a
Participant who incurs a Termination shall be entitled to receive a Supplemental
Benefit under this Plan only to the extent such Participant is vested in such
Benefit. A Supplemental Benefit shall vest and become nonforfeitable up to a
maximum of 100% as follows:
<TABLE>
<CAPTION>
SERVICE YEARS VESTED PERCENTAGE
---------------------------------- --------------------------
<S> <C>
Less than 6 years 0%
6 years but less than 7 years 10%
7 years but less than 8 years 20%
8 years but less than 9 years 30%
9 years but less than 10 years 40%
10 years but less than 11 years 50%
11 years but less than 12 years 60%
12 years but less than 13 years 70%
13 years but less than 14 years 80%
14 years but less than 15 years 90%
15 or more years 100%
</TABLE>
A Supplemental Benefit shall also be 100% vested upon the death of a
Participant.
4.02 FORM OF SUPPLEMENTAL BENEFIT. Any Participant who is entitled to a
----------------------------
Supplemental Benefit pursuant to Section 4.01 hereof shall receive such
Supplemental Benefit in the form of an annuity, which annuity shall provide a
series of level monthly payments for a period determined in accordance with the
rules set forth hereinbelow. With respect to any Participant, the amount of the
level monthly payment provided by such annuity (the "Monthly Annuity
IV-1
<PAGE>
Amount") shall be determined in accordance with Section 4.04 hereof, subject to
such modifications as may be applicable under this Section 4.02:
(a) Except as provided in subsection (b) below, a Participant shall
receive his Supplemental Benefit in the Normal Benefit Form specified
in Section 2.18.
(b) A Participant who is entitled to receive a Supplemental Benefit may,
with the consent of the Board elect in writing, on such form
designated by the Plan Administrator and received by the Plan
Administrator at least 15 months prior to the Payment Commencement
Date, to receive his Supplemental Benefit in the form of a 50% Joint
and Survivor Annuity. Notwithstanding such election, such Participant
shall be entitled to receive his Supplemental Benefit in the form of
a 50% Joint and Survivor Annuity only if such Participant has a
spouse as of such Participant's Termination Date and also has been
married continuously for at least the two years preceding such
Participant's Retirement Date. The amount of the Supplemental Benefit
so designated by the Participant shall be the Actuarial Equivalent of
the amount otherwise payable to the Participant in the Normal Benefit
Form pursuant to Section 2.18. If such election is not made or is
invalid or void, the Participant's Supplemental Benefit shall be paid
in the Normal Benefit Form specified in Section 2.18.
4.03 PAYMENT OF SUPPLEMENTAL BENEFIT. Notwithstanding any other
-------------------------------
provisions of this Plan, payment of a Participant's Supplemental Benefit (or any
portion thereof) shall commence on such Participant's Payment Commencement Date.
4.04 MONTHLY ANNUITY AMOUNT. Except to the extent modified pursuant to
----------------------
Sections 4.01 or 4.02 hereof, a Participant's "Monthly Annuity Amount" shall be
the amount of such Participant's Target Monthly Benefit (as defined in Section
4.05 hereof) reduced, but not below zero, by such Participant's Monthly Offset
Amount (as defined in Section 4.06 hereof).
4.05 TARGET MONTHLY BENEFIT. A Participant's "Target Monthly Benefit"
----------------------
shall be determined as of his Termination Date and shall be the amount
calculated by multiplying (a) the Participant's Average Monthly Compensation
determined as of his Termination Date, by (b) his Benefit Accrual Percentage
determined as of his Termination Date (or later date in the case of Disability)
by (c) his vesting percentage as of his Termination Date (or later date in the
case of Disability) under Section 4.01.
IV-2
<PAGE>
4.06 MONTHLY OFFSET AMOUNT. A Participant's "Monthly Offset Amount" shall
---------------------
be the amount equal to the sum of (1) such Participant's Social Security Offset
Amount, plus (2) such Participant's Qualified Offset Amount (both as defined
herein below).
(a) A Participant's "Social Security Offset Amount" shall be determined
in accordance with the following rules:
(i) In the case of any Participant whose Termination constitutes
Normal Retirement, such Participant's Social Security Offset
Amount shall be 50% of the amount of the monthly Primary
Social Security Benefit (as calculated by the Board under
paragraph (iii) below) to which such Participant is entitled
following such Termination.
(ii) In the case of any Participant whose Termination does not
constitute Normal Retirement (either because such Termination
does not constitute Retirement or because such Termination
constitutes Early Retirement), such Participant's Social
Security Offset Amount shall be 50% of the amount of the
monthly Primary Social Security Benefit (as calculated by the
Board under paragraph (iii) below) to which such Participant
would be entitled commencing on his Normal Benefit Date paid
to such Participant in the Normal Benefit Form if, with
respect to the period (if any) between such Participant's
Termination Date and his Normal Benefit Date, (A) such
Participant had continued to earn a constant monthly salary
equal to the Participant's Compensation for the month
immediately preceding the month of such Participant's
Termination, and (B) the Social Security wage base and other
provisions of the Social Security law relevant to the
determination of benefits thereunder (including any applicable
regulations and/or other pronouncements, such as wage base and
other provisions) in effect as of such Participant's
Termination Date had remained unchanged.
(iii) Each Participant shall submit to the Board, for use in
calculating such Participant's Primary Social Security Benefit
and the corresponding Social Security Offset Amount under
paragraphs (i) or (ii) above, as applicable, either (A) a
written earnings history obtained from the Social Security
Administration, or (B) written evidence satisfactory to the
Committee showing that, such Participant has never earned
wages subject to the jurisdiction of the U.S. Social Security
system (e.g., a foreign Participant
IV-3
<PAGE>
with no U.S. wages). In the event a Participant fails to
comply with the requirements of the preceding sentence within
90 days following such Participant's Payment Commencement
Date, the Participant's Primary Social Security Offset Benefit
(for purposes of calculating his Social Security Offset Amount
under paragraphs (i) or (ii) above, as applicable) shall be
determined by the Committee using an estimated wage history,
applying a salary scale projected backwards from the
Participant's Retirement Date, and based on (I) for the two
years prior to the Participant's Retirement Date, an increase
of six percent (6%) per annum, and (II) for the period prior
to such two year period, the actual change in average wages
from year to year as determined by the Social Security
Administration. Such estimated wage history shall be deemed
correct for all purposes of this Plan.
(b) A Participant's "Qualified Plan Offset Amount" shall be the sum of
the Defined Benefit Plan Offset Amount and the 401(k) Plan Offset
Amount determined with respect to such Participant under the
following provisions, as applicable:
(i) With respect to any Participant who was a Participant in the
Defined Benefit Plan, such Participant's "Defined Benefit Plan
Offset Amount" shall be the employer-provided portion (i.e.,
the portion attributable to employer contributions) of the
amount of the monthly annuity payment to which such
Participant would be entitled under the Defined Benefit Plan
if his benefit thereunder were paid in the Normal Benefit Form
commencing on his Normal Benefit Date. The "Defined Benefit
Plan Offset Amount" shall be zero with respect to any
Participant who was not a participant in the Defined Benefit
Plan, or to any Participant who would have become a
participant in the Defined Benefit Plan following the date
such Plan's benefit accruals were frozen.
(ii) With respect to any Participant, such Participant's "401(k)
Plan Offset Amount" shall be the amount of the monthly annuity
payment to which such Participant would be entitled if the
balance (determined as of such Participant's Payment
Commencement Date) in such Participant's 401(k) Offset Account
(as defined herein below) were paid to such Participant in the
Normal Benefit Form commencing on his Normal Benefit Date. For
purposes of this paragraph (ii), a Participant's "401(k)
Offset Account"
IV-4
<PAGE>
shall be a hypothetical account established and maintained
with respect to such Participant as follows: A Participant's
401(k) Offset Account shall be established as of December 31,
1995, and such 401(k) Offset Account shall have an initial
balance equal to the actual balance (if any) as of
December 31, 1995, in the account maintained under the 401(k)
Plan for employer contributions made with respect to such
Participant (excluding any employer contributions not
currently includible in gross income by reason of Code Section
402(e)(3)). Thereafter (A) commencing with the 1996 calendar
year and ending with the calendar year in which such
Participant incurs a Termination (the "Termination Year"), the
balance in such Participant's 401(k) Offset Account shall be
increased as of the end of each such calendar year (or, in the
case of the Termination Year, as of such Participant's
Termination Date) by the amount of such Participant's
Hypothetical Employer Contribution (as defined in paragraph
(iii) below) for such calendar year and the actual employer
profit sharing contribution made for such calendar year with
respect to such Participant under the terms of the 401(k)
Plan; and (B) commencing January 1, 1996, and ending on such
Participant's Payment Commencement Date, such Participant's
401(k) Offset Account shall also be increased as if the
balance in such account (as increased from time to time by the
Hypothetical Employer Contributions Described in Clause (A)
above) were earning interest, compounded annually, (I) from
January 1, 1996, until such Participant's Termination Date, at
the Specified Rate applicable from time to time, and (II) from
such Participant's Termination Date until his Payment
Commencement Date, at the Specified Rate in effect as of such
Participant's Termination Date.
(iii) As used in paragraph (ii) above, "Hypothetical Employer
Contribution" means, with respect to any Participant, (A) for
any calendar year prior to such Participant's Termination Year
the maximum employer matching contribution that would have
been made for such calendar year with respect to such
Participant under the terms of the 401(k) Plan (disregarding
the limits imposed by reason of Code Section 401(m)) assuming
such Participant's before-tax deferral to the 401(k) Plan for
such calendar year is equal to his Hypothetical Participant
Deferral (as defined in paragraph (iv) below) with respect to
such calendar year; and (B) for such Participant's
IV-5
<PAGE>
Termination Year, an amount equal to the product obtained by
multiplying (i) the Hypothetical Employer Contribution
determined with respect to such Participant for the
immediately preceding calendar year, by (ii) a fraction having
a numerator equal to the number of days in such Termination
Year prior to and including such Participant's Termination
Date, and having a denominator equal to 365.
(iv) For purposes of paragraph (iii) above, the "Hypothetical
Participant Deferral" applicable to any Participant for any
calendar year shall be the amount determined under the
following provisions, whichever is applicable:
(A) If, with respect to any calendar year, the 401(k) Plan
administrative committee does not take any action, either
during or after the close of such year, to reduce the
level of Participant deferrals permitted to be made by
any 401(k) Plan Participant for such year, then the
Hypothetical Participant Deferral with respect to any
Participant for such calendar year shall be the lesser of
(I) the maximum amount such Participant would be
permitted to contribute to the 401(k) Plan for such year
under Code Section 402(g), or (II) the maximum amount the
Participant would be permitted to contribute under the
terms of the 401(k) Plan.
(B) If, with respect to any calendar year, the 401(k) Plan
administrative committee takes action during and/or after
such year to reduce the level of Participant deferrals
permitted to be made by any 401(k) Plan Participant for
such year, then the Hypothetical Participant Deferral
with respect to any Participant for such year shall be
the lesser of (I) the maximum amount such Participant
would be permitted to contribute to the 401(k) Plan for
such year under Code Section 402(g), or (II) the product
determined by multiplying such Participant's compensation
for such year (as determined under the 401(k) Plan for
anti-discrimination testing purposes), by the maximum
"actual deferral percentage" for any highly compensated
employee for such year (as determined under Code Section
401(k)(3)(B) after giving effect to any corrections made
following the close of such year) applicable to "highly-
compensated employees" (as defined in Code Section
414(q)).
IV-6
<PAGE>
4.07 SPECIAL RULES FOR EARLY RETIREMENT. In the case of any Participant
----------------------------------
who incurs Early Retirement, such Participant's Monthly Annuity Amount shall be
determined as provided in Section 4.04 hereof, and then shall be reduced to
reflect the commencement of benefits on a date earlier than the Normal Benefit
Date as follows:
(a) If the Participant's Early Retirement commences on or after the first
day of the month next following his sixty-second birthday, then the
reduction shall be 0.25% for each full month by which the date of
Early Retirement precedes the first day of the month next following
his attainment of age 65.
(b) If the Participant's Early Retirement commences prior to the first
day of the month next following his sixty-second birthday, then the
reduction shall be 9.00% (representing the reduction from age 65 to
age 62 described in paragraph (a) above) plus 0.50% for each full
month by which the date of Early Retirement precedes the first day of
the month next following his sixty-second birthday.
4.08 TERMINATION OF PLAN PARTICIPATION. In the event that the Board of
---------------------------------
Directors determines that a Participant's employment performance is no longer at
a level which merits continued participation in the Plan, the Board may
terminate such Participant's participation in the Plan (without necessarily
terminating such Participant's employment) as of the date specified by the Board
(the "Participation Severance Date"). Accordingly, notwithstanding any other
provision of this Plan, the Supplemental Benefit payable to any Participant
whose Plan participation is terminated pursuant to this Section 4.08 shall be
calculated by taking into account, in determining the amount of such
Participant's Target Monthly Benefit and whether such Participant has met the
vesting requirement of Section 4.01 hereof, only the Service Years and
Compensation earned by such Participant as of his Participation Severance Date.
Such Supplemental Benefit shall be paid to the Participant pursuant to the
provisions of Section 4.03 herein.
4.09 DISABILITY. In the event that a Participant incurs a Termination as
----------
a result of such Participant's becoming Disabled, the Supplemental Benefit
payable to such Participant under this Plan shall be determined with regard to
the vesting requirement of Section 4.01 hereof assuming Service Years continue
to accrue until the earliest of (a) age 65, (b) return to Full-Time Employment,
or (c) the death of the Participant. For purposes of this Plan, a Participant
shall be deemed to be "Disabled" if and when, as a result of injury or sickness,
such Participant is permanently impaired to such an extent that he cannot
perform, and is not reasonably expected ever to be able to perform, each of the
material duties of his position of employment with the
IV-7
<PAGE>
Sponsor or any Affiliated Company. For the purpose of determining whether a
Participant is Disabled, the Board may require the Participant to submit to an
examination by a competent physician or medical clinic selected by the Board.
4.10 CHANGE OF CONTROL. Notwithstanding any other provision of this Plan,
-----------------
upon a Change in Control, all Participants in the Plan shall be fully vested in
their Supplemental Benefits. All Participants shall be entitled to the
Supplemental Benefit they would otherwise receive pursuant to this Article IV
hereof. Upon and following a Change of Control, no Participant shall be removed
from the Plan, nor shall his benefit be terminated, modified, reduced or
eliminated without his express written consent.
4.11 TERMINATION FOR CAUSE. Notwithstanding any other provision of this
---------------------
Plan except Section 4.10, a Participant who incurs a Termination for Cause prior
to a Change of Control shall not be entitled to a Supplemental Benefit,
regardless of Service Years, under this Plan.
IV-8
<PAGE>
ARTICLE V
DEATH OF A PARTICIPANT
5.01 TERMINATION BY REASON OF DEATH. In the event that a Participant
------------------------------
incurs a Termination by reason of his death, (a) such Participant shall not be
entitled to receive a Supplemental Benefit under this Plan, and (b) if such
Participant has a Spouse at the time of his death, such Participant's Spouse
(the "Surviving Spouse") shall be entitled to receive a special benefit (a
"Death Benefit") at the times and in the amounts set forth in this Article V. No
Death Benefit shall be paid in respect of any Participant who does not have a
Spouse at the time of his death.
5.02 FORM AND PAYMENT OF DEATH BENEFIT. A Surviving Spouse who is
---------------------------------
entitled to receive a Death Benefit pursuant to Section 5.01 hereof shall
receive such Death Benefit in the form of a Single Life Annuity which provides a
level monthly payment equal to the Monthly Death Benefit Amount specified in
Section 5.03 hereof. Except as otherwise provided hereinbelow, payment of a
Surviving Spouse's Death Benefit shall commence on the ninetieth (90th) day (the
"Death Benefit Commencement Date") after the Participant's death.
5.03 MONTHLY DEATH BENEFIT AMOUNT. The "Monthly Death Benefit Amount"
----------------------------
applicable to any Surviving Spouse shall be an amount equal to the Monthly
Annuity Amount of the Supplemental Benefit that would have been payable to the
deceased Participant under Article IV hereof if such Participant had incurred a
Retirement on the day prior to his death, provided, however, that the
determination of such Monthly Annuity Amount shall take into account the
following assumptions and special rules:
(a) Such Monthly Annuity Amount shall be determined assuming the
Participant would have received his Supplemental Benefit in the
Normal Benefit Form, modified, if applicable, by the provisions of
Section 4.07 hereof.
(b) Such Monthly Annuity Amount shall be determined as if the Participant
was 100% vested in the Supplemental Benefit.
(c) The Payment Commencement Date used in determining such Monthly
Annuity Amount shall be deemed to be the Surviving Spouse's Death
Benefit
V-1
<PAGE>
Commencement Date (disregarding any provision in Article IV to the
contrary), and if the deceased Participant's death caused Early
Retirement, the provisions of Section 4.07 hereof shall be applied in
determining the deceased Participant's Monthly Annuity Amount after
first determining the amount of the Defined Benefit Plan Offset
Amount pursuant to subsection (c) above.
V-2
<PAGE>
ARTICLE VI
MISCELLANEOUS PROVISIONS
6.01 PAYMENTS DURING INCAPACITY. In the event a Participant (or
--------------------------
Beneficiary) is under mental or physical incapacity at the time of any payment
to be made to such Participant (or Beneficiary) pursuant to this Plan, any such
payment may be made to the conservator or other legally appointed personal
representative having authority over and responsibility for the person or estate
of such Participant (or Beneficiary), as the case may be, and for purposes of
such payment references in this Plan to the Participant (or Beneficiary) shall
mean and refer to such conservator or other personal representative, whichever
is applicable. In the absence of any lawfully appointed conservator or other
personal representative of the person or estate of the Participant (or
Beneficiary), any such payment may be made to any person or institution that has
apparent responsibility for the person and/or estate of the Participant (or
Beneficiary) as determined by the Committee. Any payment made in accordance with
the provisions of Section 6.01 to a person or institution other than the
Participant (or Beneficiary) shall be deemed for all purposes of this Plan as
the equivalent of a payment to such Participant (or Beneficiary), and the
Sponsor shall have no further obligation or responsibility with respect to such
payment.
6.02 PROHIBITION AGAINST ASSIGNMENT. Except as otherwise expressly
------------------------------
provided in Section 6.01 hereof, the rights, interests and benefits of a
Participant under this Plan (a) may not be sold, assigned, transferred, pledged,
hypothecated, gifted, bequeathed or otherwise disposed of to any other party by
such Participant or any Beneficiary, executor, administrator, heir, distributee
or other person claiming under such Participant, and (b) shall not be subject to
execution, attachment or similar process. Any attempted sale, assignment,
transfer, pledge, hypothecation, gift, bequest or other disposition of such
rights, interests or benefits contrary to the foregoing provisions of this
Section 6.02 shall be null and void and without effect.
6.03 BINDING EFFECT. The Provisions of this Plan shall be binding upon
--------------
the Sponsor, the Participants, all Affiliated Companies employing any
Participants, and any successor-in-interest to the Sponsor.
6.04 NO TRANSFER OF INTEREST. Benefits under this Plan shall be payable
-----------------------
solely from the general assets of the Sponsor (and, with respect to any
Participant who is an employee of an Affiliated Company, also from the general
assets of such Affiliated Company), and no person shall
VI-1
<PAGE>
be entitled to look to any other source for payment of such benefits. The
Sponsor (and, if applicable, any Affiliated Company) shall have and possess all
title to, and beneficial interest in, any and all funds or reserves maintained
or held by the Sponsor (or such Affiliated Company) on account of any obligation
to pay benefits as required under this Plan, whether or not earmarked as a fund
or reserve for such purpose; any such funds, other property or reserves shall be
subject to the claims of the creditors of the Sponsor (or such Affiliated
Company), and the provisions of this Plan are not intended to create, and shall
not be interpreted as vesting, in any Participant, Beneficiary or other person,
any right to or beneficial interest in any such funds, other property or
reserves. Nothing in this Section 6.04 shall be construed or interpreted as
prohibiting or restricting the establishment of a grantor trust within the
meaning of Code Section 671 which is unfunded for purposes of Sections 201(2),
301(a)(3), and 401(a)(l) of ERISA, from which benefits under this Plan may be
payable.
6.05 AMENDMENT OR TERMINATION OF THE PLAN. The Board of Directors may
------------------------------------
amend this Plan from time to time in any respect that it deems appropriate or
desirable, and the Board may terminate this Plan at any time; provided, however,
that any such amendment or termination may not, without the written consent of a
Participant, eliminate or reduce the Supplemental Benefit that has accrued with
respect to such Participant as of the effective date of such amendment or
termination. For purposes of this Section 6.05, the Supplemental Benefit that
has accrued with respect to any Participant as of the date of any amendment of
termination of the Plan shall be deemed to be the Supplemental Benefit to which
such Participant would be entitled pursuant to Article IV hereof if such
Participant incurred Retirement immediately prior to such Plan amendment or Plan
termination.
6.06 NO RIGHT TO EMPLOYMENT. This Plan is voluntary on the part of the
----------------------
Sponsor and its Affiliated Companies, and the Plan shall not be deemed to
constitute an employment contract between any Participant and the Sponsor or any
Affiliated Company, nor shall the adoption or existence of the Plan or any
provision contained in the Plan be deemed to be a required condition of the
employment of any Participant. Nothing contained in this Plan shall be deemed
to give any Participant the right to continued employment with the Sponsor or
any Affiliated Company, and the Sponsor and its Affiliated Companies may
terminate any Participant at any time, in which case the Participant's rights
arising under this Plan shall be only those expressly provided under the terms
of this Plan.
6.07 NOTICES. All notices, requests, or other communications (hereinafter
-------
collectively referred to as "Notices") required or permitted to be given
hereunder or which are given with
VI-2
<PAGE>
respect to this Plan shall be in writing and may be personally delivered, or may
be deposited in the United States mail, postage prepaid and addressed as
follows:
To the Sponsor any Affiliated Whittaker Corporation
Company or the Committee at: Attention: Board of Directors
1955 Surveyor Avenue
Simi Valley, California 93063-3386
To Participant at: The Participant's residential
mailing address as reflected in the
Sponsor's or Affiliated Company's
employment records
A Notice which is delivered personally shall be deemed given as of the date
of personal delivery, and a Notice mailed as provided herein shall be deemed
given on the second business day following the date so mailed. Any Participant
may change his address for purposes of Notices hereunder pursuant to a Notice to
the Committee, given as provided herein, advising the Committee of such change.
The Sponsor, any Affiliated Company and/or the Committee may at any time change
its address for purposes of Notices hereunder.
6.08 GOVERNING LAW. This Plan shall be governed by, interpreted under,
-------------
and construed and enforced in accordance with the internal laws, and not the
laws pertaining to conflicts or choice of laws, of the State of California
applicable to agreements made and to be performed wholly within the State of
California.
6.09 TITLES AND HEADINGS; GENDER OF TERMS. Article and Section headings
------------------------------------
herein are for reference purposes only and shall not be deemed to be part of the
substance of this Plan or in any way to enlarge or limit the meaning or
interpretation of any provision in this Plan. Use in this Plan of the
masculine, feminine or neuter gender shall be deemed to include each of the
omitted genders wherever the context so requires.
6.10 SEVERABILITY. In the event that any provision of this Plan is found
------------
to be invalid or otherwise unenforceable by a court or other tribunal of
competent jurisdiction, such invalidity or unenforceability shall not be
construed as rendering any other provision contained herein invalid or
unenforceable, and all such other provisions shall be given full force and
effect to the same extent as though the invalid and unenforceable provision was
not contained herein.
6.11 TAX EFFECT OF PLAN. Neither the Sponsor nor any Affiliated Company
------------------
warrants any tax benefit nor any financial benefit under the Plan. Without
limiting the foregoing, the Sponsor and each Affiliated Company and their
directors, officers, employees and agents shall be
VI-3
<PAGE>
held harmless by the Participant from, and shall not be subject to any liability
on account of, any Federal or State tax consequences or any consequences under
ERISA of any determination as to the amount of Plan benefits to be paid, the
method by which Plan benefits are paid, the persons to whom Plan benefits are
paid, or the commencement or termination of the payment of Plan benefits.
6.12 ENTIRE AGREEMENT. The Plan represents the entire agreement regarding
----------------
nonqualified retirement benefits provided by Sponsor to each Participant.
Further, the Plan supersedes all Participant benefits or accruals under the
Whittaker Corporation Supplemental Benefit Plan and the Whittaker Corporation
Excess Benefit Plan.
IN WITNESS WHEREOF, the Sponsor has caused this Plan to be executed by its
duly authorized officer effective as of the Effective Date hereof.
WHITTAKER CORPORATION
By_____________________________________
Title__________________________________
VI-4
<PAGE>
WHITTAKER CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
AGREEMENT
<PAGE>
PARTICIPATION AGREEMENT
THIS PARTICIPATION AGREEMENT is made and entered into this ____________ day of
_______________________, 1995, by and between Whittaker Corporation, a Delaware
corporation (hereinafter referred to as the "Sponsor"), and
__________________________, an executive of the Sponsor (hereinafter referred to
as the "Executive").
WITNESSETH
WHEREAS, the Executive is employed by the Sponsor or an Affiliated Company; and
WHEREAS, the Sponsor recognizes the value of the services performed by the
Executive and wishes to offer a supplemental retirement benefit to the Executive
as an inducement to remain as an employee; and
WHEREAS, the Executive wishes to be assured that he will be entitled to a
supplemental retirement benefit if he continues to render substantial services
to the Sponsor; and
WHEREAS, the Sponsor had previously established the Whittaker Corporation
Supplemental Benefit Plan and the Whittaker Corporation Excess Benefit Plan to
provide certain supplemental benefits; and
WHEREAS, the Sponsor and Executive wish to revise the supplemental benefits to
be provided to the Executive; and
WHEREAS, the Sponsor hereto has established the Whittaker Corporation
Supplemental Executive Retirement Plan (hereinafter referred to as the "Plan")
to supersede all benefits provided to the Executive under the Whittaker
Corporation Supplemental Benefit Plan and Whittaker Corporation Excess Benefit
Plan; and
WHEREAS, the Whittaker Corporation Supplemental Executive Retirement Plan
provides the terms and conditions upon which the Sponsor shall pay such
supplemental retirement benefits to those executives of the Sponsor who are
selected for participation in the Plan by the President of the Sponsor and
approved by the Board of Directors; and
WHEREAS, the parties hereto intend that the Plan be considered an unfunded
arrangement, maintained primarily to provide deferred compensation benefits for
the Executive, a member of a select group of management and a highly compensated
employee of the Sponsor, within the meaning of the Employee Retirement Security
Act of 1974 (ERISA) as amended; and
NOW, THEREFORE, in consideration of the premises and of the mutual promises
herein contained, the parties hereto agree to be bound by the terms and
conditions set forth in the Plan and as set forth herein below:
1. All capitalized terms used, but not defined herein, shall have the meaning
ascribed to them in the Plan.
<PAGE>
2. The terms and conditions of the Executive's participation in the Plan shall
be governed by the provisions of the Plan. Any additional terms and conditions
of the Executive's participation shall be designated in an Addendum to this
agreement.
3. The Executive hereby designates the Form of Supplemental Benefit from the
choices below as the desired form of distribution of the Supplemental Benefit:
[_] Single Life Annuity
[_] 50% Joint and Survivor Annuity
If no election is made or the election is invalid or void, the Supplemental
Benefit shall be paid in the form of a Single Life Annuity.
4. If the Executive is married at the time of his death, his surviving spouse
shall receive the applicable Death Benefit pursuant to the terms and conditions
of the Plan. The following individual is married to the Executive and is hereby
designated as the Executive's Surviving Spouse for purposes of receiving the
Executive's Death Benefit:
_________________________________
If the Executive is not married, no person shall be designated as the Surviving
Spouse and no Death Benefit shall be paid pursuant to Article V of the Plan.
5. The Executive shall promptly notify the Sponsor of any changes in his
marital status.
6. By executing this Agreement, Executive waives all rights to benefits under
the Whittaker Corporation Supplemental Benefit Plan and the Whittaker
Corporation Excess Benefit Plan.
IN WITNESS WHEREOF, the Sponsor and the Executive have executed this agreement
to be effective as of the day and year first above written.
_______________________ _______________________
Sponsor Executive
<PAGE>
EXHIBIT 10.10
AMENDMENT AND RESTATEMENT
OF
WHITTAKER CORPORATION
EMPLOYEES' PENSION PLAN
<PAGE>
WHITTAKER CORPORATION
EMPLOYEES' PENSION PLAN
Whittaker Corporation, a Delaware corporation, hereinafter referred to as
the "Company," hereby adopts the defined benefit pension plan set forth below
(the "Plan") as an amendment and complete restatement of its current defined
benefit pension plan. The Plan is a defined benefit pension plan intended to
qualify under Section 401 of the Code, and the trust established pursuant to the
Plan is an employees' trust intended to constitute a tax-exempt organization
under Section 501 of the Code. The provisions of the Plan as amended and
restated herein shall only apply to Participants who terminate employment after
the Effective Date, except as otherwise required by law for those provisions
pursuant to the Tax Reform Act of 1986 (TRA '86) and subsequent legislation
including but not limited to the Consolidated Omnibus Budget Reconciliation Act
which are effective respectively as of January 1, 1989, January 1, 1990, January
1, 1991, January 1, 1992 and January 1, 1993.
This 1994 amendment and restatement incorporates all amendments made to the
1988 amendment and restatement and also serves to further document the Company's
intention to freeze the accrual of benefits under the Plan as of October 31,
1994 by ceasing to count as Plan Compensation and Final Average Earnings any
remuneration paid after December 31, 1994 and as Benefit Service any period of
employment after October 31, 1994. Vested Service, however, will continue to
accrue in accordance with the applicable Plan provisions.
<PAGE>
WHITTAKER CORPORATION
EMPLOYEES' PENSION PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
ARTICLE I - DEFINITIONS.................................................. I-1
1.01 Accrued Benefit.............................................. I-1
1.02 Actuarial Equivalent......................................... I-1
1.03 Adjustment Factor............................................ I-2
1.04 Affiliated Company........................................... I-2
1.05 Applicable Interest Rate..................................... I-2
1.06 Beneficiary.................................................. I-2
1.07 Benefit Commencement Date.................................... I-2
1.08 Benefit Service.............................................. I-3
1.09 Board........................................................ I-4
1.10 Code......................................................... I-4
1.11 Committee.................................................... I-4
1.12 Company...................................................... I-4
1.13 Compensation................................................. I-4
1.14 Day of Service............................................... I-7
1.15 Defined Benefit Dollar Limitation............................ I-8
1.16 Defined Benefit Plan......................................... I-8
1.17 Defined Contribution Dollar Limitation....................... I-9
1.18 Defined Contribution Plan.................................... I-9
1.19 Disability................................................... I-9
1.20 Early Retirement Age......................................... I-9
1.21 Effective Date............................................... I-9
1.22 Eligible Spouse.............................................. I-9
1.23 Employee..................................................... I-9
1.24 Enrolled Actuary............................................. I-9
1.25 ERISA........................................................ I-9
1.26 Final Average Earnings....................................... I-10
1.27 Includable Compensation...................................... I-11
1.28 Investment Advisory Committee................................ I-11
1.29 Investment Manager........................................... I-12
1.30 Leased Employee.............................................. I-12
1.31 Limitation Year.............................................. I-12
1.32 Minimum Accrual.............................................. I-12
1.33 Minimum Benefit.............................................. I-12
</TABLE>
(i)
<PAGE>
<TABLE>
<S> <C> <C>
1.34 Normal Benefit.............................................. I-12
1.35 Normal Retirement Age....................................... I-12
1.36 Normal Retirement Benefit................................... I-13
1.37 One Year Break in Service................................... I-13
1.38 Participant................................................. I-13
1.39 Participating Company....................................... I-13
1.40 Plan........................................................ I-13
1.41 Plan Year................................................... I-14
1.42 Qualified Joint and Survivor Annuity........................ I-14
1.43 Qualified Plan.............................................. I-14
1.44 Qualified Pre-retirement Survivor Annuity................... I-14
1.45 Severance................................................... I-14
1.46 Social Security Benefit..................................... I-14
1.47 Social Security Retirement Age.............................. I-15
1.48 Top-Heavy Plan.............................................. I-15
1.49 Trust Agreement............................................. I-15
1.50 Trust Fund.................................................. I-16
1.51 Trustee..................................................... I-16
1.52 Vested Service.............................................. I-16
1.53 Welfare Benefit Fund........................................ I-17
ARTICLE II - ELIGIBILITY TO PARTICIPATE................................. II-1
2.01 Initial Eligibility to Participate.......................... II-1
2.02 Subsequent Eligibility to Participate....................... II-1
2.03 Exclusions from Participation............................... II-1
2.04 Participation Following a Severance......................... II-3
2.05 Leased Employees............................................ II-4
2.06 Participation Freeze........................................ II-5
ARTICLE III - PARTICIPANT CONTRIBUTIONS................................. III-1
3.01 Participant Contributions Prohibited........................ III-1
ARTICLE IV - PARTICIPATING COMPANY CONTRIBUTIONS........................ IV-1
4.01 Amount of Contribution...................................... IV-1
4.02 Time of Payment............................................. IV-1
ARTICLE V - RETIREMENT BENEFITS......................................... V-1
5.01 Severance on or After Normal Retirement Age................. V-1
5.02 Severance Before Normal Retirement Age...................... V-1
5.03 Determination of Benefit.................................... V-2
5.04 Code Section 415 Limitations................................ V-14
5.05 Forms of Retirement Benefits................................ V-22
5.06 Special Annuity Provisions.................................. V-24
</TABLE>
(ii)
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5.07 Rules Governing Distributions............................... V-25
5.08 Relevant Information........................................ V-28
5.09 Benefits Upon Reemployment.................................. V-28
5.10 Suspension of Benefits...................................... V-28
5.11 Prohibition Against Reduction of Accrued Benefit............ V-30
5.12 Withholding on Payment of Benefits.......................... V-30
ARTICLE VI - DEATH BENEFITS............................................. VI-1
6.01 Spousal Death Benefit....................................... VI-1
6.02 Commencement of Benefit..................................... VI-1
6.03 Certain Spouses............................................. VI-1
6.04 Cost of Coverage............................................ VI-2
ARTICLE VII - VESTING................................................... VII-1
7.01 Vested Benefit.............................................. VII-1
7.02 Aggregation of Year's of Vested Service..................... VII-2
7.03 Unclaimed Benefits.......................................... VII-3
7.04 Application of Forfeited Amounts............................ VII-4
ARTICLE VIII - DESIGNATION OF BENEFICIARY............................... VIII-1
8.01 Designation of Beneficiary.................................. VIII-1
8.02 Failure to Designate Beneficiary............................ VIII-1
ARTICLE IX - TOP-HEAVY PLAN PROVISIONS.................................. IX-1
9.01 Priority over Other Plan Provisions......................... IX-1
9.02 Definitions................................................. IX-1
9.03 Compensation Taken Into Account............................. IX-4
9.04 Minimum Benefit............................................. IX-5
9.05 Minimum Vesting............................................. IX-7
9.06 Modification of Aggregate Benefit Limit..................... IX-8
ARTICLE X - ADMINISTRATIVE PROCEDURES................................... X-1
10.01 Appointment of Committee Members............................ X-1
10.02 Officers and Employees of the Committee..................... X-1
10.03 Action of the Committee..................................... X-1
10.04 Disqualification of Committee Member........................ X-1
10.05 Expenses of the Committee................................... X-1
10.06 Bonding and Compensation.................................... X-2
10.07 General Powers and Duties of the Committee.................. X-2
10.08 Specific Powers and Duties of the Committee................. X-2
10.09 Allocation of Fiduciary Responsibility...................... X-4
10.10 Information to be Submitted to the Committee................ X-4
10.11 Notices, Statements and Reports............................. X-5
10.12 Claims Procedure............................................ X-5
</TABLE>
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10.13 Service of Process.......................................... X-7
10.14 Payment to Minors or Persons Under Legal Disability......... X-8
10.15 Uniform Application of Rules and Policies................... X-8
10.16 Funding Policy.............................................. X-8
ARTICLE XI INVESTMENT OF PLAN ASSETS................................... XI-1
11.01 Trust Fund Investments...................................... XI-1
11.02 General Responsibility and Authority for Investment of
Trust Assets................................................ XI-1
11.03 The Trust Agreement......................................... XI-5
11.04 Loans Prohibited............................................ XI-5
11.05 Appointment of Investment Advisory Committee Members........ XI-5
11.06 Officers and Employees of the Investment Advisory Committee. XI-5
11.07 Action of the Investment Advisory Committee................. XI-5
11.08 Disqualification of Investment Advisory Committee Member.... XI-6
11.09 Expenses of the Investment Advisory Committee............... XI-6
11.10 Bonding and Compensation.................................... XI-6
ARTICLE XII TERMINATION AND PARTIAL TERMINATION......................... XII-1
12.01 Continuance of Plan......................................... XII-1
12.02 Complete Vesting............................................ XII-1
12.03 Allocation of Assets........................................ XII-1
12.04 Withdrawal by Participating Company......................... XII-2
12.05 Prevention of Discrimination on Early Termination........... XII-2
12.06 Residual Assets............................................. XII-10
ARTICLE XIII - AMENDMENT OF THE PLAN.................................... XIII-1
13.01 Right of Company to Amend Plan.............................. XIII-1
13.02 Amendment Procedure......................................... XIII-2
13.03 Effect on Other Participating Companies..................... XIII-2
ARTICLE XIV - ADOPTION OF PLAN BY AFFILIATED COMPANIES.................. XIV-1
14.01 Adoption Procedure.......................................... XIV-1
14.02 Effect of Adoption by Affiliated Company.................... XIV-1
ARTICLE XV - MISCELLANEOUS.............................................. XV-1
15.01 Reversion Prohibited........................................ XV-1
15.02 Bonding, Insurance and Indemnity............................ XV-2
15.03 Merger, Consolidation or Transfer of Assets................. XV-2
15.04 Spendthrift Clause.......................................... XV-3
</TABLE>
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15.05 Rights of Participants...................................... XV-4
15.06 Gender, Tense and Headings.................................. XV-4
15.07 Counterparts................................................ XV-4
15.08 Governing Law............................................... XV-5
APPENDIX A - Special Rules for Certain Employees........................ A-1
</TABLE>
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ARTICLE I
DEFINITIONS
1.01 ACCRUED BENEFIT. "Accrued Benefit" means the portion of a
Participant's retirement benefit which he has earned as of any date.
1.02 ACTUARIAL EQUIVALENT. "Actuarial Equivalent" means a form of benefit
under which the aggregate payments expected to be received are equal in value to
the aggregate payments expected to be received under a different form of benefit
using the following assumptions:
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Mortality Tables: 1971 Unisex Group annuity Table (85% of
male rate and 15% of female rate)
Interest rate: 8% per annum
</TABLE>
Notwithstanding the foregoing, in calculating the present value of a
Participant's benefit for purposes of the Lump Sum Option under Section
5.05(c)(4) or for purposes of the immediate distribution of a small benefit
under Section 5.07(f), actuarial equivalence shall be determined (1) by using an
interest rate no greater than the Applicable Interest Rate if the vested Accrued
Benefit (as determined using such rate) is not in excess of $25,000, and (2) by
using an interest rate no greater than 120% of the Applicable Interest Rate if
the vested Accrued Benefit (as determined under clause (1)) exceeds $25,000,
provided that in no event shall the present value of the vested Accrued Benefit
as determined under clause (2) be less than $25,000.
Subject to the foregoing assumptions and limitations, in calculating the
present value of a Participant's benefit, actuarial equivalence shall be
determined by using the interest rate which produces the greatest benefit.
The foregoing actuarial assumptions may be changed from time to time by
amendment to the Plan. No Participant or Beneficiary shall be deemed to have any
right, vested or nonvested, to have his benefit computed under previously
adopted actuarial assumptions, except as may be required by Section 411(d)(5) of
the Code to prevent the reduction of a Participant's Accrued Benefit.
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Notwithstanding the above, if a benefit is distributed in a form other than
a nondecreasing annuity payable for a period not less than the life of a
Participant (or in the case of a Qualified Joint and Survivor Annuity, the life
of the surviving spouse), the interest rate used in determining the Actuarial
Equivalent of that portion of the benefit based on Excess Final Average
Earnings, where applicable, shall be an interest rate determined pursuant to
Code Section 417.
1.03 ADJUSTMENT FACTOR. "Adjustment Factor" means the cost of living
adjustment factor prescribed by the Secretary of the Treasury under Section
415(d) of the Code for years beginning after December 31, l987.
1.04 AFFILIATED COMPANY. "Affiliated Company" means:
(a) Any member of a controlled group of corporations (within the meaning
of Section 414(b) of the Code, modified, for purposes of
Section 5.04, by Section 415(h) of the Code) of which the Company is
a member;
(b) Any trade or business (whether or not incorporated) under common
control with the Company (within the meaning of Section 414(c) of
the Code, modified, for purposes of Section 5.04, by Section 415(h)
of the Code);
(c) Any member of an affiliated service group (within the meaning of
Section 414(m) of the Code) of which the Company is a member; and
(d) Any other entity required to be aggregated with the Company under
Section 414(o) of the Code.
1.05 APPLICABLE INTEREST RATE. "Applicable Interest Rate" means the
interest rate or rates that would be used by the Pension Benefit Guaranty
Corporation, as of the first day of the Plan Year in which a distribution is
made, for purposes of determining the present value of the Participant's benefit
under the Plan if the Plan had terminated on the first day of such Plan Year
with insufficient assets to provide benefits guaranteed by the Pension Benefit
Guaranty Corporation on that date.
1.06 BENEFICIARY. "Beneficiary" means the one or more persons or entities
entitled to receive distribution of a Participant's interest in the Plan in the
event of his death.
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1.07 BENEFIT COMMENCEMENT DATE. "Benefit Commencement Date" means the
date upon which payment of a Participant's benefit commences.
1.08 BENEFIT SERVICE. "Benefit Service" means the number of years of
Benefit Service of a Participant determined according to this Section 1.08. A
Participant shall be deemed to accrue a full year of Benefit Service for each
Plan Year during which he completes at least 365 Days of Service as an Employee
of a Participating Company. In addition, a Participant shall be deemed to accrue
a fractional year of Benefit Service in any Plan Year in which he completes one
or more but less than 365 Days of Service as an Employee of a Participating
Company Such fractional year of Benefit Service shall be computed by dividing
the number of Days of Service completed by the Participant as an Employee of a
Participating Company during such Plan Year by 365.
Notwithstanding any other provision of the Plan to the contrary, for
purposes of determining a Participant's Benefit Service, the following
additional rules shall apply:
(a) No Benefit Service shall be credited to any Employee prior to his
commencement of participation in this Plan pursuant to the
provisions of Article II, provided, however, that upon commencement
of such participation, such Employee's service for a Participating
Company prior to commencement of participation shall be taken into
account for purposes of this Section (subject, however, to
exceptions set forth in subsections (b) through (g), below);
(b) No Benefit Service shall be credited to any Participant with respect
to any period prior to attainment of age 21;
(c) Effective for Participants who do not complete at least one Day of
Service on or after January 1, 1988, no Benefit Service shall be
credited to any such Participant with respect to any period after
such Participant's attainment of Normal Retirement Age;
(d) Subject to the provisions of Section 1.14, no Benefit Service shall
be credited to any Participant with respect to any period prior to
the date on which such Participant's employer became a Participating
Company;
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(e) No Benefit Service shall be credited to an Employee with respect to
any period of service disregarded under the provisions of Section
2.04;
(f) Effective for Participants who are hired by a Participating Company
after attaining age 60 and prior to January 1, 1988, no Benefit
Service shall be credited to any such Participant with respect to
any period prior to January 1, 1988.
(g) Effective October 31, 1994, no further Benefit Service shall accrue
on behalf of any current or former Participant.
1.09 BOARD. "Board" means the Board of Directors of the Company.
1.10 CODE. "Code" means the Internal Revenue Code of 1986, as amended
from time to time.
1.11 COMMITTEE. "Committee" means the Pension Committee appointed and
acting pursuant to the provisions of Article X.
1.12 COMPANY. "Company" means Whittaker Corporation, a Delaware
corporation. The term "Company" shall also include any successor employer, if
the successor employer expressly agrees in writing as of the effective date of
succession to continue the Plan and become a party to the Trust Agreement.
1.13 COMPENSATION. "Compensation" means the full salary and wages
(including bonuses, incentive payments, overtime, commissions, shift
differentials, and holiday, vacation and sick pay) and other compensation paid
by the Company and any Affiliated Company during a Plan Year by reason of
services performed by an Employee, subject, however, to the following special
rules:
(a) Fringe benefits (including but not limited to relocation allowance,
expense allowance, overseas allowance and other similar items),
contributions by the Company or any Affiliated Company to or
benefits under any employee benefit plan, except as provided in
subsection (b) below, and benefits received from the Whittaker
Corporation Long Term Incentive Plan shall not be taken into account
in determining Compensation;
(b) Amounts deducted pursuant to authorization by an Employee or
pursuant to requirements of law (including amounts of salary or
wages deferred in accordance
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with Code Section 401(k)) shall be included in Compensation except
as specifically provided to the contrary elsewhere in this Plan;
(c) Amounts paid or payable by reason of services performed during any
period in which an Employee is not a Participant under this Plan
shall not be taken into account in determining Compensation;
(d) Amounts not included in the Employee's gross income for his current
taxable year pursuant to any nonqualified deferred compensation plan
shall not be taken into account in determining Compensation,
however, such amounts (other than amounts under stock options) shall
be included in Compensation in the year when those amounts are
taxable to the Participant;
(e) Amounts included in any Employee's gross income with respect to life
insurance as provided by Code Section 79 shall not be taken into
account in determining Compensation;
(f) Any special cash payment in the nature of a commission, bonus or
incentive payment to an Employee whose basic annual salary is at
least $50,000 shall not be taken into account in determining the
Employee's Compensation if the payment is pursuant to an individual
written agreement with the Employee; and
(g) For any Plan Year commencing on or after January 1, 1989, the
maximum amount of a Participant's annual Compensation taken into
account for determining all benefits provided under the Plan for any
determination period, shall be $200,000 except as such limitation is
adjusted for cost of living in accordance with the provisions of
Sections 401(a)(17) of the Code, except that the dollar increase in
effect on January 1 of any calendar year is effective for any years
beginning in such calendar year. If the period for determining
Compensation used in calculating an Employee allocation for a
determination period is a short Plan Year (i.e., shorter than 12
months), the annual Compensation limit is an amount equal to the
otherwise applicable annual Compensation limit multiplied by the
fraction, the numerator of which is the number of months in the
short Plan Year, and the denominator of which is 12. In determining
the Compensation of a Participant for
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purposes of this limitation, the rules of Section 414(q)(6) of the
Code shall apply, except in applying such rules, the term "family"
shall include only the spouse of the Participant and any lineal
descendants of the Participant who have not attained age 19 before
the close of the year. If, as a result of the application of such
rules the adjusted $200,000 limitation is exceeded, then (except,
where applicable) for purposes of determining the portion of
Compensation up to the integration level the limitation shall be
prorated among the affected individuals in proportion to each such
individual's Compensation as determined under this Section 1.13
prior to the application of this limitation.
If Compensation for any prior determination period is taken
into account in determining an Employee's benefit for the current
determination period, the Compensation for such prior year is
subject to the application 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 to other applicable limitations set forth in the
Plan, and notwithstanding any other provision of the Plan to the
contrary, for Plan Years beginning on or after January 1, 1994, the
annual Compensation of each Employee taken into account under the
Plan shall not exceed the Omnibus Budget Reconciliation Act of 1993
("OBRA '93") annual Compensation limit. The OBRA '93 annual
Compensation limit is $150,000, as adjusted by the Commissioner for
increases in the cost of living in accordance with Section
401(a)(17)(B) of the Code. The cost-of-living adjustment in effect
for a calendar year applies to any period, not exceeding12 months,
over which compensation is determined (determination period)
beginning in such calendar year. If a determination period consists
of fewer than 12 months, the OBRA '93 annual Compensation limit will
be multiplied by a fraction, the numerator of which is the number of
months in the determination period, and the denominator of which is
12.
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For Plan Years beginning on or after January 1, 1994, any
reference in this Plan to the limitation under Section 401(a)(17) of
the Code shall mean the OBRA '93 annual Compensation limit set forth
in this provision.
If Compensation for any prior determination period is taken
into account in determining an Employee's benefit accruing in the
current Plan Year, the Compensation for that prior determination
period is subject to the OBRA '93 annual Compensation limit in
effect for that prior determination period. For this purpose, for
determination periods beginning before the first day of the first
Plan Year beginning on or after January 1, 1994, the OBRA '93 annual
Compensation limit is $150,000.
(h) Compensation earned after December 31, 1994 shall not be used in
determining any benefit provided by this Plan.
1.14 DAY OF SERVICE. "Day of Service" means, in the case of any Employee,
each day during any period commencing with the day on which the Employee first
enters into active service as an Employee on or following his most recent date
of rehire by the Company or any Affiliated Company and ending on the date of his
next following Severance. If an Employee's Severance date is the date of his
retirement, discharge or voluntary termination of employment, then "Day of
Service" shall also include each day between such Severance date and the date
upon which the Employee recommences active service as an Employee if the
Employee recommences such active service prior to:
(a) The first anniversary of such Severance date if such Severance date
did not occur during an absence from service by the Employee for a
reason other than retirement, discharge or voluntary termination of
employment; or
(b) The first anniversary of the date on which the Employee was first
absent from service for a reason other than retirement, discharge or
voluntary termination of employment if such Severance date occurred
during such absence.
Credit for Days of Service shall be given with respect to periods of
military service and family leave to such extent and for such purposes as
are required by applicable federal law. Credit for Days of Service shall be
given with respect to service performed for an
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operating unit, division or subsidiary of any corporation, trade or
business that is acquired by the Company or any Affiliated Company
commencing on the effective date of such acquisition. Notwithstanding the
provisions of subsection (a), the Board or the Committee by resolution may
provide that, for purposes of determining eligibility to participate in the
Plan, Benefit Service or Vested Service, credit for Days of Service also
shall be given with respect to service performed for such an entity prior
to the effective date of the acquisition. In addition, the Board or the
Committee by resolution may provide that, for purposes of determining
Vested Service of a former Employee who has less than a 100% vested and
nonforfeitable interest in his Accrued Benefit, credit for Days of Service
shall be given with respect to service performed for any other corporation,
trade or business that has acquired all or part of an operating unit,
division or subsidiary of the Company or any Affiliated Company.
Days of Service shall also include any period of service that
constitutes service with a predecessor employer within the meaning of
Section 414(a)(1) of the Code. Finally, effective for Plan Years beginning
after 1984, and solely for purposes of preventing a One Year Break in
Service, Days of Service shall include each period of service credited in
accordance with Sections 410(a)(5)(E) and 411(a)(6)(E) of the Code for
unpaid periods during which an Employee is absent from work by reason of
the pregnancy of the Employee, the birth of a child of the Employee, the
placement of a child with the Employee in connection with the adoption of
such child by the Employee, or for purposes of caring for such child for a
period beginning immediately following such birth or placement, provided
that the Employee furnishes timely information to the Company to establish
that the absence from work is for one of the aforementioned reasons, and
the number of days for which there was such an absence. The Days of Service
created under this paragraph shall be credited in the computation period in
which the absence begins only if necessary to prevent a One Year Break in
Service in that period, and in all other cases, in the immediately
succeeding computation period.
1.15 DEFINED BENEFIT DOLLAR LIMITATION. "Defined Benefit Dollar
Limitation" means the Defined Benefit Dollar Limitation computed under Section
5.04(b).
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1.16 DEFINED BENEFIT PLAN. "Defined Benefit Plan" means a Qualified Plan
other than a Defined Contribution Plan.
1.17 DEFINED CONTRIBUTION DOLLAR LIMITATION. "Defined Contribution Dollar
Limitation" means, for any Limitation Year, $30,000 or, if greater, 25% of the
Defined Benefit Dollar Limitation in effect for the Limitation Year. If a short
Limitation Year is created because of a Plan amendment changing the Limitation
Year to a different 12-consecutive month period, the Defined Contribution Dollar
Limitation for the short Limitation Year shall not exceed the amount determined
in the preceding sentence multiplied by a fraction, the numerator of which is
the number of months in the short Limitation Year, and the denominator of which
is 12.
1.18 DEFINED CONTRIBUTION PLAN. "Defined Contribution Plan" means, a
Qualified Plan which provides individual participant accounts for employer
contributions, forfeitures and gains or losses thereon, in accordance with
Section 414(i) of the Code.
1.19 DISABILITY. "Disability" means, the permanent inability of a
Participant to perform the duties assigned to him by the Company or any
Affiliated Company by reason of mental or physical illness or injury The
determination of a Participant's Disability shall be made by the Committee after
receiving competent medical advice and on a basis uniformly applicable to all
Participants.
1.20 EARLY RETIREMENT AGE. "Early Retirement Age" means the date on which
a Participant attains age 55 and completes at least 10 years of Vested Service.
1.21 EFFECTIVE DATE. "Effective Date" means January 1, 1994.
1.22 ELIGIBLE SPOUSE. "Eligible Spouse" means the spouse of a
Participant.
1.23 EMPLOYEE. "Employee" means any person who is:
(a) Employed by the Company or any Affiliated Company if the
relationship between the Company or Affiliated Company and such
person would, for federal income tax purposes, constitute the legal
relationship of employer and employee, or
(b) A Leased Employee as provided in Section 2.05.
1.24 ENROLLED ACTUARY. "Enrolled Actuary" means the enrolled actuary as
defined by Section 103(a)(4)(A) of ERISA, engaged by the Committee or the
Company as the Plan's enrolled actuary.
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1.25 ERISA. "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
1.26 FINAL AVERAGE EARNINGS. "Final Average Earnings" means:
(a) For each Participant who has a Severance with at least five
consecutive full years of Benefit Service within the 10-year period
ending on the date of such Severance, the average monthly
Compensation received by such Participant during the highest paid
consecutive five full years of Benefit Service within such 10-year
period;
(b) For each Participant who has a Severance with at least five full
years of Benefit Service (but not with five consecutive full years
of Benefit Service) within the 10-year period ending on the date of
such Severance, the average monthly compensation received by such
Participant during the highest paid five consecutive full years of
Benefit Service excluding intervening years in which no Benefit
Service was earned within such 10-year period;
(c) For each Participant who has a Severance with less than five full
years of Benefit Service within the 10-year period ending on the
date of such Severance, the average monthly Compensation received
during all years (and fractions thereof) of Benefit Service within
such 10-year period; and
(d) With respect to a Participant described in subsection (a) or (b), if
the Compensation received by the Participant during the Plan Year in
which his most recent Severance occurs is not utilized in
determining Final Average Earnings under the provisions of such
subsection (a) or (b), and if such Compensation exceeds the
Compensation received by the Participant during any other year of
Benefit Service which is utilized in determining Final Average
Earnings under the provisions of subsection (a) or (b), then the
Compensation received by the Participant during such other year of
Benefit Service shall be increased by such excess for purposes of
determining Final Average Earnings.
(e) Notwithstanding the foregoing, effective for benefits accruing with
respect to Plan Years beginning after December 31, 1988, "Final
Average Earnings" shall mean Final Average Compensation, as defined
in Section 40l(l)(5)(D) of the Code.
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(f) Notwithstanding anything herein to the contrary, Compensation earned
after December 31, 1994 shall be excluded from any computation of
Final Average Earnings.
1.27 INCLUDABLE COMPENSATION. "Includable Compensation" means an
Employee's total wages from Participating Companies or other Affiliated
Companies as determined for purposes of Internal Revenue Service Form W-2,
excluding, however:
(a) Moving expense reimbursements that are deductible by the Employee
under Section 217 of the Code,
(b) Company and Affiliated Company contributions to a simplified
employee pension plan to the extent such contributions are deductible by the
Employee and Company and Affiliated Company contributions to any other plan of
deferred compensation that, before the application of Section 5.04, are not
includable in the Employee's gross income,
(c) Distributions to the Employee from any plan of deferred compensation
other than an unfunded, nonqualified plan of deferred compensation,
(d) Amounts realized from the exercise of a nonqualified stock option,
(e) Amounts realized under Section 83 of the Code with respect to
restricted property that becomes freely transferable or is no longer subject to
a substantial risk of forfeiture,
(f) Amounts realized from the disposition of stock acquired under a
qualified stock option within the meaning of Section 422 of the Code, and
(g) Any other amounts which receive special tax benefits within the
meaning of Section l.4l5-2(d)(2) of the Treasury Regulations.
1.28 INVESTMENT ADVISORY COMMITTEE. "Investment Advisory Committee" means
the Investment Advisory Committee appointed and acting pursuant to the
provisions of Article XI.
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1.29 INVESTMENT MANAGER. "Investment Manager" means a person or
organization (other than the Committee or the Trustee):
(1) Which the Committee has appointed to manage, invest and reinvest all
or a portion of the assets of the Trust Fund;
(2) Which is
(A) Registered as an investment advisor under the Investment
Advisors Act of 1940,
(B) A bank as defined in said Act, or
(C) An insurance company qualified to manage, acquire or dispose
of the assets of a pension plan under the laws of more than
one state; and
(3) Which has acknowledged in writing to the Committee and the Trustee
that such person or organization is a fiduciary within the meaning
of Section 3(21) of ERISA with respect to the assets of the Trust
Fund under its management and control.
1.30 LEASED EMPLOYEE. "Leased Employee" means a person described in
Section 2.05(a).
1.31 LIMITATION YEAR. "Limitation Year" means the 12-consecutive month
period used by a Qualified Plan for purposes of computing the limitations on
benefits and annual additions under Section 415 of the Code. The Limitation Year
for this Plan is the Plan Year. If the Limitation Year is amended to a different
12-consecutive-month period, the new Limitation Year shall begin on a date
within the Limitation Year in which the amendment is made.
1.32 MINIMUM ACCRUAL. "Minimum Accrual" means the Minimum Accrual in a
Top-Heavy Plan computed under Section 9.04.
1.33 MINIMUM BENEFIT. "Minimum Benefit" means the Minimum Benefit in a
Top-Heavy Plan computed under Section 9.04.
1.34 NORMAL BENEFIT COMMENCEMET DATE. "Normal Benefit Commencement Date"
means the first day of the first month following a Participant's attainment of
Normal Retirement Age.
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1.35 NORMAL RETIREMENT AGE. "Normal Retirement Age" means the date on
which a Participant attains age 65. Notwithstanding the foregoing, effective
with respect to Participants who are hired by a Participating Company after
attaining age 60 and after December 31, 1988, "Normal Retirement Age" means the
fifth anniversary of the date on which such a Participant became a Participant
in the Plan.
1.36 NORMAL RETIREMENT BENEFIT. "Normal Retirement Benefit" means the
retirement benefit derived from Participating Company contributions payable as
of Normal Retirement Age to a Participant who has a Severance on his Normal
Retirement Age, determined in accordance with Section 5.03(a).
1.37 ONE YEAR BREAK IN SERVICE. "One Year Break in Service" means a 12-
consecutive-month period commencing on the date of an Employee's Severance, or
any anniversary thereof, in which the Employee completes less than one Day of
Service
1.38 PARTICIPANT. "Participant" means an Employee or former Employee who
has met the applicable eligibility requirements of Article II and who has not
yet received a distribution of the entire amount of his vested interest in the
Plan.
A Participant shall be treated as benefiting under the Plan for any Plan
Year during which such Participant accrues a benefit or is deemed to have
accrued a benefit in accordance with Income Tax Regulation Section 1.410(b)-
3(a).
1.39 PARTICIPATING COMPANY. "Participating Company" means the Company,
each Affiliated Company that has adopted the Plan in the manner provided in
Article XIV and each organizational unit of the Company or an Affiliated Company
that is designated as a Participating Company by the Board of Directors of the
Company or the Affiliated Company; excluding, however, each organizational unit
of the Company or any Affiliated Company that has adopted the Plan that is
designated as a nonparticipating unit by the Board of Directors of the Company
or such Affiliated Company. For purposes of the Plan the term "organizational
unit" shall include, without limitation, any division, department plant or
office of the Company or any Affiliated Company.
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1.40 PLAN. "Plan" means the Whittaker Corporation Employees' Pension Plan
(formerly the Whittaker Corporation Basic Pension Plan) first executed by the
Company on February 16. 1968, as amended from time to time.
1.41 PLAN YEAR. "Plan Year" means the period with respect to which the
records of the Plan are maintained, which shall be the 12-month period beginning
on January 1 and ending on December 31, and includes such periods prior to the
Effective Date.
1.42 QUALIFIED JOINT AND SURVIVOR ANNUITY. "Qualified Joint and Survivor
Annuity" means a monthly annuity paid directly from the Trust Fund or through
the purchase of a nontransferable annuity contract for the life of a Participant
and, after his death, a monthly survivor annuity for the life of such
Participant's spouse which shall be equal to 50% of the amount of the monthly
annuity payable during the joint lives of the Participant and his spouse, which
shall be the Actuarial Equivalent of the benefit provided to an unmarried
Participant.
1.43 QUALIFIED PLAN. "Qualified Plan" means an employee benefit plan that
is qualified under Section 401(a) of the Code.
1.44 QUALIFIED PRE-RETIREMENT SURVIVOR ANNUITY. "Qualified Pre-retirement
Survivor Annuity" means a monthly annuity paid directly from the Trust Fund or
through the purchase of a nontransferable annuity contract for the life of the
surviving Eligible Spouse of a deceased Participant equal to 50% of the monthly
annuity that the Participant would have received under a Straight-Life Annuity
determined under Section 5.05(c)(3).
1.45 SEVERANCE. "Severance" means an Employee's voluntary or involuntary
termination of employment with the Company and all Affiliated Companies for any
reason at any time. Notwithstanding the foregoing, if an Employees employment
with the Company and all Affiliated Companies is suspended due to the
commencement of a leave of absence or a layoff which lasts for a continuous
period of at least one year, such Employee shall be deemed to have a Severance
on the one-year anniversary of the date on which such leave of absence or layoff
commenced.
1.46 SOCIAL SECURITY BENEFIT. "Social Security Benefit" means the
estimated monthly primary benefit payable to a Participant under the Social
Security Act determined as of the time of his Severance. However:
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(a) In the event that a Participant has a Severance prior to his
attainment of Social Security Retirement Age, the Participant's
Social Security Benefit shall be the benefit which he would have
received at Social Security Retirement Age had he continued to
receive Compensation treated as wages for purposes of the Social
Security Act until such age at the same rate that he received such
Compensation during the last full year of employment prior to the
date of his Severance (and based upon the level of Social Security
Benefits in effect at the time of such Severance).
(b) Each Participant shall be informed in writing of his right to supply
his actual compensation history and of the financial consequences of
failing to supply such history. This notice shall be given each time
a copy of the Summary Plan Description is provided to the
Participant, and shall also be given to the Participant upon his
Severance. The notice shall state that the Participant may obtain
his actual compensation history from the Social Security
Administration.
(c) If the Participant supplies his actual compensation history, the
calculation of his Social Security Benefit shall be based on such
data rather than using an estimated compensation history. This data
must be provided to the Committee no later than the expiration of a
reasonable period of time (determined in accordance with Committee
rules) following the later of:
(1) The Participant's Severance, or
(2) The date on which the Participant is notified of the benefit
to which he is entitled.
(d) Estimated compensation may be used only for years prior to the
Participant's employment commencement date.
1.47 SOCIAL SECURITY RETIREMENT AGE. "Social Security Retirement Age"
means the age used as the retirement age under Section 216(1) of the Social
Security Act, except that such Section shall be applied:
(a) Without regard to the age increase factor, and
(b) As if the early retirement age under Section 216(1) of such Act were
62.
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1.48 TOP-HEAVY PLAN. "Top-Heavy Plan" means a Top-Heavy Plan as defined
in Article IX.
1.49 TRUST AGREEMENT. "Trust Agreement" means the Trust Agreement
executed by the Company and the Trustee, which established a Trust Fund to
provide for the investment, reinvestment, administration and distribution of
contributions made under the Plan and the earnings thereon, as amended from time
to time.
1.50 TRUST FUND. "Trust Fund" means the assets of the Plan held by the
Trustee pursuant to the Trust Agreement.
1.51 TRUSTEE. "Trustee" means the one or more individuals or
organizations who have entered into the Trust Agreement as Trustee(s), and any
duly appointed successor.
1.52 VESTED SERVICE. "Vested Service" means the number of years of Vested
Service determined according to this Section 1.52.
(a) An Employee shall be deemed to accrue a full year of Vested Service
for each Plan Year during which he completes at least 365 Days of
Service as an Employee. In addition, an Employee shall be deemed to
accrue a fractional year of Vested Service in any Plan Year in which
he completes one or more but less than 365 Days of Service as an
Employee. Such fractional year of Vested Service shall be computed
by dividing the number of Days of Service completed by the Employee
during such calendar year by 365.
Notwithstanding any other provision of the Plan to the contrary, for
purposes of determining Vested Service pursuant to this subsection
(a), the following additional rules shall apply:
(1) Vested Service shall not include any period of service
disregarded under the provisions of Section 7.02.
(2) Vested Service shall not include any period of service prior
to January 1, 1985 which would not be taken into account
under the provisions of this Plan as in effect prior to such
date with respect to breaks in service.
(b) Notwithstanding the provisions of subsection (a), the Vested Service
of an individual who commenced participation in the Plan prior to
January 1, 1985 shall
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be determined in accordance with the provisions of the Plan as it
existed on December 31, 1984 if the Vested Service of such
individual as so determined exceeds the Vested Service of such
individual determined under the provisions of subsection (a).
(c) Vested Service shall continue to accrue notwithstanding the fact
that Benefit Service ceased to accrue on December 31, 1994.
1.53 WELFARE BENEFIT FUND. "Welfare Benefit Fund" means an organization
described in paragraph (7), (9), (17) or (20) of Section 501(c) of the Code, a
trust, corporation or other organization not exempt from federal income tax, or
to the extent provided in Treasury Regulations, any account held for an employer
by any person, which is part of a plan of an employer through which the employer
provides benefits to employees or their beneficiaries, other than a benefit to
which Code Sections 83(h), 404 (determined without regard to Section 404(b)(2))
or 404A applies, or to which an election under Code Section 463 applies.
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ARTICLE II
ELIGIBILITY TO PARTICIPATE
2.01 INITIAL ELIGIBILITY TO PARTICIPATE. Subject to the provisions of
this Article II, each Employee who was a Participant in the Plan on December 31,
1993 shall be a Participant as of the Effective Date, if he is then employed by
a Participating Company.
2.02 SUBSEQUENT ELIGIBILITY TO PARTICIPATE. Each Employee of a
Participating Company who is not otherwise a Participant in the Plan on the
Effective Date shall become a Participant on the first year anniversary of his
date of hire by the Company or any Affiliated Company, if:
(a) Such Employee has attained age 21 on or before such date;
(b) Such Employee completed at least 365 Days of Service during the 12-
consecutive-month period beginning on such date of hire; and
(c) Such Employee is employed by a Participating Company on the first
year anniversary of such date of hire. If an Employee fails to
qualify under the preceding sentence, the Employee shall become a
Participant on the first day on which he is employed by a
Participating Company, is at least age 21 and has completed at least
365 Days of Service.
2.03 EXCLUSIONS FROM PARTICIPATION.
(a) COLLECTIVE BARGAINING EMPLOYEES. An Employee who would otherwise be
eligible to participate in the Plan shall not become a Participant
if he is covered by a collective bargaining agreement that does not
expressly provide for participation in the Plan, provided that the
representative of the Employees with whom the collective bargaining
agreement is executed has had an opportunity to bargain concerning
retirement benefits for such Employees. An Employee who is
ineligible to participate in the Plan solely by reason of this
paragraph shall become a Participant on the first day after he is no
longer covered by such a collective
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bargaining agreement on which he completes at least one Day of
Service with a Participating Company.
(b) NONPARTICIPATING AFFILIATED COMPANIES AND UNITS. An Employee who is
otherwise eligible to participate in the Plan but who is employed by
a nonparticipating unit of a Participating Company or by an
Affiliated Company that is not a Participating Company shall not
become a Participant until the date on which he completes at least
one Day of Service with a Participating Company.
(c) LEAVES OF ABSENCE OR LAYOFFS. An Employee who is otherwise eligible
to participate in the Plan but who is then on an approved leave of
absence without pay, on layoff or in the service of the armed forces
of the United States shall not become a Participant until the date
on which he completes at least one Day of Service with a
Participating Company, provided that the Employee returns to
employment with the Company or an Affiliated Company immediately
following such leave of absence or layoff or, in the case of an
Employee who is on military leave, during the period in which his
reemployment rights are guaranteed by law.
(d) NONRESIDENT ALIENS. An Employee who would otherwise be eligible to
participate in the Plan shall not become a Participant if he is a
nonresident alien who receives no earned income (within the meaning
of Section 9ll(d)(2) of the Code) from the Company or any Affiliated
Company which constitutes income from sources within the United
States (within the meaning of Section 861(a)(3) of the Code), until
the date on which he receives such earned income from a
Participating Company.
(e) LEASED EMPLOYEES. An Employee who is a Leased Employee within the
meaning of Section 2.05(a) shall be ineligible to participate in the
Plan.
(f) EXCLUSION AFTER PARTICIPATION. A Participant who becomes ineligible
under this Section shall continue to receive credit for Days of
Service and Vested Service for purposes of determining vesting under
Section 7.01, but during the period of such ineligibility, such
Participant's Compensation, Days of Service and Benefit Service
shall not be taken into account for purposes of determining his
retirement benefits under the Plan.
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2.04 PARTICIPATION FOLLOWING A SEVERANCE.
(a) SEVERANCE PRIOR TO PARTICIPATION. If an Employee who is eligible to
participate under Section 2.02 has a Severance before becoming a
Participant and is reemployed by the Company or any Affiliated
Company before incurring the number of consecutive One Year Breaks
in Service specified in the following sentence he shall become a
Participant on the later of the date initially determined under the
provisions of Section 2.02, or the date he is entitled to be
credited with one or more Days of Service by a Participating Company
after reemployment. An Employee who has a Severance before becoming
a Participant, and who is reemployed by the Company or any
Affiliated Company after incurring a number of consecutive One Year
Breaks in Service equal to the greater of five or the aggregate
number of years of Benefit Service which he completed before such
One Year Breaks in Service, shall be treated as a new Employee for
purposes of the Plan and his Days of Service completed prior to such
One Year Breaks in Service shall be disregarded for purposes of
determining the amount of the Employee's Benefit Service and when
the Employee will become a Participant after his reemployment. The
aggregate number of years of Benefit Service shall not include any
years of Benefit Service with respect to which Days of Service of
the Employee are disregarded under this Section by reason of his
prior One Year Breaks in Service.
(b) SEVERANCE FOLLOWING PARTICIPATION.
(1) A Participant who has a Severance and who has a
nonforfeitable right to his Normal Retirement Benefit at the
time of his Severance shall be eligible for participation
immediately upon his reemployment by a Participating Company.
(2) A Participant who does not have a nonforfeitable right to his
Normal Retirement Benefit upon his Severance and who is
reemployed by the Company or any Affiliated Company before
incurring the number of consecutive One Year Breaks in
Service specified in paragraph (3) shall be
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eligible for participation on the date he completes one or
more Days of Service with a Participating Company.
(3) A Participant who does not have any nonforfeitable right to
his Normal Retirement Benefit upon his Severance and who is
reemployed by the Company or any Affiliated Company after
incurring a number of consecutive One Year Breaks in Service
equal to the greater of five or the aggregate number of years
of Benefit Service which he completed before such One Year
Breaks in Service shall be treated as a new Employee for
purposes of the Plan and his Days of Service completed prior
to such One Year Breaks in Service shall be disregarded for
purposes of determining the amount of the Employee's Benefit
Service and when the Employee will become a Participant after
his reemployment. The aggregate number of years of Benefit
Service shall not include any years of Benefit Service with
respect to which Days of Service of the Employee are
disregarded under this Section by reason of his prior One
Year Breaks in Service.
2.05 LEASED EMPLOYEES.
(a) DEFINITIONS. A "Leased Employee" means any person (other than an
Employee defined under Section 1.23(a)) who, pursuant to an
agreement between the Company or any Affiliated Company
("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.
(b) INCLUSION AS EMPLOYEE. A Leased Employee shall be treated as an
Employee of the Recipient. However, contributions to or benefits
under a Qualified Plan provided by the Leasing Organization which
are attributable to the services performed for the Recipient shall
be treated as if they had been provided by the Recipient.
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(c) EXCEPTION. Subsection (b) shall not apply to any Leased Employee if
such employee is covered by a money purchase pension plan sponsored
by the Leasing Organization providing
(1) A nonintegrated employer contribution rate of at least 10% of
compensation,
(2) Immediate participation for all employees of the Leasing
Organization other than employees who perform substantially
all of their services for the Leasing Organization and
employees whose compensation from the Leasing Organization in
each plan year during the four-year period ending with the
plan year is less than $1,000, and
(3) Full and immediate vesting, and
if all Leased Employees constitute less than 20% of the Recipient's
non-highly compensated work force within the meaning of Section
4l4(n)(5)(C)(ii) of the Code.
2.06 PARTICIPATION FREEZE. Notwithstanding any other provision of the
Plan to the contrary, any Employee who is not a Participant on October 31, 1994
shall not become a Participant thereafter.
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ARTICLE III
PARTICIPANT CONTRIBUTIONS
3.01 PARTICIPANT CONTRIBUTIONS PROHIBITED. The Plan shall not accept any
Participant contributions that are accounted for separately or any other
Participant contributions.
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ARTICLE IV
PARTICIPATING COMPANY CONTRIBUTIONS
4.01 AMOUNT OF CONTRIBUTION. The Company shall pay to the Trustee for
each Plan Year the amount, if any, necessary to provide the benefits under
Article V and, if applicable, Article IX with respect to Top-Heavy Plans, as
determined by the Enrolled Actuary, subject to the Company's right to amend or
terminate the Plan under Articles XII and XIII. Any actuarial gains arising from
actual experience under the Plan will be used to reduce future Company
contributions and will not be used to increase any benefits payable under the
Plan. (All contributions will be made on the condition that they are deductible
under Section 404 of the Code.)
4.02 TIME OF PAYMENT. The contributions for a Plan Year to be made by the
Company pursuant to this Article IV shall be paid to the Trustee not later than
the date permitted under Section 412 of the Code and regulations thereunder for
purposes of determining credits to the funding standard account for such Plan
Year, unless a waiver of the minimum funding standard for such Plan Year has
been obtained by the Company from the Internal Revenue Service. The timing of
all contributions shall be entirely discretionary with the Company except that
the Company shall make contributions no less frequently than quarterly and/or in
lesser amounts than required pursuant to Code Section 412(m). Notwithstanding
anything herein to the contrary any required quarterly contribution shall always
be conditional upon its deductibility under Section 404 of the Code.
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ARTICLE V
RETIREMENT BENEFITS
5.01 SEVERANCE ON OR AFTER NORMAL RETIREMENT AGE.
(a) NORMAL RETIREMENT. A Participant who has a Severance upon his
attainment of Normal Retirement Age shall be entitled to receive a
retirement benefit commencing on his Normal Benefit Commencement
Date equal to his Normal Retirement Benefit. The amount of the
Participant's Normal Retirement Benefit shall be determined under
Section 5.03(a).
(b) LATE RETIREMENT. A Participant who remains or again becomes an
Employee after his attainment of Normal Retirement Age shall be
entitled to receive a retirement benefit commencing on the first day
of the month immediately following the date of his Severance. The
amount of the Participant's late retirement benefit shall be
determined under Section 5.03(e).
5.02 SEVERANCE BEFORE NORMAL RETIREMENT AGE.
(a) EARLY RETIREMENT. Subject to the requirements of Section 5.05, if a
Participant who has completed at least 10 years of Vested Service
has a Severance prior to his attainment of Normal Retirement Age for
any reason other than death or Disability, he shall be entitled,
upon the later of his Severance or his attainment of Early
Retirement Age, to receive a retirement benefit equal to his Accrued
Benefit determined as of the date of his Severance and payable on
his Normal Benefit Commencement Date.
If the Participant elects to begin receiving his retirement benefit
as of the first day of any month before he attains Normal Retirement
Age, the amount of the benefit shall be equal to the amount
determined under Section 5.03(a), reduced as follows:
(1) If the Participant elects to receive his retirement benefit
commencing on or after the first day of the month next
following his sixty-second birthday, then the reduction shall
be 0.25% for each full month by which the date of
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commencement of such benefit precedes the first day of the
month next following his attainment of Normal Retirement Age.
(2) If the Participant elects to receive his retirement benefit
commencing prior to the first day of the month next following
his sixty-second birthday, then the reduction shall be 9.00%
plus 0.50% for each full month by which the date of
commencement of such benefit precedes the first day of the
month next following his sixty-second birthday.
Notwithstanding the foregoing, effective with respect to
Employees who became Participants after attaining age 60 and
before January 1, 1989, if such a Participant elects to begin
receiving his retirement benefit at any time prior to the
first day of the month next following the fifth anniversary
of the date on which he became a Participant the amount of
any benefit payable to such Participant that accrued after
December 31, 1988 shall be reduced 0.25% for each full month
by which the date of commencement of such benefit precedes
the first day of the month next following the fifth
anniversary of the date on which he became a Participant in
the Plan.
(b) DEFERRED VESTED BENEFIT. Subject to the requirements of Section
5.05, if a Participant who has a vested interest in his retirement
benefit has a Severance prior to his attainment of Normal Retirement
Age for any reason other than death or Disability, he shall be
entitled upon his Severance to receive a retirement benefit equal to
his vested Accrued Benefit determined as of the date of his
Severance and payable on his Normal Benefit Commencement Date.
5.03 DETERMINATION OF BENEFIT.
(a) NORMAL RETIREMENT BENEFIT. A Participant's Normal Retirement Benefit
shall be a monthly retirement benefit, commencing on his Normal
Benefit Commencement Date and ending with the last monthly payment
specified in Section 5.05, equal to the sum of (1) and (2) as
adjusted by (3), below.
(1) The amount of the Participant's monthly benefit, if any,
accrued under any predecessor plan which has been amended and
merged into this Plan
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(which shall, in the case of any lump sum benefit provided
under a predecessor plan which has been amended and merged
into this Plan, be the Actuarial Equivalent of such lump sum
benefit).
(2) The greatest of:
(A) The sum of (i) and (ii) below:
(i) The product obtained by multiplying the difference
between 2.00% of the Participant's Final Average
Earnings and 1.50% of the Participant's Social
Security Benefit by the number of the
Participant's years (and fractions thereof) of
Benefit Service (excluding any Benefit Service
after December 31, 1988), and
(ii) The sum of (x) and (y) below:
(x) The product obtained by multiplying 1.30% of
the Participant's Final Average Earnings by
the number of the Participant's years (and
fractions thereof) of Benefit Service
(excluding any Benefit Service before
January 1, 1989), and
(y) The product obtained by multiplying .55% of
the Participant's Excess Final Average
Earnings by the number of the Participant's
years (and fractions thereof) of Benefit
Service (excluding any Benefit Service before
January 1, 1989, and excluding any Benefit
Service in excess of 35 years minus the
number of years and fractions thereof before
January 1, 1989);
(B) The product of $10.50 multiplied by the number of years
(and fractions thereof) of Benefit Service of the
Participant; or
(C) The amount of the Participant's monthly benefit, if any,
accrued under the provisions of this Plan prior to
January 1, 1980.
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(3) For Plan Years beginning on or after January 1, 1994, the
amount of each affected Participant's Accrued Benefit
impacted by the $150,000 Compensation limitation shall be
governed by the rule that each Section 401(a)(17) Employee's
Accrued Benefit under this Plan will be the greater of the
Accrued Benefit determined for the Employee under A or B
below:
(A) The Employee's Accrued Benefit determined with respect
to the benefit formula applicable for the Plan Year
beginning on or after January 1, 1994, as applied to the
Employee's total years of Benefit Service taken into
account under the Plan; or
(B) The sum of:
(i) The Employee's Accrued Benefit as of the last day
of the last Plan Year beginning before January 1,
1994, frozen in accordance with Section
1.401(a)(4)-13 of the regulations; and
(ii) The Employee's Accrued Benefit determined under
the benefit formula applicable for the Plan Year
beginning on or after January 1, 1994, as applied
to the Employee's years of Benefit Service
credited to the Employee for Plan Years beginning
on or after January 1, 1994.
A Section 401(a)(17) Employee means an Employee whose current
Accrued Benefit as of a date on or after the first day of the
first Plan Year beginning on or after January 1, 1994 is
based on Compensation for a Plan Year beginning prior to the
first day of the first Plan Year beginning on or after
January 1, 1994, that exceeded $150,000.
Notwithstanding any other provision of the Plan to the contrary, if
a collective bargaining agreement which provides for participation
in this Plan by covered Employees expressly provides for a different
determination of a Participant's monthly retirement benefit under
the Plan than that provided in subparagraph (B), such different
determination shall be made in lieu of that provided in subparagraph
(B).
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In the event that, while a Participant is receiving a retirement
benefit under the Plan, such Participant also receives a payment or
payments pursuant to a workers' compensation, occupational disease
or similar law of the United States or of any State thereof, then,
to the extent that such workers' compensation, occupational disease
or similar benefits have been provided by premiums, taxes or other
payments paid by or at the expense of the Company or any Affiliated
Company, the monthly retirement benefit payable hereunder to such
Participant shall be reduced by the amount of such payment or
payments. If a workers' compensation, occupational disease or
similar benefit is paid on a lump sum basis, the amount of such lump
sum payment shall be deducted from the monthly retirement benefit
payable hereunder until the entire amount of such lump sum payment
shall have been liquidated. A payment or payments shall be
considered to be made under a workers' compensation, occupational
disease or similar law without regard to whether such payment or
payments are made pursuant to an award or a settlement.
Notwithstanding the foregoing, no reduction in a Participant's
retirement benefit shall be made pursuant to this paragraph on
account of payments specifically allocated for hospitalization,
medical or legal expenses In addition notwithstanding the foregoing,
this paragraph shall not be applied so as to cause a reduction in
any Participant's retirement benefit below the level of benefits to
which he would have been entitled had he not been credited with a
Day of Service on or after January 1, 1981. For purposes of this
paragraph, Social Security Disability Benefits shall not be
considered payments pursuant to a workers' compensation occupational
disease or similar law.
In no event shall a Participant's Normal Retirement Benefit be less
than the Minimum Benefit to which the Participant may be entitled
under Article IX.
For purposes of this Section, "Excess Final Average Earnings" means
the excess, if any, of a Participant's Final Average Earnings over
the Breakpoint. The "Breakpoint" means, for a Plan Year, the amount
obtained by (1) dividing the contribution and benefit base in effect
under Section 230 of the Social Security Act
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on the first day of such Plan Year by $48,000, (2) multiplying such
quotient by $15,700, and (3) rounding such product to the closest
$100. The Breakpoint for a Plan Year shall apply to all Participants
who retire or otherwise terminate employment during such Plan Year.
(b) SPECIAL RETIREMENT INCENTIVE BONUS.
(1) SECTION 5.03(B) PERSONS. The provisions of this Section
5.03(b) shall apply with respect to all Participants who are
Employees on or after July 1, 1984 and who, taking into
account the provisions of this Section 5.03(b), are eligible
to have a Severance after attaining Early Retirement Age or
Normal Retirement Age provided, however, that the terms of
this Section 5.03(b) shall expire as set forth in Section
5.03(b)(4) on October 31, 1989. The persons described by the
proceeding sentence are hereinafter referred to as "Section
5.03(b) persons."
Notwithstanding any other provision of the Plan to the
contrary, effective January 1, 1986, the terms of this
Section 5.03(b) shall not apply to Employees who had a
Severance prior to January 1, 1986 after attaining Early
Retirement Age or Normal Retirement Age and who are rehired
by the Company or any Affiliated Company on or after such
date. In addition, the terms of this Section 5.03(b) shall be
subject to the requirements of Section 5.05.
(2) SPECIAL BENEFIT BONUS. The monthly amount of the retirement
benefit payable with respect to a Section 5.03(b) person who
has a Severance after attaining Early Retirement Age or
Normal Retirement Age on or after August 1, 1984 shall be
increased over the monthly amount which apart from the
provisions of this Section 5.03(b) would be payable with
respect to such person under the provisions of Sections
5.03(a), 5.03(c), 5.03(d), 5.03(e) or 9.04, whichever is
applicable, by adding to the Section 5.03(b) person's
credited Benefit Service and Vested Service (determined as of
the date of such person's Severance) a fraction, the
numerator of
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which is the Section 5.03(b) person's credited Benefit
Service accrued as of such date, and the denominator of which
is four. In no event, however, shall any Section 5.03(b)
person who was granted Vested Service for service with a
prior employer receive additional Benefit Service or Vested
Service as provided in this Section 5.03(b) for any service
performed for such prior employer. For purposes of the
preceding sentence, the term "prior employer" means. with
respect to any period of service, an employer which was not
an Affiliated Company at the time such service was rendered.
Notwithstanding any of the foregoing, the increased
retirement benefit provided under this Section 5.03(b)(2)
shall not apply to any Employee who was on layoff on
August 1, 1984 and who thereafter did not return to active
employment with the Company or any Affiliated Company.
(3) SPECIAL ADJUSTMENT OF EARLY RETIREMENT REDUCTION FACTOR. For
each year of Benefit Service or portion thereof granted under
this Section 5.03(b), each Section 5.03(b) person shall, for
the purposes of calculating the early retirement reduction
factor as set forth in Section 5.02(a), be deemed to have
attained an age equal to his actual age plus the number of
years or fraction thereof of Benefit Service granted under
the provisions of Section 5.03(b)(2) above in determining
additional Benefit Service and Vesting Service for early or
normal retirement as provided by this Section.
(4) TERM OF SPECIAL RETIREMENT INCENTIVE BONUS. The special
retirement incentive bonus set forth in this Section 5.03(b)
shall apply without reduction for Section 5.03(b) persons who
have a Severance after attaining Early Retirement Age or
Normal Retirement Age between August 1, 1984 and November 1,
1984. For Section 5.03(b) persons with respect to whom such
Severance occurs after November 1, 1984, the additional
Benefit Service, Vesting Service and years of age otherwise
granted by this Section 5.03(b) shall be reduced by 1/60th
for each full or
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partial calendar month after November 1, 1984 through
October 31, 1989, so that a Section 5.03(b) person who
retires on or after October 31, 1989 shall be entitled to no
additional years of Benefit Service Vested Service or years
of age pursuant to the provisions of this Section 5.03(b).
(5) SPECIAL RULES. Notwithstanding any other provision of this
Section 5.03(b) to the contrary, the special Vested Service,
Benefit Service and years of age provided herein shall not be
credited to any Participant until his Severance. In addition,
such Vested Service, Benefit Service and years of age shall
not be taken into account for purposes of any other benefit
plan whatsoever of the Company or any Affiliated Company.
Furthermore, the provisions of this Section 5.03(b) shall not
apply in determining: (A) the amount of a Participant's Final
Average Earnings as provided under Section 1.26 of the Plan;
and (B) whether an Employee is entitled to accelerated
vesting as provided under Section 7.01(d) of the Plan.
(c) SPECIAL TERMINATION PROGRAM BONUS.
(1) APPLICATION. The provisions of this Section 5.03(c) shall
apply to a Participant who elects to receive the increased
retirement benefit under one of the special termination bonus
programs established from time to time by the Company for a
group or classification of Employees that includes the
Participant (hereinafter referred to as a "Termination
Program"). Such a Participant is described in Section
5.03(c)(2) below and the increased retirement benefit is
described in Section 5.03(c)(3). Notwithstanding any other
provision of the Plan to the contrary, the terms of this
Section 5.03(c) shall be subject to the requirements of
Section 5.05.
(2) SECTION 5.03(C) PERSONS. To be eligible for the increased
retirement benefit established by a Termination Program and
described in Section 5.03(c)(3) below a Participant must meet
each of the following
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requirements (such a Participant is hereinafter referred to
as a "Section 5.03(c) person"):
(A) The person must be an Employee who, on or after the cut-
off date specified with respect to the applicable
Termination Program, was on the payroll and was among
the group or classification of Employees designated by
the Committee as eligible to participate in such
Termination Program. Employees who would be on that
payroll on or after that date but for an unpaid leave of
absence of less than six months as of that date shall
also be eligible.
(B) The person must voluntarily incur a Severance by
executing the specific form provided to the person for
that purpose and filing it with the appropriate
representative of the Company by the filing date
specified with respect to the applicable Termination
Program. Persons who transfer to other positions with
the Company or an Affiliated Company or successor
thereto will not be considered as having incurred a
Severance for purposes of this Section 5.03(c).
(C) The persons resignation and Severance must not be
revoked prior to the applicable filing date.
(D) The person's resignation and Severance must be accepted
by the Company or the Affiliated Company then employing
the person.
(E) The person must agree, by executing the Severance form
provided, to accept benefits under the applicable
Termination Program in lieu of pursuing any claims he
may have against the Company or any Affiliated Company
arising from his Severance.
(F) The person must actually terminate employment with the
Company and all Affiliated Companies on the date
established pursuant to the applicable Termination
Program (which date is hereinafter referred to as the
"Scheduled Termination Date").
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(3) INCREASED RETIREMENT BENEFITS. The Accrued Benefit of a
Section 5.03(c) person shall be increased by crediting the
person with five additional years of Benefit Service and
Vested Service and by deeming the person's actual
chronological age to be increased by five years. The minimum
increase in a covered Participant's Accrued Benefit (before
application of the increase in Vested Service) shall be equal
to $200 per month payable at Normal Retirement Age in the
Participant's normal form of benefit under Section 5.05. The
foregoing increases shall be calculated as of the Section
5.03(c) person's Scheduled Termination Date. The increase in
age described in this Section 5.03(c) shall be applied
without regard to any increase in age to which a Section
5.03(c) person may also be entitled under Section 5.03(b).
(4) FINAL AVERAGE EARNINGS. In calculating the Final Average
Earnings of a Section 5.03(c) person, the person's
Compensation for the Plan Year in which his Scheduled
Termination Date occurs shall include the Compensation he
would have earned had such Date occurred on the last day of
that Plan Year. In addition, a Section 5.03(c) person's
annualized Compensation for the period beginning on his
Scheduled Termination Date and ending on the last day of the
Plan Year including such date shall be taken into account in
calculating his Final Average Earnings.
(5) BENEFIT SERVICE. A Section 5.03(c) person's Benefit Service
shall be calculated in accordance with Section 1.08 but
taking into account the period beginning on his attainment of
Normal Retirement Age and ending on his Scheduled Termination
Date.
(6) RETURN TO EMPLOYMENT. If a Section 5.03(c) person again
becomes an Employee after his Scheduled Termination Date, his
Accrued Benefit under the Plan at any time thereafter shall
be the greater of the following:
(A) The person's Accrued Benefit calculated without regard
to this Section 5.03(c);
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(B) The person's Accrued Benefit calculated at his Scheduled
Termination Date, taking into account this Section
5.03(c).
Notwithstanding the foregoing, if the Section 5.03(c) person
again terminates employment before his attainment of Normal
Retirement Age, the reductions under Section 5.02 for the
early commencement of retirement benefits shall only apply to
the portion, if any, of the Section 5.03(c) person's Accrued
Benefit which exceeds his Accrued Benefit calculated at his
Scheduled Termination Date, taking into account this Section
5.03(c).
(7) NONDISCRIMINATORY BENEFITS. Notwithstanding the foregoing
provisions of this Section 5.03(c), no Termination Program
shall be implemented unless such Termination Program benefits
a group or classification of Employees that does not
discriminate in favor of highly compensated employees within
the meaning of Section 414(q) of the Code.
(d) CHANGE OF CONTROL.
(1) APPLICATION. The provisions of this Section 5.03(d) shall
provide a Participant described in Section 5.03(d)(2) below
with the increased retirement benefits described in Section
5.03(d)(4) below. Notwithstanding any other provision of the
Plan to the contrary, the terms of this Section 5.03(d) shall
be subject to the requirements of Section 5.05.
(2) SECTION 5.03(D) PERSONS. To be eligible for the increased
retirement benefits described in Section 5.03(d)(4) below, a
Participant must meet each of the following requirements
(such a Participant is hereinafter referred to as a "Section
5.03(d) person").
(A) The person must be an Employee who, on or after
September 9, 1986, is on the payroll and is among the
group or classification of Employees designated by the
Committee as eligible to receive increased retirement
benefits under this Section 5.03(d). Employees
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who would be on that payroll on or after that date but
for an unpaid leave of absence shall also be eligible.
(B) A Change of Control of the Company must occur on or
after September 9, 1986.
(C) The person must not be receiving or entitled to receive
an increased retirement benefit under Section 5.03(c).
(3) CHANGE OF CONTROL. A "Change of Control" of the Company shall
occur upon the earliest of the following events.
(A) Any "person" or "group" is or becomes (other than
pursuant to a transaction or agreement approved by the
Board prior to the acquisition of such status) the
"beneficial" owner (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934), directly or
indirectly, of securities representing 50.00% or more of
the combined voting power of the Company's then
outstanding securities having ordinary voting power to
vote in the election of directors; or
(B) During any 12-consecutive-month period commencing before
the date this Section 5.03(d) expires (see Section
5.03(d)(8)), individuals who at the beginning of such
period constituted the Board, plus any additional
individuals who during such period became members of the
Board whose election by the Board or nomination for
election by the Company's stockholders was approved by a
vote of at least a majority of the members of the Board
then still in office who either were members of the
Board at the beginning of the period or whose election
or nomination for election had been so approved, cease
for any reason (other than death, disability or
retirement in accordance with existing Company policy)
to constitute at least a majority of the members of the
Board.
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<PAGE>
(4) INCREASED RETIREMENT BENEFITS. The Accrued Benefit of a
Section 5.03(d) person shall be increased by crediting the
person with five additional years of Benefit Service and
Vested Service and by deeming the person's actual
chronological age to be increased by five years. The
foregoing increases shall be calculated as of the date the
Change of Control occurs. The increase in age described in
this Section shall be applied without regard to any increase
in age to which a Section 5.03(d) person may also be entitled
under Section 5.03(b).
(5) FINAL AVERAGE EARNINGS. In calculating the Final Average
Earnings of a Section 5.03(d) person, the person's
Compensation for the Plan Year in which the Change of Control
occurs shall include the Compensation he would have earned
had the Change of Control occurred on the last day of that
Plan Year.
(6) LIMITATION ON BENEFIT. If, as a result of Section 5.03(d)(4),
a Section 5.03(d) person is or would become a "Disqualified
Individual" as defined in Section 280G of the Code, or any
successor provision thereto, and would be subject to the
imposition of an excise tax pursuant to Section 4999 of the
Code, or any successor provision thereto, then Section
5.03(d)(4) shall be operative only if and to the extent that
the Section 5.03(d) person will not be subject to the
imposition of such excise tax.
(7) AMENDMENT OF SECTION 5.03(D). This Section 5.03(d) may not be
amended in any fashion which has the effect of revoking or
eliminating such Section, unless all Section 5.03(d) persons
consent in writing to such an amendment. The provisions of
this Section 5.03(d) may only be amended by the Board to
clarify any ambiguities hereunder or to increase the
additional retirement benefits provided hereunder.
(8) EXPIRATION OF SECTION. This Section 5.03(d) shall
automatically expire at the close of business on September 9,
1991 if, and only if, no Change of Control occurs prior
thereto.
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<PAGE>
(9) NONDISCRIMINATORY BENEFITS. Notwithstanding the foregoing
provisions of this Section 5.03(d), the provisions hereof
shall not be implemented unless the group or classification
of Employees designated by the Committee as eligible to
receive increased retirement benefits does not discriminate
in favor of highly compensated employees within the meaning
of Section 414(q) of the Code.
(e) RETIREMENT BENEFIT PAYABLE BY REASON OF RETIREMENT ON A POSTPONED
RETIREMENT DATE. Subject to Section 203 of ERISA, if a Participant
continues in active employment after his attainment of Normal
Retirement Age, the Participant's retirement benefit hereunder shall
commence on the first day of the month next following his postponed
retirement date and shall be payable as provided in Section 5.05.
The amount of the retirement benefit to which a Participant may be
entitled upon retirement after his attainment of Normal Retirement
Age shall be computed in accordance with the provisions of Section
5.03(a), based however, upon the Participant's Benefit Service and
Final Average Earnings as of his postponed retirement date.
(f) COORDINATION WITH LIMITATIONS ON CONTRIBUTIONS AND BENEFITS.
Notwithstanding any of the foregoing, in no event shall the amount
of any benefit determined under this Section exceed the maximum
benefit permitted under Section 415 of the Code.
5.04 CODE SECTION 415 LIMITATIONS.
(a) GENERAL LIMITATION. Subject to the provisions of subsections (f),
(g) and (h), a Participant's Accrued Benefit, when expressed as an
Annual Benefit (as hereinafter defined), shall not at any time
during a Plan Year exceed the lesser of: (1) the Defined Benefit
Dollar Limitation applicable to that Plan Year, or (2) 100% of the
Participant's average annual Includable Compensation for his High
Three Years (as hereinafter defined). If a Participant's Accrued
Benefit in any Plan Year would produce an Annual Benefit in excess
of this limitation, the rate of accrual will be reduced so that the
Annual Benefit will equal the maximum permitted amount. If
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<PAGE>
the Participant is, or has ever been, covered under more than one
Defined Benefit Plan maintained by the Company or an Affiliated
Company, the sum of the Participant's Annual Benefits from all such
Defined Benefit Plans may not exceed the limitation provided in this
subsection, and the rate of accrual under this Plan will be reduced,
if necessary, to meet this limitation.
(b) DETERMINATION OF DEFINED BENEFIT DOLLAR LIMITATION.
(1) LIMIT BEFORE ADJUSTMENT. The Defined Benefit Dollar
Limitation applicable to a Plan Year shall be $90,000,
adjusted for years beginning after December 31, 1987 to the
amount determined by the Commissioner of Internal Revenue,
pursuant to the authority of Section 415(d)(l)(A) of the Code
and regulations thereunder, which is made effective as of the
first day of the Plan Year.
(2) ADJUSTMENT FOR BENEFIT COMMENCEMENT DATE BEFORE SOCIAL
SECURITY RETIREMENT AGE. If a Participant's Benefit
Commencement Date is prior to the date on which he attains
Social Security Retirement Age, the Defined Benefit Dollar
Limitation described in paragraph (1) shall, with respect to
that Participant, be decreased so that it is the Actuarial
Equivalent of an annual benefit of $90,000 (adjusted in the
manner described in paragraph (1)) commencing at Social
Security Retirement Age. The adjustment provided for in the
preceding sentence shall be made in a manner prescribed by
the Secretary of the Treasury that is consistent with the
reduction under the Social Security Act of old-age insurance
benefits commencing before normal retirement age.
(3) ADJUSTMENT FOR BENEFIT COMMENCEMENT DATE AFTER SOCIAL
SECURITY RETIREMENT AGE. If a Participant's Benefit
Commencement Date is after the date on which he attains
Social Security Retirement Age, the Defined Benefit Dollar
Limitation described in paragraph (1) shall, with respect to
that Participant, be increased so that it is the Actuarial
Equivalent of an
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<PAGE>
annual benefit of $90,000 (adjusted in the manner described
in paragraph (1)) commencing at Social Security Retirement
Age.
(4) ADJUSTMENT FOR LESS THAN TEN YEARS OF PARTICIPATION. If a
Participant has less than ten years of participation in the
Plan, the Defined Benefit Dollar Limitation applicable to the
Participant's Accrued Benefit shall be adjusted by
multiplying such limitation by a fraction the numerator of
which is the number of the Participant's years of
participation (or portion thereof), and the denominator of
which is ten. For purposes of this paragraph (4), the term
"year of participation" shall have such meaning as is set
forth in regulations published by the Secretary of the
Treasury under Section 415(b) of the Code.
(c) DETERMINATION OF A PARTICIPANTS HIGH THREE YEARS. A Participant's
High Three Years shall be the three consecutive Plan Years of his
employment with the Company or Affiliated Company (or, if he does
not have three consecutive Plan Years of such employment, his
greatest actual number of consecutive Plan Years of such employment)
during which he had the greatest aggregate Includable Compensation.
(d) EXPRESSION OF ACCRUED BENEFIT AS AN ANNUAL BENEFIT.
(1) The term "Annual Benefit" means a benefit which is payable
annually in the form of a straight life annuity with no
ancillary benefits, without regard to benefits attributable
to either Employee contributions or rollover contributions
(as defined in Code Sections 402(a)(5), 403(a)(4) and
408(d)(3)).
(2) If a Participant's Accrued Benefit is payable in any form
other than an Annual Benefit, the limitation set forth in
subsection (a) shall be applied by adjusting the actual form
of that Participant's benefit distribution to an Annual
Benefit, commencing at the same Benefit Commencement Date as
the actual form of his benefit distribution, which is the
Actuarial Equivalent of such actual form.
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<PAGE>
(3) In making the adjustment described in paragraph (2), the
following values shall not be taken into account.
(A) The value of a Qualified Joint and Survivor Annuity;
(B) The value of ancillary benefits that are not directly
related to retirement benefits (including, but not
limited to, pre-retirement disability and death benefits
and post-retirement medical benefits); and
(C) The value of benefits provided by the Plan which reflect
post-retirement cost of living increases to the extent
that such increases are in accordance with Section
415(d) of the Code and Treasury Regulation Section
1.415-5.
(e) LIMITATION ON CERTAIN ASSUMPTIONS.
(1) For purposes of the adjustments described in subsections
(b)(2), (d)(2) and (d)(3), the interest rate assumption shall
not be less than the greater of 5% or the rate specified in
Section 1.02.
(2) For purposes of the adjustment described in subsection
(b)(3), the interest rate assumption shall not be greater
than the lesser of 5% or the rate specified in Section 1.02.
(3) For purposes of the adjustments described in subsections
(b)(2), (b)(3), (d)(2) and (d)(3) no adjustments under
Section 415(d)(l) of the Code shall be taken into account
prior to the year for which such adjustment first takes
effect.
(f) PERMISSIBLE MINIMUM BENEFIT. Notwithstanding the provisions of
subsection (a), but subject to the provisions of subsection (g), a
Participant's Accrued Benefit shall be deemed not to exceed the
limitations of this Section if (1) the benefits actually paid to him
under this Plan and all other Defined Benefit Plans maintained by
the Company or any Affiliated Company do not exceed $10,000 in any
Plan Year, regardless of the Benefit Commencement Date or the form
in which such benefits are paid and (2) he has not at any time
participated in a Defined
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Contribution Plan maintained by the Company or any Affiliated
Company. For purposes of subclause (2), a Participant shall not be
deemed to be participating in a separate Defined Contribution Plan
maintained by the Company or an Affiliated Company solely by reason
of his making Participant contributions to the Plan.
(g) REDUCTION FOR LESS THAN TEN YEARS OF BENEFIT SERVICE. If a
Participant has less than ten years of Benefit Service at his
Benefit Commencement Date, the limitation set forth in subsection
(a) with respect to a Participant's average Includable Compensation
for his High Three Years and the limitation set forth in subsection
(f) shall be reduced by multiplying such limitations by a fraction,
the numerator of which is his years of Benefit Service (or portion
thereof), and the denominator of which is ten.
(h) TRANSITION RULES FOR PRIOR PARTICIPATION.
(1) In the case of an individual who was a participant in one or
more Defined Benefit Plans maintained by the Company or any
Affiliated Company before July 1, 1982, the application of
the limitations of this Section shall not cause the maximum
permissible benefit for such individual under all such
Defined Benefit Plans to be less than the individual's
accrued benefit under all such Defined Benefit Plans as of
the end of the Limitation Year beginning in 1982 determined
without regard to any amendments to such Plans adopted after
July 1, 1982, including optional benefit forms. The preceding
sentence applies only if all such Defined Benefit Plans met
the requirements of Section 415 of the Code, as in effect on
July 1, 1982, for all Limitation Years beginning before
January 1, 1983.
(2) In the case of an individual who was a participant in one or
more Defined Benefit Plans maintained by the Company or any
Affiliated Company before May 6, 1986, the application of the
limitations of this Section shall not cause the maximum
permissible benefit for such individual under all such
Defined Benefit Plans to be less than the individual's
accrued benefit under all such Defined Benefit Plans as of
the end of the Limitation Year
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beginning in 1986 determined without regard to any amendments
to such Plans adopted after May 5 1986, including optional
benefit forms. The preceding sentence applies only if all
such Defined Benefit Plans met the requirements of Section
415 of the Code, as in effect on May 6 1986, for all
Limitation Years beginning before January 1, 1987.
(i) AGGREGATE BENEFIT LIMITATION. If the Company or an Affiliated
Company maintains, or at any time maintained, one or more Defined
Contribution Plans (or, after December 31, 1985, a Welfare Benefit
Fund) covering any Participant in this Plan, the sum of the Defined
Benefit Fraction (defined in paragraph (1)) and the Defined
Contribution Fraction (defined in paragraph (2)) for any Limitation
Year shall equal no more than one (1.0). The current Annual Addition
under the Defined Contribution Plan(s) will be reduced first, and
then the rate of accrual under this Plan will be reduced, if
necessary to meet this limitation.
(1) "Defined Benefit Fraction" shall mean a fraction, the
numerator of which is the Projected Annual Benefit (as
defined in paragraph (5)) of the Participant under all
Defined Benefit Plans maintained by the Company or any
Affiliated Company determined as of the close of the
Limitation Year pursuant to Treasury Regulations under
Section 415 of the Code, and the denominator of which is the
lesser of (A) 140% of the Participant's average Includable
Compensation for his High Three Years adjusted in the manner
set forth in subsection (g), or (B) 125% of the Defined
Benefit Dollar Limitation determined as of the close of the
Limitation Year.
(2) "Defined Contribution Fraction" shall mean a fraction, the
numerator of which is the sum of the Annual Additions
(hereinafter defined) to the Employee's Defined Contribution
Plan accounts for the applicable Limitation Year and each
prior Limitation Year, and the denominator of which is the
sum of the lesser of the following products for each
Limitation Year in which the Employee was an Employee
(regardless of whether a Defined Contribution Plan was in
existence for such Plan Year):
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(A) the Defined Contribution Dollar Limitation effective for
the Limitation Year, multiplied by 125%, or (B) 35% of the
Participant's Includable Compensation for such Limitation
Year.
(3) If the Participant was a participant in one or more Defined
Contribution Plans maintained by the Company or an Affiliated
Company which were in existence on July 1, 1982, the
numerator of the Defined Contribution Fraction will be
adjusted if the sum of this fraction and the Defined Benefit
Fraction would otherwise exceed 1.0 under the terms of this
Plan. Under the adjustment, an amount equal to the product
of: (A) the excess of the sum of the fractions over 1.0,
times (B) the denominator of this fraction, will be
permanently subtracted from the numerator of this fraction.
The adjustment is calculated using the fractions as they
would be computed as of the end of the last Limitation Year
beginning before January 1, 1983. This adjustment will also
be made if at the end of the last Limitation Year beginning
before January 1, 1984, the sum of the fractions exceeds 1.0
because of benefit accruals or annual additions that were
made before the limitations of this Section became effective
to any Qualified Plans of the Company or an Affiliated
Company in existence on July 1, 1982.
(4) If the Participant was a participant in one or more Defined
Contribution Plans that satisfied the requirements of Section
415 of the Code as of the last Limitation Year beginning
before January 1, 1987, an amount shall be subtracted from
the numerator of the Defined Contribution Fraction (not
exceeding such numerator) as prescribed by the Secretary of
the Treasury so that the sum of the Defined Benefit Fraction
and the Defined Contribution Fraction does not exceed 1.0 for
such Limitation Year.
(5) "Projected Annual Benefit" shall mean the Annual Benefit as
defined in subsection (d), to which the Participant would be
entitled under the terms of the Plan assuming:
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(A) The Participant will continue employment until Normal
Retirement Age (or current age, if later); and
(B) The Participant's 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.
(6) For purposes of this subsection, a master or prototype plan
is a Qualified Plan the form of which is the subject of a
favorable opinion letter from the Internal Revenue Service.
(7) "Annual Addition" shall mean, with respect to a Participant
in a Limitation Year, the sum of the following amounts with
respect to all Qualified Plans and Welfare Benefit Funds
maintained by the Company or any Affiliated Company:
(A) The amount of any employer-provided contribution with
respect to the Limitation Year which is allocated to the
Participant's account;
(B) The amount of any forfeitures for the Limitation Year
allocated to the Participant's account;
(C) The amount of a Participant's voluntary nondeductible
contributions for the Limitation Year provided that the
Annual Addition for any Limitation Year beginning before
January 1, 1987 shall not be recomputed to treat all
voluntary nondeductible contributions as an Annual
Addition;
(D) The amount allocated, after March 31, 1984, to an
individual medical account as defined in Section
415(l)(l) of the Code, which is part of a Defined
Benefit Plan maintained by the Company or an Affiliated
Company; and
(E) The amount derived from contributions paid or accrued
after December 31, 1985, in taxable years ending after
such date, which are attributable to post-retirement
medical benefits allocated to the separate account of a
key employee (as defined in Section
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<PAGE>
419A(d)(3) of the Code), under a Welfare Benefit Fund
maintained by the Company or an Affiliated Company.
(j) AGGREGATION OF PLANS. For purposes of this Section, all Defined
Benefit Plans ever maintained by the Company or an Affiliated
Company shall be treated as one Defined Benefit Plan, and all
Defined Contribution Plans ever maintained by the Company or an
Affiliated Company shall be treated as one Defined Contribution Plan
(whether or not any such Qualified Plan was terminated).
(k) LIMITATION ON CERTAIN ADJUSTMENTS. In no event shall the adjustments
of subsections (b)(4) and (g) above reduce the limitations provided
under Sections 415(b)(l) and 415(b)(4) of the Code to an amount less
than one-tenth of the applicable limitations as determined without
such adjustments.
(l) INCORPORATION OF CERTAIN REQUIREMENTS. Notwithstanding any other
provision of the Plan to the contrary, the foregoing limitations
shall be applied in accordance with requirements of Section 415 of
the Code and the Treasury Regulations thereunder, and such Section
and regulations are hereby incorporated by reference.
5.05 FORMS OF RETIREMENT BENEFIT.
(a) UNMARRIED PARTICIPANT. The normal form of payment of retirement
benefits under the Plan for a Participant who is not married on his
Benefit Commencement Date shall be a Straight-Life Annuity
consisting of equal monthly installments payable on the first day of
each month commencing on or immediately following his Benefit
Commencement Date and ending with the monthly payment due
immediately prior to his death. In the event that an unmarried
Participant has a former spouse who pursuant to Section 5.06(b) is
treated as a spouse or surviving spouse such Participant shall be
deemed to be a married Participant hereunder to the extent required
by Section 5.06(b).
(b) MARRIED PARTICIPANT. The normal form of payment of benefits under
the Plan for a Participant who is married on his Benefit
Commencement Date shall be a Qualified Joint and Survivor Annuity,
unless an optional form of benefit is selected
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pursuant to a Qualified Election as defined in Section 5.06(a)
within the 90-day period prior to the date benefits commence.
(c) OPTIONAL FORMS OF RETIREMENT BENEFIT. The optional forms of
retirement benefit under the Plan, each of which shall be the
Actuarial Equivalent of the normal form of benefit under subsection
(a) or (b) above, whichever is applicable, shall be the following:
(1) A 10-Year Certain and Continuous Annuity, under which monthly
benefit payments are made to the Participant during his
lifetime, and if the Participant's death occurs before the
Participant has received 120 monthly payments, monthly
payments shall be continued to his Beneficiary until the
Participant and his Beneficiary have received a total of 120
payments.
(2) A Contingent Annuitant Annuity, under which monthly benefit
payments are made to the Participant during his lifetime and
following his death are continued to his Beneficiary, if the
Beneficiary survives the Participant. in an amount equal to
50% or 100% (as the Participant shall elect) of the monthly
payments to the Participant. If the Participant's Beneficiary
dies after the Benefit Commencement Date, the amount of
monthly payments to the Participant shall not be increased
and shall cease upon his death. For purposes of this optional
form of benefit, a Participant may designate only one
individual as a Beneficiary.
(3) For married Participants, a Straight-Life Annuity, as
described in subsection (a).
(4) With respect to an Employee who was an active participant in
any predecessor plan that was amended and merged into this
Plan and who was entitled to receive a lump sum benefit under
such predecessor plan, a Lump Sum Option, under which the
portion of the Participant's retirement benefit attributable
to his participation in such predecessor plan is paid in a
single sum payment.
V-23
<PAGE>
Each optional form of benefit (other than the Lump Sum Option) shall
be the Actuarial Equivalent of the Participant's normal form of
benefit. The Lump Sum Option shall be the Actuarial Equivalent of
the normal form of benefit of the portion of the Participant's
retirement benefit attributable to his participation in the
applicable predecessor plan. Subject to Section 5.06, a Participant
may elect in writing, on a form provided by the Committee, to have
his monthly retirement benefit paid in one of the optional forms;
provided, however, that the election will be effective only if the
Participant is alive on the date benefits are scheduled to commence
or a single sum payment is scheduled to be made. The period for
making this election shall be for at least 90 days following the
furnishing of all applicable information to the Participant by the
Committee and ending not earlier than 90 days before his Benefit
Commencement Date. Any election made by a Participant under this
Section may be revoked in writing during the election period and
another election may be made during such period. Notwithstanding the
foregoing, the election and revocation of any election must be made
in accordance with rules adopted by the Committee which are not
inconsistent with regulations issued in accordance with ERISA and
the Code.
5.06 SPECIAL ANNUITY PROVISIONS.
(a) QUALIFIED ELECTION. For purposes of Section 5.05(b), "Qualified
Election" means a waiver of a Qualified Joint and Survivor Annuity
which meets the requirements of this subsection. The waiver must be
in writing, must be consented to by the Participant's spouse, must
designate a Beneficiary (if other than the consenting spouse) and
must select an optional form of benefit in accordance with Section
5.05. The spouse's consent to a waiver must be witnessed by a Plan
representative or notary public. Notwithstanding this consent
requirement, if the Participant establishes to the satisfaction of a
Plan representative that such written consent may not be obtained
because there is no spouse or the spouse cannot be located, a waiver
will be deemed a Qualified Election. Any consent necessary under
this provision will be valid only with respect to the spouse who
signs the
V-24
<PAGE>
consent, or in the event of a deemed Qualified Election, the
designated spouse. 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. However, a Participant whose spouse has
consented to a Qualified Election may not change the optional form
of benefits or elect an optional form following his revocation of
the Qualified Election without spousal consent unless the Qualified
Election expressly acknowledges the spouse's right to limit consent
to a single election but expressly permits the Participant to elect
optional forms of benefit without any further consent of the spouse.
Notwithstanding the foregoing or any other provision of the Plan to
the contrary, a Participant may elect to receive his retirement
benefit in the form of a Contingent Annuitant Annuity described in
Section 5.05(c)(2) without the consent of his spouse, provided his
spouse is designated as the Beneficiary under such optional form of
benefit.
(b) CERTAIN SPOUSES. A former spouse will be treated as the spouse or
surviving spouse of a Participant to the extent provided under a
qualified domestic relations order as described in Section 414(p) of
the Code.
(c) NOTICE REQUIREMENTS. In the case of a Qualified Joint and Survivor
Annuity, the Committee shall provide each Participant within a
reasonable period prior to the commencement of benefits a written
explanation of: (1) the terms and conditions of a Qualified Joint
and Survivor Annuity, (2) the Participant's right to make and the
effect of an election to waive the Qualified Joint and Survivor
Annuity form of benefit, (3) the rights of a Participant's spouse,
and (4) the right to make, and the effect of, a revocation of a
previous election to waive the Qualified Joint and Survivor Annuity.
5.07 RULES GOVERNING DISTRIBUTIONS.
(a) COMMENCEMENT OF BENEFITS. Unless the Participant elects otherwise in
writing, distribution of benefits will begin no later than the 60th
day after the close of the Plan Year in which occurs the later of:
V-25
<PAGE>
(1) The Participant's attainment of age 65; or
(2) The Participant's Severance.
Subject to subsection (b), a Participant may elect to have benefits
commence at a later date by submitting to the Committee a written
request therefor.
(b) RESTRICTIONS ON PERIOD OF DISTRIBUTION. Distribution of a
Participant's entire benefit will commence not later than April 1
following the calendar year in which the Participant attains age 70-
1/2. Unless the form of distribution is a single sum payment,
distributions will be made in non-increasing dollar payments each
year over one of the following periods: (1) the life of the
Participant, (2) the joint lives of the Participant and his
Beneficiary, (3) a period certain not exceeding the life expectancy
of the Participant, (4) a period certain not exceeding the joint
life expectancy of the Participant and his Beneficiary, or (5) a
combination of the foregoing.
(c) MINIMUM AMOUNTS TO BE DISTRIBUTED. If the Participant's entire
interest in the Plan is to be distributed in a form other than a
single sum payment, then the amount to be distributed each year must
be at least an amount equal to the quotient obtained by dividing the
Participant's entire interest by the life expectancy of the
Participant or joint and last survivor expectancy of the Participant
and designated Beneficiary. Life expectancy and joint and last
survivor expectancy shall be computed by the use of the return
multiples contained in Section 1.72-9 of the Treasury Regulations.
For purposes of this computation, the life expectancy of the
Participant (and the Participant's spouse, if the spouse is the
designated Beneficiary) may be recalculated no more frequently than
annually. The life expectancy of a Beneficiary other than a spouse
may not be recalculated. If the Participant's spouse is not the
designated Beneficiary, then 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.
V-26
<PAGE>
(d) RESTRICTIONS IN THE EVENT OF DEATH. Upon the death of the
Participant, the following distribution provisions shall apply:
(1) If the Participant dies after distribution of his interest
has commenced, 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) If the Participant dies before distribution of his interest
commences, the Participant's entire interest will be
distributed no later than 5 years after the Participant's
death except to the extent that an election is made to
receive distributions in accordance with subparagraph (A) or
(B):
(A) If any portion of the Participant's interest is payable
to a designated Beneficiary distributions may be made in
substantially equal installments over the life or life
expectancy of the designated Beneficiary commencing no
later than one year after the Participant's death.
(B) If the designated Beneficiary is the Participant's
surviving spouse, the date distributions are required to
begin in accordance with subparagraph (A) shall not be
earlier than the date in which the Participant would
have attained age 70-1/2, and if the spouse dies before
payments begin, subsequent distributions shall be made
as if the spouse had been the Participant.
For purposes of this paragraph, payments will be calculated
by use of the return multiples specified in Section 1.72-9 of
the Treasury Regulations. Life expectancy of a surviving
spouse may be recalculated annually. In the case of any other
designated Beneficiary, life expectancy will be calculated at
the time payment first commences without further
recalculation.
(3) For purposes of this subsection, any amount paid to a child
of the Participant will be treated as if it had been paid to
the surviving spouse if
V-27
<PAGE>
the amount becomes payable to the surviving spouse when the
child reaches the age of majority.
(e) DELAYED PAYMENTS. If the amount of a benefit payment required to
commence on a date determined under this Section cannot be
ascertained by such date, or if it is not possible to make such
payment on such date because the Committee has been unable to locate
the Participant after making reasonable efforts to do so, a payment
retroactive to such date may be made no later than 60 days after the
earliest date on which the amount of such payment can be ascertained
or the date on which the Participant is located (whichever is
applicable).
(f) CONSENT TO DISTRIBUTION. If the present value of a Participant's
vested Accrued Benefit ever exceeded $3,500, the Committee shall not
distribute the Participant's benefit to him unless the Participant
and his spouse (in accordance with Section 5.06(a)) consent to such
distribution or unless the Participant consents and the distribution
is in the form of a Qualified Joint and Survivor Annuity. If the
present value of the Participant's vested Accrued Benefit does not
exceed $3,500 and payment of benefits has not commenced, the
Committee may distribute the benefit as an immediate single sum
payment notwithstanding the provisions of Sections 5.05(b).
5.08 RELEVANT INFORMATION. A Participant entitled to receive benefits
under a Qualified Joint and Survivor Annuity or any other option providing
benefits or contingent benefits to his spouse or other Beneficiary shall certify
to the Committee such information as it may reasonably request respecting his
spouse or Beneficiary, including (but not limited to) information as to name,
address, age, sex, and date of marriage. The Committee shall be entitled to rely
upon any certification of a Participant's marital status and shall not be
obligated to make inquiry into the legal effect of any actual or purported
marriage, marital dissolution, or common-law relationship.
5.09 BENEFITS UPON REEMPLOYMENT. If a Participant receives a benefit and
again becomes a Participant, his Accrued Benefit or Normal Retirement Benefit on
his subsequent Severance shall be reduced by the Actuarial Equivalent of the
payments previously made to him.
V-28
<PAGE>
5.10 SUSPENSION OF BENEFITS.
(a) GENERAL RULE. If a Participant who is receiving periodic retirement
benefits from the Plan again becomes an Employee of a Participating
Company, his retirement benefit will be suspended for each calendar
month during which the Employee completes at least 40 Hours of
Service with a Participating Company in Section 203(a)(3)(B)
Service. Similarly, a retirement benefit which commences later than
Normal Benefit Commencement Date will be computed as if the Employee
had been receiving benefits since Normal Benefit Commencement Date
and had been reemployed, without actuarial increase for amounts
which would have been subject to suspension under the preceding
sentence.
(b) RESUMPTION OF PAYMENT. If benefit payments have been suspended,
payments shall resume no later than the first day of the third
calendar month after the calendar month in which the Employee ceases
to be employed in Section 203(a)(3)(B) Service. The initial payment
upon resumption shall include the payment scheduled to occur in the
calendar month when payments resume and any amounts withheld during
the period between the cessation of Section 203(a)(3)(B) Service and
the resumption of payments.
(c) NOTIFICATION. No payment shall be withheld by the Plan pursuant to
this Section unless the plan notifies the Employee by personal
delivery or first class mail during the first calendar month or
payroll period in which the Plan withholds payments that his
benefits are suspended. Such notification shall contain a
description of the specific reasons why benefit payments are being
suspended, a description of the Plan provision relating to the
suspension of payments, a copy of such provisions. and a statement
to the effect that applicable Department of Labor Regulations may be
found in Section 2530.203-3 of the Code of Federal Regulations. In
addition, the notice shall inform the Employee of the Plan's
procedures for affording a review of the suspension benefits.
Requests for such reviews may be considered in accordance with the
claims procedure set forth in Section 10.12.
(d) AMOUNT SUSPENDED.
V-29
<PAGE>
(1) LIFE ANNUITY. In the case of benefits payable periodically on
a monthly basis for as long as a life (or lives) continues,
such as a straight life annuity or a Qualified Joint and
Survivor Annuity, the amount suspended under subsection (a)
shall be equal to the monthly benefit payment.
(2) OTHER BENEFIT FORMS. In the case of a benefit payable in a
form other than the form described in paragraph (1) above,
the amount suspended under subsection (a) in a calendar month
in which the Employee is employed in Section 203(a)(3)(B)
Service shall be equal to the lesser of:
(A) The amount of benefits which would have been payable to
the Employee if he had been receiving monthly benefits
under the Plan since actual retirement based on a single
life annuity commencing at actual retirement age; or
(B) The actual amount paid or scheduled to be paid to the
Employee for such month. Payments which are scheduled to
be paid less frequently than monthly may be converted to
monthly payment for purposes of the foregoing sentence.
(e) TOP-HEAVY PLAN MINIMUM BENEFIT. This Section does not apply to the
Minimum Benefit to which the Participant is entitled under the Top-
Heavy Plan provisions of Article IX.
(f) SECTION 203(A)(3)(B) SERVICE. The definition of "Section
203(a)(3)(B) Service" is set forth in Department of Labor Regulation
Section 2530.203-3(c) (1).
5.11 PROHIBITION AGAINST REDUCTION OF ACCRUED BENEFIT. Notwithstanding
the provisions of Sections 1.35 and 5.02, with respect to individuals who become
Participants after attaining age 60 and before January 1, 1989, no change in the
Normal Retirement Age under the Plan shall be effective to the extent that it
has the effect of decreasing the present value as of December 31. 1988 of such a
Participant's Accrued Benefit.
5.12 WITHHOLDING ON PAYMENT OF BENEFITS. All nonperiodic distributions
and periodic payments shall be subject to the provisions of Section 10.08, items
(i) through (k) hereto, unless pursuant to Code Section 401(a)(31) and Treasury
Regulation Section 1.401(a)(31)-1T the
V-30
<PAGE>
distributee of any eligible rollover distribution elects to have the
distribution paid directly to an eligible retirement plan in a direct rollover.
Accordingly, in addition to any other required payment restrictions, the
Committee shall, not less than 30 days or more than 90 days prior to a
distribution, provide the distributee with a notice of his right to have his
distribution paid in a direct rollover to an eligible retirement plan and
provide the distributee the means to make such election in accordance with the
following:
(a) If a distribution is one to which Section 401(a)(11) and 417 of the
Internal Revenue Code do not apply, such distribution may commence
less than 30 days after the notice required under Section 1.411(a)-
11(c) of the Income Tax Regulations is given, provided that:
(i) The Plan administrator clearly informs the Participant that
the Participant has a right to a period of at least 30 days
after receiving the notice to consider the decision of
whether or not to elect a distribution (and, if applicable, a
particular distribution option),
(ii) The Participant after receiving the notice, affirmatively
elects a distribution, and
(iii) The Participant does not have an Eligible Spouse.
(b) This provision applies to distributions made on or after January 1,
1993. Notwithstanding any provision of the Plan to the contrary that
would otherwise limit a distributee's election under this provision,
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 that is at least equal to $500 paid directly to an
eligible retirement plan specified by the distributee in a direct
rollover.
(c) DEFINITIONS.
(i) ELIGIBLE ROLLOVER DISTRIBUTION: An eligible rollover
distribution is any distribution of all or any portion of the
balance to the credit of the distributee, except that an
eligible rollover distribution does not include: any
distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made
for the life (or life
V-31
<PAGE>
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 10 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 includable in gross income
(determined without regard to the exclusion for net
unrealized appreciation with respect to Employer securities).
(ii) ELIGIBLE RETIREMENT PLAN: An eligible retirement plan is an
individual retirement account described in Section 408(a) of
the Code, an individual retirement annuity described in
Section 408(b) of the Code, an annuity plan described in
Section 403(a) of the Code, or a qualified trust described in
Section 401(a) of the Code, that accepts the distributee's
eligible rollover distribution. However, in the case of an
eligible rollover distribution to the surviving spouse, an
eligible retirement plan is an individual retirement account
or individual retirement annuity.
(iii) DISTRIBUTEE: A 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.
(iv) DIRECT ROLLOVER: A direct rollover is a payment by the Plan
to the eligible retirement plan specified by the distributee.
V-32
<PAGE>
ARTICLE VI
DEATH BENEFITS
6.01 SPOUSAL DEATH BENEFIT. The Eligible Spouse of a Participant who has
a vested interest in his Normal Retirement Benefit and who dies prior to his
Benefit Commencement Date shall receive a Qualified Pre-retirement Survivor
Annuity, in an amount determined as follows:
(a) DEATH AFTER EARLIEST RETIREMENT AGE. If the Participant dies after
attaining Early Retirement Age, the payments to his Eligible Spouse
under the Qualified Pre-retirement Survivor Annuity shall be equal
to 50% of the payments the Participant would have received under a
Straight-Life Annuity determined under Section 5.05(c)(3) had the
Participant retired with such an annuity on the day prior to his
death.
(b) DEATH ON OR BEFORE EARLIEST RETIREMENT AGE. If the Participant dies
on or before attaining Early Retirement Age, the payments to his
Eligible Spouse under the Qualified Pre-retirement Survivor Annuity
shall be equal to 50% of the payments the Participant would have
received under a Straight-Life Annuity determined under Section
5.05(c)(3) had the Participant:
(1) Experienced a Severance on the date of his death (if he was
an Employee on the date of his death);
(2) Survived to his Early Retirement Age;
(3) Received such an annuity at his Early Retirement Age; and
(4) Died on the day after his Early Retirement Age.
6.02 COMMENCEMENT OF BENEFIT. The Eligible Spouse shall begin to receive
payments as of the last day of the month in which the Participant would have
attained Early Retirement Age unless she elects a later date (in conformity with
Sections 5.07(b), (c) and (d), as applicable).
VI-1
<PAGE>
6.03 CERTAIN SPOUSES. A former spouse will be treated as the spouse or
surviving spouse of a Participant to the extent provided under a qualified
domestic relations order as described in Section 414(p) of the Code.
6.04 COST OF COVERAGE. The Participant's benefit under the Plan shall not
be reduced by the cost of providing the Qualified Pre-retirement Survivor
Annuity coverage described in Section 6.01.
VI-2
<PAGE>
ARTICLE VII
VESTING
7.01 VESTED BENEFIT.
(a) YEARS OF VESTED SERVICE. Subject to subsections (b), (c) and (d),
the interest of each Participant in his Accrued Benefit shall become
vested and nonforfeitable in accordance with whichever of the
following vesting schedules will provide the Participant with the
greatest nonforfeitable percentage of such Accrued Benefit:
<TABLE>
<CAPTION>
NONFORFEITABLE
PERCENTAGE OF
PARTICIPANT'S YEARS SUM OF PARTICIPANT'S AGE PARTICIPANT'S
OF VESTED SERVICE AND VESTED SERVICE ACCRUED BENEFIT
--------------------------- ---------------------------- -------------------
<S> <C> <C>
Less than 5 0%
At least 5 At least 45 50%
At least 6 At least 47 60%
At least 7 At least 49 70%
At least 8 At least 51 80%
At least 9 At least 53 90%
At least 10 At least 55 100%
</TABLE>
<TABLE>
<CAPTION>
NONFORFEITABLE
PERCENTAGE OF
PARTICIPANT'S YEARS PARTICIPANT'S
OF VESTED SERVICE ACCRUED BENEFIT
--------------------------- -------------------
<S> <C>
Less than 10 0%
At least 10 50%
At least 11 60%
At least 12 70%
At least 13 80%
At least 14 90%
At least 15 100%
</TABLE>
VII-1
<PAGE>
(b) SPECIAL RULE FOR CERTAIN PARTICIPANTS. Notwithstanding the
provisions of subsection (a), but subject to the provisions of
subsections (c) and (d), the interest of each Participant who
completes at least one Day of Service after December 31, 1988 in his
Accrued Benefit shall become vested and nonforfeitable in accordance
with the following vesting schedule:
<TABLE>
<CAPTION>
NONFORFEITABLE
PERCENTAGE OF
PARTICIPANT'S YEARS PARTICIPANT'S
OF VESTED SERVICE ACCRUED BENEFIT
--------------------------- -------------------
<S> <C>
Less than 5 0%
At least 5 100%
</TABLE>
(c) SPECIAL RULE FOR PREDECESSOR PLANS. Notwithstanding the provisions
of subsections (a) and (b), if any portion of a Participant's
Accrued Benefit was earned under a predecessor plan which was
amended and merged into this Plan, the vested and nonforfeitable
interest of such Participant in that portion of his Accrued Benefit
on the date of his Severance shall equal the greatest of: (1) the
vested and nonforfeitable percentage determined pursuant to
subsection (a); (2) the vested and nonforfeitable percentage
determined pursuant to subsection (b); or (3) the vested and
nonforfeitable percentage determined as if the vesting schedule of
such predecessor plan were in effect on the date of such
Participant's Severance.
(d) ACCELERATED VESTING. An Employees interest in his Accrued Benefit
shall become 100% vested and nonforfeitable without regard to his
years of Vested Service on his attainment of Normal Retirement Age.
7.02 AGGREGATION OF YEARS OF VESTED SERVICE.
(a) VESTED PARTICIPANTS. If a Participant who has a nonforfeitable right
to all or a portion of his Accrued Benefit has a Severance and again
becomes an Employee, the Participant's years of Vested Service prior
to his Severance shall be included in
VII-2
<PAGE>
determining his vested and nonforfeitable Accrued Benefit after he
again becomes an Employee.
(b) NONVESTED EMPLOYEES AND PARTICIPANTS.
(1) If an Employee or a Participant who does not have any
nonforfeitable right to his Accrued Benefit has a Severance
and again becomes an Employee before incurring the number of
consecutive One Year Breaks in Service specified in paragraph
(2), his years of Vested Service prior to his Severance shall
be included in determining his vested and nonforfeitable
Accrued Benefit after he again becomes an Employee.
(2) If an Employee or a Participant who does not have any
nonforfeitable right to his Accrued Benefit has a Severance
and again becomes an Employee after incurring a number of
consecutive One Year Breaks in Service equal to the greater
of five or the aggregate number of years of Vested Service
which he completed before such One Year Breaks in Service,
his years of Vested Service completed prior to his One Year
Breaks in Service shall be disregarded for purposes of
determining his vested and nonforfeitable Accrued Benefit
after he again becomes an Employee. The aggregate number of
years of Vested Service shall not include any years of Vested
Service disregarded under this Section by reason of a prior
period of One Year Breaks in Service.
7.03 UNCLAIMED BENEFITS. If the Committee, acting upon information
available to it, cannot locate a person entitled to receive a benefit under the
Plan within a reasonable period of time (as determined by the Committee in its
discretion) after the benefit becomes payable, and such person has not contacted
the Committee or the Trustee concerning the distribution by the end of such
period, the amount of the benefit shall be treated as a forfeiture and shall be
applied in the manner described in Section 7.04. If, prior to the date final
distributions are made from the Trust Fund following termination of the Plan, a
person who was entitled to a benefit which has been forfeited pursuant to this
Section makes a claim to the Committee or the Trustee for
VII-3
<PAGE>
such benefit, such person shall be entitled to receive the amount of such
benefit as soon as administratively feasible after such claim is received.
7.04 APPLICATION OF FORFEITED AMOUNTS. The amount of a Participant's
benefit that is forfeited pursuant to Section 7.03 shall not be applied to
increase the benefits of Participants at any time but shall be applied to reduce
Participating Company contributions to the Plan.
VII-4
<PAGE>
ARTICLE VIII
DESIGNATION OF BENEFICIARY
8.01 DESIGNATION OF BENEFICIARY. Subject to Section 5.06(a), each
Participant shall have the right to designate a Beneficiary or Beneficiaries to
receive remaining benefits, if any, payable under the Plan (such as amounts
payable under a Certain and Continuous Annuity) upon his death. The designation
shall be made on forms prescribed by the Committee and shall be effective upon
delivery to the Committee. A Participant shall have the right to change or
revoke from time to time any such designation by filing a new designation or
notice of revocation with the Committee, but such revised designation or
revocation shall be effective only upon receipt by the Committee.
8.02 FAILURE TO DESIGNATE BENEFICIARY. In the event a Participant has not
designated a Beneficiary, or in the event no Beneficiary survives a Participant,
the distribution of the Participant's remaining benefits, if any, upon his death
shall be made: (a) to the Participant's spouse, if living; (b) if his spouse is
not then living, to his then issue by right of representation; (c) if neither
his spouse nor his issue are then living, to his then living parents; and (d) if
none of the above are then living, to his estate.
VIII-1
<PAGE>
ARTICLE IX
TOP-HEAVY PLAN PROVISIONS
9.01 PRIORITY OVER OTHER PLAN PROVISIONS. If the Plan is or becomes a
Top-Heavy Plan in any Plan Year beginning after December 31, 1983, the
provisions of this Article IX will supersede any conflicting provisions of the
Plan. However, the provisions of this Article shall not operate to increase the
rights or benefits of Participants under the Plan except to the extent required
by Section 416 of the Code and other provisions of law and the Treasury
Regulations applicable to "top-heavy plans," as that term is defined in Section
416(g) of the Code, taking into account amendments to Section 416 of the Code
and such other provisions of law which are enacted after the Tax Equity and
Fiscal Responsibility Act of 1982, as amended.
9.02 DEFINITIONS.
(a) KEY EMPLOYEE. A Key Employee is any Employee or former Employee (and
the Beneficiaries of such deceased Employee) who at any time during
the Determination Period was: (1) an officer of the Company or any
Affiliated Company if such individual's Includable Compensation
exceeds 1.5 times the Defined Contribution Dollar Limitation; (2) an
owner (or considered an owner under Section 318 of the Code) of one
of the ten largest interests in the Company or any Affiliated
Company, if such individual's Includable Compensation exceeds the
Defined Contribution Dollar Limitation; (3) a 5% owner of the
Company or any Affiliated Company; or (4) a 1% owner of the Company
or any Affiliated Company who has an annual Includable Compensation
of more than $150,000. The determination of who is a Key Employee
will be made in accordance with Section 416(i) of the Code and the
Treasury Regulations thereunder.
(b) DETERMINATION PERIOD. The Determination Period is the Plan Year
containing the Determination Date and the four preceding Plan Years.
(c) TOP-HEAVY PLANS. For any Plan Year beginning after December 31,
1983, the Plan is a Top-Heavy Plan if any of the following
conditions exists:
IX-1
<PAGE>
(1) If the Top-Heavy Ratio for the Plan exceeds 60% and the Plan
is not a part of any Required Aggregation Group or Permissive
Aggregation Group of Qualified Plans.
(2) If the Plan is a part of a Required Aggregation Group but not
part of a Permissive Aggregation Group of Qualified Plans and
the Top-Heavy Ratio for the Required Aggregation Group
exceeds 60%.
(3) If the Plan is a part of a Required Aggregation Group and
part of a Permissive Aggregation Group of Qualified Plans and
the Top-Heavy Ratio for the Permissive Aggregation Group
exceeds 60%.
Solely for the purpose of determining if the Plan or any other
Qualified Plan included in a Required Aggregation Group of which
this Plan is a part is a Top-Heavy Plan, the Accrued Benefit of a
Participant other than a Key Employee shall be determined under (1)
the method, if any, that uniformly applies for accrual purposes
under all Qualified Plans maintained by the Company or any
Affiliated Company, or (2) if there is no such method, as if such
benefit accrued not more than rapidly than the slowest accrual rate
permitted under the fractional accrual rate provisions of Section
4ll(b)(l)(C) of the Code.
(d) TOP-HEAVY RATIO.
(1) The Top-Heavy Ratio with respect to the Qualified Plans taken
into account under subsection (c)(l), (c)(2), or (c)(3), as
applicable, is a fraction, the numerator of which is the sum
of the Present Value (as defined in subsection (i)) of
accrued benefits and the account balances (as required by
Code Section 416) of all Key Employees with respect to such
Qualified Plans as of the Determination Date (including any
part of any accrued benefit or account balance distributed in
the five-year period ending on the Determination Date), and
the denominator of which is the sum of the Present Value of
the accrued benefits and the required account balances
(including any part of any accrued benefit or account balance
distributed in the five-year period ending on the
Determination Date) of all
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<PAGE>
Employees with respect to such Qualified Plans as of the
Determination Date.
(2) For purposes of paragraph (1), the value of account balances
and the Present Value of accrued benefits will be determined
as of the most recent Top-Heavy Valuation Date that falls
within or ends with the 12-month period ending on the
Determination Date, except as provided Section 416 and the
Treasury 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 will be
disregarded. The calculation of the Top-Heavy Ratio, and the
extent to which distributions (including distributions from
terminated plans), rollovers, transfer and contributions
unpaid as of the Determination Date are taken into account
will be made in accordance with the provisions of
Section 416(g)(3) and (g)(4) of the Code and the Treasury
Regulations thereunder, which are incorporated herein by
reference. Deductible 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.
(3) Notwithstanding the foregoing, the account balances and
accrued benefits of any Employee who has not performed any
services for an employer maintaining any of the aggregated
plans during the five-year period ending on the Determination
Date shall not be taken into account for purposes of this
subsection.
(e) REQUIRED AGGREGATION GROUP. A Required Aggregation Group consists
of: (1) each Qualified Plan (including simplified employee pension
plans) of the Company or any Affiliated Company in which at least
one Key Employee participates, and (2) any other Qualified Plan
(including simplified employee pension plans) of the
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<PAGE>
Company or any Affiliated Company which enables a Qualified Plan
described in subclause (1) to meet the requirement of Sections
40l(a)(4) or 410 of the Code.
(f) PERMISSIVE AGGREGATION GROUP. A Permissive Aggregation Group
consists of the Required Aggregation Group of Qualified Plans plus
any other Qualified Plan or Qualified Plans of the Company or any
Affiliated Company which, when considered as a group with the
Required Aggregation Group, would continue to satisfy the
requirements of Sections 401(a)(4) and 410 of the Code (including
simplified employee pension plans).
(g) DETERMINATION DATE. The Determination Date for any Plan Year
subsequent to the first Plan Year is the last day of the preceding
Plan Year. For the first Plan Year of the Plan, the Determination
Date is the last day of the Plan Year.
(h) TOP-HEAVY VALUATION DATE. The Top-Heavy Valuation Date is the last
day of the Plan Year. Such date shall also be the valuation date
used with respect to the Plan when applying the minimum funding
standards under Section 412 of the Code.
(i) PRESENT VALUE. Present Value means present value based only on the
interest and mortality rates specified in the Plan for the
calculation of Actuarial Equivalent benefits.
9.03 COMPENSATION TAKEN INTO ACCOUNT. For any Plan Year in which the Plan
is a Top-Heavy Plan, the amount of each Participant's Compensation taken into
account for purposes of determining benefits under the Plan shall not exceed for
Plan Years beginning on or before January 1, 1993 the first $200,000 or for Plan
Years beginning on or after January 1, 1994 the first $150,000 (or such larger
amount as may be prescribed by the Secretary of the Treasury or his delegate) of
such Participant's Includable Compensation for such Plan Year. Notwithstanding
the foregoing, no Participant's Accrued Benefit shall be reduced as a result of
the application of this Section.
9.04 MINIMUM BENEFIT.
(a) CALCULATION OF MINIMUM ACCRUAL AND MINIMUM BENEFIT. Notwithstanding
any other provision of the Plan except subsections (b), (c) and (d)
below, for any Plan
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<PAGE>
Year in which this Plan is a Top-Heavy Plan, each Participant who is
not a Key Employee and has completed 1,000 Hours of Service will
accrue a benefit (to be provided solely by Participating Company
contributions and expressed as a life annuity commencing at Normal
Retirement Age) of not less than 2% of his or her average Includable
Compensation for the five consecutive Plan Years for which the
Participant had the highest Includable Compensation (the "Minimum
Accrual"). The Minimum Accrual is determined without regard to any
Social Security contribution. The Minimum Accrual applies even
though under other Plan provisions the Participant would not
otherwise be entitled to receive an accrual, or would have received
a lesser accrual for the Plan Year because: (1) the non-Key Employee
fails to make mandatory contributions to the Plan; (2) the non-Key
Employee's Compensation is less than a stated amount; (3) the non-
Key Employee is not employed on the last day of the Plan Year; or
(4) the Plan is integrated with Social Security The total benefit
provided as a result of a Participant's Minimum Accruals as of any
date shall be his "Minimum Benefit." All accruals of employer-
derived benefits, whether or not attributable to Plan Years in which
the Plan is a Top-Heavy Plan, may be used in computing whether the
Minimum Accrual requirement is satisfied. Any Participant who is not
a Key Employee shall be a non-Key Employee.
(b) LIMITATION ON MINIMUM ACCRUALS. No additional Minimum Accruals shall
be provided pursuant to subsection (a) to the extent that the total
accruals on behalf of the Participant attributable to Participating
Company contributions will provide a benefit expressed as a life
annuity commencing at Normal Retirement Age that equals or exceeds
20% of the Participant's highest average Includable Compensation for
the five consecutive Plan Years for which the Participant had the
highest Includable Compensation.
(c) MINIMUM BENEFIT OR ALLOCATION IN OTHER PLAN(S).
(1) If the Company or any Affiliated Company maintains one or
more Defined Contribution Plans covering Employees who are
Participants in this Plan,
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<PAGE>
the minimum benefit or allocation requirement applicable to
Top-Heavy Plans will be met in such Defined Contribution Plan
or Plans unless such Plan or Plans expressly provide that
such requirement shall be met in this Plan.
(2) If the Company or any Affiliated Company maintains one or
more Defined Contribution Plans or Defined Benefit Plans
covering Employees who are Participants in this Plan, and
paragraph (1) is not applicable, the minimum benefit or
allocation requirement applicable to Top-Heavy Plans will be
met in this Plan in accordance with subsection (a).
(d) MINIMUM BENEFIT IN THIS PLAN. When the Qualified Plans aggregated
under Section 9.02(e) or (f) include at least one Defined
Contribution Plan and are Top-Heavy Plans but the Top-Heavy Ratio is
not greater than 90%, the Top-Heavy Plan requirements set forth in
Article IX of this Plan shall apply, except that the Minimum Accrual
under subsection (a) shall be 3%, and the limitation under
subsection (b) for the Minimum Accruals shall be 30%. When such Top-
Heavy Ratio exceeds 90%, the Minimum Accrual shall be as provided in
subsection (a) and the overall Minimum Benefit shall be as provided
in subsection (b). This subsection shall apply to all Employees who
are not Key Employees regardless of whether they are participating
in one or more of the Qualified Plans which are aggregated with this
Plan, but shall not apply to the extent that subsection (c)(1) is
applicable.
(e) FORM OF BENEFIT. If the form of benefit provided under the Plan is
other than a single life annuity, the Participant must receive a
benefit that is the Actuarial Equivalent of the Minimum Benefit If
the benefit commences at a date other than at Normal Retirement Age,
the Participant must receive at least an amount that is the
Actuarial Equivalent of the Minimum Benefit commencing at Normal
Retirement Age.
(f) NONFORFEITABILITY. The Participant's Minimum Benefit required under
this Section, to the extent required to be nonforfeitable under
Section 416(b) and the
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<PAGE>
special vesting schedule provided in Section 9.05, may not be
forfeited under Sections 4l1(a)(3)(B) (relating to suspension of
benefits on reemployment) or 4ll(a)(3)(D) (relating to withdrawal of
mandatory contributions) of the Code.
9.05 MINIMUM VESTING.
(a) APPLICATION. For any Plan Year in which this Plan is a Top-Heavy
Plan, the minimum vesting schedule set forth in subsection (b) will
automatically apply to the Plan with respect to those Years of
Service categories at which it provides a higher vested percentage
than the regular vesting schedule set forth in Section 7.01(a). The
minimum vesting schedule applies to all Accrued Benefits within the
meaning of Section 411(a)(7) of the Code (except those attributable
to Participant contributions), including benefits accrued before the
effective date of Section 416 of the Code and benefits accrued
before the Plan became a Top-Heavy Plan. Further, no reduction in
vested benefits may occur in the event the Plan's status as a Top-
Heavy Plan changes for any Plan Year and any change in the effective
vesting schedule set forth in subsection (b) to the schedule set
forth in Section 7.01(a) shall be treated as an amendment subject to
Section 13.01(d) However, this Section does not apply to the Accrued
Benefits of any Employee who does not have an Hour of Service after
the Plan has initially become a Top-Heavy Plan and such Employee's
Accrued Benefit attributable to Participating Company contributions
will be determined without regard to this Section.
(b) VESTING SCHEDULE. The minimum vesting schedule referred to in
subsection (a) is 20% vesting after two completed years of Vested
Service, and then 20% for each additional year of Vested Service.
9.06 MODIFICATION OF AGGREGATE BENEFIT LIMIT.
(a) MODIFICATION. Subject to the provisions of subsection (b), in any
Plan Year in which the Top-Heavy Ratio exceeds 60%, the aggregate
benefit limitation described in Section 5.04(i) shall be modified by
substituting "100%" for "125%" in paragraphs (1) and (2) of Section
5.04(i).
IX-7
<PAGE>
(b) EXCEPTION. The modification of the aggregate benefit limit described
in subsection (a) shall not be required if the Top-Heavy Ratio does
not exceed 90% and one of the following conditions is met:
(1) Employees who are not Key Employees do not participate in
both a Defined Benefit Plan and a Defined Contribution Plan
which are in the Required Aggregation Group, and the minimum
allocation requirements of Section 416(c)(2) of the Code, as
modified by Section 416(h)(2)(A) of the Code, are met in the
Defined Contribution Plan; or
(2) The minimum allocation requirements of Section 416(c)(2) of
the Code are met in the Defined Contribution Plan when such
requirements are applied with the substitution of "7-1/2%" in
each place that "3%" occurs therein; or
(3) The Minimum Accrual requirements of Section 9.04(d) are met
in this Plan or any other Defined Benefit Plan maintained by
the Company or any Affiliated Company.
IX-8
<PAGE>
ARTICLE X
ADMINISTRATIVE PROCEDURES
10.01 APPOINTMENT OF COMMITTEE MEMBERS. The Board shall appoint a Pension
Committee consisting of not less than three members, who shall hold office at
the pleasure of the Board. Any member may resign by giving notice, in writing,
filed with the Trustee and the Board.
10.02 OFFICERS AND EMPLOYEES OF THE COMMITTEE. The Committee shall choose
from its members a Chairman and a Secretary The Chairman may appoint one or more
Assistant Secretaries for the Committee who may, but need not be members of the
Committee. The Secretary (or an Assistant Secretary) shall keep a record of the
Committee's proceedings and all dates, records and documents pertaining to the
Committee's administration of the Plan The Committee may employ and suitably
compensate such persons or organizations to render advice with respect to the
duties of the Committee under the Plan as the Committee determines to be
necessary or appropriate.
10.03 ACTION OF THE COMMITTEE. Action of the Committee may be taken with
or without a meeting of Committee members, provided, however, that any action
shall be taken only upon the vote or other affirmative expression of a majority
of the Committee's members qualified to vote with respect to such action. Any
member of the Committee may execute a certificate or other written direction on
behalf of the Committee In the event the Committee members qualified to vote on
any question are unable to determine such question by a majority vote or other
affirmative expression of a majority of the Committee members qualified to vote
on such question, such question shall be determined by the Board.
10.04 DISQUALIFICATION OF COMMITTEE MEMBER. A member of the Committee who
is a Participant shall not vote on any question relating specifically to himself
unless he is the sole member of the Committee.
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<PAGE>
10.05 EXPENSES OF THE COMMITTEE. The expense of the Committee properly and
actually incurred in the performance of its duties under the Plan shall be paid
from the Trust Fund, unless the Participating Companies in their discretion pay
such expenses.
10.06 BONDING AND COMPENSATION. The members of the Committee shall serve
without bond, except as may be required by ERISA, and without compensation for
their services as Committee members.
10.07 GENERAL POWERS AND DUTIES OF THE COMMITTEE. The Committee shall have
full power to administer the Plan and the Trust Agreement and to construe and
apply their provisions. For purposes of ERISA, the Committee acting as the agent
of the Employer shall be the named fiduciary with respect to the operation and
administration of the Plan and the Trust Agreement. In addition, the Committee
shall have the powers and authority granted by the terms of the Trust Agreement.
The Committee, and all other persons with discretionary control respecting
the operation, administration control, and/or management of the Plan, the Trust
Agreement, and/or the Trust Fund, shall perform their duties under the Plan and
the Trust Agreement solely in the interests of Participants and their
Beneficiaries.
10.08 SPECIFIC POWERS AND DUTIES OF THE COMMITTEE. The Committee shall
administer the Plan and have all powers necessary to accomplish that purpose,
including the following:
(a) Resolving all questions relating to the eligibility of Employees to
become Participants;
(b) Determining the amount of benefits payable to Participants or their
Beneficiaries, and determining the time and manner in which such
benefits are to be paid;
(c) Authorizing and directing all disbursements by the Trustee from the
Trust Fund;
(d) Engaging any administrative, legal, medical accounting, clerical, or
other services it may deem appropriate to effectuate the Plan or the
Trust Agreement:
(e) Construing and interpreting the Plan and the Trust Agreement and
adopting rules for administration of the Plan and the Trust
Agreement which are not inconsistent with the terms of such
documents;
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<PAGE>
(f) Compiling and maintaining all records it determines to be necessary,
appropriate or convenient in connection with the administration of
the Plan and the Trust Agreement;
(g) Determining the disposition and distribution of assets in the Trust
Fund in the event the Plan is terminated;
(h) Reviewing the performance of the Trustee with respect to the
Trustee's administrative duties, responsibilities and obligations
under the Plan and the Trust Agreement as such administrative
duties, responsibilities and obligations are set forth in the Trust
Agreement; reporting to the Board regarding such administrative
performance of the Trustee; and recommending to the Board, if
necessary, the removal of the Trustee and the appointment of a
successor Trustee;
(i) Acting to withhold, and be liable for, payment of the tax required
to be withheld from any benefits paid in accordance with the
provisions of this Plan, unless the Participant, Eligible Spouse or
other Beneficiary who is payee for such benefits shall elect to have
withholding not apply to such payments. Such election shall remain
in effect until revoked by the elector. The maximum amount to be
withheld shall not exceed the sum of the amount of money and the
fair market value of other property (within the meaning of
applicable law) received in payment of benefits unless otherwise
required by law;
(j) (i) Notifying the Participant, Eligible Spouse or other
Beneficiary who is payee of any periodic payments, otherwise
subject to withholding, of the right to elect not to apply
withholding to such payments. Notice shall be given no
earlier than six months before, and no later than the date of
the first periodic payment subject to withholding. Notice of
the right to make and revoke such election shall be given to
payees not less frequently than once each calendar year;
(ii) Notifying the Participant, Eligible Spouse or other
Beneficiary who is payee of any nonperiodic distribution
otherwise subject to withholding of the right to elect that
withholding shall not apply to such distribution.
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<PAGE>
Notice shall be given no later than the date of distribution
or at such earlier date as may be prescribed by the Secretary
of the Treasury;
(iii) Notifying the payee of mandatory withholding requirements in
effect for years beginning after December 31, 1992 where
appropriate statutory rollover requirements have not been
met;
(k) Directing the payor of authorized disbursements from the Fund to
withhold payment of the tax required to be withheld by law. In such
case, and if the payor is supplied with such information as required
by regulations, then the payor shall be liable for payment of the
tax withheld; and
(l) Performing such other functions that are delegated to the Committee
under the Trust Agreement.
10.09 ALLOCATION OF FIDUCIARY RESPONSIBILITY. The Committee from time to
time may allocate to one or more of its members and/or may delegate to any other
persons or organizations any of the rights, powers, duties and responsibilities
of the Committee with respect to the operation and administration of the Plan
and the Trust Agreement that are permitted to be so delegated under ERISA. Any
such allocation or delegation shall be made in writing, shall be reviewed
periodically by the Committee, and shall be terminable upon such notice as the
Committee in its discretion deems reasonable and proper under the circumstances
Whenever a person or organization (the "Delegating Party") has the power
and authority under the Plan or the Trust Agreement to delegate discretionary
power and authority respecting the control, management, operation or
administration of the Plan or any portion of the Trust Fund to another person or
organization (the "Appointee"), the Delegating Party's responsibility with
respect to such delegation is limited to the selection of the Appointee and the
periodic review of the Appointee's performance and compliance with applicable
law and regulations. Any breach of fiduciary responsibility by the Appointee
which is not proximately caused by the Delegating Party's failure to properly
select or supervise the Appointee, and in which breach the Delegating Party does
not otherwise participate, will not be considered a breach by the Delegating
Party.
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<PAGE>
10.10 INFORMATION TO BE SUBMITTED TO THE COMMITTEE. To enable the
Committee to perform its functions the Participating Companies shall supply full
and timely information to the Committee on all matters relating to Employees and
Participants as the Committee may require, and shall maintain such other records
as the Committee may determine are necessary in order to determine the benefits
due or which may become due to Participants or their Beneficiaries under the
Plan. In addition, the Committee shall make arrangements to obtain from other
Affiliated Companies such records and other information with respect to each
Employee as are necessary for the Committee to determine benefits hereunder.
10.11 NOTICES, STATEMENTS AND REPORTS. The Company shall be the
"administrator" of the Plan as defined in Section 3(16)(A) of ERISA for purposes
of the reporting and disclosure requirements imposed by ERISA and the Code. The
Committee shall assist the Company, as requested, in complying with such
reporting and disclosure requirements.
10.12 CLAIMS PROCEDURE.
(a) FILING CLAIM FOR BENEFITS. If an individual (hereinafter referred to
as the "Applicant," which reference shall include where appropriate
the authorized representative, if any, of the individual) does not
receive the timely payment of the benefits which he believes he is
entitled to receive under the Plan, he may make a claim for benefits
in the manner hereinafter provided.
All claims for benefits under the Plan shall be made in writing and
shall be signed by the Applicant. Claims shall be submitted to a
representative designated by the Committee and hereinafter referred
to as the "Claims Coordinator." The Claims Coordinator may, but need
not, be an Employee or a member of the Committee. If the Applicant
does not furnish sufficient information with the claim for the
Claims Coordinator to determine the validity of the claim, the
Claims Coordinator shall indicate to the Applicant any additional
information which is necessary for the Claims Coordinator to
determine the validity of the claim.
Each claim hereunder shall be acted on or disapproved by the Claims
Coordinator within 90 days following the receipt by the Claims
Coordinator of the information necessary to process the claim.
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<PAGE>
In the event the Claims Coordinator denies a claim for benefits in
whole or in part, the Claims Coordinator shall notify the Applicant
in writing of the denial of the claim and notify such Applicant of
his right to a review of the Claims Coordinator's decision by the
Committee. Such notice by the Claims Coordinator shall also set
forth, in a manner calculated to be understood by the Applicant, the
specific reason for such denial, the specific Plan provisions on
which the denial is based, a description of any additional material
or information necessary to perfect the claim with an explanation of
why such material or information is necessary. and an explanation of
the Plan's claim review procedure as set forth in this Section.
If no action is taken by the Claims Coordinator on an Applicant's
claim within 90 days after receipt by the Claims Coordinator, such
application will be deemed to be denied for purposes of the
following appeals procedure.
(b) APPEALS PROCEDURE. Any Applicant whose claim for benefits is denied
in whole or in part (such Applicant hereinafter referred to as the
"Claimant") may appeal from such denial to the Committee for a
review of the decision by the entire Committee. Such appeal must be
made within three months after the denial provided above. An appeal
must be submitted in writing within such period and must:
(1) Request a review by the entire Committee of the claim for
benefits under the Plan;
(2) Set forth all of the grounds upon which the Claimant's
request for review is based and any facts in support thereof;
and
(3) Set forth any issues or comments which the Claimant deems
pertinent to the appeal.
The Committee shall regularly review appeals by Claimants The
Committee shall act upon each appeal within 60 days after receipt
thereof unless special circumstances require an extension of the
time for processing, in which case a decision shall be rendered by
the Committee as soon as possible but not later than 120 days after
the appeal is received by the Committee.
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<PAGE>
The Committee shall make a full and fair review of each appeal and
any written materials submitted by therewith. The Committee may
require the Claimant and/or the Participating Company to submit such
additional facts, documents or other evidence as the Committee in
its discretion deems necessary or advisable in making its review.
The Claimant shall be given the opportunity to review pertinent
documents or materials upon submission of a written request to the
Committee, provided the Committee finds the requested documents or
materials are pertinent to the appeal.
On the basis of its review, the Committee shall make an independent
determination of the Claimant's eligibility for benefits under the
Plan. The decision of the Committee on any claim for benefits shall
be final and conclusive upon all parties thereto.
In the event the Committee denies an appeal in whole or in part, the
Committee shall give written notice of the decision to the Claimant,
which notice shall set forth in a manner calculated to be understood
by the Claimant the specific reasons for such denial and which shall
make specific reference to the pertinent Plan provisions on which
the Committee decision was based.
(c) REVIEW OF ANNUAL STATEMENT. If a Participant or Beneficiary believes
a statement he receives regarding his interest in the Plan s
incorrect, such Participant or Beneficiary may submit a written
request for correction or verification of such Annual Statement to
the Claims Coordinator, and the Claims Coordinator shall respond in
writing to such request in the same manner as a claim for benefits
by an applicant. If the Participant or Beneficiary believes the
Claims Coordinator's response is incorrect, the Participant or
Beneficiary may request in writing within 30 days of the response
that the entire Committee review such statement, and the Committee
shall follow the same procedure with respect to such request as
provided above for a Claimant.
10.13 SERVICE OF PROCESS. The Committee may from time to time designate an
agent of the Plan for the service of legal process. The Committee shall cause
such agent to be identified
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<PAGE>
in materials it distributes or causes to be distributed when such identification
is required under applicable law. In the absence of such a designation, the
Company shall be the agent of the Plan for the service of legal process.
10.14 PAYMENT TO MINORS OR PERSONS UNDER LEGAL DISABILITY. If any benefit
becomes payable to a minor or to a person under a legal disability, payment of
such benefit shall be made only to the conservator or the guardian of the estate
of such person appointed by a court of competent jurisdiction or such other
person or in such other manner as the Committee determines is necessary to
ensure that the payment will legally discharge the Plan's obligation to such
person.
10.15 UNIFORM APPLICATION OF RULES AND POLICIES. The Committee in
exercising its discretion granted under any of the provisions of the Plan or the
Trust Agreement shall do so only in accordance with rules and policies
established by it which shall be uniformly applicable to all Participants.
10.16 FUNDING POLICY. The Plan is to be funded through Participating
Company contributions and earnings on such contributions, and benefits shall be
paid to Participants and Beneficiaries as provided in the Plan. The Board shall
determine investment policies from time to time that are consistent with the
objectives of the Plan.
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<PAGE>
ARTICLE XI
INVESTMENT OF PLAN ASSETS
11.01 TRUST FUND INVESTMENTS. The investment and reinvestment of Plan
assets held in the Trust Fund shall be governed by the terms of the Trust
Agreement and the provisions of this Article.
11.02 GENERAL RESPONSIBILITY AND AUTHORITY FOR INVESTMENT OF TRUST ASSETS.
(a) THE BOARD.
(1) The assets of the Trust Fund shall be invested and reinvested
by the Trustee as directed by the Board, unless the Board
delegates investment responsibility and authority for all or
a portion of the Trust Fund to the Trustee pursuant to the
provisions of subsection (b) or to an Investment Manager
pursuant to the provisions of subsection (c).
(2) All directions by the Board to the Trustee concerning the
investment, reinvestment or management of assets of the Trust
Fund shall be made, in writing or in such other manner as is
acceptable to the Trustee, by the member or members of the
Board that have been designated by the Board in writing to
the Trustee from time to time.
(b) THE TRUSTEE.
(1) The Board may by written resolution delegate to the Trustee
the responsibility and authority to invest and reinvest the
assets of all or any portion of the Trust Fund, provided
however that the Trustee accepts such investment
responsibility and authority in writing.
(2) In the event that the Board delegates investment
responsibility and authority to the Trustee, the Investment
Advisory Committee shall have the duty and power to review
the investment performance of the Trustee at periodic
intervals and report to the Board regarding such performance.
XI-1
<PAGE>
(3) The Board may revoke the delegation of any investment
responsibility and authority to the Trustee by written notice
to the Trustee of such revocation, and the Trustee may
relinquish its investment responsibility and authority to the
Board by written notice to the Board. In either event, the
investment responsibility and authority that had been
delegated to the Trustee shall be restored to the Board,
effective upon receipt of such written notice by the Trustee
or the Board.
(c) INVESTMENT MANAGERS.
(1) The Board has the power and authority to appoint one or more
Investment Managers. Each Investment Manager so appointed
shall have the power and authority to invest, acquire, manage
or dispose of the assets of the Trust Fund under its
management and control, and to direct the Trustee with
respect to the investment and reinvestment of such assets.
(2) If the Board elects to delegate investment authority for the
assets of all or any portion of the Trust Fund to an
Investment Manager pursuant to paragraph (1), the Board shall
deliver a written resolution to such effect to the Trustee,
which resolution shall specify the portion of the Trust Fund
affected. Upon receipt of such resolution, the Trustee will
be obligated to follow the investment directions of the
Investment Manager with respect to the assets of the
specified portion of the Trust Fund until such Investment
Manager resigns or is removed or replaced by the Board. The
Trustee shall not be a party to any agreement between the
Company and an Investment Manager, and shall have no
responsibility respecting the terms and conditions of such
agreement.
(3) In exercising its authority to delegate investment authority
to an Investment Manager, the Board has the duty,
responsibility and power to:
(A) Examine and analyze the performance of prospective
Investment Managers;
(B) Select an Investment Manager or Managers;
XI-2
<PAGE>
(C) Determine the portion of the Trust Fund that shall be
under the management and control of each Investment
Manager;
(D) Issue appropriate instructions to the Trustee and to
each Investment Manager regarding the allocation of
investment authority;
(E) Review the performance of each Investment Manager at
periodic intervals; and
(F) Remove any Investment Manager when the Board deems such
removal to be necessary or appropriate.
In order to assist the Board in the performance of the
aforementioned duties, responsibilities and powers, the
Investment Advisory Committee shall have the duty and power
to: (i) examine and analyze the performance of prospective
Investment Managers and report to the Board regarding such
performance; (ii) make recommendations to the Board regarding
the selection of an Investment Manager or Managers; (iii)
make recommendations to the Board regarding the portion of
the Trust Fund that should be under the management and
control of each Investment Manager; (iv) make recommendations
to the Board regarding the allocation of investment authority
between the Trustee and any Investment Manager; (v) review
the investment performance of each Investment Manager at
periodic intervals and report to the Board regarding such
performance; and (vi) make recommendations to the Board
regarding the removal of any Investment Manager.
(4) All directions by an Investment Manager to the Trustee
concerning the investment, reinvestment or management of
assets of the Trust Fund shall be made, in writing or in such
other manner as is acceptable to the Trustee, by such person
or persons as the Investment Manager designates in writing to
the Trustee from time to time.
(5) An Investment Manager may engage any investment adviser or
investment counselor that it deems necessary or appropriate,
and may provide for
XI-3
<PAGE>
directions concerning the investment and reinvestment of the
assets of the Trust Fund under its management and control to
be made directly to the Trustee by such adviser or counselor
as its agent, provided however that the Investment Manager
acknowledges in writing to the Trustee that the directions of
such agent shall be considered the directions of the
Investment Manager and that the Investment Manager shall be
responsible for the directions of such agent.
(6) If an Investment Manager resigns or is removed by the Board,
the Company shall notify the Trustee in writing of such
resignation or removal. Upon receipt of such notice, the
power and authority to invest and reinvest the assets of the
Trust Fund formerly under the control and management of the
Investment Manager shall return to the Company unless the
Company indicates that a successor Investment Manager has
been appointed.
(7) Each Investment Manager shall receive for its services
reasonable compensation as agreed upon in writing between the
Company and the Investment Manager from time to time.
(d) FIDUCIARY RESPONSIBILITY. Whenever a person or organization (the
"Delegating Party") has the power and authority under the Plan or
this Trust Agreement to delegate discretionary power and authority
respecting the control, management, operation or administration of
the Plan or any portion of the Trust Fund another person or
organization (the "Appointee"), the Delegating Party's
responsibility with respect to such delegation is limited to the
selection of the Appointee and a periodic review of the Appointee's
performance and compliance with applicable law or regulations. Any
breach of fiduciary responsibility by the Appointee which is not
proximately caused by the Delegating Party's failure to properly
select or supervise the Appointee, and in which breach the
Delegating Party does not otherwise participate, shall not be
considered to be a breach of fiduciary responsibility by the
Delegating Party.
XI-4
<PAGE>
11.03 THE TRUST AGREEMENT. Pursuant to written action by the Board, the
Company has the exclusive authority to amend, terminate or rescind the Trust
Agreement and to enter into a successor Trust Agreement to provide a fund for
the Plan. In addition, the Board has the exclusive authority to remove the
Trustee and to appoint a successor Trustee upon such terms and conditions as it
deems appropriate.
11.04 LOANS PROHIBITED. A Participant may not borrow any amount from the
Plan.
11.05 APPOINTMENT OF INVESTMENT ADVISORY COMMITTEE MEMBERS. The Board
shall appoint an Investment Advisory Committee consisting of not less than three
members, who shall hold office at the pleasure of the Board. Any member may
resign by giving notice, in writing, filed with the Trustee and the Board.
11.06 OFFICERS AND EMPLOYEES OF THE INVESTMENT ADVISORY COMMITTEE. The
Investment Advisory Committee shall choose from its members a Chairman and shall
appoint a Secretary. The Chairman may appoint one or more Assistant Secretaries
for the Investment Advisory Committee who may, but need not, be members of such
Committee. The Secretary (or an Assistant Secretary) shall keep a record of the
Investment Advisory Committee's proceedings and all dates, records and documents
pertaining to such Committee's duties and responsibilities under the Plan. The
Investment Advisory Committee may employ and suitably compensate such persons or
organizations to render advice with respect to the duties of the Investment
Advisory Committee under the Plan as such Committee determines to be necessary
or appropriate.
11.07 ACTION OF THE INVESTMENT ADVISORY COMMITTEE. Action of the
Investment Advisory Committee may be taken with or without a meeting of
Investment Advisory Committee members, provided, however, that any action shall
be taken only upon the vote or other affirmative expression of a majority of the
Investment Advisory Committee's members qualified to vote with respect to such
action. Any member of the Investment Advisory Committee may execute a
certificate or other written direction on behalf of such Committee. In the event
the Investment Advisory Committee members qualified to vote on any question are
unable to determine such question by a majority vote or other affirmative
expression of a
XI-5
<PAGE>
majority of the Investment Advisory Committee members qualified to vote on such
question, such question shall be determined by the Board.
11.08 DISQUALIFICATION OF INVESTMENT ADVISORY COMMITTEE MEMBER. A member
of the Investment Advisory Committee who is a Participant shall not vote on any
question relating specifically to himself unless he is the sole member of such
Committee.
11.09 EXPENSES OF THE INVESTMENT ADVISORY COMMITTEE. The expense of the
Investment Advisory Committee properly and actually incurred in the performance
of its duties under the Plan shall be paid from the Trust Fund, unless the
Participating Companies in their discretion pay such expenses.
11.10 BONDING AND COMPENSATION. The members of the Investment Advisory
Committee shall serve without bond, except as may be required by ERISA, and
without compensation for their services as Investment Advisory Committee
members.
XI-6
<PAGE>
ARTICLE XII
TERMINATION AND PARTIAL TERMINATION
12.01 CONTINUANCE OF PLAN. The Participating Companies expect to continue
this Plan indefinitely, but they do not assume an individual or collective
contractual obligation to do so, and the right is reserved to the Company, by
action of the Board, to terminate the Plan. In addition, subject to Section
12.04, any Participating Company at any time may discontinue its participation
in the Plan with respect to its Employees.
12.02 COMPLETE VESTING. If the Plan is terminated, the Accrued Benefits of
all affected Participants at the time of such termination shall become 100%
vested and nonforfeitable to the extent funded as of such date without regard to
their Years of Service, except as otherwise provided in Treasury Regulation
1.411(a)-4. For purposes of this Section, a Participant who has a Severance and
is not again an Employee at the time the Plan is terminated shall not be an
affected Participant entitled to full vesting if, after such Severance and
before such termination, the Participant incurred five consecutive One Year
Breaks in Service or received a distribution of his entire vested interest in
the Plan attributable to Participating Company contributions. Notwithstanding
any provision of the Plan to the contrary, if the value of a Participant's
entire vested interest in the Plan attributable to employer and employee
contributions at the time of such Participant's Severance equals $0, the
Participant shall be deemed to receive a distribution of that amount upon his
Severance.
In the event of a partial termination of the Plan, the Accrued Benefits of
those Participants who cease to participate on account of the facts and
circumstances which result in the partial termination shall become 100% vested
and nonforfeitable to the extent funded as of such date without regard to their
Years of Service.
12.03 ALLOCATION OF ASSETS. In the event of the termination or partial
termination of the Plan, the Trust Fund shall be allocated among the
Participants and Beneficiaries in the following order (except that in the event
of a partial termination, such allocation shall be with respect to the portion
of the Trust Fund as to which such partial termination has occurred):
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<PAGE>
(a) First,
(1) In the case of the benefit of a Participant or Beneficiary
who was receiving payments as of the beginning of the three
year period ending on the termination or partial termination
date of the Plan, to each such benefit, based on the
provisions of the Plan (as in effect during the five year
period ending on such date) under which such benefit would be
the least.
(2) In the case of a Participant's or Beneficiary's benefit
(other than a benefit described above) which would have been
paid as of the beginning of such three year period if the
Participant had retired prior to the beginning of such three
year period and if his benefits had commenced (in the normal
form of distribution) as of the beginning of such period, to
each such benefit based on the provisions of the Plan (as in
effect during the five year period ending on such date) under
which such benefit would be the least.
(b) Second, to all other benefits under the Plan subject to guarantee by
the Pension Benefit Guaranty Corporation.
(c) Third, to all other nonforfeitable benefits under the Plan not
subject to guarantee by the Pension Benefit Guaranty Corporation.
(d) Fourth, to all other benefits under the Plan.
12.04 WITHDRAWAL BY PARTICIPATING COMPANY. A Participating Company may
withdraw from participation in the Plan only with the approval of the Board. If
any Participating Company withdraws from the Plan, a copy of resolutions of the
Board of Directors of such Participating Company adopting such action, certified
by the secretary of such Board of Directors and reflecting approval by the
Board, shall be delivered to the Committee as soon as it is administratively
feasible to do so, and the Committee shall communicate such action to the
Trustee and to the Employees of the Participating Company.
12.05 PREVENTION OF DISCRIMINATION ON EARLY TERMINATION.
(a) RESTRICTED EMPLOYEES. Notwithstanding any provisions of the Plan
other than Article IX to the contrary, the benefits provided by
Participating Company contributions for Participants who are among
the 25 highest paid Employees at the
XII-2
<PAGE>
time the Plan is established and whose anticipated annual benefit
exceeds $1,500 will be restricted as provided in subsection (c) upon
the occurrence of any of the conditions described in subsection (b).
(b) CONDITIONS FOR RESTRICTION. The restrictions set forth in this
Section will apply under any of the following conditions:
(1) The Plan is terminated within 10 years after its
establishment;
(2) The benefits of such highest paid Employee become payable
within 10 years after the establishment of the Plan; or
(3) If the Plan is not subject to the minimum funding standards
of Section 412 of the Code (without regard to Section
412(h)(2)), the benefits of such Employee become payable
after the Plan has been in effect for 10 years, and the full
current costs of the Plan for the first 10 years have not
been funded.
(c) EFFECT OF RESTRICTION. Participating Company contributions which may
be used for the benefit of an Employee described in subsection (a)
shall not exceed the greater of $10,000, or 20% of the first $50,000
of the Employee's Compensation multiplied by the number of years
between the date of the establishment of the Plan and:
(1) If (b)(l) applies, the date of the termination of the Plan;
---------------
(2) If (b)(2) applies, the date the benefits become payable; or
---------------
(3) If (b)(3) applies, the date of the failure to meet the full
---------------
current costs.
(d) AMENDMENT OF PLAN. If the Plan is amended so as to increase the
benefit actually payable in event of the subsequent termination of
the Plan, or the subsequent discontinuance of contributions
thereunder, then the provisions of this Section shall be applied to
the Plan as so changed as if it were a new plan established on the
date of the change. The original group of 25 Employees (as described
in subsection (a)) will continue to have the limitations in
subsection (c) apply as if the Plan had not been changed. The
restrictions relating to the change of Plan shall apply to benefits
or funds for each of the 25 highest paid Employees on the
XII-3
<PAGE>
effective date of the change except that such restrictions need not
apply with respect to any Employee in this group for whom the normal
annual pension or annuity provided by Participating Company
contributions prior to that date and during the ensuing ten years,
based on his rate of Compensation on that date, could not exceed
$1,500.
The Participating Company contributions which may be used for the
benefit of the new group of 25 Employees will be limited to the
greatest of:
(1) The Participating Company contributions (or funds
attributable thereto) which would have been applied to
provide the benefits for the Employee if the previous plan
had been continued without change;
(2) $20,000; or
(3) The sum of (A) the Participating Company contributions (or
funds attributable thereto) which would have been applied to
provide benefits for the Employee under the previous plan if
it had been terminated the day before the effective date of
change, and (B) an amount computed by multiplying the number
of years for which the current costs of the Plan after that
date are met by (i) 20% of his annual Compensation, or (ii)
$10,000, whichever is smaller.
(e) MODIFICATION OF RESTRICTION. Notwithstanding the above limitations,
the following limitations will apply if they would result in a
greater amount of Participating Company contributions being used for
the benefit of the restricted Employee:
(1) In the case of a "substantial owner" (as defined in Section
4022(b)(5) of ERISA), a dollar amount which equals the
present value of the benefit guaranteed for such Employee
under Section 4022 of ERISA, or if the Plan has not
terminated, the present value of the benefit that would be
guaranteed if the Plan terminated on the date the benefit
commences, determined in accordance with regulations of the
Pension Benefit Guaranty Corporation; and
XII-4
<PAGE>
(2) In the case of the other restricted Employees, a dollar
amount which equals the present value of the maximum benefit
described in Section 4022(b)(3)(B) of ERISA (determined on
the earlier of the date the Plan terminates or the date
benefits commence, and determined in accordance with
regulations of the Pension Benefit Guaranty Corporation)
without regard to any other limitations in Section 4022 of
ERISA.
(f) SPECIAL RULE FOR PLAN TERMINATION. If, as of the date this Plan
terminates, the value of Plan assets is not less than The present
value of all Accrued Benefits (whether or not nonforfeitable),
distributions to each Participant equal to the present value of that
Participant's Accrued Benefit will not be discriminatory if the
formula for computing benefits as of the date of termination is not
discriminatory. For the purpose of this subsection, all present
values and the value of Plan assets will be computed using
assumptions satisfying Section 4044 of ERISA.
(g) SPECIAL RULE FOR SINGLE SUM PAYMENT. Notwithstanding the otherwise
applicable restrictions under this Section, a Participant's
otherwise restricted benefit may be distributed in full upon
depositing with an acceptable depository property having a fair
market value equal to 125% of the amount which would be repayable as
a distribution in excess of the permitted amount had the plan
terminated on the date of the single sum payment. If the market
value of the property held by the depository falls below 110% of the
amount which would be repayable if the plan were then to terminate,
additional property necessary to bring the value of the property
held by the depository up to 125% of such amount will be deposited.
(h) SPECIAL RULE FOR DISABILITY OR NORMAL RETIREMENT BENEFITS. These
conditions shall not restrict the current payment of full disability
or retirement benefits called for by the Plan for any retired or
disabled restricted Participant if:
(1) The Participating Company contributions which may be used for
any such Participant in accordance with the restriction
contained in subsection(a) are applied either: (A) to provide
level amounts of annuity in the normal
XII-5
<PAGE>
form of benefit provided for under the Plan for such
Participant at retirement (or, if he has already retired,
beginning immediately), or (B) to provide level amounts of
annuity in an optional form of benefit provided under the
Plan if the level amount of annuity under such optional form
of benefit is not greater than the level amount of annuity
under the normal form of benefit provided under the Plan;
(2) The annuity thus provided is supplemented to the extent
necessary to provide the full retirement benefit in the
normal form called for under the Plan by current payments to
such Participant as such benefits become due; and
(3) Such supplemental payments are made at any time only if the
full current costs of the Plan have been met, or the
aggregate of such supplemental payments for all such
Participants does not exceed the aggregate Participating
Company contributions already made under the Plan in the
current Plan Year.
(i) USE OF EXCESS FUNDING. Excess funding arising from the application
of the limitations of this Section upon the benefits of the
restricted Participants shall first be applied in a non-
discriminatory manner to provide for the Accrued Benefits of
nonrestricted Participants. After the satisfaction of the
liabilities for Accrued Benefits of such nonrestricted Participants,
any remaining excess funding shall be applied to provide for the
restricted portion of the Accrued Benefits of restricted
Participants in a nondiscriminatory manner.
(j) This Section 12.05 is included herein to conform to the requirements
of Treasury Regulation Section 1.401-4(c) and shall cease to be
effective either at such time as the provisions of Treasury
Regulation Section 1.401-4(c) or any substitute therefor are no
longer effective or applicable, or at such time as the Internal
Revenue Service rules that these provisions are unnecessary to
prevent discrimination in favor of Highly Compensated Employees.
Accordingly, effective as of the first day
XII-6
<PAGE>
of the first Plan Year beginning on or after January 1, 1994, the
provisions of paragraph (k) shall be applicable.
(k) In the event of Plan termination, the benefit of any Highly
Compensated Employee (and any highly compensated former Employee)
shall be limited to a benefit that is nondiscriminatory under
Section 401(a)(4) of the Code. Annual payments to a Participant
described in the preceding sentence shall be restricted to an amount
equal to the payments that would be made on behalf of the
Participant under a single life annuity that is the Actuarial
Equivalent of the sum of the Participant's Accrued Benefit and the
Participant's other benefits under the Plan.
(i) The restrictions set forth in the preceding paragraph shall
not apply if:
(A) After payment to a Participant described in subsection
(ii) of all benefits described in subsection (iii), the
value of Plan assets equals or exceeds one hundred ten
percent (110%) of the value of current liabilities, as
defined in Code Section 412(1)(7); or
(B) The value of all benefits described in subsection (iii)
for a Participant described in subsection (ii) is less
than one percent (1%) of the value of current
liabilities.
(ii) Participants whose benefits are restricted on distributions
shall include all Participants who are Highly Compensated
Employees and Highly Compensated former Employees. In any one
(1) year the total number of Participants whose benefits are
subject to restriction under this Section 12.05(k) shall be a
group consisting of the twenty-five (25) Participants who are
Highly Compensated Employees or Highly Compensated former
Employees whose compensation was the highest.
(iii) For the purpose of this Section 12.05(k), the term "benefit"
shall include amounts under this Plan attributable to loans
in excess of the amount set forth in Code Section
72(p)(2)(A), any periodic income, any withdrawal values
payable to a living Participant, and any death benefits not
provided for by insurance on the Participant's life.
XII-7
<PAGE>
(iv) This Section 12.05(k) is included herein to conform to the
requirements of Income Tax Regulation Section 1.401(a)(4)-
5(b) and will remain in effect unless the Internal Revenue
Service determines that such rules are not necessary to
prevent prohibited discrimination that may occur in the event
of any early termination of the Plan.
(l) Highly Compensated Employee shall mean any Employee who performs
services with respect to the Employer during the Plan Year (the
"determination year") and who is described in one or more of the
following groups applicable with respect to the determination year
or the look back year determined pursuant to Treasury Regulation
Section 1.414(q)-1T. Accordingly, the Employer hereby elects to make
the look back calculation on the basis of the calendar year ending
with or within the applicable determination year. Such Employees
shall include any Employee who:
(i) Was at any time a five percent owner as defined under Code
Section 416(i)(1); or
(ii) Received Compensation from the Employer in excess of $75,000
(as adjusted pursuant to Code Section 415(d)); or
(iii) Received Compensation from the Employer in excess of $50,000
(as adjusted pursuant to Code Section 415(d)) and who was in
the Top Paid Group of Employees for such Plan Year or such
preceding Plan Year; or
(iv) Was at any time an officer and received Compensation greater
than 50% of the amount in effect under Code Section
415(b)(1)(A) for such Plan Year or such preceding Plan Year.
(v) An Employee not described in paragraphs (i), (ii) or (iii)
above for the preceding Plan Year ("look back year") shall
not be treated as an Employee described in such paragraphs
for the current Plan Year unless such Employee is one of the
100 Employees who receive the most Compensation from the
Employer during the current Plan Year.
XII-8
<PAGE>
(vi) For the purposes of paragraph (iii) above, the term "Top Paid
Group" shall mean the top 20% of active Employees ranked on
the basis of Compensation received from the Employer during
the Plan Year.
(vii) For the purposes of paragraph (iv) above, no more than 50
Employees or, if less, the greater of three Employees or 10%
of the Employees shall be treated as officers. If for any
Plan Year no officer of the Employer is described under
paragraph (iv), the highest paid officer of the Employer for
such Plan Year shall be treated as described in such
paragraph.
(viii) If any Employee is a Family Member of a five percent owner or
a Highly Compensated Employee in the group consisting of the
10 Highly Compensated Employees paid the greatest
Compensation during a Plan Year, then such Employee shall not
be considered a separate Employee and any Compensation paid
to such Employee (and any contribution made on behalf of such
Employee) shall be treated as if it were paid to or on behalf
of the five percent owner or Highly Compensated Employee.
(ix) A former Employee shall be treated as a Highly Compensated
former Employee if such Employee was a Highly Compensated
Employee when such Employee separated from Service, or such
Employee was a Highly Compensated Employee at any time after
attaining age 55.
(x) For the purpose of this Section 12.05:
(i) The term "Compensation" shall have the meaning given
such term by Code Section 415(c)(3) as adjusted and
modified by Treasury Regulation Section 1.414(q)-1T.
(ii) Employers aggregated under Code Sections 414(b), (c),
(m), (n), or (o) shall be treated as a single Employer.
(xi) The determination of who is a Highly Compensated Employee,
including the determination of the number and identity of the
Employees in the Top Paid Group, the top 100 Employees, the
number of Employees treated as officers and the Compensation
that is considered, will be made in
XII-9
<PAGE>
accordance with Code Section 414(q) and the regulations
thereunder except as specifically provided to the contrary in
Code Section 401(a)(17).
(m) Non-Highly Compensated Employee shall mean an Employee of the
Employer who is neither a Highly Compensated Employee nor a Family
Member of a Highly Compensated Employee.
(n) Family Member shall mean, with respect to any Employee, such
Employee's spouse and lineal ascendants or descendants and spouses
of such lineal ascendants or descendants.
12.06 RESIDUAL ASSETS. Except as otherwise provided herein, no part of the
Trust Fund shall be recoverable by the Participating Companies from the Trust
Fund or from any Participant, Beneficiary, spouse or other person, or be used
for or diverted to purposes other than for the exclusive benefit of Participants
and their Beneficiaries and spouses, except that any portion of the Trust Fund
which remains after the satisfaction of all liabilities to such Participants,
Beneficiaries, and spouses determined under the provisions of Sections 12.03 and
12.05 hereof shall, upon termination of the Plan, be distributed to the
Participating Companies as directed by the Board.
XII-10
<PAGE>
ARTICLE XIII
AMENDMENT OF THE PLAN
13.01 RIGHT OF COMPANY TO AMEND PLAN. The Company reserves the right to
amend the Plan in the manner set forth in Section 13.02 at any time and from
time to time to the extent it may deem advisable or appropriate, provided,
however, that:
(a) No amendment shall increase the duties or liabilities of the Trustee
or the Committee without their respective written consent;
(b) No amendment shall contravene the provisions of Section 15.01;
(c) No amendment (including a change in the actuarial assumptions used
for determining Actuarial Equivalents) shall be effective to the
extent that it has the effect of decreasing a Participant's Accrued
Benefit. Notwithstanding the preceding sentence, a Participant's
Accrued Benefit may be reduced to the extent permitted under
Section 412(c)(8) of the Code. For purposes of this subsection, an
amendment which has the effect of: (1) eliminating or reducing an
early retirement benefit or a retirement-type subsidy, or (2)
eliminating an optional form of benefit, with respect to benefits
attributable to service before the amendment shall be treated as
reducing Accrued Benefits. In the case of a retirement-type subsidy,
the preceding sentence shall apply only with respect to a
Participant who satisfies (either before or after the amendment) the
preamendment conditions for the subsidy. In general, a retirement-
type subsidy is a subsidy that continues after Benefit Commencement
Date, but does not include a qualified disability benefit, a medical
benefit, a Social Security supplement, a death benefit (including
life insurance), or a plant shutdown benefit (that does not continue
after Benefit Commencement Date); and
(d) No amendment shall have the effect of reducing the percentage of the
vested and nonforfeitable interest of any Participant in his Accrued
Benefit nor shall the vesting provisions of the Plan be amended
unless each Participant with at least five
XIII-1
<PAGE>
Years of Service (including Years of Service, if any, disregarded
pursuant to Article VII) is permitted to elect to continue to have
the prior vesting provisions apply to him, within 60 days after the
latest of: the date on which the amendment is adopted, the date on
which the amendment is effective, or the date on which the
Participant is issued written notice of the amendment.
13.02 AMENDMENT PROCEDURE. Any amendment to the Plan shall be made only
pursuant to action of the Board. A certified copy of the resolutions adopting
any amendment and a copy of the adopted amendment as executed by the Company
shall be delivered to the Committee and to the Trustee.
Upon such action by the Board, the Plan shall be deemed amended as of the
date specified as the effective date by such Board action or in the instrument
of amendment. The effective date of any amendment may be before, on or after the
date of such Board action.
13.03. EFFECT ON OTHER PARTICIPATING COMPANIES. Unless an amendment
expressly provides otherwise, all Participating Companies shall be bound by any
amendment adopted pursuant to this Article XIII.
XIII-2
<PAGE>
ARTICLE XIV
ADOPTION OF PLAN BY AFFILIATED COMPANIES
14.01 ADOPTION PROCEDURE. Any Affiliated Company may become a
Participating Company under the Plan provided that:
(a) The Board approves the adoption of the Plan by the Affiliated
Company and designates such Affiliated Company as a Participating
Company;
(b) The Affiliated Company adopts the Plan together with all amendments
then in effect by appropriate resolutions of the Board of Directors
of the Affiliated Company;
(c) The Affiliated Company adopts the Trust Agreement together with all
amendments then in effect by appropriate resolutions of the Board of
Directors of the Affiliated Company; and
(d) The Affiliated Company by appropriate resolution of its Board of
Directors agrees to be bound by any other terms and conditions which
may be required by the Board, provided that such terms and
conditions are not inconsistent with the purposes of the Plan.
14.02 EFFECT OF ADOPTION BY AFFILIATED COMPANY. An Affiliated Company
which adopts the Plan pursuant to Section 14.01 shall be deemed to be a
Participating Company for all purposes hereunder, unless otherwise specified in
the resolutions of the Board designating the Affiliated Company as a
Participating Company. In addition, the Board may provide, in its discretion and
by appropriate resolutions, that the Employees of the Affiliated Company shall
receive credit for their employment with the Affiliated Company prior to the
date it became an Affiliated Company for purposes of determining the eligibility
of such Employees to participate in the Plan, the determination of their Accrued
Benefits, and the vested and nonforfeitable interest of such Employees as
Participants under Article VII, provided, however, that such credit shall be
applied in a uniform and nondiscriminatory manner with respect to all such
Employees.
XIV-1
<PAGE>
ARTICLE XV
MISCELLANEOUS
15.01 REVERSION PROHIBITED.
(a) GENERAL RULE. Except as provided in subsections (b), (c) and (d)
below, it shall be impossible for any part of the Trust Fund either
(1) to be used for or diverted to purposes other than those which
are for the exclusive benefit of Participants and their
Beneficiaries (except for the payment of taxes and administrative
expenses), or (2) to revert to the Company or any Affiliated
Company.
(b) DISALLOWED CONTRIBUTIONS. Each contribution of the Participating
Companies under the Plan is expressly conditioned upon the
deductibility of the contribution under Section 404 of the Code. If
all or part of a Participating Company's contribution is disallowed
as a deduction under the Code, and the contribution of the
disallowed amount was due to a good faith mistake in determining the
deductibility of the contribution, then such disallowed amount
(reduced by any Trust Fund losses attributable thereto) may be
returned to the Participating Company with respect to which the
deduction was disallowed within one year after the disallowance upon
the adoption of appropriate resolutions by the Board of Directors of
the Participating Company.
(c) MISTAKEN CONTRIBUTIONS. If a contribution is made by a Participating
Company by reason of a mistake of fact which was made in good faith,
then so much of the contribution as was made as a result of the
mistake (reduced by any Trust Fund losses attributable thereto) may
be returned to such Participating Company within one year after the
mistaken contribution was made upon the adoption of appropriate
resolutions by the Board of Directors of the Participating Company.
(d) FAILURE TO QUALIFY. In the event the Internal Revenue Service shall
determine that the Plan and the Trust Agreement as amended by
amendments acceptable to the Company, initially fail to constitute a
qualified plan and trust under the Code, then
XV-1
<PAGE>
notwithstanding any other provisions of the Plan or the Trust
Agreement, the contributions made by the Participating Companies
prior to the date of such determination may be returned to the
Participating Companies upon adoption of appropriate resolutions by
the Board of Directors of each Participating Company.
15.02 BONDING, INSURANCE AND INDEMNITY.
(a) BONDING. To the extent required under the ERISA or any other
applicable federal or state law of similar import, the Participating
Companies shall obtain, pay for and keep current a bond or bonds
with respect to each Committee member and each Employee who
receives, handles, disburses, or otherwise exercises custody or
control of, any of the assets of the Plan.
(b) INSURANCE. The Participating Companies, in their discretion, may
obtain, pay for and keep current a policy or policies of insurance,
insuring the Committee members, the members of the Board of
Directors of each Participating Company and other Employees to whom
any fiduciary responsibility with respect to the administration of
the Plan has been delegated against any and all costs, expenses and
liabilities (including attorneys' fees) incurred by such connection
with the performance of their duties, responsibilities and
obligations under the Plan and any applicable law.
(c) INDEMNITY. If the Participating Companies do not obtain, pay for and
keep current the type of insurance policy or policies referred to in
subsection (b), or if such insurance is provided but any of the
parties referred to in subsection (b) incur any costs or expenses
which are not covered under such policies, then the Participating
Companies shall indemnify and hold harmless, to the extent permitted
by law, such parties against any and all costs, expenses and
liabilities (including attorneys' fees) incurred by such parties in
performing their duties and responsibilities under this Plan,
provided that such party or parties were acting in good faith within
what was reasonably believed to have been the best interests of the
Plan and its Participants.
XV-2
<PAGE>
15.03 MERGER, CONSOLIDATION OR TRANSFER OF ASSETS. There shall be no
merger or consolidation of all or any part of the Plan with, or transfer of the
assets or liabilities of all or any part of the Plan to, any other Qualified
Plan unless each Participant who remains a Participant hereunder and each
Participant who becomes a participant in the other Qualified Plan would receive
a benefit immediately after the merger, consolidation or transfer (determined as
if the other Qualified Plan and the Plan were then terminated) which is equal to
or greater than the benefit they would have been entitled to receive under the
Plan immediately before the merger, consolidation or transfer if the Plan had
then terminated.
15.04 SPENDTHRIFT CLAUSE.
(a) GENERAL RULE. Except as provided in subsection (b), the rights of
any Participant or Beneficiary to and in any benefits under the Plan
shall not be subject to assignment or alienation, and no Participant
or Beneficiary shall have the power to assign, transfer or dispose
of such rights, nor shall any such rights to benefits be subject to
attachment, execution, garnishment, sequestration, the laws of
bankruptcy or any other legal or equitable process.
(b) QUALIFIED DOMESTIC RELATIONS ORDER. Subsection (a) shall not apply
to a "qualified domestic relations order." A "qualified domestic
relations order" means a judgment, decree or order made pursuant to
a state domestic relations law which relates to the provision of
child support, alimony payments or marital property rights to a
spouse, former spouse, child or other dependent of a Participant;
creates or recognizes the existence of an alternate payee's right
to, or assigns to an alternate payee the right to, receive all or a
portion of the benefits payable with respect to a Participant under
the Plan; and meets the following additional requirements:
(1) Such order clearly specifies:
(A) The name and the last known mailing address (if any) of
the Participant and the name and mailing address of each
alternate payee covered by the order.
XV-3
<PAGE>
(B) The amount or percentage of the Participant's benefits
to be paid by the Plan to each such alternate payee, or
the manner in which such amount or percentage is to be
determined.
(C) The number of payments or period to which such order
applies.
(D) Each plan to which such order applies.
(2) Such order does not require:
(A) The provision of any type or form of benefit, or any
option, not otherwise provided under the Plan.
(B) The provision of increased benefits (determined on the
basis of actuarial value).
(C) The payment of benefits to an alternate payee which are
required to be paid to another alternate payee under
another order previously determined to be a qualified
domestic relations order.
15.05 RIGHTS OF PARTICIPANTS. Participation in the Plan shall not give any
Participant the right to be retained in the employ of the Company or Affiliated
Company or any right or interest in the Plan or the Trust Fund except as
expressly provided herein.
15.06 GENDER, TENSE AND HEADINGS. Whenever any words are used herein in
the masculine gender, they shall be construed as though they were also used in
the feminine gender in all cases where they would so apply. Whenever any words
used herein are in the singular form, they shall be construed as though they
were also used in the plural form in all cases where they would so apply.
Headings of Articles, Sections and subsections as used herein are inserted
solely for convenience and reference and constitute no part of the Plan.
15.07 COUNTERPARTS. This Plan and any amendments thereto may be executed
in an original and any number of counterparts, each of which shall be deemed to
be an original of one and the same instrument.
XV-4
<PAGE>
15.08 GOVERNING LAW. The Plan shall be construed and governed in all
respects in accordance with applicable federal law and, to the extent not
preempted by such federal law, in accordance with the laws of the State of
California.
Executed this 22nd day of December 1994.
"Company"
WHITTAKER CORPORATION
By /s/ Thomas A. Brancati, President
------------------------------------------
By /s/ Richard B. Levin, Chief Financial Officer
---------------------------------------------
XV-5
<PAGE>
APPENDIX A
SPECIAL RULES FOR CERTAIN EMPLOYEES
1. SPECIAL RULE FOR FORMER EMPLOYEES OF CROWN ALUMINUM INDUSTRIES
DIVISION.
(a) The provisions of this Section shall apply to any Participant who
was employed by the Crown Aluminum Industries Division of the
Company as of February 17, 1977, if (1) such Participant was a
Participant in this Plan as of such date, and (2) as of February 18,
1977 such Participant became an employee of Hunter Douglas, Inc. (or
of a related corporation which is a member of a controlled group of
corporations including Hunter Douglas, Inc., within the meaning of
Section 414 of the Code).
(b) In the case of a Participant to whom this Section applies, Days of
Service shall accrue with respect to periods of employment by Hunter
Douglas, Inc. (or by a related corporation described in subsection
(a) above) for the limited purpose of determining such Participant's
Vested Service under this Plan. Such Vested Service shall be taken
into account for the limited purpose of determining (1) the
nonforfeitable percentage of such Participant's Accrued Benefit, (2)
such Participant's eligibility to begin receiving early retirement
benefits, (3) the entitlement of such Participant's Spouse to a
death benefit pursuant to Section 6.01 and (4) whether a break in
service and forfeiture of benefits has occurred, all with respect to
the Accrued Benefit of such Participant as of February 17, 1977.
(c) Days of Service and Vested Service to be recognized pursuant to this
Section shall be computed as provided in Sections 1.14 and 1.50,
respectively, as though Hunter Douglas, Inc. and the related
corporations described in subsection (a) above were Affiliated
Companies but not Participating Companies. In computing the Days of
Service and Vested Service of any Participant to whom this Section
applies (for periods of employment by Hunter Douglas, Inc. and its
related corporations described in subsection (a) above), the
Committee may, in its discretion
A-1
<PAGE>
conclusively rely upon information supplied by Hunter Douglas, Inc.
and its related corporations, and all Participants and Beneficiaries
shall be bound thereby.
(d) Notwithstanding any other provision to the contrary in this Plan or
in this Section, no individual employed by Hunter Douglas, Inc. or
by a corporation related to it shall, by reason of such employment,
(1) earn any additional Benefit Service after February 17, 1977, (2)
increase his minimum monthly retirement benefit beyond the amount
accrued as of February 17, 1977, (3) be eligible for any increased
benefits resulting from any amendment to the Plan increasing the
level, amount, type or commencement date of benefits (except an
amendment expressly so providing) or (4) be otherwise eligible for
an increase in his Accrued Benefit determined as of February 17,
1977.
(e) If a Participant to whom this Section applies is reemployed by the
Company or any Affiliated Company and again becomes eligible to
accrue benefits under the Plan, Days of Service and Vested Service
recognized under this Section shall not be taken into account for
any purpose with respect to benefits accrued during such new period
of active participation in this Plan, unless otherwise determined by
the Committee. In the case of a Participant to whom this Section
applies, for the limited purpose of determining when such
Participant's benefits shall be payable, termination of employment
with Hunter Douglas, Inc. and its related corporations (as described
in subsection (a) above) shall be treated as a Severance.
2. PAST SERVICE RECOGNITION FOR EMPLOYEES COVERED UNDER COLLECTIVE
BARGAINING AGREEMENT. Notwithstanding any other provision of the Plan to the
contrary, for those Employees who were actively employed by the Company or any
Affiliated Company as of January 1, 1981, service with the Company or any
Affiliated Company which was performed prior to January 1, 1976 shall not fail
to be recognized under the Plan for purposes of determining eligibility to
participate or vesting merely because such service was performed by Employees
who were covered by a collective bargaining agreement and did not participate in
the Plan.
A-2
<PAGE>
3. SPECIAL PROVISION FOR BERWICK FORGE AND FABRICATING DIVISION
EMPLOYEES. This Section shall apply to any Participant who (a) is employed on or
after July 1, 1978 by the Berwick Forge and Fabricating Division of the Company,
(b) is represented by United Steelworkers of America, Local 8567, and (c) is
entitled to receive a retirement benefit under the Plan by reason of the
amendment and merger into this Plan of the Pension Plan For Employees Who Are
Members Of The Berwick Industrial Workers Union ("Berwick Plan"). In the case of
a Participant to whom this Section applies, the amount of the retirement
benefit, if any, which the Participant is entitled to receive pursuant to
Section 5.03(a) of the Plan with respect to "credited service" which was earned
and recognized on or before June 30, 1972 under the Berwick Plan shall be $5.50
per month for each year of such "credited service." For purposes of this Section
only, the term "credited service" shall have the meaning ascribed to it under
provisions of the Berwick Plan as in effect immediately prior to amendment and
merger of the Berwick Plan into this Plan.
4. SPECIAL PROVISION FOR CERTAIN PARTICIPANTS IN THE PLAN AND THE
WHITTAR INDUSTRIES, LTD. EMPLOYEES' PENSION PLAN.
(a) The following special rules shall apply to certain participants in
the Whittar Industries, Ltd. Employees' Pension Plan (the "Whittar
Plan"), which was merged into the Plan:
(1) Participants in the Whittar Plan who were employees of the
Partnership on the Closing Date and immediately thereafter
became employees of Metals, the Grant Partnership or the
Grant General Partner shall not accrue any additional
benefits under the Whittar Plan or this Plan after the
Closing Date, unless they become Participants in this Plan.
However, the interest of such participants in their accrued
benefits under the Whittar Plan as of the Closing Date shall
continue to become vested and nonforfeitable in accordance
with the terms of this Plan based on such Participants'
service with Metals, the Grant Partnership or the Grant
General Partner (or any other trade or business that is
treated as a single employer with Metals, the
A-3
<PAGE>
Grant Partnership or the Grant General Partner under Section
414(b), (c) or (m) of the Code) after the Closing Date.
(2) Participants in the Whittar Plan who were employees of the
Partnership on the Closing Date and immediately thereafter
became employees of Whittar (including employees of the
Technibilt Business) shall become Participants in their Plan
in accordance with Article II and shall accrue benefits under
the Plan in accordance with Article V. In no event shall such
Participants' Accrued Benefits under the Plan at any time
after the Closing Date be less than such Participants'
accrued benefits under the Whittar Plan as of the Closing
Date.
(3) All other participants in the Whittar Plan on the Closing
Date shall be entitled to receive payment of their vested
accrued benefits under the Whittar Plan in accordance with
the terms of this Plan, but shall only become Participants in
this Plan if they satisfy the eligibility requirements of
Article II.
(b) Accrued Benefits which were transferred from the Whittar Plan to
this Plan shall be distributable in accordance with the terms of
this Plan, except that a participant in the Whittar Plan who became
employed by Metals, the Grant Partnership or the Grant General
Partner after the Closing Date shall not be considered to have a
Severance until the participant separates from service with Metals,
the Grant Partnership, the Grant General Partner (or any other trade
or business that is treated as a single employer with Metals, the
Grant Partnership or the Grant General Partner under Section 414(b),
(c) or (m) of the Code), the Company and all Affiliated Companies.
(c) Participants in the Plan who were Employees on the Option Closing
Date and immediately thereafter became employees of Metals, the
Technibilt Partnership or the Technibilt General Partner shall not
accrue any additional benefits under this Plan after the Option
Closing Date, unless they again become eligible to participate in
this Plan in accordance with Article II. However, the interest of
such
A-4
<PAGE>
Participants in their Accrued Benefits shall continue to become
vested and nonforfeitable in accordance with the terms of this Plan
based on such Participants' service with Metals, the Technibilt
Partnership or the Technibilt General Partner (or any other trade or
business that is treated as a single employer with Metals, the
Technibilt Partnership or the Technibilt General Partner under
Section 414(b), (c) or (m) of the Code) after the option Closing
Date.
(d) For purposes of this Section 4, the following terms shall have the
meaning given them in the Master Agreement dated December 12, 1986
by and among Whittar Industries, Ltd., The Arlen Corporation, Arlen
Metals Corporation, Whittaker Metals Corporation and Whittaker
Corporation: Closing Date; Grant General Partner; Grant Partnership;
Metals; Option Closing Date; Technibilt Business; Technibilt General
Partner; and Technibilt Partnership.
5. SPECIAL RULES FOR FORMER EMPLOYEES OF CERTAIN DIVISIONS AND
SUBSIDIARIES. The provisions of this Section 5 shall apply to Participants who
were employed by the following divisions or subsidiaries and who ceased to be
Employees in connection with the sale of such divisions or subsidiaries. Such a
Participant's service with the specified division or subsidiary began being
taken into account under the Plan as of the date indicated in the following
schedule. The Participant's subsequent service with the purchaser of the
division or subsidiary shall continue to be taken into account under the Plan
for purposes of determining the Participant's Days of Service and Vested
Service.
<TABLE>
<CAPTION>
Date from which
Division or subsidiary Date of sale service is counted
------------------------------ ---------------- ----------------------
<S> <C> <C>
Crown Aluminum 06/01/77 01/01/69
Medicus Affiliates 04/15/83 Date of hire
Microbiological Assoc. 07/27/84 Date of hire
Acrodyne 12/06/84 10/31/78
Toxigenics 02/10/85 Date of hire
Trojan Yacht 03/01/85 08/16/54
Bertram Yacht 03/01/85 01/01/70
Balboa Marine 06/30/86 03/01/70
</TABLE>
A-5
<PAGE>
<TABLE>
<CAPTION>
Date from which
Division or subsidiary Date of sale service is counted
------------------------------ ---------------- ----------------------
<S> <C> <C>
Kettenburg Marine 06/30/86 12/01/57
Grant Products Non-union 12/12/86 Date of hire
Juster Steel 04/26/87 10/01/75 (BU)
07/01/68 (NB)
Duall/Wind Plastics 10/29/89 02/01/69
Ram Chemicals 09/29/89 Date of hire
Thompson Paint Co. 09/29/89 08/01/88
Ram Chemicals (East) 09/29/89 Date of hire
Whittaker Plastics:
Doran 10/01/89 Date of hire
Anjac 10/01/89 Date of hire
</TABLE>
6. SPECIAL RULES FOR RECOGNITION OF SERVICE WITH CERTAIN FORMER
EMPLOYERS. This Section 6 shall apply to Participants who formerly were employed
by the following entities and who became Employees in connection with the
acquisition of such entities by the Company. Such a Participant's prior service
with such an entity shall be taken into account under the Plan from the date
indicated for purposes of determining the Participant's Days of Service and
Vested Service.
<TABLE>
<CAPTION>
Effective date Date from which
Entity of coverage service is counted
------------------------------ ---------------- ----------------------
<S> <C> <C>
Atech 05/17/85 Date of hire
Batavia 07/01/68 07/01/68
Bauer 07/01/68 07/01/68
Colton 07/01/68 Date of hire
Corporate 11/01/67 Date of hire
Dallas Metals 01/01/69 Date of hire
Dayton Chemicals 12/01/68 Date of hire
Decatur 07/01/68 07/01/68
Duall/Wind Plastics 02/01/69 02/01/69
Electronic Resources 10/01/69 08/31/52
Haynes 01/01/79 Date of hire
Heico 08/10/79 Date of hire
Houston Metals 01/01/69 06/01/67
</TABLE>
A-6
<PAGE>
<TABLE>
<S> <C> <C>
Lafayette Metals 01/01/69 01/01/69
Norris 01/31/85 Date of hire
</TABLE>
A-7
<PAGE>
<TABLE>
<CAPTION>
Effective date Date from which
Entity of coverage service is counted
---------------------------------- ---------------- ----------------------
<S> <C> <C>
North Brunswick:
Non-union 02/01/79 Date of hire
Bargaining unit 11/03/81 Date of hire
Continental Technical
Finishes Corporation:
Non-union 12/03/86 Date of hire
Bargaining unit 12/03/86 12/03/86
Orrville:
Non-union 07/01/68 07/01/68
Bargaining unit 10/01/72 10/01/72
Park Chemical
Non-union 01/01/89 Date of hire
Piedmont 11/08/88 11/08/88
Providence Chemicals
Non-union 01/01/79 Date of hire
Ram Chemicals 07/01/68 Date of hire
Thomson Paint Co. 08/01/88 08/01/88
Ram Chemicals (East) 07/01/68 Date of hire
Technibilt
Non-union 01/01/82 Date of hire
Tulsa Metals 01/01/69 01/01/69
Water Management Systems 03/01/74 Date of hire
Whittaker Bioproducts 01/01/70 Date of hire
Whittaker Coating Development Lab 07/01/68 Date of hire
Whittaker Coatings Research Center 07/01/68 Date of hire
Whittaker Controls 11/01/67 Date of hire
Whittaker Electronic:
Systems 10/01/69 09/30/59
Command, Control (4C's) 01/01/86 Date of hire
Lee Telecommunications 06/13/86 Date of hire
REL, Inc. 06/09/86 Date of hire
Whittaker Ordnance 10/24/80 Date of hire
Whittaker Plastics:
Doran 08/30/85 Date of hire
Anjac 02/01/87 Date of hire
Whittaker Power Storage Systems 11/01/67 Date of hire
</TABLE>
A-8
<PAGE>
<TABLE>
<S> <C> <C>
Whittaker Yardney Power:
Systems Non-union 03/01/70 Date of hire
GTE Corp. 06/13/88 Date of hire
Winters Industries
Non-union 01/01/72 Date of hire
Yardney Electric 11/12/69 Date of hire
</TABLE>
A-9
<PAGE>
CERTIFICATE OF SECRETARY OF
WHITTAKER CORPORATION
I, RICHARD B. LEVIN, do hereby certify that I am the duly elected
and acting Secretary of Whittaker Corporation, a Delaware corporation, that at a
special meeting of the Board of Directors of Whittaker Corporation held on
December 15, 1995, the following resolutions were adopted, that they have not
been modified or rescinded, and that they remain in full force and effect as of
the date of this certificate:
WHEREAS, Whittaker Corporation (hereafter the "Employer") maintains
the Whittaker Corporation Employees' Pension Plan (hereafter, the "Plan") Plan
Number 001; and
WHEREAS, the Employer may amend the Plan at any time pursuant to
Article XIII; and
WHEREAS, the Internal Revenue Service as a condition precedent to
issuing a favorable determination letter as to the qualified status of the Plan
under Section 401(a) of the Internal Revenue Code has requested that certain
provisions of the Plan be amended; and
WHEREAS, the Board of Directors of the Employer previously
authorized the officers of the Employer to perform all appropriate ministerial
actions to effect the Plan as a tax-qualified retirement plan;
NOW, THEREFORE, the Plan shall be amended effective as of January 1,
1994 or such earlier date required by law as follows:
Article XIII, Section 13.01(d) shall be amended in its entirety to read as
follows:
"No amendment shall have the effect of reducing the percentage
of the vested and nonforfeitable interest of any Participant in
his Accrued Benefit nor shall the vesting provisions of the Plan
be amended unless each participant with at least three Years of
Service (including Years of Service, if any, disregarded pursuant
to Article VII) is permitted to elect to continue to have the
prior vesting provisions apply to him, within 60 days after the
latest of: the date on which the amendment is adopted, the date on
which the amendment is effective, or the date on which the Participant
is issued written notice of the amendment."
Article V, Section 5.07 shall be amended to add the following Section
5.07(g) thereto:
<PAGE>
"(g) Applicable Law. Distributions will be made in
accordance with Code Section 401(a)(9) and the Treasury
Regulations thereunder including, but not limited to, Treasury
Regulations (S)1.401(a)(9)-2."
Executed this 15th day of December, at Simi Valley, California.
/s/ Richard B. Levin
__________________________________________
Richard B. Levin
Secretary
<PAGE>
EXHIBIT 10.11
WHITTAKER CORPORATION PARTNERSHIP PLAN
AMENDED AND RESTATED EFFECTIVE
NOVEMBER 1, 1994
<PAGE>
WHITTAKER CORPORATION PARTNERSHIP PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
ARTICLE I -- DESIGNATION OF PLAN AND DEFINITIONS..................................... I--1
1.01 Title..................................................................... I--1
1.02 Definitions............................................................... I--1
ARTICLE II -- SERVICE................................................................ II--1
2.01 Period of Service......................................................... II--1
2.02 Year of Eligibility Service............................................... II--1
2.03 Hours of Service.......................................................... II--2
2.04 Former Employee or Participant............................................ II--3
ARTICLE III -- PARTICIPATION......................................................... III--1
3.01 Eligibility Requirements.................................................. III--1
3.02 Participation Application................................................. III--1
3.03 Participant May Name Beneficiary.......................................... III--2
3.04 Termination of Participation.............................................. III--2
3.05 Termination Date.......................................................... III--3
3.06 Restricted Participation.................................................. III--4
3.07 Eligibility upon Reemployment............................................. III--5
ARTICLE IV -- CONTRIBUTIONS.......................................................... IV--1
4.01 Employer Contributions.................................................... IV--1
4.02 Payment................................................................... IV--3
4.03 Salary Deferral Contributions............................................. IV--3
4.04 Limitations on Contributions for Highly Compensated Employees............. IV--5
4.05 Distribution of Excess Deferrals, Excess Contributions and Excess
Aggregate Contributions................................................. IV--13
4.06 Qualified Voluntary Employee Contributions Not Permitted.................. IV--20
4.07 Duties of Funding Agent Regarding Contributions........................... IV--20
4.08 Special Investment Directions............................................. IV--20
4.09 Transfers from Other Qualified Plans...................................... IV--22
4.10 Rollover Contributions.................................................... IV--22
4.11 Segregation of Rollovers.................................................. IV--23
</TABLE>
(i)
<PAGE>
TABLE OF CONTENTS, CONTINUED
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
ARTICLE V -- ALLOCATIONS TO PARTICIPANTS' ACCOUNTS................................... V--1
5.01 Individual Accounts....................................................... V--1
5.02 Order of Adjustment to Accounts........................................... V--1
5.03 Evaluation of Accounts.................................................... V--1
5.04 Crediting of Salary Deferral Contributions................................ V--2
5.05 Crediting of Employer Profit Sharing Contributions........................ V--2
5.06 Limitation on Allocations to Participants................................. V--3
5.07 Accounts in General....................................................... V--8
5.08 Interim Evaluation of Accounts............................................ V--8
5.09 Insurance................................................................. V--9
ARTICLE VI -- RIGHT TO BENEFITS...................................................... VI--1
6.01 Vesting of Interest in Salary Deferral, Employer Matching, Rollover and
Permanent Accounts..................................................... VI--1
6.02 Vesting of Interest in Employer Profit Sharing Account.................... VI--1
6.03 Fully Vested Benefits..................................................... VI--2
6.04 Partially Vested Benefits................................................. VI--2
6.05 Forfeitures............................................................... VI--3
6.06 Top Heavy Provisions...................................................... VI--4
6.07 Persons under Legal or Other Disability................................... VI--6
6.08 Missing Participants or Beneficiaries..................................... VI--6
6.09 Lien for Debts to Fund.................................................... VI--7
6.10 Loans to Participants..................................................... VI--7
6.11 Withdrawals prior to Termination of Employment............................ VI--11
6.12 Nature of Participants' Interest.......................................... VI--13
6.13 Suspension of Benefits and Immediate Participation upon Reemployment...... VI--14
6.14 Application for Benefits.................................................. VI--14
6.15 Appeals Procedure......................................................... VI--14
6.16 Application for Correction of Annual Statement............................ VI--15
ARTICLE VII -- DISTRIBUTION OF BENEFITS.............................................. VII--1
7.01 Methods of Making Distributions........................................... VII--1
7.02 Involuntary Cash-Out of Vested Participant Accounts....................... VII--3
7.03 Voluntary Cash-Out of Vested Participant Accounts......................... VII--3
7.04 Withholding on Distributions.............................................. VII--3
</TABLE>
(ii)
<PAGE>
TABLE OF CONTENTS, CONTINUED
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
ARTICLE VIII -- THE COMMITTEE........................................................ VIII--1
8.01 Committee................................................................. VIII--1
8.02 Committee Action.......................................................... VIII--1
8.03 Rights and Duties......................................................... VIII--2
8.04 Funding Policy and Method................................................. VIII--5
8.05 Transmittal of Information................................................ VIII--5
8.06 Compensation.............................................................. VIII--5
8.07 Retention of Advisors..................................................... VIII--6
8.08 Allocation and Delegation of Fiduciary Responsibilities................... VIII--6
8.09 Indemnification........................................................... VIII--7
8.10 Determinations and Corrections............................................ VIII--7
8.11 Designation of Agents..................................................... VIII--7
8.12 Relationship of Fiduciaries............................................... VIII--7
8.13 Discharge of Duties by Fiduciaries........................................ VIII--8
8.14 Multiple Fiduciary Capacities............................................. VIII--9
ARTICLE IX -- AMENDMENT AND TERMINATION.............................................. IX--1
9.01 Amendment by Employer..................................................... IX--1
9.02 Retroactive Amendments.................................................... IX--2
9.03 Discontinuance or Termination of Plan..................................... IX--2
9.04 Partial Termination of Plan............................................... IX--3
9.05 Failure to Contribute..................................................... IX--4
9.06 Merger and Consolidation of Plan.......................................... IX--4
9.07 Substitution of Successor Employer........................................ IX--4
9.08 Distribution upon Sale.................................................... IX--4
ARTICLE X -- SPECIAL PROVISIONS FOR CERTAIN FORMER PARTICIPANTS IN WHITTAR
INDUSTRIES, LTD. SAVINGS PLAN AS AMENDED (401(K)).................................. X--1
10.01 Applicability............................................................ X--1
10.02 Participant Transfer Contributions....................................... X--1
ARTICLE XI -- MISCELLANEOUS.......................................................... XI--1
11.01 Contributions Not Recoverable............................................ XI--1
11.02 Employment Rights........................................................ XI--2
11.03 Receipt or Release....................................................... XI--3
11.04 Alienation............................................................... XI--3
11.05 Controlling Law.......................................................... XI--3
11.06 Text Prevails over Captions.............................................. XI--4
11.07 Counterparts............................................................. XI--4
11.08 Successors and Assigns................................................... XI--4
</TABLE>
(iii)
<PAGE>
TABLE OF CONTENTS, CONTINUED
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE XII -- PARTICIPATING EMPLOYERS............................................... XII--1
12.01 Adoption by Affiliated Employers......................................... XII--1
12.02 Requirements of Participating Employers.................................. XII--1
12.03 Designation of the Employer as Agent..................................... XII--1
12.04 Employee Transfers....................................................... XII--2
12.05 Participating Employer Contributions..................................... XII--2
12.06 Amendment................................................................ XII--2
12.07 Participating Employer Discontinuance.................................... XII--2
12.08 Committee Authority...................................................... XII--3
</TABLE>
(v)
<PAGE>
WHITTAKER CORPORATION
PARTNERSHIP PLAN
This Plan is made and entered into by Whittaker Corporation, a corporation
organized and existing under the laws of the State of Delaware, with its
-
principal place of business located at Los Angeles, California.
RECITALS
1. Whittaker Corporation feels the need to continue to encourage Employees to
contribute to the growth and profitability of the Company.
2. Whittaker Corporation has decided to continue to afford its Employees the
opportunity to share in the rewards of continued long and faithful service.
3. By execution of this instrument, the Employer desires to amend and restate
as of November 1, 1994, the administrative provisions of the Whittaker
Corporation Partnership Plan, and as of January 1, 1989 or such earlier
date as required by law, those regulatory provisions necessary to comply
with the applicable provisions of the Employee Retirement Income Security
Act of 1974 (Public Law 93-406), as amended, and to continue to qualify the
Plan as a profit sharing plan under Sections 401(a) and (k) of the Internal
Revenue Code of 1986, as amended.
OPERATIVE PROVISIONS
NOW, THEREFORE, effective November 1, 1994, or such earlier date as
required by law the Whittaker Corporation Partnership Plan, first promulgated
and established, effective February 16, 1968, is restated and as so promulgated
and restated, continues to constitute a profit sharing plan for
1
<PAGE>
the Employer. Under no circumstances may a salary reduction agreement or other
deferral mechanism pursuant to this Plan be adopted retroactively.
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ARTICLE I
DESIGNATION OF PLAN AND DEFINITIONS
1.01 TITLE. This profit sharing plan shall be known as the "Whittaker
Corporation Partnership Plan."
1.02 DEFINITIONS. Whenever used herein, the following terms shall have the
meanings set forth below, unless a different meaning is clearly required by the
context:
(a) "Adjustment Factor" shall mean the cost of living adjustment factor
prescribed by the Secretary of the Treasury under Section 415(d) of
the Code for years beginning after December 31, 1987, as applied to
such items and in such manner as the Secretary shall provide.
(b) "Affiliated Employer" shall mean the Employer and any corporation
which is a member of a controlled group of corporations (as defined
in Section 414(b) of the Code) which includes the Employer; any trade
or business (whether or not incorporated) which is under common
control (as defined in Section 414(c) of the Code) with the Employer;
any organization (whether or not incorporated) which is a member of
an affiliated service group (as defined in Section 414(m) of the
Code) which includes the Employer; any "leasing organization" (as
defined in Section 414(n) of the Code) to the extent its employees
constitute "leased employees" (within the meaning of Code Section
414(n)) with respect to a Participating Employer; and any other
entity required to be aggregated with the Employer pursuant to
regulations under Section 414(o) of the Code.
(c) "Anniversary Date" shall mean the last day of each Plan Year which
ends on or after the Effective Date. Such date shall be the valuation
date for determining Top Heavy status for the
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succeeding Plan Year, except that the last day of the first Plan Year
shall function as the determination date for the first Plan Year.
(d) "Annual Addition" shall mean, in the case of any Employee, when used
with respect to the Plan or a Related Plan, the sum for any Plan Year
of (i) the amount of contributions made by the Employer (or by an
Affiliated Employer maintaining a Related Plan), including any Salary
Deferral Contributions, for the Employee's benefit under the Plan (or
a Related Plan); (ii) the Employee Contributions for such Year under
such Plan (or the Related Plan); (iii) forfeitures, if any, allocated
to the Employee's Account for such Year under the Plan (or the
Related Plan); (iv) excess contributions and excess aggregate
contributions, as defined under Section 4.05(a), for such year which
are distributed in accordance with Section 4.05(c); and (v)
contributions allocated on the Employee's behalf to any individual
medical account as defined in Section 415(l)(2) of the Code which is
part of a pension or annuity plan or which are attributable to post-
retirement medical benefits under a welfare benefit fund as defined
in Section 419(e) of the Code.
A restored forfeiture pursuant to Section 6.04, a transfer from
another qualified pension plan pursuant to Section 4.09, and a
rollover contribution pursuant to Section 4.10 shall not be counted
as part of any Participant's "annual addition".
Notwithstanding the foregoing, the Annual Addition for any
Limitation Year starting prior to January 1, 1987 shall not be
recomputed to count all Employee voluntary contributions as Annual
Additions.
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(e) "Beneficiary" or "Beneficiaries" shall mean the person or persons
last designated by a Participant in accordance with Section 3.03 to
receive the benefits specified hereunder in the event of the
Participant's death. A designation of Beneficiary other than the
spouse shall be automatically revoked on the marriage or remarriage
(other than a common-law marriage) of a Participant. The designation
of the spouse as Beneficiary shall be automatically revoked upon any
finalized divorce of a Participant subsequent to the date of filing
of the designation of the Beneficiary. If a Participant fails to
designate a Beneficiary before his death, or if no designated
Beneficiary survives the Participant, the Committee shall direct the
Funding Agent to pay any benefits payable to a Beneficiary of such
Participant pursuant to the provisions of this Plan to the
Participant's spouse if such spouse survives the Participant or, if
no spouse survives or exists, then the duly appointed and currently
acting personal representative of the Participant's estate. If there
is no personal representative of the Participant's estate duly
appointed and acting in that capacity within sixty (60) days after
the Participant's death, then Beneficiary or Beneficiaries shall mean
the person or persons who can verify by affidavit or Court order to
the satisfaction of the Committee that they are legally entitled to
receive the benefits specified hereunder pursuant to the laws of
intestate succession or other statutory provision in effect at the
Participant's death in the state in which the Participant resided.
In the event any amount is payable under the Plan to a minor,
payment shall not be made to the minor, but instead shall be paid to
that person's then living parent(s) to act as custodian or, if no
parent of that person is then living, to a custodian
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selected by the Committee to hold the funds for the minor under the
Uniform Gifts to Minors Act in effect in the jurisdiction in which
the minor resides. If no parent is living and the Committee decides
not to select another custodian to hold the funds for the minor, then
payment shall be made to the duly appointed and currently acting
guardian of the estate for the minor or, if no guardian of the estate
for the minor is duly appointed and currently acting within sixty
(60) days after the date the amount becomes payable, payment shall be
deposited with the court having jurisdiction over the estate of the
minor.
In the event any amount is payable under the Plan to a person
for whom a conservator has been legally appointed, the payment shall
be distributed to the duly appointed and currently acting
conservator, without any duty on the part of the Committee to
supervise or inquire into the application of any amounts so paid.
(f) "Board of Directors" or "Board" shall mean the Board of Directors of
the Employer or its successor in interest resulting from merger,
consolidation or transfer of substantially all assets, which
expressly agrees in writing to continue the Plan as its own.
(g) "Break in Employment" shall mean the separation from Service where an
Employee completes less than 1 day of Service during a twelve (12)
month period with the Employer, all Affiliated Employers or any
Predecessor Employer as a result of resignation, discharge, death,
disability or retirement. In determining whether and when a Break in
Employment has occurred, the following rules shall apply:
(i) A Break in Employment shall not occur solely by reason of a
Leave of Absence authorized by the Employer or an Affiliated
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Employer in accordance with established nondiscriminatory
policies or a vacation, military or maternity/paternity leave.
Effective August 5, 1993, leaves of absence shall also be
granted in accordance with the requirements of The Family and
Medical Leave Act of 1993. Accordingly, an eligible Employee
with more than one year of continuous service, during which
the Employee worked at least one thousand two hundred and
fifty (1,250) hours, may take up to a total of twelve (12)
weeks in a twelve (12)-month period for unpaid family care
leave. In determining a Break in Service for eligibility
purposes, the twelve (12)-month computation period shall be
the twelve (12) consecutive month period specified in Section
2.02.
(ii) Failure to return to work after the expiration of any Leave of
Absence shall be considered a resignation effective as of the
earlier of (1) expiration of such Leave of Absence, or (2)
twelve (12) months following the commencement of such Leave of
Absence, except in the case of maternity or paternity leave
where the initial one (1)-year period of severance shall not
be counted.
(iii) A Break in Employment shall not occur solely by reason of a
Layoff from the Employer or an Affiliated Employer, but a
Break in Employment shall occur on the earlier of (1) a
refusal by the Employee to return to the employ of the
Employer or Affiliated Employer, or (2) twelve (12) months
following the commencement of such Layoff.
(iv) Failure of any Employee on military leave to make application
for reemployment within the period of time during which he is
entitled to retention of reemployment
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rights under applicable laws of the United States shall be
considered a resignation effective as of the expiration date
of such reemployment rights.
(h) "Code" shall mean the Internal Revenue Code of 1986, as amended.
Reference to a Section of the Code shall include that Section and any
comparable Section or Sections of any future legislation that amends,
supplements, or supersedes such section.
(i) "Committee" shall mean the Administrative Committee appointed
pursuant to Article VIII of the Plan.
(j) "Compensation" shall mean an Employee's wages, salaries, fees for
professional services, and other amounts received (without regard to
whether or not an amount is paid in cash) for services actually
rendered in the course of employment with the Employer to the extent
that amounts are includable in gross income (including, but not
limited to commissions paid salesman, compensation for service on the
basis of a percentage of profits, commissions on insurance premiums,
tips, bonuses, reimbursements and expense allowances). Compensation
shall also include any remuneration which is currently excluded from
the Participant's gross income by reason of the application of
Sections 125, 402(a)(8), 402(h)(1)(B), or 403(b) of the Code.
Compensation with respect to any Employee shall exclude:
(i) Any compensation directly paid or payable as fringe benefits
including benefits received from the Whittaker Corporation
Long Term Incentive Plan and the HMO Bonus Incentive Plan.
(ii) Any contributions made by the Employer for or on account of
the Employees under this Plan, except for Salary Deferral
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Contributions, or under any other employee benefit plan other
than any specifically excepted herein;
(iii) Any compensation paid or payable by reason of services
performed prior to the date the Employee becomes a
Participant; and
(iv) Any compensation paid or payable by reason of services
performed after the date the Employee ceased to be a
Participant.
(v) Any compensation not included in the Participant's gross
income for the current taxable year pursuant to non-qualified
deferred compensation plans, however, such amounts shall be
included in Compensation in the year such amounts are taxable
to the Participant under an unfunded non-qualified plan; and
(vi) Amounts included in an Employee's gross income under Section
79 of the Code.
(vii) For Plan Years beginning after December 31, 1988, Compensation
shall exclude amounts in excess of two hundred thousand
dollars ($200,000) except as such limit is adjusted for cost
of living in accordance with the provisions of Section
401(a)(17) of the Code. In determining the Compensation of a
Participant for purposes of this limitation, the rules of
Section 414(q)(6) of the Code shall apply, except in applying
such rules, the term "family" shall include only the spouse of
the Participant and any lineal descendants of the Participant
who have not attained age nineteen (19) before the close of
the year. If, as a result of the application of such rules the
adjusted two hundred thousand dollars ($200,000) limitation is
exceeded, then the
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limitation shall be prorated among the affected individuals in
proportion to each such individual's Compensation as
determined under this Section prior to the application of this
limitation.
(viii) In addition to other applicable limitations set forth in the
Plan, and notwithstanding any other provision of the Plan to
the contrary, for Plan Years beginning on or after January 1,
1994, the annual Compensation of each Employee taken into
account under the Plan shall not exceed the Omnibus Budget
Reconciliation Act of 1993 (OBRA '93) annual Compensation
limit. The OBRA '93 annual Compensation limit is one hundred
fifty thousand dollars ($150,000), as adjusted by the
Commissioner for increases in the cost of living in accordance
with Section 401(a)(17)(B) of the Code. The cost-of-living
adjustment in effect for a calendar year applies to any
period, not exceeding twelve (12) months, over which
Compensation is determined (determination period) beginning in
such calendar year. If a determination period consists of
fewer than twelve (12) months, the OBRA '93 annual
Compensation limit will be multiplied by a fraction, the
numerator of which is the number of months in the
determination period, and the denominator of which is twelve
(12).
For Plan Years beginning on or after January 1, 1994, any
reference in this Plan to the limitation under Section
401(a)(17) of the Code shall mean the OBRA '93 annual
Compensation limit set forth in this provision.
If Compensation for any prior determination period is
taken into account in determining an Employee's benefits
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accruing in the current Plan Year, the Compensation for that
prior determination period is subject to the OBRA '93 annual
Compensation limit in effect for that prior determination
period. For this purpose, for determination periods beginning
before the first day of the first Plan Year beginning on or
after January 1, 1994, the OBRA '93 annual Compensation limit
is $150,000.
Notwithstanding the above provision to the contrary,
Compensation earned but not paid in a Plan Year may include
amounts earned but not paid in a Plan Year because of the
timing of pay periods and pay days if such amounts are paid
during the first few weeks of the next following Plan Year,
the amounts are included on a uniform and consistent basis
with respect to all similarly situated Employees, and no
Compensation is included in more than one Limitation Year.
(k) "Defined Benefit Plan" shall mean any defined benefit plan (as
defined in Section 415(k) of the Code) maintained by the Employer or
by any other Affiliated Employer.
(l) "Effective Date" shall be February 16, 1968 for the original
Whittaker Corporation Partnership Plan and November 1, 1994 for the
amended and restated administrative provisions Plan and, as of
January 1, 1989 or such earlier date as required by law, for those
regulatory provisions necessary to comply with the applicable
provisions of ERISA and the Code.
(m) "Elective Deferrals" or "Salary Deferral Contributions" shall mean
contributions made to the Plan during the Plan Year by the Employer,
at the election of the Participant, in lieu of Compensation and shall
include contributions made pursuant to
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a salary reduction agreement under the Plan made on behalf of a
Participant in accordance with Section 4.03.
(n) "Eligible Employee" shall mean all Employees who have completed one
(1) Year of Eligibility Service. Eligible Employees do not include
(i) any Employee who is a member of a collective bargaining unit and
who is covered by a collective bargaining agreement, which agreement
does not specifically provide for coverage of such Employee under
this Plan, provided that retirement benefits were the subject of good
faith bargaining between Employee representatives and the Employer,
or (ii) any non-resident alien who has no earned income from sources
within the United States unless such nonresident alien is designated
by the Committee, either individually or by reference to a class of
which he is part, as an Employee eligible to become a Participant.
(o) "Employee" shall mean a person employed by the Employer, or an
Affiliated Employer, any portion of whose income is subject to
withholding of income tax and/or for whom Social Security
contributions are made by the Employer or an Affiliated Employer, as
well as any other person qualifying as a common-law Employee of the
Employer or an Affiliated Employer. Employee shall include Leased
Employees within the meaning of Section 414(n)(2) of the Code.
For purposes of this Section 1.02(o), the term "Leased Employee"
shall mean any person (other than an Employee of the Employer) who
pursuant to an agreement between the Employer and any other person
("leasing organization") has performed services for the Employer (or
for the Employer and related persons determined in accordance with
Section 414(n)(6) of the Code) on a substantially full time basis for
a period of at least one year, and
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such services are of a type historically performed by employees in
the business field of the Employer. Contributions or benefits
provided a Leased Employee by the leasing organization which are
attributable to services performed for the Employer shall be treated
as provided by the Employer.
A Leased Employee shall not be considered an Employee of the
Employer if:
(i) Such Employee is covered by a money purchase pension plan
providing:
(1) A nonintegrated employer contribution rate of at least 10
percent (10%) of compensation, as defined in Section
415(c)(3) of the Code, but including amounts contributed
by the Employer pursuant to a salary reduction agreement
which are excludable from the Employee's gross income
under Section 125, Section 402(a)(8), Section 402(h) 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 twenty percent
(20%) of the Employer's nonhighly compensated workforce.
(p) "Employee Contributions" shall mean contributions to the Plan made by
a Participant that are designated or treated at the time of deferral
or contribution as after-tax employee contributions. Employee
Contributions shall include amounts, if any, attributable to excess
contributions within the meaning of Section 401(k)(8)(B) of the Code
which are recharacterized as Employee Contributions under the
provisions of this Plan.
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(q) "Employer" or "Company" shall mean the Employer named above that has
adopted this Plan and whose Plan meets the requirements of Section
401(a) of the Internal Revenue Code of 1986 and, if the context so
requires, shall also mean a Participating Employer and/or an
Affiliated Employer; and any successor of such Employer.
(r) "Employer Matching Account" shall mean the account maintained by the
Committee for each Participant as required by Section 5.01 for the
deposit of Employer Matching Contributions
(s) "Employer Profit Sharing Account" shall mean the account maintained
by the Committee for each Participant as required by Section 5.01 for
the deposit of Employer Profit Sharing Contributions.
(t) "Employment Date" shall mean the latest of:
(i) The Employee's most recent date of employment (the day on
which he is first credited with an Hour of Service) with the
Employer or an Affiliated Employer or a Predecessor Employer
prior to January 1, 1989; or
(ii) The date on which the Employee is first credited with an Hour
of Service for the Employer or an Affiliated Employer or a
Predecessor Employer; or
(iii) His Reemployment Date if he incurs a Break in Employment and
is treated as a new Employee pursuant to Section 2.04.
(u) "ERISA" shall mean the Employee Retirement Income Security Act of
1974 (Public Law 93-406), as amended. Reference to a Section of ERISA
shall include that section and any comparable Section or Sections of
any future legislation that amends, supplements or supersedes such
section.
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(v) "Family Member" shall mean, with respect to any Employee, such
Employee's spouse and lineal ascendants or descendants and spouses of
such lineal ascendants or descendants.
(w) "Fiscal Year" shall mean the taxable year of the Employer beginning
on the first day of November and ending on the last day of October.
(x) "Fund" shall mean the aggregate of all assets held by the Funding
Agent for the accounts of Participants and their Beneficiaries.
(y) "Funding Agent" shall mean the insurance company or companies and/ or
trustee(s) selected by the Board of Directors as a depository for
assets accumulated under this Plan, severally or jointly, as the case
may be.
(z) "Funding Instrument" shall mean the trust and/or insurance contract
entered into by the Employer to fund this Plan.
(aa) "Highly Compensated Employee" shall mean any Employee who performs
services with respect to the Employer during the Plan Year (the
"determination year") and is described in one or more of the
following groups applicable with respect to the determination year or
the "lookback year" determined pursuant to I. T. Reg. 1.414(q)1-T.
Accordingly, the Employer hereby elects to make the lookback
calculation on the basis of the calendar year ending with or within
the applicable determination year. Such Employees shall include any
Employee who:
(i) Was at any time a five percent (5%) owner as defined under
Code Section 416(i)(1); or
(ii) Received Compensation from the Employer in excess of seventy-
five thousand dollars ($75,000) (as adjusted pursuant to Code
Section 415(d)); or
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(iii) Received Compensation from the Employer in excess of fifty
thousand dollars ($50,000) (as adjusted pursuant to Code
Section 415(d)) and who was in the Top Paid Group of Employees
for such Plan Year or such preceding Plan Year; or
(iv) Was at any time an officer and received Compensation greater
than fifty percent (50%) of the amount in excess of Code
Section 415(b)(1)(A) for such Plan Year or such preceding Plan
Year.
(v) An Employee described in paragraphs (ii), (iii) or (iv) above
for the current Plan Year who was not described in such
paragraphs for the preceding Plan Year shall be treated as a
Highly Compensated Employee for the current Plan Year only if
such Employee is one (1) of the one hundred (100) Employees
who receive the most Compensation from the Employer during the
current Plan Year or he is an Employee described under (i)
above.
(vi) For the purposes of paragraph (iii) above, the term "Top Paid
Group" shall mean the top twenty percent (20%) of active
Employees ranked on the basis of Compensation received from
the Employer during the Plan Year.
(vii) For the purposes of paragraph (iv) above, no more than fifty
(50) Employees or, if less, the greater of three (3) Employees
or ten percent (10%) of the Employees shall be treated as
officers. If for any Plan Year no officer of the Employer is
described under paragraph (iv), the highest paid officer of
the Employer for such Plan Year shall be treated as described
in such paragraph.
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(viii) If any Employee is a Family Member of a five percent (5%)
owner or a Highly Compensated Employee in the group consisting
of the ten (10) Highly Compensated Employees paid the greatest
Compensation during a Plan Year, then such Employee shall not
be considered a separate Employee and any Compensation paid to
such Employee (and any contribution made on behalf of such
Employee) shall be treated as if it were paid to or on behalf
of the five percent (5%) owner or Highly Compensated Employee.
(ix) A former Employee shall be treated as a highly compensated
former Employee if such Employee was a Highly Compensated
Employee when such Employee separated from service, or such
Employee was a Highly Compensated Employee at any time after
attaining age fifty-five (55).
(x) For the purpose of this Section 1.02(y):
(A) The term "Compensation" shall have the meaning given such
term by Code Section 415(c)(3).
(B) Employers aggregated under Code Sections 414(b), (c),
(m), (n), or (o) shall be treated as a single Employer.
(xi) The determination of who is a Highly Compensated Employee,
including the determination of the number and identity of the
Employees in the Top Paid Group, the top one hundred (100)
Employees, the number of Employees treated as officers and the
Compensation that is considered, will be made in accordance
with Code Section 414(q) and the regulations thereunder except
as specifically provided to the contrary in Code Section
401(a)(17).
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(bb) "Inactive Participant" shall mean any Employee or former Employee who
has ceased to be a Participant on whose behalf an account is
maintained under the Plan.
(cc) "Key Employee" shall mean each Employee or former Employee (including
a Beneficiary of a Key Employee or former Key Employee) who, at any
time during the current Plan Year or any of the four (4) immediately
preceding Plan Years:
(i) is or was an officer of the Employer having an annual
compensation greater than fifty percent (50%) of the amount
specified under Code Section 415(b)(1)(A) for such year;
(ii) is among the ten (10) Employees having an annual compensation
from the Employer of more than the limitation in effect for
such Year under Code Section 415(c)(1)(A) and owning or
considered to own (within the meaning of Code Section 318)
both more than a one-half percent (.5%) interest and the
largest interests in the Employer;
(iii) is an Employee owning (within the meaning of Code Section 318)
more than five percent (5%) of the Employer; or
(iv) is an Employee receiving more than one hundred fifty thousand
dollars ($150,000) of annual compensation from the Employer
and owning (within the meaning of Code Section 318) more than
one percent (1%) of the Employer.
Notwithstanding the foregoing, no more than fifty (50)
Employees or, if less, the greater of three (3) or ten percent (10%)
(rounded to the next highest integer) of the Employer's Employees
shall be treated as officers of the Employer. Compensation for the
purpose of this Section 1.02(aa) shall have the meaning given such
term by Code Section 414(q)(7).
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For the purposes of determining the number of officers under
(i) above, Employees described in Code Section 418(q)(8) shall be
excluded. For the purposes of (ii) above, if two Employees have the
same interest in the Employer, the Employee having the greater annual
compensation shall be treated as having the larger interest.
(dd) "Layoff" shall mean an involuntary suspension of an Employee's
employment with the Employer or Affiliated Employer resulting from a
reduction of the work force at the Employee's place of employment and
during which the Employee has seniority or other employment rights
with the Employer or Affiliated Employer during a specified recall
period, pursuant to an applicable collective bargaining agreement or
Company policy. No Employee shall be considered to be on Layoff for a
period in excess of the recall period applicable to such Employee
under an applicable collective bargaining agreement.
(ee) "Leave of Absence" shall mean any period of temporary absence
approved in writing by the Employer or an Affiliated Employer.
(ff) "Matching Contribution" shall mean any contribution to the Plan made
by the Employer for the Plan Year and allocated to a Participant's
Account by reason of the Participant's Employee Contributions, if
any, or Elective Deferrals.
(gg) "Named Fiduciary" shall mean the Committee.
(hh) "Non-Highly Compensated Employee" shall mean an Employee of the
Employer who is neither a Highly Compensated Employee nor a Family
Member.
(ii) "Non-Key Employee" shall mean each Employee who is not a Key
Employee.
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(jj) "Participant" shall mean any Eligible Employee who participates in
The Plan in accordance with Article III, including any former
Employee who is receiving or will receive benefits under the Plan. A
Participant ceases to be a Participant when all funds to which he is
entitled under the Plan have been distributed in accordance with the
terms hereof. A Participant shall be treated as benefiting under the
Plan for any Plan Year during which such Participant receives or is
deemed to receive an allocation in accordance with I.T. Regulation
Section 1.410(b)-3(a).
(kk) "Participating Employer" shall mean the Employer and each Affiliated
Employer and any such other business entity which, by resolution of
its board of directors and with the written approval of the Employer,
elects to participate in this Plan.
(ll) "Period of Separation" shall mean the period of time commencing with
the date an Employee incurs a Break in Employment and ending with the
date such Employee is first credited with an Day of Service by the
Employer or an Affiliated Employer.
(mm) "Permanent Account" shall mean the account maintained by the
Committee for each Participant as required by Section 4.09 for the
deposit of assets transferred pursuant to such Section.
(nn) "Plan" shall mean the Whittaker Corporation Partnership Plan
originally effective February 16, 1968 as amended and restated
herein, together with any and all amendments and supplements hereto.
(oo) "Plan Year" shall mean the reporting year used by the Plan beginning
on the first day of January and ending on the last day of December.
The Plan Year shall be the Limitation Year for purposes of ERISA and
for all purposes under this Plan.
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(pp) "Predecessor Employer" shall mean any corporation, partnership, or
sole proprietorship, or a division thereof, a substantial part of the
assets of which are acquired by the Employer either by purchase from,
or liquidation, merger or consolidation of or with, such other
corporation, partnership, or sole proprietorship, which has been
designated by the Employer as a Predecessor Employer for purposes of
this Plan.
(qq) "Qualified Matching Contributions" and "Qualified Nonelective
Contributions" shall have the meanings set forth in this Section
1.02(11). Qualified Matching Contributions shall mean that portion of
the Employer Matching Contributions pursuant to Section 4.01(a) which
are to be treated as Elective Deferrals for purposes of the Actual
Deferral Percentage ("ADP") test described in Section 4.04(a)(ii).
"Qualified Nonelective Contributions" shall mean contributions (other
than Matching Contributions) made by the Employer pursuant to Section
4.01(a) which are to be treated as Elective Deferrals for purposes of
the ADP test. Both Qualified Matching Contributions and Qualified
Nonelective Contributions shall be contributions that the Participant
may not elect to receive in cash earlier than the occurrence of one
of those events applicable to Salary Deferral Contributions as set
forth in Section 4.03.
(rr) "Reemployment Date" shall mean the date on which the Employee is
first credited with an Hour of Service by the Employer, an Affiliated
Employer, or a Predecessor Employer following a Break in Employment.
(ss) "Related Plan" shall mean any defined contribution plan (as defined
in Section 415(k) of the Code), other than this Plan, maintained by
the Employer or by any other Affiliated Employer,
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including, if applicable, after December 31, 1985 any welfare benefit
fund that is defined in Section 419(e) of the Code.
(tt) "Salary Deferral Contributions Account" shall mean a Participant's
Account hereunder to which his Salary Deferral Contributions, as
defined in Section 1.02(m), made pursuant to a salary reduction
agreement are allocated pursuant to Section 4.03.
(uu) "Suspense Account" shall mean an account maintained by the Committee
pursuant to Section 5.06(a)(iii).
(vv) "Top Heavy" shall mean that the aggregate of the Employer Matching,
Employer Profit Sharing and Salary Deferral Accounts of all Key
Employees hereunder and the accrued benefits under any plan which is
part of a required or permissive aggregation group, including any
amounts distributed to any Participants during the five (5) years
ending on the immediately preceding Anniversary Date but excluding
any death benefit that exceeds the actuarially equivalent present
value of accrued benefits existing immediately prior to death and any
rollover contribution (or similar transfer) initiated by a
Participant and made after January 1, 1993 to the extent permitted by
regulations and the value of the Employer Matching Account, Employer
Profit Sharing Account, Salary Deferral Account and the accrued
benefits under any plan which is part of a required or permissive
aggregation group, of each then Non-Key Employee who was previously a
Key Employee, exceeds sixty percent (60%) of the aggregate of the
Employer Matching Account, Employer Priofit Sharing Accounts, Salary
Deferral Accounts and the accrued benefits under any plan which is
part of a required or permissive aggregation group, of all
Participants (with the same inclusions and exclusions) as of such
immediately preceding Anniversary Date. Any account balance or
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accrued benefit attributable to any individual who has not been an
Employee (or received any remuneration for services rendered from the
Employer) with respect to this Plan or any other Related Plan at any
time during the five (5) years ending on the Anniversary Date shall
be disregarded. If an Employee returns to employment with the
Employer after such five (5) year period, such Employee's total
accrued benefit shall be included in determining the Top Heavy ratio.
The determination date with respect to determining whether the
Plan is Top Heavy for a particular Plan Year shall be the last day of
the preceding Plan Year, or in the case of the first Plan Year, the
last day of such year.
The required aggregation group shall consist of any plans
(including terminated plans where required by Section 416(g)(3) of
the Code) qualified under Section 401(a) of the Code in which a Key
Employee participates or which enables this Plan to meet the
requirements of Code Sections 401(a)(4) or 410. The permissive
aggregation group shall consist of the required aggregation group
plus any other plan to the extent that such plan, when so aggregated,
continues to meet the requirements of Sections 401(a)(4) and 410 of
the Code.
(ww) "Top Heavy Compensation" shall mean the maximum amount of a
Participant's Compensation which may be taken into account during any
Plan Year that the Plan is Top Heavy for purposes of determining the
amount of deductible contributions hereto (currently one hundred
fifty thousand dollars ($150,000)), as adjusted for increases in the
cost of living in accordance with the provisions of Section
401(a)(17) of the Code.
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(xx) "Valuation Date" shall mean the last day of each calendar month or,
in the Committee's discretion, such other dates on which the Funding
Agent may undertake to provide valuations to the Committee.
(yy) A pronoun or adjective in the masculine gender includes the feminine
gender unless the context clearly indicates otherwise. Where the
context admits, words in the plural shall include the singular and
the singular shall include the plural. The words "hereof," "herein,"
"hereunder," and other similar compounds of the word "here" shall
mean and refer to the entire Plan and not to any particular provision
or section. The Plan and Funding Instrument shall each form a part of
the other and the terms shall be used interchangeably.
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ARTICLE II
SERVICE
2.01 PERIOD OF SERVICE. "Period of Service" shall mean the time period
commencing with the Employee's Employment Date and ending on the date a Break in
Employment occurs; provided, however, a Period of Service for these purposes
includes a Period of Separation of less than twelve (12) consecutive months. An
Employee who separates from Service and later resumes employment with the
Employer or an Affiliated Employer following a Period of Separation of twelve
(12) consecutive months or longer shall be treated as a new Employee and shall
not be entitled to have the Period of Service he completed prior to the Break in
Employment aggregated with his Service subsequent to resumption of employment
unless:
(a) at the time of his Break in Employment he had a vested interest in a
benefit hereunder provided by Employer contributions;
(b) the Employee resumes employment before his Period of Separation
equals or exceeds sixty (60) consecutive months; or
(c) he resumes employment before his Period of Separation equals or
exceeds his Period of Service completed prior to his Break in
Employment.
If the Employee satisfies either condition (a), condition (b) or condition
(c) of the preceding sentence, his Period of Service completed prior to his
Break in Employment will be aggregated with Service subsequent to resumption of
employment and he shall be eligible to become a Participant commencing with the
first month after reemployment by a Participating Employer.
To the extent required under Section 414(a) of the Code and Regulations
issued thereunder, Period of Service shall include Service for a Predecessor
Employer. "Service" means an Employee's period of employment with the Employer
or an Affiliated Employer.
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2.02 YEAR OF ELIGIBILITY SERVICE. A Year of Eligibility Service shall mean
a period of twelve (12) consecutive months commencing on an Employee's date of
employment.
2.03 DAYS OF SERVICE.(a) "Day of Service" shall mean, in the case of any
Employee, each day during the period commencing with the date on which the
Employee first performs one (1) hour of service within the meaning of 29 C.F.R.
2530.200b-2(a) for the Employer or an Affiliated Employer, and ending on the
date on which such employment by the Employer and all Affiliated Employers
terminates for any reason, provided, however, that for the purposes of this
paragraph such termination shall be deemed to occur on the earlier of (i) the
date of retirement, resignation, release, discharge or death, or (ii) the first
anniversary of the day on which the employee last performed one (1) hour of
service within the meaning of 29 C.F. R. 2530.200b-2(a) for the Employer and all
Affiliated Employers.
(b) Notwithstanding the above, the Board of Directors or the chief
executive offic er may include in the period taken into account for purposes of
computing Days of Service those days in which an Employee or former Employee
performs service for an operating unit, division or subsidiary or any
corporation, trade or business that is acquired by the Employer or an Affiliated
Employer or a part thereof, or for such period as a former Employee subsequently
performs service for any other corporation, trade or business which may have
acquired all or part of an operating unit, division or subsidiary of the
Employer or Affiliated Employer.
(c) Notwithstanding any provision to the contrary in this Plan, for any
period during which the Plan is a multiple employer plan within the meaning of
Section 413(c) of the Internal Revenue Code an Employee shall accrue Days of
Service only with respect to periods of "covered service" and "contiguous non-
covered service" with the Company. For purposes of determining an Employee's
Days of Service, "covered service" shall mean an Employee's non-
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covered service which immediately precedes or follows such Employee's covered
service and no termination or retirement occurs between such covered service and
uncovered service; provided, however, that any transfer of an Employee between
the Employer and an Affiliated Employer shall result in such Employee's period
of uncovered service which immediately precedes or follows such transfer being
deemed "non-contiguous" for purposes of this subsection 2.03(c)
(d) Solely for purposes of determining whether a Break in Service, as
defined in Section 1.021(g), has occurred in a computation period, an individual
who is absent from work for maternity or paternity reasons shall receive credit
for the Days of service which would otherwise have been credited to such
individual but for such absence. 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 individual, (2) by reason of a birth of a child of the
individual, (3) by reason of the placement of a child with the individual in
connection with the adoption of such child by such individual, or (4) for
purposes of caring for such child for a period beginning immediately following
such birth or placement. The Days of Service credited under this paragraph shall
be credited (1) in the computation period in which the absence begins if the
crediting is necessary to prevent a Break in Service in that period.
2.04 FORMER EMPLOYEE OR PARTICIPANT. Except as otherwise specifically
provided in the Plan, if a former Employee or Participant is reemployed by the
Employer, he will be considered as a new Employee for all purposes.
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ARTICLE III
PARTICIPATION
3.01 ELIGIBILITY REQUIREMENTS. All active Eligible Employees who are in
the Service of the Employer on November 1, 1994 and who qualify for
participation in the Plan under the provisions of the second paragraph of this
Section shall become Participants in the Plan as of November 1, 1994. Any other
Eligible Employee who thereafter meets the requirements of said paragraph shall
become a Participant in the Plan as of the first day of the month coinciding
with or following the day upon which he first meets such requirements, provided
he is an Eligible Employee on such day.
Any Eligible Employee who has completed a Year of Eligibility Service shall
be eligible to participate in the Plan. If an Employee completes a Year of
Eligibility Service as described above, but either is then not employed by a
Participating Employer or is then on an approved Leave of Absence without pay,
Layoff, jury duty or active military duty, he shall be eligible to become a
Participant commencing with the first month thereafter that:
(i) he or she becomes actively employed by a Participating Employer
(or if later, as of the Effective Date of the Plan with respect
to such Participating Employer); or
(ii) he or she returns from such Leave of Absence, Layoff, jury
duty or active duty.
Nothing herein shall be construed to permit an Eligible Employee to
commence participation herein prior to the date the entity that employs him
becomes a Participating Employer.
3.02 PARTICIPATION APPLICATION FOR SALARY DEFERRAL CONTRIBUTIONS
(a) To begin salary deferral contributions, an Employee who otherwise
meets the eligibility requirements of this Article III must file a
written application for participation with the Committee (in such
form as the Committee may prescribe) within the time prescribed
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by the Committee prior to the first day of the fiscal month during
which the Employee desires salary deferrals under the Plan to be
effective (or on such later date prior to such fiscal month as may be
authorized with respect to the Employee by the Committee).
(b) The participation application shall evidence the Employee's
acceptance of the benefits and terms of this Plan shall indicate the
Employee's election to defer a portion of his compensation as set
forth in Section 4.03.
3.03 PARTICIPANT MAY NAME BENEFICIARY.
(a) A Participant may designate, in writing to the Committee upon his/her
application, the Beneficiary or Beneficiaries whom he desires to
receive the benefits of the Plan in the event of his death. A married
Participant may not designate a Beneficiary other than his spouse
unless:
(i) The spouse of the Participant consents in writing to such
designation;
(ii) The Beneficiary designation may not be changed without spousal
consent (or the consent of the spouse expressly permits
designations by the Participant without any requirement of
further consent by the spouse); and
(iii) The spouse's consent acknowledges the effect of such election
and is witnessed by a Plan representative or notary public.
The Employer, the Committee and the Funding Agent may rely upon the
designation of Beneficiary or Beneficiaries last filed in accordance
with the terms of this Agreement.
(b) If, upon the death of a Participant, there is no designated
Beneficiary or surviving Beneficiary, the Committee shall
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designate as the Beneficiary such person specified in Section
1.02(e).
3.04 TERMINATION OF PARTICIPATION. Active participation in the Plan shall
continue until the Anniversary Date coinciding with or next following the
Participant's Termination Date or, if earlier, as of the date the Plan
terminates. Participation in the Plan shall continue until a Participants'
Accounts have been withdrawn. A Participant may not voluntarily withdraw from
participation or receive any distribution of his benefit under the Plan prior to
his Termination Date, except to the extent provided in Sections 6.09 and 6.10.
3.05 TERMINATION DATE. A Participant's Termination Date shall be the date
on which his employment with the Employer is terminated because of the first to
occur of the following events:
(a) NORMAL RETIREMENT. The Participant retires or is retired from the
employ of the Employer on or after attaining age sixty-five (65). The
Plan contemplates that a Participant retire as of the Anniversary
Date coinciding with or next following his attainment of age sixty-
five (65), except that a Participant may continue his employment
after that date. During the continuation of his employment with the
Employer after attaining such date, such Participant shall continue
to participate in the Plan and shall be entitled to receive his
benefits only upon his actual termination of employment unless
otherwise required pursuant to the provisions of Section 7.01(e).
(b) EARLY RETIREMENT. A Participant's termination of employment with the
Employer on or after the date as of which the Participant reaches age
fifty-five (55).
(c) DISABILITY RETIREMENT. The Participant is retired from the employ of
the Employer because of disability, irrespective of age. A
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Participant will be considered disabled for purposes of the Plan if,
upon suffering any medically determinable physical or mental
impairment as a result of sickness, accident or other injury which,
in the opinion of a physician approved by the Committee, may be
expected to result in death or be of long, continued duration and
which renders the Participant incapable of performing the duties of
his employment with the Employer.
A Participant who claims to be totally and permanently disabled
must, within ninety (90) days of the date he became totally and
permanently disabled, give written notice thereof to the Committee
and submit, at the expense of the Participant, to the Committee such
medical evidence of such disability (including without limitation,
certification thereof by a physician approved by the Administrative
Committee) as said Committee may from time to time reasonably
require. Failure by a Participant to comply with the foregoing
requirements shall be deemed conclusive evidence that such
Participant is not totally and permanently disabled, or has ceased to
be so disabled as of the date of such failure.
A Participant who qualifies for Social Security disability
benefits will automatically satisfy the requirements under this Plan
with respect to submission of evidence of disability, throughout the
period that he remains qualified for Social Security disability
benefits.
All rules with respect to the subject of this Section 3.04(c)
shall be uniformly and consistently applied to all Participants in
similar circumstances.
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<PAGE>
(d) DEATH. The Participant's death.
(e) RESIGNATION OR DISMISSAL. The Participant resigns or is dismissed
from the employ of the Employer before retirement in accordance with
paragraphs (a), (b) or (c) above and incurs a Break in Employment. If
a Participant continues in the employ of the Employer but no longer
is a member of a group of employees to which the Plan has been and
continues to be extended by the Employer, any subsequent Termination
Date nevertheless will be as stated above, and his Salary Deferral
Account and Employer Matching and Profit Sharing Accounts will be
held in accordance with the provisions of Section 3.06.
3.06 RESTRICTED PARTICIPATION. When distribution of part or all of the
benefits to which a Participant is entitled under the Plan is deferred beyond or
cannot be made until after his Termination Date, or during any period that a
Participant continues in the employ of the Employer but no longer is a member of
a group of Employees to which the Plan has been and continues to be extended by
the Employer, the Participant will be considered and treated as a Participant
for all purposes of the Plan, except that no share of Employer contributions or
forfeitures will be credited to his Accounts for any period during which he
continues in the employ of the Employer, but is no longer a member of the group
of Employees to which the Plan has been and continues to be extended by the
Employer.
Notwithstanding the preceding paragraph, a Participant who meets the
requirements of Section 5.05 for receiving an allocation of the Employer Profit
Sharing Contributions for a Plan Year, except for the fact that at some time
during the Plan year such Participant became a member of a group of Employees
not covered by the Plan, shall be entitled to share in the allocation of
Employer Profit Sharing
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Contributions and forfeitures attributable to such Plan Year. Such Participant's
allocable share of Employer Profit Sharing Contributions and forfeitures shall
be determined on the basis of his Compensation for the period during which he
was in a group of Employees eligible to be covered under the Plan.
3.07 ELIGIBILITY UPON REEMPLOYMENT. If a former Employee incurs a Break in
Employment and is subsequently reemployed as an Eligible Employee, he shall be
treated as a new Employee and shall commence participation in this Plan only
after satisfying the eligibility requirements set forth in Section 3.01 above
following such reemployment, unless he is entitled to have his prior Period of
Service aggregated under Section 2.01 with Service subsequent to reemployment,
in which event he shall be entitled to commence participation in the Plan on his
Employment Date or the date of his reemployment as an Eligible Employee, if
later.
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<PAGE>
ARTICLE IV
CONTRIBUTIONS
4.01 EMPLOYER CONTRIBUTIONS
(a) For the Plan Year ending December 31, 1994, and for each Plan Year
thereafter, at the discretion of the Board of Directors, the Employer
may contribute out of its income for the current Fiscal Year and/or
accumulated earned surplus for such Fiscal Year before all Federal
income and excess profits taxes to the Plan: (i) a "Matching
Contribution" in an amount equal to the below listed percentage of
the Salary Deferral Contributions percentage elected pursuant to
Section 4.03 by each Participant for each payroll period up to a
maximum election of six percent (6%) per payroll period, plus (ii) a
profit sharing contribution that may be authorized at the discretion
of the Board of Directors, but not to exceed the dollar balance
remaining after subtracting the sum of the total Salary Deferral
Contributions and the Employer contributions made pursuant to
subparagraph (i) above from fifteen percent (15%) of the aggregated
annual Compensation (after any salary reductions for Salary Deferral
Contributions) of all Participants for such Fiscal Year. Matching
Contributions shall be made as follows:
(a) For the period during a Plan Year in which a Participant elected
Salary Deferral Contributions equal to one percent (1%) of his
Compensation, the Participating Employers shall contribute
three-quarters of one percent (.75%) of the Participant's
Compensation during such period (i.e., seventy-five cents ($.75)
for each one dollar ($1.00) of Salary Deferral Contributions);
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(b) For the period during a Plan Year in which a Participant elected
Salary Deferral Contributions equal to two percent (2%) of his
Compensation, the Participating Employers shall contribute one
and one-half percent (1-1/2%) of the Participant's Compensation
during such period (i.e., seventy-five cents ($.75) for each one
dollar ($1.00) of Salary Deferral Contributions);
(c) For the period during a Plan Year in which a Participant elected
Salary Deferral Contributions equal to three percent (3%) of his
Compensation, the Participating Employers shall contribute one
and eight hundred seventy-five thousandths percent (1.875%) of
the Participant's Compensation during such period (i.e., sixty-
two and one-half cents ($.62-1/2) for each one dollar ($1.00) of
Salary Deferral Contributions);
(d) For the period during a Plan Year in which a Participant elected
Salary Deferral Contributions equal to four percent (4%) of his
Compensation, the Participating Employers shall contribute two
and one-half percent (2-1/2%) of the Participant's Compensation
during such period (i.e., sixty-two and one-half cents ($.62-
1/2) for each one dollar ($1.00) of Salary Deferral
Contributions);
(e) For the period during a Plan Year in which a Participant elected
Salary Deferral Contributions equal to five percent (5%) of his
Compensation, the Participating Employers shall contribute two
and one-half percent (2-1/2%) of the Participant's Compensation
during such period (i.e., fifty cents ($.50) for each one dollar
($1.00) of Salary Deferral Contributions);
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<PAGE>
(f) For the period during a Plan Year in which a Participant elected
Salary Deferral Contributions equal to six percent (6%) or more
of his Compensation, the Participating Employers shall
contribute three percent (3%) of the Participant's Compensation
during such period (i.e., fifty cents ($.50) for each one dollar
($1.00) of Salary Deferral Contributions disregarding any such
Salary Deferral Contributions in excess of six percent (6%) of
the Participant's Compensation).
(b) Notwithstanding the foregoing, the sum of the contribution of the
Employer and the Salary Deferral Contribution for any Fiscal Year
shall not exceed an amount equal to fifteen percent (15%) of the
total Compensation (after any salary reductions) otherwise paid or
accrued to all Participants employed by the Employer for such Year.
(c) In no event shall the Employer contribution attributable to any Plan
Year be so large as to cause the Annual Addition for any Participant
to exceed the amount permitted under Section 5.06 below.
(d) In no event shall the Employer contribution for any Fiscal Year
exceed an amount which the Employer estimates will be deductible
under Section 404(a)(3) and, if applicable, Section 404(a)(7) of the
Code.
(e) The Employer may, notwithstanding any other provision of this Plan,
make all contributions to the Plan without regard to current or
accumulated earnings and profits for the taxable year or years ending
with or within such Plan Year. Notwithstanding the foregoing, the
Plan shall continue to be designed to qualify as a
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profit sharing plan for purposes of Sections 401(a), 402, 412 and 417
of the Code.
4.02 PAYMENT. All contributions shall be made directly to the Funding
Agent and may be made on any date or dates selected by the Employer; provided,
however, that the total annual contribution for each Fiscal Year shall be paid,
without interest, on or before the date on which the Federal income tax return
of the Employer for such Year is due, including any extensions of time obtained
for the filing of the return and shall be conditioned on their deductibility
under the Code.
4.03 SALARY DEFERRAL CONTRIBUTIONS.
(a) A Participant may reduce his Compensation and have the Employer
contribute on his behalf as a Salary Deferral Contribution in each
Plan Year, subject to the limitation on Annual Additions provided in
Section 5.06 and any limitation pursuant to the provisions of Section
6.11, a minimum of zero percent (0%) of his Compensation up to a
maximum of an amount which does not, exceed twelve percent (12%) of
such Participant's Compensation for the Plan Year. The rate of his
Salary Deferral Contribution shall be determined by the Participant
on a form approved by the Committee and filed with the Committee and
shall continue unless changed in the manner hereinafter provided. All
such contributions shall be calculated in integral percentages of a
Participant's Compensation.
All Salary Deferral Contributions shall be made by regular
payroll deductions. The Employer shall segregate such contributions
from Employer assets as soon as reasonably possible; provided,
however, that the Employer must pay over any contributions to the
Funding Agent within ninety (90) days after the date received or
withheld from payroll.
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<PAGE>
A Participant may change his contribution rate under this
Section 4.03(b) (but not retroactively) to any level permitted above
and at any time but, no more than once per month by filing written
notice with the Committee in such form as the Committee may
prescribe. The change in the Participant's contribution rate shall be
effective as of the first day of the month or next following the
receipt of such notice if, and only if, the Participant's notice is
delivered to the Committee within such period as may be authorized by
the Committee).
(b) Notwithstanding any other provision in this Plan to the contrary, no
Employee shall be permitted to make Salary Deferral Contributions
during any calendar year (or other taxable year of the Employee)
which are in excess of the limits set forth under Code Section
402(g)(1) (nine thousand two hundred forty dollars ($9,240) for 1994)
multiplied by the Adjustment Factor as provided by the Secretary of
the Treasury and in effect, at the beginning of such taxable year.
For the purpose of the preceding sentence only, with respect to any
taxable year, a Participant's Salary Deferral Contributions shall be
the sum of all Employer contributions made on behalf of such
Participant, pursuant to a deferral election under any qualified cash
or deferred arrangement (CODA) as described in Code Section 401(k);
any simplified employee pension cash or deferred arrangement as
described in Code Section 402(h)(1)(B); any eligible deferred
compensation plan under Code Section 457; any plan as described under
Code Section 501(c)(18), and any Employer contributions made on the
behalf of a Participant for the purchase of an annuity contract under
Code Section 403(b) to a salary reduction agreement.
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<PAGE>
(c) The interest of each Participant in his or her Salary Deferral
Contributions Account shall be, at all times, one hundred percent
(100%) vested and nonforfeitable.
(d) When a Participant terminates employment, his Salary Deferral
Contributions Account shall be distributed to him in the same manner
as his Employer Matching Account.
Except as provided pursuant to Sections 6.09 and 6.10, amounts
attributable to Elective Deferrals shall not be distributable to Plan
Participants earlier than upon one of the following events:
(i) The Participant's retirement, death, disability, or separation
from Service with the Employer
(ii) The Participant's attainment of age fifty-nine and one-half
(59-1/2)
(iii) The termination of the Plan without the establishment of a
successor plan
(iv) The sale or other disposition by the Employer to an unrelated
employer that does not maintain the Plan, of substantially all
(eighty-five percent (85%) or more) of the assets of the
Employer, provided this paragraph (d) shall not apply with
respect to Participants who continue employment with the
acquiring employer and
(v) The sale or other disposition by the Employer of its interest
in a subsidiary to an unrelated employer that does not
maintain the Plan, provided this paragraph (e) shall apply
only with respect to Participants who continue employment with
the subsidiary.
4.04 LIMITATIONS ON CONTRIBUTIONS FOR HIGHLY COMPENSATED EMPLOYEES.
Employer Contributions and Salary Deferral Contributions
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<PAGE>
made on behalf of Highly Compensated Employees in accordance with Sections 4.01
and 4.03 respectively shall be subject to limitations described in this Section
4.04.
(a) For the purpose of this Section 4.04:
(i) "Contribution Percentage" shall mean the ratio (expressed as
a percentage) of:
(A) The sum of the Employee Contributions, if any, and
Matching and Profit Sharing Contributions made on behalf
of a Participant for the Plan Year to
(B) The Compensation paid to such Participant for the Plan
Year.
The Contribution Percentage shall be determined subject to the
following provisions:
(C) If one or more Highly Compensated Employees participate in
both a cash or deferred arrangement and a plan subject to
the Actual Contribution Percentage (ACP) test maintained
by the Employer, and as the result of multiple use of the
alternative limits, the Aggregate Limit determined in
accordance with I.T. Reg. 1.401(m)-2 is exceeded, then the
ACP of those Highly Compensated Employees who also
participate in a cash or deferred arrangement shall be
reduced (beginning with such Highly Compensated Employee
whose ACP is the highest) so that the limit is not
exceeded. The amount by which each Highly Compensated
Employee's Contribution Percentage amount is reduced shall
be treated as an Excess Aggregate Contribution. The ADP
and ACP of the Highly
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Compensated Employees shall be determined after any
corrections required to meet the ADP and ACP tests.
(D) For purposes of this Section 4.04(a)(i), the Contribution
Percentage for any Participant who is a Highly Compensated
Employee, and who is eligible to have Contribution
Percentage amounts allocated to his or her account under
two or more plans subject to Code Section 401(m) that are
maintained by the Employer, shall be determined as if the
total of such Contribution Percentage amounts were made
under each plan. Further, if a Highly Compensated Employee
participates in two or more cash or deferred arrangements
that have different Plan Years, all cash or deferred
arrangements ending with or within the same calendar year
shall be treated as a single arrangement.
(E) In the event that this Plan satisfies 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 satisfy the requirements of such Sections of
the Code only if aggregated with this Plan, then this
Section 4.04(a) shall be applied by determining the
Contribution Percentage of Employees as if all such plans
were a single plan. For Plan Years beginning after
December 31, 1989, other plans may be aggregated with this
Plan in order to satisfy Code Section 401(m) only if they
have the same Plan Year.
(F) For purposes of determining the Contribution Percentage of
a Participant who is a five-percent (5%)
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<PAGE>
owner or one of the ten most highly paid Highly
Compensated Employees, the Contribution Percentage amounts
and Compensation of such Participant shall include the
Contribution Percentage amounts and Compensation for the
Plan Year of Family Members. Family Members, with respect
to Highly Compensated Employees, shall be disregarded as
separate employees in determining the Contribution
Percentage both for Participants who are Non-Highly
Compensated Employees and Participants who are Highly
Compensated Employees.
(G) For purposes of determining the Contribution Percentage
test, Employee Contributions are considered to have been
made in the Plan Year in which contributed to the Plan.
Matching Contributions and Qualified Nonelective
Contributions will be considered made for a Plan Year if
made no later than the end of the twelve(12)-month period
beginning on the day after the close of the Plan Year.
(H) Elective Deferrals may be used in determining the
Contribution Percentage amounts so long as the ADP test is
met before the Elective Deferrals are used in the ACP test
and so long as the ADP test continues to be met following
the exclusion of those Elective Deferrals that are used to
meet the ACP test.
(I) The actual compensation ratios of all eligible Employees
shall be taken into account for the purposes of the ACP
test under this Plan. For this purpose, eligible Employees
shall include each
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Employee who would be a Participant under the Plan and
eligible to receive an allocation of Employer
Contributions hereunder, except that such Employee is not
a Plan Participant because:
(1) He has failed to make required contributions, if any;
(2) He has elected not to participate; or
(3) His compensation is less than a stated dollar amount,
if such amount is a condition of his participation.
In the case of an eligible Employee who makes no Employee
contributions, his Contribution Percentage shall be deemed to be
zero(0).
(ii) "Actual Deferral Percentage" (ADP) shall mean the ratio
(expressed as a percentage) of:
(A) The Salary Deferral Contributions, Qualified Matching
Contributions, and Qualified Nonelective Contributions,
if any, made on behalf of a Participant for the Plan Year
to
(B) The Compensation paid to such Participant for the Plan
Year. The ADP shall be determined subject to the
following provisions:
(C) The ADP for any Participant who is a Highly Compensated
Employee for the Plan Year, and who is eligible to have
Elective Deferrals (and Qualified Nonelective
Contributions or Qualified Matching Contributions, or
both, if treated as Elective Deferrals for purposes of
the ADP test) allocated to his or her
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<PAGE>
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 Nonelective Contributions or
Qualified Matching Contributions, or both) were made under
a single arrangement. If a Highly Compensated Employee
participates in two (2) 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.
(D) In the event that this Plan satisfies the requirements of
Code Section 401(k), 401(a), or 410(b) 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
4.04(a)(ii) 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, other plans
may be aggregated with the Plan to satisfy Code Section
401(k) only if they have the same Plan Year.
(E) For purposes of determining the ADP test, Elective
Deferrals, Qualified Nonelective Contributions and
Qualified Matching Contributions shall be taken into
account under the ADP test for a Plan Year only if
allocated to an Employee as of a date within that Plan
Year. For this purpose, such allocation shall not be
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<PAGE>
contingent on participation or performance of services
after such date and actual payment to the Fund shall be
made before the last day of the twelve (12)-month period
immediately following the Plan Year to which such
deferrals or contributions relate.
(F) The actual deferral percentages of all eligible Employees
shall be taken into account for the purposes of the ADP
test under this Plan. For this purpose, eligible Employees
shall include each Employee who would have been eligible
to make an Elective Deferral under the Plan, except that
no Elective Deferral was made because such Employee:
(1) Was suspended from making an Elective Deferral due to
a distribution, loan or a suspension caused by the
limitations an annual additions of Code Section
415(c)(l) or 415(e);
(2) Elected not to participate in the Plan; or
(3) Received Compensation less than a stated dollar
amount, if such amount is a condition of his
participation in the Plan.
In the case of an Eligible Employee who makes no Elective
Deferral, his deferral percentage shall be deemed to be zero
(0).
(b) Neither the average ACP nor the average ADP for all Participants who
are Highly Compensated Employees for the Plan Year shall exceed the
greater of:
(i) The average ACP or the average ADP, as applicable, for all
Participants who are Non-Highly Compensated Employees for the
Plan Year multiplied by 1.25; or
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<PAGE>
(ii) The average ACP or the average ADP for all Participants who
are Non-Highly Compensated Employees, as applicable,
multiplied by 2.00, provided such averages for the Highly
Compensated Employees do not exceed such averages for Non-
Highly Compensated Employees by more than two (2) percentage
points, or such lesser amount as the Secretary of the Treasury
shall prescribe.
Notwithstanding the above, the tests provided for under
this Section 4.04(b) shall be imposed separately on
contributions and deferrals. Except as provided under
paragraph (e) below, the Plan shall not test under this
Section 4.04(b)(ii) to meet applicable Code requirements for
both contributions and deferrals in the same year.
(c) In the case of a Highly Compensated Employee who is either a five
percent (5%) owner or one of the ten (10) most Highly Compensated
Employees and is thereby subject to the family aggregation rules of
Code Section 414(q)(6):
(1) The Contribution Percentage for the family group (which is
treated as one (1) Highly Compensated Employee) is the greater
of (A) the Contribution Percentage determined by combining the
contributions and Compensation of all eligible Family Members
who are Highly Compensated without regard to family aggregation,
or (B) the Contribution Percentage determined by combining the
Contributions and compensation of all eligible Family Members.
(2) The ADP for the family group (which is treated as one (1) Highly
Compensated Employee) is the ADP determined by combining the
Elective Deferrals, and Compensation and
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amounts treated as elective contributions of all eligible Family
Members.
Except to the extent taken into account in this paragraph (c), the
contributions, Compensation, Elective Deferrals, and amounts treated
as elective contributions of all Family Members shall be disregarded
for determining either the ACPs or ADPs for the groups of Highly
Compensated Employees and Non-Highly Compensated Employees.
(d) The term "Compensation" shall have the meaning given such term by
Code Section 415(c)(3).
(e) If the test described in paragraph (b)(ii) above is used for both
contributions and deferrals in the same Plan Year, the Aggregate
Limit as defined below shall not be exceeded.
(i) The "Aggregate Limit" for the purposes of this Section 4.04(e)
shall mean the greater of:
(A) The sum of:
(1) One hundred twenty-five percent (125%) of the
greater of the Relevant Actual Deferral Percentage
or the Relevant Actual Contribution Percentage, and
(2) Two (2) percentage points plus the lesser of the
Relevant Actual Deferral Percentage or the Relevant
Actual Contribution Percentage. In no event,
however, shall this amount exceed twice the lesser
of the Relevant Actual Deferral Percentage or the
Relevant Actual Contribution Percentage; or
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(B) The sum of:
(1) One hundred twenty-five percent (125%) of the lesser
of the Relevant Actual Deferral Percentage or the
Relevant Actual Contribution Percentage, and
(2) Two (2) percentage points plus the greater of the
Relevant Actual Deferral Percentage or the Relevant
Actual Contribution Percentage. In no event,
however, shall this amount exceed twice the lesser
of the Relevant Actual Deferral Percentage or the
Relevant Actual Contribution Percentage.
(ii) For the purposes of this Section 4.04(e):
(A) Relevant Actual Deferral Percentage shall mean the ADP of
the group of eligible Non-Highly Compensated Employees
for the Plan Year; and
(B) Relevant Actual Contribution Percentage shall mean the
ACP of the eligible group of Non-Highly Compensated
Employees for the Plan Year.
(f) The determination and treatment of the Contribution Percentage, the
Salary Deferral Contributions and the ADP of a Participant shall at
all times satisfy I.T. Reg. 1.401(k)-1, 1.401(m)-1, 1.401(m)-2 and
such other requirements as may be required by the Secretary of
Treasury.
4.05 DISTRIBUTION OF EXCESS DEFERRALS, EXCESS CONTRIBUTIONS AND EXCESS
AGGREGATE CONTRIBUTIONS. The Committee shall determine, as soon as is
reasonably possible after the close of each Plan Year, Employer
Contributions pursuant to Section 4.01 and Salary Deferral Contributions
pursuant to Section 4.03, if applicable, which will result in Excess
Deferrals, Excess Contributions, or Excess Aggregate Contributions for any
Participant. In addition, prior to the close of each
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<PAGE>
Plan Year the Committee, upon a determination that the ADP test will not be
met for such Plan Year, may direct at any time that an individual Highly
Compensated Employee's future Salary Deferral Contributions be reduced or
stopped in order to avoid accumulating Excess Deferrals or Excess
Contributions under the Plan.
Notwithstanding any other provisions of this Plan, Excess Deferrals,
Excess Contributions, Excess Aggregate Contributions and income allocable
thereto shall be distributed to Participants as described in this
Section 4.05.
(a) For the purpose of this Section 4.05:
(i) "Excess Deferrals" shall mean amounts of Elective Deferrals,
Qualified Matching Contributions, and Qualified Nonelective
Contributions for a calendar year that:
(A) The Participant requests be distributed pursuant to the
claims procedure set forth in Section 4.05(b) below; or
(B) The Committee determines to be, pursuant to I. T. Reg.
1.401(k)-1, Excess Deferrals.
(ii) "Qualified Matching Contributions" and "Qualified Nonelective
Contributions" shall mean contributions reclassified pursuant
to Section 1.02(qq) and Section 5.06(d) for the purpose of
meeting the ADP test. Such reclassification shall be permitted
only if the following requirements are met:
(A) Employer Contributions, including those Qualified
Nonelective Contributions treated as Elective Deferrals
for purposes of the ADP test must satisfy the
requirements of Code Section 401(a)(4).
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<PAGE>
(B) Employer Contributions, excluding those Qualified
Matching Contributions and Qualified Nonelective
Contributions treated as Elective Deferrals for purposes
of the ADP test, must satisfy the requirements of Code
Section 401(a)(4).
(C) Those Qualified Matching Contributions and Qualified
Nonelective Contributions treated as Elective Deferrals
for purposes of the ADP test shall not be taken into
account for purposes of satisfying the requirements of
Code Section 401(m).
(D) Except as provided in paragraphs (A) and (C), Qualified
Matching Contributions and Qualified Nonelective
Contributions treated as Elective Deferrals for the
purposes of the ADP test shall not be taken into account
in determining whether any other contributions or
benefits satisfy Code Section 401(a)(4) or in
determining whether Employee Contributions or other
matching Employer Contributions meet the requirements of
Code Section 401(m).
(E) Qualified Nonelective Contributions may not be treated
as Elective Deferrals if the effect of such treatment is
to increase the difference between the ADP for the group
of eligible Highly Compensated Employees and the ADP of
all other Eligible Employees.
(F) The Qualified Nonelective Contributions must satisfy the
requirements of I.T. Reg. 1.401(k)-1(b)(6)(1) for the
Plan Year as if such contributions were Elective
Deferrals;
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<PAGE>
(G) For Plan Years which begin after December 31, 1988,
Qualified Matching Contributions and Qualified
Nonelective Contributions must be taken into account
during the Plan Year in which they are deemed made; and
(H) Any other applicable conditions described in I.T. Reg.
1.401(m)-1(b)(2) are satisfied.
(iii) "Excess Contributions" shall mean amounts described in Section
401(k)(8)(B) of the Code. The amount of Excess Contributions
for a Highly Compensated Employee shall be determined in the
following manner:
(A) First, the ADP of the Highly Compensated Employee with
the highest ADP shall be reduced to the extent necessary
to satisfy the ADP test or cause such ratio to equal the
ADP of the Highly Compensated Employee with the next
highest ratio. This process shall be repeated until the
ADP test is satisfied.
(B) The amount of Excess Contributions for a Highly
Compensated Employee shall then equal the total of
Elective Deferrals or other contributions taken into
account for the ADP test minus the product of the
Employee's contribution ratio as determined above and the
Employee's Compensation.
(C) In the case of a Highly Compensated Employee whose ADP is
determined under the family aggregation rules prescribed
by regulations, the determination of the amount of Excess
Contributions for the family unit shall be made by
combining the Contributions and Compensation of all
Family Members and then reducing the ADP in accordance
with the leveling
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<PAGE>
methods described in paragraphs (A) and (B) of this
Section 4.05(a)(iii). Excess Contributions shall be
determined by taking into account the Contributions of
all eligible Family Members and shall be allocated among
such Family Members in proportion to their Elective
Deferrals.
(iv) "Excess Aggregate Contributions" shall mean amounts described
in Section 401(m)(6)(B) of the Code. The amount of Excess
Aggregate Contributions for a Highly Compensated Employee
shall be determined in the following manner:
(A) First, the ACP of the Highly Compensated Employee with
the highest ACP shall be reduced to the extent necessary
to satisfy the ACP test or cause such ratio to equal the
ACP of the Highly Compensated Employee with the next
highest ratio. This process shall be repeated until the
ACP test is satisfied.
(B) The amount of the Excess Aggregate Contribution for a
Highly Compensated Employee shall then equal the total
amount of Employee Contributions, Employer Matching
Contributions, and other contributions taken into account
for the ACP test minus the product of the Employee's
contribution ratio as determined above and the Employee's
Compensation.
(C) In the case of a Highly Compensated Employee whose ACP is
determined under the family aggregation rules prescribed
by regulations, the determination of Excess Aggregate
Contributions shall be made by combining the
Contributions and Compensation of all Family
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<PAGE>
Members and then reducing the ACP in accordance with the
leveling method described in paragraphs (A) and (B) of
this Section 4.05(a)(iii). Excess Aggregate
Contributions shall be determined by taking into account
the Contributions of all eligible Family Members and
shall be allocated among such Family Members in
proportion to their Contributions.
(b) A Participant may determine that deferrals in excess of the limits
imposed by Code Section 402(g) have been made. Such Participant may
request a distribution of such Excess Deferral amounts by submitting
a claim in writing to the Committee no later than March 1, specifying
the Participant's Excess Deferral amount for the preceding calendar
year. Such claim shall include the Participant's written statement
that if such amounts are not distributed, such Excess Deferral
amounts, when added to amounts deferred under other plans or
arrangements as described in Sections 401(k), 408(k), or 403(b) of
the Code, exceed the limit imposed on the Participant by Section
402(g) of the Code for the year in which the deferral occurred.
Notwithstanding the above, a Participant shall be deemed to have
made the designation for the distribution of Excess Deferrals at any
time the Committee determines that the limits of Code Section 402(g)
would be exceeded by the Plan or the plan of any Affiliated Employer.
(c) Notwithstanding any other provision of the Plan to the contrary:
(i) Excess Deferrals and income allocable thereto shall be
distributed after the date on which the Plan received the
Excess Deferral, but no later than the April 15 following the
calendar year during which such Excess Deferral was made.
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<PAGE>
Any such distribution shall be designated by the Plan as a
distribution of Excess Deferrals. Excess Deferrals to be
distributed with respect to an Employee for an Employee's
taxable year shall be reduced by any Excess Contributions
previously distributed or recharacterized with respect to such
Employee for the Plan Year ending within such taxable year.
(ii) A Participant's Excess Contributions and income allocable
thereto, shall be distributed to the Participant, if
administratively feasible, not later than two and one-half (2-
1/2) months following the close of the Plan Year in which such
Excess Contributions were made, but in any event, no later
than the last day of the Plan Year following the close of the
Plan Year in which the Excess Contributions were made. If such
excess amounts are distributed more than two and one-half (2-
1/2) months following the close of the Plan Year in which such
excess amounts arose, a ten percent (10%) excise tax will be
imposed on the Employer with respect to such amounts. The
amount of Excess contributions to be recharacterized or
distributed with respect to an Employee for a Plan Year shall
be reduced by any Excess Deferrals previously distributed to
such Employee for the Employee's Taxable Year ending with or
within such Plan Year.
(iii) A Participant's Excess Aggregate Contributions and income
allocable thereto shall be distributed to each Participant, if
administratively feasible, not later than two and one-half (2-
1/2) months following the close of the Plan Year in which such
Excess Aggregate Contributions were made, but in any event, no
later than the last day of the Plan Year following
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<PAGE>
the close of the Plan Year in which the Excess Aggregate
Contributions were made. If such excess amounts are
distributed more than two and one-half (2-1/2) months
following the close of the Plan Year in which such amounts
arose, a ten percent (10%) excise tax will be imposed on the
Employer with respect to such amounts.
(d) The allocable income required to be distributed in accordance with
Section 4.05(c) shall be equal to the sum of the income allocable to
the applicable year in accordance with the procedures detailed in
Section 5.03.
(i) Income shall include all earnings and appreciation, including
such items as interest, dividends, rent, royalties, gains or
losses from the sale of property, appreciation or depreciation
in the value of stocks, bonds, annuity and life insurance
contracts, and other property, without regard to whether such
appreciation or depreciation has been realized.
(ii) No income shall be allocable to periods between the end of the
applicable year and the date of distribution.
(iii) The Committee shall not be liable to any Participant (or his
Beneficiary, if applicable) for any losses caused by
inaccurately estimating the amount of any Excess Deferrals,
Excess Contributions, or Excess Aggregate Contributions and
income allocable to such excess.
(e) Excess Contributions distributed under this Section 4.05 shall first
be treated as distributions from the Participant's Salary Deferral
Account and shall be treated as distributed from the Participant's
Account only to the extent such Excess Contributions exceed the
balance in the Participant's Salary
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<PAGE>
Deferral Account. Excess Aggregate Contributions shall be distributed
from the Participant's Salary Deferral Account and the Participant's
Account in proportion to the Participant's Employee Contributions, if
any, and Employer Matching Contributions for the Plan Year.
(f) In any year where the Plan allows after-tax Employee Contributions, a
Participant's Excess Contributions may be recharacterized as an
amount distributed to the Participant and then contributed by the
Participant to the Plan. Recharacterized amounts will remain
nonforfeitable and subject to the same distribution requirements as
Elective Deferrals. Amounts may not be recharacterized by a Highly
Compensated Employee, to the extent that such amount, in combination
with other Employee Contributions made by that Employee, would exceed
any stated limit under the Plan on Employee Contributions.
Recharacterization must occur no later than two and one-half (2-
1/2) months after the last day of the Plan Year in which such Excess
Contributions arose and is deemed to occur no earlier than the date
the last Highly Compensated Employee is informed in writing of the
amount recharacterized and the consequences thereof. Recharacterized
amounts will be taxable to the Participant for the Participant's tax
year in which the Participant would have received them in cash.
4.06 QUALIFIED VOLUNTARY EMPLOYEE CONTRIBUTIONS NOT PERMITTED. The Plan
shall accept no Employee Contributions designated by a Participant as deductible
employee contributions (within the meaning of Section 72(o)(5)(A) of the Code)
for a taxable year of the Participant beginning after December 31, 1986.
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<PAGE>
4.07 DUTIES OF FUNDING AGENT REGARDING CONTRIBUTIONS. The Funding Agent
shall receive all contributions paid by the Employer in cash or other property
acceptable to the Funding Agent and shall be accountable for all such
contributions, but shall have no duty to collect or enforce payment to it of any
contributions to the Fund, nor to determine or verify the accuracy thereof.
4.08 SPECIAL INVESTMENT DIRECTIONS. All contributions other than Employer
Matching Contributions Pursuant Section 4.01(a) (which shall be invested solely
in "Stock Fund" under the terms of the Funding Instrument) shall be invested in
such vehicles as directed by the Participant pursuant to the following
provisions of this Plan.
Each Participant shall have the right to elect from among one or more
separate and distinct investment vehicles designated, from time to time, by the
Committee, the percentage of his allocated contribution which he wishes to have
invested in each vehicle. The Committee, at its discretion, may make available
to the Participants one (1) or more of the following investment options:
(a) A "Money Market Fund" wherein monies contributed by the Participant
will be invested in a Money Market Certificate with a bank and/or
savings and loan association;
(b) A "Fixed Income Fund" wherein monies contributed by the Participant
may be invested in guaranteed interest-type contracts issued by an
insurance company licensed to do business in the State of California
or such other type of investments geared to provide maximum
protection of capital with a reasonable rate of return thereon;
(c) An "Equity Fund" wherein monies contributed by the Participant will
be invested primarily in common stocks and such other
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<PAGE>
securities or investment opportunities which provide for capital
appreciation; and
(d) A "Stock Fund" which shall consist of an unsegregated fund invested
in common stock of the Employer, or warrants or other rights to
purchase common stock of the Employer received as a result of
holdings of such common stock;
(e) Such other investment vehicle, which, in the opinion of the
Committee, may be appropriate to meet the investment goals of a
substantial portion of active Participants.
Notwithstanding any other provision of the Plan, if at any time, the
Registration Statement relating to the Plan filed with the Securities and
Exchange Commission under the Securities Act of 1933, as amended, shall become
out of date and until a post-effective amendment thereto is filed and declared
effective and a current prospectus thereunder is delivered to the Employees, any
Employee contribution directed to be invested in the Stock Fund during such
period shall be null and void.
Deposits, contributions and other amounts received by the Funding Agent for
investment in the "Stock Fund" shall be used promptly and solely to purchase
Company securities (as described in subsection (d) above) at the market price
for such securities, subject only to any limitations imposed by administrative
practicalities and applicable laws and regulations. Until so invested, cash
received by the Funding Agent may be kept temporarily in savings accounts or
other cash equivalent investments. Company securities held in the "Stock Fund"
may be sold, and cash and equivalent investments may thereafter be held by the
Funding Agent, but only when and to the extent reasonably necessary to pay
benefit distributions under the Plan, or to provide for transfers of all or a
portion of Participants' interests between investment funds pursuant to the
directions of Participants. However, notwithstanding the foregoing, neither the
Funding Agent, the Employer, a
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<PAGE>
Participating Employer, nor any other person or committee shall have any
authority or responsibility to attempt to time the purchase of Employer
securities, to attempt to time sales of Employer securities made for the purpose
of distributing benefits or providing for transfers between investment funds, or
otherwise to sell or trade such securities in an effort to anticipate movements
in the market price for Employer securities.
Participants shall be permitted to change their election of an investment
vehicle and/or the percentage to be allocated to each option out of future
contributions at each Valuation Date of the Plan. Participants may change the
options in which their prior contributions are invested not more often than
determined by the Committee. Such change shall be effective only as of a
Valuation Date unless the Committee, in its sole discretion, agrees to another
date. Participants must notify the Committee of any such change in writing, not
later than thirty (30) days prior to the date the change is to be effective.
Notwithstanding the above, all Employer Matching Contributions shall be
invested in the Stock Fund and shall not be subject to the direction of the
Participant provided however that each participant who has attained the age of
fifty-five (55) or more may direct the transfer of fifty percent (50%) of the
balance of the Participant's Employer Matching Account from the Stock Fund to
another investment vehicle or vehicles of his choice as permitted pursuant to
Section 4.08. Further, a Participant who has attained age sixty (60) or more
may direct the transfer of the remaining balance of the Participant's Employer
Matching Account from the Stock Fund to another investment vehicle or vehicles
of his choice.
4.09 TRANSFERS FROM OTHER QUALIFIED PLANS. Notwithstanding any other
provision hereof, there may be transferred to the Funding Agent of this Plan all
or any of the assets held (whether by a trustee, custodian or otherwise) on
behalf of any other plan (excluding any such plan that requires payment of a
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<PAGE>
qualified joint and survivor annuity) which satisfies the applicable
requirements of Sections 401(a) or 403(a) of the Internal Revenue Code, and
which is maintained for the benefit of any persons who are or are about to
become Participants in this Plan. Transferred amounts shall, at all times, meet
the requirements of Code Section 414(l) and, notwithstanding any other
provisions hereof, benefits under the transferor plan which are protected under
the provisions of Code Section 411(d)(6) shall be provided with respect to the
assets so transferred to this Plan.
4.10 ROLLOVER CONTRIBUTIONS. Notwithstanding any other provision hereof,
the Funding Agent shall be authorized to accept assets from a person who is or
is about to become a Participant in this Plan, provided the transfer of such
assets to this Plan qualifies as a rollover contribution within the meaning of
Section 402(c) or Section 403(c) of the Internal Revenue Code.
(a) An amount will qualify as a rollover contribution if it:
(i) Meets the criteria of Section 7.04; or
(ii) Represents the balance to his credit of a conduit individual
retirement plan; and (in either case)
(iii) Is contributed to the Plan within sixty (60) days following
distribution of such amount to him.
(b) An amount will not qualify if:
(i) It includes any amount which constituted or was treated as a
contribution made by the Employee to such plan; or
(ii) It includes any amount which constituted or was treated as
attributable to contributions made on behalf of the Employee
while he was a Key Employee in a Top Heavy plan; or
(iii) It is attributable to a Plan that requires payment of a
qualified joint and survivor annuity pursuant to Sections
401(a)(11) and 417 of the Code and such
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requirement has not been eliminated prior to the attempted
rollover.
The Committee shall require the Participant to provide reasonable evidence
that any such amount meets the above requirements. Failure of the Participant
to provide such evidence will preclude the Plan's acceptance of any such amount.
4.11 SEGREGATION OF ROLLOVERS. Notwithstanding any other provision hereof,
amounts transferred to the Funding Agent of this Plan pursuant to Sections 4.09
and 4.10 shall be maintained in separate accounts known as Permanent Accounts
and Rollover Accounts, respectively, and shall be applied solely for the benefit
of the Participant on whose behalf such amounts were transferred. Such amounts
shall not be applied to provide any accrued benefit provided by this Plan. Such
amounts shall, however, be credited with their proportionate share of the Fund's
realized and unrealized earnings and losses except where the Funding Agent or
the Participant, with the consent of the Committee, designates a separate and
distinct investment vehicle for those amounts.
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ARTICLE V
ALLOCATIONS TO PARTICIPANTS' ACCOUNTS
5.01 INDIVIDUAL ACCOUNTS. The Committee shall establish and maintain an
Employer Matching Account, an Employer Profit Sharing Account, a Salary Deferral
Contribution Account, a Permanent Account, a Rollover Account and an After-Tax
Account (for purposes of those after-tax contributions permissible pursuant to
prior plan provisions) in the name of each Participant. If any Eligible Employee
ceases participation because of a one (1)-year Period of Separation and receives
a distribution and again becomes a Participant, the Committee shall establish a
new, Employer Matching Account, Employer Profit Sharing Account, Salary Deferral
Contributions Account, Permanent Account, Rollover Account and After-Tax Account
for that Participant. To facilitate allocations hereunder, the Committee may
authorize such sub-accounts as may be required or useful.
5.02 ORDER OF ADJUSTMENT TO ACCOUNTS. The Committee shall have the
authority to establish and thereafter adjust the order of adjustments to
Employee Accounts as may be necessary to accomodate any valuation procedure or
frequencies adopted by the Committee.
5.03 EVALUATION OF ACCOUNTS. As of each Valuation Date, the Committee shall
determine the fair market value of the Fund and shall deduct from such fair
market value the following amounts in order to determine the net fair market
value of the Fund as of such date:
(a) The Employer's annual contribution for the Plan Year ending on such
Valuation Date, if any, to the extent such contribution has been paid
prior to such Date; and
(b) Salary Deferral Contributions for the period ending on such Valuation
Date to the extent such contributions have been paid prior to such
Date, but since the last preceding Valuation Date.
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<PAGE>
To determine any increase or decrease in the fair market value of the Fund,
the net fair market value of such Fund determined in accordance with the
preceding paragraph shall be compared to the net fair market value of the Fund
as of the last preceding Valuation Date.
Any increase or decrease in the net fair market value of such assets so
determined shall be allocated to the Employer Matching Accounts, Employer
Profit-Sharing Accounts and Salary Deferral Contributions Accounts of the
Participants in the proportion that the cumulative amounts previously allocated
and remaining credited to the Account of each such Participant bear to the total
of the cumulative amounts previously allocated and remaining credited to the
Accounts of all such Participants.
Notwithstanding the foregoing, segregated accounts held in accordance with
the provisions of Sections 4.08, 4.09 and 4.10 of Article IV shall be valued
separately on each regular Valuation Date, and the increment or profit shall be
allocated to or, as the case may be, the loss shall be charged against each such
account on a segregated basis.
5.04 CREDITING OF SALARY DEFERRAL CONTRIBUTIONS. Salary Deferral
Contributions and Qualified Nonelective Contributions made by the Employer on
behalf of Participants shall be allocated to their Salary Deferral Contributions
Accounts as of the Valuation Date by which such contributions were withheld by
the Employer.
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<PAGE>
5.05 CREDITING OF EMPLOYER PROFIT SHARING CONTRIBUTIONS. A person shall be
entitled to share in the Employer Profit Sharing Contributions for a Plan Year,
which occurred during such Year, if he is both a Participant and an Employee on
the last day of such Year or if his employment terminated pursuant to
subsections 3.05(a), (b) or (c). Annual Employee forfeitures pursuant to Section
6.05, if any, shall be used to off-set the annual Employer Profit Sharing
Contribution.
As of each payroll period, the Employer Matching Contribution, shall be
allocated among and credited to the Employer Matching Accounts of the persons
entitled to share in such amounts in accordance with the matching provision of
Section 4.01(a). The Employer Profit Sharing Contribution pursuant to Section
4.01(a) for the Plan Year ending on such Date shall be allocated among and
credited to the Employer Profit Sharing Accounts of the persons entitled to
share in such amounts (as provided in the preceding paragraph) in proportion to
each Participant's respective amounts of Compensation for such Plan Year.
5.06 LIMITATION ON ALLOCATIONS TO PARTICIPANTS. Notwithstanding any other
provisions of the Plan:
(a) LIMITATIONS APPLICABLE TO PARTICIPANTS IN DEFINED CONTRIBUTION PLANS
ONLY.
(i) The Annual Addition credited to a Participant's Accounts
(exclusive of any amounts credited in accordance with Section
5.03) for any Plan Year commencing on or after January 1, 1989
shall not exceed the lesser of (A) thirty thousand dollars
($30,000) or such larger amount equal to twenty-five percent
(25%) of the defined benefit dollar limitation as adjusted for
cost-of-living increases pursuant to Code Section 415(d)(3),
or (B) twenty-five percent (25%) of the Participant's
Compensation (as defined in
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<PAGE>
Section 5.06(e) for purposes of this Section, and Sections
5.06(b) and 5.06(c) of this Plan) for such Year.
(ii) In the case of any Participant who also participates in a
Related Plan, the sum of his Annual Addition under the Plan
and his Annual Addition under all Related Plans for any Plan
Year commencing on or after January 1, 1989, shall not exceed
the lesser of (A) the amount set forth in (i)(A) above or (B)
twenty-five percent (25%) of the sum of (l) the Participant's
Compensation for such Year and (2) his remuneration for such
Year from all Employers maintaining such Related Plans. The
Compensation limitation referred to in (B) 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(l)(1) or Section 419A(d)(2) of the Code.
(iii) To the extent necessary to satisfy the limitations of (i) and
(ii) above, the Committee shall reduce the amount which the
Participant is permitted to contribute under the provisions of
the Plan and, if the elimination of such Salary Deferral
Contributions will not satisfy such limitations, shall first
distribute any prior Salary Deferral Contribution made during
the year to the extent such excess results from a reasonable
error in determining the amount of the Salary Deferral
Contribution and secondly shall direct the Employer to reduce
the net contribution it would otherwise make for the
Participant's benefit for the applicable Plan Year. If after
reduction of the net contribution as aforesaid, there is any
amount of contribution for the Plan Year which
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<PAGE>
cannot be allocated to the Accounts of Participants because of
the aforesaid limitations, such amount shall be credited to a
Suspense Account and shall be applied to reduce the next
Year's contribution requirement. 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
Employee Contributions may be made to the Plan for that
limitation year. Excess amounts may not be distributed to
Participants or former Participants.
(b) LIMITATIONS APPLICABLE TO PARTICIPANTS WHO ALSO PARTICIPATE IN A
DEFINED BENEFIT PLAN.
(i) In the case of any Participant who participates in both the
Plan and in a Defined Benefit Plan, his Annual Addition under
the Plan for any Plan Year ending on or after December 31,
1988 shall be limited so that the sum of his Defined Benefit
Plan fraction and his Defined Contribution Plan fraction for
such Year does not exceed 1.0.
(ii) For purposes of the limitation of (i) above:
(A) A Participant's Defined Benefit Plan fraction for any
Plan Year is a fraction (1) whose numerator is the
Participant's projected annual benefit under all Defined
Benefit Plans as a group (determined as of the close of
the Plan Year and reflecting any limitation thereof
required under the terms of any Defined Benefit Plan or
Plans), and (2) whose denominator is the lesser of (i)
the product of 1.25, multiplied by the dollar limitation
in effect under Internal Revenue Code Section
415(b)(1)(A) for such Year, or (ii) the product of
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<PAGE>
1.4, multiplied by the amount which may be taken into
account under Code Section 415(b)(1)(B) with respect to
such Participant under the Plan for such Year; and
(B) A Participant's Defined Contribution Plan fraction for
any Plan Year is a fraction (1) whose numerator is the
sum of the Participant's Annual Additions for all Plan
Years under the Plan and all Related Plans determined as
of the close of the Plan Year, and (2) whose denominator
is the sum of the lesser of the following amounts
determined for the current Plan Year and for each prior
Year: (i) the product of 1.25, multiplied by the dollar
limitation in effect under subsection 5.06(a)(i)(A) for
such Year, or (ii) the product of 1.4, multiplied by the
amount which may be taken into account under subsection
5.06(a)(i)(B) with respect to such Participant under the
Plan and all Related Plans for such Year.
(c) ADJUSTMENTS ON ACCOUNT OF EXCESSIVE CREDITS. If, as a result of the
allocation of forfeitures, a reasonable error in estimating a
Participant's annual compensation or other limited facts and
circumstances that the Commissioner of the Internal Revenue Service
finds justifiable, it is determined at any time that the amount
credited to a Participant's Accounts for any prior Plan Year was in
excess of the amount permitted under the limitations of (a) above,
the Committee shall charge against the Participant's Accounts an
amount or amounts (adjusted to reflect income, expenses, gain or loss
of the Fund properly attributable to the excess credit or credits)
sufficient to permit the remaining credits
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<PAGE>
for such prior Year to satisfy the foregoing limitations and make
adjustments in the order provided below. To the extent the excessive
credit was an excessive Employee Contribution, as determined by the
Committee, the Funding Agent shall refund such portion, adjusted as
aforesaid, to the Participant.
To the extent the excessive credit was an excessive Employer
contribution as determined by the Committee, such excessive portion,
adjusted as aforesaid, shall be applied to reduce the first
contribution or contributions thereafter to be made by the Employer.
A reduction of benefits and/or contributions to all Plans,
where required under (b) above, shall be accomplished by first
reducing the Participant's benefit under any Defined Benefit Plans in
which he participated, such reduction to be made first with respect
to the Whittaker Corporation Employees' Pension Plan and then to the
extent necessary, from the Whittaker Corporation Retirement Security
Plan and, thereafter, in such priority as shall be determined by the
Committee and the administrators of such other Plans. Then, by
reducing contributions or allocating excess forfeitures for Defined
Contribution Plans in which the Participant participated, such
reduction to be made first with respect to the Plan in which he most
recently accrued benefits and, thereafter, in such priority as shall
be established by the Committee and the administrators of such other
Plans; provided, however, that, whenever it is in the best interest
of a Participant, necessary reductions may be made in a different
manner and priority pursuant to the agreement of the Committee and
the administrators of all other plans covering such Participant.
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<PAGE>
The charges and credits required by this Section 5.06(c) in
any Plan Year shall be made prior to any adjustments under Section
5.02 as of the same Anniversary Date.
(d) CODE SECTION 401(K) LIMITS. Under Code Section 401(k), the
contributions allocated to a Participant's Salary Deferral Account in
a particular Plan Year shall be limited as described in Section
4.04(a) and (b).
The Committee shall have the responsibility for monitoring
compliance with the requirements of Section 4.04 and shall have the
power to take any steps it deems appropriate to ensure compliance,
including limiting the amount of salary reduction permitted for
Highly Compensated Employees or designating a portion of the Employer
contributions pursuant to Section 4.01(a)(ii) on behalf of such Plan
Year to be allocated to the Salary Deferral Account of Non-Highly
Compensated Employees, with such amount to be treated as part of
their deferral percentage until such time as the Committee determines
that contributions can be made on behalf of the Highly Compensated
Employees without violating the requirements of Code Section 401(k).
(e) CODE SECTION 415 COMPENSATION DEFINITION. Participant's Compensation
for the purposes of this Section 5.06 shall mean a Participant's
earned income, 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
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<PAGE>
basis of a percentage of profits, commissions on insurance premiums,
tips, bonuses, fringe benefits, reimbursements and expense
allowances), and excluding the following:
(i) Employer contributions to a plan of deferred compensation
which are not included 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 nonqualified 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;
(iv) Other amounts which received special tax benefits, or
contributions made by the Employer (whether or not under a
salary reduction agreement) toward 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).
Compensation earned but not paid in a Plan Year may include amounts earned
but not paid in a Plan Year because of the timing of pay periods and pay days if
such amounts are paid during the first few weeks of the next following Plan
Year, the amounts are included on a uniform and consistent basis with respect to
all similarly situated Employees, and no Compensation is included in more than
one Limitation Year.
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<PAGE>
5.07 ACCOUNTS IN GENERAL. As soon as the Committee has made the adjustments
to the Participants' Accounts required by this Article, it shall notify each
Participant as to the status of his Account or Accounts. Such notification shall
in any event be made not later than one hundred twenty (120) days after the
Valuation Date. The total amounts so credited to each Participant's Accounts
shall represent each Participant's share of the Fund as of such date. Such
allocation and notification shall not vest in any Participant any right, title
or interest in the Fund, except to the extent, at the time or times, and upon
the terms and conditions set forth herein. The Employer, the Funding Agent and
the Committee do not in any manner or to any extent whatever warrant, guarantee
or represent that the value of any Participant's Accounts will at any time equal
or exceed the amount previously allocated thereto and, except as provided in
ERISA, shall not be liable or responsible for any inadequacy of the Fund to meet
and discharge any or all payments and liabilities under the Plan.
5.08 INTERIM EVALUATION OF ACCOUNTS. Each Account of a Participant whose
Termination Date occurs on a date other than a Valuation Date shall be valued
currently, using the same procedure described in Section 5.03, if such interim
evaluation, determined in a uniform and nondiscriminatory manner, is necessary
to account for a material change in the fair market value of the Fund. The
Committee shall determine the fair market value, based on information furnished
by the Funding Agent, as of the end of the calendar month next preceding the
Participant's Termination Date, of the net Fund in order to determine the
percentage of increase or decrease in the fair market value of such Fund when
compared with the fair market value of such Fund as of the next preceding
Valuation Date.
In determining the percentage of increase or decrease of the fair market
value of the Fund, all dividends, declared but not yet paid, interest and other
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<PAGE>
income received by the Funding Agent in the interim between the next preceding
Valuation Date and the interim evaluation date shall be included.
Once the percentage of increase or decrease has been determined, the
Account or Accounts of such Participant as of the next preceding Valuation Date
shall, for purposes of distribution only, be multiplied by the percentage so
determined in order to reflect such increase or decrease.
This interim evaluation shall not affect the amount to be forfeited, if
any, under Section 6.05 and any increase or decrease in the fair market value of
the Fund so distributed to, or retained with respect to the Account or Accounts
of, a former Participant shall increase or decrease unallocated assets for the
purpose of any evaluation required by Section 5.03.
5.09 INSURANCE. No portion of the interest of a Participant shall be
applied to the purchase of any policy of insurance relating to other
Participants; and no policy premium shall be less than the premium rate of an
ordinary life insurance policy. The interest of each Participant shall be
invested proportionately with the interests of all Participants in any such
policy of insurance or other earmarked investment. All policies of insurance
shall be issued by a legal reserve life insurance company authorized to do
business in the State of California.
All proceeds from any "key-man" insurance policies upon the life of any
officer or employee of the Employer shall inure solely to the benefit of the
then Participants of the Employer.
In valuing the Fund, and notwithstanding anything to the contrary herein,
all policies of insurance actually purchased are to be excluded. Nothing herein
shall be constructed to confer upon a Participant or his Beneficiary any right
to any such policy except to the extent of his vested interest in this Plan.
Ordinary policies of life insurance may be purchased. However, not more
than 49.9% of the contributions allocated to the interest of a Participant shall
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<PAGE>
be applied to the payment of premiums upon such ordinary policies of life
insurance. All policies of ordinary life insurance so purchased for the account
of a Participant shall be distributed at or before retirement to such
Participant.
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<PAGE>
ARTICLE VI
RIGHT TO BENEFITS
6.01 VESTING OF INTEREST IN SALARY DEFERRAL, EMPLOYER MATCHING, ROLLOVER
AND PERMANENT ACCOUNTS. The interest of each Participant in his Salary Deferral
Contribution Account, Employer Matching Account, Rollover and Permanent Accounts
shall be 100% vested and nonforfeitable.
6.02 VESTING OF INTEREST IN EMPLOYER PROFIT SHARING ACCOUNT. The interest
of each Participant in his Employer Profit Sharing Account shall vest and become
nonforfeitable up to a maximum of one hundred percent (100%) as follows:
(a) Pursuant to the following schedule:
<TABLE>
<CAPTION>
Vested
Period of Service percentage
----------------- ----------
<S> <C>
Less than 3 years 0%
3 years but less than 4 years 20
4 years but less than 5 years 40
5 years but less than 6 years 60
6 years but less than 7 years 80
7 or more years 100
===
</TABLE>
(b) One hundred percent (100%) on the Participant's attaining age sixty-
five (65).
(c) One hundred percent (100%) on the Participant's death, or upon a
determination, in accordance with Section 3.05(c), that he is totally
and permanently disabled.
(d) For the purpose of determining a Participant's vested percentage
under subsection (a), the following Periods of Service shall be
disregarded:
(i) All Periods of Service prior to the original Effective Date.
(ii) Those Periods of Service of a former nonvested Participant
which relate to a Period of Service prior to his incurring a
Break in Employment, if his Period of Separation exceeds
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<PAGE>
both his prior Period of Service and sixty (60) consecutive
months.
(iii) Any Period of Separation which exceeds twelve (12) consecutive
months.
The vesting of a Participant's interest in whole, or in part, in his
Employer Profit Sharing Account shall not preclude the allocations and
evaluations required under the preceding Article.
If the Plan should ever be amended to change the vesting schedule
thereunder, then each then Participant's vested percentage in his Employer
Profit Sharing Account as of the later of the date such amendment is adopted or
the date it becomes effective, shall be, at any time, not less than his vested
percentage computed under the Plan without regard to such amendment; provided,
however, that in the event the vesting schedule in a particular Plan Year goes
from the Top Heavy vesting schedule back to the vesting schedule in Section
6.02(a), only those Participants with three (3) or more Years of Service shall
have the right to retain the Top Heavy schedule.
6.03 FULLY VESTED BENEFITS. If a Participant retires or is retired from the
employ of the Employer under (a), (b) or (c) of Section 3.05, dies while in the
employ of the Employer, or resigns or is dismissed when his Employer Profit
Sharing Account is fully vested in accordance with Section 6.02, the entire
balances in his Employer Profit Sharing Account and all other Accounts as of the
Valuation Date coinciding with or next preceding his Termination Date (after all
adjustments then required or permitted under the Plan have been made) will
become distributable to or for his benefit, or for the benefit of his
Beneficiary, as the case may be, in accordance with Article VII. Any additional
allocations made pursuant to Section 5.05 shall be paid as soon as possible in
accordance with Article VII.
6.04 PARTIALLY VESTED BENEFITS. Except as specifically provided in Section
6.03, if a Participant resigns or is dismissed from the employ of the
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<PAGE>
Employer before retirement under (a), (b) or (c) of Section 3.04, the balance in
his Employer Profit Sharing Account as of the Valuation Date coinciding with or
next preceding his Termination Date (after all adjustments then required under
the Plan have been made) will be reduced to an amount from his Employer Profit
Sharing Account (hereinafter referred to as the "Vested Amount") determined in
accordance with Section 6.02. The Vested Amount in the Participant's Employer
Profit Sharing Account and the entire balance in all other Accounts (after all
adjustments then required or permitted under the Plan have been made) will
become distributable to or for his benefit, or to or for the benefit of his
Beneficiary, as the case may be, in accordance with Article VII.
6.05 FORFEITURES. The non-vested portion of a Participant's Employer Profit
Sharing Account shall be forfeited as of the Valuation Date on or following the
earlier of:
(a) The date as of which the Participant receives a distribution of his
Employer Profit Sharing Account on account of his termination of
employment or
(b) The date which is the close of a sixty (60)-month period of
Separation following a Break in Employment.
Provided, however, that if the Participant is reemployed prior to the date
that he incurs a sixty (60)-month Period of Separation following a Break in
Employment, any amounts so forfeited shall be reinstated (unadjusted by any
gains or losses occurring after such forfeitures) to the Participant's Employer
Profit Sharing Account within a reasonable time after repayment by the
Participant of the amount of any distribution he may have received pursuant to
Sections 7.02 or 7.03. Such repayment must be made before the earlier of the
date which is five (5) years after the date on which the Participant is
subsequently reemployed by the Employer or the date which is the close of a
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<PAGE>
sixty (60)-month Period of Separation commencing after a distribution or
withdrawal.
If a Participant does not receive a total distribution of his Accounts, the
amount forfeited shall be reinstated if the Participant returns to employment
covered by the Plan whether or not the Participant repays the amount of
distribution he may have received.
For the purposes of this Section 6.05, if the value of an Employee's vested
Account is zero, the Employee shall be deemed to have received a distribution of
such vested Account. If such Participant resumes employment covered by this Plan
before the date the Participant incurs a sixty month Period of Separation, the
amount forfeited shall be restored to the Participant's Account.
Amounts forfeited pursuant to this Section 6.05 shall be allocated as
provided pursuant to Section 5.05.
A Participant's vested Account shall not include any accumulated deductible
Employee contributions within the meaning of Code Section 72(o)(5)(B) made for
Plan Years beginning prior to January 1, 1987.
6.06 TOP HEAVY PROVISIONS. The following provisions shall apply for each
Plan Year for which the Plan is Top Heavy:
(a) The Compensation of each Key Employee taken into account for purposes
of computing the maximum amount of the Employer contribution hereto
or Annual Additions of any Participant's Account for each such Year
shall not exceed his Top Heavy Compensation.
(b) If the Employer does not maintain a qualified defined benefit
retirement plan, or does maintain such a plan but each Non-Key
Employee does not accrue the minimum benefit thereunder required by
Section 416 of the Code, the Employer Contribution, if any, for any
such Plan Year shall be allocated on the basis of each
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<PAGE>
Participant's Top Heavy Compensation in such manner as may be
prescribed by the Code or any pertinent regulations promulgated
thereunder as will result in each Non-Key Employee receiving an
allocation hereunder of the amount which, when added to the amount
allocated to his Account or any amount allocated pursuant to Section
401(k) under this or any other qualified defined contribution
retirement plan maintained by the Employer for such Year, will at
least equal the lesser of: (i) three percent (3%) of his Top Heavy
Compensation, (ii) the highest percentage computed by dividing the
amount of the Employer contributions so allocated to each Key
Employee's Accounts (including amounts contributed as the result of a
salary reduction agreement) by his Top Heavy Compensation, or (iii)
the amount otherwise required after any credit against or reduction
of the minimum amounts described in clauses (i) or (ii) allowable for
benefits accrued under any such defined benefit plan. Non-Key
Employees entitled to the minimum percentage contribution set forth
in clause (i) or (ii) shall also include (iv) Participants who have
not incurred a Break in Employment at the end of the Plan Year and
(v) Eligible Employees who declined to make Salary Deferral
Contributions to the Plan but must be considered as Participants to
satisfy the coverage requirements of Code Section 410(b) in
accordance with Section 401(a)(5) of the Code even if such
Participants or Eligible Employees have earned less than 1,000 Hours
of Service and regardless of their level of Compensation. However, if
the Employer maintains any other qualified defined benefit retirement
plan and this Plan is aggregated therewith for purposes of meeting
the requirements of Section 401(a)(4) or 410 of the Code, the minimum
amount described in clause (ii) of the preceding
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<PAGE>
sentence shall not be applicable. Further, if the Employer maintains
any other qualified defined benefit plan for purposes of providing
the additional benefits permissible by Section 415 of the Code, and
each Non-Key Employee does not accrue the minimum benefit thereunder
required by Section 416 of the Code, the percentage set forth in
clause (i) hereinabove shall be deemed to be seven and one-half
percent (7-1/2%).
(c) A Participant's vested percentage in his Employer Profit Sharing
Account attributable to Employer contributions made for Years in
which this Plan is Top Heavy shall be no less than the percentage
determined in accordance with the schedule below if his participation
hereunder terminates.
<TABLE>
<CAPTION>
Vested
Period of Service percentage
----------------- ----------
<S> <C>
Less than 2 years 0%
2 years but less than 3 years 20
3 years but less than 4 years 40
4 years but less than 5 years 60
5 years but less than 6 years 80
6 or more years 100
===
</TABLE>
(d) Unless the Plan qualifies under an exception as described in Section
416(h)(2) of the Code, "1.0" shall be substituted for "1.25" in the
definitions of Defined Benefit Plan fraction and Defined Contribution
Plan fraction contained in this Plan.
(e) Solely for the purpose of determining if the Plan, or any other plan
included in a required aggregation group of which this Plan is a
part, is Top Heavy (within the meaning of Section 416(g) of the Code)
the accrued benefit of an Employee other than a Key Employee (within
the meaning of Section 416(i)(1) of the Code) shall be determined
under (i) the method, if any, that uniformly applies for accrual
purposes under all plans maintained by the Affiliated Employers, or
(ii) if there is no such method, as if such
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<PAGE>
benefit accrued not more rapidly than the slowest accrual rate
permitted under the fractional accrual rule of Section 411(b)(1)(C)
of the Code.
(f) Neither Elective Deferrals nor Matching Contributions shall be used
to satisfy the minimum contribution or benefit accrual which must be
made on behalf of Non-Key Employees pursuant to this Section 6.06.
6.07 PERSONS UNDER LEGAL OR OTHER DISABILITY. In the event a Participant or
his Beneficiary is judicially determined to be incompetent, and a conservator or
other person legally charged with the care of his person or of his estate is
appointed, any benefits to which such Participant or Beneficiary is entitled
shall be paid to such conservator or other person legally charged with the care
of his person or of his estate. Except as provided in this Section, when, in the
opinion of the Committee, a Participant or his Beneficiary is in any way
incapacitated so as to be unable to manage his financial affairs, the Committee
may direct the Funding Agent to make payments or distributions to his legal
representative or to a relative or friend of such person for his benefit, or the
Committee may direct the Funding Agent to make payments and distributions for
the benefit of the Participant or his Beneficiary in any way the Committee
determines as further detailed in Section 1.02(e).
6.08 MISSING PARTICIPANTS OR BENEFICIARIES. Each Participant and each
Beneficiary shall file, or cause to be filed, with the Committee through the
Employer from time to time in writing, his mailing address and each change of
mailing address. Any communication, statement or notice addressed to a
Participant or his Beneficiary at his last mailing address filed with the
Committee, or if no address is filed with the Committee, then at his last
mailing address as shown on the Employer's records, will be binding on the
Participant and his Beneficiary for all purposes of the Plan.
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<PAGE>
Neither the Committee nor the Funding Agent shall be required to search for
or locate a Participant or his Beneficiary other than by mailing the notices set
forth in this Section 6.08. If the Committee sends the notice required by this
Section 6.08 to a Participant or his Beneficiary stating that he is entitled to
a distribution and also includes in such notice the provisions of this Section,
and the Participant or his Beneficiary fails to claim his benefits under the
Plan or make his whereabouts known to the Committee within three (3) calendar
years after notification, the benefits under the Plan of the Participant or his
Beneficiary will be disposed of as follows:
(a) If the whereabouts of the Participant is unknown but the whereabouts
of the Participant's Beneficiary then is known to the Committee,
distribution will be made to the Beneficiary;
(b) If the whereabouts of the Participant and his Beneficiary then is
unknown to the Committee, but the whereabouts of one or more
relatives by adoption, blood or marriage of the Participant is known
to the Committee, the Committee shall direct the Funding Agent to
distribute the Participant's benefits to any one or more of such
relatives and in such proportions as the Committee in its sole
discretion determines;
(c) If the whereabouts of the Participant, his Beneficiary and relatives
by adoption, blood or marriage of the Participant then is unknown to
the Committee, the amount of such benefits shall be forfeited,
provided that the amount of such benefits shall be reinstated if a
claim is subsequently made by the Participant or his Beneficiary.
6.09 LIEN FOR DEBTS TO FUND. If, at the time of occurrence of any event
which causes a distribution to be made hereunder, notwithstanding any other
provisions of the Plan to the contrary, should a Participant have any
outstanding indebtedness to the Fund, the Committee shall determine the total
amount of such indebtedness and notify the Funding Agent. The
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<PAGE>
Funding Agent, upon receipt of such notice, shall retain and pay over to the
Fund such amount from the Participant's vested interest in his Account or
Accounts. In the event the Participant is to receive payment of his interest
herein by lump sum, the Funding Agent shall pay the Fund the debt outstanding
and then distribute the remaining balance, if any, to the Participant.
6.10 LOANS TO PARTICIPANTS. If a financial emergency arises from such
causes as sickness of a Participant or his family, layoff, divorce or
dissolution of marriage, need to provide adequate housing, need to provide for
education of children or dependents or such other financial need deemed
acceptable by the Committee, the Committee, in its sole discretion and upon
written application of such Participant, may make a loan or loans to such
Participant in an amount aggregating under this Plan or any other Plan (Related
Plan) maintained by the Employer not less than one thousand dollars ($1,000) nor
in excess of the lesser of (1) fifty thousand dollars ($50,000) (reduced by the
highest outstanding loan balance during the one (1)-year period ending on the
day before the loan is made over the outstanding balance of loans from the Plan
to the Participant on the date which such loan is made), or (2) fifty percent
(50%) of the sum of the Participant's vested Employer Matching Account, Employer
Profit Sharing Account, Permanent Account, Rollover Account and the
Participant's Salary Deferral Account, provided that such loans:
(a) Are available to all Participants on a reasonably equivalent basis,
and in the same percentage of their vested balances;
(b) Are not made available to Highly Compensated Employees, officers or
shareholders in an amount greater than the amount made available to
other Employees;
(c) Are adequately secured;
VI-9
<PAGE>
(d) Will in all events be due and payable in substantially level payments
made through payroll deductions unless otherwise authorized by the
Committee in five (5) years or less (unless the loan is used to
acquire a dwelling which is used or to be used within a reasonable
time as the principal residence of the Participant or the
Participant's brothers, sisters, spouse, ancestors or lineal
descendants which may, by its terms be repaid within fifteen (15)
years);
(e) Are evidenced by the borrowing Participant's promissory note
(including in the case of a married Participant spousal consent to
such loan) for a fixed term bearing interest at a rate commensurate
with the prevailing interest rate charged on similar commercial loans
by persons in the business of lending money as determined by the
Committee. Such note shall be payable to the Trustee not later than
the earliest of :
(i) a fixed maturity date as described in (d) above provided,
however, that in the event of a Participant's termination of
employment with the Employer, such note shall become
immediately due and payable; or
(ii) the Participant's death.
(f) If valid consent has been obtained in accordance with paragraph (g)
below, then, notwithstanding any other provision of this Plan, upon
distribution of a Participant's Account, all notes are due and
payable and total amounts unpaid, including principal and interest,
will be deducted from the amount distributed, but only if such
reduction is used as a repayment of the loan. If less than one
hundred percent (100%) of the Participant's vested Account is payable
to the surviving spouse, then the Account shall be adjusted by first
reducing the vested
VI-10
<PAGE>
Account by the amount of the security used as repayment of the loan,
and then determining the benefit payable to the surviving spouse;
(g) Notwithstanding the above, no portion of a Participant's Account may
be used as security for a loan unless, at the time, the security
interest is entered into, the Participant's spouse (if any) consents
to the use of the Participant's Account as security. Such consent
must:
(i) Acknowledge the effect of the consent; and
(ii) Be signed within the 90-day period ending on the date on which
the loan is to be so secured; and
(iii) Be witnessed by a Plan representative or notary public. Such
consent shall thereafter be binding with respect to the
consenting spouse or any subsequent spouse with respect to
that loan.
A new consent shall be required if the Account is used for
renegotiation, extension or renewal, or other revision for the loan;
(h) Shall be made under specific procedures established by the
Administrative Committee. Such procedures shall include the basis on
which loans will be approved or denied; the limitations, if any, on
the types and amounts of loans offered; and the events constituting a
default and the steps that will be taken to preserve Plan assets in
the event of such default. For the purposes of this Section 6.10, if
three (3) monthly payments are not made, or if one quarterly payment
is not made the loan shall be in default.
(i) A Participant may upon thirty (30) days written notice delivered to
the Committee (on such form as the Committee may prescribe), request
that a loan be made to the Participant in conformity with the dollar
limits set forth above provided no loan request has been
VI-11
<PAGE>
made within the preceding twelve (12) calendar months. A Participant
shall first borrow the available balance in his Salary Deferral
Account, shall next borrow the available balance in his Employer
Matching Account, and finally shall borrow any available balance in
his Employer Profit Sharing Account. A Participant may not request a
second loan until any prior outstanding loan has been repaid in full.
Each loan shall be made only from an Account or Accounts of the
Participant requesting the loan and shall be treated as an investment
of such Account or Accounts funding the loan. So long as a loan to a
Participant under this Plan is outstanding, the Participant may not
elect to withdraw any portion of his Account or Accounts prior to
termination under the provisions of Article VI.
(j) The Committee shall have the power to establish additional rules with
respect to loans extended pursuant to this Article VI as may be
appropriate to ensure the orderly administration of this Plan
including, but not limited to, rules relating to non-discriminatory
minimum installments.
Notwithstanding (e) above, in no event, except as may otherwise be required
by ERISA, may the interest rate charged for a loan exceed any limit established
under the applicable state usury law. Such loan shall be treated as an earmarked
investment of the borrowing Participant who shall be entitled to all earnings or
losses thereon. In the event a Participant is deemed to be in default pursuant
to written procedures maintained by the Plan, the Plan shall treat such loan as
a deemed distribution of Plan benefits as of the date of such default with the
Participant's vested interest reduced accordingly.
VI-12
<PAGE>
6.11 WITHDRAWALS PRIOR TO TERMINATION OF EMPLOYMENT.
(a) Amounts may be withdrawn from a Participant's Employer Matching
Account, Permanent Account or Rollover Account while the Participant
remains in the employ of the Employer provided that withdrawals are
limited to contributions made to the stated Accounts at least twenty-
four (24) full calendar months prior to the beginning of the Plan
Year in which the withdrawal request is made, together with any
earnings thereon.
(b) If a Participant has attained age fifty-nine and one-half (59-1/2)
years, all amounts that have been allocated to the Participant's
Salary Deferral Contributions Account may be withdrawn by the
Participant upon request to the Committee on approved forms provided
the Participant has received distribution of all of the value of his
other Employee Accounts or has requested such withdrawals. Such
withdrawals shall be allowed only if all loans made to the
Participant pursuant to Section 6.10 have been repaid in full. The
minimum amount that may be withdrawn at any one time is the lesser of
three hundred dollars ($300.00) or the entire value of the
Participant's Salary Deferral Contribution Account. All other rules
will be uniformly applicable to all Participants and shall require
spousal consent if the Participant is married. Such spousal consent
must acknowledge the effect of the withdrawal, be signed within the
90-day period preceding the date the withdrawal is to be made, and be
witnessed by a Plan representative or notary public. No more than two
(2) requests for withdrawal pursuant to this Section 6.11(b) shall be
permitted in any Plan Year.
(c) In addition, a distribution of the Salary Deferral Contributions (but
not Qualified Matching Contributions or Qualified
VI-13
<PAGE>
Non-Elective Contributions) made by a Participant may be made from
such Participant's Salary Deferral Contributions Account on account
of hardship if the distribution is necessary in light of immediate
and heavy financial need of the Employee determined in accordance
with Code Section 401(k)(2)(b)(IV) and regulations issued thereunder.
Such distribution shall be made subject to spousal consent as
described above. In no event shall such distribution include any of
the investment gains earned after December 31, 1988 on such Salary
Deferral Contributions or any Employer Contribution which was
recharacterized or eligible to be recharacterized to enable the Plan
to meet the requirements of the ADP test in Section 4.04.
A distribution will not be treated as necessary to satisfy an
immediate and heavy financial need of an Employee to the extent the
amount of the distribution is in excess of the amount required to
relieve the financial need or to the extent such need may be
satisfied from other resources that are reasonably available to the
Participant.
(i) In order to receive a distribution under this Section 6.11(c)
a Participant shall be required to submit an appropriate
application to the Committee. Such application shall include
the Participant's written statement that the financial need
cannot be relieved:
(A) Through reimbursement or compensation by insurance or
otherwise,
(B) By reasonable liquidation of the Participant's assets, to
the extent such liquidation would not itself cause an
immediate and heavy financial need,
VI-14
<PAGE>
(C) By cessation of Elective Deferrals or Employee
Contributions under the Plan, or
(D) By other distributions or nontaxable (at the time of the
loan) loans from plans maintained by the Employer or by
any other employer, or by borrowing from commercial
sources on reasonable commercial terms.
(ii) The Committee shall deem a distribution to be necessary if all
of the following requirements are satisfied:
(A) The distribution is not in excess of the amount of the
immediate and heavy financial need of the Participant
including the amount necessary to pay income taxes or
penalties resulting from the distribution,
(B) The Participant has obtained all distributions, other
than hardship distributions, and all nontaxable loans
currently available under all plans maintained by the
Employer,
(C) The Plan, and all other plans maintained by the Employer,
provide that the Participant's Elective Deferrals and
Employee Contributions will be suspended for at least
twelve months (12) after receipt of the hardship
distribution, and
(D) The Plan, and all other plans maintained by the Employer,
provide that the Participant may not make Elective
Deferrals for the Employee's taxable year immediately
following the taxable year of the hardship distribution
in excess of the applicable limit under Code Section
402(g) for such next taxable year less the amount of such
Participant's Elective Deferrals for the taxable year of
the hardship distribution.
VI-15
<PAGE>
(E) Unless otherwise allowed by the appropriate income tax
regulations, the following are the only financial needs
which will be considered immediate and heavy: deductible
medical expenses (within the meaning of Section 213(d) of
the Code) of the Employee, and the Employee's spouse,
children, or dependents, either incurred or required; the
purchase (excluding mortgage payments) of a principal
residence of the Employee; payment of tuition and related
education expenses for twelve (12) months of post-
secondary education for the Employee, and the Employee's
spouse, children, or dependents; or the need to prevent
the eviction of the Employee from, or a foreclosure on
the mortgage of, the Employee's principal residence.
6.12 NATURE OF PARTICIPANTS' INTEREST. The interest of a Participant in the
Fund shall not be deemed to be in the assets of the Fund, but rather in a right
to receive, in cash or in kind, from the Funding Agent the nonforfeitable or
vested interest of the Participant in his Employer Profit Sharing Account and
Salary Deferral Account, as determined by the Committee at such time and subject
to the provisions of Articles VII and VIII.
6.13 SUSPENSION OF BENEFITS AND IMMEDIATE PARTICIPATION UPON REEMPLOYMENT.
Notwithstanding any other provision of this Agreement, the payment of benefits
hereunder to a former Participant who returns to the employ of the Employer
after
VI-16
<PAGE>
incurring a Break in Employment shall be suspended for the period of such
reemployment. Such former Participant will become a Participant as of the date
on which he first earns a Day of Service after his reemployment.
6.14 APPLICATION FOR BENEFITS.
(a) A Participant must complete and file an application for benefits
under the Plan. Application for benefits shall include all pertinent
information requested by the Committee, including reasonable proof
thereof. Applications for benefits must be in writing on the forms
prescribed by the Committee and must be signed by the Participant and
his spouse, if any, and submitted to the Committee. (b) Each
application for benefits shall be acted upon and approved or
disapproved within ninety (90) days following its receipt by the
Committee.
(c) If any application for benefits is denied, in whole or in part, the
Committee shall notify the applicant in writing of such denial and of
such Participant's right to a review by the Committee and shall set
forth specific reasons for such denial, specific references to
pertinent Plan provisions on which the denial is based, a description
of any additional material or information necessary for the applicant
to perfect the application, an explanation of why such material or
information is necessary and an explanation of the Plan's review
procedure. If the Committee fails to act within the ninety (90)-day
period specified above, the Participant may assume that his
application for benefits has been denied either in whole or in part.
6.15 APPEALS PROCEDURE.
(a) Any Participant, or such Participant's duly authorized
representative, whose application for benefits is denied, in whole or
in part, may appeal from such denial to the Committee for a
VI-17
<PAGE>
review of the decision by submitting to the Committee within sixty
(60) days after receiving written notice from the Committee of the
denial of the claim a written statement:
(i) Requesting a review of the application for benefits by the
Committee;
(ii) Setting forth all of the grounds upon which the request for
review is based and any facts in support thereof; and
(iii) Setting forth any issues or comments which the applicant deems
relevant to the application.
The Committee shall act upon each such application within
sixty (60) days after either receipt of the applicant's request for
review by the Committee or receipt of any additional materials
reasonably requested by the Committee from such applicant, whichever
occurs later.
(b) The Committee shall make a full and fair review of each such
application and any written materials submitted by the applicant or
the Employer in connection therewith and may require the Employer or
the Participant to submit within thirty (30) days after a written
notice by the Committee therefore, such additional facts, documents
or other evidence as is deemed necessary or advisable in the sole
discretion of the Committee in making such a review. On the basis of
the review, the Committee shall make an independent determination of
the applicant's eligibility for benefits under the Plan. The decision
of the Committee on any application for benefits shall be final and
conclusive upon all persons if supported by substantial evidence in
the record. If the Committee denies an application in whole or in
part, the Committee shall give written notice of the decision to the
applicant setting forth the specific reasons for such denial and
specific references to the
VI-18
<PAGE>
pertinent Plan provisions on which the Committee's decision is based.
Such written notice shall be given within one hundred-twenty (120)
days of the date the appeal was filed.
6.16 APPLICATION FOR CORRECTION OF ANNUAL STATEMENT. If a Participant
believes that the annual statement respecting his accounts is incorrect, he may
submit a written request to the Committee for correction or verification of the
statement. The Committee shall respond in writing in the same manner set forth
in Section 6.14 and the same appeal and review procedures shall be available to
the Participant.
VI-19
<PAGE>
ARTICLE VII
DISTRIBUTION OF BENEFITS
7.01 METHODS OF MAKING DISTRIBUTIONS.
(a) The Committee shall direct the Funding Agent to distribute the net
credit balances in the Participant's Employer Matching Account,
Employer Profit Sharing Account, Permanent Account and Rollover
Account, if any, and Salary Deferral Contributions Account to or for
the benefit of the Participant, or in the event of his death, to or
for the benefit of his Beneficiary, in cash (and whole shares in the
case of investments in the "Stock Fund") as a single payment.
(b) Distributions of a Participant's Accounts payable in accordance with
Section 6.02 will be made or commenced (unless administratively
unfeasible) no later than the sixtieth (60th) day next following the
close of the Plan Year during which the Participant's Termination
Date occurs. Provided, however, that if the Participant fails to
consent to an immediate distribution, failure to so consent shall be
construed as an election to defer distribution until the later of the
Normal Retirement Age or age sixty-two (62). Notwithstanding the
preceding sentence, a Participant who meets the service requirement,
if any, for early retirement pursuant to Section 3.05, but who
terminates prior to his early retirement age, shall be eligible to
elect to receive his early retirement benefit at any time after
attaining his early retirement age. When directed by the Committee,
the Funding Agent shall make interim payments from such accounts to
the Participant, or in the event of his death to his Beneficiary, at
such time and in such amounts as the Committee may direct during the
period from the Participant's Termination Date to the
VII-1
<PAGE>
Anniversary Date coinciding with or next following the Participant's
Termination Date.
(c) Distribution of a Participant's Accounts payable in accordance with
Section 6.03 will be made or commenced as soon as possible after the
Valuation Date as of which the net credit balances in the accounts
are determined subject to the provisions of Sections 7.03 and 7.04.
(d) The Funding Agent shall have no discretion with respect to making
distributions under the Plan and, therefore, except as otherwise
specifically provided hereinabove, shall make distributions only at
such time and in such manner as the Committee directs. The Funding
Agent shall have no responsibility to see to the application of
distributions so made or to ascertain whether the directions of the
Committee comply with the Plan.
(e) Notwithstanding anything to the contrary contained herein, the
distribution options under the Plan shall comply with Section
401(a)(9) of the Code and regulations promulgated thereunder.
Accordingly, unless otherwise permitted by law, the entire interest
of each Participant shall commence to be distributed by April 1 of
the calendar year following the calendar year in which the
Participant reaches age seventy and one-half (70-1/2) over the life
of such Participant (or over the lives of the Participant and his
Beneficiary) or over a period not extending beyond the life
expectancy of the Participant (or over a period not extending beyond
the life expectancy of the Participant and his Beneficiary). If a
distribution has begun in accordance with the preceding sentence and
the Participant dies before his entire interest has been distributed
to him, the remaining portion of his
VII-2
<PAGE>
interest shall be distributed at least as rapidly as under the method
of distribution being used under the preceding sentence as of the
date of his death. If a Participant dies before the distribution of
his interest has begun, his entire interest shall be distributed
within five (5) years after the date of his death, unless the
requirements of one (1) of the two (2) following exceptions are
satisfied: (i) the Participant's interest will be distributed to a
Beneficiary over the life of such Beneficiary or over a period not
extending beyond the life expectancy of such Beneficiary, and the
distributions begin not later than one (1) year following the date of
the Participant's death (or such later date as permitted by law), or
(ii) the Participant's interest will be distributed to or for the
benefit of his surviving spouse over the life expectancy of such
surviving spouse or over a period not extending beyond the life
expectancy of such surviving spouse, and the distributions begin no
later than the date on which the Participant would have attained age
seventy and one-half (70-1/2) (if the surviving spouse dies before
such distributions begin, this second exception shall be applied as
if the surviving spouse were the Participant). For purposes of this
paragraph and to the extent permitted by law, any amount paid to a
Participant's child shall be treated as if it had been paid to the
Participant's surviving spouse if such amount will become payable to
the surviving spouse upon such child reaching majority (or other
designated event permitted by law).
(f) Notwithstanding anything in the above to the contrary, payment of
benefits shall commence no later than sixty (60) days after the
latest of the close of the Plan Year in which:
(i) The Participant reaches Normal Retirement Age;
VII-3
<PAGE>
(ii) The tenth (10th) anniversary of the date on which the
Participant commenced participation occurs; or
(iii) The Participant terminates employment.
(g) All payment options shall require that the present value of expected
payments to be made to the Participant shall be more than fifty
percent (50%) of the present value of all payments.
7.02 INVOLUNTARY CASH-OUT OF VESTED PARTICIPANT ACCOUNTS. The Plan will
make a lump sum distribution of the entire vested interest in his Accounts to a
Participant entitled to a distribution in accordance with Sections 6.03 and
6.04, provided that the amount of his Accounts has never exceeded three thousand
five hundred dollars ($3,500).
7.03 VOLUNTARY CASH-OUT OF VESTED PARTICIPANT ACCOUNTS. A Participant
entitled to a distribution in accordance with Sections 6.03 and 6.04 may elect
to receive a lump sum distribution of his entire vested interest in his
Accounts.
7.04 WITHHOLDING ON DISTRIBUTIONS. All nonperiodic distributions and
periodic payments shall be subject to the provisions of Section 8.03, items (l)
through (n), hereto, unless pursuant to Code Section 401(a)(31) and I.T.
Regulation Section 1.401(a)(31)-IT the distributee of any eligible rollover
distribution elects to have the distribution paid directly to an eligible
retirement plan in a direct rollover. Accordingly, in addition to any other
required payment restrictions, the Committee shall, not less than 30 days or
more than 90 days prior to a distribution, provide the distributee with a notice
of his right to have his distribution paid in a direct rollover to an eligible
retirement plan and provide the distributee the means to make such election in
accordance with the following:
(a) If a distribution is one to which Sections 401(a)(11) and 417 of the
Internal Revenue Code do not apply, such distribution may commence
less than 30 days after the notice required under
VII-4
<PAGE>
Section 1.411(a)-11(c) of the Income Tax Regulations is given,
provided that:
(i) The Plan administrator clearly informs the Participant that
the Participant has a right to a period of at least 30 days
after receiving the notice to consider the decision of whether
or not to elect a distribution (and, if applicable, a
particular distribution option), and
(ii) The Participant, after receiving the notice, affirmatively
elects a distribution.
(b) This Provision applies to distributions made on or after January 1,
1993. Notwithstanding any provision of the Plan to the contrary that
would otherwise limit a distributee's election under the Provision, a
distributee may elect, at the time and in the manner prescribed by
the Committee, to have any portion of an eligible rollover
distribution that is at least equal to five hundred dollars ($500)
paid directly to an eligible retirement plan specified by the
distributee in a direct rollover.
(c) Definitions
(i) Eligible rollover distribution: An eligible rollover
distribution is any distribution of all or any portion of the
balance to the credit of the distributee, except that an
eligible rollover distribution does not include: any
distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for
the life (or life expectancy) of the distributee or the joint
lives (or joint life expectancies) of the distributee and the
distributee's designated Beneficiary, or for a specified
period of ten years or more; any distribution to the extent
such distribution is required under Section 401(a)(9) of the
Code; and the
VII-5
<PAGE>
portion of any distribution that is not includable in gross
income (determined without regard to the exclusion for net
unrealized appreciation with respect to employer securities).
(ii) Eligible retirement plan: An eligible retirement plan is an
individual retirement account described in Section 408(a) of
the Code, an individual retirement annuity described in
Section 408(b) of the Code, an annuity plan described in
Section 403(a) of the Code, or a qualified trust described in
Section 401(a) of the Code, that accepts the distributee's
eligible rollover distribution. However, in the case of an
eligible rollover distribution to the surviving spouse, an
eligible retirement plan is an individual retirement account
or individual retirement annuity.
(iii) Distributee: A 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.
(iv) Direct rollover: A direct rollover is a payment by the Plan to
the eligible retirement plan specified by the distributee.
VII-6
<PAGE>
ARTICLE VIII
THE COMMITTEE
8.01 COMMITTEE. The Employer shall appoint an Administrative Committee of
not less than three (3) persons. The Employer shall certify to the Funding Agent
the names and specimen signatures of the members of the Committee. The members
of the Committee shall serve at the pleasure of the Employer, and any member may
resign by written instrument addressed to the Employer and may be removed by the
Employer with or without cause. While a vacancy exists, the remaining member(s)
of the Committee may perform any act which the Committee is authorized to
perform. The decisions of the majority of the number of members of the Committee
then in office shall constitute the final and binding act of the Committee. The
Committee may act with or without a meeting being called or held and shall keep
minutes of all meetings held and a record of all actions taken by written
consent. The Funding Agent shall be promptly notified in writing by the Employer
of the original membership, and of any change in the membership, of the
Committee and shall be supplied with specimen signatures of each Committee
member. Vacancies in the membership of the Committee shall be filled promptly by
the Employer.
8.02 COMMITTEE ACTION. The Committee shall choose a secretary (hereinafter
referred to as the "Secretary") who may, but need not, be one of the members of
the Committee. The Secretary shall keep minutes of the Committee's proceedings
and all records and documents pertaining to the Committee's administration of
the Plan. Any action of the Committee shall be taken pursuant to a majority vote
or the written consent of a majority of its members, and such action shall
constitute the action of the Committee and be binding the same as if all members
had joined therein. A quorum of the Committee shall consist of a majority of its
members. The Secretary may execute any certificate or other written direction on
behalf of the Committee.
VIII-1
<PAGE>
The Funding Agent or third persons dealing with the Committee may conclusively
rely upon any certificate or other written direction signed by the Secretary
which purports to have been duly authorized by the Committee.
A member of the Committee shall not vote or act upon any matter which
relates solely to himself as a Participant, unless all Participants are members
of the Committee or there are no other Participants. If a matter arises
affecting one of the members of the Committee as a Participant and the other
members of the Committee are unable to agree as to the disposition of such
matter, the Employer may appoint a substitute member of the Committee in the
place and stead of the affected member, for the sole and only purpose of passing
upon and deciding the particular matter.
8.03 RIGHTS AND DUTIES. The Employer, on behalf of the Participants and
their Beneficiaries, shall be the administrator as defined in Section 3(16)(A)
of ERISA. The Committee acting as an agent of the Employer shall enforce the
Plan on a nondiscriminatory basis in accordance with its terms; shall be charged
with the general administration of the Plan; and shall have all powers and
duties necessary to accomplish those purposes, including, without limiting the
generality of the foregoing, the following:
(a) To make and enforce such rules and regulations as it deems necessary
or proper for the efficient administration of the Plan;
(b) To interpret and construe the terms and provisions of the Plan, its
interpretation and construction thereof in good faith to be final and
conclusive on all Employees, former Employees, Participants, former
Participants and Beneficiaries, except as otherwise provided by law;
(c) To determine all questions concerning the Plan and the eligibility of
any person to participate in the Plan;
(d) To determine the service of Participants to be recognized under the
Plan;
VIII-2
<PAGE>
(e) To determine, compute and certify to the Funding Agent the amount and
form of benefits which will be payable to any Participant, former
Participant, or Beneficiary in accordance with the provisions of the
Plan, and to determine the person or persons to whom such benefits
will be paid;
(f) To authorize the payment of benefits and all other disbursements by
the Funding Agent from the Fund;
(g) To maintain all the necessary records for the administration of the
Plan other than those maintained by the Funding Agent;
(h) To provide for disclosure of all information and filing or provision
of all reports and statements to Participants, Beneficiaries or
governmental bodies as shall be required by ERISA or the Code, and to
submit to the Employer, at least annually, such information as is
necessary to fully inform the Employer of the discharge by the
Committee or its delegates of responsibilities under the Plan;
(i) To enter into a written agreement or agreements with one or more
Investment Managers (as defined by Department of Labor Regulations)
to advise the Committee or the Funding Agent with respect to
investment of the Fund, or to manage (including the power to acquire
or dispose of) any assets of the Plan;
(j) To delegate to such Investment Manager or Managers who have
acknowledged his/their fiduciary status authority to exercise any and
all powers of the Committee to direct the Funding Agent as to
investment and reinvestment of the Fund;
(k) To instruct the Funding Agent in writing from time to time with
respect to investments of principal or income of trust funds,
including, but not limited to: instructing the Funding Agent to
acquire, retain, sell, exchange or lease any property, real or
VIII-3
<PAGE>
personal, which the Committee may designate; instructing the Funding
Agent to invest in stated classes of investments (e.g., to invest all
or a certain percentage of the funds in diversified mutual funds);
instructing the Funding Agent to implement stated investment goals
(e.g., to invest all or a certain percentage of the funds in high-
grade equity securities with potentialities for capital
appreciation); and instructing the Funding Agent to enter into a
group contract and to invest assets held by an insurer under a group
contract in accordance with the investment directions of the
individual Participants;
(l) To withhold, and be liable for, payment of the tax required to be
withheld from any benefits paid in accordance with the provisions of
this Plan, unless the Participant or Beneficiary who is payee for
such benefits shall elect to have withholding not apply to such
payments. Such election, where otherwise allowable, shall remain in
effect until revoked by the elector. The maximum amount to be
withheld shall not exceed the sum of the amount of money and the fair
market value of other property (within the meaning of applicable law)
received in payment of benefits, unless otherwise required by law;
(m) (i) To notify the Participant or Beneficiary who is payee of any
periodic payments, otherwise subject to withholding, of the
right to elect not to apply withholding to such payments.
Notice shall be given no earlier than six months before, and
no later than, the date of the first periodic payment subject
to withholding. Notice of the right to make and revoke such
election shall be given to payees not less frequently than
once each calendar year.
VIII-4
<PAGE>
(ii) To notify the Participant or Beneficiary who is payee of any
nonperiodic distribution otherwise subject to withholding of
the right to elect that withholding shall not apply to such
distribution. Notice shall be given no later than the date of
distribution or at such earlier date as may be prescribed by
the Secretary of the Treasury.
(iii) To notify the payee of mandatory withholding requirements in
effect for years beginning after December 31, 1992 where
appropriate statutory rollover requirements have not been met;
(n) To direct the payor of authorized disbursements from the Fund to
withhold payment of the tax required to be withheld by law. In such
case, and if the payor is supplied with such information as required
by regulations, then the payor shall be liable for payment of the tax
withheld;
(o) To establish a procedure for the Plan to deal with qualified domestic
relations orders. Such procedure shall comply with the applicable
requirements of Code Sections 401(a)(13) and 414(p), as well as ERISA
Sections 206(d)(3)(A) and 516(b)(7), provided that the Plan shall be
permitted to make an immediate distribution to an alternate payee
pursuant to a qualified domestic relations order that provides for
such distribution even though the Participant may not have attained
his earliest possible retirement age; and
(p) To determine the allocation, disposition and distribution of Trust
fund assets in the event the Plan is terminated with respect to any
one or more Participating Employers.
VIII-5
<PAGE>
8.04 FUNDING POLICY AND METHOD.
(a) The Committee shall establish and carry out a funding policy and
method for the Plan which is consistent with the objectives of the
Plan and the requirements of Title I of ERISA. In so doing, the
Committee shall, from time to time, determine whether the Plan has a
short-run need for liquidity (e.g., to pay benefits) or whether
liquidity is a long-run goal and investment growth (and the stability
of the same) is a more current need or the Committee shall appoint a
qualified person to do so.
(b) The funding policy and method, as established and amended from time
to time, shall be communicated by the Committee or its delegate to
the Funding Agent in order that the investment policies of the Fund
may be coordinated with the funding policy and method.
8.05 TRANSMITTAL OF INFORMATION. In order to enable the Committee to
establish a funding policy and to perform its other functions under the Plan,
the Employer shall supply full and timely information to the Committee on all
matters relating to the compensation of all Employees and Participants, their
employment, their retirement, death, or termination of employment, and such
other pertinent facts as may be required. The Committee shall advise the Funding
Agent of such of the foregoing facts as may be pertinent to the Funding Agent's
administration of the Fund.
8.06 COMPENSATION. The members of the Committee shall serve without
compensation for their services hereunder. Members of the Committee and its
appointed delegates shall be bonded to the extent required by ERISA and the
regulations issued by the Secretary of Labor. The expense of such bond and all
expenses of the Committee or such delegate shall be paid by the Employer, unless
charged to the Plan, and the Employer shall furnish the
VIII-6
<PAGE>
Committee without charge with such clerical and other assistance as is necessary
in the performance of its duties.
8.07 RETENTION OF ADVISORS. The Committee may employ such persons or
organizations to render advice or perform services with respect to the
responsibilities of the Committee under the Plan as the Committee, in its sole
discretion, determines to be necessary and appropriate. Such persons may
include, without limitation, actuaries, attorneys, accountants, investment
advisors and consultants. All costs, charges and expenses incurred by the
Committee under the provisions of this Section shall be paid by the Employer
unless charged to the Plan.
8.08 ALLOCATION AND DELEGATION OF FIDUCIARY RESPONSIBILITIES.
(a) As provided in this Article, the Employer shall appoint the
Committee. The Employer shall not, however, be responsible in any way
or to any extent whatever for the operation and administration of the
Plan.
(b) The Committee, from time to time, may allocate to one (1) or more of
its members and delegate to others any of its rights, powers,
responsibilities and duties (hereinafter collectively referred to as
"Duties") with respect to the operation and administration of the
Plan. Each such allocation and/or delegation shall be in writing;
shall specify the Duties so allocated or delegated; and shall be
subject to termination by the Committee upon notice to the person or
persons to whom such Duties have been allocated and/or delegated.
Each person to whom Duties have been allocated and/or delegated
shall, by a written acknowledgment, accept such allocation or
delegation and acknowledge that he is a fiduciary with respect to the
Plan.
VIII-7
<PAGE>
(c) The Committee shall periodically review the performance of any of its
members or others to whom Duties have been allocated or delegated
under the provisions of this Section:
(i) by a formal annual review;
(ii) by day-to-day contact and evaluation; or
(iii) in other appropriate ways.
8.09 INDEMNIFICATION. To the extent permitted by the laws of the State of
California and ERISA, the Employer shall indemnify and hold harmless the Board
of Directors, the Committee and each member thereof, and any other Employee to
whom any fiduciary responsibility with respect to the Plan is allocated or
delegated, from and against any and all liabilities and claims, including legal
fees to defend against such liabilities and claims, and costs and expenses,
arising out of their discharge in good faith of responsibilities under or
incident to the Plan, excepting only expenses and liabilities arising out of
willful misconduct or gross negligence. This indemnity shall not preclude such
further indemnities as may be available under insurance purchased by the
Employer or provided by the Employer under any agreement, operating policies or
otherwise, as such indemnities are permitted under the laws of the State of
California. Payments with respect to any indemnity and payment of insurance
premiums, expenses or fees under this Section shall be made only from the
Employer's assets and shall not be made directly or indirectly from the Fund
assets.
8.10 DETERMINATIONS AND CORRECTIONS. It is recognized in the administration
of the Plan that certain mathematical and accounting errors may be made, or
mistakes arise, by reason of factual errors in information supplied to the
Committee. The Committee shall have the power to make such corrections and
equitable adjustments, arising from mathematical, accounting or factual errors
made in good faith, as the Committee shall in its discretion deem appropriate,
which adjustments shall be final and binding on
VIII-8
<PAGE>
all Employees, former Employees, Participants, former Participants and
Beneficiaries.
8.11 DESIGNATION OF AGENTS. The Committee shall, in its sole discretion,
have the right to appoint such agents as it may deem necessary to carry out its
duties pursuant to the provisions of the Plan.
8.12 RELATIONSHIP OF FIDUCIARIES. It is the intent of all fiduciaries under
the Plan that each fiduciary shall be solely responsible for its own acts or
omissions. Except to the extent imposed by ERISA or the Code, no fiduciary shall
have the duty to question whether any other fiduciary is fulfilling all of the
responsibilities imposed upon such other fiduciary by ERISA or by any
regulations or rulings issued thereunder. No fiduciary shall have any liability
for breach of fiduciary responsibility of another fiduciary with respect to the
Plan unless he participates knowingly in such breach, knowingly undertakes to
conceal such breach, has actual knowledge of such breach and fails to take
reasonable remedial action to remedy said breach or, through his negligence in
performing his own specific fiduciary responsibilities which give rise to his
status as a fiduciary, has enabled such other fiduciary to commit a breach of
the latter's fiduciary responsibilities.
8.13 DISCHARGE OF DUTIES BY FIDUCIARIES. The Committee and the Funding
Agent and any other fiduciary (as that term is defined below) shall discharge
their respective duties set forth in this Plan solely in the interest of the
Participants and their Beneficiaries:
(a) for the exclusive purpose of:
(i) providing benefits to Participants and their Beneficiaries,
and
(ii) defraying reasonable expenses of administering the Plan;
(b) with the care, skill, prudence and diligence under the circumstances
then prevailing that a prudent man acting in a like
VIII-9
<PAGE>
capacity and familiar with such matters would use in the conduct of
an enterprise of a like character and with like aims;
(c) by diversifying the investments of the Plan so as to minimize the
risk of large losses, unless under the circumstances it is clearly
prudent not to do so; and
(d) in accordance with this Plan insofar as the Plan is consistent with
the provisions of Title I of ERISA.
Such fiduciaries shall not permit the indicia of ownership of any Fund
assets to be maintained outside the jurisdiction of the District Courts of the
United States, except as may otherwise be allowed under applicable Department of
Labor rules and regulations.
For purposes of this Plan, a "fiduciary" is any person who:
(e) exercises any discretionary authority or discretionary control
respecting management of the Plan or exercises any authority or
control respecting management or disposition of its assets;
(f) renders investment advice for a fee or other compensation, direct or
indirect, with respect to any monies or other property of the Plan,
or has any authority or responsibility to do so; or
(g) has any discretionary authority or discretionary responsibility in
the administration of the Plan.
8.14 MULTIPLE FIDUCIARY CAPACITIES. Any person or organization may serve in
more than one fiduciary capacity with respect to the Plan (including service
both as Funding Agent and administrator), provided, however, that the provisions
of ERISA Section 406 and Code Section 4975 are not violated.
VIII-10
<PAGE>
ARTICLE IX
AMENDMENT AND TERMINATION
9.01 AMENDMENT BY EMPLOYER. The Employer shall have the right to amend this
Plan from time to time and to amend further or cancel any such amendment. Such
amendments shall be stated in an instrument in writing executed by the Employer,
and this Plan shall be deemed to have been amended in the manner and at the time
therein set forth, and all Employees, former Employees, Participants, former
Participants, Beneficiaries, and the Employer shall be bound thereby; provided,
however:
(a) No such amendment shall be effective which shall attempt to cause any
of the assets of the Fund to be used for or diverted to purposes
other than for the exclusive benefit of the Participants, former
Participants, or their Beneficiaries, except such changes, if any, as
may be required to permit this Plan to meet the applicable
requirements of ERISA or the Code;
(b) No such amendment shall have any retroactive effect so as to deprive
any Participant of any benefit already vested, except such changes,
if any, as may be required to permit this Plan to meet the applicable
requirements of ERISA or the Code;
(c) No such amendment shall create or effect any discrimination in favor
of Participants or former Participants who are officers, shareholders
or Highly Compensated Employees;
(d) No such amendment shall increase the duties or liabilities of the
Funding Agent without its written consent;
(e) No such amendment shall cause any reduction in the retirement
benefits or other optional form of benefits with respect to benefits
accrued to the date of the amendment for any Employee who, at any
time on or after the amendment date, satisfied the pre-amendment
condition; and
IX-1
<PAGE>
(f) No such amendment shall eliminate any other benefit, including any
optional form of benefit, protected pursuant to Code Section
411(d)(6) with respect to benefits accrued as of the date of the
amendment.
9.02 RETROACTIVE AMENDMENTS. An amendment under Section 9.01 may be made
effective on a date prior to the first day of a Plan Year in which it is adopted
only if (a) or (b) below is satisfied:
(a) Any amendment may be made effective retroactively as of such date as
the Employer considers necessary or appropriate to enable the Plan to
meet any applicable requirements of the Code.
(b) Any amendment which is adopted in order to conform the Plan to any
change in Federal law, or to any regulation or ruling thereunder, may
be made effective as of the date such amendment is required to be
effective under such law, regulation or ruling.
9.03 DISCONTINUANCE OR TERMINATION OF PLAN. It is the Employer's
expectation that the Plan contained herein and the payment of contributions
hereunder will be continued indefinitely, and the Funding Instrument is
irrevocable, but continuance of the Plan by the Employer is not assumed as a
contractual obligation. The Employer, pursuant to Section 10.01(a), shall be
entitled to recover any contributions made to the Fund prior to the time that
the Commissioner of Internal Revenue, or his delegate, makes an initial
determination with respect to the exempt status of the Fund for Federal income
tax purposes and the deductibility of contributions by Employer for its income
tax purposes, if the Commissioner of Internal Revenue, or his delegate,
initially determines that the Plan does not meet the requirements of the
Internal Revenue Code with the result that the Fund is not exempt from Federal
income tax and the contributions of the Employer to the Fund are not deductible
in determining its Federal income tax, and furthermore, if such approval is not
obtained the Plan shall be treated as never having been
IX-2
<PAGE>
adopted. The Employer reserves the right at any time to reduce or temporarily
suspend contributions hereunder. The Employer may discontinue contributions
under the Plan at any time by written notice delivered to the Funding Agent
without any liability hereunder for any such discontinuance. In the event of a
complete discontinuance of contributions by the Employer, the entire interest of
each Participant shall be vested to the extent of one hundred percent (100%).
The Employer may terminate the Plan at any time by written notice delivered
to the Funding Agent without any liability hereunder for any such termination.
The Plan will be deemed terminated:
(a) If and when the Employer is judicially declared bankrupt; or
(b) If and when the Employer is a party to a merger in which it is not
the surviving business entity or sells all or substantially all of
its assets unless the surviving business entity or purchaser
continues the Plan.
Upon termination or partial termination of the Plan, the entire interest of
each affected Participant shall be vested to the extent of one hundred percent
(100%).
The Funding Agent shall, upon direction of the appropriate Committee, with
reasonable promptness, liquidate all assets remaining in the Fund. Upon the
liquidation of all assets, the Committee shall make, after deducting estimated
expense for liquidation and distribution, the allocations required under Article
V, where applicable, with the same effect as though the date of completion of
liquidation were a Valuation Date, which was an Anniversary Date of the Plan.
Following these allocations, Elective Deferrals, Qualified Employer
Deferral Contributions and income attributable thereto, shall be distributed to
Participants, or their Beneficiaries as soon as administratively feasible after
the termination of the Plan, provided that neither the Employer nor an
IX-3
<PAGE>
Affiliated Employer maintains a successor Plan. The Funding Agent shall
promptly, after receipt of appropriate instructions from the Committee,
distribute in accordance with Article VII to each former Participant a benefit
equal to the amount credited to such former Participant's Employer Matching
Account, Employer Profit Sharing Account, Rollover Account, if any, and Salary
Deferral Contributions Account as of the date of completion of the liquidation.
9.04 PARTIAL TERMINATION OF PLAN. In the event of partial termination of
the Plan, the appropriate portion of the Fund shall be allocated and treated in
accordance with Section 9.03 above.
9.05 FAILURE TO CONTRIBUTE. The failure of the Employer to contribute to
the Fund for any Plan Year when no contribution is required shall not of itself
be a discontinuance of contributions to the Fund by the Employer.
9.06 MERGER AND CONSOLIDATION OF PLAN; TRANSFER OF PLAN ASSETS. In the case
of any merger or consolidation with, or transfer of assets and liabilities to,
any other plan, provisions shall be made so that each Participant in the Plan on
the date thereof (if the Plan then terminated) would receive a benefit
immediately after the merger, consolidation, or transfer which is equal to or
greater than the benefit he would have been entitled to receive immediately
prior to the merger, consolidation or transfer (if the Plan then terminated).
Further, a merger, consolidation or transfer of assets shall be made only if
resolutions of the Board of Directors and the board of directors of the other
plan shall authorize such merger, consolidation or transfer and such other plan
and fund are qualified under Sections 401(a) and 501(a) of the Code.
9.07 SUBSTITUTION OF SUCCESSOR EMPLOYER. In the event of the dissolution,
merger, consolidation or reorganization of the Employer, provision may be made
by which the Plan will be continued by any successor and, in that event, such
successor shall be substituted for the Employer
IX-4
<PAGE>
under the Plan. Resolutions of the Board of Directors and board of directors of
any new or successor employer shall include an assumption of Plan liabilities by
the successor, and the successor shall have all of the powers, duties and
responsibilities of the Employer under the Plan.
9.08 DISTRIBUTION UPON SALE. Unless the provisions of Section 9.07 are
applicable, all Elective Deferrals, Qualified Employer Deferral Contributions,
and income attributable thereto, may be distributed as soon as administratively
feasible:
(a) To Participants after the sale to an entity that is not an Affiliated
Employer, of substantially all the assets used by the Employer in the
trade or business in which a Participant is employed; and
(b) To Participants employed by a subsidiary of the Employer after the
sale, to an entity that is not an Affiliated Employer, of an
Affiliated Employer's interest in such subsidiary.
For the purpose of this Section 9.08, a sale of eighty-five percent (85%)
of the relevant assets shall be deemed a sale of substantially all assets.
IX-5
<PAGE>
ARTICLE X
SPECIAL PROVISIONS FOR CERTAIN FORMER PARTICIPANTS IN
WHITTAR INDUSTRIES, LTD. SAVINGS PLAN AS AMENDED (401(K))
10.01 APPLICABILITY. This Article shall apply to those Participants who
ceased to be employees of employers participating in the Whittar Industries,
Ltd. Savings Plan as Amended (401(k)) and became Employees within the meaning of
this Plan. Individuals to whom this Article applies shall be referred to herein
as Article X persons. For purposes of this Article X, the Whittar Industries,
Ltd. Savings Plan as Amended (401(k)) shall be referred to herein as the Whittar
Plan.
10.02 PARTICIPANT TRANSFER CONTRIBUTIONS. Effective as of the date the
Employee became a Participant of this Plan, or such later date as may be
determined by the Committee, the account (as defined in Section 5.01 of the
Whittar Plan), if any, of an Article X person then held in trust under the
Whittar Plan may be transferred to this Plan and credited to the Participant's
corresponding Account in accordance with rules which the Committee shall
prescribe from time to time; provided, however, that the transfer of such
account from the Whittar Plan be transferred directly by the Trustee of the
Whittar Plan to the Trustee of this Plan. Any amounts so transferred shall not
be subject to distribution to an Article X person except as expressly provided
under this Plan. In addition, any amounts so transferred shall be invested in
accordance with the provisions of Section 4.08 of this Plan and at such time
and, in such manner.
X-1
<PAGE>
ARTICLE XI
MISCELLANEOUS
11.01 CONTRIBUTIONS NOT RECOVERABLE. Except where contributions are
required to be returned to the Employer or a Participant as permitted by the
provisions of the Plan or required by ERISA or the Code, it shall be impossible
for any part of the principal or income of the Fund to be used for, or diverted
to, purposes other than the exclusive benefit of such Participants or their
Beneficiaries; provided, however, that notwithstanding this or any other
provision of this Plan, the Employer shall be entitled, subject to the
conditions established under Internal Revenue Service Ruling 91-4, to recover
any contributions made to the Fund:
(a) If such contributions were conditioned on the initial qualification
of the Plan and;
(i) The Commissioner of Internal Revenue, or his delegate, makes
an initial determination, with respect to the exempt status of
the Fund for Federal income tax purposes and the deductibility
of contributions by Employer for its income tax purposes, that
the Plan does not meet the requirements of the Internal
Revenue Code with the result that the Fund is not exempt from
Federal income tax and the contributions of the Employer to
the Fund are not deductible in determining its Federal income
tax; and
(ii) The application for determination relating to the initial
qualification is filed by the due date of the Employer's
return for the taxable year in which the Plan is adopted; and
(iii) The contribution is returned within one year of the denial of
the contribution; or
(b) In error as a result of a mistake in fact; or
XI-1
<PAGE>
(c) Conditioned upon the contribution being allowed as a deduction for
Federal income tax purposes and such deduction is disallowed; or
(d) Remaining in the Suspense Account after termination of the Plan which
cannot be allocated to Participants because of the provisions of
Section 5.06.
(e) The permissible recovery under (b) must be made within one (1) year
from the date the contribution was made to the Plan, and under (c)
must be made within one (1) year from the date of disallowance of tax
qualification or tax deduction.
(f) Reversions due to a mistake of fact or the disallowance of a
deduction with respect to a contribution that was conditioned on its
deductibility shall be permitted only if the surrounding facts and
circumstances indicate that the contribution of the amount that
subsequently reverts to the Employer is attributable to a good faith
mistake of fact or, in the case of the disallowance of the deduction,
a good faith mistake in determining the deductibility of the
contribution.
(g) The maximum amount that may be returned to the Employer in the case
of a mistake of fact or the disallowance of a deduction is the excess
of (i) the amount contributed, over, as relevant, (ii) (A) the amount
that would have been contributed had no mistake of fact occurred, or
(B) the amount that would have been contributed had the contribution
been limited to the amount that is deductible after any disallowance
by the Internal Revenue Service.
(h) Earnings attributable to the excess contribution may not be returned
to the Employer, but losses attributable to such contribution shall
reduce the amount returned.
XI-2
<PAGE>
(i) If, the return of the amount attributable to the mistaken or
nondeductible contribution would cause the Account of any Participant
to be reduced to an amount which is less than the amount which would
have been in the Account of such Participant had the mistaken or
nondeductible amount not been contributed, the amount returned to the
Employer shall be limited so as to avoid such reduction.
Notwithstanding the preceding sentence, in the case of a reversion
due to initial disqualification of the Plan, the entire assets of the
Plan attributable to Employer contributions may be returned to the
Employer.
11.02 EMPLOYMENT RIGHTS. The Plan is not a contract of employment.
Participation in the Plan shall not give any Employee or any other person (a)
the right to be retained in the employ of the Employer; (b) any right or claim
to any interest in the Plan, unless the right or claim has specifically accrued
under the Plan; or (c) any legal or equitable right against the Employer, the
Committee or the Funding Agent, except as provided herein. The Employer reserves
the right to dismiss (with or without cause) any Employee without any liability
for any claim either against the Fund, except to the extent provided herein, or
against the Committee or the Employer. It is a condition of the Plan, and each
Participant expressly agrees by his participation herein, that each Participant
shall look solely to the assets held in the Fund for the payment of any benefit
to which he is entitled under the Plan.
11.03 RECEIPT OR RELEASE. Any payment to a Participant, former Participant,
or his Beneficiary in accordance with the provisions of this Plan shall, to the
extent thereof, be in full satisfaction of all claims against the Funding Agent,
the Committee and the Employer, and the Committee or Funding Agent may require
such Participant, former Participant, or
XI-3
<PAGE>
Beneficiary, as a condition precedent to such payment, to execute a receipt and
release to such effect.
11.04 ALIENATION. None of the benefits, payments, proceeds or claims of any
Participant, former Participant, or Beneficiary shall be subject to any claim of
any creditor and, in particular, the same 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. Any attempt to anticipate, alienate, sell, transfer, assign,
pledge, encumber, garnish, levy or otherwise dispose of or execute upon any
right or benefit payable hereunder shall be void. The Fund shall not in any
manner be liable or subject to the debts, contracts, liabilities, engagements or
costs of any Participant entitled to benefits hereunder, and such benefits shall
not be considered an asset of the Participant in the event of his insolvency or
bankruptcy. This provision shall not prevent the Plan from complying with the
terms of a "qualified domestic relations order" as defined in Code Sections
401(a)(13) and 414(p) so long as such compliance will not adversely affect the
qualified status of the Plan.
11.05 CONTROLLING LAW. This Plan shall be construed, administered, and
governed in all respects under applicable Federal law, and to the extent that
Federal law is inapplicable, under the laws of the State of California;
provided, however, that if any provision is susceptible to more than one
interpretation, such interpretation shall be given thereto as is consistent with
the Plan being a qualified plan within the meaning of Section 401 of the Code.
If any provisions of this instrument shall be held by a court of competent
jurisdiction to be invalid or unenforceable, the remaining provisions hereof
shall continue to be fully effective.
11.06 TEXT PREVAILS OVER CAPTIONS. The headings and subheadings of the
Articles and Sections of this Plan are included herein solely for
XI-4
<PAGE>
convenience or reference, and if there be any conflict between such headings and
subdivisions and the text of this Plan, the text shall control.
11.07 COUNTERPARTS. This Plan has been executed in several counterparts,
each of which shall be deemed an original, and said counterparts shall
constitute but one and the same instrument, which may be sufficiently evidenced
by any one counterpart.
11.08 SUCCESSORS AND ASSIGNS. This Plan shall inure to the benefit of, and
be binding upon, the parties hereto and their successors and assigns.
XI-5
<PAGE>
ARTICLE XII
PARTICIPATING EMPLOYERS
12.01 ADOPTION BY AFFILIATED EMPLOYERS. With the consent of the Employer,
any Affiliated Employer may adopt this Plan and all of the provisions hereof,
and participate herein and be known as a Participating Employer, by properly
executing a document evidencing said intent and will of such Participating
Employer.
12.02 REQUIREMENTS OF PARTICIPATING EMPLOYERS.
(a) Each Participating Employer shall be required to use the same Funding
Agent as selected pursuant to Section 1.02(w).
(b) The Funding Agent, subject to the provisions of Section 4.08, shall
commingle, hold and invest as one, all contributions received
pursuant to Sections 4.01 and 4.03.
(c) The transfer of any Participant from or to an Employer participating
in this Plan, whether he or she be an Employee of the Employer or an
Affiliated Employer, shall not affect such Participant's rights under
the Plan, and all amounts credited to such Participant's Accounts, as
well as his accumulated Years of Service with the transferor or
predecessor, and his length of participation in the Plan, shall
continue to his credit.
(d) All rights and values forfeited by termination of employment shall
inure to Participants subject to Plan Section 5.05.
(e) Any expenses of the Plan which are to be paid by the Employer or
borne by the Plan shall be paid by each Participating Employer in the
same proportion that the total amount standing to the credit of all
Participants employed by such Employer bears to the total standing to
the credit of all Participants.
12.03 DESIGNATION OF THE EMPLOYER AS AGENT. With respect to all of its
relations with the Funding Agent and Administrator for the purpose of this
XII-1
<PAGE>
Plan, each Participating Employer shall be deemed to have designated irrevocably
the Employer as its agent. Unless the context of the Plan clearly indicates the
contrary, the word "Employer" shall be deemed to include each Participating
Employer as related to its adoption of the Plan.
12.04 EMPLOYEE TRANSFERS. In the event an Employee transfers between
Participating Employers, the Employee involved shall carry with him his
accumulated Service and eligibility. No such transfer shall effect a termination
of employment hereunder, and the Participating Employer to which the Employee is
transferred shall thereupon become obligated hereunder with respect to such
Employee in the same manner as was the Participating Employer from whom the
Employee was transferred.
12.05 PARTICIPATING EMPLOYER CONTRIBUTIONS. All contributions made by a
Participating Employer, as provided for in this Plan, shall be determined
separately by each Participating Employer, and shall be paid to and held by the
Funding Agent for the exclusive benefit of the Employees of such Participating
Employer and the Beneficiaries of such Employees, subject to all the terms and
conditions of this Plan. On the basis of the information furnished by the
Employer, the Committee shall keep separate books and records concerning the
affairs of each Participating Employer hereunder and as to the Accounts and
credits of the Employees of each Participating Employer.
12.06 AMENDMENT. Amendment of this Plan by the Employer, at any time,
pursuant to Section 9.01, shall be deemed to be an amendment by each
Participating Employer, provided, however, that if such amendment affects the
individual duties or liabilities of any Participating Employer, such amendment
shall not be effective as to such Participating Employer until such
Participating Employer has submitted a properly executed document evidencing its
consent to such amendment.
XII-2
<PAGE>
12.07 PARTICIPATING EMPLOYER DISCONTINUANCE. Any Participating Employer
shall be permitted to discontinue or revoke its participation in the Plan. At
the time of any such discontinuance or revocation, satisfactory evidence thereof
and of any applicable conditions imposed shall be delivered to the Committee.
The Committee shall thereafter cause to be transferred, delivered and assigned
Plan assets allocable to the participants of such Participating Employer to such
new Funding Agent as shall have been designated by such Participating Employer.
If no successor is designated, the Committee shall retain such assets for the
Employees of said Participating Employer, pursuant to the provisions of the
Funding Instrument. In no such event shall any part of the corpus or income of
the Plan as it relates to such Participating Employer be used for or diverted
for purposes other than for the exclusive benefit of the Employees of such
Participating Employer, except as otherwise provided pursuant to Section 5.05.
12.08 COMMITTEE AUTHORITY. The Committee shall have authority to make any
and all necessary rules or regulations binding upon all Participating Employers
and all Participants to effect the purposes of this Article XI.
XII-3
<PAGE>
IN WITNESS WHEREOF, the Employer has caused this Plan to be executed by its
duly authorized officers this 22nd day of December, 1994.
___________________________
(Whittaker Corporation)
By: /s/ Thomas A. Brancati
---------------------------------
Title: President
---------------------------------
By: /s/ Richard B. Levin
---------------------------------
Title: Chief Financial Officer
---------------------------------
Approved as to form:
/s/ Robert Hardy
- ---------------------------------
Jones, Day, Reavis & Pogue
- --------------------------
Counsel for Employer
XII-4
<PAGE>
The undersigned business entities hereby join in the establishment of the
Whittaker Corporation Partnership Plan for Employees of
Whittaker Controls, Inc.
------------------------
(Affiliated Employer)
By: /s/ Richard B. Levin
---------------------------------
President
Attest: /s/ Gordon J. Louttit
---------------------------------
Secretary
(Corporate Seal)
Whittaker Services Corporation
------------------------------
(Affiliated Employer)
By: /s/ Thomas A. Brancati
---------------------------------
President
Attest: /s/ Gordon J. Louttit
---------------------------------
Secretary
(Corporate Seal)
Whittaker Technical Products Inc.
---------------------------------
(Affiliated Employer)
By: /s/ Thomas A. Brancati
---------------------------------
President
Attest: /s/ Gordon J. Louttit
---------------------------------
Secretary
(Corporate Seal)
XII-5
<PAGE>
EXHIBIT 10.13
FIRST AMENDMENT
To
WHITTAKER CORPORATION CREDIT AGREEMENT
Dated as of April 21, 1995
This FIRST AMENDMENT (this "Amendment") is among WHITTAKER CORPORATION, a
Delaware corporation (the "Borrower"), the Financial Institutions party to the
Credit Agreement referred to below (the "Lenders"), and NATIONSBANK OF TEXAS,
N.A., as agent (the "Agent") for the Lenders thereunder.
PRELIMINARY STATEMENTS:
(1) The Borrower, the Lenders and the Agent have entered into a Credit
Agreement dated as of January 23, 1995 (the "Credit Agreement"; capitalized
terms used and not otherwise defined herein have the meanings assigned to such
terms in the Credit Agreement).
(2) In connection with the proposed acquisition (the "HLS Acquisition") by
the Borrower of 100% of the capital stock of Hughes LAN Systems, Inc., a
California corporation ("HLS"), from Hughes Aircraft Company, a Delaware
corporation (the "Seller"), the Borrower has requested that the Agent and the
Lenders agree to certain amendments to the terms of the Credit Agreement.
(3) The Agent and the Lenders are, on the terms and conditions stated
below, willing to grant the requests of the Borrower.
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 agree as follows:
SECTION 1. Amendments to Credit Agreement. The Credit Agreement is,
effective concurrently with and only upon the consummation of the HLS
Acquisition and subject to the satisfaction of the conditions precedent set
forth in Section 3 hereof, hereby amended as follows:
(a) Section 1.01 of the Credit Agreement is hereby amended by adding
thereto, in appropriate alphabetical order, the following defined terms:
"'First Amendment' means the First Amendment dated as of April 21,
1995 among the Borrower, the Lenders and the Agent.
"'HLS' means Hughes LAN Systems, Inc., a California corporation.
"'HLS Acquisition' means the acquisition by the Borrower of 100%
of the capital stock of HLS.
"'HLS Acquisition Agreement' means the Stock Purchase Agreement
dated as of March 23, 1995 by and between the Seller and the Borrower.
<PAGE>
"'HLS Acquisition Documents' means the HLS Acquisition Agreement,
the HLS Subordinated Debt Documents and each other document, instrument and
agreement executed and/or delivered in connection with the HLS Acquisition.
"'HLS Contingent Payments' means (i) "Contingent Payments" as defined
in Exhibit 1.3(c) to the HLS Acquisition Agreement, (ii) HLS Mandatory
Payments, and (iii) any other amounts payable by the Borrower or any of its
Subsidiaries to the Seller or any of its Affiliates based on the revenues
or income of HLS; provided, however, that any amounts required to be paid
as a result of adjustments, pursuant to Section 1.6 of the HLS Acquisition
Agreement, to the purchase price payable in connection with the HLS
Acquisition shall not constitute HLS Contingent Payments.
"'HLS Mandatory Payments' means mandatory payments under Section 2.2
of Exhibit 1.3(c) to the HLS Acquisiiton Agreement.
"'HLS Subordinated Debt' means the 7% convertible Subordinated Debt in
the original principal amount of $15,000,000 incurred by the Borrower in
connection with the HLS Acquisition.
"'HLS Subordinated Debt Documents' means (i) the HLS Subordinated
Note, and (ii) any other instruments and agreements evidencing and
governing the HLS Subordinated Debt.
"'HLS Subordinated Note' means the 7% Convertible Subordinated Note
due May 1, 2005 in the original principal amount of $15,000,000 and any
note or notes issued in exchange therefor or replacement thereof so long as
each such note is in substantially the form of Exhibit 1.3(b) to the HLS
Acquisition Agreement.
"'HLS Transaction Documents' means the HLS Acquisition Documents and
the First Amendment.
"'Seller' means Hughes Aircraft Company, a Delaware corporation.
"'Specified Bermite Land proceeds' means the cash proceeds from the
sale, transfer, lease (other than the existing lease with the City of Santa
Clarita and any other lease with a term, including all extension options,
of two years or less) or other disposition of all or any portion of the
Bermite Land (including any sale or other disposition of any Securities of
or any other equity interest in any Affiliate of the Borrower with any
ownership interest in the Bermite Land) to any Person other than the
Borrower or a wholly owned Subsidiary of the Borrower, net of (a) all
reasonable costs incurred and payable within twelve months of, and as a
result of, the applicable transaction by the Borrower or any of its
Subsidiaries to a Person that is not its Affiliate, (b) the amount (as
estimated by the Borrower in good faith) of income, franchise, transfer or
other taxes payable by the Borrower in cash within 12 months as a result of
such transaction (after giving effect to all deductions, credits and other
items which reduce tax liability and, at the time of determination, are
available or reasonably anticipated to be available), and (c) amounts
payable to Northholme Partners or its successors in connection with the
applicable transaction pursuant to the terms of the Bermite
2
<PAGE>
Development Agreement, in each case to the extent, but only to the
extent, that the amounts so deducted are, at the time of receipt of
the applicable cash proceeds, paid or payable to a Person that is not
its Affiliate and are properly attributable to the transaction."
(b) The definition of "Fixed Charge Coverage Ratio" contained in
Section 1.01 of the Credit Agreement is herby amended and restated in its
entirety to read as follows:
"'Fixed Charge Coverage Ratio' means, subject to Section 6.01(o),
for any period, the quotient obtained by dividing (a) Consolidated
EBITDA of the Borrower and its Subsidiaries for such period minus the
sum of (i) Consolidated Capital Expenditures of the Borrower and its
Subsidiaries in such period and (ii) the amount of any HLS Contingent
Payments accrued in such period by (b) the sum of Consolidated
Interest Expense for such period plus scheduled payments of the
principal amount of (i) the Term Advances required to be made during
such period in accordance with the provisions of Section 2.03(a) (as
such scheduled payments may be reduced by any prepayments of the Term
Advances) and (ii) any other funded debt or other indebtedness for
borrowed money (including Capitalized Leases) of the Borrower and its
Subsidiaries (determined in accordance with GAAP but excluding any
Revolving Advances and L/C Advances) required to be made during such
period."
(c) Section 1.01 of the Credit Agreement is hereby amended by adding,
immediately prior to the period at the end of the definition of the term
"Debt", a proviso to read as follows:
"; provided, however, that HLS Contingent Payments shall not
constitute 'Debt' hereunder".
(d) Section 2.05(b) of the Credit Agreement is hereby amended by
adding thereto a new subsection (iii) to read as follows:
"(iii) Mandatory Prepayment: Specified Bermite Land Proceeds. On
the first Business Day after any Specified Bermite Land Proceeds are received by
the Borrower or any of its Subsidiaries, the Borrower shall pay to each Lender
(in accordance with the provisions of Section 2.09(a)) such Lender's Pro Rata
Share of an amount equal to such Specified Bermite Land Proceeds, to be applied
to the prepayment of each scheduled principal installment of the Term Advances
(ratably in accordance with the respective principal amounts of each such
installment), until the Term Advances are repaid in full."
(e) Section 6.01 of the Credit Agreement is hereby amended by adding
thereto a new subsection (h) to read as follows:
"(h) Delivery of HLS Transaction Documents. The Borrower shall deliver
to the Agent as soon as reasonably practicable after the closing of the
HLS Acquisition, and in any event within 30 days of such closing, copies
of the HLS Acquisition Agreement, the HLS Subordinated Debt Documents and
each other HLS Acquisition Document reasonably requested by the Agent or
the Required Lenders, each certified as of the date delivered as being
true, correct and complete."
3
<PAGE>
(f) Section 6.02(f)(v) of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:
"(v) from and after the date which is twelve months after the closing
date of the HLS Acquisition, Operating Investments (in addition to
Investments otherwise expressly permitted hereunder) so long as no Default
has occurred and is continuing or would occur as a result of the
consummation thereof and so long as:
(A) the amount of each such Investment (or series of related
Investments) does not exceed 10% of the total assets of the Borrower
and its Subsidiaries (determined on a Consolidated basis in accordance
with GAAP at the time of such Investment); and
(B) the cumulative amount of all Operating Investments made
during any period of twelve consecutive months, whether or not
outstanding or recovered, does not exceed $10,000,000;".
(g) Section 6.02(f) of the Credit Agreement is hereby further amended by
(i) deleting the word "and" which immediately follows the semi-colon at the
end of subsection (viii) of such Section, (ii) replacing the period at the end
of subsection (ix) of such Section with "; and", and (iii) adding to such
Section a new subsection (x) to read as follows:
"(x) the HLS Acquisition, but only if (i) such acquisition is
consummated (A) on substantially the terms disclosed in writing to the
Lenders by the Borrower prior to execution of the First Amendment, and
(B) in accordance with the terms and conditions of the HLS Acquisition
Agreement (without any material modification from the form delivered to
the Lenders prior to their execution of the First Amendment) without any
material modification or amendment thereof or waiver thereunder which has
not been approved by the Required Lenders, and (ii) the purchase price
payable in connection with such acquisition does not exceed $17,500,000
plus the amount of any positive adjustment of such amount pursuant to
Section 1.6 of the HLS Acquisition Agreement, plus amounts payable in
respect of the HLS Subordinated Note (as if effect on the closing date of
the HLS Acquisition) and HLS Contingent Payments."
(h) Section 6.02 of the Credit Agreement is hereby further amended by
adding thereto a new subsection (o) to read as follows:
"(o) HLS Contingent Payments, Etc. Make or permit to be made any
payment in respect of any HLS Contingent Payment if, at the time of such
payment, the Fixed Charge Coverage Ratio (determined as set forth below
in the case of any HLS Mandatory Payment) for the period of the four most
recently ended fiscal quarters of the Borrower is less than 1.50 to 1.0,
or prepay prior to the scheduled maturity thereof in any manner any HLS
Contingent Payments, or amend, modify or change in any manner Section 2.6
of Exhibit 1.3(c) to the HLS Acquisition Agreement or any other term or
provision of the HLS Acquisition Documents if such amendment,
modification or change would increase the amount of, or accelerate the
date for payment of, any HLS Contingent Payment. For purposes of
determining the amount of any HLS Mandatory Payment which may be made
at any time (and only for such purposes), the term "Fixed Charge
4
<PAGE>
Coverage Ratio" means, the quotient obtained by dividing (a) Consolidated
EBITDA of the Borrower and its Subsidiaries for such period minus the sum
of (i) Consolidated Capital Expenditures of the Borrower and its
Subsidiaries in such period, and (ii) the amount of any HLS Contingent
Payments accrued in such period, and (iii) without duplication of any
amount included under the foregoing clause (ii), the amount of any HLS
Mandatory Payments made in such period and any HLS Mandatory Payments
proposed to be made in the next subsequent fiscal quarter, plus the amount
of any cash proceeds received by the Borrower or any of its Subsidiaries in
such period (and, without duplication, in the next subsequent fiscal
quarter) in connection with any sale of any capital stock or assets of HLS
which constitutes a "Trigger Event" as defined in Exhibit 1.3(c) to the HLS
Acquisition Agreement (net of all taxes and expenses incurred by the
Borrower in connection with such sale, in each case as determined by the
Borrower in good faith) by (b) the sum of Consolidated Interest Expense for
such period plus scheduled payments of the principal amount of (i) the Term
Advances required to be made during such period in accordance with the
provisions of Section 2.03(a) (as such scheduled payments may be reduced by
any prepayments of the Term Advances) and (ii) any other funded debt or
other indebtedness for borrowed money (including Capitalized Leases) of
the Borrower and its Subsidiaries (determined in accordance with GAAP but
excluding any Revolving Advances and L/C Advances) required to be made
during such period. Prior to make any HLS Mandatory Payment, the Borrower
shall deliver to the Agent an Officers' Certificate of the Borrower setting
forth the amount of such HLS Mandatory Payment and the calculation of the
Fixed Charge Coverage Ratio (as set forth in this Section 6.02(o)) for the
period of the four most recently ended fiscal quarters of the Borrower
after giving effect to such HLS Mandatory Payment."
(i) Section 6.04(b) of the Credit Agreement is hereby amended and restated
in its entirety to read as follows:
"(b) Leverage Ratio. Maintain at all times during the period of twelve
consecutive months immediately following the closing date of the HLS
Acquisition a ratio of Consolidated Total Debt to Consolidated Total
Capitalization of not greater than 0.55 to 1.0 and maintain at all other
times a ratio of Consolidated Total Debt to Consolidated Total
Capitalization of not greater than 0.50 to 1.0."
(j) Section 6.04(d) of the Credit Agreement is hereby amended and restated
in its entirety to read as follows:
"(d) Consolidated Tangible Net Worth. Maintain a Consolidated Tangible
Net Worth, as determined as of the last day of each fiscal quarter, of
not less than the sum of (i) 50% of cumulative Consolidated Net Income
for all fiscal quarters commencing with and including the fiscal quarter
ending July 31, 1995 (but excluding Consolidated Net Income for any
fiscal quarter for which Consolidated Net Income is a negative number),
(ii) 75% of the amount of HLS Subordinated Debt, if any, converted to
any equity interest in the Borrower or any of its Subsidiaries, and
(iii) $50,000,000."
5
<PAGE>
(k) Article IX of the Credit Agreement is hereby amended by adding thereto
a new Section 9.19 to read as follows:
"SECTION 9.19. Notices Under HLS Acquisition Agreement. If, at any
time, the Borrower shall fail to maintain for any period of four
consecutive fiscal quarters ending on the last day of any fiscal quarter
a Fixed Charge Coverage Ratio equal to or greater than 1.50 to 1.0, then,
at the request of the Agent, the Borrower shall, and the Agent is hereby
authorized to, give written notice to the Seller pursuant to the terms of
the HLS Acquisition Agreement that a 'Fixed Charge Deficiency' has occurred
and is continuing; provided that, if the Agent gives any such notice, the
Agent shall deliver a copy thereof to the Borrower concurrently with the
delivery of such notice to the Seller (it being understood and agreed
that the failure by the Agent to so deliver such a copy to the Borrower
shall not affect the effectiveness of any such notice and shall not
result in any liability on the part of the Agent). The Borrower agrees
that, unless the Agent has made a request therefor pursuant to this
Section 9.19, the Borrower will not deliver any notice under the HLS
Acquisition Agreement of the occurrence of a 'Fixed Charge Deficiency'
without the prior written consent of the Agent."
SECTION 2. Consent to HLS Subordinated Debt. Upon the effectiveness of this
Amendment, the Agent and the Lenders hereby approve the HLS Subordinated Note
(without any material modification from the form delivered to the Lenders prior
to their execution hereof) for the purposes of the definition of "Subordinated
Debt" contained in Section 1.01 of the Credit Agreement.
SECTION 3. Conditions to Effectiveness. This Amendment shall become
effective when:
(a) the Agent has executed this Amendment and has received
counterparts of this Amendment executed by the Borrower and the Required
Lenders or, as to any of the Lenders, advice satisfactory to the Agent
that such Lender has executed this Amendment;
(b) the Agent has received counterparts of the Consent appended hereto
executed by each of the Guarantors and Grantors listed therein (such
Guarantors and Grantors, together with the Borrower, collectively the
"Loan Parties");
(c) the Borrower shall have paid to the Agent on or prior to the date
of execution by the Borrower of this Amendment, in accordance with Section
2.09(a) of the Credit Agreement, for the account of the Lenders, an
amendment fee in an amount equal to 0.25% of the sum of the outstanding
Term Advances, the outstanding Revolving Advances, the outstanding Letter
of Credit Obligations and the Unused Revolving Commitments of the Lenders;
(d) the Borrower shall have taken such steps, and shall have executed
and/or delivered such certificates, instruments and other documents, if
any, as the Agent may reasonably require to ensure that the certificates
representing 100% of the capital stock of HLS shall be pledged to the
Agent pursuant to the Security Agreement simultaneously with the closing
of the HLS Acquisition and shall be delivered to the Agent substantially
concurrently therewith; and
(e) the Agent has received a certificate, dated as of the date of
closing of the HLS Acquisition (the "HLS Acquisition Closing Date") and
in form and substance satisfactory to the
6
<PAGE>
Agent, of the Borrower and each other Loan Party, signed on behalf of the
Borrower and such other Loan Party by its President or its Vice President
and its Secretary or any Assistant Secretary, certifying as to (A) the due
incorporation and good standing of the Borrower and each other Loan Party,
as a corporation organized under the laws of the state of its
incorporation, and the absence of any proceeding for the dissolution or
liquidation of the Borrower or such other Loan Party, (B) the truth, both
immediately prior to consummation of the HLS Acquisition and after giving
effect thereto, of the representations and warranties contained in this
Amendment and in each of the Loan Documents as though made on and as of the
date thereof (other than any such representations or warranties that, by
their terms, specifically refer to a date other than the HLS Acquisition
Closing Date), (C) the absence, both immediately prior to consummation of
the HLS Acquisition and after giving effect thereto, of any event occurring
and continuing that constitutes a Default, and (D) the names and true
signatures of the officers of the Borrower or such other Loan Party
authorized to sign this Amendment or the consent hereto, as applicable.
SECTION 4. Representations and Warranties. The Borrower represents and
------------------------------
warrants as follows:
(a) Authority; Enforceability. The Borrower and each of its
-------------------------
Subsidiaries has the requisite corporate power and authority (i) to
execute, deliver and perform each HLS Transaction Document executed or to
be executed by it, and (ii) to file the HLS Transaction Documents filed by
it, or to be filed by it, with each appropriate Governmental Authority. The
execution, delivery and performance (or filing, as the case may be) by the
Borrower and each of its Subsidiaries of each HLS Transaction Document to
which it is or is to be a party and the consummation of the transactions
contemplated thereby, have been duly approved by the Board of Directors of
such Person and no other corporate proceedings on the part of such Person
are necessary to consummate such transactions. Each HLS Transaction
Document to which the Borrower or any of its Subsidiaries is a party has
been duly executed and delivered by the Borrower and/or such Subsidiary, as
the case may be, and constitutes each such Person's legal, valid and
binding obligation, enforceable against such Person in accordance with its
terms, and is in full force and effect.
(b) No Conflict. The execution, delivery and performance by the
-----------
Borrower and each of its Subsidiaries of each HLS Transaction Document to
which it is party and the consummation of the transactions contemplated
thereby do not and will not (i) constitute a tortious interference with any
Contractual Obligation of the Borrower or any of its Subsidiaries to any
Person, or (ii) conflict with or violate such Person's certificate or
articles of incorporation or bylaws, or other organizational documents, as
the case may be, or (iii) conflict with, result in a breach of or
constitute (with or without notice or lapse of time or both) a default
under any material Requirement of Law or material Contractual Obligation of
the Borrower or any of its Subsidiaries, or require termination of any
material Contractual Obligation of any such Person, or (iv) result in or
require the creation or imposition of any Lien whatsoever upon any of the
properties or assets of the Borrower or any of its Subsidiaries (other than
Liens in favor of the Agent arising pursuant to the Loan Documents or Liens
permitted pursuant to Section 6.02(a)) of the Credit Agreement, or (v)
require any approval of stockholders or any approval or consent of any
Person under any Contractual Obligation of any Loan Party, except for
corporate authorizations described in Section 3(a) which have been obtained
and are in full force and effect on the HLS Acquisition Closing Date.
7
<PAGE>
(c) Governmental Consents. The execution, delivery and performance by
---------------------
the Borrower and each of its Subsidiaries of each HLS Transaction Document
to which it is a party and the consummation of the transactions
contemplated thereby do not and will not require any registration with,
consent or approval of, or notice to, or other action to, with or by any
Governmental Authority, except for filings (i) required pursuant to the
Hart-Scott-Rodino Antitrust Improvement Act of 1976 (all of which have been
made), (ii) with the Securities and Exchange Commission under the
Securities Exchange Act, and (iii) to perfect the Liens created by the
Collateral Documents which, in the case of the foregoing clauses (ii) and
(iii), have been, or will in due course prior to the time required, be
made. Any waiting period under the Hart-Scott-Rodino Antitrust Improvement
Act of 1976 applicable to the consummation of the transactions contemplated
by the HLS Transaction Documents has, or as of the HLS Acquisition Closing
Date shall have, expired.
Section 5. Reference to and Effect on the Loan Documents. (a) Upon and
---------------------------------------------
after the effectiveness of this Amendment, each reference in the Credit
Agreement to "this Agreement", "hereunder", "hereof" or words of like import
referring to the Credit Agreement, and each reference in the other Loan
Documents to "the Credit Agreement", "thereunder", "thereof" or words of like
import referring to the Credit Agreement, shall mean and be a reference to the
Credit Agreement as modified and amended hereby.
(b) Except as specifically amended above, the Credit Agreement and all
other Loan Documents, are and shall continue to be in full force and effect and
are hereby in all respects ratified and confirmed. Without limiting the
generality of the foregoing, the Collateral Documents and all of the Collateral
described therein do and shall continue to secure the payment of all Secured
Obligations under and as defined therein, in each case as amended hereby.
(c) The execution, delivery and effectiveness of this Amendment shall not,
except as expressly provided herein, operate as a waiver of any right, power or
remedy of any Lender or the Agent under any of the Loan Documents, nor
constitute a waiver of any provision of any of the Loan Documents.
Section 6. Costs, Expenses and Taxes. The Borrower agrees to pay on demand
-------------------------
to the Agent, all costs and expenses of the Agent in connection with the
preparation, execution, delivery and administration of this Amendment and the
other instruments and documents to be delivered hereunder, including, without
limitation, the reasonable fees and out-of-pocket expenses of counsel for the
Agent with respect thereto and with respect to advising the Agent as to its
rights and responsibilities hereunder and thereunder. The Borrower further
agrees to pay on demand all costs and expenses, if any (including, without
limitation, reasonable counsel fees and expenses), in connection with the
enforcement (whether through negotiations, legal proceedings or otherwise) of
this Amendment and the other instruments and documents to be delivered
hereunder, including, without limitation, reasonable counsel fees and expenses
in connection with the enforcement of rights under this Section 6. In addition,
the Borrower shall pay any and all stamp and other taxes (excluding, in the case
---------
of each Lender, net income taxes that are imposed by the United States and
franchise taxes and income taxes that are imposed on such Lender by the state or
foreign jurisdiction under the laws of which such Lender is organized or any
political subdivision thereof or therein, and franchise taxes based on income
and income taxes that are imposed on such Lender by any jurisdiction or any
political subdivision thereof or therein in which is located such Lender's
Applicable Lending Office or principal office), and fees, payable or determined
to be payable in connection with the execution, delivery and filing of this
Amendment and the other instruments and
8
<PAGE>
documents, if any, to be delivered hereunder, and agrees to save the Agent and
each Lender harmless from and against any and all liabilities with respect to or
resulting from any delay in paying or omission to pay such taxes or fees.
SECTION 7. Execution in Counterparts. This Amendment may be executed in
-------------------------
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute but one and the
same agreement. Delivery of an executed counterpart of a signature page to this
Amendment or the Consent hereto by telefacsimile shall be effective as delivery
of a manually executed counterpart of this Amendment or such Consent.
SECTION 8. Governing Law. This Amendment shall be governed by, and
-------------
construed in accordance with, the laws of the State of New York.
[Signature Pages Follow]
9
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
WHITTAKER CORPORATION,
a Delaware corporation
By: /s/ JOHN K. OTTO
--------------------------------
John K. Otto
Treasurer
NATIONSBANK OF TEXAS, N.A.,
as Agent
By: /s/ ANDREA P. COLLIAS
--------------------------------
Andrea P. Collias
Vice President
10
<PAGE>
Lenders:
-------
NATIONSBANK OF TEXAS, N.A.
By: /s/ ANDREA P. COLLIAS
-----------------------------
Andrea P. Collias
Vice President
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By: /s/ LORI KANNEGIETER
-----------------------------
Title: Vice President
THE BANK OF CALIFORNIA, N.A.
By: /s/ J. DEREK WATSON
-----------------------------
Title: Corporate Banking Officer
CITY NATIONAL BANK
By: /s/ ERICH BOLLINGER
-----------------------------
Title: Vice President
KREDIETBANK N.V.
By: /s/ DIANE GRIMMIG
-----------------------------
Title: Vice President
By: /s/ ROBERT SNAUFFER
-----------------------------
Title: Vice President
SANWA BANK CALIFORNIA
By: /s/ JOE ARCO
-----------------------------
Title: Vice President
UNION BANK
By: /s/ ROBERT C. PETERSEN
-----------------------------
Title:
11
<PAGE>
CONSENT
Dated as of April 21, 1995
The undersigned, as Guarantors under the "Guaranty" and as Grantors under
the "Security Agreement" (as such terms are defined in and under the Credit
Agreement referred to in the foregoing First Amendment), each hereby consents
and agrees to the said First Amendment and hereby confirms and agrees that (i)
the Guaranty and Security Agreement are, and shall continue to be, in full force
and effect and are hereby ratified and confirmed in all respects except that,
upon the effectiveness of, and on and after the date of, the said First
Amendment, each reference in the Guaranty and the Security Agreement to the
Credit Agreement, "thereunder", "thereof" or words of like import referring to
the Credit Agreement, shall mean and be a reference to the Credit Agreement as
amended by the said First Amendment and (ii) the Security Agreement and all of
the Collateral described therein do, and shall continue to, secure the payment
of all of the Secured Obligations as defined therein.
BLUE BELL LEASE, INC., a California corporation,
METROPOLITAN FINANCIAL SERVICES CORPORATION, a Colorado
corporation, PARK CHEMICAL COMPANY, a Michigan corporation,
WHITTAKER CONTROLS, INC., a California corporation,
WHITTAKER CORP., a Maine corporation, WHITTAKER ORDNANCE,
INC., a Delaware corporation, WHITTAKER PORTA BELLA
DEVELOPMENT, INC., a California corporation, WHITTAKER
SERVICES CORPORATION, a California corporation, WHITTAKER
TECHNICAL PRODUCTS, INC., a Colorado corporation, and
WHITTAKER DEVELOPMENT CO., a Delaware corporation
By: /s/ JOHN K. OTTO
-------------------------------------
John K. Otto
Treasurer of each of the foregoing Loan Parties
12
<PAGE>
EXHIBIT 11
WHITTAKER CORPORATION
CALCULATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Stated in Thousands of Dollars
Year Ended October 31,
------------------------------
1995 1994 1993
-------- ------- ------
<S> <C> <C> <C>
PRIMARY EARNINGS PER SHARE
Earnings
Income................................... $7,865 $10,061 $7,256
Deduct:
Dividends on $5.00 Cumulative
Convertible Preferred Stock......... (4) (12) (12)
------ ------- ------
Net income used in primary earnings
per share calculations.............. $7,861 $10,049 $7,244
====== ======= ======
Average Common and Common Equivalent
Shares in (000)
Weighted average number of common shares
outstanding........................... 8,531 8,481 8,281
Common equivalent shares:
Series D Participating Convertible
Preferred Stock..................... 292 292 316
Stock options included under treasury
stock method........................ 802 729 894
------ ------- ------
TOTAL.................................... 9,625 9,502 9,491
====== ======= ======
Primary Earnings Per Share............... $ 0.82 $ 1.06 $ 0.76
====== ======= ======
</TABLE>
<PAGE>
WHITTAKER CORPORATION
CALCULATION OF EARNINGS PER SHARE - (Continued)
<TABLE>
<CAPTION>
Stated in Thousands of Dollars
Year Ended October 31,
------------------------------
1995 1994 1993
-------- --------- --------
<S> <C> <C> <C>
FULLY DILUTED EARNINGS PER SHARE
Earnings
Net income used in primary earnings
per share calculation (Note A)......... $7,861 $10,049 $7,244
Adjustments: - - -
------ ------- ------
Net income used in fully diluted earnings
per share calculations................. $7,861 $10,049 $7,244
====== ======= ======
Average Shares used to Calculate Fully
Diluted Earnings Per Share in (000)
Average common and common equivalent
shares (above)......................... 9,625 9,502 9,491
Add:
Additional stock options included
under treasury stock method........... - 88 32
------ ------- ------
TOTAL..................................... 9,625 9,590 9,523
====== ======= ======
Fully Diluted Earnings Per Share.......... $ 0.82 $ 1.05 $ 0.76
====== ======= ======
</TABLE>
<PAGE>
WHITTAKER CORPORATION
CALCULATION OF EARNINGS PER SHARE - (Continued)
NOTES
Earnings per share have been computed based on the weighted average number of
common and common equivalent shares outstanding during the periods, after
deducting from net income the dividend requirements on the outstanding $5.00
Cumulative Convertible Preferred Stock. Common stock equivalents include Series
D Participating Convertible Preferred Stock and dilutive employee stock options,
calculated using the treasury stock method.
Fully diluted earnings per share include the additional potential dilutive
effect of employee stock options. The inclusion of additional shares assuming
the conversion of the convertible subordinated debt would have been
antidilutive.
<PAGE>
EXHIBIT 21
WHITTAKER CORPORATION
A DELAWARE CORPORATION
ACTIVE SUBSIDIARIES
-------------------
<TABLE>
<CAPTION>
PLACE OF % OWNERSHIP
NAME OF COMPANY INCORPORATION (# SHARES)
- ------------------- ------------- ---------------
<S> <C> <C>
Blue Bell Lease, California 100% (1,000)
Inc.
Metropolitan Colorado 100% ( 100)
Financial Services
Corporation
Park Chemical Michigan 100% (1,000)
Company
Whittaker California 100% (1,000)
Communications, Inc.
Whittaker England 100% ( 2)
Communications
Limited
Whittaker Controls, California 100% (1,000)
Inc.
Whittaker Corp. Maine 100% (1,000)
Whittaker Barbados 100% (1,000)
International, Inc.
Whittaker Ordnance, Delaware 100% ( 1)
Inc.
Whittaker Political California 100% ( 100)
Action Committee,
Inc.
Whittaker Porta California 100% (1,000)
Bella, Inc.
Whittaker Services California 100% (1,000)
Corporation
Whittaker Technical Colorado 100% (1,000)
Products, Inc.
Division:
Whittaker Power
Storage Systems
</TABLE>
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in Post-Effective Amendment
Number 2 to Registration Statement Number 2-74481 on Form S-8 dated January 28,
1983, as amended and supplemented to date, Post-Effective Amendment Number 3 to
Registration Statement Number 2-74481 on Form S-8 dated October 10, 1983, Post-
Effective Amendment Number 1 to Registration Statement Number 2-97149 on Form
S-8 dated September 30, 1985, Post-Effective Amendment Number 3 to Registration
Statement Number 2-76480 on Form S-8 dated April 22, 1985, Post-Effective
Amendment Number 2 to Registration Statement Number 2-70806 on Form S-8 dated
May 20, 1981, Post-Effective Amendment Numbers 2, 1-A and 1-B to Registration
Statement Number 33-04320 on Form S-4 dated March 26, 1986, as supplemented and
amended to date, Post-Effective Amendment Numbers 2-A and 2-B to Registration
Statement Number 33-04320 on Form S-8 to Form S-4 dated June 1, 1987,
Registration Statement Numbers 33-35762 and 33-35763 on Form S-8 dated July 6,
1990, Registration Statement Number 33-52295 on Form S-8 dated February 16,
1994, and Registration Statement Number 33-58323 on Form S-8 dated March 31,
1995 of our report dated December 14, 1995 with respect to the consolidated
financial statements of Whittaker Corporation in the Annual Report (Form 10-K)
for the year ended October 31, 1995. We also consent to the reference to our
firm under the caption "Experts" in the aforementioned Registration Statements
insofar as that reference relates to our report for the year ended October 31,
1995.
ERNST & YOUNG LLP
Los Angeles, California
January 24, 1996
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AND INCOME STATEMENT AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<CASH> 161
<SECURITIES> 0
<RECEIVABLES> 66,570
<ALLOWANCES> 1,176
<INVENTORY> 39,518
<CURRENT-ASSETS> 123,729
<PP&E> 78,059
<DEPRECIATION> 36,641
<TOTAL-ASSETS> 250,959
<CURRENT-LIABILITIES> 50,228
<BONDS> 70,694
0
1
<COMMON> 86
<OTHER-SE> 102,337
<TOTAL-LIABILITY-AND-EQUITY> 250,959
<SALES> 159,479
<TOTAL-REVENUES> 159,479
<CGS> 89,974
<TOTAL-COSTS> 89,974
<OTHER-EXPENSES> 11,373
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,897
<INCOME-PRETAX> 13,026
<INCOME-TAX> 5,161
<INCOME-CONTINUING> 7,865
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,865
<EPS-PRIMARY> 0.82
<EPS-DILUTED> 0
</TABLE>
