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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Six Months Ended June 30, 1999
Commission File Number 1-5277
BEMIS COMPANY, INC.
(Exact name of registrant as specified in its charter)
Missouri 43-0178130
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
222 South 9th Street, Suite 2300
Minneapolis, Minnesota 55402-4099
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (612) 376-3000
Indicate by check mark whether the registrant has: (1) 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, and (2) has been subject
to such filing requirements for the past 90 days.
YES X NO
---- ----
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
52,310,115 shares of Common Stock, $.10 par value on August 9, 1999
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ITEM 1. FINANCIAL STATEMENTS
The financial statements, enclosed as Exhibit 19, are incorporated
by reference in this Form 10-Q. In the opinion of management, the financial
statements reflect all adjustments necessary to a fair statement of the
results for the six months ended June 30, 1999.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS - SECOND QUARTER 1999
Net sales for the second quarter of 1999 were $481.3 million
compared to $470.6 million for the second quarter of 1998, an increase of 2.3
percent or $10.7 million. Net income was $31.6 million, or $0.60 per diluted
share, for the second quarter of 1999 compared to $27.6 million, or $0.51 per
diluted share, for the same quarter in 1998, an increase of 14.3 percent.
The 1998 earnings have been restated to reflect the Company's change
to the first-in, first-out (FIFO) inventory valuation method from the
last-in, first-out (LIFO) inventory valuation method. Management believes the
change from LIFO to FIFO inventory valuation method benefits the company by
providing the best matching of the applicable raw material cost of a unit of
product to the product's selling price and, therefore, presents a clearer
picture of operating results. The change also enables management to forecast
costs more accurately. The change to FIFO inventory accounting will result in
incremental tax payments of approximately $12 million expected to be spread
over the next four years. These taxes have been reflected in the restatement
of prior years and will, therefore, have no effect on income for 1999 and
future years. Restated financial statements have been filed with the United
States Securities and Exchange Commission on Form 8-K.
The Company's flexible packaging operations reported a 3.7 percent
increase in net sales and operating profit growth of 20.0 percent compared to
the second quarter of last year due to strong results in both high barrier
plastic products and polyethylene products. The pressure sensitive materials
operations reported a 1.7 percent decrease in net sales and 20.0 percent
lower profits compared with the year earlier quarter, as that business'
previously announced reorganization continues as well as the costs of adding
new focused manufacturing capacity both affected profitability.
Within flexible packaging, net sales of high barrier products
increased $18.8 million, or 10.2 percent, while net sales declined $3.3
million for polyethylene packaging products and $2.7 million for paper
products, or 2.8 percent and 6.0 percent, respectively. Net sales in the
pressure sensitive materials business declined $2.1 million or 1.7 percent.
The $0.5 million increase in research and development expense
occurred in the flexible packaging business segment. Income associated with
the Company's flexible packaging joint venture in Brazil account for nearly
all of the favorable second quarter 1999 change in other costs (income), net,
compared to the same 1998 period. This improvement is principally due to the
partial recovery of previously recorded currency exchange rate losses. The
minority interest decrease resulted from lower operating income in the
Company's pressure sensitive materials business segment. The effective tax
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rate for the second quarter of 1999 and 1998 was 38.4 percent and 38.8
percent, respectively.
RESULTS OF OPERATIONS - SIX MONTHS ENDED JUNE 30, 1999
Net sales for the six-month period of 1999 were $931.9 million
compared to $922.1 million for the same period in 1998, an increase of 1.1
percent. Net income was $50.3 million for 1999 compared to $48.3 million for
the same six-month period in 1998, an increase of 4.1 percent. Excluding
non-comparable operating results of business acquisitions from the first half
of 1999 and 1998, net sales increased 0.3 percent while operating profit
increased 4.3 percent.
Flexible packaging net sales, adjusted for noncomparable business
activity, increased 0.8 percent while operating income increased 11.6
percent. The impact of multiple price increases for key raw materials,
experienced during the first half of 1999, has been tempered by increasing
inventory levels in advance of the announced increase. Additional increases,
expected during the balance of the year, could have a negative impact on
margins.
Pressure sensitive materials net sales declined 1.2 percent while
operating income declined 15.8 percent, as this segment's previously
announced reorganization and the costs of adding new focused manufacturing
capacity affected profitability. Sequential improvement is expected during
the second half of 1999.
Costs associated with the Company's flexible packaging joint venture
in Brazil account for nearly all of the six-month change in other costs
(income), net, compared to the same 1998 period. The effective tax rates for
the first half of 1999 and 1998 was 38.7 percent and 38.7 percent,
respectively.
EUROPEAN COMMON CURRENCY (EURO)
The European Economic and Monetary Union (EMU) and a new currency,
the "euro", began in Europe on January 1, 1999. This is a significant and
critical element in the European Union's (EU) plan to blend the economies of
the EU's member states into one integrated market, with unrestricted and
unencumbered trade and commerce across borders. Eleven of the fifteen member
EU countries are initially participating. Other member states may join in the
years to come.
On January 1, 1999, the European Central Bank (ECB) established
fixed conversion rates between the euro and existing currencies (legacy
currencies) of participating member countries of the EMU. The euro now trades
on currency exchanges and is available for noncash transactions on a "no
compulsion, no prohibition" basis. The euro will coexist with the legacy
currencies through January 1, 2002. During this transition period, currency
conversion rates no longer will be computed directly from one legacy currency
to another. Instead, a "triangulation" process must be applied with any
amount denominated in a legacy currency first converted into a euro amount
and then into the second legacy currency. Beginning on January 1, 2002, the
ECB will issue euro-denominated bills and coins for use in cash transactions.
On or before July 1, 2002, the participating countries will withdraw all
legacy bills and coins and use the euro as their legal currency.
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The principal impact on the Company will be experienced by its
operations whose functional currency is the existing currency (legacy
currency) of a participating member country of the EMU. The "triangulation"
process and the resulting single currency denomination (the euro) will impact
the information technology infrastructure, accounting record keeping
requirements, and cross-border purchasing and selling. The Company recognizes
that failure to timely resolve internal euro issues could result, in a worst
case, in the Company's European operations' inability to obtain raw materials
in a timely manner; reductions, delays, or cancellations of customer orders;
delays in payments by customers for products shipped; or a general inability
to record, track, and consummate business transactions. Any or all of these
events could have a material adverse effect on the Company's business,
financial condition, and results of operations.
The Company has selected and installed new computer software which
is euro-compliant (also Year 2000 compliant) and expects that the initial
positive experience during the first quarter of 1999 will continue as actual
utilization of the new software more fully tests its functionality over a
longer period of time. The cost of these efforts is expected to total $1.5
million of which approximately $1.0 million was incurred in 1998 and $0.3
million in 1999 for both expense and capital items. The overall effect on the
Company's international operations, principally its Pressure Sensitive
Materials business segment, is not expected to be material. In addition, the
increased "price and cost transparency" expected to result from a single
currency for a larger integrated market, is expected to lower material cost
and lower costs associated with currency transactions, however, selling
prices may be adversely affected. The experience during the first quarter of
1999 has not been out of the ordinary and the Company expects this transition
experience to continue.
YEAR 2000 ISSUE
In late-1992, the Company began to set direction for upgrading all
of its information technology (IT) systems with a focus on significant
enhancement of IT support at the division level. It was the Company's
intention to replace legacy IT systems with hardware and software that
reflected the current state of technology. Principal objectives of this major
effort were to significantly improve the quality and usefulness of
computerized information management systems, to improve employee and
manufacturing efficiencies, and to notably enhance the quality of service to
customers, suppliers, and employees. "Year 2000 compliant," was one of many
necessary attributes of any system considered. Computers and related
equipment, computer software, and other office and manufacturing equipment
utilizing microprocessors that use only two digits to identify a year in a
date field may be unable to accurately process certain date-based information
at or after the Year 2000. This is commonly referred to as the "Year 2000
issue."
The Company, like commerce in general, is highly dependent on
computerized systems or controls for the administrative recording of business
transactions, for the administrative control and actual manufacture of
products it sells, and for the efficient interaction between third parties
such as suppliers, customers, banks, and employees. The Company recognizes
that failure to timely resolve internal Year 2000 issues could result, in a
worst case, in the Company's inability to obtain raw materials in a timely
manner; reductions in the quality or quantity of materials obtained;
reductions, delays, or cancellations of customer orders; delays in payments
by customers for products shipped; or a general inability to record, track,
and consummate business transactions. Any or all of these events
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could have a material adverse effect on the Company's business, financial
condition, and results of operations.
The Company is addressing its Year 2000 issue in three areas: (1) IT
system applications, (2) non-IT systems, including engineering and
manufacturing equipment applications, and (3) relationships with third
parties.
The Company has conducted an assessment of its company-wide Year
2000 issue surrounding its IT systems. Since the initial assessment in
late-1992, concurrent efforts have been underway to evaluate, select, and
implement third party supplied or internally developed software for
company-wide or division-wide applications. All new major software
applications are in daily operation. Internally developed software is Year
2000 compliant, and where third party supplied software is not Year 2000
compliant the Company has received assurance of such compliance once the
updated software version, which was received during the second quarter 1999,
is installed, which is scheduled for completion during the third quarter of
1999. While the current stages of completion for these concurrent efforts
vary, the Company believes that implementation will be substantially complete
and Year 2000 compliant by the end of the third quarter of 1999 with
potentially one or two sites requiring fourth quarter efforts to complete the
conversion of their historical data.
The Company has completed the assessment of the Year 2000 issue
surrounding its non-IT systems, including engineering and manufacturing
equipment applications. Year 2000 remediation and testing efforts, which are
continuing throughout the Company, are more than 80 percent complete. This
Company-wide effort is being centrally coordinated with actual assessment,
remediation, and implementation assigned to identified individuals at each
manufacturing, warehouse, or office site. While the degree of effort and
extensiveness of remediation will vary by site, it is expected that all sites
will be Year 2000 compliant by the end of the third quarter of 1999.
Finally, the Company is continuing to examine its relationship with
third parties whose failure to become Year 2000 compliant in a timely manner,
if at all, could have a material effect on the Company. The Company has been
in contact with significant vendors and customers with respect to such
companies' Year 2000 compliance programs and status. In addition, follow-up
conversations have been conducted with key customers and vendors. While the
Company believes this risk has been substantially and satisfactorily
addressed, efforts surrounding third party relationships will continue as
circumstances and business relationships demand.
The Company is developing contingency plans to address the effects
of the failure of the Company or any of its principal suppliers, customers,
or other third parties to become Year 2000 compliant in a timely manner.
Initial contingency plans developed during the second quarter of 1999 will
continue to be expanded and updated throughout 1999 as required by changes in
events, facts, and circumstances surrounding the Company's Year 2000
compliance efforts as well as that of its principal suppliers, customers, and
other third parties.
Most business units meet at least monthly to review progress and
plans. Senior level representatives from the various concurrent
implementation and remediation teams meet at least quarterly with senior
level Company management to assess progress, to assure a coordinated effort
where required, and to verify a continued Company-wide focus toward a
satisfactory resolution of the
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Company's Year 2000 issue. The Company is utilizing both internal and
external resources to meet its timetable for becoming Year 2000 compliant.
Since late-1992, when the Company began to set direction for
upgrading all of its IT systems in the normal course of business, the Company
has made capital investments in certain third party software and hardware
systems to address the financial and operational needs of the business. These
systems, which will improve the efficiencies and productivity of the replaced
systems, have been, or will be certified Year 2000 compliant by the vendors
and have been or will be substantially installed and operational by the end
of the third quarter 1999. To date all of these capital projects were part of
the Company's long term strategic capital plan and their timing was not
accelerated as a result of the Year 2000 issue. Total expenditures for the
remediation of "embedded chip exposures" in manufacturing equipment and
facilities together with the unexpected replacement of selected computer
equipment is estimated to total $2.6 million, of which approximately $0.3
million has been incurred in 1998 and $1.1 million in 1999. This effort is
expected to be substantially completed by the end of the third quarter 1999.
All expenditures are made from internally generated funds and have not had a
negative impact on the Company's capital expenditure program.
FORWARD-LOOKING STATEMENTS
The following "Safe Harbor Statement" is made pursuant to the
Private Securities Litigation Reform Act of 1995. Certain of the statements
contained in the body of this report are forward-looking statements (rather
than historical facts). With respect to such forward-looking statements, the
Company seeks the protections afforded by the Private Securities Litigation
Reform Act of 1995. Such forward-looking statements are based on management's
current plans and expectations and are subject to a number of uncertainties
and risks that could cause actual results to differ materially from those
described in such statements. These forward-looking statements include, but
are not limited to, the following: the expectation of increasing raw material
prices; the successful reorganization of the pressure sensitive materials
segments; the expectation that packaging operations will remain strong in
1999; the success of the Company in expanding its international business; the
amount and distribution of expected capital expenditures in 1999; the
expectation that total debt will decrease slightly in 1999; the cost and
success of the Company's Year 2000 compliance program and euro conversion
program; and the opinion of management that resolution of the Company's
current environmental litigation will not produce a material adverse effect
on its financial condition or results of operations.
Factors that could cause actual results to differ from those
expected include, but are not limited to, general economic conditions such as
inflation, interest rates, and foreign currency exchange rates; competitive
conditions within the Company's markets, including the acceptance of new and
existing products offered by the Company; price increases for raw materials
and the ability of the Company to pass these price increases on to its
customers or otherwise manage commodity price fluctuation risks; the presence
of adequate cash available for investment in the Company's business in order
to maintain desired debt levels; unanticipated consequences of the Year 2000,
including noncompliance by the Company's customers or suppliers;
unanticipated consequences of the EMU's conversion to the euro; changes in
governmental regulation, especially in the areas of environmental, health and
safety matters, and foreign investment; unexpected outcomes in the Company's
current and future litigation proceedings; and changes in the Company's labor
relations.
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FINANCIAL CONDITION
A statement of cash flow for the six months ended June 30, 1999 is as
follows:
<TABLE>
<CAPTION>
Millions
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<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income........................................................... $50.3
Non-cash items:
Depreciation and amortization ................................. 50.6
Minority interest ............................................. 1.9
Deferred income taxes, non-current portion .................... 1.1
Net increase in working capital, net of effects of acquisitions (32.4)
Net change in deferred charges and credits .................... 4.7
Undistributed earnings of affiliated companies ................ 5.7
Other ......................................................... 0.2
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Net cash provided by operating activities ............................ 82.1
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CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment ............................... 58.3)
Business acquisitions ............................................. (1.4)
Other ............................................................. 0.9
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Net cash used in investing activities ................................ (58.8)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Change in long-term debt .......................................... (2.1)
Change in short-term debt ......................................... 0.2
Cash dividends paid ............................................... (24.0)
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Net cash used by financing activities ................................ (25.9)
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Effect of exchange rates ............................................. (1.6)
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Net increase in cash ................................................. $ (4.2)
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Registrant's 1999 Annual Meeting of Shareholders was held on
May 6, 1999.
(c) (1) The shareholders voted for three director nominees for
three-year terms. There were no abstentions and no broker
non-votes. The vote was as follows:
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<CAPTION>
Name of Candidate Votes For Votes Withheld
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<S> <C> <C>
John H. Roe 39,139,002 433,288
Loring W. Knoblauch 39,320,509 251,782
Edward N. Perry 39,140,051 432,239
</TABLE>
(2) The shareholders voted to ratify the appointment of
PricewaterhouseCoopers LLP as independent auditors for the 1999
fiscal year. The vote was 39,255,648 for, 112,153 against, and
204,490 abstentions. There were no broker non-votes.
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:
<TABLE>
<S> <C>
3(a) Restated Articles of Incorporation of the Registrant, as
amended. (1)
3(b) By-Laws of the Registrant, as amended through July 7,
1992. (2)
3(c) Amendment to the By-Laws of the Registrant dated October
29, 1998. (3)
4(a) Rights Agreement, dated as of July 29, 1999, between the
Registrant and Norwest Bank Minnesota, National
Association. (4)
4(b) Form of Indenture dated as of June 15, 1995, between the
Registrant and First Trust National Association, as
Trustee. (5)
10(a) Bemis Company, Inc. 1987 Stock Option Plan. * (6)
10(b) Bemis Company, Inc. 1994 Stock Incentive Plan, Amended
and Restated as of August 4, 1999. *
10(c) Bemis Company, Inc. 1984 Stock Award Plan .* (2)
10(d) Bemis Retirement Plan, Amended and Restated as of August
4, 1999.*
10(e) Bemis Company, Inc. Supplemental Retirement Plan dated
October 20, 1988.*(2)
10(f) Bemis Executive Incentive Plan dated April 1, 1990.* (2)
10(g) Bemis Company, Inc. Long Term Deferred Compensation
Plan, Amended and Restated as of August 4, 1999.*
10(h) Bemis Company, Inc. 1997 Executive Officer Performance
Plan. * (1)
10(i) Amended and Restated Credit Agreement among the
Registrant, the Banks Listed therein and Morgan Guaranty
Trust Company of New York, as Agent, originally dated as
of August 1, 1986, Amended and Restated as of August 1,
1991, as amended by amendment No. 1 dated as of May 1,
1992, as amended by Amendment No. 2 dated December 1,
1992, as amended by Amendment No. 3 dated January 22,
1993, as amended by Amendment No. 4 dated March 15,
1994, as amended by Amendment No. 5 dated June 1, 1994;
and as amended by Amendment No. 6 dated February 1,
1995. (2)
18 Preferability letter regarding inventory accounting
principle change.
19 Reports Furnished to Security Holders.
27 Financial Data Schedule (EDGAR electronic filing only).
</TABLE>
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*Management contract, compensatory plan or arrangement filed
pursuant to Rule 601(b)(10)(iii)(A) of Regulation S-K under
the Securities Exchange Act of 1934.
(1) Incorporated by reference to the Registrant's Definitive
Proxy Statement filed with the Securities and Exchange
Commission on March 18, 1997 (File No. 1-5277)
(2) Incorporated by reference to the Registrant's Annual
Report on Form 10-K/A for the year ended December 31,
1994 (File No. 1-5277).
(3) Incorporated by reference to the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1998
(File No. 1-5277).
(4) Incorporated by reference to Exhibit 1 to the
Registrant's Registration Statement on Form 8-A filed on
August 4, 1999 (File No. 1-5277).
(5) Incorporated by reference to the Registrant's Current
Report on Form 8-K dated June 30, 1995 (File No.
1-5277).
(6) Incorporated by reference to the Registrant's
Registration Statement on Form S-8 (File No. 33-50560).
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(b) Reports on Form 8-K
Form 8-K, filed on August 13, 1999, relating to the
adoption of the first-in, first-out (FIFO) inventory valuation
method (accounting principle change) and the adoption of a Rights
Agreement dated as of July 29, 1999.
The accounting change has been applied to prior years by
retroactively restating the financial statements. The following
prior period financial statements have been restated, where
required, and filed on Form 8-K dated August 13, 1999.
Management's Discussion and Analysis of Financial
condition and Results of Operations
Consolidated Statement of Income for the Three Years
Ended December 31, 1998
Consolidated Balance Sheet at December 31, 1998 and 1997
Consolidated Statement of Cash Flows for the Three Years
Ended December 31, 1998
Consolidated Statement of Stockholders' Equity for the
Three Years Ended December 31, 1998
Notes to Consolidated Financial Statements for the Three
Years Ended December 31, 1998
Schedule II - Valuation and Qualifying Accounts and
Reserves for the Three Years Ended December 31,
1998
SIGNATURES
Pursuant to the requirements 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.
BEMIS COMPANY, INC.
Date August 9, 1998 /s/ Gene C. Wulf
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Gene C. Wulf, Vice President
and Controller
Date August 9, 1998 /s/ Benjamin R. Field, III
------------------------------ -------------------------------
Benjamin R. Field, III, Senior Vice
President, Chief Financial Officer
and Treasurer
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Exhibit Index
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<TABLE>
<CAPTION>
Exhibit Description Form of Filing
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<S> <C> <C>
3(a) Restated Articles of Incorporation of the Registrant, as amended. (1)
3(b) By-Laws of the Registrant, as amended through July 7, 1992. (2)
3(c) Amendment to the By-Laws of the Registrant dated October 29, 1998. (3)
4(a) Rights Agreement, dated as of July 29, 1999, between the Registrant
and Norwest Bank Minnesota, National Association. (4)
4(b) Form of Indenture dated as of June 15, 1995, between the Registrant and
First Trust National Association, as Trustee. (5)
10(a) Bemis Company, Inc. 1987 Stock Option Plan. * (6)
10(b) Bemis Company, Inc. 1994 Stock Incentive Plan, Amended and
Restated as of August 4, 1999. * Filed Electronically
10(c) Bemis Company, Inc. 1984 Stock Award Plan. * (2)
10(d) Bemis Retirement Plan, Amended and Restated as of August 4, 1999.* Filed Electronically
10(e) Bemis Company, Inc. Supplemental Retirement Plan dated
October 20, 1988. * (2)
10(f) Bemis Executive Incentive Plan dated April 1, 1990. * (2)
10(g) Bemis Company, Inc. Long Term Deferred Compensation Plan,
Amended and Restated as of August 4, 1999. * Filed Electronically
10(h) Bemis Company, Inc. 1997 Executive Officer Performance Plan. * (1)
10(i) Amended and Restated Credit Agreement among the Registrant, the Banks
Listed therein and Morgan Guaranty Trust Company of New York as
Agent, originally dated as of August 1, 1986, Amended and Restated as of
August 1, 1991, as amended by Amendment No. 1 dated as of May 1, 1992,
as amended by Amendment No. 2 dated December 1, 1992, as amended by
Amendment No. 3 dated January 22, 1993, as amended by Amendment No. 4
dated March 15, 1994, as amended by Amendment No. 5 dated June 1, 1994;
and as amended by Amendment No. 6 dated February 1, 1995. (2)
18 Preferability letter regarding inventory accounting principle change. Filed Electronically
19 Reports Furnished to Security Holders. Filed Electronically
27 Financial Data Schedule (EDGAR electronic filing only). Filed Electronically
</TABLE>
-------------
* Management contract, compensatory plan or arrangement filed
pursuant to Rule 601(b)(10)(iii)(A) of Regulation S-K under
the Securities Exchange Act of 1934.
(1) Incorporated by reference to the Registrant's Definitive
Proxy Statement filed with the Securities and Exchange
Commission on March 18, 1997 (File No. 1-5277).
(2) Incorporated by reference to the Registrant's Annual Report
on Form 10-K/A for the year ended December 31, 1994
(File No. 1-5277).
(3) Incorporated by reference to the Registrant's Annual Report
on Form 10-K for the year ended December 31, 1998
(File No. 1-5277).
(4) Incorporated by reference to Exhibit 1 to the Registrant's
Registration Statement on Form 8-A filed on August 4, 1999
(File No. 1-5277).
(5) Incorporated by reference to the Registrant's Current Report
on Form 8-K dated June 30, 1995 (File No. 1-5277).
(6) Incorporated by reference to the Registrant's Registration
Statement on Form S-8 (File No. 33-50560).
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EXHIBIT 10(b) - BEMIS COMPANY, INC. 1994 STOCK INCENTIVE PLAN
AMENDED AND RESTATED
BEMIS COMPANY, INC.
1994 STOCK INCENTIVE PLAN
(AS OF AUGUST 4, 1999)
1. PURPOSE OF PLAN.
The purpose of the Bemis Company, Inc. 1994 Stock Incentive Plan
(the "Plan") is to advance the interests of Bemis Company, Inc. (the
"Company") and its shareholders by enabling the Company and its Subsidiaries
to attract and retain persons of ability to perform services for the Company
and its Subsidiaries by providing an incentive to such individuals through
equity participation in the Company and by rewarding such individuals who
contribute to the achievement by the Company of its economic objectives and
thus the enhancement of shareholder value.
2. DEFINITIONS.
The following terms will have the meanings set forth below, unless
the context clearly otherwise requires:
2.1 "BOARD" means the Board of Directors of the Company.
2.2 "BROKER EXERCISE NOTICE" means a written notice pursuant to
which a Participant, upon exercise of an Option, irrevocably instructs a
broker or dealer to sell a sufficient number of shares or loan a sufficient
amount of money to pay all or a portion of the exercise price of the Option
and/or any related withholding tax obligations and remit such sums to the
Company and directs the Company to deliver stock certificates to be issued
upon such exercise directly to such broker or dealer.
2.3 "CHANGE IN CONTROL" means an event described in Section
10.1 of the Plan.
2.4 "CODE" means the Internal Revenue Code of 1986, as amended.
2.5 "COMMITTEE" means the group of individuals administering
the Plan, as provided in Section 3 of the Plan.
2.6 "COMMON STOCK" means the common stock of the Company, par
value $.10 per share, or the number and kind of shares of stock or other
securities into which such Common Stock may be changed in accordance with
Section 4.3 of the Plan.
2.7 "DIRECTOR OPTION" means a Non-Statutory Stock Option
granted to an Eligible Director pursuant to Section 6.2.
2.8 "DISABILITY" means the disability of the Participant such
as would entitle the Participant to receive disability income benefits
pursuant to the long-term disability plan of the Company or Subsidiary then
covering the Participant or, if no such plan exists or is applicable to the
Participant, the permanent and total disability of the Participant within the
meaning of Section 22(e)(3) of the Code.
<PAGE>
2.9 "EARLY RETIREMENT" of an Eligible Employee means early
retirement under the Bemis Retirement Plan as in effect from time to time.
2.10 "ELIGIBLE DIRECTOR" means each director of the Company who
is not an employee; provided, however, that "Eligible Director" does not
include any such director who received Director Options under the Company's
1978 Non-Qualified Stock Option Plan or the Company's 1987 Stock Option Plan.
2.11 "ELIGIBLE EMPLOYEE" means each salaried employee in a
management or supervisory position (including, without limitation, officers
and directors who are also employees) with the Company or any Subsidiary.
2.12 "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended.
2.13 "FAIR MARKET VALUE" of a share of Common Stock as of a
particular day means the mean between the high and low prices for a share of
the Company's Common Stock on the New York Stock Exchange on such day, or if
no sale has been made on such exchange on such day, on the last preceding day
on which any such sale shall have been made.
2.14 "INCENTIVE AWARD" means an Option or Performance Unit
granted pursuant to the Plan.
2.15 "INCENTIVE STOCK OPTION" means a right to purchase Common
Stock granted to an Eligible Employee pursuant to Section 6.1 of the Plan
that qualifies as an "incentive stock option" within the meaning of Section
422 of the Code.
2.16 "NON-STATUTORY STOCK OPTION" means a right to purchase
Common Stock granted to an Eligible Recipient pursuant to Section 6 of the
Plan that does not qualify as an Incentive Stock Option.
2.17 "NORMAL RETIREMENT" of an Eligible Employee means normal
retirement under the Bemis Retirement Plan as in effect from time to time.
2.18 "OPTION" means an Incentive Stock Option or a Non-Statutory
Stock Option.
2.19 "PARTICIPANT" means an Eligible Employee or Eligible
Director who receives one or more Incentive Awards under the Plan.
2.20 "PERFORMANCE UNIT" means a right granted to an Eligible
Employee pursuant to Section 7 of the Plan to receive a payment from the
Company, in the form of stock, cash or a combination of both, upon the
achievement of established performance goals.
2.21 "PREVIOUSLY ACQUIRED SHARES" means shares of Common Stock
that are already owned by the Participant or, with respect to any Incentive
Award, that are to be issued upon the grant, exercise or vesting of such
Incentive Award.
2.22 "SECURITIES ACT" means the Securities Act of 1933, as
amended.
2.23 "SUBSIDIARY" means any entity that is directly or
indirectly controlled by the Company or any entity in which the Company has a
significant equity interest, as determined by the Committee.
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2.24 "TAX DATE" means the date any withholding tax obligation
arises under the Code for a Participant with respect to an Incentive Award.
3. PLAN ADMINISTRATION.
3.1 THE COMMITTEE. So long as the Company has a class of its
equity securities registered under Section 12 of the Exchange Act, the Plan
will be administered by a committee (the "Committee") consisting solely of
not less than two members of the Board who are "Non-Employee Directors"
within the meaning of Rule 16b-3 under the Exchange Act. To the extent
consistent with corporate law, the Committee may delegate to any officers of
the Company the duties, power and authority of the Committee under the Plan
pursuant to such conditions or limitations as the Committee may establish;
provided, however, that only the Committee may exercise such duties, power
and authority with respect to Eligible Recipients who are subject to Section
16 of the Exchange Act. Each determination, interpretation or other action
made or taken by the Committee pursuant to the provisions of the Plan will be
conclusive and binding for all purposes and on all persons, and no member of
the Committee will be liable for any action or determination made in good
faith with respect to the Plan or any Incentive Award granted under the Plan.
3.2 AUTHORITY OF THE COMMITTEE.
(a) In accordance with and subject to the provisions of
the Plan, the Committee will have the authority to determine all
provisions of Incentive Awards as the Committee may deem necessary or
desirable and as consistent with the terms of the Plan, including,
without limitation, the following: (i) the Eligible Employees to be
selected as Participants; (ii) the nature and extent of the Incentive
Awards to be made to each Participant (including the number of shares
of Common Stock to be subject to each Incentive Award, any exercise
price, the manner in which Incentive Awards will vest or become
exercisable and whether Incentive Awards will be granted in tandem with
other Incentive Awards) and the form of written agreement, if any,
evidencing such Incentive Award; (iii) the time or times when Incentive
Awards will be granted; (iv) the duration of each Incentive Award; and
(v) the restrictions and other conditions to which the payment or
vesting of Incentive Awards may be subject. In addition, the Committee
will have the authority under the Plan in its sole discretion to pay
the economic value of any Incentive Award in the form of cash, Common
Stock or any combination of both.
(b) The Committee will have the authority under the Plan
to amend or modify the terms of any outstanding Incentive Award in any
manner, including, without limitation, the authority to modify the
number of shares or other terms and conditions of an Incentive Award,
extend the term of an Incentive Award, accept the surrender of any
outstanding Incentive Award or, to the extent not previously exercised
or vested, authorize the grant of new Incentive Awards in substitution
for surrendered Incentive Awards; provided, however that the amended or
modified terms are permitted by the Plan as then in effect and that any
Participant adversely affected by such amended or modified terms has
consented to such amendment or modification. No amendment or
modification to an Incentive Award, however, whether pursuant to this
Section 3.2 or any other provisions of the Plan, will be deemed to be a
regrant of such Incentive Award for purposes of this Plan.
(c) In the event of (i) any reorganization, merger,
consolidation, recapitalization, liquidation, reclassification, stock
dividend, stock split, combination of shares, rights offering,
extraordinary dividend or divestiture (including a spin-off) or any
other change in corporate
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structure or shares, (ii) any purchase, acquisition, sale or
disposition of a significant amount of assets or a significant
business, (iii) any change in accounting principles or practices, or
(iv) any other similar change, in each case with respect to the Company
or any other entity whose performance is relevant to the grant or
vesting of an Incentive Award, the Committee (or, if the Company is not
the surviving corporation in any such transaction, the board of
directors of the surviving corporation) may, without the consent of any
affected Participant, amend or modify the vesting criteria of any
outstanding Incentive Award that is based in whole or in part on the
financial performance of the Company (or any Subsidiary or division
thereof) or such other entity so as equitably to reflect such event,
with the desired result that the criteria for evaluating such financial
performance of the Company or such other entity will be substantially
the same (in the sole discretion of the Committee or the board of
directors of the surviving corporation) following such event as prior
to such event; provided, however, that the amended or modified terms
are permitted by the Plan as then in effect.
(d) The Committee's authority in (a), (b) and (c) of this
Section does not extend to Director Options. Such options are subject
to the specific terms of the Plan with regard thereto, and are not
subject to Committee discretion. However, the Committee may adjust
Director Options as provided in Section 4.3.
4. SHARES AVAILABLE FOR ISSUANCE.
4.1 MAXIMUM NUMBER OF SHARES AVAILABLE. Subject to adjustment
as provided in Section 4.3 of the Plan, the maximum number of shares of
Common Stock that will be available for issuance under the Plan will be
2,000,000 shares of Common Stock in addition to any shares of Common Stock
which, as of the date the Plan is approved by the shareholders of the
Company, are reserved for issuance under either the Company's 1987 Stock
Option Plan or 1984 Stock Award Plan and which are not thereafter issued.
4.2 ACCOUNTING FOR INCENTIVE AWARDS. Shares of Common Stock
that are issued under the Plan or that are subject to outstanding Incentive
Awards will be applied to reduce the maximum number of shares of Common Stock
remaining available for issuance under the Plan. Any shares of Common Stock
that are subject to an Incentive Award that lapses, expires, is forfeited or
for any reason is terminated unexercised or unvested and any shares of Common
Stock that are subject to an Incentive Award that is settled or paid in cash
or any form other than shares of Common Stock will automatically again become
available for issuance under the Plan. However, shares withheld for the
purpose of paying applicable withholding taxes will not again become
available for issuance under the Plan.
4.3 ADJUSTMENTS TO SHARES AND INCENTIVE AWARDS. In the event of
any reorganization, merger, consolidation, recapitalization, liquidation,
reclassification, stock dividend, stock split, combination of shares, rights
offering, divestiture or extraordinary dividend (including a spin-off) or any
other change in the corporate structure or shares of the Company, the
Committee (or, if the Company is not the surviving corporation in any such
transaction, the board of directors of the surviving corporation) will make
appropriate adjustment (which determination will be conclusive) as to the
number and kind of securities available for issuance under the Plan and, in
order to prevent dilution or enlargement of the rights of the Participants,
the number, kind and, where applicable, exercise price of securities subject
to outstanding Incentive Awards.
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5. PARTICIPATION.
Participants in the Plan will be those Eligible Employees who, in
the judgment of the Committee, have contributed, are contributing or are
expected to contribute to the achievement of economic objectives of the
Company or its Subsidiaries. Eligible Employees may be granted from time to
time one or more Incentive Awards, singly or in combination or in tandem with
other Incentive Awards, as may be determined by the Committee in its sole
discretion. Incentive Awards will be deemed to be granted as of the date
specified in the grant resolution of the Committee, which date will be the
date of any related agreement with the Participant.
Eligible Directors who receive Director Options also are
Participants, but are not eligible to receive Incentive Awards other than
Director Options.
6. OPTIONS.
6.1 GRANTS TO ELIGIBLE EMPLOYEES. An Eligible Employee may be
granted one or more Options under the Plan, and such Options will be subject
to such terms and conditions, consistent with the other provisions of the
Plan, as may be determined by the Committee in its sole discretion. The
Committee may designate whether an Option is to be considered an Incentive
Stock Option or a Non-Statutory Stock Option. The aggregate number of shares
on which Options may be granted to any one Eligible Employee during the
duration of the Plan may not exceed 15% of the total shares of Common Stock
available for issuance under the Plan. If an Option granted to an Employee is
canceled, said Option will nevertheless be included in applying said 15%
limit. If an outstanding Option is amended to reduce the exercise price, and
the amendment is not made pursuant to Section 4.3, the transaction shall be
treated as a cancellation of the original Option and the grant of a new
Option, and both the original Option and the new Option will be included in
applying the 15% limit.
6.2 GRANTS TO ELIGIBLE DIRECTORS. Each Eligible Director
elected to the Board prior to 1994 shall be granted Director Options for the
purchase of 5,000 shares of Common Stock effective as of the date of the
Company's 1994 annual meeting of shareholders. Each Eligible Director elected
to the Board in 1994 or later shall be granted Director Options for the
purchase of 5,000 shares of Common Stock effective upon his or her election
to the Board. However, no director who received Director Options under the
Company's 1978 Nonqualified Stock Option Plan or 1987 Stock Option Plan shall
be eligible to receive a Director Option under this Plan. Director Options
may be issued only once to an Eligible Director and in no event may such
options when granted exceed 5,000 shares of Common Stock. The 5,000 share
amount referred to in this subparagraph is not subject to adjustment under
Section 4.3, but once a Director Option is granted to a director it will be
subject to subsequent adjustments under Section 4.3.
6.3 EXERCISE PRICE. The per share price to be paid by a
Participant upon exercise of an Option granted to an Eligible Employee will
be determined by the Committee in its discretion at the time of the Option
grant but will not be less than 100% of the Fair Market Value of one share of
Common Stock on the date of grant. The per share price to be paid by a
Participant upon exercise of a Director Option granted to an Eligible
Director will be 100% of the Fair Market Value of one share of Common Stock
on the date of grant.
6.4 EXERCISABILITY AND DURATION. An Option will become
exercisable at such times and in such installments as may be determined by
the Committee in its sole discretion at the time of grant; provided, however,
that no Option may be exercisable after 10 years from its date of grant.
However, each Director Option will be exercisable for 10 years from the date
of grant, subject to Section 8.7.
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6.5 PAYMENT OF EXERCISE PRICE. The total purchase price of the
shares to be purchased upon exercise of an Option will be paid entirely in
cash (including check, bank draft or money order); provided, however, that
the Committee, in its sole discretion and upon terms and conditions
established by the Committee, may allow such payments to be made, in whole or
in part, by tender of a Broker Exercise Notice, Previously Acquired Shares,
Attestation, or by a combination of such methods. "Attestation" means
delivery by a Participant to the Company of a written affidavit of ownership
of Previously Acquired Shares having a fair market value equal to the
exercise price of the Option in lieu of actual delivery of such Previously
Acquired Shares. Upon receipt of such attestation of Previously Acquired
Shares, the Company shall deliver to the Participant a stock certificate for
the number of Option shares so exercised, minus the number of Previously
Acquired Shares attested to in the written affidavit, and minus any shares
required to cover tax withholding obligations.
6.6 MANNER OF EXERCISE. An Option may be exercised by a
Participant in whole or in part from time to time, subject to the conditions
contained in the Plan and in the agreement evidencing such Option, by
delivery in person, by facsimile or electronic transmission or through the
mail of written notice of exercise to the Company (Attention: Secretary) at
its principal executive office in Minneapolis, Minnesota and by paying in
full the total exercise price for the shares of Common Stock to be purchased
in accordance with Section 6.5 of the Plan.
7. PERFORMANCE UNITS.
7.1 PERFORMANCE UNITS NOT QUALIFYING UNDER CODE SECTION 162(m).
An Eligible Employee may be granted one or more Performance Units under the
Plan, and such Performance Units will be subject to such terms and
conditions, consistent with the other provisions of the Plan, as may be
determined by the Committee in its sole discretion. The Committee may impose
such restrictions or conditions, not inconsistent with the provisions of the
Plan, to the vesting of such Performance Units as it deems appropriate,
including, without limitation, that the Participant remain in the continuous
employ of the Company or any Subsidiary for a certain period or that the
Participant or the Company (or any Subsidiary or division thereof) satisfy
certain performance goals or criteria. The Committee will have the sole
discretion either to determine the form in which payment of the economic
value of vested Performance Units will be made to the Participant (i.e.,
cash, Common Stock or any combination thereof) or to consent to or disapprove
the election by the Participant of the form of such payment.
7.2 PERFORMANCE UNITS QUALIFYING UNDER CODE SECTION 162(m). The
Committee may grant Performance Units to an Eligible Employee on a basis such
that these Units will be considered "qualified performance based
compensation" for purposes of the regulations issued under Code Section
162(m). Any such Units are subject to the following requirements:
(a) The Committee will determine the number of Units
granted to the Eligible Employee. The number of Units granted to any
one Eligible Employee with respect to any one performance period may
not exceed 5% of the maximum number of shares of Common Stock available
under Section 4.1 for issuance during the duration of the Plan.
(b) The Units will be subject to a performance goal based
on increase in earnings per share and revenue growth of the Company.
(c) Specific targets relating to the performance goal
will be established by the Committee prior to the period of service
during which the Performance Units will be earned. These targets must
be stated in terms of a minimum performance level below which the
entire
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award will be forfeited, a maximum performance level at or above which
the full award will be paid, and intermediate targets which will result
in partial payment of the award. The formula will be specified in
sufficient detail so that a third party having knowledge of the
relevant performance results could calculate the amount to be paid
pursuant to the award.
(d) The performance period for any such award shall be
six years.
(e) Following the close of the performance period, the
Committee will determine and certify the extent to which the
performance criteria have been met and will arrange for payment to the
Participant of any amounts earned. Payment of earned Performance Units
will be made in shares of Common Stock at the rate of one share per
Performance Unit; provided, however, that the number of shares
distributed to the Participant may be reduced as provided in Section 9
to cover withholding taxes.
(f) After the beginning of the performance period for any
such award, the terms of such award may not be modified in any way that
would increase the compensation payable upon attainment of the
performance goal.
8. EFFECT OF TERMINATION OF EMPLOYMENT.
8.1 TERMINATION DUE TO DEATH OR DISABILITY. If a Participant's
employment with the Company and all Subsidiaries is terminated by reason of
death or Disability:
(a) Options outstanding at the time of said termination
of employment will not expire as a result of said termination of
employment but rather will remain in effect for the remaining term of
the Option. However, the Committee in its sole discretion may provide
at the time it grants an Option to a Participant that the Option will
expire not later than a fixed period of time after the Participant's
termination of employment.
(b) All Performance Units then held by the Participant
will vest. The Company will transfer to the Participant (or to the
beneficiary, legal representative, heir, or legatee of a deceased
Participant) a number of shares of Common Stock equal to the number of
the Participant's vested Performance Units, reduced as provided under
Section 9 to cover any applicable withholding taxes. Said transfer
shall occur as of a date or dates determined by the Committee which
shall not be later than one year after the Participant's death or
Disability. In the case of Performance Units awarded under Section 7.1
and payable in cash, a cash payment will be made in lieu of shares.
8.2 TERMINATION DUE TO NORMAL RETIREMENT. If a Participant's
employment with the Company and all Subsidiaries is terminated by reason of his
Normal Retirement:
(a) Options outstanding at the time of said termination
of employment will not expire as a result of said termination of
employment but rather will remain in effect for the remaining term of
the Option. However, the Committee in its sole discretion may provide
at the time it grants an Option to a Participant that the Option will
expire not later than a fixed period of time after the Participant's
termination of employment.
(b) A portion of the Participant's Performance Units will
remain outstanding after his Normal Retirement, and any remaining
Performance Units will be forfeited, subject to the following:
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(1) The Committee may, in its sole discretion, provide
for payment with respect to all or any portion of the
outstanding Performance Units granted under Section
7.1. Such payments may occur at any point from the
time of Normal Retirement until the end of the
performance period, to be determined at the sole
discretion of the Committee.
(2) The Committee also may, in its sole discretion,
provide that all or any portion of the Performance
Units granted under Section 7.2 will remain in effect
until the end of the performance period, whereupon
the Committee will determine and certify the extent
to which the applicable performance criteria have
been met and will arrange for payment to the
Participant of any amounts earned.
(3) However, the number of Performance Units which
remains outstanding under (1) and (2) will not be
less than the number of Performance Units outstanding
immediately before the Participant's Normal
Retirement multiplied by a fraction, (i) the
numerator of which is the number of months in the
performance period beginning with the first month
thereof and ending with the month in which the
Participant's termination of employment occurred, and
(ii) the denominator of which is the total months in
the performance period.
(4) Except as provided in (1), (2) and (3), all
Performance Units outstanding at the time of a
Participant's Normal Retirement will be forfeited.
(5) The Committee's decision with respect to such
payments will not be binding or precedential with
regard to subsequent Normal Retirements by other
Participants.
8.3 TERMINATION DUE TO EARLY RETIREMENT. If a Participant's
employment with the Company and all Subsidiaries is terminated by reason of
his Early Retirement:
(a) Options outstanding at the time of said termination
of employment will not expire as a result of said termination of
employment but rather will remain in effect for the remaining term of
the Option. However, the Committee in its sole discretion may provide
at the time it grants an Option to a Participant that the Option will
expire not later than a fixed period of time after the Participant's
termination of employment.
(b) All Performance Units then outstanding will be
forfeited, and no payment will be made with respect thereto, subject to
the following:
(1) The Committee may, in its sole discretion, provide
for payment with respect to all or any portion of the
outstanding Performance Units granted under Section
7.1. Such payments may occur at any point from the
time of Early Retirement until the end of the
performance period, to be determined at the sole
discretion of the Committee.
(2) The Committee also may, in its sole discretion,
provide that all or any portion of the Performance
Units granted under Section 7.2 will remain
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in effect until the end of the performance period,
whereupon the Committee will determine and certify
the extent to which the applicable performance
criteria have been met and will arrange for payment
to the Participant of any amounts earned.
(3) Except as provided in (1) and (2), all Performance
Units outstanding at the time of a Participant's
Early Retirement will be forfeited.
(4) The Committee's decision with respect to such
payments will not be binding or precedential with
regard to subsequent Early Retirements by other
Participants.
8.4 TERMINATION FOR REASONS OTHER THAN DEATH, DISABILITY,
NORMAL RETIREMENT OR EARLY RETIREMENT. If a Participant's employment with the
Company and all Subsidiaries is terminated for any reason other than death,
Disability, Normal Retirement, or Early Retirement:
(a) If the termination is not for "cause", (i) options
held by the Participant which are exercisable as of the date of
termination of employment will remain exercisable for a period of three
months after such termination (but in no event after the expiration
date of any such options), and (ii) options which are not yet
exercisable as of the date employment terminates will be forfeited
immediately. If the termination of employment is for "cause", all
options will be forfeited immediately upon termination of employment,
regardless of whether they were then exercisable.
(b) All Performance Units then outstanding will be
forfeited, and no payment will be made with respect thereto. However,
if the termination of employment is involuntary (including any
resignation at the request of the Company) and not for "cause", the
Committee may, in its sole discretion, provide for payment with respect
to all or a portion of the outstanding Performance Units granted under
Section 7.1. Such payment may occur at any point from the time of
termination of employment until the end of the period of restriction,
to be determined at the sole discretion of the Committee. The
Committee's decision with respect to such payment will be not be
binding or precedential with regard to subsequent terminations of
employment by other Participants. Performance Units granted under
Section 7.2 will always be forfeited upon termination of employment and
are not subject to discretionary payout.
(c) If the termination of employment is for "cause" or is
voluntary, then any outstanding Performance Units will be forfeited
immediately and are not subject to discretionary payout.
(d) For purposes of this section, if a Participant's
employer ceases to be a Subsidiary of the Company, and the Participant
remains an employee of that employer, the Participant will be
considered to have an involuntary termination of employment as of the
date the employer ceases to be a Subsidiary. The preceding sentence
does not apply if the Participant transfers to employment with the
Company or another Subsidiary.
(e) For purposes of this section, "cause" (as determined
by the Committee) will be as defined in any employment or other
agreement or policy applicable to the Participant or, if no such
agreement or policy exists, will mean (i) dishonesty, fraud,
misrepresentation, embezzlement or deliberate injury or attempted
injury, in each case related to the Company or any Subsidiary, (ii) any
unlawful or criminal activity of a serious nature, (iii) any
intentional and deliberate breach of a duty or duties that,
individually or in the aggregate, are material in relation to the
Participant's overall
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duties, or (iv) any material breach of any employment, service,
confidentiality or noncompete agreement entered into with the Company
or any Subsidiary.
8.5 BREACH OF CONFIDENTIALITY OR NONCOMPETE AGREEMENTS.
Notwithstanding anything in the Plan to the contrary, in the event that a
Participant materially breaches the terms of any confidentiality or
noncompete agreement entered into with the Company or any Subsidiary, whether
such breach occurs before or after termination of such Participant's
employment with the Company or any Subsidiary, the Committee in its sole
discretion may immediately terminate all rights of the Participant under the
Plan and any agreements evidencing an Incentive Award then held by the
Participant without notice of any kind.
8.6 DATE OF TERMINATION OF EMPLOYMENT. Unless the Committee
otherwise determines in its sole discretion, a Participant's employment will,
for purposes of the Plan, be deemed to have terminated on the date recorded
on the personnel or other records of the Company or the Subsidiary for which
the Participant provides employment, as determined by the Committee in its
sole discretion based upon such records.
8.7 EXPIRATION OF DIRECTOR OPTIONS. Section 8.1 through 8.6 are
not applicable to Director Options. An Eligible Director who ceases to be a
director of the Company may exercise any outstanding Director Options within
12 months after ceasing to be a director (but in no event after the
expiration date of such option).
9. PAYMENT OF WITHHOLDING TAXES.
9.1 GENERAL RULES. The Company is entitled to (a) withhold and
deduct from future wages of the Participant (or from other amounts that may
be due and owing to the Participant from the Company or a Subsidiary), or
make other arrangements for the collection of, all legally required amounts
necessary to satisfy any and all federal, state and local withholding and
employment-related tax requirements attributable to an Incentive Award,
including, without limitation, the grant, exercise or vesting of, or payment
of dividends with respect to, an Incentive Award or a disqualifying
disposition of stock received upon exercise of an Incentive Stock Option, or
(b) require the Participant promptly to remit the amount of such withholding
to the Company before taking any action, including issuing any shares of
Common Stock, with respect to an Incentive Award.
9.2 SPECIAL RULES. The Committee may, in its sole discretion
and upon terms and conditions established by the Committee, permit or require
a Participant to satisfy, in whole or in part, any withholding or
employment-related tax obligation described in Section 9.1 of the Plan by
electing to tender Previously Acquired Shares (including but not limited to
the Shares the acquisition of which triggered the tax obligation) or a Broker
Exercise Notice, or by a combination of such methods.
10. CHANGE IN CONTROL.
10.1 CHANGE IN CONTROL. For purposes of this Section 10.1, a
"Change in Control" of the Company will mean the following:
(a) the sale, lease, exchange or other transfer, directly
or indirectly, of substantially all of the assets of the Company (in
one transaction or in a series of related transactions) to a person or
entity that is not controlled by the Company,
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(b) the approval by the shareholders of the Company of
any plan or proposal for the liquidation or dissolution of the Company;
(c) a merger or consolidation to which the Company is a
party if the shareholders of the Company immediately prior to effective
date of such merger or consolidation have "beneficial ownership" (as
defined in Rule 13d-3 under the Exchange Act), immediately following
the effective date of such merger or consolidation, of securities of
the surviving corporation representing (i) more than 50%, but not more
than 80%, of the combined voting power of the surviving corporation's
then outstanding securities ordinarily having the right to vote at
elections of directors, unless such merger or consolidation has been
approved in advance by the Incumbent Directors (as defined in Section
11.2 below), or (ii) 50% or less of the combined voting power of the
surviving corporation's then outstanding securities ordinarily having
the right to vote at elections of directors (regardless of any approval
by the Incumbent Directors);
(d) any person becomes after the effective date of the
Plan the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of (A) 20% or more, but not 50%
or more, of the combined voting power of the Company's outstanding
securities ordinarily having the right to vote at elections of
directors, unless the transaction resulting in such ownership has been
approved in advance by the Incumbent Directors, or (B) 50% or more of
the combined voting power of the Company's outstanding securities
ordinarily having the right to vote at elections of directors
(regardless of any approval by the Incumbent Directors);
(e) the Incumbent Directors cease for any reason to
constitute at least a majority of the Board; or
(f) a change in control of the Company of a nature that
would be required to be reported pursuant to Section 13 or 15(d) of the
Exchange Act, whether or not the Company is then subject to such
reporting requirements.
10.2 INCUMBENT DIRECTORS. For purposes of this Section 10,
"Incumbent Directors" of the Company will mean any individuals who are
members of the Board on the effective date of the Plan and any individual who
subsequently becomes a member of the Board whose election, or nomination for
election by the Company's shareholders, was approved by a vote of at least a
majority of the directors comprising the Board on the effective date of the
Plan (either by specific vote or by approval of the Company's proxy statement
in which such individual is named as a nominee for director without objection
to such nomination).
10.3 ACCELERATION OF VESTING. Without limiting the authority of
the Committee under Section 3.2 of the Plan, if a Change in Control of the
Company occurs, then, if approved by the Committee in its sole discretion
either in an agreement evidencing an Incentive Award at the time of grant or
at any time after the grant of an Incentive Award, (a) all Options (other
than Director Options) will become immediately exercisable in full and will
remain exercisable for the remainder of their terms, regardless of whether
the Participants to whom such Options have been granted remain in the employ
or service of the Company or any Subsidiary; and (b) all Performance Units
then held by the Participant will vest and/or continue to vest in the manner
determined by the Committee and set forth in the agreement evidencing such
Performance Units.
10.4 CASH PAYMENT FOR OPTIONS. If a Change in Control of the
Company occurs, then the Committee, if approved by the Committee in its sole
discretion either in an agreement evidencing an
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Incentive Award at the time of grant or at any time after the grant of an
Incentive Award, and without the consent of any Participant effected thereby,
may determine that some or all Participants holding outstanding Options will
receive, with respect to some or all of the shares of Common Stock subject to
such Options, as of the effective date of any such Change in Control of the
Company, cash in an amount equal to the excess of the Fair Market Value of
such shares immediately prior to the effective date of such Change in Control
of the Company over the exercise price per share of such Options.
10.5 LIMITATION ON CHANGE IN CONTROL PAYMENTS. Notwithstanding
anything in Section 10.3 or 10.4 of the Plan to the contrary, if, with
respect to a Participant, the acceleration of the vesting of an Incentive
Award as provided in Section 10.3 or the payment of cash in exchange for all
or part of an Incentive Award as provided in Section 10.4 (which acceleration
or payment could be deemed a "payment" within the meaning of Section
280G(b)(2) of the Code), together with any other payments which such
Participant has the right to receive from the Company or any corporation that
is a member of an "affiliated group" (as defined in Section 1504(a) of the
Code without regard to Section 1504(b) of the Code) of which the Company is a
member, would constitute a "parachute payment" (as defined in Section
280G(b)(2) of the Code), then the payments to such Participant pursuant to
Section 10.3 or 10.4 will be reduced to the largest amount as will result in
no portion of such payments being subject to the excise tax imposed by
Section 4999 of the Code; provided, however, that if such Participant is
subject to a separate agreement with the Company or a Subsidiary which
specifically provides that payments attributable to one or more forms of
employee stock incentives or to payments made in lieu of employee stock
incentives will not reduce any other payments under such agreement, even if
it would constitute an excess parachute payment, then the limitations of this
Section 10.5 will, to that extent, not apply.
11. RIGHTS OF ELIGIBLE RECIPIENTS AND PARTICIPANTS; TRANSFERABILITY.
11.1 EMPLOYMENT. Nothing in the Plan will interfere with or
limit in any way the right of the Company or any Subsidiary to terminate the
employment of any Eligible Employee or Participant at any time, nor confer
upon any Eligible Employee or Participant any right to continue in the employ
of the Company or any Subsidiary.
11.2 RIGHTS AS A SHAREHOLDER. As a holder of Incentive Awards
(other than Restricted Stock Awards), a Participant will have no rights as a
shareholder unless and until such Incentive Awards are exercised for, or paid
in the form of, shares of Common Stock and the Participant becomes the holder
of record of such shares. Except as otherwise provided in the Plan, no
adjustment will be made for dividends or distributions with respect to such
Incentive Awards as to which there is a record date preceding the date the
Participant becomes the holder of record of such shares, except as the
Committee may determine in its discretion.
11.3 RESTRICTIONS ON TRANSFER. Except pursuant to testamentary
will or the laws of descent and distribution or as otherwise expressly
permitted by the Plan, no right or interest of any Participant in an
Incentive Award prior to the exercise or vesting of such Incentive Award will
be assignable or transferable, or subjected to any lien, during the lifetime
of the Participant, either voluntarily or involuntarily, directly or
indirectly, by operation of law or otherwise. A Participant will, however, be
entitled to designate a beneficiary to receive an Incentive Award upon such
Participant's death, and in the event of a Participant's death, payment of
any amounts due under the Plan will be made to, and exercise of any Options
(to the extent permitted pursuant to Section 8 of the Plan) may be made by,
the Participant's legal representatives, heirs and legatees.
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11.4 NON-EXCLUSIVITY OF THE PLAN. Nothing contained in the Plan
is intended to modify or rescind any previously approved compensation plans
or programs of the Company or create any limitations on the power or
authority of the Board to adopt such additional or other compensation
arrangements as the Board may deem necessary or desirable.
12. SECURITIES LAW AND OTHER RESTRICTIONS.
Notwithstanding any other provision of the Plan or any agreements
entered into pursuant to the Plan, the Company will not be required to issue
any shares of Common Stock under this Plan, and a Participant may not sell,
assign, transfer or otherwise dispose of shares of Common Stock issued
pursuant to Incentive Awards granted under the Plan, unless (a) there is in
effect with respect to such shares a registration statement under the
Securities Act and any applicable state securities laws or an exemption from
such registration under the Securities Act and applicable state securities
laws, and (b) there has been obtained any other consent, approval or permit
from any other regulatory body which the Committee, in its sole discretion,
deems necessary or advisable. The Company may condition such issuance, sale
or transfer upon the receipt of any representations or agreements from the
parties involved, and the placement of any legends on certificates
representing shares of Common Stock, as may be deemed necessary or advisable
by the Company in order to comply with such securities law or other
restrictions.
13. PLAN AMENDMENT, MODIFICATION AND TERMINATION
The Board may suspend or terminate the Plan or any portion thereof
at any time, and may amend the Plan from time to time in such respects as the
Board may deem advisable in order that Incentive Awards under the Plan will
conform to any change in applicable laws or regulations or in any other
respect the Board may deem to be in the best interests of the Company;
provided, however, that no amendments to the Plan will be effective without
approval of the stockholders of the Company if stockholder approval of the
amendment is then required pursuant to Rule 16b-3 under the Exchange Act,
Section 422 of the Code or the rules of the New York Stock Exchange. No
termination, suspension or amendment of the Plan may adversely affect any
outstanding Incentive Award without the consent of the affected Participant;
provided, however, that this sentence will not impair the right of the
Committee to take whatever action it deems appropriate under Sections 4.3 and
10 of the Plan.
14. EFFECTIVE DATE AND DURATION OF THE PLAN
The Plan is effective as of February 3, 1994, 1994, the date it was
adopted by the Board. The Plan will terminate at midnight on February 3,
2004, and may be terminated prior to such time to by Board action, and no
Incentive Award will be granted after such termination. Incentive Awards
outstanding upon termination of the Plan may continue to be exercised, or
become free of restrictions, in accordance with their terms.
15. MISCELLANEOUS
15.1 GOVERNING LAW. The validity, construction, interpretation,
administration and effect of the Plan and any rules, regulations and actions
relating to the Plan will be governed by and construed exclusively in
accordance with the laws of the State of Missouri.
15.2 SUCCESSORS AND ASSIGNS. The Plan will be binding upon and
inure to the benefit of the successors and permitted assigns of the Company
and the Participants.
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EXHIBIT 10(d) - BEMIS RETIREMENT PLAN
- ------------------------------------------------------------------------------
AMENDED AND RESTATED
BEMIS RETIREMENT PLAN
(AS OF AUGUST 4, 1999)
<PAGE>
AMENDED AND RESTATED
BEMIS RETIREMENT PLAN
(AS OF AUGUST 4, 1999)
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I
GENERAL.................................................................................1
Sec. 1.1 Name of Plan...........................................................................1
Sec. 1.2 Purpose................................................................................1
Sec. 1.3 History of the Plan....................................................................1
Sec. 1.4 Plan Year..............................................................................1
Sec. 1.5 Company................................................................................1
Sec. 1.6 Participating Employer.................................................................1
Sec. 1.7 Construction and Applicable Law........................................................2
Sec. 1.8 Benefits Determined Under Provisions in Effect at Termination of Employment............2
Sec. 1.9 Transition Rules.......................................................................2
ARTICLE II
MISCELLANEOUS DEFINITIONS...............................................................3
Sec. 2.1 Accumulated Interest...................................................................3
Sec. 2.2 Active Participant.....................................................................3
Sec. 2.3 Actuary................................................................................3
Sec. 2.4 Administrator..........................................................................3
Sec. 2.5 Affiliate..............................................................................3
Sec. 2.6 Beneficiary............................................................................3
Sec. 2.7 Board..................................................................................4
Sec. 2.8 Code...................................................................................4
Sec. 2.9 Common Control.........................................................................4
Sec. 2.10 ERISA.................................................................................4
Sec. 2.11 Fund..................................................................................4
Sec. 2.12 Funding Agency........................................................................4
Sec. 2.13 Leased Employee.......................................................................4
Sec. 2.14 Named Fiduciary.......................................................................4
Sec. 2.15 Normal Retirement Age.................................................................4
Sec. 2.16 Normal Retirement Date................................................................5
Sec. 2.17 Participant...........................................................................5
Sec. 2.18 Predecessor Employer..................................................................5
Sec. 2.19 Qualified Employee....................................................................5
Sec. 2.20 Successor Employer....................................................................6
ARTICLE III
SERVICE PROVISIONS......................................................................7
Sec. 3.1 Employment Commencement Date...........................................................7
Sec. 3.2 Termination of Employment..............................................................7
</TABLE>
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<TABLE>
<S> <C>
Sec. 3.3 Recognized Break In Service............................................................7
Sec. 3.4 Elapsed Time...........................................................................7
Sec. 3.5 Credited Service.......................................................................8
Sec. 3.6 Eligibility Computation Period........................................................10
Sec. 3.7 Year of Eligibility Service...........................................................10
Sec. 3.8 Hour of Service.......................................................................11
Sec. 3.9 Service Rules at Columbus, Indiana Facility...........................................12
ARTICLE IV
BENEFIT DEFINITIONS....................................................................13
Sec. 4.1 Normal Retirement.....................................................................13
Sec. 4.2 Early Retirement......................................................................13
Sec. 4.3 Disability Retirement.................................................................13
Sec. 4.4 Vested Termination....................................................................13
Sec. 4.5 Accrued Monthly Pension...............................................................13
Sec. 4.6 Service Ratio.........................................................................14
Sec. 4.7 Monthly Earnings......................................................................14
Sec. 4.8 Final Average Earnings................................................................16
Sec. 4.9 Primary Social Security Benefit.......................................................16
Sec. 4.10 "Actuarial Equivalent", "Actuarial Value", "Present Value"...........................18
ARTICLE V
PLAN PARTICIPATION.....................................................................20
Sec. 5.1 Eligibility for Participation.........................................................20
Sec. 5.2 Duration of Participation.............................................................20
Sec. 5.3 No Guarantee of Employment............................................................20
ARTICLE VI
PENSION BENEFITS.......................................................................21
Sec. 6.1 Pension on Normal Retirement..........................................................21
Sec. 6.2 Pension on Early Retirement...........................................................21
Sec. 6.3 Pension on Disability Retirement......................................................21
Sec. 6.4 Pension on Vested Termination.........................................................22
Sec. 6.5 Deduction for Other Pension Payments..................................................22
Sec. 6.6 Amendments Affecting Pension Rights...................................................22
Sec. 6.7 Suspension of Benefits and Effect of Reemployment.....................................23
Sec. 6.8 Family Income Coverage................................................................23
Sec. 6.9 Effect of Participation in Variable Annuity Fund Prior to January 1, 1969.............24
Sec. 6.10 Preservation of Benefits Under Pre-1972 Formula......................................24
Sec. 6.11 Preservation of Benefits Under Pre-1997 Formula......................................24
Sec. 6.12 Special Vested Termination Provisions For Employees At Certain Discontinued
Operations...........................................................................26
Sec. 6.13 Special Enhanced Benefit for Certain Employees at Stow, Ohio.........................27
</TABLE>
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<TABLE>
<S> <C>
ARTICLE VII
SURVIVOR'S BENEFITS....................................................................29
Sec. 7.1 Qualified Preretirement Survivor Annuity..............................................29
Sec. 7.2 Qualified Joint and Survivor Annuity..................................................30
Sec. 7.3 Election Procedure....................................................................31
Sec. 7.4 Optional Settlements..................................................................32
Sec. 7.5 Other Death Benefits..................................................................32
ARTICLE VIII
MISCELLANEOUS BENEFIT PROVISIONS.......................................................33
Sec. 8.1 Commencement Date for Pension Payments................................................33
Sec. 8.2 Payment of Small Amounts and Certain Consequences Thereof.............................33
Sec. 8.3 No Other Benefits.....................................................................34
Sec. 8.4 Source of Benefits....................................................................34
Sec. 8.5 Incompetent Payee.....................................................................34
Sec. 8.6 Assignment or Alienation of Benefits..................................................35
Sec. 8.7 Payment of Taxes......................................................................35
Sec. 8.8 Conditions Precedent..................................................................35
Sec. 8.9 Company Directions to Funding Agency..................................................35
Sec. 8.10 Benefits Not Increased by Actuarial Gains............................................36
Sec. 8.11 Pensions Not Decreased on Account of Certain Social Security Increases...............36
Sec. 8.12 Maximum Limitations on Benefits......................................................36
Sec. 8.13 Distributions Made in Accordance with Code Section 401(a)(9).........................38
Sec. 8.14 Deemed Cash-Out Upon Termination of Employment for Unvested Participants.............38
Sec. 8.15 Rollovers and Transfers to Other Qualified Plans.....................................38
Sec. 8.16 Special Benefit Limitation...........................................................39
Sec. 8.17 Benefits of Reemployed Veterans......................................................39
ARTICLE IX
FUND...................................................................................40
Sec. 9.1 Composition...........................................................................40
Sec. 9.2 Funding Agency........................................................................40
Sec. 9.3 Compensation and Expenses of Funding Agency...........................................40
Sec. 9.4 Securities and Property of Participating Employers....................................40
Sec. 9.5 No Diversion..........................................................................40
Sec. 9.6 Employer Contributions................................................................41
ARTICLE X
ACTUARY................................................................................42
Sec. 10.1 Appointment.........................................................................42
Sec. 10.2 Responsibilities....................................................................42
Sec. 10.2 Compensation........................................................................42
Sec. 10.3 Resignation, Removal, and Successor.................................................42
</TABLE>
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<TABLE>
<S> <C>
ARTICLE XI
ADMINISTRATION OF PLAN.................................................................43
Sec. 11.1 Administration by Company...........................................................43
Sec. 11.2 Certain Fiduciary Provisions.........................................................43
Sec. 11.3 Discrimination Prohibited............................................................44
Sec. 11.4 Evidence.............................................................................44
Sec. 11.5 Correction of Errors.................................................................44
Sec. 11.6 Records..............................................................................44
Sec. 11.7 General Fiduciary Standard...........................................................44
Sec. 11.8 Prohibited Transactions..............................................................44
Sec. 11.9 Claims Procedure.....................................................................44
Sec. 11.10 Bonding.............................................................................45
Sec. 11.11 Waiver of Notice....................................................................45
Sec. 11.12 Agent For Legal Process.............................................................45
Sec. 11.13 Indemnification.....................................................................45
ARTICLE XII
AMENDMENT, TERMINATION, MERGER.........................................................46
Sec. 12.1 Amendment............................................................................46
Sec. 12.2 Discontinuance of Joint Participation in Plan by a Participating Employer............46
Sec. 12.3 Reorganization of Participating Employers............................................46
Sec. 12.4 Termination..........................................................................46
Sec. 12.5 Partial Termination..................................................................48
Sec. 12.6 Merger, Consolidation, or Transfer of Plan Assets....................................49
Sec. 12.7 Deferral of Distributions............................................................49
ARTICLE XIII
MISCELLANEOUS PROVISIONS...............................................................50
Sec. 13.1 Insurance Company Not Responsible for Validity of Plan...............................50
Sec. 13.2 Headings.............................................................................50
Sec. 13.3 Capitalized Definitions..............................................................50
Sec. 13.4 Gender...............................................................................50
Sec. 13.5 Use of Compounds of Word "Here"......................................................50
Sec. 13.6 Construed as a Whole.................................................................50
ARTICLE XIV
TOP-HEAVY PLAN PROVISIONS..............................................................51
Sec. 14.1 Key Employee Defined.................................................................51
Sec. 14.2 Determination of Top-Heavy Status....................................................51
Sec. 14.3 Minimum Accrued Benefit..............................................................52
Sec. 14.4 Vesting Schedule.....................................................................53
Sec. 14.5 Definition of Employer...............................................................54
Sec. 14.6 Exception For Collective Bargaining Unit.............................................54
</TABLE>
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<TABLE>
<S> <C>
Schedule A......................................................................................55
Appendix A......................................................................................56
Appendix B......................................................................................59
Appendix C......................................................................................61
Appendix D......................................................................................64
</TABLE>
v
<PAGE>
AMENDED AND RESTATED
BEMIS RETIREMENT PLAN
(AS OF AUGUST 4, 1999)
ARTICLE I
GENERAL
SEC. 1.1 NAME OF PLAN. The name of the pension plan set forth
herein is "Bemis Retirement Plan". It is sometimes herein referred to as the
"Plan".
SEC. 1.2 PURPOSE. The Plan has been established so that
eligible employees will have a source of retirement income in addition to the
other sources of retirement income available to them.
SEC. 1.3 HISTORY OF THE PLAN. The Company on December 21, 1945
established the Bemis Bro. Bag Company Retirement Income Plan and Trust
(sometimes referred to as "S&RIP"), under which retirement benefits were to be
provided for eligible employees. Subsequently, on March 12, 1958 the Company
established the Bemis Bro. Bag Company Supplemental Pension Plan (sometimes
referred to as "SPP"). Thereafter, the two plans were amended and combined into
one plan, the Bemis Retirement Plan, said amendment being effective as of
December 31, 1961 for the S&RIP and as of January 1, 1962 for the SPP.
Subsequently, the Plan was amended from time to time. Effective January 1, 1999,
the Plan was amended and entirely restated as set forth herein.
SEC. 1.4 PLAN YEAR. A "Plan Year" is the 12-consecutive-month
period commencing on January 1 and is the year on which records of the Plan are
kept.
SEC. 1.5 COMPANY. The "Company" is Bemis Company, Inc., a
Missouri corporation, and any Successor Employer thereof.
SEC. 1.6 PARTICIPATING EMPLOYER. The Company is a
Participating Employer in the Plan. With the consent of the Company, any other
employer may also become a Participating Employer effective as of a date
specified by it in its adoption of the Plan. Also with such consent, any such
adopting employer may modify the provisions of the Plan as they shall be
applicable to its employees. Any Successor Employer to a Participating Employer
shall also be a Participating Employer in the Plan. The other Participating
Employers on January 1, 1999 are:
(a) Banner Packaging, Inc., a Wisconsin corporation.
(b) Bemis Custom Products, Inc., a Texas corporation.
(c) Bemis Custom Products Shelbyville, Inc., a Tennessee
corporation.
(d) Curwood, Inc. a Delaware corporation.
(e) Electronic Printing Products, Inc., an Ohio corporation.
(f) MacKay Inc., a Kentucky corporation.
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(g) MACtac Engineered Products, Inc., an Ohio corporation.
(h) Milprint, Inc., a Wisconsin corporation.
(i) Morgan Adhesives Company, an Ohio corporation.
(j) Perfecseal, Inc., a Delaware corporation.
SEC. 1.7 CONSTRUCTION AND APPLICABLE LAW. The Plan is intended
to meet the requirements for qualification under Code section 401(a). The Plan
is also intended to be in full compliance with applicable requirements of ERISA.
The Plan shall be administered and construed consistent with said intent. It
shall also be construed and administered according to the internal, substantive
laws of the State of Minnesota (without regard to the conflict of law rules of
the State of Minnesota or of any other jurisdiction) to the extent that such
laws are not preempted by the laws of the United States of America. All
controversies, disputes, and claims arising hereunder shall be submitted to the
United States District Court for the District of Minnesota.
SEC. 1.8 BENEFITS DETERMINED UNDER PROVISIONS IN EFFECT AT
TERMINATION OF EMPLOYMENT. Except as may be specifically provided herein to the
contrary, with respect to a Partic ipant whose Termination of Employment has
occurred, benefits under the Plan attributable to service prior to his
Termination of Employment shall be determined and paid in accordance with the
provisions of the Plan as in effect on the date his Termination of Employment
occurred unless he becomes an Active Participant after that date and such active
participation causes a contrary result under the provisions hereof.
SEC. 1.9 TRANSITION RULES. Certain provisions of the Plan as
amended and restated January 1, 1999 are intended to comply with law changes
which have earlier effective dates. In all cases, Plan provisions required by
law are effective as of the date required by the applicable legislation. Such
changes include the following:
(a) Sec. 8.17 regarding military service is effective as of
December 12, 1994.
(b) Certain provisions are intended to reflect and comply with
certain provisions of (and legal changes made by) the Small
Business Job Protection Act of 1996, P.L. 104-88 ("SBJPA") and
the Taxpayer Relief Act of 1997, P.L. 105-34 ("TRA 97"). In
cases where these new requirements were applicable prior to
January 1, 1999, the corresponding provisions of the Plan will
be effective as of the required date, and the Plan will be
applied and interpreted in a manner that is consistent with a
good faith interpretation of the applicable legal
requirements.
2
<PAGE>
ARTICLE II
MISCELLANEOUS DEFINITIONS
SEC. 2.1 ACCUMULATED INTEREST. "Accumulated Interest"
respecting employee contributions made prior to their discontinuance effective
January 1, 1972 and respecting the cash value of certain annuity contracts
purchased in 1962 shall be determined as follows:
(a) Accumulated Interest for years prior to 1976 shall be
determined according to the provisions of the Plan as in
effect on December 31, 1975.
(b) Accumulated Interest for years after 1975 and prior to 1988
shall be computed at the annual rate of 5% per year,
compounded annually.
(c) Accumulated Interest for years after 1987 shall be computed at
an annual rate equal to 120% of the federal mid-term rate for
January of the particular plan year.
Accumulated Interest shall be determined to the first day of the month in which
said determination is to be made, but not later than the date as of which
benefits with respect to the Participant commence under the Plan. If a
retroactive pension payment is made with respect to a Participant, Accumulated
Interest will not accrue after the first day of the earliest month with respect
to which the retroactive payment is made.
SEC. 2.2 ACTIVE PARTICIPANT. An employee is an "Active
Participant" only while he is both a Participant and a Qualified Employee.
SEC. 2.3 ACTUARY. "Actuary" means the individual, partnership,
corporation, or other organization appointed and acting as such from time to
time pursuant to Article X.
SEC. 2.4 ADMINISTRATOR. The Company is the "Administrator" of
the Plan for purposes of ERISA.
SEC. 2.5 AFFILIATE. "Affiliate" means any trade or business
entity under Common Control with a Participating Employer, or under Common
Control with a Predecessor Employer while it is such.
SEC. 2.6 BENEFICIARY. A "Beneficiary" is the person or
persons, natural or otherwise, designated by a Participant or former Participant
to receive any benefit payable under the Plan in the event of his death except
the benefits payable to his spouse pursuant to Sec. 7.1 or 7.2 or to a joint or
contingent annuitant. A Participant who has designated a Beneficiary may,
without the consent of such Beneficiary, alter or revoke such designation. To be
effective, any such designation, alteration, or revocation shall be in writing,
in such form as the Company may prescribe, and shall be filed with the Company
prior to the Participant's death. If at the time a death benefit becomes payable
there is not on file with the Company a fully effectual designation of
Beneficiary, or if the designated Beneficiary does not survive the Participant,
the Beneficiary shall be the person or persons surviving him in the first of the
following classes in which there is a survivor, share and share alike:
(a) his spouse;
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(b) his children, except that if any of his children predecease
him but leave issue surviving him such issue shall take by
right of representation the share their parent would have
taken if living;
(c) his parents;
(d) his brothers and sisters;
(e) his personal representative or representatives (executors or
administrators).
Determination of who the Beneficiary is in each case shall be made by the
Company.
SEC. 2.7 BOARD. The "Board" is the board of directors of the
Company, and includes any executive committee thereof authorized to act for said
board of directors.
SEC. 2.8 CODE. "Code" means the Internal Revenue Code of 1986
as from time to time amended.
SEC. 2.9 COMMON CONTROL. A trade or business entity (whether a
corporation, partnership, sole proprietorship or otherwise) is under "Common
Control" with another trade or business entity (i) if both entities are
corporations which are members of a controlled group of corporations as defined
in Code section 414(b), or (ii) if both entities are trades or businesses
(whether or not incorporated) which are under common control as defined in Code
section 414(c), or (iii) if both entities are members of an affiliated service
group as defined in Code section 414(m), or (iv) if both entities are required
to be aggregated pursuant to regulations under Code section 414(o). In applying
the preceding sentence for purposes of Sec. 8.12, the provisions of Code section
414(b) and (c) are deemed to be modified as provided in Code section 415(h).
SEC. 2.10 ERISA. "ERISA" means the Employee Retirement Income
Security Act of 1974 as from time to time amended.
SEC. 2.11 FUND. "Fund" means the aggregate of assets described
in Sec. 9.1.
SEC. 2.12 FUNDING AGENCY. "Funding Agency" is a trustee or
trustees or an insurance company appointed and acting from time to time in
accordance with the provisions of Sec. 9.2 for the purpose of holding,
investing, and disbursing all or a part of the Fund.
SEC. 2.13 LEASED EMPLOYEE. "Leased Employees" within the
meaning of Code section 414(n)(2) and individuals who would meet those
requirements but for failure to complete a year of leased service shall be
counted as employees for purposes of determining Elapsed Time, but not for
purposes of determining Credited Service. However, if Leased Employees
constitute less than twenty percent of the Employer's nonhighly compensated work
force within the meaning of Code section 414(n)(5)(C)(ii), Leased Employees
covered by a plan described in Code section 414(n)(5) shall not be counted as
employees. Leased Employees may not accrue benefits under the Plan for service
as a Leased Employee.
SEC. 2.14 NAMED FIDUCIARY. The Company is a "Named Fiduciary"
for purposes of ERISA with authority to control or manage the operation and
administration of the Plan, including control or management of the assets of the
Plan. Other persons are also Named Fiduciaries if so
4
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provided by ERISA or if so identified by the Company, by action of the Board.
Such other person or persons shall have such authority to control or manage the
operation and administration of the Plan, including control or management of the
assets of the Plan, as may be provided by ERISA or as may be allocated by the
Company, by action of the Board.
SEC. 2.15 NORMAL RETIREMENT AGE A Participant's "Normal
Retirement Age" shall be determined as follows, according to his or her year of
birth:
<TABLE>
<CAPTION>
Year of Birth Normal Retirement Age
------------- ---------------------
<S> <C>
Before 1943 65
1943 - 1959 66
1960 and after 67
</TABLE>
SEC. 2.16 NORMAL RETIREMENT DATE. "Normal Retirement Date" is
the last day of the month in which a person attains Normal Retirement Age.
SEC. 2.17 PARTICIPANT. A "Participant" is an individual
described as such in Article V.
SEC. 2.18 PREDECESSOR EMPLOYER. Any corporation, partnership,
firm, or individual, a substantial part of the assets and employees of which are
acquired by a successor, is a "Predecessor Employer" if named in this section
and subject to any conditions and limitations with respect thereto imposed by
this section. To be considered a Predecessor Employer, the acquisition of assets
and employees of a corporation, partnership, firm, or individual must be by a
Participating Employer, by an Affiliate, or by another Predecessor Employer. As
of January 1, 1999, there are no Predecessor Employers.
SEC. 2.19 QUALIFIED EMPLOYEE. "Qualified Employee" means each
employee described in (1), (2) or (3) of subsection (a), subject to the
provisions of subsections (b) through (h):
(a) Qualified Employees includes:
(1) Employees of a Participating Employer who are
compensated in whole or in part on a regular stated
salary basis;
(2) Employees of a Participating Employer who are
employed in an office clerical or supervisory
position;
(3) Employees who are paid hourly, for regular straight
time at a Covered Location listed in Schedule A,
provided, however, that an hourly paid employee at a
location listed in Schedule A is not a Qualified
Employee prior to the effective date shown in
Schedule A for the particular location.
(b) Except as to employees of the Company, an employee is not a
Qualified Employee prior to the date as of which his employer
becomes a Participating Employer.
(c) A non-resident alien while not receiving earned income (within
the meaning of Code section 911(d)(2)) from a Participating
Employer which constitutes income from sources within the
United States (within the meaning of Code section 861(a)(3))
is not a Qualified Employee.
(d) Eligibility of employees in a collective bargaining unit to
participate in the Plan shall be
5
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subject to negotiations with the representative of that unit.
During any period that an employee is covered by the
provisions of a collective bargaining agreement between his
Participating Employer and such representative he shall not be
considered a Qualified Employee for purposes of this Plan
unless such agreement expressly so provides. For purposes of
this section only, such an agreement shall be deemed to
continue after its formal expiration during collective
bargaining negotiations pending the execution of a new
agreement.
(e) An employee shall be deemed to be a Qualified Employee during
a period of absence from active service which does not result
from his Termination of Employment, provided he is a Qualified
Employee at the commencement of such period of absence.
(f) A salaried, office clerical, or supervisory employee is not a
Qualified Employee during any period of employment prior to
January 1, 1997 at a location listed in this subsection.
However, this exclusion does not apply to service at these
locations on or after January 1, 1997. Also, this exclusion
does not apply in cases where the Plan as in effect prior to
1997 recognized service at one of these locations as Credited
Service because the individual transferred to the location
after attaining age 35.
(1) Bemis Custom Products (formerly Paramount Texas).
(2) Banner Oshkosh.
(3) Fremont.
(4) Hazleton.
(5) MACtac Scranton.
(6) Milprint Corporate - Oshkosh.
(7) Milprint Denmark.
(8) Milprint Lancaster.
(9) Milprint Lebanon.
(10) Perfecseal Philadelphia.
(g) The Plan as in effect prior to January 1, 1997 excluded
employees at the following locations. Effective as of January
1, 1997, employees at these locations are no longer excluded.
Service prior to January 1, 1997 is recognized as provided:
(1) Non-exempt employees at the Nellis, Nevada plant of
Morgan Adhesives, Inc. are Qualified Employees from
the date of hire.
(2) Salaried employees at Perfecseal Oshkosh (formerly
Cur-Med) are Qualified Employees from the date of
hire or date of acquisition by the Company, if later.
(h) An employee is not a Qualified Employee during any period of
employment prior to January 1, 1998 at Bemis Custom Products
Shelbyville (formerly Paramount
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Tennessee). This exclusion does not apply to service at this
location on or after January 1, 1998.
(i) An employee is not a Qualified Employee during any period of
employment at one of the following locations:
(1) Enterprise Software, Inc.
(2) Paramount Chalfont.
SEC. 2.20 SUCCESSOR EMPLOYER. A "Successor Employer" is any
entity that succeeds to the business of a Participating Employer through merger,
consolidation, acquisition of all or substantially all of its assets, or any
other means and which elects before or within a reasonable time after such
succession, by appropriate action evidenced in writing, to continue the Plan;
provided, however, that in the case of such succession with respect to any
Participating Employer other than the Company, the acquiring entity shall be a
Successor Employer only if consent thereto is granted by the Company.
7
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ARTICLE III
SERVICE PROVISIONS
SEC. 3.1 EMPLOYMENT COMMENCEMENT DATE. "Employment
Commencement Date" means the date on which a person first becomes an employee of
a Participating Employer (whether before or after the Participating Employer
becomes such), an Affiliate, or a Predecessor Employer.
SEC. 3.2 TERMINATION OF EMPLOYMENT. The "Termination of
Employment" of an employee for purposes of the Plan shall be deemed to occur on
the date of his resignation, discharge, retirement, death, failure to return to
active work at the end of an authorized leave of absence or the authorized
extension or extensions thereof, failure to return to work when duly called
following a temporary layoff, or upon the happening of any other event or
circumstance which, under the policy of his Participating Employer, Affiliate,
or Predecessor Employer as in effect from time to time, results in the
termination of the employer-employee relationship; provided, however, that
"Termination of Employment" shall not be deemed to occur upon a transfer between
any combination of Participating Employers, Affiliates, and Predecessor
Employers. If a Participant becomes eligible to receive benefits under a long
term disability program sponsored by his employer, his Termination of Employment
for purposes of the Plan will be deemed not to have occurred until the earlier
of his Normal Retirement Date or the termination of his benefits under such long
term disability program.
SEC. 3.3 RECOGNIZED BREAK IN SERVICE. A "Recognized Break in
Service" is a period of at least 12 consecutive months duration which begins on
the day on which an individual's Termination of Employment occurs. A Recognized
Break In Service ends, if ever, on the day on which the individual again becomes
an employee of a Participating Employer, an Affiliate or a Predecessor Employer.
(a) If an individual is absent from work for maternity or
paternity reasons, the 12-month period beginning with the
first day of such absence shall not be included in a
Recognized Break In Service.
(b) For purposes of this paragraph, an absence from work for
maternity or paternity reasons means an absence (i) by reason
of the pregnancy of the individual, (ii) by reason of a birth
of a child of the individual, (iii) by reason of the placement
of a child with the individual in connection with the adoption
of such a child by such individual, or (iv) for purposes of
caring for such child for a period beginning immediately
following such birth or placement.
SEC. 3.4 ELAPSED TIME. A Participant's "Elapsed Time" is equal
to the aggregate time elapsed between his Employment Commencement Date and his
most recent Termination of Employment or any other date as of which a
determination of Elapsed Time is to be made, expressed in years and days,
reduced as follows:
(a) All Recognized Breaks In Service shall be subtracted. Any
periods that would have been included in a Recognized Break In
Service if Sec. 3.3(a) did not apply shall also be subtracted.
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(b) With respect to employers participating in the Plan on
December 31, 1969, service rendered by an employee prior to
the date his employer adopted the Plan shall be recognized as
Elapsed Time only to the extent service with the employer was
recognized as continuous service under the Plan as in effect
on December 31, 1969; provided, however, that service with
Jaite Paper Bag Company; Claremont Paper Mills, Inc.; W. T.
Winn Company; Cello-Vision Corporation; Clear Bag-Winnpak,
Inc.; and Mountain Paper Products Corporation shall be
included in Elapsed Time.
(c) Except as otherwise specifically provided herein, service with
an employer prior to the date it becomes a Participating
Employer or Affiliate shall not be included in an employee's
Elapsed Time. However, if a Participant was an employee of any
entity listed in this subsection immediately prior to the
acquisition of that entity or some or all of its assets by the
Company or an Affiliate, the Participant's Elapsed Time for
purposes of determining vesting under the Plan and for
purposes of determining eligibility for an Early Retirement
benefit, Disability Retirement benefit, or Qualified
Preretirement Survivor Annuity shall include continuous
service beginning on the Participant's last date of hire prior
to such acquisition date. However, the pre- acquisition
service is not recognized as Credited Service. Preacquisition
service at locations acquired before 1981 is recognized to the
extent provided in Sec. 3.4(c) of the Plan as in effect on
January 1, 1994.
(1) Milprint, Inc., acquired September 28, 1990.
(2) Princeton Packaging Co., from which the Company
acquired certain plants on February 4, 1993.
(3) Fitchburg Coated Products, a division of
Technographics, Inc., from which the MACtac Scranton
facility was acquired on January 3, 1994.
(4) Hargro Health Care Packaging, acquired January 20,
1994.
(5) Banner Packaging, Inc., acquired October 5, 1995 and
the predecessor corporation which operated the Banner
plant before acquisition by Bemis.
(6) Paper Manufacturers Company (PMCO), from which the
Perfecseal operations of the Company were acquired
April 29, 1996.
(7) Paramount Packaging Corporation, acquired January 1,
1997.
(8) MACtac Electronic Printing Products, Inc. and its
predecessor, Gum Products of America, acquired March
17, 1997.
(d) If an employee has a Termination of Employment and is later
rehired by a Participating Employer or Affiliate, his Elapsed
Time prior to said Termination of Employment shall not be
disregarded by reason of said Termination of Employment.
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(e) Elapsed Time includes service in Brazil as an employee of
ITAP/BEMIS, Ltda., provided such service is recognized as
Credited Service pursuant to Sec. 3.5(a)(6).
SEC. 3.5 CREDITED SERVICE. A Participant's "Credited Service"
shall be equal to his Elapsed Time, subject to the following:
(a) Credited Service does not include service when the employee
was not a Qualified Employee, except as follows:
(1) If the employee was a Qualified Employee on January
1, 1976, he shall be deemed to be a Qualified
Employee during periods of service prior to said date
during which he would have been a Qualified Employee
but for the fact he was neither compensated in whole
or in part on a regular stated salary basis nor
employed in an office clerical position. His Credited
Service for the period prior to January 1, 1976 shall
be adjusted to reflect such additional service as a
Qualified Employee.
(2) If a former employee was not an employee of a
Participating Employer or Affiliate on January 1,
1976 but subsequently was re-employed and became a
Qualified Employee upon his re-employment, he shall
be deemed to be a Qualified Employee during period of
service prior to January 1, 1976 during which he
would have been a Qualified Employee but for the fact
he was neither compensated in whole or in part on a
regular stated salary basis nor employed in an office
clerical position; provided, however, that he shall
not be deemed to be a Qualified Employee for any such
additional period with respect to which he is
eligible to receive a vested benefit pursuant to any
other pension plan that meets the requirements of
Code section 401(a). His Credited Service for the
period prior to January 1, 1976 shall be adjusted to
reflect such additional service as a Qualified
Employee.
(3) Except as provided in the following sentence, service
in Canada as an employee of a Participating Employer
or Affiliate is not recognized as Credited Service.
However, if an employee of MACtac-Canada Limited
transferred to a position as a Qualified Employee in
the United States, and the transfer occurred on or
after January 1, 1994 and on or before July 1, 1996,
the service in Canada will be included in his
Credited Service, subject to the limitations in (b)
and (e).
(4) If a Participant is a Qualified Employee on December
31, 1986 and during the period January 1, 1976
through December 31, 1986 he transferred from an
hourly paid position with Lustour Corporation or with
Lustour's MacKay Engraving operation to a position as
a Qualified Employee of Lustour or MacKay, his
Credited Service shall include his service as an
hourly paid employee of Lustour or MacKay from the
later of (i) the date the Company acquired Lustour
(which was on or about August 1, 1968) or (ii) the
individual's last Employment Commencement Date
preceding the date of transfer. However, said
additional Credited Service is subject to the
limitations
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in subsections (b) and (e).
(5) If an employee was an Active Participant on April 30,
1997, his or her Credited Service will include
Elapsed Time as an employee of Master Palletizer
Systems, Inc. on or after June 18, 1985.
(6) If a Participant transfers from a position as a
Qualified Employee in the United States to a position
in Brazil as an employee of ITAP/BEMIS Ltda., later
returns to a position as a Qualified Employee in the
United States, and remains a Qualified Employee for
at least 12 months after the transfer back to the
United States, his service in Brazil will be
recognized as Credited Service.
(b) An employee whose Termination of Employment occurs on or
before June 30, 1999, will not accrue credit for a Plan Year
prior to 1985 if he did not attain age 25 on or before the
last day of the Plan Year. The foregoing exclusion is not
applicable in any case where the Participant's Termination of
Employment occurs on or after July 1, 1999.
(c) Service with an employer prior to the date it becomes a
Participating Employer is not included in Credited Service,
except as follows:
(1) Such service prior to January 1, 1976 shall be
included in Credited Service to the extent provided
in the Plan as in effect on December 31, 1975.
(2) Such service shall be included in Credited Service to
the extent provided in any applicable appendix to the
Plan.
(3) In the case of any Participant who was an employee of
Arnoldware-Rogers, Inc., a Vermont corporation,
immediately prior to the acquisition of said
corporation by the Company in 1980 and who was a
Qualified Employee on January 1, 1987, his Credited
Service shall include his continuous service
beginning on his last date of hire prior to said
acquisition date and ending on said acquisition date.
However, said additional Credited Service shall be
limited to service as a salaried, office clerical, or
supervisory employee, and is subject to the
limitations in subsection (b).
(4) If a Participant is a Qualified Employee on October
31, 1996, and he had service as a salaried, office
clerical, or supervisory employee of Sackner
Products, Inc. ("Sackner") on or after June 30, 1966
(the date the Company acquired Sackner) and prior to
January 1, 1982 (the date Sackner became a
Participating Employer), his Credited Service shall
include such service, subject to subsection (b),
which excludes service before the Plan Year the
Participant attains age 25.
(d) If a leave of absence or layoff continues for longer than 365
calendar days, the period of such leave of absence or layoff
in excess of 365 calendar days shall not be counted
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<PAGE>
as Credited Service. However, the foregoing limitation does
not apply to periods while the Participant is receiving long
term disability benefits under a long term disability plan
sponsored by a Participating Employer.
(e) If a Participant withdrew employee contributions or received a
single sum distribution in lieu of a monthly pension, his
Credited Service will be disregarded if so provided in the
Plan provision pursuant to which the withdrawal or
distribution occurred.
SEC. 3.6 ELIGIBILITY COMPUTATION PERIOD. An employee's first
Eligibility Computation Period is the 12-consecutive-month period beginning on
his Employment Commencement Date. His second Eligibility Computation Period is
the Plan Year commencing in said 12-consecutive- month period. Each subsequent
Plan Year prior to the end of the Plan Year in which the employee has a 1-Year
Break in Service is an Eligibility Computation Period. If subsequent to a 1-Year
Break in Service he had another Employment Commencement Date, Eligibility
Computation Periods for the period beginning on such date shall be computed as
though such date were his first Employment Commencement Date.
SEC. 3.7 YEAR OF ELIGIBILITY SERVICE. A "Year of Eligibility
Service" means an Eligibility Computation Period in which an employee completes
1000 or more Hours of Service. If an employee has a Termination of Employment
and is later rehired by a Participating Employer or Affiliate, his Years of
Eligibility Service prior to said Termination of Employment shall not be
disregarded by reason of said Termination of Employment. If a period of
preacquisition service at a location is recognized as Elapsed Time for vesting
under Sec. 3.4, Hours of Service during that period will also be recognized for
purposes of determining Years of Eligibility Service.
SEC. 3.8 HOUR OF SERVICE. An "Hour of Service" or "Hours of
Service" are determined according to the following subsections with respect to
each applicable computation period:
(a) Hours of Service are computed only with respect to service
with Participating Employers (for service both before and
after the Participating Employer becomes such), Affiliates,
and Predecessor Employers and are aggregated for service with
all such employers.
(b) For any portion of a computation period during which an
individual is within a classification for which a record of
hours for the performance duties is maintained, Hours of
Service shall be credited as follows:
(1) Each hour for which the employee is paid, or entitled
to payment, for the performance of duties for his
employer during the applicable computation period is
an Hour of Service.
(2) Each hour for which the employee is paid, or entitled
to payment, by his employer on account of a period of
time during which no duties are performed
(irrespective of whether the employment relationship
has terminated) due to vacation, holiday, illness,
incapacity (including disability), layoff, jury duty,
military duty, or leave of absence, is an Hour of
Service, subject to the
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<PAGE>
following:
(A) An hour for which the employee is directly
or indirectly paid, or entitled to payment,
on account of a period during which no
duties are performed shall not be credited
to the employee if such payment is made or
due under a plan maintained solely for the
purpose of complying with applicable
worker's compensation, unemployment
compensation, or disability insurance laws.
(B) Hours of Service shall not be credited for a
payment which solely reimburses the
individual for medical or medically related
expenses.
(C) For purposes of this paragraph a payment
shall be deemed to be made by or due from an
employer regardless of whether such payment
is made by or due from the employer
directly, or indirectly through, among
others, a trust fund or insurer to which the
employer contributes or pays premiums and
regardless of whether contributions made or
due to the trust fund, insurer, or other
entity are for the benefit of particular
employees or are on behalf of a group of
employees in the aggregate.
(3) Each hour for which back pay, irrespective of
mitigation of damages, is either awarded or agreed to
by the employer is an Hour of Service. Crediting of
Hours of Service for back pay awarded or agreed to
with respect to periods described in paragraph (2)
shall be subject to the limitations set forth in that
paragraph. Such Hours of Service shall be credited to
the computation period or periods to which the award
or agreement for back pay pertains, rather than to
the computation period in which the award, agreement
or payment is made.
(4) Hours under this subsection shall be calculated and
credited pursuant to section 2530.200b-2 of the
Department of Labor Regulations, which are
incorporated herein by this reference.
(5) The Company may use any record to determine Hours of
Service which it considers an accurate reflection of
the actual facts.
(c) For any portion of a computation period during which an
employee is within a classification for which a record of
hours for the performance of duties is not maintained, he
shall be credited with 190 Hours of Service for each month for
which he would otherwise be credited with at least one Hour of
Service under subsection (b).
(d) If an employee becomes eligible to receive benefits under a
sickness and accident program sponsored by his employer, his
Hours of Service, when aggregated with the Hours of Service to
which he is entitled with respect to said period of absence
pursuant to the foregoing provisions of this section, shall be
equal to 190 Hours of Service for each month for which
sickness and accident benefits are paid.
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(e) Nothing in this section shall be construed as denying an
employee credit for an Hour of Service if credit is required
by any federal law other than ERISA. The nature and extent of
such credit shall be determined under such other law.
(f) In no event shall duplicate credit as an Hour of Service be
given for the same hour.
SEC. 3.9 SERVICE RULES AT COLUMBUS, INDIANA FACILITY. Certain
individuals working at Morgan Adhesives Company's Columbus, Indiana facility
will be employed initially by a temporary staffing agency and will become
employees of Morgan Adhesives Company after completing approximately 480 hours
or 90 days of service with the agency. In such cases, the individual's service
with the agency at Morgan's Columbus facility will be recognized under this Plan
for purposes of determining Years of Eligibility Service, Elapsed Time and
Credited Service.
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ARTICLE IV
BENEFIT DEFINITIONS
SEC. 4.1 NORMAL RETIREMENT. "Normal Retirement" means
Termination of Employment of a Participant (except termination by his death)
occurring on or after the date he attains Normal Retirement Age.
SEC. 4.2 EARLY RETIREMENT. "Early Retirement" means any
Termination of Employment of a Participant (except termination by his death) (i)
after he has both attained age 55 and completed 10 years of Elapsed Time and
(ii) before he attains Normal Retirement Age. "Early Retirement" also includes
any Termination of Employment after a Participant attains age 65 and prior to
attainment of Normal Retirement Age.
SEC. 4.3 DISABILITY RETIREMENT. If the Company determines upon
the basis of competent medical advice that the Termination of Employment of a
Participant occurred because he is permanently disabled by bodily injury or
disease from performing the regular duties of his position with his employer,
and if at the time of such Termination of Employment the Participant has
attained age 50 and completed 10 years of Elapsed Time, such Termination of
Employment shall be considered to be a "Disability Retirement." Notwithstanding
any provision of the Plan to the contrary, if a Participant becomes eligible to
receive benefits under a long term disability program sponsored by his employer,
his Termination of Employment will be deemed not to have occurred until the
earlier of his Normal Retirement Date or the termination of his benefits under
such long term disability program. Prior to the termination of such benefits, he
shall be considered to be a Qualified Employee and his Monthly Salary shall be
deemed to remain the same as last determined.
SEC. 4.4 VESTED TERMINATION. "Vested Termination" means any
Termination of Employment of a Participant (except termination by his death)
that occurs after he completes 5 years of Elapsed Time and that is not defined
herein as a form of retirement.
SEC. 4.5 ACCRUED MONTHLY PENSION. A Participant's "Accrued
Monthly Pension" shall be determined as follows:
(a) A Participant's Accrued Monthly Pension as of any date shall
be equal to the product of the following:
(1) The greater of (i) 50% of his Final Average Earnings
minus 50% of his Primary Social Security Benefit or
(ii) $180.
(2) The number of his years (not exceeding 30) of
Credited Service determined as of said date, divided
by 30.
(b) However, in no event shall a Participant's Accrued Monthly
Pension as of any January 1 be less than his Accrued Monthly
Pension as of the preceding January 1.
(c) Effective as of January 1, 1994, the annual limit on
Compensation the Plan may
15
<PAGE>
recognize under Code section 401(a)(17) was reduced to
$150,000. However, for any person who was a Participant on
December 31, 1993, his Accrued Monthly Pension shall not be
less than the sum of (i) his Accrued Monthly Pension as of
December 31, 1993, using the Code section 401(a)(17) limit as
then in effect, and based on his pay and service through
December 31, 1993, plus (ii) any additional accruals after
December 31, 1993, based on service after said date, with pay
determined under Code Section 401(a)(17) as amended January 1,
1994.
SEC. 4.6 SERVICE RATIO. A Participant's "Service Ratio" shall
be determined, when necessary to determine his pension benefit under Sections
6.3 or 6.4, as of his Termination of Employment, and shall be the ratio that his
years of Credited Service bears to the total Years of Credited Service he would
have had if his employment as a Qualified Employee had continued until his
Normal Retirement Date.
SEC. 4.7 MONTHLY EARNINGS. The "Monthly Earnings" of an
employee whose Termination of Employment occurs on or after January 1, 1997
shall be determined as follows:
(a) If an employee is paid on a salaried or commission basis on
the earliest date in a Plan Year on which he is a Qualified
Employee, his Monthly Earnings for said Plan Year is equal to
the greater of :
(1) An amount equal to his regular monthly salary as in
effect on January 1 of said Plan Year plus, where
applicable, an amount equal to the total commissions
paid to him during the preceding Plan Year divided by
12. In any case where an employee was not a Qualified
Employee on January 1 of a Plan Year, but transferred
to a position as a Qualified Employee on a later date
in said Plan Year, his Monthly Earnings for said Plan
Year shall be determined according to the preceding
sentence except that said amount shall be based on
his salary in effect immediately following said
transfer.
(2) One-twelfth of the sum of the following amounts:
(A) The total compensation (other than the
annual, non-discretionary bonus) paid to him
during the preceding Plan Year.
(B) The annual, non-discretionary bonus, if any,
the employee earned during the preceding
Plan Year. Such bonuses will be recognized
for the Plan Year in which earned, even if
the bonus is actually paid after the close
of that Plan Year or payment is deferred to
a later date.
However, if the employee was never a Qualified
Employee at any time during the preceding Plan Year,
this paragraph (2) shall not be applicable and his
Monthly Earnings shall be determined pursuant to
paragraph (1).
(b) If an employee is hourly paid on the earliest date in a Plan
Year on which he is a Qualified Employee, his Monthly Earnings
for said Plan Year is equal to the greater of:
(1) 173 1/3 multiplied by the employee's base hourly pay
rate as in effect on January 1 of said Plan Year (or
on the earliest date he is a Qualified Employee, if
later).
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<PAGE>
(2) One-twelfth of the employee's total compensation
during the preceding Plan Year. However, if the
employee was never a Qualified Employee at any time
during the preceding Plan Year, this paragraph (2)
shall not be applicable and his Monthly Earnings
shall be determined pursuant to paragraph (1).
(c) Notwithstanding the foregoing:
(1) No Monthly Earnings shall be determined for an
employee for a Plan Year unless he was a Qualified
Employee during part or all of that Plan Year.
However, if a Participant who was age 34 or younger
transferred on or after September 28, 1990, and
before January 1, 1997, from a position as a
Qualified Employee to a position in which the
individual was a salaried, office clerical, or
supervisory employee at a location listed in Sec.
2.19(f) or at an Affiliate which is not a
Participating Employer, Monthly Earnings will
continue to be determined for each Plan Year during
all or any part of which the individual was a
salaried, office clerical, or supervisory employee.
The preceding sentence does not apply if the
individual is not a Qualified Employee due to
application of Sec. 2.19(c) (relating to non-resident
aliens) or Sec. 2.19(d) (relating to bargaining unit
employees), or during any period while the
individual's principal place of employment is outside
the United States.
(2) Allowances or reimbursements for expenses, payments
or contributions to or for the benefit of the
employee under any profit sharing, insurance, or
other employee benefit plan, income derived from
receipt or exercise of stock options, phantom stock
awards, or benefits in the form of property or the
use of property shall not be included in computing
Monthly Earnings.
(3) An employee's Monthly Earnings for any Plan Year
before 1992 will be determined pursuant to the Plan
as in effect prior to the amendment effective January
1, 1997.
(4) If an employee elects to defer salary or bonus
pursuant to a non-qualified deferred compensation
plan, his monthly salary will be determined without
regard to said deferral. For example, his monthly
salary under (a)(1) is the monthly salary rate in
effect before any voluntary deferral. Similarly, the
annual bonus under (a)(2)(B) is the amount earned
without regard to any election to defer receipt. When
the deferred compensation later is paid to the
employee, it will not be included in Monthly Earnings
at the time of payment.
(d) Monthly Earnings shall be based on gross pay before any
reduction pursuant to a Code Section 401(k) or Code Section
125 salary reduction program.
(e) A Participant's Monthly Earnings for purposes of the Plan may
not exceed the amount prescribed under Code section
401(a)(17), subject to the following:
(1) Said limit is $12,500 for 1996 or any prior Plan
Year. For each Plan Year after 1996, said limit shall
be automatically adjusted to reflect the cost of
living adjustment factor under Code section 415(d).
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(2) If a Participant's Monthly Earnings for a given Plan
Year is determined under subsection (a)(2), (i.e. is
based on pay during the preceding Plan Year), then
the dollar limit under Code section 401(a)(17) for
the preceding Plan Year applies.
(f) Notwithstanding any other provision of this section to the
contrary, if a Participant's service in Brazil with
ITAP/BEMIS, Ltd. is recognized as Credited Service pursuant to
Sec. 3.5(a)(6), his Monthly Earnings for each Plan Year
beginning after his transfer to Brazil and ending before his
return to the United States shall be equal to the average of
his last Monthly Earnings rate before his transfer and his
first Monthly Earnings rate after his return.
(g) Monthly Earnings shall be determined for periods while an
individual was a salaried employee of a Participating Employer
or Affiliate in Canada. Said determination will be made in
accordance with this section, but Monthly Earnings expressed
in Canadian dollars as of any January 1 will be converted to
U.S. dollars using the rate of exchange on the last business
day of the preceding December as reported in the Exchange Rate
Table as published in the WALL STREET JOURNAL.
SEC. 4.8 FINAL AVERAGE EARNINGS. A Participant's "Final
Average Earnings" is the highest average Monthly Earnings for any five
consecutive years out of the last 15 consecutive years for which a Monthly
Earnings was determined under Sec. 4.7, or the average for all such years if
five or less. Years for which no Monthly Earnings was determined are disregarded
in determining this average, and the years used to determine the average may be
interspersed with the years for which there was no Monthly Earnings.
SEC. 4.9 PRIMARY SOCIAL SECURITY BENEFIT. "Primary Social
Security Benefit" for purposes of the Plan is an amount estimated by the Actuary
as of the date of an employee's Termina tion of Employment to be the Social
Security Act primary monthly old-age insurance benefit to which such employee is
entitled on the basis of his employment record, with benefit payments commencing
for the month in which he attains Normal Retirement Age or in which his
Termination of Employment occurs, if later. In making such estimate, recognition
shall be given to any adjustment in the benefit that is retroactive to the month
in which he attains Normal Retirement Age or the month in which his Termination
of Employment occurs, if later. Such estimate shall be made as follows:
(a) The employee's compensation while employed by the Company
shall be determined on either or a combination of the
following bases:
(1) On the basis of the employee's actual wage history as
set forth in the Company's books and records, except
that the employee may elect to supply the Company
with his actual wage history as provided in
subsection (d).
(2) On the basis of an estimate of his compensation while
employed by the Company, subject to the following:
(A) The employee has the right to elect to
supply the Company with his actual wage
history as provided in subsection (d).
(B) If the employee does not elect to supply the
Company with his actual wage history, the
estimate is consistent with subsection (c).
18
<PAGE>
(b) The employee's wage history prior to his Employment
Commencement Date shall be determined as follows:
(1) The employee has the right to elect to supply the
Company with his actual wage history as provided in
subsection (d).
(2) If the employee does not elect to supply the Company
with his actual wage history, an estimate of his wage
history prior to his Employment Commencement Date
shall be made in a manner consistent with subsection
(c).
(c) If an employee does not elect to supply the Company with his
actual wage history, any estimate of his wage history prior to
his Termination of Employment or prior to his Employment
Commencement Date shall be made by applying a salary scale,
projected backwards, to the employee's annual rate of
compensation as in effect immediately after the period for
which the estimate is being made. Said scale is the actual
percentage change in average wages from year to year as
determined by the Social Security Administration.
(d) If the employee so elects, in lieu of the Actuary estimating
on his compensation prior to his Termination of Employment or
prior to his Employment Commencement Date, he may direct the
Actuary to estimate his Primary Social Security Benefit on the
basis of the employee's actual wage history as furnished by
the Social Security Administration or such other source as the
Company deems to be reliable. The employee must, however,
supply the Company with satisfactory documentation of his
actual wage history within a reasonable period of time
following the later of his Termination of Employment and the
date upon which the Company notifies him of the benefit, if
any, that he is entitled to receive under the Plan.
(e) Estimates under this section shall be based on the assumption
that the Social Security Act as in effect on the December 31
immediately preceding the employee's Termination of Employment
will remain unchanged thereafter.
(f) Estimates under this section shall be based on the assumption
that after the December 31 immediately preceding the
employee's Termination of Employment, there will be no benefit
or wage base changes under the Social Security Act resulting
from changes in the cost of living.
(g) Estimates under this section shall be based on the assumption
that the employee will be in covered employment under the
Social Security Act until his attainment of Normal Retirement
Age and will continue to receive compensation that would be
treated as wages for purposes of the Social Security Act at
the same annual rate as he received such compensation for the
Plan Year ending on the December 31 coincident with or
immediately preceding his Termination of Employment.
(h) If an employee's Termination of Employment occurs immediately
after a period during which he was eligible to receive
benefits under a long term disability program sponsored by his
employer, the following will be applicable:
(1) It shall be assumed that during the period while he
was receiving long term disability benefits he was
receiving compensation that would be treated as wages
for purposes of the Social Security Act at the same
annual rate as he received such compensation for the
Plan Year ending on the December 31 immediately
preceding the date as of which he became eligible to
receive long term disability benefits.
19
<PAGE>
(2) After the later of (i) December 31, 1975 or (ii) the
December 31 immediately preceding the date as of
which he became eligible to receive long term
disability benefits, there will be no benefits or
wage base changes under the Social Security Act
resulting from changes in the cost of living.
This subsection is not applicable in any case where an
employee returns to active employment with a Participating
Employer or Affiliate after a period of long term disability.
(i) Estimates under this section shall be based on the assumption
that the employee will make timely application to receive his
Social Security Act primary monthly old-age insurance benefit
with payments commencing for the month in which he attains
Normal Retirement Age, or the month in which his Termination
of Employment occurs, if later, and will not disqualify
himself from receiving said payments by employment,
self-employment, or in any other way.
SEC. 4.10 "ACTUARIAL EQUIVALENT", "ACTUARIAL VALUE", "PRESENT
VALUE". Each "Actuarial Equivalent", "Actuarial Value", or "Present Value" shall
he determined by the Actuary in accordance with the following:
(a) For determinations involving benefits payable pursuant to the
sections listed below, the amount of such benefit shall equal
the Participant's Accrued Monthly Pension multiplied by the
appropriate factor as set forth in the following table:
<TABLE>
<CAPTION>
FORM OF BENEFIT FACTOR
--------------- ------
<S> <C>
Sec. 7.2 (Qualified Joint and Survivor Annuity) 90% increased by 3/4 of 1%
and Sec. 7.4 (Joint and 1/2 Survivor Annuity) for each year that the
Participant's spouse or
designated joint annuitant
is older than the
Participant and decreased
by 3/4 of 1% for each year
that the Participant's
spouse or designated joint
annuitant is younger than
the Participant; provided,
however, that such factor
shall never exceed 100%.
Sec. 7.4 (Joint and 3/4 Survivor Annuity) 85% increased by 88/100 of
1% for each year that the
Participant's designated
joint annuitant is older
than the Participant and
decreased by 88/100 of 1%
for each year that the
Participant's designated
joint annuitant is younger
than the Participant;
provided, however, that
such factor shall never
exceed 100%.
Sec. 7.4 (Joint and Full Survivor Annuity) 80% increased by 1% for
each year that the
Participant's designated
joint annuitant is older
than the Participant and
decreased by 1% for each
year that the
Participant's designated
joint annuitant is younger
than the Participant;
provided, however, that
such factor shall never
exceed 100%.
Sec. 7.4 (Life and 10 Years Certain) 91%
</TABLE>
20
<PAGE>
For the purposes of the above table, the difference in age
between the Participant and the Participant's spouse or
designated joint annuitant, as the case may be, shall be
measured in whole years, and partial years shall be
disregarded.
(b) For determinations pursuant to Sec. 8.12, each "Actuarial
Equivalent" or "present value" shall be determined as follows:
(1) For purposes of adjusting the Code section 415 limits
in cases where a Participant's benefit begins before
the Participant reaches Social Security Retirement
Age (as defined in Sec. 8.12(g)), or in cases where
the benefit is paid in a form other than a life
annuity or qualified joint and survivor annuity, the
interest rate will be determined as provided in Sec.
4.10(c)(1).
(2) For purposes of adjusting the Code section 415 limits
in cases where a Participant's benefit begins after
the Participant reaches Social Security Retirement
Age, a 5% annual interest rate assumption will be
used.
(3) The mortality table referred to in Sec. 4.10(c)(2)
will be used for the adjustments referred to in
(b)(1) and (b)(2).
(c) For determinations of lump sum payment of benefits which would
otherwise be payable as monthly annuities, each Actuarial
Equivalent shall be determined by the Actuary on the basis of
the following actuarial assumptions:
(1) The interest rate used to calculate any lump sum paid
during a Plan Year will be the annual interest rate
on 30-year treasury securities as specified by the
Commissioner of Internal Revenue for October of the
Plan Year preceding the Plan Year in which the
payment is made.
(2) The mortality table used for such calculations is the
"applicable mortality table" referred to in Income
Tax Reg. 1.417(e)-1T(d)(2), or any successor to said
regulation.
Said assumptions shall also be used (i) for purposes of Sec.
8.6 in determining the present value of accrued benefits which
are to be paid under a qualified domestic relations order,
(ii) for purposes of the adjustment in Sec. 7.3 of Appendix C
if a Hayssen Plan Participant withdraws his Prior Service
Benefit on or after September 1, 1985, (iii) for purposes of
determining whether the Plan is "top heavy" under Sec. 14.2,
and (iv) for all purposes for which Actuarial Equivalents must
be determined under the plan except as specifically provided
elsewhere in the Plan.
(d) Each determination involving an Actuarial Equivalent shall be
made in accordance with any applicable regulation promulgated
by the Secretary of Labor or the Secretary of the Treasury.
21
<PAGE>
ARTICLE V
PLAN PARTICIPATION
SEC. 5.1 ELIGIBILITY FOR PARTICIPATION. An employee of a
Participating Employer shall become a Participant in the Plan on the earliest
date, on or after the date the Plan becomes effective with respect to his
Participating Employer, on which he both (i) is a Qualified Employee and (ii)
has completed one Year of Eligibility Service.
SEC. 5.2 DURATION OF PARTICIPATION. A Participant shall
continue to be such until the later of:
(a) His Termination of Employment.
(b) The date all benefits, if any, to which he is entitled
hereunder have been distributed to him from the Fund.
SEC. 5.3 NO GUARANTEE OF EMPLOYMENT. Participation in the Plan
does not constitute a guarantee or contract of employment with the employee's
Participant Employer. Such participation shall in no way interfere with any
rights the Participating Employer would have in the absence of such
participation to determine the duration of the employee's employment with the
Participating Employer.
22
<PAGE>
ARTICLE VI
PENSION BENEFITS
SEC. 6.1 PENSION ON NORMAL RETIREMENT. On Normal Retirement a
Participant shall be entitled to a pension payable monthly for life, the first
payment to be made as of the first day of the month following his Normal
Retirement (if he is living on said first day of the month) and the last payment
to be made as of the first day of the month in which his death occurs, in a
monthly amount equal to his Accrued Monthly Pension. The pension payable under
this section is subject to all the provisions of the Plan, and in this regard
special reference is to be made to the provisions of Articles VI, VII, and VIII.
SEC. 6.2 PENSION ON EARLY RETIREMENT. On Early Retirement, a
Participant shall be entitled to a pension payable monthly for life, the first
payment to be made on the first day of the month following his Normal Retirement
Date (if he is living on said first day of the month) and the last payment to be
made as of the first day of the month in which his death occurs, in a monthly
amount equal to his Accrued Monthly Pension. However, he may elect a monthly
pension which is in lieu of the aforesaid pension, the first payment to be made
as of the first day of any month he shall elect which is after his Early
Retirement and prior to his Normal Retirement Date (if he is living on the
commencement date so elected) and the last payment to be made as of the first
day of the month in which his death occurs, in a monthly amount equal to his
Accrued Monthly Pension, reduced by 5/12 of 1% for each of the first 60 months
and 1/3 of 1% for each additional month by which the pension commencement date
precedes his Normal Retirement Date. The election shall be made by requesting
the appropriate form from the Company and completing, signing and filing the
form with the Company before the commencement date elected. The pension payable
under this section is subject to all the provisions of the Plan, and in this
regard special reference is to be made to the provisions of Articles VI, VII and
VIII.
SEC. 6.3 PENSION ON DISABILITY RETIREMENT. On Disability
Retirement, a Participant shall be entitled to a pension payable monthly for
life, the first payment to be made as of the first day of the month following
his Termination of Employment, if he is then living, and the last as of the
first day of the month in which his death occurs. The monthly amount of said
pension shall be determined as follows:
(a) If the Participant has attained age 55 when his Disability
Retirement occurs, the monthly amount of his Disability
Retirement pension shall be determined in the same manner as
an Early Retirement pension under Sec. 6.2.
(b) If the Participant's Disability Retirement occurs prior to the
date he attains age 55, the monthly amount of his pension
shall be the product of (1) and (2), reduced as provided in
(3):
(1) The monthly amount determined according to the
formula contained in Sec. 4.5, based on the Years of
Credited Service the Participant would have completed
if his employment as a Qualified Employee had
continued until his Normal Retirement Date,
multiplied by
(2) His Service Ratio, and
(3) The amount determined in (1) and (2) shall be reduced
by 5/9 of 1% for each of the first 60 months and 5/18
of 1% for each additional month by which the
commencement date precedes his Normal Retirement
Date.
23
<PAGE>
The pension payable under this section is subject to all the provisions of the
Plan, and in this regard special reference is to be made to the provisions of
Articles VI, VII, and VIII.
SEC. 6.4 PENSION ON VESTED TERMINATION. On a Vested
Termination, a Participant shall be entitled to a pension payable monthly for
life, the first payment to be made as of the first day of the month next
following his Normal Retirement Date, if he is then living, and the last as of
the first day of the month in which his death occurs. The monthly amount of said
pension shall equal:
(a) The monthly amount determined according to the formula
contained in Sec. 4.5, based on the years of Credited Service
the Participant would have completed if his employment as a
Qualified Employee had continued until his Normal Retirement
Date, multiplied by
(b) His Service Ratio.
However, if the Participant has completed 10 years of Elapsed Time, he may elect
to receive a monthly pension which is in lieu of the aforesaid pension, the
first payment to be made as of the first day of any month he elects which is
after the month in which he attains age 55 but not later than the first day of
the month after his Normal Retirement Date (if he is living on the commencement
date so elected) and the last payment to be made as of the first day of the
month in which his death occurs. The monthly amount of such pension shall be the
monthly amount otherwise payable following his Normal Retirement Date reduced by
5/9 of 1% for each of the first 60 months and 5/18 of 1% for each additional
month by which the commencement date precedes his Normal Retirement Date. The
election shall be made by requesting the appropriate form from the Company and
completing, signing, and filing the form with the Company before the
commencement date elected. If the Participant has fewer than 10 years of Elapsed
Time, he may not elect to have his pension commence prior to his Normal
Retirement Date. The pension payable under this section is subject to all the
provisions of the Plan, and in this regard special reference is to be made to
the provisions of Articles VI, VII, and VIII.
SEC. 6.5 DEDUCTION FOR OTHER PENSION PAYMENTS. Notwithstanding
the foregoing provisions, the monthly amounts otherwise payable thereunder shall
be reduced by the amount (expressed on a comparable basis that is an Actuarial
Equivalent) of the monthly pension, if any, to which the Participant is entitled
under any other pension plan that meets the requirements of Code section 401(a),
or any comparable section or sections of any future legislation that amends,
supplements, or supersedes said section, and that is financed in whole or in
part by a Participating Employer but only to the extent such other pension is
attributable to employer contributions and to the same period of service for
which the pension is being paid under this Plan. In cases where service outside
the United States is recognized as Credited Service under this Plan, said
reduction also shall apply with respect to any benefits a Participant accrued
under a retirement plan financed in whole or in part by a Participating Employer
or Affiliate outside the U.S. for the benefit of employees working outside the
U.S.
SEC. 6.6 AMENDMENTS AFFECTING PENSION RIGHTS. Notwithstanding
the foregoing provisions, in the event of an amendment to the Plan, the
following shall be applicable:
(a) The amendment shall not reduce the accrued benefit, within the
meaning of Code section 411(d)(6), of a Participant determined
at the time of such amendment except in conformity with said
section.
(b) If the amendment to the Plan should change the vesting
schedule of the Plan, each Participant having not less than
three Years of Vesting Service by the end of the election
24
<PAGE>
period with respect to such amendment shall be permitted
within such election period to elect in writing to have his
vested percentage computed under the Plan without regard to
such amendment. The election period shall be a reasonable
period determined by the Company commencing not later than the
date the amendment is adopted. However, the Company need not
provide such an election for any Participant whose vested
percentage under the Plan, as amended, at any time cannot be
less than such percentage determined without regard to such
amendment.
SEC. 6.7 SUSPENSION OF BENEFITS AND EFFECT OF REEMPLOYMENT. If
a Participant has a Termination of Employment and is subsequently reemployed by
a Participating Employer, or if a Participant's employment with a Participating
Employer continues after he attains Normal Retirement Age, the following shall
be applicable:
(a) If a Participant is reemployed by a Participating Employer,
his pension payments shall continue through the sixth month of
such reemployment. After said month and prior to the month
following his subsequent Termination of Employment, pension
payments that the Participant would otherwise be entitled to
receive for the following calendar months shall be permanently
withheld:
(1) Each calendar month ending on or before the
Participant's Normal Retirement Date in which he
completes one or more Hours of Service.
(2) Each calendar month ending after the Participant's
Normal Retirement Date in which he completes 40 or
more Hours of Service.
(b) If a Participant's employment with a Participating Employer
continues after his Normal Retirement Date, his pension
payments will be permanently withheld for each calendar month
in which he completes 40 or more Hours of Service. However,
pension payments must commence not later than the date
provided in Sec. 8.1(b).
(c) If a monthly pension payment is made for a calendar month and
it later is determined that such payment was subject to
permanent withholding, the amount of such payment shall be
applied as an offset against subsequent monthly payments
unless the Participant has previously repaid the overpayment.
However, the amount of any such offset shall not exceed, in
any one month after the Participant attains Normal Retirement
Age, 25 percent of the monthly total benefit payment that
would have been paid but for the offset.
(d) The Company shall notify a Participant of any suspension under
subsection (a)(2) or (b). The notice shall conform to the
requirements of Section 2530.203-3(b)(4) of the Department of
Labor Regulations.
(e) When a Participant's benefit payments resume following any
period of suspension under subsection (a), the pension to
which he is entitled under the Plan shall be paid under the
same form as previously in effect and shall be in a monthly
amount equal to the sum of (i) the monthly amount payable
prior to the suspension plus (ii) any additional amount based
on his service during the period of reemployment. However,
notwithstanding any other provision of the Plan to the
contrary, no additional amount will be accrued for any Plan
Year during the period of reemployment prior to the earliest
Plan Year therein during which the Participant completes 1000
or more Hours of Service.
25
<PAGE>
(f) "Hour of Service" for purposes of this section is as defined
in Sections 2530.200b-2(a)(1) and (2) of the Labor Department
regulations.
(g) The provisions of this section shall be administered in
accordance with section 2530.203-3 of the Department of Labor
Regulations.
SEC. 6.8 FAMILY INCOME COVERAGE. Section 12.04 of the Plan as
in effect on December 31, 1968, relating to continuation of family income
coverage comparable to that provided under the S&RIP prior to 1962, shall be
deemed to continue in effect for Participants who had elected to continue such
coverage. However, for purposes of all other provisions of the Plan as set forth
herein, contributions made by a Participant and benefits paid to his Beneficiary
in connection with said family income coverage shall be deemed to be unrelated
to this Plan.
SEC. 6.9 EFFECT OF PARTICIPATION IN VARIABLE ANNUITY FUND
PRIOR TO JANUARY 1, 1969. Pursuant to Article 9 of the Plan as in effect prior
to the revision of the Plan effective January 1, 1969, members could elect to
have a portion of their accrued benefits funded through a "Variable Annuity
Fund." Effective as of January 1, 1969, said elections were no longer effective
and said Variable Annuity Fund was discontinued with respect to Participants
hereunder. However, a Participant in the Plan on or after January 1, 1969 who
made such election under the prior provisions of the Plan shall be deemed to
have made a contribution in support of the Plan on December 31, 1968 in an
amount equal to the increase in value as of that date of all contributions on
his behalf that were allocated to said Variable Annuity Fund, to the extent such
increase is attributable to the investment experience of the Variable Annuity
Fund in excess of the assumed yield rate for said Variable Annuity Fund. The
Actuary shall determine the amount to be so credited to each such Participant as
of December 31, 1968 in a manner consistent with the provisions of said Article
9 of the Plan as previously in effect. At such time as a Participant who made
such an election under the prior provisions of the Plan becomes entitled to a
benefit under the foregoing provisions of this Article VI, he shall be entitled
to a supplemental benefit, which shall be in the same form as the benefit under
said provisions. Said supplemental benefit shall be the Actuarial Equivalent of
the amount deemed to be an employee contribution pursuant to this section,
together with Accumulated Interest from the year 1968.
SEC. 6.10 PRESERVATION OF BENEFITS UNDER PRE-1972 FORMULA. The
pension payable to any person who became a Participant on or before January 1,
1972 shall not be less than the amount provided under Article XV of the Plan as
in effect on December 31, 1988.
SEC. 6.11 PRESERVATION OF BENEFITS UNDER PRE-1997 FORMULA. For
each Participant who is an "Eligible Employee" as defined in subsection (a), the
benefit provisions of subsection (b) will be applicable. These provisions
preserve certain features of the Plan as in effect on December 31, 1996. Also,
for each person who was a Participant on March 31, 1997, regardless of whether
he or she is an Eligible Employee, his or her benefit under the Plan will not be
less than the amount determined under subsection (c):
(a) DEFINITION OF ELIGIBLE EMPLOYEE. A Participant is an "Eligible
Employee" for purposes of this section if he or she meets the
requirements of (1) and (2):
(1) The requirements of this paragraph (1) are met if he
or she had an Employment Commencement Date prior to
January 1, 1992. For this purpose, if he or she first
became an employee of the Company or a subsidiary of
the Company through an acquisition, and the
acquisition occurred before July 1, 1996, the
individual's Employment Commencement Date is his or
her most recent date of hire by the acquired company.
Persons who became employees of the Company or a
Company subsidiary through acquisitions on or after
July 1, 1996 do NOT satisfy
26
<PAGE>
the requirements of this paragraph, and therefore are
NOT Eligible Employees.
(2) The requirements of this paragraph (2) are met if any
one of the following requirements is satisfied:
(A) The individual was an Active Participant on
December 31, 1996.
(B) The individual was an active employee on
January 1, 1997 in a group that became
eligible to participate in the Plan on said
date, and if the individual became an
employee of the Company or a Company
subsidiary through an acquisition, the
acquisition occured before July 1, 1996.
(Individuals who became employees of the
Company or its subsidiaries through
acquisitions on or after July 1, 1996 do NOT
satisfy this requirement.)
(C) He or she had an Early Retirement prior to
December 31, 1996, but becomes a Qualified
Employee after said date.
Also, a Participant employed at Bemis Packaging Machinery
Company, Hayssen Manufacturing Company, or Accraply, Inc.
immediately prior to sale of these units on May 6, 1997 is an
Eligible Employee regardless of whether he or she meets the
requirements of (1) and (2).
(b) PRE-1997 BENEFIT PROVISIONS WHICH ARE PRESERVED FOR ELIGIBLE
EMPLOYEES. The following benefit provisions that were in
effect on December 31, 1996 are preserved for Eligible
Employees. For Eligible Employees, these preserved benefit
provisions apply to the individual's entire pension, not just
the amount accrued through the date these provisions were
deleted from the Plan:
(1) NORMAL RETIREMENT AGE. For Eligible Employees, Normal
Retirement Age under the Plan is age 65, regardless
of the year of the Participant's birth.
(2) EARLY RETIREMENT REDUCTION FACTORS. If an Eligible
Employee has an Early Retirement and elects to have
his or her pension begin before Normal Retirement
Age, the monthly amount of said pension shall be
equal to his or her Accrued Monthly Pension,
multiplied by the early retirement factor determined
from the table set forth below according to the
Participant's age when payments commence:
<TABLE>
<CAPTION>
Attained Age on Due Date Early
of First Monthly Payment Retirement Factor
------------------------ -----------------
<S> <C>
64 98%
63 96%
62 94%
61 90%
60 86%
59 82%
58 78%
57 74%
56 70%
55 66%
</TABLE>
(A proportionate intermediary percentage
will be applied for each completed month
after the given age is attained.)
27
<PAGE>
(3) DISABILITY RETIREMENT. The early retirement
factors in (2) also apply if an Eligible
Employee has a Disability Retirement after
attaining age 55. If the Eligible Employee's
Disability Retirement occurs after the
Participant attains age 50 but before he
attains age 55, the reduction factor is 5/9
of 1% for each of the first 60 months and
5/18 of 1% for each additional month by
which the benefit commencement date precedes
age 65.
(4) SOCIAL SECURITY SUPPLEMENT. If a Eligible
Employee has an Early Retirement and elects
to have his or her pension begin before age
65, in addition to the reduced monthly
pension as provided in (b)(2), with each
monthly payment prior to age 65, the
Eligible Employee shall receive a
supplemental benefit equal to (i) 50% of his
Primary Social Security Benefit, multiplied
by (ii) the fraction described in Sec.
4.5(a)(2), multiplied by (iii) the early
retirement factor determined from the table
set forth in (b)(2) according to the
Participant's age when payments commence.
(c) BENEFITS WILL NOT BE LESS THAN AMOUNT ACCRUED THROUGH MARCH
31, 1997 UNDER PLAN AS THEN IN EFFECT. For any person who was
a Participant on March 31, 1997, and who qualifies for a
benefit under Sec. 6.1, 6.2, 6.3 or 6.4, his or her monthly
pension will not be less than an amount determined as follows:
(1) For purposes of calculating said minimum pension, the
Participant's Accrued Monthly Pension will be based
solely upon Monthly Earnings and Credited Service
through March 31, 1997; Monthly Earnings and Credited
Service after said date will be disregarded.
(2) The Participant's Normal Retirement Age for purposes
of determining said minimum pension is age 65,
regardless of his or her date of birth.
(3) The minimum pension under this subsection does NOT
include the Social Security Supplement in (b)(4). The
Social Security Supplement will only be paid if the
individual qualifies as an Eligible Employee under
subsection (a).
SEC. 6.12 SPECIAL VESTED TERMINATION PROVISIONS FOR EMPLOYEES
AT CERTAIN DISCONTINUED OPERATIONS. If a Participant was employed immediately
prior to his or her Termination of Employment at a location listed in subsection
(a), the Termination of Employment occurred on or after the date specified in
subsection (a) for the Participant's location, and the Participant meets the
requirements of subsection (b), his or her pension on Vested Termination will be
calculated as provided in subsection (c):
(a) Locations and dates covered:
(1) Hayssen Manufacturing Company, Accraply, Inc., and
Bemis Packaging Machinery Company (a division of
Bemis Company, Inc.), but only if the Participant's
Termination of Employment occurred on or after May 1,
1997.
(2) Pepperell, Massachusetts plant, but only if
Participant's Termination of Employment occurred on
or after January 1, 1998.
(b) A Participant meets the requirements of this subsection (b)
only if all of the following
28
<PAGE>
requirements are met:
(1) The Participant's Employment Commencement Date was
prior to the date the Participant attained age 35.
(2) The Participant's Termination of Employment occurred
on or after the date the Participant attained age 45,
but before he or she attained age 55.
(3) The Participant completed 10 or more years of
Credited Service prior to his or her Termination of
Employment.
(c) If a Participant meets the foregoing requirements, the monthly
pension on Vested Termination payable under Sec. 6.4 on a life
only basis beginning the month following the Participant's
attainment of age 65 will not be the product of Sec. 6.4(a)
and (b), but rather will be the Participant's Accrued Monthly
Pension (as defined in Sec. 4.5) determined as of the date of
the Participant's Termination of Employment. If the
Participant elects to have the pension begin after he or she
attains age 55, but before age 65, it will be subject to the
reduction factors specified in Sec. 6.4.
SEC. 6.13 SPECIAL ENHANCED BENEFIT FOR CERTAIN EMPLOYEES AT
STOW, OHIO. A Participant who has satisfied the eligibility requirements of
subsection (a) shall be entitled to an enhanced benefit determined as provided
in subsection (b):
(a) ELIGIBILITY. To be eligible for the special enhanced benefit
under this section, a Participant must have satisfied the
requirements of (1), (2), (3) and (4):
(1) On July 1, 1998, the Participant was employed by
Morgan Adhesives Company at its Stow, Ohio facility,
and was working in a job category designated by the
Company as eligible to elect this benefit.
(2) The Participant attained age 55 and completed 10 or
more years of Elapsed Time prior to July 1, 1998.
(3) The Participant elected Termination of Employment
during a window period established by the Company,
the last day of which shall be not later than October
31, 1998. A Participant may make such an election by
executing and submitting to the Company such forms
and releases as the Company requires. The special
enhanced benefit will not be payable if the
Participant (i) fails to execute the proper forms or
releases or (ii) subsequently rescinds the election
in accordance with procedures specified by the
Company.
(4) The Participant's Termination of Employment occurs on
or about a date approved by the Company, which
generally will not be later than December 31, 1998,
but which may be later (but not later than June 30,
1999) if the Company reasonably determines that the
Participant's continued services are necessary during
a longer transition period.
(b) BENEFIT AMOUNT. If a Participant satisfies the foregoing
eligibility requirements, his benefit under the Plan will be
enhanced as follows:
(1) The Participant will receive one "point" for each
five years of Credited Service
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he will have under Sec. 3.5 as of the date of his
Termination of Employment, determined without regard
to any enhanced Credited Service provided under this
section. Participants will receive whole points only,
and will not receive fractional points for years of
Credited Service fewer than five years. For example,
a Participant with 28.5 years of Credited Service
under Sec. 3.5 will receive five points based on 25
years of Credited Service, and the remaining three
and one-half years of Credited Service will be
disregarded.
(2) For each "point" awarded in (1), the Participant will
receive one additional year of Credited Service.
However, the Participant's total Credited Service,
enhanced as provided by this paragraph, may not
exceed 30 years, nor may it exceed the years the
Participant would have had at age 65 if he or she had
continued working. If the number of full and
fractional years of additional Credited Service which
may be awarded due to the limitations in the
preceding sentence is less than the number of points
granted in (1), the remaining points will be applied
as provided in (3). For example, if the Participant
referred to in (1) is age 61 and has 28.5 years of
Credited Service without regard to this section, 1.5
of his points will be used to give him an additional
1.5 years of Credited Service (bringing him to 30
years of Credited Service) and the remaining 3 full
points will be applied as provided in (3).
(3) Any full points which were not applied to increase
Credited Service will be converted to full years of
age and applied to increase the Participant's deemed
age for purposes of calculating his benefit on Early
Retirement. (Only full points will be used for this
purpose; fractional points will be disregarded.) The
reduction factor for early commencement in Sec. 6.2
and Sec. 6.11(b)(2) will be based on the
Participant's deemed age rather than his actual age.
For example, the remaining 3 full points of the 61
year old Participant referred to in (1) and (2) would
be converted to 3 years of age, bringing him to a
deemed age of 64 for purposes of determining his
early retirement reduction factor. A Participant's
deemed age after such enhancement shall not be more
than 65.
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ARTICLE VII
SURVIVOR'S BENEFITS
SEC. 7.1 QUALIFIED PRERETIREMENT SURVIVOR ANNUITY. A
Qualified Preretirement Survivor Annuity shall be payable to a Participant's
surviving qualified spouse following the Participant's death, subject to the
following:
(a) A Qualified Preretirement Survivor Annuity shall be payable
only if all of the following conditions are satisfied:
(1) Immediately prior to the Participant's death he had
a nonforfeitable right to a pension under the Plan.
(2) The Participant's death occurred before the due date
of his first pension payment.
(3) The Participant is survived by a qualified spouse. A
person is a "qualified spouse" of a Participant if,
and only if, such person and the Participant have
been married to each other throughout the one-year
period ending on the date of the Participant's death.
(4) The Participant had Elapsed Time on or after
August 23, 1984.
(5) No waiver of the Qualified Preretirement Survivor
Annuity is in effect under subsection (e).
(b) If the Participant's death occurs on or after the earliest
retirement date, the Qualified Preretirement Survivor Annuity
shall be the same as the annuity that would have been payable
to the Participant's qualified spouse if the Participant had
retired with a benefit commencing immediately prior to the
date of death in a form determined under subsection (d).
(c) If the Participant's death occurs before the earliest
retirement date, the Qualified Preretirement Survivor Annuity
shall be the same as the annuity that would have been payable
to the Participant's qualified spouse under the following
circumstances:
(1) The Participant's Termination of Employment occurred
on the date of death, or on his actual date of
Termination of Employment, if earlier.
(2) The Participant survived to the earliest retirement
date.
(3) The Participant commenced receiving a pension on the
earliest retirement date in a form determined under
subsection (d).
(4) The Participant died on the day after the earliest
retirement date.
(d) For purposes of subsection (b) and subsection (c)(3), the
applicable form of benefit shall be a benefit payable under
the option described in Sec. 7.4(b) if the Participant's death
occurs after he has completed ten years of Elapsed Time and
attained age 55 and
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either (i) he was an Active Participant immediately prior to
his death or (ii) his Termination of Employment had occurred
after he attained age 55. In all other cases, the applicable
form of benefit shall be a Qualified Joint and Survivor
Annuity.
(e) A Participant may waive coverage under the Qualified
Preretirement Survivor Annuity with respect to periods
described in paragraph (1). If he does not waive such
coverage, his Accrued Monthly Pension will be reduced. The
following provisions apply to such waivers and reductions.
(1) A Participant may waive the Qualified Preretirement
Survivor Annuity with respect to periods when he is
not eligible to accrue additional benefits under this
Plan or the Bemis Company, Inc. Retirement Plan for
Bemis Hourly Employees. Said cessation of accruals
may be due to the Participant's Termination of
Employment or transfer, or due to termination of the
Plan, or due to some other reason. However, he may
not waive said annuity if such accruals (i) have
ceased solely due to the Participant's reaching the
maximum length of service beyond which additional
service is not recognized as Credited Service or (ii)
have ceased due to his Normal or Early Retirement.
(2) On or about the date a Participant becomes eligible
to waive the Qualified Preretirement Survivor
Annuity, the Company will notify the Participant with
regard to the election procedure under Sec. 7.3 and
the effect of said waiver.
(3) The Participant's Accrued Monthly Pension will be
reduced by 25/1000 of 1% for each full month that he
was eligible to waive the Qualified Preretirement
Survivor Annuity but failed to do so. However, no
such reduction will be imposed for any month
throughout which the Participant did not have a
spouse to whom he had been married for at least one
year.
(f) For purposes of this section, the "earliest retirement date"
with respect to a Participant means:
(1) If the Participant has completed ten Years of Elapsed
Time, the first day of the month following the month
he attains (or would have attained) age 55.
(2) If the Participant has completed less than ten years
of Elapsed Time, the first day of the month following
his Normal Retirement Date.
SEC. 7.2 QUALIFIED JOINT AND SURVIVOR ANNUITY.
Notwithstanding the provisions of Article VI, a pension otherwise payable to
a Participant for his life only shall instead be paid in the form of a
Qualified Joint and Survivor Annuity unless the Participant elects otherwise,
subject to all of the following:
(a) A "Qualified Joint and Survivor Annuity" is a pension
commencing at the same time as the life-only pension would
commence, with monthly payments for the life of the
Participant, and, if the Participant dies after the date for
commencement of his pension payments, with monthly payments
for the life of the spouse of the Participant after the
Participant's death which are each one-half the amount of the
monthly payment made to the Participant during his lifetime.
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(b) The Company, within a reasonable period of time before the due
date for the Participant's first pension payment (and
consistent with such regulations as the Secretary of the
Treasury may prescribe), shall furnish the Participant with a
written explanation of (i) the Qualified Joint and Survivor
Annuity, (ii) the election and revocation procedures in Sec.
7.3, and (iii) the effect of an election or revocation.
(c) A Participant who elects not to receive his pension in the
form of a Qualified Joint and Survivor Annuity will receive a
pension for his life only unless he elects an optional
settlement under Sec. 7.4.
(d) The provisions of this section shall not be applicable unless
the Participant and his spouse are married to each other on
the due date for the first pension payment to the Participant.
References to "spouse" in this section are to such spouse.
(e) The benefit, if any, payable under Sec. 6.2(b) is not payable
as a Qualified Joint and Survivor Annuity.
SEC. 7.3 ELECTION PROCEDURE. Elections under Sec. 7.1 and
Sec. 7.2 are subject to the following requirements:
(a) The "election period" for waiver of the Qualified
Preretirement Survivor Annuity begins on the earlier of (i)
the first day of the Plan Year in which the Participant
attains age 35 or (ii) the date of the Participant's
Termination of Employment and ends on the date of his death.
The "election period" for the Qualified Joint and Survivor
Annuity is the 90 day period ending on the due date of the
Participant's first pension payment.
(b) An election under Sec. 7.1 or Sec. 7.2 may be revoked in
writing during the election period, and after such revocation
another written election may be made during the election
period.
(c) All elections and revocations shall be made on the appropriate
form available from the Company and shall be effective only
upon completing, signing, and filing of the form with the
Company during the election period.
(d) A Participant's election to waive the Qualified Joint and
Survivor Annuity or Qualified Preretirement Survivor Annuity
shall not take effect unless all of the following conditions
are satisfied:
(1) The Participant's spouse consents in writing to the
election.
(2) If the election pertains to a Qualified Joint and
Survivor Annuity, the Participant's election
designates a specific form of benefit payment (i.e.,
life annuity or an optional form of settlement under
Sec. 7.4) and a specific beneficiary or contingent
annuitant, if applicable in connection with such form
of benefit payment, which designations may not be
changed without further spousal consent (unless the
spouse's initial consent expressly permits future
designations by the Participant without any further
spousal consent.)
(3) The spouse's consent acknowledges the effect of the
Participant's election.
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(4) The spouse's consent is witnessed by a Plan
representative or notary public.
However, the above requirements will be deemed to be satisfied
if it is established to the satisfaction of a Plan
representative that the spouse's consent may not be obtained
because there is no spouse, because the spouse cannot be
located, or because of such other circumstances as the
Secretary of the Treasury may by regulations prescribe. Any
consent by a spouse, or establishment that the consent of a
spouse may not be obtained, shall be effective only with
respect to such spouse. A consent by a spouse is not revocable
by that spouse.
SEC. 7.4 OPTIONAL SETTLEMENTS. In lieu of the amount and
form of pension payable under the preceding sections of this Article, a
Participant with respect to whom the Qualified Preretirement Survivor Annuity
under Sec. 7.1 or the Qualified Joint and Survivor Annuity under Sec. 7.2 is
not payable may, under such rules and regulations as the Company may
prescribe which are in accord with the advice of the Actuary, elect to have a
pension which is the Actuarial Equivalent of his life-only pension payable
under one of the following options:
(a) An option providing a reduced monthly pension payable to the
Participant commencing on the same date as that upon which
payments would otherwise commence and terminating with the
last monthly payment before his death. If his death occurs on
or after the due date of the first monthly payment under the
option and before 120 monthly payments have been made to him,
such benefit shall be continued to his Beneficiary until a
total of 120 monthly payments have been made to him and his
Beneficiary.
(b) An option providing a reduced monthly pension payable to the
Participant for his lifetime commencing on the same date as
that upon which payments would otherwise commence, with
provision for continuance upon his death of monthly payments
of 100% of such reduced amount to his spouse for life if she
survives him. (The "spouse" referred to in the preceding
sentence is the spouse to whom the Participant was named on
the date his pension commenced.)
(c) An option providing a reduced monthly pension payable to the
Participant for his lifetime commencing on the same date as
that upon which payments would otherwise commence, with
provision for continuance upon his death of monthly payments
of 100%, 75% or 50% of such reduced amount, as he shall have
designated, to the person designated by him as his joint
annuitant, if such joint annuitant survives him, with such
monthly payments to continue for the lifetime of the joint
annuitant. An election of this option shall be automatically
cancelled if either the person electing the option or his
joint annuitant dies before the due date of the first monthly
payment under the option.
Election of an option may be made at any time prior to commencement of pension
payments.
SEC. 7.5 OTHER DEATH BENEFITS. Upon the death of a
Participant, his Beneficiary shall be entitled to receive a single sum
payment equal to the amount by which the total amount of benefit payments
hereunder, if any, theretofore paid to the deceased (including payments to
his spouse under Sec. 7.1) is less than the sum of (i) the cash value as of
the surrender date in 1962 of any contracts on his life originally purchased
under the S&RIP and subsequently surrendered to the insurance carrier by the
trustees of said plan, with Accumulated Interest thereon, and (ii) the
contributions made by him after 1961 (including any amount deemed to have
been contributed by him pursuant to Sec. 6.7 of the
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Plan as in effect on December 31, 1975) and prior to the cessation of
contributions, with Accumulated Interest; subject to the following:
(a) If a benefit is payable with respect to the Participant
pursuant to Sec. 7.2 or Sec. 7.4, this section shall not be
applicable and all death benefits, if any, shall be payable
under the terms of whichever of said sections is applicable.
(b) If a benefit is payable to the Participant's spouse pursuant
to Sec. 7.1, the benefit, if any, payable pursuant to this
section shall be determined and paid after the death of said
spouse.
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ARTICLE VIII
MISCELLANEOUS BENEFIT PROVISIONS
SEC. 8.1 COMMENCEMENT DATE FOR PENSION PAYMENTS. Pension
payments under this Plan shall be subject to the following rules:
(a) Pension payments shall commence at the earlier of the times
specified in paragraph (1) or (2) as follows:
(1) As soon as administratively feasible after the date
specified by the applicable Plan provision for the
commencement of pension payments.
(2) The 60th day after the close of the Plan Year in
which the Participant reaches age 65 or has a
Termination of Employment, whichever is later;
provided, however, that if the amount of the payment
to be made cannot be determined by the later of said
dates, 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.
(b) Pension payments must commence not later than April 1
following the later of:
(1) The calendar year in which the Participant attains
age 70 1/2.
(2) The calendar year in which the Participant has a
Termination of Employment.
However, if (i) the Participant is a 5% owner as defined in
Code section 416 or (ii) the Participant attained age 70 1/2
prior to January 1, 2000, his pension shall commence not
later than April 1 following the calendar year he attains
age 70 1/2, regardless of whether his Termination of
Employment has yet occurred. In such cases, the calculation
of the initial pension amount shall be based on the
assumption that his Termination of Employment occurred on
December 31 of the Plan Year in which the Participant attains
age 70 1/2. The amount of the monthly payments in each Plan
Year following the Plan Year in which payments commence shall
be adjusted to reflect any additional benefit accrued through
December 31 of the preceding Plan Year.
SEC. 8.2 PAYMENT OF SMALL AMOUNTS AND CERTAIN CONSEQUENCES
THEREOF. If the Actuarial Equivalent present value of an individual's entire
benefit is $5,000 or less ($3,500 or less for Participants who had
Terminations of Employment before January 1, 1998 and for Participants at the
Pepperell, Massachusetts and Memphis, Tennessee facilities, regardless of
termination date), the benefit shall be paid in a single lump sum as soon as
administratively feasible following the Participant's Termination of
Employment, subject to the following:
(a) Service performed by the Participant with respect to which a
lump sum distribution of his entire accrued benefit was made
shall be disregarded in determining his Years of Credited
Service under the Plan if he is reemployed, provided such
distribution was
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<PAGE>
made not later than the close of the second Plan Year
following the Plan Year in which his Termination of Employment
occurred.
(b) If the requirements of subsection (a) are not met, and the
Participant is later reemployed, his Accrued Monthly Pension
upon termination of said period of reemployment will be
reduced by the amount of Accrued Monthly Pension that was
cashed out under the foregoing provisions of this section.
(c) A lump sum distribution will not be paid to a Participant
under this section if his Termination of Employment was a
Normal Retirement (as defined in Sec. 4.1), an Early
Retirement (as defined in Sec. 4.2), or a Disability
Retirement (as defined in Sec. 4.3). However, if such a
Participant later dies under circumstances such that a death
benefit is payable under the Plan, the death benefit will be
cashed out under this section if the present value thereof is
$5,000 or less.
(d) If a former employee receives a single sum payment under the
foregoing provisions of this section, and he is later rehired
by a Participating Employer, he may repay to the Fund the full
amount of the single sum distribution and interest thereon,
subject to the following:
(1) Interest shall be computed on the amount of the
distribution from the date of such distribution to
the date of repayment, compounded annually, at the
rate of five percent per annum.
(2) The repayment must be made not later than the last
day of the second Plan Year following the Plan Year
in which the individual is rehired.
(3) If such a repayment is made, the reduction of
Credited Service referred to in (a) above and the
reduction of Accrued Monthly Pension referred to in
(b) above will not be applicable.
(4) If the employee contributed all or any part of the
single sum distributed to a conduit individual
retirement account ("IRA"), all or any part of the
repayment may consist of a direct transfer from said
IRA to the Plan. If the balance in the IRA exceeds
the required repayment, the direct transfer shall be
limited to the amount of required repayment. Direct
transfers from IRA are permitted only if the IRA
consists solely of proceeds from a single sum
distribution from this Plan.
SEC. 8.3 NO OTHER BENEFITS. No benefits other than those
specifically provided for herein are to be provided under the Plan.
SEC. 8.4 SOURCE OF BENEFITS. All benefits to which persons
become entitled hereunder shall be provided only out of the Fund and only to
the extent that the Fund is adequate therefor. No benefits are provided under
the Plan except those expressly described herein.
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SEC. 8.5 INCOMPETENT PAYEE. If in the opinion of the
Company a person entitled to payments hereunder is disabled from caring for
his affairs because of mental condition, physical condition, or age, payment
due such person may be made to such person's guardian, conservator, or other
legal personal representative upon furnishing the Company with evidence
satisfactory to the Company of such status. Prior to the furnishing of such
evidence, the Company may cause payments due the person under disability to
be made, for such person's use and benefit, to any person or institution then
in the opinion of the Company caring for or maintaining the person under
disability. The Company shall have no liability with respect to payments so
made. The Company shall have no duty to make inquiry as to the competence of
any person entitled to receive payments hereunder.
SEC. 8.6 ASSIGNMENT OR ALIENATION OF BENEFITS. Except as
otherwise expressly permitted by the Plan or required by law, the interests of
persons entitled to benefits under the Plan may not in any manner whatsoever be
assigned or alienated, whether voluntarily or involuntarily, or directly or
indirectly, subject to the following:
(a) Once a Participant, beneficiary, or contingent annuitant
begins receiving benefits under the Plan, he may assign or
alienate the right to future benefit payments provided that
the assignments or alienations (i) are voluntary and
revocable, (ii) do not in the aggregate exceed 10% of any
benefit payment, and (iii) are neither for the purpose, nor
have the effect of defraying plan administration costs.
(b) An arrangement whereby a Participant, beneficiary, or
contingent annuitant directs the Plan to pay all or any
portion of a Plan benefit to a third party (including but not
limited to a Participating Employer) will not constitute an
"assignment or alienation" for purposes of this section if
(i) it is revocable at any time by the Participant,
beneficiary, or contingent annuitant, and (ii) the third
party files a written acknowledgement with the Company
stating that the third party has no enforceable right in, or
to, any plan benefit payment or portion thereof (except to
the extent of payments actually received pursuant to the
arrangement). The written acknowledgement must be filed with
the Company not later than 90 days after the arrangement is
entered into.
(c) The Plan shall comply with the provisions of any court order
which the Company determines is a qualified domestic relations
order as defined in Code section 414(p). Where payments are to
be made under a qualified domestic relations order before
payments commence to the Participant, the present value of the
benefits actually accrued for the Participant shall be
determined on an Actuarial Equivalent basis. All benefits
otherwise payable under the Plan with respect to a Participant
shall be adjusted to the extent necessary to comply with a
qualified domestic relations order. The Company may defer
pension payments subject to a domestic relations order pending
determination that the order is qualified.
SEC. 8.7 PAYMENT OF TAXES. The Funding Agency may pay any
estate, inheritance, income, or other tax, charge, or assessment attributable to
any benefit payable hereunder which in the Funding Agency's opinion it shall be
or may be required to pay out of such benefit. The Funding Agency may require,
before making any payment, such release or other document from any taxing
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authority and such indemnity from the intended payee as the Funding Agency shall
deem necessary for its protection.
SEC. 8.8 CONDITIONS PRECEDENT. No person shall be entitled to
a benefit hereunder until his right thereto has finally been determined by the
Company or until he has submitted to the Company relevant data reasonably
requested by the Company, including, but not limited to, proof of birth or
death.
SEC. 8.9 COMPANY DIRECTIONS TO FUNDING AGENCY. The Company
shall issue such written directions to the Funding Agency as are necessary to
accomplish distributions to the Participants and Beneficiaries in accordance
with the provisions of the Plan.
SEC. 8.10 BENEFITS NOT INCREASED BY ACTUARIAL GAINS.
Forfeitures arising from severance of employment, death, or for any other reason
shall not be applied to increase the benefits that any person would otherwise
receive under the Plan.
SEC. 8.11 PENSIONS NOT DECREASED ON ACCOUNT OF CERTAIN SOCIAL
SECURITY INCREASES. Notwithstanding any provisions of the Plan to the contrary,
if a Participant has a Termination of Employment and does not subsequently again
become eligible to accrue benefits under the Plan, any pension to which he or
his beneficiary is entitled under the Plan shall not be decreased by reason of
any post-Termination of Employment social security increase effective after his
Termination of Employment. If a Participant has a Termination of Employment and
subsequently again becomes eligible to accrue benefits under the Plan, no
post-Termination of Employment social security benefit increase effective before
he again becomes eligible to accrue benefits under the Plan shall be applied to
reduce his pension under the Plan to less than the pension to which he would
have been entitled had he not again become eligible to accrue benefits under the
Plan. For purposes of this section, "post-Termination of Employment social
security benefit increase" means an increase in a benefit level or wage base
under Title II of the Social Security Act occurring after the later of (i) the
Participant's Termination of Employment or (ii) September 2, 1974.
SEC. 8.12 MAXIMUM LIMITATIONS ON BENEFITS. Notwithstanding
any provision of the Plan to the contrary, a Participant's benefit under the
Plan shall not exceed the maximum amount permitted under Code section 415.
For purposes of the preceding sentence:
(a) The projected annual pension for any Plan Year with respect to
a Participant whose benefit has not yet commenced, and the
annual pension paid during any Plan Year to a Participant
whose benefit has commenced, may not exceed the lesser of:
(1) $130,000, subject to an automatic adjustment after
1999 under Code section 416(d) to reflect changes in
the cost of living. However, if a former employee
receives a single sum payment from his employer of
the Actuarial Equivalent of his benefit in excess of
the limits under this section, such adjustment will
not have the effect of increasing his benefit under
this Plan to an amount higher than the amount upon
which said single sum payment was predicated.
(2) 100% of the Participant's average Compensation for
his high three consecutive
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years of employment.
(b) If a Participant's benefit is paid in any form other than a
straight life annuity or a qualified joint and survivor
annuity (as defined in Code section 417(b)), such benefit
shall be converted on an Actuarial Equivalent basis to a
straight life annuity beginning at the same age for purposes
of applying the limitation in subsection (a).
(c) If a Participant's benefit commences before he attains Social
Security Retirement Age and on or after the date he attains
age 62, the dollar limitation of subsection (a)(1) shall be
reduced by 5/9 of 1% for each of the first 36 months and 5/12
of 1% for each additional month (up to 24 months) by which
benefits commence before he attains Social Security Retirement
Age. If the Participant's benefit commences before he attains
age 62, the dollar limitation shall be the annual amount of a
benefit (commencing when the Participant's benefit commences)
which is the Actuarial Equivalent of an annual benefit
commencing at age 62 determined according to the preceding
sentence.
(d) If the Participant's benefit commences after he attains Social
Security Retirement Age, the dollar limitation of subsection
(a)(1) shall be increased so that such limitation (as so
increased) equals the annual amount of a benefit (commencing
when the Participant's benefit commences) which is the
Actuarial Equivalent of a benefit commencing at Social
Security Retirement Age in an annual amount determined under
subsection (a)(1).
(e) If a Participant has less than ten years of participation in
this Plan, the dollar limitation under subsection (a)(1) shall
be reduced by multiplying that amount by a fraction, the
numerator of which is the number of years (or part thereof) of
participation (not to exceed ten and not to be less than one)
in this Plan and the denominator of which is ten.
(f) If a Participant has less than ten years of service with the
employer, the limitation referred to in subsection (a)(2)
shall be reduced by multiplying the limitation otherwise
applicable by a fraction, the numerator of which is the number
of years (or part thereof) of service (not to exceed ten and
not to be less than one) with the employer and the denominator
of which is ten.
(g) For purposes of this section, "Social Security Retirement Age"
means retirement age as defined in section 216(l) of the
Social Security Act (or any successor thereto).
(h) With respect to a Participant who was a Participant prior to
January 1, 1987, the limitation under this section shall not
have the effect of reducing the Participant's annual benefit
to less than his accrued benefit as of the close of the last
Plan Year beginning before January 1, 1987. In determining the
amount of the Participant's annual accrued benefit on such
date, any change in the terms and conditions of the Plan and
any cost of living adjustment occurring after May 5, 1986
shall be disregarded.
(i) If a Participant is or has been covered under more than one
defined benefit plan
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maintained by his Participating Employer or an Affiliate, the
sum of the Participant's annual benefits under all such plans
may not exceed the maximum amount permitted under this
section. To the extend necessary to comply with such
limitation, the benefits under all such plans shall be reduced
on a pro rata basis.
(j) If the Participant is also a participant in one or more
defined contribution plans maintained by his Participating
Employer or an Affiliate, the sum of the Participant's defined
benefit plan fraction and defined contribution plan fraction,
determined according to Code section 415(e), for any Plan Year
may not exceed 1.0, and the benefit otherwise payable under
this Plan shall be adjusted to the extent necessary to reduce
the sum of such fractions to 1.0. If the Plan is top heavy
under Sec. 14.2, the limitations in this subsection will be
adjusted as provided in Code section 416(h). The limitations
in this subsection are repealed effective January 1, 2000.
(k) For purposes of this section, "Compensation" means a
Participant's earned income, wages, salaries, and fees for
professional services and other amounts received for personal
services actually rendered in the course of employment with
the Participating Employers and Affiliates (including, but not
limited to, commissions, compensation for services on the
basis of a percentage of profits and bonuses), subject to the
following:
(1) Compensation means the gross amount before any
reduction pursuant to Code section 125 or 401(k).
(2) Compensation excludes amounts by which an employee's
pay is reduced pursuant to an unfunded non-qualified
plan of deferred compensation. However, payments
received pursuant to such a plan are Compensation in
the year such amounts are includable in the
employee's gross income.
(3) Compensation excludes amounts realized from the
exercise of a nonqualified stock option, or from the
disposition of stock acquired under an incentive
stock option, or when restricted stock (or property)
held by the Participant either becomes transferable
or is no longer subject to a substantial risk of
forfeiture.
(4) Compensation recognized for an employee for a Plan
Year shall not exceed $160,000, adjusted for each
Plan Year after 1999 to take into account any
applicable cost of living increase prescribed by the
Secretary of the Treasury.
SEC. 8.13 DISTRIBUTIONS MADE IN ACCORDANCE WITH CODE
SECTION 401(a)(9). Distributions hereunder shall be made in accordance with
the requirements of Code Section 401(a)(9) and regulations thereunder,
including Treasury Regulation Section 1.401(a)(9)-2. Any provisions of the
Plan that are inconsistent with Code section 401(a)(9) and the regulations
thereunder shall be deemed inoperative.
SEC. 8.14 DEEMED CASH-OUT UPON TERMINATION OF EMPLOYMENT
FOR UNVESTED PARTICIPANTS. A Participant who is zero percent vested and
experiences a Termination of Employment is deemed upon his or her Termination
of Employment to hae received an immediate cash-out of his or
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her Accrued Monthly Pension under the Plan and to have forfeited the unvested
portion of his or her Accrued Monthly Pension under the Plan.
SEC. 8.15 ROLLOVERS AND TRANSFERS TO OTHER QUALIFIED PLANS.
Notwithstanding any provision of the Plan to the contrary that would otherwise
limit a distributee's election under this section, a distributee may elect, at
the time and in the manner prescribed by the Company, to have any portion of an
eligible rollover distribution paid directly to an eligible retirement plan
specified by the distributee. The following definitions shall be used in
administering the provisions of this section.
(a) ELIGIBLE ROLLOVER DISTRIBUTION: For purposes of this section,
an eligible rollover distribution is a distribution paid in a
single lump sum pursuant to Sec. 8.2 or pursuant to any
Appendix to the Plan.
(b) ELIGIBLE RETIREMENT PLAN: An eligible retirement plan is an
individual retirement account described in Code section
408(a), an individual retirement annuity described in Code
section 408(b), an annuity plan described in Code section
403(a), or a qualified trust described in Code section 401(a),
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 limited
to an individual retirement account or individual retirement
annuity.
(c) DISTRIBUTEE: A distributee means a Participant, a
Participant's surviving spouse, or a former spouse who is the
alternate payee under a qualified domestic relations order, as
defined in Code section 414(p). Individuals other than those
named in this subsection are not permitted to roll over
distributions from the Plan.
SEC. 8.16 SPECIAL BENEFIT LIMITATION. Notwithstanding any
other provision of the Plan to the contrary, the payment of benefits under the
conditions set forth in this section shall be limited as follows:
(a) Upon termination of the Plan, the benefit of any Participant
who is either a "highly compensated employee" or a "highly
compensated former employee" shall be limited to a benefit
that is nondiscriminatory under Code Section 401(a)(4).
(b) The annual benefit payable under the Plan to any Participant
described in subsection (c) of this section shall not exceed
an amount equal to the payments which would be made to him in
that year under a straight life annuity that is the Actuarial
Equivalent of the nonforfeitable benefit to which he is
entitled under the Plan; provided that the restrictions set
forth in this subsection (b) shall not apply if:
(1) after payment to the Participant of his benefit under
the Plan, the value of the Plan's assets equals or
exceeds 110% of the value of the Plan's current
liabilities; or
(2) the value of such Participant's benefit under the
Plan is less than 1% of the value of such current
liabilities; or
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(3) the Actuarial Equivalent value of the Participant's
benefit is $5,000 or less.
(c) The restriction set forth in subsection (b) shall apply to
benefits payable under the Plan for any Plan Year to any
Participant who is either a "highly compensated employee" or
"highly compensated former employee" with respect to such Plan
Year; provided, that if the number of such highly compensated
employees and highly compensated former employees for any Plan
Year exceeds 25, the restriction set forth in subsection (b)
shall apply for the Plan Year only to the 25 such highly
compensated employees and highly compensated former employees
with the greatest Compensation (as defined in Sec. 8.12(k))
for the current or any prior Plan Year.
(d) For purposes of this section, the terms "highly compensated
employee" and "highly compensated former employee" shall have
the meanings ascribed to such terms in Code Sections 414(q)(1)
and 414(q)(6), respectively.
SEC. 8.17 BENEFITS OF REEMPLOYED VETERANS. Notwithstanding
any provision of this Plan to the contrary, contributions, benefits and service
credit with respect to qualified military service will be provided in accordance
with Code Section 414(u).
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ARTICLE IX
FUND
SEC. 9.1 COMPOSITION. All sums of money and all securities and
other property received by the Funding Agency for purposes of the Plan, together
with all investment made therewith, the proceeds thereof, and all earnings and
accumulations thereon, and the part from time to time remaining shall constitute
the "Fund". The Company may cause the Fund to be divided into any number of
parts for investment purposes or any other purposes necessary or advisable for
the proper administration of the Plan. If for any purpose it is necessary to
determine the value of an asset in the Fund for which fair market value is not
available, the value of such asset shall be its fair value as determined in good
faith by the Company or other Named Fiduciary assigned such function, or if the
asset is held in trust and the trust agreement so provides, as determined in
good faith by the trustee.
SEC. 9.2 FUNDING AGENCY. The Fund may be held and invested as
one fund or may be divided into any number of parts for investment purposes.
Each part of the Fund, or the entire Fund if it is not divided into parts for
investment purposes, shall be held and invested by one or more trustees or by an
insurance company. The trustee or trustees or the insurance company so acting
with respect to any part of the Fund is referred to herein as the Funding Agency
with respect to such part of the Fund. The selection and appointment of each
Funding Agency shall be made by the Company, by action of the Board. The
Company, by action of the Board, shall have the right at any time to remove a
Funding Agency and appoint a successor thereto, subject only to the terms of any
applicable trust agreement or group annuity contract. The Company shall have the
right to determine the form and substance of each trust agreement and group
annuity contract under which any part of the Fund is held, subject only to the
requirement that they are not inconsistent with the provisions of the Plan. Any
such trust agreement may contain provisions pursuant to which the trustee will
make investments on direction of a third party.
SEC. 9.3 COMPENSATION AND EXPENSES OF FUNDING AGENCY. The
Funding Agency shall be entitled to receive reasonable compensation for its
services as may be agreed upon with the Company. The Funding Agency shall also
be entitled to reimbursement for all reasonable and necessary costs, expenses,
and disbursements incurred by it in the performance of its services. Such
compensation and reimbursements shall be paid from the Fund if not paid directly
by the Participating Employers in such proportions as the Company shall
determine.
SEC. 9.4 SECURITIES AND PROPERTY OF PARTICIPATING EMPLOYERS.
An agreement with a Funding Agency may provide that the Fund may be invested in
qualifying employer securities or qualifying employer real property, as those
terms are used in ERISA, and to the extent permitted by ERISA. If qualifying
employer securities or qualifying employer real property are purchased or sold
as an investment of the Fund from or to a disqualified person or party in
interest, as those terms are used in ERISA, and if there is no generally
recognized market for such securities or property, the purchase shall be for not
more than fair market value and the sale shall be for not less than fair market
value, as determined in good faith by the Company or other Named Fiduciary
assigned such function, or if such assets are held in trust and the trust
agreement so provides, as determined in good faith by the trustee.
SEC. 9.5 NO DIVERSION. The Fund shall be for the exclusive
purpose of providing
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benefits to Participants and their beneficiaries and defraying reasonable
expenses of administering the Plan. Such expenses may include premiums for the
bonding of Plan officials required by ERISA and may also include premiums
payable to the Pension Benefit Guaranty Corporation. No part of the Fund may be
used for, or diverted to, purposes other than for the exclusive benefit of
employees of the Participating Employers or their beneficiaries. Notwithstanding
the foregoing:
(a) If any contribution or portion thereof is made by a
Participating Employer by a mistake of fact, the Funding
Agency shall, upon written request of the Company, return such
contribution or portion thereof to the Participating Employer
within one year after the payment of the contribution to the
Funding Agency; however, earnings attributable to such
contribution or portion thereof shall not be returned to the
Participating Employer but shall remain in the Fund, and the
amount returned to the Participating Employer shall be reduced
by any losses attributable to such contribution or portion
thereof.
(b) Contributions by the Participating Employers are conditioned
upon the deductibility of each contribution under Code section
404. To the extent the deduction is disallowed, the Funding
Agency shall, upon written request of the Company, return such
contribution to the Participating Employer within one year
after the disallowance of the deduction; however, earnings
attributable to such contribution (or disallowed portion
thereof) shall not be returned to the Participating Employer
but shall remain in the Fund, and the amount returned to the
Participating Employer shall be reduced by any losses
attributable to such contribution (or disallowed portion
thereof).
(c) If, in the case of termination of the Plan, any residual
assets remain in the Fund after all liabilities of the Plan to
Participants and their beneficiaries have been satisfied, such
residual assets shall be returned to the Participating
Employers in such proportions as the Company may determine.
SEC. 9.6 EMPLOYER CONTRIBUTIONS. The Participating Employers
shall make such contributions to the Fund from time to time as they consider
advisable.
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ARTICLE X
ACTUARY
SEC. 10.1 APPOINTMENT. The Company shall appoint as Actuary
hereunder an individual who is an enrolled actuary as defined in ERISA or a
partnership, corporation, or other organization which has as a partner or
employee thereof such an enrolled actuary.
SEC. 10.2 RESPONSIBILITIES. The Actuary shall have the
responsibilities expressly allocated to it hereunder and shall have such other
responsibilities with respect to the Plan as may be agreed upon by the Company
and the Actuary.
SEC. 10.2 COMPENSATION. The Actuary shall receive such
reasonable compensation for its services hereunder as may be agreed upon by the
Company and the Actuary. To the extent not paid from the Fund, such compensation
shall be paid by the Participating Employers in such proportions as the Company
shall determine.
SEC. 10.3 RESIGNATION, REMOVAL, AND SUCCESSOR. Any agreement
between the Company and the Actuary for services hereunder may be terminated by
either party on 30 days written notice to the other. In the event of a vacancy
in the office of Actuary, the Company shall appoint a successor.
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ARTICLE XI
ADMINISTRATION OF PLAN
SEC. 11.1 ADMINISTRATION BY COMPANY. The Company is the
"administrator" of the Plan for purposes of ERISA. Except as expressly otherwise
provided herein, the Company shall control and manage the operation and
administration of the Plan and make all decisions and determinations incident
thereto. In carrying out its Plan responsibilities, the Company shall have
discretionary authority to construe the terms of the Plan. Except in cases where
the Plan expressly provides to the contrary, action on behalf of the Company may
be taken by any of the following:
(a) The Board.
(b) The chief executive officer of the Company.
(c) Any person or persons, natural or otherwise, or committee, to
whom responsibilities for the operation and administration of
the Plan are allocated by the Company, by resolution of the
Board or by written instrument executed by the chief executive
officer of the Company and filed with its permanent records,
but action of such person or persons or committee shall be
within the scope of said allocation.
SEC. 11.2 CERTAIN FIDUCIARY PROVISIONS. For purposes of the
Plan:
(a) Any person or group of persons may serve in more than one
fiduciary capacity with respect to the Plan.
(b) A Named Fiduciary, or a fiduciary designated by a Named
Fiduciary pursuant to the provisions of the Plan, may employ
one or more persons to render advice with regard to any
responsibility such fiduciary has under the Plan.
(c) To the extent permitted by any applicable trust agreement or
group annuity contract a Named Fiduciary with respect to
control or management of the assets of the Plan may appoint an
investment manager or managers, as defined in ERISA to manage
(including the power to acquire and dispose of) any assets of
the Plan.
(d) At any time that the Plan has more than one Named Fiduciary,
if pursuant to the Plan provisions fiduciary responsibilities
are not already allocated among such Named Fiduciaries, the
Company, by action of the Board or chief executive officer may
provide for such allocation; except that such allocation shall
not include any responsibility, if any, in a trust agreement
to manage or control the assets of the Plan other than a power
under the trust agreement to appoint an investment manager as
defined in ERISA.
(e) Unless expressly prohibited in the appointment of a Named
Fiduciary which is not the Company acting as provided in Sec.
11.1, such Named Fiduciary by written instrument may designate
a person or persons other than such Named Fiduciary to carry
out any
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or all of the fiduciary responsibilities under the Plan of
such Named Fiduciary; except that such designation shall not
include any responsibility, if any, in a trust agreement to
manage or control the assets of the Plan other than a power
under the trust agreement to appoint an investment manager as
defined in ERISA.
(f) A person who is a fiduciary with respect to the Plan,
including a Named Fiduciary, shall be recognized and treated
as a fiduciary only with respect to the particular fiduciary
functions as to which such person has responsibility.
Each Named Fiduciary (other than the Company), each other fiduciary, each person
employed pursuant to subsection (b) above, and each investment manager shall be
entitled to receive reasonable compensation for services rendered, or for the
reimbursement of expenses properly and actually incurred in the performance of
their duties with the Plan and to payment therefor from the Fund if not paid
directly by the Participating Employers in such proportions as the Company shall
determine. However, no person so serving who already receives full-time pay from
a Participating Employer shall receive compensation from the Plan, except for
reimbursement of expenses properly and actually incurred.
SEC. 11.3 DISCRIMINATION PROHIBITED. No person or persons in
exercising discretion in the operation and administration of the Plan shall
discriminate in favor of highly compensated employees (as defined in Code
section 414(q)).
SEC. 11.4 EVIDENCE. Evidence required of anyone under this
Plan may be by certificate, affidavit, document, or other instrument which the
person acting in reliance thereon considers to be pertinent and reliable and to
be signed, made, or presented by the proper party.
SEC. 11.5 CORRECTION OF ERRORS. It is recognized that in the
operation and administration of the Plan certain mathematical and accounting
errors may be made or mistakes may arise by reason of factual errors in
information supplied to the Company or Funding Agency. The Company shall have
power to cause such equitable adjustments to be made to correct for such errors
as the Company in its discretion considers appropriate. Such adjustments shall
be final and binding on all persons.
SEC. 11.6 RECORDS. Each Participating Employer, each fiduciary
with respect to the Plan, and each other person performing any functions in the
operation or administration of the Plan or the management or control of the
assets of the Plan shall keep such records as may be necessary or appropriate in
the discharge of their respective functions hereunder, including records
required by ERISA or any other applicable law. Records shall be retained as long
as necessary for the proper administration of the Plan and at least for any
period required by said Act or other applicable law.
SEC. 11.7 GENERAL FIDUCIARY STANDARD. Each fiduciary shall
discharge his duties with respect to the Plan solely in the interests of
Participants and their beneficiaries and with the care, skill, prudence, and
diligence under the circumstances then prevailing that a prudent man acting in a
like capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims.
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SEC. 11.8 PROHIBITED TRANSACTIONS. A fiduciary with respect to
the Plan shall not cause the Plan to engage in any prohibited transaction within
the meaning of ERISA.
SEC. 11.9 CLAIMS PROCEDURE. The Company shall establish a
claims procedure consistent with the requirements of ERISA. Such claims
procedure shall provide adequate notice in writing to any Participant or
beneficiary whose claim for benefits under the Plan has been denied, setting
forth the specific reasons for such denial, written in a manner calculated to be
understood by the claimant and shall afford a reasonable opportunity to a
claimant whose claim for benefits has been denied for a full and fair review by
the appropriate Named Fiduciary of the decision denying the claim. No person
claiming a benefit under the Plan may initiate a civil action regarding the
claim until all steps under the claims procedure (including appeals) have been
completed.
SEC. 11.10 BONDING. Plan personnel shall be bonded to the
extent required by ERISA. Premiums for such bonding may, in the sole discretion
of the Company, be paid in whole or in part from the Fund. Such premiums may
also be paid in whole or in part by the Participating Employers in such
proportions as the Company shall determine. The Company may provide by agreement
with any person that the premium for required bonding shall be paid by such
person.
SEC. 11.11 WAIVER OF NOTICE. Any notice required hereunder may
be waived by the person entitled thereto.
SEC. 11.12 AGENT FOR LEGAL PROCESS. The Company shall be the
agent for service of legal process with respect to any matter concerning the
Plan, unless and until the Company designates some other person as such agent.
SEC. 11.13 INDEMNIFICATION. In addition to any other
applicable provisions for indemnification, the Participating Employers jointly
and severally agree to indemnify and hold harmless, to the extent permitted by
law, each director, each officer, and each employee (collectively referred to as
the "Indemnitee") of the Participating Employers against any and all
liabilities, losses, costs, or expenses (including legal fees) of whatsoever
kind and nature which may be imposed on, incurred by, or asserted against such
person at any time by reason of such person's services as a fiduciary in
connection with the Plan, but only if such person did not act dishonestly, or in
bad faith, or in willful violation of the law or regulations under which such
liability, loss, cost, or expense arises. The Company shall have the right, but
not the obligation, to select counsel and control the defense and settlement of
any action against the Indemnitee for which the Indemnitee may be entitled to
indemnification.
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ARTICLE XII
AMENDMENT, TERMINATION, MERGER
SEC. 12.1 AMENDMENT. Subject to the non-diversion provisions
of Sec. 9.5, the Company, by action of the Board, or by action of a person or
committee so authorized by resolution of the Board, may amend the Plan at any
time and from time to time. No amendment of the Plan shall have the effect of
changing the rights, duties, and liabilities of any Funding Agency without its
written consent. The Company agrees that promptly upon the adoption of any
amendment to the Plan it will furnish a copy of the amendment together with a
certificate evidencing its adoption to each Funding Agency then acting.
SEC. 12.2 DISCONTINUANCE OF JOINT PARTICIPATION IN PLAN BY A
PARTICIPATING EMPLOYER. A Participating Employer, by action of its board of
directors and on appropriate written notice to the Company and each Funding
Agency then acting, may discontinue its joint participation in the Plan with the
other Participating Employers. The Company shall cause a determination to be
made of the equitable part of the Fund assets held on account of Participants of
the withdrawing employer and their beneficiaries. The Company shall direct the
Funding Agency or Funding Agencies to transfer assets representing such
equitable part to a separate fund for the plan of the withdrawing employer;
provided, however, that such transfer shall be made only if and when the Company
in its sole judgment is satisfied that the transfer can be made in full
compliance with the applicable requirements of ERISA. Such withdrawing employer
may thereafter exercise, in respect of such separate fund, all the rights and
powers reserved to the Company with respect to the Fund. The plan of the
withdrawing employer shall, until amended by the withdrawing employer, continue
with the same terms as the Plan herein, except that with respect to the separate
plan of the withdrawing employer the words "Participating Employer',
"Participating Employers", and "Company" shall thereafter be considered to refer
only to the withdrawing employer. Any discontinuance of participation by a
Participating Employer shall be effected in such manner that each Participant or
beneficiary would (if the Plan and the plan of the withdrawing employer then
terminated) receive a benefit immediately after such discontinuance of
participation which is equal to or greater than the benefit he would have been
entitled to receive immediately before such discontinuance of participation if
the Plan had then terminated. No transfer of assets pursuant to this section
shall be effected until such statements with respect thereto, if any, required
by ERISA to be filed in advance thereof have been filed.
SEC. 12.3 REORGANIZATION OF PARTICIPATING EMPLOYERS. If two or
more Participating Employers are consolidated or merged or if one or more
Participating Employers acquire the assets of another Participating Employer,
the Plan shall be deemed to have continued, without termination and without a
complete discontinuance of contributions, as to all the Participating Employers
involved in such reorganization and their employees. In such event, in
administering the Plan, the corporation resulting from the consolidation, the
surviving corporation in the merger, or the employer acquiring the assets shall
be considered as a continuation of all of the Participating Employers involved
in the reorganization.
SEC. 12.4 TERMINATION. The Plan may be terminated by the
Company, by action of the Board. An employer which has discontinued its joint
participation in the Plan with the other Participating Employers shall also
have the right to terminate its separate plan which resulted from such
discontinuance at any time by action of its board of directors. Any such
termination shall be made in compliance with all applicable provisions of
ERISA. The Plan or separate plan may also be terminated
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by action of the Pension Benefit Guaranty Corporation pursuant to the provisions
of ERISA. Upon termination of the Plan, or separate plan, the following shall be
applicable:
(a) No further benefits shall accrue under the terminated plan,
and the rights of each employee thereunder to benefits accrued
to the date of such termination, to the extent then funded,
shall be nonforfeitable; provided, however, that the sole
recourse for satisfaction of such rights shall be to the Fund
and, where applicable, to the Pension Benefit Guaranty
Corporation.
(b) The Funding Agency shall receive for the Fund of the
applicable terminated plan any amount recovered under section
4045 of ERISA.
(c) The Funding Agency shall deduct from the Fund of the
terminated plan its compensation, expenses properly chargeable
thereto, and any and all taxes that may be imposed upon the
Fund by virtue of the termination of the plan or otherwise;
provided, however, that the Funding Agency may accept such
reasonable indemnity therefor from the Participating Employers
as the Funding Agency shall specify.
(d) If adequate the Fund of the terminated Plan shall then be
applied to provide, in accordance with the provisions of such
terminated plan as in effect at the time of such termination,
all benefits accrued to the date of such termination whether
vested or not.
(e) If the Fund of the terminated plan is not adequate to provide
all benefits accrued to the date of termination, the assets of
the Fund of the terminated plan shall be allocated to provide
benefits in the following order of priority subject to any
applicable regulations promulgated by the Pension Benefit
Guaranty Corporation or the Secretary of the Treasury:
(1) To provide that portion of each individual's accrued
benefit that is derived from the Participant's
contributions to the Fund, if any.
(2) In the case of benefits payable as an annuity:
(A) In the case of the benefit of a Participant
or beneficiary which was in pay status as of
the beginning of the 3-year period ending on
the termination date of the plan, to provide
each such benefit, based on the provisions
of the plan (as in effect during the 5-year
period ending on such date) under which such
benefit would be the least. The lowest
benefit in pay status during the 3-year
period shall be considered the benefit in
pay status for such period.
(B) In the case of the benefit of a Participant
or beneficiary (other than a benefit
described in subparagraph (A) above) which
would have been in pay status as of the
beginning of the 3-year period ending on the
termination date of the plan if the
Participant had retired prior to the
beginning of the 3-year period and if his
benefits had commenced as a life only
annuity as of the beginning of such period,
to provide each such benefit based on the
provisions of the plan (as in effect during
the
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5-year period ending on such date) under
which such benefit would be the least.
(3) To provide all other benefits, if any, of individuals
under the plan guaranteed under ERISA (determined
without regard to section 4022(b)(5) of said Act),
and the additional benefits, if any, which would be
so provided if section 4022(b)(6) of said Act did not
apply. In determining such benefits, section 4021 of
said Act shall be applied without regard to
subsection (c) thereof.
(4) To provide all other nonforfeitable benefits under
the plan. If the assets available are not sufficient
to satisfy in full such benefits:
(A) The assets shall be allocated to provide
individuals with such benefits accrued under
the plan as in effect at the beginning of
the 5-year period ending on the date of plan
termination.
(B) If the assets available for allocation under
subparagraph (A) above are sufficient to
satisfy in full the benefits described
therein (without regard to this subparagraph
(B)), then for purposes of subparagraph (A),
benefits of individuals thereunder shall be
determined on the basis of the plan as
amended by the most recent plan amendment
effective during such 5-year period under
which the assets available for allocation
are sufficient to satisfy in full the
benefits of such individuals, and any assets
remaining to be allocated shall be allocated
on the basis of the plan as amended by the
next succeeding plan amendment effective
during such period.
(5) To provide all other accrued benefits under the plan.
The amount allocated under any of paragraphs (1) through (5)
above with respect to any benefit shall be properly adjusted
for any allocation of assets with respect to that benefit
under any of the preceding of said paragraphs. Except as
otherwise provided in paragraph (4) above, if the assets
available for allocation under any of said paragraphs are
insufficient to satisfy in full the benefits to be provided
individuals under such paragraph, the assets shall be
allocated pro rata among such individuals on the basis of the
present value, as of the termination date of the plan, of
their respective benefits described in such paragraph. If the
Secretary of the Treasury determines that the allocation made
pursuant to this subsection results in discrimination
prohibited by Code section 401(a)(4) then, if required to
prevent the disqualification of the plan (or any trust under
the plan) the assets shall be reallocated to the extent
necessary to avoid such discrimination but only to the extent
permitted by ERISA.
(f) If all liabilities of the Plan to Participants and their
beneficiaries have been satisfied, any residual assets of the
Plan shall be returned to the Participating Employers if such
distribution does not contravene any provision of law;
provided, however, that if any asset of the Plan attributable
to employee contributions should remain after all liabilities
of the Plan to Participants and their beneficiaries have been
satisfied, such assets shall be equitably distributed to the
employees who made such contributions (or their
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beneficiaries) in accordance with their rate of contributions.
(g) If the Actuarial Equivalent present value of an individual's
entire benefit is $5,000 or less, the benefit shall be paid in
a single sum promptly after termination of the Plan; provided,
however, that payment may be deferred as provided in Sec.
12.7. In all other cases, benefits following termination of
the Plan shall be provided through purchase of an annuity
contract from an insurance company offering the same
settlement options and payment terms as are provided under the
Plan.
(h) In the event of the termination of the Plan, all Plan
provisions and any agreements with Funding Agencies relating
to the Plan shall continue to have effect for the purpose of
completing distributions in accordance with this section.
SEC. 12.5 PARTIAL TERMINATION. If there is a partial
termination of the Plan, either by operation of law, by amendment of the Plan,
or for any other reason, which partial termination shall be confirmed by the
Company, the Company shall:
(a) Determine the equitable part of the Fund assets held on
account of Participants with respect to whom the Plan is
terminated and their beneficiaries as though the partial
termination was a discontinuance of joint participation in the
Plan by a Participating Employer under Sec. 12.2.
(b) Cause that portion of the Fund allocated to those Participants
(and their beneficiaries) with respect to whom the partial
termination takes place to be treated as the Fund of a
terminated plan with respect to such persons.
(c) Cause that portion of the Fund that is not allocated to those
Participants (and their beneficiaries) with respect to whom
the partial termination takes place to continue to be held and
administered under the Plan for the benefit of the other
Participants (and their beneficiaries).
The provisions of Sec. 12.4 shall be applicable to the partially terminated
plan, to the Participants (and their beneficiaries) with respect to whom the
partial termination takes place, and to the funds allocated to such persons, as
though it constituted a separate plan; provided, however, that any residual
assets shall be credited to the portion of the Fund referred to in subsection
(c) above rather than being returned to the Participating Employers.
SEC. 12.6 MERGER, CONSOLIDATION, OR TRANSFER OF PLAN ASSETS.
In the case of any merger or consolidation of the Plan with any other plan, or
in the case of the transfer of assets or liabilities of the Plan to any other
plan, provision shall be made so that each Participant and beneficiary would (if
such other plan then terminated) receive a benefit immediately after the merger,
consolidation, or transfer which is equal to or greater than the benefit he
would have been entitled to receive immediately before the merger,
consolidation, or transfer (if the Plan had then terminated). No such merger,
consolidation, or transfer shall be effected until such statements with respect
thereto, if any, required by ERISA to be filed in advance thereof have been
filed.
SEC. 12.7 DEFERRAL OF DISTRIBUTIONS. Notwithstanding any
provisions of the Plan to the contrary, in the case of a complete or partial
termination of the Plan, the Company or the Funding
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Agency may (but is not required to) defer any distribution of benefit payments
to Participants and beneficiaries with respect to which such termination applies
until after the following have occurred:
(a) Receipt of a final determination from the Treasury Department
or any court of competent jurisdiction regarding the effect of
such termination on the qualified status of the Plan under
Code section 401(a).
(b) Appropriate adjustment of the Fund to reflect taxes, costs,
and expenses, if any, incident to such termination.
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ARTICLE XIII
MISCELLANEOUS PROVISIONS
SEC. 13.1 INSURANCE COMPANY NOT RESPONSIBLE FOR VALIDITY OF
PLAN. No insurance company that issues a contract under the Plan shall have any
responsibility for the validity of the Plan. An insurance company to which an
application may be submitted hereunder may accept such application and shall
have no duty to make any investigation or inquiry regarding the authority of the
applicant to make such application or any amendment thereto or to inquire as to
whether a person on whose life any contract is to be issued is entitled to such
contract under the Plan.
SEC. 13.2 HEADINGS. Headings at the beginning of articles and
sections hereof are for convenience of reference, shall not be considered a part
of the text of the Plan, and shall not influence its construction.
SEC. 13.3 CAPITALIZED DEFINITIONS. Capitalized terms used in
the Plan shall have their meaning as defined in the Plan unless the context
clearly indicates to the contrary.
SEC. 13.4 GENDER. Any references to the masculine gender
include the feminine and vice versa.
SEC. 13.5 USE OF COMPOUNDS OF WORD "HERE". Use of the words
"hereof", "here", "hereunder", or similar compounds of the word "here" shall
mean and refer to the entire Plan unless the context clearly indicates to the
contrary.
SEC. 13.6 CONSTRUED AS A WHOLE. The provisions of the Plan
shall be construed as a whole in such manner as to carry out the provisions
thereof and shall not be construed separately without relation to the context.
55
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ARTICLE XIV
TOP-HEAVY PLAN PROVISIONS
SEC. 14.1 KEY EMPLOYEE DEFINED. "Key Employee" means any
employee or former employee of the employer who at any time during the
determination period was an officer of the employer or is deemed to have had an
ownership interest in the employer and who is within the definition of key
employee in Code section 416(i).
SEC. 14.2 DETERMINATION OF TOP-HEAVY STATUS. The top-heavy
status of the Plan shall be determined according to the following standards and
definitions:
(a) The Plan is a Top-Heavy Plan for a Plan Year if either of the
following applies:
(1) If this Plan is not part of a required aggregation
group and the top-heavy ratio for this Plan exceeds
60 percent.
(2) If this Plan is part of a required aggregation group
of plans and the top-heavy ratio for the group of
plans exceeds 60 percent.
Notwithstanding paragraphs (1) and (2) above, the Plan is not
a Top-Heavy Plan with respect to a Plan Year if it is part of
a permissive aggregation group of plans for which the
top-heavy ratio does not exceed 60 percent.
(b) The "top-heavy ratio" shall be determined as follows:
(1) If the ratio is being determined only for this Plan
or if the aggregation group only includes defined
benefit pension plans, the top-heavy ratio is a
fraction, the numerator of which is the sum of the
present values of the accrued benefits of all Key
Employees under the Plan or plans as of the
determination date (including any part of any accrued
benefit distributed in the five-year period ending on
the determination date), and the denominator of which
is the sum of the present value of all accrued
benefits (including any part of any accrued benefit
distributed in the five-year period ending on the
determination date) of all employees under the Plan
or plans as of the determination date. (The "plans"
referred to in the preceding sentence are the plans
in the required or permissive aggregation group.)
(2) If the determination is being made for a required or
permissive aggregation group which includes one or
more defined contribution plans, the top-heavy ratio
is a fraction, the numerator of which is the sum of
account balances of all Key Employees under the
defined contribution plans and the present value of
accrued benefits under the defined benefit plans for
all Key Employees as of the determination date
(including any part of any account balance or accrued
benefit distributed in the five-year period ending on
the determination date), and the denominator of which
is the sum of the account balances under the
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defined contribution plans for all employees and the
present value of accrued benefits under the defined
benefit plans for all employees as of the
determination date (including any part of any account
balance or accrued benefit distributed in the
five-year period ending on the determination date).
(The "plans" referred to in the preceding sentence
are the plans in the required or permissive
aggregation group.) Both the numerator and
denominator of the top-heavy ratio shall be adjusted
to reflect any contribution due but unpaid as of the
determination date.
(3) For purposes of paragraphs (1) and (2), the value of
account balances and the present value of accrued
benefits will be determined as of the most recent
valuation date that falls within the 12-month period
ending on the determination date. The account
balances and accrued benefits of an employee 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, rollovers, and transfers are taken
into account will be made in accordance with Code
section 416 and the regulations thereunder. When
aggregating plans, the value of account balances and
accrued benefits will be calculated with reference to
the determination dates that fall within the same
calendar year.
(c) "Required aggregation group" means (i) each qualified plan of
the employer in which at least one Key Employee participates,
and (ii) any other qualified plan of the Employer that enables
a plan described in (i) to meet the requirements of Code
sections 401(a)(4) and 410.
(d) "Permissive aggregation group" means the required aggregation
group of plans plus any other plan or plans of the employer
which, when consolidated as a group with the required
aggregation group, would continue to satisfy the requirements
of Code sections 401(a)(4) and 410.
(e) "Determination date" for any Plan Year means the last day of
the preceding Plan Year.
(f) The "determination period" for a Plan Year is the Plan Year in
which the applicable determination date occurs and the four
preceding Plan Years.
(g) The "valuation date" is the last day of each Plan Year and is
the date as of which account balances or accrued benefits are
valued for purposes of calculating the top-heavy ratio.
(h) If an individual has not performed services for the employer
during the five-year period ending on the determination date
with respect to a Plan Year, any account balance or accrued
benefit for such individual shall not be taken into account
for such Plan Year.
SEC. 14.3 MINIMUM ACCRUED BENEFIT. If the Plan is a Top-Heavy
Plan, notwithstanding any other provisions of this Plan, each Participant who is
not a Key Employee shall
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have a minimum accrued benefit (to be provided by employer contributions and
expressed as a single life annuity, with no ancillary benefits, commencing at
age 65) equal to the applicable percentage of the Participant's average monthly
compensation for years in the testing period.
(a) For purposes of this section:
(1) The "applicable percentage" is the lesser of 2
percent multiplied by the Participant's number of
years of service with the employer, or 20 percent.
For purposes of this paragraph (1), a Participant has
a year of service for each Plan Year in which he
completes 1000 Hours of Service; provided, however,
that the following years shall not be taken into
account:
(A) Plan Years commencing before January 1,
1984.
(B) Plan Years in which the Plan is not a
Top-Heavy Plan.
(C) Plan Years in which the Participant is a Key
Employee.
(D) Plan Years that end before the Participant
attains age 18.
(E) Plan Years during which the employer did not
maintain the Plan or a predecessor plan.
(2) "Compensation" is defined in Sec. 8.12(k).
(3) "Hour of Service" is defined in Sec. 6.7(f).
(4) A Participant's "testing period" comprises the five
consecutive Plan Years during which the Participant
had the greatest aggregate compensation from the
employer, subject to the following:
(A) The Plan Years taken into account for
purposes of this paragraph shall be adjusted
for years not included in years of service
for purposes of paragraph (1) above, as
provided in Code section 416(c)(1)(D)(ii).
(B) Any Plan Year commencing after the last Plan
Year in which the Plan was a Top-Heavy Plan
shall be disregarded for purposes of this
paragraph if by disregarding such Plan Year
the Participant's average monthly
compensation for years in the testing period
will be reduced.
(b) If a Participant becomes entitled to a benefit under the Plan,
and (i) if the form of the benefit is other than a single life
annuity and/or (ii) if the benefit commences at an age other
than age 65, the benefit payable to the Participant must be at
least the Actuarial Equivalent of the minimum single life
annuity benefit commencing at age 65.
(c) A Participant's minimum accrued benefit required under this
section, to the extent
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required to be nonforfeitable under Sec. 14.4, shall not be
subject to suspension of payment under Sec. 6.7(a)(2).
(d) This section shall not apply to any Participant who is covered
under any other defined benefit plan of the employer to the
extent the minimum benefit requirement otherwise applicable
under this Plan will be satisfied by such other plan.
SEC. 14.4 VESTING SCHEDULE. If a Participant's Termination of
Employment occurs under such circumstances that he is not entitled to a benefit
under Sections 6.1-6.4, and if he was an Active Participant during a Plan Year
for which the Plan was a Top-Heavy Plan, he shall be entitled to a benefit under
this section. Except as modified by this section, such benefit shall be payable
under the terms and conditions that would be applicable to a Vested Termination
benefit under Sec. 6.4.
(a) The monthly amount of the benefit under this section shall be
an amount equal to the Participant's Accrued Monthly Pension
multiplied by the vested percentage determined according to
the number of his years of Elapsed Time, as follows:
<TABLE>
<CAPTION>
Years of Elapsed Time Vested Percentage
--------------------- -----------------
<S> <C>
Less than 2 0%
2 but less than 3 20%
3 but less than 4 40%
4 but less than 5 60%
5 or more 100%
</TABLE>
(b) This section shall not apply to a Participant who has no
Elapsed Time after the Plan becomes a Top-Heavy Plan.
(c) If the Plan ceases to be a Top-Heavy Plan and continues to be
a non-Top-Heavy Plan until the Participant's Termination of
Employment, the benefit to which the Participant is entitled
under this section shall not exceed the benefit to which he
would have been entitled if his Termination of Employment had
occurred on the date of such cessation. However, the preceding
portion of this subsection (d) shall not apply to any
Participant who has completed three years of Elapsed Time by
the end of the last Plan Year for which the Plan was a
Top-Heavy Plan.
SEC. 14.5 DEFINITION OF EMPLOYER. For purposes of this Article
XIV, the term "employer" means the Company and any trade or business entity
under Common Control with the Company.
SEC. 14.6 EXCEPTION FOR COLLECTIVE BARGAINING UNIT. Sections
14.3 and 14.4 shall not apply with respect to any employee included in a unit of
employees covered by an agreement which the Secretary of Labor finds to be a
collective bargaining agreement between employee representatives and one or more
employers if there is evidence that retirement benefits were the subject of good
faith bargaining between such employee representative and such employer or
employers.
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Schedule A
BEMIS RETIREMENT PLAN
Locations Where Hourly Paid Employees Are
Qualified Employees (Plan Sec. 2.19(a)(3))
1. Effective as of January 1, 1997:
(a) Curwood Fremont, Ohio.
(b) Curwood Bemistape Oshkosh, Wisconsin.
(c) Curwood Weldon Oshkosh, Wisconsin.
(d) Perfecseal Oshkosh, Wisconsin.
(e) Milprint Lancaster, Wisconsin.
(f) Milprint Lebanon, Pennsylvania.
(g) MACtac Scranton, Pennsylvania.
(h) Nellis, Nevada.
(i) MACtac Kansas City
(j) Bemis Hazleton, Pennsylvania.
2. Effective as of January 1, 1998:
(a) Banner Oshkosh, Wisconsin.
(b) Bemis Custom Products -- Shelbyville, Tennessee (formerly
Paramount Tennessee).
3. Effective as of January 1, 1999:
(a) Bemis Custom Products -- Longview, Texas (formerly Paramount
Texas).
(b) Morgan Adhesives Company -- Columbus, Indiana
4. Effective as of date employer became a Participating Employer:
(a) Morgan Adhesives Company -- Lawrenceville, Georgia.
Note: An hourly paid employee at a location listed in "1",
"2" or "3" above is not a Qualified Employee with
regard to service prior to the effective date shown
for that location. Hourly paid employees at
Lawrenceville Georgia are Qualified Employees
retroactive to the date Morgan Adhesives Company
became a Participating Employer.
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Appendix A
BEMIS RETIREMENT PLAN
Modifications Applicable to Certain
Employees and Former Employees of
Hayssen Manufacturing Company
Prior to April 1, 1980, Hayssen Manufacturing Company
("Hayssen") maintained the Hayssen Retirement Plan as a separate plan for the
benefit of its eligible employees. Effective as of April 1, 1980, the Hayssen
Retirement Plan was merged with and into the Bemis Retirement Plan. The
following modifications of the Bemis Retirement Plan are applicable in
determining benefits payable with respect to persons who were participants in
the Hayssen Retirement Plan and who terminated employment on or after January 1,
1989. Such persons are hereafter referred to as "Hayssen Plan Participants".
This Appendix is also applicable in determining the pension payable to any
person who was a salaried employee of Hayssen and who transferred to a position
as a salaried employee of Bemis Company, Inc. prior to July 1, 1976, and such a
person is considered to be a "Hayssen Plan Participant", provided he is a
Qualified Employee on January 1, 1980 and has a Termination of Employment on or
after January 1, 1989.
1.
Hayssen is a Participating Employer effective as of April 1,
1980.
2.
A Hayssen Plan Participant shall be deemed to have been a
Qualified Employee during his employment with Hayssen prior to April 1, 1980,
subject to the provisions of Sec. 2.19 other than Sec. 2.19(a). However, in the
case of any person who became a participant in the Hayssen Retirement Plan on or
before January 1, 1980, service with Hayssen prior to January 1, 1980 in
capacities other than as an employee compensated in whole or in part on a
regular stated salary basis or employed in an office clerical or supervisory
position shall not be excluded from service as a Qualified Employee, except to
the extent provided in Sec. 2.19(c).
3.
A Hayssen Plan Participant's years of Elapsed Time shall be
determined under Sec. 3.4; subject to the following:
(a) A Hayssen Plan Participant shall not have fewer years of
Elapsed Time for service prior to January 1, 1981 than his
years of vesting service for such service as defined in
Section 1.01(z) of the Hayssen Retirement Plan as in effect
prior to the Merger Date.
(b) If a Hayssen Plan Participant either (i) has an Employment
Commencement Date which is prior to January 1, 1976 or (ii)
has, on January 1, 1981, at least five years of vesting
service as defined in Section 1.01(z) of the Hayssen
Retirement Plan, his years of Elapsed Time shall not be less
than the years of vesting service he would have had
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under Section 1.01(z) of the Hayssen Retirement Plan if said
plan had remained in effect until his Termination of
Employment.
4.
For purposes of determining his Credited Service under Sec.
3.5, a Hayssen Plan Participant's Credited Service with respect to service as an
employee of Hayssen prior to January 1, 1976 shall be equal to his Credited
Service prior to January 1, 1976 as determined under the Hayssen Retirement Plan
as in effect on June 30, 1976; provided, however, that all service as a
Qualified Employee as defined in '2' of this Appendix shall be recognized in
computing said benefit if he became a participant in the Hayssen Retirement Plan
on or before January 1, 1980. However, in the case of any person referred to in
the last sentence of the preamble to this Appendix, his Credited Service prior
to January 1, 1976 shall be equal to the Credited Service he would have had
under the Bemis Retirement Plan if Hayssen had been a Participating Employer on
and after the person's Employment Commencement Date.
5.
Each Hayssen Plan Participant shall be a Participant in the
Plan as of April 1, 1980.
6.
The following sentences shall be added at the end of Sec. 6.5:
In the case of any person who became a participant in the
Hayssen Retirement Plan prior to January 1, 1980 and who was formerly a
Participant in the Hayssen Manufacturing Company Retirement Plan for Production,
Maintenance and Nonsupervisory Engineering Employees, said reduction of his
monthly benefit shall be based on the amount (expressed on a comparable basis
that is an Actuarial Equivalent) he would have been eligible to receive under
said plan. Said amount shall be the monthly benefit payable under said plan plus
any additional benefit attributable to his account balance under Hayssen
Manufacturing Company Employees' Trust Number 2.
7.
7.1 PRIOR SERVICE BENEFIT DESCRIBED. Prior to establishment of
the Hayssen Retirement Plan, Hayssen maintained a profit sharing plan for the
benefit of certain employees. That plan was named Hayssen Manufacturing Company
Employees' Trust Number 1 ("Trust Number 1"). Hayssen discontinued contributions
to Trust Number 1 for calendar years 1972 and following. Amounts held in Trust
Number 1 for the benefit of persons who became participants in the Hayssen
Retirement Plan, to the extent such amounts were attributable to employer
contributions, were transferred to the Hayssen Retirement Plan as of December
31, 1972. Certain benefits under the Hayssen Retirement Plan were based on the
amounts so transferred plus interest.
7.2 DEFINITION OF PRIOR SERVICE BENEFIT. A Hayssen Plan
Participant's "Prior Service Benefit" is the value of his individual account in
Trust Number 1 determined as of December 31, 1972 plus accumulated interest
thereon, determined as follows:
(a) For the period from December 31, 1972 though December 31,
1984, accumulated interest shall be computed at the annual
rate of 5%, compounded annually.
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(b) For the period commencing January 1, 1985, accumulated
interest shall be compounded annually, as of each December 31,
with interest for a particular Plan Year to be credited at the
same annual rate as was used as the interest rate in the
actuarial valuation of the Plan for the actuarial valuation
date occurring within that Plan Year. However, no interest
will be credited for periods after the Participant's death or
the date as of which his pension commences, whichever first
occurs. For the year in which an event referred to in the
preceding sentence occurs, interest on the Participant's Prior
Service Benefit will be credited up to said event based on the
interest rate used at the end of the preceding Plan Year for
the year end adjustment of Prior Service Benefits.
7.3 ELECTION TO RECEIVE PRIOR SERVICE BENEFIT. Upon
Termination of Employment, any Hayssen Plan Participant may elect to receive his
Prior Service Benefit. A Hayssen Plan Participant who continues to be employed
by a Participating Employer after attaining age 65 may also elect to receive his
Prior Service Benefit. Said elections shall be made in accordance with rules
prescribed by the Company. Said rules may prescribe the method of so electing
and the deadline by which the election must be filed with the Company. If a
Participant makes such an election, an amount equal to his Prior Service Benefit
shall be paid to him in one sum as soon as practicable after his election,
provided he is living on the payment date. If a Participant's Prior Service
Benefit is paid to him pursuant to this section, his benefit under the Plan
shall be reduced by an amount which is the Actuarial Equivalent of the Prior
Service Benefit.
If a Participant's death occurs prior to the date payment of
his Prior Service Benefit would be made under this section, no payment shall be
made under this section, but his Beneficiary may be entitled to a benefit under
7.4 of this Appendix.
7.4 OTHER DEATH BENEFITS. After all benefits payable with
respect to a Participant have been paid (including any benefits payable to the
Participant during his lifetime plus any death benefits payable under Sec. 7.1,
7.2, or 7.4), his Beneficiary shall be entitled to receive a single sum payment
equal to the amount, if any, by which (a) exceeds (b):
(a) The Participant's Prior Service Benefit.
(b) All benefits paid to the Participant during his lifetime
(including monthly pension benefits and also including any
refund of his Prior Service Benefit pursuant to the foregoing
provisions of this Appendix) plus any death benefits payable
under Sec. 7.1, 7.2, or 7.4.
7.5 DISTRIBUTIONS PRIOR TO JULY 1, 1976. In any case where a
Hayssen Plan Participant's benefit under Trust Number 1 was paid to him prior to
July 1, 1976 upon his transfer from employment with Hayssen to a position as a
salaried employee of Bemis Company, Inc., said payment shall not result in any
reduction of his Accrued Monthly Pension.
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Appendix B
BEMIS RETIREMENT PLAN
Modifications Applicable to Certain
Employees and Former Employees of
Perfecseal
On April 29, 1996, Perfecseal, Inc. ("Perfecseal"), a wholly owned
subsidiary of the Company, acquired certain assets from Paper Manufacturers
Company. Paper Manufacturers Company sponsored the Pension Plan of Paper
Manufacturers Company (the "PMCO Plan") for the benefit of its salaried
employees. Salaried employees of Perfecseal continued accruing benefits under
the PMCO Plan through December 31, 1996. Effective as of January 1, 1997, these
employees became participants in the Bemis Retirement Plan. Effective as of
February 28, 1997, certain assets and liabilities of the PMCO Plan were
transferred to this Plan. The following modifications of the Bemis Retirement
Plan are applicable in determining benefits payable with respect to persons who
were participants in the PMCO Plan and who terminated employment on or after
January 1, 1997. Such persons are hereafter referred to as "PMCO Plan
Participants".
1.
Perfecseal is a Participating Employer effective as of January 1, 1997.
2.
A PMCO Plan Participant's years of Elapsed Time shall be determined
under Sec. 3.4; subject to the following:
(a) A PMCO Plan Participant's Elapsed Time for service
prior to April 29, 1996 for purposes of determining
vesting under the Plan shall include continuous
service with Paper Manufacturers Company and its
affiliates beginning on the Participant's last date
of hire prior to April 29, 1996.
(b) A PMCO Plan Participant's Elapsed Time for purposes
of determining vesting under the Plan shall not be
less than the Years of Vesting Service he would have
had if the PMCO Plan, as in effect on December 31,
1996, had remained in effect until his Termination of
Employment.
3.
Each PMCO Plan Participant shall be a Participant in the Plan as of
January 1, 1997 (or as of the date he completes one Year of Eligibility Service,
if later).
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4.
A PMCO Plan Participant shall be eligible for Early Retirement as
defined by Sec. 4.2 of this Plan after he has attained age 55 and completed 5
years of Elapsed Time and before he attains Normal Retirement Age.
5.
For purposes of determining a PMCO Plan Participant's Accrued Monthly
Pension under Sec. 4.5, a Perfecseal Plan Participant's Accrued Monthly Pension
shall be the sum of (a) plus (b):
(a) His Accrued Benefit as of December 31, 1996
calculated in accordance with Sec. 3.1 of the PMCO
Plan in effect before the Merger. For purposes of
calculating said Accrued Benefit, pay and service
after December 31, 1996 will be disregarded.
(b) His Accrued Monthly Pension calculated under Sec. 4.5
of this Plan, based solely upon pay and service after
December 31, 1996.
6.
If assets and liabilities of the PMCO Plan with respect to a
Participant whose Termination of Employment occurred prior to January 1, 1997
are transferred to this Plan, and such Participant does not have service under
this Plan after December 31, 1996, his or her benefits will be determined under
the PMCO Plan, but will be paid by this Plan.
7.
Sec. 12.4 of the Plan is modified by adding new subsection (i) reading
as follows:
(i) Notwithstanding any of the foregoing provisions to the
contrary, if the Plan is terminated on or before January 1,
2002, the order of priority described in subsection (e) of
this section shall be modified to the extent necessary to
comply with the requirements of Code section 414(1) and any
regulations issued pursuant thereto as applicable to the
merger of the PMCO Plan with and into the Plan.
65
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Appendix C
BEMIS RETIREMENT PLAN
Modifications Applicable to Certain
Employees and Former Employees of
Paramount Packaging Corporation -Tennessee
On January 1, 1997, the Company acquired Paramount Packaging
Corporation and its subsidiaries, including Paramount Packaging Corporation -
Tennessee ("Paramount Tennessee"), a Tennessee corporation. Paramount Tennessee
sponsored the Pension Plan for Salaried and Clerical Employees of Paramount
Packaging Corporation (Tennessee) (the "Paramount Salaried Plan"), and the
Pension Plan for Production and Maintenance Employees of Paramount Packaging
Corporation (Tennessee), (the "Paramount Hourly Plan"), for the benefit of its
employees. These plans are sometimes collectively referred to as the "Paramount
Plans". The Paramount Plans were merged into the Bemis Retirement Plan effective
as of December 31, 1997.
Benefits payable with respect to participants in the Paramount Plans
who terminated employment prior to December 31, 1997 will be paid by this Plan,
but will be determined according to the terms of the Paramount Salaried Plan or
Paramount Hourly Plan, whichever is applicable, as in effect at the time the
individual terminated employment. However, Sec. 8.2 and 4.10(c) of this Plan
regarding lump sum payment of pensions having a present value of $5,000 or less
applies to said individuals, and the $5,000 amount applies regardless of the
individual's termination date.
Benefits payable with respect to persons who are employees of Paramount
Tennessee on December 31, 1997 (hereafter referred to as "Paramount Plan
Participants") will be determined under this Plan, subject to the following
terms of this Appendix:
1.
Paramount Tennessee is a Participating Employer effective as of January
1, 1998.
2.
A Paramount Plan Participant's years of Elapsed Time shall be
determined under Sec. 3.4, but shall include service with Paramount Tennessee
and its affiliates prior to January 1, 1998, on the same basis as if they had
then been under Common Control with the Company.
3.
Each Paramount Plan Participant shall be a Participant in the Plan as
of January 1, 1998 (or as of the date he completes one Year of Eligibility
Service, if later).
4.
If a person who was an employee of Paramount Tennessee on December 31,
1997 has a Termination of Employment after he has completed three but fewer than
four years of Elapsed Time, he will be 20% vested, and if his Termination of
Employment occurs after he has completed four but
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fewer than five years of Elapsed Time, he shall be 40% vested. In such cases the
Participant will be eligible for a benefit under Sec. 6.4, but the benefit
amount will be adjusted to reflect the vested percentage. The foregoing special
vesting rule applies to the individual's entire benefit, not just the portion
accrued before 1998.
5.
A Paramount Plan Participant's Accrued Monthly Pension under Sec. 4.5
shall be the sum of (a) plus (b):
(a) His Accrued Monthly Pension as of December 31, 1997 calculated
in accordance with Sec. 1.1 of the Paramount Salaried Plan or
Paramount Hourly Plan, whichever is applicable, as in effect
immediately before the merger of the Paramount Plans into this
Plan. For purposes of calculating said Accrued Monthly
Pension, service after December 31, 1997 will be disregarded.
(b) His Accrued Monthly Pension calculated under Sec. 4.5 of this
Plan, based solely upon pay and service after December 31,
1997.
6.
A Paramount Plan Participant's monthly pension will not be less than
his "Minimum Monthly Pension" determined as follows:
(a) The amount of said Minimum Monthly Pension will be the
Participant's Accrued Monthly Pension as of December 31, 1997,
calculated in accordance with Sec. 1.1 of the Paramount
Salaried Plan or Paramount Hourly Plan, whichever is
applicable, adjusted as provided in (b), (c), and (d). For
purposes of calculating said Minimum Monthly Pension, service
after December 31, 1997 will be disregarded.
(b) If the Participant's pension begins before he attains age 65,
the Minimum Monthly Pension will be reduced by 5/9 of 1% for
each month by which the commencement date precedes the end of
the month in which he attains age 65. Said reduction does not
apply if the Participant's pension begins after he attains age
65.
(c) The Minimum Monthly Pension will be multiplied by a fraction,
the numerator of which is 100 and the denominator of which is
97, to reflect the value of the life and 60 months certain
normal form of payment under the Paramount Plans.
(d) If the Participant's pension is being paid in a form other
than life only, the Minimum Monthly Pension will be adjusted
as provided in Sec. 4.10(a) of this Plan or Section 7 of this
Appendix to reflect the payment form elected.
(e) For purposes of determining whether a Paramount Plan
Participant's benefit will be paid in a single sum pursuant to
Sec. 8.2 of this Plan, and for purposes of determining the
amount of the single sum payment, the lump sum benefit will be
the amount in (i) or the amount in (ii), whichever is greater:
(i) The Actuarial Equivalent present value of a monthly
pension for the Participant's lifetime beginning the
first day of the month following his attainment of
age 65 (or following his Termination of Employment if
after he
67
<PAGE>
attains age 65), in a monthly amount equal to the
amount in (a) of section 5 of this Appendix, adjusted
as provided in (c) of section 6 of this Appendix to
reflect the value of the life and 60-months-certain
normal form of payment under the Paramount Plan.
(ii) The Actuarial Equivalent present value of a monthly
pension for the Participant's lifetime beginning the
first day of the month following the date he attains
Normal Retirement Age (as defined in Sec. 2.15 of
this Plan) or following his Termination of Employment
if after he attains Normal Retirement Age, in a
monthly amount equal to the sum of the amounts in (a)
and (b) of section 5 of this Appendix.
The Actuarial Equivalent factors in Sec. 4.10(c) of this Plan
will be used to calculate said present values. If either
amount is more than $5,000, no lump sum payment will be made,
and the Participant will instead receive a monthly pension.
7.
In addition to the optional settlements listed in Sec. 7.4 of the Plan,
a Paramount Plan Participant may elect an option providing a reduced monthly
pension payable to the Participant commencing on the same date as that upon
which payments would otherwise commence and terminating with the last monthly
payment before his death. If his death occurs on or after the due date of the
first monthly payment under the option and before 60 monthly payments have been
made to him, such benefit shall be continued to his Beneficiary until a total of
60 monthly payments have been made to him and his Beneficiary. If the
Participant elects this option, his monthly pension will be 97% of the amount
otherwise payable.
8.
Sec. 12.4 of the Plan is modified by adding new subsection (i) reading
as follows:
(i) Notwithstanding any of the foregoing provisions to the
contrary, if the Plan is terminated on or before December 31,
2002, the order of priority described in subsection (e) of
this section shall be modified to the extent necessary to
comply with the requirements of Code section 414(1) and any
regulations issued pursuant thereto as applicable to the
merger of the Paramount Plans with and into the Plan.
68
<PAGE>
Appendix D
BEMIS RETIREMENT PLAN
Modifications Applicable to Certain
Employees and Former Employees of
Paramount Packaging Corporation -Texas
On January 1, 1997, the Company acquired Paramount Packaging
Corporation and its subsidiaries, including Paramount Packaging Corporation -
Texas ("Paramount Texas"), a Texas corporation with operations at Longview,
Texas. Paramount Texas sponsored the Pension Plan for Longview Employees of
Paramount Packaging Corporation (Texas) (the "Paramount Texas Plan"), for the
benefit of its salaried and hourly employees. On December 31, 1997, the
Paramount Texas Plan was merged into the Bemis Company, Inc. Retirement Plan for
Bemis Hourly Employees (the "BHRP"). Effective as of December 31, 1998, assets
and liabilities of the BHRP with respect to the following individuals at
Longview, Texas were transferred to this Plan:
(i) Hourly employees hired before January 1, 1998 who were active
employees on January 1, 1999 ("Paramount Hourly Employees").
(ii) Salaried employees hired before January 1, 1997 who were
active employees on January 1, 1999, or who terminated
employment during 1997 or 1998 ("Paramount Salaried
Employees"). However, if such an individual terminated
employment and received a lump sum cash distribution from this
Plan prior to the date the assets were transferred from the
BHRP, his or her remaining benefit will remain in the BHRP and
will not be transfered to this Plan.
Benefits payable with respect to such persons will be determined under
this Plan, subject to the terms of this Appendix. Benefits for other
participants in the Paramount Texas Plan (I.E., hourly employees who terminated
before January 1, 1999 or salaried employees who terminated before January 1,
1997) will be paid by the BHRP.
1.
Such an individual's Elapsed Time includes service with Paramount Texas
and its affiliates prior to January 1, 1997 on the same basis as if they had
then been under Common Control with the Company.
2.
Such employees will be eligible to participate in this Plan as of
whichever of the following dates is applicable:
(1) For Paramount Salaried Employees, January 1, 1997.
(2) For Paramount Hourly Employees, January 1, 1999.
3.
If a person who was a participant in the Paramount Texas Plan on
December 31, 1997 has a Termination of Employment after he has completed three,
but fewer than four years of Elapsed Time,
69
<PAGE>
he will be 20% vested, and if his Termination of Employment occurs after he has
completed four, but fewer than five years of Elapsed Time, he shall be 40%
vested. In such cases, the Participant will be eligible for a benefit under Sec.
6.4, but the benefit amount will be adjusted to reflect the vested percentage.
The foregoing special vesting rule applies to the individual's entire benefit.
4.
For Paramount Salaried Employees, the Accrued Monthly Pension under
Sec. 4.5 means the sum of (a) plus (b):
(a) $15 multiplied by his credited service through December 31,
1996 determined under the Paramount Texas Plan.
(b) His Accrued Monthly Pension calculated under Sec. 4.5 of this
Plan, based solely upon pay and service after December 31,
1996.
For Paramount Hourly Employees, the Accrued Monthly Pension under Sec.
4.5 means the sum of (c) plus (d) plus (e):
(c) $15 multiplied by his credited service through December 31,
1997 determined under the Paramount Texas Plan.
(d) $15 multiplied by his credited service during 1998 determined
under the BHRP.
(e) His Accrued Monthly Pension calculated under Sec. 4.5 of this
Plan, based solely upon pay and service after December 31,
1998.
5.
Such an employee's monthly pension will not be less than his "Minimum
Monthly Pension" determined as follows:
(a) The amount of said Minimum Monthly Pension will be the
Participant's Accrued Monthly Pension as of December 31, 1997,
calculated in accordance with Sec. 1.1 of the Paramount Texas
Plan, adjusted as provided in (b), (c), and (d). For purposes
of calculating said Minimum Monthly Pension, service after
December 31, 1997 will be disregarded.
(b) If the Participant's pension begins before he attains age 65,
the Minimum Monthly Pension will be reduced by 5/9 of 1% for
each month by which the commencement date precedes the end of
the month in which he attains age 65. Said reduction does not
apply if the Participant's pension begins after he attains age
65.
(c) The Minimum Monthly Pension will be multiplied by a fraction,
the numerator of which is 100 and the denominator of which is
97, to reflect the value of the life and 60 months certain
normal form of payment under the Paramount Texas Plan.
(d) If the Participant's pension is being paid in a form other
than life only, the Minimum Monthly Pension will be adjusted
as provided in Sec. 4.10(a) of this Plan or Section 6 of this
Appendix to reflect the payment form elected.
70
<PAGE>
(e) For purposes of determining whether the benefit will be paid
in a single sum pursuant to Sec. 8.2 of this Plan, and for
purposes of determining the amount of the single sum payment,
the lump sum benefit will be the amount in (i) or the amount
in (ii), whichever is greater:
(i) The Actuarial Equivalent present value of a monthly
pension for the Participant's lifetime beginning the
first day of the month following his attainment of
age 65 (or following his Termination of Employment if
after he attains age 65), in a monthly amount equal
to the amount in (a) adjusted as provided in (c) to
reflect the value of the life and 60-months-certain
normal form of payment under the Paramount Texas
Plan.
(ii) The Actuarial Equivalent present value of a monthly
pension for the Participant's lifetime beginning the
first day of the month following the date he attains
Normal Retirement Age (as defined in Sec. 2.15 of
this Plan) or following his Termination of Employment
if after he attains Normal Retirement Age, in a
monthly amount determined under Section 4 of this
Appendix.
The Actuarial Equivalent factors in Sec. 4.10(c) of this Plan
will be used to calculate said present values. If either
amount is more than $5,000, no lump sum payment will be made,
and the Participant will instead receive a monthly pension.
6.
In addition to the optional settlements listed in Sec. 7.4 of the Plan,
Paramount Salaried Employees and Paramount Hourly Employees may elect an option
providing a reduced monthly pension payable to the Participant commencing on the
same date as that upon which payments would otherwise commence and terminating
with the last monthly payment before his death. If his death occurs on or after
the due date of the first monthly payment under the option and before 60 monthly
payments have been made to him, such benefit shall be continued to his
Beneficiary until a total of 60 monthly payments have been made to him and his
Beneficiary. If the Participant elects this option, his monthly pension will be
97% of the amount otherwise payable.
7.
Sec. 12.4 of the Plan is modified by adding new subsection (i) reading
as follows:
(i) Notwithstanding any of the foregoing provisions to the
contrary, if the Plan is terminated on or before December 31,
2003, the order of priority described in subsection (e) of
this section shall be modified to the extent necessary to
comply with the requirements of Code section 414(1) and any
regulations issued pursuant thereto as applicable to the
merger of the Paramount Texas Plan into the BHRP and the
transfer of assets from the BHRP to this Plan.
71
<PAGE>
EXHIBIT 10(g) -- BEMIS COMPANY, INC. LONG TERM DEFERRED COMPENSATION PLAN
- -------------------------------------------------------------------------
AMENDED AND RESTATED
BEMIS COMPANY, INC.
LONG TERM DEFERRED COMPENSATION PLAN
(AS OF AUGUST 4, 1999)
Section 1. PURPOSE OF PLAN. The purpose of the Bemis Company,
Inc. Long Term Deferred Compensation Plan (the "Plan") is to enable key
executives and directors to accumulate additional funds for retirement or other
future needs by deferring current income. The plan is intended to qualify as an
unfunded plan for a select group of management or highly compensated employees
under Labor Department Reg. 2520.104-23, and will be construed and administered
consistent with that intent.
Section 2. DEFINITIONS. The following definitions shall apply
for purposes of this Plan:
(a) "Account" means an Account established pursuant to Section 6.
(b) "Beneficiary" means the person or persons a Participant
designates as such on his or her Participation Agreement or by
means of a separate written designation filed with the
Company. The Participant may alter or revoke such designation
without the consent of the Beneficiary. If there is no such
designation in effect at the time of the Participant's death,
or none of the designated Beneficiaries survives the
Participant, the Participant's estate shall be the
Beneficiary. If a Beneficiary survives the Participant, but
dies before payment of all amounts to which the Beneficiary is
entitled, any remaining payments will be made to the
Beneficiary's estate, unless the Participant designates
otherwise.
(c) "Board" means the board of directors of the Company, and
includes any executive committee thereof authorized to act for
the board of directors.
(d) "Committee" means the Bemis Employee Benefits Committee.
(e) "Company" means Bemis Company, Inc., a Missouri corporation.
(f) "Participant" means an individual designated as such pursuant
to Section 4.
(g) "Participating Employer" means the Company and any subsidiary
or affiliate of the Company which employs one or more
Participants.
(h) "Participation Agreement" is the agreement entered into
between a Participant and the Company regarding participation
in this Plan.
(i) "Plan Year" means the twelve month period ending each December
31, and corresponds to the fiscal year of the Participating
Employers.
<PAGE>
(j) "Termination of Service" of a Participant who is an employee
of a Participating Employer shall be deemed to occur upon the
happening of any event which, under the policy of the Company,
results in the termination of the employer-employee
relationship; provided, however, that Termination of Service
shall not be deemed to occur upon any transfer between
Participating Employers. In the case of Company directors who
are not employees, "Termination of Service" for purposes of
the Plan means the date the individual ceases to be a
director.
Section 3. ADMINISTRATION OF PLAN. The Plan shall be
administered in behalf of the Company by the Committee, subject to the
following:
(a) The Committee shall have discretionary authority to construe
the terms of the Plan and to make all decisions and
interpretations incident thereto. The Committee may from time
to time adopt such rules for the administration of the Plan as
it deems appropriate.
(b) The decision of the Committee on any matter affecting the Plan
or the rights and obligations arising under the Plan shall be
final and binding upon all persons.
(c) The Committee shall have authority to designate employees of
the Participating Employers as Participants.
(d) The Committee shall enter into a Participation Agreement with
each Participant. Such Agreements may be executed in behalf of
the Committee by one or more members thereof.
(e) As of the beginning of each Plan Year the Committee shall
approve the value of each Account and shall review all other
calculations made under the Plan.
Section 4. ELIGIBILITY TO PARTICIPATE. Participants who are
employees shall be designated by the Committee from among key executives of the
Participating Employers. In addition, each director of the Company who is not an
employee is a Participant. The terms of a Participant's deferral election shall
be set forth in a Participation Agreement executed by the Participant and
Committee.
Section 5. DEFERRAL OF COMPENSATION. Each Plan Year a
Participant may elect to have his bonus or director fees with respect to that
Plan Year reduced by an amount or percentage designated by the Participant. Said
elections are subject to the following:
(a) The reduction may be designated as a percentage of the bonus
or director fees, as a dollar amount, or as a combination of
the two. (For example, the Participant may direct a deferral
equal to 50% of his or her bonus to the extent the bonus
exceeds $10,000.) No particular formula need be used, provided
the deferral formula is clearly stated in the Participant's
Participation Agreement.
(b) The reduction must be specified in a written Participation
Agreement filed with the Committee. Participation Agreements
are subject to the following:
(1) Participation Agreements with respect to bonuses
must be filed on or before June 30 of the year in
which the bonus is earned.
2
<PAGE>
(2) However, if an employee first becomes a participant
after June 1 of a Plan Year, he may elect a deferral
not later than thirty days after the date he becomes
a participant; provided, however, that any such
election with respect to bonuses earned in a
particular Plan Year be made not later than December
24 of that Plan Year.
(3) Elections by a non-employee director with regard to
deferral of director fees must be made not later
than ten days prior to the start of the first
calendar quarter during which director fees are to
be deferred.
(4) However, a non-employee director may make his
initial deferral election not later than thirty days
after the date he becomes a director.
(c) The amount by which a Participant's bonus or director fees is
reduced will be credited to his Account as provided in Section
6.
Section 6. PARTICIPANT ACCOUNTS. One or more Accounts shall be
established for each Participant who elects to defer compensation pursuant to
Section 5, subject to the following:
(a) As part of his election to defer all or a part of his annual
bonus or director fees, the Participant shall designate
whether the deferral amount will be credited 100% to Account
A, 100% to Account B, or 50% to Account A and 50% to Account
B. Account A will be credited with interest as specified in
subsection (b). Account B will be adjusted up or down to
reflect the market performance and dividends on common stock
of the Company, as provided in subsection (c). Bonus amounts
which are deferred will be credited to Account A and/or
Account B as of January 1 of the year in which the bonus would
otherwise be paid to the Participant. For example, bonuses
earned with respect to 1995 would normally be paid to the
Participant early in 1996 and the deferred portion of any such
bonus will be credited to the appropriate deferred
compensation Account as of January 1, 1996. Director fees
which are deferred will be credited to Account A and/or
Account B as of the first day of the month in which the
director fees would have been paid but for the deferral.
(b) Amounts a Participant elects to have credited to his Account A
will be credited with interest each Plan Year at an annual
rate equal to the published prime rate at Norwest Bank
Minnesota, N.A. on the first business day of said Plan Year.
Said interest will be accrued and compounded quarterly.
(c) Amounts a Participant elects to have credited to his Account B
will be adjusted to reflect the performance of common stock of
the Company as follows:
(1) Amounts credited to Account B as of the first day of
any month as a result of a non-employee director's
election to defer director fees, will be converted
to phantom units by dividing the dollar amount
credited by the closing price of a share of the
Company's common stock on the New York Stock
Exchange on the first business day of that month.
(2) Amounts credited to Account B as of any January 1 as
a result of an employee's election to defer all or
part of his annual bonus will be converted to
phantom units by dividing the dollar amount credited
by the average closing price of a share of the
3
<PAGE>
Company's common stock on the New York Stock
Exchange on the last 20 trading days of the
preceding December.
(3) Phantom units outstanding on the record date for a
dividend on the Company's common stock will be
credited with dividends on said phantom units in a
dollar amount per unit equal to the actual dividend
on the Company's common stock. Each such dividend
will be converted to additional phantom units as of
the dividend payment date with the number of
additional units to be determined by dividing the
aggregate dividend on the existing phantom units by
the closing price of a share of the Company's common
stock on the New York Stock Exchange on said
dividend payment date.
(4) As of the first business day of any month in which a
payment is to be made to a Participant or a
Beneficiary under the Plan, the phantom units with
respect to which payment is being made will be
converted back to a dollar amount by multiplying
each phantom unit by the average closing price of a
share of the Company's common stock on the New York
Stock Exchange on the last 20 trading days of the
preceding month.
(5) The Committee may adjust the number of phantom units
credited to a Participant's Account to reflect the
effect of stock dividends, splits, reverse splits,
or any other adjustments for which the Committee
deems such an adjustment to be appropriate.
(d) More than one Account A or Account B may be established for a
Participant to reflect changes in the Participant's election
with regard to timing of benefit payouts. For example, if a
Participant directs that his bonuses earned in 1994 through
1996 will be paid at Termination of Service, while his bonuses
earned in 1997 and 1998 will be paid beginning in the year
2010, separate Accounts A and B would be established to
reflect the separate payout elections.
(e) During the Plan Year in which the Participant has a
Termination of Service, he may direct that all or any part of
his units in Account B be converted to a fixed dollar amount
and transferred to Account A. The fixed dollar amount shall be
determined as of January 1 of the Plan Year following the Plan
Year in which the election is made and will be determined by
multiplying the number of phantom units which are being
converted by the average closing price of a share of the
Company's common stock on the New York Stock Exchange on the
last 20 trading days of the preceding December.
Section 7. PAYMENT OF BENEFITS. As part of his deferral
election, a Participant shall designate the year or years in which the deferred
amounts will be paid to him. A Participant may designate that the entire amount
will be paid in one year, or that payment will be made in annual installments
over a period of five or ten years beginning with a designated year. Such
elections are subject to the following:
(a) A designation may designate a particular year for commencement
of payments (e.g., 2010) or the commencement date may be by
reference to the Participant's Termination of Service. If a
particular year is designated, it must be a year commencing
more than six months after the date the deferred amounts would
have been paid but for the deferral election.
(b) If the Participant designates that payments will occur over a
period of five or ten years, the amount payable in a
particular year will be equal to his Account balance divided
by the
4
<PAGE>
number of remaining installments including the current
installment. Payments will come pro rata from Account A and
Account B, in proportion to the relative values of the
Accounts from which payment is being made.
(c) In the event of a Participant's death, payments will be made
to his Beneficiary in installments over the five year period
beginning with the year following the Participant's death.
However, a Participant may as part of his deferral election
designate some other form of payment with regard to death
benefits, provided, however that in any event all death
benefit payments must be completed not later than ten years
following the Participant's death.
(d) Amounts payable in a particular Plan Year will be paid in
January of that Plan Year.
Section 8. MISCELLANEOUS PROVISIONS.
(a) No Participant of Beneficiary shall have any right to assign,
pledge, transfer or otherwise hypothecate this Plan or the
payments hereunder, in whole or in part. Benefits under this
Plan will not be subject to execution, attachment, garnishment
or similar process.
(b) This Plan constitutes the company's unconditional promise to
pay the amounts which become payable pursuant to the terms
hereof. A Participant's rights are solely those of an
unsecured creditor. This Plan does not give any Participant or
Beneficiary a security interest in any specific assets of the
Company. Accounts are for bookkeeping purposes only, and do
not require any segregation of assets.
(c) The Committee may in its sole discretion arrange for payment
by each Participating Employer of the amounts the Committee
determines are attributable to service with that Participating
Employer.
(d) In the event of a dispute over whether a Participant is
eligible for a benefit hereunder (or the amount thereof), the
Participant is responsible for paying any costs he or she
incurs in pursuing said claim, including his or her legal
expenses and attorney fees, and the Company is responsible for
payment of any costs, legal expenses and attorney fees it
incurs.
(e) This Agreement shall not be construed as a contract of
employment and does not restrict the right of the Company or
any other Participating Employer to discharge the Participant
or the right of the Participant to terminate employment.
(f) The provisions of this Agreement shall be construed and
enforced according to the laws of Minnesota.
(g) This Agreement shall be binding upon and for the benefit of
the successors and assigns of the Company, whether by way of
merger, consolidation, operation of the law, assignment,
purchase or other acquisition of substantially all of the
assets or business of the Company, and any such successor or
assign shall absolutely and unconditionally assume all of the
Company's obligations hereunder.
(h) In addition to any other applicable provisions of
indemnification, the Company agrees to indemnify and hold
harmless, to the extent permitted by law, each member of the
5
<PAGE>
Committee (collectively referred to herein as "Indemnitee")
against any and all liabilities, losses, costs or expenses
(including legal fees) of whatsoever kind and nature which may
be imposed on, reasonably incurred by or asserted against such
person at any time by reason of such person's services in
connection with the Plan, but only if such person did not
dishonestly or in bad faith or in willful violation of the law
or regulations under which such liability, loss, cost or
expense arises. The Company shall have the right, but not the
obligation, to select counsel and control the defense and
settlement of any action against the Indemnitee for which the
Indemnitee may be entitled to indemnification under this
provision.
(i) The Plan may be amended from time to time by the Company, by
action of the Board. The Board may delegate authority to amend
the Plan to the Committee.
6
<PAGE>
EXHIBIT 18 - LETTER REGARDING CHANGE IN ACCOUNTING PRINCIPLE
BEMIS COMPANY, INC. AND SUBSIDIARIES
PRICEWATERHOUSECOOPERS LLP PREFERABILITY LETTER
REGARDING CHANGE TO FIFO INVENTORY METHOD
To the Board of Directors
of Bemis Company, Inc.
Dear Directors:
We have been furnished with a copy of the Corporation's Form 10-Q for the
quarter ended June 30, 1999. Note 1 therein describes a change in the method of
determining the cost of inventories from the last-in, first-out (LIFO) method to
the first-in, first-out (FIFO) method.It should be understood that the
preferability of one acceptable method of inventory accounting over another has
not been addressed in any authoritative accounting literature and in arriving at
our opinion expressed below, we have relied on management's business planning
and judgment.Based upon our discussions with management and the stated reasons
for the change, we believe that such change represents, in your circumstances,
the adoption of a preferable alternative accounting principle for inventories in
conformity with Accounting Principles Board Opinion No. 20.
We have not made an audit in accordance with generally accepted auditing
standards of the financial statements of Bemis Company, Inc. for the three-month
or six-month periods ended June 30, 1999, or June 30, 1998, and accordingly, we
express no opinion thereon or on the financial information filed as part of the
Form 10-Q of which this letter is to be an exhibit.
Yours very truly,
/s/PricewaterhouseCoopers LLP
PRICEWATERHOUSECOOPERS LLP
Minneapolis, Minnesota
July 20, 1999
<PAGE>
EXHIBIT 19 - FINANCIAL STATEMENTS FURNISHED TO SECURITY HOLDERS
BEMIS COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
------------------------ ------------------------
1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> < C> <C>
Net sales ............................................................. $ 481,259 $ 470,595 $ 931,866 $ 922,086
Costs and expenses:
Cost of products sold ............................................... 372,956 369,449 727,105 32,279
Selling, general and
administrative expenses ........................................... 48,049 46,370 98,898 92,998
Research and development ............................................ 3,653 3,113 6,156 6,021
Interest expense .................................................... 5,198 5,627 10,342 10,687
Other costs (income) ................................................ (864) (189) 5,307 (942)
Minority interest in net income ..................................... 976 1,086 1,929 2,014
--------- --------- --------- ---------
Income before income taxes ............................................ 51,291 45,139 82,129 78,849
Provision for income taxes .......................................... 19,700 17,500 31,800 30,500
--------- --------- --------- ---------
Net income ............................................................ $ 31,591 $ 27,639 $ 50,329 $ 48,349
========= ========= ========= =========
Basic earnings per share of common stock .............................. $ .60 $ .52 $ .96 $ .91
========= ========= ========= =========
Diluted earnings per share of common stock ............................ $ .60 $ .51 $ .96 $ .90
========= ========= ========= =========
Cash dividends paid per share of common stock ......................... $ .23 $ .22 $ .46 $ .44
========= ========= ========= =========
Average common shares and common
stock equivalents outstanding ....................................... 52,616 53,710 52,592 53,684
========= ========= ========= =========
</TABLE>
<PAGE>
EXHIBIT 19 - FINANCIAL STATEMENTS FURNISHED TO SECURITY HOLDERS
BEMIS COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
Jun 30 Dec 31
ASSETS 1999 1998
---- ----
<S> <C> <C>
Cash ...................................................................... $ 19,494 $ 23,738
Accounts receivable - net ................................................. 258,905 246,676
Inventories ............................................................... 267,329 241,585
Prepaid expenses and deferred charges ..................................... 34,846 34,912
----------- -----------
Total current assets ................................................. 580,574 546,911
----------- -----------
Property and equipment, net ............................................... 744,282 740,101
Excess of cost of investments in
subsidiaries over net assets acquired ................................... 154,740 160,819
Other assets .............................................................. 19,636 34,195
----------- -----------
Total ................................................................ 174,376 195,014
----------- -----------
TOTAL ASSETS .............................................................. $ 1,499,232 $ 1,482,026
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of long-term debt ......................................... $ 2,749 $ 2,946
Short-term borrowings ..................................................... 3,449 3,553
Accounts payable .......................................................... 195,554 193,088
Accrued salaries and wages ................................................ 28,719 31,629
Accrued income and other taxes ............................................ 22,873 14,397
----------- -----------
Total current liabilities ............................................ 253,344 245,613
Long-term debt, less current portion ...................................... 369,166 371,363
Deferred taxes ............................................................ 85,389 84,679
Other liabilities and deferred credits .................................... 59,389 54,655
----------- -----------
Total liabilities .................................................... 767,288 756,310
----------- -----------
Minority interest ......................................................... 37,582 37,862
STOCKHOLDERS' EQUITY:
Common stock (59,098,203 and 59,056,047 shares) ......................... 5,910 5,906
Capital in excess of par value .......................................... 181,957 181,908
Retained income ......................................................... 734,628 708,362
Other comprehensive income (loss) ....................................... 25,884) (6,116)
Common stock held in treasury (6,788,088 and 6,786,889 shares) .......... (202,249) (202,206)
----------- -----------
Total stockholders' equity ............................................ 694,362 687,854
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ................................ $ 1,499,232 $ 1,482,026
=========== ===========
</TABLE>
<PAGE>
EXHIBIT 19 - FINANCIAL STATEMENTS FURNISHED TO SECURITY HOLDERS
BEMIS COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
Six Months Ended
June 30
------------------------
1999 1998
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income ................................................................ $ 50,329 $ 48,349
NON-CASH ITEMS:
Depreciation and amortization ........................................... 50,561 45,725
Minority interest in net income ......................................... 1,929 2,014
Deferred income taxes, non-current portion .............................. 1,097 (728)
Undistributed earnings of affiliated companies .......................... 5,729 (509)
(Gain) loss on sale of property and equipment ........................... 125 (17)
--------- ---------
Cash provided by operations ............................................... 109,770 94,834
Change in working capital, net of effects of
acquisitions and dispositions ........................................... (32,400) (882)
Net change in deferred charges and credits ................................ 4,732 (2,446)
--------- ---------
Net cash provided by operating activities ................................. 82,102 91,506
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property and equipment ....................................... (58,349) (74,828)
Business acquisitions ..................................................... 1,424) (46,319)
Proceeds from sale of property and equipment .............................. 974 1,419
Other ..................................................................... 16 2
--------- ---------
Net cash used in investing activities ..................................... (58,783) (119,726)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Change in long-term debt excluding debt assumed in
business acquisitions ................................................... 2,070) 47,454
Change in short-term debt ................................................. 169 (329)
Cash dividends paid ....................................................... (24,063) (23,486)
Subsidiary dividends to minority stockholders ............................. (1,835)
Common stock purchased for the treasury ................................... (43)
Stock incentive programs and related tax effects .......................... 53 7,388
--------- ---------
Net cash (used) provided by financing activities .......................... (25,954) 29,192
--------- ---------
Effect of exchange rates on cash .......................................... (1,609) (38)
--------- ---------
Net (decrease) increase in cash ........................................... ($ 4,244) $ 934
========= =========
</TABLE>
<PAGE>
EXHIBIT 19 - FINANCIAL STATEMENTS FURNISHED TO SECURITY HOLDERS
BEMIS COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Capital In Other Common Total
Common Excess Of Retained Comprehensive Stock Held Stockholder's
(IN THOUSANDS OF DOLLARS) Stock Par Value Income Income (Loss) In Treasury Equity
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1995, as
previously reported $5,781 $147,119 $498,167 $8,590 ($146,849) $512,808
Cumulative effect on prior years of
change in accounting for inventory
from the LIFO to FIFO method 31,553 31,553
--------------------------------------------------------------------------
Balance at January 1, 1996, as restated $5,781 $147,119 $529,720 $8,590 ($146,849) $544,361
--------------------------------------------------------------------------
Net income for 1996, as previously
reported 101,081 101,081
1996 net income adjustment for LIFO
to FIFO change 1,956 1,956
Translation adjustment for 1996 (3,917) (3,917)
Pension liability adjustment, net of
$948 tax benefit 1,546 1,546
--------
Total comprehensive income 100,666
--------
Cash dividends paid on common stock,
$. 72 per share (37,830) (37,830)
Stock incentive programs and related
tax effects 2 310 312
Common stock transactions related to an
acquisition of a subsidiary company 7 2,052 2,059
Purchase of 292,000 shares of common
stock (8,962) (8,962)
--------------------------------------------------------------------------
Balance at December 31, 1996, as restated $5,790 $149,481 $594,927 $6,219 ($155,811) $600,606
--------------------------------------------------------------------------
Net income for 1997, as previously
reported 107,584 107,584
1997 net income adjustment for LIFO to
FIFO change (6,160) (6,160)
Translation adjustment for 1997 (11,109) (11,109)
Pension liability adjustment, net of $842
tax benefit (1,373) (1,373)
--------
Total comprehensive income 88,942
--------
Cash dividends paid on common stock, $.80
per share (42,418) (42,418)
Stock incentive programs and related tax
effects 4 47 51
Common stock transactions related to an
acquisition of a subsidiary company 70 25,034 25,104
Purchase of 139,429 shares of common stock (5,051) (5,051)
--------------------------------------------------------------------------
Balance at December 31, 1997, as restated $5,864 $174,562 $653,933 ($6,263) ($160,862) $667,234
--------------------------------------------------------------------------
Net income for 1998, as previously reported 111,432 111,432
1998 net income adjustment for LIFO to FIFO
change (10,302) (10,302)
Translation adjustment for 1998 (72) (72)
Pension liability adjustment, net of $102
tax benefit 219 219
--------
Total comprehensive income 101,277
--------
Cash dividends paid on common stock, $.88
per share (46,701) (46,701)
Stock incentive programs and related tax
effects 42 7,346 7,388
Purchase of 1,110,843 shares of common stock (41,344) (41,344)
--------------------------------------------------------------------------
Balance at December 31, 1998, as restated $5,906 $181,908 $708,362 ($6,116) ($202,206) $687,854
--------------------------------------------------------------------------
Net income for first six months of 1999 50,329 50,329
Translation adjustment for first six months
of 1999 (19,768) (19,768)
--------
Total comprehensive income 30,561
--------
Cash dividends paid on common stock, $.46
per share (24,063) (24,063)
Stock incentive programs and related tax
effects 4 49 53
Purchase of 1,199 shares of common stock (43) (43)
--------------------------------------------------------------------------
Balance at June 30, 1999 $5,910 $181,957 $734,628 ($25,884) ($202,249) $694,362
==========================================================================
</TABLE>
<PAGE>
EXHIBIT 19 - FINANCIAL STATEMENTS FURNISHED TO SECURITY HOLDERS
BEMIS COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. INVENTORY ACCOUNTING CHANGE
Inventories are valued at the lower of cost, using the first-in,
first-out (FIFO) method, or market. During the second quarter of 1999, the
Company changed its method of determining the cost of inventories from the
last-in, first-out (LIFO) method to the FIFO valuation method. Management
believes the change from LIFO to FIFO inventory valuation method benefits the
Company by providing the best matching of the applicable raw material cost of
a unit of product to the product's selling price and, therefore, presents a
clearer picture of operating results. The accounting change has been applied
to prior years by retroactively restating the financial statements, which are
available by reference to the Company's mid-August 1999, Form 8-K filing with
the United States Securities and Exchange Commission. All financial statements
and data included in this June 30, 1999, Form 10-Q filing, reflect the impact
of this accounting principle change.
NOTE 2. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all the
information and footnotes necessary for a comprehensive presentation of
financial position and results of operation. It is management's opinion,
however, that all material adjustments (consisting of normal recurring
accruals) have been made which are necessary for a fair financial statement
presentation. The results for the interim period are not necessarily
indicative of the results to be expected for the year.
For further information, refer to the consolidated financial statements
and footnotes included in the Company's annual report on Form 10-K for the
year ended December 31, 1998.
NOTE 3. TAXES BASED ON INCOME
The Company's 1999 effective tax rate of 39% differs from the federal
statutory rate of 35% primarily due to state and local income taxes.
<PAGE>
NOTE 4. SEGMENTS OF BUSINESS
The Registrant's business activities are organized around its two
principal business segments, Flexible Packaging and Pressure Sensitive
Materials. Both internal and external reporting conform to this organizational
structure with no significant differences in accounting policies applied. The
Registrant evaluates the performance of its segments and allocates resources
to them based on operating profit which is defined as profit before general
corporate expense, interest expense, income taxes, and minority interest. A
summary of the Registrant's business activities reported by its two business
segments follows:
<TABLE>
<CAPTION>
For Six Months Ended
-------------------------
June 30,
-------------------------
Business Segments (In Millions Of Dollars) 1999 1998
- --------------------------------------------------------------------------------------
<S> <C> <C>
Net Sales to Unaffiliated Customers:
Flexible Packaging $ 693.8 $ 681.0
Pressure Sensitive Materials 238.2 241.1
Intersegment Sales:
Flexible Packaging (0.1) (0.1)
Pressure Sensitive Materials (0.0) (0.1)
--------- ---------
Total $ 931.9 $ 922.1
========= ========
Operating Profit and Pretax Profit:
Flexible Packaging $ 81.6 $ 74.0
Pressure Sensitive Materials 22.4 26.6
-------- --------
Total operating profit 104.0 100.6
General corporate expenses (9.7) (8.9)
Interest expense (10.3) (10.9)
Minority interest in net income (1.9) (2.0)
-------- --------
Income before income taxes $ 82.1 $ 78.8
======== ========
Identifiable Assets:
Flexible Packaging $ 1,159.2 $ 1,128.0
Pressure Sensitive Materials 295.4 291.4
-------- --------
Total identifiable assets 1,454.6 1,419.4
Corporate assets 44.6 50.8
-------- --------
Total $ 1,499.2 $ 1,470.2
======== ========
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE JUNE 30,
1999, CONSOLIDATED STATEMENT OF INCOME AND CONSOLIDATED BALANCE SHEET AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 19,494
<SECURITIES> 0
<RECEIVABLES> 258,905
<ALLOWANCES> 0
<INVENTORY> 267,329
<CURRENT-ASSETS> 580,574
<PP&E> 1,180,099
<DEPRECIATION> 435,817
<TOTAL-ASSETS> 1,499,232
<CURRENT-LIABILITIES> 253,344
<BONDS> 369,166
0
0
<COMMON> 5,910
<OTHER-SE> 688,452
<TOTAL-LIABILITY-AND-EQUITY> 1,499,232
<SALES> 931,866
<TOTAL-REVENUES> 931,866
<CGS> 727,105
<TOTAL-COSTS> 727,105
<OTHER-EXPENSES> 5,307
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,342
<INCOME-PRETAX> 82,129
<INCOME-TAX> 31,800
<INCOME-CONTINUING> 50,329
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 50,329
<EPS-BASIC> .96
<EPS-DILUTED> .96
</TABLE>
