_________________________________________________________________
_________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to __________
Commission File Number 1-6117
SOUTHDOWN, INC.
(Exact name of registrant as specified in its charter)
Louisiana 72-0296500
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1200 Smith Street
Suite 2400
Houston, Texas 77002
(Address of principal
executive offices) (Zip Code)
Registrant's telephone number, including area code:(713)650-6200
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
At July 31, 1994 there were 17.3 million common shares
outstanding.
_________________________________________________________________
_________________________________________________________________<PAGE>
SOUTHDOWN, INC. AND SUBSIDIARY COMPANIES
INDEX
Page
No.
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Consolidated Balance Sheet
June 30, 1994 and December 31, 1993 1
Statement of Consolidated Earnings
Three months and six months ended
June 30, 1994 and 1993 2
Statement of Consolidated Cash Flows
Six months ended June 30, 1994 and 1993 3
Statement of Consolidated Revenues
and Operating Earnings
by Business Segment
Three months and six months ended
June 30, 1994 and 1993 4
Statement of Shareholders' Equity
Six months ended June 30, 1994 4
Notes to Consolidated Financial Statements 5
Independent Accountants' Review Report 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
Part II. OTHER INFORMATION
Item 1. Legal Proceedings 17
Item 6. Exhibits and Reports on Form 8-K 18<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
SOUTHDOWN, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET
(unaudited)
(in millions)
----------------------
June 30, December 31,
--------- ------------
1994 1993
--------- ------------
ASSETS
Current assets:
Cash and cash equivalents $ 8.6 $ 7.4
Accounts and notes receivable,
less allowance for doubtful accounts
of $10.4 and $7.0 84.3 75.7
Inventories (Note 2) 69.1 54.7
Deferred income taxes 22.0 25.5
Prepaid expenses and other 2.3 3.6
-------- --------
Total current assets 186.3 166.9
Property, plant and equipment, less
accumulated depreciation, depletion
and amortization of $290.8 and $276.9 587.0 593.2
Goodwill 72.1 74.5
Other long-term assets:
Long-term receivables 19.8 20.6
Other 48.6 51.8
-------- --------
$ 913.8 $ 907.0
-------- --------
-------- --------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 0.9 $ 19.9
Accounts payable and accrued liabilities 92.1 91.9
-------- --------
Total current liabilities 93.0 111.8
Long-term debt 222.1 274.0
Deferred income taxes 124.0 127.6
Minority interest in consolidated
joint venture 29.8 28.8
Long-term portion of postretirement
benefit obligations 82.9 83.8
Other long-term liabilities and
deferred credits 15.8 18.8
-------- --------
567.6 644.8
-------- --------
Shareholders' equity:
Preferred stock redeemable at
issuer's option (Note 3) 152.0 67.9
Common stock, $1.25 par value 21.6 21.3
Capital in excess of par value 124.5 127.6
Reinvested earnings 48.1 45.4
-------- --------
346.2 262.2
-------- --------
$ 913.8 $ 907.0
-------- --------
-------- --------
-1-<PAGE>
SOUTHDOWN, INC. AND SUBSIDIARY COMPANIES
STATEMENT OF CONSOLIDATED EARNINGS
(unaudited)
(in millions, except per share data)
-------------------------------------
Three Months Six Months
June 30, June 30,
------------------ -----------------
1994 1993 1994 1993
-------- -------- ------- --------
Revenues $ 157.6 $ 144.4 $ 277.0 $ 250.5
-------- -------- ------- --------
Costs and expenses:
Operating 110.0 102.4 197.1 178.1
Depreciation, depletion
and amortization 10.9 10.7 21.8 21.5
Selling and marketing 4.8 4.6 9.0 9.1
General and
administrative 11.3 11.2 21.8 23.2
Other (income)
expense, net (4.1) 0.4 (2.8) 0.3
-------- -------- ------- --------
132.9 129.3 246.9 232.2
Minority interest in
earnings of consolidated
joint venture 1.1 0.8 1.0 0.8
-------- -------- ------- --------
134.0 130.1 247.9 233.0
-------- -------- ------- --------
Operating earnings 23.6 14.3 29.1 17.5
Interest (7.5) (10.4) (16.2) (20.8)
-------- -------- ------- --------
Earnings (loss) before
income taxes and
cumulative effect of a
change in accounting
principle 16.1 3.9 12.9 (3.3)
Federal and state income
tax (expense) benefit (5.1) (1.3) (4.1) 1.5
-------- -------- ------- --------
Earnings (loss) before
cumulative effect of a
change in accounting
principle 11.0 2.6 8.8 (1.8)
Cumulative effect of a
change in accounting
principle, net of taxes - - - (48.5)
-------- -------- ------- --------
Net earnings (loss) $ 11.0 $ 2.6 $ 8.8 $ (50.3)
-------- -------- ------- --------
-------- -------- ------- --------
Dividends on preferred
stock (Note 3) $ (2.4) $ (1.2) $ (4.5) $ (2.5)
-------- -------- ------- --------
-------- -------- ------- --------
Earnings (loss) available
for common stock $ 8.6 $ 1.4 $ 4.3 $ (52.8)
-------- -------- ------- --------
-------- -------- ------- --------
Earnings (loss) per
common share (Note 3
and Exhibit 11):
Primary -
Earnings (loss)
before cumulative
effect of a change
-2-<PAGE>
in accounting
principle $ 0.48 $ 0.08 $ 0.24 $ (0.26)
Cumulative effect of
a change in
accounting principle,
net of taxes - - - (2.86)
-------- -------- ------- --------
$ 0.48 $ 0.08 $ 0.24 $ (3.12)
-------- -------- ------- --------
-------- -------- ------- --------
Fully diluted -
Earnings (loss)
before cumulative
effect of a change
in accounting
principle $ 0.46 $ 0.08 $ 0.24 $ (0.26)
Cumulative effect of
a change in
accounting principle,
net of taxes - - - (2.86)
-------- -------- ------- --------
$ 0.46 $ 0.08 $ 0.24 $ (3.12)
-------- -------- ------- --------
-------- -------- ------- --------
Average shares outstanding (Exhibit 11):
Primary 17.9 16.9 17.9 16.9
-------- -------- ------- --------
-------- -------- ------- --------
Fully diluted 23.8 16.9 17.9 16.9
-------- -------- ------- --------
-------- -------- ------- --------
-3-<PAGE>
SOUTHDOWN, INC. AND SUBSIDIARY COMPANIES
STATEMENT OF CONSOLIDATED CASH FLOWS
(unaudited)
(in millions
--------------------
Six Months Ended
June 30,
--------------------
1994 1993
------- -------
Operating activities:
Net earnings (loss) $ 8.8 $(50.3)
Adjustments to reconcile net loss
to net cash provided by (used in)
operating activities:
Cumulative effect of a
change in accounting principle - 48.5
Depreciation, depletion
and amortization 21.8 21.5
Deferred income tax provision 1.0 (1.8)
Amortization of securities
issuance costs 2.1 1.6
Changes in operating assets
and liabilities (26.2) (4.7)
Other adjustments 1.0 0.8
------- -------
Net cash provided by operating activities 8.5 15.6
------- -------
Investing activities:
Additions to property, plant and equipment (13.8) (10.5)
Proceeds from asset sales 1.2 6.3
Other (2.1) 0.7
------- -------
Net cash used in investing activities (14.7) (3.5)
------- -------
Financing activities:
Additions to long-term debt 39.6 -
Reductions in long-term debt (110.6) (10.3)
Proceeds from sale of preferred stock 86.3 -
Dividends (3.3) (2.5)
Securities issuance costs (4.6) -
Changes in minority interest - (0.5)
------- -------
Net cash provided by (used in)
financing activities 7.4 (13.3)
------- -------
Net increase (decrease) in cash
and cash equivalents 1.2 (1.2)
Cash and cash equivalents at
beginning of period 7.4 12.5
------- -------
Cash and cash equivalents at end of period $ 8.6 $ 11.3
------- -------
------- -------
Cash payments for income taxes totaled $300,000 and $200,000,
respectively, in 1994 and 1993. The Company received a $15.7
million Federal income tax refund in 1993 from the carryback to
prior years of the 1992 tax loss. Interest paid, net of amounts
capitalized, was $16.7 million and $19.3 million in 1994 and
1993, respectively. The $48.5 million noncash operating charge
in 1993 for the cumulative effect of a change in accounting
principle also resulted in a noncash charge to deferred income
-4-<PAGE>
taxes of $25.9 million and a noncash credit to the long-term
portion of postretirement benefit obligations of $74.4 million.
Noncash investing activities in 1993 included the sale of a
hazardous waste processing facility for $5.6 million face value
of a new issue of the purchaser's preferred stock.
-5-<PAGE>
SOUTHDOWN, INC. AND SUBSIDIARY COMPANIES
STATEMENT OF CONSOLIDATED REVENUES AND OPERATING EARNINGS
BY BUSINESS SEGMENT
(unaudited)
(in millions)
-------------------------------------
Three Months Six Months
June 30, June 30,
----------------- -----------------
1994 1993 1994 1993
-------- ------- ------- --------
Contributions to revenues:
Cement $ 107.7 $ 101.4 $ 181.4 $ 168.0
Concrete products 53.6 42.9 103.2 80.6
Environmental services 7.9 9.3 15.7 19.2
Intersegment sales (11.8) (9.4) (23.7) (17.6)
Corporate and other 0.2 0.2 0.4 0.3
-------- ------- ------- --------
$ 157.6 $ 144.4 $ 277.0 $ 250.5
-------- ------- ------- --------
-------- ------- ------- --------
Contributions to operating earnings (loss)
before interest expense and income taxes:
Cement $ 27.6 $ 24.7 $ 44.5 $ 39.3
Concrete products 3.7 (0.4) 2.9 (1.6)
Environmental services (1.7) (0.4) (3.1) (0.2)
Corporate
General and
administrative (7.6) (8.2) (14.5) (17.2)
Depreciation,
depletion and
amortization (1.2) (1.1) (2.4) (2.2)
Miscellaneous income
(expense) 2.8 (0.3) 1.7 (0.6)
-------- ------- ------- --------
$ 23.6 $ 14.3 $ 29.1 $ 17.5
-------- ------- ------- --------
-------- ------- ------- --------
SOUTHDOWN, INC. AND SUBSIDIARY COMPANIES
STATEMENT OF SHAREHOLDERS' EQUITY
(unaudited)
(in millions)
-----------------------------------------------
Capital
Preferred Common in
Stock Stock excess Re-
------------- ------------- of par invested
Shares Amount Shares Amount value earnings
------ ------ ------ ------ ------ ---------
Balance at
December 31, 1993 3.0 $ 67.9 17.0 $ 21.3 $127.6 $ 45.4
Net earnings - - - - - 8.8
Issuance of Series
D Preferred
Stock (Note 3) 1.7 86.3 - - - -
Dividends on
preferred
stock (Note 3) - - - - - (4.5)
Issuance expenses
of capital
stock - - - - (4.2) -
Exercise of
stock options - - 0.2 0.2 (0.2) (1.5)
Other (0.1) (2.2) 0.1 0.1 1.3 (0.1)
------ ------ ------ ------ ------ ---------
Balance at
June 30, 1994 4.6 $152.0 17.3 $ 21.6 $124.5 $ 48.1
-6-<PAGE>
------ ------ ------ ------ ------ ---------
------ ------ ------ ------ ------ ---------
-7-<PAGE>
SOUTHDOWN, INC. AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 1 - Unaudited Consolidated Financial Statements:
The Consolidated Balance Sheet of Southdown, Inc. and subsidiary
companies (the Company) at June 30, 1994 and the Statements of
Consolidated Earnings, Consolidated Cash Flows, Consolidated Revenues
and Operating Earnings by Business Segment and Shareholders' Equity
for the periods indicated herein have been prepared by the Company
without audit. The Consolidated Balance Sheet at December 31, 1993 is
derived from the December 31, 1993 audited financial statements, but
does not include all disclosures required by generally accepted
accounting principles. It is assumed that these financial statements
will be read in conjunction with the audited financial statements and
notes thereto included in the Company's 1993 Annual Report on Form 10-
K, as amended by Form 10-K/A dated May 11, 1994.
In the opinion of management, the statements reflect all
adjustments necessary for a fair presentation of the financial
position, results of operations and cash flows of the Company on a
consolidated basis and all such adjustments are of a normal recurring
nature. The interim statements for the period ended June 30, 1994 are
not necessarily indicative of results to be expected for the full
year.
Note 2 - Inventories:
(unaudited, in millions)
------------------------
June 30, December 31,
---------- -----------
1994 1993
---------- -----------
Finished goods $ 21.2 $ 15.4
Work in progress 14.8 7.0
Raw materials 6.0 6.0
Supplies 27.1 26.3
---------- -----------
$ 69.1 $ 54.7
---------- -----------
---------- -----------
Inventories stated on the LIFO method were $25.6 million at June
30, 1994 and $20.4 million at December 31, 1993 compared with current
costs of $33.5 million and $28.3 million, respectively.
Note 3 - Capital Stock:
Common Stock
At June 30, 1994, the Company had 17,258,000 shares of common
stock issued and outstanding.
-8-<PAGE>
Preferred Stock Redeemable at Issuer's Option
Series A Preferred Stock - The Company had 1,994,000 shares of
Preferred Stock, $0.70 Cumulative Convertible Series A (Series A
Preferred Stock) issued and outstanding at June 30, 1994, and
1,999,000 shares issued and outstanding at December 31, 1993 and June
30, 1993. Dividends paid on the Series A Preferred Stock were
approximately $350,000 and $700,000, respectively, during each of the
three and six month periods ended June 30, 1994 and 1993.
Series B Preferred Stock - The Company had 917,000 shares of
Preferred Stock, $3.75 Convertible Exchangeable Series B (Series B
Preferred Stock) issued and outstanding at June 30, 1994, and 959,000
shares issued and outstanding at December 31, 1993 and June 30, 1993.
Dividends accrued on the Series B Preferred Stock were approximately
$800,000 and $900,000, respectively, during the three months ended
June 30, 1994 and 1993. Dividends paid on the Series B Preferred
Stock were approximately $1.7 million and $1.8 million, respectively,
during the six months ended June 30, 1994 and 1993.
Series D Preferred Stock - On January 27, 1994, the Company
issued 1,725,000 shares of Preferred Stock, $2.875 Cumulative
Convertible Series D (Series D Preferred Stock) all of which were
outstanding at June 30, 1994. The net proceeds of approximately $82
million were utilized to reduce long-term debt and to fund working
capital requirements. Dividends accrued on the Series D Preferred
Stock were approximately $1.2 million and $2.1 million, respectively,
during the three and six month periods ended June 30, 1994.
Note 4 - Contingencies:
See Item 2. "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Liquidity and Capital Resources
- Known Events, Trends and Uncertainties" for discussion of certain
contingencies.
Note 5 - Review by Independent Accountants:
The unaudited financial information presented in this report has
been reviewed by the Company's independent public accountants. The
review was limited in scope and did not constitute an audit of the
financial information in accordance with generally accepted auditing
standards such as is performed in the year-end audit of financial
statements. The report of Deloitte & Touche on its limited review of
the financial information as of June 30, 1994 and for the three and
six month periods ended June 30, 1994 and 1993 follows.
-9-<PAGE>
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
To the Shareholders and
Board of Directors of
Southdown, Inc.
Houston, Texas
We have reviewed the accompanying consolidated balance sheet of
Southdown, Inc. and subsidiary companies as of June 30, 1994, and the
related statement of consolidated earnings and the statement of
consolidated cash flows for the three and six months ended June 30,
1994 and 1993 and the statement of shareholders' equity for the six
months ended June 30, 1994. These financial statements are the
responsibility of the Company's management.
We conducted our review in accordance with standards established
by the American Institute of Certified Public Accountants. A review
of the interim financial information consists principally of applying
analytical procedures to financial data and making inquiries of
persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance with
generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material
modifications that should be made to such consolidated financial
statements for them to be in conformity with generally accepted
accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet of Southdown, Inc.
and subsidiary companies as of December 31, 1993 and the related
consolidated statements of earnings, stockholders' equity, and cash
flows for the year then ended (not presented herein); and in our
report dated January 27, 1994, we expressed an unqualified opinion on
those consolidated financial statements. In our opinion, the
information set forth in the accompanying consolidated balance sheet
as of December 31, 1993 is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which it has been
derived.
Deloitte & Touche
Houston, Texas
July 25, 1994
-10-<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Results of Operations
Consolidated Second Quarter Earnings
Operating earnings for the second quarter of 1994 were $23.6
million compared with $14.3 million in the prior year quarter. Net
earnings for the second quarter of 1994 were $11 million, $0.46 per
share fully diluted, compared with $2.6 million, $0.08 per share fully
diluted, for the comparable quarter in 1993.
Second quarter 1994 revenues improved 9% compared with the prior
year quarter primarily because of higher ready-mixed concrete sales
volumes and prices combined with a 7% improvement in cement sales
prices. Second quarter 1994 operating earnings improved $9.3 million
over the same quarter of the prior year. The improvement reflects
record quarterly earnings of $27.6 million achieved by the Cement
segment in 1994 and a $4.1 million increase in earnings from the
Concrete Products operating segment over the comparable 1993 quarter.
The record results in cement earnings were attributable to a weighted
average $3.66 per ton increase in cement sales prices reflecting price
increases implemented in virtually all of the Company's markets except
for southern California. Higher cement revenues for the period were
offset to some extent by higher costs compared with the prior year
period. The Concrete Products segment's continued improvement was
primarily attributable to higher sales volumes and prices from ready-
mixed concrete. The Florida concrete products operation demonstrated
marked improvement while the California concrete products operation
registered only a meager improvement in their slowly recovering
regional economy. Second quarter 1994 results for the Concrete
Products segment, however, also benefited from the sale of thirty-five
surplus used ready-mixed concrete mixer trucks by the California
operation in June 1994 for a $1.1 million gain. The Environmental
Services segment continued to experience difficulties as the loss
reported by the segment for the second quarter of 1994 increased $1.3
million over the comparable quarter in 1993 because of lower earnings
from the hazardous waste processing facilities and higher losses from
the resource recovery operations in 1994. Miscellaneous income in the
second quarter of 1994 included $2.3 million from the realization of
a gain contingency stemming from the 1988 acquisition of Moore
McCormack Resources, Inc. (Moore McCormack).
The decline in interest expense reflects significantly lower debt
levels from the prior year quarter resulting from the early retirement
of $90 million of 12% Senior Subordinated Notes Due 1997( 12% Notes);
$45 million in January 1994 and the remainder in May 1994.
Consolidated Year-to-date Earnings
Operating earnings for the six months ended June 30, 1994 were
$29.1 million compared with $17.5 million for the prior year period.
Net earnings for the six months ended June 30, 1994 were $8.8 million,
$0.24 per share fully diluted, compared with a net loss of $1.8
million, $0.26 per share, in the prior year excluding the $48.5
million, $2.86 per share, initial charge related to the 1993 adoption
of new accounting rules for postretirement benefits (SFAS No. 106).
Consolidated revenues in the 1994 period increased 11% over the
prior year period primarily because of improvements in sales volumes
and prices from the Concrete Products segment and improved prices in
the Cement segment. The year-over-year improvement in net earnings
resulted from a 13% increase in cement earnings, a $4.5 million
improvement in the results reported by Concrete Products (including
the aforementioned gain on the truck sale) and a 13% reduction in
corporate expenses. The Cement segment benefited from a 7%
-11-<PAGE>
improvement, or $3.44 per ton, in the weighted average sales price
combined with a slight increase in sales
volumes. Even without the gain on the sale of the surplus concrete
mixer trucks, operating results from the Concrete Products segment
were significantly improved as a result of a substantial upturn in the
Florida market. All of the resource recovery operations and hazardous
waste processing facilities in the Environmental Services segment,
except Alabama, reported poorer operating results compared with the
prior year period.
General and administrative expenses declined because the prior
year period included a $3.5 million charge to accrue benefits under
SFAS No. 106, while additional accruals have not been necessary
subsequent to the July 1, 1993 effective date of the Company's amended
postretirement benefits plan. The increase in miscellaneous income
reflects the previously mentioned $2.3 million gain. The reduction in
interest expense reflects the early retirement of the 12% Notes also
mentioned above. The Company's effective tax rate, which includes
state taxes, was lower than the federal statutory rate for 1994
because of the favorable impact of statutory depletion in excess of
cost depletion, primarily as related to the Company's limestone mining
operations. The effective tax rate for 1993 was higher than the
statutory rate because of the impact of statutory depletion relative
to an estimated improvement in annual operating results.
Segment Operating Earnings
Cement
Second quarter - Operating earnings for the three month period
ended June 30, 1994 of $27.6 million, which represented a record
quarter, improved over the $24.7 million reported in the prior year
quarter. Higher operating earnings primarily resulted from a $3.66
per ton increase in average cement sales prices on essentially flat
volume. All cement manufacturing plants reported improved year-to-
year results except for the Victorville, California and Kosmosdale,
Kentucky plants. The California plant was impacted by lower average
sales prices (primarily the result of a higher proportion of current
period sales under a large volume, lower margin contract) while the
Kentucky plant experienced operating difficulties which resulted in
higher costs.
Year-to-date - Operating earnings for the six months ended June
30, 1994 were $44.5 million compared with $39.3 million in the prior
year period. Despite higher per unit operating costs attributable to
unplanned kiln outages and two months of abnormally severe winter
weather in many markets, operating earnings improved over the prior
year period primarily because of a $3.44 per ton increase in average
cement sales prices.
Sales volumes, average unit price and cost data and unit
operating profit margins relating to the Company's cement operations
appear in the following table:
Three Months Six Months
Ended Ended
------------------- ------------------
June 30, June 30,
------------------- ------------------
1994 1993 1994 1993
-------- -------- ------- --------
Tons of cement
sold (thousands) 1,678 1,689 2,918 2,853
-------- -------- ------- --------
-------- -------- ------- --------
Weighted average per ton data:
Sales price
(net of freight) $55.61 $ 51.95 $ 54.07 $ 50.63
-12-<PAGE>
Manufacturing and
other plant
operating costs(1) 40.19 39.97 40.86 39.49
-------- -------- ------- --------
Margin $15.42 $ 11.98 $ 13.21 $ 11.14
-------- -------- ------- --------
-------- -------- ------- --------
_____________
(1) Includes fixed and variable manufacturing costs,
selling expenses, plant general and administrative
costs, other plant overhead and miscellaneous costs.
The increases in the average sales price per ton for the three
and six months ended June 30, 1994 reflect the partial realization of
price increases implemented in most of the Company's markets during
the previous twelve months. The increase in operating costs per ton
for the six months ended June 30, 1994 compared with the prior year
period was attributable to higher maintenance and repair costs of
several of the manufacturing facilities, some of which were related to
abnormally severe weather conditions, and to various major repairs
undertaken in the first quarter of 1994.
Concrete Products
Second quarter - Operating earnings for the Concrete Products
segment were $3.7 million in the second quarter of 1994 compared with
an operating loss of $395,000 in the prior year quarter. Revenues
increased 25% from the prior year quarter primarily because of
improved sales volumes and prices from the Florida concrete products
operation.
In addition to ready-mixed concrete, segment operating results
include the sale of concrete block, aggregate, fly ash, various
masonry supplies and other income. Results for the southern
California operation improved only marginally with the reported year-
over-year improvement almost entirely attributable to a $1.1 million
gain realized on the 1994 sale of thirty-five used concrete mixer
trucks. Operating results for the Florida operations improved
significantly, reflecting a 17% increase in sales volumes and an 8%
improvement in sales prices from the ready-mixed concrete operation as
well as continuing improvement from the concrete block, resale and fly
ash operations.
Year-to-date - The Concrete Products segment's operating earnings
for the six months ended June 30, 1994 were $2.9 million compared with
a $1.6 million operating loss reported in the prior year period.
Revenues increased 28% over the prior year period as sales volumes and
prices from all of the product lines showed improvement.
The loss at the southern California operation declined $1.3
million primarily because of the aforementioned gain on the sale of
thirty-five mixer trucks. Florida's operating results increased by
approximately $2.9 million compared with the prior year period
reflecting higher sales volumes and sales prices from the ready-mixed
concrete operation as well as continuing improvement from the block,
resale and fly ash operations. Ready-mixed concrete sales volumes and
prices improved by 19% and 6%, respectively, reflecting the continued
economic recovery in the Florida market area.
-13-<PAGE>
Sales volumes, unit price and cost data and unit operating profit
(loss) margins relating to the Company's ready-mixed concrete
operations appear in the following table:
Three Months Six Months
Ended Ended
------------------- ------------------
June 30, June 30,
------------------- ------------------
1994 1993 1994 1993
-------- -------- ------- --------
Yards of ready-mixed
concrete sold
(thousands) 919 795 1,812 1,500
-------- -------- ------- --------
-------- -------- ------- --------
Weighted average per cubic yard data:
Sales price $47.76 $ 43.95 $ 46.49 $ 43.94
Operating costs(1) 46.81 45.75 46.91 45.89
-------- -------- ------- --------
Margin $ 0.95 $ (1.80) $ (0.42) $ (1.95)
-------- -------- ------- --------
-------- -------- ------- --------
______________
(1) Includes variable and fixed plant costs, delivery,
selling, general and administrative and
miscellaneous operating costs, but excluding the
$1.1 million gain realized on the 1994 sale of
trucks.
The increase in the weighted average sales price per yard for the
three and six months ended June 30, 1994 compared with the 1993
periods reflects higher sales prices in both the Company's Florida and
southern California markets. The increase in the weighted average
operating costs per yard for the three and six months ended June 30,
1994 compared with the 1993 periods is attributable to higher material
costs in Florida ( primarily the cement sales prices which increased
as discussed under Cement above).
Environmental Services
Second quarter - The operating loss of the Environmental Services
segment for the three months ended June 30, 1994 was $1.7 million
compared with a loss of approximately $400,000 in the prior year
quarter. The hazardous waste processing facilities had operating
earnings of $76,000 in the current year quarter compared with $1.1
million in the prior year quarter as operating results from all but
one facility in 1994 were lower than the previous year because of
lower sales volumes and, on solid hazardous waste derived fuel, lower
margins. Losses from resource recovery operations increased compared
with the prior year quarter because of lower revenues and increased
depreciation charges.
Year-to-date - The Environmental Services segment reported an
operating loss of $3.1 million for the six months ended June 30, 1994
compared with an operating loss of $217,000 in the prior year period.
The hazardous waste processing facilities had operating earnings of
$244,000 in the current period compared with $2.2 million in the prior
year period as operating results from all facilities were lower than
the previous year because of abnormally severe winter weather
conditions and lower sales volumes and, on solid hazardous waste
derived fuel, lower margins. In March 1994, the Company sold its
Illinois hazardous waste processing facility for $1 million. No gain
-14-<PAGE>
or loss was recognized on the transaction. Resource recovery
operations declined $1.3 million to an operating loss of $590,000 in
the current period primarily as a result of a 14% decrease in solid
hazardous waste derived fuel volumes burned and higher professional
fees. The decrease in solid hazardous waste derived fuel volumes was
primarily the result of shortages of available volumes because of
competitive market conditions.
Corporate
Second quarter - Corporate general and administrative expenses
were $7.6 million in the second quarter of 1994 compared with $8.2
million in the same period of the prior year which included a $1.7
million charge to accrue the estimated postretirement health care
benefits calculated under SFAS No. 106 in excess of claims incurred.
No such charge was required in the current period.
Miscellaneous income in the second quarter of 1994 included $2.3
million from realization of a gain contingency stemming from the 1988
acquisition of Moore McCormack.
Year-to-date - Corporate general and administrative expenses for
the first six months of 1994 were substantially below the prior year
period primarily because 1993 included a $3.5 million charge to accrue
the estimated postretirement health care benefit calculated under SFAS
No. 106.
Miscellaneous income and expense during 1994 included the $2.3
million gain mentioned above and first quarter charges totaling $1.7
million in conjunction with the disposition of lawsuits.
Liquidity and Capital Resources
The discussion of liquidity and capital resources included on pages
37 through 47 of the Company's Annual Report on Form 10-K for the year
ended December 31, 1993, as amended by Form 10-K/A dated May 11, 1994,
should be read in conjunction with the discussion of liquidity and
capital resources contained herein.
The Company's Revolving Credit Facility totals $200 million and
matures in November 1996. The Revolving Credit Facility includes $20
million of borrowing capacity that is restricted solely for contingent
obligations under an agreement between the Company and the U.S.
Maritime Administration related to certain shipping operations owned
previously by Moore McCormack. The facility also includes the
issuance of standby letters of credit up to a maximum of $95 million.
Substantially all of the Company's assets are pledged to secure this
facility. At June 30, 1994, $58.6 million of borrowings and $50.3
million of letters of credit were outstanding under the Revolving
Credit Facility, leaving $71.1 million of unused and unrestricted
capacity.
On May 1, 1994 the Company utilized borrowings under its Revolving
Credit Facility to redeem the remaining $45 million outstanding
principal amount of the Company's 12% Notes. The Company had
previously utilized borrowings under its Revolving Credit Facility to
redeem $45 million of the 12% Notes in January 1994. Other borrowings
under the Company's Revolving Credit Facility were utilized to fund
working capital requirements (primarily seasonal increases in
inventory and accounts receivable) and to invest approximately $13.8
million in plant, property and equipment. In late January 1994, the
Company realized approximately $82 million in net proceeds from the
sale of 1,725,000 shares of a new issue of preferred stock. The net
proceeds were used to prepay an $18 million promissory note due in
March 1994 and to reduce borrowings under the Company's Revolving
Credit Facility.
-15-<PAGE>
During the first half of 1993, the Company utilized internally
generated cash flow from operations, including a $15.7 million federal
income tax refund from the carryback to prior years of the 1992 tax
loss and $6.3 million from asset sales primarily to (i) finance the
seasonal build-up of inventories, (ii) make scheduled debt principal
payments of $10.3 million and (iii) make investments of approximately
$10.5 million in property, plant and equipment.
Changes in Financial Condition
The change in the financial condition of the Company between
December 31, 1993 and June 30, 1994 reflects the realization of
approximately $82 million in net proceeds from the sale of a new issue
of preferred stock which was used to pay down debt, including $18
million classified as current maturities of long-term debt, and to
fund working capital requirements and capital expenditures. Accounts
and notes receivable increased because of the additional sales
activity occurring in the summer construction season relative to the
slower winter months. The increase in inventories reflects the
typical seasonal build-up in cement inventories in preparation for the
peak selling months in the second and third quarters. Other
liabilities and deferred credits decreased because of payments made
in conjunction with the shipping operations formerly owned by Moore
McCormack and other obligations.
Known Events, Trends and Uncertainties
Environmental Matters
The Company is subject to extensive Federal, state and local air,
water and other environmental laws and regulations. These constantly
changing laws regulate the discharge of materials into the environment
and may require the Company to remove or mitigate the environmental
effects of the disposal or release of certain substances at the
Company's various operating facilities.
The Federal Water Pollution Control Act, commonly known as the
Clean Water Act, provides comprehensive federal regulation of various
sources of water pollution. The Clean Air Act Amendments of 1990
provided comprehensive federal regulation of various sources of air
pollution, and established a new federal operating permit program for
virtually all manufacturing operations. The Clean Air Act Amendments
will likely result in increased capital and operational expenses for
the Company in the future, the amounts of which are not presently
determinable. By 1995, the Company's U.S. operations will have to
submit detailed permit applications and pay recurring permit fees. In
addition, the U.S. Environmental Protection Agency (U.S. EPA) is
developing air toxics regulations for a broad spectrum of industrial
sectors, including portland cement manufacturing. U.S. EPA has
indicated that the new maximum available control technology standards
could require significant reduction of air pollutants below existing
levels prevalent in the industry. Management has no reason to
believe, however, that these new standards would place the Company at
a competitive disadvantage. The Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 (CERCLA), as amended by the
Superfund Amendments and Reauthorization Act of 1986 (SARA), as well
as analogous laws in certain states, create joint and several
liability for the cost of cleaning up or correcting releases to the
environment of designated hazardous substances. Among those who may
be held jointly and severally liable are those who generated the
waste, those who arranged for disposal, those who owned the disposal
site or facility at the time of disposal and current owners.
Hazardous waste processing facilities and the cement plants that
burn hazardous waste derived fuel (HWDF), by definition, involve
materials that have been designated as hazardous wastes. The
Company's utilization of HWDF in some of its cement kilns has
necessitated the familiarization of its work force with the more
-16-<PAGE>
exacting requirements and varying interpretations of applicable
environmental laws and regulations with respect to human health and
the environment. The failure to observe the exacting requirements of
these laws and regulations could jeopardize the Company's hazardous
waste management permits and, under certain circumstances, may expose
the Company to significant liabilities and costs of cleaning up
releases of hazardous wastes into the environment or claims by
employees or others alleging exposure to toxic or hazardous
substances. Management believes that the Company's current procedures
and practices for handling and management of materials are generally
consistent with industry standards and legal requirements and that
appropriate precautions are taken to protect employees and others from
harmful exposure to hazardous materials. However, because of the
complexity of operations and legal requirements, there can be no
assurance that past or future operations will not result in
operational errors, violations, remediation liabilities or claims by
employees or others alleging exposure to toxic or hazardous materials.
Owners and operators of industrial facilities and those who handle,
store or dispose of hazardous substances may be subject to fines or
other actions imposed by the U.S. EPA and corresponding state
regulatory agencies for violations of laws or regulations relating to
those substances. The Company has incurred fines imposed by various
environmental regulatory agencies in the past.
In June 1992, the Company's Knoxville, Tennessee cement plant
submitted to the U.S. EPA a Boiler and Industrial Furnace Certificate
of Compliance, a lengthy filing made to allow the plant to continue to
burn hazardous waste derived fuels. In a Notice of Violation (NOV)
dated April 12, 1994, the U.S. EPA Region IV asserted that certain
additional information should have been included in the Certificate of
Compliance and, consequently, that the Company is in violation of
certain requirements of RCRA. The Company has filed a response to
the NOV. Although U.S. EPA did not propose any fines or penalties in
the NOV, the NOV noted that RCRA authorizes U.S. EPA to assess
penalties of up to $25,000 per day for each violation of RCRA
regulations. The U.S. EPA has not yet indicated how it might proceed
in pursuing its allegations or what penalties, if any, it might seek.
Based on information developed to date, the Company believes that this
matter should be resolved without any material fines or penalties.
Cement kiln dust - Industrial operations have been conducted at
some of the Company's cement manufacturing facilities for almost 100
years. Many of the raw materials, products and by-products associated
with the operation of any industrial facility, including those for the
production of cement or concrete products, may contain chemical
elements or compounds that are designated as hazardous substances.
Some examples of such materials are the trace metals present in cement
kiln dust (CKD), chromium present in refractory brick formerly widely
used to line cement kilns and general purpose solvents. Under the
Bevill amendment, CKD is currently exempt from management as a
hazardous waste, except CKD which is produced by kilns burning HWDF
and which fails to meet certain criteria. In December 1993, as
required by the Bevill amendment, the U.S. EPA issued a Report to
Congress on CKD and hearings were held on February 15, 1994. The U.S.
EPA is expected to issue its decision on the regulatory status of CKD
by January 31, 1995. A change in the status of CKD would require the
cement industry to develop new methods for handling this high volume,
low toxicity waste. Also, CKD that is infused with water may produce
a leachate with an alkalinity high enough to be classified as
hazardous and may also leach certain hazardous trace metals present
therein. Leaching has led to the classification of at least three CKD
disposal sites of other companies as federal Superfund sites. Several
of the Company's inactive CKD disposal sites around the country have
been under investigation by the Company, as well as in some cases by
federal and state environmental agencies, to determine if remedial
action is required at any of the sites and, if so, the extent of any
such remedial action. The Company has recorded charges totaling $9.7
million as the estimated remediation cost for one of these sites.
-17-<PAGE>
On a voluntary basis, without administrative or legal action
being taken, the Company is also investigating two other inactive Ohio
CKD disposal sites. The two additional sites in question were part of
a cement manufacturing facility that was owned and operated by a now
dissolved cement company from 1924 to 1945 and by a division of USX
Corporation (USX) from 1945 to 1975. On September 24, 1993, the
Company filed a complaint against USX, alleging that USX is a
potentially responsible party under CERCLA and under applicable Ohio
law, and therefore jointly and severally liable for costs associated
with cleanup of the larger of the two sites (USX Site). Based on the
limited information available as of December 31, 1993, the Company has
received two preliminary engineering estimates of the potential
magnitude of the remediation costs for the USX Site, $8 million and
$32 million, depending on the assumptions used.
The Company intends to vigorously pursue its right to
contribution from USX for cleanup costs under CERCLA and Ohio law.
The Company believes that USX is a responsible party because it owned
and operated the USX Site at the time of disposal of the hazardous
substances, arranged for the disposal of the hazardous substances and
transported the hazardous substances to the USX Site. Therefore, the
Company believes there is a reasonable basis for the apportionment of
cleanup costs relating to the USX Site between the Company and USX
with USX shouldering substantially all of the cleanup costs because,
based on the facts known at this time, the Company itself disposed of
no CKD at the USX Site and is potentially liable under CERCLA only
because of its current ownership of the USX Site. These
determinations, however, are preliminary, and are based only upon
facts available to the Company prior to completing discovery.
Under CERCLA and applicable Ohio law, a court generally applies
equitable principles in determining the amount of contribution which a
potentially responsible party must provide with respect to a cleanup
of hazardous substances and such determination is within the sole
discretion of the court. In addition, no regulatory agency has
directly asserted a claim against the Company as the owner of the USX
Site requiring it to remediate the property, and no cleanup of the USX
Site has yet been initiated.
No substantial investigative work has been undertaken at other
CKD sites. Although data necessary to enable the Company to estimate
total remediation costs is not available, the Company acknowledges
that the ultimate cost to remediate the CKD disposal problem in Ohio
could be significantly more than the amounts reserved.
While the Company's facilities at several locations are presently
the subject of various local, state and federal environmental
proceedings and inquiries, including being named a potentially
responsible party with regard to Superfund sites, primarily at several
locations to which they are alleged to have shipped materials for
disposal, most of these matters are in their preliminary stages and
final results may not be determined for years. Management of the
Company believes, however, based solely upon the information the
Company has developed to date, that known matters can be successfully
resolved in cooperation with local, state and federal agencies without
having a material adverse effect, either individually or in the
aggregate, upon the consolidated financial statements of the Company.
However, because the Company's results of operations vary considerably
with construction activity and other factors, it is possible that
future charges for environmental contingencies could, depending on
their timing and magnitude, have a material adverse impact on the
Company's results of operations in a particular period. Until all
environmental studies, investigations, remediation work and
negotiations with potential sources of recovery have been completed,
however, it is impossible to determine the ultimate cost of resolving
these environmental matters.
Other Contingencies
-18-<PAGE>
Discontinued Moore McCormack Operations - In conjunction with the
acquisition of Moore McCormack in 1988, the Company assumed certain
liabilities for operations that Moore McCormack had previously
discontinued. These liabilities, some of which are contingent,
represent guarantees and undertakings related primarily to Moore
McCormack's divestiture of certain businesses in 1986 and 1987.
Payments relating to liabilities from these discontinued operations
were $1.1 million in the first six months of 1994, $2.4 million in
fiscal 1993 and $2.5 million in fiscal 1992. The Company is either a
guarantor or directly liable under certain charter hire debt
agreements totaling approximately $9 million at June 30, 1994,
declining by approximately $4 million per year thereafter through
February 1997. Although the estimated liability under these
guaranties has been included in the liability for discontinued Moore
McCormack operations, enforcement of the guaranty, while not resulting
in a charge to earnings, would result in a substantial cash outlay by
the Company. However, the Company believes it currently has
sufficient borrowing capacity under its Revolving Credit Facility to
fund these guaranties, if required, as well as meet its other
borrowing needs for the foreseeable future.
Restructured Accounts Receivable - For many years, the Company
has from time-to-time offered extended credit terms to certain of its
customers, including converting trade receivables into longer term
notes receivable. This practice became more prevalent during 1992 and
continued during 1993, particularly in the southern California market
area where many of the Company's customers have been adversely
affected by the prolonged recession in the construction industry in
that region. A group of four such customers were indebted to the
Company at June 30, 1994 in the amount of $19.3 million. All of the
notes and a portion of the accounts receivable, approximately 80% of
the $19.3 million, are collateralized. Another customer, previously
included in this group, retired its note receivable with a June 1994
payment.
During 1993, two of these customers defaulted on the payment
terms of their notes. The Company restructured its agreement with one
of the defaulting customers late in the second quarter of 1993 and
that customer was in compliance with the terms of the restructured
agreement as of June 30, 1994. The Company has stopped selling cement
on credit to the other customer in default and is presently evaluating
its options for collection of outstanding balances.
A third customer in the California group, while not in default on
its note, had difficulty in maintaining prompt payment for its cement
purchases and restructuring discussions were commenced in late 1993.
In March 1994, the Company withdrew a preliminary purchase proposal to
acquire certain ready-mixed concrete and aggregate assets of this
customer but restructuring discussions are continuing. The Company is
contractually committed to supply up to 90% of the cement requirements
of the other non-defaulting customer on extended credit terms,
provided this customer remains current with respect to both current
purchases and payments on its note.
In the opinion of management, the Company is adequately reserved
for credit risks related to its potentially uncollectible receivables.
However, the Company continues to assess its allowance for doubtful
accounts and may increase or decrease its periodic provision for
doubtful accounts as additional information regarding the
collectibility of these and other accounts become available.
Labor Matters - The drivers at the Company's Transit Mixed
Concrete Company (Transmix) ready-mixed concrete operations in
southern California are represented by Local Union No. 420 of the
International Brotherhood of Teamsters (the Teamsters). Transmix's
Collective Bargaining Agreement with the Teamsters expired in April
1994 and on May 23, 1994, a new three year Collective Bargaining
Agreement with the Teamsters was accepted by its union members.
-19-<PAGE>
The hourly workers at the Company's Fairborn, Ohio cement plant are
represented by the International Brotherhood of Boilermakers, Cement,
Lime, Gypsum and Allied Workers Division Local Lodge No. D-357 (the
Boilermakers). On March 1, 1994 the Fairborn plant's collective
bargaining agreement with the Boilermakers expired. The Boilermakers
are continuing to work under the expired agreement while negotiations
on a new contract are underway.
-20-<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
(a) The information appearing under "Management's Discussion and
Analysis of Financial Condition and Results of Operations -
Liquidity and Capital Resources - Known Events, Trends and
Uncertainties - Environmental Matters" is incorporated hereunder
by reference, pursuant to Rule 12b-23.
(b) In early March 1994, the Company and a number of other cement
producers and industry associations received requests for
information (Civil Investigative Demand or CID) relating to the
period from 1991 to April 1994 from the Antitrust Division of the
U.S. Department of Justice (DOJ). The DOJ is investigating
possible price-fixing and market allocation by cement producers.
The commencement of such an investigation does not necessarily
indicate that an enforcement action will be commenced against any
cement producer. The Company has produced documents and answered
certain interrogatories in response to the CID. Because of the
early stage of the investigation, it is not possible to predict
the outcome of this matter.
(c) Litigation was initiated in 1992 by former shareholders of a
Browning-Ferris Industries, Inc. (BFI) subsidiary acquired from
BFI by the Company and included claims asserting, among other
things, that an installment of a conditional deferred payment
obligation which the Company believed to be in the amount of $9.0
million was actually in the amount of $10.0 million, that
adjustments to the purchase price and certain additional amounts
aggregating approximately $500,000 were payable to such
shareholders, that an accounting must be provided to such
shareholders, and that the defendants acted intentionally and
maliciously and therefore that the shareholders were entitled to
punitive damages. (Benita H. O'Meara, an individual; Ernest O.
Roehl, an individual, v. Southdown Environmental Systems, Inc., a
Delaware corporation, aka BFI Environmental Treatment Systems,
Inc., a Delaware corporation, aka Southdown Environmental
Treatment Systems, Inc., a corporation; Does 1 through 50,
inclusive) (Superior Court of the State of California for the
County of Los Angeles - Case No. BC 056904) The Company notified
BFI of its claim for indemnity under the stock purchase agreement
but BFI denied the Company's claim. The Company responded timely
to the suit and filed a cross-complaint and a new lawsuit against
BFI seeking judicial clarification as to BFI's liability under
the indemnity agreement, damages and other relief. (Southdown,
Inc., a Louisiana corporation, v. Browning-Ferris Industries,
Inc., a Delaware corporation; CECOS International, Inc., a New
York corporation; and Does 1 through 50, inclusive) (Superior
Court of the State of California for the County of Los Angeles -
Case No. BC 063261) On January 3, 1994 the parties orally agreed
to an out-of-court settlement pursuant to which all claims of the
former shareholders were resolved. A dispute arose, however,
between BFI and the Company as to which party between them would
bear what portion of the up to $1 million additional amount
potentially owed to the former shareholders. Following a hearing
on the matter, the trial court confirmed in June 1994 that BFI
was liable for 70% of the additional amount potentially owed to
the former shareholders.
(d) The Company owns two inactive CKD disposal sites in Ohio that
were formerly owned by a division of USX. In September 1993, the
Company filed a complaint against USX alleging that with respect
to the larger of these two sites (the USX Site), USX is a
potentially responsible party and therefore jointly and severally
liable for costs associated with cleanup of the USX Site.
(Southdown, Inc. v. USX Corporation, Case No. C-3-93-354, U.S.
District Court, Southern District of Ohio Western Division) USX
-21-<PAGE>
answered the complaint in November 1993 by filing a motion to
dismiss the lawsuit. In March 1994 the Magistrate Judge issued a
report recommending denial of USX's motion to dismiss. In April
1994, the Court recommitted the Magistrate Judge's report to the
Magistrate Judge for reconsideration of all matters raised by
USX's objections and the Company's response thereto. On July 5,
1994, the Court consolidated this case with the case captioned
Greene Environmental Coalition v. Southdown, Inc., Case No. C-3-
93-270 under the caption In Re Southdown, Inc., Litigation, Case
No. C-3-93-270. On July 13, 1994, the Magistrate Judge issued a
Supplemental Report and Recommendation recommending that USX's
motion to dismiss be denied in its entirety, reconfirming his
previous recommendation. Based on advice of counsel, the
Company believes there is a reasonable basis for the
apportionment of cleanup costs relating to the USX Site between
the Company and USX, with USX shouldering substantially all of
the cleanup costs because, based on the facts known at this time,
the Company itself disposed of no CKD at the USX Site and is
potentially liable under CERCLA because of its current ownership
of the USX Site. These determinations, however, are preliminary,
and are based only upon facts available to the Company prior to
completing discovery. As noted below, a court-supervised
settlement conference has been ordered by the Court for September
9, 1994 in the consolidated case In Re Southdown, Inc.,
Litigation.
(e) In late July 1993, a citizens environmental group brought suit in
U.S. District Court for the Southern District of Ohio, Western
Division (Greene Environmental Coalition, Inc. (GEC), an Ohio
not-for-profit corporation v. Southdown, Inc., a Louisiana
corporation - Case No. C-3-93-270) alleging the Company is in
violation of the Clean Water Act by virtue of the discharge of
pollutants in connection with the runoff of stormwater and
groundwater from an inactive cement kiln dust disposal site (the
USX Site) and is seeking injunctive relief, unspecified civil
penalties and attorneys' fees, including expert witness fees. In
August 1993, the Company moved to dismiss the complaint.
Pursuant to a preliminary pretrial conference order issued by the
court, the environmental group provided the Company with a
written settlement demand in early October 1993. On November 12,
1993, the Company rejected the environmental group's settlement
demand without offering a counterproposal. On March 30, 1994,
the court denied the Company's motion to dismiss. Subsequently,
the Company filed an answer to the GEC complaint and also filed a
third-party complaint against USX alleging that: (i) the Company
is entitled to be indemnified by USX for all costs and civil
penalties the Company may incur; and (ii) the Company is entitled
to contribution from USX for USX's proportionate share of the
costs and civil penalties the Company may incur. On June 30,
1994, third-party defendant USX filed a motion to dismiss the
third-party complaint filed against it by the Company. The
Company will respond to USX's motion on or before August 24,
1994. A court-supervised settlement conference has been ordered
by the Court for September 9, 1994 in the consolidated case In Re
Southdown, Inc., Litigation.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
11 Statement of Computation of Per Share Earnings.
99.1 Southdown, Inc. Pension Plan as adopted on May 19, 1994.
99.2 Southdown, Inc. Retirement Savings Plan as amended and
restated on July 1, 1990.
(b) Reports on Form 8-K
-22-<PAGE>
No reports on Form 8-K were filed during the quarter ended June 30,
1994.
-23-<PAGE>
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.
SOUTHDOWN, INC.
(Registrant)
Date: August 10, 1994 By: JAMES L. PERSKY
--------------------
James L. Persky
Senior Vice President-Finance
(Principal Financial Officer)
Date: August 10, 1994 By: ALLAN KORSAKOV
--------------------
Allan Korsakov
Corporate Controller
(Principal Accounting Officer)
-24-<PAGE>
EXHIBIT 11
SOUTHDOWN, INC. AND SUBSIDIARIES
STATEMENT OF COMPUTATION OF PER SHARE EARNINGS
(in millions, except per share amounts - Unaudited)
Three Months Six Months
Ended Ended
June 30, June 30,
--------------- ----------------
1994 1993 1994 1993
------ ------- ------- -------
Earnings (loss) for primary earnings
per share:
Earnings (loss) before cumulative
effect of a change in accounting
principle and preferred stock
dividends $11.0 $ 2.6 $ 8.8 $ (1.8)
Preferred stock dividends (2.4) (1.2) (4.5) (2.5)
------ ------- ------- -------
Earnings (loss) for primary earnings
per share before cumulative effect
of a change in accounting principle 8.6 1.4 4.3 (4.3)
Cumulative effect of a change in
accounting principle - - - (48.5)
------ ------- ------- -------
Net earnings (loss) for primary earnings
per share $ 8.6 $ 1.4 $ 4.3 $(52.8)
------ ------- ------- -------
------ ------- ------- -------
Earnings (loss) for fully diluted
earnings per share:
Earnings (loss) before cumulative
effect of a change in accounting
principle and preferred stock
dividends $11.0 $ 2.6 $ 8.8 $ (1.8)
Antidilutive preferred stock
dividends - (1.2) (4.5) (2.5)
------ ------- ------- -------
Earnings (loss) for primary earnings
per share before cumulative effect
of a change in accounting principle 11.0 1.4 4.3 (4.3)
Cumulative effect of a change in
accounting principle - - - (48.5)
------ ------- ------- -------
Net earnings (loss) for fully diluted
earnings per share $11.0 $ 1.4 $ 4.3 $(52.8)
------ ------- ------- -------
------ ------- ------- -------<PAGE>
SOUTHDOWN, INC.
EXHIBIT 11 - Page 2
(in millions, except per share amounts - Unaudited)
Three Months Six Months
Ended Ended
June 30, June 30,
--------------- ----------------
1994 1993 1994 1993
------ ------- ------- -------
Average shares outstanding:
Common stock 17.2 16.9 17.2 16.9
Common stock equivalent from assumed
exercise of stock options and
warrants (treasury stock method) 0.7 - 0.7 -
------ ------- ------- -------
Total for primary earnings per share 17.9 16.9 17.9 16.9
Other potentially dilutive securities:
- Assumed conversion of Series A
convertible preferred stock at
one-half share of common stock 1.0 1.0 1.0 1.0
- Assumed conversion of Series B
convertible preferred stock at
2.5 shares of common stock 2.3 2.4 2.4 2.4
- Assumed conversion of the Series D
convertible preferred stock at
1.51 shares of common stock 2.6 - 2.2 -
------ ------- ------- -------
Total for fully diluted earnings
per share 23.8 20.3 23.5 20.3
Less: Antidilutive securities
Series A preferred stock - (1.0) (1.0) (1.0)
Series B preferred stock - (2.4) (2.4) (2.4)
Series D preferred stock - - (2.2) -
------ ------- ------- -------
23.8 16.9 17.9 16.9
------ ------- ------- -------
------ ------- ------- -------
Earnings (loss) per share:
Primary
Earnings (loss) before cumulative
effect of a change in accounting
principle $ 0.48 $ 0.08 $ 0.24 $(0.26)
Cumulative effect of a change in
accounting principle, net - - - (2.86)
------ ------- ------- -------
$ 0.48 $ 0.08 $ 0.24 $(3.12)
------ ------- ------- -------
------ ------- ------- -------
Fully diluted
Earnings (loss) before cumulative
effect of a change in accounting
principle $ 0.46 $ 0.08 $ 0.24 $(0.26)
Cumulative effect of a change in
accounting principle, net - - - (2.86)
------ ------- ------- -------
$ 0.46 $ 0.08 $ 0.24 $(3.12)
------ ------- ------- -------
------ ------- ------- -------<PAGE>
SOUTHDOWN, INC.
PENSION PLAN<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
ARTICLE II
TOP HEAVY AND ADMINISTRATION
2.1 TOP HEAVY PLAN REQUIREMENTS 21
2.2 DETERMINATION OF TOP HEAVY STATUS 21
2.3 POWERS AND RESPONSIBILITIES OF THE EMPLOYER 25
2.4 DESIGNATION OF ADMINISTRATIVE AUTHORITY 25
2.5 ALLOCATION AND DELEGATION OF RESPONSIBILITIES 26
2.6 POWERS AND DUTIES OF THE ADMINISTRATOR 26
2.7 RECORDS AND REPORTS 27
2.8 APPOINTMENT OF ADVISORS 27
2.9 INFORMATION FROM EMPLOYER 28
2.10 PAYMENT OF EXPENSES 28
2.11 MAJORITY ACTIONS 28
2.12 CLAIMS PROCEDURE 28
2.13 CLAIMS REVIEW PROCEDURE 28
ARTICLE III
ELIGIBILITY
3.1 CONDITIONS OF ELIGIBILITY 30
3.2 EFFECTIVE DATE OF PARTICIPATION 30
3.3 DETERMINATION OF ELIGIBILITY 30
3.4 TERMINATION OF ELIGIBILITY 30
ARTICLE IV
CONTRIBUTION AND VALUATION
4.1 PAYMENT OF CONTRIBUTIONS 32
4.2 ACTUARIAL METHODS 32<PAGE>
ARTICLE V
BENEFITS
5.1 RETIREMENT BENEFITS 33
5.2 MINIMUM BENEFIT REQUIREMENT FOR TOP HEAVY PLAN 35
5.3 PAYMENT OF RETIREMENT BENEFITS 36
5.4 DISABILITY RETIREMENT BENEFITS 36
5.5 DEATH BENEFITS 38
5.6 TERMINATION OF EMPLOYMENT BEFORE RETIREMENT 39
5.7 DISTRIBUTION OF BENEFITS 42
5.8 DISTRIBUTION OF BENEFITS UPON DEATH 46
5.9 TIME OF SEGREGATION OR DISTRIBUTION 48
5.10 DIRECT ROLLOVERS 48
5.11 DISTRIBUTION FOR MINOR BENEFICIARY 49
5.12 MINIMUM BENEFITS PAYABLE 49
5.13 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN 49
5.14 EFFECT OF SOCIAL SECURITY ACT 50
5.15 LIMITATIONS ON BENEFITS 50
5.16 SUSPENSION OF BENEFITS 50
5.17 RETIREMENT BECAUSE OF PLANT SHUTDOWN OR LAYOFF 53
ARTICLE VI
CODE SECTION 415 LIMITATIONS
6.1 ANNUAL BENEFIT 55
6.2 MAXIMUM ANNUAL BENEFIT 55
6.3 ADJUSTMENTS TO ANNUAL BENEFIT AND LIMITATIONS 57
6.4 ANNUAL BENEFIT NOT IN EXCESS OF $10,000 58
6.5 PARTICIPATION OR SERVICE REDUCTIONS 58
6.6 MULTIPLE PLAN REDUCTION 59
6.7 INCORPORATION BY REFERENCE 61<PAGE>
ARTICLE VII
PLAN AMENDMENT
7.1 AMENDMENT 63
ARTICLE VIII
PLAN TERMINATION
8.1 TERMINATION 65
8.2 LIMITATION OF BENEFITS ON EARLY TERMINATION 68
8.3 PRE-TERMINATION RESTRICTIONS 70
ARTICLE IX
MERGER, CONSOLIDATION OR TRANSFER OF ASSETS
9.1 REQUIREMENTS 73
ARTICLE X
MISCELLANEOUS
10.1 PARTICIPANT'S RIGHTS 74
10.2 ALIENATION 74
10.3 CONSTRUCTION OF PLAN 75
10.4 GENDER AND NUMBER 75
10.5 LEGAL ACTION 75
10.6 PROHIBITION AGAINST DIVERSION OF FUNDS 75
10.7 BONDING 76
10.8 EMPLOYER'S AND TRUSTEE'S PROTECTIVE CLAUSE 76
10.9 INSURER'S PROTECTIVE CLAUSE 76
10.10 RECEIPT AND RELEASE FOR PAYMENTS 76
10.11 ACTION BY THE EMPLOYER 77
10.12 NAMED FIDUCIARIES AND ALLOCATION OF RESPONSIBILITY 77
10.13 HEADINGS 77
10.14 APPROVAL BY INTERNAL REVENUE SERVICE 78
10.15 UNIFORMITY 78<PAGE>
SOUTHDOWN, INC.
PENSION PLAN
THIS PLAN, hereby adopted this 19th day of May, 1994, by
Southdown, Inc. (herein referred to as the "Employer").
W I T N E S S E T H:
WHEREAS, the Employer heretofore established a Pension Plan
effective February 16, 1985, (hereinafter called the "Effective
D a t e ") known as Salaried Employees' Retirement Plan of
Southwestern Portland Cement Company and which plan was renamed
on February 13, 1992 as Southdown, Inc. Pension Plan (herein
referred to as the "Plan") in recognition of the contribution
made to its successful operation by its employees and for the
exclusive benefit of its eligible employees; and
WHEREAS, the Retirement Income Plan for Non-Bargaining Unit
Employees of Milwaukee Solvay Coke Co.; the Retirement Income
Plan for Hourly Employees of Milwaukee Solvay Coke Co.; the
Pension Plan for Production and Maintenance Employees of the
Carbon Brick Plant of the Carbon Block Division of the Carbon
Limestone Company; the Pension Plan for Non-Bargaining Salaried
Employees of the Carbon Limestone Company; and the Pension Plan
for Bargaining Unit Employees of the Carbon Limestone Company
were merged into the Plan effective December 31, 1988; and the
Pension Plan for Employees of Pelto Oil Company was merged into
the Plan effective December 31, 1989; and the Pension Plan for
Employees of Transmix Corp., and the Florida Mining & Materials
Corporation Amended Pension Plan and Trust Agreement were merged
into the Plan effective December 31, 1990 (all such plans
aforementioned as being merged into the Plan referred to
hereafter as the "Merged Plans"); and
WHEREAS, the Plan and certain of the Merged Plans (the "Model
Amendment Plans") were amended in order to adopt Model Amendment
3 of Internal Revenue Service Notice 88-131 and were subsequently
amended to adopt Model Amendment 2 of Internal Revenue Service
Notice 88-131, as provided for in Internal Revenue Service Notice
89-92, which provided that in calculating the Accrued Benefit
(including the right to any optional benefit provided under the
Model Amendment Plans) of any Participant in any of the Model
Amendment Plans who is a Highly Compensated Employee (a "Model
A m e ndment Plan Highly Compensated Employee"), such Model
Amendment Plan Highly Compensated Employee shall accrue no
additional benefit under the Model Amendment Plans on or after
May 31, 1989 to the extent that such additional benefit accrual
exceeds the benefit which would otherwise accrue in accordance
with the terms of the Model Amendment Plans as amended to comply
with the Tax Reform Act of 1986; and
WHEREAS, the Plan was previously amended and restated on February
1<PAGE>
13, 1992, effective January 1, 1989 except as otherwise provided
in such restatement; and
WHEREAS, the Employer wishes to amend the Plan in order to comply
with the certain revisions to the Code and the Act; and
WHEREAS, under the terms of the Plan, the Employer has the
ability to amend the Plan, provided the Trustee joins in such
amendment if the provisions of the Plan affecting the Trustee are
amended;
NOW, THEREFORE, effective January 1, 1989, except as otherwise
provided, the Employer in accordance with the provisions of the
Plan pertaining to amendments thereof, hereby amends the Plan in
its entirety and restates the Plan to provide as follows:
ARTICLE I
DEFINITIONS
1.1 "Accrued Benefit" on behalf of any Participant shall be
determined as follows:
(a) (i) For a Former Participant who has no service under this
Plan after December 31, 1988, the Accrued Benefit will be
determined under the terms of the Plan in effect at the time such
Former Participant was entitled to earn benefit accruals under
the Plan; (ii) for a Participant with at least one Hour of
Service in a Plan Year beginning on or after December 31, 1988,
the Accrued Benefit will be determined in accordance with all of
the following paragraphs of this section 1.1.
(b) Basic Formula
(i) Except as modified by other provisions of this
section 1.1, the amount of Accrued Benefit, calculated
as a monthly benefit commencing at Normal Retirement
Date, shall be equal to the sum of (1) 1.0% of such
Participant's Average Monthly Compensation multiplied
by the Participant's total number of Years of Service,
plus (2) .65% of such Average Monthly Compensation in
excess of one-twelfth of Covered Compensation
multiplied by the Participant's total number of Years
of Service (up to a maximum of 35 years), computed to
the nearest dollar.
(ii) Adjustment for Florida Mining & Materials: With
respect to a Participant who was an active participant
in the Florida Mining and Materials Corporation Amended
Pension Plan and Trust Agreement ("Florida Mining
Plan") on the date such plan was merged into the Plan,
except as modified by other provisions herein, the
Accrued Benefit shall be equal to (1) the basic
2<PAGE>
formula of (b)(i) herein, provided, however, that the
excess benefit of (b)(i)(2) will be based only on
Compensation and Years of Service after December 31,
1989.
(iii) Adjustment for Transmix Corp.: With respect to a
Participant who was an active participant ("Transmix
Participant") in the Pension Plan for Employees of
Transmix Corp. ("Transmix Plan") on the date such plan
was merged into the Plan, except as modified by other
provisions herein, the Accrued Benefit shall be equal
to (1) the basic formula of (b)(i) herein, applied to
Years of Service and Average Monthly Compensation only
for years on or after January 1, 1989 for such Transmix
Participant who is a Model Amendment Plan Highly
Compensated Employee, or only for years on or after
J a n u a ry 1, 1990 for any other such Transmix
Participant, plus (2) the benefit accrued by such
T r ansmix Participant while a participant in the
Transmix Plan. (Benefit accruals ceased under the
T r a nsmix Plan for all Transmix Participants in
accordance with Model Amendment 3 for the 1989 plan
y e ar. Transmix Participants, other than highly
compensated employees, accrued a benefit under the
Transmix Plan for the 1990 plan year.)
(iv) Adjustment for Pelto Oil Company: With respect to
a Participant who was an active participant in the
Pension Plan for Employees of Pelto Oil Company ("Pelto
Plan") on the date such plan was merged into the Plan,
except as modified by other provisions herein, the
Accrued Benefit shall be equal to (1) the basic
formula of (b)(i) herein, applied to Years of Service
and Average Monthly Compensation only for periods after
December 31, 1989, plus (2) the accrued benefit under
such Pelto Plan as of December 31, 1989.
( v ) Adjustment for Southwestern Portland Cement
S a laried Plan Participants: With respect to a
Participant who was an active participant in this Plan
on December 31, 1988, the Accrued Benefit shall be
equal to the greater of (a) the benefit determined in
accordance with the basic formula of (b)(i) herein
based on all of such Participant's Years of Service, or
(b) the sum of the Participant's benefit under the
terms of the Plan as of December 31, 1988 plus the
benefit determined in accordance with the basic formula
of (b)(i) above calculated with respect to Years of
Service beginning after December 31, 1988, except that
the number of Years of Service taken into account for
determining the excess amount in (b)(i)(2) shall be
limited to thirty-five (35) minus the number of Years
3<PAGE>
of Service completed by the Participant as of the close
of the Plan Year beginning prior to January 1, 1989.
(vi) Adjustment for certain collectively bargained
units: Accrued Benefits determined under the Plan will
be modified in accordance with Appendix A, Appendix B
or Appendix C for certain collectively bargained units,
as described in such appendices.
(vii) Offset by Other Plans: The Accrued Benefit
otherwise determined under this Plan will be reduced by
the monthly accrued benefit of any other defined
benefit pension plan to which the Employer contributes
on behalf of such Participant and which covers any
service covered by this Plan.
(c) Minimum benefit: Notwithstanding other provisions of this
section 1.1, for employees who were Participants of this Plan on
February 12, 1992, the Accrued Benefit under this Plan shall not
be less than (1) the accrued benefit determined under the
provisions of this Plan as in effect on February 12, 1992, plus
(2) the benefit determined under the basic formula of (b)(i)
h e rein, applied to Years of Service and Average Monthly
Compensation only for periods after February 12, 1992.
(d) Maximum excess: In calculating benefits under this Plan with
respect to Plan Years beginning after May 27, 1986 (or if the
Plan existed on May 27, 1986, effective for Plan Years beginning
after December 31, 1986), to the extent that the basic formula of
(b)(i) above would not otherwise satisfy the requirements of the
Code and regulations, the amount of the excess shall not exceed
the maximum excess otherwise allowable under the provisions of
the Code and regulations, multiplied by a fraction (not to exceed
one), the numerator of which is the Participant's actual Years of
Service at retirement or termination of employment and the
denominator of which is 35. Such excess shall be further reduced
(on a monthly basis to reflect the month in which benefits
commence) by 1/15th for each of the first five (5) years and
1/30th for each of the next five (5) years by which the starting
date of such benefit precedes the Social Security Retirement Age
of the Participant, and reduced actuarially for each additional
year thereafter.
(e) Limit on compensation: Unless otherwise provided under the
Plan, each Participant who is a section 401(a)(17) employee will
have his accrued benefit under this Plan determined as the
greater of the accrued benefit determined for the Participant
under (1) or (2) as follows: (1) the Participant's accrued
benefit determined with respect to the benefit formula applicable
for the Plan Year beginning on or after January 1, 1994, as
applied to the Participant's total Years of Service taken into
account under the Plan for the purposes of benefit accruals, or
4<PAGE>
(2) the sum of (a) the Participant's accrued benefit as of the
last day of the last Plan Year beginning before January 1, 1994,
f r o zen in accordance with section 1.401(a)(4)-13 of the
regulations, and adjusted by multiplying such frozen benefit by a
fraction, the numerator of which is the average compensation for
the section 401(a)(17) employee determined for the current year
(as limited by section 401(a)(17)), using the same definition and
compensation formula in effect as December 31, 1993, and the
denominator of which is the employee's average compensation as of
December 31, 1993, using the definition and compensation formula
in effect as of December 31, 1993; and (b) the Participant's
accrued benefit determined under the benefit formula applicable
for the Plan Year beginning on or after January 1, 1994, as
applied to the Participant's Years of Service credited for Plan
Years beginning on or after January 1, 1994, for purposes of
benefit accruals. For purposes of this paragraph, a section
401(a)(17) employee means an employee whose current accrued
benefit as of a date on or after the first day of the first Plan
Year beginning on or after January 1, 1994, is based on
compensation for a year beginning prior to the first day of the
first Plan Year beginning on or after January 1, 1994, that
exceeded $150,000.
(f) Accrued Benefit After Normal Retirement Age: Notwithstanding
the above, for Plan Years beginning after December 31, 1987, a
Participant's Accrued Benefit at the close of any Plan Year
coinciding with or next following his attainment of Normal
Retirement Age shall be equal to the monthly retirement benefit
determined pursuant to this section 1.1 based upon Years of
Service and Average Monthly Compensation determined at the close
of any such Plan Year.
( g ) T op Heavy Minimum: Notwithstanding the above, a
Participant's Accrued Benefit derived from Employer contributions
shall not be less than the minimum accrued benefit, if any,
provided pursuant to Section 5.2.
(h) For Plan Years beginning before Code Section 411 is
applicable hereto, a Participant's Accrued Benefit shall be the
greater of that provided by the Plan, or 1/2 of the benefit which
would have accrued had the provisions of this Section been in
effect. In the event the Accrued Benefit as of the effective date
of Code Section 411 is less than that provided by this Section,
such difference shall be accrued pursuant to this Section.
1.2 "Act" means the Employee Retirement Income Security Act of
1974, as it may be amended from time to time.
1.3 "Actuarial Equivalent" means a form of benefit differing in
time, period, or manner of payment from a specific benefit
provided under the Plan but having the same value when computed
using Unisex Pension Mortality Table (UP84) set forward one year
5<PAGE>
for Participants and four years for spouses and contingent
annuitants. Provided, however, that for purposes of determining
the Actuarial Equivalent of a Participant's Local 49 Benefit, D-
357 Benefit, or D-476 Benefit, if applicable, as such terms are
defined in Appendix A, B, or C hereof, the mortality table shall
be the 1971 Group Annuity Mortality Table.
The interest rate for the purpose of determining an Actuarial
Equivalent amount for distribution under a non decreasing annuity
(as described in Regulation section 1.417(e)-l(d)(5)) payable for
a period not less than the life of the Participant or, in the
case of a Pre-Retirement Survivor Annuity, the life of the
surviving spouse, shall be 7 percent per annum.
The interest rate for the purpose of determining an Actuarial
Equivalent amount for all other distributions including lump sum
distributions shall be 7% or the "Section 417 interest rates,"
whichever produces the greater benefit, where the "Section 417
interest rates" are:
(a) the "applicable interest rate" if the resulting present value
of the benefit is not greater than $25,000; and
(b) 120% of the "applicable interest rate" if the present value
under paragraph (a) exceeds $25,000, but in no event shall the
present value calculated under this paragraph (b) be less than
$25,000.
For this purpose, the "applicable interest rate" shall mean the
interest rate which would be used, determined as of the first day
of the Plan Year in which a distribution occurs, by the Pension
Benefit Guaranty Corporation for the purpose of determining the
present value of a lump-sum distribution on plan termination.
However, if the provisions of the Plan prior to this amendment
and restatement so provided, the "applicable interest rate" shall
be determined as of the date of distribution, rather than as of
the first day of the Plan Year in which a distribution occurs.
In the event this Section is amended, the Actuarial Equivalent of
a Participant's Accrued Benefit on or after the date of change
shall be determined as the greater of (1) the Actuarial
Equivalent of the Accrued Benefit as of the date of change
computed on the old basis, or (2) the Actuarial Equivalent of the
total Accrued Benefit computed on the new basis.
1.4 "Administrator" means the person designated by the Employer
pursuant to Section 2.4 to administer the Plan on behalf of the
Employer.
1.5 "Affiliated Employer" means the Employer and any corporation
which is a member of a controlled group of corporations (as
defined in Code Section 414(b)) which includes the Employer; any
6<PAGE>
trade or business (whether or not incorporated) which is under
common control (as defined in Code Section 414(c)) with the
Employer; any organization (whether or not incorporated) which is
a member of an affiliated service group (as defined in Code
Section 414(m)) which includes the Employer; and any other entity
r e quired to be aggregated with the Employer pursuant to
Regulations under Code Section 414(o).
1.6 "Age" means age at last birthday.
1.7 "Aggregate Account" means, with respect to each Participant,
the value of all accounts maintained on behalf of a Participant,
whether attributable to Employer or Employee contributions, used
to determine Top Heavy Plan status under the provisions of a
defined contribution plan included in any Aggregation Group (as
defined in Article II).
1.8 "Anniversary Date" means December 31st.
1.9 "Average Monthly Compensation" means the monthly Compensation
of a Participant averaged over the five (5) consecutive Calendar
Years from his date of participation which produce the highest
monthly average. If a Participant has less than five (5)
c o n secutive Calendar Years of Service from his date of
participation to his date of termination, his Average Monthly
Compensation will be based on his monthly Compensation during his
months of service from his date of participation to his date of
termination. Compensation subsequent to termination of
participation pursuant to Section 3.4 shall not be recognized.
1.10 "Beneficiary" means the Participant's spouse entitled in
Section 5.5 to receive the benefits which are payable under the
Plan upon or after the death of a Participant, or, with respect
to the life annuity with 10-years certain optional form of
benefits as provided in Section 5.7(a)(1), a contingent annuitant
designated to receive remaining benefits, if any, upon or after
the death of a Participant's surviving spouse.
1.11 "Code" means the Internal Revenue Code of 1986, as amended
or replaced from time to time.
1.12 "Compensation" with respect to any Participant means the
basic cash remuneration paid to a Participant by the Employer for
personal services rendered during the Calendar Year, (i) without
regard to hours of work or units produced, and is exclusive of
any remuneration paid on account of overtime, overtime premium,
extended workweek, shift differentials, or other penalties, or
premium rates, or bonuses or all other forms of special pay, but
including (ii) any amount contributed by the Employer pursuant to
a salary reduction agreement and which is not included in the
gross income of the Participant, pursuant to Code Sections 125,
402(a)(8), 402(h) or 403(b). Amounts contributed by the Employer
7<PAGE>
under the within Plan and any non-taxable fringe benefits shall
not be considered as Compensation.
With respect to Employees whose employment is governed by a
collective bargaining agreement described in Appendix A, B, or C
hereof, "Compensation" shall include the additional amounts, if
any, described in such Appendix.
For years beginning after December 31, 1988 and ending prior to
January 1, 1994, compensation in excess of $200,000 shall be
disregarded. With respect to those years between December 31,
1988 and January 1, 1994, such amount shall be adjusted at the
same time and in such manner as permitted under Code Section
415(d), except that the increase in effect on January 1 of any
calendar year is effective for years beginning in such calendar
year and the first adjustment to the $200,000 limitation is
effective on January 1, 1990. For years beginning on or after
January 1, 1994, the annual compensation taken into account under
the plan shall not exceed the OBRA '93 annual compensation limit.
The OBRA '93 annual compensation limit is $150,000, as adjusted
by the Commissioner for increases in the cost of living in
accordance with section 401(a)(17)(B) of the Internal Revenue
Code. The cost-of-living adjustment in effect for a calendar
year applies to any period, not exceeding 12 months, over which
compensation is determined (determination period) beginning in
such calendar year. If a compensation determination period
consists of fewer than 12 months, the $200,000 limit or the OBRA
'93 annual compensation limit, as applicable, will be multiplied
by a fraction, the numerator of which is the number of months in
the determination period, and the denominator of which is 12.
For plan years beginning on or after January 1, 1994, any
reference in this Plan to the limitation under 401(a)(17) of the
Code shall mean the OBRA '93 annual compensation limit set forth
in this provision.
If compensation for any prior determination period is taken into
account in determining a Participant's benefits accruing in the
current Plan Year, the compensation for that prior determination
period is subject to the OBRA '93 annual compensation limit in
effect for that prior determination period. For this purpose,
for determination periods beginning before the first day of the
first plan year beginning on or after January 1, 1994, the OBRA
'93 annual compensation limit is $150,000.
In applying the $200,000 limitation or the OBRA '93 limitation,
the family group of a Highly Compensated Participant who is
subject to the Family Member aggregation rules of Code Section
414(q)(6) because such Participant is either a "five percent
owner" of the Employer or one of the ten (10) Highly Compensated
Employees paid the greatest "415 Compensation" during the year,
shall be treated as a single Participant, except that for this
8<PAGE>
p u r p ose Family Members shall include only the affected
Participant's spouse and any lineal descendants who have not
attained age nineteen (19) before the close of the year. If, as a
result of the application of such rules the adjusted $200,000
limitation or OBRA '93 limit, as applicable, is exceeded, then
the limitation shall be prorated among the affected Family
Members in proportion to each such Family Member's Compensation
prior to the application of this limitation. However, for
purposes of Section 1.1(b), the preceding sentence shall not
a p ply in determining the portion of the Average Monthly
C o m p e n sation of a Participant which is below Covered
Compensation.
1.13 "Contract" or "Policy" means a life insurance policy or
annuity contract (group or individual) issued by the insurer as
elected.
1.14 "Covered Compensation" with respect to any Participant for a
Plan Year means the average (without indexing) of the Taxable
Wage Bases in effect for each calendar year during the 35-year
period ending with the last day of the calendar year in which the
Participant attains (or will attain) Social Security Retirement
Age. A Participant's Covered Compensation shall be adjusted each
Plan Year and no increase in Covered Compensation shall decrease
a Participant's Accrued Benefit. In determining the Participant's
Covered Compensation for a Plan Year, the Taxable Wage Base in
effect for the current Plan Year and any subsequent Plan Year
will be assumed to be the same as the Taxable Wage Base in effect
as of the beginning of the Plan Year for which the determination
is being made. A Participant's Covered Compensation for a Plan
Year before the 35-year period described above is the Taxable
Wage Base in effect as of the beginning of the Plan Year. A
Participant's Covered Compensation for a Plan Year after the
35-year period described above is the Participant's Covered
Compensation for the Plan Year during which the Participant
attained Social Security Retirement Age.
1.15 "Earliest Retirement Age" means the earliest date on which,
under the Plan, the Participant could elect to receive retirement
benefits.
1.16 "Early Retirement Date" means the first day of the month
(prior to the Normal Retirement Date) coinciding with or
following the date on which a Participant or Former Participant
attains age 55 and has completed at least 5 Years of Service with
the Employer (Early Retirement Age). A Participant shall become
fully Vested upon satisfying this requirement if still employed
at his Early Retirement Age.
A Former Participant who terminates employment after satisfying
the service requirement for Early Retirement and who thereafter
reaches the age requirement contained herein shall be entitled to
9<PAGE>
receive his benefits under this Plan.
1.17 "Eligible Employee" means any Employee, subject to the
following.
Employees who are Leased Employees within the meaning of Code
Sections 414(n)(2) and 414(o)(2) shall not be eligible to
participate in this Plan.
Employees who are nonresident aliens and who receive no earned
income (within the meaning of Code Section 911(d)(2)) from the
Employer which constitutes income from sources within the United
States (within the meaning of Code Section 861(a)(3)) shall not
be eligible to participate in this Plan.
Employees whose employment is governed by the terms of a
collective bargaining agreement between Employee representatives
(within the meaning of Code Section 7701(a)(46)) and the Employer
under which retirement benefits were the subject of good faith
bargaining between the parties, unless such agreement expressly
provides for such coverage in this Plan, shall not be eligible to
participate in this Plan.
Employees who are Participants in the Pension Retirement Plan of
S o uthwestern Portland Cement Company for Hourly Employees
("Hourly Plan") maintained by the Employer or the Rho-Chem
Corporation Profit Sharing Plan maintained by an Affiliated
Employer shall not be eligible to participate in this Plan.
In the event that Employees of one or more collective bargaining
units provided pension benefits by the Hourly Plan become
Participants of this Plan as a result of (i) the merger of the
Hourly Plan into the Plan, or (ii) an assumption by the Plan of
the Hourly Plan's liabilities to provide benefits to such
bargaining unit Employees and a transfer of assets by the Hourly
Plan to fund liabilities assumed (including a pro rata portion of
excess assets, if any, calculated in accordance with Code Section
414(1)(2)), all Employees of that collective bargaining unit will
be Eligible Employees and will be eligible for the benefits
provided by the Plan except as modified by the provisions of
Appendix A, Appendix B or Appendix C, as appropriate, attached
hereto.
Employees of Affiliated Employers shall not be eligible to
participate in this Plan unless such Affiliated Employers have
specifically adopted this Plan in writing.
1.18 "Employee" means any person who is employed by the Employer
or Affiliated Employer, but excludes any person who is an
independent contractor. Employee shall include Leased Employees
within the meaning of Code Sections 414(n)(2) and 414(o)(2)
unless such Leased Employees are covered by a plan described in
10<PAGE>
C o de Section 414(n)(5) and such Leased Employees do not
c o n s titute more than 20% of the recipient's non-highly
compensated work force.
1.19 "Employer" means Southdown, Inc.; any successor which shall
maintain this Plan; and any predecessor which has maintained this
Plan. The Employer is a Louisiana corporation with principal
offices in the State of Texas.
1 . 20 "Family Member" means, with respect to an affected
Participant, such Participant's spouse, such Participant's lineal
descendants and ascendants and their spouses, all as described in
Code Section 414(q)(6)(B).
1 . 21 "Fiduciary" means any person who (a) exercises any
discretionary authority or discretionary control respecting
management of the Plan or exercises any authority or control
respecting management or disposition of its assets, (b) renders
investment advice for a fee or other compensation, direct or
indirect, with respect to any monies or other property of the
Plan or has any authority or responsibility to do so, or (c) has
any discretionary authority or discretionary responsibility in
the administration of the Plan, including, but not limited to,
the Trustee, the Employer and its representative body, and the
Administrator.
1.22 "Fiscal Year" means the Employer's accounting year of 12
months commencing on January 1st of each year and ending the
following December 31st.
1.23 "Former Participant" means a person who has been a
Participant, but who has ceased to be a Participant for any
reason.
1.24 "415 Compensation" means compensation as defined in Section
6.2(b).
1.25 "Highly Compensated Employee" means an Employee described in
Code Section 414(q) and the Regulations thereunder, and generally
means an Employee who performed services for the Employer during
the "determination year" and is in one or more of the following
groups:
(a) Employees who at any time during the "determination
year" or "look-back year" were "five percent owners" as
defined in Section 1.30(c).
(b) Employees who received "415 Compensation" during
the "look-back year" from the Employer in excess of
$75,000.
(c) Employees who received "415 Compensation" during
11<PAGE>
the "look-back year" from the Employer in excess of
$50,000 and were in the Top Paid Group of Employees for
the Plan Year.
(d) Employees who during the "look-back year" were
officers of the Employer (as that term is defined
within the meaning of the Regulations under Code
Section 416) and received "415 Compensation" during the
"look-back year" from the Employer greater than 50
percent of the limit in effect under Code Section
415(b)(1)(A) for any such Plan Year. The number of
officers shall be limited to the lesser of (i) 50
employees; or (ii) the greater of 3 employees or 10
p e r c ent of all employees. For the purpose of
determining the number of officers, Employees described
in Section 1.54(a), (b), (c) and (d) shall be excluded,
but such Employees shall still be considered for the
purpose of identifying the particular Employees who are
officers. If the Employer does not have at least one
officer whose annual "415 Compensation" is in excess of
50 percent of the Code Section 415(b)(1)(A) limit, then
the highest paid officer of the Employer will be
treated as a Highly Compensated Employee.
(e) Employees who are in the group consisting of the
100 Employees paid the greatest "415 Compensation"
during the "determination year" and are also described
in (b), (c) or (d) above when these paragraphs are
m o d ified to substitute "determination year" for
"look-back year".
The "determination year" shall be the Plan Year for which testing
is being performed, and the "look-back year" shall be the
immediately preceding twelve-month period.
F o r purposes of this Section, the determination of "415
Compensation" shall be made by including amounts that would
otherwise be excluded from a Participant's gross income by reason
of the application of Code Sections 125, 402(a)(8), 402(h)(1)(B)
and, in the case of Employer contributions made pursuant to a
salary reduction agreement, by including amounts that would
otherwise be excluded from a Participant's gross income by reason
of the application of Code Section 403(b). Additionally, the
dollar threshold amounts specified in (b) and (c) above shall be
adjusted at such time and in such manner as is provided in
Regulations. In the case of such an adjustment, the dollar limits
which shall be applied are those for the calendar year in which
the "determination year" or "look-back year" begins.
In determining who is a Highly Compensated Employee, Employees
who are non-resident aliens and who received no earned income
(within the meaning of Code Section 911(d)(2)) from the Employer
12<PAGE>
constituting United States source income within the meaning of
Code Section 861(a)(3) shall not be treated as Employees.
Additionally, all Affiliated Employers shall be taken into
account as a single employer and Leased Employees within the
meaning of Code Sections 414(n)(2) and 414(o)(2) shall be
considered Employees unless such Leased Employees are covered by
a plan described in Code Section 414(n)(5) and are not covered in
any qualified plan maintained by the Employer. The exclusion of
Leased Employees for this purpose shall be applied on a uniform
and consistent basis for all of the Employer's retirement plans.
Highly Compensated Former Employees shall be treated as Highly
Compensated Employees without regard to whether they performed
services during the "determination year".
1.26 "Highly Compensated Former Employee" means a former Employee
who had a separation year prior to the "determination year" and
was a Highly Compensated Employee in the year of separation from
service or in any "determination year" after attaining age 55.
Notwithstanding the foregoing, an Employee who separated from
service prior to 1987 will be treated as a Highly Compensated
Former Employee only if during the separation year (or year
preceding the separation year) or any year after the Employee
attains age 55 (or the last year ending before the Employee's
55th birthday), the Employee either received "415 Compensation"
in excess of $50,000 or was a "five percent owner". For purposes
of this Section, "determination year", "415 Compensation" and
"five percent owner" shall be determined in accordance with
Section 1.25. Highly Compensated Former Employees shall be
treated as Highly Compensated Employees. The method set forth in
this Section for determining who is a "Highly Compensated Former
Employee" shall be applied on a uniform and consistent basis for
all purposes for which the Code Section 414(q) definition is
applicable.
1 . 2 7 "Highly Compensated Participant" means any Highly
Compensated Employee who is eligible to participate in the Plan.
1.28 "Hour of Service" means (1) each hour for which an Employee
is directly or indirectly compensated or entitled to compensation
by the Employer for the performance of duties during the
applicable computation period; (2) each hour for which an
Employee is directly or indirectly compensated or entitled to
compensation by the Employer (irrespective of whether the
employment relationship has terminated) for reasons other than
performance of duties (such as vacation, holidays, sickness, jury
duty, disability, lay-off, military duty or leave of absence)
during the applicable computation period; (3) each hour for which
back pay is awarded or agreed to by the Employer without regard
to mitigation of damages. These hours will be credited to the
Employee for the computation period or periods to which the award
or agreement pertains rather than the computation period in which
the award, agreement or payment is made. The same Hours of
13<PAGE>
Service shall not be credited both under (1) or (2), as the case
may be, and under (3).
1.29 "Investment Manager" means an entity that (a) has the power
t o manage, acquire, or dispose of Plan assets and (b)
acknowledges fiduciary responsibility to the Plan in writing.
Such entity must be a person, firm, or corporation registered as
an investment adviser under the Investment Advisers Act of 1940,
a bank, or an insurance company.
1.30 "Key Employee" means an Employee as defined in Code Section
416(i) and the Regulations thereunder. Generally, any Employee or
former Employee (as well as each of his Beneficiaries) is
considered a Key Employee if he, at any time during the Plan Year
that contains the "Determination Date" or any of the preceding
four (4) Plan Years, has been included in one of the following
categories:
(a) an officer of the Employer (as that term is defined
within the meaning of the Regulations under Code
Section 416) having annual "415 Compensation" greater
than 50 percent of the amount in effect under Code
Section 415(b)(1)(A) for any such Plan Year.
(b) one of the ten employees having annual "415
Compensation" from the Employer for a Plan Year greater
than the dollar limitation in effect under Code Section
415(c)(1)(A) for the calendar year in which such Plan
Year ends and owning (or considered as owning within
the meaning of Code Section 318) both more than
one-half percent interest and the largest interests in
the Employer.
(c) a "five percent owner" of the Employer. "Five
percent owner" means any person who owns (or is
considered as owning within the meaning of Code Section
318) more than five percent (5%) of the outstanding
stock of the Employer or stock possessing more than
five percent (5%) of the total combined voting power of
all stock of the Employer or, in the case of an
unincorporated business, any person who owns more than
five percent (5%) of the capital or profits interest in
the Employer. In determining percentage ownership
hereunder, employers that would otherwise be aggregated
under Code Sections 414(b), (c), (m) and (o) shall be
treated as separate employers.
(d) a "one percent owner" of the Employer having an
annual "415 Compensation" from the Employer of more
than $150,000. "One percent owner" means any person who
owns (or is considered as owning within the meaning of
Code Section 318) more than one percent (1%) of the
14<PAGE>
outstanding stock of the Employer or stock possessing
more than one percent (1%) of the total combined voting
power of all stock of the Employer or, in the case of
an unincorporated business, any person who owns more
than one percent (1%) of the capital or profits
interest in the Employer. In determining percentage
ownership hereunder, employers that would otherwise be
aggregated under Code Sections 414(b), (c), (m) and (o)
shall be treated as separate employers. However, in
d e t ermining whether an individual has "415
Compensation" of more than $150,000, "415 Compensation"
from each employer required to be aggregated under Code
Sections 414(b), (c), (m) and (o) shall be taken into
account.
F o r purposes of this Section, the determination of "415
Compensation" shall be made by including amounts that would
otherwise be excluded from a Participant's gross income by reason
of the application of Code Sections 125, 402(a)(8), 402(h)(1)(B)
and, in the case of Employer contributions made pursuant to a
salary reduction agreement, by including amounts that would
otherwise be excluded from a Participant's gross income by reason
of the application of Code Section 403(b).
1.31 "Late Retirement Date" means the first day of the month
c o inciding with or next following a Participant's actual
Retirement Date after having reached his Normal Retirement Date.
1.32 "Leased Employee" means any person (other than an Employee
of the recipient) who pursuant to an agreement between the
recipient and any other person ("leasing organization") has
performed services for the recipient (or for the recipient and
related persons determined in accordance with Code Section
414(n)(6)) on a substantially full time basis for a period of at
least one year, and such services are of a type historically
performed by employees in the business field of the recipient
employer. Contributions or benefits provided a Leased Employee by
the leasing organization which are attributable to services
performed for the recipient employer shall be treated as provided
by the recipient employer. A Leased Employee shall not be
considered an Employee of the recipient if both of the following
(a) and (b) are met:
(a) such employee is covered by a money purchase
pension plan providing:
(1) a non-integrated employer contribution
rate of at least 10% of compensation, as
d e fined in Code Section 415(c)(3), but
including amounts contributed pursuant to a
salary reduction agreement which are
excludable from the employee's gross income
15<PAGE>
under Code Sections 125, 402(a)(8), 402(h) or
403(b);
(2) immediate participation; and
(3) full and immediate vesting.
(b) Leased Employees do not constitute more than 20% of
the recipient's non-highly compensated work force.
1.33 "Month of Service" means a calendar month during any part of
which an Employee completed an Hour of Service. Except, however,
for purposes of vesting and participation, but not for benefit
accrual, a Participant shall be credited with a Month of Service
for each month during a 12 month period in which he has not
incurred a 1-Year Break in Service.
1.34 "Non-Highly Compensated Participant" means any Participant
who is neither a Highly Compensated Employee nor a Family Member.
1.35 "Non-Key Employee" means any Employee or former Employee
(and his Beneficiaries) who is not a Key Employee.
1.36 "Normal Retirement Date" means the first day of the month
coinciding with or next following the Participant's Normal
Retirement Age (65th birthday). A Participant shall become fully
Vested in his Normal Retirement Benefit upon attaining his Normal
Retirement Age.
1.37 "l-Year Break in Service" means the applicable computation
period of 12 consecutive months during which an Employee fails to
accrue a Month of Service. Further, solely for the purpose of
determining whether a Participant has incurred a 1-Year Break in
Service, Hours of Service shall be recognized for "authorized
leaves of absence" and "maternity and paternity leaves of
absence." Years of Service and l-Year Breaks in Service shall be
measured on the same computation period.
An Employee shall not be deemed to have incurred a l-Year Break
in Service if he completes an Hour of Service within 12 months
following the last day of the month during which his employment
t e r minated. In determining whether a Participant whose
employment is covered by a collective bargaining agreement set
forth in Appendix A, B, or C has incurred a 1-Year Break in
Service during any period preceding the date of merger of the
Hourly Plan (see 1.17) and this Plan, the terms of such Hourly
Plan as in effect on the day immediately preceding the date of
such merger shall apply.
" A uthorized leave of absence" means an unpaid, temporary
cessation from active employment with the Employer pursuant to an
established nondiscriminatory policy, whether occasioned by
16<PAGE>
illness, military service, or any other reason. An "authorized
leave of absence" shall not include a leave of absence for the
purpose of accepting a position with a labor union, at the Local,
District, or International level, or the AFL-CIO or any of its
subordinate bodies.
A period of continuing "disability" beginning with the earliest
date the Employee is incapable of performing his assigned duties
and ending as of the earlier of the date "disability" ends or the
twelfth monthly anniversary of the beginning of the period of
"disability" shall constitute an authorized leave of absence.
"Disability" means the mental or physical incapacity (the
duration of which may be either permanent or temporary) of an
Employee which, in the opinion of a licensed physician approved
by the Administrator (which opinion may reasonably be requested
at any time and one or more times to determine the status of
disability), renders the Employee totally incapable of performing
his assigned duties with the Employer; provided, however, that
any condition which constitutes total disability under the Social
Security Act shall constitute "disability" for all purposes
hereunder. A separate period of "disability" shall begin after
(i) the Employee has been authorized by the Employer to return to
work pursuant to policies uniformly and consistently applied, and
(ii) the Employee performs his assigned duties with Employer for
eight hours in a continuous 24-hour period beginning at 12:01
a.m.
A "maternity or paternity leave of absence" means, for Plan Years
beginning after December 31, 1984, an absence from work for any
period by reason of the Employee's pregnancy, birth of the
Employee's child, placement of a child with the Employee in
connection with the adoption of such child, or any absence for
the purpose of caring for such child for a period immediately
following such birth or placement. For this purpose, Hours of
Service shall be credited for the computation period in which the
absence from work begins, only if credit therefore is necessary
to prevent the Employee from incurring a l-Year Break in Service,
or, in any other case, in the immediately following computation
period.
1.38 "Participant" means any Eligible Employee who participates
in the Plan as provided in Section 3.3, and has not for any
reason become ineligible to participate further in the Plan.
1.39 "Plan" means this instrument, including all amendments
thereto.
1.40 "Plan Year" means the Plan's accounting year of twelve (12)
months commencing on January 1st of each year and ending the
following December 31st.
1.41 "Plan Year of Service" means a Plan Year during which an
17<PAGE>
Employee is a Participant and completes 12 consecutive Months of
Service.
1.42 "Pre-Retirement Survivor Annuity" means an immediate annuity
for the life of the Surviving Spouse the Actuarial Equivalent of
which is not less than the amount which the Surviving Spouse
would have received as a survivor annuity had the Participant
commenced receiving an immediate joint and 50% survivor annuity
on the day before his death.
1.43 "Present Value of Accrued Benefit" means the Actuarial
Equivalent value of a Participant's Accrued Benefit at date of
valuation. Notwithstanding the foregoing, the Present Value of
Accrued Benefit for the determination of Top Heavy Plan status
shall be made exclusively pursuant to the provisions of Section
2.2.
1.44 "Regulation" means the Income Tax Regulations as promulgated
by the Secretary of the Treasury or his delegate, and as amended
from time to time.
1.45 "Retired Participant" means a person who has been a
Participant, but who has become entitled to retirement benefits
under the Plan.
1.46 "Retirement Date" means the date as of which a Participant
retires whether such retirement occurs on a Participant's Normal
Retirement Date, Early or Late Retirement Date (see Section 5.1).
1.47 "Social Security Retirement Age" means the age used as the
retirement age under Section 216(1) of the Social Security Act,
except that such section shall be applied without regard to the
age increase factor and as if the early retirement age under
Section 216(1)(2) of such Act were 62.
1.48 "Spouse" or "Surviving Spouse" means a person of the
opposite sex to whom the Participant was married throughout the
one-year period ending on the earlier of the date distributions
commence or the date of the Participant's death. If the
Participant marries within the one-year period prior to the
commencement of his distributions and has been married to that
person throughout the one-year period ending on the date of his
death, such person shall be treated as the Surviving Spouse.
1.49 "Super Top Heavy Plan" means a plan described in Section
2.2(b).
1.50 "Taxable Wage Base" means, with respect to any calendar
year, the maximum amount of earnings which may be considered
wages for such year under Code Section 3121(x)(1).
1.51 "Terminated Participant" means a person who has been a
18<PAGE>
Participant, but whose employment has been terminated other than
by death or retirement.
1.52 "Top Heavy Plan" means a plan described in Section 2.2(a).
1.53 "Top Heavy Plan Year" means a Plan Year commencing after
December 31, 1983 during which the Plan is a Top Heavy Plan.
1.54 "Top Paid Group" means the top 20 percent of Employees who
performed services for the Employer during the applicable year,
ranked according to the amount of "415 Compensation" (determined
for this purpose in accordance with Section 1.25) received from
the Employer during such year. All Affiliated Employers shall be
taken into account as a single employer, and Leased Employees
within the meaning of Code Sections 414(n)(2) and 414(o)(2) shall
be considered Employees unless such Leased Employees are covered
by a plan described in Code Section 414(n)(5) and are not covered
in any qualified plan maintained by the Employer. Employees who
are non-resident aliens and who received no earned income (within
the meaning of Code Section 911(d)(2)) from the Employer
constituting United States source income within the meaning of
Code Section 861(a)(3) shall not be treated as Employees.
Additionally, for the purpose of determining the number of active
Employees in any year, the following additional Employees shall
also be excluded; however, such Employees shall still be
c o nsidered for the purpose of identifying the particular
Employees in the Top Paid Group:
(a) Employees with less than six (6) months of service;
(b) Employees who normally work less than 17 1/2 hours
per week;
(c) Employees who normally work less than six (6)
months during a year; and
(d) Employees who have not yet attained age 21.
In addition, if 90 percent or more of the Employees of the
Employer are covered under agreements the Secretary of Labor
finds to be collective bargaining agreements between Employee
representatives and the Employer, and the Plan covers only
Employees who are not covered under such agreements, then
Employees covered by such agreements shall be excluded from both
the total number of active Employees as well as from the
identification of particular Employees in the Top Paid Group.
The foregoing exclusions set forth in this Section shall be
applied on a uniform and consistent basis for all purposes for
which the Code Section 414(q) definition is applicable.
1.55 "Trustee" means the person or entity named as trustee herein
19<PAGE>
or in any separate trust forming a part of this Plan, and any
successors.
1.56 "Trust Fund" means the assets of the Plan and Trust as the
same shall exist from time to time.
1.57 "Vested" means the portion of a Participant's benefits under
the Plan that are nonforfeitable.
1.58 "Year of Service" means twelve (12) consecutive Months of
Service. Years of Service shall include a fractional Year of
Service expressed as a fraction, the numerator of which is the
number of completed months and the denominator of which is 12.
Years of Service with respect to a Participant whose employment
is governed by a collective bargaining agreement set forth in
Appendix A, B, or C herein will be determined under the terms of
the Hourly Plan (see 1.17) as in effect on the day immediately
preceding the day such plan was merged with this Plan, but only
with respect to service prior to such plan merger, as follows:
(a) for eligibility, eligibility service as defined in
such Hourly Plan will be substituted for Years of
Service for such period;
(b) for vesting, vesting service as defined in such
Hourly Plan will be substituted for Years of Service
for such period;
( c ) for determining the Accrued Benefit under
1.1(b)(i), transition service as defined in such Hourly
Plan will be substituted for Years of Service for such
period.
Years of Service with any predecessor Employer that was acquired
by or combined with the Employer shall be recognized for
eligibility and vesting purposes, but only for service after a
date that is to be established by mutual agreement between the
predecessor Employer and the Employer or, if no such date is
established by such parties, by the Administrator. Any date so
established shall be the same for all Employees of such
predecessor Employer eligible to participate in this Plan.
Years of Service with any Affiliated Employer shall be recognized
for eligibility and vesting purposes.
20<PAGE>
ARTICLE II
TOP HEAVY AND ADMINISTRATION
2.1 TOP HEAVY PLAN REQUIREMENTS
For any Top Heavy Plan Year, the Plan shall provide the special
vesting requirements of Code Section 416(b) pursuant to Section
5.06 of the Plan and the special minimum benefit requirements of
Code Section 416(c) pursuant to Section 5.2 of the Plan. The Top
Heavy provisions of this Plan shall not apply to Participants who
are represented by a collective bargaining agreement.
2.2 DETERMINATION OF TOP HEAVY STATUS
(a) This Plan shall be a Top Heavy Plan for any Plan Year
c o mmencing after December 31, 1983 in which, as of the
Determination Date, (1) the Present Value of Accrued Benefits of
Key Employees and (2) the sum of the Aggregate Accounts of Key
Employees under this Plan and all plans of an Aggregation Group,
exceeds sixty percent (60%) of the Present Value of Accrued
Benefits and the Aggregate Accounts of all Key and Non-Key
Employees under this Plan and all plans of an Aggregation Group.
If any Participant is a Non-Key Employee for any Plan Year, but
such Participant was a Key Employee for any prior Plan Year, such
Participant's Present Value of Accrued Benefit and/or Aggregate
Account balance shall not be taken into account for purposes of
determining whether this Plan is a Top Heavy or Super Top Heavy
Plan (or whether any Aggregation Group which includes this Plan
is a Top Heavy Group). In addition, for Plan Years beginning
after December 31, 1984, if a Participant or Former Participant
has not performed any services for any Employer maintaining the
Plan at any time during the five year period ending on the
Determination Date, any accrued benefit for such Participant or
Former Participant shall not be taken into account for the
purposes of determining whether this Plan is a Top Heavy or Super
Top Heavy Plan.
(b) This Plan shall be a Super Top Heavy Plan for any Plan Year
c o mmencing after December 31, 1983 in which, as of the
Determination Date, (1) the Present Value of Accrued Benefits of
Key Employees and (2) the sum of the Aggregate Accounts of Key
Employees under this Plan and all plans of an Aggregation Group,
exceeds ninety percent (90%) of the Present Value of Accrued
Benefits and the Aggregate Accounts of all Key and Non-Key
Employees under this Plan and all plans of an Aggregation Group.
(c) Aggregate Account: A Participant's Aggregate Account as of
the Determination Date shall be determined under applicable
provisions of the defined contribution plan used in determining
Top Heavy Plan status.
21<PAGE>
(d) "Aggregation Group" means either a Required Aggregation Group
or a Permissive Aggregation Group as hereinafter determined.
(1) Required Aggregation Group: In determining a
Required Aggregation Group hereunder, each plan of the
Employer in which a Key Employee is a participant in
the Plan Year containing the Determination Date or any
of the four preceding Plan Years, and each other plan
of the Employer which enables any plan in which a Key
Employee participates to meet the requirements of Code
Sections 401(a)(4) or 410, will be required to be
aggregated. Such group shall be known as a Required
Aggregation Group.
In the case of a Required Aggregation Group, each plan
in the group will be considered a Top Heavy Plan if the
Required Aggregation Group is a Top Heavy Group. No
p l an in the Required Aggregation Group will be
considered a Top Heavy Plan if the Required Aggregation
Group is not a Top Heavy Group.
(2) Permissive Aggregation Group: The Employer may also
include any other plan not required to be included in
the Required Aggregation Group, provided the resulting
group, taken as a whole, would continue to satisfy the
provisions of Code Sections 401(a)(4) and 410. Such
group shall be known as a Permissive Aggregation Group.
In the case of a Permissive Aggregation Group, only a
plan that is part of the Required Aggregation Group
will be considered a Top Heavy Plan if the Permissive
Aggregation Group is a Top Heavy Group. No plan in the
Permissive Aggregation Group will be considered a Top
Heavy Plan if the Permissive Aggregation Group is not a
Top Heavy Group.
(3) Only those plans of the Employer in which the
Determination Dates fall within the same calendar year
shall be aggregated in order to determine whether such
plans are Top Heavy Plans.
(4) An Aggregation Group shall include any terminated
plan of the Employer if it was maintained within the
last five (5) years ending on the Determination Date.
(e) "Determination Date" means (a) the last day of the preceding
Plan Year, or (b) in the case of the first Plan Year, the last
day of such Plan Year.
(f) Present Value of Accrued Benefit: In the case of a defined
benefit plan, a Participant's Present Value of Accrued Benefit
shall be determined:
22<PAGE>
(1) in the case of a Participant other than a Key
Employee, using the single accrual method used for all
plans of the Employer and Affiliated Employers, or if
no such single method exists, using a method which
results in benefits accruing not more rapidly than the
slowest accrual rate permitted under Code Section
411(b)(1)(C).
(2) as of the most recent "actuarial valuation date",
which is the most recent valuation date within a twelve
(12) month period ending on the Determination Date.
(3) for the first Plan Year, as if (a) the Participant
terminated service as of the Determination Date; or (b)
the Participant terminated service as of the actuarial
valuation date, but taking into account the estimated
Accrued Benefits as of the Determination Date.
(4) for the second Plan Year, the Accrued Benefit taken
into account for a current Participant must not be less
than the Accrued Benefit taken into account for the
first Plan Year unless the difference is attributable
to using an estimate of the Accrued Benefit as of the
Determination Date for the first Plan Year and using
the actual Accrued Benefit for the second Plan Year.
(5) for any other Plan Year, as if the Participant
terminated service as of the actuarial valuation date.
(6) The actuarial valuation date must be the same date
used for computing the defined benefit plan minimum
funding costs, regardless of whether a valuation is
performed that Plan Year.
(g) The calculation of a Participant's Present Value of Accrued
Benefit as of a Determination Date shall be the sum of:
(1) The Present Value of Accrued Benefit using the
actuarial assumptions of Section 1.3, which assumptions
shall be identical for all defined benefit plans being
tested for Top Heavy Plan status.
(2) any Plan distributions made within the Plan Year
that includes the Determination Date or within the four
(4) preceding Plan Years. However, in the case of
distributions made after the valuation date and prior
to the Determination Date, such distributions are not
included as distributions for top heavy purposes to the
extent that such distributions are already included in
the Participant's Present Value of Accrued Benefit as
of the valuation date. Notwithstanding anything herein
to the contrary, all distributions, including
23<PAGE>
distributions made prior to January 1, 1984, and
distributions under a terminated plan which if it had
not been terminated would have been required to be
included in an Aggregation Group, will be counted.
Further, benefits paid on account of death, to the
extent such benefits do not exceed the Present Value of
Accrued Benefits existing immediately prior to death,
shall be treated as distributions for the purposes of
this paragraph.
(3) any Employee contributions, whether voluntary or
m a n datory. However, amounts attributable to tax
deductible Qualified Voluntary Employee Contributions
s h a ll not be considered to be a part of the
Participant's Present Value of Accrued Benefit.
(4) with respect to unrelated rollovers and
plan-to-plan transfers (ones which are both initiated
by the Employee and made from a plan maintained by one
employer to a plan maintained by another employer), if
this Plan provides the rollovers or plan-to-plan
transfers, it shall always consider such rollovers or
plan-to-plan transfers as a distribution for the
purposes of this Section. If this Plan is the plan
accepting such rollovers or plan-to-plan transfers, it
shall not consider such rollovers or plan-to-plan
transfers accepted after December 31, 1983, as part of
the Participant's Present Value of Accrued Benefit.
However, rollovers or plan-to-plan transfers accepted
prior to January 1, 1984, shall be considered as part
of the Participant's Present Value of Accrued Benefit.
(5) with respect to related rollovers and plan-to-plan
transfers (ones either not initiated by the Employee or
made to a plan maintained by the same employer), if
this Plan provides the rollovers or plan-to-plan
transfers, it shall not be counted as a distribution
for purposes of this Section. If this Plan is the plan
accepting such rollovers or plan-to-plan transfers, it
shall consider such rollovers or plan-to-plan transfers
as part of the Participant's Present Value of Accrued
Benefit, irrespective of the date on which such
rollovers or plan-to-plan transfers are accepted.
(6) For the purposes of determining whether two
employers are to be treated as the same employer in (4)
and (5) above, all employers aggregated under Code
Section 414(b), (c), (m) or (o) are treated as the same
employer.
(h) "Top Heavy Group" means an Aggregation Group in which, as of
the Determination Date, the sum of:
24<PAGE>
(1) the Present Value of Accrued Benefits of Key
Employees under all defined benefit plans included in
the group, and
(2) the Aggregate Accounts of Key Employees under all
defined contribution plans included in the group,
exceeds sixty percent (60%) of a similar sum determined
for all Participants.
2.3 POWERS AND RESPONSIBILITIES OF THE EMPLOYER
(a) The Employer shall be empowered to appoint and remove the
Trustee and the Administrator from time to time as it deems
necessary for the proper administration of the Plan to assure
that the Plan is being operated for the exclusive benefit of the
Participants and their Beneficiaries in accordance with the terms
of the Plan, the Code, and the Act.
(b) The Employer shall establish a "funding policy and method",
i.e., it shall determine whether the Plan has a short-term need
for liquidity (e.g., to pay benefits) or whether liquidity is a
long-term goal and investment growth (and stability of same) is a
more current need, or shall appoint a qualified person to do so.
The Employer or its delegate shall communicate such needs and
goals to the Trustee, who shall coordinate such Plan needs with
its investment policy. The communication of such a "funding
policy and method" shall not, however, constitute a directive to
the Trustee as to investment of the Trust Funds. Such "funding
policy and method" shall be consistent with the objectives of
this Plan and with the requirements of Title I of the Act.
(c) The Employer shall periodically review the performance of any
Fiduciary or other person to whom duties have been delegated or
allocated by it under the provisions of this Plan or pursuant to
p r ocedures established hereunder. This requirement may be
satisfied by formal periodic review by the Employer or by a
qualified person specifically designated by the Employer, through
day-to-day conduct and evaluation, or through other appropriate
ways.
2.4 DESIGNATION OF ADMINISTRATIVE AUTHORITY
The Employer shall appoint one or more Administrators. Any
person, including, but not limited to, the Employees of the
Employer, shall be eligible to serve as an Administrator. Any
person so appointed shall signify his acceptance by filing
written acceptance with the Employer. An Administrator may resign
by delivering his written resignation to the Employer or be
removed by the Employer by delivery of written notice of removal,
to take effect at a date specified therein, or upon delivery to
the Administrator if no date is specified.
25<PAGE>
T h e E m ployer, upon the resignation or removal of an
Administrator, shall promptly designate in writing a successor to
this position. If the Employer does not appoint an Administrator,
the Employer will function as the Administrator.
2.5 ALLOCATION AND DELEGATION OF RESPONSIBILITIES
If more than one person is appointed as Administrator, the
responsibilities of each Administrator may be specified by the
Employer and accepted in writing by each Administrator. In the
event that no such delegation is made by the Employer, the
Administrators may allocate the responsibilities among
themselves, in which event the Administrators shall notify the
Employer and the Trustee in writing of such action and specify
t h e responsibilities of each Administrator. The Trustee
thereafter shall accept and rely upon any documents executed by
the appropriate Administrator until such time as the Employer or
the Administrators file with the Trustee a written revocation of
such designation.
2.6 POWERS AND DUTIES OF THE ADMINISTRATOR
The primary responsibility of the Administrator is to administer
the Plan for the exclusive benefit of the Participants and their
Beneficiaries, subject to the specific terms of the Plan. The
Administrator shall administer the Plan in accordance with its
terms and shall have the power and discretion to construe the
terms of the Plan and to determine all questions arising in
connection with the administration, interpretation, and
a p p lication of the Plan. Any such determination by the
Administrator shall be conclusive and binding upon all persons.
The Administrator may establish procedures, correct any defect,
supply any information, or reconcile any inconsistency in such
manner and to such extent as shall be deemed necessary or
advisable to carry out the purpose of the Plan; provided,
however, that any procedure, discretionary act, interpretation or
construction shall be done in a nondiscriminatory manner based
upon uniform principles consistently applied and shall be
consistent with the intent that the Plan shall continue to be
deemed a qualified plan under the terms of Code Section 401(a),
and shall comply with the terms of the Act and all regulations
issued pursuant thereto. The Administrator shall have all powers
necessary or appropriate to accomplish his duties under this
Plan.
The Administrator shall be charged with the duties of the general
administration of the Plan, including, but not limited to, the
following:
(a) the discretion to determine all questions relating
to the eligibility of Employees to participate or
26<PAGE>
remain a Participant hereunder and to receive benefits
under the Plan;
(b) to compute, certify, and direct the Trustee with
respect to the amount and the kind of benefits to which
any Participant shall be entitled hereunder;
(c) to authorize and direct the Trustee with respect to
all nondiscretionary or otherwise directed
disbursements from the Trust;
( d ) to maintain all necessary records for the
administration of the Plan;
(e) to interpret the provisions of the Plan and to make
and publish such rules for regulation of the Plan as
are consistent with the terms hereof;
(f) to determine the size and type of any Contract to
be purchased from any insurer and to designate the
insurer from which such Contract shall be purchased.
All Policies shall be issued on a uniform basis as of
each Anniversary Date with respect to all Participants
under similar circumstances;
(g) to compute and certify to the Employer and to the
Trustee from time to time the sums of money necessary
or desirable to be contributed to the Plan;
(h) to consult with the Employer and the Trustee
regarding the short-term and long-term liquidity needs
of the Plan in order that the Trustee can exercise any
i n v e stment discretion in a manner designed to
accomplish specific objectives;
(i) to prepare and distribute to Employees a procedure
for notifying Participants and Beneficiaries of their
rights to elect joint and survivor annuities and
Pre-Retirement Survivor Annuities as required by the
Act and Regulations thereunder;
(j) to assist any Participant regarding his rights,
benefits, or elections available under the Plan.
2.7 RECORDS AND REPORTS
The Administrator shall keep a record of all actions taken and
shall keep all other books of account, records, and other data
that may be necessary for proper administration of the Plan and
shall be responsible for supplying all information and reports to
the Internal Revenue Service, Department of Labor, Participants,
Beneficiaries and others as required by law.
27<PAGE>
2.8 APPOINTMENT OF ADVISORS
The Administrator, or the Trustee with the consent of the
Administrator, may appoint counsel, specialists, advisers, and
other persons as the Administrator or the Trustee deems necessary
or desirable in connection with the administration of this Plan.
2.9 INFORMATION FROM EMPLOYER
To enable the Administrator to perform his functions, the
Employer shall supply full and timely information to the
Administrator on all matters relating to the Compensation of all
Participants, their Hours of Service, their Years of Service,
t h e i r retirement, death, disability, or termination of
employment, and such other pertinent facts as the Administrator
may require; and the Administrator shall advise the Trustee of
such of the foregoing facts as may be pertinent to the Trustee's
duties under the Plan. The Administrator may rely upon such
information as is supplied by the Employer and shall have no duty
or responsibility to verify such information.
2.10 PAYMENT OF EXPENSES
All expenses of administration may be paid out of the Trust Fund
unless paid by the Employer. Such expenses shall include any
expenses incident to the functioning of the Administrator,
including, but not limited to, fees of accountants, counsel, and
o t h er specialists and their agents, and other costs of
administering the Plan. Until paid, the expenses shall constitute
a liability of the Trust Fund. However, the Employer may
reimburse the Trust Fund for any administration expense incurred.
A n y administration expense paid to the Trust Fund as a
reimbursement shall not be considered an Employer contribution.
2.11 MAJORITY ACTIONS
Except where there has been an allocation and delegation of
administrative authority pursuant to Section 2.5, if there shall
be more than one Administrator, they shall act by a majority of
their number, but may authorize one or more of them to sign all
papers on their behalf.
2.12 CLAIMS PROCEDURE
Claims for benefits under the Plan may be filed with the
Administrator on forms supplied by the Employer. Written notice
of the disposition of a claim shall be furnished to the claimant
within 90 days after the application is filed. In the event the
claim is denied, the reasons for the denial shall be specifically
set forth in the notice in language calculated to be understood
by the claimant, pertinent provisions of the Plan shall be cited,
28<PAGE>
and, where appropriate, an explanation as to how the claimant can
perfect the claim will be provided. In addition, the claimant
shall be furnished with an explanation of the Plan's claims
review procedure.
2.13 CLAIMS REVIEW PROCEDURE
Any Employee, former Employee, or Beneficiary of either, who has
been denied a benefit by a decision of the Administrator pursuant
to Section 2.12 shall be entitled to request the Administrator to
give further consideration to his claim by filing with the
Administrator (on a form which may be obtained from the
Administrator) a request for a hearing. Such request, together
with a written statement of the reasons why the claimant believes
h i s claim should be allowed, shall be filed with the
Administrator no later than 60 days after receipt of the written
notification provided for in Section 2.12. The Administrator
shall then conduct a hearing within the next 60 days, at which
the claimant may be represented by an attorney or any other
representative of his choosing and at which the claimant shall
have an opportunity to submit written and oral evidence and
arguments in support of his claim. At the hearing (or prior
thereto upon 5 business days written notice to the Administrator)
the claimant or his representative shall have an opportunity to
review all documents in the possession of the Administrator which
are pertinent to the claim at issue and its disallowance. Either
the claimant or the Administrator may cause a court reporter to
attend the hearing and record the proceedings. In such event, a
complete written transcript of the proceedings shall be furnished
to both parties by the court reporter. The full expense of any
such court reporter and such transcripts shall be borne by the
party causing the court reporter to attend the hearing. A final
decision as to the allowance of the claim shall be made by the
Administrator within 60 days of receipt of the appeal (unless
t h ere has been an extension of 60 days due to special
circumstances, provided the delay and the special circumstances
occasioning it are communicated to the claimant within the 60 day
period). Such communication shall be written in a manner
calculated to be understood by the claimant and shall include
specific reasons for the decision and specific references to the
pertinent Plan provisions on which the decision is based.
29<PAGE>
ARTICLE III
ELIGIBILITY
3.1 CONDITIONS OF ELIGIBILITY
Any Eligible Employee who has completed one (1) Year of Service
shall be eligible to participate hereunder as of the date he has
satisfied such requirements. However, any Employee who was a
Participant in the Plan prior to the effective date of this
amendment and restatement shall continue to participate in the
Plan.
3.2 EFFECTIVE DATE OF PARTICIPATION
An Eligible Employee shall become a Participant effective as of
the earlier of the first day of the Plan Year or the first day of
the seventh month of such Plan Year coinciding with or next
following the date such Employee met the eligibility requirements
of Section 3.1, provided said Employee was still employed as of
such date (or if not employed on such date, as of the date of
rehire if a l-Year Break in Service has not occurred).
3.3 DETERMINATION OF ELIGIBILITY
The Administrator shall determine the eligibility of each
Employee for participation in the Plan based upon information
furnished by the Employer. Such determination shall be conclusive
and binding upon all persons, as long as the same is made
pursuant to the Plan and the Act. Such determination shall be
subject to review per Section 2.13.
3.4 TERMINATION OF ELIGIBILITY
(a) In the event a Participant shall go from a classification of
an Eligible Employee to an ineligible Employee, such Former
Participant shall continue to vest in his Accrued Benefit under
the Plan for each Year of Service completed while a noneligible
employee, until such time as his Accrued Benefit shall be
forfeited or distributed pursuant to the terms of the Plan.
(b) In the event a Participant is no longer a member of an
eligible class of Employees and becomes ineligible to participate
but has not incurred a 1-Year Break in Service, such Employee
will participate immediately upon returning to an eligible class
of Employees. If such Participant incurs a 1-Year Break in
Service, eligibility will be determined under the break in
service rules of the Plan.
(c) In the event an Employee who is not a member of an eligible
class of Employees becomes a member of an eligible class, such
Employee will participate immediately if such Employee has
satisfied the minimum age and service requirements and would have
30<PAGE>
otherwise previously become a Participant.
31<PAGE>
ARTICLE IV
CONTRIBUTION AND VALUATION
4.1 PAYMENT OF CONTRIBUTIONS
No contribution shall be required under the Plan from any
Participant. The Employer shall pay to the Trustee from time to
time such amounts in cash or property acceptable to the Trustee
as the Administrator and Employer shall determine to be necessary
to provide the benefits under the Plan determined by the
application of accepted actuarial methods and assumptions. The
method of funding shall be consistent with Plan objectives.
4.2 ACTUARIAL METHODS
In measuring the liabilities under the Plan and contributions
t h ereto, the enrolled actuary will use such methods and
assumptions as will reasonably reflect the cost of the benefits.
The Plan assets are to be valued on the basis of any reasonable
method of valuation that takes into account fair market value
pursuant to regulations prescribed by the Secretary of Treasury.
There must be an actuarial valuation of the Plan at least once
every year.
32<PAGE>
ARTICLE V
BENEFITS
5.1 RETIREMENT BENEFITS
(a) The amount of monthly retirement benefit to be provided for
each Participant who retires on his Normal Retirement Date (which
benefit is herein called his Normal Retirement Benefit) shall be
the Accrued Benefit determined as of his Normal Retirement Date
in accordance with the provisions of Section 1.1 of the Plan.
The "Normal Retirement Benefit" means the periodic benefit under
the Plan commencing upon early retirement or at Normal Retirement
Date, whichever benefit is greater.
(b) A Participant may elect to retire on an Early Retirement
Date. In the event that a Participant makes such an election, he
shall be entitled to receive an Early Retirement Benefit equal to
his Accrued Benefit payable at his Normal Retirement Date.
However, if a Participant so elects, he may receive payment of an
Early Retirement Benefit commencing on the first day of the month
coinciding with or next following his Early Retirement Date,
which Early Retirement Benefit shall equal his Accrued Benefit
reduced (on a monthly basis to reflect the month in which
benefits commence) for each additional year that the commencement
of an Early Retirement Benefit precedes Normal Retirement Age
(determined without regard to any years of participation) so that
the cumulative reduction from Normal Retirement Age (determined
without regard to any years of participation) to the commencement
of an Early Retirement Benefit equals 1/15th for each of the
first five (5) years and 1/30th for each of the next five (5)
years and reduced actuarially for each additional year thereafter
that the Anniversary Date on which his Early Retirement Benefit
commences precedes his Normal Retirement Age. With respect to
Early Retirement Benefits commencing prior to the Participant
attaining age 55, the Accrued Benefit shall be further reduced
(on a monthly basis to reflect the month in which benefits
commence) to an amount that is the Actuarial Equivalent of the
Accrued Benefit (as reduced in accordance with the preceding
sentence) applicable to a benefit commencing in the month in
which the Participant attains age 55. For purposes of this
paragraph, a benefit commences on the first day of the period for
which the benefit is paid. Notwithstanding the above, if the
Actuarial Equivalent of the Present Value of Accrued Benefit
(calculated without regard to Section 1.3) of such Participant is
greater than the Early Retirement Benefit calculated above, such
amount shall be the Early Retirement Benefit.
Notwithstanding the above, the Early Retirement Benefit for any
Participant who is a Transmix Participant as defined in Section
1.1(b)(iii) herein shall not be less than the early retirement
benefit determined under the terms of the Transmix Plan, based on
the accrued benefit under such Transmix Plan as of the date of
33<PAGE>
merger of such Transmix Plan with this Plan.
(c) The Normal Retirement Benefit payable to a Participant
pursuant to this Section 5.1 shall be a monthly pension
commencing on his Retirement Date and continuing for life. The
f o rm of distribution of such benefit, however, shall be
determined pursuant to the provisions of Section 5.7.
(d) At the request of a Participant he may be continued in
employment beyond his Normal Retirement Date. In such event, no
retirement benefit will be paid to the Participant until he
actually retires, subject, however, to any required minimum
distributions pursuant to Section 5.7(e). For purposes of 5.7(e),
at the close of each Plan Year (which begins after December 31,
1987) prior to his actual Retirement Date, a Participant shall be
entitled to a retirement benefit equal to his Accrued Benefit
determined at the close of the Plan Year, subject to the
provisions of Section 5.16. The monthly retirement benefit
calculated pursuant to this Section 5.1(d) shall be offset by the
actuarial value (determined pursuant to Section 1.3) of the total
benefit distributions (pursuant to Section 5.7(e)) made by the
close of the Plan Year.
(e) If a Former Participant again becomes a Participant, such
r e newed participation shall not result in duplication of
benefits. Accordingly, if he has received a distribution of a
Vested Accrued Benefit under the Plan by reason of prior
participation (and such distribution has not been repaid to the
Plan with interest within a period of the earlier of 5 years
after the first date on which the Participant is subsequently
reemployed by the Employer or the close of the first period of 5
consecutive l-Year Breaks in Service commencing after the
distribution), his Normal Retirement Benefit and Accrued Benefit
shall be reduced by the Actuarial Equivalent (at the date of
distribution) of the present value of the Accrued Benefit as of
the date of distribution. Any repayment by a Participant shall be
equal to the total of:
(1) the amount of the distribution,
(2) interest on such distribution compounded annually
at the rate of 5 percent per annum from the date of
distribution to the date of repayment or to the last
day of the first Plan Year ending on or after December
31, 1987, if earlier, and
(3) interest on the sum of (1) and (2) above compounded
annually at the rate of 120 percent of the federal
mid-term rate (as in effect under Code Section 1274 for
the first month of a Plan Year) from the beginning of
the first Plan Year beginning after December 31, 1987
or the date of distribution, whichever is later, to the
34<PAGE>
date of repayment.
For purposes of this section (e), for a Former Participant who
was deemed under section 5.6 of the Plan to have received a
distribution, upon the reemployment of such Former Participant,
the employer-provided accrued benefit will be restored to the
amount of such accrued benefit on the date of the deemed
distribution if the Former Participant resumes employment covered
under this Plan before the date the Former Participant incurs 5
consecutive 1-Year Breaks in Service.
(f) If a Former Participant who is receiving benefit payments
under this Plan is re-employed by the Employer, the payment of
the benefit will be suspended during his period of re-employment,
subject to the provisions of Section 5.16.
5.2 MINIMUM BENEFIT REQUIREMENT FOR TOP HEAVY PLAN
(a) Subject to Section 5.2(k), the minimum Accrued Benefit
derived from Employer contributions to be provided under this
Section for each Non-Key Employee who is a Participant during a
Top Heavy Plan Year shall equal the product of (1) one-twelfth
(1/12th) of "415 Compensation" averaged over the five (5)
consecutive "limitation years" (or actual number of "limitation
years", if less) which produce the highest average and (2) the
lesser of (i) two percent (2%) multiplied by Plan Years of
Service or (ii) twenty percent (20%).
(b) For purposes of providing the minimum benefit under Code
Section 416, a Non-Key Employee who is not a Participant solely
because (1) his Compensation is below a stated amount or (2) he
declined to make mandatory contributions (if required) to the
Plan will be considered to be a Participant. Furthermore, such
minimum benefit shall be provided regardless of whether such
Non-Key Employee is employed on a specified date.
(c) For purposes of this Section, Plan Years of Service for any
Plan Year beginning before January 1, 1984, or for any Plan Year
during which the Plan was not a Top Heavy Plan shall be
disregarded.
(d) For purposes of this Section, "415 Compensation" for any
"limitation year" ending in a Plan Year which began prior to
January 1, 1984, subsequent to the last "limitation year" during
which the Plan is a Top Heavy Plan, or in which the Participant
failed to complete a Plan Year of Service, shall be disregarded.
(e) For the purposes of this Section, "415 Compensation" shall be
limited in accordance with Code Section 417(a)(17). However, for
Plan Years beginning prior to January 1, 1989, a $200,000 limit
shall apply only for Top Heavy Plan Years and shall not be
adjusted.
35<PAGE>
(f) If Section 5.1(c) provides for the Normal Retirement Benefit
to be paid in a form other than a single life annuity, the
Accrued Benefit under this Section shall be the Actuarial
Equivalent of the minimum Accrued Benefit under (a) above
pursuant to Section 1.3.
(g) If payment of the minimum Accrued Benefit commences at a date
other than Normal Retirement Date, the minimum Accrued Benefit
shall be the Actuarial Equivalent of the minimum Accrued Benefit
commencing at Normal Retirement Date pursuant to Section 1.3.
(h) The extra minimum Accrued Benefit (required by Section 6.6(d)
to provide the higher limitations) will not be provided.
(i) If a Non-Key Employee participates in this Plan and a defined
contribution plan included in a Required Aggregation Group which
is top heavy, the minimum benefits shall be provided under this
Plan.
(j) To the extent required to be nonforfeitable under Section
5.6, the minimum Accrued Benefit under this Section may not be
forfeited under Code Section 411(a)(3)(B) or Code Section
411(a)(3)(D).
(k) The Top Heavy provisions of this Plan shall not apply to a
Participant who is represented by a collective bargaining
agreement.
5.3 PAYMENT OF RETIREMENT BENEFITS
When a Participant retires, the Administrator shall immediately
take all necessary steps and execute all required documents to
cause the payment to him of the retirement benefit available to
him under the Plan or his Accrued Benefit if greater.
5.4 DISABILITY RETIREMENT BENEFITS
Except with respect to Participants whose employment is covered
by a collective bargaining agreement as set forth in Appendix A,
B, or C hereof, no disability benefits, other than those payable
upon termination of employment, are provided in this Plan.
With respect to a Participant whose employment is covered by a
collective bargaining agreement as set forth in Appendix A, B, or
C hereof, the following paragraphs (a) and (b) shall apply.
(a) With respect to a disability which commences on or after the
Transition End Date (as defined in Appendix A, B, or C as
applicable to such Participant), no disability benefits, other
than those payable upon termination of employment, are provided
in this Plan.
36<PAGE>
(b) With respect to a disability which commences prior to the
Transition End Date as applicable to such Participant, a Total
and Permanent Disability benefit shall be paid in accordance with
the following provisions.
(i) A Participant whose years of Credit Service equals or
exceeds the Disability Minimum defined in the applicable
Appendix herein, and who becomes totally and permanently
disabled shall be eligible for a disability pension. The
disability pension equal to the Accrued Benefit, using the
formula of 1.1(b)(ii), "Benefit based on Fixed Dollar Per
Year," with the fixed dollar amount equal to the sum of (a)
the amount determined in accordance with 1.1(b)(ii) and the
applicable Appendix A, B, or C, and (b) one dollar ($1.00).
The fixed dollar amount shall be that in effect at the time
the Participant qualifies for the disability benefit. The
amount determined hereunder shall not be less than $450.00
per month. Any benefit payable under this Section shall be
reduced by the amount of any income payable on account of
s u c h disability under any group disability coverage
available through the Employer, but in no event shall the
total income provided by this Plan and such other coverage
be less than the amount otherwise payable under this Plan.
If the Participant was married during the full twelve month
period prior to his disability retirement, unless the
Participant and the Participant's spouse elect otherwise,
the benefit determined above shall be modified so that a
benefit will be payable to the spouse if the Participant
dies while totally and permanently disabled as defined
herein and prior to age sixty-five. The amount of such
modified benefit shall be determined by multiplying the
benefit calculated above by a ratio based on the present
value of a benefit payable for the life of the Participant,
to the present value of a benefit payable to the
Participant for life, and one-half of such amount payable to
t h e Participant's spouse commencing on the date the
Participant would have attained age 55, if his death occurs
prior to age 55, or, the date of the Participant's death,
whichever is later, and thereafter for the spouse's life.
In determining the present values, interest and mortality
will be based on the Actuarial Equivalent in effect, based
on the age of the Participant and the Participant's spouse
and using a mortality table which reflects the impaired
mortality of the Participant.
(ii) The amount determined in (i) above shall be payable
until the Participant reaches age sixty-five (65), but only
while the Participant remains permanently disabled and
living (subject to the death benefit payable to the spouse
as described in the (i) above). At the time the Participant
reaches age sixty-five, the disability benefit will be
37<PAGE>
discontinued and replaced with a normal retirement benefit
equal to the Participant's Accrued Benefit calculated as of
the date disability commenced.
(iii) A Participant shall be deemed to be totally and
permanently disabled when on the basis of qualified medical
evidence he is found to be wholly and permanently prevented
from performing the duties of any employment as a result of
bodily injury or disease, either occupational or non-
occupational in cause; and said disability shall have
continued until he has exhausted his weekly sickness and
accident benefits paid under an Insurance and Health
Agreement between the Employer and the collective bargaining
unit; and said disability was not contracted, suffered, or
incurred while the Participant was engaged in, nor did it
result, directly or indirectly, from his having engaged in a
criminal enterprise.
(iv) Any disability pensioner may be required to submit to
medical examination at any time during retirement prior to
age 65, but not more often than semi-annually, to determine
whether he is eligible for continuance of the disability
pension. If on the basis of such examination, it is found
that such pensioner is no longer disabled as defined above,
the disability pension shall cease. In the event the
d i s a b ility pensioner refuses to submit to medical
examination, his pension will be discontinued until he
submits to examination.
(v) If any difference shall arise between the Employer and
the Participant as to whether such Participant is or
continues to be totally and permanently disabled within the
meaning hereof, such difference shall be resolved as
follows. The Participant shall be examined by a qualified
physician appointed for such purpose by the Employer and by
a qualified physician appointed for such purpose by a duly
authorized representative of the union. If they shall
disagree concerning whether the Participant is totally and
permanently disabled in accordance with this provision, that
question shall be submitted to a third physician selected by
such two physicians. The medical opinion of the third
p h y s ician after examination of the Participant and
consultation with the other two physicians, shall decide
such question.
5.5 DEATH BENEFITS
(a) The death benefit provided under this Plan shall be the
"minimum spouse's death benefit." In the case of an unmarried
Participant or unmarried Former Participant who dies prior to his
Retirement Date, no death benefits shall be payable under this
Plan.
38<PAGE>
(b) For the purposes of this Section, the "minimum spouse's death
benefit" means a death benefit for a Vested married Participant
or Vested married Former Participant payable in the form of a
Pre-Retirement Survivor Annuity. Such annuity payments shall be
equal to the amount which would be payable as a survivor annuity
under the joint and survivor annuity provisions of the Plan if:
(1) in the case of a Participant who dies after the
Earliest Retirement Age, such Participant had retired
with an immediate joint and survivor annuity on the day
before the Participant's date of death, or
(2) in the case of a Participant who dies on or before
the Earliest Retirement Age, such Participant had:
(i) separated from service on the earlier of
the actual time of separation or the date of
his death,
(ii) survived to the Earliest Retirement Age,
(iii) retired with an immediate joint and
survivor annuity at the Earliest Retirement
Age based on his Vested Accrued Benefit on
his date of death, and
(iv) died on the day after the day on which
said Participant would have attained the
Earliest Retirement Age.
( c ) The Beneficiary of the death benefit shall be the
Participant's Spouse, who shall receive such benefit in the form
of a Pre-Retirement Survivor Annuity pursuant to Section 5.8. No
designation of any Beneficiary hereunder shall be recognized for
a Participant who is not married at the time of his death.
(d) With respect to a Participant whose employment is covered by
a collective bargaining agreement as set forth in Appendix A, B,
or C herein, for deaths which occur prior to the Transition End
Date (as defined in such Appendix), and if the Participant dies
while still employed by the Employer, the minimum amount which
shall be payable to the surviving spouse shall be $75.00 per
month. This minimum payment shall be made through the month in
which said surviving spouse becomes age 62, at which time the
monthly payment will be the amount otherwise determined above
without regard to this paragraph (d).
5.6 TERMINATION OF EMPLOYMENT BEFORE RETIREMENT
(a) Payment to a Former Participant of the Vested portion of his
Accrued Benefit, unless he otherwise elects, shall begin not
later than the 60th day after the close of the Plan Year in which
39<PAGE>
the latest of the following events occurs: (1) the date on which
the Participant attains the earlier of age 65 or the Normal
Retirement Age specified herein; (2) the 10th anniversary of the
year in which the Participant commenced participation in the
Plan; or (3) the date the Participant terminates his service with
the Employer.
However, the Administrator shall direct the earlier payment of
the entire Vested portion of the Present Value of Accrued
Benefit, but only if it does not exceed $3,500 and has never
exceeded $3,500 at the time of any prior distribution.
For purposes of this Section 5.6, if the value of a Terminated
Participant's Vested portion of the Present Value of Accrued
Benefit is zero, the Terminated Participant shall be deemed to
have received a distribution of such Vested portion of the
Present Value of Accrued Benefit.
That portion of a Terminated Participant's Accrued Benefit that
is not Vested shall be forfeited and used only to reduce future
costs of the Plan.
(b) The Vested portion of any Participant's Accrued Benefit shall
be a percentage of such Participant's Accrued Benefit determined
on the basis of the Participant's number of Years of Service
according to the following schedule:
Vesting Schedule
Years of Service Percentage
0 - 4 0 %
5 100 %
(c) Notwithstanding the vesting provided for in paragraph (b)
above, for any Top Heavy Plan Year, the Vested portion of the
Accrued Benefit of any Participant who has an Hour of Service
after the Plan becomes top heavy shall be a percentage of the
Participant's Accrued Benefit determined on the basis of the
Participant's number of Years of Service according to the
following schedule:
Vesting Schedule
Years of Service Percentage
1 - 2 0 %
3 100 %
If in any subsequent Plan Year, the Plan ceases to be a Top Heavy
Plan, the Administrator shall revert to the vesting schedule in
effect before this Plan became a Top Heavy Plan. Any such
reversion shall be treated as a Plan amendment pursuant to the
terms of the Plan. The provisions of this paragraph (c) shall
40<PAGE>
not apply to Participants who are represented by a collective
bargaining agreement.
(d) Notwithstanding the vesting schedule above, the Vested
percentage of a Participant's Accrued Benefit shall not be less
than the Vested percentage attained as of the later of the
e f f e ctive date or adoption date of this amendment and
restatement.
( e ) Notwithstanding the vesting schedule above, upon the
cessation of the accrual of benefits under the Plan or upon any
full or partial termination of the Plan, an affected Participant
shall become fully Vested in his Accrued Benefit which shall not
thereafter be subject to forfeiture.
(f) The computation of a Participant's nonforfeitable percentage
of his interest in the Plan shall not be reduced as the result of
any direct or indirect amendment to this Plan. For this purpose,
the Plan shall be treated as having been amended if the Plan
provides for an automatic change in vesting due to a change in
top heavy status. In the event that the Plan is amended to change
or modify any vesting schedule, a Participant with at least three
(3) Years of Service as of the expiration date of the election
period may elect to have his nonforfeitable percentage computed
under the Plan without regard to such amendment. If a Participant
fails to make such election, then such Participant shall be
subject to the new vesting schedule. The Participant's election
period shall commence on the adoption date of the amendment and
shall end 60 days after the latest of:
(1) the adoption date of the amendment,
(2) the effective date of the amendment, or
(3) the date the Participant receives written notice of
the amendment from the Employer or Administrator.
(g) (1) If any Terminated Participant shall be reemployed
by the Employer before a 1-Year Break in Service
occurs, he shall continue to participate in the Plan in
the same manner as if such termination had not
occurred.
(2) If any Former Participant is reemployed after a
1-Year Break in Service has occurred, for the purposes
of Section 5.6(b) and for calculating Plan Years of
Service, the Years of Service and Plan Years of Service
shall include Years of Service and Plan Years of
Service prior to his 1-Year Break in Service subject to
the following rules:
(i) If a Former Participant has a 1-Year
41<PAGE>
Break in Service, his pre-break and
p o s t -break service shall be used for
computing Years of Service for eligibility
and for vesting purposes only after he has
been employed for one (1) Year of Service
following the date of his reemployment with
the Employer;
(ii) Any Former Participant who under the
Plan does not have a nonforfeitable right to
any interest in the Plan resulting from
Employer contributions shall lose credits
otherwise allowable under (i) above if his
consecutive 1-Year Breaks in Service equal or
exceed the greater of (A) five (5) or (B) the
aggregate number of his pre-break Years of
Service;
(iii) If a Former Participant who has not had
his Years of Service before a 1-Year Break in
Service disregarded pursuant to (ii) above
c o mpletes one (1) Year of Service for
e l igibility purposes following his
reemployment with the Employer, he shall
participate in the Plan retroactively from
his date of reemployment;
(iv) If a Former Participant who has not had
his Years of Service before a 1-Year Break in
Service disregarded pursuant to (ii) above
completes a Year of Service (a 1-Year Break
i n Service previously occurred, but
employment had not terminated), he shall
participate in the Plan retroactively from
the first day of the Plan Year during which
he completes one (1) Year of Service.
5.7 DISTRIBUTION OF BENEFITS
(a) (1) Unless otherwise elected as provided below, a
Participant who is married on the "annuity starting
date" and who does not die before the "annuity starting
date" shall receive the value of all of his benefits in
the form of a joint and survivor annuity. The joint and
s u r v ivor annuity is an annuity that commences
immediately and shall be the Actuarial Equivalent of a
single life annuity. Such joint and survivor benefits
following the Participant's death shall continue to the
Spouse during the Spouse's lifetime at a rate equal to
50% of the rate at which such benefits were payable to
the Participant. This joint and 50% survivor annuity
shall be considered the designated qualified joint and
42<PAGE>
survivor annuity and automatic form of payment for the
purposes of this Plan. However, the Participant may
elect to receive a smaller annuity benefit with
continuation of payments to the Spouse at a rate of
s i xty-six and two-thirds percent (66 2/3%),
seventy-five percent (75%) or one hundred percent
(100%) of the rate payable to a Participant during his
lifetime, which alternative joint and survivor annuity
shall be the Actuarial Equivalent of the automatic
joint and 50% survivor annuity. The Participant may, in
lieu of a joint and survivor annuity, elect to receive
his benefits in the form of (i) an annuity for his life
only or (ii) an annuity for his life with 10-years
certain, which are the Actuarial Equivalent of a single
life annuity. An unmarried Participant shall receive
the value of his benefit in the form of a life annuity.
The joint and survivor annuity, the life annuity with
1 0 - years certain and the life annuity form of
distribution shall be the Actuarial Equivalent of the
benefits due the Participant.
(2) Any election to waive the joint and survivor
annuity must be made by the Participant in writing
during the election period and be consented to by the
P a r ticipant's Spouse. If the Spouse is legally
i n competent to give consent, the Spouse's legal
guardian, even if such guardian is the Participant, may
g i v e consent. Such election shall designate a
Beneficiary (or a form of benefits) that may not be
changed without spousal consent (unless the consent of
the Spouse expressly permits designations by the
Participant without the requirement of further consent
b y the Spouse). Such Spouse's consent shall be
irrevocable and must acknowledge the effect of such
election and be witnessed by a Plan representative or a
notary public. Such consent shall not be required if it
is established to the satisfaction of the Administrator
that the required consent cannot be obtained because
there is no Spouse, the Spouse cannot be located, or
o t h e r circumstances that may be prescribed by
Regulations. The election made by the Participant and
consented to by his Spouse may be revoked by the
Participant in writing without the consent of the
Spouse at any time during the election period. The
number of revocations shall not be limited. Any new
election must comply with the requirements of this
paragraph. A former Spouse's waiver shall not be
binding on a new Spouse.
(3) The election period to waive the joint and survivor
annuity shall be the 90-day period ending on the
"annuity starting date."
43<PAGE>
(4) For purposes of this Section, the "annuity starting
date" means the first day of the first period for which
an amount is paid as an annuity, or, in the case of a
benefit not payable in the form of an annuity, the
first day on which all events have occurred which
entitle the Participant to such benefit.
(5) With regard to the election, the Administrator
shall provide to the Participant no less than 30 days
and no more than 90 days before the "annuity starting
date" a written explanation of:
(i) the terms and conditions of the joint and
survivor annuity, and
(ii) the Participant's right to make, and the
effect of, an election to waive the joint and
survivor annuity, and
(iii) the right of the Participant's Spouse
to consent to any election to waive the joint
and survivor annuity, and
(iv) the right of the Participant to revoke
s u ch election, and the effect of such
revocation.
(b) A Participant may not elect to receive his Accrued Benefit or
any portion thereof in a lump-sum payment except (i) as provided
in Section 5.7(c) and (ii) for that portion of his Accrued
Benefit accrued while a participant in a Merged Plan which
allowed a lump-sum payment option that was a protected optional
form of benefit pursuant to Code Section 411(d)(6)(B)(ii).
Unless specifically stated herein, a lump-sum payment shall not
include the value of any early retirement subsidy which might be
provided under the plan.
(c) The present value of a Participant's joint and survivor
annuity derived from Employer and Employee contributions may not
be paid without his written consent if the value exceeds $3,500,
o r has ever exceeded $3,500 at the time of any prior
distribution. Further, the Spouse of a Participant must consent
in writing to any immediate distribution. If the value of the
P a r ticipant's benefit derived from Employer and Employee
contributions does not exceed $3,500 and has never exceeded
$3,500 at the time of any prior distribution, the Administrator
may immediately distribute such benefit without such
Participant's consent. No distribution may be made under the
preceding sentence after the "annuity starting date" unless the
P a r t icipant and his Spouse consent in writing to such
distribution. Any written consent required under this paragraph
must be obtained not more than 90 days before commencement of the
44<PAGE>
distribution and shall be made in a manner consistent with
Section 5.7(a)(2). The Present Value of Accrued Benefit in this
regard shall be determined as provided in Section 1.43.
(d) Any distribution to a Participant who has a benefit which
exceeds $3,500, or has ever exceeded $3,500 at the time of any
prior distribution, shall require such Participant's consent if
such distribution commences prior to the later of his Normal
Retirement Age or age 62. With regard to this required consent:
(1) No consent shall be valid unless the Participant
has received a general description of the material
features and an explanation of the relative values of
the optional forms of benefit available under the Plan
that would satisfy the notice requirements of Code
Section 417.
(2) The Participant must be informed of his right to
defer receipt of the distribution. If a Participant
fails to consent, it shall be deemed an election to
defer the commencement of payment of any benefit.
However, any election to defer the receipt of benefits
shall not apply with respect to distributions which are
required under Section 5.7(e).
(3) Notice of the rights specified under this paragraph
shall be provided no less than 30 days and no more than
90 days before the "annuity starting date".
( 4 ) Written consent of the Participant to the
distribution must not be made before the Participant
receives the notice and must not be made more than 90
days before the "annuity starting date".
(5) No consent shall be valid if a significant
detriment is imposed under the Plan on any Participant
who does not consent to the distribution.
(e) Notwithstanding any provision in the Plan to the contrary,
the distribution of a Participant's benefits made on or after
January 1, 1985, whether under the Plan or through the purchase
of an annuity Contract, shall be made in accordance with the
following requirements and shall otherwise comply with Code
Section 401(a)(9) and the Regulations thereunder (including
R e g u l ation 1.401(a)(9)-2), the provisions of which are
incorporated herein by reference:
(1) A Participant's benefits shall be distributed to
him not later than April 1st of the calendar year
following the later of (i) the calendar year in which
the Participant attains age 70 1/2 or (ii) the calendar
year in which the Participant retires, provided,
45<PAGE>
however, that this clause (ii) shall not apply in the
case of a Participant who is a "five (5) percent owner"
at any time during the five (5) Plan Year period ending
in the calendar year in which he attains age 70 1/2 or,
in the case of a Participant who becomes a "five (5)
percent owner" during any subsequent Plan Year, clause
(ii) shall no longer apply and the required beginning
date shall be the April 1st of the calendar year
following the calendar year in which such subsequent
Plan Year ends. Alternatively, distributions will be
made in the form of a joint and survivor annuity, life
annuity with 10-years certain, or single life annuity
as provided in paragraph (a)(1) above, then
distributions must begin no later than the applicable
April 1st as determined under the preceding sentence
and must be made over the life of the Participant (or
the lives of the Participant and the Participant's
designated Beneficiary) or the life expectancy of the
P a r t i cipant (or the life expectancies of the
P a r t icipant and his designated Beneficiary) in
a c c ordance with Regulations. Notwithstanding the
foregoing, clause (ii) above shall not apply to any
Participant unless the Participant had attained age 70
1/2 before January 1, 1988 and was not a "five (5)
percent owner" at any time during the Plan Year ending
w i th or within the calendar year in which the
Participant attained age 66 1/2 or any subsequent Plan
Year.
(2) Distributions to a Participant and his
Beneficiaries shall only be made in accordance with the
incidental death benefit requirements of Code Section
401(a)(9)(G) and the Regulations thereunder.
A d d i tionally, for calendar years beginning before 1989,
distributions may also be made under an alternative method which
provides that the then present value of the payments to be made
over the period of the Participant's life expectancy exceeds
fifty percent (50%) of the then present value of the total
payments to be made to the Participant and his Beneficiaries.
(f) Subject to the Spouse's right of consent afforded under the
Plan, the restrictions imposed by this Section shall not apply if
a Participant has, prior to January 1, 1984, made a written
designation to have his retirement benefit paid in an alternative
method acceptable under Code Section 401(a) as in effect prior to
the enactment of the Tax Equity and Fiscal Responsibility Act of
1982.
( g ) A l l annuity Contracts under this Plan shall be
non-transferable when distributed. Furthermore, the terms of any
annuity Contract purchased and distributed to a Participant or
46<PAGE>
Spouse shall comply with all of the requirements of the Plan.
5.8 DISTRIBUTION OF BENEFITS UPON DEATH
(a) A Vested Participant or Vested Former Participant who dies
before the annuity starting date and who has a Surviving Spouse
shall have a death benefit paid to his Surviving Spouse in the
form of a Pre-Retirement Survivor Annuity. The Participant's
Spouse may direct that payment of the Pre-Retirement Survivor
A n nuity commence not later than the month in which the
Participant would have attained the Earliest Retirement Age under
the Plan. If the Spouse does not so direct, payment of such
benefit will commence at the time the Participant would have
attained the later of his Normal Retirement Age or age 62.
However, the Spouse may elect a later commencement date, subject
to the rules specified in Section 5.8(c).
(b) If the value of the Pre-Retirement Survivor Annuity derived
from Employer and Employee contributions does not exceed $3,500
and has never exceeded $3,500 at the time of any prior
distribution, the Administrator shall direct the immediate
distribution of such amount to the Participant's Spouse. No
distribution may be made under the preceding sentence after the
annuity starting date unless the Spouse consents in writing. If
the value exceeds $3,500 or has ever exceeded $3,500 at the time
of any prior distribution, an immediate distribution of the
entire amount may be made to the Surviving Spouse, provided such
Surviving Spouse consents in writing to such distribution. Any
written consent required under this paragraph must be obtained
not more than 90 days before commencement of the distribution and
shall be made in a manner consistent with Section 5.7(a)(2). The
Present Value of Accrued Benefit in this regard shall be
determined as provided in Section 1.43.
(c) Notwithstanding any provision in the Plan to the contrary,
distributions upon the death of a Participant made on or after
January 1, 1985 shall be made in accordance with the following
requirements and shall otherwise comply with Code Section
401(a)(9) and the Regulations thereunder. If it is determined
pursuant to Regulations that the distribution of a Participant's
interest has begun and the Participant dies before his entire
interest has been distributed to him, the remaining portion of
such interest shall be distributed at least as rapidly as under
the method of distribution selected pursuant to Section 5.7 as of
his date of death. If a Participant dies before he has begun to
receive any distributions of his interest under the Plan or
before distributions are deemed to have begun pursuant to
Regulations, then his death benefit shall be distributed to his
Beneficiaries by December 31st of the calendar year in which the
fifth anniversary of his date of death occurs.
However, the 5-year distribution requirement of the preceding
47<PAGE>
paragraph shall not apply to any portion of the deceased
Participant's interest which is payable to or for the benefit of
a designated Beneficiary. In such event, such portion shall be
distributed over the life of such designated Beneficiary (or over
a period not extending beyond the life expectancy of such
designated Beneficiary) provided such distribution begins not
later than December 31st of the calendar year immediately
following the calendar year in which the Participant died.
However, in the event the Participant's Spouse (determined as of
the date of the Participant's death) is his Beneficiary, the
requirement that distributions commence within one year of a
P a r t i cipant's death shall not apply. In lieu thereof,
distributions must commence on or before the later of: (1)
December 31st of the calendar year immediately following the
calendar year in which the Participant died; or (2) December 31st
of the calendar year in which the Participant would have attained
age 70 1/2. If the Surviving Spouse dies before distributions to
such Spouse begin, then the 5-year distribution requirement of
this Section shall apply as if the Spouse was the Participant.
(d) Subject to the Spouse's right of consent afforded under the
Plan, the restrictions imposed by this Section shall not apply if
a Participant has, prior to January 1, 1984, made a written
designation to have his death benefits paid in an alternative
method acceptable under Code Section 401(a) as in effect prior to
the enactment of the Tax Equity and Fiscal Responsibility Act of
1982.
5.9 TIME OF SEGREGATION OR DISTRIBUTION
Except as limited by Sections 5.7 and 5.8, whenever the Trustee
is to make a distribution or to commence a series of payments on
or as of an Anniversary Date, the distribution or series of
payments may be made or begun on such date or as soon thereafter
as is practicable, but in no event later than 180 days after the
Anniversary Date. However, unless a Former Participant elects in
writing to defer the receipt of benefits (such election may not
result in a death benefit that is more than incidental), the
payment of benefits shall begin not later than the 60th day after
the close of the Plan Year in which the latest of the following
events occurs: (a) the date on which the Participant attains the
earlier of age 65 or the Normal Retirement Age specified herein;
(b) the 10th anniversary of the year in which the Participant
commenced participation in the Plan; or (c) the date the
Participant terminates his service with the Employer.
5.10 DIRECT ROLLOVERS
(a) This section applies to distributions made on or after
January 1, 1993. Notwithstanding any provision of the Plan to
the contrary that would otherwise limit a distributee's election
under this part, a distributee may elect, at the time and in the
48<PAGE>
manner prescribed by the Administrator, to have any portion of an
eligible rollover distribution paid directly to an eligible
retirement plan specified by the distributee in a direct
rollover. This section does not in any way expand the options
available under the Plan.
(b) Definitions - The following definitions apply for purposes of
this section 5.10.
E l i gible rollover distribution: An eligible rollover
distribution is any distribution of all or any portion of
the balance to the credit of the distributee, except that an
e l igible rollover distribution does not include: any
distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made
for the life (or life expectancy) of the distributee or the
joint lives (or joint life expectancies) of the distributee
and the distributee's designated beneficiary, or for a
specified period of ten years or more; any distribution to
the extent such distribution is required under section
401(a)(9) of the Internal Revenue Code; and the portion of
any distribution that is not includable in gross income
( d etermined without regard to the exclusion for net
u n realized appreciation with respect to employer
securities).
Eligible retirement plan: An eligible retirement plan is an
individual retirement account described in section 408(a) of
the Code, an individual retirement annuity described in
section 408(b) of the Code, an annuity plan described in
section 403(a) of the Code, or a qualified trust described
i n s e ction 401(a) of the Code, that accepts the
distributee's eligible rollover distribution. However, in
the case of an eligible rollover distribution to the
s u rviving spouse, an eligible retirement plan is an
individual retirement account or individual retirement
annuity.
Distributee: A distributee includes a Participant or Former
Participant. In addition, the Participant's or Former
Participant's surviving spouse and the Participant's or
Former Participant's spouse or former spouse who is the
alternate payee under a qualified domestic relations order,
as defined in section 414(p) of the Code, are distributees
with regard to the interest of the spouse or former spouse.
Direct rollover: A direct rollover is a payment by the Plan
t o t h e eligible retirement plan specified by the
distributee.
5.11 DISTRIBUTION FOR MINOR BENEFICIARY
49<PAGE>
In the event a distribution is to be made to a minor, then the
Administrator may direct that such distribution be paid to the
legal guardian, or if none, to a parent of such Beneficiary or a
responsible adult with whom the Beneficiary maintains his
residence, or to the custodian for such Beneficiary under the
Uniform Gift to Minors Act or Gift to Minors Act, if such is
permitted by the laws of the state in which said Beneficiary
resides. Such a payment to the legal guardian, custodian or
parent of a minor Beneficiary shall fully discharge the Trustee,
Employer, and Plan from further liability on account thereof.
5.12 MINIMUM BENEFITS PAYABLE
Notwithstanding the provisions of Sections 5.1(b) and 5.4, the
benefits payable to a Participant or a Beneficiary pursuant to
such Sections shall not be less than a Participant's Present
Value of Vested Accrued Benefit as of the date of distribution.
5.13 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN
In the event that all, or any portion, of the distribution
payable to a Participant or his Beneficiary hereunder shall, at
the later of the Participant's attainment of age 62 or his Normal
Retirement Age, remain unpaid solely by reason of the inability
of the Administrator, after sending a registered letter, return
receipt requested, to the last known address, and after further
diligent effort, to ascertain the whereabouts of such Participant
or his Beneficiary, the amount so distributable shall be
forfeited and shall be used to reduce the cost of the Plan. In
the event a Participant or Beneficiary is located or his
whereabouts is made known to the Administrator subsequent to his
benefit's being forfeited, such benefit shall be restored,
provided such Participant or Beneficiary is still living at the
time the Administrator receives such information.
5.14 EFFECT OF SOCIAL SECURITY ACT
Benefits being paid to a Participant or Beneficiary under the
terms of the Plan may not be decreased by reason of any
post-separation Social Security benefit increases or by the
increase of the Social Security wage base under Title II of the
Social Security Act. Benefits to which a Former Participant has a
Vested interest may not be decreased by reason of an increase in
a benefit level or wage base under Title II of the Social
Security Act.
5.15 LIMITATIONS ON BENEFITS
All rights and benefits, including elections, provided to a
Participant in this Plan shall be subject to the rights afforded
to any "alternate payee" under a "qualified domestic relations
order." For the purposes of this Section, "alternate payee" and
50<PAGE>
"qualified domestic relations order" shall have the meaning set
forth under Code Section 414(p).
5.16 SUSPENSION OF BENEFITS
(a) Suspension of Benefits: Normal or early retirement benefits
will be suspended for each calendar month during which the
employee completes at least 40 Hours of Service in Section
2 0 3 (a)(3)(B) service, including service with an employer
described in Section 2530.210 (d) and (e) of the Code of Federal
Regulations. Consequently, the amount of benefits which are paid
later than Normal Retirement Age will be computed as if the
employee had been receiving benefits since Normal Retirement Age.
(b) Resumption of payment: If benefit payments have been
suspended, payments shall resume no later than the first day of
the third calendar month after the calendar month in which the
Employee ceases to be employed in such Section 203(a)(3)(B)
service. The initial payment upon resumption shall include the
payment scheduled to occur in the calendar month when payments
resume and any amounts withheld during the period between the
cessation of Section 203(a)(3)(B) service and the resumption of
payments.
(c) Notification: No payment shall be withheld by the Plan
pursuant to this section unless the Plan notifies the Employee by
personal delivery or first class mail during the first calendar
month or payroll period in which the Plan withholds payments that
his or her benefits are suspended. Such notifications shall
contain a description of the Plan provision relating to the
suspension of payments, a copy of such provisions, and a
statement to the effect that applicable Department of Labor
regulations may be found in Section 2530.203-3 of the Code of
Federal Regulations.
In addition, the notice shall inform the Employee of the Plan's
procedures for affording a review of the suspension of benefits.
Requests for such reviews may be considered in accordance with
the claims procedure adopted by the Plan pursuant to section 503
of ERISA and applicable regulations.
T h e suspension notification shall provide the following
i n formation regarding offset of suspendible amounts under
paragraph (f) of this section: specific identification of the
periods of employment, the suspendible amounts which are the
subject of offset, and the manner in which the Plan intends to
offset such suspendible amounts.
If the Plan's summary plan description contains information which
is substantially the same as the information required by this
p a ragraph (c), the suspension notification may refer the
Participant to relevant pages of the summary plan description for
51<PAGE>
information as to a particular item, provided the Participant is
informed how to obtain a copy of the summary plan description or
relevant pages thereof, and provided requests for referenced
information are honored within a reasonable period of time, not
to exceed thirty days.
(d) Amount Suspended: (a) In the case of benefits payable
periodically on a monthly basis for as long as a life (or lives)
continues, such as a straight life annuity or a qualified joint
and survivor annuity, an amount equal to the portion of a monthly
benefit payment derived from Employer contributions; (b) in the
case of a benefit payable in a form other than the form described
in (a), an amount of the Employer-provided portion of benefit
payments for a calendar month in which the Employee is employed
in Section 203(a)(3)(B) service, equal to the lesser of (i) the
amount of benefits which would have been payable to the Employee
if he had been receiving monthly benefits under the Plan since
actual retirement based on a straight life annuity commencing at
actual retirement age, or (ii) the actual amount paid or
scheduled to be paid to the Employee for such month. Payments
which are scheduled to be paid less frequently than monthly may
be converted to monthly payments for purposes of the preceding
sentence.
(e) Top Heavy Plans: This section does not apply to the minimum
benefit to which the Retired Participant is entitled under the
top heavy rules of Article II.
(f) Offset: There may be deducted from benefit payments to be
made by the Plan those payments previously made by the Plan
during those calendar months in which the Employee worked in
employment of the Employer for forty (40) or more Hours of
Service to the extent provided in Section 2530.203-3(b)(3) of the
Code of Federal Regulations.
(g) Verification: If a Retired Participant is employed by the
Employer, said Retired Participant shall notify the Plan of his
rehired status no later than five (5) days following the date of
such employment. The notification shall be in writing and in the
f o r m and manner prescribed by the Administrator. The
Administrator may request from said Retired Participant access to
r e asonable information for the purpose of verifying such
employment.
A Retired Participant shall, at the Administrator's request and
as a condition to receiving future benefit payments, either
certify that he was not employed by the Employer or provide
factual information sufficient to establish the fact that,
although employed by the Employer, the suspension of benefit
provisions do not apply to such employment.
(h) Status Determination: A Retired Participant may request a
52<PAGE>
determination as to whether the suspension of benefit provisions
herein would apply if he engaged in specific contemplated
employment subsequent to retirement under the Plan. Said request
shall be made in the form and manner prescribed by the
Administrator. Within sixty (60) days following receipt of such
request and all necessary information, the Administrator shall
furnish the Retired Participant with a written notice by mail of
the determination rendered with respect to such request.
(i) Presumption Regarding Status: On or after January 1, 1994,
w h e never the Administrator becomes aware that a Retired
P a rticipant is employed by the Employer and the Retired
P a r t icipant has not complied with the Plan's reporting
requirements with regard to that employment, the Administrator
may, unless it is unreasonable under the circumstances to do so,
act on the basis of a rebuttable presumption that the Retired
Participant had worked a period exceeding the Plan's minimum
number of hours for that month.
The Plan shall describe its employment verification requirements
and the nature and effect of the presumption regarding status in
the Plan's summary plan description and in any communication to
Participants which relate to the verification requirements.
Retired Participants shall be furnished such disclosure at least
once every 12 months.
(j) Benefit Resumption: Benefits suspended pursuant to this
section shall be resumed upon the subsequent termination of the
Participant and the filing of a benefits resumption notice in a
form and pursuant to the procedures required by section 2.12 of
the Plan regarding applications for retirement.
(k) Redetermination and Form of Payment: Upon the subsequent
termination of employment of a Retired Participant who was
eligible for a benefit upon his prior termination of employment
(whether or not payment of such benefit had commenced), the
Participant's benefit shall be redetermined upon the basis of his
aggregate years of service, as if no prior benefit payments had
been made. His benefit as so redetermined shall then be reduced
by the actuarial equivalent of the benefit payments (if any)
p r eviously made to such Participant prior to his Normal
Retirement Date. In no event shall the Participant's benefit be a
l o w er monthly benefit then he was receiving before his
r e e m p loyment (for the purposes of this sentence, such
determination shall be calculated under the same form of
payment). The form of payment of any benefit to which he may
thereafter become entitled shall be determined in accordance to
the provisions of this Plan without regard to the form in which
his benefit had previously been paid.
5.17 RETIREMENT BECAUSE OF PLANT SHUTDOWN OR LAYOFF
53<PAGE>
(a) This section shall apply only to Participants who are listed
on the seniority list of those employed within a collective
bargaining unit covered by this Plan, but only as negotiated from
time to time by the Employer and such collective bargaining unit.
(b) In applying this section of the Plan to a given collective
bargaining unit, the terms "Minimum Years of Service" and
"Minimum Combined Total" shall have the meaning set forth in the
Plan appendix which applies to such collective bargaining unit.
(c) A Participant who is otherwise eligible for benefits under
this section, determined in accordance with paragraph (a) above,
shall be eligible for benefits under this section only if his
Credited Service equals or exceeds the Minimum Years of Service
and only if his combined age and years of Credited Service equals
or exceeds the Minimum Combined Total. With respect to such
eligible Participant, if
(i) while this section is in effect with respect to
such Participant, his service is broken by reason of a
p e r manent shutdown of the plant, department or
subdivision thereof, or by reason of a layoff, or
(ii) his service is not broken and he is absent from
work by reason of a layoff which occurred while this
section is in effect with respect to such Participant,
and his return to active employment is declared
unlikely by the Employer, or
(iii) such Participant considers that it would be in
his interest to retire and the Employer considers that
such retirement would likewise be in its interest and,
while this section is in effect with respect to such
Participant, the Employer approves an application for
retirement under mutually satisfactory conditions,
such Participant shall be eligible to retire and receive a
pension. The monthly pension payable to such Participant shall
be equal to his Accrued Benefit under the Plan, determined as of
the date he ceases active employment with the Employer, unreduced
because of early commencement. The actual form of payment will
be determined based on all other provisions of the Plan.
(d) Benefits payable under this section shall be in lieu of all
other benefits under the Plan.
(e) This Section 5.17 shall not apply to events listed in (c)(i),
(ii) or (iii) above which occur on or after the Transition End
Date applicable to such Participant, as set forth in Appendix A,
B, or C herein.
54<PAGE>
ARTICLE VI
CODE SECTION 415 LIMITATIONS
6.1 ANNUAL BENEFIT
For purposes of this Article, "annual benefit" means the benefit
payable annually under the terms of the Plan (exclusive of any
benefit not required to be considered for purposes of applying
the limitations of Code Section 415 to the Plan) payable in the
form of a straight life annuity with no ancillary benefits. If
the benefit under the Plan is payable in any other form, the
"annual benefit" shall be adjusted to the equivalent of a
straight life annuity pursuant to Section 6.3(d).
6.2 MAXIMUM ANNUAL BENEFIT
(a) Notwithstanding the foregoing and subject to the exceptions
below, the maximum "annual benefit" payable to a Participant
under this Plan in any "limitation year" shall equal the lesser
of: (1) $90,000 or (2) one hundred percent (100%) of the
P a r ticipant's "415 Compensation" averaged over the three
consecutive "limitation years" (or actual number of "limitation
years" for Employees who have been employed for less than three
consecutive "limitation years") during which the Employee had the
greatest aggregate "415 Compensation" from the Employer.
(b) For purposes of applying the limitations of Code Section 415,
" 4 15 Compensation" shall include the Participant's wages,
salaries, fees for professional service and other amounts
received (without regard to whether or not an amount is paid in
cash) for personal services actually rendered in the course of
employment with an Employer maintaining the Plan to the extent
that the amounts are includable in gross income (including, but
not limited to, commissions paid salesmen, compensation for
services on the basis of a percentage of profits, commissions on
i n s u rance premiums, tips, bonuses, fringe benefits,
reimbursements, and expense allowances, and in the case of a
Participant who is an Employee within the meaning of Code Section
401(c)(1) and the regulations thereunder, the Participant's
earned income (as described in Code Section 401(c)(2) and the
regulations thereunder)) paid during the "limitation year".
"415 Compensation" shall exclude (1) (A) contributions made by
the Employer to a plan of deferred compensation to the extent
that, before the application of the Code Section 415 limitations
to the Plan, the contributions are not includable in the gross
income of the Employee for the taxable year in which contributed,
(B) contributions made by the Employer to a plan of deferred
compensation to the extent that all or a portion of such
c o ntributions are recharacterized as a voluntary Employee
contribution, (C) Employer contributions made on behalf of an
Employee to a simplified employee pension plan described in Code
55<PAGE>
Section 408(k) to the extent such contributions are excludable
from the Employee's gross income, (D) any distributions from a
plan of deferred compensation regardless of whether such amounts
are includable in the gross income of the Employee when
distributed except any amounts received by an Employee pursuant
to an unfunded non-qualified plan to the extent such amounts are
includable in the gross income of the Employee; (2) amounts
realized from the exercise of a non-qualified stock option or
when restricted stock (or property) held by an Employee either
becomes freely transferable or is no longer subject to a
substantial risk of forfeiture; (3) amounts realized from the
sale, exchange or other disposition of stock acquired under a
qualified stock option; and (4) other amounts which receive
special tax benefits, such as premiums for group term life
insurance (but only to the extent that the premiums are not
includable in the gross income of the Employee), or contributions
made by the Employer (whether or not under a salary reduction
agreement) towards the purchase of any annuity contract described
in Code Section 403(b) (whether or not the contributions are
excludable from the gross income of the Employee). For the
purposes of this Section, the determination of "415 Compensation"
shall be made by not including amounts that would otherwise be
excluded from a Participant's gross income by reason of the
application of Code Sections 125, 402(a)(8), 402(h)(1)(B) and, in
the case of Employer contributions made pursuant to a salary
reduction agreement, Code Section 403(b).
(c) For purposes of applying the limitations of Code Section 415,
the "limitation year" shall be the Calendar Year.
(d) Notwithstanding anything in this Article to the contrary, if
the Plan was in existence on May 6, 1986, and had complied at all
times with the requirements of Code Section 415, the maximum
"annual benefit" for any individual who is a Participant as of
the first day of the "limitation year" beginning after December
31, 1986, shall not be less than the "current accrued benefit".
"Current accrued benefit" shall mean a Participant's Accrued
Benefit under the Plan, determined as if the Participant had
separated from service as of the close of the last "limitation
year" beginning before January 1, 1987, when expressed as an
annual benefit within the meaning of Code Section 415(b)(2). In
determining the amount of a Participant's "current accrued
benefit", the following shall be disregarded: (1) any change in
the terms and conditions of the Plan after May 5, 1986; and (2)
any cost of living adjustment occurring after May 5, 1986.
(e) The dollar limitation under Code Section 415(b)(1)(A) stated
in paragraph (a)(1) above shall be adjusted annually as provided
in Code Section 415(d) pursuant to the Regulations. The adjusted
limitation is effective as of January 1st of each calendar year
and is applicable to "limitation years" ending with or within
that calendar year.
56<PAGE>
( f ) The limitation stated in paragraph (a)(2) above for
Participants who have separated from service with a
non-forfeitable right to an Accrued Benefit shall be adjusted
annually as provided in Code Section 415(d) pursuant to the
regulations prescribed by the Secretary of the Treasury.
(g) For the purpose of this Article, all qualified defined
benefit plans (whether terminated or not) ever maintained by the
Employer shall be treated as one defined benefit plan, and all
qualified defined contribution plans (whether terminated or not)
ever maintained by the Employer shall be treated as one defined
contribution plan.
(h) For the purpose of this Article, if the Employer is a member
of a controlled group of corporations, trades or businesses under
common control (as defined by Code Section 1563(a) or Code
Section 414(b) and (c) as modified by Code Section 415(h)) or is
a member of an affiliated service group (as defined by Code
Section 414(m)), all Employees of such Employers shall be
considered to be employed by a single Employer.
(i) For the purpose of this Article, if this Plan is a Code
Section 413(c) plan; all Employers of a Participant who maintain
this Plan will be considered to be a single Employer.
6.3 ADJUSTMENTS TO ANNUAL BENEFIT AND LIMITATIONS
(a) If the "annual benefit" begins before the Participant's
Social Security Retirement Age under the Social Security Act,
then the $90,000 limitation shall be reduced in such manner as
the Secretary of the Treasury shall prescribe which is consistent
with the reduction for old-age insurance benefits commencing
before the Social Security Retirement Age under the Social
Security Act.
(b) Notwithstanding Section 6.3 (a) above, for "limitation years"
beginning prior to January 1, 1987, the $90,000 limit shall not
be reduced if the annual benefit begins on or after age 62. If
the "annual benefit" begins before age 62, the $90,000 limitation
shall be reduced so that it is the actuarial equivalent of the
$90,000 limitation beginning at age 62. However, the $90,000
limitation shall not be actuarially reduced to less than: (1)
$75,000 if the "annual benefit" commences on or after age 55, or
(2) the amount which is the actuarial equivalent of the $75,000
limitation at age 55 if the "annual benefit" commences prior to
age 55. For purposes of adjusting the $90,000 limitation
applicable prior to age 62 or the $75,000 limitation applicable
prior to age 55, the adjustment shall be made pursuant to Section
1.3 except that the interest rate assumption shall be the greater
of five percent (5%) or the rate specified in Section 1.3 and the
mortality decrement shall be ignored to the extent that a
forfeiture does not occur at death.
57<PAGE>
(c) If the "annual benefit" begins after the Participant's Social
Security Retirement Age (or for Plan Years beginning prior to
January 1, 1987, age 65) the $90,000 limitation shall be
increased so that it is the actuarial equivalent of the $90,000
limitation at the Participant's Social Security Retirement Age
(or for Plan Years beginning prior to January 1, 1987, age 65).
(d) For purposes of adjusting the "annual benefit" to a straight
life annuity, the adjustment shall be made pursuant to Section
1.3 except that the interest rate assumption shall be the greater
of five percent (5%) or the rate specified in Section 1.3.
(e) For purposes of adjusting the $90,000 limitation applicable
after the Participant's Social Security Retirement Age (or for
Plan Years beginning prior to January 1, 1987, age 65) the
adjustment shall be made pursuant to Section 1.3 except that the
interest rate assumption shall be the lesser of five percent (5%)
or the rate specified in Section 1.3 and the mortality decrement
shall be ignored to the extent that a forfeiture does not occur
at death.
(f) For purposes of Sections 6.1, 6.3(a) and 6.3(b), no
adjustments under Code Section 415(d) shall be taken into account
before the "limitation year" for which such adjustment first
takes effect.
(g) For purposes of Section 6.1, no adjustment is required for
qualified joint and survivor annuity benefits, pre-retirement
death benefits and post-retirement medical benefits.
6.4 ANNUAL BENEFIT NOT IN EXCESS OF $10,000
This Plan may pay an "annual benefit" to any Participant in
excess of his maximum "annual benefit" if the "annual benefit"
derived from Employer contributions under this Plan and all other
defined benefit plans maintained by the Employer does not in the
aggregate exceed $10,000 for the "limitation year" or for any
prior "limitation year" and the Employer has not at any time
maintained a defined contribution plan in which the Participant
participated. For purposes of this paragraph, if this Plan
provides for voluntary or mandatory Employee contributions, such
c o n tributions will not be considered a separate defined
contribution plan maintained by the Employer.
6.5 PARTICIPATION OR SERVICE REDUCTIONS
If a Participant has less than ten (10) years of participation in
the Plan at the time he begins to receive benefits under the
Plan, the limitations in Sections 6.2(a)(1) and 6.3 shall be
reduced by multiplying such limitations by a fraction (a) the
numerator of which is the number of years of participation (or
part thereof) in the Plan and (b) the denominator of which is ten
58<PAGE>
(10), provided, however, that said fraction shall in no event be
less than 1/10th. The limitations of Sections 6.2(a)(2) and 6.4
shall be reduced in the same manner except the preceding sentence
shall be applied with respect to years of service with the
Employer rather than years of participation in the Plan.
Additionally, to the extent provided in Regulations, for Plan
Years beginning after December 31, 1986, the above described
reductions to the limitations in Sections 6.2(a)(1) and 6.3 shall
be applied separately with respect to each change in the benefit
structure of the Plan.
6.6 MULTIPLE PLAN REDUCTION
(a) If an Employee is (or has been) a Participant in one or more
defined benefit plans and one or more defined contribution plans
maintained by the Employer, the sum of the defined benefit plan
fraction and the defined contribution plan fraction for any
"limitation year" may not exceed 1.0.
(b) The defined benefit plan fraction for any "limitation year"
is a fraction, the numerator of which is the sum of the
Participant's projected annual benefits under all the defined
benefit plans (whether or not terminated) maintained by the
Employer, and the denominator of which is the lesser of 125
percent of the dollar limitation determined for the "limitation
year" under Code Sections 415(b) and (d) or 140 percent of the
highest average compensation, including any adjustments under
Code Section 415(b).
Notwithstanding the above, if the Participant was a Participant
as of the first day of the first "limitation year" beginning
after December 31, 1986, in one or more defined benefit plans
maintained by the Employer which were in existence on May 6,
1986, the denominator of this fraction will not be less than 125
percent of the sum of the annual benefits under such plans which
the Participant had accrued as of the close of the last
"limitation year" beginning before January 1, 1987, disregarding
any changes in the terms and conditions of the plan after May 5,
1986. The preceding sentence applies only if the defined benefit
p l a n s individually and in the aggregate satisfied the
requirements of Code Section 415 for all "limitation years"
beginning before January 1, 1987.
(c) (1) The defined contribution plan fraction for any
"limitation year" is a fraction, the numerator of which
is the sum of the annual additions to the Participant's
account under all the defined contribution plans
(whether or not terminated) maintained by the Employer
for the current and all prior "limitation years"
(including the annual additions attributable to the
Participant's nondeductible Employee contributions to
all defined benefit plans, whether or not terminated,
59<PAGE>
maintained by the Employer, and the annual additions
attributable to all welfare benefit funds, as defined
i n Code Section 419(e), and individual medical
a c counts, as defined in Code Section 415(1)(2),
maintained by the Employer), and the denominator of
which is the sum of the maximum aggregate amounts for
the current and all prior "limitation years" of service
with the Employer (regardless of whether a defined
contribution plan was maintained by the Employer). The
maximum aggregate amount in any "limitation year" is
the lesser of 125 percent of the dollar limitation
determined under Code Sections 415(b) and (d) in effect
under Code Section 415(c)(1)(A) or 35 percent of the
Participant's Compensation for such year.
If the Employee was a Participant as of the end of the
first day of the first "limitation year" beginning
after December 31, 1986, in one or more defined
contribution plans maintained by the Employer which
were in existence on May 6, 1986, the numerator of this
fraction will be adjusted if the sum of this fraction
and the defined benefit fraction would otherwise exceed
1.0 under the terms of this Plan. Under the adjustment,
an amount equal to the product of (1) the excess of the
sum of the fractions over 1.0 times (2) the denominator
of this fraction, will be permanently subtracted from
the numerator of this fraction. The adjustment is
calculated using the fractions as they would be
computed as of the end of the last "limitation year"
beginning before January 1, 1987, and disregarding any
changes in the terms and conditions of the Plan made
after May 6, 1986, but using the Code Section 415
limitation applicable to the first "limitation year"
beginning on or after January 1, 1987. The annual
addition for any "limitation year" beginning before
January 1, 1987 shall not be recomputed to treat all
Employee contributions as annual additions.
( 2 ) F o r purposes of this Article, the term
" P a r ticipant's account" shall mean the account
established and maintained by the Administrator for
each Participant with respect to his total interest in
t h e defined contribution plan maintained by the
Employer resulting from "annual additions".
(3) For purposes of this Article, the term "annual
a d d i t ions" shall mean the sum credited to a
"Participant's account" for any "limitation year" of
(A) Employer contributions, (B) Employee contributions,
(C) forfeitures, (D) amounts allocated after March 31,
1984, to an individual medical account, as defined in
Code Section 415(1)(2) which is part of a pension or
60<PAGE>
annuity plan maintained by the Employer, and (E)
amounts derived from contributions paid or accrued
after December 31, 1985, in taxable years ending after
such date, which are attributable to post-retirement
medical benefits allocated to the separate account of a
key employee (as defined in Code Section 419A(d)(3))
under a welfare benefit plan (as defined in Code
Section 419(e)) maintained by the Employer. Except,
however, the percentage limitation referred to in
(4)(B) below shall not apply to: (1) any contribution
for medical benefits (within the meaning of Code
Section 419A(f)(2)) after separation from service which
is otherwise treated as an "annual addition", or (2)
any amount otherwise treated as an "annual addition"
under Code Section 415(1)(1). Notwithstanding the
foregoing, for "limitation years" beginning prior to
J a nuary 1, 1987, only that portion of Employee
c o n t ributions equal to the lesser of employee
contributions in excess of six percent (6%) of "415
Compensation" or one-half of employee contributions
shall be considered an "annual addition".
(4) If as a result of a reasonable error in estimating
a Participant's Compensation or other facts and
circumstances to which Regulation 1.415-6(b)(6) shall
be applicable, voluntary employee contributions for the
"limitation year" would cause the "annual additions"
credited to a "Participant's account" to exceed the
lesser of (A) $30,000 (or, if greater, one-fourth of
the dollar limitation in effect under Code Section
415(b)(1)(A)) or (B) twenty-five percent (25%) of the
Participant's "415 Compensation" for such limitation
year, the Administrator shall, pursuant to Regulation
1 . 415-6(b)(6)(iv), return such voluntary employee
c o n tributions to the Participant to the extent
n e c e s sary so that "annual additions" for the
"limitation year" do not exceed the lesser of (A) or
(B).
(d) Notwithstanding the foregoing, for any "limitation year" in
which the Plan is a Top Heavy Plan, 100% shall be substituted for
125% in Sections 6.6(b) and 6.6(c)(1) unless the extra minimum
benefit is being provided pursuant to Section 5.2. However, for
any "limitation year" in which the Plan is a Super Top Heavy
Plan, 1.0 shall be substituted for 1.25 in any event.
(e) If the sum of the defined benefit plan fraction and the
defined contribution plan fraction shall exceed 1.0 in any
" l imitation year" for any Participant in this Plan, the
Administrator shall adjust the numerator of the defined benefit
plan fraction so that the sum of both fractions shall not exceed
1.0 in any "limitation year" for such Participant.
61<PAGE>
6.7 INCORPORATION BY REFERENCE
Notwithstanding anything contained in this Article to the
contrary, the limitations, adjustments and other requirements
prescribed in this Article shall at all times comply with the
provisions of Code Section 415 and the Regulations thereunder,
the terms of which are specifically incorporated herein by
reference.
62<PAGE>
ARTICLE VII
PLAN AMENDMENT
7.1 AMENDMENT
(a) The Employer shall have the right at any time to amend the
Plan, subject to the limitations of this Section. Such amendment
shall be effective upon approval of the Employer's Board of
Directors or the Executive Committee of the Board of Directors in
accordance with established Board of Directors procedures.
However, any amendment which affects the rights, duties or
responsibilities of the Trustee and Administrator may only be
made with the Trustee's and Administrator's written consent. Any
such amendment shall become effective as provided therein upon
its execution. The Trustee shall not be required to execute any
such amendment unless the Trust provisions contained herein are a
part of the Plan and the amendment affects the duties of the
Trustee hereunder.
(b) No amendment to the Plan shall be effective if it authorizes
or permits any part of the Trust Fund (other than such part as is
required to pay taxes and administration expenses) to be used for
or diverted to any purpose other than for the exclusive benefit
of the Participants or their Beneficiaries or estates; or causes
any reduction in the Accrued Benefit of any Participant (except
to the extent permitted under Code Section 412(c)(8)); or causes
or permits any portion of the Trust Fund to revert to or become
property of the Employer.
(c) Except as permitted by Regulations, no Plan amendment or
transaction having the effect of a Plan amendment (such as a
merger, plan transfer or similar transaction) shall be effective
if it eliminates or reduces any "Section 411(d)(6) protected
benefit" or adds or modifies conditions relating to "Section
411(d)(6) protected benefits" the result of which is a further
restriction on such benefit unless such protected benefits are
preserved with respect to benefits accrued as of the later of the
adoption date or effective date of the amendment. "Section
411(d)(6) protected benefits" are benefits described in Code
S e c t ion 411(d)(6)(A), early retirement benefits and
retirement-type subsidies, and optional forms of benefit.
(d) If this Plan is amended and an effect of such amendment is to
i n c r ease current liability (as defined in Code Section
401(a)(29)(E)) under the Plan for a Plan Year, and the funded
current liability percentage of the Plan for the Plan Year in
which the amendment takes effect is less than sixty percent
(60%), including the amount of the unfunded current liability
under the Plan attributable to the amendment, the amendment shall
not take effect until the Employer (or any member of a controlled
group which includes the Employer) provides security to the Plan.
T h e form and amount of such security shall satisfy the
63<PAGE>
requirements of Code Section 401(a)(29)(B) and (C). Such security
may be released provided the requirements of Code Section
401(a)(29)(D) are satisfied.
64<PAGE>
ARTICLE VIII
PLAN TERMINATION
8.1 TERMINATION
(a) The Employer shall have the right to terminate the Plan by
delivering to the Trustee, the Administrator, and, if applicable,
the union representative, written notice of such termination.
Such termination shall be effective upon approval of the
Employer's Board of Directors or the Executive Committee of the
Board of Directors in accordance with established Board of
Directors procedures. However, any termination (other than a
partial termination or an involuntary termination pursuant to Act
Section 4042) must satisfy the requirements and follow the
procedures outlined herein and in Act Section 4041 for a Standard
Termination or a Distress Termination. Upon any termination (full
or partial), all amounts shall be allocated in accordance with
the provisions hereof and the Accrued Benefit, to the extent
funded as of such date, of each affected Participant shall become
fully Vested and shall not thereafter be subject to forfeiture.
(b) Standard Termination Procedure
(1) The Administrator shall first notify all "affected
parties" (as defined in Act Section 4001(a)(21)) of the
Employer's intention to terminate the Plan and the
proposed date of termination. Such termination notice
must be provided at least sixty (60) days prior to the
proposed termination date. However, in the case of a
standard termination, it shall not be necessary to
provide such notice to the Pension Benefit Guaranty
Corporation (PBGC). As soon as practicable after the
termination notice is given, the Administrator shall
provide a follow-up notice to the PBGC setting forth
the following:
(i) a certification of an enrolled actuary of
the projected amount of the assets of the
Plan as of the proposed date of final
distribution of assets, the actuarial present
v a lue of the "benefit liabilities" (as
defined in Act Section 4001(a)(16)) under the
Plan as of the proposed termination date, and
confirmation that the Plan is projected to be
sufficient for such "benefit liabilities" as
of the proposed date of final distribution;
(ii) a certification by the Administrator
that the information provided to the PBGC and
upon which the enrolled actuary based his
certification is accurate and complete; and
65<PAGE>
(iii) such other information as the PBGC may
prescribe by regulation.
( i v) The certification of the enrolled
actuary and of the Administrator shall not be
applicable in the case of a plan funded
exclusively by individual insurance
contracts.
(2) No later than the date on which the follow-up
notice is sent to the PBGC, the Administrator shall
provide all Participants and Beneficiaries under the
Plan with an explanatory statement specifying each such
person's "benefit liabilities," the benefit form on the
basis of which such amount is determined, and any
additional information used in determining "benefit
l i a b ilities" that may be required pursuant to
regulations promulgated by the PBGC.
(3) A standard termination may only take place if at
the time the final distribution of assets occurs, the
Plan is sufficient to meet all "benefit liabilities"
determined as of the termination date.
(c) Distress Termination Procedure
(1) The Administrator shall first notify all "affected
parties" of the Employer's intention to terminate the
Plan and the proposed date of termination. Such
termination notice must be provided at least 60 days
prior to the proposed termination date. As soon as
practicable after the termination notice is given, the
Administrator shall also provide a follow-up notice to
the PBGC setting forth the following:
(i) a certification of an enrolled actuary of
the amount, as of the proposed termination
date, of the current value of the assets of
the Plan, the actuarial present value (as of
such date) of the "benefit liabilities" under
the Plan, whether the Plan is sufficient for
"benefit liabilities" as of such date, the
actuarial present value (as of such date) of
benefits under the Plan guaranteed under Act
S e ction 4022, and whether the Plan is
sufficient for guaranteed benefits as of such
date;
(ii) in any case in which the Plan is not
sufficient for "benefit liabilities" as of
such date, the name and address of each
Participant and Beneficiary under the Plan as
66<PAGE>
of such date;
(iii) a certification by the Administrator
that the information provided to the PBGC and
upon which the enrolled actuary based his
certification is accurate and complete; and
(iv) such other information as the PBGC may
prescribe by regulation.
(v) The certification of the enrolled actuary
a n d of the Administrator shall not be
applicable in the case of a plan funded
exclusively by individual insurance
contracts.
(2) A distress termination may only take place if:
(i) the Employer demonstrates to the PBGC
that such termination is necessary to enable
the Employer to pay its debts while staying
i n business, or to avoid unreasonably
burdensome pension costs caused by a decline
in the Employer's work force;
(ii) the Employer is the subject of a
petition seeking liquidation in a bankruptcy
or insolvency proceeding which has not been
dismissed as of the proposed termination
date; or
(iii) the Employer is the subject of a
petition seeking reorganization in a
bankruptcy or insolvency proceeding which has
n o t been dismissed as of the proposed
termination date, and the bankruptcy court
(or such other appropriate court) approves
the termination and determines that the
Employer will be unable to continue in
business outside a Chapter 11 reorganization
p r o c ess and that such termination is
necessary to enable the Employer to pay its
debts pursuant to a plan of reorganization.
(d) Priority and Payment of Benefits
In the case of a distress termination, upon approval by the PBGC
that the Plan is sufficient for "benefit liabilities" or for
"guaranteed benefits", or in the case of a standard termination,
a letter of non-compliance has not been issued within the sixty
(60) day period (as extended) following the receipt by the PBGC
of the follow-up notice, the Administrator shall allocate the
67<PAGE>
assets of the Plan among Participants and Beneficiaries pursuant
to Act Section 4044(a). As soon as practicable thereafter, the
assets of the Trust shall be distributed to the Participants and
Beneficiaries, in cash or through the purchase of irrevocable
commitments from an insurer, in a manner consistent with Section
5.7. However, if all liabilities with respect to Participants and
Beneficiaries under the Plan have been satisfied and there
remains a balance in the Trust due to erroneous actuarial
computation, such balance, if any, shall be returned to the
Employer. In the case of a distress termination in which the PBGC
is unable to determine that the Plan is sufficient for guaranteed
benefits, the assets of the Plan shall only be distributed in
accordance with proceedings instituted by the PBGC.
(e) The termination of the Plan shall comply with such other
requirements and rules as may be promulgated by the PBGC under
authority of Title IV of the Act, including any rules relating to
time periods or deadlines for providing notice or for making a
necessary filing.
8.2 LIMITATION OF BENEFITS ON EARLY TERMINATION
Prior to the date the pre-termination restrictions in Section 8.3
of the Plan are effective, the provisions of this Section 8.2
shall apply.
In the event the Plan is terminated for any reason other than the
failure to obtain Internal Revenue Service approval pursuant to
Section 10.14, then notwithstanding any provision in this Plan to
the contrary, during the first ten (10) years after the Effective
Date hereof, and if full current costs had not been met at the
end of the first ten (10) years, until said full current costs
are met, the benefits provided by the Employer's contributions
for the Participants whose anticipated annual retirement benefit
at Normal Retirement Date exceeds $1,500 and who at the Effective
Date of the Plan were among the twenty-five (25) highest paid
Employees of the Employer will be subject to the conditions set
forth in the following provisions:
(a) The benefit payable to a Participant described in
this Section or his Beneficiary shall not exceed the
greater of the following:
(1) those benefits purchasable by the greater
of (a) $20,000, or (b) an amount equal to 20%
of the first $50,000 of the Participant's
annual Compensation multiplied by the number
of years from the Effective Date of the Plan
to the earlier of (i) the date of termination
of the Plan, or (ii) the date the benefit of
the Participant becomes payable or (iii) the
date of a failure on the part of the Employer
68<PAGE>
to meet the full current costs of the Plan;
or
(2) if a Participant is a "substantial owner"
(as defined in Section 4022(b)(5)(A) of the
Act), the present value of the benefit
guaranteed for "substantial owners" under
Section 4022 of the Act, or
(3) if the Participant is not a "substantial
owner", the present value of the maximum
benefit provided in Section 4022(b)(3)(B) of
the Act, determined on the date the Plan
terminates or on the date benefits commence,
whichever is earlier and in accordance with
regulations of the Pension Benefit Guaranty
Corporation.
(b) If the Plan is terminated or the full current costs
thereof have not been met at any time within ten (10)
years after the Effective Date, the benefits which any
of the Participants described in this Section may
receive from the Employer's contribution shall not
exceed the benefits set forth in Section 8.2(a). If at
the end of the first ten (10) years the full current
costs are not met, the restrictions will continue to
apply until the full current costs are funded for the
first time.
(c) If a Participant described in this Section leaves
t h e employ of the Employer or withdraws from
participation in the Plan when the full current costs
have been met, the benefits which he may receive from
the Employer contributions shall not at any time within
the first ten (10) years after the Effective Date
exceed the benefits set forth in Section 8.2(a), except
as provided in Section 8.2(i).
(d) These conditions shall not restrict the full
payment of any survivor's benefits on behalf of a
Participant who dies while in the Plan and the full
current costs have been met.
(e) These conditions shall not restrict the current
payment of full retirement benefits called for by the
Plan for any Retired Participant while the Plan is in
full effect and its full current costs have been met,
provided an agreement, adequately secured, guarantees
the repayment of any part of the distribution that is
or may become restricted.
(f) If the benefits of, or with respect to, any
69<PAGE>
Participant shall have been suspended or limited in
accordance with the limitations of Section 8.2(a), (b),
and (c) above because the full current costs of the
Plan shall not then have been met, and if such full
current costs shall thereafter be met, then the full
amount of the benefits payable to such Participant
shall be resumed and the parts of such benefits which
have been suspended shall then be paid in full.
(g) Notwithstanding anything in Section 8.2(a), (b),
and (c) above, if on the termination of the Plan within
the first ten (10) years after the Effective Date, the
funds, Contracts, or other property under the Plan are
more than sufficient to provide Accrued Benefits as
defined in Section 1.1 for Participants and their
Beneficiaries including full benefits for all
Participants other than such of the twenty-five (25)
highest paid Employees as are still in the service of
the Employer and also including Accrued Benefits as
limited by this Section for such twenty-five (25)
highest paid Employees, then any excess of such funds,
Contracts, and property shall be used to provide
Accrued Benefits for the twenty-five (25) highest paid
Employees in excess of such limitations of this Section
up to the benefits to which such Employees would be
entitled under Section 1.1 without such limitations.
(h) In the event that Congress should provide by
statute, or the Treasury Department or the Internal
Revenue Service should provide by regulation or ruling,
that the limitations provided for in this Section are
no longer necessary in order to meet the requirements
for a qualified pension plan under the Internal Revenue
Code as then in effect, the limitations in this Section
shall become void and shall no longer apply without the
necessity of amendment to this Plan.
(i) In the event a lump-sum distribution is made to an
Employee subject to the above restrictions in an amount
in excess of that amount otherwise permitted under this
Article, an agreement shall be made, with adequate
security guaranteeing repayment of any amount of the
distribution that is restricted. Adequate security
shall mean property having a fair market value of at
least 125% of the amount which would be repayable if
the Plan had terminated on the date of distribution of
such lump sum. If the fair market value of the property
falls below 110% of the amount which would then be
repayable if the Plan were then to terminate, the
distributee shall deposit additional property to bring
the value of the property to 125% of such amount.
70<PAGE>
8.3 PRE-TERMINATION RESTRICTIONS
In the event of Plan termination, the benefit of any highly
compensated Participant or Former Participant is limited to a
benefit that is nondiscriminatory under Code Section 401(a)(4).
For plan years beginning on or after January 1, 1992, benefits
distributed to any member of the group of the 25 most highly
c o mpensated active employees or highly compensated former
employees of the employer who have the greatest compensation
from the employer in the current or any prior plan year ("top 25
highly compensated employees") are restricted such that the
annual payments are no greater than an amount equal to the
payment that would be made on behalf of the employee under a
straight life annuity that is the actuarial equivalent of the sum
of the employee's accrued benefit, the employee's other benefits
under the plan (other than a social security supplement, within
the meaning of section 1.411(a)-7(c)(4)(ii) of the Income Tax
Regulations), and the amount the employee is entitled to receive
under a social security supplement. The group of employees whose
benefits are restricted under this paragraph may be amended at
any time without violating section 411(d)(6).
The restrictions in the preceding paragraph shall not apply if:
(1) after payment of the benefit to an employee described in the
preceding paragraph, the value of plan assets equals or exceeds
110% of the value of current liabilities, as defined in section
412(l)(7) of the Internal Revenue Code, (2) the value of the
benefits for an employee described above is less than 1% of the
value of current liabilities before distribution, or (3) the
value of the benefits payable under the plan to an employee
described above does not exceed $3,500.
For purposes of this section, benefit includes loans in excess of
the amount set forth in section 72(p)(2)(A) of the Internal
Revenue Code, any periodic income, any withdrawal values payable
to a living employee, and any death benefits not provided for by
insurance on the employee's life.
An employee's otherwise restricted benefit may be distributed in
full to the affected employee if prior to the receipt of the
restricted amount, the employee enters into a written agreement
with the Administrator to secure repayment to the Plan of the
restricted amount. The restricted amount is the excess of the
amounts distributed to the Employee (accumulated with reasonable
interest) over the amounts that could have been distributed to
the Employee under the straight life annuity (accumulated with
reasonable interest). The employee may secure repayment of the
restricted amount upon distribution by: (1) entering into an
agreement for promptly depositing in escrow with an acceptable
depositary property having a fair market value equal to at least
125 percent of the restricted amount, (2) providing a bank letter
71<PAGE>
of credit in an amount equal to at least 100 percent of the
restricted amount, or (3) posting a blond equal to at least 100
percent of the restricted amount. If the employee elects to post
bond, the bond will be furnished by an insurance company, bonding
company or other surety for federal bonds.
The escrow arrangement may provide that an employee may withdraw
amounts in excess of 125 percent of the restricted amount. If
the market value of the property in an escrow account falls below
110 percent of the remaining restricted amount, the employee must
deposit additional property to bring the value of the property
held by the depositary up to 125 percent of the restricted
amount. The escrow arrangement may provide that the employee may
have the right to receive any income from the property placed in
e s c row, subject to the employee's obligation to deposit
additional property, as set forth in the preceding sentence.
A surety or bank may release any liability on a bond or letter of
credit in excess of 100 percent of the restricted amount.
If the Administrator certifies to the depositary, surety or bank
that the employee (or the employee's estate) is no longer
obligated to repay any restricted amount, a depositary may
redeliver to the employee any property held under an escrow
agreement, and a surety or bank may release any liability on an
employee's bond or letter of credit.
In the event that Congress should provide by statute, or the
Treasury Department or the Internal Revenue Service should
provide by regulation or ruling, that the limitations provided
for in this Section are no longer necessary in order to meet the
requirements for a qualified pension plan under the Internal
Revenue Code as then in effect, the limitations in this Section
shall become void and shall no longer apply without the necessity
of amendment to this Plan.
72<PAGE>
ARTICLE IX
MERGER, CONSOLIDATION OR TRANSFER OF ASSETS
9.1 REQUIREMENTS
Before this Plan can be merged or consolidated with any other
qualified plan or its assets or liabilities transferred to any
other qualified plan, the Administrator must secure (and file
with the Secretary of Treasury at least 30 days beforehand) a
c e rtification from a government-enrolled actuary that the
benefits which would be received by a Participant of this Plan,
in the event of a termination of the Plan immediately after such
transfer, merger or consolidation, are at least equal to the
benefits the Participant would have received if the Plan had
terminated immediately before the transfer, merger or
consolidation, and such transfer, merger or consolidation does
not otherwise result in the elimination or reduction of any
"Section 411(d)(6) protected benefits" as described in Section
7.1.
73<PAGE>
ARTICLE X
MISCELLANEOUS
10.1 PARTICIPANT'S RIGHTS
This Plan shall not be deemed to constitute a contract between
the Employer and any Participant or to be a consideration or an
inducement for the employment of any Participant or Employee.
Nothing contained in this Plan shall be deemed to give any
Participant or Employee the right to be retained in the service
of the Employer or to interfere with the right of the Employer to
discharge any Participant or Employee at any time regardless of
the effect which such discharge shall have upon him as a
Participant of this Plan.
10.2 ALIENATION
(a) Subject to the exceptions provided below, no benefit which
shall be payable out of the Trust Fund to any person (including a
Participant or his Beneficiary) shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, or charge, and any attempt to anticipate, alienate,
sell, transfer, assign, pledge, encumber, or charge the same
shall be void; and no such benefit shall in any manner be liable
f o r , or subject to, the debts, contracts, liabilities,
engagements, or torts of any such person, nor shall it be subject
to attachment or legal process for or against such person, and
the same shall not be recognized by the Trustee, except to such
extent as may be required by law.
(b) This provision shall not apply to the extent a Participant or
Beneficiary is indebted to the Plan, as a result of a loan from
the Plan. At the time a distribution is to be made to or for a
Participant's or Beneficiary's benefit, such proportion of the
amount distributed as shall equal such loan indebtedness shall be
paid by the Trustee to the Trustee or the Administrator, at the
direction of the Administrator, to apply against or discharge
such loan indebtedness. Prior to making a payment, however, the
Participant or Beneficiary must be given written notice by the
Administrator that such loan indebtedness is to be so paid in
whole or part from his Participant's Accrued Benefit. If the
P a rticipant or Beneficiary does not agree that the loan
indebtedness is a valid claim against his Vested Participant's
Accrued Benefit, he shall be entitled to a review of the validity
of the claim in accordance with procedures provided in Sections
2.12 and 2.13.
(c) This provision shall not apply to a "qualified domestic
relations order" defined in Code Section 414(p), and those other
domestic relations orders permitted to be so treated by the
Administrator under the provisions of the Retirement Equity Act
of 1984. The Administrator shall establish a written procedure to
74<PAGE>
determine the qualified status of domestic relations orders and
to administer distributions under such qualified orders. Further,
to the extent provided under a "qualified domestic relations
order", a former spouse of a Participant shall be treated as the
spouse or surviving spouse for all purposes under the Plan.
10.3 CONSTRUCTION OF PLAN
This Plan shall be construed and enforced according to the Act
and the laws of the State of Texas, other than its laws
respecting choice of law, to the extent not preempted by the Act.
10.4 GENDER AND NUMBER
Wherever any words are used herein in the masculine, feminine or
neuter gender, they shall be construed as though they were also
used in another gender in all cases where they would so apply,
and whenever any words are used herein in the singular or plural
form, they shall be construed as though they were also used in
the other form in all cases where they would so apply.
10.5 LEGAL ACTION
In the event any claim, suit, or proceeding is brought regarding
the Trust and/or Plan established hereunder to which the Trustee
or the Administrator may be a party, and such claim, suit, or
proceeding is resolved in favor of the Trustee or Administrator,
they shall be entitled to be reimbursed from the Trust Fund for
any and all costs, attorney's fees, and other expenses pertaining
thereto incurred by them for which they shall have become liable.
10.6 PROHIBITION AGAINST DIVERSION OF FUNDS
(a) Except as provided below and otherwise specifically permitted
by law, it shall be impossible by operation of the Plan or of the
Trust, by termination of either, by power of revocation or
amendment, by the happening of any contingency, by collateral
arrangement or by any other means, for any part of the corpus or
income of any trust fund maintained pursuant to the Plan or any
funds contributed thereto to be used for, or diverted to,
purposes other than the exclusive benefit of Participants,
Retired Participants, or their Beneficiaries.
( b ) In the event the Employer shall make an excessive
contribution under a mistake of fact pursuant to Act Section
403(c)(2)(A), the Employer may demand repayment of such excessive
contribution at any time within one (1) year following the time
of payment and the Trustees shall return such amount to the
Employer within the one (1) year period. Earnings of the Plan
attributable to the excess contributions may not be returned to
the Employer but any losses attributable thereto must reduce the
amount so returned.
75<PAGE>
76<PAGE>
10.7 BONDING
Every Fiduciary, except a bank or an insurance company, unless
exempted by the Act and regulations thereunder, shall be bonded
in an amount not less than 10% of the amount of the funds such
Fiduciary handles; provided, however, that the minimum bond shall
be $1,000 and the maximum bond, $500,000. The amount of funds
handled shall be determined at the beginning of each Plan Year by
the amount of funds handled by such person, group, or class to be
covered and their predecessors, if any, during the preceding Plan
Year, or if there is no preceding Plan Year, then by the amount
of the funds to be handled during the then current year. The bond
shall provide protection to the Plan against any loss by reason
of acts of fraud or dishonesty by the Fiduciary alone or in
connivance with others. The surety shall be a corporate surety
company (as such term is used in Act Section 412(a)(2)), and the
bond shall be in a form approved by the Secretary of Labor.
Notwithstanding anything in the Plan to the contrary, the cost of
such bonds shall be an expense of and may, at the election of the
Administrator, be paid from the Trust Fund or by the Employer.
10.8 EMPLOYER'S AND TRUSTEE'S PROTECTIVE CLAUSE
Neither the Employer nor the Trustee, nor their successors, shall
be responsible for the validity of any Contract issued hereunder
or for the failure on the part of the insurer to make payments
provided by any such Contract, or for the action of any person
which may delay payment or render a Contract null and void or
unenforceable in whole or in part.
10.9 INSURER'S PROTECTIVE CLAUSE
Any insurer who shall issue Contracts hereunder shall not have
any responsibility for the validity of this Plan or for the tax
or legal aspects of this Plan. The insurer shall be protected and
held harmless in acting in accordance with any written direction
of the Trustee, and shall have no duty to see to the application
of any funds paid to the Trustee, nor be required to question any
actions directed by the Trustee. Regardless of any provision of
this Plan, the insurer shall not be required to take or permit
any action or allow any benefit or privilege contrary to the
terms of any Contract which it issues hereunder, or the rules of
the insurer.
10.10 RECEIPT AND RELEASE FOR PAYMENTS
Any payment to any Participant, his legal representative,
Beneficiary, or to any guardian or committee appointed for such
Participant or Beneficiary in accordance with the provisions of
the Plan, shall, to the extent thereof, be in full satisfaction
of all claims hereunder against the Trustee and the Employer,
either of whom may require such Participant, legal
77<PAGE>
r e p resentative, Beneficiary, guardian or committee, as a
condition precedent to such payment, to execute a receipt and
release thereof in such form as shall be determined by the
Trustee or Employer.
10.11 ACTION BY THE EMPLOYER
Whenever the Employer under the terms of the Plan is permitted or
required to do or perform any act or matter or thing, it shall be
done and performed by a person duly authorized by its legally
constituted authority.
10.12 NAMED FIDUCIARIES AND ALLOCATION OF RESPONSIBILITY
The "named Fiduciaries" of this Plan are (1) the Employer, (2)
the Administrator and (3) the Trustee. The named Fiduciaries
shall have only those specific powers, duties, responsibilities,
and obligations as are specifically given them under the Plan. In
general, the Employer shall have the sole responsibility for
making the contributions provided for under Section 4.1; and
shall have the sole authority to appoint and remove the Trustee
and the Administrator; to formulate the Plan's "funding policy
and method"; and to amend or terminate, in whole or in part, the
Plan. The Administrator shall have the sole responsibility for
t h e administration of the Plan, which responsibility is
specifically described in the Plan. The Trustee shall have the
sole responsibility of management of the assets held under the
Trust, except those assets, the management of which has been
a s s igned to an Investment Manager, who shall be solely
responsible for the management of the assets assigned to it, all
as specifically provided in the Plan. Each named Fiduciary
warrants that any directions given, information furnished, or
action taken by it shall be in accordance with the provisions of
t h e Plan, authorizing or providing for such direction,
information or action. Furthermore, each named Fiduciary may rely
upon any such direction, information or action of another named
Fiduciary as being proper under the Plan, and is not required
under the Plan to inquire into the propriety of any such
direction, information or action. It is intended under the Plan
that each named Fiduciary shall be responsible for the proper
e x ercise of its own powers, duties, responsibilities and
obligations under the Plan. No named Fiduciary shall guarantee
the Trust Fund in any manner against investment loss or
depreciation in asset value. Any person or group may serve in
more than one Fiduciary capacity. In the furtherance of their
responsibilities hereunder, the "named Fiduciaries" shall be
empowered to interpret the Plan and Trust and to resolve
ambiguities, inconsistencies and omissions, which findings shall
be binding, final and conclusive.
10.13 HEADINGS
78<PAGE>
The headings and subheadings of this Plan have been inserted for
c o n venience of reference and are to be ignored in any
construction of the provisions hereof.
10.14 APPROVAL BY INTERNAL REVENUE SERVICE
(a) Notwithstanding anything herein to the contrary,
contributions to this Plan are conditioned upon the initial
qualification of the Plan under Code Section 401, including any
amendments to the Plan. If the Plan receives an adverse
d e t e rmination with respect to its initial or continued
qualification, then the Plan shall return such contributions to
the Employer within one year after such determination, provided
the application for the determination is made by the time
prescribed by law for filing the Employer's return for the
taxable year in which the Plan was adopted, or such later date as
the Secretary of the Treasury may prescribe.
( b ) Notwithstanding any provisions to the contrary, any
contribution by the Employer to the Trust Fund is conditioned
upon the deductibility of the contribution by the Employer under
the Code and, to the extent any such deduction is disallowed, the
Employer shall, within one (1) year following the disallowance of
the deduction, demand repayment of such disallowed contribution
and the Trustee shall return such contribution within one (1)
y e a r following the disallowance. Earnings of the Plan
attributable to the excess contribution may not be returned to
the Employer, but any losses attributable thereto must reduce the
amount so returned.
10.15 UNIFORMITY
All provisions of this Plan shall be interpreted and applied in a
uniform, nondiscriminatory manner. In the event of any conflict
between the terms of this Plan and any Contract purchased
hereunder, the Plan provisions shall control.
79<PAGE>
IN WITNESS WHEREOF, this Plan has been executed the day and year
first above written.
Southdown, Inc.
B y /s/ Kenneth D. Cohn, Vice
President
EMPLOYER
80<PAGE>
APPENDIX A
Employees whose terms of employment are governed by a collective
bargaining agreement between the Employer and the International
Brotherhood of Boilermakers, Cement, Lime, Gypsum and Allied
Workers Division AFL-CIO Local Lodge D-357, or successors to the
interests of either party thereto, who are Eligible Employees
pursuant to Section 1.17 of, and are Participants in, the Plan
(referred to in this Appendix A as the "D-357 Participants") will
have benefits determined in accordance with the provisions of
this Plan as modified by the provisions of this Appendix A.
A.1 Definitions applicable for Appendix A only:
(a) Local Change Date - The later of such D-357 Participant's
date of eligibility, or March 1, 1991.
(b) Transition Service - Transition Service shall be equal to the
D-357 Participant's credited service determined immediately prior
to the Local Change Date plus such D-357 Participant's Years of
Service beginning on such Local Change Date and ending on the
termination of employment date. Transition Service will be
determined in accordance with the terms of the Hourly Plan (see
Section 1.17) on the day preceding the day of the merger of the
Hourly Plan with this Plan.
(c) D-357 Service - a D-357 Participant's Transition Service as
defined in (b) above, taking into account Years of Service
beginning on the Local Change Date and ending on the Transition
End Date.
(d) D-357 Benefit - a monthly retirement benefit payable in the
form of a single life annuity for the life of the D-357
Participant, equal to a fixed dollar amount multiplied by such D-
357 Participant's D-357 Service. The fixed dollar amount shall
be the fixed dollar amount set forth in the following table
corresponding to the applicable period in which falls the D-357
Participant's date of termination of eligibility.
Applic
a b le
Period
Rate
1/1/89 - 3/31/89 $20.50
4/1/89 - 2/28/91 $21.00
3/1/91 - 2/29/96 $21.00
The D-357 Benefit shall be reduced in accordance with Section
1.1(b)(vii) of this Plan.
(e) Transition End Date - the earlier of the termination of
81<PAGE>
eligibility date or February 29, 1996.
A.2 Accrued Benefit: The Accrued Benefit for D-357 Participants
covered by this Appendix A shall be equal to the greater of (i)
the Accrued Benefit otherwise determined by the provisions of
this Plan, and (ii) the D-357 Participant's D-357 Benefit.
A.3 Early Retirement Benefits: A D-357 Participant electing to
retire on an Early Retirement Date will receive the greater of:
( a ) his Early Retirement Benefit determined in
accordance with the other provisions of this Plan, or,
( b ) provided such D-357 Participant's Transition
Service equals or exceeds 10, a monthly retirement
pension in an amount equal to his D-357 Benefit reduced
by three-tenths of one percent (0.3%) for each month by
w h ich his Early Retirement Date precedes Normal
Retirement Date. However, if such D-357 Participant has
accumulated thirty (30) or more years of Transition
Service prior to his termination, he may elect to
retire and receive an immediate pension, unreduced for
early commencement (but reduced to reflect a form of
payment other than a life only form).
A.4 Plant Shutdown Benefits: With respect to Section 5.17,
Retirement Because of Plant Shutdown or Layoff, the Minimum Years
of Service for any D-357 Participant shall be ten (10) years, and
the Minimum Combined Total shall be sixty-five (65). No benefits
will become payable under Section 5.17 or any other provisions of
this Plan solely as the result of an event described in Section
5.17 which occurs after the Transition End Date.
A.5 Disability Benefits: For purposes of Section 5.4, the
Disability Minimum is ten (10) years.
A.6 Amendments: Article VII notwithstanding and except with
respect to amendments which may be required by law, no amendment
affecting pensions including service, benefit accrual,
eligibility, vesting, rights, compensation, or claims shall be
effective with respect to a D-357 Participant unless such
amendment is agreed to between the Employer and the union
representative. Further, to the extent permitted by, or not
v i olative of, law, provisions of a collective bargaining
agreement respecting pensions including service, benefit accrual,
eligibility, vesting, rights, compensation, or claims shall be
deemed an amendment to this Plan and are incorporated herein by
reference. No such amendment shall be effective, however, if the
effect is to disqualify this Plan pursuant to Code Section 401(a)
or to reduce a pre-amendment Accrued Benefit.
82<PAGE>
APPENDIX B
Employees whose terms of employment are governed by a collective
bargaining agreement between the Employer and the International
Brotherhood of Boilermakers, Cement, Lime, Gypsum and Allied
Workers Division AFL-CIO Local Lodge D-476, or successors to the
interests of either party thereto, who are Eligible Employees
pursuant to Section 1.17 of, and are Participants in, the Plan
(referred to in this Appendix B as the "D-476 Participants") will
have benefits determined in accordance with the provisions of
this Plan, as modified by this Appendix B. A "D-476 Participant"
shall include only those Employees described herein who were
employed by the Employer on the day preceding the date of merger
of the Hourly Plan (see Section 1.17) with this Plan (herein
referred to as the "Hourly Merger Date").
B.1 Definitions applicable for Appendix B only:
(a) Local Change Date - The later of such D-476 Participant's
date of eligibility, or August 1, 1991.
(b) Transition Service - Transition Service shall be equal to the
D-476 Participant's credited service determined immediately prior
to the Local Change Date plus such D-476 Participant's Years of
Service beginning on such Local Change Date and ending on the
termination of employment date. Transition Service will be
determined in accordance with the terms of the Hourly Plan (see
Section 1.17) on the day preceding the day of the merger of the
Hourly Plan with this Plan.
(c) D-476 Service - a D-476 Participant's Transition Service as
defined in (b) above, taking into account Years of Service
beginning on the Local Change Date and ending on the Transition
End Date.
(d) D-476 Benefit - a monthly retirement benefit payable in the
form of a single life annuity for the life of the D-476
Participant, equal to a fixed dollar amount multiplied by such D-
476 Participant's D-476 Service. The fixed dollar amount shall
be the fixed dollar amount set forth in the following table
corresponding to the applicable period in which falls the D-476
Participant's date of termination of eligibility.
Applicable Period Rate
1/1/89 - 7/31/90 $20.50
8/1/90 - 7/31/91 $21.00
8/1/91 - 7/31/92 $21.50
8/1/92 - 7/31/96 $22.00
This benefit shall be reduced in accordance with Section
1.1(b)(vii) of this Plan.
83<PAGE>
(e) Transition End Date - the earlier of the termination of
eligibility date or July 31, 1996.
B.2 Accrued Benefit: The Accrued Benefit for D-476 Participants
covered by this Appendix B shall be equal to the greater of (i)
the Accrued Benefit otherwise determined by the provisions of
this Plan, and (ii) the D-476 Participant's D-476 Benefit.
B.3 Early Retirement Benefits: A D-476 Participant electing to
retire on an Early Retirement Date will receive the greater of:
( a ) his Early Retirement Benefit determined in
accordance with the other provisions of this Plan, or,
( b ) provided such D-476 Participant's Transition
Service equals or exceeds 10, a monthly retirement
pension in an amount equal to his D-476 Benefit reduced
by three-tenths of one percent (0.3%) for each month by
w h ich his Early Retirement Date precedes Normal
Retirement Date. However, if such D-476 Participant has
accumulated thirty (30) or more years of Transition
Service prior to his termination, he may elect to
retire and receive an immediate pension, unreduced for
early commencement (but reduced to reflect a form of
payment other than a life only form).
B.4 Plant Shutdown Benefits: With respect to Section 5.17,
Retirement Because of Plant Shutdown or Layoff, the Minimum Years
of Service for any D-476 Participant shall be ten (10) years, and
the Minimum Combined Total shall be sixty-five (65). No benefits
will become payable under Section 5.17 or any other provisions of
this Plan solely as the result of an event described in Section
5.17 which occurs after the Transition End Date.
B.5 Disability Benefits: For purposes of Section 5.4, the
Disability Minimum is ten (10) years.
B.6 Amendments: Article VII notwithstanding and except with
respect to amendments which may be required by law, no amendment
affecting pensions including service, benefit accrual,
eligibility, vesting, rights, compensation, or claims shall be
effective with respect to a D-476 Participant unless such
amendment is agreed to between the Employer and the union
representative. Further, to the extent permitted by, or not
v i olative of, law, provisions of a collective bargaining
agreement respecting pensions including service, benefit accrual,
eligibility, vesting, rights, compensation, or claims shall be
deemed an amendment to this Plan and are incorporated herein by
reference. No such amendment shall be effective, however, if the
effect is to disqualify this Plan pursuant to Code Section 401(a)
or to reduce a pre-amendment Accrued Benefit.
84<PAGE>
APPENDIX C
Employees whose terms of employment are governed by a collective
b a rgaining agreement between the Employer and the United
Paperworkers International Union, Local 30049, or successors to
the interests of either party thereto, who are Eligible
Employees pursuant to Section 1.17 of, and are Participants in,
the Plan (referred to in this Appendix C as the "Local 49
Participants") will have benefits determined in accordance with
the provisions of this Plan, as modified by this Appendix C.
C.1 Definitions applicable for Appendix C only:
(a) Local Change Date - The later of such Local 49 Participant's
date of eligibility, or August 16, 1993.
(b) Transition Service - Transition Service shall be equal to the
Local 49 Participant's credited service determined immediately
prior to the Local Change Date plus such Local 49 Participant's
Years of Service beginning on such Local Change Date and ending
on the termination of employment date. Transition Service will
be determined in accordance with the terms of the Hourly Plan
(see Section 1.17) on the day preceding the day of the merger of
the Hourly Plan with this Plan.
(c) Local 49 Service - a Local 49 Participant's Transition
Service as defined in (b) above, taking into account Years of
Service beginning on the Local Change Date and ending on the
Transition End Date.
(d) Local 49 Benefit - a monthly retirement benefit payable in
the form of a single life annuity for the life of the Local 49
Participant, equal to a fixed dollar amount multiplied by such
Local 49 Participant's Local 49 Service. The fixed dollar amount
shall be the fixed dollar amount set forth in the following table
corresponding to the applicable period in which falls the Local
49 Participant's date of termination of eligibility.
Applicable Period Rate
1/1/89 - 2/25/90 $20.50
2/26/90- 8/15/90 $21.00
8/16/90- 8/15/91 $21.50
8/16/91- 8/15/92 $22.00
8/16/92- 8/15/93 $22.50
8/16/93- 8/15/94 $23.00
8/16/94- 8/15/95 $23.50
8/16/95- 8/15/96 $24.00
8/16/96- 8/15/97 $24.50
8/16/97- 8/15/98 $25.00
The minimum Local 49 Benefit for any Local 49 Participant who
retires during the five-year period commencing August 16, 1993
85<PAGE>
and who has Transition Service of thirty (30) years or more at
the time of retirement will not be less than $25.00 multiplied by
such Local 49 Participant's Transition Service. The Local 49
Benefit shall be reduced in accordance with Section 1.1(b)(vii)
of this Plan.
(e) Transition End Date - the earlier of the termination of
eligibility date or August 15, 1998.
C . 2 Accrued Benefit: The Accrued Benefit for Local 49
Participants covered by this Appendix C shall be equal to the
greater of (i) the Accrued Benefit otherwise determined by the
provisions of this Plan, and (ii) the Local 49 Participant's
Local 49 Benefit. Provided, however, that with respect to Local
49 Participants covered by this Appendix C, "Compensation" as
defined in Section 1.12 of this Plan shall include "gainsharing."
C.3 Early Retirement Benefits: A Local 49 Participant electing to
retire on an Early Retirement Date will receive the greater of:
( a ) his Early Retirement Benefit determined in
accordance with the other provisions of this Plan, or,
(b) provided such Local 49 Participant's Transition
Service equals or exceeds 10, a monthly retirement
pension in an amount equal to his Local 49 Benefit
reduced by three-tenths of one percent (0.3%) for each
month by which his Early Retirement Date precedes
Normal Retirement Date. However, if such Local 49
Participant has accumulated thirty (30) or more years
of Transition Service prior to his termination, he may
elect to retire and receive an immediate pension,
unreduced for early commencement (but reduced to
reflect a form of payment other than a life only form).
C.4 Plant Shutdown Benefits: With respect to Section 5.17,
Retirement Because of Plant Shutdown or Layoff, the Minimum Years
of Service for any Local 49 Participant shall be ten (10) years,
and the Minimum Combined Total shall be sixty-five (65). No
benefits will become payable under Section 5.17 or any other
provisions of this Plan solely as the result of an event
described in Section 5.17 which occurs after the Transition End
Date.
C.5 Disability Benefits: For purposes of Section 5.4, the
Disability Minimum is five (5) years.
C.6 Amendments: Article VII notwithstanding and except with
respect to amendments which may be required by law, no amendment
affecting pensions including service, benefit accrual,
eligibility, vesting, rights, compensation, or claims shall be
effective with respect to a Local 49 Participant unless such
86<PAGE>
amendment is agreed to between the Employer and the union
representative. Further, to the extent permitted by, or not
v i olative of, law, provisions of a collective bargaining
agreement respecting pensions including service, benefit accrual,
eligibility, vesting, rights, compensation, or claims shall be
deemed an amendment to this Plan and are incorporated herein by
reference. No such amendment shall be effective, however, if the
effect is to disqualify this Plan pursuant to Code Section 401(a)
or to reduce a pre-amendment Accrued Benefit.
87<PAGE>
SOUTHDOWN, INC.
RETIREMENT SAVINGS PLAN
PLAN AND TRUST AGREEMENT
AS AMENDED AND RESTATED
GENERALLY EFFECTIVE JULY 1, 1990<PAGE>
Southdown, Inc. Retirement Savings Plan and Trust
As Amended and Restated Generally Effective July 1, 1990
Southdown, Inc. previously established the Southdown, Inc.
Retirement Savings Plan for the benefit of eligible employees of
the Company and its participating affiliates. The Plan is
intended to constitute a qualified profit sharing plan, as
described in Code section 401(a), which includes a qualified cash
or deferred arrangement, as described in Code section 401(k).
The provisions of this Plan and Trust relating to the Trustee
constitute the trust agreement which is entered into by and
b e t w een Southdown, Inc. and Wells Fargo Bank, National
Association. The Trust is intended to be tax exempt as described
under Code section 501(a).
The Plan constitutes an amendment and restatement of the
Southdown, Inc. Retirement Savings Plan which was originally
established effective as of July 1, 1990, and its related trust
agreement. Effective July 1, 1990 the Transmix Corporation
Retirement Savings Plan and the Savings Plan for Employees of
Moore McCormack Cement, Inc. and Certain Subsidiary Companies
were merged into this Plan. Effective March 1, 1991 the Moore
McCormack Resources & Lines Salaried Employees Savings Plan was
merged into this Plan.
The Southdown, Inc. Retirement Savings Plan and Trust, as set
forth in this document, is hereby amended and restated generally
effective as of July 1, 1990.
Date: ___________ , 19___ Southdown, Inc.
By: ___________________
Title: ___________________
The trust agreement set forth in those provisions of this Plan
and Trust which relate to the Trustee is hereby executed.
Date: ___________ , 19___ Wells Fargo Bank, National
Association
By: ___________________
Title: ___________________
Date: ___________ , 19___ Wells Fargo Bank, National Association
By: ___________________
Title: ___________________<PAGE>
TABLE OF CONTENTS
1 DEFINITIONS
2 ELIGIBILITY
2.1 Eligibility
2.2 Ineligible Employees
2.3 Ineligible or Former Participants
3 PARTICIPANT CONTRIBUTIONS
3.1 Pre-Tax Contribution Election
3.2 After-Tax Contribution Election
3.3 Changing a Contribution Election
3.4 Revoking and Resuming a Contribution Election
3.5 Contribution Percentage Limits
3.6 Refunds When Contribution Dollar Limit Exceeded
3.7 Timing, Posting and Tax Considerations
4 ROLLOVERS & TRUST-TO-TRUST TRANSFERS
4.1 Rollovers
4.2 Transfers From Other Qualified Plans
5 EMPLOYER CONTRIBUTIONS
5.1 Matching Contributions
6 ACCOUNTING
6.1 Individual Participant Accounting
6.2 Sweep Account is Transaction Account
6.3 Trade Date Accounting and Investment Cycle
6.4 Accounting for Investment Funds
6.5 Payment of Fees and Expenses
6.6 Accounting for Participant Loans
6.7 Error Correction
6.8 Participant Statements
6.9 Special Accounting During Conversion Period
6.10 Accounts for QDRO Beneficiaries
7 INVESTMENT FUNDS AND ELECTIONS
7.1 Investment Funds
7.2 Investment Fund Elections
7.3 Responsibility for Investment Choice
7.4 Default if No Election
7.5 Timing
7.6 Investment Fund Election Change Fees
i<PAGE>
8 VESTING
8.1 Fully Vested Contribution Accounts
9 PARTICIPANT LOANS
9.1 Participant Loans Permitted
9.2 Loan Application, Note and Security
9.3 Spousal Consent
9.4 Loan Approval
9.5 Loan Funding Limits
9.6 Maximum Number of Loans
9.7 Source and Timing of Loan Funding
9.8 Interest Rate
9.9 Repayment
9.10 Repayment Hierarchy
9.11 Repayment Suspension
9.12 Loan Default
9.13 Call Feature
10 IN-SERVICE WITHDRAWALS
10.1 In-Service Withdrawals Permitted
10.2 In-Service Withdrawal Application and Notice
10.3 Spousal Consent
10.4 In-Service Withdrawal Approval
10.5 Minimum Amount, Payment Form and Medium
10.6 Source and Timing of In-Service Withdrawal Funding
10.7 Hardship Withdrawals
10.8 After-Tax Account Withdrawals
10.9 Over Age 59-1/2 Withdrawals
11 DISTRIBUTIONS ONCE EMPLOYMENT ENDS OR AS REQUIRED BY LAW
11.1 Benefit Information, Notices and Election
11.2 Spousal Consent
11.3 Payment Form and Medium
11.4 Small Amounts Paid Immediately
11.5 Source and Timing of Distribution Funding
11.6 Latest Commencement Permitted
11.7 Payment Within Life Expectancy
11.8 Incidental Benefit Rule
11.9 Payment to Beneficiary
11.10 Beneficiary Designation
12 ADP AND ACP TESTS
12.1 Contribution Limitation Definitions
12.2 ADP and ACP Tests
12.3 Correction of ADP and ACP Tests
12.4 Multiple Use Test
12.5 Correction of Multiple Use Test
12.6 Adjustment for Investment Gain or Loss
12.7 Testing Responsibilities and Required Records
12.8 Separate Testing
13 MAXIMUM CONTRIBUTION AND BENEFIT LIMITATIONS
13.1 "Annual Addition" Defined
13.2 Maximum Annual Addition
13.3 Avoiding an Excess Annual Addition
13.4 Correcting an Excess Annual Addition
13.5 Correcting a Multiple Plan Excess
13.6 "Defined Benefit Fraction" Defined
13.7 "Defined Contribution Fraction" Defined
13.8 Combined Plan Limits and Correction
14 TOP HEAVY RULES
14.1 Top Heavy Definitions
14.2 Special Contributions
14.3 Adjustment to Combined Limits for
Different Plans
15 PLAN ADMINISTRATION
15.1 Plan Delineates Authority and Responsibility
15.2 Fiduciary Standards
ii<PAGE>
15.3 Company is ERISA Plan Administrator
15.4 Administrator Duties
15.5 Advisors May be Retained
15.6 Delegation of Administrator Duties
15.7 Committee Operating Rules
16 MANAGEMENT OF INVESTMENTS
16.1 Trust Agreement
16.2 Investment Funds
16.3 Authority to Hold Cash
16.4 Trustee to Act Upon Instructions
16.5 Administrator Has Right to
Vote Registered Investment Company Shares
16.6 Custom Fund Investment Management
16.7 Authority to Segregate Assets
16.8 Maximum Permitted Investment in Company Stock
16.9 Participants Have Right to Vote and
Tender Company Stock
16.10 Registration and Disclosure for Company Stock
17 TRUST ADMINISTRATION
17.1 Trustee to Construe Trust
17.2 Trustee To Act As Owner of Trust Assets
17.3 United States Indicia of Ownership
17.4 Tax Withholding and Payment
17.5 Trustee Duties and Limitations
17.6 Trust Accounting
17.7 Valuation of Certain Assets
17.8 Legal Counsel
17.9 Fees and Expenses
18 RIGHTS, PROTECTION, CONSTRUCTION AND JURISDICTION
18.1 Plan Does Not Affect Employment Rights
18.2 Limited Return of Contributions
18.3 Assignment and Alienation
18.4 Facility of Payment
18.5 Reallocation of Lost Participant's Accounts
18.6 Claims Procedure
18.7 Construction
18.8 Jurisdiction and Severability
18.9 Indemnification by Employer
19 AMENDMENT, MERGER AND TERMINATION
19.1 Amendment
19.2 Merger
19.3 Plan Termination
19.4 Termination of Employer's Participation
19.5 Replacement of the Trustee
19.6 Final Settlement and Accounting of Trustee
APPENDIX A - INVESTMENT FUNDS
APPENDIX B - PAYMENT OF PLAN FEES AND EXPENSES
APPENDIX C - LOAN INTEREST RATE
iii<PAGE>
1 DEFINITIONS
When capitalized, the words and phrases below have the
following meanings unless different meanings are clearly
required by the context:
1.1 "Account". The records maintained for purposes of
accounting for a Participant's interest in the Plan.
"Account" may refer to one or all of the following
accounts which have been created on behalf of a
Participant to hold specific types of Contributions
under the Plan:
(a) "Pre-Tax Account". An account created to hold
Pre-Tax Contributions.
(b) "After-Tax Account". An account created to hold
After-Tax Contributions.
(c) "Rollover Account". An account created to hold
Rollover Contributions.
(d) "Matching Account". An account created to hold
Matching Contributions.
(e) "Prior Plan Matching Account". An account
c r e a ted to hold Prior Plan Matching
Contributions.
1.2 "ACP" or "Average Contribution Percentage". The
percentage calculated in accordance with Section 12.1.
1.3 "Administrator". The Company, which may delegate all
or a portion of the duties of the Administrator under
the Plan to a Committee in accordance with Section
15.6.
1.4 " A D P " or "Average Deferral Percentage". The
percentage calculated in accordance with Section 12.1.
1.5 "Beneficiary". The person or persons who is to
receive benefits after the death of the Participant
pursuant to the "Beneficiary Designation" paragraph in
Section 11, or as a result of a QDRO.
1.6 "Code". The Internal Revenue Code of 1986, as
amended. Reference to any specific Code section shall
include such section, any valid regulation promulgated
thereunder, and any comparable provision of any future
legislation amending, supplementing or superseding
such section.
1.7 "Committee". If applicable, the committee which has
been appointed by the Company to administer the Plan
in accordance with Section 15.6.
1<PAGE>
1.8 "Company". Southdown, Inc. or any successor by
merger, purchase or otherwise.
1.9 "Company Stock". Shares common of stock of the
Company, its predecessor(s), or its successors or
assigns, or any corporation with or into which said
c o rporation may be merged, consolidated or
reorganized, or to which a majority of its assets may
be sold.
1.10 "Compensation". The sum of a Participant's Taxable
Income and salary reductions, if any, pursuant to Code
sections 125, 402(e)(3), 402(h), 403(b), 414(h)(2) or
457.
For purposes of determining benefits under this Plan,
Compensation is limited to $200,000 (as indexed for
t h e cost of living pursuant to Code sections
401(a)(17) and 415(d)) per Plan Year. For purposes of
determining benefits under this Plan for Plan Years
beginning after December 31, 1993, Compensation is
limited to $150,000 (as indexed for the cost of living
pursuant to Code sections 401(a)(17) and 415(d)) per
Plan Year.
For purposes of the preceding sentences, in the case
of an HCE who is a 5% Owner or one of the 10 most
highly compensated Employees, (i) such HCE and such
HCE's family group (as defined below) shall be treated
as a single employee and the Compensation of each
family group member shall be aggregated with the
Compensation of such HCE, and (ii) the limitation on
Compensation shall be allocated among such HCE and his
or her family group members in proportion to each
individual's Compensation before the application of
this sentence. For purposes of this Section, the term
"family group" shall mean an Employee's spouse and
lineal descendants who have not attained age 19 before
the close of the year in question.
For the purpose of determining HCEs and key employees,
Compensation for the entire Plan Year shall be used.
F o r the purpose of determining ADP and ACP,
Compensation shall be limited to amounts paid to an
Eligible Employee while a Participant.
1.11 "Contribution". An amount contributed to the Plan by
the Employer or an Eligible Employee, and allocated by
c o ntribution type to Participants' Accounts, as
d e s cribed in Section 1.1. Specific types of
contribution include:
(a) "Pre-Tax Contribution". An amount contributed by
the Employer on an eligible Participant's behalf
in conjunction with a Participant's Code section
401(k) salary deferral election.
(b) "After-Tax Contribution". An amount contributed
by a Participant on an after-tax basis.
2<PAGE>
(c) "Rollover Contribution". An amount contributed
by an Eligible Employee which originated from
another employer's qualified plan.
(d) "Matching Contribution". An amount contributed
by the Employer on an eligible Participant's
behalf based upon the amount contributed by the
eligible Participant.
(e) "Prior Plan Matching Contribution". An amount
previously contributed by the Employer on an
e l igible Participant's behalf which was
transferred to this plan from another qualified
plan of a Related Company, which continue to be
accounted for in the Plan.
1.12 "Contribution Dollar Limit". The annual limit placed
on each Participant's Pre-Tax Contributions, which
shall be $7,000 per calendar year (as indexed for the
cost of living pursuant to Code section 402(g)(5) and
4 1 5 ( d ) ). For purposes of this Section, a
Participant's Pre-Tax Contributions shall include (i)
any Employer contribution made under any qualified
cash or deferred arrangement as defined in Code
section 401(k) to the extent not includible in gross
income for the taxable year under Code section
402(e)(3) or 402(h)(1)(B) (determined without regard
to Code section 402(g)), and (ii) any Employer
contribution to purchase an annuity contract under
Code section 403(b) under a salary reduction agreement
(within the meaning of Code section 3121(a)(5)(D)).
1.13 "Direct Rollover". A payment from the Plan to an
Eligible Retirement Plan specified by a Distributee.
1.14 "Disability". A Participant's total and permanent,
mental or physical disability resulting in termination
of employment as evidenced by presentation of medical
evidence satisfactory to the Administrator.
1.15 "Distributee". An Employee or former Employee, the
surviving spouse of an Employee or former Employee and
a spouse or former spouse of an Employee or former
Employee determined to be an alternate payee under a
QDRO.
1.16 "Effective Date". July 1, 1990, unless stated
otherwise. The date upon which the provisions of this
document become effective. In general, the provisions
of this document only apply to Participants who are
Employees on or after the Effective Date. However,
investment and distribution provisions apply to all
Participants with Account balances to be invested or
distributed after the Effective Date.
1.17 "Eligible Employee". An Employee of an Employer,
except any Employee:
(a) whose compensation and conditions of employment
are covered by a collective bargaining agreement
to which an Employer is a party unless the
agreement calls for the Employee's participation
in the Plan;
3<PAGE>
(b) who is treated as an Employee because he or she
is a Leased Employee; or
(c) who is a nonresident alien who (i) either
receives no earned income (within the meaning of
Code section 911(d)(2)), from sources within the
United States under Code section 861(a)(3); or
(ii) receives such earned income from such
sources within the United States but such income
is exempt from United States income tax under an
applicable income tax convention.
1.18 "Eligible Retirement Plan". An individual retirement
a c c o unt described in Code section 408(a), an
i n dividual 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 a Distributee's Eligible
Rollover Distribution, except that with regard to an
Eligible Rollover Distribution to a surviving spouse,
a n E ligible Retirement Plan is an individual
retirement account or individual retirement annuity.
1.19 "Eligible Rollover Distribution". A distribution of
all or any portion of the balance to the credit of a
Distributee, excluding a distribution that is one of a
series of substantially equal periodic payments (not
less frequently than annually) made for the life (or
life expectancy) of a Distributee or the joint lives
(or joint life expectancies) of a Distributee and the
D i s tributee's designated Beneficiary, or for a
specified period of ten years or more; a distribution
to the extent such distribution is required under Code
section 401(a)(9); and the portion of a distribution
that is not includible in gross income (determined
without regard to the exclusion for net unrealized
appreciation with respect to Employer securities).
1.20 "Employee". An individual who is:
(a) directly employed by any Related Company and for
whom any income for such employment is subject to
withholding of income or social security taxes,
or
(b) a Leased Employee.
1.21 "Employer". The Company and any Subsidiary or other
Related Company of either the Company or a Subsidiary
which adopts this Plan with the approval of the
Company.
1.22 "ERISA". The Employee Retirement Income Security Act
of 1974, as amended. Reference to any specific
s e c tion shall include such section, any valid
regulation promulgated thereunder, and any comparable
p r o v ision of any future legislation amending,
supplementing or superseding such section.
4<PAGE>
1.23 "Execution Date". The date on which this Plan and
Trust document is executed.
1.24 "HCE" or "Highly Compensated Employee". An Employee
described as a Highly Compensated Employee in Section
12.
1.25 "Ineligible". The Plan status of an individual during
the period in which he or she is (1) an Employee of a
Related Company which is not then an Employer, (2) an
Employee, but not an Eligible Employee, or (3) not an
Employee.
1.26 "Investment Fund" or "Fund". An investment fund as
described in Section 16.2. The Investment Funds
authorized by the Administrator to be offered as of
the Execution Date to Participants and Beneficiaries
are as set forth in Appendix A.
1.27 "Leased Employee". An individual who is deemed to be
an employee of any Related Company as provided in Code
section 414(n) or (o).
1.28 "Leave of Absence". A period during which an
individual is deemed to be an Employee, but is absent
from active employment, provided that the absence:
(a) was authorized by a Related Company; or
(b) was due to military service in the United States
armed forces and the individual returns to active
employment within the period during which he or
she retains employment rights under federal law.
1.29 "NHCE" or "Non-Highly Compensated Employee". An
E m p loyee described as a Non-Highly Compensated
Employee in Section 12.
1.30 "Normal Retirement Date". The date of a Participant's
65th birthday.
1.31 "Owner". A person with an ownership interest in the
capital, profits, outstanding stock or voting power of
a Related Company within the meaning of Code section
318 or 416 (which exclude indirect ownership through a
qualified plan).
1.32 "Participant". An Eligible Employee who begins to
p a r t icipate in the Plan after completing the
eligibility requirements as described in Section 2.1.
An Eligible Employee who makes a Rollover Contribution
prior to completing the eligibility requirements as
described in Section 2.1 shall also be considered a
Participant except for purposes of provisions related
to Contributions (other than a Rollover Contribution).
A Participant's participation continues until his or
her employment with all Related Companies ends and his
or her Account is distributed or forfeited.
5<PAGE>
1.33 "Pay". All cash compensation paid to an Eligible
Employee by an Employer while a Participant during the
current period. Pay excludes reimbursements or other
expense allowances, cash and non-cash fringe benefits,
moving expenses, deferred compensation and welfare
benefits.
Pay is neither increased nor decreased by any salary
credit or reduction pursuant to Code sections 125 or
402(e)(3). Pay is limited to $200,000 (as indexed for
t h e cost of living pursuant to Code sections
401(a)(17) and 415(d)) per Plan Year. Pay is limited
to $150,000 (as indexed for the cost of living
pursuant to Code sections 401(a)(17) and 415(d)) per
Plan Year effective for Plan Years beginning after
December 31, 1993.
1.34 "Period of Employment". The period beginning on the
date an Employee first performs an hour of service and
ending on the date his or her employment ends.
Employment ends on the date the Employee quits,
retires, is discharged, dies or (if earlier) the first
anniversary of his or her absence for any other
reason. The period of absence starting with the date
an Employee's employment temporarily ends and ending
on the date he or she is subsequently reemployed is
(1) included in his or her Period of Employment if the
period of absence does not exceed one year, and (2)
excluded if such period exceeds one year.
An Employee's service with a predecessor or acquired
company shall only be counted in the determination of
his or her Period of Employment for eligibility and/or
vesting purposes if (1) the Company directs that
credit for such service be granted, or (2) a qualified
plan of the predecessor or acquired company is
subsequently maintained by any Employer or Related
Company.
1.35 "Plan". The Southdown, Inc. Retirement Savings Plan
set forth in this document, as from time to time
amended.
1.36 "Plan Year". The annual accounting period of the Plan
and Trust which ends on each December 31.
1.37 " Q DRO". A domestic relations order which the
A d ministrator has determined to be a qualified
domestic relations order within the meaning of Code
section 414(p).
1.38 "Related Company". With respect to any Employer, that
Employer and any corporation, trade or business which
is, together with that Employer, a member of the same
controlled group of corporations, a trade or business
under common control, or an affiliated service group
within the meaning of Code section 414(b), (c), (m) or
(o).
1.39 " S e t tlement Date". The date on which the
transactions from the most recent Trade Date are
settled. Effective April 1, 1992 for each Trade Date,
the Trustee's next business day.
6<PAGE>
1.40 "Spousal Consent". The written consent given by a
spouse to a Participant's election or waiver of a
specified form of benefit, including a loan or in-
service withdrawal, or Beneficiary designation. The
spouse's consent must acknowledge the effect on the
spouse of the Participant's election, waiver or
d e s i gnation and be duly witnessed by a Plan
representative or notary public. Spousal Consent
shall be valid only with respect to the spouse who
signs the Spousal Consent and only for the particular
choice made by the Participant which requires Spousal
Consent. A Participant may revoke (without Spousal
Consent) a prior election, waiver or designation that
required Spousal Consent at any time before payments
begin. Spousal Consent also means a determination by
the Administrator that there is no spouse, the spouse
cannot be located, or such other circumstances as may
be established by applicable law.
1.41 "Subsidiary". A company which is 50% or more owned,
directly or indirectly, by the Company.
1.42 "Sweep Account". The subsidiary Account for each
P a r ticipant through which all transactions are
processed, which is invested in interest bearing
deposits of the Trustee.
1.43 "Sweep Date". The cut off date and time for receiving
instructions for transactions to be processed on the
next Trade Date.
1.44 "Taxable Income". Compensation in the amount reported
by the Employer as "Wages, tips, other compensation"
on Form W-2, or any successor method of reporting
under Code section 6041(d).
1.45 "Trade Date". Each day the Investment Funds are
valued, which is the last business day of the month.
Effective April 1, 1992, each day the Investment Funds
are valued, which is normally every day the assets of
such Funds are traded.
1.46 "Trust". The legal entity created by those provisions
of this document which relate to the Trustee. The
Trust is part of the Plan and holds the Plan assets
which are comprised of the aggregate of Participants'
Accounts.
1.47 "Trustee". Wells Fargo Bank, National Association.
7<PAGE>
2 ELIGIBILITY
2.1 Eligibility
Each Eligible Employee shall become a Participant on
the first January 1 or July 1 after the date he or she
completes a 12 month Period of Employment. The
eligibility period begins on the date an Employee's
Period of Employment commences.
Notwithstanding the foregoing, each individual who is
an Eligible Employee on July 1, 1990 shall become a
Participant on July 1, 1990 and each individual who is
an Eligible Employee on January 1, 1991 shall become a
Participant on January 1, 1991.
Effective August 15, 1991 each Eligible Employee shall
become a Participant on October 1, 1991 or thereafter
on the first January 1, April 1, July 1 or October 1
after the date he or she completes a 3 month Period of
Employment. The eligibility period begins on the date
an Employee's Period of Employment commences.
2.2 Ineligible Employees
I f an Employee completes the above eligibility
r e q u i rements, but is Ineligible at the time
participation would otherwise begin (if he or she were
not Ineligible), he or she shall become a Participant
on the first subsequent date on which he or she is an
Eligible Employee.
2.3 Ineligible or Former Participants
A P articipant may not make or share in Plan
Contributions, nor generally be eligible for a new
Plan loan, during the period he or she is Ineligible,
but he or she shall continue to participate for all
other purposes. An Ineligible Participant or former
Participant shall automatically become an active
Participant on the date he or she again becomes an
Eligible Employee.
8<PAGE>
3 PARTICIPANT CONTRIBUTIONS
3.1 Pre-Tax Contribution Election
Upon becoming a Participant, an Eligible Employee may
elect to reduce his or her Pay by an amount which does
not exceed the Contribution Dollar Limit, within the
limits described in the Contribution Percentage Limits
paragraph of this Section 3, and have such amount
contributed to the Plan by the Employer as a Pre-Tax
Contribution. The election shall be made as a whole
percentage of Pay in such manner and with such advance
notice as prescribed by the Administrator. In no
event shall an Employee's Pre-Tax Contributions under
t h e P lan and all other plans, contracts or
arrangements of all Related Companies exceed the
Contribution Dollar Limit for the Employee's taxable
year beginning in the Plan Year.
3.2 After-Tax Contribution Election
Upon becoming a Participant, an Eligible Employee may
elect to make After-Tax Contributions to the Plan in
an amount which does not exceed the limits described
in the Contribution Percentage Limits paragraph of
this Section 3. The election shall be made as a whole
percentage of Pay in such manner and with such advance
notice as prescribed by the Administrator.
3.3 Changing a Contribution Election
A Participant who is an Eligible Employee may change
his or her Pre-Tax and/or After-Tax Contribution
election as of any January 1, April 1, July 1, or
October 1 in such manner and with such advance notice
as prescribed by the Administrator. The changed
percentage shall become effective with the first
p a y r oll paid after such date. Participants'
Contribution election percentages shall automatically
apply to Pay increases or decreases.
3.4 Revoking and Resuming a Contribution Election
A Participant may revoke his or her Contribution
election at any time in such manner and with such
advance notice as prescribed by the Administrator, and
such election shall be effective with the first
payroll paid after such date.
A Participant may resume Contributions by making a new
Contribution election at the same time in which a
Participant may change his or her election in such
manner and with such advance notice as prescribed by
t h e Administrator, and such election shall be
effective with the first payroll paid after such date.
3.5 Contribution Percentage Limits
The Administrator may establish and change from time
to time, without the necessity of amending this Plan
and Trust document, the separate minimum,if
a p p l icable, and maximum Pre-Tax and After-Tax
Contribution percentages, and/or a maximum combined
Pre-Tax and After-Tax Contribution percentage,
prospectively or retrospectively (for the current Plan
Year), for all Participants. In addition, the
Administrator may establish any lower percentage
limits for Highly Compensated Employees as it deems
9<PAGE>
necessary. As of the Effective Date, the maximum
Contribution percentages are:
Highly
Contribution Compensated All Other
Type Employees Participants
Pre-Tax 16% 16%
After-Tax 16% 16%
Sum of Both 16% 16%
Irrespective of the limits that may be established by
the Administrator in accordance with this paragraph,
in no event shall the contributions made by or on
behalf of a Participant for a Plan Year exceed the
maximum allowable under Code section 415.
3.6 Refunds When Contribution Dollar Limit Exceeded
A Participant who makes Pre-Tax Contributions for a
calendar year to this and any other qualified defined
contribution plan in excess of the Contribution Dollar
Limit may notify the Administrator in writing by the
following March 1 (or as late as April 14 if allowed
by the Administrator) that an excess has occurred. In
this event, the amount of the excess specified by the
Participant, adjusted for investment gain or loss,
shall be refunded to him or her by April 15 and shall
not be included as an Annual Addition under Code
section 415 for the year contributed. Refunds shall
not include investment gain or loss for the period
between the end of the applicable Plan Year and the
date of distribution. However, for Plan Years ending
before December 31, 1993, refunds shall include
investment gain or loss for the period between the end
o f the applicable Plan Year and the date of
distribution. Any Matching Contributions attributable
to refunded excess Pre-Tax Contributions as described
in this Section shall be deemed a Contribution made by
reason of a mistake of fact and removed from the
Participant's Account.
3.7 Timing, Posting and Tax Considerations
P a rticipants' Contributions, other than Rollover
Contributions, may only be made through payroll
deduction. Such amounts shall be paid to the Trustee
in cash and posted to each Participant's Account(s) as
soon as such amounts can reasonably be separated from
the Employer's general assets and balanced against the
specific amount made on behalf of each Participant.
In no event, however, shall such amounts be paid to
the Trustee more than 90 days after the date amounts
are deducted from a Participant's Pay. Pre-Tax
C o ntributions shall be treated as employer
contributions in determining tax deductions under Code
section 404(a).
10<PAGE>
4 ROLLOVERS & TRUST-TO-TRUST TRANSFERS
4.1 Rollovers
The Administrator may authorize the Trustee to accept
a rollover contribution in cash, within the meaning of
Code section 402(c) or 408(d)(3)(A)(ii), directly from
an Eligible Employee or effective January 1, 1993, as
a Direct Rollover from another qualified plan on
behalf of the Eligible Employee, even if he or she is
not yet a Participant. The Employee shall be
responsible for furnishing satisfactory evidence, in
such manner as prescribed by the Administrator, that
the amount is eligible for rollover treatment. A
r o llover contribution received directly from an
Eligible Employee must be paid to the Trustee in cash
within 60 days after the date received by the Eligible
Employee from a qualified plan or conduit individual
retirement account. Contributions described in this
paragraph shall be posted to the applicable Employee's
Rollover Account as of the date received by the
Trustee.
If it is later determined that an amount contributed
pursuant to the above paragraph did not in fact
qualify as a rollover contribution under Code section
402(c) or 408(d)(3)(A)(ii), the balance credited to
the Employee's Rollover Account shall immediately be
(1) segregated from all other Plan assets, (2) treated
as a nonqualified trust established by and for the
benefit of the Employee, and (3) distributed to the
Employee. Any such nonqualifying rollover shall be
deemed never to have been a part of the Plan.
4.2 Transfers From Other Qualified Plans
The Administrator may instruct the Trustee to receive
assets in cash or in kind directly from another
qualified plan. The Trustee may refuse the receipt of
any transfer if:
(a) t h e Trustee finds the in-kind assets
unacceptable;
(b) instructions for posting amounts to Participants'
Accounts are incomplete;
(c) any amounts are not exempted by Code section
401(a)(11)(B) from the annuity requirements of
Code section 417; or
(d) any amounts include benefits protected by Code
section 411(d)(6) which would not be preserved
under applicable Plan provisions.
Such amounts shall be posted to the appropriate
Accounts of Participants as of the date received by
the Trustee.
11<PAGE>
5 EMPLOYER CONTRIBUTIONS
5.1 Matching Contributions
(a) Frequency and Eligibility. For each period for
which Participants' Contributions are made, the
Employer shall make Matching Contributions as
described in the following Allocation Method
paragraph on behalf of each Participant who
contributed during the period.
(b) Allocation Method. The Matching Contributions
for each period shall total 50% of the sum of
each eligible Participant's Pre-Tax and After-Tax
Contributions for the period, provided that no
Matching Contributions shall be made based upon a
Participant's Contributions in excess of 6% of
his or her Pay.
(c) Timing, Medium and Posting. The Employer shall
make each period's Matching Contribution in cash
as soon as is feasible, and not later than the
Employer's federal tax filing date, including
extensions, for deducting such Contribution. The
T r u s t ee shall post such amount to each
Participant's Matching Account once the total
Contribution received has been balanced against
the specific amount to be credited to each
Participant's Matching Account.
12<PAGE>
6 ACCOUNTING
6.1 Individual Participant Accounting
The Administrator shall maintain an individual set of
Accounts for each Participant in order to reflect
t r a nsactions both by type of Contribution and
investment medium. Financial transactions shall be
accounted for at the individual Account level by
posting each transaction to the appropriate Account of
each affected Participant. Participant Account values
shall be maintained in shares for the Investment Funds
and in dollars for their Sweep and Participant loan
Accounts. At any point in time, the Account value
shall be determined using the most recent Trade Date
values provided by the Trustee.
6.2 Sweep Account is Transaction Account
All transactions related to amounts being contributed
to or distributed from the Trust shall be posted to
each affected Participant's Sweep Account. Any amount
held in the Sweep Account will be credited with
interest up until the date on which it is removed from
the Sweep Account.
6.3 Trade Date Accounting and Investment Cycle
Participant Account values shall be determined as of
each Trade Date. For any transaction to be processed
a s of a Trade Date, the Trustee must receive
instructions for the transaction by the Sweep Date.
Such instructions shall apply to amounts held in the
Account on that Sweep Date. Financial transactions of
the Investment Funds shall be posted to Participants'
Accounts as of the Trade Date, based upon the Trade
Date values provided by the Trustee, and settled on
the Settlement Date.
6.4 Accounting for Investment Funds
I n v e stments in each Investment Fund shall be
maintained in shares. The Trustee is responsible for
determining the share values of each Investment Fund
as of each Trade Date. To the extent an Investment
Fund is comprised of collective investment funds of
the Trustee, or any other fiduciary to the Plan, the
share values shall be determined in accordance with
the rules governing such collective investment funds,
which are incorporated herein by reference. All other
share values shall be determined by the Trustee. The
share value of each Investment Fund shall be based on
the fair market value of its underlying assets.
6.5 Payment of Fees and Expenses
Except to the extent Plan fees and expenses related to
Account maintenance, transaction and Investment Fund
management and maintenance, as set forth below, are
paid by the Employer directly, or indirectly, such
fees and expenses shall be paid as set forth below.
The Employer may pay a lower portion of the fees and
expenses allocable to the Accounts of Participants who
are no longer Employees.
(a) Account Maintenance: Account maintenance fees
and expenses, may include but are not limited to,
administrative, Trustee, government annual report
p r eparation, audit, legal, nondiscrimination
testing, and fees for any other special services.
13<PAGE>
Account maintenance fees shall be charged to
Participants on a per Participant basis provided
that no fee shall reduce a Participant's Account
balance below zero.
(b) Transaction: Transaction fees and expenses, may
i n clude but are not limited to, recurring
payment, Investment Fund election change and loan
fees. Transaction fees shall be charged to the
Participant's Account involved in the transaction
provided that no fee shall reduce a Participant's
Account balance below zero.
(c) I n vestment Fund Management and Maintenance:
Management and maintenance fees and expenses
related to the Investment Funds shall be charged
at the Investment Fund level and reflected in the
net gain or loss of each Fund.
As of the Effective Date, a breakdown of which Plan
fees and expenses shall generally be borne by the
T r u st (and charged to individual Participants'
Accounts) and those that shall be paid by the
Employer, directly or indirectly, is set forth in
Appendix B and may be changed from time to time,
without the necessity of amending this Plan and Trust
Document.
The Trustee shall have the authority to pay any such
fees and expenses, which remain unpaid by the Employer
for 60 days, from the Trust.
6.6 Accounting for Participant Loans
Participant loans shall be held in a separate Account
of the Participant and accounted for in dollars as an
e a r marked asset of the borrowing Participant's
Account.
6.7 Error Correction
The Administrator may correct any errors or omissions
in the administration of the Plan by restoring any
Participant's Account balance with the amount that
would be credited to the Account had no error or
omission been made. Funds necessary for any such
restoration shall be provided through payment made by
the Employer, or by the Trustee to the extent the
error or omission is attributable to actions or
inactions of the Trustee.
14<PAGE>
6.8 Participant Statements
The Administrator shall provide Participants with
statements of their Accounts as soon after the end of
each quarter of the Plan Year as is administratively
feasible.
6.9 Special Accounting During Conversion Period
The Administrator and Trustee may use any reasonable
accounting methods in performing their respective
duties during the period of converting the prior
accounting system of the Plan and Trust to conform to
the individual Participant accounting system described
in this Section. This includes, but is not limited
to, the method for allocating net investment gains or
losses and the extent, if any, to which contributions
received by and distributions paid from the Trust
during this period share in such allocation.
6.10 Accounts for QDRO Beneficiaries
A separate Account shall be established for an
a l t ernate payee entitled to any portion of a
Participant's Account under a QDRO as of the date and
in accordance with the directions specified in the
QDRO. In addition, a separate Account may be
established during the period of time the
Administrator, a court of competent jurisdiction or
other appropriate person is determining whether a
domestic relations order qualifies as a QDRO. Such a
separate Account shall be valued and accounted for in
the same manner as any other Account.
(a) Distributions Pursuant to QDROs. If a QDRO so
provides, the portion of a Participant's Account
payable to an alternate payee may be distributed,
in a form as permissible under the Distribution
Once Employment Ends Section, to the alternate
p a yee at the time specified in the QDRO,
regardless of whether the Participant is entitled
to a distribution from the Plan at such time.
(b) Participant Loans. Except to the extent required
by law, an alternate payee, on whose behalf a
separate Account has been established, shall not
be entitled to borrow from such Account. If a
QDRO specifies that the alternate payee is
entitled to any portion of the Account of a
Participant who has an outstanding loan balance,
all outstanding loans shall generally continue to
be held in the Participant's Account and shall
not be divided between the Participant's and
alternate payee's Accounts.
(c) Investment Direction. Where a separate Account
has been established on behalf of an alternate
payee and has not yet been distributed, the
alternate payee may direct the investment of such
Account in the same manner as if he or she were a
Participant.
15<PAGE>
7 INVESTMENT FUNDS AND ELECTIONS
7.1 Investment Funds
Except for Participants' Sweep and loan Accounts, the
Trust shall be maintained in various Investment Funds.
The Administrator shall select the Investment Funds
offered to Participants and may change the number or
composition of the Investment Funds, subject to the
terms and conditions agreed to with the Trustee. As
of the Execution Date, a list of the Investment Funds
offered to Participants is set forth in Appendix A,
and may be changed from time to time, without the
necessity of amending this Plan and Trust document.
7.2 Investment Fund Elections
Each Participant shall direct the investment of all of
his or her Contribution Accounts except for these
Accounts:
Matching Account
which shall be entirely invested in the Investment
Fund specified by the Administrator, which Investment
Fund as of the Execution Date is set forth in Appendix
A. Effective June 30, 1992 and anytime thereafter, a
Participant who has attained age 59-1/2 may direct the
investment of the balances in his or her Matching
Account. Future amounts allocated to his or her
Matching Account will continue to be entirely invested
in the Investment Fund specified by the Administrator,
until otherwise directed by the Participant.
A Participant shall make his or her investment
election in any combination of one or any number of
the Investment Funds offered in accordance with the
p r ocedures established by the Administrator and
Trustee. However, during the period of converting the
prior accounting system of the Plan and Trust to
conform to the individual Participant accounting
system described in Section 6, Trust assets may be
held in any investment vehicle permitted by the Plan,
as directed by the Administrator, irrespective of
Participant investment elections.
The Administrator may set a maximum percentage of the
total election that a Participant may direct into any
specific Investment Fund, which maximum, if any, is
set forth in Appendix A, and may be changed from time
to time, without the necessity of amending this Plan
and Trust document.
7.3 Responsibility for Investment Choice
Each Participant shall be solely responsible for the
selection of his or her Investment Fund choices. No
fiduciary with respect to the Plan is empowered to
advise a Participant as to the manner in which his or
her Accounts are to be invested, and the fact that an
Investment Fund is offered shall not be construed to
be a recommendation for investment.
16<PAGE>
7.4 Default if No Election
The Administrator shall specify an Investment Fund for
the investment of that portion of a Participant's
Account which is not yet held in an Investment Fund
and for which no valid investment election is on file.
The Investment Fund specified as of the Execution Date
is as set forth in Appendix A, and may be changed from
time to time, without the necessity of amending this
Plan and Trust document.
7.5 Timing
A Participant shall make his or her initial investment
election upon becoming a Participant and may change
his or her election at any time in accordance with the
p r ocedures established by the Administrator and
Trustee. Investment elections received by the Trustee
by the Sweep Date will be effective on the following
Trade Date.
7.6 Investment Fund Election Change Fees
A reasonable processing fee may be charged directly to
a Participant's Account for Investment Fund election
changes in excess of a specified number per year as
determined by the Administrator.
17<PAGE>
8 VESTING
8.1 Fully Vested Contribution Accounts
A Participant shall be fully vested in all Accounts at
all times.
18<PAGE>
9 PARTICIPANT LOANS
9.1 Participant Loans Permitted
Loans to Participants are permitted pursuant to the
terms and conditions set forth in this Section.
9.2 Loan Application, Note and Security
A Participant shall apply for any loan in such manner
and with such advance notice as prescribed by the
Administrator. All loans shall be evidenced by a
promissory note, secured only by the portion of the
Participant's Account from which the loan is made, and
the Plan shall have a lien on this portion of his or
her Account.
9.3 Spousal Consent
A Participant is not required to obtain Spousal
Consent in order to take out a loan under the Plan.
9.4 Loan Approval
T h e Administrator, or the Trustee if otherwise
authorized by the Administrator and expressly agreed
to by the Trustee, is responsible for determining that
an loan request conforms to the requirements described
in this Section and granting such request.
9.5 Loan Funding Limits
The loan amount must meet all of the following limits
as determined as of the Sweep Date the loan is
processed:
(a) Plan Minimum Limit. The minimum amount for any
loan is $1,000.
(b) Plan Maximum Limit. Subject to the legal limit
described in (c) below, the maximum a Participant
may borrow, including the outstanding balance of
existing Plan loans, is 100% of the following
Accounts which are fully vested:
Pre-Tax Account
Rollover Account
After-Tax Account
(c) Legal Maximum Limit. The maximum a Participant
may borrow, including the outstanding balance of
existing Plan loans, is 50% of his or her vested
Account balance, not to exceed $50,000. However,
the $50,000 maximum is reduced by the
Participant's highest outstanding loan balance
during the 12 month period ending on the day
before the Sweep Date as of which the loan is
made. For purposes of this paragraph, the
qualified plans of all Related Companies shall be
treated as though they are part of this Plan to
the extent it would decrease the maximum loan
amount.
19<PAGE>
9.6 Maximum Number of Loans
A Participant may have only one loan outstanding at
any given time.
9.7 Source and Timing of Loan Funding
A loan to a Participant shall be made solely from the
assets of his or her own Accounts. The available
assets shall be determined first by Account type and
then by investment type within each type of Account.
The hierarchy for loan funding by type of Account
shall be the order listed in the preceding Plan
Maximum Limit paragraph. Within each Account used for
funding a loan, amounts shall first be taken from the
Sweep Account and then taken by type of investment in
d i r ect proportion to the market value of the
Participant's interest in each Investment Fund as of
the Trade Date on which the loan is processed.
Loans will be funded on the Settlement Date following
the Trade Date as of which the loan is processed. The
Trustee shall make payment to the Participant as soon
thereafter as administratively feasible.
9.8 Interest Rate
The interest rate charged on Participant loans shall
be a fixed reasonable rate of interest, determined
from time to time by the Administrator, which provides
t h e Plan with a return commensurate with the
prevailing interest rate charged by persons in the
business of lending money for loans which would be
made under similar circumstances. As of the Effective
Date, the interest rate is determined as set forth in
Appendix C, and may be changed from time to time,
without the necessity of amending this Plan and Trust
document.
9.9 Repayment
Substantially level amortization shall be required of
each loan with payments made at least monthly,
generally through payroll deduction. Loans may be
prepaid in full or in part at any time. The
Participant may choose the loan repayment period, not
to exceed five years.
9.10 Repayment Hierarchy
Loan principal repayments shall be credited to the
Participant's Accounts in the inverse of the order
used to fund the loan. Loan interest shall be
credited to the Participant's Accounts in direct
proportion to the principal payment. Loan payments
are credited by investment type based upon the
Participant's current investment election for new
Contributions.
20<PAGE>
9.11 Repayment Suspension
The Administrator may agree to a suspension of loan
payments for up to 12 months for a Participant who is
on a Leave of Absence. During the suspension period
interest shall continue to accrue on the outstanding
loan balance. At the expiration of the suspension
period all outstanding loan payments and accrued
interest thereon shall be due unless otherwise agreed
upon by the Administrator.
9.12 Loan Default
A loan is treated as a default if scheduled loan
payments are more than 90 days late. A Participant
shall then have 30 days from the time he or she
receives written notice of the default and a demand
for past due amounts to cure the default before it
becomes final.
In the event of default, the Administrator may direct
the Trustee to report the default as a taxable
distribution. As soon as a Plan withdrawal or
distribution to such Participant would otherwise be
permitted, the Administrator may instruct the Trustee
t o execute upon its security interest in the
Participant's Account by distributing the note to the
Participant.
9.13 Call Feature
The Administrator shall have the right to call any
Participant loan once a Participant's employment with
all Related Companies has terminated or if the Plan is
terminated.
21<PAGE>
10 IN-SERVICE WITHDRAWALS
10.1 In-Service Withdrawals Permitted
In-service withdrawals to a Participant who is an
Employee are permitted pursuant to the terms and
conditions set forth in this Section and as required
by law as set forth in Section 11.6.
10.2 In-Service Withdrawal Application and Notice
A P a rticipant shall apply for any in-service
withdrawal in such manner and with such advance notice
as prescribed by the Administrator. Effective for in-
service withdrawals applied for after December 31,
1992, the Participant shall be provided the notice
prescribed by Code section 402(f).
If an in-service withdrawal is one to which Code
sections 401(a)(11) and 417 do not apply, such in-
service withdrawal may commence less than 30 days
after the aforementioned notice is provided, if:
(a) the Participant is clearly informed that he or
she has the right to a period of at least 30 days
after receipt of such notice to consider his or
her option to elect or not elect a Direct
Rollover for the portion, if any, of his or her
in-service withdrawal which will constitute an
Eligible Rollover Distribution; and
(b) the Participant after receiving such notice,
affirmatively elects a Direct Rollover for the
portion, if any, of his or her in-service
withdrawal which will constitute an Eligible
Rollover Distribution or alternatively elects to
have such portion made payable directly to him or
her, thereby not electing a Direct Rollover.
10.3 Spousal Consent
A Participant is not required to obtain Spousal
Consent in order to make an in-service withdrawal
under the Plan.
10.4 In-Service Withdrawal Approval
T h e Administrator, or the Trustee if otherwise
authorized by the Administrator and expressly agreed
to by the Trustee, is responsible for determining that
an in-service withdrawal request conforms to the
requirements described in this Section and granting
such request.
10.5 Minimum Amount, Payment Form and Medium
There is no minimum amount for any type of withdrawal.
22<PAGE>
For withdrawals made after December 31, 1992, with
regard to the portion of a withdrawal representing an
Eligible Rollover Distribution, a Participant may
elect a Direct Rollover. The form of payment for an
in-service withdrawal shall be a single lump sum and
payment shall be made in cash.
10.6 Source and Timing of In-Service Withdrawal Funding
An in-service withdrawal to a Participant shall be
made solely from the assets of his or her own Accounts
and will be based on the Account values as of the
Trade Date the in-service withdrawal is processed.
The available assets shall be determined first by
Account type and then by investment type within each
type of Account. Within each Account used for funding
an in-service withdrawal, amounts shall first be taken
from the Sweep Account and then taken by type of
investment in direct proportion to the market value of
the Participant's interest in each Investment Fund
(which excludes Participant loans) as of the Trade
Date on which the in-service withdrawal is processed.
I n - S ervice withdrawals will be funded on the
Settlement Date following the Trade Date as of which
the in-service withdrawal is processed. The Trustee
s h all make payment as soon thereafter as
administratively feasible.
10.7 Hardship Withdrawals
(a) Requirements. A Participant who is an Employee
may request the withdrawal of up to the amount
necessary to satisfy a financial need including
amounts necessary to pay any federal, state or
l o cal income taxes or penalties reasonably
anticipated to result from the withdrawal. Only
requests for withdrawals (1) on account of a
Participant's "Deemed Financial Need" or
"Demonstrated Financial Need", and (2) which are
" D emonstrated as Necessary" to satisfy the
financial need will be approved.
(b) "Deemed Financial Need". Financial commitments
relating to:
(1) t h e payment of unreimbursable medical
expenses described under Code section 213(d)
i n c urred (or to be incurred) by the
Employee, his or her spouse or dependents;
(2) the purchase (excluding mortgage payments)
of the Employee's principal residence;
(3) the payment of unreimbursable tuition and
related educational fees for up to the next
12 months of post-secondary education for
t h e Employee, his or her spouse or
dependents;
(4) the payment of funeral expenses of an
Employee's family member;
23<PAGE>
(5) the payment of amounts necessary for the
Employee to prevent losing his or her
principal residence through eviction or
foreclosure on the mortgage; or
(6) any other circumstance specifically
p e r m i t t ed under Code section
401(k)(2)(B)(i)(IV).
(c) "Demonstrated Financial Need". A determination
by the Administrator that a severe financial
hardship to the Participant has resulted from:
(1) a sudden and unexpected illness or accident
to the Employee or his or her spouse or
dependents;
(2) the loss, due to casualty, of the Employee's
property other than nonessential property
(such as a boat or a television); or
(3) some other similar extraordinary and
unforeseeable circumstances arising as a
result of events beyond the control of the
Employee.
(d) "Demonstrated as Necessary". A withdrawal is
" d emonstrated as necessary" to satisfy the
financial need only if the withdrawal amount does
not exceed the financial need, the Employee
represents that he or she is unable to relieve
the financial need (without causing further
hardship) by doing any or all of the following
and the Administrator does not have actual
knowledge to the contrary:
(1) receiving any reimbursement or compensation
from insurance or otherwise;
(2) reasonably liquidating his or her assets and
the assets of his or her spouse or minor
children that are reasonably available to
the Employee;
(3) ceasing all of his or her contributions to
all qualified and nonqualified plans of
deferred compensation and all stock option
o r stock purchase plans maintained by
Related Companies;
(4) obtaining all other possible withdrawals and
nontaxable loans available from all plans
maintained by Related Companies; and
(5) obtaining all possible loans from commercial
sources on reasonable commercial terms.
24<PAGE>
(e) Account Sources for Withdrawal. All available
a m o u n ts must first be withdrawn from a
Participant's After-Tax Account. The remaining
withdrawal amount shall come only from the
Participant's fully vested Accounts, in the
following priority order:
Rollover Account
Prior Plan Matching Account
Pre-Tax Account
T h e amount that may be withdrawn from a
Participant's Pre-Tax Account shall not include
any earnings credited to his or her Pre-Tax
Contribution Account after the start of the first
Plan Year beginning after December 31, 1988.
(f) Permitted Frequency. There is no restriction on
the number of Hardship withdrawals permitted to a
Participant.
(g) Suspension from Further Contributions. Upon
making a Hardship withdrawal a Participant may
not make additional Contributions for a period of
twelve months from the date the withdrawal
payment is made.
10.8 After-Tax Account Withdrawals
(a) Requirements. A Participant who is an Employee
may withdraw up to the entire balance from his or
her After-Tax Account.
(b) Permitted Frequency. The maximum number of
After-Tax Account withdrawals permitted to a
Participant in any 12-month period is one.
(c) Suspension from Further Contributions. Upon
m a k ing an After-Tax Account withdrawal, a
Participant may not make additional Contributions
for a period of three months from the date the
withdrawal payment is made.
10.9 Over Age 59-1/2 Withdrawals
(a) Requirements. A Participant who is an Employee
and over age 59-1/2 may withdraw from the
Accounts listed in paragraph (b) below.
(b) Account Sources for Withdrawal. The withdrawal
amount shall come only from the Participant's
fully vested Accounts, in the following priority
order with the exception that the Participant may
instead choose to have amounts taken from his or
her After-Tax Account first:
Pre-Tax Account
Rollover Account
Matching Account
Prior Plan Matching Account
After-Tax Account
25<PAGE>
Effective December 1, 1990, The withdrawal amount
shall come only from the Participant's fully
vested Accounts, in the following priority order
with the exception that the Participant may
instead choose to have amounts taken from his or
her After-Tax Account first:
Rollover Account
Pre-Tax Account
Matching Account
Prior Plan Matching Account
After-Tax Account
(c) Permitted Frequency. The maximum number of Over
Age 59-1/2 withdrawals permitted to a Participant
in any 12-month period is one.
(d) Suspension from Further Contributions. An Over
A g e 59-1/2 withdrawal shall not affect a
Participant's ability to make or be eligible to
receive further Contributions.
26<PAGE>
11 DISTRIBUTIONS ONCE EMPLOYMENT ENDS OR AS REQUIRED BY LAW
11.1 Benefit Information, Notices and Election
A Participant, or his or her Beneficiary in the case
o f his or her death, shall be provided with
information regarding all optional times and forms of
d i s tribution available, to include the notices
prescribed by Code section 402(f), effective January
1, 1993, and Code section 411(a)(11). Subject to the
other requirements of this Section, a Participant, or
his or her Beneficiary in the case of his or her
death, may elect, in such manner and with such advance
notice as prescribed by the Administrator, to have his
or her vested Account balance paid to him or her
beginning upon any Settlement Date following the
Participant's termination of employment with all
Related Companies or if earlier, at the time required
by law as set forth in Section 11.6.
If a distribution is one to which Code sections
401(a)(11) and 417 do not apply, such distribution may
commence less than 30 days after the aforementioned
notices are provided, if:
(a) the Participant is clearly informed that he or
she has the right to a period of at least 30 days
after receipt of such notices to consider the
decision as to whether to elect a distribution
a n d if so to elect a particular form of
distribution and to elect or not elect a Direct
Rollover for all or a portion, if any, of his or
h e r distribution which will constitute an
Eligible Rollover Distribution; and
(b) the Participant after receiving such notice,
affirmatively elects a distribution and a Direct
Rollover for all or a portion, if any, of his or
h e r distribution which will constitute an
Eligible Rollover Distribution or alternatively
elects to have all or a portion made payable
directly to him or her, thereby not electing a
Direct Rollover for all or a portion thereof.
11.2 Spousal Consent
A Participant is not required to obtain Spousal
Consent in order to receive a distribution under the
Plan.
11.3 Payment Form and Medium
A Participant shall be paid in the form of a single
lump sum. Notwithstanding, a Participant who is an
Employee at the time he or she is required by law to
commence distribution, or anytime thereafter, may
instead elect to be paid annually in a lump sum an
a m o unt sufficient to comply with Code section
401(a)(9).
27<PAGE>
D i stributions shall generally be made in cash.
Alternatively, a lump sum payment may be made in a
combination of cash and whole shares of Company Stock
(to the extent invested in the Company Stock Fund).
For distributions made after December 31, 1992, with
regard to the portion of a distribution representing
an Eligible Rollover Distribution, a Distributee may
elect a Direct Rollover for all or a portion of such
amount.
11.4 Small Amounts Paid Immediately
If, at the time a Participant's employment with all
Related Companies ends, the Participant's vested
Account balance is $3,500 or less, the Participant's
benefit shall be paid as a single lump sum as soon as
administratively feasible after his or her employment
with all Related Companies ends in accordance with
procedures prescribed by the Administrator.
11.5 Source and Timing of Distribution Funding
A distribution to a Participant shall be made solely
from the assets of his or her own Accounts and will be
based on the Account values as of the Trade Date the
distribution is processed. The available assets shall
be determined first by Account type and then by
investment type within each type of Account. Within
each Account used for funding a distribution, amounts
shall first be taken from the Sweep Account and then
taken by type of investment in direct proportion to
the market value of the Participant's interest in each
Investment Fund as of the Trade Date on which the
distribution is processed.
Distributions will be funded on the Settlement Date
following the Trade Date as of which the distribution
is processed. The Trustee shall make payment as soon
thereafter as administratively feasible.
11.6 Latest Commencement Permitted
In addition to any other Plan requirements and unless
a Participant elects otherwise, his or her benefit
payments will begin not later than 60 days after the
end of the Plan Year in which he or she attains his or
her Normal Retirement Date or retires, whichever is
later. However, if the amount of the payment or the
location of the Participant (after a reasonable
search) cannot be ascertained by that deadline,
payment shall be made no later than 60 days after the
earliest date on which such amount or location is
ascertained but in no event later than as described
below.
Unless the Participant is subject to an exception
below, benefit payments shall begin by the April 1
immediately following the end of the calendar year in
which the Participant attains age 70-1/2 (whether or
not he or she is an Employee). The exceptions to this
rule include the following:
28<PAGE>
(a) Birth before July 1, 1917. Distribution for an
Employee who was born before July 1, 1917 does
not need to begin until his or her employment
with all Related Companies ends; and
(b) TEFRA Transitional Rule. Where a Participant had
1) accrued a benefit under the Plan before July
1 , 1 984, and 2) designated a method of
distribution which would not have disqualified
the trust under Code section 401(a)(9) as in
e f f ect prior to amendment by the Deficit
Reduction Act of 1984, and 3) such designation
was in writing signed by the Participant before
January 1, 1984, distribution to such Participant
(or his Beneficiary) need not begin prior to
termination of his or her employment with all
Related Companies.
11.7 Payment Within Life Expectancy
The Participant's payment election must be consistent
with the requirement of Code section 401(a)(9) that
all payments are to be completed within a period not
to exceed the lives or the joint and last survivor
life expectancy of the Participant and his or her
Beneficiary. The life expectancies of a Participant
and his or her Beneficiary, if such Beneficiary is his
or her spouse, may be recomputed annually.
11.8 Incidental Benefit Rule
The Participant's payment election must be consistent
with the requirement that, if the Participant's spouse
is not his or her sole primary Beneficiary, the
minimum annual distribution for each calendar year,
beginning with the year in which he or she attains age
70-1/2 (or such later date as provided otherwise in
Section 11), shall not be less than the quotient
obtained by dividing (a) the Participant's vested
Account balance as of the last Trade Date of the
preceding year by (b) the applicable divisor as
determined under the incidental benefit requirements
of Code section 401(a)(9).
11.9 Payment to Beneficiary
Payment to a Beneficiary must be completed by the end
o f the calendar year that contains the fifth
anniversary of the Participant's death, except that:
(a) If the Participant dies after the April 1
immediately following the end of the calendar
year in which he or she attains age 70-1/2,
payment to his or her Beneficiary must be made at
least as rapidly as provided in the Participant's
distribution election;
(b) If the surviving spouse is the Beneficiary,
payments need not begin until the end of the
calendar year in which the Participant would have
attained age 70-1/2 and must be completed within
the spouse's life or life expectancy; and
29<PAGE>
(c) If the Participant and the surviving spouse who
is the Beneficiary die (1) before the April 1
immediately following the end of the calendar
year in which the Participant would have attained
age 70-1/2 and (2) before payments have begun to
the spouse, the spouse will be treated as the
Participant in applying these rules.
11.10 Beneficiary Designation
Each Participant may complete a beneficiary
designation form indicating the Beneficiary who is to
receive the Participant's remaining Plan interest at
the time of his or her death. The designation may be
changed at any time. However, a Participant's spouse
shall be the sole primary Beneficiary unless the
designation includes Spousal Consent for another
Beneficiary. If no proper designation is in effect at
t h e time of a Participant's death or if the
Beneficiary does not survive the Participant, the
Beneficiary shall be, in the order listed, the:
(a) Participant's surviving spouse,
(b) Participant's children, in equal shares, per
stirpes (by right of representation), or
(c) Participant's estate.
30<PAGE>
12 ADP AND ACP TESTS
12.1 Contribution Limitation Definitions
The following definitions are applicable to this
Section 12 (where a definition is contained in both
Sections 1 and 12, for purposes of Section 12 the
Section 12 definition shall be controlling):
(a) "ACP" or "Average Contribution Percentage". The
Average Percentage calculated using Contributions
allocated to Participants as of a date within the
Plan Year.
(b) "ACP Test". The determination of whether the ACP
is in compliance with the Basic or Alternative
Limitation for a Plan Year (as defined in Section
12.2).
(c) "ADP" or "Average Deferral Percentage". The
Average Percentage calculated using Deferrals
allocated to Participants as of a date within the
Plan Year.
(d) "ADP Test". The determination of whether the ADP
is in compliance with the Basic or Alternative
Limitation for a Plan Year (as defined in Section
12.2).
(e) " A verage Percentage". The average of the
calculated percentages for Participants within
the specified group. The calculated percentage
r e f e rs to either the "Deferrals" or
"Contributions" (as defined in this Section) made
on each Participant's behalf for the Plan Year,
divided by his or her Compensation for the
portion of the Plan Year in which he or she was
an Eligible Employee while a Participant. (Pre-
Tax Contributions which will be refunded solely
because they exceed the Contribution Dollar Limit
are included in the percentage for the HCE Group
but not for the NHCE Group if such excess Pre-Tax
Contributions were made to plans of Related
Companies.)
(f) "Contributions" shall include Matching and After-
Tax Contributions. In addition, Contributions
may include Pre-Tax Contributions, but only to
the extent that (1) the Employer elects to use
them, (2) they are not used or counted in the ADP
Test, and (3) they are necessary to meet the ACP
Test Alternative Limitation (defined in Section
12.2 (b)) or the Multiple Use Test.
(g) "Deferrals" shall include Pre-Tax Contributions.
In addition, Deferrals may include Matching
Contributions, but only to the extent that (1)
the Employer elects to use them, (2) they are not
used or counted in the ACP Test, and (3) such
Contributions are fully vested when made and not
withdrawable by an Employee before he or she
attains age 59-1/2.
31<PAGE>
(h) "Family Member". An Employee who is, at any time
during the Plan Year or Lookback Year, a spouse,
lineal ascendant or descendant, or spouse of a
lineal ascendant or descendant of (1) an active
or former Employee who at any time during Plan
Year or Lookback Year is a more than 5% Owner
(within the meaning of Code section 414(q)(3)),
or (2) an HCE who is among the 10 Employees with
the highest Compensation for such Year.
(i) "HCE" or "Highly Compensated Employee". With
r e s pect to each Employer and its Related
Companies, an Employee during the Plan Year or
Lookback Year who (in accordance with Code
section 414(q)):
(1) Was a more than 5% Owner at any time during
the Lookback Year or Plan Year;
(2) Received Compensation during the Lookback
Year (or in the Plan Year if among the 100
Employees with the highest Compensation for
such Year) in excess of (i) $75,000 (as
adjusted for such Year pursuant to Code
sections 414(q)(1) and 415(d)), or (ii)
$50,000 (as adjusted for such Year pursuant
to Code sections 414(q)(1) and 415(d)) in
the case of a member of the "top-paid group"
( w i t hin the meaning of Code section
414(q)(4)) for such Year), provided,
however, that if the conditions of Code
s e ction 414(q)(12)(B)(ii) are met, the
Company may elect for any Plan Year to apply
clause (i) by substituting $50,000 for
$75,000 and not to apply clause (ii);
(3) Was an officer of a Related Company and
received Compensation during the Lookback
Year (or in the Plan Year if among the 100
Employees with the highest Compensation for
such Year) that is greater than 50% of the
dollar limitation in effect under Code
section 415(b)(1)(A) and (d) for such Year
(or if no officer has Compensation in excess
of the threshold, the officer with the
highest Compensation), provided that the
number of officers shall be limited to 50
Employees (or, if less, the greater of three
Employees or 10% of the Employees); or
(4) Was a Family Member at any time during the
Lookback Year or Plan Year, in which case
the Contributions and Compensation of the
HCE and his or her Family Members shall be
aggregated and they shall be treated as a
single HCE.
A former Employee shall be treated as an HCE if
(1) such former Employee was an HCE when he
separated from service, or (2) such former
Employee was an HCE in service at any time after
attaining age 55.
32<PAGE>
The determination of who is an HCE, including the
determinations of the number and identity of
Employees in the top-paid group, the top 100
Employees and the number of Employees treated as
officers shall be made in accordance with Code
section 414(q).
(j) "HCE Group" and "NHCE Group". With respect to
each Employer and its Related Companies, the
respective group of HCEs and NHCEs who are
eligible to have amounts contributed on their
behalf for the Plan Year, including Employees who
would be eligible but for their election not to
participate or to contribute, or because their
Pay is greater than zero but does not exceed a
stated minimum.
(1) If the Related Companies maintain two or
more plans which are subject to the ADP or
ACP Test and are considered as one plan for
purposes of Code sections 401(a)(4) or
410(b), all such plans shall be aggregated
and treated as one plan for purposes of
meeting the ADP and ACP Tests, provided
t h a t, for Plan Years beginning after
D e cember 31, 1989, plans may only be
aggregated if they have the same Plan Year.
(2) If an HCE, who is one of the top 10 paid
Employees or a more than 5% Owner, has any
Family Members, the Deferrals, Contributions
and Compensation of such HCE and his or her
Family Members shall be combined and treated
as a single HCE. Such amounts for all other
Family Members shall be removed from the
NHCE Group percentage calculation and be
combined with the HCE's.
(3) If an HCE is covered by more than one cash
or deferred arrangement maintained by the
Related Companies, all such plans shall be
aggregated and treated as one plan for
purposes of calculating the separate
percentage for the HCE which is used in the
determination of the Average Percentage.
(k) "Lookback Year". Pursuant to Code section
414(q), the Company elects as the Lookback Year
the current calendar year (ending with the Plan
Year). Effective for Plan Years ending on or
after December 31, 1992, pursuant to Code section
414(q), the Company elects as the Lookback Year
the 12 months ending immediately prior to the
start of the Plan Year.
(l) "Multiple Use Test". The test described in
Section 12.4 which a Plan must meet where the
Alternative Limitation (described in Section
12.2(b)) is used to meet both the ADP and ACP
Tests.
(m) "NHCE" or "Non-Highly Compensated Employee". An
Employee who is not an HCE.
33<PAGE>
12.2 ADP and ACP Tests
For each Plan Year, the ADP and ACP for the HCE Group
must meet either the Basic or Alternative Limitation
when compared to the respective ADP and ACP for the
NHCE Group, defined as follows:
(a) B a s ic Limitation. The HCE Group Average
Percentage may not exceed 1.25 times the NHCE
Group Average Percentage.
(b) Alternative Limitation. The HCE Group Average
Percentage is limited by reference to the NHCE
Group Average Percentage as follows:
If the NHCE Group Then the Maximum HCE
Average Group Average Percentage
Percentage is: is:
Less than 2% 2 times NHCE Group
2% to 8% Average %
More than 8% NHCE Group Average %
plus 2%
NA - Basic Limitation
applies
12.3 Correction of ADP and ACP Tests
If the ADP or ACP Tests are not met, the Administrator
shall determine, no later than the end of the next
Plan Year, a maximum percentage to be used in place of
the calculated percentage for all HCEs that would
reduce the ADP and/or ACP for the HCE group by a
sufficient amount to meet the ADP and ACP Tests.
(a) ADP Correction. Pre-Tax Contributions shall, by
the end of the next Plan Year, be refunded
(including amounts previously refunded because
they exceeded the Contribution Dollar Limit) to
the Participant in an amount equal to the actual
Deferrals minus the product of the maximum
percentage and the HCE's Compensation. Any
Matching Contributions attributable to refunded
excess Pre-Tax Contributions as described in this
Section 12.3(a) shall be deemed a Contribution
made by reason of a mistake of fact and removed
from the Participant's Account.
(b) ACP Correction. Contributions shall, by the end
of the next Plan Year, be refunded to the
Participant in an amount equal to the actual
Contributions minus the product of the maximum
percentage and the HCE's Compensation. The
e x c ess amounts shall first be taken from
unmatched After-Tax Contributions and then as a
proportional combination of matched After-Tax and
Matching Contributions.
(c) Investment Fund Sources. Once the amount of
excess Deferrals and/or Contributions is
d e termined, and with regard to excess
Contributions, allocated by type of Contribution,
amounts shall then be taken by type of investment
in direct proportion to the market value of the
Participant's interest in each Investment Fund
(which excludes Participant loans) at the time
the correction is made.
(d) Family Member Correction. To the extent any
34<PAGE>
reduction is necessary with respect to an HCE and
his or her Family Members that have been combined
and treated for testing purposes as a single
Employee, the excess Deferrals and Contributions
from the ADP and/or ACP Test shall be prorated
among each such Participant in direct proportion
to his or her Deferrals or Contributions included
in each Test.
12.4 Multiple Use Test
If the Alternative Limitation (defined in Section
12.2) is used to meet both the ADP and ACP Tests, the
ADP and ACP for the HCE Group must also comply with
the requirements of Code section 401(m)(9). Such Code
section requires that the sum of the ADP and ACP for
the HCE Group (as determined after any corrections
needed to meet the ADP and ACP Tests have been made)
not exceed the sum (which produces the most favorable
result) of:
(a) the Basic Limitation (defined in Section 12.2)
applied to either the ADP or ACP for the NHCE
Group, and
(b) the Alternative Limitation applied to the other
NHCE Group percentage.
12.5 Correction of Multiple Use Test
I f t h e multiple use limit is exceeded, the
Administrator shall determine a maximum percentage to
be used in place of the calculated percentage for all
HCEs that would reduce either or both the ADP or ACP
for the HCE Group by a sufficient amount to meet the
multiple use limit. Any excess shall be handled in
the same manner that the distribution of excess
Deferrals or Contributions are handled.
12.6 Adjustment for Investment Gain or Loss
Any excess Deferrals or Contributions to be refunded
to a Participant in accordance with Section 12.3 or
12.5 shall be adjusted for investment gain or loss.
Refunds shall not include investment gain or loss for
the period between the end of the applicable Plan Year
and the date of distribution. However, for Plan Years
ending before December 31, 1993, refunds shall include
investment gain or loss for the period between the end
o f the applicable Plan Year and the date of
distribution.
35<PAGE>
12.7 Testing Responsibilities and Required Records
The Administrator shall be responsible for ensuring
that the Plan meets the ADP, ACP and Multiple Use
Tests and that the Contribution Dollar Limit is not
exceeded. In carrying out its responsibilities, the
Administrator shall have sole discretion to limit or
reduce Deferrals or Contributions at any time. The
A d m inistrator shall maintain records which are
sufficient to demonstrate that the ADP, ACP and
Multiple Use Tests have been met for each Plan Year
for at least as long as the Employer's corresponding
tax year is open to audit.
12.8 Separate Testing
(a) Multiple Employers: The determination of HCEs,
NHCEs, and the performance of the ADP, ACP and
Multiple Use Tests and any corrective action
resulting therefrom shall be made separately with
regard to the Employees of each Employer (and its
Related Companies) that is not a Related Company
with the other Employer(s).
(b) Collective Bargaining Units: For Plan Years
beginning after December 31, 1992, the
performance of the ADP Test, and if applicable,
the ACP Test and Multiple Use Test and any
corrective action resulting therefrom shall be
applied separately to Employees who are eligible
to participate in the Plan as a result of a
collective bargaining agreement.
In addition, separate testing may be applied, at the
discretion of the Administrator and to the extent
permitted under Treasury regulations, to any group of
Employees for whom separate testing is permissible.
36<PAGE>
13 MAXIMUM CONTRIBUTION AND BENEFIT LIMITATIONS
13.1 "Annual Addition" Defined
The sum of all amounts allocated to the Participant's
A c c o u n t for a Plan Year. Amounts include
contributions (except for rollovers or transfers from
another qualified plan), forfeitures and, if the
Participant is a Key Employee (pursuant to Section 14)
for the applicable or any prior Plan Year, medical
benefits provided pursuant to Code section 419A(d)(1).
For purposes of this Section 13.1, "Account" also
includes a Participant's account in all other defined
contribution plans currently or previously maintained
by any Related Company. The Plan Year refers to the
year to which the allocation pertains, regardless of
when it was allocated. The Plan Year shall be the
Code section 415 limitation year.
13.2 Maximum Annual Addition
The Annual Addition to a Participant's accounts under
this Plan and any other defined contribution plan
maintained by any Related Company for any Plan Year
shall not exceed the lesser of (1) 25% of his or her
Taxable Income or (2) the greater of $30,000 or one-
quarter of the dollar limitation in effect under Code
section 415(b)(1)(A).
13.3 Avoiding an Excess Annual Addition
If, at any time during a Plan Year, the allocation of
any additional Contributions would produce an excess
Annual Addition for such year, Contributions to be
made for the remainder of the Plan Year shall be
limited to the amount needed for each affected
Participant to receive the maximum Annual Addition.
13.4 Correcting an Excess Annual Addition
Upon the discovery of an excess Annual Addition to a
Participant's Account (resulting from forfeitures,
a l locations, reasonable error in determining
Participant compensation or the amount of elective
c o ntributions, or other facts and circumstances
acceptable to the Internal Revenue Service) the excess
amount (adjusted to reflect investment gains) shall
first be returned to the Participant to the extent of
his or her After-Tax Contributions, and then to the
extent of his or her Pre-Tax Contributions (however to
the extent After-Tax and/or Pre-Tax Contributions were
matched, the applicable Matching Contributions shall
be forfeited in proportion to the returned matched
A f ter-Tax and/or Pre-Tax Contributions) and the
remaining excess, if any, plus returned Matching
Contributions, shall be forfeited by the Participant
and used to reduce subsequent Contributions as soon as
is administratively feasible.
37<PAGE>
13.5 Correcting a Multiple Plan Excess
If a Participant, whose Account is credited with an
excess Annual Addition, received allocations to more
than one defined contribution plan, the excess shall
be corrected by reducing the Annual Addition to this
Plan only after all possible reductions have been made
to the other defined contribution plans.
13.6 "Defined Benefit Fraction" Defined
The fraction, for any Plan Year, where the numerator
is the "projected annual benefit" and the denominator
is the greater of 125% of the "protected current
accrued benefit" or the normal limit which is the
lesser of (1) 125% of the maximum dollar limitation
provided under Code section 415(b)(1)(A) for the Plan
Year or (2) 140% of the amount which may be taken into
account under Code section 415(b)(1)(B) for the Plan
Year, where a Participant's:
(a) "projected annual benefit" is the annual benefit
provided by the Plan determined pursuant to Code
section 415(e)(2)(A), and
(b) "protected current accrued benefit" in a defined
benefit plan in existence on (1) July 1, 1982,
shall be the accrued annual benefit provided for
under Public Law 97-248, section 235(g)(4), as
amended, or (2) on May 6, 1986, shall be the
accrued annual benefit provided for under Public
Law 99-514, section 1106(i)(3).
13.7 "Defined Contribution Fraction" Defined
The fraction where the numerator is the sum of the
Participant's Annual Addition for each Plan Year to
date and the denominator is the sum of the "annual
amounts" for each year in which the Participant has
performed service with a Related Company. The "annual
amount" for any Plan Year is the lesser of (1) 125% of
t h e Code section 415(c)(1)(A) dollar limitation
(determined without regard to subsection (c)(6)) in
effect for the Plan Year and (2) 140% of the Code
section 415(c)(1)(B) amount in effect for the Plan
Year, where:
(a) each Annual Addition is determined pursuant to
the Code section 415(c) rules in effect for such
Plan Year, and
(b) the numerator is adjusted pursuant to Public Law
97-248, section 235(g)(3), as amended, or Public
Law 99-514, section 1106(i)(4).
13.8 Combined Plan Limits and Correction
If a Participant has also participated in a defined
benefit plan maintained by a Related Company, the sum
of the Defined Benefit Fraction and the Defined
Contribution Fraction for any Plan Year may not exceed
1.0. If the combined fraction exceeds 1.0 for any
Plan Year, the Participant's benefit under any defined
b e n efit plan (to the extent it has not been
distributed or used to purchase an annuity contract)
shall be limited so that the combined fraction does
38<PAGE>
not exceed 1.0 before any defined contribution limits
will be enforced.
39<PAGE>
14 TOP HEAVY RULES
14.1 Top Heavy Definitions
When capitalized, the following words and phrases have
the following meanings when used in this Section:
(a) "Aggregation Group". The group consisting of
each qualified plan of an Employer (and its
Related Companies) (1) in which a Key Employee is
a participant or was a participant during the
determination period (regardless of whether such
plan has terminated), or (2) which enables
a n o t h er plan in the group to meet the
requirements of Code sections 401(a)(4) and
410(b). The Employer may also treat any other
qualified plan as part of the group if the group
would continue to meet the requirements of Code
sections 401(a)(4) and 410(b) with such plan
being taken into account.
(b) "Determination Date". The last Trade Date of the
preceding Plan Year or, in the case of the Plan's
first year, the last Trade Date of the first Plan
Year.
(c) "Key Employee". A current or former Employee (or
his or her Beneficiary) who at any time during
the five year period ending on the Determination
Date was:
(1) an officer of a Related Company whose
Compensation (i) exceeds 50% of the amount
in effect under Code section 415(b)(1)(A)
and (ii) places him within the following
highest paid group of officers:
Number of Number of
Employees Highest Paid
not Excluded Under Officers Included
Code
Section 414(q)(8)
Less than 30 3
30 to 500 10% of the number
of
Employees not
excluded
More than 500 under Code section
414(q)(8)
50
(2) a more than 5% Owner,
(3) a more than 1% Owner whose Compensation
exceeds $150,000, or
(4) a more than 0.5% Owner who is among the 10
Employees owning the largest interest in a
R e lated Company and whose Compensation
exceeds the amount in effect under Code
section 415(c)(1)(A).
40<PAGE>
(d) "Plan Benefit". The sum as of the Determination
Date of (1) an Employee's Account, (2) the
present value of his or her other accrued
benefits provided by all qualified plans within
the Aggregation Group, and (3) the aggregate
distributions made within the five year period
ending on such date. Plan Benefits shall exclude
rollover contributions and plan to plan transfers
made after December 31, 1983 which are both
employee initiated and from a plan maintained by
a non-related employer.
(e) "Top Heavy". The Plan's status when the Plan
Benefits of Key Employees account for more than
60% of the Plan Benefits of all Employees who
have performed services at any time during the
five year period ending on the Determination
Date. The Plan Benefits of Employees who were,
but are no longer, Key Employees (because they
have not been an officer or Owner during the five
year period), are excluded in the determination.
14.2 Special Contributions
(a) Minimum Contribution Requirement. For each Plan
Year in which the Plan is Top Heavy, the Employer
shall not allow any contributions (other than a
Rollover Contribution) to be made by or on behalf
of any Key Employee unless the Employer makes a
contribution (other than Pre-Tax and Matching
Contributions) on behalf of all Participants who
were Eligible Employees as of the last day of the
Plan Year in an amount equal to at least 3% of
each such Participant's Taxable Income. The
Administrator shall remove any such contributions
(including applicable investment gain or loss)
credited to a Key Employee's Account in violation
of the foregoing rule and return them to the
Employer or Employee to the extent permitted by
the Limited Return of Contributions paragraph of
Section 18.
(b) Overriding Minimum Benefit. Notwithstanding,
contributions shall be permitted on behalf of Key
Employees if the Employer also maintains a
defined benefit plan which automatically provides
a benefit which satisfies the Code section
416(c)(1) minimum benefit requirements, including
the adjustment provided in Code section
416(h)(2)(A), if applicable. If this Plan is
part of an aggregation group in which a Key
Employee is receiving a benefit and no minimum is
provided in any other plan, a minimum
contribution of at least 3% of Taxable Income
shall be provided to the Employees specified in
the preceding paragraph of this plan. In
addition, the Employer may offset a defined
benefit minimum by contributions (other than Pre-
Tax and Matching Contributions) made to this
Plan.
14.3 Adjustment to Combined Limits for Different Plans
For each Plan Year in which the Plan is Top Heavy,
100% shall be substituted for 125% in determining the
Defined Benefit Fraction and the Defined Contribution
41<PAGE>
Fraction.
15 PLAN ADMINISTRATION
15.1 Plan Delineates Authority and Responsibility
P l a n fiduciaries include the Company, the
Administrator, the Committee and/or the Trustee, as
applicable, whose specific duties are delineated in
this Plan and Trust. In addition, Plan fiduciaries
also include any other person to whom fiduciary duties
or responsibility is delegated with respect to the
Plan. Any person or group may serve in more than one
fiduciary capacity with respect to the Plan. To the
extent permitted under ERISA section 405, no fiduciary
shall be liable for a breach by another fiduciary.
15.2 Fiduciary Standards
Each fiduciary shall:
(a) discharge his or her duties in accordance with
this Plan and Trust to the extent they are
consistent with ERISA;
(b) use that degree of care, skill, prudence and
diligence that a prudent person 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;
(c) act with the exclusive purpose of providing
benefits to Participants and their Beneficiaries,
and defraying reasonable expenses of
administering the Plan;
(d) diversify Plan investments, to the extent such
f i duciary is responsible for directing the
investment of Plan assets, so as to minimize the
r i s k of large losses, unless under the
circumstances it is clearly prudent not to do so;
and
(e) treat similarly situated Participants and
Beneficiaries in a uniform and nondiscriminatory
manner.
15.3 Company is ERISA Plan Administrator
The Company is the plan administrator, within the
meaning of ERISA section 3(16), which is responsible
for compliance with all reporting and disclosure
requirements, except those that are explicitly the
responsibility of the Trustee under applicable law.
The Administrator and/or Committee shall have any
necessary authority to carry out such functions
t h rough the actions of the Administrator, duly
a p p ointed officers of the Company, and/or the
Committee.
42<PAGE>
15.4 Administrator Duties
T h e Administrator shall have the discretionary
authority to construe this Plan and Trust, other than
the provisions which relate to the Trustee, and to do
all things necessary or convenient to effect the
intent and purposes of the Plan, whether or not such
powers are specifically set forth in this Plan and
T r u s t. Actions taken in good faith by the
Administrator shall be conclusive and binding on all
interested parties, and shall be given the maximum
possible deference allowed by law. In addition to the
duties listed elsewhere in this Plan and Trust, the
Administrator's authority shall include, but not be
limited to, the discretionary authority to:
(a) determine who is eligible to participate, if a
contribution qualifies as a rollover
contribution, the allocation of Contributions,
and the eligibility for loans, withdrawals and
distributions;
(b) provide each Participant with a summary plan
description no later than 90 days after he or she
has become a Participant (or such other period
permitted under ERISA section 104(b)(1)), as well
as informing each Participant of any material
modification to the Plan in a timely manner;
(c) make a copy of the following documents available
to Participants during normal work hours: this
Plan and Trust (including subsequent amendments),
all annual and interim reports of the Trustee
related to the entire Plan, the latest annual
report and the summary plan description;
(d) determine the fact of a Participant's death and
o f any Beneficiary's right to receive the
deceased Participant's interest based upon such
proof and evidence as it deems necessary;
(e) establish and review at least annually a funding
policy bearing in mind both the short-run and
long-run needs and goals of the Plan. To the
e x t e nt Participants may direct their own
investments, the funding policy shall focus on
w h i c h Investment Funds are available for
Participants to use; and
(f) a d j u dicate claims pursuant to the claims
procedure described in Section 18.
15.5 Advisors May be Retained
The Administrator may retain such agents and advisors
(including attorneys, accountants, actuaries,
consultants, record keepers, investment counsel and
administrative assistants) as it considers necessary
to assist it in the performance of its duties. The
Administrator shall also comply with the bonding
requirements of ERISA section 412.
43<PAGE>
15.6 Delegation of Administrator Duties
The Company, as Administrator of the Plan, has
appointed a Committee to administer the Plan on its
behalf. The Company shall provide the Trustee with
the names and specimen signatures of any persons
authorized to serve as Committee members and act as or
on its behalf. Any Committee member appointed by the
Company shall serve at the pleasure of the Company,
but may resign by written notice to the Company.
Committee members shall serve without compensation
from the Plan for such services. Except to the extent
that the Company otherwise provides, any delegation of
duties to a Committee shall carry with it the full
d i scretionary authority of the Administrator to
complete such duties.
15.7 Committee Operating Rules
(a) Actions of Majority. Any act delegated by the
Company to the Committee may be done by a
majority of its members. The majority may be
expressed by a vote at a meeting or in writing
without a meeting, and a majority action shall be
equivalent to an action of all Committee members.
(b) Meetings. The Committee shall hold meetings upon
such notice, place and times as it determines
necessary to conduct its functions properly.
(c) Reliance by Trustee. The Committee may authorize
one or more of its members to execute documents
on its behalf and may authorize one or more of
its members or other individuals who are not
members to give written direction to the Trustee
in the performance of its duties. The Committee
shall provide such authorization in writing to
the Trustee with the name and specimen signatures
of any person authorized to act on its behalf.
The Trustee shall accept such direction and rely
upon it until notified in writing that the
Committee has revoked the authorization to give
such direction. The Trustee shall not be deemed
to be on notice of any change in the membership
of the Committee, parties authorized to direct
the Trustee in the performance of its duties, or
the duties delegated to and by the Committee
until notified in writing.
44<PAGE>
16 MANAGEMENT OF INVESTMENTS
16.1 Trust Agreement
All Plan assets shall be held by the Trustee in trust,
in accordance with those provisions of this Plan and
Trust which relate to the Trustee, for use in
providing Plan benefits and paying Plan expenses not
paid directly by the Employer. Plan benefits will be
drawn solely from the Trust and paid by the Trustee as
directed by the Administrator. Notwithstanding, the
Administrator may appoint, with the approval of the
Trustee, another trustee to hold and administer Plan
assets which do not meet the requirements of Section
16.2.
16.2 Investment Funds
The Administrator is hereby granted authority to
direct the Trustee to invest Trust assets in one or
more Investment Funds. The number and composition of
Investment Funds may be changed from time to time,
without the necessity of amending this Plan and Trust
document. The Trustee may establish reasonable limits
on the number of Investment Funds as well as the
acceptable assets for any such Investment Fund. Each
of the Investment Funds may be comprised of any of the
following:
(a) s h ares of a registered investment company,
whether or not the Trustee or any of its
affiliates is an advisor to, or other service
provider to, such company;
(b) collective investment funds maintained by the
Trustee, or any other fiduciary to the Plan,
which are available for investment by trusts
which are qualified under Code sections 401(a)
and 501(a);
(c) individual equity and fixed income securities
which are readily tradeable on the open market;
(d) guaranteed investment contracts issued by a bank
or insurance company;
(e) interest bearing deposits of the Trustee; and
(f) Company Stock.
Any Investment Fund assets invested in a collective
i n v estment fund, shall be subject to all the
p r o visions of the instruments establishing and
governing such fund. These instruments, including any
subsequent amendments, are incorporated herein by
reference.
45<PAGE>
16.3 Authority to Hold Cash
The Trustee shall have the authority to cause the
investment manager of each Investment Fund to maintain
sufficient deposit or money market type assets in each
Investment Fund to handle the Fund's liquidity and
disbursement needs. Each Participant's and
Beneficiary's Sweep Account, which is used to hold
assets pending investment or disbursement, shall
consist of interest bearing deposits of the Trustee.
16.4 Trustee to Act Upon Instructions
The Trustee shall carry out instructions to invest
assets in the Investment Funds as soon as practicable
a f t er such instructions are received from the
Administrator, Participants, or Beneficiaries. Such
instructions shall remain in effect until changed by
the Administrator, Participants or Beneficiaries.
16.5 Administrator Has Right to Vote Registered Investment
Company Shares
The Administrator shall be entitled to vote proxies or
exercise any shareholder rights relating to shares
held on behalf of the Plan in a registered investment
company. Notwithstanding, the authority to vote
proxies and exercise shareholder rights related to
such shares held in a Custom Fund is vested as
provided otherwise in Section 16.
16.6 Custom Fund Investment Management
The Administrator may designate, with the consent of
the Trustee, an investment manager for any Investment
Fund established by the Trustee solely for
Participants of this Plan (a "Custom Fund"). The
investment manager may be the Administrator, Trustee
or an investment manager pursuant to ERISA section
3(38). The Administrator shall advise the Trustee in
writing of the appointment of an investment manager
and shall cause the investment manager to acknowledge
to the Trustee in writing that the investment manager
is a fiduciary to the Plan.
A Custom Fund shall be subject to the following:
(a) Guidelines. Written guidelines, acceptable to
the Trustee, shall be established for a Custom
Fund. If a Custom Fund consists solely of
collective investment funds or shares of a
registered investment company (and sufficient
deposit or money market type assets to handle the
Fund's liquidity and disbursement needs), its'
u n derlying instruments shall constitute the
guidelines.
(b) Authority of Investment Manager. The investment
manager of a Custom Fund shall have the authority
to vote or execute proxies, exercise shareholder
rights, manage, acquire, and dispose of Trust
assets. Notwithstanding, the authority to vote
proxies and exercise shareholder rights related
to shares of Company Stock held in a Custom Fund
is vested as provided otherwise in Section 16.
(c) Custody and Trade Settlement. Unless otherwise
expressly agreed to by the Trustee, the Trustee
shall maintain custody of all Custom Fund assets
and be responsible for the settlement of all
46<PAGE>
Custom Fund trades. For purposes of this
section, shares of a collective investment fund,
shares of a registered investment company and
guaranteed investment contracts issued by a bank
or insurance company, shall be regarded as the
Custom Fund assets instead of the underlying
assets of such instruments.
(d) Limited Liability of Co-Fiduciaries. Neither the
Administrator nor the Trustee shall be obligated
to invest or otherwise manage any Custom Fund
assets for which the Trustee or Administrator is
n o t the investment manager nor shall the
Administrator or Trustee be liable for acts or
omissions with regard to the investment of such
assets except to the extent required by ERISA.
16.7 Authority to Segregate Assets
The Company may direct the Trustee to split an
Investment Fund into two or more funds in the event
any assets in the Fund are illiquid or the value is
not readily determinable. In the event of such
segregation, the Company shall give instructions to
the Trustee on what value to use for the split-off
assets, and the Trustee shall not be responsible for
confirming such value.
16.8 Maximum Permitted Investment in Company Stock
If the Company provides for a Company Stock Fund the
Fund may be comprised entirely of Company Stock and
the Fund may be as large as necessary to comply with
Participants' and Beneficiaries' investment elections,
if the Company Stock Fund is authorized as an
Investment Fund available to Participants, as well the
total investment of Participants' and Beneficiaries'
Matching Accounts.
16.9 Participants Have Right to Vote and Tender Company
Stock
Each Participant or Beneficiary shall be entitled to
instruct the Trustee as to the voting or tendering of
any full or partial shares of Company Stock held on
his or her behalf in the Company Stock Fund. Prior to
such voting or tendering of Company Stock, each
Participant or Beneficiary shall receive a copy of the
proxy solicitation or other material relating to such
vote or tender decision and a blank form for the
Participant or Beneficiary to complete which
confidentially instructs the Trustee to vote or tender
s u c h shares in the manner indicated by the
Participants or Beneficiaries. Upon receipt of such
instructions, the Trustee shall act with respect to
such shares as instructed. The Administrator shall
instruct the Trustee with respect to how to vote or
tender any shares for which instructions are not
received from Participants or Beneficiaries.
47<PAGE>
16.10 Registration and Disclosure for Company Stock
The Administrator shall be responsible for determining
the applicability (and, if applicable, complying with)
the requirements of the Securities Act of 1933, as
amended, the California Corporate Securities Law of
1968, as amended, and any other applicable blue sky
law. The Administrator shall also specify what
restrictive legend or transfer restriction, if any, is
required to be set forth on the certificates for the
securities and the procedure to be followed by the
Trustee to effectuate a resale of such securities.
48<PAGE>
17 TRUST ADMINISTRATION
17.1 Trustee to Construe Trust
The Trustee shall have the discretionary authority to
construe those provisions of this Plan and Trust which
relate to the Trustee and to do all things necessary
or convenient to the administration of the Trust,
whether or not such powers are specifically set forth
in this Plan and Trust. Actions taken in good faith
by the Trustee shall be conclusive and binding on all
interested parties, and shall be given the maximum
possible deference allowed by law.
17.2 Trustee To Act As Owner of Trust Assets
Subject to the specific conditions and limitations set
forth in this Plan and Trust, the Trustee shall have
all the power, authority, rights and privileges of an
absolute owner of the Trust assets and, not in
limitation but in amplification of the foregoing, may:
(a) receive, hold, manage, invest and reinvest, sell,
t e nder, exchange, dispose of, encumber,
h y pothecate, pledge, mortgage, lease, grant
options respecting, repair, alter, insure, or
distribute any and all property in the Trust;
(b) borrow money, participate in reorganizations, pay
calls and assessments, vote or execute proxies,
exercise subscription or conversion privileges,
exercise options and register any securities in
the Trust in the name of the nominee, in federal
book entry form or in any other form as will
permit title thereto to pass by delivery;
(c) renew, extend the due date, compromise,
arbitrate, adjust, settle, enforce or foreclose,
by judicial proceedings or otherwise, or defend
against the same, any obligations or claims in
favor of or against the Trust; and
(d) lend, through a collective investment fund, any
securities held in such collective investment
fund to brokers, dealers or other borrowers and
to permit such securities to be transferred into
the name and custody and be voted by the borrower
or others.
17.3 United States Indicia of Ownership
T h e Trustee shall not maintain the indicia of
ownership of any Trust assets outside the jurisdiction
of the United States, except as authorized by ERISA
section 404(b).
49<PAGE>
17.4 Tax Withholding and Payment
(a) Withholding. Effective for taxable distributions
made on or before December 31, 1992 the Trustee
shall calculate and withhold federal (and, if
applicable, state) income taxes in accordance
w i t h a Participant's withholding election.
Effective for taxable distributions made after
December 31, 1992, the Trustee shall calculate
and withhold federal (and, if applicable, state)
income taxes with regard to any Eligible Rollover
Distribution that is not paid as a Direct
Rollover. With regard to any taxable
distribution that is not an Eligible Rollover
Distribution, the Trustee shall calculate and
withhold federal (and, if applicable, state)
income taxes in accordance with the Participant's
withholding election.
(b) Taxes Due From Investment Funds. The Trustee
shall pay from the Investment Fund any taxes or
assessments imposed by any taxing or governmental
authority on such Fund or its income, including
related interest and penalties.
17.5 Trustee Duties and Limitations
Unless otherwise agreed to by the Trustee, the
Trustee's duties shall be confined to construing the
terms of the Plan and Trust as they relate to the
Trustee, receiving funds on behalf of and making
payments from the Trust, safeguarding and valuing
Trust assets, and investing and reinvesting Trust
assets in the Investment Funds as directed by the
Administrator or Participants. The Trustee shall have
no duty or authority to ascertain whether
Contributions are in compliance with the Plan, to
enforce collection or to compute or verify the
accuracy or adequacy or any amount to be paid to it by
the Employer. The Trustee shall not be liable for the
proper application of any part of the Trust with
respect to any disbursement made at the direction of
the Administrator.
17.6 Trust Accounting
(a) A n nual Report. Within 60 days (or other
reasonable period) following the close of the
P l a n Year, the Trustee shall provide the
Administrator with an annual accounting of Trust
a s s ets and information to assist the
Administrator in meeting ERISA's annual reporting
and audit requirements.
(b) Periodic Reports. The Trustee shall maintain
records and provide sufficient reporting to allow
the Administrator to properly monitor the Trust's
assets and activity.
(c) Administrator Approval. Approval of any Trustee
accounting will automatically occur 90 days after
s u c h accounting has been received by the
Administrator, unless the Administrator files a
written objection with the Trustee within such
time period. Such approval shall be final as to
all matters and transactions stated or shown
therein and binding upon the Administrator.
50<PAGE>
51<PAGE>
17.7 Valuation of Certain Assets
If the Trustee determines the Trust holds any asset
which is not readily tradable and listed on a national
securities exchange registered under the Securities
Exchange Act of 1934, as amended, the Trustee may
engage a qualified independent appraiser to determine
the fair market value of such property, and the
appraisal fees shall be paid from the Investment Fund
containing the asset.
17.8 Legal Counsel
The Trustee may consult with legal counsel of its
choice, including counsel for the Employer or counsel
of the Trustee, upon any question or matter arising
under this Plan and Trust. When relied upon by the
Trustee, the opinion of such counsel shall be evidence
that the Trustee has acted in good faith.
17.9 Fees and Expenses
The Trustee's fees for its services as Trustee shall
be such as may be mutually agreed upon by the Company
and the Trustee. Trustee fees and all reasonable
expenses of counsel and advisors retained by the
Trustee shall be paid in accordance with Section 6.
52<PAGE>
18 RIGHTS, PROTECTION, CONSTRUCTION AND JURISDICTION
18.1 Plan Does Not Affect Employment Rights
The Plan does not provide any employment rights to any
Employee. The Employer expressly reserves the right
to discharge an Employee at any time, with or without
cause, without regard to the effect such discharge
would have upon the Employee's interest in the Plan.
18.2 Limited Return of Contributions
Except as provided in this paragraph, (1) Plan assets
shall not revert to the Employer nor be diverted for
any purpose other than the exclusive benefit of
P a rticipants or their Beneficiaries; and (2) a
Participant's vested interest shall not be subject to
divestment. As provided in ERISA section 403(c)(2),
the actual amount of a Contribution made by the
Employer (or the current value of the Contribution if
a net loss has occurred) may revert to the Employer
if:
(a) such Contribution is made by reason of a mistake
of fact;
(b) initial qualification of the Plan under Code
section 401(a) is not received and a request for
such qualification is made within the time
p r e scribed under Code section 401(b) (the
existence of and Contributions under the Plan are
hereby conditioned upon such qualification); or
(c) such Contribution is not deductible under Code
s e ction 404 (such Contributions are hereby
conditioned upon such deductibility) in the
taxable year of the Employer for which the
Contribution is made.
The reversion to the Employer must be made (if at all)
within one year of the mistaken payment of the
Contribution, the date of denial of qualification, or
the date of disallowance of deduction, as the case may
be. A Participant shall have no rights under the Plan
with respect to any such reversion.
18.3 Assignment and Alienation
As provided by Code section 401(a)(13) and to the
extent not otherwise required by law, no benefit
provided by the Plan may be anticipated, assigned or
alienated, except:
(a) to create, assign or recognize a right to any
benefit with respect to a Participant pursuant to
a QDRO, or
(b) to use a Participant's vested Account balance as
security for a loan from the Plan which is
permitted pursuant to Code section 4975.
53<PAGE>
18.4 Facility of Payment
If a Plan benefit is due to be paid to a minor or if
the Administrator reasonably believes that any payee
is legally incapable of giving a valid receipt and
discharge for any payment due him or her, the
Administrator shall have the payment of the benefit,
or any part thereof, made to the person (or persons or
institution) whom it reasonably believes is caring for
or supporting the payee, unless it has received due
notice of claim therefor from a duly appointed
guardian or conservator of the payee. Any payment
shall to the extent thereof, be a complete discharge
of any liability under the Plan to the payee.
18.5 Reallocation of Lost Participant's Accounts
If the Administrator cannot locate a person entitled
to payment of a Plan benefit after a reasonable
search, the Administrator may at any time thereafter
treat such person's Account as forfeited and use such
amount to offset any Employer Contributions. If such
person subsequently presents the Administrator with a
valid claim for the benefit, such person shall be paid
the amount treated as forfeited, plus the interest
that would have been earned in the Sweep Account to
the date of determination. The Administrator shall
p a y the amount through an additional Employer
Contribution.
18.6 Claims Procedure
(a) Right to Make Claim. An interested party who
disagrees with the Administrator's determination
of his or her right to Plan benefits must submit
a written claim and exhaust this claim procedure
before legal recourse of any type is sought. The
claim must include the important issues the
interested party believes support the claim. The
Administrator, pursuant to the authority provided
in this Plan, shall either approve or deny the
claim.
(b) Process for Denying a Claim. The Administrator's
partial or complete denial of an initial claim
must include an understandable, written response
covering (1) the specific reasons why the claim
is being denied (with reference to the pertinent
Plan provisions) and (2) the steps necessary to
perfect the claim and obtain a final review.
(c) A p p eal of Denial and Final Review. The
interested party may make a written appeal of the
Administrator's initial decision, and the
Administrator shall respond in the same manner
and form as prescribed for denying a claim
initially.
54<PAGE>
(d) Time Frame. The initial claim, its review,
appeal and final review shall be made in a timely
fashion, subject to the following time table:
Days to Respond
Action From Last Action
Administrator determines benefit NA
Interested party files initial request 60 days
Administrator's initial decision 90 days
Interested party requests final review 60 days
Administrator's final decision 60 days
However, the Administrator may take up to twice
the maximum response time for its initial and
final review if it provides an explanation within
the normal period of why an extension is needed
and when its decision will be forthcoming.
18.7 Construction
Headings are included for reading convenience. The
text shall control if any ambiguity or inconsistency
exists between the headings and the text. The
singular and plural shall be interchanged wherever
appropriate. References to Participant shall include
Beneficiary when appropriate and even if not otherwise
already expressly stated.
18.8 Jurisdiction and Severability
The Plan and Trust shall be construed, regulated and
administered under ERISA and other applicable federal
laws and, where not otherwise preempted, by the laws
of the State of California. If any provision of this
Plan and Trust shall become invalid or unenforceable,
t h a t fact shall not affect the validity or
enforceability of any other provision of this Plan and
Trust. All provisions of this Plan and Trust shall be
so construed as to render them valid and enforceable
in accordance with their intent.
18.9 Indemnification by Employer
The Employers hereby agree to indemnify all Plan
fiduciaries against any and all liabilities resulting
from any action or inaction, (including a Plan
termination in which the Company fails to apply for a
favorable determination from the Internal Revenue
Service with respect to the qualification of the Plan
upon its termination), in relation to the Plan or
Trust (1) including (without limitation) expenses
reasonably incurred in the defense of any claim
relating to the Plan or its assets, and amounts paid
in any settlement relating to the Plan or its assets,
but (2) excluding liability resulting from actions or
inactions made in bad faith, or resulting from the
negligence or willful misconduct of the Trustee. The
Company shall have the right, but not the obligation,
to conduct the defense of any action to which this
Section applies. The Plan fiduciaries are not
entitled to indemnity from the Plan assets relating to
any such action.
55<PAGE>
19 AMENDMENT, MERGER AND TERMINATION
19.1 Amendment
The Company reserves the right to amend this Plan and
Trust at any time, to any extent and in any manner it
may deem necessary or appropriate. The Company (and
not the Trustee) shall be responsible for adopting any
amendments necessary to maintain the qualified status
of this Plan and Trust under Code sections 401(a) and
501(a). The Administrator shall have the authority to
a d opt Plan and Trust amendments which have no
substantial adverse financial impact upon an Employer
or the Plan. All interested parties shall be bound by
any amendment, provided that no amendment shall:
(a) become effective until it is accepted in writing
by the Trustee (which acceptance shall not
unreasonably be withheld);
(b) except to the extent permissible under ERISA and
the Code, make it possible for any portion of the
Trust assets to revert to an Employer or to be
used for, or diverted to, any purpose other than
for the exclusive benefit of Participants and
Beneficiaries entitled to Plan benefits and to
defray reasonable expenses of administering the
Plan;
(c) decrease the rights of any Employee to benefits
accrued (including the elimination of optional
forms of benefits) to the date on which the
amendment is adopted, or if later, the date upon
which the amendment becomes effective, except to
the extent permitted under ERISA and the Code;
nor
(d) permit an Employee to be paid the balance of his
or her Pre-Tax Account unless the payment would
otherwise be permitted under Code section 401(k).
19.2 Merger
This Plan and Trust may not be merged or consolidated
with, nor may its assets or liabilities be transferred
t o , another plan unless each Participant and
Beneficiary would, if the resulting plan were then
terminated, receive a benefit just after the merger,
consolidation or transfer which is at least equal to
the benefit which would be received if either plan had
terminated just before such event.
19.3 Plan Termination
The Company may, at any time and for any reason,
t e r m inate the Plan, or completely discontinue
contributions. Upon either of these events, or in the
event of a partial termination of the Plan within the
meaning of Code section 411(d)(3), the Accounts of
e a c h affected Employee shall be fully vested.
D i s t ributions or withdrawals will be made in
accordance with the terms of the Plan as in effect at
the time of the Plan's termination or as thereafter
amended provided that a post-termination amendment
will not be effective to the extent that it violates
56<PAGE>
Section 19.1 unless it is required in order to
maintain the qualified status of the Plan upon its
termination. The Trustee's and Employer's authority
shall continue beyond the Plan's termination date
until all Trust assets have been liquidated and
distributed.
19.4 Termination of Employer's Participation
Any Employer may terminate its Plan participation upon
written notice executed by the Employer and delivered
to the Company. Upon the Employer's request, the
Company may instruct the Trustee and Administrator to
spin off all affected Accounts and underlying assets
into a separate qualified plan under which the
Employer shall assume the powers and duties of the
Company. Alternatively, the Company may treat the
event as a partial termination described above or
continue to maintain the Accounts under the Plan.
19.5 Replacement of the Trustee
The Trustee may resign as Trustee under this Plan and
Trust or may be removed by the Company at any time
upon at least 90 days written notice (or less if
agreed to by both parties). In such event, the
Company shall appoint a successor trustee by the end
of the notice period. The successor trustee shall
then succeed to all the powers and duties of the
Trustee under this Plan and Trust. If no successor
trustee has been named by the end of the notice
period, the Company's chief executive officer shall
become the trustee, or if he or she declines, the
Trustee may petition the court for the appointment of
a successor trustee.
19.6 Final Settlement and Accounting of Trustee
(a) Final Settlement. As soon as is administratively
feasible after its resignation or removal as
Trustee, the Trustee shall transfer to the
successor trustee all property currently held by
the Trust. However, the Trustee is authorized to
reserve such sum of money as it may deem
a d visable for payment of its accounts and
expenses in connection with the settlement of its
accounts or other fees or expenses payable by the
Trust. Any balance remaining after payment of
such fees and expenses shall be paid to the
successor trustee.
(b) Final Accounting. The Trustee shall provide a
final accounting to the Administrator within 90
days of the date Trust assets are transferred to
the successor trustee.
(c) Administrator Approval. Approval of the final
accounting will automatically occur 90 days after
s u c h accounting has been received by the
Administrator, unless the Administrator files a
written objection with the Trustee within such
time period. Such approval shall be final as to
all matters and transactions stated or shown
therein and binding upon the Administrator.
57<PAGE>
APPENDIX A - INVESTMENT FUNDS
I. Investment Funds Available
The Investment Funds offered to Participants and
Beneficiaries as of the Execution Date include this set of
daily valued funds:
Category Funds
Income Income Accumulation
Balanced Asset Allocation
Equity S&P 500 Stock
II. Default Investment Fund
The default Investment Fund as of the Execution Date is the
Income Accumulation Fund.
III. Contribution Accounts For Which Investment is Restricted
A Participant or Beneficiary may direct the investment of
h i s or her entire Account except for the following
Contribution Accounts, and except as otherwise provided in
Section 7, which shall be invested as of the Effective Date
as follows:
Matching Company Stock Fund
IV. M a ximum Percentage Restrictions Applicable to Certain
Investment Funds
As of the Effective Date, there are no maximum percentage
restrictions applicable to any Investment Funds.
58<PAGE>
APPENDIX B - PAYMENT OF PLAN FEES AND EXPENSES
As of the Effective Date, payment of Plan fees and expenses shall
be as follows:
1) Investment Management Fees: These are paid by Participants
in that management fees reduce the investment return
reported and credited to Participants, except that the
Employer shall pay the fees related to the Company Stock
Fund. These are paid by the Employer on a quarterly basis.
2) Recordkeeping Fees: These are paid by the Employer on a
quarterly basis.
3) Loan Fees: A $3.50 per month fee is assessed and
b i l led/collected quarterly from the Account of each
Participant who has an outstanding loan balance.
4) Investment Fund Election Changes: For each Investment Fund
election change by a Participant, in excess of 4 changes per
year, a $10 fee will be assessed and billed/collected
quarterly from the Participant's Account.
5) Additional Fees Paid by Employer: All other Plan related
fees and expenses shall be paid by the Employer. To the
extent that the Administrator later elects that any such
fees shall be borne by Participants, estimates of the fees
shall be determined and reconciled, at least annually, and
the fees will be assessed monthly and billed/collected from
Accounts quarterly.
59<PAGE>
APPENDIX C - LOAN INTEREST RATE
A s of the Effective Date, the interest rate charged on
Participant loans shall be equal to the U.S. Treasury rate for a
note of the same maturity, plus 3%.
The rate may be determined once for all loans made in a month,
and the maturity may be determined to the nearest year.
60<PAGE>
